Exhibit 10.1

THIRD AMENDED AND RESTATED LOAN AGREEMENT

Dated as of June 4, 2018

between

SEARS, ROEBUCK AND CO.,

KMART STORES OF ILLINOIS LLC,

KMART OF WASHINGTON LLC,

KMART CORPORATION,

SHC DESERT SPRINGS, LLC,

INNOVEL SOLUTIONS, INC.,

SEARS HOLDINGS MANAGEMENT CORPORATION,

MAXSERV, INC.,

TROY COOLIDGE NO. 13, LLC,

SEARS DEVELOPMENT CO., and

BIG BEAVER OF FLORIDA DEVELOPMENT, LLC

collectively, as Borrower,

SEARS HOLDINGS CORPORATION, as Guarantor,

the Lenders party hereto

and

JPP, LLC,

as Agent

 

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ARTICLE I

  GENERAL TERMS      17  

Section 1.1.

  The Loan; Fees; Term      17  

Section 1.2.

  Interest and Principal      17  

Section 1.3.

  Method and Place of Payment      18  

Section 1.4.

  Taxes; Regulatory Change      18  

Section 1.5.

  Release      19  

Section 1.6.

  Individual Property Releases      19  

ARTICLE II

  CLOSING DELIVERIES      20  

Section 2.1.

  Post-Closing Deliveries      20  

ARTICLE III

  REPRESENTATIONS      21  

Section 3.1.

  Organization      21  

Section 3.2.

  Authorization      21  

Section 3.3.

  No Conflicts      21  

Section 3.4.

  Consents      22  

Section 3.5.

  Enforceable Obligations      22  

Section 3.6.

  No Default      22  

Section 3.7.

  Payment of Taxes      22  

Section 3.8.

  Compliance with Law      22  

Section 3.9.

  ERISA      23  

Section 3.10.

  Investment Company Act      23  

Section 3.11.

  [Reserved]      23  

Section 3.12.

  Other Debt      23  

Section 3.13.

  Litigation      23  

Section 3.14.

  Leases      23  

Section 3.15.

  Full and Accurate Disclosure      24  

Section 3.16.

  Use of Loan Proceeds      24  

Section 3.17.

  [Reserved]      24  

Section 3.18.

  Title      24  

Section 3.19.

  No Encroachments      25  

Section 3.20.

  Physical Condition      25  

Section 3.21.

  Reserved      25  

Section 3.22.

  Management      25  

Section 3.23.

  Condemnation      25  

Section 3.24.

  Utilities and Public Access      26  

Section 3.25.

  Environmental Matters      26  

Section 3.26.

  Assessments      27  

Section 3.27.

  No Joint Assessment      27  

Section 3.28.

  Separate Lots      27  

Section 3.29.

  Permits; Certificate of Occupancy      27  

Section 3.30.

  Flood Zone      27  

Section 3.31.

  Security Deposits      27  

Section 3.32.

  Insurance      27  

 

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Section 3.33.

  No Dealings      27  

Section 3.34.

    

ARTICLE IV

  AFFIRMATIVE COVENANTS      28  

Section 4.1.

  Existence; Licenses      28  

Section 4.2.

  Maintenance of Properties      28  

Section 4.3.

  Compliance with Legal Requirements      28  

Section 4.4.

  Impositions and Other Claims      29  

Section 4.5.

  Access to Properties      29  

Section 4.6.

  Cooperate in Legal Proceedings      29  

Section 4.7.

  Leases      29  

Section 4.8.

  Plan Assets, etc      31  

Section 4.9.

  Further Assurances      31  

Section 4.10.

  Notice of Material Event      32  

Section 4.11.

  Property-Specific Information      32  

Section 4.12.

  Insurance      32  

Section 4.13.

  Casualty and Condemnation      33  

Section 4.14.

  Compliance with Encumbrances and Material Agreements      35  

Section 4.15.

  FATCA      36  

ARTICLE V

  NEGATIVE COVENANTS      36  

Section 5.1.

  Liens on the Collateral      36  

Section 5.2.

  Transfer; Prohibited Change of Control      36  

Section 5.3.

  Debt      36  

Section 5.4.

  Dissolution; Merger or Consolidation      36  

Section 5.5.

  Misapplication of Funds      37  

Section 5.6.

  Jurisdiction of Formation; Name      37  

Section 5.7.

  Modifications and Waivers      37  

Section 5.8.

  ERISA      37  

Section 5.9.

  Alterations and Expansions      37  

Section 5.10.

  Zoning and Uses      38  

Section 5.11.

  Waste      38  

ARTICLE VI

  DEFAULTS      38  

Section 6.1.

  Event of Default      38  

Section 6.2.

  Remedies      40  

Section 6.3.

  Application of Payments after an Event of Default      42  

ARTICLE VII

  MISCELLANEOUS      43  

Section 7.1.

  Successors      43  

Section 7.2.

  GOVERNING LAW      43  

Section 7.3.

  Modification, Waiver in Writing      44  

Section 7.4.

  Notices      44  

Section 7.5.

  TRIAL BY JURY      45  

Section 7.6.

  Headings      46  

 

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Section 7.7.

  Transfers of Loan; Cooperation      46  

Section 7.8.

  Severability      47  

Section 7.9.

  Preferences; Waiver of Marshalling of Assets      47  

Section 7.10.

  Remedies of Borrower      47  

Section 7.11.

  Offsets, Counterclaims and Defenses      48  

Section 7.12.

  No Joint Venture      48  

Section 7.13.

  Conflict; Construction of Documents      48  

Section 7.14.

  Brokers and Financial Advisors      48  

Section 7.15.

  Counterparts      48  

Section 7.16.

  Estoppel Certificates      48  

Section 7.17.

  General Indemnity; Payment of Expenses      49  

Section 7.18.

  No Third-Party Beneficiaries      51  

Section 7.19.

  Right of Set-Off      51  

Section 7.20.

  Exculpation of Lender      52  

Section 7.21.

  Servicer      52  

Section 7.22.

  No Fiduciary Duty      52  

Section 7.23.

  Borrower Information      53  

Section 7.24.

  Prior Agreements      53  

Section 7.25.

  Delay Not a Waiver      54  

Section 7.26.

  Schedules and Exhibits Incorporated      54  

Section 7.27.

  Joint and Several Liability      54  

Section 7.28.

  Survival or Representations      53  

Section 7.29.

  Certain Tax Forms      53  

 

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THIRD AMENDED AND RESTATED LOAN AGREEMENT

This Third Amended and Restated Loan Agreement (this “Agreement”) is dated as of
June 4, 2018 and is among (i) JPP, LLC, a Delaware limited liability company, as
agent (in its capacity as administrative agent for the Lenders, together with
its permitted successors and assigns in accordance with Section 7.1, the
“Agent”), (ii) JPP, LLC, JPP II, LLC and Cascade Investment, L.L.C. (“Cascade”),
collectively, as lenders (together with their respective permitted successors
and assigns, individually or collectively, as the context may require,
“Lender”), (iii) SEARS, ROEBUCK AND CO. (“Sears”), KMART STORES OF ILLINOIS LLC,
KMART OF WASHINGTON LLC, KMART CORPORATION (“KMART”), SHC DESERT SPRINGS, LLC,
INNOVEL SOLUTIONS, INC., SEARS HOLDINGS MANAGEMENT CORPORATION, MAXSERV, INC.,
TROY COOLIDGE NO. 13, LLC, SEARS DEVELOPMENT CO. and BIG BEAVER OF FLORIDA
DEVELOPMENT, LLC, collectively as borrowers (individually or collectively, as
the context may require, jointly and severally, together with their respective
permitted successors and assigns, “Borrower”), and (iv) SEARS HOLDINGS
CORPORATION, as guarantor (for purposes of Section 7.30(b)).

RECITALS

JPP, LLC and JPP II, LLC (collectively, “Initial Lender”) entered into that
certain Loan Agreement with Borrower (the “Original Loan Agreement”), dated as
of January 3, 2017 (the “Original Closing Date”), pursuant to which Initial
Lender made a loan to Borrower in the amount of $500,000,000 secured by
mortgages on certain real property and certain other collateral more
particularly described in the Original Loan Agreement.

Borrower and Initial Lender amended the Original Loan Agreement pursuant to that
certain Amended and Restated Loan Agreement, dated as of October 4, 2017,
whereupon the Initial Lender made an additional advance to Borrower in the
amount of $100,000,000.

Borrower and Initial Lender amended the First Amended Loan Agreement pursuant to
that certain Second Amended and Restated Loan Agreement (the “Second Amended
Loan Agreement”), dated as of October 18, 2017, whereupon Initial Lender made an
additional advance to Borrower in the amount of $100,000,000.

Borrower and Initial Lender amended the Second Amended Loan Agreement pursuant
to that certain Amendment to Second Amended and Restated Loan Agreement, dated
as of October 25, 2017, and further amended it pursuant to that certain Second
Amendment to Second Amended and Restated Loan Agreement, dated as of March 8,
2018, whereupon Initial Lender made an additional advance to Borrower in the
amount of $100,000,000.

In connection with the sale of certain properties, prior to the New Closing
Date, Borrower repaid a portion of the Principal Indebtedness (and such
properties were released from the Liens of the applicable Mortgages), such that
immediately prior to the New Closing Date, the Principal Indebtedness was
$592,553,155.54.

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JPP, LLC, JPP II, LLC and Cascade made a loan in the amount of $500,000,000 (the
“JPP-Cascade Loan”) in accordance with the terms and provisions of that certain
Loan Agreement (as amended, restated, supplemented or otherwise modified from
time to time, the “JPP-Cascade Loan Agreement”), dated as of April 8, 2016,
secured by mortgages on certain real property more particularly described in the
JPP-Cascade Loan Agreement. In connection with the sale of certain properties,
prior to the New Closing Date Borrower repaid a portion of the JPP-Cascade Loan,
such that immediately prior to the New Closing Date, the outstanding principal
balance of the JPP-Cascade Loan was $186,527,682.14.

On the New Closing Date, (A) Lender will make an additional advance to Borrower
in the amount of $186,527,682.14, the proceeds of which will be used to
refinance the JPP-Cascade Loan, (B) the JPP-Cascade Loan Agreement will be
terminated and the existing mortgages on the Additional Properties securing the
JPP-Cascade Loan will be released, (C) the existing second-lien Mortgages on the
Additional Properties securing certain obligations hereunder are being amended
and restated in their entirety such that, following such amendment and
restatement, the Mortgages on the Additional Properties will be first-lien
mortgages securing the entire Loan, and (D) the additional advance described in
clause (A) above shall be made a part of the Loan and secured by Mortgages on
all of the Properties, all on the terms and conditions set forth in this
Agreement.

Borrower and Initial Lender desire to amend and restate the Second Amended Loan
Agreement in its entirety on the terms and conditions set forth herein.

In consideration of the agreements, provisions and covenants contained herein
and in the other Loan Documents, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Lender and
Borrower agree as follows:

DEFINITIONS

(a) When used in this Agreement, the following capitalized terms have the
following meanings:

“ABL Collateral” means inventory and accounts receivable and other personal
property that is collateral for the obligations of certain Borrowers under the
Third Amended and Restated Credit Agreement, dated as of July 21, 2015, as
further amended from time to time, with Bank of America, N.A. as Administrative
Agent and Co-Collateral Agent, Wells Fargo Bank, National Association, as
Co-Collateral Agent. For the avoidance of doubt, the ABL Collateral does not
include any of the Properties.

“Additional Properties” means those certain Properties noted as “Additional
Properties” on the Property List and for which Borrower is delivering Mortgages
to Lender on the New Closing Date.

“Agent” has the meaning set forth in the introductory paragraph.

 

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“Agreement” means this Loan Agreement, as the same may from time to time
hereafter be amended, restated, replaced, supplemented or otherwise modified in
accordance herewith.

“Allocated Loan Amount” means, with respect to each Property, the portion of the
Principal Indebtedness allocated thereto as set forth next to such Property on
the Property List.

“Alteration” means any demolition, or any material alteration, installation,
improvement or expansion of or to any of the Properties or any portion thereof.

“Appraisal” means, with respect to each Property, the appraisal of such
Property, in each case dated within 90 days prior to the New Closing Date,
determining market value on an as if leased basis that is prepared by a member
of the Appraisal Institute selected by Lender.

“Bankruptcy Code” has the meaning set forth in Section 6.1(d).

“Borrower or “Borrowers” has the meaning set forth in the first paragraph of
this Agreement.

“Broker” has the meaning set forth in Section 7.7(d).

“Business Day” means any day other than (i) a Saturday and a Sunday and (ii) a
day on which federally insured depository institutions in the State of New York
or the state in which the offices of Lender, its trustee, its Servicer or its
Servicer’s collection account are located are authorized or obligated by law,
governmental decree or executive order to be closed.

“Cascade” has the meaning set forth in the introductory paragraph.

“Casualty” means a fire, explosion, flood, collapse, earthquake or other
casualty affecting all or any portion of any Property.

“Code” means the Internal Revenue Code of 1986, as amended.

“Co-Lender Agreement” means that certain Co-Lender Agreement, dated as of the
date hereof, by and among JPP, LLC, JPP II, LLC and Cascade Investments LLC, as
lenders, and JPP, LLC, as administrative agent.

“Collateral” means all assets owned from time to time by Borrower located at and
including the Properties and all other tangible and intangible property located
at or related to the Properties, in respect of which Lender is expressly granted
a Lien under the Loan Documents, and all proceeds thereof; provided, however,
that in any event the Collateral shall not include the ABL Collateral.

“Condemnation” means a taking or voluntary conveyance of all or part of any of
the Properties or any interest in or right accruing to or use of any of the
Properties, as the result of, or in settlement of, any condemnation or other
eminent domain proceeding by any Governmental Authority, other than immaterial
takings by and/or the granting of immaterial easements or rights of way to a
Governmental Authority in the ordinary course of business that do not, in the
aggregate, have a Property Material Adverse Effect.

 

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“Contingent Obligation” means, with respect to any Person, any obligation of
such Person directly or indirectly guaranteeing any Debt of any other Person in
any manner and any contingent obligation to purchase, to provide funds for
payment, to supply funds to invest in any other Person or otherwise to assure or
indemnify a creditor against loss.

“Damages” to a Person means any and all liabilities, obligations, losses,
demands, damages, penalties, assessments, actions, causes of action, judgments,
proceedings, suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (including reasonable attorneys’ fees and other costs of
defense and/or enforcement whether or not suit is brought), fines, charges,
fees, settlement costs and disbursements imposed on, incurred by or asserted
against such party, whether based on any federal, state, local or foreign laws,
statutes, rules or regulations (including securities and commercial laws,
statutes, rules or regulations and Environmental Laws), on common law or
equitable cause or on contract or otherwise; provided, however, that “Damages”
shall not include special, consequential or punitive damages, except to the
extent imposed upon Lender by one or more third parties.

“Debt” means, with respect to any Person, without duplication:

(i) all indebtedness of such Person to any other party (regardless of whether
such indebtedness is evidenced by a written instrument such as a note, bond or
debenture), including indebtedness for borrowed money or for the deferred
purchase price of property or services;

(ii) all letters of credit issued for the account of such Person and all
unreimbursed amounts drawn thereunder;

(iii) all indebtedness secured by a Lien on any property owned by such Person
(whether or not such indebtedness has been assumed) except obligations for
impositions that are not yet due and payable;

(iv) all Contingent Obligations of such Person;

(v) all payment obligations of such Person under any interest rate protection
agreement (including any interest rate swaps, floors, collars or similar
agreements) and similar agreements;

(vi) all contractual indemnity obligations of such Person; and

(vii) any material actual or contingent liability to any Person or Governmental
Authority with respect to any employee benefit plan (within the meaning of
Section 3(3) of ERISA) subject to Title IV of ERISA, Section 302 of ERISA or
Section 412 of the Code.

“Default” means the occurrence of any event that, but for the giving of notice
or the passage of time, or both, would be an Event of Default.

 

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“Default Interest” means, during the continuance of an Event of Default, the
amount by which interest accrued on the Notes or Note Components at their
respective Default Rates exceeds the amount of interest that would have accrued
on the Notes or Note Components at their respective Interest Rates.

“Default Rate” means, with respect to any Note or Note Component, the greater of
(x) 2.5% per annum in excess of the Interest Rate otherwise applicable to such
Note or Note Component hereunder and (y) 1% per annum in excess of the Prime
Rate from time to time; provided that if the foregoing would result in an
interest rate in excess of the maximum rate permitted by applicable law, the
Default Rate shall be limited to the maximum rate permitted by applicable law.

“Delayed Origination Fee” means, as of the date of determination, an amount
equal to 1.00% times the Principal Indebtedness outstanding under Note A.

“Environmental Claim” means any written notice, claim, proceeding, notice of
proceeding, investigation, demand, abatement order or other order or directive
by any Person or Governmental Authority alleging or asserting liability with
respect to Borrower directly in connection with any Property arising out of,
based on, in connection with, or resulting from (i) the actual or alleged
presence, Use or Release of any Hazardous Substance, (ii) any actual or alleged
violation of any Environmental Law, or (iii) any actual or alleged injury or
threat of injury to property, health or safety, natural resources or to the
environment caused by Hazardous Substances.

“Environmental Indemnity” means that certain Amended and Restated Environmental
Indemnity agreement executed by Borrower and Guarantor as of the New Closing
Date, as the same may from time to time be amended, restated, replaced,
supplemented or otherwise modified in accordance herewith.

“Environmental Laws” means, with respect to any Properties, any and all present
and future federal, state and local laws, statutes, ordinances, orders, rules,
regulations and the like, as well as common law, any judicial or administrative
orders, decrees or judgments thereunder, and any permits, approvals, licenses,
registrations, filings and authorizations, in each case as now or hereafter in
effect, relating to (i) the pollution, protection or cleanup of the environment,
(ii) the impact of Hazardous Substances on property, health or safety, (iii) the
Use or Release of Hazardous Substances, (iv) occupational safety and health,
industrial hygiene or the protection of human, plant or animal health or welfare
or (v) the liability for or costs of other actual or threatened danger to health
or the environment. The term “Environmental Law” includes, but is not limited
to, the following statutes, as amended, any successors thereto, and any
regulations promulgated pursuant thereto, and any state or local statutes,
ordinances, rules, regulations and the like addressing similar issues: the
Comprehensive Environmental Response, Compensation and Liability Act; the
Emergency Planning and Community Right-to-Know Act; the Hazardous Materials
Transportation Act; the Resource Conservation and Recovery Act (including
Subtitle I relating to underground storage tanks); the Clean Water Act; the
Clean Air Act; the Toxic Substances Control Act; the Safe Drinking Water Act;
the Occupational Safety and Health Act; the Federal Water Pollution Control Act;
the Federal Insecticide, Fungicide and Rodenticide Act; the Endangered Species
Act; the National Environmental Policy Act; and the

 

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River and Harbors Appropriation Act. The term “Environmental Law” also includes,
but is not limited to, any present and future federal state and local laws,
statutes ordinances, rules, regulations and the like, as well as common law,
conditioning transfer of property upon a negative declaration or other approval
of a Governmental Authority of the environmental condition of a property; or
requiring notification or disclosure of Releases of Hazardous Substances or
other environmental conditions of a property to any Governmental Authority or
other Person, whether or not in connection with transfer of title to or interest
in property.

“Environmental Reports” means “Phase I Environmental Site Assessments” as
referred to in the ASTM Standards on Environmental Site Assessments for
Commercial Real Estate, E 1527-013 (and, if necessary as determined in such
Phase I Environmental Site Assessments, “Phase II Environmental Site
Assessments”), prepared by an independent environmental auditor selected by
Borrower and reasonably approved by Lender and delivered to Lender in connection
with the Loan and any amendments or supplements thereto delivered to Lender, and
shall also include any other environmental reports delivered to Lender pursuant
to this Agreement and the Environmental Indemnity.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations promulgated thereunder.

“ERISA Affiliate” means, at any time, each trade or business (whether or not
incorporated) that would, at the time, be treated together with Borrower as a
single employer under Title IV or Section 302 of ERISA or Section 412 of the
Code.

“Event of Default” has the meaning set forth in Section 6.1.

“Exception Report” means the report prepared by Borrower and certified to Lender
in the Officer’s Certificate delivered to Lender as of the date hereof.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), any current or future
regulations or official interpretations thereof and any agreement entered into
pursuant to Section 1471(b)(1) of the Code or any legislation adopted pursuant
to any intergovernmental agreement entered into in connection with the
implementation of such Sections of the Code.

“Form W-8BEN” means Form W-8BEN (Certificate of Foreign Status of Beneficial
Owner for United States Tax Withholding and Reporting (Individuals)) of the
Department of Treasury of the United States of America, and any successor form.

“Form W-8BEN-E” means Form W-8BEN (Certificate of Foreign Status of Beneficial
Owner for United States Tax Withholding and Reporting (Entities)) of the
Department of the Treasury of the United States of America, and any successor
form.

“Form W-8ECI” means Form W-8ECI (Certificate of Foreign Person’s Claim that
Income is Effectively Connected with the Conduct of a Trade or Business in the
United States) of the Department of the Treasury of the United States of
America, and any successor form.

 

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“Form W-9” means Form W-9 (Request for Taxpayer Identification Number and
Certification) of the Department of the Treasury of the United States of
America, and any successor form.

“GAAP” means generally accepted accounting principles in the United States of
America, consistently applied.

“Governmental Authority” means any federal, state, county, regional, local or
municipal government, any bureau, department, agency or political subdivision
thereof and any Person with jurisdiction exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
(including any court).

“Guarantor” means Sears Holdings Corporation.

“Guaranty” means that certain Amended and Restated Guaranty, dated as of the New
Closing Date, executed by Guarantor for the benefit of Lender, as the same may
be amended, restated, replaced, supplemented or otherwise modified in accordance
herewith.

“Hazardous Substances” means any and all substances (whether solid, liquid or
gas) defined, listed, or otherwise classified as pollutants, hazardous wastes,
hazardous substances, hazardous materials, extremely hazardous wastes, toxic
substances, toxic pollutants, contaminants, pollutants or words of similar
meaning or regulatory effect under any present or future Environmental Laws or
the presence of which on, in or under any of the Properties is prohibited or
requires monitoring, investigation or remediation under Environmental Law,
including petroleum and petroleum by-products, asbestos and asbestos-containing
materials, toxic mold, polychlorinated biphenyls, lead and radon, and compounds
containing them (including gasoline, diesel fuel, oil and lead-based paint),
pesticides and radioactive materials, flammables and explosives and compounds
containing them, but excluding those substances commonly used in the operation
and maintenance of properties of kind and nature similar to those of the
Properties that are used at the Properties in compliance with all Environmental
Laws and in a manner that does not result in contamination any of the Properties
or in a Property Material Adverse Effect.

“Indebtedness” means the Principal Indebtedness, together with interest and all
other obligations and liabilities of Borrower under the Loan Documents,
including protective advances, all transaction costs, late fees and other
amounts due or to become due to Lender pursuant to this Agreement, under the
Notes or in accordance with any of the other Loan Documents, and all other
amounts, sums and expenses reimbursable by Borrower to Lender hereunder or
pursuant to the Notes or any of the other Loan Documents.

“Indemnified Parties” has the meaning set forth in Section 7.17.

“Initial Lender” has the meaning set forth in the recitals to this Agreement.

“Insurance Requirements” means, collectively, (i) all material terms of any
insurance policy required pursuant to this Agreement and (ii) all material
regulations and then-current standards applicable to or affecting any of the
Properties or any portion thereof or any use or condition thereof, which may, at
any time, be recommended by the board of fire underwriters, if any, having
jurisdiction over any of the Properties, or any other body exercising similar
functions.

 

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“Interest Accrual Period” means each period from and including the first day of
a calendar month (or, if later, the date the relevant advance was made) through
but excluding the first day of the immediately succeeding calendar month (or, if
earlier, the Maturity Date).

“Interest Determination Date” means, in connection with the calculation of
interest accrued for any Interest Accrual Period, the second Business Day
preceding the first day of such Interest Accrual Period.

“Interest Rate” means (i) with respect to Note A, the sum of (A) 6.5% per annum,
plus (B) the greater of (x) zero and (y) LIBOR, determined as of the Interest
Determination Date immediately preceding such Interest Accrual Period, and
(ii) with respect to Note B, the sum of (A) 9.0% per annum, plus (B) the greater
of (x) zero and (y) LIBOR, determined as of the Interest Determination Date
immediately preceding such Interest Accrual Period; provided that at any time
that the Loan is a Prime Rate Loan, such rate per annum shall be the sum of the
applicable Prime Rate Spread plus the Prime Rate, determined as of the Interest
Determination Date immediately preceding such Interest Accrual Period.

“JPP-Cascade Loan” has the meaning set forth in the recitals hereto.

“JPP-Cascade Loan Agreement” has the meaning set forth in the recitals hereto.

“KMART” has the meaning set forth in the introductory paragraph.

“Lease” means any leasehold estate, lease, sublease, sub-sublease, license,
concession, occupancy agreement or other agreement (written or oral, now or at
any time in effect and every modification, amendment or other agreement relating
thereto, including every guarantee of the performance and observance of the
covenants, conditions and agreements to be performed and observed by the other
party thereto) that grant a possessory interest in, or the right to use or
occupy, all or any part of the Property, together with all related security and
other deposits (together with any and all modifications, renewals, extensions
and substitutions of the foregoing), but specifically excluding (a) all Leases
under which Borrower is not the landlord, sublandlord or licensor thereunder,
(b) Multi-Site Agreements and (c) REA’s that expressly prohibit the encumbrance
of Borrower’s interests, rights and obligations thereunder.

“Legal Requirements” means all governmental statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions of Governmental
Authorities (including Environmental Laws and zoning restrictions) affecting
Borrower, Guarantor, the Property or any other Collateral or any portion thereof
or the construction, ownership, use, alteration or operation thereof, or any
portion thereof (whether now or hereafter enacted and in force), and all
permits, licenses and authorizations and regulations relating thereto.

“Lender” has the meaning set forth in the introductory paragraph.

 

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“LIBOR” means the rate per annum calculated as set forth below:

On each Interest Determination Date, LIBOR for the applicable period will be the
rate for deposits in United States dollars for a one-month period which appears
as the London interbank offered rate on the display designated as “LIBOR01” on
the Reuters Screen (or such other page as may replace that page on that service,
or such page or replacement therefor on any successor service) as the London
interbank offered rate as of 11:00 a.m., London time, on such date.

All percentages resulting from any calculations or determinations referred to in
this definition will be rounded upwards to the nearest multiple of 1/100 of 1%
and all U.S. dollar amounts used in or resulting from such calculations will be
rounded to the nearest cent (with one-half cent or more being rounded upwards).

“Lien” means any mortgage, lien (statutory or other), pledge, hypothecation,
assignment, preference, priority, security interest, restrictive covenant,
easement, or any other encumbrance or charge on or affecting any Collateral or
any portion thereof, or any interest therein (including any conditional sale or
other title retention agreement, any sale-leaseback, any financing lease or
similar transaction having substantially the same economic effect as any of the
foregoing, the filing of any financing statement or similar instrument under the
Uniform Commercial Code or comparable law of any other jurisdiction, domestic or
foreign, and mechanics’, materialmen’s and other similar liens and encumbrances,
as well as any option to purchase, right of first refusal, right of first offer
or similar right).

“Loan” means the aggregate outstanding Indebtedness of Borrower under the
Note(s).

“Loan Documents” means this Agreement, the Notes, each of the Mortgages (and
related financing statements), the Environmental Indemnity, the Guaranty and all
other agreements, instruments, certificates and documents necessary to
effectuate the granting to Lender of Liens on the Collateral or otherwise in
satisfaction of the requirements of this Agreement or the other documents listed
above or hereafter entered into by Lender and Borrower in connection with the
Loan, as all of the aforesaid may be amended, restated, replaced, supplemented
or otherwise modified from time to time in accordance herewith.

“Loan Transfer” has the meaning set forth in Section 7.7(b).

“Loan Transferee” has the meaning set forth in Section 7.7(c).

“Loss Proceeds” means amounts, awards or payments payable to Borrower or Lender
in respect of all or any portion of any of the Properties in connection with a
Casualty or Condemnation thereof (after the deduction therefrom and payment to
Borrower and Lender, respectively, of any and all reasonable expenses incurred
by Borrower and Lender in the recovery thereof, including all reasonable
attorneys’ fees and disbursements, the fees of insurance experts and adjusters
and the costs incurred in any litigation or arbitration with respect to such
Casualty or Condemnation).

 

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“Loss Proceeds Account” means an account maintained by Lender for purposes of
depositing any Loss Proceeds.

“Material Adverse Effect” means a material adverse effect upon (i) Borrower’s
title to the Properties taken as a whole, (ii) the ability of Borrower and
Guarantor, taken as a whole, to perform their obligations under the Loan
Documents, (iii) Lender’s ability to enforce and derive the principal benefit of
the security intended to be provided by the Mortgage and the other Loan
Documents, or (iv) the use or value of the Properties taken as a whole.

“Material Agreements” means each contract and agreement in force and effect
relating to the Property a default under which or the termination or
cancellation of which could reasonably be expected to result in a Material
Adverse Effect, other than (i) Leases (but including REA’s), (ii) Multi-Site
Agreements and (iii) any agreement (other than REA’s) set forth on Schedule B of
the Title Insurance Policy.

“Material Alteration” means any Alteration to be performed by or on behalf of
Borrower at any of the Properties that (i) is reasonably expected to result in a
Material Adverse Effect with respect to the applicable Property or (ii) is
reasonably expected to permit (or is reasonably likely to induce) any Tenant to
terminate its Lease or abate rent.

“Maturity Date” means July 20, 2020, or such earlier date as may result from
acceleration of the Loan in accordance with this Agreement.

“Mortgage” means, collectively, and as applicable, with respect to each
Property, that certain first-lien mortgage, deed of trust or deed to secure
debt, as the case may be, assignment of rents and leases, collateral assignment
of property rents, security agreement and fixture filing encumbering such
Property, executed by Borrower, as amended and as the same may from time to time
be further amended, restated, replaced, supplemented or otherwise modified in
accordance herewith, provided, however, that in the event that the jurisdiction
in which the Property is located imposes a mortgage recording, intangibles or
similar Tax and does not permit the allocation of indebtedness for the purpose
of determining the amount of such Tax payable, the principal amount secured by
such Mortgage shall be equal to the value allocated to the applicable Property
as determined by the applicable Appraisal.

“Multi-Site Agreements” means, collectively, national, multi-site or master
leases, licenses, or concession or department agreements with tenants or
licensees that operate within and as a part of Borrower’s store, or that operate
kiosks, ATM or vending machines or drive –through facilities located on the
Property, in each case, solely to the extent any such leases, licenses,
concessions or agreements terminate with respect to the Property upon the
cessation of Mortgagor’s operations at the Property.

“New Closing Date” means June 4, 2018.

“Note A” means that certain Amended and Restated Promissory Note, dated as of
the date hereof, in the maximum principal amount of $93,263,841.07 by Borrower
in favor of Cascade, as the same may be replaced by multiple Notes pursuant to
the terms hereof and as otherwise assigned (in whole or in part), amended,
restated, replaced, supplemented or otherwise modified in accordance herewith.

 

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“Note B” means that certain Amended and Restated Promissory Note, dated as of
the date hereof, in the maximum principal amount of $685,816,996.61 by Borrower
in favor of the Initial Lender, as the same may be replaced by multiple Notes
pursuant to the terms hereof and as otherwise assigned (in whole or in part),
amended, restated, replaced, supplemented or otherwise modified in accordance
herewith.

“Note(s)” means, individually or collectively as the context may require, Note A
and Note B.

“Note Component” with respect to any Note has the meaning set forth in such
Note.

“Officer’s Certificate” means the officer’s certificate of Borrower, dated as of
the New Closing Date, delivered to Lender and certifying, among other things,
(i) certain organizational documents of Borrower, (ii) the Property List,
(iii) the Allocated Loan Amounts, (iv) the Policies, (v) the Rent Roll and
(vi) the organizational chart referred to in Section 3.1(b).

“Original Closing Date” has the meaning set forth in the recitals to this
Agreement.

“Original Loan Agreement” has the meaning set forth in the recitals to this
Agreement.

“Original Properties” means the real property secured with Mortgages dated prior
to the New Closing Date, as described in greater detail in the applicable
Mortgages, together with all buildings and other improvements thereon (other
than leasehold improvements that are the property of a Tenant under a Lease at a
Property) and all personal property owned by Borrower and encumbered by the
Mortgages, together with all rights pertaining to such property.

“Overpaying Borrower” has the meaning set forth in Section 7.27(a).

“PATRIOT Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001)), as amended from time to
time.

“Payment Date” means (i) the first day of each calendar month and (ii) the
Maturity Date. Whenever a Payment Date is not a Business Day, the entire amount
that would have been due and payable on such Payment Date shall instead be due
and payable on the immediately succeeding Business Day.

“Permits” means all licenses, permits, variances and certificates used in
connection with the ownership, operation, use or occupancy of each of the
Properties (including certificates of occupancy, business licenses, state health
department licenses, licenses to conduct business and all such other permits,
licenses, consents, approvals and rights, obtained from any Governmental
Authority or private Person concerning ownership, operation, use or occupancy of
such Property).

 

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“Permitted Debt” means the Indebtedness and any other Debt of Borrower or any
affiliate of Borrower that is not secured by a lien on any of the Properties or
any other Collateral and, to the extent constituting Debt, all obligations
secured by Liens constituting Permitted Encumbrances (including Liens on the ABL
Collateral) other than Debt for borrowed money secured by a Lien on the Land or
the Improvements, each as defined in the Mortgage.

“Permitted Encumbrances” means:

(i) the Liens created by the Loan Documents;

(ii) all (A) Liens and other matters specifically disclosed on Schedule B of the
Title Insurance Policies and any matters omitted from any previous title report
or commitment that would have appeared on such Schedule B but for such omission,
(B) easements, rights-of-way, covenants, conditions, restrictions (including
building, fire and safety, land use and development, and zoning regulations and
restrictions), declarations, rights of reverter, minor defects or irregularities
in title and other similar charges or encumbrances, whether or not of record, in
each case and (C) matters which a physical inspection or accurate survey of the
Properties would disclose, in each case of (B) and (C), solely to the extent the
same do not, in the aggregate, result in a Material Adverse Effect;

(iii) Liens, if any, for Taxes not yet delinquent and Liens for delinquent taxes
or impositions if being diligently contested in good faith and by appropriate
proceedings, provided that, with respect to delinquent taxes or impositions,
either (a) each such Lien is released or discharged of record or fully insured
over by the title insurance company issuing the applicable Title Insurance
Policy (including be subsequent endorsement) within 60 days of its creation, or
(b) Borrower deposits with Lender, by the expiration of such 60-day period, an
amount equal to 125% of the dollar amount of such Lien or a bond in the
aforementioned amount from such surety, and upon such terms and conditions, as
is reasonably satisfactory to Lender, as security for the payment or release of
such Lien;

(iv) mechanics’, materialmen’s, environmental or similar Liens or other Liens
created by operation of law and judgment liens or lis pendens, in each case
securing obligations that are not overdue for a period of more than 30 days or
that are being diligently contested in good faith and by appropriate
proceedings, provided that no such Lien is in imminent danger of foreclosure and
provided further that either (a) each such Lien is released or discharged of
record or fully insured over by the title insurance company issuing the
applicable Title Insurance Policy (including by subsequent endorsement) within
30 days of its creation, or (b) Borrower deposits with Lender, by the expiration
of such 30-day period, an amount equal to 125% of the dollar amount of such Lien
or a bond in the aforementioned amount from such surety, and upon such terms and
conditions, as is reasonably satisfactory to Lender, as security for the payment
or release of such Lien;

 

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(v) all Leases (including all subleases, licenses, sublicenses and concessions
by the Tenant of any Borrower, as landlord, lessor or licensor, which are
permitted under the terms of any Lease with Borrower) and all Multi-Site
Agreements, and all rights of existing and future Tenants as tenants only
(including the rights of any subtenant or licensee deriving rights through any
such Tenant) pursuant to written Leases, and all rights of existing and future
occupants under all Multi-Site Agreements;

(vi) any interest or title of a lessor under any lease with respect to assets
other than the Land or Improvements as defined in the Mortgage (including
without limitation, leases of furniture, furnishings, fixtures, equipment and
other personal property) entered into by a Borrower in the ordinary course of
business and covering only the assets so leased;

(vii) all other Liens on personal property Collateral existing as of the date
hereof or hereafter incurred in connection with the acquisition thereof
(including Liens on ABL Collateral);

(viii) all bonds, deposits and security instruments or other Liens required or
imposed by any Governmental Authority in connection with the use, occupancy or
operation of the Property in the ordinary course of business of a Borrower, so
long as such Liens do not arise from the failure of Borrower to pay taxes or
other amounts payable with respect to the Properties;

(ix) all Material Agreements and all other agreements and licenses in connection
the ordinary use and operation of the Properties, in each case, solely to the
extent the same do not grant a Lien on the Land or the Improvements (as defined
in the Mortgage) for the purpose of securing Debt; and

(x) any financing of a Tenant’s leasehold interest under its Lease.

“Person” means any natural person, corporation, limited liability company,
partnership, joint venture, estate, trust, unincorporated association or
Governmental Authority and any fiduciary acting in such capacity on behalf of
any of the foregoing.

“Plan Assets” means assets of any (i) employee benefit plan (as defined in
Section 3(3) of ERISA) subject to Title I of ERISA, (ii) plan (as defined in
Section 4975(e)(1) of the Code) subject to Section 4975 of the Code, or
(iii) governmental plan (as defined in Section 3(32) of ERISA) subject to
federal, state or local laws, rules or regulations substantially similar to
Title I of ERISA or Section 4975 of the Code.

“Policies” means each insurance policy covering any of the Properties as more
particularly described in the Officer’s Certificate.

“Prime Rate” means the “prime rate” published in the “Money Rates” section of
The Wall Street Journal. If The Wall Street Journal ceases to publish the “prime
rate,” then Lender shall select an equivalent publication that publishes such
“prime rate,” and if such “prime rate” is no longer generally published or is
limited, regulated or administered by a governmental or quasi-governmental body,
then Lender shall reasonably select a comparable interest rate index.

 

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“Prime Rate Loan” means the Loan at such time as interest thereon accrues at a
rate of interest equal to the Prime Rate plus the Prime Rate Spread.

“Prime Rate Spread” means, in connection with any conversion of the Loan into to
a Prime Rate Loan, the amount obtained by subtracting (x) the Prime Rate,
determined as of the Interest Determination Date for which LIBOR was last
available, from (y) the per annum Interest Rate payable with respect to the
applicable Note while the Loan was accruing interest at LIBOR, determined as of
the Interest Determination Date for which LIBOR was last available; provided,
however, that if the amount so obtained is a negative number, then the Prime
Rate Spread shall be zero.

“Principal Indebtedness” means the principal balance of the Loan outstanding
from time to time.

“Prohibited Change of Control” means the failure of each Borrower to be,
directly or indirectly, wholly owned by Guarantor.

“Properties” means the real property identified on the Property List, as
described in greater detail in the applicable Mortgages, together with all
buildings and other improvements thereon (other than leasehold improvements that
are the property of a Tenant under a Lease at a Property) and all personal
property owned by Borrower and encumbered by the Mortgages, together with all
rights pertaining to such property; and “Property” means an individual property
included in the Properties or all Properties collectively, as the context may
require. For the avoidance of doubt, the Properties do not include the ABL
Collateral.

“Property List” means the list of real properties certified to Lender in the
Officer’s Certificate.

“Property Material Adverse Effect” means a material adverse effect upon
(i) Borrower’s title to any individual Property, (ii) Lender’s ability to
enforce and derive the principal benefit of the security intended to be provided
by any Mortgage and/or the other Loan Documents, or (iii) the use or value of
any individual Property.

“Proportional Amount” has the meaning set forth in Section 7.27(a).

“REA” means any reciprocal access, easement, construction and/or operating or
similar agreements with respect to the individual Properties in effect as of the
New Closing Date.

“Release” with respect to any Hazardous Substance means any release, deposit,
discharge, emission, leaking, leaching, spilling, seeping, migrating, injecting,
pumping, pouring, emptying, escaping, dumping, disposing or other movement of
Hazardous Substances into the indoor or outdoor environment (including the
movement of Hazardous Substances through ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata), and “Released” has the
meaning correlative thereto.

 

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“Release Price” means, with respect to the release of any individual Property,
the greater of (a) the proceeds actually received by Borrower from the sale of
such Property, net of the documented reasonable and customary closing costs
actually incurred by Borrower in connection with such sale; and (b) 100% of such
Property’s Allocated Loan Amount.

“Rent Roll” means the rent roll certified to Lender in the Officer’s
Certificate.

“Replacement Qualifications” has the meaning set forth in Section 2.2(a).

“Representative Borrower” has the meaning set forth in Section 7.04(a).

“SAC Conditions” means, collectively, the visible or surface level presence of
materials and/or the existence of hydraulic lifts, oil and fluid separators,
storage tanks and all other machinery and equipment, in each case, solely to the
extent related to, used in or incidental to the operation of a Sears Auto Center
facility.

“Sears” has the meaning set forth in the introductory paragraph.

“Second Amended Loan Agreement” has the meaning set forth in the recitals to
this Agreement.

“Second Delayed Origination Fee” means, as of the date of determination, an
amount equal to 2.00% times the Principal Indebtedness outstanding under Note A.

“Service” means the Internal Revenue Service or any successor agency thereto.

“Servicer” means the entity or entities (if any) appointed by Lender from time
to time to serve as servicer and/or special servicer of the Loan. If at any time
no entity is so appointed, the term “Servicer” shall be deemed to refer to
Lender.

“Severed Loan Documents” has the meaning set forth in Section 6.2(g).

“Survey” means, with respect to each Property, a current land title survey
thereof, certified to Borrower, the title company issuing the applicable Title
Insurance Policy and Lender and their respective successors and assigns, in form
and substance reasonably satisfactory to Lender.

“Taxes” means all real estate and personal property taxes, assessments, fees,
taxes on rents or rentals, water rates or sewer rents, facilities and other
governmental, municipal and utility district charges or other similar taxes or
assessments now or hereafter levied or assessed or imposed against the
Properties or Borrower with respect to the Properties or rents therefrom or that
may become Liens upon any of the Properties, without deduction for any amounts
reimbursable to Borrower by third parties.

“Tenant” means any Person liable by contract or otherwise to pay monies
(including a percentage of gross income, revenue or profits) pursuant to a
Lease.

“Threshold Amount” means, with respect to each Property, $1,000,000.

 

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“Third-Party Lease” means any Lease that covers all or any portion of any
Property with a Tenant that is not an affiliate of Borrower.

“Title Insurance Policy” means, with respect to each Property, an American Land
Title Association lender’s title insurance policy or a comparable form of
lender’s title insurance policy approved for use in the applicable jurisdiction,
in form and substance reasonably satisfactory to Lender.

“Transfer” means the sale or other whole or partial conveyance of all or any
portion of any of the Collateral or any direct or indirect interest therein to a
third party, including any grant made after the Original Closing Date of any
purchase options, rights of first refusal, rights of first offer or similar
rights in respect of any portion of the Collateral or the subjecting of any
portion of the Collateral to restrictions on transfer; except that the
conveyance (including assignment and subleasing) of a space lease at any
Property by a Borrower in accordance herewith or by a Tenant or subtenant or
licensee in accordance with the terms and conditions of any Lease or any
Multi-Site Agreement shall not constitute a Transfer.

“Use” means, with respect to any Hazardous Substance, the generation,
manufacture, processing, distribution, handling, possession, use, discharge,
placement, treatment, disposal, disposition, removal, abatement, recycling or
storage of such Hazardous Substance or transportation of such Hazardous
Substance.

“Waste” means any intentional and material abuse or destructive use (whether by
action or inaction) of any Property.

(b) Rules of Construction. Unless otherwise specified, (i) all references to
sections, schedules and exhibits are to sections, schedules and exhibits in or
to this Agreement, (ii) all meanings attributed to defined terms in this
Agreement shall be equally applicable to both the singular and plural forms of
the terms so defined, (iii) “including” means “including, but not limited to”,
(iv) “mortgage” means a mortgage, deed of trust, deed to secure debt or similar
instrument, as applicable, and “mortgagee” means the secured party under a
mortgage, deed of trust, deed to secure debt or similar instrument, (v) the
words “hereof,” “herein,” “hereby,” “hereunder” and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision, article, section or other subdivision of this Agreement,
(vi) unless otherwise indicated, all references to “this Section” shall refer to
the Section of this Agreement in which such reference appears in its entirety
and not to any particular clause or subsection or such Section, (vii) terms used
herein and defined by cross-reference to another agreement or document shall
have the meaning set forth in such other agreement or document as of the
Original Closing Date, notwithstanding any subsequent amendment or restatement
of or modification to such other agreement or document. Except as otherwise
indicated, all accounting terms not specifically defined in this Agreement shall
be construed in accordance with GAAP, as the same may be modified in this
Agreement and (viii) all references to “foreclosure’ herein shall include
acceptance of a deed-in-lieu of foreclosure.

 

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ARTICLE I

GENERAL TERMS

Section 1.1. The Loan; Fees; Term.

(a) As of immediately prior to the New Closing Date, the outstanding Principal
Indebtedness was $592,553,155.54. On the New Closing Date, subject to the terms
and conditions of this Agreement, Lender shall make an additional advance to
Borrower in the amount of $186,527,682.14 (the “Additional Advance”) such that
the Principal Indebtedness immediately following the Additional Advance will be
$779,080,837.68. The Loan (which, for the avoidance doubt, includes the
Additional Advance) shall be represented by the Notes and shall bear interest as
described in this Agreement at a per annum rate equal to the Interest Rate.
Interest payable hereunder shall be computed on the basis of a 360-day year and
the actual number of days elapsed in the related Interest Accrual Period. On the
New Closing Date, Borrower shall (i) pay to Cascade an extension and origination
fee in an amount equal to $466,319.21, (ii) pay to the Initial Lenders an
extension and origination fee in an amount equal to $1,146,198.33, and
(iii) reimburse each Lender for any reasonable and documented out-of-pocket
costs and expenses incurred by such Lender in connection with the amendment and
restatement of this Agreement and any other matters relating to the Loan. In
addition, (A) to the extent any portion of the Principal Indebtedness
outstanding under Note A remains outstanding on December 4, 2018, Borrower shall
pay to holder of Note A the Delayed Origination Fee on or before December 11,
2018 and (B) to the extent any portion of the Principal Indebtedness outstanding
under Note A remains outstanding on June 4, 2019, Borrower shall pay to holder
of Note A the Second Delayed Origination Fee on or before June 11, 2019.

(b) In the event that Lender determines in good faith as of any Interest
Determination Date that adequate and reasonable means do not exist for
ascertaining LIBOR, then the Loan shall be converted to a Prime Rate Loan
effective as of the first day of the Interest Accrual Period corresponding to
such Interest Determination Date and Lender shall give notice thereof to
Borrower (which may be by telephone or e-mail, followed promptly by written
notice) prior to the next succeeding Payment Date. Except as provided in this
Section, the Loan shall at all times be a LIBOR Loan. In no event shall Borrower
have the right to convert a LIBOR Loan to a Prime Rate Loan.

(c) The Loan is secured by the Collateral pursuant to the Mortgages and the
other Loan Documents.

Section 1.2. Interest and Principal.

(a) On each Payment Date, Borrower shall pay to Lender interest in arrears on
each Note for the applicable Interest Accrual Period at the applicable Interest
Rate (except that in each case, interest shall be payable on the Indebtedness,
including due but unpaid interest, at the Default Rate with respect to any
portion of such Interest Accrual Period falling during the continuance of an
Event of Default).

 

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(b) The Loan may be prepaid, in whole or in part, at any time and from time to
time, to the extent not prohibited by any agreement governing other Debt of the
Guarantor and its subsidiaries. All prepayments or repayments of the Loan
permitted or required hereunder shall be applied toward the reduction of the
Principal Indebtedness among the Notes and/or the Note Components in the
following order of priority: (i) first to the holder of Note A, until the
Principal Indebtedness outstanding under Note A is equal to zero; and (ii) any
remaining amounts to the holder of Note B. The Loan must be repaid in connection
with each release of a Property pursuant to Section 1.6(a), in the amount
required thereby. The entire outstanding principal balance of the Loan together
with interest through the Maturity Date and all other amounts then due under the
Loan Documents, shall be due and payable by Borrower to Lender on the Maturity
Date. Interest will cease to accrue on any portion of the Principal Indebtedness
that has been repaid to Lender.

(c) Any payments of interest and/or principal not paid when due hereunder shall
bear interest at the applicable Default Rate.

(d) Any and all payments by or on account of any obligation of Borrower
hereunder shall be made without deduction or withholding for any taxes, except
as required by law; provided that to the extent any deduction or withholding is
so required by law, Borrower shall be entitled to so deduct or withhold the
amounts required to be withheld or deducted from any such payment.

Section 1.3. Method and Place of Payment. Except as otherwise specifically
provided in this Agreement, all payments under this Agreement and the Notes
shall be made to Lender not later than 1:00 p.m., New York City time, on the
date when due and shall be made in lawful money of the United States of America
by wire transfer in federal or other immediately available funds to the account
specified from time to time by Lender. Any funds received by Lender after such
time shall be deemed to have been paid on the next succeeding Business Day.
Lender shall notify Borrower in writing of any changes in the account to which
payments are to be made. If the amount received from Borrower is less than the
sum of all amounts then due and payable hereunder, such amount shall be applied,
at Lender’s sole discretion, either toward the components of the Indebtedness
(e.g., interest, principal and other amounts payable hereunder) and the Notes
and Note Components, in such sequence as Lender shall elect in its sole
discretion, or toward the payment of Property expenses.

Section 1.4. Taxes; Regulatory Change. Borrower shall indemnify Lender and hold
Lender harmless from and against any present or future stamp, documentary or
other similar taxes or charges now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority solely by reason of the
execution and delivery of the Loan Documents and any consents, waivers,
amendments and enforcement of rights under the Loan Documents, other than any
such taxes or charges imposed as a result of a present or former connection
between Lender and the jurisdiction imposing such tax or charges (other than
connections arising from the Lender having executed, delivered, become a party
to, performed its obligations under, received payments under, received or
perfected a security interest under, engaged in any other transaction pursuant
to or enforced any Loan Document, or sold or assigned an interest in the Loan or
any Loan Document).

 

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Section 1.5. Release. Upon (a) payment in full of the Indebtedness or (b) in
connection with the Transfer of a Property permitted by Section 5.2 and upon
making the payment required pursuant to Section 1.6(a), Lender shall execute
instruments prepared by Borrower and reasonably satisfactory to Lender, which,
at Borrower’s election and at Borrower’s sole cost and expense: either, (i) in
the case of a repayment of the Indebtedness in full (w) release and discharge
all Liens on all Collateral securing payment of the Indebtedness (subject to
Borrower’s obligation to pay any associated fees and expenses), or (x) assign
such Liens (and the Loan Documents) to a new lender designated by Borrower; or
(ii) in the case of the Transfer of a Property permitted by Section 5.2 and upon
making the payment required under Section 1.6, (A) release and discharge the
Lien of the applicable Mortgage on the Property subject to a Transfer (which may
be in the form of a partial release of mortgage if such Mortgage covers multiple
Properties) (the date of the recording of such release and discharge of the Lien
of the applicable Mortgage on the Property, the “Release Date”) and (B) if
following such Transfer, any Borrower (other than Sears or Kmart) that is not
then the owner of any Property requests a release from being “Borrower” under
the Loan Documents, release such Borrower from its obligations hereunder and
under the other Loan Documents and release and discharge all Liens on all
Collateral of such Borrower securing payment of the Indebtedness. All Liens on
Collateral constituting personal property (but expressly excluding the Land and
Improvements as defined in the Mortgage) shall be automatically released upon
any transfer of such Collateral permitted under Section 5.2 and Lender shall,
upon Borrower’s request and at Borrower’s expense, execute such further
documents reasonably acceptable to Lender as Borrower may reasonably request to
evidence such release. Any release or assignment provided by Lender pursuant to
this Section shall be without recourse, representation or warranty of any kind.

Section 1.6. Individual Property Releases.

(a) Provided that no Event of Default is then continuing and all amounts then
due and owing to Lender have been paid in full, Borrower shall have the right,
at its option, on reasonable prior written notice to Lender, to obtain the
release of one or more of the Properties from the Liens of the Loan Documents in
connection with an arm’s-length Transfer of such Property, provided that the
following conditions shall have been satisfied:

 

  (i) Borrower shall make a payment to Lender, as repayment of the Indebtedness,
in an amount equal to the applicable Release Price, which payment shall be
accompanied by all interest and fees thereon through the end of the applicable
Interest Accrual Period and shall be applied to the Notes and Note Components in
the sequence set forth in Section 1.2(b);

 

  (ii) Borrower shall reimburse Lender for any actual out-of-pocket costs and
expenses incurred by Lender in connection with this Section 1.6 (including the
reasonable fees and expenses of legal counsel).

(b) Upon satisfaction of the requirements set forth in this Section 1.6, Lender
will execute and deliver to Borrower such instruments as required pursuant to
Section 1.5.

Section 1.7. Collateral for the Loan. Notwithstanding anything to the contrary
contained herein, but subject to Section 7.27, the entirety of the Indebtedness
evidenced by the Notes shall be secured by each of the Mortgages recorded by
Lender against the Properties.

 

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ARTICLE II

POST-CLOSING DELIVERIES

Section 2.1. Post-Closing Deliveries.

(a) Within 15 Business Days following the New Closing Date, Borrower shall cause
to be delivered to Lender, at Borrower’s sole cost and expense, a date down and
modification endorsement to each Title Insurance Policy covering the Original
Properties insuring the continued priority of the related Mortgage following the
delivery of an amendment to such Mortgage (each, a “Mortgage Amendment”). Within
30 days following request by Lender, Borrower shall cause to be delivered to
Lender, at Borrower’s sole cost and expense, a legal opinion, in form and
substance reasonably satisfactory to Lender, as to the enforceability of each
Mortgage Amendment under the laws of the state in which the applicable
individual Property is located, and certain other matters covered by local
counsel opinions previously delivered to Lender in connection with the Loan (it
being understood that the formulation of such opinions shall be subject to the
policies of the counsel providing such opinions and qualifications required by
the various jurisdictions in which the Properties are located).

(b) If Lender shall receive comments from the title company that issued the
Title Insurance Policies, regarding the enforceability, validity, effectiveness
or insurability of each Mortgage for the Original Properties in light of the
advances made prior to the New Closing Date and on the New Closing Date pursuant
to the terms hereof, Borrower shall cooperate with Lender in the preparation,
execution and recording of amendments to such Mortgages (and/or other
instruments reasonably required) necessitated by such comments and the delivery
of an appropriate mortgage modification endorsement to the applicable Title
Insurance Policy, all at Borrower’s sole cost and expense.

(c) As a material inducement to Lender making the Loan, Borrower agrees that it
(x) shall deliver Title Insurance Policies acceptable to Lender for each of the
Additional Properties and (y) shall use commercially reasonable efforts to
deliver a legal opinion as to the enforceability of each Mortgage securing an
Additional Property under the laws of the state in which the applicable
individual Additional Property is located, and certain other matters covered by
local counsel opinions previously delivered to Lender in connection with the
Loan (it being understood that the formulation of such opinions shall be subject
to the policies of the counsel providing such opinions and qualifications
required by the various jurisdictions in which the Properties are located), in
each case, on or before the 15th Business Day following the New Closing Date or
such later date as to which Lender may grant its consent, not to be unreasonably
withheld, delayed or conditioned (so long as Borrower is diligently pursuing the
satisfaction of such items).

 

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(d) If Lender shall receive comments to any Mortgage from local counsel in
connection with the delivery of the opinions delivered pursuant to
Section 2.1(c), or from the title company issuing the Title Insurance Policies,
in each case, regarding the enforceability, validity, effectiveness or
insurability of such Mortgage, Borrower shall cooperate with Lender in the
preparation, execution and recording of any amendments to such Mortgages
necessitated by such comments and the delivery of an appropriate mortgage
modification endorsement to the applicable Title Insurance Policy, all at
Borrower’s sole cost and expense.

ARTICLE III

REPRESENTATIONS

Each individual Borrower represents to Lender with respect to itself and each
other Borrower that, as of the New Closing Date, except as set forth in the
Exception Report:

Section 3.1. Organization.

(a) Each Borrower is duly organized, validly existing and in good standing under
the laws of the of its jurisdiction of organization, and is in good standing in
each other jurisdiction where ownership of the Properties requires it to be so,
and each Borrower has all power and authority under such laws and its
organizational documents and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted at the
Properties.

(b) The organizational chart contained in the Officer’s Certificate is true and
correct as of the date hereof.

Section 3.2. Authorization. Borrower has the power and authority to enter into
this Agreement and the other Loan Documents, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated by the
Loan Documents and has by proper action duly authorized the execution and
delivery of the Loan Documents.

Section 3.3. No Conflicts. Neither the execution and delivery of the Loan
Documents, nor the consummation of the transactions contemplated therein, nor
performance of and compliance with the terms and provisions thereof will
(i) violate or conflict with any provision of its formation and governance
documents, (ii) violate any Legal Requirement, regulation (including Regulation
U, Regulation X or Regulation T), order, writ, judgment, injunction, decree or
permit applicable to it where, except in the case of Regulation U, Regulation X
or Regulation T, such violation is not reasonably be expected to result in a
Material Adverse Effect, (iii) violate or conflict with contractual provisions
of, or cause an event of default under, any indenture, loan agreement, mortgage,
contract or other Material Agreement to which Guarantor, any of its direct or
indirect subsidiaries or any Borrower is a party or may be bound except where
such violation or conflict is not reasonably be expected to result in a Material
Adverse Effect, or (iv) result in or require the creation of any Lien or other
charge or encumbrance upon or with respect to the Collateral in favor of any
Person other than Lender. No reciprocal easement agreement or similar agreement
to which any of the Properties are subject requires Borrower to obtain the
consent of any party thereto in connection with the making of the Loan or the
recording of the Mortgages.

 

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Section 3.4. Consents. No consent, approval, authorization or order of, or
qualification with, any court or Governmental Authority is required in
connection with the execution, delivery or performance by Borrower of this
Agreement or the other Loan Documents, except for any of the foregoing that have
already been obtained and for the filings to perfect any security interest
granted to Lender or its agents or representatives under the Loan Documents.

Section 3.5. Enforceable Obligations. This Agreement and the other Loan
Documents have been duly executed and delivered by Borrower and constitute
Borrower’s legal, valid and binding obligations, enforceable in accordance with
their respective terms, subject to bankruptcy, insolvency and similar laws of
general applicability relating to or affecting creditors’ rights and to general
equity principles (whether enforcement is sought by proceedings in equity or at
law), and further subject to any requirements in the various jurisdictions in
which the Properties are located with respect to the order of and requirements
for the realization on security, including any applicable so-called “security
first” and “one-action” or similar rules, requirements or limitations. The Loan
Documents to which Guarantor is a party have been duly executed and delivered by
Guarantor and constitute Guarantor’s legal, valid and binding obligations,
enforceable in accordance with their respective terms, subject to bankruptcy,
insolvency and similar laws of general applicability relating to or affecting
creditors’ rights and to general equity principles (whether enforcement is
sought by proceedings in equity or at law), and further subject to any
requirements in the various jurisdictions in which the Properties are located
with respect to the order of and requirements for the realization on security,
including any applicable so-called “security first” and “one-action” or similar
rules, requirements or limitations. The Loan Documents are not subject to any
right of rescission, offset, abatement, counterclaim or defense by Borrower or
Guarantor, including the defense of usury or fraud

Section 3.6. No Default. No Default or Event of Default will exist immediately
following the making of the Loan.

Section 3.7. Payment of Taxes. Borrower has filed, or caused to be filed, all
material tax returns (federal, state, local and foreign) required to be filed
(taking into account any applicable extensions) and paid all material amounts of
taxes due (including interest and penalties) except for taxes that are not yet
delinquent and taxes the amount or validity of which are currently being
contested in good faith by appropriate proceedings and has paid all other taxes,
fees, assessments and other governmental charges (including mortgage recording
taxes, documentary stamp taxes and intangible taxes) owing by it necessary to
preserve the Liens in favor of Lender.

Section 3.8. Compliance with Law. Except as would not reasonably be expected to
result in a Material Adverse Effect, to the knowledge of Borrower, Borrower,
each Property and the uses thereof comply with all applicable material Insurance
Requirements and Legal Requirements, including building and zoning ordinances
and codes (taking into account all grandfathering provisions thereof). Borrower
is not in default or violation of any order, writ, injunction, decree or demand
of any Governmental Authority with respect to any Property the violation of
which could result in a Material Adverse Effect. There has not been committed by
or on behalf of Borrower or, to Borrower’s knowledge, any other person in
occupancy of or involved with the operation or use of any Property, any act or
omission affording any federal Governmental Authority or any state or local
Governmental Authority the right of forfeiture as against any Property or any
portion thereof or any monies paid in performance of its obligations under any
of the Loan Documents. Neither Borrower nor Guarantor has purchased any portion
of the Properties with proceeds of any illegal activity.

 

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Section 3.9. ERISA. Except as would not be otherwise expected to result in a
Material Adverse Effect, neither Borrower nor any ERISA Affiliate of Borrower
(a) has incurred any liability under Title IV of ERISA other than the payment of
premiums to the Pension Benefit Guaranty Corporation, none of which are overdue,
or (b) failed to satisfy the requirements of Section 302(a) of ERISA and
Section 412(a) of the Code with respect to any employee benefit plan (as defined
in Section 3(3) of ERISA) subject to Title IV or Section 302 of ERISA or
Section 412 of the Code The consummation of the transactions contemplated by
this Agreement will not constitute or result in any non-exempt prohibited
transaction under Section 406 of ERISA, Section 4975 of the Code or
substantially similar provisions under federal, state or local laws, rules or
regulations, assuming that the source of funds used by Lender for the Loan does
not constitute Plan Assets.

Section 3.10. Investment Company Act. Borrower is not an “investment company”,
or a company “controlled” by an “investment company”, registered or required to
be registered under the Investment Company Act of 1940, as amended.

Section 3.11. [Reserved].

Section 3.12. Other Debt. Borrower does not have outstanding any Debt other than
Permitted Debt.

Section 3.13. Litigation. There are no actions, suits, proceedings, arbitrations
or governmental investigations by or before any Governmental Authority or other
court or agency now filed or otherwise pending, and to Borrower’s knowledge
there are no such actions, suits, proceedings, arbitrations or governmental
investigations threatened in writing against Borrower, Guarantor or any of the
Collateral, in each case, (a) with respect to any of the Loan Documents or any
of the transactions contemplated hereby or thereby or (b) that would reasonably
be expected to have a Material Adverse Effect.

Section 3.14. Leases. Borrower has delivered to Lender true and complete copies
of all Leases pursuant to which any Borrower is the lessor at any of the
Properties, including all modifications and amendments thereto, which are in
Borrower’s possession. Except for Borrower or affiliates of Borrower occupying
all or any part of any Property, no person has any possessory interest in any of
the Properties or right to occupy the same except under and pursuant to the
provisions of the Leases or Permitted Encumbrances. The Rent Roll is accurate
and complete in all material respects, and the applicable Borrower that owns the
Property covered by each Lease on the Rent Roll is the lessor under such Lease.
Except as indicated on the Rent Roll or Exception Report, no security deposits
are being held by Borrower (including bonds or letters of credit being held in
lieu of cash security deposits) and no Tenant or other party has any option,
right of first refusal or similar preferential right to purchase all or any
portion of any Property. Subject to the provisions of Section 4.7(a) and except
as set forth in the Exception Report, upon foreclosure on any Property, with
respect to each Lease at such Property

 

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either (i) Lender shall automatically succeed to the rights and obligations of
the landlord under such Leases (ii) or such Leases may be terminated in
accordance with any early termination provisions within such Lease. Lender
agrees, at Borrower’s sole cost and expense, to provide a subordination,
attornment and non-disturbance agreement in form and substance reasonably
acceptable to Lender if expressly required pursuant to any Lease. No material
amounts are payable by Borrower to any Tenant under a Lease (other than in
connection with common area maintenance and other routine reconciliations) and
no Tenant has the right to require Borrower to perform or finance any Material
Alterations or improvements to the space covered by its Lease. Notwithstanding
any provision contained in this Agreement to the contrary, Leases may contain
(and the same shall be expressly permitted hereunder without notice to or the
consent of Lender, except to the extent required pursuant to Section 4.7(b)) the
rights of tenants to receive reimbursement, contribution or allowance by
landlord for tenant improvements or rent concessions or abatements, in each case
as set forth in the Exception Report.

Section 3.15. Full and Accurate Disclosure. No statement of fact heretofore
delivered by Guarantor or Borrower to Lender in writing with respect to the
Properties or the Loan contains any untrue statement of a material fact or omits
to state any material fact necessary to make statements contained therein not
misleading unless subsequently corrected (except that the foregoing
representation, as it relates to any Environmental Report, Title Insurance
Policy and zoning report delivered to Lender in connection with the closing of
the Loan, shall be limited to Borrower’s actual knowledge). To Borrower’s actual
knowledge, there is no fact, event or circumstance presently known to Borrower
that has intentionally not been disclosed to Lender that has had or could
reasonably be expected to result in a Material Adverse Effect.

Section 3.16. Use of Loan Proceeds. No part of the proceeds of the Loan will be
used for the purpose of purchasing or acquiring any “margin stock” within the
meaning of Regulations T, U or X of the Board of Governors of the Federal
Reserve System or for any other purpose that would be inconsistent with such
Regulations T, U or X or any other Regulations of such Board of Governors, or
for any purpose prohibited by Legal Requirements or by the terms and conditions
of the Loan Documents. The Loan is solely for the general corporate purposes of
Borrower, Guarantor and the subsidiaries and no portion thereof shall be used
for personal, consumer, household or similar purposes.

Section 3.17. [Reserved]

Section 3.18. Title. Borrower owns good, valid and insurable title to the
Properties and good, valid and transferrable title to any other Collateral, in
each case free and clear of all Liens whatsoever except the Permitted
Encumbrances. No Property is subject to a Lien (other than a Permitted
Encumbrance described in clause (i) of the definition thereof) that secures Debt
for borrowed money (expressly excluding all leases of furnishings, fixtures,
equipment and other personal property). The Mortgages, when properly recorded in
the appropriate records, together with any Uniform Commercial Code financing
statements required to be filed in connection therewith, will create (i) valid,
perfected first priority Liens on the Properties, enforceable as such against
creditors of and purchasers from Borrower and subject only to Permitted
Encumbrances and any requirements in the various jurisdictions in which the
Properties are located with respect to the order of and requirements for the
realization on

 

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security, including any applicable so-called “security first” and “one-action”
or similar rules, requirements or limitations and (ii) perfected Liens in and to
all personalty constituting Collateral, all in accordance with the terms
thereof, in each case subject only to any applicable Permitted Encumbrances and
any requirements in the various jurisdictions in which the Properties are
located with respect to the order of and requirements for the realization on
security, including any applicable so-called “security first” and “one-action”
or similar rules, requirements or limitations. The Permitted Encumbrances do
not, individually or in the aggregate, result in a Material Adverse Effect.
Subject to clause (v) of the definition of Permitted Encumbrances, there are no
claims for payment for work, labor or materials affecting the Properties that
are or may become a Lien prior to, or of equal priority with, the Liens created
by the Loan Documents.

Section 3.19. No Encroachments. Except as set forth on the Surveys, all of the
improvements on each Property lie wholly within the boundaries and building
restriction lines of the such Property, and no improvements on adjoining
property encroach upon any Property, and no easements or other encumbrances upon
any Property encroach upon any of the improvements, except to the extent the
same is not reasonably be expected to result in a Material Adverse Effect.

Section 3.20. Physical Condition.

(a) Except as would not reasonably be expected to result in a Material Adverse
Effect, each Property and all building systems (including sidewalks, storm
drainage system, roof, plumbing system, HVAC system, fire protection system,
electrical system, equipment, elevators, exterior sidings and doors, irrigation
system and all structural components) are free of all material damage and are in
good condition, order and repair in all respects material to such Property’s
use, operation and value, subject to ordinary wear and tear and any maintenance,
restoration, repairs and/or replacements that are diligently being prosecuted to
completion in accordance with Borrower’s ordinary course of business.

(b) Except as would not reasonably be expected to result in a Material Adverse
Effect, Borrower is not aware of any material structural or other material
defect or damages in any of the Properties, whether latent or otherwise.

(c) Borrower has not received written notice, and has not received written
notice that any Tenant has received written notice from any insurance company or
bonding company of any defects or inadequacies in any of the Properties that
would, alone or in the aggregate, adversely affect in any material respect the
insurability of the same or cause the imposition of extraordinary premiums or
charges thereon or of any termination or threatened termination of any policy of
insurance or bond.

Section 3.21. Reserved.

Section 3.22. Management. No property management agreements to which Borrower or
any affiliate is a party are in effect with respect to the Properties.

Section 3.23. Condemnation. No Condemnation has been commenced or, to Borrower’s
knowledge, is contemplated or threatened with respect to all or any portion of
any of the Properties or for the relocation of roadways providing access to any
of the Properties to the extent that such Condemnation would reasonably be
expected to cause a Material Adverse Effect.

 

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Section 3.24. Utilities and Public Access. Each Property has adequate rights of
access to dedicated public ways (and makes no material use of any means of
access or egress that is not pursuant to such dedicated public ways or recorded,
irrevocable rights-of-way or easements) and is adequately served by all public
utilities, including water and sewer (or well and septic), necessary to the
continued use and enjoyment of such Property as presently used and enjoyed.

Section 3.25. Environmental Matters. To Borrower’s knowledge, except as would
not reasonably be expected to result in a Property Material Adverse Effect (it
being agreed that the presence of SAC Conditions shall not, in and of
themselves, constitute a Property Material Adverse Effect):

 

  (i) No Hazardous Substances are located at, on, in or under any of the
Properties or have been handled, manufactured, generated, stored, processed, or
disposed of at, on, in or under, or have been Released from, any of the
Properties. Without limiting the foregoing, there is not present at, on, in or
under any of the Properties, any PCB-containing equipment not maintained in
compliance with Environmental Laws), asbestos or asbestos containing materials
not maintained in compliance with Environmental Laws, underground storage tanks
or surface impoundments for any Hazardous Substance not maintained in compliance
with Environmental Laws, lead in drinking water (except in concentrations that
comply with all Environmental Laws, or lead-based paint. There is no threat of
any Release of any Hazardous Substance migrating to any of the Properties.

 

  (ii) Each Property is in compliance in all material respects with all
Environmental Laws applicable to such Property (which compliance includes, but
is not limited to, the possession of, and compliance with, all environmental,
health and safety permits, approvals, licenses, registrations and other
governmental authorizations required in connection with the ownership and
operation of such Property under all Environmental Laws). No Environmental Claim
is pending with respect to any of the Properties, nor is any threatened, nor are
there any consent decrees or other decrees, consent orders, administrative
orders or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to Borrower or any of the
Properties.

 

  (iii) No Liens are presently recorded with the appropriate land records under
or pursuant to any Environmental Law with respect to any of the Properties and,
to Borrower’s knowledge, no Governmental Authority has been taking any action to
subject any of the Properties to Liens under any Environmental Law.

 

  (iv) There are no Phase I Environmental Reports completed within the last two
years in the possession of Borrower in relation to any of the Properties that
have not been made available to Lender.

 

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Section 3.26. Assessments. There are no pending or, to Borrower’s knowledge,
proposed special or other assessments for public improvements or otherwise
affecting any of the Properties, nor are there any contemplated improvements to
any of the Properties that may result in such special or other assessments, to
the extent the same would reasonably be expected to result in a Material Adverse
Effect.

Section 3.27. No Joint Assessment. Borrower has not suffered, permitted or
initiated the joint assessment of any of the Properties (i) with any other real
property constituting a separate tax lot, or (ii) with any personal property, or
any other procedure whereby the Lien of any Taxes that may be levied against
such other real property or personal property shall be assessed or levied or
charged to any of the Properties as a single Lien.

Section 3.28. Separate Lots. No portion of any of the Properties is part of a
tax lot that also includes any real property that is not Collateral.

Section 3.29. Permits; Certificate of Occupancy. Borrower has obtained all
material Permits necessary for the present use and operation of each Property.
The uses being made of each Property are in conformity in all material respects
with the certificate of occupancy (if any) and/or Permits for such Property and
any other restrictions, covenants or conditions affecting such Property.

Section 3.30. Flood Zone. None of the improvements on any of the Properties is
located in an area identified by the Federal Emergency Management Agency or the
Federal Insurance Administration as a “100 year flood plain” or as having
special flood hazards (including Zones A and V), or, to the extent that any
portion of any of the Properties is located in such an area, such Property is
covered by flood insurance in an amount equal to the maximum limit of coverage
available under the National Flood Insurance Program.

Section 3.31. Security Deposits. Borrower is in compliance in all material
respects with all Legal Requirements relating to security deposits.

Section 3.32. Insurance. Borrower has obtained insurance policies reflecting the
insurance coverages as set forth and certified to Lender in the Officer’s
Certificate, and such list accurately reflects the insurance coverage maintained
with respect to each of the Properties. All premiums on such insurance policies
required to be paid as of the New Closing Date have been paid for the current
policy period. No Person, including Borrower, has done, by act or omission,
anything that would impair the coverage of any such policy.

Section 3.33. No Dealings. Neither Borrower nor Guarantor is aware of any
unlawful influence on the assessed value of any of the Properties.

 

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ARTICLE IV

AFFIRMATIVE COVENANTS

Each Borrower covenants and agrees as follows with respect to itself, and each
other Borrower:

Section 4.1. Existence; Licenses. Each Borrower shall do or cause to be done all
things necessary to remain in existence. Borrower shall do or cause to be done
all things necessary to preserve, renew and keep in full force and effect all
rights, licenses, Permits, franchises, certificates of occupancy, consents,
approvals and other agreements necessary for the continued use and operation of
the Properties.

Section 4.2. Maintenance of Properties. Borrower shall cause each Property to be
maintained in good and safe working order and repair, reasonable wear and tear
excepted, and in keeping with the condition and repair of properties of a
similar use, value, age, nature and construction, all in accordance with each
Borrower’s customary practice in the ordinary course of business. Borrower shall
not knowingly use, maintain or operate any Property in any manner that
constitutes a public or private nuisance or that makes void, voidable, or
cancelable, or increases the premium of, any insurance then in force with
respect thereto. Subject to Section 5.9, no improvements or fixtures
constituting Collateral located at or on any Property shall be voluntarily
removed, demolished or materially altered without the prior written consent of
Lender (except for replacement of fixtures, furnishings, machinery, equipment
and other personal property in the ordinary course of Borrower’s business with
items of the same utility and of equal or greater value and sales or
dispositions of obsolete or economically unusable fixtures, furnishings,
machinery, equipment or other personal property no longer needed for the
operation of the applicable Property), and Borrower shall from time to time
make, or cause to be made, all reasonably necessary and desirable repairs,
renewals, replacements, betterments and improvements to the Properties in
accordance with Borrower’s reasonable business judgment. Borrower shall not make
any change in the use of any Property that would materially increase the risk of
fire or other hazard arising out of the operation of any Property, or do or
permit to be done thereon anything that may in any way impair the value of any
Property in any material respect or the Liens of the Mortgages or otherwise
cause or reasonably be expected to result in a Property Material Adverse Effect.
Borrower shall not install or permit to be installed on any Property any
underground storage tank except in accordance with Environmental Laws, and
solely in connection with the Sears Auto Centers. Borrower shall not, without
the prior written consent of Lender, permit any drilling or exploration for or
extraction, removal, or production of any minerals from the surface or the
subsurface of any Property, regardless of the depth thereof or the method of
mining or extraction thereof, subject to all Permitted Encumbrances.

Section 4.3. Compliance with Legal Requirements. Borrower shall materially
comply with (or cause all Tenants to materially comply with), and shall cause
each Property to materially comply with and be operated, maintained, repaired
and improved in material compliance with, all Legal Requirements, Insurance
Requirements and all material contractual obligations by which Borrower is
legally bound.

 

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Section 4.4. Impositions and Other Claims. Borrower shall timely pay and
discharge all Taxes and all other taxes, assessments and governmental charges
levied upon it, its income and its assets pursuant to Legal Requirements as and
when such taxes, assessments and charges are due and payable, as well as all
lawful claims for labor, materials and supplies or otherwise, subject to any
rights to contest contained in the definition of Permitted Encumbrances.
Borrower shall timely file all material federal, state and local tax returns and
other reports that it is required by law to file (taking into account any
applicable extensions). If any law or regulation applicable to Lender, any Note,
any of the Collateral or any of the Mortgages is enacted that deducts from the
value of property for the purpose of taxation any Lien thereon, or imposes upon
Lender the payment of the whole or any portion of the taxes or assessments or
charges or Liens required by this Agreement to be paid by Borrower, or changes
in any way the laws or regulations relating to the taxation of mortgages or
security agreements or debts secured by mortgages or security agreements or the
interest of the mortgagee or secured party in the property covered thereby, or
the manner of collection of such taxes, so as to affect any of the Mortgages,
the Indebtedness or Lender, then Borrower, upon demand by Lender, shall pay such
taxes, assessments, charges or Liens, or reimburse Lender for any amounts paid
by Lender.

Section 4.5. Access to Properties. Borrower shall permit, subject to the rights
of Tenants under Leases, agents, representatives and employees of Lender and the
Servicer to enter and inspect the Properties or any portion thereof, and/or
inspect, examine, audit and copy the books and records of Borrower to the extent
relating to the Properties (including all recorded data of any kind or nature,
regardless of the medium of recording), at such reasonable times so as not to
disrupt the normal business operations of Borrower as may be requested by Lender
upon reasonable advance notice allowing an opportunity for agents or
representatives of Borrower to be present. If an Event of Default is continuing,
the reasonable cost of such inspections, examinations, copying or audits shall
be borne by Borrower, including the reasonable cost of all follow up or
additional investigations, audits or inquiries deemed reasonably necessary by
Lender. The cost of such inspections, examinations, audits and copying, if not
paid for by Borrower within a reasonable time after presentment with
documentation of expenses in reasonable detail following demand, may be added to
the Indebtedness and shall bear interest thereafter until paid at the Default
Rate.

Section 4.6. Cooperate in Legal Proceedings. Except with respect to any claim by
Borrower against Lender, Borrower shall reasonably cooperate with Lender with
respect to any proceedings before any Governmental Authority that may in any way
affect the rights of Lender hereunder or under any of the Loan Documents and, in
connection therewith, Lender may, at its election, participate or designate a
representative to participate in any such proceedings.

Section 4.7. Leases.

(a) Borrower shall furnish Lender with copies of all Leases to which any
Borrower is a party entered into after the Original Closing Date. All new Leases
and renewals or amendments of Leases shall, subject in the case of renewals to
the terms and provisions of the applicable existing Lease (including any
conditions or requirements with respect to attornment, subordination and
attornment), be (i) entered into on terms and with Tenants that could not

 

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reasonably be expected to result in a Material Adverse Effect, (ii) subject and
subordinate to the Mortgages and (iii) contain provisions for the agreement by
the Tenant thereunder to attorn to Lender and any purchaser at a foreclosure
sale, such attornment to be self-executing and effective upon acquisition of
title to the applicable Property by any purchaser at a foreclosure sale, which
agreement by Tenant may be conditioned upon Lender entering into a
subordination, attornment and non-disturbance agreement mutually acceptable to
Lender and the applicable Tenant. If expressly required pursuant to a Lease,
Lender shall enter into a subordination, attornment and non-disturbance
agreement mutually acceptable to Lender and the applicable Tenant.

(b) Any Lease that does not conform to the standards set forth in Section 4.7(a)
(except for any Lease to an owner or operator of part or all of the Sears Auto
Center business in connection with the separation of a material portion of the
business or assets of such business from the assets of Guarantor ) shall be
subject to the prior written consent of Lender, which consent shall not be
unreasonably withheld, delayed or conditioned. In addition, all new Leases that
are Third-Party Leases, and all terminations, renewals and amendments of
Third-Party Leases, and any surrender of rights under any Third-Party Lease,
shall be subject to the prior written consent of Lender, which consent shall not
be unreasonably withheld, delayed or conditioned.

(c) Borrower shall (i) observe and punctually perform in all material respects
all the material obligations imposed upon the lessor under the Leases; (ii) use
all reasonable efforts to enforce all of the material terms, covenants and
conditions contained in the Leases on the part of the lessee thereunder to be
observed or performed, short of termination thereof, except that Borrower may
terminate any Lease following a material default thereunder by the respective
Tenant; (iii) not collect any of the rents thereunder more than one month in
advance; (iv) not execute any assignment of lessor’s interest in the Leases or
associated rents other than the assignments of rents and leases under the
Mortgages; and (v) not cancel or terminate any guarantee of any of the
Third-Party Leases without the prior written consent of Lender.

(d) Security deposits of Tenants under all Leases shall be held in compliance
with Legal Requirements and any provisions in Leases relating thereto. Borrower
shall maintain books and records of sufficient detail to identify all security
deposits of Tenants separate and apart from any other payments received from
Tenants. Subject to Legal Requirements, Borrower hereby pledges to Lender as
security for the Indebtedness any bond or other instrument held by Borrower in
lieu of cash security. Upon foreclosure on any Property, Borrower shall deliver
to Lender an amount equal to the aggregate security deposits of the Tenants at
such Property (and any interest theretofore earned on such security deposits and
actually received by Borrower), and any such bonds, that Borrower had not
returned to the applicable Tenants or applied in accordance with the terms of
the applicable Lease.

(e) Borrower shall promptly deliver to Lender a copy of each written notice from
a Tenant under any Third-Party Lease claiming that Borrower is in default in the
performance or observance of any of the material terms, covenants or conditions
thereof to be performed or observed by Borrower. Borrower shall use commercially
reasonable efforts to provide in each Third-Party Lease executed after the
Original Closing Date to which Borrower is a party that any Tenant delivering
any such notice shall send a copy of such notice directly to Lender.

 

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(f) All agreements entered into by or on behalf of Borrower that require the
payment of leasing commissions with respect to Leases at any Property or other
similar compensation to any party shall (i) provide that the obligation will not
be enforceable against Lender and (ii) be subordinate to the lien of the
Mortgage.

Section 4.8. Plan Assets, etc. Borrower will do, or cause to be done, all things
necessary to ensure that it will not be deemed to impermissibily hold Plan
Assets at any time.

Section 4.9. Further Assurances. Borrower shall, at Borrower’s sole cost and
expense, from time to time as reasonably requested by Lender, execute,
acknowledge, record, register, file and/or deliver to Lender such other
reasonable instruments, agreements, certificates and documents (including
amended or replacement mortgages), and Borrower hereby consents to the filing by
Lender of any Uniform Commercial Code financing statements, in each case as
Lender may reasonably request to evidence, confirm, perfect and maintain the
Liens securing or intended to secure the obligations of Borrower and the rights
of Lender under the Loan Documents, and do and execute all such further lawful
and reasonable acts, conveyances and assurances for the better and more
effective carrying out of the intents and purposes of this Agreement and the
other Loan Documents as Lender shall reasonably request from time to time
(including the payment and application of Loss Proceeds), so long as none of the
same decrease any rights or remedies of Borrower under any of the Loan Documents
(the “Further Assurance Standard”). Borrower shall, at Lender’s sole cost and
expense, from time to time as reasonably requested by Lender, execute,
acknowledge, record, register, file and/or deliver to Lender such other
reasonable instruments, agreements, certificates and documents (including
amended or replacement mortgages), and Borrower hereby consents to the filing by
Lender of any Uniform Commercial Code financing statements, in each case as
Lender may reasonably request to reflect any change of the identity of the
Agent. Upon foreclosure, the appointment of a receiver or any other relevant
action, Borrower shall, at its sole cost and expense, cooperate fully and
completely to effect the assignment or transfer of any license, permit,
agreement or any other right necessary or useful to the operation of the
Collateral, subject to the Further Assurance Standard. Upon receipt of an
affidavit of Lender as to the loss, theft, destruction or mutilation of any
Note, Borrower shall issue, in lieu thereof, a replacement Note in the same
principal amount thereof and in the form thereof. Borrower hereby authorizes and
appoints Lender as its attorney-in-fact to, during the continuance of an Event
of Default, execute, acknowledge, record, register and/or file such instruments,
agreements, certificates and documents, and to do and execute such acts,
conveyances and assurances, should Borrower fail to do so itself in violation of
this Agreement or the other Loan Documents following written request from
Lender, in each case without the signature of Borrower, subject to the Further
Assurance Standard. The foregoing grant of authority is a power of attorney
coupled with an interest and such appointment shall be irrevocable for the term
of this Agreement. Borrower hereby ratifies all actions that such attorney shall
lawfully take or cause to be taken in accordance with this Section.

 

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Section 4.10. Notice of Material Event. Borrower shall give Lender prompt notice
(containing reasonable detail) of (i) any material change in the financial or
physical condition of any Property that would have a Material Adverse Effect,
(ii) any litigation or governmental proceedings pending or threatened in writing
against Borrower or any Property that is reasonably expected to result in a
Material Adverse Effect, (iii) the insolvency or bankruptcy filing of any
Borrower, Guarantor or an affiliate of any of the foregoing and (iv) any other
circumstance or event that could reasonably be expected to result in a Material
Adverse Effect.

Section 4.11. Property-Specific Information. At Lender’s request, Borrower shall
furnish within 30 days after the end of the applicable calendar month such
information with respect to the Properties as Lender shall reasonably request,
to the extent such other information is then reasonably available at no material
expense to Borrower.

Section 4.12. Insurance.

(a) At all times while any portion of the Loan remains outstanding, Borrower
shall maintain the Policies with respect to the Properties, for the mutual
benefit of Borrower and Lender.

(b) All Policies:

 

  (i) shall be maintained throughout the term of the Loan without cost to Lender
and shall name each Borrower (and may name affiliates of each Borrower) as the
named insured;

 

  (ii) with respect to property insurance policies, shall contain a standard
noncontributory mortgagee clause naming Lender and its successors and assigns as
their interests may appear as first mortgagee and loss payee;

 

  (iii) with respect to liability policies, except for workers compensation,
employers liability and auto liability, shall name Lender and its successors and
assigns as their interests may appear as additional insureds;

 

  (iv) with respect to property insurance policies, shall either be written on a
no coinsurance form or contain an endorsement providing that neither Borrower
nor Lender nor any other party shall be a co-insurer under such Policies;

 

  (v) with respect to property insurance policies, shall contain an endorsement
or other provision providing that Lender shall receive 10 days’ prior written
notice of cancellation thereof due to non-payment of premium;

 

  (vi) with respect to property insurance policies, shall contain an endorsement
providing that no act or negligence of Borrower or any foreclosure or other
proceeding or notice of sale relating to one or more of the Properties shall
affect the validity or enforceability of the insurance insofar as a mortgagee is
concerned;

 

  (vii) shall not contain provisions that would make Lender liable for any
insurance premiums thereon or subject to any assessments thereunder;

 

  (viii) shall contain a waiver of subrogation against Lender, as applicable;

 

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  (ix) may be in the form of a blanket or umbrella policy; and

 

  (x) shall otherwise be reasonably satisfactory in form and substance to Lender
and shall contain such other provisions as Lender deems reasonably necessary or
desirable to protect its interests; provided, that nothing in this clause
(x) shall require Borrower to obtain types of coverage that it does not
typically carry, or coverage in an amount greater than it typically carries,
each case in the ordinary course of its business.

(c) Borrower shall pay the premiums for all Policies as the same become due and
payable. Complete copies of such Policies shall be delivered to Lender
reasonably promptly upon request. Not later than 30 days prior to the expiration
date of each Policy, Borrower shall deliver to Lender evidence, reasonably
satisfactory to Lender, of its renewal. Borrower shall reasonably promptly
forward to Lender a copy of each written notice received by Borrower of any
modification, reduction or cancellation of any of the Policies or of any of the
coverages afforded under any of the Policies.

(d) Borrower shall not procure any other insurance coverage that would be on the
same level of payment as the Policies or would adversely impact in any way the
ability of Lender or Borrower to collect any proceeds under any of the Policies,
unless the foregoing provisions (a)-(c) are applicable to such other insurance
coverage. If at any time Lender is not in receipt of written evidence that all
Policies are in full force and effect when and as required hereunder, upon
notice to Borrower Lender shall have the right to take such reasonable action as
Lender deems necessary to protect its interest in the Properties, including the
obtaining of such insurance coverage as Lender in its sole discretion deems
appropriate (but limited to the coverages and amounts required hereunder). All
premiums, costs and expenses (including reasonable attorneys’ fees and expenses)
incurred by Lender in connection with such action or in obtaining such insurance
and keeping it in effect shall be paid by Borrower to Lender upon demand and,
until paid, shall bear interest at the Default Rate.

(e) Borrower or Guarantor shall provide Lender with at least 30 days’ prior
written notice of cancellation by Borrower or Guarantor or any of their
respective affiliates of any property insurance policies relating to any
Property.

(f) Borrower shall have the right to replace any Policy with one or more
additional Policies providing substantially similar or better coverage.

Section 4.13. Casualty and Condemnation.

(a) Upon learning thereof, Borrower shall give reasonably prompt notice to
Lender of any Casualty or Condemnation or of the actual or threatened
commencement of proceedings that would result in a Condemnation.

(b) Lender may participate in any proceedings for any taking by any public or
quasi-public authority accomplished through a Condemnation or any transfer made
in lieu of or in anticipation of a Condemnation, to the extent permitted by law.
Upon Lender’s request, Borrower shall deliver to Lender all instruments
reasonably requested by it to permit such participation. Borrower shall, at its
sole cost and expense, diligently prosecute any such

 

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proceedings, and shall consult with Lender, its attorneys and experts, and
cooperate with them in the carrying on or defense of any such proceedings.
Borrower shall not consent or agree to a Condemnation or action in lieu thereof
without the prior written consent of Lender in each instance, which consent
shall not be unreasonably withheld, delayed or conditioned in the case of a
taking of an immaterial portion of any Property.

(c) Lender may (x) jointly with Borrower settle and adjust any insurance claims,
(y) following the commencement of a foreclosure action, settle and adjust any
insurance claims without the consent or cooperation of Borrower, or (z) allow
Borrower to settle and adjust any insurance claims; except that if no Event of
Default is continuing, Borrower may settle and adjust such claims aggregating
not in excess of the Threshold Amount if such settlement or adjustment is
carried out in a competent and timely manner, but Lender, at its election, shall
be entitled to collect and receive (as set forth below) any and all Loss
Proceeds. The reasonable expenses incurred by Lender in the adjustment and
collection of Loss Proceeds shall become part of the Indebtedness and shall be
reimbursed by Borrower to Lender upon demand therefor.

(d) All Loss Proceeds from any Casualty or Condemnation shall be immediately
deposited into an account under the sole dominion and control of Lender that is
subject to a deposit account control agreement and in which the Lenders have a
perfected security interest. So long as no Event of Default exists and is
continuing, Loss Proceeds after receipt thereof by Lender and reimbursement of
any reasonable expenses incurred by Lender in connection therewith shall be
applied promptly to the cost of restoring, repairing, replacing or rebuilding
such Property or part thereof subject to the Casualty or Condemnation, in the
manner set forth below (and Borrower shall commence, as promptly and diligently
as practicable, to prosecute such restoring, repairing, replacing or rebuilding
of such Property in a workmanlike fashion and in accordance with applicable law
to a status at least equivalent to the quality and character of such Property
immediately prior to the Condemnation or Casualty). Provided that no Event of
Default shall have occurred and be then continuing, Lender shall disburse such
Loss Proceeds to Borrower upon Lender’s being furnished with (i) evidence
reasonably satisfactory to it of the estimated cost of completion of the
restoration, (ii) if the cost of completion of the restoration plus payment of
debt service on the Loan during the period of restoration exceeds the amount
then contained in the Loss Proceeds Account, funds in an amount equal to such
excess, which funds shall be remitted into the Loss Proceeds Account as
additional Collateral for the Loan, and (iii) such architect’s certificates,
waivers of lien, contractor’s sworn statements, title insurance endorsements,
bonds, plats of survey and such other evidences of cost, payment and performance
as Lender may reasonably request; and Lender may, in any event, require that all
plans and specifications for restoration reasonably estimated by Lender to
exceed the Threshold Amount be submitted to and approved by Lender prior to
commencement of work (which approval shall not be unreasonably withheld, delayed
or conditioned). If Lender reasonably estimates that the cost to restore will
exceed the Threshold Amount, Lender may retain a local construction consultant
to inspect such work and review Borrower’s request for payments and Borrower
shall, on demand by Lender, reimburse Lender for the reasonable fees and
expenses of such consultant (which fees and expenses shall constitute
Indebtedness). No payment shall exceed 90% of the value of the work performed
from time to time until such time as 50% of the restoration (calculated based on
the anticipated aggregate cost of the work) has been completed, and thereafter,
100% of the value of the work shall be disbursed, and amounts retained prior to

 

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completion of 50% of the restoration shall not be paid prior to the final
completion of the restoration. Funds other than Loss Proceeds shall be disbursed
prior to disbursement of such Loss Proceeds, and at all times the undisbursed
balance of such proceeds remaining in the Loss Proceeds Account, together with
any additional funds irrevocably and unconditionally deposited therein or
irrevocably and unconditionally committed for that purpose, shall be at least
sufficient in the reasonable judgment of Lender to pay for the cost of
completion of the restoration free and clear of all Liens or claims for Lien,
subject to all Permitted Encumbrances.

(e) Borrower shall cooperate with Lender in obtaining for Lender the benefits of
any Loss Proceeds lawfully or equitably payable to Lender in connection with the
Properties. Lender shall be reimbursed for any expenses reasonably incurred in
connection therewith (including reasonable attorneys’ fees and disbursements,
and, if reasonably necessary to collect such proceeds, the expense of an
Appraisal on behalf of Lender) out of such Loss Proceeds or, if insufficient for
such purpose, by Borrower.

Section 4.14. Compliance with Encumbrances and Material Agreements. Borrower
covenants and agrees as follows:

 

  (i) Borrower shall comply with all material terms, conditions and covenants of
each Material Agreement and each material Permitted Encumbrance, including any
reciprocal easement agreement, ground lease, declaration of covenants,
conditions and restrictions, and any condominium arrangements.

 

  (ii) Borrower shall promptly deliver to Lender a true and complete copy of
each and every notice of default or event of default received by Borrower with
respect to any obligation of Borrower under the provisions of any Material
Agreement and/or Permitted Encumbrance.

 

  (iii) Borrower shall deliver to Lender copies of any written notices of
default or event of default relating to any Material Agreement and/or Permitted
Encumbrance served by Borrower.

 

  (iv) Without the prior written consent of Lender, not to be unreasonably
withheld, conditioned or delayed, Borrower shall not grant or withhold any
material consent, approval or waiver under any Material Agreement or Permitted
Encumbrance, unless no Event of Default is continuing and the same is not be
reasonably likely to have a Material Adverse Effect.

 

  (v) Borrower shall deliver to each other party to any Permitted Encumbrance
and any Material Agreement notice of the identity of Lender and each assignee of
Lender of which Borrower is aware if such notice is required under the terms of
such Material Agreement or Permitted Encumbrance in order to protect Lender’s
interest thereunder.

 

  (vi) Borrower shall use reasonable efforts to enforce, short of termination
thereof, the performance and observance of each and every material term,
covenant and provision of each Material Agreement and Permitted Encumbrance to
be performed or observed, if any, if and to the extent the failure to do so
would have a Material Adverse Effect.

 

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Section 4.15. FATCA If a payment made to the Lender under any Loan Document
would be subject to U.S. Federal withholding Tax imposed by FATCA if the Lender
were to fail to comply with the applicable reporting requirements of FATCA
(including those contained in Section 1471(b) or 1472(b) of the Code, as
applicable), such Lender shall deliver to such Borrower at the time or times
prescribed by law and at such time or times reasonably requested by such
Borrower such documentation prescribed by applicable law (including as
prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional
documentation reasonably requested by such Borrower as may be necessary for such
Borrower to comply with its obligations under FATCA and to determine that the
Lender has complied with the Lender’s obligations under FATCA or to determine
the amount to deduct and withhold from such payment.

ARTICLE V

NEGATIVE COVENANTS

Each individual Borrower covenants and agrees as follows with respect to itself
and each other individual Borrower:

Section 5.1. Liens on the Collateral. No Borrower shall permit or suffer the
existence of any Lien on (i) any of the Properties senior to the Lien of the
applicable Mortgage, other than Permitted Encumbrances, or (ii) any other
Collateral, other than Permitted Encumbrances.

Section 5.2. Transfer; Prohibited Change of Control. Borrower shall not Transfer
any Collateral other than the replacement or other disposition of obsolete or
non-useful personal property and fixtures in the ordinary course of business,
and except as otherwise provided in Section 4.2 and Borrower shall not hereafter
file a declaration of condominium with respect to any of the Properties. No
Prohibited Change of Control shall occur. No transfers of any direct or indirect
equity interests in any Borrower shall be permitted, except for (i) any such
transfers that do not result in a Prohibited Change of Control, (ii) transfers
of shares of common stock in Sears Holdings Corporation and (iii) any other such
transfer for which Borrower shall have obtained Lender’s prior written consent.
Notwithstanding the foregoing, Borrower may Transfer any Property provided that
Borrower complies with the requirements of Section 1.6.

Section 5.3. Debt. Borrower shall not have any Debt, other than Permitted Debt.

Section 5.4. Dissolution; Merger or Consolidation. No Borrower shall dissolve,
liquidate, merge with or consolidate into another Person, unless such Borrower
is the surviving Person.

 

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Section 5.5. Misapplication of Funds. Borrower shall not (a) distribute any Loss
Proceeds in violation of the provisions of this Agreement (and shall promptly
cause the reversal of any such distributions made in error of which Borrower
becomes aware), or (b) misappropriate any security deposit or portion thereof.

Section 5.6. Jurisdiction of Formation; Name. Borrower shall not change its
jurisdiction of formation or name without receiving Lender’s prior written
consent, not to be unreasonably withheld, delayed or conditioned, and promptly
providing Lender such information and replacement Uniform Commercial Code
financing statements and legal opinions as Lender may reasonably request in
connection therewith.

Section 5.7. Modifications and Waivers. Unless otherwise consented to in writing
by Lender:

 

  (i) Borrower shall not amend, modify, terminate, renew, or surrender any
material rights or remedies under any Lease, or enter into any Lease, except in
accordance with the express terms and conditions of any Lease or otherwise in
compliance with Section 4.7; and

 

  (ii) Borrower shall not (x) enter into any Material Agreement, or amend,
modify, surrender or waive any material rights or remedies under any Material
Agreement, except, in each case, on arms-length commercially reasonable terms,
(y) terminate any Material Agreement, except for terminations in connection with
a material default thereunder, or (z) default in its material obligations under
any Material Agreement.

Section 5.8. ERISA.

(a) Other than required contributions to the Sears Holdings Pension Plan 1 and
Sears Holdings Pension Plan 2, Borrower shall not maintain or contribute to, or
agree to maintain or contribute to, or permit any ERISA Affiliate of Borrower to
maintain or contribute to or agree to maintain or contribute to, any employee
benefit plan (as defined in Section 3(3) of ERISA) subject to Title IV or
Section 302 of ERISA or Section 412 of the Code which would be reasonably likely
to result in a Material Adverse Effect.

(b) Borrower shall not engage in a non-exempt prohibited transaction under
Section 406 of ERISA, Section 4975 of the Code, or substantially similar
provisions under federal, state or local laws, rules or regulations or in any
transaction that would cause any obligation or action taken or to be taken
hereunder (or the exercise by Lender of any of its rights under the Notes, this
Agreement, the Mortgages or any other Loan Document) to be a non-exempt
prohibited transaction under such provisions assuming that the source of the
funds for the Loan by Lender does not constitute Plan Assets.

Section 5.9. Alterations and Expansions. Borrower shall not perform, undertake,
contract to perform or consent to any Material Alteration without the prior
written consent of Lender, which consent (in the absence of the continuation of
an Event of Default) shall not be unreasonably withheld, delayed or conditioned,
but may be conditioned on the delivery of additional collateral in the form of
cash or cash equivalents acceptable to Lender in respect of the amount by which
any such Material Alteration exceeds the Threshold Amount. If Lender’s consent
is requested hereunder with respect to a Material Alteration, Lender may retain
a construction consultant to review such request and, if such request is
granted, Lender may retain a construction consultant to inspect the work from
time to time. Borrower shall, on demand by Lender, reimburse Lender for the
reasonable fees and disbursements of such consultant.

 

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Section 5.10. Zoning and Uses. Borrower shall not do any of the following
without the prior written consent of Lender:

 

  (i) initiate or support any limiting change in the permitted uses of any of
the Properties (or to the extent applicable, zoning reclassification of any of
the Properties) or any portion thereof, seek any variance under existing land
use restrictions, laws, rules or regulations (or, to the extent applicable,
zoning ordinances) applicable to a Property, or use or permit the use of a
Property in a manner that would result in the use of such Property first
becoming a nonconforming use under applicable land-use restrictions or zoning
ordinances or that would violate any of the material terms of any Lease,
Material Agreement or Legal Requirement (and if under applicable zoning
ordinances the use of all or any portion of any Property is a nonconforming use,
Borrower shall not cause or permit such nonconforming use to be discontinued or
abandoned);

 

  (ii) execute or file any subdivision plat affecting any of the Properties, or
institute, or permit the institution of, proceedings to alter any tax lot
comprising any of the Properties; or

 

  (iii) permit or consent to any of the Properties being used by the public or
any Person in such manner as might reasonably make possible a valid claim of
adverse usage or possession or of any implied dedication or easement.

Section 5.11. Waste. Borrower shall not commit or permit any Waste on any of the
Properties, nor take any actions that might invalidate any insurance carried on
any of the Properties (and Borrower shall promptly correct any such actions of
which Borrower becomes aware).

ARTICLE VI

DEFAULTS

Section 6.1. Event of Default. The occurrence of any one or more of the
following events shall be, and shall constitute the commencement of, an “Event
of Default” hereunder (any Event of Default that has occurred shall continue
unless and until waived by Lender in writing in its sole discretion):

(a) Payment.

 

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  (i) Borrower shall default in the payment when due of any principal or
interest owing hereunder or under any of the Notes (including any mandatory
repayment required hereunder); or

(ii) Borrower shall default, and such default shall continue for at least five
Business Days after notice to Borrower that such amounts are owing, in the
payment when due of fees, expenses or other amounts owing to Lender hereunder,
under any of the Notes or under any of the other Loan Documents (other than
principal and interest).

(b) Representations. Any representation made by Borrower in any of the Loan
Documents, or in the Officer’s Certificate shall have been false or misleading
in any material respect (or, with respect to any representation that itself
contains a materiality qualifier, in any respect) as of the date such
representation was made.

(c) Other Loan Documents. Any Loan Document shall fail to be in full force and
effect or to convey the material Liens, rights, powers and privileges purported
to be created thereby and Borrower shall fail to promptly remedy such failure in
accordance with Section 4.9.

(d) Bankruptcy, etc.

 

  (i) Any Borrower or Guarantor shall commence a voluntary case concerning
itself under any Title of the United States Code concerning bankruptcy or
insolvency (as amended, modified, succeeded or replaced, from time to time, the
“Bankruptcy Code”);

 

  (ii) any Borrower or Guarantor shall commence any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of creditors,
dissolution, insolvency or similar law of any jurisdiction whether now or
hereafter in effect relating to such Borrower or Guarantor, or shall dissolve or
otherwise cease to exist;

 

  (iii) there is commenced against any Borrower or Guarantor an involuntary case
under the Bankruptcy Code, or any such other proceeding, which remains
undismissed for a period of 90 days after commencement;

 

  (iv) any Borrower or Guarantor is adjudicated insolvent or bankrupt by a court
of competent jurisdiction;

 

  (v) any Borrower or Guarantor suffers appointment of any custodian or the like
for it or for any substantial portion of its property and such appointment
continues unchanged or unstayed for a period of 90 days after commencement of
such appointment;

 

  (vi) any Borrower or Guarantor makes a general assignment for the benefit of
creditors; or

 

  (vii) any Borrower or Guarantor takes any action for the purpose of effecting
any of the foregoing.

 

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(e) Prohibited Change of Control. A Prohibited Change of Control shall occur.

(f) Insurance. Borrower shall fail to maintain in full force and effect all
Policies required hereunder.

(g) Negative Covenants. A default shall occur in the due performance or
observance by Borrower of any term, covenant or agreement contained in Article
V, provided that such default shall not constitute an Event of Default unless
and until it shall remain uncured for 30 days after Borrower receives written
notice thereof.

(h) Legal Requirements. Borrower shall fail to cure properly any violations of
Legal Requirements affecting all or any portion of any Property that could
reasonably be expected to result in a Material Adverse Effect within 30 days
after Borrower first receives written notice of any such violations; provided,
however, if any such violation is reasonably susceptible of cure, but not within
such 30 day period, then Borrower shall be permitted up to an additional 30 days
to cure such violation provided that Borrower commences a cure within such
initial 30 day period and thereafter diligently and continuously pursues such
cure.

(i) Other Covenants. A default shall occur in the due performance or observance
by Borrower of any material term, covenant or agreement (other than those
referred to in any other subsection of this Section or those, if any, that
expressly provide for a notice and cure period other than as set forth in this
clause (i)) contained in this Agreement or in any of the other Loan Documents,
except that in the case of a default that can be cured by the payment of money,
such default shall not constitute an Event of Default unless and until it shall
remain uncured for 10 days after Borrower receives written notice thereof; and
in the case of a default that cannot be cured by the payment of money but is
susceptible of being cured within 30 days, such default shall not constitute an
Event of Default unless and until it remains uncured for 30 days after Borrower
receives written notice thereof, provided that if such non-monetary default is
not cured within such 30 day period despite Borrower’s diligent efforts but is
susceptible of being cured within 90 days of Borrower’s receipt of Lender’s
original notice, then Borrower shall have such additional time as is reasonably
necessary to effect such cure, but in no event in excess of 90 days from
Borrower’s receipt of Lender’s original notice, provided that Borrower promptly
delivers written notice to Lender of its intention and ability to effect such
cure prior to the expiration of such 90 day period.

Section 6.2. Remedies.

(a) During the continuance of an Event of Default, Lender may by written notice
to Borrower, in addition to any other rights or remedies available pursuant to
this Agreement, the Notes, the Mortgages and the other Loan Documents, at law or
in equity, declare by written notice to Borrower all or any portion of the
Indebtedness to be immediately due and payable, whereupon all or such portion of
the Indebtedness shall so become due and payable, and Lender may enforce or
avail itself of any or all rights or remedies provided in the Loan Documents
against Borrower and the Collateral (including all rights or remedies available
at law or in equity); provided, however, that, notwithstanding the foregoing, if
an Event of Default specified in Section 6.1(d) shall occur, then the
Indebtedness shall immediately become due and

 

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payable without the giving of any notice or other action by Lender and Borrower
expressly waives any such notice or demand, notwithstanding anything contained
herein or in the other Loan Documents. Any actions taken by Lender shall be
cumulative and concurrent and may be pursued independently, singly,
successively, together or otherwise, at such time and in such order as Lender
may determine in its sole discretion, to the fullest extent permitted by law,
without impairing or otherwise affecting the other rights and remedies of Lender
permitted by law, equity or contract or as set forth in this Agreement or in the
other Loan Documents.

(b) If Lender forecloses on any Collateral, Lender shall, subject to
Section 6.3, apply all net proceeds of such foreclosure to repay the
Indebtedness, the Indebtedness shall be reduced to the extent of such net
proceeds and the remaining portion of the Indebtedness shall remain outstanding
and secured by the remaining Collateral. At the election of Lender, the Notes
shall be deemed to have been accelerated only to the extent of the net proceeds
actually received by Lender with respect to the Properties and applied in
reduction of the Indebtedness. Without limiting the generality of the foregoing,
Borrower agrees that if an Event of Default is continuing, (i) to the extent
permitted by applicable law, Lender is not subject to any “one action” or
“election of remedies” law or rule, and (ii) all Liens and other rights,
remedies or privileges provided to Lender shall remain in full force and effect
until Lender has exhausted all of its remedies against the Property, the
Mortgage has been foreclosed, the Property has been sold and/or otherwise
realized upon in satisfaction of the Indebtedness or the Indebtedness has been
paid in full. With respect to Borrower and the Properties, nothing contained
herein or in any other Loan Document shall be construed as requiring Lenders to
resort to any individual Property for the satisfaction of any of the
Indebtedness in preference or priority to any other individual Property, and
Lenders may seek satisfaction out of all of the Properties or any part thereof,
in its absolute discretion in respect of the Indebtedness.

(c) During the continuance of any Event of Default (including an Event of
Default resulting from a failure to satisfy the insurance requirements specified
herein), Lender may, but without any obligation to do so and without notice to
or demand on Borrower and without releasing Borrower from any obligation
hereunder, take any action to cure such Event of Default. Lender may enter upon
any or all of the Properties upon reasonable notice to Borrower for such
purposes or appear in, defend, or bring any action or proceeding to protect its
interest in the Collateral or to foreclose the Mortgages or collect the
Indebtedness. The costs and expenses incurred by Lender in exercising rights
under this paragraph (including reasonable attorneys’ fees), with interest at
the Default Rate for the period after notice from Lender that such costs or
expenses were incurred to the date of payment to Lender, shall constitute a
portion of the Indebtedness, shall be secured by the Mortgages and other Loan
Documents and shall be due and payable to Lender upon demand therefor.

(d) Interest shall accrue on any judgment obtained by Lender in connection with
its enforcement of the Loan at a rate of interest equal to the Default Rate.

(e) Notwithstanding the availability of legal remedies, Lender will be entitled
to obtain specific performance, mandatory or prohibitory injunctive relief, or
other equitable relief requiring Borrower to cure or refrain from repeating any
Default

 

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(f) Upon the occurrence and during the continuance of an Event of Default,
Lender shall have the right from time to time to sever the Notes and the other
Loan Documents into one or more separate notes, mortgages and other security
documents (the “Severed Loan Documents”) in such denominations as Lender shall
determine in its sole discretion for purposes of evidencing and enforcing its
rights and remedies provided hereunder. Borrower shall execute and deliver to
Lender from time to time, promptly after the request of Lender, a severance
agreement and such other documents as Lender shall request in order to effect
the severance described in the preceding sentence, all in form and substance
reasonably satisfactory to Lender. Borrower hereby absolutely and irrevocably
appoints Lender as its true and lawful attorney, coupled with an interest, in
its name and stead to execute the Severed Loan Documents (Borrower ratifying all
that its said attorney shall do by virtue thereof); provided, however, that
Lender shall not make or execute any such Severed Loan Documents under such
power until the expiration of three days after written notice has been given to
Borrower by Lender of Lender’s intent to exercise its rights under the aforesaid
power. Borrower shall be obligated to pay any costs or expenses incurred in
connection with the preparation, execution, recording or filing of the Severed
Loan Documents. The Severed Loan Documents shall not contain any
representations, warranties or covenants not contained in the Loan Documents,
and any such representations and warranties contained in the Severed Loan
Documents will be given by Borrower only as of the New Closing Date.

(g) In the event the Lenders determine, in their reasonable discretion that it
is necessary or desirable to make a protective advance in order to protect and
preserve the Collateral or the security for the Loan, or to pay Taxes, ground
lease rents or insurance premiums required by the terms of this Agreement to be
paid by the Borrower but that are not so paid prior to the contractual or
statutory due date and prior to the expiration of any grace period or
opportunity to cure or prior to delinquency, the Lenders shall provide written
notice to the Borrower and to the extent Borrower does not expend such funds
within five (5) days after receipt of such notice, then the Lenders may advance
such funds to the Borrower or, in its sole and absolute discretion, pay such
amounts on behalf of Borrower, such funds shall accrue interest at the Default
Rate and such amounts shall be added to the Indebtedness. After the occurrence
and during the continuance of any Event of Default, the Lenders shall not be
required to provide Borrower with any such notice, and each Lender may make such
determination as to whether to make a protective advance in its respective sole
discretion.

Section 6.3. Application of Payments after an Event of Default. Notwithstanding
anything to the contrary contained herein, during the continuance of an Event of
Default, all amounts received by Lender or Agent respect of the Loan shall be
applied at Lender’s sole discretion either toward the components of the
Indebtedness (e.g., Lender’s expenses in enforcing the Loan, interest, principal
and other amounts payable hereunder) and the Notes or Note Components in such
sequence as Lender shall elect in its sole discretion, or toward the payment of
Property expenses.

 

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ARTICLE VII

MISCELLANEOUS

Section 7.1. Agent; Successors.

(a) Lender hereby appoints the Agent as agent for the Lender for all purposes
under this Agreement and each of the Loan Documents. In each case in this
Agreement or any Loan Document where Lender has the right to take an action,
approve or waive a decision or enforce any term (including, without limitation
entry into an amendment to this Agreement or any Loan Document), Lender hereby
authorizes Agent to be the sole party to take such action, approve or waive each
such decision and/or enforce any term on behalf of Lender, in each case, subject
to the Co-Lender Agreement and any other applicable intercreditor, participation
or co-lender arrangements among the Agent and Lender. Lender hereby appoints
Agent to be the sole party to whom notices, requests and other communications
hereunder shall be required to be addressed unless otherwise specified in
writing by Agent. Agent may resign in its capacity as Agent at any time upon 10
days written notice to Lender and Lender may appoint any Lender as replacement
Agent for all purposes under this Agreement, subject to the Co-Lender Agreement
and any other applicable intercreditor, participation or co-lender arrangements
among the Agent and Lender. Lender may, subject to the Co-Lender Agreement and
any other applicable intercreditor, participation or co-lender arrangements,
replace Agent with another Lender who shall be the Agent for all purposes
hereunder.

(b) Except as otherwise provided in this Agreement, whenever in this Agreement
any of the parties to this Agreement is referred to, such reference shall be
deemed to include the successors and permitted assigns of such party. All
covenants, promises and agreements in this Agreement contained, by or on behalf
of Borrower, shall inure to the benefit of Lender and its successors and
permitted assigns.

Section 7.2. GOVERNING LAW.

(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CHOICE OF LAW RULES TO THE
EXTENT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY.

(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS (OTHER THAN
ANY ACTION IN RESPECT OF THE CREATION, PERFECTION OR ENFORCEMENT OF A LIEN OR
SECURITY INTEREST CREATED PURSUANT TO ANY LOAN DOCUMENTS NOT GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK) MAY BE INSTITUTED IN ANY FEDERAL OR STATE COURT
IN NEW YORK, NEW YORK. BORROWER AND LENDER HEREBY (i) IRREVOCABLY WAIVE, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT THEY MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM, (ii) IRREVOCABLY SUBMIT TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING, AND
(iii) IRREVOCABLY CONSENT TO SERVICE OF PROCESS BY MAIL, PERSONAL SERVICE OR IN
ANY OTHER MANNER PERMITTED BY APPLICABLE LAW, AT THE ADDRESS SPECIFIED IN
SECTION 7.4 (AND AGREES THAT SUCH SERVICE AT SUCH ADDRESS IS SUFFICIENT TO
CONFER PERSONAL JURISDICTION OVER ITSELF IN ANY SUCH SUIT, ACTION OR PROCEEDING
IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN
EVERY RESPECT).

 

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Section 7.3. Modification, Waiver in Writing. Neither this Agreement nor any
other Loan Document may be amended, changed, waived, discharged or terminated,
nor shall any consent or approval of Lender be granted hereunder, unless such
amendment, change, waiver, discharge, termination, consent or approval is in
writing signed by Initial Lender and such other Lender as may be designated in
the Co-Lender Agreement and any other applicable intercreditor, participation or
co-lender agreement among the Lenders.

Section 7.4. Notices. All notices, consents, approvals and requests required or
permitted hereunder or under any other Loan Document shall be given in writing
by expedited prepaid delivery service, either commercial or United States Postal
Service, with proof of delivery or attempted delivery, addressed as follows
(except that any party hereto may change its address and other contact
information for purposes hereof at any time by sending a written notice to the
other parties to this Agreement in the manner provided for in this Section). A
notice shall be deemed to have been given when delivered or upon refusal to
accept delivery.

If to Agent:

c/o ESL Investments, Inc.

1170 Kane Concourse, Suite 200

Bay Harbor Islands, FL 33154

Attention: Edward S. Lampert, CEO

and

ESL Investments, Inc.

1170 Kane Concourse, Suite 200

Bay Harbor Islands, FL 33154

Attention: Harold R. Talisman

with copies to:

with a copy (which shall not constitute notice) to:

Cleary Gottlieb Steen & Hamilton

One Liberty Plaza

New York, New York 10006

Attention: John V. Harrison, Esq.

If to Borrower:

Sears, Roebuck and Co.

3333 Beverly Road

Hoffman Estates, Illinois 60179

Attention: General Counsel

 

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with copies to (which shall not constitute notice):

Sears, Roebuck and Co.

3333 Beverly Road, Dept. 824RE

Hoffman Estates, IL 60179

Attention: Vice President Real Estate

and

Sears, Roebuck and Co.

3333 Beverly Road, Dept. 824RE

Hoffman Estates, IL 60179

Attention: Associate General Counsel, Real Estate

and

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, New York 10019

Attention: Scott Charles, Esq.

Borrowers hereby appoint the individual Borrower named as notice party above
(the “Representative Borrower”) to serve as agent on behalf of all Borrowers to
receive any notices required to be delivered to any or all Borrowers hereunder
or under the other Loan Documents and to be the sole party authorized to deliver
notices on behalf of the Borrowers hereunder and under each of the other Loan
Documents. Any notice delivered to the Representative Borrower shall be deemed
to have been delivered to all Borrowers, and any notice received from the
Representative Borrower shall be deemed to have been received from all
Borrowers. Borrowers shall be entitled from time to time to appoint a
replacement Representative Borrower by written notice delivered to Lender and
signed by both the new Representative Borrower and the Representative Borrower
being so replaced.

Section 7.5. TRIAL BY JURY. LENDER AND BORROWER, TO THE FULLEST EXTENT THAT THEY
MAY LAWFULLY DO SO, HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE
TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TO THE
EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN
DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION
THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY LENDER AND BORROWER AND IS INTENDED TO ENCOMPASS INDIVIDUALLY
EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD
OTHERWISE ACCRUE. LENDER AND BORROWER ARE EACH HEREBY INDIVIDUALLY AUTHORIZED TO
FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS
WAIVER.

 

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Section 7.6. Headings. The Article and Section headings in this Agreement are
included in this Agreement for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.

Section 7.7. Transfers of Loan; Cooperation. (a) Borrower may not sell, assign
or otherwise transfer any rights, obligations or other interest of Borrower in
or under the Loan Documents.

(b) Lender and each Loan Transferee shall have the right from time to time in
its discretion and without the consent of Borrower to sell, assign, syndicate or
otherwise transfer one or more of the Notes or Note Components or any interest
therein and/or sell a participation interest in one or more of the Notes or Note
Components (each, a “Loan Transfer”) to one or more banks, financial
institutions, funds, institutional lenders or such other Persons that are
acceptable to Lender (each, a “Loan Transferee”); provided, however, that
(i) for so long as no Event of Default is continuing, no Loan Transfer shall be
made to a Loan Transferee that is a competitor or affiliate of a competitor of
any Borrower or Guarantor; and (ii) in the case of a participation (x) the
obligations under the Loan Documents of the Lender selling such participation
shall remain unchanged and (y) such Lender shall remain solely responsible to
the other parties hereto for the performance of such obligations. Borrower shall
reimburse JPP and Cascade for any actual out-of-pocket costs and expenses
incurred by JPP and/or Cascade in connection with any Loan Transfer made by JPP
or Cascade, as applicable, to another Person, including without limitation, any
costs and expenses of JPP or Cascade’s legal counsel.

(c) Borrower and Guarantor shall, at their sole and cost and expense, if so
requested by Lender, amend the Note and the other Loan Documents, to the extent
necessary, to divide the Loan into multiple tranches and/or Note Components
(each of which may be evidenced by a separate Note), which tranches and Note
Components may be pari passu and/or senior/subordinate to one another and may
bear different interest rates, so long as the weighted average of all such
interest rates equals the Interest Rate (except following the application of
principal during an Event of Default); provided, however, in connection with
this Section 7.7(c), in no event shall Borrower or Guarantor be required to pay
any commitment or other fee (other than any fees expressly provided for in this
Agreement), provide any additional security or modify any existing mortgage,
deed of trust, or other security document, deliver or pay for any new Title
Insurance Policies or endorsements to any new or existing Title Insurance
Policies or incur additional liability or obligation whatsoever in connection
with any Loan Transfer, other than as expressly set forth in this Agreement.

(d) Notwithstanding anything in this Agreement to the contrary, after a Loan
Transfer, the transferring Lender (in addition to the Loan Transferee) shall
continue to have the benefits of any indemnifications contained in this
Agreement that such transferring Lender had prior to such Loan Transfer with
respect to matters occurring prior to the date of such Loan Transfer. If,
pursuant to this Section, any interest in this Agreement or any Note is
transferred to any Loan Transferee, such Loan Transferee shall, promptly upon
receipt of written request from Borrower, furnish to Borrower a Form W-9, Form
W-8BEN, Form W-8BEN-E or Form W-8ECI, as applicable.

 

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Section 7.8. Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement. All covenants hereunder
shall be given independent effect so that if a particular action or condition is
not permitted by any of such covenants, the fact that it would be permitted by
an exception to, or would otherwise be within the limitations of, another
covenant shall not avoid the occurrence of a Default or an Event of Default if
such action is taken or condition exists.

Section 7.9. Preferences; Waiver of Marshalling of Assets. Lender shall have no
obligation to marshal any assets in favor of Borrower or any other party or
against or in payment of any or all of the obligations of Borrower pursuant to
the Loan Documents. Lender shall have the continuing and exclusive right to
apply or reverse and reapply any and all payments by Borrower to any portion of
the obligations of Borrower hereunder and under the Loan Documents. If any
payment to Lender is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any
other party under any bankruptcy law, state or federal law, common law or
equitable cause, then the obligations hereunder or portion thereof intended to
be satisfied by such payment shall be revived and continue in full force and
effect, as if such payment had not been made. Borrower hereby waives any legal
right otherwise available to Borrower that would require the sale of any
Collateral either separate or apart from other Collateral, or require Lender to
exhaust its remedies against any Collateral before proceeding against any other
Collateral. Without limiting the foregoing, to the fullest extent permitted by
law, Borrower hereby waives and shall not assert any rights in respect of a
marshalling of Collateral, a sale in the inverse order of alienation, any
homestead exemption, the administration of estates of decedents, or any other
matters whatsoever to defeat, reduce or affect the right of Lender under the
Loan Documents to a sale of the Collateral or any portion thereof in any
sequence and any combination as determined by Lender in its sole discretion.

Section 7.10. Remedies of Borrower. If a claim is made that Lender or its agents
have unreasonably delayed acting or acted unreasonably (including unreasonable
refusal of, or unreasonable conditioning of, of any consent or approval of
Lender required hereunder) in any case where by law or under this Agreement or
the other Loan Documents any of such Persons has an obligation to act promptly
or reasonably, Borrower agrees that no such Person shall be liable for any
monetary damages, and Borrower’s sole remedy shall be limited to commencing an
action seeking specific performance, injunctive relief and/or declaratory
judgment. Without limiting the foregoing, Borrower shall not assert, and hereby
waives, any claim against Lender and/or its affiliates, directors, employees,
attorneys, agents or sub-agents, on any theory of liability, for special,
indirect, consequential or punitive damages (whether or not the claim therefor
is based on contract, tort or duty imposed by any applicable Legal Requirement)
arising out of, as a result of, or in any way related to, this Agreement or any
other Loan Document or any agreement or instrument contemplated hereby or
thereby or referred to herein or therein, the transactions contemplated hereby
or thereby, the Loan or the use of the proceeds thereof or any act or omission
or event occurring in connection therewith, and Borrower hereby waives, releases
and agrees not to sue upon any such claim for any such damages, whether or not
accrued and whether or not known or suspected to exist in its favor.

 

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Section 7.11. Offsets, Counterclaims and Defenses. All payments made by Borrower
hereunder or under the other Loan Documents shall be made irrespective of, and
without any deduction for, any offsets, counterclaims or defenses. Borrower
waives the right to assert a counterclaim, other than a mandatory or compulsory
counterclaim, in any action or proceeding brought against it by Lender arising
out of or in any way connected with the Notes, this Agreement, the other Loan
Documents or the Indebtedness. Any assignee of Lender’s interest in the Loan
shall take the same free and clear of all offsets, counterclaims or defenses
against the assigning Lender.

Section 7.12. No Joint Venture. Nothing in this Agreement is intended to create
a joint venture, partnership, tenancy-in-common, or joint tenancy relationship
between Borrower and Lender, nor to grant Lender any interest in any Property
other than that of mortgagee or lender.

Section 7.13. Conflict; Construction of Documents. In the event of any conflict
between the provisions of this Agreement and the provisions of the other Loan
Documents, the provisions of this Agreement shall prevail. The parties
acknowledge that they were each represented by competent counsel in connection
with the negotiation, drafting and execution of the Loan Documents and that the
Loan Documents shall not be subject to the principle of construing their meaning
against the party that drafted same.

Section 7.14. Brokers and Financial Advisors. Borrower represents that neither
it nor Guarantor has dealt with any financial advisors, brokers, underwriters,
placement agents, agents or finders (other than the Broker) in connection with
the transactions contemplated by this Agreement. Borrower shall indemnify and
hold Lender harmless from and against any and all claims, liabilities, costs and
expenses of any kind in any way relating to or arising from a claim by any
Person that such Person acted on behalf of Borrower in connection with the
transactions contemplated in this Agreement. The provisions of this Section
shall survive the expiration and termination of this Agreement and the repayment
of the Indebtedness.

Section 7.15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. Copies
of originals, including copies delivered by facsimile, pdf or other electronic
means shall have the same import and effect as original counterparts and shall
be valid, enforceable and binding for the purposes of this Agreement.

Section 7.16. Estoppel Certificates.

(a) Borrower shall execute, acknowledge and deliver to Lender, within five days
after receipt of Lender’s written request therefor at any time from time to
time, a statement in writing setting forth (A) the Principal Indebtedness,
(B) the date on which installments of interest and/or principal were last paid,
(C) any offsets or defenses to the payment of the Indebtedness, (D) that the
Notes, this Agreement, the Mortgages and the other Loan Documents are valid,
legal and binding obligations and have not been modified or if modified, giving
particulars of such modification and (E) that neither Borrower nor, to
Borrower’s knowledge, Lender, is in default under the Loan Documents (or
specifying any such default). Any Loan Transferee shall be permitted to rely on
such certificate.

 

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(b) Upon Lender’s written request, Borrower shall use commercially reasonable
efforts to obtain from each Tenant and thereafter promptly deliver to Lender
duly executed estoppel certificates from any one or more Tenants specified by
Lender, attesting to such facts regarding the Leases as Lender may reasonably
require, including attestations that each Lease covered thereby is in full force
and effect with no material defaults thereunder on the part of any party, that
rent has not been paid more than one month in advance, except as security, and
that the Tenant claims no defense or offset against the full and timely
performance of its obligations under the Lease.

Section 7.17. General Indemnity; Payment of Expenses.

(a) Borrower, at its sole cost and expense, shall protect, indemnify, reimburse,
defend and hold harmless Lender and its officers, partners, members, directors,
trustees, advisors, employees, agents, sub-agents, affiliates, successors,
participants and assigns of any and all of the foregoing (collectively, the
“Indemnified Parties”) for, from and against any and all Damages of any kind or
nature whatsoever that may be imposed on, incurred by, or asserted against any
of the Indemnified Parties, in any way relating to or arising out of Lender’s
interest in the Loan; provided, however, that no Indemnified Party shall have
the right to be indemnified hereunder to the extent that such Damages have been
found by a final, non-appealable judgment of a court of competent jurisdiction
to have resulted from the gross negligence, bad faith or willful misconduct of
such Indemnified Party.

(b) If for any reason (including violation of law or public policy) the
undertakings to defend, indemnify, pay and hold harmless set forth in this
Section are unenforceable in whole or in part or are otherwise unavailable to an
Indemnified Party or insufficient to hold it harmless, then Borrower shall
contribute to the amount paid or payable by an Indemnified Party as a result of
any Damages the maximum amount Borrower is permitted to pay under Legal
Requirements. The obligations of Borrower under this Section will be in addition
to any liability that Borrower may otherwise have hereunder and under the other
Loan Documents.

(c) To the extent any Indemnified Party has notice of a claim for which it
intends to seek indemnification hereunder, such Indemnified Party shall give
prompt written notice thereof to Borrower, provided that failure by Lender to so
notify Borrower will not relieve Borrower of its obligations under this Section,
except to the extent that Borrower suffers actual prejudice as a result of such
failure. In connection with any claim for which indemnification is sought
hereunder, Borrower shall have the right to defend the applicable Indemnified
Party (if requested by the applicable Indemnified Party, in the name of such
Indemnified Party) from such claim by attorneys and other professionals
reasonably approved by the applicable Indemnified Party. Upon assumption by
Borrower of any defense pursuant to the immediately preceding sentence, Borrower
shall have the right to control such defense, provided that the applicable
Indemnified Party shall have the right to reasonably participate in such defense
and Borrower

 

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shall not consent to the terms of any compromise or settlement of any action
defended by Borrower in accordance with the foregoing without the prior consent
of the applicable Indemnified Party, unless such compromise or settlement
(i) includes an unconditional release of the applicable Indemnified Party from
all liability arising out of such action and (ii) does not include a statement
as to or an admission of fault, culpability or a failure to act, by or on behalf
of the applicable Indemnified Party. The applicable Indemnified Party shall have
the right to retain its own counsel if (i) Borrower shall have failed to employ
counsel reasonably satisfactory to the applicable Indemnified Party in a timely
manner, or (ii) the applicable Indemnified Party shall have been advised by
counsel that there are actual or potential material conflicts of interest
between Borrower and the applicable Indemnified Party, including situations in
which there are one or more legal defenses available to the applicable
Indemnified Party that are different from or additional to those available to
Borrower. So long as Borrower is conducting the defense of any action defended
by Borrower in accordance with the foregoing in a prudent and commercially
reasonable manner, Lender and the applicable Indemnified Party shall not
compromise or settle such action defended without Borrower’s consent, which
shall not be unreasonably withheld or delayed. Upon demand, Borrower shall pay
or, in the sole discretion of the applicable Indemnified Party, reimburse the
applicable Indemnified Party for the payment of reasonable fees and
disbursements of attorneys, engineers, environmental consultants, laboratories
and other professionals retained by the applicable Indemnified Party in
accordance with this Section in connection with defending any claim subject to
indemnification hereunder.

(d) Any amounts payable to Lender by reason of the application of this Section
shall be secured by the Mortgages and shall become immediately due and payable
and shall bear interest at the Default Rate from the date Damages are sustained
by the Indemnified Parties until paid.

(e) The provisions of and undertakings and indemnifications set forth in this
Section shall survive the satisfaction and payment in full of the Indebtedness
and termination of this Agreement.

(f) Borrower shall reimburse Lender upon receipt of written notice from Lender
for (i) all reasonable and documented out-of-pocket costs and expenses incurred
by Lender (or any of its affiliates) in connection with the origination of the
Loan (whether incurred before or after the Original Closing Date or New Closing
Date), including legal fees and disbursements, accounting fees, and the costs of
the Title Insurance Policies, the Surveys, the Environmental Reports and any
other third-party diligence materials; (ii) all reasonable and documented
out-of-pocket costs and expenses incurred by Lender (or any of its affiliates)
in connection with (A) the negotiation, preparation, execution, delivery and
administration of any consents, amendments, waivers or other modifications to
this Agreement and the other Loan Documents and any other documents or matters
relating hereto (including Leases, Material Agreements, and Permitted
Encumbrances), (B) filing, registration and recording fees and expenses and
other similar expenses incurred in creating and perfecting the Liens in favor of
Lender pursuant to this Agreement and the other Loan Documents (including the
filing, registration or recording of any instrument of further assurance) and
all stamp, court, recording, filing, documentary or other similar taxes
(including, if applicable, intangible taxes), search fees, title insurance
premiums, duties, imposts, assessments and charges arising out of or in

 

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connection with the execution and delivery of the Loan Documents, any mortgage
supplemental thereto, any security instrument with respect to the Collateral or
any instrument of further assurance (other than any such taxes or charges
resulting from any present or former connection between Lender and the
jurisdiction imposing such tax or charges (other than connections arising from
the Lender having executed, delivered, become a party to, performed its
obligations under, received payments under, received or perfected a security
interest under, engaged in any other transaction pursuant to or enforced any
Loan Document, or sold or assigned an interest in the Loan or any Loan
Document)) and (C) enforcing or preserving any rights, in response to third
party claims or the prosecuting or defending of any action or proceeding or
other litigation, in each case against, under or affecting Borrower, this
Agreement, the other Loan Documents or any Collateral; and (iii) all actual
out-of-pocket costs and expenses (including attorney’s fees) incurred by Lender
(or any of its affiliates) in connection with the enforcement of any obligations
of Borrower, or a Default by Borrower, under the Loan Documents, including any
actual or attempted foreclosure, deed-in-lieu of foreclosure, refinancing,
restructuring, settlement, protective advance or workout and any insolvency or
bankruptcy proceedings (including any applicable transfer taxes).

Section 7.18. No Third-Party Beneficiaries. This Agreement and the other Loan
Documents are solely for the benefit of Lender and Borrower, and nothing
contained in this Agreement or the other Loan Documents shall be deemed to
confer upon anyone other than Lender, Borrower and Indemnified Parties any right
to insist upon or to enforce the performance or observance of any of the
obligations contained herein or therein. All conditions to the obligations of
Lender to make the Loan hereunder are imposed solely and exclusively for the
benefit of Lender, and no other Person shall have standing to require
satisfaction of such conditions in accordance with their terms or be entitled to
assume that Lender will refuse to make the Loan in the absence of strict
compliance with any or all thereof, and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender’s sole
discretion, Lender deems it advisable or desirable to do so.

Section 7.19. Right of Set-Off. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, during the continuance of an Event of Default, Lender may from time
to time, without presentment, demand, protest or other notice of any kind (all
of such rights being hereby expressly waived), set-off and appropriate and apply
any and all deposits (general or special) and any other indebtedness at any time
held or owing by Lender (including branches, agencies or affiliates of Lender
wherever located) to or for the credit or the account of Borrower against the
obligations and liabilities of Borrower to Lender hereunder, under the Notes,
the other Loan Documents or otherwise, irrespective of whether Lender shall have
made any demand hereunder and although such obligations, liabilities or claims,
or any of them, may be contingent or unmatured, and any such set-off shall be
deemed to have been made immediately upon the occurrence of an Event of Default
even though such charge is made or entered on the books of Lender subsequent
thereto.

 

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Section 7.20. Exculpation of Lender. Lender neither undertakes nor assumes any
responsibility or duty to Borrower or any other party to select, review,
inspect, examine, supervise, pass judgment upon or inform Borrower or any third
party of (a) the existence, quality, adequacy or suitability of Appraisals of
the Properties or other Collateral, (b) any environmental report, or (c) any
other matters or items, including engineering, soils and seismic reports that
are contemplated in the Loan Documents. Any such selection, review, inspection,
examination and the like, and any other due diligence conducted by Lender, is
solely for the purpose of protecting Lender’s rights under the Loan Documents,
and shall not render Lender liable to Borrower or any third party for the
existence, sufficiency, accuracy, completeness or legality thereof.

Section 7.21. Servicer. Lender may delegate any and all rights and obligations
of Lender hereunder and under the other Loan Documents to the Servicer upon
notice by Lender to Borrower, whereupon any notice or consent from the Servicer
to Borrower, and any action by Servicer on Lender’s behalf, shall have the same
force and effect as if Servicer were Lender.

Section 7.22. No Fiduciary Duty.

(a) Borrower acknowledges that, in connection with the Loan, this Agreement, the
other Loan Documents, the transactions contemplated thereby , Lender has relied
upon and assumed the accuracy and completeness of all of the financial, legal,
regulatory, accounting, tax and other information provided to, discussed with or
reviewed by Lender for such purposes, and Lender does not assume any liability
therefor or responsibility for the accuracy, completeness or independent
verification thereof. Lender, its affiliates and their respective equityholders
and employees (for purposes of this Section, the “Lending Parties”) have no
obligation to conduct any independent evaluation or appraisal of the assets or
liabilities (including any contingent, derivative or off-balance sheet assets
and liabilities) of Guarantor, Borrower or any other Person or any of their
respective affiliates or to advise or opine on any related solvency or viability
issues.

(b) It is understood and agreed that (i) the Lending Parties shall act under
this Agreement and the other Loan Documents as an independent contractor,
(ii) the Loan, the Loan Documents and the transactions contemplated thereby
represent an arm’s-length commercial transaction between the Lending Parties, on
the one hand, and Borrower, on the other, (iii) each Lending Party is acting
solely as principal and not as the agent or fiduciary of Borrower, Guarantor or
their respective affiliates, stockholders, employees or creditors or any other
Person and (iv) nothing in this Agreement, the other Loan Documents or the
transactions contemplated thereby shall be deemed to create (A) a fiduciary duty
(or other implied duty) on the party of any Lending Party to Guarantor,
Borrower, any of their respective affiliates, stockholders, employees or
creditors, or any other Person or (B) a fiduciary or agency relationship between
Guarantor, Borrower or any of their respective affiliates, stockholders,
employees or creditors, on the one hand, and the Lending Parties, on the other.
Borrower agrees that neither it nor Guarantor nor any of their respective
affiliates shall make, and hereby waives, any claim against the Lending Parties
based on an assertion that any Lending Party has rendered advisory services of
any nature or respect, or owes a fiduciary or similar duty to Borrower,
Guarantor or their respective affiliates, stockholders, employees or creditors.
Nothing in this Agreement or the other Loan Documents is intended to confer upon
any other Person (including affiliates, stockholders, employees or creditors of
Borrower and Guarantor) any rights or remedies by reason of any fiduciary or
similar duty.

 

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(c) Borrower acknowledges and agrees that Borrower has consulted its own legal
and financial advisors to the extent it deemed appropriate and that it is
responsible for making its own independent judgment with respect to this
Agreement, the other Loan Documents, the transactions contemplated thereby and
the process leading thereto.

Section 7.23. Borrower Information. Borrower shall make available to Lender all
information concerning its business and operations that Lender may reasonably
request. Lender agrees that it shall maintain in confidence any information
relating to Borrower, Guarantor, any of their subsidiaries, their businesses or
the Properties furnished to it by or on behalf of Borrower, Guarantor or any of
their subsidiaries; provided that Lender shall have the right to disclose any
and all such information (i) to affiliates of Lender and to Lender’s agents and
advisors (so long as each such Person shall have been instructed to keep the
same confidential in accordance with this Section 7.23), (ii) to any actual or
potential assignee, transferee or participant in connection with the
contemplated assignment, transfer or participation of all or any portion of the
Loan or any participations therein and their respective advisors and agents, or
to any direct or indirect contractual counterparties (or the professional
advisors thereto) to any swap or derivative transaction relating to Borrower and
its obligations, or to any Person that is a party to a repurchase agreement with
respect to the Loan (so long as each such Person shall have been instructed to
keep the same confidential in accordance with this Section 7.23) and (iii) to
any governmental agency, if requested by such governmental agency or otherwise
required to comply with the applicable rules and regulations of such
governmental agency or if required pursuant to legal or judicial process. In
addition, Lender may disclose the existence of this Agreement and the
information about this Agreement to market data collectors, similar services
providers to the lending industry, and service providers to Lender in connection
with the administration and management of this Agreement and the other Loan
Documents. Each party hereto (and each of their respective affiliates,
employees, representatives or other agents) may disclose to any and all Persons,
without limitation of any kind, the tax treatment and tax structure of the Loan,
this Agreement, the other Loan Documents, the transactions contemplated thereby
and all materials of any kind (including opinions and other tax analyses) that
are provided to any such party relating to such tax treatment and tax structure.
For the purpose of this Section, “tax structure” means any facts relevant to the
federal income tax treatment of the Loan, this Agreement, the other Loan
Documents, the transactions contemplated thereby but does not include
information relating to the identity of any of the parties hereto or any of
their respective affiliates.

Section 7.24. Prior Agreements. THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND
(WITH RESPECT TO AGENT AND THE LENDERS) THE CO-LENDER AGREEMENT CONTAIN THE
ENTIRE AGREEMENT OF THE PARTIES HERETO AND THERETO IN RESPECT OF THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY, AND ALL PRIOR AGREEMENTS AMONG OR
BETWEEN SUCH PARTIES, WHETHER ORAL OR WRITTEN, INCLUDING ANY TERM SHEETS,
CONFIDENTIALITY AGREEMENTS AND COMMITMENT LETTERS, ARE SUPERSEDED BY THE TERMS
OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (EXCEPT THAT ANY ORIGINATION FEE
SPECIFIED IN ANY TERM SHEET, COMMITMENT LETTER OR FEE LETTER SHALL BE AN
OBLIGATION OF BORROWER AND SHALL BE PAID AT CLOSING, AND ANY INDEMNIFICATIONS,
FLEX PROVISION, EXIT FEES AND THE LIKE PROVIDED FOR THEREIN SHALL SURVIVE THE
CLOSING).

 

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Section 7.25. Delay Not a Waiver. Neither any failure nor any delay on the part
of Lender in insisting upon strict performance of any term, condition, covenant
or agreement, or exercising any right, power, remedy or privilege hereunder,
under any other Loan Document, or under any other instrument given as security
therefor, shall operate as or constitute a waiver thereof, nor shall a single or
partial exercise thereof preclude any other future exercise, or the exercise of
any other right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting payment after the due date of any amount payable
hereunder or under any other Loan Document, Lender shall not be deemed to have
waived any right either to require prompt payment when due of all other amounts
due under this Agreement, the Note or the other Loan Documents, or to declare a
default for failure to effect prompt payment of any such other amount.

Section 7.26. Schedules and Exhibits Incorporated. The Schedules and Exhibits
annexed hereto are hereby incorporated herein as a part of this Agreement with
the same effect as if set forth in the body hereof.

Section 7.27. Joint and Several Liability.

(a) The representations, covenants, warranties and obligations of Borrower
hereunder are joint and several. In the event of (i) any payment by any one or
more of the Borrowers of any amount in excess of its respective Proportional
Amount, or (ii) the foreclosure of, or the delivery of deeds in lieu of
foreclosure relating to, any of the Collateral owned by one or more of the
Borrowers, each Borrower (the “Overpaying Borrower”) that has paid more than its
Proportional Amount or whose Collateral or assets have been utilized to satisfy
obligations under the Loan or otherwise for the benefit of one or more other
Borrowers shall be entitled, after payment in full of the Indebtedness and the
satisfaction of all the Borrowers’ other obligations to the Lender under the
Loan Documents, to contribution from each of the benefited Borrowers (i.e., the
Borrowers, other than the Overpaying Borrower, who have paid less than their
respective Proportional Amount or whose Collateral or assets have not been so
utilized to satisfy obligations under the Loan), for the amounts so paid,
advanced or benefited, up to such benefited Borrower’s then current Proportional
Amount. Such right to contribution shall be subordinate in all respects to the
Loan. As used herein, the “Proportional Amount” with respect to any Borrower
shall equal the amount derived as follows: (a) the ratio of the aggregate amount
of the Loan allocable to the Property or Properties in which such Borrower has
an interest to the then outstanding Principal Indebtedness; times (b) the
aggregate amount paid or payable by the Borrowers under the Loan Documents
(including interest).

(b) Notwithstanding the foregoing or anything in this Agreement or the other
Loan Documents to the contrary, the maximum amount of the Principal Indebtedness
that each of the following Borrowers shall be liable for under Loan Documents
shall be limited to the amount listed next to each such Borrower’s name below:

 

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  (i) Maxserv, Inc. - $25,410,000.

 

  (ii) Troy Coolidge No. 13, LLC - $4,070,000

 

  (iii) Sears Holdings Management Corporation - $246,070,000

 

  (iv) SHC Desert Springs, LLC - $7,370,000

 

  (v) KMART of Illinois, LLC - $3,520,000

 

  (vi) KMART of Washington, LLC – $9,790,000.

Section 7.28. Survival or Representations. All of the representations of
Borrower set forth in this Agreement and in the other Loan Documents shall
survive for so long as any portion of the Indebtedness is outstanding. All
representations, covenants and agreements made by Borrower in this Agreement or
in the other Loan Documents shall be deemed to have been relied upon by Lender
notwithstanding any investigation heretofore or hereafter made by Lender or on
its behalf.

Section 7.29. Certain Tax Forms. Upon request of Borrower, Lender shall provide
to Borrower a duly completed and executed Form W-9, Form W-8BEN, Form W-8BEN-E
or Form W-8ECI, as applicable.

Section 7.30. Amendment and Restatement.

(a) As of the New Closing Date, Borrower hereby (1) unconditionally ratifies and
confirms, renews and reaffirms all of its obligations under each of the other
Loan Documents, (2) acknowledges and agrees that such obligations remain in full
force and effect, binding on and enforceable against it in accordance with the
terms, covenants and conditions of this Agreement and the other Loan Documents
(as amended hereby), in each case, without impairment, and (3) represents,
warrants and covenants that it is not in default under this Agreement or any of
the other Loan Documents beyond any applicable notice and cure periods, and
there are no defenses, offsets or counterclaims against the Indebtedness.

(b) Sears Holdings Corporation hereby (1) unconditionally approves and consents
to the execution by Borrower of this Agreement and the modifications to the Loan
Documents effected hereby, (2) unconditionally ratifies, confirms, renews and
reaffirms all of its obligations under the Guaranty, (3) acknowledges and agrees
that its obligations under the Guaranty remain in full force and effect, binding
on and enforceable against it in accordance with the terms, covenants and
conditions of such documents without impairment, and (4) as of the New Closing
Date, represents, warrants and covenants that (i) it is not in default under the
Guaranty beyond any applicable notice and cure periods and (ii) there are no
defenses, offsets or counterclaims against its obligations under the Guaranty.

(c) Lender, Borrower and Guarantor hereby agree that the other Loan Documents
are amended as follows:

 

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  (i) All references to “Lender” in each of the Loan Documents shall mean each
party that is a “Lender” hereunder.

 

  (ii) Section 7.1(a) of this Agreement shall be incorporated by reference into
each of the Loan Documents and each reference to “Lender” in any Loan Document
shall be subject to the terms of Section 7.1(a) of this Agreement.

 

  (iii) All references to “Loan Agreement” in each of the Loan Documents shall
mean this Agreement, and all references to “Loan Documents shall mean the Loan
Documents as amended by this Section 7.30. As applicable, references to “Closing
Date” in any Loan Document shall mean the “Original Closing Date.” All
references in any other Loan Document to the principal amount of the Loan or any
of the Notes are hereby deemed revised to reflect the principal amount of the
Loan outstanding from time to time pursuant to this Agreement. All other terms
defined in any Loan Document by reference to the “Loan Agreement” shall have the
respective meanings ascribed to such terms in this Agreement.

(d) Upon Lender’s request, Borrower shall execute such amendments to the other
Loan Documents as reasonably necessary to conform such Loan Documents with this
Agreement.

[Signatures appear on following pages.]

 

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The parties hereto are executing this Agreement as of the date first above
written.

 

AGENT AND LENDER:

JPP, LLC,

a Delaware limited liability company, as Agent and Lender

By:  

/s/ Edward S. Lampert

Name:   Edward S. Lampert Title:   Authorized Signatory LENDER:

JPP II, LLC,

a Delaware limited liability company, as Lender

By:  

/s/ Edward S. Lampert

Name:   Edward S. Lampert Title:   Authorized Signatory

[Signatures continue on following page.]

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LENDER:

CASCADE INVESTMENT, L.L.C.,

a Washington limited liability company

By:   /s/ Justin Howell Name:   Justin Howell Title:   Authorized Signatory

[Signatures continue on following page.]

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GUARANTOR:

SEARS HOLDINGS CORPORATION,

a Delaware corporation

By:  

/s/ Robert A. Riecker

  Name: Robert A. Riecker   Title: Chief Financial Officer

[Signatures continue on following page.]

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BORROWER: SEARS, ROEBUCK AND CO., a New York corporation

By:  

/s/ Robert A. Riecker

  Name: Robert A. Riecker   Title: Chief Financial Officer

KMART CORPORATION,

a Michigan corporation

By:  

/s/ Robert A. Riecker

  Name: Robert A. Riecker   Title: Chief Financial Officer

KMART STORES OF ILLINOIS LLC,

an Illinois limited liability company

By: Kmart Corporation, a Michigan corporation, as Sole Member

By:  

/s/ Robert A. Riecker

  Name: Robert A. Riecker   Title: Chief Financial Officer

KMART OF WASHINGTON LLC,

a Washington limited liability company

By: Kmart Corporation, a Michigan corporation, as Sole Member

By:  

/s/ Robert A. Riecker

  Name: Robert A. Riecker   Title: Chief Financial Officer

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SHC DESERT SPRNGS, LLC,

a Delaware limited liability company

By: Kmart Corporation, a Michigan corporation, as Sole Member By:  

/s/ Robert A. Riecker

  Name: Robert A. Riecker   Title: Chief Financial Officer

INNOVEL SOLUTIONS, INC.,

a Delaware corporation

By:  

/s/ Robert A. Riecker

  Name: Robert A. Riecker   Title: Vice President

SEARS HOLDINGS MANAGEMENT CORPORATION,

a Delaware corporation

By:  

/s/ Robert A. Riecker

  Name: Robert A. Riecker   Title: President

MAXSERV, INC.,

a Delaware corporation

By:  

/s/ Robert A. Riecker

  Name: Robert A. Riecker   Title: Vice President

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TROY COOLIDGE NO. 13, LLC,

a Michigan limited liability company

By: Kmart Corporation, a Michigan corporation, as Sole Member By:  

/s/ Robert A. Riecker

  Name: Robert A. Riecker   Title: Chief Financial Officer

BIG BEAVER OF FLORIDA DEVELOPMENT, LLC,

a Florida limited liability company

By:  

/s/ Robert A. Riecker

  Name: Robert A. Riecker   Title: Vice President

SEARS DEVELOPMENT CO.,

a Delaware corporation

By:  

/s/ Robert A. Riecker

  Name: Robert A. Riecker   Title: Vice President