Document:

BS Inland (New Deals) - form Loan Agreement

Exhibit 10.589

JUNIOR MEZZANINE LOAN AGREEMENT

Dated as of December 1, 2009

By and Among

IW MEZZ 2 2009, LLC,

as Borrower

and

JPMORGAN CHASE BANK, N.A.,

as Lender

TABLE OF CONTENTS

Page

ARTICLE I

DEFINITIONS; PRINCIPLES OF CONSTRUCTION

Section 1.1

Definitions

2

Section 1.2

Principles of Construction

28

ARTICLE II

GENERAL TERMS

Section 2.1

Loan Commitment; Disbursement to Borrower

29

Section 2.2

Interest; Loan Payments; Late Payment Charge

29

Section 2.3

Prepayments

31

Section 2.4

Intentionally Omitted

33

Section 2.5

Release of Property

33

Section 2.6

Intentionally Omitted

36

Section 2.7

Lockbox Account/Cash Management

36

ARTICLE III

INTENTIONALLY OMITTED

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

Section 4.1

Borrower Representations

37

Section 4.2

Survival of Representations

52

ARTICLE V

BORROWER COVENANTS

Section 5.1

Affirmative Covenants

52

Section 5.2

Negative Covenants

69

-i-

ARTICLE VI

INSURANCE; CASUALTY; CONDEMNATION

Section 6.1

Insurance

78

Section 6.2

Casualty

79

Section 6.3

Condemnation

79

Section 6.4

Restoration

80

ARTICLE VII

RESERVE FUNDS

Section 7.1

Required Repair Funds

80

Section 7.2

Tax and Insurance Reserve Fund

80

Section 7.3

Replacements and Replacement Reserve

81

Section 7.4

Rollover Reserve

86

Section 7.5

Ground Lease Reserve Fund

87

Section 7.6

Excess Cash Flow Reserve Fund

88

Section 7.7

Reserve Funds, Generally

89

ARTICLE VIII

DEFAULTS

Section 8.1

Event of Default

90

Section 8.2

Remedies

93

Section 8.3

Remedies Cumulative; Waivers

94

ARTICLE IX

SPECIAL PROVISIONS

Section 9.1

Securitization

94

Section 9.2

Securitization Indemnification

100

Section 9.3

Intentionally Omitted

103

Section 9.4

Exculpation

103

Section 9.5

Termination of Manager

106

Section 9.6

Servicer

106

Section 9.7

Splitting the Loan

107

ARTICLE X

MISCELLANEOUS

Section 10.1

Survival

107

-ii-

Section 10.2

Lender’s Discretion

108

Section 10.3

Governing Law

108

Section 10.4

Modification; Waiver in Writing

109

Section 10.5

Delay Not a Waiver

109

Section 10.6

Notices

110

Section 10.7

Trial by Jury

111

Section 10.8

Headings

111

Section 10.9

Severability

111

Section 10.10

Preferences

112

Section 10.11

Waiver of Notice

112

Section 10.12

Remedies of Borrower

112

Section 10.13

Expenses; Indemnity

112

Section 10.14

Schedules Incorporated

113

Section 10.15

Offsets, Counterclaims and Defenses

114

Section 10.16

No Joint Venture or Partnership; No Third Party Beneficiaries

114

Section 10.17

Publicity

114

Section 10.18

Waiver of Marshalling of Assets

114

Section 10.19

Waiver of Counterclaim

115

Section 10.20

Conflict; Construction of Documents; Reliance

115

Section 10.21

Brokers and Financial Advisors

115

Section 10.22

Prior Agreements

115

Section 10.23

Transfer of Loan

116

Section 10.24

Intentionally Omitted

116

Section 10.25

Certain Additional Rights of Lender (VCOC)

116

Section 10.26

Co-Lender Agent

116

Section 10.27

Note Register

117

SCHEDULES

Schedule I

–

Mortgage Borrower List

Schedule II

–

Leasing Conditions

Schedule III

–

O&M Properties

Schedule IV

–

Required Repairs

Schedule V

–

Lease Carveouts

Schedule VI

–

Release Amounts

Schedule VII

–

Alteration Conditions

Schedule VIII

–

List of Ground Leases

Schedule IX

–

Ground Lease Exceptions

Schedule X

–

Organizational Chart

Schedule XI

–

REOAs

Schedule XII

–

Flood Zone Properties

Schedule XIII

–

Intentionally Omitted

Schedule XIV

–

Sole Tenant Individual Properties/Leases

Schedule XV-A

–

Inland Pacific Property Services Managed Properties

Schedule XV-B

–

Inland Southwest Management LLC Managed Properties

Schedule XV-C

–

Inland US Management LLC Managed Properties

Schedule XVI

–

Assignment Representations

-iii-

JUNIOR MEZZANINE LOAN AGREEMENT

THIS JUNIOR MEZZANINE LOAN AGREEMENT, dated as of this 1st day of December, 2009 (as amended, restated, replaced, supplemented or otherwise modified from time to time, this “Agreement”), by and among JPMORGAN CHASE BANK, N.A., a banking association chartered under the laws of the United States of America, having an address at 383 Madison Avenue, New York, New York 10179 (together with its successors and assigns, “Lender”) and IW MEZZ 2 2009, LLC, a Delaware limited liability company having an address at 2901 Butterfield Road, Oak Brook, Illinois 60523 (“Borrower”).

W I T N E S S E T H:

WHEREAS, JPMorgan Chase Bank N.A., a banking association chartered under the laws of the Untied States of America, having an address at 383 Madison Avenue, New York, New York 10179 as mortgage lender (“Mortgage Lender”), has made a loan in the original principal amount of Five Hundred Million and No/100 Dollars ($500,000,000.00) (the “Mortgage Loan”) to the entities set forth on Schedule I hereto (“Mortgage Borrower”) pursuant to a Loan Agreement dated the date hereof (as amended, supplemented or otherwise modified from time to time, the “Mortgage Loan Agreement”), which Mortgage Loan is evidenced by an Amended, Restated and Consolidated Promissory Note of even date therewith (as amended, supplemented or otherwise modified from time to time, the “Mortgage Note”) made by Mortgage Borrower to Mortgage Lender and secured by, among other things, a certain Mortgage/Deed of Trust/Indemnity Deed of Trust/Deed to Secure Debt and Security Agreement of even date therewith (as amended, supplemented or otherwise modified from time to time, the “Mortgage”) by Mortgage Borrower in favor of Mortgage Lender pursuant to which Mortgage Borrower has granted the Mortgage Lender a first priority mortgage on, among other things, the real property and other collateral as more fully described in the Mortgage (collectively, the “Property”);

WHEREAS, JPMorgan Chase Bank, N.A., senior mezzanine lender (“Senior Mezzanine Lender”), has made a loan in the aggregate original principal amount of Eighty-Five Million and No/100 Dollars ($85,000,000.00) (the “Senior Mezzanine Loan”) to IW Mezz 2009, LLC, a Delaware limited liability company (“Senior Mezzanine Borrower”), pursuant to that certain Senior Mezzanine Loan Agreement between Senior Mezzanine Lender and Senior Mezzanine Borrower, dated as of the date hereof (the “Senior Mezzanine Loan Agreement”), which Senior Mezzanine Loan is evidenced by each certain Senior Mezzanine Promissory Notes A-1, A-2 and A-3, dated as of the date hereof, made by Senior Mezzanine Borrower in favor of Senior Mezzanine Lender (the “Senior Mezzanine Note”), and secured by, among other things, all of Senior Mezzanine Borrower’s interest in Mortgage Borrower, Colesville One, LLC, a Maryland limited liability company (“Maryland Owner”) and Principal (as defined herein) (the “Senior Mezzanine Collateral”) pursuant to that certain Senior Mezzanine Pledge Agreement, dated as of the date hereof (the “Senior Mezzanine Pledge Agreement”);

WHEREAS, Borrower is the legal and beneficial owner of all of the limited liability company interests in Senior Mezzanine Borrower, consisting of a one hundred percent (100%) interest therein (the “Pledged Company Interests”);

WHEREAS, as a condition precedent to the obligation of Lender to make the Loan to Borrower, Borrower has entered into that certain Junior Mezzanine Pledge Agreement and Security Agreement, dated as of the date hereof, in favor of Lender (as amended, supplemented or otherwise modified from time to time, the “Pledge Agreement”), pursuant to which Borrower has granted to Lender a first priority security interest in the Collateral (as defined in the Pledge Agreement) as collateral security for the Debt (as defined below);

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 hereto hereby covenant, agree, represent and warrant as follows:

ARTICLE I

DEFINITIONS; PRINCIPLES OF CONSTRUCTION

Section 1.1

Definitions.

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

“Accrual Period” shall have the meaning set forth in Section 2.2.4 hereof.

“Additional Insolvency Opinion” shall mean any subsequent Insolvency Opinion.

“Adjusted Release Amount” shall mean, for each Individual Property, the sum of (a) the Release Amount for such Individual Property and (b) fifteen percent (15%) of the Release Amount for such Individual Property.

“Affected Collateral” shall have the meaning set forth in Section 9.1.5 hereof.

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

“Affiliated Manager” shall mean any Manager in which Borrower, Mortgage Borrower, Maryland Owner, Principal, Senior Mezzanine Borrower or Indemnitor has, directly or indirectly, any legal, beneficial or economic interest.

“Agent” shall mean Wells Fargo Bank, National Association, a banking association chartered under the laws of the United States of America, or any successor Eligible Institution acting as Agent under the Cash Management Agreement.

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

-2-

“Aggregate Threshold Amount” shall mean five percent (5%) of the outstanding principal balance of the Mortgage Loan.

“Agreement” shall mean this Loan Agreement, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Allocated Loan Amount” shall have the meaning set forth in Section 9.1.5 hereof.

“ALTA” shall mean American Land Title Association, or any successor thereto.

“Alteration Conditions” shall have the meaning set forth on Schedule VII hereof.

“Annual Budget” shall mean the operating budget, including all planned Capital Expenditures, for each Individual Property prepared by Borrower in accordance with Section 5.1.11(d) for the applicable Fiscal Year or other period.

“Approved Annual Budget” shall have the meaning set forth in Section 5.1.11(d) hereof.

“Assignment of Leases” shall mean (a) with respect to each Individual Property (other than the Maryland Individual Property), that certain first priority Assignment of Leases and Rents, dated as of the Closing Date, from the related Individual Mortgage Borrower, as assignor, to Mortgage Lender, as assignee, assigning to Mortgage Lender all of such Individual Mortgage Borrower’s interest in and to the Leases and Rents of the applicable Individual Property as security for the Mortgage Loan, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, and (b) with respect to the Maryland Individual Property, that certain first priority Indemnity Assignment of Leases and Rents, dated as of the Closing Date, from Maryland Owner, as assignor, to Lender, as assignee, assigning to Mortgage Lender all of Maryland Owner’s interest in and to the Leases and Rents of the Maryland Individual Property as security for the Mortgage Loan, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Assignment of Management Agreement” shall mean (a) with respect to each Individual Property (other than the Maryland Individual Property), that certain Junior Mezzanine Subordination of Management Agreement and Subordination of Management Fees dated as of the Closing Date among Lender, Borrower, the related Individual Mortgage Borrower and Manager, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, and (b) with respect to the Maryland Individual Property, that certain Junior Mezzanine Subordination of Management Agreement and Subordination of Management Fees dated as of the Closing Date among Lender, Borrower, Maryland Owner and Manager, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Award” shall mean any compensation paid by any Governmental Authority in connection with a Condemnation in respect of all or any part of any Individual Property.

-3-

“Bankruptcy Action” shall mean with respect to any Person (a) such Person filing a voluntary petition under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law; (b) the filing of an involuntary petition against such Person under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law; (c) such Person filing an answer consenting to or otherwise acquiescing in or joining in any involuntary petition filed against it, by any other Person under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law; (d) such Person consenting to or acquiescing in or joining in an application for the appointment of a custodian, receiver, trustee, or examiner for such Person or any portion of any Individual Property; or (e) such Person making an assignment for the benefit of creditors, or admitting, in writing or in any legal proceeding, its insolvency or inability to pay its debts as they become due.

“Bankruptcy Code” shall mean Title 11 of the United States Code, 11 U.S.C. §101, et seq., as the same may be amended from time to time, and any successor statute or statutes and all rules and regulations from time to time promulgated thereunder, and any comparable foreign laws relating to bankruptcy, insolvency or creditors’ rights or any other Federal or state bankruptcy or insolvency law.

“Borrower” shall have the meaning set forth in the introductory paragraph hereto, together with its successors and permitted assigns.

“Borrower Remainder Account” shall have the meaning set forth in the Cash Management Agreement.

“Business Day” shall mean any day other than a Saturday, Sunday or any other day on which national banks in New York, New York or the place of business of the trustee under a Securitization (or, if the Securitization has not occurred, Lender), or any Servicer or the financial institution that maintains any collection account for or on behalf of any Servicer or any Reserve Funds or the New York Stock Exchange or the Federal Reserve Bank of New York is not open for business.

“Capital Expenditures” shall mean, for any period, the amount expended for items capitalized under GAAP (including expenditures for building improvements or major repairs, leasing commissions and tenant improvements).

“Cash Management Account” shall have the meaning set forth in Section 2.7.2(a) hereof.

“Cash Management Agreement” shall mean that certain Cash Management Agreement, dated as of the date hereof, by and among Borrower, Mortgage Borrower, Senior Mezzanine Borrower, Maryland Owner, Manager, Agent, Mortgage Lender, Senior Mezzanine Lender and Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Cash Sweep Event” shall mean the occurrence of:

(a)

an Event of Default; 

-4-

(b)

any Bankruptcy Action of any Borrower, Senior Mezzanine Borrower, Mortgage Borrower or Maryland Owner;

(c)

a DSCR Trigger Event; or

(d)

any Bankruptcy Action of Indemnitor or Joint Venture Entity.

“Cash Sweep Event Cure” shall mean (a) if the Cash Sweep Event is caused solely by the occurrence of a DSCR Trigger Event, the achievement of a Debt Service Coverage Ratio of 1.12 to 1.00 or greater for six (6) consecutive months based upon the trailing six (6) month period immediately preceding the date of determination, or (b) if the Cash Sweep Event is caused by an Event of Default, the acceptance by Lender of a cure of such Event of Default (which cure Lender is not obligated to accept and may reject or accept in its sole and absolute discretion); provided, however, that, such Cash Sweep Event Cure set forth in this definition shall be subject to the following conditions, (i) no Event of Default shall have occurred and be continuing under this Agreement or any of the other Loan Documents, (ii) a Cash Sweep Event Cure may occur no more than a total of five (5) times in the aggregate during the term of the Loan, and (iii) Borrower shall have paid all of Lender’s reasonable expenses incurred in connection with such Cash Sweep Event Cure including, reasonable attorney’s fees.

“Cash Sweep Period” shall mean each period commencing on the occurrence of a Cash Sweep Event and continuing until the earlier of (a) the Payment Date next occurring following the related Cash Sweep Event Cure, or (b) until payment in full of all principal and interest on the Mortgage Loan and the Loan and all other amounts payable under the Loan Documents in accordance with the terms and provisions of the Loan Documents.

“Closing Date” shall mean the date hereof.

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

“Co-Lender” shall have the meaning set forth in Section 10.26(a) hereof.

“Collateral” shall have the meaning set forth in the Pledge Agreement.

“Condemnation” shall mean a temporary or permanent taking by any Governmental Authority as the result or in lieu or in anticipation of the exercise of the right of condemnation or eminent domain, of all or any part of any Individual Property, or any interest therein or right accruing thereto, including any right of access thereto or any change of grade affecting such Individual Property or any part thereof.

“Contractual Obligation” shall mean as to any Person, any provision of any security issued by such Person or of any agreement, instrument or undertaking to which such Person is a party or by which it or any of its property is bound, or any provision of the foregoing.

“Control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of management, policies or activities of a Person, whether through 

-5-

ownership of voting securities, by contract or otherwise.  “Controlled” and “Controlling” shall have correlative meanings.

“Covered Disclosure Information” shall have the meaning set forth in Section 9.2(b) hereof.

“Debt” shall mean the outstanding principal amount set forth in, and evidenced by, this Agreement and the Note together with all interest accrued and unpaid thereon and all other sums (including the Yield Maintenance Payment or Prepayment Premium) due to Lender in respect of the Loan under the Note, this Agreement, the Pledge Agreement, the Environmental Indemnity or any other Loan Document.

“Debt Service” shall mean, with respect to any particular period of time, interest payments due under this Agreement and the Note.

“Debt Service Coverage Ratio” shall mean a ratio as of the applicable date of determination in which:

(a)

the numerator is the Net Operating Income (excluding interest on credit accounts and using annualized amounts for any recurring expenses not paid monthly) for the applicable period as set forth in the statements required hereunder, without deduction for (i) actual management fees incurred in connection with the operation of the Properties, (ii) amounts paid to the Reserve Funds, less (A) management fees equal to four percent (4.0%) of Gross Income from Operations, (B) assumed Replacement Reserve Fund contributions equal to $0.15 per square foot of gross leasable area at the Properties; and (C) assumed reserves for tenant improvements and leasing commissions equal to $0.60 per square foot of gross leasable area at the Properties; and

(b)

the denominator is the aggregate amount, for the applicable period, of the Aggregate Debt Service.

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

“Default Rate” shall mean, with respect to the Loan, a rate per annum equal to the lesser of (a) the Maximum Legal Rate, and (b) five percent (5%) above the Interest Rate.

“Disclosure Document” shall mean any written materials used or provided to any prospective investors and/or Rating Agencies in connection with any public offering or private placement of Securities in a Securitization, including, without limitation, a prospectus, prospectus supplement, private placement memorandum, or similar offering memorandum or offering circular or collateral term sheet, in each case in preliminary or final form, and in each case, including any amendments or supplements thereto.

“DSCR Trigger Event” shall mean the Debt Service Coverage Ratio is less than 1.09 to 1.00, as determined by Lender, based upon the trailing three (3) month period immediately preceding the date of determination.

-6-

“Eligible Account” shall mean a separate and identifiable account from all other funds held by the holding institution that is either (a) an account or accounts maintained with a federal or state-chartered depository institution or trust company which complies with the definition of Eligible Institution or (b) a segregated trust account or accounts maintained with a federal or state chartered depository institution or trust company acting in its fiduciary capacity which, in the case of a state chartered depository institution or trust company, is subject to regulations substantially similar to 12 C.F.R. § 9.10(b), having in either case a combined capital and surplus of at least $50,000,000.00 and subject to supervision or examination by federal or state authority, as applicable.  An Eligible Account will not be evidenced by a certificate of deposit, passbook or other instrument.

“Eligible Institution” shall mean a depository institution or trust company insured by the Federal Deposit Insurance Corporation the short term unsecured debt obligations or commercial paper of which are rated at least “A-1” by S&P, in the case of accounts in which funds are held for thirty (30) days or less (or, in the case of accounts in which funds are held for more than thirty (30) days, the long term unsecured debt obligations of which are rated at least “AA-” by S&P); provided that KeyBank National Association will be deemed to be an Eligible Institution so long as its short-term unsecured debt obligations or commercial paper are rated at least “A-2” by S&P (or, if KeyBank National Association does not have any short-term unsecured debt rated by S&P, its long term unsecured debt obligations are rated at least “BBB+” by S&P).

“Embargoed Person” shall mean any Person, entity or government subject to trade restrictions under U.S. law, including, but not limited to, The USA PATRIOT Act (including the anti-terrorism provisions thereof), the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701, et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1, et seq., and any Executive Orders or regulations promulgated thereunder including those related to Specially Designated Nationals and Specially Designated Global Terrorists, with the result that the investment in Borrower, Senior Mezzanine Borrower, Maryland Owner, Principal or Indemnitor, as applicable (whether directly or indirectly), is prohibited by law or the Loan made by Lender is in violation of law.

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

“Environmental Report” shall have the meaning set forth in the Environmental Indemnity.

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

“Event of Default” shall have the meaning set forth in Section 8.1(a) hereof.

“Excess Cash Flow” shall have the meaning set forth in the Cash Management Agreement.

-7-

“Excess Cash Flow Reserve Account” shall have the meaning set forth in Section 7.6 hereof.

“Excess Cash Flow Reserve Fund” shall have the meaning set forth in Section 7.6 hereof.

“Exchange Act” shall have the meaning set forth in Section 9.2 hereof.

“Fiscal Year” shall mean each twelve (12) month period commencing on January 1 and ending on December 31 during each year of the term of the Loan.

“Fitch” shall mean Fitch, Inc.

“Fixtures” shall have the meaning set forth in the granting clause of the Mortgage with respect to each Individual Property.

“Fresno Individual Property” shall mean the Individual Property located in Fresno, California.

“Fullerton Individual Property” shall mean the Individual Property located Fullerton, California.

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

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

“Gross Income from Operations” shall mean, during any period, all sustainable income as reported on the financial statements delivered by Borrower in accordance with this Agreement, computed in accordance with GAAP, derived from the ownership and operation of the Properties from whatever source during such period, including, but not limited to, (i) Rents from Tenants that are in occupancy, open for business and paying unabated Rent (excluding termination fees), (ii) utility charges, (iii) escalations, (iv) intentionally omitted, (v) service fees or charges, (vi) license fees, (vii) parking fees, and (viii) other required pass-throughs but excluding (i) Rents from Tenants that are subject to any Bankruptcy Actions (unless such Tenant has affirmed its Lease and is in occupancy, open for business and paying unabated, post-petition Rent), (ii) refunds and uncollectible accounts, (iii) sales of furniture, fixtures and equipment, (iv) Insurance Proceeds (other than business interruption or other loss of income insurance), (v) Awards, (vi) forfeited or unforfeited security deposits, (vii) utility and other similar deposits and (viii) any disbursements to Borrower, Senior Mezzanine Borrower, any Individual Mortgage Borrower or Maryland Owner from the Reserve Funds or Mortgage Reserve Funds, or Senior Mezzanine Reserve Funds, if any.  Gross income shall not be diminished as a result of the Mortgages or the creation of any intervening estate or interest in the Properties or any part thereof.

-8-

“Ground Lease Property” shall mean each real property demised by a Ground Lease.

“Ground Lease Reserve Account” shall have the meaning set forth in Section 7.5.1 hereof.

“Ground Lease Reserve Fund” shall have the meaning set forth in Section 7.5.1 hereof.

“Ground Leases” shall mean, collectively, those certain leases described on Schedule VIII attached hereto, as modified by any agreements executed by a Ground Lessor in favor of Lender in connection with the Loan.

“Ground Lessor” shall mean the respective ground lessor under each of the Ground Leases.

“Ground Rent” shall mean all rents (including both base and additional rent) and other charges due under each Ground Lease.

“Improvements” shall have the meaning set forth in the granting clause of the related Mortgage with respect to each Individual Property.

“Indebtedness” of a Person, at a particular date, means the sum (without duplication) at such date of (a) indebtedness or liability for borrowed money; (b) obligations evidenced by bonds, debentures, notes, or other similar instruments; (c) obligations for the deferred purchase price of property or services (including trade obligations); (d) obligations under letters of credit; (e) obligations under acceptance facilities; (f) all guaranties, endorsements (other than for collection or deposit in the ordinary course of business) and other contingent obligations to purchase, to provide funds for payment, to supply funds, to invest in any Person or entity, or otherwise to assure a creditor against loss; and (g) obligations secured by any Liens, whether or not the obligations have been assumed (other than the Permitted Encumbrances).

“Indemnification Agreement” shall mean that certain Junior Mezzanine Guaranty Agreement dated as of the Closing Date by Indemnitor in favor of Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Indemnified Persons” shall have the meaning set forth in Section 9.2(b) hereof.

“Indemnifying Persons” shall have the meaning set forth in Section 9.2(b) hereof.

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

“Independent Director” shall mean a natural Person who (a) is not at the time of initial appointment, or at any time while serving in such capacity, and is not, and has never been, and will not while serving as Independent Director be:  (i) a stockholder, director (with the exception of serving as the Independent Director of Borrower, Senior Mezzanine Borrower, an 

-9-

Individual Mortgage Borrower or Maryland Owner), officer, employee, partner, member (other than a “special member” or “springing member”), manager, attorney or counsel of Borrower, Senior Mezzanine Borrower, an Individual Mortgage Borrower or Maryland Owner, equity owners of Borrower, Senior Mezzanine Borrower, an Individual Mortgage Borrower, Senior Mezzanine Borrower, Maryland Borrower or Indemnitor or any Affiliate of Borrower, Senior Mezzanine Borrower, Indemnitor, an Individual Mortgage Borrower or Maryland Owner; (ii) a customer, supplier or other person who derives any of its purchases or revenues from its activities with Indemnitor, Borrower, Senior Mezzanine Borrower, an Individual Mortgage Borrower, Maryland Owner, equity owners of Borrower, Senior Mezzanine Borrower, Indemnitor, an Individual Mortgage Borrower or Maryland Owner or any Affiliate of Borrower, Senior Mezzanine Borrower, Indemnitor, an Individual Mortgage Borrower or Maryland Owner; (iii) a Person Controlling or under common Control with any such stockholder, director, officer, employee, partner, member, manager, customer, supplier or other Person; or (iv) a member of the immediate family of any such stockholder, director, officer, employee, partner, member, manager, customer, supplier or other Person and (b) has (i) prior experience as an independent director or independent manager for a corporation, a trust or limited liability company whose charter documents required the unanimous consent of all independent directors or independent managers thereof before such corporation, trust or limited liability company could consent to the institution of bankruptcy or insolvency proceedings against it or could file a petition seeking relief under any applicable federal or state law relating to bankruptcy and (ii) at least three years of employment and/or ownership experience with one or more nationally recognized companies that provides, inter alia, professional independent directors or independent managers in the ordinary course of their respective business to issuers of securitization or structured finance instruments, agreements or securities or lenders originating commercial real estate loans for inclusion in securitization or structured finance instruments, agreements or securities (a “Professional Independent Director”) and is at all times during his or her service as an Independent Director of Borrower, Senior Mezzanine Borrower, an Individual Mortgage Borrower or Maryland Owner an employee and/or owner of such a company or companies.  A natural Person who satisfies the foregoing definition except for being (or having been) the independent director or independent manager of a “special purpose entity” affiliated with a Borrower, Senior Mezzanine Borrower, an Individual Mortgage Borrower or Maryland Owner (provided such affiliate does not or did not own a direct or indirect equity interest in Borrower, Senior Mezzanine Borrower, an Individual Mortgage Borrower or Maryland Owner) shall not be disqualified from serving as an Independent Director, provided that such natural Person satisfies all other criteria set forth above and that the fees such individual earns from serving as independent director or independent manager of affiliates of Borrower, Senior Mezzanine Borrower, an Individual Mortgage Borrower or Maryland Owner in any given year constitute in the aggregate less than five percent (5%) of such individual’s annual income for that year.  A natural person who satisfies the foregoing definition other than subparagraph (a)(ii) shall not be disqualified from serving as an Independent Director of Borrower, Senior Mezzanine Borrower, an Individual Mortgage Borrower or Maryland Owner if such individual is a Professional Independent Director.

“Individual Mortgage Borrower” shall have the meaning set forth in the Mortgage Loan Agreement.

-10-

“Individual Property” shall mean each parcel of real property, the Improvements thereon and all personal property owned (or leased pursuant to a Ground Lease) by an Individual Mortgage Borrower or Maryland Owner and encumbered by a Mortgage, together with all rights pertaining to such property and Improvements, as more particularly described in the granting clauses of the related Mortgage and referred to therein as the “Property”.

“Insolvency Opinion” shall mean that certain non-consolidation opinion letter dated the date hereof delivered by Katten Muchin Rosenman LLP in connection with the Loan.

“Insurance Premiums” shall have the meaning set forth in the Mortgage Loan Agreement.

“Insurance Proceeds” shall have the meaning set forth in the Mortgage Loan Agreement.

“Interest Rate” shall mean a rate of fourteen percent (14%) per annum.

“Joint Venture Entity” shall mean IW JV 2009, LLC, a Delaware limited liability company.

“Junior Mezzanine Loan Cash Management Account” shall have the meaning set forth in the Section 2.7.2 hereof.

“Junior Mezzanine Note A-1” shall mean that certain Junior Mezzanine Promissory Note A-1 of even date herewith in the principal amount of Twenty Million and No/100 Dollars ($20,000,000.00), made by Junior Mezzanine Borrower in favor of Junior Mezzanine Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Junior Mezzanine Note A-2” shall mean that certain Junior Mezzanine Promissory Note A-2 of even date herewith in the principal amount of Twenty Million and No/100 Dollars ($20,000,000.00), made by Junior Mezzanine Borrower in favor of Junior Mezzanine Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“JPM” shall mean JPMorgan Chase Bank, N.A. and its successors in interest.

“Lease” shall mean, with the exception of any Ground Lease, any lease (including, without limitation, any Sole Tenant Lease), sublease or subsublease, letting, license, concession or other agreement (whether written or oral and whether now or hereafter in effect) pursuant to which any Person is granted a possessory interest in, or right to use or occupy all or any portion of any space in any Individual Property of an Individual Mortgage Borrower or Maryland Owner, and (a) every modification, amendment or other agreement relating to such lease (including, without limitation, any Sole Tenant Lease), sublease, subsublease, or other agreement entered into in connection with such lease, sublease, subsublease, or other agreement and (b) every guarantee of the performance and observance of the covenants, conditions and agreements to be performed and observed by the other party thereto.

-11-

“Leasing Conditions” shall have the meaning set forth on Schedule II hereof.

“Legal Requirements” shall mean, with respect to each Individual Property, all federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of Governmental Authorities affecting Borrower, the Collateral, Senior Mezzanine Borrower, Mortgage Borrower, Maryland Owner or any such Individual Property or any part thereof (including the Improvements thereon), or the construction, use, alteration or operation thereof, or any part thereof, whether now or hereafter enacted and in force, and all permits, licenses and authorizations and regulations relating thereto, and all covenants, agreements, restrictions and encumbrances contained in any instruments, either of record or known to Borrower, Senior Mezzanine Borrower, any Individual Mortgage Borrower or Maryland Owner, at any time in force affecting Borrower, Senior Mezzanine Borrower, Mortgage Borrower, Maryland Owner or such Individual Property or any part thereof (including the Improvements thereon), including, without limitation, any which may (a) require repairs, modifications or alterations in or to such Individual Property or any part thereof, or (b) in any way limit the use and enjoyment thereof.

“Lender” shall have the meaning set forth in the introductory paragraph hereto and, as context shall provide, means any individual Co-lender or all Co-Lenders collectively..

“Liabilities” shall have the meaning set forth in Section 9.2(b) hereof.

“Lien” shall mean any mortgage, deed of trust, deed to secure debt, indemnity deed of trust, lien, pledge, hypothecation, assignment, security interest, or any other encumbrance, charge or transfer of, on or affecting Borrower, any Individual Mortgage Borrower, Senior Mezzanine Borrower, Maryland Owner, any Individual Property or the Collateral, any portion thereof or any interest therein, including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, the filing of any financing statement, and mechanic’s, materialmen’s and other similar liens and encumbrances.

“Liquidation Event” shall have the meaning set forth in Section 2.3.2(a) hereof. 

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

“Loan Documents” shall mean, collectively, this Agreement, the Note, the Pledge Agreement, the Environmental Indemnity, the O&M Agreements, the Assignment of Management Agreement, the Indemnification Agreement, the Cash Management Agreement and all other documents executed and/or delivered in connection with the Loan or any Securitization.

“Lockbox Account” shall have the meaning set forth in Section 2.7.1(a) hereof.

“Lockbox Agreement” shall mean that certain Clearing Account Agreement among Mortgage Borrower, Mortgage Lender, Manager and Lockbox Bank as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, relating to funds deposited in the Lockbox Account.

-12-

“Lockbox Bank” shall mean the clearing bank which establishes, maintains and holds the Lockbox Account.

“Management Agreement” shall mean (a) with respect to each Individual Property (other than the Maryland Individual Property), the management agreement entered into by and between the related Individual Mortgage Borrower and Manager, pursuant to which Manager is to provide management and other services with respect to such Individual Property; (b) with respect to the Maryland Individual Property, the management agreement entered into by and between Maryland Owner and Manager, pursuant to which Manager is to provide management and other services with respect to the Maryland Individual Property; or (c) if the context requires, the Replacement Management Agreement.

“Manager” shall mean (a) Inland Pacific Property Services LLC, a Delaware limited liability company, with respect to each Individual Property set forth on Schedule XV-A hereto, (b) Inland Southwest Management LLC, a Delaware limited liability company, with respect to each Individual Property set forth on Schedule XV-B hereto, (c) Inland US Management LLC, a Delaware limited liability company, with respect to each Individual Property set forth on Schedule XV-C hereto, or (d) if the context requires, a Qualifying Manager who is operating and managing an Individual Property in accordance with the terms and provisions of this Agreement pursuant to a Replacement Management Agreement.

“Market Conditions” shall mean a substantive adverse change in the performance or cash flow of properties generally resulting from significant downturns in the economy, disruptions in rental or other income or reimbursements due to a bankruptcy action of any tenant, casualty or condemnation, natural disaster, domestic unrest, terrorist activity, or unforeseen factors beyond the reasonable control of Manager.

“Maryland Individual Borrower” shall mean Inland Western Colesville New Hampshire SPE, L.L.C., a Delaware limited liability company, together with its successors and permitted assigns.

“Maryland Individual Property” shall mean the Individual Property located in the City of Colesville, County of Montgomery, and State of Maryland and currently known as the “Eckerd-Colesville, Maryland”.

“Maryland Owner” shall have the meaning set forth in the recitals hereto, together with its successors and permitted assigns.

“Maryland Owner Company Agreement” shall mean the Limited Liability Company Agreement of Maryland Owner, dated the date hereof, by Borrower, as sole member.

“Maryland Owner Indebtedness” shall have the meaning set forth in the Mortgage related to the Maryland Individual Property.

“Material Action” means, with respect to any Person, to file any insolvency or reorganization case or proceeding, to institute proceedings to have such Person be adjudicated bankrupt or insolvent, to institute proceedings under any applicable insolvency law, to seek any relief under any law relating to relief from debts or the protection of debtors, to consent to the 

-13-

filing or institution of bankruptcy or insolvency proceedings against such Person, to file a petition seeking, or consent to, reorganization or relief with respect to such Person under any applicable federal or state law relating to bankruptcy or insolvency, to seek or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian, or any similar official of or for such Person or a substantial part of its property, to make any assignment for the benefit of creditors of such Person, to admit in writing such Person's inability to pay its debts generally as they become due, or to take action in furtherance of any of the foregoing.

“Material Agreements” means each contract and agreement relating to the ownership, management, development, use, operation, leasing, maintenance, repair or improvement of the Properties, other than the Management Agreement and the Leases, under which there is an obligation of Borrower, Senior Mezzanine Borrower, Mortgage Borrower or Maryland Owner to pay more than $100,000 per annum.

“Maturity Date” shall mean December 1, 2019, or such other date on which the final payment of principal of the Note becomes due and payable as therein or herein provided, whether at such stated maturity date, by declaration of acceleration, or otherwise.

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

“Mezzanine Lender Agent” shall have the meaning set forth in Section 10.26(a) hereof.

“Miami Individual Property” shall mean the Individual Property located in Miami, Florida.

“Monthly Debt Service Payment Amount” shall mean the monthly payment of interest on the Loan calculated pursuant to Section 2.2.2 hereof.

“Moody’s” shall mean Moody’s Investors Service, Inc.

“Mortgage” shall have the meaning set forth in the recitals to this Agreement.

“Mortgage Adjusted Release Amount” shall mean the “Adjusted Release Amount” as defined in the Mortgage Loan Agreement.

“Mortgage Borrower” shall have the meaning set forth in the recitals to this Agreement, together with its successors and permitted assigns.

“Mortgage Borrower Company Agreement” shall mean, collectively, (i) the Limited Liability Company Agreement of any applicable Individual Mortgage Borrower and any applicable Principal dated the date hereof, by Senior Mezzanine Borrower, as sole member, (ii) the Amended and Restated Limited Partnership Agreements of the applicable Individual Mortgage Borrowers by Senior Mezzanine Borrower, as limited partner and certain entities 

-14-

comprising Principal, as general partner, dated the date hereof, and (iii) the Amended and Restated Trust Agreements, dated the date hereof, of INLAND WESTERN BETHLEHEM SAUCON VALLEY DST, a Delaware statutory trust, INLAND WESTERN DUNCANSVILLE HOLLIDAY DST, a Delaware statutory trust, and INLAND WESTERN CRANBERRY DST, with INLAND WESTERN BETHLEHEM SAUCON VALLEY BENEFICIARY, L.L.C., INLAND WESTERN DUNCANSVILLE HOLLIDAY BENEFICIARY, L.L.C, and INLAND WESTERN CRANBERRY BENEFICIARY, L.L.C., as sole beneficiary, as applicable.

“Mortgage Lender” shall have the meaning set forth in the recitals to this Agreement, together with its successors and assigns.

“Mortgage Loan” shall have the meaning set forth in the recitals to this Agreement.

“Mortgage Loan Agreement” shall have the meaning set forth in the recitals to this Agreement.

“Mortgage Loan Default” shall mean a “Default” under and as defined in the Mortgage Loan Agreement.

“Mortgage Loan Documents” shall mean, collectively, the Mortgage Note, the Mortgage Loan Agreement, the Mortgage, the Cash Management Agreement, and any and all other documents defined as “Loan Documents” in the Mortgage Loan Agreement, as amended, restated, replaced, supplemented or otherwise modified from time to time.

“Mortgage Loan Event of Default” shall mean an “Event of Default” under and as defined in the Mortgage Loan Agreement.

“Mortgage Note” shall have the meaning set forth in the recitals to this Agreement.

“Mortgage Release Amount” shall have the meaning ascribed to the term “Release Amount” in the Mortgage Loan Agreement.

“Mortgage Reserve Funds” shall mean the “Reserve Funds” as defined in the Mortgage Loan Agreement.

“Net Cash Flow” shall mean, with respect to the Properties for any period, the amount obtained by subtracting Operating Expenses and Capital Expenditures for such period from Gross Income from Operations for such period.

“Net Cash Flow Schedule” shall have the meaning set forth in Section 5.1.11(b) hereof.

“Net Liquidation Proceeds After Debt Service” shall mean, with respect to any Liquidation Event, all amounts paid to or received by or on behalf of Mortgage Borrower or Maryland Owner in connection with such Liquidation Event, including, without limitation, proceeds of any sale, refinancing or other disposition or liquidation, less (i) Lender’s, Senior 

-15-

Mezzanine Lender’s and/or Mortgage Lender’s reasonable costs incurred in connection with the recovery thereof, (ii) the costs incurred by Mortgage Borrower or Maryland Owner in connection with a restoration of all or any portion of the Properties made in accordance with the Mortgage Loan Documents, (iii) amounts required or permitted to be deducted therefrom and amounts paid pursuant to the Mortgage Loan Documents to Mortgage Lender, (iv) in the case of a foreclosure sale, disposition or Transfer of any Individual Property in connection with realization thereon following an Event of Default under the Mortgage Loan, such reasonable and customary costs and expenses of sale or other disposition (including attorneys’ fees and brokerage commissions), (v) in the case of a foreclosure sale, such costs and expenses incurred by Mortgage Lender under the Mortgage Loan Documents as Mortgage Lender shall be entitled to receive reimbursement for under the terms of the Mortgage Loan Documents, (vi) in the case of a refinancing of the Mortgage Loan and/or the Senior Mezzanine Loan, such costs and expenses (including attorneys’ fees) of such refinancing as shall be reasonably approved by Lender and in the case of a foreclosure sale, disposition or Transfer of any Senior Mezzanine Collateral in connection with realization thereon following an Event of Default under the Senior Mezzanine Loan, such reasonable and customary costs and expenses of sale or other disposition (including attorneys’ fees and brokerage commissions) and (vii) in the case of a foreclosure sale, such costs and expenses incurred by Senior Mezzanine Lender under the Senior Mezzanine Loan Documents as Senior Mezzanine Lender shall be entitled to receive reimbursement for under the terms of the Senior Mezzanine Loan Documents.

“Net Operating Income” shall mean the amount obtained by subtracting from Gross Income from Operations (i) Operating Expenses, and (ii) a vacancy allowance equal to (a) zero, if actual vacancy at the Properties in the aggregate is greater than five percent (5%) or (b) five percent (5%) of Gross Income from Operations if actual vacancy at the Properties in the aggregate is less than five percent (5%).

“New Mezzanine Borrower” shall mean the entity which owns interests in the New Senior Mezzanine Borrower similar to the interests in Senior Mezzanine Borrower owned by Borrower.

“New Senior Mezzanine Borrower” shall mean the entity which owns interests in the New Mortgage Borrower similar to the interests in Mortgage Borrower, Maryland Owner and Principal owned by Borrower.

“New Mezzanine Loan” shall have the meaning set forth in Section 9.1.3 hereof.

“New Mortgage Borrower” shall mean the entities to which the Properties are Transferred in accordance with Section 5.2.10(d).

“New Note” shall have the meaning set forth in Section 9.1.5 hereof.

“New Securitization Mezzanine Borrower” shall have the meaning set forth in Section 9.1.3 hereof.

“Northpointe Individual Property” shall have the meaning assigned to such term as set forth in the Mortgage Loan Agreement.

-16-

“Northpointe Remainder Property” shall have the meaning assigned to such term as set forth in the Mortgage Loan Agreement.

“Northpointe Target Expansion Parcel” shall have the meaning assigned to such term as set forth in the Mortgage Loan Agreement.

“Note” shall mean, collectively or individually as the context may require, Junior Mezzanine Note A-1 and Junior Mezzanine Note A-2.

“O&M Agreement” shall mean, with respect to each Individual Property set forth on Schedule III hereof, that certain Junior Mezzanine Operations and Maintenance Agreement, dated as of the date hereof, between Borrower, the related Individual Mortgage Borrower, Maryland Owner and Mortgage Lender given in connection with the Loan, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Officer’s Certificate” shall mean a certificate delivered to Lender by Borrower which is signed by an authorized officer of the general partner, managing member of Borrower.

“Operating Expenses” shall have the meaning as set forth in the Mortgage Loan Agreement.

“Organizational Documents” means as to any Person, the certificate of incorporation and by-laws with respect to a corporation; the certificate of organization and operating agreement with respect to a limited liability company; the certificate of limited partnership and partnership agreement with respect to a limited partnership, or any other organizational or governing documents of such Person.

“Other Charges” shall have the meaning as set forth in the Mortgage Loan Agreement.

“Payment Date” shall mean the first (1st) day of each calendar month during the term of the Loan or, if such day is not a Business Day, the immediately preceding Business Day.

“Permitted Encumbrances” shall mean, with respect to an Individual Property, collectively, (a) the Liens and security interests created by the Loan Documents, the Mortgage Loan Documents and the Senior Mezzanine Loan Documents, (b) all Liens, encumbrances and other matters disclosed in the Title Insurance Policies relating to such Individual Property or any part thereof, (c) Liens, if any, for Taxes imposed by any Governmental Authority not yet due or delinquent, (d) easements or other encumbrances granted pursuant to Section 5.2.10(e) hereof, and (e) such other title and survey exceptions as Lender has approved or may approve in writing in Lender’s reasonable discretion, which Permitted Encumbrances in the aggregate do not materially and adversely affect the value, operation or use of the Collateral, the Senior Mezzanine Collateral or the applicable Individual Property as used on the Closing Date or Borrower’s, Senior Mezzanine Borrower’s or Mortgage Borrower’s ability to repay the Loan, the Senior Mezzanine Loan and Mortgage Loan and/or Maryland Owner’s ability to repay the Maryland Owner Indebtedness (as defined in the Mortgage Loan Agreement), respectively.

-17-

“Permitted Investments” shall have the meaning set forth in the Mortgage Loan Agreement.

“Permitted Par Prepayment Date” shall mean the Payment Date three (3) months prior to the Maturity Date.

“Person” shall mean any individual, corporation, partnership, joint venture, limited liability company, estate, trust, unincorporated association, 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.

“Personal Property” shall have the meaning set forth in the granting clause of the Mortgage with respect to each Individual Property.

“Physical Conditions Report” shall mean, with respect to each Individual Property, a report prepared by a company satisfactory to Lender regarding the physical condition of such Individual Property, satisfactory in form and substance to Lender in its sole discretion, which report shall, among other things, (a) confirm that such Individual Property and its use complies, in all material respects, with all applicable Legal Requirements (including, without limitation, zoning, subdivision and building laws) and (b) include a copy of a final certificate of occupancy with respect to all Improvements on such Individual Property.

“Pledge Agreement” shall have the meaning set forth in the recitals to this Agreement.

“Pledged Company Interests” shall have the meaning set forth in the recitals to this Agreement.

“Pledgor” shall have the meaning as set forth in the Pledge Agreement.

“Policies” shall have the meaning specified in the Mortgage Loan Agreement.

“Policy” shall have the meaning specified in the Mortgage Loan Agreement.

“Prepayment Premium” shall mean the outstanding principal amount of the Loan being prepaid multiplied by (a) five percent (5.00%) if the relevant prepayment occurs on or prior to the forty-eighth (48th) Payment Date, (b) four percent (4.00%) if such prepayment occurs after the forty-eighth (48th) Payment Date, and through and including the sixtieth (60th) Payment Date, (c) three percent (3.00%) if the relevant prepayment occurs after the sixtieth (60th) Payment Date and through and including the seventy-second (72nd) Payment Date, (d) two percent (2.00%) if such prepayment occurs after the seventy-second (72nd) Payment Date and through and including the eighty-fourth (84th) Payment Date, and (e) one percent (1.00%) if such prepayment occurs after the eighty-fourth (84th) Payment Date and prior to the Permitted Par Prepayment Date.

“Prepayment Rate” shall mean the bond equivalent yield (in the secondary market) on the United States Treasury Security that as of the date any payment is received which is governed by Section 2.3.3 has a remaining term to maturity closest to, but not exceeding, the 

-18-

remaining term to the Maturity Date, as most recently published in “Statistical Release H.15 (519), Selected Interest Rates,” or any successor publication, published by the Board of Governors of the Federal Reserve System, or on the basis of such other publication or statistical guide as Lender may reasonably select.

“Prepayment Release Date” shall mean the Payment Date immediately following the third (3rd) anniversary of the first Payment Date.

“Principal” shall have the meaning set forth in the Mortgage Loan Agreement.

“Properties” shall mean, collectively, each and every Individual Property which is subject to the terms of the Mortgage Loan Agreement.

“Provided Information” shall have the meaning set forth in Section 9.1.1 hereof.

“Qualifying Manager” shall mean a reputable and experienced management organization reasonably satisfactory to Lender, which organization or its principals possess at least ten (10) years’ experience in managing properties similar in scope, size, use and value of the applicable Individual Property, provided that, if a Securitization has occurred, Borrower shall have obtained prior written confirmation from the Rating Agencies that management of such Individual Property by such entity will not cause a downgrading, withdrawal or qualification of the then current rating of the Securities issued pursuant to the Securitization or, if a Securitization has not occurred, Borrower shall have obtained the prior written consent of Lender.  Lender acknowledges that on the Closing Date, Manager shall be deemed a Qualifying Manager.

“Rating Agencies” shall mean each of S&P and Realpoint, or such other nationally recognized statistical securities rating organizations as may be designated by Lender to assign a rating to all or any portion of the Securities.

“Realpoint” shall mean Realpoint LLC, a Pennsylvania limited liability company.

“Register” shall have the meaning set forth in Section 10.27 hereof.

“Related Entities” shall have the meaning set forth in Section 5.2.10(d) hereof.

“Release Amount” shall mean for an Individual Property the amount set forth on Schedule VI hereto, as the same may be reduced pursuant to Section 2.3.2 hereof.

“Release Debt Service Coverage Ratio” shall mean the product of 1.16 multiplied by a fraction of which (a) the numerator is the sum of the Release Amounts, the Mortgage Release Amounts and the Senior Mezzanine Release Amounts of all Properties subject to the Liens of the Mortgages (including the Individual Property to be released), and (b) the denominator is the sum of the then-current outstanding principal amounts of the Loan, the Mortgage Loan and the Senior Mezzanine Loans.

-19-

“Relevant Leasing Threshold” shall mean, with respect to each Individual Property, any Lease for an amount of leaseable square footage equal to or greater than ten thousand (10,000) square feet.

“Relevant Restoration Threshold” shall mean, with respect to the applicable Individual Property, two percent (2%) of the related Release Amount.

“REMIC Trust” shall mean a “real estate mortgage investment conduit” within the meaning of Section 860D of the Code that holds the Note.

“Rents” shall mean, with respect to each Individual Property, all rents, rent equivalents, moneys payable as damages or in lieu of rent or rent equivalents, royalties (including, without limitation, all oil and gas or other mineral royalties and bonuses), income, receivables, receipts, revenues, deposits (including, without limitation, security, utility and other deposits), accounts, cash, issues, profits, charges for services rendered, termination fees, and other consideration of whatever form or nature received by or paid to or for the account of or benefit of Borrower, Senior Mezzanine Borrower, Mortgage Borrower or Maryland Owner or any agents or employees of Borrower, Senior Mezzanine Borrower, the related Individual Mortgage Borrower or Maryland Owner from any and all sources arising from or attributable to the Individual Property, and proceeds, if any, from business interruption or other loss of income insurance.

“REOA” shall mean each of those agreements more particularly set forth on Schedule XI attached hereto.

“Replacement Management Agreement” shall mean, collectively, (a) either (i) a management agreement with a Qualifying Manager substantially in the same form and substance as the Management Agreement, or (ii) a management agreement with a Qualifying Manager, which management agreement shall be reasonably acceptable to Lender in form and substance, provided, with respect to this subclause (ii), Lender, at its option, may require that Borrower shall cause Mortgage Borrower to obtain prior written confirmation from the applicable Rating Agencies that such management agreement will not cause a downgrade, withdrawal or qualification of the then current rating of the Securities or any class thereof and (b) a subordination of management agreement and subordination of management fees substantially in the form of the Assignment of Management Agreement (or of such other form and substance reasonably acceptable to Lender), executed and delivered to Lender by Borrower, the related Individual Mortgage Borrower or Maryland Owner, as the case may be, and such Qualifying Manager at Borrower’s, Mortgage Borrower’s and Maryland Owner’s expense.

“Replacement Reserve Account” shall have the meaning set forth in Section 7.3.1 hereof.

“Replacement Reserve Cap” shall have the meaning set forth in Section 7.3.1 hereof.

“Replacement Reserve Fund” shall have the meaning set forth in Section 7.3.1 hereof.

-20-

“Replacement Reserve Monthly Deposit” shall have the meaning set forth in Section 7.3.1 hereof.

“Replacements” shall have the meaning set forth in Section 7.3.1(a) hereof.

“Required Repair Account” shall have the meaning set forth in Section 7.1.1 hereof.

“Required Repair Fund” shall have the meaning set forth in Section 7.1.1 hereof.

“Required Repairs” shall have the meaning set forth in Section 7.1.1 hereof.

“Reserve Funds” shall mean, collectively, the Tax and Insurance Reserve Fund, the Replacement Reserve Fund, the Required Repair Fund, the Rollover Reserve Fund, the Ground Lease Reserve Fund, the Excess Cash Flow Reserve Fund and any other escrow fund established by the Loan Documents.

“Restoration” shall mean the repair and restoration of an Individual Property after a Casualty or Condemnation as nearly as possible to the condition the Individual Property was in immediately prior to such Casualty or Condemnation, with such alterations as may be reasonably approved by Lender.

“Restricted Party” shall mean collectively, (a) Borrower, Mortgage Borrower, Maryland Owner, Principal, Senior Mezzanine Borrower, Joint Venture Entity, and any Affiliated Manager and (b) any shareholder, partner, member, non-member manager, any direct or indirect legal or beneficial owner of, Borrower, Mortgage Borrower, Maryland Owner, Principal, Senior Mezzanine Borrower, any Affiliated Manager or any non-member manager.  “Restricted Party” shall not include Inland Equity Investors, LLC or its members or the holders, assignees or transferees of any direct or indirect ownership interests in Inland Equity Investors, LLC.

“Rollover Reserve Account” shall have the meaning set forth in Section 7.4.1 hereof.

“Rollover Reserve Fund” shall have the meaning set forth in Section 7.4.1 hereof.

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

“SEC” shall mean the United States Securities and Exchange Commission.

“Securities” shall have the meaning set forth in Section 9.1 hereof.

“Securities Act” shall have the meaning set forth in Section 9.2 hereof.

“Securitization” shall have the meaning set forth in Section 9.1 hereof.

-21-

“Senior Mezzanine Borrower” shall have the meaning set forth in the recitals to this Agreement, together with its successors and permitted assigns.

“Senior Mezzanine Borrower Company Agreement” shall mean that certain limited liability company agreement of Senior Mezzanine Borrower, dated the date hereof.

“Senior Mezzanine Collateral” shall have the meaning set forth in the recitals to this Agreement.

“Senior Mezzanine Loan Subaccount” shall have the meaning set forth in Section 2.6.3 of the Senior Mezzanine Loan Agreement.

“Senior Mezzanine Lender” shall have the meaning set forth in the recitals to this Agreement, together with its successors and assigns.

“Senior Mezzanine Loan” shall have the meaning set forth in the recitals to this Agreement.

“Senior Mezzanine Loan Agreement” shall have the meaning set forth in the recitals to this Agreement.

“Senior Mezzanine Loan Default” shall mean a “Default” under and as defined in the Senior Mezzanine Loan Agreement.

“Senior Mezzanine Loan Documents” shall mean, collectively, the Senior Mezzanine Note, the Senior Mezzanine Loan Agreement, the Senior Mezzanine Pledge, the Senior Mezzanine Cash Management Agreement, and any and all other documents defined as “Loan Documents” in the Senior Mezzanine Loan Agreement, as amended, restated, replaced, supplemented or otherwise modified from time to time.

“Senior Mezzanine Loan Event of Default” shall mean an “Event of Default” under and as defined in the Senior Mezzanine Loan Agreement.

“Senior Mezzanine Note” shall have the meaning set forth in the recitals to this Agreement.

“Senior Mezzanine Pledge Agreement” shall have the meaning set forth in the recitals to this Agreement.

“Senior Mezzanine Release Amount” shall have the meaning ascribed to the term “Release Amount” in the Senior Mezzanine Loan Agreement.

“Senior Mezzanine Reserve Funds” shall mean the Reserve Funds as defined in the Senior Mezzanine Loan Agreement.

“Servicer” shall have the meaning set forth in Section 9.6 hereof.

“Servicing Agreement” shall have the meaning set forth in Section 9.6 hereof.

-22-

“Severed Loan Documents” shall have the meaning set forth in Section 8.2(c) hereof.

“Severing Documentation” shall have the meaning set forth in Section 9.7 hereof.

“Sole Tenant” shall mean each Tenant under a Sole Tenant Lease.

“Sole Tenant Individual Property” shall mean each Individual Property set forth on Schedule XIV hereto.

“Sole Tenant Lease” shall mean, with respect to each Sole Tenant Individual Property, the Lease specified on Schedule XIV as the related “Sole Tenant Lease”.

“Special Purpose Entity” shall mean a corporation, limited partnership, limited liability company, or Delaware statutory trust which at all times on and after the Closing Date:

(i)

is organized solely for the purpose of acquiring, owning, holding, transferring, exchanging, managing and operating the Collateral, entering into this Agreement with Lender, refinancing the Collateral in connection with a permitted repayment of the Loan, and transacting lawful business that is incident, necessary and appropriate to accomplish the foregoing;

(ii)

is not engaged and will not engage in any business unrelated to the acquisition, ownership, management or operation of the Collateral;

(iii)

does not and will not have any assets other than the Collateral;

(iv)

has not engaged, sought or consented to and will not engage in, seek or consent to any dissolution, winding up, liquidation, consolidation, merger, sale of all or substantially all of its assets, transfer of partnership, membership or beneficial or trustee interests (if such entity is a general partner in a limited partnership, a member in a limited liability company or a beneficiary of a Delaware trust), without the prior written consent of Lender and receipt of prior written confirmation from the applicable Rating Agencies that the same will not cause a downgrade, withdrawal or qualification of the then current rating of the Securities or any class thereof, any amendment of its limited partnership agreement, articles of incorporation, articles of organization, certificate of formation, operating agreement or trust formation and governance documents (as applicable) with respect to the matters set forth in this definition;

(v)

if such entity is a limited partnership, has as its only general partner, a Special Purpose Entity that is a corporation, limited partnership or limited liability company that satisfies the requirements of subparagraph (viii) below;

(vi)

if such entity is a corporation, has at least two (2) Independent Directors, and has not caused or allowed and will not cause or allow the board of 

-23-

directors of such entity to take any action related to a bankruptcy or insolvency proceeding or a voluntary dissolution without the unanimous affirmative vote of one hundred percent (100%) of the members of its board of directors, including the Independent Directors;

(vii)

if such entity is a limited liability company and such limited liability company has more than one member, such limited liability company has as its manager a Special Purpose Entity that is a corporation and that owns at least one percent (1.0%) of the equity of the limited liability company;

(viii)

if such entity is a limited liability company and such limited liability company has only one member, such limited liability company (a) has been formed under Delaware law, (b) has either a corporation or one (1) other person or entity that shall become a member of the limited liability company upon the dissolution or disassociation of the member, (c) has a board of directors with not less than two (2) Independent Directors, and (d) has a limited liability company agreement that does not and will not cause or allow its board of directors to take any action related to a bankruptcy or insolvency proceeding without the unanimous affirmative vote of one hundred percent (100%) of the members of its board of directors, including the Independent Directors;

(ix)

if such entity is a statutory trust, such statutory trust (a) has been formed under Delaware law, (b) has a board of trustees with not less than two (2) Independent Directors, and (c) has trust documents that do not and will not cause or allow its board of trustees to take any action related to a bankruptcy or insolvency proceeding without the unanimous affirmative vote of one hundred percent (100%) of the members of its board of trustees, including the Independent Directors;

(x)

if such entity is (a) a limited liability company, has articles of organization, a certificate of formation and/or an operating agreement, as applicable, (b) a limited partnership, has a limited partnership agreement, (c) a corporation, has a certificate or articles of incorporation and bylaws, as applicable, or (d) a Delaware statutory trust, has a trust certificate and trust agreement that, in each case, provide that such entity will not:  (1) dissolve, merge, liquidate, consolidate; (2) sell all or substantially all of its assets or the assets of Borrower or Senior Mezzanine Borrower, Mortgage Borrower or Maryland Owner (as applicable); (3) except as permitted herein, engage in any other business activity, or amend its organizational documents with respect to the matters set forth in this definition without the consent of the Lender and receipt of prior written confirmation from the applicable Rating Agencies that the same will not cause a downgrade, withdrawal or qualification of the then current rating of the Securities or any class thereof; or (4) without the affirmative vote of all its directors (including its Independent Directors) or if the entity is a limited partnership or limited liability company with more than one member, the affirmative vote of all of the directors (including the Independent Directors) of the general partner or managing member of such entity), or the vote of all of its 

-24-

administrative trustees (including its Independent Directors), file a bankruptcy or insolvency petition or otherwise institute insolvency proceedings with respect to itself or to any other entity in which it has a direct or indirect legal or beneficial ownership interest;

(xi)

except for capital contributions or capital distributions permitted under the terms and conditions of its organizational documents and applicable law and properly reflected on its books and records, has not entered into or been a party to, and will not enter into or be a party to, any transaction with its partners, members, beneficiaries, shareholders or Affiliates except in the ordinary course of its business and on terms which would be obtained in a comparable arm’s-length transaction with an unrelated third party;

(xii)

is solvent and pays its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from its assets as the same become due, and is maintaining adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require any member, partner or beneficiary to make additional capital contributions;

(xiii)

has not failed and will not fail to correct any known misunderstanding regarding the separate identity of such entity;

(xiv)

will file its own tax returns separate from those of any other Person, except to the extent that Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable law;

(xv)

has maintained and will maintain its own resolutions and agreements;

(xvi)

(a) except as permitted by the Loan Documents, the Senior Mezzanine Loan Documents and Mortgage Loan Documents, has not commingled and will not commingle its funds or assets with those of any other Person and (b) has not participated and will not participate in any cash management system with any other Person;

(xvii)

has held and will hold its assets in its own name;

(xviii)

has conducted and will conduct its business in its name or in a name franchised or licensed to it by an entity other than an Affiliate of Borrower, Mortgage Borrower, Senior Mezzanine Borrower or Maryland Owner;

(xix)

has maintained and will maintain its books, records, bank accounts, balance sheets, operating statements and other entity documents separate from any other Person and has not permitted and will not permit its assets to be listed as assets on the financial statement of any other entity except as required or permitted by applicable accounting principles acceptable to Lender, consistently 

-25-

applied; provided, however, that appropriate notation shall be made on any such consolidated statements to indicate its separateness from such Affiliate and to indicate that its assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person and such assets shall be listed on its own separate balance sheet;

(xx)

has and will maintain a sufficient number of employees in light of its contemplated business operations, which may be none;

(xxi)

has observed and will observe all partnership, corporate, limited liability company or Delaware statutory trust formalities, as applicable;

(xxii)

has and will have no Indebtedness (including loans (whether or not such loans are evidenced by a written agreement) between Borrower, Mortgage Borrower, Senior Mezzanine Borrower and/or Maryland Owner and any Affiliates of Borrower, Mortgage Borrower, Senior Mezzanine Borrower and/or Maryland Owner or relating to the management of funds in the segregated custodial account maintained by the Manager for the sole benefit of Borrower and Maryland Owner) other than (i) the Loan, (ii) liabilities incurred in the ordinary course of business relating to the ownership and operation of the Collateral and the routine administration of Borrower, Senior Mezzanine Borrower, Mortgage Borrower and/or Maryland Owner, which liabilities are (A) not more than sixty (60) days past the date incurred (unless disputed in accordance with applicable law), (B) not evidenced by a note, (C) paid when due, and (D) normal and reasonable under the circumstances, and (iii) such other liabilities that are permitted pursuant to this Agreement;

(xxiii)

except for any general partner of Borrower in such capacity, has not and will not assume or guarantee or become obligated for the debts of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person;

(xxiv)

has not and will not acquire obligations or securities of its partners, members, beneficiaries or shareholders or any other Affiliate;

(xxv)

has allocated and will allocate fairly and reasonably any overhead expenses that are shared with any Affiliate, including, but not limited to, paying for shared office space and services performed by any employee of an Affiliate;

(xxvi)

has not maintained or used, and will not maintain or use, invoices and checks bearing its own name;

(xxvii)

has not pledged and will not pledge its assets to secure the obligations of any other Person;

(xxviii)

has held itself out and identified itself and will hold itself out and identify itself as a separate and distinct entity under its own name or in a name 

-26-

franchised or licensed to it by an entity other than an Affiliate of Borrower and not as a division or department of any other Person;

(xxix)

has maintained and will maintain its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;

(xxx)

has not made and will not make loans or advance to, or own or acquire any stock or securities of, any Person or hold evidence of indebtedness issued by any other person or entity (other than cash and investment-grade securities issued by an entity that is not an Affiliate of or subject to common ownership with such entity);

(xxxi)

has not identified and will not identify its partners, members, beneficiaries or shareholders, or any Affiliate of any of them, as a division or department of it, and has not identified itself and shall not identify itself as a division or department of any other Person;

(xxxii)

does not and will not have any of its obligations guaranteed by any Affiliate except as otherwise required in the Loan Documents;

(xxxiii)

has not formed, acquired or held and will not form, acquire or hold any subsidiary or own any equity interest in any other entity, except for the equity interests it currently owns in Senior Mezzanine Borrower; and

(xxxiv)

has complied and will comply with all of the terms and provisions contained in its organizational documents since its formation.  The statement of facts contained in its organizational documents are true and correct and will remain true and correct.

“State” shall mean, with respect to an Individual Property, the State or Commonwealth in which such Individual Property or any part thereof is located.

“Survey” shall mean a survey of the Individual Property in question prepared by a surveyor licensed in the State and satisfactory to Lender and the company or companies issuing the Title Insurance Policies, and containing a certification of such surveyor satisfactory to Lender.

“Tax and Insurance Reserve Fund” shall have the meaning set forth in Section 7.2 hereof regardless of whether the funds held therein are held by Lender for the payment of Taxes or Insurance Premiums or both.

“Tax and Insurance Reserve Account” shall have the meaning set forth in Section 7.2 hereof.

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

-27-

“Tenant” shall have the meaning set forth in the Mortgage Loan Agreement.

“Threshold Amount” shall mean, with respect to the applicable Individual Property, two percent (2%) of the related Mortgage Release Amount.

“Transfer” shall have the meaning set forth in Section 5.2.10(b) hereof.

“Transferee” shall have the meaning set forth in Section 5.2.10(d) hereof.

“Transferee’s Principals” shall mean all members, partners or shareholders which directly or indirectly own an interest in Transferee.

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

“University Individual Property” shall mean the Individual Property located in Tuscaloosa, Alabama.

“U.S. Obligations” shall mean non-redeemable securities evidencing an obligation to pay principal and/or interest in a full and timely manner that are (a) direct obligations of the United States of America for the payment of which its full faith and credit is pledged, or (b) to the extent acceptable to the Rating Agencies, other “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended.

“Yield Maintenance Premium” shall mean an amount equal to the greater of (a) three percent (3%) of the outstanding balance of the Loan to be prepaid or satisfied and (b) the excess, if any, of (i) the sum of the present values of all then-scheduled payments of principal and interest under the Loan, assuming that all scheduled payments are made timely and that the remaining outstanding principal and interest on the Loan is paid on the Maturity Date (with each such payment and assumed payment discounted to its present value at the date of prepayment at the rate which, when compounded monthly, is equivalent to the Prepayment Rate when compounded semi-annually and deducting from the sum of such present values any short-term interest paid from the date of prepayment to the next succeeding Payment Date in the event that such payment is not made on a Payment Date), over (ii) the principal amount being prepaid.

Section 1.2

Principles of Construction.

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

-28-

ARTICLE II

GENERAL TERMS

Section 2.1

Loan Commitment; Disbursement to Borrower.

2.1.1

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

2.1.2

Disbursement to Borrower.  Borrower may request and receive only one borrowing hereunder in respect of the Loan and any amount borrowed and repaid hereunder in respect of the Loan may not be reborrowed.  Borrower acknowledges and agrees that the Loan has been fully funded as of the Closing Date.

2.1.3

The Note, Pledge Agreement and Loan Documents.  The Loan shall be evidenced by the Note and secured by the Pledge Agreement and the other Loan Documents.

2.1.4

Use of Proceeds.  Borrower shall use the proceeds of the Loan solely to (a) make an equity contribution to Senior Mezzanine Borrower in order to cause the Mortgage Borrower and Maryland Owner to use such amounts for any use permitted pursuant to Section 2.1.4 of the Mortgage Loan Agreement, (b) pay costs and expenses incurred in connection with the closing of the Loan, as approved by Lender, and (c) retain the balance, if any.

Section 2.2

Interest; Loan Payments; Late Payment Charge.

2.2.1

Interest Generally.  Interest on the outstanding principal balance of the Loan shall accrue from (and include) the Closing Date to but excluding the Maturity Date at the Interest Rate.

2.2.2

Interest Calculation.  Interest on the outstanding principal balance of the Loan shall be calculated by multiplying (a) the actual number of days elapsed in the Accrual Period, by (b) a daily rate based on the Interest Rate and a three hundred sixty (360) day year, by (c) the outstanding principal balance of the Loan.

2.2.3

Monthly Debt Service Payments.  Borrower shall pay to Lender on January 1, 2010 and each Payment Date thereafter up to but not including the Maturity Date, an amount equal to the Monthly Debt Service Payment Amount, which payments shall be applied to accrued and unpaid interest.

2.2.4

Payments Generally.  The first (1st) interest Accrual Period hereunder shall commence on and include the Closing Date and shall end on and include December 31, 2009.  Each interest accrual period thereafter shall commence on the first (1st) day of each calendar month during the term of the Loan and shall end on and include the final calendar date of such calendar month (the “Accrual Period”).  For purposes of making payments hereunder, but not for purposes of calculating Accrual Periods, if the day on which such payment is due is not a Business Day, then amounts due on such date shall be due on the immediately preceding 

-29-

Business Day and with respect to payments of principal due on the Maturity Date, interest shall be payable at the Interest Rate or the Default Rate, as the case may be, through and including the day immediately preceding such Maturity Date.  All amounts due under this Agreement and the other Loan Documents shall be payable without setoff, counterclaim, defense or any other deduction whatsoever.  All payments due on account of the Loan and for any obligations due under the Loan Documents shall be made on a pro rata, pari passu basis with respect to Junior Mezzanine Note A-1 and Junior Mezzanine Note A-2

2.2.5

Payment on Maturity Date.  Borrower shall pay to Lender on the Maturity Date the outstanding principal balance of the Loan, all accrued and unpaid interest and all other amounts due hereunder and under the Note, the Pledge Agreement and the other Loan Documents.

2.2.6

Payments after Default.  Upon the occurrence and during the continuance of an Event of Default, interest on the outstanding principal balance of the Loan and, to the extent permitted by law, all accrued and unpaid interest and other amounts due in respect of the Loan, shall accrue interest at the Default Rate, calculated from the date such payment was due without regard to any grace or cure periods contained herein.  Interest at the Default Rate shall be computed from the occurrence of the Event of Default until the earlier of (i) in the event of a non-monetary default, the cure of such Event of Default by Borrower, and (ii) in the event of a monetary default, the actual receipt and collection of the Debt (or that portion thereof that is then due).  To the extent permitted by applicable law, interest at the Default Rate shall be added to the Debt, shall itself accrue interest at the same rate as the Loan and shall be secured by the Pledge Agreement.  This paragraph shall not be construed as an agreement or privilege to extend the date of the payment of the Debt, nor as a waiver of any other right or remedy accruing to Lender by reason of the occurrence of any Event of Default and Lender retains its rights under the Note and this Agreement to accelerate and to continue to demand payment of the Debt upon the occurrence and continuance of any Event of Default.

2.2.7

Late Payment Charge.  If any principal, interest or any other sums due under the Loan Documents are not paid by Borrower on or prior to the date on which it is due (except, in the case of Debt Service, provided no Event of Default shall then exist and there are sufficient funds in the Junior Mezzanine Loan Cash Management Account to pay such Debt Service), Borrower shall pay to Lender upon demand an amount equal to the lesser of five percent (5%) of such unpaid sum or the Maximum Legal Rate in order to defray the expense incurred by Lender in handling and processing such delinquent payment and to compensate Lender for the loss of the use of such delinquent payment.  Any such amount shall be secured by the Pledge Agreement and the other Loan Documents to the extent permitted by applicable law.  The foregoing late payment charge shall not apply to the payment of all outstanding principal, interest and other sums due on the Maturity Date.

2.2.8

Usury Savings.  This Agreement, the Note and the other Loan Documents are subject to the express condition that at no time shall Borrower be obligated or required to pay interest on the principal balance of the Loan at a rate which could subject Lender to either civil or criminal liability as a result of being in excess of the Maximum Legal Rate.  If, by the terms of this Agreement or the other Loan Documents, Borrower is at any time required or obligated to pay interest on the principal balance due hereunder at a rate in excess of the Maximum Legal 

-30-

Rate, the Interest Rate or the Default Rate, as the case may be, shall be deemed to be immediately reduced to the Maximum Legal Rate and all previous payments in excess of the Maximum Legal Rate shall be deemed to have been payments in reduction of principal and not on account of the interest due hereunder.  All sums paid or agreed to be paid to Lender for the use, forbearance, or detention of the sums due under the Loan, shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term of the Loan until payment in full so that the rate or amount of interest on account of the Loan does not exceed the Maximum Legal Rate of interest from time to time in effect and applicable to the Loan for so long as the Loan is outstanding.

2.2.9

Making of Payments.  Except as otherwise specifically provided herein, all payments and prepayments under this Agreement and the Note shall be made to Lender not later than 11:00 A.M., New York City time, on the date when due and shall be made in lawful money of the United States of America in immediately available funds at Lender’s office or as otherwise directed by Lender, and any funds received by Lender after such time shall, for all purposes hereof, be deemed to have been paid on the next succeeding Business Day.

2.2.10

No Deductions, etc.  All payments made by Borrower hereunder or under the Note or the other Loan Documents shall be made irrespective of, and without any deduction for, any setoff, defense or counterclaims.

Section 2.3

Prepayments.

2.3.1

Voluntary Prepayments. 

(a)

Except as otherwise provided herein, Borrower shall not have the right to prepay the Loan in whole or in part prior to the Prepayment Release Date.

(b)

On and after the Prepayment Release Date, Borrower may, at its option, provided it has given Lender thirty (30) days’ prior written notice in accordance with the terms of this Agreement, prepay the unpaid principal balance of the Loan in whole or (in connection with the release of an Individual Property pursuant to, and in accordance with, Section 2.5.2 hereof) in part, by paying, together with the amount to be prepaid, (i) interest accrued and unpaid on the outstanding principal balance of the Loan being prepaid to and including the date of prepayment, (ii) unless prepayment is tendered on a Payment Date, an amount equal to the interest that would have accrued on the amount being prepaid after the date of prepayment through and including the next Payment Date had the prepayment not been made (which amount shall constitute additional consideration for the prepayment), (iii) all other sums then due under this Agreement, the Note, the Pledge Agreement and the other Loan Documents, and (iv) the applicable Prepayment Premium.  Lender shall notify Borrower of the amount and the basis of determination of the required prepayment consideration. 

(c )

Notwithstanding anything contained in Section 2.3.1(b) above to the contrary, provided no Event of Default has occurred and is continuing, on the Permitted Par Prepayment Date, and on each day thereafter through the Maturity Date, Borrower may, at its option, prepay the Debt in full (but not in part) without payment of the Prepayment Premium or other penalty or premium; provided, however, if for any reason such prepayment is not paid on a 

-31-

regularly scheduled Payment Date, the Debt shall include interest that would have accrued on such prepayment through and including the next occurring Payment Date.  Borrower’s right to prepay the principal balance of the Loan in full pursuant to this Section 2.3.1(c) shall be subject to (i) Borrower’s submission of a notice to Lender setting forth the projected date of prepayment, which date shall be no less than thirty (30) days from the date of such notice, and (ii) Borrower’s actual payment to Lender of the full amount of the Debt, including any interest that would have accrued on the amount being prepaid after the date of prepayment through and including the next Payment Date had the prepayment not been made. 

(d)

Notwithstanding anything contained in Section 2.3.1(a) above to the contrary, Borrower may prepay a portion of the Loan in accordance with Section 2.5.3 hereof.

2.3.2

Liquidation Events. 

(a)

In the event of (i) any Casualty to all or any all or any portion of the Properties or any material portion of any Individual Property thereof, (ii) any Condemnation of all or any portion of the Properties or any material portion of any Individual Property thereof, (iii) a Transfer of any Senior Mezzanine Collateral or of Individual Property in connection with realization thereon following an Event of Default under the Mortgage Loan or an Event of Default under the Senior Mezzanine Loan, as applicable, including without limitation a foreclosure sale, (iv) any refinancing of any Individual Property or the Mortgage Loan or the Senior Mezzanine Loan, or (v) the receipt by Mortgage Borrower or Maryland Owner of any excess proceeds realized under its owner’s title insurance policy after application of such proceeds by Mortgage Borrower or Maryland Owner to cure any title defect (each, a “Liquidation Event”), Borrower shall cause the related Net Liquidation Proceeds After Debt Service to be deposited directly into the Junior Mezzanine Loan Cash Management Account.  On each date on which Lender actually receives a distribution of Net Liquidation Proceeds After Debt Service, Borrower shall prepay the outstanding principal balance of the Note in an amount equal to one hundred percent (100%) of such Net Liquidation Proceeds After Debt Service, together with interest that would have accrued on such amount through the next Payment Date, and, other than in connection with a Liquidation Event occurring under subclauses (i) or (ii) above, together with any applicable Prepayment Premium and/or Yield Maintenance Premium.  Any amounts of Net Liquidation Proceeds After Debt Service in excess of the Debt shall be paid to Borrower.  Any prepayment received by Lender pursuant to this Section 2.3.2(a) on a date other than a Payment Date shall be held by Lender as collateral security for the Loan in an interest bearing account, with such interest accruing to the benefit of Borrower, and shall be applied by Lender on the next Payment Date.  Notwithstanding the foregoing, the Transfer of Properties in connection with a refinancing an Individual Property or the Mortgage Loan shall not be deemed a Liquidation Event provided that the provisions of Sections 2.3.1 and 2.5 hereof are satisfied.

(b)

Borrower shall immediately notify Lender of any Liquidation Event once Borrower has knowledge of such event.  Borrower shall be deemed to have knowledge of (i) a sale (other than a foreclosure sale) of any Individual Property on the date on which a contract of sale for such sale is entered into, and a foreclosure sale, on the date notice of such foreclosure sale is given, and (ii) a refinancing of any Individual Property, on the date on which a commitment for such refinancing has been entered into.  The provisions of this Section 2.3.2 

-32-

shall not be construed to contravene in any manner the restrictions and other provisions regarding refinancing of the Mortgage Loan, the Senior Mezzanine Loan or Transfer of the Properties or the Senior Mezzanine Collateral set forth in this Agreement and the other Loan Documents.

2.3.3

Mandatory Prepayments.  Subject to Section 5.2.10 hereof, if the Properties or Mortgage Borrower’s interests therein or Senior Mezzanine Borrower’s interests in Mortgage Borrower or Maryland Owner or Principal are sold, transferred or otherwise disposed of, voluntarily or involuntarily, or if the Mortgage Loan is repaid or defeased but other than in accordance with Section 2.3.2 of the Mortgage Loan Agreement or if the Senior Mezzanine Loan is repaid but other than in accordance with Sections 2.3.3 or 5.2.10 of the Senior Mezzanine Loan Agreement or Borrower’s interests in Senior Mezzanine Borrower are sold, transferred or otherwise disposed of, voluntarily or involuntarily, then Borrower shall be required to pre-pay the Loan in whole (or in part in connection with releases of Individual Properties) and otherwise in accordance with Section 2.3.1 hereof.

2.3.4

Prepayments after Default.  Following an Event of Default, if Borrower or anyone on Borrower’s behalf makes a tender of payment of all or any portion of the Debt at any time prior to a foreclosure sale (including a sale under the power of sale under the Pledge Agreement), or during any redemption period after foreclosure, such payment shall include, in addition to other amounts due hereunder, a premium equal to:  (i) the Yield Maintenance Premium and the Prepayment Premium, if such payment is made prior to the Prepayment Release Date and (ii)  the Prepayment Premium (and not the Yield Maintenance Premium), if such payment is made after the Prepayment Release Date and prior to the Permitted Par Prepayment Date, which amounts can be applied by Lender in such order and priority as Lender shall determine in is sole and absolute discretion.

Section 2.4

Intentionally Omitted.

Section 2.5

Release of Property.

  Except as set forth in this Section 2.5, no repayment or prepayment of all or any portion of the Loan shall cause, give rise to a right to require, or otherwise result in, the release of any Lien of the Pledge Agreement.

2.5.1

Release of All of the Collateral.

(a)

If Borrower has elected to prepay the entire Loan and the requirements of Section 2.3.1 and this Section 2.5.1 have been satisfied, all of the Collateral shall be released from the Lien of the Pledge Agreement.

(b)

In connection with the release of the Lien of the Pledge Agreement, Borrower shall submit to Lender, not less than fifteen (15) days prior to the Payment Date upon which the full prepayment of the Loan will be made in accordance with Section 2.3.1 hereof, as applicable, a release of Lien (and related Loan Documents) for the Collateral for execution by Lender.  Each such release shall be in a form appropriate in each jurisdiction in which the Collateral is located and that would be satisfactory to a prudent lender and contains standard provisions, if any, protecting the rights of the releasing lender.  In addition, Borrower shall provide all other documentation Lender reasonably requires to be delivered by Borrower in 

-33-

connection with such releases, together with an Officer’s Certificate certifying that such documentation (i) is in compliance with all Legal Requirements, and (ii) will effect such releases in accordance with the terms of this Agreement.

2.5.2

Release of Individual Property.  If Borrower has elected to prepay a portion of the Loan in connection with the release of an Individual Property and the requirements of Section 2.3.1(b) have been satisfied and provided that no Event of Default has occurred and is continuing (and no event has occurred which, with notice, the passage or time, or both would constitute an Event of Default shall have occurred), Borrower may permit Mortgage Borrower to obtain the release of an Individual Property from the Lien of the Mortgage thereon (and related Mortgage Loan Documents) and the release of the related Individual Borrower’s obligations (and, with respect to the release of the Maryland Individual Property, Maryland Owner’s obligations) under the Mortgage Loan Documents with respect to such Individual Property (other than those expressly stated to survive), upon the satisfaction of each of the following conditions:

(a)

The amount of the outstanding principal balance of the Loan to be prepaid shall equal or exceed the Adjusted Release Amount for the applicable Individual Property, and such prepayment shall be deemed a voluntary prepayment for all purposes hereunder;

(b)

In connection with a partial prepayment of the Loan pursuant to Section 2.3.1(b) hereof, Borrower shall pay the applicable Prepayment Premium to Lender on or prior to the date of such release;

(c)

Subsequent to such release, Borrower, each Mortgage Borrower and Maryland Owner shall continue to be a Special Purpose Entity pursuant to, and in accordance with, Section 4.1.30 hereof and Section 4.1.30 of the Mortgage Loan Agreement, as applicable;

(d)

Borrower shall deliver to Lender an Additional Insolvency Opinion or an update of the Insolvency Opinion indicating that the release does not affect the opinions set forth therein;

(e)

Intentionally omitted;

(f)

Intentionally omitted;

(g)

After giving effect to the release of the applicable Individual Property (including the amount prepaid in Section 2.3.1(b) above), the Debt Service Coverage Ratio for the Properties then remaining subject to the Liens of the Mortgages based on the trailing twelve (12) month period immediately preceding the release of the applicable Individual Property shall be equal to or greater than the greater of (i) the Release Debt Service Coverage Ratio, and (ii) the Debt Service Coverage Ratio for all of the Properties then remaining subject to the Liens of the Mortgages (including the Individual Property requested to be released) immediately preceding the release of the applicable Individual Property based on the trailing twelve (12) month period immediately preceding the release of the applicable Individual Property;

(h)

Borrower shall reimburse Lender and Servicer for any costs and expenses Lender and Servicer incur arising from such release (including reasonable attorneys’ fees and 

-34-

expenses) and Borrower shall have caused Mortgage Borrower and Maryland Owner to have paid, in connection with such release, (i) all recording charges, filing fees, taxes or other expenses payable in connection therewith, (ii) all costs and expenses of the Rating Agencies incurred with respect to such release, and (iii) to any Servicer, the current fee being assessed by such Servicer to effect such release; 

(i)

In connection with a partial prepayment of the Loan pursuant to Section 2.3.1(b) hereof, concurrently with the payment of the Adjusted Release Amount, as applicable, Borrower shall cause Mortgage Borrower and Maryland Owner to defease the Mortgage Loan equal to the related Mortgage Adjusted Release Amount applicable to such Individual Property and Borrower shall deliver evidence satisfactory to Lender that Mortgage Borrower and Maryland Owner have complied with all of the terms and conditions set forth in the Mortgage Loan Documents with respect to such partial defeasance and the release of such Individual Property;

(j)

Borrower shall deliver evidence satisfactory to Lender that Senior Mezzanine Borrower has complied with all the terms and conditions set forth in the applicable Senior Mezzanine Loan Documents with respect to the release of such Individual Property;

(k)

Notwithstanding the foregoing, it is acknowledged by Borrower that Borrower will not permit Mortgage Borrower or Maryland Owner to obtain a release from the Lien of the Mortgage with respect to any Individual Property or Senior Borrower obtaining a release from the Lien of the Senior Mezzanine Collateral without Section 2.5.2 hereof being complied with; and

(l)

In no event shall the Northpointe Remainder Property be released pursuant to this Section 2.5.2 unless the Northpointe Target Expansion Parcel has been released (or is simultaneously being released) pursuant to Section 2.5.3 hereof.

2.5.3

Release of Northpointe Target Expansion Parcel.  Borrower may permit Mortgage Borrower to transfer and obtain a release of the Northpointe Target Expansion Parcel from the Lien of the applicable Mortgage upon at least thirty (30) days’ prior written notice, provided that any such release shall only be granted if the following conditions have been met or satisfied:

(a)

Borrower shall (i) pay Lender (x) the Adjusted Release Amount for the Northpointe Target Expansion Parcel together with the applicable Prepayment Premium and (y) a processing fee equal to $25,000, and (ii) reimburse Lender for any costs and expenses it reasonably incurs arising from the transfer of the Northpointe Target Expansion Parcel and any release of the Northpointe Target Expansion Parcel from the Lien of the applicable Mortgage (including, without limitation, reasonable attorneys’ fees and expenses);

(b)

At the time Borrower requests such release and at the time such release is granted there is no continuing Event of Default;

(c)

Lender shall have received evidence reasonably satisfactory to it that Mortgage Borrower and Senior Mezzanine Borrower, as applicable, shall have satisfied all the 

-35-

terms and conditions of Section 2.5.3 of the Mortgage Loan Agreement and Senior Mezzanine Loan Agreement, as applicable;

(d)

Intentionally omitted;

(e)

Lender shall have received copies of any deliverables required to be delivered to Mortgage Lender pursuant to Section 2.5.3 of the Mortgage Loan Agreement; and

(f)

If a Securitization shall have occurred, Borrower shall obtain prior written confirmation from the applicable Rating Agencies that the release of the Northpointe Target Expansion Parcel will not cause a downgrade, withdrawal or qualification of the then current ratings of the Securities or any class thereof.

Section 2.6

Intentionally Omitted.

Section 2.7

Lockbox Account/Cash Management.

2.7.1

Lockbox Account.

(a)

During the term of the Loan, Borrower shall cause Mortgage Borrower and Maryland Owner shall establish and maintain one account (the “Lockbox Account”) with respect to the Properties with Lockbox Bank in trust for the benefit of Mortgage Lender, which Lockbox Account shall be under the sole dominion and control of Mortgage Lender.  Mortgage Lender and Servicer shall have the sole right to make withdrawals from the Lockbox Account and all costs and expenses for establishing and maintaining the Lockbox Account shall be paid by Mortgage Borrower and Maryland Owner.

(b)

Borrower shall cause Mortgage Borrower, Maryland Owner or Manager to deliver Tenant Instruction Letters to all tenants under Leases on or prior to the Closing Date to deliver all Rents payable thereunder directly to the Lockbox Account.  Borrower shall cause Mortgage Borrower, Maryland Owner or Manager to deposit all amounts received by Mortgage Borrower, Maryland Owner or Manager constituting Rents into the Lockbox Account within one (1) Business Day after receipt thereof.

(c)

Borrower shall or shall cause Mortgage Borrower and Maryland Owner to obtain from Lockbox Bank its agreement to transfer to the Cash Management Account in immediately available funds by federal wire transfer all amounts on deposit in the Lockbox Account once every Business Day throughout the term of the Loan.

(d)

The Lockbox Account shall not be commingled with other monies held by Borrower, Mortgage Borrower, Maryland Owner, Manager or Lockbox Bank.

(e)

Borrower shall not cause or permit Mortgage Borrower or Maryland Owner to further pledge, assign or grant any security interest in the Lockbox Account or the monies deposited therein or permit any lien or encumbrance to attach thereto, or any levy to be made thereon, or any UCC-1 Financing Statements, except those naming Lender as the secured party, to be filed with respect thereto.

-36-

2.7.2

Cash Management Account.

 

(a)

During the term of the Loan, Borrower shall cause Mortgage Borrower and Maryland Owner to establish and maintain (i) a segregated Eligible Account (the “Cash Management Account”) to be held by Agent in trust and for the benefit of Mortgage Lender, which Cash Management Account shall be under the sole dominion and control of Mortgage Lender, and (ii) a segregated Eligible Account, the “Senior Mezzanine Loan Cash Management Account” to be held by Agent in trust and for the benefit of Senior Mezzanine Lender, which account shall be under the sole dominion and control of Senior Mezzanine Lender. In addition, during the term of the Loan, Borrower shall, or shall cause Mortgage Borrower and Maryland Owner to establish and maintain a segregated Eligible Account (the “Junior Mezzanine Loan Cash Management Account”) to be held by Agent in trust and for the benefit of Lender, which Junior Mezzanine Loan Cash Management Account shall be under the sole dominion and control of Lender.  The Junior Mezzanine Loan Cash Management Account shall be entitled “IW Mezz 2 2009, LLC, as Borrower, and JPMorgan Chase Bank, N.A., as Lender, pursuant to Loan Agreement dated as of December 1, 2009 – Cash Management Account”. Borrower hereby grants to Lender a first priority security interest in the Junior Mezzanine Loan Cash Management Account and all deposits at any time contained therein and the proceeds thereof and will take all actions necessary to maintain in favor of Lender a perfected first priority security interest in the Junior Mezzanine Loan Cash Management Account, including, without limitation, filing UCC-1 Financing Statements and continuations thereof.  Borrower will not in any way alter or modify the Cash Management Account and will notify Lender of the account number thereof.

(b)

The insufficiency of funds on deposit in the Junior Mezzanine Loan Cash Management Account shall not relieve Borrower from the obligation to make any payments, as and when due pursuant to this Agreement and the other Loan Documents, and such obligations shall be separate and independent, and not conditioned on any event or circumstance whatsoever.

(c)

All funds on deposit in the Junior Mezzanine Loan Cash Management Account following the occurrence of an Event of Default may be applied by Lender in such order and priority as Lender shall determine.

2.7.3

Payments Received under the Cash Management Agreement.

  Notwithstanding anything to the contrary contained in this Agreement or the other Loan Documents, and provided no Event of Default has occurred and is continuing, Borrower’s obligations with respect to the payment of the Monthly Debt Service Payment Amount and amounts required to be deposited into the Reserve Funds, if any, shall be deemed satisfied to the extent sufficient amounts are deposited in the Junior Mezzanine Loan Cash Management Account to satisfy such obligations pursuant to the Cash Management Agreement on the dates each such payment is required, regardless of whether any of such amounts are so applied by Lender.

ARTICLE III

INTENTIONALLY OMITTED

-37-

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

Section 4.1

Borrower Representations.

  Borrower represents and warrants as of the date hereof and as of the Closing Date that:

4.1.1

Organization.  Borrower has been duly organized and is validly existing and in good standing with requisite power and authority to own its assets and to transact the businesses in which it is now engaged.  Borrower is duly qualified to do business and is in good standing in each jurisdiction where it is required to be so qualified in connection with its assets, businesses and operations.  Borrower possesses all rights, licenses, permits and authorizations, governmental or otherwise, necessary to entitle it to own its assets and to transact the businesses in which it is now engaged, and the sole business of Borrower is the ownership and management of Senior Mezzanine Borrower.  The ownership interests in Borrower are as set forth on the organizational chart attached hereto as Schedule X.

4.1.2

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

4.1.3

No Conflicts.  The execution, delivery and performance of this Agreement and the other Loan Documents by Borrower will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any Lien, charge or encumbrance (other than pursuant to the Loan Documents) upon any of the property or assets of Borrower pursuant to the terms of any partnership agreement or other agreement or instrument to which Borrower is a party or by which any of Borrower’s property or assets is subject, nor will such action result in any violation of the provisions of any statute or any order, rule or regulation of any Governmental Authority having jurisdiction over Borrower or any of Borrower’s property or assets, and any consent, approval, authorization, order, registration or qualification of or with any court or any such Governmental Authority required for the execution, delivery and performance by Borrower of this Agreement or any other Loan Documents has been obtained and is in full force and effect.

4.1.4

Litigation.  There are no actions, suits or proceedings at law or in equity by or before any Governmental Authority or other agency now pending or, to Borrower’s knowledge, threatened against or affecting Borrower, Mortgage Borrower, Maryland Owner, Indemnitor, Principal, Senior Mezzanine Borrower, the Collateral, the Senior Mezzanine Collateral or any Individual Property, which actions, suits or proceedings, if determined against Borrower, Mortgage Borrower, Maryland Owner, Indemnitor, Principal, the Senior Mezzanine Borrower, the Collateral, the Senior Mezzanine Collateral or any Individual Property, might materially adversely affect the condition (financial or otherwise) or business of Borrower, 

-38-

Mortgage Borrower, Maryland Owner, Indemnitor, Principal, the Senior Mezzanine Borrower or the condition or ownership of the Collateral, the Senior Mezzanine Collateral or any Individual Property.

4.1.5

Agreements.  Borrower is not a party to any agreement or instrument or subject to any restriction which might materially and adversely affect Borrower, Mortgage Borrower, Senior Mezzanine Borrower, the Senior Mezzanine Collateral, Maryland Owner or any Individual Property, or Borrower’s, Mortgage Borrower’s, Senior Mezzanine Borrower’s or Maryland Owner’s business, properties or assets, operations or condition, financial or otherwise.  To Borrower’s knowledge, neither Borrower, Senior Mezzanine Borrower, Mortgage Borrower nor Maryland Owner is in default in any material respect in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement or instrument to which Borrower, Mortgage Borrower or Maryland Owner is a party or by which Borrower, Mortgage Borrower, Maryland Owner, the Properties, Senior Mezzanine Borrower, the Senior Mezzanine Collateral or any of the Collateral are bound.  Neither Borrower, Senior Mezzanine Borrower, Mortgage Borrower nor Maryland Owner has any material financial obligation under any indenture, mortgage, deed of trust, indemnity deed of trust, deed to secure debt, loan agreement or other agreement or instrument to which Borrower, Senior Mezzanine Borrower, Mortgage Borrower or Maryland Owner is a party or by which Borrower, Mortgage Borrower, Maryland Owner, the Properties, Senior Mezzanine Borrower, the Senior Mezzanine Collateral or the Collateral is otherwise bound, other than (a) obligations incurred in the ordinary course of the ownership of the Collateral and the operation of Senior Mezzanine Borrower as permitted pursuant to clause xxi of the definition of “Special Purpose Entity” set forth in Section 1.1 hereof and (b) obligations under the Loan Documents, the Senior Mezzanine Loan Documents and the Mortgage Loan Documents, as applicable.

4.1.6

Title.  The Pledgor under the Pledge Agreement is the record and beneficial owner of, and has good title to, the Collateral, free and clear of all Liens whatsoever.  The Pledge Agreement, together with the UCC Financing Statements relating to the Collateral when properly filed in the appropriate records will create a valid, perfected first priority security interests in and to the Collateral, for which a Lien can be perfected by filing a UCC Financing Statement.  Borrower’s delivery of the certificates, if any, as set forth in Section 4 of the Pledge Agreement to Lender as set forth in the Pledge Agreement creates a first priority valid and perfected security interest in the Collateral.

4.1.7

Solvency; No Bankruptcy Filing.  Borrower has (a) not entered into this transaction or executed the Note, this Agreement or any other Loan Documents with the actual intent to hinder, delay or defraud any creditor and (b) received reasonably equivalent value in exchange for its obligations under such Loan Documents.  Giving effect to the Loan, the fair saleable value of Borrower’s assets exceeds and will, immediately following the making of the Loan, exceed Borrower’s total liabilities, including, without limitation, subordinated, unliquidated, disputed and contingent liabilities.  The fair saleable value of Borrower’s assets is and will, immediately following the making of the Loan, be greater than Borrower’s probable liabilities, including the maximum amount of its contingent liabilities on its debts as such debts become absolute and matured.  Borrower’s assets do not and, immediately following the making of the Loan will not, constitute unreasonably small capital to carry out its business as conducted or as proposed to be conducted.  Borrower does not intend to, and does not believe that it will, 

-39-

incur debt and liabilities (including contingent liabilities and other commitments) beyond its ability to pay such debt and liabilities as they mature (taking into account the timing and amounts of cash to be received by Borrower and the amounts to be payable on or in respect of obligations of Borrower).  No petition in bankruptcy has been filed against Borrower, Senior Mezzanine Borrower, Mortgage Borrower or Maryland Owner, or, to the best of Borrower’s knowledge, any of its constituent Persons of any of the foregoing in the last seven (7) years, and neither Borrower, Senior Mezzanine Borrower, Mortgage Borrower, Maryland Owner, nor to the best of Borrower’s knowledge, any constituent Persons or any of the foregoing in the last seven (7) years has ever made an assignment for the benefit of creditors or taken advantage of any insolvency act for the benefit of debtors.  Neither Borrower, Senior Mezzanine Borrower, Maryland Owner, Mortgage Borrower, nor any constituent Persons of any of the foregoing are contemplating either the filing of a petition by it under any state or federal bankruptcy or insolvency laws or the liquidation of all or a major portion of Borrower’s assets or property, and Borrower has no knowledge of any Person contemplating the filing of any such petition against it, Senior Mezzanine Borrower, Mortgage Borrower, Maryland Owner, or such constituent Persons of any of the foregoing.

4.1.8

Full and Accurate Disclosure.  No statement of fact made by Borrower in this Agreement or in any of the other Loan Documents contains any untrue statement of a material fact or omits to state any material fact necessary to make statements contained herein or therein not misleading.  There is no material fact presently known to Borrower which has not been disclosed to Lender which adversely affects, nor as far as Borrower can foresee, might adversely affect, Borrower, the Collateral, Maryland Owner, Mortgage Borrower, any Individual Property, Senior Mezzanine Borrower, the Senior Mezzanine Collateral or the business, operations or condition (financial or otherwise) of Borrower, Senior Mezzanine Borrower, Mortgage Borrower or Maryland Owner.

4.1.9

No Plan Assets.  Borrower does not sponsor, is not obligated to contribute to, and is not itself an “employee benefit plan,” as defined in Section 3(3) of ERISA, subject to Title I of ERISA or Section 4975 of the Code, and none of the assets of Borrower constitutes or will constitute “plan assets” of one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101.  In addition, (a) Borrower is not a “governmental plan” within the meaning of Section 3(32) of ERISA and (b) transactions by or with Borrower are not subject to any state or other statute, regulation or other restriction regulating investments of, or fiduciary obligations with respect to, governmental plans within the meaning of Section 3(32) of ERISA which is similar to the provisions of Section 406 of ERISA or Section 4975 of the Code and which prohibit or otherwise restrict the transactions contemplated by this Agreement, including, but not limited to the exercise by Lender of any of its rights under the Loan Documents.

4.1.10

Compliance.  Except as disclosed in the zoning reports obtained by Lender in connection the origination of the Loan (but only to the extent that Borrower has no knowledge of any inconsistencies contained therein), Borrower, Senior Mezzanine Borrower, Mortgage Borrower, Maryland Owner and each Individual Property and the use thereof comply in all material respects with all applicable Legal Requirements, including, without limitation, building and zoning ordinances and codes.  Neither Borrower, Senior Mezzanine Borrower, Mortgage Borrower nor Maryland Owner is in default or violation of any order, writ, injunction, decree or demand of any Governmental Authority.  There has not been committed by Borrower, Senior 

-40-

Mezzanine Borrower, Mortgage Borrower, Maryland Owner or, to Borrower’s knowledge, any other Person in occupancy of or involved with the operation or use of any Individual Property, any act or omission affording the federal government or any other Governmental Authority the right of forfeiture as against any Individual Property, or any part thereof, or any monies paid in performance of Borrower’s obligations under any of the Loan Documents.  On the Closing Date, the Improvements at each Individual Property were in material compliance with applicable law.

4.1.11

Financial Information.  All financial data, including, without limitation, the statements of cash flow and income and operating expense, that have been delivered to Lender in respect of Borrower, the Collateral, Senior Mezzanine Borrower, the Senior Mezzanine Collateral, Mortgage Borrower, Maryland Owner or the Properties (a) are, to the best of Borrower’s knowledge, true, complete and correct in all material respects, (b) accurately represent the financial condition of Borrower, the Collateral, Senior Mezzanine Borrower, the Senior Mezzanine Collateral, Mortgage Borrower, Maryland Owner and each Individual Property, as applicable, as of the date of such reports, and (c) to the extent prepared or audited by an independent certified public accounting firm, have been prepared in accordance with GAAP throughout the periods covered, except as disclosed therein; provided, however, that if any financial data is delivered to Lender by any Person other than Borrower, Indemnitor or any Affiliate of Borrower or Indemnitor, or if such financial data has been prepared by or at the direction of any Person other than Borrower, Indemnitor or any Affiliate of Borrower or Indemnitor, then the foregoing representations with respect to such financial data shall be to the best of Borrower’s knowledge, after due inquiry.  Except for Permitted Encumbrances, Borrower does not have any contingent liabilities, liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable commitments that are known to Borrower and reasonably likely to have a material adverse effect on any Borrower, the Collateral, Senior Mezzanine Borrower, the Senior Mezzanine Collateral, Mortgage Borrower, Maryland Owner or any Individual Property or the operation thereof as a retail shopping center, except as referred to or reflected in said financial statements.  Since the date of such financial statements, there has been no material adverse change in the financial condition, operations or business of Borrower, Senior Mezzanine Borrower, Mortgage Borrower or Maryland Owner from that set forth in said financial statements.

4.1.12

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

4.1.13

Federal Reserve Regulations.  No part of the proceeds of the Loan will be used for the purpose of purchasing or acquiring any “margin stock” within the meaning of Regulation U of the Board of Governors of the Federal Reserve System or for any other purpose which would be inconsistent with such Regulation U or any other Regulations of such Board of Governors, or for any purposes prohibited by Legal Requirements or by the terms and conditions of this Agreement or the other Loan Documents.

4.1.14

Intentionally Omitted.

-41-

4.1.15

Not a Foreign Person.  Borrower is not a “foreign person” within the meaning of § 1445(f)(3) of the Code.

4.1.16

Intentionally Omitted.

4.1.17

Intentionally Omitted.

4.1.18

Enforceability.  The Loan Documents are not subject to any right of rescission, set-off, counterclaim or defense by Borrower, and/or Indemnitor, including the defense of usury, nor would the operation of any of the terms of the Loan Documents, or the exercise of any right thereunder, render the Loan Documents unenforceable, (subject to principles of equity and bankruptcy, insolvency and other laws generally affecting creditors’ rights and the enforcement of debtors’ obligations), and none of Borrower and/or Indemnitor have asserted any right of rescission, set-off, counterclaim or defense with respect thereto.

4.1.19

No Prior Assignment.  There are no prior assignments of the Leases or any portion of the Rents by Mortgage Borrower or Maryland Owner or any of their predecessors in interest, given as collateral security for the Mortgage Loan which are presently outstanding.  There are no prior assignments of the Collateral which are presently outstanding except in accordance with the Loan Documents.

4.1.20

Insurance.  Borrower has obtained and has delivered to Lender certified copies of the Policies reflecting the insurance coverages, amounts and other requirements set forth in this Agreement.  To the best of Borrower’s knowledge, no claims have been made or are currently pending, outstanding or otherwise remain unsatisfied under any such Policy, which would materially and adversely affect the value, operation or use of any Individual Property or Borrower’s ability to repay the Loan, and no Person, including each of Borrower, Mortgage Borrower, Senior Mezzanine Borrower and Maryland Owner, has done, by act or omission, anything which would impair the coverage of any such Policy.

4.1.21

Mortgage Loan Representations

.  All of the representations and warranties contained in the Mortgage Loan Documents are hereby incorporated into this Agreement and deemed made hereunder as and when made thereunder and shall remain incorporated without regard to any waiver, amendment or other modification thereof by the Mortgage Lender or to whether the related Mortgage Loan Document has been repaid, defeased or otherwise terminated, unless otherwise consented to in writing by Lender.

4.1.22

Senior Mezzanine Loan Representations.  All of the representations and warranties contained in the Senior Mezzanine Loan Documents hereby incorporated into this Agreement and deemed made hereunder as and when made thereunder and shall remain incorporated without regard to any waiver, amendment or other modification thereof by the Senior Mezzanine Lender or to whether the related Senior Mezzanine Loan Document has been repaid, defeased or otherwise terminated, unless otherwise consented to in writing by Lender are true and correct in all material respects.

4.1.23

Intentionally Omitted.

4.1.24

Intentionally Omitted.

-42-

4.1.25

Intentionally Omitted.

4.1.26

Leases.  The Properties are not subject to any Leases other than the Leases described on the certified rent rolls delivered to Lender in connection with the origination of the Loan, which rent rolls are true, complete and accurate in all respects as of the Closing Date.  Mortgage Borrower or Maryland Owner, as applicable, is the owner and lessor of landlord’s interest in the Leases.  No Person has any possessory interest in any Individual Property or right to occupy the same except under and pursuant to the provisions of the Leases.  The current Leases are in full force and effect and to Borrower’s knowledge after due inquiry, there are no defaults thereunder by either party and there are no conditions that, with the passage of time or the giving of notice, or both, would constitute defaults thereunder.  No Rent (including security deposits) has been paid more than one (1) month in advance of its due date.  All security deposits are held by each of Mortgage Borrower and Maryland Owner, as applicable, in accordance with applicable law.  All work to be performed by Mortgage Borrower or Maryland Owner, as applicable, under each Lease has been performed as required and has been accepted by the applicable tenant, and any payments, free rent, partial rent, rebate of rent or other payments, credits, allowances or abatements required to be given by Mortgage Borrower or Maryland Owner, as applicable, to any tenant has already been received by such tenant.  There has been no prior sale, transfer or assignment, hypothecation or pledge of any Lease or of the Rents received therein which is outstanding.  To Borrower’s knowledge after due inquiry, except as set forth on Schedule V, no tenant under any Lease has assigned its Lease or sublet all or any portion of the premises demised thereby, no such tenant holds its leased premises under assignment or sublease, nor does anyone except such tenant and its employees occupy such leased premises.  No tenant under any Lease has a right or option pursuant to such Lease or otherwise to purchase all or any part of the leased premises or the building of which the leased premises are a part.  Except as set forth in Schedule V, no tenant under any Lease has any right or option for additional space in the Improvements.  To Borrower’s actual knowledge based on the Environmental Report delivered to Lender in connection herewith, no hazardous wastes or toxic substances, as defined by applicable federal, state or local statutes, rules and regulations, have been disposed, stored or treated by any tenant under any Lease on or about the leased premises nor does Borrower have any knowledge of any tenant’s intention to use its leased premises for any activity which, directly or indirectly, involves the use, generation, treatment, storage, disposal or transportation of any petroleum product or any toxic or hazardous chemical, material, substance or waste, except in either event, in compliance with applicable federal, state or local statues, rules and regulations.

4.1.27

Intentionally Omitted.

4.1.28

Inventory.  Mortgage Borrower (excluding Maryland Individual Borrower) and Maryland Owner are the owners of all of the Equipment, Fixtures and Personal Property (as such terms are defined in the Mortgages) located on or at each Individual Property and shall not lease any Equipment, Fixtures or Personal Property other than as permitted hereunder.  All of the Equipment, Fixtures and Personal Property are sufficient to operate the Properties in the manner required hereunder and in the manner in which they are currently operated.

-43-

4.1.29

Filing and Recording Taxes.  All transfer taxes, deed stamps, intangible taxes or other amounts in the nature of transfer taxes required to be paid by any Person under applicable Legal Requirements currently in effect in connection with the acquisition of each Individual Property by Mortgage Borrower and Maryland Owner, as applicable, have been paid or are simultaneously being paid.  All mortgage, mortgage recording, stamp, intangible or other similar tax required to be paid by any Person under applicable Legal Requirements currently in effect in connection with the execution, delivery, recordation, filing, registration, perfection or enforcement of any of the Loan Documents, including, without limitation, the Pledge Agreement and the Mortgages, have been paid, and, under current Legal Requirements, each of the Mortgages and the Pledge Agreement are enforceable in accordance with their respective terms by Lender (or any subsequent holder thereof), subject to principles of equity and bankruptcy, insolvency and other laws generally applicable to creditors’ rights and the enforcement of debtors’ obligations.

4.1.30

Special Purpose Entity/Separateness.

(a)

Until the Debt has been paid in full, Borrower hereby represents, warrants and covenants that (i) Borrower is, shall be and shall continue to be a Special Purpose Entity, (ii) each of the Mortgage Borrower, Principal and Maryland Owner is, shall be and shall continue to be a Special Purpose Entity (as defined in the Mortgage Loan Agreement) and (iii) Senior Mezzanine Borrower is, shall be and shall continue to be a Special Purpose Entity (as defined in the Senior Mezzanine Loan Agreement).

(b)

Borrower hereby represents and Borrower’s predecessors in interest, if any, to the extent applicable, from the date of formation of Borrower and Borrower’s predecessors in interest, if any, to the extent applicable, to the date of this Agreement as follows:

(i)

Borrower has not owned any asset or property other than the Collateral;

(ii)

Intentionally omitted.

(iii)

Borrower has not engaged in any business other than the ownership of the Collateral;

(iv)

Borrower has not entered into any contract or agreement with any of their respective Affiliates, constituents, or owners, or any guarantors of any of their respective obligations or any Affiliate of any of the foregoing (individually, a “Related Party” and collectively, the “Related Parties”), except upon terms and conditions that are commercially reasonable and substantially similar to those available in an arm’s-length transaction with an unrelated party;

(v)

Borrower has not incurred any Indebtedness other then in connection with the Loan;

(vi)

Borrower has not made any loans to any Person or held evidence of indebtedness issued by any other Person or entity (other than cash and investment-grade securities issued by an entity that is not an Affiliate of or subject to common ownership with such entity);

-44-

(vii)

Borrower has remained solvent and have paid their respective debts and liabilities from their own respective assets and generally as the same have became due;

(viii)

Borrower has allocated fairly and reasonably any overhead expenses that have been shared with an Affiliate, including paying for office space and services performed by any employee of an Affiliate or Related Party;

(ix)

Borrower has done or caused to be done all things necessary to observe all their respective organizational formalities and to preserve their respective existence or has promptly taken curative action with respect thereto;

(x)

(i) Borrower has maintained all of its accounts (including bank accounts), books and records separate from those of any Person; (ii) Borrower has maintained separate financial statements and its assets have not been listed as assets on the financial statement of any other Person; provided, however, that any such consolidated financial statements have contained a note indicating that its separate assets and liabilities are neither available to pay the debts of the consolidated entity nor constitute obligations of the consolidated entity; (iii) Borrower has filed its own separate tax returns, except to the extent that Borrower was treated as a “disregarded entity” for tax purposes and was not required to file tax returns under applicable law; and (iv) Borrower has maintained its books, records, resolutions and agreements as official records;

(xi)

Borrower has been, and at all times has held itself out and identified itself and will hold itself out and identify itself as a separate and distinct entity under its own name or in a name franchised or licensed to it by an entity other than an Affiliate of Borrower and not as a division or part of any other Person, except for services rendered under a business management services agreement with an Affiliate that complies with the terms contained in subsection (iv) above, so long as the manager, or equivalent thereof, under such business management services agreement holds itself out as an agent of Borrower has conducted business in its own name; has not identified itself or any of its Affiliates as a division or part of the other; and has used separate stationery, invoices and checks bearing its own name and not the name of any Affiliate;

(xii)

Intentionally omitted;

(xiii)

Borrower has corrected any known misunderstanding regarding its status as a separate entity;

(xiv)

Borrower has maintained adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations;

(xv)

Borrower has not, nor have any of its constituent parties, sought or effected the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of such Borrower;

-45-

(xvi)

Borrower has not commingled their respective funds or other assets with those of any Affiliate or constituent party or any other Person, and Borrower has held all of its assets in its own name;

(xvii)

Borrower has maintained its assets in such a manner that it would not be costly or difficult to segregate, ascertain or identify its individual assets from those of any Affiliate or constituent party or any other Person;

(xviii)

Borrower has not guaranteed or become obligated for the debts of any other Person and have not held itself out to be responsible for or to have its credit available to satisfy the debts or obligations of any other Person;

(xix)

Borrower has not permitted any Affiliate or constituent party independent access to its bank accounts;

(xx)

Borrower has paid the salaries of its own employees (if any) from its funds and has maintained a sufficient number of employees (if any) in light of its contemplated business operations;

(xxi)

Borrower has compensated its consultants and agents from its own funds for services provided to it and pay from its own assets all obligations of any kind incurred;

(xxii)

Borrower has not acquired any obligations or securities of any of its Affiliates;

(xxiii)

Borrower has not acquired or held any equity interest or subsidiary interest in any entity other than its direct interest in Senior Mezzanine Borrower;

(xxiv)

Borrower has not pledged its assets for the benefit of any other Person other than with respect to loans secured by the Collateral;

(xxv)

Borrower has not incurred any indebtedness that is still outstanding other than indebtedness that is permitted under the Loan Documents;

(xxvi)

Borrower is and always has been duly formed, validly existing, and in good standing in the state of its incorporation and in all other jurisdictions where it is qualified to do business;

(xxvii)

Borrower has no judgments or liens of any nature against it except for tax liens not yet due;

(xxviii)

Borrower is in compliance with all laws, regulations, and orders applicable to it and has received all permits necessary for it to operate;

(xxix)

Borrower is not involved in any dispute with any taxing authority;

(xxx)

Borrower has paid all taxes which it owes;

-46-

(xxxi)

Borrower is not now party to any lawsuit, arbitration, summons, or legal proceeding that is still pending or that has resulted in a judgment against it that has not been paid in full, which lawsuit, arbitration, summons or legal proceeding, if determined against Borrower might materially adversely affect the condition (financial or otherwise) or business of Borrower or the condition or ownership of any Collateral;

(xxxii)

Borrower has provided Lender with complete financial statements that reflect a fair and accurate view of the entity’s financial condition;

(xxxiii)

Borrower has not had any of its obligations guaranteed by an Affiliate, except for guaranties that have been either released or discharged (or that will be discharged as a result of the closing of the Loan) or guaranties that are expressly contemplated by the Loan Documents; and

(xxxiv)

Borrower has no material contingent or actual obligations not related to its direct interest in the Collateral.

(c)

The representations, warranties and covenants set forth in Section 4.1.30 shall survive for so long as any amount remains payable to Lender under this Agreement or any other Loan Document;.

(d)

Any and all of the stated facts and assumptions made in any Insolvency Opinion, including, but not limited to, any exhibits attached thereto, will have been and shall be true and correct in all respects, and Borrower will have complied and will comply with all of the stated facts and assumptions made with respect to it in any Insolvency Opinion.  Each entity other than Borrower, with respect to which an assumption is made or a fact stated in any Insolvency Opinion will have complied and will comply with all of the assumptions made and facts stated with respect to it in any such Insolvency Opinion.

(e)

Borrower covenants and agrees that Borrower shall provide Lender with thirty (30) days’ prior written notice prior to the removal of an Independent Director of Borrower.

(f)

Each amendment and each restatement of the organizational documents of the Special Purpose Entities has been accomplished in accordance with, and was permitted by, the relevant provisions of each such document prior to its amendment or restatement from time to time.

4.1.31

Management Agreement.  The Management Agreement is in full force and effect and there is no default thereunder by any party thereto and no event has occurred that, with the passage of time and/or the giving of notice would constitute a default thereunder.  The Management Agreement was entered into on commercially reasonable terms.

4.1.32

Illegal Activity.  No portion of the Senior Mezzanine Collateral, any Individual Property or the Collateral has been or will be purchased with proceeds of any illegal activity.

-47-

4.1.33

No Change in Facts or Circumstances; Disclosure.  All information submitted by and on behalf of Borrower to Lender and in all financial statements, rent rolls (including the certified rent rolls delivered to Lender in connection with the origination of the Loan), reports, certificates and other documents submitted in connection with the Loan or in satisfaction of the terms thereof and all statements of fact made by Borrower in this Agreement or in any other Loan Document, are accurate, complete and correct in all material respects, provided, however, that if such information was provided to Borrower by non-affiliated third parties, Borrower represents that such information is, to the best of its knowledge after due inquiry, accurate, complete and correct in all material respects.  There has been no material adverse change in any condition, fact, circumstance or event that would make any such information inaccurate, incomplete or otherwise misleading in any material respect or that otherwise materially and adversely affects or might materially and adversely affect the use, operation or value of any Individual Property or the business operations or the financial condition of Borrower, Senior Mezzanine Borrower or Mortgage Borrower and/or Maryland Owner.  Borrower has disclosed to Lender all material facts and has not failed to disclose any material fact that could cause any Provided Information or representation or warranty made herein to be materially misleading.

4.1.34

Investment Company Act.  Borrower is not (a) an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended; (b) a “holding company” or a “subsidiary company” of a “holding company” or an “affiliate” of either a “holding company” or a “subsidiary company” within the meaning of the Public Utility Holding Company Act of 1935, as amended; or (c) subject to any other federal or state law or regulation which purports to restrict or regulate its ability to borrow money.

4.1.35

Principal Place of Business and Organization.  Borrower shall not change its principal place of business set forth in the introductory paragraph of this Agreement without first giving Lender thirty (30) days prior written notice.  Borrower shall not change the place of its organization as set forth in the introductory paragraph to this Agreement without the prior written consent of Lender, which consent shall not be unreasonably withheld, conditioned or delayed.  Upon Lender’s request, Borrower shall execute and deliver additional financing statements, security agreements and other instruments which may be necessary to effectively evidence or perfect Lender’s security interest in the Collateral as a result of such change of principal place of business or place of organization.

4.1.36

Embargoed Person.  As of the date hereof and at all times throughout the term of the Loan, including after giving effect to any Transfers permitted pursuant to this Agreement (but excluding, for purposes of the representations and warranties being given by Borrower in this Section 4.1.36, any Person or Persons holding publicly traded shares in Indemnitor after the initial sale or offering thereof), and/or transfers or assignments of direct and/or indirect ownership interests in Inland Equity Investors, LLC (a) none of the funds or other assets of Borrower, Senior Mezzanine Borrower, Mortgage Borrower, Maryland Owner, Principal, Joint Venture Entity and/or Indemnitor constitute property of, or are beneficially owned, directly or indirectly, by any Embargoed Person; (b) no Embargoed Person has any interest of any nature whatsoever in Borrower, Senior Mezzanine Borrower, Mortgage Borrower, Maryland Owner, Principal, Joint Venture Entity and/or Indemnitor, as applicable, with the result 

-48-

that the investment in Borrower, Senior Mezzanine Borrower, Mortgage Borrower, Maryland Owner, Principal, Joint Venture Entity and/or Indemnitor, as applicable, (whether directly or indirectly), is prohibited by law or the Loan is in violation of law; and (c) none of the funds of Borrower, Senior Mezzanine Borrower, Mortgage Borrower, Maryland Owner, Principal, Joint Venture Entity and/or Indemnitor, as applicable, have been derived from any unlawful activity with the result that the investment in Borrower, Senior Mezzanine Borrower, Mortgage Borrower, Maryland Owner, Principal, Joint Venture Entity and/or Indemnitor, as applicable (whether directly or indirectly), is prohibited by law or the Loan is in violation of law. 

4.1.37

Intentionally Omitted.

4.1.38

Ground Lease.  Except as otherwise set forth in Schedule IX attached hereto, each of Borrower hereby represents and warrants to Lender the following with respect to each Ground Lease:

(a)

Each Ground Lease (or a memorandum of such Ground Lease) has been duly recorded.  Each Ground Lease permits the interest of the applicable Individual Mortgage Borrower or Maryland Owner, as applicable, to be encumbered by a mortgage, deed of trust, indemnity deed of trust or deed to secure debt (provided that the mortgage, deed of trust, indemnity deed of trust or deed to secure debt, as applicable, is at all times subject and subordinate to the Ground Lease) or the Ground Lessor has approved and consented to the encumbrance of the Ground Lease Property by the applicable Mortgage.  There have not been amendments or modifications to the terms of the Ground Lease since recordation of the Ground Lease (or a memorandum thereof), with the exception of written instruments which have been recorded.  No Ground Lease may be terminated, surrendered or amended without the prior written consent of Lender; provided that a Ground Lessor shall not be prevented from exercising its remedies in accordance with the related Ground Lease if the obligations of Individual Mortgage Borrower or Maryland Owner, as applicable, under the Ground Lease are not performed as provided in the Ground Lease.

(b)

Except for the Permitted Encumbrances and other encumbrances of record, the applicable Individual Mortgage Borrower’s or Maryland Owner’s interest in the related Ground Lease is not subject to any Liens or encumbrances superior to, or of equal priority with, the applicable Mortgage other than the Ground Lessor’s related fee interest.

(c)

Mortgage Borrower’s or Maryland Owner’s, as applicable, interest in the Ground Lease is assignable without the consent of Ground Lessor to Lender or Mortgage Lender, the purchaser at any foreclosure sale or the transferee under a deed or assignment in lieu of foreclosure in connection with the foreclosure of the Lien of the Mortgage or transfer of Mortgage Borrower’s or Maryland Owner’s, as applicable, leasehold estate by deed or assignment in lieu of foreclosure.  Thereafter, the Ground Lease is further assignable by such transferee and its successors and assigns without the consent of the applicable Ground Lessor.

(d)

As of the date hereof, each Ground Lease is in full force and effect and no material default has occurred under any Ground Lease that is continuing and there is no existing condition which, but for the passage of time or the giving of notice, could result in a material default under the terms of any Ground Lease.

-49-

(e)

Under the terms of each Ground Lease and the Loan Documents, taken together, any related insurance and condemnation proceeds that are paid or awarded to Mortgage Borrower or Maryland Owner, as applicable, with respect to the leasehold interest will be applied either to the repair or restoration of all or part of such Ground Lease Property, with Mortgage Lender having the right subject to the terms of the Loan Documents to hold and disburse the proceeds as the repair or restoration progresses, or to the payment of the outstanding principal balance of the Loan together with any accrued interest thereon.

(f)

No Ground Lease imposes any restrictions on subleasing.

(g)

Each Ground Lease requires the applicable Ground Lessor to give notice of any default by the applicable Individual Mortgage Borrower or Maryland Owner, as applicable, under such Ground Lease to Lender prior to exercising its remedies thereunder.

(h)

Mortgage Lender is permitted the opportunity (including, where necessary, sufficient time to gain possession of the interest of the applicable Individual Mortgage Borrower or Maryland Owner, as applicable, under the Ground Lease) to cure any default under such Ground Lease, which is curable after the receipt of notice of the default before the applicable Ground Lessor thereunder may terminate such Ground Lease.

(i)

Each Ground Lease has a term which extends not less than twenty (20) years beyond the Maturity Date.

(j)

Each Ground Lease requires the Ground Lessor thereunder to enter into a new lease upon termination (prior to expiration of the term thereof) of such Ground Lease for any reason, including rejection or disaffirmation of such Ground Lease in a bankruptcy proceeding.

4.1.39

Junior Mezzanine Loan Cash Management Account. Borrower and hereby represents and warrants to Lender that:

(a)

This Agreement, together with the other Loan Documents, create a valid and continuing security interest (as defined in the Uniform Commercial Code of the State of New York) in the Junior Mezzanine Loan Cash Management Account in favor of Lender, which security interest is prior to all other Liens, other than Permitted Encumbrances, and is enforceable as such against creditors of and purchasers from Borrower.  Other than in connection with the Loan Documents and except for Permitted Encumbrances, Borrower has not sold, pledged, transferred or otherwise conveyed any interest in the Junior Mezzanine Loan Cash Management Account;

(b)

The Junior Mezzanine Loan Cash Management Account constitutes “deposit accounts” and/or “securities accounts” within the meaning of the Uniform Commercial Code of the State of New York);

(c )

Pursuant and subject to the terms hereof and the other applicable Loan Documents, Agent has agreed to comply with all instructions originated by Lender, without further consent by Borrower, directing disposition of the Junior Mezzanine Loan Cash Management Account and all sums at any time held, deposited or invested therein, together with 

-50-

any interest or other earnings thereon, and all proceeds thereof (including proceeds of sales and other dispositions), whether accounts, general intangibles, chattel paper, deposit accounts, instruments, documents or securities; and

(d)

The Junior Mezzanine Loan Cash Management Account is not in the name of any Person other than Borrower, as pledgor, or Lender, as pledgee.  Borrower has not consented to Agent complying with instructions with respect to the Junior Mezzanine Loan Cash Management Account from any Person other than Lender.

4.1.40

REOA.  Borrower hereby represents and warrants to Lender that:  Other than the Loan Documents, the Borrower Operating Agreement, Senior Mezzanine Borrower Company Agreement, the Maryland Owner Company Agreements and Mortgage Borrower Company Agreements, as of the date of this Agreement, Borrower is not subject to any Contractual Obligations and has not entered into any agreement, instrument or undertaking by which it or its assets are bound, or has incurred any Indebtedness, and prior to the date of this Agreement and Borrower has not entered into any Contractual Obligation, or any agreement, instrument or undertaking by which it or its assets are bound or incurred any Indebtedness.

(a)

each of Mortgage Borrower or Maryland Owner is a party to each REOA and each REOA is in full force and effect and has not been amended or modified and each of Mortgage Borrower’s or Maryland Owner’s interest therein has not been assigned pursuant to any assignment which survives the Closing Date except the assignment to Lender pursuant to the Mortgage Loan Documents;

(b)

each REOA is in full compliance with all applicable local, state and federal laws, rules and regulations,

(c )

Neither Mortgage Borrower nor Maryland Owner is in default under any REOA and, to the best of each of Borrower’s knowledge, no other party to any REOA is in default thereunder and there are no grounds for default thereunder after the giving of the requisite notice thereunder;

(d)

Borrower has no knowledge of any notice of termination or default given with respect to any REOA;

(e)

to the best of each of Borrower’s knowledge, after inquiry, the current addresses to which notices are sent to each of Mortgage Borrower or Maryland Owner or any other party to any REOA are correctly set forth in such REOA;

(f)

none of Mortgage Borrower, Maryland Owner or any other party to any REOA has performed any work pursuant to such REOA, the cost of which Mortgage Borrower, Maryland Owner or such other party is or will be entitled to charge in whole or in part to Borrower or Maryland Owner under the provisions of such REOA;

(g)

there are no set-offs, claims, counterclaims or defenses being asserted by Mortgage Borrower, Maryland Owner or any other party to any REOA for the enforcement of the obligations under any REOA;

-51-

(h)

there are no liens capable of being asserted for amounts due under the provisions of any REOA which, if unpaid, may be asserted as a lien prior to the lien of the Mortgage; and

(i)

all common charges and other sums due from each of Mortgage Borrower or Maryland Owner under any REOA have been paid to the extent they are payable to the date hereof.

Section 4.2

Survival of Representations.

  Borrower agrees that all of the representations and warranties of Borrower set forth in Section 4.1 hereof and elsewhere in this Agreement and in the other Loan Documents shall survive for so long as any amount remains owing to Lender under this Agreement or any of the other Loan Documents by Borrower.  All representations, warranties, covenants and agreements made in this Agreement or in the other Loan Documents by Borrower shall be deemed to have been relied upon by Lender notwithstanding any investigation heretofore or hereafter made by Lender or on its behalf.

ARTICLE V

BORROWER COVENANTS

Section 5.1

Affirmative Covenants.

  From the Closing Date and until payment and performance in full of all obligations of Borrower under the Loan Documents or the earlier release of the Liens encumbering the Collateral (and all related obligations) in accordance with the terms of this Agreement and the other Loan Documents, Borrower hereby covenants and agrees with Lender that:

5.1.1

Existence; Compliance with Legal Requirements; Insurance.  Borrower shall do or cause to be done all things necessary to preserve, renew and keep in full force and effect its existence, rights, licenses, permits and franchises and/or cause Mortgage Borrower and Senior Mezzanine Borrower, Maryland Owner to comply with all Legal Requirements applicable to Borrower, Mortgage Borrower, Maryland Owner, the Collateral and/or the Properties (and the Improvements thereon and the use thereof), including, without limitation, building and zoning ordinances and codes.  There shall not be committed by Borrower, Senior Mezzanine Borrower, Mortgage Borrower, Maryland Owner or any other Person in occupancy of or involved with the operation or use of any Individual Property, any act or omission affording the federal government or any state or local government the right of forfeiture as against any Individual Property or any part thereof or any monies paid in performance of Borrower’s obligations under any of the Loan Documents.  Borrower hereby covenants and agrees not to permit or cause Senior Mezzanine Borrower, Mortgage Borrower or Maryland Owner to commit, permit or suffer to exist any act or omission affording such right of forfeiture.  Borrower shall at all times cause Senior Mezzanine Borrower, Mortgage Borrower and Maryland Owner to maintain, preserve and protect all franchises and trade names and preserve all the remainder of its property used or useful in the conduct of its business and shall keep, or cause Mortgage Borrower and Maryland Owner to keep, the Properties in good working order and repair, and from time to time make, or cause to be made, all reasonably necessary repairs, renewals, replacements, betterments and improvements thereto in accordance with the Loan Documents and the Mortgage Loan Documents.  Borrower shall keep, or cause Mortgage Borrower and Maryland Owner to keep, 

-52-

the Properties insured at all times by financially sound and reputable insurers, to such extent and against such risks, and maintain liability and such other insurance, as is more fully provided in this Agreement and the Mortgage Loan Agreements.  Borrower shall cause Mortgage Borrower and Maryland Owner to operate, or cause the applicable Tenant to operate, each Individual Property that is the subject of an O&M Agreement in accordance with the terms and provisions thereof in all material respects.  After prior written notice to Lender, Borrower, at its own expense, may contest, or permit Senior Mezzanine Borrower, Mortgage Borrower and Maryland Owner to contest, by appropriate legal proceeding promptly initiated and conducted in good faith and with due diligence, the validity of any Legal Requirement, the applicability of any Legal Requirement to Borrower, Mortgage Borrower, Maryland Owner or any Individual Property or any alleged violation of any Legal Requirement, provided that (i) such proceeding shall be permitted under and be conducted in accordance with the provisions of any instrument to which Mortgage Borrower or Maryland Owner, as applicable, is subject and shall not constitute a default thereunder and such proceeding shall be conducted in accordance with all applicable statutes, laws and ordinances; (ii) no Individual Property nor any part thereof or interest therein (including the Collateral) will be in danger of being sold, forfeited, terminated, cancelled or lost; (iii) Borrower shall, and cause Mortgage Borrower and Maryland Owner to promptly upon final determination thereof comply with any such Legal Requirement determined to be valid or applicable or cure any violation of any Legal Requirement; (iv) such proceeding shall suspend the enforcement of the contested Legal Requirement against Borrower, Mortgage Borrower, Maryland Owner, Senior Mezzanine Borrower, the Collateral, Senior Mezzanine Collateral or any Individual Property; and (v) Borrower shall furnish such security as may be required in the proceeding, or as may be requested by Lender, to insure compliance with such Legal Requirement, together with all interest and penalties payable in connection therewith.  Lender may apply any such security, as necessary to cause compliance with such Legal Requirement at any time when, in the reasonable judgment of Lender, the validity, applicability or violation of such Legal Requirement is finally established or any Individual Property or the Collateral (or any part thereof or interest therein) shall be in danger of being sold, forfeited, terminated, cancelled or lost.

5.1.2

Taxes and Other Charges.  Borrower shall pay, or shall cause Mortgage Borrower and Maryland Owner to pay, all Taxes and Other Charges now or hereafter levied or assessed or imposed against the Properties or any part thereof as the same become due and payable; provided, however, Borrower’s obligation to cause Mortgage Borrower and Maryland Owner to directly pay to the appropriate taxing authority Taxes shall be suspended for so long as Mortgage Borrower and Maryland Owner comply with the terms and provisions of Section 7.2 of the Mortgage Loan Agreement.  Borrower will deliver, or cause to be delivered, to Lender receipts for payment or other evidence satisfactory to Lender that the Taxes and Other Charges have been so paid or are not then delinquent no later than ten (10) days prior to the date on which the Taxes and/or Other Charges would otherwise be delinquent if not paid (provided, however, Borrower is not required to furnish such receipts for payment of Taxes in the event that such Taxes have been paid by Lender pursuant to Section 7.2 of the Mortgage Loan Agreement).  Borrower shall not suffer and shall promptly cause Mortgage Borrower and Maryland Owner to promptly pay and discharge any Lien or charge whatsoever which may be or become a Lien or charge against any Individual Property, and shall promptly pay for, or cause to be paid, all utility services provided to the Properties.  After prior written notice to Lender, Borrower, at its or Mortgage Borrower’s or Maryland Owner’s own expense, may contest or permit Mortgage 

-53-

Borrower or Maryland Owner to contest, by appropriate legal proceeding, promptly initiated and conducted in good faith and with due diligence, the amount or validity or application in whole or in part of any Taxes or Other Charges, provided that (i) Mortgage Borrower or Maryland Owner, as applicable, is permitted to do so under the provisions of any mortgage, deed of trust, indemnity deed of trust or deed to secure debt superior in lien to the applicable Mortgage; (ii) such proceeding shall be permitted under and be conducted in accordance with the provisions of any other instrument to which Borrower and Mortgage Borrower or Maryland Owner, as applicable, is subject and shall not constitute a default thereunder and such proceeding shall be conducted in accordance with all applicable statutes, laws and ordinances; (iii) none of the Collateral, the Senior Mezzanine Collateral, nor any Individual Property nor any part thereof or interest therein will be in danger of being sold, forfeited, terminated, cancelled or lost; (iv) Borrower shall cause Mortgage Borrower or Maryland Owner to promptly upon final determination thereof pay the amount of any such Taxes or Other Charges, together with all costs, interest and penalties which may be payable in connection therewith; (v) such proceeding shall suspend the collection of such contested Taxes or Other Charges from the applicable Individual Property; and (vi) Borrower shall, or shall cause Mortgage Borrower to furnish such security as may be required in the proceeding, or as may be requested by Lender, to insure the payment of any such Taxes or Other Charges, together with all interest and penalties thereon.  Lender may pay over any such cash deposit or part thereof held by Lender to the claimant entitled thereto at any time when, in the reasonable judgment of Lender, the entitlement of such claimant is established or any Individual Property or the Collateral (or part thereof or interest therein) shall be in danger of being sold, forfeited, terminated, cancelled or lost or there shall be any danger of the Lien of any Mortgage being primed by any related Lien.

5.1.3

Litigation.  Borrower shall give prompt written notice to Lender of any litigation or governmental proceedings pending or threatened against Borrower, Senior Mezzanine Borrower, Mortgage Borrower, Maryland Owner, Principal, Indemnitor, the Properties, the Senior Mezzanine Collateral, and/or the Collateral which might materially adversely affect Borrower’s, Senior Mezzanine Borrower’s, Mortgage Borrower’s, Maryland Owner’s, Principal’s and/or Indemnitor’s condition (financial or otherwise) or business or any Individual Property, the Senior Mezzanine Collateral or the Collateral.

5.1.4

Access to Properties.  Borrower shall cause Mortgage Borrower and Maryland Owner to permit agents, representatives and employees of Lender to inspect the Properties or any part thereof at reasonable hours upon reasonable advance notice, subject to the rights of Tenants under their respective Leases.

5.1.5

Notice of Default.  Borrower shall promptly advise Lender of any material adverse change in Borrower’s, Senior Mezzanine Borrower’s, Mortgage Borrower’s, Maryland Owner’s, Principal’s or Indemnitor’s condition, financial or otherwise, or of the occurrence of any Default or Event of Default of which Borrower has knowledge, including any Mortgage Loan Default, Mortgage Loan Event of Default or Senior Loan Event of Default.

5.1.6

Cooperate in Legal Proceedings.  Borrower shall cooperate fully with Lender with respect to any proceedings before any court, board or other Governmental Authority which may in any way affect the rights of Lender hereunder or any rights obtained by Lender 

-54-

under any of the other Loan Documents and, in connection therewith, permit Lender, at its election, to participate in any such proceedings.

5.1.7

Perform Loan Documents.  Borrower shall observe, perform and satisfy all the terms, provisions, covenants and conditions of, and shall pay when due all costs, fees and expenses to the extent required under the Loan Documents executed and delivered by, or applicable to, Borrower.

5.1.8

Insurance Benefits/Condemnation Awards.  Borrower shall cooperate with Lender in obtaining for Lender the benefits of any Awards or Insurance Proceeds or Net Liquidation Proceeds After Debt Service lawfully or equitably payable in connection with any Individual Property or the Senior Mezzanine Collateral, and Lender shall be reimbursed for any expenses incurred in connection therewith (including reasonable attorneys’ fees and disbursements, and the payment by Borrower of the expense of an appraisal on behalf of Lender in case of Casualty or Condemnation affecting any Individual Property or any part thereof) out of such Insurance Proceeds.

5.1.9

Further Assurances.  Borrower shall, at Borrower’s sole cost and expense:

(a)

furnish to Lender all instruments, documents, boundary surveys, footing or foundation surveys, certificates, plans and specifications, appraisals, title and other insurance reports and agreements, and each and every other document, certificate, agreement and instrument required to be furnished by Borrower, Mortgage Borrower and Maryland Owner pursuant to the terms of the Loan Documents and Mortgage Loan Documents, as applicable, or which are reasonably requested by Lender in connection therewith;

(b)

execute and deliver to Lender such documents, instruments, certificates, assignments and other writings, and do such other acts necessary or desirable, to evidence, preserve and/or protect the collateral at any time securing or intended to secure the obligations of Borrower under the Loan Documents, as Lender may reasonably require; and

(c)

do and execute all and such further lawful and reasonable acts, conveyances and assurances for the better and more effective carrying out of the intents and purposes of this Agreement and the other Loan Documents, as Lender shall reasonably require from time to time.

5.1.10

Principal Place of Business, State of Organization.  Borrower will not cause or permit any change to be made in its or Mortgage Borrower’s, Senior Mezzanine Borrower’s or Maryland Owner’s name, identity (including its trade name or names), place of organization or formation (as set forth in Section 4.1.35 hereof) or Borrower’s or Mortgage Borrower’s, Senior Mezzanine Borrower’s or Maryland Owner’s corporate, or partnership or other structure unless Borrower shall have first notified Lender in writing of such change at least thirty (30) days prior to the effective date of such change, and shall have first taken all action required by Lender for the purpose of perfecting or protecting the lien and security interests of Lender pursuant to this Agreement, the Cash Management Agreement and the other Loan Documents and, in the case of a change in Borrower’s structure, without first obtaining the prior written consent of Lender.  Upon Lender’s request, Borrower shall, at its sole cost and expense, 

-55-

execute and deliver additional financing statements, security agreements and other instruments which may be necessary to effectively evidence or perfect Lender’s security interest in the Collateral as a result of such change of principal place of business or place of organization.  Borrower’s principal place of business and chief executive office, and the place where Borrower keeps its books and records, including recorded data of any kind or nature, regardless of the medium or recording, including software, writings, plans, specifications and schematics, has been for the preceding four months (or, if less, the entire period of the existence of Borrower) and will continue to be the address of Borrower set forth at the introductory paragraph of this Agreement (unless Borrower notifies Lender in writing at least thirty (30) days prior to the date of such change).  Borrower’s organizational identification number assigned by the state of incorporation or organization is 4755720.

5.1.11

Financial Reporting. 

(a)

Borrower will keep and maintain or will cause, Mortgage Borrower and Maryland Owner to keep and maintain on a Fiscal Year basis, in accordance with the requirements for a Special Purpose Entity set forth above, proper and accurate books, records and accounts reflecting all of the financial affairs of Borrower, Mortgage Borrower and Maryland Owner and all items of income and expense in connection with the operation on an individual basis of the Properties.  Lender shall have the right from time to time at all times during normal business hours upon reasonable notice to examine such books, records and accounts at the office of Borrower, Senior Mezzanine Borrower, Mortgage Borrower and Maryland Owner or any other Person maintaining such books, records and accounts and to make such copies or extracts thereof as Lender shall desire.  After the occurrence and during the continuance of an Event of Default, Borrower shall pay any costs and expenses incurred by Lender to examine Borrower’s accounting records with respect to the Collateral and Properties and the Senior Mezzanine Collateral, as Lender shall reasonably determine to be necessary or appropriate in the protection of Lender’s interest.

(b)

Borrower will furnish, and cause to be furnished, to Lender annually, within ninety (90) days following the end of each Fiscal Year a consolidated and annotated annual financial statement of Borrower, Mortgage Borrower, Maryland Owner, Principal and Senior Mezzanine Borrower, audited by an accounting firm or other independent certified public accountant reasonably acceptable to Lender in accordance with GAAP covering the Properties on a combined basis for such Fiscal Year, together with unaudited financial statements relating to Borrower, Maryland Owner, Principal, Senior Mezzanine Borrower and the Properties.  Such financial statements for the Properties for such Fiscal Year shall contain statements of profit and loss for Mortgage Borrower, Maryland Owner, Principal, Senior Mezzanine Borrower and the Properties and a balance sheet for each of Borrower, Mortgage Borrower, Maryland Owner, Principal and Senior Mezzanine Borrower.  Such statements shall set forth the financial condition and the results of operations for each Individual Property for such Fiscal Year, and shall include, but not be limited to, amounts representing annual Net Cash Flow, Net Operating Income, Gross Income from Operations and Operating Expenses.  Borrower’s, Mortgage Borrower’s, Maryland Owner’s, Principal’s and Senior Mezzanine Borrower’s annual financial statements shall be accompanied by (i) a comparison of the budgeted income and expenses and the actual income and expenses for the prior Fiscal Year, (ii) a certificate executed by the chief financial officer of Borrower, Mortgage Borrower, Maryland Owner, Principal or Senior 

-56-

Mezzanine Borrower, as applicable, stating that each such annual financial statement presents fairly the financial condition and the results of operations of Borrower, Mortgage Borrower, Maryland Owner, Principal, Senior Mezzanine Borrower and the Properties being reported upon and has been prepared in accordance with GAAP, (iii) an unqualified opinion of an accounting firm or other independent certified public accountant reasonably acceptable to Lender, (iv) a certified rent roll containing current rent, lease expiration dates and the square footage occupied by each tenant, (v) a schedule certified by the chief financial officer of Borrower, Mortgage Borrower, Maryland Owner, Principal or Senior Mezzanine Borrower, as applicable, reconciling Net Operating Income to Net Cash Flow (the “Net Cash Flow Schedule”), which shall itemize all adjustments made to Net Operating Income to arrive at Net Cash Flow deemed material by such chief financial officer of Borrower, Mortgage Borrower, Maryland Owner, Principal or Senior Mezzanine Borrower, as applicable.  Together with Borrower’s, Mortgage Borrower’s, Maryland Owner’s, Principal’s and Senior Mezzanine Borrower’s annual financial statements, Borrower shall furnish to Lender an Officer’s Certificate certifying as of the date thereof whether there exists an event or circumstance which constitutes a Default or Event of Default under the Loan Documents executed and delivered by, or applicable to, Borrower, and if such Default or Event of Default exists, the nature thereof, the period of time it has existed and the action then being taken to remedy the same.

(c )

Borrower will furnish, or cause to be furnished, to Lender on or before forty five (45) days after the end of each calendar quarter the following items, accompanied by a certificate of the chief financial officer of Borrower, Mortgage Borrower, Maryland Owner, Principal or Senior Mezzanine Borrower, as applicable, stating that such items are true, correct, accurate, and complete and fairly present the financial condition and results of the operations of Borrower, Mortgage Borrower, Maryland Owner, Principal, Senior Mezzanine Borrower and the Properties (subject to normal year-end adjustments) as applicable:  (i) a rent roll for the subject months; (ii) quarterly and year-to-date operating statements (including Capital Expenditures) prepared for each calendar quarter, noting Net Operating Income, Gross Income from Operations, and Operating Expenses (not including any contributions to the Replacement Reserve Fund, and other information necessary and sufficient to fairly represent the financial position and results of operation of the Properties during such calendar month, and containing a comparison of budgeted income and expenses and the actual income and expenses together with a detailed explanation of any variances of five percent (5%) or more between budgeted and actual amounts for such periods, all in form satisfactory to Lender; (iii) a calculation reflecting the annual Debt Service Coverage Ratio for the immediately preceding three (3) month, six (6) month and twelve (12) month period, respectively, as of the last day of such month; and (iv) a Net Cash Flow Schedule.  In addition, such certificate shall also be accompanied by a certificate of the chief financial officer of Borrower, Mortgage Borrower, Maryland Owner, Principal or Senior Mezzanine Borrower, as applicable, stating that the representations and warranties of Borrower set forth in Section 4.1.30(a) are true and correct as of the date of such certificate.

(d)

For the partial year period commencing on the Closing Date, and for each Fiscal Year thereafter, Borrower shall submit to Lender an Annual Budget not later than thirty (30) days after the commencement of such period or Fiscal Year in form reasonably satisfactory to Lender.  The Annual Budget for the current Fiscal Year and for each Fiscal Year thereafter shall be subject to Lender’s written approval (each such Annual Budget, an “Approved Annual Budget”).  In the event that Lender objects to a proposed Annual Budget 

-57-

submitted by Borrower, Lender shall advise Borrower of such objections within fifteen (15) days after receipt thereof (and deliver to Borrower a reasonably detailed description of such objections) and Borrower shall promptly revise such Annual Budget and resubmit the same to Lender.  Lender shall advise Borrower of any objections to such revised Annual Budget within ten (10) days after receipt thereof (and deliver to Borrower a reasonably detailed description of such objections) and Borrower shall promptly revise the same in accordance with the process described in this Section 5.1.11(d) until Lender approves the Annual Budget.  Until such time that Lender approves a proposed Annual Budget, the most recently Approved Annual Budget shall apply; provided that, such Approved Annual Budget shall be adjusted to reflect actual increases in Taxes, Insurance Premiums and Other Charges.

(e)

Borrower shall furnish to Lender, within ten (10) Business Days after request (or as soon thereafter as may be reasonably possible), such further detailed information with respect to the operation of the Properties (or any Individual Property) and the financial affairs of Borrower, Senior Mezzanine Borrower, Mortgage Borrower (or any Individual Mortgage Borrower) and Maryland Owner as may be reasonably requested by Lender.

(f)

Borrower shall furnish to Lender, within ten (10) Business Days after Lender’s request (or as soon thereafter as may be reasonably possible), financial and sales information from any Tenant designated by Lender (to the extent such financial and sales information is required to be provided under the applicable Lease and same is received by Mortgage Borrower or Maryland Owner, as applicable, after request therefor).

(g)

Borrower will cause Indemnitor to furnish to Lender annually, within one hundred twenty (120) days following the end of each Fiscal Year of Indemnitor, financial statements audited by an independent certified public accountant, which shall include an annual balance sheet and profit and loss statement of Indemnitor, in the form reasonably required by Lender.

(h)

Any reports, statements or other information required to be delivered under this Agreement shall be delivered (i) in paper form, (ii) on a diskette, and (iii) if requested by Lender and within the capabilities of Borrower’s data systems without change or modification thereto, in electronic form and prepared using Microsoft Word for Windows or WordPerfect for Windows files (which files may be prepared using a spreadsheet program and saved as word processing files).  Borrower agrees that Lender may disclose information regarding the Properties, the Collateral, Senior Mezzanine Collateral, Borrower, Mortgage Borrower, Senior Mezzanine Borrower and Maryland Owner that is provided to Lender pursuant to this Section 5.1.11(h) in connection with the Securitization to such parties requesting such information in connection with such Securitization.

5.1.12

Business and Operations.  Borrower will continue to engage in the businesses presently conducted by each of Borrower as and to the extent the same are necessary for the ownership, maintenance, management and operation of the Collateral.  Borrower will, and shall cause Mortgage Borrower and Maryland Owner to, qualify to do business and will remain in good standing under the laws of each jurisdiction of its formation as and to the extent the same are required for the ownership of the Collateral or maintenance, management and operation of the Properties.  Borrower shall, and shall cause Mortgage Borrower and Maryland 

-58-

Owner at all times during the term of the Loan to, continue to own all of Equipment, Fixtures and Personal Property which are necessary to operate the Properties in the manner required hereunder and in the manner in which it is currently operated.

5.1.13

Title to the Properties/Senior Mezzanine Collateral.

(a)

Borrower will cause Mortgage Borrower and Maryland Owner to warrant and defend (a) the title to each Individual Property and every part thereof, subject only to Liens permitted hereunder and under the Mortgage Loan Agreement (including Permitted Encumbrances) and (b) the validity and priority of the Liens of the Mortgages and the Assignments of Leases on the Properties, subject only to Liens permitted hereunder (including Permitted Encumbrances), in each case against the claims of all Persons whomsoever.  Borrower shall reimburse Lender for any losses, costs, damages or expenses (including reasonable attorneys’ fees and court costs) incurred by Lender if an interest in the Collateral or any Individual Property, other than as permitted hereunder, is claimed by another Person.

(b)

Borrower will cause Senior Mezzanine to warrant and defend (a) the title to the Senior Mezzanine Collateral, subject only to Liens permitted hereunder and under the Senior Mezzanine Loan Agreement (including Permitted Encumbrances) and (b) the validity and priority of the Liens of the Senior Mezzanine Pledge Agreement, subject only to Liens permitted hereunder (including Permitted Encumbrances), in each case against the claims of all Persons whomsoever.  Borrower shall reimburse Lender for any losses, costs, damages or expenses (including reasonable attorneys’ fees and court costs) incurred by Lender if an interest in the Senior Mezzanine Collateral, other than as permitted hereunder, is claimed by another Person.

5.1.14

Costs of Enforcement.  In the event (a) that Lender exercises any or all of its rights or remedies under the Pledge Agreement or any other Loan Documents as and when permitted thereby, or (b) of the bankruptcy, insolvency, rehabilitation or other similar proceeding in respect of any of Borrower, Mortgage Borrower, Principal, Senior Mezzanine Borrower or Maryland Owner or any constituent Persons of any of the foregoing or an assignment by Borrower, Mortgage Borrower, Principal, Senior Mezzanine Borrower or Maryland Owner or any constituent Persons of any of the foregoing for the benefit of its creditors, Borrower, its successors or assigns, shall be chargeable with and agrees to pay all costs of collection and defense, including reasonable attorneys’ fees and costs, incurred by Lender or Borrower in connection therewith and in connection with any appellate proceeding or post-judgment action involved therein, together with all required service or use taxes.

5.1.15

Estoppel Statement. 

(a)

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

-59-

(b)

Borrower shall use commercially reasonable efforts to deliver to Lender upon request, tenant estoppel certificates from each commercial tenant leasing space at the Properties in form and substance reasonably satisfactory to Lender provided that Borrower shall not be required to deliver such certificates with respect to all such tenants more frequently than two (2) times in any calendar year.

(c)

Within thirty (30) days of request by Borrower, Lender shall deliver to Borrower a statement setting forth the items described at (a)(i), (ii), (iii) and (iv) of this Section 5.1.15.

5.1.16

Loan Proceeds.  Borrower shall use the proceeds of the Loan received by it on the Closing Date only for the purposes set forth in Section 2.1.4 hereof.

5.1.17

Performance by Borrower. 

(a)

Borrower shall in a timely manner observe, perform and fulfill each and every covenant, term and provision of each Loan Document executed and delivered by, or applicable to, Borrower and shall not enter into or otherwise suffer or permit any amendment, waiver, supplement, termination or other modification of any Loan Document executed and delivered by, or applicable to, Borrower without the prior written consent of Lender.

(b)

Borrower shall cause Mortgage Borrower and Maryland Owner, in a timely manner, to observe, perform and fulfill each and every covenant, term and provision of each Mortgage Loan Document executed and delivered by, or applicable to, Mortgage Borrower and Maryland Owner, and shall not cause or permit Mortgage Borrower or Maryland Owner to enter into or otherwise suffer or permit any amendment, waiver, supplement, termination or other modification of any Mortgage Loan Document executed and delivered by, or applicable to, Mortgage Borrower and Maryland Owner without the prior written consent of Lender.

5.1.18

Confirmation of Representations.  Borrower shall deliver, in connection with any Securitization, (a) one (1) or more Officer’s Certificates certifying as to the accuracy of all representations made by Borrower in the Loan Documents as of the date of the closing of such Securitization, and (b) certificates of the relevant Governmental Authorities in all relevant jurisdictions indicating the good standing and qualification of Borrower, Mortgage Borrower, Maryland Owner, Principal, Senior Mezzanine Borrower and Indemnitor as of the date of the Securitization.

5.1.19

No Joint Assessment.  Borrower shall not cause or permit Mortgage Borrower or Maryland Owner to suffer, permit or initiate the joint assessment of any Individual Property (a) with any other real property constituting a tax lot separate from such Individual Property, and (b) which constitutes real property with any portion of such Individual Property which may be deemed to constitute personal property, or any other procedure whereby the lien of any taxes which may be levied against such personal property shall be assessed or levied or charged to such real property portion of the Individual Property.

-60-

5.1.20

Leasing Matters.

(a)

Borrower may permit Mortgage Borrower and Maryland Owner to enter into Leases or modify existing Leases demising a portion of any Individual Property less than or equal to the Relevant Leasing Threshold without Lender’s prior written approval provided such Leases shall be on commercially reasonable terms and shall not contain any terms which would materially affect Lender’s rights under the Loan Documents, and further provided that such Leases shall provide that (x) they are subordinate to the Mortgage encumbering the applicable Individual Property, (y) the tenant thereunder agrees to attorn to Mortgage Lender or any purchaser at a sale by foreclosure or power of sale, and (z) the tenant shall deliver all Rents payable thereunder directly to the Lockbox Account (or, such Lease is accompanied by a Tenant Direction Letter countersigned by the tenant and the applicable Individual Borrower or Maryland Owner, as applicable, directing such tenant to deliver all Rents payable thereunder directly to the Lockbox Account).

(b)

Borrower will not permit Mortgage Borrower or Maryland Owner to enter into a Lease or modify an existing Lease covering all or substantially all of any Individual Property without the prior written approval of Lender, which approval may be given or withheld in the sole discretion of Lender.  

(c )

Borrower will not permit Mortgage Borrower or Maryland Owner to enter into Leases or modify existing Leases demising a portion of any Individual Property greater than the Relevant Leasing Threshold without the prior written approval of Lender, provided, however, Lender shall not withhold such approval if Borrower, as applicable, delivers to Lender, together with its request for approval, an abstract or summary of the proposed Lease terms and an Officer’s Certificate certifying that the Leasing Conditions have been satisfied.

(d)

To the extent Lender’s written approval is required pursuant to this Section 5.1.20 to any Lease or modification (excluding a Lease for all or substantially all of an Individual Property, the approval of which is required pursuant to Section 5.1.20(b) hereof), Borrower’s written request therefor shall be delivered together with such materials reasonably requested by Lender in order to evaluate such request (it being acknowledged and agreed that no request for consent shall be effective unless and until such materials have been delivered to Lender) and shall conspicuously state, in large bold type, that “PURSUANT TO SECTION 5.1.20 OF THE LOAN AGREEMENT, THIS IS A REQUEST FOR LENDER’S CONSENT.  LENDER’S RESPONSE IS REQUESTED WITHIN TEN (10) BUSINESS DAYS.  LENDER’S FAILURE TO RESPOND WITHIN SUCH TIME PERIOD WILL ENABLE BORROWER TO DELIVER A SECOND NOTICE REQUESTING LENDER’S CONSENT”.  In the event Lender fails to approve or disapprove to such request within ten (10) Business Days’ of the effective date of such initial request, Borrower may deliver to Lender a second written request for approval, which second written request for approval shall conspicuously state, in large bold type, that “THIS IS A REQUEST FOR LENDER’S CONSENT.  LENDER’S CONSENT IS REQUESTED WITHIN FIVE (5) BUSINESS DAYS.  THE LEASE SHALL BE DEEMED APPROVED IF LENDER DOES NOT RESPOND TO THE CONTRARY WITHIN FIVE (5) BUSINESS DAYS’ OF LENDER’S RECEIPT OF THIS WRITTEN NOTICE”.  In the event that Lender fails to approve or disapprove the second written request within such five (5) Business Day period, then Lender’s 

-61-

consent shall be deemed to have been granted. Notwithstanding the foregoing to the contrary, Lender’s failure to approve or disapprove a written request from Borrower shall not constitute Lender’s deemed consent of such Lease unless such initial request for approval was delivered to Lender on or after January 15, 2010.   

(e)

Borrower shall furnish Lender with executed copies of all Leases.

(f)

Borrower shall cause Mortgage Borrower and Maryland Owner to (i) observe and perform the obligations imposed upon the lessor under the Leases in a commercially reasonable manner; (ii) enforce the terms, covenants and conditions contained in the Leases upon the part of the tenant thereunder to be observed or performed in a commercially reasonable manner and in a manner not to impair the value of the Individual Property involved except that, subject to the terms of this Section 5.1.20, no termination by Mortgage Borrower or Maryland Owner or acceptance of surrender by a tenant of any Lease shall be permitted without the written consent of Lender which consent may be withheld in the sole discretion of Lender; (iii) not collect any of the rents more than one (1) month in advance (other than security deposits); (iv) not execute any other assignment of lessor’s interest in the Leases or the Rents (except as contemplated by the Mortgage Loan Documents); (v) not alter, modify or change the terms of the Leases in a manner inconsistent with the provisions of the Mortgage Loan Documents; and (vi) execute and deliver at the request of Lender all such further assurances, confirmations and assignments in connection with the Leases as Lender shall from time to time reasonably require.  Notwithstanding the foregoing, Borrower may permit Mortgage Borrower and Maryland Owner to, without the prior written consent of Lender, terminate (or accept a surrender of) any Lease which demises less than the Relevant Leasing Threshold under any of the following circumstances:  (i) the tenant under said Lease is in default beyond any applicable grace and cure period, and Mortgage Borrower or Maryland Owner, as applicable, has the right to terminate such Lease; (ii) such termination is permitted by the terms of the Lease in question and Mortgage Borrower or Maryland Owner, as applicable, has secured an obligation from a third party to lease the space under the Lease to be terminated at a rental equal to or higher than the rental due under the Lease to be terminated; and (iii) if the tenant under the Lease to be terminated has executed a right under said Lease to terminate its Lease upon payment of a termination fee to Mortgage Borrower or Maryland Owner, as applicable, and has in fact terminated its Lease and paid said fee, Mortgage Borrower or Maryland Owner, as applicable, may accept said termination.

5.1.21

Alterations.  Subject to the rights of tenants to make alterations pursuant to the terms of their respective Leases, Borrower shall obtain Lender’s prior written consent prior to permitting Mortgage Borrower or Maryland Owner to perform any alterations to any Improvements, which consent shall not be unreasonably withheld or delayed except with respect to alterations that may have a material adverse effect on Borrower’s, Mortgage Borrower’s and/or Maryland Owner’s financial condition, the value of the applicable Individual Property or the Net Operating Income.  Notwithstanding the foregoing, Lender’s consent shall not be required in connection with any alterations that will not have a material adverse effect on Borrower’s, Mortgage Borrower’s and/or Maryland Owner’s financial condition, the value of the applicable Individual Property or the Net Operating Income, provided that such alterations are made in connection with (a) tenant improvement work performed pursuant to the terms of any Lease executed on or before the Closing Date, or any Lease executed after the Closing Date (to a 

-62-

Lessee that is not an Affiliate of Borrower, Mortgage Borrower or Maryland Owner) for which Lender’s approval was not required or was given, (b) tenant improvement work performed pursuant to the terms and provisions of a Lease and not adversely affecting any structural component of any Improvements, any utility or HVAC system contained in any Improvements or the exterior of any building constituting a part of any Improvements, (c) alterations performed in connection with the Restoration of an Individual Property after the occurrence of a Casualty or Condemnation in accordance with the terms and provisions of the Mortgage Loan Agreement, or (d) any alteration which costs less than both (i) the Threshold Amount (in the aggregate for all current alterations at the related Individual Property), and (ii) together with all other alterations currently being performed at the Properties, the Aggregate Threshold Amount, provided that, in all of the foregoing clauses (a) through (d), Borrower causes Mortgage Borrower or Maryland Owner, as applicable, to comply with the Alteration Conditions.  If the total unpaid amounts due and payable with respect to alterations to the Improvements at any Individual Property (other than such amounts to be paid or reimbursed by tenants under the Leases) shall at any time equal or exceed the Threshold Amount, Borrower, upon Lender’s request, shall promptly deliver to Lender as security for the payment of such total unpaid amounts and as additional security for Borrower’s obligations under the Loan Documents any of the following:  (A) cash, (B) U.S. Obligations, (C) other securities having a rating acceptable to Lender and that the applicable Rating Agencies have confirmed in writing will not, in and of itself, result in a downgrade, withdrawal or qualification of the initial, or, if higher, then current ratings assigned to any Securities or any class thereof in connection with any Securitization, or (D) a completion bond or an irrevocable letter of credit (payable on sight draft only) issued by a financial institution having a rating by S&P of not less than A-1+ if the term of such bond or letter of credit is no longer than three (3) months or, if such term is in excess of three (3) months, issued by a financial institution having a rating that is acceptable to Lender and that the applicable Rating Agencies have confirmed in writing will not, in and of itself, result in a downgrade, withdrawal or qualification of the initial, or, if higher, then current ratings assigned to any Securities or class thereof in connection with any Securitization.  Such security shall be in an amount equal to the excess of the total unpaid amounts with respect to alterations to the Improvements on the applicable Individual Property (other than such amounts to be paid or reimbursed by tenants under the Leases) over the Threshold Amount and, if cash, may be applied from time to time, at the option of Borrower, to pay for such alterations.  At the option of Lender, following the occurrence and during the continuance of an Event of Default, Lender may terminate any of the alterations work and use the deposit to restore the applicable Individual Property to the extent necessary to prevent any material adverse effect on the value of such Individual Property.  Notwithstanding the foregoing to the contrary, Borrower shall be relieved of its obligation to deposit such security, provided that (1) Mortgage Borrower is required to and does deposit such security under the Mortgage Loan, (2) Senior Mezzanine Borrower is required to and does deposit such security under the Senior Mezzanine Loan and (3) Lender receives evidence reasonably acceptable to Lender of the deposit of such security with Mortgage Lender or with Senior Mezzanine Lender.

5.1.22

Operation of Property. 

(a)

Borrower shall cause Mortgage Borrower and Maryland Owner to operate the Properties, in all material respects, in accordance with the Management Agreement (or Replacement Management Agreement) as applicable.  In the event that any Management 

-63-

Agreement expires or is terminated (without limiting any obligation of Borrower to obtain Lender’s consent to causing or permitting any termination or modification of the Management Agreement in accordance with the terms and provisions of this Agreement), Borrower shall promptly cause Mortgage Borrower and Maryland Owner to enter into a Replacement Management Agreement with Manager or another Qualifying Manager, as applicable.

(b)

Borrower shall cause Mortgage Borrower and Maryland Owner to:  (i) promptly perform and/or observe, in all material respects, all of the covenants and agreements required to be performed and observed by them under the Management Agreement and do all things necessary to preserve and to keep unimpaired its material rights thereunder; (ii) promptly notify Lender of any material default under the Management Agreement of which it is aware; and (iii) enforce the performance and observance of all of the covenants and agreements required to be performed and/or observed by Manager under the Management Agreement, in a commercially reasonable manner.

5.1.23

Mortgage Loan Reserve Funds.  Borrower shall cause Mortgage Borrower and Maryland Owner to deposit and maintain each of the Mortgage Loan Reserve Funds as more particularly set forth in Article VII of the Mortgage Loan Agreement, shall cause Senior Mezzanine Borrower to deposit and maintain each of the Senior Mezzanine Loan Reserve Funds as more particularly set forth in Article VII of the Senior Mezzanine Loan Agreement and to perform and comply with all the terms and provisions relating thereto.  Borrower grants to Lender a first-priority perfected security interest in Borrower’s interest in each of the Mortgage Loan Reserve Funds and Senior Mezzanine Loan Reserve Funds, if any, subject to the prior rights of Mortgage Lender and Senior Mezzanine Lender, as applicable, and any and all monies now or hereafter deposited in the Mortgage Loan Reserve Fund and Senior Mezzanine Loan Reserve Fund as additional security for payment of the Debt to the extent Borrower has an interest in same.  Subject to the qualifications regarding Borrower’s interest in the Mortgage Loan Reserve Funds and the Senior Mezzanine Loan Reserve Funds, if any, until expended or applied in accordance with the Mortgage Loan Documents, the Senior Mezzanine Loan Documents or the Loan Documents, as applicable, Borrower’s interest in the Mortgage Loan Reserve Funds and the Senior Mezzanine Loan Reserve Funds shall constitute additional security for the Debt and upon the occurrence of an Event of Default, Lender may, in addition to any and all other remedies available to Lender, apply any sums then present in any or all of the Mortgage Loan Reserve Funds and the Senior Mezzanine Loan Reserve Funds to the payment of the Debt in any order in its sole discretion.

5.1.24

Notices.  Borrower shall give notice, or cause notice to be given to Lender, promptly upon the occurrence of:

(a)

any Default, Mortgage Loan Default, Mortgage Loan Event of Default, Senior Mezzanine Loan Default, Senior Mezzanine Loan Event of Default;

(b)

any default or event of default under any Contractual Obligation of Borrower, or, to the knowledge of Borrower, Mortgage Borrower, Senior Mezzanine Borrower, Principal, Maryland Owner or Indemnitor that could reasonably be expected to have a material adverse effect on Borrower, the ability of Borrower to perform under the Loan Documents or the rights and remedies of Lender under the Loan Documents; and

-64-

(c)

a change in the business, operations, property or financial or other condition or prospects of Borrower, or, to the knowledge of Borrower, Mortgage Borrower, Senior Mezzanine Borrower, Principal, Maryland Owner or Indemnitor which could reasonably be expected to have a material adverse effect on Borrower, the ability of Borrower to perform under the Loan Documents or the rights and remedies of Lender under the Loan Documents.

5.1.25

Special Distributions

.  On each date on which amounts are required to be disbursed to Lender pursuant to the terms of the Cash Management Agreement or are required to be paid to Lender under any of the Loan Documents, Borrower shall exercise its rights under the Mortgage Borrower Company Agreement and the Maryland Owner Company Agreement to cause Mortgage Borrower and Maryland Owner to make to Borrower a distribution in an aggregate amount such that Lender shall receive the amount required to be disbursed to Lender on such date.

5.1.26

Curing

.  Lender shall have the right, but shall not have the obligation, to exercise Borrower’s rights under the Mortgage Borrower Company Agreement and the Maryland Owner Company Agreement (a) to cure a Mortgage Loan Default or Mortgage Loan Event of Default and (b) to satisfy any Liens, claims or judgments against the Properties (except for Liens permitted by the Mortgage Loan Documents), in the case of either (a) or (b), unless Borrower or Mortgage Borrower shall be diligently pursuing remedies to cure to Lender’s sole satisfaction and (b) Senior Mezzanine Borrower Company Agreement (a) to cure a Senior Mezzanine Loan Default or Senior Mezzanine Loan Event of Default and (b) to satisfy any Liens, claims or judgments against the Senior Mezzanine Collateral (except for Liens permitted by the Senior Mezzanine Loan Documents), in the case of either (a) or (b), unless Borrower or Senior Mezzanine Borrower shall be diligently pursuing remedies to cure to Lender’s sole satisfaction.  Borrower shall reimburse Lender on demand for any and all costs incurred by Lender in connection with curing any such Mortgage Loan Default or Mortgage Loan Event of Default, Senior Mezzanine Loan Default, Senior Mezzanine Loan Event of Default or satisfying any Liens, claims or judgments against any Individual Property or the Senior Mezzanine Collateral.

5.1.27

Embargoed Person.  Borrower has performed and shall perform reasonable due diligence to insure that at all times throughout the term of the Loan, including after giving effect to any Transfers permitted pursuant to the Loan Documents (but excluding, for purposes of the covenants being made by each of Borrower and Maryland Owner in this Section 5.1.27, any Person or Persons holding publicly traded shares in Indemnitor after the initial sale or offering thereof), and/or transfers or assignments of direct and/or indirect ownership interests in Inland Equity Investors, LLC (a) none of the funds or other assets of Borrower, Senior Mezzanine Borrower, Mortgage Borrower, Maryland Owner, Principal, Joint Venture Entity and/or Indemnitor constitute property of, or are beneficially owned, directly or indirectly, by any Embargoed Person; (b) no Embargoed Person has any interest of any nature whatsoever in Borrower, Senior Mezzanine Borrower, Mortgage Borrower, Maryland Owner, Principal, Joint Venture Entity and/or Indemnitor, as applicable, with the result that the investment in Borrower, Senior Mezzanine Borrower, Mortgage Borrower, Maryland Owner, Principal, Joint Venture Entity and/or Indemnitor, as applicable (whether directly or indirectly), is prohibited by law or the Loan is in violation of law; and (c) none of the funds of Borrower, Senior Mezzanine Borrower, Mortgage Borrower, Maryland Owner, Principal, Joint Venture Entity and/or Indemnitor, as applicable, have been derived from, or are the proceeds of, any unlawful activity, 

-65-

including money laundering, terrorism or terrorism activities, with the result that the investment in any of Borrower, Mortgage Borrower, Senior Mezzanine Borrower, Maryland Owner, Principal, Joint Venture Entity and/or Indemnitor, as applicable (whether directly or indirectly), is prohibited by law or the Loan is in violation of law, or may cause any Individual Property to be subject to forfeiture or seizure.

5.1.28

Senior Mezzanine Borrower Covenants

.  Borrower shall cause Senior Mezzanine Borrower to comply with all obligations with which Senior Mezzanine Borrower has covenanted to comply under the Senior Mezzanine Loan Agreement and all other Senior Mezzanine Loan Documents (including, without limitation, those certain affirmative and negative covenants set forth in Article V of the Senior Mezzanine Loan Agreement) whether the related Senior Mezzanine Loan Document has been repaid or otherwise terminated, unless otherwise consented to in writing by Lender.

5.1.29

Mortgage Borrower Covenants.  Borrower shall cause Mortgage Borrower and Maryland Owner to comply with all obligations with which Mortgage Borrower and Maryland Owner has covenanted to comply under the Mortgage Loan Agreement and all other Mortgage Loan Documents (including, without limitation, those certain affirmative and negative covenants set forth in Article V of the Mortgage Loan Agreement) whether the related Mortgage Loan Document has been repaid or otherwise terminated, unless otherwise consented to in writing by Lender.

5.1.30

Ground Leases. 

(a)

Borrower shall, at its sole cost and expense, promptly and timely cause Mortgage Borrower and Maryland Owner to perform and observe all the terms, covenants and conditions required to be performed and observed by Mortgage Borrower or Maryland Owner, as applicable, as lessee under each Ground Lease (including, but not limited to, the payment of all rent, additional rent, percentage rent and other charges required to be paid under each Ground Lease).

(b)

Borrower shall notify Lender promptly in writing of the occurrence of any default by Ground Lessor under any Ground Lease or the occurrence of any event that, with the passage or time or service of notice, or both, would constitute a default by Ground Lessor and the receipt by any Individual Mortgage Borrower or Maryland Owner of any notice (written or otherwise) from a Ground Lessor under any Ground Lease noting or claiming the occurrence of any default by Mortgage Borrower or Maryland Owner, as applicable, under any Ground Lease or the occurrence of any event that, with the passage of time or service of notice, or both, would constitute a default by Mortgage Borrower or Maryland Owner, as applicable, under any Ground Lease.  Borrower shall promptly deliver to Lender a copy of any such written notice of default.

(c)

Within ten (10) days after receipt of written demand by Lender, Borrower shall use reasonable efforts to obtain from Ground Lessor under each Ground Lease and furnish to Lender the estoppel certificate of Ground Lessor stating the date through which rent has been paid and whether or not there are any defaults thereunder and specifying the nature of such claimed defaults, if any.

-66-

(d)

Borrower shall cause Mortgage Borrower and Maryland Owner to promptly execute, acknowledge and deliver to Lender such instruments as may reasonably be required to permit Lender to cure any default under any Ground Lease or permit Lender to take such other action required to enable Lender to cure or remedy the matter in default and preserve the security interest of Lender under the Loan Documents with respect to each Ground Lease Property.  Each Individual Borrower hereby irrevocably appoints Lender as its true and lawful attorney-in-fact to do, in its name or otherwise, any and all acts and to execute any and all documents that are necessary to preserve any rights of Mortgage Borrower or Maryland Owner, as applicable, under or with respect to each Ground Lease, including, without limitation, the right to effectuate any extension or renewal of each Ground Lease, or to preserve any rights of Mortgage Borrower and Maryland Owner whatsoever in respect of any part of each Ground Lease (and the above powers granted to Lender are coupled with an interest and shall be irrevocable).

(e)

Notwithstanding anything to the contrary contained in this Agreement with respect to each Ground Lease:

(i)

Borrower shall not permit Mortgage Borrower or Maryland Owner, without Lender’s prior written consent, to elect to treat the Ground Lease as terminated under Subsection 365(h)(l) of the Bankruptcy Code.  Any such election made without Lender’s prior written consent shall be void.

(ii)

As security for the Debt, each of Borrower unconditionally assigns, transfers and sets over to Lender all of Borrower’s claims and rights to the payment of damages arising from any rejection by the lessor under the Ground Lease under the Bankruptcy Code.  Lender and Borrower shall proceed jointly or in the name of Borrower in respect of any claim, suit, action or proceeding relating to the rejection of the Ground Lease, including, without limitation, the right to file and prosecute any proofs of claim, complaints, motions, applications, notices and other documents in any case in respect of lessor under the Bankruptcy Code.  This assignment constitutes a present, irrevocable and unconditional assignment of the foregoing claims, rights and remedies, and shall continue in effect until all of the Debt shall have been satisfied and discharged in full.  Any amounts received by Lender or Borrower as damages arising out of the rejection of the Ground Lease as aforesaid may be applied by Lender to all costs and expenses of Lender (including, without limitation, attorney’s fees and costs) incurred in connection with the exercise of any of its rights or remedies in accordance with the applicable provisions of this Agreement.  The foregoing assignment is expressly subject to any similar assignment in favor of Mortgage Lender contained in the Mortgage Loan Documents.

(iii)

If any action, proceeding, motion or notice shall be commenced or filed in respect of any lessor of all or any part of the Ground Lease Property in connection with any case under the Bankruptcy Code, Lender and Borrower shall, subject to any similar control rights in favor of Mortgage Lender pursuant to the Mortgage Loan Documents cooperatively, conduct and control any such litigation with counsel agreed upon between Borrower and Lender in connection with such litigation at Borrower’s sole cost and expense.  Borrower shall, upon demand, pay to Lender all costs and expenses (including reasonable attorneys’ fees and costs) actually paid or actually incurred by Lender in 

-67-

connection with the cooperative prosecution or conduct of any such proceedings.  All such costs and expenses shall be secured by the lien of the related Pledge Agreement and the other Loan Documents.

(iv)

Borrower shall promptly, after obtaining knowledge of such filing notify Lender orally of any filing by or against the lessor under the Ground Lease of a petition under the Bankruptcy Code.  Borrower shall thereafter promptly give written notice of such filing to Lender, setting forth any information available to Borrower as to the date of such filing, the court in which such petition was filed, and the relief sought in such filing.  Borrower shall promptly deliver to Lender any and all notices, summonses, pleadings, applications and other documents received by Borrower in connection with any such petition and any proceedings relating to such petition.

5.1.31

REOA.  Borrower hereby covenants and agrees with Lender with respect to the REOA as follows:

(a)

Borrower shall not, without Lender’s prior written consent, permit Mortgage Borrower or Maryland Owner to materially amend, modify or supplement, or consent to or suffer the material amendment, modification or supplementation of any REOA except that Lender shall not unreasonably withhold its consent to any amendment or modification which will not be deemed to have a material adverse effect on the use, value or operation of any Individual Property or Borrower’s ability to pay the Monthly Debt Service Payment Amount including the payment due on the Maturity Date;

(b)

Borrower shall cause Mortgage Borrower and Maryland Owner to pay all charges and other sums to be paid by Mortgage Borrower and Maryland Owner pursuant to the terms of each REOA as the same shall become due and payable and prior to the expiration of any applicable grace period therein provided.  After prior written notice to Lender, Borrower may, at Borrower’s own expense, contest by appropriate legal proceeding, promptly initiated and conducted in good faith and with due diligence, the amount or validity or application in whole or in part of any charges required to be paid by Mortgage Borrower or Maryland Owner pursuant to any REOA, provided that (i) no Event of Default has occurred and remains uncured; (ii) such proceeding shall be permitted under and be conducted in accordance with the provisions of such REOA and any other instrument to which Mortgage Borrower or Maryland Owner, as applicable, is subject or by which the applicable Individual Property is bound and shall not constitute a default thereunder and such proceeding shall be conducted in accordance with all applicable statutes, laws and ordinances; (iii) the Individual Property and no part thereof or interest therein will be in danger of being sold, forfeited, terminated, cancelled or lost; (iv) the applicable REOA will not be in danger of being terminated; (v) Borrower shall promptly upon final determination thereof cause Mortgage Borrower and Maryland Owner to pay the amount of any such charges, together with all costs, interest and penalties which may be payable in connection therewith; (vi) such proceeding shall suspend the collection of such charges from Mortgage Borrower or Maryland Owner and the Individual Property; and (vii) Borrower shall cause Mortgage Borrower and Maryland Owner to furnish such security as may be required in the proceeding to insure the payment of any such charges, together with all interest and penalties thereon.  Notwithstanding the foregoing to the contrary, Borrower shall be relieved of its obligation to deposit such security, provided that (1) Mortgage Borrower or Senior Mezzanine 

-68-

Borrower is required to and does deposit such security under the Mortgage Loan or the Senior Mezzanine Lender and (2) Lender receives evidence reasonably acceptable to Lender of the deposit of such security with Mortgage Lender or Senior Mezzanine Lender;

(c )

Borrower shall cause Mortgage Borrower and Maryland Owner to comply, in all material respects, with all of the terms, covenants and conditions on the Mortgage Borrower’s and Maryland Owner’s part to be complied with pursuant to terms of each REOA;

(d)

Borrower shall cause Mortgage Borrower and Maryland Owner to take all actions as may be necessary from time to time to preserve and maintain each REOA in accordance with applicable laws, rules and regulations;

(e)

Borrower shall not, without the prior written consent of Lender, as determined in its sole discretion, permit Mortgage Borrower and Maryland Owner to take (and hereby assigns to Lender any right it may have to take) any action to terminate, surrender, or accept any termination or surrender of, any REOA;

(f)

Borrower shall cause Mortgage Borrower and Maryland Owner to enforce, in a commercially reasonably manner, the obligations to be performed by the parties to any REOA (other than Borrower or Maryland Owner, as applicable);

(g)

Borrower shall promptly furnish to Lender any notice of default or other communication delivered in connection with any REOA by any party to such REOA or any third-party other than routine correspondence and invoices; and

(h)

Borrower shall not permit Mortgage Borrower and Maryland Owner to assign (other than to Lender) or encumber its rights under any REOA.

Section 5.2

Negative Covenants.

  From the Closing Date until payment and performance in full of all obligations of Borrower under the Loan Documents or the earlier release of the Collateral in accordance with the terms of this Agreement and the other Loan Documents, Borrower covenants and agrees with Lender that it will not do, directly or indirectly, any of the following:

5.2.1

Operation of Property.  Borrower shall not, without the prior written consent of Lender, permit Mortgage Borrower or Maryland Owner to terminate the Management Agreement or otherwise replace Manager or enter into any other management agreement with respect to any Individual Property unless (a) Manager is in default thereunder beyond any applicable grace or cure period, (b) Manager is replaced with a Qualifying Manager pursuant to a Replacement Management Agreement, and (c) in the event the replacement Manager is an Affiliate of Borrower, Mortgage Borrower, Maryland Owner, Senior Mezzanine Borrower, Principal or Indemnitor, Borrower shall have delivered an acceptable Additional Insolvency Opinion covering such replacement Manager if such Person was not covered by the Insolvency Opinion.  Lender agrees that its consent will not be unreasonably withheld, delayed or conditioned provided that (x) the Person chosen by Mortgage Borrower or Maryland Owner, as applicable, as the replacement Manager is a Qualifying Manager operating and managing the related Properties pursuant to a Replacement Management Agreement, and (y) Borrower shall deliver an acceptable Additional Insolvency Opinion covering such replacement Manager if such 

-69-

Person (1) is an Affiliate of Borrower, Mortgage Borrower, Maryland Owner, Senior Mezzanine Borrower, Principal or Indemnitor, and (2) was not covered by the Insolvency Opinion.

5.2.2

Liens. 

(a)

Borrower shall not create, incur, assume or suffer to exist any Lien on any of the Collateral, except Liens created by or permitted pursuant to the Loan Documents.

(b)

Borrower shall not permit or cause Senior Mezzanine Borrower, Mortgage Borrower or Maryland Owner to create, incur, assume or suffer to exist any Lien on any portion of any Individual Property or Senior Mezzanine Collateral, as applicable, or permit any such action to be taken, except:

(i)

Permitted Encumbrances;

(ii)

Liens created by or related to Indebtedness permitted pursuant to the Mortgage Loan Documents, Senior Mezzanine Loan Documents or the Loan Documents, as applicable; and

(iii)

Liens for Taxes or Other Charges not yet due (or that Borrower is contesting in accordance with the terms of Section 5.1.2 hereof or Mortgage Borrower or Maryland Owner is contesting in accordance with the terms of the Mortgage Loan Documents).  Borrower shall obtain Lender’s consent for any Lien for which Mortgage Borrower, Senior Mezzanine Borrower or Maryland Owner is required to obtain Mortgage Lender’s consent under the Mortgage Loan Agreement or the Senior Mezzanine Lender’s consent under the Senior Mezzanine Loan Agreement, as applicable.

5.2.3

Dissolution.  Borrower shall not (a) engage in any dissolution, liquidation or consolidation or merger with or into any other business entity, (b) engage in any business activity not related to the ownership of the Collateral, (c) transfer, lease or sell, in one transaction or any combination of transactions, the assets or all or substantially all of the properties or assets of Borrower except to the extent permitted by the Loan Documents, (d) modify, amend, waive or terminate its organizational documents or its qualification and good standing in any jurisdiction or (e) cause Principal, Mortgage Borrower or Maryland Owner to (i) dissolve, wind up or liquidate or take any action, or omit to take an action, as a result of which Principal, Mortgage Borrower or Maryland Owner would be dissolved, wound up or liquidated in whole or in part, or (ii) amend, modify, waive or terminate the certificate of limited partnership or partnership agreement of Principal or the Organizational Documents of the Mortgage Borrower or Maryland Owner, in each case, without obtaining the prior written consent of Lender or Lender’s designee; or (f) cause the Senior Mezzanine Borrower to (i) dissolve, wind up or liquidate or take any action, or omit to take an action, as a result of which the Senior Mezzanine Borrower would be dissolved, wound up or liquidated in whole or in part, or (ii) amend, modify, waive or terminate the organizational documents of the Senior Mezzanine Borrower, in each case, without obtaining the prior written consent of Lender or Lender’s designee.

-70-

5.2.4

Change in Business. 

(a)

Borrower shall not enter into any line of business other than the ownership of the Collateral, or make any material change in the scope or nature of its business objectives, purposes or operations, or undertake or participate in activities other than the continuance of its present business. 

(b)

Borrower shall not allow Mortgage Borrower or Maryland Owner to enter into any line of business other than the ownership and operation of the applicable Individual Property, or make any material change in the scope or nature of its business objectives, purposes or operations, or undertake or participate in activities other than the continuance of its present business.

(c)

Borrower shall not allow Senior Mezzanine Borrower to enter into any line of business other than the ownership of the Mortgage Borrower, or make any material change in the scope or nature of its business objectives, purposes or operations, or undertake or participate in activities other than the continuance of its present business.  Nothing contained in this Section 5.2.4 is intended to expand the rights of Borrower contained in Section 5.2.10(d) hereof.

5.2.5

Debt Cancellation.  Borrower shall not cancel or otherwise forgive or release any claim or debt (other than termination of Leases in accordance herewith) owed to Borrower by any Person, except for adequate consideration and in the ordinary course of Borrower’s business.  In addition, Borrower shall not permit or cause Mortgage Borrower, Maryland Owner or Senior Mezzanine Borrower to cancel or otherwise forgive or release any material claim or debt (other than termination of Leases in accordance herewith) owed to Mortgage Borrower, Maryland Owner or Senior Mezzanine Borrower by any Person, except for adequate consideration and in the ordinary course of Mortgage Borrower’s, Mortgage Owner’s or Senior Mezzanine Borrower’s business.

5.2.6

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

5.2.7

Intentionally Omitted.

5.2.8

Ground Lease.

(a)

Borrower shall not, without Lender’s prior written consent, permit Mortgage Borrower or Maryland Owner to fail to exercise any option or right to renew or extend the term of any Ground Lease in accordance with the terms of the related Ground Lease, and shall give immediate written notice to Lender thereof; provided, however, Borrower shall not be required to cause Mortgage Borrower or Maryland Owner to exercise any particular such option or right to renew or extend to the extent Borrower shall have received the prior written consent 

-71-

of Lender (which consent may be withheld by Lender in its sole and absolute discretion) allowing Borrower to forego exercising such option or right to renew or extend.

(b)

Borrower shall not permit Mortgage Borrower or Maryland Owner to waive, excuse, condone or in any way release or discharge any Ground Lessor under any Ground Lease of or from such Ground Lessor’s material obligations, covenant and/or conditions under the related Ground Lease without the prior written consent of Lender.

(c )

Borrower shall not, without Lender’s prior written consent, permit Mortgage Borrower or Maryland Owner to surrender, terminate, forfeit, or suffer or permit the surrender, termination or forfeiture of, or change, modify or amend in a material or adverse manner, any Ground Lease.  Consent to one amendment, change, agreement or modification shall not be deemed to be a waiver of the right to require consent to other, future or successive amendments, changes, agreements or modifications.  Borrower shall cause any acquisition of Ground Lessor’s interest in any Ground Lease by Mortgage Borrower or Maryland Owner or any Affiliate of Mortgage Borrower or Maryland Owner to be accomplished in such a manner so as to avoid a merger of the interests or estates of lessor and lessee in such Ground Lease, unless prior written consent to such merger is granted by Lender.

(d)

With respect to each of the two (2) Ground Leases comprising the University Individual Property, Borrower shall not permit Mortgage Borrower to provide the Ground Lessor thereunder with notice (written or otherwise) of its intent to opt-out of an Extension Term (as such term is defined in each of the aforementioned Ground Leases) under such Ground Leases.

5.2.9

ERISA.

(a)

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

(b)

Borrower further covenants and agrees to deliver to Lender such certifications or other evidence from time to time throughout the term of the Loan, as requested by Lender in its sole discretion, that (A) Borrower is not and does not maintain, an “employee benefit plan” as defined in Section 3(3) of ERISA, which is subject to Title I of ERISA, or a “governmental plan” within the meaning of Section 3(32) of ERISA; (B) Borrower is not subject to any state statute regulating investment of, or fiduciary obligations with respect to governmental plans; and (C) one or more of the following circumstances is true:

(i)

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

(ii)

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

-72-

(iii)

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

5.2.10

Transfers. 

(a)

Unless such action is permitted by the provisions of this Section 5.2.10, Borrower agrees that it will not (i) sell, assign, mortgage, grant, pledge, assign, grant options with respect to, transfer or otherwise dispose of its legal or beneficial interests in any Individual Property, the Senior Mezzanine Collateral or the Collateral or any part thereof or permit Senior Mezzanine Borrower, Principal, Mortgage Borrower or Maryland Owner to do any of the foregoing other than pursuant to space leases permitted under, and entered into in accordance with, Section 5.1.20 hereof (or Section 5.1.20 of the Mortgage Loan Agreement with respect to Mortgage Borrower and Maryland Owner or Section 5.1.20 of the Senior Mezzanine Loan Agreement), (ii) permit any owner, directly or indirectly, of an ownership interest in the Collateral, the Senior Mezzanine Collateral or any Individual Property, to transfer or dispose of such interest, whether by transfer of stock or other interest in a Restricted Party, or otherwise, (iii) incur Indebtedness (other than the Indebtedness permitted pursuant to the terms of this Agreement), or permit Mortgage Borrower or Maryland Borrower to incur Indebtedness (other than Indebtedness permitted pursuant to the terms of the Mortgage Loan Agreement) or permit Senior Mezzanine Borrower to incur Indebtedness (other than Indebtedness permitted pursuant to the terms of the Senior Mezzanine Loan Agreement), (iv) mortgage, hypothecate or otherwise encumber or grant a security interest in the Collateral, the Senior Mezzanine Collateral, any Individual Property or any part thereof, (v) sell, assign, convey, transfer, mortgage, encumber, grant a security interest in, or otherwise transfer or dispose of any direct or indirect ownership interest in any Restricted Party or permit any owner of an interest in a Restricted Party to do the same, or (vi) file, or permit Senior Mezzanine Borrower, Mortgage Borrower or Maryland Owner to file, a declaration of condominium with respect to any Individual Property (any of the foregoing transactions, a “Transfer”).  For avoidance of doubt, except as expressly set forth in Section 5.2.10(d) below, no assumption of all or any portion of the Loan shall be permitted without Lender’s prior written consent, such consent to be granted or withheld in Lender’s sole and absolute discretion.

(b)

For purposes hereof, a “Transfer” shall not include (i) any public issuance, sale or transfer of non-controlling interests in Inland Western Retail Real Estate Trust, Inc., (ii) transfer by devise or descent or by operation of law upon the death of a member or partner of Borrower, Senior Mezzanine Borrower, Mortgage Borrower, Principal or Maryland Owner, or (iii) the transfer of direct or indirect equity interests in Inland Equity Investors, LLC or in Inland Equity, LLC by the current holders thereof or their respective successors, transferees and assigns.

(c )

Notwithstanding the provisions of this Section 5.2.10 to the contrary, Lender’s consent shall not be required in connection with one or a series of Transfers, of up to forty-nine percent (49%) of the stock, the partnership interests or the membership interests (as the case may be) in a Restricted Party; provided, however, no such Transfer shall result in the change of Control in the Restricted Party, and as a condition to each such Transfer, Lender shall receive not less than thirty (30) days prior notice of such proposed Transfer.  If after giving effect to any such Transfer, more than forty-nine percent (49%) in the aggregate of direct or indirect interests in a Restricted Party are owned by any Person and its Affiliates that owned less than 

-73-

forty-nine percent (49%) direct or indirect interest in such Restricted Party as of the Closing Date, Borrower shall, no less than thirty (30) days prior to the effective date of any such Transfer, deliver to Lender an Additional Insolvency Opinion acceptable to Lender and the Rating Agencies.  In addition, at all times, Indemnitor must continue to (i) Control each Restricted Party, and (ii) own, directly or indirectly, not less than fifty-one percent (51%) legal and beneficial interest in each Restricted Party.  Notwithstanding anything contained in this Section 5.2.10(c), no Transfer of any direct ownership interests in Borrower, any Individual Mortgage Borrower, Maryland Owner, Principal or any Senior Mezzanine Borrower shall be permitted.

(d)

At any time after the first (1st) anniversary of the first (1st) Payment Date, Lender shall not withhold its consent to a one (1) time Transfer of all of the Properties and in the equity of Mortgage Borrower, Senior Mezzanine Borrower, Principal and Maryland Owner that results in an assumption of the entire Loan, the Senior Mezzanine Loan and Mortgage Loan, provided that Lender receives sixty (60) days’ prior written notice of such Transfer and further provided that the following additional conditions are satisfied:

(i)

the New Mortgage Borrower, New Senior Mezzanine Borrower  and the New Mezzanine Borrower, (collectively the “Transferee”) shall each be a Special Purpose Entity which at the time of such transfer will be in compliance with, and must be able to satisfy all of, the representations, warranties and covenants contained in Section 4.1.30, Section 4.1.36, Section 5.1.27 and Section 5.2.9 and corresponding provisions of the Mortgage Loan Agreement, and Senior Mezzanine Loan Agreement, as applicable, and which shall have assumed in writing (subject to the terms of Section 9.4 hereof) and agreed to comply with all the terms, covenants and conditions set forth in this Loan Agreement and the other Loan Documents, the Mortgage Loan Documents and Senior Mezzanine Loan Documents, as applicable, expressly including, without limitation the representations, warranties and covenants contained in Section 4.1.30, Section 4.1.35, Section 5.1.1 and Section 5.1.27 hereof, and corresponding provisions of the Mortgage Loan Agreement and Senior Mezzanine Loan Agreement, as applicable;

(ii)

Borrower shall deliver confirmation in writing from the Rating Agencies that such proposed Transfer will not cause a downgrading, withdrawal, reduction or qualification of the ratings in effect immediately prior to such Transfer for the Securities, or any class thereof, issued in connection with a Securitization which are then outstanding;

(iii)

Transferee and Transferee’s Principals shall, as of the date of such transfer, have an aggregate net worth and liquidity reasonably acceptable to Lender;

(iv)

Transferee or Transferee’s Principals must have demonstrated expertise in owning and operating properties similar in location, size, class and operation to the Properties, which expertise shall be reasonably determined by Lender;

(v)

Transferee, Transferee’s Principals and all other entities which may be owned or Controlled directly or indirectly by Transferee’s Principals (“Related Entities”) must not have been party to any bankruptcy proceedings, voluntary or 

-74-

involuntary, made an assignment for the benefit of creditors or taken advantage of any insolvency act, or any act for the benefit of debtors within seven (7) years prior to the date of the proposed Transfer;

(vi)

Without limiting the generality of Section 5.2.10(d)(i), New Mezzanine Borrower shall assume all of the obligations of Borrower under the Loan Documents in a manner satisfactory to Lender in all respects, including, without limitation, by entering into an assumption agreement in form and substance reasonably satisfactory to Lender;

(vii)

There shall be no material litigation or regulatory action pending or threatened against Transferee, Transferee’s Principals or Related Entities which is not reasonably acceptable to Lender;

(viii)

Each Individual Property shall be managed by a Qualifying Manager pursuant to a Replacement Management Agreement;

(ix)

Transferee, Transferee’s Principals and Related Entities shall not have defaulted under its or their obligations with respect to any other Indebtedness in a manner which is not reasonably acceptable to Lender;

(x)

no Event of Default shall have occurred and be continuing and no Default or Event of Default shall otherwise occur as a result of such Transfer;

(xi)

Borrower shall deliver, at its sole cost and expense, an endorsement to each existing UCC Title Insurance Policy, as modified by the assumption agreement, as a valid first lien on the Collateral and naming New Mezzanine Borrowers as owner of the Collateral, which endorsement shall insure that, as of the date of the recording of the assumption agreement, shall not be subject to any additional exceptions or liens other than those contained in the relevant UCC Title Insurance Policy issued on the date hereof and the Permitted Encumbrances relating thereto;

(xii)

Borrower or Transferee, at its sole cost and expense, shall deliver to Lender an Additional Insolvency Opinion reflecting such Transfer satisfactory in form and substance to Lender, which Additional Insolvency Opinion may be relied upon by Lender, the Rating Agencies and their respective counsel, agents and representatives with respect to the proposed transaction, including, without limitation, Transferee;

(xiii)

Borrower or Transferee, at its sole costs and expense, shall deliver to Lender a fraudulent conveyance opinion reflecting such Transfer, which fraudulent conveyance opinion may be relied upon by Lender, the Rating Agencies and their respective counsel, agents and representatives with respect to the proposed transaction, including, without limitation, Transferee;

(xiv)

Transferee, at its sole cost and expense, shall deliver opinions regarding existence, authority and enforceability, which opinions may be relied upon by Lender, the Rating Agencies and their respective counsel, agents and representatives with respect to the proposed transaction;

-75-

(xv)

Transferee and Transferee’s Principals shall deliver (1) all organizational documentation reasonably requested by Lender, which shall be reasonably acceptable to Lender, and (2) all certificates, agreements and covenants reasonably required by Lender;

(xvi)

Prior to any release of Indemnitor, one (1) or more substitute indemnitors reasonably acceptable to Lender shall have assumed all of the liabilities and obligations of Indemnitor under the Indemnification Agreement executed by Indemnitor or execute a replacement guaranty reasonably satisfactory to Lender;

(xvii)

if the Senior Mezzanine Loan is still outstanding, Senior Mezzanine Borrower has complied with all of the terms and conditions set forth in the Senior Mezzanine Loan Documents with respect to the Transfer and assumption of the Senior Mezzanine Loan;

(xviii)

Borrower shall have paid an assumption fee equal to one percent (1.0%) of the then outstanding principal balance of the Loan; 

(xix)

Borrower shall pay (or cause to be paid) any and all reasonable out-of-pocket costs actually incurred by Lender in connection with such Transfer (including, without limitation, Lender’s reasonable counsel fees and disbursements) and all recording fees, title insurance premiums and mortgage and intangible taxes and the fees and expenses of the Rating Agencies pursuant to clause (b) above; and

(xx)

Mortgage Loan Borrower shall have complied with all terms and conditions set forth in the Mortgage Loan Documents with respect to the Transfer and the assumption of the Mortgage Loan.

Lender shall approve or disapprove any proposed Transfer governed by this Section 5.2.10(d) within thirty (30) days of Lender’s receipt of a written notice from Borrower requesting Lender’s approval, provided such notice includes all information necessary to make such decision, and further provided that such written notice from Borrower shall conspicuously state, in large bold type, that “PURSUANT TO SECTION 5.2.10(D) OF THE LOAN AGREEMENT, A RESPONSE IS REQUIRED WITHIN THIRTY (30) DAYS’ OF LENDER’S RECEIPT OF THIS WRITTEN NOTICE”.  If Lender fails to disapprove any proposed Transfer within such period, Borrower shall provide a second written notice requesting approval, which written notice shall conspicuously state, in large bold type, that “PURSUANT TO SECTION 5.2.10(D) OF THE LOAN AGREEMENT, THE MATTER DESCRIBED HEREIN SHALL BE DEEMED APPROVED IF LENDER DOES NOT RESPOND TO THE CONTRARY WITHIN FIFTEEN (15) BUSINESS DAYS’ OF LENDER’S RECEIPT OF THIS WRITTEN NOTICE”.  Thereafter, if Lender does not disapprove the proposed Transfer within said fifteen (15) Business Day period, Lender's consent to the proposed Transfer shall be deemed to have been given; provided, however, and notwithstanding the foregoing, no such consent to the proposed Transfer shall be deemed given unless and until Borrower shall have delivered confirmation in writing from the Rating Agencies that such proposed Transfer will not cause a downgrading, withdrawal, reduction or qualification of the ratings in effect immediately prior to such Transfer for the Securities, or any class thereof, issued in connection with a Securitization which are then outstanding.

-76-

(e)

Each of Mortgage Borrower and Maryland Owner, without the consent of Lender, may grant easements, restrictions, covenants, reservations and rights of way in the ordinary course of business for access, parking, water and sewer lines, telephone and telegraph lines, electric lines and other utilities or for other similar purposes, provided that no such transfer, conveyance or encumbrance shall materially impair the utility and operation of the applicable Individual Property or materially adversely affect the value of such Individual Property or the Net Operating Income of such Individual Property.

(f)

Notwithstanding anything contained in this Section 5.2.10 to the contrary, restrictions on Transfers set forth herein or in the Pledge Agreement shall not apply to the direct or indirect pledge by Senior Mezzanine Borrower of the ownership interests in Mortgage Borrower, Borrower, Maryland Owner and Principal as security for the Senior Mezzanine Loan pursuant to the Senior Mezzanine Loan Agreement.

(g)

Borrower shall not consent to or permit a Transfer of the Properties by Mortgage Borrower as permitted under Sections 5.2.10(d) of the Mortgage Loan Agreement unless it obtains the prior consent of Lender.  Lender shall consent to such a Transfer if the provisions of Section 5.2.10(d) are complied with. 

(h)

Notwithstanding anything that may be contained in this Section 5.2.10 to the contrary, during the three (3) month period immediately following the Closing Date, Borrower covenants and agrees that in no event shall (i) any Transfers be permitted, including, without limitation, in instances where the consent of Lender is not otherwise required in connection therewith, and/or (ii) any members or holders of direct and/or indirect ownership interests in Inland Equity Investors, LLC assign or transfer any such direct and/or indirect ownership interests in Inland Equity Investors, LLC.

(i)

Borrower shall not consent to or permit a Transfer of the Properties by Senior Mezzanine Borrower as permitted under Sections 5.2.10(d) of the Senior Mezzanine Loan Agreement unless it obtains the prior consent of Lender.  Lender shall consent to such a Transfer if the provisions of Section 5.2.10(d) are complied with.

5.2.11

Material Agreements

.  Borrower shall not and shall cause or permit Senior Mortgage Borrower, Mortgage Borrower and Maryland Owner to, without Lender’s prior written consent:  (a) surrender or terminate any Material Agreement to which it is a party (unless the other party thereto is in material default and the termination of such agreement would be commercially reasonable), (b) increase or consent to the increase of the amount of any charges under any Material Agreement to which it is a party, except as provided therein or on an arms’-length basis and commercially reasonable terms; (c) otherwise modify, change, supplement, alter or amend, or waive or release any of its rights and remedies under any Material Agreement to which it is a party in any material respect, except on an arm’s-length basis and commercially reasonable terms or (d) enter into any Material Agreement which is not included as part of an Approved Annual Budget.

5.2.12

Limitation on Securities Issuances

.  Without limiting the generality of any applicable restrictions set forth in Section 5.2.10, none of Borrower or any Restricted Party other than Indemnitor shall issue any limited liability company interests, partnership interests, 

-77-

beneficial interests in a trust or other securities other than those that have been issued as of the date hereof.

5.2.13

Limitations on Distributions

.  Following the occurrence and during the continuance of an Event of Default, Borrower shall not make any distributions to its members.

5.2.14

Other Limitations

.  Prior to the payment in full of the Debt, neither Borrower nor any of its Affiliates shall, without the prior written consent of Lender (which may be furnished or withheld at its sole and absolute discretion), give its consent or approval to any of the following actions or items:

(a)

except as permitted by Lender herein (i) any refinance of the Mortgage Loan or the Senior Mezzanine Loan, (ii) any prepayment in full or defeasance of the Mortgage Loan, (iii) any Transfer of any or all of the Properties or any portion thereof, or (iv) any action in connection with or in furtherance of the foregoing;

(b)

creating, incurring, assuming or suffering to exist any additional Liens on any portion of the Properties except for Permitted Encumbrances.

(c )

any modification, amendment, consolidation, spread, restatement, waiver or termination of any of the Mortgage Loan Documents or Senior Mezzanine Loan Documents;

(d)

approve the terms of any Annual Budget;

(e)

the distribution to the direct or indirect partners, members, owners or shareholders of Mortgage Borrower or Maryland Owner of property other than cash;

(f)

except as set forth in an Approved Annual Budget or as permitted under the Mortgage Loan Documents, any (i) improvement, renovation or refurbishment of all or any part of the Properties to a materially higher standard or level than that of comparable properties in the same market segment and in the same geographical area as the respective Individual Property, (ii) removal, demolition or material alteration of the improvements or equipment on the Property or (iii) material increase in the square footage or gross leasable area of the improvements on the Properties if a material portion of any of the expenses in connection therewith are paid or incurred by Mortgage Borrower or Maryland Owner;

(g)

any material change in the method of conduct of the business of Borrower or any of its Affiliates (including the entering into of an operating lease with respect to any hotel), such consent to be given in the sole discretion of the Lender;

(h)

except as required by the Mortgage Loan Documents, any determination to restore any Individual Property after a Casualty or Condemnation;

5.2.15

Contractual Obligations

.  Other than the Loan Documents, the Borrower Operating Agreement (and the initial limited liability company interests in Borrower issued pursuant thereto), the Maryland Owner Company Agreements, if any, and the Mortgage Borrower Company Agreements, the Senior Mezzanine Borrower Company Agreement, neither Borrower nor any of its assets shall be subject to any Contractual Obligations, and Borrower 

-78-

shall not enter into any agreement, instrument or undertaking by which it or its assets are bound, except for such liabilities, not material in the aggregate, that are incidental to its activities as a member of Senior Mezzanine Borrower.

ARTICLE VI

INSURANCE; CASUALTY; CONDEMNATION

Section 6.1

Insurance.

 

(a)

Borrower shall cause Mortgagor Borrower to maintain at all times during the term of the Loan the insurance required under Section 6.1 of the Mortgage Loan Agreement, including, without limitation, meeting all insurer requirements thereunder.  In addition, Borrower shall cause Lender and Borrower to each to be named as an additional insured under the insurance policies described in Section 6.1(a), (ii), (vii), (viii) and (ix) of the Mortgage Loan Agreement.  In addition, Borrower shall cause Lender to be named as a loss payee together with Mortgage Lender, as their interest may appear but subject to the terms of the Intercreditor Agreement, under all other insurance policies required under Section 6.1(a) of the Mortgage Loan Agreement.  Borrower shall also cause all insurance policies required under this Section 6.1 to provide for at least thirty (30) days prior notice to Lender in the event of policy cancellation or material changes.  Borrower shall provide Lender with evidence of all such insurance required hereunder simultaneously with Mortgage Borrower’s and Maryland Owner’s provision of such evidence to Mortgage Lender.

(b)

If at any time Lender is not in receipt of written evidence that all insurance required hereunder is in full force and effect, Lender shall have the right, after five (5) Business Days written notice to Borrower, to take such action as Lender deems necessary to protect its interest in the Properties, including, without limitation, the obtaining of such insurance coverage as Lender in its sole discretion deems appropriate.  All premiums incurred by Lender in connection with such action or in obtaining such insurance and keeping it in effect shall be paid by Borrower to Lender upon demand and, until paid, shall be secured by the Collateral and shall bear interest at the Default Rate.  If Borrower fails in so insuring the Property or in so assigning and delivering the Policies, Lender may, at its option, obtain such insurance using such carriers and agencies as Lender shall elect from year to year and pay the premiums therefor, and Borrower will reimburse Lender for any premium so paid, with interest thereon as stated in the Note from the time of payment, on demand, and the amount so owing to Lender shall be secured by the Mortgages.  The insurance obtained by Lender may, but need not, protect Borrower’s, Mortgage Borrower’s and Maryland Owner’s interest and the coverage that Lender purchases may not pay any claim that Borrower, Mortgage Borrower or Maryland Owner makes or any claim that is made against Borrower, Mortgage Borrower or Maryland Owner in connection with any Individual Property.

Section 6.2

Casualty.

  If any Individual Property shall be damaged or destroyed, in whole or in part, by fire or other casualty (a “Casualty”), Borrower (a) shall give to Lender prompt written notice of such damage reasonably estimated by Borrower to cost more than One Hundred Thousand Dollars ($100,000.00) to repair, and (b) shall promptly commence and diligently prosecute the completion of the repair and restoration of such Individual Property 

-79-

as nearly as possible to the condition such Individual Property was in immediately prior to such fire or other casualty, with such alterations as may be reasonably approved by Lender and otherwise in accordance with Section 6.4 of the Mortgage Loan Agreement.

Section 6.3

Condemnation.

 

(a)

Borrower shall promptly give Lender notice of the actual or threatened commencement of any proceeding for the Condemnation of any Individual Property and shall cause Mortgage Borrower and Maryland Owner to deliver to Lender copies of any and all papers served in connection with such proceedings.  Lender may participate in any such proceedings, and Borrower shall from time to time deliver to Lender all instruments requested by it to permit such participation.  Borrower shall cause Mortgage Borrower and Maryland Owner to, at their expense, diligently prosecute any such proceedings, and shall consult with Lender, its attorneys and experts, and cooperate with them in the carrying on or defense of any such proceedings.  Notwithstanding any taking by any public or quasi-public authority through Condemnation or otherwise (including but not limited to any transfer made in lieu of or in anticipation of the exercise of such taking), Borrower shall continue to pay the Debt at the time and in the manner provided for its payment in the Note and in this Agreement and the Debt shall not be reduced until Net Liquidation Proceeds After Debt Service have been actually received and applied by Lender, after the deduction of expenses of collection, to the reduction or discharge of the Debt.  Lender shall not be limited to the interest paid on the Award by the condemning authority but shall be entitled to receive out of the Net Liquidation Proceeds After Debt Service at the rate or rates provided herein or in the Note.  If any Individual Property or any portion thereof is taken by a condemning authority, Borrower shall promptly cause Mortgage Borrower or Maryland Owner, as applicable, to promptly commence and diligently prosecute the Restoration of the applicable Individual Property or any portion thereof pursuant to Section 6.4 of the Mortgage Loan Agreement and otherwise comply with the provisions of Section 6.4 of the Mortgage Loan Agreement.

Section 6.4

Restoration.

  Borrower shall, or shall cause Mortgage Borrower to, deliver to Lender all reports, plans, specifications, documents and other materials that are delivered to Mortgage Lender under Section 6.4 of the Mortgage Loan Agreement and to otherwise comply in all respects with Section 6.4 of the Mortgage Loan Agreement in connection with a restoration of any Individual Property after a Casualty or Condemnation.

ARTICLE VII

RESERVE FUNDS

Section 7.1

Required Repair Funds.

  Borrower shall, or shall cause Mortgage Borrower to perform the Required Repairs (as defined in the Mortgage Loan Agreement), in accordance with all of the terms and conditions set forth in Section 7.1 of the Mortgage Loan Agreement.

Section 7.2

Tax and Insurance Reserve Fund.

  Borrower shall pay to Lender on each Payment Date (a) one-twelfth of the Taxes and Other Charges that Lender estimates will be payable during the next ensuing twelve (12) months in order to accumulate with Lender 

-80-

sufficient funds to pay all such Taxes and Other Charges at least thirty (30) days prior to their respective due dates and (b) one-twelfth of the Insurance Premiums that Lender estimates will be payable for the renewal of the coverage afforded by the Policies upon the expiration thereof in order to accumulate with Lender sufficient funds to pay all such Insurance Premiums at least thirty (30) days prior to the expiration of the Policies (said amounts in (a) and (b) above are hereinafter called the “Tax and Insurance Reserve Fund” and the account in which such amounts are held shall hereinafter be referred to as Borrower’s “Tax and Insurance Reserve Account”).  The Tax and Insurance Reserve Fund, the Monthly Debt Service Payment Amount and all other payments due hereunder or under the other Loan Documents, shall be added together and shall be paid as an aggregate sum by Borrower to Lender.  Lender will apply the Tax and Insurance Reserve Fund to payments of Taxes and Insurance Premiums required to be made by Borrower pursuant to this Agreement and under the Mortgages.  In making any payment relating to the Tax and Insurance Reserve Fund, Lender may do so according to any bill, statement or estimate procured from the appropriate public office (with respect to Taxes) or insurer or agent (with respect to Insurance Premiums) or from Borrower without inquiry into the accuracy of such bill, statement or estimate or into the validity of any tax, assessment, sale, forfeiture, tax lien or title or claim thereof; provided, however, Lender shall use reasonable efforts to pay such real property taxes sufficiently early to obtain the benefit of any available discounts to which it has knowledge.  If the amount of the Tax and Insurance Reserve Fund shall exceed the amounts due for Taxes, Other Charges and Insurance Premiums, Lender shall, in its sole discretion, return any excess to Borrower or credit such excess against future payments to be made to the Tax and Insurance Reserve Fund.  The Tax and Insurance Reserve Fund shall be held by Lender in an interest-bearing account and shall at Lender’s option be held in Eligible Account at an Eligible Institution.  In allocating such excess, Lender may deal with the Person shown on the records of Lender to be the owner of the Properties.  If at any time Lender reasonably determines that the Tax and Insurance Reserve Fund is not or will not be sufficient to pay Taxes, Other Charges and Insurance Premiums by the dates set forth above, Lender shall notify Borrower of such determination and Borrower shall increase their monthly payments to Lender by the amount that Lender estimates is sufficient to make up the deficiency at least thirty (30) days prior to delinquency of the Taxes or Insurance Premiums.  Any Tax and Insurance Reserve Funds remaining after the Debt has been paid in full shall be paid to Borrower.

Notwithstanding anything to the contrary hereinbefore contained, Lender shall waive the requirement set forth herein for Borrower to make deposits for the payment of Insurance Premiums into the Tax and Insurance Reserve Fund so long as (a) no Event of Default has occurred and is continuing, and (b) Borrower has provided Lender with satisfactory evidence (as determined by Lender) that each Individual Property is insured in accordance with Section 6.1 of this Agreement and the Mortgage Loan Agreement pursuant to a blanket insurance Policy covering substantially all real property owned directly or indirectly by Indemnitor, including, without limitation, the Properties.

7.2.1

Waiver of Tax Escrow

.  Borrower shall be relieved of its obligation to make deposits of Tax and Insurance Reserve Fund under Section 7.2 above, provided that (a) Mortgage Borrower is in compliance with Section 7.2 of the Mortgage Loan Agreement or Senior Mezzanine Borrower in compliance with Section 7.2 of the Senior Mezzanine Loan 

-81-

Agreement and (b) Lender receives evidence acceptable to it of the making of any required deposits and of the payment of all such Taxes and Insurance Premiums.

Section 7.3

Replacements and Replacement Reserve.

7.3.1

Replacement Reserve Fund.  Borrower Owner shall pay to Lender on the Closing Date the sum of Two Million Six Hundred Seventeen Thousand Three Hundred Two and 00/100 Dollars ($2,617,302.00) and on each Payment Date thereafter the sum of One Hundred Nine Thousand Fifty-Four and 27/100 Dollars ($109,054.27) (the “Replacement Reserve Monthly Deposit”), which amounts shall be deposited with and held by Lender to be due for replacements and repairs required to be made to the Properties during the calendar year (collectively, the “Replacements”).  Amounts so deposited shall hereinafter be referred to as Borrower’s “Replacement Reserve Fund” and the account in which such amounts are held shall hereinafter be referred to as Borrower’s “Replacement Reserve Account”.  Notwithstanding the preceding sentence, the amount of Replacement Reserve Funds on deposit in the Replacement Reserve Account at any given time shall not exceed Two Million Six Hundred Seventeen Thousand Three Hundred Two and No/100 Dollars ($2,617,302.00) in the aggregate (the “Replacement Reserve Cap”) and, accordingly, to the extent a Replacement Reserve Monthly Deposit would result in the aggregate amount of Replacement Reserve Funds in the Replacement Reserve Account to exceed the Replacement Reserve Cap, such Replacement Reserve Monthly Deposit shall be decreased by an amount equal to such excess.  Lender may reassess its estimate of the amount necessary for the Replacement Reserve Fund from time to time, and may increase the monthly amounts required to be deposited into the Replacement Reserve Fund upon thirty (30) days notice to Borrower if Lender determines in its reasonable discretion that an increase is necessary to maintain the proper maintenance and operation of the Properties.  

7.3.2

Disbursements from Replacement Reserve Account. 

(a)

Lender shall make disbursements from the Replacement Reserve Account to pay Borrower only for the costs of the Replacements.  Lender shall not be obligated to make disbursements from the Replacement Reserve Account to reimburse Borrower for the costs of routine maintenance to an Individual Property, replacement of inventory or for costs which are to be reimbursed from the Required Repair Fund or the Rollover Reserve Fund.

(b)

Lender shall, upon written request from Borrower and satisfaction of the requirements set forth in this Section 7.3.2, disburse to Borrower amounts from the Replacement Reserve Account necessary to pay for the actual approved costs of Replacements or to reimburse Borrower therefor, upon completion of such Replacements (or, upon partial completion in the case of Replacements made pursuant to Section 7.3.2(e)) as determined by Lender.  In no event shall Lender be obligated to disburse funds from the Replacement Reserve Account if a Default or an Event of Default exists.

(c )

Each request for disbursement from the Replacement Reserve Account shall be in a form specified or approved by Lender and shall specify (i) the specific Replacements for which the disbursement is requested, (ii) the quantity and price of each item purchased, if the Replacement includes the purchase or replacement of specific items, (iii) the price of all materials (grouped by type or category) used in any Replacement other than the 

-82-

purchase or replacement of specific items, and (iv) the cost of all contracted labor or other services applicable to each Replacement for which such request for disbursement is made.  With each request Borrower shall certify that all Replacements have been made in accordance with all applicable Legal Requirements of any Governmental Authority having jurisdiction over the applicable Individual Property to which Replacements are being provided and, unless Lender has agreed to issue joint checks as described below, each request shall include evidence of payment of all such amounts.  Each request for disbursement shall include copies of invoices for all items or materials purchased and all contracted labor or services provided.  Except as provided in Section 7.3.2(e), each request for disbursement from the Replacement Reserve Account shall be made only after completion of the Replacement for which disbursement is requested.  Borrower shall provide Lender evidence of completion satisfactory to Lender in its reasonable judgment.

(d)

Borrower shall pay all invoices in connection with the Replacements with respect to which a disbursement is requested prior to submitting such request for disbursement from the Replacement Reserve Account or, at the request of Borrower, Lender will issue joint checks, payable to Borrower and the contractor, supplier, materialman, mechanic, subcontractor or other party to whom payment is due in connection with a Replacement.  In the case of payments made by joint check, Lender may require a waiver of lien from each Person receiving payment prior to Lender’s disbursement from the Replacement Reserve Account.  In addition, as a condition to any disbursement, Lender may require Borrower to obtain lien waivers from each contractor, supplier, materialman, mechanic or subcontractor who receives payment in an amount equal to or greater than $100,000 for completion of its work or delivery of its materials.  Any lien waiver delivered hereunder shall conform to the requirements of applicable law and shall cover all work performed and materials supplied (including equipment and fixtures) for the applicable Individual Property by that contractor, supplier, subcontractor, mechanic or materialman through the date covered by the current reimbursement request (or, in the event that payment to such contractor, supplier, subcontractor, mechanic or materialmen is to be made by a joint check, the release of lien shall be effective through the date covered by the previous release of funds request).

(e)

If (i) the cost of a Replacement exceeds $100,000, (ii) the contractor performing such Replacement requires periodic payments pursuant to terms of a written contract, and (iii) Lender has approved in writing in advance such periodic payments, a request for reimbursement from the Replacement Reserve Account may be made after completion of a portion of the work under such contract, provided (A) such contract requires payment upon completion of such portion of the work, (B) the materials for which the request is made are on site at the applicable Individual Property and are properly secured or have been installed in such Individual Property, (C) all other conditions in this Agreement for disbursement have been satisfied, (D) funds remaining in the Replacement Reserve Account are, in Lender’s judgment, sufficient to complete such Replacement and other Replacements when required, and (E) if required by Lender, each contractor or subcontractor receiving payments under such contract shall provide a waiver of lien with respect to amounts which have been paid to that contractor or subcontractor.

(f)

Borrower shall not make a request for disbursement from the Replacement Reserve Account more frequently than once in any calendar month and (except in connection 

-83-

with the final disbursement) the total cost of all Replacements in any request shall not be less than $5,000.00.

(g)

Borrower shall make a capital contribution to Mortgage Borrower in an amount equal to any Replacement Reserve Funds disbursed to Borrower as and when such disbursements are made pursuant to this Section 7.3.2.  Borrower shall cause Mortgage Borrower to pay for the related Replacement.

7.3.3

Performance of Replacements. 

(a)

Borrower shall make Replacements when required in order to keep each Individual Property in condition and repair consistent with other first class, full service retail properties in the same market segment in the metropolitan area in which the respective Individual Property is located, and to keep each Individual Property or any portion thereof from deteriorating.  Borrower shall complete all Replacements in a good and workmanlike manner as soon as practicable following the commencement of making each such Replacement.

(b)

Lender reserves the right, at its option, to approve all contracts or work orders with materialmen, mechanics, suppliers, subcontractors, contractors or other parties providing labor or materials under contracts for an amount in excess of $100,000 in connection with the Replacements.  Upon Lender’s request, Borrower shall assign any contract or subcontract to Lender.

(c )

In the event Lender determines in its reasonable discretion that any Replacement is not being performed in a workmanlike or timely manner or that any Replacement has not been completed in a workmanlike or timely manner, and such failure continues to exist for more than thirty (30) days after notice from Lender to Borrower, Lender shall have the option to withhold disbursement for such unsatisfactory Replacement and to proceed under existing contracts or to contract with third parties to complete such Replacement and to apply the Replacement Reserve Fund toward the labor and materials necessary to complete such Replacement, without providing any prior notice to Borrower and to exercise any and all other remedies available to Lender upon an Event of Default hereunder.

(d)

In order to facilitate Lender’s completion or making of such Replacements pursuant to Section 7.3.3(c) above, Borrower shall cause Mortgage Borrower and Maryland Owner to grant Lender the right to enter onto any Individual Property and perform any and all work and labor necessary to complete or make such Replacements and/or employ watchmen to protect such Individual Property from damage, subject to the rights of Tenants.  All sums so expended by Lender, to the extent not from the Replacement Reserve Fund, shall be deemed to have been advanced under the Loan to Borrower and secured by the Pledge Agreement.  For this purpose Borrower constitutes and appoints Lender its true and lawful attorney-in-fact with full power of substitution to complete or undertake such Replacements in the name of Borrower.  Such power of attorney shall be deemed to be a power coupled with an interest and cannot be revoked but shall only be effective following an Event of Default.  Borrower empowers said attorney-in-fact as follows:  (i) to use any funds in the Replacement Reserve Account for the purpose of making or completing such Replacements; (ii) to make such additions, changes and corrections to such Replacements as shall be necessary or desirable to complete the 

-84-

Replacements; (iii) to employ such contractors, subcontractors, agents, architects and inspectors as shall be required for such purposes; (iv) to pay, settle or compromise all existing bills and claims which are or may become Liens against any Individual Property, or as may be necessary or desirable for the completion of such Replacements, or for clearance of title; (v) to execute all applications and certificates in the name of Borrower which may be required by any of the contract documents; (vi) to prosecute and defend all actions or proceedings in connection with any Individual Property or the rehabilitation and repair of any Individual Property; and (vii) to do any and every act which Borrower might do in its own behalf to fulfill the terms of this Agreement.

(e)

Nothing in this Section 7.3.3 shall:  (i) make Lender responsible for making or completing any Replacements; (ii) require Lender to expend funds in addition to the Replacement Reserve Fund to make or complete any Replacement; (iii) obligate Lender to proceed with any Replacements; or (iv) obligate Lender to demand from Borrower additional sums to make or complete any Replacement.

(f)

Borrower shall cause Mortgage Borrower and Maryland Owner to permit Lender and Lender’s agents and representatives (including, without limitation, Lender’s engineer, architect, or inspector) or third parties making Replacements pursuant to this Section 7.3.3 to enter onto each Individual Property during normal business hours (subject to the rights of tenants under their Leases) to inspect the progress of any Replacements and all materials being used in connection therewith, to examine all plans and shop drawings relating to such Replacements which are or may be kept at each Individual Property, and to complete any Replacements made pursuant to this Section 7.3.3.  Borrower shall cause Mortgage Borrower and Maryland Owner to cause all contractors and subcontractors to cooperate with Lender or Lender’s representatives or such other persons described above in connection with inspections described in this Section 7.3.3(f) or the completion of Replacements pursuant to this Section 7.3.3.

(g)

Lender may require an inspection of the Individual Property at Borrower’s expense prior to making a monthly disbursement in excess of $10,000 from the Replacement Reserve Account in order to verify completion of the Replacements for which reimbursement is sought.  Lender may require that such inspection be conducted by an appropriate independent qualified professional selected by Lender and/or may require a copy of a certificate of completion by an independent qualified professional acceptable to Lender prior to the disbursement of any amounts from the Replacement Reserve Account.  Borrower shall pay the expense of the inspection as required hereunder, whether such inspection is conducted by Lender or by an independent qualified professional.

(h)

The Replacements and all materials, equipment, fixtures, or any other item comprising a part of any Replacement shall be constructed, installed or completed, as applicable, free and clear of all mechanic’s, materialmen’s or other liens (except for those Liens existing on the date of this Agreement which have been approved in writing by Lender).

(i)

Before each disbursement from the Replacement Reserve Account, Lender may require Borrower to provide Lender with a search of title to the applicable Individual Property effective to the date of the disbursement, which search shows that no mechanic’s or 

-85-

materialmen’s liens or other liens of any nature have been placed against the applicable Individual Property since the date of recordation of the related Mortgage and that title to such Individual Property is free and clear of all Liens (other than the lien of the related Mortgage and any other Liens previously approved in writing by Lender, if any).

(j)

All Replacements shall comply with all applicable Legal Requirements of all Governmental Authorities having jurisdiction over the applicable Individual Property and applicable insurance requirements including, without limitation, applicable building codes, special use permits, environmental regulations, and requirements of insurance underwriters.

(k)

In addition to any insurance required under the Loan Documents or any Ground Lease, Borrower shall provide or cause to be provided workmen’s compensation insurance, builder’s risk, and public liability insurance and other insurance to the extent required under applicable law in connection with a particular Replacement.  All such policies shall be in form and amount reasonably satisfactory to Lender.  All such policies which can be endorsed with standard mortgagee clauses making loss payable to Lender or its assigns shall be so endorsed.  Certified copies of such policies shall be delivered to Lender.

7.3.4

Failure to Make Replacements.

(a)

It shall be an Event of Default under this Agreement if Borrower fails to comply with any provision of this Section 7.3 and such failure is not cured within thirty (30) days after notice from Lender; provided, however, if such failure is not capable of being cured within said thirty (30) day period, then provided that Borrower commences action to complete such cure and thereafter diligently proceeds to complete such cure, such thirty (30) day period shall be extended for such time as is reasonably necessary for Borrower in the exercise of due diligence, to cure such failure, but such additional period of time shall not exceed sixty (60) days.  Upon the occurrence of such an Event of Default, Lender may use the Replacement Reserve Fund (or any portion thereof) for any purpose, including but not limited to completion of the Replacements as provided in Section 7.3.3, or for any other repair or replacement to any Individual Property or toward payment of the Debt in such order, proportion and priority as Lender may determine in its sole discretion.  Lender’s right to withdraw and apply the Replacement Reserve Funds shall be in addition to all other rights and remedies provided to Lender under this Agreement and the other Loan Documents.

(b)

Nothing in this Agreement shall obligate Lender to apply all or any portion of the Replacement Reserve Fund on account of an Event of Default to payment of the Debt or in any specific order or priority.

7.3.5

Balance in the Replacement Reserve Account.  The insufficiency of any balance in the Replacement Reserve Account shall not relieve Borrower from its obligation to fulfill all preservation and maintenance covenants in the Loan Documents.  Any Replacement Reserve Funds remaining after the Debt has been paid in full shall be paid to Borrower.

7.3.6

Indemnification.  Borrower shall indemnify Lender and Servicer and hold Lender and Servicer harmless from and against any and all actions, suits, claims, demands, liabilities, losses, damages, obligations and costs and expenses (including litigation costs and 

-86-

reasonable attorneys fees and expenses) arising from or in any way connected with the performance of the Replacements unless the same are solely due to gross negligence or willful misconduct of Lender and/or Servicer.  Borrower shall assign to Lender all rights and claims Borrower may have against all persons or entities supplying labor or materials in connection with the Replacements; provided, however, that Lender may not pursue any such right or claim unless an Event of Default has occurred and remains uncured.

7.3.7

Waiver of Replacements Escrow.  Borrower shall be relieved of its obligation to make deposits of the Replacement Reserve Funds under Section 7.3.1 above, provided that (a) Mortgage Borrower is in compliance with Section 7.3 of the Mortgage Loan Agreement or Senior Mezzanine Borrower is in compliance with Section 7.3 of the Senior Mezzanine Loan Agreement and (b) Lender receives evidence acceptable to it of the making of such deposits and of the replacements and repairs to the Properties.

Section 7.4

Rollover Reserve.

7.4.1

Deposits to Rollover Reserve Fund.  Borrower shall pay to Lender on the Closing Date the sum of Eight Million Six Hundred Sixty Seven Thousand Fifty Eight and No/100 Dollars ($8,667,058.00) and on each Payment Date thereafter the sum of Three Hundred Sixty One Thousand One Hundred Twenty Seven and 42/100 Dollars ($361,127.42) (the “Monthly Rollover Reserve Fund Deposit”), which amounts shall be deposited with and held by Lender for tenant improvement and leasing commission obligations incurred following the date hereof.  Amounts so deposited shall hereinafter be referred to as the “Rollover Reserve Fund” and the account to which such amounts are held shall hereinafter be referred to as the “Rollover Reserve Account”.  Notwithstanding the aforementioned, the aggregate amount of the Rollover Reserve Fund shall not exceed Eight Million Six Hundred Sixty Seven Thousand Fifty Eight and No/100 Dollars ($8,667,058.00) in the aggregate on any Payment Date (after giving effect to the payment of the Monthly Rollover Reserve Fund Deposit) and accordingly, a Monthly Rollover Reserve Deposit shall be decreased to the extent necessary.

7.4.2

Withdrawal of Rollover Reserve Funds.  Provided no Event of Default has occurred and is continuing, Lender shall make disbursements from the Rollover Escrow Fund for tenant improvement and leasing commission obligations incurred by Borrower.  All such expenses shall be approved by Lender in its sole discretion.  Lender shall make disbursements as requested by Borrower on a quarterly basis in increments of no less than $5,000.00 upon delivery by Borrower of Lender’s standard form of draw request accompanied by copies of paid invoices for the amounts requested and, if required by Lender, lien waivers and releases from all parties furnishing materials and/or services in connection with the requested payment.  Lender may require an inspection of the Properties at Borrower’s expense prior to making a quarterly disbursement in order to verify completion of improvements for which reimbursement is sought.  Any Rollover Reserve Funds remaining after the Debt has been paid in full shall be paid to Borrower.

7.4.3

Waiver of Rollover Escrow

.  Borrower shall be relieved of its obligation to make deposits Rollover Funds under Section 7.4.1 above, provided that (a) Mortgage Borrower is in compliance with Section 7.4 of the Mortgage Loan Agreement or Senior Mezzanine Borrower is in compliance with Section 7.4 of the Senior Mezzanine Loan 

-87-

Agreement and (b) Lender receives evidence acceptable to it of the making of such deposits and of the payment of the tenant improvement costs and leasing commissions.

Section 7.5

Ground Lease Reserve Fund.

7.5.1

Deposits to Ground Lease Fund.  On each Payment Date after the Closing Date, Borrower shall pay to Lender one-twelfth of the Ground Rent that Lender estimates will be payable by the applicable Individual Mortgage Borrowers as lessees under the Ground Leases during the next ensuing twelve (12) months in order to accumulate with Lender sufficient funds to pay all such Ground Rent at least thirty (30) days prior to the respective due dates.  Notwithstanding the foregoing to the contrary, and provided that no Event of Default has occurred, with respect to the Ground Leases for the Miami Individual Property, the Fresno Individual Property and parcels #2 and #3 and the “Corner Parcel” of the Fullerton Individual Property, on the Closing Date, Borrower shall pay to Lender an amount equal to one month’s installment of the Ground Rent due under such Ground Leases and thereafter, unless an Event of Default occurs, no additional deposits of Ground Rent for the Ground Leases for the Miami Individual Property, the Fresno Individual Property and parcels #2 and #3 and the “Corner Parcel” of the Fullerton Individual Property shall be required hereunder.  In addition, on the Closing Date, Borrower shall pay to Lender an amount equal to any Ground Rent payable and outstanding under any Ground Lease within thirty (30) days of the first Payment Date.  Amounts so deposited shall hereinafter be referred to as the “Ground Lease Reserve Fund” and the account in which such amounts are held shall hereinafter be referred to as the “Ground Lease Reserve Account”.  

7.5.2

Release of Ground Lease Reserve Funds.  Lender shall have the right to apply amounts in the Ground Lease Reserve Fund to the payment of the Ground Rent.  In making any payment relating to the Ground Rent, Lender may do so according to any bill, statement or estimate procured from the Ground Lessor under each Ground Lease, without inquiry into the accuracy of such bill, statement or estimate.  If the amount of Ground Lease Reserve Funds shall exceed the amounts due for the Ground Rent under each Ground Lease for the immediately succeeding twelve (12) months as determined by Lender, Lender shall, in its sole discretion, return any excess to Borrower or credit such excess against future payments to be made to the Ground Lease Reserve Fund.  If at any time Lender reasonably determines that the Ground Lease Reserve Fund is not or will not be sufficient to pay the Ground Rent by the dates set forth above, Lender shall notify Borrower of such determination and Borrower shall increase its monthly payments to Lender by the amount that Lender estimates is sufficient to make up the deficiency at least thirty (30) days prior to the due date of the Ground Rent.  Any Ground Lease Reserve Funds remaining after the Debt has been paid in full shall be paid to Borrower.

7.5.3

Waiver of Ground Rent Escrow.  Borrower shall be relieved of its obligation to make deposits of the Ground Lease Reserve Funds under Section 7.5.1 above, provided that (a) Mortgage Borrower is in compliance with Section 7.5 of the Mortgage Loan Agreement or Senior Mezzanine Borrower is in compliance with Section 7.5 of the Senior Mezzanine Loan Agreement and (b) Lender receives evidence acceptable to it of the making of any required deposits and of payment of Ground Rent.

-88-

Section 7.6

Excess Cash Flow Reserve Fund.

7.6.1

Deposits to Excess Cash Flow Reserve Fund.  During a Cash Sweep Period, Borrower shall deposit with Lender all Excess Cash Flow in the Junior Mezzanine Loan Cash Management Account, which shall be held by Lender as additional security for the Loan and amounts so held shall be hereinafter referred to as the “Excess Cash Flow Reserve Fund” and the account to which such amounts are held shall hereinafter be referred to as the “Excess Cash Flow Reserve Account”.

7.6.2

Release of Excess Cash Flow Reserve Funds.  Upon the occurrence of a Cash Sweep Event Cure, all Excess Cash Flow Reserve Funds shall be deposited into the Junior Mezzanine Loan Cash Management Account to be disbursed in accordance with the Cash Management Agreement.  Any Excess Cash Flow Reserve Funds remaining after the Debt has been paid in full shall be paid (i) to Senior Mezzanine Lender to be held by Senior Mezzanine Lender pursuant to the Senior Mezzanine Loan Agreement for purposes similar to those described in this Section 7.6, or (ii) if the Senior Mezzanine Loan is not then outstanding, then to Borrower.

7.6.3

Waiver of Excess Cash Flow Escrow. Borrower shall be relieved of its obligation to make deposits of the Excess Cash Flow during a Cash Sweep Event under Section 7.6.1 above, provided that (a) Mortgage Borrower is in compliance with Section 7.6.1 of the Mortgage Loan Agreement or Senior Mezzanine Borrower is in compliance with Section 7.5 of the Senior Mezzanine Loan Agreement and (b) Lender receives evidence acceptable to it of the making of such deposits.

7.6.4

Transfer of Reserve Funds under Mortgage Loan

.  If Mortgage Lender and the Senior Mezzanine Lender waives any reserves or escrow accounts required in accordance with the terms of the Mortgage Loan Agreement or the Senior Mezzanine Loan Agreement, which reserves or escrow accounts are also required in accordance with the terms of this Article VII, or if the Mortgage Loan and/or the Senior Mezzanine Loan is refinanced or paid off in full (without a prepayment of the Loan, to the extent permitted hereunder) and Reserve Funds that are required hereunder are not required under the new mortgage loan, if any, then Borrower shall cause any amounts that would have been deposited into any reserves or escrow accounts in accordance with the terms of the Mortgage Loan Agreement and the Senior Mezzanine Loan Agreement to be transferred to and deposited with Lender in accordance with the terms of this Article VII (and Borrower shall enter into a cash management and lockbox agreement for the benefit of Lender substantially similar to the arrangement entered into at the time of the closing of the Mortgage Loan and the Senior Mezzanine Loan), and, if any letters of credit have been substituted by Mortgage Borrower or Senior Mezzanine Borrower for any such reserves or escrows as may be specifically permitted by the Mortgage Loan Agreement and the Senior Mezzanine Loan Agreement, then Borrower shall also cause such letters of credit to be transferred to Lender to be held by Lender upon the same terms and provisions as set forth in the Mortgage Loan Agreement and the Senior Mezzanine Loan Agreement, as applicable.

-89-

Section 7.7

Reserve Funds, Generally.

7.7.1

Borrower grants to Lender a first-priority perfected security interest in each of the Reserve Funds and any and all monies now or hereafter deposited in each Reserve Fund as additional security for payment of the Debt.  Until expended or applied in accordance herewith, the Reserve Funds shall constitute additional security for the Debt.

7.7.2

Upon the occurrence of an Event of Default, Lender may, in addition to any and all other rights and remedies available to Lender, apply any sums then present in any or all of the Reserve Funds to the payment of the Debt in any order in its sole discretion.

7.7.3

The Reserve Funds shall not constitute trust funds and may be commingled with other monies held by Lender.

7.7.4

The Reserve Funds shall be held in an Eligible Account in Permitted Investments as directed by Lender or Lender’s Servicer.  All interest earned on a Reserve Fund shall accrue in such Reserve Fund for the benefit of Borrower, Senior Mezzanine Borrower, Mortgage Borrower and Maryland Owner, but shall remain in and constitute a part of such Reserve Fund, and shall be disbursed in accordance with the terms hereof.  Borrower shall be responsible for payment of any federal, state or local income or other tax applicable to the interest earned on the Reserve Funds credited or paid to Borrower, Mortgage Borrower and/or Maryland Owner.

7.7.5

Borrower shall not, without obtaining the prior written consent of Lender, further pledge, assign or grant any security interest in any Reserve Fund or the monies deposited therein or permit any lien or encumbrance to attach thereto, or any levy to be made thereon, or any UCC-1 Financing Statements, except those naming Lender as the secured party, to be filed with respect thereto.

7.7.6

Neither Lender nor Lender’s Servicer shall be liable for any loss sustained on the investment of any funds constituting the Reserve Funds unless occasioned by the gross negligence or willful misconduct of Lender and/or Lender’s Servicer, as applicable.

7.7.7

Borrower shall indemnify Lender and Lender’s Servicer and hold Lender and Lender’s Servicer harmless from and against any and all actions, suits, claims, demands, liabilities, losses, damages, obligations and costs and expenses (including litigation costs and reasonable attorneys fees and expenses) arising from or in any way connected with the Reserve Funds or the performance of the obligations for which the Reserve Funds were established unless occasioned by the gross negligence or willful misconduct of Lender and/or Lender’s Servicer, as applicable, provided, however, it being acknowledged and agreed that any default in the payment under a Permitted Investment shall not constitute the gross negligence or willful misconduct of Lender and/or Lender’s Servicer.

-90-

ARTICLE VIII

DEFAULTS

Section 8.1

Event of Default.

(a)

Each of the following events shall constitute an event of default hereunder (an “Event of Default”):

(i)

if any portion of the Debt is not paid when due, except, with respect to the payment of the Monthly Debt Service Payment Amount, to the extent there are sufficient funds in the Junior Mezzanine Loan Cash Management Account to pay such Monthly Debt Service Payment Amount when due);

(ii)

if any of the Taxes or Other Charges are not paid prior to the date when the same become delinquent, except to the extent that Borrower is contesting the same in accordance with the terms of Section 5.1.2 hereof, or there are sufficient funds in the Tax and Insurance Reserve Fund to pay such Taxes or Other Charges and, Lender, Senior Mezzanine Lender or Mortgage Lender fails to or refuses to release the same from the Tax and Insurance Reserve Fund to the extent required under this Agreement or the Mortgage Loan Agreement, as applicable;

(iii)

if the Policies are not kept in full force and effect, or if certified copies of the Policies are not delivered to Lender within ten (10) days of request;

(iv)

if Borrower Transfers or otherwise encumbers any portion of the Collateral without Lender’s prior written consent (to extent such consent is required) or otherwise violates the provisions of Section 5.2.10 of this Agreement or the Pledge Agreement;

(v)

if any representation or warranty made by Borrower herein or in any other Loan Document, or in any report, certificate, financial statement or other instrument, agreement or document furnished to Lender shall have been false or misleading in any material respect as of the date the representation or warranty was made;

(vi)

if Borrower, Senior Mezzanine Borrower, Mortgage Borrower, Maryland Owner, or Principal shall make an assignment for the benefit of creditors;

(vii)

if a receiver, liquidator or trustee shall be appointed for Borrower, Senior Mezzanine Borrower, Mortgage Borrower, Maryland Owner or Principal or if Borrower, Senior Mezzanine Borrower, Mortgage Borrower, Maryland Owner or Principal shall be adjudicated a bankrupt or insolvent, or if any petition for bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law, or any similar federal or state law, shall be filed by or against, consented to, or acquiesced in by, Borrower, Senior Mezzanine Borrower, Mortgage Borrower, Maryland Owner or Principal, or if any proceeding for the dissolution or liquidation of Borrower, Senior Mezzanine Borrower, Mortgage Borrower, Maryland Owner or Principal shall be instituted; provided, however, if such appointment, adjudication, petition or proceeding was involuntary and not consented to 

-91-

by Borrower, Senior Mezzanine Borrower, Mortgage Borrower, Maryland Owner or Principal, upon the same not being discharged, stayed or dismissed within ninety (90) days;

(viii)

if Borrower attempts to assign its rights under this Agreement or any of the other Loan Documents or any interest herein or therein in contravention of the Loan Documents;

(ix)

if Indemnitor or any guarantor or indemnitor under any guaranty or indemnity issued in connection with the Loan shall make an assignment for the benefit of creditors or if a receiver, liquidator or trustee shall be appointed for Indemnitor or any guarantor or indemnitor under any guarantee or indemnity issued in connection with the Loan or if Indemnitor or such other guarantor or indemnitor shall be adjudicated a bankrupt or insolvent, or if any petition for bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law, or any similar federal or state law, shall be filed by or against, consented to, or acquiesced in by, Indemnitor or such other guarantor or indemnitor, or if any proceeding for the dissolution or liquidation of Indemnitor or such other guarantor or indemnitor shall be instituted; provided, however, if such appointment, adjudication, petition or proceeding was involuntary and not consented to by Indemnitor or such other guarantor or indemnitor, upon the same not being discharged, stayed or dismissed within ninety (90) days; provided, further, however, it shall be at Lender’s option to determine whether any of the foregoing shall be an Event of Default;

(x)

if Borrower breaches any of its respective negative covenants contained in Section 5.2 or any covenant contained in Section 4.1.30 hereof;

(xi)

with respect to any term, covenant or provision set forth herein which specifically contains a notice requirement or grace period, if Borrower shall be in default under such term, covenant or condition after the giving of such notice or the expiration of such grace period;

(xii)

if any of the assumptions contained in any Insolvency Opinion or Additional Insolvency Opinion are or shall become untrue in any material respect;

(xiii)

if (A) a breach or default by any Individual Mortgage Borrower or Maryland Owner under any condition or obligation contained in any Ground Lease is not cured within any applicable cure period provided therein, (B) there occurs any event or condition that gives the lessor under any Ground Lease a right to terminate or cancel such Ground Lease, or (C) any Ground Lease Property shall be surrendered or any Ground Lease shall be terminated or cancelled for any reason or under any circumstances whatsoever, or (D) any of the terms, covenants or conditions of any Ground Lease shall in any manner be modified, changed, supplemented, altered, or amended without the prior written consent of Lender;

(xiv)

If (A) a breach or a material default by any Individual Mortgage Borrower or Maryland Owner under any condition or obligation contained in any REOA is not cured within any applicable cure period provided therein, (B) there occurs any event or 

-92-

condition that gives any party to any REOA (other than the applicable Individual Borrower) the right to terminate or cancel such REOA and such event or condition is not cured within any applicable cure period under such REOA, or (C) any REOA is terminated or cancelled without Lender’s prior consent, or (D) any of the terms, covenants or conditions of any REOA shall in any manner be modified, changed, supplemented, altered, or amended without the prior written consent of Lender.

(xv)

if Borrower shall continue to be in Default under any of the terms, covenants or conditions of Section 9.1 hereof, or fails to cooperate with Lender in connection with a Securitization pursuant to the provisions of Section 9.1 hereof, for three (3) days after notice to Borrower from Lender;

(xvi)

if Borrower shall continue to be in Default under any of the other terms, covenants or conditions of this Agreement not specified in subsections (i) to (xv) above or (xvii) through (xx) below, for ten (10) days after notice to Borrower from Lender, in the case of any Default which can be cured by the payment of a sum of money, or for thirty (30) days after notice from Lender in the case of any other Default; provided, however, that if such non-monetary Default is susceptible of cure but cannot reasonably be cured within such thirty (30) day period and provided further that Borrower shall have commenced to cure such Default within such thirty (30) day period and thereafter diligently and expeditiously proceeds to cure the same, such thirty (30) day period shall be extended for such time as is reasonably necessary for Borrower in the exercise of due diligence to cure such Default, such additional period not to exceed ninety (90) days;

(xvii)

if there shall be default under any of the other Loan Documents beyond any applicable cure periods contained in such documents, whether as to Borrower, Mortgage Borrower, Maryland Owner, the Collateral or the Indemnitor or any Individual Property, or if any other such event shall occur or condition shall exist, if the effect of such event or condition is to accelerate the maturity of any portion of the Debt or to permit Lender to accelerate the maturity of all or any portion of the Debt;

(xviii)

the Liens created pursuant to any Loan Document shall cease to be a fully perfected enforceable first priority security interest;

(xix)

a Mortgage Loan Event of Default shall occur; or

(xx)

a Senior Mezzanine Loan Event of Default shall occur.

(b)

Upon the occurrence of an Event of Default (other than an Event of Default described in clauses (vi), (vii), (viii) or (ix) above) and at any time thereafter, in addition to any other rights or remedies available to it pursuant to this Agreement and the other Loan Documents or at law or in equity, Lender may take such action, without notice or demand, that Lender deems advisable to protect and enforce its rights against Borrower and the Collateral, including, without limitation, declaring the Debt to be immediately due and payable, and Lender may enforce or avail itself of any or all rights or remedies provided in the Loan Documents and any or all of the Collateral and may exercise all the rights and remedies of a secured party under the Uniform Commercial Code, as adopted and enacted by the State or States where any of the 

-93-

Collateral is located, against Borrower and any or all of the Collateral including, without limitation, all rights or remedies available at law or in equity; and upon any Event of Default described in clauses (vi), (vii), (viii) or (ix) above, the Debt and all other obligations of Borrower hereunder and under the other Loan Documents shall immediately and automatically become due and payable, without notice or demand, and Borrower hereby expressly waives any such notice or demand, anything contained herein or in any other Loan Document to the contrary notwithstanding.

Section 8.2

Remedies.

 

(a)

Upon the occurrence of an Event of Default, all or any one or more of the rights, powers, privileges and other remedies available to Lender against Borrower under this Agreement or any of the other Loan Documents executed and delivered by, or applicable to, Borrower or at law or in equity may be exercised by Lender at any time and from time to time, whether or not all or any of the Debt shall be declared due and payable, and whether or not Lender shall have commenced any foreclosure proceeding or other action for the enforcement of its rights and remedies under any of the Loan Documents with respect to all or any of the Collateral.  Any such actions taken by Lender shall be cumulative and concurrent and may be pursued independently, singularly, successively, together or otherwise, at such time and in such order as Lender may determine in its sole discretion, to the fullest extent permitted by law, without impairing or otherwise affecting the other rights and remedies of Lender permitted by law, equity or contract or as set forth herein or in the other Loan Documents.  Without limiting the generality of the foregoing, Borrower agrees that if an Event of Default is continuing (i) Lender is not subject to any “one action” or “election of remedies” law or rule and (ii) all liens and other rights, remedies or privileges provided to Lender shall remain in full force and effect until Lender has exhausted all of its remedies against the Collateral and the Collateral has been foreclosed, sold and/or otherwise realized upon in satisfaction of the Debt or the Debt has been paid in full.

(b)

With respect to Borrower and the Collateral, nothing contained herein or in any other Loan Document shall be construed as requiring Lender to resort to any portion of the Collateral for the satisfaction of any of the Debt in any preference or priority to any other portion of the Collateral, and Lender may seek satisfaction out of all of the Collateral, or any part thereof, in its absolute discretion in respect of the Debt.  In addition, to the extent permitted by applicable law, Lender shall have the right from time to time to partially foreclose upon the Collateral in any manner and for any amounts secured by the Pledge Agreement then due and payable as determined by Lender in its sole discretion including, without limitation, the following circumstances:  (i) in the event Borrower defaults beyond any applicable grace period in the payment of one or more scheduled payments of principal and interest, Lender may foreclose upon the Collateral to recover such delinquent payments, or (ii) in the event Lender elects to accelerate less than the entire outstanding principal balance of the Loan, Lender may foreclose upon the Collateral to recover so much of the principal balance of the Loan as Lender may accelerate and such other sums secured by the Collateral as Lender may elect.  Notwithstanding one or more partial foreclosures, the Collateral shall remain subject to the Pledge Agreement and the other Loan Documents to secure payment of sums secured by the Pledge Agreement and the other Loan Documents and not previously recovered.

-94-

(c)

Lender shall have the right from time to time to sever the Note and the other Loan Documents into one or more separate notes, pledges and other security documents (the “Severed Loan Documents”) in such denominations as Lender shall determine in its sole discretion for purposes of evidencing and enforcing its rights and remedies provided hereunder.  Borrower shall execute and deliver to Lender from time to time, promptly after the request of Lender, a severance agreement and such other documents as Lender shall request in order to effect the severance described in the preceding sentence, all in form and substance reasonably satisfactory to Lender.  Borrower hereby absolutely and irrevocably appoints Lender following the occurrence of an Event of Default as its true and lawful attorney, coupled with an interest, in its name and stead to make and execute all documents necessary or desirable to effect the aforesaid severance, Borrower ratifying all that its said attorney shall do by virtue thereof; provided, however, Lender shall not make or execute any such documents under such power until three (3) days after notice has been given to Borrower by Lender of Lender’s intent to exercise its rights under such power.  Borrower shall be obligated to pay any costs or expenses incurred in connection with the preparation, execution, recording or filing of the Severed Loan Documents, and the Severed Loan Documents shall not contain any representations, warranties or covenants not contained in the Loan Documents and any such representations and warranties contained in the Severed Loan Documents will be given by Borrower only as of the Closing Date.

Section 8.3

Remedies Cumulative; Waivers.

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

ARTICLE IX

SPECIAL PROVISIONS

Section 9.1

Securitization.

9.1.1

Sale of Notes and Securitization.  Borrower acknowledges and agrees that Lender may in one or more transactions sell all or any portion of its interest in the Loan and the Loan Documents, or issue one or more participations therein, or consummate one or more private or public securitizations of rated single- or multi-class securities (any such interests, portions of the Loan, participations or securities, the “Securities”) secured by or evidencing ownership interests in all or any portion of the Loan and the Loan Documents or a pool of assets that include the Loan and the Loan Documents (such sales, participations and/or securitizations, collectively, a “Securitization”).  Borrower agrees that each of Borrower, Senior Mezzanine 

-95-

Borrower, Mortgage Borrower, Maryland Owner, Principal, Indemnitor and their respective officers and representatives, shall, at Lender’s request, at no cost or expense to Lender, cooperate with Lender’s efforts to arrange for a Securitization in accordance with the market standards to which Lender customarily adheres and/or which may be required by prospective investors and/or the Rating Agencies in connection with any such Securitization.  Without limiting the foregoing, Borrower shall, at its sole cost and expense, upon request from Lender:

(a)

to the extent not already prepared and provided by or on behalf of Borrower, Mortgage Borrower, Maryland Owner, Senior Mezzanine Borrower, Principal, Indemnitor or Manager under this Agreement or in connection with the origination of the Loan, prepare and provide (or cause to be prepared and provided) any and all financial and other information (or any update thereto) with respect to any Individual Property, Borrower, any Individual Mortgage Borrower, Maryland Owner, Senior Mezzanine Borrower, Principal, Indemnitor, Manager, the Loan, the Mortgage Loan or the Senior Mezzanine Loan (including, without limitation, any financial data or financial statements required under Section 5.1.11 hereof) and any other information, that may be requested by Lender (for legal disclosure or marketing purposes) to (i) include in any Disclosure Documents, (ii) provide to the Rating Agencies or potential purchasers of Securities, (iii) include in any other operative documents relating to a Securitization, or (iv) facilitate any Securitization (such information provided pursuant to this clause (a) and other provisions of this Agreement and the other Loan Documents or in connection with the origination of the Loan, the “Provided Information”);

(b)

in connection with the provision of any Provided Information, prepare and deliver appropriate verification, written confirmation of the origin and/or accuracy of any such Provided Information and/or consents related to the Provided Information through letters of auditors or opinions of counsel of independent attorneys acceptable to Lender, prospective investors and/or the Rating Agencies;

(c )

assist in preparing descriptive materials for presentations to any or all of the Rating Agencies, and work with, and if requested, supervise, third-party service providers engaged by Borrower and approved by Lender, Mortgage Borrower, Maryland Owner, Principal, Senior Mezzanine Borrower, Indemnitor and their respective affiliates to obtain, collect, and deliver information requested or required by Lender, prospective investors and/or the Rating Agencies;

(d)

cooperate fully and in good faith with the preparation, completion, execution and delivery of any other Disclosure Document containing such Provided Information as may be customary for private or public offerings (as applicable) of securities similar to the Securities or as may be required by the SEC in connection therewith and comply with Section 5.1.11 hereof in connection therewith;

(e)

deliver (i) an Additional Insolvency Opinion and opinions with respect to due execution and enforceability of the Loan Documents and other opinions with respect to the Collateral, Borrower, Mortgage Borrower, Maryland Owner, Principal, Senior Mezzanine Borrower, Indemnitor and their respective Affiliates and the Loan Documents, including, without limitation, a so called “10b-5” opinion with respect to the Disclosure Documents, which counsel opinions shall be satisfactory to Lender, prospective investors and/or the Rating Agencies;

-96-

(f)

if required by any prospective investor and/or any Rating Agency, use commercially reasonable efforts to deliver such additional tenant estoppel letters, subordination agreements or other agreements from parties to agreements that affect the Collateral, which estoppel letters, subordination agreements or other agreements shall be satisfactory to Lender, prospective investors and/or the Rating Agencies;

(g)

make such representations and warranties as of the closing date of the Securitization with respect to the Collateral, Borrower, Mortgage Borrower, Maryland Owner, Principal, Senior Mezzanine Borrower, Indemnitor and the Loan Documents as may be requested by Lender, prospective investors and/or the Rating Agencies and consistent with the facts covered by such representations and warranties as they exist on the date thereof, including the representations and warranties made in the Loan Documents;

(h)

execute such restatements, amendments, supplements, replacements or other modifications to (i) the Loan Documents (including, without limitation, to change the Payment Date and/or interest accrual period to accord with the payment dates and/or interest accrual periods or (ii) the organizational documents of Borrower, Mortgage Borrower, Maryland Owner, Senior Mezzanine Borrower and/or Principal as may be requested by Lender in order to facilitate any Securitization, or to satisfy Rating Agency Requirements;

(i)

intentionally omitted;

(j)

intentionally omitted;

(k)

cause Indemnitor to execute and deliver an indemnity agreement in form and substance satisfactory to Lender and the placement agents or underwriters in connection with a Securitization, pursuant to which indemnity agreement Indemnitor shall agree to indemnify the placement agents or underwriters for the Covered Disclosure Information;

(l)

intentionally omitted;

(m)

review any information regarding the Properties, Borrower, Mortgage Borrower, Maryland Owner, Joint Venture Entity, Senior Mezzanine Borrower, Principal, Indemnitor, Manager and the Loan which is contained in any Disclosure Document;

(n)

cooperate fully and in good faith with the preparation, completion, execution and delivery of an auditor’s agreed-upon procedures letter issued by auditors engaged by Lender regarding such financial, operating and statistical data of Borrower, Mortgage Borrower, Maryland Owner, Principal, Senior Mezzanine Borrower, Indemnitor, Manager and the Properties set forth in the Disclosure Document, as Lender determines is necessary for legal disclosure or marketing purposes or to satisfy Rating Agency Requirements;

(o)

permit to be performed, with respect to each Individual Property, such site inspections, appraisals, market studies, structural engineering reports and Phase II environmental reports (if existing Phase I environmental reports recommend Phase II environmental reports), and other due diligence investigations of each Individual Property, in each case as Lender determines is necessary for legal disclosure or marketing purposes or to satisfy Rating Agency Requirements;

-97-

(p)

if requested by Lender, participate (including senior management of Indemnitor) in meetings with Rating Agencies and/or banks and potential investors;

(q)

in connection with any sale of an interest in the Loan to a foreign banking institution, provide such information regarding Borrower, Mortgage Borrower, Maryland Owner, Principal, Senior Mezzanine Borrower and Indemnitor (and the entities or persons ultimately controlling and/or signing for any of the foregoing) as may be required for regulatory purposes, including organizational documents, organizational charts, certified balance sheets, and copies of drivers’ licenses of signatories; and

(r )

supply to Lender such documentation, financial statements and reports in form and substance as required in order to comply with any applicable securities laws.

9.1.2

Loan Components.  Borrower covenants and agrees that in connection with any Securitization of the Loan, upon Lender’s request Borrower shall deliver one or more new component notes to replace the original note or modify the original note to reflect multiple components of the Loan (each a “Resizing Event”).  Lender agrees that such new notes or modified note shall, immediately after the Resizing Event, have the same initial weighted average coupon as the original note prior to such Resizing Event, notwithstanding that such new notes or modified note may, in connection with the application of principal to such new notes or modified note subsequently cause the weighted average coupon of such new notes or modified note to change and apply principal, interest rates and amortization of the Loan between such new components in a manner specified by Lender in its sole discretion such that the pricing and marketability of the Securities and the size of each class of Securities and the rating assigned to each such class by the Rating Agencies shall provide the most favorable rating levels and achieve the optimum bond execution for the Loan.  In connection with any Resizing Event, Borrower covenants and agrees to modify the Cash Management Agreement to reflect the newly created components.

9.1.3

Mezzanine Loans.  Notwithstanding the provisions of Section 9.1 to the contrary, Borrower covenants and agrees that after the Closing Date and prior to a Securitization of the Loan, Mortgage Loan or the Senior Mezzanine Loan, Lender shall have the right to create one or more additional mezzanine loans (each, a “New Mezzanine Loan”), to establish different interest rates and to reallocate the amortization, interest rate and principal balances (including, without limitation, the reallocation of the Release Amounts on a pro rata basis) of each of the Loan, the Mortgage Loan, the Senior Mezzanine Loan and any New Mezzanine Loan(s) amongst each other and to require the payment of the Loan, the Mortgage Loan, the Senior Mezzanine Loan and any New Mezzanine Loan(s) in such order of priority as may be designated by Lender such that the pricing and marketability of the Securities and the size of each class of Securities and the rating assigned to each class by the Rating Agencies shall provide the most favorable rating levels and achieve the optimum bond execution for the Loan; provided, that, Lender agrees that the Loan, the Mortgage Loan, the Senior Mezzanine Loan and any New Mezzanine Loan(s) shall immediately after such reallocation, modification and creation of any New Mezzanine Loan(s) have the same initial weighted average coupon of the Loan, the Mortgage Loan and the Senior Mezzanine Loan prior to such reallocation, modification and creation of any New Mezzanine Loan(s), notwithstanding that the Loan, the Mortgage Loan, the Senior Mezzanine Loan and any New Mezzanine Loan(s) may, in connection with the application of 

-98-

principal to and among the Loan, the Mortgage Loan, the Senior Mezzanine Loan and any New Mezzanine Loan(s), subsequently cause the weighted average coupon of the Loan, the Mortgage Loan, the Senior Mezzanine Loan and any New Mezzanine Loan(s) to change.  Borrower shall execute and deliver such documents as shall reasonably be required by Lender as promptly as possible under the circumstances in connection with this Section 9.1.3, all in form and substance reasonably satisfactory to Lender and the Rating Agencies, including, without limitation, in connection with the creation of any New Mezzanine Loan, a promissory note and loan documents necessary to evidence such New Mezzanine Loan, and Borrower shall execute such amendments to the Loan Documents, the Mortgage Loan Documents and the Senior Mezzanine Loan Documents as are necessary in connection with the creation of such New Mezzanine Loan.  In addition, Borrower shall cause the formation of one or more special purpose, bankruptcy remote entities as required by Lender in order to serve as the borrower under any New Mezzanine Loan (each, a “New Securitization Mezzanine Borrower”) and the applicable organizational documents of each of Borrower, Mortgage Borrower, Principal Maryland Owner and Senior Mezzanine Borrower shall be amended and modified as necessary or required in the formation of any New Securitization Mezzanine Borrower and Borrower shall continue to be a Special Purpose Entity pursuant to, and in accordance with, Section 4.1.30 hereof.  Further, in connection with any New Mezzanine Loan, Borrower shall deliver to Lender opinions of legal counsel with respect to due execution, authority and enforceability of the New Mezzanine Loan and the Loan Documents, the Mortgage Loan Documents and the Senior Mezzanine Loan Documents, in each case, as amended, and an Additional Insolvency Opinion for the Loan, the Mortgage Loan and the Senior Mezzanine Loan and a substantive non-consolidation opinion with respect to any New Mezzanine Loan, each as acceptable to Lender, prospective investors and/or the Rating Agencies.

9.1.4

Securitization Costs.  All third party costs and expenses incurred by Borrower, Mortgage Borrower, Maryland Owner, Principal, Senior Mezzanine Borrower, Manager and Indemnitor in connection with Borrower’s, Maryland Owner’s, Principal’s, Senior Mezzanine Borrower’s, Manager’s and Indemnitor’s complying with requests made under this Section 9.1 (including, without limitation, the fees and expenses of the Rating Agencies) shall be paid by Borrower.

9.1.5

Uncross of Properties.  Borrower agrees that at any time Lender shall have the unilateral right to elect to uncross any of the Collateral (the “Affected Collateral”).  In furtherance thereof, Lender shall have the right to (i) sever or divide the Note and the other Loan Documents in order to allocate to such Affected Collateral the portion of the Loan allocable to such Collateral (the “Allocated Loan Amount”) evidenced by a new note and secured by such other loan documents (collectively, the “New Note”) having a principal amount equal to the Allocated Loan Amount applicable to such Affected Collateral, (ii) segregate the applicable portion of each of the Reserve Funds relating to the Affected Collateral, (iii) release any cross-default and/or cross-collateralization provisions applicable to such Affected Collateral and (iv) take such additional action consistent therewith; provided, that such New Note secured by such Affected Collateral, together with the Loan Documents secured by the remaining Collateral, shall not increase in the aggregate (A) any monetary obligation of Borrower under the Loan Documents (provided, however, it being acknowledged and agreed that such New Notes shall immediately after the dividing of the Note have the same initial weighted average coupon as the original Note prior to such dividing, notwithstanding that such New Notes may, in connection 

-99-

with the application of principal to such New Notes, subsequently cause the weighted average coupon of such New Notes to change (but not increase, except that the weighted average coupon may subsequently increase due to prepayments or if an Event of Default shall occur)), or (B) any other obligation of Borrower under the Loan Documents in any material respect.  In connection with the transfer of any such Affected Collateral as provided for in this Section 9.1.5, the Loan shall be reduced by an amount equal to amount of the New Note applicable to such Affected Collateral and the new loan secured by such Affected Collateral and evidenced by the New Note shall be in an amount equal to such Allocated Loan Amount.  Subsequent to the release of the Affected Collateral from the lien of the Loan pursuant to this Section 9.1.5, the balances of the components of the Loan shall be the same as they would have been had a prepayment occurred in an amount equal to the Allocated Loan Amount of the Affected Collateral.  At the request of Lender, Borrower shall otherwise cooperate with Lender in its attempt to satisfy all requirements necessary in order for Lender to obtain written confirmation from the Rating Agencies that such transfer of the Affected Collateral from the Securitization and splitting of the Loan shall not cause a downgrade, withdrawal or qualification of the then current ratings of the Securities or any class thereof, which requirements shall include, without limitation:  (A) delivery of evidence that the single purpose nature and bankruptcy remoteness of Borrower owning an Individual Property other than the Affected Collateral following such release have not been adversely affected and are in accordance with the terms and provisions of this Agreement (which evidence may include a “bring-down” of the Insolvency Opinion); and (B) the execution of such documents and instruments and delivery by Lender of such opinions of counsel as are typical for similar transactions, including, an opinion of counsel that the release of the Affected Collateral will not be a “significant modification” of this Loan within the meaning of Section 1.860G2(b) of the regulations of the United States Department of the Treasury and that all other requirements applicable, if any, to a REMIC Trust, have been satisfied or have not otherwise been violated.

9.1.6

Loan/Mezzanine Loan.  Notwithstanding the provisions of Section 9.1 to the contrary, each of Borrower covenants and agrees that after the Closing Date and prior to a Securitization of any of the Loan, the Mortgage Loan or the Senior Mezzanine Loan, Lender shall have the right to establish different interest rates and to reallocate the amortization, interest rate and principal balances (including, without limitation, the reallocation of the Release Amounts on a pro rata basis) of each of the Loan, the Mortgage Loan and the Senior Mezzanine Loan amongst each other and to require the payment of the Loan, the Mortgage Loan and the Senior Mezzanine Loan in such order of priority as may be designated by Lender such that the pricing and marketability of the Securities and the size of each class of Securities and the rating assigned to each class by the Rating Agencies shall provide the most favorable rating levels and achieve the optimum bond execution for the Loan; provided, that, Lender agrees that the Loan, the Mortgage Loan and the Senior Mezzanine Loan shall immediately after such reallocation and modification have the same initial weighted average coupon of the Loan, the Mortgage Loan and the Senior Mezzanine Loan prior to such reallocation and modification, notwithstanding that the Loan, the Mortgage Loan and the Senior Mezzanine Loan may, in connection with the application of principal to and among the Loan, the Mortgage Loan and the Senior Mezzanine Loan, subsequently cause the weighted average coupon of the Loan, the Mortgage Loan and the Senior Mezzanine Loan to change.  Borrower shall execute and deliver such amendments to the Loan Documents, the Mortgage Loan Documents and the Senior Mezzanine Loan Documents and other documents as shall reasonably be required by Lender in connection with such reallocation or modification as promptly as possible under the circumstances in connection with 

-100-

this Section 9.1.4, all in form and substance reasonably satisfactory to Lender and the Rating Agencies and each of Borrower shall continue to be a Special Purpose Entity pursuant to, and in accordance with, Section 4.1.30 hereof.  Further, in connection with any reallocation or modification, Borrower shall deliver to Lender opinions of legal counsel with respect to due execution, authority and enforceability of the Loan Documents, the Mortgage Loan Documents and the Senior Mezzanine Loan Documents, in each case, as amended, and an Additional Insolvency Opinion for the Loan, the Mortgage Loan and the Senior Mezzanine Loan, each as acceptable to Lender, prospective investors and/or the Rating Agencies.

Section 9.2

Securitization Indemnification.

 

(a)

Borrower acknowledges and agrees that certain of the Provided Information may be included in Disclosure Documents in connection with a Securitization and may also be included in filings with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended (the “Securities Act”), or the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or provided or made available to investors or prospective investors, the Rating Agencies, and service providers relating to a Securitization.  In the event that the Disclosure Document is required to be revised prior to the sale of all Securities, Borrower will cooperate with Lender in updating the Disclosure Documents by providing all current information necessary to keep the Disclosure Documents accurate and complete in all material respects.

(b)

Borrower on behalf of Mortgage Borrower, Maryland Owner, Senior Mezzanine Borrower, Principal and Indemnitor (collectively, the “Indemnifying Persons”) agrees to provide, in connection with the Securitization, an indemnification agreement (A) certifying that (i) the Indemnifying Persons have carefully examined the Disclosure Documents as such Disclosure Documents relate to Borrower, Senior Mortgage Borrower, Maryland Owner, Principal, Indemnitor, the Properties, the Loan and the Senior Mezzanine Loan, including without limitation, the sections entitled “Risk Factors,” “Special Considerations,” “Description of the Mortgages,” “Description of the Mortgage Loans and Mortgaged Properties,” “The Manager,” “The Borrower,” “The Maryland Owner” and “Certain Legal Aspects of the Senior Mezzanine Loan,” “Certain Legal Aspects of the Mortgage Loan” and (ii) the factual statements and representations contained in such sections and such other information in the Disclosure Documents (to the extent such information relates to, or is based on, or includes any Provided Information or any information regarding the Collateral, Borrower, Mortgage Borrower, Indemnitor, Maryland Owner, Senior Mezzanine Borrower, Manager, the Loan and/or the Senior Mezzanine Loan (collectively with the Provided Information, the “Covered Disclosure Information”) do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, (B) jointly and severally indemnifying Lender, its designee (whether or not it is the Lender), any Affiliate of Lender that has filed any registration statement relating to the Securitization or has acted as the sponsor or depositor in connection with the Securitization, any Affiliate of Lender that acts as an underwriter, placement agent or initial purchaser of Securities issued in the Securitization, any other co-underwriters, co-placement agents or co-initial purchasers of Securities issued in the Securitization, and each of their respective officers, directors, partners, employees, representatives, agents and Affiliates and each Person or entity who Controls any such Person 

-101-

within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively, the “Indemnified Persons”), for any losses, claims, damages, liabilities, costs or expenses (including without limitation legal fees and expenses for enforcement of these obligations to which any such Indemnified Person may become subject (collectively, the “Liabilities”), whether or not relating to a third party claim, insofar as the Liabilities arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Covered Disclosure Information or arise out of or are based upon the omission or alleged omission to state in the Covered Disclosure Information a material fact required to be stated therein or necessary in order to make the statements in the Covered Disclosure Information, in light of the circumstances under which they were made, not misleading and (C) agreeing to reimburse each Indemnified Person for any legal or other expenses incurred by such Indemnified Person, as they are incurred, in connection with investigating or defending the Liabilities.  This indemnity agreement will be in addition to any liability which Borrower may otherwise have.  Moreover, the indemnification and reimbursement obligations provided for in clauses (B) and (C) above shall be effective, valid and binding obligations of the Indemnifying Persons, whether or not an indemnification agreement described in clause (A) above is provided.

(c )

In connection with Exchange Act Filings, the Indemnifying Persons jointly and severally agree to indemnify (i) the Indemnified Persons for Liabilities to which any such Indemnified Person may become subject insofar as the Liabilities arise out of or are based upon any untrue statement or alleged untrue statement of any material fact in the Covered Disclosure Information, or the omission or alleged omission to state in the Covered Disclosure Information a material fact required to be stated therein or necessary in order to make the statements in the Covered Disclosure Information, in light of the circumstances under which they were made, not misleading and (ii) reimburse each Indemnified Person for any legal or other expenses incurred by such Indemnified Persons, as they are incurred, in connection with defending or investigating the Liabilities.

(d)

In the event any Indemnified Person receives notice of any claim or the commencement of any action, the Indemnified Person shall, if a claim in respect thereof is to be made against any Indemnifying Person, notify such Indemnifying Person in writing of the claim or the commencement of that action; provided, however, that the failure to notify such Indemnifying Person shall not relieve it from any liability which it may have under the indemnification provisions of this Section 9.2 except to the extent that it has been materially prejudiced by such failure and, provided further that the failure to notify such Indemnifying Person shall not relieve it from any liability which it may have to an Indemnified Person otherwise than under the provisions of this Section 9.2.  If any such claim or action shall be brought against an Indemnified Person, and it shall notify any Indemnifying Person thereof, such Indemnifying Person shall be entitled to participate therein and, to the extent that it wishes, assume the defense thereof with counsel reasonably satisfactory to the Indemnified Person.  After notice from any Indemnifying Person to the Indemnified Person of its election to assume the defense of such claim or action, such Indemnifying Person shall not be liable to the Indemnified Person for any legal or other expenses subsequently incurred by the Indemnified Person in connection with the defense thereof except as provided in the following sentence; provided, however, if the defendants in any such action include both an Indemnifying Person, on the one hand, and one or more Indemnified Persons on the other hand, and an Indemnified Person shall have reasonably concluded that there are any legal defenses available to it and/or 

-102-

other Indemnified Persons that are different or in addition to those available to the Indemnifying Person, the Indemnified Person or Persons shall have the right to select separate counsel to assert such legal defenses and to otherwise participate in the defense of such action on behalf of such Indemnified Person or Persons.  The Indemnified Person shall instruct its counsel to maintain reasonably detailed billing records for fees and disbursements for which such Indemnified Person is seeking reimbursement hereunder and shall submit copies of such detailed billing records to substantiate that such counsel’s fees and disbursements are solely related to the defense of a claim for which the Indemnifying Person is required hereunder to indemnify such Indemnified Person.  No Indemnifying Person shall be liable for the expenses of more than one (1) such separate counsel (in addition to local counsel) unless such Indemnified Person shall have reasonably concluded that there may be legal defenses available to it that are different from or additional to those available to another Indemnified Person.

(e)

Without the prior written consent of the Indemnified Persons (which consent shall not be unreasonably withheld or delayed), no Indemnifying Person shall settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought hereunder (whether or not any Indemnified Person is an actual or potential party to such claim, action, suit or proceeding) unless the Indemnifying Person shall have given the Indemnified Persons reasonable prior written notice thereof and such settlement, compromise or consent provides for the unconditional release of all Indemnified Persons and is without any admission of fault, culpability or failure to act by or on behalf of the Indemnified Persons in connection with all matters relating to the claim that have been asserted against the Indemnified Persons by the other parties to such settlement.  As long as an Indemnifying Person has complied with its obligations to defend and indemnify hereunder, such Indemnifying Person shall not be liable for any settlement made by any Indemnified Person without the consent of such Indemnifying Person (which consent shall not be unreasonably withheld or delayed).

(f)

The Indemnifying Persons agree that if any indemnification or reimbursement sought pursuant to this Section 9.2 is finally judicially determined to be unavailable for any reason or is insufficient to hold any Indemnified Person harmless (with respect only to the Liabilities that are the subject of this Section 9.2), then the Indemnifying Persons, on the one hand, and such Indemnified Person, on the other hand, shall contribute to the Liabilities for which such indemnification or reimbursement is held unavailable or is insufficient:  (x) in such proportion as is appropriate to reflect the relative benefits to the Indemnifying Persons, on the one hand, and such Indemnified Person, on the other hand, from the transactions to which such indemnification or reimbursement relates; or (y) if the allocation provided by clause (x) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (x) but also the relative faults of the Indemnifying Persons, on the one hand, and all Indemnified Persons, on the other hand, as well as any other equitable considerations.  Notwithstanding the provisions of this Section 9.2, (A) no party found liable for a fraudulent misrepresentation shall be entitled to contribution from any other party who is not also found liable for such fraudulent misrepresentation, and (B) the Indemnifying Persons agree that in no event shall the amount to be contributed by the Indemnified Persons collectively pursuant to this paragraph exceed the amount of the fees actually received by the Indemnified Persons in connection with the closing of the Loan.

-103-

(g)

The Indemnifying Persons agree that the indemnification, contribution and reimbursement obligations set forth in this Section 9.2 shall apply whether or not any Indemnified Person is a formal party to any lawsuits, claims or other proceedings.  The Indemnifying Persons further agree that the Indemnified Persons are intended third party beneficiaries under this Section 9.2.

(h)

The liabilities and obligations of the Indemnified Persons and the Indemnifying Persons under this Section 9.2 shall survive the termination of this Agreement and the satisfaction and discharge of the Debt.

(i)

All third party costs and expenses incurred by Borrower, Mortgage Borrower, Maryland Owner, Principal, Senior Mezzanine Borrower, Manager and Indemnitor in connection with Borrower’s, Mortgage Borrower’s, Maryland Owner’s, Principal’s, Senior Mezzanine Borrower’s, Manager’s and Indemnitor’s complying with requests made under this Section 9.2 (except for the fees and expenses of the Rating Agencies) shall be paid by Borrower.

Section 9.3

Intentionally Omitted.

Section 9.4

Exculpation.

  Subject to the qualifications below, Lender shall not enforce the liability and obligation of Borrower to perform and observe the obligations contained in the Note, this Agreement, the Pledge Agreement or the other Loan Documents by any action or proceeding wherein a money judgment shall be sought against Borrower, except that Lender may bring a foreclosure action, an action for specific performance or any other appropriate action or proceeding to enable Lender to enforce and realize upon its interest under the Note, this Agreement, the Pledge Agreement and the other Loan Documents, or in the Collateral, or any other collateral given to Lender pursuant to the Loan Documents; provided, however, that, except as specifically provided herein, any judgment in any such action or proceeding shall be enforceable against Borrower only to the extent of Borrower’s interest in the Collateral and in any other collateral given to Lender, and Lender, by accepting the Note, this Agreement, the Pledge Agreement and the other Loan Documents, agrees that it shall not sue for, seek or demand any deficiency judgment against Borrower in any such action or proceeding under or by reason of or under or in connection with the Note, this Agreement, the Pledge Agreement or the other Loan Documents.  The provisions of this Section shall not, however, (a) constitute a waiver, release or impairment of any obligation evidenced or secured by any of the Loan Documents; (b) impair the right of Lender to name Borrower as a party defendant in any action or suit for foreclosure and sale under the Pledge Agreement; (c) affect the validity or enforceability of or any guaranty made in connection with the Loan or any of the rights and remedies of Lender thereunder; (d) impair the right of Lender to obtain the appointment of a receiver; (e) constitute a prohibition against Lender to seek a deficiency judgment against Borrower in order to fully realize the security granted by the Pledge Agreement to commence any other appropriate action or proceeding in order for Lender to exercise its remedies against all of the Collateral; or (f) constitute a waiver of the right of Lender to enforce the liability and obligation of Borrower, by money judgment or otherwise, to the extent of any loss, damage, cost, expense, liability, claim or other obligation incurred by Lender (including attorneys’ fees and costs reasonably incurred) arising out of or in connection with the following:

-104-

(i)

fraud or intentional misrepresentation by Borrower, any Individual Mortgage Borrower, Maryland Owner, any Principal, any Senior Mezzanine Borrower or Indemnitor in connection with the Loan;

(ii)

the gross negligence or willful misconduct of Borrower, Maryland Owner, Principal, Indemnitor, Senior Mezzanine Borrower or any Individual Mortgage Borrower;

(iii)

the breach of any representation, warranty, covenant or indemnification provision in the Environmental Indemnity concerning environmental laws, hazardous substances or asbestos or any indemnification of Lender with respect thereto;

(iv)

the removal or disposal of any portion of any Individual Property, the Senior Mezzanine Collateral or the Collateral after an Event of Default;

(v)

the misapplication or conversion by Borrower, Maryland Owner, Principal, Indemnitor, Senior Mezzanine Borrower or any Individual Mortgage Borrower of (A) any Insurance Proceeds paid by reason of any loss, damage or destruction to any Individual Property which are not applied by Borrower in accordance with this Agreement or by Mortgage Borrower and Maryland Owner in accordance with the Mortgage Loan Agreement, (B) any Awards or other amounts received in connection with the Condemnation of all or a portion of any Individual Property which are not applied by Borrower in accordance with this Agreement or by Mortgage Borrower and Maryland Owner in accordance with the Mortgage Loan Agreement, (C) any Net Liquidation Proceeds After Debt Service, (D) any Rents following an Event of Default, or (E) any Rents paid more than one (1) month in advance or (F) any distributions or other payments made in connection with any part of the Collateral or the Senior Mezzanine Collateral; 

(vi)

the failure to pay charges for labor or materials or other charges or judgments that can create Liens on any portion of any Individual Property (other than resulting from Lender’s, Senior Mezzanine Lender’s or Mortgage Lender’s failure to pay Taxes from the Tax and Insurance Reserve Fund provided that (A) no other Event of Default shall then exist, (B) Borrower has performed all of its respective obligations under Sections 5.1.2 and 7.2 hereof, and (C) sufficient funds are then on deposit therein and such funds are allocated for the payment of such Taxes) provided that if (i) such Lien is fully bonded to the satisfaction of Lender (which bond shall create no obligations on the part of Borrower, Mortgage Borrower or Maryland Owner), and (ii) such Lien is discharged of record, Borrower shall not have any liability to Lender for such Lien under this Section 9.4;

(vii)

(A) any termination of a Ground Lease by any Individual Mortgage Borrower and/or Maryland Owner without Lender’s prior written consent and other than as expressly permitted hereunder, (B) any rejection by any Individual Mortgage Borrower and/or Maryland Owner (as debtor in possession in connection with a Bankruptcy Action or otherwise) of a Ground Lease, (C) any termination of any Ground Lease by the landlord thereunder which termination is caused by any Individual Mortgage Borrower 

-105-

and/or Maryland Owner interfering with the exercise of Lender’s or Mortgage Lender’s cure rights under the Ground Lease (including, deliberately failing to act to cure a non-monetary default if so directed by Lender provided such action is within any Individual Mortgage Borrower’s and/or Maryland Owner’s control), or (D) if any Ground Lease is amended, modified or terminated without Lender’s prior written consent other than as expressly permitted hereunder;

(viii)

any security deposits, advance deposits or any other deposits collected with respect to any Individual Property which are not delivered to Mortgage Lender upon a foreclosure of such Individual Property or action in lieu thereof, except to the extent any such security deposits were applied in accordance with the terms and conditions of any of the Leases prior to the occurrence of the Event of Default that gave rise to such foreclosure or action in lieu thereof; and

(ix)

any breach of any representation, warranty or covenant contained in Section 4 of the Pledge Agreement.

Notwithstanding anything to the contrary in this Agreement, the Note or any of the Loan Documents, (A) the Debt shall be fully recourse to the Borrower and (B) Lender shall not be deemed to have waived any right which Lender may have under Section 506(a), 506(b), 1111(b) or any other provisions of the Bankruptcy Code to file a claim for the full amount of the Debt secured by the Pledge Agreement or to require that all collateral shall continue to secure all of the Debt owing to Lender in accordance with the Loan Documents in the event of:  (1) the first full monthly payment under the Note not being paid within five (5) days of notice that such payment is late (provided, however, that such grace period relates only to the recourse trigger described in this paragraph), (2) the failure of Borrower to cause Maryland Owner or any Individual Mortgage Borrower to permit on-site inspections of any Individual Property subject to the rights of Tenants and any applicable cure period set forth in the Loan Documents, (3) the failure of Borrower to provide financial information as required under the Loan Documents subject to any applicable cure period (except for financial information required to be delivered by a tenant pursuant to the applicable Lease that has not been delivered to Maryland Owner or the applicable Individual Mortgage Borrower, provided Maryland Owner or such Individual Mortgage Borrower has requested such financial information from such tenant), (4) the failure of any of Borrower, Mortgage Borrower, Maryland Owner, Senior Mezzanine Borrower or Principal to maintain its respective status as a Single Purpose Entity or the breach of any representation or warranty set forth in Section 4.1.30 hereof, Section 4.1.30 of the Mortgage Loan Agreement or Section 4.1.30 of the Senior Mezzanine Loan Agreement, as applicable, (5) Borrower, Senior Mezzanine Borrower, Principal, any Individual Mortgage Borrower or Maryland Owner filing a voluntary petition under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law; (6) the filing of an involuntary petition against Borrower, Senior Mezzanine Borrower, any Individual Mortgage Borrower, Principal or Maryland Owner under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law, in which Borrower, Senior Mezzanine Borrower, any Individual Mortgage Borrower, Principal or Maryland Owner colludes with, or otherwise assists such Person, or solicits or causes to be solicited petitioning creditors for any involuntary petition against any Borrower, Senior Mezzanine Borrower, Individual Mortgage Borrower, Principal or Maryland Owner from any Person; (7) Borrower, Senior Mezzanine Borrower, any Individual Mortgage Borrower, Principal 

-106-

Maryland Owner filing an answer consenting to or otherwise acquiescing in or joining in any involuntary petition filed against it, by any other Person under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law; (8) Borrower, Senior Mezzanine Borrower, any Individual Mortgage Borrower, Principal or Maryland Owner consenting to or acquiescing in or joining in an application for the appointment of a custodian, receiver, trustee, or examiner for Borrower, Senior Mezzanine Borrower, any Individual Mortgage Borrower, Principal or Maryland Owner or any Individual Property (or any portion thereof); (9) Borrower, Senior Mezzanine Borrower, any Individual Mortgage Borrower, Principal or Maryland Owner making an assignment for the benefit of creditors, or admitting, in writing or in any legal proceeding, its insolvency or inability to pay its debts as they become due; (10) the failure of Borrower to obtain Lender’s prior written consent (to extent such consent is required) to any subordinate financing or other voluntary Lien encumbering any Individual Property, the Senior Mezzanine Collateral or the Collateral; or (11) the failure of Borrower to obtain Lender’s prior written consent to any Transfer or permit any Transfer of any Individual Property by Mortgage Borrower or Maryland Owner, the Senior Mezzanine Collateral or of the Collateral or any portion thereof, or any interest therein as required by this Agreement or the Pledge Agreement.  Upon the acceptance by Lender of any cure by Borrower of a recourse trigger described in clauses (1), (2), (3), (10) or (11) above (which Lender is not obligated to accept and may reject or accept in its sole and absolute discretion), the Debt shall no longer be fully recourse to Borrower solely as a result of such trigger, provided, however, Borrower shall remain liable to the extent of any loss, damage, cost, expense, liability, claim or other obligation incurred by Lender (including attorneys’ fees and costs reasonably incurred) arising out of or in connection with such trigger.

Section 9.5

Termination of Manager.

  If (a) an Event of Default has occurred and remains uncured, (b) Manager shall become subject to a Bankruptcy Action, (c) Manager is in default under the terms of the Management Agreement beyond any applicable grace or cure period, (d) the Debt Service Coverage Ratio, as determined by Lender, shall be less than 1.05 to 1.00 based on the trailing twelve (12) month period immediately preceding the date of such determination, provided that such Debt Service Coverage Ratio is not less than 1.05 to 1.00 by reason of Market Conditions, or (e) Manager is not managing the related Individual Property in accordance with the management practices of nationally recognized management companies managing similar properties in locations comparable to those of the related Individual Property, then, in the case of (a), (b), (c), (d) or (e), Borrower shall, at the request of Lender, cause Mortgage Borrower or Maryland Owner, as applicable, to terminate the Management Agreement and replace Manager with a Qualifying Manager pursuant to a Replacement Management Agreement, it being understood and agreed that the management fee for such Qualifying Manager shall not exceed then prevailing market rates.

Section 9.6

Servicer.

  At the option of Lender, the Loan may be serviced by a master servicer, servicer, special servicer/trustee (any such master servicer, servicer, special servicer/trustee, together with its agents, nominees or designees, are collectively referred to as “Servicer”) selected by Lender and Lender may delegate all or any portion of its responsibilities under this Agreement and the other Loan Documents to the Servicer pursuant to a servicing agreement and/or a special servicing agreement (collectively, the “Servicing Agreement”) between Lender and Servicer.  Borrower shall be responsible for any reasonable set-up fees or any other initial costs relating to or arising under the Servicing Agreement; provided, however, that Borrower shall not be responsible for payment of the monthly servicing fee due to Servicer 

-107-

under the Servicing Agreement.  Notwithstanding the foregoing, Borrower shall pay (i) any liquidation fees that may be due to Servicer under the Servicing Agreement in connection with the exercise of any or all remedies permitted under this Agreement, (ii) any workout fees or special servicing fees that may be due to Servicer under the Servicing Agreement, which fees shall be due and payable by Borrower on a periodic or continuing basis in accordance with the Servicing Agreement, and (iii) the costs of all property inspections and/or appraisals of the Properties and/or Collateral (or any updates to any existing inspection or appraisal) required under the Servicing Agreement or that a Servicer may otherwise require under the Servicing Agreement (other than the cost of annual inspections to be borne by Servicer under the Servicing Agreement).  Provided no Event of Default is continuing, Servicer proposes to transfer the servicing of the Loan to a Servicer that is a special servicer based on Servicer’s judgment that a Default in the payment of Debt Service is reasonably foreseeable, Servicer shall use good faith efforts to consult with Borrower before transferring the servicing of the Loan, except in those instances in which Servicer determines in its sole discretion that the failure to so transfer the servicing of the Loan would materially and adversely affect the holders of the Securities of the Loan or the Mortgage Loan, and Borrower acknowledge and agree that any such consultation shall be conducted on a non-binding basis and any decision by Servicer to transfer the Loan to a special servicer shall be final and binding on, and shall not be subject to challenge by, Borrower.

Section 9.7

Splitting the Loan.

  At the election of Lender in its sole discretion or in connection with a repurchase by Lender of any portion of the Loan under the operative documents for any Securitization, the Loan or any individual Note making up the Loan shall be split and severed into two or more loans which, at Lender’s election, shall not be cross-collateralized or cross-defaulted with each other.  Borrower hereby agrees to deliver to Lender to effectuate such severing of the Loan or any individual Note, as the case may be, as requested by Lender, (a) additional executed documents, or amendments and modifications to the applicable Loan Documents, (b) new opinions or updates to the opinions delivered to Lender in connection with the closing of the Loan, (c) endorsements and/or updates to the title insurance policies delivered to Lender in connection with the closing of the Loan, and (d) any other certificates, instruments and documentation determined by Lender as necessary or appropriate to such severance (the items described in subsections (a) through (d) collectively hereinafter shall be referred to as “Severing Documentation”), which Severing Documentation shall be acceptable to Lender in form and substance in its sole discretion.  Borrower hereby agrees to be responsible for all third-party expenses incurred in connection with the preparation and delivery of the Severing Documentation and the effectuation of the uncrossing of the Loan from the additional loans.  Borrower hereby acknowledges and agrees that upon such severing of the Loan, Lender may effect, in its sole discretion, one or more Securitizations of which the severed loans may be a part.

ARTICLE X

MISCELLANEOUS

Section 10.1

Survival.

  This Agreement and all covenants, agreements, representations and warranties made herein and in the certificates delivered pursuant hereto shall survive the making by Lender of the Loan and the execution and delivery to Lender of the Note, 

-108-

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

Section 10.2

Lender’s Discretion.

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

Section 10.3

Governing Law.

 

(a)

THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, THE LOAN WAS MADE BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, AND THE PROCEEDS OF THE LOAN DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS AND THE OBLIGATIONS ARISING HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH COLLATERAL IS LOCATED OR AS OTHERWISE DETERMINED BY APPLICABLE LAW, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING HEREUNDER OR THEREUNDER.  TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS, AND THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

-109-

(b)

ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS MAY AT LENDER’S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.  BORROWER DOES HEREBY DESIGNATE AND APPOINT:

KATTEN MUCHIN ROSENMAN LLP

575 MADISON AVENUE

NEW YORK, NEW YORK 10022-2585

ATTENTION: DANIEL S. HUFFENUS, ESQ.

AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK.  BORROWER (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.

Section 10.4

Modification; Waiver in Writing.

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

Section 10.5

Delay Not a Waiver.

  Neither any failure nor any delay on the part of Lender in insisting upon strict performance of any term, condition, covenant or agreement, or exercising any right, power, remedy or privilege hereunder, or under the Note or under any other 

-110-

Loan Document, or any other instrument given as security therefor, shall operate as or constitute a waiver thereof, nor shall a single or partial exercise thereof preclude any other future exercise, or the exercise of any other right, power, remedy or privilege.  In particular, and not by way of limitation, by accepting payment after the due date of any amount payable under this Agreement, the Note or any other Loan Document, Lender shall not be deemed to have waived any right either to require prompt payment when due of all other amounts due under this Agreement, the Note or the other Loan Documents, or to declare a default for failure to effect prompt payment of any such other amount.

Section 10.6

Notices.

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

If to Lender:

JPMorgan Chase Bank, N.A.

383 Madison Avenue

New York, New York  10179

Attention:  Joseph E. Geoghan

Facsimile No.:  (212) 272-7047

with a copy to:

Cadwalader, Wickersham & Taft LLP

One World Financial Center

New York, New York  10281

Attention:  William P. McInerney, Esq.

Facsimile No.:  (212) 504-6666

with an additional copy to:

JPMorgan Chase Bank, N.A.

4 NY Plaza, 22nd Floor

New York, New York  10004

Attention:  Nancy S. Alto

Facsimile No.:  (212) 623-4779

-111-

If to Borrower:

c/o Inland Western Retail Real Estate Trust, Inc.

2901 Butterfield Road

Oak Brook, IL  60523

Attention:  Steven Grimes

Facsimile No.:  (630) 586-6446

with a copy to:

Inland Western Retail Real Estate Trust, Inc.

2901 Butterfield Road

Oak Brook, IL  60523

Attention:  Dennis Holland, Esq.

Facsimile No.:  (630) 586-6446

with an additional copy to:

Katten Muchin Rosenman LLP

401 South Tryon Street, Ste. 2600

Charlotte, North Carolina  28202

Attention:  Daniel S. Huffenus, Esq.

Facsimile No.:  (704) 344-3056

A notice shall be deemed to have been given:  in the case of hand delivery, at the time of delivery; in the case of registered or certified mail, when delivered or the first attempted delivery on a Business Day; or in the case of expedited prepaid delivery and telecopy, upon the first attempted delivery on a Business Day; or in the case of telecopy, upon sender’s receipt of a machine-generated confirmation of successful transmission after advice by telephone to recipient that a telecopy notice is forthcoming.

Section 10.7

Trial by Jury.

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

-112-

Section 10.8

Headings.

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

Section 10.9

Severability.

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

Section 10.10

Preferences.

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

Section 10.11

Waiver of Notice.

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

Section 10.12

Remedies of Borrower.

  In the event that a claim or adjudication is made that Lender or its agents have acted unreasonably or unreasonably delayed acting in any case where by law or under this Agreement or the other Loan Documents, Lender or such agent, as the case may be, has an obligation to act reasonably or promptly, Borrower agrees that neither Lender nor its agents shall be liable for any monetary damages, and Borrower’s sole remedies shall be limited to commencing an action seeking injunctive relief or declaratory judgment.  The parties hereto agree that any action or proceeding to determine whether Lender has acted reasonably shall be determined by an action seeking declaratory judgment.

Section 10.13

Expenses; Indemnity.

 

(a)

Borrower covenants and agrees to pay or, if Borrower fails to pay, to reimburse, Lender upon receipt of written notice from Lender for all costs and expenses (including reasonable attorneys’ fees and disbursements) incurred by Lender in connection with (i) the preparation, negotiation, execution and delivery of this Agreement and the other Loan Documents and the consummation of the transactions contemplated hereby and thereby and all the costs of furnishing all opinions by counsel for Borrower (including without limitation any opinions requested by Lender as to any legal matters arising under this Agreement or the other 

-113-

Loan Documents with respect to the Properties or Collateral); (ii) Borrower’s ongoing performance of and compliance with Borrower’s respective agreements and covenants contained in this Agreement and the other Loan Documents on its part to be performed or complied with after the Closing Date, including, without limitation, confirming compliance with environmental and insurance requirements; (iii) Lender’s ongoing performance and compliance with all agreements and conditions contained in this Agreement and the other Loan Documents on its part to be performed or complied with after the Closing Date (except for those costs and expenses expressly assumed herein or in the other Loan Documents by Lender); (iv) except as otherwise provided in this Agreement, the negotiation, preparation, execution, delivery and administration of any consents, amendments, waivers or other modifications to this Agreement and the other Loan Documents and any other documents or matters requested by Lender; (v) securing Borrower’s compliance with any requests made pursuant to the provisions of this Agreement; (vi) the filing and recording fees and expenses, title insurance and fees and expenses of counsel for providing to Lender all required legal opinions, and other similar expenses incurred in creating and perfecting the Liens in favor of Lender pursuant to this Agreement and the other Loan Documents; (vii) enforcing or preserving any rights, in response to third party claims or the prosecuting or defending of any action or proceeding or other litigation, in each case against, under or affecting Borrower, this Agreement, the other Loan Documents, any Individual Property or the Collateral, or any other security given for the Loan; and (viii) enforcing any obligations of or collecting any payments due from Borrower under this Agreement, the other Loan Documents or with respect to the Collateral (including, without limitation, any reasonable and customary fees incurred by Servicer that is a master servicer or Servicer in connection with the transfer of the Loan to a Servicer that is a special servicer prior to or following a Default or an Event of Default) or in connection with any refinancing or restructuring of the credit arrangements provided under this Agreement in the nature of a “work-out” or of any insolvency or bankruptcy proceedings; provided, however, that Borrower shall not be liable for the payment of any such costs and expenses to the extent the same arise by reason of the gross negligence, illegal acts, fraud or willful misconduct of Lender.  Any cost and expenses due and payable to Lender may be paid from any amounts in the Junior Mezzanine Loan Cash Management Account.

(b)

Borrower shall indemnify, defend and hold harmless Lender from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including, without limitation, the reasonable fees and disbursements of counsel for Lender in connection with any investigative, administrative or judicial proceeding commenced or threatened, whether or not Lender shall be designated a party thereto), that may be imposed on, incurred by, or asserted against Lender in any manner relating to or arising out of (i) any breach by Borrower of its obligations under, or any material misrepresentation by Borrower contained in, this Agreement or the other Loan Documents, or (ii) the use or intended use of the proceeds of the Loan (collectively, the “Indemnified Liabilities”); provided, however, that Borrower shall not have any obligation to Lender hereunder to the extent that such Indemnified Liabilities arise from the gross negligence, illegal acts, fraud or willful misconduct of Lender.  To the extent that the undertaking to indemnify, defend and hold harmless set forth in the preceding sentence may be unenforceable because it violates any law or public policy, Borrower shall pay the maximum portion that it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all Indemnified Liabilities incurred by Lender.

-114-

(c)

Borrower covenants and agrees to pay for or, if Borrower fails to pay, to reimburse Lender for, any fees and expenses incurred by any Rating Agency in connection with any review by a Rating Agency of the Loan, the Loan Documents or any transaction contemplated thereby or any consent, approval, waiver or confirmation obtained from any Rating Agency pursuant to the terms and conditions of this Agreement or any other Loan Document and Lender shall be entitled to require payment of such fees and expenses as a condition precedent to the obtaining of any such consent, approval, waiver or confirmation.

Section 10.14

Schedules Incorporated.

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

Section 10.15

Offsets, Counterclaims and Defenses.

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

Section 10.16

No Joint Venture or Partnership; No Third Party Beneficiaries.

(a)

Borrower and Lender intend that the relationships created hereunder and under the other Loan Documents be solely that of borrower and lender.  Nothing herein or therein is intended to create a joint venture, partnership, tenancy-in-common, or joint tenancy relationship between Borrower and Lender.

(b)

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

Section 10.17

Publicity.

  All news releases, publicity or advertising by Borrower or Affiliates of Borrower through any media intended to reach the general public which refers to the Loan Documents or the financing evidenced by the Loan Documents, to Lender, to JPM or any of their Affiliates shall be subject to the prior written approval of JPM.  All news releases, publicity or advertising by Lender through any media intended to reach the general public which refers solely to Borrower, Mortgage Borrower, Maryland Owner, Senior Mezzanine Borrower, the Loan, the Mortgage Loan or the Junior Mezzanine Loan shall be subject to the prior written 

-115-

approval of Borrower, provided however, the foregoing shall not apply to Provided Information included in disclosure documents in connection with a Securitization.

Section 10.18

Waiver of Marshalling of Assets.

  To the fullest extent permitted by law, Borrower, for itself and its successors and assigns, waives all rights to a marshalling of the assets of Borrower, Borrower’s partners and others with interests in Borrower, and of the Collateral, and shall not assert any right under any laws pertaining to the marshalling of assets, the sale in inverse order of alienation, the administration of estates of decedents, or any other matters whatsoever to defeat, reduce or affect the right of Lender under the Loan Documents to a sale of the Collateral for the collection of the Debt without any prior or different resort for collection or of the right of Lender to the payment of the Debt out of the net proceeds of the Collateral in preference to every other claimant whatsoever.  In addition, Borrower, for itself and its successors and assigns, waives in the event of foreclosure of any or all of the Collateral, any equitable right otherwise available to Borrower which would require the separate sale of any part of the Collateral or require Lender to exhaust its remedies against any part of the Collateral or any combination of the Collateral before proceeding against any other part of the Collateral or combination of Collateral; and further in the event of such foreclosure Borrower does hereby expressly consents to and authorizes, at the option of Lender, the foreclosure and sale either separately or together of any combination of the Collateral.

Section 10.19

Waiver of Counterclaim.

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

Section 10.20

Conflict; Construction of Documents; Reliance.

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

Section 10.21

Brokers and Financial Advisors.

  Borrower hereby represents that it has dealt with no financial advisors, brokers, underwriters, placement agents, agents or finders in connection with the transactions contemplated by this Agreement.  Borrower hereby agrees to indemnify, defend and hold Lender harmless from and against any and all claims, liabilities, costs and expenses of any kind (including Lender’s reasonable attorneys’ fees and expenses) in 

-116-

any way relating to or arising from a claim by any Person that such Person acted on behalf of Borrower or Lender in connection with the transactions contemplated herein.  The provisions of this Section 10.21 shall survive the expiration and termination of this Agreement and the payment of the Debt.

Section 10.22

Prior Agreements.

  This Agreement and the other Loan Documents contain the final and entire agreement of the parties hereto and thereto in respect of the transactions contemplated hereby and thereby, and all prior agreements or understandings among or between such parties, whether oral or written, are superseded by the terms of this Agreement and the other Loan Documents and unless specifically set forth in a writing contemporaneous herewith the terms, conditions and provisions of such prior agreement do not survive execution of this Agreement and this Agreement and the other Loan Documents may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties hereto or thereto.

Section 10.23

Transfer of Loan.

  In the event that Lender transfers the Loan, Borrower shall continue to make payments at the place set forth in the Note until such time that Borrower is notified in writing by Lender that payments are to be made at another place.

Section 10.24

Intentionally Omitted.

 

Section 10.25

Certain Additional Rights of Lender (VCOC).

  Notwithstanding anything to the contrary contained in this Agreement, Lender shall have:

(a)

the right to routinely consult with and advise Borrower’s management regarding the significant business activities and business and financial developments of Borrower; provided, however, that such consultations shall not include discussions of environmental compliance programs or disposal of hazardous substances.  Consultation meetings should occur on a regular basis (no less frequently than quarterly) with Lender having the right to call special meetings at any reasonable times and upon reasonable advance notice;

(b)

the right, in accordance with the terms of this Agreement, to examine the books and records of Borrower at any reasonable times upon reasonable notice;

(c )

the right, in accordance with the terms of this Agreement, including, without limitation, Section 5.1.11 hereof, to receive monthly, quarterly and year end financial reports, including balance sheets, statements of income, shareholder’s equity and cash flow, a management report and schedules of outstanding indebtedness; and

(d)

the right, without restricting any other rights of Lender under this Agreement (including any similar right), to approve any acquisition by Mortgage Borrower or Maryland Owner of any other significant property (other than personal property required for the day to day operation of any Individual Property).

The rights described above in this Section 10.25 may be exercised by any entity which owns and controls, directly or indirectly, substantially all of the interests in Lender.

-117-

Section 10.26

Co-Lender Agent.

(a)

On or prior to the Closing Date, the holders of each Note (each, a “Co-Lender”) shall designate either a single Co-Lender or the Servicer to act on behalf of all such Persons holding an interest in the Loan (the “Mezzanine Lender Agent”).  The Mezzanine Lender Agent shall have the sole right to receive any notices which are required to be given or which may be given to the Lender pursuant to this Agreement and to exercise any approval rights and powers given to the Lender; provided, however, that notwithstanding the foregoing, for the avoidance of doubt, all other rights of Lender under this Agreement including, without limitation, the exercise of Lender’s remedies under this Agreement and/or the other Loan Documents, may be exercised by one or more Co-Lenders and/or Servicer as the Co-Lenders may elect in their sole discretion.  Once a Mezzanine Lender Agent has been designated hereunder with respect to the Loan, Borrower shall be entitled to rely on such designation until it has received written notice from a Co-Lender or the servicer of a different Person to act as the Mezzanine Lender Agent for Loan.  

(b)

Following the Closing Date (i) the liabilities of Lender shall be several and not joint, (ii) neither Co-Lender shall be responsible for the obligations of the other Co-Lender, and (iii) each Co-Lender shall be liable to Borrower only for their respective ratable share of the Loan.  Notwithstanding anything to the contrary herein, all indemnities by Borrower and obligations for principal and interest payments, payment of prepayment fees, exits fees, default interest or any other amounts due hereunder, including costs, expenses, damages or advances each as set forth herein shall run to and benefit each Co-Lender in accordance with its ratable share.

Section 10.27

Note Register.

 The Servicer (or in the case of participants, the applicable Lender), as non-fiduciary agent of Borrower, shall maintain a record that identifies each owner (including successors, assignees, and participants) of an interest in the Loan, including the name and address of the owner, and each owner's rights to principal and stated interest (the “Register”), and shall record all transfers of an interest in the Loan, including each assignment and participation, in the Register.  Servicer (or in the case of participants, the applicable Lender) as a non-fiduciary agent of Borrower, will update the Register to reflect a transfer.  The entries in the Register shall be conclusive, and the Borrower, the Lenders and the Servicer may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  The parties intend for the Loan to be in registered form for tax purposes and to the extent of any conflict with this Section 10.27, this Section 10.27 shall be construed in accordance with that intent.

[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]

-118-

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

BORROWER:

IW MEZZ 2 2009, LLC, a Delaware limited liability company

By:

Inland Western Retail Real Estate Trust, Inc., a Maryland corporation, its sole member

By:

 Name:

 Title:

LENDER:

JPMORGAN CHASE BANK, N.A., a banking association chartered under the laws of the United States of America

By:

 Name:

 Title:

SCHEDULE I

MORTGAGE BORROWER LIST

				
	 
	Individual Borrower

	State/Commonwealth of Formation

	Organizational Identification Number

	1.

	Inland Western Birmingham Edgemont, L.L.C.

	Delaware

	3882010

	2.

	Inland Western Tuscaloosa University, L.L.C.

	Delaware

	3882014

	3.

	Inland Western Phenix City, L.L.C.

	Delaware

	3900020

	4.

	Inland Western Avondale McDowell L.L.C.

	Delaware

	3892335

	5.

	Inland Western Phoenix, L.L.C.

	Delaware

	3776679

	6.

	Inland Western Fullerton Metrocenter, L.L.C.

	Delaware

	3809723

	7.

	Inland Western Ontario 4th Street, L.L.C.

	Delaware

	3951208

	8.

	Inland Western Fresno Blackstone Avenue, L.L.C.

	Delaware

	3951209

	9.

	Inland Western Placentia, L.L.C.

	Delaware

	3882379

	10.

	Inland Western Longmont Fox Creek, L.L.C.

	Delaware

	3880445

	11.

	Inland Western Wesley Chapel Northwoods, L.L.C.

	Delaware

	3890156

	12.

	Inland Western Miami 19th Street, L.L.C.

	Delaware

	3841362

	13.

	Inland Western Panama City, L.L.C.

	Delaware

	3890163

	14.

	Inland Western Lake Mary, L.L.C.

	Delaware

	3838467

	15.

	Inland Western Cumming Green’s Corner, L.L.C.

	Delaware

	3898718

	16.

	Inland Western Acworth Stilesboro, L.L.C.

	Delaware

	3898721

	17.

	Inland Western Covington Newton Crossroads, L.L.C.

	Delaware

	3898715

	18.

	Inland Western Evans, L.L.C.

	Delaware

	3899068

Sch. I-1

				
	19.

	Inland Western Gurnee, L.L.C.

	Delaware

	3725826

	20.

	Inland Western Woodridge Seven Bridges, L.L.C.

	Delaware

	3937498

	21.

	Inland Southeast Stony Creek, L.L.C.

	Delaware

	3733893

	22.

	Inland Western Houma Magnolia, L.L.C.

	Delaware

	3841999

	23.

	Inland Western Colesville New Hampshire SPE, L.L.C.

	Delaware

	4017581

	24.

	Inland Western High Ridge, L.L.C.

	Delaware

	3934045

	25.

	Inland Western

Hickory-Catawba, L.L.C.

	Delaware

	3749939

	26.

	Inland Western Kill Devil Hills Croatan, L.L.C.

	Delaware

	3809707

	27.

	Inland Western Las Vegas, L.L.C.

	Delaware

	3772105

	28.

	Inland Western Coram Plaza, L.L.C.

	Delaware

	3882017

	29.

	Inland Western Massillon Village, L.L.C.

	Delaware

	3951190

	30.

	Inland Western Heath Southgate, L.L.C.

	Delaware

	3935371

	31.

	Inland Western Cuyahoga Falls, L.L.C.

	Delaware

	3951196

	32.

	Inland Western Oklahoma City Quail, L.L.C.

	Delaware

	3730645

	33.

	Inland Western Norman, L.L.C.

	Delaware

	3730654

	34.

	Inland Western Danforth, L.L.C.

	Delaware

	3730641

	35.

	Inland Western Cranberry DST

	Delaware

	3815401

	36.

	Inland Western Bethlehem Saucon Valley DST

	Delaware

	3841705

	37.

	Inland Western Duncansville Holliday DST

	Delaware

	3877085

	38.

	Inland Western Pawtucket Cottage, L.L.C.

	Delaware

	3851405

	39.

	Inland Western Middletown Brown’s Lane, L.L.C.

	Delaware

	3951198

Sch. I-2

				
	40.

	Inland Western Pawtucket Boulevard, L.L.C.

	Delaware

	3951200

	41.

	Inland Western Summerville Azalea Square, L.L.C.

	Delaware

	3842002

	42.

	Inland Western Charleston North Rivers, L.L.C.

	Delaware

	3786953

	43.

	Inland Western Irmo Station, L.L.C.

	Delaware

	3899063

	44.

	Inland Western Mt. Pleasant Park West, L.L.C.

	Delaware

	3854747

	45.

	Inland Western Columbia Broad River, L.L.C.

	Delaware

	3809709

	46.

	Inland Western Greer Wade Hampton, L.L.C.

	Delaware

	3809713

	47.

	Inland Western Jackson Columns, L.L.C.

	Delaware

	3842003

	48.

	Inland Western Memphis Winchester, L.L.C.

	Delaware

	3865200

	49.

	Inland Western Knoxville Harvest, L.L.C.

	Delaware

	3838466

	50.

	Inland Western Crossville Main, L.L.C.

	Delaware

	3809715

	51.

	Inland Western Denton Crossing Limited Partnership

	Illinois

	S020878

	52.

	Inland Western Cedar Hill Pleasant Run Limited Partnership

	Illinois

	S021073

	53.

	Inland Western McAllen Trenton Limited Partnership

	Illinois

	S022060

	54.

	Inland Western St. George, L.L.C.

	Delaware

	3760776

	55.

	Inland Western Spokane Northpointe, L.L.C.

	Delaware

	3786952

Sch. I-3

SCHEDULE II

LEASING CONDITIONS

Such proposed Lease:

1.

Complies with restrictions of record, restrictions/exclusives in other Leases and Applicable Law (including zoning laws, regulations and ordinances);

2.

Contains base rent, allowance and other concessions consistent with local market terms;

3.

Contains commercially reasonable terms;

4.

Is subordinate to the applicable Mortgage, and the tenant thereunder agrees to attorn to Lender or any purchaser at a sale by foreclosure or power of sale;

5.

Does not contain any right of first refusal to purchase the related Individual Property (or any part thereof) or purchase option for all or part of such Individual Property;

6.

Does not contain any early termination rights (other than termination rights vesting upon a violation of a co-tenancy provision) vesting prior to three (3) years after the Maturity Date;

7.

Provides that the tenant shall deliver all Rents payable thereunder directly to the Lockbox Account (or, such Lease is accompanied by a Tenant Direction Letter countersigned by tenant and the applicable Individual Borrower or Maryland Owner, as applicable, and directing such tenant to deliver all Rents payable thereunder directly to the Lockbox Account).

8.

Does not contain any terms that would materially affect Lender’s rights under the Loan Documents;

9.

Contains a no merger of estates provision; and

10.

Subleases and assignments do not affect tenant’s primary obligations.

Sch. II-1

SCHEDULE III

O&M PROPERTIES

1.

Metrocenter, Fullerton, California

2.

Coram Plaza, Coram, New York

3.

Irmo Station, Irmo, South Carolina

4.

Massillon Village Center, Massillon, Ohio

5.

Placentia Town Center, Placentia, California

6.

Quail Springs, Oklahoma City, Oklahoma

7.

Brown’s Lane, Middletown, Rhode Island

8.

Boulevard Plaza, Pawtucket, Rhode Island

Sch. III-1

SCHEDULE IV

REQUIRED REPAIRS

Sch. IV-1

SCHEDULE V

LEASE CARVEOUTS

None

Sch. V-1

SCHEDULE VI

RELEASE AMOUNTS

			
	 
	Individual Property

	Release Amount

	1.

	Fullerton Metrocenter

	$2,360,000.00

	2.

	Denton Town Crossing

	$2,296,000.00

	3.

	Gateway Pavilions

	$2,040,000.00

	4.

	Northpointe Plaza

	 (i) Northpointe Target Expansion Parcel: $70,000

(ii) Northpointe Remainder Property: $1,890,000

	5.

	Hickory Ridge

	$1,624,000.00

	6.

	Best on the Boulevard

	$1,464,000.00

	7.

	Trenton Crossing

	$1,368,000.00

	8.

	Gurnee Town Centre

	$1,272,000.00

	9.

	Coram Plaza

	$1,184,000.00

	10.

	Pleasant Run Town Crossing

	$1,160,000.00

	11.

	Edwards Multiplex - Ontario

	$1,156,000.00

	12.

	Columns

	$1,040,000.00

	13.

	Azalea Square I

	$1,008,000.00

	14.

	Placentia Town Center

	$936,000.00

	15.

	Cranberry Square

	$928,000.00

	16.

	Cottage Plaza

	$904,000.00

	17.

	North Rivers Town Center

	$848,000.00

	18.

	Edwards Multiplex - Fresno

	$800,000.00

	19.

	Paradise Valley Marketplace

	$776,000.00

	20.

	Fox Creek Village

	$760,000.00

	21.

	Bed Bath & Beyond Plaza - Miami

	$760,000.00

	22.

	Saucon Valley Square

	$720,000.00

	23.

	Stony Creek

	$720,000.00

	24.

	Northwoods Center

	$720,000.00

	25.

	Promenade at Red Cliff

	$680,000.00

	26.

	Holliday Town Center

	$656,000.00

Sch. VI-1

			
	27.

	Massillon Commons

	$588,000.00

	28.

	Edgemont Town Center

	$548,000.00

	29.

	Magnolia Square

	$536,000.00

	30.

	Winchester Commons

	$480,000.00

	31.

	Shoppes at Park West Publix

	$448,000.00

	32.

	Greens Corner

	$448,000.00

	33.

	Village at Quail Springs

	$440,000.00

	34.

	Stilesboro Oaks

	$428,800.00

	35.

	Irmo Station

	$424,000.00

	36.

	Cinemark Seven Bridges

	$416,000.00

	37.

	Brown's Lane

	$416,000.00

	38.

	High Ridge Crossing

	$416,000.00

	39.

	University Town Center

	$376,000.00

	40.

	Evans Town Center

	$360,000.00

	41.

	Phenix Crossing

	$352,000.00

	42.

	Southgate Plaza

	$336,000.00

	43.

	Harvest Towne Center

	$336,000.00

	44.

	Newton Crossroads

	$316,000.00

	45.

	Cuyahoga Falls Market Center

	$308,000.00

	46.

	CVS Pharmacy (Eckerd) - Norman

	$296,000.00

	47.

	Rite Aid (Eckerd) - Colesville

	$260,000.00

	48.

	23rd Street Plaza

	$257,600.00

	49.

	Boulevard Plaza

	$200,000.00

	50.

	CVS Pharmacy (Eckerd) - Edmond

	$188,000.00

	51.

	Rite Aid (Eckerd) - Kill Devil Hills

	$160,000.00

	52.

	Rite Aid (Eckerd) - Columbia

	$140,000.00

	53.

	Lake Mary Pointe

	$139,200.00

	54.

	Rite Aid (Eckerd) - Greer

	$134,400.00

	55.

	Rite Aid (Eckerd) - Crossville

	$112,000.00

Sch. VI-2

SCHEDULE VII

ALTERATION CONDITIONS

Prior to commencement of such Alterations, Borrower or Maryland Owner, as applicable, shall provide to Lender:

1.

Plans and specifications for such Alterations;

2.

Evidence that Borrower has obtained all necessary municipal approvals;

3.

A budget for such Alterations;

4.

A completion guaranty from Indemnitor;

5.

The identity of the contractor(s) engaged in the Alterations, as well as copies of the contracts under which they have been engaged; and

An affidavit certifying that the Alterations comply with all Applicable Laws, and do not violate the terms of any Leases.

Upon commencement of such Alterations, Borrower diligently prosecutes same to completion, or if Borrower elects, to promptly remove such Alterations and restore the Property.

Upon completion (or removal) of such Alterations, Borrower shall provide to Lender:

1.

A certification from a licensed architect or engineer that the Alterations were completed (or removed) in accordance with all applicable approvals and Applicable Laws;

2.

A copy of a final certificate of occupancy with respect to the Alterations (unless certificates of occupancy are not available in the applicable jurisdiction);

3.

Lien waivers or other evidence that all sums due to others as a result of such Alterations have been paid in full;

4.

A revised survey reflecting such Alterations;

Either (a) a date down endorsement to the title policy issued to Lender in connection with the closing of the Loan, without new exceptions and confirming that no subordinate liens exist related to such Alterations, or (b) a so-called “comfort letter” from an independent attorney or title company confirming the foregoing.

Sch. VII-1

SCHEDULE VIII

GROUND LEASES

1.

Ground Lease executed as of May 15, 2003 by and between The Board of Trustees of the University of Alabama, a public corporation, and University Retail Company II, L.L.C., a Delaware limited liability company (“URCII”), as evidenced by that certain Memorandum of Ground Lease executed May 15, 2003, recorded in Deed Book 2003, Page 9370, in the Office of the Probate Judge in Tuscaloosa County, Alabama, as assigned by URCII to Inland Western Tuscaloosa University, L.L.C., a Delaware limited liability company (“Lessee”), pursuant to that certain Assignment and Assumption of Ground Lease dated November 23, 2004, by and between URCII and Lessee, recorded in Deed Book 2005, Page 1147, aforesaid records, as further amended by that certain Ground Lessor’s Affidavit and Agreement Ground Lease A, by and between Lessor, Mortgage Lender and Lessee executed in connection with the Mortgage Loan.

2.

Ground Lease executed as of June 17, 1999 by and between The Board of Trustees of the University of Alabama, a public corporation (“Lessor”), and Bayer Construction, L.L.C., an Alabama limited liability company (“Bayer”), as evidenced by that certain Memorandum of Ground Lease dated August 24, 1999, recorded in Deed Book 2000, Page 6673, in the Office of the Probate Judge in Tuscaloosa County, Alabama, as assigned by Bayer to University Retail Company, L.L.C., a Delaware limited liability company (“URC”), pursuant to that certain Assignment and Assumption of Ground Lease dated August 7, 2000 by and between Bayer and URC and recorded in Deed Book 2000, Page 18771, aforesaid records, as amended by that certain First Amendment to Ground Lease dated June 25, 2002 by and between Lessor and URC, as assignee of Bayer, as assigned by URC to Inland Western Tuscaloosa University, L.L.C., a Delaware limited liability company (“Lessee”), pursuant to that certain Assignment and Assumption of Ground Lease dated November 23, 2004, by and between URCII and Lessee, recorded in Deed Book 2005, Page 1134, aforesaid records, as further amended by that certain Ground Lessor’s Affidavit and Agreement Ground Lease B, by and between Lessor, Mortgage Lender and Lessee executed in connection with the Mortgage Loan.

3.

Ground Lease Agreement, dated January 31, 2002, by and between International Plaza Associates III, Ltd., a Florida limited partnership (“IPA III”), as lessor, and IPSC Associates, L.L.C., a Florida limited liability company (“IPSC”), as lessee, a Memorandum of which was recorded on June 20, 2002 in Book 20480, at Page 532 in the Official Records of Miami-Dade County, Florida (the “Recording Office”), and as re-recorded on September 3, 2002 in Book 20627, at Page 3001 in the Recording Office, as amended by that certain First Amendment to Ground Lease Agreement, dated May 28, 2004, by and between IPA III and IPSC, as assigned by IPA III to Elston/LaJolla L.L.C., an Illinois limited liability company (“Elston”), pursuant to that certain Assignment and Assumption of Ground Lease, dated as of August 26, 2004, by and between IPA III and Elston, as assigned by IPSC to Inland Western Miami 19th Street, L.L.C., a Delaware limited liability company (“Inland Miami”), pursuant to that certain Assignment and Assumption of Ground Lease, dated as of October 5, 2004, by and between IPSC and Inland Miami, as further amended by that certain Ground Lessor Estoppel and Agreement, dated as of November 5, 2009, made by Inland Miami and Elston in favor of the Mortgage Lender.

Sch. VIII-1

4.

That certain sublease between Montgomery Ward & Co., Inc. (“Wards”) as Sub-Landlord, and Anaton Associates, as Sub-Tenant, dated as of September 12, 1986, as evidenced by that certain Memorandum of Sublease, recorded May 15, 1987 as Instrument No. 87-274838 in the office of the County Recorder of Orange County, California, with respect to parcels B, C, D, E, F and G as more particularly described therein (and designated respectively as parcels 2-B, 2-C, 2-D, 2-E, 2-F and 2-G in Chicago Title Insurance Company title insurance commitment no. 910075994-x59, dated June 16, 2009), as amended by that certain First Amendment to Sublease, dated April 9, 1987, and by that certain Fourth Amendment to Lease and Second Amendment to Sublease dated as of December 21, 2001 which replaced Wards as Sub-Landlord with Target Corporation as successor Sub-Landlord, as assigned by Anaton Associates, as Sub-Tenant, to Inland Western Fullerton Metrocenter, L.L.C. (“Inland Western Fullerton”), as successor Sub-Tenant, by that certain Assignment and Assumption of Wards/Target Sublease, dated June 30, 2004 and recorded July 20, 2004 as Instrument No. 2004000655787 of the Official Records of Orange County, California; the aforementioned being a sublease of that certain Lease, dated as of May 1, 1964, between Wilson W. Phelps and Adele K. Phelps, as Trustees under the Trust created by the Last Will and Testament of John Wilson Phelps (the “Phelps Trust”), as lessor, and Montgomery Ward & Co., Incorporated, as lessee, as amended by that certain Addendum to Lease, dated as of January 5, 1965, between Wilson W. Phelps and John W. Phelps, as Trustees under the Trust created by the Last Will and Testament of John Wilson Phelps, as lessor, and Montgomery Ward & Co., Incorporated, as lessee, as further amended by that certain Second Addendum to Lease, dated as of August 25, 1965, between Wilson W. Phelps and John W. Phelps, as Trustees under the Trust created by the Last Will and Testament of John Wilson Phelps, as lessor, and Montgomery Ward & Co., Incorporated, as lessee, as further amended by that certain Third Addendum of Lease, dated as of September 30, 1986, between Wilson W. Phelps and John W. Phelps, as Trustees under the Trust created by the Last Will and Testament of John Wilson Phelps, as lessor, and Montgomery Ward & Co., Incorporated, as lessee, as further amended by that certain Fourth Amendment to Lease and Second Amendment to Sublease, dated as of December 21, 2001, the interest of Montgomery Ward & Co., Incorporated, as lessee, being assumed by Target Corporation (“Target”) by acquiring that interest from Montgomery Ward & Co., Incorporated in the so-called Ward Bankruptcy Matter filed in the United States Bankruptcy Court for the District of Delaware, Case No. 00-4667 (PJW), as supplemented by that certain Restated Non-Disturbance, Indemnity and Attornment Agreement, dated as of March 6, 2004, between John W. Phelps and James S. Phelps, as Trustees under the Trust created by the Last Will and Testament of John Wilson Phelps, deceased, and the Decree of Distribution entered into in the matter of his estate, a certified copy of which Decree is recorded in Book 2296, Page 452, Official Records of Orange County, California, all collectively known as the “JOHN WILSON PHELPS TESTAMENTARY TRUST” and ANATON ASSOCIATES, a California limited partnership, as further amended by that certain Agreement dated as of December 1, 2009, by and among Target, Mortgage Lender and Inland Western Fullerton and consented to by the Phelps Trust pursuant to that certain Consent of Prime Ground Lease Lessor dated as of December 1, 2009.

5.

That certain Amended and Restated Ground Lease, dated December 1, 2003 between Fullerton Metro Center LLC (“Fullerton Metro Center”), as Landlord, and Anaton Associates, as Tenant, with respect to Parcel 2, Parcel 3 and the Corner Parcel, as described therein (and designated respectively as parcel 4, parcel 1 and parcel 3 in Chicago Title Insurance Company title insurance commitment no. 910075994-x59, dated June 16, 2009), as assigned by Anaton 

Sch. VIII-2

Associates, as Tenant, to Inland Western Fullerton Metrocenter, L.L.C. (“Inland Fullerton”), as successor Tenant, by that certain Assignment and Assumption, dated June 30, 2004 and recorded July 20, 2004 as Instrument No. 2004000655788 of the Official Records of Orange County, California, as amended by that certain Agreement dated December 1, 2009 by and among Fullerton Metro Center, Inland Fullerton and Mortgage Lender.

6.

That certain Lease dated July 15, 1996, between River Park Properties II, a California Limited Partnership, as Lessor, and Edwards Theatres Circuit, Inc., a California Corporation, as Lessee, as disclosed in the document entitled "That Certain Memorandum of Lease", recorded December 27, 1999 as Instrument No. 1990183071 in the Official Records of Fresno County, California, as amended by that certain First Amendment to Ground Lease, dated November 4, 1997, as further amended by that certain Second Amendment to Ground Lease, dated April 13, 1998, as further amended by that certain Third Amendment to Ground Lease, dated February 3, 1999, as further amended by that certain Side Agreement dated as of December 27, 1999, as further amended by that certain Notice of Lease recorded December 27, 1999 as Instrument No. 19990183072 in the Official Records of Fresno County, California, as further assigned to Starwood Wasserman, Fresno, LLC, a Delaware limited liability company, by that certain Assignment and Assumption of Ground Lease recorded December 27, 1999 as Instrument No. 19990183073 in the Official Records of Fresno County, California, as further amended by that certain Fourth Amendment to Ground Lease, dated as of December 27, 1997, as disclosed by that certain Amended and Restated Memorandum of Ground Lease recorded May 16, 2000 as Instrument No. 20000058443 in the Official Records of Fresno County, California, and as further assigned to Inland Western Fresno Blackstone Avenue, L.L.C., a Delaware limited liability company (“Inland Fresno”), by that certain Assignment and Assumption of Ground Lease and Memorandum of Ground Lease, recorded May 17, 2005, as Document No. 2005-108510 in the Official Records of Fresno County, California, as further amended by that certain Landlord Consent and Estoppel Agreement dated as of November 30, 2009, by and among River Park Properties VII, LLC, Inland Fresno and Mortgage Lender.

Sch. VIII-3

SCHEDULE IX

GROUND LEASE EXCEPTIONS

None

Sch. IX-1

SCHEDULE X

ORGANIZATIONAL CHART

[attached hereto]

Sch. X-1

SCHEDULE XI

REOAS

			
	 
	Individual Property

	REOA

	1. 

	Phenix Crossing, Phenix City, Alabama

	Declaration of Restrictive Covenants and Conditions and Grant of Easements dated December 28, 2004, by Regency Realty Group, Inc. and filed for record in Miscellaneous Book 1274, at Page 635, in the Office of the Judge of Probate of Lee County, Alabama.

	2. 

	Coram Plaza, Coram, New York

	Declaration of Easement and Covenants as recorded in Liber 11238, page 213, in the Office of the County Clerk of the County of Suffolk, New York.

	3. 

	Azalea Square I, Summerville, South Carolina

	Declaration of Cross Access Easements and Agreements by Silver Oak Associates, Limited Partnership and Target Corporation, recorded December 26, 2002 in Book 3062, page 51, Register of Deeds of Berkeley County, South Carolina.

	4. 

	Azalea Square I, Summerville, South Carolina

	Declaration of Easements, Covenants and Restrictions, dated April 19, 2002 and recorded April 22, 2002 in Book 2706, page 101, Register of Deeds, Berkely County, South Carolina

	5. 

	Paradise Valley Marketplace

Phoenix, Arizona

	Reciprocal Easement Agreement, with Covenants, Conditions and Restrictions, dated July 18, 2003 and recorded August 21, 2003 under Clerk's File No. 2003-1154542, Official Records of Maricopa County, Arizona

	6. 

	Fox Creek Village

Longmont, Colorado

	Declaration of Covenants, Conditions, and Restrictions, for Fox Creek Village, dated February 11, 2003, and recorded February 21, 2003 under Clerk's File Number 2399823, Official Records of Boulder County, Colorado

	7. 

	23rd Street Plaza

Panama City, Florida

	Reciprocal Easement Easements and Operation Agreement, dated July 29, 1998, and recorded August 27, 1998 in Official Records Book 1815, page 210, Public Records of Bay County, Florida

	8. 

	23rd Street Plaza

Panama City, Florida

	Declaration of Covenants, Conditions, Easements and Restrictions recorded in Official Records Book 1848, page 2123, as amended by First Amendment thereof recorded in Official Records Book 1965, page 1232, Public Records of Bay County, Florida

Sch. XI-1

			
	9. 

	Stilesboro Oaks

Acworth, Georgia

	Declaration of Easements, Covenants and Restrictions, dated November 16, 1995 and recorded in Deed Book 9255, page 452, Cobb County, Georgia

	10. 

	Gurnee Town Center

Gurnee, Illinois

	Reciprocal Easement Agreement dated October 31, 2000 and recorded November 3, 2000 as Document No. 4604202, County Recorder of Lake County, Illinois

	11. 

	Magnolia Square

Houma, Louisiana

	Declaration of Easements and Restrictions dated January 21, 2004 and recorded January 23, 2004 under Entry No. 1170026, COB 1853, folio 14, Terrebonne Parish, Louisiana

	12. 

	Cuyahoga Falls Market Center, Cuyahoga Falls, Ohio

	Reciprocal Easement and Operation Agreement dated February 11, 1997 and recorded in Official Records Volume 2362, page 427 of Summit County, Ohio records

	13. 

	Cranberry Square

Cranberry Township, Pennsylvania

	Declaration of Easements, Covenants and Restrictions, dated January 25, 1996 and recorded in Deed Book 2596, page 465, as amended by Amendment thereto, dated March 19, 2004 and recorded March 25, 2004 as Instrument No. 200403260009270, Butler County, Pennsylvania records

	14. 

	Denton Crossing Shopping Center, Denton, Texas

	Reciprocal Easement Agreement dated February 2, 2003 and recorded in Volume 5264, page 3304, Public Records of Denton County, Texas

Sch. XI-2

SCHEDULE XII

FLOOD ZONE PROPERTIES

1.

Eckerd Drug Store, Kill Devil Hills, North Carolina

Sch. XII-1

SCHEDULE XIII

INTENTIONALLY OMITTED

Sch. XIII-1

SCHEDULE XIV

SOLE TENANT INDIVIDUAL PROPERTIES/LEASES

			
	 
	Sole Tenant Individual Property

	Sole Tenant Lease

	1.

	Cinemark Theater

Woodridge, Illinois

	That certain lease dated August 10, 1998 between American National Bank and Trust Company of Chicago, as trustee, Forest City-Harris Group, as Beneficiary, and Cinemark USA, Inc., as Tenant, as amended by that certain First Amendment to Lease dated August 14, 1999.

	2.

	Edwards Multiplex

Fresno, California

	That certain sublease dated December 27, 1999 between Inland Western Fresno Blackstone Avenue, L.L.C. (successor in interest to Starwood Wasserman Fresno, LLC) and Edwards Theatres, Inc. (successor in interest to Edwards Megaplex Holdings, LLC), as amended as follows: Consent to Sublease Agreement dated December 27, 1999; First Amendment of Ground Sublease dated December 27, 1999; Letter Confirming Certain Facts re Third Amendment to Ground Lease dated June 1, 2000 and Amendment to Theatre Lease dated March 8, 2002.

	3.

	Edwards Multiplex, Ontario, California

	That certain sublease dated July 16, 1999 between Inland Western Ontario 4th Street, L.L.C. (successor in interest to Starwood Wasserman Ontario, LLC) and Edwards Theatres, LLC (successor by merger to Edwards Megaplex holdings, LLC), as amended by the Amendment to Theater Lease dated March 8, 2002.

	4.

	CVS, Norman, Oklahoma

	That certain lease dated April 16, 2003 between Inland Western Norman, LLC (successor in interest to Commercial Net Lease Realty Services, Inc.) and Oklahoma CVS Pharmacy, L.L.C. (successor in interest to Eckerd Corporation)

	5.

	CVS, Edmond, Oklahoma

	That certain lease dated April 21, 2003 between Inland Western Dansforth, LLC (successor in interest to Commercial Net Lease Realty Services, Inc.) and Oklahoma CVS Pharmacy, L.L.C. (successor in interest to Eckerd Corporation)

	6.

	Eckerd Drug Store No. 6328, Colesville, Maryland

	That certain lease dated June 3, 2004 between Inland Western Colesville New Hampshire, LLC (successor in interest to Colesville One, LLC), and Eckerd Corporation, as amended by Lease Amendment No. 1 dated May 28, 2004 and Letter Agreement dated May 2, 2005

Sch. XIV-1

			
	7.

	Eckerd Drug Store

Columbia, South Carolina

	That certain lease dated June 3, 2004 between Inland Western Columbia Broad River, L.L.C., and Eckerd Corporation

	8.

	Eckerd Drug Store

Crossville, Tennessee

	That certain lease dated June 3, 2004 between Inland Western Crossville Main, L.L.C., and Eckerd Corporation

	9.

	Eckerd Drug Store

Greer, South Carolina

	That certain lease dated June 3, 2004 between Inland Western Retail Real Estate Trust, Inc. (successor in interest to Inland Western Greer Wade Hampton, L.L.C.), and Eckerd Corporation, as amended by that certain Letter Agreement dated July 8, 2004

	10.

	Eckerd Drug Store

Kill Devil Hills, North Carolina

	That certain lease dated June 3, 2004 between Inland Western Retail Real Estate Trust, Inc. (successor in interest to Inland Western Kill Devil Hills Croatan, L.L.C.), and Eckerd Corporation, as amended by that certain Lease Amendment No. 1 dated January 9, 2006

Sch. XIV-2

SCHEDULE XV-A

INLAND PACIFIC PROPERTY SERVICES MANAGED PROPERTIES

		
	 
	Individual Property

	1.

	Metrocenter

Fullerton, California

	2.

	Edwards Multiplex

Ontario, California

	3.

	Edwards Multiplex

Fresno, California

	4.

	Placentia Town Center

Placentia, California

Sch. XV-A

SCHEDULE XV-B

INLAND SOUTHWEST MANAGEMENT LLC MANAGED PROPERTIES

		
	 
	Individual Property

	1.

	Gateway Pavilions

Avondale, Arizona

	2.

	Paradise Valley Marketplace

Phoenix, Arizona

	3.

	Fox Creek Village

Longmont, Colorado

	4.

	Magnolia Square

Houma, Louisiana

	5.

	Best on the Boulevard Shopping Center

Las Vegas, Nevada

	6.

	Quail Springs

Oklahoma City, Oklahoma

	7.

	CVS

Norman, Oklahoma

	8.

	CVS

Edmond, Oklahoma

	9.

	Denton Crossing Shopping Center

Denton, Texas

	10.

	Pleasant Run Towne Crossing Shopping Center

Cedar Hill, Texas

	11.

	Trenton Crossing

McAllen, Texas

	12.

	Promenade at Red Cliff

St. George, Utah

Sch. XV-B

SCHEDULE XV-C

INLAND US MANAGEMENT LLC MANAGED PROPERTIES

		
	 
	Individual Property

	1.

	Edgemont Town Center

Birmingham, Alabama

	2.

	University Town Center

Tuscaloosa, Alabama

	3.

	Phenix Crossing

Phenix City, Alabama

	4.

	Northwoods Shopping Center

Wesley Chapel, Florida

	5.

	Bed Bath & Beyond Plaza,

f/k/a International Plaza

Miami, Florida

	6.

	23rd Street Plaza

Panama City, Florida

	7.

	Lake Mary Pointe

Lake Mary, Florida

	8.

	Green’s Corner

Cumming, Georgia

	9.

	Stilesboro Oaks

Acworth, Georgia

	10.

	Newton Crossroads

Covington, Georgia

	11.

	Evans Towne Center

Augusta, Georgia

	12.

	Gurnee Town Center

Gurnee, Illinois

	13.

	Cinemark Theater

Woodridge, Illinois

	14.

	Stony Creek Marketplace

Noblesville, Indiana

	15.

	Eckerd Drug Store No. 6328

Colesville, Maryland

	16.

	High Ridge Crossing

High Ridge, Missouri

Sch. XV-C-1

		
	17.

	Hickory Ridge Shopping Center

Hickory, North Carolina

	18.

	Eckerd Drug Store

Kill Devil Hills, North Carolina

	19.

	Coram Plaza

Coram, New York

	20.

	Massillon Village Center

Massillon, Ohio

	21.

	Southgate Plaza

Heath, Ohio

	22.

	Cuyahoga Falls Market Center

Cuyahoga Falls, Ohio

	23.

	Cranberry Square

Cranberry Township, Pennsylvania

	24.

	Saucon Valley Shopping Center

Bethlehem, Pennsylvania

	25.

	Holliday Town Center

Duncansville, Pennsylvania

	26.

	Cottage Plaza

Pawtucket, Rhode Island

	27.

	Brown’s Lane

Middletown, Rhode Island

	28.

	Boulevard Plaza

Pawtucket, Rhode Island

	29.

	Azalea Square

Summerville, South Carolina

	30.

	North Rivers Town Center

Charleston, South Carolina

	31.

	Irmo Station

Irmo, South Carolina

	32.

	The Shoppes at Park West

Mt. Pleasant, South Carolina

	33.

	Eckerd Drug Store

Columbia, South Carolina

	34.

	Eckerd Drug Store

Greer, South Carolina

Sch. XV-C-2

		
	35.

	The Columns Shopping Center

Jackson, Tennessee

	36.

	Winchester Commons Shopping Center

Memphis, Tennessee

	37.

	Harvest Towne Center

Knoxville, Tennessee

	38.

	Eckerd Drug Store

Crossville, Tennessee

	39.

	Northpointe Plaza

Spokane, Washington

Sch. XV-C-3

SCHEDULE XVI

ASSIGNMENT REPRESENTATIONS

1.

Lender is the sole legal and beneficial owner and holder of the Loan and the Loan Documents, free and clear of any and all liens, pledges, charges, security interests or other encumbrances of any nature on its interest in the Loan.

2.

Lender has not previously assigned, sold or otherwise transferred any of its interest in and to the Loan or any of its rights under the Loan Documents or any portion thereof.

3.

The amount of the unpaid principal balance of the Loan as of the date of assignment.

Sch. XVI-1indenturenewnotes.htm

    
      
         

      

      
        
           

        

        
          
          

          
            

          

        

        
          Table of Contents

        

      

      
        

        

      

       

       

      MORRIS
PUBLISHING GROUP, LLC

       

      and

       

      MORRIS
PUBLISHING FINANCE CO.,

       

      as
Issuers,

       

      THE
GUARANTORS PARTY HERETO,

       

      as
Guarantors

       

      Floating
Rate Secured Notes due 2014

       

      _________________________

       

      INDENTURE

       

      Dated
as of March 1, 2010

       

      _________________________

       

      Wilmington
Trust FSB,

       

      as
Trustee and Collateral Agent

       

       

      
        

        

      

      
        
           

        

        
          
          

          
          

        

        
          Table of Contents

        

      

       

       

      CROSS-REFERENCE TABLE*

       

       

      
        	
                Trust
      Indenture Act Section

              	
                Indenture
      Section

              
	
                310

              	
                (a)(1)

              	
                7.10

              
	 
      	
                (a)(2)

              	
                7.10

              
	 
      	
                (a)(3)

              	
                N.A.

              
	 
      	
                (a)(4)

              	
                N.A.

              
	 
      	
                (a)(5)

              	
                7.10

              
	 
      	
                (b)

              	
                7.3,7.8,
      7.10

              
	 
      	
                (c)

              	
                N.A.

              
	
                311

              	
                (a)

              	
                7.11

              
	 
      	
                (b)

              	
                7.11

              
	 
      	
                (c)

              	
                N.A.

              
	
                312

              	
                (a)

              	
                2.5

              
	 
      	
                (b)

              	
                14.3

              
	 
      	
                (c)

              	
                14.3

              
	
                313

              	
                (a)

              	
                7.6

              
	 
      	
                (b)(1)

              	
                N.A.

              
	 
      	
                (b)(2)

              	
                7.6

              
	 
      	
                (c)

              	
                7.6,
      14.2

              
	 
      	
                (d)

              	
                7.6

              
	
                314

              	
                (a)(1)

              	
                N.A.

              
	 
      	
                (a)(2)

              	
                N.A.

              
	 
      	
                (a)(3)

              	
                N.A.

              
	 
      	
                (a)(4)

              	
                14.5

              
	 
      	
                (b)

              	
                12.2

              
	 
      	
                (c)(1)

              	
                14.4

              
	 
      	
                (c)(2)

              	
                14.4

              
	 
      	
                (c)(3)

              	
                14.4

              
	 
      	
                (d)

              	
                12.2,
      12.5

              
	 
      	
                (e)

              	
                14.5

              
	 
      	
                (f)

              	
                N.A.

              
	
                315

              	
                (a)

              	
                7.2

              
	 
      	
                (b)

              	
                7.5,14.2

              
	 
      	
                (c)

              	
                7.1

              
	 
      	
                (d)

              	
                7.1

              
	 
      	
                (e)

              	
                6.12

              
	
                316

              	
                (a)(last
      sentence)

              	
                2.9

              
	 
      	
                (a)(1)(A)

              	
                6.5

              
	 
      	
                (a)(1)(B)

              	
                6.4

              
	 
      	
                (a)(2)

              	
                N.A.

              
	 
      	
                (b)

              	
                6.7

              
	 
      	
                (c)

              	
                N.A.

              
	
                317

              	
                (a)(1)

              	
                6.8

              
	 
      	
                (a)(2)

              	
                6.10

              
	 
      	
                (b)

              	
                2.4

              
	
                318

              	
                (a)

              	
                14.1

              
	 
      	
                (b)

              	
                N.A.

              
	 
      	
                (c)

              	
                14.1

              

      

       

       

      N.A.
means not applicable.

      

        

      

      

        *      This
Cross-Reference Table shall not, for any purpose, be deemed a part of the
Indenture.

         

      

      

      
        
          
             

          

          
             

            
              

            

          

          
            Table of Contents

          

        

      

       

      TABLE OF CONTENTS

       

      Page

       

       

      ARTICLE I.

       

       

      DEFINITIONS
AND INCORPORATION BY REFERENCE

       

      
        	
                Section 1.1.

              	
                Definitions. 

              	
                1

              

      

      
        	
                Section 1.2.

              	
                Other Definitions. 

              	
                27

              

      

      
        	
                Section 1.3.

              	
                Incorporation by Reference of Trust Indenture
      Act. 

              	
                28

              

      

      
        	
                Section 1.4.

              	
                Rules of Construction. 

              	
                28

              

      

      
        	
                Section 1.5.

              	
                Acts of Holders. 

              	
                29

              

      

       

       

      ARTICLE II.

       

       

       

      THE
NOTES

       

      
        	
                Section 2.1.

              	
                Form and Dating. 

              	
                30

              

      

      
        	
                Section 2.2.

              	
                Execution and Authentication. 

              	
                32

              

      

      
        	
                Section 2.3.

              	
                Registrar and Paying Agent. 

              	
                33

              

      

      
        	
                Section 2.4.

              	
                Paying Agents To Hold Money in
Trust. 

              	
                33

              

      

      
        	
                Section 2.5.

              	
                Holder Lists. 

              	
                34

              

      

      
        	
                Section 2.6.

              	
                Transfer and Exchange. 

              	
                34

              

      

      
        	
                Section 2.7.

              	
                Replacement Notes. 

              	
                38

              

      

      
        	
                Section 2.8.

              	
                Outstanding Notes. 

              	
                39

              

      

      
        	
                Section 2.9.

              	
                Treasury Notes. 

              	
                39

              

      

      
        	
                Section 2.10.

              	
                Temporary Notes. 

              	
                39

              

      

      
        	
                Section 2.11.

              	
                Cancellation. 

              	
                39

              

      

      
        	
                Section 2.12.

              	
                Defaulted Interest. 

              	
                40

              

      

      
        	
                Section 2.13.

              	
                Persons Deemed Owners. 

              	
                40

              

      

      
        	
                Section 2.14.

              	
                CUSIP Numbers. 

              	
                40

              

      

       

       

      ARTICLE III.

       

       

      REDEMPTION
AND REPURCHASE

       

      
        	
                Section 3.1.

              	
                Notices to Trustee. 

              	
                41

              

      

      
        	
                Section 3.2.

              	
                Selection of Notes. 

              	
                41

              

      

      
        	
                Section 3.3.

              	
                Notice of Optional Redemption. 

              	
                42

              

      

      
        	
                Section 3.4.

              	
                Effect of Notice of Redemption. 

              	
                43

              

      

      
        	
                Section 3.5.

              	
                Deposit of Redemption Price or Purchase
      Price. 

              	
                43

              

      

      
        	
                Section 3.6.

              	
                Notes Redeemed or Repurchased in
    Part. 

              	
                43

              

      

      
        	
                Section 3.7.

              	
                Optional Redemption. 

              	
                44

              

      

      
        	
                Section
      3.8.

              	
                [Intentionally
      Omitted]. 

              	
                44

              

      

      
        	
                Section 3.9.

              	
                Repurchase upon Change of Control
    Offer. 

              	
                44

              

      

      
        	
                Section 3.10.

              	
                Repurchase upon Application of Excess
      Proceeds. 

              	
                46

              

      

      
        	
                Section 3.11.

              	
                Mandatory Redemption with Excess Free Cash
      Flow. 

              	
                48

              

      

       

      

      
        
          
             

          

          
            -i-

            
              

            

          

          
            Table of Contents

          

        

      

       

      ARTICLE IV.

       

       

      COVENANTS

       

      
        	
                Section 4.1.

              	
                Payment of Principal and Interest. 

              	
                50

              

      

      
        	
                Section 4.2.

              	
                Maintenance of Office or Agency. 

              	
                51

              

      

      
        	
                Section 4.3.

              	
                Reports. 

              	
                51

              

      

      
        	
                Section 4.4.

              	
                Compliance Certificate. 

              	
                52

              

      

      
        	
                Section 4.5.

              	
                Taxes. 

              	
                53

              

      

      
        	
                Section 4.6.

              	
                Stay, Extension and Usury Laws. 

              	
                53

              

      

      
        	
                Section 4.7.

              	
                Limitation on Restricted Payments. 

              	
                54

              

      

      
        	
                Section 4.8.

              	
                Limitation on Dividend and Other Payment Restrictions
      Affecting Restricted Subsidiaries. 

              	
                55

              

      

      
        	
                Section 4.9.

              	
                Limitation on Incurrence of Additional
      Indebtedness. 

              	
                56

              

      

      
        	
                Section 4.10.

              	
                Limitation on Asset Sales. 

              	
                56

              

      

      
        	
                Section 4.11.

              	
                Limitations on Transactions with
      Affiliates. 

              	
                58

              

      

      
        	
                Section 4.12.

              	
                Limitation on Liens. 

              	
                60

              

      

      
        	
                Section 4.13.

              	
                Continued Existence. 

              	
                60

              

      

      
        	
                Section 4.14.

              	
                Insurance Matters. 

              	
                60

              

      

      
        	
                Section 4.15.

              	
                Working Capital Balance. 

              	
                61

              

      

      
        	
                Section 4.16.

              	
                Additional Subsidiaries. 

              	
                61

              

      

      
        	
                Section 4.17.

              	
                Conduct of Business. 

              	
                61

              

      

      
        	
                Section 4.18.

              	
                Payments for Consent. 

              	
                62

              

      

      
        	
                Section 4.19.

              	
                Limitation on Preferred Stock of Restricted
      Subsidiaries. 

              	
                62

              

      

      
        	
                Section 4.20.

              	
                Prohibition on Incurrence of Senior Subordinated
      Debt. 

              	
                62

              

      

      
        	
                Section 4.21.

              	
                Events of Loss. 

              	
                62

              

      

      
        	
                Section 4.22.

              	
                Financial Covenants. 

              	
                64

              

      

      
        	
                Section 4.23.

              	
                Capital Expenditures. 

              	
                65

              

      

      
        	
                Section 4.24.

              	
                Services Agreement. 

              	
                66

              

      

      
        	
                Section 4.25.

              	
                Maintenance of Properties and Intellectual Property
      Rights. 

              	
                66

              

      

      
        	
                Section 4.26.

              	
                Compliance with Laws. 

              	
                66

              

      

      
        	
                Section 4.27.

              	
                Books and Records; Inspection
    Rights. 

              	
                66

              

      

      
        	
                Section 4.28.

              	
                Security Documents. 

              	
                66

              

      

      
        	
                Section 4.29.

              	
                Further Assurances. 

              	
                67

              

      

      
        	
                Section 4.30.

              	
                Board Observer. 

              	
                67

              

      

       

       

      ARTICLE V.

       

       

      SUCCESSORS

       

      
        	
                Section 5.1.

              	
                Merger, Consolidation and/or Sale of
      Assets. 

              	
                68

              

      

      
        	
                Section 5.2.

              	
                Successor Corporation Substituted. 

              	
                71

              

      

    

    
 

    
      
        
          
             

          

          
            -ii-

            
              

            

          

          
            Table of Contents

          

        

      

       

      
        ARTICLE VI.

         

         

        DEFAULTS AND
REMEDIES

      

      
      

      
        	
                Section 6.1.

              	
                Events of Default. 

              	
                71

              

      

      
        	
                Section 6.2.

              	
                Acceleration. 

              	
                73

              

      

      
        	
                Section 6.3.

              	
                Other Remedies. 

              	
                74

              

      

      
        	
                Section 6.4.

              	
                Waiver of Past Defaults. 

              	
                74

              

      

      
        	
                Section 6.5.

              	
                Control by Majority. 

              	
                75

              

      

      
        	
                Section 6.6.

              	
                Limitation on Suits. 

              	
                75

              

      

      
        	
                Section 6.7.

              	
                Rights of Holders of Notes To Receive
      Payment. 

              	
                75

              

      

      
        	
                Section 6.8.

              	
                Collection Suit by Trustee. 

              	
                76

              

      

      
        	
                Section
      6.9.

              	
                [Intentionally
      Omitted]. 

              	
                76

              

      

      
        	
                Section 6.10.

              	
                Trustee May File Proofs of Claim. 

              	
                76

              

      

      
        	
                Section 6.11.

              	
                Priorities. 

              	
                76

              

      

      
        	
                Section 6.12.

              	
                Undertaking for Costs. 

              	
                77

              

      

       

       

      ARTICLE VII.

       

       

      TRUSTEE

       

      
        	
                Section 7.1.

              	
                Duties of Trustee. 

              	
                77

              

      

      
        	
                Section 7.2.

              	
                Rights of Trustee. 

              	
                78

              

      

      
        	
                Section 7.3.

              	
                Individual Rights of Trustee. 

              	
                80

              

      

      
        	
                Section 7.4.

              	
                Trustee’s Disclaimer. 

              	
                80

              

      

      
        	
                Section 7.5.

              	
                Notice of Defaults. 

              	
                80

              

      

      
        	
                Section 7.6.

              	
                Reports by Trustee to Holder of the
      Notes. 

              	
                80

              

      

      
        	
                Section 7.7.

              	
                Compensation, Reimbursement and
      Indemnity. 

              	
                80

              

      

      
        	
                Section 7.8.

              	
                Replacement of Trustee. 

              	
                81

              

      

      
        	
                Section 7.9.

              	
                Successor Trustee by Merger, Etc. 

              	
                82

              

      

      
        	
                Section 7.10.

              	
                Eligibility; Disqualification. 

              	
                83

              

      

      
        	
                Section 7.11.

              	
                Preferential Collection of Claims Against
      Issuers. 

              	
                83

              

      

       

       

      ARTICLE VIII.

       

       

      LEGAL
DEFEASANCE AND COVENANT DEFEASANCE

       

      
        	
                Section 8.1.

              	
                Option To Effect Legal Defeasance or Covenant
      Defeasance. 

              	
                83

              

      

      
        	
                Section 8.2.

              	
                Legal Defeasance and Discharge. 

              	
                83

              

      

      
        	
                Section 8.3.

              	
                Covenant Defeasance. 

              	
                84

              

      

      
        	
                Section 8.4.

              	
                Conditions to Legal or Covenant
      Defeasance. 

              	
                84

              

      

      
        	
                Section 8.5.

              	
                Deposited Money and U.S. Government Securities To Be Held in
      Trust; Other Miscellaneous Provisions. 

              	
                86

              

      

      
        	
                Section 8.6.

              	
                Repayment to the Issuers. 

              	
                86

              

      

      
        	
                Section 8.7.

              	
                Reinstatement. 

              	
                87

              

      

      
 

      
        
          
             

          

          
            -iii-

            
              

            

          

          
            Table of Contents

          

        

      

       

      
        ARTICLE IX.

         

         

        AMENDMENT,
SUPPLEMENT AND WAIVER

         

      

      
      

      
        	
                Section 9.1.

              	
                Without Consent of Holders of Notes. 

              	
                87

              

      

      
        	
                Section 9.2.

              	
                With Consent of Holders of Notes. 

              	
                87

              

      

      
        	
                Section 9.3.

              	
                Compliance with Trust Indenture Act. 

              	
                89

              

      

      
        	
                Section 9.4.

              	
                Revocation and Effect of Consents. 

              	
                89

              

      

      
        	
                Section 9.5.

              	
                Notation on or Exchange of Notes. 

              	
                89

              

      

      
        	
                Section 9.6.

              	
                Trustee To Sign Amendment, Etc. 

              	
                89

              

      

       

       

      ARTICLE X.

       

       

      SUBORDINATION

       

      
        	
                Section 10.1.

              	
                Notes Subordinated. 

              	
                90

              

      

      
        	
                Section 10.2.

              	
                Payments May Be Made Prior to
      Dissolution. 

              	
                91

              

      

      
        	
                Section 10.3.

              	
                Notice to Trustee. 

              	
                91

              

      

      
        	
                Section 10.4.

              	
                Reliance on Judicial Order or Certificate of Liquidating
      Agent. 

              	
                92

              

      

      
        	
                Section 10.5.

              	
                Trustee’s Relation to Senior Debt. 

              	
                92

              

      

      
        	
                Section 10.6.

              	
                Noteholders Authorize Trustee To Effectuate Subordination of
      Notes. 

              	
                92

              

      

      
        	
                Section 10.7.

              	
                The Intercreditor Agreement Not To Prevent Events of
      Default. 

              	
                93

              

      

      
        	
                Section 10.8.

              	
                Trustee’s Compensation Not
    Prejudiced. 

              	
                93

              

      

       

       

      ARTICLE XI.

       

       

      GUARANTEE

       

      
        	
                Section 11.1.

              	
                Unconditional Guarantee. 

              	
                93

              

      

      
        	
                Section 11.2.

              	
                Severability. 

              	
                93

              

      

      
        	
                Section 11.3.

              	
                Limitation of Guarantor’s
Liability. 

              	
                93

              

      

      
        	
                Section 11.4.

              	
                Release of Guarantor. 

              	
                93

              

      

      
        	
                Section 11.5.

              	
                Contribution. 

              	
                94

              

      

      
        	
                Section 11.6.

              	
                Deferral of Subrogation. 

              	
                94

              

      

      
        	
                Section 11.7.

              	
                Execution of Guarantee. 

              	
                95

              

      

      
        	
                Section 11.8.

              	
                Waiver of Stay, Extension or Usury
      Laws. 

              	
                95

              

      

       

       

      ARTICLE XII.

       

       

      COLLATERAL
AND SECURITY

       

      
        	
                Section 12.1.

              	
                Security Documents; Intercreditor
      Agreement. 

              	
                96

              

      

      
        	
                Section 12.2.

              	
                Recording and Opinions. 

              	
                99

              

      

      
        	
                Section 12.3.

              	
                Release of Collateral. 

              	
                100

              

      

      
        	
                Section 12.4.

              	
                Additional Collateral. 

              	
                100

              

      

      
        	
                Section 12.5.

              	
                Certificates of the Issuers. 

              	
                101

              

      

      
        	
                Section 12.6.

              	
                No Determination by the Trustee. 

              	
                101

              

      

      
 

      
        
          
             

          

          
            -iv-

            
              

            

          

          
            Table of Contents

          

        

      

      

      
        	
                Section 12.7.

              	
                Authorization of Actions to Be Taken by the Trustee and the
      Collateral Agent Under the Security Documents. 

              	
                102

              

      

      
        	
                Section 12.8.

              	
                Action by the Trustee or Collateral
      Agent. 

              	
                102

              

      

      
        	
                Section 12.9.

              	
                Replacement of Collateral Agent. 

              	
                103

              

      

      
        
          	
                  Section 12.10.

                	
                  Authorization of Receipt of Funds by the Collateral Agent
      Under the Security Documents.

                	
                  103

                

        

        
          	
                  Section 12.11.

                	
                  Termination of Security Interest.

                	
                  103

                

        

        
          	
                  Section 12.12.

                	
                  Conflicts Between Indenture and Security
      Documents.

                	
                  104

                

        

      

       

       

      ARTICLE XIII.

       

       

      SATISFACTION
AND DISCHARGE

       

      
        	
                Section 13.1.

              	
                Satisfaction and Discharge. 

              	
                104

              

      

      
        	
                Section 13.2.

              	
                Application of Trust. 

              	
                104

              

      

       

       

      ARTICLE XIV.

       

       

      MISCELLANEOUS

       

      
        	
                Section 14.1.

              	
                Trust Indenture Act Controls. 

              	
                104

              

      

      
        	
                Section 14.2.

              	
                Notices. 

              	
                104

              

      

      
        	
                Section 14.3.

              	
                Communication by Holders of Notes with Other Holders of
      Notes. 

              	
                106

              

      

      
        	
                Section 14.4.

              	
                Certificate and Opinion as to Conditions
      Precedent. 

              	
                106

              

      

      
        	
                Section 14.5.

              	
                Statements Required in Certificate or
      Opinion. 

              	
                107

              

      

      
        	
                Section 14.6.

              	
                Rules by Trustee and Agents. 

              	
                107

              

      

      
        	
                Section 14.7.

              	
                No Personal Liability of Directors, Managers, Officers,
      Employees, Members and Stockholders. 

              	
                107

              

      

      
        	
                Section 14.8.

              	
                Governing Law; Submission to Jurisdiction; Waiver of Jury
      Trial. 

              	
                108

              

      

      
        	
                Section 14.9.

              	
                No Adverse Interpretation of Other
      Agreements. 

              	
                108

              

      

      
        
          	
                  Section 14.10.

                	
                  Successors.

                	
                  108

                

        

        
          	
                  Section 14.11.

                	
                  Severability.

                	
                  108

                

        

        
          	
                  Section 14.12.

                	
                  Counterpart Originals.

                	
                  108

                

        

        
          	
                  Section 14.13.

                	
                  Table of Contents, Headings, Etc.

                	
                  109

                

        

         

         

      

      SCHEDULES

       

      
        
          	
                  Schedule A

                	
                  Guarantors

                
	
                  Schedule B

                	
                  List of Acceptable Financial
      Institutions

                

        

        
          
            	
                    Schedule C

                  	
                    Properties subject to a
      Mortgage

                  

          

        

      

       

       

      EXHIBITS

       

      
        	
                Exhibit A

              	
                Form
      of Note

              
	
                Exhibit B

              	
                Form
      of Guarantee

              

      

      
 

      
        
          
             

          

          
            -v-

            
              

            

          

          
            Table of Contents

          

        

      

      
 

      INDENTURE

       

       

      
        INDENTURE
dated as of March 1, 2010 among Morris Publishing Group, LLC, a Georgia limited
liability company (the “Company”
or “Morris
Publishing”), and Morris Publishing Finance Co., a Georgia corporation,
(“Morris
Finance,” each an “Issuer”
and together, the “Issuers”)
as joint and several obligors, the Guarantors (as defined herein) listed on
Schedule A hereto, and Wilmington Trust FSB, a federal savings bank, as trustee
(the “Trustee”).

         

        Each
party agrees as follows for the benefit of the other parties and for the equal
and ratable benefit of the Holders (as defined below) of the Issuers’ Floating
Rate Secured Notes due 2014:

         

         

      

      ARTICLE I.

       

       

      DEFINITIONS
AND INCORPORATION BY REFERENCE

       

      
        	
                Section 1.1.

              	
                Definitions.

              

      

       

      “Acceptable
Financial Institution” means (a) each of the financial institutions
listed in Schedule B attached hereto and (b) any financial institution organized
under the laws of the United States or any state thereof or the District of
Columbia or any U.S. branch of a foreign bank having combined capital and
surplus of not less than $250.0 million.

       

      “Acquired
Indebtedness” means Indebtedness of a Person or any of its Subsidiaries
existing at the time such Person becomes a Restricted Subsidiary of Morris
Publishing or at the time it merges or consolidates with or into Morris
Publishing or any of its Subsidiaries or assumed in connection with the
acquisition of assets from such Person and in each case not incurred by such
Person in connection with, or in anticipation or contemplation of, such Person
becoming a Restricted Subsidiary of Morris Publishing or such acquisition,
merger or consolidation.

       

      “Affiliate”
means, with respect to any specified Person, any other Person who directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with, such specified Person.  For so long as
any individual or entity that is a Permitted Holder is an Affiliate of such
Person, all Permitted Holders shall be deemed to be Affiliates of such
Person.  The term “control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise; and the terms “controlling”
and “controlled”
have meanings correlative of the foregoing.

       

      “Agent”
means any Registrar, Paying Agent or co-registrar.

       

      “Applicable
Procedures” means, with respect to any transfer or exchange of or for
beneficial interests in any Global Note, the rules and procedures of the
Depositary that apply to such transfer or exchange.

       

       

      
        
           

        

        
          -1-

          
            

          

        

        
          Table of Contents

        

      

       

      “Asset
Sale” means any direct or indirect sale, issuance, conveyance, transfer,
lease (other than operating leases entered into in the ordinary course of
business), assignment or other transfer or disposition for value by Morris
Publishing or any of its Restricted Subsidiaries (including any Sale and
Leaseback Transaction) to any Person other than Morris Publishing or a Wholly
Owned Restricted Subsidiary of Morris Publishing of:

       

      (1)           any
Capital Stock of any Restricted Subsidiary of Morris Publishing; or

       

      (2)           any
other property or assets of Morris Publishing or any Restricted Subsidiary of
Morris Publishing other than in the ordinary course of business; provided,
however,
that an Asset Sale shall not include:

       

      (a)           a
transaction or series of related transactions for which Morris Publishing or its
Restricted Subsidiaries receive aggregate consideration of less than $1.0
million;

       

      (b)           the
sale, lease, conveyance, disposition or other transfer of all or substantially
all of the assets of Morris Publishing as permitted under Section
5.1;

       

      (c)           any
Restricted Payment permitted by Section 4.7 or that constitutes a Permitted
Investment;

       

      (d)           the
sale or discount, in each case without recourse, of accounts receivable arising
in the ordinary course of business, but only in connection with the compromise
or collection thereof;

       

      (e)           disposals
or replacements of obsolete or worn out equipment; or

       

      (f)           an
Asset Swap permitted by Section 4.10.

       

      “Asset
Swap” means a concurrent purchase and sale or exchange of Permitted
Business Assets between Morris Publishing or any of its Restricted Subsidiaries
and another Person; provided,
however,
that any cash received must be applied in accordance with Section
4.10.

       

      “Average
Availability Balance” means the amount that is determined by an Officer
of the Company by dividing
the sum of the “excess availability” under the Working Capital Facility, if any,
at the close of the Business Day on each Business Day during the applicable
calendar month by
the number of Business Days in such calendar month.

       

      “Average
Cash Balance” means the amount that is determined by an Officer of the
Company by dividing
the sum of the Working Capital Balance at the close of the business day on each
Business Day during the applicable calendar month by
the number of Business Days in such calendar month.

       

      “Bankruptcy
Law” means Title 11, U.S. Code or any similar federal or state law for
the relief of debtors.

       

       

      
        
           

        

        
          -2-

          
            

          

        

        
          Table of Contents

        

      

       

      “Board
of Directors” means, as to any Person, the board of directors (or similar
governing body) of such Person or any duly authorized committee
thereof.

       

      “Board
Resolution” means, with respect to any Person, a copy of a resolution
certified by the Secretary or an Assistant Secretary of such Person to have been
duly adopted by the Board of Directors of such Person and to be in full force
and effect on the date of such certification, and delivered to the
Trustee.

       

      “Business
Day” means any day other than a Saturday, a Sunday or a day on which
banking institutions in the City of New York or Atlanta are authorized or
required by law, regulation or executive order to remain closed.  If a
payment date is not on a Business Day at the place where such payment is to be
made, payment may be made at that place on the next succeeding day that is a
Business Day, and no interest shall accrue for the intervening
period.

       

      “Capital
Expenditures” means, with respect to any Person, all expenditures (by the
expenditure of cash or the incurrence of Indebtedness) by such Person during any
measuring period for any fixed assets or improvements or for replacements,
substitutions or additions thereto that have a useful life of more than one year
and that are required to be capitalized under GAAP.

       

      “Capital
Stock” means:

       

      (1)           with
respect to any Person that is a corporation, any and all shares, interests,
participations or other equivalents (however designated and whether or not
voting) of corporate stock, including each class of Common Stock and Preferred
Stock of such Person, and all options, warrants or other rights to purchase or
acquire any of the foregoing; and

       

      (2)           with
respect to any Person that is not a corporation, any and all partnership,
membership or other equity interests of such Person, and all options, warrants
or other rights to purchase or acquire any of the foregoing.

       

      “Capitalized
Lease Obligation” means, as to any Person, the obligations of such Person
under a lease that are required to be classified and accounted for as capital
lease obligations under GAAP and, for purposes of this definition, the amount of
such obligations at any date shall be the capitalized amount of such obligations
at such date, determined in accordance with GAAP; provided,
that for purposes of this definition, references to “GAAP” shall mean GAAP as in
effect on the Issue Date

       

      “Cash
Equivalents” means:

       

      (1)           marketable
direct obligations issued by, or unconditionally guaranteed by, the United
States government or issued by any agency thereof and backed by the full faith
and credit of the United States, in each case maturing within one year from the
date of acquisition thereof;

       

      (2)           marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within one year from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from either
S&P, Moody’s or Fitch, Inc. (“Fitch”);

       

       

      
        
           

        

        
          -3-

          
            

          

        

        
          Table of Contents

        

      

       

      (3)           commercial
paper maturing no more than one year from the date of creation thereof and, at
the time of acquisition, having a rating of at least A-1 from S&P, at least
P-1 from Moody’s or at least F1 from Fitch;

       

      (4)           certificates
of deposit or bankers’ acceptances maturing within one year from the date of
acquisition thereof issued by any bank organized under the laws of the United
States or any state thereof or the District of Columbia or any U.S. branch of a
foreign bank having at the date of acquisition thereof combined capital and
surplus of not less than $250.0 million;

       

      (5)           repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clause (1) above entered into with any bank meeting the
qualifications specified in clause (4) above; and

       

      (6)           investments
in money market funds which invest substantially all their assets in securities
of the types described in clauses (1) through (5) above; provided,
however,
that for purposes of the subordination provisions, the term “Cash
Equivalents” shall not include obligations of the type referred to in
clause (5).

       

      “Cash
Flow Adjustments” means the sum of the following for the Issuers and
their Subsidiaries during or for any applicable period and solely to the extent
not accounted for in the Company’s net cash provided by operating activities in
the consolidated cash flow statements for the applicable period:  (i)
Capital Expenditures (net of any proceeds of any related financings) permitted
pursuant to this Indenture, (ii) cash payments made in respect of any
acquisitions of any businesses by the Company or any of its Restricted
Subsidiaries permitted by this Indenture (including related fees and expenses
and any earn-out, purchase price adjustment, non-competition, and other
customary cash payments required to be made in respect of such acquisitions),
(iii) cash amounts paid in respect of Permitted Investments (other than all or
any portion of any Permitted Investments held in the form of Cash or Cash
Equivalents), (iv) scheduled principal payments and mandatory and voluntary
prepayments, including prepayment premiums or penalties, of funded Indebtedness
(including Capital Lease Obligations) permitted to be incurred pursuant to this
Indenture, provided that payments or prepayments in respect of any revolving
credit Indebtedness under any revolving credit facility shall not be included in
this clause (iv) to the extent of the amounts borrowed on such revolving credit
facility during the applicable period, (v) Net Cash Proceeds, (vi) Net Loss
Proceeds and (vii) cash interest payments on the Notes (regardless of whether
GAAP would treat such payments as interest expense).

       

      “Cash
Interest Coverage Ratio” means, as at any date of determination, the
ratio of Consolidated EBITDA during the preceding four fiscal quarters to the
Consolidated Interest Expense required to be paid in cash during the preceding
four fiscal quarters; provided,
however,
that interest accrued on any of the Issuers’ 7% Senior Subordinated Notes due
2013 that are not outstanding on the date of determination shall be
disregarded.

    

    
 

    
      
        
          
             

          

          
            -4-

            
              

            

          

          
            Table of Contents

          

        

      

       

      “Cash
on Hand” means for any day, the balance of cash and Cash Equivalents held
by the Company and its Subsidiaries.

       

      “Certificated
Note” means a certificated Note registered in the name of the Holder
thereof and issued in accordance with Section 2.1(d), in substantially the form
of Exhibit A hereto except that such Note shall not bear the Global Note Legend
and shall not have the “Schedule of Exchanges of Interests in the Global Note”
attached thereto.

       

      “Change
of Control” means the occurrence of one or more of the following
events:

       

      (1)           any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all or substantially all of the assets of Morris
Publishing to any Person or group of related Persons for purposes of Section
13(d) of the Exchange Act (a “Group”),
together with any Affiliates thereof (whether or not otherwise in compliance
with the provisions of the Indenture), other than to the Permitted
Holders;

       

      (2)           the
approval by the holders of Capital Stock of Morris Publishing of any plan or
proposal for the liquidation or dissolution of Morris Publishing (whether or not
otherwise in compliance with the provisions of this Indenture);

       

      (3)           any
Person or Group (other than the Permitted Holders and any entity formed solely
for the purpose of owning Capital Stock of Morris Publishing) shall become the
owner, directly or indirectly, beneficially or of record, of shares representing
more than 50% of the aggregate ordinary voting power represented by the issued
and outstanding Capital Stock of Morris Publishing;

       

      (4)           the
replacement of a majority of the Board of Directors of Morris Publishing
over a two-year period from the directors who constituted the Board of Directors
of Morris Publishing at the beginning of such period, and such replacement shall
not have been approved by a vote of at least a majority of the Board of
Directors of Morris Publishing then still in office who either were members of
such Board of Directors at the beginning of such period or whose election as a
member of such Board of Directors was previously so approved; or

       

      (5)           Permitted
Holders shall cease to own, directly or indirectly, beneficially or of record,
shares representing more than 50% of the aggregate ordinary voting power
represented by the issued and outstanding Capital Stock of Morris
Publishing.

       

      “Collateral”
has the meaning given to such term in the Security Agreement.

       

      “Collateral
Agent” means Wilmington Trust FSB solely in its capacity as collateral
agent for the Holders and the Tranche B Lender or any other collateral agent for
the Holders and the Tranche B Lender under the Security Documents.

       

      “Commission”
means the Securities and Exchange Commission.

       

      

      
        
          
             

          

          
            -5-

            
              

            

          

          
            Table of Contents

          

        

      

      

      “Common
Stock” of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated and whether voting
or non-voting) of such Person’s common stock, whether outstanding on the Issue
Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.

       

      “Company”
means Morris Publishing Group, LLC, a limited liability company organized under
the laws of the State of Georgia, until a successor Person shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
means such successor Person.

       

      “Consolidated
EBITDA” means, with respect to any Person, for any period, the sum
(without duplication) of:

       

      (1)           Consolidated
Net Income; and

       

      (2)           to
the extent Consolidated Net Income has been reduced thereby:

       

      (a)           all
income taxes of such Person and its Restricted Subsidiaries paid or accrued in
accordance with GAAP for such period (other than income taxes attributable to
extraordinary, unusual or nonrecurring gains or losses or taxes attributable to
sales or dispositions outside the ordinary course of business);

       

      (b)           Consolidated
Interest Expense;

       

      (c)           Consolidated
Non-cash Charges less
any non-cash items increasing Consolidated Net Income for such period, all as
determined on a consolidated basis for such Person and its Restricted
Subsidiaries in accordance with GAAP; and

       

      (d)           non-recurring
cash restructuring charges for such Person and its Restricted Subsidiaries
incurred during calendar years 2009 and 2010 and in connection with (i) this
Indenture, (ii) the Senior Debt Credit Agreement, (iii) the Restructuring
Support Agreement, (iv) the JPM Facility, (v) the Refinanced Debt and (vi) all
negotiations and transactions directly related to (i) through (v)
above.

       

      “Consolidated
Interest Expense” means, with respect to any Person for any period, the
sum of, without duplication:

       

      (1)           the
aggregate of the interest expense of such Person and its Restricted Subsidiaries
for such period determined on a consolidated basis in accordance with GAAP,
including without limitation:  (a) any amortization of debt discount
and amortization or write-off of deferred financing costs; (b) the net costs
under Interest Swap Obligations; (c) all capitalized interest; and (d) the
interest portion of any deferred payment obligation;

       

      (2)           the
interest component of Capitalized Lease Obligations paid, accrued and/or
scheduled to be paid or accrued by such Person and its Restricted Subsidiaries
during such period as determined on a consolidated basis in accordance with
GAAP; and

       

      

      
        
          
             

          

          
            -6-

            
              

            

          

          
            Table of Contents

          

        

      

      

      (3)           an
amount equal to the product of (i) the aggregate dividends paid on Disqualified
Capital Stock during such period and (ii) a fraction, the numerator of which is
one and the denominator of which is one minus such Person’s then effective
combined tax rate, to the extent paid.

       

      “Consolidated
Net Income” means, with respect to any Person, for any period, the
aggregate net income (or loss) of such Person and its Restricted Subsidiaries
for such period on a consolidated basis, determined in accordance with GAAP;
provided,
however,
that there shall be excluded therefrom (to the extent otherwise not excluded
therefrom):

       

      (1)           after-tax
gains from Asset Sales (without regard to the $1.0 million limitation set forth
in the definition thereof) or abandonments or reserves relating
thereto;

       

      (2)           after-tax
items classified as extraordinary gains or losses;

       

      (3)           the
net income (but not loss) of any Restricted Subsidiary of the referent Person to
the extent that the declaration of dividends or similar distributions by that
Restricted Subsidiary of that income is restricted by a contract, operation of
law or otherwise;

       

      (4)           the
net income of any Person, other than a Restricted Subsidiary of the referent
Person, except to the extent of cash dividends or distributions paid to the
referent Person or to a Wholly Owned Restricted Subsidiary of the referent
Person by such Person;

       

      (5)           any
restoration to income of any contingency reserve, except to the extent that
provision for such reserve was made out of Consolidated Net Income accrued at
any time following the Issue Date;

       

      (6)           income
or loss attributable to discontinued operations (including, without limitation,
operations disposed of during such period whether or not such operations were
classified as discontinued);

       

      (7)           in
the case of a successor to the referent Person by consolidation or merger or as
a transferee of the referent Person’s assets, any earnings of the successor
corporation prior to such consolidation, merger or transfer of assets;
and

       

      (8)           Permitted
Tax Distributions.

       

      “Consolidated
Net Worth” of any Person means the consolidated stockholders’ or members’
equity of such Person, determined on a consolidated basis in accordance with
GAAP, less (without duplication) amounts attributable to Disqualified Capital
Stock of such Person.

       

      “Consolidated
Non-cash Charges” means, with respect to any Person, for any period, the
aggregate depreciation, amortization and other non-cash expenses of such Person
and its Restricted Subsidiaries reducing Consolidated Net Income of such Person
and its Restricted Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP

       

      

      
        
          
             

          

          
            -7-

            
              

            

          

          
            Table of Contents

          

        

      

      

      (excluding
any such charges constituting an extraordinary item or loss or any such charge
which requires an accrual of or a reserve for cash charges for any future
period).

       

      “Currency
Agreement” means any foreign exchange contract, currency swap agreement
or other similar agreement or arrangement designed to protect Morris Publishing
or any Restricted Subsidiary of Morris Publishing against fluctuations in
currency values.

       

      “Default”
means an event or condition the occurrence of which is, or with the lapse of
time or the giving of notice or both would be, an Event of Default.

       

      “Depositary”
means, with respect to the Notes issuable in whole or in part in global form,
the Person specified in Section 2.6(b) as the Depositary with respect to the
Notes, until a successor shall have been appointed and become such pursuant to
the applicable provisions of this Indenture, and, thereafter, “Depositary” shall
mean or include such successor.

       

      “Designated
Senior Debt” means (1) Indebtedness under or in respect of the
Refinanced Debt, if applicable, and (2) Indebtedness under or in respect of
the Working Capital Facility.

       

      “Disqualified
Capital Stock” means that portion of any Capital Stock which, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable at the option of the holder thereof), or upon the happening
of any event (other than an event which would constitute a Change of Control),
matures or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the sole option of the holder thereof (except, in
each case, upon the occurrence of a Change of Control) on or prior to the final
maturity date of the Notes.

       

      “Domestic
Restricted Subsidiary” means a Restricted Subsidiary incorporated or
otherwise organized or existing under the laws of the United States, any state
thereof or any territory or possession of the United States.

       

      “Environmental
Laws” means all laws, rules, regulations, codes, ordinances, orders,
decrees, judgments, injunctions, or binding agreements issued, promulgated or
entered into by any Governmental Authority, relating in any way to the pollution
or protection of the environment or the preservation or reclamation of natural
resources, including those relating to the management, release or threatened
release of, or exposure to, any Hazardous Material.

       

      “Event
of Loss” means, with respect to any property, any (i) loss, destruction
or damage of such property, (ii) condemnation, seizure or taking, by exercise of
the power of eminent domain or otherwise, of such property, or confiscation or
requisition of the use of such property or (iii) settlement in lieu of clause
(ii) above.

       

      “Event
of Loss Trigger Date” means the later of (i) the 181st day after receipt
of Net Loss Proceeds from an Event of Loss, or (ii) the 361st day after receipt
of Net Loss Proceeds from an Event of Loss, if Morris Publishing or the
Restricted Subsidiary, as applicable, has entered into a definitive, binding
agreement on commercially reasonable terms negotiated on an arms-length basis to
apply Net Loss Proceeds to the purchase or construction of assets permitted in
Section 4.21(a).

       

      

      
        
          
             

          

          
            -8-

            
              

            

          

          
            Table of Contents

          

        

      

      

      “Excess
Free Cash Flow” means, for any Excess Cash Flow Period, an amount, if
positive, equal to (i) the amount of net cash provided by operating activities
as shown on Morris Publishing’s consolidated cash flow statements for such
period plus
(ii) any Working Capital Balance on the relevant Cash Flow Determination Date
resulting from any drawdown under any revolving credit facility, including the
Working Capital Facility, to the extent such Working Capital Balance is not
either included in clause (i) of this definition or used in compliance with the
provisions of this Indenture prior to the delivery of the Officers’ Certificate
required under Section 3.11(b) with respect such Excess Cash Flow Period less
(iii) the Cash Flow Adjustments during such Excess Cash Flow
Period.

       

      “Exchange
Act” means the Securities Exchange Act of 1934, as amended, or any
successor statute or statutes thereto and the rules and regulations promulgated
thereunder.

       

      “Fair
market value” means, with respect to any asset or property, the price
which could be negotiated in an arm’s-length, free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of whom is under
undue pressure or compulsion to complete the transaction.  Fair market
value shall be determined by the Board of Directors of Morris Publishing acting
reasonably and in good faith and shall be evidenced by a Board Resolution of the
Board of Directors of Morris Publishing delivered to the Trustee.

       

      “GAAP”
means generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
may be approved by a significant segment of the accounting profession of the
United States, which are in effect as of the Issue Date.

       

      “Global
Notes” means the global Notes substantially in the form of Exhibit A
hereto issued in accordance with Article II hereof.

       

      “Governmental
Authority” means the government of the United States, any other nation or
any political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

       

      “Guarantee”
means each guarantee of the Notes by each Guarantor.

       

      “Guarantor”
means:  (1) each Domestic Restricted Subsidiary of Morris Publishing
(other than Morris Finance) as of the Issue Date; and (2) each of Morris
Publishing’s Restricted Subsidiaries that in the future executes a supplemental
indenture in which such Restricted Subsidiary agrees to be bound by the terms of
this Indenture as a Guarantor; provided,
however,
that any Person constituting a Guarantor as described above shall cease to
constitute a Guarantor when its respective Guarantee is released in accordance
with the terms of this Indenture.

       

      “Guarantor
Senior Debt” means, with respect to any Guarantor:  the
principal of, premium, if any, and interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for in
the documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law) on any Indebtedness of, or

       

      

      
        
          
             

          

          
            -9-

            
              

            

          

          
            Table of Contents

          

        

      

       

      guaranteed
by, a Guarantor, whether outstanding on the Issue Date or thereafter created,
incurred or assumed, unless, in the case of any particular Indebtedness, the
instrument creating or evidencing the same or pursuant to which the same is
outstanding expressly provides that such Indebtedness shall not be senior in
right of payment to the Guarantee of such Guarantor.  Without limiting
the generality of the foregoing, “Guarantor Senior Debt” shall also include the
principal of, premium, if any, interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for in
the documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law) on, and all other amounts owing in respect
of (including guarantees of the foregoing obligations):

       

      (x)           all
monetary obligations of every nature of such Guarantor under, or with respect
to, the Designated Senior Debt, including, without limitation, obligations to
pay principal, premium and interest, reimbursement obligations under letters of
credit, fees, expenses and indemnities (and guarantees thereof);

       

      (y)           all
Interest Swap Obligations (and guarantees thereof); and

       

      (z)           all
obligations under Currency Agreements (and guarantees thereof);

       

      in each
case whether outstanding on the Issue Date or thereafter incurred.

       

      Notwithstanding
the foregoing, “Guarantor Senior Debt” shall not include:

       

      (1)           any
Indebtedness of such Guarantor to a Subsidiary of such Guarantor;

       

      (2)           Indebtedness
to, or guaranteed on behalf of, any shareholder, director, officer or employee
of such Guarantor or any Subsidiary of such Guarantor (including, without
limitation, amounts owed for compensation) other than a shareholder who is also
a lender (or an Affiliate of a lender) under the Designated Senior
Debt;

       

      (3)           Indebtedness
to trade creditors and other amounts incurred in connection with obtaining
goods, materials or services;

       

      (4)           Indebtedness
represented by Disqualified Capital Stock;

       

      (5)           any
liability for federal, state, local or other taxes owed or owing by such
Guarantor;

       

      (6)           that
portion of any Indebtedness incurred in violation of this Indenture provisions
set forth under Section 4.9 (but, as to any such obligation, no such violation
shall be deemed to exist for purposes of this clause (6) if the holder(s) of
such obligation or their representative shall have received an Officers’
Certificate of Morris Publishing to the effect that the incurrence of such
Indebtedness does not (or, in the case of revolving credit indebtedness, that
the incurrence of the entire committed amount thereof at the date on which the
initial borrowing thereunder is made would not) violate such provisions of this
Indenture);

       

      

      
        
          
             

          

          
            -10-

            
              

            

          

          
            Table of Contents

          

        

      

      

      (7)           Indebtedness
which, when incurred and without respect to any election under Section 1111(b)
of Title 11, United States Code, is without recourse to Morris Publishing;
and

       

      (8)           any
Indebtedness which is, by its express terms, subordinated in right of payment to
any other Indebtedness of such Guarantor.

       

      “Hazardous
Material” means any substance, material or waste in such form or amount
that is classified, regulated or otherwise characterized under any Environmental
Law as hazardous, toxic, a contaminant or a pollutant or by other words of
similar meaning or regulatory effect, including, without limitation, petroleum
or any fraction thereof, asbestos, polychlorinated biphenyls and radioactive
substances in the applicable forms and amounts.

       

      “Holder”
means a Person in whose name a Note is registered on the Registrar’s
books.

       

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

       

      (1)           all
Obligations of such Person for borrowed money;

       

      (2)           all
Obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments;

       

      (3)           all
Capitalized Lease Obligations of such Person;

       

      (4)           all
Obligations of such Person issued or assumed as the deferred purchase price of
property, all conditional sale obligations and all Obligations under any title
retention agreement (but excluding trade accounts payable and other accrued
liabilities arising in the ordinary course of business that are not overdue by
90 days or more or are being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted);

       

      (5)           all
Obligations of such Person for the reimbursement of any obligor on any letter of
credit, banker’s acceptance or similar credit transaction;

       

      (6)           guarantees
and other contingent obligations of such Person in respect of Indebtedness
referred to in clauses (1) through (5) above and clause (8) below;

       

      (7)           all
Obligations of any other Person of the type referred to in clauses (1) through
(6) which are secured by any lien on any property or asset of such Person, the
amount of such Obligation being deemed to be the lesser of the fair market value
of such property or asset or the amount of the Obligation so
secured;

       

      (8)           all
Obligations under any Currency Agreement and Interest Swap Obligations of such
Person; and

       

      (9)           all
Disqualified Capital Stock issued by such Person with the amount of Indebtedness
represented by such Disqualified Capital Stock being equal to the greater of its
voluntary or involuntary liquidation preference and its maximum fixed repurchase
price, but excluding accrued dividends, if any.

       

      

      
        
          
             

          

          
            -11-

            
              

            

          

          
            Table of Contents

          

        

      

       

      For
purposes hereof, the “maximum fixed repurchase price” of any Disqualified
Capital Stock which does not have a fixed repurchase price shall be calculated
in accordance with the terms of such Disqualified Capital Stock as if such
Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to this Indenture, and if such price
is based upon, or measured by, the fair market value of such Disqualified
Capital Stock, such fair market value shall be determined reasonably and in good
faith by the Board of Directors of the issuer of such Disqualified Capital
Stock.

       

      “Indenture”
means this Indenture, as amended or supplemented from time to time.

       

      “Indenture
Documents” means this Indenture, the Notes and the Security
Documents.

       

      “Independent
Director” of any Person means a member of the Board of Directors of such
Person that is “Independent” within the meaning of the New York Stock Exchange
Listed Company Manual.

       

      “Independent
Financial Advisor” means a firm of national status:

       

      (1)           which
does not, and whose directors, officers and employees or Affiliates do not, have
a direct or indirect financial interest in Morris Publishing; and

       

      (2)           which,
in the judgment of the Board of Directors of Morris Publishing, is otherwise
independent and qualified to perform the task for which it is to be
engaged.

       

      “Indirect
Participant” means a Person who holds a beneficial interest in a Global
Note through a Participant.

       

      “Intercreditor
Agreement” means an Intercreditor Agreement, meeting the criteria set
forth in Section 10.1 (b), to be entered into between the Collateral Agent
and agent for the lenders parties to the Refinanced Debt and/or Working Capital
Facility, as amended, supplemented or otherwise modified from time to time in
accordance with the provisions thereof.

       

      “Interest
Swap Obligations” means the obligations of any Person pursuant to any
arrangement with any other Person, whereby, directly or indirectly, such Person
is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such other Person calculated by
applying a fixed or a floating rate of interest on the same notional amount and
shall include, without limitation, interest rate swaps, caps, floors, collars
and similar agreements.

       

      “Investment”
means, with respect to any Person, any direct or indirect loan or other
extension of credit (including, without limitation, a guarantee) or capital
contribution to (by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of others), or any
purchase or acquisition by such Person of any Capital Stock, bonds, notes,
debentures or other securities or evidences of Indebtedness issued by,
any

       

      

      
        
          
             

          

          
            -12-

            
              

            

          

          
            Table of Contents

          

        

      

      

      other
Person.  “Investment” shall exclude extensions of trade credit by
Morris Publishing and its Restricted Subsidiaries (to Persons who are not
otherwise Affiliates) on commercially reasonable terms in accordance with normal
trade practices of Morris Publishing or such Restricted Subsidiary, as the case
may be.  If Morris Publishing or any Restricted Subsidiary of Morris
Publishing sells or otherwise disposes of any Common Stock of any direct or
indirect Restricted Subsidiary of Morris Publishing such that, after giving
effect to any such sale or disposition, Morris Publishing no longer owns,
directly or indirectly, 50% of the outstanding Common Stock of such Restricted
Subsidiary, Morris Publishing shall be deemed to have made an Investment on the
date of any such sale or disposition equal to the fair market value of the
Common Stock of such Restricted Subsidiary not sold or disposed of.

       

      “Issue
Date” means the date of original issuance of the Notes.

       

      “Issuers”
means the Persons named as Issuers in the introductory paragraph to this
Indenture until a successor Person or Persons shall have become such in
accordance with the applicable provisions of this Indenture, and thereafter
means such successor Person or Persons.

       

      “JPM
Facility” means the Credit Agreement dated as of December 14, 2005 as
amended and supplemented among Morris Publishing, Morris Communications, the
lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative
agent.

       

      “LIBOR”
means the rate for deposits in U.S. Dollars for a period comparable to the
relevant interest period which appears on Reuters Screen LIBOR01 Page as of
11:00 a.m., London, England time.

       

      “Lien”
means any lien, mortgage, deed of trust, pledge, security interest, charge or
encumbrance of any kind (including any conditional sale or other title retention
agreement, any lease in the nature thereof and any agreement to give any
security interest).

       

      “Moody’s”
means Moody’s Investors Service, Inc.

       

      “Morris
Communications” means Morris Communications Company, LLC, a Georgia
limited liability company.

       

      “Morris
Communications Fee” shall have the meaning given such term in the
Services Agreement.

       

      “Mortgages”
means, collectively, one or more instruments of mortgage, deeds of trust,
assignment of rents, security agreement and fixture filing executed by an
Obligor in favor of the Collateral Agent, for the benefit of the Holders and the
Tranche B Lender, and covering the properties and leasehold interests identified
in Schedule C hereto that are to be subject to the Lien of a
mortgage.

       

      “MSTAR
Solutions Fee” shall have the meaning given such term in the Services
Agreement.

       

      “Net
Cash Proceeds” means, with respect to any Asset Sale, the proceeds in the
form of cash or Cash Equivalents including payments in respect of deferred
payment obligations when

       

      

      
        
          
             

          

          
            -13-

            
              

            

          

          
            Table of Contents

          

        

      

      

      received
in the form of cash or Cash Equivalents (other than the portion of any such
deferred payment constituting interest) received by Morris Publishing or any of
its Restricted Subsidiaries from such Asset Sale net of:

       

      (1)           reasonable
out-of-pocket expenses and fees relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees and sales
commissions);

       

      (2)           taxes
paid or payable after taking into account any reduction in consolidated tax
liability due to available tax credits or deductions and any tax sharing
arrangements;

       

      (3)           repayment
of Indebtedness that is secured by the property or assets that are the subject
of such Asset Sale; and

       

      (4)           appropriate
amounts to be provided by Morris Publishing or any Restricted Subsidiary, as the
case may be, as a reserve, in accordance with GAAP, against any liabilities
associated with such Asset Sale and retained by Morris Publishing or any
Restricted Subsidiary, as the case may be, after such Asset Sale, including,
without limitation, pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale.

       

      “Net
Cash Proceeds Amount” means the aggregate amount of Net Cash Proceeds
applied to repurchase Notes in a Net Proceeds Offer.

       

      “Net
Loss Proceeds” means the aggregate cash proceeds received by an Issuer or
any of its Restricted Subsidiaries in respect of any Event of Loss, including,
without limitation, insurance proceeds, condemnation awards or damages awarded
by any judgment, net of the direct costs in recovery of such Net Loss Proceeds
(including, without limitation, legal, accounting, appraisal and insurance
adjuster fees and any relocation expenses incurred as a result thereof), and any
taxes attributable to such Event of Loss paid or payable by an Issuer or any
Restricted Subsidiary as a result thereof (after taking into account any
available tax credits or deductions and any tax sharing
arrangements).

       

      “Net
Proceeds Offer Trigger Date” means, with respect to Net Cash Proceeds
that will be applied to a Net Proceeds Offer, the date of the first Business Day
that is 100 days after the consummation of the applicable Asset Sale yielding
such Net Cash Proceeds, or such other earlier date, if any, as the Board of
Directors of Morris Publishing or of a Restricted Subsidiary determines to apply
such Net Cash Proceeds to a Net Proceeds Offer.

       

      “Note
Custodian” means the Trustee, as custodian with respect to the Notes in
global form, or any successor entity thereto.

       

      “Notes”
means up to $100,000,000 in aggregate principal amount of the Issuers’ Floating
Rate Secured Notes due 2014, originally issued on the Issue Date, which amount
may be increased to reflect the payments of PIK Interest, as amended or
supplemented from time to time, substantially in the form set forth in Exhibit
A.  For purposes of this Indenture, all references to “principal
amount” of the Notes shall include any increase in the principal amount of the
Notes as a result of the payment of PIK Interest.

       

      

      
        
          
             

          

          
            -14-

            
              

            

          

          
            Table of Contents

          

        

      

       

      “Obligations”
means all obligations for principal, premium, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.

       

      “Obligors”
means, collectively, the Issuers and the Guarantors.

       

      “Officer”
means (a) with respect to any Person that is a corporation, the Chairman of its
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
any Vice President, the Chief Financial Officer, the Treasurer, the Controller,
the Secretary or any Assistant Treasurer or Assistant Secretary of such Person
and (b) with respect to any other Person, the individuals selected by such
Person to perform functions similar to those of the officers listed in clause
(a).

       

      “Officers’
Certificate” means, with respect to any Person, a certificate signed by
two Officers of such Person, one of whom must be the Chairman of the Board, the
Chief Executive Officer, the Chief Financial Officer, the Treasurer or any
principal accounting officer of such Person, that meets the requirements of
Sections 14.4 and 14.5.

       

      “Opinion
of Counsel” means an opinion from legal counsel that meets the
requirements of Sections 14.4 and 14.5.  The counsel may be an
employee of or in-house counsel to an Issuer or any Subsidiary of Morris
Publishing and who shall be acceptable to the Trustee.

       

      “Pari
Passu Indebtedness” means any Indebtedness of Morris Publishing or any
Guarantor that ranks equal in right of payment with the Notes or the Guarantee
of such Guarantor, as the case may be.

       

      “Participant”
means, with respect to the Depositary, a Person who has an account with the
Depositary.

       

      “Permitted
Business” means (i) the ownership and operation of regional, local and
other newspapers and other businesses directly related to the newspaper
operations of Morris Publishing and its Restricted Subsidiaries, including the
gathering and dissemination of news and information; and (ii) broadcast,
electronic media and other businesses deriving a majority of revenue from
advertising or subscriptions.

       

      “Permitted
Business Assets” means assets used or useful in a Permitted
Business.

       

      “Permitted
Holders” means as of the date of determination (1) William S. Morris III,
William S. Morris IV, Mary S. Morris, J. Tyler Morris and Susie Morris Baker;
(2) immediate family members (including spouses and direct descendants) of the
Persons described in clause (1); (3) any trusts created for the benefit of the
Persons described in clauses (1), (2) or (4) or any trust for the benefit of any
such trust; or (4) in the event of the incompetence or death of any of the
Persons described in clauses (1) and (2), such Person’s estate, executor,
administrator, committee or other personal representative or beneficiaries, in
each case who at any particular date shall beneficially own or have the right to
acquire, directly or indirectly, Capital Stock of Morris
Publishing.

       

      

      
        
          
             

          

          
            -15-

            
              

            

          

          
            Table of Contents

          

        

      

       

      “Permitted
Indebtedness” means, without duplication, each of the
following:

       

      (1)           Indebtedness
under the Notes in an aggregate principal amount not to exceed $100.0 million
(plus
the amount of any PIK Interest), pursuant to this Indenture and the Guarantees
(plus any amounts in respect of potential interest payments, including payments
with respect to PIK Interest added to principal, under the Notes that may be
treated as indebtedness in accordance with GAAP);

       

      (2)           Indebtedness
incurred pursuant to the Tranche B Loan, the Refinanced Debt, and the Working
Capital Facility;

       

      (3)           other
Indebtedness of Morris Publishing and its Restricted Subsidiaries outstanding on
the Issue Date less the amount of any scheduled amortization payments or
mandatory prepayments, in each case, when actually paid, or permanent reductions
thereon;

       

      (4)           Interest
Swap Obligations of Morris Publishing or any Restricted Subsidiary of Morris
Publishing covering Indebtedness of Morris Publishing or any of its Restricted
Subsidiaries; provided,
however,
that such Interest Swap Obligations are entered into to protect Morris
Publishing and its Restricted Subsidiaries from fluctuations in interest
rates;

       

      (5)           Indebtedness
under Currency Agreements; provided,
however,
that (a) in the case of Currency Agreements which relate to Indebtedness, such
Currency Agreements do not increase the Indebtedness of Morris Publishing and
its Restricted Subsidiaries outstanding other than as a result of fluctuations
in foreign currency exchange rates or by reason of fees, indemnities and
compensation payable thereunder and (b) such Currency Agreements are designed to
protect Morris Publishing or any Restricted Subsidiary of Morris Publishing
against fluctuations in currency values;

       

      (6)           Indebtedness
of a Restricted Subsidiary of Morris Publishing to Morris Publishing or to a
Wholly Owned Restricted Subsidiary of Morris Publishing for so long as such
Indebtedness is held by Morris Publishing or a Wholly Owned Restricted
Subsidiary of Morris Publishing or the holder of a Lien permitted under this
Indenture, in each case subject to no Lien held by a Person other than Morris
Publishing or a Wholly Owned Restricted Subsidiary of Morris Publishing or the
holder of a Lien permitted under this Indenture; provided,
however,
that if as of any date any Person other than Morris Publishing or a Wholly Owned
Restricted Subsidiary of Morris Publishing or the holder of a Lien permitted
under this Indenture owns or holds any such Indebtedness or holds a Lien in
respect of such Indebtedness, such date shall be deemed the incurrence of
Indebtedness not constituting Permitted Indebtedness under this clause (6) by
the issuer of such Indebtedness;

       

      (7)           Indebtedness
of Morris Publishing to a Wholly Owned Restricted Subsidiary of Morris
Publishing for so long as such Indebtedness is held by a Wholly

       

      

      
        
          
             

          

          
            -16-

            
              

            

          

          
            Table of Contents

          

        

      

      

      Owned
Restricted Subsidiary of Morris Publishing or the holder of a Lien permitted
under this Indenture, in each case subject to no Lien other than a Lien
permitted under this Indenture; provided,
however,
that (a) any Indebtedness of Morris Publishing to any Wholly Owned Restricted
Subsidiary of Morris Publishing that is not a Guarantor is unsecured and
subordinated, pursuant to a written agreement, to Morris Publishing’s
obligations under this Indenture and the Notes and (b) if as of any date any
Person other than a Wholly Owned Restricted Subsidiary of Morris Publishing or
the holder of a Lien permitted under this Indenture owns or holds any such
Indebtedness or any Person holds a Lien in respect of such Indebtedness, such
date shall be deemed the incurrence of Indebtedness not constituting Permitted
Indebtedness under this clause (7) by Morris Publishing;

       

      (8)           Indebtedness
arising from the honoring by a bank or other financial institution of a check,
draft or similar instrument inadvertently (except in the case of daylight
overdrafts) drawn against insufficient funds in the ordinary course of business;
provided,
however,
that such Indebtedness is extinguished within two Business Days of
incurrence;

       

      (9)           Indebtedness
of Morris Publishing or any of its Restricted Subsidiaries in respect of
performance bonds, bankers’ acceptances, workers’ compensation claims, surety or
appeal bonds, payment obligations in connection with self-insurance or similar
obligations, and bank overdrafts (and letters of credit in respect thereof) in
the ordinary course of business;

       

      (10)           Indebtedness
represented by Capitalized Lease Obligations and Purchase Money Indebtedness of
Morris Publishing and its Restricted Subsidiaries incurred in the ordinary
course of business not to exceed in the aggregate $5.0 million at any one time
outstanding;

       

      (11)           Refinancing
Indebtedness;

       

      (12)           Indebtedness
represented by guarantees by Morris Publishing or its Restricted Subsidiaries of
Indebtedness otherwise permitted to be incurred under this Indenture;
and

       

      (13)           Indebtedness
of Morris Publishing or any Restricted Subsidiary consisting of guarantees,
indemnities or obligations in respect of purchase price adjustments in
connection with the acquisition or disposition of assets permitted under this
Indenture.

       

      For
purposes of determining compliance with Section 4.9, in the event that an item
of Indebtedness meets the criteria of more than one of the categories of
Permitted Indebtedness described in clauses (1) through (13) above, Morris
Publishing shall, in its sole discretion, classify (or later reclassify) such
item of Indebtedness in any manner that complies with Section
4.9.  Accrual of interest, accretion or amortization of original issue
discount, the payment of interest on any Indebtedness in the form of additional
Indebtedness with the same terms, and the payment of dividends on Disqualified
Capital Stock in the form of additional shares of the same class of Disqualified
Capital Stock will not be deemed to be an incurrence of Indebtedness or an
issuance of Disqualified Capital Stock for purposes of Section 4.9.

       

      

      
        
          
             

          

          
            -17-

            
              

            

          

          
            Table of Contents

          

        

      

       

      “Permitted
Investments” means:

       

      (1)           Investments
by Morris Publishing or any Restricted Subsidiary of Morris Publishing in any
Person that is or will become immediately after such Investment a Restricted
Subsidiary of Morris Publishing or that will merge or consolidate into Morris
Publishing or a Restricted Subsidiary of Morris Publishing;

       

      (2)           Investments
in Morris Publishing by any Restricted Subsidiary of Morris Publishing; provided,
however,
that any Indebtedness evidencing such Investment and held by a Restricted
Subsidiary that is not a Guarantor is unsecured and subordinated, pursuant to a
written agreement, to Morris Publishing’s obligations under the Notes and this
Indenture;

       

      (3)           investments
in cash and Cash Equivalents;

       

      (4)           loans
and advances to employees, directors and officers of Morris Publishing and its
Restricted Subsidiaries (other than employees, directors and officers that are
Permitted Holders or Affiliates thereof) in the ordinary course of business for
bona
fide
business purposes not in excess of $100,000 in the aggregate at any one time
outstanding;

       

      (5)           Currency
Agreements and Interest Swap Obligations entered into in the ordinary course of
Morris Publishing’s or its Restricted Subsidiaries’ businesses and otherwise in
compliance with this Indenture;

       

      (6)           Investments
in securities of trade creditors or customers received pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of such
trade creditors or customers or in good faith settlement of delinquent
obligations of such trade creditors or customers;

       

      (7)           Investments
represented by guarantees that are otherwise permitted under this
Indenture;

       

      (8)           Investments
the payment for which is Qualified Capital Stock of Morris Publishing;
and

       

      (9)           any
Asset Swap made in accordance with Section 4.10.

       

      “Permitted
Liens” means the following types of Liens:

       

      (1)           Liens
for taxes, assessments or governmental charges or claims either (a) not
delinquent or (b) contested in good faith by appropriate proceedings and as to
which Morris Publishing or its Restricted Subsidiaries shall have set aside on
its books such reserves as may be required pursuant to GAAP;

       

      

      
        
          
             

          

          
            -18-

            
              

            

          

          
            Table of Contents

          

        

      

      

      (2)           statutory
Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers,
materialmen, repairmen and other Liens imposed by law incurred in the ordinary
course of business for sums not yet delinquent or being contested in good faith,
if such reserve or other appropriate provision, if any, as shall be required by
GAAP shall have been made in respect thereof;

       

      (3)           Liens
incurred or deposits made in the ordinary course of business in connection with
workers’ compensation, unemployment insurance and other types of social
security, including any Lien securing letters of credit issued in the ordinary
course of business consistent with past practice in connection therewith, or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, performance and return-of-money bonds
and other similar obligations (exclusive of obligations for the payment of
borrowed money);

       

      (4)           judgment
Liens not giving rise to an Event of Default so long as such Lien is adequately
bonded (if required under applicable law) and any appropriate legal proceedings
which may have been duly initiated for the review of such judgment shall not
have been finally terminated or the period within which such proceedings may be
initiated shall not have expired;

       

      (5)           easements,
rights-of-way, zoning restrictions and other similar charges or encumbrances in
respect of real property not interfering in any material respect with the
ordinary conduct of the business of Morris Publishing or any of its Restricted
Subsidiaries;

       

      (6)           any
interest or title of a lessor under any Capitalized Lease Obligation; provided,
however,
that such Liens do not extend to any property or assets which is not leased
property subject to such Capitalized Lease Obligation;

       

      (7)           Liens
securing Purchase Money Indebtedness incurred or in the ordinary course of
business; provided,
however,
that (a) such Purchase Money Indebtedness shall not exceed the purchase price or
other cost of such property or equipment and shall not be secured by any
property or equipment of Morris Publishing or any Restricted Subsidiary of
Morris Publishing other than the property and equipment so acquired and (b) the
Lien securing such Purchase Money Indebtedness shall be created within 90 days
of such acquisition;

       

      (8)           Liens
upon specific items of inventory or other goods and proceeds of any Person
securing such Person’s obligations in respect of bankers’ acceptances issued or
created for the account of such Person to facilitate the purchase, shipment or
storage of such inventory or other goods;

       

      (9)           Liens
securing reimbursement obligations with respect to commercial letters of credit
which encumber documents and other property relating to such letters of credit
and products and proceeds thereof;

       

      

      
        
          
             

          

          
            -19-

            
              

            

          

          
            Table of Contents

          

        

      

      

      (10)           Liens
encumbering deposits made to secure obligations arising from statutory,
regulatory, contractual, or warranty requirements of Morris Publishing or any of
its Restricted Subsidiaries, including rights of offset and
set-off;

       

      (11)           Liens
securing Interest Swap Obligations which Interest Swap Obligations relate to
Indebtedness that is otherwise permitted under this Indenture;

       

      (12)           Liens
securing Indebtedness under Currency Agreements;

       

      (13)           Liens
securing Acquired Indebtedness incurred in accordance with Section 4.9; provided,
however,
that:

       

      (a)           such
Liens secured such Acquired Indebtedness at the time of and prior to the
incurrence of such Acquired Indebtedness by Morris Publishing or a Restricted
Subsidiary of Morris Publishing and were not granted in connection with, or in
anticipation of, the incurrence of such Acquired Indebtedness by Morris
Publishing or a Restricted Subsidiary of Morris Publishing; and

       

      (b)           such
Liens do not extend to or cover any property or assets of Morris Publishing or
of any of its Restricted Subsidiaries other than the property or assets that
secured the Acquired Indebtedness prior to the time such Indebtedness became
Acquired Indebtedness of Morris Publishing or a Restricted Subsidiary of Morris
Publishing and are no more favorable to the lienholders than those securing the
Acquired Indebtedness prior to the incurrence of such Acquired Indebtedness by
Morris Publishing or a Restricted Subsidiary of Morris Publishing;

       

      (14)           Liens
on assets of a Restricted Subsidiary of Morris Publishing that is not a
Guarantor to secure Indebtedness of such Restricted Subsidiary that is otherwise
permitted under this Indenture;

       

      (15)           leases,
subleases, licenses and sublicenses granted to others that do not materially
interfere with the ordinary course of business of Morris Publishing and its
Restricted Subsidiaries;

       

      (16)           banker’s
Liens, rights of setoff and similar Liens with respect to cash and Cash
Equivalents on deposit in one or more bank accounts in the ordinary course of
business;

       

      (17)           Liens
arising from filing Uniform Commercial Code financing statements regarding
leases; and

       

      (18)           Liens
in favor of customs and revenue authorities arising as a matter of law to secure
payments of custom duties in connection with the importation of
goods.

       

      “Permitted
Tax Distributions” means the payment of any dividend or distribution to
the direct or indirect beneficial owners of shares of Capital Stock of Morris
Publishing in an amount not to exceed the then maximum federal, state and local
income tax liabilities arising from income of Morris Publishing and its
Restricted 

       

      

      
        
          
             

          

          
            -20-

            
              

            

          

          
            Table of Contents

          

        

      

      

      Subsidiaries
and attributable to them solely as a result of Morris Publishing (and any
intermediate entity through which the holder owns such shares of Capital Stock)
being a disregarded limited liability company, partnership or similar entity for
federal income tax purposes.

       

      “Person”
means an individual, partnership, limited liability company, corporation,
unincorporated organization, trust or joint venture, any other business entity
or a governmental agency or political subdivision thereof.

       

      “PIK
Interest” means interest paid on the Notes in the form of increasing the
outstanding principal amount of the Notes or issuing additional
Notes.

       

      “Preferred
Stock” of any Person means any Capital Stock of such Person that has
preferential rights to any other Capital Stock of such Person with respect to
dividends or redemptions or upon liquidation.

       

      “Purchase
Date” means, with respect to any Note to be repurchased, the date fixed
for such repurchase by or pursuant to this Indenture.

       

      “Purchase
Money Indebtedness” means Indebtedness of Morris Publishing or its
Restricted Subsidiaries incurred in the normal course of business for the
purpose of financing all or any part of the purchase price, or the cost of
installation, construction or improvement, of property or
equipment.

       

      “Purchase
Price” means the amount payable for the repurchase of any Note on a
Purchase Date, exclusive of accrued and unpaid interest thereon to the Purchase
Date, unless otherwise specifically provided herein.

       

      “Qualified
Capital Stock” means any Capital Stock that is not Disqualified Capital
Stock.

       

      “Redemption
Date” means, with respect to any Note to be redeemed, the date fixed for
such redemption by or pursuant to this Indenture.

       

      “Redemption
Price” means the amount payable for the redemption of any Note on a
Redemption Date, exclusive of accrued and unpaid interest thereon to the
Redemption Date, unless otherwise specifically provided herein.

       

      “Refinance”
means, in respect of any security or Indebtedness, to refinance, extend, renew,
refund, or replace or to issue a security or Indebtedness in exchange or
replacement for, such security or Indebtedness in whole or in
part.  “Refinanced”
and “Refinancing”
shall have correlative meanings.

       

      “Refinanced
Debt” means the credit facility or credit facilities entered into by the
Issuers or their Affiliates to effect the Required Refinancing which credit
facility or credit facilities shall be entered into with a commercial bank that
is not an Affiliate of any of the Obligors.

       

      “Refinancing
Indebtedness” means any Refinancing by Morris Publishing or any
Restricted Subsidiary of Morris Publishing of Indebtedness incurred in
accordance with Section

       

      

      
        
          
             

          

          
            -21-

            
              

            

          

          
            Table of Contents

          

        

      

      

      4.9
(other than pursuant to clauses (2), (4), (5), (6), (7), (8), (9), (10), (12) or
(13) of the definition of Permitted Indebtedness), in each case that does
not:

       

      (1)           result
in an increase in the aggregate principal amount of Indebtedness of such Person
as of the date of such proposed Refinancing (plus the amount of any premium
required to be paid under the terms of the instrument governing such
Indebtedness and plus the amount of reasonable expenses incurred by Morris
Publishing in connection with such Refinancing); or

       

      (2)           create
Indebtedness with:  (a) a Weighted Average Life to Maturity that is
less than the Weighted Average Life to Maturity of the Indebtedness being
Refinanced; or (b) a final maturity earlier than the final maturity of the
Indebtedness being Refinanced; provided,
however,
that (x) if such Indebtedness being Refinanced is Indebtedness solely of Morris
Publishing (and is not otherwise guaranteed by a Restricted Subsidiary of Morris
Publishing), then such Refinancing Indebtedness shall be Indebtedness solely of
Morris Publishing and (y) if such Indebtedness being Refinanced is subordinate
or junior to the Notes or any Guarantee, then such Refinancing Indebtedness
shall be subordinate to the Notes or such Guarantee, as the case may be, at
least to the same extent and in the same manner as the Indebtedness being
Refinanced.

       

      “Representative”
means the indenture trustee or other trustee, agent or representative in respect
of any Designated Senior Debt; provided,
however,
that if, and for so long as, any Designated Senior Debt lacks such a
representative, then the Representative for such Designated Senior Debt shall at
all times constitute the holders of a majority in outstanding principal amount
of such Designated Senior Debt in respect of any Designated Senior
Debt.

       

      “Required
Noteholders” means Holders of more than 50% of the principal amount of
Notes then outstanding.

       

      “Required
Refinancing” means the Refinancing of the full amount of the Tranche B
Loan that is required within 150 days from the date of this Indenture pursuant
to the terms of this Indenture and the Restructuring Support
Agreement.

       

      “Responsible
Officer” means, when used with respect to the Trustee or the Collateral
Agent, any officer within the corporate trust department of the Trustee or the
Collateral Agent, including any vice president, assistant vice president,
assistant secretary, assistant treasurer, trust officer or any other officer of
the Trustee or the Collateral Agent who customarily performs functions similar
to those performed by the persons who at the time shall be such officers,
respectively, or to whom any corporate trust matter is referred because of such
person’s knowledge of and familiarity with the particular subject and who shall
have direct responsibility for the administration of this
Indenture.

       

      “Restricted
Subsidiary” of any Person means any Subsidiary of such Person which at
the time of determination is not an Unrestricted Subsidiary.

       

      “Restructuring
Support Agreement” means the Restructuring Support Agreement, dated as of
October 30, 2009, entered into by and among the Issuers, the Guarantors and
certain holders of the 7% Senior Subordinated Notes due 2013 signatory
thereto.

       

      

      
        
          
             

          

          
            -22-

            
              

            

          

          
            Table of Contents

          

        

      

      

      “S&P”
means Standard & Poor’s Ratings Group.

       

      “Sale
and Leaseback Transaction” means any direct or indirect arrangement with
any Person or to which any such Person is a party, providing for the leasing to
Morris Publishing or a Restricted Subsidiary of any property, whether owned by
Morris Publishing or any Restricted Subsidiary at the Issue Date or later
acquired, which has been or is to be sold or transferred by Morris Publishing or
such Restricted Subsidiary to such Person or to any other Person from whom funds
have been or are to be advanced by such Person on the security of such
Property.

       

      “Securities
Act” means the Securities Act of 1933, as amended, or any successor
statute or statutes thereto and the rules and regulations promulgated
thereunder.

       

      “Security
Agreement” means a Security and Collateral Agency Agreement, dated the
date hereof, by and among each Obligor, the Tranche B Lender and the Collateral
Agent, in favor of the Collateral Agent, for the benefit of the Holders and the
Tranche B Lender, as amended, supplemented or otherwise modified from time to
time in accordance with the provisions thereof.

       

      “Security
Documents” means, collectively, the Security Agreement, the Mortgages and
all Uniform Commercial Code financing statements, pledge agreements, collateral
assignments, control agreements and other instruments evidencing or creating a
Lien in favor of the Collateral Agent, for the benefit of the Holders and the
Tranche B Lender, in each case, as amended, restated, extended, renewed,
supplemented, or otherwise modified from time to time, in accordance with the
terms thereof.

       

      “Senior
Debt” means the principal of, premium, if any, and interest (including
interest accruing after the commencement of any bankruptcy or other like
proceeding at the rate specified in the applicable Senior Debt whether or not
such interest is an allowed claim in any such proceeding) on any Indebtedness of
Morris Publishing, whether outstanding on the Issue Date or thereafter created,
incurred or assumed, pursuant to which Obligations under the Indenture, the
Notes and the Indenture Documents are expressly subordinated pursuant to the
Indenture, Intercreditor Agreement or the Security Documents.  Without
limiting the generality of the foregoing, “Senior Debt” shall also include the
principal of, premium, if any, interest (including interest accruing after the
commencement of any bankruptcy or other like proceeding at the rate specified in
the applicable Senior Debt whether or not such interest is an allowed claim in
any such proceeding) on, and all other amounts owing in respect of (including
guarantees of the foregoing obligations):

       

      (1)           all
monetary obligations of every nature of Morris Publishing under, or with respect
to, the Refinanced Debt, and the Working Capital Facility, including, without
limitation, obligations to pay principal, premium and interest, reimbursement
obligations under letters of credit, fees, expenses and indemnities (and
guarantees thereof);

       

      (2)           all
Interest Swap Obligations (and guarantees thereof); and

       

      (3)           all
obligations under Currency Agreements (and guarantees thereof); in each
case whether outstanding on the Issue Date or thereafter incurred.

       

      

      
        
          
             

          

          
            -23-

            
              

            

          

          
            Table of Contents

          

        

      

      

      Notwithstanding
the foregoing, “Senior Debt” shall not include:

       

      (1)           any
Indebtedness of Morris Publishing to a Subsidiary of Morris
Publishing;

       

      (2)           Indebtedness
to, or guaranteed on behalf of, any shareholder, director, officer or employee
of Morris Publishing or any Subsidiary of Morris Publishing (including, without
limitation, amounts owed for compensation);

       

      (3)           Indebtedness
to trade creditors and other amounts incurred in connection with obtaining
goods, materials or services;

       

      (4)           Indebtedness
represented by Disqualified Capital Stock;

       

      (5)           any
liability for federal, state, local or other taxes owed or owing by Morris
Publishing;

       

      (6)           that
portion of any Indebtedness incurred in violation of Section 4.9 (but, as to any
such obligation, no such violation shall be deemed to exist for purposes of this
clause (6) if the holder(s) of such obligation or their representative shall
have received an Officers’ Certificate of Morris Publishing to the effect that
the incurrence of such Indebtedness does not (or, in the case of revolving
credit indebtedness, that the incurrence of the entire committed amount thereof
at the date on which the initial borrowing thereunder is made would not) violate
such provisions of this Indenture);

       

      (7)           Indebtedness
which, when incurred and without respect to any election under Section 1111(b)
of Title 11, United States Code, is without recourse to Morris
Publishing;

       

      (8)           any
Indebtedness which, by its express terms, is subordinated in right of payment to
any other Indebtedness of Morris Publishing; or

       

      (9)           the
Tranche B Loan.

       

      “Senior
Debt Credit Agreement” means that certain Amended and Restated Credit
Agreement, dated as of October 15, 2009, by and among Morris Publishing, Morris
Communications, Tranche Manager, LLC, as administrative agent, and the lenders
party thereto, as amended, restated, supplemented, or otherwise modified from
time to time in accordance with the Intercreditor Agreement.

       

      “Services
Agreement” means the Management and Services Agreement, dated as of
August 7, 2003, among Morris Communications, MSTAR Solutions, LLC and the
Company, as such Services Agreement, as it may be amended or supplemented from
time to time.

       

      “Significant
Subsidiary”, with respect to any Person, means any Restricted Subsidiary
of such Person that satisfies the criteria for a “significant subsidiary” set
forth in Rule 1.02(w) of Regulation S-X under the Exchange Act.

       

      

      
        
          
             

          

          
            -24-

            
              

            

          

          
            Table of Contents

          

        

      

      

      “Subsidiary”,
with respect to any Person, means:

       

      (1)           any
corporation of which the outstanding Capital Stock having at least a majority of
the votes entitled to be cast in the election of directors under ordinary
circumstances shall at the time be owned, directly or indirectly, by such
Person; or

       

      (2)           any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such
Person.

       

      “TIA”
means the Trust Indenture Act of 1939 (15 U.S.C. §§  77aaa-77bbbb) as
in effect on the date on which this Indenture is qualified under the TIA; provided
that in the event the Trust Indenture Act of 1939 is amended after such date,
“TIA” means, to the extent required by any such amendment, the Trust Indenture
Act of 1939 as so amended.

       

      “Total
Leverage Ratio” means, as of any date of determination, with respect to
any Person, the ratio of (a) the sum of (i) the aggregate outstanding
consolidated Indebtedness of such Person for borrowed money (exclusive of trade
payables), net of cash and Cash Equivalents and (ii) except to the extent
included in the previous clause (i), the aggregate liquidation preference of any
Preferred Stock of the Restricted Subsidiaries of such Person (exclusive of such
Preferred Stock, if any, held by such Person), on a consolidated basis in
accordance with GAAP to (b) the Consolidated EBITDA of such Person during the
last four full fiscal quarters ending on or prior to such determination date for
which financial statements are available.

       

      “Tranche
A Loan” means the Tranche A Loan as defined in the Senior Debt Credit
Agreement.

       

      “Tranche
B Lender” means the lender or lenders holding the Tranche B Loan, and
their successors and assigns.

       

      “Tranche
B Loan” means the Tranche B Loan as defined in the Senior Debt Credit
Agreement.

       

      “Trustee”
means the party named as such above until a successor replaces it in accordance
with the applicable provisions of this Indenture, and thereafter means the
successor serving hereunder.

       

      “Unrestricted
Subsidiary” of any Person means:

       

      (1)           any
Subsidiary of such Person that at the time of determination shall be or continue
to be designated an Unrestricted Subsidiary by the Board of Directors of such
Person in the manner provided below; and

       

      (2)           any
Subsidiary of an Unrestricted Subsidiary.

       

      The Board
of Directors may designate any Subsidiary (including any newly acquired or newly
formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary owns
any Capital Stock of, or owns or holds any Lien on any property of, Morris
Publishing or any other

       

      

      
        
          
             

          

          
            -25-

            
              

            

          

          
            Table of Contents

          

        

      

      

      Restricted
Subsidiary of Morris Publishing that is not a Subsidiary of the Subsidiary to be
so designated; provided,
however,
that:

       

      (1)           Morris
Publishing certifies to the Trustee that such designation complies with Section
4.7;

       

      (2)           each
Subsidiary to be so designated and each of its Subsidiaries has not at the time
of designation created, incurred, issued, assumed, guaranteed or otherwise
become, and will not after the time of designation take any such action to
become, directly or indirectly liable with respect to any Indebtedness pursuant
to which any lender has recourse to any of the assets of Morris Publishing or
any of its Restricted Subsidiaries; and

       

      (3)           immediately
before and immediately after giving effect to such designation, no Default or
Event of Default shall have occurred and be continuing.

       

      For
purposes of making the determination of whether any such designation of a
Subsidiary as an Unrestricted Subsidiary complies with Section 4.7, the portion
of the fair market value of the net assets of such Subsidiary of Morris
Publishing at the time that such Subsidiary is designated as an Unrestricted
Subsidiary that is represented by the interest of Morris Publishing and its
Restricted Subsidiaries in such Subsidiary, in each case as determined in good
faith by the Board of Directors of Morris Publishing, shall be deemed to be an
Investment.  Such designation will be permitted only if such
Investment would be permitted at such time under Section 4.7.

       

      The Board
of Directors may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary only if:

       

      (1)           immediately
after giving effect to such designation, Morris Publishing is able to incur at
least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in
compliance with Section 4.9; and

       

      (2)           immediately
before and immediately after giving effect to such designation, no Default or
Event of Default shall have occurred and be continuing.

       

      Any such
designation by the Board of Directors shall be evidenced to the Trustee by
promptly filing with the Trustee a copy of the Board Resolution giving effect to
such designation and an Officers’ Certificate certifying that such designation
complied with the foregoing provisions.

       

      Morris
Publishing may not designate Morris Finance as an Unrestricted
Subsidiary.

       

      “U.S.
Government Securities” means securities which are (i) direct obligations
of the United States for the payment of which its full faith and credit is
pledged or (ii) obligations of a person controlled or supervised by and acting
as an agency or instrumentality of the United States, the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States, which, in either case, are not callable or redeemable at the option of
the issuer thereof, and shall also include a depository receipt issued by a bank
or trust company as custodian with respect to any such U.S. Government
Securities or a specific payment of interest

       

      

      
        
          
             

          

          
            -26-

            
              

            

          

          
            Table of Contents

          

        

      

      

      on or
principal of any such U.S. Government Securities held by such custodian for the
account of the holder of a depository receipt; provided
that (except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the U.S. Government
Securities or the specific payment of interest on or principal of the U.S.
Government Securities evidenced by such depository receipt.

       

      “Weighted
Average Life to Maturity” means, when applied to any Indebtedness at any
date, the number of years obtained by dividing (a) the then outstanding
aggregate principal amount of such Indebtedness into (b) the sum of the total of
the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.

       

      “Wholly
Owned Restricted Subsidiary” of any Person means any Wholly Owned
Subsidiary of such Person which at the time of determination is a Restricted
Subsidiary of such Person.

       

      “Wholly
Owned Subsidiary” of any Person means any Subsidiary of such Person of
which all the outstanding voting securities (other than in the case of a foreign
Subsidiary, directors’ qualifying shares or an immaterial amount of shares
required to be owned by other Persons pursuant to applicable law) are owned by
such Person or any other Wholly Owned Subsidiary of such Person.

       

      “Working
Capital Balance” means, for any day, the aggregate balance of cash and
Cash Equivalents of the Company and its Subsidiaries; provided,
however,
that amounts of Net Cash Proceeds (plus amounts described in causes (2) and (4)
of the definition of Net Cash Proceeds pending their use as contemplated) or Net
Loss Proceeds shall be excluded from the Working Capital Balance.

       

      “Working
Capital Facility” means a secured working capital revolving credit
facility to be entered into by the Company with a commercial bank that is not an
Affiliate of any of the Obligors with a maximum available amount of up to $10.0
million.

       

      
        	
                Section 1.2.

              	
                Other
      Definitions.

              

      

       

      
        	
                Term

              	
                Defined
      in Section

              
	 
      	 
      
	
                “Acceleration
      Notice”                                                                                   

              	
                6.2

              
	
                “Action”                                                                                   

              	
                12.8

              
	
                “Affiliate
      Transaction”                                                                                   

              	
                4.11

              
	
                “Agent
      Members”                                                                                   

              	
                2.6

              
	
                “Audited
      Adjustment”                                                                                   

              	
                3.11

              
	
                “Cause”                                                                                   

              	
                4.30

              
	
                “Change
      of Control
      Offer”                                                                                   

              	
                3.9

              
	
                “Change
      of Control Payment
      Date”                                                                                   

              	
                3.9

              

         

         

        
        

        
          
            -27-

            
              

            

          

        

         

        
          Table of Contents

        

        	
                “Covenant
      Defeasance”                                                                                   

              	
                8.3

              
	
                “Event
      of
      Default”                                                                                   

              	
                6.1

              
	
                “Event
      of Loss
      Offer”                                                                                   

              	
                4.21

              
	
                “Excess
      Cash Flow Determination
      Date”                                                                                   

              	
                3.11

              
	
                “Excess
      Cash Flow Payment
      Date”                                                                                   

              	
                3.11

              
	
                “Excess
      Cash Flow
      Period”                                                                                   

              	
                3.11

              
	
                “Excess
      Loss
      Amount”                                                                                   

              	
                4.21

              
	
                “Foreign
      Person”                                                                                   

              	
                2.6

              
	
                “Funding
      Guarantor”                                                                                   

              	
                11.5

              
	
                “incur”                                                                                   

              	
                4.9

              
	
                “Institutional
      Accredited
      Investors”                                                                                   

              	
                2.1

              
	"Intercreditor
      Agreement Form"	 10.1
	
                “Legal
      Defeasance”                                                                                   

              	
                8.2

              
	
                “Net
      Proceeds
      Offer”                                                                                   

              	
                4.10

              
	
                “Notice
      of
      Acceleration”                                                                                   

              	
                6.2

              
	
                “Observer”                                                                                   

              	
                4.30

              
	
                “Offer
      to
      Purchase”                                                                                   

              	
                3.10

              
	
                “Optional
      Redemption”                                                                                   

              	
                3.7

              
	
                “Paying
      Agent”                                                                                   

              	
                2.3

              
	
                “Reference
      Date”                                                                                   

              	
                4.7

              
	
                “Registrar”                                                                                   

              	
                2.3

              
	
                “Relevant
      Meetings”                                                                                   

              	
                4.30

              
	
                “Replacement
      Assets”                                                                                   

              	
                4.10

              
	
                “Restricted
      Payment”                                                                                   

              	
                4.7

              
	
                “Subject
      Property”                                                                                   

              	
                4.21

              
	
                “Surviving
      Entity”                                                                                   

              	
                5.1

              

      

       

      
        	
                Section 1.3.

              	
                Incorporation
      by Reference of Trust Indenture
Act.

              

      

       

      Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture.

       

      The
following TIA terms used in this Indenture have the following
meanings:

       

      “indenture
trustee” means the Trustee;

       

      “obligor”
on the Notes means the Issuers and any successor obligor upon the
Notes.

       

      All other
terms used in this Indenture that are defined by the TIA, defined by TIA
reference to another statute or defined by Commission rule under the TIA have
the meanings so assigned to them.

       

      
        	
                Section 1.4.

              	
                Rules
      of Construction.

              

      

       

      Unless
the context otherwise requires:

       

      (a)           a
term has the meaning assigned to it;

       

      

      
        
          
             

          

          
            -28-

            
              

            

          

          
            Table of Contents

          

        

      

      

      (b)           an
accounting term not otherwise defined has the meaning assigned to it in
accordance with GAAP;

       

      (c)           “or”
is not exclusive;

       

      (d)           words
in the singular include the plural, and in the plural include the
singular;

       

      (e)           provisions
apply to successive events and transactions; and

       

      (f)           references
to sections of or rules under the Securities Act, the Exchange Act and the TIA
shall be deemed to include substitute, replacement and successor sections or
rules adopted by the Commission from time to time.

       

      
        	
                Section 1.5.

              	
                Acts
      of Holders.

              

      

       

      (a)           Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Holders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is hereby expressly required, to the Issuers.  Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the “Act”
of Holders signing such instrument or instruments.  Proof of execution
of any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to Section 7.1)
conclusive in favor of the Trustee and the Issuers, if made in the manner
provided in this Section.

       

      (b)           The
fact and date of the execution by any Person of any such instrument or writing
may be proved by the affidavit of a witness of such execution or by the
certificate of any notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him or her the execution thereof.  Where
such execution is by an officer of a corporation, a partner of a partnership, or
any other duly authorized individual of another business entity on behalf of
such corporation, partnership or other business entity, such certificate or
affidavit shall also constitute sufficient proof of his or her
authority.

       

      (c)           The
ownership of Notes shall be proved by the register maintained by the
Registrar.

       

      (d)           Any
request, demand, authorization, direction, notice, consent, waiver or other Act
of the Holder of any Note shall bind every future Holder of the same Note and
the Holder of every Note issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof in respect of anything done or suffered to
be done by the Trustee or the Issuers in reliance thereon, whether or not
notation of such action is made upon such Note.

       

      

      
        
          
             

          

          
            -29-

            
              

            

          

          
            Table of Contents

          

        

      

      

      ARTICLE II.

       

       

      THE
NOTES

       

      
        	
                Section 2.1.

              	
                Form
      and Dating.

              

      

       

      (a)           General.  The
aggregate principal amount of Notes that may be authenticated and delivered and
outstanding under this Indenture is limited to $100,000,000 (plus the principal
amount of any additional Notes issued in payment of PIK Interest pursuant to the
terms of the Notes).  The Notes shall mature on September 1,
2014.  The Notes and the Trustee’s certificate of authentication
relating thereto shall be substantially in the form of Exhibit A
hereto.  The Notes may have notations, legends or endorsements
required by law, stock exchange rule or usage (but which do not affect the
rights, duties and obligations of the Trustee) in addition to those set forth in
Exhibit A hereto.  The notation on each Note relating to the
Guarantees shall be substantially in the form set forth on Exhibit B
hereto.  Each Note shall be dated the date of its
authentication.  The terms and provisions contained in the Notes and
Guarantees shall constitute, and are hereby expressly made, a part of this
Indenture, and the Issuers, the Guarantors, the Holders and the Trustee, upon
the execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.  To the extent any provision of
any Note conflicts with the express provisions of this Indenture, the provisions
of this Indenture shall govern and be controlling.

       

      (b)           Form
of Notes.  Notes issued in global form shall be substantially
in the form of Exhibit A hereto (including the Global Note Legend thereon and
the “Schedule of Exchanges of Interests in the Global Note” attached
thereto).  Notes issued in definitive form shall be substantially in
the form of Exhibit A attached hereto (but without the Global Note Legend
thereon and without the “Schedule of Exchanges of Interests in the Global Note”
attached thereto).  Each Global Note shall represent such aggregate
principal amount of the outstanding Notes as shall be specified therein, and
each shall provide that it shall represent the aggregate principal amount of
outstanding Notes from time to time endorsed thereon and that the aggregate
principal amount of outstanding Notes represented thereby may from time to time
be reduced or increased, as appropriate, to reflect exchanges and redemptions
thereof, transfers of interests therein and payments of PIK
Interest.  Any endorsement of a Global Note to reflect the amount of
any increase or decrease in the aggregate principal amount of outstanding Notes
represented thereby shall be made by the Trustee, in accordance with written
instructions given by the Holder thereof as required by Section 2.6(f)
hereof.

       

      (c)           Book-Entry
Provisions.  With respect only to Global Notes deposited with
the Trustee, as custodian for the Depositary,  Participants and
Indirect Participants shall have no rights under this Indenture or any Global
Note with respect to any Global Note held on their behalf by the Depositary or
by the Trustee as custodian for the Depositary, and the Depositary shall be
treated by the Issuers, the Trustee and any agent of the Issuers or the Trustee
as the absolute owner of such Global Note for all purposes
whatsoever.  Notwithstanding the foregoing, nothing herein shall
prevent the Issuers, the Trustee or any agent of the Issuers or the Trustee from
giving effect to any written certification, proxy or other authorization
furnished by the Depositary or impair, as between the Depositary and its
Participants or Indirect Participants, the Applicable Procedures or the
operation of customary practices of the Depositary governing the exercise of the
rights of a holder of a beneficial interest in any Global Note.

       

      

      
        
          
             

          

          
            -30-

            
              

            

          

          
            Table of Contents

          

        

      

       

      (d)           Certificated
Securities.

       

      (i)           The
Issuers shall issue Certificated Notes to all owners of beneficial interests in
Global Notes if:  (1) at any time the Depositary notifies the Issuers
that it is unwilling or unable to continue to act as Depositary for the Global
Notes or if at any time the Depositary shall no longer be eligible to act as
such because it ceases to be a clearing agency registered under the Exchange
Act, and, in either case, the Issuers shall not have appointed a successor
Depositary within 120 days after the Issuers receive such notice or become aware
of such ineligibility or (2) the Issuers, at their option, determine that the
Global Notes shall be exchanged for Certificated Notes and deliver a written
notice to such effect to the Trustee.  Upon the occurrence of any of
the events set forth in clauses (1) or (2) above, the Issuers shall execute,
and, upon receipt of an authentication order in accordance with Section 2.2, the
Trustee shall authenticate and deliver, Certificated Notes, in authorized
denominations, in an aggregate principal amount equal to the principal amount of
the Global Notes in exchange for such Global Notes.  Upon the exchange
of a Global Note for Certificated Notes, such Global Note shall be cancelled by
the Trustee or an agent of the Trustee.

       

      (ii)           The
Issuers shall issue Certificated Notes to a Holder of a Global Note (or such
party designated by such Holder) in exchange for such Global Note, upon written
request from a Holder of a Global Note if a Default or Event of Default shall
have occurred and be continuing.  Upon the occurrence of the
foregoing, the Issuers shall execute, and, upon receipt of an authentication
order in accordance with Section 2.2, the Trustee shall authenticate and
deliver, Certificated Notes, in authorized denominations, in an aggregate
principal amount equal to the principal amount of the Global Note or portion of
a Global Note being exchanged.  Upon the exchange of all or a portion
of a Global Note for Certificated Notes, such Global Note shall be cancelled or
correspondingly reduced by the Trustee or an agent of the Issuers or the
Trustee.  In the event that the Certificated Notes are not issued to a
party designated by such Holder promptly after the Issuers have received a
request from such Holder, the Issuers expressly acknowledge, with respect to the
right of any Holder to pursue a remedy pursuant to this Indenture, the right of
any such party designated by such Holder to pursue such remedy with respect to
the portion of the Global Note that represents such party’s beneficial interest
as if such Certificated Notes had been issued.

       

      (iii)           Certificated
Notes issued in exchange for a Global Note pursuant to this Section
2.1(h) shall be registered in such names and in such authorized
denominations as the Depositary shall instruct the Trustee.  The
Issuers shall, or shall cause the Trustee to, deliver such Certificated Notes to
or as directed by the Persons in whose names such Certificated Notes are so
registered or to the Depositary.

       

      

      
        
          
             

          

          
            -31-

            
              

            

          

          
            Table of Contents

          

        

      

      
         

        
          	
                  Section 2.2.

                	
                  Execution
      and Authentication

                

        

         

      

      Two
Officers of each of the Issuers shall sign the Notes for the Issuers by manual
or facsimile signature.

       

      If an
Officer whose signature is on a Note was an Officer at the time of such
execution but no longer holds that office or position at the time a Note is
authenticated, the Note shall nevertheless be valid.  Each Guarantor
shall execute a Guarantee in the manner set forth in Section 11.7.

       

      A Note
shall not be valid until authenticated by the manual signature of the
Trustee.  The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.

       

      The
Trustee, upon a written order of the Issuers signed by two Officers of each of
the Issuers, together with the other documents required by Sections 14.4 and
14.5, shall authenticate Notes for original issue on the Issue Date in the
aggregate principal amount not to exceed $100.0 million.  Such written
order of the Issuers shall specify the amount of Notes to be authenticated and
the date on which the original issue of Notes is to be
authenticated.  The Trustee shall authenticate and deliver any
additional Notes (or increases in the principal amount of any Notes) as a result
of a payment of PIK Interest, for an aggregate principal amount specified in
such authentication order for such additional Notes (or increases in the
principal amount of any Notes) issued or increased hereunder, for original issue
upon receipt of an authentication order.

       

      The
Trustee may appoint an authenticating agent acceptable to the Issuers to
authenticate Notes.  Unless otherwise provided in the appointment, an
authenticating agent may authenticate Notes whenever the Trustee may do
so.  Each reference in this Indenture to authentication by the Trustee
includes authentication by such agent.  An authenticating agent has
the same rights as the Trustee to deal with the Issuers or with any Affiliate of
the Issuers.

       

      On any
interest payment date on which the Issuers pay PIK Interest with respect to a
Global Note in accordance with the terms of the Notes, the Company shall cause
the principal amount of the Global Note to be increased by  an amount
equal to the interest payable, rounded up to the nearest $1.00, for the relevant
interest period on the principal amount of such Global Note as of the relevant
record date for such interest payment date, to the credit of the Holders on such
record date, pro
rata
in accordance with their interests, and an adjustment shall be made on the books
and records of the Trustee (if it is then the Note Custodian for such Global
Note) with respect to such Global Note, by the Trustee or the Note Custodian, to
reflect such increase.  On any interest payment date on which the
Issuers pay PIK Interest by issuing additional Notes, the principal amount of
any such Notes issued to any Holder, for the relevant interest period as of the
relevant record date for such interest payment date, shall be rounded up to the
nearest $1.00.  Each additional Note shall be an additional obligation
of the Issuers and the Guarantors and shall be governed by, and entitled to the
benefits of, this Indenture and shall be subject to the terms of this Indenture
(including the Guarantees), shall rank pari
passu
with and be subject to the same terms (including the rate of interest from time
to time payable thereon) as all other Notes (except, as the case may be, with
respect to the issuance date and aggregate principal amount), and shall have the
benefit of the Liens securing the Notes.

       

      

      
        
          
             

          

          
            -32-

            
              

            

          

          
            Table of Contents

          

        

      

      

      The Notes
shall be issued in integral multiples of $1.00 (in each case with a minimum
denomination of at least $1.00).

       

      
        	
                Section 2.3.

              	
                Registrar
      and Paying Agent.

              

      

       

      The
Issuers shall maintain an office or agency where Notes may be presented or
surrendered for registration of transfer or for exchange (the “Registrar”)
and an office or agency where Notes may be presented for payment (the “Paying
Agent”).  The Registrar shall keep or cause to be kept a
register of the Notes and of their transfer and exchange.  At the
option of the Issuers, payment of interest may be made by check mailed to the
Holders at their addresses set forth in the register of Holders, provided
that payment by wire transfer of immediately available funds will be required
with respect to principal, Redemption Price and Purchase Price of, and interest
on, all Global Notes and all other Notes the Holders of which shall have
provided wire transfer instructions to the Trustee or the Paying
Agent.  The Issuers may appoint one or more co-registrars and one or
more additional paying agents.  The term “Registrar” includes any
co-registrar and the term “Paying Agent” includes any additional paying
agent.  The Issuers may change any Paying Agent or Registrar without
notice to any Holder.  The Issuers shall notify the Trustee in writing
of the name and address of any Paying Agent not a party to this
Indenture.  If the Issuers fail to appoint or maintain another entity
as Registrar or Paying Agent, the Trustee shall act as such.  The
Issuers may act as Paying Agent or Registrar so long as no Event of Default has
occurred and is continuing.  The Depositary shall, by acceptance of a
Global Note, agree that transfers of beneficial interests in such Global Note
may be effected only through a book-entry system maintained by the Depositary
(or its agent), and that ownership of a beneficial interest in the Note shall be
required to be reflected in a book entry.

       

      The
Issuers initially appoint the Trustee to act as the Registrar and Paying Agent
and to act as Note Custodian with respect to the Global Notes, until such time
as the Trustee has resigned or a successor has been appointed.

       

      
        	
                Section 2.4.

              	
                Paying
      Agents To Hold Money in Trust.

              

      

       

      The
Issuers shall require each Paying Agent other than the Trustee to agree in
writing that such Paying Agent shall hold in trust for the benefit of Holders or
the Trustee all money held by the Paying Agent for the payment of principal,
premium, if any, or interest on the Notes, and shall notify the Trustee of any
default by the Issuers in making any such payment.  While any such
default continues, the Trustee may require a Paying Agent to pay all money held
by it relating to the Notes to the Trustee.  The Issuers at any time
may require a Paying Agent to pay all money held by it relating to the Notes to
the Trustee and account for any such money disbursed.  Upon payment
over to the Trustee, the Paying Agent (if other than an Issuer) shall have no
further liability for such money.  If an Issuer acts as Paying Agent,
it shall segregate and hold in a separate trust fund for the benefit of the
Holders all money relating to the Notes held by it as Paying
Agent.  Upon any bankruptcy or reorganization proceedings relating to
an Issuer, the Trustee shall serve as Paying Agent for the Notes.

       

      

      
        
          
             

          

          
            -33-

            
              

            

          

          
            Table of Contents

          

        

      

       

      
        
          	
                  Section 2.5.

                	
                  Holder
      Lists

                

        

         

      

      The
Trustee shall preserve in as current a form as is reasonably practicable the
most recent list available to it of the names and addresses of all Holders and
shall otherwise comply with TIA § 312(a).  If the Trustee is not
the Registrar, the Issuers shall furnish or cause to be furnished to the Trustee
at least five Business Days before each interest payment date and at such other
times as the Trustee may request in writing, a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of the
Holders of Notes, and the Issuers shall otherwise comply with TIA
§ 312(a).

       

      
        	
                Section 2.6.

              	
                Transfer
      and Exchange.

              

      

       

      (a)           Transfer
and Exchange Generally:  Book Entry Provisions.  Upon
surrender for registration of transfer of any Note to the Registrar, and
satisfaction of the requirements for such transfer set forth in this Section
2.6, the Issuers shall execute, and the Trustee shall authenticate and deliver,
in the name of the designated transferee or transferees, one or more new Notes
of any authorized denominations and of a like aggregate principal amount and
bearing such restrictive legends as may be required by this
Indenture.

       

      Notes may
be exchanged for other Notes of any authorized denominations and of a like
aggregate principal amount, upon surrender of the Notes to be exchanged at any
such office or agency maintained by the Issuers pursuant to Section
4.2.  Whenever any Notes are so surrendered for exchange, the Issuers
shall execute, and the Trustee shall authenticate and deliver, the Notes which
the Holder making the exchange is entitled to receive bearing registration
numbers not contemporaneously outstanding.

       

      All Notes
presented or surrendered for registration of transfer or exchange shall be duly
endorsed, or be accompanied by a written instrument or instruments of transfer
in form satisfactory to the Issuers and the Registrar, and the Notes shall be
duly executed by the Holder thereof or his attorney duly authorized in
writing.

       

      (b)           The
Depositary.  The Depositary shall be a clearing agency
registered under the Exchange Act.  The Issuers initially appoint The
Depository Trust Company to act as Depositary with respect to the Global
Note.  Notes in certificated form issued in exchange for all or a part
of a Global Note pursuant to this Section 2.6 shall be registered in such names
and in such authorized denominations as the Depositary, pursuant to instructions
from its Participants or Indirect Participants or otherwise, shall instruct the
Trustee.  Upon execution and authentication, the Trustee shall deliver
such Certificated Notes to the persons in whose names such Notes in certificated
form are so registered.

       

      (c)           Transfer
and Exchange of Global Notes.  A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary.  All Global Notes will be
exchanged by the Issuers for Certificated Notes as provided in Section
2.1(d)(i).  Global Notes also may be exchanged or replaced, in whole
or in part, as provided in Sections 2.7 and Section 2.10.  Except as
otherwise provided herein, every Note authenticated

       

      

      
        
          
             

          

          
            -34-

            
              

            

          

          
            Table of Contents

          

        

      

      

      and
delivered in exchange for, or in lieu of, a Global Note or any portion thereof,
pursuant to this Section 2.6 or Sections 2.7 or Section 2.10, shall be
authenticated and delivered in the form of, and shall be, a Global
Note.  A Global Note may not be exchanged for another Note other than
as provided in Section 2.1(d)(i) and this Section 2.6(c), however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.6(d) or (e).  Neither the Issuers nor the Trustee will be
liable for any delay by a Holder of a Global Note or the Depositary in
identifying the beneficial owners of Notes, except as a result of the Issuers’
or Trustee’s own negligent action, negligent failure to act or own willful
misconduct, as the case may be.  In the absence of bad faith on their
part, the Issuers and the Trustee may conclusively rely on, and will be
authorized and protected in relying on written instructions from the Holder of a
Global Note or the Depositary for all purposes under this
Indenture.

       

      (d)           Transfer
and Exchange of Beneficial Interests in the Global Notes.  The
transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures.  Beneficial interests in
Global Notes may be subject to restrictions on transfer to the extent required
by the Securities Act.

       

      Beneficial
interests in any Global Note may be transferred to Persons who take delivery
thereof in the form of a beneficial interest in a Global Note, in accordance
with the Applicable Procedures.  No written orders or instructions
shall be required to be delivered to the Registrar to effect the transfers
described in this Section 2.6(d).

       

      (e)           Transfer
or Exchange of Beneficial Interests for Certificated Notes. The
holder of a beneficial interest in a Global Note may exchange such beneficial
interest for a Certificated Note or transfer such beneficial interest to a
Person who takes delivery thereof in the form of a Certificated Note only upon
the occurrence of the events described in Section 2.1(d)(ii), in which event
such owner of such beneficial interest shall instruct the Depositary (or shall
cause the appropriate Participant to direct the Depositary) in accordance with
the Applicable Procedures to instruct the Trustee to reduce the aggregate
principal amount of the Global Note by the applicable amount of such exchange or
transfer and to issue in exchange therefore a Certificated Note or Notes in such
aggregate amount and registered as provided in such instruction; and upon the
Trustee’s receipt of such instruction from the Depositary (or from the
applicable Participant or beneficial owner pursuant to the Depositary’s proxy
procedures), the Trustee shall cause the aggregate principal amount of the
applicable Global Note to be reduced accordingly pursuant to Section 2.6(i), and
the Issuers shall execute and the Trustee shall authenticate and deliver, in
both cases in accordance with Section 2.2, to the Person designated in such
instruction a Certificated Note in the appropriate principal
amount.  Any Certificated Note issued in exchange for a beneficial
interest pursuant to this Section 2.6(e) shall be registered in such name or
names and in such authorized denomination or denominations as the holder of such
beneficial interest shall instruct the Registrar through instructions from the
Depositary and the Participant or Indirect Participant.  The Trustee
shall mail or deliver such Certificated Notes to the Persons in whose names such
Notes are so registered.

       

      

      
        
          
             

          

          
            -35-

            
              

            

          

          
            Table of Contents

          

        

      

      

      (f)           Transfer
and Exchange of Certificated Notes for Beneficial Interests. A Holder
of a Certificated Note may exchange such Note for a beneficial interest in a
Global Note or transfer such Certificated Notes to a Person who takes delivery
thereof in the form of a beneficial interest in a Global Note at any
time.  Upon receipt of a request for such an exchange or transfer
together with surrender of the Certificated Note to be exchanged or transferred
(and, accompanied by a written instrument or instruments of transfer as provided
in Section 2.6(g), and subject to the Applicable Procedures), the Trustee shall
cancel the applicable Certificated Note and increase or cause to be increased
the aggregate principal amount of one of the Global Notes pursuant to Section
2.6(i).

       

      (g)           Transfer
and Exchange of Certificated Notes for Certificated
Notes.  Upon request by a Holder of Certificated Notes and such
Holder’s compliance with the provisions of this Section 2.6(g), the Registrar
shall register the transfer or exchange of Certificated Notes.  Prior
to such registration of transfer or exchange, the requesting Holder shall
present or surrender to the Registrar the Certificated Notes duly endorsed or
accompanied by a written instruction of transfer in form satisfactory to the
Registrar duly executed by such Holder or by its attorney, duly authorized in
writing.  In addition, the requesting Holder must provide any
additional certifications, documents and information, as applicable, reasonably
requested by the Issuers to demonstrate compliance by such Holder with
applicable law.

       

      (h)           Legends.  Each
Global Note shall bear the following legend on the face thereof:

       

      THIS NOTE
IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND
IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A
SUCCESSOR DEPOSITARY.  THIS NOTE IS NOT EXCHANGEABLE FOR NOTES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER
OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE INDENTURE.

       

      UNLESS
THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE

       

      

      
        
          
             

          

          
            -36-

            
              

            

          

          
            Table of Contents

          

        

      

      

      BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.

       

      (i)           Cancellation
and/or Adjustment of Global Notes.  At such time as all
beneficial interests in Global Notes have been exchanged for Certificated Notes,
redeemed, repurchased or cancelled, all Global Notes shall be returned to, or
retained and cancelled by, the Trustee in accordance with Section 2.11. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for Certificated Notes, redeemed, repurchased or cancelled, the
principal amount of Notes represented by such Global Notes shall be reduced
accordingly and an endorsement shall be made on such Global Note by the Trustee
or the Note Custodian, at the direction of the Trustee, to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee upon its
receipt of instructions from the Holder thereof or by the Depositary at the
direction of the Trustee to reflect such increase.

       

      (j)           General
Provisions Relating to Transfers and Exchanges.

       

      (i)           To
permit registrations of transfers and exchanges, the Issuers shall execute and
the Trustee shall authenticate Certificated Notes and Global Notes upon the
Issuers’ order or at the Registrar’s request.

       

      (ii)           No
service charge shall be made to a Holder for any registration of transfer, fee
or exchange, but the Issuers may require payment of a sum sufficient to cover
any transfer tax or similar governmental charge payable in connection therewith
(other than any such transfer taxes or similar governmental charge payable upon
exchange or transfer pursuant to Sections 3.6 and 9.5).

       

      (iii)           The
Registrar shall not be required to register the transfer of or exchange any Note
selected for redemption in whole or in part, except the unredeemed portion of
any Note being redeemed in part.

       

      (iv)           All
Certificated Notes and Global Notes issued upon any registration of transfer or
exchange of Certificated Notes or Global Notes shall be the valid obligations of
the Issuers, evidencing the same debt, and entitled to the same benefits under
this Indenture, as the Certificated Notes or Global Notes surrendered upon such
registration of transfer or exchange.

       

      (v)           The
Issuers shall not be required:

       

      (a)           to
issue, to register the transfer of or to exchange Notes during a period
beginning at the opening of business 15 days before the day of any selection of
Notes for redemption under Section 3.2 and ending at the close of business on
the day of selection; or

       

      

      
        
          
             

          

          
            -37-

            
              

            

          

          
            Table of Contents

          

        

      

      

      (b)           to
register the transfer of or to exchange any Note so selected for redemption in
whole or in part, except the unredeemed portion of any Note being redeemed in
part; or

       

      (c)           to
register the transfer of or to exchange a Note between a record date and the
next succeeding interest payment date.

       

      (vi)           Prior
to due presentment of the registration of a transfer of any Note, the Trustee,
any Agent and the Issuers may deem and treat the Person in whose name any Note
is registered as the absolute owner of such Note for the purpose of all payments
with respect to such Notes, and none of the Trustee, any Agent or the Issuers
shall be affected by notice to the contrary.

       

      (vii)           The
Trustee shall authenticate Certificated Notes and Global Notes in accordance
with the provisions of Section 2.2.

       

      (viii)           Each
Holder of a Note agrees to indemnify the Issuers and the Trustee against any
liability that may result from the transfer, exchange or assignment of such
Holder’s Note in violation of any provision of this Indenture and/or applicable
United States federal or state securities law.

       

      (ix)           The
Trustee shall have no obligation or duty to monitor, determine or inquire as to
compliance with any restrictions on transfer imposed under this Indenture or
under applicable law with respect to any transfer of any interest in any Note
(including any transfers between or among agent members or beneficial owners of
interests in any global security) other than to require delivery of such
certificates and other documentation or evidence as are expressly required by,
and to do so if and when expressly required by the terms of, this Indenture, and
to examine the same to determine substantial compliance as to form with the
express requirements hereof.

       

      
        	
                Section 2.7.

              	
                Replacement
      Notes.

              

      

       

      If any
mutilated Note is surrendered to the Trustee or either of the Issuers or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Note, the Issuers shall issue and the Trustee, upon receipt of an
authentication order in accordance with Section 2.2, shall authenticate a
replacement Note if the Trustee’s requirements for replacement of Notes are
met.  An indemnity bond must be supplied by the Holder that is
sufficient in the judgment of the Trustee and the Issuers to protect the
Issuers, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced.  The Trustee and the
Issuers each may charge such Holder for their expenses in replacing such
Note.

       

      Every
replacement Note is an additional Obligation of the Issuer and shall be entitled
to all of the benefits of this Indenture equally and proportionately with all
other Notes duly issued hereunder.

       

      

      
        
          
             

          

          
            -38-

            
              

            

          

          
            Table of Contents

          

        

      

       

      
        
          	
                  Section 2.8

                	
                  Outstanding
      Notes

                

        

      

       

      The Notes
outstanding at any time are all the Notes that have been authenticated by the
Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected in
accordance with the provisions hereof, and those described in this Section as
not outstanding. Except as set forth in Section 2.9, a Note does not cease
to be outstanding because an Issuer or any of its Affiliates holds the
Note.

       

      If a Note
is replaced pursuant to Section 2.7, it shall cease to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Note is held by a
bona fide purchaser for value.

       

      If the
principal amount of any Note is considered paid under Section 4.1, it ceases to
be outstanding and interest on it ceases to accrue.

       

      If the
Paying Agent (other than an Issuer, a Subsidiary or an Affiliate of any thereof)
holds, on a redemption date or maturity date, money sufficient to pay Notes
payable on that date, then on and after that date such Notes shall be deemed to
be no longer outstanding and shall cease to accrue interest.

       

      
        	
                Section 2.9.

              	
                Treasury
      Notes.

              

      

       

      In
determining whether the Holders of the required principal amount of Notes have
concurred in any direction, waiver or consent, Notes owned by the Issuers, the
Guarantors or by any Affiliate thereof shall be considered not outstanding,
except that for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, waiver or consent, only Notes that a
Responsible Officer of the Trustee actually knows are so owned shall be so
disregarded.  The Issuers agree to notify the Trustee of the existence
of any such treasury Notes or Notes owned by an Issuer, any Guarantor or an
Affiliate thereof.

       

      
        	
                Section 2.10.

              	
                Temporary
      Notes.

              

      

       

      Until
Certificated Notes are ready for delivery, the Issuers may prepare and the
Trustee, upon receipt of an authentication order in accordance with Section 2.2,
shall authenticate temporary Notes.  Temporary Notes shall be
substantially in the form of Certificated Notes, but may have such variations as
the Issuers consider appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee.  Without unreasonable delay, the Issuers
shall prepare and the Trustee shall authenticate Global Notes or Certificated
Notes in exchange for temporary Notes, as applicable.

       

      Holders
of temporary Notes shall be entitled to all of the benefits of this
Indenture.

       

      
        	
                Section 2.11.

              	
                Cancellation.

              

      

       

      The
Issuers at any time may deliver Notes to the Trustee for
cancellation.  The Registrar and Paying Agent shall forward to the
Trustee any Notes surrendered to them for registration of transfer, exchange or
payment.  The Trustee, or at the direction of the Trustee, the
Registrar or Paying Agent, and no one else shall cancel all Notes surrendered
for registration of transfer, exchange, payment, replacement or cancellation and
shall dispose of all cancelled Notes in accordance with the Trustee’s usual
procedures.  

       

      

      
        
          
             

          

          
            -39-

            
              

            

          

          
            Table of Contents

          

        

      

      

      The
Trustee shall maintain a record of all cancelled Notes.  All cancelled
Notes shall be delivered to the Issuers.  Subject to Section 2.7, the
Issuers may not issue new Notes to replace Notes that have been paid or that
have been delivered to the Trustee for cancellation.

       

      
        	
                Section 2.12.

              	
                Defaulted
      Interest.

              

      

       

      If the
Issuers default in a payment of interest on the Notes, the Issuers shall pay the
defaulted interest in any lawful manner plus,
to the extent lawful, interest payable on the defaulted interest, to the Persons
who are Holders on a subsequent special record date, in each case at the rate
provided in the Notes and in Section 4.1.  The Issuers shall notify
the Trustee in writing of the amount of defaulted interest proposed to be paid
on each Note and the date of the proposed payment.  The Issuers shall
fix or cause to be fixed each such special record date and payment date, provided
that no such special record date shall be less than 10 days prior to the related
interest payment date for such defaulted interest.  At least 15 days
before the special record date, the Issuers (or, upon the written request of the
Issuers, the Trustee in the name and at the expense of the Issuers) shall mail
or cause to be mailed to Holders a notice that states the special record date,
the related interest payment date and the amount of such interest to be
paid.

       

      
        	
                Section 2.13.

              	
                Persons
      Deemed Owners.

              

      

       

      Prior to
due presentment of a Note for registration of transfer and subject to Section
2.12, the Issuers, the Trustee, any Paying Agent, any co-registrar and any
Registrar may deem and treat the person in whose name any Note shall be
registered upon the register of Notes kept by the Registrar as the absolute
owner of such Note (whether or not such Note shall be overdue and
notwithstanding any notation of the ownership or other writing thereon made by
anyone other than the Issuers, any co-registrar or any Registrar) for the
purpose of receiving all payments with respect to such Note and for all other
purposes, and none of the Issuers, the Trustee, any Paying Agent, any
co-registrar or any Registrar shall be affected by any notice to the
contrary.

       

      
        	
                Section 2.14.

              	
                CUSIP
      Numbers.

              

      

       

      The
Issuers in issuing the Notes may use a “CUSIP” number, and if so, the Trustee
shall use the CUSIP number in notices of redemption or exchange as a convenience
to Holders; provided
that any such notice may state that no representation is made as to the
correctness or accuracy of the CUSIP number printed in the notice or on the
Notes, and that reliance may be placed only on the other identification numbers
printed on the Notes, and any such redemption shall not be affected by any
defect in or omission of such numbers.  The Issuers shall promptly
notify the Trustee of any change to the CUSIP numbers.

       

      

      
        
          
             

          

          
            -40-

            
              

            

          

          
            Table of Contents

          

        

      

      

      ARTICLE III.

       

       

      REDEMPTION
AND REPURCHASE

       

      
        	
                Section 3.1.

              	
                Notices
      to Trustee.

              

      

       

      If the
Issuers elect to redeem Notes pursuant to the provisions of Section 3.7, they
shall furnish to the Trustee, at least 30 days but not more than 60 days before
the Redemption Date (unless a shorter notice period shall be satisfactory to the
Trustee), an Officers’ Certificate setting forth the Redemption Date, the
principal amount of Notes to be redeemed and the Redemption Price.

       

      If the
Issuers are required to offer to repurchase Notes pursuant to the provisions of
Section 3.9, 4.10, or 4.21, they shall notify the Trustee in writing, at least
45 days but not more than 60 days before the Purchase Date, of the Section of
this Indenture pursuant to which the repurchase shall occur, the Purchase Date,
the principal amount of Notes required to be repurchased and the Purchase Price
and shall furnish to the Trustee an Officers’ Certificate to the effect that (a)
the Issuers are required to make or have made a Change of Control Offer, an
Event of Loss Offer or a Net Proceeds Offer, as the case may be, and
(b) the conditions set forth in Section 3.9, 4.10 or 4.21 as the case may
be, have been satisfied.

       

      If the
Registrar is not the Trustee, the Issuers shall, concurrently with each notice
of redemption or repurchase, cause the Registrar to deliver to the Trustee a
certificate (upon which the Trustee may rely) setting forth the principal
amounts of Notes held by each Holder.

       

      
        	
                Section 3.2.

              	
                Selection
      of Notes.

              

      

       

      Except as
set forth below, if less than all of the Notes are to be redeemed or
repurchased, the Trustee shall select the Notes or portions thereof to be
redeemed or repurchased either in compliance with the requirements of the
principal national securities exchange, if any, on which the Notes are listed;
or on a pro
rata basis, by lot or by such method as the Trustee shall deem fair and
appropriate.  In the event of partial redemption by lot, the
particular Notes or portions thereof to be redeemed shall be selected, unless
otherwise provided herein, not less than 30 nor more than 60 days prior to the
Redemption Date by the Trustee from the outstanding Notes not previously called
for redemption.

       

      If less
than all of the Notes tendered are to be repurchased pursuant to the provisions
of Section 3.10, the Trustee shall select the Notes or portions thereof to be
repurchased in compliance with Section 3.10.  In the event of partial
repurchase by lot, the particular Notes or portions thereof to be repurchased
shall be selected at the close of business of the last Business Day prior to the
Purchase Date.

       

      The
Trustee shall promptly notify the Issuers in writing of the Notes or portions
thereof selected for redemption or repurchase and, in the case of any Note
selected for partial redemption or repurchase, the principal amount thereof to
be redeemed or repurchased.  Notes and portions thereof selected shall
be in amounts of $1,000 or integral multiples of $1,000; except that if all of
the Notes of a Holder are to be redeemed, the entire outstanding amount of Notes
held by such Holder, even if not a multiple of $1,000, shall be
redeemed.  No Notes of a principal amount of $1,000 or less shall be
redeemed in part; provided,
that in the case of a redemption pursuant to Section 3.11, the principal amount
of Notes  to be redeemed or repurchased shall be in amounts of $1.00
or integral multiples of $1.00.

       

      

      
        
          
             

          

          
            -41-

            
              

            

          

          
            Table of Contents

          

        

      

       

      
        	
                Section 3.3.

              	
                Notice
      of Optional Redemption.

              

      

       

      In the
event Notes are to be redeemed pursuant to Section 3.7, at least 30 days but not
more than 60 days before the Redemption Date, the Issuers shall mail a notice of
redemption to each Holder by first-class mail at its registered address, whose
Notes are to be redeemed in whole or in part, with a copy to the
Trustee.  In the event Notes are to be redeemed pursuant to Section
3.11, as soon as practicable following the delivery to the Trustee of the
Officers’ Certificate required by Section 3.11(b), the Issuers shall mail a
notice of redemption to each Holder by first-class mail at its registered
address, whose Notes are to be redeemed in whole or in part, with a copy to the
Trustee.

       

      The
notice shall identify the Notes or portions thereof to be redeemed (including
the CUSIP number, if any) and shall state:

       

      (a)           the
Redemption Date;

       

      (b)           the
Redemption Price;

       

      (c)           if
any Note is being redeemed in part, the portion of the principal amount of such
Note to be redeemed and that, after the Redemption Date, upon surrender of such
Note, a new Note or Notes in principal amount equal to the unredeemed portion
will be issued in the name of the Holder thereof upon cancellation of the
original Note;

       

      (d)           the
name and address of the Paying Agent;

       

      (e)           that
Notes called for redemption must be surrendered to the Paying Agent to collect
the Redemption Price, and, unless the Redemption Date is after a record date and
or before the succeeding interest payment date, accrued interest thereon to the
Redemption Date;

       

      (f)           that,
unless the Issuers default in making the redemption payment, interest on Notes
called for redemption will cease to accrue on and after the Redemption Date, and
the only remaining right of the Holders of such Notes is to receive payment of
the Redemption Price and, unless the Redemption Date is after a record date and
on or before the succeeding interest payment date, accrued interest thereon to
the Redemption Date upon surrender to the Paying Agent of the Notes
redeemed;

       

      (g)           if
fewer than all the Notes are to be redeemed, the identification of the
particular Notes (or portions thereof) to be redeemed, as well as the aggregate
principal amount of the Notes to be redeemed and the aggregate principal amount
of Notes to be outstanding after such partial redemption;

       

      (h)           the
paragraph of the Notes pursuant to which the Notes called for redemption are
being redeemed; and

       

      

      
        
          
             

          

          
            -42-

            
              

            

          

          
            Table of Contents

          

        

      

      

      (i)           that
no representation is made as to the correctness or accuracy of the CUSIP number,
if any, listed in such notice or printed on the Notes and that reliance may be
placed only on the other identification numbers printed on the
Notes.

       

      At the
Issuers’ request, the Trustee shall give the notice of redemption in the
Issuers’ name and at their expense; provided
that the Issuers shall deliver to the Trustee, at least 40 days prior to the
Redemption Date (or as soon as practicable in the event of a redemption under
Section 3.11), an Officers’ Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.

       

      
        	
                Section 3.4.

              	
                Effect
      of Notice of Redemption.

              

      

       

      Once
notice of redemption is mailed, Notes or portions thereof called for redemption
become due and payable on the Redemption Date at the Redemption
Price.  Upon surrender to any Paying Agent, such Notes or portions
thereof shall be paid at the Redemption Price, plus
accrued interest to the Redemption Date; provided,
however,
that installments of interest which are due and payable on or prior to the
Redemption Date shall be payable to the Holders of such Notes, registered as
such, at the close of business on the relevant record date for the payment of
such installment of interest.  On or after the Redemption Date,
interest will cease to accrue on Notes or portions thereof called for redemption
as long as the Issuers have deposited with the Paying Agent funds in
satisfaction of the applicable redemption price.

       

      
        	
                Section 3.5.

              	
                Deposit
      of Redemption Price or Purchase
Price.

              

      

       

      On or
before 10:00 a.m. Eastern Time on each Redemption Date or Purchase Date, the
Issuers shall irrevocably deposit with the Trustee or with the Paying Agent
money sufficient to pay the aggregate amount due on all Notes to be redeemed or
repurchased on that date, including, without limitation, any accrued and unpaid
interest to the Redemption Date or Repurchase Date.  Upon written
request by the Issuers, the Trustee or the Paying Agent shall promptly return to
the Issuers any money not required for that purpose.

       

      Unless
the Issuers default in making such payment, interest on the Notes to be redeemed
or repurchased will cease to accrue on the applicable Redemption Date or
Purchase Date, whether or not such Notes are presented for
payment.  If any Note called for redemption shall not be so paid upon
surrender because of the failure of the Issuers to comply with the preceding
paragraph, interest will be paid on the unpaid principal, from the applicable
Redemption Date or Purchase Date until such principal is paid, and on any
interest not paid on such unpaid principal, in each case at the rate provided in
the Notes and in Section 4.1.

       

      
        	
                Section 3.6.

              	
                Notes
      Redeemed or Repurchased in Part.

              

      

       

      Upon
surrender of a Note that is redeemed or repurchased in part, the Issuers shall
issue and the Trustee shall authenticate for the Holder at the expense of the
Issuers a new Note equal in principal amount to the portion of the Note
surrendered that is not to be redeemed or repurchased; provided, however, that
in lieu of issuing a new Global Note, the Issuers may authorize the Trustee or
the Note Custodian to reduce the aggregate principal amount of the Global Note
by endorsement in accordance with Section 2.1(b).

       

      

      
        
          
             

          

          
            -43-

            
              

            

          

          
            Table of Contents

          

        

      

       

      
        
          	
                  Section 3.7.

                	
                  Optional
      Redemption.

                

        

         

      

      The
Issuers may redeem the Notes at their option, in whole or in part (an “Optional
Redemption”), upon not less than 30 nor more than 60 days’ notice, at the
redemption prices set forth in the Notes.

       

      In
addition, the Issuers must pay accrued and unpaid interest on the Notes redeemed
to the date of redemption.  Any redemption pursuant to this Section
3.7 shall be made pursuant to the provisions of Sections 3.1 through
3.6.

       

      
        	
                Section 3.8.

              	
                [Intentionally
      Omitted].

              

      

       

      
        	
                Section 3.9.

              	
                Repurchase
      upon Change of Control Offer.

              

      

       

      If a
Change of Control occurs, the Issuers shall make a binding offer (the “Change
of Control Offer”) to each Holder to repurchase all or any part (equal to
$1,000 or an integral multiple of $1,000) of that Holder’s Notes pursuant to the
Change of Control Offer at a purchase price, in cash, equal to 101% of the
aggregate principal amount of Notes repurchased, plus accrued and unpaid
interest on the Notes repurchased, to the Purchase Date (subject to the right of
Holders of record on the relevant regular record date to receive interest due on
the relevant interest payment date).

       

      The
Change of Control Offer shall remain open for a period from the date of the
mailing of the notice of the Change of Control Offer described in the next
paragraph until a date determined by the Issuers which is at least 30 but no
more than 60 days from the date of mailing of such notice, except to the extent
that a longer period is required by applicable law (such date, or the date of
the last day of any such required longer period, the “Change
of Control Payment Date”).  On the Purchase Date, which shall
be no later than the latest permissible Change of Control Payment Date, the
Issuers shall purchase the principal amount of Notes properly tendered in
response to the Change of Control Offer.  Payment for any Notes so
purchased shall be made in the same manner as interest payments are
made.

       

      Within 30
days following any Change of Control, the Issuers must send, by first class
mail, a notice to each of the Holders, with a copy to the Trustee, which notice
shall govern the terms of the Change of Control Offer.  The notice
shall contain all instructions and materials necessary to enable such Holders to
tender Notes pursuant to the Change of Control Offer.  The Change of
Control Offer shall be made to all Holders.  The notice shall
state:

       

      (a)           the
transaction or transactions that constitute the Change of Control, providing
information, to the extent publicly available, regarding the Person or Persons
acquiring control, and stating that the Change of Control Offer is being made
pursuant to this Section 3.9 and that, to the extent lawful, all Notes tendered
will be accepted for payment;

       

      (b)           the
Purchase Price, the Change of Control Payment Date, and the Purchase
Date;

       

      

      
        
          
             

          

          
            -44-

            
              

            

          

          
            Table of Contents

          

        

      

      

      (c)           that
any Note not properly tendered or otherwise not accepted for repurchase will
continue to accrue interest;

       

      (d)           that,
unless the Issuers default in the payment of the amount due on the Purchase
Date, all Notes or portions thereof accepted for repurchase pursuant to the
Change of Control Offer shall cease to accrue interest after the Purchase
Date;

       

      (e)           that
Holders electing to have a Note purchased pursuant to the Change of Control
Offer will be required to surrender the Note, with the form entitled “Option of
Holder To Elect Purchase” on the reverse of the Notes completed, or transfer by
book-entry transfer, to the Issuers, a Depositary, if appointed by the Issuers,
or a Paying Agent at the address specified in the notice prior to the close of
business on the third Business Day preceding the Change of Control Payment
Date;

       

      (f)           that
Holders will be entitled to withdraw their election if the Issuers, the
Depositary or the Paying Agent, as the case may be, receives, not later than the
Purchase Date, a facsimile transmission or letter setting forth the name of the
Holder, the principal amount of Notes delivered for repurchase, and a statement
that such Holder is withdrawing his election to have the Notes redeemed in whole
or in part; and

       

      (g)           that
Holders whose Notes are being repurchased only in part will be issued new Notes
equal in principal amount to the portion of the Notes tendered (or transferred
by book-entry transfer) that is not to be repurchased, which portion must be
equal to $1,000 in principal amount or an integral multiple
thereof.

       

      Prior to
the mailing of the notice referred to above, but in any event within 30 days
following any Change of Control, the Issuers covenant to:

       

      (1)           repay
in full and terminate all commitments under all Indebtedness constituting Senior
Debt the terms of which require repayment upon a Change of Control, or offer to
repay in full and terminate all commitments under all Indebtedness constituting
Senior Debt and to repay the Indebtedness owed to (and terminate the commitments
of) each lender which has accepted such offer; or

       

      (2)           obtain
the requisite consents under the Senior Debt to permit the repurchase of the
Notes as provided above.

       

      The
Issuers shall first comply with the covenant in the immediately preceding
paragraph before they shall be required to either repurchase Notes or send the
notice pursuant to the provisions described above.  The Issuers’
failure to comply with the covenant described in the immediately preceding
paragraph (and any failure to send the notice referred to in the second
preceding paragraph as a result of the prohibition in the preceding paragraph)
may (with notice and lapse of time) constitute an Event of Default described in
clause (3) but shall not constitute an Event of Default described in clause (2)
in Section 6.1.

       

      On or
before the Purchase Date, the Issuers shall to the extent lawful, (i) accept for
payment all Notes or portions thereof properly tendered pursuant to the Change
of Control Offer, (ii) deposit with the Paying Agent an amount equal to the
Purchase Price, together with accrued and unpaid interest thereon to the
Purchase Date in respect of all Notes or portions thereof 

       

      

      
        
          
             

          

          
            -45-

            
              

            

          

          
            Table of Contents

          

        

      

      

      so
tendered and accepted for repurchase and (iii) deliver or cause to be delivered
to the Trustee the Notes so accepted together with an Officers’ Certificate
stating the aggregate principal amount of Notes or portions thereof being
repurchased by the Issuers.  The Paying Agent shall promptly (but in
any case not later than five days after the Purchase Date) mail to each Holder
of Notes so repurchased the amount due in connection with such Notes, and the
Issuers shall promptly issue a new Note, and the Trustee, upon written request
from the Issuers in the form of an Officers’ Certificate and authentication
order shall authenticate and mail or deliver (or cause to transfer by book
entry) to each relevant Holder a new Note, in a principal amount equal to any
unpurchased portion of the Notes surrendered to the Holder thereof; provided,
that each such new Note shall be in a principal amount of $l,000 or an integral
multiple thereof.  The Issuers shall publicly announce the results of
the Change of Control Offer on or as soon as practicable after the Purchase
Date.

       

      If the
Purchase Date is on or after an interest record date and on or before the
related interest payment date, any accrued and unpaid interest to the Purchase
Date, shall be paid to the Person in whose name a Note is registered at the
close of business on such record date.

       

      Notwithstanding
anything to the contrary in this Section 3.9, the Issuers shall not be required
to make a Change of Control Offer upon a Change of Control if a third party
makes the Change of Control Offer in the manner, at the times and otherwise in
compliance with the requirements set forth in this Section 3.9 and purchases all
Notes validly tendered and not withdrawn under the Change of Control
Offer.  A Change of Control Offer may be made in advance of a Change
of Control, conditional upon such Change of Control, if, at the time of making
such Change of Control Offer, a definitive, binding agreement has been executed
by all the parties thereto that specifically contemplates a Change of
Control.

       

      The
Issuers will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations to the extent such laws and
regulations are applicable in connection with the repurchase of Notes pursuant
to a Change of Control Offer.  To the extent that the provisions of
any securities laws or regulations conflict with this Section 3.9, the Issuers
shall comply with the applicable securities laws and regulations and shall not
be deemed to have breached their obligations under this Section 3.9 by virtue
thereof.

       

      
        	
                Section 3.10.

              	
                Repurchase
      upon Application of Excess
Proceeds.

              

      

       

      In the
event that, pursuant to Section 4.10 or 4.21, the Issuers shall be required to
commence a Net Proceeds Offer or an Event of Loss Offer (each, an “Offer
to Purchase”), it shall follow the procedures specified
below.

       

      The
Issuers shall commence the Offer to Purchase by sending, by first-class mail,
with a copy to the Trustee, to each record Holder as shown on the register of
Holders, a notice the terms of which shall govern the Offer to Purchase
containing all instructions and materials necessary to enable such Holders to
tender Notes pursuant to the Offer to Purchase.

       

      The Offer
to Purchase shall be made to all Holders.  Each Offer to Purchase will
be mailed to the record Holders as shown on the register of Holders within 25
days following the

       

      

      
        
          
             

          

          
            -46-

            
              

            

          

          
            Table of Contents

          

        

      

       

      Net
Proceeds Offer Trigger Date or the Event of Loss Trigger Date, or, if earlier,
within 30 days of a determination not to apply the Net Loss Proceeds as
specified in Section 4.21, as applicable, with a copy to the Trustee, and shall
comply with the procedures set forth in this Indenture.  Upon
receiving notice of an Offer to Purchase, Holders may elect to tender their
Notes in whole or in part in integral multiples of $1,000 in exchange for
cash.  An Offer to Purchase shall remain open for a period of 20
Business Days or such longer period as may be required by law.  The
notice, which shall govern the terms of the Offer to Purchase, shall
state:

       

      (a)           that
the Offer to Purchase is being made pursuant to Section 4.10 or Section
4.21;

       

      (b)           the
Net Cash Proceeds Amount or the Excess Loss Amount, as applicable, the Purchase
Price and the Purchase Date;

       

      (c)           that
any Note not properly tendered or otherwise not accepted for repurchase shall
continue to accrue interest;

       

      (d)           that,
unless the Issuers default in the payment of the amount due on the Purchase
Date, all Notes or portions thereof accepted for repurchase pursuant to the
Offer to Purchase shall cease to accrue interest after the Purchase
Date;

       

      (e)           that
Holders electing to have any Notes repurchased pursuant to any Offer to Purchase
shall be required to tender the Notes, with the form entitled “Option of Holder
To Elect Purchase” on the reverse of the Notes completed, or transfer by
book-entry transfer, to the Issuers, a Depositary, if appointed by the Issuers,
or a Paying Agent at the address specified in the notice prior to the close of
business on the third Business Day preceding the Purchase Date;

       

      (f)           that
Holders will be entitled to withdraw their election if the Issuers, the
Depositary or the Paying Agent, as the case may be, receives, not later than the
Purchase Date, a facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Notes delivered for repurchase and a
statement that such Holder is withdrawing his election to have such Notes
repurchased in whole or in part;

       

      (g)           that,
to the extent Holders properly tender Notes and holders of Pari Passu
Indebtedness properly tender such Indebtedness in an amount exceeding the Net
Cash Proceeds Amount or Excess Loss Amount, as applicable, the tendered Notes
and Pari Passu Indebtedness will be purchased on a pro
rata basis based on the aggregate amounts of Notes and Pari Passu
Indebtedness tendered (and the Trustee shall select the tendered Notes of
tendering Holders on a pro
rata basis based on the amount of Notes tendered); and

       

      (h)           that
Holders whose Notes are being repurchased only in part will be issued new Notes
equal in principal amount to the portion of the Notes tendered (or transferred
by book-entry transfer) that is not to be repurchased, which portion must be
equal to $1,000 in principal amount or an integral multiple
thereof.

       

      

      
        
          
             

          

          
            -47-

            
              

            

          

          
            Table of Contents

          

        

      

      

      On or
before the Purchase Date, the Issuers shall to the extent lawful, (i) accept for
payment, on a pro
rata basis in accordance with this Indenture to the extent necessary, the
Net Cash Proceeds Amount or the Excess Loss Amount, as applicable, of (A) Notes
or portions thereof properly tendered pursuant to the Offer to Purchase and (B)
properly tendered Pari Passu Indebtedness, or if less than the Net Cash Proceeds
Amount or the Excess Loss Amount, as applicable, has been tendered, all Notes
and Pari Passu Indebtedness properly tendered, (ii) deposit with the Paying
Agent an amount equal to the Purchase Price, plus
accrued and unpaid interest thereon to the Purchase Date in respect of all Notes
or portions thereof so tendered and accepted for repurchase and (iii) deliver or
cause to be delivered to the Trustee the Notes so accepted together with an
Officers’ Certificate stating the aggregate principal amount of Notes or
portions thereof being repurchased by the Issuers.  The Paying Agent
shall promptly (but in any case not later than five days after the Purchase
Date) mail to each Holder of Notes so repurchased the amount due in connection
with such Notes, and the Issuers shall promptly issue a new Note, and the
Trustee, upon written request from the Issuers in the form of an Officers’
Certificate and authentication order shall authenticate and mail or deliver such
new Note to such Holder, in a principal amount equal to any unpurchased portion
to the Holder thereof; provided,
that each such new Note shall be in a principal amount of $1,000 or an integral
multiple thereof.  The Issuers shall publicly announce the results of
each Offer to Purchase on or as soon as practicable after the applicable
Purchase Date.

       

      If the
Purchase Date is on or after an interest record date and on or before the
related interest payment date, any accrued and unpaid interest to the Purchase
Date, shall be paid to the Person in whose name a Note is registered at the
close of business on such record date.

       

      The
Issuers will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
or regulations are applicable in connection with the repurchase of the Notes
pursuant to an Offer to Purchase.  To the extent that the provisions
of any securities laws or regulations conflict with the provisions of the
Indenture, the Issuers will comply with the applicable securities laws and
regulations and shall not be deemed to have breached their obligations described
in the Indenture by virtue thereof.

       

      
        	
                Section 3.11.

              	
                Mandatory
      Redemption with Excess Free Cash
Flow.

              

      

       

      (a)           Subject
to the terms of the Intercreditor Agreement and Section 3.11(c), not later than
the 17th Business Day of each month (each an “Excess
Cash Flow Payment Date”), commencing on the first full calendar month
following the Issue Date, if the Issuers have Excess Free Cash Flow for the
one-month period ended on the last day of the previous month (each such period,
an “Excess
Cash Flow Period” and each such day, an “Excess
Cash Flow Determination Date”), the Issuers shall apply an amount equal
to 100% of the amount of such Excess Free Cash Flow to amortize outstanding
Indebtedness, including accrued interest, fees and all other amounts owing
thereon, in the following priority:

       

      (i)           Indebtedness
under the Working Capital Facility;

       

      (ii)           Indebtedness
under the Refinanced Debt (if applicable); and

       

      

      
        
          
             

          

          
            -48-

            
              

            

          

          
            Table of Contents

          

        

      

      

      (iii)           Indebtedness
under the Tranche B Loan (if applicable) and to redeem the Notes, on a pro
rata
basis.

       

      Notwithstanding
the foregoing sentence, (y) if the terms of the Working Capital Facility or the
Refinanced Debt provide for a different order of priority as between the Working
Capital Facility or the Refinanced Debt, then the priority of payment as between
such loans shall be governed in accordance with such terms, and (z) net payments
made on the Working Capital Facility or the Refinanced Facility after the Excess
Cash Flow Determination Date and before the Excess Cash Flow Payment Date shall
be credited under clause (i) and (ii) above as payments on the Excess Cash Flow
Payment Date.

       

      (b)           The
Notes shall be redeemed at a redemption price of 100% of the aggregate principal
amount of Notes redeemed plus accrued and unpaid interest to the date of
redemption.  At least 2 Business Days prior to each Excess Cash Flow
Payment Date, the Issuers shall deliver to the Trustee an Officers’ Certificate
stating the amount of Excess Free Cash Flow, if any, for the preceding Excess
Cash Flow Period ending on the immediately preceding Excess Cash Flow
Determination Date, each of the Cash Flow Adjustments, if any, made in
determining the Excess Free Cash Flow, the amount that the Excess Cash Flow to
be applied pursuant to Section 3.11(a) has been reduced, if any, pursuant to
Section 3.11(c), the amount of such Excess Free Cash Flow applied to reduce
amounts outstanding under the Working Capital Facility or Refinanced Debt (if
applicable) and the Tranche B Loan (if applicable) and the net amount of Excess
Free Cash Flow to be applied to redeem Notes.  The Redemption Date for
redemptions under this Section 3.11 shall be the Excess Cash Flow Payment Date
immediately following the applicable Excess Cash Flow Determination
Date.  Any redemption pursuant to this Section 3.11 shall be made
pursuant to the provisions of Sections 3.2 through 3.6, provided,
that, if less than all of the Notes are to be redeemed, the Trustee shall select
the Notes or portions thereof to be redeemed on a pro
rata basis.

       

      (c)           The
Issuers will not be required to make any payments or mandatory redemptions with
respect to an Excess Cash Flow Period under this Section 3.11 (i) unless the
Excess Free Cash Flow for such period is equal to or in excess of $250,000 as of
the applicable Excess Cash Flow Determination Date or (ii) if Morris Publishing
does not have in effect a Working Capital Facility, if the Working Capital
Balance on the Excess Cash Flow Determination Date for such Excess Cash Flow
Period is less than $7,000,000.  If Morris Publishing does not have a
Working Capital Facility in effect on any Excess Cash Flow Determination Date
and the Working Capital Balance is more than $7,000,000, the Issuers will only
be required to apply an amount of Excess Free Cash Flow pursuant to Section
3.11(a) equal to the amount that, if applied, would reduce the Working Capital
Balance on the Excess Cash Flow Determination Date to $7,000,000 and such amount
to be applied shall be deemed the “Excess Free Cash Flow” for such Excess Cash
Flow Period for purposes of this Section 3.11.  With respect to the
Excess Cash Flow Period containing the Issue Date, the Issuers will only be
required to apply an amount of Excess Free Cash Flow for such period equal to
the product of (A) (i) the amount of Excess Free Cash Flow for such calendar
month divided
by (ii) the number of days in such period multiplied
by (B) the number of days from the Issue Date to the end of the calendar
month in such period and such amount to be applied shall be deemed the “Excess
Free Cash Flow” for such Excess Cash Flow Period for purposes of this Section
3.11.  The Issuers shall, in any case, be required to deliver the
Officers’ Certificate required by this Section 3.11.

       

      

      
        
          
             

          

          
            -49-

            
              

            

          

          
            Table of Contents

          

        

      

      

      (d)           To
the extent that, in connection with the preparation of consolidated audited
financial statements of the Company and its Subsidiaries, it is determined that
the amount of Excess Free Cash Flow for any Excess Cash Flow Period was higher
than the amount of Excess Free Cash Flow previously reported in the Officers’
Certificate delivered pursuant to Section 3.11 for such Excess Cash Flow Period,
the amount of the difference between the amount of the audited Excess Free Cash
Flow and the amount of Excess Free Cash Flow that was reported for such Excess
Cash Flow Period (such difference, the “Audited
Adjustment”) shall be added to the Excess Free Cash Flow for the Excess
Cash Flow Period next following the determination that the Excess Free Cash Flow
for such prior Excess Cash Flow Period requires an Audited
Adjustment.  If the Excess Free Cash Flow for such prior Excess Cash
Flow Period was determined in good faith by the Issuers, the occurrence of an
Audited Adjustment shall not be deemed a Default or Event of Default under this
Section 3.11 if the Audited Adjustment is applied to the subsequent calculation
of Excess Free Cash Flow pursuant to this paragraph (d).

       

      (e)           Subject
to the following sentence, on the Issue Date, the Issuers shall apply an amount
equal to 100% of the amount of the Cash on Hand as of the Issue Date to amortize
outstanding Indebtedness, including accrued interest, fees and all other amounts
owing thereon in accordance with the priority set forth in Section
3.11(a).  If Morris Publishing has not entered into a Working Capital
Facility on the Issue Date, the Issuers shall apply an amount of cash equal to
an amount that, if applied, would reduce the Cash on Hand as of the Issue Date
to $7,000,000, to amortize outstanding Indebtedness, including accrued interest,
fees and all other amounts owing thereon in accordance with the priority set
forth in Section 3.11(a).

       

      (f)           On
the date that the Company enters into the Working Capital Facility, the Company
shall apply an amount equal to 100% of the outstanding amount of the Working
Capital Balance as of such date to amortize outstanding Indebtedness, including
accrued interest, fees and all other amounts owing thereon in accordance with
the priority set forth in Section 3.11(a).

       

      ARTICLE IV.

       

       

      COVENANTS

       

      
        	
                Section 4.1.

              	
                Payment
      of Principal and Interest.

              

      

       

      The
Issuers shall pay or cause to be paid the principal, Redemption Price and
Purchase Price of, and interest on the Notes on the dates, in the amounts and in
the manner provided herein and in the Notes.  Principal, Redemption
Price, Purchase Price and interest shall be considered paid on the date due if
the Paying Agent, if other than an Issuer, holds as of 10:00 a.m. Eastern Time
on the due date money deposited by the Issuers in immediately available funds
and designated for and sufficient to pay the aggregate amount then
due.

       

      The
Issuers shall pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) during any period in which an Event of Default has
occurred and is continuing (including any interest on overdue principal,
Redemption Price and Purchase Price and on overdue installments of interest
(without regard to any applicable grace period)) at the rate equal to 2% per
annum in excess of the then applicable interest rate on the Notes to the extent
lawful, which excess rate shall be paid in cash; the Issuers shall also pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace period) at the same rate to the extent lawful.

       

      

      
        
          
             

          

          
            -50-

            
              

            

          

          
            Table of Contents

          

        

      

       

      
        	
                Section 4.2.

              	
                Maintenance
      of Office or Agency.

              

      

       

      The
Issuers shall maintain an office or agency (which may be an office of the
Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes
may be surrendered for registration of transfer or for exchange and where
notices and demands to or upon the Issuers in respect of the Notes and this
Indenture may be served.  The Issuers shall give prompt written notice
to the Trustee of the location, and any change in the location, of such office
or agency.  If at any time the Issuers shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the office of the Trustee.

       

      The
Issuers may also from time to time designate one or more other offices or
agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations.  The
Issuers shall give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.

       

      The
Issuers hereby designate the office of the Trustee as one such office or agency
of the Issuers in accordance with Section 2.3.  The Trustee may resign
such agency at any time by giving written notice to the Issuers no later than 30
days prior to the effective date of such resignation.

       

      
        	
                Section 4.3.

              	
                Reports.

              

      

       

      Whether
or not required by the rules and regulations of the Commission, so long as any
Notes are outstanding Morris Publishing will furnish the Holders of Notes (which
may be furnished by making publicly available filings with the
Commission):

       

      (a)           beginning
with reports for the first quarter ending after the Issue Date, all quarterly
and annual financial information that would be required to be contained in a
filing with the Commission on Forms 10-Q and 10-K if Morris Publishing were
required to file such Forms, including a “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” that describes the financial
condition and results of operations of Morris Publishing and its consolidated
Subsidiaries (showing in reasonable detail, either on the face of the financial
statements or in the footnotes thereto and in Management’s Discussion and
Analysis of Financial Condition and Results of Operations, the financial
condition and results of operations of Morris Publishing and its Restricted
Subsidiaries separate from the financial condition and results of operations of
the Unrestricted Subsidiaries of Morris Publishing, if any) and, with respect to
the annual information only, a report thereon by Morris Publishing’s independent
public accountants;

       

      

      
        
          
             

          

          
            -51-

            
              

            

          

          
            Table of Contents

          

        

      

      

      (b)           all
current reports that would be required to be filed with the Commission on Form
8-K if Morris Publishing were required to file such reports, and

       

      (c)           the
certifications that would be required to be filed with the Commission pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002, if Morris Publishing were
required to file such certifications.

       

      in each
case, within the time periods specified in the Commission’s rules and
regulations.  In addition, whether or not required by the rules and
regulations of the Commission, Morris Publishing will file a copy of all such
information and reports with the Commission for public availability within the
time periods specified in the Commission’s rules and regulations (unless the
Commission will not accept such a filing) and make such information available to
securities analysts and prospective investors upon request.

       

      In
addition, Morris Publishing agrees to furnish the Trustee within 50 days after
the end of each of the first three fiscal quarters and 105 days after the end of
the fourth fiscal quarter, and beginning with the fiscal quarter ended December
31, 2009, (x) an Officers’ Certificate certifying that no Default or Event of
Default under the Indenture exists, or if any Default or Event of Default under
the Indenture exists, specifying the nature and extent thereof, which
certificate shall also certify the Total Leverage Ratio and the Cash Interest
Coverage Ratio as of the last day of such quarter as well as the calculations
performed to establish such ratios (and provide such calculations) and
(y) a certificate providing, in reasonable detail, information about the
costs incurred by it and being charged to it under the Services Agreement during
such fiscal quarter.

       

      The
portions of each Officers’ Certificate in clause (x) in the preceding sentence
which certify the Total Leverage Ratio and the Cash Interest Coverage Ratio as
of the last day of such quarter as well as the calculations performed to
establish such ratios (and provide such calculations), and the Officers’
Certificates in clause (y) in the preceding sentence shall be treated as
confidential material nonpublic information and shall not be disclosed or used
as a basis to purchase or sell the Notes or other securities of the Issuers,
unless and until the Issuers publicly disclose such information, and shall not
be used to the competitive advantage of any other business.  If a
Holder enters into a confidentiality agreement with the Issuers to maintain the
confidentiality of such information and not to use such information as a basis
to purchase or sell the Notes or other securities of the Issuers, unless and
until the Issuers publicly disclose such information, and not to use such
information for the competitive advantage of any other business, then the
Issuers shall promptly deliver a copy of such certificate(s) to such Holder that
makes a written request therefor.

       

      
        	
                Section 4.4.

              	
                Compliance
      Certificate.

              

      

       

      The
Issuers shall deliver to the Trustee, within 120 days after the end of each
fiscal year (which on the date hereof ends on December 31), a certificate from
its principal executive officer, principal financial officer or principal
accounting officer stating that a review of the activities of the Issuers and
the Guarantors during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Issuers and the

       

      

      
        
          
             

          

          
            -52-

            
              

            

          

          
            Table of Contents

          

        

      

      

      Guarantors
have kept, observed, performed and fulfilled their respective obligations under
this Indenture and the Security Documents in all material respects, and further
stating, as to each such Officer signing such certificate, that to the best of
his or her knowledge the Issuers and the Guarantors have kept, observed,
performed and fulfilled each and every covenant contained in this Indenture in
all material respects and are not in Default in the performance or observance of
any of the terms, provisions and conditions of this Indenture and the Security
Documents (and, if a Default or Event of Default shall have occurred, describing
all such Defaults or Events of Default) of which he or she may have knowledge,
and that to the best of his or her knowledge no event has occurred and remains
in existence by reason of which, payments on account of the principal of or
interest, if any, on the Notes is prohibited or if such event has occurred, a
description of the event, and that to the best of his or her knowledge each of
the Issuers and the Guarantors has complied in all material respects with all
applicable laws and Environmental Laws (and if any material violation of law or
Environmental Laws shall have occurred, describing all such
violations).

       

      So long
as not contrary to the then current recommendations of the American Institute of
Certified Public Accountants, the year-end financial statements delivered
pursuant to Section 4.3 above shall be accompanied by a written statement of the
Company’s independent public accountants (who shall be a firm of established
national reputation) that in making the examination necessary for certification
of such financial statements, nothing has come to their attention that would
lead them to believe that any of the Issuers or Guarantors has violated any
provisions of Article IV or Article V or, if any such violation has occurred,
specifying the nature and period of existence thereof, it being understood that
such accountants shall not be liable directly or indirectly to any Person for
any failure to obtain knowledge of any such violation.

       

      The
Issuers shall, so long as any of the Notes are outstanding, deliver to the
Trustee, forthwith upon any Officer of an Issuer becoming aware of any Default
or Event of Default an Officers’ Certificate specifying such Default or Event of
Default; provided
that the Issuers shall provide such Officers’ Certificate at least annually
whether or not any Officer knows of any Default or Event of
Default.

       

      The
Issuers shall promptly notify the Trustee in writing upon the incurrence of the
Refinanced Debt, including a statement of the interest rate payable on the
Refinanced Debt and whether such interest rate constitutes an Event of Default
under clause (11) of Section 6.1.

       

      
        	
                Section 4.5.

              	
                Taxes.

              

      

       

      The
Issuers shall pay or discharge, and shall cause each of its Subsidiaries to pay
or discharge, prior to delinquency, all material taxes, assessments, and
governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders of the Notes.

       

      
        	
                Section 4.6.

              	
                Stay,
      Extension and Usury Laws.

              

      

       

      Each of
the Issuers covenants (to the extent that it may lawfully do so) that it shall
not at any time insist upon, plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay, extension or usury law wherever enacted,
now or at any time hereafter in force, that may affect the covenants or the
performance of this Indenture; and each of the Issuers

       

      

      
        
          
             

          

          
            -53-

            
              

            

          

          
            Table of Contents

          

        

      

      

      (to the
extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants it shall not, by resort to any such
law, hinder, delay or impede the execution of any power herein granted to the
Trustee or the Collateral Agent, but shall suffer and permit the execution of
every such power as though such law has not been enacted.

       

      
        	
                Section 4.7.

              	
                Limitation
      on Restricted Payments.

              

      

       

      Morris
Publishing will not, and will not cause or permit any of its Restricted
Subsidiaries to, directly or indirectly:

       

      (1)           declare
or pay any dividend or make any distribution (other than dividends or
distributions payable in Qualified Capital Stock of Morris Publishing) on or in
respect of shares of Morris Publishing’s Capital Stock to holders of such
Capital Stock;

       

      (2)           purchase,
redeem or otherwise acquire or retire for value any Capital Stock of Morris
Publishing; or

       

      (3)           make
any Investment (other than Permitted Investments)

       

      (each of
the foregoing actions set forth in clauses (1), (2) and (3) being referred to as
a “Restricted
Payment”).

       

      Notwithstanding
the foregoing, the provisions set forth in the immediately preceding paragraph
do not prohibit:

       

      (1)           if
no Default or Event of Default shall have occurred and be continuing, the
acquisition of any shares of Capital Stock of Morris Publishing, either (i)
solely in exchange for shares of Qualified Capital Stock of Morris Publishing or
(ii) through the application of net proceeds of a substantially concurrent sale
for cash (other than to a Subsidiary of Morris Publishing) of shares of
Qualified Capital Stock of Morris Publishing;

       

      (2)           so
long as no Default or Event of Default shall have occurred and be continuing,
repurchases by Morris Publishing of Common Stock of Morris Publishing from
officers, directors and employees of Morris Publishing or any of its
Subsidiaries (other than officers, directors and employees that are Permitted
Holders or any Affiliates thereof) or their authorized representatives upon the
death, disability or termination of employment of such officers, directors or
employees or termination of such director’s seat on the board of Morris
Publishing, in an aggregate amount not to exceed $2.0 million in any calendar
year; and

       

      (3)           Permitted
Tax Distributions.

       

      

      
        
          
             

          

          
            -54-

            
              

            

          

          
            Table of Contents

          

        

      

      
         

        
          	
                  Section 4.8.

                	
                  Limitation
      on Dividend and Other Payment Restrictions Affecting Restricted
      Subsidiaries.

                

        

         

         

      

      Morris
Publishing will not, and will not cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or permit to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary of Morris Publishing to:

       

      (1)           pay
dividends or make any other distributions on or in respect of its Capital
Stock;

       

      (2)           make
loans or advances to Morris Publishing or any other Restricted Subsidiary or to
pay any Indebtedness or other obligation owed to Morris Publishing or any other
Restricted Subsidiary of Morris Publishing; or

       

      (3)           transfer
any of its property or assets to Morris Publishing or any other Restricted
Subsidiary of Morris Publishing, except in each case for such encumbrances or
restrictions existing under or by reason of:

       

      (a)           applicable
law;

       

      (b)           the
Indenture Documents;

       

      (c)           customary
non-assignment provisions of any contract or any lease governing a leasehold
interest of any Restricted Subsidiary of Morris Publishing;

       

      (d)           any
instrument governing Acquired Indebtedness, which encumbrance or restriction is
not applicable to any Person, or the properties or assets of any Person, other
than the Person or the properties or assets of the Person so
acquired;

       

      (e)           the
Tranche B Loan, the Refinanced Debt and the Working Capital
Facility;

       

      (f)           an
agreement governing other Senior Debt or Guarantor Senior Debt permitted to be
incurred under this Indenture; provided,
however,
that, with respect to any agreement governing such other Senior Debt or
Guarantor Senior Debt, the provisions relating to such encumbrance or
restriction are no less favorable to Morris Publishing in any material respect
as determined by the Board of Directors of Morris Publishing in its reasonable
and good faith judgment than the provisions contained in the Tranche A Loan as
in effect immediately prior to the Issue Date;

       

      (g)           restrictions
on the transfer of assets subject to any Lien permitted under this Indenture
imposed by the holder of such Lien;

       

      (h)           restrictions
imposed by any agreement to sell assets or Capital Stock permitted under this
Indenture to any Person pending the closing of such sale;

       

      

      
        
          
             

          

          
            -55-

            
              

            

          

          
            Table of Contents

          

        

      

      

      (i)           customary
provisions in joint venture agreements and other similar agreements (in each
case relating solely to the respective joint venture or similar entity or the
equity interests therein) entered into in the ordinary course of business;
and

       

      (j)           an
agreement governing Indebtedness incurred to Refinance the Indebtedness issued,
assumed or incurred pursuant to an agreement referred to in clauses (b), (d),
(e), (f) and (g) above; provided,
however,
that the provisions relating to such encumbrance or restriction contained in any
such Indebtedness are no less favorable to Morris Publishing in any material
respect as determined by the Board of Directors of Morris Publishing in their
reasonable and good faith judgment than the provisions relating to such
encumbrance or restriction contained in agreements referred to in such clauses
(b), (d), (e), (f) and (g).

       

      
        	
                Section 4.9.

              	
                Limitation
      on Incurrence of Additional
Indebtedness.

              

      

       

      Morris
Publishing will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create, incur, assume, guarantee, acquire, become
liable, contingently or otherwise, with respect to, or otherwise become
responsible for payment of (collectively, “incur”)
any Indebtedness (other than Permitted Indebtedness).

       

      Other
than as expressly contemplated by this Indenture, Morris Publishing will not,
and will not permit any of its Restricted Subsidiaries to incur any Indebtedness
which represents an extension, modification, refinancing, or renewal of any
Indebtedness in an aggregate amount in excess of $100,000 in any calendar year;
provided,
that this limitation shall not apply to Indebtedness constituting a trade
payable or similar obligation to a trade creditor or to such extensions,
modifications, refinancings or renewals of Indebtedness in the ordinary course
of business.

       

      
        	
                Section 4.10.

              	
                Limitation
      on Asset Sales.

              

      

       

      Morris
Publishing will not, and will not cause or permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:

       

      (1)           Morris
Publishing or the applicable Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value of the assets sold or otherwise disposed of (as determined in good faith
by Morris Publishing’s Board of Directors);

       

      (2)           at
least 75% of the consideration received by Morris Publishing or the Restricted
Subsidiary, as the case may be, from such Asset Sale shall be in the form of
cash, Cash Equivalents and/or assets of the same type having the same general
utility as the subject assets, as determined by Issuer (“Replacement
Assets”) and is received at the time of such disposition; provided,
however,
that the amount of (i) any liabilities (as shown on Morris Publishing’s or such
Restricted Subsidiary’s most recent balance sheet or in the notes thereto) of
Morris Publishing or any such Restricted Subsidiary (other than liabilities that
are by their terms subordinated to the Notes or any Guarantee of a Guarantor)
that are assumed by the transferee of any such assets shall be deemed to
be

       

      

      
        
          
             

          

          
            -56-

            
              

            

          

          
            Table of Contents

          

        

      

      

      cash for
purposes of this provision and (ii) any notes or other obligations received by
Morris Publishing or such Restricted Subsidiary from such transferee that are
immediately converted by Morris Publishing or such Restricted Subsidiary into
cash (to the extent of the cash received) shall be deemed, to the extent of cash
so received, to be cash for purposes of this provision; and

       

      (3)           upon
the consummation of an Asset Sale, Morris Publishing shall apply, or cause such
Restricted Subsidiary to apply, the Net Cash Proceeds relating to such Asset
Sale within 180 days of receipt thereof:

       

      (a)           to
prepay any Senior Debt or Guarantor Senior Debt and, in the case of any Senior
Debt or Guarantor Senior Debt under any revolving credit facility (other than
the Working Capital Facility), effect a permanent reduction in the availability
under such revolving credit facility; and/or

       

      (b)           to
make an offer to all Holders and the Tranche B Lender to reduce the balance on
the Tranche B Loan and to repurchase the maximum principal amount of Notes, on a
pro rata basis, that may be reduced and purchased out of the Net Cash Proceeds
(or the portion thereof not applied pursuant to clause (a) above) at a Purchase
Price in cash in an amount equal to 101% of the principal amount thereof,
together with accrued and unpaid interest to the date fixed for the closing of
such offer, in accordance with the procedures set forth in Section 3.10 (a
“Net
Proceeds Offer”).

       

      (4)           Notwithstanding
the foregoing, all Net Cash Proceeds of any Collateral in respect of any Asset
Sale shall, pending their application in accordance with this Section 4.10 or
the release thereof in accordance with the provisions of the Security Documents,
be deposited in an account subject to a deposit account control agreement as
provided in the Security Documents.

       

      In the
event of the transfer of substantially all (but not all) of the property and
assets of Morris Publishing and its Restricted Subsidiaries as an entirety to a
Person in a transaction permitted under Section 5.1, which transaction does not
constitute a Change of Control, the successor corporation shall be deemed to
have sold the properties and assets of Morris Publishing and its Restricted
Subsidiaries not so transferred for purposes of this covenant, and shall comply
with the provisions of this covenant with respect to such deemed sale as if it
were an Asset Sale.  In addition, the fair market value of such
properties and assets of Morris Publishing or its Restricted Subsidiaries deemed
to be sold shall be deemed to be Net Cash Proceeds for purposes of this
covenant.

       

      Morris
Publishing will not, and will not cause or permit any of its Restricted
Subsidiaries to, engage in any Asset Swaps, unless:

       

      (1)           at
the time of entering into such Asset Swap and immediately after giving effect to
such Asset Swap, no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;

       

      

      
        
          
             

          

          
            -57-

            
              

            

          

          
            Table of Contents

          

        

      

      

      (2)           in
the event such Asset Swap involves the transfer by Morris Publishing or any
Restricted Subsidiary of assets having an aggregate fair market value in excess
of $25.0 million, either (i) the terms of such Asset Swap shall be approved by a
majority of the Independent Directors of Morris Publishing, but in no event
fewer than two Independent Directors of Morris Publishing, such approval to be
evidenced by a Board Resolution stating that such Independent Directors have
determined that such transaction complies with the foregoing provisions or, (ii)
in the event there are fewer than two such Independent Directors, Morris
Publishing shall, prior to the consummation thereof, obtain a favorable opinion
as to the fairness of such Asset Swap to Morris Publishing or such Restricted
Subsidiary, as the case may be, from a financial point of view, from an
Independent Financial Advisor and file the same with the Trustee;
and

       

      (3)           in
the event such Asset Swap involves the transfer by Morris Publishing or any
Restricted Subsidiary of assets having an aggregate fair market value in excess
of $50.0 million, Morris Publishing shall, prior to the consummation thereof,
obtain a favorable opinion as to the fairness of such Asset Swap to Morris
Publishing or such Restricted Subsidiary, as the case may be, from a financial
point of view, from an Independent Financial Advisor and file the same with the
Trustee.

       

      
        	
                Section 4.11.

              	
                Limitations
      on Transactions with Affiliates.

              

      

       

      (a)           Morris
Publishing will not, and will not permit any of its Restricted Subsidiaries to,
(i) directly or indirectly, enter into or permit to exist any transaction
or series of related transactions (including, without limitation, the purchase,
sale, lease or exchange of any property or the rendering of any service) with,
or for the benefit of, any of its Affiliates (each, an “Affiliate
Transaction”), other than (x) Affiliate Transactions specifically
permitted under subsections (1) through (6) of clause (d) of this Section 4.11
and (y) Affiliate Transactions in the ordinary course of business on terms that
are no less favorable than those that might reasonably have been obtained in a
comparable transaction at such time on an arm’s-length basis from a Person that
is not an Affiliate of Morris Publishing or such Restricted Subsidiary or
(ii) materially amend, modify or waive any provisions of any agreement,
whether written or oral, respecting an Affiliate Transaction in effect on the
date hereof; provided,
that the Services Agreement may be amended as provided for in Section
4.24.

       

      (b)           So
long as any Notes are outstanding, and notwithstanding anything to the contrary
herein, Morris Publishing will not, and will not permit any of its Restricted
Subsidiaries to, make or permit to exist any intercompany loans from any Obligor
to any Affiliate thereof that is not an Obligor other than (i) the Tranche B
Loan and (ii) short term intercompany payables between Morris Publishing and
Morris Communications incurred in the ordinary course of business on terms that
are no less favorable than those that might reasonably have been obtained in a
comparable transaction at such time on an arm’s-length basis from a Person that
is not an Affiliate of Morris Publishing or such Restricted Subsidiary
consistent with past practices which are settled monthly.

       

      (c)           All
Affiliate Transactions (and each series of related Affiliate Transactions which
are similar or part of a common plan) involving aggregate payments or other
property with a fair market value in excess of $1.0 million shall either (i) be
approved by a majority of the

       

      

      
        
          
             

          

          
            -58-

            
              

            

          

          
            Table of Contents

          

        

      

      

      Independent
Directors of Morris Publishing, but in no event fewer than two Independent
Directors of Morris Publishing, such approval to be evidenced by a Board
Resolution stating that such Independent Directors have determined that such
transaction complies with the foregoing provisions or, (ii) in the event there
are fewer than two such Independent Directors, Morris Publishing shall, prior to
the consummation thereof, obtain a favorable opinion as to the fairness of such
Affiliate Transaction to Morris Publishing or such Restricted Subsidiary, as the
case may be, from a financial point of view, from an Independent Financial
Advisor and file the same with the Trustee.  If Morris Publishing or
any Restricted Subsidiary of Morris Publishing enters into an Affiliate
Transaction (or a series of related Affiliate Transactions related to a common
plan) that involves an aggregate fair market value of more than $5.0 million,
Morris Publishing shall, prior to the consummation thereof, obtain a favorable
opinion as to the fairness of such transaction or series of related transactions
to Morris Publishing or the relevant Restricted Subsidiary, as the case may be,
from a financial point of view, from an Independent Financial Advisor and file
the same with the Trustee.

       

      (d)           Except
as expressly permitted below and subject at all times to the restrictions set
forth in clause (b) of this Section, the restrictions set forth in clause (a) of
this Section shall not apply to:

       

      (1)           reasonable
fees and compensation paid to and indemnity provided on behalf of, officers,
directors, employees or consultants of Morris Publishing or any Restricted
Subsidiary of Morris Publishing as determined in good faith by Morris
Publishing’s Board of Directors or senior management;

       

      (2)           Affiliate
Transactions between or among Morris Publishing, any of its Restricted
Subsidiaries that are Guarantors or exclusively between or among such Restricted
Subsidiaries, provided such transactions are not otherwise prohibited by this
Indenture;

       

      (3)           The
Services Agreement or, an amendment or replacement agreement thereto so long as
any such amendment or replacement thereto is not more disadvantageous to the
Holders in any material respect than the Services Agreement, as amended in
accordance with Section 4.24 as in effect on the Issue Date;

       

      (4)           Restricted
Payments permitted by this Indenture;

       

      (5)           transactions
in the ordinary course of business and conducted on an arm’s length basis,
exclusively between Morris Publishing or any of its Restricted Subsidiaries and
a joint venture to which Morris Publishing or any of its Restricted Subsidiaries
is a party; provided,
however,
that the other party or parties to such joint venture are not Affiliates of
Morris Publishing, any of its Restricted Subsidiaries or any Permitted Holder;
and

       

      (6)           the
Loan Documents (as defined in the Senior Debt Credit Agreement) as in effect on
the Issue Date, as such documents may be amended, restated, supplemented, or
otherwise modified from time to time in accordance with the Intercreditor
Agreement, if applicable.

       

      

      
        
          
             

          

          
            -59-

            
              

            

          

          
            Table of Contents

          

        

      

      
         

        
          	
                  Section 4.12.

                	
                  LimLimitation
      on Liens.

                

        

         

      

      Morris
Publishing will not, and will not cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or permit or
suffer to exist any Liens of any kind against or upon any property or assets of
Morris Publishing or any of its Restricted Subsidiaries (including pledging any
Common Stock of any Restricted Subsidiary) whether owned on the Issue Date or
acquired after the Issue Date, or any proceeds therefrom, or assign or otherwise
convey any right to receive income or profits therefrom except for:

       

      (1)           Liens
securing the Refinanced Debt, the Working Capital Facility or the Tranche B
Loan;

       

      (2)           Liens
securing the Notes and the Guarantees;

       

      (3)           Liens
of Morris Publishing or a Wholly Owned Restricted Subsidiary of Morris
Publishing on assets of any Restricted Subsidiary of Morris
Publishing;

       

      (4)           Liens
securing Refinancing Indebtedness which is incurred to Refinance any
Indebtedness which has been secured by a Lien permitted under this Indenture and
which has been incurred in accordance with the provisions of this Indenture;
provided,
however,
that such Liens:  (i) are no less favorable to the Holders in any
material respect and are not more favorable to the lienholders in any material
respect with respect to such Liens than the Liens in respect of the Indebtedness
being Refinanced; and (ii) do not extend to or cover any property or assets of
Morris Publishing or any of its Restricted Subsidiaries not securing the
Indebtedness so Refinanced; and

       

      (5)           Permitted
Liens.

       

      
        	
                Section 4.13.

              	
                Continued
      Existence.

              

      

       

      Subject
to Article V, each of the Issuers and the Guarantors shall do or cause to be
done all things necessary to preserve and keep in full force and effect (i) its
corporate or other existence in accordance with the organizational documents (as
the same may be amended from time to time) of the Issuers or such Guarantor and
(ii) the material rights (charter and statutory), licenses, permits, privileges
and franchises of the Issuers or such Guarantor, except to the extent that the
applicable Board of Directors determines in good faith that the preservation of
such right, license or franchise is no longer necessary or desirable in the
conduct of the business of the Issuers or such Guarantor.

       

      
        	
                Section 4.14.

              	
                Insurance
      Matters.

              

      

       

      Morris
Publishing shall provide or cause to be provided, for itself and each of its
Restricted Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds that, in the reasonable, good faith opinion
of Morris Publishing, are adequate and appropriate for the conduct of the
business of Morris Publishing and its Restricted Subsidiaries in a prudent
manner, with reputable insurers or with the government of the United States or
an agency or instrumentality thereof, in such amounts, with such deductibles,
and by such methods as shall be either (i) consistent with past practices of
Morris Publishing or the applicable Restricted Subsidiary or (ii) customary, in
the reasonable, good faith opinion 

       

      

      
        
          
             

          

          
            -60-

            
              

            

          

          
            Table of Contents

          

        

      

      

      of Morris
Publishing, for corporations similarly situated in the industry, unless the
failure to provide such insurance (together with all other such failures) would
not have a material adverse effect on the financial condition or results of
operations of Morris Publishing and its Restricted Subsidiaries, taken as a
whole.

       

      
        	
                Section 4.15.

              	
                Working
      Capital Balance.

              

      

       

      At times
when there is no Working Capital Facility, Morris Publishing and its
Subsidiaries may maintain a Working Capital Balance in an aggregate amount equal
to or greater than $5.0 million; provided,
that, at all times (including when there is a Working Capital Facility), the sum
of (i) the Average Cash Balance during any calendar month plus (ii) the Average
Availability Balance during such calendar month under the Working Capital
Facility, if applicable, shall be no less than $2.0 million in the
aggregate.  Morris Publishing and its Subsidiaries shall maintain all
cash, with the exception of no more than $500,000 at any time, in one or more
accounts at Acceptable Financial Institutions.

       

      
        	
                Section 4.16.

              	
                Additional
      Subsidiaries.

              

      

       

      If Morris
Publishing or any of its Restricted Subsidiaries transfers or causes to be
transferred, in one transaction or a series of related transactions, any
property to any Domestic Restricted Subsidiary that is not a Guarantor, or if
Morris Publishing or any of its Restricted Subsidiaries shall organize, acquire
or otherwise invest in another Domestic Restricted Subsidiary having total
assets with a book value in excess of $500,000, then Morris Publishing shall
cause such transferee or acquiree or other Restricted Subsidiary
to:

       

      (1)           execute
and deliver to the Trustee a supplemental indenture pursuant to which such
Restricted Subsidiary shall unconditionally guarantee all of Morris Publishing’s
obligations under the Notes and this Indenture on the terms set forth in this
Indenture;

       

      (2)           execute
and deliver to the Trustee such instruments and documents (including opinions of
legal counsel) as are appropriate to confirm the obligations of such Restricted
Subsidiary under the Security Documents; and

       

      (3)           deliver
to the Trustee an Opinion of Counsel that such supplemental indenture has been
duly authorized, executed and delivered by such Restricted Subsidiary and
constitutes a legal, valid, binding and enforceable obligation of such
Restricted Subsidiary.  Thereafter, such Restricted Subsidiary shall
be a Guarantor for all purposes of this Indenture.

       

      
        	
                Section 4.17.

              	
                Conduct
      of Business.

              

      

       

      (a)           Limitations
on Activities of Morris Publishing.  Morris Publishing will
not, and will not cause or permit any of its Restricted Subsidiaries to, engage
in any business other than a Permitted Business; provided,
however,
that Morris Publishing may continue the business of any Restricted Subsidiary
acquired in accordance with the terms of this Indenture.

       

      

      
        
          
             

          

          
            -61-

            
              

            

          

          
            Table of Contents

          

        

      

      

      (b)           Limitations
on Activities of Morris Finance.  Morris Finance will not hold
any material assets, become liable for any material obligations, engage in any
trade or business, or conduct any business activity, other than the issue of
Capital Stock to Morris Publishing or any Wholly Owned Restricted Subsidiary of
Morris Publishing, the incurrence of Indebtedness as a co-obligor or guarantor
of the Notes, the Obligations under the Tranche B Loan, the Working Capital
Facility, the Refinanced Debt,  and any other Indebtedness that is
permitted to be incurred by Morris Publishing pursuant to Section 4.9; provided,
however,
that the net proceeds of such Indebtedness are retained by Morris Publishing or
loaned to or contributed as capital to one or more of the Restricted
Subsidiaries of Morris Publishing other than Morris Finance, and activities
incidental thereto.  Morris Publishing will not, and will not cause or
permit any Restricted Subsidiary to, engage in any transactions with Morris
Finance in violation of the preceding sentence.

       

      
        	
                Section 4.18.

              	
                Payments
      for Consent.

              

      

       

      Morris
Publishing will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, pay or cause to be paid any consideration to or for the
benefit of any Holder of Notes for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of the Indenture or the Notes unless
such consideration is offered to be paid and is paid to all Holders of the Notes
that consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or
agreement.

       

      
        	
                Section 4.19.

              	
                Limitation
      on Preferred Stock of Restricted
Subsidiaries.

              

      

       

      Morris
Publishing will not permit any of its Restricted Subsidiaries that is not an
Issuer or a Guarantor to issue any Preferred Stock (other than to Morris
Publishing or to a Wholly Owned Restricted Subsidiary of Morris Publishing) or
permit any Person (other than Morris Publishing or a Wholly Owned Restricted
Subsidiary of Morris Publishing) to own any Preferred Stock of any Restricted
Subsidiary of Morris Publishing that is not an Issuer or a
Guarantor.

       

      
        	
                Section 4.20.

              	
                Prohibition
      on Incurrence of Senior Subordinated
Debt.

              

      

       

      Morris
Publishing will not, and will not permit any Restricted Subsidiary that is a
Guarantor to, incur or suffer to exist Indebtedness that is senior in right of
payment to the Notes or such Guarantor’s Guarantee, as the case may be, and
subordinate in right of payment to any other Indebtedness of Morris Publishing
or such Guarantor, as the case may be.

       

      
        	
                Section 4.21.

              	
                Events
      of Loss.

              

      

       

      (a)           In
the event of an Event of Loss with respect to any Collateral with a fair market
value (or replacement cost, if greater, if insured for their full replacement
cost) equal to or less than $1,000,000, the Issuer or Guarantor, at their
option, may apply the Net Loss Proceeds to purposes determined by Issuer, so
long as such application does not violate this Indenture.  In the
event of an Event of Loss with respect to any Collateral with a fair market
value (or replacement cost, if greater, if insured for their full replacement
cost) in excess of $1,000,000, within 180 days after the receipt of the Net Loss
Proceeds of such Event of Loss, the Issuers or such Guarantor, at their option,
may apply the Net Loss Proceeds from such Event of Loss,

       

      

      
        
          
             

          

          
            -62-

            
              

            

          

          
            Table of Contents

          

        

      

      

      (1)           to
the rebuilding, repair or construction of improvements to the affected
Collateral (the “Subject
Property”) or to the investment in Replacement Assets, provided,
that if such Event of Loss occurs with respect to Collateral with a fair market
value in excess of $2,000,000, the Issuers deliver (A) a written opinion from a
reputable contractor that the Subject Property can be rebuilt, repaired,
replaced or constructed and operating within 360 days from the receipt of the
Net Loss Proceeds of such Event of Loss; and (B) an Officers’ Certificate
certifying that the Issuers or the affected Guarantor has available from Net
Loss Proceeds (including amounts collectible from the applicable insurance
carrier) or other sources sufficient funds to complete the rebuilding, repair,
replacement or construction described in this clause (1); provided,
also
that any improvements to the Subject Property or Replacement
Assets  acquired with any Net Loss Proceeds of Collateral shall be
owned by the Issuers or by a Guarantor and shall not be subject to any Liens
other than Permitted Liens, and the Issuers or such Guarantor, as the case may
be, shall execute and deliver to the Collateral Agent such Security Documents or
other instruments as shall be reasonably necessary to cause such improvements or
Replacement Assets to become subject to a Lien in favor of the Collateral Agent,
for the benefit of the Holders and the Tranche B Lender, securing the
obligations under the Notes or the Guarantees, and the Senior Debt Credit
Agreement, the Refinanced Debt and the Working Capital Facility, as the case may
be, and otherwise shall comply with the terms of this Indenture and the
Intercreditor Agreement; or

       

      (2)           if
permitted  by the Intercreditor Agreement, to the repayment of any
Senior Debt secured by a Permitted Lien on the Collateral subject to the Event
of Loss in an amount up to the Net Loss Proceeds with respect to such Collateral
and, if such Senior Debt is revolving credit Indebtedness (other than the
Working Capital Facility), to correspondingly reduce commitments with respect
thereto, in each case with no concurrent obligation to make any purchase or
redemption of any Notes;

       

      provided
that if, within such 180-day period, the Company or applicable Restricted
Subsidiary has entered into a definitive, binding agreement on commercially
reasonable terms negotiated on an arms-length basis to apply such Net Loss
Proceeds to the purchase or construction of assets permitted in this paragraph
(a), then the Company may extend such 180-day period for up to an additional 180
days.  The Issuers shall promptly notify the Trustee upon entry by the
Company or a Restricted Subsidiary of such an agreement.

       

      (b)           Any
Net Loss Proceeds that are not invested or applied within the time period
specified in clause (a) above for the purposes provided in such clause (a) will
be deemed to constitute “Excess
Loss Amount”.  Within 25 days following the Event of Loss
Trigger Date, or such earlier date, if any, as the Board of Directors of Morris
Publishing determines not to apply the Net Loss Proceeds relating to such Event
of Loss as set forth in paragraph (a) of this Section 4.21, then within 30 days
following such determination (but in no event later than 25 days following the
Event of Loss Trigger Date), the Issuers will make an offer to all Holders and
the Tranche B Lender (an “Event
of Loss Offer”), to reduce the balance of the Tranche B Loan and purchase
the maximum principal amount of Notes, on a pro
rata
basis, that may be reduced and purchased out of the Excess Loss Amount at a
Purchase Price in cash in an amount equal to 101% of the principal amount plus
accrued and unpaid interest to the date fixed for the closing of such offer, in
accordance with the procedures set forth in Section 3.10.  To the
extent that the offer price for the aggregate amount of Notes
tendered  and for the reduction of the Tranche B Loan pursuant to an
Event of Loss Offer is less than the Excess Loss Amount, 

       

      

      
        
          
             

          

          
            -63-

            
              

            

          

          
            Table of Contents

          

        

      

      

      such
remaining Excess Loss Amount shall be released to the Issuers for use for any
purposes, subject to any other applicable conditions and covenants in this
Indenture and the Security Documents.  If the offer price for the
aggregate principal amount of Notes tendered and for the reduction of the
Tranche B Loan pursuant to an Event of Loss Offer exceeds the amount of Excess
Loss Amount, the Trustee shall select the Notes to be purchased on a pro rata
basis in authorized denominations based on the aggregate principal amount of the
Notes so tendered.  Upon completion of any Event of Loss Offer, the
amount of Excess Loss Amount shall be reset at zero.

       

      (c)           The
Issuers will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
or regulations are applicable in connection with the repurchase of the Notes
pursuant to an Event of Loss Offer.  To the extent that the provisions
of any securities laws or regulations conflict with the provisions of the
Indenture, the Issuers will comply with the applicable securities laws and
regulations and shall not be deemed to have breached their obligations described
in the Indenture by virtue thereof.

       

      (d)           In
the event of any conflict between this Section 4.21 and any Security Document,
this Section 4.21 shall control; provided,
that to the extent this Section 4.21 conflicts with the Intercreditor
Agreement, the Intercreditor Agreement shall control.

       

      
        	
                Section 4.22.

              	
                Financial
      Covenants.

              

      

       

      Morris
Publishing will not permit the Total Leverage Ratio to exceed the following
respective amounts at any time during the following respective
periods:

       

      
        	
                Period

              	
                Total
      Leverage Ratio

              
	
                January
      1, 2010  to  December 31, 2010

              	
                5.50
      to 1

              
	
                January
      1, 2011  to        March 31,
      2011

              	
                5.50
      to 1

              
	
                   
      April 1,
      2011  to           June
      30, 2011

              	
                5.50
      to 1

              
	
                     
      July 1, 2011  to September 30, 2011

              	
                5.25
      to 1

              
	
                 
      October 1, 2011  to  December 31, 2011

              	
                5.25
      to 1

              

         

         

        
        

        
          
            -64-

            
              

            

          

        

         

        	 Period	Total Leverage Ratio
	
                                                   
      January 1, 2012  to  December 31, 2012

              	
                5.00
      to 1

              
	
                                                      
      January 1, 2013  to  December 31, 2013

              	
                4.75
      to 1

              
	
                                                      
      January 1, 2014  to  December 31, 2014

              	
                4.50
      to 1

              

      

       

      Morris
Publishing will not permit the Cash Interest Coverage Ratio to be less than the
following respective amounts at any time during the following respective
periods:

       

      
        	
                Period

              	
                Cash
      Interest Coverage Ratio

              
	
                    
      January 1, 2010  to  December 31, 2010

              	
                1.8
      to 1

              
	
                    
      January 1, 2011  to  December 31, 2011

              	
                1.8
      to 1

              
	
                    
      January 1, 2012  to  December 31, 2012

              	
                1.8
      to 1

              
	
                    
      January 1, 2013  to  December 31, 2013

              	
                1.9
      to 1

              
	
                    
      January 1, 2014  to  December 31, 2014

              	
                2.1
      to 1

              

      

       

      Morris
Publishing agrees to test its compliance with this Section 4.22 quarterly, on
March 31, June 30, September 30 and December 31 of each year and report on
its results in compliance with Section 4.3(ii) of this Indenture.

       

      Notwithstanding
any requirements under GAAP that would require an alternative calculation solely
with respect to the matters set forth in clauses (i) and (ii) below, the
financial covenants set forth in this Section 4.22 shall be calculated, where
applicable, such that (i) the aggregate principal amount of the Notes shall in
no event exceed the aggregate principal amount from time to time outstanding
under the terms of the Notes, including, without limitation, any PIK Interest
that has been added to such principal amount, and (ii) interest expense on the
Notes shall be treated as the amount designated as interest under the terms of
the Notes.

       

      
        	
                Section 4.23.

              	
                Capital
      Expenditures.

              

      

       

      Morris
Publishing will not, and will not permit any Restricted Subsidiary that is a
Guarantor to, make or incur any Capital Expenditures not in the ordinary course
of business, or make such Capital Expenditures in an aggregate amount (for the
Company and all of its Restricted Subsidiaries) in excess of $10.0 million in
any calendar year excluding Capital Expenditures made with Net Loss Proceeds as
permitted under this Indenture.

       

      

      
        
          
             

          

          
            -65-

            
              

            

          

          
            Table of Contents

          

        

      

      
         

        
          	
                  Section 4.24.

                	
                  Services
      Agreement.

                

        

         

      

      Notwithstanding
anything to the contrary contained in Section 4.11(b), Morris Publishing shall,
and shall cause its applicable Affiliates to, amend the Services Agreement to
(a) fix the combined annual payment of the Morris Communications Fee and
the MSTAR Solutions Fee at actual costs and (b) to provide that the
combined annual payment of the Morris Communications Fee and the MSTAR Solutions
Fee shall not, under any circumstances, exceed $22.0 million in the aggregate
during any calendar year.

       

      
        	
                Section 4.25.

              	
                Maintenance
      of Properties and Intellectual Property
Rights.

              

      

       

      Morris
Publishing will, and will cause each Restricted Subsidiary that is a Guarantor
to:  (a) keep and maintain all property material to the conduct of its
business in good working order and condition sufficient and advisable for its
ordinary operations (ordinary wear and tear excepted),  (b) obtain and
maintain in effect at all times all material franchises, governmental
authorizations, intellectual property rights (including patents, copyrights,
trademarks, trade names), trade secrets, licenses and permits, which are
reasonably necessary for it to own its property and conduct its business as
conducted on the date of this Indenture or as permitted hereafter to be
conducted, (c) consistent with their past practices (i) continue to use each
material trademark in a manner that maintains such material trademark in full
force free from any claim of abandonment for non-use, and (ii) use such material
trademark with the appropriate notice of registration and all other notices and
legends required by applicable law.

       

      
        	
                Section 4.26.

              	
                Compliance
      with Laws.

              

      

       

      Morris
Publishing will, and will cause each Restricted Subsidiary that is a Guarantor
to, comply with all laws, rules, regulations and orders of any Governmental
Authority applicable to it or its property, including Environmental Laws, except
where the failure to do so, individually or in the aggregate, would not
reasonably be expected to result in a material adverse effect on the business,
assets, financial condition, or results of operations of the Company and its
Subsidiaries taken as a whole.

       

      
        	
                Section 4.27.

              	
                Books
      and Records; Inspection Rights.

              

      

       

      Morris
Publishing will, and will cause each Restricted Subsidiary that is a Guarantor
to,  (a) keep proper books of record and account in which full,
true and correct entries are made of all dealings and transactions in relation
to its business and activities in conformity with GAAP and all requirements of
law and (b) permit any representatives or independent contractors designated by
the Holders or the Trustee, upon reasonable prior notice and during normal
business hours, to visit and inspect its properties, to examine and make
extracts from its books and records, and to discuss its affairs, finances and
condition with its officers and independent accountants (at which conferences
the Company may participate), subject to confidentiality agreements reasonably
acceptable to Morris Publishing.

       

      
        	
                Section 4.28.

              	
                Security
      Documents.

              

      

       

      On the
date hereof, the Issuers and the Guarantors will enter into each Security
Document and each other instrument and document required thereby.

       

      

      
        
          
             

          

          
            -66-

            
              

            

          

          
            Table of Contents

          

        

      

      
         

        
          	
                  Section 4.29.

                	
                  Further
      Assurances.

                

        

         

      

      The
Issuers will, and will cause each of their Subsidiaries to, take such action
from time to time as shall be necessary or desirable to effectuate the purposes
and objectives of the Indenture Documents.

       

      Without
limiting the generality of the foregoing, the Issuers will take such action, and
will cause each of their applicable Subsidiaries to take such action, from time
to time as shall be necessary to ensure that each Subsidiary of the Issuers is a
“Subsidiary Guarantor” under the Security Agreement.  Accordingly, in
the event that any new Subsidiary meeting such conditions is formed or acquired
by Morris Publishing after the date hereof, the Issuers will cause such
Subsidiary to become a “Guarantor” and a “Grantor” under the Security Agreement
pursuant to an instrument of assumption, and to deliver such proof of corporate
action, incumbency of officers, opinions of counsel and other documents as is
consistent with those delivered by each Obligor upon the date hereof (and each
Issuer hereby instructs such counsel to deliver such opinions to the Trustee and
the Holders).

       

      In
addition, without limiting the generality of the foregoing, the Issuers will,
and will cause each of the other Obligors to, take such action from time to time
(including filing appropriate Uniform Commercial Code financing statements and
executing and delivering such assignments, security agreements, mortgages and
other instruments) as shall be necessary or desirable to create, in favor of the
Collateral Agent for the benefit of the Holders, perfected security interests
and Liens in substantially all of the property of the Obligors of the type
required to be collateral under the Senior Debt Credit Agreement as collateral
security for their Obligations hereunder and under the Security Documents; provided
that any such security interest or Lien shall be subject to the relevant
requirements of the Security Documents and the Intercreditor
Agreement.

       

      
        	
                Section 4.30.

              	
                Board
      Observer.

              

      

       

      Holders
of a majority in aggregate principal amount of the outstanding Notes shall have
the right to designate one representative (the “Observer”)
to attend all meetings of the Board of Directors of the Company, the Board of
Directors of each of the Company’s material subsidiaries and each committee of
such Board of Directors of the Company or material subsidiary (collectively, the
“Relevant
Meetings”) as a non-voting observer by notifying the Company in writing
or by directing the Trustee in writing to notify the Company in writing of such
designation; provided
that such Observer shall have the same duties of confidentiality and
non-disclosure as the other members of the Board of Directors.  The
Observer shall be entitled to (i) prior written notice of all Relevant
Meetings in the same manner and with the same amount of advance notice, which
shall be at least five (5) Business Days’ advance notice where practicable, that
is provided to all other members of the Board of Directors of the Company, its
material subsidiaries and any committees of such Board of Directors in
connection with such Relevant Meetings, (ii) receive all materials provided to
members (contemporaneously with other members’ receipt of such materials) of the
Board of Directors of the Company, its material subsidiaries and any committees
of such Board of Directors in connection with such Relevant Meetings, (iii)
attend (whether in person, by telephone, or otherwise) all Relevant Meetings as
a non-voting observer, and (iv) receive reimbursement for reasonable fees and
expenses incurred in connection with attending such Relevant Meetings; provided,

       

      

      
        
          
             

          

          
            -67-

            
              

            

          

          
            Table of Contents

          

        

      

      

       however,
that the Company reserves the right to exclude such Observer from access to any
material or meeting or portion thereof  (only if the Observer is
notified of such withholding) if the Board votes in good faith after advice of
counsel, that such exclusion is necessary (taking into account any
confidentiality agreements that such Observer has executed or is willing to
execute):  (a) to preserve the attorney-client privilege; or (b) to
avoid the impairment of the Company’s ability to enforce its rights under this
Agreement in any bona fide dispute with the Observer.  The Company
will provide reasonable advance notice if it intends to exclude the Observer
from attending any portion of any meeting or from receiving any particular
materials, describing the basis for such exclusion, and shall cooperate with the
Observer in good faith to limit to the maximum extent reasonably possible the
degree to which the Observer will be excluded from such portions of such
meetings or receiving such materials.  Such Observer shall be
removable only by (A) the Required Noteholders (i) by providing written notice
to the Company or (ii) by directing the Trustee in writing to notify the Company
in writing, or (B) the Company for Cause.  For purposes of this
Indenture, “Cause”
shall mean that the Observer:  (x) has been convicted of an act
constituting a misdemeanor involving moral turpitude or a felony under the laws
of the United States or any state or political subdivision thereof, (y) has
committed an act constituting gross negligence or willful misconduct that is
detrimental to the business, reputation, character or standing of the Company,
or (z) has committed an act of fraud, self-dealing, conflict of interest,
material dishonesty or misrepresentation that is detrimental to the business,
reputation, character or standing of the Company.

       

      ARTICLE V.

       

       

      SUCCESSORS

       

      
        	
                Section 5.1.

              	
                Merger,
      Consolidation and/or Sale of
Assets.

              

      

       

      (a)           Morris
Publishing will not, in a single transaction or series of related transactions,
consolidate or merge with or into any Person, or sell, assign, transfer, lease,
convey or otherwise dispose of (or cause or permit any Restricted Subsidiary of
Morris Publishing to sell, assign, transfer, lease, convey or otherwise dispose
of) all or substantially all of Morris Publishing’s assets (determined on a
consolidated basis for Morris Publishing and Morris Publishing’s Restricted
Subsidiaries) whether as an entirety or substantially as an entirety to any
Person unless:

       

      (1)           either:

       

      (a)           Morris
Publishing shall be the surviving or continuing corporation; or

       

      (b)           the
Person (if other than Morris Publishing) formed by such consolidation or into
which Morris Publishing is merged or the Person which acquires by sale,
assignment, transfer, lease, conveyance or other disposition the properties and
assets of Morris Publishing and of Morris Publishing’s Restricted Subsidiaries
substantially as an entirety (the “Surviving
Entity”):

       

      

      
        
          
             

          

          
            -68-

            
              

            

          

          
            Table of Contents

          

        

      

      

      (x)           shall
be a corporation, limited liability company or limited partnership organized and
validly existing under the laws of the United States or any State thereof or the
District of Columbia; and

       

      (y)           shall
expressly assume, by supplemental indenture (in form and substance satisfactory
to the Trustee), executed and delivered to the Trustee, the due and punctual
payment of the principal of, and premium, if any, and interest on all of the
Notes and the performance of every covenant of the Notes and the Indenture on
the part of Morris Publishing to be performed or observed;

       

      (2)           immediately
after giving effect to such transaction and, if applicable, the assumption
contemplated by clause (1)(b)(y) above (including giving effect to any
Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred in
connection with or in respect of such transaction), Morris Publishing or such
Surviving Entity, as the case may be, (a) shall have a Consolidated Net Worth
equal to or greater than the Consolidated Net Worth of Morris Publishing
immediately prior to such transaction and (b) shall be able to incur at least
$1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to
Section 4.22;

       

      (3)           immediately
before and immediately after giving effect to such transaction and, if
applicable, the assumption contemplated by clause (1)(b)(y) above (including,
without limitation, giving effect to any Indebtedness and Acquired Indebtedness
incurred or anticipated to be incurred and any Lien granted in connection with
or in respect of the transaction), no Default or Event of Default shall have
occurred or be continuing; and

       

      (4)           Morris
Publishing or the Surviving Entity shall have delivered to the Trustee an
Officers’ Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, sale, assignment, transfer, lease, conveyance or other
disposition and, if a supplemental indenture is required in connection with such
transaction, such supplemental indenture, complies with the applicable
provisions of the Indenture and that all conditions precedent in the Indenture
relating to such transaction have been satisfied.

       

      For
purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Restricted
Subsidiaries of Morris Publishing the Capital Stock of which constitutes all or
substantially all of the properties and assets of Morris Publishing, shall be
deemed to be the transfer of all or substantially all of the properties and
assets of Morris Publishing.

       

      Notwithstanding
the foregoing clauses (1), (2) and (3), Morris Publishing may merge with an
Affiliate that is a Person that has no material assets or liabilities and which
was organized solely for the purpose of reorganizing Morris Publishing in
another jurisdiction.

       

      (b)           Each
Guarantor (other than any Guarantor whose Guarantee is to be released in
accordance with the terms of the Guarantee and the Indenture in connection with
any transaction complying with Section 4.10) will not, and Morris Publishing
will not cause or permit any Guarantor to, consolidate with or merge with or
into any Person other than Morris Publishing or any other Guarantor
unless:

       

      

      
        
          
             

          

          
            -69-

            
              

            

          

          
            Table of Contents

          

        

      

      

       

       

      (1)           the
entity formed by or surviving any such consolidation or merger (if other than
the Guarantor) or to which such sale, lease, conveyance or other disposition
shall have been made is a corporation, limited liability company or limited
partnership organized and existing under the laws of the United States or any
State thereof or the District of Columbia;

       

      (2)           such
entity assumes all of the obligations of the Guarantor on the
Guarantee;

       

      (3)           immediately
after giving effect to such transaction, no Default or Event of Default shall
have occurred and be continuing; and

       

      (4)           immediately
after giving effect to such transaction and the use of any net proceeds
therefrom on a pro
forma basis, Morris Publishing could satisfy the provisions of clause (2)
of the first paragraph of this covenant.

       

      Any
merger or consolidation of a Guarantor with and into Morris Publishing (with
Morris Publishing being the surviving entity) or another Guarantor that is a
Wholly Owned Restricted Subsidiary of Morris Publishing need only comply with
clause (4) of the first paragraph of this covenant.

       

      (c)           The
following additional conditions shall apply to each transaction described in the
above paragraphs:

       

      (1)           the
Company, such Guarantor or the relevant surviving entity, as applicable, will
cause to be filed and recorded in the relevant jurisdictions (so long as such
jurisdictions are in the United States) such amendments or other instruments, if
any, as may be required by applicable law to preserve and protect the Lien on
the Collateral owned by or transferred to such Person created by the Security
Documents in favor of the Collateral Agent for the benefit of the Holders,
together with such financing statements as may be required to perfect any
security interests in such Collateral which may be perfected by the filing of a
financing statement under the Uniform Commercial Code of the relevant
states;

       

      (2)           following
any such transaction, to the extent that any assets constituted Collateral prior
to such transaction, the Collateral owned by or transferred to the Company, such
Guarantor or the relevant surviving entity, as applicable,
shall:  (a) continue to constitute Collateral under this
Indenture and the Security Documents; and (b) not be subject to any Lien other
than Liens permitted by this Indenture and created by the Security
Documents;

       

      (3)           the
assets of the Person which is merged or consolidated with or into the relevant
surviving entity, to the extent such assets are of the types which would
constitute Collateral under the Security Documents and which would be required
to be pledged thereunder, shall be treated as after-acquired property and such
surviving entity shall take such action as may be reasonably necessary to cause
such assets to be made subject to the Lien created by the Security Documents in
the manner and to the extent required in this Indenture; and

       

      

      
        
          
             

          

          
            -70-

            
              

            

          

          
            Table of Contents

          

        

      

       

      (4)           the
Company shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that such transaction and, if a supplemental
indenture or supplemental Security Documents are required in connection with
such transaction, such supplemental indenture and Security Documents comply with
the applicable provisions of this Indenture, that all conditions precedent in
this Indenture relating to such transaction have been satisfied and that such
supplemental indenture and Security Documents are authorized or permitted under
the Indenture and are enforceable, subject to customary
qualifications.

       

      
        	
                Section 5.2.

              	
                Successor
      Corporation Substituted.

              

      

       

      Upon any
consolidation or merger, or any sale, lease, conveyance or other disposition of
all or substantially all of the assets of Morris Publishing, as the case may be,
in accordance with Section 5.1, the Surviving Entity shall succeed to and be
substituted for, and may exercise every right and power of, Morris Publishing,
as the case may be, under this Indenture, the Notes and the Security Documents
with the same effect as if such Surviving Entity had been named as Morris
Publishing, as the case may be, herein; provided,
however,
that the predecessor Company shall not be relieved from the obligation to pay
the principal, Purchase Price or Redemption Price of or interest on the Notes
except in the case of a sale of all of the Company’s assets that meets the
requirements of Section 5.1.

       

       

      ARTICLE VI.

       

       

      DEFAULTS
AND REMEDIES

       

      
        	
                Section 6.1.

              	
                Events
      of Default.

              

      

       

      Each of
the following constitutes an “Event
of Default”:

       

      (1)           the
failure to pay interest on any Notes when the same becomes due and payable and
the default continues for a period of 30 days (whether or not such payment shall
be prohibited by the subordination provisions of the Indenture);

       

      (2)           the
failure to pay the principal on any Notes, when such principal becomes due and
payable, at maturity, upon redemption, repurchase or otherwise (including the
failure to make a payment to purchase Notes properly tendered pursuant to a
Change of Control Offer, a Net Proceeds Offer or an Event of Loss Offer)
(whether or not such payment shall be prohibited by the subordination provisions
of this Indenture);

       

      (3)           a
default in the observance or performance of any other covenant or agreement
contained in this Indenture which default continues for a period of 30 days
after Morris Publishing receives written notice specifying the default (and
demanding that such default be remedied) from the Trustee or the Holders of at
least 25% of the outstanding principal amount of the Notes (except in the case
of a default with respect to Sections 3.9, 4.10, 4.21 and 5.1, which will
constitute an Event of Default with such notice requirement but without such
passage of time requirement);

       

      

      
        
          
             

          

          
            -71-

            
              

            

          

          
            Table of Contents

          

        

      

      

      (4)           the
failure to pay at final maturity (giving effect to any applicable grace periods
and any extensions thereof) the stated principal amount of any Indebtedness of
Morris Publishing or any Restricted Subsidiary of Morris Publishing, or the
acceleration of the final stated maturity of any such Indebtedness (which
acceleration is not rescinded, annulled or otherwise cured within 20 days of
receipt by Morris Publishing or such Restricted Subsidiary of notice of any such
acceleration) if the aggregate principal amount of such Indebtedness is $5.0
million or more or the aggregate amount of such Indebtedness, together with the
principal amount of any other such Indebtedness in default for failure to pay
principal at final stated maturity or which has been accelerated (in each case
with respect to which the 20-day period described above has elapsed), aggregates
$10.0 million or more at any time;

       

      (5)           one
or more judgments in an aggregate amount in excess of $10.0 million shall have
been rendered against Morris Publishing or any of its Restricted Subsidiaries
and such judgments remain undischarged, unpaid or unstayed for a period of 60
days after such judgment or judgments become final and
non-appealable;

       

      (6)           Morris
Publishing, Morris Finance or any Significant Subsidiary of Morris
Publishing:

       

      (a)           commences
a voluntary case under any Bankruptcy Law,

       

      (b)           consents
to the entry of an order for relief against it in an involuntary
case,

       

      (c)           consents
to the appointment of a custodian or receiver of it or for all or substantially,
all of its property,

       

      (d)           makes
a general assignment for the benefit of its creditors, or

       

      (e)           generally
is not paying its debts as they become due;

       

      (7)           a
court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that:

       

      (a)           is
for relief in an involuntary case against Morris Publishing, Morris Finance or
any Significant Subsidiary of Morris Publishing;

       

      (b)           appoints
a custodian or receiver of Morris Publishing, Morris Finance or any Significant
Subsidiary of Morris Publishing or for all or substantially all of the property
of any of the foregoing; or

       

      (c)           orders
the liquidation of Morris Publishing, Morris Finance or any Significant
Subsidiary of Morris Publishing and the order or decree remains unstayed and in
effect for 60 consecutive days;

       

      

      
        
          
             

          

          
            -72-

            
              

            

          

          
            Table of Contents

          

        

      

      

      (8)           any
Guarantee of a Significant Subsidiary ceases to be in full force and effect or
any Guarantee of a Significant Subsidiary is declared to be null and void and
unenforceable or any Guarantee of a Significant Subsidiary is found to be
invalid or any Guarantor that is a Significant Subsidiary denies its liability
under its Guarantee (other than by reason of release of a Guarantor in
accordance with the terms of this Indenture);

       

      (9)           
the actual or asserted invalidity or impairment of any material provision in
this Indenture or any other Indenture Document delivered in connection with the
issuance of the Notes or pursuant to this Indenture;

       

      (10)        (a)
the Liens created by the Security Documents shall at any time not constitute a
valid and perfected Lien on the Collateral intended to be covered thereby (to
the extent perfection by filing, registration, recordation or possession is
required herein or therein) in favor of the Collateral Agent, free and clear of
all other Liens (other than Liens permitted hereunder and under the respective
Security Documents), (b) except for expiration in accordance with its terms, any
of the Security Documents shall for whatever reason be terminated or cease to be
in full force and effect, or (c) the enforceability thereof shall be contested
by Morris Publishing, Morris Finance or any Guarantor;

       

      (11)         The
interest rate payable on the Refinanced Debt exceeds LIBOR plus 970 basis
points, as calculated on a per annum basis; provided
that if the Refinanced Debt bears a fixed rate of interest, such determination
shall be made on the date such Refinanced Debt is incurred; or

       

      (12)         Any
Obligor or Restricted Subsidiary makes a payment of cash interest on the Tranche
B Loan or makes any principal payment on, purchases, redeems, prepays or
otherwise acquires for cash, any portion of the Tranche B Loan prior to the
payment in full in cash of the Obligations under this Indenture, except as
expressly provided in this Indenture or in connection with the Required
Refinancing.

       

      
        	
                Section 6.2.

              	
                Acceleration.

              

      

       

      If an
Event of Default (other than an Event of Default specified in clause (6) or (7)
of Section 6.1 with respect to Morris Publishing) shall occur and be continuing,
the Trustee or the Holders of at least 25% in principal amount of outstanding
Notes may declare the principal of and accrued interest on all the Notes to be
due and payable by notice in writing to Morris Publishing and the Trustee
specifying the respective Event of Default and that it is a “notice of
acceleration” (the “Acceleration
Notice”), and the same shall become immediately due and payable; provided,
however,
that if there are any amounts outstanding under the Refinanced Debt, if
applicable, the Notes shall not become due and payable until the first to occur
of (i) an acceleration under the Refinanced Debt, if applicable and (ii) five
Business Days after receipt by Morris Publishing and the Representative under
the Refinanced Debt, if applicable, of such acceleration notice but only if such
Event of Default is then continuing.

       

      If an
Event of Default specified in clause (6) or (7) of Section 6.1 with respect to
Morris Publishing occurs and is continuing, then all unpaid principal of, and
premium, if any, and

       

      

      
        
          
             

          

          
            -73-

            
              

            

          

          
            Table of Contents

          

        

      

      

      accrued
and unpaid interest on all of the outstanding Notes shall ipso
facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holder.

       

      At any
time after a declaration of acceleration with respect to the Notes as described
in the first paragraph of this Section 6.2, the Holders of a majority in
principal amount of the Notes may rescind and cancel such declaration and its
consequences:

       

      (1)           if
the rescission would not conflict with any judgment or decree;

       

      (2)           if
all existing Events of Default have been cured or waived except nonpayment of
principal or interest that has become due solely because of the
acceleration;

       

      (3)           to
the extent the payment of such interest is lawful, interest on overdue
installments of interest and overdue principal, which has become due otherwise
than by such declaration of acceleration, has been paid;

       

      (4)           if
Morris Publishing has paid the Trustee its reasonable compensation and
reimbursed the Trustee for its related expenses, disbursements and advances;
and

       

      (5)           in
the event of the cure or waiver of an Event of Default of the type described in
clause (6) or (7) of Section 6.1, the Trustee shall have received an Officers’
Certificate and an Opinion of Counsel that such Event of Default has been cured
or waived.  No such rescission shall affect any subsequent Default or
Event of Default or impair any right consequent thereto.

       

      
        	
                Section 6.3.

              	
                Other
      Remedies.

              

      

       

      If an
Event of Default occurs and is continuing, the Trustee may pursue any available
remedy to collect the payment of principal, premium, if any, and interest on the
Notes or to enforce the performance of any provision of the Notes or this
Indenture.

       

      The
Trustee may maintain a proceeding even if it does not possess any of the Notes
or does not produce any of them in the proceeding, and any recovery or judgment
shall, after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Notes.  A delay or omission by
the Trustee or any Holder in exercising any right or remedy accruing upon an
Event of Default shall not impair the right or remedy or constitute a waiver of
or acquiescence in the Event of Default.  All remedies are cumulative
to the extent permitted by law.

       

      
        	
                Section 6.4.

              	
                Waiver
      of Past Defaults.

              

      

       

      The
Holders of a majority in principal amount of the Notes may waive any existing or
past Default or Event of Default under this Indenture, and its consequences,
except a default in the payment of the principal of or interest on any
Notes.  Upon any such waiver, such Default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent
thereon.

       

      

      
        
          
             

          

          
            -74-

            
              

            

          

          
            Table of Contents

          

        

      

      
      

       

      
        	
                Section 6.5.

              	
                Control
      by Majority.

              

      

       

      Holders
of a majority in principal amount of the then outstanding Notes may direct the
time, method and place of conducting any proceeding for exercising any remedy
available to the Trustee or exercising any trust or power conferred on
it.  However, the Trustee may refuse to follow any direction that
conflicts with applicable law or this Indenture that the Trustee reasonably
determines may be unduly prejudicial to the rights of other Holders of Notes or
that may subject the Trustee to personal liability and shall be entitled to the
benefit of Sections 7.1(c)(iii) and (e).

       

      
        	
                Section 6.6.

              	
                Limitation
      on Suits.

              

      

       

      A Holder
of a Note may pursue a remedy with respect to this Indenture or the Notes only
if:

       

      (a)           the
Holder of a Note gives to the Trustee written notice of a continuing Event of
Default;

       

      (b)           the
Holders of at least 25% in principal amount of the then outstanding Notes make a
written request to the Trustee to pursue the remedy;

       

      (c)           such
Holder or Holders of Notes offer and, if requested, provide to the Trustee
indemnity satisfactory to the Trustee against any loss, liability or
expense;

       

      (d)           the
Trustee does not comply with the request within 60 days after receipt of the
request and the offer and, if requested, the provision of satisfactory
indemnity; and

       

      (e)           during
such 60-day period the Holders of a majority in principal amount of the then
outstanding Notes do not give the Trustee a direction inconsistent with the
request.

       

      A Holder
of a Note may not use this Indenture to prejudice the rights of another Holder
of a Note or to obtain a preference or priority over another Holder of a
Note.

       

      
        	
                Section 6.7.

              	
                Rights
      of Holders of Notes To Receive
Payment.

              

      

       

      Notwithstanding
any other provision of this Indenture, the right of any Holder of a Note to
receive payment of principal of, or premium, if any, and interest on the Note,
on or after the respective due dates thereon (including in connection with an
offer to repurchase), or to bring suit for the enforcement of any such payment
on or after such respective dates, shall not be impaired or affected without the
written consent of such Holder.

       

      

      
        
          
             

          

          
            -75-

            
              

            

          

          
            Table of Contents

          

        

      

      
         

        
          	
                  Section 6.8.

                	
                  Collection
      Suit by Trustee.

                

        

         

      

          If an Event
of Default specified in Section 6.l (1) or (2) occurs and is continuing, the
Trustee is authorized to recover judgment in its own name and as trustee of an
express trust against the Issuers for the whole amount of principal of, premium,
if any, and interest remaining unpaid on the Notes and interest on overdue
principal and, to the extent lawful, interest, and such further amounts as shall
be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expense, disbursements and advances of the Trustee, its
agents and counsel.

       

      
        	
                Section 6.9.

              	
                [Intentionally
      Omitted].

              

      

       

      
        	
                Section 6.10.

              	
                Trustee
      May File Proofs of Claim.

              

      

       

      The
Trustee is authorized to file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee or
the Collateral Agent (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee the Collateral Agent, or
their respective agents (including accountants, experts or such other
professionals as the Trustee or the Collateral Agent deems necessary, advisable
or appropriate) and counsel) and the Holders of the Notes allowed in any
judicial proceedings relative to the Issuers (or any other Obligor upon the
Notes), its creditors or its property and shall be entitled and empowered to
collect, receive and distribute any money or other property payable or
deliverable on any such claims, and any custodian in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee, and in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses, disbursements and advances of the Trustee
or the Collateral Agent or their respective agents and counsel, and any other
amounts due the Trustee or the Collateral Agent under the Indenture Documents,
including without limitation, under Section 7.7.  To the extent that
the payment of any such compensation, expenses, disbursements and advances of
the Trustee, the Collateral Agent or their respective agents and counsel, and
any other amounts due the Trustee or the Collateral Agent under the Indenture
Documents, including without limitation under Section 7.7, out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise.  Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.

       

      
        	
                Section 6.11.

              	
                Priorities.

              

      

       

      If the
Trustee collects any money pursuant to this Article, it shall, subject to the
requirements of the Intercreditor Agreement, pay out the money in the following
order:

       

      

      
        
          
             

          

          
            -76-

            
              

            

          

          
            Table of Contents

          

        

      

      

      First:  to
the Trustee, the Collateral Agent, the Paying Agent, the Registrar and their
agents and attorneys for amounts due under Section 7.7, including payment of all
compensation, expense and liabilities incurred, and all advances made, by the
Trustee or the Collateral Agent and the costs and expenses of
collection;

       

      Second:  to
Holders of Notes for amounts due and unpaid on the Notes for principal, Purchase
Price, Redemption Price and interest, ratably, without preference or priority of
any kind, according to the amounts due and payable on the Notes for principal,
Purchase Price, Redemption Price and interest, respectively;
and

       

      Third:  to
the Issuers, the Guarantors or to such party as a court of competent
jurisdiction shall direct.

       

      The
Trustee may fix a special record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.11.

       

      
        	
                Section 6.12.

              	
                Undertaking
      for Costs.

              

      

       

      In any
suit for the enforcement of any right or remedy under this Indenture or in any
suit against the Trustee for any action taken or omitted by it as a Trustee, a
court in its discretion may require the filing by any party litigant in the suit
of an undertaking to pay the costs of the suit, and the court in its discretion
may assess reasonable costs, including reasonable attorneys’ fees and expenses,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant.  This
Section does not apply to a suit by the Trustee, a suit by a Holder pursuant to
Section 6.7, or a suit by Holders of more than 10% in principal amount of the
then outstanding Notes.

       

       

      ARTICLE VII.

       

       

      TRUSTEE

       

      
        	
                Section 7.1.

              	
                Duties
      of Trustee.

              

      

       

      (a)           If
an Event of Default has occurred and is continuing, the Trustee shall exercise
such of the rights and powers vested in it by this Indenture, and use the same
degree of care and skill in its exercise thereof, as a prudent person would
exercise or use under the circumstances in the conduct of such person’s own
affairs.

       

      (b)           Except
during the continuance of an Event of Default:

       

      (i)           
the duties of the Trustee shall be determined solely by the express provisions
of this Indenture and the TIA and the Trustee need perform only those duties
that are specifically set forth in this Indenture and no others, and no implied
covenants or obligations shall be read into this Indenture or the TIA against
the Trustee; and

       

      (ii)           in
the absence of bad faith on its part, the Trustee may conclusively rely, without
investigation, as to the truth or the statements and the correctness of the
opinions expressed therein, upon and statements, certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Indenture.

       

      

      
        
          
             

          

          
            -77-

            
              

            

          

          
            Table of Contents

          

        

      

      

      However,
in the case of any such certificates or opinions which by any provision hereof
are specifically required to be furnished to the Trustee, the Trustee shall
examine the certificates and opinions to determine whether or not they conform
on their face to the requirements of this Indenture.

       

      (c)           The
Trustee may not be relieved from liabilities for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except
that:

       

      (i)           this
paragraph does not limit the effect of paragraph (b) of this
Section;

       

      (ii)           the
Trustee shall not be liable for any error of judgment made in good faith by a
Responsible Officer, unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts; and

       

      (iii)           the
Trustee shall not be liable with respect to any action it takes or omits to take
in good faith in accordance with a direction received by it pursuant to Section
6.5.

       

      (d)           Whether
or not therein expressly so provided, every provision of this Indenture that in
any way relates to the Trustee is subject to this Section 7.1.

       

      (e)           No
provision of this Indenture or the Security Documents shall require the Trustee
or the Collateral Agent to expend or risk its own funds or incur any
liability.  Neither the Trustee nor the Collateral Agent shall be
under any obligation to exercise any of its rights and powers under this
Indenture at the request of any Holders, pursuant to the provisions of this
Indenture, including, without limitation, Section 6.5, unless such Holder shall
have offered to the Trustee and/or the Collateral Agent, as the case may be,
security and indemnity satisfactory to it against any loss, liability or expense
which might be incurred by it in compliance with such request or
direction.

       

      (f)           The
Trustee shall not be liable for interest on any money received by it except as
the Trustee may agree in writing with the Issuers.  Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.

       

      (g)           Anything
to the contrary notwithstanding, in no event shall the Trustee or the Collateral
Agent be liable to any Person for special, punitive, indirect, consequential or
incidental loss or damage of any kind whatsoever (including, but not limited to,
lost profits) even if the Trustee or the Collateral Agent has been apprised of
the likelihood of such loss or damage.

       

      
        	
                Section 7.2.

              	
                Rights
      of Trustee.

              

      

       

      (a)           The
Trustee may conclusively rely and shall be protected in acting or refraining
from acting upon any document believed by it to be genuine and to have been
signed or presented by the proper Person.  The Trustee need not
investigate any fact or matter stated in the document.

       

      

      
        
          
             

          

          
            -78-

            
              

            

          

          
            Table of Contents

          

        

      

      

      (b)           Before
the Trustee acts or refrains from acting, it may require an Officers’
Certificate or an Opinion of Counsel or both.  The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers’ Certificate or Opinion of Counsel.  The Trustee may
consult with counsel of its own selection and the written advice of such counsel
and Opinions of Counsel shall be full and complete authorization and protection
from liability in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon.

       

      (c)           The
Trustee may act through its attorneys, accountants, experts and such other
agents or professionals as the Trustee deems necessary, advisable or appropriate
and shall not be responsible for the misconduct or negligence of any attorney,
accountant, expert or other such agent or professional appointed with due
care.

       

      (d)           The
Trustee shall not be liable for any action it takes or omits to take in good
faith that it believes to be authorized or within the rights or powers conferred
upon it by this Indenture.

       

      (e)           Unless
otherwise specifically provided in this Indenture, any demand, request,
direction or notice from the Issuers shall be sufficiently evidenced by a
written order signed by two Officers of an Issuer.

       

      (f)           The
Trustee shall not be charged with knowledge of any Default or Event of Default
under Section 6.1 (other than under Section 6.1(1) or Section 6.1(2)) unless
either (i) a Responsible Officer shall have actual knowledge thereof, or (ii)
the Trustee shall have received notice thereof in accordance with Section 14.2
from the Issuers or any Holder of the Notes.

       

      (g)           The
rights, privileges, protections, immunities and benefits given to the Trustee,
including, without limitation, its right to be indemnified, are extended to, and
shall be enforceable by, the Trustee in each of its capacities hereunder, and
each agent, custodian and other Person employed to act hereunder.

       

      (h)           The
Trustee may request that the Issuers deliver an Officers’ Certificate setting
forth the names of individuals and/or titles of officers authorized at such time
to take specified actions pursuant to this Indenture, which Officers’
Certificate may be signed by any person specified as so authorized in any such
certificate previously delivered and not superseded.

       

      (i)           The
Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of any of the Holders
pursuant to this Indenture, unless such Holders shall have offered to the
Trustee security or indemnity reasonably satisfactory to the Trustee against the
costs, expenses and liabilities which might be incurred by it in compliance with
such request or direction.

       

      (j)           The
Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit.

       

      

      
        
          
             

          

          
            -79-

            
              

            

          

          
            Table of Contents

          

        

      

      
         

        
          	
                  Section 7.3.

                	
                  Individual
      Rights of Trustee.

                

        

      The
Trustee in its individual or any other capacity may become the owner or pledgee
of Notes and may otherwise deal with the Issuers or any Affiliate of the Issuers
with the same rights it would have if it were not Trustee.  However,
in the event that the Trustee acquires any conflicting interest within the
meaning of the TIA it must eliminate such conflict within 90 days, apply
(subject to the consent of the Issuers) to the Commission for permission to
continue as trustee or resign.  Any Agent may do the same with like
rights and duties.  The Trustee is also subject to Sections 7.10 and
7.11.

       

      
        	
                Section 7.4.

              	
                Trustee’s
      Disclaimer.

              

      

       

      The
Trustee shall not be responsible for and makes no representation as to the
validity or adequacy of this Indenture, or the Notes, it shall not be
accountable for the Issuers’ use of the proceeds from the Notes or any money
paid to the Issuers or upon the Issuers’ direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.

       

      
        	
                Section 7.5.

              	
                Notice
      of Defaults.

              

      

       

      If a
Default or Event of Default occurs and is continuing, the Trustee shall mail to
Holders of Notes a notice of the Default or Event of Default known to it within
90 days after it occurs.  Except in the case of a Default in payment
on any Note (including the failure to make a mandatory repurchase pursuant
hereto), the Trustee may withhold the notice if and so long as a committee of
its Responsible Officers in good faith determines that withholding the notice is
in the interests of the Holders of the Notes.

       

      
        	
                Section 7.6.

              	
                Reports
      by Trustee to Holder of the Notes.

              

      

       

      Within 60
days after each February 15 beginning with the February 15 following the date of
this Indenture, and for so long as Notes remain outstanding, the Trustee shall
mail to the Holders of the Notes a brief report dated as of such reporting date
that complies with TIA § 313(a) (but if no event described in TIA
§ 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted).  The Trustee also shall comply
with TIA § 313(b)(2).  The Trustee shall also transmit by mail
all reports as required by TIA § 313(c).

       

      A copy of
each report at the time of its mailing to the Holders of Notes shall be mailed
to the Issuers and filed with the Commission and each stock exchange on which
the Notes are listed in accordance with TIA § 313(d).  The
Issuers shall promptly notify the Trustee when the Notes are listed on any stock
exchange or delisted therefrom.

       

      
        	
                Section 7.7.

              	
                Compensation,
      Reimbursement and Indemnity.

              

      

       

      The
Issuers shall pay to the Trustee from time to time such compensation for its
acceptance of this Indenture and the rendering by it of the services required
hereunder as shall be agreed upon in writing by the Issuers and the
Trustee.  The Trustee’s compensation shall not be limited by any law
on compensation of a trustee of an express trust.  The Issuers shall
reimburse 

       

      

      
        
          
             

          

          
            -80-

            
              

            

          

          
            Table of Contents

          

        

      

      

      the
Trustee promptly upon request for all reasonable disbursements, advances
and expenses incurred or made by or on behalf of it in addition to the
compensation for its services.  Such expenses shall include the
reasonable compensation, disbursements and expenses of the Trustee’s attorneys,
accountants, experts and such other professionals as the Trustee deems
necessary, advisable or appropriate.

       

      The
Issuers and the Guarantors shall jointly and severally indemnify the Trustee and
any predecessor Trustee against any and all losses, liabilities, claims, damages
or expenses, including taxes (other than taxes based upon, measured by or
determined by the income of the Trustee), incurred by it arising out of or in
connection with the acceptance or administration of its duties under this
Indenture (including its duties under Section 9.6), including the costs and
expenses of enforcing this Indenture or any Guarantee against the Issuers or a
Guarantor (including this Section 7.7) and defending itself against or
investigating any claim (whether asserted by the Issuers, any Guarantor, any
Holder or any other Person) or liability in connection with the exercise or
performance of any of its powers or duties hereunder, except to the extent any
such loss, liability or expense may be attributable to its negligence or willful
misconduct.  The Trustee shall notify the Issuers promptly of any
claim for which it may seek indemnity.  Failure by the Trustee to so
notify the Issuers shall not relieve the Issuers of their obligations
hereunder.  The Issuers shall defend any claim or threatened claim
asserted against the Trustee, and the Trustee shall cooperate in the
defense.  The Trustee may have separate counsel and the Issuers shall
pay the reasonable fees and expenses of such counsel.  The Issuers
need not pay for any settlement made without their consent, which consent shall
not be unreasonably withheld, conditioned or delayed.

       

      The
obligations of the Issuers under this Section 7.7 shall survive the resignation
or removal of the Trustee, the satisfaction and discharge of this Indenture and
the termination of this Indenture.

       

      The
obligations of the Issuers under this Section 7.7 shall not be subordinated to
the payment of Senior Debt pursuant to Article X of the Intercreditor
Agreement.  To secure the Issuers’ payment obligations in this Section
7.7, the Trustee shall have a Lien prior to the Notes on all money or property
held or collected by the Trustee, except that held in trust to pay principal,
Redemption Price or Purchase Price of, or interest on, particular
Notes.  Such Lien shall survive the resignation or removal of the
Trustee, the satisfaction and discharge of this Indenture and the termination of
this Indenture.

       

      When the
Trustee incurs expenses or renders services after an Event of Default specified
in Section 6.1(6) or (7) occurs, the expenses and the compensation for the
services (including the fees and expenses of its agents and counsel) are
intended to constitute expenses of administration under any Bankruptcy
Law.

       

      
        	
                Section 7.8.

              	
                Replacement
      of Trustee.

              

      

       

      A
resignation or removal of the Trustee and appointment of a successor Trustee
shall become effective only upon the successor Trustee’s acceptance of
appointment as provided in this Section.

       

      

      
        
          
             

          

          
            -81-

            
              

            

          

          
            Table of Contents

          

        

      

      

      The
Trustee may resign in writing at any time and be discharged from the trust
hereby created by so notifying the Issuers.  The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Issuers in writing.  The
Issuers may remove the Trustee if:

       

      (a)           the
Trustee fails to comply with Section 7.10;

       

      (b)           the
Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered
with respect to the Trustee under any Bankruptcy Law;

       

      (c)           a
custodian, receiver or public officer takes charge of the Trustee or its
property for the purpose of rehabilitation, conversation or liquidation;
or

       

      (d)           the
Trustee becomes incapable of acting.

       

      If the
Trustee resigns or is removed or if a vacancy exists in the office of Trustee
for any reason, the Issuers shall promptly appoint a successor
Trustee.  Within one year after the date on which the successor
Trustee takes office, the Holders of a majority in principal amount of the then
outstanding Notes may appoint a successor Trustee to replace the successor
Trustee appointed by the Issuers.

       

      If a
successor Trustee does not take office within 30 days after the retiring trustee
resigns or is removed, the retiring Trustee, the Issuers, or the Holders of
Notes of at least 10% in principal amount of the then outstanding Notes may
petition any court of competent jurisdiction, in the case of the Trustee, at the
expense of the Issuers, for the appointment of a successor Trustee.

       

      If the
Trustee, after written request by any Holder of a Note who has been a bona fide
holder of a Note or Notes for at least six months, fails to comply with Section
7.10, such Holder of a Note may petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor
Trustee.

       

      A
successor Trustee shall deliver a written acceptance of its appointment to the
retiring Trustee and to the Issuers.  Thereupon, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture.  The Issuers shall mail a notice of its succession to
Holders of the Notes.  The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided
all sums owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.7.  Notwithstanding replacement of the
Trustee pursuant to this Section 7.8, the Issuers’ obligations under Section 7.7
shall continue for the benefit of the retiring Trustee.

       

      
        	
                Section 7.9.

              	
                Successor
      Trustee by Merger, Etc.

              

      

       

      If the
Trustee consolidates, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another Person that is eligible under
Section 7.10, the successor Person without any further act shall be the
successor Trustee.

       

      

      
        
          
             

          

          
            -82-

            
              

            

          

          
            Table of Contents

          

        

      

      
         

        
          	
                  Section 7.10.

                	
                  Eligibility;
      Disqualification.

                

        

         

      

      There
shall at all times be a Trustee hereunder that is a Person organized and doing
business under the laws of the United States or of any state thereof (including
the District of Columbia) that is authorized under such laws to exercise
corporate trust power, that is subject to supervision or examination by federal
or state authorities and that has a combined capital and surplus of at least $50
million as set forth in its most recent published annual report of
condition.

       

      This
Indenture shall always have a Trustee who satisfies the requirements of TIA
§ 310(a)(1), (2) and (5).  The Trustee is subject to TIA
§ 310(b).

       

      
        	
                Section 7.11.

              	
                Preferential
      Collection of Claims Against
Issuers.

              

      

       

      The
Trustee is subject to TIA § 311(a), excluding any creditor relationship
listed in TIA § 311(b).  A Trustee who has resigned or been
removed shall be subject to TIA § 311(a) to the extent indicated
therein.

       

       

      ARTICLE VIII.

       

       

      LEGAL
DEFEASANCE AND COVENANT DEFEASANCE

       

      
        	
                Section 8.1.

              	
                Option
      To Effect Legal Defeasance or Covenant
  Defeasance.

              

      

       

      The
Issuers may, at their option and at any time, elect to have either Section 8.2
or 8.3 be applied to all outstanding Notes upon compliance with the conditions
set forth below in this Article VIII.

       

      
        	
                Section 8.2.

              	
                Legal
      Defeasance and Discharge.

              

      

       

      Upon the
Issuers’ exercise under Section 8.1 of the option applicable to this Section
8.2, the Issuers and the Guarantors shall, subject to the satisfaction of the
conditions set forth in Section 8.4, be deemed to have been discharged from
their obligations with respect to all outstanding Notes (including the
Guarantees) on the date the conditions set forth below are satisfied
(hereinafter, “Legal
Defeasance”).  For this purpose, Legal Defeasance means that
the Issuers shall be deemed to have paid and discharged the entire Indebtedness
represented by the outstanding Notes (including the Guarantees), which shall
thereafter be deemed to be “outstanding” only for the purposes of Section 8.5
and the other Sections of this Indenture referred to in clauses (a) through (d)
below, and to have satisfied all their other obligations under such Notes and
this Indenture (and the Trustee, on demand of and at the expense of the Issuers,
shall execute proper instruments acknowledging the same), except for the
following provisions which shall survive until otherwise terminated or
discharged hereunder:

       

      (a)           the
rights of Holders to receive payments in respect of the principal of, premium,
if any, and interest on the Notes when such payments are due;

       

      (b)           the
Issuers’ obligations with respect to the Notes concerning issuing temporary
Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the
maintenance of an office or agency for payments;

       

      

      
        
          
             

          

          
            -83-

            
              

            

          

          
            Table of Contents

          

        

      

      

      (c)           the
rights, powers, trust, duties and immunities of the Trustee and the Issuers’
obligations in connection therewith; and

       

      (d)           the
Legal Defeasance provisions of this Article VIII.

       

      Subject
to compliance with this Article VIII, the Issuers may exercise their option
under this Section 8.2, notwithstanding the prior exercise of their option under
Section 8.3.

       

      
        	
                Section 8.3.

              	
                Covenant
      Defeasance.

              

      

       

      Upon the
Issuers’ exercise under Section 8.1 of the option applicable to this Section
8.3, the Issuers and the Guarantors shall, subject to the satisfaction of the
conditions set forth in Section 8.4, be released from their obligations under
the covenants contained in Sections 3.9, 3.10, 3.11, 4.3, 4.5, 4.7 through 4.12,
4.13 (except with respect to the existence of each Issuer) and 4.14 through
4.30, both inclusive, and Section 5.1(2) with respect to the outstanding Notes
on and after the date the conditions set forth below are satisfied (hereinafter,
“Covenant
Defeasance”), and the Notes shall thereafter be deemed not “outstanding”
for the purposes of any direction, waiver, consent or declaration or act of
Holders (and the consequences of any thereof) in connection with such covenants,
but shall continue to be deemed “outstanding” for all other purposes hereunder
(it being understood that such Notes shall not be deemed outstanding for
accounting purposes).  For this purpose, Covenant Defeasance means
that, with respect to the outstanding Notes, the Issuers and the Guarantors may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein or
in any other document, and such omission to comply shall not constitute a
Default or an Event of Default under Section 6.1, but, except as specified above
the remainder of this Indenture and such Notes shall be unaffected
thereby.  In addition, upon the Issuers’ exercise under Section 8.1 of
the option applicable to this Section 8.3, subject to the satisfaction of the
conditions set forth in Section 8.4, Sections 6.1(3) through 6.1(13) shall not
constitute Events of Default.

       

      
        	
                Section 8.4.

              	
                Conditions
      to Legal or Covenant Defeasance.

              

      

       

      The
following are the conditions precedent to the application of either Section 8.2
or 8.3 to the outstanding Notes:

       

      In order
to exercise either Legal Defeasance or Covenant Defeasance:

       

      (1)           Morris
Publishing must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders cash in U.S. dollars, non-callable U.S. Government Securities, or
a combination thereof, in such amounts as will be sufficient, in the opinion of
a nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on the Notes on the stated date for
payment thereof or on the applicable redemption date, as the case may
be;

       

      (2)           in
the case of Legal Defeasance, the Issuers shall have delivered to the Trustee an
Opinion of Counsel in the United States reasonably acceptable to the Trustee
confirming that:

       

      

      
        
          
             

          

          
            -84-

            
              

            

          

          
            Table of Contents

          

        

      

      

      (a)           the
Issuers have received from, or there has been published by, the Internal Revenue
Service a ruling; or

       

      (b)           since
the date of this Indenture, there has been a change in the applicable federal
income tax law,

       

      in either
case to the effect that, and based thereon such Opinion of Counsel shall confirm
that, the Holders will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;

       

      (3)           in
the case of Covenant Defeasance, the Issuers shall have delivered to the Trustee
an Opinion of Counsel in the United States reasonably acceptable to the Trustee
confirming that the Holders will not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant Defeasance and will be subject
to federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;

       

      (4)           no
Default or Event of Default shall have occurred and be continuing on the date of
such deposit (other than a Default or an Event of Default resulting from the
borrowing of funds to be applied to such deposit and the grant of any Lien
securing such borrowings);

       

      (5)           such
Legal Defeasance or Covenant Defeasance shall not result in a breach or
violation of, or constitute a default under this Indenture (other than a Default
or an Event of Default resulting from the borrowing of funds to be applied to
such deposit and the grant of any Lien securing such borrowings) or any other
material agreement or instrument to which the Issuers or any of their
Subsidiaries is a party or by which Morris Publishing or any of its Subsidiaries
is bound;

       

      (6)           the
Issuers shall have delivered to the Trustee an Officers’ Certificate stating
that the deposit was not made by the Issuers with the intent of preferring the
Holders over any other creditors of the Issuers or with the intent of defeating,
hindering, delaying or defrauding any other creditors of the Issuers or
others;

       

      (7)           the
Issuers shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that all conditions precedent provided for or
relating to the Legal Defeasance or the Covenant Defeasance have been complied
with;

       

      (8)           the
Issuers shall have delivered to the Trustee an Opinion of Counsel to the effect
that:

       

      (a)           the
trust funds will not be subject to any rights of holders of Senior Debt,
including, without limitation, those arising under this Indenture;
and

       

      (b)           assuming
no intervening bankruptcy of the Issuers between the date of deposit and the
91st day following the date of deposit and that no Holder

       

      

      
        
          
             

          

          
            -85-

            
              

            

          

          
            Table of Contents

          

        

      

      

      is an
insider of the Issuers, after the 91st day following the date of deposit, the
trust funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors’ rights
generally; and

       

      (9)           certain
other customary conditions precedent are satisfied.

       

      Notwithstanding
the foregoing, the Opinion of Counsel required by clause (2) above with respect
to a Legal Defeasance need not be delivered if all Notes not theretofore
delivered to the Trustee for cancellation (1) have become due and payable or (2)
will become due and payable on the maturity date within one year under
arrangements satisfactory to the Trustee for the giving of notice of redemption
by the Trustee in the name, and at the expense, of the Issuers.

       

      
        	
                Section 8.5.

              	
                Deposited
      Money and U.S. Government Securities To Be Held in Trust; Other
      Miscellaneous Provisions.

              

      

       

      Subject
to Section 8.6, all money and U.S. Government Securities (including the proceeds
thereof) deposited with the Trustee (or other qualifying trustee, collectively
for purposes of this Section 8.5 only, the “Trustee”) pursuant to Section 8.4 in
respect of the outstanding Notes shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Notes and this Indenture, to
the payment, either directly or through any Paying Agent (other than an Issuer)
as the Trustee may determine, to the Holders of such Notes of all sums due and
to become due thereon in respect of principal or Redemption Price of, or
interest on, the Notes, that such money need not be segregated from other funds
except to the extent required by law.

       

      The
Issuers shall pay and indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against the cash or U.S. Government Securities deposited
pursuant to Section 8.4 or the principal and interest received in respect
thereof other than any such tax, fee or other charge which by law is for the
account of the Holders of the outstanding Notes.

       

      Anything
in this Article VIII to the contrary notwithstanding, the Trustee shall deliver
or pay to the Issuers from time to time upon the request of the Issuers any
money or U.S. Government Securities held by it as provided in Section 8.4 which,
in the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee (which may
be the opinion delivered under Section 8.4(1)), are in excess of the amount
thereof that would then be required to be deposited to effect an equivalent
Legal Defeasance or Covenant Defeasance.

       

      
        	
                Section 8.6.

              	
                Repayment
      to the Issuers.

              

      

       

      Any money
deposited with the Trustee or any Paying Agent, or then held by the Issuers, in
trust for the payment of the principal, Redemption Price or Purchase Price of,
or interest on any Note and remaining unclaimed for two years after such amount
has become due and payable shall be paid to the Issuers on their written request
or (if then held by an Issuer) shall be discharged from such trust; and the
Holder of such Note shall thereafter look only to the Issuers for payment
thereof as a general creditor, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Issuers as
trustee thereof, shall thereupon cease; provided,
however,
that the Trustee or such Paying Agent, 

       

      

      
        
          
             

          

          
            -86-

            
              

            

          

          
            Table of Contents

          

        

      

      

      before
being required to make any such repayment, at the expense of the Issuers, may
cause to be published once, in The New York Times and The Wall Street Journal
(national editions), notice that such money remains unclaimed and that, after a
date specified therein, which shall not be less than 30 days after the date of
such notification or publication, any unclaimed balance of such money then
remaining will be repaid to the Issuers.

       

      
        	
                Section 8.7.

              	
                Reinstatement.

              

      

       

      If the
Trustee or Paying Agent is unable to apply any money or U.S. Government
Securities in accordance with the Issuers’ election to apply either of Section
8.2 or 8.3 to all outstanding Notes, as the case may be, by reason of any order
of judgment of any court or Governmental Authority enjoining, restraining or
otherwise prohibiting such application, then the obligations of the Issuers and
the Guarantors under this Indenture, and the Notes and the Guarantees shall be
revived and reinstated as though no deposit had occurred pursuant to Section 8.4
until such time as the Trustee or Paying Agent is permitted to apply all such
money in accordance with Section 8.5; provided,
however,
that, if the Issuers make any payment with respect to any Note following the
reinstatement of their obligations, the Issuers shall be subrogated to the
rights of the Holders of such Notes to receive such payment from the money held
by the Trustee or Paying Agent.

       

       

      ARTICLE IX.

       

       

      AMENDMENT,
SUPPLEMENT AND WAIVER

       

      
        	
                Section 9.1.

              	
                Without
      Consent of Holders of Notes.

              

      

       

      From time
to time, the Issuers, the Guarantors and the Trustee, without the consent of the
Holders, may amend this Indenture for purposes of curing ambiguities, defects or
inconsistencies or adding a Guarantor under the Indenture so long as such change
does not adversely affect the rights of any of the Holders in any material
respect.  In formulating its opinion on such matters, the Trustee will
be entitled to rely on such evidence as it deems appropriate, including, without
limitation, solely on an Opinion of Counsel.

       

      No
amendment of, or supplement or waiver to, this Indenture shall adversely affect
the rights of the holders of any Senior Debt or Guarantor Senior Debt under the
subordination provisions of this Indenture (including any defined terms as used
therein) and the Intercreditor Agreement without the consent of each holder of
Senior Debt or Guarantor Senior Debt affected thereby.

       

      
        	
                Section 9.2.

              	
                With
      Consent of Holders of Notes.

              

      

       

      Except as
provided below in this Section 9.2, the Issuers and the Trustee may amend or
supplement this Indenture and the Notes may be amended or supplemented, in each
case, with the consent of the Holders of at least a majority in principal amount
of the Notes then outstanding (including, without limitation, consents obtained
in connection with a tender offer or exchange offer for the Notes), and, subject
to Sections 6.2, 6.4 and 6.7, any existing Default or Event of Default or
compliance with any provision of this Indenture or the Notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Notes (including consents obtained in connection with a tender offer
or exchange offer for the Notes).

       

      

      
        
          
             

          

          
            -87-

            
              

            

          

          
            Table of Contents

          

        

      

       

      Without
the consent of each Holder affected, an amendment, supplement or waiver may not
(with respect to any Notes held by a non-consenting Holder):

       

      (1)           reduce
the principal amount of Notes at maturity whose Holders must consent to an
amendment;

       

      (2)           reduce
the rate of or change or have the effect of changing the time for payment of
interest, including defaulted interest, on any Notes;

       

      (3)           reduce
the principal of or change or have the effect of changing the fixed maturity of
any Notes, or change the date on which any Notes may be subject to redemption or
reduce the redemption price therefor;

       

      (4)           make
any Notes payable in money other than that stated in the Notes;

       

      (5)           make
any change in provisions of this Indenture protecting the right of each Holder
to receive payment of principal of and interest on such Holder’s Note or Notes
on or after the due date thereof or to bring suit to enforce such payment, or
permitting Holders of a majority in principal amount of Notes to waive Defaults
or Events of Default;

       

      (6)           after
the Issuers’ obligation to purchase Notes arises hereunder, amend, change or
modify in any material respect the obligation of the Issuers to make and
consummate a Change of Control Offer in the event of a Change of Control or make
and consummate an Event of Loss Offer or Net Proceeds Offer after an Event of
Loss Trigger Date or a Net Proceeds Offer Trigger Date, respectively, or, after
such Change of Control, Event of Loss or Asset Sale has occurred, modify any of
the provisions or definitions with respect thereto;

       

      (7)           modify
or change any provision of this Indenture or the related definitions affecting
the ranking of the Notes or any Guarantee in a manner which adversely affects
the Holders; or

       

      (8)           release
Morris Publishing or any Guarantor that is a Significant Subsidiary of Morris
Publishing from any of its obligations under its Guarantee or this Indenture
otherwise than in accordance with the terms of this Indenture.

       

      Upon the
written request of the Issuers accompanied by a resolution of the Board of
Directors (evidenced by an Officers’ Certificate) authorizing the execution of
any such amended or supplemental indenture, and upon the filing with the Trustee
of evidence satisfactory to the Trustee of the consent of the Holders of Notes
as aforesaid, and upon receipt by the Trustee of an Officers’ Certificate and an
Opinion of Counsel, the Trustee shall join with the Issuers in the execution of
such amended or supplemental indenture unless such amended or supplemental
Indenture affects the Trustee’s own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such amended or supplemental
indenture.

       

      

      
        
          
             

          

          
            -88-

            
              

            

          

          
            Table of Contents

          

        

      

       

      It shall
not be necessary for the consent of the Holders of Notes under this Section 9.2
to approve the particular form of any proposed amendment or waiver, but it shall
be sufficient if such consent approves the substance thereof.

       

      After an
amendment, supplement or waiver under this Section 9.2 becomes effective, the
Issuers shall mail to the Holders of Notes affected thereby a notice briefly
describing the amendment, supplement or waiver.  Any failure of the
Issuers to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such amended or supplemental Indenture
or waiver.

       

      
        	
                Section 9.3.

              	
                Compliance
      with Trust Indenture Act.

              

      

       

      Every
amendment or supplement to this Indenture or the Notes shall be set forth in a
amended or supplemental indenture that complies with the TIA as then in
effect.

       

      
        	
                Section 9.4.

              	
                Revocation
      and Effect of Consents.

              

      

       

      Until an
amendment, supplement or waiver becomes effective, a consent to it by a Holder
of a Note is a continuing consent by the Holder of a Note and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder’s Note, even if notation of the consent is not made on any
Note.  However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective.  An amendment, supplement or waiver becomes effective in
accordance with its terms and therefore binds every Holder.

       

      
        	
                Section 9.5.

              	
                Notation
      on or Exchange of Notes.

              

      

       

      The
Trustee may place an appropriate notation about an amendment, supplement or
waiver on any Note thereafter authenticated.  The Issuers in exchange
for all Notes may issue and the Trustee shall authenticate new Notes that
reflect the amendment, supplement or waiver.

       

      Failure
to make the appropriate notation or issue a new Note shall not affect the
validity and effect of such amendment, supplement or waiver.

       

      
        	
                Section 9.6.

              	
                Trustee
      To Sign Amendment, Etc.

              

      

       

      The
Trustee shall sign any amended or supplemental indenture authorized pursuant to
this Article IX if the amendment or supplement does not adversely affect the
rights, duties, liabilities or immunities of the Trustee.  The Issuers
may not sign an amendment or supplemental Indenture until the Board of Directors
approves such amendment or supplemental indenture.  In executing any
amended or supplemental indenture, the Trustee shall receive, in addition to the
documents required by Sections 14.4 and 14.5, and, subject to Section 7.1, shall
be fully protected in relying upon, an Officers’ Certificate and an Opinion of
Counsel stating that (i) the execution of such amended or supplemental indenture
is authorized or permitted by this Indenture, (ii) no Event of Default shall
occur as a result of the execution of such Officers’ Certificate or the delivery
of such Opinion of Counsel and (iii) the amended or supplemental indenture
complies with the terms of this Indenture.

       

      

      
        
          
             

          

          
            -89-

            
              

            

          

          
            Table of Contents

          

        

      

       

      ARTICLE X.

       

      SUBORDINATION

       

      
        	
                
Section
      10.1.

              	
                Notes
      Subordinated.

              

      

       

      
        The
payment of all Obligations on or relating to the Notes will be subordinated in
right of payment to the payment of Obligations under the Refinanced Debt and/or
Working Capital Facility in accordance with the Intercreditor Agreement, once
executed by the parties thereto.  If and when the Issuers enter into
an agreement for the Refinanced Debt and/or Working Capital Facility, the
Collateral Agent, upon the request of the Issuers pursuant to an Officers'
Certificate and an Opinion of Counsel (upon which the Collateral Agent shall be
authorized and permitted to rely) certifying that:

         

        (a) such
Refinanced Debt and/or Working Capital Facility is authorized and permitted
under the Indenture,

         

        (b) the
Intercreditor Agreement is either (i) in the form of the Intercreditor Agreement
attached as Exhibit
A to the Security Agreement (the “Intercreditor
Agreement Form”) with only such changes to add the names of the parties
thereto, the dates and the names of the facilities therein or (ii) approved by
the Required Noteholders, such approval not to be unreasonably withheld or
delayed, provided, that, the Required Noteholders shall not object or withhold
consent to any provision in the Intercreditor Agreement that is unchanged from
the Intercreditor Agreement Form, and

         

        (c) the
Intercreditor Agreement would accomplish the subordination contemplated by this
Section 10.1,

         

        shall,
and each Holder by its acceptance of a Note hereby directs the Collateral Agent
to, enter into the Intercreditor Agreement and any other related or ancillary
documents or instruments necessary or desirable in furtherance of the foregoing
(including without limitation account control agreements and other similar
agreements and each of which additional documentation shall be specified in the
Opinion of Counsel and Officers’ Certificate referenced above) to provide the
lender of the Refinanced Debt and/or Working Capital Facility the benefits of
the status of a holder of Senior Indebtedness (as defined in the Intercreditor
Agreement Form ) and to subordinate the Obligations on or relating to the Notes
to the obligations under the Refinanced Debt and/or Working Capital Facility to
the same extent as the subordination of the Obligations relating to the Notes to
the Senior Indebtedness (as defined in the Intercreditor Agreement Form) as
contemplated under the Intercreditor Agreement Form.

        
           

          
            
              
                 

              

              
                -90-

                
                  

                

              

              
                Table of Contents

              

            

          

        

      

      
        	
                
Section
      10.2.

              	
                Payments
      May Be Made Prior to Dissolution.

              

      

       

      Nothing contained in this
Article X or elsewhere in this Indenture shall prevent (i) the Issuers,
except under the conditions described in the Intercreditor Agreement, from
making payments at any time for the purpose of making payments of principal of,
and interest on, the Notes, or from depositing with the Trustee any moneys for
such payments, or (ii) in the absence of actual knowledge by the Trustee that a
given payment would be prohibited by the Intercreditor Agreement, the
application by the Trustee of any moneys deposited with it for the purpose of
making such payments of principal of, and interest on, the Notes to the Holders
entitled thereto unless at least two Business Days prior to the date upon which
such payment would otherwise become due and payable a Responsible Officer of the
Trustee shall have actually received the written notice provided for in Section
10.3; provided that, notwithstanding the foregoing, the Holders receiving any
payments made in contravention of the Intercreditor Agreement shall otherwise be
subject to the provisions of the Intercreditor Agreement.  The Issuers
shall give prompt written notice to the Trustee of any dissolution, winding-up,
liquidation or reorganization of the Issuers, although any delay or failure to
give any such notice shall have no effect on the subordination provisions
contained in the Intercreditor Agreement.

       

      
        	
                Section 10.3.

              	
                Notice
      to Trustee.

              

      

       

      The
Issuers shall give prompt written notice to the Trustee of any fact known to the
Issuers which would prohibit the making of any payment to or by the Trustee in
respect of the

       

      

      Notes
pursuant to the provisions of the Intercreditor Agreement, although any delay or
failure to give any such notice shall have no effect on the subordination
provisions contained in the Intercreditor Agreement.  Regardless of
anything to the contrary contained in this Article X or elsewhere in this
Indenture, the Trustee shall not be charged with knowledge of the existence of
any default or event of default with respect to any Senior Debt or of any other
facts which would prohibit the making of any payment to or by the Trustee unless
and until the Trustee shall have received notice in writing from the Issuers, or
from a holder of Senior Debt or a Representative therefor and, prior to the
receipt of any such written notice, the Trustee shall be entitled to assume (in
the absence of actual knowledge to the contrary) that no such facts
exist.  The Trustee shall be entitled to rely on the delivery to it of
any notice pursuant to this Section 10.3 to establish that such notice has been
given by a holder of Senior Debt (or a trustee thereof).

       

      In the
event that the Trustee determines in good faith that any evidence is required
with respect to the right of any Person as a holder of Senior Debt to
participate in any payment or distribution pursuant to the Intercreditor
Agreement, the Trustee may request such Person to furnish evidence to the
satisfaction of the Trustee as to the amounts of Senior Debt held by such
Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under the Intercreditor Agreement, and if such evidence is not furnished
the Trustee may defer any payment to such Person pending judicial determination
as to the right of such Person to receive such payment.

      
         

        

        
          
            
               

            

            
              -91-

              
                

              

            

            
              Table of Contents

            

          

        

      

       

      
        	
                Section 10.4.

              	
                Reliance
      on Judicial Order or Certificate of Liquidating
  Agent.

              

      

       

      Upon any
payment or distribution of assets of the Issuers referred to in the
Intercreditor Agreement, the Trustee, subject to the provisions of Article VII
hereof, and the Holders of the Notes shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which any insolvency,
bankruptcy, receivership, dissolution, winding-up, liquidation, reorganization
or similar case or proceeding is pending, or upon a certificate of the receiver,
trustee in bankruptcy, liquidating trustee, assignee for the benefit of
creditors, agent or other person making such payment or distribution, delivered
to the Trustee or the Holders, for the purpose of ascertaining the persons
entitled to participate in such payment or distribution, the holders of the
Senior Debt and other Indebtedness of the Issuers, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to the Intercreditor Agreement.

       

      
        	
                Section 10.5.

              	
                Trustee’s
      Relation to Senior Debt.

              

      

       

      The
Trustee and the Collateral Agent and any agent of the Issuers or the Trustee or
the Collateral Agent shall be entitled to all the rights set forth in the
Intercreditor Agreement with respect to any Senior Debt which may at any time be
held by it in its individual or any other capacity to the same extent as any
other holder of Senior Debt and nothing in this Indenture shall deprive the
Trustee or the Collateral Agent  or any such agent of any of its
rights as such holder.

       

      With
respect to the holders of Senior Debt, the Trustee and the Collateral Agent
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article X and the Intercreditor Agreement,
and no implied covenants or obligations with respect to the holders of Senior
Debt shall be read into this Indenture against the

       

      

      Trustee
or the Collateral Agent.  Neither the Trustee nor the Collateral Agent
shall be deemed to owe any fiduciary duty to the holders of Senior
Debt.

       

      Whenever
a distribution is to be made or a notice given to holders or owners of Senior
Debt, the distribution may be made and the notice may be given to their
Representative, if any.

       

      
        	
                Section 10.6.

              	
                Noteholders
      Authorize Trustee To Effectuate Subordination of
  Notes.

              

      

       

      Each
Holder by its acceptance of a Note authorizes and expressly directs the Trustee
and the Collateral Agent on its behalf to take such action as may be necessary
or appropriate to effectuate, as between the holders of Senior Debt and the
Holders, the subordination provided in the Intercreditor Agreement, and appoints
the Trustee and the Collateral Agent its attorney-in-fact for such purposes,
including, in the event of any dissolution, winding-up, liquidation or
reorganization of the Issuer (whether in bankruptcy, insolvency, receivership,
reorganization or similar proceedings or upon an assignment for the benefit of
credits or otherwise) tending towards liquidation of the business and assets of
the Issuers, the filing of a claim for the unpaid balance of its Notes and
accrued interest in the form required in those proceedings.

      
         

        

        
          
            
               

            

            
              -92-

              
                

              

            

            
              Table of Contents

            

          

        

         

      

      
        	
                Section 10.7.

              	
                The
      Intercreditor Agreement Not To Prevent Events of
  Default.

              

      

       

      The
failure to make a payment on account of principal of or interest on the Notes by
reason of any provision of the Intercreditor Agreement will not be construed as
preventing the occurrence of an Event of Default.

       

      
        	
                Section 10.8.

              	
                Trustee’s
      Compensation Not Prejudiced.

              

      

       

      Nothing
in this Article X will apply to amounts due to the Trustee (other than payments
of Obligation owing to Holders in respect of Notes) pursuant to other sections
of this Indenture.

       

       

      ARTICLE XI.

       

       

      GUARANTEE

       

      
        	
                Section 11.1.

              	
                Unconditional
      Guarantee.

              

      

       

      Each
Guarantor hereby unconditionally guarantees, on a senior subordinated basis
jointly and severally, subordinated to Guarantor Senior Debt on the same basis
as the Notes are subordinated to Senior Debt, to each Holder of a Note
authenticated and delivered by the Trustee and to the Trustee and its successors
and assigns, the Notes or the obligations of the Issuers hereunder or
thereunder, that:  (i) the principal of and interest on the Notes will
be promptly paid in full when due, subject to any applicable grace period,
whether at maturity, by acceleration or otherwise and interest on the overdue
principal, if any, and interest on any interest, to the extent lawful, of the
Notes and all other obligations of the Issuers to the Holders or the Trustee
hereunder or thereunder will be promptly paid in full or performed, all in
accordance with the terms hereof and thereof; and (ii) in case of any extension
of time of payment or renewal of any Notes or of any such other obligations, the
same will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, subject to any applicable grace period,
whether at stated maturity, by acceleration or otherwise, subject, however, in
the case of clauses (i) and (ii) above, to the limitations set forth in Section

       

      

      11.3.  Each
Guarantor hereby agrees that its obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of the Notes or this
Indenture, the absence of any action to enforce the same, any waiver or consent
by any Holder of the Notes with respect to any provisions hereof or thereof, the
recovery of any judgment against the Issuers, and action to enforce the same or
any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a Guarantor.  Each Guarantor hereby waives
diligence, presentment, demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of the Issuers, any right to require a
proceeding first against the Issuers, protest, notice and all demands whatsoever
and covenants that this Guarantee will not be discharged except by complete
performance of the obligations contained in the Notes, this Indenture and in
this Guarantee.  If any Holder or the Trustee is required by any court
or otherwise to return to the Issuers, any Guarantor, or any custodian, trustee,
liquidator or other similar official acting in relation to the Issuers or any
Guarantor, any amount paid by the Issuers or any Guarantor to the Trustee or
such Holder, this Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect.  Each Guarantor further agrees
that, as between each Guarantor, on the one hand, and the Holders and the
Trustee, on the other hand, (x) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article VI for the purposes of this
Guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the obligations guaranteed hereby, and (y) in
the event of any acceleration of such obligations as provided in Article VI,
such obligations (whether or not due and payable) shall forthwith become due and
payable by each Guarantor for the purpose of this Guarantee.

       

      
        	
                Section 11.2.

              	
                Severability.

              

      

       

      In case
any provision of this Guarantee shall be invalid, illegal or unenforceable, the
validity, legality, and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

       

      
        	
                Section 11.3.

              	
                Limitation
      of Guarantor’s Liability.

              

      

       

      Each
Guarantor and by its acceptance hereof each Holder hereby confirms that it is
the intention of all such parties that the guarantee by such Guarantor pursuant
to its Guarantee not constitute a fraudulent transfer or conveyance for purposes
of any Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform
Fraudulent Transfer Act or any similar federal or state law.  To
effectuate the foregoing intention, each Guarantor hereby irrevocably agrees
that the obligations of each Guarantor under its Guarantee shall be limited to
the maximum amount as will, after giving effect to all other contingent and
fixed liabilities of each Guarantor and after giving effect to any collections
from or payments made by or on behalf of any other Guarantor in respect of the
obligations of each other Guarantor under its Guarantee or pursuant to Section
11.5, result in the obligations of each Guarantor under the Guarantee not
constituting such fraudulent transfer or conveyance.

       

      
        	
                Section 11.4.

              	
                Release
      of Guarantor.

              

      

       

      (a)           The
Guarantee of a Guarantor will be automatically and unconditionally released
without any action on the part of the Trustee or the Holders of the
Notes:  (1) in connection with any sale or other disposition of all or
substantially all of the assets of that Guarantor (including, without
limitation, by way of merger or consolidation), 

       

      

      
        
          
             

          

          
            -93-

            
              

            

          

          
            Table of Contents

          

        

      

      

      if the
Issuers apply the Net Cash Proceeds of that sale or other disposition in
accordance with the applicable provisions of this Indenture; (2) in connection
with any sale of all of the Capital Stock of that Guarantor, if the Issuers
apply the Net Cash Proceeds of that sale in accordance with the applicable
provisions of this Indenture; (3) if Morris Publishing designates that Guarantor
as an Unrestricted Subsidiary in accordance with the applicable provisions of
this Indenture; or (4) upon the payment in full of the Notes.

       

      In
addition, concurrently with any Legal Defeasance or Covenant Defeasance, the
Guarantors shall be released from all of their Obligations under their
respective applicable Guarantees.

       

      (b)           The
Trustee shall deliver an appropriate instrument evidencing such release upon
receipt of a request by the Issuers accompanied by an Officers’ Certificate and
Opinion of Counsel certifying as to the compliance with this Section
11.4.

       

      
        	
                Section 11.5.

              	
                Contribution.

              

      

       

      In order
to provide for just and equitable contribution among the Guarantors, the
Guarantors agree, inter
se, that in the event any payment or distribution is made by any
Guarantor (a “Funding
Guarantor”) under its Guarantee, such Funding Guarantor shall be entitled
to a contribution from all other Guarantors in a pro
rata amount based on the Adjusted Net Assets (as defined below) of each
Guarantor (including the Funding Guarantor) for all payments, damages and
expenses incurred by that Funding Guarantor in discharging the Issuers’
obligations with respect to the Notes or any other Guarantor’s obligations with
respect to the Guarantee.  “Adjusted
Net Assets” of such Guarantor at any date shall mean the lesser of the
amount by which the sum of (x) the fair value of the property of such Guarantor
exceeds the total amount of liabilities, including, without limitation,
contingent liabilities (after giving effect to all other fixed and contingent
liabilities incurred or assumed on such date), but excluding liabilities under
the Guarantee, of such Guarantor at such date and (y) the present fair salable
value of the assets of such Guarantor at such date exceeds the amount that will
be required to pay the probable liability of such Guarantor on its debts (after
giving effect to all other fixed and contingent liabilities incurred or assumed
on such date), excluding debt in respect of the Guarantee of such Guarantor, as
they become absolute and matured.

       

      
        	
                Section 11.6.

              	
                Deferral
      of Subrogation.

              

      

       

      Until all
Obligations are paid in full, each Guarantor hereby irrevocably and
unconditionally defers any claims or other rights which it may now or hereafter
acquire against the Issuers that arise from the existence, payment, performance
or enforcement of such Guarantor’s obligations under the Guarantee and this
Indenture, including, without limitation, any right of subrogation,
reimbursement, exoneration, indemnification, and any right to participate in any
claim or remedy of any Holder against the Issuers, whether or not such claim,
remedy or right arises in equity, or under contract, statute or common law,
including, without limitation, the right to take or receive from the Issuers,
directly or indirectly, in cash or other property or by set-off or in any other
manner, payment or security on account of such claim or other
rights.  If any amount shall be paid to any Guarantor in violation of
the preceding sentence 

       

      

      
        
          
             

          

          
            -94-

            
              

            

          

          
            Table of Contents

          

        

      

      

      and the
Notes shall not have been paid in full, such amount shall have been deemed to
have been paid to such Guarantor for the benefit of, and held in trust for the
benefit of, the Holders, and shall, forthwith be paid to the Trustee for the
benefit of such Holders to be credited and applied upon the Notes, whether
matured or unmatured, in accordance with the terms of this
Indenture.  Each Guarantor acknowledges that it will receive direct
and indirect benefits from the financing arrangements contemplated by this
Indenture and that the deferral set forth in this Section 11.6 is knowingly made
in contemplation of such benefits.

       

      
        	
                Section 11.7.

              	
                Execution
      of Guarantee.

              

      

       

      To
evidence their Guarantees to the Holders set forth in this Article XI, the
Guarantors hereby agree to execute the Guarantee in substantially the form
attached hereto as Exhibit B, which shall be endorsed on each Note ordered to be
authenticated and delivered by the Trustee.  Each Guarantor hereby
agrees that its Guarantee set forth in this Article XI shall remain in full
force and effect notwithstanding any failure to endorse on each Note a notation
of such Guarantee.  Each such Guarantee shall be signed on behalf of
each Guarantor by one of its authorized Officers prior to the authentication of
the Note on which it is endorsed, and the delivery of such Note by the Trustee,
after the authentication thereof hereunder, shall constitute due delivery of
such Guarantee on behalf of such Guarantor.  Such signatures upon the
Guarantee may be by manual or facsimile signature of such Officers and may be
imprinted or otherwise reproduced on the Guarantee, and in case any such Officer
who shall have signed the Guarantee shall cease to be such Officer before the
Note on which such Guarantee is endorsed shall have been authenticated and
delivered by the Trustee or disposed of by the Issuers, such Note nevertheless
may be authenticated and delivered or disposed of as though the Person who
signed the Guarantee had not ceased to be such Officer of the
Guarantor.

       

      
        	
                Section 11.8.

              	
                Waiver
      of Stay, Extension or Usury Laws.

              

      

       

      Each
Guarantor covenants (to the extent that it may lawfully do so) that it will not
at any time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or other law
that would prohibit or forgive each such Guarantor from performing its Guarantee
as contemplated herein, wherever enacted, now or at any time hereafter in force,
or which may affect the covenants or the performance of this Indenture; and (to
the extent that it may lawfully do so) each such Guarantor hereby expressly
waives all benefit or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.

       

       

      ARTICLE XII.

       

       

      COLLATERAL
AND SECURITY

       

      
        	
                Section 12.1.

              	
                Security
      Documents; Intercreditor Agreement.

              

      

       

      (a)           The
due and punctual payment of the principal of and interest on the Notes when and
as the same shall be due and payable, whether on an interest payment date, at

       

      

      
        
          
             

          

          
            -95-

            
              

            

          

          
            Table of Contents

          

        

      

      

      maturity,
by acceleration, repurchase, redemption or otherwise, and interest on the
overdue principal of and interest on the Notes and performance of all other
obligations of the Obligors to the Holders or the Trustee under this Indenture,
the Notes and the Guarantees, according to the terms hereunder or thereunder,
shall be secured as provided in the Security Documents which the Obligors shall
enter into on the Issue Date.  The Obligors shall deliver to the
Collateral Agent copies of all documents executed pursuant to this Indenture or
the Security Documents and shall do or cause to be done all such acts and things
as may be required by the provisions of the Security Documents, or reasonably
necessary or advisable to establish, perfect and maintain the security interest
in the Collateral contemplated hereby, by the Security Documents or any part
thereof, as from time to time constituted, so as to render the same available
for the security and benefit of this Indenture and of the Notes and the
Guarantees secured hereby and thereby, according to the intent and purposes
herein and therein expressed.  The Issuers shall, and shall cause
their Subsidiaries to, at their own expense, take all reasonable actions as
reasonably necessary or advisable to establish, maintain and perfect a security
interest in and continuing Lien on all of the Collateral in favor of the
Collateral Agent for the benefit of the Holders, superior to the rights of all
third Persons, except for holders of Senior Debt, and subject to no Liens other
than Permitted Liens and other Liens permitted by this Indenture or the Security
Documents.  Without limiting the generality of the foregoing, the
Issuers shall execute or cause to be executed and shall file or cause to be
filed such financing statements, continuation statements, and fixture filings
and such mortgages, or deeds of trust in all places necessary to establish,
maintain and perfect the Liens purported to be provided for in the Security
Documents.

       

      (b)           Each
Holder, by its acceptance of a Note:

       

      (1)           irrevocably
appoints and designates the Collateral Agent to act as its agent under this
Indenture and the Security Documents (and by its signature below, the Collateral
Agent accepts such appointment);

       

      (2)           authorizes
and directs the Collateral Agent to enter into the Security Documents to which
it is a party, to take such action on its behalf and in the Collateral Agent’s
designated capacity under the provisions of this Indenture and the Security
Documents and to perform its obligations and exercise its rights expressly
designated to it hereunder and thereunder in accordance herewith and
therewith;

       

      (3)           consents
and agrees to the terms of each Security Document as the same may be in effect
or may be amended, restated, supplemented or otherwise modified from time to
time in accordance with their respective terms, and authorizes and directs the
Collateral Agent to enter into the Security Documents and to perform its
obligations and exercise its rights thereunder in accordance therewith;
and

       

      (4)           appoints
and authorizes the Collateral Agent to enter into the Intercreditor Agreement as
provided in Section 10.1 and to act under and in accordance with the terms of
the Intercreditor Agreement.

       

      Each
Holder agrees that any action taken by the Collateral Agent in accordance with
the provisions of this Indenture and the Security Documents, and the exercise by
the Collateral Agent of any rights or remedies set forth therein, together with
all other powers reasonably incidental thereto, shall be authorized and binding
upon all Holders.  

       

      

      
        
          
             

          

          
            -96-

            
              

            

          

          
            Table of Contents

          

        

      

      

      The
duties of the Collateral Agent shall be ministerial and administrative in
nature, and the Collateral Agent shall not have a trust relationship with any
Holder, obligor or any other Person by reason of this Indenture or any of the
Security Documents.

       

      (c)           The
Collateral Agent shall not have any duties or responsibilities except those
expressly set forth in this Indenture and the Security Documents to which the
Collateral Agent is a party, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Indenture or the Security Documents or otherwise shall exist on the part of the
Collateral Agent.  The conferral upon the Collateral Agent of any
right shall not imply a duty on the Collateral Agent’s part to exercise such
right, unless instructed to do so by the Required Noteholders in accordance with
this Indenture

       

      (d)           The
Collateral Agent may perform its duties under this Indenture and the Security
Documents to which the Collateral Agent is a party by or through receivers,
agents, attorneys-in-fact and employees.  The Collateral Agent may
consult with and employ legal counsel, and shall be entitled to act or refrain
from acting upon, and shall be fully authorized and protected in taking, or
refraining from taking, action in reliance upon any advice or opinion given by
legal counsel.

       

      (e)           The
Collateral Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, consent, certificate, affidavit,
letter, certification, statement, notice or other communication, document or
conversation (including those by telephone or e-mail) believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person,
and upon the advice and statements of legal counsel (including without
limitation, counsel to the Company or any Obligor).  The Collateral
Agent shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture or other paper or
document.  The Collateral Agent shall have no liability for failing or
refusing to take any action under this Indenture or the Security Documents
unless it shall first receive such advice, direction, instruction or concurrence
of the Holders as is required hereunder; and the Collateral Agent has the right
to seek instructions from the Holders before acting or electing not to act under
this Indenture and/or the Security Documents.  The Collateral Agent
shall in all cases have no liability in acting, or refraining from acting, under
this Indenture and the Security Documents in accordance with a direction or
instruction from the Required Noteholders, and such direction or instruction and
any action taken or failure to act pursuant thereto shall be binding upon all
the Holders.

       

      (f)           The
Collateral Agent shall not be deemed to have knowledge of any Default or Event
of Default unless a responsible officer of the Collateral Agent has received
written notice from the Company or the Required Noteholders specifying the
occurrence and nature thereof and stating that such notice is a “notice of
default”.  The Collateral Agent shall take such action with respect to
any Default or Event of Default as shall be directed by the Required
Noteholders.

       

      (g)           The
Collateral Agent shall not be liable for any action taken or omitted to be taken
by it in connection with this Indenture or any Security Document or instrument
referred to or provided for herein or therein, except to the extent that any of
the foregoing are found by a final, nonappealable decision of a court of
competent 

       

      

      
        
          
             

          

          
            -97-

            
              

            

          

          
            Table of Contents

          

        

      

      

      jurisdiction to
have resulted from its own gross negligence or willful
misconduct.  The Collateral Agent does not assume any responsibility
for any failure or delay in performance or any breach by the Company or any
obligor of any obligations under this Indenture and the Security
Documents.  The Collateral Agent shall not be responsible to the
Holders or any other Person for any recitals, statements, information,
representations or warranties contained in any Security Documents or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Collateral Agent under or in connection with, this Indenture
or any Security Document; the execution, validity, genuineness, effectiveness or
enforceability of any Security Document; the genuineness, enforceability,
collectibility, value, sufficiency, location or existence of any Collateral, or
the validity, effectiveness, enforceability, sufficiency, extent, perfection or
priority of any Lien therein; the validity, enforceability or collectibility of
any Obligations; the assets, liabilities, financial condition, results of
operations, business, creditworthiness or legal status of any Obligor; or for
any failure of any Obligor to perform its obligations under this Indenture and
the Security Documents.  The Collateral Agent shall have no obligation
to any Holder or any other Person to ascertain or inquire into the existence of
any Default or Event of Default, the observance or performance by any Obligor of
any terms of this Indenture and the Security Documents, or the satisfaction of
any conditions precedent contained in any Security Documents.  The
Collateral Agent shall not be required to initiate or conduct any litigation or
collection or other proceeding under this Indenture and the Security Documents
without the express written direction of the Required
Noteholders.  The Collateral Agent shall have the right at any time to
seek instructions from the Holders with respect to the administration of the
Security Documents.

       

      (h)           No
provision of this Indenture or the Security Documents shall require the
Collateral Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder or
thereunder or in the exercise of any of its rights or powers unless the
Collateral Agent shall have received indemnity satisfactory to the Collateral
Agent against potential costs and liabilities incurred by the Collateral Agent
relating thereto.  Notwithstanding anything to the contrary contained
in this Indenture or any of the Security Documents, in the event the Collateral
Agent is entitled or required to commence an action to foreclose or otherwise
exercise its remedies to acquire control or possession of the Collateral, the
Collateral Agent shall not be required to commence any such action or exercise
any such remedy if the Collateral Agent has determined that the Collateral Agent
may incur personal liability as the result of the presence at, or release on or
from, the Collateral, of any hazardous substances unless the Collateral Agent
has received security or indemnity in an amount and in a form all satisfactory
to the Collateral Agent in its sole discretion, protecting the Collateral Agent
from all such liability.  The Collateral Agent shall at any time be
entitled to cease taking any action described above if it no longer reasonably
deems any indemnity, security or undertaking from the Company or the Holders to
be sufficient.  Without limiting the foregoing, the Collateral Agent
shall not be required to take any enforcement or other type of action under any
account control agreement (including without limitation the sending of a notice
of exclusive control or other similar action) unless the Collateral Agent shall
have received indemnity satisfactory to the Collateral Agent against potential
costs and liabilities incurred by the Collateral Agent relating
thereto.

       

      (i)           The
parties hereto and the Holders hereby agree and acknowledge that the Collateral
Agent shall not assume, be responsible for or otherwise be obligated for any
liabilities, claims, causes of action, suits, losses, allegations, requests,
demands, penalties, fines, settlements, damages (including foreseeable and
unforeseeable), 

       

      

      
        
          
             

          

          
            -98-

            
              

            

          

          
            Table of Contents

          

        

      

      

      judgments, expenses
and costs (including but not limited to, any remediation, corrective action,
response, removal or remedial action, or investigation, operations and
maintenance or monitoring costs, for personal injury or property damages, real
or personal) of any kind whatsoever, pursuant to any environmental law as a
result of this Indenture, the Security Documents or any actions taken pursuant
hereto or thereto.  Further, the parties hereto and the Holders hereby
agree and acknowledge that in the exercise of its rights under this Indenture
and the Security Documents, the Collateral Agent may hold or obtain indicia of
ownership primarily to protect the security interest of the Collateral Agent in
the Collateral, including without limitation the properties under the Mortgages,
and that any such actions taken by the Collateral Agent shall not be construed
as or otherwise constitute any participation in the management of such
Collateral, including without limitation the properties under the Mortgages, as
those terms are defined in Section 101(20)(E) of the Comprehensive Environmental
Response, Compensation, and Liability Act 42 U.S.C.  §§  9601 et
seq., as amended.

       

      (j)           This
Article XII, the Security Agreement and the other Security Documents (other than
the Intercreditor Agreement) will be subject to the terms, limitations and
conditions set forth in any Intercreditor Agreement, except as to such terms,
limitations and conditions that relate to the rights, duties and immunities of
the Trustee and the Collateral Agent, which shall be subject to the terms
hereof.

       

      
        	
                Section 12.2.

              	
                Recording
      and Opinions.

              

      

       

      The
Issuers and the Guarantors shall furnish to the Trustee no later than June 30 in
each year beginning with March 31, 2011, an Opinion of Counsel, dated as of such
date, either:

       

      (a)           (A)
to the effect that, in the opinion of such counsel, action has been taken with
respect to the recording, registering, filing, re-recording, re-registering and
re-filing of all supplemental indentures, financing statements, continuation
statements or other instruments of further assurance as is necessary to maintain
perfection of the Lien of the Security Documents and reciting with respect to
the security interest in the Collateral the details of such action or referring
to prior Opinions of Counsel in which such details are given, and (B) to the
effect that, in the opinion of such counsel, based on relevant laws as in effect
on the date of such Opinion of Counsel, all financing statements and
continuation statements have been executed and filed that are necessary as of
such date and during the succeeding 12 months fully to preserve and protect, to
the extent such protection and preservation are possible by filing, the rights
of the Holders, the Collateral Agent and the Trustee hereunder and under the
Security Documents with respect to the security interest in the Collateral;
or

       

      (b)           to
the effect that, in the opinion of such counsel, no such action is necessary to
maintain such Lien.

       

      The
Issuers will otherwise comply with the provisions of TIA § 314(b).

       

      

      
        
          
             

          

          
            -99-

            
              

            

          

          
            Table of Contents

          

        

      

      
         

        
          	
                  Section 12.3.

                	
                    Release
      of Collateral.

                

        

         

      

      (a)           Subject
to subsections (b), (c) and (d) of this Section 12.3 and the Intercreditor
Agreement, Collateral may be released from the Lien and security interest
created by the Security Documents at any time or from time to time in accordance
with the provisions of the Security Documents, the Intercreditor Agreement or as
provided hereby.  In addition, subject to the terms of the
Intercreditor Agreement, upon the request of the Company pursuant to an
Officers’ Certificate and an Opinion of Counsel certifying that all conditions
precedent under the Indenture have been met, then (at the sole cost and expense
of the Company) the Collateral Agent shall release (or cause to be released)
Collateral that is sold, conveyed or disposed of in compliance with the
provisions of this Indenture; provided,
that if such sale, conveyance or disposition constitutes an Asset Sale, the
Company will apply the Net Cash Proceeds in compliance with Section
4.10.  Upon receipt of such Officers’ Certificate and Opinion of
Counsel the Collateral Agent shall promptly execute, deliver or acknowledge any
necessary or proper instruments of termination, satisfaction or release to
evidence the release of any Collateral permitted to be released pursuant to this
Indenture, the Security Documents or the Intercreditor Agreement.

       

      (b)           No
Collateral may be released from the Lien and security interest created by the
Security Documents pursuant to the provisions of the Security Documents and the
Intercreditor Agreement unless the certificate required by this Section 12.3 has
been delivered to the Collateral Agent.

       

      (c)           The
release of any Collateral from the terms of this Indenture, the Security
Documents and the Intercreditor Agreement shall not be deemed to impair the
security under this Indenture in contravention of the provisions hereof if and
to the extent the Collateral is released pursuant to the terms of the Security
Documents, this Indenture and the Intercreditor Agreement.  To the
extent applicable, the Issuers shall cause TIA § 313(b), relating to reports,
and TIA § 314(d), relating to the release of property or securities from the
Lien and security interest of the Security Documents and relating to the
substitution therefor of any property or securities to be subjected to the Lien
and security interest of the Security Documents, to be complied
with.  Any certificate or opinion required by TIA § 314(d) may be made
by an Officer of the Company except in cases where TIA § 314(d) requires that
such certificate or opinion be made by an independent Person, which Person shall
be an independent engineer, appraiser or other expert selected or approved by
the Issuers in the exercise of reasonable care.

       

      
        	
                Section 12.4.

              	
                Additional
      Collateral.

              

      

       

      If at any
time, the Issuers or any Guarantor acquires in fee simple any real property or
any entity which owns in fee simple any real property becomes a Guarantor, which
real property has a fair market value of at least $3 million, in either case as
determined in good faith by the Company’s Board of Directors, the Issuers or
such Guarantor shall, grant to the Collateral Agent, for the benefit of the
Holders, a Mortgage or Amended and Restated Mortgage, as appropriate, on such
real property that is not already covered by the Security
Documents.  All such Mortgages, shall be in form and substance
reasonably satisfactory to the Required Noteholders.  In connection
therewith, within 60 days following such request, the Issuers shall deliver or
caused to be delivered such Mortgage, proper fixture filings under the UCC on
Form UCC-1, Opinion of Counsel, subordination, nondisturbance and 

       

      

      
        
          
             

          

          
            -100-

            
              

            

          

          
            Table of Contents

          

        

      

      

      attornment agreement,
assignment of leases, landlord consent, tenant estoppel certificate, survey and
insurance certificates and such other customary documents relating to the
Mortgages that the Required Noteholders may reasonably request, in each case, in
form and substance reasonably satisfactory to the Required
Noteholders.

       

      
        	
                Section 12.5.

              	
                Certificates
      of the Issuers.

              

      

       

      (a)           The
Issuers shall furnish to the Trustee and the Collateral Agent, prior to each
proposed release of Collateral pursuant to the Security Documents and the
Intercreditor Agreement:

       

      (1)           all
documents required by TIA § 314(d); and

       

      (2)           an
Opinion of Counsel, which may be rendered by internal counsel to the Issuers to
the effect that such accompanying documents constitute all documents required by
TIA § 314(d).

       

      (b)           The
Trustee, to the extent permitted by Sections 7.1 and 7.2 hereof, and the
Collateral Agent may accept as conclusive evidence of compliance with the
foregoing provisions the appropriate statements contained in such documents and
such Opinion of Counsel.

       

      (c)           Notwithstanding
anything to the contrary in this Section 12.5, the Issuers shall not be required
to comply with all or any portion of TIA § 314(d) if they determine, in good
faith based on advice of counsel, that under the terms of TIA § 314(d) and/or
any interpretation or guidance as to the meaning thereof of the SEC or its
staff, including “no action” letters or exemptive orders, all or any portion of
TIA § 314(d) is inapplicable to one or a series of releases of Collateral or the
SEC will not take any action against the Issuers for failure to comply with, or
that the Issuers are exempt from, all or any portion of TIA §
314(d).  Any determination made pursuant to this Section 12.5 shall be
binding on the Trustee, without the further action of the Trustee and the
Trustee shall not be liable for any determination made by the Issuers in
connection with TIA § 314(d)

       

      
        	
                Section 12.6.

              	
                No
      Determination by the Trustee.

              

      

       

      In the
event that the Issuers wish to release Collateral in accordance with the
Security Documents and the Intercreditor Agreement and has delivered the
certificates and documents required by the Security Documents, the Intercreditor
Agreement and Sections 12.3 and 12.5 hereof, the Trustee will be entitled to
rely on an Opinion of Counsel stating that it has received all documentation
required by TIA § 314(d) in connection with such release.

       

      
        	
                Section 12.7.

              	
                Authorization
      of Actions to Be Taken by the Trustee and the Collateral Agent Under the
      Security Documents.

              

      

       

      The
Trustee shall, upon the instructions of the Required Noteholders, direct the
Collateral Agent to take all actions it deems necessary or appropriate in order
to:

       

      

      
        
          
             

          

          
            -101-

            
              

            

          

          
            Table of Contents

          

        

      

      

      (a)           enforce
any of the terms of the Security Documents and the Intercreditor Agreement;
and

       

      (b)           collect
and receive any and all amounts payable in respect of the Obligations of the
Issuers and the Guarantors hereunder and under the Notes and the
Guarantees.

       

      (c)           Subject
to the provisions of the applicable Security Documents, each Holder by
acceptance of any Notes agrees that the Collateral Agent shall execute and
deliver the Security Documents to which it is a party, and all agreements,
documents and instruments incidental thereto, and act in accordance with the
terms thereof.  For the avoidance of doubt, the Collateral Agent shall
have no discretion under this Indenture, the Security Documents or the
Intercreditor Agreement and shall not be required to take any action or make or
give any determination, consent, approval, request or direction without the
written direction of the Required Noteholders.

       

      (d)           Prior
to the occurrence of an Event of Default, the Company may direct the Collateral
Agent in connection with any action required or permitted by this Indenture, the
Security Documents or the Intercreditor Agreement.  After the
occurrence of an Event of Default, the Trustee may direct the Collateral Agent
in connection with any action required or permitted hereby or
thereby.

       

      The
Collateral Agent shall, upon the instruction of the Required Noteholders, have
the power to institute and maintain such suits and proceedings as it may deem
expedient to prevent any impairment of the Collateral by any acts that may be
unlawful or in violation of the Security Documents, this Indenture or the
Intercreditor Agreement, and such suits and proceedings as are expedient to
preserve or protect its interests and the interests of the Holders in the
Collateral (including power to institute and maintain suits or proceedings to
restrain the enforcement of, or compliance with, any legislative or other
governmental enactment, rule or order that may be unconstitutional or otherwise
invalid if the enforcement of, or compliance with, such enactment, rule or order
would impair the security interest hereunder or be prejudicial to the interests
of the Holders or of the Collateral Agent).

       

      
        	
                Section
      12.8.

              	
                Action
      by the Trustee or Collateral Agent.

              

      

       

      In each
case that the Trustee or the Collateral Agent may or is required hereunder or
under any Security Document, the Intercreditor Agreement or any other document
relating to the Indenture to take any action on behalf of the Holders (an “Action”),
including without limitation to make any determination, to give consents, to
exercise rights, powers or remedies, to release or sell Collateral or otherwise
to act hereunder or under any Security Document, the Intercreditor Agreement, or
any other document relating to the Indenture,  the Trustee and the
Collateral Agent may seek direction from the Required
Noteholders.  Neither the Trustee nor the Collateral Agent shall be
liable with respect to any Action taken or omitted to be taken by it in
accordance with the direction from the Required Noteholders.  If the
Trustee or the Collateral Agent shall request direction from the Required
Noteholders with respect to any Action, the Trustee and the Collateral Agent
shall be entitled to refrain from such Action unless and until the Trustee or
the Collateral Agent shall have received direction from the Required
Noteholders, and the Trustee and the Collateral Agent shall not incur liability
to any Person by reason of so refraining.

       

      

      
        
          
             

          

          
            -102-

            
              

            

          

          
            Table of Contents

          

        

      

      

      Notwithstanding
anything to the contrary in this Indenture, any Security Document or the
Intercreditor Agreement in no event shall the Collateral Agent be responsible
for, or have any duty or obligation with respect to the recording, filing,
registering, perfection, protection or maintenance of the security interests or
Liens intended to be created by the Security Documents (including without
limitation the filing or continuation of any UCC financing or continuation
statements or similar documents or instruments), nor shall the Collateral Agent
be responsible for, and the Collateral Agent makes no representation regarding,
the validity, effectiveness or priority of any of the Security Documents, the
Intercreditor Agreement or the security interests or Liens intended to be
created thereby.

       

      
        	
                Section 12.9.

              	
                Replacement
      of Collateral Agent.

              

      

       

      Subject
to the appointment and acceptance of a successor Collateral Agent as provided
below, the Collateral Agent may resign at any time by giving notice thereof to
the Company, the Trustee and the Holders.  Upon receipt of such
notice, the Company shall appoint a successor Collateral Agent.  Upon
acceptance by a successor Collateral Agent of an appointment to serve as
Collateral Agent hereunder and under the Security Documents, such successor
Collateral Agent shall thereupon succeed to and become vested with all the
rights, powers, duties and obligations of the retiring Collateral Agent without
further act but the retiring Collateral Agent shall continue to have the
benefits of the compensation, reimbursement and indemnification set forth in
this Indenture and the Security Documents.  Notwithstanding any
Collateral Agent’s resignation, the provisions of this Article XII shall
continue in effect for its benefit with respect to any actions taken or omitted
to be taken by it while Collateral Agent.  Any successor to Wilmington
Trust FSB by merger or acquisition of stock or acquisition of the corporate
trust business shall continue to be Collateral Agent hereunder without further
act on the part of the parties hereto, unless such successor resigns as provided
above.

       

      
        	
                Section 12.10.

              	
                Authorization
      of Receipt of Funds by the Collateral Agent Under the Security
      Documents.

              

      

       

      The
Collateral Agent is authorized to receive any funds for the benefit of the
Holders distributed under the Security Documents and the Intercreditor
Agreement, and to make further distributions of such funds to the Holders
according to the provisions of this Indenture, the Security Documents and the
Intercreditor Agreement.

       

      
        	
                Section 12.11.

              	
                Termination
      of Security Interest.

              

      

       

      Subject
to the Intercreditor Agreement, upon the full and final payment and performance
of all Obligations of the Obligors under this Indenture, the Notes and the
Guarantees or in connection with the discharge of all Obligations (exclusive of
Obligations expressly stated to survive pursuant to Article VII and Article
VIII) under the Notes, the Guarantees and this Indenture as described under
Article VIII and Article XIII (including a release of Guarantees under Section
11.4 hereunder or designation of a Restricted Subsidiary as an Unrestricted
Subsidiary in accordance with the terms of this Indenture), the Issuers shall
deliver an Officers’ Certificate to the Collateral Agent stating that such
Obligations have been paid in full or discharged, as the case may be, and
instruct the Collateral Agent to release, and the Collateral Agent
shall release, the Liens pursuant to this Indenture, the Intercreditor Agreement
and the Security Documents.

       

      

      
        
          
             

          

          
            -103-

            
              

            

          

          
            Table of Contents

          

        

      

       

      
        	
                Section 12.12.

              	
                Conflicts
      Between Indenture and Security
Documents.

              

      

       

      If any
conflict or inconsistency exists between this Indenture and any of the Security
Documents, this Indenture shall govern; provided,
however, that to the extent a Security Document is governed by a law
other than the internal laws of the State of New York, this Indenture shall not
require that the internal laws of the State of New York govern such Security
Document; and provided,
further, that to the extent the Indenture or the other Indenture
Documents conflict with the Intercreditor Agreement, the Intercreditor Agreement
shall govern.

       

       

      ARTICLE XIII.

       

       

      SATISFACTION
AND DISCHARGE

       

      
        	
                Section 13.1.

              	
                Satisfaction
      and Discharge.

              

      

       

      This
Indenture will be discharged and will cease to be of further effect (except as
set forth below) and the Trustee, at the expense of the Issuers, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture
when:

       

      (1)           either:

       

      (a)           all
the Notes theretofore authenticated and delivered (except lost, stolen or
destroyed Notes which have been replaced or paid as provided in Section 2.7 and
Notes for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Issuers and thereafter repaid to the Issuers
or discharged from such trust) have been delivered to the Trustee for
cancellation; or

       

      (b)           all
Notes not theretofore delivered to the Trustee for cancellation (1) have become
due and payable or (2) will become due and payable within one year, or are to be
called for redemption within one year, under arrangements reasonably
satisfactory to the Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the Issuers, and the Issuers have
irrevocably deposited or caused to be deposited with the Trustee funds in an
amount sufficient to pay and discharge the entire Indebtedness on the Notes not
theretofore delivered to the Trustee for cancellation, for principal of,
premium, if any, and interest on the Notes to the date of deposit together with
irrevocable instructions from the Issuers directing the Trustee to apply such
funds to the payment thereof at maturity or redemption, as the case may
be;

       

      (2)           the
Issuers have paid all other sums payable under this Indenture by Morris
Publishing; and

       

      

      
        
          
             

          

          
            -104-

            
              

            

          

          
            Table of Contents

          

        

      

      

      (3)           the
Issuers have delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel stating that all conditions precedent under this Indenture relating to
the satisfaction and discharge of this Indenture have been complied
with.

       

      Notwithstanding
the satisfaction and discharge of this Indenture, the Issuers’ obligations in
Sections 2.3, 2.4, 2.6, 2.7, 2.11, 7.7, 7.8, 14.2, 14.3 and 14.4, and the
Trustee’s and Paying Agent’s obligations in Section 13.2 shall survive until the
Notes are no longer outstanding.  Thereafter, only the Issuers’
obligations in Section 7.7 shall survive.

       

      
        	
                Section 13.2.

              	
                Application
      of Trust.

              

      

       

      All money
deposited with the Trustee pursuant to Section 13.1 shall be held in trust and,
at the written direction of the Issuers, be invested prior to maturity of any
payment Obligations in U.S. Government Securities, and applied by the Trustee in
accordance with the provisions of the Notes and this Indenture, to the payment,
either directly or through any Paying Agent as the Trustee may determine, to the
Persons entitled thereto, of the principal (and premium, if any) and interest
for the payment of which money has been deposited with the Trustee; but such
money need not be segregated from other funds except to the extent required by
law.

       

       

      ARTICLE XIV.

       

       

      MISCELLANEOUS

       

      
        	
                Section 14.1.

              	
                Trust
      Indenture Act Controls.

              

      

       

      If any
provision hereof limits, qualifies or conflicts with a provision of the TIA or
another provision that would be required or deemed under the TIA to be part of
and govern this Indenture if this Indenture were subject thereto, the latter
provision shall control.  If any provision of this Indenture modifies
or excludes any provision of the TIA that may be so modified or excluded, the
latter provision shall be deemed to apply to this Indenture as so modified or to
be excluded, as the case may be.

       

      
        	
                Section 14.2.

              	
                Notices.

              

      

       

      Any
notice or communication by the Issuers or the Trustee to others is duly given if
in writing and delivered in Person or mailed by first class mail (registered or
certified, return receipt requested), telecopier or overnight air courier
guaranteeing next day delivery, to the others’ address:

       

      If to the
Issuers:

       

      Morris
Publishing Group, LLC

      725 Broad
Street

      Augusta,
Georgia 30901

      Attention:  Craig
S. Mitchell

      Fax: (706) 722-7125

      
      

      

      
        
          
             

          

          
            -105-

            
              

            

          

          
            Table of Contents

          

        

      

       

      
        With a
copy to:

      

       

      Hull
Barrett, PC

      801 Broad
Street, 7th Floor

      Augusta,
Georgia 30901

      Attention:  Mark
S. Burgreen

      Fax:  (706)
722-9779

       

       

      If to the
Trustee:

       

      Wilmington
Trust FSB

      c/o
Wilmington Trust Company

      Rodney
Square North

      1100
North Market Street

      Wilmington,
Delaware  19890-1605

      Fax:
(302) 636-4149

       

      The
Issuers or the Trustee, by notice to the others may designate additional or
different addresses for subsequent notices or communications.

       

      All
notices and communications (other than those sent to Holders) shall be deemed to
have been duly given:  at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when receipt acknowledged, if telecopied; and the next
Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.

       

      Any
notice or communication to a Holder shall be mailed by first class mail,
certified or registered, return receipt requested, or by overnight air courier
guaranteeing next day delivery to its address shown on the register kept by the
Registrar.  Any notice or communication shall also be so mailed to any
Person described in TIA § 313(c), to the extent required by the
TIA.  Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other
Holders.

       

      If a
notice or communication is mailed in the manner provided above within the time
prescribed, it is duly given, whether or not the addressee receives
it.

       

      If the
Issuers mail a notice or communication to Holders, it shall mail a copy to the
Trustee and each Agent at the same time.

       

      
        	
                Section 14.3.

              	
                Communication
      by Holders of Notes with Other Holders of
Notes.

              

      

       

      Holders
may communicate pursuant to TIA § 312(b) with other Holders with respect to
their rights under this Indenture or the Notes.  The Issuers, the
Trustee, the Registrar and anyone else shall have the protection of TIA
§ 312(c).

       

      
        	
                Section 14.4.

              	
                Certificate
      and Opinion as to Conditions
Precedent.

              

      

       

      Upon any
request or application by the Issuers and/or any Guarantor to the Trustee to
take any action under this Indenture, the Issuers and/or any Guarantor shall
furnish to the Trustee:

       

      

      
        
          
             

          

          
            -106-

            
              

            

          

          
            Table of Contents

          

        

      

      

      (a)           an
Officers’ Certificate in form and substance reasonably satisfactory to the
Trustee stating that, in the opinion of the signers, all conditions precedent
and covenants, if any, provided for in this Indenture relating to the proposed
action have been satisfied; and

       

      (b)           an
Opinion of Counsel in form and substance reasonably satisfactory to the Trustee
stating that, in the opinion of such counsel, all such conditions precedent and
covenants have been satisfied.

       

      
        	
                Section 14.5.

              	
                Statements
      Required in Certificate or Opinion.

              

      

       

      Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than a certificate provided pursuant to
TIA § 314(a)(4)) shall comply with the provisions of TIA § 314(e) and
shall include:

       

      (a)           a
statement that the Person making such certificate or opinion has read such
covenant or condition;

       

      (b)           a
brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion
are based;

       

      (c)           a
statement that, in the opinion of such Person, he or she has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and

       

      (d)           a
statement as to whether or not, in the opinion of such Person, such condition or
covenant has been satisfied.

       

      
        	
                Section 14.6.

              	
                Rules
      by Trustee and Agents.

              

      

       

      The
Trustee may make reasonable rules for action by or at a meeting of
Holders.  The Registrar or Paying Agent may make reasonable rules and
set reasonable requirements for its functions.

       

      
        	
                Section 14.7.

              	
                No
      Personal Liability of Directors, Managers, Officers, Employees, Members
      and Stockholders.

              

      

       

      No
director, officer, employee or member of Morris Publishing, Morris Finance, the
Guarantors, Morris Communications or any Subsidiary of any of them, as such,
will have any liability for any obligations under the Notes, this Indenture or
the Guarantees or for any claim based on, in respect of, or by reason of, those
obligations or their creation.  Each holder of the Notes by accepting
a Note waives and releases all such liability.  The waiver and release
are part of the consideration for issuance of each Note.  That waiver
may not be effective to waive liabilities under the federal securities laws, and
it is the view of the Commission that such a waiver is against public
policy.

       

      

      
        
          
             

          

          
            -107-

            
              

            

          

          
            Table of Contents

          

        

      

      
         

        
          	
                  Section 14.8.

                	
                  Governing
      Law; Submission to Jurisdiction; Waiver of Jury
  Trial.

                

        

      

       

      THIS
INDENTURE, THE GUARANTEES AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.  EACH OF
THE ISSUERS, THE GUARANTORS AND THE TRUSTEE HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS INDENTURE, THE GUARANTEES AND THE NOTES, AND IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS.  EACH OF THE
ISSUERS, THE GUARANTORS AND THE TRUSTEE IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT THAT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE
TRUSTEE OR ANY HOLDER OF THE NOTES TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE ISSUERS OR ANY GUARANTOR IN ANY OTHER JURISDICTION.

       

      
        	
                Section 14.9.

              	
                No
      Adverse Interpretation of Other
Agreements.

              

      

       

      This
Indenture may not be used to interpret any other indenture, loan or debt
agreement of Morris Publishing or its Subsidiaries or of any other
Person.  Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.

       

      
        	
                Section 14.10.

              	
                Successors.

              

      

       

      All
agreements of the Issuers in this Indenture and the Notes shall bind their
successors. All agreements of the Trustee in this Indenture shall bind its
successors.

       

      
        	
                Section 14.11.

              	
                Severability.

              

      

       

      In case
any provision in this Indenture or in the Notes shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

       

      
        	
                Section 14.12.

              	
                Counterpart
      Originals.

              

      

       

      The
parties may sign any number of copies of this Indenture.  Each signed
copy shall be an original, but all of them together represent the same
agreement.

       

      

      
        
          
             

          

          
            -108-

            
              

            

          

          
            Table of Contents

          

        

      

      
         

        
          	
                  Section 14.13.

                	
                  Table
      of Contents, Headings, Etc.

                

        

                         

      

      The Table
of Contents, Cross-Reference Table and Headings of the Articles and Sections of
this Indenture, which have been inserted for convenience of reference only, are
not to be considered a part of this Indenture and shall in no way modify or
restrict any of the terms or provisions hereof.

       

      [Signatures
on following page]

       

      

      
        
          
             

          

          
            -109-

            
              

            

          

          
            Table of Contents

          

        

      

      

      SIGNATURES

       

      
        	 
      	 
      
	
                MORRIS
      PUBLISHING GROUP, LLC

              
	 
      	 
      
	 
      	 
      
	
                By:

              	 
      
	 
      	
                Name:
      Craig S. Mitchell

              
	 
      	
                Title:
      Senior Vice President, Finance

              
	 
      	 
      
	 
      	 
      
	
                MORRIS
      PUBLISHING FINANCE CO.

              
	 
      	 
      
	 
      	 
      
	
                By:

              	 
      
	 
      	
                Name:
      Craig S. Mitchell

              
	 
      	
                Title:
      Senior Vice President, Finance

              
	 
      	 
      
	 
      	 
      
	 
      	 
      

      

       

      

      
        
          
             

          

          
            -110-

            
              

            

          

          
            Table of Contents

          

        

      

      

       

       

      
        	 
      
	
                YANKTON
      PRINTING COMPANY

                BROADCASTER
      PRESS, INC.

                THE
      SUN TIMES, LLC

                HOMER
      NEWS, LLC

                LOG
      CABIN DEMOCRAT, LLC

                ATHENS
      NEWSPAPERS, LLC

                SOUTHEASTERN
      NEWSPAPERS COMPANY, LLC

                STAUFFER
      COMMUNICATIONS, INC.

                FLORIDA
      PUBLISHING COMPANY

                THE
      OAK RIDGER, LLC

                MPG
      ALLEGAN PROPERTY, LLC

                MPG
      HOLLAND PROPERTY, LLC

              
	 
      	 
      
	 
      	 
      
	
                By:

              	 
      
	 
      	
                Name:
      Craig S. Mitchell

              
	 
      	
                Title:
      Senior Vice President, Finance

              
	 
      	 
      
	 
      	 
      
	
                SOUTHWESTERN
      NEWSPAPERS COMPANY, L.P.

              
	 
      	 
      
	
                By:

              	
                Morris
      Publishing Group, LLC

                its
      General Partner

              
	 
      	 
      
	 
      	 
      
	
                By:

              	 
      
	 
      	
                Name:
      Craig S. Mitchell

              
	 
      	
                Title:
      Senior Vice President, Finance

              
	 
      	 
      
	 
      	 
      
	
                WILMINGTON
      TRUST FSB,

                solely
      as Trustee and Collateral Agent

              
	 
      	 
      
	 
      	 
      
	
                By:

              	 
      
	 
      	
                Name:
      Patrick J. Healy   

              
	 
      	
                Title:
      Vice President

              

      

      
 

      
        
          
             

          

          
            -111-

            
              

            

          

          
            Table of Contents

          

        

      

      

      SCHEDULE A

       

      GUARANTORS

       

       

      Yankton
Printing Company

       

      Broadcaster
Press, Inc.

       

      The Sun
Times, LLC

       

      Homer
News, LLC

       

      Log Cabin
Democrat, LLC

       

      Athens
Newspapers, LLC

       

      Southeastern
Newspapers Company, LLC

       

      Stauffer
Communications, Inc.

       

      Florida
Publishing Company

       

      Southwestern
Newspapers Company, L.P.

       

      The Oak
Ridger, LLC

       

      MPG
Allegan Property, LLC

       

      MPG
Holland Property, LLC

       

      

      
        
          
             

          

          
            -110-

            
              

            

          

          
            Table of Contents

          

        

      

      

      SCHEDULE B

       

      LIST
OF ACCEPTABLE FINANCIAL INSTITUTIONS

       

      
        	
                1.

              	
                Amarillo
      National Bank, P.O. Box 1, Amarillo, TX
79105

              

      

       

      
        	
                2.

              	
                Bank
      of America, N.A., 800 5th
      Avenue, Mail Code WA1-501-08-21, Seattle, WA
  98104

              

      

       

      
        	
                3.

              	
                First
      National Bank Alaska, 1751 Gamble Street, Anchorage, AK
    99510

              

      

       

      
        	
                4.

              	
                Synovus
      Financial Corp., P.O. Box 120, Columbus, GA 31902, for itself and on
      behalf of all of its affiliates, including, but not limited to, Columbus
      Bank and Trust Company, 1148 Broadway, Columbus, GA
  31901

              

      

       

      
        	
                5.

              	
                Wachovia
      Bank, National Association, Mail Address Code 1129-072, 301 South Tryon
      Street, Floor M-7, Charlotte, NC
28288

              

      

       

      
        	
                6.

              	
                Wells
      Fargo Bank, National Association, Mail Address Code N1794-013, 101 North
      Phillips Avenue, 1st
      Floor, Sioux Falls, SD 57104

              

      

       

      

      
        
          
             

          

          
            -111-

            
              

            

          

          
            Table of Contents

          

        

      

      

      
SCHEDULE
C

       

      LIST
OF PROPERTIES SUBJECT TO A MORTGAGE

       

       

      
        	 
      	
                Property
      Owner Name

              	
                Property
      Location

              	
                Municipal
      Address of Property

              
	 
      	 
      	 
      	 
      
	
                1.

              	
                Southeastern
      Newspapers Company, LLC

                 

              	
                Juneau,
      AK

              	
                3100
      Channel Drive, Juneau, AK

              
	
                2.

              	
                Athens
      Newspapers, LLC

                 

              	
                Clarke
      County, GA

              	
                1
      Press Place, Athens, GA 30601

              
	
                3.

              	
                Southeastern
      Newspapers Company, LLC

              	
                Richmond
      County, GA

              	
                721,
      723, 725-731 & 735-737 Broad Street, 712-718 Reynolds Street and 127
      Seventh Street, Augusta, GA 30901

                 

              
	
                4.

              	
                Morris
      Publishing Group, LLC

              	
                Shawnee
      County, KS

              	
                616
      Jefferson Street, Topeka, KS 66606

                 

              
	
                5.

              	
                Morris
      Publishing Group, LLC

              	
                Crow
      Wing County, MN

              	
                506
      James Street NW, Brainerd, MN 56401

                 

              
	
                6.

              	
                Southwestern
      Newspapers Company, LP

              	
                Potter
      County, TX

              	
                909
      South Van Buren & 900 South Harrison Street, Amarillo, TX
      79101

                 

              
	
                7.

              	
                Southwestern
      Newspapers Company, LP

              	
                Lubbock
      County, TX

              	
                702
      & 707 Avenue J, Lubbock, TX 79401

                 

              
	
                8.

              	
                Morris
      Publishing Group, LLC

              	
                St.
      Johns County, FL

              	
                1
      News Place, St. Augustine, FL 32086

                 

              
	
                9.

              	
                Morris
      Publishing Group, LLC

              	
                Duval
      County, FL

              	
                1
      Riverside Avenue, Jacksonville, FL
32202

              

      

      

      
        
          
             

          

          
            -112-

            
              

            

          

          
            Table of Contents

          

        

      

      

      EXHIBIT A1

       

      FORM
OF NOTE

       

       

      (Face of
Note)

       

      MORRIS
PUBLISHING GROUP, LLC

       

      MORRIS
PUBLISHING FINANCE CO.

       

      FLOATING
RATE SECURED NOTE DUE 2014

       

      [THIS
NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED
TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR
A SUCCESSOR DEPOSITARY.  THIS NOTE IS NOT EXCHANGEABLE FOR NOTES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER
OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE INDENTURE.

       

      UNLESS THIS NOTE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW
YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE, OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.]2

       

      

        

      

      
 

        1 NTD:
Sections of the Note that track Indenture will be conformed to Indenture upon
its finalization.

         

      

      
 

        2      To
be included only if the Note is issued in global form.

         

      

      

      
        
          
             

          

          
            A-1

            
              

            

          

          
            Table of Contents

          

        

      

      

      MORRIS
PUBLISHING GROUP, LLC

       

      MORRIS
PUBLISHING FINANCE CO.

       

      FLOATING
RATE SECURED NOTE DUE 2014

       

      
        	 
      	
                CUSIP
      No. _______

              
	
                No.___________

              	
                $________________

              

      

       

      Interest
Payment Dates:  January 1, April 1, July 1, October 1

       

      Record
Dates:  December 15, March 15, June 15, September 15

       

       

      MORRIS PUBLISHING GROUP,
LLC, a Georgia limited liability company (the “Company”),
and MORRIS PUBLISHING FINANCE CO., a Georgia corporation (“Morris
Finance” and, together with the Company, the “Issuers,”
which term includes any successor entity under the Indenture hereinafter
referred to), as joint and several obligors, for value received, promise to pay
to CEDE & CO., or registered assigns, the principal sum of ______________
Dollars on September 1, 2014.3

       

      Reference
is hereby made to the further provisions of this Note set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as
set forth at this place.

       

      Unless
the certificate of authentication hereon has been executed by the Trustee
referred to on the reverse hereof by manual signature, this Note shall not be
entitled to any benefits under the Indenture referred to on the reverse hereof
or be valid or obligatory for any purpose.

       

      [Signatures
on following page]

       

      

        

      

      
 

        3 NTD:
Maturity date to be 4 years and 6 months after issuance.

         

      

      

      
        
          
             

          

          
            A-2

            
              

            

          

          
            Table of Contents

          

        

      

      

      IN
WITNESS WHEREOF, the Issuers have caused this Note to be duly
executed.

       

      
        	 
      
	
                MORRIS
      PUBLISHING GROUP, LLC

              
	 
      	 
      
	 
      	 
      
	
                By:

              	 
      
	 
      	
                Name:

              
	 
      	
                Title:

              
	 
      	 
      
	 
      	 
      
	
                By:

              	 
      
	 
      	
                Name:

              
	 
      	
                Title:

              
	 
      	 
      
	 
      	 
      
	
                MORRIS
      PUBLISHING FINANCE CO.

              
	 
      	 
      
	 
      	 
      
	
                By:

              	 
      
	 
      	
                Name:

              
	 
      	
                Title:

              
	 
      	 
      
	 
      	 
      
	
                By:

              	 
      
	 
      	
                Name:

              
	 
      	
                Title:

              

      

       

      

      
        
          
             

          

          
            A-3

            
              

            

          

          
            Table of Contents

          

        

      

      

      CERTIFICATE
OF AUTHENTICATION

       

      This is
one of the Floating Rate Secured Notes due 2014 referred to in the
within-mentioned Indenture.

       

       

      
        	 
      	
                WILMINGTON
      TRUST FSB,

                as
      Trustee

              
	 
      	 
      
	 
      	 
      
	 
      	
                By:

                Authorized
      Signatory

              
	 
      	 
      
	 
      	 
      
	
                Dated:

              	 
      

      

       

      

      
        
          
             

          

          
            A-4

            
              

            

          

          
            Table of Contents

          

        

      

      

      (Back of
Note)

       

      Floating
Rate Secured Notes due 2014

       

      Capitalized
terms used herein shall have the meanings assigned to them in the Indenture
referred to below unless otherwise indicated.

       

      1.           Interest.  The
Issuers promise to pay interest on the principal amount of this Note in
accordance with the following terms:

       

      (a)           during
such time that any Refinanced Debt is outstanding, this Note shall accrue
interest (the “Refinance
Term Interest”) at the aggregate rate of 5% plus
the highest regular interest rate payable on such Refinanced Debt, provided
that in any event, the Refinance Term Interest shall not be lower than 10% per
annum.  During the period when Refinance Term Interest is accruing on
this Note, such Refinance Term Interest shall be payable 50% in cash, payable
quarterly in arrears, and 50% as PIK Interest, compounded quarterly in
arrears.  By way of example, if the Refinanced Debt has a per annum
interest rate of 7%, the per annum interest rate of this Note shall be 12% and
shall be payable 6% in cash and 6% in PIK Interest; and

       

      (b)           during
such time that no Refinanced Debt is outstanding, this Note shall accrue cash
interest at the rate of 10% per annum, payable quarterly in arrears, until
maturity.

       

      The
Issuers will pay interest quarterly on January 1, April 1, July 1, and October 1
each year, or if any such day is not a Business Day, on the next succeeding
Business Day (each an “Interest
Payment Date”).  Interest on the Note will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from the date of issuance; provided
that if there is no existing Default in the payment of interest, and if this
Note is authenticated between a record date referred to on the face hereof and
the next succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided,
further,
that the first Interest Payment Date shall be April 1, 2010.  The
Issuers shall pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) during any period in which an Event of Default has
occurred and is continuing (including any interest on overdue principal,
Redemption Price and Purchase Price and on overdue installments of interest
(without regard to any applicable grace period)) at the rate equal to 2% per
annum in excess of the then applicable interest rate on the Notes to the extent
lawful, which excess rate shall be paid in cash.  Interest will be
computed on the basis of a 360-day year of twelve 30-day months.

       

      2.           
Method
of Payment.  The Issuers will pay interest on the Notes (except
defaulted interest) to the Persons who are registered Holders of Notes at the
close of business on December 15, March 15, June 15, and September 15 next
preceding the Interest Payment Date, even if such Notes are canceled after such
record date and on or before such Interest Payment Date, except as provided in
Section 2.12 of the Indenture with respect to defaulted interest.  Any
such installment of interest not punctually paid or duly provided for shall
forthwith cease to be payable to the registered Holders on such Interest Payment
Date, and may be paid to the registered Holders at the close of business on a
special interest payment date to be fixed by the Trustee for the payment of such
defaulted interest, notice whereof shall be given to the registered Holders not
less than 10 days prior to such special interest payment date, or may be paid at
any time in any other lawful manner not inconsistent with

       

      

      
        
          
             

          

          
            A-5

            
              

            

          

          
            Table of Contents

          

        

      

      

       the
requirements of any securities exchange on which the Notes may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
in the Indenture.  The Notes will be payable as to principal,
Redemption Price, Purchase Price, interest (whether cash interest or PIK
Interest, subject to the next paragraph), at the office or agency of the Issuers
maintained for such purpose within or without the City and State of New York,
or, at the option of the Issuers, payment of interest may be made by check
mailed to the Holders at their addresses set forth in the register of Holders,
provided
that payment by wire transfer of immediately available funds will be required
with respect to principal, Redemption Price and Purchase Price of, and cash
interest on, all Global Notes and all other Notes the Holders of which shall
have provided wire transfer instructions to the Trustee or the Paying
Agent.  Such payment shall be in such coin or currency of the United
States as at the time of payment is legal tender for payment of public and
private debts.

       

      All PIK
Interest payable pursuant to this Note will be payable by [increasing the
principal amount of this Note by an amount equal to the amount of PIK Interest
for the applicable quarterly interest period (rounded up to the nearest whole
dollar) (or, if necessary, pursuant to requirements of the Depositary or
otherwise, to authenticate a new Global Note executed by the Issuers with such
increased principal amount)]4  [issuing additional Notes in an
aggregate principal amount equal to the amount of PIK Interest for the
applicable interest period (rounded up to the nearest whole dollar) and the
Trustee will, at the request of the Issuers, authenticate and deliver such PIK
Notes for original issuance to the Holder of this Note on the relevant record
date]5.  If the Company is required to pay
PIK Interest on any Interest Payment Date it must deliver, not less than 45 days
prior to such Interest Payment Date, an authentication order to the Trustee
specifying the aggregate amount of PIK Interest to be paid through increases in
the Global Note and through the issuance of additional Notes; provided,
that the Issuers shall deliver an updated authentication order on the day
preceding an Interest Payment Date to the extent modifications in the amount of
PIK Interest to be paid are needed in accordance with the terms of the Indenture
due to the continuation or cessation of an Event of Default.  On the
relevant Interest Payment Date, the Trustee shall, at the request of the
Issuers, record increases in the Global Note and authenticate additional Notes,
as appropriate, in the aggregate principal amounts required to pay the PIK
Interest then due.

       

      3.           
Paying
Agent and Registrar.  Initially, Wilmington Trust FSB, the
Trustee under the Indenture, will act as Paying Agent and
Registrar.  The Issuers may change any Paying Agent or Registrar
without notice to any Holder.  The Issuers may act in any such
capacity so long as no Event of Default has occurred and is
continuing.

       

      4.           
Indenture
and Guarantees; Security Documents and Intercreditor
Agreement.  The Issuers are issuing the Notes on the Issue Date
under an Indenture dated as of March 1, 2010 (the “Indenture”)
among the Issuers, the Guarantors, the Trustee and the Collateral
Agent.  The terms of the Notes include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S.C. Code §§ 77aaa-77bbbb).

       

      

        

      

      
 

        4      For
Global Notes only.

         

      

      
 

        5      For
Certificated Notes only.

         

      

      

      
        
          
             

          

          
            A-6

            
              

            

          

          
            Table of Contents

          

        

      

      

      The Notes
are subject to all such terms, and Holders are referred to the Indenture and
such Act for a statement of such terms.  The Notes are general
obligations of the Issuers.  Payment on each Note is guaranteed on a
secured basis, jointly and severally, by the Guarantors pursuant to Article XI
of the Indenture.  The Notes are secured by the Collateral as set
forth in the Security Documents, subject to the terms of the Intercreditor
Agreement.

       

      5.           
Optional
Redemption.  The Issuers may redeem any or all of the Notes at
any time, upon not less than 30 nor more than 60 days’ prior notice in amounts
of $1,000 or an integral multiple thereof at the Redemption Prices (expressed as
a percentage of the principal amount) set forth below, if redeemed during the
12-month period beginning on the Issue Date or the anniversary of the Issue Date
of the years indicated below:

       

      
        	
                Year

              	
                Redemption
      Price

              
	 
      	 
      
	
                2010

              	
                103.000%

              
	
                2011

              	
                102.000%

              
	
                2012

              	
                101.000%

              
	
                2013
      and thereafter

              	
                100.000%

              

      

       

      in each
case together with accrued and unpaid interest on the Notes redeemed to the
Redemption Date.

       

      If less
than all the Notes are to be redeemed, the Trustee will select the particular
Notes or portions thereof to be redeemed by lot, pro
rata or by any other method the Trustee shall deem fair and
appropriate.

       

      6.           Repurchase
upon Application of Excess Proceeds.

       

      (a)           Not
later than the 17th Business Day of each month (each an “Excess
Cash Flow Payment Date”), commencing on the first full calendar month
following the Issue Date, if the Issuers have Excess Free Cash Flow for the
one-month period ended on the last day of the previous month (each such
period,  “Excess
Cash Flow Period”), the Company shall apply an amount equal to 100% of
the amount of such Excess Free Cash Flow to amortize outstanding Indebtedness,
including accrued interest, fees and all other amounts owing thereon, in the
following priority, (i) Indebtedness under the Working Capital Facility, (ii)
Indebtedness under the Refinanced Debt (if applicable); and (iii) Indebtedness
under the Tranche B Loan and to redeem the Notes on a pro
rata
basis; provided that the order of priority as between the indebtedness described
in clauses (i) and (ii) may be reversed in accordance with the terms of such
indebtedness.  The Notes shall be redeemed at a redemption price of
100% of the aggregate principal amount of the Notes redeemed plus accrued and
unpaid interest to the date of redemption.

       

      (b)           
Any prepayment pursuant to this Paragraph 6 shall be made pursuant to the
provisions of Sections 3.2 through 3.6 and Section 3.11 of the
Indenture.

       

      7.           Notice
of Redemption.  Subject to the provisions of the Indenture, a
notice of redemption will be mailed by first-class mail at least 30 days but not
more than 60 days 

       

      

      
        
          
             

          

          
            A-7

            
              

            

          

          
            Table of Contents

          

        

      

      

      (or 45
days in the case of mandatory redemption) before the Redemption Date to each
Holder whose Notes are to be redeemed at its registered address; provided, that
in the case of a redemption pursuant to Section 3.11 of the Indenture, the
notice of redemption shall be mailed as soon as practicable before the
Redemption Date.  Notes in denominations larger than $1,000 may be
redeemed in part but only in whole multiples of $1,000, unless all of the Notes
held by a Holder are to be redeemed.  On and after the redemption date
interest ceases to accrue on Notes or portions thereof called for redemption;
provided, that in the case of a redemption pursuant to Section 3.11 of the
Indenture, the principal amount of Notes to be redeemed or repurchased shall be
in amounts of $1.00 or integral multiples of $1.00.

       

      8.           
Repurchase
at Option of Holder.  Sections 3.9, 4.10 and 4.21 of the
Indenture provide that after an Event of Loss, an Asset Sale, or upon the
occurrence of a Change of Control, and subject to further limitations contained
therein, the Issuers shall make an offer to purchase certain amounts of Notes at
a purchase price, in cash, equal to 101% of the aggregate principal amount of
Notes repurchased, plus accrued and unpaid interest on the Notes, to the
repurchase date, in accordance with the procedures set forth in the
Indenture.

       

      9.           
Denominations,
Transfer, Exchange.  The Notes are in registered form without
coupons and issued in integral multiples of $1.00 (in each case with a minimum
denomination of at least $1.00).  The transfer of Notes may be
registered and Notes may be exchanged as provided in the
Indenture.  The Registrar and the Trustee may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and the
Issuers may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture.  The Issuers need not exchange or register
the transfer of any Note or portion of a Note selected for redemption, except
for the unredeemed portion of any Note being redeemed in part.  Also,
it need not exchange or register the transfer of any Notes for a period of 15
days before a selection of Notes to be redeemed or during the period between a
record date and the corresponding interest payment date.

       

      10.          Persons
Deemed Owners.  The registered Holder of a Note may be treated
as its owner for all purposes.

       

      11.          Amendment,
Supplement and Waiver.  Subject to certain exceptions, the
Indenture, the Notes and the Guarantees may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount of the then
outstanding Notes, and any existing default or compliance with any provision of
the Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes.  Without
the consent of any Holder of a Note, the Indenture, the Notes and the Guarantees
may be amended or supplemented to cure any ambiguity, defect or inconsistency,
to provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Issuers’ or any Guarantor’s
obligations to Holders of the Notes in case of a merger or consolidation, to
make any change that would provide any additional rights or benefits to the
Holders of the Notes or that does not adversely affect the legal rights under
the Indenture of any such Holder, or to comply with the requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act.

       

      

      
        
          
             

          

          
            A-8

            
              

            

          

          
            Table of Contents

          

        

      

      

      12.          Defaults
and Remedies.  Events of Default include:  (i)
default for 30 days in the payment when due of interest, on the Notes; (ii) the
failure to pay the principal on any Notes, when such principal becomes due and
payable at maturity, upon redemption, repurchase or otherwise (including the
failure to make a payment to purchase Notes tendered pursuant to a Change of
Control Offer, Net Proceeds Offer or an Event of Loss Offer); (iii) default of
any covenant contained in the Indenture for 30 days after notice to Morris
Publishing by the Trustee or the Holders of at least 25% of the aggregate
principal amount of the Notes outstanding (except in the case of a default with
respect to Sections 3.9, 4.10, 4.21 and 5.1 of the Indenture which will
constitute an Event of Default with such notice requirement but without the
passage of time requirement); (iv) the failure to pay at final maturity (giving
effect to any applicable grace periods and any extensions thereof) the stated
principal amount of any Indebtedness of Morris Publishing or any Restricted
Subsidiary of Morris Publishing, or the acceleration of the final stated
maturity of any such Indebtedness (which acceleration is not rescinded, annulled
or otherwise cured within 20 days of receipt by Morris Publishing or such
Restricted Subsidiary of notice of any such acceleration) if the aggregate
principal amount of such Indebtedness is $5.0 million or more or the aggregate
amount of such Indebtedness, together with the principal amount of any other
such Indebtedness in default for failure to pay principal at final stated
maturity or which has been accelerated (in each case with respect to which the
20-day period described above has elapsed), aggregates $10.0 million or more at
any time; (v) certain final judgments for the payment of money that remain
undischarged for a period of 60 days, provided that the aggregate of all such
undischarged judgments exceeds $10.0 million; (vi) certain events of bankruptcy
or insolvency with respect to the Morris Publishing, Morris Finance or any
Significant Subsidiary of Morris Publishing, (vii) any Guarantee of a
Significant Subsidiary ceases to be in full force and effect or any Guarantee of
a Significant Subsidiary is declared to be null and void and unenforceable or
any Guarantee of a Significant Subsidiary is found to be invalid or any
Guarantor that is a Significant Subsidiary denies its liability under its
Guarantee (other than by reason of release of a Guarantor in accordance with the
terms of the Indenture), (viii) the actual or asserted invalidity or impairment
of any material provision in the Indenture or any other Indenture Document
delivered in connection with the Issuance of the Notes or pursuant to the
Indenture, (ix) (a) the Liens created by the Security Documents shall at any
time not constitute a valid and perfected Lien on the Collateral intended to be
covered thereby (to the extent perfection by filing, registration, recordation
or possession is required herein or therein) in favor of the Collateral Agent,
free and clear of all other Liens (other than Liens permitted under the
Indenture and under the respective Security Documents), (b) except for
expiration in accordance with its terms, any of the Security Documents shall for
whatever reason be terminated or cease to be in full force and effect, or (c)
the enforceability thereof shall be contested by Morris Publishing, Morris
Finance or any Guarantor; (x) the interest rate payable on the Refinanced Debt
exceeds LIBOR plus 970 basis points, as calculated on a per annum basis,
provided that if the Refinanced Debt bears a fixed rate of interest, such
determination shall be made on the date such Refinanced Debt is incurred; (xi)
any Obligor or Restricted Subsidiary makes a payment of cash interest on the
Tranche B Loan or makes any principal payment on, purchases, redeems, prepays or
otherwise acquires for cash, any portion of the Tranche B Loan prior to the
payment in full in cash of the Obligations under the Indenture, except as
expressly provided in this Indenture or in connection with the Required
Refinancing.

       

      If any Event of Default
(other than those arising from certain events of bankruptcy or insolvency
described in the Indenture) occurs and is continuing, the Trustee or the

      
 

      
        
          
             

          

          
            A-9

            
              

            

          

          
            Table of Contents

          

        

      

      

      Holders
of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately; provided, however, that
if there are any amounts outstanding under the Refinanced Debt, if applicable,
the Notes shall not become due and payable until the first to occur of (i) an
acceleration under the Refinanced Debt, if applicable and (ii) five Business
Days after receipt by Morris Publishing and the representative under the
Refinanced Debt, if applicable, of such acceleration notice but only if such
Event of Default is then continuing.  Upon any such declaration, the
entire principal amount of, and accrued and unpaid interest, on the Notes shall
become immediately due and payable.  Notwithstanding the foregoing, in
the case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Notes will become due and payable without further
action or notice.  Holders may not enforce the Indenture or the Notes
except as provided in the Indenture.  Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power.  The Trustee
may withhold from Holders of the Notes notice of any continuing Default or Event
of Default (except a Default or Event of Default relating to payment on any
Note) if it determines that withholding notice is in their
interest.  The Holders of a majority in principal amount of the Notes
may waive any existing or past Default or Event of Default under the Indenture,
and its consequences, except a default in the payment of the principal of, or
interest on any Notes.  The Issuers are required to deliver to the
Trustee annually a statement regarding compliance with the Indenture, and the
Issuers are required upon becoming aware of any Default or Event of Default, to
deliver to the Trustee a statement specifying such Default or Event of
Default.

       

      13.           Trustee
Dealings with the Issuers.  Subject to certain limitations, the
Trustee under the Indenture, in its individual or any other capacity, may become
owner or pledgee of Notes and may otherwise deal with the Issuers or their
Affiliates as if it were not Trustee.

       

      14.           No
Recourse Against Others.  No past, present or future director,
manager, officer, employee, incorporator (or Person forming any limited
liability company), agent, member or stockholder of the Issuers, as such, shall
have any liability for any obligations of the Issuers under the Notes, the
Guarantees or the Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation.  Each Holder by
accepting a Note waives and releases all such liability.  The waiver
and release are part of the consideration for the issuance of the
Notes.

       

      15.           Authentication.  This
Note shall not be valid until authenticated by the manual signature of the
Trustee or an authenticating agent.

       

      16.           Abbreviations.  Customary
abbreviations may be used in the name of a Holder or an assignee, such
as:  TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).

       

      17.           Discharge
Prior to Maturity.  If the Issuers deposit with the Trustee or
Paying Agent cash or U.S. Government Securities sufficient to pay the principal
or Redemption Price of, and interest on, the Notes to maturity or a specified
Redemption Date and satisfies certain conditions specified in the Indenture, the
Issuers will be discharged from the Indenture, except for certain Sections
thereof.

       

      

      
        
          
             

          

          
            A-10

            
              

            

          

          
            Table of Contents

          

        

      

      

      18.           Governing
Law.  The Indenture, the Guarantees and this Note shall be
governed by and construed in accordance with the laws of the State of New York
but without giving effect to applicable principles of conflicts of law to the
extent that the application of the law of another jurisdiction would be required
thereby.  Each of the Issuers, the Guarantors and the
Trustee  irrevocably submits to the jurisdiction of any New York state
court sitting in the Borough of Manhattan in the City of New York or any federal
court sitting in the Borough of Manhattan in the City of New York in respect of
any suit, action or proceeding arising out of or relating to the Indenture and
the Notes, and irrevocably accept for itself and in respect of its property,
generally and unconditionally, jurisdiction of the aforesaid
courts.  Each of the Issuers, the Guarantors and the Trustee
irrevocably waives, to the fullest extent that it may effectively do so under
applicable law, trial by jury and any objection which it may now or hereafter
have to the laying of the venue of any such suit, action or proceeding brought
in any such court and any claim that any such suit, action or proceeding brought
in any such court has been brought in an inconvenient forum.  Nothing
herein shall affect the right of the Trustee or any Holder of the Notes to serve
process in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against the Issuers or any Guarantor in any other
jurisdiction.

       

      19.           CUSIP
Numbers.  Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuers have caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders.  No
representation is made as to the correctness or accuracy of such numbers either
as printed on the Notes or as contained in any notice of redemption or
repurchase and reliance may be placed only on the other identification numbers
placed thereon.

       

      The
Issuers will furnish to any Holder upon written request and without charge a
copy of the Indenture.  Request may be made to:

       

      Morris
Publishing Group, LLC

      725 Broad
Street

      Augusta,
Georgia 30901

      Attention:  Craig
S. Mitchell

       

      

      
        
          
             

          

          
            A-11

            
              

            

          

          
            Table of Contents

          

        

      

      

      ASSIGNMENT
FORM

       

      To assign
this Note, fill in the form below:

       

      (I) or
(we) assign and transfer this Note to

       

      
        	 
      
	 
      
	
                (Insert
      assignee’s soc. sec. or tax I.D. no.)

              
	 
      
	 
      
	 
      
	 
      
	 
      
	 
      
	 
      
	 
      
	 
      
	 
      
	
                (Print
      or type assignee’s name address and zip code)

              
	 
      
	
                and
      irrevocably appoint

              	 
      
	
                agent
      to transfer this Note on the books of the Issuers.  The agent
      may substitute another to act for
him.

              

      

       

      
        	
                Date:

              	 
      	 
      	
                Your
      Signature:

              	 
      
	 
      	 
      	 
      	 
      	
                (Sign
      exactly as your name appears on the face of this Note)

              
	 
      	 
      	 
      	 
      	 
      
	
                Signature
      Guarantee:

              	 
      
	 
      	
                (Participant
      in recognized signature guarantee medallion
  program)

              

      

      
 

      
        
          
             

          

          
            A-12

            
              

            

          

          
            Table of Contents

          

        

      

      

      OPTION
OF HOLDER TO ELECT PURCHASE

       

      If you
elect to have all or any portion of this Note purchased by the Issuers pursuant
to Section 3.9 (“Change
of Control Offer”), Section 4.10 (“Net
Proceeds Offer”) or Section 4.21 (“Net
Loss Offer”) of the Indenture, check the applicable boxes:

       

      
        	 
      	
                 

              	
                Net
      Loss or Net Proceeds Offer:

              	 
      	
                 

              	
                Change
      of Control Offer:

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                in
      whole

              	
                 

              	 
      	 
      	
                in
      whole

              	
                 

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                in
      part

              	
                 

              	 
      	 
      	
                in
      part

              	
                 

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                Amount
      to be purchased: $

              	 
      	 
      	 
      	
                Amount
      to be purchased: $

              	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                Dated:

              	 
      	 
      	 
      	
                Signature:

              	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	
                (Sign
      exactly as your name appears on the face of this Note)

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                Signature
      Guarantee:

              	 
      
	 
      	 
      	
                (Participant
      in recognized signature guarantee medallion program)

              
	 
      	 
      	 
      
	 
      	
                Social
      Security Number or

                Taxpayer
      Identification Number:

              	 
      

      

       

       

      

      
        
          
             

          

          
            A-13

            
              

            

          

          
            Table of Contents

          

        

      

      

      SCHEDULE
OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*

       

      The
following exchanges of a part of this Global Note for an interest in another
Global Note or for a Certificated Note, or exchanges of a part of another Global
Note or Certificated Note for an interest in this Certificated Note or increases
for a payment of PIK Interest, have been made:

       

      
        	
                Date
      of

                Exchange

              	
                Amount
      of

                decrease

                in
      Principal

                Amount

              	
                Amount
      of increase

                in
      Principal

                Amount
      of this

                Global
      Note

              	
                Principal
      Amount

                of
      this

                Global
      Note

                following
      such

                decrease
      or

                increase

              	
                Signature
      of

                authorized

                officer

                of
      Trustee or

                Custodian

              
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      

      

      _____________________________

      *This
schedule should be included only if the Note is issued in global
form.

       

      

      
        
          
             

          

          
            A-14

            
              

            

          

          
            Table of Contents

          

        

      

      

      EXHIBIT B

       

      GUARANTEE

       

      For value
received, the undersigned hereby unconditionally guarantees, as principal
obligor and not only as a surety, to the Holder of this Note the cash payments
in United States dollars of principal of, premium, if any, and interest on this
Note in the amounts and at the times when due and interest on the overdue
principal, premium, if any, and interest, if any, of this Note, if lawful, and
the payment or performance of all other Obligations of the Issuers under the
Indenture (as defined below) or the Note, to the Holder of this Note and the
Trustee, all in accordance with and subject to the terms and limitations of this
Note, Article XI of the Indenture and this Guarantee.  This Guarantee
will become effective in accordance with Article XI of the Indenture and its
terms shall be evidenced therein.  The validity and enforceability of
this Guarantee shall not be affected by the fact that it is not affixed to any
particular Note.  Capitalized terms used but not defined herein shall
have the meanings ascribed to them in the Indenture dated as of March 1, 2010
among Morris Publishing Group, LLC, a Georgia limited liability company (the
“Company”)
and Morris Publishing Finance Co., a Georgia corporation (“Morris
Finance” and, together with the Company, the “Issuers”),
as joint and several obligors, each of the Guarantors named therein and
Wilmington Trust FSB, as trustee (the “Trustee”)
and  collateral agent (as amended or supplemented, the “Indenture”).

       

      THIS
GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF
CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.  Each Guarantor hereby
agrees to submit to the jurisdiction of the courts of the State of New York in
any action or proceeding arising out of or relating to this
Guarantee.

       

      [Signatures
on following page]

       

      

      
        
          
             

          

          
            B-1

            
              

            

          

          
            Table of Contents

          

        

      

      

      This
Guarantee is subject to release upon the terms set forth in the
Indenture.

       

      
        	 
      
	
                YANKTON
      PRINTING COMPANY

                BROADCASTER
      PRESS, INC.

                THE
      SUN TIMES, LLC

                HOMER
      NEWS, LLC

                LOG
      CABIN DEMOCRAT, LLC

                ATHENS
      NEWSPAPERS, LLC

                SOUTHEASTERN
      NEWSPAPERS COMPANY, LLC

                STAUFFER
      COMMUNICATIONS, INC.

                FLORIDA
      PUBLISHING COMPANY

                THE
      OAK RIDGER, LLC

                MPG
      ALLEGAN PROPERTY, LLC

                MPG
      HOLLAND PROPERTY, LLC

              
	 
      	 
      
	 
      	 
      
	
                By:

              	 
      
	 
      	
                Name:
      Craig S. Mitchell

              
	 
      	
                Title:
      Senior Vice President, Finance

              
	 
      	 
      
	 
      	 
      
	
                SOUTHWESTERN
      NEWSPAPERS COMPANY, L.P.

              
	 
      	 
      
	
                By:

              	
                Morris
      Publishing Group, LLC

                its
      General Partner

              
	 
      	 
      
	 
      	 
      
	
                By:

              	 
      
	 
      	
                Name:
      Craig S. Mitchell

              
	 
      	
                Title:
      Senior Vice President, Finance

              
	 
      	 
      

      

      
 

      
        
          
             

          

          
            B-2

            
              

            

          

          
            Table of
Contents

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00169-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00169-of-00352.parquet"}]]