-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, R3jD/qSwscpaLDXSFdzUGUMr3g85O1j03BRbUfDO5YlBa0fgZaMhYxMFXUZ4PnZc I05OliIl+PokmTMjObdUAw== 0000950131-98-003738.txt : 19980608 0000950131-98-003738.hdr.sgml : 19980608 ACCESSION NUMBER: 0000950131-98-003738 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19980508 ITEM INFORMATION: FILED AS OF DATE: 19980605 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL GROWTH PROPERTIES INC CENTRAL INDEX KEY: 0000895648 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 421283895 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-11656 FILM NUMBER: 98643331 BUSINESS ADDRESS: STREET 1: 110 N WACKER DRIVE CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3129605000 MAIL ADDRESS: STREET 1: 110 N WACKER DRIVE CITY: CHICAGO STATE: IL ZIP: 60606 8-K/A 1 AMENDMENT NO. 1 TO FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A AMENDMENT NO. 1 Current Report Pursuant to Section 13 or 15(d) of the Securities Act of 1934 May 8, 1998 Date of Report (Date of Earliest Event Reported) General Growth Properties, Inc. (Exact name of registrant as specified in its charter) Delaware 1-11656 42-1283895 (State or other (Commission File (I.R.S. Employer jurisdiction of Number) Identification incorporation) Number) 110 N. Wacker Drive, Chicago, Illinois 60606 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (312) 960-5000 ------------------------------- (Former name or former address, if changed since last report.) ONLY THOSE ITEMS AMENDED ARE REPORTED HEREIN. The registrant hereby amends its Current Report on Form 8-K dated May 26, 1998 as follows: Item 7. FINANCIAL STATEMENTS AND EXHIBITS. Listed below are the financial statements, pro forma financial information and exhibits filed as a part of this report: (a) Financial Statements of Businesses acquired and to be acquired. The financial statements of Southwest Plaza, the financial statements of Northbrook Court, the combined financial statements of the Landmark Mall, Mayfair Complex, Northgate Mall, Oglethorpe Mall and Park City Center, and the combined financial statements of certain retail properties of MEPC American Holdings, Inc., U.K.-American Properties, Inc. and Caledonian Holding Holding Company, Inc. as listed in the accompanying Index to Financial Statements and Pro Forma Financial Information are filed as part of this Current Report on Form 8-K/A. (b) Pro Forma Financial Information. The pro forma financial information of General Growth Properties, Inc. listed in the accompanying Index to Financial Statements and Pro Forma Financial Information is filed as part of this Current Report on Form 8-K/A. (c) Exhibits. See Exhibit Index attached hereto and incorporated herein by reference. -2- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. GENERAL GROWTH PROPERTIES, INC. By: /s/ Bernard Freibaum --------------------------------- Bernard Freibaum Executive Vice President and Chief Financial Officer Date: June 2, 1998 -3- EXHIBIT INDEX -------------
Exhibit Page Number Name* Number - ------- ----------------------------------------------------------- ------ 2.1 Purchase and Sale Agreement, dated May 8, 1998, among Grosvenor International Limited, P.I.C. Investments, Northbrook Court I L.L.C. and Northbrook Court II L.L.C.** 2.2 Stock Purchase Agreement, dated as of April 17, 1998, among MEPC plc, MEPC North American Properties Limited, U.K.- American Holdings Limited and GGP Limited Partnership.** 2.3 Merger Agreement, dated May 14, 1998, among GGP Limited Partnership, GGP Acquisition L.L.C. and U.S. Prime Property, Inc.** 2.4 Sale and Contribution Agreement, dated April 2, 1998, between Southwest Properties Venture and GGP Limited Partnership. 4.1 Redemption Rights Agreement, dated April 2, 1998, among GGP Limited Partnership, General Growth Properties, Inc. and Southwest Properties Venture.** 4.2 Indenture and Servicing Agreement, dated as of November 25, 1997, among the Issuers named therein, LaSalle National Bank, as Trustee, and Midland Loan Services, L.P., as Servicer (the "Indenture Agreement"). 4.3 Form of Note pursuant to the Indenture Agreement. 4.4 Mortgage, Deed of Trust, Security Agreement, Assignment of Leases and Rents, Fixture Filing and Financing Statement, dated and effective as of November 25, 1997, among the Issuers, the Trustee and the Deed Trustees named therein. 12.1 Statement of Computation of Ratio of Earnings to Fixed Charges. 23.1 Consent of Deloitte and Touche. 23.2 Consent of KPMG Peat Marwick LLP. 23.3 Consent of Coopers & Lybrand L.L.P.
- --------------- * In accordance with Rule 601(b)(2) of Regulation S-K, the exhibits to these agreements and the related disclosure schedules have not been filed. The Company agrees to furnish supplementally a copy of any such omitted exhibit or disclosure schedule to the Securities and Exchange Commission upon request. ** Previously filed by the Company in its Current Report on Form 8-K dated May 26, 1998. -4- INDEX TO FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL INFORMATION The following financial information is presented in accordance with Rule 3-14 of Regulation S-X of the Securities and Exchange Commission. Accordingly, such historical information has been audited only for the respective properties most recent fiscal year as the transactions relating to the properties acquired or to be acquired (as described in the registrant's Current Report on Form 8-K dated May 26, 1998) are not with related parties and the registrant, after reasonable inquiry, is not aware of any material factors related to the properties not otherwise disclosed that would cause the reported financial information to not be necessarily indicative of future operating results. In addition, as the properties will be directly or indirectly owned by entities that elect to be treated as REITs for Federal income tax purposes, a presentation of estimated taxable operating results is not applicable.
PAGE ---- SOUTHWEST PLAZA - --------------- Statements of Revenues and Certain Expenses for the Year Ended December 31, 1997 and for the Three Months Ended March 31, 1998 (Unaudited)....... F-2 NORTHBROOK COURT - ---------------- Statement of Revenues and Certain Expenses for the Three Months Ended March 31, 1998 (Unaudited)............................................... F-3 Independent Auditors' Report.............................................. F-5 Statement of Revenues and Certain Expenses for the Year Ended December 31, 1997..................................................................... F-6 Notes to Statement of Revenues and Certain Expenses....................... F-7 LANDMARK MALL, MAYFAIR COMPLEX, THE MEADOWS, NORTHGATE MALL, OGLETHORPE MALL AND PARK CITY CENTER - ----------------------------------------------------------------------- Independent Auditors' Report.............................................. F-9 Combined Statements of Revenues and Certain Expenses for the Year Ended December 31, 1997 and for the Three Months Ended March 31, 1998 (Unaudited).............................................................. F-10 Notes to Combined Statements of Revenues and Certain Expenses............. F-11 MEPC AMERICAN HOLDINGS INC., U.K.-AMERICAN PROPERTIES, INC. AND CALEDONIAN HOLDING COMPANY, INC. - -------------------------------------------------------------------------- Independent Auditors' Report.............................................. F-14 Combined Statements of Revenues and Certain Expenses for Certain Retail Properties for the Year Ended September 30, 1997 and for the Three Months Ended December 31, 1997 (Unaudited) and March 31, 1998 (Unaudited)....... F-15 Notes to Combined Statements of Revenues and Certain Expenses............. F-16 GENERAL GROWTH PROPERTIES, INC. - ------------------------------- Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 1997 (Unaudited)............................................ F-19 Notes to Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 1997 (Unaudited)............................................ F-20 Pro Forma Condensed Consolidated Statement of Operations for the Three Months Ended March 31, 1998 (Unaudited)............................................... F-23 Notes to Pro Forma Condensed Consolidated Statement of Operations for the Three Months Ended March 31, 1998 (Unaudited)......................................... F-24 Pro Forma Condensed Consolidated Balance Sheet as of March 31, 1998 (Unaudited).............................................................. F-26 Notes to Pro Forma Condensed Consolidated Balance Sheet as of March 31, 1998 (Unaudited)......................................................... F-27
F-1 SOUTHWEST PLAZA STATEMENTS OF REVENUES AND CERTAIN EXPENSES (AMOUNTS IN THOUSANDS--UNAUDITED) The Statements of Revenues and Certain Expenses, as shown below, present the summarized results of operations of Southwest Plaza. On April 3, 1998, the Company acquired 100% of Southwest Plaza, a two-level enclosed mall shopping center located in Denver, Colorado, with approximately 1.3 million square feet of GLA. Southwest Plaza, which opened in 1983 and was renovated in 1994 and 1995, is anchored by Joslin's, Foley's, Sears, JCPenney and Montgomery Ward.
THREE MONTHS YEAR ENDED ENDED DECEMBER 31, MARCH 31, 1997 1998 ------------ --------- Revenues: Rental income.......................................... $ 9,650 $2,391 Percentage rent........................................ 311 203 Tenant recoveries and other charges.................... 5,040 1,227 ------- ------ 15,001 3,821 Expenses: Real estate taxes...................................... 2,220 588 Management fee......................................... 505 130 Property operating expenses............................ 3,609 931 ------- ------ 6,334 1,649 ------- ------ Revenues in excess of certain expenses................. $ 8,667 $2,172 ======= ======
F-2 NORTHBROOK COURT STATEMENTS OF REVENUES AND CERTAIN EXPENSES (AMOUNTS IN THOUSANDS--UNAUDITED) The Statements of Revenues and Certain Expenses, as shown below, present the summarized results of operations of Northbrook Court. On May 8, 1998, the Company acquired 100% of the partnership interests in Westcoast Estates, the partnership that owns Northbrook Court, a two-level enclosed mall shopping center located in Northbrook (Chicago), Illinois, with approximately 1.0 million square feet of GLA. Northbrook Court, which opened in 1976 and was renovated in 1996, is anchored by Lord & Taylor, Marshall Fields, Neiman Marcus and General Cinema.
THREE MONTHS ENDED MARCH 31, 1998 --------- Revenues: Rental income....................................................... $5,138 Expenses: Property operating expenses......................................... 2,341 Management fee...................................................... 131 ------ 2,472 ------ Revenues in excess of certain expenses.............................. $2,666 ======
F-3 GENERAL GROWTH PROPERTIES, INC. NORTHBROOK COURT STATEMENT OF REVENUES AND CERTAIN EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1997 F-4 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of General Growth Properties, Inc. We have audited the accompanying statement of revenues and certain expenses of Northbrook Court for the year ended December 31, 1997. This financial statement is the responsibility of Northbrook Court's management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. The accompanying statement of revenues and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, and is not intended to be a complete presentation of Northbrook Court's revenues and expenses. In our opinion, the financial statement referred to above presents fairly, in all material respects, the revenues and certain expenses of Northbrook Court for the year ended December 31, 1997, in conformity with generally accepted accounting principles. Coopers & Lybrand L.L.P. San Francisco, California February 6, 1998, except for Note 1 for which the date is May 28, 1998 F-5 GENERAL GROWTH PROPERTIES, INC. NORTHBROOK COURT STATEMENT OF REVENUES AND CERTAIN EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1997 (IN THOUSANDS) Revenues: Minimum rent......................................................... $10,653 Percentage rent...................................................... 620 Tenant recoveries.................................................... 8,209 Other income......................................................... 772 ------- Total revenues..................................................... 20,254 ------- Expenses: CAM expenses......................................................... 4,462 Real estate taxes.................................................... 4,255 Management fee....................................................... 496 Other property operating expenses.................................... 674 ------- Total expenses..................................................... 9,887 ------- Revenues in excess of certain expenses................................. $10,367 =======
The accompanying notes are an integral part of the financial statement. F-6 GENERAL GROWTH PROPERTIES, INC. NORTHBROOK COURT NOTES TO FINANCIAL STATEMENT (IN THOUSANDS) 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The statement of revenues and certain expenses is for an enclosed mall shopping center including all free standing stores which was acquired by General Growth Properties, Inc. (the "Company") on May 8, 1998 located in Northbrook (Chicago), Illinois and referred to as Northbrook Court. The statement is not representative of the actual operations for the period presented as certain expenses, primarily depreciation and amortization expense, interest expense and other costs not directly related to the future operations of the property have been excluded. Revenue Recognition Minimum rent revenues are recognized on a straight-line basis over the terms of the related leases. The amount of straight-line rent included in minimum rent is approximately $107. Percentage rents are recognized on an accrual basis. Recoveries from tenants for taxes, insurance and other shopping center operating expenses are recognized as revenues in the period the applicable costs are incurred. A provision for doubtful accounts representing that portion of accounts receivable which is estimated to be uncollectible has been included in other property operating expenses. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions of the reported amounts of revenues and certain expenses during the reporting period. Actual results could differ from those estimates. 2. FUTURE REVENUE RENTALS The minimum future rentals based on noncancelable operating leases held as of December 31, 1997, are as follows:
YEARS ENDING ------------ 1998........................................................... $10,709 1999........................................................... 10,187 2000........................................................... 10,064 2001........................................................... 9,327 2002........................................................... 8,110 Thereafter..................................................... 31,591
F-7 LANDMARK MALL, MAYFAIR COMPLEX, THE MEADOWS, NORTHGATE MALL, OGLETHORPE MALL AND PARK CITY CENTER COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1997 AND FOR THE THREE MONTHS ENDED MARCH 31, 1998 (UNAUDITED) F-8 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholders of General Growth Properties, Inc. We have audited the accompanying combined statements of revenues and certain expenses of the Landmark Mall, Mayfair Complex, The Meadows, Northgate Mall, Oglethorpe Mall and Park City Center (the "Malls") for the year ended December 31, 1997. This financial statement is the responsibility of the Malls' management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined statement of revenues and certain expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the combined statement of revenues and certain expenses. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the combined statement of revenues and certain expenses. We believe that our audit provides a reasonable basis for our opinion. The accompanying combined statements of revenues and certain expenses was prepared for purposes of complying with certain rules and regulations of the Securities and Exchange Commission as described in Note 2 to the combined statement of revenues and certain expenses and is not intended to be a complete presentation of the combined revenues and expenses of the Malls. In our opinion, the aforementioned combined statements of revenues and certain expenses presents fairly, in all material respects, the combined revenues and certain expenses of the Malls for the year ended December 31, 1997 in conformity with generally accepted accounting principles. Deloitte & Touche LLP Atlanta, Georgia May 14, 1998 F-9 COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES OF: LANDMARK MALL, MAYFAIR COMPLEX, THE MEADOWS, NORTHGATE MALL, OGLETHORPE MALL AND PARK CITY CENTER
YEAR ENDED THREE MONTHS ENDED DECEMBER MARCH 31, 1998 31, 1997 (UNAUDITED) ----------- ------------------ REVENUES: Rental income, including percentage rentals..... $50,395,444 $12,771,299 Tenant common area, property taxes and insurance recovery....................................... 29,800,315 7,589,063 Other operating income.......................... 4,932,749 902,294 ----------- ----------- $85,128,508 $21,262,656 =========== =========== EXPENSES: Building and common area........................ $19,699,537 $ 4,652,847 Real estate taxes............................... 10,052,263 2,600,512 Management fee.................................. 2,387,575 651,676 Other operating expenses........................ 5,420,300 1,308,107 ----------- ----------- 37,559,675 9,213,142 ----------- ----------- Revenues in excess of certain expenses.......... $47,568,833 $12,049,514 =========== ===========
See notes to combined statements of revenues and certain expenses. F-10 NOTES TO COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES OF: LANDMARK MALL, MAYFAIR COMPLEX, THE MEADOWS, NORTHGATE MALL, OGLETHORPE MALL AND PARK CITY CENTER 1. BUSINESS: The combined statements of revenues and certain expenses include the operations of the Landmark Mall, Mayfair Complex, The Meadows, Northgate Mall, Oglethorpe Mall and Park City Center ("the Malls"). Other than Park City Center, the Malls are owned by U.S. Prime Property Inc. ("USPPI"), a privately held Real Estate Investment Trust. USPPI has a 50% interest in Parcit-IIP Lancaster Venture, the owner of Park City Center. P City, Inc. ("PCI"), an affiliate of a shareholder of USPPI, owns the remaining 50% interest.
Property City State ---------------- ----------- ------------ Landmark Mall Alexandria Virginia Mayfair Complex Wauwatosa Wisconsin The Meadows Las Vegas Nevada Northgate Mall Chattanooga Tennessee Oglethorpe Mall Savannah Georgia Park City Center Lancaster Pennsylvania
On May 14, 1998, USPPI entered into a Merger Agreement with GGP Limited Partnership (the "Buyer"), an affiliate of General Growth Properties, Inc. Under the Merger Agreement, the Buyer will acquire all of the outstanding capital stock of USPPI for cash. Immediately prior to the merger, PCI will transfer its interest in Park City Center to USPPI. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: a. Basis of Presentation: The accounts of each property are combined in the statements of revenues and certain expenses. The financial statements are not representative of the actual operations for the period presented as certain expenses that may not be comparable to the expenses expected to be incurred in the future operations of the to be acquired properties have been excluded in accordance with Rule 3-14 of Regulation S-X of the Securities and Exchange Commission. Expenses excluded consist of interest, depreciation, amortization, impairment, corporate expenses and other costs not directly related to the future operations of the properties. b. Revenue Recognition: The Malls recognize minimum rental income over the term of a lease on a straight-line basis. Contingent rentals based on the properties' operating expenses and tenant sales volumes are recognized as revenue when earned. Percentage rental income based on tenant sales volumes were $2,811,000 for the year ended December 31, 1997 and $635,000 (unaudited) for the three-month period ended March 31, 1998. c. Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that effect the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. d. Unaudited Information: The combined financial statement for the three- month period ended March 31, 1998 is unaudited. In management's opinion, such combined financial statement includes all adjustments, consisting solely of normal recurring adjustments, necessary for a fair presentation. F-11 3. LEASES: The following is a schedule, by year, of combined future minimum rental payments expected under executed operating leases of Landmark Mall, Mayfair Complex, The Meadows, Northgate Mall, Oglethorpe Mall and Park City Center that have initial or remaining noncancelable lease terms in excess of one year, as of December 31, 1997. 1998.......................................................... $ 47,659,260 1999.......................................................... 43,238,731 2000.......................................................... 38,210,654 2001.......................................................... 32,726,133 2002.......................................................... 28,508,047 Thereafter.................................................... 97,022,481 ------------ Total....................................................... $287,365,306 ============
F-12 MEPC AMERICAN HOLDINGS INC., U.K.-AMERICAN PROPERTIES, INC. AND CALEDONIAN HOLDINGS COMPANY, INC. COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES FOR CERTAIN RETAIL PROPERTIES FOR THE YEAR ENDED SEPTEMBER 30, 1997 AND FOR THE THREE MONTHS ENDED DECEMBER 31, 1997 (UNAUDITED) AND MARCH 31, 1998 (UNAUDITED) F-13 INDEPENDENT AUDITORS' REPORT The Board of Directors General Growth Properties, Inc. We have audited the accompanying combined statement of revenues and certain expenses for certain retail properties of MEPC American Holdings Inc., U.K.- American Properties, Inc. and Caledonian Holding Company, Inc., wholly owned subsidiaries of MEPC plc., a United Kingdom Company (the MEPC American Group) (the combined statement) described in Note A for the year ended September 30, 1997. This combined statement is the responsibility of MEPC American Group management. Our responsibility is to express an opinion on the combined statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the combined statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the combined statement. We believe that our audit provides a reasonable basis for our opinion. The accompanying combined statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and for inclusion in the registration statement of General Growth Properties, Inc. as described in Note B. The presentation is not intended to be a complete presentation of the retail properties' revenues and expenses. In our opinion, the aforementioned combined statement referred to above presents fairly, in all material respects, the combined revenues and certain expenses for certain retail properties for the year ended September 30, 1997, in conformity with generally accepted accounting principles. KPMG PEAT MARWICK LLP Dallas, Texas May 8, 1998 F-14 COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES FOR CERTAIN RETAIL PROPERTIES OF MEPC AMERICAN HOLDINGS INC., U.K.-AMERICAN PROPERTIES, INC. AND CALEDONIAN HOLDING COMPANY, INC. (MEPC AMERICAN GROUP) FOR THE THREE MONTHS ENDED MARCH 31, 1998 (UNAUDITED) AND DECEMBER 31, 1997 (UNAUDITED) AND FOR THE YEAR ENDED SEPTEMBER 30, 1997
THREE MONTHS THREE MONTHS ENDED YEAR ENDED ENDED DEC. 31, SEPTEMBER MARCH 31, 1998 1997 30, 1997 -------------- ----------- ----------- (UNAUDITED) (UNAUDITED) Revenues: Rental revenues........................ $15,869,770 $15,555,344 $59,570,310 Other real estate income............... 7,750,155 8,223,698 31,938,695 ----------- ----------- ----------- 23,619,925 23,779,042 91,509,005 ----------- ----------- ----------- Certain Expenses: Salaries and benefits.................. 1,062,357 1,145,663 3,834,805 Utilities.............................. 1,199,774 1,450,634 5,966,312 Repairs and maintenance................ 1,685,768 1,621,219 7,269,609 Real estate taxes...................... 2,169,147 1,921,710 8,233,418 Advertising and promotion.............. 321,208 797,589 2,021,929 Insurance.............................. 634,179 634,533 3,769,011 Other.................................. 1,505,570 1,988,377 5,667,387 ----------- ----------- ----------- 8,578,003 9,559,725 36,762,471 ----------- ----------- ----------- Revenues in excess of certain expenses... $15,041,922 $14,219,317 $54,746,534 =========== =========== ===========
See notes to combined statements of revenues and certain expenses. F-15 NOTES TO COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES FOR CERTAIN RETAIL PROPERTIES OF MEPC AMERICAN HOLDINGS INC., U.K.-AMERICAN PROPERTIES, INC. AND CALEDONIAN HOLDING COMPANY, INC. (MEPC AMERICAN GROUP) FOR THE THREE MONTHS ENDED MARCH 31, 1998 (UNAUDITED) AND DECEMBER 31, 1997 (UNAUDITED) AND FOR THE YEAR ENDED SEPTEMBER 30, 1997 A. OPERATING PROPERTIES: The combined statements of revenues and certain expenses for certain retail properties, (the combined statements) for the three-month periods ended March 31, 1998 and December 31, 1997 and for the year ended September 30, 1997 relates to the operations of the following retail properties which are expected to be acquired by General Growth Properties, Inc. (General Growth) from the MEPC American Group:
RETAIL PROPERTIES LOCATION ----------------- -------- Apache Mall Rochester, Minnesota Boulevard Mall Las Vegas, Nevada Cumberland Mall Atlanta, Georgia McCreless Mall San Antonio, Texas Northridge Fashion Center Northridge, California Regency Square Mall Jacksonville, Florida Riverlands Shopping Center LaPlace, Louisiana Valley Plaza Mall Bakersfield, California
On April 17, 1998, GGP Limited Partnership, (of which General Growth is the general partner), agreed to purchase the stock of MEPC American Holdings Inc., U.K.-American Properties, Inc. and Caledonian Holding Company, Inc. (wholly owned subsidiaries of MEPC plc) from MEPC plc in a transaction anticipated to close during the second quarter of 1998. B. BASIS OF PRESENTATION: The accompanying combined statements have been prepared on the accrual basis of accounting. The combined statements have been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and for inclusion in a registration statement for General Growth. The combined statements are not intended to be a complete presentation of the combined revenues and expenses of the retail properties listed above for the three-month periods ended March 31, 1998 (unaudited) and December 31, 1997 (unaudited), and for the year ended September 30, 1997. The combined statements exclude certain amounts, which would not be comparable to the proposed future operations of the retail properties as follows: (a) depreciation of the buildings and improvements; (b) amortization of other assets; (c) interest expense; (d) interest income; (e) income taxes; (f) gain from condemnation transaction at Cumberland Mall; (g) loss from abandonment of renovation projects at Valley Plaza Mall; and (h) other income and expense items unique to MEPC American Group. F-16 NOTES TO COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES FOR CERTAIN RETAIL PROPERTIES OF MEPC AMERICAN HOLDINGS INC., U.K.-AMERICAN PROPERTIES, INC. AND CALEDONIAN HOLDING COMPANY, INC. (MEPC AMERICAN GROUP)--(CONTINUED) C. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Revenue Recognition Rental income from leasing activities consists of lease payments earned from tenants under lease agreements. Capitalization Policy Ordinary repairs and maintenance are expensed as incurred; major replacements and betterments are capitalized. Advertising and Promotion The cost of advertising and promotion is expensed as incurred. Use of Estimates The preparation of the combined statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the combined statements and accompanying notes. Actual results could differ from those estimates. Unaudited Interim Combined Statements The combined statements for the three-month periods ended March 31, 1998 and December 31, 1997 are unaudited. In the opinion of management, all significant adjustments necessary for a fair presentation of the combined statements for the interim periods have been included. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year for the retail properties. F-17 GENERAL GROWTH PROPERTIES, INC. PRO FORMA FINANCIAL STATEMENTS F-18 GENERAL GROWTH PROPERTIES, INC. PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA--UNAUDITED)
1998 ACQUISITIONS ------------------------------------ HISTORICAL PROPERTY GENERAL ACQUISITIONS GROWTH PRO FORMA -------------------- TOTAL PROPERTIES, FISCAL 1997 PRO FORMA FISCAL SOUTHWEST NORTHBROOK PRO FORMA PRO FORMA INC.(1) ACQUISITIONS ADJUSTMENTS 1997 PLAZA COURT MEPC(2) USPPI ADJUSTMENTS COMBINED ----------- ------------ ----------- --------- --------- ---------- ------- ------- ----------- --------- Total revenues... $291,147 $14,427 $ -- $305,574 $15,001 $20,254 $91,509 $85,129 $ -- $517,467 Expenses: Property operating....... 106,369 5,818 -- 112,187 5,829 9,391 36,762 35,172 -- 199,341 Management fees. 3,308 252 (46) 3,514 505 496 -- 2,388 (1,789)(a) 5,114 Depreciation and amortization.... 48,509 -- 2,077 50,586 -- -- -- -- 39,591(b) 90,177 -------- ------- -------- -------- ------- ------- ------- ------- --------- -------- Total Expenses... 158,186 6,070 2,031 166,287 6,334 9,887 36,762 37,560 37,802 294,632 -------- ------- -------- -------- ------- ------- ------- ------- --------- -------- Operating Income. 132,961 8,357 (2,031) 139,287 8,667 10,367 54,747 47,569 (37,802) 222,835 Interest expense, net.... (70,252) -- (8,459) (78,711) -- -- -- -- (97,520)(c) (176,231) Equity in net income/(loss) unconsolidated affiliates: GGP/Homart, Inc. ........... 16,506 -- -- 16,506 -- -- -- -- -- 16,506 Property Joint Ventures........ 3,032 391 -- 3,423 -- -- -- -- -- 3,423 General Growth Management, Inc. ........... (194) -- -- (194) -- -- -- -- -- (194) -------- ------- -------- -------- ------- ------- ------- ------- --------- -------- Income before minority interest......... 82,053 8,748 (10,490) 80,311 8,667 10,367 54,747 47,569 (135,322) 66,339 Minority interest in Operating Partnership...... (29,398) -- 37 (29,361) -- -- -- -- 12,785(d) (16,576) -------- ------- -------- -------- ------- ------- ------- ------- --------- -------- Net income....... 52,655 8,748 (10,453) 50,950 8,667 10,367 54,747 47,569 (122,537) 49,763 Convertible preferred stock dividends(3)..... -- -- -- -- -- -- -- -- (21,750) (21,750) -------- ------- -------- -------- ------- ------- ------- ------- --------- -------- Net income available to common stockholders..... $ 52,655 $ 8,748 $(10,453) $ 50,950 $ 8,667 $10,367 $54,747 $47,569 $(144,287) $ 28,013 ======== ======= ======== ======== ======= ======= ======= ======= ========= ======== Weighted average shares outstanding-- basic............ 32,623 Weighted average shares outstanding-- diluted.......... 32,840 Earnings per share--basic..... $ 0.86 Earnings per share--diluted... $ 0.85 TOTAL PRO FORMA PRO FORMA EQUITY ADJUSTED FOR PARTNER POTENTIAL ADJUSTMENTS EQUITY PARTNER -------------- -------------- Total revenues... $(85,129)(e) $432,338 Expenses: Property operating....... (35,172)(f) 164,169 Management fees. (600)(g) 4,514 Depreciation and amortization.... (14,063)(h) 76,114 -------------- -------------- Total Expenses... (49,835) 244,797 -------------- -------------- Operating Income. (35,294) 187,541 Interest expense, net.... 33,916 (i) (142,315) Equity in net income/(loss) unconsolidated affiliates: GGP/Homart, Inc. ........... -- 16,506 Property Joint Ventures........ 3,433 (j) 6,856 General Growth Management, Inc. ........... 3,405 (k) 3,211 -------------- -------------- Income before minority interest......... 5,460 71,799 Minority interest in Operating Partnership...... (2,030)(d) (18,606) -------------- -------------- Net income....... 3,430 53,193 Convertible preferred stock dividends(3)..... -- (21,750) -------------- -------------- Net income available to common stockholders..... $ 3,430 $ 31,443 ============== ============== Weighted average shares outstanding-- basic............ 32,623 Weighted average shares outstanding-- diluted.......... 32,840 Earnings per share--basic..... $ 0.96 Earnings per share--diluted... $ 0.96
- ---- (1) Amounts are from the statements and footnotes included in the Company's 1997 Form 10-K except that the non-recurring gain on sale of a portion of the CenterMark stock and the extraordinary item are excluded. (2) Reflects the results of MEPC operations for the fiscal year ended September 30, 1997. (3) Pro forma earnings have been reduced by the pro forma dividends on the 7.25% Preferred Income Equity Redeemable Stock, Series A. The accompanying notes are an integral part of the Pro Forma Condensed Consolidated Statement of Operations. For alphabetical references, please refer to Note 3--Pro Forma Adjustments. F-19 GENERAL GROWTH PROPERTIES, INC. NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997 NOTE 1 PRO FORMA BASIS OF PRESENTATION This unaudited pro forma condensed consolidated statement of operations is presented as if (i) the sale of CenterMark Properties, Inc. ("CenterMark") and the acquisitions made in 1997 (Market Place Mall, Century Plaza Shopping Center, Town East Mall, Southlake Mall, Eden Prairie Mall, GGP/Ivanhoe Portfolio Malls and Valley Hills Mall), (ii) the acquisitions made or to be made in 1998 (Southwest Plaza, Northbrook Court (collectively the "Property Acquisitions"), the MEPC Portfolio and the USPPI Portfolio) and (iii) the Company's use of the net proceeds of the Offering to fund the acquisitions and for other working capital purposes, had all occurred on January 1, 1997. The total pro forma condensed consolidated statement of operations adjusted for a potential equity partner reflects these transactions plus the effect of a potential joint venture partner with respect to the USPPI Portfolio (as described below). In management's opinion, all adjustments necessary to reflect these transactions have been included. Such pro forma statement of operations is based upon the historical information of General Growth Properties, Inc. excluding the non-recurring gain on sale of a portion of CenterMark stock and extraordinary item and the historical information of each of the above-mentioned entities for the year ended December 31, 1997. The MEPC Portfolio information reflects the results of operations for the fiscal year ended September 30, 1997. This unaudited pro forma statement of operations should be read in conjunction with the "Selected Consolidated Financial Data" included elsewhere herein and is not necessarily indicative of what actual results of General Growth Properties, Inc. would have been assuming such transactions had been completed as of January 1, 1997 nor does it purport to represent the results of operations for future periods. NOTE 2 ACQUISITIONS/DISPOSITIONS On June 28, 1996, Westfield U.S. Investments, Pty. Limited exercised its option to acquire the remaining 30% of the outstanding CenterMark stock from General Growth Properties, Inc. (the "Company") in two transactions. The first payment in the amount of $87.0 million was received on July 1, 1996, and the second payment in the amount of $130.5 million was received on January 2, 1997. As described above, the gain on this transaction has been excluded from the continuing operations of the Company and its pro forma operations for the year ended December 31, 1997. On March 31, 1997, the Company acquired a 100% interest in Market Place Mall for a cash purchase price of approximately $70.0 million which was funded by an unsecured short-term facility. Market Place Mall is located in Champaign, Illinois. During the second quarter of 1997, the Company also acquired a 100% ownership interest in three properties, Century Plaza Shopping Center, Southlake Mall, Eden Prairie Mall and a 50% interest in Town East Mall. Century Plaza Shopping Center located in Birmingham, Alabama was acquired on May 1, 1997 for $31.8 million in cash. Southlake Mall was acquired on June 19, 1997, for a purchase price of $67.0 million. The purchase price consisted of $45.1 million of mortgage debt assumption, $11.5 million (353,537 units) of newly issued Operating Partnership Units, and $10.4 million in cash. Southlake Mall is located in Atlanta, Georgia. The aggregate consideration paid for Eden Prairie Center located in Minneapolis, Minnesota was $19.9 million. It included the assumption of a $16.8 million mortgage, the payment of $1.1 million in cash and the assumption of $2.0 million in short-term liabilities. On June 11, 1997, the Company acquired a 50% interest in Town East Mall, located in Mesquite, Texas for $56.5 million. The consideration included approximately $27.5 million in cash, the assumption of approximately $27.9 million of mortgage indebtedness and the assumption of $1.1 million in net current liabilities. On September 17, 1997, GGP/Ivanhoe, Inc. ("GGP/Ivanhoe") acquired both The Oaks Mall in Gainesville, Florida and Westroads Mall in Omaha, Nebraska. The purchase price for the two properties was approximately F-20 GENERAL GROWTH PROPERTIES, INC. NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS--(CONTINUED) $206 million of which $125 million was financed through property level indebtedness. The Company owns 51% of the ownership interest in GGP/Ivanhoe for a net investment of approximately $43.8 million. Ivanhoe, Inc. of Montreal, Quebec, Canada owns the remaining 49% ownership interest in GGP/Ivanhoe. On April 3, 1998 and May 8, 1998, the Company acquired a 100% ownership interest in Southwest Plaza in Denver, Colorado and Northbrook Court in Northbrook, Illinois, respectively. On June 2, 1998, the Company acquired the U.S. retail property portfolio of MEPC plc (the "MEPC Portfolio"), a United Kingdom based real estate company ("MEPC"). Through the purchase of the stock of the three U.S. subsidiaries of MEPC that directly or indirectly own the MEPC Portfolio (the "MEPC U.S. Subsidiaries"), the Company acquired for approximately $871 million in cash (less certain adjustments) 100% of eight enclosed mall shopping centers located throughout the United States. On May 14, 1998, the Company entered into a definitive merger agreement to acquire U.S. Prime Property, Inc. ("USPPI"), which owns (or as of closing will own) 100% of six enclosed mall shopping centers (and office buildings adjacent to one of the malls)(the "USPPI Portfolio"). The Company expects to acquire USPPI together with an approximately 50% joint venture partner. The purchase price for the USPPI acquisition is approximately $625 million in cash (subject to certain adjustments), less approximately $65 million of mortgage indebtedness. This transaction is expected to close during the second quarter of 1998. NOTE 3 PRO FORMA ADJUSTMENTS (a) Management Fees The management fee adjustment represents the difference in management costs charged and/or allocated to the properties by the previous owners and the new rates charged by General Growth Management, Inc. (b) Depreciation and Amortization Depreciation and amortization is adjusted to include additional amounts related to the periods from January 1, 1997 to the dates of acquisition for the 1997 acquisitions and for the entire year of 1997 for the acquisitions made or to be made in 1998. (c) Interest Expense Interest expense increased due to a combination of debt assumption and increased borrowings. In connection with the acquisitions described above, the Company assumed $114.1 million of mortgage debt bearing interest at the weighted average rate of 8.50%. The Company also issued approximately $1,320.7 million of secured and unsecured borrowings to fund the cash portion of the acquisitions. The pro forma interest expense on new borrowings was calculated using an interest rate of 6.65%. (d) Minority Interest The pro forma income statement has been adjusted to reflect the allocation of earnings to the minority interest. (e) Revenues Revenues relating to the USPPI Portfolio have been eliminated to reflect on an equity basis the potential inclusion of a joint venture partner. F-21 GENERAL GROWTH PROPERTIES, INC. NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS--(CONTINUED) (f) Property Operating Property operating expenses relating to the USPPI Portfolio have been eliminated to reflect on an equity basis the potential inclusion of a joint venture partner. (g) Management Fees Management fees related to the USPPI Portfolio have been adjusted to reflect the fee to be charged by General Growth Management, Inc., given the potential inclusion of a joint venture partner. (h) Depreciation and Amortization Depreciation and amortization relating to the USPPI Portfolio has been eliminated to reflect on an equity basis the potential inclusion of a joint venture partner. (i) Interest Expense Interest expense has been adjusted to reflect the potential inclusion of a joint venture partner related to the USPPI Portfolio. (j) Equity in Property Joint Ventures Reflects the reduction in ownership and the change to the equity method of accounting for the pro forma operating results of the USPPI Portfolio during the fiscal year ended December 31, 1997 due to the potential inclusion of a joint venture partner. (k) Equity in General Growth Management, Inc. Reflects the increase in General Growth Management, Inc. net income for management fees assuming the USPPI Portfolio is acquired with a joint venture partner. F-22 GENERAL GROWTH PROPERTIES, INC. PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1998 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA--UNAUDITED)
1998 ACQUISITIONS ----------------------------------------- PROPERTY ACQUISITIONS ------------------------ PRO FORMA HISTORICAL ADJUSTED GENERAL PRO FORMA FOR GROWTH TOTAL EQUITY POTENTIAL PROPERTIES, SOUTHWEST NORTHBROOK PRO FORMA PRO FORMA PARTNER EQUITY INC.(1) PLAZA COURT MEPC USPPI ADJUSTMENTS COMBINED ADJUSTMENTS PARTNER ----------- ---------- ----------- ------- ------- ----------- --------- ----------- --------- Total revenues......... $ 80,447 $ 3,821 $ 5,138 $23,620 $21,263 $ -- $134,289 $(21,263)(e) $113,026 Expenses: Property operating.... 29,647 1,519 2,341 8,578 8,561 -- 50,646 (8,561)(f) 42,085 Management fees....... 875 130 131 -- 652 (513)(a) 1,275 (150)(g) 1,125 Depreciation and amortization......... 13,967 -- -- -- -- 9,898 (b) 23,865 (3,516)(h) 20,349 -------- ---------- ---------- ------- ------- -------- -------- -------- -------- Total Expenses........ 44,489 1,649 2,472 8,578 9,213 9,385 75,786 (12,227) 63,559 -------- ---------- ---------- ------- ------- -------- -------- -------- -------- Operating Income....... 35,958 2,172 2,666 15,042 12,050 (9,385) 58,503 (9,036) 49,467 Interest expense, net. (17,883) -- -- -- -- (24,381)(c) (42,264) 8,479 (i) (33,785) Equity in unconsolidated affiliates: GGP/Homart, Inc....... 1,735 -- -- -- -- -- 1,735 -- 1,735 Joint Venture Properties........... 1,041 -- -- -- -- -- 1,041 967 (j) 2,008 General Growth Management, Inc...... (7,969) -- -- -- -- -- (7,969) 851 (k) (7,118) -------- ---------- ---------- ------- ------- -------- -------- -------- -------- Income before minority interest.............. 12,882 2,172 2,666 15,042 12,050 (33,766) 11,046 1,261 12,307 Minority interest in Operating Partnership. (4,427) -- -- -- -- 2,466 (d) (1,961) (441)(d) (2,402) -------- ---------- ---------- ------- ------- -------- -------- -------- -------- Net income............. 8,455 2,172 2,666 15,042 12,050 (31,300) 9,085 820 9,905 Convertible preferred stock dividends(2).... -- -- -- -- -- (5,438) (5,438) -- (5,438) -------- ---------- ---------- ------- ------- -------- -------- -------- -------- Net income available to common stockholders... $ 8,455 $ 2,172 $ 2,666 $15,042 $12,050 $(36,738) $ 3,647 $ 820 $ 4,467 ======== ========== ========== ======= ======= ======== ======== ======== ======== Weighted average shares outstanding--basic.... 35,689 35,689 Weighted average shares outstanding--diluted.. 35,937 35,937 Earnings per share-- basic................. $ 0.10 $ 0.13 Earnings per share-- diluted............... $ 0.10 $ 0.12
- -------- (1) Amounts are from the statements and footnotes included in the Company's Form 10-Q for the quarter ended March 31, 1998. (2) Pro forma earnings have been reduced by pro forma dividends on the 7.25% Preferred Income Equity Redeemable Stock, Series A. The accompanying notes are an integral part of the Pro Forma Condensed Consolidated Statement of Operations. For alphabetical references please refer to Note 3--Pro Forma Adjustments. F-23 GENERAL GROWTH PROPERTIES, INC. NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1998 (AMOUNTS IN THOUSANDS--UNAUDITED) NOTE 1 PRO FORMA BASIS OF PRESENTATION This unaudited condensed consolidated statement of operations is presented as if (i) the acquisitions made or to be made in 1998 (Southwest Plaza, Northbrook Court (collectively the "Property Acquisitions"), the MEPC Portfolio and the USPPI Portfolio) and (ii) the Company's use of the net proceeds of the Offering to fund the acquisitions and for other working capital purposes, had all occurred on January 1, 1998. The total pro forma condensed consolidated statement of operations adjusted for a potential equity partner reflects these transactions plus the effect of a potential joint venture partner with respect to the USPPI Portfolio (as described below). In management's opinion, all adjustments necessary to reflect these transactions have been included. Such pro forma statement of operations is based upon the historical information of General Growth Properties, Inc. and the historical information of each of the above-mentioned entities for the three months ended March 31, 1998. This unaudited pro forma statement of operations should be read in conjunction with the "Selected Consolidated Financial Data" included elsewhere herein and is not necessarily indicative of what actual results of General Growth Properties, Inc. would have been assuming such transactions had been completed as of January 1, 1998 nor does it purport to represent the results of operations for future periods. NOTE 2 ACQUISITIONS On April 3, 1998 and May 8, 1998, the Company acquired a 100% ownership interest in Southwest Plaza in Denver, Colorado and Northbrook Court in Northbrook, Illinois, respectively. On June 2, 1998, the Company acquired the U.S. retail property portfolio of MEPC plc (the "MEPC Portfolio"), a United Kingdom based real estate company ("MEPC"). Through the purchase of the stock of the three U.S. subsidiaries of MEPC that directly or indirectly own the MEPC portfolio (the "MEPC U.S. Subsidiaries"), the Company acquired for approximately $871 million in cash (less certain adjustments) 100% of eight enclosed mall shopping centers located throughout the United States. On May 14, 1998, the Company entered into a definitive merger agreement to acquire U.S. Prime Property, Inc. ("USPPI"), which owns (or as of closing will own) 100% of six enclosed mall shopping centers (and office buildings adjacent to one of the malls)(the "USPPI Portfolio"). The Company expects to acquire USPPI together with an approximately 50% joint venture partner. The purchase price for the USPPI acquisition is approximately $625 million in cash (subject to certain adjustments), less approximately $65 million of mortgage indebtedness. This transaction is expected to close during the second quarter of 1998. NOTE 3 PRO FORMA ADJUSTMENTS (a) Management Fees The management fee adjustment represents the difference in management costs charged and/or allocated to the properties by the previous owners and the new rates charged by General Growth Management, Inc. (b) Depreciation and Amortization Depreciation and amortization is adjusted to include additional amounts related to the three months ended March 31, 1998 for the acquisitions made or to be made in 1998. F-24 GENERAL GROWTH PROPERTIES, INC. NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS--(CONTINUED) (c) Interest Expense Interest expense increased due to a combination of debt assumption and increased borrowings. In connection with the acquisitions described above, the Company assumed $114.1 million of mortgage debt bearing interest at the weighted average rate of 8.50%. The Company also issued approximately $1,320.7 million of secured and unsecured borrowings to fund the cash portion of the acquisitions. The pro forma interest expense on new borrowings was calculated using an interest rate of 6.65%. (d) Minority Interest The pro forma income statement has been adjusted to reflect the allocation of earnings to the minority interest. (e) Revenues Revenues relating to the USPPI Portfolio have been eliminated to reflect on an equity basis the potential inclusion of a joint venture partner. (f) Property Operating Property operating expenses relating to the USPPI Portfolio have been eliminated to reflect on an equity basis the potential inclusion of a joint venture partner. (g) Management Fees Management fees related to the USPPI Portfolio have been adjusted to reflect the fee to be charged by General Growth Management, Inc., given the potential inclusion of a joint venture partner. (h) Depreciation and Amortization Depreciation and amortization relating to the USPPI Portfolio have been eliminated to reflect on an equity basis the potential inclusion of a joint venture partner. (i) Interest Expense Interest expense has been adjusted to reflect the potential inclusion of a joint venture partner related to the USPPI Portfolio. (j) Equity in Property Joint Ventures Reflects the reduction in ownership and the change to the equity method of accounting for the pro forma operating results of the USPPI Portfolio during the three months ended March 31, 1998 due to the potential inclusion of a joint venture partner. (k) Equity in General Growth Management, Inc. Reflects the increase in General Growth Management, Inc. net income for management fees assuming the USPPI Portfolio is acquired with a joint venture partner. F-25 GENERAL GROWTH PROPERTIES, INC. PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET MARCH 31, 1998 (AMOUNTS IN THOUSANDS--UNAUDITED)
TOTAL HISTORICAL PRO FORMA GENERAL PRO FORMA ADJUSTED GROWTH TOTAL EQUITY FOR POTENTIAL PROPERTIES, PRO FORMA PRO FORMA PARTNER EQUITY INC.(1) ADJUSTMENTS COMBINED ADJUSTMENTS PARTNER ----------- ----------- ---------- ----------- ------------- ASSETS ------ Investment in real estate Land................... $ 200,906 $ 173,400(a) $ 374,306 $ (62,500)(g) $ 311,806 Buildings and equipment............. 1,615,222 1,583,600(a) 3,198,822 (562,500)(g) 2,636,322 Less accumulated depreciation.......... (245,776) -- (245,776) -- (245,776) Developments in progress.............. 87,710 -- 87,710 -- 87,710 ---------- ---------- ---------- --------- ---------- Net property and equipment........... 1,658,062 1,757,000 3,415,062 (625,000) 2,790,062 Investment in GGP/Homart............ 198,620 -- 198,620 -- 198,620 Investment in Property Joint Ventures........ 91,151 -- 91,151 127,500 (g) 218,651 ---------- ---------- ---------- --------- ---------- Net investment in real estate......... 1,947,833 1,757,000 3,704,833 (497,500) 3,207,333 Cash and cash equivalents............ 6,436 -- 6,436 -- 6,436 Tenant accounts receivable, net........ 35,332 -- 35,332 -- 35,332 Deferred expenses, net.. 45,734 -- 45,734 -- 45,734 Investment in and note receivable from GGMI... 67,439 -- 67,439 -- 67,439 Mortgage note receivable............. 49,948 -- 49,948 -- 49,948 Prepaid expenses and other assets........... 9,638 -- 9,638 -- 9,638 ---------- ---------- ---------- --------- ---------- Total Assets......... $2,162,360 $1,757,000 $3,919,360 $(497,500) $3,421,860 ========== ========== ========== ========= ========== LIABILITIES AND STOCKHOLDERS' EQUITY --------------------- Mortgage notes and other debt payable........... $1,349,009 $1,434,760(b) $2,783,769 $(497,500)(g) $2,286,269 Distributions payable... 25,620 -- 25,620 -- 25,620 Accounts payable and accrued expenses....... 40,514 16,553(c) 57,067 -- 57,067 ---------- ---------- ---------- --------- ---------- Total Liabilities.... 1,415,143 1,451,313 2,866,456 (497,500) 2,368,956 Minority interest in Operating Partnership.. 256,052 6,507 262,559 -- 262,559 Mandatory Redeemable Preferred Stock, $100 par value; 300,000 shares issued and outstanding on a pro forma basis............ -- 300,000(e) 300,000 -- 300,000 Stockholder's equity Common stock; $.10 par value; 210,000,000 shares authorized; 35,769,454 shares issued; 35,736,572 shares outstanding.... 3,577 -- 3,577 -- 3,577 Additional paid-in capital............... 738,960 (820)(f) 738,140 -- 738,140 Retained earnings (deficit)............. (250,218) -- (250,218) -- (250,218) Treasury stock, at cost; 32,882 shares held.................. (1,154) -- (1,154) -- (1,154) ---------- ---------- ---------- --------- ---------- Total stockholders' equity.............. 491,165 (820) 490,345 -- 490,345 ---------- ---------- ---------- --------- ---------- Total Liabilities and Equity................. $2,162,360 $1,757,000 $3,919,360 $(497,500) $3,421,860 ========== ========== ========== ========= ==========
- -------- (1) Amounts are from the statements included in the Company's Form 10-Q for the quarter ended March 31, 1998. The accompanying notes are an integral part of the Pro Forma Condensed Consolidated Balance Sheet. For alphabetical references, please refer to Note 2--Pro Forma Adjustments. F-26 GENERAL GROWTH PROPERTIES, INC. NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET MARCH 31, 1998 (AMOUNTS IN THOUSANDS--UNAUDITED) NOTE 1 PRO FORMA BASIS OF PRESENTATION This unaudited condensed consolidated balance sheet is presented as if (i) the acquisitions or pending acquisitions of Southwest Plaza, Northbrook Court (collectively the "Property Acquisitions"), the MEPC Portfolio and the USPPI Portfolio and (ii) the Company's use of the net proceeds of the Offering to fund the acquisitions and for other working capital purposes, had all occurred on March 31, 1998. In management's opinion, all adjustments necessary to reflect these transactions have been included. NOTE 2 PRO FORMA ADJUSTMENTS (a) Investment in Real Estate Asset additions are as follows: Property Acquisitions........................................ $ 261,000 MEPC Portfolio............................................... 871,000 USPPI Portfolio.............................................. 625,000 ---------- $1,757,000 ========== Allocated to: Land......................................................... $ 173,400 Buildings and equipment...................................... 1,583,600 ---------- $1,757,000 ==========
(b) Mortgage Notes and other Debt Payable Debt incurred was as follows: Property Acquisitions (including debt assumed)................. $ 226,010 MEPC Portfolio................................................. 583,750 USPPI Portfolio (including debt assumed)....................... 625,000 ---------- $1,434,760 ==========
(c) Working capital assumed by the Company at closing. (d) Minority Interest Operating Partnership Units issued for a portion of the Property Acquisitions cost............................................... $18,437 Adjustment to minority interest for additional stockholders' equity as determined by the relationship of the units to common stock at March 31, 1998......................................... (11,930) ------- $ 6,507 =======
(e) Convertible preferred stock issued to fund acquisitions and for other working capital purposes shown at liquidation value. (f) Additional Paid-in Capital Adjustment to additional paid-in capital for minority interest as determined by the relationship of the units to common stock at March 31, 1998.................................................. $11,930 Costs related to the issuance of convertible preferred stock..... (12,750) ------- $ (820) =======
(g) Adjustments to reflect the inclusion of a joint venture partner related to the USPPI Portfolio resulting in a change to the equity method of accounting. F-27 EX-2.4 2 SALE AND CONTRIBUTION AGREEMENT Exhibit 2.4 SALE AND CONTRIBUTION AGREEMENT BETWEEN SOUTHWEST PROPERTIES VENTURE, a Colorado joint venture and GGP LIMITED PARTNERSHIP a Delaware limited partnership April 2, 1998 TABLE OF CONTENTS ----------------- Page ---- ARTICLE I Definitions 1.1 Definitions..................................................... 1 1.2 References...................................................... 13 ARTICLE II Contribution and Sale; Consideration 2.1 Contribution.................................................... 14 2.2 Consideration................................................... 14 2.3 Assumption of Liabilities....................................... 15 2.4 Matters Relating to Existing Indebtedness....................... 17 2.5 Termination of Existing Management Agreements and Release of Property Management Liens............................ 18 2.6 Admission to Partnership; Redemption Rights; Etc................ 18 2.7 Guaranty Agreement.............................................. 19 2.8 Matters Relating to Gart Sports................................. 19 2.9 Other Leasing Matters........................................... 20 2.10 Matters Relating to Ground Lease................................ 22 2.11 Matters Relating to District.................................... 22 2.12 Matters Relating to Right of First Refusal...................... 22 2.13 Matters Relating to Tank........................................ 23 2.14 Matters Relating to Gift Certificates........................... 23 ARTICLE III Closing 3.1 Closing......................................................... 25 3.2 Contributor Closing Documents................................... 25 3.3 Partnership Closing Documents................................... 28 ARTICLE IV Prorations and Adjustments 4.1 Items to Be Prorated............................................ 30 4.2 Installment Payment of Assessments.............................. 31 4.3 Adjustable Tenant Charges....................................... 31 4.4 Advertising and Promotional Contributions....................... 32 4.5 Fixed and Other Tenant Charge Arrearage......................... 33 4.6 Sales Based Tenant Charges...................................... 34 4.7 Application of Rent Receipts.................................... 34 4.8 Security and Utility Deposits................................... 34 4.9 Collection of Rents............................................. 35 4.10 Settlement of Adjustments....................................... 37 ARTICLE V Title Insurance and Survey 5.1 Title Commitment................................................ 38 5.2 Survey.......................................................... 39 5.3 Title and Survey Defects........................................ 39 5.4 Title Insurance Premiums and Survey Costs....................... 40 ARTICLE VI Representations and Warranties 6.1 Partnership Representations and Warranties...................... 41 6.2 Contributor's Representations and Warranties.................... 42 -i- ARTICLE VII Access and Certain Rights of Early Termination 7.1 Due Diligence and Access...................................... 54 7.2 [Intentionally Deleted]....................................... 55 ARTICLE VIII Conditions to Closing 8.1 Conditions to Contributor's Obligations....................... 55 8.2 Conditions to Partnership's Obligations....................... 56 ARTICLE IX Condemnation and Destruction 9.1 Casualty or Condemnation in General........................... 57 9.2 Adjustment of Claims and Condemnation Proceedings............. 58 ARTICLE X Additional Covenants 10.1 Indemnification............................................... 59 10.2 Conduct of Business Pending Closing........................... 60 10.3 Supplemental Disclosure....................................... 62 10.4 [Intentionally Deleted]....................................... 62 10.5 Cooperation................................................... 62 10.6 Transfer and Other Taxes; Etc................................. 62 10.7 Estoppel Certificates......................................... 63 10.8 Record Retention.............................................. 63 10.9 Publicity..................................................... 63 10.10 Assistance Following Closing.................................. 64 10.11 Further Assurances............................................ 65 10.12 Restrictions on Certain Dispositions of Real Property......... 65 10.13 Debt Allocation; Etc.......................................... 66 10.14 Delivery of Certain Information............................... 68 10.15 Transfer of Units; Etc........................................ 68 10.16 Employees..................................................... 68 ARTICLE XI Miscellaneous 11.1 Survival...................................................... 69 11.2 Notices....................................................... 69 11.3 Counterparts.................................................. 70 11.4 Amendments.................................................... 70 11.5 Waiver........................................................ 70 11.6 Successors and Assigns........................................ 70 11.7 Third Party Beneficiaries..................................... 71 11.8 Partial Invalidity............................................ 71 11.9 Governing Law................................................. 71 11.10 Assignment.................................................... 71 11.11 Headings; Exhibits............................................ 71 11.12 Gender and Number............................................. 71 11.13 Entire Agreement; Construction................................ 71 11.14 Costs of Enforcement.......................................... 72 -ii- Exhibits/Schedule Description - ----------------- ----------- Exhibit A Legal Description of Excluded Parcels Exhibit B Legal Description of Land Exhibit C Permitted Exceptions Exhibit D [Intentionally Omitted] Exhibit E Amendment to Partnership Agreement Exhibit F Redemption Rights Agreement Exhibit G Guaranty Agreement Exhibit H Opinion or Opinions of Counsel for Contributor Exhibit I Opinion of Counsel for the Partnership Schedule 1.1(a) Anchors Schedule 1.1(b) Personalty Schedule 2.2(a) Allocation of Gross Asset Value Schedule 2.9(a) Certain Leasing Matters (Contributor Responsibility) Schedule 2.9(c) Certain Leasing Matters (Partnership Responsibility) Schedule 2.13 Replacement Tank Specifications Schedule 6.2(d) Permits and Licenses Schedule 6.2(f) Rent Roll Schedule 6.2(g-1) Leases Schedule 6.2(g-2) Reciprocal Easement Agreements Schedule 6.2(i) Lease Defaults Schedule 6.2(k) Intellectual Property Schedule 6.2(m) Contracts Schedule 6.2(r) Legal Compliance Schedule 6.2(s) Litigation Schedule 6.2(t) Insurance Coverage Schedule 6.2(w) Existing Indebtedness Documents Schedule 6.2(x) Matters Relating to Promotional Association Schedule 6.2(ai) District Documents Schedule 6.2(z) Ownership or Lease of Land within One-Mile Radius -iii- SALE AND CONTRIBUTION AGREEMENT ------------------------------- Sale and Contribution Agreement, dated April 2, 1998, between Southwest Properties Venture, a Colorado joint venture ("Contributor"), and GGP Limited Partnership, a Delaware limited partnership (the "Partnership"). R E C I T A L S --------------- WHEREAS, Contributor is the owner of a regional shopping center located in Jefferson County, Colorado and commonly known as Southwest Plaza (the "Mall"); and WHEREAS, Contributor desires to sell to, and/or contribute to the capital of, the Partnership all of the Property (as defined herein) and the Partnership desires to acquire the Property. NOW, THEREFORE, the parties hereby agree as follows: ARTICLE I Definitions ----------- 1.1 Definitions. For purposes of this Agreement, the following terms shall have the meanings indicated below: "ADA" shall mean the Americans With Disabilities Act, as amended. "Adjustable Tenant Charges" shall mean common or mall area maintenance (exterior and interior) charges, real estate taxes and assessments, property insurance charges to the extent denominated or treated as such in the Leases and the Reciprocal Easement Agreement. "Advertising and Promotional Contributions" shall mean contributions by Tenants, Anchors and the landlord to the Advertising and Promotional Fund. "Affiliates" shall mean, with respect to the Partnership, any Person controlling, controlled by or under common control with the General Partner or the Partnership and, with respect to Contributor, the venturers of Contributor, the partners of such venturers, the members of the families of such Persons, trusts for the benefit of any of such Persons and any Person controlling, controlled by or under common control with any of such Persons. "Agreement" shall mean this Sale and Contribution Agreement, as amended or modified from time to time hereafter in accordance with the terms hereof. "Anchor" shall mean each Person identified in Schedule 1.1(a). "Annual Financial Statements" shall have the meaning set forth in Section 6.2(j). "Applicable Closing Fiscal Period" shall mean, with respect to any item which is prorated under Article IV, the calendar year (or other fiscal period for which such item is determined or assessed) during which the Closing Date occurs. "Assumed Liabilities" shall have the meaning set forth in Section 2.3. "Basic Information" shall have the meaning set forth in Section 6.2(f). "Books and Records" shall mean all records, books of account and papers of Contributor relating to the construction, ownership and operation of the Property, whether on paper or electronic media, including without limitation architect's drawings, blue prints and as-built plans, maintenance logs, instruction books, licenses and permits, employee manuals, records and correspondence relating to insurance claims, copies of guaranties and warranties, financial statements, operating budgets, structural, mechanical, geotechnical and other engineering studies, soil test reports, environmental (including without limitation underground storage tank) reports, feasibility studies, appraisals, ADA surveys or reports, marketing studies, lease summaries and originals and/or copies of the Leases, the Reciprocal Easement Agreement and the Contracts and correspondence related thereto. "Cash Amount" shall mean $38,730,780.00. Contributor shall elect to receive cash in respect of the portion of the Net Asset Value which is allocable to any partner of the venturers of Contributor if such partner is not a Qualified Investor and so that the number of Qualified Investors to whom Units are indirectly issued pursuant hereto and who are not accredited investors (as defined in Regulation D under the Securities Act) does not exceed 35. " Casualty" shall mean any damage to or destruction of the Property or any portion thereof caused by fire or other casualty, whether or not insured. "Closing" shall have the meaning set forth in Section 3.1. "Closing Date" shall have the meaning set forth in Section 3.1. "Closing Documents" shall mean the Contributor Closing Documents and Partnership Closing Documents, collectively. "Closing Price" shall have the meaning set forth in the Partnership Agreement. -2- "Code" shall mean the Internal Revenue Code of 1986, as amended. "Common Stock" shall mean the common stock, $.10 par value per share, of the General Partner. "Contract Party Consents" shall have the meaning set forth in Section 10.5. "Contracts" shall mean the service, maintenance and other contracts and concessions that are currently in effect with respect to the Mall respecting the use, maintenance, development, sale or operation thereof or any portion thereof (but excluding this Agreement, the Ground Lease, the Leases, the Permitted Exceptions and the Reciprocal Easement Agreement) which are listed on Schedule 6.2(m), together with any additions thereto, modifications thereof or substitutions therefor hereafter entered into in accordance with the provisions of this Agreement. "Contributor Information" shall have the meaning set forth in Section 6.2(ag). "Contributor's Liabilities" shall have the meaning set forth in Section 2.3. "District" shall mean the Southwest Plaza Metropolitan District, a governmental subdivision of the State of Colorado. "District Documents" shall have the meaning set forth in Section 6.2(ai). "District Financial Statements" shall have the meaning set forth in Section 6.2(j). "Earnest Money" shall have the meaning set forth in Section 2.2(d). "Earnest Money Escrow" shall have the meaning set forth in Section 2.2(d). "Environmental Laws" shall mean all federal, state and local statutes, ordinances, codes, rules, regulations, guidelines, orders and decrees regulating, relating to or imposing liability or standards concerning or in connection with Hazardous Materials, underground or above-ground storage tanks or the protection of human health or the environment, as any of the same may be amended from time to time, including but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. (S) 9601 et. seq., as amended by the Superfund Amendments and Reauthorization Act or any equivalent state or local laws or ordinances; the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. (S) 6901 et seq., as amended by the Hazardous and Solid Waste -3- Amendments of 1984, or any equivalent state or local laws or ordinances; the Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA"), 7 U.S.C. (S) 136 et. seq. or any equivalent state or local laws or ordinances; the Hazardous Materials Transportation Act (49 U.S.C. (S) 1801 et seq.); the Emergency Planning and Community Right-to-Know Act ("EPCRA"), 42 U.S.C. (S) 11001 et. seq. or any equivalent state or local laws or ordinances; the Toxic Substance Control Act ("TSCA"), 15 U.S.C. (S) 2601 et. seq. or any equivalent state or local laws or ordinances; the Atomic Energy Act, 42 U.S.C. (S) 2011 et. seq., or any equivalent state or local laws or ordinances; the Clean Water Act (the "Clean Water Act"), 33 U.S.C. (S) 1251 et. seq. or any equivalent state or local laws or ordinances; the Clean Air Act (the "Clean Air Act"), 42 U.S.C. (S) 7401 et seq. or any equivalent state or local laws or ordinances; the Occupational Safety and Health Act, 29 U.S.C. (S) 651 et seq. or any equivalent state or local laws or ordinances. "Escrow Agent" shall have the meaning set forth in Section 2.2(d). "Estoppels" shall mean the estoppel certificates to be obtained pursuant to Section 10.7. "Excluded Parcels" shall mean those certain parcels of land legally described in Exhibit A and the improvements thereon owned by certain of the Anchors or other Persons other than Contributor. "Excluded Personalty" shall mean the personal items belonging to employees of Existing Manager and, except as otherwise provided herein (including without limitation Section 9.1(b) and Article IV), the cash, cash accounts and receivables of Contributor. "Existing Indebtedness" shall mean the loans listed on Schedule 6.2(w). "Existing Indebtedness Documents" shall have the meaning set forth in Schedule 6.2(w). "Existing Indebtedness Consent Documents" shall have the meaning set forth in Section 2.4. "Existing Lender" shall mean Teacher Retirement System of Texas. "Existing Management Agreements" shall mean that certain Management Agreement dated July 20, 1983, between Contributor and the Existing Manager, as amended by that certain Extension and Modification of Management Agreement dated as of July 20, 1995, between Contributor and Existing Manager, and that certain Agreement For Administrative and Operations Services dated May 3, 1982, between the District and a predecessor in interest of Existing Manager. -4- "Existing Manager" shall mean Jordon Perlmutter & Co. "Fifth Anniversary Date" shall have the meaning set forth in Section 10.12. "Financial Statements" shall have the meaning set forth in Section 6.2(j). "Fixed and Other Tenant Charges" shall mean Rent other than Adjustable Tenant Charges, Sales Based Tenant Charges and Advertising and Promotional Contributions, including without limitation "environmental charges" as that term is defined in the Leases. "Fixed and Other Tenant Charge Arrearage" shall mean Fixed and Other Tenant Charges due and payable prior to but unpaid as of the Closing Date. "GAAS" shall mean Generally Accepted Auditing Standards as promulgated by the Auditing Standards Division of the American Institute of Certified Public Accountants from time to time. "Gart Amendment" shall mean that certain Amendment to Lease dated January 1998, between Gart Bros. Sporting Goods Company and Contributor. "Gart Work" shall have the meaning set forth in Section 2.8(b). "Gart Work Contract" shall have the meaning set forth in Section 2.8(b). "General Partner" shall mean General Growth Properties, Inc., a Delaware corporation and the general partner of the Partnership. "GGMI" shall mean General Growth Management, Inc., a Delaware corporation. "Gift Certificate Accounts" shall have the meaning set forth in Section 2.14. "Gift Certificate Bank" shall have the meaning set forth in Section 2.14. "Gross Asset Value" shall mean $113,000,000.00. "Ground Lease" shall mean that certain Lease dated August 10, 1978, between Grant Properties I, Ltd. and Contributor, as amended by that certain First Amendment of Lease dated July 14, 1980, that certain Second Amendment of Lease dated February 16, 1981, that certain Third Amendment to Lease dated November 30, 1981, that certain Fourth Amendment of Lease dated December 7, 1986, that -5- certain Fifth Amendment to Lease dated July 1, 1996 and that certain Memorandum of Understanding dated June 14, 1986. Grant Properties I, Ltd. has assigned all of its right, title and interest in and to the Ground Lease to Chanson LLC and Chanson LLC has assigned all of its right, title and interest in and to the Ground Lease to Ground Lessor. "Ground Lessor" shall mean C-1 Partnership, a Colorado general partnership. "Guarantors" shall have the meaning set forth in Section 2.7. "Guaranty Agreement" shall have the meaning set forth in Section 2.7. "Hazardous Materials" shall mean any substance, material, waste, gas or particulate matter which (a) is regulated by the United States Government, the State of Colorado, any other state with jurisdiction, or any local governmental authority, (b) the exposure to, or manufacture, possession, presence, use, generation, storage, transportation, treatment, release, disposal, abatement, cleanup, removal, remediation or handling of is prohibited, controlled or regulated by any Environmental Law, or (c) requires investigation or remediation under any Environmental Law or common law, or (d) is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous, or (e) causes or threatens to cause a nuisance upon the Property or to adjacent properties or poses or threatens to pose a hazard to the health or safety of persons on or about the Property. Such term includes, without limitation, any material or substance which is (1) defined as a "hazardous waste," "hazardous material," "hazardous substance," "extremely hazardous waste," "restricted hazardous waste" or any like or similar term under any applicable Environmental Law; (2) oil and petroleum products; (3) asbestos or asbestos-containing material as defined in the regulations of the Occupational Safety and Health Administration at 29 C.F.R. (S) 1910.1001; (4) polychlorinated biphenyls; (5) radioactive material; (6) designated as a "toxic pollutant" or a "hazardous substance" pursuant to Sections 307 or 311 of the Clean Water Act; (7) defined as a "hazardous waste" pursuant to Section 1004 of RCRA; (8) defined as a "hazardous substance" pursuant to Section 101 of CERCLA; (9) now designated as a "hazardous chemical" substance or mixture pursuant to TSCA; (10) designated as an "extremely hazardous" substance under Section 302 of EPCRA; (11) designated as a "priority pollutant" or "hazardous air pollutant" pursuant to the Clean Air Act; (12) designated as a hazardous chemical under the Occupational Safety and Health Act; (13) radon gas or other radioactive source material, including special nuclear material, and byproduct materials regulated under the Atomic Energy Act, 42 U.S.C. (S) 2011 et. seq.; (14) subject to regulation under FIFRA; (15) natural gas, natural gas liquids, liquefied natural gas, and synthetic gas usable for fuel; or (16) infectious wastes -6- or materials and pathogenic bacteria or other pathogenic microbial agents. "Improvements" shall mean all buildings, structures (surface and subsurface), and other improvements located on the Land, including any fixtures as shall constitute real property under applicable provisions of law. "Improvements" shall not include any Tenant improvements which will not be a part of the landlord's reversion upon expiration or termination of the Leases. "Indemnified Partnership Persons" shall have the meaning set forth in Section 10.1(a). "Initial Earnest Money" shall have the meaning set forth in Section 2.2(d). "Inspection Period Expiration Date" shall have the meaning set forth in Section 7.2. "Insurance Policy" shall have the meaning set forth in Section 3.2(d). "Intellectual Property" shall have the meaning set forth in Section 6.2(k). "IRS" shall have the meaning set forth in Section 10.13. "Key Bank" shall mean Key Bank of Colorado. "Key Bank Indebtedness" shall mean the unsecured indebtedness of Contributor to Key Bank in the original principal amount of $3,150,000. "Land" shall mean those certain parcels of real estate described on Exhibit B, including without limitation Parcel B. "Leases" shall mean those leases, tenancies, concessions, licenses and occupancy agreements currently in effect affecting or relating to the Mall which are listed on Schedule 6.2(g-1), together with any additions thereto, modifications thereof or substitutions therefor hereafter entered into in accordance with the provisions of this Agreement. Leases shall not include the Ground Lease. "Liens" shall mean mortgages, deeds of trust, liens, pledges, security interests, options, rights of first refusal, charges, claims, restrictions and other encumbrances of any nature whatsoever. "Loss" shall have the meaning set forth in Section 10.1(a). "Mall" shall have the meaning set forth in the recitals. -7- "Memorandum" shall mean that certain Private Placement Memorandum dated February 27, 1998 relating to the issuance of Units pursuant hereto, among other things. "Missing Parties" shall have the meaning set forth in Section 8.2(c). "Net Asset Value" shall mean the excess of (a) the Gross Asset Value over (b) the outstanding principal amount of the Existing Indebtedness and the Key Bank Indebtedness on the Closing Date, as the same may be further adjusted in accordance with the terms hereof. "Net Operating Cash Flow" shall have the meaning set forth in the Partnership Agreement. "Other Deposits" shall have the meaning set forth in Section 4.8. "P&P" shall mean P&P Southwest Partnership, a Colorado general partnership. "Parcel B" shall mean that portion of the Land designated on Exhibit B as "Parcel B". "Parcel B Owners" shall mean Jordon Perlmutter, Samuel Primack, Michael Cooper, Irving Hook and Sheldon Silverman. "Partnership Agreement" shall mean the Amended and Restated Agreement of Limited Partnership of the Partnership dated as of July 27, 1993, as amended by that certain First Amendment thereto dated May 23, 1995, that certain Second Amendment thereto dated June 13, 1995, that certain Third Amendment thereto dated as of May 21, 1996, that certain Fourth Amendment thereto dated as of August 30, 1996, that certain Fifth Amendment thereto dated as of October 4, 1996, that certain Sixth Amendment thereto dated as of November 27, 1996, that certain Seventh Amendment thereto dated December 6, 1996, that certain Eighth Amendment thereto dated June 19, 1997, that certain Ninth Amendment thereto dated as of August 8, 1997, that certain Tenth Amendment thereto dated September 8, 1997, that certain Eleventh Amendment thereto dated as of September 11, 1997, that certain Twelfth Amendment thereto dated October 15, 1997, that certain Thirteenth Amendment thereto dated October 24, 1997 and that certain Fourteenth Amendment thereto dated as of October 29, 1997 and as the same may be further amended hereafter. "Party" shall mean a party to the Reciprocal Easement Agreement, a Contract or a Tenant under a Lease (or the successor or assignee thereof), in each case other than Contributor or the Partnership or any predecessor in title with respect to the Property. -8- "Permitted Exceptions" shall mean the following: (a) those title exceptions, defects and other matters that are shown on Exhibit C; (b) the terms, covenants and conditions of the Reciprocal Easement Agreement; (c) provided that Contributor knows of no violation thereof, zoning, subdivision, environmental, municipal building and all other laws, rules, regulations, ordinances, codes, restrictions or legal requirements applicable to the ownership, use, occupancy or development of, or the right to maintain or operate (including the construction of improvements on), the Real Property and any other lawful action of any duly constituted public authority or other body having or exercising jurisdiction over the Real Property presently existing; (d) the state of facts shown on the Survey; (e) Liens for unpaid real property taxes and assessments, water rates and charges, sewer taxes and rents and other governmental charges which are not yet due and payable; (f) the rights of the Tenants under the Leases as tenants only; (g) mechanics' liens, lis pendens and notices of commencement of action against Contributor in respect of the Real Property (or which affect the interest of Contributor in the Real Property) provided that the same do not exceed $25,000 in the aggregate and provided further that the Title Company shall provide affirmative insurance with respect thereto insuring the Partnership from loss with respect thereto in form and substance acceptable to the Partnership in its reasonable discretion; and (h) all other Liens and title exceptions the Partnership may accept under Section 5.3. No agreement to take title to the Real Property subject to Permitted Exceptions shall be deemed a waiver of any representation or warranty of Contributor set forth in Section 6.2 or the rights of the Partnership contained in Section 5.3, it being understood and agreed that the Partnership's agreements regarding Permitted Exceptions assume the truth and accuracy of all such representations and warranties. "Person" shall mean any individual, corporation, partnership, limited liability company, governmental unit or agency, trust, estate or other entity of any type. -9- "Personalty" shall mean all right, title and interest of Contributor or the Existing Manager in and to the personal property, both tangible and intangible, located in or upon and used in connection with the operation and maintenance of the Mall, including without limitation fixtures; machinery; equipment; building supplies and materials; consumables; inventories; names, logos, trademarks, trade names and copyrights; all assignable licenses, permits and certificates of occupancy; all assignable guaranties or warranties (including performance bonds obtained by, or for the benefit of, Contributor pertaining to the ownership, construction or development of the Real Property or any part thereof); the Intellectual Property; the Books and Records; computer and peripheral equipment and computer software; advertising materials and telephone exchange numbers. Without limiting the foregoing, "Personalty" shall include the computer and peripheral equipment located at the Mall and the property listed on Schedule 1.1(b) but shall not include the rights of Contributor in or under the Leases, Reciprocal Easement Agreement, Contracts or Excluded Personalty. "Pledge Agreement" shall have the meaning set forth in Section 2.7. "Post-Signing Occupant Event" shall have the meaning set forth in Section 8.2(b). "Prescribed Form" shall have the meaning set forth in Section 10.7. "Prohibited Disposition" shall have the meaning set forth in Section 10.12. "Promotional and Advertising Fund" shall have the meaning set forth in the Leases. "Promotional Association Waiver" shall have the meaning set forth in Section 2.9. "Property" shall mean (a) the Real Property, (b) the Personalty, (c) the rights of Contributor under all Leases and the Ground Lease, (d) the rights of the Ground Lessor under the Ground Lease and (e) the rights and interests of Contributor under, in and to the Contracts to the extent assignable. "Qualified Investor" shall mean a Person that (a) is either (i) an "accredited investor" within the meaning of Regulation D under the 1933 Act or (ii) a Person who, alone or together with his purchaser representative (as defined in such regulation), has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of an investment in the Units and (b) has provided to the Partnership a Questionnaire establishing the same to the satisfaction of the Partnership. -10- "Questionnaire" shall mean an investor questionnaire in the form prescribed by the Partnership. "Real Property" shall mean the Land and the Improvements, together with all of the estate, right, title and interest of Contributor and the Ground Lessor therein, and in and to (a) any land lying in the beds of any streets, roads or avenues, open or proposed, public or private, in front of or adjoining the Land to the center lines thereof, and in and to any awards to be made in lieu thereof and in and to any unpaid awards for damage to the foregoing by reason of the change of grade of any such streets, roads or avenues; and (b) all easements, rights, licenses, privileges, rights-of-way, strips and gores, hereditaments and such other real property rights and interests appurtenant to the foregoing (including, without limitation, all rights of Contributor and Ground Lessor under the Reciprocal Easement Agreement). "Reciprocal Easement Agreement" shall have the meaning set forth in Section 6.2(g-2) and shall include those certain "Allocable Share Agreements" set forth on Schedule 6.2(g-2). "Recourse Liabilities" shall have the meaning set forth in Section 2.4. "Regulations" shall mean the final, temporary or proposed Income Tax Regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations). "Rent Roll" shall have the meaning set forth in Section 6.2(f). "Rents" shall mean fixed, minimum, additional, percentage and overage rents, common area maintenance charges, advertising and promotional fees, insurance charges, rubbish removal charges, sprinkler charges, shoppers aid charges, water charges, utility charges, environmental charges (as such term is defined in the Leases), amounts payable with respect to real estate and other taxes, and other amounts payable by the Parties under the Leases and the Reciprocal Easement Agreement. "Required Estoppels" shall mean (a) Estoppels from each Anchor and each other individual Tenant which under its Lease occupies 20,000 or more square feet of floor area, and (b) Estoppels from Tenants under not fewer than 70% of the other Leases. "Right of First Refusal" shall have the meaning set forth in Section 2.11. "Sales Based Tenant Charges" shall mean Rent consisting of overage or percentage rent. -11- "Security Deposits" shall have the meaning set forth in Section 4.8. "Share Price" shall mean the average of the Closing Price for the twenty (20) Trading Days preceding the third Trading Day prior to the Closing Date. "Substantial Casualty" or "Substantial Taking" shall mean, a Casualty or Taking, as the case may be, where: (a) the condemnation award, or the proceeds payable under the applicable policy or policies of casualty insurance maintained by Contributor, are insufficient by more than $100,000 to fully repair the damage caused by such Casualty or Taking, unless Contributor shall (at its sole option and without any obligation to do so) grant to the Partnership a credit equal to such deficiency less One Hundred Thousand Dollars ($100,000.00); or (b) an Anchor shall, by reason of such Casualty or Taking, either terminate its Lease or its obligations under the Reciprocal Easement Agreement, or cease operating at the Mall (other than temporarily due to such damage and destruction, remodeling, renovation or any similar cause), or cease operating at the Mall under the name under which it was operating immediately prior to such Taking or Casualty or have the right to do any of the foregoing (unless such right shall have expired or been waived) or the same shall occur with regard to Tenants occupying more than 100,000 leasable square feet at the Property in the aggregate; or (c) the estimated time for repair or restoration shall exceed three (3) months; or (d) in the case of a Taking, a Taking with respect to such portion of the Real Property as, when so taken would, in the reasonable opinion of the Partnership, leave remaining a balance of the Real Property, which, due either to the area taken or the location of the part taken would not, under applicable zoning laws, building regulations and economic conditions then prevailing or otherwise, readily accommodate a new or restructured building or buildings of a type and size generally similar to the building or buildings existing on the date hereof, or would result in inadequate parking or lack of reasonable access to public roads. "Survey" shall mean have the meaning set forth in Section 5.2. "Taking" shall mean a taking of all or any portion of the Real Property in condemnation or by exercise of the power of eminent domain or by an agreement in lieu thereof. -12- "Tenants" shall mean tenants, concessionaires, licensees and/or occupants under the Leases (but shall not include Contributor, in its capacity as ground lessee under the Ground Lease). "Tenant Services" shall mean all services supplied by or on behalf of Contributor to Tenants for which Tenants are separately charged, other than services in the nature of common area maintenance. "Tank" shall mean the underground storage tank described in item 2 of Schedule 6.2(r). "Tank Work" shall have the meaning set forth in Section 2.13. "Tank Work Contract" shall have the meaning set forth in Section 2.13. "Termination of Property Management Documents" shall have the meaning set forth in Section 2.5. "Title Commitment" shall have the meaning set forth in Section 5.1. "Title Company" shall mean Empire Title and Escrow Corporation as issuing agent for First American Title Insurance Company. "Title Policies" shall have the meaning set forth in Section 5.1. "Trading Day" shall mean a day on which the New York Stock Exchange is open for business. "Transactions" shall mean the transactions contemplated by this Agreement. "Units" shall mean units of limited partnership interest in the Partnership. "Unredeemed Gift Certificates" shall have the meaning set forth in Section 2.14. "Unredeemed Gift Certificate Statement" shall have the meaning set forth in Section 2.14. "Wards" shall mean Montgomery Ward Development Corp. and Montgomery Ward & Co., Incorporated, collectively. 1.2 References. All references in this Agreement to particular sections or articles shall, unless expressly otherwise provided, or unless the context otherwise requires, be deemed to refer to the specific sections or articles in this Agreement, and -13- and any references to "Exhibit" shall, unless otherwise specified, refer to one of the exhibits annexed hereto and, by such reference, made a part hereof. The words "herein", "hereof", "hereunder", "hereinafter", "hereinabove" and other words of similar import refer to this Agreement as a whole and not to any particular section, subsection or article hereof. ARTICLE II Contribution and Sale; Consideration ------------------------------------ 2.1 Contribution and Sale. Upon the terms and subject to the conditions contained herein, at the Closing, Contributor shall sell to, and/or contribute to the capital of the Partnership, and the Partnership shall acquire, the Property, free and clear of all Liens (except for the Liens created by the Existing Indebtedness Documents and Permitted Exceptions). The Property is being acquired hereunder only as an entirety, and not in separate parts, and all portions of the Property shall be simultaneously conveyed to the Partnership and/or one or more designees of the Partnership in accordance with this Agreement. 2.2 Consideration. (a) In exchange for the sale and/or contribution of the Property (including without limitation all right, title and interest of the Ground Lessor and the Parcel B Owners in and to the Real Estate) and in addition to the assumption of liabilities and subject to adjustment as hereinafter provided (including without limitation adjustment in accordance with Section 2.4 and Article IV), at the Closing, the Partnership shall (i) issue to Contributor the number of Units equal to the quotient of (A) the excess of the Net Asset Value over the Cash Amount divided by (B) the Share Price and (ii) pay to Contributor by wire transfer the Cash Amount. The Gross Asset Value is allocated among the items of Property as set forth on Schedule 2.2(a). (b) Contributor shall not, and shall cause the Guarantors not to, buy or sell or induce any Person to buy or sell (including without limitation short sell) any shares of Common Stock during the twenty-five (25) Trading Days prior to the Closing whether in the open market or in a negotiated transaction. (c) Notwithstanding anything contained herein to the contrary, fractional Units shall not be issued hereunder; instead, the number of Units to be issued hereunder shall be the number of Units issuable pursuant to the other provisions of this Agreement rounded up to the nearest whole Unit. (d) The Partnership has deposited in an account (the "Earnest Money Escrow") with Empire Title and Escrow -14- Corporation (the "Escrow Agent") the sum of Five Hundred Thousand Dollars ($500,000.00), to be held as an earnest money deposit pursuant to that certain Escrow Agreement dated January 8, 1998, as the same may be amended from time to time (the "Earnest Money"). In the event that the Partnership fails to close the acquisition of the Property in violation of this Agreement (which failure is not cured within five business days after written notice by Contributor to the Partnership) and Contributor also is not in default hereunder, the Earnest Money shall be delivered to Contributor as liquidated damages as its sole and exclusive remedy for any such failure to close hereunder and all interest thereon shall be paid to the Contributor. The parties agree that actual damages would be difficult to ascertain and that the Earnest Money is a reasonable and good faith estimate of Contributor's damages resulting from the Partnership's failure to consummate the Transactions in violation of this Agreement. In the event that the Closing shall not occur for any other reason, the full amount of the Earnest Money, together with all interest thereon, shall be refunded to the Partnership. All funds deposited in the Earnest Money Escrow shall be invested in interest-bearing or money-market accounts. Upon and subject to the occurrence of the Closing, all funds on deposit in the Earnest Money Escrow shall be transferred to Contributor, such amount to be applied in partial payment of the Cash Amount. The parties shall issue instructions to the Escrow Agent to effectuate the provisions of this Section 2.2(d). The provisions of this Section 2.2(d) shall survive the termination of this Agreement, however caused. (e) At Closing, the Partnership shall be entitled to credits of $785,000.00 and $100,000.00 for potential inducement costs for Joslin's and repair or replacement of the fire alarm and Office Centre I roof, respectively, which credits shall reduce the Net Asset Value. Such credits shall be final and not subject to adjustment based on actual costs. 2.3 Assumption of Liabilities. (a) At Closing, the Partnership (or the Affiliate to which the ground lessee's interest under the Ground Lease is conveyed) shall assume (i) the obligations of Contributor under the Existing Indebtedness Documents, as modified pursuant to Section 2.4 (including the obligation to repay the principal owing thereunder and accrued and unpaid interest thereon but excluding liabilities and obligations that arise out of any facts or circumstances that exist or existed on or prior to the Closing Date and that constitute a breach of a representation, warranty or covenant contained in such Existing Indebtedness Documents or otherwise require the indemnification of or other payment [other than regularly scheduled payments of principal and interest] to the Existing -15- Lender) (and the Partnership also shall assume the liabilities to be assumed by any Affiliate of the Partnership pursuant to this clause (i) to the extent that they are Recourse Liabilities), (ii) the liabilities and obligations of Contributor arising from and after the Closing Date under or in respect of the Leases, the Ground Lease, the Reciprocal Easement Agreement and the assignable Contracts (with such liabilities being limited to the same extent, if any, as the liability of Contributor is limited thereunder) but (subject to the provisions of the second paragraph of Section 2.3(b)) only to the extent that such liabilities and obligations do not arise out of any event, circumstance, action, failure to act or occurrence of any sort or type which occurred, existed or was taken prior to the Closing Date, (iii) the obligation to repay the outstanding principal amount of the Key Bank Indebtedness (but no other obligations in respect of the Key Bank Indebtedness) and (iv) other liabilities and obligations of Contributor herein described to the extent the Partnership has agreed herein to pay the same or has received credit therefor. All of the obligations to be assumed by the Partnership pursuant to this Section 2.3(a) are herein referred to as the "Assumed Liabilities". (b) Except as provided in Section 2.3(a), from and after the Closing and whether or not disclosed herein or elsewhere, neither the Partnership nor any Affiliate of the Partnership shall be responsible for, and neither the Partnership nor any Affiliate is assuming, any liabilities or obligations of Contributor whether or not the same relate to the Property or were incurred in connection with the ownership, use, management or operation thereof by Contributor or by its agents (such liabilities, exclusive of the Assumed Liabilities, collectively, the "Contributor's Liabilities") and Contributor shall pay or otherwise satisfy Contributor's Liabilities as and when due. Without limiting the foregoing, Contributor's Liabilities shall include (a) all federal, state and local taxes of whatever kind and nature of Contributor or Ground Lessor relating to the period prior to Closing or the consummation of the Transactions (other than real estate taxes and assessments on real property to the extent that the Partnership has received credit under Article IV and transfer and other taxes to the extent the Partnership is obligated to pay the same under Section 10.6); (b) liabilities relating to any employees, employee benefit plans or collective bargaining agreements of Contributor or the Existing Manager, including without limitation severance pay and accrued vacation pay obligations and other liabilities of Contributor, the Existing Manager or others relating to the termination of such employees as the result of the consummation of the Transactions (but not the termination by the Partnership or any Affiliate thereof of any such employees who are employed by the Partnership or such Affiliate following Closing); (c) -16- any tort liability arising from any accident, injury, event, circumstance, action or omission occurring prior to Closing (other than tort liability resulting from the physical condition of the Property on the Closing Date where the accident or injury occurs after the Closing Date), whether asserted before or after the Closing, (d) any liability to a Party or the Existing Lender for breach of, or other payment obligation under, a Lease, Reciprocal Easement Agreement, Contract or Existing Indebtedness Document that occurred, was due or accrued prior to Closing, whether asserted before or after the Closing (including, without limitation, any claimed overcharge of Adjustable Tenant Charges or claim relating to the substitution of JCPenney for Adcor at the Mall), and (e) any fine, penalty or the like that is imposed or assessed by a governmental authority for the period prior to Closing, whether imposed or assessed before or after the Closing. Notwithstanding anything to the contrary contained in this Section 2.3 but subject to the last sentence of this Section 2.3(b), "Contributor's Liabilities" shall not include the cost of repair, remediation or correction of any physical defect in the Property or its systems (including without limitation the matters specified in Section 2.2(e), the matter disclosed in item number 5 on Schedule 6.2(r) and repair of the Central Court gutter) or any environmental matter or Hazardous Substances affecting the Real Property (but do include damages, fines or other amounts owing to Parties, governmental authorities or others on account thereof as provided in clauses (d) and (e) above), and Contributor shall have no obligation under this Agreement to indemnify the Partnership for any of the same (other than the damages, fines or other amounts referred to in the immediately preceding parenthetical). Nothing contained in this Section 2.3 shall impair the rights of the Partnership for a breach of any representation or warranty contained herein or in the Contributor Closing Documents. 2.4 Matters Relating to Existing Indebtedness. Contributor shall use reasonable best efforts (including, without limitation, the payment of the transfer fees and other fees and costs imposed or required to be paid by the Existing Lender, such as the attorneys' fees of Existing Lender) to obtain, at or prior to Closing and at no cost to the Partnership, (i) the unconditional consent of the Existing Lender to the consummation of the Transactions (including, without limitation, the ownership of the Property following Closing by one or more Affiliates of the Partnership and the management of the Property following Closing by GGMI) and (ii) an agreement and confirmation by the Existing Lender that (A) the Existing Indebtedness Documents shall not restrict the issuance or transfer of Units or shares of Common Stock, (B) Existing Lender shall have no recourse to the Partnership, the General Partner or other Affiliates of the Partnership or the -17- assets of any of them other than the Property except that the Existing Lender may have recourse to the Partnership in those instances where the Existing Lender has recourse (without giving effect to the Transactions) to the venturers of Contributor (the liabilities for which such recourse against the venturers of Contributor exists, the "Recourse Liabilities"), and (C) all rights of Contributor under the Existing Indebtedness Documents shall inure to the benefit of the Partnership or an Affiliate of the Partnership following Closing, including without limitation the right not to make tax escrow deposits thereunder. Contributor may request from Existing Lender a release of liability of Contributor, its venturers and the partners of such venturers in respect of the Recourse Liabilities to the extent such liability arises out of events or matters which occur after the Closing, but the receipt of the same shall not be condition to Contributor's obligation to close hereunder. The documents referred to in this Section are hereinafter referred to as the "Existing Indebtedness Consent Documents." Notwithstanding anything to the contrary contained herein, Contributor shall not be obligated to prepay the Existing Indebtedness or to pay a transfer fee of more than $495,000.00 (exclusive of costs, including without limitation attorneys' fees of Existing Lender, and other nominal fees that the Existing Lender shall require Contributor to pay) in order to obtain the consent of Existing Lender pursuant to this Section 2.4. At the election of Contributor or the Partnership, the Partnership shall, subject to the occurrence of the Closing, assume the obligation to pay such transfer fee (which may not exceed $495,000.00), and the Net Asset Value shall be reduced by the amount of such fee. At Closing, the Partnership shall be entitled to a cash payment of $1,925,000 to compensate the Partnership for the above-market interest rate and prepayment fees in respect of the Existing Indebtedness. 2.5 Termination of Existing Management Agreements and Release of Property Management Liens. On or prior to the Closing, Contributor shall cause the Existing Management Agreements to be terminated and obtain from the Existing Manager a release of Liens or other claims with respect to the property management or leasing or other services performed by the Existing Manager in respect of the Property through the Closing Date, including without limitation any claim for leasing commissions relating to leases signed before or after the Closing (except as provided in Section 2.9(c) and except for amounts owed under the Gart Work Contract in accordance with Section 2.8). The document effecting such termination and release is hereinafter referred to as the "Termination of Property Management Documents". 2.6 Admission to Partnership; Redemption Rights; Etc. (a) At the Closing, the General Partner and Contributor shall execute and deliver an amendment to the Partnership Agreement substantially in the form of Exhibit E (the "Amendment to Partnership Agreement"), pursuant to which the -18- Partnership issues to Contributor the number of Units to be issued to it in accordance with this Agreement and Contributor is admitted as a limited partner of the Partnership and agrees to be bound by the terms of the Partnership Agreement, as amended by the Amendment to Partnership Agreement (or the Partnership shall deliver to Contributor a certificate representing such Units and Contributor shall execute a signature page to the Partnership Agreement [provided that the Partnership Agreement has been amended to include the provisions set forth in Section 4 of the Amendment to Partnership Agreement]). (b) At the Closing, the General Partner, the Partnership and Contributor shall execute and deliver a Redemption Rights Agreement substantially in the form of Exhibit F (the "Redemption Rights Agreement"), pursuant to which Contributor is granted the right to require the Partnership to redeem its Units from time to time as provided therein. (c) Contributor acknowledges that, notwithstanding anything to the contrary contained in the Partnership Agreement, Contributor will be entitled to receive as a distribution only a pro rata portion of the Net Operating Cash Flow which is distributed for the calendar quarter during which the Closing occurs based on the number of Units issued to it pursuant hereto relative to the total number of issued and outstanding Units and the number of days in such quarter from and following the Closing Date relative to the total number of days in such quarter (and Contributor will be entitled to receive no distributions for previous quarters, including without limitation the distribution for the first quarter of 1998, which is scheduled to be paid in April 1998). Contributor acknowledges that the distribution for a calendar quarter is made in the immediately succeeding calendar quarter. 2.7 Guaranty Agreement. At the Closing, Contributor shall cause Jordon Perlmutter, Samuel Primack and Michael Cooper (collectively, the "Guarantors") to execute and deliver to the Partnership a Guaranty Agreement substantially in the form of Exhibit G (the "Guaranty Agreement"). 2.8 Matters Relating to Gart Sports. (a) Contributor shall pay all amounts specified in Sections 3 and 6 of the Gart Amendment and, with respect to such amounts that have not been paid in full prior to the Closing Date (other than amounts due under Section 3 and subsection C of Section 6 of the Gart Amendment, which shall be paid by Contributor when due), the Partnership shall be entitled to a credit therefor at Closing (which credit shall reduce Net Asset Value), including without limitation a credit of $81,000 for the amount referred to in subsection B of Section 6 of the Gart Amendment, whether or not such amounts are then payable. In the event the Partnership receives a -19- credit of $81,000 at Closing in respect of subsection B of Section 6 of the Gart Amendment and the amount owing under such subsection is finally determined to be less than $81,000, the Partnership shall refund such excess to Contributor promptly following determination of the same. Contributor shall pay all leasing commissions, if any, relating to the Gart Amendment and all legal fees and costs incurred by Contributor in connection with the same. (b) Contributor shall enter into a construction contract with Existing Manager for the work (the "Gart Work") to be performed by Contributor pursuant to the Gart Amendment (the "Gart Work Contract"), which Gart Work Contract shall provide for a fixed price and otherwise be reasonably satisfactory to the Partnership and, when fully executed, shall be deemed a "Contract" hereunder. From the date hereof until Closing, Contributor shall, at its sole cost and expense, cause the Gart Work to be performed in accordance with the Gart Work Contract in a good and workmanlike manner and otherwise in accordance with industry practice for first-class regional malls and all applicable laws. At Closing, Contributor shall (i) assign to the Partnership or, if any of the same shall not be assignable, use reasonable best efforts to cause to be reissued to the Partnership, any licenses, permits or governmental approvals issued with respect to the performance of the Gart Work, (ii) deliver to the Partnership a certificate setting forth the amount actually paid to the Existing Manager by Contributor under the Gart Work Contract on or prior to the Closing Date and any amounts retained pursuant to the provisions of any such contract and (iii) lien waivers in respect of any amounts paid to the Existing Manager thereunder on or prior to the Closing, and the Partnership shall receive a credit (which shall reduce Net Asset Value) for the remaining amount to be paid to the Existing Manager pursuant to the Gart Work Contract (including without limitation any retainage). At Closing, Contributor shall deliver, and shall cause the Existing Manager to deliver, to the Title Company such certificates and other documentation as the Title Company may reasonably request in order to issue the Title Policies without exceptions for liens and/or claims with respect to that portion of the Gart Work that is performed prior to Closing Date. 2.9 Other Leasing Matters. (a) From the date hereof through Closing, Contributor shall use reasonable best efforts to obtain signed Leases and Lease renewals for the Tenants or potential Tenants listed on Schedule 2.9(a) upon the terms set forth on Schedule 2.9(a) (but, with respect to The Gap, Contributor shall use reasonable best efforts to renew The Gap Lease for one additional year and otherwise upon the terms of the existing -20- Gap Lease). Each such document executed prior to Closing shall be deemed to be a "Lease" hereunder. (b) Contributor shall pay all tenant allowances and other tenant inducement costs which are specified on Schedule 2.9(a) (other than the inducements specified for The Gap) and, except as set forth in Section 2.9(c), all tenant allowances and other tenant inducement costs which are owing or become owing under Leases entered into prior to the date hereof; and the Partnership shall be entitled to a credit at Closing for the allowances and other costs that are specified on Schedule 2.9(a) that have not been paid in full prior to the Closing Date (which credit shall reduce the Net Asset Value), whether or not such allowances and other costs are then payable or the Lease or Lease renewal to which they relate has been consummated, delayed or abandoned (and following Closing the Partnership shall be responsible for the costs for which it has received a credit). Without limiting the foregoing, the Partnership shall be entitled to a credit at Closing (which shall reduce Net Asset Value) for the allowance and payment specified for The Gap on Schedule 2.9(a) notwithstanding that the renewal described thereon shall not have been consummated. Contributor shall pay all leasing commissions and legal costs incurred by it in respect of the Leases and renewals described on Schedule 2.9(a). Without limiting the foregoing, Contributor shall reimburse the Partnership for the cost of the special order door for American National Insurance to the extent that such cost is paid by the Partnership or one of its Affiliates. (c) From and after and subject to the occurrence of Closing, the Partnership shall pay the cost of the tenant allowances and other inducements and leasing commissions (including leasing commissions payable to Existing Manager) that are specified on Schedule 2.9(c) and, except as provided in Section 2.9(b), all tenant allowances and other tenant inducement costs that are owing or become owing under any Leases entered into following the date hereof which are approved by the Partnership in accordance with the terms hereof; and Contributor shall be entitled to a credit at Closing for such amounts that have been paid prior to the Closing Date (which credit shall increase the Net Asset Value). (d) Contributor shall obtain the prior written approval of the Partnership for any and all Leases relating to the matters described in this Section 2.9, which approval shall not be unreasonably withheld or delayed (and the terms of the Leases described in Schedule 2.9(c) are hereby approved and Contributor shall use reasonable best efforts to consummate the transactions contemplated thereby as soon as is practicable). If the Partnership does not respond to a -21- request for an approval under this subparagraph (c) within ten (10) business days, such approval shall conclusively be presumed. 2.10 Matters Relating to Ground Lease. (a) Contributor currently leases the Land (other than Parcel B) pursuant to the Ground Lease, and the Ground Lease provides that it terminates upon a sale of the "Developer's Interest" (as defined therein). Prior to Closing, Contributor shall cause the Ground Lease to be amended to provide that the Ground Lease shall not terminate upon or as the result of any such sale and/or a sale of the Land. (b) At or prior to Closing, Contributor shall, at Contributor's sole cost, purchase from the Ground Lessor all of the Ground Lessor's right, title and interest in and to the Real Estate and the Ground Lease pursuant to the Ground Lease; and, at Closing, Contributor shall convey the same to the Partnership or a designee of the Partnership as provided herein (or, at the Partnership's election, Contributor shall cause Ground Lessor to convey the same directly to the Partnership or such designee). The instrument or instruments effecting any such transfer shall provide that the Ground Lease shall not terminate on account of such transfer. 2.11 Matters Relating to District. (a) At or prior to Closing, Contributor shall cause the Parcel B Owners, who are the current directors of the District, to (i) appoint such Persons as the Partnership shall designate in writing as replacement directors of the District and (ii) resign as directors of the District in such manner as the Partnership shall specify (which may include the sequential resignation of the current directors). From the date hereof until Closing, Contributor shall not permit any Person other than the Parcel B Owners to serve as a director of the District. (b) Prior to Closing, Contributor shall, at Contributor's sole cost and expense, acquire from the Parcel B Owners all of the Parcel B Owner's right, title and interest in and to Parcel B; and, at Closing, Contributor shall convey the same to the Partnership or its designees as provided herein (or, at the Partnership's election, Contributor shall cause Ground Lessor to convey the same directly to the Partnership or such designee). 2.12 Matters Relating to Right of First Refusal. Contributor has delivered to the Anchors a written notice pursuant to the right of first refusal (the "Right of First Refusal") contained in Section 15.3 of the document referred to as item number one on Schedule 6.2(g)-2. Contributor shall use reasonable best efforts to obtain the approval by the bankruptcy or other court having -22- jurisdiction over the Chapter 11 case of Wards to the election by Wards not to exercise the Right of First Refusal. 2.13 Matters Relating to Tank. (a) Contributor shall enter into a contract (the "Tank Work Contract") with a contractor reasonably acceptable to the Partnership for the abandonment of the Tank and the installation of a replacement tank therefor (collectively, the "Tank Work"), which Tank Work Contract shall be reasonably satisfactory to the Partnership and, when fully executed, shall be deemed a "Contract" hereunder. The Tank Work Contract shall provide that the Tank Work shall be performed in a good and workmanlike manner and otherwise in accordance with industry practice, applicable law, that certain letter dated February 19, 1998 from David Dansky to Michael Zarlengo, Assistant Chief/Fire Marshall, West Metro Fire Protection and Schedule 2.13(a). From the date hereof through Closing, Contributor shall cause any Tank Work to be performed at its sole cost and expense and otherwise in accordance with the Tank Work Contract and the specifications described above. Contributor shall not be responsible for environmental remediation relating to the Tank. (b) At Closing, Contributor shall (i) assign to the Partnership or, if any of the same shall not be assignable, use reasonable best efforts to cause to be reissued to the Partnership, any licenses, permits or governmental approvals issued with respect to the performance of the Tank Work, (ii) deliver to the Partnership a certificate setting forth the amount actually paid to the contractor by Contributor under the Tank Work Contract on or prior to the Closing Date, if any, and any amounts retained pursuant to the provisions of any such contract and (iii) deliver to the Partnership lien waivers in respect of any amounts paid to the contractor thereunder on or prior to the Closing and such certificates and other documentation as the Title Company may reasonably request in order to issue the Title Policies without exceptions for liens and/or claims with respect to that portion of the Tank Work, if any, that is performed prior to Closing Date; and the Partnership shall receive a cash credit for the remaining amount to be paid to the contractor pursuant to the Tank Work Contract, including without limitation any retainage (and Contributor shall pay upon demand any other reasonable costs of completing the Tank Work in accordance with the specifications described above). 2.14 Matters Relating to Gift Certificates. On the Closing Date, Contributor shall deliver to the Partnership the following: -23- (a) an assignment of all rights in and to the gift certificate accounts (the "Gift Certificate Accounts") known as "Southwest Plaza Gift Certificate Account", Account No. 2830906329, at Norwest Bank Colorado N.A. (the "Gift Certificate Bank"), and "Southwest Plaza Management Certificate Account," Account No. 283801086, at the Gift Certificate Bank, together with a cash deposit by Contributor in an amount equal to the excess, if any, of the amount of the Unredeemed Gift Certificates as shown on the Unredeemed Gift Certificate Statement over the balance in the Gift Certificate Accounts as of the Closing Date; (b) any and all other documentation (including without limitation new signature cards) as may be reasonably required by the Gift Certificate Bank in order to accomplish the transfer of the Gift Certificate Accounts; and (c) a statement (the "Unredeemed Gift Certificate Statement") setting forth a list of the gift certificates issued prior to Closing in respect of the Property which remain unredeemed as of the Closing Date (any gift certificates issued and unredeemed prior to Closing, the "Unredeemed Gift Certificates"), with such Unredeemed Gift Certificate Statement to be itemized by gift certificate number and dollar amount (however, with respect to Unredeemed Gift Certificates issued prior to January 1, 1996, the Unredeemed Gift Certificate Statement need not be itemized by gift certificate number and dollar amount but may show only the aggregate dollar amount thereof). On and after the Closing Date and subject to the occurrence of the Closing, the Partnership shall cause the Gift Certificate Bank to honor the Unredeemed Gift Certificates that are properly presented for payment against the Gift Certificate Accounts. In the event that any Unredeemed Gift Certificate (other than an Unredeemed Gift Certificate issued prior to January 1, 1996) is not listed on the Unredeemed Gift Certificate Statement and is presented for redemption (or the Partnership otherwise is required to pay the amount of such Unredeemed Gift Certificate to the holder thereof or any other Person), Contributor shall, within ten days after receipt of written notice from the Partnership, reimburse the Partnership for the amount of such Unredeemed Gift Certificate. In the event that any Unredeemed Gift Certificate issued prior to January 1, 1996 is presented for redemption (or the Partnership otherwise is required to pay the amount of such Unredeemed Gift Certificate to the holder thereof or any other Person) and the aggregate amount theretofore paid by the Partnership in respect of the Unredeemed Gift Certificates issued prior to January 1, 1996 exceeds the amount therefor set forth on the Unredeemed Gift Certificate Statement, Contributor shall, within ten days after receipt of written notice from the Partnership, reimburse the Partnership for the amount of such Unredeemed Gift Certificate. -24- ARTICLE III Closing 3.1 Closing. The closing of the Transactions (the "Closing") shall take place at the offices of Neal, Gerber & Eisenberg, Two North LaSalle Street, Chicago, Illinois 60602, commencing at 8:00 a.m., local time, on April 2, 1998 (the "Closing Date") through a so-called "New York" style closing. 3.2 Contributor Closing Documents. At or prior to the Closing, Contributor shall deliver, or cause to be delivered, to the Partnership (through an escrow with the Title Company) the following documents (collectively, the "Contributor Closing Documents"), duly executed by Contributor and the other parties thereto (other than the General Partner and the Partnership) and in form and substance reasonably acceptable to the Partnership and to Contributor unless the form thereof is attached hereto: (a) Special warranty deed or deeds in proper form for recording, so as to convey the entire fee simple estate in the Land and Improvements and all other items of Real Property. (b) Assignment or assignments of all of the right, title and interest of Contributor and/or Ground Lessor under the Leases and the Ground Lease, all of which, to the extent the same relate to documents or memoranda thereof which have been recorded in appropriate land records, shall be in form suitable for recording. (c) Assignment or assignments of all of the right, title and interest of Contributor and Ground Lessor under the Reciprocal Easement Agreement in form suitable for recording. (d) Assignment of all of Contributor's right, title and interest in and to the Contracts and the insurance policies listed as the first and second items on Schedule 6.2(t) (the "Insurance Policy"), to the extent assignable, and an insurance certificate evidencing that coverage under the Insurance Policy is effective for the benefit of the Partnership and/or its designees as of the Closing Date. (e) Bill of Sale so as to transfer Contributor's right, title and interest in and to the Personalty to the Partnership. (f) The Termination of Property Management Documents. (g) Searches conducted by an independent firm reasonably satisfactory to the Partnership showing any Uniform Commercial Code, judgment, bankruptcy, pending suit or tax lien filings against Contributor, Ground Lessor and the Parcel B Owners in the jurisdictions designated by the Partnership no later than -25- twenty (20) days prior to the Closing Date but in any event in the state and county or counties in which the Mall and the principal offices and residences of Contributor, Ground Lessor and the Parcel B Owners are located, which searches shall be dated not more than ten days prior to the Closing Date. (h) The instruments, documents or certificates as are required by the Title Company as a condition to the issuance of a title insurance policies and endorsements as described in the Title Commitment. (i) An affidavit of Contributor stating its U.S. taxpayer identification number and that it is a "United States person", as defined by Sections 1445(f)(3) and 7701(b) of the Code. (j) The Estoppels as required by Section 8.2(c). (k) A written certificate executed on behalf of Contributor and addressed to the Partnership to the effect that all of the representations and warranties of Contributor herein contained in Section 6.2 are true and correct in all material respects as of the Closing Date (as supplemented in accordance with Section 10.3) with the same force and effect as though remade and repeated in full on and as of the Closing Date (except for actions taken in accordance with or as contemplated by this Agreement and except for matters approved in writing or consented to in writing by the Partnership) or stating the specific respects, if any, in which any of the representations and warranties is untrue (and a similar certificate of P&P as to the representations and warranties made by it herein). (l) Written notices to the Parties to the Reciprocal Easement Agreement, the Leases and the Contracts and other Owners of Excluded Parcels advising them of the consummation of the Transactions and advising them of the address to which Rent or other payments and notices are to be sent and that the Partnership will be responsible for the return of the Security Deposits in accordance with the Leases. (m) Such documents and instruments as shall be reasonably required to substitute the Partnership for Contributor as the plaintiff in legal actions contemplated by Section 4.9. (n) An opinion or opinions of counsel for Contributor dated as of the Closing Date, in form attached hereto as Exhibit H. (o) All Books and Records. -26- (p) Keys and combinations to locked compartments within the Mall. (q) an updated rent roll containing the items described in Section 6.2(f) as of the Closing Date or a date not more than 10 days prior thereto. (r) The statements referred to in Section 4.3 and 4.6. (s) The Contract Party Consents. (t) The Guaranty Agreement. (u) The Amendment to Partnership Agreement or the other documents referred to in Section 2.6(a). (v) The Redemption Rights Agreement. (w) The Existing Indebtedness Consent Documents. (x) Pay-off letter for full repayment of the Key Bank Indebtedness. (y) A copy of the certificate of limited partnership or assumed name filing of each of Contributor and its venturers, as amended (if any), certified by the Colorado Secretary of State or other applicable governmental authority as of a date not more than 30 days prior to the Closing Date and a copy of the partnership agreement of each of Contributor and its venturers and any and all amendments thereto, together with a certification by one of the general partners of such partnership that the attached copies of the partnership agreement of such partnership, as amended, and the certificate of limited partnership or assumed name filing of such partnership, as amended, (if any), are true, accurate and complete and have not been further amended, revised, restated, cancelled or rescinded up to and including the Closing Date. (z) Such certificates as the Partnership may reasonably request as to the authorization on the part of Contributor of the execution, delivery and performance of this Agreement, the authorization on the part of the venturers of Contributor of the execution and delivery of this Agreement by them in their capacities as venturers of the Contributor and the authority of the Persons executing and delivering this Agreement and the Contributor Closing Documents on behalf of the venturers of Contributor. (aa) Such other documents, instruments or agreements which Contributor is required to deliver to the Partnership pursuant to the other provisions of this Agreement or which the Partnership reasonably may deem necessary or desirable in -27- order to consummate the Transactions or to vest or better vest in the Partnership title to the Property; provided, however, that any such other documents, instruments or agreements which the Partnership reasonably deems necessary or desirable shall not impose upon Contributor any obligation or liability other than an obligation or liability expressly imposed upon Contributor pursuant to the terms of this Agreement or pursuant to the terms of the other Contributor Closing Documents specified in this Section 3.2. Notwithstanding any provision to the contrary set forth elsewhere in this Agreement, if after the use of reasonable best efforts Contributor is unable to deliver to the Partnership at Closing the Contract Party Consents, the Required Estoppels, the consent of the Existing Lender pursuant to Section 2.4, and such inability continues for five (5) days after the specified Closing Date, the Partnership shall have the option, as the Partnership's sole and exclusive right and remedy either (a) to terminate this Agreement by giving written notice of such termination to Contributor on or before the Closing or (b) to complete Closing without the delivery of such item or items and waive the requirement for the delivery of such item or items. If the Partnership shall terminate this Agreement pursuant to the provisions of this paragraph, this Agreement shall be null and void and no party shall have any further rights or obligations under this Agreement (other than any right or obligation that expressly survives the termination of this Agreement). 3.3 Partnership Closing Documents. At or prior to the Closing, the Partnership shall deliver to Contributor (through an escrow with the Title Company) the following documents (herein referred to collectively as the "Partnership Closing Documents"), duly executed by an authorized officer of the General Partner and the other parties thereto (other than Contributor) and in form and substance reasonably acceptable to Contributor and the Partnership unless the form thereof is attached hereto: (a) An agreement or agreements pursuant to which the Partnership assumes the Assumed Liabilities. (b) A duly executed and acknowledged secretary's certificate, certifying that the Board of Directors of the General Partner or committee thereof has duly adopted resolutions authorizing the consummation of the Transactions and certifying the authority of the officers of the General Partner executing and delivering this Agreement and the Partnership Closing Documents in their capacities as officers of the General Partner. (c) A certificate issued by the Secretary of State of Delaware dated not earlier than ten days prior to the Closing -28- Date certifying the good standing of the Partnership as of the date of such certificate. (d) Copies of the certificate of limited partnership of the Partnership and certificate of incorporation of the General Partner and any amendments thereto, certified by the Secretary of State of the State of Delaware as of a date not more than 30 days prior to the Closing Date, together with a certificate of the secretary of the General Partner to the effect that such certificate of limited partnership and certificate of incorporation, as amended, have not been further amended, revised, restated, cancelled or rescinded up to and including the Closing Date and that the attached copies of the partnership agreement of the Partnership and by-laws of the General Partner, in each case as amended, are true, accurate and complete and have not been further amended, revised, restated, cancelled or rescinded up to and including the Closing Date. (e) An opinion of counsel for the Partnership dated as of the Closing Date, in form attached hereto as Exhibit I. (f) A written certificate addressed to Contributor to the effect that all of the representations and warranties of the Partnership contained in Section 6.1 are true and correct in all material respects on and as of the Closing Date (as supplemented in accordance with Section 10.3) with the same force and effect as though remade and repeated in full on and as of the Closing Date (except for actions taken in accordance with or as contemplated by this Agreement and except for matters approved in writing or consented to in writing by Contributor) or stating the specific respects, if any, in which any of the representations and warranties is untrue. (g) The Amendment to Partnership Agreement or the other documents referred to in Section 2.6(a). (h) The Guaranty Agreement. (i) The Redemption Rights Agreement. (j) Such other documents, instruments or agreements which the Partnership may be required to deliver to Contributor pursuant to the other provisions of this Agreement or which Contributor reasonably may deem necessary or desirable to consummate the Transactions; provided, however, that any such other document, instrument or agreement which Contributor reasonably deems necessary or desirable shall not impose upon the Partnership any obligation or liability other than an obligation or liability expressly imposed upon the Partnership pursuant to the terms of this Agreement or -29- pursuant to the terms of the other Partnership Closing Documents specified in this Section 3.3. ARTICLE IV Prorations and Adjustments 4.1 Items to Be Prorated. Subject to the other provisions of this Article and this Agreement, the following items in respect of the Property shall be apportioned or adjusted on a per diem basis (employing the actual number of calendar days in the period involved and a 365-day year) between Contributor and the Partnership at the Closing as of 11:59 p.m., Mountain Standard Time, on the day immediately preceding the Closing Date and the net amount thereof shall be settled as hereinafter provided: (a) real property taxes and assessments (or installments thereof) based on the most recent tax bills except those required to be paid directly to the entity imposing the same by those Tenants who are current in all of their Lease payment obligations on the Closing Date; (b) water rents and charges, if any, except those required to be paid directly to the entity imposing the same by Tenants who are current in all of their Lease payment obligations on the Closing Date; (c) sewer taxes and rents, if any, except those required to be paid directly to the entity imposing the same by Tenants who are current in all of their Lease payment obligations on the Closing Date; (d) actually accrued interest, if any, required to be paid to a Party on Security Deposits; (e) amounts, if any, payable by or owed to Contributor under the Reciprocal Easement Agreement; (f) annual permit, license and inspection fees, if any, on the basis of the fiscal year for which levied, if the rights with respect thereto continue for the benefit of the Partnership following the Closing; (g) fuel oil, diesel fuel and liquid propane gas, if any, at the cost or costs per gallon or cubic foot most recently charged with respect to the Mall, based on the supplier's measurements thereof, plus sales taxes thereon; (h) [INTENTIONALLY DELETED]; (i) amounts paid or payable by Contributor to the Promotional and Advertising Fund; -30- (j) Rents (subject to the other provisions of this Article IV); (k) amounts paid or payable by Contributor under the Contracts to the extent the same constitute Assumed Liabilities; (l) interest on the Existing Indebtedness; (m) the premium paid for the Insurance Policy for the current policy year (and the Partnership shall pay any premium payments due after the Closing); and (n) all other items customarily apportioned in connection with the sale of properties that are similar to the Property and similarly located. Contributor shall cooperate with the Partnership in any transfer of electricity, gas, water and other utility services if deemed necessary by the Partnership. Notwithstanding anything to the contrary contained herein, there shall be no prorations or other adjustments in respect of amounts payable under the Ground Lease. 4.2 Installment Payment of Assessments. In furtherance of Section 4.1(a), if any real property assessment affects the Mall at the Closing Date and such real property assessment is payable in installments (whether at the election of Contributor or otherwise), the installment relating to, or payable over, the Applicable Closing Fiscal Period shall be apportioned between Contributor and the Partnership as of 11:59 p.m. Mountain Standard Time, on the day immediately preceding the Closing Date, and the remaining installments shall be the obligation of the Partnership. 4.3 Adjustable Tenant Charges. (a) Notwithstanding anything to the contrary contained herein, no adjustments or apportionments shall be made with respect to the expense items listed in Section 4.1 hereof (other than real estate taxes and assessments, as to which adjustment shall be made as set forth in Section 4.1) for the Applicable Closing Fiscal Period or any prior fiscal period to the extent such expense items are payable or reimbursable from funds collected as Adjustable Tenant Charges. Contributor shall be responsible for the payment of all such expenses incurred by Contributor prior to Closing (including without limitation real estate taxes and assessments for which Contributor has received credit under Section 4.1), and the Partnership shall pay or otherwise satisfy all such expenses incurred by it following Closing (including without limitation -31- real estate taxes and assessments for which the Partnership has received credit under Section 4.1). (b) From and after the Closing, the Partnership shall have the right to receive and retain, subject to Section 4.3(c), below, any amounts required to be paid as Adjustable Tenant Charges by Tenants which were due and payable on or before, but remain unpaid on, the Closing Date, and there shall be no adjustment at Closing with respect thereto. At the Closing, Contributor shall deliver to the Partnership a true and correct statement setting forth in reasonable detail and certifying the amount of Adjustable Tenant Charges collected and expenditures for such items of expense made (and any credits for real estate taxes given) by Contributor for the portion of the Applicable Closing Fiscal Period through the Closing Date and for any prior fiscal period. (c) The Partnership shall, no less frequently than is set forth in Section 4.10(d), remit to Contributor any amounts collected by it after the Closing Date which relate to Adjustable Tenant Charges payable with respect to any fiscal period ending prior to the Applicable Closing Fiscal Period. Within 210 days following the end of the Applicable Closing Fiscal Period and from time to time thereafter as amounts are received by the Partnership from Parties, the aggregate amount of Adjustable Tenant Charges, if any, collected by the Partnership on the one hand, and Contributor, on the other hand, with respect to the Applicable Closing Fiscal Period shall be apportioned and adjusted such that the total amount of such Adjustable Tenant Charges received by the Partnership, on the one hand, and Contributor, on the other hand, shall be in the same proportion as the amount of the expense items to which such Adjustable Tenant Charges relate which each of the Partnership, on the one hand, and Contributor, on the other hand, have borne (including without limitation real estate taxes or assessments for which either party has received credit under Section 4.1), and, to the extent that either shall have received a greater amount of Adjustable Tenant Charges, such party or parties shall promptly pay such excess to the other. 4.4 Advertising and Promotional Contributions. (a) Notwithstanding anything to the contrary contained herein, no adjustments or apportionments shall be made with respect to the expense items listed in Section 4.1 hereof for the Applicable Closing Fiscal Period or any prior fiscal period to the extent such expense items are payable or reimbursable from funds collected or held as Advertising and Promotional Contributions. The Partnership shall be responsible for the payment of all such expenses incurred by it and, to the extent of the funds paid by Contributor to the Partnership pursuant to Section 4.4(b), expenses -32- properly incurred by Contributor prior to Closing and Contributor otherwise shall be responsible for the payment of all such expenses incurred by it. (b) At the Closing, Contributor shall pay to the Partnership in cash the aggregate of all funds, if any, then held by Contributor as Advertising and Promotional Contributions (or, upon written notice from the Partnership, Contributor shall assign and transfer to the Partnership all of Contributor's right, title and interest in and to the bank account(s) in which such funds are held) and, from and after the Closing, the Partnership shall have the right to collect, receive and retain any amounts required to be paid as Advertising and Promotional Contributions which were due and payable on or before, but remain unpaid on, the Closing Date, and there shall be no adjustment hereunder with respect thereto (other than an adjustment pursuant to Section 4.1(i) for amounts paid or payable by Contributor as Advertising and Promotional Contributions and Section 4.4(d)). At the Closing, Contributor shall deliver to the Partnership a true and correct statement setting forth in reasonable detail and certifying the amount of Advertising and Promotional Contributions collected and expenditures for such items of expense made by Contributor for the portion of the Applicable Closing Fiscal Period through the Closing Date. (c) Any amounts collected by the Partnership after the Closing Date which constitute Advertising and Promotional Contributions shall be retained by the Partnership and held and disbursed by the Partnership according to the Leases. (d) Whenever Fixed and Other Tenant Charge Arrearage are collected, as contemplated by Section 4.5, the amount remitted to Contributor in accordance with the provisions of Sections 4.5 and 4.7 shall be reduced or Contributor shall make a payment to the Partnership from the amount collected by Contributor to the extent the landlord is obligated under Leases to, or by custom has in the past, made contributions or other payments to the Promotional and Advertising Fund as Fixed and Other Tenant Charge Arrearages are collected, and such withheld or remitted amounts shall be paid to the Promotional and Advertising Fund. 4.5 Fixed and Other Tenant Charge Arrearage. Subject to the provisions of Section 4.7, Fixed and Other Tenant Charge Arrearage (which, for purposes of this Section 4.5, shall include, without limitation, any real estate taxes or special assessments or other amounts otherwise required to be paid by a Party directly to the taxing authority but actually paid by Contributor to the taxing authority with respect to the amount of the taxes or special assessments actually paid), if and when collected, shall be paid to the Partnership as to Fixed and Other Tenant Charge Arrearages which relate to periods from and after the Closing Date, and to Contributor with respect to all other Fixed and Other Tenant Charge -33- Arrearages. Upon payment by Enchanted Planet of deferred base rent due on December 10, 1998 and notwithstanding anything to the contrary contained herein, the Partnership shall promptly remit to Contributor a portion of the same equal to the product of the amount of such deferred base rent collected multiplied by a fraction the numerator of which is the number of days in 1998 preceding the Closing Date and the denominator of which is 334 (and the Partnership may retain the remainder). 4.6 Sales Based Tenant Charges. Sales Based Tenant Charges which are payable with respect to any period prior to the Closing Date or which have been accrued prior to the Closing Date shall not be apportioned as of the Closing Date. In lieu thereof, such amounts shall be apportioned, after the Closing Date and after final determination thereof, so that the amount thereof to which Contributor shall be entitled shall be the entire amount thereof with respect to any fiscal period ending prior to the Closing Date, and, for each Applicable Closing Fiscal Period (it is recognized that there are different year ends for different Tenants in computing Sales Based Tenant Charges), an amount which bears the same ratio to the total Sales Based Tenant Charges for the Applicable Closing Fiscal Period as the number of days in the Applicable Closing Fiscal Period which have elapsed prior to the Closing Date bears to the total number of days in the Applicable Closing Fiscal Period. At the Closing, Contributor shall deliver to the Partnership a true and correct statement setting forth in reasonable detail and certifying the amount of Sales Based Tenant Charges collected for the portion of the Applicable Closing Fiscal Periods through the Closing Date. 4.7 Application of Rent Receipts. Notwithstanding anything to the contrary contained herein, in determining the adjustments and apportionments pursuant to Sections 4.3, 4.4, 4.5 and 4.6, any payment of Rent shall be applied to the payment of the item or items of Rent designated or indicated by the Party making such payment (and the Partnership may not suggest in its billings or otherwise that Tenants designate how a payment of rent is to be applied among the item or items of Rent then due and payable). If not designated or indicated, any payment of Rent shall be applied (a) first, to Fixed and Other Tenant Charge Arrearage, (b) second, to Sales Based Tenant Charges, (c) third, to Adjustable Tenant Charges, (d) fourth, to Advertising and Promotional Contributions and (e) last, to other Rents; and within each such category, such payment shall be applied to pay older arrearages prior to newer arrearages. 4.8 Security and Utility Deposits. At the Closing, Contributor shall furnish the Partnership with a schedule setting forth and certifying, as of the Closing Date, the unapplied and unreturned portion of any security deposits which have been deposited with Contributor or its agents (or with any predecessor-in-interest to Contributor or any such agent) by any Tenants -34- through the Closing Date (the "Security Deposits") and the amount of any deposits on account with any utility company servicing the Mall or Existing Lender that will continue for the benefit of the Partnership following Closing ("Other Deposits"), and Contributor shall credit to the Partnership at Closing the amount of the Security Deposits (together with all interest, if any, accrued thereon and required to be paid to Tenants or actually paid in accordance with past practices to Tenants). Contributor shall receive a credit at Closing for the amount of the Other Deposits. 4.9 Collection of Rents. (a) The Partnership shall use reasonable best efforts to collect the Fixed and Other Tenant Charge Arrearage, Adjustable Tenant Charges, Sales Based Tenant Charges and other Rents which are payable with respect to the Applicable Closing Fiscal Period and any prior fiscal period (including showing such outstanding amounts on any Tenant billings), but the Partnership shall not be required to retain a collection agency, commence litigation or file proofs of claim or commence an adversary proceeding in a bankruptcy case, or terminate Leases or the Reciprocal Easement Agreement in connection with such collection efforts. The Partnership shall not waive or settle any claims for any such amounts in whole or in part to the extent such amounts, if collected, would be payable to Contributor hereunder. Reasonable collection costs shall be charged against amounts collected and charged to the parties hereto in the proportion in which each is entitled to the proceeds of such collection. The Partnership shall provide to Contributor quarterly reports after Closing with respect to the collection by the Partnership after Closing of any such amounts which are payable with respect to the Applicable Closing Fiscal Period and any prior fiscal year. Contributor shall have the right to pursue the collection of and retain any amounts collected from Tenants on account of Rents who have relinquished possession of their leased premises prior to the Closing Date, and (notwithstanding anything to the contrary contained herein) the Partnership shall have no responsibility with respect to the collection thereof. (b) Contributor shall have the right to seek collection of any Fixed and Other Tenant Charge Arrearage or other item of Rent owed to it hereunder and not collected by the Partnership within six months following the later of the Closing Date and the date such item of Rent is due and payable (but Contributor otherwise shall not have the right to seek collection of any Rents except as provided in the last sentence of Section 4.9(a)); provided, however, that in seeking to collect any such Fixed and Other Tenant Charge Arrearage, Contributor shall not be entitled to terminate any Lease or the Reciprocal Easement Agreement or otherwise seek -35- any remedy other than a money judgment against the delinquent Party. Prior to filing any such action, Contributor shall notify the Partnership and the Partnership may join such action. The Partnership shall not be required to join in any such actions or proceedings commenced by Contributor unless the provisions of any law, rule or regulation at the time in effect shall require that such actions or proceedings be brought by and/or in the name of the Partnership, in which event the Partnership shall join and cooperate in such actions or proceedings or permit the same to be brought by Contributor in the Partnership's name but Contributor shall pay all costs and expenses relating thereto, including without limitation the Partnership's reasonable legal fees in reviewing pleadings and other materials filed in connection with such litigation. (c) Notwithstanding anything to the contrary contained herein, the Partnership shall have the right at any time on or after the Closing, and whether or not the joinder of the Partnership shall be required as a matter of law, to cause the Partnership to join in, or to be substituted for Contributor in, any proceedings for the eviction of Tenants and/or the collection of Rent which may have been instituted by Contributor either prior to or after the Closing, if the Tenant in question is still in possession of the premises covered by its Lease and if, in connection therewith, the Partnership intends to seek eviction of such Tenant, cancellation of the Lease or repossession of the premises. If the Partnership joins in, or is substituted for Contributor as plaintiff, in any such litigation, the Partnership shall, thereafter, assume sole liability for all costs and expenses of such litigation, including legal fees and expenses, as may thereafter be incurred (except as provided below) and shall thereafter control all aspects of such proceedings, except that the Partnership shall not waive, reduce or otherwise compromise any claims for Rent to the extent that the amount of such claims, if collected, would be payable to Contributor hereunder. Contributor in any event may, at its option, continue to participate in such litigation. In any event, Contributor shall reimburse the Partnership for a pro rata portion of the Partnership's out-of-pocket costs and expenses of such collection in proportion to, but in no event in an amount greater than, the amount, if any, actually received by Contributor after Closing as a result of such proceedings; provided, however, Contributor shall be entitled to a credit for legal fees and expenses incurred by Contributor prior to the intervention by the Partnership in connection with the proceedings previously instituted by Contributor in connection with such collection efforts. -36- 4.10 Settlement of Adjustments. (a) Contributor and the Partnership acknowledge that it may be difficult to calculate, as of the day immediately preceding the Closing Date, certain of the adjustments, apportionments and payments to be made pursuant to this Article IV. Accordingly, Contributor and the Partnership hereby agree that, except as provided in Section 4.1(a), any adjustments, apportionments and payments otherwise required to be made as of the Closing Date may to the extent necessary or desirable be estimated by the Partnership and Contributor based on the most recent available data, and additional adjustments, apportionments and payments shall be made to adjust for any differences between the actual apportionment or adjustment and the amount thereof estimated on the Closing Date. Any errors or omissions in computing apportionments at the Closing shall be corrected promptly after their discovery. (b) Except as otherwise provided herein, net prorations and adjustments made pursuant to this Article IV or other sections of this Agreement on the Closing Date shall be settled in cash. From time to time after the Closing as further adjustments are made as herein provided, settlement thereon between Contributor and the Partnership shall be made in cash. (c) The Partnership, upon reasonable advance notice, shall provide Contributor with access to the books and records of the Partnership, including back-up calculations and information, relating to the calculation of the adjustments required to be made pursuant to this Article IV. (d) Any Rents that are payable to Contributor hereunder shall be paid from time to time following the Closing as determined by the Partnership, but in no event less frequently than quarterly. (e) Notwithstanding anything to the contrary contained herein, a final adjustment shall be made on December 31, 1999, with respect to amounts owing under this Article IV as of such date, and the amounts owing settled in cash no later than 10 days thereafter. No further adjustments or payments shall be required to be made under this Article IV thereafter (except with respect to legal proceedings for or bankruptcy claims in respect of the collection of Rent which are pending on such date or legal proceedings or bankruptcy claims brought by Contributor under Section 4.9(b)). -37- ARTICLE V Title Insurance and Survey 5.1 Title Commitment. Contributor has caused the Title Company to deliver to the Partnership a commitment of the Title Company (the "Title Commitment") to issue, at and as of Closing, its ALTA Owners Title Insurance Policy in its current form as to Parcels A, B, D and E of the Land (the "Owner's Policy") and an ALTA Owners Leasehold Title Policy in its current form as to Parcels C, D and E of the Land (the "Leasehold Policy" and, together with the Owner's Policy, the "Title Policies") in the aggregate amount of the Gross Asset Value with coverage against matters relating to federal bankruptcy, state insolvency or similar creditors' rights laws and with the following special endorsements: (a) Full extended coverage over all general exceptions; (b) An endorsement insuring against any and all liens and claims arising out of or with respect to that portion of the Gart Work and Tank Work, if any, performed prior to the Closing Date; provided, however, that this provision shall be satisfied so long as neither of the Title Policies include exceptions with respect to the portion of the Gart Work or Tank Work, if any, performed prior to the Closing Date; (c) An endorsement insuring legal access to the Real Property from each of the streets bordering thereon, and insuring that all such streets are dedicated public streets; (d) An endorsement insuring against existing violations of covenants, conditions or restrictions of record affecting the Property and loss of title to the Real Property or the inability of the owner thereof to maintain the improvements now located thereon by reason of any future violation of any such covenant, condition or restriction of record; (e) [INTENTIONALLY DELETED]; (f) Zoning endorsement (ALTA 3.1) (with parking); (g) [INTENTIONALLY DELETED]; (h) [INTENTIONALLY DELETED]; (i) [INTENTIONALLY DELETED]; (j) [INTENTIONALLY DELETED]. The Partnership also may require the issuance at the Closing of such additional endorsements at no additional cost to Contributor as the Partnership deems appropriate, but the issuance -38- thereof shall not be a condition to the Partnership's obligations hereunder. Contributor shall cause the Title Company to reinsure portions of the risk covered by its title insurance policies with reinsurance companies reasonably satisfactory to the Partnership under standard reinsurance agreements (providing, at a minimum, for direct access and enforcement of rights by the insured party to and against the reinsurer) which have been approved by the Partnership. 5.2 Survey. Contributor has delivered to the Partnership a survey for the Real Property, dated not earlier than 90 days prior to the Closing Date, which was prepared by a licensed or registered professional surveyor in the jurisdiction in which such property is located (such survey, the "Survey"). The Survey is an Urban ALTA/ACSM Land Title Survey made in compliance with and meeting the accuracy standards under the "Minimum Standard Detail Requirements for ALTA/ACSM Land Surveys" jointly established by the American Land Title Association and American Congress on Surveying and Mapping then in effect; contains Table A Optional Survey Responsibilities and Specifications 1, 2, 3, 4, 6, 7(a), 7(b)(1), 7(c), 8, 9, 10, 11 and 13; shows the boundaries of the Land; discloses whether or not the Land comprises a single parcel of land with no strips, gores or gaps within its boundaries; discloses any encroachments of any Improvements located primarily on the Land onto adjoining premises or public ways (and whether or not a valid easement for the benefit of such property exists and is in place with respect to each such encroachment) or onto or over setback or building or side yard lines located on the Land or of improvements located primarily on adjoining premises onto any portion of the Land (and whether or not a valid easement for the benefit of the adjoining premises exists and be in place with respect to each such encroachment); locates all easements created by recorded instruments (to the extent plottable) or visible on the Land and discloses any encroachment by any of the Improvements located thereon, or any other structures located on the Land, in violation of any such easements; contains a legal description of the Land; shows the location of any adjacent public streets, disclosing access, if any, to the Land therefrom; shows the configuration and number of parking spaces on the Land; shows the area of the Land; indicates whether the Land is located in an area designated by HUD as having special flood risks and contains a certificate of the surveyor attesting to the accuracy of the Survey and its conformity to the requirements of the aforesaid Minimum Standard Detail Requirements, which certificate is directed to the Partnership, the Existing Lender and the Title Company. 5.3 Title and Survey Defects. (a) If any update to the Title Commitment or any update to the Survey discloses exceptions to title other than the -39- Permitted Exceptions, the Partnership shall notify Contributor in writing. (b) Upon receipt of any such notice, Contributor shall (i) cause any such exceptions which are monetary liens of a fixed and ascertainable amount that may be removed and/or bonded solely by the payment of money, including without limitation, judgment and mechanics' liens, to be removed at or prior to the Closing and shall deposit with the Title Company releases or other appropriate instruments, in recordable form, sufficient to cause the removal of such items from the title; and (ii) use reasonable best efforts to cause all other such title exceptions or matters to be so released and removed from title and waived from the Title Commitment (or insured over at its sole cost by the Title Company by an endorsement reasonably satisfactory to the Partnership) or otherwise cured (but, with respect to title exceptions and other matters referred to in clause (ii) of this Section 5.3(b) that do not result from the intentional act or acts of Contributor or the failure of Contributor to pay or otherwise satisfy obligations incurred by it, Contributor shall not be obligated to expend more the $10,000 in the aggregate, including without limitation the cost of title company endorsements). (c) Nothing contained in this Section 5.3 shall limit the rights of the Partnership in respect of a breach by Contributor of Section 10.2. (d) If, despite compliance by Contributor with its obligations contained herein, title is not insurable at Closing as required by Section 5.1 and this Section 5.3 (including the removal of or issuance of insurance over or other cure of all matters specified in any of the above notices), then the Partnership may, as its sole remedy, (A) waive such defects and accept title subject to all such defects (without any abatement or reduction of the consideration hereunder) or (B) terminate this Agreement by giving written notice of such termination to Contributor. In the event that this Agreement is terminated, this Agreement shall be null and void and the parties shall be released from all further rights and obligations under this Agreement (other than any right or obligation that expressly survives the termination of this Agreement). 5.4 Title Insurance Premiums and Survey Costs. Except as otherwise set forth herein, Contributor shall pay the premiums and other charges in connection with the issuance of the owner's title policies and endorsements complying with the requirements of Section 5.1 (but each of Contributor and the Partnership shall pay one-half the cost of the endorsement listed in clause (d) of Section 5.1) and the Survey. -40- ARTICLE VI Representations and Warranties ------------------------------ 6.1 Partnership Representations and Warranties. The Partnership represents and warrants to Contributor as follows as of the date hereof and as of the Closing Date: (a) The Partnership is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Delaware with full right, power and authority to execute, deliver and perform this Agreement. (b) The execution, delivery and performance by the Partnership of this Agreement have been duly and validly authorized by all requisite action on the part of the Partnership. This Agreement has been, and the Partnership Closing Documents to which the Partnership is a party will be, duly executed and delivered by the Partnership. This Agreement constitutes, and when so executed and delivered such Partnership Closing Documents will constitute, the legal, valid and binding obligations of the Partnership, enforceable against it in accordance with their terms. (c) None of the execution, delivery or performance of this Agreement or the Partnership Closing Documents by the Partnership does or will, with or without the giving of notice, lapse of time or both, violate, conflict with, constitute a default or result in a loss of rights under or require the approval or waiver of or filing with any Person (including without limitation any governmental body, agency or instrumentality) under (i) the organizational documents of the Partnership or any material agreement, instrument or other document to which the Partnership is a party or by which the Partnership is bound or (ii) any judgment, decree, order, statute, injunction, rule, regulation or the like of a governmental unit applicable to the Partnership. (d) No broker, finder, investment banker or other Person is entitled to any brokerage, finder's or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of the Partnership. (e) No bankruptcy, insolvency, rearrangement or similar action involving the Partnership, whether voluntary or involuntary, is pending or, to the best of the Partnership's knowledge, threatened. (f) The Partnership acknowledges and agrees that the Contributor has made and makes no representation and warranty, whether implied or express, as to: the physical condition of the Property; compliance of the Property with Environmental Laws, regulations and ordinances relating to Hazardous -41- Materials and toxic waste; the presence or absence of underground tanks, pipelines or appliances; the susceptibility of the Property to flooding; or any other matter of municipal, county, state or United States law regarding the use and enjoyment of the Property or liability relating to the ownership thereof, or any other matter or thing affecting or relating to the Property, except as expressly set forth in this Agreement or the Closing Documents. The Partnership acknowledges and agrees that no such representation or warranty has been made other than as are expressly set forth in this Agreement or the Closing Documents and, subject to other provisions of this Agreement, agrees to take the Property "AS IS". The Partnership acknowledges and agrees and represents that it has inspected the Property (including the conditions outlined above). Nothing contained in this section shall limit the liability of Contributor for breach of the representations and warranties contained herein or in the Contributor Closing Documents, such representations and warranties having been relied upon by the Partnership in connection with its investigation of the Property. (g) As of the date hereof, the Memorandum and the documents incorporated by reference therein do not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading; provided, however, that the Partnership makes no representations or warranties as to (i) the information contained in or omitted from the Memorandum in reliance upon and in conformity with information furnished by Contributor to the Partnership or (ii) the tax consequences of the Transactions as more fully set forth in Section 6.2(ad). 6.2 Contributor's Representations and Warranties. Contributor represents and warrants to the Partnership as follows (other than the representations and warranties contained in Sections (aa) through (ag), which are made solely by P&P in its individual capacity) as of the date hereof and as of the Closing Date: (a) Contributor is a joint venture duly formed, validly existing and in good standing under the laws of the State of Colorado with full power and authority to execute, deliver and perform this Agreement. Each venturer of Contributor is a partnership duly formed, validly existing and in good standing (to the extent applicable) under the laws of the State of Colorado with full power and authority to execute and deliver this Agreement in its capacity as venturer of Contributor. The execution, delivery and performance of this Agreement by Contributor has been authorized by all necessary partnership action on the part of Contributor, and the execution and delivery of this Agreement by each venturer of Contributor in -42- its capacity as venturer of Contributor has been authorized by all necessary partnership action. This Agreement has been, and when executed and delivered the Contributor Closing Documents will have been, duly executed and delivered by Contributor in its individual capacity and by each venturer of Contributor in its capacity as venturer of Contributor. This Agreement constitutes, and when so executed and delivered the Contributor Closing Documents will constitute, the legal, valid and binding obligations of Contributor, enforceable against it in accordance with their terms. (b) Subject to obtaining the consent of the Existing Lender in accordance with Section 2.4 and obtaining the court approval referred to in Section 2.12, none of the execution, delivery or performance of this Agreement by Contributor or the consummation of the Transactions does or will, with or without the giving of notice, lapse of time or both, violate, conflict with, constitute a default, result in a loss of rights, acceleration of payments due or creation of any Lien upon the Property or require the approval or waiver of or filing with any Person (including without limitation any governmental body, agency or instrumentality) under (i) the organizational documents of Contributor or either of its venturers, (ii) any agreement, instrument or other document to which Contributor or either of its venturers is a party or by which any of them is bound or (iii) any judgment, decree, order, statute, injunction, rule, regulation or the like of a governmental unit applicable to any of them. (c) At Closing, the Partnership (and/or its designees) will have good and marketable title to the Property (other than the Land and the other Real Property to the extent covered by the Title Policies), free and clear of all Liens other than the Permitted Exceptions (including without limitation Liens created pursuant to the Existing Indebtedness Documents) and Liens created by, under or through the Partnership. The Property comprises all of the assets and property necessary to operate the Mall as now operated. (d) Schedule 6.2(d) contains a list of all permits and licenses currently maintained with respect to the Property and they are all of the licenses and permits which are required for the present use of the Property. Contributor has not received any notice of violation of any such license or permit from any federal, state or municipal entity that has not been cured or otherwise resolved to the satisfaction of such governmental entity. (e) To Contributor's knowledge and except as stated in Schedule 6.2(r), neither Contributor nor the District has received any notice from any governmental unit or other Person (including without limitation any consultant or engineer -43- engaged by Contributor or any other Person) that it or the Real Property or any occupant thereof is not in compliance with any Environmental Law, that the Real Property or any portion thereof has been used as a storage or disposal site for Hazardous Materials (other than the storage of substances commonly present at or used in the operation and maintenance of shopping centers in quantities commonly present at shopping centers and in compliance with applicable laws) or that it has any liability with respect thereto, and there are no administrative, regulatory or judicial proceedings pending or, to Contributor's knowledge, threatened with respect thereto pursuant to, or alleging any violation of, or liability under any Environmental Law. (f) Contributor has delivered a rent roll for the Mall (the "Rent Roll") by memoranda dated March 19, 1998 and March 20, 1998 from Lana Duensing to Joel Bayer and Avram Feldman. The Rent Roll shows identification of each rentable space in the Mall by space number, whether leased or not, and for each such space, the name of the Tenant, the minimum or fixed annual rent payable for 1998, the percentage sales rate (all of the foregoing information, the "Basic Information"), the sales breakpoint for percentage rent, the commencement and expiration dates of the current Lease term, the square footage of such space, the unapplied amount of any security or other deposit held, all delinquencies in Rent, all outstanding rent abatements, all outstanding tenant fit-out allowances and other tenant concessions or inducements, all renewal options and "kick-out" clauses (excluding cotenancy clauses). All information therein is accurate as of March 19, 1998 (except that any of such information other than the Basic Information is deemed to have been modified to the extent of conflicting information contained in the Leases). Except as set forth in the Rent Roll, no Tenant has paid any rent in advance except for the current month. (g) Schedule 6.2(g)-1 contains a complete and correct list of all existing Leases and modifications thereof and supplements thereto (including without limitation side letters) regardless of whether the terms thereof have commenced, setting forth with respect to each (i) the date thereof and of each modification thereof and supplement thereto and (ii) the names of the parties thereto (including the name of the current assignee, if any, but only if and to the extent Contributor has actual notice of any such assignment). The documents listed on Schedule 6.2(g)-2 constitute a complete and correct list of the reciprocal easement agreements and allocable share agreements (which shall be deemed part of the Reciprocal Easement Agreement for purposes of this Agreement) relating to the Real Property and modifications thereof and supplements thereto (including without limitation side letters) (the "Reciprocal Easement -44- Agreement") setting forth with respect to each (i) the date thereof and of each modification thereof and supplement thereto and (ii) the names of the parties thereto. True and complete copies of the Reciprocal Easement Agreement and Leases, including each written modification thereof and supplement thereto and all material correspondence between the parties thereto have heretofore been furnished or made available to the Partnership for inspection. The Reciprocal Easement Agreement and each Lease constitutes the entire agreement between the parties thereto and there are no oral promises or agreements amending or modifying the same. (h) There are no leases or other rights of occupancy or use relating to the Real Property other than the Leases, the Ground Lease and the Reciprocal Easement Agreement and other rights of Persons arising under instruments or agreements which comprise Permitted Exceptions and/or the Contracts, except subleases, concessions or license agreements which may have been entered into by Tenants or by subtenants of Tenants. Contributor has received no notice of the termination of any easement granted in the Leases and the Reciprocal Easement Agreement. (i) (i) No Party to the Reciprocal Easement Agreement or any Lease has made any claim to Contributor (A) that Contributor has defaulted in any extent in performing any of its obligations under the Reciprocal Easement Agreement or such Lease which has not heretofore been cured, (B) that any condition exists which with the passage of time would constitute any such default, or (C) that such Party is entitled to any reduction in, refund of, or counterclaim or offset against, or is otherwise disputing, any Rents or other charges paid, payable or to become payable by such Party, to cancel the Reciprocal Easement Agreement or such Lease or to be relieved of its operating covenants thereunder. (ii) Except for delinquencies in the payment of Rents disclosed in the Rent Roll and except as set forth on Schedule 6.2(i), to Contributor's knowledge, no default exists under the Reciprocal Easement Agreement or any Lease on the part of the Party or Parties thereto. Contributor is not in default (without giving effect to any applicable notice and cure rights) in any respect with respect to any Lease or the Reciprocal Easement Agreement. (iii) There are no unsatisfied rent abatements or other tenant concessions or inducements, including, without limitation, lease assumptions or buy-outs, applicable to any of the Leases or any rights to extend or renew any of the Leases except as set forth in the Rent Roll. -45- (iv) No Party to any Lease or the Reciprocal Easement Agreement has any rights, options or rights of first refusal of any kind which are currently in effect, to purchase or to otherwise acquire the Real Property or any part thereof or interest therein other than the rights of such Tenant (as tenants only) under its Lease or such Party to the Reciprocal Easement Agreement under the Reciprocal Easement Agreement with respect to easements and the Right of First Refusal only. (j) Contributor has furnished the Partnership with audited financial statements for the Mall (consisting of balance sheets and income statements) as of, and for the calendar years ended, December 31, 1995, 1996 and 1997 (the "Annual Financial Statements"), audited financial statements for the District (consisting of balance sheets and income statements) as of, and for the calendar years ended, December 31, 1996 and 1997 (the "District Financial Statements"), and unaudited financial statements for the Mall (consisting of balance sheets and income statements) as of and for the one-month period ended January 31, 1998 (the "Interim Financial Statements" and, together with the Annual Financial Statements and District Financial Statements, the "Financial Statements"). The Financial Statements are consistent with the books and records and accounts of Contributor or the District, as the case may be, and fairly present the financial condition and results of operations of Contributor or the District, as the case may be, as of the dates thereof and for the periods referred to therein, and, except for the absence of footnotes and subject to normal year-end accruals as to the Interim Financial Statements, the Financial Statements have been prepared in accordance with the income tax basis method of accounting (or, in the case of the District Financial Statements, generally accepted accounting principles as provided therein) consistently applied throughout the periods indicated. Since December 31, 1997, the business or activities of the Mall and the District have been conducted in the ordinary course consistent with past practice and there have been no material adverse changes in the financial condition of the Mall or the District, and Contributor has no knowledge of any circumstance or event which, insofar as can be reasonably foreseen, is likely to result in any such material adverse change (except for changes that might occur as the result of general economic and market conditions). (k) Schedule 6.2(k) lists the patents, trademarks (including registrations thereof), and trade names which are used by Contributor in connection with the operation of the Mall (the "Intellectual Property"). To Contributor's knowledge, the conduct of the business of Contributor and the use of the Intellectual Property do not infringe upon the patents, trademarks, copyrights or other intellectual property rights of any third party and no third parties are currently -46- infringing upon the patents, copyrights, trademarks or other intellectual property rights of Contributor. Contributor has not granted to any Person or Persons the right to use the Intellectual Property or any portion thereof. (l) Neither Contributor nor Existing Manager is a party to or is bound by any collective bargaining or union agreements with respect to the Mall. Neither Contributor nor Existing Manager has encountered any labor union organizing activity or experienced any actual or threatened employee strikes, work-stoppages, slow-downs or lockouts. Contributor has no employees and does not maintain or sponsor any employee benefit plan, including, without limitation, any plans subject to the Employer Retirement Income Security Act of 1974, as amended. (m) Schedule 6.2(m) contains a true and complete list of all Contracts with respect to the Mall, including all modifications thereof and supplements thereto (including without limitation side letters and the material terms of oral contracts). There has been no default (without giving effect to any notice and cure rights) by Contributor or, to Contributor's knowledge, any Party under any Contract which has not heretofore been cured. Contributor has not received notice of any claim by a Party of any such default, which has not heretofore been cured. A true and complete copy of each written Contract, including any amendments or supplements thereto, has been delivered or made available to the Partnership. Such documents constitute the entire agreement between the parties thereto and there are no oral promises or agreements amending, modifying or supplementing the same. (n) No condemnation proceeding or other proceeding or action in the nature of eminent domain is pending with respect to all or any part of the Real Property, and, to Contributor's knowledge, no condemnation proceeding or other proceeding or action in the nature of eminent domain is pending with respect to any property owned by a Party to the Reciprocal Easement Agreement which is the subject of the Reciprocal Easement Agreement and no Taking is threatened with respect to all or any part of the Real Property or any property owned by a Party to the Reciprocal Easement Agreement which is the subject of the Reciprocal Easement Agreement. (o) The Real Property is an independent unit which does not now rely on any facilities (other than facilities covered by Permitted Exceptions [including, without limitation, the Reciprocal Easement Agreement] or facilities of municipalities or public utility and water companies) located on any property not included in the Real Property to fulfill any municipal or governmental requirement or for the furnishing to the Real Property of any essential building systems or utilities, -47- including but not limited to, water, electrical, plumbing, mechanical and heating, ventilating and air conditioning systems, drainage facilities, catch basins and retention ponds, sewage treatment facilities and the like, unless recorded easements or other rights are in effect for the benefit of the Real Property (which run with the land) for the continued use and benefit thereof. Except as may be covered by the Permitted Exceptions (including, without limitation, the Reciprocal Easement Agreement), no building or other improvement not included in any part of the Real Property relies on any part of the Real Property to fulfill any governmental or municipal requirement or to provide facilities to such building or improvement for any essential building systems or utilities, including, without limitation, electrical, plumbing, mechanical, sewage treatment or heating, ventilating and air conditioning facilities or services. (p) Copies of current real estate tax bills with respect to the Real Property, other than tax bills sent to Tenants who have the obligation to pay such taxes to the collecting authority, have been delivered to the Partnership. No portion of the Real Property comprises part of a tax parcel which includes property other than property comprising all or a portion of the Real Property. No application or proceeding is pending with respect to a reduction in or refund of or increase in such taxes. Contributor has no knowledge of any special tax or assessment to be levied against the Real Property or any change in the tax assessment of the Real Property. (q) To Contributor's knowledge, Contributor has not received notice that there is and, except as set forth on Schedule 6.2(i) and to Contributor's knowledge, there does not now exist any violation of any restriction, condition or agreement contained in any easement, restrictive covenant or any similar instrument or agreement affecting the Real Property or any portion thereof. (r) Except as set forth in Schedule 6.2(r) and to Contributor's knowledge, each of the Property and the District is in compliance with all laws, statutes, rules, regulations, and ordinances (including without limitation the ADA but excepting all Environmental Laws), and neither Contributor nor the District has received any notice from any governmental authority having jurisdiction over the Real Property, the Mall or the District or from any other Person (including without limitation a consultant or engineer or any insurance company or Board of Fire Underwriters) (A) of any violation of any law, ordinance, order or regulation (including without limitation the ADA) relating to the Mall or the District which has not heretofore been complied with or (B) requiring Contributor, the Ground Lessor or the District to make any -48- alterations, improvements or changes in or about the Real Property or any portion thereof which have not been completed. None of Contributor, the Ground Lessor or the District has any obligation to any other governmental authority for the performance of any capital improvements or other work to be performed in or about the Real Property or donations of monies or land (other than general real property taxes) which have not been completely paid for or otherwise performed. (s) Except as provided in Schedule 6.2(s), there is no litigation, including any arbitration, investigation or other proceeding by or before any court, arbitrator or governmental or regulatory official, body or authority which is pending or, to Contributor's knowledge, threatened against Contributor, the District or the Ground Lessor relating to the Property or the Transactions and there are no unsatisfied arbitration awards or judicial orders against Contributor, the District or the Ground Lessor relating to the same. Copies of all pleadings and other documents which have been requested with respect to the litigation described on Schedule 6.2(s) have been furnished to the Partnership and are true, accurate and complete in all respects. (t) Schedule 6.2(t) contains a true and accurate list of all policies of insurance relating to the Mall and the District, which policies are and will be kept in full force to and including the Closing Date. All premiums for such insurance have been paid in full. Neither Contributor nor the District has received (and Contributor has no knowledge of) any notice or request from any insurance company or Board of Fire Underwriters (or organization exercising functions similar thereto) cancelling or threatening to cancel any of said policies or denying or disputing coverage thereunder. The Insurance Policy is freely assignable to the Partnership or its designee and, except for the premiums therefor, contains the same terms as the policy which it replaced. A true and complete copy of such replaced policy, including any modifications thereof or supplements thereto, and the premium information for the Insurance Policy have been furnished to the Partnership. (u) Except as set forth in Schedule 6.2(s) and to Contributor's knowledge, none of the Tenants or Anchors is the subject of any bankruptcy, reorganization, insolvency or similar proceedings or has ceased or reduced or intends to cease or reduce operations at the Mall other than temporarily due to casualty, remodeling, renovation or similar cause. (v) [INTENTIONALLY DELETED]. (w) Schedule 6.2(w) accurately sets forth (i) a list of all instruments, agreements and other documents relating to -49- the Existing Indebtedness and all modifications or amendments thereof and supplements thereto (including without limitation guaranties, indemnity agreements and side letters) (the "Existing Indebtedness Documents"), (ii) the date of the Existing Indebtedness Documents and of each modification or amendment thereof and supplement thereto, (iii) the name of the holders of the Existing Indebtedness as of the date hereof, (iv) the unpaid balances thereof as of the date hereof, (v) the security therefor as of the date hereof and (vi) the amount of any deposits or escrows held or established in connection therewith. The Existing Indebtedness Documents are in full force and effect, Contributor has not received any notice of default under any Existing Indebtedness Document, and no default on the part of Contributor or, to the Contributor's knowledge, any other Party thereto exists thereunder (without regard to notice and cure provisions). A true and complete copy of the Existing Indebtedness Documents, including without limitation each written modification thereof and supplement thereto, have heretofore been furnished to the Partnership. Such documents constitute the entire agreement between the parties thereto, and there are no oral promises or agreements amending or modifying the same. The outstanding principal amount of the Key Bank Indebtedness is $2,936,905.00 as of the date hereof, and the Key Bank Indebtedness may be repaid in full at Closing without notice or penalty. (x) Except as set forth on Schedule 6.2(x), neither Contributor nor the Ground Lessor is under obligation to make contributions or otherwise provide assistance to any promotional association or promotional fund and has not customarily in the past made or provided any such contributions or assistance. Contributor has paid or remitted to the Promotional and Advertising Fund any amounts (including without limitation amounts received by it from Tenants and other Parties that constitute contributions to such promotional association or fund) that are required to be paid or remitted by it to such promotional fund. (y) To Contributor's knowledge, Contributor has delivered to the Partnership true and complete copies of all environmental reports (including without limitation asbestos surveys), engineering reports, ADA surveys and other material reports or studies relating to the Mall or the Property that were prepared at the request of or otherwise are in the possession of Contributor, the Ground Lessor or any Affiliate of Contributor. Contributor does not warrant the accuracy of any such report, but Contributor does not have knowledge of any inaccuracy contained therein. (z) Except as indicated on Schedule 6.2(z), none of Contributor, the Guarantors or any spouse or child of -50- Guarantors directly or indirectly owns or leases any land within a one (1) mile radius of the Real Property. (aa) Each of Contributor and P&P has been advised that the Units to be issued to Contributor hereunder shall not be registered under the 1933 Act or under the securities laws of any state or other jurisdiction; that the Partnership shall not have any obligation to register the same in connection with the offering, sale or issuance thereof to it pursuant hereto or at any time thereafter; that the Units are subject to restrictions on transfer contained in the Partnership Agreement and herein and, in any event, cannot be sold unless they are subsequently registered under the 1933 Act or an exemption from such registration is available; and that the Partnership, in issuing its Units in accordance with the provisions hereof, is relying upon the representations contained herein and in the Questionnaires. (ab) Each of Contributor and P&P has received a copy of, has been advised to read, and has read the Memorandum, including its exhibits, and each of Contributor and P&P has become familiar with the Memorandum's terms and provisions. (ac) Each of Contributor and P&P has been provided with such other information regarding the Partnership as it has requested and has had an opportunity to meet with and ask questions of representatives of the Partnership. No oral or written representations have been made to either Contributor or P&P in connection with the Transactions which are in any way inconsistent with the information contained in the Memorandum and this Agreement, and, if any representations or warranties were made that do not expressly state in writing that they supersede this disclaimer, neither Contributor nor P&P is relying on or will rely on them. (ad) Each of Contributor and P&P understands that the Transactions may involve complex tax consequences, that it has been advised to consult with, and has consulted with, independent tax counsel, regarding the tax consequences of the Transactions and that each of Contributor and P&P is relying solely upon the advice of its own tax advisors in evaluating such consequences and that none of the Partnership, the General Partner or their advisors have made (nor shall they be deemed to have made) any representations as to the tax consequences of the Transactions. (ae) Each of Contributor and P&P is an "accredited investor" within the meaning of Regulation D under the 1933 Act and has knowledge and experience in financial and business matters such that it is capable of evaluating the merits and risks of receiving and owning the Units to be issued to Contributor pursuant hereto, and each of Contributor and P&P -51- is able to bear the economic risk of such ownership. Neither Contributor nor P&P learned of the Units or was attracted or induced to enter into this Agreement as a result of any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, or presented at any seminar or meeting, or any solicitation of a subscription by a person not previously known to it in connection with investments in real estate generally. (af) The Units to be acquired by Contributor pursuant to this Agreement are being acquired by Contributor for its own account, for investment purposes only and not with a view to, and with no present intention of, selling or distributing the same (other than a distribution of Units to the Qualified Investors in which no consideration is paid by any of such Qualified Investors). (ag) All information provided by Contributor or P&P to its venturers or partners (or the partners of such venturers) in connection with the issuance of the Units (the "Contributor Information") (other than the Memorandum [except for information contained in or omitted from the Memorandum in reliance upon and in conformity with information provided by Contributor or P&P to the Partnership] and any other data supplied in writing by the Partnership and expressly identified as information supplied for inclusion in the Contributor Information and incorporated therein as supplied by the Partnership) contained no untrue statement of material fact and did not omit to state any material fact necessary in order to make the statements therein not misleading. P&P has provided copies of all Contributor Information to the Partnership for its review, but such review shall not impose any liability on the Partnership for any untrue or misleading statements or omissions in the Contributor Information. (ah) Contributor acknowledges that the General Partner may be obligated, under applicable securities laws, to disclose information relating to the Transactions in registration statements or public reports filed under such laws (which registration statements and reports may be filed prior to or following the Closing Date). Contributor consents to the inclusion by the General Partner in any such registration statements or public reports of information provided to the Partnership by or on behalf of Contributor in connection with this Agreement without further notice to Contributor and confirms that none of such information contains any untrue statement of material fact or omits to state any material fact necessary in order to make the statements therein not misleading. -52- (ai) The District is a duly organized and validly existing governmental subdivision of the State of Colorado with full power and authority to conduct its activities as they are currently being conducted. Schedule 6.2(ai) accurately sets forth (i) a list of all organizational documents of the District and indentures, evidences of indebtedness and other agreements or instruments to which the District is a party or is bound and all modifications or amendments thereof and supplements thereto (the "District Documents"), (ii) the date of the District Documents and of each modification or amendment thereof and supplement thereto, (iii) the unpaid balances as of the date hereof of any indebtedness created pursuant to the District Documents, (iv) the security therefor as of the date hereof and (v) the amount of any deposits or escrows held or established in connection therewith. The District Documents are in full force and effect, neither Contributor nor the District has received any notice of default under any District Document, and no default on the part of the District or, to Contributor's knowledge, any other Party thereto exists thereunder (without regard to notice and cure provisions). A true and complete copy of the District Documents, including without limitation each written modification thereof and supplement thereto, have heretofore been furnished to the Partnership. Such documents constitute the entire agreement between the parties thereto, and there are no oral promises or agreements amending or modifying the same. The District has no liabilities (absolute, accrued, contingent or otherwise) except liabilities arising under the District Documents. The District has made no payments to, or reduced amounts due to the District by, Contributor or any of its Affiliates except for amounts paid in accordance with the Existing Management Agreement between a predecessor in interest of the Existing Manager and the District and reductions on account of reductions in the mill levy. (aj) The Ground Lease is in full force and effect, there has been no default by Contributor or the Ground Lessor under the Ground Lease, Contributor has received no notice of default thereunder, the Ground Lease contains the entire agreement between Contributor and the Ground Lessor and there are no oral promises or agreements amending or modifying the same. (ak) No broker, finder, investment banker or other Person is entitled to any brokerage, finder's or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of Contributor (other than Marcus & Millichap Inc., whose fee or commission of not more than $1,000,000 shall, upon and subject to the occurrence of Closing, be paid by the Partnership and shall reduce Net Asset Value). -53- For purposes of this Agreement, the phrase "to Contributor's knowledge" and other phrases of similar import only shall refer to the actual, current, subjective knowledge of the Guarantors, Shell Cook and Eileen Stembler. Notwithstanding anything to the contrary contained herein, (a) the liability of Contributor for a breach of the representations and warranties set forth herein or in the Contributor Closing Documents other than the Estoppels for a Missing Tenant (including the indemnification obligations of Contributor under clause (i) of Section 10.1(a)) shall not exceed in the aggregate $11,300,000.00 and (b) the liability of Contributor for breach of the Estoppels for a Missing Tenant shall not exceed in the aggregate the sum of $250,000.00 (but nothing contained in this sentence shall affect or limit Contributor's liability under this Agreement or the Contributor Closing Documents to the extent that such liability also arises under other indemnities and covenants contained herein or in the Closing Documents other than the Estoppels for a Missing Tenant). ARTICLE VII Access and Certain Rights of Early Termination ---------------------------------------------- 7.1 Due Diligence and Access. (a) From the date hereof until the Closing, Contributor shall give the Partnership and its representatives and consultants, during normal business hours, upon reasonable notice and in a manner that does not unreasonably interfere with the operation of Contributor's business, access to and the right to inspect the Mall and the Property (including without limitation for purposes of conducting environmental testing, the cost of which shall be borne by the Partnership). From the date hereof until Closing and upon request by the Partnership, Contributor promptly shall provide the Partnership with other material information and data with respect to the Mall and the Property which is in the possession of Contributor or the Existing Manager, including without limitation copies of Leases, the Reciprocal Easement Agreement and the Contracts and such financial and other information as the Partnership reasonably requests with respect thereto. The Partnership may contact Parties as the Partnership deems appropriate in connection with its due diligence examination. The Partnership shall bear all expenses associated with its due diligence activities, promptly restore the Property to its former condition, and not permit the Property to become subject to any Liens on account of such due diligence activities. (b) From the date hereof until the Closing, the Partnership shall provide to Contributor such public information and data with respect to the Partnership and the -54- General Partner which is in the Partnership's possession and which Contributor may request. (c) The Partnership shall indemnify, defend and hold harmless Contributor and its successors and assigns from and against any Loss proximately caused by the exercise by the Partnership of its rights of access and inspection pursuant to the provisions of this Section 7.1. The indemnification obligations of the Partnership under this Section 7.1(c) shall survive the termination of this Agreement. 7.2 [INTENTIONALLY DELETED] ARTICLE VIII Conditions to Closing --------------------- 8.1 Conditions to Contributor's Obligations. Contributor's obligation to close is subject to satisfaction of each of the following conditions (any of which may be waived by Contributor in its sole discretion): (a) Compliance with Agreement. On the Closing Date, all of the covenants and agreements to be complied with or performed by the Partnership under this Agreement on or before the Closing shall have been complied with or performed in all material respects. (b) Accuracy of Representations and Warranties. The representations and warranties made by the Partnership in this Agreement (without regard to materiality qualifications contained therein and any supplementation in accordance with Sections 3.3(f) or 10.3) shall be true and complete in all material respects on and as of the Closing Date (without regard to events or developments permitted hereunder or as to which Contributor has otherwise consented in writing). (c) No Other Termination. No termination of this Agreement by Contributor or the Partnership shall have occurred pursuant to any other provision hereof. (d) Consent Obtained; Etc. The consent of the Existing Lender pursuant to Section 2.4 shall have been obtained and the Anchors shall not have exercised the Right of First Refusal. (e) No Litigation. At Closing, there is no litigation, including any arbitration, investigation or other proceeding, pending by or before any court, arbitrator or governmental or regulatory official, body or authority or any decree, order or injunction issued by any such court, arbitrator or governmental or regulatory official, body or authority and remaining in effect which does or is likely to prevent or -55- hinder the timely consummation of the Closing by the Partnership. 8.2 Conditions to Partnership's Obligations. The Partnership's obligation to close is subject to satisfaction of each of the following conditions (any of which may be waived by the Partnership in its sole discretion): (a) Compliance with Agreement. On the Closing Date, all of the covenants and agreements to be complied with or performed by Contributor or P&P under this Agreement on or before the Closing shall have been complied with or performed in all material respects. (b) Accuracy of Representation and Warranties. The representations and warranties made by Contributor and P&P in this Agreement (without regard to materiality qualifications contained therein and any supplementation in accordance with Sections 3.2(k) or 10.3) shall be true and complete in all material respects on and as of the Closing Date (without regard to the bankruptcy or default of any Anchor or Tenant that occurred following the date hereof which was not caused by the acts of Contributor (a "Post-Signing Occupant Event") or events or developments permitted hereunder or as to which the Partnership has otherwise consented in writing). Notwithstanding anything to the contrary contained herein, the Partnership shall have no right to assert a claim for breach of this Agreement, to seek a reduction in the consideration payable hereunder or to refuse to close hereunder on account of any Post-Signing Occupant Event. (c) Estoppels Obtained. The Estoppels shall have been obtained in accordance with Section 10.7 and such Estoppels shall contain no material deviations from (i) the forms thereof provided by or approved by the Partnership (or, where applicable, the Prescribed Form) or (ii) the information contained in this Agreement and the schedules hereto (without regard to the deemed modification of the rent roll pursuant to the parenthetical contained in the second to last sentence of Section 6.2(f)) or the information otherwise furnished to the Partnership by Contributor (without limiting the foregoing, the Estoppels shall contain no assertion of default by Contributor as the result of the matter described on Schedule 6.2(i)). Notwithstanding any provision in this Agreement to the contrary, if Contributor has not obtained Estoppels from all Anchors or Tenants (the Parties from whom Estoppels have not been obtained being herein called the "Missing Parties") but has obtained the Required Estoppels, Contributor shall, in its own capacity, satisfy the condition of this Section 8.2(c) with respect to the Estoppel from each Missing Party by executing and delivering to the Partnership at Closing an Estoppel for such Missing Party in the form prescribed by -56- Section 10.7 (with appropriate changes to such form to reflect that Contributor and not such Missing Party is signing such Estoppel and containing no representation concerning environmental matters) and meeting the requirements set forth in the first sentence of this Section 8.2(c) and the Partnership shall accept same as if executed by the Missing Party. (d) Consents Obtained; Gap Renewal. The Contract Party Consents and the consent and agreement of the Existing Lender pursuant to Section 2.4 shall have been obtained, and the Anchors shall not have exercised the Right of First Refusal (and, with respect to Wards, the court approval referred to in Section 2.12 shall have been obtained). (e) Issuance of Title Policies. The Title Company shall have issued, or be irrevocably committed to issue, the Title Policies as herein contemplated subject only to the Permitted Exceptions with respect thereto. (f) No Other Termination. No termination of this Agreement by the Partnership or Contributor shall have occurred pursuant to any other provision hereof. (g) No Litigation. At Closing, there is no litigation, including any arbitration, investigation or other proceeding, pending by or before any court, arbitrator or governmental or regulatory official, body or authority or any decree, order or injunction issued by any such court, arbitrator or governmental or regulatory official, body or authority and remaining in effect which does or is likely to prevent or hinder the timely consummation of the Closing or materially adversely affect the Mall or the operation thereof. Nothing contained in this Article VIII shall relieve any party hereto of responsibility for the breach by such party of a representation, warranty or covenant of such party contained in this Agreement. ARTICLE IX Condemnation and Destruction ---------------------------- 9.1 Casualty or Condemnation in General. (a) If prior to the Closing Date the Property shall be the subject of a Taking or Casualty, Contributor shall promptly inform the Partnership of same. (b) If prior to the Closing Date the Property shall be the subject of a Substantial Taking or a Substantial Casualty, -57- the Partnership may by written notice delivered to Contributor on or before the Closing Date, elect as its sole remedy on account thereof, either (i) to terminate this Agreement, and the rights of the parties hereto, in which event this Agreement (other than any right or obligation that expressly survives the termination of this Agreement) shall terminate as of the date of delivery of such notice; or (ii) to continue this Agreement in effect, in which event (A) the Partnership shall be entitled to receive and retain any and all insurance proceeds, whether collected before or after Closing (and Contributor shall pay in cash to the Partnership all deductibles paid or payable in respect thereof), or condemnation awards with respect thereto (less, in each such case, (i) reasonable costs of collection thereof (other than the cost of deductibles), and (ii) amounts, if any, applied by Contributor prior to Closing to preservation, repair or restoration), and (B) Contributor shall cooperate in all reasonable respects with the Partnership at the Partnership's sole cost and expense, in connection with the collection thereof, to the extent not collected at the Closing. (c) If prior to the Closing Date, the Property or any portion thereof is (i) the subject of a Taking (other than a Substantial Taking) or (ii) the subject of a Casualty (other than a Substantial Casualty), this Agreement shall nevertheless remain in full force and effect with no abatement of the consideration to be delivered to Contributor on account thereof and the Transactions shall be consummated as provided herein. In such event, any insurance proceeds or condemnation awards shall be applied and paid in the same manner and subject to the same provisions set forth above as are applicable in a case of a Substantial Casualty or a Substantial Taking as to which the Partnership has elected nevertheless to continue this Agreement in effect. 9.2 Adjustment of Claims and Condemnation Proceedings. If a Taking or Casualty shall occur, Contributor shall initiate or cause to be initiated all actions required to adjust, compromise and collect the awards payable by the condemning authority or the proceeds payable under the applicable policy or policies of casualty insurance. Contributor shall permit the Partnership to participate with Contributor in the initiation of all such actions and, in any event, Contributor shall consult with, and keep the Partnership advised of, Contributor's progress in connection therewith. Contributor shall not agree to any settlement of the awards or insurance proceeds payable in connection with any such Taking or Casualty (or enter into any agreement in lieu of a Taking) without the Partnership's approval, which approval shall not be unreasonably withheld or delayed. -62- ARTICLE X Additional Covenants -------------------- 10.1 Indemnification. (a) Indemnification by Contributor. From and after the Closing, Contributor shall indemnify, defend and hold harmless the Partnership, its successors and assigns and their members, shareholders, partners, directors, officers, employees and agents (the "Indemnified Partnership Persons") from and against any claim, action, demand, loss, cost, expense, liability, penalty or damages, including, without limitation, reasonable attorneys' fees and expenses (a "Loss"), incurred or suffered by any Indemnified Partnership Person that results from, relates to or arises out of (i) the breach or inaccuracy of any representation or warranty made by Contributor in this Agreement or the Contributor Closing Documents, (ii) the breach or non-fulfillment by Contributor of any of the covenants or agreements of Contributor under this Agreement or the Contributor Closing Documents, (iii) the Contributor's Liabilities, or (iv) the operation or use of the Mall or the Property prior to the Closing Date (other than Losses that constitute, result from or arise out of the Assumed Liabilities or a breach of a representation, warranty or other covenant made by the General Partner or the Partnership herein or in the Closing Documents). (b) Indemnification by Partnership. From and after the Closing, the Partnership shall indemnify, defend and hold harmless Contributor and its constituent joint venturers and its successors and assigns and their partners, employees and agents (the "Indemnified Contributor Persons") from and against any Loss incurred or suffered by any Indemnified Contributor Person that results from, relates to, or arises out of (i) the breach or inaccuracy of any representation or warranty made by the Partnership in this Agreement or the Partnership Closing Documents, (ii) the breach or non-fulfillment by the Partnership of any of the covenants or agreements of the Partnership under this Agreement or the Partnership Closing Documents, (iii) the Assumed Liabilities, or (iv) the operation or use of the Property on or after the Closing (other than Losses that constitute, result from or arise out of the Contributor's Liabilities or a breach of a representation, warranty or other covenant made by Contributor herein or in the Closing Documents). (c) Indemnification by P&P. From and after the Closing, P&P shall indemnify, defend and hold harmless the Indemnified Partnership Persons from and against any Loss incurred or suffered by any Indemnified Partnership Person that results from, relates to or arises out of (i) the breach or inaccuracy of any representation or warranty made by P&P in this -59- Agreement or the Contributor Closing Documents or (ii) the breach or non- fulfillment by P&P of any of the covenants or agreements of P&P under this Agreement or the Contributor Closing Documents. (d) Joint Cooperation. Upon obtaining knowledge of the institution of any action or proceeding or other event which could give rise to a claim for indemnity hereunder, the Person seeking indemnification shall promptly give written notice thereof (but no later than 15 days after being served with process in any litigation and 30 days after receiving any other written claim which may be the subject of indemnification hereunder) to the party from whom indemnification may be sought. If such claim or demand relates to a claim or demand asserted by a third party, the indemnifying party shall have the right, at its expense, to employ counsel to defend such claim or demand and the indemnified Person shall have the right, but not the obligation, to participate in the defense of any such claim or demand at its own cost; provided, however, that counsel to be utilized in defense of the matter by the indemnifying party shall be reasonably approved by the indemnified Person, and provided further that the indemnifying party shall not assume the defense for matters as to which there is a conflict of interest or separate and inconsistent defenses, in which case the indemnified Person will utilize counsel reasonably approved by the indemnifying party and the indemnifying party will reimburse the indemnified Person for any legal and other expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action. The indemnified Person will not settle any claim or demand for which indemnity is sought hereunder without the indemnifying party's written consent (which consent shall not be unreasonably withheld or delayed), and the indemnifying party may settle such claim or demand with the written consent of the indemnified Person, which consent may not be unreasonably withheld or delayed so long as the indemnified Person receives an unconditional release. The indemnified Person shall make available to the indemnifying party all records and other materials reasonably required by it in contesting a claim or demand asserted by a third party against the indemnified Person and shall cooperate in the defense thereof. Notwithstanding anything to the contrary contained herein, a failure to provide written notice to the party from whom indemnification is sought within the time period specified above shall not preclude the other party's right to indemnification except to the extent the indemnifying party has been prejudiced by such failure. 10.2 Conduct of Business Pending Closing. From the date hereof until the Closing and unless otherwise provided herein (including without limitation Sections 2.8 and 2.9), Contributor -60- shall (a) use reasonable best efforts to maintain, for the benefit of the Partnership following the Closing, the goodwill of Tenants, prospective tenants of the Property, vendors of the Property and other parties having business relations with Contributor in respect of the Property; (b) pay its debts (or in good faith contest the same) and perform its obligations in respect of the Property as they become due; (c) maintain the Mall in good condition and repair, as such condition shall be altered by reason of Casualty, Taking and/or normal wear and tear; (d) without the express written consent of the Partnership, not (i) enter into any new or additional Lease or ground lease, or extend, renew or modify, consent to any assignment of or sublease or other matter in respect of, or waive any material right under any Lease or the Ground Lease, other than renewals or extensions resulting from the exercise by a Tenant of a currently existing renewal or extension option, (ii) cancel or terminate the Ground Lease or any Lease or take any action to enforce any Lease which would have the effect of cancelling or terminating the same, (iii) enter into a new reciprocal easement or similar agreement in respect of the Property or amend or modify, consent to the assignment or any other matter in respect of or waive any material right under the Reciprocal Easement Agreement, (iv) make any alterations to the Mall or enter into any new contracts or extend or renew or cancel any Contract relating to capital expenditures in respect of the Property, (v) enter into any other new contracts in respect of the Property or extend, renew or cancel, consent to the assignment or any other matter in respect of or waive any material right under any other Contract, except in the ordinary and usual course and business and in accordance with past practices and policies (provided any such new extended or renewed contracts must be terminable without penalty or payment on not more than 30 days' notice), (vi) sell, transfer, exchange, further encumber or grant interests (including easements) in the Property or any part thereof, (vii) extend, modify or amend any of the Existing Indebtedness Documents or borrow additional funds thereunder, (viii) hire any employees in respect of the Property, and (ix) otherwise take any action which could or would render inaccurate any of the representations or warranties made by Contributor in this Agreement; (e) not convert Contributor to, or permit any venturer of Contributor or any partner of any such venturer to become, a limited liability entity or otherwise to limit its liability as a venturer or general partner of Contributor or any of such venturers; and (f) otherwise operate the Mall in the ordinary course consistent with current practice. From the date hereof until the Closing or the earlier termination of this Agreement, Contributor shall not sell, transfer, exchange, encumber or grant any interest in the Property or any part thereof, permit the sale, transfer, exchange, further encumbrance or grant of any interest in the Property, or engage in negotiations or discussions with, or otherwise solicit or assist, any third party relating to the acquisition by such third party of the Property. -61- 10.3 Supplemental Disclosure. From the date hereof through Closing, Contributor and the Partnership shall have the continuing obligation to promptly supplement or amend the Schedules with respect to the representations and warranties made by each of them to reflect any matter hereafter arising or discovered which, if existing or known at the date hereof, would have been required to be set forth herein or described thereon (but no such supplementation shall relieve either party from liability for any breach of its representations and warranties as of the date made). Without limiting the foregoing, if any Leases or Contracts, or amendments thereto, are hereafter entered into, Contributor shall give the Partnership prompt written notice thereof and the appropriate exhibits or schedules hereto shall be updated and amended accordingly. In addition, if, at any time prior to the Closing Date, Contributor should learn of any information that is necessary to correct any statement that is or becomes incorrect in any material respect (based upon information, including financial information, supplied by or on behalf of Contributor) made in, or to provide material information omitted from, the Contributor Information or the Memorandum, or if Contributor obtains knowledge of any material event that requires disclosure in the Contributor Information or the Memorandum, Contributor shall promptly inform the Partnership and cooperate with the Partnership so that the Contributor and the Partnership may each prepare a supplement to the Contributor Information and Memorandum, respectively, if the responsible party deems that a supplement is necessary. 10.4 [Intentionally Deleted] 10.5 Cooperation. Contributor shall use reasonable best efforts to obtain a consent of the Parties to the Contracts marked with a "1" on Schedule 6.2(m), if any (the "Contract Party Consents"). The Partnership shall cooperate with Contributor in seeking to obtain all approvals, consents and estoppels of third parties required by this Agreement (but shall not be obligated to pay money or grant concessions therefor), including any Contract Party Consents, and shall furnish to Contributor or to any Party such information as to the Partnership, its capabilities, its experience in the ownership and management of real property and as to such other matters as Contributor or any Party shall reasonably request in connection therewith. 10.6 Transfer and Other Taxes; Etc. The Partnership shall pay the real property transfer taxes, personal property sales taxes and recording fees, if any, imposed by the state, county or municipality as the result of the Transactions. Each of Contributor, on the one hand, and the Partnership, on the other hand, shall pay one-half of the costs of any escrow established in connection with the Closing of the Transactions. Each of Contributor, on the one hand, and the Partnership, on the other hand, shall pay the legal costs incurred by it in connection with the Transactions. -62- 10.7 Estoppel Certificates. Contributor shall request, and shall use reasonable best efforts to obtain from each Party to the Reciprocal Easement Agreement and each Tenant or other Party under a Lease an estoppel certificate, dated not more than thirty (30) days prior to the Closing Date, in form reasonably acceptable to the Partnership, and an estoppel certificate, dated not more than thirty (30) days prior to the Closing Date, from the Existing Lender in form reasonably satisfactory to the Partnership; provided, however, that if the Reciprocal Easement Agreement or any Lease shall, by its terms, prescribe the form or content of an estoppel certificate, Contributor only shall be required to attempt to obtain an estoppel certificate from the Party thereto in the form prescribed by the relevant document and containing only such information as is required to be delivered thereunder (the "Prescribed Form"). Contributor shall complete the missing information in such form estoppel certificates prior to sending them to Parties or the Existing Lender, as the case may be. The Partnership shall not be deemed to have approved any matters disclosed in the estoppel certificates delivered to the Partnership on or prior to the date hereof and no such disclosure shall constitute a waiver by the Partnership of any provision hereof. Notwithstanding anything to the contrary contained herein, Contributor shall have no liability hereunder for breaches of representations or warranties to the extent that the facts giving rise to such breach are disclosed in the Estoppels (but nothing contained in this sentence shall affect or limit Contributor's liability under this Agreement to the extent that such liability also arises under other provisions hereof). 10.8 Record Retention. After the Closing, the Partnership shall provide Contributor with reasonable access to the Books and Records and, at Contributor's cost, copies of all or any portion thereof (and Contributor shall retain copies of such records as shall be necessary to enable it to comply with its obligations contained in the last sentence of Section 10.10). The Partnership shall retain the Books and Records until the fifth anniversary of the date hereof or notify Contributor of its desire to dispose of the Books and Records or any portion thereof and turn the Books and Records or such portion thereof over to Contributor if Contributor so requests. 10.9 Publicity. In no event shall Contributor, on the one hand, or the Partnership, on the other hand, issue any press release or otherwise disclose any non-public information regarding this Agreement or the Transactions (including without limitation any information contained therein) unless the other party or parties have consented thereto in writing and to the form and substance of any such statement or disclosure (and Contributor and the Partnership agree not unreasonably to withhold or delay such consent); provided, however, that nothing herein shall be deemed to limit or impair in any way any party's ability to disclose the details of or information concerning this Agreement, the -63- Transactions or the Property to such party's attorneys, accountants or other advisors or to the extent such party reasonably deems necessary or desirable pursuant to any court or governmental order or applicable securities or other laws or regulations or financial reporting requirements, to obtain the Contract Party Consents, the consent of the Existing Lender, Estoppels or financing for the acquisition of the Property and to assess the Property in connection with the Partnership's due diligence examination (including without limitation contacting Tenants and other Parties). Further, the Partnership may disclose any information regarding this Agreement or the Transactions to its direct or indirect constituent partners or shareholders, as the case may be (and to counsel for such constituent partners and shareholders) and as otherwise necessary to comply with the terms of this Agreement. Any disclosure by a party's advisors or direct or indirect constituent partners or shareholders or their advisors shall be deemed a breach hereof by such party. If for any reason the Transaction is not consummated, each party promptly shall return to the other party all originals and copies of documents, reports and financial and other information relating to such other party and/or the Property which such other party has furnished to such party. The provisions of this Section 10.9 shall terminate upon the Closing. 10.10 Assistance Following Closing. From and after the Closing, Contributor, at the Partnership's sole cost and expense, shall provide reasonable assistance to the Partnership in connection with the preparation of financial statements, securities filings and bills, the adjustment of losses and claims, the enforcement or settlement of any such claims or the operation of the Property. Without limiting the foregoing and upon the request of the Partnership from time to time, Contributor shall (a) subject to applicable law and contractual requirements, cause the lease and property management databases relating to the Mall to be loaded onto the computer systems of the Partnership or its designee or provide disks containing such databases on or prior to Closing, (b) promptly provide to the Partnership or confirm any information concerning Contributor or the Property or the operation thereof that the Partnership or the General Partner reasonably determines is necessary or desirable to be included in any registration statement or periodic report of the General Partner that is filed or to be filed under applicable securities law and (c) promptly provide signed representation letters with respect to revenues and expenses relating to the Mall if required under GAAS to enable the Partnership's certified public accountants to render an opinion on the financial statements of the Partnership. Notwithstanding anything to the contrary contained herein, Contributor shall, at Contributor's sole cost and expense, (a) calculate and prepare (or cause to be calculated and prepared) Tenant invoices for Adjustable Tenant charges for any period ending prior to the Closing Date and (b) investigate, handle and, with the approval of the Partnership (which shall not be unreasonably withheld or delayed), settle all -64- inquiries and disputes relating to such Adjustable Tenant Charges (but any and all amounts collected shall be paid to the Partnership and, to the extent provided in Article IV, remitted to Contributor. 10.11 Further Assurances. Each of Contributor and the Partnership agree, at any time and from time to time after the Closing, to execute, acknowledge where appropriate and deliver such further instruments and other documents (and to bear its own costs and expenses incidental thereto) and to take such other actions as the other of them may reasonably request in order to carry out the intents and purposes of this Agreement; provided, however, that neither of Contributor nor the Partnership shall be obligated, pursuant to this Section 10.11, to incur any expense of a material nature and/or to incur any material obligations in addition to those set forth in or contemplated by this Agreement and/or the Closing Documents. 10.12 Restrictions on Certain Dispositions of Real Property. (a) Without the written consent of Contributor, the Partnership shall not voluntarily sell or otherwise dispose of all or a portion of the Real Property prior to the fifth anniversary of the Closing Date (the "Fifth Anniversary Date") if such sale or disposition would be treated as a "sale" or "disposition" for federal income tax purposes or if gain would otherwise be recognized to Contributor as the result thereof. (b) The provisions of Section 10.12(a) shall not apply to (i) transactions, such as like-kind exchanges, which would not result in the recognition of income or gain to the Partnership for federal income tax purposes that would be allocable to Contributor by reason of the application of Section 704(c) or Section 737 of the Code (but, in the event of any disposition permitted by the preceding clause, the disposition of any carryover basis real property or other successor real property shall be subject to the provisions of this Section 10.12), (ii) the conveyance of the Real Property or any part thereof to any Person in connection with a bona fide foreclosure proceeding or deed in lieu thereof, (iii) the conveyance of all or a portion of the Real Property to a governmental authority in connection with an eminent domain proceeding or conveyance in lieu thereof or (iv) the grant of an easement or right-of-way for access, parking or utilities but not for substantial consideration. In addition, the provisions of Section 10.12(a) shall not apply to the sale, conveyance or disposition of the Real Property when, in the reasonable judgment of the Partnership, dire, immediate circumstances exist as to the business of the Partnership and the General Partner taken as a whole which require the disposition of the Real Property and similar measures are being taken with respect to other properties of the -65- Partnership or its subsidiaries. If the Partnership shall have obtained and provided to the Contributor or its successors an unqualified opinion of counsel with respect to the determination of whether a particular transaction will result in income or gain for federal income tax purposes by Contributor or is treated as a sale or disposition of all or part of the Real Property for federal income tax purposes (although the Partnership shall not be required to do so), the determination set forth in such opinion shall be deemed conclusive for purposes of this Agreement. Any transaction prohibited pursuant to the provisions of Section 10.12(a) is hereinafter referred to as a "Prohibited Disposition." 10.13 Debt Allocation; Etc. (a) The Partnership shall use commercially reasonable efforts to refinance the Existing Indebtedness with nonrecourse indebtedness provided that the cost and other terms thereof are not substantially less favorable than the cost and other terms of other available financing alternatives, including without limitation the use of internally generated funds. (b) In accordance with paragraph (3)(a) under the heading "Analysis" in Revenue Ruling 95-41, 1995-1 C.B. 32, "excess nonrecourse liabilities" of the Partnership shall be allocated among the partners of the Partnership by taking into account the share of Section 704(c) built-in gain of Contributor with respect to the Real Property to the extent such gain is not taken into account in making an allocation of nonrecourse liabilities to it under Treasury Regs. (S)1.752-3(a)(2). Therefore, the parties agree that the "excess nonrecourse liabilities" allocated to the Contributor will be an amount equal to (1) the total nonrecourse liabilities attributable to the contributed property reduced by (2) the first and second tier allocations pursuant to Rev. Rul. 95-41. This treatment shall not be binding on the Partnership in the event that the Internal Revenue Service (the "IRS") revokes, amends or modifies Rev. Rul. 95-41 or in the event that the IRS issues guidance which indicates that Rev. Rul. 95-41 cannot be interpreted consistently with this Section. (c) The Partnership shall notify Contributor prior to the repayment or refinancing of any Contributor Property Indebtedness that occurs on or before the tenth anniversary of the date hereof, which notice shall include a good faith estimate of the amount by which the amount of Partnership liabilities that Contributor may include in the tax basis of its Units pursuant to Section 1.752 of the Treasury Regulations shall be reduced as the result thereof. -66- (d) In the event that any such repayment or refinancing or any other event occurs prior to the tenth anniversary of the Closing Date and reduces the amount of the Partnership liabilities that Contributor may include in the tax basis of its Units pursuant to Section 1.752 of the Treasury Regulations, the Partnership shall, upon receipt of written notice from Contributor, use commercially reasonable efforts to make provision for Contributor to guaranty one or more indebtednesses of the Partnership (but, except as provided in subsection (a) above, the Partnership shall not be obligated to incur additional indebtedness or retain the Existing Indebtedness or to permit such guaranties if such guaranties shall have a material adverse tax effect on the Partnership or the other partners thereof) so as to enable Contributor to increase its "economic risk of loss" (within the meaning of Section 1.752-2 of the Treasury Regulations) with respect to liabilities of the Partnership to the extent of such reduction but minimize the economic risk of such guaranties to Contributor to the extent practicable by guarantying the "bottom" portion. The amount of the "bottom" guaranties given by Contributor and others (whose obligations shall be pari passu) in respect of any indebtedness shall not exceed fifty percent of the fair market value of the collateral for that indebtedness at the time of such guaranty, as determined in good faith by the Partnership. To the extent that the amount to be "bottom" guaranteed exceeds fifty percent of the fair market value (as determined above) of the collateral for such indebtedness at the time of such guaranty, the Partnership shall make commercially reasonable efforts to allow Contributor to "bottom" guaranty one or more other indebtednesses of the Partnership upon the terms and subject to the limitations contained in the other sentences of this subsection (d). Any such guaranties shall be in form reasonably acceptable to Contributor and the Partnership. (e) The Partnership shall allocate the tax items arising from the ownership of the Real Property, including items of depreciation, amortization and gain or loss, using the "traditional method" provided in Treasury Regulation (S)1.704-3(b)(1). The parties hereto expressly agree and acknowledge that, notwithstanding anything to the contrary in the Partnership Agreement, Contributor will bear the tax detriments associated with any precontribution gain with respect to the Real Property to the extent and in the manner required by Treasury Regulation (S)1.704-3(b)(1), taking into account the "ceiling rule", and that the General Partner shall not specifically allocate any other tax items of the Partnership to "cure" for the effects of the ceiling rule as applied to the Real Property. The parties agree that the built-in gain with respect to the Property (as defined in Reg. (S)1.704-3(a)(3)(ii)) shall be determined in accordance with the provisions of Reg. (S)1.704-1(b)(2)(iv)(g)(3). -67- (f) Not later than sixty days prior to the end of each calendar year (provided Contributor has submitted to the Partnership a written request not less than thirty days nor more than sixty days prior thereto), the Partnership shall provide written notice to Contributor of the Partnership's good faith estimate of the amount of liabilities that will be allocated to Contributor for such calendar year. If the Partnership acts in good faith in calculating such estimate and the estimate referred to in Section 10.13(c), the Partnership shall have no liability for mistakes in the calculation of such estimates. 10.14 Delivery of Certain Information. The Partnership shall transmit to Contributor (a) all periodic reports or statements furnished to the public stockholders of the General Partner simultaneously with the transmission thereof to such public stockholders, (b) promptly following written request by Contributor or its successors or assigns, copies of all amendments to the Partnership Agreement and (c) promptly following written request by Contributor or its successors or assigns (but no more frequently than once each calendar year), a list of the names and addresses of all partners of the Partnership. 10.15 Transfer of Units; Etc. (a) The Units issued pursuant hereto may be distributed to the venturers of Contributor or the partners of such venturers who are Qualified Investors (without the payment of consideration by such venturers or partners), and the General Partner shall acknowledge that such Persons are substituted limited partners of the Partnership. The Units may not otherwise be conveyed to any of such partners and no other Person may own any direct or indirect interest in Units through Contributor or any venturer of Contributor following Closing. (b) Except as provided in Section 10.15(a), the Units may not be sold, pledged or otherwise transferred prior to the first anniversary of the Closing Date. (c) There may be no more than 25 record owners at any time hereafter of the Units that are issued pursuant hereto and indirectly owned as of the Closing Date by Jordon Perlmutter or Samuel Primack, a member of the families of either of them, a trust for the benefit of any of the foregoing Persons or a Person controlled by one or more of the foregoing Persons. 10.16 Employees. Following Closing, either the Partnership or GGMI may, in its discretion, offer to employ any or all Property employees (who Contributor shall cause to be terminated prior to Closing) on such terms as it deems advisable. Contributor shall pay or cause to be paid all amounts owing to all -68- Property employees through the Closing Date and accrued vacation pay through the Closing Date. ARTICLE XI Miscellaneous 11.1 Survival. The representations, warranties and agreements of Contributor, P&P and the Partnership set forth herein and in the Closing Documents or an Estoppel for a Missing Tenant shall survive Closing indefinitely. Notwithstanding the foregoing, the representations and warranties of Contributor contained herein, in the Estoppels for a Missing Tenant and in other Closing Documents (other than the representations and warranties contained in Sections 6.2 (a), (b), (c) and (aa)-(ah) or that relate thereto), including the indemnification obligations of Contributor set forth in clause (i) of Section 10.1(a) to the extent that they relate to such representations and warranties, shall survive Closing only until the eighteen month anniversary of the Closing Date except as to Losses of which written notice has been given prior to such anniversary date in accordance with Section 12.2 and the other provisions of this Agreement (but nothing contained in this sentence shall affect or limit Contributor's liability under this Agreement to the extent that such liability also arises under other indemnities and covenants contained herein or in the Closing Documents). 11.2 Notices. Notices must be in writing and sent to the party to whom or to which such notice is being sent, by certified or registered mail, return receipt requested, commercial overnight delivery service or delivered by hand with receipt acknowledged in writing, as follows: (a) To the Partnership: 55 West Monroe Street, Suite 3100 Chicago, Illinois 60603 Attention: Matthew Bucksbaum with a copy thereof to: Neal, Gerber & Eisenberg Two North LaSalle Street, Suite 2200 Chicago, Illinois 60602 Attention: Marshall E. Eisenberg (b) To Contributor: 1601 Blake Street-#600 Denver, Colorado 80202 Attention: Jordon Perlmutter -69- with a copy to: Silverman & Riley 1601 Blake Street-#310 Denver, Colorado 80202 Attention: William Silverman with a copy to: Michael Cooper/Irving Hook Cooper Investments 3515 S. Tamarac Denver, Colorado 80237 with a copy to: Samuel Primack 6825 East Tennessee Ave, #201 Denver, Colorado 80224 Except as otherwise set forth herein, all notices (a) shall be deemed given when received or, if mailed as described above with appropriate postage, after 5 business days and (b) may be given either by a party or by such party's attorneys. The cost of delivery shall be borne by the party delivering the notice. 11.3 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and all of which together shall constitute a single document when at least one counterpart has been executed and delivered by each party hereto. Facsimile signatures shall be deemed to be the equivalent of original signatures for purposes hereof. 11.4 Amendments. Except as otherwise provided herein, this Agreement may not be changed, modified, supplemented or terminated, except by an instrument executed by the parties hereto. 11.5 Waiver. Each party shall have the right, exercisable in its sole and absolute discretion, but under no circumstances shall be obligated, to waive or defer compliance by any other party with its obligations hereunder or to waive satisfaction of any conditions contained herein for its benefit. No waiver by any party of a breach of any covenant or a failure to satisfy any condition shall be deemed a waiver of any other or subsequent breach or failure to satisfy any other condition. All waivers of any term, breach or condition hereof must be in writing. 11.6 Successors and Assigns. Subject to the provisions of Section 11.10, the terms, covenants, agreements, conditions, representations and warranties contained in this Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. -70- 11.7 Third Party Beneficiaries. The provisions of this Agreement are made for the benefit of the parties hereto and their respective successors in interest and assigns and are not intended for, and may not be enforced by, any other person or entity. 11.8 Partial Invalidity. If any term or provision of this Agreement or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each term and provision of this Agreement shall be valid and enforced to the fullest extent permitted by law. 11.9 Governing Law. This Agreement has been made pursuant to and shall be governed by the laws of the State of Colorado (without regard to conflicts of law rules). 11.10 Assignment. This Agreement may not be assigned or delegated by any party without the written consent of the other party except that the Partnership may assign this Agreement (or any rights hereunder) to an Affiliate of the Partnership, it being acknowledged and agreed by the Partnership that no such assignment shall relieve the Partnership of its obligations under this Agreement. 11.11 Headings; Exhibits. The headings of the various Articles and Sections of this Agreement have been inserted solely for purposes of convenience, are not part of this Agreement and shall not be deemed in any manner to modify, explain, expand or restrict any of the provisions of this Agreement. 11.12 Gender and Number. Words of any gender shall include the other gender and the neuter. Whenever the singular is used, the same shall include the plural wherever appropriate, and whenever the plural is used, the same also shall include the singular where appropriate. 11.13 Entire Agreement; Construction. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes any prior written or oral understandings and/or agreement among them with respect thereto, including without limitation that certain letter of intent dated December 24, 1997, between Contributor and the General Partner, as amended. Each party hereto hereby acknowledges that all parties hereto participated equally in the negotiation and drafting of this Agreement and that, accordingly, no court construing this Agreement shall construe it more stringently against one party than against the other. -71- 11.14 Costs of Enforcement. In the event that any action is brought by any party or parties to this Agreement or any Closing Document against any other party or parties to enforce rights under this Agreement or any Closing Document, the prevailing party's or parties' costs in such action, including reasonable attorneys' fees, shall be paid by the other party or parties. Any amounts owing hereunder or thereunder which are not paid when due shall bear interest at the per annum rate equal to the prime rate of First Chicago NBD N.A. (or any successor), as the same may change from time to time. -72- IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto (and P&P for purposes of binding itself under Section 6.2(aa) through (ag), Section 10.1(c) and Section 3.2(k)) on the date and year first above written. CONTRIBUTOR: SOUTHWEST PROPERTIES VENTURE, a Colorado joint venture By: P&P SOUTHWEST PARTNERSHIP, a Colorado general partnership, which is a joint venturer of Southwest Properties Venture By: /s/ Jordon Perlmutter ---------------------------- Jordon Perlmutter Managing General Partner By: /s/ Samuel Primack ---------------------------- Samuel Primack Managing General Partner By: WADSWORTH PARTNERSHIP, a Colorado limited partnership, which is a joint venturer of Southwest Properties Venture By: The Wadsworth Holding Partnership, a Colorado general partnership, which is the sole general partner of The Wadsworth Partnership By: Cooper Investments, a Colorado general partnership, which is a general partner of The Wadsworth Holding Partnership By: /s/ Michael Cooper ------------------------- Michael Cooper General Partner -73- P&P: P&P SOUTHWEST PARTNERSHIP, a Colorado general partnership By: /s/ Jordon Perlmutter ----------------------------------- Jordon Perlmutter Managing General Partner By: /s/ Samuel Primack ----------------------------------- Samuel Primack Managing General Partner PARTNERSHIP: GGP LIMITED PARTNERSHIP, a Delaware limited partnership By: GENERAL GROWTH PROPERTIES, INC., a Delaware corporation, its general partner By: /s/ Joel Bayer -------------------------------- Its: Senior Vice President ---------------------------- -74- EX-4.2 3 INDENTURE AND SERVICING AGREEMENT DATED NOV. 25, 1997 ================================================================================ THE THIRTEEN ENTITIES IDENTIFIED ON EXHIBIT A HERETO --------- as Issuers, LASALLE NATIONAL BANK, as Trustee and MIDLAND LOAN SERVICES, L.P., as Servicer ____________________ INDENTURE AND SERVICING AGREEMENT Dated and effective as of November 25, 1997 ____________________ Collateralized Fixed Rate Notes due November 15, 2004 Series A-1 Fixed Rate Notes Series B-1 Fixed Rate Notes Series C-1 Fixed Rate Notes Series D-1 Fixed Rate Notes Series E-1 Fixed Rate Notes Collateralized Fixed Rate Notes due November 15, 2007 Series A-2 Fixed Rate Notes Series B-2 Fixed Rate Notes Series C-2 Fixed Rate Notes Series D-2 Fixed Rate Notes Series E-2 Fixed Rate Notes ================================================================================ TABLE OF CONTENTS
Page RECITALS OF THE ISSUERS.......................................................1 GENERAL COVENANT..............................................................1 ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 1.1 Definitions.......................................................2 SECTION 1.2 Form of Documents Delivered to Trustee...........................21 SECTION 1.3 Acts of Holders..................................................22 SECTION 1.4 Computation of Principal Amount..................................23 SECTION 1.5 Notices..........................................................23 SECTION 1.6 Notice to Holders of Notes.......................................25 SECTION 1.7 Successors and Assigns...........................................26 SECTION 1.8 Separability Clause..............................................26 SECTION 1.9 Benefits of Indenture............................................27 SECTION 1.10 Governing Law...................................................27 SECTION 1.11 Legal Holidays..................................................27 SECTION 1.12 Security Agreement..............................................28 SECTION 1.13 Third-Party Beneficiary.........................................28 SECTION 1.14 Obligations are Without Recourse................................28 SECTION 1.15 Issuer Representative...........................................30 SECTION 1.16 Execution in Counterparts.......................................31 SECTION 1.17 Consolidation and Splitting of Prior Notes......................31 ARTICLE II FORMS OF THE NOTES SECTION 2.1 Forms Generally..................................................32 SECTION 2.2 Form of Trustee's Certificate of Authentication..................33 SECTION 2.3 Form of the Notes................................................33 SECTION 2.4 Legends..........................................................35 SECTION 2.5 Restricted Notes.................................................38 SECTION 2.6 Global Notes.....................................................38 ARTICLE III THE NOTES SECTION 3.1 Equal and Ratable Securities; Amount; Authorization..............40 SECTION 3.2 Denominations....................................................41 SECTION 3.3 Conditions Precedent to Issuance of Notes........................41 SECTION 3.4 Execution, Authentication and Delivery of the Notes..............43 SECTION 3.5 Payment Account; Holdover Account................................44 SECTION 3.6 Registration; Paying Agent.......................................47 SECTION 3.7 Holder Lists.....................................................49 SECTION 3.8 Transfer and Exchange............................................49
-i- SECTION 3.9 Mutilated, Destroyed, Lost and Stolen Notes.......................56 SECTION 3.10 Interest.........................................................57 SECTION 3.11 Payment of Principal and Interest................................58 SECTION 3.12 Interest on New Notes............................................60 SECTION 3.13 Cancellation.....................................................61 SECTION 3.14 Information......................................................61 SECTION 3.15 Paying Agent to Hold Money in Trust..............................61 ARTICLE IV SATISFACTION AND DISCHARGE OF INDENTURE SECTION 4.1 Satisfaction and Discharge of Indenture...........................62 SECTION 4.2 Defeasance of Notes...............................................63 SECTION 4.3 Application of Trust Money........................................64 SECTION 4.4 Repayment to Issuers..............................................64 SECTION 4.5 Reinstatement.....................................................65 SECTION 4.6 Partial Release of Collateral.....................................65 ARTICLE V REMEDIES SECTION 5.1 Events of Default.................................................66 SECTION 5.2 Acceleration of Maturity; Rescission and Annulment................67 SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee...69 SECTION 5.4 Trustee May File Proofs of Claim..................................69 SECTION 5.5 Trustee May Enforce Claims Without Possession of Notes............70 SECTION 5.6 Application of Money Collected....................................70 SECTION 5.7 Limitation on Suits...............................................73 SECTION 5.8 Unconditional Right of Holders to Receive Principal and Interest..73 SECTION 5.9 Restoration of Rights and Remedies................................74 SECTION 5.10 Rights and Remedies Cumulative...................................74 SECTION 5.11 Delay or Omission Not Waiver.....................................74 SECTION 5.12 Control by Holders...............................................74 SECTION 5.13 Waiver of Past Defaults..........................................75 SECTION 5.14 Undertaking for Costs............................................75 ARTICLE VI THE TRUSTEE SECTION 6.1 Certain Duties and Responsibilities...............................76 SECTION 6.2 Money Held in Trust...............................................82 SECTION 6.3 Notice of Defaults................................................82 SECTION 6.4 Certain Rights of Trustee.........................................83 SECTION 6.5 Compensation and Reimbursement....................................84 SECTION 6.6 Confidentiality...................................................85 SECTION 6.7 Corporate Trustee Required; Eligibility...........................86 SECTION 6.8 Representations and Warranties of the Trustee.....................86
-ii- SECTION 6.9 Merger, Conversion, Consolidation or Succession to Business.......88 SECTION 6.10 Resignation and Removal; Appointment of Successor................88 SECTION 6.11 Acceptance of Appointment by Successor...........................89 SECTION 6.12 Conflicting Interests............................................90 SECTION 6.13 Self Dealing.....................................................90 SECTION 6.14 Investments......................................................91 SECTION 6.15 Unclaimed Funds..................................................93 SECTION 6.16 Illegal Acts.....................................................94 SECTION 6.17 Communications to be Sent to the Rating Agency, Holders and the Initial Purchasers...............................................94 SECTION 6.18 Separate Trustees and Co-trustees................................95 SECTION 6.19 Streit Act.......................................................97 SECTION 6.20 Withholding and Information Reporting............................97 ARTICLE VII THE SERVICER SECTION 7.1 Servicer to Act as Servicer.......................................97 SECTION 7.2 Sub-Servicing Agreements..........................................98 SECTION 7.3 Certain Duties and Responsibilities...............................99 SECTION 7.4 Payment of Impositions, etc. ....................................100 SECTION 7.5 Maintenance of Insurance and Errors and Omissions and Fidelity Coverage.........................................................101 SECTION 7.6 Collection Account...............................................102 SECTION 7.7 Realization upon Mortgaged Property..............................104 SECTION 7.8 Trustee to Cooperate; Release of Original Security Documents.....106 SECTION 7.9 Title and Management of Foreclosed Property......................107 SECTION 7.10 Sale of Foreclosed Property.....................................108 SECTION 7.11 Servicing Compensation..........................................110 SECTION 7.12 Reports to the Trustee; Statements to the Issuer................110 SECTION 7.13 Annual Statement as to Compliance...............................111 SECTION 7.14 Annual Independent Public Accountants' Servicing Report.........111 SECTION 7.15 Access to Certain Documentation Regarding the Loan..............112 SECTION 7.16 Inspections.....................................................112 SECTION 7.17 Advances........................................................112 SECTION 7.18 Rights of the Issuers with Respect to the Servicer..............114 SECTION 7.19 Limitation on the Liability of the Servicer and Others..........115 SECTION 7.20 Servicer Not to Resign; Termination of Servicer by Holders......117 SECTION 7.21 Merger or Consolidation of the Servicer.........................118
-iii- SECTION 7.22 Servicer Default................................................119 SECTION 7.23 Remedies of Trustee.............................................121 SECTION 7.24 Directions by Holders and Duties of Trustee During Servicer Default.........................................................122 SECTION 7.25 Trustee to Act as Servicer; Appointment of Successor............122 SECTION 7.26 Notification to Holders.........................................124 SECTION 7.27 Waiver of Past Events of Default................................124 SECTION 7.28 Representations and Warranties of the Servicer..................124 ARTICLE VIII THE ISSUERS SECTION 8.1 Reports by the Issuers...........................................126 SECTION 8.2 Representations and Warranties of the Issuers....................126 ARTICLE IX SUPPLEMENTAL INDENTURES; AMENDMENTS SECTION 9.1 Supplemental Indentures or Amendments Without Consent of Holders.128 SECTION 9.2 Supplemental Indentures With Consent of Holders..................130 SECTION 9.3 Delivery of Supplements..........................................131 SECTION 9.4 Opinion of Counsel...............................................131 ARTICLE X COVENANTS; WARRANTIES SECTION 10.1 Payment of Principal and Interest...............................132 SECTION 10.2 Maintenance of Office or Agency.................................132 SECTION 10.3 Paying Agents; Transfer Agent; Money for Note Payments to be Held in Trust...................................................132 SECTION 10.4 Withholding; Payment of Additional Amounts......................133 SECTION 10.5 Corporate Existence.............................................135 SECTION 10.6 Payment of Taxes and Other Claims...............................136 SECTION 10.7 Maintenance of Lien and Recording...............................136 SECTION 10.8 Performance and Enforcement.....................................137 SECTION 10.9 Negative Covenants..............................................137 SECTION 10.10 Statement as to Compliance.....................................138 SECTION 10.11 Notices to Rating Agency.......................................138 SECTION 10.12 Resale of Certain Securities...................................138 SECTION 10.13 Completion of Capital/Environmental Items......................139 ARTICLE XI REDEMPTION OF NOTES SECTION 11.1 Applicability of Article........................................139 SECTION 11.2 Election to Redeem; Notice to Trustee...........................141 SECTION 11.3 Selection by Trustee of Notes to be Redeemed....................142 SECTION 11.4 Notice of Redemption............................................143 SECTION 11.5 Deposit of Redemption Price.....................................144 SECTION 11.6 Notes Payable on Redemption Date................................144
-iv- SECTION 11.7 Notes Redeemed in Part..........................................144 ARTICLE XII LIQUIDATION OF COLLATERAL ARTICLE XIII MEETINGS OF HOLDERS OF NOTES SECTION 13.1 Purposes for Which Meetings May Be Called.......................145 SECTION 13.2 Call, Notice and Place of Meetings..............................145 SECTION 13.3 Persons Entitled to Vote at Meetings............................146 SECTION 13.4 Quorum; Action..................................................146 SECTION 13.5 Determination of Voting Rights; Conduct and Adjournment of Meetings........................................................147 SECTION 13.6 Counting Votes and Recording Action of Meetings.................148
ARTICLE XIV ASSUMPTION OF OBLIGATIONS UNDER THE NOTES EXHIBITS Exhibit A Issuers/Shopping Centers Exhibit A-1 Schedule of Issuer Affiliates Exhibit B Form of Note Exhibit C-1 Owner Securities Certification Exhibit C-2 Depositary Securities Certification Exhibit C-3 Transferee Securities Certification Exhibit C-4 Form of Certification for Transfer or Exchange of Restricted Note to Global Note Exhibit C-5 Form of Certification for Transfer or Exchange of Restricted Global Note to Regulation S Temporary Global Note Exhibit C-6 Form of Certification for Transfer or Exchange of Restricted Global Note to Unrestricted Global Note Exhibit C-7 Form of Instruction for Exchange; Exchange Instructions Exhibit C-8 Transferee Certification Exhibit D Form of Certification Requesting Documentation Pursuant to Agreement Section 6.17 Exhibit E Authorized Persons Exhibit F Request for Release of Documents Exhibit G Deferred Maintenance and Other Capital and Environmental Items -v- INDENTURE AND SERVICING AGREEMENT, dated and effective as of November 25, 1997 (this "Indenture"), among THE THIRTEEN ENTITIES IDENTIFIED ON EXHIBIT A HERETO, each having an address c/o GGP Limited Partnership, 55 West Monroe Street, Suite 3100, Chicago, Illinois 60603, Attention: Mr. Bernard Freibaum, LaSalle National Bank, a nationally chartered bank, as trustee (defined herein, together with its successors and any separate or co-trustee appointed pursuant to Section 6.18, as the "Trustee"), having an address at 135 South LaSalle Street, Chicago, Illinois 60603, Attention: Asset-Backed Securities Trust Services: General Growth Properties, and Midland Loan Services, L.P., a Missouri limited partnership, having an address at 210 West 10th Street, 6th Floor, Kansas City, Missouri 64105, Attention: Alan L. Atterbury (defined herein as the "Servicer"). RECITALS OF THE ISSUERS The Issuers have duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of their notes or other evidences of indebtedness (herein individually called a "Note" and collectively called the "Notes") to be issued as provided in this Indenture in the form of Collateralized Fixed Rate Notes due November 15, 2004 and Collateralized Fixed Rate Notes due November 15, 2007 in an aggregate principal amount of up to $560,000,000 and in such additional forms as may be permitted hereunder. All things necessary to make the Notes, when executed by each Issuer and authenticated and delivered by the Trustee hereunder and duly issued by each Issuer, the valid and legally binding obligations of each Issuer enforceable in accordance with their terms, and to make this Indenture a valid and legally binding agreement of each Issuer, the Servicer and the Trustee enforceable in accordance with its terms, except in each case as such enforcement may be limited by bankruptcy, fraudulent conveyance or transfer, insolvency, reorganization, receivership, moratorium or other similar laws relating to or affecting the rights of creditors generally, and by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law), have been done. GENERAL COVENANT IT IS HEREBY COVENANTED AND DECLARED that the Notes are to be authenticated and delivered by the Trustee (or any Authenticating Agent), and the Collateral is to be held and applied by the Trustee, subject to the further covenants, conditions and trusts hereinafter set forth, and each Issuer does hereby represent and warrant, and covenant and agree, to and with the Trustee, for the equal and proportionate benefit and security of the Trustee for the benefit of the Holders of the Notes as follows: ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION 1.1 SECTION 1.1 Definitions. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (b) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles in the United States of America; (c) the word "including" shall be construed to be followed by the words "without limitation"; (d) Section headings are for the convenience of the reader and shall not be considered in interpreting this Indenture or the intent of the parties hereto; (e) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; and (f) the words "immediately available funds" shall have the same meaning as "same day funds" when used herein. 2004 Fixed Rate Notes means the Collateralized Fixed Rate Notes due November 15, 2004 issuable hereunder, which are designated as Series A-1 Fixed Rate Notes, Series B-1 Fixed Rate Notes, Series C-1 Fixed Rate Notes, Series D-1 Fixed Rate Notes and Series E-1 Fixed Rate Notes. 2007 Fixed Rate Notes means the Collateralized Fixed Rate Notes due November 15, 2007 issuable hereunder, which are designated as Series A-2 Fixed Rate Notes, Series B-2 Fixed Rate Notes, Series C-2 Fixed Rate Notes, Series D-2 Fixed Rate Notes and Series E-2 Fixed Rate Notes. Acceleration means that the principal of and interest on the Notes shall become and thereafter be immediately due and payable in full in accordance with their respective terms and the terms of this Indenture, whether automatically or by action of the Servicer, the Trustee or the Holders. -2- Accepted Servicing Practices has the meaning stated in Section 7.1. Act has the meaning stated in Section 1.3. Additional Amounts has the meaning stated in Section 10.4(b). Additional Notes means any Notes (including any Global Notes) representing obligations of the Issuers that are secured by the Collateral and are issued pursuant to a supplemental indenture hereto as set forth in Section 9.1(6). Advance means any Interest Advance or Carrying Cost Advance. Advance Interest Rate has the meaning stated in Section 7.17(c). Affiliate means a Person or Persons, directly or indirectly, through one or more intermediaries, controlling, controlled by or under common control with the Person or Persons in question. The term "control", as used in the immediately preceding sentence, shall mean, with respect to a Person that is a corporation, the right to exercise, directly or indirectly, more than 50% of the voting rights attributable to the shares of the controlled corporation and, with respect to a Person that is not a corporation, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the controlled Person. Agent means any Registrar, Paying Agent or Transfer Agent. Agent Members has the meaning stated in Section 2.6(e). Allocated Amount has the meaning stated in the Mortgage. Applicable Procedures has the meaning stated in Section 3.8(d)(iii). Assignment of Leases has the meaning stated in the Mortgage. Assignment of Contracts has the meaning stated in the Mortgage. Authenticating Agent means the Trustee and/or any Person authorized by the Trustee to act on behalf of the Trustee to authenticate and deliver the Notes. Written notice of such authorization shall be transmitted to the Issuers by the Trustee in a timely manner. Authorized Newspaper means, so long as the Notes are listed on a securities exchange and the rules of such exchange so require, a newspaper published in the city in which such securities exchange is located; provided, however, that for so long as the Notes are listed on the Bourse de Luxembourg, "Authorized Newspaper" shall include the -3- Luxembourg Wort (subject to the next sentence). If, because of temporary or permanent suspension of publication or general circulation of any newspaper or for any other reason, it is impossible or, in the opinion of the Trustee, impracticable to make reasonable publication of any notice required herein in a newspaper published in the city in which the securities exchange is located, "Authorized Newspaper" shall mean any publication in an English language newspaper of general circulation in Europe. Authorized Person, when used with respect to an Issuer, has the meaning stated in Section 3.4 and, when used with respect to the Servicer, means a Servicing Officer. Basic Carrying Costs means the sum of the following costs with respect to the Mortgaged Properties (computed on a monthly basis): (i) Impositions, (ii) insurance premiums, (iii) all ground rent and other charges due by any of the Issuers pursuant to any lease or Operating Agreement relating to any Mortgaged Property, (iv) the fees payable to the Servicer under the Servicer Fee Agreement and the fees payable to the Trustee under the Trustee Fee Agreement, (v) the costs and expenses of the Servicer (including, without limitation, reasonable attorneys' fees and expenses) incurred in connection with a release of a Mortgaged Property or any portion thereof from the lien of the Mortgage and any other Security Documents and (vi) all other costs and expenses reimbursable by any Issuer to the Trustee and the Servicer pursuant to this Indenture. Board of Directors means, with respect to each Issuer, the board of directors of the entity identified on Exhibit A-1 for such Issuer, or, to the extent such board of directors has authorized any committee thereof such committee. Board Resolution means, with respect to each Issuer, a copy of a resolution certified by the Secretary or an Assistant Secretary of the entity identified on Exhibit A-1 for such Issuer or, in the case of a transferee Issuer, the direct or indirect owner of such transferee Issuer having a comparable relationship to such Issuer, to have been duly adopted by the Board of Directors of such Issuer and to be in full force and effect on the date of such certification. Business Day means, any day (i) other than a Saturday or a Sunday or (ii) other than a day on which banking institutions are authorized or required by law, regulation or executive order to close in New York, New York and in the city in which the Corporate Trust Office then is located. Carrying Cost Advance means, subject to the next succeeding sentence, (A) all customary, reasonable and necessary "out of pocket" costs and expenses incurred by the Servicer in the performance of its servicing obligations, including, but not limited to, costs and expenses incurred in connection with (i) the operation, preservation, restoration and protection of any of the Mortgaged Properties which, in the Servicer's judgment and discretion, are necessary to prevent an immediate or material loss to the Holders' interest in such Mortgaged Property, (ii) the payment of Basic Carrying Costs and any other -4- amounts necessary to preserve the priority of the liens created by the Mortgage and the other Security Documents, if unpaid by the Issuers, (iii) any enforcement, foreclosure or other judicial proceedings, including, but not limited to, court costs, reasonable attorneys' fees and expenses, and costs for environmental and engineering consultants and any other third-party experts, and (iv) the management and liquidation of any of the Mortgaged Properties if any of the Mortgaged Properties are acquired in full or partial satisfaction of the Secured Obligations, including Liquidation Expenses, and (B) to the extent not covered by clause (A) above, all costs and expenses incurred by the Servicer for any deferred maintenance with respect to a Mortgaged Property which has not been completed at the time the Servicer, in the name of the Trustee, for the benefit of the Holders, takes possession of such Mortgaged Property by foreclosure or otherwise. In no event shall the term "Carrying Cost Advance" include (a) any principal due on the Notes, (b) any loss due to an Uninsured Cause, (c) amounts disbursed to pay capital improvements to any Mortgaged Property, other than those necessary to prevent an immediate or material loss to the Holders' interest in the Mortgaged Properties or as otherwise described in clause (B) above with respect to deferred maintenance or (d) any amounts required to cure a failure of any of the Mortgaged Properties to comply with any applicable Environmental Law, or (except in connection with the foreclosure or other acquisition of a Mortgaged Property upon the occurrence of an Event of Default) to investigate, test, monitor, contain, clean-up or remedy an environmental condition present at any of the Mortgaged Properties. Cash means coin or currency of the United States of America or immediately available federal funds, including such funds delivered by wire transfer. Casualty Account has the meaning stated in Section 10.8(b). CEDEL means Cedel Bank, societe anonyme. CERCLA means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. Class means the Notes of any two series having the same initial letter designation. For example, all Notes designated as Series A-1 Fixed Rate Notes and Series A-2 Fixed Rate Notes belong to the same Class (i.e. "Class A"). Class A Notes means the Series A-1 Notes and the Series A-2 Notes, collectively. Class B Notes means the Series B-1 Notes and the Series B-2 Notes, collectively. Class C Notes means the Series C-1 Notes and the Series C-2 Notes, collectively. Class D Notes means the Series D-1 Notes and the Series D-2 Notes, collectively. Class E Notes means the Series E-1 Notes and the Series E-2 Notes, collectively. -5- Closing Date means November 25, 1997. Code means the United States Internal Revenue Code of 1986, as amended, and applicable Treasury Department regulations thereunder. Collateral means the Security Documents and all monies, accounts, instruments and other property (other than the proceeds of the issuance of the Notes), including the interest of the Trustee in the Mortgaged Properties as mortgagee or beneficiary under the Security Documents (including, without limitation, all rent, revenues, issues, Proceeds, profits, security and other monies payable or receivable thereunder or with respect thereto and the after- acquired property clauses thereof) subject or intended to be subject to this Indenture or constituting a part of the security for the Holders of the Notes for the performance by each Issuer of its obligations thereunder or hereunder as of any particular time, and the proceeds of the foregoing, or evidenced and assigned to the Trustee after the date hereof (whether by the Issuers or any other Person) and all amounts in the Payment Account and any other property that is conveyed to the Trustee in trust for the benefit of the Holders of the Notes. Collateral Value means as of any date with respect to Eligible Investments theretofore delivered to the Trustee, the aggregate amount of payments of principal of U.S. Government Securities and Debt Securities and the predetermined and certain income therefrom that will be paid or payable to the Trustee on or before the Business Day prior to each day on which payments are due on the obligations in respect of which such Eligible Investments were delivered, without consideration of any reinvestment of such income, plus the face amount of any Cash, all as certified in writing to the Trustee by a recognized and reputable independent certified public accounting firm or investment banking firm selected by the Issuers (unless reasonably disapproved by the Trustee). Collection Account has the meaning stated in Section 7.6. Confidential Information has the meaning stated in Section 6.6. Corporate Trust Office means the principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which as of the Closing Date is 135 South LaSalle Street, Chicago, Illinois 60603, Attention: Asset-Backed Securities Trust Services: General Growth Properties, and, with respect to presentations of the Notes, the New York presenting office of the Trustee shall be IBJ Schroder Trust Bank Stock Transfer Department, One State Street Plaza, New York, New York 10015 for the account of LaSalle National Bank, ABS Trust Services Group. Custodian means LaSalle National Bank, and any successor custodian, as custodian of the Global Notes for DTC under custody agreements, or any similar successor agreement or agreements. -6- Debt Securities means debt obligations, other than U.S. Government Securities, of any Person, whether evidenced by bonds, notes, debentures, certificates, book entry deposits, certificates of deposit, commercial paper, bankers acceptances, reinvestment letters, funding agreements or other instruments, which (x) are not subject to prepayment or redemption prior to maturity and (y) are rated not less than the then Required Rating; or any combination of the foregoing. Debt Service Coverage Ratio has the meaning stated in the Mortgage. Debt Service Reports means, with respect to the most recently completed quarter and calendar year, reports, prepared by the Servicer within thirty (30) days after the receipt from the Issuers of the financial reports to be delivered by them under Section 18 of the Mortgage for such quarter or year, providing (a) the debt service owed and paid by the Issuers on the Notes for the relevant period (in the aggregate and broken out by Series), (b) the average principal amount of the Notes outstanding during the relevant period (in the aggregate and broken out by Series), (c) the aggregate Debt Service Coverage Ratio for the relevant period and (d) a schedule identifying each of the Mortgaged Properties, if any, that has been released from (or encumbered by) the lien of the Mortgage since the Closing Date. Default Interest has the meaning stated in Section 3.11(b). Default Rate has the meaning stated in Section 3.11(b). Defeasance Portion has the meaning stated in Section 4.2. Defeasance Property has the meaning stated in Section 4.2. Depositary means, with respect to the Global Notes, DTC or such other Person as shall be designated as Depositary by the Issuers pursuant to Section 2.6(a) of this Indenture. Depositary Securities Certification has the meaning stated in Section 2.3(b)(ii). Dollars, U.S.$ and $ mean such coin or currency of the United States as, at the time, shall be legal tender for the payment of public or private debts. DTC means The Depository Trust Company, a New York corporation. Eligible Account means either (i) an account or accounts maintained with a federal or state-chartered depository institution or trust company which complies with the definition of Eligible Institution (as defined below) or (ii) a segregated trust account or accounts maintained with the corporate trust department of a federal depository institution or state-chartered depository institution subject to regulations regarding fiduciary funds on deposit similar to Title 12 of the Code of Federal Regulations Section 9.10(b) which, in -7- either case, has corporate trust powers, acting in its fiduciary capacity. No Eligible Account shall be evidenced by a certificate of deposit, passbook or other instrument. Each Eligible Account (x) shall be a separate and identifiable account from all other funds held by the holding institution, (y) shall be established and maintained in the name of the Trustee (and shall bear a designation clearly indicating that the funds deposited therein are held for the benefit of the Holders of the Notes), and (z) shall be under the sole dominion and control of the Trustee or the Servicer, as applicable, and should contain only funds held for its benefit. With respect to clause (i) above, if at any time the rating assigned by the Rating Agency to the depository institution at which any Eligible Account is held falls below the lowest rating permitted in the definition of "Eligible Institution", the Trustee or the Servicer, as applicable, shall move any amounts held by it in such account to another Eligible Account within thirty (30) days of the date the Trustee or Servicer, as applicable, first learns of the downgrading of such Eligible Institution. Eligible Institution means an institution whose (i) commercial paper, short-term debt obligations or other short-term deposits are rated at least "P-1" (or the equivalent) by the Rating Agency, if the deposits are to be held in the account for less than 35 days, or (ii) long-term senior unsecured debt obligations are rated at least "Aa3" (or the equivalent) by the Rating Agency, if the deposits are to be held in the account for more than 30 days. Following a rating downgrade, withdrawal, qualification or suspension of any such institution's rating, each account with that institution must promptly (and in any case within not more than 30 calendar days) be moved to a qualifying institution or to one or more segregated trust accounts in the trust department of such institution, if permitted. Eligible Investments has the meaning stated in Section 6.14. Environmental Indemnity has the meaning stated in the Mortgage. Environmental Laws has the meaning stated in the Mortgage. Euroclear means Morgan Guaranty Trust Company of New York, Brussels Office, as operator of the Euroclear System. Event of Default has the meaning stated in Section 5.1. Exchange Act means the Securities Exchange Act of 1934, as amended from time to time, and any successor statute thereto. Exculpated Persons has the meaning stated in Section 1.14(a). Excusable Delay has the meaning stated in the Mortgage. -8- FHLMC means Federal Home Loan Mortgage Corporation, a corporate instrumentality of the United States created and existing under Title III of the Emergency Home Finance Act of 1970, as amended, or any successor thereto. First Interest Period means the period commencing on the Closing Date and ending on but excluding the first Interest Payment Date. Fixed Rate Notes means the 2004 Fixed Rate Notes together with the 2007 Fixed Rate Notes. FNMA means Federal National Mortgage Association, a federally chartered and privately owned corporation organized and existing under the Federal National Mortgage Association Charter Act or any successor thereto. Foreclosed Property means any Mortgaged Property if acquired by the Servicer in the name of the Trustee for the benefit of the Holders by foreclosure or acceptance of a deed in lieu of foreclosure or otherwise. Foreclosure Proceeds means proceeds, net of any related expenses of the Servicer or the Trustee, received in respect of any Foreclosed Property (including, without limitation, proceeds from the rental of such Foreclosed Property) prior to the final liquidation of the Foreclosed Property. General Growth means General Growth Properties, Inc., a Delaware corporation, and its successors and assigns. GGP means GGP Limited Partnership, a Delaware limited partnership, and its successors and assigns. Global Note means any Regulation S Temporary Global Note, any Restricted Global Note or any Unrestricted Global Note, as the case may be, and Global Notes means any two or more of such Notes. Hazardous Substances has the meaning stated in the Mortgage. Holder means, with respect to any Note, the Person in whose name such Note is registered in the Register. Holdover Account has the meaning stated in Section 3.5(d). Impositions has the meaning stated in the Mortgage. Independent when used with respect to any specified Person means such a Person who (i) does not have any direct financial interest or any material indirect financial interest -9- in any Issuer, the Trustee or the Servicer or in any of their respective Affiliates and (ii) is not connected with any Issuer, the Trustee or the Servicer or any of their respective Affiliates as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions. Indenture has the meaning stated in the introductory paragraph hereto. Initial Purchasers means Goldman, Sachs & Co., a Delaware limited partnership, and Goldman Sachs International, a company organized under the laws of the United Kingdom. Insurance Proceeds has the meaning stated in the Mortgage. Interest Advance means, with respect to any Servicer Advance Date, an advance of interest with respect to the Notes equal to the Interest Advance Amount. Interest Advance Amount means, with respect to any Interest Payment Date, an amount equal to the amount of interest that was to have been deposited by the Issuers in the Payment Account for payment to Holders on such Interest Payment Date (but excluding any Default Interest in excess of the regular non default interest payable on the Notes and excluding Additional Amounts), less any amounts then already on deposit in the Payment Account. Interest Installment means an installment of interest payable with respect to any Note issued hereunder in accordance with the terms of this Indenture. Interest Payment Date means, with respect to the Notes, the fifteenth (15th) day of each calendar month beginning in December 1997, except as otherwise provided in Section 1.11 hereof. Interest Period means, with respect to the Notes, (i) the period beginning on (and including) the Closing Date and ending on (but excluding) the first Interest Payment Date and (ii) each successive period beginning on (and including) the preceding Interest Payment Date and ending on (but excluding) the next succeeding Interest Payment Date. Interested Person means, as of any date of determination, each Issuer, the Servicer, the Manager, the Trustee and any Holder, or, in each such case, any of their respective Affiliates. Investment Grade means having a long term unsecured debt rating (or, with respect to the providers of insurance, claims paying ability rating) not lower than Baa3 (or its equivalent) by the Rating Agency. Issuer means any one or more of the Issuers or all Issuers taken together, as the context may require. -10- Issuer Action has the meaning stated in Section 1.15. Issuer Representative has the meaning stated in Section 1.15. Issuer Request or Issuer Order means a written request or order signed in the name of any Issuer by any Authorized Person. Issuers means, collectively, the thirteen entities described in Exhibit A, and any permitted successors or assigns thereto permitted hereunder and under the terms of the other Security Documents. Ivanhoe Entities has the meaning stated in the Mortgage. Lease has the meaning stated in the Mortgage. Liquidated Mortgaged Property means a Mortgaged Property that has been liquidated and, with respect to which the Servicer, has determined that all amounts which it expects to recover from or on account of such Mortgaged Property have been recovered. Liquidation Expenses means reasonable and customary expenses (other than expenses actually covered by insurance and reimbursed by the insurer to the Servicer or the Trustee) incurred by the Servicer or the Trustee in connection with the liquidation of a Mortgaged Property, such expenses including, without limitation, legal fees and expenses, appraisal fees, the costs of any environmental reports, receivership fees, brokerage fees, trustee and co trustee fees, if any, fees and expenses in connection with the maintenance and preservation of such Mortgaged Property, any unreimbursed amount expended by the Servicer and any unreimbursed expenditures for Basic Carrying Costs or for property restoration or preservation relating to such Mortgaged Property. Liquidation Expenses shall not include any expenses actually incurred by the Trustee or the Servicer that were subsequently reimbursed to the Servicer or the Trustee or that were netted against income from the Foreclosed Property and were considered in the calculation of the amount of Foreclosure Proceeds pursuant to the definition thereof. Liquidation Proceeds means amounts received by the Servicer in connection with the liquidation of a Mortgaged Property, whether through judicial foreclosure, sale or otherwise, other than amounts required to be paid to any Issuer pursuant to law or the terms of this Indenture or the other Security Documents. Loan means the indebtedness evidenced by the Notes and secured by the Mortgage and the other Security Documents. Make Whole Payment means, with respect to any Fixed Rate Note being prepaid hereunder in whole or in part, the excess, if any, of (i) the sum of (A) the aggregate respective present values of all scheduled interest payments in respect of such Fixed Rate -11- Note (or the portion of all such interest payments corresponding to the portion of such Fixed Rate Note to be prepaid or redeemed) for the period from the date of such prepayment or acceleration to the applicable Scheduled Maturity Date, discounted monthly at a rate equal to the Treasury Constant Yield and based on a 360-day year of twelve 30-day months and (B) the present value of the then current outstanding principal amount of such Fixed Rate Note (or the then unpaid portion thereof to be prepaid or accelerated) were such amount paid in full on the applicable Scheduled Maturity Date, discounted monthly at a rate equal to the Treasury Constant Yield and based on a 360-day year of twelve 30-day months over (ii) the then current outstanding principal amount of such Fixed Rate Note (or the then unpaid portion thereof to be prepaid or accelerated). The calculation of a Make-Whole Amount shall be made by the Trustee and shall, absent manifest error, be final, conclusive and binding upon the Issuers and the Holders. As used in this definition, the Treasury Constant Yield means, with respect to each Series of Fixed Rate Notes, the sum of the Make-Whole Spread applicable to such Series plus the arithmetic mean of the monthly equivalents of the rates published as "Treasury Constant Maturities" as of 5:00 p.m., New York time, for the five Business Days preceding the date on which acceleration has been declared or the five Business Days preceding the date on which notice of prepayment shall be furnished to the Trustee and the Servicer by the Issuers pursuant to Section 11.2, as shown on the USD screen of the Telerate service or, if such service is not available, the Bloomberg service, or if neither the Telerate nor the Bloomberg service is available, under Section 504 in the weekly statistical release designated H.15(519) (or any successor publication) published by the Board of Governors of the Federal Reserve System, for "On the Run" U.S. Treasury obligations corresponding to the remaining life to the applicable Scheduled Maturity Date; if no such maturity shall so exactly correspond, yields for the two most closely corresponding published maturities shall be calculated pursuant to the foregoing sentence and the Treasury Constant Yield shall be interpolated or extrapolated (as applicable) from such yields on a straight-line basis (rounding, in the case of relevant periods, to the nearest month). If the Make-Whole Payment as calculated pursuant to the above provisions of this definition would not be a positive number, the Make-Whole Payment is zero. The Make-Whole Payment, if any, to be paid in connection with any prepayment, shall be determined by the Trustee and written notice of the amount thereof shall be furnished to the Issuers and the Servicer by the Trustee five (5) Business Days prior to the date fixed for such prepayment or redemption or, in the case of an acceleration, promptly after such acceleration. Make-Whole Spread means, with respect to each Series as follows:
Make-Whole Series Spread ------ ---------- Series A-1/A-2 .15% Series B-1/B-2 .25%
-12-
Series C-1/C-2 .35% Series D-1/D-2 .50% Series E-1/E-2 .60%
Management Fee means, as to any Foreclosed Property, a fee payable out of the Collateral to the Manager for managing such property while it is owned by or on behalf of the Trustee, which shall be reasonable and customary in the market in which such Foreclosed Property is located. Manager has the meaning stated in Section 7.9(a). Maturity means, with respect to any of the Notes, the date on which the principal of such Notes shall become due and payable as herein provided, whether at the Scheduled Maturity Date, or by acceleration, call for redemption or otherwise. Maturity Date means, with respect to any Notes, the date on which the principal of such Notes shall become due and payable as herein provided, whether at the Scheduled Maturity Date, as applicable, or by acceleration, call for redemption or otherwise. Mortgage means that certain Mortgage, Deed of Trust, Security Agreement, Assignment of Leases and Rents, Fixture Filing and Financing Statement, dated as of the date hereof, among the Issuers, First American Title Insurance Company, as deed trustee solely with respect to the Mortgaged Property located in the State of California, Robert Meckfessel, as deed trustee solely with respect to the Mortgaged Property located in the State of Missouri, First American Title Insurance Company, as deed trustee solely with respect to the Mortgaged Property located in the State of Nebraska, and the Trustee, granting the Trustee, for the benefit of the Holders, first priority mortgage liens on each Issuer's interests in the Mortgaged Properties, as the same may be amended or supplemented from time to time. Mortgaged Properties means the Issuers' respective fee, leasehold (where applicable) and other ownership interests in the shopping center properties known as Colony Square Mall, Columbia Mall, Fallbrook Square Mall, Fox River Shopping Center, Lockport Mall, Market Place Shopping Center, Rio West Mall, River Hills Mall, Sooner Fashion Mall, Southlake Mall, The Oaks Mall, Westroads Mall and Westwood Mall, which have been pledged to the Trustee for the benefit of the Holders pursuant to the Mortgage. Mortgagee has the meaning stated in the Mortgage. Mortgagor has the meaning stated in the Mortgage. -13- Mortgagors has the meaning stated in the Mortgage. New Note has the meaning stated in Section 3.9. Nonrecoverable Advance means any portion of an Advance proposed to be made or previously made which has not been previously reimbursed to the Servicer or the Trustee, as applicable, and which, in the good faith business judgment of the Servicer or the Trustee, as applicable, will not or, in the case of a proposed Advance, would not be ultimately recoverable from late payments, Insurance Proceeds, Liquidation Proceeds and other collections on or in respect of the Secured Obligations. The judgment or determination by the Servicer or the Trustee, as applicable, that it has made a Nonrecoverable Advance or that any proposed Advance, if made, would constitute a Nonrecoverable Advance shall be evidenced, in the case of the Servicer, by a certificate of a Servicing Officer delivered to the Trustee and the Issuers, and, in the case of the Trustee, by a certificate of a Responsible Officer of the Trustee delivered to the Issuers, which in each case sets forth such judgment or determination and the procedures and considerations of the Servicer or Trustee, as applicable, forming the basis of such determination (including, but not limited to information selected by the Person making such judgment or determination in its good faith discretion, such as related income and expense statements, rent rolls, occupancy status, property inspection reports, the written responses to any Servicer or Trustee inquiries and third party engineering and environmental reports). Notwithstanding the above, the Trustee shall be entitled to rely upon any determination by the Servicer that any Advance previously made is a Nonrecoverable Advance or that any proposed Advance would, if made, constitute a Nonrecoverable Advance. Note means any physical note issued hereunder, including, without limitation, each Global Note; provided, however, that with respect to any Global Note, the term "Note" also includes, when appropriate within the context of any Section of this Indenture, any interest in such Global Note in the authorized denomination as provided herein of any Person as shown on the records of Euroclear, CEDEL or the Depositary. Offering Circular has the meaning stated in Section 3.3(g). Officer's Certificate means a certificate signed on behalf of each applicable Issuer by an Authorized Person. Operating Agreements has the meaning stated in the Mortgage. Opinion of Counsel means, when required to be delivered by any Issuer, a written opinion of counsel selected by such Issuer, which shall be delivered at the expense of such Issuer, and when required to be delivered by any other Person, a written opinion of counsel reasonably acceptable to the Trustee and to any other party hereto to whom such opinion is to be delivered pursuant to the applicable terms of this Indenture, who may be regular counsel to such Person. -14- Outstanding, when used with respect to the Notes, means, as of the date of determination, any Note theretofore authenticated and delivered under this Indenture (including, as of such date, all Notes represented by Global Notes authenticated and delivered under this Indenture), except the reduced portion or portions of any Global Note, as such reduction or reductions shall have been endorsed on such Global Note by the Trustee as provided herein and except: (i) Notes theretofore canceled by the Trustee or delivered to the Trustee for cancellation (other than any Note as to which any amount that has become due and payable in respect thereof has not been paid in full); (ii) Notes for the payment or redemption of which Cash and/or Eligible Investments in the necessary amount have been deposited with the Trustee in trust for the Holders of such Notes in accordance with this Indenture; provided that if such Notes are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and (iii) Notes in exchange for or in lieu of which other Notes have been authenticated and delivered pursuant to this Indenture, other than any such Notes in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Notes are held by a bona fide purchaser in whose hands such Notes are valid obligations of the Issuer; provided, however, that in determining whether the Holders of the requisite principal amount of the Outstanding Notes are present at a meeting of Holders for quorum purposes or have given any request, demand, authorization, vote, direction, notice, consent or waiver hereunder, any Notes owned by any Issuer, or any Affiliate of any Issuer, shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, vote, direction, notice, consent or waiver or upon any such determination as to the presence of a quorum, only Notes which the Trustee knows to be so owned shall be so disregarded. Notes so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the sole satisfaction of the Trustee the pledgee's right to act with respect to such Notes and that the pledgee is not an Issuer, or an Affiliate of any Issuer. Owner Securities Certification has the meaning stated in Section 2.3(b)(ii). Paying Agent means any Person authorized by the Issuers pursuant to Section 3.6(b) hereof to pay the principal of and interest on any Notes on behalf of the Issuers, and shall include the Principal Paying Agent unless otherwise specified. -15- Payment Account means the segregated trust account or accounts established by the Trustee pursuant to Section 3.5. Permitted Exceptions has, with respect to each Mortgaged Property, the meaning stated in the Mortgage. Person means any individual, sole proprietorship, corporation, general partnership, limited partnership, limited liability company or partnership, joint venture, association, joint stock company, bank, trust, estate, unincorporated organization, any federal, state, county or municipal government (or any agency or political subdivision thereof), endowment fund or any other form of entity. Predecessor Note of any particular Note means every previous Note evidencing all or a portion of the same indebtedness as that evidenced by such particular Note. Principal Paying Agent means the Trustee, until replaced in accordance with Section 3.6(b), and thereafter shall mean such successor. Prior Advances means, as of any date, all unreimbursed Advances and all accrued but unpaid interest thereon at the Advance Interest Rate. Proceeds has the meaning stated in the Mortgage. Purchase Agreement means the Purchase Agreement, dated as of November 20, 1997, among GGP, each Issuer and Goldman, Sachs & Co. and any related pricing agreement or agreements. QIB means a "qualified institutional buyer" within the meaning of Rule 144A. Rated Maturity Date means, with respect to the Notes of any Series, the third anniversary of the Maturity Date applicable to such Series. Rating Agency means Moody's Investors Service, Inc., and any successor thereto, and, if such corporation shall for any reason no longer perform the functions of a securities rating agency, "Rating Agency" shall be deemed to refer to any other nationally recognized rating agency selected by the Issuers (and not reasonably disapproved by the Trustee). Rating Confirmation, with respect to the matter in question, means that as a condition thereto the Rating Agency shall have confirmed in writing that such investment, replacement, transfer, or other action, in and of itself, will not result in a reduction, withdrawal or qualification of any rating then assigned by the Rating Agencies to any Outstanding Notes. -16- Redemption Date, when used with respect to any Note to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture in accordance with Article XI. Redemption Price, when used with respect to any Note to be redeemed, means the price at which such Note is to be redeemed calculated pursuant to Article XI. Register has the meaning stated in Section 3.6(a). Registrar has the meaning stated in Section 3.6(a). Regular Record Date means the fifth (5th) Business Day immediately prior to the related Interest Payment Date. Regulation S means Regulation S under the Securities Act. Regulation S Restricted Period means, with respect to any Series, the period of 40 consecutive days beginning on and including the later of (i) the day that Goldman, Sachs & Co. (acting on behalf of Goldman Sachs International) advises the Issuers and the Trustee in writing is the day on which Notes of such Series are first offered to Persons (other than distributors) in reliance upon Regulation S, and (ii) the Closing Date. Regulation S Temporary Global Note has the meaning stated in Section 2.3(b)(i). Release Property has the meaning stated in Section 4.6. Required Rating means the higher of (i) the highest rating then assigned by the Rating Agency to any of the outstanding Notes, and (ii) "A2" (or its equivalent) by the Rating Agency. Responsible Officer means any officer of the Trustee customarily performing functions with respect to corporate trust matters and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of such officer's knowledge of and familiarity with the particular subject. Restricted Global Note has the meaning stated in Section 2.3(c). Restricted Global Notes has the meaning stated in Section 2.3(c). Restricted Notes has the meaning stated in Section 2.5. Rule 144 means Rule 144 under the Securities Act. Rule 144A means Rule 144A under the Securities Act. -17- Rule 144A Information means such information as is specified pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision thereto). Scheduled Maturity Date means November 15, 2004 with respect to the 2004 Fixed Rate Notes and November 15, 2007 with respect to the 2007 Fixed Rate Notes, except as otherwise provided in Section 1.11 hereof; provided, that if either such date is not a Business Day, the applicable Scheduled Maturity Date shall be the next succeeding Business Day and no further interest or other payment shall be due any Holder as a result of such adjustment. Secured Obligations has the meaning stated in the Mortgage. Securities Act means the Securities Act of 1933, as amended, and the rules and regulations of the United States Securities and Exchange Commission promulgated thereunder from time to time. Security Documents means the Mortgage, the Assignment of Leases, the Environmental Indemnity, the Assignment of Contracts, the Subordination of Management Agreement, the Notes, the Indenture, the Trustee Fee Agreement, the Servicer Fee Agreement, the financing statements now or hereafter executed in connection herewith and any and all other agreements, certificates (including, without limitation, Officer's Certificates), instruments or documents executed by the Issuers or any of them evidencing, securing or delivered in connection with the Loan and/or the transactions contemplated hereby. Series means any group of Notes having the same letter and number designation. For example, all Notes designated as Series A-1 Fixed Rate Notes belong to the same Series. The Notes are issuable in each of the following ten Series: A-1, A-2, B-1, B-2, C-1, C-2, D-1, D-2, E-1 and E-2. Series A-1 Note means a Note executed by the Issuers and authenticated by the Trustee or the Authenticating Agent in substantially the form set forth in Exhibit B hereto and designated as a Series A-1 Fixed Rate Note. Series A-2 Note means a Note executed by the Issuers and authenticated by the Trustee or the Authenticating Agent in substantially the form set forth in Exhibit B hereto and designated as a Series A-2 Fixed Rate Note. Series B-1 Note means a Note executed by the Issuers and authenticated by the Trustee or the Authenticating Agent in substantially the form set forth in Exhibit B and designated as a Series B-1 Fixed Rate Note. -18- Series B-2 Note means a Note executed by the Issuers and authenticated by the Trustee or the Authenticating Agent in substantially the form set forth in Exhibit B and designated as a Series B-2 Fixed Rate Note. Series C-1 Note means a Note executed by the Issuers and authenticated by the Trustee or the Authenticating Agent in substantially the form set forth in Exhibit B and designated as a Series C-1 Fixed Rate Note. Series C-2 Note means a Note executed by the Issuers and authenticated by the Trustee or the Authenticating Agent in substantially the form set forth in Exhibit B and designated as a Series C-2 Fixed Rate Note. Series D-1 Note means a Note executed by the Issuers and authenticated by the Trustee or the Authenticating Agent in substantially the form set forth in Exhibit B and designated as a Series D-1 Fixed Rate Note. Series D-2 Note means a Note executed by the Issuers and authenticated by the Trustee or the Authenticating Agent in substantially the form set forth in Exhibit B and designated as a Series D-2 Fixed Rate Note. Series E-1 Note means a Note executed by the Issuers and authenticated by the Trustee or the Authenticating Agent in substantially the form set forth in Exhibit B and designated as a Series E-1 Fixed Rate Note. Series E-2 Note means a Note executed by the Issuers and authenticated by the Trustee or the Authenticating Agent in substantially the form set forth in Exhibit B and designated as a Series E-2 Fixed Rate Note. Servicer means Midland Loan Services, L.P., a Missouri limited partnership, or its successor in interest, or, if any successor servicer is appointed as herein provided, such successor servicer. Servicer Advance Date means, with respect to each Interest Payment Date, the Business Day preceding such Interest Payment Date. Servicer Default has the meaning stated in Section 7.22. Servicer Fee Agreement means the letter agreement regarding fees for services under this Indenture from the Servicer to the Issuers dated the date hereof. Servicing Officer means any officer or employee of the Servicer involved in, or responsible for, the administration and servicing of the Loan whose name and specimen signature appear on a written list of servicing officers furnished to the Trustee on the -19- Closing Date by the Servicer, as such list may from time to time be amended by the Servicer. Special Record Date has the meaning stated in Section 3.11(b). Subordination of Management Agreement has the meaning stated in the Mortgage. Taking Proceeds has the meaning stated in the Mortgage. Transfer Agent means the Trustee or such other person as the Trustee may appoint from time to time to act as a transfer agent for any Series of the Notes. Transferee Securities Certification has the meaning stated in Section 3.8(d)(ii). Trustee means (i) LaSalle National Bank, a nationally chartered bank, until a successor Person or successor Persons shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean or include each Person who is then a Trustee hereunder and (ii) any separate or co- trustee appointed pursuant to Section 6.18. Trustee Fee Agreement means the letter agreement regarding fees for services under this Indenture from the Trustee to the Issuers dated the date hereof. Uninsured Cause means any cause of damage to a Mortgaged Property such that the complete restoration of the property is not fully reimbursable (but without regard to any applicable deductible provisions) by any insurance policy required to be maintained with respect thereto under the Mortgage, and any uninsured loss arising from defect in title to a Mortgaged Property. United States means the United States of America, the District of Columbia, Puerto Rico, the United States Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands. United States Alien means any person not subject to United States federal income tax on a net income basis with respect to the Notes who, for United States federal income tax purposes, is a foreign corporation, a nonresident alien individual, a nonresident alien fiduciary of a foreign estate or trust, or a foreign partnership one or more of the members of which is, for United States federal income tax purposes, a foreign corporation, a nonresident alien individual or a nonresident alien fiduciary of a foreign estate or trust. Unrestricted Global Note has the meaning stated in Section 2.3(b)(i). Unrestricted Global Notes has the meaning stated in Section 2.3(b)(i). -20- U.S. Government Securities means securities evidencing an obligation to pay principal and interest in a full and timely manner that are (y) direct obligations of the United States of America for the payment of which its full faith and credit is pledged, or (z) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of and guaranteed as a full faith and credit obligation by the United States of America, which in either case are not callable or redeemable at the option of the issuer thereof (including a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any such securities or a specific payment of principal of or interest on any such securities held by such custodian for the account of the holder of such depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the securities or the specific payment of principal of or interest on the securities evidenced by such depository receipt. SECTION I.2 Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by any specified Person, it is not necessary that all such matters be certified by only one such Person, or that they be so certified by only one document, but one such Person may certify with respect to some matters and one or more other such Persons may certify with respect to other matters, and any such Persons may certify as to such matters in one or several documents. Any certificate of an officer of any Issuer may be based, insofar as it relates to legal matters, upon an opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the opinion or representations with respect to the matters upon which the certificate is based are erroneous. Any such opinion of counsel may be based, insofar as it relates to factual matters relating to any Issuer, upon a certificate of, or representations by, an officer or officers of such Issuer stating that the information with respect to such factual matters is in the possession of such Issuer unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. SECTION I.3 Acts of Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by the Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor -21- signed by such Holders in person or by an agent duly appointed in writing. Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders shall be embodied in and evidenced by the record of Holders voting in favor thereof in person at any meeting of Holders duly called and held in accordance with the provisions of Article XIII. Except as herein otherwise expressly provided, such action will become effective when such instrument or instruments of record or both are delivered to the Trustee, and, where it is expressly required by this Indenture, to the Issuers. Such instrument or instruments and any such record (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments and so voting at any such meeting. Proof of execution of any such instrument or of a writing appointing any such agency or proxy, or of the holding by any Person of a Note, shall be sufficient for any purpose of this Indenture or any other Security Document and (subject to Section 6.1) conclusive in favor of the Servicer, Trustee and the Issuers if made in the manner provided in this Section 1.3. The record of any meeting of Holders of Notes shall be proved in the manner provided in this Section 1.3. With respect to authorization to be given or taken by Holders of Notes, the Trustee shall be authorized to follow the written directions or the vote of Holders of Notes of not less than 66 2/3% of Outstanding Notes (or a particular Series thereof, if the vote in question only affects Holders of Notes of such Series) unless any greater or lower percentage is required or permitted by the terms hereof. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner that the Trustee deems sufficient. (c) The principal amount and serial numbers of Notes held by any Person, and the date of holding the same, shall be proved by the Register for the Notes. (d) Any request, demand, authorization, direction, notice, consent, election, declaration, waiver or other act of the Holder of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Servicer, Trustee or the Issuers in reliance thereon, whether or not notation of such action is made upon such Note. (e) Any provision of this Indenture which permits or requires Holders of Notes to make any request, demand, authorization, direction, notice, consent, election, declaration, waiver or any other act, shall, unless otherwise provided in such provision, -22- require (i) the specified percentage of Holders of Notes of a particular Series or group of Series, if Holders of such Series or group of Series shall be affected thereby, or (ii) the specified percentage of all Holders if Holders of Notes of all Outstanding Series shall be affected thereby. SECTION I.4 Computation of Principal Amount. Whenever this Indenture states that any action may be taken by a specified percentage of Holders, such statement shall mean that such action may be taken by the Holders of such specified percentage of the aggregate principal amount of the Outstanding Notes to which such vote relates. SECTION I.5 Notices. Any notice, direction, request, consent, election, waiver or demand which by any provision of this Indenture is required or permitted to be given may be served by national overnight courier service or may be given or served by facsimile only during business hours (9 a.m. - 5 p.m.) of the addressee on a Business Day (with a confirmation copy sent by certified or registered mail, return receipt requested, or by national overnight courier) or by certified or registered mail, in each case return receipt requested, postage prepaid, to the address or addresses set forth below or such other address or addresses in the continental United States as such Person may designate in accordance with the provisions hereof. If to any Issuer, addressed to such Issuer at: c/o GGP Limited Partnership 55 West Monroe Street, Suite 3100 Chicago, Illinois 60603 Facsimile No. (312) 551-5463 Attention: Bernard Freibaum, with a copy to: Neal, Gerber & Eisenberg Two North LaSalle Street Chicago, Illinois 60602 Facsimile No. (312) 269-1747 Attention: Marshall E. Eisenberg, Esq.; and Ivanhoe Equities V L.P. World Trade Centre Montreal -23- 413 St. Jacques Street Montreal, Quebec H2Y 3Z4 CANADA Facsimile No. (514) 841-7762 Attention: Legal Affairs if to the Servicer, addressed to it at: Midland Loan Services, L.P. 210 West 10th Street, 6th Floor, Kansas City, Missouri 64105 Facsimile No. (816) 435-2326 Attention: Alan L. Atterbury, with a copy to the Trustee and to: Morrison & Hecker, L.L.P. 2600 Grand Avenue Kansas City, Missouri 64108 Facsimile No. (816) 474-4208 Attention: William A. Hirsch; if to the Trustee, addressed to it at: LaSalle National Bank 135 South LaSalle Street Chicago, Illinois 60603 Facsimile No. (312) 904-2084 Attention: Asset-Backed Securities Trust Services: General Growth Properties, with a copy to: The Servicer, at the address provided above; if to the Rating Agency, addressed to: Moody's Investors Service, Inc. 99 Church Street 4th Floor New York, New York 10007 Facsimile No. (212) 553-7820 Attention: Commercial Mortgage Monitoring Group -- Structured Finance; -24- if to the Initial Purchasers, addressed to them at: c/o Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 Facsimile No. (212) 357-5505 Attention: Commercial Mortgage Trading Desk, with a copy to: Sullivan & Cromwell 125 Broad Street New York, New York 10004 Facsimile No. (212) 558-3588 Attention: Arthur S. Adler, Esq. SECTION I.6 Notice to Holders of Notes. Where this Indenture provides for notice to the Holders of the Notes from the Trustee, the Trustee, subject to reimbursement by the Issuers, shall (i) publish such notice (excluding, for publication purposes, any documents required to accompany such notice) in an Authorized Newspaper (if applicable), (ii) in the case of a Global Note, mail such notice by overnight mail to the Depositary, (iii) in the case of Notes other than the Global Notes, mail such notice by first class mail, postage prepaid (except with respect to any redemption notice, which shall be sent by overnight mail) to the Holders thereof at the addresses appearing on the Register and (iv) give notice to the Luxembourg Stock Exchange (for so long as the Notes are listed thereon), with a copy of all such notices delivered (by mail or otherwise) to the Issuers. Any such notice so sent shall be conclusively presumed to have been received by such Holders. In case by reason of the suspension of regular mail service or overnight mail service, as the case may be, or by reason of any other cause it shall be impracticable to give any notice in the manner required above, then any other method of notification found satisfactory in the reasonable judgment of the Trustee shall constitute a sufficient notification for every purpose hereunder. In any case where notice to the Holders of Notes is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders of the Notes. Where this Indenture provides for notice in any manner, such notice may be waived in writing by any Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders -25- of Notes shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. All requests, demands, authorizations, directions, notices, consents, waivers and other communications required or permitted under this Indenture shall be in writing in the English language. Notice to any Holder will be deemed to have been given on the date of such publication or mailing. SECTION I.7 Successors and Assigns. All covenants and agreements in this Indenture by any party shall bind such party and its successors and assigns, whether so expressed or not. SECTION I.8 Separability Clause. In case any provision of this Indenture or of the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION I.9 Benefits of Indenture. Nothing in this Indenture or in the Notes, express or implied, shall give to any Person, other than the parties hereto, their successors hereunder, and the Holders of the Notes, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION I.10 Governing Law. (a) THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES OF SUCH STATE. (b) Any action or proceeding against any of the parties hereto relating in any way to this Indenture or any Note or the Collateral may be brought and enforced in the courts of the State of New York or of the United States for the Southern District of New York located in the borough of Manhattan, The City of New York, and each Issuer irrevocably submits to the jurisdiction of each such court in respect of any such action or proceeding. Each Issuer hereby waives any right to remove any such action or proceeding by reason of improper venue. As long as any of the Notes remain Outstanding, each Issuer will at all times have an authorized agent in New York City upon whom process may be served in any legal action or proceeding relating in any way to this Indenture or any Note. Service of process upon such agent and written notice of such notice mailed or delivered to any Issuer shall, to the fullest extent permitted by law, be deemed in every respect effective service upon such Issuer in any such legal action or proceeding. Each Issuer's authorized -26- agent for service of process shall initially be Corporation Service Company at 80 State Street, Albany, New York 12207-2543, or such other person as such Issuer shall identify in a notice to the Trustee and the Servicer in accordance with Section 1.5. SECTION I.11 Legal Holidays. In any case where any Interest Payment Date, Redemption Date, Servicer Advance Date, Maturity Date or the Maturity of any of the Notes shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Notes) payment of interest on and/or principal of such Note need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the Interest Payment Date, Redemption Date, Servicer Advance Date or Maturity Date; provided, however, that no interest shall accrue on the amount so payable with respect to such Interest Payment Date, Redemption Date or Maturity Date for the period from and after such Interest Payment Date, Redemption Date or Maturity Date, as the case may be, if paid on the next succeeding Business Day. SECTION I.12 Security Agreement. This Indenture shall constitute a security agreement under the Uniform Commercial Code as in effect in the states where the Payment Account, the Holdover Account and any other similar account established by the Trustee or the Servicer in furtherance of such entity's responsibilities under this Indenture or any other Security Document are located (with respect to the liens and security interests granted in Section 3.1(c)). Upon the occurrence of any Event of Default, and in addition to any other rights available under this Indenture, the Security Documents or any other instruments included in the Collateral or otherwise available at law or in equity, the Trustee shall have all rights and remedies of a secured party under the Uniform Commercial Code to enforce the assignments and security interests contained herein and, in addition, shall have the right, subject to compliance with any mandatory requirements of applicable law, to sell at public or private sale or apply, as appropriate, all monies or other property then on deposit in the Payment Account, the Holdover Account and any other similar account established by the Trustee or the Servicer in furtherance of its rights or responsibilities under this Indenture or any other Security Document and any other rights and other interests assigned or pledged hereby in accordance with the terms of this Indenture. All amounts received hereunder and under the other Security Documents and any other instruments included in the Collateral shall be applied in accordance with the priorities established in Section 5.6. SECTION I.13 Third-Party Beneficiary. This Indenture shall inure to the benefit of and be binding upon the parties hereto and their respective successors. Except as otherwise provided in this Article I, no other Person shall have any right or obligation hereunder. -27- SECTION I.14 Obligations are Without Recourse. (a) The obligations of the Issuers under this Indenture are joint and several. Anything contained in this Indenture or the other Security Documents to the contrary notwithstanding, the recourse for the satisfaction of the indebtedness due under the Notes and for the payment and performance of all of the obligations and liabilities of the Issuers under the Indenture or the other Security Documents shall be limited (x) solely to each Issuer's interest in the Pledged Assets (as defined in the Mortgage), and none of the Issuers, General Growth, GGP, the Ivanhoe Entities or any of their respective successors or assigns, or any partner (general or limited, or a subpartner at any level), member tenant in common, officer, director, trustee, beneficiary, shareholder, controlling person, employee, agent, contractholder or policyholder, or any Affiliate of any of the foregoing (collectively, "Exculpated Persons"), shall be liable in any other respect for (i) the payment of the principal of or interest or Make-Whole Payment, if any, or Additional Amounts, if any, on the Notes, or (ii) the payment of any other amount due under the Notes, this Indenture or the other Security Documents, or (iii) damages for the breach of, or any costs or expenses associated with the performance of or failure to perform, any of the covenants, obligations, representations, warranties or indemnifications contained herein or in the Notes or the other Security Documents, and (y) with respect to each Issuer, such that the total liability of that Issuer under the Notes, this Indenture, the Mortgage and each other Security Document shall not (i) at any time during the period from the date hereof to a date one year and a day after the date hereof exceed the sum of (A) the Allocated Amount for the Mortgaged Property identified on Exhibit A as being owned by such Issuer plus (B) such Issuer's Net Worth on the date hereof, less (C) $1,000, and (ii) at any time after the period referred to in clause (i) above exceed the sum of (A) the Allocated Amount for the Mortgaged Property identified on Exhibit A as being owned by such Issuer plus (B) the greater of such Issuer's Net Worth on the date hereof and such Issuer's Net Worth on the date such determination is being made (it being understood that for purposes of determining such Issuer's Net Worth on any date subsequent to the date that is one year and a day after the date hereof, such Issuer's liabilities shall only include liabilities that are permitted under the terms of the Security Documents), less (C) $1,000. For purposes of the foregoing, "Net Worth" of an Issuer shall mean the positive net worth of such Issuer, based on the sum of (x) the fair saleable value of its -28- assets (determined after giving effect to distributions, if any, by such Issuer to such Issuer's partners, members or other equity investors, as applicable, of the proceeds of the Loan received by such Issuer on account of the issuance of the Notes and determined in accordance with applicable laws governing determinations of the insolvency of debtors), less (y) its liabilities (determined as in (x) above), including for purposes of this clause (y) a portion of the Loan equal to the Allocated Amount for the Mortgaged Property identified on Exhibit A as being owned by such Issuer, but excluding amounts payable under the Notes, this Indenture, the Mortgage and any other Security Documents in excess of such Allocated Amount. Each document that is executed by any Issuer and/or any other Exculpated Persons pursuant to or in connection with this Indenture and/or any other Security Documents shall either expressly incorporate, or shall be deemed to incorporate, the non-recourse provisions contained in this Section 1.14. For purposes of this Section 1.14(a), each and every reference to "the Issuers" (including the possessory thereof) shall mean the Issuers, their successors and assigns, and all persons and/or entities whose rights under this document arise by, through or under the Issuers, their successors and/or assigns. (b) In furtherance of the foregoing, it is expressly understood and agreed that nothing herein nor any act of any Issuer nor any document or instrument executed by the Issuers (or any of them) in connection herewith shall create or impose on any Issuer or any other Exculpated Persons any personal liability, and this Indenture is executed by each Issuer with the express understanding and agreement that nothing contained herein, in the Notes or under any of the other Security Documents (including the Mortgage and the Notes) shall be construed as creating any liability on the part of the Issuers or any other Exculpated Persons personally, to pay the principal obligation or any interest that may accrue thereon or any indebtedness that may accrue hereunder or under any of the other Security Documents or to perform any covenant, either express or implied, herein contained, and that every Person now or hereafter claiming any right or security hereunder shall look solely to the Pledged Assets for the payment thereof and the enforcement of any lien hereby created or the enforcement of any covenant, condition or agreement contained herein or under any of the other Security Documents. (c) The provisions of Section 1.14(a) and (b) hereof shall not (i) constitute a waiver, release or impairment of any obligation of any Issuer (without recourse to its partners, members or other equity investors) evidenced or secured by the Notes, this Indenture, the Mortgage or any other Security Document to the extent that it would impair the Trustee's right or ability to declare an Event of Default or accelerate the maturity of the Notes, (ii) constitute a waiver of the Trustee's right under Section 1111(b) of the United States Bankruptcy Code to claim against any Issuer (without recourse to its partners, members or other equity investors) the full amount of the indebtedness evidenced by the Notes or incurred pursuant to any of the other Security Documents or (iii) impair the right of the Trustee to obtain a deficiency judgment (without recourse to any partner, -29- member or other equity investor in any Issuer) in any action or proceeding in order to preserve its rights and remedies against Collateral as to which a lien is granted hereunder, including, without limitation, foreclosure, nonjudicial foreclosure or the exercise of a power of sale, under the Mortgage. SECTION I.15 Issuer Representative. Each of the Issuers hereby designates and appoints Lockport L.L.C. as the representative of the Issuers (the "Issuer Representative") which shall be and hereby is authorized to make any and all elections and to grant any and all consents, waivers or approvals and to take any such other actions as may be required or permitted to be taken by the Issuers under this Indenture, the Mortgage or any other Security Document (each an "Issuer Action") for and on behalf of the Issuers as a group, and the Trustee and the Servicer shall be entitled to rely on any instruction or request made by the Issuer Representative as if the same had been made by each of the Issuers. In addition, whenever, in this Indenture, the Mortgage or any of the other Security Documents, the Trustee or the Servicer is authorized to make any payment or return any funds or instruments to the Issuers without specifying any particular Issuer, the Trustee and Servicer shall have satisfied their obligations hereunder and thereunder by delivering such funds or instruments to the Issuer Representative. The Issuer named above shall continue as the Issuer Representative throughout the term of this Indenture, and any Issuer Action taken by such Issuer Representative shall be binding upon and shall inure to the benefit of each of the Issuers and their successors until such time as the Issuers deliver to the Trustee and the Servicer an Officer's Certificate signed by or on behalf of each of the Issuers notifying the Trustee and the Servicer of the appointment of another Issuer as the replacement Issuer Representative. Any Issuer Representative hereunder shall not be released from its obligations under this Indenture, nor shall its Mortgaged Property be released from the lien of the Mortgage, unless the entities that will be Issuers after such release have appointed a replacement Issuer Representative in accordance with the foregoing. The Issuers covenant and agree to maintain the appointment of an Issuer Representative at all times during the term of this Indenture, and the Trustee and the Servicer shall not be required to accept or act upon any Issuer Action, unless such action is taken by an Issuer Representative or is otherwise evidenced by a written instrument signed by or on behalf of every Issuer. SECTION I.16 Execution in Counterparts. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION I.17 Consolidation and Splitting of Prior Notes. -30- Concurrently with the execution and delivery hereof, certain of the Issuers and the Trustee are executing and delivering (i) a Consolidation and Splitting Agreement with respect to that certain Amended and Restated Promissory Note dated as of October 15, 1996 in the original principal amount of $7,000,000.00 (the "First Note") made payable to the order of Goldman Sachs Mortgage Company ("GSMC") and that certain Demand Note in the original principal amount of $5,200,000.00 dated the date hereof (the "Second Note") and made payable to the order of GSMC, and (ii) a Consolidation and Splitting Agreement with respect to that certain Promissory Note dated as of June 9, 1997 in the original principal amount of $19,200,000.00 and made payable to the order of GSMC (the "Third Note") and that certain Promissory Note dated as of June 11, 1997 in the original principal amount of $19,200,000.00 and made payable to the order of GSMC (the "Fourth Note"). Pursuant to such Consolidation and Splitting Agreements (a) the First Note, the Second Note, the Third Note and the Fourth Note are being consolidated and renewed, and replaced by, that certain single Consolidated Demand Note in the original principal amount of $560,000,000.00, dated the date hereof, executed by the Issuers and made payable to the order of the Trustee (the "Consolidated Note"), (b) the Consolidated Note is being split into the Notes, and (c) the lien of the mortgages or trust deeds securing the First Note, the Second Note, the Third Note and the Fourth Note are being consolidated and renewed, and amended and restated, into the Mortgage, and by their acceptance of the Notes, the Holders acknowledge, ratify and confirm, and are deemed to authorize, acknowledge, ratify and confirm, the execution and delivery of the Consolidation and Splitting Agreements by the Trustee on behalf of the Holders, and the taking of all other actions by the Trustee, in connection with said agreement (including, without limitation, the Trustee's acceptance of an assignment of each of the First Note, the Second Note, the Third Note, the Fourth Note and the respective mortgages or trust deeds securing such notes. ARTICLE II FORMS OF THE NOTES SECTION II.1 Forms Generally. (a) The Notes and the Trustee's certificate of authentication shall be in substantially the form set forth in this Article, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification or designation and such legends or endorsements placed thereon as may be required to comply with any law or with any rules made pursuant thereto or with the rules of any securities exchange on which any of the Notes may be listed, any depositary or any governmental agency or as may, consistent herewith, be determined by the officers executing any Notes, as evidenced by their execution of such Notes. (b) Notes that are Restricted Notes (including each Restricted Global Note) shall bear a legend as set forth in Section 2.4(a) and as required by Section 2.5. Notes that are -31- Global Notes shall bear a legend as set forth in Section 2.4(b). Each Regulation S Temporary Global Note shall bear a legend as set forth in Section 2.4(c). Each Note shall be dated the date of its authentication. (c) The definitive Notes shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Notes, as evidenced by their execution of such Notes. Any Note may have such letters, numbers or other marks of identification or designation and such legends or endorsements printed, lithographed or engraved thereon as the Trustee may deem appropriate and as are not inconsistent with this Indenture, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any securities exchange on which the Notes may be listed, or to conform to market practice. SECTION II.2 Form of Trustee's Certificate of Authentication. The Trustee's certificates of authentication for the Notes shall be in substantially the following form: This Note is one of the Notes referred to in the above-mentioned Indenture. LaSalle National Bank, as Trustee By:____________________________________ Authorized Officer or LaSalle National Bank, as Trustee By:____________________________________, as Authenticating Agent By:______________________________ Authorized Officer SECTION II.3 Form of the Notes. (a) Except as otherwise provided pursuant to this Section 2.3, the Notes are issuable in definitive, fully registered form without coupons in substantially the form of -32- Exhibit B hereto, with such applicable legends as are provided for in Sections 2.4 and 2.5. The Notes are not issuable in bearer form. (b) (i) Notes of any fixed rate Series that are to be offered and sold in reliance on Regulation S shall be issued initially in the form of a single temporary Global Note (a "Regulation S Temporary Global Note") in fully registered form without interest coupons, substantially in the form of Exhibit B hereto, with such applicable legends as are provided for in Section 2.4. Any Regulation S Temporary Global Note shall be duly executed by each Issuer and authenticated by the Trustee, as provided herein, and shall be registered in the name of the Depositary or its nominee and deposited with the Trustee, as Custodian, at its Corporate Trust Office, for credit to the accounts of the Agent Member then acting for Euroclear or CEDEL, as the case may be, for credit to the respective beneficial owners of such Note in accordance with the rules thereof. On or after the termination of the relevant Regulation S Restricted Period, interests in any Regulation S Temporary Global Note will be exchangeable for corresponding interests in an unrestricted Global Note (individually, an "Unrestricted Global Note" and, collectively, "Unrestricted Global Notes"), respectively, each in definitive, fully registered form without interest coupons, substantially in the form of Exhibit B hereto, and each with such applicable legends as are provided for in Section 2.4 and in clause (ii) below. The aggregate principal amount of a Regulation S Temporary Global Note and an Unrestricted Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for the Depositary, as hereinafter provided. (ii) A holder of a beneficial interest in a Regulation S Temporary Global Note of any Series may arrange to receive Interest Installments through Euroclear or CEDEL on such Regulation S Temporary Global Note only after delivery by such Person to Euroclear or CEDEL, as the case may be, of a written certification (an "Owner Securities Certification") substantially in the form of Exhibit C-1 hereto, and upon delivery by Euroclear or CEDEL, as the case may be, to the Principal Paying Agent of a certification or certifications (each, a "Depositary Securities Certification") substantially in the form of Exhibit C-2 hereto. The delivery by such holder of a beneficial interest in such Regulation S Temporary Global Note of such certification shall constitute an irrevocable instruction by such holder to Euroclear or CEDEL, as the case may be, to exchange (1) such holder's beneficial interest in the Regulation S Temporary Global Note for a beneficial interest in the Unrestricted Global Note of the same Series upon the expiration of the relevant Regulation S Restricted Period in accordance with the next succeeding paragraph. No interest shall be paid to any holder of a beneficial interest in a Regulation S Temporary Global Note until the foregoing Owner Securities Certification has been provided to Euroclear or CEDEL, as the case may be, by such holder and no interest shall be paid to Euroclear or CEDEL in respect of such holder's interest in a Regulation S Temporary Global Note unless Euroclear or CEDEL, as the case may be, has provided a Depositary Securities Certification to the Principal Paying Agent with respect to such interest. -33- Upon (A) the expiration of the relevant Regulation S Restricted Period, (B) receipt by Euroclear or CEDEL, as the case may be, and the Principal Paying Agent of the certificates described in the preceding paragraph, (C) receipt by the Depositary of (1) written instructions given in accordance with the Applicable Procedures from an Agent Member directing the Depositary to credit or cause to be credited to a specified Agent Member's account a beneficial interest in an Unrestricted Global Note in a principal amount equal to that of the beneficial interest in a corresponding Regulation S Temporary Global Note for which the necessary certificates have been delivered, and (2) a written order given in accordance with the Applicable Procedures containing information regarding the account of the Agent Member, and the Euroclear or CEDEL account for which such Agent Member's account is held, to be credited with, and the account of the Agent Member to be debited for, such beneficial interest, and (D) receipt by the Trustee of notification from the Depositary of the transactions described in (C) above, the Trustee, as Registrar, shall instruct the Depositary to reduce the principal amount of such Regulation S Temporary Global Note and to increase the principal amount of such Unrestricted Global Note, by the principal amount of the beneficial interest in such Regulation S Temporary Global Note to be so transferred, and to credit or cause to be credited to the account of the person specified in such instructions a beneficial interest in such Unrestricted Global Note having a principal amount equal to the amount by which the principal amount of such Regulation S Temporary Global Note was reduced upon such transfer. (c) Notes of any Series that are to be offered and sold to QIBs in accordance with Rule 144A shall be issued in definitive, fully registered form without interest coupons, substantially in the form of Exhibit B hereto, with such applicable legends as are provided for in Section 2.4. The Notes of any such Series may be issued in the form of a single Global Fixed Rate Note (individually, a "Restricted Global Note" and, collectively, the "Restricted Global Notes"). Restricted Global Notes shall be duly executed by each Issuer and authenticated by the Trustee as provided herein and shall be registered in the name of a nominee of the Depositary and deposited with the Trustee, as Custodian, at its Corporate Trust Office, for credit to the respective account of the Depositary's Agent Members who -34- hold interests in such Restricted Global Notes. The aggregate principal amount of a Restricted Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for the Depositary, as hereinafter provided. SECTION II.4 Legends. (a) Restricted Notes (including Restricted Global Notes) shall bear a legend substantially in the following form: THE NOTES EVIDENCED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT REGISTRATION UNDER THE SECURITIES ACT, EXCEPT (A)(I) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) PURSUANT TO AN EXEMPTION (IF AVAILABLE) FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER OR (III) IN A TRANSACTION OUTSIDE OF THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT AND (B) IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE ISSUERS THAT THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE. THIS NOTE WILL NOT BE ACCEPTED FOR REGISTRATION OF TRANSFER UNLESS THE REGISTRAR OR TRANSFER AGENT IS SATISFIED THAT THE RESTRICTIONS ON TRANSFER SET FORTH ABOVE HAVE BEEN COMPLIED WITH, ALL AS PROVIDED IN THE INDENTURE. (b) So long as DTC is acting as Depositary, Global Notes shall bear a legend substantially in the following form: UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO EACH ISSUER OR ITS RESPECTIVE -35- AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE REFERRED TO HEREIN. THIS GLOBAL NOTE MAY NOT BE EXCHANGED, IN WHOLE OR IN PART, FOR A NOTE REGISTERED IN THE NAME OF ANY PERSON OTHER THAN DTC OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES SET FORTH IN THE INDENTURE. BENEFICIAL INTERESTS IN THIS GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE INDENTURE. (c) Regulation S Temporary Global Notes shall bear a legend substantially in the following form: THIS NOTE IS A REGULATION S TEMPORARY GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE REFERRED TO HEREINAFTER. INTERESTS IN THIS REGULATION S TEMPORARY GLOBAL NOTE MAY NOT BE OFFERED OR SOLD TO A U.S. PERSON OR FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON PRIOR TO THE EXPIRATION OF THE REGULATION S RESTRICTED PERIOD (AS DEFINED IN THE INDENTURE), AND NO TRANSFER OR EXCHANGE OF AN INTEREST IN THIS REGULATION S TEMPORARY GLOBAL NOTE MAY BE MADE FOR AN INTEREST IN A RESTRICTED GLOBAL NOTE OR IN AN UNRESTRICTED GLOBAL NOTE UNTIL AFTER THE LATER OF THE DATE OF TERMINATION OF THE REGULATION S RESTRICTED PERIOD AND THE DATE ON WHICH THE OWNER SECURITIES CERTIFICATION AND THE DEPOSITARY SECURITIES CERTIFICATION RELATING TO SUCH INTEREST HAVE BEEN PROVIDED IN ACCORDANCE WITH THE TERMS OF THE INDENTURE, TO THE EFFECT THAT THE BENEFICIAL OWNER OR OWNERS OF SUCH INTEREST ARE NOT U.S. PERSONS. (d) Notes, other than Global Notes, will bear a legend substantially in the following form: -36- THIS NOTE WILL NOT BE ACCEPTED IN EXCHANGE FOR A BENEFICIAL INTEREST IN A GLOBAL NOTE UNLESS THE HOLDER OF THIS NOTE, SUBSEQUENT TO SUCH EXCHANGE, WILL HOLD A MINIMUM AGGREGATE BENEFICIAL INTEREST IN SUCH GLOBAL NOTE OF AT LEAST ONE HUNDRED THOUSAND DOLLARS ($100,000). SECTION II.5 Restricted Notes. During the period beginning on the Closing Date and ending on the date two years from the Closing Date, all Notes offered and sold to QIBs in reliance on Rule 144A shall be deemed "Restricted Notes" and shall bear on their face, and be subject to the restrictions on transfer provided in, the legend set forth in Section 2.4(a); provided, however, that the term "Restricted Notes" shall not include Notes as to which restrictions have terminated in accordance with Section 3.8(c). SECTION II.6 Global Notes. (a) (i) Any Note issued in exchange for a Global Note or any portion thereof shall be a Global Note, provided, however, that any such Note so issued that is registered in the name of a Person other than the Depositary or a nominee thereof shall not be a Global Note. Notwithstanding any other provision of this Indenture, a Global Note shall not be exchanged in whole or in part for a Fixed Rate Note registered in the name of any person other than the Depositary or one or more nominees thereof, unless (1) the Depositary (A) notifies the Issuers that it is unwilling or unable to continue as Depositary for such Global Note or (B) ceases to be a clearing agency registered under the Exchange Act, and in either case the Issuers fail to appoint a successor Depositary (as described below) or (2) there shall have occurred and be continuing an Event of Default with respect to the Notes. Any Global Note exchanged pursuant to clause (1) above shall be so exchanged from time to time in whole and not in part and any Global Note exchanged pursuant to clause (2) above may be exchanged from time to time in whole or in part as directed by the Depositary. (ii) The Issuers hereby designate DTC as the Depositary with respect to the Global Notes. If at any time DTC notifies the Issuers that it is unwilling or unable to continue as Depositary for the Global Notes or if at any time DTC has ceased to be a clearing agency registered under the Exchange Act if so required by applicable law or regulation, the Issuers shall be entitled to appoint a successor depositary with respect to each Global Note and provide notice to the Trustee of such appointment. If (x) a successor depositary for such Global Note is not appointed by the Issuers within 90 days after the Issuers receive such notice or become aware of such unwillingness, inability or ineligibility, (y) an Event of Default has occurred and is continuing and the beneficial owners representing a majority in principal amount of the Notes represented by such Global Note advise DTC, with a copy to the Trustee and the Issuers, to cease acting as -37- depositary for such Global Note or (z) the Issuers, in their sole discretion, determine at any time that all (but not less than all) Outstanding Notes issued or issuable in the form of a Global Note shall no longer be represented by such Global Note and advise the Trustee and DTC of such determination, then the Issuers shall execute, and the Trustee shall authenticate and deliver, definitive Notes of like series, rank, tenor and terms in definitive form in an aggregate principal amount equal to the principal amount of such Global Notes. On or after the earliest date on which such interests may be so exchanged as described above, each Global Note shall be surrendered for exchange by DTC to the Trustee; provided, however, that such exchange is subject to the terms of Section 3.8(b) herein. (b) Notes issued in exchange for a Global Note or any portion thereof shall be issued in definitive, fully registered form, shall have an aggregate principal amount equal to that of such Global Note or portion thereof to be so exchanged, shall be registered in such names and be in such authorized denominations as the Depositary shall designate and shall bear the applicable legends provided for herein. Any Global Note to be exchanged in whole shall be surrendered by the Depositary to the Transfer Agent located in the Borough of Manhattan, The City of New York, to be so exchanged. With regard to any Global Note to be exchanged in part, either such Global Note shall be so surrendered or exchanged or, if the Trustee is acting as custodian for the Depositary or its nominee with respect to such Global Note, the principal amount thereof shall be reduced, by an amount equal to the portion thereof to be so exchanged, by means of an appropriate adjustment made on the records of the Trustee. Upon any such surrender or adjustment, the Trustee shall authenticate and deliver the Note issuable on such exchange to or upon the order of the Depositary or an authorized representative thereof. Any Note delivered in exchange for the Global Note or any portion thereof shall, except as otherwise provided by Section 3.8, bear the legend regarding transfer restrictions required by Section 2.5. (c) Subject to the provisions in the legends required by Section 2.4 above, the registered Holder may grant proxies and otherwise authorize any Person, including any Agent Member and any Person who may hold an interest in an Agent Member, to take any action that such Holder is entitled to take under this Indenture. (d) In the event of the occurrence of any of the events specified in paragraph (a) of this Section 2.6, the Issuers will promptly make available to the Trustee a reasonable supply of certificated Fixed Rate Notes of each Series in definitive, fully registered form. (e) Neither members of, or participants in, the Depositary ("Agent Members" and each an "Agent Member") nor any other Person on whose behalf Agent Members may act shall have any rights under this Indenture with respect to any Global Note held on their behalf by the Depositary or under any such Global Note, and the Depositary may be treated by the Issuers, the Trustee and any agent of any of the Issuers or the Trustee (including, without limitation, the Servicer) as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent any Issuer, the Trustee or any agent of any Issuer or the Trustee from giving effect to any -38- written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Note. With respect to any Global Note deposited on behalf of the subscribers for the Notes represented thereby with the Trustee as custodian for the Depositary for credit to their respective accounts (or to such other accounts as they may direct) at Euroclear or CEDEL, the provisions of the "Operating Procedures of the Euroclear System" and the "Terms and Conditions Governing Use of Euroclear" and the "Management Regulations" and "Instructions to Participants" of CEDEL, respectively, shall be applicable to Global Notes. ARTICLE III THE NOTES SECTION III.1 Equal and Ratable Securities; Amount; Authorization. (a) The Issuers may issue Notes from time to time in one or more Series which may be in the form of Fixed Rate Notes, as more particularly set forth herein or, with respect to any Additional Notes, in the applicable indenture supplement. Each Note of each Class shall rank pari passu with each other Note of such Class (except, with respect to Additional Notes, to the extent set forth in the applicable supplemental indenture). The Notes of all Classes shall be equally and ratably secured by the Collateral, provided that (i) payment of principal and interest on the Notes of any Class shall be subject to the priorities of distributions set forth in Section 3.5 and Section 5.6 and (ii) payments of Additional Amounts, if any, on any Notes and payments of Make-Whole Payments, if any, on any Fixed Rate Note shall be subordinate to any payment of principal and interest on any Outstanding Note, also as set forth in Section 3.5 and Section 5.6. The aggregate principal amount of the Notes that may be authenticated, delivered and Outstanding under this Indenture and which may be Outstanding at any time is limited to $560,000,000 (except for Notes authenticated and delivered upon registration of, transfer of, or in exchange for, or in lieu of, other Notes pursuant to the provisions of this Indenture or the Notes) or such greater amount as may be specified in any supplemental indenture hereto in connection with the issuance of Additional Notes. All Notes shall be substantially identical except as to denominations and tenor and except as expressly permitted in this Indenture and, with respect to any Additional Notes, any applicable supplemental indenture. (b) (i) The 2004 Fixed Rate Notes shall be known and designated as the "Collateralized Fixed Rate Notes Due November 15, 2004" and shall be issuable hereunder in the following Series: Series A-1 Fixed Rate Notes; Series B-1 Fixed Rate Notes; Series C-1 Fixed Rate Notes; Series D-1 Fixed Rate Notes; and Series E-1 Fixed Rate Notes. The Scheduled Maturity Date for the 2004 Fixed Rate Notes shall be November 15, 2004. -39- (ii) The 2007 Fixed Rate Notes shall be known and designated as the "Collateralized Fixed Rate Notes Due November 15, 2007" and shall be issuable hereunder in the following Series: Series A-2 Fixed Rate Notes; Series B-2 Fixed Rate Notes; Series C-2 Fixed Rates Notes; Series D-2 Fixed Rate Notes; and Series E-2 Fixed Rate Notes. The Scheduled Maturity Date for the 2007 Fixed Rate Notes shall be November 15, 2007. (c) Each Issuer hereby grants, and this Indenture shall evidence, a continuing lien and security interest in the Payment Account, the Holdover Account and any other similar account established by the Trustee or the Servicer in furtherance of its rights or responsibilities under this Indenture or any other Security Document to secure the full payment of the principal of and interest, and all other amounts payable, on all the Notes, which shall in all respects be equally and ratably secured hereby without preference, priority or distinction on account of the actual time or times of the authentication and delivery of the Notes; provided, however, that Additional Notes may be subordinate to other Notes to the extent so provided in any supplemental indenture. (d) Notes may be transferred at the option of the Holder thereof to the Depositary for credit to the account of any Agent Member in accordance with this Indenture. Thereafter, the Depositary or its nominee shall be the Holder of the portion of the Global Note evidencing any Notes so transferred and the beneficial ownership thereof. SECTION III.2 Denominations. The Notes shall be issuable in fully registered form, without coupons, in denominations of $100,000 and integral multiples of $1,000 in excess thereof. SECTION III.3 Conditions Precedent to Issuance of Notes. On the date hereof, Notes may be executed by the Issuers and authenticated and delivered by the Trustee to the specified parties upon an Issuer Request (directing the Trustee to authenticate the Notes and designating to whom the Trustee shall deliver the authenticated Notes) only if each Issuer shall have delivered the following to the Trustee: (a) A copy of the certificate of formation, certificate of limited partnership, certificate of incorporation or any other charter or organizational document (as applicable) of such Issuer, and any amendments thereto, certified by the appropriate government official of its jurisdiction of incorporation or organization. (b) A certificate of the Secretary or Assistant Secretary of the entity identified on Exhibit A-1 hereto with respect to such Issuer, given under its corporate seal stating that: (i) the copy of the applicable charter or organizational document, as amended, provided under clause (a) above is true and complete; -40- (ii) the attached copy of resolutions of such Issuer's Board of Directors: (A) authorizing the issuance of the Notes and (B) authorizing the officers (or classes of officers) identified therein to execute documents on such Issuer's behalf, is true and complete and that such resolutions remain in full force and effect and have not been modified or amended; and (iii) the persons who, as officers of such entity (acting on behalf of such Issuer), executed this Indenture, the Notes, the Mortgage and each other Security Document, and any certificates or other papers delivered to the Trustee in connection with the execution and delivery of this Indenture, the Mortgage and each other Security Document and the issuance of the Notes, were validly elected to, and the incumbents of, the offices they purported to hold at the time of such execution, delivery and issuance, and that their signatures set forth on such certificate are genuine. (c) Executed counterparts of this Indenture, the agreements between the Issuers and the Agents referred to in the penultimate paragraph of Section 3.6(b), the Notes, the Mortgage, the Assignment of Leases, the Environmental Indemnity, the Subordination of Management Agreement and the Assignment of Contracts (as defined in the Mortgage). (d) Copies of any orders of any governmental body or any other third party consents identified in any opinion of counsel to any Issuer as being required in connection with the issuance of the Notes or the execution and delivery of this Indenture and each other Security Document. (e) Opinions of Counsel for such Issuer addressed to the Trustee and the Initial Purchasers and substantially to the effect set forth in the Purchase Agreement. (f) Executed counterparts of the Trustee Fee Agreement and the Servicer Fee Agreement. (g) An Officer's Certificate from the Issuers, dated the Closing Date, stating that, to the best knowledge of the signer(s) thereof, (i) there is no Event of Default continuing under this Indenture, (ii) no Issuer has sustained since the date of the latest unaudited financial statements included in the final offering circular, dated November 20, 1997 and relating to the offering and sale of the Notes (the "Offering Circular"), any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, in each case that could reasonably be expected to have a material adverse effect on any Issuer or any of the Mortgaged Properties and (iii) since the respective dates as of which information is given in the Offering Circular, there has not been any change in the long-term debt of any Issuer or any material change, or any development involving a -41- prospective change in, or affecting, the general affairs, management, financial position, equity or results of operations of any Issuer. (h) Executed UCC-1 financing statements naming each Issuer as debtor and the Trustee as secured party hereunder (to be filed by or on behalf of the Issuer in the appropriate filing offices in Illinois). (i) ALTA form title insurance policies (or fully effective, "marked-up" commitments therefor) insuring the Mortgagee's interest in each of the Mortgaged Properties, in each case in an amount at least equal to the Allocated Amount applicable to such Mortgaged Property (and, in the case of the Mortgaged Properties known as Lockport Mall and The Oaks Mall, at least equal to the fair market value of each such property, as reasonably estimated by the Issuers as of the Closing Date) in form and substance and with such endorsements and affirmative insurance as may be satisfactory to the Issuers and the Initial Purchasers, such approval to be conclusively evidenced by the delivery thereof to the Trustee. (j) Such other opinions, certificates, letters, and documents as the Trustee shall reasonably request. SECTION III.4 Execution, Authentication and Delivery of the Notes. Each Note shall be executed manually or in facsimile on behalf of each Issuer by any person so authorized and listed on Exhibit E hereto to sign documents on behalf of such Issuer in connection with the performance of such Issuer's obligations under this Indenture and the other Security Documents (each, an "Authorized Person"), notwithstanding that such persons, or any of them, shall have ceased, for any reason, to be so authorized prior to the authentication and delivery of such Note or was not so authorized at the date of any such Note. Each Issuer shall have the right to add to or delete from the names listed on Exhibit E upon written notice to the Trustee and the Servicer signed by an Authorized Person and, in the case of additions to the list of Authorized Persons, accompanied by a specimen signature of each newly designated Authorized Person. The Notes may also have such additional provisions, omissions, variations or substitutions as are not inconsistent with the provisions of this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with any law or with any rules made pursuant thereto or with the rules of any securities exchange or governmental agency or as may, consistently herewith, be determined by an Authorized Person executing such Notes, as conclusively evidenced by their execution of such Notes. All Notes shall be otherwise substantially identical except as to denomination and as provided herein. The Trustee is hereby authorized, upon receipt of Notes duly executed on behalf of each Issuer for the purposes of the original issuance of such Notes and receipt of the other documents set forth in Section 3.3, to authenticate such Notes in an aggregate -42- principal amount not in excess of $560,000,000 and to deliver such Notes to the Issuers or any other Person designated by the Issuers and, thereafter, to authenticate and deliver Notes in accordance with the provisions hereinafter set forth. The Trustee may, with the consent of the Issuer, appoint by an instrument or instruments in writing one or more Authenticating Agents (which may include the Trustee itself) for the authentication of Notes and, with such consent, vary or terminate any such appointment upon written notice and approve any change in the office through which any Authenticating Agent acts. The Issuers (by written notice to the Trustee and the Authenticating Agent whose appointment is to be terminated) may also terminate any such appointment at any time; provided, however, that if the Trustee is acting as the Authenticating Agent, it may be terminated as Authenticating Agent if it is also being terminated as Trustee. The Trustee hereby agrees to solicit written acceptances from the entities concerned (in form and substance satisfactory to the Issuers) of such appointments; provided, however, that the Trustee shall not be required to solicit such written acceptances from any of its affiliates who act in the capacity of Paying Agent. In its acceptance of such appointment, each Authenticating Agent shall agree to act as an authenticating agent pursuant to the terms and conditions of this Indenture. The Principal Paying Agent and Paying Agent shall also be Authenticating Agents. No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Note a certificate of authentication substantially in the form provided for in Section 2.2, executed by the Trustee or an Authenticating Agent by manual signature, and such certificate of authentication upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture. SECTION III.5 Payment Account; Holdover Account. (a) On or prior to the date hereof, the Trustee shall establish one or more segregated trust accounts, or in the case of an account established in Luxembourg, segregated accounts (collectively, the "Payment Account"), in the Trustee's name, each of which shall be an Eligible Account, each bearing a designation clearly indicating that such account and all funds deposited therein (including all investments of such deposited funds and all income or other gain from such investments) are held for the exclusive benefit of the Holders. The Issuers shall deposit, or cause to be deposited in the Payment Account, on or before the close of business (in the city in which the Corporate Trust Office then is located) on the fourth (4th) Business Day preceding each Interest Payment Date, any amount needed to make the payment of all interest that will be required to be paid by the Issuers in respect of any Notes Outstanding on such Interest Payment Date, and if such deposit shall have not been made on or before 12:00 noon (New York time) the second (2nd) Business Day prior to each Interest Payment Date, then the same shall constitute an Event of Default hereunder and the Issuers shall owe interest on such amount as set forth in Section 3.11(b). The Trustee will promptly advise the Servicer by facsimile of all -43- amounts received hereunder. The Trustee shall have exclusive control and sole right of withdrawal with respect to the Payment Account for the purpose of making withdrawals from the Payment Account in accordance with this Indenture. Funds in the Payment Account shall not be commingled with any other monies. All monies deposited from time to time in the Payment Account and all investments made with such monies, including all income or other gain from such investments, shall be held by the Trustee in the Payment Account for the benefit of the Holders as provided herein and, to the extent specified in Section 6.14, the Issuers. (b) So long as no Event of Default shall have occurred and be continuing, all of the funds on deposit in the Payment Account shall be invested and reinvested by the Trustee in one or more Eligible Investments specified in an Issuer Request (or, if no Issuer Request is delivered to the Trustee, in accordance with the priorities established in Section 6.14) if such funds are reasonably expected to be on deposit for a period in excess of two days, subject to the following requirements: (i) such Eligible Investments shall not mature later than the Business Day prior to the date such amounts are required to be applied under this Indenture; (ii) securities purchased with the monies in the Payment Account shall be deemed a part of the Payment Account; (iii) each such Eligible Investment shall be made in the name of the Trustee (in its capacity as such) or in the name of a nominee of the Trustee under its complete and exclusive dominion and control (or, if applicable law provides for perfection of pledges of an instrument not evidenced by a certificate or other instrument through registration of such pledge on books maintained by or on behalf of the issuer of such investment, such pledge may be so registered); (iv) the Trustee shall have the sole control over such investment, the income thereon and the proceeds thereof; (v) other than the investments described in clause (iii) above, any certificate or other instrument evidencing such investment, if any, shall be delivered directly to the Trustee or its agent; and (vi) the proceeds of each investment (which shall be made as provided in Section 6.14) shall be remitted by the purchaser thereof (if not the Trustee) directly to the Trustee. All net income or other gain from investments of monies deposited in the Payment Account shall be applied in accordance with the last sentence of Section 6.14 and any net loss resulting from such investments shall be charged to the Payment Account. The Trustee shall not be liable to the Holder of any Note, any Issuer or any other Person for -44- any loss resulting from any such investment or sale in accordance with this Indenture, whether by depreciation in value or otherwise, unless such loss results from the Trustee's negligence or willful misconduct. (c) Except as otherwise provided in Sections 5.6 and 11.3 hereof, on each Interest Payment Date, Redemption Date or Maturity Date, as applicable, the Trustee shall apply all amounts on deposit in the Payment Account to pay, pursuant to Section 3.11, the following amounts in the following order of priority: (i) any interest due and payable on the Notes (excluding Additional Amounts) shall be paid to the Holders, first, to the Holders of Class A Notes, then to the Holders of Class B Notes, then to the Holders of Class C Notes, then to the Holders of Class D Notes and then to the Holders of Class E Notes, until, in each case, all such interest has been paid in full; provided, however, that if there are not sufficient funds in the Payment Account to pay all interest then due and payable on the Notes of any Class, any amounts available shall be allocated between the Holders of the Notes of such Class so that the amount paid to Holders of Notes of each Series within such Class is equal to the total amount available multiplied by the ratio of (x) the amount of interest then due and payable on the Notes of such Series over (y) the total amount of interest then due and payable to all Holders of Notes of such Class; (ii) any principal (excluding Make-Whole Payments, if any) due and payable on any Notes shall be paid to the Holders thereof in the order of priority described in clause (i) above with respect to payments of interest, until, in each case, all such principal due and payable on each Class of Notes has been paid in full; provided, however, that if there are not sufficient funds in the Payment Account to pay all principal then due and payable on the Notes of any Class, the amounts available shall be allocated among the Holders of such Class pro rata according to the principal amounts of Notes of such Class owned by such Holders immediately prior to any such payments of principal hereunder; (iii) Additional Amounts due and payable on any Notes shall be paid to the Holders thereof in the order of priority described in clause (i) above with respect to payments of interest, until, in each case, all Additional Amounts due and payable on each Class have been paid in full provided, however, that if there are not sufficient funds in the Payment Account to pay all Additional Amounts then due and payable on the Notes of any Class, the amount available shall be allocated among the Holders of such Class to whom such Additional Amounts are payable so that the amount paid to each such Holder is equal to the total amount available multiplied by the ratio of (x) the amount of Additional Amounts then due and payable to such Holder in respect of the Notes of such Class over (y) the total amount of Additional Amounts then due and payable to all Holders of Notes of such Class; -45- (iv) any Make-Whole Payments due and payable on any of the Notes shall be paid to the Holders thereof, in the order of priority described in clause (i) above with respect to payments of interest, until, in each case, all such principal due and payable on each Class of Notes has been paid in full; provided, however, that if there are not sufficient funds in the Payment Account to pay all Make-Whole Payments then due and payable on the Notes of any Class, any amounts available shall be allocated among the Holders of such Class pro-rata based on the principal amounts of Notes of such Class owned by such Holders immediately prior to any such payments of principal hereunder; and (v) the balance, if any, except amounts representing unclaimed funds which shall be deposited in the Holdover Account, shall be returned to the Issuers. (d) Funds in the Payment Account for payments of amounts due and payable and not claimed in accordance with this Indenture on any Outstanding Note shall be deposited by the Trustee in a segregated trust account (the "Holdover Account") in the Trustee's name with the Trustee and shall be held for the account of the Holder or Holders of such Notes pursuant to Section 6.15. Upon the written request of the Issuers, the Trustee shall invest such funds pursuant to Section 6.14, but the Trustee shall not otherwise be under any obligation to do so. Any investment income earned on amounts held in the Holdover Account shall be held for the benefit of the Issuers as provided in the last sentence of Section 6.14. SECTION III.6 Registration; Paying Agent. (a) General. The Issuers shall cause to be kept at the Corporate Trust Office a register (the "Register"), within the meaning of Section 163(f) of the Code and any regulations thereunder, for the registration or transfer of the Notes. The Register shall be maintained by the Trustee, which is hereby appointed as "Registrar" for the purpose of registering Notes and transfers of Notes as provided herein. The name and address of the Holder of each Note, records of any transfers of the Notes and the name and address of any transferee of a Note shall be entered in the Register under such reasonable regulations as the Trustee may prescribe. There shall be no more than one Holder for each Note, including all beneficial interests therein. The Trustee may appoint one or more co-registrars, and the term "Registrar" includes any such co-registrar. The Registrar shall (i) at all reasonable times during office hours make the Register available to any Issuer or any Person authorized by any Issuer in writing for inspection and the making of copies thereof or extracts therefrom and (ii) mail a copy of the Register to any Issuer or any other such Person promptly after request therefor from any Issuer. Upon surrender for registration of transfer of any Note at the Corporate Trust Office, accompanied by a written instrument of transfer in the form approved by the Issuers and the Trustee (it being understood that, until notice to the contrary is given to Holders, the Issuers and the Trustee shall each be deemed to have approved the form of instrument of transfer, if any, printed on the Notes), executed by the registered owner, in -46- person or by such Holder's attorney thereunto duly authorized in writing, such Note shall be transferred upon the Register, and each Issuer shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more newly registered Notes of any authorized denominations and of a like aggregate principal amount. Transfers and exchanges of Notes shall be subject to the restrictions set forth in this Section 3.6 and in the text of the Notes and such reasonable regulations as may be prescribed by the Issuers. Successive registrations of transfers as aforesaid may be made from time to time as desired, and each such registration shall be noted on the Register. Any Note (subject, in the case of a Regulation S Temporary Global Note, to the requirements of Section 2.3(b)) may be exchanged for two or more Notes of any authorized denominations and of a like aggregate principal amount in accordance with the provisions of Section 3.2 hereof if the Note to be so exchanged is surrendered for cancellation at the Corporate Trust Office accompanied by the written request of the Holder thereof specifying the denominations of the new Notes to be issued in exchange therefor. New Notes, executed by each Issuer and payable to such Holder in the denominations so requested (but in denominations not less than the principal amount of $100,000 and integral multiples of $100,000 in excess thereof, except as such amounts may be adjusted following a partial redemption and related elections under Article XI or elsewhere in this Indenture), and in an aggregate principal amount equal to the principal amount of the surrendered Notes, shall be authenticated and delivered by the Trustee to such Holder in exchange for the surrendered Note and any exchange of a Note, Global Note, Restricted Global Note or Regulation S Temporary Global Note provided for in this Indenture shall only be permitted between Notes of the same Series. No provision of this Indenture permitting the exchange of any Note, Global Note, Restricted Global Note, Restricted Note, Regulation S Temporary Global Note or Regulation S Global Note shall ever be interpreted as permitting exchanges between Notes of different Series. (b) In addition to the Principal Paying Agent, the Trustee may, at its discretion, appoint one or more Paying Agents and Transfer Agents, and the Paying Agent, Registrar, Transfer Agent and Authenticating Agent may be the same Person. If, at any time, and then only so long as any Notes are listed on the Luxembourg Stock Exchange and such exchange shall so require, the Trustee (on behalf of the Issuers) shall maintain a Paying Agent and Transfer Agent in Luxembourg. The Trustee shall promptly notify each Issuer of the name and address of each Paying Agent appointed by it and of the country or countries in which a Paying Agent may act in that capacity, and will notify each Issuer of the resignation or termination of any Paying Agent. Subject to the provisions of this Section 3.6 and the third paragraph of Section 3.4, the Issuers may vary or terminate the appointment of any Agent at any time and from time to time upon giving notice to such Agent and to the Trustee. Each Paying Agent shall have a long-term unsecured debt rating of not less than Investment Grade or be a wholly-owned subsidiary of an entity that is so -47- rated. Each Paying Agent hereunder shall be entitled to the same protections and exculpations as are available to the Trustee under Article VI hereof. In respect of the Notes, the Trustee (on behalf of the Issuers) shall cause notice of any resignation, termination or appointment of any Paying Agent (including the Principal Paying Agent) or of the Trustee, and of any change in the office outside the United States through which any such Agent will act, to be given to the Holders as provided in Section 1.6 hereof. Each Issuer (or the Trustee on each Issuer's behalf) shall enter into an appropriate agency agreement with any Agent not a party to this Indenture and shall provide a copy of any such agreement to the Trustee. The agreement shall implement the provisions of this Indenture that relate to such Agent. The Issuers shall notify the Trustee of the name and address of any Agent not a party to this Indenture. If the Issuers fail to maintain a Registrar, Transfer Agent or Paying Agent, the Trustee shall act as such. Each Issuer initially appoints the Trustee as Registrar, Principal Paying Agent, Transfer Agent and Authenticating Agent. SECTION III.7 Holder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders. If the Trustee is not the Registrar, the Issuers or any other obligor upon the Notes shall furnish to the Trustee in writing at least four Business Days before each Interest Payment Date and at such other times as the Trustee may request in writing a list in such form and as of such date as the Trustee may reasonably request of the names and addresses of the Holders. SECTION III.8 Transfer and Exchange. (a) General. At the option of each Holder but subject to the provisions of this Section 3.8, Notes of any Series may be exchanged for other Notes of that Series of any authorized denomination or denominations and of the same aggregate principal amount, upon surrender of the Notes to be exchanged at any office or agency of the Trustee appointed in or pursuant to Section 3.6 for such purpose. Subject to the terms of this Section 3.8, upon surrender for registration of transfer of any Note at any such office or agency of the Trustee, the Issuers shall prepare and each Issuer shall execute, and the Trustee or an Authenticating Agent shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized denomination or denominations and of the same aggregate principal amount. The Trustee will, throughout the term of this Indenture, retain in its permanent records executed originals of all retired Notes delivered to it in connection with any exchanges or replacements hereunder. -48- All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of each Issuer evidencing the same debt, and entitled to the same benefits under this Indenture, as the Notes surrendered upon such registration of transfer or exchange. Every Note presented or surrendered for registration of transfer or for exchange shall (if so required by the Issuers or the Registrar) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Issuers and the Registrar (it being understood that, until notice to the contrary is given to Holders of Notes, each Issuer and the Registrar shall each be deemed to have approved the form of instrument of transfer, if any, printed on any definitive Note), duly executed by the Holder or such Holder's attorney duly authorized in writing. No service charge shall be made for any registration, registration of transfer or exchange of Notes, but the Issuers and the Trustee shall have the right to require payment from the Holder requesting any such registration of transfer or exchange of an amount in United States Dollars sufficient to pay or discharge any stamp duty, tax or other governmental charge or insurance charge that may be imposed in connection with such registration of transfer or exchange. Neither the Issuers nor the Trustee shall be required to register the transfer of, or exchange, any Note called for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. (b) Redemption Period. Neither the Issuers nor the Trustee shall issue Notes, register the transfer of Notes or exchange Notes during a period beginning at the opening of business fifteen (15) days before any selection of Notes to be redeemed and ending on the relevant Redemption Date if the Global Note for which exchange is requested may be among those selected for redemption. (c) Restricted Notes. Every Restricted Note, including any Note issued upon transfer or exchange thereof, shall be subject to the restrictions on transfer provided in the legend required to be set forth on the face of such Restricted Note pursuant to Section 2.5, unless such restrictions on transfer shall be waived by the written consent of the Issuers, and the Holder of each Restricted Note, by such Holder's acceptance thereof, agrees to be bound by such restrictions on transfer. Whenever any Restricted Note is presented or surrendered for registration of transfer or for exchange for a Note registered in a name other than that of the Holder, such Restricted Note must be accompanied by a transferor's certificate in substantially the form set forth in Exhibit C-4 and, in the case of transfers of Restricted Notes being effected in reliance on the exemption from registration provided by Rule 144A, a transferee's certificate substantially in the form set forth in Exhibit C-8. Neither the Registrar nor any Transfer Agent shall be required to accept for such registration of transfer or exchange any Restricted Note unless such Registrar or Transfer Agent -49- is satisfied that such transfer or exchange is being effected in compliance with the restrictions on transfer as set forth in this Indenture. The restrictions imposed by this Section 3.8(c) and Section 2.5 upon the transferability of any particular Restricted Note shall cease and terminate when such Restricted Note has been (i) sold pursuant to an effective registration statement, (ii) transferred pursuant to Rule 144 (or any successor provision thereto), unless the transferor in such transfer is an affiliate of any Issuer within the meaning of Rule 144 (or such successor provision), or (iii) transferred pursuant to Regulation S. Any Restricted Note as to which such restrictions on transfer shall have expired in accordance with their terms or shall have terminated may, upon surrender of such Restricted Note for exchange to the Registrar or any Transfer Agent in accordance with the provisions of this Section 3.8 (accompanied, in the event that such restrictions on transfer have terminated by reason of a transfer pursuant to Rule 144 or any successor provision, by an opinion of counsel having substantial experience in practice under the Securities Act and otherwise reasonably acceptable to the Issuers, addressed to each Issuer and in form acceptable to the Issuers, to the effect that the transfer of such Restricted Note has been made in compliance with Rule 144 or such successor provision) be exchanged for a new Note, of like aggregate principal amount, which shall not bear the restrictive legend required by Section 2.5. The Issuers shall inform the Trustee of the effective date of any registration statement registering the Notes under the Securities Act. The Trustee shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the aforementioned opinion of counsel or registration statement. As used in the preceding two paragraphs of this Section 3.8(c), the term "transfer" encompasses any sale, pledge, transfer or other disposition of any Restricted Note. (d) Transfer of Global Notes and Interests Therein. Notwithstanding any other provision of this Indenture or the Notes, transfers of a Global Note, in whole or in part, and transfers of interests therein of the kind described in clauses (iii), (iv) or (v) below, shall be made only in accordance with this Section 3.8(d), and all transfers of an interest in a Regulation S Temporary Global Note shall comply with Sections 3.8(d)(ii), (v) and (vi) below. (i) General. A Global Note may not be transferred, in whole or in part, to any person other than the Depositary or a nominee thereof, and no such transfer to any such other person may be registered; provided, however, that this clause (i) shall not prohibit any transfer of a Note that is issued in exchange for a Global Note but is not itself a Global Note. No transfer of a Note to any person shall be effective under this Indenture or the Notes unless and until such Note has been registered in the name of such person. Nothing in this Section 3.8(d)(i) shall prohibit or render ineffective any transfer of a beneficial interest in a Global Note effected in accordance with the other provisions of this Section 3.8(d). -50- (ii) Regulation S Temporary Global Note. If the holder of a beneficial interest in a Regulation S Temporary Global Note wishes at any time to transfer such interest to a person who wishes to take delivery thereof in the form of a beneficial interest in such Regulation S Temporary Global Note, such transfer may be effected, subject to Applicable Procedures (as defined below), only in accordance with this Section 3.8(d)(ii). Upon delivery (i) by a beneficial owner of an interest in a Regulation S Temporary Global Note to Euroclear or CEDEL, as the case may be, of an Owner Securities Certification, (ii) by the proposed transferee of such beneficial interest in the Regulation S Temporary Global Note to Euroclear or CEDEL, as the case may be, of a written certification (a "Transferee Securities Certification") substantially in the form of Exhibit C-3 hereto and (iii) by Euroclear or CEDEL, as the case may be, to the Trustee of a Depositary Securities Certification, the Trustee may direct either Euroclear or CEDEL, as the case may be, to reflect on its records the transfer of a beneficial interest in the Regulation S Temporary Global Note from the beneficial owner providing the Owner Securities Certification to the Person providing the Transferee Securities Certification. (iii) Restricted Global Note to Regulation S Temporary Global Note. If the holder of a beneficial interest in a Restricted Global Note wishes at any time to transfer such interest to a person who wishes to take delivery thereof in the form of a beneficial interest in a Regulation S Temporary Global Note, such transfer may be effected, subject to the rules and procedures of the Depositary, Euroclear or CEDEL and the Agent Member who acts on behalf of Euroclear and CEDEL, in each case to the extent applicable (the "Applicable Procedures"), only in accordance with the provisions of this Section 3.8(d)(iii). Upon receipt by (1) the Depositary of (A) written instructions given in accordance with the Applicable Procedures from an Agent Member directing the Depositary to credit or cause to be credited to a specified Agent Member's account a beneficial interest in a Regulation S Temporary Global Note in a principal amount equal to that of the beneficial interest in such Restricted Global Note to be transferred, (B) a written order from the Agent Member and/or Euroclear or CEDEL, as applicable, given in accordance with the Applicable Procedures containing information regarding the Euroclear or CEDEL account, as the case may be, to be credited with, and the account of the Agent Member to be debited for, such beneficial interest and (C) a certificate in substantially the form of Exhibit C-5 attached hereto given by the transferor of such beneficial interest in the Restricted Global Note and (2) the Trustee, as Registrar, at its Corporate Trust Office of (A) notification from the Depositary of the transaction described in (1) above and (B) the certificate described in (1)(C) above, then the Trustee, as Registrar, shall instruct the Depositary to reduce the principal amount of a Restricted Global Note, and to increase the principal amount of a Regulation S Temporary Global Note by the principal amount of the beneficial interest in the Restricted Global Note to be so transferred, and to credit or cause to be credited to the account of the person specified in such instructions (which shall be the Agent Member for Euroclear and/or CEDEL or both, as the case may be) a beneficial interest in such Regulation S Temporary Global Note -51- having a principal amount equal to the amount by which the principal amount of the Restricted Global Note was reduced upon such transfer. (iv) Restricted Global Note to Unrestricted Global Note. If the holder of a beneficial interest in a Restricted Global Note wishes at any time to transfer such interest to a person who wishes to take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, such transfer may be effected, subject to the Applicable Procedures, only in accordance with this Section 3.8(d)(iv). Upon receipt by (1) the Depositary of (A) written instructions given in accordance with the Applicable Procedures from an Agent Member directing the Depositary to credit or cause to be credited to a specified Agent Member's account a beneficial interest in an Unrestricted Global Note in a principal amount equal to that of the beneficial interest in such Restricted Global Note, (B) a written order given in accordance with the Applicable Procedures containing information regarding the account of the Agent Member (and, in the case of any such transfer pursuant to Regulation S, the Euroclear or CEDEL account for which such Agent Member's account is held) to be credited with, and the account of the Agent Member to be debited for, such beneficial interest and (C) a certificate in substantially the form of Exhibit C-6 attached hereto given by the holder of such beneficial interest to be transferred and (2) the Trustee, as Registrar, at its Corporate Trust Office of (A) notification from the Depositary of the transaction described in (1) above and (B) the certificate described in (1)(C) above, the Trustee, as Registrar, shall instruct the Depositary to reduce the principal amount of a Restricted Global Note, and to increase the principal amount of an Unrestricted Global Note by the principal amount of the beneficial interest in the Restricted Global Note to be so transferred, and to credit or cause to be credited to the account of the person specified in such instructions a beneficial interest in such Unrestricted Global Note having a principal amount equal to the amount by which the principal amount of the Restricted Global Note was reduced upon such transfer. (v) Regulation S Temporary Global Note or Unrestricted Global Note to Restricted Global Note. If the holder of a beneficial interest in a Regulation S Temporary Global Note on or after the termination of the Regulation S Restricted Period, or the holder of a beneficial interest in an Unrestricted Global Note at any time, wishes to transfer such interest to a person who wishes to take delivery thereof in the form of a beneficial interest in a Restricted Global Note, such transfer may be effected only in accordance with the Applicable Procedures and this Section 3.8(d)(v); provided, that with respect to any transfer of a beneficial interest in a Regulation S Temporary Global Note (except a transfer pursuant to Section 3.8(d)(vii)(2)) the transferor and Euroclear or CEDEL, as the case may be, also must have previously delivered the certificates described in the first paragraph of Section 2.3(b)(ii) with respect to such beneficial interest. Upon receipt by (1) the Depositary of (A) written instructions given in accordance with the Applicable Procedures from an Agent Member, directing the Depositary to credit or cause to be credited to a specified Agent Member's account a beneficial interest in the Restricted Global Note equal to that of -52- the beneficial interest in a Regulation S Temporary Global Note or an Unrestricted Global Note to be so transferred and (B) a written order given in accordance with the Applicable Procedures containing information regarding the account of the Agent Member to be credited with, and the account of the Agent Member (and, if such account is held for Euroclear or CEDEL, the Euroclear or CEDEL account, as the case may be) to be debited for, such beneficial interest, and (2) the Trustee, as Registrar, at its Corporate Trust Office of notification from the Depositary of the transaction described in (1) above, the Trustee, as Registrar, shall instruct the Depositary to reduce the principal amount of such Regulation S Temporary Global Note or Unrestricted Global Note as the case may be and increase the principal amount of the Restricted Global Note, by the principal amount of the beneficial interest in such Regulation S Temporary Global Note or Unrestricted Global Note to be so transferred, and to credit or cause to be credited to the account of the person specified in such instructions a beneficial interest in such Restricted Global Note having a principal amount equal to the amount by which the principal amount of such Regulation S Temporary Global Note or Unrestricted Global Note was reduced upon such transfer. (vi) Interests in Regulation S Temporary Global Note to be Held Through Euroclear or CEDEL. Until the later of the termination of the Regulation S Restricted Period and the delivery of the certifications required by Section 2.3(b)(ii), (A) interests in any Regulation S Temporary Global Note may be held only through Agent Members acting for and on behalf of Euroclear and CEDEL, and (B) any purchaser of Notes in a sale made in reliance on Regulation S may not sell or offer to sell such Notes within the United States or to a U.S. Person or for the account or benefit of a U.S. Person within the meaning of Regulation S. (vii) Other Exchanges. (1) In the event that a Global Note or any portion thereof is exchanged for Notes other than Global Notes, such other Notes may in turn be exchanged (on transfer or otherwise) for Notes that are not Global Notes or for beneficial interests in a Global Note of the same Series as the definitive Note to be so exchanged (if any is then Outstanding) only in accordance with such procedures, which shall be substantially consistent with the provisions of clauses (i) through (vi) above (including the certification requirements intended to insure that transfers of beneficial interests in a Global Note comply with Rule 144A, Rule 144 or Regulation S, as the case may be) and any Applicable Procedures, as may be from time to time adopted by the Issuers and the Trustee; provided, that, except as permitted in paragraph (2) hereof, no beneficial interest in a Regulation S Temporary Global Note shall be exchangeable for a definitive Note until the expiration of the Regulation S Restricted Period and then only if the certifications described in Section 2.3(b)(ii) have been provided in respect of such interest. (2) Notwithstanding any other provision of this Section 3.8, an Initial Purchaser may exchange beneficial interests in a Regulation S Temporary Global Note held by -53- it for one or more Restricted Notes (including an interest in a Restricted Global Note) upon delivery by such Initial Purchaser of instructions for such exchange substantially in the form of Exhibit C-7. Upon receipt of the instruction described in the preceding sentence, the Trustee shall instruct the Depositary to reduce the principal amount of a Regulation S Temporary Global Note by the principal amount of the beneficial interest in such Regulation S Temporary Global Note to be so transferred and either (A) the Trustee shall instruct the Depositary to increase the principal amount of the Restricted Global Note and credit or cause to be credited to the account of the Initial Purchasers a beneficial interest in such Restricted Global Note having a principal amount equal to the amount by which the principal amount of the Regulation S Temporary Global Note was reduced upon such transfer or (B) authenticate and deliver one or more Restricted Notes in definitive form and in the aggregate principal amount of the beneficial interest in the Regulation S Temporary Global Note to be so transferred, pursuant to the instructions described in the first sentence of this subclause (2). (e) Transfer of Restricted Notes (Other Than a Restricted Global Note) to a Global Note. If the holder of a Restricted Note (other than a Restricted Global Note) wishes at any time to transfer such Note to a person who wishes to take delivery thereof in the form of a beneficial interest in a Restricted Global Note, a Regulation S Temporary Global Note or an Unrestricted Global Note, such transfer may be effected, subject to the other provisions of this Indenture and the Applicable Procedures, only in accordance with this Section 3.8(e). Upon receipt by (1) the Depositary of (A) written instructions given in accordance with the Applicable Procedures from an Agent Member directing the Depositary to credit or cause to be credited to a specified Agent Member's account a beneficial interest in a Restricted Global Note, a Regulation S Temporary Global Note or an Unrestricted Global Note, as the case may be, in a principal amount equal to the principal amount of the Restricted Note to be so transferred, (B) a written order given in accordance with the Applicable Procedures containing information regarding the account of the Agent Member (and, in the case of any transfer pursuant to Regulation S, the Euroclear and CEDEL account for which such Agent Member's account is held, or if such account is held for Euroclear or CEDEL, the Euroclear or CEDEL account, as the case may be) to be credited with such beneficial interest and (C) an appropriately completed certificate substantially in the form of Exhibit C-4 hereto and (2) the Trustee of (A) the Restricted Note to be transferred, (B) notification from the Depositary of the transaction described in (1) above and (C) the certificate described in (1)(C) above, the Trustee shall cancel the Restricted Note and instruct the Depositary to increase the principal amount of a Restricted Global Note, Regulation S Temporary Global Note or Unrestricted Global Note, as the case may be, by the principal amount of the Restricted Note so transferred, and to credit or cause to be credited to the account of the person specified in such instructions (which, in the case of any increase in the principal amount of such Regulation S Temporary Global Note, shall be the Agent Member for Euroclear or CEDEL or both, as the case may be) a corresponding principal amount of such Restricted Global Note, such Regulation S Temporary Global Note or such Unrestricted Global Note. Any transfer of -54- a Restricted Note to a person who wishes to take delivery thereof in the form of a beneficial interest in a Global Note other than a Restricted Global Note may only be effected in accordance with Regulation S or Rule 144. (f) Notwithstanding any other provision of this Section 3.8, transfers of any Note or a beneficial interest in a Global Note made in reliance on Rule 144A may be effected only after delivery to the Depositary or the Trustee by the proposed transferee of an appropriately completed certificate substantially in the form of Exhibit C-8. (g) Successive registrations and registrations of transfers and exchanges as aforesaid may be made from time to time as desired, and each such registration shall be noted on the Register. No service charge shall be made for any registration of transfer or exchange of the Notes, but the Trustee may require payment of a sum sufficient to cover any stamp duty, tax or other governmental charge or insurance charge payable in connection therewith and any other amounts required to be paid by the provisions of the Notes. (h) All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of each Issuer, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Notes surrendered upon such registration of transfer or exchange. SECTION III.9 Mutilated, Destroyed, Lost and Stolen Notes. If any mutilated Note is surrendered to the Trustee, each Issuer shall execute, and the Trustee shall authenticate and deliver in exchange therefor, a new Note (a "New Note") of like tenor and principal amount and bearing a number not contemporaneously outstanding. Each New Note issued pursuant to this Section in exchange for, in substitution for, or in lieu of a Predecessor Note shall be dated the date of, and be in the form of, such Predecessor Note. If there shall be delivered to the Issuers and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Note and (ii) such security or indemnity as may be required by each of them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Issuers or the Trustee that such Note has been acquired by a bona fide purchaser, each Issuer shall execute and upon their request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Note, a New Note of like tenor and principal amount and bearing a number not contemporaneously outstanding. In every case of mutilation or defacement, the applicant shall surrender to the Trustee the Note so mutilated or defaced. Upon the issuance of any substitute Note, the Issuers may require the payment by the applicant of a sum sufficient to cover any stamp duty, tax or other governmental charge or insurance charge that may be imposed or incurred in relation thereto and any other expenses connected therewith. -55- Every New Note issued pursuant to this Section in lieu of any destroyed, lost or stolen Note shall constitute an original additional contractual obligation of each Issuer evidencing the same debt as the Predecessor Note, whether or not the destroyed, lost or stolen Note shall be at any time enforceable by anyone having rights in such New Note thereunder and hereunder, and any such New Note shall be entitled to all the benefits of this Indenture and of the other Security Documents to the same extent as such Predecessor Note. All Notes shall be held and owned upon the express condition that, to the extent permitted by law, the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes or negotiable instruments without their surrender. SECTION III.10 Interest. (a) Each Note shall bear interest from and including its date of issuance until its respective Maturity Date. Such interest shall accrue during each Interest Period for the Notes and be payable by the Issuers in arrears for such Interest Period on the related Interest Payment Date and upon the redemption or maturity thereof. Interest on each Note shall, except to the extent that funds are not available in the Payment Account, cease to accrue from Maturity or, if earlier, the date of redemption. (b) (i) For the period from the initial issuance to, but not including, the Maturity Date, or earlier redemption, the per annum interest rate for each Interest Period applicable to the Notes shall be: for the Series A-1 Notes, 6.537%; for the Series B-1 Notes, 6.635%; for the Series C-1 Notes, 6.762%; for the Series D-1 Notes, 6.917%; for the Series E-1 Notes, 7.052%; for the Series A-2 Notes, 6.602%; for the Series B-2 Notes, 6.728%; for the Series C-2 Notes, 6.806%; for the Series D-2 Notes, 6.992%; and for the Series E-2 Notes, 7.224%. (ii) Interest on each Note shall, from the Closing Date to, but not including, the applicable Maturity Date, be payable monthly on each Interest Payment Date commencing December 15, 1997. Interest on the Fixed Rate Notes shall be computed based on a year of 360 days comprised of twelve 30-day months. SECTION III.11 Payment of Principal and Interest. (a) Each Issuer hereby authorizes and directs the Trustee to make or cause to be made payment, from funds available in the Payment Account and any other funds made available to the Trustee for such purpose, of the principal of and any interest (and Make- -56- Whole Payment and Additional Amounts, if any) on the Notes as set forth in this Indenture. (b) Subject to the provisions set forth below with respect to Default Interest, any interest on the Notes shall be paid on each Interest Payment Date to the Person who was the Holder thereof at the close of business on the Regular Record Date for such Interest Payment Date; provided, however, that interest payable at Maturity of the Notes of any Series shall be payable to the Person to whom principal shall be payable. Payments of principal of (and Make-Whole Payments, if any, on) the Notes shall be payable at Maturity against surrender thereof at the Corporate Trust Office and at the offices of such other Paying Agents as the Trustee shall have appointed pursuant to Section 3.6(b). So long as the Notes are held through the Depositary's book-entry system, payments of interest and principal (and Additional Amounts and Make-Whole Payments, if any) on the Notes will be made, subject to applicable laws and regulations, by wire transfer from the Trustee to the Depositary and will be forwarded to investors in accordance with the payment procedures of the Depositary and the Agent Members thereof. If any Note is not held through the Depositary, payments of principal (and Make-Whole Payment, if any) with respect to the Notes shall be made at Maturity upon surrender of such Notes and payments of any interest (and Additional Amounts, if any) on such Notes shall be made on the applicable Interest Payment Date, in accordance with the foregoing and subject to applicable laws and regulations, by check mailed on or before the due date for such payment to the Person entitled thereto at such Person's address appearing on the Register, or, in the case of payments of principal, to such other address as the Holder shall provide in writing at the time of such surrender (or, in the case of a Holder that provides the Trustee with wire instructions and complies with any other reasonable requirements of the Principal Paying Agent, by wire transfer to such account as such Holder shall designate by written instruction received by the Principal Paying Agent not less than five (5) Business Days prior to the Regular Record Date). If, for any reason, interest on any Note is not paid or provided for by the Issuers on or prior to 12:00 noon on the date which is two (2) Business Days prior to the Interest Payment Date on which such interest is due, or the principal of any Notes is not repaid or provided for by the Issuers on or prior to 12:00 noon on the Maturity Date applicable to such Notes, the Issuers will be required to pay default interest at a per annum rate equal to the higher of (i) the regular per annum interest rate applicable thereto plus 400 basis points or (ii) the Advance Interest Rate (such rate, the "Default Rate", and such interest, "Default Interest") for every day that such nonpayment continues until the Issuers have paid all such amounts, all Default Interest incurred by the Issuers in connection therewith as provided below and all other amounts then due and payable under this Indenture and the other Security Documents. The portion of such Default Interest equal to the product of the relevant aggregate principal balance and the Advance Interest Rate will be payable to the Servicer (or the Trustee, as back-up Servicer, if applicable), to the extent, but only to the extent, that the Servicer (or the Trustee) has advanced the regular interest payment in -57- question, as reimbursement for the Interest Advance in accordance with Section 5.6 and the excess, if any, of the Default Interest payable over the product of relevant aggregate principal balance and the Advance Interest Rate will be payable to the Holders of the Notes; provided, however, that payments of any such amounts payable to Holders will be subordinate to payments of principal and interest as set forth in Section 5.6. If the Issuers default in the timely payment of interest or principal on any Notes and the Servicer (and the Trustee, as back-up Servicer) is not required to make, or defaults in its obligation to make, an Interest Advance, the Holders of such Notes will be entitled to receive 100% of the Default Interest payable by the Issuers in respect of such default. Upon a default by the Issuers in the payment of interest or principal on the Notes, any Default Interest payable in connection therewith shall forthwith cease to be payable to the Holders on the relevant Regular Record Date, and Default Interest (to the extent payable to Holders under this Section 3.11, as opposed to the Servicer or the Trustee as back-up Servicer) shall be paid by the Issuers to the Person or Persons registered as Holders at the close of business on a Special Record Date for the payment of such Default Interest, which shall be fixed in the following manner. The Issuers shall notify the Trustee in writing of the amount of Default Interest proposed to be paid on each such Note and the date of the proposed payment, and at the same time the Issuers shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Default Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Default Interest as in this clause provided. Thereupon the Trustee shall fix a special record date (the "Special Record Date") for the payment of such Default Interest which shall be not more than ten (10) Business Days and not less than five (5) Business Days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify each Issuer and the Servicer of such Special Record Date and, in the name and at the expense of the Issuers, shall cause notice of the proposed payment of such Default Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder at the address of such Holder as it appears in the Register, not less than five (5) Business Days prior to such Special Record Date. Notice of the proposed payment of such Default Interest and the Special Record Date therefor having been so mailed, such Default Interest shall be paid to the Person in whose name each respective Note (or their respective Predecessor Note) is registered at the close of business on such Special Record Date. At the Maturity Date of each Note, the Trustee shall pay the principal amount of such Note, and any unpaid interest thereon in immediately available funds from funds in the Payment Account as promptly as possible after presentation to the Trustee of such Note but shall initiate such payment no later than 3:00 p.m. (New York time) on the day of such presentation, provided that such presentation has been made no later than 11:00 a.m. (New York time). If presentation is made after 11:00 a.m. (New York time) on any day, such presentation shall be deemed to have been made not later than 11:00 a.m. (New York time) on the immediately succeeding Business Day. -58- In the event that a Note is not presented for payment by 11:00 a.m. (New York time) at its Maturity Date, the Trustee shall transfer any principal thereof and interest thereon to the Holdover Account. If the Holder of such Note shall present such Note to the Trustee within two (2) years after its Maturity Date, the Trustee shall pay such Note from funds in the Holdover Account. In no event (other than following a default by any of the Issuers) shall such Note earn interest after its Maturity Date. If such Note is not presented for payment within two (2) years after its Maturity Date, the Trustee shall not honor a demand for payment of such Note and the Trustee shall act in accordance with Section 6.15 in respect of the unclaimed funds in the Holdover Account in respect of such Note. If at 4:00 p.m. (New York time) of any day, any funds remain in the Payment Account after (i) the payment of each Note with a Maturity Date of such day which are presented by 11:00 a.m. (New York time) for payment on such date and (ii) the transfer of funds to the Holdover Account for each Note with a Maturity Date of such day which is not presented for payment on such date (or is presented after 11:00 a.m. (New York time) on such date), then such remaining funds shall be transferred by the Trustee to the Issuers in accordance with written wire transfer instructions given by the Issuers to the Trustee. SECTION III.12 Interest on New Notes. Interest shall be deemed to have been paid on each New Note issued pursuant to Section 3.9 hereof in exchange for, in substitution for, or in lieu of a Predecessor Note to the date to which interest was paid on such Predecessor Note. SECTION III.13 Cancellation. All Notes surrendered for payment, redemption, registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly canceled by it. The Issuers may at any time deliver to the Trustee for cancellation any Notes previously authenticated and delivered hereunder which any Issuer may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly canceled by the Trustee. No Notes shall be authenticated in lieu of or in exchange for any Notes canceled as provided in this Section 3.13, except as expressly permitted by this Indenture. All canceled Notes held by the Trustee shall be retained by the Trustee in accordance with Section 3.8(a). SECTION III.14 Information. For so long as any of the Notes remain Outstanding and are "restricted securities" within the meaning of Rule 144(a)(3) under the Securities Act, each of the Issuers will, during any period in which such Issuer is neither subject to Section 13 or 15(d) under the -59- Exchange Act nor exempt from reporting under the Exchange Act pursuant to Rule 12g3-2(b) thereunder, make available to any Holder of a Restricted Note or any owner of a beneficial interest in a Restricted Global Note, to a prospective purchaser of such Note or beneficial interest therein who is a QIB, or to the Trustee for delivery to such Holder or beneficial owner or prospective purchaser, as the case may be, in connection with any sale thereof, in each case at a Holder's or the Trustee's written request to the Issuers, the Rule 144A Information; provided, that the Issuers shall not be required to furnish such information at any time to a prospective purchaser located outside the United States who is not a "U.S. person" within the meaning of Regulation S if such Note may then be sold to such prospective purchaser in accordance with Rule 904 under the Securities Act (or any successor provision thereto). SECTION III.15 Paying Agent to Hold Money in Trust. The Trustee shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders and the Trustee all money held by the Paying Agent for the payment of principal of or interest on the Notes, and will notify the Trustee of any default by any Issuer or any other obligor upon the Notes in making any such payment or in depositing the funds to make such payment with the Paying Agent. While any such default continues, the Trustee may require a Paying Agent to pay all money and other property, if any, held by it to the Trustee. The Issuers at any time may require a Paying Agent to remit all money and other property, if any, held by it to the Trustee (for deposit into the Payment Account). Upon payment over to the Trustee, the Paying Agent shall have no further liability for such funds so remitted. If any Issuer acts as Paying Agent, it shall segregate and hold as a separate trust fund all money and other property, if any, held by it as Paying Agent. ARTICLE IV SATISFACTION AND DISCHARGE OF INDENTURE SECTION IV.1 Satisfaction and Discharge of Indenture. This Indenture shall upon an Issuer Request cease to be of further effect (except as to any surviving rights of transfer or exchange of Notes herein expressly provided for and except, in the case of clause (1)(b) below, for the rights of the Holders of the Notes hereunder to receive payment of the principal of and interest on the Notes, and any Additional Amounts or Make-Whole Payments, if any, and any other rights of the Holders of the Notes hereunder with respect to amounts deposited with the Trustee), and the Trustee, at the expense of the Issuers, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture and release of the collateral to the Issuers, when (1) either -60- (a) all Notes theretofore authenticated and delivered (other than (i) Notes that have been destroyed, lost or stolen and that have been replaced or paid as provided in Section 3.9 and (ii) Notes for which payment money has theretofore been deposited in trust or segregated and held in trust by the Trustee and thereafter repaid to the Issuers or discharged from such trust, as provided in Section 6.15) have been delivered to the Trustee for cancellation; or (b) all such Notes not theretofore delivered to the Trustee for cancellation (i) have become due and payable, or (ii) will become due and payable at their Maturity Date within one (1) year, or (iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Issuers, and, in the case of (i), (ii) or (iii) above, the Issuers have deposited or caused to be deposited with or delivered to the Trustee as trust funds in trust for these purposes Cash and Eligible Investments with Collateral Value sufficient, without consideration of any reinvestment of interest therefrom, to pay and discharge the entire indebtedness on such Notes not theretofore delivered to the Trustee for cancellation, or principal and any interest (and Additional Amounts, if any) to the date of such deposit (in the case of Notes that have become due and payable) or to the Maturity Date or Redemption Date, as the case may be; provided, however, that, in the case of (ii) or (iii) above with respect to Notes that are not yet due and payable, the Issuers shall direct by Issuer Order how any Cash received pursuant to this Section 4.1 will be invested and no satisfaction and discharge will be permitted unless the Issuers deliver to the Trustee an Opinion of Counsel addressed to each Issuer and the Trustee from counsel experienced in federal income tax matters to the effect that, based on such stipulations of the Issuers, any action taken pursuant to this Section 4.1 will not (a) result in any payments to Holders being subject to United States federal withholding taxes or (b) be treated as an exchange pursuant to Section 1001 of the Code; (2) the Issuers have paid or caused to be paid all other sums payable hereunder and under the other Security Documents by any Issuer to the Trustee, and each of the Holders; and (3) each of the Issuers has delivered to the Trustee an Officer's Certificate stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the foregoing, but subject to the provisions of Section 1.12 and Section 1.14 hereof, each Issuer's obligations under this Indenture and in respect of the -61- Notes shall survive the discharge of this Indenture if and to the extent that any payment of any amount paid by any Issuer to the Trustee or any Holder is avoided as a preferential transfer or otherwise rescinded or required to be restored under applicable law. Upon the payment of all of the Outstanding Notes in full, the Trustee shall notify the Rating Agency of such event. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of each Issuer to the Trustee under Section 6.5 hereof and of the Trustee to the Holders of Notes under Section 4.2 hereof shall survive. SECTION IV.2 Defeasance of Notes. The Issuers may elect, at any time and from time to time, to be released from part or all of their obligations under the Notes (and thereby effect a reduction of the principal amount secured by the Mortgage and the other Security Documents) by notifying the Trustee in writing of the specific Notes to be defeased and irrevocably conveying to the Trustee, in trust for the payment of any interest (and Additional Amounts, if any) then due and the principal amount (or any part thereof) of the Notes that the Issuers wish to defease, Eligible Investments with Collateral Value sufficient, without consideration of any reinvestment of interest therefrom, to pay (i) all amounts then due under such Notes, (ii) the outstanding principal amount of such Notes (the "Defeasance Portion") and (iii) the portion of the interest (and Additional Amounts, if any are then known) that will become due under such Notes on any date prior to and including the Scheduled Maturity Date (all such interest as described in this clause (iii) together with the Defeasance Portion and any and all other amounts previously conveyed to the Trustee pursuant to clauses (ii) and (iii) of this Section 4.2 being hereinafter referred to as the "Defeasance Property"); provided, however, that each Issuer's right to proceed as aforesaid shall be subject to the delivery by the Issuers of an Opinion of Counsel, from counsel experienced in the relevant subject matter, to the effect that (a) the delivery of such Eligible Investments will not (x) result in any Issuer or the Trustee being regarded as an investment company under the Investment Company Act of 1940, (y) result in any payments to Holders being subject to United States federal withholding taxes or (z) be treated as an exchange pursuant to Section 1001 of the Code, and (b) the Trustee will have a perfected security interest in such Eligible Investments and (c) the delivery of the Eligible Investments shall not constitute a voidable preference under the Bankruptcy Code (the last of which opinion may rely on the fact that the appraised values of the Mortgaged Properties being released are equal to or greater than the value of the Defeasance Property being conveyed to the Trustee in respect of the Notes being defeased). When specifying Notes to be defeased, the Issuers may only defease Notes in the order of priority that would apply if the Issuers were seeking to redeem those Notes pursuant to Article XI. All Eligible Investments conveyed by the Issuers to the Trustee pursuant to this Section 4.2, and any interest accruing thereon, shall be owned by the Trustee free and clear of any claim of the Issuers, and not as security for repayment of obligations under the Notes. In the event of a release in part of the obligations of any Issuer under one or more of the Notes, the Mortgage may be enforced against the Mortgaged Properties only to the extent of the amount of the principal balance remaining outstanding on the Notes at the time of enforcement (after giving effect to any partial -62- releases granted by the Mortgagee as a result of the delivery of the Defeasance Property) and the amount of the other obligations under this Indenture, the Mortgage and the other Security Documents. The defeasance by the Issuers of 100% of the Outstanding Notes shall not, in and of itself, relieve the Trustee of its obligations to the Holders hereunder. SECTION IV.3 Application of Trust Money. Subject to Section 4.5, the Trustee shall hold in trust Cash or Eligible Investments deposited with it pursuant to Section 4.1 or Section 4.2 of this Indenture, as the case may be, and shall apply the deposited Cash and the money from Eligible Investments in accordance with this Indenture to the payment either directly or through any Paying Agent as the Trustee may determine, to Persons entitled thereto, of principal of and interest (and Additional Amounts, if any, and, in the case of a redemption pursuant to Section 4.1(1)(b)(iii), Make-Whole Payments, if any) on the Notes. SECTION IV.4 Repayment to Issuers. Subject to the other provisions of this Indenture and any other applicable Security Documents, the Trustee shall promptly pay to the Issuers upon written request any excess money held by it in the Payment Account or any other account established by the Trustee in furtherance of its rights or obligations under this Indenture of any other Security Document (exclusive of money to be held by the Trustee pursuant to Section 6.15) at any time and thereupon shall be relieved from all liability with respect to such money. SECTION IV.5 Reinstatement. If the Trustee is unable to apply any Cash or Eligible Investments in accordance with Section 4.1 or Section 4.2 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, each Issuer's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 4.1 or Section 4.2 until such time as the Trustee has received the final order or decree of such court or governmental authority permitting it to apply all such Cash or Eligible Investments in accordance with Section 4.1 or Section 4.2, as applicable; provided that, if any of the Issuers has made any payment of principal of or interest on any Notes because of the reinstatement of its obligations, such Issuers shall be subrogated to the rights of the Holders of the Notes to receive such payment from the Cash or Eligible Investment held by the Trustee. SECTION IV.6 Release of Collateral. Upon the release of any Mortgaged Property from the lien of the Mortgage or any portion of the other Collateral from the lien and security interest of this Indenture, the Mortgage or any other Security Document in accordance with the relevant provisions -63- hereof and thereof, the Trustee and the Servicer (if applicable) shall execute such instruments as may be reasonably requested and presented by the Issuers to effect and/or acknowledge such release. The above-referenced instruments may include, at the Issuers' election, (i) one or more amendments and/or restatements of the Mortgage, the Assignment of Leases and/or any other Security Document (in each case, without any representation or warranty by or recourse to the Trustee or the Servicer) as may be appropriate to separate the Liens created thereby against the Mortgaged Property to be released (as used herein, the "Release Property") from the Liens encumbering the remaining Mortgaged Properties and, thereafter, one or more assignments of the resulting Security Documents relating to the Release Property to any designee or nominee of the Issuers and (ii) such uniform commercial code financing statements, each in customary form and as may be mutually agreed upon by the Issuers and the Trustee; provided, however, that neither the Trustee nor the Servicer shall be required to take any action or execute any instruments pursuant to the foregoing unless such entity is satisfied, in its reasonable judgment, that such action or instrument will not compromise in any way the validity or enforceability of the Lien of any Security Document with respect to any of the Mortgaged Properties that are not Release Property. Concurrently with any release transaction contemplated hereby the Trustee and Servicer shall return to the Issuer that owns the Release Property the duplicate originals of any amendment or restatement of any collateral agreement to which it is a party which relates solely to the Release Property and in which the Trustee or Servicer, as applicable, will no longer have any interest after such release. ARTICLE V REMEDIES SECTION V.1 Events of Default. "Event of Default", wherever used herein with respect to Notes, means the occurrence of any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) an Event of Default as described in the second sentence of Section 3.5(a) hereof; or (2) a default in the payment of the principal of any Note at Maturity or any payment of the Make-Whole Payment, if any, owing in respect of any Fixed Rate Note when the same becomes due and payable to the Holders of such Notes; or (3) a default in the performance of any material covenant, or breach of any material representation or warranty, of any Issuer in this Indenture, in any other Security -64- Document or in any certificate delivered pursuant to this Indenture (other than a material covenant, representation or warranty a default in whose performance or whose breach is elsewhere in this Section 5.1 specifically dealt with), and continuance of such default or breach for a period of thirty (30) Business Days after there has been given, by registered or certified mail, to the Issuers by the Trustee (or the Servicer on the Trustee's behalf) a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; provided that in the case of any such failure that is susceptible of cure but that cannot with diligence be cured within such thirty (30) Business Day period, if the Issuer shall have promptly commenced to cure the same within such thirty (30) Business Day period and shall thereafter prosecute the curing thereof with diligence, the period within which such failure may be cured shall be extended for such further period as shall be reasonably necessary for the curing thereof, although such extended period shall not exceed one hundred and eighty (180) days unless, in the case of a cure that requires construction or remedial work, such cure cannot with diligence reasonably be achieved within one hundred and eighty (180) days, in which case such period shall be extended for an additional one hundred and eighty (180) days, subject to Excusable Delays; or (4) the entry by a court having jurisdiction over any Issuer of (A) a decree or order for relief in respect of such Issuer in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization, rehabilitation or other similar law or (B) a decree or order adjudging such Issuer a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, rehabilitation, arrangement, adjustment or composition of or in respect of such Issuer under any applicable federal or state bankruptcy, insolvency, reorganization, rehabilitation or other similar law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of such Issuer or of any substantial part of its property, or ordering the winding up or liquidation of its affairs; or (5) the commencement by any Issuer of a voluntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by any Issuer to the entry of a decree or order for relief in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal or state law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of any Issuer or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by any Issuer in furtherance of any such action; or -65- (6) an "Event of Default" as defined in the Mortgage shall have occurred and be continuing. SECTION V.2 Acceleration of Maturity; Rescission and Annulment. If an Event of Default specified in Section 5.1(4) or 5.1(5) hereof occurs and is continuing, the amounts specified in the next sentence shall automatically become and be due and payable immediately without any action whatsoever on the part of the Trustee, the Servicer or the Holders. If an Event of Default specified in Section 5.1(1), 5.1(2), 5.1(3), or 5.1(6) (other than an Event of Default which arises thereunder solely by virtue of the occurrence of an Event of Default arising under Section 5.1(4) or Section 5.1(5) of this Indenture) occurs and is continuing, then in every such case the Trustee may and at the direction of the Holders of not less than 66-2/3% in aggregate principal amount of the Outstanding Notes shall, by a notice in writing to the Issuers and the Servicer, declare the sum of (i) the principal amount of all Outstanding Notes and (ii) any other amounts, including but not limited to, accrued interest, Additional Amounts, if any, and Make-Whole Payments, if any, payable to the Holders under the Notes, to the extent such amounts are permitted by law to be paid, to be due and payable immediately, and upon any such declaration such amounts shall become immediately due and payable. At any time after such an automatic acceleration or a declaration of acceleration of the Notes has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee or the Servicer as hereinafter provided in this Article, the Holders of not less than 66-2/3% in aggregate principal amount of the Outstanding Notes, by written notice to the Issuers, the Trustee and the Servicer, may rescind and annul such declaration and its consequences if (1) the Issuers have paid or caused to be deposited with the Trustee a sum sufficient to pay: (a) all interest (and Additional Amounts, if any) due and payable on all Outstanding Notes, (b) the principal of and Make-Whole Payment, if any, on any Outstanding Notes that have become due, if any, otherwise than by such declaration of acceleration, and interest and all other amounts due thereon at the rate or rates or in the amount prescribed therefor in such Notes, (c) all sums paid or advanced by the Trustee or the Servicer hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee and the Servicer and their respective agents and counsel, and -66- (d) any other amounts then due and payable under the Indenture or any other Security Document (other than principal that became due solely as a consequence of such acceleration; and (2) all Events of Default, other than the non-payment of the principal of the Outstanding Notes which has become due solely by such declaration of acceleration, have been cured or waived as provided in Section 5.13. No such rescission shall affect any subsequent default or impair any right consequent thereon. If the Issuers fail to make a payment when due, and then deliver to the Trustee funds sufficient to make all payments current, absent acceleration, and the Trustee on behalf of the Holders agrees in writing to accept that payment and to rescind the declaration of an Event of Default or acceleration, or Holders of not less than 66-2/3% in aggregate principal amount of the Outstanding Notes, prior to an acceleration, agree to rescind the declaration of an Event of Default, in either case, the Holders shall also be deemed to waive the right to claim that the failure to make the payment when due was an Event of Default and is continuing. SECTION V.3 Collection of Indebtedness and Suits for Enforcement by Trustee. If the Issuers fail to pay all amounts due upon an acceleration under Section 5.2 forthwith upon demand, the Trustee (and the Servicer on its behalf), in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and, subject to the provisions of Section 1.12 and Section 1.14 hereof, may enforce the same against the Issuers and collect the monies adjudged or decreed to be payable in the manner provided by law out of the Collateral and pursuant to the Security Documents, wherever situated, or may institute such non-judicial proceedings in lieu of judicial proceedings as are then permitted by applicable law, and may take such actions through a mortgage trustee if necessary or advisable under applicable law. If an Event of Default with respect to the Notes occurs and is continuing, subject to the provisions of Section 1.12 and Section 1.14 hereof, the Trustee (and the Servicer on its behalf) may in its discretion proceed to protect and enforce its rights and the rights of the Holders of the Notes by such appropriate judicial proceedings as the Trustee (or the Servicer) shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. -67- SECTION V.4 Trustee May File Proofs of Claim. In the case of pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, rehabilitation, arrangement, adjustment, composition or other judicial proceeding relative to any Issuer, or the property of any Issuer or its creditors, the Trustee (irrespective of whether the principal of the Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Issuers for the payment of overdue principal or interest) shall be entitled and empowered, to the extent not prohibited by applicable law, by intervention in such proceeding or otherwise, (i) to file and prove a claim for the whole amount of the principal of and any interest (and Make-Whole Payment and Additional Amount, if any) on the Notes owing and unpaid and all other sums owing and unpaid under the Notes, the Mortgage, this Indenture, or any other Security Document, if any, and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel), except as a result of its or their gross negligence or bad faith, and of the Holders allowed in such judicial proceeding, and (ii) to collect and receive any monies, notes or other property payable or deliverable on any such claims and to distribute the same in accordance with this Indenture; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee hereunder. Nothing contained in this Article V shall be interpreted as limiting the right or responsibility of the Servicer to take any actions on behalf of the Trustee in furtherance or fulfilment of the Servicer's responsibility to service the Loan as set out in Article VII. In addition, nothing herein contained shall be deemed to limit each Holder's right to file and prove its claim with respect to Notes held by it and to collect and receive any award in any such proceeding, or to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, rehabilitation, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION V.5 Trustee May Enforce Claims Without Possession of Notes. -68- All rights of action and claims under this Indenture or the Notes may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee (consistent with those paid under the Trustee Fee Agreement), its agents and counsel, be for the ratable benefit of the Holders of the Notes, if any, in respect of which such judgment has been recovered. SECTION V.6 Application of Money Collected. Upon the occurrence and during the continuance of an Event of Default, money collected by the Trustee hereunder (including, without limitation, all money deposited by any Issuer or the Servicer into the Payment Account) shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of the principal of (and Make-Whole Payments, if any), or interest (and Additional Amounts, if any) on, the Notes, upon presentation of the Notes (to the extent not held in global form), and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: (i) to the payment of all amounts due the Trustee, under the Trustee Fee Agreement, and the Servicer, under the Servicer Fee Agreement, and each Paying Agent, under their respective fee agreements (including reasonable amounts payable in respect of the Trustee's and the Servicer's agents and counsel fees and expenses, but excluding repayment of Advances, which are covered by item (ii) below); (ii) to the payment (first to the Trustee and then to the Servicer) of Advances made (and any accrued and unpaid interest thereon) and (if not already covered by item (i) above) other liabilities owed under this Indenture (including, without limitation, indemnification payment obligations of the Issuers under Section 7.19) and the other Security Documents (including, without limitation, payment of any indemnification obligations), the cost and expenses of any foreclosure proceedings and any other enforcement proceedings (including, without limitation, reasonable counsel fees and disbursements, advertising costs and expenses, Impositions, and receivers' and trustee's fees and commissions in connection therewith); (iii) to the payment of accrued interest (excluding Additional Amounts, if any, and interest payable in connection with a default in excess of the regular interest payments owed, if any) and then principal (excluding Make-Whole Payments, if any) due and payable on any Notes, in each case, first, to the Holders of the Class A Notes, then to the Holders of the Class B Notes, then to the Holders of the Class C Notes, then to the Holders of the Class D Notes and then to the Holders of the Class E Notes; provided, however, that (A) if there are not sufficient funds in the Payment Account to pay all interest accrued on the Notes of any Class, any amount available will be -69- allocated between the Holders of each Series of such Class so that the amount paid to Holders of Notes in each such Series is equal to the total amount available multiplied by the ratio of (x) the amount of interest then due and payable on the Notes of such Series in such Class over (y) the amount of interest then due and payable to all Holders of Notes of such Class and (B) if there are not sufficient funds in the Payment Account to pay all principal then due and payable on the Notes of any Class, the amounts available shall be allocated among the Holders of such Class pro rata according to the principal amounts of Notes of such Class owned by such Holders immediately prior to any payments of principal hereunder; (iv) to the payment of any Additional Amounts due and payable on any Notes in the order of priority described above with respect to payments of interest; provided, however, that if there are not sufficient funds in the Payment Account to pay all Additional Amounts then due and payable on the Notes of any Class, the amount available shall be allocated among the Holders of such Class to whom such Additional Amounts are payable so that the amount paid to each such Holder is equal to the total amount available multiplied by the ratio of (x) the amount of Additional Amounts then due and payable to such Holder in respect of the Notes of such Class over (y) the total amount of Additional Amounts then due and payable to all Holders of Notes of such Class; (v) to the payment of any Make-Whole Payment due and payable on any Notes in the following order: first, to the Holders of the Class A Notes, then to Holders of Class B Notes, then to Holders of Class C Notes, then to Holders of Class D Notes and then to Holders of Class E Notes; provided, however, that if there are not sufficient funds in the Payment Account to pay all Make-Whole Payments then due and payable on the Notes of any Class, the amounts available therefore shall be allocated among the Holders of such Class pro rata based on the principal amounts of Notes of such Class owned by such Holders immediately prior to any such payments of principal hereunder; (vi) to the payment of any other sums (including interest payable in connection with a default in excess of the regular interest payments owed on any Note), if any, due to the Holders under any Security Documents; and (vii) to the payment of the remainder, if any, to the Issuers, their respective successors or assigns, to whomever may lawfully be entitled thereto or as a court of competent jurisdiction may determine. For purposes of Section 10.4 and clauses (iii) through (vi) of this Section 5.6, amounts withheld on account of taxes from money collected by the Trustee or the Servicer as a result of the identity, the jurisdiction of organization, residence or citizenship or any other characteristic of a Holder or beneficial owner of any Note shall be treated as having -70- been distributed by the Trustee to such Holder or to the Holder through which such beneficial owner holds such Note, or to any successor to any such Holder. Payment of the Outstanding Notes of any Class shall be on a pro rata basis and shall be based, with respect to interest, on the relative proportions of the accrued interest on any Note of such Class to the aggregate amount of accrued interest on all Outstanding Notes of such Class and, with respect to principal, on the relative proportions of the unpaid principal amount of any Outstanding Notes of such Class to the aggregate unpaid principal amount of all Outstanding Notes of such Class. Notwithstanding the foregoing, to the extent that principal on Outstanding Notes is not then due, the pro rata allocated amount with respect to the principal of such Outstanding Notes that is not then due shall be deposited by the Trustee into the Payment Account, to be held by the Trustee for application to the payment of principal on such Outstanding Notes upon their Maturity. SECTION V.7 Limitation on Suits. Except as provided in Section 5.8, no Holder of any Note shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, any Note or any other Security Document, or for the appointment of a receiver or trustee, or for any other remedy hereunder or thereunder, unless: (1) such Holder has previously given written notice to the Trustee and the Servicer of a continuing Event of Default; (2) the Holders of not less than 66 2/3% in aggregate principal amount of the Outstanding Notes have made written request to the Trustee and the Servicer to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (3) such Holder or Holders have offered to the Trustee and the Servicer reasonable indemnity or security against any potential losses, expenses and liabilities to be incurred in connection with such request; (4) both the Trustee and the Servicer for sixty (60) days after their receipt of such notice, request and offer of indemnity or security have failed to institute any such proceeding; (5) no direction inconsistent with such written request has been given to the Trustee or the Servicer during such sixty (60) day period by the Holders of 66 2/3% in aggregate principal amount of the Outstanding Notes; and (6) an Event of Default shall have occurred and be continuing; it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to -71- affect, disturb or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all of such Holders. The Holders may exercise their rights under this Section 5.7 independently without being subject to Section 1.3. SECTION V.8 Unconditional Right of Holders to Receive Principal and Interest. Notwithstanding any other provision in this Indenture, the Holder of any Note shall have the right, which is absolute and unconditional, to receive payment of the principal of and interest on such Note at the Scheduled Maturity Date expressed in such Note (or in the case of redemption, to receive payment of the principal of and interest and Make-Whole Payment, if any, on such Note, on the Redemption Date) and such rights shall not be impaired without the consent of such Holder. SECTION V.9 Restoration of Rights and Remedies. If the Trustee (or the Servicer on the Trustee's behalf) or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture or under any other Security Document and such proceeding has been discontinued, waived, rescinded, or abandoned for any reason, or has been determined adversely to the Trustee, the Servicer or to such Holder, then and in every such case, subject to any determination in such proceeding, each Issuer, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee, the Holders and the Issuers shall continue as though no such proceeding had been instituted. SECTION V.10 Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in Section 3.9, no right or remedy herein conferred upon or reserved to the Trustee, the Servicer or to the Holders of Notes is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION V.11 Delay or Omission Not Waiver. No delay or omission of the Trustee, the Servicer or any Holder of any Note to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence -72- therein. Every right and remedy given by this Indenture or by any of the Security Documents or by law to the Trustee, the Servicer or to the Holders may be exercised from time to time, and as often as may be deemed expedient, to the extent permitted by applicable law, by the Trustee, the Servicer or by the Holders entitled to exercise such remedies, as the case may be. SECTION V.12 Control by Holders. The Holders of not less than 66 2/3% in aggregate principal amount of the Outstanding Notes shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or the Servicer, or exercising any trust or power conferred on the Trustee or the Servicer or any right otherwise granted to the Holders; provided that any such direction shall not be in conflict with any rule of law or with this Indenture or any Security Document and that the Trustee or the Servicer may take any other action deemed proper by the Trustee or the Servicer, as applicable, which is not inconsistent with such direction or expressly prohibited hereunder. Notwithstanding anything herein to the contrary, if in connection with any Event of Default the Servicer has recommended the commencement of foreclosure or any proceedings or actions which relate to the realization against any of the Mortgaged Properties, or the Servicer has recommended the sale or liquidation of any Foreclosed Property, and, in either case, the requisite Holders have disapproved or have not approved such action pursuant to this Indenture, the Servicer shall nevertheless be entitled to commence such foreclosure proceedings or actions and sell or liquidate such Foreclosed Property, as the case may be, in accordance with Accepted Servicing Practices, upon but only upon a determination by the Servicer or the Trustee that any previously made and unreimbursed Advances with interest thereon constitute Nonrecoverable Advances. SECTION V.13 Waiver of Past Defaults. The Holders of not less than 66 2/3% in aggregate principal amount of the Outstanding Notes may on behalf of the Holders of all the Notes waive any past default hereunder and its consequences, except a default: (1) in the payment of principal of or interest on any Note, which shall require the waiver by the Holders of 100% in aggregate principal amount of the Outstanding Notes directly affected thereby; or (2) in respect of a covenant or provision hereof which under Article IX cannot be modified or amended without the consent of the Holder of each Outstanding Note affected thereby. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture, -73- but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. SECTION V.14 Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Note by its acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture or any other Security Document, or in any suit against the Trustee or the Servicer for any action taken, suffered or omitted by the Trustee or the Servicer, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by any Issuer, or to any suit instituted by the Trustee, or to any suit instituted by the Servicer, or to any suit instituted by any Holder, or group of Holders, holding in the aggregate at least 25% in aggregate principal amount of Outstanding Notes, or to any suit instituted by any Holder of any Note for the enforcement of the payment of the principal of or interest or Make-Whole Payment, if any, on any Note on or after any Maturity of such Note (or, in the case of redemption, on or after the Redemption Date). ARTICLE VI THE TRUSTEE ----------- SECTION VI.1 Certain Duties and Responsibilities. (a) The duties, responsibilities and liabilities of the Trustee in respect of the Security Documents and the other duties and liabilities of the Trustee under this Indenture shall be as follows: (1) The Trustee (and the Servicer on its behalf) shall have the full power and authority to do all things not inconsistent with the provisions of this Indenture or any other Security Document that it may deem advisable in order to enforce the provisions hereof or thereof or to take any action with respect to a default or an Event of Default hereunder or thereunder, or to institute, appear in or defend any suit or other proceeding with respect hereto or thereto, or to protect the interests of the Holders. Neither the Trustee nor any of its directors, officers, shareholders, agents or employees (each, a "Trustee Indemnified Party" and, collectively, the "Trustee Indemnified Parties") shall be answerable to or accountable for, except for its or their own bad faith, willful misconduct or negligence, and each Issuer agrees to indemnify and save harmless the Trustee Indemnified Parties from, any costs, expenses, liabilities and damages that any of them may incur or sustain, in good faith and without willful misconduct or negligence, in the exercise and performance of the -74- Trustee's powers and duties hereunder, including the cost and expense of defending themselves against any claim or liability in connection with the exercise or performance thereof; provided, however, that if it is found that any such claim or liability has resulted from the bad faith, willful misconduct or negligence of any Trustee Indemnified Party in the performance of its duties hereunder, such Trustee Indemnified Party shall repay such portion of the reimbursed amounts that is attributable to expenses incurred in relation to that portion of its acts or omissions that is the subject of such finding. If any Trustee Indemnified Party is entitled to receive indemnification hereunder with respect to any such action or proceeding brought by a third party, the Issuers or any of them shall be entitled to assume the defense of any such action or proceeding with counsel reasonably satisfactory to such Trustee Indemnified Party who shall not, except with the consent of such Trustee Indemnified Party, be counsel to any Issuer or any Affiliate thereof. Upon assumption by any Issuer of the defense of any such action or proceeding, such Trustee Indemnified Party shall have the right to participate in such action or proceeding and to retain its own separate counsel, but the Issuers shall not be liable for any legal fees or expenses of such a separate counsel subsequently incurred by such Trustee Indemnified Party in connection with the defense thereof unless (i) the Issuers have agreed to pay such fees and expenses or (ii) counsel provided by any Issuer pursuant to the foregoing is counsel to one or more of the Issuers and such Trustee Indemnified Party shall have been advised by such counsel that representation of such Trustee Indemnified Party by such counsel provided by the Issuer pursuant to the foregoing would be inappropriate due to actual or potential conflicting interests between the Issuers and such Trustee Indemnified Party, including situations in which there are one or more legal defenses available to such Trustee Indemnified Party that are different from or additional to those available to any Issuer; provided, however, that the Issuers shall not, in connection with any such action or proceeding, or separate but substantially similar action or proceeding arising out of the same general allegations, be liable for the fees and expenses of more than one separate firm of attorneys at any time, in addition to any local counsel, for any such Trustee Indemnified Party. No Issuer shall consent to the terms of any compromise or settlement of any action defended by any Issuer in accordance with the foregoing without the prior consent of the Trustee Indemnified Party. No Issuer shall be required to indemnify any Trustee Indemnified Party for any amount paid or payable by such Trustee Indemnified Party in settlement of any action, proceeding or investigation without the prior written consent of the Issuers, which consent shall not be unreasonably withheld. Promptly after receipt by any Trustee Indemnified Party of notice of its involvement (or the involvement of any of its affiliates or such affiliate's directors, officers, shareholders, agents or employees) in any action, proceeding or investigation, such Trustee Indemnified Party shall, if a claim for indemnification in respect thereof is to be made against the Issuers hereunder, notify the Issuers in writing of such involvement, but the failure of such Trustee Indemnified Party to provide such notice shall neither cause the forfeiture of the right to receive indemnity hereunder nor limit such right, except to the extent, if any, that any Issuer is prejudiced by the failure of the Trustee Indemnified Party to -75- promptly give such notice. The Issuers' indemnification obligations under this Section 6.1(a)(1) shall survive payment of the Notes and any resignation, removal or replacement of the Trustee. The Trustee shall be authorized to make, at the expense of the Issuers, all required refilings of any Security Document to preserve the liens created thereby to the extent not so done by the Issuers or the Servicer as provided herein or therein, but shall have no obligation to take any action to protect, preserve or enforce any rights or interests in the Security Documents or towards the execution or enforcement of the trusts hereby or thereby created which, in its opinion, shall be likely to involve expense or liability to the Trustee, unless the Trustee shall have received an agreement satisfactory to the Trustee in its sole discretion to indemnify it against such liability and expense. The Trustee shall not be required to ascertain or inquire as to the performance or observance of any of the covenants or agreements contained herein, or in any other Security Document or in any other instruments to be performed or observed by any Issuer or any other party to any Security Document (including, without limitation, the necessity or desirability under any applicable state law to re-record, re-register or re-file any Security Document). In accepting the trusts hereunder and under the Security Documents, the Trustee is acting solely as Trustee hereunder and not in its individual capacity and all Persons, other than the Issuers and the Holders, having any claim against the Trustee arising by reason hereof shall look only to the Collateral for payment or satisfaction thereof except as provided herein. (2) The Trustee shall incur no liability in acting upon any signature, notice, request, consent, certificate, opinion, or other instrument reasonably believed by it to be genuine. In administering the trusts, the Trustee may exercise any of the powers hereof directly or through its agents or attorneys and may, at the expense of the Issuers, consult with counsel, accountants and other skilled Persons to be selected and employed by it, and the reasonable expenses thereof shall be paid by the Issuers, and the Trustee shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the advice of any such Person nor for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts. (3) The Trustee shall have no duty to make, arrange or ensure the completion of any recording, filing or registration of any Security Document, any instrument of further assurance, any instrument constituting part of any of the Mortgaged Properties, or any amendments or supplements to any of said instruments and the Trustee shall have no duty to make, arrange or ensure the completion of the payment of any fees, charges or taxes in connection therewith (and the Trustee may act with respect to the Security Documents and pay out deposited monies without regard thereto), or to give any notice thereof, or to make, arrange or ensure the completion of the payment of or be under any duty in respect of any tax, assessment or other governmental charge that may be levied or assessed on any of the Mortgaged -76- Properties or any part thereof or against any of the Issuers. Notwithstanding the foregoing, the Trustee agrees that it will notify the Issuers in writing of any filings, fees, taxes or other payments required in connection with the satisfaction of any Issuer's obligations hereunder and under the other Security Documents known to any Responsible Officer of the Trustee assigned to its Corporate Trust Department and actively involved in the administration of the Loan. (4) Whenever, in administering the trust, the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee may, in the absence of bad faith on the part of the Trustee, request and rely upon (unless other evidence in respect thereof be specifically prescribed herein or in any Security Document) an Officer's Certificate of any one or more of the Issuers, and such Officer's Certificate shall be full warrant to the Trustee for any action taken, suffered or omitted by it on the faith thereof, but in its discretion the Trustee may in lieu thereof accept other evidence of such fact or matter or may require such further or additional evidence as it may deem reasonable. (5) Whenever, in administering the trust, the Trustee shall be permitted, whether pursuant to the terms of this Indenture or any other Security Document, to determine to grant or withhold its consent to or waiver or approval of any matter described herein or therein or to take or omit to take any action or course of conduct permitted or required hereunder or thereunder, the Trustee shall be fully protected in making such determination based solely upon the written direction of the Servicer or, absent such direction, (a) on the basis of the related submission required by this Indenture or by such other Security Document, as the case may be, or (b) if a standard for such determination is specified herein or therein, on the basis of its determination in good faith as to whether or not such standard has been satisfied, or (c) if no such standard is specified, on the basis of its determination in good faith as to (x) with respect to any act, omission or course of conduct, whether such act, omission or course of conduct is reasonable (which determination may be made solely on the basis of advice from professionals selected by the Trustee with reasonable care) and (y) with respect to the selection of any professional, whether the party proposing the engagement of such professional is motivated primarily by interests contrary to those of the Holders in making such proposal, provided, in each case, that the Trustee grants or withholds its consent or approval or takes any other action on a timely basis. The Trustee shall not be required to seek the individual consents or approvals of the Holders with respect to any such consent or approval unless the same shall be explicitly required by the terms of this Indenture or such other Security Document, as the case may be. Without limiting the generality of the foregoing, in the event the approval of the Trustee is requested with respect to a settlement of an insurance claim pursuant to Article 15 of the Mortgage, the Trustee shall be fully protected in granting such approval if the Trustee has selected with reasonable care and retained a qualified independent insurance adjuster who has advised the Trustee that the proposed settlement is reasonable, and the Trustee determines in good faith, solely on the basis -77- of such advice, that such settlement is reasonable and approves the same. Notwithstanding anything to the contrary herein or in any of the other Security Documents, neither the Trustee nor the Servicer on its behalf shall consent to any transfer of any of the Mortgaged Properties or any beneficial interest therein, any modification or waiver of the other Security Documents or the terms of this Indenture (other than modifications or waivers that may be made unilaterally (within the meaning of Prop. Treas. Reg. (S) 1.1001-3, or any successor provision) as provided herein or in the other Security Documents), any release or substitution of any property pledged pursuant to this Indenture or the other Security Documents, or any release of any Issuer from its obligations hereunder or under the other Security Documents (other than any actions expressly contemplated by this Indenture or the other Security Documents in connection with payments on the Notes (including any redemptions) or otherwise), unless the Issuers have obtained and delivered to the Trustee an Opinion of Counsel from counsel experienced in federal income tax matters that such consent or modification, or waiver, as the case may be, will not be treated as an exchange of any Note for a newly issued obligation pursuant to Section 1001 of the Code and provided, further, that in the case of a transfer of any portion of any of the Mortgaged Properties without release of such transferred portion a further opinion shall be furnished to the Trustee to the effect that (i) such transfer shall not adversely affect the status of the Notes as debt for federal income tax purposes or (ii) result in the creation of a "taxable mortgage pool" within the meaning of Section 7701 of the Code. (6) The Trustee shall have no obligation to see to the payment or discharge of any liens (other than the liens of the Security Documents, and then only to the extent therein provided), or to see to the application of any payment of the principal of or interest on any Note secured thereby or to the delivery or transfer to any Person of any property released from any such lien, or to give notice to or make demand upon any mortgagor, mortgagee, trustor, beneficiary or other Person for the delivery or transfer of any such property. (7) The Trustee shall not be concerned with or accountable to any Person for the use or application of any deposited monies that shall be released or withdrawn in accordance with the provisions hereof or of any other Security Document or of any property or securities or the proceeds thereof that shall be released from the lien hereof or thereof in accordance with the provisions hereof or thereof and the Trustee shall have no liability for the acts of other parties hereto that are not in accordance with the provisions hereof. (8) The Trustee shall not be charged with knowledge of any Event of Default hereunder or under any other Security Document (except default in the payment of monies to the Trustee that the Issuers are required to pay or cause to be paid to the Trustee on or before a specified date and except default in the delivery of any certificate, opinion or other document expressly required to be delivered to the Trustee by any provision hereof or any Security Document) or any condition which -78- after notice and/or the passage of time would constitute an Event of Default or any other fact, circumstance or event the occurrence of which would require the Trustee to give any notice or otherwise take any action (any such Event of Default, condition, circumstance or other event, an "Event"), unless either (i) a Responsible Officer of the Trustee assigned to its Corporate Trust Department shall have actual knowledge of such Event or (ii) written notice of such Event shall have been given to and received by the Trustee, by the Issuers, the Servicer or any Holder or Holders of at least 25% in aggregate principal amount of the Notes then Outstanding. (9) The Trustee shall not be responsible for any act or omission of the Servicer. The Trustee and the Servicer each may, without the consent of the Holders, but subject to subparagraph (5) above, give any consent, waiver or authorization under, and agree to any modification of, the Notes, this Indenture or any other Security Document, but shall not (i) without the consent of the Holders of not less than 66 2/3% (or such greater amount as may be required thereunder) in aggregate principal amount of the Outstanding Notes consent to any amendment or modification of any Security Document in any respect having a material adverse effect on the interests of the Holders generally, except as expressly permitted by the terms thereof or hereof, (ii) consent to any amendment or modification of any Security Document in any respect having a material adverse effect on the interests of any individual Holder apart from the effect on the interests of the Holders generally without the consent of each individual Holder that would be affected thereby, or (iii) without the prior written consent of all the Holders, consent to or accept any cancellation or termination of any Security Document, or any change in the timing or amount of payment of the Notes, except as contemplated by the terms thereof or hereof. (b) Except during the continuance of an Event of Default with respect to the Notes, the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee. (c) In the absence of actual knowledge of a Responsible Officer to the contrary or bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform on their face to the requirements of this Indenture. (d) In case an Event of Default known to the Trustee with respect to the Notes has occurred and is continuing, the Trustee shall exercise, with respect to the Notes, such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent Person would exercise or use under the circumstances -79- in the conduct of his own affairs. The Trustee may agree, without the consent of the Holders, inter alia, to any modification (subject to certain exceptions) of, or to the waiver or authorization of any breach or proposed breach of, any of the Notes or any provisions of this Indenture which shall not, in the opinion of the Trustee, materially prejudice the interests of the Holders, or to any modification which is of a formal, minor or technical nature or which is made to correct a manifest error or is otherwise not materially prejudicial to the interests of the Holders. (e) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own wilful misconduct, except that (1) this Subsection (e) shall not be construed to limit the effect of Subsections (a) or (b) of this Section; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved by a court of competent jurisdiction that the Trustee was negligent in ascertaining the pertinent facts; and (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith and without negligence in accordance with the directions of the Holders of not less than 66 2/3% in aggregate principal amount of the Outstanding Notes relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Notes or the Security Documents. SECTION VI.2 Money Held in Trust. Accounts established by the Trustee hereunder shall be subject to regulations regarding fiduciary funds on deposit substantially similar to those described in 12 C.F.R. (S) 9.10(b). Money held by the Trustee hereunder shall be held in trust for the purposes for which it was paid, and shall be segregated from any other monies held by the Trustee, and may be deposited by the Trustee, under such general conditions as may be prescribed by law, in the trust department of the Trustee. The Trustee shall be under no liability for interest on any money received by it hereunder except as provided in this Indenture or as otherwise agreed with the Issuers. Within a reasonable time after the end of each calendar year or portion thereof during the term of the Notes, the Trustee shall cause the depository for any accounts referred to in this Article to deliver to the Issuers, the Servicer and the Trustee and, upon request, to the Holder of any Note a statement of any amounts received or disbursed by the Trustee in respect of the Collateral during such calendar year or portion thereof. SECTION VI.3 Notice of Defaults. -80- The Trustee, promptly after a Responsible Officer of the Trustee acquires actual knowledge of the occurrence of an Event of Default or any event that with notice or lapse of time or both would become an Event of Default, shall notify all Holders of then-Outstanding Notes (pursuant to the procedures as set forth in Section 1.6), the Rating Agency and the Issuers of any such Event of Default or other event, unless all such defaults or potential defaults known to the Trustee shall have been cured before the giving of such notice or unless, with respect to an Event of Default, the same is waived by the Trustee pursuant to Section 6.1. SECTION VI.4 Certain Rights of Trustee. Subject to the provisions of Section 6.1: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Issuers referred to herein shall be sufficiently evidenced by an Issuer Request or an Issuer Order and any resolution of any Issuer's Board of Directors may be sufficiently evidenced by a Board Resolution; (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting to take any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officer's Certificate; (d) the Trustee may consult with counsel and the written advice of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the -81- Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of any Issuer personally or by agent or attorney (any such examination to be made upon reasonable advance notice and at reasonable times, except that if an Event of Default has occurred and is continuing such examination shall be permitted at such times, with or without notice, as the Trustee may select in its sole discretion); and (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. SECTION VI.5 Compensation and Reimbursement. Each Issuer agrees: (a) to pay to the Trustee amounts due from time to time pursuant to the Trustee Fee Agreement, to the extent fees have been fixed, and if fees have not been fixed then reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (b) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in carrying out its duties and responsibilities under this Indenture or under the other Security Documents (including the reasonable compensation, expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence, willful misconduct or bad faith; and (c) that the Trustee Indemnified Parties shall not be answerable to or accountable for, except in the case of their own bad faith, willful misconduct or negligence, and, each Issuer agrees to indemnify, consistent with the provisions set forth in Section 6.1(a)(1) hereof, each of the Trustee Indemnified Parties for, and to hold them harmless against, any loss, liability, damage or expense that it may incur or sustain without negligence, willful misconduct, or bad faith on its part, arising out of or in connection with the exercise and performance of the Trustee's powers and duties hereunder and the acceptance or administration of the trust or trusts hereunder, under the Mortgage or under any other instrument included in the Collateral, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of the Trustee's powers or duties hereunder. The indemnification obligation of the Issuers under this Section 6.5(c) shall survive payment of the Notes and any resignation, removal or replacement of the Trustee. -82- The Trustee shall have, as security for the performance of each Issuer under this Section 6.5, a lien ranking senior to the lien of the Notes upon all property and funds held or collected as part of the Collateral for such Notes by the Trustee in its capacity as such or to be distributed to the Holders in any bankruptcy or insolvency proceeding, which lien shall only be enforced as set forth herein, including in Article V. The expenses and the compensation for the services rendered by the Trustee after an Event of Default as specified in Section 5.1(4) or Section 5.1(5) hereof in connection herewith are intended to constitute expenses of administration under any bankruptcy proceeding; provided that this sentence shall not affect the lien described in the preceding sentence. The Trustee shall not institute any proceeding seeking the enforcement of such lien against the Collateral unless (i) such proceeding is in connection with a proceeding in accordance with Article V hereof for enforcement of the lien of this Indenture for the benefit of the Holders after the occurrence of an Event of Default (other than an Event of Default due solely to a breach of this Section 6.5) and a resulting declaration of acceleration of Maturity of such Notes that has not been rescinded and annulled, or (ii) such proceeding does not result in or cause a sale or other disposition of such Collateral. SECTION VI.6 Confidentiality. Unless an Event of Default has occurred and is continuing, the Holders (each in their individual capacities only) shall not have any right to obtain any information relating to the Mortgaged Properties, including information regarding lease rents, any rent rolls or copies of any leases, except as expressly provided for herein. The Holders, the Trustee and the Servicer agree to keep confidential, and to cause their respective directors, officers, employees, agents, attorneys, accountants, financial advisors and other representatives to keep confidential, all leases, lease abstracts, rent rolls, financial statements, appraisals and other financial information, including information relating to lease terms and identities of tenants, furnished to, or obtained by, the Holders, the Trustee or the Servicer hereunder (the "Confidential Information") and to use reasonable efforts, if such material is not marked "Proprietary" or "Confidential", and to use special efforts, if such material is so marked, to not, without the prior written consent of the Issuers, disclose such Confidential Information in whole or in part in any manner whatsoever; provided, however, that the Trustee shall be permitted to fulfill its responsibilities under Section 6.17 hereof and the Trustee, the Servicer and the Holders, and their representatives shall be permitted to disclose Confidential Information if (i) required by law (or regulations thereunder) or (ii) such disclosure is necessary for either the Trustee or the Servicer to perform its duties hereunder or (iii) an Event of Default shall have occurred and be continuing and such disclosure is made in connection with the enforcement of the provisions of the Notes, this Indenture or any other Security Document. This Section shall not apply to any provisions of the Confidential Information that are or become generally available to the public or to information in or incorporated by reference in offering memoranda prepared in connection with the sale of the Notes. SECTION VI.7 Corporate Trustee Required; Eligibility. -83- There shall at all times be a Trustee hereunder which shall be a trust company, an association or a banking corporation, in each case organized and doing business under the laws of the United States of America, any state thereof or the District of Columbia, authorized under such laws to exercise corporate trust powers, having a long-term unsecured debt rating not less than Aa3 (or its equivalent) from the Rating Agency, and a combined capital and surplus of at least $100,000,000, and subject to supervision or examination by federal or state authority. If such corporation or national banking association publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation or national banking association shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. SECTION VI.8 Representations and Warranties of the Trustee. The Trustee hereby represents and warrants to the other parties hereto that, as of the Closing Date: (i) the Trustee has been duly organized and is validly existing under the laws of the United States of America and is qualified under the laws of each jurisdiction in which any Mortgaged Property is located to the extent necessary to perform its obligations in accordance with the terms of this Indenture; (ii) the execution and delivery of this Indenture and the other Security Documents to which it is a party by the Trustee have been duly authorized by all necessary corporate action on the part of the Trustee; the Trustee is duly authorized under applicable law, its articles of incorporation and its by-laws to authenticate the Notes, to accept the delivery of the Collateral and to perform its obligations under this Indenture and each of the other Security Documents to which it is a party, and all corporate action necessary or required therefore has been duly and effectively taken or obtained; none of the execution, delivery and performance of this Indenture, or the consummation of the transactions herein contemplated, nor the compliance with the provisions hereof, will conflict with or result in a breach of, or constitute a default under (A) the terms of any agreement or instrument to which the Trustee is a party or by which it is bound; (B) the certificate of incorporation or bylaws of the Trustee; or (C) to the Trustee's knowledge, the provisions of any law, governmental rule, regulation, judgment, decree or order binding on the Trustee or its properties; neither the Trustee nor any of its Affiliates is a party to, bound by, or in breach of or in violation of any material indenture or other agreement or instrument, or subject to or in violation of any statute, order or regulation of any court, regulatory body, administrative agency or governmental body having jurisdiction over it, which -84- materially and adversely affects or to the knowledge of the Trustee may in the future materially and adversely affect (X) the ability of the Trustee to perform its obligations under this Indenture or (Y) the business, operations, financial condition, properties or assets of the Trustee; (iii) the execution and delivery by the Trustee of this Indenture and the consummation of the transactions contemplated hereby (with the benefit of the provisions hereof) do not require any consent, approval, authorization, order, registration or qualification of or with any court or any regulatory authority or other governmental agency or body, except such as has been obtained and is in full force and effect; (iv) this Indenture has been duly executed and delivered by the Trustee and, assuming due authorization, execution and delivery by the other parties hereto, constitutes a valid and legally binding obligation of the Trustee enforceable against it in accordance with its terms, subject to (A) applicable bankruptcy, fraudulent conveyance or transfer, insolvency, reorganization, moratorium or similar laws of general applicability relating to or affecting the rights and remedies of creditors generally and (B) the application of principles of equity (regardless of whether considered and applied in a proceeding in equity or at law); (v) there are no actions, suits or proceedings pending or, to the Trustee's knowledge, threatened against the Trustee, before or by any court, administrative agency, arbitrator or governmental body (A) with respect to any of the transactions contemplated by this Indenture or (B) with respect to any other matter which could, if determined adversely to the Trustee, materially and adversely affect it or its business, assets, operations or condition, financial or otherwise, or adversely affect its ability to perform its obligations under this Indenture; and (vi) the Trustee is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or governmental agency, which default might have consequences that would materially and adversely affect the condition (financial or otherwise) or operations of the Trustee or its properties or might have consequences that would materially and adversely affect its performance hereunder. Within thirty (30) days of the earlier of discovery by the Trustee or receipt of notice by the Trustee of the breach of any representation or warranty of the Trustee set forth in this Section 6.8, the Trustee shall cure such breach in all material respects. SECTION VI.9 Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion -85- or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, and shall be deemed to have assumed all of the liabilities and obligations of the Trustee hereunder without the execution or filing of any paper or any further act on the part of any of the parties hereto (other then such Person). In case any Notes shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion, consolidation or succession to such authenticating Trustee may adopt such authentication and deliver the Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes. SECTION VI.10 Resignation and Removal; Appointment of Successor. (a) The Trustee may resign at any time by giving written notice thereof to the Servicer and the Issuers. No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 6.11. (b) If the instrument of acceptance by a successor Trustee required by Section 6.11 shall not have been delivered to the Trustee within thirty (30) days after the giving of a notice of resignation as contemplated in clause (a) above, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (c) The Trustee may be removed at any time with respect to the Notes by the Holders of 66 2/3% in principal amount of the Outstanding Notes and notice of such action by such Holders shall be delivered to the Trustee, the Issuers and the Servicer. (d) If at any time: (1) the Trustee shall fail to comply with Section 6.6 or shall fail to comply with Section 6.12 after written request for compliance by any Issuer or any Holder who has been a bona fide Holder for at least six (6) months, or (2) the Trustee shall cease to be eligible under Section 6.7, or the representations in Section 6.8 shall prove to be untrue, and the Trustee shall fail to resign after written request therefor by the Issuers or any such Holder referred to in clause (1) above, or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; -86- then, in any such case, (i) the Issuers, upon the order of each of their respective Boards of Directors, may remove the Trustee with respect to the Notes, or (ii) subject to Section 5.14, any Holder of a Note may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee with respect to the Notes and the appointment of a successor Trustee or Trustees. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, with respect to the Notes, the Issuers, upon the order of each of their respective Boards of Directors, shall promptly appoint a successor Trustee or Trustees satisfying the requirements of Section 6.7 with respect to the Notes and shall comply with the applicable requirements of Section 6.11. If, within sixty (60) days after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee shall not have been appointed by the Issuers or, if appointed, shall not have accepted such appointment in accordance with the applicable requirements of Section 6.11, then a successor Trustee shall be appointed by Act of the Holders of not less than 66 2/3% in aggregate principal amount of the Outstanding Notes delivered to the Issuers and the retiring Trustee, and the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 6.11, become the successor Trustee with respect to the Notes. Upon such resignation, removal, incapacity or other vacancy, the Trustee shall forward all documents relating to the Notes to the successor Trustee at the address provided by the Issuers. If, within one hundred and twenty (120) days after such resignation, removal or incapability, or the occurrence of such vacancy, no successor Trustee shall have been so appointed and accepted appointment in the manner required by Section 6.11, any bona fide Holder may, on behalf of such Holder and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (f) The Issuers shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee by giving notice of such event to each of the Holders and the Rating Agency in accordance with Section 1.6. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office. SECTION VI.11 Acceptance of Appointment by Successor. In case of the appointment hereunder of a successor Trustee, the successor Trustee so appointed shall execute, acknowledge and deliver to the Issuers and to the retiring Trustee an instrument accepting such appointment and assuming the responsibilities of the Trustee hereunder, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of any Issuer or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring -87- to such successor Trustee all the rights, powers and trusts of the retiring Trustee, shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder, shall take such action as may be necessary to provide for the appropriate interest in the Collateral to be vested in such successor Trustee, and shall execute and deliver any amendments to the Security Documents necessary in connection therewith, but shall not be responsible for the recording of such documents and instruments as may be necessary to give effect to the foregoing (which responsibility shall be borne by the successor Trustee). Upon request of any such successor Trustee, the Issuers shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in this Section. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. SECTION VI.12 Conflicting Interests. If the Trustee has or shall acquire any conflicting interest (as defined in Section 310 of the Trust Indenture Act of 1939, as amended, applied as if this Indenture were an Indenture to be qualified under such Act), such Trustee shall, within ninety (90) days after ascertaining that it has such conflicting interest and if the default (as defined in Section 310 of such Act) has not been cured or duly waived or otherwise eliminated before the end of such ninety day period, either eliminate such conflicting interest or resign, such resignation to become effective upon the appointment of a successor Trustee and such successor's acceptance of such appointment, and the Issuers shall take prompt steps to have a successor appointed in the manner provided in Section 6.10 hereof. SECTION VI.13 Self Dealing. The Trustee may purchase Eligible Investments through the Trustee, in its individual capacity, and through its Affiliates, and such Persons may retain any charges or commissions customarily imposed for such purchases. SECTION VI.14 Investments. The Trustee shall invest any amounts held in the Payment Account (pursuant to Section 3.5), pending their application to the purposes herein provided, in one or more of the following investments (the "Eligible Investments") as directed by the Issuers or, in the absence of any such direction, in one or more investments described in clause (i) below: (a) obligations of, or obligations guaranteed as to principal and interest by, the U.S. government or any agency or instrumentality thereof, when such -88- obligations are backed by the full faith and credit of the U.S. These obligations include, but are not limited to: . U.S. Treasury obligations All direct or fully guaranteed obligations . Farmers Home Administration Certificates of beneficial ownership . General Services Administration Participation certificates . U.S. Maritime Administration Guaranteed Title XI financing . Small Business Administration Guaranteed participation certificates Guaranteed pool certificates . U.S. Department of Housing and Urban Development Local authority bonds . Washington Metropolitan Area Transit Authority Guaranteed transit bonds; (b) Federal Housing Administration debentures when such obligations are backed by the full faith and credit of the U.S.; (c) obligations of government-sponsored agencies that are not backed by the full faith and credit of the U.S., where the obligation is limited to those instruments that have a predetermined fixed dollar amount of principal due at maturity that cannot vary or change. These obligations are limited to: . Federal Home Loan Mortgage Corp. (FHLMC) Debt obligations . Farm Credit System (formerly: Federal Land Banks, Federal Intermediate Credit Banks, and Banks for Cooperatives) Consolidated systemwide bonds and notes . Federal Home Loan Banks (FHL Banks) Consolidated debt obligations . Federal National Mortgage Association (FNMA) Debt obligations . Student Loan Marketing Association (SLMA) Debt obligations . Financing Corp. (FICO) Debt obligations . Resolution Funding Corp. (REFCORP) Debt obligations; -89- (d) Federal funds, unsecured certificates of deposit, time deposits, banker's acceptances, and repurchase agreements having maturities of not more than 365 days of any bank, the short-term debt obligations of which are rated "P-1" (or the equivalent) by the Rating Agency; (e) deposits that are fully insured by the Federal Deposit Insurance Corp. (FDIC); (f) debt obligations maturing in 365 days or less that are rated "Aaa" or higher (or the equivalent) by the applicable Rating Agency; (g) commercial paper rated by the Rating Agency as follows:
Minimum long- and Maximum Maturity Short-Term Ratings ---------------- ------------------ One Month A2 or P-1 Three Month A1 and P-1 Six Months Aa3 and P-1 Over Six Months Aaa and P-1
(h) investments in certain short-term debt of issuers rated "P-1" (or the equivalent) by the Rating Agency may be permitted with certain restrictions. The total amount of debt from "P-1" (or the equivalent) issuers must be limited to the investment of an amount equal to the debt service payment amount due in any month for all then Outstanding Notes. The total amount of "P-1" (or the equivalent) investments should not represent more than 20% of the rated issuer's outstanding principal amount and each investment should not mature beyond 30 days. Investments in "P-1" (or the equivalent) rated securities are not eligible for reserve accounts, cash collateral accounts, or other forms of credit enhancement. Short-term debt for purposes of this definition includes: commercial paper, federal funds, repurchase agreements, unsecured certificates of deposit, time deposits and banker's acceptances; (i) investment in money market funds rated "Aaa" (or the equivalent) by the Rating Agency; and (j) such other investments as shall be affirmed by means of a Rating Confirmation. Notwithstanding the foregoing, "Eligible Investments": (i) shall exclude any security with the Standard & Poor's "r" symbol (or the Rating Agency's corresponding symbol, if any) attached to the rating (indicating high volatility or dramatic fluctuations in their expected returns because of market risk), as well as any mortgage-backed securities; (ii) shall not have maturities in excess of one year; (iii) as to the investments described in (a), (c), (d), (e), (f), (g) and (h): the obligations shall be limited to those instruments that have a predetermined fixed dollar of principal due at maturity that cannot vary or change; interest -90- may either be fixed or variable; and any variable interest should (other than with respect to investments described in (i)) be tied to a single interest rate index plus a single fixed spread (if any), and move proportionately with that index; and (iv) shall exclude any investment where the right to receive principal and interest derived from the underlying investment provides a yield to maturity in excess of 120 percent of the yield to maturity at par of such underlying investment. No investment shall be made which requires a payment above par for an obligation if the obligation may be prepaid at the option of the issuer thereof prior to its maturity. All investments shall mature or be redeemable upon the option of the holder thereof on or prior to the earlier of (x) three (3) months from the date of their purchase or (y) the Business Day preceding the day before the date such amounts are required to be applied hereunder. The Trustee shall not be responsible for its inability to invest funds received after 12:00 p.m. New York City time. After application to the purposes for which any amounts invested pursuant to this Section 6.14 are held and so long as no Event of Default has occurred and is continuing hereunder, the Trustee shall pay any net investment income earned from Eligible Investments (after any expenses associated with those investments) promptly to the Issuers. SECTION VI.15 Unclaimed Funds. At the expiration of two (2) years following the date of Maturity of any Notes issued hereunder, any monies deposited in the Holdover Account for such Notes then remaining on deposit and unclaimed by the lawful owner thereof shall be paid to the Issuers (or in accordance with any directions previously given to the Trustee by the Issuers) and the Person entitled to receive such monies thereafter shall look only to the Issuers for payment thereof as an unsecured general creditor (without regard to any limitation on recourse contained herein or in the Notes or any other Security Document), and all liability of the Trustee with respect to such trust money shall thereupon cease; provided that the Trustee, before being required to make any such repayment, may, at the expense of the Issuers, cause to be published at least once but not more than three times in any Authorized Newspaper (if the Notes were, as of the Trustee's receipt of such payment, listed on a securities exchange) and in two newspapers in the English language customarily published on each Business Day and of general circulation, one in New York, New York and the other in London, England, a notice to the effect that said monies remain unclaimed and have not been applied for the purpose for which they were deposited, and that after a date specified therein, which shall be not less than thirty (30) days after the date of first publication of said notice, any unclaimed balance of said monies then remaining in the hands of the Trustee will be paid to the Issuers upon their written directions. Any successor to any Issuer through merger, consolidation or otherwise or any recipient of substantially all the assets of any Issuer in a liquidation of such Issuer shall remain liable for the amount of any unclaimed balance paid to such Issuer pursuant to this paragraph. SECTION VI.16 Illegal Acts. -91- No provision of this Indenture or any amendment or supplement hereto shall be deemed to impose any duty or obligation on the Trustee to do any act in the performance of its duties hereunder or to exercise any right, power, duty or obligation conferred or imposed on it, which under any present or future law shall be unlawful, or which shall be beyond the corporate powers, authorization or qualification of the Trustee. SECTION VI.17 Communications to be Sent to the Rating Agency, Holders and the Initial Purchasers. (a) The Trustee shall send to the Rating Agency (with copies to the Issuers and the Servicer) copies of each supplement, notice, certificate, request, demand, report and financial statement sent by it or received by it pursuant to or in connection with this Indenture, the other Security Documents or the Mortgaged Properties, and any other quarterly or annual materials in the Trustee's possession, relating to the Notes or the obligations of the Issuers under the Security Documents and requested by the Rating Agency in accordance with their monitoring activities; provided, that the foregoing shall not apply to statements of the Trustee's fees and expenses sent by it to the Issuers and other communications determined by the Trustee to be of a similarly solely administrative nature. The Trustee shall also provide copies of the documents delivered to it by the Issuers pursuant to Section 18.2 and Sub-sections 18.3(c), 18.3(f), 18.3(g) (if then applicable) and 18.3(h) (if then applicable) of the Mortgage and copies of Debt Service Reports to the Initial Purchasers and to any Holder (or beneficial owner of Notes) requesting delivery of all or part of such information in writing, upon receipt by the Trustee, in the case of any Holder (or beneficial owner of Notes), of a certificate from the requesting Holder (or beneficial owner of Notes) in substantially the form set forth in Exhibit D, it being understood that the Trustee shall be entitled to conclusively rely upon the accuracy of the information provided to it in such certificate. (b) The Trustee shall (i) send to the Issuers, within five (5) days after the date on which any installment of interest on the Notes (including Additional Amounts, if any, and Make-Whole Payments, if any) becomes due and payable hereunder and is not paid, a written demand for payment thereof; (ii) send to the Issuers, within five (5) days after any amount other than principal or interest becomes due and payable hereunder and is not paid, a written demand for payment of such amount; (iii) send to the Issuers, within five (5) Business Days after a Responsible Officer of the Trustee acquires actual knowledge that any mechanic's or other lien (other than Permitted Exceptions) shall have been filed against the Mortgaged Property or any part thereof, a written demand that the Issuers bond -92- or otherwise satisfy such lien unless the Servicer shall have already delivered such notice and demand to the Issuers; and (iv) send to the Issuers, within seven (7) Business Days after a Responsible Officer of the Trustee acquires actual knowledge of (A) any failure to perform or comply with any of the terms of this Indenture, the Mortgage or any other Security Document, or (B) any breach, in any material respect, of a representation or warranty made by any Issuer in this Indenture, written notice of such default, failure or breach and demand for cure in accordance with the Agreement. (c) The Trustee may attach a notice to any document to be delivered by it under clause (a) above disclaiming any responsibility for the contents thereof. SECTION VI.18 Separate Trustees and Co-trustees. (a) If at any time the Trustee reasonably shall deem it necessary for the purpose of meeting any legal requirements applicable to it in the performance of its duties hereunder (including any legal requirements of any jurisdiction in which any of the Collateral is located), the Trustee shall have the power to, and shall, execute and deliver any and all instruments necessary to appoint one or more Persons to act as separate trustees or co-trustees hereunder, jointly with the Trustee, of any of the Collateral, including any of the Mortgaged Properties, subject to this Indenture, and any such Persons shall be such separate trustee or co-trustee, with such powers and duties consistent with this Indenture and the other Security Documents as shall be specified in the instrument appointing such Person but without thereby releasing the Trustee from any of its duties hereunder. If the Trustee shall request the Issuers so to do, each Issuer shall join with the Trustee in the execution of such instrument, but the Trustee shall have the power to make such appointment without making such request. (b) Every separate trustee and co-trustee shall, to the extent not prohibited by law, be subject to the following terms and conditions: (1) the rights, powers, duties and obligations conferred or imposed upon such separate or co-trustee shall be conferred or imposed upon and exercised or performed by the Trustee and such separate or co-trustee jointly, as shall be provided in the appointing instrument, except to the extent that under any law of any jurisdiction in which any particular act is to be performed any nonresident trustee shall be incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations shall be exercised and performed by such separate trustee or co-trustee; provided, however, that in the event of a conflict between the instructions or directions of the Trustee and any separate or co-trustee, the directions of the Trustee shall govern; -93- (2) all powers, duties, obligations and rights conferred upon the Trustee, in respect of the custody of all cash and other securities to be deposited with or otherwise held by the Trustee hereunder shall be exercised solely by the Trustee; and (3) the Trustee may at any time by written instrument accept the resignation of or remove any such separate trustee or co-trustee, and, upon the request of the Trustee, each Issuer shall join with the Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to make effective such resignation or removal, but the Trustee shall have the power to accept such resignation or to make such removal without making such request. A successor to a separate trustee or co-trustee so resigning or removed may be appointed in the manner otherwise provided herein. (c) Such separate trustee or co-trustee, upon acceptance of such trust, shall be vested with the estates or property specified in such instrument, jointly with the Trustee and the Trustee shall take such action as may be necessary to provide for the appropriate interest in the Collateral, including the Mortgaged Properties, to be vested in such separate trustee or co-trustee, the execution and delivery of any amendments to the Security Documents necessary in connection therewith, and the recording of such documents and instruments as may be necessary to give effect to the foregoing. Any separate trustee or co- trustee may, at any time, by written instrument constitute the Trustee, his agent or attorney in fact with full power and authority, to the extent permitted by law, to do all acts and things and exercise all discretion authorized or permitted by him, for and on behalf of him and in his name. If any separate trustee or co-trustee shall be dissolved, become incapable of acting, resign, be removed or die, all the estates, property, rights, powers, trusts, duties and obligations of said separate trustee or co-trustee, so far as permitted by law, shall vest in and be exercised by the Trustee, without the appointment of a successor to said separate trustee or co-trustee, until the appointment of a successor to said separate trustee or co-trustee is necessary as provided in this Indenture. The appointment of a co-trustee shall in no way release the Trustee from any of its duties or responsibilities hereunder. (d) Any notice, request or other writing, by or on behalf of any Holder, delivered to the Trustee shall be deemed to have been delivered to all separate trustees and co-trustees. SECTION VI.19 Streit Act. Any provisions required to be contained in this Indenture by Section 126 of Article 4-A of the New York Real Property Law are hereby incorporated, and such provisions shall be in addition to those conferred or imposed by this Indenture, provided, however, that to the extent that such Section 126 shall not apply to this Indenture, said Section 126 shall not have any effect, and if said Section 126 should at any time be repealed or cease to apply to -94- this Indenture, or be construed by judicial decision to be inapplicable, said Section 126 shall cease to have any further effect upon the provisions of this Indenture. In case of a conflict between the provisions of this Indenture and any mandatory provisions of Article 4-A of the New York Real Property Law, such mandatory provisions shall prevail, provided that if said Article 4-A shall not apply to this Indenture, should at any time be repealed, or cease to apply to this Indenture, or should be construed by judicial decision to be inapplicable, such mandatory provisions of such Article 4-A shall cease to have any further effect upon the provisions of this Indenture. SECTION VI.20 Withholding and Information Reporting. The Trustee agrees with each Issuer that the Trustee will comply with all applicable United States federal income tax withholding and informational reporting requirements in respect of payments on the Notes. ARTICLE VII THE SERVICER SECTION VII.1 Servicer to Act as Servicer. The Servicer, as an independent contract servicer, shall service and administer the Loan on behalf of the Trustee and in the interests of (as determined by the Servicer in its reasonable judgment) and for the benefit of the Holders in accordance with the terms of this Indenture and the other Security Documents and, to the extent consistent with such terms, giving due consideration to customary and usual standards of practice of prudent institutional commercial mortgage loan servicers utilized with respect to assets comparable to those securing the Loan, with a view toward maximizing the timely recovery of principal and interest on the Loan, but without regard to: (i) any relationship that the Servicer or any Affiliate of the Servicer may have with any Issuer or any Affiliate of any Issuer; (ii) the ownership of any Note by the Servicer or any Affiliate of the Servicer; (iii) Servicer's obligations to make Advances or to incur servicing expenses with respect to the Loan; or (iv) the adequacy of the Servicer's compensation for its services hereunder or with respect to any particular transaction. Subject to the above-described servicing standards (hereinafter referred to as "Accepted Servicing Practices") and the terms of this Indenture and of the other Security Documents, the Servicer shall have full power and authority to do or cause to be done any and all -95- things in connection with such servicing and administration which it may deem necessary or desirable. The Servicer shall service and administer the Loan in accordance with applicable state and federal law. At the written request of the Servicer, accompanied by the form of powers or other documents being requested and a certificate that such power of attorney or document is necessary or appropriate to enable the Servicer to carry out its servicing and administrative duties hereunder, the Trustee shall furnish to the Servicer any powers of attorney and other documents and the Trustee shall not be held responsible for any acts by the Servicer in its uses of any such powers of attorney or other documents. Where the terms of the Mortgage or any other Security Document provide that the consent or approval of the Mortgagee is required, then (unless otherwise provided therein) such consent or approval shall be granted or withheld by the Servicer on behalf of the Mortgagee in accordance with Accepted Servicing Practices. In the event the Servicer is administering any consent, approval or other request by any Issuer pursuant to the Notes, this Indenture or any of the other Security Documents, and such consent, approval or request requires a Rating Confirmation, the Servicer shall not be obligated to make any recommendation or provide any opinion to the Rating Agency as to whether such consent, approval or request should be granted or withheld, unless such recommendation or opinion is expressly required to be made or provided pursuant to the terms and provisions of this Indenture. SECTION VII.2 Sub-Servicing Agreements. The Servicer, at its own expense without a right of reimbursement from the Issuers under this Indenture or the Servicer Fee Agreement, may enter into sub- servicing agreements with sub-servicers for the servicing and administration of the Mortgaged Properties, provided that, (i) each Issuer shall have consented in writing to the appointment of such sub-servicer, unless (x) such sub-servicer is a wholly owned subsidiary of the Servicer named herein and has substantially the same Servicing Officers as the Servicer, or (y) the Servicer has determined, in good faith, that the appointment of such sub-servicer is necessary for the purpose of meeting any legal requirements applicable to it in the performance of its duties hereunder (including any legal requirements of any jurisdiction in which any of the Collateral is located) (ii) any such sub-servicing agreement will be upon such terms and conditions as are not inconsistent with this Indenture and as the Servicer and the sub-servicer have agreed, and (iii) no sub-servicer retained by the Servicer shall grant any modification, waiver, or amendment to the Security Documents without the written approval of the Servicer. References in this Indenture to actions taken or to be taken, and limitations on actions permitted to be taken, by the Servicer in servicing the Mortgaged Properties include actions taken or to be taken by a sub-servicer on behalf of the Servicer. Each sub-servicer shall be (i) authorized to transact business in the applicable state(s), if, and to the extent, required by applicable law to enable the sub-servicer to perform its obligations hereunder and under the applicable sub-servicing agreement, and (ii) qualified to service mortgage loans comparable to the Loan. For purposes of this Indenture, the Servicer shall be deemed to have received any amount when the sub-servicer receives such amount and actions taken by the sub-servicer shall be deemed to be actions -96- of the Servicer. The Servicer shall notify the Trustee and the Issuers in writing promptly upon the appointment of any sub-servicer and promptly furnish the Trustee and the Issuers with a copy of the sub-servicing agreement. Notwithstanding any sub-servicing agreement, any of the provisions of this Indenture relating to agreements or arrangements between the Servicer and a sub- servicer or reference to actions taken through a sub-servicer or otherwise, the Servicer shall remain obligated and liable to the Trustee and the Holders for the servicing and administering of the Loan in accordance with the provisions of Section 7.1 without diminution of such obligation or liability by virtue of such sub-servicing agreement or arrangements or by virtue of indemnification from a sub-servicer and to the same extent and under the same terms and conditions as if the Servicer alone were servicing and administering the Loan. SECTION VII.3 Certain Duties and Responsibilities. Until the principal and interest on each Note is paid in full, the Servicer shall proceed diligently to collect all payments called for under the terms and provisions of the Security Documents, including payments from the Issuers' Insurance Proceeds and Taking Proceeds, and in doing so the Servicer shall follow such collection procedures as are in accordance with Accepted Servicing Practices. The foregoing responsibilities shall include, without limitation, making, at the expense of the Issuers, timely filings of any Uniform Commercial Code continuation statements and any refilings of any Security Document as necessary to preserve the liens created thereby to the extent not so done by the Issuers as provided herein or in the other Security Documents. The Servicer agrees that it will notify the Issuers and the Trustee in writing of any filings, fees, taxes or other similar payments required in connection with the satisfaction of the obligations of the Issuers under this Indenture and the other Security Documents known to any officer or employee of the Servicer actively involved in the administration of the Loan. Upon receiving notice of an acceleration of the Notes pursuant to Section 5.2, the Servicer may, unless the Event of Default preceding such acceleration is an Event of Default in the payment of interest (including Additional Amounts, if any) or principal or Make- Whole Payments, if any, under the Notes, in which case the Servicer shall, initiate foreclosure proceedings with respect to the Mortgaged Properties; provided, however, that the Servicer will not convert ownership of any Mortgaged Property to the Trustee on behalf of the Holders unless and until the Servicer has complied with the terms of this Indenture and the Servicer has notified the Trustee in writing and the Trustee, in turn, has notified each Holder. After an Event of Default with respect to the payment of amounts due under the Notes or the Security Documents has occurred, if the Servicer determines that a modification, waiver or amendment of the terms of any Security Document is reasonably likely to produce a greater recovery on a present value basis than liquidation of one or more of the Mortgaged Properties, then the Servicer may, but is not required to, agree to a modification, waiver or amendment of any of the terms of such Security Document in accordance with its terms; provided, however, that the Servicer shall not permit any modification that would change the interest rate payable on any of the Notes, extend the maturity date of any Note or -97- forgive any principal or interest thereof, unless (i) the Servicer has notified the Trustee in writing and the Trustee has notified the Holders in writing of such proposed modification and such modification has been approved in writing by Holders of 100% in aggregate principal amount of the Outstanding Notes affected by such modification and (ii) any such modification will be made in compliance with the terms of this Indenture (including Section 6.1(a)(5)) and any other applicable Security Documents. SECTION VII.4 Payment of Impositions, etc. The Servicer shall maintain accurate records with respect to the Mortgaged Properties reflecting the status of Impositions and other similar items that are or may become a lien thereon and the status of insurance premiums payable in respect of any of the insurance policies required to be maintained by the Issuers (in their capacities as Mortgagors) under Article 13 of the Mortgage. The Issuers shall supply to the Servicer evidence of the payment of such amounts at least three (3) Business Days prior to the applicable penalty or termination dates. To the extent the Servicer has obtained notice of any Impositions that have not been paid by the Issuers as required by the immediately preceding sentence and no Issuer is contesting such items pursuant to Article 12 of the Mortgage, the Servicer shall obtain all bills for the payment of such items (including renewal premiums) and shall instruct the Issuers in writing to effect payment thereof prior to the applicable penalty or termination date, provided that failure of the Servicer to provide such instruction shall in no way limit the obligation of the Issuers to timely pay such Impositions nor shall it be a condition for the Servicer to make an advance from its own funds as set forth below. If evidence of such payment is not promptly received by the Servicer, the Servicer shall Advance from its own funds (without having any obligation to give any prior notice to the Issuers but subject to the Servicer's determination that such Advance will not, if made, constitute a Nonrecoverable Advance) amounts payable with respect to all such items related to the Mortgaged Properties when and as the same shall become due and payable, which advance shall constitute a Carrying Cost Advance. The Servicer shall not be obligated to advance from its own funds any amounts required to cure, or pay any other amounts due by reason of, any failure of any Mortgaged Property to comply with any applicable Legal Requirements (as defined in the Mortgage), including any Environmental Law (as defined in the Mortgage), or to investigate, test, monitor, contain, clean up or remedy an environmental condition present at any Mortgaged Property, except to the extent provided in Section 7.7. SECTION VII.5 Maintenance of Insurance and Errors and Omissions and Fidelity Coverage. (a) The Servicer shall use its best efforts to cause the Issuers to maintain for each Mortgaged Property all insurance required by the terms of the Mortgage in the amounts, with the terms and provisions, and from the insurers set forth therein. If the Issuers fail to maintain the insurance policies required by the Mortgage, the Servicer shall obtain such required insurance policies (which may be through the Servicer's master force-placed insurance policy) to the extent available and to the extent the Trustee, as Mortgagee, has an insurable interest (as determined by the Servicer in accordance with Accepted Servicing Practices). The cost (including any deductible relating to such -98- insurance) of such required insurance policies (or, in the case of the Servicer's master force-placed policy, the incremental cost (including any related deductible) of such insurance related to the specific Mortgaged Property) shall be paid by the Servicer as a Carrying Cost Advance. In carrying out the foregoing, the Servicer shall monitor each Issuer's compliance with the requirements of Article 13 of the Mortgage and shall advise the Issuers of any instance where the Servicer believes that any Issuer is no longer in compliance with Article 13 of the Mortgage. The Servicer shall also cause to be maintained on each Mortgaged Property after it becomes a Foreclosed Property all such insurance, to the extent the same is then available at reasonable cost and maintaining such insurance would be in the interest of the Holders in accordance with Accepted Servicing Practices. Pursuant to Section 7.6, any amounts collected by the Servicer under any such policies (other than amounts to be applied to the restoration or repair of a Mortgaged Property or property so acquired or amounts released to the Mortgagor in accordance with the terms of the Mortgage) shall be deposited in the Collection Account, subject to withdrawal pursuant to Section 7.6. Any costs incurred by the Servicer pursuant to this Section shall be reimbursable to the Servicer pursuant to Section 7.6. Nothing in this Section shall be deemed to require the Servicer to make a Nonrecoverable Advance. (b) The Servicer shall obtain and maintain at its own expense, and keep in full force and effect throughout the term of this Indenture, a blanket fidelity bond and an errors and omissions insurance policy from a provider that is rated at least Investment Grade and covering the Servicer's officers and employees and agents acting on behalf of the Servicer in connection with its activities under this Indenture (to the extent such agents are under the supervision, direction and control of the Servicer). The amount of coverage shall be such as is commercially reasonable given the Servicer's role hereunder and at least equal to the coverage that is required by applicable governmental authorities having regulatory power over the Servicer and the insurer or insurers providing such coverage shall be assigned a rating of at least Investment Grade. If no such coverage amounts are imposed by such regulatory authorities, the amount of coverage shall be at least equal to the coverage that would be required by FNMA or FHLMC with respect to the Servicer if the Servicer were servicing and administering the Loan for FNMA or FHLMC. In the event that any such bond or policy ceases to be in effect, the Servicer shall obtain a comparable replacement bond or policy. Coverage of the Servicer under a policy or bond obtained by an Affiliate of the Servicer and providing the coverage and continuing for the term required by this Section 7.5 shall satisfy the requirements of this Section 7.5. No provision of this Section 7.5 requiring such fidelity bond and errors and omissions insurance shall diminish or relieve the Servicer from its duties and obligations as set forth in this Indenture. Concurrently with the execution hereof, the Servicer shall deliver or cause to be delivered to the Trustee a certificate of insurance from the surety, insurer or insurance broker. The Servicer shall immediately provide notice to the Trustee and the Rating Agency of any cancellation, termination, expiration, reduction in amount -99- of, or material change (other than an increase) in, coverage under any such fidelity bond or policy of errors and omissions insurance. (c) The Servicer shall approve adjustments and settlements of insurance claims on behalf of the Trustee as Mortgagee. SECTION VII.6 Collection Account. (a) Upon the occurrence and continuation of an Event of Default, the Servicer shall establish one or more accounts (collectively, the "Collection Account") in the name of the Trustee in an Eligible Account bearing a designation clearly indicating that such account and all funds deposited therein (including all investments of such deposited funds and all income or other gain from such investments) are held for the exclusive benefit of the Holders. The Servicer shall deposit, or cause to be deposited, in the Collection Account within one (1) Business Day after receipt all revenues received from any Foreclosed Property and all other amounts received by the Servicer with respect to the Security Documents and the Mortgaged Properties. The Servicer shall have exclusive control and the right of withdrawal with respect to the Collection Account for the purpose of making deposits to and withdrawals from the Collection Account in accordance with this Indenture. Funds in the Collection Account shall not be commingled with any other funds of the Servicer. All monies deposited from time to time in the Collection Account and all investments made with such monies, including all income or other gain from such investments, shall be held by the Servicer in the Collection Account for the benefit of the Holders as herein provided. (b) The Servicer may make withdrawals from the Collection Account only as described below (the order set forth below constituting an order of priority for such withdrawals): (i) to withdraw any sums deposited in error in the Collection Account and pay such sums to Persons entitled thereto; (ii) to pay to the Servicer and the Trustee (pro rata, based on the relative amounts, if any, then owed) the fees due under the terms of the Servicer Fee Agreement and the Trustee Fee Agreement, respectively; (iii) to pay or reimburse the Trustee and the Servicer, in that order, for Advances made by it and not previously reimbursed, including any Advance previously made that the Trustee or the Servicer, as applicable, determines in good faith to be a Nonrecoverable Advance, and all accrued but unpaid interest on such Advances computed as set forth in Section 7.17; -100- (iv) to pay costs and expenses (not previously advanced by the Servicer) necessary for the proper operation, maintenance and management of any Foreclosed Property pursuant to Section 7.9(c). (v) to pay or reimburse the Servicer and the Trustee for any other amounts reimbursable pursuant to the terms of this Indenture and not previously paid or reimbursed pursuant to subsections (iii) or (iv) above or any other Security Document (including satisfaction of any indemnification obligations of the Issuers hereunder or thereunder); (vi) following the appointment of a Manager, to pay the Manager the Management Fee; (vii) to transfer to the Payment Account on the fourth (4th) Business Day preceding an Interest Payment Date, any amounts remaining in the Collection Account for the purpose of making payments pursuant to Section 5.6 hereof; and (viii) to clear and terminate the Collection Account following liquidation of all of the Collateral. (c) Money held by the Servicer hereunder shall be held in trust for the purposes for which it was paid, and shall be segregated from any other monies held by the Servicer, and may be deposited by the Servicer under such general conditions as may be prescribed by law. The Servicer shall invest any amounts held in the Collection Account pending their application to the purposes herein provided in one or more Eligible Investments in the manner described in Section 6.14 with respect to the Payment Account. The Servicer shall not be under any liability to the Issuers, the Holders or any other Person for interest or other earnings (or losses) on any money received by it hereunder or Eligible Investments made by it in accordance herewith, except for such losses as may be caused by the negligence or willful misconduct of the Servicer. Within a reasonable time after the end of each calendar year or portion thereof during the term of the Notes, the Servicer shall deliver to the Issuers and the Trustee and, upon request, to the Holder of any Note a statement of any amounts received or disbursed by the Servicer out of the Collection Account in respect of the Collateral during such calendar year or portion thereof. SECTION VII.7 Realization upon Mortgaged Property. (a) Upon an Event of Default (i) the Servicer shall exercise the remedies available under Article V hereof, and under the Mortgage and the Assignment of Leases, including foreclosing on all or some of the Mortgaged Properties, and (ii) the Servicer shall deliver such notices as may be required by any Leases or Operating Agreements to the parties entitled thereto. Except in the case of rescission of acceleration in accordance with Article V, the Servicer shall liquidate the Collateral and transfer the payments to the Payment Account for disbursement pursuant to Section 5.6 hereof. In determining whether or not to foreclose on any -101- Mortgaged Property, the Servicer may obtain a full narrative appraisal of the Mortgaged Property from an appraiser the cost of which shall constitute a Carrying Cost Advance. In addition, upon an Event of Default, or an event which with the giving of notice or the passage of time would become an Event of Default, the Servicer may obtain advice from persons with expertise in the field of distressed real estate, bankruptcy or other relevant fields the cost of which shall constitute a Carrying Cost Advance. Notwithstanding the foregoing but subject to Section 7.7(c), the Servicer shall promptly commence foreclosure following the Maturity Date with respect to any Series, unless prior to that time the term of the Mortgage has been extended with approval of the Holders of not less than 100% in aggregate principal amount of the Notes at the time Outstanding as described in Section 7.3. Within sixty (60) days after an Event of Default and acceleration of the Loan, the Servicer shall prepare, or cause to be prepared, a liquidation plan for the Collateral and shall deliver a copy of such plan to the Trustee for distribution to each Holder. Nothing in such plan shall conflict with or alter in any way any of the obligations of the parties to this Indenture. Such liquidation plan shall be deemed approved by the Holders unless, within sixty (60) days after its delivery, Holders of more than 50% in aggregate principal amount of the Notes then Outstanding object by writings filed with the Trustee to such liquidation plan. In connection with such foreclosure or other conversion, the Servicer shall follow such practices and procedures as it shall deem necessary or advisable and as shall be consistent with Accepted Servicing Practices. At the time the Servicer on behalf of the Trustee for the benefit of the Holders takes possession of a Mortgaged Property by foreclosure or otherwise, the Servicer may, but shall have no obligation whatsoever to, pay the cost of any capital improvements to the Mortgaged Property if the Servicer determines that such expenditures are advisable to protect or, if permitted by Section 33 of the Mortgage, enhance the value of such Mortgaged Property and are in the best interests of the Holders, and any such payment by the Servicer shall constitute a Carrying Cost Advance hereunder. The foregoing is subject to the condition that the Servicer shall not be required to expend its own funds to restore any property damaged by an Uninsured Cause. (b) Notwithstanding Section 7.7(a), the Servicer shall not, on behalf of the Trustee, obtain title to any Mortgaged Property as a result or in lieu of foreclosure or otherwise, and shall not otherwise acquire possession of, or take other action with respect to, such Mortgaged Property, if, as a result of any such action, the Servicer or the Trustee would be considered to hold title to, be a "mortgagee-in-possession" of, or be an "owner" or "operator" of such Mortgaged Property within the meaning of CERCLA or any applicable comparable federal, state or local law, or a "discharger" or "responsible party" thereunder unless the Servicer has also previously determined, based on an environmental report prepared at the direction of the Servicer by a person having the qualifications set forth in Section 7.7(c) (a copy of which report shall have been delivered to the Trustee), that such Mortgaged Property does not contain an "unacceptable environmental condition" as defined in Section 501.04 (or any successor provision) of Part II of the Fannie Mae Multifamily Guide, or that, if any such unacceptable environmental condition exists, taking -102- such actions as are necessary to bring such Mortgaged Property into compliance with applicable Environmental Laws, or taking such actions as are necessary to contain, clean-up, remove or remediate Hazardous Substances affecting such Mortgaged Property is reasonably likely to produce a greater recovery on a present value basis than not taking such actions. If the Servicer has so determined based on satisfaction of the criteria in this Section 7.7(b) that it would be in the best economic interest of the Holders to take any such actions and foreclose or otherwise acquire possession of such Mortgaged Property, the Servicer shall notify the Trustee in writing setting forth in reasonable detail the reasons for its determination, and the Trustee, in turn, shall send a copy of the related environmental report and notification to the Holders notifying them of their right to object to such proposed action. Such proposed action shall be taken unless the Trustee (i) shall have received and delivered to the Servicer, within thirty (30) days after such notification from the Servicer, written instructions from the Holders of not less than 66 2/3% in aggregate principal amount of the Outstanding Notes directing it not to take such action or (ii) has given the Servicer similar written instructions based upon the Trustee's reasonable opinion that there would be a likelihood of the Trustee's individual liability resulting from such action against which it would not be indemnified hereunder. (c) Any environmental report contemplated by Section 7.7(b) shall be prepared by any Independent Person who regularly conducts environmental site assessments for purchasers of comparable properties, as determined by the Servicer in a manner consistent with Accepted Servicing Practices. The cost of preparation of any environmental site assessment shall qualify as a Carrying Cost Advance and shall be advanced by the Servicer, and the Servicer shall be reimbursed therefor from the Payment Account, as provided in Section 5.6, or the Collection Account pursuant to Section 7.6. (d) If the Servicer determines, pursuant to Section 7.7(b), that taking such actions as are necessary to bring a Mortgaged Property into compliance with applicable Environmental Laws, or taking such actions with respect to the containment, clean-up, removal or remediation of Hazardous Substances affecting such Mortgaged Property, is not reasonably likely to produce a greater recovery on a present value basis than not taking such actions, the Servicer shall notify the Trustee in writing setting forth in reasonable detail the reasons for its determination and any action which it determines to take, and the Trustee, in turn, shall send a copy of such notification to the Holders notifying them of their right to give contrary direction. The Servicer shall take such alternative action as it deems to be in the best economic interests of the Holders, consistent with Accepted Servicing Practices including, without limitation, releasing the lien of the Mortgage with respect to such Mortgaged Property, unless the Trustee has received and delivered to the Servicer within thirty (30) days after such notification from the Servicer, contrary directions from the Holders of not less than 66 2/3% in aggregate principal amount of the Outstanding Notes. Neither the Trustee nor the Servicer shall be obligated to take any -103- action, or refrain from taking any action at the direction of Holders pursuant to this Section 7.7(d) unless the Holders offer to the Trustee or the Servicer, as the case may be, security or indemnification satisfactory to the Trustee or the Servicer against the costs, expenses and liabilities that may be incurred with respect to such actions or inaction. SECTION VII.8 Trustee to Cooperate; Release of Original Security Documents. From time to time and as appropriate for the servicing or foreclosure of the Mortgaged Properties, the Trustee shall, upon written request of the Servicer and delivery to the Trustee of a trust receipt in the form of Exhibit F hereto, release or cause to be released originals of any Security Documents being held by it to the Servicer and shall execute such documents furnished to it as shall, according to an Officer's Certificate of the Servicer, be necessary to the prosecution of any such proceedings. The Servicer shall promptly return such items to the Trustee (or the Custodian) when the need therefor by the Servicer no longer exists. SECTION VII.9 Title and Management of Foreclosed Property. (a) In the event that title to any Mortgaged Property is acquired by the Servicer for the benefit of the Holders in foreclosure or by deed-in-lieu of foreclosure or otherwise, the deed or certificate of sale shall be taken in the name of the Trustee, or its nominee, on behalf of the Holders or as otherwise contemplated pursuant to Section 6.18. The Servicer, on behalf of the Holders, shall sell any Foreclosed Property as expeditiously as possible in accordance with the provisions of Section 7.10. Subject to Section 7.9(d), the Servicer shall retain the entity or entities that were acting as the Property Manager (as defined in the Mortgage) with respect to the Mortgaged Properties immediately prior to the Event of Default, or such other property managers as the Servicer shall deem appropriate (the "Manager"), to provide property management services at each of the Foreclosed Properties. In connection with such management, the property manager selected by the Servicer shall be entitled to the related Management Fees from the Collateral, and such fees shall be payable in accordance with Section 7.6. (b) The Servicer and the Manager shall segregate and hold all funds collected and received in connection with the operation of any Foreclosed Property separate and apart from their own funds and general assets and shall deposit all such funds collected and received in connection with the operation of any Foreclosed Property in the Collection Account. (c) The Servicer shall have full power and authority, subject only to the specific requirements and prohibitions of this Indenture and Accepted Servicing Practices, to do any and all things in connection with the Foreclosed Property for the benefit of the Holders on such terms and for such period as the Servicer deems to be in the best interests of the Holders and as consistent with Accepted Servicing Practices. In connection therewith, the Servicer shall require the Manager to deposit or cause to be deposited within one (1) -104- Business Day after receipt in the Collection Account all revenues received with respect to all Foreclosed Properties. To the extent such funds are available therefor pursuant to Section 7.6(b)(iv) the Servicer shall withdraw from the Collection Account funds necessary for the proper operation, management and maintenance of the Foreclosed Property, including, but not limited to: (i) all insurance premiums due and payable in respect of the Foreclosed Properties; (ii) all Impositions in respect of the Foreclosed Properties that could result or have resulted in the imposition of a lien thereon; (iii) all amounts that are due and payable under the Ground Leases, any Leases or Operating Agreements affecting the Foreclosed Properties; and (iv) all costs and expenses necessary to preserve the Foreclosed Properties. To the extent that funds on deposit in the Collection Account are insufficient for the purposes set forth in clauses (i) through (iv) above, the Servicer shall make a Carrying Cost Advance, subject to the limitations set forth in Section 7.17. (d) The Servicer, in the name of the Trustee on behalf of the Holders, shall contract with any Manager for the operation and management of the Foreclosed Properties, provided that no such contract shall impose individual liability on the Trustee, the Servicer or the Holders; and provided, further, that: (i) the terms and conditions of any such contract shall not be inconsistent herewith (including those set forth in the definition of Management Fee); (ii) any such contract shall require, or shall be administered to require, that the Manager (A) pay from revenues of all Foreclosed Properties all costs and expenses incurred in connection with the operation and management of the Foreclosed Properties, and (B) remit all related revenues, net of such costs and expenses, to the Servicer for deposit to the Collection Account as soon as practicable but in no event later than the Business Day immediately following receipt; and (iii) none of the provisions of this Section 7.9 relating to any such contract or to actions taken by any such Manager shall be deemed to relieve the Servicer of any of its duties and obligations to the Trustee on behalf of the Holders with respect to the asset management of the Foreclosed Properties. The Servicer in the name of the Trustee on behalf of the Holders shall be entitled to enter into any agreement with any Manager related to its duties and obligations hereunder for indemnification of the Servicer by such Manager, and nothing in this -105- Indenture shall be deemed to limit or modify such indemnification. The Servicer agrees to monitor the performance of the Manager and to enforce the obligations of the Manager on behalf of the Trustee in accordance with Accepted Servicing Practices. Expenses incurred by the Servicer in connection herewith shall qualify as Carrying Cost Advances. The Servicer shall not serve as Manager, but shall be obligated with respect to any management contract with the Manager to the same extent as if the Servicer alone were performing all duties and obligations in connection with the operation and management of the Foreclosed Property. SECTION VII.10 Sale of Foreclosed Property. (a) Promptly after the acquisition of a Foreclosed Property by the Servicer in the name of and on behalf of the Trustee, the Servicer shall on behalf of the Trustee obtain a full narrative appraisal of such Foreclosed Property from an appraiser (unless there exists and is available to the Servicer a full narrative appraisal of such Mortgaged Property performed within the last twelve (12) months) in order to determine the fair market value of such Foreclosed Property and shall provide copies of such appraisal to the Trustee and the Issuers. The Servicer may offer to sell to any Person one or more of the Foreclosed Properties, if and when the Servicer determines, consistent with the Accepted Servicing Practices, that such a sale would be in the best economic interests of the Holders. The Servicer shall give the Trustee not less than five (5) days' prior written notice of its intention to sell any Foreclosed Property and shall accept the highest cash offer received from any Person (which Person shall certify in its offer as to whether it is an Interested Person) for the Foreclosed Property that at least equals the sum of (i) the Allocated Amount for such Foreclosed Property, plus (ii) all unpaid interest accrued on Notes representing a principal amount equal to the Allocated Amount (assuming a pro-rata selection of all Outstanding Notes, based on principal amount) from time to time through the date of sale, plus (iii) all amounts owed to the Servicer and the Trustee hereunder and the Manager with respect to such Foreclosed Property, and all reasonably estimated Liquidation Expenses. In the absence of any such offer, the Servicer shall accept the highest cash offer received from any Person that is not less than the fair market value of the Foreclosed Property as set forth in the most recent full narrative appraisal (prepared by an appraiser) of such Foreclosed Property. In the absence of any such offer, the Servicer shall offer the Foreclosed Property for sale to any Person other than an Interested Person, in a commercially reasonable manner for a period of not less than ten (10) or more than 365 days, and shall accept the highest cash offer received therefor in excess of the highest cash offer previously submitted. If no such offer is received, any Interested Person may submit an offer for no less than the full amount of principal of, and all other amounts due under, the Notes and all other amounts due under the Security Documents, and the Servicer shall accept the highest outstanding cash offer, regardless of from whom received and regardless of its amount. No Interested Person shall be obligated to submit an offer to purchase any Foreclosed Property, and notwithstanding anything to the contrary herein, neither the Trustee in its individual capacity nor any of its Affiliates may offer to purchase or purchase any Foreclosed Property pursuant hereto. -106- (b) Subject to the provisions of Section 7.9, the Servicer shall act on behalf of the Trustee for the benefit of the Holders in negotiating and taking any other action necessary or appropriate in connection with the sale of the Foreclosed Properties, including the collection of all amounts payable in connection therewith. Any sale of a Foreclosed Property shall be without warranty by, or recourse to, the Trustee, any Issuer, the Servicer, the Holders or any other Person (except for such warranties of title and condition as may be customary under the circumstances of any such sale) and, if consummated in accordance with the provisions of this Section 7.10, neither the Trustee, any Issuer nor the Servicer shall have any liability to any Holder with respect to the purchase price thereof accepted by the Servicer or the Trustee. (c) The proceeds of any sale effected pursuant to Section 7.10(a), after deduction of the expenses incurred in connection therewith, shall be deposited in the Collection Account in accordance with Section 7.6. SECTION VII.11 Servicing Compensation. (a) Prior to the occurrence of any Event of Default, the Issuers shall pay the Servicer as servicing compensation the servicer fees and expenses provided for in the Servicer Fee Agreement. On and after the occurrence of an Event of Default, the Servicer shall be entitled to receive from the Collection Account as servicing compensation the servicer fees and expenses provided for in the Servicer Fee Agreement, including reimbursement for the actual out-of-pocket expenses incurred by it in the performance of its duties hereunder, including reasonable amounts payable in respect of the Servicer's counsel fees and expenses. In no event shall the Servicer receive as servicing compensation (i) fees and expenses of any sub- servicer; (ii) the cost of any fidelity bond or errors and omissions policy required by Section 7.5; (iii) overhead expenses of the Servicer, including but not limited to those that may properly be allocable under the Servicer's accounting system or otherwise to the Servicer's activities under this Indenture or the income derived by it hereunder (including the costs to the Servicer associated with employees of the Servicer performing services in connection with the obligations of the Servicer hereunder); and (iv) costs and expenses arising from the negligence or willful misconduct of the Servicer. (b) No transfer, sale, pledge or other disposition of the Servicer's right to receive all or any portion of the fees payable to the Servicer hereunder or under the Servicer Fee Agreement shall be made, and any such attempted transfer, sale, pledge or other disposition shall be void, unless such transfer is made to a successor servicer in connection with the assumption by such successor servicer of the duties hereunder pursuant to Section 7.25 and all (and not a portion) such fees are transferred to such successor servicer. SECTION VII.12 Reports to the Trustee; Statements to the Issuers. (a) After an Event of Default, the Servicer shall (i) furnish to the Trustee or its designee the originals of all agreements entered into by the Servicer in the name of the -107- Trustee pursuant to this Indenture, (ii) advise the Trustee in writing of any event or circumstance materially affecting the Mortgaged Properties or the interests of the Holders therein coming to the attention of any Servicing Officer in connection or as a result of the fulfillment by the Servicer of its obligations under this Indenture, and (iii) furnish, and cause any Manager to furnish, to the Trustee or its designee such other reports with respect to the Mortgaged Properties, their condition, tenants, and the income resulting therefrom as the Trustee or its designee may reasonably request in writing. (b) On or before the fifth (5th) Business Day preceding each Interest Payment Date the Servicer shall deliver to the Issuers and the Trustee a statement setting forth the total amount of interest and any other expenses due in respect of all of the Notes on such Interest Payment Date; provided, however, that if the Servicer shall at any time fail to deliver such statement to the Issuers, the Issuers shall not be relieved of their obligation to timely pay all interest and other expenses due on any Interest Payment Date and the Servicer shall have no liability to any Issuer for any such failure; and, provided further, that if any such statement shall contain any mistaken information, the Issuers shall not be relieved of their obligation to timely pay all amounts due and owing on such Interest Payment Date and neither the Trustee nor the Servicer shall have any liability to any Issuer arising from such mistaken information. SECTION VII.13 Annual Statement as to Compliance. The Servicer shall deliver to the Trustee and the Issuers on or before March 31 of each year, beginning March 31, 1998, an Officer's Certificate stating, (a) that a review of the activities of the Servicer during the preceding calendar year (or since the Closing Date in the case of the first such Officer's Certificate) and of performance under this Indenture has been made under such officer's supervision and (b) that to the best of such officer's knowledge, based on such review, the Servicer has fulfilled all of its obligations under this Indenture throughout such period, or if there has been a default in the fulfillment of any such obligation, specifying each such default known to such officer and the nature and status thereof. Copies of such statements shall be provided by the Servicer to the Rating Agency. SECTION VII.14 Annual Independent Public Accountants' Servicing Report. On or before March 31 of each year beginning March 31, 1998, the Servicer, at its expense, shall cause a firm of independent public accountants that is a member of the American Institute of Certified Public Accountants to furnish a statement to the Trustee, the Issuers and the Rating Agency to the effect that such firm has examined such documents and records as it deemed necessary and appropriate relating to the Servicer's servicing of mortgage loans (which examination, if it is conducted on the basis of any sampling of less than all mortgage loans serviced by the Servicer in the relevant period, must include an examination of documents and records relating to the Loan) for the preceding calendar year (or since the Closing Date in the case of the first such statement) and that, on the basis of such examination conducted substantially in compliance with generally accepted auditing standards and the Uniform Single Attestation Program for -108- Mortgage Bankers, such firm is of the opinion that the assertion of the management of the Servicer that it maintained an effective internal control system over servicing of mortgage loans is fairly stated in all material respects except for such exceptions that, in the opinion of such firm, generally accepted auditing standards and the Uniform Single Attestation Program for Mortgage Bankers requires it to report, in which case such exceptions shall be set forth in such statement. Copies of such statement provided to the Trustee by the Servicer shall be provided by the Trustee to any Holder upon request. SECTION VII.15 Access to Certain Documentation Regarding the Loan. Upon reasonable advance notice, the Servicer shall provide reasonable access during its normal business hours at its offices (i) to the Trustee to any information in its possession relating to its servicing of the Loan and (ii) subject to the confidentiality restrictions of Section 6.6 and delivery by it of a certificate in the form of Exhibit D hereto to each Holder which is a savings and loan association, bank or insurance company, to certain reports and to information and documentation regarding the Loan sufficient to permit such Holder, the Office of Thrift Supervision, the FDIC, the supervisory agents and the examiners of any such entity to comply with applicable regulations of the Office of Thrift Supervision or other regulatory authorities with respect to investment in the Notes. The Servicer shall provide any inquiring savings and loan association, bank or insurance company desiring to purchase a Note, or a beneficial ownership interest therein, at the reasonable request of such association, bank or insurance company, to the extent reasonably available to the Servicer, specific information as requested; provided that, the institution making such request delivers a Certificate in the form of Exhibit D and agrees to pay the reasonable fees and out-of-pocket expenses incurred by the Servicer in connection therewith. SECTION VII.16 Inspections. The Servicer shall, at its expense, inspect or cause to be inspected each Mortgaged Property at least once each calendar year and furnish to the Trustee a written report of the results of any inspection required hereunder. If the Issuers fail to pay any sums due under any Note on or before their due date and such failure is not remedied within five days, or if an inspection is otherwise warranted in accordance with Accepted Servicing Practices, the Servicer shall inspect the Mortgaged Properties (or such of them as the Servicer deems appropriate) within 30 days of the relevant event (or as soon thereafter as is practicable). The cost of inspecting the Mortgaged Properties more than once per year shall be paid by the Issuers upon written request by the Servicer therefor explaining in reasonable detail the basis for such costs. If an Event of Default shall have occurred and be continuing, the costs of inspecting the Mortgaged Properties more than once per year shall constitute Carrying Cost Advances and shall be payable in accordance with Section 7.6 or Section 5.6, as applicable. SECTION VII.17 Advances. (a) On or before each Servicer Advance Date, the Servicer shall make the Interest Advance by depositing in the Payment Account the -109- amount of interest on the Notes that is due from the Issuers with respect to the next Interest Payment Date (at the regular interest rate set forth in Section 3.5) and was delinquent as of the close of business on the Business Day immediately preceding such Servicer Advance Date to the extent required under this Section 7.17. If the Servicer fails to make such Interest Advance on such date in accordance with the terms of this Indenture, which failure shall constitute an immediate Servicer Default, the Trustee, as successor Servicer shall deposit into the Payment Account such Interest Advance amount on the Interest Payment Date; provided that the Trustee shall be required to make an Interest Advance only to the extent that the Trustee has determined that such Interest Advance, together with interest thereon at the Advance Interest Rate, would not constitute a Nonrecoverable Advance if made. Such determination by the Trustee shall be made on the same basis that the Servicer would make such determination in Section 7.17(d) hereof. All Carrying Cost Advances shall be made by the Servicer in a timely manner as necessary and in accordance with Accepted Servicing Practices to the extent required under this Section 7.17. If the Servicer fails to fulfill its obligation to make a Carrying Cost Advance, which failure shall constitute an immediate Servicer Default, the Trustee, as successor Servicer, shall make the Carrying Cost Advance; provided that the Trustee shall be required to make a Carrying Cost Advance only to the extent that the Trustee has determined that such Carrying Cost Advance, together with interest thereon at the Advance Interest Rate, would not constitute a Nonrecoverable Advance if made. The Servicer will not be required to make Advances of any principal payable on the Notes, of any Make-Whole Payments, of any Additional Amounts or of any default interest in excess of the regular interest payments owed by the Issuers on the Notes. (b) It is understood that the obligation of the Servicer to make such Advances is mandatory, subject to the limitations set forth in this Indenture, and shall continue to apply after any modification of the Security Documents pursuant to Section 7.3 hereof, beyond the Maturity Date for any Series if a payment default shall have occurred on such date, notwithstanding any other provision of this Indenture, other than the requirement of recoverability, and beyond the insolvency of any Issuer (or any successor Issuer), and shall continue, subject to the requirement of recoverability until the earliest of (i) the payment in full of all amounts due under the Notes and the Security Documents and (ii) the date on which all of the Mortgaged Properties become Liquidated Mortgaged Properties; provided, however, that the obligations of the Servicer to make Advances hereunder are limited to providing a liquidity facility with respect to the Loan and making certain advances with respect to the preservation of the Mortgaged Properties as expressly set forth in this Indenture and do not constitute insurance or any similar credit enhancement with respect to the Loan or the Notes and in no event shall the Servicer be required to advance any Nonrecoverable Advance. (c) Interest on each Advance made by the Servicer or the Trustee will accrue for each day that such Advance is outstanding at a rate of interest equal to the Prime Rate as reported in the Money Rates Section of the Wall Street Journal (the "Advance Interest -110- Rate") as most recently available for such day on the basis of a year of 360 days comprised of twelve (12) thirty (30) day months and the actual number of days elapsed. The Servicer or the Trustee will be entitled to recover interest payable on Advances as set forth in Section 7.6(b)(iii) or Section 5.6(ii), at the Trustee's or the Servicer's option, as applicable. (d) Notwithstanding anything herein to the contrary, the Servicer shall be obligated to make an Advance only to the extent that the Servicer has determined that such Advance, together with interest thereon at the Advance Interest Rate, would not constitute a Nonrecoverable Advance if made. The Servicer is not obligated to advance or pay (i) any principal due on the Notes, (ii) any amounts required to cure a failure of any Mortgaged Property to comply with any law, including any applicable Environmental Law, or to investigate (except in connection with the foreclosure or acquisition of a Mortgaged Property as contemplated by Section 7.7(c)), test, monitor, contain, cleanup or remedy an environmental condition present at a Mortgaged Property, (iii) Uninsured Causes, (iv) the cost of any capital improvements to any Mortgaged Property other than those necessary to prevent an immediate or material loss to the Holder's interest in the Mortgaged Properties or (v) any other payments not specified in this Indenture. (e) The determination by the Servicer that it has made a Nonrecoverable Advance or that any proposed Advance, if made, would constitute a Nonrecoverable Advance, shall be evidenced by a certificate of a Servicing Officer, delivered on or before the related Servicer Advance Date in the case of an Interest Advance or on or before the next Servicer Advance Date in the case of any other Advance, to the Trustee and the Issuers, and detailing the reasons for such determination, which in each case shall be accompanied by copies of any engineers' reports, environmental surveys, other third party reports or other information relevant thereto that were used by the Servicer to support its determination that any Advance would be non-recoverable. The costs of any such reports, surveys or other information used by the Servicer or the Trustee in making the determination that an Advance is or would be a Nonrecoverable Advance shall be an expense of the Holders or shall constitute a Carrying Cost Advance if paid by the Servicer or the Trustee from its own funds. All Advances shall be repaid in the order in which originally advanced, and Advances owed to any prior Servicer shall be repaid in full, with interest, prior to the repayment of Advances made by the successor Servicer; provided, however, that if the Trustee has made an Advance as successor Servicer, it shall be repaid in full, with interest, prior to the repayment of any Advance made by any other Servicer. SECTION VII.18 Rights of the Issuers with Respect to the Servicer. The Servicer shall afford each Issuer, upon reasonable notice, during normal business hours access to all records regarding payments made with respect to the Loan and the Notes and with respect to any Advances made by the Servicer, including those in -111- electronic form, maintained by the Servicer as required hereunder and access to Servicing Officers of the Servicer responsible for such records. Upon request, the Servicer shall furnish the Issuers with the most recent publicly available financial statements of Servicer. The Issuers shall not have any responsibility or liability for any action or failure to act by the Servicer and are not obligated to supervise the performance of the Servicer under this Indenture or otherwise. SECTION VII.19 Limitation on the Liability of the Servicer and Others. (a) Neither the Servicer, nor any of its directors, officers, employees, Affiliates or agents shall be under any liability to the Trustee or the Holders for any action taken or for refraining from the taking of any action in good faith pursuant to this Indenture, or for errors in judgment; provided, however, that this provision shall not protect the Servicer or any such other Person against any breach of warranties or representations made herein or any liability which would otherwise be imposed by reason of willful misfeasance, bad faith or negligence in the performance of duties or by reason of reckless disregard of obligations and duties hereunder. The Servicer and any of its directors, officers, employees, Affiliates or agents may rely in good faith on any document of any kind prima facie properly executed and submitted by any Person respecting any matters arising hereunder. The Servicer, and any of its directors, officers, employees or agents (each, a "Servicer Indemnified Party" and, collectively, the "Servicer Indemnified Parties") shall be indemnified by the Issuers and held harmless against any loss, liability, claim, demand or expense relating to this Indenture, the Loan, the Mortgaged Properties, or the Security Documents, other than any loss, liability or expense incurred by reason of willful misfeasance, bad faith or negligence in the performance of duties hereunder or by reason of reckless disregard of obligations and duties hereunder; provided, however, that if it is found that any such claim or liability has resulted from the bad faith, willful misconduct or negligence of any Servicer Indemnified Party in the performance of its duties hereunder, such Servicer Indemnified Party shall repay such portion of the reimbursed amounts that is attributable to expenses incurred in relation to its act or omission which is the subject of such finding. If any Servicer Indemnified Party is entitled to receive indemnification hereunder with respect to any such action or proceeding brought by a third party, the Issuers shall be entitled to assume the defense of any such action or proceeding with counsel reasonably satisfactory to such Servicer Indemnified Party who shall not, except with the consent of such Servicer Indemnified Party, be counsel to any Issuer. Upon assumption by any Issuer of the defense of any such action or proceeding, such Servicer Indemnified Party shall have the right to participate in such action or proceeding and to retain its own counsel, but the Issuers shall not be liable for any legal fees or expenses subsequently incurred by such Servicer Indemnified Party in connection with the defense thereof unless (i) the Issuers have agreed to pay such fees and expenses or (ii) counsel provided by any Issuer pursuant to the foregoing is counsel to one or more of the Issuers and such Servicer Indemnified Party shall have been advised by such counsel that representation of such Servicer Indemnified Party by such counsel provided by the Issuer -112- pursuant to the foregoing would be inappropriate due to actual or potential conflicting interests between the Issuers and such Servicer Indemnified Party, including situations in which there are one or more legal defenses available to such Servicer Indemnified Party that are different from or additional to those available to any Issuer; provided, however, that the Issuers shall not, in connection with any such action or proceeding, or separate but substantially similar actions or proceedings arising out of the same general allegations, be liable for the fees and expenses of more than one separate firm of attorneys at any time, in addition to any local counsel, for all such Servicer Indemnified Parties. No Issuer shall consent to the terms of any compromise or settlement of any action defended by any Issuer in accordance with the foregoing without the prior consent of the Servicer Indemnified Party. No Issuer shall be required to indemnify any Servicer Indemnified Party for any amount paid or payable by such Servicer Indemnified Party in settlement of any action, proceeding or investigation without the prior written consent of the Issuers, which consent shall not be unreasonably withheld. Promptly after receipt by any Servicer Indemnified Party of notice of its involvement (or the involvement of any of its affiliates or such affiliate's directors, officers, shareholders, agents or employees) in any action, proceeding or investigation, such Servicer Indemnified Party shall, if a claim for indemnification in respect thereof is to be made against any Issuer hereunder, notify the Issuers in writing of such involvement, but the failure of such Servicer Indemnified Party to provide such notice shall neither cause the forfeiture of the right to receive indemnity hereunder nor limit such right, except to the extent, if any, that any Issuer is prejudiced by the failure of the Servicer Indemnified Party to promptly give such notice. The Servicer shall not be under any obligation to appear in, prosecute or defend any legal action which is not incidental to its duties under this Indenture and which in the Servicer's opinion may involve it in any expense or liability; provided, however, that the Servicer may, in its discretion, undertake any such action which it may deem necessary or desirable in respect of this Indenture and the rights and duties of the parties hereto and the interests of the Holders hereunder. In such event, the legal expenses and costs of such action and any liability resulting therefrom shall be expenses, costs and liabilities of the Issuers. The indemnification provided herein is limited in each case to direct damages and does not extend to consequential damages. (b) The Servicer agrees, with respect to its actions and omissions and those of its agents (but, not with respect to the actions or omissions of any other Person), to indemnify the Trustee, and the Holders, and hold them harmless against any and all claims, losses, penalties, fines, forfeitures, legal fees and related costs, judgments, and any other costs, liabilities, fees and expenses (including reasonable attorneys' fees) that the Trustee and/or the Holders may sustain in connection with this Indenture related to the willful misconduct, bad faith and/or negligence by the Servicer or its agents, in the performance of duties by the Servicer or its agents hereunder or by reason of reckless disregard of obligations and duties by the Servicer or its agents, as the case may be, except that the Servicer shall not be liable for losses (i) that arise from events occurring or conditions -113- existing prior to the date of this Indenture; (ii) which were known to the Trustee but not disclosed to the Servicer and as to which an employee or agent of the Servicer performing the duties of the Servicer hereunder did not otherwise have knowledge, unless such failure to have such knowledge resulted from such Person's negligence, bad faith or misfeasance; (iii) which are caused by Servicer's inability to perform because of the unavailability of funds in the Collection Account or the Payment Account or because any Advance would be a Nonrecoverable Advance; or (iv) which are caused by any action or inaction taken by the Servicer in accordance with the express recommendation or at the direction of Trustee; provided, that such indemnity is limited to direct damages and shall not cover consequential damages. The Trustee shall immediately notify the Servicer if a claim is made with respect to this Indenture or the Loan entitling the Trustee or the Holders to indemnification hereunder, whereupon the Servicer shall assume the defense of any such claim (with counsel reasonably satisfactory to the Trustee) and pay all expenses in connection therewith, including counsel fees, and promptly pay, discharge and satisfy any judgment or decree which may be entered against it or them in respect of such claim. Any failure to so notify the Servicer shall not affect any rights the Trustee or the Holders may have to indemnification under this Indenture or otherwise except to the extent the Servicer is prejudiced by such failure. Such indemnity obligation shall survive the termination of the Trustee and the Servicer hereunder and the termination of this Indenture. The Servicer shall not be required to indemnify the Trustee and the Holders for any amount paid or payable by either of them in settlement of any action, proceeding or investigation without the prior written consent of the Servicer, which consent shall not be unreasonably withheld. (c) The Issuers shall, consistent with the provisions set forth in Section 6.1(a)(1) and Section 7.19(a) hereof, defend, indemnify and hold harmless the Servicer Indemnified Parties and the Trustee Indemnified Parties, against any and all claims, losses, penalties, fines, forfeitures, legal fees and related costs, judgments and any other costs fees and expenses that the Servicer Indemnified Parties or Trustee Indemnified Parties may sustain in connection with lawsuits brought by third parties based upon actions taken by the Servicer or Trustee pursuant to or in furtherance of this Indenture and the servicing of the Loan, other than the making of Advances; provided, however, that in no event shall the Servicer or Trustee be indemnified or held harmless under this Section 7.19(c) with respect to consequential damages or from its own negligent actions or omissions or its willful misconduct. Any payment made by any Issuer under this Section 7.19(c) shall not be part of the Collateral. SECTION VII.20 Servicer Not to Resign; Termination of Servicer by Holders. (a) Subject to the provisions of Section 7.21, the Servicer shall not resign from its obligations and duties hereby imposed on it, except upon determination that its duties hereunder are no longer permissible under applicable law or are in material conflict with -114- applicable law. Any such determination permitting the resignation of the Servicer must be evidenced by an Opinion of Counsel to such effect obtained by the Servicer (at the Servicer's expense) and delivered to the Trustee and the Issuers. No resignation by the Servicer under this Indenture shall become effective until the Trustee, in accordance with Section 6.20 hereof, or a successor Servicer shall have assumed the Servicer's responsibilities and obligations. The Servicer may assign its rights and delegate its duties hereunder to a directly or indirectly wholly owned subsidiary of the Servicer provided such assignment is consented to in writing by the Trustee (which consent shall not be unreasonably withheld). (b) Upon the occurrence and continuance of a Servicer Default, the Holders of Notes evidencing, in the aggregate, no less than 66 2/3% of the Outstanding aggregate principal amount of the Notes may terminate the Servicer under this Indenture and replace the Servicer with a successor servicer having the qualifications set forth in Section 7.25; provided, however, that such replacement shall not terminate any rights (including rights to any amounts owed to the Servicer under this Indenture or any other Security Documents) and obligations accrued prior to such replacement and provided, further, that the Holders shall not be entitled to terminate the Servicer under this Section 7.20(b) unless the successor servicer reimburses the Servicer for all outstanding unreimbursed Advances made by the Servicer and interest thereon, whereupon such successor servicer shall be entitled to reimbursement of such Advances from the Collateral pursuant to this Indenture to the same extent as the prior Servicer would have otherwise been entitled. In connection with any termination and replacement of the Servicer, the Trustee shall make such arrangements for the compensation of the successor servicer as it shall deem reasonable and, if such compensation is in excess of the compensation being paid the Servicer hereunder, such compensation shall be approved by the Holders of no less than 66 2/3% of the Outstanding aggregate principal amount of the Notes and, if no Event of Default has occurred and is continuing, each Issuer; provided that if the Holders select a successor Servicer the Holders will also be responsible for negotiating the compensation to be paid to such successor Servicer in accordance with the foregoing. SECTION VII.21 Merger or Consolidation of the Servicer. The Servicer shall keep in full effect its existence and rights as a corporation or other entity, as the case may be, under the laws of the jurisdiction of its organization, and shall be in compliance with the laws of the State of New York and any other State in which any Mortgaged Property is located to the extent necessary to perform its duties under this Indenture. Any Person into which the Servicer may be merged or consolidated, or any Person resulting from any merger or consolidation to which the Servicer shall be a party, or any Person succeeding to substantially all business of the Servicer, shall be a permitted successor of the Servicer hereunder and shall be deemed to have assumed all of the -115- liabilities and obligations of the Servicer hereunder without the execution or filing of any paper or any further act on the part of any of the parties hereto (other than such Person), anything herein to the contrary notwithstanding; so long as (i) the successor or surviving Person to the Servicer shall agree in writing to service the Loan in accordance with this Indenture, (ii) such successor has been affirmed by Rating Confirmation and (iii) such successor shall not in the reasonable opinion of the Trustee be unable to perform the duties of Servicer hereunder in at least the same manner as the Servicer. SECTION VII.22 Servicer Default. "Servicer Default," wherever used herein, means any one of the following events (whatever the reason for such Servicer Default and whether it is voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (i) any failure by the Servicer to remit to the Trustee (including deposits to the Payment Account) any Advance or any other payment required to be so made or remitted by it under the terms of this Indenture; or (ii) any failure by the Servicer to observe or perform in any material respect any other of the Servicer's covenants or agreements contained in this Indenture, which failure shall continue unremedied for a period of thirty (30) days (except that such number of days shall be fifteen (15) in the case of a failure to pay the premium for any insurance policy required to be maintained under the Mortgage as required hereunder) after the date on which written notice of such failure shall have been given to the Servicer by the Trustee; or (iii) a representation or warranty of the Servicer set forth in this Indenture shall prove to be incorrect as of the time made in any respect that materially and adversely affects the interests of the Holders, and the circumstances or condition in respect of which such representation or warranty was incorrect shall not have been eliminated or cured within thirty (30) days after the date on which written notice thereof shall have been given to the Servicer by the Trustee; or (iv) the entry of a decree or order of a court or agency or supervisory authority having jurisdiction in the premises for the appointment of a conservator, receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings against the Servicer, or for the winding-up or liquidation of the Servicer's affairs, and such decree or order remains unstayed and in effect for a period of sixty (60) days; or (v) the consent by the Servicer to the appointment of a conservator or receiver or liquidator or liquidating committee in any insolvency, readjustment of -116- debt, marshalling of assets and liabilities, voluntary liquidation or similar proceedings of or relating to the Servicer or of or relating to all or substantially all of its property; or (vi) any failure of the Servicer to make any Advance required to be made from its own funds pursuant to Section 7.17; or (vii) the reduction, qualification or withdrawal by the Rating Agency of the outstanding rating of any Series of the Notes because the existing or prospective financial condition or mortgage loan servicing capability of the Servicer (taking into account the availability of the Trustee as a "backup servicer" hereunder) is insufficient to maintain such outstanding rating. If (A) a Servicer Default due to any action or inaction of the Servicer shall occur, (B) any of the representations or warranties of Servicer are breached in any material respect and, as a result thereof, a Servicer Default occurs, or (C) the Servicer fails to carry out any other of its obligations under this Indenture and, as a result thereof, a Servicer Default occurs or (D) a Servicer Default occurs under clause (vii) above, then, and in each and every such case, so long as such Servicer Default, breach, or other failure shall not have been remedied, the Trustee either (i) may, or (ii) shall, upon the written direction of the Holders of Notes evidencing, in the aggregate, not less than 66 2/3% of the Outstanding principal amount of the Notes, terminate all of the rights and obligations of the Servicer hereunder other than rights (including rights to any amounts owed to it under this Indenture) and obligations accrued prior to such termination by notice in writing to the Servicer (with a copy to the Rating Agency). Upon any termination of the Servicer or appointment of a successor to the Servicer, the Trustee shall, as soon as practicable, give written notice thereof to the Issuers, the Rating Agency and the Holders. Any failure by the Servicer to make an Advance required to be made by it pursuant to Section 7.17 shall constitute an immediate Servicer Default which shall entitle the Trustee immediately to succeed to the rights of the Servicer with respect to any such Advance. If a Responsible Officer of the Trustee shall obtain knowledge of any Servicer Default hereunder, the Trustee shall immediately notify the Servicer of the occurrence of such Servicer Default. Upon the occurrence and continuation of any Servicer Default hereunder known to a Responsible Officer of the Trustee for more than ten (10) Business Days after notice thereof to the Servicer, the Trustee shall give the Rating Agency and the Issuers written notice of the occurrence thereof. Within sixty (60) days after a Responsible Officer of the Trustee obtains actual knowledge of the occurrence of any Servicer Default, the Trustee shall transmit by mail to all Holders notice of such Servicer Default, unless such Servicer Default shall have been cured or waived. On or after the receipt by the Servicer of written notice of termination, all authority, power and obligations of the Servicer under this Indenture (other than its -117- capacity, if any, as a Holder) shall pass to and be vested in the Trustee in its capacity as successor Servicer hereunder pursuant to and under this Section including, without limitation, the obligation to make Advances hereunder pursuant to Section 7.17. The Servicer agrees to provide to the Trustee promptly (and in any event no later than five Business Days subsequent to such notice) all documents and records, including those in electronic form, requested by it to enable it to assume the Servicer's obligations hereunder, and to cooperate with the Trustee in effecting the termination of the Servicer's responsibilities and rights hereunder, including, without limitation, the transfer within one Business Day to the Trustee or its duly appointed agent or any successor appointed by it for administration by it of all cash and other securities then held in the Collection Account and any other cash received by the Servicer under the Loan or the Security Documents and which shall at the time have been or should have been credited by the Servicer to the Payment Account or thereafter received with respect to the Loan (provided, however, that notwithstanding anything to the contrary in this Section, the Servicer shall continue to be entitled to receive all amounts accrued or owing to it under this Indenture on or prior to the date of such termination, whether in respect of Advances or otherwise in accordance with the terms hereof). All reasonable costs and expenses (including attorneys' fees) incurred by the Trustee, any Issuer or the Holders in connection with the appointment of a successor Servicer, including, but not limited to, transferring originals of the Security Documents to the successor Servicer and, if applicable, amending this Indenture to reflect such succession as Servicer pursuant to this Section shall be paid by the predecessor Servicer upon presentation of reasonable documentation of such costs and expenses to the Trustee. If not paid by the predecessor Servicer within sixty (60) days after the request therefor, such costs and expenses shall be advanced by the Issuers, who shall then be entitled to reimbursement therefor from the predecessor Servicer. SECTION VII.23 Remedies of Trustee. During the continuance of any Servicer Default and so long as such Servicer Default shall not have been remedied, the Trustee, in addition to the rights specified in Section 7.22 and elsewhere in this Indenture, shall have the right, in its own name as trustee of an express trust, to take all actions now or hereafter existing at law, in equity or by statute to enforce its rights and remedies and to protect the interests, and enforce the rights and remedies, of the Holders (including the institution and prosecution of all judicial, administrative and other proceedings and the filing of proofs of claim, debt and other papers in connection therewith). Except as otherwise expressly provided in this Indenture, no remedy provided for by this Indenture shall be exclusive of any other remedy, and each and every remedy shall be cumulative and in addition to any other remedy and no delay or omission to exercise any right or remedy shall impair any such right or remedy or shall be deemed to be a waiver of any Servicer Default. SECTION VII.24 Directions by Holders and Duties of Trustee During Servicer Default. During the continuance of any Servicer Default, Holders of Notes evidencing, in the aggregate, not less than a majority of the Outstanding principal of the -118- Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture; provided, however, that the Trustee shall be under no obligation to pursue any such remedy, or to exercise any of the trusts or powers vested in it by this Indenture (including, without limitation, (i) the conducting or defending of any administrative action or litigation hereunder or in relation hereto, and (ii) the terminating of the Servicer or any successor Servicer from its rights and duties as Servicer hereunder) at the request, order or direction of any of the Holders, unless such Holders shall have offered the Trustee security or indemnification satisfactory to the Trustee against the costs, expenses and liabilities which may be incurred therein or thereby and, provided, further, that the Trustee shall have the right to decline to follow any such direction if the Trustee determines that the action or proceeding so directed may not lawfully be taken (such determination to be evidenced by an Opinion of Counsel obtained by the Trustee and delivered to the Holders of the Notes making such direction, with a copy to the Servicer and the Issuers; the cost of such Opinion of Counsel to be payable by the Issuers in accordance with Section 6.5) or if the Trustee in good faith determines that the action or proceeding so directed would involve it in personal liability or be unjustly prejudicial to the non-assenting Holders. SECTION VII.25 Trustee to Act as Servicer; Appointment of Successor. (a) On and after the time the Servicer receives a notice of termination pursuant to Section 7.22 or the Trustee receives the resignation of the Servicer in accordance with Section 7.20(a), the Trustee shall be the successor in all respects to the Servicer in its capacity as Servicer under this Indenture and the transactions set forth or provided for herein and shall have all the rights and powers and be subject to all the responsibilities, duties and liabilities relating thereto placed on the Servicer accruing after such termination other than those responsibilities, duties and liabilities of the Servicer arising under Section 7.28; provided, however, that any failure to perform such duties or responsibilities caused by the Servicer's failure to comply with Section 7.22 shall not be considered a default by the Trustee hereunder. In its capacity as such successor, the Trustee shall have the same limitation of liability herein granted to the Servicer. As compensation therefor, the Trustee shall be entitled to such compensation as the Servicer would have been entitled to hereunder if no such notice of termination or resignation had been given, including, without limitation, the fees payable under the Servicer Fee Agreement. Notwithstanding anything contained herein, the Trustee may, if it shall be unwilling to so act, or shall, if it is unable to so act, appoint, any established financial institution or mortgage servicing institution which, (i) is then rated (A) by the Rating Agency as having a long term debt rating at least equal to Aa3 (or equivalent), (ii) shall be affirmed pursuant to a Rating Confirmation, (iii) has a net worth of not less than $15,000,000 and (iv) has been consented to in writing by each Issuer, such consent not to be unreasonably withheld, as the successor to the Servicer hereunder in the assumption of all or any part of the responsibilities, duties or liabilities of the Servicer hereunder; provided, however, that until such appointment and assumption, the Trustee will continue to perform the servicing -119- obligations pursuant to this Indenture to the extent set forth above. In connection with any such appointment and assumption, the Trustee may make such arrangements for the compensation of such successor as it and such successor shall agree; provided, however, that no such compensation shall be in excess of that permitted the Servicer hereunder unless approved by each Issuer and the Holders of no less than 66 2/3 of the Notes. In the event that no successor Servicer has been appointed as provided above, the Trustee shall solicit, by public announcement, bids from commercial finance institutions, banks and mortgage servicing institutions meeting the qualifications set forth above. Within sixty (60) days after any such public announcement, the Trustee shall negotiate and effect the sale, transfer and assignment of the servicing rights and responsibilities hereunder to the qualified party submitting the highest satisfactory bid. The Trustee shall deduct all costs and expenses of any public announcement and of any sale, transfer and assignment of the servicing rights and responsibilities hereunder from any sum received by the Trustee from the successor to the Servicer in respect of such sale, transfer and assignment. After such deductions, the remainder of such sum shall be paid by the Trustee to the Servicer at the time of such sale, transfer and assignment to the Servicer's successor, net of any amounts due from the Servicer hereunder, which shall be deposited in the Payment Account. If no successor servicer shall have been so appointed and have accepted appointment within sixty (60) days after the Trustee receives the resignation of the Servicer in accordance with Section 7.20, the Trustee may petition any court of competent jurisdiction for the appointment of a successor servicer in accordance with the procedures and terms set forth above. The Trustee, the Issuers, the Servicer and such successor shall take such action, consistent with this Indenture, as shall be necessary to effectuate any such succession. Neither the Trustee nor any successor Servicer shall be deemed to be in default of any of its obligations under this Section if and to the extent that such default arises from failure of the Servicer to timely provide all applicable books, records and other documents necessary to effectuate the sale, transfer or assignment of servicing rights to the Trustee or a successor Servicer in accordance with this Section. (b) Any successor, including the Trustee, to the Servicer as servicer hereunder shall during the term of its service as servicer maintain in force (i) a policy or policies of insurance covering errors and omissions in the performance of its obligations as mortgage servicer hereunder, and (ii) a fidelity bond in respect of its officers, employees and agents to the same extent that the Servicer is required pursuant to Section 7.5(b). (c) Notwithstanding any other provision of this Indenture, no Person (other than the Trustee) shall be appointed as a successor Servicer if such appointment, in and of itself, would result in a downgrading or withdrawal of the then-current rating assigned to any Note by the Rating Agency. SECTION VII.26 Notification to Holders. -120- (a) Upon any termination of the Servicer or appointment of a successor to the Servicer, in each case as provided herein, the Trustee shall as soon as practicable give written notice thereof to the Rating Agency, to the Issuers and to the Holders at their respective addresses appearing in the Register. (b) Any notification to Holders required pursuant to Section 7.24(a) or Section 7.22, shall advise the Holders of their rights hereunder, including, if applicable, their rights pursuant to item (ii) of the second paragraph of Section 7.22. SECTION VII.27 Waiver of Past Events of Default. Either the Trustee or the Holders of Notes evidencing, in the aggregate, not less than 66 2/3% of the Outstanding Principal of the Notes may, on behalf of all Holders of Notes, waive any Servicer Default hereunder and its consequences; provided, that in the absence of written instructions from all Holders the Trustee shall not waive any Servicer Default (i) consisting of the failure to remit or deposit any interest on the Notes as required by it hereunder, or the failure of the Servicer to make any Advance as required hereunder, or (ii) in respect of a covenant or provision hereunder that under Article IX hereof cannot be modified or amended without the consent of each Holder. Upon any such waiver of a past default, such default shall cease to exist, and any Servicer Default arising therefrom shall be deemed to have been remedied for every purpose of this Indenture. No such waiver shall extend to any subsequent or other default or impair any right consequent thereon. SECTION VII.28 Representations and Warranties of the Servicer. The Servicer hereby represents and warrants to the other parties hereto that as of the Closing Date: (i) the Servicer has been duly organized and is validly existing under the laws of the state of its organization and is in compliance with the laws of the State of New York and each other jurisdiction in which any Mortgaged Property is located to the extent necessary to perform its obligations in accordance with the terms of this Indenture; (ii) the execution and delivery of this Indenture by the Servicer have been duly authorized by all necessary action on the part of the Servicer and its general partner; the Servicer is duly authorized under applicable law, its certificate of limited partnership and its limited partnership agreement to perform its obligations under this Indenture and all action necessary or required therefore has been duly and effectively taken or obtained; none of the execution, delivery and performance of this Indenture, or the consummation of the transactions herein contemplated, nor the compliance with the provisions hereof, in each case by the Servicer will conflict with or result in a breach of or constitute a default under (A) the terms of any material agreement or instrument to which the Servicer is a party or by which it is bound; (B) the certificate -121- of limited partnership or limited partnership agreement of the Servicer; or (C) to the Servicer's knowledge, the provisions of any law, governmental rule, regulation, judgment, decree or order binding on the Servicer or its properties, which conflict, breach or default in the case of clause (A) or clause (C) materially and adversely affects or to the knowledge of the Servicer may in the future materially and adversely affect (X) the ability of the Servicer to perform its obligations under this Indenture or (Y) the business, operations or financial condition of the Servicer; neither the Servicer nor any of its Affiliates is a party to, bound by, or in breach of or in violation of any material indenture or other agreement or instrument, or subject to or in violation of any statute, order or regulation of any court, regulatory body, administrative agency or governmental body having jurisdiction over it, which materially and adversely affects or to the knowledge of the Servicer may in the future materially and adversely affect (X) the ability of the Servicer to perform its obligations under this Indenture or (Y) the business, operations or financial condition of the Servicer; (iii) the execution and delivery by the Servicer of this Indenture and the consummation by the Servicer of the transactions contemplated hereby do not require any consent, approval, authorization, order, registration or qualification of or with any court or any regulatory authority or other governmental agency or body required for the execution, delivery and performance by Servicer of this Indenture, except such as has been obtained and is in full force and effect; (iv) this Indenture has been duly executed and delivered by the Servicer and, assuming due authorization, execution and delivery by the other parties hereto, constitutes a valid and legally binding obligation of the Servicer, enforceable against it in accordance with its terms, subject to (A) applicable bankruptcy, fraudulent conveyance or transfer, insolvency, reorganization, moratorium or similar laws of general applicability relating to or affecting the rights and remedies of creditors generally and (B) the application of principles of equity (regardless of whether considered and applied in a proceeding in equity or at law); (v) there are no actions, suits or proceedings pending or, to the Servicer's knowledge, threatened against the Servicer, before or by any court, administrative agency, arbitrator or governmental body (A) with respect to any of the transactions contemplated by this Indenture or (B) with respect to any other matter which could, if determined adversely to the Servicer, materially and adversely affect the Servicer's (x) business, operations or financial condition or (y) ability to perform its obligations under this Indenture; and (vi) the Servicer is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or governmental agency, which default might have consequences that would materially and adversely affect the Servicer's business, operations or financial condition or might -122- have consequences that would materially and adversely affect the Servicer's ability to perform its obligations hereunder. Within thirty (30) days of the earlier of discovery by the Servicer or receipt of notice by the Servicer of the breach of any representation or warranty of the Servicer set forth in this Section 7.28, the Servicer shall cure such breach in all material respects. ARTICLE VIII THE ISSUERS SECTION VIII.1 Reports by the Issuers. (a) The Issuers shall, at the expense of the Issuers, promptly deliver to the Trustee and the Servicer, for distribution to the Rating Agency and, where applicable under Section 6.17, the Initial Purchasers, Holders and owners of beneficial interests in the Notes, copies of all reports and statements to be prepared hereunder and under the Mortgage including, without limitation, the Rule 144A Information as required under Section 3.14. (b) If any Notes are listed on the Luxembourg Stock Exchange, the Trustee shall, promptly after receipt of any annual and quarterly financial statements of the Issuers required to be provided by the Issuers under the terms of the Mortgage, deliver the same to the Luxembourg Stock Exchange. SECTION VIII.2 Representations and Warranties of the Issuers. (a) The Issuers hereby collectively represent and warrant to the other parties hereto that as of the Closing Date: (i) each Issuer is a limited liability company, limited partnership or other entity (as applicable), duly organized or formed (as applicable), validly existing and in good standing under the laws of the jurisdiction in which it was organized or formed, with full power and authority to own the Mortgaged Property described on Exhibit A hereto as being owned by such Issuer to carry on its business relating to such Mortgaged Property as presently conducted and to enter into and perform its obligations under the Notes, this Indenture and the other Security Documents to which it is a party; (ii) the execution and delivery of the Notes, this Indenture and the other Security Documents to which it is a party by each Issuer have been duly authorized by all necessary action on the part of each such Issuer; neither the execution, delivery and performance of the Notes, this Indenture and the other Security Documents, nor -123- the consummation of the transactions herein or therein contemplated, nor the compliance with the provisions hereof or thereof, will conflict with or result in a breach of, or constitute a default under (A) the terms of any material agreement or instrument to which any Issuer is a party or by which it is bound; (B) the operating agreement, partnership agreement, charter and by-laws or other comparable organizational documents (as applicable) of any Issuer; or (C) to the knowledge of any Issuer, the provisions of any law, governmental rule, regulation, judgment, decree or order binding on any of the Issuers or any Mortgaged Property; none of the Issuers or any of their respective Affiliates is a party to, bound by, or in breach of or in violation of any indenture or other agreement or instrument, or subject to or in violation of any statute, order or regulation of any court, regulatory body, administrative agency or governmental body having jurisdiction over it, which, in any such case, would reasonably be expected to have a material adverse effect on any Issuer's ability to perform its obligations under this Indenture or the other Security Documents to which such Issuer is a party; (iii) to each Issuer's knowledge, no consent, approval, authorization, order, registration or qualification of or with any court or any regulatory authority or other governmental agency or body required for the execution, delivery and performance by the Issuers of their obligations under the Notes, this Indenture or the other Security Documents, except such as has been obtained and is in full force and effect; (iv) each of the Notes, this Indenture and each of the other Security Documents have been duly executed and delivered by each Issuer (to the extent it is a party thereto) and, assuming due authorization, execution and delivery by the other parties hereto or thereto, as applicable, constitutes a valid and legally binding obligation of each Issuer enforceable against it in accordance with its terms, except as such enforcement may be limited by bankruptcy, fraudulent conveyance or transfer, insolvency, reorganization, receivership, moratorium or other similar laws relating to or affecting the rights of creditors generally, and by general equity principles (regardless of whether such enforcement is considered in a proceeding in equity or at law); (v) there are no actions, suits or proceedings pending or, to the knowledge of any of the Issuers, threatened against any Issuer, before or by any court or other governmental body (A) with respect to any of the transactions contemplated by this Indenture or any other Security Document or (B) with respect to any other matter which could, if determined adversely to any Issuer, materially and adversely affect its ability to perform its obligations under the Notes, this Indenture and the other Security Documents to which it is a party. -124- Commencing upon the earlier of discovery by any Issuer or receipt of notice by the Issuers of a breach of any representation or warranty set forth in this Section 8.2, the Issuers shall diligently cure such breach in all material respects. ARTICLE IX SUPPLEMENTAL INDENTURES; AMENDMENTS SECTION IX.1 Supplemental Indentures or Amendments Without Consent of Holders. Without the consent of any Holders, the Issuers, when authorized by their respective Boards of Directors, the Servicer (it being understood that the Servicer's signature shall not be required for any such supplement or amendment unless the supplement or amendment restricts or impairs the rights of the Servicer hereunder in any material respect) and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, or one or more amendments hereto or to the Notes, and the Issuers and the Trustee may enter into any amendments to the Security Documents (other than the Mortgage, the amendment of which is governed by Article 53 thereof), in form satisfactory to the Trustee and the Servicer (it being understood that the Servicer's signature or approval, as applicable, shall not be required for any such amendment to any such Security Document unless the amendment restricts or impairs the rights of the Servicer thereunder in any material respect), for any of the following purposes: (1) to evidence the succession of one or more Persons as the Issuers and the assumption by (subject to Section 1.12 and Section 1.14) any such successors of the covenants of the Issuers herein and in the Notes if such succession and assumption are effected in accordance with Article XIV; or (2) to add to the covenants of the Issuers for the benefit of the Holders of the Notes or to surrender any right or power herein conferred upon any Issuer, provided such surrender shall not adversely affect the interests of the Holders of the Notes; or (3) to add any additional Events of Default, provided such action shall not adversely affect the interests of any Holder of the Notes; or (4) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee; or (5) to cure any ambiguity, or to cure, correct or supplement any defective or inconsistent provision herein, in the Notes, or in any Security Document, provided such action shall not adversely affect the interests of the Holders of the Notes; or -125- (6) to provide for the issuance of Additional Notes (or the increase in the principal amount of any of the Global Notes) secured by the Collateral that are either senior to, pari passu in right of payment with or subordinate to the Notes of any other Class of Notes issued hereunder, and to add to, change or eliminate any of the provisions of this Indenture solely in respect of or otherwise necessary in connection with the issuance of such Additional Notes; provided, however, that any such issuance of Additional Notes shall be subject to the conditions precedent that: (i) such Additional Notes may only be issued after the Issuers have redeemed some portion of the 2004 Fixed Rate Notes being issued under this Indenture on the date hereof (or simultaneous with such a redemption); (ii) such Additional Notes shall mature on November 15, 2007; (iii) at the time of issuance of such Additional Notes, no Event of Default shall have occurred and be continuing; (iv) immediately after the issuance of any such Additional Notes, the Debt Service Coverage Ratio shall be at least equal to 1.4:1; (v) the Additional Notes may rank (in right of payment as set forth in Section 5.6) junior to, pari passu with or senior to the Notes of any Series, provided that Additional Notes (a) shall not rank senior in right of payment to the Notes of the highest rated Series that will be Outstanding immediately after the issuance of such Additional Notes and (b) shall have been assigned a minimum rating of Baa3 or higher by the Rating Agency; (vi) the Trustee shall have received written confirmation from the Rating Agency that the issuance of such Additional Notes, in and of itself, will not cause the rating on any Series of Notes intended to be outstanding after such issuance to be rated below the rating level assigned to such Notes on the date of this Indenture (it being understood that the Issuers will pay any fees the Rating Agency may charge in connection with their review and approval of such confirmation); (vii) the Issuer may not issue Additional Notes more than once in any period of twelve consecutive months; and (viii) the Issuers shall have provided evidence satisfactory to the Servicer (which may include, among other things, opinions of counsel or additional title insurance coverage) that the lien of the mortgage will secure the Additional Notes and that either (i) such lien will have the same priority over other encumbrances on each Mortgaged Property as the mortgage lien that secures the then-outstanding Notes -126- or (ii) such lien will not, at the time of the issuance of the Additional Notes, be impaired by any intervening liens. SECTION IX.2 Supplemental Indentures With Consent of Holders . With the consent of the Holders of not less than 66 2/3% in aggregate principal amount of the Outstanding Notes, each Issuer, when authorized by its respective Board of Directors, the Servicer (it being understood that the Servicer's signature shall not be required for any such supplement or amendment unless the supplement or amendment restricts or impairs the rights of the Servicer hereunder in any material respect) and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding to any provisions of or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of the Notes under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Note adversely affected thereby, (1) change the Maturity Date of, the principal of, or the due date or amount of any Interest Installment on, any Note, or reduce the principal amount thereof or the rate of interest thereon or change any obligation of any Issuer to pay Make-Whole Payments pursuant to Section 11.1, or change any obligation of any Issuer to pay Additional Amounts pursuant to Section 10.4, or change the coin or currency in which any Note or interest or Additional Amounts thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Maturity Date thereof (or, in the case of redemption, on or after the Redemption Date), or (2) reduce the percentage in principal amount of the Outstanding Notes, the consent of whose Holders is required for any supplemental indenture, or the consent of whose Holders is required for any waiver of compliance with certain provisions of this Indenture or for any other reason under this Indenture or reduce the requirements of Section 13.4 for quorum or voting, or (3) change any obligation of any Issuer to maintain an office or agency in the places and for the purposes specified in Section 10.2, or (4) modify any of the provisions of this Section or Section 5.13, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Note affected thereby, or (5) except as otherwise expressly provided in this Indenture or in the Mortgage, deprive any Holder of the benefit of a first priority security interest in the Mortgaged Properties. -127- In connection with the execution of any such supplemental indenture, the Issuers shall obtain and deliver to the Trustee an Opinion of Counsel from counsel experienced in federal income tax matters that the execution of such supplemental indenture will not result in the Notes being treated as having been exchanged for new notes pursuant to Section 1001 of the Code, provided that no such Opinion of Counsel shall be required if such Opinion of Counsel cannot be obtained and that fact is disclosed to the Holder of each Outstanding Note whose consent is required hereunder. It shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. SECTION IX.3 Delivery of Supplements. Promptly after the execution by each Issuer and the Trustee of any supplemental indenture pursuant to the provisions of Section 9.2, the Issuers shall mail, first class postage prepaid, a notice to each Holder at the address for such Holder set forth in the Register setting forth in general terms the substance of such supplemental indenture or amendment. Any failure of the Issuers to mail such a notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. The Trustee also shall mail, first class postage prepaid, a conformed copy of such supplement to the Rating Agency. Any failure of the Trustee to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. SECTION IX.4 Opinion of Counsel. If the Trustee determines in the exercise of its good faith judgment that it has doubt as to whether a proposed amendment or supplement to this Indenture is permitted under the terms of Section 9.1 or 9.2 above, the Trustee may require, as a condition to its executing any such amendment or supplement, that the Issuers deliver, at no expense to the Trustee, an Opinion of Counsel confirming that the amendment or supplement in question is permitted under the relevant Section of this Article IX, it being understood that the Trustee does not have any affirmative obligation to request such an opinion. ARTICLE X COVENANTS; WARRANTIES SECTION X.1 Payment of Principal and Interest. The Issuers collectively covenant and agree for the benefit of the Holders of the Notes that they will duly and punctually pay the principal of, and interest (including -128- Additional Amounts, if any, and Make-Whole Payments, if any) on, the Notes and any fees due and payable in accordance with the terms of the Notes and this Indenture. SECTION X.2 Maintenance of Office or Agency. The Issuers will maintain or cause to be maintained an office or agency in the continental United States where notices and demands to or upon any Issuer in respect of the Notes and this Indenture may be served. The Issuers will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Issuers shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Issuers hereby appoint the Trustee as its agent to receive such respective notices and demands. The Issuers may also from time to time designate one or more other offices or agencies outside the United States where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve any Issuer of its obligation to maintain an office or agency in accordance with the requirements set forth in the preceding paragraph. The Issuers will give prompt written notice to the Trustee and prompt notice to the Holders, in accordance with the provisions of Section 1.6, of any such designation or rescission and of any change in the location of such office or agency. SECTION X.3 Paying Agents; Transfer Agent; Money for Note Payments to be Held in Trust. The Trustee hereby appoints (on behalf of each Issuer) itself, at its Corporate Trust Office, as Paying Agent, Transfer Agent and listing agent in connection with the Notes. The foregoing appointments may be rescinded at any time by the Issuers giving notice thereof to the Trustee. The Issuers may have more than one Paying Agent and Transfer Agent for the Notes at any time, and the Paying Agent and the Transfer Agent may be the same person. Prior to 11:00 a.m. (New York time) on the date immediately preceding each due date of the principal of or interest on any Notes, the Trustee shall transfer funds from the Payment Account, to the extent funds are available therefor, to the Principal Paying Agent in an amount sufficient to pay when due the principal of or interest (and Make-Whole Payment, if any) on the Notes so becoming due, such funds to be held in trust for the benefit of the Persons entitled to such principal, Make-Whole Payment, if any, and interest. All payments made by the Trustee in its capacity as a Paying Agent, will be made by wire transfer to such account as a Holder shall designate by written instructions to be received by the Trustee no less than five (5) Business Days prior to the applicable Regular Record Date or Special Record Date). -129- The Issuers will cause any Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will: (1) hold all sums held by it for the payment of the principal of and interest (and Make-Whole Payment, if any) on the Notes in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (2) give the Trustee notice of any default by any Issuer (or any other obligor upon the Notes) in the making of any payment of principal of or interest (and Make-Whole Payment, if any) on the Notes; and (3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. The Issuers may, at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Issuer Order direct the Paying Agent (if other than the Trustee or any Issuer) to pay, to the Trustee all sums held in trust by the Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Paying Agent; and, upon such payment by the Paying Agent to the Trustee, the Paying Agent shall be released from all further liability with respect to such money. SECTION X.4 Withholding; Payment of Additional Amounts. (a) In respect of the Notes held by United States Aliens, at least ten (10) days prior to the first date of payment of interest on such Notes and at least ten (10) days prior to each date, if any, of payment of principal or interest thereafter, the Issuers will furnish the Trustee and each other Paying Agent with a certificate of an Authorized Person instructing the Trustee and each other Paying Agent whether such payment of principal of or any interest on such Notes shall be made without deduction or withholding for or on account of any tax, assessment or other governmental charge. If any such deduction or withholding shall be required, then such certificate shall specify, by country, the amount, if any, required to be withheld on such payment to Holders of such Notes, and the Issuers will pay or cause to be paid to the Trustee (or, if applicable, directly to a Paying Agent or Agents) Additional Amounts (as defined below), if any, as required by Section 10.4(b) to be paid. The Issuers agree, consistent with the provisions set forth in Section 6.1(a)(1) hereof, to indemnify the Trustee, the Servicer and each other Paying Agent for, and to hold them harmless against, any loss, liability or expense reasonably incurred without negligence, wilful misconduct or bad faith on their part arising out of or in connection with actions taken or omitted by them in reliance on any certificate furnished pursuant hereto. -130- (b) The Issuers will pay to the Holder of any Note who is a United States Alien such additional amounts ("Additional Amounts") as may be necessary in order that every net payment of the principal of and interest on such Note, after deduction or withholding for or on account of any present or future tax, assessment or governmental charge imposed upon or as a result of such payment by the United States or any political subdivision or taxing authority thereof or therein, will not be less than the amount provided for in such Note to be then due and payable; provided, however, that the foregoing obligation to pay Additional Amounts will not apply to any one or more of the following: (1) any tax, assessment or other governmental charge which would not have been so imposed but for (i) the existence of any present or former connection between such Holder (or between a fiduciary, settlor, beneficiary or member of such Holder, if such Holder is an estate, a trust or a partnership) and the United States, including, without limitation, such Holder (or such fiduciary, settlor, beneficiary or member) being or having been a citizen or resident or treated as a resident thereof, or being or having been engaged in trade or business or present therein, or having or having had a permanent establishment therein, or (ii) such Holder's present or former status as a passive foreign investment company, a personal holding company, a foreign personal holding company, or a controlled foreign corporation for United States tax purposes or a corporation which accumulates earnings to avoid United States federal income tax; (2) any tax, assessment or other governmental charge imposed on interest received by reason of such Holder's past or present status as the actual or constructive owner (taking into account attribution rules of ownership under Section 871(h)(3) of the Code) of 10% or more of the capital or profits interest in the Issuers; (3) any tax, assessment or other governmental charge which would not have been imposed but for the failure to comply with any certification, identification or other reporting requirements concerning the nationality, residence, identity, affiliation or connection with the United States of the Holder or beneficial owner of such Note or similar information reporting requirements if compliance is required by statute or by regulation of the United States Treasury Department as a precondition to exemption from such tax, assessment or other governmental charge; (4) any estate, inheritance, gift, sales, transfer, personal property or any similar tax, assessment or other governmental charge; (5) any tax, assessment or other governmental charge which is payable otherwise than by deduction or withholding from payments of principal of or interest on such Note; -131- (6) any tax, assessment or other governmental charge which would not have been so imposed but for the presentation by the Holder of such Note for payment on a date more than fifteen (15) days after the date on which such payment became due and payable or the date on which payment thereof is duly provided for, whichever occurs later; or (7) any tax, assessment or other governmental charge required to be withheld by any Paying Agent from a payment on a Note, if such payment can be made without such withholding by any other Paying Agent; nor will Additional Amounts be paid with respect to any payment of principal of or interest (or Make-Whole Payment, if any) on any such Note to any United States Alien who is a fiduciary or partnership or other than the sole beneficial owner of any such payment to the extent that a beneficiary or settlor with respect to such fiduciary, a member of such a partnership or the beneficial owner would not have been entitled to the Additional Amounts had such beneficiary, settlor, member or beneficial owner been the Holder of such Note. (c) All references in this Indenture to principal and interest in respect of Notes shall, unless the context otherwise requires, be deemed to mean and include all Additional Amounts, if any, payable in respect thereof as set forth in this Indenture. SECTION X. Corporate Existence. Each Issuer represents and agrees that it will do or cause to be done all things necessary and within its control to preserve and keep in full force and effect the existence, rights (contractual and statutory) and franchises of such Issuer; provided, however, that no Issuer shall be required to preserve any such right or franchise if it shall determine that the preservation thereof is no longer desirable for the conduct of its business and that loss thereof is not disadvantageous in any material respect to the Holders, and the Issuer shall deliver to the Trustee an Officer's Certificate to that effect. The Issuers collectively represent that they are not in default in the payment of any taxes levied or assessed against any of the Mortgaged Properties under any applicable statute, rule, order or regulation of any governmental authority, under the Notes, this Indenture or any of the other Security Documents to which any Issuer is a party or under any other agreement to which any Issuer is a party or by which any Issuer or any of the Mortgaged Properties are bound. SECTION X.6 Payment of Taxes and Other Claims. Each Issuer agrees, in its independent capacity, that it will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (1) all taxes, assessments and governmental charges levied or imposed upon the Mortgaged Property described on Exhibit A as being owned by such Issuer or upon the income or profits of such Issuer derived from such Mortgaged Property, as shown to be due on the tax returns -132- filed by the Issuer and (2) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien upon the Mortgaged Property, except any such taxes, assessments, governmental charges or claims which the Issuer is in good faith contesting in appropriate proceedings in accordance with Article 12 of the Mortgage. SECTION X.7 Maintenance of Lien and Recording. (a) Each Issuer will maintain and preserve the security interest created by this Indenture (in Section 3.1(c)) and each other Security Document to which it is a party (except in connection with a release thereof permitted hereby or thereby) so long as any Note is Outstanding. (b) The Issuers will, forthwith after the execution and delivery of this Indenture and thereafter from time to time, cause the Mortgage and any continuation statement or, upon the reasonable request of the Trustee or the Servicer, any additional financing statement or similar instrument relating to the Mortgage or to any property intended to be subject to the lien thereof to be filed, registered and recorded in such manner and in such places as may be required by law in order to publish notice of and fully to protect and perfect the validity thereof or the lien thereof purported to be created upon the property subject thereto and the Issuers will take such actions with respect to the interest and rights of the Trustee in the Collateral as are necessary or reasonably requested by the Trustee or the Servicer to preserve the interest and rights of the Trustee therein. The Issuers will pay or cause to be paid all document, recording, stamp and similar taxes and fees incident to such filing, registration and recording, and all expenses incident to the preparation, execution and acknowledgment of the Mortgage and of any instrument of further assurance, and all taxes (except income taxes and franchise taxes of parties other than any Issuer), duties and charges arising out of or incurred in connection with the execution and delivery of such instruments; provided, however, that no Issuer shall be required to pay or discharge or cause to be paid or discharged any lien or encumbrance affecting the Collateral to the extent such lien or encumbrance is being contested in good faith by appropriate proceedings in accordance with and as permitted by the provisions of Section 12 of the Mortgage. The Issuers will at all times preserve, warrant and defend the Trustee's title and right in and to the property included in the Collateral against the claims of all Persons, subject to the Permitted Exceptions. SECTION X.8 Performance and Enforcement. (a) Each Issuer will faithfully observe and perform, or cause to be observed and performed, all its covenants, agreements, conditions and requirements contained in the Security Documents in accordance with the terms thereof and will maintain the validity and effectiveness of such instruments and the pledge thereof to the Trustee. No Issuer will take action, nor permit any action to be taken, that will release any party to such instruments from any of its obligations or liabilities thereunder, or will result in the termination, -133- modification or amendment, or will impair the validity, of any such instruments, except as expressly provided for herein and therein. The Issuers will give the Trustee and the Servicer written notice of any default by any party to any of such instruments promptly after it becomes known to any Issuer. (b) Subject to the provisions of the Operating Agreements and the Leases in the event of a casualty or condemnation resulting in the payment to the Trustee, to be held in trust and applied in accordance with provisions of the Mortgage, of any Proceeds, the Trustee shall hold such Proceeds as part of the Collateral in an Eligible Account (the "Casualty Account"), shall invest the funds in the Casualty Account in the manner described in Section 6.14 with respect to the Payment Account and, acting in accordance with directions given by the Servicer, shall disburse or apply such Proceeds in accordance with the provisions of Article 15 of the Mortgage. (c) Each Issuer agrees to undertake any reasonable action necessary to maintain ratings of each Series of the Notes by the Rating Agency (including the payment of any reasonable fees in connection with monitoring by the Rating Agency). SECTION X.9 Negative Covenants. The Issuers collectively agree that they will not: (a) incur, create or assume any indebtedness other than the Notes and as otherwise expressly permitted by the provisions of this Indenture, the Mortgage and the other Security Documents; or (b) voluntarily file a petition for bankruptcy, insolvency, rehabilitation, reorganization, assignment for the benefit of creditors or similar proceeding under any Federal or state bankruptcy, insolvency, reorganization, or other similar law. SECTION X.10 Statement as to Compliance. Each Issuer will deliver to the Servicer and the Trustee, within one hundred and twenty (120) days after the end of each fiscal year, an Officer's Certificate, stating that in the course of the performance by the signer of such Officer's Certificate of his or her present duties as an officer or authorized signatory of such Issuer such signer would normally obtain knowledge or have made due inquiry as to the existence of any condition or event which constitutes an Event of Default or would constitute an Event of Default after notice or lapse of time or both and that to the best of the signer's knowledge, based on such review, (a) the applicable Issuer has fulfilled all its obligations under this Indenture in all material respects throughout such year, or, if there has been a default in the fulfillment of any such obligation in any material respect, specifying each such default known to such signer and the nature and status thereof, and (b) no event has occurred and is continuing which is, or after notice or lapse of time or both would become, an Event of Default, or, -134- if such an event has occurred and is continuing, specifying each such event known to such signer and the nature and status thereof. SECTION X.11 Notices to Rating Agency. The Servicer shall provide written notice to the Rating Agency of (i) any Event of Default, (ii) any merger, consolidation or sale of substantially all of the assets of any Issuer, and (iii) any amendments to or modifications of this Indenture, in each case to the extent the Servicer has actual knowledge thereof, and the Trustee, upon receipt, shall provide copies to the Rating Agency of all compliance reports delivered pursuant to Section 10.10 hereof and all certificates, financial statements and reports delivered by the Issuers pursuant to Article 18 of the Mortgage. SECTION X.12 Resale of Certain Securities. During the period beginning on the Closing Date and ending on the date that is three years from the Closing Date, the Issuers will not, and will not permit any of their "affiliates" (as defined under Rule 144 under the Securities Act or any successor provision thereto) to, resell any Notes which constitute "restricted securities" under Rule 144 that have been reacquired by any of them. SECTION X.13 Completion of Capital/Environmental Items. During the two years following the Closing Date, the Issuers will undertake each of the deferred maintenance and capital improvement items identified on Exhibit G hereto, which items shall have been completed on or prior to the second anniversary of the Closing Date. In addition, the Issuers agree to complete the environmental remediation at Westroads Mall as described on Exhibit G on or before December 31, 1998. The Issuers will provide the Trustee and the Servicer written confirmation of compliance with the requirements of this Section 10.13 (including a schedule identifying actions to date with respect to each item on Exhibit G) at least once per calendar year within thirty (30) days of the end of each such calendar year beginning with 1998, and each such notice shall be accompanied by such updated cost information with respect to the items on Exhibit G as the Issuers (or their agents or contractors) shall have in their possession at such time. In the event that any of the deferred maintenance or capital improvement items set forth on Exhibit G have not been completed on or before the second anniversary of the Closing Date, such failure shall not form the basis for an Event of Default so long as the Issuers deliver to and maintain with the Trustee Cash and Cash Equivalents, a Credit Facility and/or Eligible Collateral, in any such case in an amount equal to the excess of $2,274,000 over the amount actually expended on such items though the date of determination, provided that the collateral so delivered shall be subject to reduction as and when such excess amount is actually expended. -135- ARTICLE XI REDEMPTION OF NOTES ------------------- SECTION XI.1 Applicability of Article. (a) All principal, accrued and unpaid interest and other amounts, if any, in respect of the Notes shall be paid in full upon Maturity of such Notes. Upon receipt by the Trustee of amounts corresponding to all principal and accrued and unpaid interest and other amounts owing on the Notes and any other Security Documents upon Maturity, the Trustee shall deposit such monies into the Payment Account and apply such monies as provided in Section 3.5. (b) The Notes shall be subject to redemption as set forth in writing to the Trustee on any Interest Payment Date or any other date fixed for redemption in accordance with this Article XI (i) at the option of the Issuers, in whole or in part, as provided in Section 11.1(c), (ii) in whole or in part as specified in Sections 11.1(d) and 11.1(e), and (iii) at the option of the Issuers, in whole but not in part, as specified in Section 11.1(f); provided, that in each such case no Notes may be redeemed hereunder unless and until all other amounts then due and payable to the Trustee and the Servicer under this Indenture and the other Security Documents have been paid in full. (c) In the event the Issuers (by notice to the Trustee in accordance with Section 11.2) elect to redeem Notes pursuant to Section 11.1(b), the Trustee shall give notice to the Holders of the Notes (with a copy given to the Rating Agency), which notice shall be given not less than fifteen (15) days prior to the date fixed for redemption, that Notes (in an aggregate principal amount specified in the notice to the Trustee by the Issuers pursuant to Section 11.2) shall be redeemed on such date. Such Notes shall be redeemed at a price equal to 100% of their outstanding principal amounts, together with interest and all other amounts owing on the Notes accrued to the date fixed for redemption and, in the case of a redemption of any Note being redeemed more than five Business Days prior to the applicable Scheduled Maturity Date, the Make-Whole Payment applicable thereto. (d) In the event that (i) following the occurrence of a casualty or taking affecting a Mortgaged Property, the Issuers are required or elect pursuant to the terms of the Mortgage to redeem Notes, the Issuers shall redeem such Notes as are required or permitted under Article 15 of the Mortgage at a redemption price equal to 100% of their principal amounts together with interest and all other amounts owing on the Notes accrued to the date of redemption (but without Make-Whole Payment), in accordance with this Indenture, on the first Interest Payment Date on which the Issuers are able to do so after complying with the notice provisions of this Article XI or (ii) after the date hereof, any law of any of the states in which the Mortgaged Properties are located is passed changing in any way the laws for the taxation of mortgages or debts secured by mortgages for state or -136- local purposes or the manner of the collection of any such taxes, and imposing a tax, either directly or indirectly, on the Mortgage or any of the Notes (other than a tax that may arise in connection with the ownership or transfer of the Notes) and resulting in an increase in the taxes or other charges imposed on or incurred by the Holders by reason of such change in law, the Trustee may, at its option, upon sixty (60) days' notice, declare the Notes to be due and payable (without any premium or Make-Whole Payment); provided, however, that the Trustee shall not make such declaration if, notwithstanding said law, (A)(x) the Issuers may lawfully pay such taxes on behalf of the Holders or (y) the Issuers and the Trustee may lawfully, and do, enter into an enforceable agreement obligating the Issuers to pay the Trustee, for the benefit of the Holders, an amount equal to any increase in taxation or charges imposed on or incurred by such Holders by reason of such change in law (which agreement shall thereupon become part of this Indenture), and (B) the Issuers do in fact pay such taxes or such increases in taxation or charges, as applicable; provided, however, that this clause (d)(ii) shall not apply to any taxes that may arise in connection with the ownership or transfer of the Notes or that may be imposed upon the income of the Holders. (e) In the event that the rate of interest on the Notes of any Series is determined to be usurious under applicable law the Issuers shall redeem the Notes of such Series at a redemption price equal to 100% of their principal amounts together with interest and all other amounts owing on the Notes accrued to the date of redemption (but without Make-Whole Payment), in accordance with this Indenture, on the first Interest Payment Date at which the Issuers are able to do so after complying with the notice provisions of this Article XI. (f) Notes held by United States Aliens may be redeemed, as a whole but not in part, at the option of the Issuers, upon not more than one hundred and eighty (180) or less than fifteen (15) days' prior notice as described under Section 1.6 (which notice shall be irrevocable), at a redemption price equal to 100% of their principal amount, together with interest and all other amounts owing on the Notes (but without Make-Whole Payment) accrued to the date fixed for redemption, if, as a result of any amendment to, or change in, the laws (or any regulations or rulings thereunder) of the United States or any political subdivision or taxing authority thereof affecting taxation, or any amendment to or change in an official interpretation or application of such laws or regulations or rulings, which amendment or change is effective on or after the Closing Date, the Issuers will become obligated to pay Additional Amounts (pursuant to Section 10.4) on the next succeeding Interest Payment Date, and such obligation cannot be avoided by the use of reasonable measures available to the Issuers, not including assignment of the Notes; provided, however, that (1) no such notice of redemption may be given earlier than sixty (60) days prior to the earliest date on which the Issuers would be obligated to pay such Additional Amounts were a payment in respect of the Notes then due, and (2) at the time such notice of redemption is given, such amendment or change giving rise to the obligation to pay such Additional Amounts shall not have been repealed or otherwise voided. Immediately prior -137- to the publication of any notice of redemption pursuant to Section 11.4, the Issuers shall deliver to the Trustee (i) a certificate stating that the Issuers are entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuers so to redeem have occurred, and (ii) an opinion of independent legal counsel of recognized standing to the effect that the Issuers have or will become obligated to pay such Additional Amounts as a result of such change or amendment. SECTION XI.2 Election to Redeem; Notice to Trustee. Any redemption of Notes issued hereunder pursuant to Section 11.1(c), (d), (e) or (f) shall be preceded by the delivery to the Trustee (with a copy to the Servicer as required by Section 1.5) by the Issuers of an Officer's Certificate, at least thirty (30) days prior to the Redemption Date fixed by the Issuers (unless a shorter period shall be reasonably satisfactory to the Trustee) (i) stating that the Issuers are entitled or required to effect such redemption, (ii) setting forth in reasonable detail the circumstances giving rise to such redemption, (iii) stating the aggregate principal amount of the Notes to be redeemed, (iv) stating whether a Make-Whole Payment is payable in connection with such redemption and, if so, setting forth the estimated amount thereof and the calculations made to determine such estimated amount and stating that such calculations were made in accordance with the applicable provisions of this Indenture, (v) with respect to the redemption of Notes to be effected pursuant to Section 11.1(c) attaching the written notice of the Issuers referred to in Section 11.1(c) and (vi) specifying the Redemption Date applicable thereto. SECTION XI.3 Selection by Trustee of Notes to be Redeemed. (a) With the exception of redemptions described in clause (f) of Section 11.1, if less than all the Notes of any Class are to be redeemed, an equal proportion in aggregate current principal amount of the Outstanding Notes of such Class held by each Holder shall be redeemed. (b) In all cases, Notes shall be redeemed only in integral multiples of U.S. $100,000 and increments of $100,000 (or such smaller amount as remains outstanding at such time) for amounts in excess thereof from funds available for such redemption. (c) Except as set forth below or elsewhere in this Article XI (including, without limitation, the last clause of Section 11.1(b)), the Trustee will allocate redemption proceeds in the following order of priority: first, to redeem any Outstanding Class A Notes, then to redeem any Outstanding Class B Notes, then to redeem any Outstanding Class C Notes, then to redeem any Outstanding Class D Notes and then to redeem any Outstanding Class E Notes. In each such instance, the Trustee shall promptly notify the Issuers in writing of the Notes selected for redemption and, in the case of any Notes selected for partial redemption, the principal amount thereof to be redeemed. -138- In the event that the Issuers elect to redeem Notes as permitted hereunder without seeking the release of any of the Mortgaged Properties from the lien of the Mortgage in connection therewith (other than in connection with a Casualty or Taking or as may be permitted to avoid paying Additional Amounts), the Issuers may, in their sole discretion, select the Series and/or the Notes thereof toward which the Trustee will apply the related redemption proceeds. In the event that the Issuers elect to redeem Notes in connection with the release of one or more Mortgaged Properties as permitted under Section 44.1 of the Mortgage, the Trustee will apply (i) the redemption proceeds first toward the redemption of any Outstanding Class A Notes, then toward the redemption of any Outstanding Class B Notes, then toward the redemption of any Outstanding Class C Notes, then toward the redemption of any Outstanding Class D Notes and then toward the redemption of any Outstanding Class E Notes until Notes with a principal amount equal to 100% of the Allocated Amount for each Mortgaged Property to be released have been redeemed and (ii) (A) so long as the Issuers remaining after such release can demonstrate a Debt Service Coverage Ratio (adjusted to give effect to the release and related redemptions) of at least 1.4:1, the remaining proceeds (i.e. the portion of the redemption proceeds representing the prepayment premium) to repay Notes from such Classes, or Series thereof, as the Issuers may direct in their sole discretion and (B) in all other cases, the remaining proceeds in the same manner as is described in clause (i) above with respect to the initial portion of the redemption proceeds. (d) For purposes of this Agreement, unless the context otherwise requires, all provisions relating to the redemption of Notes shall relate, in the case of any Notes redeemed or to be redeemed only in part, to the portion of the principal amount of such Notes which has been or is to be redeemed. SECTION XI.4 Notice of Redemption. Notice of redemption shall be given in the manner provided in Section 1.6 to the Holders of the Notes to be redeemed, not later than fifteen (15) Business Days prior to the Redemption Date. All notices of redemption shall state: (1) the Redemption Date (which date must be an Interest Payment Date), (2) if less than all the Outstanding Notes are to be redeemed, which Notes are to be redeemed and the aggregate principal amount of the Notes to be redeemed, (3) the Redemption Price, (4) whether a Make-Whole Payment is payable, -139- (5) that on the Redemption Date the Redemption Price will become due and payable upon each Note to be redeemed and, if applicable, that interest thereon will cease to accrue on and after said date, and (6) with respect to Notes other than those in global form, the place or places where such Notes maturing after the Redemption Date are to be surrendered for payment of the Redemption Price. SECTION XI.5 Deposit of Redemption Price. On or before the Business Day next preceding a Redemption Date, the Issuers shall deposit with the Trustee an amount of Cash sufficient to pay the Redemption Price of all the Notes which are to be redeemed on such Redemption Date. SECTION XI.6 Notes Payable on Redemption Date. If notice of redemption shall have been given as aforesaid, the Notes subject to redemption shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless the Issuers shall default in the payment of the Redemption Price) such Notes shall cease to bear interest. Upon surrender of any such Note for redemption in accordance with said notice, such Note shall be paid by the Issuers at the Redemption Price; provided, however, that principal and Interest Installments on Notes which have a Maturity Date on or prior to the Redemption Date shall be payable to the Holders of such Notes, or one or more Predecessor Notes, as of the close of business on the relevant Record Dates according to their terms and the provisions of this Indenture. If any Note called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and Make-Whole Payment, if any) shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Note. SECTION XI.7 Notes Redeemed in Part. Any Note which is to be redeemed only in part shall be surrendered at a place of payment therefor (with, if any Issuer or the Trustee so requires, due endorsement by, or written instrument of transfer in form satisfactory to the Issuers or the Trustee duly executed by, the Holder thereof or an attorney for the Holder duly authorized in writing), and each Issuer shall execute, and the Trustee shall authenticate and deliver to the Holder of such Note without service charge, a new Note or Notes, of any authorized denomination as requested by such Holder, in an aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Notes so surrendered. -140- In the event of a redemption of the Notes in part, no Issuer shall be required (i) to register the transfer of or to exchange any Note during a period beginning at the opening of business fifteen (15) days before, and continuing until, the date notice is given identifying the Notes to be redeemed, or (ii) to register the transfer or exchange of any Note, or portion thereof, called for redemption, or (iii) to exchange any Note called for redemption, except for a Note of like aggregate principal amount which is simultaneously surrendered for redemption. ARTICLE XII LIQUIDATION OF COLLATERAL ------------------------- Following an Event of Default and acceleration of the Notes, the Trustee, or the Servicer on the Trustee's behalf, may take such action as is required (and is permitted by law) in order to liquidate the Collateral or any portion thereof until the sum of the funds so received or obtained by the Trustee are sufficient to make timely payment of such principal and interest and such other amounts as are due to Holders, the Trustee and the Servicer in accordance with Article V and the other provisions of this Indenture and the other Security Documents. This Article XII shall not be interpreted as limiting the rights of the Trustee and the Servicer described in Article V and Section 1.13. Payment made with funds obtained by the Trustee by liquidating any part of the Collateral shall not constitute a cure of a failure by the Issuers to make a payment for purposes of Section 5.1 hereof unless the Event of Default relating thereto is waived in accordance with Section 5.13. ARTICLE XIII MEETINGS OF HOLDERS OF NOTES ---------------------------- SECTION XIII.1 Purposes for Which Meetings May Be Called. A meeting of Holders of Notes may be called at any time and from time to time pursuant to this Article to make, give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be made, given or taken by Holders of Notes, or any Series of the foregoing, as required by Section 1.3(e). SECTION XIII.2 Call, Notice and Place of Meetings. (a) The Trustee may at any time call a meeting of Holders of Notes for any purpose specified in Section 13.1, to be held at such time and at such place in the Borough of Manhattan, The City of New York, as the Trustee shall determine. Notice of every meeting of Holders of Notes of any Series, setting forth the time and place of such meeting -141- and in general terms the action proposed to be taken at such meeting, shall be given by the Trustee to each Holder of Notes of such Series and the Issuers, in the manner provided in Section 1.6, not less than 10 nor more than 180 days prior to the date fixed for the meeting. (b) In case at any time any Issuer or the Holders of at least 10% in principal amount of the Outstanding Notes shall have requested the Trustee to call a meeting of the Holders of Notes for any purpose specified in Section 13.1, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have made the first publication of the notice of such meeting within 10 days after receipt of such request or shall not thereafter proceed to cause the meeting to be held as provided herein, then any Issuer or the Holders of Notes in the amount above specified, as the case may be, may determine the time and the place in the Borough of Manhattan, The City of New York, for such meeting and may call such meeting for such purposes by giving notice thereof as provided in subsection (a) of this Section. SECTION XIII.3 Persons Entitled to Vote at Meetings. To be entitled to vote at any meeting of Holders a Person shall (a) be a Holder of one or more Notes or (b) be a Person appointed by an instrument in writing as proxy by a Holder of one or more Notes. The only Persons who shall be entitled to be present or to speak at any meeting of Holders shall be the Persons entitled to vote at such meeting and their counsel and any representatives of the Trustee and its counsel and any representatives of any Issuer and its legal and financial advisers. SECTION XIII.4 Quorum; Action. The Persons entitled to vote a majority in principal amount of the Outstanding Notes (or, in the case of a Series-specific meeting, a majority of the Notes of such Series) shall constitute a quorum for a meeting of Holders of Notes; provided, however, that if any action is to be taken at such meeting with respect to a consent or waiver that this Indenture expressly provides may be given by Holders of not less than 66 2/3% in principal amount of the Outstanding Notes, the Persons entitled to vote 66 2/3% in principal amount of the Outstanding Notes shall constitute a quorum. In the absence of a quorum within 60 minutes of the time appointed for any such meeting, the meeting shall, if convened at the request of Holders of Notes, be dissolved. In any other case the meeting may be adjourned for a period of not less than ten (10) days as determined by the chairman of the meeting prior to the adjournment of such meeting. In the absence of a quorum at any such adjourned meeting, such adjourned meeting may be further adjourned for a period of not less than ten (10) days as determined by the chairman of the meeting prior to the adjournment of such adjourned meeting. Notice of the reconvening of any adjourned meeting shall be given as provided in Section 13.2, except that such notice need be given only once not less than five (5) days prior to the date on which the meeting is scheduled to be reconvened. Notice of -142- the reconvening of an adjourned meeting shall state expressly the percentage, as provided above, of the principal amount of the Outstanding Notes (or, if applicable, the Outstanding Notes of a particular Series) that shall constitute a quorum. Except as limited by the proviso to the first paragraph of Section 9.2, any resolution presented to a meeting or adjourned meeting duly reconvened at which a quorum is present as aforesaid may be adopted by the affirmative vote of the Holders of a majority in principal amount of the Outstanding Notes entitled to vote thereon; provided, however, that, except as limited by the proviso to the first paragraph of Section 9.2, any resolution with respect to any consent or waiver that this Indenture expressly provides may be given by the Holders of not less than 66 2/3% in principal amount of the Outstanding Notes may be adopted at a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid only by the affirmative vote of the Holders of 66 2/3% in principal amount of the Outstanding Notes; and provided, further, that, except as limited by the proviso to the first paragraph of Section 9.2, any resolution with respect to any request, demand, authorization, direction, notice, consent, waiver or other action that this Indenture expressly provides may be made, given or taken by the Holders of a specified percentage, which is less than a majority, in principal amount of the Outstanding Notes may be adopted at a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid by the affirmative vote of the Holders of such specified percentage in principal amount of the Outstanding Notes. Any resolution passed or decision taken at any meeting of Holders of Notes duly held in accordance with this Section shall be binding on all the Holders of such Notes, whether or nor present or represented at the meeting. SECTION XIII.5 Determination of Voting Rights; Conduct and Adjournment of Meetings. (a) Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Holders of Notes in regard to proof of the holding of Notes and of the appointment of proxies and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the rights to vote, and such other matters concerning the conduct of the meeting as it shall deem appropriate. Such regulations may provide that written instruments appointing proxies, regular on their face, may be presumed valid and genuine without the proof specified in Section 1.3 or other proof. (b) The Trustee shall, by an instrument in writing, appoint a chairman of the meeting, unless the meeting shall have been called by any Issuer or by Holders of Notes as provided in Section 13.2(b), in which case such Issuer or the Holders of Notes calling the meeting, as the case may be, shall in like manner appoint a chairman. A permanent -143- chairman and a permanent secretary of the meeting shall be elected by vote of the Persons entitled to vote a majority in principal amount of the Outstanding Notes represented at the meeting. (c) At any meeting each Holder of a Note or proxy shall be entitled to one vote for each $1,000 principal amount of the Outstanding Notes held or represented by such Holder; provided, however, that no vote shall be cast or counted at any meeting in respect of any Note challenged as not Outstanding and ruled by the chairman of the meeting to be not Outstanding. The chairman of the meeting shall have no right to vote, except as a Holder of a Note or of a proxy. (d) Any meeting of Holders of Notes duly called pursuant to Section 13.2 at which a quorum is present may be adjourned from time to time by Persons entitled to vote a majority in principal amount of the Outstanding Notes represented at the meeting; and the meeting may be held as so adjourned without further notice. SECTION XIII.6 Counting Votes and Recording Action of Meetings. The vote upon any resolution submitted to any meeting of Holders of Notes shall be by written ballots on which shall be subscribed the signatures of the Holders of Notes or their representatives by proxy and the principal amounts and serial numbers of the Outstanding Notes held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record, at least in duplicate, of the proceedings of each meeting of Holders of Notes shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was given as provided in Section 13.2 and, if applicable, Section 13.4. Each copy shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one such copy shall be delivered to the issuers, and another to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein stated. ARTICLE XIV ASSUMPTION OF OBLIGATIONS UNDER THE NOTES Each Issuer may at any time assign all of such Issuer's interest in the Mortgaged Property or Mortgaged Properties identified in the Mortgage as being owned by such Issuer to a permitted transferee in connection with a permitted transfer of all (but not less -144- than all) of such Mortgaged Property or interests in the ownership of such Mortgaged Property, pursuant to Article 19 of the Mortgage; provided, however that such transferee assumes the obligations of an Issuer under, and agrees to comply with all of the provisions of, this Indenture and, in particular, Section 10.10 hereof. Upon any such assignment and the express assumption, subject to the provisions of Sections 1.12 and 1.14, by the assignee of all of the obligations of an Issuer under the Notes and this Indenture, the transferring Issuer or Issuers shall be released from such obligations, and the assignee shall assume and perform such obligations, and shall succeed to, and be substituted for, and may exercise every right and power of, an Issuer under this Indenture with the same effect as if such assignee had been named as an Issuer herein, subject to Section 1.12 and Section 1.14. -145- IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed, all as of the day and year first above written. LASALLE NATIONAL BANK, as Trustee By: Name: Title: MIDLAND LOAN SERVICES, L.P., as Servicer By: Midland Data Systems, Inc., its general partner By: Name: Title: [SIGNATURE BLOCKS FOR ISSUERS TO COME] -146- EX-4.3 4 FORM OF NOTE PURSUANT TO THE INDENTURE AGREEMENT EXHIBIT 4.3 [FORM OF NOTE] [UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUERS OR THEIR AGENTS FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THIS IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE REFERRED TO HEREINAFTER. THIS GLOBAL NOTE MAY NOT BE EXCHANGED, IN WHOLE OR IN PART, FOR A NOTE REGISTERED IN THE NAME OF ANY PERSON OTHER THAN DTC OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES SET FORTH IN THE INDENTURE. BENEFICIAL INTERESTS IN THIS GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE INDENTURE.]/1/ [THE NOTES EVIDENCED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT REGISTRATION UNDER THE SECURITIES ACT, EXCEPT (A)(I) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) PURSUANT TO AN EXEMPTION (IF AVAILABLE) FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER OR (III) IN A TRANSACTION OUTSIDE OF THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT AND (B) IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE B-1 UNITED STATES. THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE ISSUERS THAT THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE. THIS NOTE WILL NOT BE ACCEPTED FOR REGISTRATION OF TRANSFER UNLESS THE REGISTRAR OR TRANSFER AGENT IS SATISFIED THAT THE RESTRICTIONS ON TRANSFER SET FORTH ABOVE HAVE BEEN COMPLIED WITH, ALL AS PROVIDED IN THE INDENTURE.]/2/ [THIS NOTE WILL NOT BE ACCEPTED IN EXCHANGE FOR A BENEFICIAL INTEREST IN A GLOBAL NOTE UNLESS THE HOLDER OF THIS NOTE, SUBSEQUENT TO SUCH EXCHANGE, WILL HOLD A MINIMUM AGGREGATE BENEFICIAL INTEREST IN THE GLOBAL NOTE OF AT LEAST ONE HUNDRED THOUSAND DOLLARS ($100,000).]/3/ [THIS NOTE IS A REGULATION S TEMPORARY GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE REFERRED TO HEREINAFTER. INTERESTS IN THIS REGULATION S TEMPORARY GLOBAL NOTE MAY NOT BE OFFERED OR SOLD TO A U.S. PERSON OR FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON PRIOR TO THE EXPIRATION OF THE REGULATION S RESTRICTED PERIOD (AS DEFINED IN THE INDENTURE), AND NO TRANSFER OR EXCHANGE OF AN INTEREST IN THIS REGULATION S TEMPORARY GLOBAL NOTE MAY BE MADE FOR AN INTEREST IN THE RESTRICTED GLOBAL NOTE OR IN THE UNRESTRICTED GLOBAL NOTE UNTIL AFTER THE LATER OF THE DATE OF TERMINATION OF THE REGULATION S RESTRICTED PERIOD AND THE DATE ON WHICH THE OWNER SECURITIES CERTIFICATION AND THE DEPOSITARY SECURITIES CERTIFICATION RELATING TO SUCH INTEREST HAVE BEEN PROVIDED IN ACCORDANCE WITH THE TERMS OF THE INDENTURE, TO THE EFFECT THAT THE BENEFICIAL OWNER OR OWNERS OF SUCH INTEREST ARE NOT U.S. PERSONS.]/4/ [THIS IS ONE OF THE "NOTES" REFERRED TO AND DEFINED IN THAT CERTAIN CONSOLIDATION AND SPLITTING AGREEMENT OF EVEN DATE HEREWITH BETWEEN LOCKPORT L.L.C. AND PAYEE (THE "LOCKPORT CONSOLIDATION AGREEMENT") AND THAT CERTAIN CONSOLIDATION AND SPLITTING AGREEMENT OF EVEN DATE HEREWITH BETWEEN SOONER FASHION MALL L.L.C. AND PAYEE (THE "SOONER CONSOLIDATION AGREEMENT" AND TOGETHER WITH THE LOCKPORT CONSOLIDATION AGREEMENT HEREINAFTER REFERRED TO AS THE "CONSOLIDATION AND SPLITTING AGREEMENTS").] B-2 Series [ ]/5/ Fixed Rate Note No. R-____ [CUSIP No.________] U.S.$__________________ The thirteen entities identified on Exhibit A hereto (herein called the "Issuers"), for value received, hereby promise to pay in lawful currency of the United States of America to _____________/6/, or registered assigns, the principal sum of ______________ Million Dollars (U.S.$____,000,000) as provided in the Indenture, and to pay interest thereon in arrears on the 15th day of each month, commencing December 15, 1997 (each an "Interest Payment Date"), from the date hereof until the principal hereof is paid or made available for payment, provided, however, that if any Interest Payment Date is not a Business Day, the Interest Payment Date shall be the next succeeding Business Day, without additional interest. The interest payable on this Note for the period from the date of issuance to, but not including, the Maturity Date shall be [ ]%/7/ per annum. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on the Regular Record Date for such Interest Payment Date, which shall be the fifth (5th) Business Day next preceding such Interest Payment Date. Interest shall be calculated on the basis of twelve 30-day Interest Periods (as defined in the Indenture). If, for any reason, interest on any Note is not paid on or prior to the Interest Payment Date on which such interest is due, or the principal of any Note is not repaid on or prior the Maturity Date applicable to such Note, the Issuers will be required to pay Default Interest as set forth in Section 3.11(b) of the Indenture. Upon default by the Issuers, in the payment of interest on principal on the Notes, such interest and Default Interest payable in connection therewith shall forthwith cease to be payable to the Holder on such Regular Record Date, and Default Interest will instead be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on a Special Record Date for the payment of such Default Interest to be fixed by the Trustee, notice whereof shall be given to Holders not less than five (5) Business Days prior to such Special Record Date, all as more fully provided in the Indenture. Payment of the principal of this Note will be payable against surrender thereof at the office or agency of the Issuers maintained for that purpose in the Borough of Manhattan, the City of New York, by wire or by check mailed on or before the due date for such payment to the Person entitled thereto at such Person's address appearing on the Register or to such other address as the registered Holder shall provide in writing at the time of such surrender. All capitalized terms used but not defined herein shall have the meanings specified in the Indenture. If an Event of Default specified in Section 5.1(4) or 5.1(5) of the Indenture occurs and is continuing, the amounts specified in the next sentence shall automatically become and be due and payable immediately without any action B-3 whatsoever on the part of the Trustee, the Servicer or the Holders. If an Event of Default specified in Section 5.1(1), 5.1(2), 5.1(3) or 5.1(6) (other than an Event of Default which arises thereunder solely by virtue of the occurrence of an Event of Default arising under Section 5.1(4) or Section 5.5(5) of the Indenture) of the Indenture occurs and is continuing, then in every such case the Trustee may and at the direction of the Holders of not less than 66 2/3% in aggregate principal amount of the Outstanding Notes shall, by a notice in writing to the Issuers and the Servicer, declare the sum of (i) the principal amount of this Note and (ii) any other amounts, including, but not limited to accrued interest, Additional Amounts, if any, and Make-Whole Payments, if any, payable to the Holder under this Note, to the extent such amounts are permitted by law to be paid, to be due and payable immediately, and upon any such declaration such amounts shall become immediately due and payable. This Note is one of a duly authorized issue of securities of the Issuers (herein called the "Notes") designated as specified in the title hereof, issued and to be issued in accordance with the Indenture and Servicing Agreement, dated as of November 25, 1997 (herein called the "Indenture"), among the Issuers, LaSalle National Bank, as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), and Midland Loan Services, L.P., as Servicer, copies of which Indenture are on file and available for inspection at the corporate trust office of the Trustee in Chicago, Illinois. Reference is hereby made to the Indenture and all indentures supplemental thereto for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Issuers, the Trustee, the Principal Paying Agent and the Holders of the Notes. The Holder of this Note may receive payment in respect of principal and interest only as provided in the Indenture. This Note is subject to mandatory redemption, in whole or in part, on any Interest Payment Date (i) upon certain events of casualty or condemnation with respect to the Mortgaged Properties, (ii) at the option of the Trustee upon a change in laws governing taxation of any Mortgage, and (iii) upon the determination that the rate of interest on this Note is usurious under applicable law. The Redemption Price of this Note under such circumstances shall be equal to 100% of the principal amount, together with accrued and unpaid interest and Additional Amounts, if any, to the Redemption Date, but without any Make-Whole Payment of penalty. This Note is also redeemable, at the option of the Issuers, on any Interest Payment Date, (i) in whole or in part, at a Redemption Price equal to 100% of the principal amount to be redeemed, together with accrued and unpaid interest and Additional Amounts, if any, to the Redemption Date and Make-Whole Payment, if any, and (ii) in whole if held by a United States Alien upon an amendment to or change in the laws of the United States or a political subdivision thereof resulting in the Issuers becoming obligated, pursuant to the B-4 Indenture, to pay Additional Amounts at a Redemption Price equal to 100% of the principal amount to be redeemed, together with accrued and unpaid interest and Additional Amounts, if any, to the Redemption Date, but without any Make-Whole Payment or penalty. Notice of redemption of any Notes will be given no later than fifteen (15) days prior to the proposed Redemption Date for such Notes. Such notice shall specify, among other things, the Redemption Date, the Redemption Price and (if less than all Notes are to be redeemed) the principal amount of the Notes to be redeemed. In the event that this Note is redeemed in part only, a New Note for the unredeemed portion hereof shall be issued in the name of the Holder hereof upon the cancellation hereof. As more fully described in the Indenture and the Mortgage, this Note is secured by the Collateral. The Indenture constitutes a security agreement under the Uniform Commercial Code as in effect in each state where property which is a part of the Collateral is located and the Payment Account, the Holdover Account and any other similar account established by the Trustee or the Servicer in furtherance of its rights or responsibilities under this Indenture or any other Security Document are located. Upon the occurrence of any Event of Default, the Trustee shall have all rights and remedies in respect of the Collateral of a secured party on default under the Uniform Commercial Code to enforce the assignments and security interests contained in the Indenture and the Mortgage and under applicable law. The Indenture permits, with certain exceptions as therein provided, the amendment thereof or the modification of the rights and obligations of the Issuers and the rights of the Holders of the Notes under the Indenture at any time by the Issuers and the Trustee with the consent of the Holders of not less than 66 2/3% in aggregate principal amount of the Notes at the time Outstanding. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Notes at the time Outstanding, on behalf of the Holders of all the Notes, to waive compliance by the Issuers with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consents or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note. As provided in the Indenture and subject to the limitations therein set forth, the transfer of this Note is registrable in the Register, upon surrender of this Note for registration of transfer at the office or agency of the Trustee in the Borough of B-5 Manhattan, the City of New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Issuers and the Registrar duly executed by, the Holder hereof or his or her attorney duly authorized in writing, and thereupon one or more New Notes, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. This Note may not be exchanged for Notes in bearer form. The Notes issued are issuable only in registered form without coupons in authorized denominations of $100,000 and integral multiples of $1,000 in excess thereof. Prior to due presentation of this Note for registration of transfer, the Issuers, the Trustee and any agent of any Issuer or the Trustee may treat the Person in whose name this Note is registered as the owner hereof, for all purposes, whether or not this Note be overdue, and neither any Issuer, the Trustee nor any such agent shall be affected by notice to the contrary. The agreements contained herein shall remain in full force and effect notwithstanding any changes in the shareholders or other equity owners of, or the officers and directors relating to, any Issuer, and the term "Issuers" as used herein, shall include any alternate or successor Person, but any predecessor Person shall not be relieved of any liability hereunder except as provided in Article XIV of the Indenture. The Issuers and all others who may become liable for the payment of all or any part of the amounts due under this Note do hereby severally waive presentment and demand for payment, notice of dishonor, protest, notice of protest and non-payment and all other notices of any kind, except those expressly required under the Indenture and the other Security Documents. No notice to or demand on any Issuer or any other Person shall be deemed to be a waiver of the obligation of any Issuer or the right of the Trustee, on behalf of the Holders, to take further action without notice or demand as permitted in this Note, the Indenture and the other Security Documents. It is not intended that, and none of the terms and conditions of the Indenture, the Mortgage or the other Security Documents shall ever be construed to create a contract whereby, any Issuer or any guarantor, endorser or other party now or hereafter becoming liable for payment of this Note shall be required to pay interest on this Note at a rate in excess of the maximum interest that may be lawfully charged under applicable law. If the Notes, the Mortgage or any other Security Document would otherwise be usurious under applicable law, the terms of Article 48 of the Mortgage shall govern. B-6 The representations, undertakings, covenants and agreements of the Issuers contained in the Indenture are those of the Issuers only and not of the Trustee and the Trustee will have no liability with respect thereto. As provided in Section 1.14 of the Indenture, this Note is a non-recourse obligation of the Issuers payable only from and secured only by the Collateral. Unless the certificate of authentication hereon has been executed by the Trustee by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. [The remainder of this page was intentionally left blank] B-7 IN WITNESS WHEREOF, the undersigned have caused this instrument to be duly executed. Dated: --------- ---, ----- SIGNATURE BLOCKS FOR ISSUERS TO COME By: --------------------------- Name: Title: This Note is one of the Notes referred to in the above-mentioned Indenture. LaSalle National Bank, as Trustee By: --------------------------- Name: Title: /1/ Insert if the Note is a Global Note. /2/ Insert if the Note is a Restricted Note. /3/ Intentionally deleted. /4/ Insert if the Note is a Regulation S Temporary Global Note. /5/ Insert the applicable letter and number designation for the Series of which this note is a part. /6/ Insert "Cede & Co." if the Note is a Global Note. /7/ Insert the interest rate applicable to the Series of which this Note is a part. B-9 Repayments of Principal, Make-Whole Payments, if any, and Transfers Affecting the Note (Initial Principal Balance on ________ __, ____: $_____)
============================================================================================================== Amount of Repayment or Transfer To or From Amount of Make-Whole Date of Repayment or Balance After Repayment Notation Made Another Note Payment, if any Transfer or Transfer By: - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- ==============================================================================================================
EX-4.4 5 MTGE, DEED OF TRUST, SECURITY AGR DATED 11/25/97 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Jill Ann Coleman, Esq. Neal, Gerber & Eisenberg Two North LaSalle Street, Suite 2100 Chicago, Illinois 60602 - -------------------------------------------------------------------------------- MORTGAGE, DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS, FIXTURE FILING AND FINANCING STATEMENT Dated and effective as of November 25, 1997 among THE BORROWERS NAMED HEREIN, together, Mortgagor (Index as Grantor), and FIRST AMERICAN TITLE INSURANCE COMPANY, as Deed Trustee, solely with respect to Mortgaged Property located in the State of California, and ROBERT MECKFESSEL, as Deed Trustee, solely with respect to Mortgaged Property located in the State of Missouri, and FIRST AMERICAN TITLE INSURANCE COMPANY, as Deed Trustee, solely with respect to Mortgaged Property located in the State of Nebraska and LASALLE NATIONAL BANK, as Trustee, as Mortgagee (also index as Grantee and as Beneficiary in California, Georgia, Missouri and Nebraska) - -------------------------------------------------------------------------------- THE SECURED PARTY DESIRES THAT THIS FINANCING STATEMENT BE INDEXED AGAINST THE RECORD OWNER OF THE REAL ESTATE Name of Record Owner: Tax ID Number of Record Owner: [TO BE COMPLETED DIFFERENTLY FOR EACH MORTGAGOR FOR EACH FILING] Property Identification Number of Mortgaged Property: THIS DOCUMENT WAS PREPARED BY: Benjamin R. Weber, Esq. Sullivan & Cromwell 125 Broad Street New York, New York 10004 THIS MORTGAGE SECURES NOTES MADE OUTSIDE THE STATE OF FLORIDA AND IS SECURED BY A MULTI-STATE MORTGAGE RECORDED IN FLORIDA WHICH DESCRIBES AND PLEDGES THE FLORIDA PROPERTY DESCRIBED HEREIN TOGETHER WITH COLLATERAL OUTSIDE THE STATE OF FLORIDA. FLORIDA DOCUMENTARY STAMP TAXES HAVE BEEN COMPUTED PURSUANT TO SECTION 12B-4.053(32)(b), F.A.C.AND FLORIDA INTANGIBLE TAXES HAVE BEEN COMPUTED PURSUANT TO SECTION 199.133(2), FLORIDA STATUTES, ON A FLORIDA ALLOCATION OF INDEBTEDNESS OF $76,440,000 COMPUTED BY DIVIDING $116,000,000 (THE VALUE OF ALL FLORIDA COLLATERAL) BY $850,000,000 (THE VALUE OF ALL FLORIDA AND OUTSIDE OF FLORIDA COLLATERAL), AND OBTAINING 13.65%, WHICH IS MULTIPLIED BY $560,000,000 (THE TOTAL INITIAL PRINCIPAL INDEBTEDNESS SECURED BY ALL COLLATERAL). BASED UPON THE FOREGOING DOCUMENTARY STAMP TAXES ARE BEING PAID IN THE AMOUNT OF $267,540.00 AND INTANGIBLE TAXES ARE BEING PAID IN THE AMOUNTS OF $152,880.00 SIMULTANEOUSLY WITH THE RECORDING OF THIS MORTGAGE. TO THE EXTENT PERMITTED BY LAW, A POWER OF SALE HAS BEEN GRANTED IN THIS INSTRUMENT. A POWER OF SALE MAY ALLOW THE MORTGAGEE TO TAKE AND SELL ALL OR A PORTION OF THE PROPERTY ENCUMBERED BY THIS INSTRUMENT WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY MORTGAGORS UNDER THIS INSTRUMENT. TABLE OF CONTENTS
Page PRELIMINARY STATEMENT.................................................................. 1 GRANTING CLAUSES....................................................................... 3 1. PRINCIPLES OF CONSTRUCTION; DEFINITIONS; PARTICULAR PROVISIONS................................................................... 6 1.1. Principles of Construction............................................. 6 1.2. Definitions............................................................ 7 1.3. Provisions Concerning Particular States................................ 27 1.4. Mortgagor Representative............................................... 27 1.5. Mortgagee Consents and Approvals....................................... 27 2. PARTICULAR COVENANTS, REPRESENTATIONS AND WARRANTIES................................................................... 28 2.1. Due Authorization; Validity of the Mortgage and the Other Security Documents; Title to the Premises; Etc..................... 28 2.2. Maintenance of Validity, Recording and Other Covenants Relating to the Mortgaged Properties........................................ 30 2.3. Negative Covenants..................................................... 32 2.4. Existence and Rights................................................... 34 2.5. Payment of Taxes and Other Claims...................................... 34 2.6. Payment of the Notes, All Other Amounts and the Trustee's Fees......... 34 3. THE GROUND LEASES................................................................. 35 3.1. Ground Leases Covenants................................................ 35 4. MAINTENANCE AND REPAIRS; SHORING.................................................. 36 5. UTILITY SERVICES.................................................................. 36
-i- 6. NO CLAIMS AGAINST THE MORTGAGEE................................................... 36 7. INDEMNIFICATION BY THE MORTGAGOR.................................................. 37 8. INSPECTION........................................................................ 38 9. PAYMENT OF IMPOSITIONS, ETC....................................................... 38 10. COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS, INSTRUMENTS..................... 39 11. LIENS............................................................................. 39 12. PERMITTED CONTESTS................................................................ 39 13. INSURANCE......................................................................... 40 13.1. Risks to be Insured................................................... 40 13.2. Ratings of Insurers................................................... 42 13.3. Policy Provisions..................................................... 43 13.4. Certificates.......................................................... 44 13.5. Replacement Policies.................................................. 44 13.6. Reports of Insurance Broker........................................... 44 13.7. Separate Insurance.................................................... 45 14. ALTERATIONS AND EXPANSIONS........................................................ 45
-ii- 15. CASUALTY, TAKING AND APPLICATION OF INSURANCE PROCEEDS AND TAKING PROCEEDS........ 48 16. ENFORCEMENT....................................................................... 54 17. EVICTION BY PARAMOUNT TITLE....................................................... 55 18. BOOKS AND RECORDS, FINANCIAL STATEMENTS, REPORTS AND OTHER INFORMATION............ 55 18.1. Books and Records..................................................... 55 18.2. Financial Statements.................................................. 56 18.3. Additional Information................................................ 56 19. TRANSFERS AND INDEBTEDNESS........................................................ 58 19.1. Sale of the Mortgaged Property........................................ 59 19.2. Indebtedness.......................................................... 61 19.3. Subordinate Liens..................................................... 62 19.4. Additional Permitted Transfers........................................ 62 19.5. Delivery of Documents to the Mortgagee................................ 64 19.6. Potential Mortgagor Obligations....................................... 65 20. PERFORMANCE OF LEASES; APPLICATION OF RENTS....................................... 65 21. NO ENDORSEMENT.................................................................... 68 22. NO CREDIT FOR PAYMENT OF TAXES OR IMPOSITIONS..................................... 68 23. EVENT OF DEFAULT.................................................................. 68
-iii- 24. COMPROMISE OF ACTIONS BY THE MORTGAGEE............................................ 69 25. FORECLOSURE....................................................................... 69 25.1. Foreclosure........................................................... 69 25.2. The Mortgagors' Waivers............................................... 70 25.3. Recovery of Advances.................................................. 71 25.4. Sale.................................................................. 71 25.5. Several Parcels....................................................... 72 26. THE MORTGAGEE AUTHORIZED TO EXECUTE INSTRUMENTS................................... 72 27. PURCHASE OF PROPERTIES BY THE MORTGAGEE........................................... 73 28. RECEIPT A SUFFICIENT DISCHARGE TO PURCHASER....................................... 73 29. WAIVER OF MARSHALLING............................................................. 73 30. SALE SHALL BE A BAR AGAINST THE MORTGAGORS........................................ 73 31. APPLICATION OF PROCEEDS OF SALE................................................... 73 32. APPOINTMENT OF RECEIVER........................................................... 74 33. POSSESSION, MANAGEMENT AND INCOME................................................. 74 34. RIGHT OF THE MORTGAGEE TO PERFORM THE MORTGAGORS' COVENANTS........................ 75
-iv- 35. REMEDIES CUMULATIVE............................................................... 76 36. APPLICABLE LAW.................................................................... 76 37. NO WAIVER......................................................................... 77 38. OBLIGATIONS ARE WITHOUT RECOURSE.................................................. 77 39. STAMP AND OTHER TAXES............................................................. 79 40. FURTHER ASSURANCES................................................................ 80 41. ESTOPPEL CERTIFICATES............................................................. 80 42. ADDITIONAL SECURITY............................................................... 80 43. FINANCING STATEMENT............................................................... 80 44. RELEASE; SUBSTITUTE PROPERTY...................................................... 81 44.1. Release of Mortgaged Properties....................................... 81 44.2. Substitute Property................................................... 82 45. CONFIDENTIALITY................................................................... 88
-v- 46. SECURITY AGREEMENT, ETC........................................................... 89 46.1. Grant of Security..................................................... 89 46.2. Financing Statements.................................................. 89 46.3. Multiple Remedies..................................................... 89 46.4. Waiver of Rights...................................................... 89 46.5. Expenses of Disposition of the Properties............................. 90 47. EXPENSES OF THE MORTGAGEE......................................................... 90 48. USURY............................................................................. 91 49. MISCELLANEOUS..................................................................... 92 50. NON-MERGER........................................................................ 92 51. ASSIGNMENT OF RENTS AND THE MORTGAGORS' INTEREST IN LEASES........................ 92 52. NOTICES........................................................................... 97 53. SUPPLEMENTS....................................................................... 98 53.1. Supplements Without Consent........................................... 98 53.2. Supplements With Consent.............................................. 99 53.3. Delivery of Supplements............................................... 99 54. WAIVER OF TRIAL BY JURY........................................................... 100 55. SEVERABILITY...................................................................... 100
-vi- 56. SPECIAL STATE PROVISIONS.......................................................... 100 57. THE DEED TRUSTEE IN THE DEED OF TRUST STATES...................................... 114 58. FUTURE ADVANCES................................................................... 116
-vii- Page ---- EXHIBITS EXHIBIT A Mortgagors/Shopping Centers EXHIBIT B-1 Property Description for Colony Square Mall EXHIBIT B-2 Property Description for Columbia Mall EXHIBIT B-3 Property Description for Fallbrook Square Mall EXHIBIT B-4 Property Description for Fox River Shopping Center EXHIBIT B-5 Property Description for Lockport Mall EXHIBIT B-6 Property Description for Market Place Shopping Center EXHIBIT B-7 Property Description for Rio West Mall EXHIBIT B-8 Property Description for River Hills Mall EXHIBIT B-9 Property Description for Sooner Fashion Mall EXHIBIT B-10 Property Description for Southlake Mall EXHIBIT B-11 Property Description for The Oaks Mall EXHIBIT B-12 Property Description for Westroads Mall EXHIBIT B-13 Property Description for Westwood Mall EXHIBIT C -- Permitted Exceptions EXHIBIT D -- Assumption EXHIBIT E -- [Intentionally Omitted] EXHIBIT F -- Allocated Amounts EXHIBIT G -- Charter Provisions for a Corporate Single Purpose/Insolvency- Remote Entity EXHIBIT H -- Environmental Reports EXHIBIT I -- Potential Mortgagor Obligations EXHIBIT J -- Subordination, Attornment And Non-Disturbance Agreement -xi- THIS MORTGAGE, DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS, FIXTURE FILING AND FINANCING STATEMENT, dated and effective as of November 25, 1997 (this "Mortgage"), among the thirteen entities listed on Exhibit A hereto, each of which shall have an address for all purposes hereunder - --------- c/o GGP Limited Partnership, 55 West Monroe Street, Suite 3100, Chicago, Illinois 60603, Attention: Mr. Bernard Freibaum, Chief Financial Officer, First American Title Insurance Company, a California corporation ("Deed Trustee" solely with respect to Mortgaged Property located in the State of California), whose address for all purposes hereunder is c/o First American Title Company of Los Angeles, 520 North Central Avenue, Glendale, California 91203, Robert Meckfessel ("Deed Trustee" solely with respect to Mortgaged Property in the State of Missouri), whose address for all purposes hereunder is c/o First American Title Company, 7600 Forsyth Blvd., Clayton, Missouri 63105, First American Title Insurance Company ("Deed Trustee" solely with respect to Mortgaged Property in the State of Nebraska), whose address for all purposes hereunder is c/o First American Title Insurance Company, 13924 Gold Circle, Omaha, Nebraska 68144, and LaSalle National Bank, a nationally chartered bank, solely in its capacity as trustee on behalf of the Holders (as defined below), mortgagee to the extent that this Mortgage operates as a mortgage, grantee, to the extent this Mortgage operates as a deed to secure debt, beneficiary to the extent that this Mortgage operates as a deed of trust and secured party hereunder (together with its permitted successors and assigns, "Mortgagee"), whose address for all purposes hereunder is 135 South LaSalle Street, Chicago, Illinois 60603, Attention: Asset-Backed Securities Trust Services: General Growth Properties. W I T N E S S E T H : ------------------- PRELIMINARY STATEMENT WHEREAS, each of the Mortgagors (as defined herein) is the owner of the fee and other interests in one of the thirteen (13) regional shopping centers known as Colony Square Mall, located in Zanesville, Ohio, Columbia Mall, located in Columbia, Missouri, Fallbrook Square Mall, located in Canoga Park, California, Fox River Shopping Center, located in Appleton, Wisconsin, Lockport Mall, located in Lockport, New York, Market Place Shopping Center, located in Champaign, Illinois, Rio West Mall, located in Gallup, New Mexico, River Hills Mall, located in Mankato, Minnesota, Sooner Fashion Mall, located in Norman, Oklahoma, Southlake Mall, located in Morrow, Georgia, The Oaks Mall, located in Gainesville, Florida, Westroads Mall, located in Omaha, Nebraska and Westwood Mall, located in Jackson, Michigan (each a "Shopping Center" and together the "Shopping Centers"), as identified on Exhibit A as being owned by it. WHEREAS, the Mortgagors are executing and delivering this Mortgage for the purpose of granting, conveying, transferring and assigning to the Mortgagee a first priority lien on the Mortgagors' respective interests in the Shopping Centers. WHEREAS, simultaneously with the execution of this Mortgage, the Mortgagors intend to issue Collateralized Fixed Rate Notes Due November 15, 2004 and Collateralized Fixed Rate Notes Due November 15, 2007, in the aggregate principal amount of up to $560,000,000, the latest scheduled maturity date of which is November 15, 2007, pursuant to an Indenture and Servicing Agreement, dated as of the date hereof, among the Mortgagors, the Servicer, as hereinafter defined, and the Mortgagee, as trustee for the holders from time to time of the Notes (as hereinafter defined), as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time (the "Indenture"); the Notes issued under the Indenture on the date hereof will be in the following series and principal amounts: Series Principal Annual Interest Maturity A-1 $151,350,000 6.537% November 15, 2004 B-1 29,500,000 6.635% November 15, 2004 C-1 29,500,000 6.762% November 15, 2004 D-1 29,500,000 6.917% November 15, 2004 E-1 10,150,000 7.052% November 15, 2004 A-2 187,700,000 6.602% November 15, 2007 B-2 36,500,000 6.728% November 15, 2007 C-2 36,500,000 6.806% November 15, 2007 D-2 36,500,000 6.992% November 15, 2007 E-2 12,800,000 7.224% November 15, 2007 The Mortgagors may issue securities evidencing additional indebtedness in excess of $560,000,000 in one or more issuances after the date hereof, which securities would also be secured hereby (provided that, for purposes of the Mortgaged Property in the State of Minnesota, the principal amount of indebtedness secured by such Mortgaged Property will never exceed Five Hundred Sixty Million Dollars ($560,000,000) and for purposes of the Mortgaged Property in the State of Nebraska the principal amount of indebtedness secured by such Mortgaged Property will never exceed One Billion Dollars ($1,000,000,000)), upon satisfaction of certain conditions set forth in Section 9.1 of the Indenture; WHEREAS, the Mortgagors are granting this Mortgage in order to secure the payment by the Mortgagors of the principal of, interest and Make-Whole Payment, if any, on, Additional Amounts, if any, in respect of and all other amounts payable under, the Notes, this Mortgage and the other Security Documents (as defined below), and to secure the performance by the Mortgagors of the covenants and agreements contained in this Mortgage and the other Security Documents. -2- WHEREAS, the Mortgagors are the fee owners of the real property described on Exhibits B-1 through B-13 hereto, except parcels described in the next clause ------------ ---- (subject to such exception, the "Owned Land"); WHEREAS, certain of the Mortgagors are the lessees of the real property (the "Leased Land") leased under the following ground leases (as the same have been and may hereafter be amended, renewed, modified, replaced, assigned or substituted from time to time and collectively referred to herein as the "Ground Leases"): (i) Lease of Mall Stores R and S at Fallbrook Square Mall, dated October 1, 1985, between Fairbanks, Equity Ltd. (assignee of Sears, Roebuck & Co.) and Fallbrook Square Partners Limited Partnership (f/k/a Fallbrook Square Partners), as amended by Lease Amendment No. 1, dated December 5, 1994, (ii) Lease of Non-Mall Store 1 at Fallbrook Square Mall dated October 1, 1985, between Fairbanks Equity, Ltd., (assignee of Sears Roebuck & Co.) and Fallbrook Square Partners Limited Partnership (f/k/a Fallbrook Square Partners) and (iii) Ground Lease Agreement for Rio West Mall, dated May 19, 1980, between Gamerco Associates Current Investment Limited Partnership, No. 2 (assignee of Gamerco Associates, Ltd.), and Rio West L.L.C. (f/k/a Rio West Partners), indirect assignee of General Growth Development Corporation. WHEREAS, the indebtedness evidenced by the Notes and secured by this Mortgage and the other Security Documents is referred to herein as the "Loan". WHEREAS, each of the Mortgagors has duly authorized the execution and delivery of this Mortgage and has taken all actions required by law and all other actions of such Mortgagor required therefor. NOW, THEREFORE, in order to secure: (i) payment by the Mortgagors of the principal of, interest (including Additional Amounts (as defined in the Indenture), if any) on, Additional Amounts, if any, in respect of, Make-Whole Payment, if any, on and all other amounts payable under, the Notes; (ii) the payment of all amounts payable under this Mortgage and the other Security Documents; (iii) the performance by the Mortgagors of their respective covenants and agreements contained in this Mortgage and the other Security Documents; and (iv) the payment and performance by the Mortgagors of their respective covenants and agreements under the Leases (as defined below) and the Operating Agreements (as defined below) (items (i) through (iv) being referred to herein as the "Secured Obligations"); the Mortgagors and the Mortgagee by these presents do hereby agree as follows: GRANTING CLAUSES ---------------- Each Mortgagor does hereby grant, convey, bargain, sell, mortgage (in a Mortgage State), warrant, pledge, assign and transfer to the Mortgagee, to the extent that the Mortgaged Property is in a Mortgage State or the State of Georgia, and to Deed Trustee for the benefit of the Mortgagee, as beneficiary in trust, to the extent that the -3- Mortgaged Property is in a Deed of Trust State, the following property (such property being referred to herein, with respect to any one of the Shopping Centers, as a "Mortgaged Property", and, with respect to all of the Shopping Centers, as the "Mortgaged Properties") with respect to the Shopping Center identified on Exhibit A as being owned by it, subject to the Ground Leases and --------- the other permitted encumbrances described on Exhibit C hereto (the "Permitted --------- Exceptions"): (i) all of such Mortgagor's estate, right, title and interest in and to the Owned Land; (ii) in the case of each of Rio West L.L.C. and Fallbrook Square Partners Limited Partnership, all of such Mortgagor's estate, right, title and interest in, to and under each Ground Lease to which such Mortgagor is a party and the leasehold estate created thereby in the Leased Land, together with all appurtenances including, but not limited to (a) extension, renewal, modification and option rights, and all of the estate and right of such Mortgagor of, in, and to the Leased Land under and by virtue of such Ground Lease, (b) all credits to and deposits of such Mortgagor under such Ground Lease and all other options, privileges and rights granted and demised to such Mortgagor under such Ground Lease, and (c) all the right or privilege of such Mortgagor to terminate, cancel, surrender or merge such Ground Lease; (iii) all additional estates in real estate (including the Land), if any, which, from time to time, by supplemental mortgage, deed to secure debt or deed of trust or otherwise, may be expressly made subject to the lien hereof; (iv) all of such Mortgagor's right, title and interest in and to the Improvements (including, without limitation, any such right, title and interest granted to such Mortgagor pursuant to any Ground Lease, if applicable) and any alterations thereto or replacements thereof, now or hereafter erected upon the Land; (v) all of such Mortgagor's right, title and interest in and to all Fixtures now or at any time hereafter affixed to, attached to, placed upon or used in any way in connection with the complete and comfortable use, enjoyment, occupancy or operation of the Land or the Improvements, together with any and all replacements thereof and additions thereto; (vi) all of such Mortgagor's right, title and interest in and to all Equipment and Personal Property now or at any time hereafter located at or used in connection with the Land or the Improvements, together with any and all replacements thereof and additions thereto; (vii) all of such Mortgagor's right, title and interest in, to and under all Leases and all Specialty Leases of the Land and/or the Improvements, or any part thereof, now or hereafter entered into, and in and to all cash or securities deposited -4- thereunder to secure performance by the lessees of their obligations thereunder, to the extent legally assignable, and the right upon the occurrence and continuation of an Event of Default hereunder, to receive and collect the rents thereunder; (viii) all of such Mortgagor's right, title and interest now owned or hereafter acquired in and to the permits, licenses and rights in and to the use, occupation and operation of the Land and the Improvements and any part thereof, to the extent legally assignable; (ix) all of such Mortgagor's right, title and interest in and to all rights of way or use, air rights, water rights (whether riparian, appropriative, or otherwise), utility rights, privileges, franchises, servitudes, easements, tenements, hereditaments and appurtenances now or hereafter belonging or appertaining to any of the foregoing or to the Land, and all of such Mortgagor's right, title and interest in and to any streets, ways, alleys, roadbeds, inclines, tunnels, culverts, strips or gores of land adjoining or serving the Land or any part thereof, whether now owned or hereafter acquired by such Mortgagor; and (x) all of such Mortgagor's right, title and interest in and to all rents, issues, profits, proceeds and products arising from any of the foregoing and all of such Mortgagor's right, title and interest, if any, to all proceeds of the conversion, voluntary or involuntary, of any of the foregoing into cash or liquidated claims, including, without limitation, proceeds of insurance and condemnation awards. AND, without limiting any of the other provisions of this Mortgage, each Mortgagor expressly grants to the Mortgagee, as secured party, a security interest in the portion of the Mortgaged Property identified on Exhibit A as --------- being owned by it which is or may be subject to the provisions of the Uniform Commercial Code as in effect from time to time in the state in which such Mortgaged Property is located (the "Commercial Code") which are applicable to secured transactions; it being understood and agreed that the Improvements and Fixtures are part and parcel of the Land and appropriated to the use thereof and, whether affixed or annexed to the Land or not, shall for the purposes of this Mortgage be deemed conclusively to be real estate and conveyed hereby in a Deed of Trust State and mortgaged hereby in a Mortgage State. TO HAVE AND TO HOLD the above granted and described Mortgaged Properties, subject in all respects only to the Permitted Exceptions and any items that are being contested in accordance with Article 12 hereof, unto and to the proper use and benefit of the Mortgagee (or the Deed Trustee in a Deed of Trust State) and its successors, assigns and substitutes, and each Mortgagor hereby binds itself and its successors, assigns and substitutes in each case forever upon the terms and conditions set forth herein. -5- PROVIDED ALWAYS, and this instrument is upon the express condition that, if the Mortgagors pay to the Mortgagee the aggregate principal balance of all of the Notes, the interest thereon and all other sums payable to the holders of the Notes and to the Mortgagee and the Servicer in accordance with the provisions of the Notes, this Mortgage, the Indenture and the other Security Documents, at the times and in the manner specified, without offset, deduction, fraud or delay, and the Mortgagors perform and comply with all the other agreements, conditions, covenants, provisions and stipulations contained in the Notes, this Mortgage, the Indenture and the other Security Documents, then this Mortgage and the estate hereby granted (i) in a Mortgage State or Deed of Trust State shall cease and become void and (ii) in the State of Georgia, shall be canceled and surrendered; provided, further, this instrument is intended to operate and is to be construed in the State of Georgia as a deed passing title to the Owned Land to Mortgagee and is made under those provisions of the existing laws of the State of Georgia relating to deeds to secure debt, and is given to secure the payment of the Secured Obligations. The following actions of the Mortgagee shall not affect the liability of the Mortgagors for payment and performance of the Secured Obligations and shall not affect the lien hereof upon any portion of any Mortgaged Property not expressly released herefrom: if the Mortgagee shall, with or without notice (a) retain or obtain a security interest in any property to secure all or any portion of the Secured Obligations, (b) retain or obtain the primary or secondary liability of any party or parties with respect to all or any portion of the Secured Obligations, (c) alter, exchange, extend, renew, modify, release or cancel for any period (whether or not longer than their original maturity) any terms, conditions, provisions or covenants contained in any or all of the Security Documents, (d) release or compromise any liability of any party or parties primarily or secondarily liable on all or any portion of the Secured Obligations, (e) release its security interest, if any, in all or any portion of the Mortgaged Properties and/or permit any substitution or exchange for any such portion of the Mortgaged Properties, (f) resort to any Mortgaged Property conveyed by this Mortgage, or any portion thereof, for payment of the Secured Obligations, or any portion thereof, whether or not the Mortgagee shall have resorted to any other property otherwise securing the Secured Obligations, or shall have proceeded against any other party primarily or secondarily liable on the Secured Obligations, and (g) apply all or any portion of any of the Mortgaged Properties or direct the order or manner of sale thereof as the Mortgagee in its sole discretion chooses in accordance with the terms of this Mortgage. AND, TO PROTECT THE SECURITY OF THIS MORTGAGE, each Mortgagor represents, warrants, covenants and agrees as follows: 1 PRINCIPLES OF CONSTRUCTION; DEFINITIONS; PARTICULAR PROVISIONS -------------------------------------------------------------- -6- 1.1. Principles of Construction. (a) Capitalized terms, not otherwise -------------------------- defined in this Mortgage, shall have the respective meanings assigned thereto in the Indenture. (b) For all purposes of this Mortgage, except as otherwise expressly provided or unless the context otherwise requires: (1) The terms defined in this Article shall have the meanings assigned to them in this Article and shall include the plural as well as the singular; (2) All accounting terms not otherwise defined herein shall have the meanings assigned to them in accordance with generally accepted accounting principles in the United States of America, and, except as otherwise herein expressly provided, the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted in the United States of America as of the date of such computation; (3) The word "including" shall be construed to be followed by the words "without limitation"; (4) Section headings are for the convenience of the reader and shall not be considered in interpreting this Mortgage or the intent of the parties hereto; and (5) The words "herein", "hereof" and "hereunder" and other words of similar import shall refer to this Mortgage as a whole and not to any particular Article, Section or other subdivision. 1.2. Definitions. As used in this Mortgage the following terms have the ----------- following respective meanings: Affiliate shall mean a Person or Persons directly or indirectly, through --------- one or more intermediaries, controlling, controlled by or under common control with the Person or Persons in question. The term "control", as used in the immediately preceding sentence, shall mean, with respect to a Person that is a corporation, the right to exercise, directly or indirectly, more than 50% of the voting rights attributable to the shares of the controlled corporation and, with respect to a Person that is not a corporation, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the controlled Person. Allocated Amount shall mean, with respect to each Mortgaged Property, the ---------------- amount set forth on Exhibit F hereto; provided, however, that such amounts --------- shall be reduced as set forth in Section 44.1 in the event of certain prepayments of the Notes in accordance with the terms of this Mortgage and the Indenture. -7- Alteration shall have the meaning stated in Article 14 hereof. ---------- Alteration Threshold Amount shall have the meaning stated in Section --------------------------- 14(d) hereof. Appraiser shall mean any Person selected by the Mortgagors who is a --------- member of the Appraisal Institute (formerly the American Institute of Real Estate Appraisers of the National Association of Realtors) or any successor organization thereto, has at least ten (10) years' experience in appraising regional shopping center properties and is not an Affiliate of any Mortgagor. Approved Bank shall mean banks or other financial institutions which have ------------- (i)(a) a minimum net worth of $500,000,000, or (b) total assets of $5,000,000,000 and (ii) a minimum long-term unsecured debt rating at least equivalent to the Required Rating. Assignment of Contracts shall mean the blanket Assignment of Agreements, ----------------------- Licenses, Permits and Contracts, dated as of the date hereof, from the Mortgagors, as assignors, to the Mortgagee, as assignee, together with any amendments thereto. Assignment of Leases shall mean the blanket Assignment of Leases and -------------------- Rents, dated as of the date hereof, from the Mortgagors, as assignors, to the Mortgagee, as assignee, together with any amendments thereto pursuant to the provisions thereof, assigning all the Leases, Specialty Leases and rents therefrom relating to the Mortgaged Properties. Business Day shall have the meaning stated in the Indenture. ------------ Calculation Date shall mean the date as of which Net Operating Income is ---------------- being calculated. Cash and Cash Equivalents shall mean (i) cash, (ii) U.S. Government ------------------------- Securities, (iii) interest bearing or discounted obligations of federal agencies and government sponsored entities or pools of such instruments offered by Approved Banks and dealers, including, without limitation, Federal Home Loan Mortgage Corporation participation sale certificates, Government National Mortgage Association modified pass-through certificates, Federal National Mortgage Association bonds and notes, Federal Farm Credit System securities (provided all of the obligations described in this clause (iii) shall be rated "AAA" or backed by the full faith and credit of the United States government for full and timely payment), (iv) time deposits, domestic and Eurodollar certificates of deposit, bankers acceptances or commercial paper rated at least P-1 (or its equivalent) by the Rating Agency, and/or guaranteed by an entity having a long-term rating at least equal to the Required Rating, floating rate notes, other money market instruments and letters of -8- credit each issued by Approved Banks (provided that if the scheduled maturity of any such note, instrument or letter of credit is more than six (6) months after the date of purchase of such obligation by a Mortgagor or Mortgagee, the note, instrument or letter of credit must be issued by a bank having a long-term unsecured debt rating at least equal to the Required Rating), (v) obligations issued by state and local governments or their agencies, carrying a rating at least equal to the Required Rating and/or guaranteed by an irrevocable letter of credit of an Approved Bank (provided that if the scheduled maturity of any such obligation is more than six (6) months after the date of purchase by a Mortgagor or Mortgagee and such obligation is guaranteed by a letter of credit, the letter of credit guaranteeing such obligation must be issued by an Approved Bank having a long-term unsecured debt rating at least equal to the Required Rating), (vi) repurchase agreements with major banks and primary government securities dealers fully secured by U.S. government or agency collateral with a value equal to or exceeding the principal amount on a daily basis and held in safekeeping (provided that at the time of purchase the counterparty to such repurchase agreement must have a long-term unsecured debt rating at least equal to the Required Rating), (vii) investments in money market funds and money market mutual funds all the assets of which are comprised of investments described in clauses (i) through (vi) above, and (viii) any other investment which the Rating Agency confirms in writing will not, in and of itself, result in a downgrading, qualification or withdrawal of the rating then assigned to any of the Notes. Except as otherwise provided in this definition, Cash and Cash Equivalents shall not include any investments commonly known as "derivatives", any investments requiring a payment above par for an obligation, and under no circumstances shall Cash and Cash Equivalents include interest-only strips. Any investment in Cash and Cash Equivalents shall have a maturity date not later than one Business Day prior to the date that the proceeds therefrom are required hereunder. Casualty shall have the meaning stated in Article 15 hereof. -------- Closing Date shall mean November 25, 1997 or such other date as the ------------ parties hereto shall mutually agree upon. Code shall mean the Internal Revenue Code of 1986, as amended from time ---- to time. Cost Sharing Agreement shall mean that certain Cost Sharing Agreement, ---------------------- dated as of the date hereof, among the Mortgagors named herein, which describes how the Mortgagors will share the proceeds of the Loan and the costs and expenses arising under the Notes and the other Security Documents. Credit Facility shall mean a clean irrevocable, unconditional --------------- transferable letter of credit, payable on sight draft only, in respect of which (a) any reimbursement obligation is not secured by any of the Mortgaged Properties or any other property -9- pledged to secure the Secured Obligations, and (b) Mortgagors shall be permitted to have a contingent reimbursement obligation only in favor of any lender with respect to any Credit Facility issued by such lender which Credit Facility was issued for the benefit of Mortgagors, if and only if (i) such lender's rights with respect to such reimbursement obligation are fully subordinated to payment of the Secured Obligations, (ii) no payment shall be made to such lender in respect of such reimbursement obligation during the occurrence and continuation of an Event of Default and (iii) such lender shall be prohibited from exercising any and all remedial action against any Mortgagor in connection therewith until the Secured Obligations have been paid in full, in favor of the Mortgagee and entitling Mortgagee to draw thereon in New York, New York or in such other city as Mortgagee's corporate trust office may be located at the time of the issuance of such letter of credit, issued by a domestic bank or the U.S. agency or branch of a foreign bank the long-term unsecured debt rating of which at the time such letter of credit is delivered and throughout the term of such letter of credit is not less than the then Required Rating, or, if there are no domestic banks or U.S. agencies or branches of a foreign bank having such long-term unsecured debt rating then issuing letters of credit, then such letter of credit may be issued by a domestic bank the long-term unsecured debt rating of which is not lower than "Aa3" by the Rating Agency. Anything to the contrary herein notwithstanding, the parties hereto agree that, for so long as U.S. Bank, National Association ("U.S. Bank"), Union Bank of Switzerland, New York Branch ("UBS") or Bank of America National Trust and Savings Association ("BofA"), as the case may be, has a long-term senior unsecured credit rating not less than its rating as of the Closing Date, U.S. Bank, UBS or BofA, as the case may be, may be the issuer of any Credit Facility required or permitted hereunder. Such Credit Facility shall provide that it will automatically renew unless the issuer of such Credit Facility delivers written notice to Trustee, as beneficiary, and Mortgagors, as account parties, at least 30 days prior to its expiration that such Credit Facility will not be renewed, and, in such case, shall provide that Mortgagee, as beneficiary, shall be entitled to draw upon the full amount of such Credit Facility. Without in any way limiting the generality of the foregoing, if any Credit Facility is not renewed or replaced with another Credit Facility prior to the date that is 30 days prior to its expiration, Mortgagee shall be entitled to draw upon the full amount of such Credit Facility. Debt Securities shall mean debt obligations, other than U.S. Government --------------- Securities, of any Person, whether evidenced by bonds, notes, debentures, certificates, book entry deposits, certificates of deposit, commercial paper, bankers acceptances, reinvestment letters, funding agreements or other instruments, which (x) are not subject to prepayment or redemption prior to maturity and (y) are rated not less than the then Required Rating; or any combination of the foregoing. Debt Service shall mean, in respect of the Notes and any other ------------ indebtedness for borrowed money of any of the Mortgagors permitted hereunder for any period, all payments of interest (assuming a constant annual interest rate of 9.25% on all -10- Notes) and principal amortization, if any, paid or payable by the Mortgagors or any of them during such period, excluding (i) balloon payments of principal or accrued interest, if any, due at maturity and (ii) amounts payable with respect to Notes that have been defeased pursuant to Article IV of the Indenture. Debt Service Coverage Ratio shall mean the ratio of (i) Net Operating --------------------------- Income to (ii) Debt Service on the Notes, for the four (4) most recent preceding calendar quarters for which the Mortgagors have delivered financial statements to the Mortgagee pursuant to Section 18.2 hereof. Deed of Trust State shall have the meaning stated in Section 1.3 hereof. ------------------- Deed Trustee shall mean, with respect to the Mortgaged Property located ------------ in the State of California, First American Title Company, with respect to the Mortgaged Property located in the State of Missouri, Robert Meckfessel, with respect to the Mortgaged Property located in the State of Nebraska, First American Title Insurance Company, or their respective successors. Default shall mean any condition or event which constitutes or which, ------- after the giving of notice or lapse of time or both, would constitute an Event of Default hereunder. Eligible Account shall have the meaning stated in the Indenture. ---------------- Eligible Collateral shall mean U.S. Government Securities, Debt ------------------- Securities or Cash and Cash Equivalents, or any combination thereof. Employee Benefit Plan shall mean any employee benefit plan within the --------------------- meaning of Section 3(3) of ERISA which is established, sponsored, maintained, or contributed to by any one or more of the Mortgagors on behalf of its employees, if any. Environmental Indemnity shall mean that certain blanket Environmental ----------------------- Indemnity Agreement, dated as of the date hereof, from the Mortgagors to the Mortgagee and the Servicer, together with any amendments, supplement on modifications thereto. Environmental Laws shall mean, to the extent applicable to the Premises ------------------ of any Mortgaged Property, the following: the Resource Conservation and Recovery Act (42 U.S.C. (S) 6901 et seq.), as amended by the Hazardous and Solid Waste Amendments of 1984, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. (S) 9601 et seq.), as amended by the Superfund Amendments and Reauthorization Act of 1986, the Hazardous Materials Transportation Act (49 U.S.C. (S) 1801 et seq.), the Toxic Substances Control Act (15 -11- U.S.C. (S) 2601 et seq.), Clean Air Act (42 U.S.C. (S) 9402 et seq.), the Clean Water Act (33 U.S.C. (S) 1251 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. (S) 136 et seq.), the Occupational Safety and Health Act (29 U.S.C. (S) 651 et seq.) and all other federal, state and local laws, including obligations under the common law, ordinances, rules and regulations, as any of the foregoing may have been or may be amended, supplemented or supplanted, relating to the regulation or control of Hazardous Substances or wastes, or their handling, storage or disposal, to the protection of human health or to the health, safety and protection of the environment. Equipment shall mean all machinery, apparatus, equipment, materials, --------- fittings, fixtures, chattels, articles of personal property and all other property (real, personal or mixed), and all appurtenances and additions thereto and betterments, renewals, substitutions and replacements thereof, now or hereafter owned by any of the Mortgagors or in which any of the Mortgagors has or shall acquire an interest (to the extent of such interest), and now or hereafter located on, attached to or contained in or used in connection with the Land or the Improvements, or placed on any part thereof though not attached thereto, including all indoor and outdoor furniture, landscaping, indoor plants, tools, screens, awnings, shades, blinds, curtains, draperies, partitions, carpets, rugs, furniture and furnishings, heating, lighting, plumbing, water heating, cooking, monitoring, ventilating, air conditioning, refrigerating, sanitation, waste removal, incinerating or compacting plants, systems, fixtures and equipment, elevators, escalators, stoves, ranges, vacuum systems, window washing and other cleaning systems, call systems, sprinkler systems and other fire prevention and extinguishing apparatus and materials, alarms, telecommunications, entertainment, recreational or security systems and equipment, motors, automobiles, trucks, machinery, pipes, ducts, conduits, dynamos, engines, compressors, generators, boilers, stokers, furnaces, pumps, tanks, and appliances. ERISA shall mean the Employee Retirement Income Security Act of 1974, as ----- amended from time to time. Event of Default shall have the meaning stated in Article 23 hereof. ---------------- Exculpated Persons shall have the meaning stated in Article 38 hereof. ------------------ Excusable Delay shall mean a delay due to any act of God, governmental --------------- restriction, enemy action, civil commotion, fire, casualty, strike, shortage of supplies or labor, work stoppage or other cause beyond the reasonable control of the Mortgagors or any of them, but lack of funds shall not be deemed a cause beyond the reasonable control of the Mortgagor. Fiscal Year shall mean the period from January 1 through December 31, ----------- inclusive, of any calendar year. -12- Fixed Rate Notes shall have the meaning stated in the Indenture. ---------------- Fixtures shall mean all Equipment now owned by any Mortgagor, leased to -------- any Mortgagor pursuant to any of the Ground Leases or otherwise or hereafter acquired by any Mortgagor, which is so related to the Land and Improvements forming part of any of the Mortgaged Properties that it is deemed fixtures or real property under the law of the particular state in which the Equipment is located, including, without limitation, all building or construction materials intended for construction, reconstruction, alteration or repair of or installation on any of the Mortgaged Properties, construction equipment, appliances, machinery, plant equipment, fittings, apparatuses, fixtures and other items now or hereafter attached to, installed in or used in connection with (temporarily or permanently) any of the Improvements or the Land, including, but not limited to, Equipment, engines, devices for the operation of pumps, pipes, plumbing, cleaning, call and sprinkler systems, fire extinguishing apparatuses and equipment, water tanks, heating, ventilating, plumbing, laundry, incinerating, electrical, air conditioning and air cooling equipment and systems, gas and electric machinery, appurtenances and equipment, pollution control equipment, security systems, disposals, dishwashers, refrigerators and ranges, recreational equipment and facilities of all kinds, and water, gas, electrical, storm and sanitary sewer facilities, utility lines and equipment (whether owned individually or jointly with others, and, if owned jointly, to the extent of the applicable Mortgagor's interest therein) and all other utilities whether or not situated in easements, all water tanks, water supply systems, water power sites, fuel stations, fuel tanks, fuel supply systems, and all other structures, together with all accessions, appurtenances, additions, replacements, betterments and substitutions for any of the foregoing and the proceeds thereof. Notwithstanding the foregoing, "Fixtures" shall not include any property which tenants are entitled to remove pursuant to Leases, except to the extent that the applicable Mortgagor shall have any right or interest therein. GAAP shall mean generally accepted accounting principles in the United ---- States of America as of the relevant date in question. General Growth shall mean General Growth Properties, Inc., a Delaware -------------- corporation, and its successors and assigns. GGP shall mean GGP Limited Partnership, a Delaware limited partnership, --- and its successors and assigns. Guaranty shall have the meaning stated in Section 51(a). -------- Ground Leases shall have the meaning stated in the Preliminary Statement ------------- hereto. -13- Hazardous Substances shall mean (i) those substances in such amounts -------------------- included within definitions of or identified as "hazardous substances", "hazardous materials", or "toxic substances" in or pursuant to Environmental Laws; (ii) those substances in such amounts listed in the United States Department of Transportation Table (40 CFR 172.101 and amendments thereto) or by the Environmental Protection Agency (or any successor agency) as hazardous substances (40 CFR Part 302 and amendments thereto); (iii) any material, waste or substance which is or contains (A) petroleum, including crude oil or any fraction thereof, natural gas, or synthetic gas usable for fuel or any mixture thereof, or any product containing the foregoing substances, (B) asbestos or asbestos containing material, (C) polychlorinated biphenyls, (D) any substance in such amount designated as "hazardous substance" pursuant to Section 311 of the Clean Water Act, 33 U.S.C. (S) 1251 et seq. (33 U.S.C. (S) 1321), or listed pursuant to Section 307 of the Clean Water Act (33 U.S.C. (S) 1317), (E) flammable explosives and (F) radioactive materials; and (iv) such other substances, materials and wastes in such amounts which are regulated as hazardous, toxic or "special" or "industrial" wastes, or any other substance which may result in liability, under Environmental Laws. Hazardous Substances shall not include those types and amounts of substances which are (1)(x) commonly used in maintenance, repair and renovation activities (y) standard office supplies and (z) retail tenants' inventory generally held for resale in typical shopping centers, provided that they are used, stored and handled in a commercially acceptable fashion and in compliance with all applicable laws and (2) gas, oil and other ordinary automotive fluids contained in an ordinary manner in motor vehicles visiting the applicable Mortgaged Property. Hazardous Substance Activity shall mean any storage, holding, existence, ---------------------------- release, spill, leaking, pumping, pouring, injection, escaping, deposit, disposal, dispersal, leaching, migration, use, treatment, emission, discharge, generation, processing, abatement, removal, disposition, handling or transportation of any Hazardous Substance from, under, into, or on any Mortgaged Property, including, without limitation, the discharge of any Hazardous Substance emanating from any Mortgaged Property through the air, soil, surface water, groundwater or property and also including, without limitation, the abandonment or disposal of any barrels, containers and other closed receptacles containing any Hazardous Substance from or on such Mortgaged Property, in each case whether sudden or non-sudden, accidental or intentional; provided, however, that the usage and/or storage of Hazardous Substances at any Mortgaged Property in compliance with applicable Environmental Laws and consistent with the normal operation and maintenance of such Mortgaged Property shall not constitute a Hazardous Substance Activity. Holder shall have the meaning stated in the Indenture. ------ Impositions shall have the meaning stated in Article 9 hereof. ----------- -14- Improvements shall mean any and all buildings, structures, utility sheds, ------------ workrooms, air conditioning towers, open parking areas, and all other structures and improvements of every kind whatsoever, and any and all additions, alterations, betterments or appurtenances thereto, now or at any time owned by any Mortgagor, leased to any Mortgagor pursuant to any of the Ground Leases or hereafter acquired by any Mortgagor and situated, placed or constructed on, over or under the Land or any part thereof, except the term Improvements shall not include buildings, structures, or other improvements situated on portions of the Land leased to tenants under ground leases or other customary arrangements but owned by such tenants, except at such time, if any, and only for such time, as the relevant Mortgagor shall be entitled to possession thereof by reason of the termination of such ground leases or other arrangements. Indenture shall have the meaning stated in the Preliminary Statement --------- hereof. Independent Architect shall mean a Person selected by the relevant --------------------- Mortgagor that is a member of a nationally recognized architecture or construction management firm that is licensed or registered in the state where the relevant Mortgaged Property is located, if required by the laws of such state, and is not an Affiliate of the Mortgagor. Insurance Proceeds shall have the meaning stated in Article 15 hereof. ------------------ Insurance Requirements shall mean all terms of any insurance policy ---------------------- required hereunder covering or applicable to any Mortgaged Property or any part thereof, all requirements of the issuer of any such policy, and all orders, rules, regulations and other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) applicable to or affecting any Mortgaged Property or any part thereof or the use of any Mortgaged Property or any part thereof. Interest Payment Date shall have the meaning stated in the Indenture. --------------------- Investment Grade shall mean having a long-term unsecured debt rating (or, ---------------- with respect to providers of insurance, claims-paying-ability rating) not lower than Baa3 by the Rating Agency. Ivanhoe Entities shall mean any one or more of the following: Ivanhoe ---------------- Equities V L.P., a Delaware limited partnership, Ivanhoe III Inc., a Quebec corporation, or Caisse De Depot Et Placement Du Quebec. Land shall mean the Owned Land and the Leased Land. ---- Lease shall mean, with respect to each Mortgaged Property, any lease, ----- sublease, further sublease, license, occupancy agreement or other agreement, -15- including, without limitation, any Specialty Lease, existing on the date hereof or hereafter entered into by the Mortgagor identified on Exhibit A --------- as owning such Mortgaged Property permitting the use, occupancy or enjoyment of any part of the Mortgaged Property, and every modification, amendment, or extension relating thereto. Leased Land has the meaning stated in the Preliminary Statement hereof. ----------- Legal Requirements shall mean all laws, statutes, codes, acts, ------------------ ordinances, orders, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations, directions having the force of law and requirements of all governments, departments, commissions, boards, courts, authorities, agencies, officials and officers, of governments, federal, state, county and municipal, ordinary or extraordinary (including Environmental Laws), and all covenants, restrictions and conditions now or hereafter of record, which now or at any time hereafter may be applicable to and enforceable against any Mortgagor or any Mortgaged Property as a result of the ownership, use, manner of use, occupancy, possession, operation, maintenance, alteration, repair or reconstruction of the Premises or any part thereof, including, without limitation, building and zoning codes and ordinances. Lien shall mean any mortgage, deed of trust, lien, pledge, hypothecation, ---- assignment, security interest, or any other encumbrance of, on or affecting any Mortgaged Property or 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, liens for delinquent real estate taxes and construction, mechanic's, materialmen's and other similar liens and encumbrances. Loan shall have the meaning stated in the Preliminary Statement hereto. ---- Make-Whole Payment shall have the meaning stated in the Indenture. ------------------ Mall Store Space shall mean the aggregate gross leasable area leased and ---------------- available for lease to tenants (but not including anchor Tenants) along the enclosed corridors connecting the anchor stores at the Premises. Mall Store Tenants shall mean Tenants that lease Mall Store Space. ------------------ Maturity shall have the meaning stated in the Indenture. -------- Maximum Foreseeable Casualty Loss shall have the meaning set forth in --------------------------------- Section 13.2 hereof. Mortgage shall mean this Mortgage, Deed of Trust, Security Agreement, -------- Assignment of Leases and Rents, Fixture Filing and Financing Statement, as the -16- same may be amended, restated, replaced, supplemented or otherwise modified from time to time, and shall also include the version of this agreement recorded in the State of Michigan under the title "Mortgage and Security Agreement". Mortgage State shall have the meaning stated in Section 1.3 hereof. -------------- Mortgaged Property and Mortgaged Properties shall have the meanings ------------------ -------------------- stated in the Granting Clause, but shall not include any property or portion thereof that is hereafter released from the lien of this Mortgage. Mortgagee shall have the meaning provided in the introductory paragraph --------- hereto. Mortgagor shall mean any one or more of the Mortgagors, as the context --------- may require. Mortgagors shall mean, collectively, the thirteen entities described on ---------- Exhibit A, and any successors and assigns thereto permitted hereunder, --------- subject in all cases to the provisions of Section 38. Multiemployer Plan shall mean a "multiemployer plan" as defined in ------------------ Section 4001(a)(3) of ERISA, if any, to which the Mortgagor is making or has an obligation to make contributions. Net Operating Income shall mean the excess of Operating Income over -------------------- Operating Expense based upon the Mortgagors' most recent audited financial statements (or, if such audited financial statements are as of a date more than one hundred and thirty-five (135) days before the determination date, the aggregate sum of net operating income as it appears on the Mortgagors' unaudited financial statements for the four most recent quarters for which such financial statements are available, provided, that those statements are prepared on a basis substantially consistent with the most recent audited financial statements). Notes shall have the meaning stated in the Indenture. ----- Officer's Certificate shall mean a certificate signed by any of the --------------------- persons identified on Exhibit D to the Indenture or any other person or --------- persons authorized to act on behalf of each of the Mortgagors, which shall mean, with respect to each Mortgagor, a responsible officer of the Mortgagor, if the Mortgagor is a corporation, a general partner of the Mortgagor, if the Mortgagor is a partnership, or by an individual of similar authority and responsibility authorized to sign such certificate on behalf of the Mortgagor if the Mortgagor shall not be a corporation or a partnership, which certificate shall, in each case, be subject to the non- recourse provisions of Article 38 hereof. -17- Operating Agreements shall mean the operating agreements, reciprocal -------------------- easement agreements, ground leases or other agreements, as applicable, setting out the respective rights and obligations between each Mortgagor and each of the anchor store owners at or adjacent to each of the Mortgaged Properties. Operating Expenses shall mean, for any period, all expenses payable by ------------------ the Mortgagors (or by the Property Manager for the account of any of the Mortgagors) during such period in connection with the operation of the Mortgaged Properties, determined on an accrual basis, in accordance with GAAP, which shall include the following expenses: (i) expenses in connection with cleaning, repair, maintenance, management, leasing, decoration or painting thereof, or the provision of services to any Tenant, net of any insurance proceeds or condemnation proceeds in respect of any of the foregoing; (ii) wages, benefits, payroll taxes, uniforms, insurance costs and all other related expenses for on-site building personnel, up to and including the level of the on-site building manager, engaged in cleaning, repair, maintenance, management, leasing, decoration or painting thereof or the provision of services to any Tenant; (iii) the compensation being paid for bookkeeping, accounting and building management services for the Mortgaged Properties, and all other items of compensation and reimbursement payable by any of the Mortgagors to the Property Manager (exclusive, however, of any investment advisory fees) and, if applicable (but without duplication), allocations of wages, benefits, payroll taxes, insurance costs and other related expenses for bookkeeping, accounting and other building management functions and home office expenses and computer usage relating to the Mortgaged Properties; (iv) the cost of all electricity, oil, gas, water, steam, heat, ventilation, air conditioning and any other energy, telecommunications, utility or similar items, including overtime usage, and the cost of building and cleaning supplies; (v) Impositions; (vi) premiums for liability, casualty, fidelity, business interruption, loss of "rental value" and other insurance (which, in the case of any policy covering multiple properties, shall be allocated by the Mortgagors to each Mortgaged Property in such manner as the Mortgagors determine to be equitable, taking into account the relative replacement values of each of the -18- properties covered by such policy for casualty insurance, the respective size and experience rating of each of the properties covered by such policy for liability insurance, and the insured value of each of the properties covered by such policy for the other coverages); (vii) legal accounting, appraisal and other professional fees, expenses and disbursements including annual fees and other amounts payable annually to the Trustee in accordance with the Indenture and to the Rating Agency in connection with the Notes; (viii) amounts paid in consideration of any modification, amendment, supplement, waiver, renewal, or termination of any Lease or Specialty Lease; (ix) all amounts paid or expenses incurred under any Lease of an anchor department store or a peripheral site at any of the Mortgaged Properties; (x) fees and expenses of the Mortgagee (if any) paid by the Mortgagors; and (xi) all other amounts paid during such period in respect of items which in accordance with generally accepted accounting principles would be included in the Mortgagors' annual financial statements for such period or any other period as operating expenses of the Mortgaged Properties and are reasonably expected by the Mortgagors to be regularly recurring operating expenses of the Mortgaged Properties and not separately deducted in the definition of Operating Income. Notwithstanding the foregoing clauses (i) through (xi), Operating Expenses shall not include (1) depreciation or amortization or other noncash items (other than expenses that are due and payable but not yet paid), (2) the principal of and interest and Make-Whole Payment, if any, on the Notes or any other indebtedness for borrowed money of any of the Mortgagors (except as otherwise provided in clause (vii) above), (3) income taxes or other Impositions in the nature of income taxes, (4) any expenses (including legal, accounting and other professional fees, expenses and disbursements) incurred in connection with the issuance of the Notes or the sale, exchange, transfer, financing or refinancing of all or any portion of the Mortgaged Properties or in connection with the recovery of insurance or condemnation proceeds which are applied to prepay any of the Notes pursuant to Article 15 hereof, (5) the cost of leasehold improvements and tenant improvements, leasing commissions, any other expenditures on behalf of Tenants (except to the extent, and only to the extent, that reimbursement from Tenants for such items is included in Operating Income), any Equipment (except to the extent, and only to the extent, that the proceeds from the sale of the Equipment being replaced thereby are included in Operating Income) and -19- any capital expenditures, (6) distributions to the partners or members in any Mortgagor, or any asset management fees or similar compensation payable to any Affiliate of any Mortgagors to the extent such compensation exceeds market rates, (7) certain other non-operating, non-recurring expenses identified by the Mortgagors and related to any of the Mortgaged Properties and (8) any item of expense which otherwise would be considered within Operating Expenses pursuant to the provisions above but is paid directly by any Tenant. Operating Income shall mean, for any period, all income payable to any of ---------------- the Mortgagors (or to the Property Manager for the account of any of the Mortgagors) from any Person on account of such period in connection with the operation of any of the Mortgaged Properties, determined on an accrual basis modified as set forth below, which shall include the following income: (i) all amounts received as rent by the applicable Mortgagor (or by a Property Manager for the account of the applicable Mortgagor) (including percentage rent, franchise fees and fees from temporary tenants), charges for electricity, oil, gas, water, steam, heat, ventilation, air conditioning and any other energy, telecommunications, telephone, utility or similar items, including overtime usage, HVAC equipment charges, sprinkler charges, escalation charges, license fees, maintenance fees, charges for improvements, Impositions and other amounts received by any of the Mortgagors (or to the Property Manager for the account of any of the Mortgagors) under any Lease or other agreement relating to any of the Mortgaged Properties pursuant to which any portion of the Premises or the Improvements thereon (including storage space rentals and rentals for community hall usage), utilities, facilities, equipment, parking facilities or other services are furnished by any of the Mortgagors, and including late charges, default interest and temporary investment income but excluding any security deposits received; (ii) condemnation proceeds under a temporary taking to the extent that such proceeds are compensation for lost rent; (iii) business interruption and loss of "rental value" insurance proceeds; (iv) proceeds of any sale of Equipment pursuant to Section 19.1 hereof to the extent replaced with other Equipment purchased; (v) all amounts received under any Lease of an anchor department store or a peripheral site at any of the Mortgaged Properties reasonably expected by the Mortgagors to recur in the ordinary course of business; (vi) income from cash holdings and interest from notes in lieu of rent; and -20- (vii) all other amounts received by any of the Mortgagors during such period in respect of items which in accordance with GAAP would be included in the Mortgagors' annual financial statements for such period or any other period as operating income of the Mortgaged Properties and which are reasonably expected to recur during the next two (2) years following the Calculation Date; provided, however, that the items of income described in subparagraphs (i) and (vi) shall be reduced by the greater of one percent (1%) or the then-current allowance for doubtful accounts or, if no such allowance has been established, the average bad debts expense for the first two (2) calendar years preceding the year in which the Calculation Date falls, in each case established by the relevant Mortgagor in accordance with its bad debts policy and generally acceptable accounting principles. Notwithstanding the foregoing clauses (i) through (vi), Operating Income shall not include (A) any condemnation or insurance proceeds (other than of the types described in clauses (ii) and (iii) above), (B) any proceeds resulting from the sale, exchange, transfer, financing or refinancing of all or any part of any Mortgaged Property (other than of the types described in clauses (ii) and (iv) above), (C) any rent accrued by any Mortgagor but not received because of any free rent provisions or other rental concessions in any Lease, (D) any repayments received from Tenants of principal loaned or advanced to Tenants by any Mortgagor, (E) items of non-recurring income or (F) any type of income that would otherwise be considered Operating Income pursuant to the provisions above but is paid directly by any Tenant to a Person other than a Mortgagor. Out-of-Pocket Costs shall mean with respect to the Mortgaged Properties, ------------------- following an Event of Default, (a) any and all sums actually paid or required to be paid by the Mortgagee or the Servicer for real estate taxes, taxes on rents or rentals or insurance premiums as provided in this Mortgage, and any and all other sums actually paid or required to be paid by the Mortgagee or the Servicer pursuant to the terms of this Mortgage to protect and preserve any of the Mortgaged Properties or the Mortgagee's interest therein, and (b) any and all sums, including, without limitation, judgments, settlements or compromises (to the extent such settlements or compromises have been consented to by the Mortgagors if such consent is required under the Security Documents), reasonable attorneys' fees and other costs and expenses, paid by the Mortgagee or the Servicer in connection with any suit, action, legal proceeding or dispute of any kind, in which the Mortgagee or the Servicer is a party or appears, arising from or related to any of the Mortgaged Properties or the indebtedness secured by this Mortgage. Outstanding shall, with reference to the Notes, have the meaning set ----------- forth in the Indenture. -21- Owned Land shall have the meaning stated in the Preliminary Statement ---------- hereto. Permitted Exceptions shall mean those matters identified in Exhibit C -------------------- --------- hereto. Permitted Owner shall mean: --------------- A. any Person that satisfies at least one of the criteria in each of the following two categories: (a) any one of the following: (i) a pension fund, pension trust or pension account, (ii) an insurance company, (iii) a national money-center bank, or (iv) a Person with a long-term unsecured debt rating of at least Investment Grade, and (b) any one of the following (all of the figures in this clause (b) are to be calculated exclusive of the Mortgaged Properties): (i) a Person with a current net worth of $250 million or more and owns real estate assets of $500 million or more or, if such Person is a pension fund advisor, one which controls $1 billion or more of real estate equity investments, or (ii) a pension fund, pension trust or pension account that has total assets of $500 million or more, managed by a Person that controls at least $1 billion in real estate equity investments, or (iii) a Person that controls at least twelve (12) regional malls containing (in the aggregate) at least six million square feet of leasable space, or B. any Person approved by the Mortgagee (such approval not to be unreasonably withheld or delayed) and affirmed by Rating Confirmation, or C. any Person controlled by General Growth, or D. with respect to The Oaks Mall and Westroads Mall only, any Person controlled by one or more Ivanhoe Entities. For purposes of this definition and of Section 19, "control" or "controlled" means primary responsibility to make or veto all material decisions with respect to -22- the operation, management, financing and disposition of the specified interest, rather than a beneficial ownership requirement, and without being compromised by the fact that responsibility for such day-to-day operating and management functions or leasing activities as are ordinarily handled by a property manager has been delegated by such controlling Person pursuant to an agreement in writing. Person shall mean any individual, sole proprietorship, corporation, ------ general partnership, limited partnership, limited liability company or partnership, joint venture, association, joint stock company, bank, trust, estate, unincorporated organization, any federal, state, county or municipal government (or any agency or political subdivision thereof), endowment fund or any other form of investment vehicle or other entity. Personal Property shall have the meaning stated in Section 46.1 ----------------- hereof. Pledged Assets means, collectively and as of the date of -------------- determination, all of the Mortgaged Properties then subject to the lien of this Mortgage (including, without limitation, any Substitute Mortgaged Property then encumbered by a mortgage lien in favor of the Mortgagee), but excluding all Loan proceeds distributed by any Mortgagor to its partners or members. Potential Mortgagor Obligations means the Mortgagor's contingent ------------------------------- obligations to expand anchor stores (or contribute toward the cost thereof) as identified on Exhibit I hereto. --------- Premises shall mean the Land, Improvements and Equipment and all -------- accessions and additions thereto and increases therein which at any future time constitute a part of the Land, Improvements and/or Equipment. Proceeds shall mean amounts, awards or payments payable to any of the -------- Mortgagors or the Mortgagee in respect of all or any part of any of the Mortgaged Properties in connection with the damage, destruction, taking or condemnation thereof (after the deduction therefrom and payment to the relevant Mortgagor and the Mortgagee, respectively, of any and all reasonable expenses incurred by such Mortgagor and the Mortgagee in the recovery thereof, including all attorneys' fees and expenses, the fees of insurance experts and adjusters and the costs incurred in any litigation or arbitration with respect to such damage, destruction, taking or condemnation). Property Manager has the meaning stated in Section 20(b). ---------------- Qualified Fire Protection Engineer shall mean with respect to any ---------------------------------- Mortgaged Property (a) an engineer duly licensed in the State where the Mortgaged Property is located who shall either (x) have ten (10) years' experience evaluating fire and life -23- safety systems and making estimates comparable to the estimates described in Section 13.2 hereof or (y) be certified as a qualified fire protection engineer (or equivalent) by a professional, trade or other similar association of recognized standing, (b) a reputable insurance broker having an in-house engineering and loss control group capable of making estimates comparable to the estimates described in Section 13.2 hereof, or (c) an insurer meeting the criteria set forth in Section 13.2 hereof or a qualified employee thereof, in each case selected by the Mortgagor identified in Exhibit A as owning such Mortgaged Property (unless --------- reasonably disapproved by the Mortgagee). Rating Agency shall mean Moody's Investors Service, Inc., or any successor thereto, and, if such corporation shall for any reason no longer perform the functions of a securities rating agency, "Rating Agency" shall be deemed to refer to any other nationally recognized rating agency selected by the Mortgagors (and not reasonably disapproved by the Mortgagee). Rating Confirmation shall have the meaning stated in the Indenture. ------------------- Release Premises shall have the meaning stated in Section 44.1(c) ---------------- hereof. Renewal Lease shall have the meaning stated in Section 20(b) hereof. ------------- Required Rating shall mean the higher of (i) the highest rating then --------------- assigned by the Rating Agency to any of the outstanding Notes, and (ii) "A2" (or its equivalent) by the Rating Agency. Restoration shall mean, in case of damage to, destruction of, taking ----------- or condemnation of the Premises of any Mortgaged Property or any part thereof, the restoration, replacement or rebuilding of such Premises as nearly as practicable (after taking into account the consequences of a taking or condemnation, if any) to at least the value and utility (in light of commercial materials and services then available) of such Premises immediately prior to such damage, destruction, taking or condemnation, together with such Alterations as may be made at the relevant Mortgagor's election in accordance with the applicable provisions of this Mortgage. Secured Obligations shall have the meaning stated in the Preliminary ------------------- Statement hereof. Security Documents shall mean this Mortgage, the Assignment of Leases, ------------------ the Environmental Indemnity, the Assignment of Contracts, the Subordination of Management Agreement, the Notes, the Indenture, the Trustee Fee Agreement, the Service Fee Agreement, the financing statements now or hereafter executed in connection herewith and any and all other agreements, certificates (including, without limitation, Officer's Certificates), instruments or documents executed by the -24- Mortgagors or any of them evidencing, securing or delivered in connection with the Loan and/or the transactions contemplated hereby. Servicer shall mean the institution serving from time to time as -------- Servicer for the benefit of the Holders of Notes under and pursuant to the Indenture. Shopping Centers shall have the meaning stated in the Preliminary ---------------- Statement hereof. Single Purpose/Insolvency Remote Entity shall mean a Person, other --------------------------------------- than an individual, which is formed or organized solely for the purpose of holding, directly, an ownership interest in any of the Mortgaged Properties, does not engage in any business unrelated to such Mortgaged Property or Mortgaged Properties and the financing thereof, does not have any assets other than those related to its interest in such Mortgaged Property or Mortgaged Properties or the financing thereof or any indebtedness other than as permitted by this Mortgage or the other Security Documents, has its own separate books and records and its own accounts, in each case which are separate and apart from the books and records and accounts of any other Person, and holds itself out as being a Person, separate and apart from any other Person. If the foregoing entity is a partnership or limited liability company, (i) its partnership agreement or operating agreement, as applicable, must provide that the partnership or limited liability company will dissolve upon the withdrawal or dissolution of the last remaining general partner or member, but the partnership or limited liability company will not be dissolved if the remaining partners or members, within ninety (90) days, by majority vote elect to continue the partnership or limited liability company and, in the case of a limited partnership, appoint a new general partner, (ii) one general partner or managing member (as applicable) must at all times be a Single Purpose/Insolvency Remote Entity formed solely for the purpose of acting as such general partner or managing member, as applicable, and (iii) the partnership agreement or operating agreement (as applicable) must provide that the dissolution and winding up or insolvency filing of such partnership or limited liability company requires the unanimous consent of all general partners or members, respectively. If the foregoing entity is a corporation, the entity's articles of incorporation must include provisions substantially similar to those contained on Exhibit G hereto and that --------- otherwise limit its business to a single purpose as described above in the first sentence of this definition. Any other entity seeking to qualify as a Single Purpose/Insolvency Remote Entity shall have adopted provisions in its governing documents that are substantively similar to the provisions contained in Exhibit G and described above for partnerships, limited --------- liability companies and corporations. Specialty Lease shall mean any lease, sublease, future sublease, --------------- license, occupancy agreement or other agreement having an initial term of less than one (1) year existing on the date hereof or hereafter, in either case entered into by a -25- Mortgagor and permitting the use, occupancy or enjoyment of any part of any Mortgaged Property, and every modification, amendment or extension relating thereto. Square Footage shall have the meaning stated in Section 15(d). -------------- Subordination of Management Agreement shall mean the Manager's Consent ------------------------------------- and Subordination of Management Agreement, dated as of the date hereof, by General Growth Management, Inc. to the Trustee, together with any amendments thereto. Substitute Assignment of Leases shall have the meaning stated in ------------------------------- Section 44.2(d). Substitute Mortgaged Property shall have the meaning stated in Section ----------------------------- 44.2. Substitution Notice shall have the meaning stated in Section ------------------- 44.2(a)(i). Taking shall have the meaning stated in Article 15 hereof. ------ Taking Proceeds shall have the meaning stated in Article 15 hereof. --------------- Tax Opinion shall have the meaning stated in the first paragraph of ----------- Section 19 hereof. Tenant shall mean any Person (i) liable by contract or otherwise to ------ pay rent or a percentage of gross income, revenue or profits pursuant to a Lease or (ii) party to an Operating Agreement affecting any of the Mortgaged Properties. Termination Percentage shall have the meaning stated in Section 15(d) ---------------------- hereof. Threshold Amount shall mean, with respect to any Mortgaged Property, ---------------- five percent (5%) of the original Allocated Amount applicable to such Mortgaged Property, rounded up to the nearest hundred thousand; provided, that the Threshold Amount for any Mortgaged Property shall always be at least Two Million Dollars ($2,000,000). Title Company shall mean First American Title Insurance Company, or ------------- any successor in interest thereto, or any other nationally recognized title insurance company selected by the relevant Mortgagor. Trade Payables, with respect to a Mortgagor, shall mean amounts -------------- payable by or on behalf of such Mortgagor for or in respect of the operation of the Mortgaged Property identified on Exhibit A hereto as being --------- owned by such Mortgagor in the ordinary course and which would under GAAP be regarded as ordinary expenses, as well as leasing commissions and tenant improvements, including amounts payable -26- to suppliers, vendors, contractors, mechanics, materialmen or other Persons providing property or services to such Mortgaged Property or Mortgagor. Transferee Mortgagor shall mean with respect to any Mortgaged Property -------------------- any Mortgagor other than the entity identified on Exhibit A as owning such --------- Mortgaged Property as of the date hereof. Trustee shall mean the institution serving from time to time as ------- Trustee for the benefit of the Holders of Notes under and pursuant to the Indenture (and does not refer to the Deed Trustees). U.S. Government Securities shall mean securities evidencing an -------------------------- obligation to pay principal and interest in a full and timely manner that are (y) direct obligations of the United States of America for the payment of which its full faith and credit is pledged, or (z) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of and guaranteed as a full faith and credit obligation by the United States of America, which in either case are not callable or redeemable at the option of the issuer thereof (including a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any such securities or a specific payment of principal of or interest on any such securities held by such custodian for the account of the holder of such depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the securities or the specific payment of principal of or interest on the securities evidenced by such depository receipt. Withdrawal Notice shall have the meaning stated in Section 44.2(c). ----------------- Work shall have the meaning stated in Section 15(d)(ii). ---- 1.3. Provisions Concerning Particular States. Notwithstanding anything --------------------------------------- to the contrary herein contained: (a) To the extent the Mortgaged Property is located in Florida, Georgia, Illinois, Ohio, Oklahoma, Michigan, Minnesota, New Mexico, New York or Wisconsin (each a "Mortgage State"), this instrument shall -------------- be deemed to be and shall be enforceable as a mortgage and/or leasehold mortgage, and as a security agreement, assignment of leases and rents and fixture filing and financing statement. (b) To the extent the Mortgaged Property is located in the State of Georgia, this instrument shall be enforceable as a deed to secure debt and as a security agreement, assignment of leases and rents and fixtures filing and financing statement. (c) To the extent the Mortgaged Property is located in California, Nebraska or Missouri (each a "Deed of Trust State"), this instrument shall be ------------------- deemed to be and shall be enforceable as a deed of trust and/or leasehold deed of trust and as a security -27- agreement, assignment of leases and rents and fixture filing and financing statement. This Section 1.3 is not intended to preclude the Mortgagee (or the Servicer on its behalf) from treating this Mortgage as a "mortgage" in any Deed of Trust State if such treatment is necessary or desirable to enable the Mortgagee to realize the practical benefits intended to be provided by this Mortgage. Wherever herein contained, the word "Mortgagee" (i) shall be deemed to refer to the Mortgagee (as the mortgagee) to the extent a Mortgaged Property is situated in any Mortgage State and to the Mortgagee (as grantee) to the extent the Mortgaged Property is situated in the State of Georgia, and neither Deed Trustee shall have any rights, powers or obligations in those States, and (ii) to the extent the Mortgaged Property is situated in any Deed of Trust State, shall be deemed to refer to (1) the relevant Deed Trustee for the benefit of the Mortgagee (as beneficiary) and (2) if the context so requires or permits and if the Mortgagee so elects and if the law of the applicable Deed of Trust State permits, the Mortgagee. 1.4. Mortgagor Representative. The Mortgagors hereby acknowledge the ------------------------ provisions of Section 1.15 of the Indenture (appointing Lockport L.L.C., a New York limited liability company, to act as representative of the Mortgagors under the Indenture, this Mortgage and the other Security Documents), which Section hereby is incorporated by reference into this Mortgage. 1.5. Mortgagee Consents and Approvals. Whenever, in this Mortgage or -------------------------------- in any other Security Document, any consent or approval or other action may or shall be granted, withheld or otherwise taken by the Mortgagee, such consent, approval or other action shall be granted or withheld and such other action may be taken by the Servicer on behalf of the Mortgagee in accordance with Accepted Servicing Practices (as defined in the Indenture). In deciding whether to grant or withhold any such consent or approval or to take any such other action, the Servicer shall be entitled (but not required) to consult with such counsel, real estate professionals or other Persons as the Servicer may deem necessary or appropriate and the Mortgagors shall reimburse the Servicer for all reasonable fees and expenses incurred by the Servicer in connection with any such consultation. 2. PARTICULAR COVENANTS, REPRESENTATIONS AND WARRANTIES. ---------------------------------------------------- 2.1. Due Authorization; Validity of the Mortgage and the Other --------------------------------------------------------- Security Documents; Title to the Premises; Etc. The Mortgagors collectively - ----------------------------------------------- covenant and agree and represent and warrant as follows: (a) this Mortgage and the other Security Documents have been duly authorized, executed and delivered and constitute legal, valid and binding obligations of the Mortgagors enforceable in accordance with their respective terms, subject, as to -28- enforcement, to bankruptcy, insolvency, fraudulent transfer, fraudulent conveyance, reorganization, moratorium, rehabilitation and other laws relating to or affecting creditors' rights and to general equity principles; (b) each Mortgagor is duly authorized to execute and deliver this Mortgage and the other Security Documents and thereby to grant, convey, transfer and assign the Mortgaged Property identified on Exhibit A as being owned by such --------- Mortgagor to the Mortgagee in accordance with this Mortgage and the other applicable Security Documents, and all limited liability company, partnership, corporate and governmental action, consents, authorizations and approvals necessary therefor have been duly and effectively taken or obtained; (c) as of the date hereof, each Mortgagor has good and marketable fee simple title to the portion of the Owned Land and the Improvements attributable to the Mortgaged Property identified on Exhibit A as being owned by such --------- Mortgagor and valid title to the portion of the Personal Property (including, without limitation, Equipment, but excluding Personal Property that is leased to the Mortgagor by third parties, as to which the Mortgagor holds a valid, enforceable and unencumbered leasehold interest) relating thereto and has in each case good right to convey the same aforesaid, subject to no liens, charges or encumbrances other than the Permitted Exceptions (excluding, however, Permitted Exceptions of the type set forth in clause (h) of Exhibit C hereto for --------- purposes of this representation), and upon the execution by each Mortgagor of this Mortgage, and the proper recording of the same (and any required Uniform Commercial Code financing statements) in the appropriate public records, the Mortgagee shall have a valid first lien and security title on the Premises and a valid first priority security interest in the Personal Property (other than that excluded above) in trust for the benefit of the Mortgagee subject to no liens, charges or encumbrances other than the Permitted Exceptions (but excluding, for purposes of this representation, liens, charges and encumbrances of the type described in clause (h) of Exhibit C); there is no condemnation, appropriation --------- or recapture proceeding pending or, to its knowledge, threatened with respect to any Mortgaged Property and there are no unrecorded options to purchase all or any part of any Mortgaged Property; and each Mortgagor warrants that the Permitted Exceptions affecting title to the Mortgaged Property as of the date hereof will not materially and adversely affect the ability of the Mortgagors to timely pay principal and interest due under the Notes; no title insurance company issuing a policy covering all or any part of any Mortgaged Property shall be considered a beneficiary of, or entitled to rely on, the representations and warranties contained herein; (d) None of the Mortgagors has ever had any employees or made or been required to make any contributions to any Employee Benefit Plans. None of the Mortgagors has any knowledge of any material liability which has been incurred by it or any other Mortgagor and remains unsatisfied for any taxes or penalties with respect to any Employee Benefit Plan or any Multiemployer Plan, or of any lien which has been -29- imposed on such Mortgagor's assets pursuant to Section 412 of the Code or Sections 302 or 4068 of ERISA; (e) at the time of execution of this Mortgage, there is no litigation to which any Mortgagor is a party which, if determined adversely to such Mortgagor, would have a material adverse effect on any of the Mortgaged Properties or on the ability of the Mortgagors to perform their obligations hereunder that would not be covered by insurance; and at the time of the execution of this Mortgage none of the Mortgagors has knowledge of any contingent liabilities of any of the Mortgagors which, if realized, would have a material adverse effect on any of the Mortgaged Properties or on the ability of the Mortgagors to perform their obligations hereunder, in each case that would not be covered by insurance; (f) at the time of execution of this Mortgage, no Mortgagor has any past due financial obligation under any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Mortgagor is a party which, if left unpaid could be expected to have any material adverse effect on the Mortgaged Property owned by such Mortgagor or the ability of such Mortgagor to satisfy its obligations under the Notes, this Mortgage or any other Security Documents; (g) (i) each Mortgagor is the sole owner of the entire lessor's interest in the Leases and the Specialty Leases in effect at the Mortgaged Property identified on Exhibit A as being owned or leased by such Mortgagor on --------- the date hereof, subject to the Permitted Exceptions; (ii) to each Mortgagor's knowledge (and except for such leases as have terminated in accordance with their terms between November 6, 1997 and the date hereof), the Leases with the Tenants identified on the rent rolls dated November 6, 1997 and previously delivered to the Mortgagee are valid, enforceable and in full force and effect in all material respects, subject in each case to bankruptcy, insolvency, fraudulent transfer, fraudulent conveyance, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; (iii) except as provided in the Assignment of Leases, no Mortgagor's rights to receive rents under the Leases are assigned or otherwise pledged or hypothecated; (iv) none of the rents payable under the Leases (excluding, for purposes hereof, Specialty Leases) have been collected for more than one (1) month in advance of their due date; and (v) no person or entity other than the Mortgagor identified on Exhibit A as owning such Mortgaged --------- Property has any possessory interest in or right to occupy any of the Mortgaged Properties except under and pursuant to a Lease (and, with respect to the Leased Land, the lessors under the respective Ground Leases); (h) except as disclosed in the environmental reports identified in Exhibit H hereto, (i) to the knowledge of the Mortgagors none of the Mortgagors - --------- has any liability, including, without limitation, any contingent liability, in connection with any Hazardous Substance Activity on, at or relating to any of the Mortgaged Properties under any Environmental Laws in effect as of the date hereof that could reasonably be expected to -30- have a material adverse effect on the value of any of the Mortgaged Properties (taken individually or together as a group) or the prospect of timely payment of interest and principal on the Notes when due; and (ii) none of the Mortgagors is aware of any condition in existence, or any Hazardous Substance Activity taking place, in either case on, at or relating to any of the Mortgaged Properties that could reasonably be expected to subject any Mortgagor, or any Tenant or occupant of any of the Mortgaged Properties, to any liability under any Environmental Law that would have a material adverse effect on the value of any of the Mortgaged Properties (taken individually or together as a group) or the prospect of timely payment of interest and principal on the Notes when due; and (i) to the knowledge of the Mortgagors there are no current or contingent liabilities arising from or relating to any real estate or other assets, other than the Mortgaged Properties, which, individually or in the aggregate, could be expected to have a material adverse effect on any of the Mortgaged Properties or the Mortgagors' ability to make timely payments of interest and principal on the Notes and any other amounts payable under the Security Documents when due. 2.2. Maintenance of Validity, Recording and Other Covenants Relating --------------------------------------------------------------- to the Mortgaged Properties. (a) Each Mortgagor covenants that it will forthwith - --------------------------- after the execution and delivery of this Mortgage and thereafter as necessary from time to time cause this Mortgage and the other Security Documents and any continuation statement or similar instrument relating to any property subject thereto or to any property intended to be granted, conveyed, transferred and assigned by this Mortgage to be filed, registered and recorded in such manner and in such places as may be required by law in order to publish notice of and fully to protect the validity thereof or the grant thereby of the property subject thereto and the interest and rights of the Mortgagee therein. Each Mortgagor covenants that it has paid or will pay or cause to be paid all taxes and fees incident to such filing, registration and recording, and all expenses incident to the preparation, execution and acknowledgment thereof, and of any instrument of further assurance, and all federal or state stamp taxes or other charges arising out of or in connection with the execution and delivery of such instruments. (b) Each Mortgagor covenants that at all times it will itself, or will use its best efforts to cause third parties to, preserve, warrant and defend the Mortgagee's title and right in and to each Mortgaged Property, subject to the Permitted Exceptions and items being contested in accordance with Article 12 hereof, against the claims of all Persons (other than those claiming by or through the Mortgagee) and will maintain and preserve such title and right so long as any of the Notes are outstanding. (c) Notwithstanding any provision to the contrary contained herein, the Mortgagee hereby (i) consents to the modification of existing easements, rights of way, restrictive covenants, dedications or similar agreements included in the Permitted Exceptions and to the creation by any Mortgagor of additional easements, rights of way, -31- restrictive covenants, dedications or similar agreements affecting title to the Premises owned or leased by such Mortgagor, including in connection with an Alteration, and (ii) agrees that this Mortgage shall be subordinate to such modifications, additional easements, rights of way, restrictive covenants, dedications or similar agreements, in either case upon receipt by the Mortgagee of an Officer's Certificate confirming that such action (A) will either benefit the Mortgaged Property affected thereby or will not affect the utility, operation or value of such Mortgaged Property in any material adverse respect and (B) will not, to the knowledge of each certifying officer, cause the Mortgaged Property affected thereby to be in violation of any Legal Requirements, Leases or Insurance Requirements or result in the loss of any certificate of occupancy. (d) Each Mortgagor covenants and agrees (i) to punctually perform all obligations and agreements to be performed by it as lessor under any Lease or as a party to or a beneficiary of any of the Permitted Exceptions, and to take such action as shall be commercially reasonable and diligent to compel performance by each other party to each of such instruments of such other party's obligations and agreements thereunder, (ii) to maintain the validity, perfection, priority and effectiveness of this Mortgage and the other Security Documents, (iii) that, unless otherwise permitted in this Mortgage and the other Security Documents, such Mortgagor will not take any action, will not permit action to be taken by others and will not omit to take any action, nor will the Mortgagor give any notice, approval or consent or exercise, waive or modify any rights under or in respect of the Permitted Exceptions, which action, omission, notice, approval, consent or exercise, waiver or modification of rights would release the Mortgagor from, or reduce any of the Mortgagor's obligations or liabilities under, or would result in the termination, surrender or assignment of, or the amendment or modification of, any of the Security Documents, or would impair the validity of any of the Permitted Exceptions in a manner materially adverse to any Mortgaged Property or the rights of the Mortgagee therein, this Mortgage or any of the other Security Documents, or would otherwise affect any Mortgaged Property in any material adverse respect, without the Mortgagee's consent, and any attempt to do any of the foregoing without such consent shall be of no force and effect, and (vi) that such Mortgagor will not take any action, will not permit action to be taken by others and will not omit to take any action, nor, except as permitted by Article 20 hereof, will the Mortgagor give any notice, approval or consent or exercise any rights under or in respect of any Lease or any of such other instruments, which action, omission, notice, approval, consent or exercise of rights would release any Tenant or other party from, or reduce any Tenant's or any other party's obligations or liabilities under, or would result in the termination, surrender or assignment of, or the amendment or modification of in any material adverse respect, or would impair the validity of, any Lease, any such other instruments, this Mortgage or any of the other Security Documents (other than as expressly permitted by Article 20 hereof), if any of the foregoing would affect any Mortgaged Property in any material adverse respect, without the prior written consent of the Mortgagee, and any attempt to do any of the foregoing without such consent shall be of no force and effect. -32- (e) Each Mortgagor represents that, to such Mortgagor's knowledge, no Mortgaged Property or portion thereof is, on the date hereof, in violation of any Legal Requirement or any Insurance Requirement or of any Lease, Operating Agreement or other agreement binding upon any Mortgagor in a manner that could have a material adverse effect on such Mortgaged Property, any of the other Mortgaged Properties or the ability of any Mortgagor to operate the Mortgaged Property identified on Exhibit A as being owned or leased by it or the ability --------- of any of the Mortgagors to otherwise satisfy its obligations under this Mortgage or the other Security Documents. (f) The Mortgagors covenant that they will deliver to the Mortgagee a mortgagee's title insurance policy for each Mortgaged Property in an amount not less than the original Allocated Amount applicable to such Mortgaged Property and in form and substance and with such endorsements as shall have been previously agreed between the Mortgagors and the Initial Purchasers (as defined in the Indenture), which title insurance policy shall be dated the Closing Date and redated the date of recording of this Mortgage and shall insure that this Mortgage is a valid first priority grant of, and lien on, the Premises, subject only to the Permitted Exceptions. The issuer of such title insurance shall be the Title Company or one or more other nationally recognized title insurance companies and there shall be reinsurance and direct access agreements to the extent previously agreed upon between the Mortgagor and the Placement Agents. 2.3. Negative Covenants. Each Mortgagor covenants that until the ------------------ Secured Obligations are paid in full it will not: (a) engage, directly or indirectly, in any business other than that arising out of entering into this Mortgage and the other Security Documents to which the Mortgagor is a party and ownership, operation, management, leasing and financing of the Mortgaged Property identified on Exhibit A as being owned or --------- leased by it; (b) partition the Mortgaged Property owned or leased by it or any portion thereof (except as permitted by Section 2.2(c) or Section 19.4 or to a tenancy-in-common permitted in accordance with Section 19.1(a)(i)(x)); (c) commingle its assets with the assets of any of its Affiliates; (d) transfer or lease any Mortgaged Property or any interest therein, except in each case as permitted by this Article 2 and by Article 19 or Article 20 hereof; (e) to its knowledge, engage in a nonexempt prohibited transaction described in Section 406 of ERISA or Section 4975 of the Code that would cause any obligation or action taken or to be taken hereunder (or the exercise by the Mortgagee of any of its rights under the Notes, this Mortgage or the other Security Documents) to be a non-exempt prohibited transaction under ERISA; -33- (f) incur, create or assume any indebtedness for borrowed sums (whether secured by any Mortgaged Property or any interest therein or otherwise) except for the Notes and such other indebtedness as is expressly permitted by the provisions of this Mortgage and the Indenture; each Mortgagor represents and warrants that as of the date hereof such Mortgagor does not have any indebtedness or obligations that would cause it to be in violation of the foregoing covenant; (g) permit title to any material real estate asset other than the Mortgaged Properties to be acquired by any of the Mortgagors, unless (i) such additional real estate asset is a Substitute Mortgaged Property and the conditions set forth in Section 44.2 are satisfied, or a property determined by the Mortgagor, in the exercise of its reasonable judgment, to be complementary to any Mortgaged Property, (ii) the relevant Mortgagor's interest in such real property becomes subject to the lien of this Mortgage concurrently with the acquisition thereof by such Mortgagor and (iii) in the case of any real estate complementary to a Mortgaged Property, the relevant Mortgagor has provided the Trustee and the Servicer with the items that would be required under clauses (1), (2), (4), (6) and (7) of Section 44.2(a)(i) if such real estate were to be a Substitute Mortgaged Property at least fifteen (15) days prior to the closing of the acquisition, so as to permit the Servicer to confirm the Mortgagor's determination described in clause (i) above; (h) it will not guarantee any obligation of any Person or make loans or advances to any of its Affiliates except in accordance with the Cost Sharing Agreement and as is otherwise expressly permitted by this Mortgage; (i) it will not voluntarily file, or consent to the filing of, a petition for bankruptcy, reorganization, assignment for the benefit of creditors or similar proceeding, without the unanimous consent of its general partners, members or other similar governing body or entity, as applicable; (j) (A) it will not own or acquire any assets other than the Mortgaged Property identified on Exhibit A as being owned or leased by such --------- Mortgagor and additional property incidental to the ownership of such Mortgaged Property and (B) it will not own any subsidiaries or make investments in any Person, other than investments in Eligible Investments permitted under this Mortgage or under any other Security Documents; and (k) in the case of a general (other than a limited liability partnership) or limited partnership, each of its general partners, or in the case of a limited liability partnership or limited liability company at least one (1) of its general partners or members, as applicable, will be a Single Purpose/Insolvency-Remote Entity that complies with the requirements of this Section 2.3, as and to the extent applicable. 2.4. Existence and Rights. Each Mortgagor covenants that it will do or -------------------- cause to be done all things necessary to preserve and keep in full force and effect its existence and will maintain adequate capitalization (taking into account, among other -34- things, the market value of its assets) for its business purposes; that it will not modify its partnership agreement, certificate of formation, operating agreement, certificate of incorporation or other organizational document in any manner that would have a material adverse effect on the interests of the Mortgagee hereunder; that it will pay all expenses of the Mortgaged Property identified on Exhibit A as being owned or leased by it from property of such --------- Mortgagor; that it will maintain books and records and bank accounts separate from those of its Affiliates and will maintain a separate business office (which may be a management office at the Premises); that it will at all times hold itself out to the public as a legal entity separate and distinct from any of its Affiliates (including in its leasing activities, in entering into any contract, in preparing its financial statements, and to the extent practicable in its stationery), and will cause its Affiliates to conduct business with it on an arm's-length basis (or, as to management and leasing, on a basis comparable to the management and leasing arrangements at properties similar to the Premises owned by any Affiliate of the Mortgagor and managed by the Property Manager or a similar property manager); that it will file its own tax returns or, if part of a consolidated group, will join in the consolidated tax return of such group as a separate member thereof; and will cause its management to meet regularly to carry on its business; 2.5. Payment of Taxes and Other Claims. Subject to the provisions of --------------------------------- Article 12 hereof, each Mortgagor represents that there is no default in the payment of, and covenants that it will pay or discharge or cause to be paid or discharged before any fine, penalty, interest or other cost may be imposed for nonpayment thereof, all taxes, assessments and governmental charges (or installments thereof) levied or imposed upon the Mortgaged Property identified on Exhibit A as being owned or leased by it. --------- 2.6. Payment of the Notes, All Other Amounts and the Trustee's Fees. -------------------------------------------------------------- Subject to the provisions of Article 38 hereof, the Mortgagors, jointly and severally, will cause to be duly paid the principal of, interest on and Make- Whole Payment, if any, on the Notes and all other amounts due under the Notes at the places, at the respective times and in the manner provided in the Notes. The Mortgagors will also cause to be duly paid all other charges, fees and other amounts that become due by any of them under this Mortgage and the other Security Documents and the fees, expenses and proper disbursements payable to the Trustee and the Servicer under the terms of the Indenture. 3. THE GROUND LEASES. Each of Rio West L.L.C. and Fallbrook Square ----------------- Partners Limited Partnership agrees, and any successor in interest to either such Mortgagor shall be deemed to agree, with respect to the leasehold interests identified on Exhibit A as being owned by such Mortgagor, as follows: --------- 3.1. Ground Leases Covenants. (a) Upon the occurrence and during the ----------------------- continuation of an Event of Default, such Mortgagors shall not modify, waive, extend or in any way alter, or grant any consents in respect of any material terms of, any of the Ground Leases or in any way cancel, release, terminate or surrender any of the Ground -35- Leases without the Mortgagee's prior written consent which consent shall be granted or withheld in the Mortgagee's sole discretion. (b) Each such Mortgagor shall use all reasonable efforts to keep and perform, or cause to be kept and performed, all of the material covenants and conditions contained in the Ground Lease to which it is a party by the lessee therein to be kept, provided, that in any case and to the extent where performance of any such covenant or condition is also the obligation of a third party in possession, the Mortgagor shall not be obligated to undertake such performance itself, but the Mortgagor shall use commercially reasonable efforts to cause performance of such covenant or condition by such third party. (c) If any Mortgagor exercises any option to purchase any portion of the Leased Land under any Ground Lease, thereafter such Leased Land shall for all purposes hereunder be treated as if the subject Leased Land had been Owned Land and shall be subject to this Mortgage as such. (d) Each Mortgagor shall give the Mortgagee prompt notice in writing of the receipt by such Mortgagor of any notice of default from the lessor under any of the Ground Leases, together with a copy of the same. (e) If any Mortgagor shall fail to comply with Section 3.1(b) hereof, the Mortgagee may (but shall not be obligated to), after notice to the Mortgagors and the failure of the Mortgagors to cure the same as provided in Article 34 hereof and subject to applicable Legal Requirements, exercise the rights provided to it in Article 34 hereof as provided therein. (f) So long as this Mortgage is in effect, there shall be no merger of the Ground Leases or any interest therein, or of the leasehold estate created thereby, with the fee estate in the Leased Land or any portion thereof by reason of the fact that the Ground Leases or such interest therein or such leasehold estate may be held directly or indirectly by or for the account of any person who shall hold the fee estate in the Leased Land or any portion thereof or any interest of the lessor under the Ground Leases. In case any Mortgagor acquires the fee title to the Land leased under any of the Ground Leases, this Mortgage shall attach to and cover and be a lien upon the fee title or such other estate so acquired, and such fee title or other estate shall, without further assignment, mortgage or conveyance, become and be subject to the lien of and covered by this Mortgage. 4. MAINTENANCE AND REPAIRS; SHORING. The Mortgagors will keep, or -------------------------------- use all reasonable efforts (consistent with standards that would generally be employed by institutional owners of comparable properties) to cause Tenants to keep, the Premises and the parking areas, sidewalks, curbs and streets and ways located on the Land and all other means of access to the Premises in good and clean order and condition such that the utility and operation of the Premises will not be affected in any material adverse respect, subject to ordinary wear and tear, and, subject to Excusable Delays, the -36- temporary results of any Alteration permitted hereunder and the provisions set forth in this Mortgage with respect to damage or destruction caused by fire or other Casualty or by a Taking or condemnation, the Mortgagors will promptly make or use all reasonable efforts to cause to be made all necessary or appropriate repairs, replacements and renewals thereof (which if not made would affect the utility or operation of the Premises in any material adverse respect), whether interior or exterior, structural or nonstructural, ordinary or extraordinary. All repairs and replacements shall consist of materials which are compatible with the existing Improvements and installed in a good and workmanlike manner. The Mortgagors will do or use all reasonable efforts to cause others to do, to the extent permitted by applicable law, all shoring of foundations and walls (i) of any Improvements or (ii) of the ground adjacent thereto, and every other act necessary or appropriate for the preservation and safety of the Premises by reason of or in connection with any excavation or other building operation upon the Land or any adjoining property, whether or not the Mortgagor or any other Person shall, by any Legal Requirement, be required to take such action or be liable for failure to do so. Subject (to the extent applicable) to the provisions of Article 12 relating to permitted contests, the Mortgagors each agree that they will not do or permit any act or thing which might affect the utility or operation of any Mortgaged Property or any part thereof in any material adverse respect, or commit or permit any waste of any Mortgaged Property or any part thereof. 5. UTILITY SERVICES. Subject to the provisions of Article 12 hereof, ---------------- the Mortgagors will pay or cause to be paid when due all charges for all public or private utility services, all public or private highway services, all public or private communication services and all sprinkler systems and protective services at any time rendered to or in connection with each Mortgaged Property or any part thereof and which are incurred by or on behalf of the Mortgagors. 6. NO CLAIMS AGAINST THE MORTGAGEE. Nothing contained in this ------------------------------- Mortgage shall constitute any consent or request by the Mortgagee, express or implied, for the performance of any labor or services or the furnishing of any materials or other property in respect of the Mortgaged Property or any part thereof, nor as giving any of the Mortgagors any right, power or authority to contract for or permit the performance of any labor or services or the furnishing of any materials or other property in such fashion as would permit the making of any claim against the Mortgagee in respect thereof or any claim that any Lien based on the performance of such labor or services or the furnishing of any such materials or other property is prior to the interest of the Mortgagee under this Mortgage. 7. INDEMNIFICATION BY THE MORTGAGOR. Subject to the provisions of --------------------------------- Article 38 hereof and Section 6.1 of the Indenture, each Mortgagor agrees that it will protect, indemnify and save harmless the Mortgagee, the Servicer and the Holders and, in the case of clause (h) hereof, the Deed Trustees (collectively, the "Indemnified Parties") from and against: all liabilities, obligations, claims, damages, penalties, causes of action, costs and expenses (including all reasonable attorneys' fees -37- and expenses) imposed upon or incurred by or asserted against such Indemnified Party (without the negligence or wilful misconduct of any of them) by reason of the occurrence or existence of any of the following (to the extent the insurance proceeds payable on account of the following and received by the Indemnified Party shall be inadequate) prior to the payment in full of the Notes and the satisfaction of all conditions for the satisfaction and release or defeasance of this Mortgage: (a) ownership or possession of any Mortgagor's interest in any of the Mortgaged Properties, or any interest therein, or receipt of any rent or other sum therefrom, (b) any accident, injury to or death of any Persons or loss of or damage to property occurring on or about the Premises or any part thereof or the adjoining parking areas, sidewalks, curbs, vaults and vault space, if any, streets or ways, (c) any use, non-use or condition of the Premises or any part thereof or the adjoining parking areas, sidewalks, curbs, streets or ways, including claims or penalties arising from violation of any Legal Requirement or Insurance Requirement, as well as any claim based on any patent or latent defect, whether or not discoverable by the Indemnified Party, any claim the insurance as to which is inadequate, and any claim in respect of any adverse environmental impact or effect, (d) any failure on the part of any Mortgagor to perform or comply with any of the terms of any Lease, any Ground Lease, this Mortgage or any other Security Document to which it is a party and any breach of any representation made by any Mortgagor herein, (e) any performance of any labor or services or the furnishing of any materials or other property in respect of the Mortgaged Properties or any part thereof, (f) any negligence or tortious act or omission on the part of any Mortgagor or any of its agents, contractors, servants, employees, subleasees, licensees or invitees, (g) any contest referred to in Article 12, or (h) the presence at, on, or under the Premises or the migration from or release at, on, or from the Premises of any Hazardous Substance. Any Indemnified Party shall give notice to the Mortgagor of any claims, liabilities, obligations, damages, penalties, costs or causes of action for which the Indemnified Party believes it is entitled to indemnification hereunder promptly upon its discovery of the action or event giving rise to such claim, but the failure of such Indemnified Party to provide such notice shall neither cause the forfeiture of the right to receive indemnity hereunder nor limit such right, except to the extent, if any, that the Mortgagor is prejudiced by the failure of the Indemnified Party to promptly give such notice. Any amounts payable under this Section to the Indemnified Parties that are not paid within ten (10) Business Days after written demand therefor by the Indemnified Parties, setting forth in reasonable detail the amount of such demand and the basis therefor, shall bear interest from the date of demand until paid at the rate applicable to the lowest rated series of Notes on the date hereof, and shall be secured by this Mortgage. In case any action, suit or proceeding is brought against any Indemnified Parties by reason of any such occurrence, the Mortgagor, upon the request of the Indemnified Parties, will (or at the option of the Mortgagors, the Mortgagors may) at the Mortgagors' expense resist and defend such action, suit or proceeding or cause the same to be resisted and defended by counsel for the insurer of the liability or by counsel selected by the Mortgagors (unless reasonably disapproved by the Indemnified Parties); provided that Mortgagor shall be entitled to recover from such Indemnified Parties any costs or expenses incurred by the Mortgagor on behalf of any such Indemnified Parties in -38- satisfaction of its obligation under this sentence (or otherwise under this Section) if it is determined by final judgment that the action, suit or proceeding in question was not properly the subject of a claim for indemnification under this Section. So long as the Mortgagors are resisting and defending such action, suit or proceeding as provided above in a prudent and commercially reasonable manner, none of the Indemnified Parties shall be entitled to settle such action, suit or proceeding or claim the benefit of this Article 7 with respect to such action, suit or proceeding (including the right to reimbursement of such Indemnified Parties' counsel fees and expenses) and the Indemnified Parties are deemed to agree in advance that they will not settle any such action, suit or proceeding without the written consent of the Mortgagors; provided that if the Mortgagors are not diligently defending such action, suit or proceeding in a prudent and commercially reasonable manner as provided above, any Indemnified Party may settle such action, suit or proceeding as it relates to such Indemnified Party, subject only to the written consent of the Mortgagors, which consent then may not be unreasonably withheld or delayed, and claim the benefit of this Article 7 with respect to settlement of such action, suit or proceeding. 8. INSPECTION. The Mortgagee, the Servicer and their authorized ---------- representatives may upon reasonable notice and accompanied by an agent of the Mortgagors (but no more than once per month unless an Event of Default has occurred and is continuing) enter and examine any Mortgaged Property (including any labor performed and materials furnished in and about the Premises in connection with any Alteration or Restoration), subject to the rights of Tenants; provided that at all times during such visits, the Mortgagee's or Servicer's representatives and agents, as applicable, use all reasonable efforts not to interfere with operation of the Mortgaged Property or the business of the Tenants. Neither the Mortgagee nor the Servicer shall inspect the Premises on any day other than a Business Day, except in the case of an emergency or at any time following the occurrence and during the continuance of an Event of Default. Neither the Mortgagee nor the Servicer shall have any duty under this Mortgage to make any such inspection and neither of them shall have any liability or obligation for making or not making any such inspection (except that the foregoing shall not relieve the Mortgagee or the Servicer from their obligations arising under any other Security Document or from any liability resulting from its negligence or wilful misconduct in connection with the conduct of an inspection permitted hereby). 9. PAYMENT OF IMPOSITIONS, ETC. Subject to the provisions of Article --------------------------- 12 relating to permitted contests, the Mortgagors agree to pay, or cause to be paid, before any fine, penalty, interest or cost may be added for such nonpayment, all real estate taxes, assessments, fees, taxes on rents or rentals, and other governmental charges that may be levied or assessed against any of the Mortgaged Properties or any of the Mortgagors with respect to any of the Mortgaged Properties or rents therefrom or which might, if due and unpaid, become Liens upon any of the Mortgaged Properties (collectively, "Impositions"). Except as set forth in Section 10.4 of the Indenture, the Mortgagors shall not be required to pay any income, excess profits or revenue tax, excise tax or inheritance tax, gift tax, franchise tax, corporation tax, capital levy, estate -39- succession or other similar tax or charge that may be payable by or chargeable to the Mortgagee, any interest, fines, costs, additions to tax or penalties in respect thereof, unless such tax is imposed, levied or assessed in substitution for any Impositions that the Mortgagors are required to pay pursuant to this Article 9. 10. COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS, INSTRUMENTS. ------------------------------------------------------------- (a) Subject to the provisions of Article 12 relating to permitted contests, each Mortgagor agrees promptly, subject to Excusable Delays, to comply in all material respects with, or use all reasonable efforts (consistent with the standards that would generally be employed by institutional owners of comparable properties) to cause Tenants or other third parties whose obligation it is to so comply by contract or pursuant to law to comply in all material respects with, all Legal Requirements and all Insurance Requirements. (b) Each Mortgagor covenants and agrees (i) to perform punctually all material obligations and agreements to be performed by it as lessor under any Lease, as lessee under any Ground Lease, or as subject obligor under any other instrument or agreement constituting a Permitted Exception or any management agreement, such that there will be no material and adverse impairment of the value of any Mortgaged Property or the Mortgagee's interest under this Mortgage, and (ii) to do all things necessary or appropriate in the ordinary course of its business to compel performance by each other party to each of such instruments of such other party's obligations and agreements thereunder. 11. LIENS. Subject to the provisions of Article 12 relating to ----- permitted contests, Section 19.2 relating to permitted indebtedness, the Mortgagor will not directly or indirectly create or permit or suffer to be created or to remain, and will discharge or promptly cause to be bonded or discharged by bonding, payment, final order of a court of competent jurisdiction or otherwise, within forty-five (45) Business Days after receiving written notice of the filing thereof, any Lien against any Mortgaged Property or any part thereof, other than the Permitted Exceptions. 12. PERMITTED CONTESTS. Anything to the contrary contained herein ------------------ notwithstanding, any Mortgagor at its expense may contest, by appropriate legal, administrative or other proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part, of any Imposition or lien therefor or any Legal Requirement or Insurance Requirement or any taxes, assessments, charges or other amounts required to be paid pursuant to the provisions of Section 2.5 or Articles 4, 5, 9, 10, 11, 14, 39 or any other similar provision hereof, or the application of any instrument of record affecting any Mortgaged Property or any part thereof (other than the Security Documents) or any claims or judgments of mechanics, materialmen, -40- suppliers, vendors or other Persons or any lien therefor, and may withhold payment of the same pending such proceedings if permitted by law; provided that (a) in the case of any Impositions or lien therefor or any claims or judgments of mechanics, materialmen, suppliers, vendors or other Persons or any lien therefor, such proceedings shall suspend the collection thereof from the Mortgagor, the Mortgagee and the Mortgaged Property, (b) neither the Mortgaged Property nor any part thereof or interest therein would be in danger of being sold, forfeited or lost if the Mortgagor were to pay the amount or satisfy the condition being contested, and the Mortgagor will have the opportunity to so pay or satisfy, and commits that it will do so, if required to avoid such a sale, forfeiture or loss, in the event of the Mortgagor's failure to prevail in the contest, (c) in the case of an Insurance Requirement, the failure of the Mortgagor to comply therewith shall not impair the validity of any insurance required to be maintained by the Mortgagor under Article 13 or the right to full payment in respect of any claims thereunder, (d) in the case of taxes, if an amount can be contested without being paid, the Mortgagor shall establish reserves in the amount being contested together with interest and penalties reasonably expected to accrue for so long as such amount is due and payable and unpaid, provided that if the aggregate amount of all reserves established by the Mortgagors under this clause (d) with respect to a particular Mortgaged Property shall exceed the Threshold Amount for such Mortgaged Property, the Mortgagors shall escrow the excess reserve amount with the Mortgagee (to be held and invested by the Mortgagee in an Eligible Account and invested in the same manner as is described in Section 6.14 of the Indenture with respect to the Payment Account), (e) in the case of any utility service described in Article 5, any contest or failure to pay will not result in a discontinuance of any such service, (f) in the case of any instrument of record affecting the Mortgaged Property or any part thereof, the contest or failure to perform under any such instrument shall not result in the placing of any Lien on the Mortgaged Property or any part thereof unless such Lien is bonded or otherwise discharged in accordance with Article 11 and (g) except to the extent the Mortgagor has provided sufficient Eligible Collateral or Credit Facility therefor, neither the failure to pay or perform any obligation which the Mortgagor is permitted to contest under this Article 12 nor an adverse determination of any such contest shall result in a material adverse effect on the utility, value or operation of the Mortgaged Property. 13. INSURANCE. --------- 13.1. Risks to be Insured. During the term of this Mortgage the ------------------- Mortgagors will, at their sole cost and expense, maintain or cause to be maintained with respect to each Mortgaged Property, insurance coverage, cost and expense, of the following types (and minimum limits) and shall pay in a timely manner all premiums due in connection therewith: (a) insurance with respect to the Improvements and the Equipment against any peril included within the classification "All Risks of Physical Loss" with extended coverage in amounts at all times sufficient to prevent any Mortgagor from becoming co-insurer within the terms of the applicable policies, but in any event such insurance shall be maintained in an amount equal to the full insurable value of the Improvements and the Equipment, the term "full insurable value" to mean the actual replacement cost -41- of the Improvements and the Equipment (without taking into account any depreciation, and exclusive of excavations, footings and foundations, landscaping and paving) as reasonably determined annually in accordance with the Mortgagors' customary practices by an insurer, a recognized independent insurance broker or an appraiser selected and paid by the Mortgagors (unless reasonably disapproved by the Mortgagee) and in no event less than the coverage required pursuant to the terms of any Ground Lease, Lease or Operating Agreement; (b) comprehensive general liability insurance, including bodily injury, death and property damage liability, and umbrella liability insurance against any and all claims, including all legal liability to the extent insurable imposed upon the Mortgagee and all court costs and attorneys' fees and expenses, arising out of or connected with the possession, use, leasing, operation, maintenance or condition of such Mortgaged Property in such amounts as are generally available at reasonable premiums and are generally required by institutional lenders for properties comparable to such Mortgaged Property; (c) statutory workers' compensation insurance (to the extent the risks to be covered thereby are not already covered by other policies of insurance maintained by the Mortgagors or their agents), with respect to any work on or about such Mortgaged Property; (d) business interruption and/or loss of "rental value" insurance in an amount sufficient to avoid any co-insurance penalty and, if the duration of such coverage is limited by reference to the passage of time, to provide Proceeds for a period not less than one and one half years of loss, the term "rental value" to mean the sum of (A) the total payable under the Leases and (B) the total amount of all other amounts to be received by the applicable Mortgagor or third parties that are the legal obligation of the Tenants pursuant to the terms of the Leases or Guarantees, reduced to the extent such amounts would not be received because of expenses not incurred during a period of non-occupancy of that portion of such Mortgaged Property then not being occupied; (e) broad form boiler and machinery insurance (without exclusion for explosion) covering all boilers or other pressure vessels, machinery and equipment located in, on or about such Mortgaged Property and insurance against loss of occupancy or use arising from any breakdown in such amounts as are generally available at reasonable premiums and are generally required by institutional lenders for properties comparable to such Mortgaged Property; (f) if any portion of the Improvements is located within an area federally designated a "100 year flood plain", flood insurance (x) if generally available at reasonable premiums and in such amount as generally required by institutional lenders for similar properties or (y) if not so available from a private carrier, from the federal government to the extent available; and -42- (g) such other insurance with respect to such Mortgaged Property against loss or damage of the kinds from time to time customarily insured against and in such amounts as are generally available at reasonable premiums and are generally required by institutional lenders for properties comparable to such Mortgaged Property. 13.2. Ratings of Insurers. The Mortgagors will maintain a portion of ------------------- the insurance coverage described in Section 13.1(a) above for each Mortgaged Property (in an amount at least equal to the Maximum Foreseeable Casualty Loss for such Mortgaged Property) and the insurance coverage described in Section 13.1(d) above, in each case with either the insurers who insure the Mortgaged Properties on the date of this Mortgage or one or more other primary insurers having (or a syndicate (i.e., either a consortium or a co-insurance group) of - - insurers through which at least seventy-five percent (75%) of the coverage (if there are four or fewer members of the syndicate) or at least sixty percent (60%) of the coverage (if there are five or more members of the syndicate) is with carriers having) a claims paying ability of not less than "A2" by the Rating Agency (or its equivalent); the coverage described in clauses (b) and (e) of Section 13.1 above shall be maintained with either the insurers who insure the Mortgaged Properties on the date of this Mortgage or one or more other primary insurers having (or a syndicate (as defined above) of insurers through which at least seventy-five percent (75%) of the coverage (if there are four or fewer members of the syndicate) or at least sixty percent (60%) of the coverage (if there are five or more members of the syndicate) is with carriers having) a claims paying ability of not less than "A2". The coverage described in clause (c) of Section 13.1 above shall be maintained with either an insurer having a claims paying ability of not less than "A" or the applicable state workers' compensation fund. In each case, however, if no providers of such insurance are so rated, the requirement for such rating shall be the highest rating then given to insurers by the Rating Agency; provided that in the case of a syndicate (as defined above) failing to satisfy the foregoing test, supplementary qualifying coverage shall be required within ninety (90) days of the date any of the Mortgagors learn of such failure only to the extent the syndicate (as defined above) fails to satisfy the test. If, during the term of the Notes, any insurer providing insurance coverage required under this Mortgage becomes insolvent, the Mortgagors agree to use commercially reasonable efforts to replace the insurance provided by any such insurer within thirty (30) days after any of the Mortgagors first receives notice of such insolvency. All insurance coverage shall be provided by one or more primary insurers having an Alfred M. Best Company, Inc. rating of "A" or better, except to the extent that insurance in force on the date of this Mortgage does not satisfy such criteria or that any of the providers of such insurance on the date hereof may hereafter be downgraded or if otherwise approved by the Mortgagee. All insurers providing insurance required by this Section 13 shall be authorized to issue insurance in the state or states where each Mortgaged Property covered by such insurer is located. -43- The insurance coverage required under this Article 13 may be effected under a blanket policy or policies covering the Mortgaged Properties and other properties and assets not constituting Mortgaged Properties; provided that any such blanket policy shall specify, except in the case of public liability insurance, the portion of the total coverage of such policy that is allocated to the Mortgaged Properties, and any sublimits in such blanket policy applicable to the Mortgaged Properties, which amounts shall not be less than the amounts required pursuant to Section 13.1 and which shall in any case comply in all other respects with the requirements of this Article 13. The "Maximum Foreseeable Casualty Loss" with respect to the Premises at any particular Mortgaged Property shall be the estimate of the Qualified Fire Protection Engineer then being used in connection with its existing insurance package (unless reasonably disapproved by the Mortgagee) of the maximum probable casualty loss that would be incurred in respect of the Premises of such Mortgaged Property as a result of damage caused by the perils covered by the insurance described in clause (a) of Section 13.1 above. 13.3. Policy Provisions. Each policy of insurance maintained in respect ----------------- of any Mortgagor and/or any Mortgaged Property pursuant to Section 13.1 and Section 13.2 shall (a) except in the case of workers' compensation insurance and public liability insurance, name the Mortgagor or Mortgagors, as applicable, as insured(s) and name the Mortgagee and Servicer as additional insureds or as loss payees and in the case of public liability insurance, name the Mortgagee and Servicer as additional insureds (and not loss payees); (b) except in the case of public liability insurance and workers' compensation insurance, provide that all Proceeds thereunder shall be payable to the Mortgagee pursuant to a standard first mortgagee endorsement, without contribution, and that adjustment and settlement of any material loss shall be subject to the reasonable approval of the Mortgagee; (c) include effective waivers by the insurer of all claims for insurance premiums against all loss payees, additional insureds and named insureds (other than the Mortgagors) and, to the extent available at commercially reasonable rates, all rights of subrogation against any loss payee, additional insured or named insured; (d) permit the Mortgagee to pay the premiums and continue any insurance upon failure of any Mortgagor to pay premiums when due, upon the insolvency of any Mortgagor or through foreclosure or other transfer of title to any Mortgaged Property (it being understood that the Mortgagors' rights to coverage under such policies may not be assignable without the consent of the provider); (e) except in the case of public liability and workers' compensation insurance, provide that any Proceeds shall be payable to the Mortgagee and that the insurance shall not be impaired or invalidated by virtue of (i) any act, failure to act, negligence of, or violation of declarations, warranties or conditions contained in such policy by any Mortgagor, the Mortgagee or any other named insured, additional insured or loss payee, except for the willful misconduct of the Mortgagee knowingly in violation of the conditions of such policy, (ii) the occupation or use of the insured properties for purposes more hazardous than permitted by the terms of the policy, (iii) any foreclosure or other proceeding or notice of sale relating to the insured properties or -44- (iv) any change in the possession of the insured properties without a change in the identity of the holder of actual title to such properties (provided that with respect to items (iii) and (iv), any notice requirements of the applicable policies are satisfied); (f) be subject to a deductible, if any, not greater in any material respect, in proportion to the coverage maintained, than the deductible applicable under such coverage on the date of this Mortgage, provided that such coverage is available at commercially reasonable rates; and (g) except to the extent the Mortgagors have provided sufficient Eligible Collateral or Credit Facility therefor, provide that if all or any part of such policy shall be cancelled or terminated, or shall expire, the insurer will forthwith give notice thereof to each named insured, additional insured and loss payee and that no cancellation, termination, reduction in amount of, or material change (other than an increase) in, coverage thereof shall be effective until at least thirty (30) days after receipt by each named insured, additional insured and loss payee of written notice thereof. 13.4. Certificates. The Mortgagors will deliver to the Mortgagee and to ------------ the Servicer on or prior to the Closing Date certificates setting forth in reasonable detail the material terms (including any applicable notice requirements) of all insurance policies that the Mortgagors are required to maintain hereunder, from the respective insurance companies that issued such policies. The Mortgagors will deliver to the Mortgagee and to the Servicer, concurrently with each material change in or renewal of any insurance policy covering any part of the Premises required to be maintained by the Mortgagors hereunder, a certificate with respect to such changed or renewed insurance policy certified by the insurance company issuing such policy, in substantially the same form and containing substantially the same information as the certificates required to be delivered by the Mortgagor pursuant to the first sentence of this Section 13.4 and stating that all premiums then due thereon have been paid to the applicable insurers and that the same are in full force and effect (or if such certificate and report shall not be obtainable by the Mortgagors with respect to any coverage obtained by them in satisfaction hereof, the Mortgagor may deliver an Officer's Certificate to such effect in lieu thereof). 13.5. Replacement Policies. Not less than ten (10) Business Days prior -------------------- to the expiration, termination or cancellation of any insurance policy which the Mortgagors are required to maintain hereunder, the Mortgagors shall obtain a replacement policy or policies (or a binding commitment for such replacement policy or policies), which shall be effective no later than the date of the expiration, termination or cancellation of the previous policy, and shall deliver to the Mortgagee a certificate in respect of such policy or policies in the same form and (i) containing the same information as the certificates required to be delivered by the Mortgagors pursuant to the first sentence of Section 13.4, or a copy of the binding commitment for such policy or policies and (ii) confirming that such policy complies with all the requirements of Section 13.1 and Section 13.2. 13.6. Reports of Insurance Broker. Within ninety (90) days following --------------------------- the end of each calendar year during the term of this Mortgage commencing with the end of the calendar year in which the Closing Date occurs, and concurrently with the delivery -45- of each replacement policy or a binding commitment for the same pursuant to Section 13.5, the Mortgagors shall deliver to the Mortgagee and to the Servicer a report from a reputable and experienced insurance broker or from the insurer setting forth the particulars as to all insurance obtained by the Mortgagors pursuant to this Article 13 and then in effect and stating that all premiums then due thereon have been paid to the applicable insurers, that the same are in full force and effect and that, in the opinion of such insurance broker or insurer, such insurance otherwise complies in all material respects with the requirements of this Article 13 (or if such report shall not be available after the Mortgagors shall have used reasonable efforts to provide the same, the Mortgagors will deliver to the Mortgagee an Officer's Certificate containing the information to be provided in such report). 13.7. Separate Insurance. None of the Mortgagors may take out separate ------------------ insurance concurrent in form or contributing in the event of loss with that required to be maintained pursuant to this Article 13 unless such insurance complies with Section 13.3. 14. ALTERATIONS AND EXPANSIONS. (a) Except as expressly provided in -------------------------- Article 15 hereof, and subject to Section 14(d), the Mortgagors, Tenants and other occupants of the Mortgaged Properties shall have the right to make modernizations, alterations, renovations, improvements and additions (collectively, "Alterations") to any Mortgaged Property or Mortgaged Properties ----------- without the prior consent of the Mortgagee so long as the Alterations will not materially and adversely affect the value of the subject Mortgaged Property or Mortgaged Properties; provided that except as otherwise provided herein no such Alterations shall be made without the prior written consent of the Mortgagee, which consent shall not be unreasonably withheld or delayed, if, as a result of the performance of such Alterations, (i)(x) Tenants leasing fifteen percent (15%) or more (in the aggregate) of space at the relevant Mortgaged Property then leased to Mall Store Tenants (excluding, for purposes hereof, Tenants pursuant to Specialty Leases) cancel, or have the right to cancel, their Leases or abate, or have the right to abate, rent thereunder and such cancellation or abatement is not covered by rent abatement or interruption insurance, or (y) one (1) or more anchors at such Mortgaged Property cancel or have the right to cancel their Lease or Operating Agreement and such cancellation (assuming the exercise of such cancellation rights) would result in there being fewer than three (3) anchors at the Mortgaged Property in question (any Alteration described in clause (i)(x) or (i)(y) above, a "Significant Alteration") and (ii) ---------------------- after giving effect to the cancellations and abatements and assuming the cancellations and abatements referred to in clause (i) above, the Debt Service Coverage Ratio will be less than 1.40:1. In addition, the Mortgagors shall not be permitted to commence or continue more than three Significant Alterations at any given time unless, prior to commencing each such additional Significant Alteration the Mortgagors shall have obtained Rating Confirmation. -46- (b) All Alterations shall be constructed in compliance with all applicable Legal Requirements, whether or not the Mortgagee's consent is required in connection therewith. (c) The Mortgagee's consent shall not be required in connection with any Alterations contemplated by any Operating Agreement or Lease now or hereinafter in effect and as amended from time to time in accordance with the Security Documents. (d) If the cost of any Alteration will exceed the lesser of (a) five percent (5%) of the aggregate Allocated Amounts of all the Mortgaged Properties and (b) fifteen percent (15%) of the Allocated Amount of the Mortgaged Property to which such Alteration relates, the Mortgagor identified on Exhibit A as --------- owning or leasing such Mortgaged Property shall not commence construction of such Alteration unless it (i) obtains a construction bond covering the cost of the Alteration (as reasonably determined by such Mortgagor, in consultation with a licensed or registered architect or engineer, and not disapproved by the Mortgagee, acting reasonably) from an entity having a long-term unsecured debt rating of at least Aa2 or its equivalent by the Rating Agency, (ii) obtains a completion guaranty from an entity having a long-term unsecured debt rating of at least Aa2 or its equivalent by the Rating Agency or (iii) delivers to the Mortgagee to be held in escrow a Credit Facility or Cash and Cash Equivalents (which amounts shall be held in an Eligible Account and invested in the same manner as is described in Section 6.14 of the Indenture with respect to the Payment Account), or any combination thereof, in an amount equal to the lesser of (a) the cost to complete the Alteration, as reasonably determined by such Mortgagor, in consultation with a licensed or registered architect or engineer, and not disapproved by the Mortgagee, acting reasonably, and (b) the cost (as reasonably determined by the Mortgagor, in consultation with a licensed or registered architect or engineer, and not disapproved by the Mortgagee, acting reasonably), if work on the Alteration were to be terminated on such date, to restore the Mortgaged Property to the extent necessary so that, as restored, there would be no material adverse effect on the value of the Mortgaged Property taken as a whole, as reasonably determined by such Mortgagor. Each Mortgagor agrees to provide the Servicer with commercially reasonable access to such information as it has relied upon (including without limitation, any architectural or engineering plans, specifications or other items) in determining the costs to complete and/or restore for purposes of clause (iii) above, so that the Servicer will be able to assess the reasonableness of the Mortgagor's determination thereof. (e) Any Alteration of the type described in Section 14(d) shall be undertaken in accordance with the following requirements: (1) no phase of construction of such Alteration shall be undertaken until the Mortgagor shall have procured and paid for, so far as the same may be required from time to time, all permits and consents of all governmental authorities having jurisdiction that would be procured and paid for, as of such time, in accordance with sound construction practices; -47- (2) any work done in connection with the Alteration shall be conducted under the supervision of a licensed architect and/or engineer selected by the applicable Mortgagor, and no such work shall be done except in accordance with plans and specifications and cost estimates (x) prepared and approved in writing by the Mortgagor's architect and/or engineer (such approval not to be unreasonably withheld or delayed) and (y) if the cost of such work exceeds the lesser of fifty percent (50%) of the applicable Allocated Amount for the subject Mortgaged Property and $15,000,000, also approved by the Mortgagee (provided that the Mortgagee shall not unreasonably withhold or delay such approval); in connection with the foregoing each Mortgagor agrees that it will deliver to the Mortgagee copies of all plans and specifications and cost estimates relating to any such work regardless of the cost to be incurred in connection therewith; (3) any work shall be completed free and clear of all liens, encumbrances, chattel mortgages, conditional bills of sale and other charges, and in accordance with the plans and specifications therefor; (4) during the performance of any such work, the applicable Mortgagor shall procure and maintain the insurance coverages required under the applicable provisions of Article 13 hereof; and (5) the Mortgagors shall reimburse the Mortgagee for all reasonable fees and expenses incurred by the Mortgagee in connection with review of such Alteration, including, but not limited to, the reasonable fees and expenses of any architect or other real estate professional selected by the Mortgagee to review the plans and specifications and to inspect the work on behalf of the Mortgagee. In addition, provided no Event of Default has occurred and is continuing, any Cash and Cash Equivalents delivered to the Mortgagee pursuant to clause (d) above shall be applied by the Mortgagee either to pay, or to reimburse the Mortgagor for, the costs and expenses incurred for the Alteration (including payments to contractors, subcontractors, materialmen, suppliers, attorneys, engineers, architects or other Persons who have rendered services or furnished materials for such Alteration), in the manner set forth below: (x) each request for payment shall be made by (or on behalf of) the applicable Mortgagor on 10 days' prior notice to the Mortgagee and shall be accompanied by a certificate to be made by the supervising architect or engineer or by an officer of the Mortgagors stating that the sum requested is justly required to reimburse the Mortgagors for payments by the Mortgagor to, or is justly due to, the contractor, subcontractors, materialmen, laborers, -48- engineers, architects or other Persons rendering services or materials for the Alteration (giving a brief description of such services and materials); and (y) each request shall be accompanied by written waivers of liens reasonably satisfactory to the Mortgagee, covering that part of the Alteration for which payment or reimbursement is being requested, or by other evidence satisfactory to the Mortgagee that there has not been filed with respect to such Mortgaged Property any mechanics' or other lien or instrument for the retention of title in respect of any part of the Alteration not discharged of record or bonded to the reasonable satisfaction of the Mortgagee, subject, in each case, to the applicable Mortgagor's right to contest such liens in accordance with Article 12 hereof. Except upon the occurrence and continuance of an Event of Default, the Mortgagee will pay to the applicable Mortgagor any amounts held by it after the application of proceeds in the above-mentioned escrow account to the Alteration and the completion thereof. Any Credit Facility delivered to the Mortgagee pursuant to clause (d) above may be reduced at the applicable Mortgagor's request in the same manner as Cash and Cash Equivalents are to be reduced in accordance with the above terms of this Section 14(e). (f) Any Cash and Cash Equivalents and/or Credit Facility delivered to the Mortgagee pursuant to Section 14(d) shall be held by the Mortgagee in an Eligible Account (if it be cash) as additional security for the repayment of the Secured Obligations, subject to the terms of Section 14(e), and any such cash shall be invested at the Mortgagors' direction in the same manner as is permitted under Section 6.14 of the Indenture with respect to the Payment Account. So long as no Event of Default has occurred and is continuing, the Mortgagors shall be entitled, upon ten (10) days' written notice to the Mortgagee but no more frequently than once per month, to receive any interest or other income earned in respect of such investments from the Mortgagee free of the lien of this Mortgage. (g) Each Mortgagor agrees to give the Mortgagee prior written notice of its intention to make any Alteration or series of related Alterations to any Mortgaged Property costing in excess of the Threshold Amount for such Mortgaged Property, whether or not the Mortgagee's consent is required in accordance with this Article 14. CASUALTY, TAKING AND APPLICATION OF INSURANCE PROCEEDS AND TAKING ----------------------------------------------------------------- PROCEEDS. (a) The Mortgagors agree to give the Mortgagee prompt written notice - -------- of (A) any damage to or destruction of all or any portion of any Mortgaged Property, the insurance proceeds payable to the Mortgagors (or any of them) in respect of which exceed $2,000,000 (any such damage or destruction to the extent that any insurance proceeds payable to the Mortgagors (or any of them) in -49- connection therewith exceed the lesser of $5,000,000 and 15% of the applicable Allocated Amount for the related Mortgaged Property being hereinafter referred to as a "Casualty" and such proceeds being hereinafter referred to as "Insurance Proceeds"), and (B) any actual or, to the knowledge of the Mortgagor, proposed, contemplated or threatened taking of all or any portion of any Mortgaged Property by reason of any public improvements or condemnation or similar proceeding, the condemnation proceeds payable to the Mortgagors (or any of them) in respect of which exceed $2,000,000 (such taking, condemnation or other similar proceeding, the condemnation award proceeds or other compensation payable to the Mortgagors (or any of them) in respect of which exceed the lesser of $5,000,000 and 15% of the applicable Allocated Amount for the related Mortgaged Property being hereinafter referred to as a "Taking" and any such award proceeds or other compensation being hereinafter referred to as "Taking Proceeds"). (b) Subject to the immediately succeeding sentence, all Insurance Proceeds and all Taking Proceeds shall be applied and disbursed in accordance with the provisions of this Article 15. So long as no Event of Default has occurred and is continuing, all proceeds of insurance which do not constitute Insurance Proceeds and all awards or other compensation from condemnation or taking proceedings which do not constitute Taking Proceeds shall be the property of and payable to the Mortgagor identified on Exhibit A as owning the Mortgaged --------- Property in respect of which such proceeds were paid (subject to such Mortgagor's compliance with Section 20(a)) or such other Tenant, occupant or other person who is, pursuant to any Lease or Operating Agreement, otherwise entitled to such proceeds or taking compensation. Notwithstanding any provision of this Mortgage or the other Security Documents to the contrary, in the event of any conflict between the provisions of this Mortgage relating to Insurance Proceeds and Taking Proceeds and/or the payment and application thereof and the provisions of any anchor Lease, Operating Agreement or Ground Lease (existing on the date hereof), the provisions of such anchor Lease, Operating Agreement or Ground Lease shall control to the extent necessary to avoid such conflict. (c) Subject to Section 15(b), in the event of any Casualty at or Taking of any Mortgaged Property or any part thereof and if an Event of Default shall have occurred and be continuing, all Insurance Proceeds or Taking Proceeds, as the case may be, shall be payable to the Mortgagee for the benefit of the Holders (the Mortgagors hereby authorizing and directing any affected insurance company to make payment of such Insurance Proceeds directly to the Mortgagee) and the Mortgagee shall have the right to apply such proceeds to the payment of the Secured Obligations on the next Interest Payment Date, in accordance with the priorities established in Section 5.6 of the Indenture. (d) Subject to Section 15(b), in the event of any Casualty at or Taking of any Mortgaged Property or any part thereof, and if an Event of Default shall not have occurred and be continuing, the following provisions shall apply: - --- -50- (i) In the event (any such event, a "Major Casualty/Taking") that, in connection with any Casualty or Taking, occupants of thirty percent (30%) or more (in the aggregate) of the total square footage (the "Square Footage") of such Mortgaged Property devoted to retail and appurtenant uses (exclusive of common areas and leasable square footage which is not then subject to a Lease) exercise their rights to cancel their Leases (not including Specialty Leases) or Operating Agreements or, in the case of Leases (not including Specialty Leases), are exercising their rights to abate their rent (which abatement is expected to continue for more than 12 months, as reasonably determined by the applicable Mortgagor and not disapproved by the Servicer, acting reasonably) and such abatement is not covered by rent interruption/ abatement insurance (the percentage of the Square Footage in which the occupants exercising any such rights have interests is hereinafter referred to as the "Termination Percentage"), the applicable Mortgagor shall be obligated to apply the Insurance Proceeds or the Taking Proceeds to the prepayment of Notes (without penalty or Make- Whole Payment) in accordance with the Indenture in an amount up to, but not exceeding, 125% of the Allocated Amount for the affected Mortgaged Property plus accrued but unpaid interest thereon on the next Interest Payment Date after a final determination of the amount of the Insurance Proceeds or Taking Proceeds has been made, provided, however, that the amount of such Insurance Proceeds or Taking Proceeds so applied shall be determined after deducting from the total Proceeds the applicable Mortgagor's reasonable estimate of the cost to restore any portion of the affected Mortgaged Property that was occupied by an anchor store prior to the Major Casualty/Taking if, but only if, the Mortgagor has provided evidence, reasonably satisfactory to the Mortgagee, that one or more retailers reasonably acceptable to the Mortgagee are of a comparable value to the anchor store being replaced (based upon a report provided by the Mortgagor and prepared by an Appraiser to the Mortgaged Property) and have delivered commitments to operate a replacement anchor store in the portion of the Mortgaged Property adversely affected by the Major Casualty/Taking, if the amount of Insurance Proceeds or Taking Proceeds applied by the applicable Mortgagor in accordance with the foregoing clause equals or exceeds the Allocated Amount applicable to the affected Mortgaged Property, plus accrued and unpaid interest on Notes with a principal amount equal to such Allocated Amount, and no Event of Default has occurred and is continuing, the affected Mortgaged Property shall be released from the Lien of this Mortgage, and the Mortgagee agrees that it will execute any documents that may be reasonably requested by the Mortgagors (or any of them) to evidence such release. For purposes of the foregoing, the Termination Percentage shall be determined on the day that is sixty (60) days after the date on which a substantially final determination of the amount of the Insurance Proceeds or the Taking Proceeds is made. In the -51- event that Insurance Proceeds or Taking Proceeds are insufficient to prepay Notes with a principal amount at least equal to the Allocated Amount applicable to the affected Mortgaged Property at a price of par plus accrued and unpaid interest (without penalty or Make-Whole Payment), the Mortgagor may pay the amount of such insufficiency up to such Allocated Amount plus any accrued but unpaid interest to the Mortgagee for the benefit of the Holders, and upon the payment of such Allocated Amount plus accrued and unpaid interest thereon (both without penalty or Make-Whole Payment), provided no Event of Default has occurred and is continuing and provided further that the terms of the PROVISO set forth in the first sentence of this Section 15.1(d)(i) are complied with, such Mortgaged Property shall be released from the Lien of this Mortgage and the Mortgagee agrees that it will execute any documents that may be reasonably requested by the Mortgagors (or any of them) to evidence such release. Notwithstanding the foregoing, no Mortgagor shall be entitled to obtain the release of an affected Mortgaged Property hereunder in exchange for the repayment of Notes in an amount less than 125% of the Allocated Amount therefor, plus accrued and unpaid interest thereon, if such Mortgagor shall have elected to apply any portion of the Insurance Proceeds or Taking Proceeds, as applicable, paid in respect of such Mortgaged Property to the Restoration of the affected Mortgaged Property. (ii) In the event of any Casualty or Taking other than a Major Casualty/ Taking (i.e., a Casualty or Taking not described in clause (i) above), the Mortgagor identified on Exhibit A as owning or leasing the --------- affected Mortgaged Property shall have the option to: (1) apply the Insurance Proceeds or the Taking Proceeds to prepayment of Notes (without penalty or Make-Whole Payment) on the first Interest Payment Date occurring after the expiration of sixty (60) days from the final determination of the amount of such Insurance Proceeds or Taking Proceeds, in an amount up to, but not exceeding, 125% of the Allocated Amount for the affected Mortgaged Property plus accrued and unpaid interest thereon, and if the amount of Insurance Proceeds or Taking Proceeds applied by such Mortgagor in accordance with the foregoing clause equals or exceeds the Allocated Amount applicable to the affected Mortgaged Property, and no Event of Default has occurred and is continuing, the affected Mortgaged Property shall be released from the Lien of this Mortgage (provided that the terms of the PROVISO set forth in the first sentence of Section 15.1(d)(i) are complied with), and the Mortgagee shall execute any documents that may be reasonably requested by the Mortgagors (or any of them) to evidence such release; provided, that, if the resulting -------- Insurance Proceeds or Taking Proceeds exceed eighty percent (80%) of the Allocated Amount for the affected Mortgaged Property but are insufficient to prepay Notes with a principal -52- amount at least equal to the Allocated Amount applicable thereto at a price of par plus accrued but unpaid interest (without penalty or Make-Whole Payment), such Mortgagor may pay the amount of such insufficiency to the Mortgagee for the benefit of the Holders and upon the payment of such Allocated Amount plus accrued and unpaid interest thereon (both without penalty or Make-Whole Payment), provided no -------- Event of Default has occurred and is continuing (and the terms of the PROVISO set forth in the first sentence of Section 15.1(d)(i) are complied with), such Mortgaged Property shall be released from the Lien of this Mortgage); or (2) upon written notice to the Mortgagee no later than sixty (60) days after a substantially final determination of the amount of the Insurance Proceeds or the Taking Proceeds, to elect irrevocably to apply such proceeds to the Restoration of the Mortgaged Property, in which event the Mortgagor shall comply with the following conditions in connection with the performance of all of such Restoration (hereinafter "Work"): (A) no Work shall be undertaken until the Mortgagor shall have procured and paid for, so far as the same may be required from time to time, all permits and consents of all governmental authorities having jurisdiction that would be procured and paid for, as of such time, in accordance with sound construction practices; (B) any Work done pursuant to this Section 15(d)(ii) shall be conducted under the supervision of a licensed architect and/or engineer selected by the Mortgagor, and no such Work shall be done except in accordance with plans and specifications and cost estimates prepared by the Mortgagor and (x) approved in writing by the Mortgagor's architect and/or engineer (such approval not to be unreasonably withheld or delayed) and (y) if the cost of such Work exceeds the lesser of fifty percent (50%) of the applicable Allocated Amount for such Mortgaged Property and $15,000,000, also approved by the Mortgagee (provided that the Mortgagee shall not unreasonably withhold or delay such approval). The Mortgagor shall deliver to the Mortgagee copies of all plans and specifications and cost estimates relating to any such Work regardless of the cost to be incurred in connection therewith; (C) any Work shall be commenced promptly and in any event within one hundred eighty days (180) after a final determination of the amount of the Insurance Proceeds or the Taking Proceeds and, once commenced, shall be prosecuted diligently to completion in a good and workmanlike manner and in compliance with all applicable -53- permits and authorizations and with all other applicable Legal Requirements; (D) the Work shall be performed with the objective of restoring the Mortgaged Property to at least its value and general utility prior to the relevant Casualty or Taking (as determined by an Appraiser); (E) any Work shall be completed free and clear of all liens, encumbrances, chattel mortgages, conditional bills of sale and other charges, and in accordance with the plans and specifications therefor; (F) during the performance of any such Work, such Mortgagor shall procure and maintain the insurance coverages required under the applicable provisions of Article 13 hereof; and (G) the Mortgagors shall reimburse the Mortgagee for all reasonable fees and expenses incurred by the Mortgagee in connection with review of such Work, including, but not limited to, the reasonable fees and expenses of any architect or other real estate professional selected by the Mortgagee to review the plans and specifications and to inspect the Work on behalf of the Mortgagee. In the event that such Mortgagor fails to elect to restore within the time period specified above for the making of such election, it shall be deemed to have elected to prepay Notes in accordance with clause (ii)(1) above. (iii) Subject to Section 15(b), if a Mortgagor has elected pursuant to the terms of Section 15(d)(ii)(2) to restore the Mortgaged Property identified on Exhibit A as being owned or leased by it, such Mortgagor --------- shall, at the Mortgagee's request, deposit all such Insurance Proceeds or Taking Proceeds with the Mortgagee. The Mortgagee shall disburse such Insurance Proceeds or Taking Proceeds to or for the account of such Mortgagor, upon request, in installments, to pay the costs and expenses associated with the Restoration of the Mortgaged Property, as set forth below: (x) each request for payment shall be made on 10 days' prior notice to the Mortgagee and shall be accompanied by a certificate to be made by the supervising architect or engineer or by an officer of the Mortgagor stating that the sum requested is justly required to reimburse the Mortgagor for payments by the Mortgagor to, or is justly due to, the contractor, subcontractors, materialmen, laborers, engineers, architects or other Persons rendering services or materials -54- for the Work (giving a brief description of such services and materials);and (y) each request shall be accompanied by waivers of liens reasonably satisfactory to the Mortgagee, covering that part of the Work for which payment or reimbursement is being requested, or by other evidence satisfactory to the Mortgagee that there has not been filed with respect to such Mortgaged Property any mechanics' or other lien or instrument for the retention of title in respect of any part of the Work not discharged of record or bonded to the reasonable satisfaction of the Mortgagee, subject, in each case, to the Mortgagor's right to contest such liens in accordance with Article 12 hereof. Upon the payment of such costs and expenses, the balance of such Insurance Proceeds or Taking Proceeds, if any, shall be delivered to the Mortgagor. (e) Subject to Section 15(b), if Section 15(c) shall be applicable, the Mortgagee and not the Mortgagors shall have the right to settle, adjust or compromise any claim under any policy of insurance relating to any Casualty or Taking. In all other cases, (A) the applicable Mortgagor may settle, adjust or compromise any claim which is equal to or less than $5,000,000; and (B) with respect to any claim in excess of $5,000,000, the Mortgagee and the applicable Mortgagor shall consult and cooperate with each other and each shall be entitled to participate in all meetings and negotiations with respect to the settlement of such claim. Any adjustment or settlement by the Mortgagor of any claim which is in excess of $5,000,000 shall be subject to the prior approval of the Mortgagee, which approval shall not be unreasonably withheld or delayed. (f) All Insurance Proceeds and Taking Proceeds received or held by or deposited with the Mortgagee shall be invested in Eligible Collateral (as directed by the Mortgagor) and all interest accruing thereon shall be deemed part of such Insurance Proceeds or Taking Proceeds. (g) Subject to Section 15(b), if Section 15(c) (Event of Default) or Section 15(d)(i) (Major Casualty/Condemnation and no Event of Default) shall govern and the amount then due to the Mortgagee by the applicable Mortgagor exceeds the Taking Proceeds by an amount in excess of 25% of the Allocated Amount for the related Mortgaged Property (i.e., the Proceeds are significantly lower than the amount payable by the Mortgagor to the Mortgagee in respect of such taking), the Mortgagor alone shall have the right to settle, adjust or compromise any claim in connection with such a Taking. In all other cases, (A) the Mortgagor may settle, adjust or compromise any claim which is less than or equal to $5,000,000; and (B) with respect to any claim which is in -55- excess of $5,000,000, the Mortgagee and the Mortgagor shall consult and cooperate with each other and each shall be entitled to participate in all meetings and negotiations with respect to the settlement of such claim. Any adjustment or settlement by the Mortgagor of any claim which is in excess of $5,000,000 shall be subject to the approval of the Mortgagee. (h) Nothing in this Article 15 shall prevent the Mortgagee from applying at any time all or any part of the Insurance Proceeds or Taking Proceeds then held by the Mortgagee to the prepayment of the Secured Obligations following (A) the occurrence and continuance of an Event of Default or (B) the acceleration of the Secured Obligations in accordance with Section 5.2 of the Indenture. 16. ENFORCEMENT. The Mortgagors acknowledge that the Secured ----------- Obligations are secured by this Mortgage, the Assignment of Leases and various other documents or instruments securing or evidencing the Loan. Upon the occurrence of an Event of Default, the Mortgagee shall have the right to institute a proceeding or proceedings for the total or partial foreclosure of this Mortgage and any or all of the other Security Documents, whether by court action, power of sale or otherwise, under any applicable provisions of law, for all of the indebtedness secured by the Security Documents or the portion of such indebtedness allocated to any particular Mortgaged Property, and the liens and the security interests created by the Security Documents shall continue in full force and effect as to the Mortgaged Property not foreclosed without loss of priority securing that portion of the indebtedness then due and payable and still outstanding. The Mortgagors acknowledge that the Mortgaged Properties are located in thirteen (13) different states and agree that, subject to Article 38 of this Mortgage, upon the occurrence of an Event of Default hereunder the Mortgagee shall be entitled to enforce payment of the indebtedness secured by the Security Documents and the performance of any term, covenant or condition of the Security Documents and exercise any and all rights and remedies under the Security Documents or as provided by law or at equity, by one or more proceedings, whether contemporaneous, consecutive or both, to be determined by the Mortgagee in its sole discretion, in any one or more states in which the Mortgaged Properties are located. Neither the acceptance of this Mortgage or the other Security Documents nor the enforcement thereof in any one state, whether by court action, foreclosure, power of sale or otherwise, shall prejudice or in any way limit or preclude enforcement by court action, foreclosure, power of sale or otherwise, of the Notes, this Mortgage or the other Security Documents through one or more additional proceedings in that state or in any other state. Any and all sums received by the Mortgagee under the Notes, this Mortgage or the other Security Documents shall be applied toward the repayment of the Secured Obligations in such order and priority as the Mortgagee shall determine, consistent with the requirements of the Security Documents (including, without limitation, the rights of Mortgagors set forth in Section 44 of this Mortgage), but otherwise without regard to the Allocated Amount applicable to each Mortgaged Property or the appraised value of any of the Mortgaged Properties. -56- 17. EVICTION BY PARAMOUNT TITLE. The Mortgagors, within three (3) --------------------------- Business Days of obtaining knowledge of the pendency of any proceedings for the eviction of any Mortgagor from the Premises or any part thereof by paramount title or otherwise questioning any Mortgagor's title to the Premises as warranted in this Mortgage, or of any condition which might reasonably be expected to give rise to any such proceedings, shall notify the Mortgagee thereof. The Mortgagee may participate in such proceedings, and the Mortgagors will deliver or cause to be delivered to the Mortgagee all instruments reasonably requested by the Mortgagee to permit such participation. In any such proceeding the Mortgagee may be represented by counsel reasonably satisfactory to it and the Mortgagors will pay all costs, fees and expenses reasonably incurred by the Mortgagee and the Servicer on its behalf (including all reasonable attorneys' fees and expenses, the fees of insurance experts and adjusters and the reasonable costs incurred in any litigation or arbitration), in connection with any such proceeding and seeking and obtaining any award or payment on account thereof. 18. BOOKS AND RECORDS, FINANCIAL STATEMENTS, REPORTS AND OTHER ---------------------------------------------------------- INFORMATION. - ----------- 18.1. Books and Records. Each Mortgagor will keep proper books of ----------------- record and account, in which accurate and complete entries shall be made of all dealings or transactions of or in relation to the Mortgaged Property identified on Exhibit A as being owned or leased by such Mortgagor and the business and --------- affairs of the Mortgagor relating to the Premises. The Mortgagee, the Servicer and their authorized representatives may from time to time, designate an agent to examine, at reasonable times and upon reasonable notice, the books and records of each Mortgagor relating to the operation of the Premises; provided that the confidentiality provisions of Section 6.6 of the Indenture shall apply to any information gathered in such examinations. 18.2. Financial Statements. (a) Not later than one hundred twenty -------------------- (120) days after each December 31 and for the year then ended, the Mortgagors will prepare and deliver to the Mortgagee an audited balance sheet as of the last day of such year and an audited statement of income and expenses for such year for the Mortgaged Properties as a group, in each case in reasonable detail as to the sources and character thereof and stating in comparative form the figures for the previous year. Such annual financial statements for each year shall be certified by the certified public accounting firm that prepared such statements and that is reasonably acceptable to the Mortgagee and shall be accompanied by an Officer's Certificate certifying that such statements fairly and accurately present the information set forth therein as of the date thereof, and that the officer signing such certificate has obtained no knowledge of any Default or Event of Default or, if so, specifying each such Default or Event of Default and the nature and status thereof and what action the Mortgagors are taking and propose to take with respect -57- thereto. Without limitation, any of the six largest national accounting firms shall be acceptable to the Mortgagee. (b) Not later than ninety (90) days after the end of each fiscal quarter (other than the fourth quarter) of the Mortgagors, the Mortgagors will deliver to the Mortgagee an unaudited balance sheet as of the last day of such quarter and an unaudited statement of income and expenses for the year-to-date for the Mortgaged Properties as a group, in each case in reasonable detail as to the sources and character thereof. Such unaudited financial statements shall be accompanied by an Officer's Certificate certifying that such statements fairly and accurately present the information set forth therein as of the date thereof, and that the officer signing such certificate has obtained no knowledge of a Default or Event of Default or, if so, specifying each such Default or Event of Default and the nature and status thereof and what action the Mortgagors are taking and propose to take with respect thereto. 18.3. Additional Information. Subject to Section 6.6 of the Indenture, ---------------------- the Mortgagors will deliver to the Mortgagee (for each Mortgaged Property) as soon as reasonably available but in no event later than sixty (60) days after such items become available to the Mortgagors in final form: (a) [Intentionally Omitted]; (b) an annual rent roll dated not later than the anniversary of the date of the last rent roll relating to such Mortgaged Property so delivered; (c) copies of any final engineering or environmental reports prepared for any Mortgagor with respect to the Premises; (d) notice in the event of any (i) material change in an insurance policy or coverage required by the terms of this Mortgage, (ii) material tort action against any Mortgagor relating to the Premises and not covered by insurance, (iii) Event of Default under this Mortgage or the Indenture, (iv) material casualty to any Mortgaged Property, (v) change in the Property Manager for any Mortgaged Property, (vi) release of the Lien of this Mortgage in whole or in part, (vii) Taking or threatened Taking or (viii) amendment to any Security Document; (e) a copy of any notice received by any Mortgagor from any environmental authority having jurisdiction over the Mortgaged Property with respect to a condition existing or alleged to exist or emanate from or at the Mortgaged Property; (f) an annual report containing total revenues, total expenses, Mall Store occupancy as of December 31, reported Mall Store sales per square foot and capital expenditures (including separate line items for (1) maintenance (i.e., roofs, parking lots, -58- equipment and HVAC), (2) tenant improvements and leasing commissions, and (3) renovations, expansions and enhancements), in each case for the most recently completed fiscal year; (g) in addition to the foregoing, if at any time while any Notes are outstanding any of the following has occurred: (i) an Event of Default, or (ii) the Debt Service Coverage Ratio of the Mortgaged Properties for 1998 or any subsequent calendar year is less than 1.4:1, or (iii) Mortgaged Properties having an aggregate initial Allocated Amount of $187 million or more have been (1) released from the Lien of this Mortgage, (2) replaced through substitution of collateral or (3) transferred directly or indirectly such that they are no longer owned and controlled (as such term is defined in the definition of Permitted Owner) by General Growth and are no longer being managed by the Property Manager or another affiliate of General Growth, then, in any such case, the Mortgagors shall provide each of the following items for each of the Mortgaged Properties; (x) for each calendar year and not later than one hundred twenty (120) days after December 31 of such year, an audited balance sheet as of the last day of such year and an audited statement of income and expenses for such year; (y) for each quarter and not later than ninety (90) days after the end of such quarter, an unaudited balance sheet as of the last day of such quarter and an unaudited statement of income and expenses for such quarter; and (z) for each quarter and not later than ninety (90) days after the end of such quarter, a report containing Operating Income, Operating Expenses and total Mall store occupancy for such quarter. (h) The Mortgagors hereby agree that, within one hundred twenty (120) days after the end of any calendar year during which any Release Premises was released from the Lien of this Mortgage, they will provide to the Mortgagee, and the Mortgagee will make available to Holders of the Notes upon written request (but subject to the confidentiality requirements of the Indenture), the Operating Income and Operating Expenses for the Mortgaged Properties that are not Release Premises for (i) the year then ended and (ii) the immediately preceding calendar year. 19. TRANSFERS AND INDEBTEDNESS. Unless such action is permitted by the -------------------------- provisions of Section 2.2(c) or the provisions of Article 19 or Article 20 hereof, -59- no Mortgagor will (i) sell, assign, convey, transfer or otherwise dispose of or encumber legal or equitable interests in all or any part of any Mortgaged Property, (ii) permit or suffer any owner, directly or indirectly, of a beneficial interest in any of the Mortgaged Properties, to transfer such interest, whether by transfer of stock or other beneficial interest in any entity or otherwise, (iii) mortgage, hypothecate or otherwise encumber or grant a security interest in all or any part of the Mortgaged Properties or (iv) file a declaration of condominium with respect to any of the Mortgaged Properties. In addition to satisfying the requirements of this Mortgage, any transaction described in clauses (i)-(iv) above must also be made in accordance with Article XIV of the Indenture. Notwithstanding the foregoing or any other provision of this Article 19, a sale, assignment, conveyance, transfer, or other disposition or hypothecation or other encumbrance of a direct or indirect beneficial interest: (A) in any Mortgagor shall be permitted if (x) after giving effect to the proposed transaction either General Growth or GGP, or the two Persons acting together, will own at least 51% of the equity interests in and control such Mortgagor, or (y) upon completion of such transfer one or more Permitted Owners, acting individually or in concert, shall own at least 51% of the equity interests in and control the Mortgagor and such transfer is affirmed by Rating Confirmation, or (B) in the case of a transaction or series of related transactions that will result in one or more Persons other than GGP and General Growth, directly or indirectly, owning 50% or more of the equity interests in each of the Mortgagors, shall be permitted if (x) upon completion of such transfers any one Permitted Owner individually, or any two or more Permitted Owners jointly, directly or indirectly, will own at least 51% of the equity interests in and control each of the Mortgagors and (y) if, upon completion of such transfer or transfers, the same Permitted Owner does not, or Permitted Owners do not, own and control each of the Mortgagors then each such transfer shall have been affirmed by Rating Confirmation, or (C) in the Mortgagor that owns The Oaks Mall or Westroads Mall shall be permitted if after giving effect to the proposed transaction one or more of the Ivanhoe Entities shall own at least 51% of the equity interests in and control such Mortgagor; provided, however, that in each such case (a) if the above-described transfer constitutes a transfer of a block of 25% or more of the membership interests, stock or other direct equity ownership interests in any Mortgagor or a transfer of a general partnership interest in any Mortgagor organized as a partnership or managing member's interest (if any) in any Mortgagor organized as a limited liability company, such transfer will require an Officer's Certificate of the type described in clause 19.1(c)(i) below and an Opinion of Counsel of the type described in clause 19.1(c)(ii) below, (b) if the above-described transfer involves the transfer of any interest in a general partner or managing member of any Mortgagor where such general partner or managing member is the requisite Single -60- Purpose/Insolvency-Remote Entity, such transfer will require an Officer's Certificate of the type described in clause 19.1(c)(i) below and an Opinion of Counsel relating to such Single Purpose/Insolvency-Remote Entity and such transferee of the type described in clause 19.1(c)(ii) below and (c) if the above-described transfer is of a type that requires Rating Confirmation, the Mortgagors shall also have obtained and delivered to the Mortgagee an Opinion of Counsel (as defined in the Indenture) from counsel experienced in federal income tax matters that such transfer will not result in a deemed exchange of any Note for a newly issued obligation pursuant to Section 1001 of the Code, or adversely affect the status of the Notes as debt for federal income tax purposes or result in the creation of a "taxable mortgage pool" within the meaning of Section 7701 of the Code (such opinions, collectively, a "Tax Opinion"). ----------- Nothing in this Section 19 and no other provision of this Mortgage or any other Security Document shall prohibit or be construed as prohibiting any shareholder in General Growth or any partner in GGP from selling, assigning, pledging, conveying, transferring or otherwise disposing of or encumbering such Person's shares in General Growth or partnership interests in GGP, respectively, to any other Person. 19.1. Sale of the Mortgaged Property. (a) Except as set forth in the ------------------------------ penultimate sentence of this Section 19.1(a) or elsewhere in this Article 19, the Mortgagors (or any of them) may only sell, assign, convey, transfer or otherwise dispose of legal or equitable title to the Mortgaged Properties or any one or more of them if, after giving effect to the proposed transaction, (i) each of the Mortgaged Properties will be either (x) directly owned by a Single Purpose/Insolvency-Remote Entity (including a tenancy-in-common among Single Purpose Entities under a tenancy-in-common agreement in substance the same in all material respects as a partnership agreement of a Single Purpose/Insolvency- Remote Entity organized as a partnership) which at the time of such transfer will be in compliance with the applicable covenants contained in Sections 2.3 and 2.4 hereof and which has assumed in writing (subject to the terms of Article 38 hereof) and agreed to comply with all the terms, covenants and conditions set forth in this Mortgage, expressly including the applicable covenants contained in Sections 2.3 and 2.4 hereof, and each of the other Security Documents, or (y) beneficially owned and controlled by an entity with a rating from the Rating Agency no less than one (1) rating category below the highest rating then assigned by the Rating Agency (but in no event less than Investment Grade) to any series of the Notes, (ii) one or more Permitted Owners, directly or indirectly, will own at least 51% of the equity interests in and control each Mortgagor and, in the case of a transfer of less than all of the Mortgaged Properties, the transferring Mortgagor(s) shall have obtained a Rating Confirmation (provided, however, that Rating Confirmation shall not be required in connection with a transfer of The Oaks Mall and/or Westroads Mall to any Person directly or indirectly owned and controlled by one or more of the Ivanhoe Entities), (iii) if the entity specifically named in the definition of "Property Manager" or a person controlled by General Growth does not act as Property Manager of the Mortgaged Properties and -61- General Growth does not own or control each transferee, then (A) the Property Manager of each Mortgaged Property retained by the Mortgagors or any of them must be a reputable and experienced professional management company having under management, at the time of the proposed transfer, at least twelve (12) regional shopping centers (at least six (6) of which must be "super-regional" shopping centers, as defined by The Urban Land Institute or any successor thereto) comprising an aggregate of at least twelve (12) million gross leasable square feet (excluding the Mortgaged Properties) and (B) the Permitted Owner, with respect to such transferee (other than one or more of the Ivanhoe Entities in the case of a transfer of The Oaks Mall and/or Westroads Mall to it or any Person owned and controlled by it), together with its Affiliates, must own or control at least twelve (12) super-regional shopping centers (as defined by The Urban Land Institute or any successor thereto) totalling at least six (6) million gross leasable square feet (excluding the Mortgaged Properties), (iv) if, pursuant to any of the foregoing clauses, the transfer is of a type that requires Rating Confirmation, the Mortgagors shall also have obtained and delivered to the Mortgagee a Tax Opinion, and (v) no Event of Default shall have occurred and be continuing. The permitted transferee of the Mortgaged Property or Mortgaged Properties transferred shall execute an assumption in the form of Exhibit D hereto, subject to the provisions of Article 38 hereof, of the - --------- obligations of a Mortgagor under this Mortgage with respect to each Mortgaged Property transferred to such Person. Notwithstanding the foregoing, each Mortgagor will be entitled to sell the Mortgaged Property owned or leased by it or any portion thereof if such Mortgagor first obtains a release of such Mortgaged Property from the Lien of this Mortgage in accordance with Article 44. As used in this Article 19 the terms "control" and "controlled" shall have the meanings assigned to them in the definition of Permitted Owner. (b) Notwithstanding the provisions of Section 19.1(a), any Mortgagor may transfer or dispose of Equipment that is either being replaced or that is no longer necessary in connection with the operation of the Premises of any Mortgaged Property, free from the interest of the Mortgagee under this Mortgage; provided that such transfer or disposal will not adversely affect the value of the Mortgaged Property, will not materially impair the utility of the Premises relating thereto, and will not result in a reduction or abatement of, or right of offset against, the rentals payable under any Lease, in either case as a result thereof, and provided that any new Equipment acquired by any Mortgagor (and not so disposed of) shall be subject to the interest of the Mortgagee under this Mortgage unless leased to such Mortgagor. The Mortgagee shall, from time to time, upon receipt of an Officer's Certificate requesting the same and confirming satisfaction of the conditions set forth above, execute a written instrument in form reasonably satisfactory to it confirming that such Equipment which is to be, or has been, sold or disposed of is free from the interest of the Mortgagee under this Mortgage. (c) (i) Not less than fifteen (15) Business Days prior to the closing of any transaction subject to the provisions of this Section 19.1, the Mortgagors shall give the -62- Mortgagee written notice of the transaction and the expected date of the closing thereof, and on or prior to the closing of any such transaction the Mortgagors shall deliver to the Mortgagee an Officer's Certificate describing the proposed transaction and stating that such transaction is permitted by this Article 19, together with any documents upon which such Officer's Certificate is based; and (ii) on or prior to the closing of any transaction subject to the provisions of this Section 19.1, the Mortgagors shall deliver to the Mortgagee and to the Rating Agency an Opinion of Counsel to the Mortgagors or the transferee selected by either of them (unless reasonably disapproved by the Mortgagee), confirming, among other things, that after giving effect to the proposed transfer the assets and liabilities of the relevant Mortgagor(s), and of its (their) managing general partner(s) or special purpose member(s) (as applicable) will not be substantively consolidated with the assets of certain owners or controlling persons of such Mortgagor(s) in a bankruptcy or similar proceeding, such opinion to be in form and substance consistent with similar opinions then being required by the Rating Agency. 19.2. Indebtedness. No Mortgagor shall incur, create or assume any ------------ indebtedness or incur any liabilities whether or not secured by any Mortgaged Property without the consent of the Mortgagee (other than the Notes and the other obligations, indebtedness and liabilities secured by this Mortgage); provided, however, that if no (x) monetary Default or (y) Event of Default shall have occurred and be continuing, each Mortgagor may, without the consent of the Mortgagee, incur, create or assume the following indebtedness: (i) unsecured Trade Payables incurred in the ordinary course of such Mortgagor's business, customarily paid by such Mortgagor within sixty (60) days outstanding, or such longer period as such Mortgagor is, in good faith and in accordance with customary and prudent practices, contesting the payment of same, and capitalized personal property leasing expenses, or in connection with the ownership, management, operation, leasing, cleaning, maintenance, repair, replacement, financing, improvement, alteration or restoration thereof incurred in the ordinary course of operating such Mortgagor's business (provided, however, that notwithstanding the foregoing, in no event shall any Mortgagor be permitted under this provision to enter into a note for borrowed money); (ii) amounts, not secured by any Mortgaged Property, payable or reimbursable to any Tenant of any portion of the applicable Mortgaged Property on account of work performed at the Mortgaged Property by such Tenant or for costs incurred by such Tenant in connection with its occupancy of space in the Premises of such Mortgaged Property, in each case incurred in the ordinary course of such Mortgagor's business (provided, however, that notwithstanding the foregoing, in no event shall any Mortgagor be permitted under this provision to enter into a note for borrowed money); -63- (iii) indebtedness not secured by any of the Mortgaged Properties, relating solely to financing of capital improvements, tenant improvements, Equipment or leasing costs relating to any Mortgaged Property or Mortgaged Properties, and costs associated with such indebtedness, in an amount of up to 5% of the aggregate Allocated Amounts of all Mortgaged Properties (initially, $28,000,000) (it being understood that the maximum amount of indebtedness described in this clause (iii) that may be outstanding at any time when any Notes are outstanding under the Indenture shall be 5% of the aggregate of the original Allocated Amounts of all of the Mortgaged Properties); the Mortgagor will initially be deemed to have incurred $2,500,000 of unsecured debt in accordance with the foregoing clause (which $2,500,000 will be reduced proportionately as the then-Potential Mortgagor Obligations are undertaken and/or the Mortgagor's responsibility in respect thereof is satisfied or waived or the amounts payable in connection therewith are secured by one or a combination of the items described in Section 14(d)(i)-(iii)); and (iv) indebtedness in the form of Additional Notes as permitted under Section 9.1(6) of the Indenture. 19.3. Subordinate Liens. [Intentionally omitted] ----------------- 19.4. Additional Permitted Transfers. Notwithstanding the foregoing ------------------------------ provisions of this Article 19, each Mortgagor without the consent of the Mortgagee may (i) make transfers of portions of the Premises relating to any Mortgaged Property (by sale, ground lease, subordination of fee interest to a leasehold mortgage, sublease or other conveyance of any interest) to any federal, state or local government or any political subdivision thereof in connection with takings or condemnations of any portion of such Premises for dedication or public use (subject to the provisions of Article 15 hereof, if applicable) or portions of such Premises to third parties, including, without limitation, owners of out parcels, department store pads, pads for office buildings, hotels or other properties for the purpose of erecting and operating additional structures whose use is integrated and consistent with the use of such Mortgaged Property, (ii) dedicate portions of the Premises relating to any Mortgaged Property or grant easements, restrictions, covenants, reservations and rights of way in the ordinary course of business for traffic circulation, ingress, egress, parking, access, water and sewer lines, telephone and telegraph lines, electric lines or other utilities or for other similar purposes or amend any Operating Agreement and (iii) transfer to a retail or an office user (by conveyance, ground lease or otherwise) one or more anchor sites (together with parking ancillary thereto), as well as reasonable and/or customary easements in connection therewith, provided, in each such case, that the transfer, conveyance or other encumbrance set forth -64- in the foregoing clauses (i), (ii) and (iii) will not materially impair the utility and operation of the related Mortgaged Property or materially adversely affect the value of the related Mortgaged Property, in each case taken as a whole. Subject to the provisions of Article 15 hereof, if any Mortgagor receives any consideration in connection with any such transfer or other conveyance, the Mortgagor shall have the right to use any such proceeds in connection with any Alterations being performed in connection with, or required as a result of, such transfer or conveyance. Any net proceeds received by such Mortgagor in excess of the cost of such Alterations (including, without limitation, amounts received in excess of the threshold described below in respect of non-revenue generating land) shall, at the Mortgagor's option, (i) be paid to the Mortgagee for the benefit of the Holders in repayment of the Notes on the next occurring Interest Payment Date (as defined in the Indenture), together with the applicable Make- Whole Payment (as defined in the Indenture), if any, and any amounts then payable under the Security Documents or (ii) be deposited in escrow with the Mortgagee to be held by the Mortgagee for the benefit of the Holders for application toward payments of Secured Obligations if such payments are not made by the Mortgagors when due, such amounts to be held by the Mortgagee in an Eligible Account and to be invested by the Mortgagee in the same manner as is permitted in Section 6.14 of the Indenture with respect to amounts held in the Payment Account; provided, however, that if and to the extent that such proceeds were received by any of the Mortgagors in payment for non-revenue generating land as described below, and no Default or Event of Default has occurred and is continuing, the Mortgagee shall disburse such proceeds to the Mortgagors upon their written request (such request to be accompanied by an Officer's Certificate confirming the absence of any Default under the Loan and identifying, in reasonable detail, the expenses to which such request relates) to reimburse the Mortgagors for any capital expenditures incurred by them at any of the Mortgaged Properties, it being understood that for purposes hereof "capital expenditures" shall mean leasing commissions, tenant improvement costs and the costs of capital improvements that, in each case, are borne by a Mortgagor and are not reimbursable by tenants. The Mortgagee shall invest any amounts held in such account in the same manner as is permitted in Section 6.14 of the Indenture with respect to amounts held in the Payment Account. Such escrow shall be released to the Mortgagors by the Mortgagee upon repayment in full of the Notes. Notwithstanding the foregoing, if any such transfer or other conveyance shall be of any currently unimproved and non-revenue-generating portion of the Land that is not necessary for the operation of the relevant Mortgaged Property, as certified to the Mortgagee by the applicable Mortgagor, and no Event of Default shall have occurred and be continuing, the Mortgagor may retain the first One Million Dollars ($1,000,000) of net proceeds received in the aggregate from such transfers or other conveyances (subject, however, to the same being used to pay the costs of any related Alterations). In addition, and notwithstanding the foregoing, the Mortgagors shall be entitled to retain 100% of the proceeds of the sale by it of (x) the former J.C. Penney site at Sooner Fashion Mall and (y) a vacant anchor pad and surrounding parking area at Market Place Shopping Center, in each case provided that such sale is consummated on or prior to the second -65- anniversary of the date hereof. In connection with any transfer, conveyance or subordination or other encumbrance permitted pursuant to this Section 19.4, the Mortgagee agrees to execute and deliver any instrument reasonably necessary or appropriate to facilitate said action and, in the case of any transfers of fee interests referred to in clauses (i), (ii) and (iii) of the first sentence of this Section 19.4, to release the portion of the Land affected by such taking or condemnation or such transfer from the Lien of this Mortgage or, in the case of other transfers, conveyances or grants described in clauses (i), (ii) or (iii) of the first sentence of this Section 19.4, to subordinate the Lien of this Mortgage to such leasehold interests, subordination agreements, easements, restrictions, covenants, reservations and rights of way or other similar grants and, if appropriate, amend the relevant Operating Agreement or Operating Agreements, in either case, upon receipt by the Mortgagee of: (1) a copy of the instrument of transfer; (2) a plot plan identifying the location of the portion of the Mortgaged Property to be released from the Lien of this Mortgage; (3) a metes and bounds description of the portion of such Mortgaged Property to be released; (4) an amendment to the relevant Exhibit B to this Mortgage --------- implementing the proposed release, including a metes and bounds description of the portion of the Land at the relevant Mortgaged Property that will continue to be encumbered by the Lien of this Mortgage after the proposed release; (5) and an Officer's Certificate stating (x) with respect to any taking or condemnation or deed in lieu thereof, the consideration, if any, being paid for the transfer, (y) that such transfer does not materially impair the utility and operation of the Land, materially reduce its value or cause the Mortgaged Property to be in violation of any applicable Legal Requirements, including laws relating to the number of parking spaces at the Premises and (z) that the lien of this Mortgage will continue unimpaired, subject to Permitted Exceptions, with respect to the real estate described in item (4) above. All Taking Proceeds shall be applied in accordance with the provisions of Article 15 hereof. 19.5. Delivery of Documents to the Mortgagee. No more than twenty (20) -------------------------------------- Business Days after the completion of any transaction subject to this Article 19, the Mortgagors shall provide the Mortgagee with copies of executed deeds, mortgages and such other similar closing documents as may be reasonably requested by the Mortgagee. 19.6. Potential Mortgagor Obligations. If the Mortgagors elect to ------------------------------- transfer all of the Mortgaged Properties to a transferee permitted by Section 19.1, but not otherwise affirmed by Rating Confirmation, then, on or before such transfer, the Mortgagors (or such Transferee Mortgagor) will be required to deliver to the Mortgagee a Credit Facility or Eligible Collateral in the amount of the sum of (i) $2,500,000 to secure Potential Mortgagor Obligations, provided, that such amount shall be reduced from time to time (in such amounts as are proposed by the Mortgagors based upon the amount of work then performed or waived in respect of Potential Mortgagor Obligations and the amount of -66- any such Potential Mortgagor Obligations that has then lapsed by the terms of the documents giving rise thereto, and approved or disapproved by the Mortgagee, in its reasonable discretion based upon the recommendation of the Servicer), plus (ii) if such transfer will be completed before January 1, 1999 and, as of the completion of such transfer, Westroads Mall still will be a Mortgaged Property and the Mortgagors will not have completed the environmental remediation required under Section 10.13 of the Indenture, an amount equal to the cost to complete such remediation as estimated by the environmental consultant then supervising such remediation, plus (iii) if such transfer will be completed before the second anniversary of the date of this Mortgage, $2,296,061 to secure the cost of completing the deferred maintenance and other capital items required under Section 10.13 of the Indenture, provided, that such amount shall be reduced to reflect amounts actually expended by the Mortgagors on such required deferred maintenance and other capital items through the date of such transfer. Any Credit Facility or Eligible Collateral delivered to the Mortgagee in satisfaction of this Section 19.6 shall (a) be held by the Mortgagee in escrow, if cash, in an Eligible Account (in which case the Mortgagee shall invest such cash in the same manner as is described in Section 6.14 of the Indenture with respect to the Payment Account), (b) serve as additional security for the Secured Obligations and (c) be reduced and released or disbursed to the Mortgagors from time to time upon receipt by the Mortgagee of at least five (5) Business Days' prior notice of such request accompanied by an Officer's Certificate confirming that (x) no Event of Default has occurred and is continuing and (y) the sum requested is justly required to reimburse the Mortgagors for payments made by them in furtherance of completing the Potential Mortgagor Obligations, environmental remediation or deferred maintenance and other capital items, as applicable, for which such Credit Facility or Eligible Collateral was originally provided. 20. PERFORMANCE OF LEASES; APPLICATION OF RENTS. (a) Each Mortgagor ------------------------------------------- shall use reasonable efforts to timely perform and observe or cause to be performed or observed all the material terms, covenants and conditions required to be performed and observed by such Mortgagor under the Leases relating to the Mortgaged Property identified on Exhibit A as being owned or leased by such --------- Mortgagor, such that there will be no material and adverse impairment of the value of any Mortgaged Property or the Mortgagee's interest therein under this Mortgage. Each Mortgagor will promptly deliver to the Mortgagee and the Servicer a copy of any notice from any Tenant under any Lease covering 15,000 square feet or more of the gross leasable area of the Premises of any Mortgaged Property claiming that the Mortgagor is in default in any material respect in the performance or observance of any of the terms, covenants or conditions thereof to be performed or observed by the Mortgagor. (b) Each Mortgagor shall engage, and shall maintain during the term hereof, its engagement of General Growth Management, Inc., any other entity controlled by (as defined in the definition of Permitted Owner) General Growth or another prominent -67- professional management company that manages at least twelve (12) other regional shopping centers in the United States (at least six (6) of which must be "super-regional" shopping centers, as defined by The Urban Land Institute or any successor thereto) comprising an aggregate of at least twelve (12) million square feet (exclusive of the Mortgaged Properties), as the property manager of each Mortgaged Property identified on Exhibit A as being owned or leased by such --------- Mortgagor (any such property manager, the "Property Manager"). The Mortgagors shall, or shall cause the Property Manager to, manage and operate each Mortgaged Property in a reasonably prudent manner and shall not enter into any Lease with respect to any Mortgaged Property after the date hereof that would, evaluated alone or in conjunction with any then existing Leases of the Mortgaged Property, result in any material impairment of the fair market value, as of the date such Lease is executed by the Mortgagor, of the Mortgaged Property. Each Mortgagor may enter into any Lease which is not inconsistent with the provisions of this Article 20 and the other applicable provisions of this Mortgage, if any. If Mortgagee delivers to Mortgagors written notice of any Default under this Mortgage, Mortgagors agree that from and after the date Mortgagors receive said notice, Mortgagors will deliver to the Mortgagee promptly after execution and delivery thereof by all parties thereto either a duplicate original executed counterpart or a certified copy of each Lease thereafter executed. Each Lease entered into after the date hereof (including the renewal or extension on or after the date hereof of any Lease entered into prior to the date hereof if the rent payable during such renewal or extension, or a formula to compute such rent, is not provided for in such Lease; each such a renewal or extension a "Renewal Lease") shall (A) provide for rent and all other material items ------------- thereunder to be payable in amounts at least equal to the fair market rental value (taking into account the type and quality of the Tenant), as of the date such Lease is executed by the Mortgagor, of the space covered by such Lease or Renewal Lease for the term thereof, including any renewal options, (B) not have a material adverse effect on the value of the related Mortgaged Property, taken as a whole, or the ability of the applicable Mortgagor to pay its obligations in respect of the Notes and this Mortgage or (C) be consented to by the Mortgagee. (c) In addition to the foregoing, each Mortgagor may, without the consent of the Mortgagee, amend, modify or waive the provisions of any Lease or Operating Agreement, provided that such action does not have a material adverse effect upon the value of the related Mortgaged Property, and provided further that such Lease or Operating Agreement, as amended, modified or waived, is otherwise in compliance with the requirements of this Mortgage and a certified copy of the amendment, modification or waiver is delivered to the Mortgagee. (d) Each Mortgagor may terminate or permit the termination of any Lease of space or accept surrender of all or any portion of the space demised under the Lease or acquire any Lease or reduce the rentals reserved under or shorten the term of any Lease so long as such action (taking into account the planned alternative uses of the -68- space) does not materially adversely affect the value of the Mortgaged Property to which such Lease relates (it being agreed that termination of the Lease of a Tenant that is in default, after any applicable notice and cure periods, shall be considered to be for the benefit of the Mortgaged Property) or the ability of the applicable Mortgagor to pay its obligations in respect of the Notes and this Mortgage. (e) The Mortgagors shall not enter into any Lease with an Affiliate of any Mortgagor at any Mortgaged Property, unless (i) the space is for the use and occupancy of one or more of such Affiliates, and (ii) the material terms of such Lease comply with the requirements set forth in Section 20(b) hereof; provided, however, that a reasonable amount of office space not in excess of 10,000 net leasable square feet can be provided to the Property Manager for the purpose of management of each Mortgaged Property at less than fair market rental or at no rental, at the discretion of the Mortgagors. Each Mortgagor shall have the right, subject to the provisions of this Mortgage, to acquire Leases by way of assignment, surrender, acquisition or further sublease. No Mortgagor shall modify the terms governing the management of any Mortgaged Property in any respect that would have a materially adverse effect on the operation of, or the Net Operating Income generated by, or the value of, the Mortgaged Property in question without the prior approval of the Mortgagee. Each Mortgagor shall provide prompt written notice to the Mortgagee if it engages a new Property Manager at any Mortgaged Property. (f) No Mortgagor shall receive or collect, or permit the receipt or collection of, any rental or other payments under any Lease (excluding, for purposes hereof, Specialty Leases) more than one (1) month in advance of the respective period in respect of which they are to accrue, except that (i) in connection with the execution and delivery of any Lease or of any amendment to any Lease, rental payments thereunder may be collected and received in advance in an amount not in excess of one (1) month's rent and a security deposit (including advance rents as or in lieu of a security deposit) may be required thereunder (provided that such deposits are maintained in accordance with applicable law and in accordance with Article 51 hereof), (ii) the Mortgagors may receive and collect escalation, percentage rent and other charges in accordance with the terms of each Lease and (iii) the Mortgagors may receive and collect more than one month's rent in connection with a Tenant terminating its Lease if the termination of the Lease is permitted under this Mortgage. (g) Upon receipt by the Mortgagee of a written request from any Mortgagor therefor, the Mortgagee shall execute and deliver to the Tenant under any Lease (other than a Lease to an Affiliate of such Mortgagor) existing on the date hereof or made in accordance with the provisions of this Article 20 a subordination, non-disturbance and attornment agreement in the form attached hereto as Exhibit J or such other form as may be proposed by the applicable --------- Mortgagor and reasonably acceptable to the Mortgagee. -69- 21. NO ENDORSEMENT. The Mortgagee shall not become or be considered -------------- to be an endorser, co-maker or co-obligor on the Notes or on any obligation of the Mortgagors secured by this Mortgage. 22. NO CREDIT FOR PAYMENT OF TAXES OR IMPOSITIONS. None of the --------------------------------------------- Mortgagors shall be entitled to any credit against the principal of or interest or Make-Whole Payment, if any, payable on the Notes, and none of the Mortgagors shall be entitled to any credit against any other amounts which may become payable under the terms thereof or hereof, by reason of the payment of any tax on any Mortgaged Property or any part thereof or by reason of the payment of any other Imposition or other amount required to be paid hereunder. No deduction shall be made or claimed from the taxable value of any Mortgaged Property or any part thereof by reason of this Mortgage. 23. EVENT OF DEFAULT. If one or more of the following events (each an ---------------- "Event of Default") shall occur: ---------------- (a) default in the payment of any amounts due and payable hereunder (other than interest, principal, Additional Amounts or Make-Whole Payment on the Notes), which continues for a period of thirty (30) Business Days after written demand by the Mortgagee for payment thereof; or (b) an "Event of Default" as defined in the Indenture or any other Security Document; or (c) any Mortgagor shall, directly or indirectly, make or permit to occur a violation of the covenants contained in Sections 2.3 or 2.4 hereof, or a violation of the covenants contained in Article 11 hereof (subject to the provisions of Article 12 hereof), or any sale, assignment, conveyance, transfer, mortgage, pledge, encumbrance or other disposition in violation of Article 19 hereof, or incur any indebtedness in violation of Article 19 hereof; or (d) any Mortgagor shall fail to perform or comply with any of the material covenants of this Mortgage, or any Mortgagor shall breach any material representation or warranty made by it in this Mortgage or in any other Security Document, and in any such case, such failure or breach shall continue for more than thirty (30) Business Days after written notice thereof by the Mortgagee to such Mortgagor; provided that in the case of any such failure or breach that is susceptible of cure but that cannot with diligence be cured within such thirty Business Day period, if the Mortgagor shall promptly have commenced to cure the same and shall thereafter prosecute the curing thereof with diligence, subject to Excusable Delays, the period within which such failure may be cured shall be extended for such further period as shall be reasonably necessary for the curing thereof with diligence, subject to Excusable Delays, provided that such extended period shall not exceed one hundred eighty (180) days unless, only in the case -70- of cures which require construction or remedial work, such cure cannot with diligence reasonably be achieved within such one hundred eighty (180) days and the Mortgagor has delivered an Officer's Certificate to the Mortgagee to such effect, in which event such period shall be extended for an additional one hundred eighty (180) days, subject to Excusable Delays (and provided that cure of any breach of representation or warranty, and that cure of any failure to make a delivery, subsequent to the date as of which the representation or warranty was made or applies, or such delivery was required, shall constitute cure of such breach, or cure of such failure to make the delivery, provided such breach or failure has not had an irreparable material adverse effect on the interest of the Mortgagee hereunder); or (e) any Mortgagor shall fail to redeem the Notes as required by the last paragraph of Article 48 hereof; then, in any such event, the Mortgagee, at its option, may, in accordance with the provisions of Section 5.2 of the Indenture, declare the Notes and the entire indebtedness secured by this Mortgage and the other Security Documents due and payable and, to the extent permitted by applicable law, the Mortgagee may exercise the other remedies provided for herein for an Event of Default. Notwithstanding anything to the contrary contained herein or in the Security Documents, the Mortgagors shall not be in default with respect to any monetary obligation under the Notes or hereunder or become obligated for the payment of any additional interest so long as all amounts due and payable on the Notes and all other amounts due hereunder and under any other Security Document are paid to the Mortgagee in collectable funds on the Business Day preceding the date the same are due and payable and are received by the Mortgagee before 12:00 noon New York, New York time on such Business Day. 24. COMPROMISE OF ACTIONS BY THE MORTGAGEE. Any action, suit or -------------------------------------- proceeding brought by the Mortgagee pursuant to this Mortgage or otherwise and any claim made by the Mortgagee under this Mortgage or otherwise may be compromised, withdrawn or otherwise dealt with by the Mortgagee without notice to or the approval of the Mortgagors or any of them. 25. FORECLOSURE. ----------- 25.1. Foreclosure. Subject to Article 38 hereof, if any Event of ----------- Default shall have occurred, the Mortgagee, for the benefit of the Holders, may (but shall be under no obligation to) at any time proceed, at law or in equity or otherwise, to enforce the payment of the Notes in accordance with the terms thereof and, if the Notes have been declared due and payable: (a) in any Mortgage State or the State of Georgia, to institute an action to foreclose, and in any Deed of Trust State, cause the Deed Trustee to foreclose, its interest under and the lien of this Mortgage against the Mortgaged Property -71- or Mortgaged Properties located in each such state by judicial foreclosure sale or strict foreclosure in one proceeding in each such state or against portions of the Mortgaged Properties in a series of separate proceedings, and to have the same sold under the judgment or decree of a court of competent jurisdiction or proceed to take any of such actions, all to the extent permitted by applicable law, it being understood that, subject to the provisions of Section 7.10 of the Indenture, the Mortgagors and the Mortgagee shall each be entitled to bid in any such sale; (b) to take such other action at law or in equity or otherwise for the enforcement of this Mortgage and the realization on the security or any other security herein or elsewhere provided for, as the law may allow, and may proceed therein to final judgment and execution for the entire unpaid balance of the principal debt, together with all other sums payable by the Mortgagors in accordance with the provisions of the Notes, this Mortgage and the other Security Documents, and all sums which may have been advanced by the Mortgagee for taxes, water or sewer rents, charges or claims, payment on prior liens, insurance or repairs to the Mortgaged Properties, all costs of suit, together with interest thereon at such interest rate as may be awarded in any judgment obtained by the Mortgagee, as the case may be, from and after the date of any foreclosure sale until actual payment is made to the Mortgagee of the full amount due the Mortgagee, and attorneys' fees through and including all appellate levels; and/or (c) to sell, assign, transfer and deliver the whole or, from time to time, any Mortgaged Property, or any interest in any part thereof, at any private sale or at public auction permitted by law, with such demand, advertisement or notice as required by law, and on such other terms as required or permitted by law, and the aforesaid power of sale and agency hereby granted are coupled with an interest and are irrevocable. Before taking title to or possession of all or any portion of the Mortgaged Properties, the Mortgagee, at the expense of the Mortgagors, may determine whether any environmental hazards exist at any Mortgaged Property in respect of which the Mortgagee may become liable by taking title, which determination shall include the performance of an environmental audit of the Mortgaged Properties (or any of them) by a qualified professional. 25.2. The Mortgagors' Waivers. It shall not be necessary for the ----------------------- Mortgagee, in a Mortgage State, or the Deed Trustee, in a Deed of Trust State, to have actual or constructive possession of any part of any Mortgaged Property in order to pass the title to and the right of possession of the Mortgaged Property, and the title to and the right of possession of the Mortgaged Properties, or any of them, shall pass to the purchaser or purchasers thereof at any sale hereunder as fully as if the same actually had been present and delivered. To the fullest extent allowed by applicable law, upon foreclosure of this Mortgage, whether by power of sale or any other nonjudicial or judicial foreclosure process, the Mortgagors or any person claiming any part of any Mortgaged Property by, -72- through or under any Mortgagor shall not be entitled to direct the order of sale or to a marshalling of assets or a sale in inverse order of alienation. The recitals and statements of fact contained in any notice or in any conveyance to the purchaser or purchasers at any sale hereunder shall be prima facie evidence of the truth of such facts, and all prerequisites and requirements necessary to the validity of any such sale shall be presumed to have been performed. In the event of a foreclosure sale, to the extent that any Mortgagor is in possession of any of the Premises, such Mortgagor shall be deemed a tenant at will of the purchaser at such judicial foreclosure sale and shall be liable for a reasonable rental for the use of such Premises; and if such Mortgagor refuses to surrender possession of the Premises upon demand, the purchaser shall be entitled to institute and maintain the statutory action of forcible entry and detainer and procure a writ of possession thereunder, and such Mortgagor expressly waives all damages sustained by reason thereof and such Mortgagor agrees to pay to the purchaser the reasonable costs and expenses (including all reasonable attorneys' fees and expenses) of such action and writ, subject to the provisions of Article 38. 25.3. Recovery of Advances. Subject to the provisions of Article 35 -------------------- and subject to the provisions of Article 38, the Mortgagee shall have the right, from time to time, to bring an appropriate action to recover any sums required to be paid by any Mortgagor under the terms of this Mortgage and/or the Notes as they become due, without regard to whether the principal indebtedness evidenced by the Notes or any other sums secured by this Mortgage shall be due, and without prejudice to the right of the Mortgagee thereafter to bring an action of foreclosure, or any other action, for any default by any Mortgagor existing at the time the earlier action was commenced. 25.4. Sale. Upon the completion of any sale or sales of all or any ---- portion of the Mortgaged Properties by virtue of this Article 25, the Mortgagee, in a Mortgage State or the State of Georgia, or the Deed Trustee, in a Deed of Trust State, or any officer of any court empowered to do so, shall execute and deliver to the accepted purchaser or purchasers, good and sufficient instrument or instruments (subject to the provisions of Article 38 hereof), conveying, assigning and transferring all estate, right, title and interest in and to the property and rights sold. In such event, the Mortgagee, in a Mortgage State or the State of Georgia, or the Deed Trustee, in a Deed of Trust State, is hereby irrevocably appointed the true and lawful attorney of the Mortgagors, in their name and stead, to make all the necessary conveyances, assignments, transfers and deliveries of the Mortgaged Property, or any portions thereof, and rights so sold, and for that purpose the Mortgagee, in a Mortgage State or the State of Georgia, or the Deed Trustee, in a Deed of Trust State, may execute all necessary instruments of conveyance, assignment and transfer and may substitute one or more persons with like power, the Mortgagors hereby ratifying and confirming all that the Mortgagors' said attorney or such substitute or substitutes shall lawfully do by virtue hereof. Nevertheless, any Mortgagor shall, if so requested by the Mortgagee, in a Mortgage State or the State of Georgia, or the Deed Trustee, in a Deed of Trust State, ratify and confirm (subject to the provisions of Article -73- 38 hereof) any such sale or sales by executing and delivering to the Mortgagee, in a Mortgage State or the State of Georgia, or the Deed Trustee, in a Deed of Trust State, or to such purchaser or purchasers all such instruments (which in each case shall be without recourse to or representation or warranty by such Mortgagor) as may be advisable, in the judgment of the Mortgagee, in a Mortgage State or the State of Georgia, or the Deed Trustee, in a Deed of Trust State, for the purpose and as may be designated in such request. Any such sale or sales shall operate to divest all the estate, right, title, interest, claim and demand whatsoever, whether at law or in equity, of the applicable Mortgagor in and to the properties, interests and rights so sold, and shall be a perpetual bar both at law and in equity against such Mortgagor and against any and all persons claiming or who may claim the same, or any part thereof from, through or under such Mortgagor. 25.5. Several Parcels. If any Event of Default shall have occurred and --------------- the Notes shall have been declared due and payable, the Mortgagee, in a Mortgage State or the State of Georgia, or the Deed Trustee, in a Deed of Trust State, shall have the right to sell all or any portion of the Mortgaged Properties in such order as it may determine, and the right of sale hereunder shall not be exhausted by one or more sales, but successive sales may be had until all of the Secured Obligations shall have been paid in full. In the event any sale hereunder is not completed or is defective in the opinion of the Mortgagee, in a Mortgage State or the State of Georgia, or the Deed Trustee, in a Deed of Trust State, such sale shall not exhaust the power of sale hereunder, and until all of the Secured Obligations shall have been paid in full, the Mortgagee, in a Mortgage State or the State of Georgia, or the Deed Trustee, in a Deed of Trust State, shall have the right to cause a subsequent sale or sales. 26. THE MORTGAGEE AUTHORIZED TO EXECUTE INSTRUMENTS. Each Mortgagor ----------------------------------------------- hereby appoints (which appointment is irrevocable and is coupled with an interest) the Mortgagee, in a Mortgage State, or the Deed Trustee, in a Deed of Trust State, the true and lawful attorney-in-fact of the Mortgagors, in its name and stead and on its behalf, for the purpose of effectuating any sale, assignment, transfer or delivery for the enforcement of this Mortgage after the occurrence and during the continuance of an Event of Default hereunder, to execute and deliver all such deeds, assignments, bills of sale and other instruments (without recourse, warranty or representation of any kind) as the Mortgagee, in a Mortgage State, or the Deed Trustee, in a Deed of Trust State, may consider necessary or appropriate, with full power of substitution, the Mortgagors hereby ratifying and confirming (subject to the provisions of Article 38 hereof) all that such attorney or any substitutes shall lawfully do by virtue hereof. Nevertheless, if so requested by the Mortgagee, in a Mortgage State, or the Deed Trustee, in a Deed of Trust State, or any purchaser, the Mortgagors shall ratify and confirm (subject to the provisions of Article 38 hereof) any such sale, assignment, transfer or delivery by executing and delivering to the Mortgagee, in a Mortgage State, or the Deed Trustee, in a Deed of Trust State, or such purchaser all deeds, assignments, bills of sale, releases and other proper instruments (which in each case shall be without recourse to or representation or -74- warranty by the Mortgagor) to effect such ratification and confirmation as may be designated in any such request. 27. PURCHASE OF PROPERTIES BY THE MORTGAGEE. The Mortgagee, any --------------------------------------- Holder individually, or any nominee of any of them may be a purchaser of the Mortgaged Properties or of any interest therein at any sale thereof, and may apply to the purchase price all or any part of the indebtedness secured hereby then held by it in lieu of payment in cash of the amount of such indebtedness applied. Any such purchaser shall, upon any such purchase, acquire good title to the property so purchased, free of the lien of this Mortgage and, except to the extent expressly prohibited by law, free of all rights of redemption in the Mortgagors (or any of them). 28. RECEIPT A SUFFICIENT DISCHARGE TO PURCHASER. Upon any sale of any ------------------------------------------- Mortgaged Property after the Notes become due and payable, whether at maturity, by declaration of acceleration or by automatic acceleration if applicable after an Event of Default or otherwise, the receipt of the Mortgagee, in a Mortgage State or the State of Georgia, or the Deed Trustee, in a Deed of Trust State, or the receipt of the officer making the sale under judicial proceedings shall, to the full extent legally permitted, be sufficient discharge to the purchaser for the purchase money, and such purchaser shall not be obligated to see to the application thereof. 29. WAIVER OF MARSHALLING. Each Mortgagor hereby waives all rights, --------------------- legal and equitable, it may now or hereafter have to require marshalling of assets or to require upon foreclosure sales of assets in a particular order. Each successor and assign of any of the Mortgagors, including a holder of a Lien subordinate to the Lien created hereby (without implying that any Mortgagor has, except as expressly provided herein, a right to grant an interest in, or a subordinate lien on, any of the Mortgaged Properties), by acceptance of its interest or Lien agrees that it shall be bound by the above waiver, as if it gave the waiver itself. 30. SALE SHALL BE A BAR AGAINST THE MORTGAGORS. The sale of all or ------------------------------------------ any portion of the Mortgaged Properties in connection with the exercise of remedies under this Mortgage after the Notes become due and payable, whether at maturity, by declaration of acceleration or by automatic acceleration if applicable after an Event of Default or otherwise, shall, to the full extent legally permitted, forever be a perpetual bar against any Mortgagor's asserting any claim to title to such portion of the Mortgaged Properties so sold. 31. APPLICATION OF PROCEEDS OF SALE. To the extent permitted by ------------------------------- applicable Legal Requirements and except as otherwise required by law, the proceeds of any sale of any Mortgaged Property or any part thereof or any interest therein, after the Notes become due and payable, whether at maturity, by declaration of acceleration or by automatic acceleration if applicable after an Event of Default or otherwise, together with -75- any other moneys and the proceeds of any Credit Facility or Eligible Collateral at the time held by the Mortgagee, shall be applied as set forth in Section 5.6 of the Indenture. 32. APPOINTMENT OF RECEIVER. If an Event of Default shall have ----------------------- occurred and be continuing, the Mortgagee shall, to the fullest extent permitted by law, as a matter of right, be entitled to the appointment of a receiver for all or any part of the Mortgaged Properties and the rents and profits therefrom, whether such receivership be incidental to a proposed sale of the Mortgaged Properties or otherwise, and without consideration of the value of the Mortgaged Properties as security for the amounts due or the solvency of any Person liable for the payment of such amounts, and each Mortgagor hereby consents to the appointment of such a receiver and agrees that it will not oppose any such appointment. 33. POSSESSION, MANAGEMENT AND INCOME. If an Event of Default shall --------------------------------- have occurred and be continuing, the Mortgagee, with such notice, if any, to the Mortgagors as may be required by law or as the Mortgagee considers appropriate in the circumstances, and subject to the rights of Tenants and the provisions of applicable law, may (but shall be under no obligation to) immediately enter upon and take possession of the Premises by self-help, summary proceedings, ejectment or otherwise, and may remove each Mortgagor and all other Persons and any and all property therefrom, and may hold, operate and manage the same and receive all earnings, income, rents, issues and proceeds accruing with respect thereto; provided, however, that upon the cure of such Event of Default within the permitted time, if any, and if no other Event of Default shall have occurred and be continuing, the Mortgagee will surrender possession of such Premises back to the Mortgagors. The Mortgagee shall be under no liability for or by reason of any such taking of possession, entry, removal or holding, operation or management, except (i) for its negligence or willful misconduct or (ii) to the extent required by applicable law, and except that any amounts so received by the Mortgagee shall be applied as set forth in Section 5.6 of the Indenture. At the request of the Mortgagee, the Mortgagors shall promptly execute and deliver (subject to the provisions of Article 38 hereof and without representation or warranty) to the Mortgagee such deeds, instruments of assignment and other documents as the Mortgagee may deem necessary or advisable to enable the Mortgagee or any agent or representative designated by the Mortgagee, at such time or times and place or places as the Mortgagee may reasonably specify, to obtain possession of all or any portion or portions of any of the Mortgaged Properties to which the Mortgagee shall at the time be entitled hereunder, subject to the rights of Tenants. If any Mortgagor shall fail for any reason to execute and deliver such instrument or document after such request by the Mortgagee, the Mortgagee, to the fullest extent permitted by law, may (i) obtain a judgment conferring on the Mortgagee the right to immediate possession and requiring such Mortgagor to execute and deliver -76- such instruments and documents to the Mortgagee, which entry of judgment such Mortgagor, to the extent it may lawfully do so, hereby specifically consents and (ii) pursue the Mortgaged Properties wherever they may be found and to the extent lawfully permitted, take possession of and remove the same, subject to the rights of Tenants. Upon every such taking of possession, the Mortgagee may (but shall have no obligation to), from time to time, at the expense of the Mortgagors and such expenses to constitute additional indebtedness secured by the Mortgaged Properties, make all such expenditures for maintenance, insurance, repairs, replacements and, to the extent commercially reasonable under the circumstances in existence at the time, alterations, additions and improvements, to and of the Premises, in each case as it may deem proper. In such case, the Mortgagee, to the fullest extent permitted by law, shall have the right to manage, control, use, operate, store, lease or otherwise deal with the Mortgaged Properties, or any portion thereof, and to carry on the business and exercise all the rights and powers of the Mortgagors relating to the Mortgaged Properties, as the Mortgagee shall deem appropriate or advisable, including the right to enter into any and all such agreements with respect to the management, cleaning, control, use, operation, storage, leasing of or otherwise dealing with the Mortgaged Properties, or any part thereof, as the Mortgagee may determine; and, to the fullest extent permitted by law, the Mortgagee shall be entitled to collect and receive all tolls, rents, revenues, issues, income, products and profits of each of the Mortgaged Properties and every part thereof. Such tolls, rents, revenues, issues, income, products and profits may be applied to pay the expenses of the management, control, use, operation, storage, leasing of or otherwise dealing with the Premises and of conducting the business thereof, and of all maintenance, repairs, replacements and, to the extent commercially reasonable under the circumstances in existence at the time, alterations, additions and improvements, and to make all payments which the Mortgagee may be required or may elect to make, if any, for Impositions, or other taxes, assessments, insurance or other proper charges upon the Premises or any part thereof (including the employment of engineers and accountants to examine, inspect and make reports), and all other payments which the Mortgagee may be required or authorized to make under any provision of this Mortgage or the Indenture. 77. RIGHT OF THE MORTGAGEE TO PERFORM THE MORTGAGORS' COVENANTS. If ----------------------------------------------------------- the Mortgagors (or any of them) shall fail to make any payment or perform any act required to be made or performed hereunder, the Mortgagee, upon notice to the Mortgagors and upon the expiration of any applicable grace or cure period provided in Article 23 (except in cases of emergency that threatens bodily injury or material damage to property, in which case the Mortgagee will allow such notice and grace or cure period, if any, as is reasonable under the circumstances) and subject to each Mortgagor's right of contest under Article 12 hereof, but without waiving or releasing any obligation, Default or Event of Default, may (but shall be under no obligation to) at any time thereafter make such payment or perform such act for the account and at the expense of the Mortgagors, and, to the extent permitted by applicable law, may enter -77- upon the Premises for such purpose and take all such action thereon as, in the judgment of the Mortgagee, may be reasonably necessary or appropriate therefor, subject to the rights of Tenants. All sums so paid by the Mortgagee and all reasonable costs and expenses (including all attorneys' fees and expenses) so incurred, together with interest thereon at the highest rate of interest applicable to the Notes on the date hereof from the date of payment by the Mortgagee until paid, shall constitute additional indebtedness secured by this Mortgage and, subject to the provisions of Article 38 hereof, shall be paid by the Mortgagors to the Mortgagee upon demand therefor. 35. REMEDIES CUMULATIVE. Subject to the provisions of Article 38 ------------------- hereof, to the extent permitted under applicable law each right, power and remedy of the Mortgagee provided for in this Mortgage or now or hereafter existing at law or in equity or by statute or otherwise shall be cumulative and concurrent and shall be in addition to every other right, power or remedy provided for in this Mortgage or now or hereafter existing at law or in equity or by statute (including the Uniform Commercial Code as enacted in the State where any Mortgaged Property is located) or otherwise, and the exercise or beginning of the exercise by the Mortgagee of any one or more of the rights, powers or remedies provided for in this Mortgage or now or hereafter existing at law or in equity or by statute or otherwise shall not preclude the simultaneous or later exercise by the Mortgagee, to the extent permitted by law, of any or all of such other rights, powers or remedies. 36. APPLICABLE LAW. (a) All rights, powers and remedies provided -------------- herein may be exercised only to the extent that the exercise thereof, including those which do not require the giving of notice, do not violate any applicable law, and are intended to be limited to the extent necessary so that they will not render this Mortgage invalid, unenforceable or not entitled to be recorded, registered or filed under any applicable law. All waivers, consents, confessions and releases provided for in this Mortgage are effective only to the extent permitted by applicable law. (B) THIS MORTGAGE WAS NEGOTIATED AND MADE BY EACH MORTGAGOR IN THE STATE OF NEW YORK, AND THE PROCEEDS OF THE LOAN SECURED HEREBY WERE DISBURSED FROM NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY. IN ALL RESPECTS, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE VALIDITY OF AND ENFORCEABILITY OF THIS MORTGAGE, THE NOTES AND THE INDENTURE, AND THE INDEBTEDNESS OR OBLIGATIONS ARISING THEREUNDER, BUT THE CREATION, VALIDITY, PERFECTION, PRIORITY AND ENFORCEABILITY OF THE LIEN, SECURITY TITLE AND SECURITY INTEREST IN A PARTICULAR MORTGAGED PROPERTY CREATED BY THIS MORTGAGE, ALL WARRANTIES OF TITLE CONTAINED HEREIN WITH RESPECT TO SUCH MORTGAGED PROPERTY AND ALL PROVISIONS HEREOF RELATING TO THE REALIZATION OF THE SECURITY COVERED BY THIS MORTGAGE AND RELATING TO SUCH MORTGAGED PROPERTY SHALL BE GOVERNED BY THE LAWS OF THE STATE IN WHICH SUCH MORTGAGED PROPERTY IS LOCATED -78- AND THE MORTGAGORS AND THE MORTGAGEE WILL SUBMIT TO JURISDICTION AND THE LAYING OF VENUE FOR ANY SUIT ON THIS MORTGAGE IN EACH SUCH STATE. 37. NO WAIVER. No failure by the Mortgagee to insist upon the strict --------- performance of any term hereof or to exercise any right, power or remedy consequent upon a breach thereof shall constitute a waiver of any such term or of any such breach. No waiver of any breach shall affect or alter this Mortgage, which shall continue in full force and effect, or shall affect or alter the rights of the Mortgagee with respect to any other then-existing or subsequent breach. None of the Mortgagors nor any other person now or hereafter obligated for payment of all or any part of the sums now or hereafter secured by this Mortgage shall be relieved of such obligation by reason of the failure of the Mortgagee to comply with any request of any of the Mortgagors or of any other person so obligated, to take action to foreclose on this Mortgage or otherwise to enforce any provisions of this Mortgage or the Notes or by reason of the release, regardless of consideration, of all or any part of the security held for the indebtedness secured by this Mortgage, or by reason of any agreement or stipulation between any subsequent owner of any of the Mortgaged Properties and the Mortgagee extending the time of payment or modifying the terms of this Mortgage or the Notes without first having obtained the consent of the Mortgagors or such other persons; and in the latter event each Mortgagor and all such other persons shall continue to be liable, subject to Article 38, to make payments according to the terms of any such extension or modification agreement, unless expressly released and discharged in writing by the Mortgagee. 38. OBLIGATIONS ARE WITHOUT RECOURSE. (a) The obligations of the -------------------------------- Mortgagors under this Mortgage and the other Security Documents are joint and several. Anything contained in this Mortgage or the other Security Documents to the contrary notwithstanding (except as provided below in this Section 38), the recourse of the Mortgagee, the Servicer, any Holder of a Note or any other Person, their respective successors and assigns, and all persons and/or entities whose rights under this document arise by, through or under any of the foregoing Persons, for the satisfaction of the indebtedness due under the Notes and for the payment and performance of all of the obligations and liabilities of the Mortgagors under this Mortgage or the other Security Documents shall be limited: (x) solely to each Mortgagor's interest in the Pledged Assets, and none of the Mortgagors, General Growth, GGP, any of the Ivanhoe Entities or any of their respective successors or assigns, or any partner (general or limited, or a subpartner at any level), member, tenant in common, officer, director, trustee, beneficiary, shareholder, controlling person, employee, agent, contractholder or policyholder, or any Affiliate of any of the foregoing (collectively, "Exculpated ---------- Persons"), shall be liable in any other respect for (i) the payment of ------- the principal of or interest, Make-Whole Payment, if any, or Additional Amounts, if any, on the Notes, or (ii) the payment of any other -79- amount due under the Notes, this Mortgage or the other Security Documents, or (iii) damages for the breach of, or any costs or expenses associated with the performance of or failure to perform, any of the covenants, obligations, representations, warranties or indemnifications contained herein or in the Notes or the other Security Documents, and (y) with respect to each Mortgagor, such that the total liability of that Mortgagor under the Notes, this Mortgage, the Indenture and each other Security Document shall not (i) at any time during the period from the date hereof to a date one year and a day after the date hereof exceed the sum of (A) the Allocated Amount for the Mortgaged Property identified on Exhibit A --------- as being owned by such Mortgagor plus (B) such Mortgagor's Net Worth on the date hereof, less (C) $1,000, and (ii) at any time after the period referred to in clause (i) above exceed the sum of (A) the Allocated Amount for the Mortgaged Property identified on Exhibit A as being owned by such Mortgagor --------- plus (B) the greater of such Mortgagor's Net Worth on the date hereof and such Mortgagor's Net Worth on the date such determination is being made (it being understood that for purposes of determining such Mortgagor's Net Worth on any date subsequent to the date that is one year and a day after the date hereof, such Mortgagor's liabilities shall only include liabilities that are permitted under the terms of the Security Documents), less (C) $1,000. For purposes of the foregoing, "Net Worth" of a Mortgagor shall mean the positive net worth of such Mortgagor, based on the sum of (x) the fair saleable value of its assets (determined after giving effect to distributions, if any, by such Mortgagor to such Mortgagor's partners, members or other equity investors, as applicable, of the proceeds of the Loan received by such Mortgagor on account of the issuance of the Notes and determined in accordance with applicable laws governing determinations of the insolvency of debtors), less (y) its liabilities (determined as in clause (x) above), including a portion of the Loan equal to the Allocated Amount for the Mortgaged Property identified on Exhibit A as being owned by such Mortgagor, but excluding amounts --------- payable under the Notes, this Mortgage, the Indenture and any other Security Documents in excess of such Allocated Amount. Each document that is executed by any Mortgagor and/or any other Exculpated Persons pursuant to or in connection with this Mortgage and/or any other Security Documents -80- shall either expressly incorporate, or shall be deemed to incorporate, the provisions contained in this Article 38. (b) In furtherance of the foregoing, it is expressly understood and agreed that nothing herein nor any act of any Mortgagor nor any document or instrument executed by the Mortgagors (or any of them) in connection herewith shall create or impose on any Mortgagor or any other Exculpated Persons any personal liability, and this Mortgage is executed by each Mortgagor with the express understanding and agreement that nothing herein contained or under any of the Security Documents (including the Indenture and the Notes) shall be construed as creating any liability on the part of the Mortgagors or any other Exculpated Persons personally, to pay the principal obligation or any interest that may accrue thereon or any indebtedness that may accrue hereunder or under any of the other Security Documents (including the Indenture and the Notes) or to perform any covenant, either express or implied, herein contained, and that every Person now or hereafter claiming any right or security hereunder shall look solely to the Pledged Assets for the payment thereof and the enforcement of any lien hereby created or the enforcement of any covenant, condition or agreement contained herein or under any of the other Security Documents (including the Indenture and the Notes). (c) The provisions of Section 38(a) and (b) hereof shall not (i) constitute a waiver, release or impairment of any obligation of any Mortgagor (without recourse to its partners, members or other equity investors) to the extent that it would impair the Mortgagee's right or ability to declare an Event of Default, accelerate the maturity of the indebtedness evidenced or secured by the Notes, this Mortgage or any other Security Document, (ii) constitute a waiver of the Mortgagee's right under Section 1111(b) of the United States Bankruptcy Code to claim against any Mortgagor (without recourse to its partners, members or other equity investors) which is a debtor in a bankruptcy proceeding the full amount of the indebtedness evidenced by the Notes or incurred pursuant to any of the other Security Documents or (iii) impair the right of the Mortgagee to obtain a deficiency judgment (without recourse to any partner, member or other equity investor in any Mortgagor) in any action or proceeding in order to preserve its rights and remedies against Collateral as to which a lien is granted hereunder, including, without limitation, foreclosure, nonjudicial foreclosure or the exercise of a power of sale, under this Mortgage. 39. STAMP AND OTHER TAXES. Subject to the provisions of Article 12 --------------------- relating to permitted contests and Section 3.8(g) of the Indenture relating to stamp and other taxes due upon transfers of Notes, each Mortgagor will pay any United States documentary stamp taxes, with interest and fines and penalties, if any, and any city, county or state mortgage recording taxes, with interest and fines and penalties, if any, that may hereafter be levied, imposed or assessed under or upon or by reason of this Mortgage or any instrument or transaction (including a transfer of any Mortgaged Property and an assumption by the transferee of the indebtedness evidenced by the -81- Notes) affecting or relating thereto. In the event of any Mortgagor's failure to pay any such amounts, the Mortgagee may advance the same and the amount so advanced, together with interest thereon at the highest interest rate applicable to any series of the Notes on the date hereof, shall be due and payable by the Mortgagors to the Mortgagee within ten (10) days after demand therefor and shall be considered Secured Obligations and shall be secured by the Lien of this Mortgage. Except as set forth in Section 10.4 of the Indenture, none of the Mortgagors shall be obligated to pay any taxes which may be imposed upon the income of the Mortgagee. 40. FURTHER ASSURANCES. Subject to the provisions of Article 38 hereof, ------------------ the Mortgagors, at their own expense, will execute, acknowledge and deliver all such instruments and take all such actions as the Mortgagee from time to time reasonably may request or as may be reasonably necessary or proper for the better assuring to the Mortgagee of the properties and rights now or hereafter subject to the Lien hereof or intended so to be. 41. ESTOPPEL CERTIFICATES. The Mortgagors and the Mortgagee each will, --------------------- from time to time, upon fourteen (14) days' prior written request by the other party, execute, acknowledge and deliver to the requesting party, in the case of a request directed to the Mortgagee, a certificate signed by an authorized officer or officers and in the case of a request directed to the Mortgagors, an Officer's Certificate from the Mortgagors, stating that this Mortgage is unmodified and in full force and effect (or, if there have been modifications, that this Mortgage is in full force and effect as modified and setting forth such modifications) and stating the interest accrued to date on the aggregate principal amount of the Notes then outstanding. The estoppel certificate from the Mortgagee shall also state either that, to the best knowledge of the signer of such certificate but with no independent investigation, no Default or Event of Default exists hereunder or, if any Default or Event of Default shall exist hereunder, specify each Default or Event of Default of which the Mortgagee has actual knowledge. 42. ADDITIONAL SECURITY. Without notice to or consent of the Mortgagors ------------------- (or any of them) and without impairment of the Lien and rights created by this Mortgage, the Mortgagee may accept (but the Mortgagors shall not be obligated to furnish) from the Mortgagors (or any of them) or from any other Person or Persons, additional security for the Notes. 43. FINANCING STATEMENT. This Mortgage shall be deemed to be and may be ------------------- enforced from time to time as a mortgage, chattel mortgage, assignment, contract, security agreement, financing statement, or lien on machinery or other Equipment situated on the Premises, and from time to time as any one or more thereof, and shall constitute, with respect to each Mortgaged Property, a "fixture filing" for the purposes of Article 9 of the Uniform Commercial Code as enacted in the State where the Mortgaged Property is located. -82- 44. RELEASE; SUBSTITUTE PROPERTY. ---------------------------- 44.1. Release of Mortgaged Properties. (a) If the Mortgagors shall pay ------------------------------- or cause to be paid to the Mortgagee on behalf of the Holders of Notes the principal of and interest (and Make-Whole Payment, if any) on the Notes in full at maturity or earlier as permitted in accordance with the terms of the Indenture and all other sums payable by the Mortgagors (or any of them) to the Mortgagee hereunder and under the other Security Documents or secured hereby or by the other Security Documents, then this Mortgage and all the other Security Documents shall be discharged and satisfied or, if requested by the Mortgagors and to the extent not prohibited by law, assigned (to the Mortgagors or to any other Person at the Mortgagors' direction), at the Mortgagors' option and its expense, without representation, recourse or warranty, other than for the acts of the Mortgagee. Concurrently with such release and satisfaction or assignment of this Mortgage and all the other Security Documents, the Mortgagee will return to the Mortgagors (or deliver to any Person designated by the Mortgagors) the Notes, executed originals of the other Security Documents and all title and other insurance policies relating to the Mortgaged Properties and, on the written request and at the expense of the Mortgagors, will execute and deliver such proper instruments of release or assignment, as applicable (including appropriate UCC-3 termination statements and/or assignment statements) as may reasonably be requested by the Mortgagors to evidence such release and satisfaction or assignment, and any such instrument, when duly executed by the Mortgagee and duly recorded in the places where this Mortgage and each other Security Document is recorded, shall conclusively evidence the release and satisfaction or assignment of this Mortgage and the other Security Documents. In furtherance of the foregoing, the provisions of Section 4.6 of the Indenture are hereby incorporated into this Mortgage by reference. Any release of this Mortgage with respect to the Mortgaged Property pursuant to Section 44.1(c) or (d) shall be also effected in accordance with the procedures specified in the immediately preceding two sentences to the extent applicable to such release. (b) Any Mortgagor may elect at any time and from time to time during the term of the Notes to be released from part or all of such Mortgagor's obligations under the Notes and in connection therewith to have all or a portion of the Mortgaged Property identified on Exhibit A as being owned or leased by --------- such Mortgagor released from the Lien of this Mortgage, provided that such Mortgagor complies with Section 44.1(c) hereof and the applicable provisions of Article IV and XI of the Indenture. Any Eligible Collateral given by the Mortgagors (or any of them) to the Mortgagee pursuant to this Section 44.1(b), Section 44.1(c) hereof and Article IV of the Indenture, and any interest accruing thereon, shall be irrevocably and unconditionally conveyed to the Mortgagee free and clear of any claim of the Mortgagors (or any of them), and not as security for repayment of obligations under the Notes. In the event of a release in part of the obligations of the Mortgagors under the Notes, this Mortgage may be enforced against -83- the remaining Mortgaged Properties only to the extent of the amount of the principal balance remaining outstanding on the Notes at the time of enforcement (after giving effect to any partial releases as a result of the delivery of Eligible Collateral, together with all income and other predetermined and certain income from the investment thereof) and the amount of the other obligations of the Mortgagors under the Indenture, this Mortgage and the other Security Documents secured hereby and thereby. (c) Except as otherwise provided in Article 15 or in Section 19.4, in the event that the Mortgagors desire to obtain a release from the lien of this Mortgage of one or more of the Mortgaged Properties, the Mortgagee shall consent to the release of such property (the "Release Premises") from the lien of this ---------------- Mortgage, provided that (i) in connection with the release Notes are prepaid or defeased in accordance with Article IV or Article XI of the Indenture in an aggregate principal amount at least equal to 125% of the Allocated Amount applicable to each such Mortgaged Property, but in no event more than the entire aggregate amount payable with respect to all then-outstanding Notes and (ii) no Event of Default has occurred and is continuing, unless the proposed release, by itself, will eliminate the basis for all outstanding Events of Default, in which case the requirement of this clause (ii) will be deemed to be satisfied. In determining the principal amount of the Notes to be redeemed in connection with the release of a Mortgaged Property under the foregoing sentence, the Allocated Amount for such Mortgaged Property shall not be adjusted by reason of any prior voluntary prepayment, except in the case of a partial prepayment resulting from a Casualty or Condemnation as permitted or required under Article 15 of this Mortgage, in which case the Allocated Amount for such Mortgaged Property shall be reduced by the amount of any such prepayment. 44.2. Substitute Property. (a) Substitution. Except as expressly ------------------- ------------ provided in this Section 44.2 or otherwise in this Mortgage in connection with the replacement of deteriorated or obsolete portions of any portion of any Mortgaged Property or the release of portions of any of the Mortgaged Properties generally, the Mortgagors may not substitute any property or properties for any Mortgaged Properties without the prior written consent of the Mortgagee, which consent may be given or withheld by the Mortgagee in its sole and absolute discretion. At any time that a Default or Event of Default (other than a monetary default) has occurred which is the result of an event, condition or state of facts resulting from or relating to a particular Mortgaged Property or a breach by any Mortgagor of any obligation of such Mortgagor with respect to a particular Mortgaged Property contained in this Mortgage, the Assignment of Leases or any other Security Document, the Mortgagors may (but shall not be obligated to) substitute a new property (a "Substitute Mortgaged Property") in lieu of such Mortgaged Property and on any five (5) other occasions selected by the Mortgagors in their sole discretion (and without the requirement that a Default or Event of Default has occurred), the Mortgagors may (but shall not be obligated to) substitute a new property in lieu of -84- any one of the Mortgaged Properties, provided that each of the following conditions is satisfied in connection with any such substitution: (i) The Mortgagors shall deliver written notice (a "Substitution Notice") to the Mortgagee (x) describing the circumstances giving rise to the Default or Event of Default, if any, and (y) stating their intention to replace the relevant Mortgaged Property with the Substitute Mortgaged Property (such notice to be delivered not less than 20 days, nor more than 45 days, prior to the date upon which the Mortgagors intend to effect such substitution), which Substitution Notice shall, if given prior to the date a Notice of Redemption (as defined in the Indenture) is issued in accordance with Article XI of the Indenture as a result of the acceleration of the Loan hereunder after an Event of Default, operate to stay the declaration of any Default or Event of Default relating to such Mortgaged Property and the exercise by the Mortgagee of any remedies in connection with such Default or Event of Default, and which Substitution Notice shall contain or shall be accompanied by all of the following information: (1) a current title commitment, issued by the Title Company or another reputable title insurer reasonably acceptable to the Mortgagee, for the Substitute Mortgaged Property, together with copies of (or reasonable access to copies of) (A) all instruments appearing on Schedule B to such title commitment (other than Leases and instruments relating to Leases if such Leases and related instruments are already in the Mortgagee's possession), and (B) all anchor Leases, Operating Agreements, ground leases and reciprocal easement agreements relating to the Substitute Mortgaged Property; (2) a current survey of the Substitute Mortgaged Property, in form and detail (including certifications) substantially similar to the surveys delivered by the Mortgagors to the Mortgagee on or prior to the date of this Mortgage; (3) evidence of the casualty and property insurance then in effect for the Substitute Mortgaged Property, including the identity of the carriers thereof; (4) a current rent roll for the Substitute Mortgaged Property, in form and detail substantially similar to the rent rolls delivered by the Mortgagors to the Mortgagee on or prior to the date of this Mortgage with respect to the Mortgaged Properties; (5) [intentionally omitted]; -85- (6) a current phase I environmental report for the Substitute Mortgaged Property (the "Substitute Property Phase I Report") and, if recommended pursuant to such phase I environmental report, a current phase II environmental report for the Substitute Mortgaged Property; (7) a current statement of cash flow for the Substitute Mortgaged Property; and (8) calculation of the Debt Service Coverage Ratio, which shall be not less than 1.4:1, after giving effect to the proposed substitution, indicating the satisfaction of such ratio, or, if such ratio will not be satisfied after giving effect to such substitution, indicating the principal balance of the Notes that the Mortgagors intend to prepay in order to satisfy such ratio (and if such a prepayment is required, evidence of satisfaction of all conditions contained in Article XI of the Indenture relating thereto); (ii) all payments of principal of, interest on and Make-Whole Payment, if any, in respect of the Notes required to be paid on or before the date of such substitution shall have been paid and all other amounts theretofore or at such time required to be paid under the Security Documents shall have been received by the Mortgagee; (iii) the Mortgagors shall have delivered an Officer's Certificate to the Mortgagee at least 30 days prior to the date upon which the Mortgagors desire to effect such substitution, and updated on the date of such substitution, certifying in each case that (x) the conditions in this Section have been satisfied (or will be on or prior to the date of such substitution) and (y) the representations and warranties contained in Section 2.1, Section 2.2 and Section 2.5, as applied to (A) the Substitute Mortgaged Property and (B) the actions to be taken, the consents and approvals to be obtained, the Legal Requirements applicable to and the documents to be delivered by the Mortgagors at or in connection with the closing for the Substitute Mortgaged Property, are or will be true and correct; (iv) immediately prior to and after giving effect to the proposed substitution, no Event of Default shall have occurred and be continuing (other than the Event of Default, if any, relating to the Mortgaged Property being substituted, which Event of Default shall terminate upon such substitution); (v) the proposed Substitute Mortgaged Property shall be devoted principally to use as an enclosed regional Shopping Center of at least the same general character and quality as the Mortgaged Property being replaced; -86- (vi) concurrently with the closing of such substitution, the Mortgagor that owns the Mortgaged Property to be replaced shall divest itself of all ownership interests in the Mortgaged Property to be replaced and shall acquire and own the fee and/or leasehold interests in the Substitute Mortgaged Property free and clear of all Liens other than such Liens as would constitute Permitted Exceptions hereunder; (vii) the Mortgagors shall have obtained Rating Confirmation; (viii) concurrently with such substitution the Mortgagor and the Issuers will amend the Mortgage and the Assignment of Leases as necessary to cause such instruments to encumber the Mortgagor's interests in the Substitute Mortgaged Property; and (ix) the Mortgagors shall have obtained and delivered to the Mortgagee a Tax Opinion. (b) The Mortgagee's Review. Upon its receipt of the Substitution ---------------------- Notice and other information required pursuant to Section 44.2(a)(i), the Mortgagee shall (and, at the expense of the Mortgagors, shall cause its counsel and the Mortgagee's or the Servicer's environmental consultant, without duplication to) review and evaluate the same, and shall, within 15 days, notify the Mortgagors of: (i) any matters shown in the title report relating to such Substitute Mortgaged Property to which the Mortgagee objects and which (A) indicate the existence of Liens materially greater in scope or amount than those generally accepted by the Mortgagee as Permitted Exceptions for the original Mortgaged Properties, or (B) render title uninsurable pursuant to a title insurance policy similar in form and coverage to those issued in respect of the Mortgaged Properties on the Closing Date, taking account of specific guidelines applicable to title insurance in the jurisdiction in which the Substitute Mortgaged Property is located; (ii) any matters shown on the survey relating to such Substitute Mortgaged Property to which the Mortgagee objects and which (A) indicate the existence of Liens materially greater in scope or amount than those generally accepted by the Mortgagee as Permitted Exceptions for the original Mortgaged Properties, or (B) render title uninsurable pursuant to a title insurance policy similar in form and coverage to those issued in respect of the Mortgaged Properties on the Closing Date, taking account of specific guidelines applicable to title insurance in the jurisdiction in which the Substitute Mortgaged Property is located; -87- (iii) any matters regarding compliance with Environmental Laws or Hazardous Substance Activity at or relating to such Substitute Mortgaged Property to which the Mortgagee objects upon advice from any environmental consultant retained by the Mortgagee in connection with its review of the Substitute Mortgaged Property and which (x) are set forth in the Substitute Property Phase I Report relating to such Substitute Mortgaged Property, and (y) are recommended to be remedied or otherwise reserved against by the Mortgagee's environmental consultant; and (iv) any matters which, in the Mortgagee's reasonable opinion, indicate that the Mortgagors have inaccurately determined the Debt Service Coverage Ratio pursuant to Section 44.2(a)(i)(8). (c) The Mortgagee's Objections. Upon receipt of any notice from the -------------------------- Mortgagee pursuant to clause (i) or (ii) of Section 44.2(b), Mortgagors may, at their election, (x) undertake to remedy any such title or survey defect, in which circumstance the Mortgagors shall be afforded any extension of the projected date for effecting the substitution as is necessary to complete such remediation, and which remediation may be effected by providing to the title insurer documents and instruments sufficient to allow the title insurer to "insure over" such title or survey defect to the reasonable satisfaction of the Mortgagee, or (y) withdraw their proposal to make the substitution by written notice to the Mortgagee (a "Withdrawal Notice"), which Withdrawal Notice shall either (A) state that the Mortgagors no longer intend to replace the proposed Mortgaged Property (and upon its receipt of such notice the Mortgagee shall have the right to declare a Default or Event of Default, if the same has occurred as of such date, and exercise remedies in respect thereof in accordance with the Security Documents), or (B) state that the Mortgagors intend to replace the Mortgaged Property with another Substitute Mortgaged Property, in which event such Withdrawal Notice shall constitute the Substitution Notice required pursuant to Section 44.2(a)(i) in respect of such Substitute Mortgaged Property and shall include or be accompanied by all information required by such Section, provided that, in any event, such substitution shall be consummated no later than 180 days from the date of the Substitution Notice for the withdrawn Substitute Mortgaged Property. Upon receipt of any notice from the Mortgagee pursuant to clause (iii) of Section 44.2(b), the Mortgagors may, at their election, (x) undertake to remedy any such environmental condition, in which circumstance the Mortgagors shall be afforded, subject to Section 44.2(g), a reasonable extension of the projected date for effecting the substitution necessary to complete such remediation, (y) establish an escrow account with the Mortgagee for the purpose of securing the performance of the remediation work, which escrow account shall be established upon terms reasonably satisfactory to the Mortgagee, or (z) deliver a Withdrawal Notice to the Mortgagee. -88- Upon receipt of any notice from the Mortgagee pursuant to clause (iv) of Section 44.2(b), the Mortgagors may, at their election, (x) agree to prepay Notes in accordance with Article XI of the Indenture in an amount sufficient to satisfy the Mortgagee's objections, (y) provide further information to the Mortgagee in an effort to cause the Mortgagee to withdraw its objections, or (z) deliver a Withdrawal Notice to the Mortgagee. (d) The Mortgagors' Deliveries. On or before the date of the -------------------------- consummation of such substitution, the Mortgagors shall deliver or cause to be delivered to the Mortgagee (i) a mortgage or deed of trust (the "Substitute Mortgage") encumbering the Substitute Mortgaged Property as security for the Secured Obligations, substantially in the form of this Mortgage (but modified to account for laws of the jurisdiction in which the Substitute Mortgaged Property is located); (ii) an assignment of leases and rents (the "Substitute Assignment of Leases") encumbering the leases of portions of the Substitute Mortgaged Property as security for the Secured Obligations, substantially in the form of the Assignment of Leases (but modified to account for laws of the jurisdiction in which the Substitute Mortgaged Property is located); (iii) an environmental indemnity agreement (the "Substitute Environmental Indemnity") signed by the Substitute Mortgagor and relating to the Substitute Mortgaged Property, substantially in the form of the Environmental Indemnity (but modified as may be appropriate in the reasonable discretion of the Mortgagee to account for the laws of the jurisdiction in which the Substitute Mortgaged Property is located); (iv) an Assignment of Contracts (the "Substitute Assignment of Contracts"); (v) a Subordination of Management Agreement (the "Substitute Subordination of Management Agreement"); (vi) a written instrument signed by the Substitute Mortgagor and in form and substance satisfactory to the Mortgagee, acting reasonably, in which such Substitute Mortgagor assumes all of the obligations of an "Issuer" under the Indenture, a maker under each of the Notes and a Mortgagor under this Mortgage; (vii) UCC-1 Financing Statements relating to the Substitute Mortgage for filing with the appropriate Secretary of State and City or County Clerk or otherwise as required by local law; (viii) a mortgagee title insurance policy for the Substitute Mortgaged Property, based upon the title commitment described in Section 44.2(a)(i), incorporating remedies of the reasonable title objections made by the Mortgagee, issued by the Title Company or such other title insurer as is reasonably acceptable to the Mortgagee and substantially in the form of the title insurance policies delivered on the Closing Date in respect of the Mortgaged Properties (including, without limitation, as to endorsements thereto, to the extent the same are available at reasonable rates in the jurisdiction where the Substitute Mortgaged Property is located); (ix) a current survey of the Substitute Mortgaged Property, certified by a licensed surveyor in a form substantially similar to the survey certifications delivered in connection with the Mortgaged Properties on the Closing Date; (x) certificates of insurance from the carriers of the property and casualty insurance relating to the Substitute Mortgaged Property fulfilling the requirements therefor set forth in Article 13 hereof; and (xi) an opinion or opinions of counsel as to the due authorization, execution and delivery by the Mortgagors -89- of the Substitute Mortgage and the Substitute Assignment of Leases, and the validity and enforceability of such documents under the laws of the jurisdiction in which the Substitute Mortgaged Property is located, addressing such matters in respect of the Substitute Mortgage and Substitute Assignment of Leases as were addressed in the opinions of counsel delivered on the Closing Date in respect of this Mortgage and the Assignment of Leases. Additionally, the Mortgagors shall use reasonable efforts to obtain, either prior to or within a reasonable period of time following such substitution, estoppel certificates and subordination agreements from tenants under anchor Leases and parties to Operating Agreements, as applicable, at the Substitute Mortgaged Property, which estoppel certificates and subordination agreements shall provide at least the minimum protection required to be afforded to a mortgagee pursuant to the provisions of such tenant's anchor Lease or such party's Operating Agreement, as the case may be. On or before the date of the consummation of such substitution and provided that all conditions contained in this Section 44.2 have been satisfied to the Mortgagee's reasonable satisfaction, the Mortgagee shall deliver to the Mortgagors all documentation necessary to effect the release of the Lien of this Mortgage upon the Mortgaged Property being substituted, as more particularly described in Section 44.1 hereof. (e) Costs; Cooperation. Each Mortgagor and the Mortgagee agree to ------------------ cooperate with one another in order to effect any such substitution in a timely and cost-effective manner. All costs and expenses incurred by any Mortgagor and the Mortgagee in connection with any such substitution shall be for the account of the Mortgagors, including, without limitation, reasonable attorneys' fees, recording and filing fees, costs of title searches, surveys and title insurance premiums. (f) Mortgaged Property. Upon consummation of any substitution under ------------------ this Section 44.2, (i) the Mortgaged Property released in connection therewith shall cease to be a "Mortgaged Property" hereunder and under the other Security Documents, (ii) the Substitute Mortgaged Property shall constitute a "Mortgaged Property" for all purposes (including, without limitation, in connection with any determination of the Pledged Assets and any calculation relating thereto), and (iii) the Substitute Mortgage and Substitute Assignment of Leases shall constitute additional Security Documents for all purposes hereunder and under the other Security Documents. (g) Failure to Effect Substitution. If for any reason other than the ------------------------------ negligence, wilful misconduct or breach of an obligation contained in the Security Documents by the Mortgagee, such substitution is not consummated on or before the latest date for substitution which is set forth in the Substitution Notice or, in the event any extensions of time have been granted pursuant to the above provisions, 180 days after the relevant original Substitution Notice, the Mortgagee may, at its option, elect either to (i) grant the Mortgagors an extension of time to effect the consummation of such substitution, or (ii) by written notice to the Mortgagors, declare a Default or Event -90- of Default (if the same has occurred on such date), and commence pursuit of remedies under the Security Documents in respect thereof. 45. CONFIDENTIALITY. The Mortgagee agrees to keep confidential all --------------- financial statements and other information obtained by it from any Mortgagor pursuant to this Mortgage as and to the extent provided in Section 6.6 of the Indenture and to not disclose such information to any other Person except (i) to the Holders pursuant to the terms of this Mortgage and the Indenture (subject to the confidentiality restrictions set forth in the Indenture applicable to the Mortgagee and the Holders), to the Initial Purchasers (as defined in the Indenture) and to the Rating Agency, (ii) to the extent required by any law, or (iii) to the extent that such information is public when received by the Mortgagee or becomes public thereafter due to the action or omission of any party other than the Mortgagee and the Holders. 46. SECURITY AGREEMENT, ETC. ------------------------ 46.1. Grant of Security. In addition to functioning, with respect to ----------------- those portions of the Mortgaged Properties that are classified as real estate, as a mortgage in each Mortgage State and a deed of trust in each Deed of Trust State, this Mortgage is also a security agreement within the meaning of the Uniform Commercial Code of the state where each Mortgaged Property is located with respect to all personal property now or hereafter located at such Mortgaged Property and owned by the applicable Mortgagor as to which the creation and perfection of a security interest are subject to such Uniform Commercial Code (the "Personal Property"). Each Mortgagor hereby grants to the Mortgagee a ----------------- security interest in and to the Personal Property constituting a part of the Mortgaged Property identified in Exhibit A as being owned or leased by such --------- Mortgagor to secure the payment of the Notes. Any completely executed counterpart of this instrument may be filed as a mortgage or deed of trust on real property or fixtures, as a security agreement or financing statement on Personal Property or as both. The address of the Mortgagors, as debtor, and the address of the Mortgagee, as secured party, are shown on page 1 of this Mortgage. 46.2. Financing Statements. The Mortgagors shall cause all financing -------------------- and continuation statements and other instruments with respect to the Personal Property at all times to be kept recorded, filed or registered in such manner and in such places as may be required by law to fully evidence, perfect and secure the interests of the Mortgagee in the Personal Property, and shall pay all filing fees in connection therewith. The Mortgagors hereby appoint the Mortgagee as their attorney-in-fact to perform the obligations of the Mortgagors under this Section 46.2, at the expense of the Mortgagors, in the event they fail to do so. 46.3. Multiple Remedies. If an Event of Default shall have occurred and ----------------- be continuing, the Mortgagee shall have the option of proceeding, to the extent permitted under applicable law, as to both real and personal property in accordance with its rights -91- and remedies in respect of the real property as an alternative to proceeding in accordance with the provisions of the Uniform Commercial Code; and the Mortgagee may exercise any and all of the other rights of a secured party under such Uniform Commercial Code. 46.4. Waiver of Rights. To the extent permitted under applicable law, ---------------- each Mortgagor waives all rights of redemption after foreclosure and all other rights and remedies of a debtor thereunder and all formalities prescribed by law relative to the sale or disposition of the Personal Property after the occurrence and during the continuance of an Event of Default hereunder and all other rights and remedies of the Mortgagors with respect thereto. In exercising its right to take possession of the Personal Property upon the occurrence and during the continuance of an Event of Default hereunder, the Mortgagee, personally or by its agents or attorneys, and subject to the rights of any Tenant, may enter upon any part of the Premises without being guilty of trespass or any wrongdoing, and without liability for damages thereby occasioned, except damages arising from the Mortgagee's negligence or willful misconduct. To the extent any notice of sale or other disposition of the Personal Property is required and cannot be waived, in the event the Mortgagee elects to proceed with respect to the Personal Property separately from the real property, the Mortgagee shall give at least ten (10) Business Days' notice of the sale of the Personal Property, which shall for all purposes be deemed to be commercially reasonable. All recitals in any instrument of assignment or any other instrument executed by the Mortgagee incident to any sale, transfer, assignment, lease or other disposition or utilization of the Personal Property or any part thereof shall be full proof of the matter stated therein and no other proof shall be required to establish full legal propriety of the sale or other action taken by the Mortgagee or of any fact or condition incident thereto, all of which shall, absent gross error or fraud, be deemed conclusively to have been performed or to have occurred. 46.5. Expenses of Disposition of the Properties. The Mortgagors shall ----------------------------------------- reimburse the Mortgagee, within thirty (30) Business Days after demand, for all reasonable expenses of retaking, holding, preparing for sale, lease or other use or disposition, selling, leasing or otherwise using or disposing of the Personal Property which are incurred, including all reasonable attorneys' fees and expenses, and all such expenses shall be added to the obligations of the Mortgagors to the Mortgagee and shall be secured hereby. 47. EXPENSES OF THE MORTGAGEE. (a) Subject to Article 38, if any ------------------------- action, suit or other proceeding affecting the Mortgaged Properties or any part thereof shall be commenced in which action, suit or proceeding the Mortgagee is made a party or participates or in which the right to use the Mortgaged Properties or any part thereof is threatened, or in which it becomes necessary in the reasonable judgment of the Mortgagee to defend or uphold the interest of the Mortgagee under this Mortgage (including any action, suit or proceeding to establish or uphold the compliance of the Improvements with any Legal Requirement), then all amounts reasonably paid or -92- incurred by the Mortgagee for the expense of any such action, suit or other proceeding or to protect its rights therein (whether or not the Mortgagee is made or becomes a party thereto) or otherwise to enforce or defend the rights and Lien created by this Mortgage (including all reasonable attorneys' fees and expenses), shall be paid by the Mortgagors upon demand and, if not paid within thirty (30) days of the giving of such demand, shall bear interest at the highest interest rate applicable to any series of the Notes on the date hereof from the date of the payment or incurring thereof, and any such amount and the interest thereon shall be a Lien on the Mortgaged Properties, prior to any right, or right to, interest in, or claim upon the Mortgaged Properties attaching or accruing subsequent to or otherwise subordinate to the Lien of this Mortgage, and the same shall be deemed to be indebtedness secured hereby, provided such right of payment in the case of any enforcement of the rights of the Mortgagee under this Mortgage shall only arise in the case where an Event of Default shall have occurred and be continuing. All other reasonable amounts paid, advanced or incurred by the Mortgagee after the occurrence and during the continuance of an Event of Default in order to secure and protect the interest of the Mortgagee under this Mortgage or the other Security Documents shall be a like Lien on the Mortgaged Properties and be deemed to be part of the indebtedness secured hereby. (b) Subject to the provisions of Article 38, in the event this Mortgage or the Notes are placed in the hands of counsel for collection of any amount payable hereunder or thereunder or for the enforcement of any of the provisions hereof or thereof and if an Event of Default shall have occurred and shall then be continuing, the Mortgagors agree to pay all reasonable costs associated therewith incurred by the Mortgagee, either with or without the institution of an action, suit or other proceeding, in addition to all reasonable costs, disbursements and allowances provided by law, all such costs to be paid upon demand, together with interest thereon at the highest interest rate applicable to any series of the Notes on the date hereof from the date of notice or incurring thereof, and the same shall be deemed to be part of the indebtedness secured hereby. 48. USURY. The Mortgagors and the Mortgagee intend to conform strictly ----- to applicable laws regarding usury. The Mortgagors and the Mortgagee hereby stipulate and agree that none of the terms and provisions contained in the Notes or this Mortgage shall ever be construed to create a contract to pay for the use, forbearance, or detention of money in an amount in excess of the maximum nonusurious amount allowed by applicable law. If the Notes or this Mortgage or the transactions contemplated by any of them would be otherwise usurious under applicable law, then notwithstanding anything to the contrary in the Notes or this Mortgage, the Mortgagors and the Mortgagee hereby agree as follows: (i) for any applicable period of time specified by any applicable law, interest under the Security Documents shall never exceed the maximum nonusurious amount allowed by such law; and (ii) if the Notes shall be accelerated in whole or in part for any reason, or if any required or permitted prepayment occurs hereunder, then for any applicable period of time specified by any applicable law, -93- interest shall never include more than the maximum nonusurious amount allowed by each such law, and in either such case any excess interest (if any) otherwise provided for under any or all of the Security Documents shall automatically be applied by the Mortgagee in the following order: (1) to interest properly charged under the Notes and this Mortgage; (2) to principal properly charged under the Notes and this Mortgage (without Make-Whole Payment); (3) if all sums due under (1) and (2) have been or would thereby be paid in full, all other interest on the Notes shall be cancelled automatically as of and through the date of such acceleration or prepayment; and (4) if any such excess interest has been received by the Mortgagee, it shall be refunded by the Mortgagee to the Mortgagors. No Mortgagor shall be required to pay unearned interest under the Notes and this Mortgage or to pay interest under any or all of the Security Documents in an amount in excess of the maximum nonusurious amount allowed by applicable law, and the provisions of this Article 48 shall control over all other provisions of any Security Document which may be in apparent conflict herewith. Notwithstanding anything to the contrary contained in this Article 48, in the event that any payments required to be made under the Notes are determined to be usurious under applicable law, the Mortgagor shall be required to redeem the Notes immediately in accordance with the terms of the Indenture, and failure to do so shall be an Event of Default under this Mortgage. 49. MISCELLANEOUS. This Mortgage may be discharged or terminated only by ------------- an instrument in writing signed by the party against which enforcement of such discharge or termination is sought. In the event any time period or any date provided in this Mortgage ends or falls on a day other than a Business Day, then such time period shall be deemed to end and such date shall be deemed to fall on the next succeeding Business Day, and performance herein may be made on such Business Day, with the same force and effect as if made on such preceding day. Subject to Article 38 hereof, this Mortgage shall be binding upon each of the Mortgagors and the Mortgagee and their respective successors and permitted assigns and all Persons claiming under or through any Mortgagor and the Mortgagee or any such successors or permitted assigns, and shall inure to the benefit of and be enforceable by the Mortgagors and the Mortgagee and their respective successors and permitted assigns. This Mortgage may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument. 50. NON-MERGER. It is the intention and agreement of each Mortgagor and ---------- the Mortgagee that there shall be no merger of any leasehold estate in the Premises with the fee interest in the Premises or any other estate or interest in the Premises, and there shall be no merger of this Mortgage and any estate in the Premises, by reason of the fact that the same Person may own or hold (a) any leasehold estate in the Premises, and/or (b) this Mortgage, and/or (c) the fee interest in the Premises or any other estate or interest in the Premises. -94- 51. ASSIGNMENT OF RENTS AND THE MORTGAGORS' INTEREST IN LEASES. (a) ---------------------------------------------------------- During the term hereof, each Mortgagor hereby pledges, grants, sells, assigns, conveys, delivers, transfers and sets over to the Mortgagee, subject to the terms and conditions hereof, all of its respective right, title and interest, now or hereafter acquired, in and to any and all existing Leases and Operating Agreements and any Leases and Operating Agreements that may hereafter be entered into by such Mortgagor, and any modifications, renewals, extensions or replacements thereof, and any guaranties of the Tenant's obligations under any Lease (each such guaranty, a "Guaranty") and all right, title and interest of such Mortgagor thereunder, including, but not limited to, all claim, right and demand to receive, collect and retain all rents and all other amounts due thereunder and under any modifications, renewals or extensions thereof, including, but not limited to: (i) the immediate and continuing right to receive and collect all amounts payable to such Mortgagor by all Tenants, subtenants or other parties pursuant to the Leases, Operating Agreements and Guarantees, including, without limitation, (A) all rents (including, without limitation, all amounts payable to such Mortgagor on account of maintenance, repairs, taxes, insurance and common area charges or similar charges), income, revenues, issues, profits, insurance proceeds, condemnation awards and other payments, tenders and security payable to or receivable by such Mortgagor under the Leases and the Operating Agreements, (B) all damages or other amounts payable in the event of any disposition, expiration or termination of any Lease or Operating Agreement pursuant to the terms thereof, by operation of law or otherwise, (C) any indemnification against, or reimbursement for, sums paid and costs and expenses incurred by such Mortgagor under any Lease or Operating Agreement or otherwise, (D) any award in the event of the bankruptcy of any Tenant or guarantor of a Lease and (E) any security deposits, other security instruments, other deposits or prepayments with respect to any such Lease or Operating Agreement; (ii) all claims, rights, powers, privileges and remedies of such Mortgagor, whether provided for in any Lease, Operating Agreement or Guaranty or arising by statute or at law or in equity or otherwise, consequent on any failure on the part of any Tenant to perform or comply with any term of any Lease or any counterparty to comply with the Operating Agreement; (iii) all right to take all action upon the happening of a default under any Lease, Operating Agreement or Guaranty as shall be permitted by any Lease or by law, including, without limitation, the commencement, conduct and consummation of proceedings at law or in equity; and -95- (iv) the full power and authority, in the name of such Mortgagor or otherwise, to enforce, collect, receive and make receipt for any and all of the foregoing and to do any and all other acts and things whatsoever that such Mortgagor is or may be entitled to do under any Lease, Operating Agreement or Guaranty; subject, however, to the right of such Mortgagor to mortgage and/or assign the Leases, Operating Agreements and Guarantees and/or pledge excess rents from the Premises in accordance with Section 19.2 hereof. (b) Except as otherwise required by applicable law, any funds received by the Mortgagee under this Article 51, after payment of all expenses of managing and securing the Premises, including, without limitation, the salaries, fees and wages of a managing agent and such other employees or agents as the Mortgagee may deem necessary or desirable and all expenses of operating and maintaining the Premises, including, without limitation, all taxes, charges, claims, assessments, water charges, sewer rents and any other liens, and premiums for all insurance that the Mortgagee may deem necessary or desirable, and the cost of all alterations, renovations, repairs and replacements and, to the extent commercially reasonable under the circumstances, alterations and renovations, and all expenses incident to taking and retaining possession of the Premises, shall be applied first to payment of all amounts then due and payable under this Mortgage and the other Security Documents (other than the Notes), and second to payment of all amounts then due and payable under the Notes. The Mortgagee shall be accountable to the Mortgagors only for monies actually received by the Mortgagee pursuant to this Article 51. Neither the collection of said funds and the application thereof as aforesaid, nor any act done or omitted pursuant to the power and rights granted to the Mortgagee hereunder, shall cure or waive any Event of Default or waive, modify or affect any notice of Event of Default or invalidate any act done pursuant to such notice, nor shall the same be a waiver of any of the Mortgagee's rights and remedies under the Notes, the Mortgages or the other Security Documents. (c) (i) So long as no Event of Default shall have occurred and be continuing, each Mortgagor shall have a license, which may be performed by the Property Manager, to collect, receive and retain from the Tenants and the parties to the Operating Agreements, rent and all other sums payable under the Leases and the Operating Agreements, to enforce the obligations of Tenants under the Leases and of such other parties under the Operating Agreements, and to exercise all the rights and remedies of the landlord under the Leases and the Operating Agreements, subject, however, to compliance with the provisions of this Mortgage. The portion of all sums received by any Mortgagor or the Property Manager under the license granted hereby equal to the Secured Obligations then due and owing shall be held in trust for the benefit of the Mortgagee and used to pay the Secured Obligations then due and owing. -96- (ii) If any Event of Default shall have occurred and be continuing, the license granted in Section 51(c)(i) hereof shall immediately cease and terminate, without waiver of such Event of Default, with or without notice, any action or proceeding or the intervention of a receiver appointed by a court, and the Mortgagee or an agent or receiver appointed by the Mortgagee may, to the fullest extent permitted by the Leases and the Operating Agreements and applicable law, do any or all of the following: (A) exercise any of the Mortgagors' rights under the Leases, Operating Agreements and Guarantees, including notifying Tenants to pay rent to an account or location selected by the Mortgagee; (B) enforce the Leases, Operating Agreements and Guarantees; (C) demand, collect, sue for, attach, levy, recover, receive, compromise and adjust, and make, execute and deliver receipts and releases for all rents or other payments that may then be or may thereafter become due, owing or payable with respect to the Leases, Operating Agreements and Guarantees; (D) demand that any sums held by any Mortgagor with respect to any Lease, Operating Agreement or Guarantees (including, but not limited to, any security deposits, other deposits or prepayments) be immediately remitted to the Mortgagee; and (E) generally, do, execute and perform any other act, deed, matter or thing whatsoever that ought to be done, executed and performed in and about or with respect to the Leases, Operating Agreements and Guarantees as fully as allowed or authorized by this Article 51. (d) Each Mortgagor hereby irrevocably authorizes and directs each Tenant under a Lease and each other party under an Operating Agreement or Guaranty, upon receipt of notice from the Mortgagee that an Event of Default has occurred and is continuing, to pay directly to, or as directed by, the Mortgagee all rents, issues and profits accruing or due under such Tenant's Lease or such other party's Operating Agreement or Guaranty from and after the receipt of such notice. Each Mortgagor agrees that any Tenant and any other party under an Operating Agreement or Guaranty shall have the right to rely upon the notice from the Mortgagee, and shall pay such rents, issues and profits to or as directed by the Mortgagee without any obligation to inquire into the actual existence of any Event of Default claimed by the Mortgagee, and notwithstanding any notice from or contrary claim by any Mortgagor, and no Mortgagor shall have any right or claim against any such Tenant, party under an Operating Agreement or guarantor under a Guaranty for any rents, issues or profits so paid to the Mortgagee. Such rents, issues and profits shall continue to be paid to the Mortgagee -97- unless and until the Event of Default which gave rise to the termination of the Mortgagors' license under Section 51(c)(i) is, and any intervening Events of Default have been, cured to the satisfaction of the Mortgagee (and so long as no amount shall then be due and payable under the Notes, whether at maturity, by declaration of acceleration or otherwise, and such acceleration has not been rescinded). In the event each such Event of Default has been cured as aforesaid (or, if the provisions set forth in the parenthetical in the immediately preceding sentence are applicable, upon completion of foreclosure or comparable remedies resulting in a disposition of the Premises), the Mortgagee shall direct each Tenant and each other party under an Operating Agreement or Guaranty by written notice to resume the payment of all rents, issues or profits accruing or due under its respective Lease, Operating Agreement or Guaranty in accordance with the provisions of Section 51(c) hereof (or, if the immediately preceding parenthetical is applicable, to the then-owner of the Premises) from and after receipt of such notice from the Mortgagee. (e) Except for any termination of any Lease, Operating Agreement or Guaranty or any amendment, modification or waiver of the provisions of any Lease, Operating Agreement or Guaranty expressly permitted by the provisions thereof and by Article 20 hereof, the Mortgagors at their expense will prudently enforce in all material respects each of the Leases, Operating Agreements and Guarantees in accordance with their terms. Neither the execution and delivery of the Mortgage or any other Security Document nor any action or inaction on the part of the Mortgagee or the Servicer shall release (i) any Tenant from its Lease, (ii) any guarantor from any Guaranty or (iii) any Mortgagor from any of its obligations under the Leases or constitute an assumption of any such obligation under the Leases or constitute an assumption of any such obligation on the part of the Mortgagee. No action or failure to act on the part of any Mortgagor shall adversely affect or limit the rights of the Mortgagee under this Mortgage or the Assignment of Leases or, through this Mortgage or the Assignment of Leases, under the Leases. (f) During the term hereof, all rights, powers and privileges of the Mortgagee herein set forth are coupled with an interest and are irrevocable, subject to the terms and conditions hereof, and no Mortgagor will take any action under the Leases or otherwise which is inconsistent with the Assignment of Leases or this Mortgage or any of the terms hereof or thereof, and any such action inconsistent herewith or therewith shall, to the fullest extent permitted by law, be void. Any further assignment of any rents, issues, or profits from the Premises shall to the fullest extent permitted by law be void except as permitted by Section 19.2 hereof. To the fullest extent permitted by applicable law, each Mortgagor hereby waives any requirement that the Mortgagee or the Servicer commence any foreclosure proceeding with respect to any or all of the Mortgaged Properties prior to enforcement of any remedies pursuant to this Article 51, including the right to commence and prosecute an action to appoint a receiver for rents and all other amounts due under any Leases. The Mortgagors will, from time to time, upon request of the -98- Mortgagee, at the sole cost and expense of the Mortgagors, execute on a non- recourse basis all instruments and further assurances and all supplemental instruments and take all such action as the Mortgagee from time to time may reasonably request in order to perfect, preserve and protect the interests intended to be assigned to the Mortgagee hereby. (g) Each Mortgagor hereby agrees that it will not, unilaterally or by agreement, subordinate, amend, modify, extend, discharge, terminate, surrender, waive or otherwise change any term of any of the Leases, Operating Agreements or Guarantees in any manner that would violate this Mortgage. If any of the Leases shall be amended as permitted thereby, they shall continue to be subject to the provisions hereof without the necessity of any further act by any of the parties hereto, subject to the provisions of any non-disturbance agreement that the Mortgagee may have granted in accordance with the provisions of this Mortgage. (h) Upon the payment, or the provision, in accordance with the applicable provisions of the Indenture, for payment in full, of the principal of and interest on the Notes at maturity or as permitted under the Notes in accordance with the terms thereof and of all other sums payable under this Mortgage and each other Security Document by the Mortgagors, the assignment made in this Article 51 and all rights hereunder assigned to the Mortgagee shall cease and terminate and shall revert to the Mortgagors. Further, upon the partial payment of the Notes and all other sums in an amount sufficient to cause the release of the Premises from the lien of this Mortgage pursuant to the terms of this Mortgage, the assignment made in this Article 51 with respect to the Premises and all rights hereunder assigned to the Mortgagee in respect thereof shall cease and terminate and revert to the Mortgagors. 52. NOTICES. Any notice, direction, certificate, request, consent, ------- election, waiver or demand which by any provision of this Mortgage is required or permitted to be given may be served by an overnight national courier service or may be given or served by facsimile only during business hours (9 a.m. - 5 p.m.) on a Business Day (with a confirmation copy sent by certified or registered mail, return receipt requested, or by overnight courier) or by certified or registered mail, in each case return receipt requested, postage prepaid; (a) If to the Mortgagee, to: LaSalle National Bank 135 South LaSalle Street Chicago, Illinois 60603 Attention: Asset-Backed Securities Trust Services: General Growth Properties and to the Servicer at: -99- Midland Loan Services, L.P. 210 West 10th Street, 6th Floor Kansas City, Missouri 64105 Attention: Legal Counsel If to the Deed Trustees, to: First American Title Company of Los Angeles 520 North Central Avenue Glendale, California 91203 and First American Title Company 7600 Forsyth Blvd. Clayton, Missouri 63105 Attention: Robert Meckfessel -100- and First American Title Company 13924 Gold Circle Omaha, Nebraska 68144 (b) If to any Mortgagor, to such Mortgagor c/o GGP Limited Partnership, 55 West Monroe Street, Suite 3100, Chicago, Illinois 60603, Attention: Bernard Freibaum, with copies to: Neal, Gerber & Eisenberg Two North LaSalle Street Chicago, Illinois 60602 Attention: Marshall E. Eisenberg and Ivanhoe Equities V L.P. World Trade Centre Montreal 413 St. Jacques Street Montreal, Quebec H2Y 3Z4 CANADA Attention: Legal Affairs or at such other address in the continental United States as any such Person may designate in accordance with the provisions hereof. Any notices, requests, approvals, demand or other communications shall be deemed given on the date first received or, if earlier, on the date on which the initial attempted delivery is refused or cannot be made because of a change of address of which the sending party has not been notified. 53. SUPPLEMENTS. ----------- 53.1. Supplements Without Consent. Without the consent of any Holders, --------------------------- the Mortgagors and the Mortgagee, upon their mutual agreement, may enter into supplements to or may otherwise amend or modify this Mortgage for any one or more of the following purposes: (a) to correct or amplify the description of any property subject to the Lien hereof; or (b) to pledge to the Mortgagee any additional property; or -101- (c) to evidence the succession of another Person as a Mortgagor as permitted herein and the assumption (subject to Article 38) by such successor of the covenants of the Mortgagors herein; or (d) to evidence the succession of another Person as the Mortgagee hereunder and the assumption by any successor of the Mortgagee's covenants herein; or (e) to add to the covenants and agreements thereafter to be observed by the Mortgagors or to surrender any right or power herein reserved to or conferred upon the Mortgagors, provided such surrender does not adversely affect the interests of the Holders; or (f) to add any additional Events of Default, provided such action shall not adversely affect the interest of any Holder; or (g) to cure any ambiguity, or to cure, correct or supplement any defective or inconsistent provision contained herein or in any other Security Document, provided that such action shall not adversely affect the interests of the Holders of the Notes, or to evidence any succession and the assumption by any such successor of the respective covenants herein; or (h) to qualify this Mortgage under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, except that nothing herein contained shall permit or authorize the inclusion in any supplement hereto of the provisions referred to in Section 316(a)(2) of said Act or any corresponding provisions of any such similar federal statute; or (i) in connection with any amendment or supplement to the Indenture permitted thereunder. 53.2. Supplements With Consent. With the written consent of the Holders ------------------------ of more than 66% in aggregate principal amount of the outstanding Notes, the Mortgagors and the Mortgagee may enter into supplements to or may otherwise amend or modify this Mortgage to change in any manner or eliminate any of the provisions of this Mortgage, as amended and supplemented; provided, that without the consent of the Holder of each outstanding Note no such supplement shall, except as otherwise expressly provided in this Mortgage, deprive the Holder of any Notes of the benefit of a first priority security interest in any Mortgaged Property as provided herein. The Mortgagee shall join with each Mortgagor in the execution of such supplement unless such supplement affects the Mortgagee's rights, duties or immunities hereunder, in which case the Mortgagee may, but shall not be obligated to, enter into such supplement. -102- 53.3. Delivery of Supplements. Promptly after the execution by the ----------------------- Mortgagors and the Mortgagee of any supplemental mortgage pursuant to the provisions of Section 53.2, the Mortgagors shall mail, first class postage prepaid, a notice to each Holder at the address for such Holder set forth in the Register (as defined in the Indenture) setting forth in general terms the substance of such supplemental mortgage or amendment. Any failure of the Mortgagors to mail such a notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental mortgage. The Mortgagee also shall mail, first class postage prepaid, a conformed copy of such supplement to the Rating Agency. Any failure of the Mortgagee to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental mortgage. 54. WAIVER OF TRIAL BY JURY. To the extent permitted under applicable ----------------------- law, each Mortgagor and Mortgagee hereby waive trial by jury in any action or proceeding brought by, or any counterclaim asserted by any Mortgagor which, action, proceeding or counterclaim in any way arises out of or is connected with this Mortgage. 55. SEVERABILITY. In case any one or more of the provisions contained ------------ in this Mortgage shall be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. Without in any way limiting or qualifying the foregoing, the invalidity or unenforceability of any provision in this Mortgage with respect to a Mortgaged Property situated in one state shall not in any way affect or impair the validity or enforceability of such provision with respect to any Mortgaged Property situated in another state where such provision is otherwise valid and enforceable. 56. SPECIAL STATE PROVISIONS. ------------------------ (a) Ohio. (i) Priority of Mortgage Lien. Mortgagee is authorized to do ---- ------------------------- all things permitted or sanctioned by Ohio Revised Code Section 1311.4, as now existing or as hereafter amended. (ii) Open-End Mortgage. This Mortgage is an open-end mortgage. The ----------------- Mortgagors and the Mortgagee intend that this Mortgage may secure indebtedness in addition to the initial disbursement made hereunder. The maximum amount of the unpaid balance of the principal indebtedness, in the aggregate and exclusive of advancements and accrued interest, which may be outstanding and secured by the Mortgaged Property located in Ohio at any time, is One Billion Dollars ($1,000,000,000). (b) Missouri. Notwithstanding anything to the contrary set forth in -------- this Mortgage, the Notes or the other Security Documents, if an Event of Default shall have occurred and is continuing, the Trustee named herein may proceed to sell the -103- Mortgaged Property located in Missouri, or any part thereof, at public vendue, at the customary place, in the County of Boone and State of Missouri to the highest bidder for cash, first giving at least twenty (20) days notice as required by the laws of the State of Missouri with respect to the exercise of the power of sale under Deeds of Trust, or any such other notice requirement then in effect, and upon such sale shall execute a deed in fee simple of the Mortgaged Property sold, to purchaser or purchasers thereof, and shall receive the proceeds of such sale, out of which the Trustee shall pay such amounts in accordance with the provisions of the Indenture. Upon any sale made under or by virtue of this Mortgage of Mortgaged Property located in Missouri (whether made under the power of sale herein granted or under or by virtue of judicial proceedings or of a judgment or decree of foreclosure and sale), Mortgagee may bid for and acquire the Mortgaged Property so sold or any part thereof and in lieu of paying cash therefor may make settlement for the purchase price by crediting upon the indebtedness secured hereby the net sales price after deducting therefrom (to the extent allowed by applicable law) the expenses of the sale and costs of the action and any other sums which Mortgagee is authorized to deduct under this Mortgage. No recovery of any judgment by Mortgagee and no levy of an execution under any judgment upon the Mortgaged Property or any portion thereof or upon any other property of Mortgagors shall affect in any manner or to any extent the lien of this Mortgage upon the Mortgaged Property or any part thereof, or any liens, rights, powers or remedies of Mortgagee hereunder, but such liens, rights, powers and remedies of Mortgagee shall continue unimpaired as before. The Trustee hereby lets the Mortgaged Property located in Missouri to Mortgagors until a sale be had under the foregoing provisions therefor or until an Event of Default, upon the following terms and conditions, to-wit: Mortgagors and every and all persons claiming or possessing the Mortgaged Property located in Missouri or any part thereof by, through or under Mortgagors shall pay rent therefor during said term at the rate of one cent (1c) per month, payable monthly upon demand, and shall surrender immediate peaceable possession of the Mortgaged Property located in Missouri and any and every part thereof sold under said provisions to the purchaser thereof under such sale, without notice or demand thereof, and shall and will at once, without notice, surrender up possession of such Mortgaged Property and every part thereof in the event Mortgagee shall take charge and enter such Mortgaged Property as provided in this Mortgage. (i) THIS MORTGAGE SECURES FUTURE ADVANCES AND OTHER FUTURE OBLIGATIONS INCLUDING, WITHOUT LIMITATION, THE STATED PRINCIPAL INDEBTEDNESS OF $560,000,000.00. THIS MORTGAGE IS TO BE GOVERNED BY MO. REV. STAT. (S)443.055. -104- (ii) ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT, INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT, ARE NOT ENFORCEABLE. TO PROTECT YOU (MORTGAGORS) AND US (MORTGAGEE) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THE INDENTURE, THE NOTES, THIS MORTGAGE OR THE OTHER SECURITY DOCUMENTS, WHICH ARE THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT. (c) California. (i) Notice to Mortgagors. Mortgagor hereby ---------- -------------------- requests that a copy of any notice of default and every notice of sale hereunder be mailed to it as provided by law at Mortgagor's address set forth in Section 52. (ii) Prepayment and Yield Maintenance. -------------------------------- EACH MORTGAGOR HEREBY EXPRESSLY (i) WAIVES ANY RIGHTS IT MAY HAVE UNDER CALIFORNIA LAW TO REPAY THE NOTES, IN WHOLE OR IN PART, WITHOUT ------- PENALTY, UPON ACCELERATION OF THE NOTES, AND (ii) AGREES THAT IF, FOR ------- ANY REASON, A PREPAYMENT OF ALL OR ANY PORTION OF THE PRINCIPAL AMOUNT OF THE NOTES IS MADE INCLUDING WITHOUT LIMITATION UPON OR FOLLOWING ANY ACCELERATION OF THE NOTES BY MORTGAGEE ON ACCOUNT OF ANY EVENT OF DEFAULT BY ANY MORTGAGOR INCLUDING, WITHOUT LIMITATION, ANY TRANSFER, DISPOSITION, OR FURTHER ENCUMBRANCE PROHIBITED OR RESTRICTED BY THIS INDENTURE, THEN MORTGAGORS SHALL BE OBLIGATED TO PAY CONCURRENTLY WITH SUCH PREPAYMENT THE YIELD MAINTENANCE PAYMENT SPECIFIED ABOVE. BY INITIALING THIS PROVISION IN THE SPACE PROVIDED BELOW, EACH MORTGAGOR HEREBY DECLARES THAT (1) EACH OF THE FACTUAL MATTERS SET FORTH IN THIS PARAGRAPH IS TRUE AND CORRECT, (2) MORTGAGEE'S AGREEMENT TO MAKE THE LOAN EVIDENCED BY THE NOTES CONSTITUTES ADEQUATE CONSIDERATION FOR THIS WAVIER AND AGREEMENT, AND HAS BEEN GIVEN INDIVIDUAL WEIGHT BY EACH MORTGAGOR AND MORTGAGEE, (3) EACH MORTGAGOR IS A SOPHISTICATED AND KNOWLEDGEABLE REAL ESTATE INVESTOR WITH COMPETENT AND INDEPENDENT LEGAL COUNSEL AND (4) EACH -105- MORTGAGOR FULLY UNDERSTANDS THE EFFECT OF THIS WAIVER AND AGREEMENT. ____________________________ MORTGAGOR INITIALS (iii) Default Provisions. If an Event of Default shall have ------------------ occurred and be continuing, in addition to the remedies set forth in this Mortgage, Mortgagee may, at its option, by or through Deed Trustee or otherwise, exercise one or more or all of the following remedies: a. Judicial Proceedings. Institute proceedings for the -------------------- complete or partial foreclosure of this Mortgage or take such steps to protect and enforce its rights whether by action, suit or proceeding in equity or at law for the specific performance of any covenant, condition or agreement in the Notes or in this Mortgage (without being required to foreclose this Mortgage), or in aid of the execution of any power herein granted, or for any foreclosure hereunder, or for the enforcement of any other appropriate legal or equitable remedy or otherwise as Mortgagee shall elect. b. Sale of Mortgaged Property. Cause the Mortgaged -------------------------- Property and all estate, title and interest, claim and demand therein, or any part thereof to be sold as follows: (1) Mortgagee may proceed as if all of the Mortgaged Property were real property, in accordance with subparagraph (4) below, or Mortgagee may elect to treat any of the Mortgaged Property which consists of a right in action or which is property that can be severed from the premises without causing structural damage thereto as if the same were personal property, and dispose of the same in accordance with subparagraph (3) below, separate and apart from the sale of real property, with the remainder of the Mortgaged Property being treated as real property. (2) Mortgagee may cause any such sale or other disposition to be conducted immediately following the expiration of any grace period, if any, herein provided (or required by law) or Mortgagee may delay any such sale or other disposition for such period of time as Mortgagee deems to be in its best interest. Should Mortgagee desire that more than one such sale or other disposition be conducted, Mortgagee may, at its option, cause the same to be conducted simultaneously, or successively on the same day, or at -106- such different days or times and in such order as Mortgagee may deem to be in its best interest. (3) Should Mortgagee elect to cause any of the Mortgaged Property to be disposed of as personal property as permitted by subparagraph (1) above, it may dispose of any part thereof in any manner now or hereafter permitted by Division 9 of the California Commercial Code (the "UCC") or in accordance with any other remedy provided by law. Both Mortgagors and Mortgagee shall be eligible to purchase any part or all of such property at any such disposition. Any such disposition may be either public or private as Mortgagee may so elect, subject to the provisions of the UCC. Mortgagee shall give Mortgagors at least ten (10) days prior written notice of the time and place of any public sale or other disposition of such property or of the time at or after which any private sale or any other intended disposition is to be made, and if such notice is sent to Mortgagors it shall constitute reasonable notice to Mortgagors. (4) Should Mortgagee elect to sell the Mortgaged Property which is real property or which Mortgagee has elected to treat as real property, upon such election Mortgagee or Deed Trustee shall give such Notice of Default and Election to sell as may then be required by law. Thereafter, upon the expiration of such time and the giving of such Notice of Sale as may then be required by law, Deed Trustee, at the time and place specified in the Notice of Sale, shall sell such Mortgaged Property, or any portion thereof specified by Mortgagee at public auction to the highest bidder for cash in lawful money of the United States, subject, however, to the provisions of subparagraph (5) below. Mortgagee may, from time to time, postpone the sale by public announcement thereof at the time and placed noticed therefor. If the Mortgaged Property consists of several lots or parcels, Mortgagee may designate the order in which such lots or parcels may be offered for sale or sold, and may direct that such property be sold in one parcel, as an entirety, or in such parcels as Mortgagee, in its sole discretion, may elect. Each Mortgagor expressly waives any right which it may have to direct the order in which any of the Mortgaged Property shall be sold, and its rights, if any, to require that the Mortgaged Property be sold as separate tracts, lots, units or parcels. Any person, including Mortgagors, Deed Trustee or Mortgagee, may purchase at the sale. Upon any sale, Deed Trustee shall execute and deliver to the purchaser or purchasers a deed or -107- deeds conveying the property so sold, but without any covenant or warranty whatsoever, express or implied, whereupon such purchaser or purchasers shall be let into immediate possession. (5) Upon any sale of the Mortgaged Property, whether made under a power of sale herein granted or pursuant to judicial proceedings, if the holder of the Notes is a purchaser at such sale, it shall be entitled to use and apply all or any portion of the indebtedness then secured hereby for or in settlement or payment of all or any portion of the purchase price of the property purchased. (6) In the event of a sale or other disposition of any such Mortgaged Property or any part thereof, and the execution of a deed or other conveyance pursuant thereto, the recitals in the deed or deeds of facts (such as of a default, the giving of notice of default and notice of sale, demand that such sale should be made, postponement of sale, terms of sale, sale, purchaser, payment of purchase money, and any other fact affecting the regularity or validity of such sale or disposition) shall be conclusive proof (absent fraud) of the truth of such facts; and any such deed or conveyance shall be conclusive against all persons as to such facts recited therein. c. Receiver. Mortgagee shall be entitled, as a matter of -------- strict right, without notice and upon ex parte application, and without regard to the value or occupancy of the security, or the solvency of Mortgagors, or the adequacy or the Mortgaged Property or other collateral as security for the Notes, to have a receiver appointed to enter upon and take possession of the Mortgaged Property, collect the rents and all other sums payable under the Leases and apply the same as the court may direct, such receiver to have all the rights and powers permitted under the laws of the jurisdiction in which the Mortgaged Property is located. Each Mortgagor hereby waives any requirements on the receiver or Mortgagee to post any surety or other bond. Mortgagee or the receiver may also take possession of, and for these purposes use, any and all personalty which is a part of the Mortgaged Property and used by Mortgagors in the rental or leasing thereof or any part thereof. The expense (including the receiver's fees, counsel fees, costs and agent's compensation) incurred pursuant to the powers herein contained shall be secured by this Deed of Trust. To the extent not prohibited by applicable law, Mortgagee shall (after payment of all costs and expenses incurred) apply such rents and other sums payable -108- under the Leases received by it in the order set forth in Section 51. The right to enter and take possession of the Mortgaged Property, to manage and operate the same, and to collect the rents and other sums payable under the leases whether by receiver or otherwise, shall be cumulative to any other right or remedy hereunder or afforded by law, and may be exercised concurrently therewith or independently thereof. Mortgagee shall be liable to account only for such rents and other sums payable under the Leases actually received by Mortgagee. (iv) Fixture Filing. The personal property in which Mortgagee has -------------- a security interest includes goods that are or shall become fixtures on the Land or Improvements. This Mortgage is intended to serve as a fixture filing pursuant to the terms of Sections 9313 and 9402 of the UCC. This filing shall remain in effect as a fixture filing until this Mortgage is released or satisfied of record or its effectiveness otherwise terminates as to the Mortgaged Property. In that regard, the following information is provided: Name of Debtors: Each of the entities identified on Exhibit A hereto --------- Address of Debtors: c/o GGP Limited Partnership 55 West Monroe Street, Suite 3100 Chicago, Illinois 60603 Attention: Mr. Bernard Freibaum Name of Secured Party: LaSalle National Bank, as trustee Address of Secured Party: 135 South LaSalle Street Chicago, Illinois 60603 Attention: Asset Backed Securities Trust Services: General Growth Properties (d) Wisconsin. None. --------- (e) New Mexico. ---------- (i) The grant by the Mortgagors of the mortgage and security interest herein are made with mortgage covenants and upon the statutory mortgage condition, for the breach of which this Mortgage is subject to foreclosure as provided by law. -109- (ii) Copies of the Fixed Rate Notes and the other Security Documents may be obtained from the Mortgagee at the address specified for it in Section 52 herein. (iii) To the extent, if at all, N.M. Stat. Ann. (S) 56-7-1 is applicable to this Mortgage, any agreement to indemnify given by Mortgagors to the Mortgagee or any other indemnitee will not extend to liability, claims, damages, losses or expenses, including fees of lawyers, arising out of (i) the preparation or approval of maps, drawings, opinions, reports, surveys, change orders, designs or specifications by the Mortgagee or any other indemnitee, or the agents or employees of the Mortgagee or any other indemnitee, or (ii) the giving of or the failure to give directions or instructions by the Mortgagee or indemnitee, or the agents or employees of the Mortgagee or indemnitee, where such giving or failure to give directions or instructions is the primary cause of bodily injury to persons or damage to property. (iv) Notwithstanding anything to the contrary in the Mortgage, the filing with the court having jurisdiction over any action to foreclose the lien of the Mortgage of the report of the Special Master appointed by the court to conduct the foreclosure sale and of the Order approving such Special Master's report shall discharge the purchaser of the Mortgaged Property for the purchase money, and such purchaser shall not be obligated to see to the application thereof. (v) Maximum Amount Secured. The maximum amount secured by the lien ---------------------- of this Mortgage against property located in New Mexico shall not exceed at any one time the maximum principal sum of One Billion Dollars ($1,000,000,000), plus interest thereon. The maximum amount shall not in any way imply that the Mortgagee is obligated to make any future advances to the Mortgagors at any time. The maximum amount secured by this Mortgage may be advanced and repaid, and again made or advanced from time to time, in the sole and absolute discretion of the Mortgagee, and the aforesaid maximum amount shall limit only the total amount of principal that may be, at any one time, outstanding and secured upon the terms set forth in this Mortgage. (vi) No Power of Sale. This Mortgage is granted by the Mortgagor ---------------- related to the Mortgaged Property located in New Mexico to the Mortgagee. Any power of sale granted herein, and any designation of the Mortgagee as such Mortgagor's attorney-in-fact for purposes of effecting transfers of property sold pursuant to such power of sale and/or such other non-judicial foreclosure proceeding, shall have no effect in the State of New Mexico. -110- (vii) Shortening of Redemption Period. Notwithstanding anything to ------------------------------- the contrary in the Mortgage, the parties recognize Mortgagor's statutory right of redemption following a foreclosure sale, but agree that IF THIS MORTGAGE IS FORECLOSED, THE REDEMPTION PERIOD FOR THE REAL PROPERTY FOLLOWING ANY FORECLOSURE SALE SHALL BE ONE MONTH INSTEAD OF NINE MONTHS, AS PERMITTED UNDER N.M. STAT. ANN. (S) 35-5-19. (viii) Oral Agreements. Each Mortgagor confirms that it is aware of --------------- the provisions of N.M. Stat. Ann. (S) 58-6-5, providing that no contract, promise or commitment to loan money or to grant, extend or renew credit or any modification thereof, in any amount greater than $25,000, not primarily for personal, family or household purposes, made by a financial institution, including Mortgagee, is enforceable unless in writing and signed by the party to be charged, or by that party's authorized representative. (ix) Simple Description. A simple description of the Mortgaged ------------------ Property located in New Mexico is all property and improvements commonly known as Rio West Mall located in Gallup, New Mexico just north of the intersection of U.S. Highway 666 and Interstate 40. (x) Address. An address of the secured party from which ------- information concerning the security interest granted hereby may be obtained is the address for the Mortgagee as set forth in Section 52 hereof. A carbon, photographic or other reproduction of this Mortgage or any related financing statement is sufficient as a financing statement when filed in the real estate records of the county in which the Land is located. (xi) Financing Statement. When filed in the real property records ------------------- of McKinley County, New Mexico, this Mortgage shall be effective as a financing statement filed as a fixture filing pursuant to New Mexico Uniform Commercial Code (S) 9-402(6) and (S) 9-313 (N.M.S.A. 1978), as amended. Any copy of this Mortgage or any carbon, photographic or other reproduction of this Mortgage may also serve as the financing statement. (xii) Use of Proceeds. The Mortgagor identified on Exhibit A as --------------- --------- owning the Mortgaged Property situate in New Mexico will not use the proceeds of the Loan to finance construction at said Mortgaged Property. (f) New York. (i) New York Trust Fund. Pursuant to Section 14 of the -------- ------------------- Lien Law of New York, the Mortgagors shall receive the advances secured hereby and shall hold the right to receive the advances secured hereby as a trust fund to be applied first for the purpose of paying the cost of any improvement and shall apply such -111- advances first to the payment of the cost of any such improvement on the Mortgaged Property before using any part of the total of the same for any other purpose. (ii) Non-Residential Property. This Mortgage does not cover real ------------------------ property principally improved by one or more structures containing in the aggregate six or less residential units having their own separate cooking facilities. (iii) Section 256 of the Tax Law. Reference is made to Section 256 -------------------------- of the Tax Law of the State of New York. Notwithstanding anything to the contrary contained herein, the maximum amount of principal indebtedness secured by this Mortgage at the time of execution or which under any contingency may hereafter become secured hereby at any time is Twelve Million Two Hundred Thousand ($12,200,000) dollars; provided that such -------- limitation shall not limit the security of this mortgage with respect to (i) interest on the aforesaid maximum amount of principal indebtedness at the rates set forth in the Note, (ii) sums to pay impositions, (iii) sums to pay premiums on insurance policies covering the premises, (iv) expenses incurred after an Event of Default in upholding or enforcing the lien of this Mortgage, including, but not limited to, the expenses of any litigation to prosecute or defend the rights and lien created by this Mortgage, (v) costs of removal of or otherwise related to Hazardous Substances incurred after an Event of Default, (vi) any amount, costs or charge to which Mortgagee becomes subrogated, upon payment, whether under recognized principles of law or equity, or under express statutory authority and (vii) any other amount secured by this Mortgage which, if not limited by such limitation, would not increase the amount of mortgage recording taxes, if any, payable with respect to this Mortgage. (iii) This Mortgage amends and restates the terms and conditions of that certain Consolidation and Splitting Agreement (the "Agreement"), dated as of the date hereof and recorded in the Clerk's Office in the County of Niagara ("Clerk's Office"). The Agreement consolidated, amended and restated the following prior mortgages: 1. Combination Mortgage, Security Agreement and Fixture Financing Statement between Lockport Partners Limited Partnership (now known as Lockport L.L.C.) ("LPLP") and The Prudential Insurance Company of America ("Prudential"), dated as of October 15, 1986 and recorded in the Clerk's Office on November 5, 1986 at Liber 1801, Page 232, which secures an original principle amount of $11,750,000.00, as amended by that certain First Amendment of Documents, dated September 26, -112- 1988, by and between LPLP and Prudential, as recorded in the Clerk's office. 2. Combination Mortgage, Security Agreement and Fixture Financing Statement by and between LPLP and Prudential, dated as of September 26, 1988 and recorded in the Clerk's Office on November 17, 1988 at Liber 2011, Page 141, which secures an original principal amount of $750,000.00. (a) Mortgages 1 and 2 above were consolidated pursuant to the terms of that certain Mortgage Consolidation Agreement made by LPLP and Prudential, dated September 26, 1988 and recorded in the Clerk's Office on November 17, 1988 at Liber 577, Page 290, which mortgage consolidated the liens of the above mortgages to forma single lien of $12,500,000.00 (b) The mortgages as consolidated were assigned to Goldman Sachs Mortgage Company ("GSMC") by an Assignment, dated October 15, 1996 and recorded in the Clerk's Office on October 21, 1996 at Liber 969, Page 317. (c) The mortgages were also modified by that ceratin Modification of Mortgage and of Assignment of Leases, dated October 15, 1996 and recorded in the Clerk's Office on October 21, 1996 at Liber 969, Page 317. (d) The above mortgages secure an existing indebtedness of $7,000,000.00. 3. Mortgage, dated as of the date hereof and intended to be recorded in the Clerk's Office immediately prior hereto securing an indebtedness of $5,200,000.00. 4. Mortgages 1, 2 and 3 were consolidated pursuant to that certain Consolidation and Splitting Agreement, dated as of the date hereof and intended to be recorded in the Clerk's Office immediately after Mortgage 3 above but prior hereto, which secures a consolidated lien of $12,200,000.00. The above mortgages as so consolidated, amended and restated as set forth above are amended and restated herein to form a single lien serving a -113- maximum indebtedness of $12,200,000.00 with respect to the property Situate in NY Mortgage. (g) Minnesota. None. --------- (h) Illinois. -------- (i) With respect to the Mortgaged Property situated in the State of Illinois and without limiting the generality of any other provisions of this Mortgage, the Mortgagor hereby and in accordance with the provisions of Section 15-1701 of the Illinois Mortgage Foreclosure Law, 735 ILCS 5/15-1701, expressly authorizes and consents to the placing of the mortgagee in possession and the appointment of a receiver as herein provided and hereby expressly waives the statutory right of redemption provided in Section 15-1601 of the Illinois Mortgage Foreclosure Law, 735 ILCS 5/15-1601. (ii) This Mortgage is granted to secure future advances and loans from the Holders to or for the benefit of the Mortgagors as provided in the Indenture, and costs and expenses of enforcing the Mortgagors' obligations under this Mortgage and the other Security Documents. All advances, disbursements or other payments required by this Mortgage or the Indenture are obligatory advances up to the credit limits established therein and shall, to the fullest extent permitted by law, have priority over any and all mechanics' liens and other liens and encumbrances arising after this Mortgage is recorded. All obligations secured by this Mortgage, including, without limitation, all future advances, shall have the same priority, to the same extent as if such obligations secured by this Mortgage, including, without limitation, future advances, were made on the date of this Mortgage. (h) Oklahoma. This Mortgage is given in confirmation, ratification, -------- modification, restatement and incorporation, and not in extinguishment of that certain Mortgage, Assignment of Rents and Security Agreement executed by Oklahoma Mall L.L.C., a Delaware limited liability company, in favor of Goldman Sachs Mortgage Company, a New York limited partnership, filed November 18, 1997 recorded in Book RB 2896, Page 951 (the "Prior Oklahoma Mortgage") and secures the Westwood and Sooner Notes (as defined in the first page of the Prior Oklahoma Mortgage. The liens and security interests contained in the Prior Oklahoma Mortgage hereby are incorporated, renewed, extended, modified, ratified, confirmed and brought forward to secure payment of the Notes until all indebtedness of the Mortgagors has been fully paid and satisfied. Mortgagors hereby agree that, except pursuant to the terms hereby, this Mortgage shall in no manner affect, impair or extinguish the liens and security interests contained in the Prior Oklahoma Mortgage. -114- (i) Georgia. In the event of any sale conducted pursuant to Section 25.4 ------- of this Mortgage, Mortgagee, at its option, may sell the Mortgaged Properties or any part of the Mortgaged Properties at public sale or sales before the door of the courthouse of the county in which the Mortgaged Properties or any part of the Mortgaged Properties are situated, to the highest bidder for cash, in order to pay the Secured Obligations and all expenses of the sale and of all proceedings in connection therewith, including attorneys' fees actually incurred, after advertising the time, place and terms of sale once a week for four (4) weeks immediately preceding such sale (but without regard to the number of days) in a newspaper in which Sheriff's sales are advertised in said county. At any such public sale, Mortgagee may execute and deliver to the purchaser a conveyance of the Mortgaged Properties or any part of the Mortgaged Properties in fee simple, with full warranties of title, and to this end, Grantor hereby constitutes and appoints Mortgagee the agent and attorney-in-fact of Grantor to make such sale and conveyance, and thereby to divest Mortgagors of all right, title or equity that Mortgagors may have in and to the Mortgaged Properties and to vest the same in the purchaser or purchasers at such sale or sales, and all the acts and doings of said agent and attorney-in-fact are hereby ratified and confirmed and any recitals in said conveyance or conveyances as to facts essential to a valid sale shall be binding (absent fraud) upon Mortgagors. The aforesaid power of sale and agency hereby granted are coupled with an interest and are irrevocable, by bankruptcy or otherwise, and are granted as cumulative of the other remedies provided hereby or by law for collection of the Secured Obligations and shall not be exhausted by one exercise thereof but may be exercised until full payment of all of the Secured Obligations. In the event of any sale under this Mortgage by virtue of the exercise of the powers herein granted, or pursuant to any order in any judicial proceeding or otherwise, the Mortgaged Properties may be sold as an entirety or in separate parcels and in such manner or order as Mortgagee in its sole discretion may elect, and if Mortgagee so elects, Mortgagee may sell the personal property covered by this Mortgage at one or more separate sales in any manner permitted by the Uniform Commercial Code of the State of Georgia, and one or more exercises of the powers herein granted shall not extinguish nor exhaust such powers, until the entire Mortgaged Properties are sold or the Secured Obligations is paid in full. If the Secured Obligations are now or hereafter further secured by any chattel mortgages, pledges, contracts of guaranty, assignments of lease or other security instruments, Mortgagee may at its option exhaust the remedies granted under any of said security instruments either concurrently or independently, and in such order as Mortgagee may determine. (j) Florida. None. ------- (k) Nebraska. (i) Acceleration of Maturity. If an Event of Default -------- ------------------------ shall have occurred, the entire unpaid principal of the Note, together with all other sums payable under this Mortgage shall, at the option of Beneficiary, immediately become due and payable by delivery to Deed Trustee of written declaration of default. The Deed Trustee shall have the power of sale of the Property, and if Beneficiary desires the -115- Mortgaged Property to be sold, it shall deposit with Deed Trustee this Mortgage, the Note and all other documents evidencing expenditures secured hereby, and shall deliver to Deed Trustee a written notice of default and election to cause the Mortgaged Property to be sold, and the Deed Trustee, in turn, shall prepare a similar notice in the form required by law, and shall record said notice in each county in which any part of the Mortgaged Property is located and shall mail copies of such notice in the manner required by law to Mortgagor and to any other persons prescribed by law. After the time required by applicable law, Deed Trustee shall give public notice of sale to the persons and in the manner prescribed by applicable law. Deed Trustee, without demand on Mortgagor, shall sell the Mortgaged Property at public auction to the highest bidder at the time and place and under the terms designated in the notice of sale in one or more parcels and in any order Deed Trustee determines. Deed Trustee may postpone sale of all or any parcel of the Mortgaged Property by public announcement at the time and place of any previously scheduled sale. Beneficiary or its designee may purchase the Mortgaged Property at any sale. Upon receipt of payment of the bid price, Deed Trustee shall deliver to the purchaser Deed Trustee's deed conveying the Mortgaged Property. The recitals in the Deed Trustee's deed shall be (absent fraud) prima facie evidence of the truth of the statements made therein. Deed Trustee shall apply the proceeds of the sale in the following order: (a) to the actual expenses of the sale, including, but not limited to, Trustee's and Servicer's fees and reasonable attorneys' fees, but not to exceed five percent (5%) of the principal balance at the time of recording the Notice of Default,; (b) to all sums secured by this Mortgage; and (c) any excess to the person or persons legally entitled to it. (ii) Mortgagor's Right to Reinstate. If, within one (1) month ------------------------------ after the recording of a Notice of Default under this Mortgage, if the Power of Sale is to be exercised, Mortgagor meets certain conditions, Mortgagor shall have the right to have enforcement of this Mortgage discontinued. Those conditions are that Mortgagor: (a) pays Beneficiary all sums which then would be due under this Mortgage and the Notes had no acceleration occurred; (b) cures any default of any other covenants or agreement; (c) pays all expenses incurred in enforcing this Mortgage, including, but not limited to, reasonable attorneys' fees; and (d) takes such action as Beneficiary may reasonably require to assure that the lien of this Mortgage, Beneficiary's rights in the Mortgaged Property and Mortgagor's obligation to pay the sums secured by this Mortgage shall continue unchanged. Upon reinstatement by Mortgagor, this Mortgage and the obligations secured hereby shall remain fully effective as if no acceleration had occurred. -116- (l) Michigan. -------- (i) With respect to the real property located in Michigan, Mortgagors grant power to the Mortgagee to sell the Mortgaged Property or to cause the same to be sold at public sale, and to convey the same to the purchaser, in accordance with applicable statutes. WARNING: This Mortgage contains a power of sale and upon default, may be foreclosed by advertisement. In foreclosure by advertisement and the related sale of the Mortgaged Property, no hearing is required and the only notice required is to publish notice in a local newspaper and to post a copy of the notice on the Mortgaged Property. The Mortgagors waive all rights under the constitution and laws of the United States and under the constitution and laws of the State of Michigan to a hearing prior to sale in connection with foreclosure by advertisement and all notice requirements except as set forth in the Michigan statute providing for foreclosure by advertisement. (ii) Failure to pay any taxes and/or assessments assessed against the Mortgaged Property located in the State of Michigan, or any installment thereof, or any insurance premium upon policies covering any of the Mortgaged Property located in the State of Michigan, shall constitute waste and Mortgagors agree to and hereby do consent to the appointment of a receiver, in the case of such waste should Mortgagee so elect. (iii) The assignment of leases set forth in Section 51 hereof shall include, without limitation an assignment by Mortgagors to Mortgagee of the right to receive and apply the rents, issues, profits, license fees, revenues, charges, accounts and general intangibles arising from the Mortgaged Property located in the State of Michigan, or relating to any business conducted by the Mortgagors thereon, under present or future Leases, which are hereby specifically assigned and transferred to the Mortgagors including, without limit, all rights conferred by Article No. 210 of the Michigan Public Acts of 1953, as amended. 57. THE DEED TRUSTEE IN THE DEED OF TRUST STATES. (a) No Required -------------------------------------------- ----------- Action. The Deed Trustee shall not be required to take any action toward the - ------ execution and enforcement of the trust hereby created or to institute, appear in or defend any action, suit or other proceeding in connection therewith where in its opinion such action will be likely to involve it in expense or liability, unless requested so to do by a written instrument signed by the Mortgagee and, if the Deed Trustee so requests, unless the Deed Trustee is tendered security and indemnity satisfactory to it against any and all -117- costs, expense and liabilities arising therefrom. The Deed Trustee shall not be responsible for the execution, acknowledgement or validity of the Security Documents, or for the proper authorization thereof, or for the sufficiency of the lien or security interest purported to be created hereby, and makes no representation in respect thereof or in respect of the rights, remedies and recourses of the Mortgagee. (b) Certain Rights. The Deed Trustee shall have the right to take any -------------- and all of the following actions: (i) to select, employ and consult with counsel (who may be, but need not be, counsel for the Mortgagee) upon any matters arising hereunder, including the preparation, execution and interpretation of the Security Documents, and shall be fully protected in relying as to legal matters on the advice of counsel; (ii) to execute any of the trusts and powers hereof and to perform any duty hereunder either directly or through its agents or attorneys; (iii) to select and employ, in and about the execution of its duties hereunder, suitable accountants, engineers and other experts, agents and attorneys-in-fact, either corporate or individual, not regularly in the employ of the Deed Trustee, and the Deed Trustee shall not be answerable for any act, default or misconduct of any such accountant, engineer or other expert, agent or attorney-in-fact, if selected with reasonable care, or be otherwise responsible or accountable under any circumstances whatsoever, except for the Deed Trustee's gross negligence, wilful misconduct or bad faith; and (iv) to take any and all other lawful action as the Mortgagee may instruct the Deed Trustee to take to protect or enforce the Mortgagee's rights hereunder. The Deed Trustee shall not be personally liable, except for its gross negligence, willful misconduct or bad faith, in case of entry by it, or anyone entering by virtue of the powers herein granted to it, upon the Mortgaged Property located in the Deed of Trust State to which the Deed Trustee's appointment relates for debts contracted or liability or damages incurred in the management or operation of such Mortgaged Property. The Deed Trustee shall have the right to rely on any instrument, document or signature authorizing or supporting any action taken or proposed to be taken by it hereunder, believed by it in good faith to be genuine. The Deed Trustee shall be entitled to reimbursement for reasonable expenses incurred by it in the performance of its duties hereunder and to reasonable compensation for such of its services hereunder as shall be rendered. The Mortgagors will, from time to time, pay the reasonable compensation due to the Deed Trustee hereunder and reimburse the Deed Trustee for, and save it harmless against, any and all liability and expenses (other than liabilities and expenses arising out of the Deed Trustee's gross negligence or misconduct) which may be incurred by it in the performance of its duties. (c) Retention of Moneys. All moneys received by the Deed Trustee shall, ------------------- until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated in any manner from any other moneys (except to the extent required by law) and the Deed Trustee shall be under no liability for interest on any moneys received by it hereunder. -118- (d) Successor Deed Trustees. The Deed Trustee may resign by giving ----------------------- written notice of such resignation in recordable form to the Mortgagee. If the Deed Trustee shall die, resign or become disqualified from acting in the execution of this deed of trust, or shall fail or refuse to execute the same when requested by the Mortgagee so to do, or if, for any reason, the Mortgagee shall determine that it is prudent to appoint a substitute trustee or trustees to act instead of the aforenamed Deed Trustee, the Mortgagee shall (after reasonable notice to the Mortgagors) have full power to appoint a substitute trustee or trustees and, if preferred, several substitute trustees in succession who shall succeed to all the estates, properties, rights, powers and duties of the aforenamed Deed Trustee. Such appointment may be executed by any authorized agent or officer of the Mortgagee, and if the Mortgagee be a corporation and such appointment be executed on its behalf by any officer of such corporation, such appointment shall be conclusively presumed to be executed with authority and shall be valid and sufficient without proof of any action by the Board of Directors or any superior officer of the corporation. Such appointment shall be duly recorded in the appropriate real estate records at any time before or, if permitted by applicable law, upon sale of any Mortgaged Property by the successor appointed thereby. Each Mortgagor hereby ratifies and confirms any and all acts which the aforementioned Deed Trustee, or its successor or successors in this trust, lawfully may do by virtue hereof. The Mortgagors shall reimburse the Mortgagee and/or Deed Trustee for any reasonable expenses incurred pursuant to the provisions of this Article 53. (e) Perfection of Appointment. Should any deed, conveyance or ------------------------- instrument of any nature be required from the Mortgagors by any successor Deed Trustee to more fully and certainly vest in and confirm to such new Deed Trustee such estates, rights, -119- powers and duties, then, upon request by such Deed Trustee, any and all such deeds, conveyances and instruments shall be made, executed, acknowledged and delivered subject to the provisions of Article 38 hereof and shall be caused to be recorded and/or filed by the Mortgagors and the Mortgagors shall pay for any expenses incurred by the Deed Trustee pursuant to this Article 53. (f) Succession Instruments. Any new Deed Trustee appointed pursuant to ---------------------- any of the provisions hereof shall, without any further act, deed or conveyance, become vested with all the estates, properties, rights, powers and trusts of its or its predecessor in the rights hereunder with like effect as if originally named as a Deed Trustee herein; but nevertheless, upon the written request of the Mortgagee or of the successor Deed Trustee, the Deed Trustee ceasing to act shall execute and deliver an instrument in recordable form transferring to such successor Deed Trustee, upon the trusts herein expressed, all the estates, properties, rights, powers and trusts of the Deed Trustee so ceasing to act, and shall duly assign, transfer and deliver any of the property and moneys held by such Deed Trustee to the successor Deed Trustee so appointed in its place. (g) No Representation by Deed Trustee. By accepting or approving --------------------------------- anything required to be observed, performed or fulfilled or to be given to the Deed Trustee or beneficiary pursuant to the Security Documents, including but not limited to, any officer's certificate, balance sheet, statement of profit and loss or other financial statement, survey, appraisal or insurance policy, Deed Trustee shall not be deemed to have warranted, consented to, or affirmed the sufficiency, legality, effectiveness or legal effect of the same, or of any term, provision or condition thereof, and such acceptance or approval thereof shall not be or constitute any warranty, consent or affirmation with respect thereto by the Deed Trustee. 58. Future Advances. Mortgagee may, in Mortgagee's sole discretion, --------------- from time to time, within 20 years from the date of this Mortgage, or within such lesser time as may be provided by law, as a prerequisite for the sufficiency of the actual or record notice of optional future or additional advances (including in connection with the issuance of Additional Notes under the Indenture) as against the rights of creditors or subsequent purchasers for valuable considerations, make further advances to Mortgagors or Mortgagors' permitted successors in title, which shall be secured by the lien of this Mortgage, provided that at no time shall the outstanding principal indebtedness secured by this Mortgage, including advances, exceed the sum of $1,000,000,000, plus interest and any disbursements made for the payment of taxes, levies, insurance or other matters on each of the Mortgaged Properties, with interest on those disbursements (provided, that the maximum principal indebtedness of the Notes and the Additional Notes secured by the Mortgaged Property in the State of Minnesota will never exceed, with respect to such Mortgaged Property, $560,000,000 and the maximum principal indebtedness of the Notes and Additional Notes secured by the Mortgaged Property in the State of Nebraska will never exceed, with respect to such Mortgaged Property $1,000,000,000) and will -120- otherwise be subject to any other limitations set forth in this Mortgage or any other Security Document. -121- Each Mortgagor hereby acknowledges receipt, without charge, of a true copy of this Mortgage. WITNESS THE EXECUTION OF THIS MORTGAGE as of the date first above written. Signed, sealed and delivered in the LASALLE NATIONAL BANK, not in its presence of: individual capacity but solely as Trustee ________________________________ By:___________________________ Print Name:___________ Name: Title Address: 135 South LaSalle Street Chicago, Illinois 60603 ________________________________ Print Name:___________ [CORPORATE SEAL] EX-12.1 6 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES General Growth Properties, Inc. Computation of Ratio of Earnings to Fixed Charges (Dollars in thousands-Unaudited)
Quarter ended March 31, 1998 1997 1996 1995 1994 1993 -------------- ---- ---- ---- ---- ---- Available Earnings: Net income (loss) 8,455 89,551 $ 59,742 $ 43,054 $14,165 $12,610 Adjustments: Minority interest 4,427 49,997 34,580 25,856 9,518 9,823 Equity in net (income) loss of unconsolidated affiliates 5,193 (19,344) (17,589) (9,274) (6,096) - Distribution from unconsolidated affiliate(s) 9,379 20,352 35,322 23,462 14,600 - Interest expense/(1)/ 21,379 79,343 71,266 49,099 45,847 42,136 ------- -------- -------- -------- ------- ------- Available Earnings $48,833 $219,899 $183,321 $132,197 $78,034 $64,569 ======= ======== ======== ======== ======= ======= Fixed Charges/(2)/: Interest expense/(1)/ $21,379 $ 79,343 $ 71,266 $ 49,099 $45,847 $42,136 Capitalized interest 2,734 4,753 5,947 5,409 913 107 ------- -------- -------- -------- ------- ------- Fixed Charges $24,113 $ 84,096 $ 77,213 $ 54,508 $46,760 $42,243 ======= ======== ======== ======== ======= ======= Ratio of Earnings to Fixed Charges 2.03 2.61 2.37 2.43 1.67 1.53 ======= ======== ======== ======== ======= =======
/(1)/ Interest expense includes amortization of debt expense. /(2)/ Rental expense is not calculated because annual rental expense of the company is insignificant. EX-23.1 7 CONSENT OF DELOITTE AND TOUCHE Exhibit 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS Independent Auditors' Consent We consent to the incorporation by reference in the Registration Statements of General Growth Properties, Inc. on Forms S-3 (File Nos. 333-11067, 333-15907, 333-17021, 333-23035, 333-37247, 333-37383 and 333-41603) and the Registration Statements on Forms S-8 (File Nos. 33-79372, 333-07241, 333-11237 and 333-28449) of our report dated May 14, 1998, relating to our audit of the combined statement of revenues and certain expenses of the Landmark Mall, Mayfair Complex, The Meadows, Northgate Mall, Oglethorpe Mall and Park City Center ("the Malls") for the year ended December 31, 1997, included in this Form 8-K/A dated June 2, 1998, and to the references to us as experts in such registration statements. Deloitte and Touche LLP Atlanta, Georgia June 2, 1998 EX-23.2 8 CONSENT OF KPMG PEAT MARWICK LLP Exhibit 23.2 CONSENT OF INDEPENDENT ACCOUNTANTS INDEPENDENT AUDITORS' CONSENT The Board of Directors General Growth Properties, Inc. We consent to the incorporation by reference in the Registration Statement of General Growth Properties, Inc. on Forms S-3 (File Nos. 333-11067, 333-15907, 333-17021, 333-23035, 333-37247, 333-37383 and 333-41603) and the Registration Statement on Forms S-8 (File Nos. 33-79372, 333-07241, 333-11237 and 333-28449) of our report dated May 8, 1998, with respect to the combined statement of revenues and certain expenses of certain retail properties of MEPC American Holdings, Inc., U.K.-American Properties, Inc. and Caledonian Holding Company, Inc. (wholly owned subsidiaries of MEPC plc, a United Kingdom company) for the year ended September 30, 1997, which report appears in the Form 8-K/A Amendment No. 1 dated June 2, 1998, of General Growth Properties, Inc., and to the reference to our firm under the heading "Experts" in the prospectus supplement. KPMG Peat Marwick LLP Dallas, Texas June 2, 1998 EX-23.3 9 CONSENT OF COOPERS & LYBRAND L.L.P. Exhibit 23.3 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the Registration Statements of General Growth Properties, Inc. on Forms S-3 (File Nos. 333-11067, 333-15907, 333-17021, 333-23035, 333-37247, 333-37383 and 333-41603) and the Registration Statements on Forms S-8 (File Nos. 33-79372, 333-07241, 333-11237 and 333-28449) of our report dated February 6, 1998, except as to Note 1 for which the date is May 28, 1998, on our audit of the statement of revenues and certain expenses of Northbrook Court for the year ended December 31, 1997, and which is also included in this Form 8-K/A dated June 2, 1998. We also consent to the reference to our firm under the caption "Experts" in the above Registration Statements. Coopers & Lybrand L.L.P. Chicago, Illinois June 2, 1998 -----END PRIVACY-ENHANCED MESSAGE-----