Document:

Exhibit 4.01

 

SUPPLEMENTAL TRUST INDENTURE

 

FROM

 

NORTHERN STATES POWER COMPANY

(A MINNESOTA CORPORATION)

 

TO

 

BNY MIDWEST TRUST COMPANY

 

 

DATED JULY 1, 2005

 

 

SUPPLEMENTAL TO TRUST INDENTURE

DATED FEBRUARY 1, 1937

 

AND

 

SUPPLEMENTAL AND RESTATED 

TRUST INDENTURE

 

DATED MAY 1, 1988

 

 

TABLE OF CONTENTS

 

	
  PARTIES

  	
   

  
	
   

  	
   

  
	
  RECITALS

  	
   

  
	
   

  	
   

  
	
  ARTICLE I

  	
  SPECIFIC SUBJECTION OF ADDITIONAL PROPERTY TO THE LIEN OF THE
  INDENTURE

  	
   

  
	
   

  	
   

  
	
  Section 1.01

  	
   

  
	
   

  	
   

  
	
  ARTICLE II

  	
  FORM AND EXECUTION OF BONDS OF SERIES DUE JULY 15, 2035

  	
   

  
	
   

  	
   

  
	
  Section 2.01

  	
   

  
	
   

  	
   

  
	
  Section 2.02

  	
   

  
	
   

  	
   

  
	
  Section 2.03

  	
   

  
	
   

  	
   

  
	
  Section 2.04

  	
   

  
	
   

  	
   

  
	
  Section 2.05

  	
   

  
	
   

  	
   

  
	
  Section 2.06

  	
   

  
	
   

  	
   

  
	
  ARTICLE III

  	
  APPOINTMENT OF AUTHENTICATING AGENT

  	
   

  
	
   

  	
   

  
	
  Section 3.01

  	
   

  
	
   

  	
   

  
	
  Section 3.02

  	
   

  
	
   

  	
   

  
	
  Section 3.03

  	
   

  
	
   

  	
   

  
	
  Section 3.04

  	
   

  
	
   

  	
   

  
	
  ARTICLE IV

  	
  EFFECTIVE DATE OF RESTATED INDENTURE

  	
   

  
	
   

  	
   

  
	
  Section 4.01

  	
   

  
	
   

  	
   

  
	
  ARTICLE V

  	
  FINANCING STATEMENT TO COMPLY WITH THE UNIFORM COMMERCIAL
  CODE

  	
   

  
	
   

  	
   

  
	
  Section 5.01

  	
   

  
	
   

  	
   

  
	
  Section 5.02

  	
   

  
	
   

  	
   

  
	
  Section 5.03

  	
   

  
	
   

  	
   

  
	
  Section 5.04

  	
   

  
	
   

  	
   

  
	
  Section 5.05

  	
   

  

 

i

 

	
  Section 5.06

  	
   

  
	
   

  	
   

  
	
  ARTICLE VI

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  
	
  Section 6.01

  	
   

  
	
   

  	
   

  
	
  Section 6.02

  	
   

  
	
   

  	
   

  
	
  Section 6.03

  	
   

  
	
   

  	
   

  
	
  Section 6.04

  	
   

  
	
   

  	
   

  
	
  Section 6.05

  	
   

  
	
   

  	
   

  
	
  Section 6.06

  	
   

  
	
   

  	
   

  
	
  SCHEDULE A - PROPERTIES

  	
   

  
			

 

ii

 

Supplemental Trust Indenture, made effective as of the 1st day of July, 2005, by and
between NORTHERN STATES POWER COMPANY (formerly Northern Power Corporation), a
corporation duly organized and existing under and by virtue of the laws of the
State of Minnesota, having its principal office in the City of Minneapolis,
Minnesota (the “Company”), party of the first part, and BNY MIDWEST TRUST
COMPANY, a corporation duly organized and existing under and by virtue of the
laws of the State of Illinois, having its principal office in the City of
Chicago, Illinois (as successor Trustee to Harris Trust and Savings Bank), as
trustee (the “Trustee”), party of the second part;

 

WITNESSETH:

 

WHEREAS, a predecessor in
interest to the Company, Xcel Energy Inc. (formerly Northern States Power
Company), a corporation duly organized and existing under and by virtue of the
laws of the State of Minnesota (the “Predecessor Company”) has heretofore
executed and delivered to the Trustee its Trust Indenture (the “1937 Indenture”),
made as of February 1, 1937, whereby the Predecessor Company granted,
bargained, sold, warranted, released, conveyed, assigned, transferred,
mortgaged, pledged, set over and confirmed to the Trustee and to its respective
successors in trust, all property, real, personal and mixed then owned or
thereafter acquired or to be acquired by the Predecessor Company (except as
therein excepted from the lien thereof) and subject to the rights reserved by
the Predecessor Company in and by the provisions of the 1937 Indenture, to be
held by said Trustee in trust in accordance with the provisions of the 1937
Indenture for the equal pro rata benefit and security of all and each of the
bonds issued and to be issued thereunder in accordance with the provisions
thereof; and

 

WHEREAS, the Predecessor Company
heretofore has executed and delivered to the Trustee a Supplemental Trust
Indenture, made as of June 1, 1942, whereby the Predecessor Company
conveyed, assigned, transferred, mortgaged, pledged, set over and confirmed to
the Trustee, and its respective successors in said trust, additional property
acquired by it subsequent to the date of the 1937 Indenture; and

 

WHEREAS, the Predecessor Company
heretofore has executed and delivered to the Trustee the following additional
Supplemental Trust Indentures which, in addition to conveying, assigning,
transferring, mortgaging, pledging, setting over and confirming to the Trustee,
and its respective successors in said trust, additional property acquired by it
subsequent to the preparation of the next preceding Supplemental Trust
Indenture and adding to the covenants, conditions and agreements of the 1937
Indenture certain additional covenants, conditions and agreements to be
observed by the Predecessor Company, created the following series of First
Mortgage Bonds:

 

 

	
  Date of Supplemental

  Trust Indenture

  	
   

  	
  Designation
  of Series

  
	
   

  	
   

  	
   

  
	
  February 1, 1944

  	
   

  	
  Series due February 1, 1974 (retired)

  
	
  October 1, 1945

  	
   

  	
  Series due October 1, 1975 (retired)

  
	
  July 1, 1948

  	
   

  	
  Series due July 1, 1978 (retired)

  
	
  August 1, 1949

  	
   

  	
  Series due August 1, 1979 (retired)

  
	
  June 1, 1952

  	
   

  	
  Series due June 1, 1982 (retired)

  
	
  October 1, 1954

  	
   

  	
  Series due October 1, 1984 (retired)

  
	
  September 1, 1956

  	
   

  	
  Series due 1986 (retired)

  
	
  August 1, 1957

  	
   

  	
  Series due August 1, 1987 (redeemed)

  
	
  July 1, 1958

  	
   

  	
  Series due July 1, 1988 (retired)

  
	
  December 1, 1960

  	
   

  	
  Series due December 1, 1990 (retired)

  
	
  August 1, 1961

  	
   

  	
  Series due August 1, 1991 (retired)

  
	
  June 1, 1962

  	
   

  	
  Series due June 1, 1992 (retired)

  
	
  September 1, 1963

  	
   

  	
  Series due September 1, 1993 (retired)

  
	
  August 1, 1966

  	
   

  	
  Series due August 1, 1996 (redeemed)

  
	
  June 1, 1967

  	
   

  	
  Series due June 1, 1995 (redeemed)

  
	
  October 1, 1967

  	
   

  	
  Series due October 1, 1997 (redeemed)

  
	
  May 1, 1968

  	
   

  	
  Series due May 1, 1998 (redeemed)

  
	
  October 1, 1969

  	
   

  	
  Series due October 1, 1999 (redeemed)

  
	
  February 1, 1971

  	
   

  	
  Series due March 1, 2001 (redeemed)

  
	
  May 1, 1971

  	
   

  	
  Series due June 1, 2001 (redeemed)

  
	
  February 1, 1972

  	
   

  	
  Series due March 1, 2002 (redeemed)

  
	
  January 1, 1973

  	
   

  	
  Series due February 1, 2003 (redeemed)

  
	
  January 1, 1974

  	
   

  	
  Series due January 1, 2004 (redeemed)

  
	
  September 1, 1974

  	
   

  	
  Pollution Control Series A (redeemed)

  
	
  April 1, 1975

  	
   

  	
  Pollution Control Series B (redeemed)

  
	
  May 1, 1975

  	
   

  	
  Series due May 1, 2005 (redeemed)

  
	
  March 1, 1976

  	
   

  	
  Pollution Control Series C (retired)

  
	
  June 1, 1981

  	
   

  	
  Pollution Control Series D, E and F (redeemed)

  
	
  December 1, 1981

  	
   

  	
  Series due December 1, 2011 (redeemed)

  
	
  May 1, 1983

  	
   

  	
  Series due May 1, 2013 (redeemed)

  
	
  December 1, 1983

  	
   

  	
  Pollution Control Series G (redeemed)

  
	
  September 1, 1984

  	
   

  	
  Pollution Control Series H (redeemed)

  
	
  December 1, 1984

  	
   

  	
  Resource Recovery Series I (redeemed)

  
	
  May 1, 1985

  	
   

  	
  Series due June 1, 2015 (redeemed)

  
	
  September 1, 1985

  	
   

  	
  Pollution Control Series J, K and L (redeemed)

  
	
  July 1, 1989

  	
   

  	
  Series due July 1, 2019 (redeemed)

  
	
  June 1, 1990

  	
   

  	
  Series due June 1, 2020 (redeemed)

  
	
  October 1, 1992

  	
   

  	
  Series due October 1, 1997 (retired)

  
	
  April 1, 1993

  	
   

  	
  Series due April 1, 2003 (retired)

  
	
  December 1, 1993

  	
   

  	
  Series due December 1, 2000 (retired), and December 1,
  2005

  

 

2

 

	
  Date of Supplemental

  Trust Indenture

  	
   

  	
  Designation
  of Series

  
	
   

  	
   

  	
   

  
	
  February 1, 1994

  	
   

  	
  Series due February 1, 1999 (retired)

  
	
  October 1, 1994

  	
   

  	
  Series due October 1, 2001 (retired)

  
	
  June 1, 1995

  	
   

  	
  Series due July 1, 2025

  
	
  April 1, 1997

  	
   

  	
  Pollution Control Series M (redeemed), N, O and P

  
	
  March 1, 1998

  	
   

  	
  Series due March 1, 2003 (retired), and  March 1, 2028

  
	
  May 1, 1999

  	
   

  	
  Resource Recovery Series Q

  
	
  June 1, 2000

  	
   

  	
  Resource Recovery Series R; and

  

 

WHEREAS, on August 18,
2000, New Centuries Energies, Inc. was merged with and into the
Predecessor Company and the Predecessor Company changed its corporate name from
Northern States Power Company to Xcel Energy Inc.; and

 

WHEREAS, pursuant to an
Assignment and Assumption Agreement dated as of August 18, 2000 between
the Predecessor Company and the Company, substantially all the assets of the
Predecessor Company (other than the stock of the Predecessor Company’s
subsidiaries) were conveyed to, and substantially all the liabilities of the
Predecessor Company, including liabilities created under the Indenture (as
hereinafter defined), were assumed by, the Company (the “Assignment”); and

 

WHEREAS, pursuant to the
Supplemental Trust Indenture dated as of August 1, 2000 among the Predecessor
Company, the Company and Harris Trust and Savings Bank, as trustee, the
requirements and conditions precedent set forth in the Original Indenture and
the Restated Indenture (each as hereinafter defined) with respect to the
Assignment were satisfied; and

 

WHEREAS, the Company heretofore has executed and
delivered to the Trustee the following additional Supplemental Trust Indentures
which, in addition to conveying, assigning, transferring, mortgaging, pledging,
setting over and confirming to the Trustee, and its respective successors in
said trust, additional property acquired by it (or, as the case may be, the
Predecessor Company) subsequent to the preparation of the next preceding
Supplemental Trust Indenture and adding to the covenants, conditions and agreements
of the 1937 Indenture certain additional covenants, conditions, and agreements
to be observed by the Company, created the following series of First Mortgage
Bonds:

 

	
  Date of Supplemental

  Trust Indenture

  	
   

  	
  Designation
  of Series

  
	
   

  	
   

  	
   

  
	
  June 1, 2002

  	
   

  	
  Series due August 15,
  2003 (retired)

  
	
  July 1, 2002

  	
   

  	
  Pollution
  Control Series S

  
	
  August 1, 2002

  	
   

  	
  Series A
  and Series B due August 28, 2012

  
	
  May 1, 2003

  	
   

  	
  Series due
  2004, extendible through 2006 (retired);

  
	
  August 1, 2003

  	
   

  	
  Series due
  2006 and Series due 2010; and

  

 

3

 

WHEREAS, the 1937 Indenture and
all of the foregoing Supplemental Trust Indentures are referred to herein
collectively as the “Original Indenture”; and

 

WHEREAS, the Predecessor Company
heretofore has executed and delivered to the Trustee a Supplemental and
Restated Trust Indenture, dated May 1, 1988 (the “Restated Indenture”),
which, in addition to conveying, assigning, transferring, mortgaging, pledging,
setting over and confirming to the Trustee, and its respective successors in
said trust additional property acquired by it subsequent to the preparation of
the next preceding Supplemental Trust Indenture, amended and restated the
Original Indenture (except for those Supplemental Trust Indentures executed
after May 1, 1988); and

 

WHEREAS, the Restated Indenture
will become effective and operative when all bonds of each series issued under
the Original Indenture prior to May 1, 1988, shall have been retired
through payment or redemption (including those bonds “deemed to be paid” within
the meaning of that term as used in Article XVII of the 1937 Indenture) or
when, subject to certain exceptions, the holders of the requisite principal
amount of such bonds shall have consented to the amendments contained in the
Restated Indenture (such date being herein called the “Effective Date”); and

 

WHEREAS, in accordance with the
terms of the Restated Indenture, because all bonds of each series issued under
the Original Indenture prior to May 1, 1988 have been retired through
payment or redemption, the Company desires to have the Restated Indenture
become effective and operative on the date this Supplemental Trust Indenture is
first recorded and filed in such manner and to such extent as is required by
law; and

 

WHEREAS, the Effective Date will
be July 20, 2005; and

 

WHEREAS, the Original Indenture,
the Restated Indenture and all trust indentures supplemental thereto are
referred to herein collectively as the “Indenture”; and

 

WHEREAS, pursuant to the
Agreement of Resignation, Appointment and Acceptance dated as of May 1,
2002 among the Company, BNY Midwest Trust Company, as successor trustee, and
Harris Trust and Savings Bank, the Trustee accepted the rights, powers, duties
and obligations of the trustee under the Indenture effective as of May 9,
2002; and

 

WHEREAS, the Indenture provides
that bonds may be issued thereunder in one or more series, each series to have
such distinctive designation as the Board of Directors of the Company may
select for such series; and

 

WHEREAS, the Company is desirous
of providing for the creation of a new series of First Mortgage Bonds, said new
series of bonds to be designated “First Mortgage Bonds, Series due July 15,
2035,” the bonds of such series to be issued
as registered bonds without coupons in denominations of a multiple of $1,000,
and the bonds of such series to be substantially in the form and of the tenor
following with the redemption prices inserted therein in conformity with the
provisions of Section 2.02 hereof, to-wit:

 

4

 

(Form of Bonds of Series due July 15,
2035)

NORTHERN STATES POWER COMPANY

(Incorporated under the laws of the State of Minnesota)

First Mortgage Bond

Series due July 15, 2035

 

	
  No.

  	
   

  	
  $                            

  

 

[Unless this certificate is
presented by an authorized representative of The Depository Trust Company, a
New York corporation, to the Company or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of
Cede & Co. or such other name as is requested by an authorized
representative of The Depository Trust Company (and any payment is made to Cede &
Co. or to such other entity as is requested by an authorized representative of
The Depository Trust Company), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner
hereof, Cede & Co., has an interest herein.]*

 

NORTHERN STATES POWER COMPANY, a
corporation organized and existing under the laws of the State of Minnesota
(the “Company”), for value received, hereby promises to pay to [                         ]
or its registered assigns, at the office of the Trustee, in Chicago, Illinois,
or, at the option of the registered owner, at the agency of the Company in the
Borough of Manhattan, City and State of New York, an amount equal to [                              ]
Dollars in lawful money of the United States of America, on the 15th day of
July, 2035, and to pay interest hereon from the date hereof at the rate of 5.25
percent per annum, in like money, until the Company’s obligation with respect
to the payment of such principal sum shall be discharged; said interest being
payable at the option of the person entitled to such interest either at the
office of the Trustee, in Chicago, Illinois, or at the agency of the Company in
the Borough of Manhattan, City and State of New York, on the 15th day of January and
on the 15th day of July in each year provided that as long as there is no
existing default in the payment of interest and except for the payment of
defaulted interest, the interest payable on any January 15 or July 15
will be paid to the person in whose name this bond was registered at the close
of business on the record date (the January 1 prior to such January 15
or the July 1 prior to such July 15 (whether or not a business day)).

 

[EXCEPT UNDER THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, THESE GLOBAL BONDS MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE REGISTERED DEPOSITORY OR BY A NOMINEE OF
THE REGISTERED DEPOSITORY TO THE REGISTERED DEPOSITORY, ANOTHER NOMINEE OF THE
REGISTERED DEPOSITORY, A SUCCESSOR OF THE REGISTERED DEPOSITORY OR A NOMINEE OF
SUCH SUCCESSOR.]*

 

This bond is one of a duly
authorized issue of bonds of the Company, of the series and designation
indicated on the face hereof, which issue of bonds consists, or may consist, of
several series of varying denominations, dates and tenor, all issued and to be
issued under and

 

* This legend to be included if the bonds are issued as
a global bond in book-entry form.

 

5

 

equally secured (except insofar
as a sinking fund, or similar fund, established in accordance with the
provisions of the Indenture may afford additional security for the bonds of any
specific series) by a Trust Indenture dated February 1, 1937 (the “1937
Indenture”), as supplemented by 54 supplemental trust indentures (collectively,
the “Supplemental Indentures”), a Supplemental and Restated Trust Indenture
dated May 1, 1988 (the “Restated Indenture”) and a new supplemental trust
indenture for the bonds of this series (the “Supplemental Trust Indenture”),
executed by the Company to BNY MIDWEST TRUST COMPANY (as successor trustee to
Harris Trust and Savings Bank), as trustee (the “Trustee”).  The 1937 Indenture, as supplemented by the
Supplemental Indentures, the Restated Indenture and the Supplemental Trust
Indenture, is referred to herein as the “Indenture.”  The Restated Indenture amends and restates
the 1937 Indenture and certain of the Supplemental Indentures and became
effective and operative on July 20, 2005.  Reference hereby is made
to the Indenture for a description of the property mortgaged and pledged, the
nature and extent of the security, the rights of the holders of the bonds as to
such security and the terms and conditions upon which the bonds may be issued
under the Indenture and are secured.  The
principal hereof may be declared or may become due on the conditions, in the
manner and at the time set forth in the Indenture upon the happening of a
default as provided in the Indenture.

 

With the consent of the Company
and to the extent permitted by and as provided in the Indenture, the rights and
obligations of the Company and of the holders of the bonds and the terms and
provisions of the Indenture and of any instruments supplemental thereto may be
modified or altered by affirmative vote of the holders of at least 66 2/3% in
principal amount of the bonds then outstanding under the Indenture and any instruments
supplemental thereto (excluding bonds challenged and disqualified from voting
by reason of the Company’s interest therein as provided in the Indenture);
provided that without the consent of all holders of all bonds affected no such
modification or alteration shall permit the extension of the maturity of the
principal of any bond or the reduction in the rate of interest thereon or any
other modification in the terms of payment of such principal or interest.

 

The Company and the Trustee may
deem and treat the person in whose name this bond is registered as the absolute
owner hereof for the purpose of receiving payment and for all other purposes
and shall not be affected by any notice to the contrary.

 

The bonds of this series
shall be redeemable at the option of the Company, as a whole or in part, on any
date upon not less than 30 days’ previous notice to be given in the manner and
with the effect provided in Section 10.02 of the Restated Indenture at a
redemption price equal to the greater of (a) the principal amount being
redeemed or (b) the sum of the present values of the remaining scheduled
payments of principal and interest on the bonds of this series that are being
redeemed, discounted to the redemption date on a semi-annual basis (assuming a 360-day
year consisting of twelve 30-day months) at the Treasury Yield plus 15 basis
points, plus in each case accrued and unpaid interest to the redemption date.

 

“Treasury Yield” means, with respect to any redemption
date, (i) the yield, under the heading which represents the average for
the immediately preceding week, appearing in the most recently published
statistical release designated “H.15(519)” or any
successor publication which is published weekly by the Board of Governors of
the Federal Reserve System and which establishes yields on actively traded U.S.
Treasury securities adjusted to constant maturity under

 

6

 

the caption “Treasury Constant Maturities,” for the
maturity corresponding to the Comparable Treasury Issue (if no maturity is
within three months before or after the Remaining Term, yields for the two
published maturities most closely corresponding to the Comparable Treasury
Issue will be determined and the Treasury Yield will be interpolated or
extrapolated from such yields on a straight line basis, rounding to the nearest
month); or (ii) if such release (or any successor release) is not
published during the week preceding the calculation date or does not contain
such yields, the rate per annum equal to the semi-annual equivalent yield to
maturity of the Comparable Treasury Issue, calculated using a price for the
Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for such redemption date.  The Treasury Yield will be calculated on the
third business day preceding the date fixed for redemption.

 

“Comparable Treasury Issue” means the United States
Treasury security selected by an Independent Investment Banker as having a
maturity comparable to the remaining term (the “Remaining Term”) of the bonds
of this series that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of
corporate debt securities of comparable maturity to the remaining term of the
bonds of this series.

 

“Comparable Treasury Price” means (i) the average
of the Reference Treasury Dealer Quotations for such redemption date, after
excluding the highest and lowest of such Reference Treasury Dealer Quotations
for such redemption date, or (ii) if the Trustee obtains fewer than four
such Reference Treasury Dealer Quotations, the average of all such Reference
Treasury Dealer Quotations.

 

“Independent Investment Banker” means Barclays Capital
Inc. or J.P. Morgan Securities Inc. or their successors or, if such firms or
their successors are unwilling or unable to select the Comparable Treasury
Issue, an independent investment banking institution of national standing
appointed by the Trustee after consultation with the Company.

 

“Reference Treasury Dealer” means (i) Barclays
Capital Inc. or J.P. Morgan Securities Inc. and any other primary U.S.
Government securities dealer in New York City (a “Primary Treasury Dealer”)
designated by, and not affiliated with, Barclays Capital Inc., J.P. Morgan
Securities Inc. and their respective successors, provided, however, that if
Barclays Capital Inc. or J.P. Morgan Securities Inc. or any of their designees
ceases to be a Primary Treasury Dealer, the Company shall appoint another Primary
Treasury Dealer as a substitute, and (ii) any other Primary Treasury
Dealers selected by the Company after consultation with the Independent
Investment Banker.

 

“Reference Treasury Dealer Quotations” means, for each
Reference Treasury Dealer and any redemption date, the average, as determined
by the Independent Investment Banker, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Independent Investment Banker by
such Reference Treasury Dealer at 5:00 p.m. on the third business day
preceding such redemption date.

 

Bonds of this series are not subject to a sinking
fund.

 

7

 

This bond is transferable as
prescribed in the Indenture by the registered owner hereof in person, or by his
duly authorized attorney, at the office of the Trustee in Chicago, Illinois, or
at the option of the owner at the agency of the Company in the Borough of
Manhattan, City and State of New York, or elsewhere if authorized by the
Company, upon surrender and cancellation of this bond, and thereupon a new bond
or bonds of the same series and of a like aggregate principal amount will be
issued to the transferee in exchange therefor as provided in the Indenture,
upon payment of taxes or other governmental charges, if any, that may be
imposed in relation thereto.

 

Bonds of this series are
interchangeable as to denominations in the manner and upon the conditions
prescribed in the Indenture.

 

No charge shall be made by the
Company for any exchange or transfer of bonds of this series, other than for
taxes or other governmental charges, if any, that may be imposed in relation
thereto.

 

The Company shall not be required to issue, transfer
or exchange any bond of this series during a period of 10 days immediately
preceding any selection of bonds of this series to be redeemed.  The Company shall not be required to transfer
or exchange any bond of this series called or being called for redemption in its
entirety or to transfer or exchange the called portion of a bond of this series
which has been called for partial redemption.

 

No recourse shall be had for the
payment of the principal of or the interest on this bond, or any part thereof,
or of any claim based hereon or in respect hereof or of said Indenture, against
any incorporator, or any past, present, or future shareholder, officer or
director of the Company or of any predecessor or successor corporation, either
directly or through the Company, or through any such predecessor or successor
corporation, or through any receiver or a trustee in bankruptcy, whether by
virtue of any constitution, statute, or rule of law or by the enforcement
of any assessment or penalty or otherwise, all such liability being, by the
acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released, as more fully provided in the Indenture.

 

This bond shall not be valid or
become obligatory for any purpose unless and until the certificate of
authentication hereon shall have been signed by or on behalf of BNY Midwest
Trust Company (as successor trustee to Harris Trust and Savings Bank), as
Trustee under the Indenture, or its successor thereunder.

 

8

 

IN WITNESS WHEREOF, NORTHERN
STATES POWER COMPANY has caused this bond to be executed in its name by its
President or a Vice President and its corporate seal, or a facsimile thereof,
to be hereto affixed and attested by its Secretary or an Assistant Secretary.

 

 

	
  Dated: 

  	
   

  	
   

  	
  NORTHERN STATES
  POWER COMPANY

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  President

  	
   

  
									

 

(Form of Trustee’s Certificate)

 

This bond is one of the bonds of
the series designated thereon, described in the within-mentioned Indenture.

 

	
   

  	
  BNY MIDWEST TRUST
  COMPANY, 

  
	
   

  	
  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized
  Officer

  

 

and

 

WHEREAS, the Company is desirous
of conveying, assigning, transferring, mortgaging, pledging, setting over and
confirming to the Trustee and to its respective successors in trust, additional
property acquired by it subsequent to the date of the preparation of the
Supplemental Trust Indenture dated as of August 1, 2003; and

 

WHEREAS, the Indenture provides
in substance that the Company and the Trustee may enter into indentures
supplemental thereto for the purposes, among others, of creating and setting
forth the particulars of any new series of bonds and of providing the terms and
conditions of the issue of the bonds of any series not expressly provided for
in the Indenture and of conveying, assigning, transferring, mortgaging,
pledging, setting over and confirming to the Trustee additional property of the
Company, and for any other purpose not inconsistent with the terms of the
Indenture; and

 

WHEREAS, the execution and
delivery of this Supplemental Trust Indenture have been duly authorized by a
resolution adopted by the Board of Directors of the Company; and

 

WHEREAS, the Trustee has duly
determined to execute this Supplemental Trust Indenture and to be bound,
insofar as it may lawfully do so, by the provisions hereof;

 

NOW, THEREFORE, Northern States
Power Company, in consideration of the premises and of one dollar duly paid to
it by the Trustee at or before the ensealing and delivery of these presents,
the receipt of which is hereby acknowledged, and other good and valuable
considerations, does hereby covenant and agree to and with BNY Midwest Trust
Company (as successor trustee to Harris Trust and Savings Bank), as Trustee,
and its successors in the trust

 

9

 

under the Indenture for the benefit of those who hold
or shall hold the bonds, or any of them, issued or to be issued thereunder, as
follows:

 

ARTICLE I

SPECIFIC SUBJECTION OF ADDITIONAL PROPERTY

TO THE LIEN OF THE INDENTURE

 

SECTION 1.01.  The Company, in order to better secure the
payment, of both the principal and interest, of all bonds of the Company at any
time outstanding under the Indenture according to their tenor and effect and
the performance of and compliance with the covenants and conditions contained
in the Indenture, has granted, bargained, sold, warranted, released, conveyed,
assigned, transferred, mortgaged, pledged, set over and confirmed, and by these
presents does grant, bargain, sell, warrant, release, convey, assign, transfer,
mortgage, pledge, set over and confirm, to the Trustee and to its respective
successors in said trust forever, subject to the rights reserved by the Company
in and by the provisions of the Indenture, all of the property described and
mentioned or enumerated in a schedule annexed hereto and marked Schedule A,
reference to said schedule being made hereby with the same force and
effect as if the same were incorporated herein at length; together with all and
singular the tenements, hereditaments and appurtenances belonging and in any
way appertaining to the aforesaid property or any part thereof with the
reversion and reversions, remainder and remainders, tolls, rents and revenues,
issues, income, products and profits thereof;

 

Also, in order to subject the
personal property and chattels of the Company to the lien of the Indenture and
to conform with the provisions of the Uniform Commercial Code, all fossil,
nuclear, hydro and other electric generating plants, including buildings and
other structures, turbines, generators, exciters, boilers, reactors, nuclear
fuel, other boiler plant equipment, condensing equipment and all other
generating equipment; substations; electric transmission and distribution
systems, including structures, poles, towers, fixtures, conduits, insulators,
wires, cables, transformers, services and meters; steam heating mains and
equipment; gas transmission and distribution systems, including structures,
storage facilities, mains, compressor stations, purifier stations, pressure
holders, governors, services and meters; telephone plant and related
distribution systems; trucks and trailers; office, shop and other buildings and
structures, furniture and equipment; apparatus and equipment of all other kinds
and descriptions; materials and supplies; all municipal and other franchises,
leaseholds, licenses, permits, privileges, patents and patent rights; all
shares of stock, bonds, evidences of indebtedness, contracts, claims, accounts
receivable, choses in action and other intangibles, all books of account and
other corporate records;

 

Excluding, however, all
merchandise and appliances heretofore or hereafter acquired for the purpose of
sale to customers and others;

 

All the estate, right, title,
interest and claim, whatsoever, at law as well as in equity, which the Company
now has or hereafter may acquire in and to the aforesaid property and every
part and parcel thereof subject, however, to the right of the Company, upon the
occurrence and continuation of a Completed Default as defined in the Indenture,
to retain in its possession all shares of stock, notes, evidences of
indebtedness, other securities and cash not expressly required by the
provisions hereof to be deposited with the Trustee, to retain in its possession
all contracts,

 

10

 

bills and accounts receivable,
motor cars, any stock of goods, wares and merchandise, equipment or supplies
acquired for the purpose of consumption in the operation, construction or
repair of any of the properties of the Company, and to sell, exchange, pledge,
hypothecate or otherwise dispose of any or all of such property so retained in
its possession, free from the lien of the Indenture, without permission or
hindrance on the part of the Trustee, or any of the bondholders. No person in
any dealings with the Company in respect of any such property shall be charged
with any notice or knowledge of any such Completed Default under the Indenture
while the Company is in possession of such property.  Nothing contained herein or in the Indenture
shall be deemed or construed to require the deposit with, or delivery to, the
Trustee of any of such property, except such as is specifically required to be
deposited with the Trustee by some express provision of the Indenture;

 

To have and to hold all said
property, real, personal and mixed, granted, bargained, sold, warranted,
released, conveyed, assigned, transferred, mortgaged, pledged, set over or
confirmed by the Company as aforesaid, or intended so to be, to the Trustee and
its successors and assigns forever, subject, however, to Permitted Encumbrances and to the further reservations, covenants, conditions,
uses and trusts set forth in the Indenture; in trust nevertheless for the same
purposes and upon the same conditions as are set forth in the Indenture.

 

ARTICLE II

FORM AND EXECUTION OF BONDS OF SERIES DUE JULY 15, 2035

 

SECTION 2.01.  There is hereby created, for issuance under
the Indenture, a series of bonds designated Series due July 15, 2035, each of which shall bear the descriptive title “First
Mortgage Bonds, Series due July 15, 2035,” (such bonds, the “Series 2035
Bonds”) and the form thereof shall contain suitable provisions with respect to
the matters hereafter specified in this Section.  The Series 2035 Bonds may forthwith be executed by the Company
substantially in the form set forth in the recitals, including the relevant
provisions as indicated therein, and delivered to the Trustee for
authentication and delivery by the Trustee in accordance with the provisions of
the Indenture and this Supplemental Trust Indenture.  The aggregate principal amount of the Series 2035 Bonds outstanding at any
time shall not exceed $250,000,000.  The Series 2035
Bonds shall mature on July 15, 2035, and shall be issued as registered bonds
without coupons in denominations of $1,000. 
The Series 2035 Bonds shall bear interest at a rate of 5.25% per
annum on the principal amount thereof payable semi-annually on January 15 and
July 15 of each year, and the
principal shall be payable at the office of the Trustee in Chicago, Illinois,
or at the option of the registered owner at the agency of the Company in the
Borough of Manhattan, City and State of New York, in lawful money of the United
States of America, and the interest shall be payable in like money at the
option of the person entitled to such interest either at said office of the
Trustee in Chicago, Illinois, or at the agency of the Company in the Borough of
Manhattan, City and State of New York.  Interest
on the Series 2035 Bonds shall be
calculated on the basis of a 360-day year consisting of twelve 30-day
months.  The Series 2035 Bonds shall be dated as of the date of
authentication thereof by the Trustee.

 

As long as there is no existing default in the payment
of interest on the Series 2035 Bonds,
the person in whose name any Series 2035 Bond is registered at the close
of business on any Record Date with respect to any interest payment date shall
be entitled to receive the interest payable on such interest payment date
notwithstanding any transfer or exchange of any such

 

11

 

Series 2035 Bond subsequent
to the Record Date and on or prior to such interest payment date, except as and
to the extent the Company shall default in the payment of the interest due on
such interest payment date, in which case such defaulted interest shall be paid
to the person in whose name such Series 2035 Bond is registered on the
Special Record Date for the payment of such defaulted interest to be fixed by
the Trustee, notice thereof shall be given to the registered holder of any Series 2035
Bond not less than 10 days prior to such Special Record Date, or may be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Series 2035 Bond may be listed, and
upon such notice as may be required by such exchange.

 

The term “Record Date” as used
in this Section 2.01 with respect to any interest payment date (January 15
or July 15) shall mean the January 1 prior to such January 15 or
the July 1 prior to such July 15 (whether or not a business
day).  The term “business day” shall mean
any day other than a Saturday or Sunday or a day on which the offices of the
Trustee in the City of Chicago, Illinois, are closed pursuant to authorization
of law.

 

As used in this Section 2.01,
the term “default in the payment of interest” means failure to pay interest on
the applicable interest payment date disregarding any period of grace permitted
by the Indenture.

 

The “Special Record Date” as
used in this Section 2.01 shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of defaulted interest
proposed to be paid on each Series 2035 Bond and
the date of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such defaulted interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in trust for the
benefit of the persons entitled to such defaulted interest as provided in this Section 2.01.  Thereupon the Trustee shall fix a Special
Record Date for the payment of such defaulted interest which shall be not more
than 15 nor less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the Trustee of
the notice of the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such defaulted interest
and the Special Record Date therefor to be mailed, first class postage prepaid,
to each holder of the Series 2035 Bonds, at his, her or its address as it
appears in the bond register, not less than 10 days prior to such Special
Record Date. Notice of the proposed payment of such defaulted interest and the
Special Record Date therefor having been mailed as aforesaid, such defaulted
interest shall be paid to the persons in whose names the Series 2035 Bonds
are registered on such Special Record Date and shall not be payable pursuant to
the paragraph immediately following in this Section 2.01.

 

The Company may make payment of
any defaulted interest in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Series 2035 Bonds may
be listed, and upon such notice as may be required by such exchange, if, after
notice is given by the Company to the Trustee of the proposed payment pursuant
to this Section 2.01, such payment shall be deemed practicable by the
Trustee.

 

12

 

SECTION 2.02.  The Series 2035
Bonds shall be redeemable at the option of the Company, as a whole or in
part, on any date upon not less than 30 days’ previous notice to be given in
the manner and with the effect provided in Section 10.02 of the Restated
Indenture at a redemption price equal to the greater of (a) the principal
amount being redeemed or (b) the sum of the present values of the
remaining scheduled payments of principal and interest on the Series 2035 Bonds that are being
redeemed, discounted to the redemption date on a semi-annual basis (assuming a
360-day year consisting of twelve 30-day months) at the Treasury Yield plus 15
basis points, plus in each case accrued and unpaid interest to the redemption
date.

 

“Treasury Yield” means, with respect to any redemption
date, (i) the yield, under the heading which represents the average for
the immediately preceding week, appearing in the most recently published
statistical release designated “H.15(519)” or any successor publication which
is published weekly by the Board of Governors of the Federal Reserve System and
which establishes yields on actively traded U.S. Treasury securities adjusted
to constant maturity under the caption “Treasury Constant Maturities,” for the
maturity corresponding to the Comparable Treasury Issue (if no maturity is
within three months before or after the Remaining Term, yields for the two
published maturities most closely corresponding to the Comparable Treasury
Issue will be determined and the Treasury Yield will be interpolated or
extrapolated from such yields on a straight line basis, rounding to the nearest
month); or (ii) if such release (or any successor release) is not
published during the week preceding the calculation date or does not contain
such yields, the rate per annum equal to the semi-annual equivalent yield to
maturity of the Comparable Treasury Issue, calculated using a price for the
Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for such redemption date. The Treasury
Yield will be calculated on the third business day preceding the date fixed for
redemption.

 

“Comparable Treasury Issue” means the United States
Treasury security selected by an Independent Investment Banker as having a
maturity comparable to the remaining term (the “Remaining Term”) of the bonds
of the series to be redeemed that would be utilized, at the time of selection
and in accordance with customary financial practice, in pricing new issues of
corporate debt securities of comparable maturity to the remaining term of the
bonds of the series being redeemed.

 

“Comparable Treasury Price” means (i) the average
of the Reference Treasury Dealer Quotations for such redemption date, after
excluding the highest and lowest of such Reference Treasury Dealer Quotations
for such redemption date, or (ii) if the Trustee obtains fewer than four
such Reference Treasury Dealer Quotations, the average of all such Reference
Treasury Dealer Quotations.

 

“Independent Investment Banker” means Barclays Capital
Inc. or J.P. Morgan Securities Inc. or their successors or, if such firms or
their successors are unwilling or unable to select the Comparable Treasury
Issue, an independent investment banking institution of national standing
appointed by the Trustee after consultation with the Company.

 

“Reference Treasury Dealer” means (i) Barclays
Capital Inc. or J.P. Morgan Securities Inc. and any other primary U.S.
Government securities dealer in New York City (a “Primary Treasury Dealer”)
designated by, and not affiliated with, Barclays Capital Inc., J.P. Morgan

 

13

 

Securities Inc. and their respective successors,
provided, however, that if Barclays Capital Inc. or J.P. Morgan Securities Inc.
or any of their designees ceases to be a Primary Treasury Dealer, the Company shall
appoint another Primary Treasury Dealer as a substitute and (ii) any other
Primary Treasury Dealers selected by the Company after consultation with the
Independent Investment Banker.

 

“Reference Treasury Dealer Quotations” means, for each
Reference Treasury Dealer and any redemption date, the average, as determined
by the Independent Investment Banker, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Independent Investment Banker by
such Reference Treasury Dealer at 5:00 p.m. on the third business day
preceding such redemption date.

 

The Series 2035
Bonds are not subject to a sinking fund.

 

The redemption prices of the Series 2035 Bonds need not be specified in any temporary bond
of said series if an appropriate reference be made in said temporary bond to
the provision of this Section.

 

SECTION 2.03.  The registered owner of any Series 2035
Bond or Bonds, at his, her, or its option, may surrender the same with other
bonds of such series at the office of the Trustee in Chicago, Illinois, or at
the agency of the Company in the Borough of Manhattan, City and State of New
York, or elsewhere if authorized by the Company, for cancellation, in exchange
for other bonds of such series of higher or lower authorized denominations, but
of the same aggregate principal amount, bearing interest from its date, and
upon receipt of any payment required under the provisions of Section 2.04
hereof.  Thereupon the Company shall
execute and deliver to the Trustee and the Trustee shall authenticate and
deliver such other registered bonds to such registered owner at its office or
at any other place specified as aforesaid.

 

Notwithstanding any other provisions of the Indenture
to the contrary, the Company shall not be required to issue, transfer or
exchange any Series 2035 Bond during a
period of ten (10) days next preceding any selection of Series 2035
Bonds to be redeemed.  The Company shall
not be required to transfer or exchange any Series 2035 Bond called or
being called for redemption in its entirety or to transfer or exchange the
called portion of a Series 2035 Bond which has been called for partial
redemption.

 

SECTION 2.04.  No charge shall be made by the Company for
any exchange or transfer of Series 2035
Bonds  other than for taxes or other
governmental charges, if any, that may be imposed in
relation thereto.

 

SECTION 2.05.  The Series 2035
Bonds shall be executed on behalf of the Company by its President or one
of its Vice Presidents, and its corporate seal shall be thereunto affixed, or
printed, lithographed, or engraved thereon, in facsimile, and attested by the
signature of its Secretary or one of its Assistant Secretaries. Any such
signatures may be manual or facsimile signatures and may be imprinted or
otherwise reproduced.  In case any of the
officers who shall have signed any bonds or attested the seal thereon shall
cease to be such officers of the Company before the bonds so signed and sealed
actually shall have been authenticated by the Trustee or

 

14

 

delivered
by the Company, such bonds nevertheless may be issued, authenticated, and
delivered with the same force and effect as though the person or persons who
signed such bonds and attested the seal thereon had not ceased to be such
officer or officers of the Company.  Any
bond issuable hereunder may be signed or attested on behalf of the Company by
such person as at the actual date of the execution of such bond shall be the
proper officer of the Company, although at the date of such bond such person
shall not have been an officer of the Company.

 

SECTION 2.06.  (a) Except as provided in subsections (c) and
(g) below, the registered holder of all of the Series 2035 Bonds shall be The Depository Trust Company (“DTC”)
and such Series 2035 Bonds
shall be registered in the name of Cede & Co., as nominee for
DTC.  Payment of principal of, premium,
if any, and interest on any Series 2035
Bonds registered in the name of Cede & Co. shall be made by
transfer of New York Federal or equivalent immediately available funds with
respect to the Series 2035 Bonds
to the account of Cede & Co. on each such payment date for the Series 2035 Bonds at the address
indicated for Cede & Co. in the bond register kept by the Trustee.

 

(b)                                 The
Series 2035 Bonds shall be
initially issued in the form of one or more separate single authenticated fully
registered certificates in the aggregate principal amount of all Series 2035 Bonds. Upon initial
issuance, the ownership of such Series 2035
Bonds shall be registered in the bond register kept by the Trustee in
the name of Cede & Co., as nominee of DTC. The Trustee and the Company
may treat DTC (or its nominee) as the sole and exclusive registered holder of the
Series 2035 Bonds registered in
its name for the purposes of payment of the principal of, premium, if any, and
interest on the Series 2035 Bonds
and of giving any notice permitted or required to be given to holders under the
Indenture, except as provided in Section 2.06(g) below; and neither
the Trustee nor the Company shall be affected by any notice to the contrary.
Neither the Trustee nor the Company shall have any responsibility or obligation
to any of DTC’s participants (each a “Participant”), any person claiming a
beneficial ownership in the Series 2035
Bonds under or through DTC or any Participant (each a “Beneficial Owner”)
or any other person which is not shown on the bond register maintained by the
Trustee as being a registered holder, with respect to (1) the accuracy of
any records maintained by DTC or any Participant; (2) the payment by DTC
or any Participant of any amount in respect of the principal of, premium, if
any, or interest on the Series 2035
Bonds; (3) the delivery by DTC or any Participant of any notice to
any Beneficial Owner which is permitted or required to be given to registered
holders under the Indenture of the Series 2035
Bonds; (4) the selection of the Beneficial Owners to receive
payment in the event of any partial redemption of the Series 2035 Bonds; or (5) any consent given or other
action taken by DTC as bondholder.  The
Trustee shall pay all principal of, premium, if any, and interest on the Series 2035 Bonds registered in the
name of Cede & Co. only to or “upon the order of” (as that term is
used in the Uniform Commercial Code as adopted in Minnesota and New York) DTC,
and all such payments shall be valid and effective to fully satisfy and
discharge the Company’s obligations with respect to the principal of, premium,
if any, and interest on such Series 2035
Bonds to the extent of the sum or sums so paid. Except as otherwise
provided in Sections 2.06(c) and (g) below, no person other than DTC
shall receive authenticated bond certificates evidencing the obligation of the
Company to make payments of principal of and interest on the Series 2035 Bonds.  Upon delivery by DTC to the Trustee of
written notice to the effect that DTC has determined to substitute a new
nominee in place of Cede & Co., and subject to the provisions of the
Indenture with respect to

 

15

 

transfers
of bonds, the word “Cede & Co.” in this Supplemental Trust Indenture
shall refer to such new nominee of DTC.

 

(c)                                  If
the Company in its discretion determines that it is in the best interest of the
Beneficial Owners that they be able to obtain bond certificates for the Series 2035 Bonds or there shall have
occurred and be continuing a Completed Default with respect to the Series 2035 Bonds, the Company shall
notify DTC and the Trustee, whereupon DTC will notify the Participants of the
availability through DTC of bond certificates. In such event, the Trustee shall
issue, transfer and exchange bond certificates as requested by DTC in
appropriate amounts pursuant to Article II of the Restated Indenture and Section 2.03
of this Supplemental Trust Indenture. 
The Company shall pay all costs in connection with the production of
bond certificates if the Company makes such a determination under this Section 2.06(c).  DTC may determine to discontinue providing
its services with respect to the Series 2035
Bonds at any time by giving written notice to the Company and the
Trustee and discharging its responsibilities with respect thereto under
applicable law.  Under such circumstances
(if there is no successor book-entry depository), the Company and the Trustee
shall be obligated (at the sole cost and expense of the Company) to deliver
bond certificates as described in this Supplemental Trust Indenture.  If bond certificates are issued, the
provisions of the Indenture shall apply to, among other things, the transfer
and exchange of such certificates and the method of payment of principal of,
premium, if any, and interest on such certificates.  Whenever DTC requests the Company and the Trustee
to do so, the Company will direct the Trustee (at the sole cost and expense of
the Company) to cooperate with DTC in taking appropriate action after
reasonable notice (1) to make available one or more separate certificates
evidencing the Series 2035 Bonds
to any Participant or (2) to arrange for another book-entry depository to
maintain custody of certificates evidencing the Series 2035 Bonds registered in the name of such depository
or its nominee.  Any successor book-entry
depository must be a clearing agency registered with the Securities and
Exchange Commission pursuant to Section 17A of the Securities Exchange Act
of 1934, as amended, and must enter into an agreement with the Company and the
Trustee agreeing to act as the depository and clearing agency for the Series 2035 Bonds (except as provided
in Section 2.06(g) below). 
After such agreement has become effective, DTC shall present the Series 2035 Bonds for registration of
transfer in accordance with Section 2.12 of the Restated Indenture, and the
Trustee shall register them in the name of the successor book-entry depository
or its nominee and all references thereafter to DTC shall be to such successor
book-entry depository.  If a successor
book-entry depository has not accepted such position before the effective date
of DTC’s termination of its services, the book-entry system shall automatically
terminate and may not be reinstated without the consent of all registered
holders of the Series 2035 Bonds.

 

(d)                                 Notwithstanding
any other provision of this Supplemental Trust Indenture to the contrary, so
long as any Series 2035 Bonds
are registered in the name of Cede & Co., as nominee of DTC, all
payments with respect to the principal of, premium, if any, and interest on
such Series 2035 Bonds and all notices
with respect to such Series 2035 Bonds
shall be made and given, respectively, to DTC as provided in the blanket
representation letter among DTC, the Company and the Trustee.  The Trustee is hereby authorized and directed
to comply with all terms of the representation letter.

 

(e)                                  In
connection with any notice or other communication to be provided pursuant to
the Indenture for the Series 2035
Bonds by the Company or the Trustee with respect to any

 

16

 

consent or other
action to be taken by the registered holders of the Series 2035 Bonds, the Company or the Trustee, as the case
may be, shall seek to establish a record date to the extent permitted by the
Indenture for such consent or other action and give DTC notice of such record
date not less than fifteen (15) calendar days in advance of such record date to
the extent possible. Such notice to DTC shall be given only when DTC is the
sole registered holder.

 

(f)                                    NEITHER
THE COMPANY NOR THE TRUSTEE WILL HAVE ANY RESPONSIBILITY OR OBLIGATIONS TO THE
PARTICIPANTS OR THE BENEFICIAL OWNERS WITH RESPECT TO (1) THE ACCURACY OF
ANY RECORDS MAINTAINED BY DTC OR ANY PARTICIPANT; (2) THE PAYMENT BY DTC
OR ANY PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE
PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2035 BONDS; (3) THE DELIVERY BY DTC OR ANY PARTICIPANT
OF ANY NOTICE TO ANY BENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED UNDER THE
TERMS OF THE INDENTURE TO BE GIVEN TO REGISTERED HOLDERS; (4) THE
SELECTION OF THE BENEFICIAL OWNERS TO RECEIVE PAYMENT IN THE EVENT OF ANY
PARTIAL REDEMPTION OF THE SERIES 2035 BONDS;
OR (5) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS A REGISTERED
HOLDER.

 

SO LONG AS CEDE & CO. IS THE REGISTERED HOLDER
OF THE SERIES 2035 BONDS AS NOMINEE
OF DTC, REFERENCES HEREIN TO REGISTERED HOLDERS OF THE SERIES 2035 BONDS SHALL MEAN CEDE & CO. AND SHALL NOT
MEAN THE BENEFICIAL OWNERS OF THE SERIES
2035 BONDS NOR THE PARTICIPANTS.

 

(g)                                 The
Company, in its sole discretion, may terminate the services of DTC with respect
to the Series 2035 Bonds if the
Company determines that: (i) DTC (x) is unable to discharge its
responsibilities with respect to the Series 2035
Bonds or (y) at any time ceases to be a clearing agency registered
under the Securities Exchange Act of 1934, as amended; or (ii) there shall
have occurred and be continuing a Completed Default with respect to the Series 2035 Bonds.  The Company, in its sole discretion, may
terminate the services of DTC with respect to the Series 2035 Bonds if the Company determines that a
continuation of the requirement that all of the outstanding Bonds be registered
with the registration books kept by the Trustee in the name of Cede &
Co., as nominee of DTC, is not in the best interest of the Beneficial Owners of
the Series 2035 Bonds.  After such event and if no substitute
book-entry depository is appointed by the Company, bond certificates will be
delivered as described in the Indenture.

 

(h)                                 Upon
the termination of the services of DTC with respect to the Series 2035 Bonds pursuant to
subsections (c) or (g) of this Section 2.06 after which no
substitute book-entry depository is appointed, the Series 2035 Bonds shall be registered in whatever name or
names holders transferring or exchanging the Series 2035 Bonds shall designate in accordance with the
provisions of the Indenture.

 

ARTICLE III

APPOINTMENT OF AUTHENTICATING AGENT

 

SECTION 3.01.  The
Trustee shall, if requested in writing so to do by the Company, promptly
appoint an agent or agents of the Trustee who shall have authority to
authenticate

 

17

 

 

registered Series 2035 Bonds in the name and on behalf of the Trustee.  Such appointment by the Trustee shall be
evidenced by a certificate of a vice-president of the Trustee delivered to the
Company prior to the effectiveness of such appointment.

 

SECTION 3.02.  (a) Any
such authenticating agent shall be acceptable to the Company and at all times
shall be a corporate bank or trust company organized and doing business under
the laws of the United States or any of its states, have a combined capital and
surplus of at least $5,000,000, be authorized under such laws to exercise
corporate trust powers and be subject to supervision or examination by Federal
or State authority.  If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section 3.02 the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published.

 

(b)                                 Any corporation into which any authenticating
agent may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion, or consolidation to which
any authenticating agent shall be a party, or any corporation succeeding to the
corporate agency business of any authenticating agent, shall continue to be the
authenticating agent without the execution or filing of any paper or any
further act on the part of the Trustee or the authenticating agent.

 

(c)                                  Any authenticating agent at any time may resign
by giving written notice of resignation to the Trustee and to the Company.  The Trustee may at any time, and upon written
request of the Company to the Trustee shall, terminate the agency of any
authenticating agent by giving written notice of termination to such
authenticating agent and to the Company. 
Upon receiving such a notice of resignation or upon such a termination,
or in case at any time any authenticating agent shall cease to be eligible in
accordance with the provisions of this Section 3.02, the Trustee, unless
otherwise requested in writing by the Company, promptly shall appoint a
successor authenticating agent, which shall be acceptable to the Company.  Any successor authenticating agent upon
acceptance of its appointment hereunder shall become vested with all the
rights, powers, duties and responsibilities of its predecessor hereunder, with
like effect as if originally named.  No
successor authenticating agent shall be appointed unless eligible under the
provisions of this Section 3.02.

 

(d)                                 The Trustee agrees to pay to any authenticating
agent, appointed in accordance with the provisions of this Section 3.02,
reasonable compensation for its services, and the Trustee shall be entitled to
be reimbursed for such payments.

 

SECTION 3.03.  If an
appointment is made pursuant to this Article III, the registered Series 2035
Bonds shall have endorsed thereon, in addition to the Trustee’s Certificate, an
alternate Trustee’s Certificate in the following form:

 

This bond is one of the bonds of
the Series designated thereon, described in the within-mentioned
Indenture.

 

18

 

	
   

  	
  BNY MIDWEST
  TRUST COMPANY, as 

  Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Authenticating Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized Officer

  	
   

  

 

SECTION 3.04.  No
provision of this Article III shall require the Trustee to have at any
time more than one such authenticating agent for any one State or to appoint
any such authenticating agent in the State in which the Trustee has its
principal place of business.

 

ARTICLE IV

EFFECTIVE DATE OF RESTATED INDENTURE

 

SECTION 4.01.  The Effective Date of the Restated Indenture
shall be July 20, 2005, which is the date this Supplemental Trust Indenture
is first recorded and filed in such manner and to such extent as is required by
law.

 

ARTICLE V

FINANCING STATEMENT TO COMPLY WITH

THE UNIFORM COMMERCIAL CODE

 

SECTION 5.01.  The name and address of the debtor and
secured party are set forth below:

 

	
  Debtor:

  	
   

  	
  Northern States
  Power Company 

  414 Nicollet Mall 

  Minneapolis, Minnesota 55401

  
	
   

  	
   

  	
   

  
	
  Secured Party:

  	
   

  	
  BNY Midwest
  Trust Company, Trustee 

  2 North LaSalle Street 

  Suite 1020 

  Chicago, Illinois 60602

  

 

NOTE:  Northern States Power Company, the debtor
above named, is “a transmitting utility” under the Uniform Commercial Code as
adopted in Minnesota, North Dakota and South Dakota.

 

SECTION 5.02.  Reference to Article I hereof is made
for a description of the property of the debtor covered by this Financing
Statement with the same force and effect as if incorporated in this Section at
length.

 

SECTION 5.03.  The maturity dates and respective principal
amounts of obligations of the debtor secured and presently to be secured by the
Indenture and this Supplemental Trust 

 

19

 

Indenture,
reference to all of which for the terms and conditions thereof is hereby made
with the same force and effect as if incorporated herein at length, are as
follows:

 

	
  First Mortgage Bonds

  	
   

  	
  Principal Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Series due December 1,
  2005

  	
   

  	
  $

  	
  70,000,000

  	
   

  
	
  Series due July 1,
  2025

  	
   

  	
  $

  	
  250,000,000

  	
   

  
	
  Pollution Control Series N

  	
   

  	
  $

  	
  27,900,000

  	
   

  
	
  Pollution Control Series O

  	
   

  	
  $

  	
  50,000,000

  	
   

  
	
  Pollution Control Series P

  	
   

  	
  $

  	
  50,000,000

  	
   

  
	
  Series due March 1,
  2028

  	
   

  	
  $

  	
  150,000,000

  	
   

  
	
  Resource Recovery Series Q

  	
   

  	
  $

  	
  4,750,000

  	
   

  
	
  Resource Recovery Series R

  	
   

  	
  $

  	
  9,790,000

  	
   

  
	
  Pollution Control Series S

  	
   

  	
  $

  	
  69,000,000

  	
   

  
	
  Series A and Series B
  due August 28, 2012

  	
   

  	
  $

  	
  450,000,000

  	
   

  
	
  Series due August 1,
  2006

  	
   

  	
  $

  	
  200,000,000

  	
   

  
	
  Series due August 1,
  2010

  	
   

  	
  $

  	
  175,000,000

  	
   

  
	
  Series due July 15,
  2035

  	
   

  	
  $

  	
  250,000,000

  	
   

  

 

SECTION 5.04.  This Financing Statement is hereby adopted
for all of the First Mortgage Bonds of the Series mentioned above secured
by said Indenture and this Supplemental Trust Indenture.

 

SECTION 5.05.  The 1937 Indenture, the Restated Indenture
and the prior Supplemental Indentures, as set forth below, have been filed or
recorded in each and every office in the States of Minnesota, North Dakota, and
South Dakota designated by law for the filing or recording thereof in respect
of all property of the Company subject thereto:

 

	
  Original Indenture 

  Dated February 1, 1937

  
	
   

  
	
  Supplemental Indenture 

  Dated June 1, 1942

  
	
   

  
	
  Supplemental Indenture 

  Dated February 1, 1944

  
	
   

  
	
  Supplemental Indenture 

  Dated October 1, 1945

  
	
   

  
	
  Supplemental Indenture 

  Dated July 1, 1948

  
	
   

  
	
  Supplemental Indenture 

  Dated August 1, 1949

  

 

20

 

	
  Supplemental Indenture 

  Dated June 1, 1952

  
	
   

  
	
  Supplemental Indenture 

  Dated October 1, 1954

  
	
   

  
	
  Supplemental Indenture 

  Dated September 1, 1956

  
	
   

  
	
  Supplemental Indenture 

  Dated August 1, 1957

  
	
   

  
	
  Supplemental Indenture 

  Dated July 1, 1958

  
	
   

  
	
  Supplemental Indenture 

  Dated December 1, 1960

  
	
   

  
	
  Supplemental Indenture 

  Dated August 1, 1961

  
	
   

  
	
  Supplemental Indenture 

  Dated June 1, 1962

  
	
   

  
	
  Supplemental Indenture 

  Dated September 1, 1963

  
	
   

  
	
  Supplemental Indenture 

  Dated August 1, 1966

  
	
   

  
	
  Supplemental Indenture 

  Dated June 1, 1967

  
	
   

  
	
  Supplemental Indenture 

  Dated October 1, 1967

  
	
   

  
	
  Supplemental Indenture 

  Dated May 1, 1968

  
	
   

  
	
  Supplemental Indenture 

  Dated October 1, 1969

  
	
   

  
	
  Supplemental Indenture 

  Dated February 1, 1971

  
	
   

  
	
  Supplemental Indenture 

  Dated May 1, 1971

  

 

21

 

	
  Supplemental Indenture 

  Dated February 1, 1972

  
	
   

  
	
  Supplemental Indenture 

  Dated January 1, 1973

  
	
   

  
	
  Supplemental Indenture 

  Dated January 1, 1974

  
	
   

  
	
  Supplemental Indenture 

  Dated September 1, 1974

  
	
   

  
	
  Supplemental Indenture 

  Dated April 1, 1975

  
	
   

  
	
  Supplemental Indenture 

  Dated May 1, 1975

  
	
   

  
	
  Supplemental Indenture 

  Dated March 1, 1976

  
	
   

  
	
  Supplemental Indenture 

  Dated June 1, 1981

  
	
   

  
	
  Supplemental Indenture 

  Dated December 1, 1981

  
	
   

  
	
  Supplemental Indenture 

  Dated May 1, 1983

  
	
   

  
	
  Supplemental Indenture 

  Dated December 1, 1983

  
	
   

  
	
  Supplemental Indenture 

  Dated September 1, 1984

  
	
   

  
	
  Supplemental Indenture 

  Dated December 1, 1984

  
	
   

  
	
  Supplemental Indenture 

  Dated May 1, 1985

  
	
   

  
	
  Supplemental Indenture 

  Dated September 1, 1985

  
	
   

  
	
  Supplemental and Restated Indenture 

  Dated May 1, 1988

  

 

22

 

	
  Supplemental Indenture 

  Dated July 1, 1989

  
	
   

  
	
  Supplemental Indenture 

  Dated June 1, 1990

  
	
   

  
	
  Supplemental Indenture 

  Dated October 1, 1992

  
	
   

  
	
  Supplemental Indenture 

  Dated April 1, 1993

  
	
   

  
	
  Supplemental Indenture 

  Dated December 1, 1993

  
	
   

  
	
  Supplemental Indenture 

  Dated February 1, 1994

  
	
   

  
	
   

  
	
  Supplemental Indenture 

  Dated October 1, 1994

  
	
   

  
	
  Supplemental Indenture 

  Dated June 1, 1995

  
	
   

  
	
  Supplemental Indenture 

  Dated April 1, 1997

  
	
   

  
	
  Supplemental Indenture 

  Dated March 1, 1998

  
	
   

  
	
  Supplemental Indenture 

  Dated May 1, 1999

  
	
   

  
	
  Supplemental Indenture 

  Dated June 1, 2000

  
	
   

  
	
  Supplemental Indenture 

  Dated August 1, 2000

  
	
   

  
	
  Supplemental Indenture 

  Dated June 1, 2002

  
	
   

  
	
  Supplemental Indenture 

  Dated July 1, 2002

  
	
   

  
	
  Supplemental Indenture 

  Dated August 1, 2002

  

 

23

 

	
  Supplemental Indenture 

  Dated May 1, 2003

  
	
   

  
	
  Supplemental Indenture 

  Dated August 1, 2003

  

 

SECTION 5.06.  The property covered by this Financing Statement
also shall secure additional series of First Mortgage Bonds of the debtor which
may be issued from time to time in the future in accordance with the provisions
of the Indenture.

 

ARTICLE VI

MISCELLANEOUS

 

SECTION 6.01.  The recitals of fact herein, except the
recital that the Trustee has duly determined to execute this Supplemental Trust
Indenture and be bound, insofar as it may lawfully so do, by the provisions
hereof and in the bonds shall be taken as statements of the Company and shall
not be construed as made by the Trustee. The Trustee makes no representations
as to the value of any of the property subject to the lien of the Indenture, or
any part thereof, or as to the title of the Company thereto, or as to the
security afforded thereby and hereby, or as to the validity of this
Supplemental Trust Indenture or of the bonds issued under the Indenture by
virtue hereof (except the Trustee’s certificate) and the Trustee shall incur no
responsibility in respect of such matters.

 

SECTION 6.02.  This Supplemental Trust Indenture shall be
construed in connection with and as a part of the Indenture.

 

SECTION 6.03.  (a) If any provision of the Indenture or
this Supplemental Trust Indenture limits, qualifies or conflicts with another
provision of the Indenture required to be included in indentures qualified
under the Trust Indenture Act of 1939, as amended (as enacted prior to the date
of this Supplemental Trust Indenture) by any of the provisions of Sections 310
to 317, inclusive, of the said Act, such required provision shall control.

 

(b)                                 In
case any one or more of the provisions contained in this Supplemental Trust
Indenture or in the bonds issued hereunder shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected, impaired, prejudiced or disturbed thereby.

 

SECTION 6.04.  Wherever in this Supplemental Trust Indenture
the word “Indenture” is used without the prefix “1937,” “Original,” “Restated,”
or “Supplemental,” such word was used intentionally to include in its meaning
both the 1937 Indenture, as amended and restated by the Restated Indenture, and
all indentures supplemental thereto.

 

SECTION 6.05.  Wherever in this Supplemental Trust Indenture
either of the parties hereto is named or referred to, this shall be deemed to
include the successors or assigns of such party, and all the covenants and
agreements in this Supplemental Trust Indenture contained by or on behalf of
the Company or by or on behalf of the Trustee shall bind and inure to the
benefit of the respective successors and assigns of such parties, whether so
expressed or not.

 

24

 

SECTION 6.06.  (a) This Supplemental Trust Indenture
may be executed simultaneously in several counterparts, and all said
counterparts executed and delivered, each as an original,
shall constitute but one and the same instrument.

 

(b)                                 The
Table of Contents and the descriptive headings of the several Articles of this
Supplemental Trust Indenture were formulated, used and inserted in this
Supplemental Trust Indenture for convenience only and shall not be deemed to
affect the meaning or construction of any of the provisions hereof.

 

The total aggregate amount of
obligations to be issued forthwith under this Supplemental Trust Indenture is
$250,000,000.

 

25

 

IN WITNESS WHEREOF, on this 1st
day of July, A.D. 2005, NORTHERN STATES POWER COMPANY, a Minnesota corporation,
party of the first part, has caused its corporate name and seal to be hereunto
affixed and this Supplemental Trust Indenture effective July 1, 2005, to
be signed by its President or a Vice President, and attested by its Secretary
or an Assistant Secretary, for and in its behalf, and BNY MIDWEST TRUST COMPANY
(as successor trustee to Harris Trust and Savings Bank), an Illinois
corporation, as Trustee, party of the second part, to evidence its acceptance
of the trust hereby created, has caused its corporate name and seal to be
hereunto affixed, and this Supplemental Trust Indenture effective July 1,
2005, to be signed by its President, a Vice President, or an Assistant Vice
President, and attested by its Secretary or an Assistant Secretary, for and in
its behalf.

 

	
   

  	
   

  	
  NORTHERN STATES
  POWER COMPANY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Benjamin G.S. Fowke III

  	
   

  
	
   

  	
   

  	
  By: Benjamin
  G.S. Fowke III

  	
   

  
	
   

  	
   

  	
  Its: Vice
  President and CFO

  	
   

  
	
  Attest:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Peter F. Rechek

  	
   

  	
   

  	
   

  
	
  By: Peter F.
  Rechek

  	
   

  	
   

  	
   

  
	
  Its: Assistant
  Secretary

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Executed by
  Northern States Power Company

  in the presence of:

  	
   

  	
  (CORPORATE SEAL)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Sharon S. Babcock

  	
   

  	
   

  	
   

  
	
  Witness

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Robert E. LaBahn

  	
   

  	
   

  	
   

  
	
  Witness

  	
   

  	
   

  	
   

  

 

 

	
   

  	
   

  	
  BNY MIDWEST
  TRUST COMPANY, as

  Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ D.G. Donovan

  	
   

  
	
   

  	
   

  	
  By:

  	
  D.G. Donovan

  	
   

  
	
   

  	
   

  	
  Its:

  	
  Vice President

  	
   

  
	
  Attest:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ L. Garcia

  	
   

  	
   

  	
   

  
	
  By: L. Garcia

  	
   

  	
   

  	
   

  
	
  Its: Assistant
  Vice President

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Executed by BNY
  Midwest Trust Company in

  the presence of:

  	
   

  	
  (CORPORATE SEAL)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ M. Callahan

  	
   

  	
   

  	
   

  
	
  M. Callahan,
  Witness

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ J. Reiss

  	
   

  	
   

  	
   

  
	
  J. Reiss,
  Witness

  	
   

  	
   

  	
   

  

 

 

	
  STATE OF MINNESOTA

  	
  )

  	
   

  
	
   

  	
  )

  	
  SS.:

  
	
  COUNTY OF HENNEPIN

  	
  )

  	
   

  

 

On this 1st day of July, A.D.
2005, before me, Pamela C. Wilson, a Notary Public in and for said County in
the State aforesaid, personally appeared Benjamin G.S. Fowke III and Peter F.
Rechek, to me personally known, and to me known to be the Vice President and
Chief Financial Officer and Assistant Secretary, respectively, of Northern
States Power Company, one of the corporations described in and which executed
the within and foregoing instrument, and who, being by me severally duly sworn,
each for himself, did say that he, the said Benjamin G.S. Fowke III is a Vice
President and Peter F. Rechek is an Assistant Secretary, of said Northern States
Power Company, a corporation; that the seal affixed to the within and foregoing
instrument is the corporate seal of said corporation, and that said instrument
was executed on behalf of said corporation by authority of its stockholders and
board of directors; and said Benjamin G.S. Fowke III and Peter F. Rechek each
acknowledged said instrument to be the free act and deed of said corporation
and that such corporation executed the same.

 

WITNESS my hand and notarial seal, this 1st day of July,
A.D. 2005.

 

	
    /s/ Pamela C. Wilson

  	
   

  	
   

  
	
  Pamela C. Wilson

  	
   

  	
   

  
	
  Notary Public

  	
   

  	
   

  
	
  My commission
  expires: January 31, 2010

  	
   

  	
   

  
	
   

  	
  (NOTARY SEAL)

  	
   

  

 

 

	
  STATE OF MINNESOTA

  	
  )

  	
   

  
	
   

  	
  )

  	
  SS.:

  
	
  COUNTY OF HENNEPIN

  	
  )

  	
   

  

 

Benjamin G.S. Fowke III and
Peter F. Rechek, being severally
duly sworn, each deposes and says that they
are Vice President and Chief Financial Officer and Assistant Secretary,
respectively, of Northern States Power Company, the corporation described in
and which executed the within and foregoing Supplemental Trust Indenture, as
mortgagor; and each for himself further says that said Supplemental Trust
Indenture was executed in good faith, and not for the purpose of hindering,
delaying, or defrauding any creditor of the said mortgagor.

 

 

	
  /s/ Benjamin
  G.S. Fowke III

  	
   

  	
  /s/ Peter F.
  Rechek

  	
   

  
	
  Benjamin G.S. Fowke III

  	
   

  	
  Peter F. Rechek

  	
   

  

 

Subscribed and sworn to before
me this 1st day of July, A.D. 2004.

 

	
    /s/ Pamela C. Wilson

  	
   

  	
   

  
	
  Pamela C. Wilson

  	
   

  	
   

  
	
  Notary Public

  	
   

  	
   

  
	
  My commission
  expires: January 31, 2010

  	
   

  	
   

  
	
   

  	
  (NOTARY SEAL)

  	
   

  

 

 

	
  STATE OF ILLINOIS

  	
  )

  	
   

  
	
   

  	
  )

  	
  SS.:

  
	
  COUNTY OF COOK

  	
  )

  	
   

  

 

On this 1st day of July, A.D.
2005, before me, T. Mosterd, a Notary Public in and for said County in the
State aforesaid, personally appeared D.G. Donavan and L. Garcia to me personally known, and to me known to be
the Vice President and Assistant Vice President, respectively, of BNY Midwest
Trust Company, one of the corporations described in and which executed the
within and foregoing instrument, and who, being by me severally duly sworn,
each, did say that he, the said D.G. Donovan, is Vice President, and she, the
said L. Garcia, is the Assistant Vice President, of said BNY Midwest Trust
Company, a corporation; that the seal affixed to the within and foregoing
instrument is the corporate seal of said corporation, and that said instrument
was executed on behalf of said corporation by authority of its board of
directors; and said D.G. Donovan and L. Garcia each acknowledged said
instrument to be the free act and deed of said corporation and that such
corporation executed the same.

 

WITNESS my hand and notarial seal, this 1st day of July,
A.D. 2005.

 

	
  /s/ T. Mosterd

  	
   

  	
   

  
	
  T. Mosterd

  	
   

  	
   

  
	
  Notary Public

  	
   

  	
   

  
	
  My commission
  expires: January 22, 2009

  	
   

  	
   

  
	
   

  	
  (NOTARY SEAL)

  	
   

  

 

 

	
  STATE OF ILLINOIS

  	
  )

  	
   

  
	
   

  	
  )

  	
  SS.:

  
	
  COUNTY OF COOK

  	
  )

  	
   

  

 

D.G. Donovan and L. Garcia, being severally duly sworn,
each for himself/herself deposes and says that he/she, the said D.G. Donovan,
is Vice President, and he/she, the said L. Garcia, is Assistant Vice President,
of BNY Midwest Trust Company, the corporation described in and which executed
the within and foregoing Supplemental Trust Indenture, as mortgagee; and each
for himself further says that said Supplemental Trust Indenture was executed in
good faith, and not for the purpose of hindering, delaying, or defrauding any
creditor of the mortgagor.

 

 

	
  /s/ D.G. Donovan

  	
   

  	
  /s/ L. Garcia

  	
   

  
	
  D.G. Donovan

  	
   

  	
  L. Garcia

  	
   

  

 

Subscribed and sworn to before
me this 1st day of July, A.D. 2005.

 

	
  /s/ T. Mosterd

  	
   

  	
   

  
	
  T. Mosterd

  	
   

  	
   

  
	
  Notary Public

  	
   

  	
   

  
	
  My commission
  expires: January 22, 2009

  	
   

  	
   

  
	
   

  	
  (NOTARY SEAL)

  	
   

  

 

 

SCHEDULE A

 

The property referred to in Article I
of the foregoing Supplemental Trust Indenture from Northern States Power
Company to BNY Midwest Trust Company, Trustee, effective as of July 1,
2005, includes the following property hereafter more specifically described.
Such description, however, is not intended to limit or impair the scope or
intention of the general description contained in the granting clauses or
elsewhere in the Indenture.

 

I. PROPERTIES IN THE STATE OF MINNESOTA

 

1.                                       The
following described real property, situate, lying and being in the County of
Chisago, to-wit:

 

The
South Half of the Northwest Quarter and the Southwest Quarter of Section 1,
Township 34, Range 21, excepting therefrom approximately one-third (1/3) of an
acre of property which is described as the parcel located southwest of  the southwest boundary of that certain creek
or stream running through said land.

AND

 

The
Southwest Quarter of the Northwest Quarter of Section 2, Township 34,
Range 21 West.

 

EXCEPTING from the above described land Parcel 18 and
Parcel 20, Chisago County Right of way Plat No. 18, consisting of
approximately 6.31 acres.

 

2.                                       The
following described real property, situate, lying and being in the County of
Lyon, to-wit:

 

Part of
the Northeast Quarter of the Northeast Quarter of Section 15, Township 109
North, Range 42 West, Rock Lake Township, Lyon County, Minnesota.

 

Commencing
at the Northeast corner of Section 15, Township 109 North, Range 42 West;
thence South 00 degrees 25 minutes 40 seconds East, 1324.84 feet to the point
of beginning; thence South 89 degrees 57 minutes 25 seconds West, 340.01 feet;
thence North 00 degrees 25 minutes 40 seconds West, 214.90 feet; thence North
89 degrees 58 minutes 17 seconds East, 340.01 feet; thence South 00 degrees 25
minutes 40 seconds East, 214.82 feet to the point of beginning and there
terminating.

 

Excepting County
Road 5 right of way, being the easterly 50 feet of the property referenced in
this description.

 

3.                                       The
following described real property, situate, lying and being in the County of
Watonwan, to-wit:

 

Beginning at the
Southwest corner of the Southeast Quarter of Section 13, Township 106
North, Range 33 West; thence North 00 degrees 21 minutes 34 seconds West
(bearings referenced to the south line of the Southeast Quarter, Section 13,
Township 106 North, 

 

 

Range 33 West
which bears North 89 degrees 16 minutes 04 seconds West) 467.00 feet; thence
South 89 degrees 16 minutes 04 seconds East 467.00 feet; thence South 00
degrees 21 minutes 34 seconds East 467.00 feet; thence North 89 degrees 16
minutes 04 seconds West 467.00 feet to the point of beginning, and there
terminating.

 

4.                                       The
following described real property, situate, lying and being in the County of
Stearns, to-wit:

 

Commencing
at a point on the East side of St. Cloud and Forest City Road (so called) where
the North line of the Southwest Quarter of the Northwest Quarter of Section 11,
in Township 121 North, of Range 29 West, crosses said road; thence running East
200 feet, along the North line of said Southwest Quarter of the Northwest
Quarter; thence running south 50 feet to a point; thence running West 200 feet
to said road; thence North along said road 50 feet to the place of beginning.

 

ALSO:
The West 200 feet of the South 25 feet of Block 13 in the Townsite of Kimball,
according to the plat and survey thereof on file and of record in the Office of
the County Recorder, in and for Stearns County, Minnesota;

 

Which
property is also described as follows:

 

That part of the Southwest Quarter of the Northwest
Quarter of Section 11, Township 121 North, Range 29 West, and of Lot 1,
Block 13, of Kimball Prairie, according to the recorded plat thereof, described
as follows: Beginning at the Southwest corner of said Lot 1; thence north on
the west line thereof a distance of 25 feet; thence east parallel with the
south line thereof a distance of 200 feet; thence south parallel with the west
line thereof and it southerly prolongation a distance of 75 feet; thence west
parallel with the north line of said quarter-quarter a distance of 200 feet;
thence north on the southerly prolongation of the west line of said Lot 1 a
distance of 50 feet to the point of beginning.

 

5.                                       The
following described real property, situate, lying and being in the County of
Hennepin, to-wit:

 

Lots 27 and 28, Koehler’s Addition to Mound, according
to the map or plat thereof on file and of record in the office of the County
Recorder in and for the County of Hennepin, State of Minnesota.

 

6.                                       The
following described real property, situate, lying and being in the County of
Renville, to-wit:

 

The South 273.00 feet of the West 333.00 feet of the
West Half of the Southwest Quarter of Section 3, Township 115, 

Range 35.

 

 

II. TRANSMISSION LINES OF THE COMPANY

IN THE STATE OF MINNESOTA

 

The electric transmission lines of the Company,
including towers, poles, pole lines, wire, switch racks, switchboards,
insulators, and other appliances and equipment, and all other property forming
a part thereof or appertaining thereto, and all service lines extending
therefrom; together with all rights for or relating to the construction,
maintenance of operation thereof, through, over, under, or upon any private
property of public streets or highways within as well as without the corporate
limits of any municipal corporation, and particularly the following described
lines, to-wit:

 

	
  Line 5534

  	
   

  	
  24.6 miles

  	
   

  	
  Chanarambie-Lake
  Yankton

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Murray Co., MN., Sec 6,
  T106, R43W

  
	
   

  	
   

  	
   

  	
   

  	
  Murray Co., MN., Sec’s
  6,7,18,19,30,31, T107, R43W

  
	
   

  	
   

  	
   

  	
   

  	
  Murray Co., MN., Sec’s
  13,14,15,16,17,20,21,29,31,32, T108, R43W

  
	
   

  	
   

  	
   

  	
   

  	
  Lyon Co., MN., Sec’s
  15,16, T109, R42W

  
	
   

  	
   

  	
   

  	
   

  	
  Murray Co., MN., Sec
  21, T109, R42W

  
	
   

  	
   

  	
   

  	
   

  	
  Murray Co., MN., Sec
  28, T109, R42W

  
	
   

  	
   

  	
   

  	
   

  	
  Murray Co., MN., Sec
  33, T109, R42W

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Line 5535

  	
   

  	
  29.14 miles

  	
   

  	
  Lake Yankton-Lyon
  County Sub

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Lyon Co., MN., Sec’s
  11,13,14,15, T109, R42W

  
	
   

  	
   

  	
   

  	
   

  	
  Lyon Co., MN., Sec’s
  8,9,10,11,12,18, T109, R41W

  
	
   

  	
   

  	
   

  	
   

  	
  Lyon Co., MN., Sec’s
  3,7,8,9,10, T109, R40W

  
	
   

  	
   

  	
   

  	
   

  	
  Lyon Co., MN., Sec’s
  3,10,15,22,27,34, T110, R40W

  
	
   

  	
   

  	
   

  	
   

  	
  Lyon Co., MN., Sec’s
  4,9,16,21,22,27,34, T111, R40W

  
	
   

  	
   

  	
   

  	
   

  	
  Lyon Co., MN., Sec’s
  28,33 T112, R40W

  

 

III. 
GAS DISTRIBUTION SYSTEMS OF THE COMPANY

IN THE STATE OF MINNESOTA

 

1.                                       A
sixteen-inch transmission line in Scott County, extending approximately 11.36 miles  (approximately
60,000 feet), known as the “Blue Lake Pipeline”, which only serves the Xcel
Energy Blue Lake Peaking Plant in Shakopee, MN.

 

2.                                       A
six-inch transmission main in Washington County, extending approximately 1.63
miles (approximately 8,600 feet), known as the “70th Street Line”.

 

 

This instrument was drafted by Northern States Power
Company, 414 Nicollet Mall, Minneapolis, Minnesota
55401.

 

Tax statements for the real property described in this
instrument should be sent to Northern States Power Company, 414 Nicollet Mall, Minneapolis, Minnesota 55401.

 

Return recorded document(s) to Lori R. Pagel,
GO-Mezzanine, Xcel Energy, 414 Nicollet Mall, Minneapolis, Minnesota  55401.Exhibit
4.1

 

LOAN
AGREEMENT

754485

 

THIS LOAN
AGREEMENT, made as of July 15, 2005, is by and between PRINCIPAL COMMERCIAL
FUNDING, LLC, a Delaware limited liability company, with an address at 801
Grand Avenue, Des Moines, Iowa 50392-1450 (“Lender”), and AAR WOOD DALE
LLC, an Illinois limited liability company, with an address at 1100 Wood Dale
Road, Wood Dale, Illinois 60191 (“Borrower”).

 

RECITALS

 

A.            Borrower desires to obtain
a loan (the “Loan”) from Lender in the original principal amount of
$11,000,000.00 (the “Loan Amount”);

 

B.            Lender is willing to make
the Loan on the condition that Borrower, among other things, joins in the
execution and delivery of this Agreement; and

 

C.            Lender and Borrower
contemplate that all or any portion of Lender’s interest in the Loan, the Loan
Documents and the Environmental Indemnity may be assigned, in whole or in part,
by Lender, including without limitation, in connection with a Securitization
Transaction.

 

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

 

ARTICLE
I

CERTAIN
DEFINITIONS

 

“Account Collateral” has the meaning
set forth in Section 5.3(A) of this Agreement.

 

“Affiliate(s)” means any person or
Entity directly or indirectly controlling, controlled by, or under common
control with Borrower or any person or Entity owning a material interest in
Borrower, either directly or indirectly.

 

“Agreement” means this Loan
Agreement, as the same may from time to time hereafter be modified,
supplemented or amended.

 

“Approved Accounting Method” has the
meaning set forth in Section 5.1 of this Agreement.

 

“Code” has the meaning set forth in
Section 3.1(F) of this Agreement.

 

 

“Collateral” means, collectively,
the Premises, the Account Collateral and all proceeds and products of the
foregoing, all whether now owned or hereafter acquired, and all other property
of Borrower which is or hereafter may become subject to a lien in favor of
Lender.

 

“Collateral Release” means a release
of the Premises in accordance with Section 2.1(D) of this Agreement.

 

“Collateral Release Deposit” has the
meaning set forth in Section 2.1(D) of this Agreement.

 

“Entity” means a (a) corporation,
(b) limited or general partnership, (c) limited liability company, or (d)
trust.

 

“ERISA” has the meaning set forth in
Section 3.1(G) of this Agreement.

 

“Event of Default” or “Events of
Default” has the meaning set forth in the Mortgage.

 

“Governmental Authority” means any
national, federal, state, regional or local government, or any other political
subdivision of any of the foregoing, in each case with jurisdiction over
Borrower, the Premises, or any Person with jurisdiction over Borrower, the
Premises exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.

 

“Guarantor” means AAR Corp., a
Delaware corporation.

 

“Indebtedness” has the meaning set
forth in the Mortgage.

 

“Interest Owner(s)” means any person
or entity owning an interest (directly or indirectly) in Borrower, but shall in
no event include the shareholders of AAR Corp.

 

“Investor” has the meaning set forth
in Section 5.5(A) of this Agreement.

 

“Leases” has the meaning provided in
the Assignment of Leases.

 

“Lockout Date” means the earlier
of:  (i) the date which is two (2) years
after the date of the Securitization Transaction; or (ii) the date which is
four (4) years after the date of the first full debt service payment under the
Note.

 

“Material Adverse Effect” means a
material adverse effect upon (i) the business or the financial position or
results of operation of Borrower, (ii) the ability of Borrower to perform, or
of Lender to enforce, any of the Loan Documents or Environmental Indemnity or
(iii) the value of (x) the Collateral taken as a whole or (y) the Premises.

 

“Mortgage” means the mortgage, deed
of trust, trust deed or deed to secure debt as applicable, dated the date
hereof, executed by Borrower and delivered to Lender as security for the Loan,
as the same may be modified, supplemented or amended.

 

2

 

“Note” means and refers to the
promissory note evidencing the Loan, dated as of the date hereof, made by
Borrower to Lender, as such promissory note may be modified, amended,
supplemented, extended or consolidated in writing, and any note(s) issued in
exchange therefor or in replacement thereof.

 

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

 

“Pledge Agreement” has the meaning
set forth in Section 2.1(D) of this Agreement.

 

“Premises” has the meaning set forth
in the Mortgage.

 

“Property Reserves” has the meaning
set forth in Section 5.2(B) of this Agreement.

 

“Rating Agency(ies)” shall mean each
statistical rating agency that has assigned a rating to any participation
interest, certificate or security issued in connection with a Securitization
Transaction.

 

“Release Date” has the meaning set
forth in Section 2.1(D) of this Agreement.

 

“Rents” has the meaning provided in
the Assignment of Leases.

 

“Scheduled Collateral Release Payments”
has the meaning set forth in Section 2.1(D) of this Agreement.

 

“Securitization Transaction” has the
meaning set forth in Section 5.5(A) of this Agreement.

 

“Security Deposits” means all
security deposits held or to be held with respect to the Premises, pursuant to
the applicable Leases.

 

“Single-Purpose Entity” (as it
relates solely to AAR Wood Dale LLC, an Illinois limited liability company) means
a limited liability company which, at all times until the Indebtedness is paid
in full (i) will be organized solely for the purpose of owning the Premises,
(ii) will not engage in any business unrelated to the ownership of
the Premises, (iii) will not have any assets other than those related to the
Premises, (iv) will not engage in, seek or consent to any dissolution, winding
up, liquidation, consolidation or merger, and, except as otherwise expressly
permitted by the Loan Documents, will not engage in, seek or consent to any
asset sale, transfer of membership interests, or amendment of its articles of
organization, certificate of formation, or operating agreement, (v) will not
fail to correct any known misunderstanding regarding the separate identity of
such Entity, (vi) without the unanimous consent of all of the members, will not
with respect to itself or to any other Entity in which it has a direct or
indirect legal or beneficial ownership interest, in each case excluding any
shareholders in AAR Corp. (a) file a

 

3

 

bankruptcy, insolvency or reorganization petition or
otherwise institute insolvency proceedings or otherwise seek any relief under
any laws relating to the relief from debts or the protection of debtors
generally; (b) seek or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator, custodian or any similar official for such
Entity or all or any portion of such Entity’s properties; (c) make any
assignment for the benefit of such Entity’s creditors; or (d) take any action
that might cause such Entity to become insolvent, (vii) will maintain its
books, records, resolutions and agreements as official records, (viii) has held
and will hold its assets in its own name, (ix) will conduct its business in its
name, (x)  will account for its own
liabilities out of its own funds and assets, (xi) will observe all corporate,
limited liability company and partnership formalities, as applicable, (xii) has
maintained and will maintain an arms-length relationship with its Affiliates
(Lender acknowledging the existing lease between Borrower and AAR Corp.),
(xiii) if such Entity owns the Premises, will have no indebtedness other than
the Indebtedness and commercially reasonable unsecured trade payables in the
ordinary course of business relating to the ownership and operation of the
Premises which are paid within ninety (90) days of the date incurred,
(xiv) will not assume or guarantee or become obligated for the debts of
any other person or Entity or hold out its credit as being available to satisfy
the obligations of any other person or Entity, except for the Indebtedness,
(xv) will not acquire obligations or securities of its members, (xvi) will
allocate fairly and reasonably shared expenses, including, without limitation,
shared office space, (xvii) will not pledge its assets for the benefit of any
other person or Entity, (xviii) will hold itself out and identify itself as a
separate and distinct Entity under its own name and not as a division or part
of any other person or Entity, (xix) will not make loans to any person or
Entity, (xx) will not identify its members or any Affiliates of any of them as
a division or part of it, (xxi) will not enter into or be a party to, any
transaction with its members or its Affiliates except in the ordinary course of
its business and on terms which are intrinsically fair and are no less
favorable to it than would be obtained in a comparable arms-length transaction
with an unrelated third party, (xxii) will account for the salaries of its own
employees, if any, from its own funds, (xxiii) will maintain adequate capital
in light of its contemplated business operations, (xxiv) if such Entity is a
limited liability company, then such Entity shall continue and not dissolve
whether as a consequence of bankruptcy or insolvency of one or more of the
members, or otherwise, for so long as a solvent managing member exists and,
subject to applicable law, dissolution of the Entity shall not occur so long as
the Entity remains owner of the Premises subject to the Mortgage.  Such Entity’s organizational documents shall
contain such provisions, (xxv) if such entity is a limited liability company
with two (2) or more members, it may be organized and existing under the laws
of any state, (xxvi) if such entity is a limited liability company with only a
single member then it must be organized and existing under the laws of the
state of Delaware, and upon the occurrence of any event that causes the member
to cease to be a member of the limited liability company (other than (a) upon
an assignment by the member of all of its limited liability company interest in
the limited liability company and the admission of the transferee pursuant to
the operating agreement, or (b) the resignation of the member and the admission
of an additional member of the limited liability company), each person acting
as a Special Member pursuant to the operating agreement shall, without any
action of any person and simultaneously with the member ceasing to be a member
of the limited liability company, automatically be admitted to the limited
liability company

 

4

 

as a Special Member and shall continue the limited
liability company without dissolution. 
No Special Member may resign from the limited liability company or
transfer its rights as Special Member unless a successor Special Member has
been admitted to the limited liability company as Special Member by executing a
counterpart to the operating agreement; provided, however, the Special Members
shall automatically cease to be members of the limited liability company upon
the admission to the limited liability company of a substitute member.  Each Special Member shall be a member of the
limited liability company that has no interest in the profits, losses and
capital of the limited liability company and has no right to receive any
distributions of limited liability company assets.  Pursuant to Section 18-301 of the Delaware
Limited Liability Company Act (the “Act”), a Special Member shall not be
required to make any capital contributions to the limited liability company and
shall not receive a limited liability company interest in the limited liability
company.  A Special Member, in its
capacity as Special Member, may not bind the limited liability company.  Except as required by any mandatory provision
of the Act, each Special Member, in its capacity as Special Member, shall have
no right to vote on, approve or otherwise consent to any action by, or matter
relating to, the limited liability company, including, without limitation, the
merger, consolidation or conversion of the limited liability company.  The member shall not, so long as any
obligation to the Lender is outstanding, amend, alter, change or repeal the
definition of “Special Member” or any sections that relate to Special Members
of the operating agreement without the unanimous written consent of all
member(s) and Special Members.  For so
long as any obligation to Lender is outstanding, notwithstanding any other
provision of the operating agreement and any provision of law that otherwise
empowers the limited liability company or any member or any other person to the
contrary, no member nor any other person so authorized shall permit the limited
liability company, without the prior unanimous written consent of the member
and all Special Members, to take any bankruptcy-related action.  As long as any obligation to Lender is
outstanding, the member shall cause the limited liability company at all times
to have at least two Special Members who will be appointed by the member.  In the event of a vacancy in the position of
Special Member, the member shall, as soon as practicable, appoint a successor
Special Member.  One or more additional
members of the limited liability company may be admitted to the limited
liability company with the written consent of the member; provided, however,
that, notwithstanding the foregoing, so long as any obligation to the Lender
remains outstanding, no additional member may be admitted to the limited
liability company unless permitted by the Loan Documents.  The member shall agree that the operating
agreement constitutes a legal, valid and binding agreement of the member, and
is enforceable against the member by the Special Members, in accordance with
its terms.  In addition, the Special
Members shall be intended beneficiaries of the operating agreement.  For purposes hereof the term “Special
Member” means a person or entity who is not a member of the limited
liability company but has agreed to act as a Special Member under the terms of
the operating agreement with only the rights and duties expressly set forth in
the operating agreement and only upon the occurrence of certain events that
cause the member to cease to be a member of the limited liability company.

 

Notwithstanding
the above, Lender acknowledges that Borrower may make distributions to AAR
Corp., a Delaware corporation, which distributions are not expected to be
repaid.

 

Further
notwithstanding the above, upon the occurrence of any Permitted Transfer (as
described in the Mortgage), the Single Purpose Entity definition above will
become null and void and the following definition of a Single Purpose Entity
will become effective thereafter for the remaining term of the Loan:

 

5

 

“Single-Purpose
Entity” means a corporation, limited partnership, limited liability
company, or business trust which, at all times until the Indebtedness is paid
in full (i) will be organized solely for the purpose of owning the Premises,
(ii) will not engage in any business unrelated to the ownership of
the Premises, (iii) will not have any assets other than those related to the
Premises, (iv) will not engage in, seek or consent to any dissolution, winding
up, liquidation, consolidation or merger, and, except as otherwise expressly
permitted by the Loan Documents, will not engage in, seek or consent to any
asset sale, transfer of partnership, membership, shareholder, beneficial
interests, or amendment of its limited partnership agreement, articles of
incorporation, articles of organization, certificate of formation, operating
agreement, trust agreement, or trust certificate (as applicable), (v) will not
fail to correct any known misunderstanding regarding the separate identity of
such Entity, (vi) without the unanimous consent of all of the partners,
directors, members, beneficial owners and trustees, as applicable, will not
with respect to itself or to any other Entity in which it has a direct or
indirect legal or beneficial ownership interest (a) file a bankruptcy,
insolvency or reorganization petition or otherwise institute insolvency
proceedings or otherwise seek any relief under any laws relating to the relief
from debts or the protection of debtors generally; (b) seek or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator,
custodian or any similar official for such Entity or all or any portion of such
Entity’s properties; (c) make any assignment for the benefit of such Entity’s
creditors; or (d) take any action that might cause such Entity to become
insolvent, (vii) will maintain its accounts, books and records separate
from any other person or Entity, (viii) will maintain its books, records,
resolutions and agreements as official records, (ix) has not commingled and
will not commingle its funds or assets with those of any other person or
Entity, (x) has held and will hold its assets in its own name, (xi) will
conduct its business in its name, (xii) will maintain its financial statements,
accounting records and other Entity documents separate from any other person or
Entity, (xiii) will pay its own liabilities out of its own funds and assets,
(xiv) will observe all corporate, limited liability company and partnership formalities,
as applicable, (xv) has maintained and will maintain an arms-length
relationship with its Affiliates, (xvi) if such Entity owns the Premises, will
have no indebtedness other than the Indebtedness and commercially reasonable
unsecured trade payables in the ordinary course of business relating to the
ownership and operation of the Premises which are paid within sixty (60) days
of the date incurred, (xvii) will not assume or guarantee or become
obligated for the debts of any other person or Entity or hold out its credit as
being available to satisfy the obligations of any other person or Entity,
except for the Indebtedness, (xviii) will not acquire obligations or securities
of its partners, members, trustees, beneficial owners or shareholders, (xix) will
allocate fairly and reasonably shared expenses, including, without limitation,
shared office space and uses separate stationery, invoices and checks, (xx)
will not pledge its assets for the benefit of any other person or Entity, (xxi)
will hold itself out and identify itself as a separate and distinct Entity
under its own name and not as a division or part of any other person or Entity,
(xxii) will not make loans to any person or Entity, (xxiii) will not identify
its partners, members, shareholders, trustees, beneficiaries or any Affiliates
of any of them as a division or part of it, (xxiv) will not enter into or be a
party to, any transaction with its partners, members, shareholders,
beneficiaries, trustees or its Affiliates except in the ordinary course of its
business and on terms which are intrinsically fair and are no less favorable to
it than would be obtained in a comparable arms-length transaction with an
unrelated third party, (xxv) will pay the salaries of its own employees from
its own funds, (xxvi) will maintain adequate capital in light of its
contemplated business operations, (xxvii) if such Entity is a limited liability

 

6

 

company, limited partnership, or business trust then
such Entity shall continue and not dissolve whether as a consequence of
bankruptcy or insolvency of one or more of the members, general partners, or
trustees, as applicable, or otherwise, for so long as a solvent managing
member, general partner, or trustee, as applicable, exists and, subject to
applicable law, dissolution of the Entity shall not occur so long as the Entity
remains owner of the Premises subject to the Mortgage.  Such Entity’s organizational documents shall
contain such provisions, (xxviii) if such entity is a limited liability company
with two (2) or more members, it may be organized and existing under the laws
of any state, (xxix) if such entity is a limited liability company with only a
single member then it must be organized and existing under the laws of the
state of Delaware, and upon the occurrence of any event that causes the member
to cease to be a member of the limited liability company (other than (a) upon
an assignment by the member of all of its limited liability company interest in
the limited liability company and the admission of the transferee pursuant to
the operating agreement, or (b) the resignation of the member and the admission
of an additional member of the limited liability company), each person acting
as a Special Member pursuant to the operating agreement shall, without any
action of any person and simultaneously with the member ceasing to be a member
of the limited liability company, automatically be admitted to the limited
liability company as a Special Member and shall continue the limited liability
company without dissolution.  No Special
Member may resign from the limited liability company or transfer its rights as
Special Member unless a successor Special Member has been admitted to the
limited liability company as Special Member by executing a counterpart to the
operating agreement; provided, however, the Special Members shall automatically
cease to be members of the limited liability company upon the admission to the
limited liability company of a substitute member.  Each Special Member shall be a member of the
limited liability company that has no interest in the profits, losses and
capital of the limited liability company and has no right to receive any
distributions of limited liability company assets.  Pursuant to Section 18-301 of the Delaware
Limited Liability Company Act (the “Act”), a Special Member shall not be
required to make any capital contributions to the limited liability company and
shall not receive a limited liability company interest in the limited liability
company.  A Special Member, in its
capacity as Special Member, may not bind the limited liability company.  Except as required by any mandatory provision
of the Act, each Special Member, in its capacity as Special Member, shall have
no right to vote on, approve or otherwise consent to any action by, or matter
relating to, the limited liability company, including, without limitation, the
merger, consolidation or conversion of the limited liability company.  The member shall not, so long as any
obligation to the Lender is outstanding, amend, alter, change or repeal the
definition of “Special Member” or any sections that relate to Special Members
of the operating agreement without the unanimous written consent of all
member(s) and Special Members.  For so
long as any obligation to Lender is outstanding, notwithstanding any other
provision of the operating agreement and any provision of law that otherwise
empowers the limited liability company or any member or any other person to the
contrary, no member nor any other person so authorized shall permit the limited
liability company, without the prior unanimous written consent of the member
and all Special Members, to take any bankruptcy-related action.  As long as any obligation to Lender is
outstanding, the member shall cause the limited liability company at all times
to have at least two Special Members who will be appointed by the member.  In the event of a vacancy in the position of
Special Member, the member shall, as soon as practicable, appoint a successor
Special Member.  One or more additional
members of the limited liability company may be admitted to the limited
liability company with the written consent of the member; provided, however,
that,

 

7

 

notwithstanding the foregoing, so long as any
obligation to the Lender remains outstanding, no additional member may be
admitted to the limited liability company unless permitted by the Loan
Documents.  The member shall agree that
the operating agreement constitutes a legal, valid and binding agreement of the
member, and is enforceable against the member by the Special Members, in
accordance with its terms.  In addition,
the Special Members shall be intended beneficiaries of the operating
agreement.  For purposes hereof the term
“Special Member” means a person or entity who is not a member of the
limited liability company but has agreed to act as a Special Member under the
terms of the operating agreement with only the rights and duties expressly set
forth in the operating agreement and only upon the occurrence of certain events
that cause the member to cease to be a member of the limited liability company.

 

“State” means the state or
commonwealth where the Premises is located.

 

“Successor Borrower” has the meaning
set forth in Section 2.1(D) of this Agreement.

 

“Taking” has the meaning provided in
the Mortgage.

 

“Tax and Insurance Escrows” has the
meaning set forth in Section 5.2(A) of this Agreement.

 

“Title Insurance Policy” means a
loan policy of title insurance for the Premises issued by Chicago Title
Insurance Company with respect to the Premises in an amount (not less than the
Loan Amount) acceptable to Lender and insuring the first priority lien in favor
of Lender created by the Mortgage, in each case acceptable to Lender in
Lender’s discretion.

 

“UCC” means, with respect to any
Collateral, the Uniform Commercial Code in effect in the jurisdiction in which
the relevant Collateral is located.

 

“U.S. Obligations” has the meaning
set forth in Section 2.1(D) of this Agreement.

 

8

 

ARTICLE
II

GENERAL
TERMS

 

Section 2.1             Loan Commitment;
Disbursement to Borrower; Prepayment.

 

(A)          The Loan.  Subject to, and upon the
terms and conditions set forth herein, Lender hereby agrees to make the Loan to
Borrower on the Closing Date, in the Loan Amount, which Loan will mature on the
Maturity Date, as such terms are defined herein or in the Loan Documents.

 

(B)           Disbursement to Borrower.  Borrower may request and
receive only one borrowing in respect of the Loan, which will not be subject to
future advances and any amount borrowed and repaid in respect of the Loan may
not be reborrowed.  Borrower shall, on
the Closing Date, receive the Loan Amount, subject to the direction given by
Borrower as to the application of Loan proceeds.

 

(C)           The Note and Other Loan
Documents. 
The Loan shall be evidenced by the Note (made in the Loan Amount) and
evidenced or secured by the other Loan Documents executed and delivered in
connection with the Loan.  The Note shall
bear interest as provided in the Note, and shall be subject to the payment of
interest and the repayment and prepayment of the Indebtedness as provided for
herein.  The Note shall be entitled to
the benefits of this Agreement and shall be secured by the Mortgage and the
other Loan Documents given to further secure the Loan.

 

(D)          Early Release of the
Premises.

 

(i)            At any
time from and after the Lockout Date and provided no Event of Default has
occurred and is continuing, Borrower may obtain a Collateral Release upon
satisfaction of the following conditions precedent: (a) Borrower shall have
provided Lender with not less than thirty (30) days and not more than sixty
(60) days prior written Notice specifying the date which shall be a date upon
which a scheduled installment of principal and interest is due (the “Release
Date”) on which the Collateral Release is to be made; (b) Borrower shall
have paid to Lender all interest accrued and unpaid on the principal balance of
the Note to and including the Release Date; (c) Borrower shall have paid to
Lender all other Indebtedness due and payable under the Loan Documents through
and including the Release Date; (d) Borrower shall have paid to Lender the
Collateral Release Deposit (hereinafter defined); and (e) Borrower shall have
delivered to Lender the following:

 

(1)           a
security agreement, in form and substance satisfactory to Lender, creating a
first priority lien on the Collateral Release Deposit and the U.S. Obligations
(hereinafter defined) purchased on behalf of Borrower with the Collateral
Release Deposit in accordance with this Section 2.1(D) (the “Pledge
Agreement”), which Pledge Agreement shall provide, among other things, that
any excess payments of principal and interest received by Lender under the U.S.

 

9

 

Obligations
over the amount needed to make payments of principal, interest, all other
Indebtedness and other sums due from Borrower under the Note shall be refunded
to Borrower;

 

(2)           a
release of the Premises from the lien of the Mortgage (for execution by Lender)
in a form satisfactory to Lender and appropriate for the jurisdiction in which
the Premises is located;

 

(3)           an
officer’s certificate of Borrower certifying that the requirements set forth in
this Section 2.1(D) have been satisfied;

 

(4)           an
opinion of counsel for Borrower in form reasonably satisfactory to Lender
stating that: (i) the Successor Borrower (as hereinafter defined) has been duly
formed and is authorized to enter into and has properly executed the Pledge
Agreement; and (ii) Lender has a perfected first priority security interest in
the Collateral Release Deposit and the U.S. Obligations purchased by Lender on
behalf of Borrower;

 

(5)           if
required by any rating agency(s) associated with the Securitization
Transaction, evidence in writing from the applicable Rating Agencies to the
effect that such release will not result in a re-qualification, reduction or
withdrawal of any rating in effect immediately prior to such defeasance issued
in connection with the applicable Securitization Transaction;

 

(6)           an
independent accountant’s mathematical verification report in form and substance
reasonably acceptable to Lender;

 

(7)           such
other certificates, documents or instruments as Lender may reasonably request;
and

 

(8)           a
reasonable fee for the handling and processing of the Collateral Release.

 

(ii)           Borrower
hereby appoints Lender as its agent and attorney-in-fact for the purpose of
using the Collateral Release Deposit to purchase U.S. Obligations which provide
payments which are (a) payable on or prior to, but as close as possible to, all
successive scheduled dates upon which principal and interest are due and
payable under the Note after the Release Date to and including the Maturity
Date and (b) in amounts necessary to meet the scheduled payments of principal
and interest due under the Note on such dates (the “Scheduled Collateral
Release Payments”).  Borrower,
pursuant to the Pledge Agreement or other appropriate documents, shall
authorize and direct that the payments received from the U.S. Obligations be
made directly to Lender and applied to satisfy the obligations of the Borrower
under the Note.

 

(iii)          Upon
compliance with the requirements of this Section 2.1(D), the Premises shall be
released from the lien of the Mortgage and the pledged Collateral Release

 

10

 

Deposit and
the U.S. Obligations purchased therewith shall be the sole source of collateral
securing the Note.  In connection with
such release, Lender, or its designee, shall establish or designate a successor
entity (the “Successor Borrower”) and Borrower shall transfer and assign
all obligations, rights and duties under and to the Note together with the
pledged Collateral Release Deposit and/or U.S. Obligations to such Successor
Borrower.  Such Successor Borrower shall
assume the obligations of Borrower under the Note and the Pledge Agreement and
Borrower shall be relieved of its obligations thereunder.  Borrower shall pay $1,000 to any such Successor
Borrower on the Release Date as consideration for assuming the obligations
under the Note and the Pledge Agreement. 
Notwithstanding anything in the Loan Documents to the contrary, no other
assumption fee shall be payable upon a transfer of the Note in accordance with
this Section 2.1(D)(iii), but Borrower
shall pay the fee set forth in item (8) of this Section 2.1(D) above and all
costs and expenses incurred by Lender, including Lender’s attorneys’ fees and
expenses, incurred in connection with this Section 2.1(D).  Following the delivery of the Collateral
Release Deposit to Lender, Borrower shall not have any right to prepay the
Note.

 

(iv)          In the
event an Event of Default and acceleration occur, Borrower shall pay to Lender
a “Make Whole Premium”.  The Make
Whole Premium shall be the greater of one percent (1%) of the outstanding
principal amount of the Loan at the time of the Event of Default, or a premium
calculated as provided in subparagraphs (1)-(3) below:

 

(1)           Determine
the “Reinvestment Yield”.  The
Reinvestment Yield will be equal to the yield on the August 2015 10 5/8 U.S.
Treasury Issue (“Primary Issue”) published one week prior to the date of
prepayment and converted to an equivalent monthly compounded nominal
yield.  In the event there is no market
activity involving the Primary Issue at the time of prepayment, the Lender
shall choose a comparable Treasury Bond, Note or Bill (“Secondary Issue”)
which the Lender reasonably deems to be similar to the Primary Issue’s
characteristics (i.e., rate, remaining time to maturity, yield).

 

(2)           Calculate the “Present Value of the Loan”.  The Present Value of the Loan is the present
value of the payments to be made in accordance with the Note (all installment
payments and any remaining payment due on the Maturity Date) discounted at the
Reinvestment Yield for the number of months remaining from the date of
prepayment to the Maturity Date.

 

(3)           Subtract
the amount of the prepaid proceeds from the Present Value of the Loan as of the
date of prepayment.  Any resulting
positive differential shall be the premium.

 

Notwithstanding
anything in this Section 2.1(D)(iv) to the contrary, during the last 90 days
prior to the Maturity Date, the Make Whole Premium shall not be subject to the
one percent (1%) minimum and shall be calculated only as provided in (1)
through (3) above.

 

11

 

(v)           For
purposes hereof, the following terms shall have the following meanings:

 

(a)           The
term “Collateral Release Deposit” shall mean an amount equal to the sum
of (1) the amount which will be sufficient to purchase U.S. Obligations
necessary to meet the Scheduled Collateral Release Payments and (2) any
revenue, documentary stamp or intangible taxes or any other tax or charge due
in connection with the transfer of the Note or otherwise required to accomplish
the agreements of this Section 2.1(D), all fees, costs and expenses incurred or
to be incurred by Lender in the purchase of such U.S. Obligations and the
assumption payments referred to above;

 

(b)           The
term “U.S. Obligations” shall mean direct non-callable obligations of
the United States of America.

 

(E)           Loan Prepayment.  Borrower shall not have the
right or privilege to prepay all or any portion of the unpaid principal balance
of the Note until the date which is one (1) month prior to the Maturity
Date.  From and after such date, provided
there is no Event of Default, the principal balance of the Note may be prepaid,
at par, in whole but not in part, upon: (a) not less than 15 days prior written
notice to Lender specifying the date on which prepayment is to be made, which
prepayment must occur no later than the fifth day of any such month unless
Borrower pays to Lender all interest that would have accrued for the entire
month in which the Note is prepaid absent such prepayment.  If prepayment occurs on a date other than a
scheduled monthly payment date, Borrower shall make the scheduled monthly
payment in accordance with the terms of the Note, regardless of any prepayment;
(b) payment of all accrued and unpaid interest on the outstanding principal
balance of the Note to and including the date on which prepayment is to be
made; and (c) payment of all other Indebtedness then due under the Loan
Documents.  Lender shall not be obligated
to accept any prepayment of the principal balance of the Note unless it is
accompanied by all sums due in connection therewith.

 

ARTICLE
III

REPRESENTATIONS
AND WARRANTIES

 

In order to
induce Lender to make the Loan to Borrower and in consideration of Lender’s reliance
thereon, Borrower hereby represents, warrants and covenants, as follows:

 

Section 3.1             Representations and
Warranties Relating to Borrower.

 

(A)          Organization.

 

(i)            Borrower
is and, until the Indebtedness is paid in full, will continue to (a) be a
duly organized and validly existing Entity in good standing under the laws of
the state of its formation, (b) if applicable, be duly qualified as a foreign
Entity in each jurisdiction in which the nature of its business, the Premises
or any of the other Collateral makes such qualification necessary,
(c) have the requisite Entity power and authority to carry on its business
as now being conducted, (d) have the requisite Entity power to execute,

 

12

 

deliver and perform
its obligations under the Loan Documents and Environmental Indemnity, and (e)
comply with the provisions of all of its organizational documents and the Legal
Requirements of the state of its formation.

 

(ii)           Borrower,
until the Indebtedness is paid in full, will continue to be a Single-Purpose
Entity.

 

(B)           Authorization.  The execution, delivery and
performance of the Loan Documents and Environmental Indemnity and the borrowing
evidenced by the Note (i) are within the applicable powers of the Borrower and
each other party to the Loan Documents and Environmental Indemnity (in each
case other than Lender); (ii) have been authorized by all requisite
action; (iii) have received all necessary approvals and consents,
corporate, governmental or otherwise; (iv) will not violate, conflict with,
result in a breach of or constitute (with notice or lapse of time or both) a
default under any provision of law, any order or judgment of any court or
Governmental Authority, the articles of incorporation, by-laws, partnership,
operating or trust agreement, or other governing instrument of Borrower or any
other party to the Loan Documents or the Environmental Indemnity (in each case
other than Lender), or any indenture, agreement or other instrument to which
Borrower or any other party to the Loan Documents and Environmental Indemnity
(in each case other than Lender) is a party or by which each such party or any
of their respective assets or the Premises is or may be bound or affected; (v)
will not result in the creation or imposition of any lien, charge or
encumbrance whatsoever upon any of such party’s assets, except the liens and
security interests created by the Loan Documents; and (vi) will not require any
authorization or license from, or any filing with, any Governmental Authority
or other body (except for the recordation of the Mortgage and any other Loan
Document intended to be recorded in the appropriate land records in the State
and except for UCC filings relating to the security interest created hereby).

 

(C)           Enforceability.  The Loan Documents and
Environmental Indemnity constitute the legal, valid and binding obligations of
Borrower and the other parties to the Loan Documents and Environmental
Indemnity (in each case other than Lender), enforceable against each such party
in accordance with their respective terms, except as may be limited by
(i) bankruptcy, insolvency, reorganization or other similar laws affecting
the rights of creditors generally, and (ii) general principles of equity
(regardless of whether considered in a proceeding in equity or at law).  Such Loan Documents and Environmental
Indemnity are, as of the date hereof, not subject to any right of rescission,
set-off, counterclaim or defense by Borrower or any other party to the Loan
Documents and Environmental Indemnity (in each case other than Lender),
including the defense of usury, nor will the operation of any of the terms of
the Note, the Mortgage, or such other Loan Documents and Environmental
Indemnity, or the exercise of any right thereunder, render the Mortgage
unenforceable against Borrower, in any material respect, or subject to any
right of rescission, set-off, counterclaim or defense by Borrower, including
the defense of usury, and Borrower nor any other party to the Loan Documents
and Environmental Indemnity (in each case other than Lender) have asserted any
right of rescission, set-off, counterclaim or defense with respect thereto.

 

13

 

(D)          Financial
Condition. 
(i) Borrower is solvent and no bankruptcy, reorganization, insolvency or
similar proceeding under any state or federal law with respect to the Borrower
has been initiated, (ii) Borrower has not entered into this Loan transaction
with the intent to hinder, delay or defraud any creditor, (iii) Borrower has
received reasonably equivalent value for the making of the Loan and (iv)
Borrower has no known contingent liabilities which could have a Material
Adverse Effect.

 

(E)           Litigation.  There are no actions, suits
or proceedings at law or in equity by or before any Governmental Authority now
pending and served or, to the knowledge of Borrower, threatened against
Borrower or the Premises that would have a Material Adverse Effect.

 

(F)           Not
Foreign Person. 
Borrower is not a “foreign person” within the meaning of §1445(f)(3) of
the Internal Revenue Code of 1986, as amended, and as it may be further amended
from time to time, any successor statutes thereto, together with applicable
U.S. Department of Treasury regulations issued pursuant thereto in temporary or
final form (the “Code”).

 

(G)           ERISA.  As of the date hereof and
until the Indebtedness is paid in full: (i) Borrower is not and will not be an
“employee benefit plan” as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”), which is subject to
Title I of ERISA, (ii) the assets of Borrower do not and will not
constitute “plan assets” of one or more such plans for purposes of Title I of
ERISA, (iii) Borrower is not and will not be a “governmental plan” within
the meaning of Section 3(32) of ERISA, (iv) transactions by or with Borrower
are not and will not be subject to state statutes applicable to Borrower
regulating investments of and fiduciary obligations with respect to
governmental plans, (v) Borrower has made and will continue to make all
required contributions to all employee benefit plans, if any, established for
or on behalf of Borrower or to which Borrower is required to contribute (vi)
Borrower has and will continue to administer each such plan, if any, in
accordance with its terms and the applicable provisions of ERISA and any other
federal or state law; and (vii) Borrower has not and will not permit any
liability under Sections 4201, 4243, 4062 or 4069 of Title IV of ERISA or taxes
or penalties relating to any employee benefit plan or multi-employer plan to
become delinquent or assessed, respectively, which would have a Material
Adverse Effect.

 

(H)          Investment
Company Act; Public Utility Holding Company Act.  Borrower is not and, until the Indebtedness
is paid in full, Borrower will not be (i) an “investment company” or a company
“controlled” by an “investment company,” within the meaning of the Investment
Company Act of 1940, as amended, (ii) a “holding company” or a “subsidiary
company” of a “holding company” or an “affiliate” of either a “holding company”
or a “subsidiary company” within the meaning of the Public Utility Holding
Company Act of 1935, as amended, or (iii) subject to any other federal or state
law or regulation which purports to restrict or regulate its ability to borrow
money.

 

(I)            Agreements.  Borrower is not a party to
any agreement or instrument or subject to any restriction which is likely to
have a Material Adverse Effect.  Borrower
is not

 

14

 

in default in
any respect in the performance, observance or fulfillment of any of the
material obligations, covenants or conditions contained in any indenture,
agreement or instrument to which it is a party or by which Borrower or the
Premises is bound.

 

(J)            Location
of Chief Executive Offices and Borrower’s Trade Names.  The location of Borrower’s
principal place of business and chief executive office is 1100 Wood Dale
Road, Wood Dale, Illinois 60191, and Borrower has no other places of
business.  Borrower does not conduct its
business “also known as”, “doing business as” or under any other name.  Borrower shall not change its principal place
of business or chief executive office or conduct its business under any other
name, without first notifying Lender in writing at least thirty (30) days prior
to any such change.

 

(K)          No
Defaults.  No
default or Event of Default exists under or with respect to any Loan Document.

 

(L)           Labor
Matters. 
Borrower is not a party to any collective bargaining agreements.

 

(M)         Intellectual
Property. 
All trademarks, trade names and service marks that Borrower owns or has
pending, in each case, if any, or under which Borrower is licensed, if any, are
in good standing and uncontested.  There
is no right under any trademark, trade name or service mark necessary to the
business of Borrower as presently conducted or as Borrower contemplates
conducting its business.  To the best of
Borrower’s knowledge, Borrower has not infringed, is not infringing, and has
not received notice of infringement with respect to asserted trademarks, trade
names and service marks of others.  To
Borrower’s knowledge, there is no infringement by others of trademarks, trade
names and service marks of Borrower.

 

Section 3.2             Representations and
Warranties Relating to The Premises.

 

(A)          Title Issues.

 

(i)            Borrower
owns good, indefeasible, marketable and insurable fee simple title to the
Premises, free and clear of all liens, other than the Permitted Encumbrances
applicable to the Premises, and until the Indebtedness is paid in full Borrower
shall not permit any liens (other than the Permitted Encumbrances, any title
matters or exceptions reasonably approved in writing by Lender subsequent to
the date hereof, taxes which are not yet due or delinquent, or any lien that is
contested by Borrower in accordance with and subject to paragraph 1(e) of the
Mortgage) to attach to the Premises. 
Borrower has good title to the Premises and has the right to mortgage,
grant, bargain, sell, pledge, assign, warrant, transfer and convey the
same.  There are not now, and until the
Indebtedness is paid in full, there will not be any outstanding options or
agreements to purchase or rights of first refusal affecting the Premises.  The Permitted Encumbrances do not and, until
the Indebtedness is paid in full, will not materially and adversely affect (a)
the ability of Borrower to pay in full all sums due under the Note or any of
its other obligations in a timely manner (b) the use of the Premises for the
use currently being made thereof, the

 

15

 

operation of
the Premises as currently being operated or the value of the Premises, or (c)
the value or marketability of the Premises.

 

(ii)           No
Taking has been commenced or, to Borrower’s knowledge, is contemplated with
respect to all or any portion of the Premises or for the relocation of roadways
providing access to the Premises.

 

(iii)          All
costs and expenses of any and all labor, materials, supplies and equipment used
in the construction of the Improvements have been paid in full (other than
customary and routine maintenance work currently in process so long as said
work is paid for on a timely basis). 
Borrower has paid in full for, and is the owner of, all furnishings,
fixtures and equipment (other than tenants’ personal property and trade
fixtures) used in connection with the operation of the Premises, free and clear
of any and all security interests, liens or encumbrances, except the lien and
security interest created by the Loan Documents securing the Loan.

 

(iv)          The
Premises is and, until the Indebtedness is paid in full, will be assessed for
real estate tax purposes as one or more wholly independent tax lot or lots,
separate from any adjoining land or improvements not constituting a part of
such lot or lots, and no other land or improvements is and, until the
Indebtedness is paid in full, will be assessed and taxed together with the
Premises or any portion thereof.

 

(v)           Except
as disclosed in the Title Insurance Policy, there are no pending or, to the
knowledge of Borrower, proposed special or other assessments for public
improvements or otherwise affecting the Premises, nor, to the knowledge of
Borrower, are there any contemplated improvements to the Premises that may
result in such special or other assessments and until the Indebtedness is paid
in full, Borrower shall not permit any taxes, assessments, fees, water, sewer
or other charges by Governmental Authorities relating to the Premises to become
delinquent.

 

(vi)          The
Mortgage creates a valid and enforceable first mortgage lien on the Premises as
security for the repayment of the Indebtedness, subject only to the Permitted
Encumbrances, any title matters or exceptions approved in writing by Lender
subsequent to the date hereof, and taxes which are not yet due or
delinquent.  Each Loan Document securing
the Loan establishes and creates a valid, effective, and enforceable lien on
and a security interest in, or claim to, the rights and property described
therein.  All personal property and
fixtures covered by each such Loan Document are subject to a UCC financing
statement filed and/or recorded, as appropriate, or irrevocably delivered to an
authorized agent of the company issuing the Title Insurance Policy for such
recordation or filing in all places necessary to perfect a valid first priority
lien with respect to the rights and property that are the subject of each such
Loan Document to the extent governed by the UCC.

 

(B)           Status of the Premises.

 

(i)            No
portion of the Improvements is located in an area identified by the Secretary
of Housing and Urban Development or the Federal Emergency Management

 

16

 

Agency or any
successor thereto as an area having special flood or seismic hazards, or, if
now or hereafter located within any such area, Borrower has obtained and will
maintain the applicable flood hazard and/or earthquake insurance prescribed in
the Mortgage.

 

(ii)           Borrower
has obtained and, until the Indebtedness is paid in full, will maintain all
necessary certificates, licenses, permits and other approvals, governmental and
otherwise, necessary for the operation of the Premises; and the conduct of its
business and all required zoning, building code, land use, environmental and
other similar permits or approvals, all of which are and, until the
Indebtedness is paid in full, will remain in full force and effect and not be
revocated, suspended, forfeited or modified.

 

(iii)          As of
the date hereof, and until the Indebtedness is paid in full: (a) the Premises
and the present and contemplated use, occupancy, operation and construction
thereof are and will remain in full compliance with all covenants and
restrictions and all applicable licenses, permits and other approvals and all
zoning ordinances, building codes, land use and environmental laws and other
similar laws, (b) none of the Improvements lie or will lie outside of the
boundaries of the Land or the applicable building restriction lines to the
extent that such would have a Material Adverse Effect, (c) no improvements on
adjoining properties (now or will) materially encroach upon the Land.

 

(iv)          The
Premises is served by all utilities required for the current or contemplated
use thereof.  All utility service is
provided by public utilities and the Premises has accepted or is equipped to
accept such utility service.  The
Premises is served by public water and sewer systems.  All of the foregoing utilities are located in
the public right-of-way abutting the Premises, and all such utilities are
connected so as to serve the Premises either (a) without passing over other
property or, (b) if such utilities pass over other property, they do so
pursuant to valid easements.

 

(v)           All
public roads and streets necessary for service of and access to the Premises
for the current or contemplated use thereof have been completed, are
serviceable and all-weather and are physically and legally open for use by the
public.

 

(vi)          The
Premises is free from (a) damage caused by fire or other casualty; and (b) material
structural defects; and all building systems contained therein are in good
working order in all material respects, subject to ordinary wear and tear.

 

(vii)         Any and
all liquid and solid waste disposal, septic and sewer systems located on the
Premises are in a good and safe condition and repair and in compliance with all
Legal Requirements.

 

(C)           Status of the Leases and
Rents.

 

(i)            No
Prior Assignment. 
As of the date hereof, (i) Lender is the assignee of Borrower’s
interest under the Leases, and (ii) there are no prior assignments of the
Leases or any portion of the Rents due and payable or to become due and payable
which are presently outstanding.

 

17

 

(ii)           Security
Deposits.  As
of the date hereof, Borrower is in compliance with all applicable Legal
Requirements relating to all Security Deposits.

 

(iii)          Leases.  (a) Borrower is the sole
owner of the entire lessor’s interest in the Leases; (b) the Leases are the
valid, binding and enforceable obligations of Borrower and the applicable
tenant or lessee thereunder; (c) the terms of all alterations, modifications
and amendments to the Leases are reflected in the certified rent roll delivered
to and approved by Lender; (d) none of the Rents reserved in the Leases have
been assigned or otherwise pledged or hypothecated other than to Lender; (e)
none of the Rents have been collected for more than one (1) month in advance;
(f) the premises demised under the Leases have been completed and the tenants
under the Leases have accepted the same and have taken possession of the same
on a rent-paying basis; (g) there exists no offset or defense to the payment of
any portion of the Rents; (h) no Lease contains an option to purchase, right of
first refusal to purchase, expansion right, or any other similar provision; and
(i) no Person has any possessory interest in, or right to occupy the Premises,
except under and pursuant to a Lease; and (j) all leasing broker fees and
commissions payable by Borrower with respect to the Lease(s) have been paid in
full, in cash or other form of immediately available funds.

 

Section 3.3             Full and Accurate
Disclosure. 
No statement of fact made by or on behalf of Borrower in the Loan
Documents, the Environmental Indemnity or in any other document or certificate
delivered to Lender by Borrower contains any untrue statement of a material
fact or omits to state any material fact necessary to make statements contained
herein or therein not misleading.  There
is no fact presently known to Borrower which has not been disclosed to Lender
which will have a Material Adverse Effect, nor as far as Borrower can foresee,
might have a Material Adverse Effect.

 

Section 3.4.            Survival of
Representations and Warranties.  Borrower agrees that (A) all of the representations
and warranties of Borrower set forth in this Agreement, in the other Loan
Documents and Environmental Indemnity delivered as of the date hereof are made
as of the date hereof (except as expressly otherwise provided) and (B) all
representations, warranties and covenants made by Borrower shall survive the
delivery of the Note and continue for so long as any Indebtedness remains
owing, provided, however, that the representations and warranties
set forth in the Environmental Indemnity shall survive in perpetuity and shall
not be subject to the limitation of liability provisions set forth in the
Note.  All representations, warranties,
covenants and agreements made in this Agreement or in the other Loan Documents
shall be deemed to have been relied upon by Lender in conjunction with third
party reports provided to Lender and any investigation heretofore or hereafter
made by Lender or on its behalf.

 

ARTICLE
IV

DEFAULTS
AND REMEDIES

 

Section 4.1             Remedies.  Upon the occurrence of an
Event of Default, all or any one or more of the rights, powers and other
remedies available to Lender against Borrower under this Agreement, the Note,
the Mortgage or any of the other Loan Documents, or at law or in equity

 

18

 

may be exercised by Lender at any time and from time
to time, without notice or demand (unless otherwise required herein or the
other Loan Documents), whether or not all or any portion of the Indebtedness
shall be declared due and payable, and whether or not Lender shall have
commenced any foreclosure proceeding or other action for the enforcement of its
rights and remedies under any of the Loan Documents with respect to the
Premises or all or any portion of the Collateral.  Any such 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 discretion, to the fullest extent permitted by law,
without impairing or otherwise affecting the other rights and remedies of
Lender permitted by law, equity or contract or as set forth herein or in the
other Loan Documents.

 

ARTICLE
V

SPECIAL
PROVISIONS

 

Section 5.1             Financial Reporting.  Borrower shall keep
adequate books and records of account in accordance with generally accepted
accounting principles or in accordance with other methods of accounting
acceptable to Lender in its reasonable discretion, consistently applied (“Approved
Accounting Method”) and shall furnish to Lender the following, which shall
be prepared, dated and certified by Borrower as true, correct and complete in
the form required by Lender, unless otherwise specified below:

 

(A)          Within
90 days after the end of each fiscal year for Borrower, detailed financial
reports covering the full and complete operation of the Premises, prepared in
accordance with the Approved Accounting Method, including, without limitation,
income and expense statements;

 

(B)           Within
60 days after the end of each fiscal year of Borrower, a detailed rent roll of
the leasing status of the Premises as of the end of such year identifying the
lessee (and assignee, subtenants and licensees, if any) and location of demised
premises; square footage leased; base and additional rental amounts including
any increases; rental concessions, allowances, abatements and/or rental
deferments; pass-through amounts; purchase options; commencement and expiration
dates; early termination dates; renewal options and annual renewal rents; total
net rentable area of the Premises; the existence of any affiliation between
Borrower and tenant; a detailed listing of tenant defaults;

 

(C)           Within
15 days following Lender’s request, (i) a detailed annual budget for the
current fiscal year, in form and content reasonably acceptable to Lender, to
include, without limitation, a comparison showing corresponding information for
Borrower’s preceding fiscal year; (ii) detailed annual financial reports for
Borrower and Guarantor (which Lender acknowledges that so long as Guarantor is
a public company, such reports shall be detailed public annual financial
reports only) for the immediately preceding fiscal year; and (iii) an aged
accounts receivable report for Borrower; and

 

(D)          Such
other financial statements for the Borrower, Guarantor (but only if Guarantor
is no longer a public company) or the Premises, and such other information and

 

19

 

reports for
the Borrower, Guarantor (but only if Guarantor is no longer a public company)
or the Premises as may, from time to time, be reasonably required by Lender.

 

Section 5.2             Reserves and Cash
Management.

 

(A)          Borrower
shall deposit with and pay to Lender, on the Closing Date and/or each payment
date specified in the Note, sums reasonably calculated by Lender for payment
of: (i) the estimated taxes and assessments assessed or levied against the
Premises, and (ii) following an Event of Default on each payment date specified
in the Note the estimated premiums for insurance required by the Loan
Documents, excluding commercial general liability insurance (collectively, the
“Tax and Insurance Escrows”). 
Lender shall use the Tax and Insurance Escrows to pay the taxes,
assessments and premiums when the same become due unless any such expenses for
taxes or insurance have been deposited by Borrower into the Tax and Insurance
Escrows, in which case such expenses shall be paid by Lender out of the Tax and
Insurance Escrows.  Borrower agrees it is
liable for any taxes, assessments and/or insurance premiums identified as being
paid for by Borrower on Lender’s written Tax and Insurance Escrow analysis
previously provided to Borrower and Borrower agrees to make any such payments
when the same become due.  Borrower shall
procure and deliver to Lender, in advance, statements for such charges.  If the total payments made by Borrower under
this Section exceed the amount of payments actually made by Lender for taxes,
assessments and insurance premiums, such excess shall be credited by Lender on
subsequent deposits to be made by Borrower. 
If, however, the Tax and Insurance Escrows are insufficient to pay the
taxes, assessments and insurance premiums when the same shall be due and
payable, Borrower will pay to Lender any amount necessary to make up the
deficiency, within five (5) business days after Lender has notified Borrower in
writing of such deficiency, but in all events prior to the date when payment of
such taxes, assessments and insurance premiums shall be delinquent.  If at any time Borrower shall tender to
Lender, in accordance with the provisions of the Note and the other Loan
Documents, full payment of the entire Indebtedness, Lender shall, in computing
the amount of such Indebtedness, credit to the account of Borrower any balance
remaining in the Tax and Insurance Escrows. 
If there is an Event of Default resulting in a public sale of the
Premises, or if Lender otherwise acquires the Premises after an Event of
Default, Lender shall apply, at the time of commencement of such proceedings,
or at the time the Premises is otherwise acquired, the then remaining balance
in the Tax and Insurance Escrows as a credit toward any delinquent or accrued
taxes and then, in such priority as Lender elects, to the other Indebtedness.

 

Section 5.3             Security Agreement.

 

(A)          Pledge
of Accounts. 
To secure the full and punctual payment and performance of all of the
Indebtedness, Borrower hereby assigns, conveys, pledges and transfers to Lender
and grants to Lender a first and continuing lien on and security interest in
and to all of Borrower’s right, title and interest in (i) the Tax and Insurance
Escrows; (ii) the Property Reserves, if any; (iii) all funds from time to time
deposited or held in any of the foregoing, all investments made with respect
thereto and all interest, if any, earned thereon; (iv) all other amounts
required under the Loan Documents to be deposited with and/or held by Lender,
including but not limited to insurance proceeds and proceeds payable to

 

20

 

Borrower
pursuant to a Taking; and (v) to the extent not covered by the foregoing clauses,
all products and proceeds of any or all of the foregoing (collectively, the “Account
Collateral”).  Borrower agrees that
the Account Collateral shall not constitute any deposit or account of the
Borrower or moneys to which the Borrower is entitled upon demand, or upon the
mere passage of time, or sums to which Borrower is entitled to any interest or crediting of interest by virtue of Lender’s mere
possession of such deposits.  Lender
shall not be required to segregate any Account Collateral and may hold such
deposits in its general account or any other account and may commingle such
deposits with any other moneys of Lender or moneys which Lender is holding on
behalf of any other person or entity.

 

(B)           Lender
Appointed Attorney-In-Fact.  Borrower hereby irrevocably constitutes and
appoints Lender as Borrower’s true and lawful attorney-in-fact, with full power
of substitution, at any time after the occurrence of an Event of Default to
execute, acknowledge and deliver any instruments and to exercise and enforce
every right, power, remedy, option and privilege of Borrower with respect to
the Account Collateral, and do in the name, place and stead of Borrower, all
such acts, things and deeds for and on behalf of and in the name of Borrower
with respect to the Account Collateral, which Borrower could or might do or
which Lender may deem necessary or desirable to more fully vest in Lender the
rights and remedies provided for herein with respect to the Account Collateral
and to accomplish the purposes of this Agreement.  The foregoing powers of attorney are
irrevocable and coupled with an interest. 
Beyond the exercise of reasonable care in the custody thereof, Lender
shall not have any duty as to any Account Collateral or any income thereon in
Lender’s possession or control or in the possession or control of any agents
for, or of Lender, or the preservation of rights against any Person or
otherwise with respect thereto, it being understood that so long as Lender
exercises reasonable care, Lender shall not be liable or responsible for any
loss, damage or diminution in value by reason of the act or omission of Lender,
or Lender’s agents, employees or bailees.

 

Section 5.4             Assignment and
Assumption of the Loan.  Borrower shall not Transfer all or any
portion of the Premises nor shall any of the Interest Owners Transfer all or
any portion of their equity held in Borrower to another Person(s) except as may
be expressly permitted in the Mortgage.

 

Section 5.5             Transfer of Loan by
Lender.

 

(A)          Lender
may, at any time, sell, transfer or assign the Note, the other Loan Documents
and the Environmental Indemnity, and any or all servicing rights with respect
thereto, or grant participations therein or issue mortgage pass-through
certificates or other securities evidencing a beneficial interest in a rated or
unrated public offering or private placement (each, as designated by Lender, a
“Securitization Transaction”). 
Lender may forward to each purchaser, transferee, assignee, servicer,
participant, investor in such Securitization Transaction or any Rating Agency
(as hereinafter defined) rating such Securitization Transaction (collectively,
the “Investor”) and each prospective Investor and the advisor of each of
the foregoing, all documents and information which Lender now has or may
hereafter acquire relating to the Indebtedness and to Borrower, any guarantor,
if any

 

21

 

and the
Premises, whether furnished by Borrower, any guarantor, if any or otherwise, as
Lender determines reasonably necessary or desirable.

 

(B)           Borrower
agrees that it shall cooperate with Lender and use Borrower’s reasonable
efforts, without incurring expense unless expressly agreed to herein, to
facilitate the consummation of any Securitization Transaction, including,
without limitation, by:  (i) promptly and
reasonably providing such information as may be requested in connection with
the preparation of any documentation related to such Securitization Transaction;
(ii) providing within 10 days of Lender’s request the reports described in
Section 5.1(B) above and monthly income information for each of the preceding
12 months; and (iii) permitting Lender, or its designees to inspect the
Premises during normal business hours upon five (5) business days advance
notice from Lender requesting same and to discuss with Borrower or its agents
information and documentation with respect to the operation and management of
the Premises.  Lender shall make
reasonable efforts to ensure that the lessees’ business operations are not
disrupted.  Notwithstanding the
foregoing, Borrower shall only be obligated to produce such financial
statements, documents and reports that Borrower and Guarantor produce to comply
with Section 5.1 above.

 

(C)           At any
time, upon request of Lender, Borrower shall issue one or more separate (or
component) notes (subject to a maximum of five (5)) (the “Component Notes”)
with revised interest rates and/or amortization schedules to replace the Note,
the aggregate weighted average coupon rate of which shall, as of the issuance
of the Component Notes, equal the initial interest rate on the Loan (adjusted
to account for amortization).  Each
Component Note may have a different interest rate and/or different amortization.
Borrower shall also be obligated to enter into such reasonable amendments to
other Loan Documents as are necessary to reference the Component Notes.  Notwithstanding the foregoing, Borrower shall
only be required to issue such Component Notes as long as:

 

(i)            at and at all times after the issuance of such Component Notes, the
aggregate weighted average coupon rate of the revised interest rates of the
Component Notes equals the aggregate weighted average coupon rate of the Loan
as if the Note had never been replaced;

 

(ii)           there shall be no negative economic effect upon Borrower’s debt
service payments or otherwise; and

 

(iii)          such replacement shall be at no cost and expense to Borrower
(including that Lender shall reimburse Borrower for its reasonable attorneys’
fees in reviewing the Component Notes).

 

(D)          Lender
agrees that any costs and expenses incurred by Lender under this Section 5.5
shall be the responsibility of and paid for by Lender.

 

Section 5.6             Insurance Requirements.  Borrower shall at all times
keep or cause to be kept in full force and effect the insurance required by the
Mortgage.

 

22

 

Section 5.7             Management of Premises.  If the Premises are managed
by Borrower or an affiliate of Borrower, then upon the occurrence of an Event
of Default, Lender may request, upon thirty (30) days prior written notice to
Borrower, that Borrower select a successor manager not affiliated with Borrower
to manage the Premises.  If a successor
manager is required pursuant hereto, Borrower shall promptly seek to appoint a
successor manager acceptable to Lender in Lender’s reasonable discretion which
successor manager shall be a reputable management company having at least seven
(7) years’ experience in the management of commercial properties with similar
uses as the Premises and in the jurisdiction in which the Premises is located
and shall not be paid management fees in excess of fees which are market fees
in the surrounding geographic area.

 

ARTICLE
VI

MISCELLANEOUS

 

Section 6.1             No Liability of Lender.  Borrower acknowledges and
agrees that Lender’s acceptance or approval of any action of Borrower or any
other matter requiring Lender’s approval, satisfaction, acceptance or consent
pursuant to this Agreement, the other Loan Documents or the Environmental
Indemnity, including any report certificate, financial statement, appraisal or
insurance policy, will not be deemed a warranty or representation by Lender of
the sufficiency, legality, effectiveness or other import or effect of such
matter.

 

Section 6.2             No Third Parties
Benefited. 
This Agreement is between and for the sole benefit of Borrower and
Lender, and Lender’s successors and assigns, and creates no rights whatsoever
in favor of any other Person and no other Person will have any rights to rely
hereon.

 

Section 6.3             Time is of the Essence.  Time is of the essence of
each of Borrower’s obligations under this Agreement.  The waiver by Lender of any default or Event
of Default under this Agreement will not be deemed a waiver of any subsequent
default or Event of Default.

 

Section 6.4             Binding Effect; No
Borrower Assignment.  This Agreement will be binding upon and inure
to the benefit of Borrower and Lender and their respective heirs, executors,
administrators, successors and assigns, provided however Borrower may not
assign its rights or interests in this Agreement without the prior consent of
Lender, which may be withheld in Lender’s discretion as provided in the
Mortgage.

 

Section 6.5             Execution in
Counterparts. 
This Agreement may be executed in counterparts, each of which shall be
deemed an original, and such counterparts when taken together shall constitute
but one agreement.

 

Section 6.6             Integration;
Amendments; Consents.  This Agreement, together with the other Loan
Documents and the Environmental Indemnity, constitutes the entire agreement of
the parties with respect to the Loan, and supersedes any prior negotiations or
agreements, and supersedes any loan application submitted by Borrower to Lender
and any commitment letter for the Loan delivered by Lender to Borrower.  No modification, extension, discharge,
termination or waiver of any provision of this Agreement or the other Loan
Documents will be effective unless in

 

23

 

writing, signed by the Person against whom enforcement
is sought, and will be effective only in the specific instance for which it is
given.

 

Section 6.7             Governing Law.  The Loan will be deemed to
have been made in the State, and this Agreement, the other Loan Documents and
the Environmental Indemnity will be governed by and construed and enforced in
accordance with the laws of the State without regard to the State’s conflicts
of laws principles.  Borrower and Lender
each unconditionally and irrevocably waives any right to assert that the law of
any other jurisdiction governs this Agreement, the other Loan Documents, and
the Environmental Indemnity.

 

Section 6.8             Jurisdiction.  Borrower irrevocably (a)
agrees that any suit, action or other legal proceeding arising out of or
relating to this Agreement, the Note, the Mortgage, the other Loan Documents
and the Environmental Indemnity may be brought in a court of record in the
State or in the Courts of the United States located in the State, (b) submits to
the jurisdiction of each such court in any such suit, action or proceeding and
(c) waives any objection which it may have to the laying of venue of any such
suit, action or proceeding in any of such courts and any claim that any such
suit, action or proceeding has been brought in an inconvenient forum.  Borrower irrevocably consents to the service
of any and all process in any such suit, action or proceeding by service of
copies of such process to Borrower at its address provided in the
Mortgage.  Nothing in this Section 6.8
will affect the right of Lender to serve legal process in any other manner
permitted by law or affect the right of Lender to bring any suit, action or
proceeding against Borrower or Borrower’s assets in the courts of any other
jurisdiction.  Notwithstanding the above,
so long as AAR Wood Dale LLC is the Borrower, AAR Wood Dale LLC continues to be
a Single Purpose Entity and AAR Wood Dale LLC is organized as an Illinois
limited liability company, then Lender agrees to file any suit, action or other
legal proceeding against Borrower or Borrower’s assets in a court of record in
the State of Illinois.

 

Section 6.9             Severability of
Provisions. 
If a court of competent jurisdiction finds any provision of this
Agreement, the other Loan Documents or the Environmental Indemnity to be
invalid or unenforceable as to any Person or circumstance in any state, such
finding will not render that provision invalid or unenforceable as to any other
Person or circumstance or in any other state. 
Where permitted by Legal Requirements, any provision found invalid or
unenforceable will be deemed modified to the extent necessary to be within the
limits of enforceability or validity; however, if such provision cannot be
deemed so modified, it will be deemed stricken and all other provisions of this
Agreement in all other respects will remain valid and enforceable.

 

Section 6.10           Preferences.  Lender will have no
obligation to marshal any assets for the benefit of Borrower or any other
Person or in satisfaction of any or all of the Indebtedness.  Lender will have the continuing and exclusive
right to apply or reverse and reapply any and all payments by Borrower to any
portion of the Indebtedness.  To the
extent Borrower makes a payment to Lender or Lender receives any proceeds from
the Collateral, which payment or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
to be repaid to a trustee, receiver or any other Person under any bankruptcy,
insolvency or other law, or for equitable cause, then, to the extent of such
payment or proceeds released by Lender, the Indebtedness will be revived and
continue in full force and effect, as if such payment or proceeds had not been
received by Lender.

 

24

 

Section 6.11           Joint and Several
Obligations. 
If this Agreement is executed by more than one Person as Borrower, the
Indebtedness will be joint and several obligations.

 

Section 6.12           No Joint Venture or
Partnership. 
Borrower and Lender intend that the relationship created under this
Agreement, the other Loan Documents and the Environmental Indemnity be solely
that of borrower and lender.  Nothing is
intended to create a joint venture, partnership, tenancy-in-common, or joint
tenancy relationship between Borrower and Lender nor to grant to Lender any
interest in the Premises other than that of mortgagee or secured party.

 

Section 6.13           Waiver of Counterclaim.  Borrower hereby waives, to
the extent permitted by applicable law, the right to assert any counterclaim,
other than a compulsory counterclaim, in any action or proceeding brought
against Borrower by Lender under any of the Loan Documents or the Environmental
Indemnity.

 

Section 6.14           Liability.  Borrower’s obligations
under this Loan Agreement are subject to the provisions of paragraph 9 of the
Note.

 

Section 6.15           Headings, etc.  The headings and captions of
various paragraphs of this Agreement are for convenience of reference only and
are not to be construed as defining or limiting, in any way, the scope or
intent of the provisions hereof.

 

Section 6.16           Capitalized Terms.  Capitalized terms used
herein and not otherwise defined shall have those meanings given to them in the
other Loan Documents.

 

(Signatures
on next page)

 

25

 

IN WITNESS WHEREOF, Borrower and Lender
have hereunto caused this Agreement to be executed on the date first above
written.

 

	
  LENDER:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PRINCIPAL
  COMMERCIAL FUNDING, LLC, a

  Delaware limited liability company

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  PRINCIPAL
  REAL ESTATE INVESTORS,

  LLC, a Delaware limited liability company,

  its authorized signatory

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Kent
  Jurgensen

  	
   

  
	
   

  	
   

  	
  Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Brenda
  Tyler

  	
   

  
	
   

  	
   

  	
  Director

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  BORROWER:

  	
   

  
	
   

  	
   

  	
   

  
	
  AAR WOOD
  DALE LLC, an Illinois limited

  liability company

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  AAR CORP., a
  Delaware corporation, its

  managing member

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Timothy
  J. Romenesko

  	
   

  
	
   

  	
   

  	
  Name:
  Timothy J. Romenesko

  	
   

  
	
   

  	
   

  	
  Title: Vice
  President

  	
   

  
								

 

26

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