Exhibit
10.504


 


LOAN
AGREEMENT


 


 


Dated as of January 26,
2005


 


 


Between


 


 


INLAND
WESTERN MARKHAM CORP.,


 


 


as Borrower


 


 


and


 


 


BANK OF
AMERICA, N.A.,


as Lender


 





















 


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 from
time to time, this “Agreement”),
between BANK OF AMERICA, N.A., a national banking association, having an
address 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 corporation
governed 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 other
Loan Documents (defined below).


 


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


 


ARTICLE 1


DEFINITIONS; PRINCIPLES OF CONSTRUCTION


 


Section 1.1.                                 Definitions


 


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


 


“Account Collateral” shall mean (i) the Accounts, and all cash,
checks, drafts, certificates and instruments, if any, from time to time
deposited or held in the Accounts; (ii) any and all amounts in or credited to
the Accounts invested in Permitted Investments; (iii) all interest, dividends, cash,
instruments and other property from time to time received, receivable or
otherwise payable in respect of, or in exchange for, any or all of the
foregoing; 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 or
Province in which the Accounts are located) of any or all of the foregoing.


 


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


 


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


 


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


 





















 


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


 


“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 7.1
hereof.


 


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


 


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


 


“American Express Lease Default”
shall mean (i) a
default, after the expiration of any applicable notice or cure periods, under
the American Express Lease or (ii) the cancellation, termination or surrender
of the American Express Lease.


 


“Assignment of Management
Agreement” shall
mean that certain Assignment and Subordination of Management Agreement dated
the 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 any
Governmental Authority in connection with a Condemnation in respect of all or
any part of the Property.


 


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


 


“Business Day” shall mean a day on which Lender is open for
the conduct of substantially all of its banking business at its office in the
city 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 45th
day 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 the
Loan.


 


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


 


2





















 


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


 


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


 


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


 


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


 


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


 


“Dollars” and “$”  shall mean the lawful currency of the United
States of America.


 


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


 


“Eligible Institution” shall mean a depository institution or trust
company insured by the Federal Deposit Insurance Corporation, the short term
unsecured debt obligations or commercial paper of which are rated at least “A-l”
by S&P, “P-l” by Moody’s and “F-l” by Fitch in the case of accounts in
which funds are held for thirty (30) days or less (or, in the case of accounts
in which funds are held for more than thirty (30) days, the long term unsecured
debt 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 a
Securitization, Bank of America, N.A. shall be an Eligible Institution.


 


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


 


3





















 


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


 


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


 


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


 


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


 


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


 


“ERISA” shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time and any successor statutes
thereto and applicable regulations issued pursuant thereto in temporary or
final form.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“Expropriation” shall mean any
expropriation, requisition or other taking or sale of the use, occupancy or
title to any or all of the Property, by or on account of any expropriation
proceeding or other action by any Governmental Authority or other Person under
the power of statutory right of expropriation or otherwise or any transfer in
lieu of or in anticipation thereof.


 


“Fitch” shall mean Fitch, Inc.


 


“GAAP” shall mean generally accepted accounting
principles in the United States of America as of the date of the applicable
financial report.


 


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


 


4





















 


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 for
any 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 above
the Trigger Rating that may, from time to time, at the option of American
Express, execute a guaranty in favor of landlord under the American Express
Lease.


 


“Hazardous Materials” shall have the
meaning set forth in Section 12.5 hereof.


 


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


 


“Income Taxes” shall
have the meaning set forth in Section 5.5 hereof.


 


“Indemnified Parties” shall mean (a) Lender, (b) any prior owner
or holder of the Loan or Participations in the Loan, (c) any servicer or prior
servicer 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 a
full or partial interest in the Loan for the benefit of any Investor or other
third party, (f) any receiver or other fiduciary appointed in a foreclosure or
other 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 the
foregoing, and (h) the heirs, legal representatives, successors and assigns of
any and all of the foregoing (including, without limitation, any successors by merger,
consolidation or acquisition of all or a substantial portion of the Indemnified
Parties’ assets and business), in all cases whether during the term of the Loan
or as part of or following a foreclosure of the Mortgage.


 


“Independent Director” shall have the
meaning set forth in Section 6.4(a).


 


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


 


“Insurance Premiums” shall have the
meaning set forth in Section 8.1 hereof.


 


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


 


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


 


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


 


5





















 


“Lease” shall
have the meaning set forth in
the Mortgage.


 


“Legal Requirements”
shall mean all statutes, laws, rules, orders, regulations, ordinances,
judgments, decrees and injunctions of Governmental Authorities affecting the
Property or any part thereof, or the construction, use, alteration or operation
thereof, 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, either
of record or known to Borrower, at any time in force affecting the Property or
any part thereof, including, without limitation, any which may (a) require
repairs, modifications or alterations in or to the Property or any part
thereof, or (b) in any way limit the use and enjoyment thereof.


 


“Lien” shall
mean 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 portion
thereof or any interest therein, including, without limitation, any conditional
sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, the filing of
any financing statement, and mechanic’s, materialmen’s and other similar liens
and encumbrances.


 


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


 


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


 


“Loan Documents”
shall mean, collectively, this Agreement, the Note, the Mortgage, the
Environmental Indemnity, the General Assignment of Rents, the Specific
Assignment of Lease, the Assignment of Management Agreement and any and all
other documents, agreements and certificates executed and/or delivered in
connection 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 of
the 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 not
limited to legal fees and other costs of defense).


 


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


 


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


 


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


 


6





















 


purposes
of this definition, a matter shall be deemed material if it is reasonably
foreseeable that a prudent institutional commercial real estate mortgage lender
would consider such matter as a material adverse factor in its underwriting of
the Person in question. With respect to non-criminal matters, isolated actions
occurring more than five (5) years prior to the date of a proposed transfer
shall not be deemed material provided that there is no indication of fraud,
intentional misrepresentation or intent to defraud creditors with respect to
such 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 as
provided for herein or the other Loan Documents, under the laws of such state
or states whose laws are held by any court of competent jurisdiction to govern
the interest rate provisions of the Loan.


 


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


 


“Monthly Payment Amount” shall mean the monthly payment of interest
due 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 of
trust/deed to secure debt and security agreement dated the date hereof,
executed and delivered by Borrower as security for the Loan and encumbering the
Property, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.


 


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


 


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


 


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


 


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


 


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


 


“Operating Expenses”
shall mean, with respect to any period of time, the total of all expenses
actually paid or payable, computed in accordance with federal tax basis
accounting, or in accordance with other methods acceptable to Lender in its
sole discretion, of whatever kind relating to the operation, maintenance and
management of the Property, including, without limitation, utilities, ordinary
repairs and maintenance, Insurance Premiums, license fees, Taxes and Other
Charges, advertising expenses, payroll and related taxes, computer processing
charges, management fees equal to the greater of 4% of the Operating Income and
the management fees actually payable under the Management Agreement for such
period of time, operational equipment or other lease payments as approved by
Lender, normalized capital expenditures but


 


7





















 


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


 


“Optional
Prepayment Date” shall have the meaning set forth
in the Note.


 


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


 


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


 


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


 


“Permitted Encumbrances”
shall mean collectively, (a) the Lien and security
interests created by the Loan Documents, (b) all Liens, encumbrances and other
matters disclosed in the Title Insurance Policy, (c) Liens, if any, for Taxes
imposed by any Governmental Authority not yet due or delinquent, and (d) such
other title and survey exceptions as Lender has approved or may approve in
writing in Lender’s sole discretion.


 


“Permitted
Investments” shall mean to the extent available
from Lender or Lender’s servicer for deposits in the Reserve Accounts and the
Lockbox Account, any one or more of the following obligations or securities
acquired at a purchase price of not greater than par, including those issued by
a servicer of the Loan, the trustee under any securitization or any of their
respective Affiliates, payable on demand or having a maturity date not later
than the Business Day immediately prior to the date on which the funds used to
acquire such investment are required to be used under this Agreement and
meeting one of the appropriate standards set forth below:


 


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


 


8





















 


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


 


(b)                                 Federal Housing Administration debentures;


 


(c)                                  obligations of the following United States
government sponsored agencies: Federal Home Loan Mortgage Corp. (debt
obligations), the Farm Credit System (consolidated systemwide bonds and notes),
the Federal Home Loan Banks (consolidated debt obligations), the Federal
National Mortgage Association (debt obligations), the Financing Corp. (debt
obligations), and the Resolution Funding Corp. (debt obligations); provided, however, that the investments
described in this clause must (i) have a predetermined fixed dollar of
principal 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 such
investments have a variable rate of interest, such interest rate must be tied
to a single interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (iv) such investments must not be subject
to liquidation prior to their maturity;


 


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


 


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


 


9





















 


(f)                                    debt obligations
with maturities of not more than 365 days and at all times rated by each Rating
Agency (or, if not rated by all Rating Agencies, rated by at least one Rating
Agency and otherwise acceptable to each other Rating Agency, as confirmed in
writing that such investment would not, in and of itself, result in a
downgrade, qualification or withdrawal of the initial, or, if higher, then
current ratings assigned to the Securities) in its highest long-term unsecured
rating category; provided, however, that the investments described in this
clause must (i) have a predetermined fixed dollar of principal 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 such investments have a variable
rate of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (iv) such investments must not be subject to liquidation prior to
their maturity;


 


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


 


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


 


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


 


provided, however, that no obligation or
security shall be a Permitted Investment if (A) such obligation or security
evidences a right to receive only interest payments, (B) the right to receive
principal and interest payments on such obligation or security are derived from
an underlying investment that provides a yield to maturity in excess of one
hundred twenty percent (120%) of the yield to maturity at par of such
underlying investment or (C) such obligation or security has a remaining term
to maturity in excess of one (1) year.


 


10





















 


“Person” shall
mean any individual, corporation, partnership, joint venture, limited liability
company, estate, trust, unincorporated association, any federal, state,
provincial, county or municipal government or any bureau, department or agency
thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.


 


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


 


“Policies” shall
have the meaning set forth in Section 8.1 hereof.


 


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


 


“Prohibited
Transfer” shall have the meaning set forth in Section 7.2
hereof.


 


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


 


“Property
Condition Report” shall mean a report prepared by
a company satisfactory to Lender regarding the physical condition of the
Property, satisfactory in form and substance to Lender in its sole discretion.


 


“Province” shall
mean the province in which the Property or any part thereof is located.


 


‘‘Qualified
Manager” shall mean (a) Manager or (b) a reputable
and experienced professional management organization (i) which manages,
together with its affiliates, at least ten (10) first class office buildings
totaling at least 3,500,000 square feet of gross leasable area, exclusive of
the Property and (ii) approved by Lender, which approval shall not have been
unreasonably withheld and for which Lender shall have received written
confirmation from the Rating Agencies that the employment of such manager will
not result in a downgrade, withdrawal or qualification of the initial, or if
higher, then current ratings issued in connection with a Securitization, or if
a Securitization has not occurred, any ratings to be assigned in connection
with a Securitization.


 


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


 


“REA” shall
mean any construction, operation and reciprocal easement agreement or similar
agreement (including any separate agreement or other agreement between Borrower
and one or more other parties to an REA with respect to such REA) affecting the
Property or portion thereof.


 


“Release” shall
have the meaning set forth in Section 12.5 hereof.


 


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


 


11





















 


“Rents” shall have the meaning set forth in the
Mortgage.


 


“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 Insurance
Reserve Funds.


 


“Restoration” shall mean, following the occurrence
of a Casualty or a Condemnation which is of a type necessitating the repair of
the Property, the completion of the repair and restoration of the Property as
nearly as possible to the condition the Property was in immediately prior to
such Casualty or Condemnation, with such alterations as may be reasonably
approved by Lender.


 


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


 


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


 


“Restricted Party” shall have the meaning set forth
in Section 7.1 hereof.


 


“Sale or Pledge” shall have the meaning set forth in
Section 7.1 hereof.


 


“Scheduled Payment Date” shall have the meaning set forth
in 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 in
Section 13.1 hereof.


 


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


 


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


 


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


 


“State” shall
mean the State of New York.


 


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


 


12





















 


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


 


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


 


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


 


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


 


“Title Insurance
Policy” shall mean that certain mortgagee title
insurance policy issued with respect to the Property and insuring the lien of
the Mortgage.


 


“Transferee” shall
have the meaning set forth in Section 7.5 hereof.


 


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


 


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


 


Section 1.2.                                Principles of Construction.


 


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


 


ARTICLE 2


GENERAL TERMS


 


Section 2.1.                                Loan Commitment;
Disbursement to Borrower


 


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


 


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


 


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


 


13





















 


(d)                                 Borrower shall use the proceeds of the Loan
to (i) pay the purchase price for acquiring the Property, (ii) pay certain
costs and expenses incurred in connection with the closing of the Loan, as
approved 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 hereunder
is subject to the fulfillment by Borrower or waiver by Lender of all the
conditions precedent to closing set forth in the application or term sheet for
the 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, each
Borrower Principal represents and warrants to Lender as of the Closing Date
that:


 


Section 4.1.                                Organization


 


Borrower and each Borrower Principal (when not an
individual) (a) has been duly organized and is validly existing and in good
standing with requisite
power and authority to own its properties and to transact the businesses in
which it is now engaged, (b) is duly qualified to do business and is in good
standing in each jurisdiction where it is required to be so qualified in
connection with its properties, businesses and operations, (c) possesses all
rights, licenses, permits and authorizations, governmental or otherwise,
necessary to entitle it to own its properties and to transact the businesses in
which 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, has
full power, authority and legal right to mortgage, grant, bargain, sell,
pledge, assign, warrant, transfer and convey the Property pursuant to the terms
of 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 terms
of the Loan Documents to which it is a party. Borrower and each Borrower
Principal represent and warrant that the chart attached hereto as Exhibit A
sets forth an accurate listing of the direct and indirect owners of the equity
interests in Borrower, and each Borrower Principal (when not an individual).


 


14





















 


Section 4.2.                                Status of Borrower


 


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


 


Section 4.3.                                Validity of Documents


 


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


 


Section 4.4.                                No Conflicts


 


The execution, delivery and performance of this
Agreement and the other Loan Documents by Borrower and Borrower Principal will
not conflict with or result in a breach of any of the terms or provisions of,
or constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance (other than pursuant to the Loan Documents) upon
any of the property or assets of Borrower or Borrower Principal pursuant to the
terms of any agreement or instrument to which Borrower or Borrower Principal is
a party or by which any of Borrower’s or Borrower Principal’s property or
assets is subject, nor will such action result in any violation of the
provisions of any statute or any order, rule or regulation of any Governmental
Authority having jurisdiction over Borrower or Borrower Principal or any of
Borrower’s or Borrower Principal’s properties or assets, and any consent,
approval, authorization, order, registration or qualification of or with any
Governmental Authority required for the execution, delivery and performance by
Borrower or Borrower Principal of this Agreement or any of the other Loan
Documents has been obtained and is in full force and effect.


 


Section 4.5.                                Litigation


 


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


 


15





















 


Section 4.6.                                Agreements


 


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


 


Section 4.7.                                Solvency


 


Borrower and each Borrower Principal have (a) not
entered into the transaction or executed the Note, this Agreement or any other
Loan Documents with the actual intent to hinder, delay or defraud any creditor
and (b) received reasonably equivalent value in exchange, for their obligations
under such Loan Documents. Giving effect to the Loan, the fair saleable value
of the assets of Borrower and each Borrower Principal exceeds and will,
immediately following the making of the Loan, exceed the total liabilities of
Borrower and Borrower Principal, including, without limitation, subordinated,
unliquidated, disputed and contingent liabilities. No petition in bankruptcy
has been filed against Borrower, Borrower Principal, or Affiliated Manager in
the last ten (10) years, and neither Borrower nor Borrower Principal, or
Affiliated Manager in the last ten (10) years has made an assignment for the
benefit of creditors or taken advantage of any Creditors Rights Laws. Neither
Borrower nor Borrower Principal, or Affiliated Manager is contemplating either
the filing of a petition by it under any Creditors Rights Laws or the
liquidation of all or a major portion of Borrower’s assets or property, and Borrower
has no knowledge of any Person contemplating the filing of any such petition
against Borrower or Borrower Principal, or Affiliated Manager.


 


Section 4.8.                                Full and Accurate Disclosure


 


No statement of fact made by or on behalf of
Borrower or Borrower Principal in this Agreement or in any of the other Loan
Documents or in any other document or certificate delivered by or on behalf of
Borrower or Borrower Principal contains any untrue statement of a material fact
or omits to state any material fact necessary to make statements contained
herein or therein not misleading. There is no material fact presently known to
Borrower or Borrower Principal which has not been disclosed to Lender which
adversely affects, nor as far as Borrower or Borrower Principal can reasonably
foresee, might adversely affect, the Property or the business, operations or
condition (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 or
will constitute “plan assets” of one or more such plans within the meaning of
29 C.F.R. Section 2510.3-101. In addition, (a) Borrower is not a
“governmental plan” within the meaning of Section 3(32) of


 


16





















 


ERISA and (b) transactions by or with Borrower are not subject to state
statutes regulating investment of, and fiduciary obligations with respect to,
governmental plans similar to the provisions of Section 406 of ERISA or Section 4975
of the Internal Revenue Code currently in effect, which prohibit or otherwise
restrict 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 of
rescission, set-off, counterclaim or defense by Borrower, including the defense
of usury, nor would the operation of any of the terms of the Loan Documents, or
the exercise of any right thereunder, render the Loan Documents unenforceable,
and neither Borrower nor Borrower Principal has asserted any right of
rescission, set-off, counterclaim or defense with respect thereto. No Default
or 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 for
personal, family, household, or agricultural purposes.


 


Section 4.13.                         Compliance


 


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


 


Section 4.14.                         Financial Information


 


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


 


17





















 


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


 


Section 4.15.                         Condemnation


 


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


 


Section 4.16.                         Utilities
and Public Access; Parking


 


To the best of Borrower’s knowledge, the
Property has adequate rights of access to public ways and is served by water,
sewer, sanitary sewer and storm drain facilities adequate to service the
Property for full utilization of the Property for its intended uses. All public
utilities necessary to the full use and enjoyment of the Property as currently
used and enjoyed are located either in the public right-of-way abutting the
Property (which are connected so as to serve the Property without passing over
other property) or in recorded easements serving the Property and such
easements are set forth in and insured by the Title Insurance Policy. All roads
necessary for the use of the Property for its current purposes have been
completed and dedicated to public use and accepted by all Governmental
Authorities. The Property has, or is served by, parking to the extent required
to comply with all Legal Requirements.


 


Section 4.17.                         Separate
Lots


 


The Property is assessed for real estate tax
purposes as one or more wholly independent tax lot or lots, separate from any
adjoining land or improvements not constituting a part of such lot or lots, and
no other land or improvements is assessed and taxed together with the Property
or any portion thereof.


 


Section 4.18.                         Assessments


 


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


 


Section 4.19.                         Insurance


 


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


 


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


 


Section 4.20.                         Use of Property


 


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


 


Section 4.21.                         Certificate of Occupancy;
Licenses


 


All certificates of occupancy and to Borrower’s
knowledge all certifications, permits, licenses and approvals, including,
without limitation, certificates of completion and any applicable liquor
license required for the legal use, occupancy and operation of the Property for
the purpose intended herein, have been obtained and are valid and in full force
and effect. Borrower shall keep and maintain (or require American Express to
maintain) all licenses necessary for the operation of the Property for the
purpose intended herein. The use being made of the Property is in conformity
with the final certificate of occupancy (or compliance, if applicable) and any
other permits or licenses issued for the Property.


 


Section 4.22.                         Flood Zone


 


None of the Improvements on the Property are located
in an area identified by the Town of Markham or the local conservation
authority having jurisdiction as an area having special flood hazards, or, if
any portion of the Improvements is located within such area, Borrower will
obtain 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 a
self-insurer or when the rating of American Express by the Rating Agencies
falls below the Trigger Rating.


 


Section 4.23.                         Physical Condition


 


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


 


Section 4.24.                         Boundaries; Survey


 


(a) None of the Improvements which were included in
determining the appraised value of the Property lie outside the boundaries and
building restriction lines of the Property to any material extent, and (b) no
improvements on adjoining properties encroach upon the


 


19





















 


Property
and no easements or other encumbrances upon the Property encroach upon
any of the Improvements so as to materially affect the value or marketability
of the Property.


 


Section 4.25.                         Leases


 


The entire Property has been leased to American
Express pursuant to the American Express Lease. (a) The American Express Lease
is in full force and effect; (b) the premises demised under the American
Express Lease have been completed and American Express has accepted possession
of and is in occupancy of the demised premises; (c) American Express has
commenced the payment of rent under the American Express Lease, there are no
offsets, claims or defenses to the enforcement thereof and Borrower has no
monetary obligations to American Express under the American Express Lease; (d)
all Rents due and payable under the American Express Lease have been paid and
no portion thereof has been paid for any period more than thirty (30) days in
advance; (e) the rent payable under the American Express Lease is the amount of
fixed rent set forth in the American Express Lease, and there is no claim or
basis 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 the
American Express Lease; (g) the American Express Lease is the valid, binding
and enforceable obligation of Borrower and American Express thereunder and
there are no agreements with American Express with respect to the American
Express Lease other than as expressly set forth therein; (h) no Person has any
possessory interest in, or right to occupy, the Property or any portion thereof
except under the American Express Lease; (i) except for the right of First
refusal set forth in Article 4 and the right to offer to purchase the
Property under Article 12, the American Express Lease does not contain any
option or offer to purchase or right of first refusal to purchase the Property
or any part thereof; and (j) neither the American Express Lease nor the Rents
have been assigned or pledged except to Lender, and no other Person has any
interest therein.


 


Section 4.26.                         Filing and Recording Taxes


 


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


 


Section 4.27.                         Management Agreement


 


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


 


Section 4.28.                         Illegal Activity


 


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


 


20





















 


Section 4.29.                         Construction Expenses


 


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


 


Section 4.30.                         Personal Property


 


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


 


Section 4.31.                         Taxes


 


Borrower and Borrower Principal have filed
all federal, provincial, state, county, municipal, and city income, personal
property and other tax returns required to have been filed by them and have
paid all taxes and related liabilities which have become due pursuant to such
returns or pursuant to any assessments received by them. Neither Borrower nor
Borrower Principal knows of any basis for any additional assessment in respect
of 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 of
the security intended to be provided by the Loan Documents, materially and
adversely affects the value of the Property, impairs the use or the operation
of the Property or impairs Borrower’s ability to pay its obligations in a
timely manner.


 


Section 4.33.                         Federal Reserve Regulations


 


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


 


Section 4.34.                         Investment Company Act


 


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


 


21





















 


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


 


Section 4.35.        Reciprocal Easement Agreements


 


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


 


(b)                                 All easements granted
pursuant to the REA which were to have survived the site preparation and
completion 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 of
Borrower’s knowledge, all sums due and owing by Borrower to the other parties
to the REA (or by the other parties to the REA to the Borrower) pursuant to the
terms of the REA, including without limitation, all sums, charges, fees,
assessments, costs, and expenses in connection with any taxes, site preparation
and construction, non-shareholder contributions, and common area and other
property management activities have been paid, are current, and no lien has
attached on the Property (or threat thereof been made) for failure to pay any
of the foregoing;


 


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


 


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


 


Section 4.36.                         No Change in Facts or
Circumstances; Disclosure


 


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


 


22





















 


Section 4.37.                         Intellectual Property


 


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


 


Section 4.38.                         Compliance with Anti-Terrorism
Laws


 


None of Borrower, Borrower Principal or any Person
who Controls Borrower or Borrower Principal currently is identified by the
Office of Foreign Assets Control, Department of the Treasury (“OFAC”) or otherwise qualifies as an Embargoed Person, and
Borrower has implemented procedures to ensure that no Person who now or
hereafter owns a material direct or indirect equity interest in Borrower is an
Embargoed Person or is Controlled by an Embargoed Person. To Borrower’s
knowledge neither Borrower nor Borrower Principal is in violation of any
applicable law relating to anti-money laundering or anti-terrorism, including,
without limitation, those related to transacting business with Embargoed
Persons or the requirements of the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001, U.S. Public Law 107-56, and the related regulations issued thereunder,
including temporary regulations (collectively, as the same may be amended from
time to time, the “Patriot Act”).
To the best of Borrower’s knowledge, no tenant at the Property is currently
identified by OFAC or otherwise qualifies as an Embargoed Person, or is owned
or Controlled by an Embargoed Person.


 


Section 4.39.                         Patriot Act


 


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


 


Section 4.40.                         Survival


 


Borrower agrees that, unless expressly provided
otherwise, all of the representations and warranties of Borrower set forth in
this Article 4 and elsewhere in this Agreement and in the other Loan
Documents shall survive for so long as any portion of the Debt remains owing to
Lender. All representations, warranties, covenants and agreements made in this
Agreement or in


 


23





















 


the other Loan Documents by Borrower shall be deemed to have been
relied upon by Lender notwithstanding any investigation heretofore or hereafter
made by Lender or on its behalf.


 


ARTICLE 5


BORROWER COVENANTS


 


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


 


Section 5.1.                                Existence;
Compliance with Legal Requirements


 


(a)                                  Borrower shall do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect its existence, rights, licenses, permits and franchises and comply
with all Legal Requirements applicable to it and the Property. Borrower hereby
covenants and agrees not to commit, permit or suffer to exist any act or
omission affording any Governmental Authority the right of forfeiture as
against the Property or any part thereof or any monies paid in performance of
Borrower’s obligations under any of the Loan Documents. Borrower shall at all
times maintain, preserve and protect all franchises and trade names used in
connection with the operation of the Property. So long as American Express is
in compliance with the terms of the American Express Lease with respect to the
matters described in this Section 5.1, Borrower shall be deemed in
compliance with this Section 5.1.


 


(b)                                 Borrower, at its own
expense, may contest or permit American Express to contest by appropriate legal
proceeding, promptly initiated and conducted in good faith and with due
diligence, the Legal Requirements affecting the Property, provided that (i) no
Default or Event of Default has occurred and is continuing; (ii) such
proceeding shall be permitted under and be conducted in accordance with the
provisions of any other instrument to which Borrower or the Property is subject
and shall not constitute a default thereunder; (iii) neither the Property, any
part thereof or interest therein, any of the tenants or occupants thereof, nor
Borrower shall be affected in any material adverse way as a result of such
proceeding; (iv) non-compliance with the Legal Requirements shall not impose
civil or criminal liability on Borrower or Lender; (v) unless the contest is
initiated and conducted by American Express pursuant to the American Express
Lease Borrower shall have furnished the security as may be required in the
proceeding or by Lender to ensure compliance by Borrower with the Legal
Requirements; and (vi) if the contest is initiated and conducted by Borrower,
Borrower shall have furnished to Lender all other items reasonably requested by
Lender. Borrower shall give written notice to Lender of any contest initiated
and conducted by Borrower promptly after initiation thereof and shall inform
Lender of any contest initiated and conducted by American Express of which
Borrower is given notice by American Express.


 


Section 5.2.                                Maintenance
and Use of Property


 


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


 


24





















 


landlord
thereunder, materially altered (except for normal replacement of the Personal
Property) without the prior written consent of Lender. So long as American
Express is in compliance with the terms of the American Express Lease with
respect to the matters described in this Section 5.2, Borrower shall be
deemed in compliance with this Section 5.2. If under applicable zoning
provisions the use of all or any portion of the Property is or shall become a
nonconforming use, Borrower will not cause or permit the nonconforming use to
be discontinued or the nonconforming Improvement to be abandoned without the
express written consent of Lender.


 


Section 5.3.                                Waste


 


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


 


Section 5.4.                                Taxes and Other Charges


 


(a)                                  Borrower shall pay or cause American Express
to pay all Taxes and Other Charges now or hereafter levied or assessed or
imposed against the Property or any part thereof as the same become due and
payable. Borrower shall furnish or cause to be furnished to Lender such
receipts for the payment of the Taxes and the Other Charges as are delivered to
Borrower by American Express and, upon request by Lender, a certificate from
Borrower and Borrower Principal that as of the date of such certificate there
are no liens filed against the Property arising from the non-payment of Taxes
or Other Charges. Borrower shall not suffer nor permit American Express to
suffer and shall promptly cause to be paid and discharged any Lien or charge
whatsoever which may be or become a Lien or charge against the Property, and
shall promptly pay for all utility services provided to the Property. So long
as American Express is in compliance with the terms of the American Express
Lease with respect to the matters described in this Section 5.4, Borrower
shall be deemed in compliance with this Section 5.4.


 


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


 


25





















 


American
Express under the American Express Lease) such security as may be required in
the proceeding, or deliver to Lender such reserve deposits as may be requested
by Lender, to insure the payment of any such Taxes or Other Charges, together
with all interest and penalties thereon (unless Borrower or American Express
has paid all of the Taxes or Other Charges under protest). Lender may pay over
any such cash deposit or part thereof held by Lender to the claimant entitled
thereto at any time when, in the judgment of Lender, the entitlement of such
claimant is established or the Property (or part thereof or interest therein)
shall be in danger of being sold, forfeited, terminated, canceled or lost or
there shall be any danger of the Lien of the Mortgage being primed by any
related Lien.


 


Section 5.5.                                Payments Free of Taxes


 


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


 


(b)                                 Borrower hereby indemnifies and holds
harmless Lender for the full amount of Income Taxes and for any incremental
Income Taxes due to Borrower’s failure to remit to Lender the required receipts
or other required documentary evidence or due to a Borrower’s failure to pay
any Income Taxes when due to the appropriate taxing authority (including,
without limitation, any Income Taxes imposed by any jurisdiction on amounts
payable under this Section 5.5) paid by Lender and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Income Taxes were correctly or legally assessed. Lender
shall promptly notify Borrower of any such payment of Income Taxes and, if such
payment was made pursuant to an incorrect or illegal assessment, shall
reasonably cooperate with Borrower, at the expense of Borrower, in any dispute
of such assessment. Payment pursuant to this indemnification shall be made
within 30 days from the date Lender makes written demand therefor.


 


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


 


26





















 


Section 5.6.                                Litigation


 


Borrower shall give prompt written notice to Lender
of any litigation or governmental proceedings pending or threatened in writing
against 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 and
employees of Lender to inspect the Property or any part thereof at reasonable
hours upon reasonable advance notice, subject to the rights of American Express
under the American Express Lease.


 


Section 5.8.                                Notice of Default


 


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


 


Section 5.9.                                Cooperate in Legal Proceedings


 


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


 


Section 5.10.                         Performance by Borrower


 


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


 


Section 5.11.                         Awards; Insurance Proceeds


 


Borrower shall cooperate with Lender in obtaining
for Lender the benefits of any Awards or Insurance Proceeds lawfully or equitably
payable to Borrower in connection with the Property, and Lender shall be
reimbursed for any expenses incurred in connection therewith (including
reasonable, actual attorneys’ fees and disbursements, and the payment by
Borrower of the expense of an appraisal on behalf of Lender in case of a
Casualty or Condemnation affecting the Property or any part thereof) out of
such Awards or Insurance Proceeds. The actual payment of any Awards shall be
governed by Section 8.4 hereof.


 


Section 5.12.                         Financial Reporting


 


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


 


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(i)                                     prior
to a Securitization, at the request of Lender, monthly, and following a
Securitization, 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 the
giving of notice, could become a default) exist thereunder and any other
information as is reasonably required by Lender, within twenty (20) days after
the end of each calendar month, thirty (30) days after the end of each fiscal
quarter or one hundred twenty (120) days after the close of each fiscal year of
Borrower, as applicable;


 


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


 


(iii)                               annual
balance sheets, profit and loss statements, statements of cash flows, and statements
of change in financial position of Borrower and Borrower Principal in the form
required by Lender prepared and certified by Borrower and Borrower Principal
within one hundred twenty (120) days after the close of each fiscal year of
Borrower and Borrower Principal, as the case may be (provided that with respect
to Borrower, such statements may be delivered by the holder(s) of beneficial
interests 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 with
respect to the foregoing delivered to Borrower by American Express under the
American Express Lease.


 


(b)                                 To
the extent not inconsistent with the provisions of Section 5.l2(a) hereof
(e.g., GAAP accounting and audits shall not be required ), Borrower and
Borrower Principal shall furnish Lender with such other additional financial or
management information (including state, provincial and federal tax returns) as
may, from time to time, be reasonably required by Lender in form and substance
satisfactory to Lender (including, without limitation, any financial reports required
to be delivered by any Tenant or any guarantor of any Lease pursuant to the
terms of such Lease), and shall furnish to Lender and its agents convenient
facilities for the examination and audit of any such books and records


 


(c)                                  Without
limiting any other rights available to Lender under this Loan Agreement or any
of the other Loan Documents, in the event Borrower shall fail to timely furnish
Lender 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 construed
to relieve Borrower of any Event of Default hereunder arising from such
failure.


 


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(d)                                 All
items requiring the certification of Borrower shall, except where Borrower is
an individual, require a certificate
executed by the general partner, managing member or chief executive officer of
Borrower, as applicable (and the same rules shall apply to any sole
shareholder, general partner or managing member which is not an individual).


 


Section 5.13.                         Estoppel
Statement


 


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


 


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


 


Section 5.14.                         Leasing
Matters.


 


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


 


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


 


Section 5.15.                         Property Management


 


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


 


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(b)                                 If
at 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 has
occurred and is continuing after the expiration of any applicable cure periods
under the Management Agreement, Borrower shall, at the request of Lender,
terminate the Management Agreement upon thirty (30) days prior notice to
Manager and replace Manager with a Qualified Manager, it being understood and
agreed that the management fee for such replacement manager shall not exceed
then prevailing market rates.


 


(c)                                  In
addition 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 generally
accepted management practices for projects similarly situated, Lender may
deliver written notice thereof to Borrower and Manager, which notice shall
specify with particularity the grounds for Lender’s determination. If Lender
reasonably determines that the conditions specified in Lender’s notice are not
remedied to Lender’s reasonable satisfaction by Borrower or Manager within
thirty (30) days from the date of such notice or that Borrower or Manager has
failed to diligently undertake correcting such conditions within such thirty
(30) day period, Lender may direct Borrower to terminate the Management
Agreement and to replace Manager with a Qualified Manager on terms and
conditions satisfactory to Lender, it being understood and agreed that the
management fee for such replacement manager shall not exceed then prevailing
market rates.


 


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


 


(e)                                  Notwithstanding
the foregoing, Borrower shall be permitted to transfer the management of the
Property to Inland US Management LLC, a Delaware limited liability company,
provided that the terms of the management contract between Borrower and such
entity provides for fees no greater than, is on terms that are substantially
similar to and is no less favorable to Borrower than the Management Agreement
in effect as of the date hereof.


 


Section 5.16.                         Liens


 


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


 


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Section 5.17.                         Debt
Cancellation


 


Borrower shall
not cancel or otherwise forgive or release any claim or debt owed to Borrower
by any Person, except for adequate consideration and in the ordinary course of
Borrower’s business.


 


Section 5.18.                         Zoning


 


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


 


Section 5.19.                         ERISA


 


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


 


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


 


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


 


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


 


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


 


Section 5.20.                         No
Joint Assessment


 


Borrower shall
not suffer, permit or initiate the joint assessment of the Property with (a)
any other real property constituting a tax lot separate from the Property, or
(b) any portion of the Property which may be deemed to constitute personal
property, or any other procedure whereby the Lien of any taxes which may be
levied against such personal property shall be assessed or levied or charged to
the Property.


 


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Section 5.21.                         Reciprocal Easement
Agreements


 


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


 


ARTICLE 6

ENTITY COVENANTS


 


Section 6.1.                                Single Purpose
Entity/Separateness


 


Until the Debt has been paid
in full, Borrower represents, warrants and covenants
as follows:


 


Borrower has not and will
not:


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


32





















 


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


 


(viii)                        permit its
records, books of account, bank accounts, financial statements and accounting
records (including with respect to financial position, assets, liabilities, net
worth and operating results) to be shown on the financial statements of any
holder of a beneficial interest in Borrower unless such financial statements
shall contain a footnote indicating that Borrower is a separate legal entity
and the assets of Borrower are not available as collateral to creditors of such
holder;


 


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


 


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


 


(xi)                                assume
or guarantee the debts of any other Person, hold itself out to be responsible
for the debts of any other Person, or otherwise
pledge its assets for the benefit of any other Person or hold out its credit as
being available to satisfy the obligations of any other Person;


 


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


 


(xiii)                          fail to
file its own tax returns or files a consolidated federal income tax return with
any Person (unless prohibited or required, as the case may be, by applicable
Legal Requirements);


 


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


 


(xv)                            fail
to maintain adequate capital for the normal obligations reasonably foreseeable
in a business of its size and character and in light of its contemplated
business operations (provided that Borrower’s failure to do so solely because
of a shortfall in cash flow derived from the operation of the Property shall
not, by itself, constitute a breach of this covenant);


 


(xvi)                         Without
the unanimous written consent of all of its members, as applicable, and the
written consent of 100% of the directors of Borrower, including, without
limitation, the Independent Director, (a) file or consent to the filing of any


 


33





















 


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


 


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


 


(xviii)                   fail to remain solvent or pay its own
liabilities (including, without limitation, salaries of its own employees) only
from its own funds (provided that Borrower’s failure to do so solely because of
a 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 assumptions
made with respect to Borrower, Manager (if applicable) and their respective
direct and/or indirect owners in any opinion letter pertaining to substantive
consolidation delivered to Lender in connection with the Loan; or


 


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


 


Section 6.2.                                Change of Name, Identity or
Structure


 


Borrower shall not change or
permit to be changed (a) Borrower’s name, (b) Borrower’s identity (including
its trade name or names), (c) Borrower’s principal place of business set forth
on the first page of this Agreement, (d) the corporate, partnership or other
organizational structure of Borrower, or Borrower Principal, (e) Borrower’s
province of organization, or (f) Borrower’s organizational identification
number, if applicable, without in each case notifying Lender of such change in
writing at least thirty (30) days prior to the effective date of such change
and, in the case of a change in Borrower’s structure, without first obtaining
the prior written consent of Lender. In addition, Borrower shall not change or
permit to be changed any organizational documents of Borrower if such change
would adversely impact the covenants set forth in Section 6.1 and Section 6.4
hereof. Borrower authorizes Lender to file any financing statement or financing
statement amendment required by Lender to establish or maintain the validity,
perfection and priority of the security interest granted herein. At the request
of Lender, Borrower shall execute a certificate in form satisfactory to Lender
listing the trade names under which Borrower intends
to operate the Property, and representing and warranting that Borrower does
business under no other trade name with respect to the Property. If Borrower does
not now have an organizational identification number and later obtains one, or
if the organizational identification number assigned to Borrower subsequently
changes, Borrower shall promptly notify Lender of such organizational
identification number or change. Nothing in this Section 6.2 shall be
deemed to restrict any express rights granted to Borrower under Article 7
hereof.


 


34





















 


Section 6.3.                                Business and Operations


 


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


 


Section 6.4.                                Independent Director


 


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


 


(b)                                 The organizational documents of Borrower
shall provide that the board of directors of Borrower shall not take any action
which, under the terms of any certificate of incorporation, by-laws or any
voting trust agreement with respect to any common stock, requires an unanimous
vote of the board of directors of Borrower unless at the time of such action
there 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 of
directors including the Independent Director, on behalf of Borrower, (i) file
or consent to the filing of any petition, either voluntary or involuntary, to
take advantage of any applicable Creditors Rights Laws; (ii) seek or consent to
the appointment of a receiver, liquidator or any similar official; (iii) take
any action that might cause such entity to become insolvent; or (iv) make an
assignment for the benefit of creditors.


 


ARTICLE 7

NO SALE OR ENCUMBRANCE


 


Section 7.1.                                Transfer Definitions


 


For purposes of this Article 7
an “Affiliated Manager” shall mean any
managing agent in which Borrower, Borrower Principal, or any affiliate of such
entities has, directly or indirectly, any legal, beneficial or economic
interest; “Control” shall mean the power to
direct, the management and policies of a Restricted Party, directly or
indirectly, whether through the ownership of voting securities or other
beneficial interests, by contract or otherwise; “Restricted
Party” shall mean Borrower, Borrower Principal any Affiliated
Manager, or any shareholder, partner, member or non-member manager, or any
direct or indirect legal or beneficial owner of


 


35





















 


Borrower, Borrower Principal, any Affiliated Manager or any non-member
manager; and a “Sale or Pledge” shall mean a
voluntary or involuntary sale, conveyance, mortgage, grant, bargain,
encumbrance, pledge, assignment, grant of any options with respect to, or any
other transfer or disposition of (directly or indirectly, voluntarily or
involuntarily, by operation of law or otherwise, and whether or not for
consideration or of record) of a legal or beneficial interest.


 


Section 7.2.                                No
Sale/Encumbrance


 


(a)                                  Borrower
shall not cause or permit a Sale or Pledge of the Property or any part thereof
or any legal or beneficial interest therein nor permit a Sale or Pledge of an
interest in any Restricted Party (in each case, a “Prohibited
Transfer”), other than pursuant to the American Express Lease,
without the prior written consent of Lender.


 


(b)                                 A
Prohibited Transfer shall include, but not be limited to, (i) an installment
sales agreement wherein Borrower agrees to sell the Property or any part
thereof for a price to be paid in installments; (ii) an agreement by Borrower
leasing all or a substantial
part of the Property for other than actual occupancy by a space tenant
thereunder or a sale, assignment or other transfer of, or the grant of a
security interest in, Borrower’s right, title and interest in and to any Leases
or any Rents; (iii) if a Restricted Party is a corporation, any merger,
consolidation or Sale or Pledge of such corporation’s stock or the creation or
issuance of new stock in one or a series of transactions; (iv) if a Restricted
Party is a limited or general partnership or joint venture, any merger or
consolidation or the change, removal, resignation or addition of a general
partner or the Sale or Pledge of the partnership interest of any general or
limited partner or any profits or proceeds relating to such partnership
interests or the creation or issuance of new partnership interests; (v) if a
Restricted Party is a limited liability company, any merger or consolidation or
the change, removal, resignation or addition of a managing member or non-member
manager (or if no managing member, any member) or the Sale or Pledge of the
membership interest of any member or any profits or proceeds relating to such
membership interest; (vi) if a Restricted Party is a trust or nominee trust,
any merger, consolidation or the Sale or Pledge of the legal or beneficial
interest in a Restricted Party or the creation or issuance of new legal or
beneficial interests; or (vii) the removal or the resignation of the Manager
(including, without limitation, an Affiliated Manager) other than in accordance
with Section 5.15.


 


Section 7.3.                                Permitted
Transfers


 


Notwithstanding
the provisions of Section 7.2, the following transfers shall not be deemed
to be a Prohibited Transfer: (a) a transfer by devise or descent or by
operation of law upon the death of a member, partner or shareholder of a
Restricted Party, so long as Borrower delivers notice to Lender as soon as
practicable thereafter and that such Restricted Party is promptly
reconstituted, if applicable, following the death of such member, partner or
shareholder and there is no change in Control of such Restricted Party as a
result of such transfer; (b) the Sale or Pledge, in one or a series of related
transactions, of not more than forty-nine percent (49%) of the stock, limited
partnership interests or non-managing membership interests (as the case may be)
in a Restricted Party; (c) a transfer of the Property to Western Markham
Limited Partnership provided that the sole general partner is Borrower or a
Canadian trust whose sole beneficiary is Borrower Principal; (d) a transfer of
the Property to a newly formed Canadian trust of which a newly formed Canadian
corporation will be the sole trustee and Borrower will be the sole


 


36





















 


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


 


Section 7.4.                                Lender’s
Rights


 


Lender
reserves the right to condition the consent to a Prohibited Transfer requested
hereunder upon (a) a modification of the terms hereof and an assumption of the
Note and the other Loan Documents as so modified by the proposed Prohibited
Transfer, (b) receipt of payment of a transfer fee equal to one percent (1%) of
the outstanding principal balance of the Loan and all of Lender’s expenses
incurred in connection with such Prohibited Transfer, (c) receipt of written
confirmation from the Rating Agencies that the Prohibited Transfer will not
result in a downgrade, withdrawal or qualification of the initial, or if
higher, then current ratings issued in connection with a Securitization, or if
a Securitization has not occurred, any ratings to be assigned in connection
with a Securitization, (d) the proposed transferee’s continued compliance with
the covenants set forth in this Agreement (including, without limitation, the
covenants in Article 6) and the other Loan Documents, (e) a new manager
for the Property and a new management agreement satisfactory to Lender, and (f)
the satisfaction of such other conditions and/or legal opinions as Lender shall
determine in its sole discretion to be in the interest of Lender. All expenses
incurred by Lender shall be payable by Borrower whether or not Lender consents
to the Prohibited Transfer. Lender shall not be required to demonstrate any
actual impairment of its security or any increased risk of default hereunder in
order to declare the Debt immediately due and payable upon a Prohibited
Transfer made without Lender’s consent. This provision shall apply to each and
every Prohibited Transfer, whether or not Lender has consented to any previous
Prohibited Transfer. In the event an opinion letter pertaining to substantive
consolidation was delivered to Lender and the Rating Agencies in connection
with the closing of the Loan, and if any Sale or Pledge permitted under this Article 7
results in any Person and its Affiliates owning in excess of forty-nine percent
(49%) of the ownership interests in a Restricted Party, Borrower shall, prior
to such transfer, and in addition to any other requirement for Lender consent
contained herein, deliver a revised substantive non-consolidation opinion
letter to Lender reflecting such Prohibited Transfer, which opinion shall be in
form, scope and substance acceptable in all respects to Lender and the Rating
Agencies.


 


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Section 7.5.                                Assumption


 


Notwithstanding
the foregoing provisions of this Article 7, following the date which is
six (6) months from the Closing Date, Lender shall not unreasonably withhold consent to a
transfer of the Property in its entirety to, and the related assumption of the
Loan by, a corporation (a “Transferee”) provided
that each of the following terms and conditions are satisfied:


 


(a)                                  no Default or
Event of Default has occurred;


 


(b)                                 Borrower shall have (i) delivered
written notice to Lender of the terms of such prospective transfer not less
than forty-five (45) days before the date on which such transfer is scheduled
to close and, concurrently therewith, all such information concerning the
proposed Transferee as Lender shall reasonably require and (ii) paid to Lender
a non-refundable processing fee in the amount of $10,000. Lender shall have the
right to approve or disapprove the proposed transfer based on its then current
underwriting and credit requirements for similar loans secured by similar
properties which loans are sold in the secondary market, such approval not to
be unreasonably withheld. In determining whether to give or withhold its
approval of the proposed transfer, Lender shall consider the experience and
track record of Transferee and its principals in owning and operating
facilities similar to the Property, the financial strength of Transferee and
its principals, the general business standing of Transferee and its principals
and Transferee’s and its principals’ relationships and experience with
contractors, vendors, tenants, lenders and other business entities; provided,
however, that, notwithstanding Lender’s agreement to consider the foregoing
factors in determining whether to give or withhold such approval, such approval
shall be given or withheld based on what Lender determines to be commercially reasonable
and, if given, may be given subject to such conditions as Lender may deem reasonably
appropriate;


 


(c)                                  Borrower shall have paid to Lender,
concurrently with the closing of such transfer, (i) a non-refundable assumption
fee in an amount equal to one percent (1.0%) of the then outstanding principal
balance of the Note, and (ii) all out-of-pocket costs and expenses, including
reasonable 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 subject
to the provisions of Article 15 hereof and, prior to or concurrently with the closing of such
transfer, Transferee and its constituent partners, members or shareholders as
Lender may require, shall have executed, without any cost or expense to Lender,
such documents and agreements as Lender shall reasonably require to evidence
and effectuate said assumption and (ii) if required by Lender, a Person
affiliated with Transferee and acceptable to Lender shall have assumed the
obligations of Borrower Principal under the Loan Documents with respect to all
acts and events occurring or arising after the transfer of the Property
pursuant to this Section 7.5;


 


(e)                                  Borrower and Transferee, without any
cost to Lender, shall furnish any information requested by Lender for the
preparation of, and shall authorize Lender to file, new financing statements
and financing statement amendments and other documents to the fullest extent
permitted by applicable law, and shall execute any additional documents
reasonably 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 Title
Insurance Policy insuring that fee simple or leasehold title to the Property,
as applicable, is vested in Transferee (subject to Permitted Encumbrances), hazard
insurance endorsements or certificates and other similar materials as Lender
may deem necessary at the time of the transfer, all in form and substance
satisfactory 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 the
organization and formation of Transferee. Transferee and such constituent
shareholders of Transferee, as Lender shall require, shall comply with the
covenants set forth in Article 6 hereof;


 


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


 


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


 


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


 


(k)                                  Borrower’s obligations under the contract of
sale pursuant to which the transfer is proposed to occur shall expressly be
subject 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 shall
be in form, scope and substance acceptable in all respects to Lender and the
Rating Agencies; and


 


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


 


A consent by Lender with respect to a transfer of the
Property in its entirety to, and the related assumption of the Loan by, a
Transferee pursuant to this Section 7.5 shall not be construed to be a
waiver of the right of Lender to consent to any subsequent Sale or Pledge of
the Property. Upon the transfer of the Property pursuant to this Section 7.5,
Borrower and Borrower Principal shall be relieved of all liability under the
Loan Documents for acts, events, conditions, or circumstances occurring or
arising 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


 


39





















 


circumstances
that existed prior to the date of such transfer, whether or not discovered
prior or subsequent to the date of such transfer.


 


Section 7.6.                                Assumption
by Inland Permitted Transferee


 


Notwithstanding
the foregoing
provisions of this Article 7, Borrower shall be permitted to transfer the
Property in its entirety to, provided the Loan is simultaneously assumed by, an
Inland Permitted Transferee, and provided further that each of the following
terms and conditions is satisfied:


 


(a)                                  no Default or
Event of Default has occurred;


 


(b)                                 Borrower shall have delivered written
notice to Lender of the terms of such prospective transfer not less than
forty-five (45) days before the date on which such transfer is scheduled to
close and, concurrently therewith, all such information concerning the proposed
Transferee as Lender shall reasonably require;


 


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


 


(d)                                 such
Inland Permitted Transferee assumes and agrees to pay the Debt as and when due
subject to the provisions of Article 15 hereof and, prior to or concurrently with the
closing of such transfer, such Inland Permitted Transferee and its constituent
partners, members or shareholders as Lender may require, shall execute, without
any cost or expense to Lender, such documents and agreements as Lender shall
reasonably require to evidence and effectuate said assumption;


 


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


 


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


 


(g)                                 such Inland Permitted 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
the organization and formation of such Transferee. Transferee and such constituent
shareholders of Transferee, as Lender shall require, shall comply with the
covenants set forth in Article 6 hereof;


 


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


 


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which
meets with the requirements of Section 5.15 hereof and assign to Lender as
additional security such new management agreement;


 


(i)                                     Transferee shall furnish an opinion of
counsel satisfactory to Lender and its counsel (A) that Transferee’s formation
documents provide for the matters described in subparagraph (g) above, (B) that
the assumption of the Debt has been duly authorized, executed and delivered,
and that the Note, the Mortgage, the General Assignment of Rents, the Specific
Assignment of Rents, this Agreement, the assumption agreement and the other
Loan Documents are valid, binding and enforceable against Transferee in
accordance with their terms, (C) that Transferee and any entity which is a
controlling stockholder, have been duly organized, and are in existence and
good standing, and (E) with respect to such other matters as Lender may
reasonably request; and


 


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


 


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


 


ART1CLE 8


INSURANCE; CASUALTY; CONDEMNATION;
RESTORATION


 


Section 8.1.                                Insurance


 


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


 


(i)                                     comprehensive “special causes of loss” form
of 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 “Full
Replacement Cost,” which for purposes of this Agreement shall mean actual
replacement value (exclusive of costs of excavations, foundations, underground
utilities and footings) with a waiver of depreciation; (B) written on a
replacement cost basis and containing either an agreed amount endorsement with
respect to the Improvements and Personal Property or a waiver of all
co-insurance provisions; (C) providing for no deductible in excess of $10,000
for all such insurance coverage; (D) at all times insuring against at least,
those hazards that are commonly insured against, under a “special causes of
loss” form of policy, as the same shall exist on the date hereof, and together
with any increase in the scope of coverage provided under such form after the
date hereof; and (E) if any of the Improvements or the use of the Property
shall at any time constitute legal non-conforming structures or uses, providing
coverage for contingent liability from Operation of Building Laws, Demolition
Costs and Increased Cost of Construction Endorsements and containing an “Ordinance
or Law Coverage” or “Enforcement” endorsement. In


 


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


 


(ii)                                  commercial general liability insurance
against claims for personal injury, bodily injury, death or property damage
occurring upon, in or about the Property, with such insurance (A) to be on the
so-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) to
continue at not less than the aforesaid limit until required to be changed by
Lender in writing by reason of changed economic conditions making such
protection inadequate; and (C) to cover at least the following hazards: (1)
premises and operations; (2) products and completed operations; (3) independent
contractors; (4) blanket contractual liability; and (5) contractual liability
covering the indemnities contained in Article 12 and Article 14
hereof to the extent the same is available;


 


(iii)                               if the rating of American Express issued by
the Rating Agencies falls below the Trigger Rating, loss of rents insurance or
business 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 Improvements
and Personal Property occurs, the loss of rents or income, as applicable, will
be insured until such rents or income, as applicable, either returns to the
same level that existed prior to the loss or the expiration of twelve (12)
months, whichever first occurs, and notwithstanding that the policy may expire
prior to the end of such period; and (D) which contains an extended period of
indemnity endorsement which provides that after the physical loss to the
Improvements and Personal Property has been repaired, the continued loss of
income will be insured until such income either returns to the same level it
was at prior to the loss, or the expiration of twelve (12) months from the date
that the Property is repaired or replaced and operations are resumed, whichever
first occurs, and notwithstanding that the policy may expire prior to the end
of such period. The amount of such loss of rents or business income insurance,
as applicable, shall be determined prior to the date hereof and at least once
each year thereafter based on Borrower’s reasonable estimate of the gross
income from the Property for the succeeding period of coverage required above.
All proceeds payable to Lender pursuant to this subsection shall be held
by Lender and shall be applied to the obligations secured by the Loan Documents
from time to time due and payable hereunder and under the Note; provided,
however, that nothing herein contained shall be deemed to relieve Borrower of
its obligations to pay the obligations secured by the Loan Documents on the
respective dates of payment provided for in the Note, this Agreement and the
other Loan Documents except to the extent, such amounts are actually paid out
of the proceeds of such loss of rents or business income insurance, as
applicable;


 


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


 


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


 


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


 


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


 


(vii)                           excess
liability insurance in an amount not less than $75,000,000 per occurrence on
terms consistent with the commercial general liability insurance required under
subsection (ii) above; and


 


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


 


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


 


(b)                                 All
insurance provided for in Section 8.1(a) shall be obtained under valid and
enforceable policies (collectively, the “Policies”
or in the singular, the “Policy”), and shall be subject to the
approval of Lender as to insurance companies, amounts, deductibles, loss payees
and insureds. The Policies shall be issued by financially sound and responsible
insurance companies authorized to do business in the State and/or Province and
having a claims paying ability rating of “A-” or better by S&P (or such
other ratings approved by Lender) and/or a general policy rating of “A” or
better and a financial class of VIII or better by A.M. Best Company, Inc. The
Policies described in Section 8.1(a) shall designate Lender and its
successors and assigns as additional insureds, mortgagees and/or loss payee as
deemed appropriate by Lender. To the extent such Policies are not available as
of the Closing Date, Borrower shall deliver to Lender prior to the Closing Date
a certificate of insurance evidencing the coverages and amounts required
hereunder and, upon request of Lender as soon as available after the Closing
Date, certified copies of all Policies. Not less than ten (10) days prior to
the expiration dates of any insurance coverage in place with respecl to the
Property. Borrower shall deliver to Lender an Acord 28 or similar certificate,
accompanied by evidence satisfactory to Lender of payment of the premiums due
in connection therewith (the “Insurance
Premiums”), and, as
soon as available thereafter, certified copies of all renewal Policies.


 


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(c)                                  Any
blanket insurance Policy shall specifically allocate to the Property the amount
of coverage from time to time required hereunder and shall otherwise provide
the same protection as would a separate Policy insuring only the Property in
compliance with the provisions of Section 8.1 (a).


 


(d)                                 All
Policies provided for or contemplated by Section 8.l(a),
except for the Policy referenced in Section 8.l(a)(v), shall name Borrower
as the insured and Lender as the additional insured, as its interests may
appear, and in the case of property damage, boiler and machinery, flood and
earthquake insurance, shall contain a standard Insurance Bureau of Canada
mortgagee clause in favor of Lender providing that the loss thereunder shall be
payable to Lender.


 


(e)                                  All
Policies provided for in Section 8.1(a) shall contain clauses or
endorsements to the effect that:


 


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


 


(ii)                                  the
Policies shall not be materially changed (other than to increase the coverage
provided 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 to
Lender and any other party named therein as an additional insured;


 


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


 


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


 


(f)                                    If
at any time Lender is not in receipt of written evidence that all insurance required
hereunder is in full force and effect, Lender shall have the right, without notice
to Borrower, to take such action as Lender deems necessary to protect its
interest in the Property, including, without limitation, obtaining such
insurance coverage as Lender in its sole discretion deems appropriate. All
premiums incurred by Lender in connection with such action or in obtaining such
insurance and keeping it in effect shall be paid by Borrower to Lender upon demand
and, until paid, shall be secured by the Mortgage and shall bear interest at
the Default Rate.


 


(g)                                 Notwithstanding
any other provision hereof to the contrary, Lender acknowledges that so long as
no American Express Lease Default has occurred, Borrower shall not be required to
obtain 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-insurer
and maintains a rating issued by the Rating Agencies of not less than the
Trigger Rating or (y) American Express maintains insurance with coverages and
carriers in compliance with the terms of the American Express Lease.


 


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Section 8.2.                                Casualty


 


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


 


Section 8.3.                                Expropriation


 


Borrower shall promptly give
Lender notice of the actual or threatened commencement of any proceeding for
the Expropriation of the Property of which Borrower has knowledge and shall
deliver to Lender copies of any and all papers served in connection with such
proceedings. Lender may participate in any such proceedings, and Borrower shall
from time to time deliver to Lender all instruments requested by it to permit
such participation. Borrower shall, at its expense, diligently prosecute any
such proceedings, and shall consult with Lender, its attorneys and experts, and
cooperate with them in the carrying on or defense of any such proceedings.
Notwithstanding any taking by any public or quasi-public authority through
Expropriation or otherwise (including but not limited to any transfer made in
lieu of or in anticipation of the exercise of such taking), Borrower shall
continue to pay the Debt at the time and in the manner provided for its payment
in the Note and in this Agreement and the Debt shall not be reduced until any
Award shall have been actually received and applied by Lender, after the
deduction of expenses of collection, to the reduction or discharge of the Debt.
Lender shall not be limited to the interest paid on the Award by the
expropriating authority but shall be entitled to receive out of the Award
interest at the rate or rates provided herein or in the Note. If the Property
or any portion thereof is taken by an appropriating authority, Borrower shall
promptly commence and diligently prosecute the Restoration of the Property and
otherwise comply with the provisions of Section 8.4, whether or not Lender
makes any Net Proceeds available pursuant to Section 8.4. If the Property
is sold, through foreclosure or otherwise, prior to the receipt by Lender of
the Award, Lender shall have the right, whether or not a deficiency judgment on
the Note shall have been sought, recovered or denied, to receive the Award, or
a portion thereof sufficient to pay the Debt. So long as no American Express
Lease Default has occurred, the payment and allocation of any Awards shall be
governed by the American Express Lease.


 


Section 8.4.                                Restoration


 


The following provisions
shall 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, provided
that all of the conditions set forth in Section 8.4(b)(i)
are met and Borrower delivers to Lender a written undertaking to expeditiously
commence and to satisfactorily complete with due diligence the Restoration in
accordance with the terms of this Agreement.


 


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(b)                                 If
the Net Proceeds are equal to or greater than $50,000 or the costs of completing
the Restoration are equal to or greater than $50,000, Lender shall make the Net
Proceeds available for the Restoration in accordance with the provisions of
this Section 8.4. The term “Net Proceeds”
for purposes of this Section 8.4 shall mean: (i) the net amount
of 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 its
reasonable costs and expenses (including, but not limited to, reasonable
counsel fees), if any, in collecting the same (“Insurance Proceeds”), or
(ii) the net amount of the Award as a result of an Expropriation, after
deduction 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)                                     The
Net Proceeds shall be made available to Borrower for Restoration provided that
each of the following conditions are met:


 


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


 


(B)                                (1) in the event the
Net Proceeds are Insurance Proceeds, less than thirty percent (30%) of the
total 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 event
the Net Proceeds are Expropriation Proceeds, less than ten percent (10%) of the
land constituting the Property is taken, such land is located along the perimeter
or periphery of the Property, and no portion of the Improvements is located on
such land;


 


(C)                                The American Express
Lease shall remain in full force and effect during and after completion of the
Restoration without abatement of Rent;


 


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


 


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


 


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


 


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


 


46





















 


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


 


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


 


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


 


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


 


(ii)                                  The Net Proceeds shall be held by Lender
until disbursements commence, and, until disbursed in accordance with the
provisions of this Section 8.4,
shall constitute additional security for the Debt and other obligations under
the Loan Documents. The Net Proceeds shall be disbursed by Lender to, or as
directed by, Borrower from time to time during the course of the Restoration,
upon receipt of evidence satisfactory to Lender that (A) all the conditions
precedent 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 requested
disbursement) in connection with the related Restoration item have been paid
for in full, and (C) there exist no notices of pendency, stop orders, mechanic’s
or materialman’s liens or notices of intention to file same, or any other liens
or encumbrances of any nature whatsoever on the Property which have not either
been fully bonded to the satisfaction of Lender and discharged of record or in
the alternative fully insured to the satisfaction of Lender by the title
company issuing the Title Insurance Policy. Notwithstanding the foregoing, Business
Interruption 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 the
provisions of this Section 8.4 and shall be used solely for the payment of
the obligations under the Loan Documents and Operating Expenses.


 


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


 


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(iv)                              In no event shall Lender be obligated to make
disbursements of the Net Proceeds in excess of an amount equal to the costs
actually incurred from time to
time for work in place as part of the Restoration, as certified by the
Restoration Consultant, minus the Restoration Retainage. The term “Restoration Retainage” shall mean an amount equal to the
greater of:


 


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


 


(B)                                the amount of the owner’s holdback required to
be 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 notwithstanding
anything to the contrary set forth above in this Section 8.4(b), be less
than the amount actually held back by Borrower from contractors, subcontractors
and materialmen engaged in the Restoration. The Restoration Retainage shall not
be released until the Restoration Consultant certifies to Lender that the
Restoration 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 Property
have been obtained from all appropriate Governmental Authorities, and Lender
receives evidence satisfactory to Lender that the costs of the Restoration have
been paid in full or will be paid in full out of the Restoration Retainage;
provided, however, that Lender will release the portion of the Restoration
Retainage being held with respect to any contractor, subcontractor or
materialman engaged in the Restoration as of the date upon which the
Restoration Consultant certifies to Lender that the contractor, subcontractor
or materialman has satisfactorily completed all work and has supplied all
materials in accordance with the provisions of the contractor’s, subcontractor’s
or materialman’s contract, the contractor, subcontractor or materialman
delivers the lien waivers and evidence of payment in full of all sums due to
the contractor, subcontractor or materialman as may be reasonably requested by
Lender or by the title company issuing the Title Insurance Policy, and evidence
of compliance with the provisions of the Construction Lien Act (Ontario) and
Lender receives an endorsement to the Title Insurance Policy insuring the
continued priority of the lien of the Mortgage and evidence of payment of any
premium payable for such endorsement. If required by Lender, the release of any
such portion of the Restoration Retainage shall be approved by the surety
company, if any, which has issued a payment or performance
bond with respect to the contractor, subcontractor or materialman.


 


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


 


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


 


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


 


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


 


(c)                                  All Net Proceeds not required (i) to be made
available for the Restoration or (ii) to be returned to Borrower as excess Net
Proceeds pursuant to Section 8.4(b)(vii)
may (x) be retained and applied by Lender toward the payment of the Debt
whether or not then due and payable in such order, priority and proportions as
Lender in its sole discretion shall deem proper, or, (y) at the sole discretion
of Lender, the same may be paid, either in whole or in part, to Borrower for
such 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 in
part of the Debt, all right, title and interest of Borrower in and to the
Policies then in force concerning the Property and all proceeds payable thereunder
shall thereupon vest in the purchaser at such foreclosure, Lender or other
transferee in the event of such other transfer of title.


 


(e)                                  Notwithstanding the foregoing, so long as no
American Express Lease Default has occurred, the Net Proceeds shall be used for
restoration of the Property in accordance with the provisions of the American
Express Lease.


 


ARTICLE 9

REPLACEMENTS; RESERVE FUNDS


 


Section 9.1.                                Replacements


 


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


 


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Section 9.2.                                Tax
and Insurance Reserve Funds


 


If required by Lender
following a default by American Express under the American Express Lease Borrower
shall establish an Eligible Account with Lender or Lender’s agent sufficient to
discharge Borrower’s obligations for the payment of Taxes and Insurance
Premiums pursuant to Section 5.4 and Section 8.1 hereof (the “Tax and Insurance Reserve
Account”) Borrower shall deposit into the Tax and Insurance Reserve
Account on each Scheduled Payment Date (a) one-twelfth of the Taxes that Lender
estimates will be payable during the next ensuing twelve (12) months or such
higher amount necessary to accumulate with Lender sufficient funds to pay all
such Taxes at least thirty (30) days prior to the earlier of (i) the date that
the same will become delinquent and (ii) the date that additional charges or
interest will accrue due to the non-payment thereof, and (b) except to the
extent Lender has waived the insurance escrow because the insurance required
hereunder is maintained under a blanket insurance Policy acceptable to Lender
in accordance with Section 8.1(c), one-twelfth of the Insurance Premiums
that Lender estimates will be payable during the next ensuing twelve (12)
months for the renewal of the coverage afforded by the Policies upon the
expiration thereof or such higher amount necessary to accumulate with Lender
sufficient funds to pay all such Insurance Premiums at least thirty (30) days
prior to the expiration of the Policies (said amounts in (a) and (b) above
hereinafter called the “Tax and insurance Reserve
Funds”). Lender will apply the Tax and Insurance Reserve Funds to
payments of Taxes and Insurance Premiums required to be made by Borrower
pursuant to Section 5.4 and Section 8.1 hereof. In making any
disbursement from the Tax and Insurance Reserve Account, Lender may do so
according to any bill, statement or estimate procured from the appropriate
public office or tax lien service (with respect to Taxes) or insurer or agent
(with respect to Insurance Premiums), without inquiry into the accuracy of such
bill, statement or estimate or into the validity of any tax, assessment, sale,
forfeiture, tax lien or title or claim thereof. If the amount of the Tax and
Insurance Reserve Funds shall exceed the amounts due for Taxes and Insurance
Premiums pursuant to Section 5.4 and Section 8.1 hereof, Lender
shall, in its sole discretion, return any excess to Borrower or credit such
excess against future payments to be made to the Tax and Insurance Reserve
Account. In allocating any such excess, Lender may deal with the person shown
on Lender’s records as being the owner of the Property. Any amount remaining in
the Tax and Insurance Reserve Account after the Debt has been paid in full
shall be returned to Borrower or the person shown on Lender’s records as being
the owner of the Property and no other party shall have any right or claim
thereto. If at any time Lender reasonably determines that the Tax and Insurance
Reserve Funds are not or will not be sufficient to pay Taxes and Insurance
Premiums by the dates set forth in (a) and (b) above, Lender shall notify
Borrower of such determination and Borrower shall pay to Lender any amount
necessary to make up the deficiency within ten (10) days after notice from
Lender to Borrower requesting payment thereof.


 


Section 9.3.                                Reserve Funds Generally


 


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


 


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


 


(c)                                  The Reserve Accounts
and any and all Reserve Funds deposited therein shall be subject to the
exclusive dominion and control of Lender, which shall hold the Reserve Accounts
and 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 any
other right or power with respect to the Reserve Accounts or any or all of the Reserve
Funds hereinafter deposited therein, except as expressly provided in this
Agreement.


 


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


 


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


 


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


 


51





















 


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


 


(h)                                 Borrower will maintain
the security interest created by this Section 9.9 as a first priority
perfected security interest and will defend the right, title and interest of Lender in and to the Reserve
Accounts and the Reserve Funds against the claims and demands of all Persons
whomsoever. At any time and from time to time, upon the written request of
Lender, and at the sole expense of Borrower, Borrower will promptly and duly
execute and deliver such further instruments and documents and will take such
further actions as Lender reasonably may request for the purpose of obtaining
or preserving the full benefits of this Agreement and of the rights and powers
herein granted.


 


ARTICLE 10

CASH MANAGEMENT


 


Section 10.1.                         Cash
Management Account


 


(a)                                  Borrower
acknowledges and confirms that Borrower has established, and Borrower covenants
that it shall maintain an Eligible Account into which Borrower shall, and shall
cause Manager to, deposit or cause to be deposited all Rents and other revenue
from the Property during the Cash Management Period or upon the occurrence of
an Event of Default prior to the commencement of the Cash Management Period
pursuant to the terms of Section 10.2 hereof (such account, the
sub-accounts thereof, all funds at any time on deposit therein and any
proceeds, replacements or substitutions of such account or funds therein, are
referred to herein as the “Cash Management Account”).


 


(b)                                 The
Cash Management Account shall be in the name of Borrower for the benefit of
Lender, provided that Borrower shall be the owner of all funds on deposit in
such accounts for federal and applicable state, provincial and local tax
purposes (except to the extent Lender retains any interest earned on the Cash
Management Account for its own account following the occurrence and during the
continuance of an Event of Default). Sums on deposit in the Cash Management
Account shall not be invested except in such Permitted Investments as
determined and directed by Lender and all income earned thereon shall be the
income of Borrower and be applied to and become part of the Cash Management
Account, to be disbursed in accordance with this Article 10. Lender shall
have no liability for any loss resulting from the investment of funds in
Permitted Investments in accordance with the terms and conditions of this
Agreement.


 


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


 


52





















 


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


 


(e)                                  Lender shall be responsible for the
performance only of such duties with respect to the Cash Management Account as
are specifically set forth
herein, and no duty shall be implied from any provision hereof. Lender shall
not be under any obligation or duty to perform any act which would involve it
in 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 Lender
and its directors, employees, officers and agents harmless from and against any
loss, cost or damage (including, without limitation, reasonable attorneys’ fees
and disbursements) incurred by such parties in connection with the Cash
Management Account other than such as result from the gross negligence or
willful misconduct of Lender or intentional nonperformance by Lender of its obligations
under this Agreement.


 


Section 10.2.                         Deposits and Withdrawals


 


(a)                                  Borrower represents,
warrants and covenants that:


 


(i)                                     Concurrently with the execution of this
Agreement Borrower has executed and delivered to Lender an instruction letter
in the form of Exhibit B attached hereto addressed to American Express (the “Tenant
Direction Letter”). Upon the occurrence of an Event of Default or upon
commencement of the Cash Management Period, Lender or Lender’s agent, shall
have the right to deliver the Tenant Direction Letter to American Express and
all payments of Rent and other items payable under the American Express Lease
shall thereafter be sent directly to the Cash Management Account;


 


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


 


(iii)                               All Rents or other income from the Property
received after the commencement of the Cash Management Period or the occurrence
of an Event of Default shall (A) be deemed additional security for payment of
the Debt and shall be held in trust for the benefit, and as the property, of
Lender, (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 the
Tenant 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 Cash
Management Period or the continuance of an Event of Default neither Borrower
nor Manager shall terminate, amend, revoke or modify the Tenant Direction
Letter in any manner whatsoever or direct or cause American


 


53





















 


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


 


(v)                                 So long as any portion of the Debt remains
outstanding, during the Cash Management Period or during the continuance of an
Event of Default neither Borrower, Manager nor any other
Person shall open or maintain any accounts other than the Cash
Management Account into which revenues from the ownership and operation of the
Property are deposited.


 


(b)                                 Intentionally Omitted.


 


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


 


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


 


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


 


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


 


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


 


(v)                                 funds in an amount equal to the balance (if
any) remaining on deposit in the Cash Management Account after the foregoing
withdrawals and allocations shall be withdrawn and paid to Lender to be applied
to the principal amount of the Loan until the principal amount of the Loan is
paid in full.


 


(d)                                 Notwithstanding
anything to the contrary herein, Borrower acknowledges that Borrower is
responsible for monitoring the sufficiency of funds deposited in the Cash Management
Account and that Borrower is liable for any deficiency in available funds, irrespective
of whether Borrower has received
any account statement, notice or demand from Lender or Lender’s servicer. If
the amount on deposit in the Cash Management Account is insufficient to make
all of the withdrawals and allocations described in Section 10.2(c)(i) through
(v) above, Borrower shall deposit such deficiency into the Cash Management
Account within five (5) days (provided that such five day period shall not
constitute a grace period for any


 


54





















 


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


 


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


 


Section 10.3.  Security Interest


 


(a)                                  To secure the full
and punctual payment of the Debt and performance of all obligations of Borrower
now or hereafter existing under this Agreement and the other Loan Documents,
Borrower hereby grants to Lender a first-priority perfected security interest
in each of the Accounts and the Account Collateral. Furthermore, Borrower shall
not, without obtaining the prior written consent of Lender, further pledge,
assign or grant any security interest in any of the foregoing or permit any
Lien to attach thereto or any levy to be made thereon or any UCC and/or PPSA
Financing Statements to be filed with respect thereto. Borrower will maintain
the security interest created by this Section 10.3(a) as a first priority
perfected security interest and will defend the right, title and interest of
Lender in and to each of the Accounts and the Account Collateral against the
claims and demands of all Persons whomsoever.


 


(b)                                 Borrower authorizes Lender to file any
financing statement or statements required by Lender to establish or maintain
the validity, perfection and priority of the security interest granted herein
in connection with the Cash Management Account. Borrower agrees that at any time
and from time to time, at the expense of Borrower, Borrower will promptly and
duly execute and deliver all further instruments and documents, and take all
further action, that may be necessary or desirable, or that Lender may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby (including, without limitation, any security
interest in and to any Permitted Investments) or to enable Lender to exercise
and 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 Account
Collateral.  Without limitation of the
foregoing, upon any Event of Default, Lender may use the Accounts and the
Account Collateral for any of the following purposes: (A) repayment of the
Debt, including, but not limited to, principal prepayments and the prepayment premium
applicable 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 a
result of such Event of Default; (C) payment of any amount expended in
exercising any or all rights and remedies available to Lender at law or in equity
or under this Agreement or under any of the other Loan Documents; (D) payment
of any item as required or permitted under this Agreement; or (E) any other
purpose permitted by applicable law; provided, however, that any such
application of funds shall not cure or be


 


55





















 


deemed to cure any Event of Default. Without limiting any other
provisions hereof, each of the remedial actions described in the immediately
preceding sentence shall be deemed to be a commercially reasonable exercise of
Lender’s rights and remedies as a secured party with respect to the Accounts
and the Account Collateral and shall not in any event be deemed to constitute a
setoff or a foreclosure of a statutory banker’s lien. Nothing in this Agreement
shall obligate Lender to apply all or any portion of the Accounts and the
Account Collateral to effect a cure of any Event of Default, or to pay the
Debt, or in any specific order of priority. The exercise of any or all of
Lender’s rights and remedies under this Agreement or under any of the other
Loan Documents shall not in any way prejudice or affect Lender’s right to
initiate and complete a foreclosure under the Mortgage.


 


ARTICLE 11


EVENTS OF
DEFAULT; REMEDIES


 


Section 11.1.  Event of Default


 


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


 


(a)                                  if
any portion of the Debt is not paid on or prior to the tenth day following the date
the same is due or if the entire Debt is not paid on or before the Maturity
Date;


 


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


 


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


 


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


 


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


 


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


 


56





















 


Borrower,
Borrower Principal, or American Express shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against Borrower,
any managing member or general partner of Borrower, Borrower Principal, or
American Express any case, proceeding or other action of a nature referred to
in clause (i) above which (A) results in the entry of an order for relief or
any such adjudication or appointment or (B) remains undismissed, undischarged
or unbonded for a period of sixty (60) days; or (iii) there shall be commenced
against Borrower, any managing member or general partner of Borrower, Borrower
Principal, or American Express any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets which results in the entry of
any order for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within sixty (60) days from the entry thereof;
or (iv) Borrower, any managing member or general partner of Borrower, Borrower
Principal, or American Express shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i), (ii), or (iii) above; or (v) Borrower, any managing member
or general partner of Borrower, Borrower Principal, or American Express shall
generally not, or shall be unable to, or shall admit in writing its inability
to, pay its debts as they become due;


 


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


 


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


 


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


 


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


 


(k)                                  if any default occurs under any guaranty or
indemnity executed in connection herewith and such default continues after the
expiration of applicable grace periods, if any;


 


(l)                                     if Borrower shall permit any event within its
control to occur that would cause any REA to terminate without notice or action
by any party thereto or would entitle any party to terminate any REA and the
term thereof by giving notice to Borrower; or any REA shall be surrendered,
terminated or canceled for any reason or under any circumstance whatsoever
except as provided for in such REA; or any term of any REA shall be modified or
supplemented unless permitted by the American Express Lease; or Borrower shall
fail, within ten (10) Business Days after demand by Lender, to exercise its
option to renew or extend the term of any REA or shall fail or neglect to
pursue diligently all actions necessary to exercise such renewal rights
pursuant to such REA except as provided for in such REA; or


 


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


 


(n)                                 if Borrower shall
continue to be in default under any other term, covenant or condition of this
Agreement or any of the Loan Documents for more than ten (10) days after notice
from Lender in the case of any default which can be cured by the payment of a
sum of money or for thirty (30) days after notice from Lender in the case of
any other default, provided that if such default cannot reasonably be cured
within such thirty (30) day period and Borrower shall have commenced to cure
such default within such thirty (30) day period and thereafter diligently and
expeditiously proceeds to cure the same, such thirty (30) day period shall be
extended for so long as it shall require Borrower in the exercise of due
diligence to cure such default, it being agreed that no such extension shall be
for a period in excess of one hundred twenty (120) days.


 


Section 11.2.  Remedies


 


(a)                                  Upon
the occurrence of an Event of Default (other than an Event of Default described
in Section 11.1(f) above) and at any time thereafter Lender may, in
addition to any other rights or remedies available to it pursuant to this
Agreement and the other Loan Documents or at law or in equity, take such
action, without notice or demand, that Lender deems advisable to protect and
enforce its rights against Borrower and in the Property, including, without
limitation, declaring the Debt to be immediately due and payable, and Lender
may enforce or avail itself of any or all rights or remedies provided in the
Loan Documents against Borrower and the Property, including, without
limitation, all rights or remedies available at law or in equity; and upon any Event
of Default described in Section 11.1(f) above, the Debt and all other
obligations of Borrower hereunder and under the other Loan Documents shall
immediately and automatically become due and payable, without notice or demand,
and Borrower hereby expressly waives any such notice or demand, anything
contained herein or in any other Loan Document to the contrary notwithstanding.


 


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


 


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ART1CLE 12


ENVIRONMENTAL
PROVISIONS


 


Section 12.1.  Environmental Representations
and Warranties


 


Borrower represents and warrants, except as
disclosed in an Environmental Report of the Property and information that
Borrower knows that: (a) there are no Hazardous Materials or underground
storage tanks in, on, or under the Property, except those that are both (i) in
compliance with Environmental Laws and with permits issued pursuant thereto (if
such permits are required), if any, and (ii) either (A) in the case of
Hazardous Materials, in amounts not in excess of that necessary to operate the
Property for the purposes set forth herein or (B) fully disclosed to and
approved by Lender in writing pursuant to an Environmental Report; (b) there
are no past, present or threatened Releases of Hazardous Materials in violation
of any Environmental Law or which would require remediation by a Governmental
Authority in, on, under or from the Property except as described in the
Environmental Report; (c) there is no threat of any Release of Hazardous
Materials migrating to the Property except as described in the Environmental
Report; (d) there is no past or present non-compliance with Environmental Laws,
or with permits issued pursuant thereto, in connection with the Property except
as described in the Environmental Report; (e) Borrower does not know of, and
has not received, any written or oral notice or other communication from any
Person relating to Hazardous Materials in, on, under or from the Property; (f)
the Property is free of Mold; and (g) Borrower has truthfully and fully
provided to Lender, in writing, any and all information relating to
environmental conditions in, on, under or from the Property known to Borrower
or contained in Borrower’s files and records, including but not limited to any
reports relating to Hazardous Materials in, on, under or migrating to or from
the Property and/or to the environmental condition of or the presence of Mold
at the Property.


 


Section 12.2.  Environmental
Covenants


 


Borrower covenants and agrees that so long as
Borrower 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 any
other Person, shall be in compliance with all Environmental Laws and permits
issued pursuant thereto; (b) there shall be no Releases of Hazardous Materials
in, on, under or from the Property; (c) there shall be no Hazardous Materials
in, on, or under the Property, except those that are both (i) in compliance
with all Environmental Laws and with permits issued pursuant thereto, if and to
the extent required, and (ii) (A) in amounts not in excess of that necessary to
operate the Property for the purposes set forth herein or (B) fully disclosed
to and approved by Lender in writing or (C) with respect to Mold, not in a
condition, location, or of a type which may pose a risk to human health or safety
or the environment or which may result in damage to or would adversely affect
or impair the value or marketability of the Property; (d) Borrower shall keep
the Property free and clear of all Environmental Liens; (e) Borrower shall, at
its sole cost and expense, fully and expeditiously cooperate in all activities
pursuant to Section 12.4 below, including but not limited to providing all
relevant information and making knowledgeable persons available for interviews;
(f) Borrower shall, at its sole cost and expense, perform any environmental
site assessment or other investigation of environmental conditions in
connection with the Property, pursuant to any reasonable written request of
Lender, upon Lender’s reasonable belief that the Property is not in full
compliance with all Environmental Laws, and share with Lender the reports and
other results thereof, and Lender and other Indemnified Parties shall be
entitled to rely on such reports and other results thereof; (g) Borrower shall
keep the Property free of Mold; and (h) Borrower shall, at its sole cost and
expense, comply with all reasonable written requests of Lender to (i)
reasonably effectuate remediation of any Hazardous Materials in, on, under or
from the Property; and (ii) comply with


 


59





















 


any
Environmental Law; (i) Borrower shall not allow any tenant or other user of the
Property to violate any Environmental Law; and (j) Borrower shall immediately
notify Lender in writing after it has become aware of (A) any presence or
Release or threatened Release of Hazardous Materials in, on, under, from or
migrating towards the Property; (B) any non-compliance with any Environmental
Laws related in any way to the Property; (C) any actual or potential
Environmental Lien against the Property; (D) any required or proposed
remediation of environmental conditions relating to the Property; and (E) any
written or oral notice or other communication of which Borrower becomes aware
from any source whatsoever (including but not limited to a Governmental
Authority) relating in any way to Hazardous Materials. Any failure of Borrower
to perform its obligations pursuant to this Section 12.2 shall constitute
bad 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 of
competent jurisdiction, shall have the right, but not the obligation, to enter
upon the Property at all reasonable times to assess any and all aspects of the
environmental condition of the Property and its use, including but not limited
to conducting any environmental assessment or audit (the scope of which shall
be determined in Lender’s sole discretion) and taking samples of soil,
groundwater or other water, air, or building materials, and conducting other
invasive testing. Borrower shall cooperate with and provide access to Lender
and any such person or entity designated by Lender.


 


Section 12.4.  Operations and Maintenance Programs


 


If recommended by the Environmental Report or any
other environmental assessment or audit of the Property, Borrower shall
establish and comply with an operations and maintenance program with respect to
the Property, in form and substance reasonably acceptable to Lender, prepared
by an environmental consultant reasonably acceptable to Lender, which program
shall address any asbestos-containing material or lead based paint that may now
or in the future be detected at or on the Property. Without limiting the
generality of the preceding sentence, Lender may require (a) periodic notices
or reports to Lender in form, substance and at such intervals as Lender may
specify, (b) an amendment to such operations and maintenance program to address
changing 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 and
assess the environmental condition of the Property and Borrower’s compliance
with any operations and maintenance program, and (e) variation of the
operations and maintenance program in response to the reports provided by any
such consultants.


 


Section 12.5.  Environmental
Definitions


 


“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, as
well as common law, including but not limited to the Environmental Protection
Act (Ontario) and the Water Resources


 


60





















 


Act
(Ontario), that apply to Borrower or the Property and relate to Hazardous
Materials or protection of human health or the environment. “Environmental Liens” means all Liens and
other encumbrances imposed pursuant to any Environmental Law, whether due to
any act or omission of Borrower or any other Person. “Environmental Report” means the written reports resulting
from the environmental site assessments of the Property delivered to Lender in
connection with the Loan. “Hazardous
Materials” shall mean petroleum and petroleum products and compounds
containing them, including gasoline, diesel fuel and oil; explosives, flammable
materials; radioactive materials; polychlorinated biphenyls and compounds
containing them; lead and lead-based paint; asbestos or asbestos-containing
materials in any form that is or could become friable; underground or
above-ground storage tanks, whether empty or containing any substance; any
substance the presence of which on the Property is prohibited by any federal,
state or local authority; any substance that requires special handling; and any
other material or substance now or in the future defined as a “hazardous
substance,” “hazardous material”, “hazardous waste”, “toxic substance”, “toxic
pollutant”, “contaminant”, or “pollutant” within the meaning of any Environmental
Law. “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 a
type which may pose a risk to human health or safety or the environment, may
result in damage to or would adversely affect or impair the value or
marketability of the Property. “Release” of
any 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 Hazardous
Materials.


 


ARTICLE 13


SECONDARY
MARKET


 


Section 13.1.  Transfer of
Loan


 


Lender may, at any time, sell, transfer or assign
the Loan Documents, or grant participations therein (“Participations”) or
syndicate the Loan (“Syndication”) or issue mortgage
pass-through certificates or other securities evidencing a beneficial interest
in 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.  Delegation
of Servicing


 


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


 


Section 13.3.  Dissemination
of Information


 


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


 


61





















 


databases
on the underwriting and performance of commercial mortgage loans, all documents
and information which Lender now has or may hereafter acquire relating to the
Debt and to Borrower, any managing member or general partner thereof, Borrower
Principal, and the Property, including financial statements, whether furnished
by Borrower or otherwise, as Lender determines necessary or desirable. Borrower
irrevocably waives any and all rights it may have under applicable Legal
Requirements to prohibit such disclosure, including but not limited to any
right of privacy.


 


Section 13.4.  Cooperation


 


Borrower and Borrower Principal agree to cooperate
with Lender in connection with any sale or transfer of the Loan or any
Participation and/or Securities created pursuant to this Article 13,
including, without limitation, (a) the delivery of an estoppel certificate
required in accordance with Section 5.13 and such other documents as may
be reasonably requested by Lender, (b) the execution of such amendments to the
Loan Documents as may be requested by the holder of the Note or the Rating
Agencies or otherwise to effect the Securitization including, without
limitation, bifurcation of the Loan into two or more components and/or separate
notes; provided, however, that Borrower shall not be required to modify or
amend any Loan Document if such modification or amendment would (i) change the
interest rate, the stated maturity or the amortization of principal set forth
in the Note, except in connection with a bifurcation of the Loan which may
result in varying fixed interest rates and amortization schedules, but which
shall have the same initial weighted average coupon of the original Note, or
(ii) in the reasonable judgment of Borrower, modify or amend any other material
economic term of the Loan, or (iii) in the reasonable judgment of Borrower,
materially increase Borrower’s obligations and liabilities under the Loan
Documents, and (c) make changes to the organizational documents of Borrower and
its principals and/or use its best efforts to cause changes to the legal
opinions delivered by Borrower in connection with the Loan, provided, that such
changes shall not result in a material adverse economic effect to Borrower.
Borrower shall also furnish and Borrower and Borrower Principal consent to
Lender furnishing to such Investors or such prospective Investors or such
Rating Agency any and all information concerning the Property, the American
Express Lease, the financial condition of Borrower or Borrower Principal as may
be requested by Lender, any Investor, any prospective Investor or any Rating
Agency in connection with any sale or transfer of the Loan or any
Participations or Securities. Neither Borrower nor Borrower Principal shall be
responsible for any costs incurred by Lender in connection with a
Securitization.


 


ARTICLE 14


INDEMNIFICATIONS


 


Section 14.1.  General Indemnification


 


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


 


62





















 


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


 


Section 14.2.  Mortgage and Intangible Tax Indemnification


 


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


 


Section 14.3.  ERISA Indemnification


 


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


 


Section 14.4.  Survival


 


The obligations and liabilities of Borrower
and Borrower Principal under this Article 14 shall fully survive
indefinitely notwithstanding any termination, satisfaction, assignment, entry
of a judgment of foreclosure, exercise of any power of sale, or delivery of a
deed 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 the
other Loan Documents, Lender shall not enforce the liability and obligation of
Borrower or Borrower Principal, as applicable, to perform and observe the
obligations contained herein or in the other Loan Documents by any action or
proceeding wherein a money judgment shall be sought against Borrower or
Borrower Principal, except that Lender may bring a foreclosure action, action
for specific performance or other appropriate action or proceeding to enable
Lender to enforce and realize upon this Agreement, the Note, the Mortgage and
the other Loan Documents, and the interest in the Property, the Rents
(following an Event of Default) and any other collateral given to Lender created
by this Agreement, the Note, the Mortgage and the other Loan Documents;
provided, however, that any judgment in any such action or proceeding shall be
enforceable against Borrower or Borrower Principal, as applicable, only to the
extent of Borrower’s or Borrower Principal’s interest in the Property, in the
Rents and in any other collateral given to Lender. Lender, by accepting this
Agreement, the Note, the Mortgage and the other Loan Documents, agrees that it
shall not, except as otherwise provided in this Section 15.1, sue for,
seek or demand any deficiency judgment against Borrower or Borrower Principal
in any such action or proceeding, under or by reason of or under or in
connection with this Agreement, the Note, the Mortgage or the other Loan
Documents. The provisions of this Section 15.1 shall not, however, (i)
constitute a waiver, release or impairment of any obligation evidenced or
secured 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 a
party defendant in any action or suit for judicial foreclosure and sale under
this Agreement and the Mortgage; (iii) affect the validity or enforceability of
any indemnity (including, without limitation, those contained in Section 12.6
and Article 14 of this Agreement), environmental indemnity, guaranty,
master lease or similar instrument made in connection with this Agreement, the
Note, the Mortgage and the other Loan Documents; (iv) impair the right of
Lender to obtain the appointment of a receiver; (v) impair the enforcement of
the assignment of leases provisions contained in the Mortgage; or (vi) impair
the right of Lender to obtain a deficiency judgment or other judgment on the
Note against Borrower or Borrower Principal if necessary to obtain any
Insurance Proceeds or Awards to which Lender would otherwise be entitled under
this Agreement; provided however, Lender shall only enforce such judgment to
the extent of the Insurance Proceeds and/or Awards.


 


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


 


(i)                                     fraud or intentional misrepresentation by
Borrower, Borrower Principal or any other Affiliate of Borrower or Borrower
Principal 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 Lender
at the time of the closing of the Loan or during the term of the Loan;


 


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


 


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


 


64





















 


(iv)                              the misapplication or the misappropriation of
Insurance Proceeds or Awards;


 


(v)                                 Borrower’s failure to pay Taxes, Other
Charges (except to the extent that sums sufficient to pay such amounts have
been deposited in escrow with Lender pursuant to the terms hereof and there
exists no impediment to Lender’s utilization thereof), charges for labor or
materials or other charges that can create liens on the Property beyond any
applicable notice and cure periods specified herein;


 


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


 


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


 


(viii)                        Borrower’s failure following any Event of
Default to deliver to Lender upon demand all Rents and books and records
relating to the Property; or


 


(ix)                                following an Event of Default, the
withholding from Rents by American Express of non-resident withholding taxes
required under Part XIII of the Income Tax Act (Canada), as same may be
amended, supplemented, superseded or replaced or as required by any rules or
regulations promulgated by Canadian governmental authorities having
jurisdiction.


 


(c)                                  Notwithstanding the foregoing, the agreement
of 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 effect
and the Debt shall be fully recourse to Borrower and Borrower Principal on a
joint and several basis in the event (i) of a breach by Borrower or Borrower
Principal of any of the covenants set forth in Article 6 hereof, to the
extent 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 knowledge
of such breach, (ii) of a breach of any of the covenants set forth in Article 7
hereof, (iii) the Property or any part thereof shall become an asset in a
voluntary bankruptcy or insolvency proceeding of Borrower, (iv) Borrower,
Borrower Principal or any Affiliate, officer, director, or representative which
controls, directly or indirectly, Borrower or Borrower Principal files, or
joins in the filing of, an involuntary petition against Borrower under any
Creditors Rights Laws, or solicits or causes to be solicited petitioning
creditors for any involuntary petition against Borrower from any Person; (v)
Borrower tiles an answer consenting to or otherwise acquiescing in or joining
in any involuntary petition filed against it, by any other Person under any
Creditors Rights Laws, or solicits or causes to be solicited petitioning
creditors for any involuntary petition from any Person; or (vi) any Affiliate,
officer, director, or representative which controls Borrower consents to or
acquiesces 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 waiver
of 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 Mortgage
or to require that all collateral shall continue to secure all of the
indebtedness owing to Lender in accordance with this Agreement, the Note, the Mortgage
or the other Loan Documents.


 


ARTICLE 16


NOTICES


 


Section 16.1.  Notices


 


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


 


	
  If to Lender:

  	
  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

  



 


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


 


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 not
of public record and, in the case of such mutilation upon surrender and
cancellation of such Note or other Loan Document, Borrower will issue in lieu
thereof a replacement Note or other Loan Document, dated the date of such lost,
stolen, destroyed or mutilated Note or other Loan Document in the same
principal amount thereof and otherwise of like tenor.


 


Section 17.2.  Recording
of Mortgage, etc.


 


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


 


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Section 17.3.  Further Acts, Etc.


 


Borrower will, at the cost of Borrower (except with
respect 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, control
agreements, notices of assignments, transfers and assurances as Lender shall,
from time to time, reasonably require, for the better assuring, conveying,
assigning, transferring, and confirming unto Lender the property and rights
hereby mortgaged, deeded, granted, bargained, sold, conveyed, confirmed,
pledged, assigned, warranted and transferred or intended now or hereafter so to
be, or which Borrower may be or may hereafter become bound to convey or assign
to Lender, or for carrying out the intention or facilitating the performance of
the terms of this Agreement or for filing, registering or recording the
Mortgage, or for complying with all Legal Requirements. Borrower, on demand,
will execute and deliver, and in the event it shall fail to so execute and
deliver, hereby authorizes Lender to execute in the name of Borrower or without
the signature of Borrower to the extent Lender may lawfully do so, one or more
financing statements and financing statement amendments to evidence more
effectively, perfect and maintain the priority of the security interest of
Lender in the Property. Borrower grants to Lender an irrevocable power of
attorney coupled with an interest for the purpose of exercising and perfecting
any and all rights and remedies available to Lender at law and in equity,
including without limitation, such rights and remedies available to Lender
pursuant to this Section 17.3.


 


Section 17.4.  Changes in Tax, Debt, Credit
and Documentary Stamp Laws


 


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


 


(b)                                 Borrower will not claim or demand or be
entitled to any credit or credits on account of the Debt for any part of the
Taxes or Other Charges assessed against the Property, or any part thereof, and
no deduction shall otherwise be made or claimed from the assessed value of the
Property, or any part thereof, for real estate tax purposes by reason of the
Mortgage or the Debt. If such claim, credit, or deduction shall be required by
law, Lender shall have the option, by written notice of not less than one
hundred eighty (80) days, to declare the Debt immediately due and payable.


 


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


 


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Section 17.5.  Expenses


 


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


 


ARTICLE 18


WAIVERS


 


Section 18.1.  Remedies Cumulative; Waivers


 


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


 


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


 


Section 18.2.  Modification, Waiver in Writing


 


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


 


Section 18.3.  Delay Not a Waiver


 


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


 


Section 18.4.  Trial by Jury


 


BORROWER, BORROWER PRINCIPAL AND LENDER EACH
HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY
JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH
RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY
CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS
WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY
BORROWER, BORROWER PRINCIPAL AND LENDER, AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
JURY WOULD OTHERWISE ACCRUE. EACH OF LENDER, BORROWER PRINCIPAL AND BORROWER IS
HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS
CONCLUSIVE 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 any
nature whatsoever from Lender except with respect to matters for which this Agreement
or the other Loan Documents specifically and expressly provide for the giving
of notice by Lender to Borrower and except with respect to matters for which
Borrower is not, pursuant to applicable Legal Requirements, permitted to waive
the giving of notice. Borrower hereby expressly waives the right to receive any
notice from Lender with respect to any matter for which this Agreement or the
other Loan Documents do not specifically and expressly provide for the giving
of notice by Lender to Borrower.


 


Section 18.6.  Remedies of Borrower


 


In the event that a claim or adjudication is made
that Lender or its agents have acted unreasonably or unreasonably delayed
acting in any case where by law or under this Agreement or the other Loan
Documents, Lender or such agent, as the case may be, has an obligation to act
reasonably or promptly, Borrower agrees that neither Lender nor its agents
shall be liable for any monetary damages, and Borrower’s sole remedies shall be
limited to commencing an action seeking injunctive relief or declaratory
judgment. The parties hereto agree that any action or proceeding to determine
whether Lender has acted reasonably shall be determined by an action seeking
declaratory judgment. Lender agrees that, in such event, it shall cooperate in
expediting 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 marshalling
of the assets of Borrower, Borrower’s partners and others with interests in
Borrower, and of the Property, and agrees not to assert any right under any
laws pertaining to the marshalling of assets, the sale in inverse order of
alienation, homestead exemption, the administration of estates of decedents, or
any other matters whatsoever to defeat, reduce or affect the right of Lender
under the Loan Documents to a sale of the Property for the collection of the
Debt without any prior or different resort for collection or of the right of
Lender to the payment of the Debt out of the net proceeds of the Property in
preference to every other claimant whatsoever.


 


Section 18.8.  Waiver of Statute of Limitations


 


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


 


Section 18.9.  Waiver of Counterclaim


 


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


 


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ARTICLE 19


GOVERNING LAW


 


Section 19.1.  Choice of
Law


 


This Agreement shall be deemed to be a contract
entered into pursuant to the laws of the State and shall in all respects be
governed, construed, applied and enforced in accordance with the laws of the
State of New York and applicable laws of the United States of America,
provided, however, that the Mortgage, General Assignment of Rents and Specific
Assignment of Lease shall be governed, construed, applied and enforced in
accordance with the laws of the Province in which the real and personal
property secured thereby is located and provided that with respect to the
security interest in each of the Reserve Accounts, and the Cash Management
Account, the laws of the state where each such account is located shall apply.


 


Section 19.2.  Severability


 


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


 


Section 19.3.  Preferences


 


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


 


ARTICLE 20


MISCELLANEOUS


 


Section 20.1.  Survival


 


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


 


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Section 20.2.  Lender’s Discretion


 


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


 


Section 20.3.  Headings


 


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


 


Section 20.4.  Cost of Enforcement


 


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


 


Section 20.5.  Schedules Incorporated


 


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


 


Section 20.6.  Offsets, Counterclaims and Defenses


 


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


 


Section 20.7.  No joint Venture or Partnership; No Third
Party Beneficiaries


 


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


 


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(b)                                 This Agreement and the other Loan Documents
are solely for the benefit of Lender and Borrower and nothing contained in this
Agreement or the other Loan Documents shall be deemed to confer upon anyone
other than Lender and Borrower any right to insist upon or to enforce the
performance or observance of any of the obligations contained herein or
therein. All conditions to the obligations of Lender to make the Loan hereunder
are imposed solely and exclusively for the benefit of Lender and no other
Person shall have standing to require satisfaction of such conditions in
accordance with their terms or be entitled to assume that Lender will refuse to
make the Loan in the absence of strict compliance with any or all thereof and
no other Person shall under any circumstances be deemed to be a beneficiary of
such conditions, any or all of which may be freely waived in whole or in part
by Lender if, in Lender’s sole discretion, Lender deems it advisable or
desirable to do so.


 


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


 


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


 


(e)                                  By accepting or approving anything required
to be observed, performed or fulfilled or to be given to Lender pursuant to
this Agreement, the Mortgage, the Note or the other Loan Documents, including,
without limitation, any officer’s certificate, balance sheet, statement of
profit and loss or other financial statement, survey, appraisal, or insurance
policy, Lender shall not be deemed to have warranted, consented to, or affirmed
the sufficiency, the legality or effectiveness of same, and such acceptance or
approval thereof shall not constitute any warranty or affirmation with respect
thereto by Lender.


 


(f)                                    Borrower recognizes and acknowledges that in
accepting this Agreement, the Note, the Mortgage and the other Loan Documents,
Lender is expressly and primarily relying on the truth and accuracy of the
representations and warranties set forth in Article 4 of this Agreement
without any obligation to investigate the Property and notwithstanding any
investigation of the Property by Lender; that such reliance existed on the
part, of Lender prior to the date hereof, that the warranties and
representations are a material inducement to Lender in making the Loan; and
that Lender would not be willing to make the Loan and accept this Agreement,
the Note, the Mortgage and the other Loan Documents in the absence of the
warranties and representations as set forth in Article 4 of this
Agreement.


 


Section 20.8.  Publicity


 


All news releases, publicity or advertising by
Borrower or its Affiliates through any media intended to reach the general
public which refers to the Loan, Lender, Banc of America Securities LLC, or any
of 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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or
advertising by Lender or its Affiliates through any media intended to reach the
general public which refers to the Loan, the Property, Borrower, Borrower
Principal and their respective Affiliates without the approval of Borrower or
any such Persons. Borrower also agrees that Lender may share any information
pertaining to the Loan with Bank of America Corporation, including its bank
subsidiaries, Banc of America Securities LLC and any other Affiliates of the foregoing,
in connection with the sale or transfer of the Loan or any Participations
and/or Securities created.


 


Section 20.9.  Conflict;
Construction of Documents; Reliance


 


In the event of any conflict between the provisions
of this Agreement and any of the other Loan Documents, the provisions of this
Agreement shall control. The parties hereto acknowledge that they were
represented by competent counsel in connection with the negotiation, drafting
and execution of the Loan Documents and that such Loan Documents shall not be
subject to the principle of construing their meaning against the party which
drafted same. Borrower acknowledges that, with respect to the Loan, Borrower
shall rely solely on its own judgment and advisors in entering into the Loan
without relying in any manner on any statements, representations or
recommendations of Lender or any parent, subsidiary or Affiliate of Lender.
Lender shall not be subject to any limitation whatsoever in the exercise of any
rights or remedies available to it under any of the Loan Documents or any other
agreements or instruments which govern the Loan by virtue of the ownership by
it or any parent, subsidiary or Affiliate of Lender of any equity interest any
of them may acquire in Borrower, and Borrower hereby irrevocably waives the
right to raise any defense or take any action on the basis of the foregoing
with respect to Lender’s exercise of any such rights or remedies. Borrower
acknowledges that Lender engages in the business of real estate financings and
other real estate transactions and investments which may be viewed as adverse
to or competitive with the business of Borrower or its Affiliates.


 


Section 20.10.  Entire Agreement


 


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


 


Section 20.11.  Interest Act (Canada)


 


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


 


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Section 20.12.  Maximum Interest Rate


 


(a)                                  To the extent applicable, in the event that
any provision of this Agreement would oblige the borrower to make any payment
of interest or any other payment which is construed by a court of competent
jurisdiction to be interest in an amount or calculated at a rate which would be
prohibited by law or would result in a receipt by the Lender of interest at a
criminal 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 maximum
amount or rate of interest, as the case may be, as would not be so prohibited
by 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 of
interest 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 the
purposes of Section 347 of the Criminal
Code (Canada).


 


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


 


(c)                                  Any amount or rate of interest referred to in
this Section shall be determined in accordance with generally accepted
actuarial practices and principles at an effective annual rate of interest over
the term of this Agreement on the assumption that any charges, fees or expenses
that fall within the meaning of “Interest” (as defined in the Criminal Code (Canada)) shall, if they
relate to a specific period of time, be prorated over that period of time and
otherwise be prorated over the term of this Agreement and, in the event of
dispute, a certificate of a Fellow of the Canadian Institute of Actuaries
appointed by the Lender shall be conclusive for the purposes of such
determination.


 


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 “payment
obligation”) required to be made in a particular currency (the “original
currency”), which payment is made in a currency (the “other currency”) other
than the original currency (whether made voluntarily or pursuant to any
judgment or order of a court or tribunal of any jurisdiction), shall constitute
a discharge of the obligations of the payor only to the extent of the amount of
the original currency which may be purchased by the payee with such payment in
the other currency on the date of payment thereof. If the amount of the
original currency which may be so purchased is less than the amount of the
payment obligation, the payor shall indemnify and save the payee harmless from
and against any loss or damage arising as a result of such deficiency. Such
indemnity shall (a) constitute an obligation separate and independent from the
other obligations of the payor contained in this agreement; (b) shall give rise
to a separate and independent cause of action, and (c) shall


 


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continue
in full force and effect notwithstanding, and shall not be merged in, any
judgment or order in respect of any amount due hereunder or under any other
judgment or order.


 


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


 


	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  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 ESTATE

  TRUST INC., a Maryland corporation its

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Valerie Medina

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
  Valerie Medina

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
  Asst. Secretary

  	
   

  
												



 


[ADDITIONAL SIGNATURE PAGE TO
FOLLOW]


 





















 


	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A., a national banking

  association

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lisa K. McGee

  	
   

  
	
   

  	
   

  	
  Name:

  	
   Lisa
  K. McGee

  	
   

  
	
   

  	
   

  	
  Title:

  	
   Vice
  President

  	
   

  
						



 





















 


EXHIBIT A


 


Borrower
Equity Ownership Structure


 





















 


INLAND WESTERN RETAIL

REAL ESTATE TRUST, INC., a

Maryland
corporation

(Borrower Principal)


 


100%


 


INLAND WESTERN MARKHAM

CORP.,
a New Brunswick

corporation (Borrower)


 





















 


EXHIBIT B 


 


Tenant Direction Letter