KMART CORP, S-3/A, 1994-08-18

KMART CORP
S-3/A, 1994-08-18
VARIETY STORES

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<PAGE> 1

As filed with the Securities and Exchange Commission on August 17, 1994

REGISTRATION NO. 33-54043
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------

AMENDMENT NO. 2

TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
KMART CORPORATION
(Exact Name of Registrant as Specified in its Charter)

MICHIGAN
(State or other jurisdiction of incorporation or organization)
38-0729500
(I.R.S. Employer Identification No.)

3100 WEST BIG BEAVER ROAD
TROY, MICHIGAN 48084
(810) 643-1000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------------

A. N. PALIZZI
EXECUTIVE VICE PRESIDENT AND
GENERAL COUNSEL
KMART CORPORATION
3100 WEST BIG BEAVER ROAD
TROY, MICHIGAN 48084
(810) 643-1000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

Copies to:

Verne C. Hampton, II
Dickinson, Wright, Moon,
Van Dusen & Freeman
500 Woodward Avenue, Suite 4000
Detroit, Michigan 48226

Norman C. Storey
Squire, Sanders & Dempsey
Two Renaissance Square
40 North Central Avenue, Suite 2700
Phoenix, Arizona 85004

James L. Purcell
Paul, Weiss, Rifkind,
Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following box./ /

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
---------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE AMOUNT OF
TITLE OF AMOUNT BEING OFFERING PRICE OFFERING REGISTRATION
SECURITIES BEING REGISTERED REGISTERED PER UNIT PRICE FEE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mortgage Pass-Through
Certificates................... $250,000,000 100% $250,000,000 $86,206.90*
</TABLE>

* Previously paid.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2

Information contained in this preliminary prospectus supplement is subject
to completion or amendment. This preliminary prospectus supplement and
accompanying prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any jurisdiction in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction.

SUBJECT TO COMPLETION, DATED AUGUST 17, 1994
PRELIMINARY PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED AUGUST , 1994)

$85,000,000*
$ MORTGAGE PASS-THROUGH CERTIFICATES SERIES 1994A-1
$ MORTGAGE PASS-THROUGH CERTIFICATES SERIES 1994A-2

The Mortgage Pass-Through Certificates Series 1994A-1 and the Mortgage
Pass-Through Certificates Series 1994A-2 (collectively, the "Certificates") will
evidence fractional undivided beneficial ownership interests in the assets of
one of two separate Pass-Through Trusts to be formed pursuant to two separate
Pass-Through Trust Agreements between National Tenant Finance Corporation (the
"Depositor") and United States Trust Company of New York, as Pass-Through
Trustee. The Pass-Through Trust Property of each Pass-Through Trust will consist
of Mortgage Notes evidencing the non-recourse obligations of the Borrowers under
the Loan Agreements, each between a Borrower and the Depositor, pursuant to
which the Depositor will loan each Borrower a portion of the proceeds of the
Certificates offered hereby to (i) finance the acquisition and/or construction
of, or to provide permanent financing for, certain real property and
improvements thereon described in this Prospectus Supplement (the "Facilities")
to be leased by Builders Square, Inc. ("Builders"); Borders, Inc. ("Borders");
OfficeMax, Inc. ("OfficeMax"); or The Sports Authority, Inc. ("TSA")
(individually, a "Subsidiary" and collectively, the "Subsidiaries"),
subsidiaries of

KMART CORPORATION

a Michigan corporation ("Kmart") and (ii) to pay a pro rata portion of the costs
of issuance of the Certificates. Each Certificate will evidence a fractional
undivided beneficial ownership interest in the assets of the related Pass-
Through Trust and will have no rights, benefits or interests in respect of any
other Pass-Through Trust or the Trust Property held in any other Pass-Through
Trust.

Scheduled Payments of interest paid on the Mortgage Notes held in each
Pass-Through Trust will be passed through to the Certificateholders of such
Pass-Through Trust on the first Business Day of September and March of each year
commencing March 1, 1995 (each, a "Remittance Date"), until the final scheduled
Remittance Date for such Pass-Through Trust. Scheduled Payments of principal
paid on the Mortgage Notes held in each Pass-Through Trust will be passed
through to the Certificateholders of such Pass-Through Trust in scheduled
amounts on the first Business Day of September of each year, commencing on the
initial scheduled principal distribution date for such Pass-Through Trust set
forth below, until the final scheduled Remittance Date for such Trust.
(continued on following page)

<TABLE>
<CAPTION>
MORTGAGE PRINCIPAL INTEREST PRICE TO INITIAL SCHEDULED PRINCIPAL FINAL SCHEDULED
PASS-THROUGH CERTIFICATES AMOUNT RATE PUBLIC DISTRIBUTION DATE REMITTANCE DATE PROCEEDS(1)
- -------------------------- --------- -------- --------- ---------------------------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Series 1994A-1............ $ % % / / / / $
Series 1994A-2............ $ % % / / / / $
</TABLE>

- -------------------------
(1) The underwriting discount and certain other expenses relating to the
offering, of $ in the aggregate and % of the principal amount of
the Certificates, will be paid by the Borrowers out of the loan amounts.
The proceeds of the sale of the Certificates will be used by the
Pass-Through Trusts to purchase the Mortgage Notes from the Depositor.
Kmart has agreed to indemnify Sutro & Co. Incorporated against certain
liabilities under the Securities Act of 1933. See "PLAN OF DISTRIBUTION"
herein.
THESE CERTIFICATES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE
MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
------------------

The Certificates are offered by the underwriter named below when, as and if
issued, delivered to, and accepted by it and subject to its right to reject
orders in whole or in part. It is expected that the Certificates will be
delivered in book-entry form on or about September , 1994, through the Same
Day Funds Settlement System of The Depository Trust Company.
------------------
SUTRO & CO. INCORPORATED
------------------
The date of this Prospectus Supplement is August , 1994.
- -------------------------
* Preliminary; subject to change.
<PAGE> 3

The related Collateral Trust Property described in the Prospectus,
including Mortgages on the Facilities and assignments of the Lease Payments
payable by the Subsidiaries, will be held for the benefit, pari passu, of the
Pass-Through Trusts in a Collateral Trust pursuant to a Collateral Trust
Agreement between the Depositor and United States Trust Company of New York as
Collateral Trustee. The obligations of the Subsidiaries under the Leases are
guaranteed by Kmart pursuant to a Lease Guaranty with respect to each Lease.
Pursuant to the terms of Note Put Agreements, each between Kmart, a Subsidiary
and the Depositor, such Subsidiary, or in the event of such Subsidiary's failure
to do so, Kmart will be obligated to purchase the related Mortgage Notes upon
the occurrence of a Triggering Event.

Kmart has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 (File No. 33-54043) (the
"Registration Statement"), which was declared effective by the Commission on
August , 1994, relating to the offering of $250,000,000 aggregate principal
amount of Mortgage Pass-Through Certificates. The Prospectus, dated August ,
1994, included in the Registration Statement is referred to herein as the
"Prospectus." Capitalized terms not otherwise defined herein are defined in the
Glossary in the Prospectus.

ALTHOUGH LEASE PAYMENTS IN AMOUNTS SUFFICIENT TO PERMIT THE TIMELY PAYMENT
OF THE REGULARLY SCHEDULED INSTALLMENTS OF PRINCIPAL OF AND INTEREST ON THE
MORTGAGE NOTES WILL BE A DIRECT OBLIGATION OF A SUBSIDIARY, WHICH LEASE PAYMENTS
WILL BE GUARANTEED BY KMART, NEITHER THE CERTIFICATES NOR THE MORTGAGE NOTES
WILL REPRESENT AN INTEREST IN OR DIRECT OBLIGATION OF, OR WILL BE GUARANTEED BY,
KMART, ANY SUBSIDIARY, ANY PASS-THROUGH TRUSTEE, THE COLLATERAL TRUSTEE, ANY
BORROWER OR THE DEPOSITOR. UNDER CERTAIN CIRCUMSTANCES MORE FULLY DESCRIBED IN
THE PROSPECTUS, A SUBSIDIARY WILL HAVE THE RIGHT TO TERMINATE THE LEASE AND
CEASE MAKING LEASE PAYMENTS THEREUNDER.

SEE "SPECIAL CONSIDERATIONS" IN THE PROSPECTUS FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BEFORE PURCHASING THE CERTIFICATES, INCLUDING,
WITHOUT LIMITATION, THE ANNOUNCEMENT BY KMART OF ITS INTENTION TO SELL MAJORITY
INTERESTS IN BORDERS, OFFICEMAX AND TSA THROUGH INITIAL PUBLIC OFFERINGS OF
STOCK OF THOSE SUBSIDIARIES. SEE "SPECIAL CONSIDERATIONS -- OPTION OF SUBSIDIARY
OR KMART TO TERMINATE LEASE GUARANTY UNDER CERTAIN CIRCUMSTANCES" IN PROSPECTUS.

The Certificates offered by this Prospectus Supplement will constitute
separate Series of Certificates being offered pursuant to the Prospectus of
which this Prospectus Supplement is a part and which accompanies this Prospectus
Supplement. The Prospectus contains material information about this offering
that is not contained herein, and prospective investors are urged to read both
this Prospectus Supplement and the Prospectus in full. Sales of the Certificates
may not be consummated unless the purchaser has received both the Prospectus and
this Prospectus Supplement.

There is currently no secondary market for the Certificates and there can
be no assurance that such a market will develop. See "SPECIAL CONSIDERATIONS" in
the Prospectus.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CERTIFICATES AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

S-2
<PAGE> 4

SUMMARY INFORMATION

The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and in
the Prospectus. Capitalized terms used herein and not defined herein or in the
Prospectus shall have the respective meanings assigned to them in the "Glossary"
contained in the Prospectus.

CERTIFICATES OFFERED.......... $85,000,000* Mortgage Pass-Through Certificates
Series 1994A-1 will be scheduled to bear
interest at % per annum and $
Mortgage Pass-Through Certificates Series
1994A-2 will be scheduled to bear interest at
% per annum. Each Certificate represents a
fractional undivided beneficial ownership
interest in the related Pass-Through Trust
Property. See "THE CERTIFICATES" in the
Prospectus and herein.

DEPOSITOR..................... National Tenant Finance Corporation, a limited
purpose financing corporation.

COMPANY....................... Kmart Corporation. See "KMART" in the
Prospectus.

SUBSIDIARIES.................. Builders Square, Inc. ("Builders"); Borders,
Inc. ("Borders"); OfficeMax, Inc.
("OfficeMax"); and The Sports Authority, Inc.
("TSA").

BOOK-ENTRY FORM;
DENOMINATIONS............... The Certificates will be issued in fully
registered form in minimum denominations of
$1,000 and integral multiples thereof, and will
be registered in the name of Cede & Co. as the
nominee of The Depository Trust Company. No
person acquiring an interest in the
Certificates will be entitled to receive a
Definitive Certificate representing such
person's interest in the related Pass-Through
Trust unless Definitive Certificates are
issued, which will only occur under limited
circumstances. See "THE CERTIFICATES -- Book
Entry Registration" in the Prospectus.

CLOSING DATE.................. On or about September , 1994.

REMITTANCE DATES.............. (A) The first Business Day of each October and
April commencing April 1, 1995 and continuing
until the earlier of (i) October 1, with
respect to Series 1994A-1 and October 1,
with respect to Series 1994A-2 or (ii) the
payment in full of such Series, or (B) such
other date when a distribution is made to the
related Certificateholders as a result of a
prepayment, purchase or liquidation of a
related Mortgage Note.

SCHEDULED PAYMENTS OF
INTEREST...................... Scheduled Payments of interest paid on the
Mortgage Notes held in each Pass-Through Trust
will be passed through to the
Certificateholders of such Pass-Through Trust
on each Remittance Date, until the final
scheduled Remittance Date for such Pass-Through
Trust. Distributions on any regularly scheduled
Remittance Date will include interest paid on
the outstanding Mortgage Notes from and
including the first day of the sixth month
immediately preceding such Remittance Date (or
from and including the Closing Date with
respect to the first Remittance Date) through
the end of the calendar month immediately
preceding such Remittance Date. See

- ---------------

* Preliminary, subject to change.

S-3
<PAGE> 5

"THE CERTIFICATES -- Distributions of Scheduled
Payments" herein.

SCHEDULED PAYMENTS OF
PRINCIPAL..................... Scheduled Payments of principal paid on the
Mortgage Notes held in each Pass-Through Trust
will be passed through to the
Certificateholders of each such Pass-Through
Trust in scheduled amounts on the first
Business Day of each October commencing October
1, 1995 and continuing until October 1,
with respect to Series 1994A-1 and commencing
October 1, and continuing until October 1,
with respect to Series 1994A-2. See "THE
CERTIFICATES -- Distributions of Scheduled
Payments" herein.

PASS-THROUGH TRUST
AGREEMENTS.................... The Pass-Through Trust Agreements, each dated
as of August , 1994, between the Depositor
and the Pass-Through Trustee pursuant to each
of which the related Pass-Through Trusts will
be formed, the related Mortgage Notes will be
held and the related Certificates will be
issued. See "THE TRUSTS, PASS-THROUGH TRUSTS
AND COLLATERAL TRUSTS -- The Trust Agreements
and Pass-Through Trust Agreements" in the
Prospectus and "THE PASS-THROUGH TRUSTS AND THE
COLLATERAL TRUST" herein.

PASS-THROUGH TRUSTEE.......... United States Trust Company of New York, a New
York banking corporation. See "THE PASS-THROUGH
TRUSTS AND THE COLLATERAL TRUST -- The
Pass-Through Trustee and Collateral Trustee"
herein.

COLLATERAL TRUST AGREEMENT.... The Collateral Trust Agreement dated as of
September , 1994, between the Depositor and
the Collateral Trustee pursuant to which the
Collateral Trustee will hold the Collateral for
the benefit, pari passu, of the Pass-Through
Trusts. See "THE TRUSTS, PASS-THROUGH TRUSTS
AND COLLATERAL TRUSTS -- The Collateral Trust
Agreements" in the Prospectus and "THE
PASS-THROUGH TRUSTS AND THE COLLATERAL TRUST"
herein.

COLLATERAL TRUSTEE............ United States Trust Company of New York, a New
York banking corporation. See "THE PASS-THROUGH
TRUSTS AND THE COLLATERAL TRUST -- The Pass
Through Trustee and Collateral Trustee" herein.

THE MORTGAGE NOTES............ The aggregate principal amount of the Mortgage
Notes held in the Pass-Through Trust Series
1994A-1 is $ and such Mortgage Notes bear
interest at % per annum. The aggregate
principal amount of the Mortgage Notes held in
the Pass-Through Trust Series 1994A-2 is
$ and such Mortgage Notes bear interest
at % per annum. The overdue interest rate
applicable to any late payments is % per
annum for the Mortgage Notes held in the
Pass-Through Trust Series 1994A-1 and % per
annum for the Mortgage Notes held in the
Pass-Through Trust Series 1994A-2. The interest
rate on the Mortgage Notes held in each Pass-
Through Trust will correspond to the interest
rate on the Certificates evidencing interests
in such Pass-Through Trust. The aggregate
principal amount of such Certificates will
equal the aggregate principal amount of such
Mortgage Notes. See "THE MORTGAGE NOTES, THE
LOAN AGREEMENTS AND

S-4
<PAGE> 6
RELATED DOCUMENTS" in the Prospectus and "THE
MORTGAGE NOTES" herein.

LEASES........................ Each Borrower will own one of the commercial
properties identified herein and will lease
such property to a Subsidiary for use as a
retail outlet except as otherwise specified
herein. The primary term of each Lease will
expire on or after maturity of the related
Mortgage Loan unless earlier terminated due to
certain bankruptcy, casualty loss or
condemnation events. The Lease Payments under a
Lease will be scheduled to be in amounts
sufficient to pay Scheduled Payments on the
related Mortgage Notes. Payment of the Lease
Payments will be guaranteed by Kmart pursuant
to a related Lease Guaranty. See "THE LEASES,
THE LEASE GUARANTIES AND RELATED DOCUMENTS" in
the Prospectus and "THE FACILITIES AND THE
LEASES" herein.

RATINGS....................... It is a condition to their issuance that the
Certificates be rated BBB-or better by Standard
& Poor's Ratings Group ("S&P"). See "RATINGS"
herein and "SPECIAL CONSIDERATIONS -- Limited
Nature of Credit Ratings" in the Prospectus.

S-5
<PAGE> 7

USE OF PROCEEDS

The proceeds from the sale of the Certificates will be used to make
Mortgage Loans to the Borrowers (i) for permanent financing of, or for the
acquisition or the acquisition and construction of, the related Facility and
(ii) for the payment of a pro rata portion of the costs of issuance of the
Certificates. All or a portion of the amount of each Mortgage Loan, less the
respective pro rata share of the issuance costs, will be used to refinance a
short-term loan to the related Borrower, the proceeds of which funded the
construction (in whole or in part) and/or acquisition of the related Facility.
The related Subsidiary and Kmart executed note put agreements in connection with
each short-term loan which entitle the holder of the related promissory note to
require the Subsidiary or Kmart, as the case may be, to purchase the note if it
is not paid at maturity.

THE CERTIFICATES

GENERAL

The Certificates will be issued pursuant to the terms of two separate
Pass-Through Trust Agreements, each providing for the issuance of a single class
of Certificates designated either Mortgage Pass-Through Certificates Series
1994A-1 or Mortgage Pass-Through Certificates Series 1994A-2. The original
principal amount of and interest rate applicable to each Series of Certificates
are shown on the front cover page of this Prospectus Supplement. The summary of
the terms of the Certificates contained herein does not purport to be complete
and is subject to, and qualified in its entirety by reference to, the provisions
of the Pass-Through Trust Agreements. Reference is made to the Prospectus for
additional information regarding the terms and conditions of the Certificates.

The Certificates will be issued in fully registered form. All payments of
principal and interest will be made by or on behalf of the Pass-Through Trustee
to DTC for distribution to Beneficial Owners of the Certificates through DTC
Participants or Indirect Participants. See "THE CERTIFICATES -- Book-Entry
Registration" in the Prospectus.

DISTRIBUTIONS OF SCHEDULED PAYMENTS

Scheduled Payments of interest paid on the Mortgage Notes held by each
Pass-Through Trust will be passed through to the Certificateholders of such
Pass-Through Trust semiannually on each Remittance Date commencing April 1,
1995, and on the first Business Day of each October and April thereafter until
October 1, with respect to Series 1994A-1 and until October 1, with
respect to Series 1994A-2.

Scheduled Payments of principal paid on such Mortgage Notes will be passed
through to such Certificateholders on the first Business Day of each October,
commencing October 1, 1995, and continuing until October 1, , with respect
to Series 1994A-1, and commencing October 1, , and continuing until October
1, , with respect to Series 1994A-2.

S-6
<PAGE> 8

The schedule of interest and principal payments on the Certificates is as
follows:

<TABLE>
<CAPTION>
SERIES 1994A-1 SERIES 1994A-1 SERIES 1994A-2 SERIES 1994A-2
SCHEDULED SCHEDULED SCHEDULED SCHEDULED SCHEDULED
PAYMENT DATE PRINCIPAL PAYMENT INTEREST PAYMENT PRINCIPAL PAYMENT INTEREST PAYMENT
- --------------------------------- ----------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C>
April 1, 1995....................
October 1, 1995..................
April 1, 1996....................
October 1, 1996..................
April 1, 1997....................
October 1, 1997..................
April 1, 1998....................
October 1, 1998..................
April 1, 1999....................
October 1, 1999..................
April 1, 2000....................
October 1, 2000..................
April 1, 2001....................
October 1, 2001..................
April 1, 2002....................
October 1, 2002..................
April 1, 2003....................
October 1, 2003..................
April 1, 2004....................
October 1, 2004..................
April 1, 2005....................
October 1, 2005..................
April 1, 2006....................
October 1, 2006..................
April 1, 2007....................
October 1, 2007..................
April 1, 2008....................
October 1, 2008..................
April 1, 2009....................
October 1, 2009..................
April 1, 2010....................
October 1, 2010..................
April 1, 2011....................
October 1, 2011..................
April 1, 2012....................
October 1, 2012..................
April 1, 2013....................
October 1, 2013..................
April 1, 2014....................
October 1, 2014.................. *
April 1, 2015....................
October 1, 2015..................
April 1, 2016....................
October 1, 2016..................
April 1, 2017....................
October 1, 2017..................
April 1, 2018....................
October 1, 2018..................
April 1, 2019....................
October 1, 2019.................. *
------- ------- ------- -------
Total.......................
============= ============ ============= ============
</TABLE>

- -------------------------
* Final Scheduled Remittance Date

S-7
<PAGE> 9

OTHER DISTRIBUTIONS

The Certificateholders may receive other distributions in the event that a
Mortgage Note is prepaid or purchased. See "THE CERTIFICATES -- Other
Distributions" in the Prospectus.

THE PASS-THROUGH TRUSTS AND THE COLLATERAL TRUST

GENERAL

The Certificates Series 1994A-1 will be issued pursuant to the Pass-Through
Trust Agreement Series 1994A-1, and the Certificates Series 1994A-2 will be
issued pursuant to the Pass-Through Trust Agreement Series 1994A-2
(collectively, the "Pass-Through Trust Agreements"). Each Pass-Through Trustee
will hold the related Mortgage Notes for the benefit of the Certificateholders
of the related Pass-Through Trust. Pursuant to the Collateral Trust Agreement,
the Collateral Trustee will hold the Collateral for the benefit, pari passu, of
the Pass-Through Trusts. See "THE TRUSTS, PASS-THROUGH TRUSTS AND COLLATERAL
TRUSTS" in the Prospectus. The Depositor will provide to any prospective or
actual Certificateholder, upon written request, a copy (without exhibits) of the
related Pass-Through Trust Agreement and the Collateral Trust Agreement.
Requests should be addressed to National Tenant Finance Corporation, 40 North
Central Avenue, Suite 2700, Phoenix, Arizona 85004, Attention: Secretary.

THE PASS-THROUGH TRUSTEE AND COLLATERAL TRUSTEE

United States Trust Company of New York will act as Pass-Through Trustee of
each Pass-Through Trust and will act as Collateral Trustee of the Collateral
Trust. The mailing address of the corporate trust office of the Pass-Through
Trustee and Collateral Trustee is United States Trust Company of New York, c/o
U.S. Trust Company of California, N.A., Suite 2700, 555 South Flower Street, Los
Angeles, California 90071 Attention: Corporate Trust Division.

THE MORTGAGE NOTES

GENERAL

Each Mortgage Note will be issued pursuant to a Loan Agreement between the
Depositor and a Borrower and will be a non-recourse obligation of such Borrower.
Each Borrower will be a special purpose corporation, limited partnership,
limited liability company or other entity that will not be permitted to have any
significant assets or sources of funds other than the related Mortgage Loan and
the related Facility which will be leased to a Subsidiary. No Borrower will
receive the proceeds of more than one Mortgage Loan or own or lease more than
one Facility. A default under one Mortgage Loan will not constitute a default
under any other Mortgage Loan.

The Mortgage Notes Series 1994A-1 will be held by the Pass-Through Trust
Series 1994A-1 and the Mortgage Notes Series 1994A-2 will be held by the
Pass-Through Trust Series 1994A-2. The maturity date of the Mortgage Notes
Series 1994A-1 is September 30, , which is one day prior to the final
scheduled Remittance Date for the Certificates Series 1994A-1, and the maturity
date of the Mortgage Notes Series 1994A-2 is September 30, , which is one
day prior to the final scheduled Remittance Date for the Certificates Series
1994A-2.

Interest on the Mortgage Notes will be calculated on the basis of a 360-day
year consisting of twelve 30-day months. The Mortgage Notes Series 1994A-1 will
bear interest at % per annum and will have an overdue interest rate
applicable to any late payments of % per annum. The Mortgage Notes Series
1992A-2 will bear interest at % per annum and will have an overdue interest
rate applicable to any late payments of % per annum.

S-8
<PAGE> 10

SCHEDULED PAYMENTS

Interest on the Mortgage Notes is payable semiannually on each Due Date
commencing March 31, 1995, and on the last Business Day of each September and
March thereafter until September 30, with respect to Series 1994A-1 and
until September 30, with respect to Series 1994A-2.

Payments of principal on the Mortgage Notes will be made on the last
Business Day of each September, commencing September 30, 1995, and continuing
until September 30, with respect to Series 1994A-1 and commencing September
30, and continuing until September 30, with respect to Series 1992A-2.

PREPAYMENTS AND PURCHASES

The Mortgage Notes are subject to being prepaid or purchased under the
circumstances described in the Prospectus. The Purchase Price for any Mortgage
Note in the event of a prepayment or purchase is the sum of (i) the principal
amount of such Mortgage Note that is to be paid or prepaid ("Called Principal"),
(ii) accrued interest thereon, and (iii) the Make-Whole Premium related thereto,
or, in the case of a purchase pursuant to a Note Put Agreement as a result of a
Lease Guaranty Termination, the lesser of the Make-Whole Premium or the
Termination Premium. See "THE MORTGAGE NOTES, THE LOAN AGREEMENTS AND RELATED
DOCUMENTS -- Prepayments" and "THE NOTE PUT AGREEMENTS" in the Prospectus.

The "Make-Whole Premium" means with respect to any amount of Called
Principal of a Mortgage Note, an amount equal to the positive excess, if any, as
of the Purchase Date of the Discounted Prepayment Value of the Called Principal
of such Mortgage Note over such Called Principal.

The "Termination Premium" means (a) the product of the unpaid principal
balance of the Mortgage Note being purchased multiplied by the applicable
factor: (i) prior to the first anniversary of the date of such Mortgage Note --
, (ii) on or after the first anniversary of such Mortgage Note but before
the second anniversary thereof -- , (iii) on or after the second
anniversary of the date of such Mortgage Note but before the third anniversary
thereof -- , (iv) on or after the third anniversary of the date of
Mortgage Note but before the fourth anniversary thereof -- , or (v) on or
after the fourth anniversary of the date of such Mortgage Note but before the
maturity date -- ; less (b) the unpaid principal balance of such Mortgage
Note.

S-9
<PAGE> 11

THE FACILITIES RELATED TO THE MORTGAGE NOTES

The following table sets forth the Facility location, the Subsidiary that
will be leasing such Facility and the principal amount of the related Mortgage
Notes.

<TABLE>
<CAPTION>
LOCATION SUBSIDIARY PRINCIPAL AMOUNT OF MORTGAGE NOTE
OF RELATED LEASING RELATED -------------------------------------
FACILITY FACILITY SERIES 1994A-1 SERIES 1994A-2
- ------------------------------------------------ --------------- -------------- --------------
<S> <C> <C> <C>
1. Aurora, CO.................................. Builders $ $
2. Upper Merion Township, PA................... Builders
3. Mission Viejo, CA........................... Borders
4. Torrance, CA................................ Borders
5. Westwood, CA................................ Borders
6. Dauphin County, PA.......................... Borders
7. Mesa, AZ.................................... OfficeMax
8. Orlando, FL................................. OfficeMax
9. Miami, FL................................... TSA
10. North Miami Beach, FL....................... TSA
11. Gaithersburg, MD............................ TSA
12. Virginia Beach, VA.......................... TSA
------- -------
Total...................................... $ $
=========== ===========
</TABLE>

THE FACILITIES AND THE LEASES

Each Borrower will own one of the commercial properties listed below and
will lease such property to a Subsidiary for use as a retail outlet except as
otherwise specified. The Lease Payments under a Lease will be scheduled to be in
amounts sufficient to pay Scheduled Payments under the related Mortgage Notes
and will be paid by the Subsidiary directly to the Collateral Trustee. The
primary term of the Leases will commence on the Closing Date and expire on or
after September 30, 2019, except that the primary term of the Lease of the
Facility located in Dauphin County, Pennsylvania will commence on the Closing
Date and expire prior to September 30, 2019, in each case unless earlier
terminated as provided in the Lease. See "THE LEASES, THE LEASE GUARANTIES AND
RELATED DOCUMENTS" in the Prospectus.

The Facilities consist of two Builders Square store locations operated by
Builders Square Group, three Borders Books and Music store locations operated by
the Borders-Walden Group, one Borders Books and Music regional distribution
warehouse location operated by the Borders-Walden Group, two OfficeMax store
locations operated by the OfficeMax Group, and four The Sports Authority store
locations operated by the Sports Authority Group.

S-10
<PAGE> 12

Certain information regarding each of the Facilities is set forth below:

<TABLE>
<CAPTION>
APPROXIMATE DATE PURPOSE
FACILITY LEASE OF CAPITALIZED
SIZE LOT SIZE PAYMENTS MORTGAGE DEBT SERVICE
LOCATION SUBSIDIARY (SQ. FT.) (ACRES) COMMENCE LOAN(1) RESERVE(2)
------------------------ ----------- ----------- -------- ------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1. Aurora, CO.............. Builders 107,500 11.4 Closing Date P N/A
2. Upper Merion Township,
PA...................... Builders 109,800 19.6 4/15/95 C,P $
3. Mission Viejo, CA....... Borders 30,000 2.5 Closing Date C,P $ 50,000
4. Torrance, CA............ Borders 35,800 3.3 Closing Date C,P N/A
5. Westwood, CA............ Borders 43,800 0.7 Closing Date C,P N/A
6. Dauphin County, PA...... Borders 108,000 11.8 Closing Date P N/A
7. Mesa, AZ................ OfficeMax 23,500 2.2 9/8/94 C,P $
8. Orlando, FL............. OfficeMax 23,500 2.9 Closing Date A,P N/A
9. Miami, FL............... TSA 42,500 3.9 Closing Date P N/A
10. North Miami Beach, FL... TSA 42,500 3.1 Closing Date P N/A
11. Gaithersburg, MD........ TSA 43,200 4.4 Closing Date P N/A
12. Virginia Beach, VA...... TSA 41,300 3.2 Closing Date P N/A
</TABLE>

- -------------------------
(1) The related Mortgage Loan will be used to acquire the Facility ("A"),
construct the Facility ("C") and/or provide permanent financing for the
Facility ("P").

(2) If Lease Payments do not commence on the date of the related Mortgage Notes,
the amount indicated will be deducted from the proceeds of the related
Mortgage Loan and will be deposited in the related Capitalized Debt Service
Reserve Account. Such amount will be equal to Scheduled Payments due or
accrued on the related Mortgage Notes prior to the commencement of Lease
Payments. In the case of the Facility located in Mission Viejo, California,
the Capitalized Debt Service Reserve consists of a real property tax impound
as discussed below under "Separate Tax Parcels." See "THE TRUSTS, THE
PASS-THROUGH TRUSTS AND THE COLLATERAL TRUSTS -- Accounts -- Capitalized
Debt Service Account" in the Prospectus.

FACILITIES AS TO WHICH CONSTRUCTION IS COMPLETE

The Note Put Agreements related to Facilities with respect to which the
Mortgage Loan is being used solely to provide permanent financing include only
two Triggering Events. Construction of these Facilities is complete and,
consequently, the third Triggering Event, failure to complete construction by
the Completion Date, is inapplicable.

MISSION VIEJO, CALIFORNIA DEED RESTRICTIONS AND COVENANTS

Title to the land in Mission Viejo, California is subject to certain deed
restrictions and covenants, including the following: (i) on or before June 29,
1995, the improvements on the land must be completed, the Facility fully stocked
and fixtured and opened for business as a Borders Books retail store, and (ii)
for a period of six months from the date of the initial opening Borders must
continuously operate the Facility as a Borders Books retail store. Borders is
not obligated pursuant to the related Lease to open, occupy or operate the
store. The deed provides that a breach of the covenants shall not defeat or
render the lien of the related Mortgage invalid, however, the covenants will
bind any new owner, whether by foreclosure or otherwise, and, therefore, may
adversely affect marketability of the property.

S-11
<PAGE> 13

SEPARATE TAX PARCELS

The Mission Viejo, California and Mesa, Arizona properties are each
presently taxed along with other property not owned by the respective Borrower
and not subject to the lien of the related Mortgage. In each case, failure of
the other property owner to pay its share of taxes for the larger tax parcel
will result in a lien on the related Borrower's property which is superior to
the lien of the related Mortgage. Each Borrower has applied to the appropriate
taxing authority for designation of the related Facility as a separate tax
parcel. The Capitalized Debt Service Reserve for the Mission Viejo, California
property consists of an impound sufficient to pay real property taxes on the
larger tax parcel through the May 1, 1995 tax installment. The Mesa, Arizona
property is subject to a reciprocal tax agreement pursuant to which each party
thereto agrees to pay its respective share of the entire tax bill.

FACILITIES UNDER CONSTRUCTION

With respect to the three Facilities under construction that are being
leased to Borders, there will be no Construction Fund Disbursement Agreements.
In each case the related Borrower caused a portion of the proceeds of its
short-term loan discussed in "USE OF PROCEEDS" of this Prospectus Supplement to
be disbursed to Borders to satisfy such Borrower's obligation under the related
Lease to provide a leasehold improvement allowance to Borders. Borders will use
such funds to complete construction of the related Facility. Construction Fund
Disbursement Agreements were entered into in connection with the related short-
term loans discussed in "USE OF PROCEEDS" of this Prospectus Supplement with
respect to the other two Facilities under construction. The remaining balances
of the existing Construction Fund Disbursement Agreements will be pledged to the
Depositor as security for the related Mortgage Loan. The latest date for
completion of construction under the Loan Agreement related to each Facility is
July , 1996. The Escrow Agents under such Construction Fund Disbursement
Agreements are as follows:

<TABLE>
<CAPTION>
LOCATION SUBSIDIARY ESCROW AGENT
- -------------------------------------------- --------------- -------------------------------
<S> <C> <C>
1. Upper Merion Township, PA................ Builders Square Congress Abstract Corporation
2. Mesa, AZ................................. OfficeMax Chicago Title Insurance Company
</TABLE>

PLAN OF DISTRIBUTION

Sutro & Co. Incorporated (the "Underwriter") has agreed, on the terms and
conditions of the Underwriting Agreement, dated the date hereof, between the
Underwriter, the Depositor and Kmart (the "Underwriting Agreement") to purchase
the entire principal amount of the Certificates offered hereby if any
Certificates are purchased. In the event of default by the Underwriter, the
Underwriting Agreement provides that, in certain circumstances, the Underwriting
Agreement may be terminated.

The Depositor will provide in each Loan Agreement with a Borrower that such
Borrower will bear its proportionate share of the costs of issuance of the
Certificates, including (i) the underwriter's discount (i.e., % of the
proceeds of sale of the Certificates, or an aggregate of $ ), (ii) a
shelf expense recovery fee (i.e., one-fourth of 1% of the proceeds of sale of
the Certificates or an aggregate of $ ) to reimburse the Underwriter
for a portion of expenses incurred by it in connection with preparing and filing
the Registration Statement, the exhibits thereto and the Prospectus and (iii)
certain expenses of the offering being made by this Prospectus Supplement (not
to exceed $ in the aggregate); and each Borrower as a condition to
receiving a Mortgage Loan shall authorize the Depositor to apply a portion of
the related Mortgage Loan amount to payment of the Borrower's proportionate
share of such costs of issuance by agreeing that the Underwriter may withhold
from the proceeds of sale of the Certificates, such Borrower's proportionate
share of the costs of issuance of the Certificates.

Kmart and the Depositor have been advised by the Underwriter that it
proposes initially to offer the Certificates to the public at the offering price
set forth on the cover page of this Prospectus Supplement, and to certain
dealers at such price less concessions not in excess of % of the principal
amount evidenced thereby. The Underwriter may allow and such dealers may reallow
discounts not in excess of % of the principal amount evidenced thereby, on
sales to certain other dealers. After the initial public offering, the public
offering price and concessions and discounts to dealers may be changed.

S-12
<PAGE> 14

The distribution of the Certificates by the Underwriter may be effected
from time to time in one or more negotiated transactions, or otherwise, at
varying prices to be determined, in each case, at the time of sale. The
Underwriter may effect such transactions by selling the Certificates to or
through dealers, and such dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the Underwriter. In
connection with the sale of the Certificates, the Underwriter may be deemed to
have received compensation in the form of underwriting compensation. The
Underwriter and any dealers that participate with the Underwriter in the
distribution of the Certificates may be deemed to be underwriters and any
commissions received by them and any profit on the resale of the Certificates by
them may be deemed to be underwriting discounts and commissions under the
Securities Act of 1933.

The Underwriting Agreement provides that Kmart will indemnify the
Underwriter against certain liabilities, including liabilities under the
Securities Act of 1933, or contribute to payments the Underwriter may be
required to make in respect thereof.

LEGAL MATTERS

The legality of the Certificates and certain other legal matters will be
passed upon for the Depositor by Squire, Sanders & Dempsey. Certain legal
matters will be passed upon for Kmart by its general counsel and Dickinson,
Wright, Moon, Van Dusen & Freeman, Detroit, Michigan, and for the Underwriter by
Paul, Weiss, Rifkind, Wharton & Garrison, New York, New York. The material
federal income tax consequences of the Certificates will be passed upon by
Squire, Sanders & Dempsey.

RATINGS

It is a condition to the issuance of the Certificates that the Certificates
be rated BBB- or better by S&P. A security rating is not a recommendation to
buy, sell or hold securities and may be subject to revision or withdrawal at any
time by the assigning rating organization. The security rating assigned to the
Certificates should be evaluated independently of similar security ratings
assigned to other kinds of securities. See "SPECIAL CONSIDERATIONS" in the
Prospectus.

S-13
<PAGE> 15

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there by any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.

SUBJECT TO COMPLETION, DATED AUGUST 17, 1994

PROSPECTUS

$250,000,000
MORTGAGE PASS-THROUGH CERTIFICATES
(ISSUABLE IN SERIES)
-------------------------

The Mortgage Pass-Through Certificates (the "Certificates") offered hereby
and by the related Prospectus Supplements will be offered from time to time in
one or more Series in amounts, at prices and on terms to be determined at the
time of the offering. Capitalized terms used herein and not defined herein shall
have the respective meanings assigned to them in the glossary set forth on pages
53 through 59 of this Prospectus (the "Glossary").

Each Certificate of each Series offered hereby will evidence a fractional
undivided beneficial ownership interest in the assets of a single separate Trust
to be created pursuant to the related Trust Agreement between National Tenant
Finance Corporation, a Delaware corporation (the "Depositor"), and the Trustee
identified in the related Prospectus Supplement. If more than one Series of
Certificates is offered by a related Prospectus Supplement, each such Series
will be issued pursuant to a single separate Trust.

The Trust Property of each Trust will include, but not be limited to, one or
more Mortgage Notes (each, a "Mortgage Note," and collectively, the "Mortgage
Notes"). Generally, each such Mortgage Note will evidence the non-recourse
obligation of a Borrower under a Loan Agreement between such Borrower and the
Depositor pursuant to which the Depositor will loan a portion of the proceeds of
the offering of the related Series of Certificates to such Borrower (i) to
finance the acquisition or the acquisition and construction of, or to provide
permanent financing for, a facility described in the Prospectus Supplement (a
"Facility") which will be leased for use as a retail store to a tenant
("Tenant") which will be

KMART CORPORATION

("Kmart") or a subsidiary (a "Subsidiary") of Kmart identified in the Prospectus
Supplement and (ii) to pay a pro rata portion of the costs of issuance of the
Certificates.

The Trust Property will generally also include, with respect to each
Facility, the following Collateral for the related Mortgage Note(s): (i) a
Mortgage on such Facility securing each such Mortgage Note; (ii) all of the
Depositor's rights under the Loan Agreement pursuant to which the related
Mortgage Note(s) were issued; (iii) an assignment of the related Lease, Lease
Payments and (if the Tenant is a Subsidiary) Lease Guaranty; (iv) a pledge of
certain moneys held in certain funds established pursuant to the Trust
Agreement, or Collateral Trust Agreement, if applicable; (v) a Note Put
Agreement requiring the Tenant and Kmart (if the Tenant is a Subsidiary) to
purchase the related Mortgage Note(s) upon the occurrence of a Triggering Event;
(vi) an assignment of the Borrower's right, title and interest in and to any
Construction Fund Disbursement Agreement and Construction Fund Disbursement
Agreement-Common Area related to such Facility; (vii) a pledge of certain
investments of fund balances held in the Trust, or the Collateral Trust if
applicable, and income earned thereon; and (viii) any other Loan Documents.

In some cases a Loan Agreement may provide that a Mortgage Loan will be
evidenced by two or more Mortgage Notes having different maturities. In such
event, (i) each such Mortgage Note (and, if Mortgage Notes of different
maturities are issued pursuant to two or more Loan Agreements, all of such
Mortgage Notes having the same maturity) will be held by a separate Pass-Through
Trust, and, in the case of Mortgage Notes issued under two or more Loan
Agreements, all Mortgage Notes held by each separate Pass-Through Trust will
have the same maturity, (ii) each Certificate will evidence a fractional
undivided beneficial ownership interest in the assets of the related
Pass-Through Trust and will have no rights, benefits or interests in respect of
any other Pass-Through Trust or the Pass-Through Trust Property held in any
other Pass-Through Trust, and (iii) the Collateral securing such Mortgage Notes
will be held by a Collateral Trustee for the benefit, pari passu, of all
Pass-Through Trusts holding any of the Mortgage Notes secured by such
Collateral.

Scheduled Payments on the Mortgage Notes will be passed through to the
Certificateholders of each Trust on the dates and in the amounts set forth in
the related Prospectus Supplement until the final scheduled Remittance Date for
such Trust. The maturity date of the Mortgage Notes acquired by each Trust will
correspond to the final scheduled Remittance Date applicable to the Certificates
evidencing interests in such Trust. Each Trust will acquire Mortgage Notes
having an interest rate corresponding to the interest rate on the Certificates
evidencing interests in such Trust. The aggregate principal amount of the
Certificates evidencing interests in each Trust will be equal to the aggregate
principal amount of the Mortgage Notes held in such Trust.

The Prospectus Supplement relating to a Series of Certificates will set
forth, among other things, the following information if applicable to such
Series: (i) the aggregate principal amount, interest rate and authorized
denominations of such Certificates, (ii) certain information concerning the
Mortgage Notes and the nature of the related Facilities, (iii) the Remittance
Dates on which periodic distributions will be made to Certificateholders, and
(iv) additional information with respect to the plan of distribution of such
Certificates. The Prospectus Supplement will also set forth whether the Mortgage
Note(s) have the same maturity, in which case the Collateral will be held by the
related Trust, or whether the Mortgage Notes have different maturities, in which
case the Collateral will be held by the related Collateral Trust.

ALTHOUGH LEASE PAYMENTS IN AMOUNTS NECESSARY TO PERMIT THE TIMELY PAYMENT OF
THE REGULARLY SCHEDULED INSTALLMENTS OF PRINCIPAL OF AND INTEREST ON THE
MORTGAGE NOTE(S) WILL BE A DIRECT OBLIGATION OF A TENANT, WHICH LEASE PAYMENTS
WILL BE GUARANTEED BY KMART IF IT IS NOT THE TENANT, NEITHER THE CERTIFICATES
NOR THE MORTGAGE NOTES WILL REPRESENT AN INTEREST IN OR A DIRECT OBLIGATION OF,
OR BE GUARANTEED BY, KMART, ANY SUBSIDIARY, ANY TRUSTEE, ANY PASS-THROUGH
TRUSTEE, ANY COLLATERAL TRUSTEE, ANY BORROWER OR THE DEPOSITOR.

THE CERTIFICATES WILL REPRESENT AN INTEREST IN THE RELATED TRUST ONLY, AND
WILL NOT BE GUARANTEED BY ANY GOVERNMENTAL AGENCY OR DEPARTMENT, OR BY THE
DEPOSITOR, KMART, ANY SUBSIDIARY, THE TRUSTEE, THE COLLATERAL TRUSTEE, THE
PASS-THROUGH TRUSTEE, OR BY ANY OF THEIR RESPECTIVE AFFILIATES, OR BY ANY OTHER
PERSON OR ENTITY.

SEE "SPECIAL CONSIDERATIONS" FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD
BE CONSIDERED BEFORE PURCHASING THE CERTIFICATES OF ANY SERIES.
-------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
-------------------------

THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE
MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
-------------------------

The Certificates are offered when, as and if delivered to and accepted by
Sutro & Co. Incorporated and the other underwriters, if any, subject to prior
sale, withdrawal or modification of the offer without notice, the approval of
counsel and other conditions. Retain this Prospectus for future reference. This
Prospectus may not be used to consummate sales of the Certificates offered
hereby unless accompanied by a Prospectus Supplement.

SUTRO & CO. INCORPORATED

THE DATE OF THIS PROSPECTUS IS AUGUST , 1994

<PAGE> 16

AVAILABLE INFORMATION

Kmart Corporation ("Kmart" or the "Company") is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith files reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's regional offices at 7 World Trade Center, 13th Floor, New York, New
York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 upon
payment of prescribed rates. Kmart's common stock is listed on the New York
Stock Exchange, the Chicago Stock Exchange and the Pacific Stock Exchange. Such
reports, proxy statements and other information can also be inspected and copied
at the New York Stock Exchange, 20 Broad Street, 7th Floor, New York, New York
10005.

Kmart has filed with the Commission a registration statement on Form S-3
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Certificates. This Prospectus does not
contain all of the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. The Registration Statement may be inspected without charge at the
public reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and copies thereof may be obtained from
the Commission upon payment of prescribed rates.

-------------------------

REPORTS TO CERTIFICATEHOLDERS

The Trustee will furnish to Certificateholders of each Series periodic
statements containing information with respect to principal and interest
distributions on the Certificates of that Series. Any financial information
contained in such reports will not have been examined or reported upon by an
independent public accountant. See "THE TRUSTS, PASS-THROUGH TRUSTS AND
COLLATERAL TRUSTS -- The Trust Agreements and Pass-Through Trust Agreements --
Reports to Certificateholders." Unless and until Definitive Certificates are
issued, such statements will be sent to Cede & Co., the nominee of The
Depository Trust Company, as registered holder of the Certificates. See "THE
CERTIFICATES -- Book-Entry Registration."
-------------------------

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed with the Commission (File No. 1-327) pursuant
to the Exchange Act are incorporated or deemed to be incorporated herein by
reference.

1. The Company's Annual Report on Form 10-K for the fiscal year ended
January 26, 1994, its Quarterly Report on Form 10-Q for the quarter ended
April 27, 1994, and its Form 8-K filed on June 8, 1994; and

2. All other documents filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Prospectus and prior to the termination of the offering of the
Certificates.

Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for all purposes to the extent that a statement contained in any other
subsequently filed document which is also, or is deemed to be, incorporated by
reference, modifies or replaces such statement. Any such statement so modified
or superseded shall not be deemed to constitute a part of this Prospectus,
except as so modified or superseded.

The Company will provide without charge to each person to whom this
Prospectus has been delivered, on written or oral request of such person, a copy
(without exhibits, unless such exhibits are specifically incorporated by
reference into such document(s)) of any or all documents incorporated by
reference in this Prospectus. Requests for such copies should be addressed to
Kmart Corporation, Corporate Reporting Department, 3100 West Big Beaver Road,
Troy, Michigan 48084, telephone number (810) 643-1093.

2
<PAGE> 17
PROSPECTUS SUMMARY

The following summary is qualified in its entirety by reference to detailed
information appearing elsewhere in, or incorporated by reference in, this
Prospectus and by reference to the information with respect to each Series of
Certificates contained in the related Prospectus Supplement and in the Trust
Agreement, the Pass-Through Trust Agreement, the Collateral Trust Agreement, if
applicable, the Mortgage Note(s) and the Loan Documents with respect to such
Series. The forms of the Trust Agreement, the Pass-Through Trust Agreement, the
Collateral Trust Agreement and certain of the Loan Documents, each in
substantially the form in which it will be used, have been filed as exhibits to
the Registration Statement of which this Prospectus is a part.

Capitalized terms used herein and not defined herein shall have the
respective meanings assigned to them in the Glossary.

CERTIFICATES OFFERED. . . . . . Mortgage Pass-Through Certificates (the
"Certificates"), issuable in Series, all as
more fully described in the related Prospectus
Supplement. The Certificates of each Series
will represent fractional undivided beneficial
ownership interests in a single separate Trust
established for the benefit of the
Certificateholders of such Series. If more than
one Series is offered by a related Prospectus
Supplement, such Series will be issued pursuant
to separate Trusts and each Certificate will
represent a fractional undivided beneficial
ownership interest in one of such separate
Trusts. Each Certificate will evidence a
fractional undivided beneficial ownership
interest in the assets of one Trust and will
have no rights, benefits or interests in
respect of any other Trust or the Trust
Property held in any other Trust. The
Certificates will mature on the date specified,
and will be subject to prepayment
distributions, as described herein, as a
consequence of the prepayment, sale or other
liquidation of the Mortgage Note(s) held by the
related Trust. See "THE CERTIFICATES."

BOOK-ENTRY REGISTRATION . . . . The Certificates will be issued in
fully-registered form only and in denominations
of $1,000 or integral multiples thereof unless
otherwise specified in the related Prospectus
Supplement. Each Series will be represented by
one or more global Certificates registered in
the name of Cede & Co. as the nominee of The
Depository Trust Company. No person acquiring
an interest in the Certificates of such Series
will be entitled to receive a Definitive
Certificate representing such person's interest
in the related Trust, except in the event that
Definitive Certificates are issued under the
limited circumstances described herein. See
"THE CERTIFICATES -- Book-Entry Registration."

DISTRIBUTIONS . . . . . . . . . Distributions from funds held in the
Certificate Account established pursuant to
each Trust Agreement will be made by the
Trustee to the Certificateholders to pay Debt
Service on the Remittance Dates specified in
the related Prospectus Supplement. Interest
will be paid on each Certificate at the rate of
interest specified in the related Prospectus
Supplement and will be calculated on the basis
of a 360-day year consisting of twelve 30-day
months. See "THE CERTIFICATES -- Distribution
of Scheduled Payments."

THE COMPANY . . . . . . . . . . Kmart is one of the world's largest
mass-merchandise retailers. The Subsidiaries
consist of five companies which are
subsidiaries of

3
<PAGE> 18

Kmart: Borders, Inc., which operates large
format book superstores; Walden Book Company
Inc., which operates mall-based bookstores;
Builders Square, Inc., which operates home
improvement superstores; OfficeMax Inc., which
operates office supply superstores; and The
Sports Authority, Inc., which operates large
format sporting goods megastores. See "KMART."

DEPOSITOR The Depositor is a limited purpose finance
corporation formed solely for the purpose of
facilitating the financing and sale of mortgage
loans. See "THE DEPOSITOR."
THE TRUSTS, PASS-THROUGH
TRUSTS AND COLLATERAL TRUSTS Each Series of Certificates will be issued
pursuant to a Trust Agreement between the
Depositor and the Trustee identified in the
related Prospectus Supplement. Each Trust will
hold one or more Mortgage Notes, evidencing one
or more Mortgage Loans.

Each Mortgage Loan will be made to a separate
Borrower, pursuant to a separate Loan
Agreement, and with respect to a separate
Facility. If the Loan Agreement(s) provide for
Mortgage Loan(s) evidenced by Mortgage Note(s)
of one maturity, then, pursuant to a single
Trust Agreement, the Depositor will convey to
the Trustee, without recourse, all of its
right, title and interest in and to such
Mortgage Loan(s) and the related Mortgage
Note(s) and Loan Documents. If the Loan
Agreement(s) provide for Mortgage Notes having
different maturities, then (i) all of such
Mortgage Notes having the same maturity will be
conveyed to a separate Trust ("Pass-Through
Trust") which will be established pursuant to a
form of Trust Agreement sometimes referred to
herein as a "Pass-Through Trust Agreement" and
(ii) the Collateral for all of the Mortgage
Notes issued pursuant to such Loan Agreement(s)
will be conveyed by the Depositor to a single
Collateral Trust pursuant to a Collateral Trust
Agreement for the benefit, pari passu, of all
Pass-Through Trusts holding any of the Mortgage
Notes secured by such Collateral. If the
Mortgage Notes are issued pursuant to more than
one Loan Agreement, the Mortgage Notes relating
to separate Loan Agreements will not be
cross-collateralized or subject to
cross-default provisions. See "THE TRUSTS,
PASS-THROUGH TRUSTS AND COLLATERAL TRUSTS."

The maturity date of the Mortgage Notes
acquired by each Trust will correspond to the
final scheduled Remittance Date applicable to
the Certificates evidencing interests in such
Trust. Each Trust will acquire Mortgage Notes
having an interest rate corresponding to the
interest rate on the Certificates evidencing
interests in such Trust. The aggregate
principal amount of the Certificates evidencing
interests in each Trust will be equal to the
aggregate principal amount of the Mortgage
Notes held in such Trust.

The Trust Property held by either the Trust or
the Collateral Trust will generally also
include, with respect to each Facility, the
following Collateral for the related Mortgage
Note(s): (i) a Mortgage on such Facility; (ii)
all of the Depositor's rights under the Loan
Agreement pursuant to which the related
Mortgage Note(s) were issued; (iii) an
assignment of the related Lease,

4
<PAGE> 19

Lease Payments and, if the related Tenant is a
Subsidiary, Lease Guaranty; (iv) a pledge of
certain moneys held in certain funds
established pursuant to the Trust Agreement, or
Collateral Trust Agreement if applicable, (v) a
Note Put Agreement requiring the Tenant and
Kmart (if the Tenant is a Subsidiary) to
purchase the related Mortgage Note(s) upon the
occurrence of a Triggering Event; (vi) an
assignment of the Borrower's right, title and
interest in and to any Construction Fund
Disbursement Agreement and any Construction
Fund Disbursement Agreement-Common Area related
to such Facility; (vii) a pledge of certain
investments of fund balances held in the Trust
or the Collateral Trust, if applicable, and
income earned thereon; and (viii) any other
Loan Documents. See "STRUCTURE OF THE
FINANCINGS" and "THE TRUSTS, PASS-THROUGH
TRUSTS AND COLLATERAL TRUSTS."

MORTGAGE NOTES Each Mortgage Note will evidence the
non-recourse obligation of a Borrower under a
Loan Agreement between such Borrower and the
Depositor pursuant to which the Depositor will
loan a portion of the proceeds of the offering
of the related Series of Certificates to such
Borrower to (i) finance the acquisition or the
acquisition and construction of, or to provide
permanent financing for, a Facility which will
be leased to a Tenant and (ii) pay a pro rata
portion of the costs of issuance of the
Certificates. Scheduled Payments on the
Mortgage Notes will be passed through to the
Certificateholders of each Trust on the dates
set forth in the related Prospectus Supplement
until the final scheduled Remittance Date for
such Trust. The Mortgage Notes will be subject
to prepayment prior to maturity as described
herein. Although the Mortgage Note(s) will not
be a direct obligation of, or guaranteed by,
Kmart or a Subsidiary, Lease Payments payable
by the Tenant of the related Facility (the
payment of which will be guaranteed by Kmart if
a Subsidiary is the Tenant), together with any
payments to be made from funds on deposit in
any related Capitalized Debt Service Account,
will be scheduled to be sufficient to pay the
Scheduled Payments on the Mortgage Notes which,
in turn, will be scheduled to be sufficient to
pay Debt Service on the Certificates. See "THE
MORTGAGE NOTES, THE LOAN AGREEMENTS AND RELATED
DOCUMENTS."

NOTE PUT AGREEMENT Kmart, a Subsidiary (if it is the Tenant) and
the Depositor will enter into a Note Put
Agreement with respect to each Mortgage Loan.
Each Note Put Agreement will provide that, in
the event (a)(i) a Tenant fails to pay when due
any Lease Payment within 10 days (or 30 days if
the Tenant is Kmart) after notice to the Tenant
of such default and (ii) if the Tenant is a
Subsidiary, Kmart fails to pay any such Lease
Payment within 30 days after notice to Kmart of
such Subsidiary's failure to do so (which
notice may be given concurrently with the
corresponding notice to such Subsidiary), (b)
completion of construction of the Facility to
be leased to the Tenant does not occur prior to
the Completion Date, or (c) if the Tenant is a
Subsidiary, a Lease Guaranty Termination occurs
(each, a Triggering Event), the Trustee, or the
Collateral Trustee if applicable, will have the
right to require the Tenant, and in the event
of the Tenant's failure to do so when the
Tenant is

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<PAGE> 20

a Subsidiary, to require Kmart to purchase the
related Mortgage Note(s) in whole (but not in
part) at the Purchase Price (which Purchase
Price will include the Make-Whole Premium or,
under certain circumstances, the Termination
Premium). In the event the Trustee, or the
Collateral Trustee if applicable, exercises
such right, the Purchase Price will be
deposited with the Trustee, or initially with
the Collateral Trustee if applicable, and on
the next Business Day with the Pass-Through
Trustee, and such amount, less any costs and
expenses incurred by the Trustee, the Pass-
Through Trustee or the Collateral Trustee in
connection with the exercise of their rights
under the Note Put Agreement, will be
distributed to the related Certificateholders.
If the Trust holds no other Mortgage Notes,
such distribution will be the final
distribution with respect to that Series of
Certificates. If the Trust holds other Mortgage
Notes, subsequent Debt Service on the
Certificates will be adjusted as provided in
the Trust Agreement. All of the Depositor's
right, title and interest in and to the Note
Put Agreement will be assigned to the Trustee,
or to the Collateral Trustee if applicable. See
"THE NOTE PUT AGREEMENTS."

LEASE Each Facility will be leased to a Tenant by the
related Borrower. The term of each Lease,
excluding renewal or extension terms, will
expire on or after maturity of the related
Mortgage Loan unless earlier terminated due to
certain bankruptcy, casualty loss or
condemnation events. Lease Payments will be
scheduled to be in amounts sufficient to pay
the Scheduled Payments on the related Mortgage
Notes, and such Scheduled Payments will be
scheduled to be in amounts sufficient to pay
Debt Service on the related Certificates. The
Lease Payments will be made by the related
Tenant directly to the Trustee or, if Mortgage
Notes of different maturities are issued by the
related Borrower, to the Collateral Trustee.
The obligation of the Tenant to make Lease
Payments will commence on the date the related
Mortgage Loan is made, if no construction of
the Facility is required, or, if construction
of the Facility is required, on the date
specified in the Lease regardless of whether
construction has been completed. All of the
Borrower's right, title and interest in and to
the Lease will be assigned to the Trustee, or
the Collateral Trustee if applicable. See "THE
LEASES, LEASE GUARANTIES AND RELATED DOCUMENTS"
and "THE MORTGAGE NOTES, THE LOAN AGREEMENTS
AND RELATED DOCUMENTS -- The Assignments of
Leases and Rents."

LEASE GUARANTY Kmart will enter into a Lease Guaranty with
respect to each Facility leased by a Borrower
to a Subsidiary. Pursuant to such Lease
Guaranty, Kmart will guarantee to the Borrower
the full and punctual payment, performance and
observance by the related Subsidiary of all of
the terms, conditions, covenants and
obligations to be performed and observed by the
Subsidiary under the related Lease. Except for
Kmart's or the Subsidiary's right to terminate
the Lease Guaranty in certain specific
circumstances stated in the Lease Guaranty, the
liability of Kmart under the Lease Guaranty
will be irrevocable so long as the Lease is not
terminated as permitted in the Lease. All of
the Borrower's right, title and

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<PAGE> 21

interest in and to the Lease Guaranty will be
assigned to the Trustee, or the Collateral
Trustee if applicable. See "THE LEASES, THE
LEASE GUARANTIES AND RELATED DOCUMENTS -- The
Lease Guaranty Agreements" and "THE MORTGAGE
NOTES, THE LOAN AGREEMENTS AND RELATED
DOCUMENTS -- The Assignments of Leases and
Rents."

FEDERAL INCOME TAX
CONSEQUENCES A Trust should be classified as a grantor trust
and not as an association taxable as a
corporation for federal income tax purposes.
Each Beneficial Owner will be treated as the
owner of a fractional undivided interest in the
Trust Property and, as such, will be required
to report a pro rata share of the income of
such Trust on its federal income tax return in
accordance with such Beneficial Owner's method
of accounting. See "CERTAIN FEDERAL INCOME TAX
CONSEQUENCES."
ERISA CONSIDERATIONS A fiduciary of any employee benefit plan
subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or
the Internal Revenue Code of 1986, as amended
(the "Code"), should review carefully with its
legal counsel whether the purchase or holding
of the Certificates could give rise to a
transaction prohibited or otherwise not
permissible under ERISA or the Code. See "ERISA
CONSIDERATIONS."
LEGAL INVESTMENT Institutions whose investment authority is
subject to review by federal or state
regulatory authorities should consult with
their counsel or the applicable authorities to
determine whether and to what extent the
Certificates constitute legal investments for
them. The Certificates will not constitute
"mortgage related securities" for purposes of
the Secondary Mortgage Market Enhancement Act
of 1984, as amended. See "LEGAL INVESTMENT
CONSIDERATIONS."

USE OF PROCEEDS The proceeds from the sale of each Series of
Certificates will be used by the Depositor to
make Mortgage Loans to Borrowers to (i) finance
the acquisition or acquisition and construction
of, or to provide permanent financing for,
Facilities and (ii) pay a pro rata portion of
the costs of issuance of the Certificates. In
the case of Mortgage Loans made to finance the
construction of Facilities, a portion of the
Mortgage Loan proceeds will be deposited in a
Capitalized Debt Service Account maintained in
a Trust or Collateral Trust, if applicable. See
"USE OF PROCEEDS."

RATING Unless otherwise specified in the related
Prospectus Supplement, each Series of
Certificates offered by means of this
Prospectus and the related Prospectus
Supplement will have an Investment Grade Rating
from the rating agency or rating agencies
identified in such Prospectus Supplement. See
"SPECIAL CONSIDERATIONS -- Limited Nature of
Credit Ratings."

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<PAGE> 22

SPECIAL CONSIDERATIONS

Investors should consider, among other things, the following factors in
connection with the purchase of Certificates.

NON-RECOURSE OBLIGATIONS OF SPECIAL PURPOSE BORROWER; RELIANCE ON LEASE PAYMENTS

Each Borrower will be a special purpose entity without assets other than
the related Facility and its interest as landlord under the related Lease, and
the related Mortgage Note(s) will be non-recourse obligation(s) of such
Borrower. Accordingly, the only source of payments under, or with respect to,
any Mortgage Note will be the related Lease Payments (which will be guaranteed
by Kmart if the Tenant is a Subsidiary), the proceeds of any foreclosure of the
related Facility, the right, under certain circumstances, to sell such Mortgage
Note to the related Tenant or to Kmart (if the Tenant is a Subsidiary) pursuant
to the related Note Put Agreement, and, under certain other circumstances,
Insurance Proceeds or Condemnation Proceeds payable in respect of such Facility.
Although the Lease Payments under each Lease, together with amounts in the
related Capitalized Debt Service Account, if any, will be scheduled to be in
amounts sufficient to pay the Scheduled Payments under the related Mortgage
Note(s), there can be no assurance, in the event of a default under such Lease
and the related Lease Guaranty and Note Put Agreement, or a termination of such
Lease in connection with a casualty, condemnation or Borrower bankruptcy, that
the value of the related Facility, and, if applicable, the amount of Insurance
Proceeds or Condemnation Proceeds, will be sufficient to permit the payment in
full of all amounts due under the Mortgage Note(s), or that Insurance Proceeds
or Condemnation Proceeds will be received in time to make Scheduled Payments on
the dates when due.

OPTION OF TENANT TO TERMINATE LEASE UNDER CERTAIN CIRCUMSTANCES

Each Lease will provide that in the event that all of the related Facility
is permanently expropriated, the Lease will automatically terminate. If (i) the
points of ingress and egress to the public roadways are materially impaired by a
permanent expropriation by a public or quasi-public authority (with no
reasonable replacement points of ingress and egress provided) so as to render
such Facility unsuitable for its intended use, (ii) less than the whole, but
more than 10% or such other higher percentage specified in the Prospectus
Supplement, of the square footage of the building or land constituting the
Facility is permanently expropriated by public or quasi-public authority, or
(iii) damage or destruction to the Facility takes place within two years prior
to the expiration date of the initial term of the Lease and the cost of
restoration exceeds 50% of the fair market value of the Facility immediately
prior to the time such damage or destruction took place, the Tenant will have
the right to terminate the Lease. If the Lease automatically terminates or the
Tenant exercises its right to terminate the Lease, the Tenant will have no
further obligation to make Lease Payments, the related Lease Guaranty (if the
Tenant is a Subsidiary) will be terminated, and the related Mortgage Note(s)
will automatically become due and payable, together with accrued but unpaid
interest and the Make-Whole Premium. Such termination of the Lease and Lease
Guaranty (if the Tenant is a Subsidiary) and the acceleration of the maturity of
the related Mortgage Note(s) will not give the Trustee or Collateral Trustee, if
applicable, the right to sell such Mortgage Note(s) under the related Note Put
Agreement. Accordingly, the only source from which to pay the amounts due under
such Mortgage Note(s) will be any Condemnation Proceeds or Insurance Proceeds
and the proceeds of foreclosure or other sale. There can be no assurance that
such proceeds will be sufficient to pay all amounts then due under the Mortgage
Note(s), although, in the case of a termination resulting from damage or
destruction during the last two years of the term of the Lease, the resulting
Insurance Proceeds may, in light of the fact that each Mortgage Note fully
amortizes during its term, be sufficient to pay all amounts due under such
Mortgage Note, except in the case of extraordinary devaluation of the Facility
during the term of such Mortgage Note.

OPTION OF SUBSIDIARY OR KMART TO TERMINATE LEASE GUARANTY UNDER CERTAIN
CIRCUMSTANCES

Each Lease Guaranty will provide that at the option of the related
Subsidiary or Kmart, the obligations of Kmart under the Lease Guaranty may be
terminated upon the occurrence of any of the following events: (a) the related
Subsidiary achieves Investment Grade Status without regard to Kmart's credit
rating, (b) the related Lease is assigned to a third party and such third party,
or an affiliate of such third party which has

8
<PAGE> 23

guaranteed such third party's obligations under the related Lease, has achieved
or subsequently achieves Investment Grade Status, or (c) more than 50% of the
issued and outstanding capital stock of the related Subsidiary is acquired by a
third party and such third party, or affiliate thereof, which has guaranteed the
Subsidiary's obligations under the related Lease, has achieved or subsequently
achieves Investment Grade Status. Termination of the Lease Guaranty as a result
of either (a), (b) or (c) above constitutes a Triggering Event pursuant to the
related Note Put Agreement and unless the holders of Certificates evidencing not
less than a 66 2/3% Percentage Interest in the related Mortgage Note(s) direct
the Trustee not to exercise its rights under the Note Put Agreement, the related
Subsidiary, or upon the failure of the Subsidiary to do so, Kmart must purchase
the related Mortgage Note(s). In the event the Trustee is directed by the
required percentage of holders of Certificates not to exercise its rights under
the Note Put Agreement, and the long-term unsecured debt rating of the (i)
Tenant or (ii) Assignee (in the event of a Qualified Assignment) and the New
Guarantor is lower than the long-term unsecured debt rating of Kmart, the
Investment Grade Rating of the Certificates will be downgraded to the greater of
the Investment Grade Rating of such Tenant or Assignee or of the New Guarantor.
A Termination Premium or, if less, a Make-Whole Premium is payable in connection
with any such purchase. The Note Put Agreement will terminate in the event of a
termination of the related Lease Guaranty if the related Mortgage Note(s) are
not required to be purchased in accordance with such Note Put Agreement as a
consequence of such Lease Guaranty Termination. Kmart has announced plans to
sell majority interests in Borders/Walden, OfficeMax and The Sports Authority
through initial public offerings of stock. Investors in the Certificates may
wish to consider whether the sale of such interests by Kmart will increase the
likelihood that the obligations of Kmart under the related Lease Guarantees will
be terminated. See "THE LEASES, THE LEASE GUARANTIES AND RELATED DOCUMENTS --
The Lease Guaranty Agreements" and "THE NOTE PUT AGREEMENTS."

BANKRUPTCY

In the event that a bankruptcy petition should be filed by or against a
Borrower under the Bankruptcy Code, the rights of Certificateholders may be
adversely affected as a result of the Borrower's exercise of certain rights and
remedies available to a debtor-in-possession under the Bankruptcy Code. If a
Borrower is in bankruptcy and rejects the related Lease, the related Consent and
Agreement will require the related Tenant to elect under Section 365(h) of the
Bankruptcy Code to remain in possession of the Facility, and to continue making
Lease Payments, for the remaining term of the Lease. However, if notwithstanding
such election, the Tenant is deprived of possession of the Facility as a result
of the Lease having been rejected by such Borrower in the bankruptcy proceeding,
such Tenant and Kmart (if the Tenant is a Subsidiary) will have no further
obligation to make Lease Payments or any further obligations under such Lease,
the related Lease Guaranty or the related Note Put Agreement.

In the event that a Tenant should become the subject of a bankruptcy
proceeding, such Tenant as a debtor-in-possession, or its bankruptcy trustee,
may reject the related Lease, thereby leaving the Borrower with an unsecured
claim for damages limited to an amount equal to the rent reserved under such
Lease, without acceleration, for the greater of one year or 15 percent (not to
exceed three years) of the remaining term of such Lease (plus rent already due
but unpaid). Alternatively, such Lease may be recharacterized by the bankruptcy
court as a secured loan to such Tenant, thereby subjecting the Borrower (and,
indirectly, the Trustee or Collateral Trustee) to certain risks associated with
being a secured creditor of such Tenant. In the event of bankruptcy proceedings
instituted by or against a Subsidiary which is a Tenant, Kmart would continue to
be obligated under the related Lease Guaranty for the payment of the
Subsidiary's obligations under the Lease, and Kmart would remain obligated under
the Note Put Agreement to purchase the related Mortgage Note(s) upon the
occurrence of a Triggering Event. See "CONSEQUENCES OF BANKRUPTCY OF A TENANT OR
A BORROWER."

LIMITED LIQUIDITY

There can be no assurance that a secondary market for the Certificates of
any Series will develop or, if it does develop, that it will provide
Certificateholders with liquidity of their investment or will continue for the
life of the Certificates. In addition, the market value of Certificates of each
Series will fluctuate with changes

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<PAGE> 24
in prevailing interest rates. Consequently, sale of the Certificates in any
secondary market which may develop may be at a discount from par value or from
their purchase price. Certificateholders have no optional redemption rights.

LIMITED NATURE OF CREDIT RATINGS

Any rating assigned to the Certificates by a rating agency will reflect
only such rating agency's assessment of the likelihood that timely distributions
will be made with respect to such Certificates. Such rating will not constitute
an assessment of the risk that the Leases will be terminated, or of the
likelihood that principal prepayments on the Mortgage Notes comprising part of
the Trust Property will be made by Borrowers, or address the effect of any
Make-Whole Premium or Termination Premium on the anticipated yield for any
Series. As a result, such rating will not address the possibility that a
prepayment of a Mortgage Loan may cause such investor to experience a lower than
anticipated yield.

Kmart will be either the Tenant under, or (unless the guaranty is
terminated as described above) the guarantor of, all of the Leases, and, as
such, may become the ultimate source of payment on the Mortgage Loans and,
therefore, the ultimate source of payments on the Certificates. Because of this
dependence upon Kmart for the ultimate payment of the Certificates, the ratings
on the Certificates are directly related to the credit of Kmart. It should,
therefore, be expected that a reduction or withdrawal of the debt ratings of
Kmart will adversely affect the ratings on the Certificates. The long-term
unsecured debt obligations of Kmart are currently rated "BBB+" by S&P, "A3" by
Moody's and "A-" by Duff & Phelps Credit Rating Co.

KMART

BACKGROUND

Kmart Corporation ("Kmart" or "Company") is one of the world's largest mass
merchandise retailers. The dominant portion of Kmart's business consists of the
Kmart Group which as of January 26, 1994 operated a chain of 2,323 Kmart
discount stores with locations in each of the 50 United States and Puerto Rico.
The Kmart Group's international operations consisted primarily of 127 Kmart
stores in Canada and 13 department stores located in the Czech Republic and
Slovakia as of January 26, 1994. The Central European stores were acquired in
mid-1992 and represent Kmart's entry into that market. Kmart is developing
advanced distribution methods and merchandising skills to modernize, refurbish
and streamline operations in the two Central European countries. As part of its
international expansion strategy, the Kmart Group has formed joint ventures in
Mexico and Singapore and expects to open stores in those countries in 1994.
Kmart also holds significant equity interest in Coles Myer Ltd., Australia's
largest retailer, and substantially all of the Meldisco subsidiaries of Melville
Corporation, which operate the footwear departments in domestic Kmart stores.
The Kmart Group also includes the operations of PayLess Drug Stores Northwest,
Inc., which was sold in the first quarter of 1994, and PACE Membership
Warehouse, Inc., substantially all of the assets of which were sold in January
1994, each of which has been presented as a discontinued operation in the
Company's consolidated financial statements.

Kmart's Specialty Retail Groups consist of the Borders-Walden Group, the
Builders Square Group, the OfficeMax Group and The Sports Authority Group. The
Borders-Walden Group is a leading book retailer in the United States, and is
comprised of the Company's Borders, Inc. ("Borders") and Walden Book Company,
Inc. ("Walden") subsidiaries. As of January 23, 1994, Borders operated 44 large
format superstores in 22 states and the District of Columbia, each of which is
designed to be the premier book retailer in its market, and Walden, which is the
largest operator of mall-based bookstores in the United States, operated 1,159
book stores in 50 states and the District of Columbia. Although Borders and
Walden will continue to operate independently, Borders and Walden recently have
been combined under common executive leadership in order to realize synergies in
certain areas, including in the development of inventory control systems and in
merchandise distribution. The Builders Square Group, comprised of the Company's
Builders Square, Inc. subsidiary operated 177 home improvement stores in 26
states and Puerto Rico at January 23, 1994, of which 130 were Builders Square I
Stores and 47 were Builders Square II Stores. The business strategy of Builders
Square is to phase out its self-service warehouse-style home improvement stores
and operate large format superstores that emphasize customer service and provide
an extensive selection of quality products and

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<PAGE> 25
services to repair, remodel, redecorate and maintain both home and garden. The
OfficeMax Group is one of the largest operators of high-volume, deep discount
office products superstores in the United States, and is comprised of the
Company's OfficeMax, Inc. subsidiary. It operated 328 superstores in 38 states
as of January 22, 1994. The Sports Authority Group is the largest operator of
large format sporting goods stores in the United States in terms of both sales
and number of stores and is also the largest full-line sporting goods retailer
in the United States in terms of sales. It is comprised of the Company's The
Sports Authority, Inc. subsidiary which operated 80 sporting goods megastores at
January 23, 1994.

Kmart was incorporated under the laws of the State of Michigan on March 9,
1916. The principal executive offices of Kmart are located at 3100 West Big
Beaver Road, Troy, Michigan 48084, and its telephone number is (810) 643-1000.

RECENT DEVELOPMENTS

On January 5, 1994, the Board of Directors approved a restructuring plan
involving the Kmart Group (including Kmart Canada), the Builders Square Group
and the Borders-Walden Group. As a result, in the fourth quarter of 1993, Kmart
recorded a charge (Store Restructuring and Other Charges) to earnings of $1,348
million before taxes. Net of taxes, the charge was $862 million. The provision
included anticipated costs associated with Kmart stores which will be closed and
relocated, enlarged or refurbished in the United States and Canada, the closing
and relocation of certain Builders Square stores and the closing of
underperforming Walden stores. These costs, which represent approximately 85% of
the total, include lease obligations for store closings as well as fixed asset
writedowns, primarily furniture and fixtures, and inventory dispositions for all
affected stores. The remainder of the charge is for costs related to certain
changes to Walden's accounting policies in connection with its combination with
Borders, re-engineering programs (principally severance) and non-routine legal
contingency accrual.

The Store Restructuring and Other Charges related to the U.S. General
Merchandise Operations were principally for specifically-identified relocations
which will result in replacing smaller, less productive stores with larger
stores in better locations. These new stores are expected to generate improved
sales and gross margin which will be partially offset by increased store
occupancy and depreciation expense. The Kmart Group also expects that there will
be continued sales and profitability improvement at the stores modernized to
date. In 1993, modernized stores (including new stores, relocations, expansions
and refurbishments) outperformed non-modernized stores by 17% in sales, 12% in
customer count, 16% in units sold and 6% in transaction amounts, and the Super
Kmart Center stores open the full year averaged in excess of $55 million in
sales. These larger-format stores are a key part of the Kmart Group's strategy
to compete effectively in the marketplace. The Kmart Group will integrate these
larger-format stores and the Super Kmart Center program into the remaining U.S.
Kmart store modernization program. The Kmart Group anticipates that the store
modernization program will be substantially complete by the end of fiscal 1996.

In January 1994, PACE Membership Warehouse, Inc. ("PACE") sold the assets
and lease obligations of 93 of its warehouses and virtually all of the inventory
and membership files in the 34 warehouses not included in the transaction to
Sam's Club, a division of Wal-Mart, Stores, Inc. for $774 million. The book
value of the assets sold to Wal-Mart was $624 million. Operations of the 34
remaining PACE sites not included in the transaction were discontinued and PACE
is in the process of evaluating and marketing these leased sites as well as
leased premises for unopened warehouses and corporate facilities. Included in
the loss on the disposition of PACE was unamortized goodwill of $395 million,
expected remaining lease obligations in the warehouses not sold, other PACE
liabilities and a provision for additional costs anticipated during the wind-
down of PACE operations. The Company has accounted for PACE as a discontinued
operation in its financial statements.

In addition, Kmart sold its PayLess Drug Stores Northwest, Inc. ("PayLess")
subsidiary to Thrifty PayLess Holdings, Inc. ("TPH") and its subsidiary Thrifty
PayLess, Inc. for approximately $595 million in cash, $100 million in senior
notes of TPH and approximately 46% of the common equity of TPH. The book value
of PayLess' net assets sold was $1,186 million at January 26, 1994. The
structure of the sale was designed to maximize value received for PayLess. It is
Kmart's intention to divest substantially all of its

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<PAGE> 26

interest in TPH within one year. Management expects the disposition to be
achieved either through a private offering or other alternative means.
Accordingly, Kmart has reported PayLess as a discontinued operation in its
financial statements and has recorded its investment in TPH at anticipated net
realizable value.

Kmart has called for early redemption $300 million of its 8 3/8% debentures
due January 15, 2017, using the proceeds of the sale of PayLess to redeem the
issue. The resulting redemption premium and associated cost of $18 million, net
of applicable income taxes, was recorded in 1993 as part of the loss on disposal
of the discontinued operations. The $300 million principal amount has been
included in the current portion of long-term debt. Kmart believes the effect of
recognizing the charge in 1993 rather than in the first quarter of 1994 would
not have a material effect on the results of operations for its 1993 or 1994
fiscal years.

On July 21, 1994, Kmart announced that it accepted an offer from Coles Myer
which provides for the purchase of Kmart's 21.5 percent equity interest in the
Australian retailer. The transaction is conditional upon the approval of Coles
Myer shareholders and is subject to Coles Myer obtaining any necessary approval
by the Australian regulatory authorities. Under the terms of the agreement,
Kmart will receive the equivalent of A$4.55 per share for its Coles Myer shares,
which represented a premium over the then-current market price for the shares.
The closing price per share on July 20, 1994 was A$4.31. The total proceeds will
amount to approximately A$1,259 million (equivalent to U.S. $924 million.)

Following its meeting on August 16, 1994, the Company's Board of Directors
announced plans for public offerings of shares in three of the Company's
specialty retail businesses. A sale of a majority interest in Borders/Walden,
OfficeMax and The Sports Authority will be made through Initial Public Offerings
(IPO's). An IPO of shares in OfficeMax is expected to be filed within a few
weeks of the date of the meeting. Others will follow in an orderly manner
dependent upon market conditions. The Board of Directors and management continue
to review alternatives with respect to Builders Square and initiatives related
to the Company's core business. See "SPECIAL CONSIDERATIONS -- Option of
Subsidiary or Kmart to Terminate Lease Guaranty under Certain Circumstances."

FINANCIAL INFORMATION

Net income (loss) from continuing retail operations in 1993 was $(328)
million, as compared to $882 million and $789 million in 1992 and 1991,
respectively. Excluding the net of tax $862 million store restructuring and
other charges, 1993 net income from continuing retail operations was $534
million. The decrease in net income from continuing retail operations in 1993,
exclusive of the store restructuring and other charges, resulted primarily from
the inventory reduction program and gross margin pressure in U.S. Kmart stores.

Net income (loss) from discontinued operations in 1993 was $(81) million,
as compared to $59 million and $70 million in 1992 and 1991, respectively.
Discontinued operations include the results of PayLess and PACE, which have been
reclassified to reflect their respective dispositions announced in the fourth
quarter of 1993. The $81 million after-tax loss from the operation of
discontinued businesses in 1993 was the result of a significant net operating
loss at PACE which more than offset net income from PayLess. Additionally, in
1993, an after-tax loss of $521 million was realized from the disposal of
discontinued businesses.

Sales in 1993 were $34.16 billion, an increase of 10.1% from the $31.03
billion in the preceding year, as restated to exclude the PACE and PayLess
businesses.

Net income from continuing retail operations for the 13 weeks ended April
27, 1994 declined to $18 million from $58 million for the 13 weeks ended April
28, 1993 as restated to exclude the discontinued PACE and PayLess businesses and
before an extraordinary item and accounting changes. First-quarter sales reached
$7.81 billion, an increase of 6.2% from $7.35 billion for the same period of
1993.

12
<PAGE> 27

KMART CORPORATION
SELECTED FINANCIAL INFORMATION
(DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
13 WEEKS ENDED
----------------------
APRIL 27, APRIL 28,
1989(1) 1990 1991 1992 1993(2) 1994 1993
------- ------- ------- ------- ------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Summary of Operations
Sales........................ $27,670 $28,133 $29,042 $31,031 $34,156 $ 7,810 $ 7,352
Cost of merchandise sold..... 20,310 20,614 21,243 22,800 25,646 5,840 5,466
Selling, general and
administrative expenses... 6,277 6,435 6,603 6,875 7,636 1,886 1,744
Interest expense -- net...... 353 384 384 414 477 124 122
Income (loss) from continuing
retail operations before
income taxes.............. 444 1,070 1,189 1,327 (550) 28 83
Net income (loss) from
continuing retail
operations before an
extraordinary item and the
effect of accounting
changes................... 282 712 789 882 (328) 18 58
Ratio of earnings from
continuing retail
operations to fixed
charges................... 1.8 2.9 3.0 3.0 (3) (4) (4)
Balance Sheet (at end of
period):
Working capital.............. $ 3,685 $ 3,519 $ 4,682 $ 5,014 $ 4,123 $ 4,042 $ 4,593
Merchandise inventories...... 6,933 6,891 7,546 8,752 7,252 7,815 9,747
Total assets................. 13,145 13,899 15,999 18,931 17,504 17,963 20,090
Long-term debt............... 1,480 1,701 2,287 3,237 2,227 2,224 3,041
Capital leases............... 1,549 1,598 1,638 1,698 1,720 1,764 1,762
Shareholders' equity......... 4,972 5,384 6,891 7,536 6,093 6,010 7,464
</TABLE>

- -------------------------
(1) Results of operations for 1989 include a pre-tax provision of $640 million
($422 million net of tax) for store restructuring and other charges.

(2) Results of operations for 1993 include a pre-tax provision of $1,348 million
($862 million net of tax) for store restructuring and other charges.

(3) Fixed charges represent total interest charges, a portion of operating
rentals representative of the interest factor and amortization of debt
discount and expense. The deficiency of income from continuing retail
operations versus fixed charges was $581 million for the fiscal year ended
January 26, 1994.

(4) Due to the seasonality of Kmart's business, the ratio of earnings from
continuing retail operations to fixed charges for the interim period
computed as described in (3) above using 52 weeks ended April 28, 1993 was
2.8. The deficiency of income from continuing retail operations versus
fixed charges was $663 million for the 52 weeks ended April 27, 1994.

SECOND QUARTER 1994 FINANCIAL RESULTS

Net income from continuing retail operations for the 13 weeks ended July
27, 1994 declined to $94 million from $125 million for the 13 weeks ended July
28, 1993 as restated to exclude the discontinued PACE and divested PayLess
businesses. Second-quarter sales reached $8.83 billion, an increase of 4.6% from
$8.44 billion for the same period in 1993.

Net income for the 26 weeks of 1994 declined to $112 million from $183
million for the same period of 1993 as restated to exclude the discontinued and
divested businesses and before an extraordinary item and accounting changes.
Sales rose 5.4% to $16.64 billion from $15.79 billion for the same 26-week
period of 1993.

13
<PAGE> 28

KMART CORPORATION

SALES AND OPERATING INCOME

26 WEEKS ENDED JULY 27, 1994 AND JULY 28, 1993

(MILLIONS)

<TABLE>
<CAPTION>
26 WEEKS ENDED
--------------------
JULY 27, JULY 28,
1994 1993
-------- --------
<S> <C> <C>
Sales..................................................................... 16,638 15,791
Cost of merchandise sold.................................................. 12,477 11,775
Selling, general and administrative expenses.............................. 3,916 3,669
Interest expense -- net................................................... 240 247
Income from continuing retail operations before income taxes.............. 171 263
Net income from continuing retail operations.............................. 112 183
</TABLE>

THE DEPOSITOR

National Tenant Finance Corporation will be a Delaware corporation to be
formed prior to the initial issuance of Certificates. The Depositor will be a
limited purpose financing corporation formed solely for the purpose of
facilitating the origination and sale of Mortgage Loans. The Depositor's
certificate of incorporation will limit its business to the foregoing and will
place certain other restrictions on its activities.

The Depositor's principal executive office will be located in Phoenix,
Arizona.

USE OF PROCEEDS

The proceeds from the sale of each Series of Certificates will be used by
the Depositor to make Mortgage Loans to Borrowers (i) for permanent financing
of, or for the acquisition or acquisition and construction of, Facilities and
(ii) for the payment of a pro rata share of the costs of issuance of the
Certificates.

14
<PAGE> 29

DIAGRAM OF TRANSACTION STRUCTURE
INVOLVING A MORTGAGE NOTE WITH ONE MATURITY

CERTIFICATE HOLDERS
/\ /\
| |
| |
(13)| (1) |
| |
| |
| |
\/ \/
TRUST
/\ | \
| | \
| | \
(9) | | (2) \
| | \
| \/ (7) \
DEPOSITOR <------------- <---------
/\ | /\ \ TENNANT ----- |
|(4)| | (4) \ |(10) | |
| | | \ | | |
| | ESCROW \ \/ | |
(3)| | AGENT / KMART | |
| | | (11) / | |
| | | / | |
| \/ \/ / (5) | |
BORROWER <----------------------------| |
-----------------------------------|
(10)

15
<PAGE> 30

FOOTNOTES TO DIAGRAM WITH SINGLE MATURITY:

(1) On the Closing Date, the Certificates will be issued to the
Certificateholders by the Trust in exchange for the proceeds thereof.

(2) On the Closing Date, the Trust will provide funds to the Depositor to make
a Mortgage Loan to a Borrower.

(3) On the Closing Date, the Depositor will enter into a Loan Agreement with a
Borrower pursuant to which such Borrower will deliver to the Depositor a
Mortgage Note equal to the amount of the Mortgage Loan, a Mortgage on the
Facility to be leased to the Tenant, and an assignment of the Lease and
Lease Guaranty, if applicable.

(4) Unless otherwise specified in the related Prospectus Supplement, on the
Closing Date, if construction of the Facility is complete, the net proceeds
of the Mortgage Loan after payment of a pro rata share of the costs of
issuance of the Certificates will be disbursed to the Borrower. If the
Facility will be constructed with such proceeds, then such proceeds (net of
land costs and the amount placed in the Capitalized Debt Service Account)
will be disbursed to the Escrow Agent pursuant to a Construction Fund
Disbursement Agreement among the Borrower, the Depositor, the Tenant, Kmart
(if the Tenant is a Subsidiary), the Escrow Agent, and, if applicable, the
Construction Monitor.

(5) On the Closing Date, the Borrower will enter into a Lease with the Tenant
pursuant to which the Tenant will lease the Facility for use as a retail
store.

(6) On the Closing Date, if the Tenant is a Subsidiary, the Borrower will enter
into a Lease Guaranty with Kmart pursuant to which Kmart will guaranty the
payment and performance of the Subsidiary's obligations under the Lease.

(7) On the Closing Date, the Depositor, the Tenant and Kmart (if the Tenant is
a Subsidiary) will enter into a Note Put Agreement pursuant to which the
Depositor, upon the occurrence of a Triggering Event, will be entitled to
require the Tenant and, if the Tenant is a Subsidiary and fails to perform,
to require Kmart to purchase the related Mortgage Note(s) at the Purchase
Price.

(8) On the Closing Date, if the Tenant is a Subsidiary, the Depositor and Kmart
will enter into an Indemnity Agreement pursuant to which Kmart will
indemnify the Depositor in the event any Lease Payments under the Lease or
Lease Guaranty are asserted to be voidable in any bankruptcy proceeding
filed by or against the Subsidiary.

(9) On the Closing Date, the Depositor will assign to the Trust for the benefit
of the Certificateholders the Depositor's interest in the Mortgage Note and
the related Loan Documents including the Loan Agreement, the Mortgage, the
Lease, the Lease Guaranty, if applicable, the Note Put Agreement, the
Construction Fund Disbursement Agreement, if applicable, and the Indemnity
Agreement, if applicable.

(10) On the Closing Date, if the Facility will be constructed with the proceeds
of a Mortgage Loan, the Borrower will grant the Tenant a second mortgage on
the Facility to secure the Borrower's obligation to construct the Facility
and also will grant the Tenant an option to purchase the Facility in the
event Borrower does not complete such construction on or before the
Completion Date. If the Tenant is a Subsidiary, it will assign its rights
under the second mortgage and the option to purchase to Kmart to secure the
performance by the Subsidiary of its reimbursement obligations to Kmart
with respect to payments made by Kmart under the Lease Guaranty and the
Note Put Agreement.

(11) Unless otherwise stated in the related Prospectus Supplement, as
construction of the Facility continues, the Borrower will receive drawdowns
from the Escrow Agent pursuant to the Construction Fund Disbursement
Agreement. Each drawdown will require the approval of the Tenant.

(12) The Tenant will make Lease Payments directly to the Trust.

(13) On each Due Date, the Trustee will use such Lease Payments to pay Scheduled
Payments on the Mortgage Note and, on each Remittance Date, will use such
Scheduled Payments on the Mortgage Note to pay Debt Service on the
Certificates. As long as no Event of Default exists under any of the
related Loan Documents (other than a non-monetary default by the Tenant
under the Lease), on the second scheduled Remittance Date after the Closing
Date and on each anniversary thereafter of such Remittance Date, Lease
Payments received by the Trustee in excess of amounts needed to pay
Scheduled Payments on the Mortgage Note and certain other expenses will be
remitted to the Borrower.

See "STRUCTURE OF THE FINANCINGS" herein for a more detailed description of
the transaction set forth in the foregoing diagram.

16
<PAGE> 31

INVOLVING MORTGAGE NOTES WITH TWO MATURITIES

|--------------------------------------------------|
| (14) |
| |------------------------------ |
(15) \/ \/ (15) | |
CERTIFICATE<-------- PASS THROUGH PASS THROUGH -----> CERTIFICATE | |
HOLDERS (1) TRUST TRUST (1) HOLDERS | |
Series B ----------> Series B Series A <--------- Series A | |
/\| /\ | | |
| | | | | |
(9)| | (9) | | | |
| | | | COLLATERAL---------| |
| |(2) | | (2) / TRUST ----------------
| | | | (10)/ /\
| | | | / | (13)
| \/ | \/ (7) | <-------------
DEPOSITOR <------------ TENNANT ----------- |
/\| | \ | (11) | |
| |(4) \/ (4) \ | | |
| | ESCROW (7) \/ | |
(3) | | AGENT (8) \ KMART | |
| | | / | |
| | | / | |
| \/ \/ / (6) (5) | |
BORROWER <-------------------------------- |
-------------------------------------|
(11)

<PAGE> 32

FOOTNOTES TO DIAGRAM WITH TWO MATURITIES:

(1) On the Closing Date, the Certificates Series A will be issued to the
Certificateholders Series A by the Pass-Through Trust Series A in exchange
for the proceeds thereof, and the Certificates Series B will be issued to
the Certificateholders Series B by the Pass-Through Trust Series B in
exchange for the proceeds thereof. The Certificates Series A and the
Certificates Series B will have different maturities.

(2) On the Closing Date, the Pass-Through Trust Series A and the Pass-Through
Trust Series B will provide funds to the Depositor to make a Mortgage Loan
to a Borrower.

(3) On the Closing Date, the Depositor will enter into a Loan Agreement with
the Borrower pursuant to which the Borrower will deliver to the Depositor
the Mortgage Note Series A and the Mortgage Note Series B, the aggregate
principal amount of which will equal the principal amount of the Mortgage
Loan, a Mortgage on the Facility to be leased to the Tenant, and an
assignment of the Lease and Lease Guaranty, if applicable.

(5) On the Closing Date, the Borrower will enter into a Lease with the Tenant
pursuant to which the Tenant will lease the Facility for use as a retail
store.

(9) On the Closing Date, the Depositor will assign to the Pass-Through Trust
Series A for the benefit of Certificateholders Series A the Mortgage Note
Series A and will assign to the Pass-Through Trust Series B for the benefit
of Certificateholders Series B the Mortgage Note Series B. The Mortgage
Note Series A and the Mortgage Note Series B will have different maturities
that correspond, respectively, to the maturities of the Certificates Series
A and of the Certificates Series B.

(10) On the Closing Date, the Depositor will assign to the Collateral Trustee
for the benefit of the Pass-Through Trust Series A and the Pass-Through
Trust Series B the Depositor's interest in the Loan Documents including the
Loan Agreement, the Mortgage, the Lease, the Lease Guaranty, if applicable,
the Note Put Agreement, the Construction Fund Disbursement Agreement, if
applicable, and the Indemnity Agreement, if applicable.

(11) On the Closing Date, if the Facility will be constructed with the proceeds
of a Mortgage Loan, the Borrower will grant the Tenant a second mortgage on
the Facility to secure the Borrower's obligation to construct the Facility
and also will grant the Tenant an option to purchase the Facility in the
event Borrower does not complete such construction on or before the
Completion Date. If the Tenant is a Subsidiary, it will assign its rights
under the second mortgage and the option to purchase to Kmart to secure the
performance by the Subsidiary of its reimbursement obligations to Kmart
with respect to payments made by Kmart pursuant to the Lease Guaranty and
the Note Put Agreement.

(12) Unless otherwise stated in the related Prospectus Supplement, as
construction of the Facility continues, the Borrower will receive drawdowns
from the Escrow Agent pursuant to the Construction Fund Disbursement
Agreement. Each drawdown will require the approval of the Tenant.

(13) The Tenant will make Lease Payments directly to the Collateral Trust.

(14) On each Due Date, the Collateral Trustee will use such Lease Payments to
pay to the Pass-Through Trust Series A Scheduled Payments due on the
Mortgage Note Series A and to the Pass-Through Trust Series B Scheduled
Payments due on the Mortgage Note Series B. As long as no Event of Default
exists under any of the related Loan Documents (other than a non-monetary
default by the Tenant under the Lease), on the second scheduled Remittance
Date after the Closing Date and on each anniversary thereafter of such
Remittance Date, Lease Payments received by the Collateral Trustee in
excess of amounts needed to pay Scheduled Payments on the Mortgage Note
Series A and on the Mortgage Note Series B and certain other expenses will
be remitted to the Borrower.

(15) On each Remittance Date, the Pass-Through Trustee Series A will use such
Scheduled Payments on the Mortgage Note Series A to pay Debt Service on the
Certificates Series A, and the Pass-Through Trustee Series B will use such
Scheduled Payments on the Mortgage Note Series B to pay Debt Service on the
Certificates Series B.

NOTE: If the proceeds of the sale of Certificates are used to finance more than
one Facility, then each Facility will be owned and, if applicable, constructed
by a different Borrower, each Loan Agreement, the Mortgage Notes issued
thereunder and related Loan Documents will relate to only one Facility, the
Facilities may be leased by the same Tenant or by different Tenants and the
foregoing structure will apply to each Mortgage Loan except that only a portion
of the proceeds of the sale of Certificates will be used to finance such
Mortgage Loan. If a Mortgage Loan is evidenced by Mortgage Notes of more than
two maturities, there will be a different Pass-Through Trust and a different
series of Certificates for each maturity. In all other respects, the foregoing
structure will apply.
See "STRUCTURE OF THE FINANCINGS" herein for a more detailed description of
the transaction set forth in the foregoing diagram.

18
<PAGE> 33

STRUCTURE OF THE FINANCINGS

Concurrently with the issuance of each Series of Certificates, the
Depositor will make a Mortgage Loan to a Borrower or multiple Mortgage Loans,
each to a different Borrower, with the proceeds from the sale of the
Certificates to be used as permanent financing for, or for the financing of the
acquisition or the acquisition and construction of, one or more Facilities and
to pay a pro rata share of the costs of issuance of the Certificates. Each
Facility will be owned or owned and constructed by a different Borrower
(provided that in certain cases the Borrower may have a ground leasehold
interest in, and not fee simple title to, the Demised Premises) and will be a
retail or warehouse facility to be leased to a Tenant pursuant to a Lease
between such Borrower and such Tenant. Lease Payments will be guaranteed by
Kmart pursuant to a Lease Guaranty (if the Tenant is a Subsidiary). Lease
Payments will be made by the Tenant directly to the Trustee or to the Collateral
Trustee, if applicable, and will be scheduled to be sufficient to pay Scheduled
Payments on the related Mortgage Note(s) for the period from and after the
commencement of such Lease Payments. If the Facility is constructed when the
Mortgage Loan is made, Lease Payments will commence immediately. If the Facility
is to be constructed with the proceeds of the Mortgage Loan, Lease Payments will
commence on a date specified in the Lease even if construction of the Facility
is not complete. With respect to each Mortgage Loan when Lease Payments do not
commence immediately, a portion of such Mortgage Loan will be deposited in a
related Capitalized Debt Service Account, and such amount will be sufficient to
pay Scheduled Payments that become due or accrue prior to the commencement of
Lease Payments. In connection with each Mortgage Loan, the related Borrower will
execute and deliver, or cause to be executed and delivered, to the Depositor (i)
a Mortgage Note or Mortgage Notes and Mortgage (ii) an assignment of the Lease,
Lease Payments and, if the Tenant is a Subsidiary, the Lease Guaranty and (iii)
other Loan Documents.

With respect to each Mortgage Loan, the related Tenant and Kmart (if the
Tenant is a Subsidiary) will enter into a Note Put Agreement with the Depositor
giving the Depositor the right to require such Tenant and Kmart, if applicable,
to purchase the related Mortgage Note(s) at the Purchase Price upon the
occurrence of (i) a default in the payment of Lease Payments by such Tenant
after 10 days notice (or 30 days notice if the Tenant is Kmart) of such default
and, if the Tenant is a Subsidiary, by Kmart after 30 days notice of such
default (which notice may be given concurrently with the corresponding notice to
such Subsidiary), (ii) a failure to complete construction of the related
Facility by the Completion Date or (iii) if the Tenant is a Subsidiary, the
occurrence of a Lease Guaranty Termination of the related Lease Guaranty (each,
a Triggering Event).

In consideration for the proceeds of the sale of the Certificates, and if
the related Loan Agreements provide for Mortgage Notes of a single maturity, the
Depositor will convey to the Trustee, without recourse, such Mortgage Notes and
all of the Depositor's right, title and interest in and to the related Loan
Documents, including the related Lease, Lease Guaranty, if applicable, Indemnity
Agreement, if applicable, Loan Agreement, Mortgage and Note Put Agreement. When
the Loan Agreements provide for Mortgage Notes of different maturities, the
Depositor will convey the Mortgage Notes to different Pass-Through Trustees such
that each Pass-Through Trustee will hold only Mortgage Notes having the same
maturity. All of the Depositor's right, title and interest in and to the related
Loan Documents, including the related Lease, Lease Guaranty, if applicable,
Indemnity Agreement, if applicable, Loan Agreement, Mortgage and Note Put
Agreement, will be conveyed by the Depositor to the Collateral Trustee which
will hold such property in trust for the benefit, pari passu, of the
Pass-Through Trustees as holders of the related Mortgage Notes. In no case will
Mortgage Notes issued under different Loan Agreements be cross-collateralized or
subject to cross-default provisions.

If the proceeds of a Mortgage Loan will be used to construct a Facility,
unless otherwise stated in the related Prospectus Supplement, the Depositor, the
related Borrower, the related Tenant, Kmart (if the Tenant is a Subsidiary), an
Escrow Agent and, in some cases, a Construction Monitor engaged at the request
of such Tenant will enter into a Construction Fund Disbursement Agreement, which
will provide that the Borrower will deposit the net proceeds of the Mortgage
Loan (less amounts used to pay a pro rata share of the costs of issuance of the
Certificates, amounts used to acquire land or ground leasehold interest, amounts
used to fund the related Capitalized Debt Service Account and amounts deposited
in the related Escrow Account-Common Area, if any) into the Escrow Account
created pursuant to such Construction Fund

19
<PAGE> 34
Disbursement Agreement. Amounts deposited in each Escrow Account will be
disbursed to a Borrower in connection with the acquisition and construction of a
Facility upon approval by the related Tenant and the Construction Monitor, if
one is appointed, of draw requests submitted by such Borrower. In certain
instances, Borrowers may own or acquire, or may lease, contiguous but separate
parcels of land for the purpose of constructing a shopping center to be occupied
by more than one Tenant. If the Common Area of such a shopping center is to be
built using a portion of the proceeds of the Mortgage Loans related to such
Facilities, then, in addition to the Construction Fund Disbursement Agreement,
there will be a Construction Fund Disbursement Agreement -- Common Area among
the same parties together with each additional Borrower and each additional
Tenant that is leasing a Facility that will be utilizing such Common Area. The
portion of the related Mortgage Loans that will be used to construct such Common
Area will be deposited in an Escrow Account -- Common Area established pursuant
to such Construction Fund Disbursement Agreement -- Common Area, and will be
disbursed upon approval of such Tenants and the Construction Monitor, if one is
appointed, of draw requests submitted by the Borrowers constructing such Common
Area. All of each Borrower's right, title and interest in and to any
Construction Fund Disbursement Agreement and any Construction Fund Disbursement
Agreement -- Common Area will be pledged, subject to the rights of the Tenants
and Kmart under such Agreements, to the Trustee, or to the Collateral Trustee,
if applicable.

Each Trust Agreement will provide for the establishment of a Certificate
Account and, if there is no Collateral Trust, a Rental Payment Account. Each
Collateral Trust Agreement will provide for the establishment of a Rental
Payment Account and a Mortgage Note Account. The Lease Payments related to the
Mortgage Notes held by the Trustee, or Pass-Through Trustees, if applicable,
will be paid directly by the related Tenants to such Trustee, or the Collateral
Trustee if applicable, and, unless an Event of Default has occurred under any of
the Loan Documents (other than a non-monetary default by the related Tenant
under the related Lease), deposited in the related Rental Payment Account. Such
Lease Payments will be scheduled to be in amounts sufficient to pay Scheduled
Payments on such Mortgage Notes. On the Business Day immediately preceding each
Remittance Date, amounts on deposit in the Rental Payment Account(s) equal to
Scheduled Payments due under the related Mortgage Note or Mortgage Notes will be
deposited in the Certificate Account(s) in the related Trust or Pass-Through
Trust, as applicable, and will be applied to pay Debt Service on the
Certificates as set forth in the related Prospectus Supplement. The Scheduled
Payments on the Mortgage Note(s) will be scheduled to be sufficient to pay the
interest applicable to the related Series of the Certificates and over the term
of such Mortgage Notes to pay the principal of such Series of Certificates. The
maturity date of each Mortgage Note acquired by a Trust or Pass-Through Trust
will correspond to the final Remittance Date applicable to the related Series of
the Certificates.

THE CERTIFICATES

The Certificates described herein and in the related Prospectus Supplements
will be issued from time to time in Series pursuant to one or more Trust
Agreements or Pass-Through Trust Agreements. Each Pass-Through Trust Agreement
(used when there are Mortgage Notes of different maturities) will contain
substantially the same terms as each other such Pass-Through Trust Agreement,
except that interest rates, scheduled payments of principal, aggregate principal
amount and final distribution dates applicable to each Series of Certificates
may differ. When there are Mortgage Notes of different maturities, the
Collateral for all such Mortgage Notes will be held in a Collateral Trust for
the benefit, pari passu, of all Pass-Through Trusts holding any of the Mortgage
Notes secured by such Collateral. The following summaries describe certain
provisions common to each Series of Certificates. The summaries do not purport
to be complete and are subject to, and are qualified in their entirety by
reference to, the Prospectus Supplement and the provisions of the Trust
Agreement or Pass-Through Trust Agreement relating to each such Series of
Certificates, the forms of which have been filed as exhibits to the Registration
Statement of which (in substantially the form in which they will be used) this
Prospectus is a part.

GENERAL

The Certificates will be issued in fully registered form only. Each
Certificate will represent a fractional undivided beneficial ownership interest
in the assets conveyed to the Trust or Pass-Through Trust pursuant to

20
<PAGE> 35

which such Series of Certificates was issued. Each Certificate will correspond
to a pro rata share of the outstanding principal amount of the Mortgage Notes
held in the related Trust or Pass-Through Trust and will be issued in minimum
denominations of $1,000 initial principal amount and integral multiples of
$1,000 in excess thereof unless otherwise specified in the related Prospectus
Supplement. The Certificates will be registered in the name of Cede & Co.
("Cede") as the nominee of The Depository Trust Company ("DTC"). No person
acquiring an interest in the Certificates (a "Beneficial Owner") will be
entitled to receive a Certificate representing such person's interest in the
Certificates, except as set forth below under "Book-Entry Registration --
Definitive Certificates." Unless and until Definitive Certificates are issued
under the limited circumstances described herein, all references to actions by
Certificateholders shall refer to actions taken by DTC upon instructions from
DTC Participants (as defined below) and all references herein to distributions,
notices, reports and statements to Certificateholders shall refer, as the case
may be, to distributions, notices, reports and statements to DTC or Cede, as the
registered holder of the Certificates, or to DTC Participants for distribution
to Beneficial Owners in accordance with DTC procedures. See "Book-Entry
Registration."

Scheduled Payments made on the Mortgage Notes held in a Trust or a
Pass-Through Trust will be passed through to Certificateholders of such Trust or
Pass-Through Trust on the dates and in the amounts set forth in the related
Prospectus Supplement until the final scheduled Remittance Date for such Trust.

Each Certificate will represent a fractional undivided beneficial ownership
interest in the related Trust or Pass-Through Trust and will not have any
rights, benefits or interest in respect of any other Trust or Pass-Through Trust
or in the property held by any other Trust or Pass-Through Trust. All payments
and distributions on each Series of Certificates will be made only from the
Trust Property in which such Series of Certificates evidences an interest.
Although Lease Payments in amounts necessary to permit the timely payment of
Scheduled Payments on the Mortgage Notes, and consequently Debt Service on the
Certificates, will be direct obligations of one or more Tenants, which Lease
Payments will be guaranteed by Kmart if the related Tenant is a Subsidiary, the
Certificates themselves will not represent an interest in or obligation of
Kmart, any Subsidiary, any Trustee, any Pass-Through Trustee, any Collateral
Trustee, any Borrower or the Depositor. Each purchaser of a Certificate will
look solely to the income and proceeds from the Trust Property to the extent
available for distribution as provided in the Trust Agreement or Pass-Through
Trust Agreement.

No Trust Agreement, Pass-Through Trust Agreement, Collateral Trust
Agreement, Lease, Lease Guaranty, if applicable, Note Put Agreement or other
Loan Document will include financial covenants or other provisions that would
afford Certificateholders protection in the event of highly leveraged or other
transactions involving Kmart. The Certificateholders will have the benefit
solely of the Collateral securing the Mortgage Loan held in the related Trust
Agreement or Collateral Trust, as applicable. See "THE MORTGAGE NOTES, THE LOAN
AGREEMENTS AND RELATED DOCUMENTS."

BOOK-ENTRY REGISTRATION

General

DTC is a limited purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered pursuant to Section 17A of the Exchange Act. DTC
was created to hold securities for its participants ("DTC Participants") and to
facilitate the clearance and settlement of securities transactions between DTC
Participants through electronic book-entries, thereby eliminating the need for
physical movement of certificates. DTC Participants include securities brokers
and dealers, banks, trust companies and clearing corporations. Indirect access
to the DTC system also is available to others such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a DTC Participant either directly or indirectly ("Indirect Participants").

Beneficial Owners that are not DTC Participants or Indirect Participants
but desire to purchase, sell or otherwise transfer ownership of, or other
interests in, Certificates may do so only through DTC Participants and Indirect
Participants. In addition, Beneficial Owners will receive all distributions of
principal and interest from the Trustee through DTC Participants or Indirect
Participants, as the case may be. Under a book-entry format, Beneficial Owners
may experience some delay in their receipt of payments, since such payments will

21
<PAGE> 36
be forwarded by the Trustee to Cede, as nominee for DTC. DTC will forward such
payments to DTC Participants, which thereafter will forward them to Indirect
Participants or Beneficial Owners, as the case may be, in accordance with
customary industry practices. The forwarding of such distributions to the
Beneficial Owners will be the responsibility of such DTC Participants and
Indirect Participants. When book-entry registration is used, the only
"Certificateholder" of a Trust will be Cede, as nominee of DTC. Beneficial
Owners will not be recognized by the Trustee as Certificateholders, as such term
is used in the Trust Agreement or Pass-Through Trust Agreement, and Beneficial
Owners will be permitted to exercise the rights of Certificateholders only
indirectly through DTC and DTC Participants.

Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
Certificates among DTC Participants on whose behalf it acts with respect to the
Certificates and to receive and transmit distributions of principal of, premium,
if any, and interest on, the Certificates to DTC Participants. DTC Participants
and Indirect Participants with which Beneficial Owners have accounts with
respect to the Certificates similarly are required to make book-entry transfers
and receive and transmit such payments on behalf of their respective Beneficial
Owners. Accordingly, although Beneficial Owners will not possess Certificates,
the Rules provide a mechanism by which Beneficial Owners will receive payments
and will be able to transfer their interests.

Because DTC can only act on behalf of DTC Participants, who in turn act on
behalf of Indirect Participants, the ability of a Beneficial Owner to pledge
Certificates to persons or entities that do not participate in the DTC system,
or to otherwise act with respect to such Certificates, may be limited due to the
absence of a physical certificate for such Certificates.

DTC has advised the Depositor that it will take any action permitted to be
taken by a Certificateholder under the Trust Agreement only at the direction of
one or more DTC Participants to whose accounts with DTC the Certificates are
credited. Additionally, DTC has advised the Depositor that it will take such
actions with respect to any percentage of Certificateholders of each Trust only
at the direction of and on behalf of DTC Participants whose holdings include
fractional undivided interests that satisfy any such percentage. DTC may take
conflicting actions with respect to other fractional undivided interests to the
extent that such actions are taken on behalf of DTC Participants whose holdings
include such fractional undivided interests. All notices to Certificateholders
under a Trust Agreement or Pass-Through Trust Agreement will be sent to Cede so
long as the Series of Certificates issued pursuant to such Trust Agreement or
Pass-Through Trust Agreement is represented by a single Certificate registered
in the name of Cede.

None of the Company, the Depositor, the Trustee or the Pass-Through Trustee
will have any liability for any aspect of the records relating to or payments
made on account of beneficial ownership interests in the Certificates held by
Cede, as nominee for DTC, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.

The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company and the Depositor believe to be
reliable, but neither the Company nor the Depositor takes any responsibility for
the accuracy thereof.

Definitive Certificates

The Certificates will be issued in fully registered, certificated form
("Definitive Certificates") to Beneficial Owners or their nominees, rather than
to DTC or its nominee, only if (i) the Depositor advises the Trustee or
Pass-Through Trustee in writing that DTC is no longer willing or able to
discharge properly its responsibilities as depository with respect to the
Certificates and the Depositor is unable to appoint a qualified successor or
(ii) the Depositor, at its option and only with the prior written consent of
Kmart, elects to terminate the book-entry system through DTC.

Upon the occurrence of any event described in the immediately preceding
paragraph, the Trustee or Pass-Through Trustee will be required to notify all
Beneficial Owners through DTC Participants of the availability of Definitive
Certificates. Upon surrender by DTC of the global certificates representing the

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Certificates and receipt of instructions for re-registration, the Trustee or
Pass-Through Trustee will reissue the Certificates as Definitive Certificates to
Beneficial Owners.

Definitive Certificates will be freely transferable and exchangeable at the
office of the Trustee or Pass-Through Trustee upon compliance with the
requirements set forth in the Trust Agreement or Pass-Through Trust Agreement.
No service charge will be imposed for any registration of transfer or exchange,
but payment of a sum sufficient to cover any tax or other governmental charge
will be required.

Settlement and Payment

So long as the Certificates are registered in the name of Cede, as nominee
of DTC, all payments of distributions pursuant to the Trust Agreement or
Pass-Through Trust Agreement will be paid to DTC in immediately available funds.

Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing-house or next-day funds. In contrast, the
Certificates will trade in DTC's Same-Day Funds Settlement System until
maturity, and secondary market trading activity in the Certificates will
therefore be required by DTC to settle in immediately available funds. No
assurance can be given as to the effect, if any, of settlement in immediately
available funds on trading activity in the Certificates.

DISTRIBUTIONS OF SCHEDULED PAYMENTS

The Prospectus Supplement for a Series will specify the Due Dates on which
payments of interest and principal on each Mortgage Note ("Scheduled Payments")
held by a related Trust or Pass-Through Trust are due and the Remittance Dates
on which the Trustee or Pass-Through Trustee will distribute to each
Certificateholder its pro rata share of the Available Distribution Amount for
the payment of Debt Service. Each such distribution will be made by the Trustee
to holders of record of the Certificates on the close of business of the
fifteenth day preceding the related Remittance Date, except with respect to
Scheduled Payments received after the Due Date (the "Record Date"). Lease
Payments related to any Mortgage Note will be paid directly to the Trustee, or
the Collateral Trustee if applicable. On each Due Date, the Trustee will use
such Lease Payments to pay the Scheduled Payments on the related Mortgage Note
or the Collateral Trustee will transfer to the Pass-Through Trustee amounts
sufficient to pay the Scheduled Payments on the related Mortgage Notes. Such
Scheduled Payments will then be used by the Trustee, or Pass-Through Trustee, if
applicable, to pay Debt Service to the Certificateholders on the related
Remittance Date. See "THE TRUSTS, PASS-THROUGH TRUSTS AND COLLATERAL TRUSTS."

Each Mortgage Note will provide for interest at an overdue rate as
specified in the related Prospectus Supplement on any Scheduled Payments, or
portions thereof, that are not paid when due. The related Lease will provide for
a late payment rate applicable to any Lease Payments, or portions thereof, that
are not paid when due (including any grace period). The late payment rate in the
Lease is scheduled to be sufficient to pay the overdue rate on the related
Mortgage Note(s). Any portion of Scheduled Payments and overdue interest thereon
received by the Trustee or Pass-Through Trustee after the related Due Date will
be distributed to the Certificateholders, based upon their Percentage Interests,
within 10 Business Days of receipt of the corresponding late Lease Payments by
the Trustee or Collateral Trustee. The Record Date with respect to such
distributions will be the close of business on the fifteenth day prior to the
Remittance Date on which the related Scheduled Payment would have been
distributable to Certificateholders had such Scheduled Payment been timely paid
in full. See "THE MORTGAGE NOTES AND THE LOAN AGREEMENTS -- Scheduled Payments."

OTHER DISTRIBUTIONS

Certificateholders may receive other distributions on the Certificates due
to the optional prepayment of a Mortgage Note by the related Borrower, the sale
of a Mortgage Note as a result of the occurrence of a Triggering Event under the
related Note Put Agreement, the termination of a Lease due to certain casualty
or condemnation events, a condemnation that does not result in a termination of
the related Lease, or the liquidation of a Mortgage Note. The Trustee or
Pass-Through Trustee will send notice of any such distribution

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to the Certificateholders at the address shown on the Certificate Register not
less than 10 days prior to the date fixed for such distribution. The reasonable
costs of such notices incurred by the Trustee or Pass-Through Trustee will be
deducted from the amount of any such distribution.

Optional Prepayment Distribution

Unless otherwise specified in the related Prospectus Supplement, any
Mortgage Note may be prepaid at any time, in whole or in part (but if in part,
then in units of $1,000,000 or an integral multiple of $100,000 in excess
thereof), at the option of the related Borrower at a price equal to the Purchase
Price. See "THE MORTGAGE NOTES, THE LOAN AGREEMENTS AND RELATED DOCUMENTS --
Prepayments -- Optional Prepayments." Any such prepayment will be deposited with
the Trustee, or, if applicable, the Collateral Trustee, which will transfer it
to the related Pass-Through Trustees on the next Business Day. Any such
prepayment will be distributed to the Certificateholders, based on their
Percentage Interests, within 30 days of receipt by the Trustee or Collateral
Trustee. Subsequent distributions to Certificateholders of Debt Service will be
proportionately reduced as a consequence of the reduction of the aggregate
outstanding principal balance of the Mortgage Note(s) and the corresponding
reduction of Scheduled Payments.

Distribution from Proceeds of Purchase of Mortgage Note

A distribution will be made with respect to the Certificates of any Series
in the event that a Tenant or Kmart (if the Tenant is a Subsidiary) purchases a
Mortgage Note pursuant to the related Note Put Agreement. Each Note Put
Agreement will provide that, in the event (a)(i) a Tenant fails to pay when due
any Lease Payment within 10 days (or 30 days if the Tenant is Kmart) after
notice to the Tenant of such default and (ii) if the Tenant is a Subsidiary,
Kmart fails to pay any such Lease Payment within 30 days after notice to Kmart
of such Subsidiary's failure to do so (which notice may be given concurrently
with the corresponding notice to such Subsidiary), (b) completion of
construction of the Facility to be leased to the Tenant does not occur prior to
the Completion Date, or (c) if the Tenant is a Subsidiary, a Lease Guaranty
Termination occurs (each, a Triggering Event), the Trustee, or Collateral
Trustee, if applicable, will have the right to require the Tenant, and in the
event of the Tenant's failure to do so when the Tenant is a Subsidiary, to
require Kmart to purchase the related Mortgage Note(s) in whole (but not in
part) at the Purchase Price. In the event the Trustee or Collateral Trustee
exercises such right, the Purchase Price will be deposited with the Trustee, or,
if applicable, the Collateral Trustee which will transfer it to the related
Pass-Through Trustees on the next Business Day. Upon receipt of the Purchase
Price with respect to such Mortgage Note(s), the Trustee, or the Pass-Through
Trustee if applicable, will endorse the related Mortgage Notes(s), and the
Trustee, or the Collateral Trustee if applicable, will assign the related Loan
Documents to the purchaser of the Mortgage Note(s), whereupon the Trust, or the
Pass-Through Trust and the Collateral Trust if applicable, will terminate as to
such Mortgage Note(s) and the related Collateral. Any Purchase Price received by
the Trustee or Pass-Through Trustee as a result of its exercise of its rights
under a Note Put Agreement, less any expense incurred by the Trustee, or the
Pass-Through Trustee and Collateral Trustee, will be distributed to the related
Certificateholders within 30 days of the receipt of such Purchase Price by the
Trustee, or Collateral Trustee if applicable. If the Trust or Pass-Through Trust
holds any other Mortgage Note(s), Debt Service distributable to the
Certificateholders will be proportionately reduced to reflect the reduction in
the aggregate Scheduled Payments payable to the Trust or Pass-Through Trust
after the sale of the Mortgage Note(s) pursuant to the Note Put Agreement. See
"THE NOTE PUT AGREEMENTS."

Distribution Due to Casualty or Condemnation

If a Lease is terminated pursuant to the terms thereof by the related
Tenant as a result of casualty loss or condemnation, the Borrower will be
required to prepay the related Mortgage Note(s) at the Purchase Price. Any
related Condemnation Proceeds or Insurance Proceeds will be used to make such
prepayment, but there can be no assurance that such amounts will be sufficient
for that purpose. Unless the Borrower prepays the related Mortgage Note(s) at
the Purchase Price, the only additional sources of funds to make such prepayment
will be any amounts recoverable through foreclosure or other disposition of any
remaining part of the Mortgaged Property. Any such Borrower prepayment,
Insurance Proceeds or Condemnation Proceeds will

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be deposited with the Trustee, or the Collateral Trustee if applicable which on
the next Business Day will transfer a proportionate amount of such prepayment
(based upon the respective Purchase Prices of the related Mortgage Notes) to the
related Pass-Through Trustees. Any such prepayments will be distributed by the
Trustee, or Pass-Through Trustee if applicable, to the Certificateholders within
30 days of receipt of such amounts by the Trustee, or Collateral Trustee if
applicable. If the Trust or Pass-Through Trust holds Mortgage Notes relating to
other Facilities, subsequent distributions to the Certificateholders of Debt
Service will be proportionately reduced to reflect the deduction from aggregate
Scheduled Payments of principal and interest payable under the Mortgage Note(s)
required to be prepaid. In the event that Condemnation Proceeds or Insurance
Proceeds deposited with the Trustee exceed the Purchase Price for the related
Mortgage Note(s), such excess amount will be distributed to the related
Borrower.

If Lease Payments under a Lease are abated due to a condemnation which does
not result in a termination of the related Lease, Scheduled Payments on the
related Mortgage Note(s) will be reduced in proportion to the reduced Lease
Payments, and Debt Service will be correspondingly reduced. Any Condemnation
Proceeds resulting from such condemnation will be applied first by the related
Tenant toward restoration of the related Facility. In the unlikely event that
such Condemnation Proceeds exceed the amount necessary to restore the Facility,
such excess will be used to prepay a portion of the related Mortgage Note(s)
(including the Make-Whole Premium with respect to such portion). Unless such
excess Condemnation Proceeds are sufficient to prepay the portion of the related
Mortgage Note(s) that is proportionate to the reduction of Scheduled Payments as
a consequence of such Lease Payment abatement, Scheduled Payments following such
condemnation will be less than the amounts necessary to amortize the remaining
principal balance of the related Mortgage Note and to pay the interest thereon.
In that event: (i) subsequent Scheduled Payments will be applied first to pay
accrued interest on the related Mortgage Note(s) and then to reduce the
principal of such Mortgage Note(s); (ii) if any such Scheduled Payments are
insufficient to pay accrued interest on a related Mortgage Note, such unpaid
interest will, to the extent permitted under applicable law, be added to
principal; and (iii) the unpaid principal balance of the related Mortgage
Note(s), together with all accrued and unpaid interest thereon, will, if not
already paid, be due and payable at the maturity date of the Mortgage Note with
the longest term issued pursuant to the related Loan Agreement. At such maturity
date, if such amounts are not paid by the related Borrower, the only source of
payment will be the proceeds recovered from a foreclosure on the related
Facility, which depends upon the fair market value of the Facility, and there
can be no assurance that such proceeds will be sufficient to make such payments.
Such modification of the Lease Payments, the related Scheduled Payments and the
amortization of the related Mortgage Note(s) will not constitute an Event of
Default under such Mortgage Note(s) or any of the related Loan Documents or give
rise to any rights under the related Note Put Agreement. See "THE MORTGAGE
NOTES, THE LOAN AGREEMENTS AND RELATED DOCUMENTS -- Prepayments -- Mandatory
Prepayments and -- Purchase Price" and "THE LEASES, THE LEASE GUARANTIES AND
RELATED DOCUMENTS -- The Leases -- Condemnation and Casualty."

Distribution Due to Liquidation

If any Mortgage Note is liquidated as a result of foreclosure or other
disposition pursuant to the terms of the related Loan Documents, any amounts
received with respect to such liquidation, net of expenses incurred in
connection with such liquidation, will be distributed to the related
Certificateholders within 30 days of receipt by the Trustee, or Collateral
Trustee if applicable. There can be no assurance that the amounts realized from
a foreclosure or other disposition of a Mortgage Note will be sufficient to pay
the principal of, interest on and Make-Whole Premium with respect thereto. If
the Trust or Pass-Through Trust holds other Mortgage Notes, subsequent
distributions to the Certificateholders of Debt Service will be proportionately
reduced to reflect the deduction from aggregate Scheduled Payments of principal
and interest payable under the liquidated Mortgage Note. See "THE MORTGAGE
NOTES, THE LOAN AGREEMENTS AND RELATED DOCUMENTS -- Prepayments -- Liquidation."

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THE TRUSTS, PASS-THROUGH TRUSTS AND COLLATERAL TRUSTS

The following summaries describe certain provisions of the Trust
Agreements, the Pass-Through Trust Agreements and the Collateral Trust
Agreements. The summaries do not purport to be complete and are subject to, and
qualified in their entirety by reference to, the provisions of such documents,
the forms of which (each in substantially the form in which it will be used)
have been filed as exhibits to the Registration Statement of which this
Prospectus is a part. The Pass-Through Trust Agreement and the Collateral Trust
Agreement will be used when there are Mortgage Notes of more than one maturity
issued pursuant to one or more Loan Agreements. A Pass-Through Trust Agreement
will provide for the Pass-Through Trustee to hold one or more Mortgage Notes,
but Collateral securing such Mortgage Note(s), including, with respect to each
such Mortgage Note, the related Loan Agreement, Mortgage, Note Put Agreement,
Lease, Lease Guaranty, if applicable, and all other Loan Documents, will be held
by the related Collateral Trustee. For purposes of the following summaries,
unless otherwise indicated, the Trust Agreements and Pass-Through Trust
Agreements are each referred to as a "Trust Agreement," the Trust and
Pass-Through Trust are each referred to as a "Trust" and the Trustee and
Pass-Through Trustee are each referred to as a "Trustee."

GENERAL

The Depositor will sell, transfer, assign, set over and convey the Mortgage
Note(s) to the Trustee without recourse for the benefit of the
Certificateholders of each Series. If the related Loan Agreements provide for
Mortgage Notes of a single maturity, then the Trust Property of the Trust will
also include, but not be limited to, the following Collateral with respect to
each Mortgage Loan: (i) a Mortgage on the Facility securing the related Mortgage
Note(s), (ii) all of the Depositor's rights under the Loan Agreement pursuant to
which the related Mortgage Note(s) were issued, (iii) an assignment of the
related Lease, Lease Payments and Lease Guaranty, if applicable, (iv) a pledge
of certain moneys held in certain funds established pursuant to the Trust
Agreement, (v) a Note Put Agreement, (vi) an assignment of the Borrower's right,
title and interest in and to any Construction Fund Disbursement Agreement and
any Construction Fund Disbursement Agreement -- Common Area, (vii) a pledge of
certain investments of fund balances held under the Trust Agreement and income
earned thereon, and (viii) any other Loan Documents.

In some cases a Loan Agreement may provide that a Mortgage Loan will be
evidenced by two or more Mortgage Notes having different maturities. In such
case, the Depositor will sell, transfer, assign, set over and convey each such
Mortgage Note to a different Pass-Through Trust. In the event Mortgage Notes are
issued pursuant to more than one Loan Agreement, all Mortgage Notes having the
same maturity will be conveyed to a different Pass-Through Trust such that each
Pass-Through Trust will hold only Mortgage Notes having the same maturity. Each
Certificate will evidence a fractional undivided beneficial ownership interest
in the assets of the related Pass-Through Trust and will have no rights,
benefits or interests in respect of any other Pass-Through Trust or the Trust
Property held in any other Pass-Through Trust. When Mortgage Notes having
different maturities are issued, the Collateral with respect to such Mortgage
Notes will be held by the Collateral Trustee in a separate Collateral Trust for
the benefit, pari passu, of the separate Pass-Through Trusts holding the
Mortgage Notes.

ACCOUNTS

Rental Payment Account

Lease Payments (including Lease Payments made after any Due Date), payments
pursuant to any Lease Guaranty and payments pursuant to any Indemnity Agreement
with respect to each Facility will be deposited in a Rental Payment Account
created and maintained pursuant to the Trust Agreement, or, if applicable,
pursuant to the Collateral Trust Agreement, for the related Series of
Certificates to secure the obligations of the Borrower under the related Loan
Documents and Mortgage Note(s). Each Rental Payment Account will be maintained
as a fund separate and distinct from other accounts created under the Trust
Agreement or Collateral Trust Agreement and will remain the property of the
related Borrower subject to the rights of the Trustee, or the Collateral
Trustee, as the case may be, under the related Loan Documents, the related Trust
Agreement or Collateral Trust Agreement and the pledge of the Rental Payment
Account by such Borrower

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to secure the related Mortgage Loan. On each Due Date, amounts on deposit in
such Rental Payment Account equal to Scheduled Payments due under the related
Mortgage Note will be deposited in the Certificate Account maintained pursuant
to the Trust Agreement, or, if such Rental Payment Account is maintained in a
Collateral Trust pursuant to a Collateral Trust Agreement, transferred to the
Certificate Accounts maintained pursuant to the related Pass-Through Trust
Agreements and will be applied on the related Remittance Date to pay Debt
Service on the Certificates. On the second scheduled Remittance Date after the
Closing Date and on each anniversary thereafter of such Remittance Date, amounts
remaining in such Rental Payment Account after such deposit in or transfer to
the Certificate Account will be distributed to the related Borrower. If the
Trustee, or the Collateral Trustee if applicable, becomes aware of an Event of
Default under any of the related Loan Documents (other than a non-monetary
default by the related Tenant under the related Lease), amounts in the Rental
Payment Account will be transferred to the Certificate Account in the Trust or,
if applicable, to the related Mortgage Note Account in the Collateral Trust and
will continue to be held as Collateral by the Trustee or, if applicable, the
Collateral Trustee.

On the next Business Day after receipt, any Lease Payments made after the
applicable Due Date will be deposited in the Certificate Account maintained
pursuant to the Trust Agreement, or if the Rental Payment Account into which
such Lease Payments were initially deposited is maintained in a Collateral Trust
pursuant to a Collateral Trust Agreement, transferred to the Certificate Account
maintained pursuant to the related Pass-Through Trust Agreements and will be
distributed to Certificateholders within ten Business Days of receipt.

Certificate Account

All Scheduled Payments required to be made by a Borrower pursuant to the
terms of the related Mortgage Note(s) and Loan Documents will be paid from the
Lease Payments deposited in the related Rental Payment Account and will be
transferred to a Certificate Account maintained pursuant to the Trust Agreement
or, in the case of Mortgage Notes with different maturities, will be transferred
from the Rental Payment Account or Mortgage Note Account, if applicable,
maintained in the Collateral Trust to the Certificate Accounts maintained
pursuant to the Pass-Through Trust Agreements. On each Remittance Date, the
Trustee or Pass-Through Trustee will distribute to each Certificateholder its
pro rata share of the Available Distribution Amount for the payment of Debt
Service due on such Remittance Date. See "THE CERTIFICATES -- Distribution of
Scheduled Payments." In addition, any prepayments on the related Mortgage
Note(s), Insurance Proceeds or Condemnation Proceeds (to the extent required for
mandatory prepayment of the related Mortgage Note(s) pursuant to the related
Loan Agreement), net proceeds from the liquidation of the related Mortgage and
the Purchase Price under the Note Put Agreement will be deposited in the
Certificate Account, or, if there is a Collateral Trust, deposited in the
Mortgage Note Account and the next Business Day deposited in the Certificate
Accounts of the related Pass-Through Trusts, for distribution in accordance with
the Trust Agreement or Pass-Through Trust Agreements. See "THE CERTIFICATES --
Other Distributions." If an Event of Default occurs and is continuing with
respect to any Mortgage Loan (other than a non-monetary default by the related
Tenant under the related Lease), all amounts in the related Rental Payment
Account will be transferred to the Certificate Account established by such Trust
or to the Mortgage Note Account in the Collateral Trust, if applicable. All
related Lease Payments subsequently received by the Trustee will be deposited in
such Certificate Account, and all related Lease Payments subsequently received
by the Collateral Trustee will be deposited in the Mortgage Note Account. All
such amounts deposited into the Certificate Account or the Mortgage Note Account
after the occurrence of, and during the continuation of, an Event of Default
will continue to be held as Collateral by the Trustee or Collateral Trustee.

Capitalized Debt Service Account

In cases where proceeds of the Certificates are to be used to finance
construction of a Facility, Lease Payments will not commence until a date
specified in the related Prospectus Supplement. In such event, the Depositor
will establish, out of the proceeds of the related Mortgage Loan, a Capitalized
Debt Service Account in an amount sufficient to pay Scheduled Payments on the
related Mortgage Note(s) before Lease

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Payments commence. Each Capitalized Debt Service Account will be maintained as a
fund separate and distinct from other accounts created under the Trust
Agreement, or under the Collateral Trust Agreement, if applicable, and will
remain the property of the Borrower on whose behalf it was established, subject
to the rights of the Trustee, or the Collateral Trustee, as the case may be,
under the Loan Documents, the Trust Agreement or the Collateral Trust Agreement,
and the pledge of the Capitalized Debt Service Account by such Borrower to
secure the related Mortgage Loan. Amounts in the Capitalized Debt Service
Account will be transferred to the related Certificate Account(s) on the Due
Dates and in the amounts specified in the related Trust Agreement, or Collateral
Trust Agreement if applicable, to pay, in whole or in part, the Scheduled
Payments on the Mortgage Note(s). After all amounts required to be transferred
from a Capitalized Debt Service Account to the related Certificate Account have
been so transferred, any amounts remaining in such Capitalized Debt Service
Account will be transferred to the related Tenant. If an Event of Default occurs
under any of the related Loan Documents (other than a non-monetary default by
the related Tenant under the related Lease), all amounts in the related
Capitalized Debt Service Account will be transferred to the Certificate Account
or, if applicable, the related Mortgage Note Account and will continue to be
held as Collateral by the Trustee or, if applicable, the Collateral Trustee.

Mortgage Note Account

With respect to each Mortgage Loan evidenced by Mortgage Notes of different
maturities, the Collateral Trustee will establish a separate Mortgage Note
Account. Each Mortgage Note Account will be maintained as a fund separate and
distinct from other accounts created under the Collateral Trust Agreement. The
Collateral Trustee will deposit in the Mortgage Note Account any prepayments on
the related Mortgage Notes, including any Condemnation Proceeds or Insurance
Proceeds (to the extent required for mandatory prepayments of the related
Mortgage Notes pursuant to the related Loan Agreement), any Purchase Price
received pursuant to any Note Put Agreement, and any net proceeds from the
liquidation of the related Mortgage. All amounts in the Mortgage Note Account
used to pay Scheduled Payments on the Mortgage Notes will be transferred to the
Certificate Accounts of the related Pass-Through Trusts on the Due Dates. All
other amounts in the Mortgage Note Account will be transferred to the related
Pass-Through Trusts the next Business Day after receipt thereof. If an Event of
Default occurs and is continuing with respect to any Mortgage Loan or any
related Loan Document (other than a non-monetary default by the related Tenant
under the related Lease), all amounts in the related Rental Payment Account and
any Capitalized Debt Service Account will be transferred to such Mortgage Note
Account, and all related Lease Payments subsequently received will be deposited
in such Mortgage Note Account. All such amounts transferred or deposited into
the Mortgage Note Account will continue to be held as Collateral by the
Collateral Trustee.

THE TRUST AGREEMENTS AND PASS-THROUGH TRUST AGREEMENTS

The Trustee

The Trustee under each Trust Agreement will be named in the related
Prospectus Supplement. The Trustee must be a corporation or national banking
association organized under the laws of the United States of America or of any
State, must be authorized to exercise corporate trust powers, must have a
combined capital and surplus of at least $50,000,000 in the case of United
States Trust Company of New York and of at least $100,000,000 in the case of any
other trustee and must be subject to regulation and examination by state or
federal regulatory authorities.

The Trustee may resign at any time by giving written notice to the
Depositor and the Certificateholders. If a Trustee (i) fails to comply with
certain requirements of the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act") after written request for such compliance by any
Certificateholder who has been a bona fide Certificateholder for at least six
months, or (ii) ceases to be eligible to continue as Trustee under a Trust
Agreement and fails to resign after written request therefor by the Depositor or
any such bona fide Certificateholder, or (iii) becomes incapable of acting as
Trustee or becomes insolvent, then, in any such case, (i) the Depositor may
remove the Trustee and appoint a successor trustee, or (ii) subject to certain
provisions of the Trust Agreement, any Certificateholder who has been a bona
fide Certificateholder for at least six months may, on behalf of itself and all
others similarly situated, petition any court of competent jurisdiction

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for the removal of the Trustee and the appointment of a successor trustee. A
Trustee may also be removed at any time by the holders of Certificates
evidencing not less than a 66 2/3 Percentage Interest. Any resignation or
removal of a Trustee will not become effective until acceptance of the
appointment by the successor Trustee.

Each Trust Agreement will provide that the Trustee's Fees will be paid by
the Tenants pursuant to the Consent and Agreements. See "THE LEASES, LEASE
GUARANTIES AND RELATED DOCUMENTS -- The Consent and Agreements."

Modification of the Trust Agreements

Each Trust Agreement will contain provisions permitting the Depositor and
the Trustee to enter into a supplement to the Trust Agreement with the consent
of Kmart (except that no consent will be required with respect to (vii) below)
but without the consent of the Certificateholders, (i) to evidence the
succession of another Person to the Depositor and the assumption by such Person
of the Depositor's obligations under such Trust Agreement; (ii) to add to the
covenants of the Depositor for the benefit of the Certificateholders; (iii) to
cure any ambiguity, to correct or supplement any defective or inconsistent
provisions of such Trust Agreement or any supplement, or to make any other
provisions with respect to matters or questions arising under such Trust
Agreement or any supplement, provided such action will not materially adversely
affect the interests of the Certificateholders; (iv) to correct or amplify the
description of any property constituting property of the Trust or to acknowledge
any change relating to title to a Mortgaged Property that does not materially
adversely affect the rights of the Certificateholders; (v) to surrender any
rights or powers conferred upon the Depositor or add to the rights of the
Certificateholders; (vi) to evidence or provide for the appointment of a
successor trustee or to add or change any provision of such Trust Agreement as
may be necessary to provide for or facilitate the administration of the Trust
created thereby by more than one Trustee; or (vii) to add, eliminate or change
any provision under such Trust Agreement to the extent necessary to continue the
qualification of the Trust Agreement under the Trust Indenture Act; provided,
that in each case such supplement does not cause the Trust to fail to be
characterized as a trust for federal income tax purposes or the Collateral
Trust, if applicable, to become taxable as an association within the meaning of
Treasury Regulation Section 301.7701-2.

Each Trust Agreement will also contain provisions permitting the Depositor
and the Trustee, with the consent of the Certificateholders evidencing
fractional undivided beneficial ownership interests aggregating not less than a
66 2/3 Percentage Interest of the Trust, to execute supplements adding any
provisions to or changing or eliminating any of the provisions of the Trust
Agreement or modifying the rights of the Certificateholders, except that no such
supplement may, without the consent of each affected Certificateholder and, with
respect to (ii) and (unless there is a monetary default under the related Lease)
(iii), Kmart, (i) modify the provision of the Trust Agreement that concerns
notifying Certificateholders and Kmart of the occurrence of an Event of Default,
modify the provision of the Trust Agreement concerning approval by
Certificateholders of supplements to the Trust Agreement, or modify the
definition of "Certificateholder" in the Trust Agreement; (ii) modify the
definition of "Percentage Interest" in the Trust Agreement or reduce the
Percentage Interests, the consent of the Holders of Certificates of which is
required for any such supplement to the Trust Agreement, or the consent of the
Holders of Certificates of which is required for any waiver provided for in the
Trust Agreement; (iii) reduce the amount or extend the time of payment of any
amount owing or payable under the Mortgage Note(s) or distributions to be made
on any Certificate; (iv) impair the right of any Certificateholder to commence
legal proceedings to enforce a right to receive payment under such Certificate
or under the Trust Agreement; or (v) create or permit the creation of any lien
on the Trust Property or any part thereof, or deprive any Certificateholder of
the benefit of the Trust Agreement, whether by disposition of such Trust
Property or otherwise; provided however, in each case such supplement does not
cause the Trust to fail to be characterized as a trust for federal income tax
purposes or the Collateral Trust, if applicable, to become taxable as an
association within the meaning of Treasury Regulations Section 301.7701-2.

Events of Default

Events of Default under a Trust Agreement in respect of a Series of
Certificates will consist of the occurrence of any event constituting an Event
of Default under any of the Loan Documents or Mortgage

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Note(s) held by the Trustee, or Collateral Trustee if applicable. The Trustee
will be obligated to notify the Certificateholders and Kmart of any Event of
Default within the later of 90 days from the occurrence thereof or 30 days after
obtaining knowledge thereof, unless such Event of Default has been cured or
waived before the giving of such notice. Except in the case of a default in the
payment of principal of, or interest on, the Mortgage Note(s), the Trustee may
withhold such notice so long as its board of directors, the executive committee
or a committee of its directors and/or responsible officers in good faith
determines that the withholding of such notice is in the interests of the
Certificateholders.

Rights Upon Event of Default

So long as an Event of Default has not been remedied, the Trustee, at the
written direction of the holders of Certificates evidencing not less than a
66 2/3 Percentage Interest, will exercise any rights and remedies that it may
have against a Borrower, a Tenant or Kmart (if the Tenant is a Subsidiary)
pursuant to the related Loan Documents, Mortgage Note(s), Lease or Lease
Guaranty, if applicable, or at law or in equity, including injunctive relief and
specific performance, subject to the rights of the related Tenant and Kmart (if
the Tenant is a Subsidiary) under the related Lease, the related Consent and
Agreement, the related Construction Fund Disbursement Agreement, if any, and the
related Construction Fund Disbursement Agreement -- Common Area, if any;
provided that, if as a result of the occurrence of an Event of Default, the
Trustee acquires any property other than cash, whether pursuant to foreclosure
or otherwise, the Trustee will be required to sell such property as promptly as
is reasonably possible. In addition, the Trustee will not be required to take
title to a Facility in a foreclosure or similar proceeding if the Trustee has
actual knowledge or reasonably believes that all or any part of such Facility is
affected by hazardous or toxic wastes or substances. In the case of an Event of
Default which also constitutes a Triggering Event, the Trustee's rights will
include the right to require the related Tenant or Kmart (if the Tenant is a
Subsidiary) to purchase the related Mortgage Note(s) pursuant to the Note Put
Agreement. See "THE NOTE PUT AGREEMENTS."

Where there is both a Collateral Trust and a Pass-Through Trust, the
Pass-Through Trustee will hold a Mortgage Note but not the related Loan
Documents. Consequently, upon an occurrence of an Event of Default under the
Pass-Through Trust Agreement with respect to a Mortgage Note, the Pass-Through
Trustee's principal right and remedy will be to vote the principal balance of
such Mortgage Note, as directed by the Certificateholders of such Pass-Through
Trust, in favor of the exercise by the Collateral Trustee of its rights and
remedies under the related Loan Documents, and accordingly to direct the related
Collateral Trustee to exercise such rights and remedies. The Collateral Trustee
will be required to exercise such rights and remedies if such Collateral Trustee
receives written directions in favor of such exercise from the related
Pass-Through Trustees voting not less than 66 2/3% of the outstanding principal
balance of all Mortgage Note(s) affected by such Event of Default.

The occurrence of an Event of Default pursuant to the Loan Documents
relating to any Mortgage Loan, the related Mortgage Note(s), the related Lease
or the related Lease Guaranty, if applicable, will not give rise to an election
to terminate the Trust. The occurrence of such an Event of Default will not
constitute a cross default with respect to any other Mortgage Loan and will have
no effect on any Loan Documents, Mortgage Note, Lease or Lease Guaranty with
respect to any such other Mortgage Loan. Consequently, remedies may be exercised
only with respect to the related Mortgage Note and Loan Documents. Any amounts
realized upon the exercise of such remedies may be less than the Purchase Price
for such Mortgage Note. No person or entity, including the related Tenant, Kmart
(if the Tenant is a Subsidiary), the related Borrower or the Depositor has any
liability for any deficiency which may result from a sale of a Facility upon
foreclosure of the related Mortgage.

Each Trust Agreement will contain a provision entitling the Trustee,
subject to the duty of the Trustee during the continuance of an Event of Default
to act with the required standard of care, to be indemnified by the
Certificateholders before exercising any right or power under such Trust
Agreement or the related Loan Documents.

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<PAGE> 45

Rights Upon Triggering Event

If a Triggering Event other than a Lease Guaranty Termination occurs, the
Trustee, at the written direction of the holders of Certificates evidencing not
less than a 66 2/3 Percentage Interest (which direction must be given within 90
days after the giving by the Trustee to the Certificateholders of a notice
stating that such Triggering Event has occurred), will exercise its rights under
the Note Put Agreement. If the Triggering Event is a Lease Guaranty Termination,
the Trustee will exercise its rights under the Note Put Agreement unless, within
30 days after notice by the Trustee to the Certificateholders of the occurrence
of such Lease Guaranty Termination, holders of Certificates evidencing not less
than a 66 2/3 Percentage Interest elect not to exercise such rights. In cases
where the Note Put Agreement is held in a Collateral Trust, the 66 2/3
Percentage Interest required for the exercise of such rights (or, in the case of
a Lease Guaranty Termination, the election not to exercise such rights) will be
computed by reference to the outstanding principal amount of all Mortgage Notes
issued pursuant to the applicable Loan Agreement. See "THE NOTE PUT AGREEMENTS."

Termination

Each Trust Agreement and the obligations of the Depositor and the Trustee
created thereby will terminate as to any Mortgage Note and the related Loan
Documents upon the final payment, prepayment in full or other liquidation of
such Mortgage Note, including the disposition of all property acquired upon
foreclosure of such Mortgage Note and the remittance of all funds due thereunder
with respect to such Mortgage Note. In no event, however, will any Trust
continue beyond the expiration of 21 years from the death of the survivor of
certain persons described in such Trust Agreement. Written notice of termination
of the Trust Agreement will be given to each Certificateholder and the final
payment on the Certificates will be made only upon surrender and cancellation of
the Certificates at the corporate trust office of the Trustee.

Reports to Certificateholders

The Trustee will furnish to Certificateholders on each Remittance Date a
statement setting forth the following information (per $1,000 aggregate
principal amount, as to (i) and (ii) below):

(i) that portion of the distribution paid on such Remittance Date
which is allocable to principal on the related Mortgage Note(s);

(ii) that portion of such distribution which is allocable to interest
on the related Mortgage Note(s);

(iii) any amounts expended by the Trustee or the Collateral Trustee,
if applicable, following an Event of Default under any of the Loan
Documents in connection with enforcing the Trustee's or the Collateral
Trustee's rights and remedies thereunder for the benefit of the
Certificateholders; and

(iv) whether any Mortgage Note is delinquent.

So long as the Certificates of any Series are registered in the name of
Cede, as nominee for DTC, on the Record Date prior to each Remittance Date, the
Trustee will request from DTC a securities position listing setting forth the
names of all DTC Participants reflected on DTC's books as holding positions in
such Certificates on such Record Date. On each Remittance Date, the Trustee will
mail to each such DTC Participant the statement described above, and will make
available additional copies as requested by such DTC Participant, to be
available for forwarding to the related Beneficial Owners.

In addition, within 90 days after the end of each calendar year, the
Trustee will prepare for each Certificateholder a report setting forth the
interest paid on the related Mortgage Note(s) during the year with respect to
the Certificates held by such Certificateholder. Such report will be prepared by
the Trustee and will be delivered by the Trustee to such DTC Participants to be
available for forwarding by DTC Participants to Beneficial Owners in the manner
described in the immediately preceding paragraph for so long as the Certificates
of any Series are registered in the name of Cede, as nominee for DTC. If the
Certificates of any Series are issued as Definitive Certificates, the Trustee
will prepare and deliver the information described above to each
Certificateholder of record as the name of such Certificateholder appears on the
records of the Trustee.

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THE COLLATERAL TRUST AGREEMENTS

The Collateral Trustee

The Collateral Trustee under each Collateral Trust Agreement, if any, will
be named in the related Prospectus Supplement. The Collateral Trustee must be a
corporation or national banking association organized under the laws of the
United States of America or of any State, authorized to exercise corporate trust
powers, must have a combined capital and surplus of at least $50,000,000 in the
case of United States Trust Company of New York and of at least $100,000,000 in
the case of any other trustee and must be subject to regulation and examination
by state or federal regulatory authorities. The same entity may serve as
Trustee, Pass-Through Trustee and Collateral Trustee.

The Collateral Trustee may resign at any time by giving written notice to
the related Pass-Through Trustees for distribution to their Certificateholders.
If a Collateral Trustee (i) ceases to be eligible to continue as Collateral
Trustee under the Collateral Trust Agreement, and fails to resign after written
request therefor by the Depositor or a related Pass-Through Trustee at the
direction of a bona fide Certificateholder who has been a bona fide
Certificateholder for at least six months or (ii) becomes incapable of acting as
Collateral Trustee or becomes insolvent, then, in any such case, the Depositor
or the related Pass-Through Trustees may remove the Collateral Trustee and
appoint a successor collateral trustee. A Collateral Trustee may also be removed
at any time by the related Pass-Through Trustees, at the direction of holders of
Certificates evidencing not less than a 66 2/3 Percentage Interest. Any
resignation or removal of a Collateral Trustee will not become effective until
acceptance of the appointment by the successor Collateral Trustee.

Each Collateral Trust Agreement will provide that the Collateral Trustee's
Fees will be paid by the related Tenants pursuant to the Consent and Agreements.
See "THE LEASE, THE LEASE GUARANTIES AND RELATED DOCUMENTS -- The Consent and
Agreements."

Modification of the Collateral Trust Agreements

Each Collateral Trust Agreement will contain provisions permitting the
Depositor and the Collateral Trustee to enter into a supplement to the
Collateral Trust Agreement with the consent of Kmart but without the consent of
the Pass-Through Trustees or the Certificateholders, (i) to evidence the
succession of another Person to the Depositor and the assumption by such Person
of the Depositor's obligations under such Collateral Trust Agreement; (ii) to
add to the covenants of the Depositor for the benefit of the Pass-Through
Trustees and the Certificateholders; (iii) to cure any ambiguity, to correct or
supplement any defective or inconsistent provisions of such Collateral Trust
Agreement or any supplement, or to make any other provisions with respect to
matters or questions arising under such Collateral Trust Agreement or any
supplement, provided such action will not materially adversely affect the
interests of the Pass-Through Trustees or the Certificateholders; (iv) to
correct or amplify the description of any property constituting property of the
Collateral Trust or to acknowledge any change relating to title to the Mortgaged
Property that does not materially adversely affect the rights of the
Certificateholders; (v) to surrender any rights or powers conferred upon the
Depositor or add to the rights of the Pass-Through Trustees for the benefit of
the Certificateholders; or (vi) to evidence or provide for a successor
Collateral Trustee or to add or change any provision of such Collateral Trust
Agreement as may be necessary to provide for or facilitate the administration of
the Collateral Trust created thereby by more than one Collateral Trustee;
provided, that in each case such supplement does not cause the Collateral Trust
to become taxable as an association within the meaning of Treasury Regulation
Section 301.7701-2 or cause any Trust to fail to be characterized as a trust for
federal income tax purposes.

Each Collateral Trust Agreement will also contain provisions permitting the
Depositor and the Collateral Trustee, with the consent of the Pass-Through
Trustees at the direction of holders of Certificates evidencing pass-through
ownership of not less than 66 2/3% of the aggregate outstanding principal
balance of all Mortgage Notes, to execute supplements adding any provisions to
or changing or eliminating any of the provisions of the Collateral Trust
Agreement or modifying the rights of the Pass-Through Trustees or the
Certificateholders, except that no such supplement may, without the consent of
each affected Certificateholder and, with respect to (ii) and (unless there is a
monetary default under the related Lease) (iii), Kmart, (i) modify the provision
of the Collateral Trust Agreement that concerns notifying the related
Pass-Through Trustees and Kmart of

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the occurrence of an Event of Default, modify the provision of the Collateral
Trust Agreement concerning approval by the related Pass-Through Trustees and
Certificateholders of supplements to the Collateral Trust Agreement, or modify
the definitions of "Pass-Through Trust," "Pass-Through Trustee" or
"Certificateholder" in the Collateral Trust Agreement, (ii) modify the
definition of "Percentage Interest" in the Collateral Trust Agreement or reduce
the Percentage Interest vote that is required for any such supplement to the
Collateral Trust Agreement, or the consent required from the related
Pass-Through Trustees for any waiver provided for in the Collateral Trust
Agreement; (iii) reduce the amount or extend the time of payment of any amount
owing or payable under the Mortgage Note(s); (iv) impair the right of any
related Pass-Through Trustee or Certificateholder to commence legal proceedings
to enforce a right to receive payment on a related Mortgage Note; or (v) create
or permit the creation of any lien on the Collateral Trust Property or any part
thereof, or deprive any Certificateholder of the benefit of the Collateral Trust
Agreement, whether by disposition of such Collateral Trust Property or
otherwise; provided, that in each such case such supplement does not cause the
Collateral Trust to become taxable as an association within the meaning of
Treasury Regulation Section 301.7701-2 or cause any Pass-Through Trust to fail
to be characterized as a trust for federal income tax purposes.

Events of Default

Events of Default under a Collateral Trust Agreement will consist of the
occurrence of any event constituting an Event of Default under any of the Loan
Documents held by the Collateral Trustee or the Mortgage Notes held by the
related Pass-Through Trustees. The Collateral Trustee will be obligated to
notify the Pass-Through Trustees of such Event of Default within five Business
Days after the Collateral Trustee obtains knowledge thereof, unless such Event
of Default has been cured or waived before the giving of such notice.

Rights Upon Event of Default

So long as an Event of Default has not been remedied, the Collateral
Trustee, at the written direction of Pass-Through Trustees voting not less than
66 2/3% of the outstanding principal balance of the Mortgage Notes affected by
such Event of Default, will exercise any rights and remedies that it may have
against a Borrower, a Tenant or, if the Tenant is a Subsidiary, Kmart pursuant
to the related Loan Documents, Mortgage Notes, Lease or Lease Guaranty, if
applicable, or at law or in equity, including injunctive relief and specific
performance, subject to the rights of the Tenant and, if the Tenant is a
Subsidiary, Kmart under the related Lease, the related Consent and Agreement,
the related Construction Fund Disbursement Agreement, if any, and the related
Construction Fund Disbursement Agreement -- Common Area, if any; provided that,
if as a result of the occurrence of an Event of Default, the Collateral Trustee
acquires any property other than cash, whether pursuant to foreclosure or
otherwise, the Collateral Trustee will sell such property as promptly as is
reasonably possible. In addition, the Collateral Trustee will not be required to
take title to a Facility in a foreclosure or similar proceeding if the
Collateral Trustee has actual knowledge or reasonably believes that all or any
part of such Facility is affected by hazardous or toxic wastes or substances. In
the case of an Event of Default which also constitutes a Triggering Event, the
rights of the Collateral Trustee will include the right to require the related
Tenant or Kmart (if the Tenant is a Subsidiary) to purchase the related Mortgage
Note(s) pursuant to the Note Put Agreement. See "THE NOTE PUT AGREEMENTS."

The occurrence of an Event of Default pursuant to any of the Loan Documents
relating to any Mortgage Loan, the related Mortgage Notes, the related Lease or
the related Lease Guaranty, if applicable, will not give rise to an election to
terminate the Collateral Trust as to such Mortgage Loan. The occurrence of such
an Event of Default will not constitute a cross default with respect to any
other Mortgage Loan held by the Collateral Trust and will have no effect on any
Loan Documents, Mortgage Note, Lease or Lease Guaranty, if applicable, with
respect to any such other Mortgage Loan. Consequently, remedies may only be
exercised with respect to the related Mortgage Note and Loan Documents. Any
amounts realized upon the exercise of such remedies may be less than the
Purchase Price for such Mortgage Note.

Each Collateral Trust Agreement will contain a provision entitling the
Collateral Trustee, subject to the duty of the Collateral Trustee during the
continuance of an Event of Default to act with the required standard

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of care, to be indemnified by the holders of Certificates evidencing
pass-through ownership of not less than 66 2/3% of the aggregate outstanding
principal balance of the Mortgage Notes before exercising any right or power
under such Collateral Trust Agreement.

Termination

Each Collateral Trust Agreement and the obligations of the Depositor and
the Collateral Trustee created thereby will terminate with respect to any
Mortgage Loan and related Loan Documents upon the final payment, prepayment in
full or other liquidation of the Mortgage Notes held by the related Pass-Through
Trusts, including the disposition of all property acquired upon foreclosure of
such Mortgage Notes, and the remittance to the Pass-Through Trustee of all funds
due with respect thereto under the Collateral Trust Agreement. In no event,
however, will any Collateral Trust continue beyond the expiration of 21 years
from the death of the survivor of certain persons described in such Collateral
Trust Agreement.

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THE MORTGAGE NOTES, THE LOAN AGREEMENTS AND RELATED DOCUMENTS

The following summaries describe certain provisions of the Mortgage Notes,
the Loan Agreements, the Mortgages and the Assignments of Leases and Rents. The
summaries do not purport to be complete and are subject to, and qualified in
their entirety by reference to, the provisions of such documents, the forms of
which (each in substantially the form in which it will be used) have been filed
as exhibits to the Registration Statement of which this Prospectus is a part.

GENERAL

Concurrently with the issuance of each Series of Certificates, the
Depositor will make one or more Mortgage Loans from the proceeds of such
issuance to one or more Borrowers. Each Mortgage Loan will be made to a
different Borrower, which will enter into a Loan Agreement with the Depositor.
The Loan Agreements will require the Borrowers to execute and deliver to the
Depositor Mortgage Notes evidencing the Mortgage Loans together with the other
Loan Documents securing the Mortgage Loans. The Depositor in turn will assign
all of its right, title and interest in, under and to the Loan Documents and the
Mortgage Notes to the Trustee under the related Trust Agreement for such Series
if all Mortgage Notes have the same maturity. If the Mortgage Notes have
different maturities, the Depositor will assign all of its right, title and
interest in, under and to the Mortgage Notes to different Pass-Through Trusts
such that all the Mortgage Notes in any Pass-Through Trust will have the same
maturity, and the Depositor will assign all of its right, title and interest in,
under and to the other Loan Documents to the Collateral Trustee under the
related Collateral Trust Agreement.

SCHEDULED PAYMENTS

Each Mortgage Note will be a promissory note obligating a Borrower to make
Scheduled Payments which will be passed through to the Trust or Pass-Through
Trust to pay Debt Service on the related Series of Certificates. The Lease
Payments due pursuant to a Lease will be scheduled to be sufficient to pay
Scheduled Payments on the related Mortgage Notes(s). The maturity date of the
Mortgage Notes acquired by each Trust will correspond to the final scheduled
Remittance Date applicable to the Certificates evidencing interests in such
Trust. Each Mortgage Note will provide for an increased interest rate applicable
to any overdue principal or interest payments with respect to such Mortgage
Note. The related Lease will provide for a late payment rate on any Lease
Payments or portions thereof that are not paid when due (including any grace
period). The late payment rate in a Lease is scheduled to be sufficient to pay
the overdue rate on the related Mortgage Note(s). See "THE CERTIFICATES --
Distributions of Scheduled Payments."

Each Trust will acquire Mortgage Notes having an interest rate
corresponding to the interest rate on the Certificates evidencing interests in
such Trust. The aggregate principal amount of the Certificates evidencing
interests in each Trust will be equal to the aggregate principal amount of the
Mortgage Notes held in such Trust.

PREPAYMENTS

Optional Prepayment

Unless otherwise specified in the related Prospectus Supplement, each
Borrower will have the option at any time and from time to time to prepay a
Mortgage Note in whole or in part (but if in part, then in units of $1,000,000
or an integral multiple of $100,000 in excess thereof) by payment of the
Purchase Price. Any optional prepayment of a Mortgage Note will be distributed
by the Trustee or Pass-Through Trustee to the related Certificateholders based
upon their Percentage Interests. See "THE CERTIFICATES -- Other Distributions --
Optional Prepayment Distribution."

Mandatory Prepayments

A Borrower will be required to prepay a Mortgage Note at the Purchase Price
in the event the related Lease is terminated in connection with a taking by
condemnation of all or any part of, or a casualty affecting,

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the related Facility. See "THE LEASES, LEASE GUARANTIES AND RELATED DOCUMENTS --
The Leases -- Condemnation and Casualty." In the event of any such required
prepayment, any Insurance Proceeds or Condemnation Proceeds will be used to pay
the Purchase Price of the related Mortgage Loan. There can be no assurance that
such Insurance Proceeds or Condemnation Proceeds will be sufficient to pay such
Purchase Price in full, although, in the case of a termination resulting from
damage or destruction during the last two years of the term of the Leases, the
resulting Insurance Proceeds may, in light of the fact that the Mortgage Note
fully amortizes during its term, be sufficient to pay all amounts due under the
Mortgage Note, except in the case of extraordinary devaluation of the Facility
during the term of the Mortgage Note. If the Insurance Proceeds or Condemnation
Proceeds are insufficient to pay the Purchase Price in full, the Borrower will
in all likelihood not have sufficient funds to pay the deficiency, and there can
be no assurance that such deficiency will be satisfied out of the proceeds of
any subsequent foreclosure of the related Facility.

In the event of any condemnation of a Facility which does not result in the
termination of the related Lease, the Lease Payments under such Lease may be
abated (see "THE LEASES, LEASE GUARANTIES AND RELATED DOCUMENTS -- The Leases --
Condemnation and Casualty") and, in such event, Scheduled Payments under the
related Mortgage Note(s) will be reduced in the same proportion as Lease
Payments have been abated under such Lease. Any Condemnation Proceeds resulting
from such condemnation will be applied by the related Tenant to restore the
related Facility. In the unlikely event that such Condemnation Proceeds exceed
the amount necessary to restore the Facility, such excess will be used to prepay
a portion of the related Mortgage Note(s) (including the Make-Whole Premium with
respect to such portion). Subsequent Scheduled Payments will be applied first to
pay accrued interest on the related Mortgage Note(s) and then to reduce the
principal of such Mortgage Note(s), and any unpaid interest will, to the extent
permitted under applicable law, be capitalized. The unpaid principal amount of
such Mortgage Note(s), together with all accrued and unpaid interest, will be
due and payable at the maturity date of Mortgage Note with the longest term
issued pursuant to the related Loan Agreement. See "THE CERTIFICATES -- Other
Distributions -- Distribution Due to Casualty or Condemnation."

Any prepayment of any Mortgage Loan in connection with a casualty or
condemnation will be distributed by the Trustee or Pass-Through Trustee to the
related Certificateholders based upon their Percentage Interests.

Liquidation

If an Event of Default under a Loan Document occurs (other than a
non-monetary default by a Tenant under a Lease) and if the Trustee, or
Collateral Trustee if applicable, accelerates the related Mortgage Note, the
related Borrower will be required to pay the Purchase Price to the Trustee or
Collateral Trustee. All proceeds of any foreclosure or any other liquidation of
the related Mortgage Note under the related Loan Documents, net of expenses
incurred in connection therewith, from such liquidation will be applied toward
payment of such Purchase Price. All of such net proceeds will be distributed by
the Trustee, or the Pass-Through Trustee if applicable, to the
Certificateholders based upon their Percentage Interests. There can be no
assurance that the proceeds of any such liquidation will be sufficient to pay
the Purchase Price of the related Mortgage Note(s). See "THE CERTIFICATES --
Other Distributions -- Distribution Due to Liquidation."

Purchase Price

The Purchase Price for a Mortgage Note in case of an optional prepayment,
mandatory prepayment or liquidation will be equal to the outstanding principal
balance of such Mortgage Note, accrued interest thereon and the Make-Whole
Premium related thereto. Under the laws of certain states the enforceability of
the obligation to pay amounts similar to the Make-Whole Premium is unclear, and
there can be no assurance that the obligation to pay the Make-Whole Premium will
be enforceable in the event of a prepayment or acceleration of a Mortgage Note.

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EVENTS OF DEFAULT

Unless otherwise provided in the Prospectus Supplement for a Series, Events
of Default under each Loan Agreement and Mortgage Note will include the
following (after the expiration of any applicable cure periods):

(i) a default in the payment or prepayment of the principal of,
Make-Whole Premium, if any, or interest on, a Mortgage Note when due;

(ii) if applicable, the construction of a Facility ceases for a period
longer than that specified in the Loan Agreement or is abandoned or is not
completed in compliance with the Loan Agreement on or before the date
specified in the Loan Agreement;

(iii) the occurrence of a default under a Lease, a Lease Guaranty, if
applicable, or an Indemnity Agreement, if applicable; and

(iv) the occurrence of any default by Kmart in the performance of its
obligations under a Note Put Agreement.

Each Loan Agreement also will provide for other Events of Default that are
customary in mortgage loan transactions. An event or condition giving rise to an
Event of Default under a Loan Agreement will not necessarily give rise to an
Event of Default under the related Lease or permit the Trustee, or the
Collateral Trustee if applicable, to exercise any remedy against the Tenant or,
if the Tenant is a Subsidiary, Kmart under the related Lease, Lease Guaranty, if
applicable, or Note Put Agreement. An Event of Default with respect to one
Mortgage Loan will not constitute an Event of Default under any other Mortgage
Loan or the Loan Documents related thereto or permit the Trustee, or Collateral
Trustee if applicable, to exercise any remedies with respect to any other
Mortgage Loan or the Loan Documents related thereto.

REMEDIES UPON EVENT OF DEFAULT

If any Event of Default occurs and is continuing following any applicable
cure period, the Trustee, or the Collateral Trustee if applicable, as assignee
of the Depositor will upon the direction of 66 2/3 Percentage Interests of the
Certificateholders, declare the entire unpaid principal amount of such Mortgage
Note, interest accrued thereon and the Make-Whole Premium immediately due and
payable and the Trustee, or the Collateral Trustee if applicable, will be
entitled to commence proceedings for immediate foreclosure of the Mortgage and
may avail itself of any other relief to which the Trustee, or the Collateral
Trustee if applicable, may be legally or equitably entitled under the other Loan
Documents, the Mortgage Notes, or otherwise. The Trustee, or the Collateral
Trustee if applicable, will, upon becoming the owner of the Facility pursuant to
any such foreclosure, take title subject to the related Lease, provided that, if
a monetary Event of Default exists under such Lease and, if the Tenant is a
Subsidiary, any Lease Guaranty, the Trustee, or the Collateral Trustee if
applicable, will have the right, after completion of such foreclosure (possibly
including the expiration of any redemption period) or prior to such completion
if permitted under the laws of the state in which the Facility is located, to
exercise the right of the Borrower as lessor to terminate such Lease. In the
case of an Event of Default which also constitutes a Triggering Event, the
rights of the Trustee, or Collateral Trustee if applicable, will include the
right to require the related Tenant or Kmart (if the Tenant is a Subsidiary) to
purchase the related Mortgage Note(s) pursuant to the Note Put Agreement. See
"THE NOTE PUT AGREEMENTS."

LIMITATION OF A BORROWER'S LIABILITY

Each Loan Agreement will provide that the recourse of the Trustee, or the
Collateral Trustee if applicable, will be limited to foreclosure and other
remedies set forth in the Loan Documents. Generally, neither a Borrower nor any
of its affiliates will be personally liable for payment of principal, interest
or other amounts which may become due and payable under any of the Loan
Documents, the holder of a Mortgage Note will be entitled to look solely to the
security provided for in the Loan Documents, and no deficiency judgment for
amounts unsatisfied after the application of such security and the proceeds
thereof may be obtained against a Borrower or its affiliates. The general
limitation on the personal liability of the Borrower and its affiliates will not
prejudice the rights of the Trustee, or the Collateral Trustee if applicable, to
recover

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(i) for fraud, intentional misrepresentation or breach of any representation or
warranty or willful misconduct by or on behalf of a Borrower, (ii) certain
funds, deposits, advances and other amounts which may be held by or for a
Borrower at the time of an Event of Default under a Mortgage Note or any other
Loan Documents, and (iii) amounts recoverable for certain environmental hazards.
However, because each Borrower is expected to be an entity without any assets
(other than the related Facility) the recourse of the Trustee or the Collateral
Trustee will be limited even in those instances where personal liability may be
established against a Borrower.

THE MORTGAGES

General

The Mortgage Note(s) issued under a Loan Agreement, and the payment and
performance of all of the obligations of the Borrower under such Loan Agreement,
will be secured by a first mortgage and security interest in (i) a Facility and
all improvements thereon; (ii) all leases, rents, profits, royalties and income
and other benefits derived from the Facility; (iii) all right, title and
interest of a Borrower in and to all tangible personal property, whenever
acquired by the Borrower, which is located on or at the Facility and used solely
in connection therewith; (iv) all of the Borrower's interest in intangible
property related to the acquisition, ownership, leasing, construction,
operation, servicing or management of the Facility; and (v) all of the
Borrower's interest in claims or demands including those with respect to
Insurance Proceeds and Condemnation Proceeds of the whole or any part of the
Facility. Each Mortgage will be subordinate to the related Lease.

Each Mortgage will provide that the Borrower may transfer its interest in
the Facility prior to the completion of construction only with the consent of
the Trustee, or Collateral Trustee if applicable, as assignee of the Depositor.
Thereafter, if no default under the Mortgage has occurred and is continuing, and
subject to satisfying certain conditions set forth in the Mortgage, the Borrower
may transfer its interest in the Facility without the consent of the Trustee or
the Collateral Trustee.

Events of Default

An Event of Default under a Loan Agreement will also be an Event of Default
under the related Mortgage. In addition, any failure on the part of a Borrower
to perform any covenants or agreements contained in the related Mortgage which
are not cured within 30 days after notice thereof will constitute an Event of
Default under such Mortgage.

Remedies Upon Event of Default

Upon the occurrence of an Event of Default, the Trustee, or the Collateral
Trustee if applicable, may declare all obligations secured by a Mortgage to be
due and payable and thereafter, subject to the provisions of applicable state
law, the Trustee, or Collateral Trustee if applicable, may (i) enter upon and
take possession of the related Facility; (ii) commence an action to foreclose
the Mortgage; (iii) exercise any and all of the remedies available to a secured
party under applicable law; and (iv) apply to any court having jurisdiction to
appoint a receiver of the Facility or to specifically enforce any of the
covenants set forth in the Mortgage.

If the Trustee, or the Collateral Trustee if applicable, forecloses by
reason of the occurrence of an Event of Default prior to the completion of
construction of a Facility, the Tenant will, prior to the occurrence of a
Triggering Event, retain its right under the related Construction Fund
Disbursement Agreement and any Construction Fund Disbursement Agreement --
Common Area to complete construction of the Facility and Common Area. See "THE
LEASES, THE LEASE GUARANTIES AND RELATED DOCUMENTS -- Construction Fund
Disbursement Agreements."

If the Trustee, or Collateral Trustee if applicable, forecloses on a
Facility, it may not be able subsequently to exercise its rights under the
related Note Put Agreement if the Mortgage Note is deemed to have been
extinguished in or satisfied by the foreclosure proceeding. However, a
foreclosure will not affect the continuing rights and obligations of the Tenant
under the Lease or of Kmart (if the Tenant is a Subsidiary) under the Lease
Guaranty.

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THE ASSIGNMENTS OF LEASES AND RENTS

Pursuant to an Assignment of Leases and Rents, all Lease Payments due under
a related Lease will be assigned to the Trustee or Collateral Trustee, if
applicable. The Assignment of Leases and Rents will also give the Trustee or
Collateral Trustee the right, upon the occurrence of an Event of Default under
the related Loan Agreement, to exercise the rights and remedies of the related
Borrower as lessor under the Lease. Although each Assignment of Leases and Rents
will, by its terms, be a present assignment of the related Lease and Lease
Payments, it may, under the laws of certain states in which Facilities are
located, be deemed a collateral assignment. In such event, the rights of the
Trustee or Collateral Trustees thereunder may be exercisable only upon
completion of a foreclosure of the related Mortgage (possibly including the
expiration of any redemption period) or otherwise as permitted or required under
the laws of the applicable state.

THE NOTE PUT AGREEMENTS

The following summary describes certain provisions of the Note Put
Agreements to be entered into by and among Kmart, a Subsidiary (if it is a
Tenant) and the Depositor. The summary does not purport to be complete and is
subject to, and qualified in its entirety by reference to, the provisions of
each Note Put Agreement, the form of which (in substantially the form in which
it will be used) has been filed as an exhibit to the Registration Statement of
which this Prospectus is a part.

Each Note Put Agreement will provide that, in the event (a) (i) a Tenant
fails to pay when due any Lease Payment within 10 days (or 30 days if the Tenant
is Kmart) after notice to the Tenant of such default and (ii) if the Tenant is a
Subsidiary, Kmart fails to pay any such Lease Payment within 30 days after
notice to Kmart of such Subsidiary's failure to do so (which notice may be given
concurrently with the corresponding notice to such Subsidiary), (b) completion
of construction of the Facility to be leased to the Tenant does not occur prior
to the Completion Date, or (c) if the Tenant is a Subsidiary, a Lease Guaranty
Termination occurs (each, a Triggering Event), the Trustee, or Collateral
Trustee if applicable, will have the right to require the Tenant, and in the
event of the Tenant's failure to do so when the Tenant is a Subsidiary, to
require Kmart to purchase the related Mortgage Note(s) in whole (but not in
part) at the Purchase Price. If a Triggering Event other than a Lease Guaranty
Termination occurs, the Trustee, at the written direction of the holders of
Certificates evidencing not less than a 66 2/3 Percentage Interest (which
direction must be given within 90 days after the giving by the Trustee to the
Certificateholders of a notice stating that such Triggering Event has occurred),
will exercise its rights under the Note Put Agreement. If the Triggering Event
is a Lease Guaranty Termination, the Trustee will exercise its rights under the
Note Put Agreement unless, within 30 days after notice by the Trustee to the
Certificateholders of the occurrence of such Lease Guaranty Termination, holders
of Certificates evidencing not less than a 66 2/3 Percentage Interest elect not
to exercise such rights. In cases where the Note Put Agreement is held in a
Collateral Trust, the 66 2/3 Percentage Interest required for the exercise of
such rights (or, in the case of a Lease Guaranty Termination, the election not
to exercise such rights) will be computed by reference to the outstanding
principal amount of all Mortgage Notes issued pursuant to the applicable Loan
Agreement.

The Purchase Price for a Mortgage Note pursuant to the Note Put Agreement
will be equal to (i) the outstanding principal balance of such Mortgage Note,
(ii) accrued interest thereon and (iii) the Make-Whole Premium related thereto,
or, in the case of a purchase of a Mortgage Note as a result of a Lease Guaranty
Termination, the lesser of the Make-Whole Premium and the Termination Premium.
Under the laws of certain states the enforceability of the obligation to pay
amounts similar to the Make-Whole Premium or the Termination Premium is unclear,
and there can be no assurance that the obligation to pay the Make-Whole Premium
or the Termination Premium will be enforceable upon the occurrence of a
Triggering Event.

In the event the Trustee, or the Collateral Trustee, if applicable,
exercises its rights under the related Note Put Agreement, the date of sale of
the Mortgage Note(s) will be not more than 35 Business Days after the Trustee,
or Collateral Trustee, receives direction to sell such Mortgage Note(s). The
Purchase Price will be deposited with the Trustee, or, if applicable, with the
Collateral Trustee which will transfer it to the related Pass-Through Trustees
on the next Business Day. Any Purchase Price received by a Trustee, or
Collateral Trustee, pursuant to the exercise of rights under a Note Put
Agreement, less any expense incurred by the

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Trustee, or Pass-Through Trustees and Collateral Trustee, if applicable, will be
distributed to Certificateholders within 30 days of receipt. See "THE
CERTIFICATES -- Other Distributions -- Distribution from Proceeds of Purchase of
Mortgage Note."

The Note Put Agreement will terminate if the related Mortgage Note(s) are
not required to be purchased in accordance with such Note Put Agreement as a
consequence of a Lease Guaranty Termination. See "THE LEASES, THE LEASE
GUARANTIES AND RELATED DOCUMENTS -- The Lease Guaranty Agreements --
Termination."

THE LEASES, THE LEASE GUARANTIES AND RELATED DOCUMENTS

The following summaries describe certain provisions of the Leases, the
Lease Guaranties, the Consent and Agreements, the Indemnity Agreements and the
Construction Fund Disbursement Agreements. The summaries do not purport to be
complete and are subject to, and qualified in their entirety by reference to the
provisions of, such documents, the forms of which (each in substantially the
form in which it will be used) have been filed as exhibits to the Registration
Statement of which this Prospectus is a part.

THE LEASES

General

Each Facility will be leased to a Tenant which will be either Kmart or a
Subsidiary. The obligations of a Subsidiary under a Lease will be guaranteed by
Kmart pursuant to a Lease Guaranty. The Leases will be assigned by the Borrower
to the Depositor pursuant to an Assignment of Leases and Rents and the Mortgage,
and the Depositor's rights under those documents will then be assigned to the
Trustee, or to the Collateral Trustee if applicable.

Term and Rental

Each Lease will have a primary term that, excluding renewal or extension
terms, will expire on or after the scheduled maturity of the related Mortgage
Note(s) unless terminated due to certain casualty, condemnation or bankruptcy
events. Lease Payments will be payable monthly and will be scheduled to be in
amounts sufficient to pay Scheduled Payments on the related Mortgage Note(s).
The term of each Lease and the obligation of the Tenant to make Lease Payments
will commence on the date specified in each Lease whether or not construction of
the Facility has been completed, the Tenant takes occupancy or accepts the
Facility as constructed.

Net Lease

The obligation of the Tenant under each Lease will, except with respect to
the cost of construction and certain environmental costs and liabilities, be
that of a lessee under a "net lease." The Tenant's obligation to pay rent under
each Lease will be absolute and unconditional and amounts payable by the Tenant
under each Lease will be paid as absolute net sums, without diminution for any
reason except for a permitted termination by the Tenant by reason of certain
casualty or condemnation events as described below (see "Condemnation and
Casualty"), a rejection of the Lease by a Borrower as lessor in a bankruptcy
proceeding if the Tenant is deprived of possession of the Facility by reason of
such rejection, certain Tenant bankruptcy events (see "CONSEQUENCES OF
BANKRUPTCY OF A TENANT OR A BORROWER") or an abatement of Lease Payments
following a condemnation which does not result in a Lease termination. The
Tenant will be obligated to pay all costs, including without limitation real
estate taxes and utilities, associated with the Facility, except for the costs
of construction and acquisition and certain environmental costs and liabilities.

Maintenance and Alterations

Each Lease will require the Tenant to make and pay for all maintenance,
replacement and repair necessary to keep the related Facility in a good state of
repair and tenantable condition. The Tenant may, at its own expense, from time
to time, make such additions or changes, structural or otherwise in and to the
Facility

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as it may deem necessary or suitable, which additions or changes (other than a
Tenant's trade fixtures) will become the property of the related Borrower. The
Tenant may also, at its own expense, at any time, erect or construct additional
buildings, structures or improvements, which will become a part of the Facility
and subject to all obligations under the Lease. Any alterations, additions or
improvements will be required to be made in a good and workmanlike manner and in
compliance with applicable law.

Use, Assignment and Subletting

Except as otherwise specified in the related Prospectus Supplement, each
Lease will generally provide that the related Facility may be used for any
lawful purpose. Each Lease will permit the Tenant to assign the Lease or sublet
the whole or any part of the related Facility without the consent of the
Borrower or the related Trustee, or Collateral Trustee if applicable, but in any
such case, the Tenant will remain primarily liable under the Lease, and Kmart,
if the Tenant is a Subsidiary, will remain liable under the Lease Guaranty. The
Tenant will not be required continuously to operate or occupy the Facility.

Insurance

Provided that the net worth of the Tenant or Kmart (if the Tenant is a
Subsidiary) exceeds $100,000,000, as determined in accordance with generally
accepted accounting principles consistently applied, the Tenant will be
permitted under each Lease to self-insure. If the Tenant elects not to, or is
not entitled to, self-insure, the Tenant will be required, at its own cost and
expense, to obtain and maintain insurance in the amounts and upon the terms and
conditions set forth in the Lease. All property insurance maintained by the
Tenant must be for 100% of the replacement value of the Facility, exclusive of
excavation costs.

Condemnation and Casualty

In the event that at any time during the term of a Lease the related
Facility is damaged or destroyed (partially or totally) by fire or other
casualty, the Lease will require that the Tenant, at its own expense, promptly
repair, rebuild and restore the Facility to the condition existing just prior to
such damage or destruction, or for the same use and purpose but in accordance
with such plans and specifications as are then generally in use by the Tenant
for the construction of the Tenant's stores and related structures; provided,
however, the repaired, rebuilt or replaced building has a value not less than
its fair market value immediately prior to such loss. Notwithstanding the
foregoing, each Lease will provide that if such damage or destruction takes
place within two years prior to the expiration date of the current term of the
Lease and if the cost of restoration exceeds 50% of the fair market value of the
Facility at the time such damage or destruction took place, the Tenant will have
the option to terminate the Lease as of the date such damage or destruction took
place by giving written notice to the Borrower within 30 days thereafter. After
such termination, the Tenant will have an additional 60 days, rent free, within
which to remove its property from the Facility. If the Tenant so terminates the
Lease and is carrying property insurance, all Insurance Proceeds will be paid to
the Trustee, or the Collateral Trustee if applicable. If the Facility is
self-insured and the Tenant terminates the Lease, the Tenant will pay the
Trustee, or the Collateral Trustee if applicable, an amount sufficient to
rebuild the Facility whether or not rebuilt.

In the event that all of a Facility is permanently expropriated, the
related Lease will automatically terminate. If (i) the points of ingress and
egress to public roadways are materially impaired by a permanent expropriation
by a public or quasi-public authority (with no reasonable replacement points of
ingress and egress) so as to render the Facility unsuitable for its intended
use, or (ii) less than the whole, but more than 10%, or such other greater
percentage as may be specified in the Prospectus Supplement, of the square
footage of the building or land constituting the Facility is permanently
expropriated by public or quasi-public authority, the Tenant will have the
option to terminate the related Lease as of the date of such permanent
expropriation.

In the event a Lease is terminated because of casualty loss or
condemnation, the only source of funds to prepay the related Mortgage Note(s) is
likely to be the Insurance Proceeds or Condemnation Proceeds, respectively, and
any amounts that could be realized from the liquidation of the related Mortgaged
Property.

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There can be no assurance that such amounts would be sufficient to pay the
Purchase Price of the related Mortgage Note(s).

In the event of an expropriation of a portion of a Facility under
circumstances where the Lease is not terminated, the Lease will continue as to
the portion of the Facility which has not been expropriated or taken. If the
floor area of the Facility is reduced as a result of such expropriation, Lease
Payments will be proportionately reduced to reflect such reduction. The Tenant
will be required, at its sole cost and expense, promptly to restore the Facility
as nearly as practicable to the condition existing prior to such expropriation,
or for the same use and purpose but in accordance with such plans and
specifications as are then generally in use by the Tenant for the construction
of the Tenant's stores and related structures. All Condemnation Proceeds will be
paid over to the Tenant for restoration, and restoration costs in excess of the
Condemnation Proceeds will be paid by the Tenant. Any Condemnation Proceeds in
excess of restoration costs will be paid to the Trustee, or the Collateral
Trustee if applicable, as assignee of the Depositor and will be applied against
amounts outstanding under the related Mortgage Note(s). See "THE CERTIFICATES --
Other Distributions -- Distribution Due to Casualty or Condemnation" and "THE
MORTGAGE NOTES AND THE LOAN AGREEMENTS -- Prepayments -- Mandatory Prepayments."

Borrower Bankruptcy

If a Borrower is in bankruptcy and rejects the related Lease, the related
Consent and Agreement will require the related Tenant to elect under Section
365(h) of the Bankruptcy Code to remain in possession of the Facility for the
remaining term of such Lease. However, if, notwithstanding such election, the
Tenant is deprived of possession of the Facility as a result of such Borrower's
rejection of the Lease in the bankruptcy proceeding, the Lease will terminate
and such Tenant and Kmart (if the Tenant is a Subsidiary) will have no further
obligations under such Lease, the related Lease Guaranty or the related Note Put
Agreement.

Remedies Upon Event of Default

Each Lease will provide that in the case of nonpayment of rent, if the
Tenant is in default for a period of 10 days after notice to the Tenant, and (if
the Tenant is a Subsidiary) Kmart is in default under the related Lease Guaranty
for 30 days after written notice to Kmart, then the Borrower, as lessor under
the Lease, with the consent of the Trustee, or Collateral Trustee if applicable,
may by giving notice to the Tenant at any time thereafter during the continuance
of such default either terminate the Lease, or reenter the related Facility by
summary proceedings or otherwise, and, in either case, expel the Tenant and
remove all property therefrom, relet the Facility at the best possible rent
readily attainable and receive the rent from the Facility; provided, however
that the Tenant and, if the Tenant is a Subsidiary, Kmart, as guarantor under
the Lease Guaranty, will remain liable for any and all deficiencies in Lease
Payments. The Lease by its terms gives neither the Borrower, as lessor under the
Lease, nor the Trustee (or Collateral Trustee, if applicable) as assignee of the
Borrower's rights under the Lease, any right to collect such deficiencies on an
accelerated basis. The Borrower (or the Trustee or Collateral Trustee) must
instead proceed against the Tenant for such deficiencies as and when they become
due. However, in the event of a payment default under the Lease and a default
under the related Lease Guaranty, the Trustee or Collateral Trustee, if
applicable, will be entitled, if such defaults are not cured within the period
specified in the Note Put Agreement, to exercise its rights under the Note Put
Agreement. See "THE NOTE PUT AGREEMENTS." Neither the Borrower nor the Trustee
(or Collateral Trustee, if applicable) have the right to terminate the Lease by
reason of non-monetary defaults by the Tenant; however, the Borrower will, in
the event of any such default, be entitled to bring an action against the Tenant
for damages or injunctive relief.

Indemnification

Each Lease will contain provisions obligating the Tenant to indemnify the
related Borrower and the Trustee, or the Collateral Trustee if applicable, as
assignee of the Depositor against any liability for damage to property or
injuries sustained by any person within the Facility prior to or during the term
of the Lease, except for liabilities arising from the Borrower's negligence.
Each Lease and the related Consent and Agreement will further contain provisions
obligating the Tenant to indemnify the Borrower, the Depositor and the Trustee,
or

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the Collateral Trustee if applicable, and to provide insurance, against
liabilities caused by the Tenant, its employees or agents during the Tenant's
occupancy of the Facility (although not during any construction at the Facility
by the Tenant prior to its taking occupancy) and arising out of the release,
use, storage, treatment, transportation, transfer, manufacture, refinement,
handling, production, disposal or threatened release of hazardous materials or
related violations of environmental laws.

The Borrower will be required under the Lease to indemnify the Tenant
against environmental liabilities which are not caused by the Tenant, its
employees or agents. If the Borrower incurs any liability under its indemnity in
favor of the Tenant, or any liability to a third party by reason of any
environmental condition as to which the Tenant has not given its indemnity, the
Borrower will in all likelihood not have any assets (other than the Facility) in
order to satisfy such liability (although, under the Lease, the Tenant will have
no recourse against the Borrower until the earlier of the expiration of the
initial term of the Lease or the payment in full of the related Mortgage
Note(s)). In addition, if the Trustee or Collateral Trustee, if applicable,
becomes the owner of a Borrower's interest in a Facility as the result of a
foreclosure, it may become subject to liability for environmental costs and
liabilities as to which it has not been indemnified by the Tenant or, if the
Tenant is a Subsidiary, by Kmart pursuant to the related Lease Guaranty. It will
be a condition to the making of each Mortgage Loan that the Depositor obtain or
cause to be obtained a phase I environmental audit of the related Facility
satisfactory to the Depositor and such further information or studies as the
Depositor deems necessary. In addition, the Loan Documents will require the
maintenance of insurance against environmental liabilities, although there can
be no assurance that such insurance will cover all environmental risks or that
such insurance will remain available at all times. The Tenant will pay premiums
for such environmental liability insurance pursuant to the Consent and
Agreement.

THE LEASE GUARANTY AGREEMENTS

General

If the Tenant is a Subsidiary, Kmart will enter into a Lease Guaranty
Agreement ("Lease Guaranty") with a Borrower with respect to the related
Facility. The Lease Guaranty will be assigned by the Borrower to the Depositor
pursuant to an Assignment of Leases and Rents and the Mortgage, and the
Depositor's rights under those documents then will be assigned to the Trustee,
or to the Collateral Trustee if applicable.

The Lease Guaranty

Pursuant to the terms of each Lease Guaranty, Kmart will absolutely and
unconditionally guarantee to a Borrower the full and punctual payment,
performance and observance by the related Subsidiary of all of the terms,
conditions, covenants and obligations to be performed and observed by the
Subsidiary under the related Lease. Except for the right of Kmart and the
Subsidiary to terminate the Lease Guaranty in certain circumstances described
below, the liability of Kmart under the Lease Guaranty will be irrevocable,
continuing, absolute, independent and unconditional except that Kmart will be
relieved of any liability under the Lease Guaranty if the Lease is rejected and
terminated by a trustee or debtor-in-possession in the Borrower's bankruptcy
proceeding and, as a result, the Subsidiary has been deprived of its possessory
rights pursuant to the Lease. Kmart will also be relieved of liability under the
Lease Guaranty if the Lease is terminated by the Subsidiary in the event of a
condemnation or casualty.

Termination

Kmart or a Subsidiary may terminate Kmart's obligations under a Lease
Guaranty if (i) the related Subsidiary achieves Investment Grade Status without
regard to Kmart's credit rating, (ii) the related Lease is assigned to a third
party (a) which has achieved or achieves Investment Grade Status or (b) an
affiliate of which has achieved or achieves Investment Grade Status and such
affiliate delivers to the Trustee, or the Collateral Trustee if applicable, a
new lease guaranty agreement with substantially the same terms as the Lease
Guaranty and an indemnity agreement with substantially the same terms as the
Indemnity Agreement, or (iii) more than 50% of the issued and outstanding stock
of the Subsidiary is acquired by a third party and such third party or an
affiliate of such third party has achieved or achieves Investment Grade Status
and

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delivers to the Trustee, or the Collateral Trustee if applicable, a new lease
guaranty agreement with substantially the same terms as the Lease Guaranty and
an indemnity agreement with substantially the same terms as the Indemnity
Agreement. The Lease Guaranty provides that any new lease guaranty agreement
will not contain a Lease Guaranty Termination provision. In the case of a
termination of a Lease Guaranty in connection with an assignment of the Lease or
the delivery of a new lease guaranty and indemnity agreement, the third party
assignee or the new guarantor will also be required to deliver to the Trustee,
or the Collateral Trustee if applicable, a new note put agreement with
substantially the same terms as the Note Put Agreement and such Note Put
Agreement will terminate if the related Mortgage Note(s) is not required to be
purchased in accordance with such Note Put Agreement as a consequence of such
Lease Guaranty Termination. For purposes of the Lease Guaranty, an entity will
have achieved "Investment Grade Status" if the senior debt of such entity will
have been rated at least Standard & Poor's rating of BBB- or Moody's rating of
Baa3 for the immediately preceding twelve month period. The exercise by Kmart or
a Subsidiary of the right to terminate a Lease Guaranty is a Triggering Event
under the related Note Put Agreement. See "THE NOTE PUT AGREEMENTS."

THE CONSENT AND AGREEMENTS

Each Consent and Agreement will provide that Kmart, the related Tenant if
it is a Subsidiary and the related Borrower consent to the Depositor's sale,
conveyance, transfer and absolute assignment of all of its right, title and
interest in the related Loan Documents and Lease to the Trustee, or the
Collateral Trustee if applicable. Each Consent and Agreement will further
provide that all Lease Payments will be paid directly to the Trustee, or the
Collateral Trustee if applicable, for the benefit of the Borrower and that such
payment will constitute payment to the Borrower in accordance with the Lease.
Each Consent and Agreement will also provide that the Tenant will pay the annual
Trustee's Fee and the Collateral Trustee's Fee, if applicable, and premiums for
environmental liability insurance. Kmart, the Tenant (if it is a Subsidiary),
the Borrower and the Depositor will acknowledge and agree that the Trustee, or
the Collateral Trustee if applicable, will have the sole right to pursue any
claim for Lease Payments and, subject to the rights of the Tenant and Kmart (if
the Tenant is a Subsidiary) under the related Construction Fund Disbursement
Agreement and any Construction Fund Disbursement Agreement -- Common Area, to
perform all other necessary and appropriate acts to protect and preserve any
right, title and interest of the Trustee, or the Collateral Trustee if
applicable, Borrower and Depositor in and to the Loan Documents. Each Consent
and Agreement will provide that without the prior consent of the Trustee or
Collateral Trustee, if applicable, the Borrower will not modify the Lease,
except with respect to modifications that do not reduce Lease Payments, alter
the initial term of the Lease, add to the Borrower's covenants under the Lease
or limit the obligations of the Tenant under the Lease. Each Consent and
Agreement will also provide that no amendment to the Loan Agreement, the
Mortgage Notes or the Loan Documents may be made without the prior consent of
the Tenant and, if the Tenant is a Subsidiary, Kmart, unless a monetary default
exists under the related Lease.

THE INDEMNITY AGREEMENTS

If the Tenant is a Subsidiary, Kmart will enter into an Indemnity Agreement
pursuant to which Kmart will indemnify the Trustee, or the Collateral Trustee if
applicable, in the event any Lease Payments made to such Trustee or Collateral
Trustee by such Subsidiary pursuant to the related Lease or by Kmart pursuant to
the related Lease Guaranty are asserted to be voidable under the Bankruptcy
Code, whether by preference or otherwise, in a proceeding in a bankruptcy case
filed by or against such Subsidiary.

The Indemnity Agreement will terminate if the related Mortgage Note(s) are
not required to be purchased in accordance with the related Note Put Agreement
as a consequence of a Lease Guaranty Termination. See "The Lease Guaranty
Agreements -- Termination" and "THE NOTE PUT AGREEMENTS."

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THE CONSTRUCTION FUND DISBURSEMENT AGREEMENTS

General

In those cases where Mortgage Loan proceeds are being used in whole or in
part to construct a Facility, the related Borrower will be obligated under its
Lease with the related Tenant to construct the Facility in accordance with the
provisions of the Lease. The obligation of such Tenant to make Lease Payments
will commence on the date specified in the Lease whether or not the Facility is
completed, the Tenant takes occupancy, or the Tenant accepts the improvements as
constructed. In addition, the Tenant and, if the Tenant is a Subsidiary, Kmart
will be obligated under the related Note Put Agreement to purchase the related
Mortgage Note(s) in the event construction of the Facility is not completed on
or before the Completion Date. In an effort to provide assurance to the Tenant
that each such Facility will be developed and constructed in a timely manner in
accordance with the plans and specifications referred to in the related Loan
Agreement, unless otherwise specified in the Prospectus Supplement, the
Depositor, the related Tenant, the related Borrower, Kmart (if the Tenant is a
Subsidiary), an Escrow Agent and, in some cases, a Construction Monitor engaged
at the request of the Tenant will enter into a Construction Fund Disbursement
Agreement which will provide that the proceeds of the Mortgage Loan being used
for the construction of the Facility will be deposited in an Escrow Account and
disbursed to the Borrower upon approval by the Tenant. It will also provide for
certain remedies in favor of the Tenant and Kmart, including the right to
foreclose on a second mortgage on the Facility given by the Borrower to the
Tenant and the right to acquire the Facility pursuant to an option granted by
the Borrower to the Tenant, in the event of a default by the Borrower in the
performance of its obligations under the related Lease to construct the Facility
in accordance with such Lease and the Construction Fund Disbursement Agreement.

If a portion of the proceeds from more than one Mortgage Loan will be used
to construct a Common Area to be used by the Tenants leasing the Facilities to
be constructed with the balance of such Mortgage Loans, then, in addition to the
previously described Construction Fund Disbursement Agreement, there will be a
Construction Fund Disbursement Agreement -- Common Area among the Depositor, the
related Borrowers, an Escrow Agent, such Tenants, Kmart (if any of the Tenants
are Subsidiaries) and a Construction Monitor, if applicable. Such Construction
Fund Disbursement Agreement -- Common Area will provide that the proceeds from
such Mortgage Loans which will be used for the construction of such Common Area
will be deposited in an Escrow Account -- Common Area and disbursed upon
approval by the applicable Tenants. It will also provide for certain remedies in
favor of such Tenants and Kmart (if any of the Tenants are Subsidiaries) in the
event of the default by the related Borrowers in the performance of their
obligations to construct such Common Area.

Prior to a Triggering Event under the related Note Put Agreement, neither
the Depositor, the Trustee, nor the Collateral Trustee, if applicable, will have
any rights with respect to the disbursement of Mortgage Loan proceeds used in
the construction of the related Facility and, if applicable, the related Common
Area. In addition, in the event the Trustee or Collateral Trustee forecloses on
a related Facility, it will do so subject to the right of the related Tenant or
Tenants to control disbursements from the Escrow Account and, if applicable, the
Escrow Account -- Common Area and to complete construction of the Facility and
the Common Area, if any.

Remedies Upon Default Under Lease

Upon the occurrence of a default by a Borrower in the performance of its
obligation in favor of the related Tenant under the Lease and prior to the
occurrence of a Triggering Event, such Tenant may, in addition to any remedies
it may have at law or in equity, (i) within the first three (3) years of the
term of the Mortgage Loan, foreclose on the second mortgage on the Facility
given by the Borrower to the Tenant or, at any time prior to completion of
construction acquire the Facility pursuant to the option granted by the Borrower
to the Tenant, and (ii) if Borrower's default is related to construction of the
Facility, (x) cease approving disbursements to a Borrower from the Escrow
Account, (y) exercise its rights under the license granted to the Tenant under
the Construction Fund Disbursement Agreement to complete the construction of the
Facility if the Borrower fails to do so, or (z) specifically enforce the
Borrower's obligations to complete the work. However, the Tenant will

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not have the right, prior to the earlier of the payment in full of the related
Mortgage Note(s) or the expiration of the initial term of the Lease, to withhold
Lease Payments, terminate the Lease, or recover monetary damages by reason of
the Borrower's default under the Lease, including Borrower's failure to complete
the Facility.

THE BORROWERS

Each Borrower will be a special purpose corporation, limited partnership,
limited liability company or other entity that will not be permitted to have any
significant assets or sources of funds other than the Mortgage Loan made to such
Borrower and the Facility owned or leased by such Borrower and leased or
subleased to a Tenant. No Borrower will receive the proceeds of or be a party to
more than one Loan Agreement, and no Borrower will own or lease more than one
Facility. No Borrower will be an affiliate of Kmart, any Subsidiary, the
Depositor, the Trustee or the Collateral Trustee.

CONSEQUENCES OF BANKRUPTCY OF A TENANT
OR A BORROWER

In the event a bankruptcy case is commenced by or against a Tenant, such
Tenant, as a debtor-in-possession, or its trustee in bankruptcy would have the
right, subject to bankruptcy court approval, to assume or reject any Lease. If
such Tenant were to reject a Lease its payments thereunder would terminate,
thereby leaving the related Borrower without cash flow to make payments on the
related Mortgage Note(s). In addition, under Section 502(b)(6) of the Bankruptcy
Code, any unsecured claim of the Trustee or the Collateral Trustee, as the case
may be, for termination damages would be limited to an amount equal to the rent
reserved under such Lease, without acceleration, for the greater of one year or
15 percent (not to exceed three years) of the remaining term of such Lease (plus
rent already due but unpaid as of the commencement date of the bankruptcy
proceeding). Therefore, if such Tenant were to reject the Lease, the damages
that could be claimed for rejection, even assuming full recovery on such claims
(which may not occur), would, in all likelihood, not be sufficient to repay the
related Mortgage Note(s). Subject to bankruptcy court approval, such Tenant, as
a debtor-in-possession, or its trustee, would also have the right, in lieu of
rejecting the Lease, to assume and to assign all of its rights and obligations
under the Lease provided, among other requirements, adequate assurance of future
performance by the assignee were provided.

It is possible that a bankruptcy court could characterize the transactions
described herein not as a lease that may be rejected, but instead as a secured
loan to the bankrupt Tenant. In such event, the Borrower, as a secured creditor,
would be prohibited by operation of the automatic stay contained in Section
362(a) of the Bankruptcy Code from taking any action against the Tenant or its
property without bankruptcy court approval. In addition, the Tenant may be
permitted to use or, under certain circumstances, sell the related Facility,
together with any other property securing the Tenant's obligations to the
Borrower, over the objection of the Trustee or the Collateral Trustee. Finally,
as a secured creditor of the Tenant, the Borrower may be required to accept
restructured payments under a Chapter 11 plan filed by the Tenant provided that
it satisfies certain plan confirmation requirements set forth in the Bankruptcy
Code. The occurrence of any of these events would have a material adverse effect
on the Certificateholders.

In the event of bankruptcy proceedings instituted by or against a
Subsidiary that is a Tenant, Kmart would continue to be obligated under the
Lease Guaranty for the payment of the Subsidiary's obligations under the Lease,
even if the Lease were rejected in bankruptcy, and would continue to be
obligated under the Note Put Agreement to purchase the related Mortgage Note(s)
if a Triggering Event occurred. See "THE LEASES, THE LEASE GUARANTIES AND
RELATED DOCUMENTS" and "THE NOTE PUT AGREEMENTS."

Although Lease Payments under each Lease will be scheduled to be sufficient
to pay Scheduled Payments under the related Mortgage Notes, and although the
Tenant under each Lease will be required to pay substantially all of the
expenses relating to the Facility, each Borrower will incur certain obligations
which will not be passed on to the Tenant under the Lease. The most significant
of these obligations will consist of

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<PAGE> 61
agreements to compensate contractors, architects and other third parties in
connection with the construction of the Facility, to pay certain environmental
liabilities for which the Tenant is not responsible under the Lease, and to pay
any Make-Whole Premium in connection with the prepayment of the related Mortgage
Note(s). It is also possible that the Borrower will, in violation of the Loan
Documents, incur obligations which are unrelated to the Facility. If the cost of
completing the Facility exceeds the amount of Mortgage Loan proceeds available
to the Borrower, or if the Borrower otherwise lacks the funds to pay obligations
which are not required to be paid by the Tenant under the Lease, it is possible
that a bankruptcy petition may be filed by or against the Borrower even in the
absence of a default by the Tenant in its obligations under the Lease. In such
event, the Borrower may benefit from various powers and remedies available to
debtors-in-possession under the Bankruptcy Code. Although the outcome of a
bankruptcy case involving the Borrower is difficult to predict, events may
transpire in the case that may adversely affect the interests of the
Certificateholders. For example, upon the filing of its bankruptcy petition, the
Borrower would enjoy the protection of the automatic stay that would prohibit
the Trustee or the Collateral Trustee, as the case may be, from taking any
action against the Borrower or its property, including foreclosing upon the
related Facility and collecting the Lease Payments directly. In order to take
such action, the Trustee or the Collateral Trustee, as the case may be, would be
required to obtain permission from the bankruptcy court by satisfying certain
requirements set forth in Section 362(d) of the Bankruptcy Code for obtaining
relief from the stay. In addition, the Borrower may be able to use the
Collateral, including the funds in the Capitalized Debt Service Account, the
Rental Payment Account, the Certificate Account and the Mortgage Note Account,
without the consent of the Trustee or the Collateral Trustee, if the Borrower
obtains bankruptcy court approval and provides such parties with adequate
protection (which adequate protection may take the form of a replacement lien,
substitute collateral or periodic cash payments). The Borrower may also have
access to the funds in the Escrow Account established under the Construction
Fund Disbursement Agreement or in the Escrow Account -- Common Area established
under the Construction Fund Disbursement Agreement -- Common Area. So long as
Lease Payments are made in accordance with the terms of the Lease or, if
applicable, the related Lease Guaranty or as otherwise ordered by the bankruptcy
court, the Trustee, or Collateral Trustee if applicable, would in no event have
any right to proceed against the Tenant or (if the Tenant is a Subsidiary) Kmart
under such Lease, such Lease Guaranty or the related Note Put Agreement.

It is also possible that the secured claims of the Trustee or the
Collateral Trustee, as the case may be, may receive economically unfavorable
treatment under the Borrower's Chapter 11 plan. For example, in the event that
it is determined that the value of the Collateral is less than the indebtedness
evidenced by the Mortgage Note(s), there may be no entitlement to receive
interest that accrued on the Mortgage Note(s) after the filing of the Borrower's
petition. In addition, if the Borrower were unable to satisfy all of the
requirements of Section 1129(a) of the Bankruptcy Code to confirm a consensual
Chapter 11 plan, the Borrower might attempt to restructure the secured claims of
the Trustee or the Collateral Trustee over its objections by invoking the
"cramdown" provisions of Section 1129(b). In such event Certificateholders may
be required, for example, to accept deferred payments in respect to the
Certificates over a longer period of time than the original term of the Mortgage
Notes.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

GENERAL

The following is a general discussion of the anticipated federal income tax
consequences of the purchase, ownership and disposition of Certificates. The
summary is based upon laws, regulations, rulings and decisions now in effect,
all of which are subject to change or possibly differing interpretations. The
discussion below does not purport to deal with federal income tax consequences
applicable to all categories of investors, such as foreign persons or tax exempt
entities, some of which may be subject to special rules. Investors should
consult their own tax advisors in determining the federal, state, local and any
other tax consequences to them of the purchase, ownership and disposition of the
Certificates.

Unless otherwise specified in the Prospectus Supplement for a Series of
Certificates, it is intended that each Trust will be classified for federal
income tax purposes as a grantor trust and that each Trust and any

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Collateral Trust will not be classified as an association taxable as a
corporation. For each Series, Squire, Sanders & Dempsey, counsel to the
Depositor, will deliver a separate opinion to that general effect.

In rendering its opinion for each Series that each Trust will be classified
as a grantor trust, counsel will have considered whether two or more Trusts
holding separate Mortgage Notes from (i) the same obligor with respect to the
same Facility or (ii) different obligors with respect to different Facilities,
to the extent those facts are present, could be recharacterized as a "taxable
mortgage pool" or as a single grantor trust with impermissible multiple classes
of ownership, each of which is treated as a corporation for federal income tax
purposes. Generally, an entity is classified as a "taxable mortgage pool" only
if, among other requirements, the entity is the obligor on debt obligations (or
equity interests treated as debt obligations) with two or more maturities.
Similarly, if certificates in a single grantor trust have different maturities,
it would have multiple classes of ownership. However, under Treasury
Regulations, such multiple classes are permissible if the trust was formed to
facilitate direct investment in the assets of the trust, and the existence of
multiple classes of ownership interests is incidental to that purpose. Because
each Trust will generally issue only one class of beneficial ownership interest
having only one maturity date, such Trust could be treated as a "taxable
mortgage pool" or as a single grantor trust with potentially impermissible
multiple classes of ownership only if such Trust is integrated with one or more
other Trusts, or if the Trusts serve to recast the manner in which principal and
interest on the debt obligations held therein are paid to Certificateholders.
While there is no authority directly on point, each Trust should be respected as
a separate entity because (i) each Trust will own separate assets in the form of
100 percent interests in separate Mortgage Notes issued directly by the obligors
thereof to such Trusts, which Mortgage Notes will not be secured by other debt
obligations, (ii) each Trust will issue a separate Series of Certificates to a
substantially separate set of Beneficial Owners, and (iii) each Trust will have
independent economic substance, in that the Trusts serve primarily to facilitate
the offering of fractional undivided participation interests in one or more
separate Mortgage Notes without recasting the interest and principal payments
thereon. Moreover, even if two or more Trusts were integrated (e.g., Trusts
holding Mortgage Notes with different maturities issued by the same obligor with
respect to the same Facility were treated as a single Trust), the integrated
single Trust will not alter the payment terms of the Mortgage Notes held;
rather, Beneficial Owners will have a fractional undivided interest in all of
the principal and interest payments received by the Trusts with respect to only
one or the other Mortgage Note (or groups of Mortgage Notes having the same
maturity). Accordingly, because the integrated single Trust would serve merely
to facilitate investment in assets that might have been separately invested in,
it should not be treated as having impermissible multiple classes of ownership.
Finally, pursuant to proposed regulations under the taxable mortgage pool
provisions, an ownership interest in an entity that is classified as an
investment trust will not be treated as a debt obligation of the trust.
Accordingly, if such proposed regulations are ultimately adopted, assuming that
the Trusts qualify as trusts under the analysis set forth above, they should not
be subject to taxable mortgage pool treatment.

Each Beneficial Owner will be treated as the owner of a pro rata fractional
undivided interest in the related Trust Property. Each Beneficial Owner, in
accordance with its method of accounting, will be required to report on its
federal income tax return its pro rata share of the interest and other income
from any Mortgage Note or other property held in the related Trust and may
deduct its pro rata share of the deductible expenses of the related Trust, at
the same time and to the same extent as if it held directly a pro rata interest
in the Trust Property and received and paid directly the amounts received by the
Trust. A Beneficial Owner who is an individual, trust or estate will be allowed
a deduction for certain itemized deductions subject to certain limitations in
the Code.

Collateral Trusts will be viewed as mere security arrangements and not as
separate entities for federal income tax purposes.

Market Discount

A purchaser of a Certificate of any Series will be treated as purchasing an
interest in any Mortgage Note and other Trust Property in the related Trust at a
price determined by allocating the purchase price paid for the Certificate among
such Mortgage Note and other Trust Property in proportion to their respective
fair market values at the time of purchase of the Certificate. To the extent
that the portion of the purchase price of

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a Certificate allocated to a Mortgage Note is less than the portion of the
principal balance of the Mortgage Note allocable to the Certificate by more than
a prescribed de minimis amount, that interest in the Mortgage Note will be
deemed to have been acquired with original issue discount. It is not anticipated
that the Mortgage Notes will have "original issue discount" because the purchase
price of a Certificate of any Series, as well as the portion of such purchase
price allocable to the related Mortgage Note, are not expected to be less than
the principal amount of such related Mortgage Note by more than the prescribed
de minimis amount. A Beneficial Owner may have market discount if it purchases a
Certificate subsequent to the origination of the respective Trust and the
remaining principal amount of the Mortgage Note allocable to the Certificate
exceeds the Beneficial Owner's tax basis allocable to such Mortgage Note, unless
the excess does not exceed a prescribed de minimis amount. In the event such
excess exceeds the de minimis amount, the Beneficial Owner will be subject to
the market discount rules of sections 1276 to 1278 of the Code with regard to
its interest in the Mortgage Note, with the result that actual or deemed
receipts of principal on a Mortgage Note may be treated as the receipt of
taxable interest income to the extent of accrued market discount. In particular,
in the case of a sale or certain other dispositions of a Mortgage Note subject
to the market discount rules, any gain from such sale or disposition will be
treated as ordinary income to the extent such payment does not exceed the market
discount that has accrued on such Mortgage Note during the period in which it
was held. A partial principal payment on a Mortgage Note subject to the market
discount rules will be included in gross income as ordinary income to the extent
such payment does not exceed the market discount that has accrued on such
Mortgage Note during the period in which it was held, with adjustments to
prevent double inclusion.

Generally, market discount accrues under a straight line method, unless the
taxpayer elects a constant interest method. However, in the case of installment
obligations, such as the Mortgage Notes, Congress has indicated its intent that,
until Treasury regulations are issued, holders of installment obligations with
market discount may elect to accrue market discount either on the basis of a
constant interest rate or, assuming the installment obligation was issued
without original issue discount, on the basis of that portion of remaining
market discount which corresponds to the ratio of the amount of stated interest
paid in the accrual period to the total amount of stated interest remaining to
be paid on the installment obligation as of the beginning of such period. Rules
are also provided that defer the deduction of part or all of the interest paid
or accrued on indebtedness incurred or continued to purchase or carry market
discount indebtedness to the extent it exceeds the interest currently includable
in income with respect to such market discount indebtedness. As an alternative
to the rules stated in this section, taxpayers can elect to include market
discount in gross income currently, without regard to the actual or deemed
receipt of principal payments, as discussed above.

A Beneficial Owner purchasing Certificates subsequent to the creation of
the respective Trust at a price which is less than the allocable principal
amount of a Mortgage Note should consult its tax advisor with respect to the
manner of reporting accrued market discount on its annual tax return and on sale
or other disposition of its Certificates.

Premium

A Beneficial Owner will generally be considered to have acquired an
interest in a Mortgage Note at a premium to the extent that its tax basis
allocable to such interest, determined as described above, exceeds the principal
amount of the Mortgage Note allocable to such interest (or the remaining
principal amount of the Mortgage Note allocable to such interest in the case of
Certificates purchased subsequent to the creation of the respective Trust). It
is not anticipated that Certificates will be issued at a premium above the
principal amount of the Mortgage Notes because the aggregate principal amount of
the Certificates evidencing interests in each Trust will be equal to the
aggregate principal amount of the Mortgage Notes held in such Trust (see "THE
MORTGAGE NOTES, THE LOAN AGREEMENTS AND RELATED DOCUMENTS -- Scheduled
Payments"). The existence of a premium with respect to Certificates acquired
subsequent to original issuance is, of course, a function of market conditions.
A Beneficial Owner owning a Certificate as a capital asset may elect to amortize
any such premium as an offset to interest income under section 171 of the Code,
with corresponding reductions in the Beneficial Owner's tax basis in that
Mortgage Note. Generally, such amortization is on a constant yield basis, based
on the Beneficial Owner's yield to maturity. However, Congress has indicated its
intent that, until regulations are issued by the Treasury Department, an
alternate

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method of amortization may be used where, as here, installment obligations are
involved. Such alternate method is based on the ratio of stated interest paid
during a particular period to stated interest remaining to be paid on the
Mortgage Note at the beginning of such period, multiplied by the amount of
unamortized premium. Beneficial Owners are urged to consult their own tax
advisors as to the amount of any such amortizable premium.

Sale of Certificates

If a Certificate is sold, gain or loss will be recognized equal to the
difference between the amount realized on the sale and the Beneficial Owner's
adjusted tax basis in the Certificate. Such tax basis will equal the Beneficial
Owner's cost for the Certificate, increased by any discount previously included
in income, and decreased by any deduction previously allowed for amortization of
premium and by the amount of principal payments previously received on the
Certificate. Any such gain or loss will be capital gain or loss if the
Certificate was held as a capital asset for more than one year, except that gain
may be treated in whole or in part as ordinary interest income under the market
discount rules of the Code.

Backup Withholding

Payments made on the Certificates, and proceeds from the sale of the
Certificates to or through certain brokers, may be subject to a "backup"
withholding tax of 31% unless the Beneficial Owner complies with certain
reporting procedures or is an exempt recipient under section 6049(b)(4) of the
Code. Any such withheld amounts will be allowed as a credit against the
Beneficial Owner's federal income tax.

STATE AND LOCAL TAX CONSIDERATIONS

In addition to the federal income tax consequences described in "Certain
Federal Income Tax Consequences," potential investors should consider the state
and local income tax consequences of the acquisition, ownership and disposition
of the Certificates. State and local income tax law may differ substantially
from the corresponding federal law, and this discussion does not purport to
describe any aspect of the income tax law of any state or other political
subdivision. Therefore, potential investors should consult their own tax
advisors with respect to the various state and local consequences of an
investment in the Certificates.

ERISA CONSIDERATIONS

In considering an investment of the assets of an employee benefit plan in a
Certificate, a fiduciary should consider, among other things (i) the purposes,
requirements and liquidity needs of such plan; (ii) the plan asset rules under
ERISA and the U.S. Department of Labor regulations; (iii) whether the investment
satisfies the diversification standards of Section 404(a)(1)(C) of ERISA, (iv)
whether the investment is prudent, considering the nature of an investment in
the Certificate; and (v) whether the investment can be valued annually. The
prudence of a particular investment must be determined by the responsible
fiduciary (usually the trustee or investment manager) with respect to each
employee benefit plan taking into account all of the facts and circumstances of
the investment.

Section 406 of ERISA and Section 4975 of the Code prohibit certain pension,
profit sharing or other employee benefit plans, individual retirement accounts
("IRAs") or annuity and employee annuity plans from engaging in certain
transactions involving "plan assets" with persons that are "parties in interest"
under ERISA or "disqualified persons" under the Code with respect to the plan. A
violation of these "prohibited transaction" rules may generate excise tax and
other liabilities under ERISA and the Code for such persons.

The U.S. Department of Labor has issued a regulation (the "Plan Asset
Regulation") concerning "plan assets" of certain employee benefit plans
(including annuities and individual retirement accounts) that are subject to
ERISA or to the prohibited transaction provisions of the Code (collectively
referred to as "Benefit Plans"). Under the Plan Asset Regulation the assets and
properties of corporations, partnerships and certain

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other entities in which a Benefit Plan makes an equity investment could be
deemed to be assets of the Benefit Plan in certain circumstances.

In general, the Plan Asset Regulation applies to the purchase by a Benefit
Plan of an "equity interest" in an entity. An equity interest is defined as any
interest in an entity other than an instrument that is treated as debt under
applicable local law and which has no substantial equity features. Although no
assurance can be given that the Certificates will be treated as debt under
applicable law, if the Certificates are deemed to be debt rather than equity
interests, the Trust's assets would not be treated as plan assets solely as a
result of the purchase of a Certificate by a Benefit Plan.

If the Certificates represent equity interests, however, and investments
are made in a Trust by Benefit Plans, the Trust could be deemed to hold plan
assets unless an exception is applicable to the Trust. The Plan Asset Regulation
states that an entity's assets will not be deemed to be plan assets if equity
participation in the entity by "benefit plan investors" is not significant.
Benefit plan investors include employee welfare benefit plans and employee
pension benefit plans that are employee benefit plans as defined pursuant to
Section 3(3) of ERISA, trusts described in Section 401(a) of the Code or plans
described in Section 403(a) of the Code, which are exempt from tax under Section
501(a) of the Code, IRAs under Section 408 of the Code and any entity whose
underlying assets include plan assets by reason of a plan's investment in the
entity. Equity participation in an entity by benefit plan investors is not
significant on any date if, immediately after the most recent acquisition of any
equity interest in the entity, less than 25% of the value of any class of equity
interests in the entity is held by benefit plan investors.

If an exception is not applicable, then (i) the prudence standards and
other provisions of Part 4 of Title I of ERISA applicable to investments by
Benefit Plans (other than IRAs) and their fiduciaries would extend to
investments of the Trust; (ii) fiduciaries of Benefit Plans that are subject to
ERISA could be liable for investments of the Trust that do not conform to such
ERISA standards; (iii) certain transactions that may be entered into between or
among the Depositor, the Trustee, the Collateral Trustee, Kmart, or a Subsidiary
might be "prohibited transactions" under ERISA and/or the Code; and (iv) the
assets of the Trust would be subject to certain reporting and disclosure
requirements under ERISA.

Finally, fiduciaries of certain types of Benefit Plans are required to
determine the fair market value of the assets of the Benefit Plan as of the
close of the Benefit Plan's fiscal year. To the extent there is a public market
in the Certificates, fiduciaries should be able to value the Benefit Plan's
investment; however, no assurances can be given that a public market will
develop or that the fiduciary will be able to determine precisely the fair
market value of the Certificates. Although the Trustee will provide periodic
statements to investors with respect to principal and interest distributions on
the Certificates, these statements will not state the fair market value of the
Certificates, and neither Kmart, the Depositor nor the Trustee can assume any
responsibility for providing such a valuation.

In light of the foregoing, fiduciaries of a Benefit Plan considering the
purchase of Certificates should consult their own counsel regarding the impact
of ERISA and the Code upon such an investment.

No transfer of a Certificate or of a beneficial ownership interest in a
Certificate will be made unless the Trustee or Pass-Through Trustee (i) has
received a representation from the transferee of the Certificate or from the
proposed Beneficial Owner of a beneficial interest in a Certificate that such
transferee or Beneficial Owner is not a Benefit Plan, or a person acting on
behalf of or purchasing for the benefit of any such Benefit Plan; (ii) has
received an opinion of counsel reasonably satisfactory to the Trustee or
Pass-Through Trustee to the effect that the purchase or holding of such
Certificate or beneficial interest in a Certificate will not result in the
assets of the Trust or Pass-Through Trust being deemed to be "plan assets"
subject to the prohibited transaction provisions of ERISA or the Code, or that
the purchase or holding of such Certificates or such beneficial interest
qualifies as an exempt prohibited transaction under the provisions of ERISA or
the Code, and will not subject the Trustee or Pass-Through Trustee or the
Depositor to any obligation in addition to those undertaken in the Trust
Agreement or Pass-Through Trust Agreement, or (iii) otherwise authorizes such
transfer. In the absence of an opinion of counsel or the Trustee's or
Pass-Through Trustee's authorization as provided in (ii) or (iii) above, the
representation as described in (i) above shall be deemed to have been made to
the Trustee or Pass-Through Trustee by the transferee's or Beneficial Owner's
acceptance of a

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Certificate or beneficial interest therein. In the event that such
representation is violated, or any attempt is made to transfer a Certificate or
a beneficial interest therein to a Benefit Plan, or a person acting on behalf of
or purchasing for the benefit of any such Benefit Plan, without an opinion of
counsel or the Trustee's or Pass-Through Trustee's authorization as provided in
(i) or (ii) above, such attempted transfer shall be void and of no effect.

LEGAL INVESTMENT CONSIDERATIONS

The Certificates will not constitute "mortgage related securities" for
purposes of the Secondary Mortgage Market Enhancement Act of 1984. There may be
restrictions on the ability of certain investors, including depository
institutions, either to purchase the Certificates or to purchase Certificates
representing more than a specified percentage of the investor's assets.
Investors should consult their own legal advisors in determining whether and to
what extent the Certificates constitute legal investments for such investors.

PLAN OF DISTRIBUTION

The Certificate offered hereby will be sold through Sutro & Co.
Incorporated ("Sutro") or through Sutro and one or more other underwriters or
underwriting syndicates. The Prospectus Supplement for each Series will set
forth the terms of the offering of such Series, including the name or names of
the underwriters, the use of proceeds thereof, and either the initial offering
price, the discounts and commissions to the underwriters and any discounts or
concessions allowed or reallowed to certain dealers, or the method by which the
price at which the underwriters will sell the Certificates will be determined.

The Certificates of a Series may be acquired by the underwriters for their
own account and may be resold from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. The obligations of any
underwriter will be subject to certain conditions precedent and such
underwriters will be severally obligated to purchase all the Certificates of a
Series described in the related Prospectus Supplement, if any are purchased.

The place and time of delivery for the Certificates of a Series in respect
of which this Prospectus is delivered will be set forth in the Prospectus
Supplement.

LEGAL MATTERS

The legality of the Certificates and certain other legal matters will be
passed upon for the Depositor by Squire, Sanders & Dempsey. Certain legal
matters will be passed upon for Kmart by its general counsel and Dickinson,
Wright, Moon, Van Dusen & Freeman, Detroit, Michigan, and for the underwriter by
Paul, Weiss, Rifkind, Wharton & Garrison, New York, New York. The material
federal income tax consequences of the Certificates will be passed upon by
Squire, Sanders & Dempsey.

EXPERTS

The consolidated financial statements and schedules of Kmart appearing in
or incorporated by reference in Kmart's 1993 Annual Report on Form 10-K to the
Commission have been examined by Price Waterhouse, independent accountants, to
the extent stated in their report incorporated by reference therein and herein.
The financial statements referred to are incorporated by reference herein in
reliance upon such report and the authority of such firm as experts in
accounting and auditing.

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<PAGE> 67

GLOSSARY

There follows an abbreviated definition of certain capitalized terms used
in this Prospectus and in the Prospectus Supplement. The Trust Agreement, the
Pass-Through Trust Agreement, the Collateral Trust Agreement if applicable, and
the Loan Agreement may contain a more complete definition of certain of the
terms defined herein and reference should be made to such documents for a more
complete definition of such terms. If there is a conflict between the definition
of any term contained in any agreement referred to in this Prospectus and the
definition included herein, the definition contained in such agreement controls.

"Assignment of Leases and Rents": Each Assignment of Leases and Rents by
and between a Borrower and the Depositor pursuant to which a Borrower will
assign to the Depositor all its rights under a Lease and Lease Guaranty, if
applicable, including, where permitted by law, a present assignment of its
rights to Lease Payments.

"Available Distribution Amount": As to any Remittance Date, an amount equal
to the amount on deposit in the Certificate Account as of the close of business
on the Business Day immediately preceding such Remittance Date.

"Bankruptcy Code": Title 11 of the United States Code.

"Beneficial Owner": A Person having a beneficial ownership interest in any
Certificate which is registered in the name of Cede.

"Borrower": A special purpose corporation, limited partnership, limited
liability company or other entity which is the obligor under the related Loan
Agreement and Mortgage Note and the lessor under the related Lease.

"Business Day": Any day other than (i) a Saturday or Sunday, or (ii) a day
on which banks in New York or California are required by law to be closed or are
customarily closed.

"Called Principal": With respect to a Mortgage Note, the principal of such
Mortgage Note that is to be paid or prepaid or is declared to be immediately due
and payable or, in the case of the purchase of a Mortgage Note under the related
Note Put Agreement, the outstanding principal balance of such Mortgage Note.

"Capitalized Debt Service Account": Each Capitalized Debt Service Account
created and maintained pursuant to a Trust Agreement, or a Collateral Trust
Agreement if applicable, from which Scheduled Payments on the related Mortgage
Note(s) will be made prior to the date Lease Payments are scheduled to commence
under the related Lease.

"Capitalized Debt Service Reserve": With respect to each Mortgage Loan, an
amount equal to all Scheduled Payments due (on a prorated basis) under the
related Mortgage Note(s) through the date when Lease Payments under the related
Lease will commence as specified in the Prospectus Supplement.

"Cede": Cede & Co. as nominee of DTC.

"Certificate Account": Each Certificate Account created and maintained
pursuant to a Trust Agreement or Pass-Through Trust Agreement.

"Certificateholder" or "Holder": The person in whose name a Certificate is
registered in the Certificate Register.

"Certificate Register": The register maintained pursuant to a Trust
Agreement or Pass-Through Trust Agreement.

"Certificates": The mortgage pass-through certificates, issuable in Series.

"Closing Date": The date on which the sale of a Series is closed and the
Certificates issued.

"Code": The Internal Revenue Code of 1986, as amended.

"Collateral": The Collateral for the Mortgage Note(s) issued pursuant to a
Loan Agreement will consist of the following: (i) a Mortgage on the related
Facility securing such Mortgage Note(s); (ii) all of the

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<PAGE> 68
Depositor's rights under the Loan Agreement pursuant to which the related
Mortgage Note(s) were issued; (iii) an assignment of the related Lease, Lease
Payments and Lease Guaranty, if applicable; (iv) a pledge of certain moneys held
in certain funds established pursuant to the Trust Agreement or Collateral Trust
Agreement, if applicable; (v) a Note Put Agreement requiring the related Tenant
and Kmart (if the Tenant is a Subsidiary) to purchase the related Mortgage
Note(s) upon the occurrence of a Triggering Event; (vi) an assignment of the
Borrower's right, title and interest in and to any Construction Fund
Disbursement Agreement and Construction Fund Disbursement Agreement-Common Area
related to such Facility; (vii) a pledge of certain investments of fund balances
held under the Trust Agreement, or Collateral Trust Agreement if applicable, and
income earned thereon; and (viii) any other Loan Documents.

"Collateral Trust": A collateral trust created pursuant to a Collateral
Trust Agreement.

"Collateral Trustee": The bank, trust company or other fiduciary named in
the Prospectus Supplement for each Series of Certificates for which a Collateral
Trust has been established as the collateral trustee under the Collateral Trust
Agreement related to such Series.

"Collateral Trustee's Fee": The amount of the annual fee paid to a
Collateral Trustee for its ordinary fees and expenses arising under a Collateral
Trust Agreement.

"Collateral Trust Agreement": An agreement between the Depositor and a
Collateral Trustee pursuant to which the Depositor will transfer, convey and
assign to such Collateral Trustee all of the Collateral related to Mortgage
Notes having different maturities to be held for the benefit, pari passu, of the
Pass-Through Trusts holding such Mortgage Notes.

"Collateral Trust Property": The corpus of the Collateral Trust created by
a Collateral Trust Agreement related to certain Mortgage Notes, consisting of
(i) the Collateral related to such Mortgage Notes; (ii) property which secured
any related Mortgage Loan and which has been acquired by foreclosure or deed in
lieu of foreclosure; and (iii) Insurance Proceeds, Condemnation Proceeds and any
other amounts receivable under any related Loan Document.

"Commission": The Securities and Exchange Commission.

"Common Area": Area used in common by more than one Facility in a shopping
center.

"Completion Date": With respect to any Note Put Agreement, the second
anniversary of the related Mortgage Note(s).

"Condemnation Proceeds": Awards in respect of, or settlements in lieu of,
condemnation proceedings affecting the Mortgaged Property, net of any amounts to
which Tenant is entitled under the Lease in respect of unamortized leasehold
improvements by Tenant, Tenant's relocation expenses and Tenant's loss of
goodwill.

"Consent and Agreement": A Consent and Agreement among a Tenant, Kmart (if
the Tenant is a Subsidiary), a Borrower, the Depositor and the Trustee, or
Collateral Trustee if applicable, (i) providing for the direct payment of Lease
Payments to the Trustee, or Collateral Trustee if applicable, (ii) requiring
such Tenant to pay the Trustee's Fee, or Collateral Trustee's Fee if applicable,
(iii) requiring such Tenant to pay the premium on certain required environmental
insurance, and (iv) concerning certain other matters.

"Construction Fund Disbursement Agreement": Each Construction Fund
Disbursement Agreement among a Borrower, Tenant, Kmart (if the Tenant is a
Subsidiary), the Depositor, a Construction Monitor, if applicable, and an Escrow
Agent pursuant to which an Escrow Account will be created and certain procedures
regarding the disbursement of the proceeds from a Mortgage Loan for construction
of a Facility will be established.

"Construction Fund Disbursement Agreement -- Common Area": Each
Construction Fund Disbursement Agreement -- Common Area among two or more
Borrowers, Kmart, two or more Tenants, the Depositor, a Construction Monitor, if
applicable, and an Escrow Agent pursuant to which an Escrow Account -- Common
Area will be created and certain procedures for the disbursement of the portion
of the proceeds from two or more Mortgage Loans to be used for construction of a
Common Area will be established.

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<PAGE> 69

"Construction Monitor": A party, in some cases, to a Construction Fund
Disbursement Agreement or a Construction Fund Disbursement Agreement -- Common
Area who is responsible for monitoring the progress of the construction of the
related Facility or Common Area.

"Debt Service": The principal and interest which is scheduled to be paid
with respect to a Series of Certificates in the amounts specified in the
Prospectus Supplement on each scheduled Remittance Date.

"Definitive Certificates": Certificates issued in fully registered,
certificated form to Certificateholders other than DTC or its nominee.

"Demised Premises": The interest of a Borrower (which may be fee title
ownership or a ground leasehold) in the land on which the Facility is or will be
located and which will be leased to a Tenant pursuant to a Lease, including the
Borrower's interest in any rights, licenses, privileges and easements
appurtenant thereto.

"Depositor": National Tenant Finance Corporation, a Delaware corporation
and its successors and assigns.

"Discounted Prepayment Value": With respect to the Called Principal, the
amount obtained by discounting all Remaining Scheduled Payments with respect to
such Called Principal from their respective scheduled Due Dates to the Purchase
Date with respect to such Called Principal, in accordance with generally
accepted financial practice and at a discount factor (applied generally on a
semiannual basis) equal to the Reinvestment Yield.

"DTC": The Depository Trust Company.

"DTC Participants": Those participants for whom DTC holds securities on
deposit.

"Due Date": With respect to a Mortgage Note, the last Business Day of the
month on which each Scheduled Payment is due, exclusive of any days of grace.

"ERISA": The Employee Retirement Income Security Act of 1974, as amended.

"Escrow Account": An escrow account created pursuant to a Construction Fund
Disbursement Agreement.

"Escrow Account -- Common Area": An escrow account created pursuant to a
Construction Fund Disbursement Agreement -- Common Area.

"Escrow Agent": The bank, trust company or other fiduciary named in the
Prospectus Supplement for each Series of Certificates as the escrow agent under
a Construction Fund Disbursement Agreement or Construction Fund Disbursement
Agreement -- Common Area related to such Series.

"Event of Default": For any Trust Agreement, Pass-Through Trust Agreement,
Collateral Trust Agreement, Mortgage Note or Loan Document, an event of default
described in such Trust Agreement, Pass-Through Trust Agreement, Collateral
Trust Agreement, Mortgage Note or Loan Document, as the context requires.

"Exchange Act": The Securities Exchange Act of 1934, as amended.

"Facility": Each Demised Premises and the improvements constructed or to be
constructed thereon, as described in the Prospectus Supplement for each Series.

"Indemnity Agreement": Each Indemnity Agreement between Kmart and the
Depositor when the Tenant is a Subsidiary pursuant to which Kmart will indemnify
the Depositor and its successors and assigns in the event that any Lease Payment
under the related Lease or Lease Guaranty is asserted to be voidable in any
bankruptcy case filed by or against such Subsidiary.

"Indirect Participants": Those Persons who clear through, or maintain a
custodial relationship with, a DTC Participant, either directly or indirectly.

55
<PAGE> 70

"Insurance Proceeds": Proceeds paid by any insurer pursuant to any
insurance policy (other than liability insurance) and self-insurance proceeds
paid by any of the Tenants or, pursuant to a Lease Guaranty, Kmart with respect
to any Mortgaged Property.

"Investment Grade Rating": A rating by Standard & Poor's of BBB- or better
or a rating by Moody's of Baa3 or better.

"Investment Grade Status": The long-term senior unsecured debt of the
entity issuing such debt has continuously had an Investment Grade Rating for a
period of not less than 12 full calendar months immediately prior to the related
Lease Guaranty Termination.

"Kmart" or "Kmart Corporation": Kmart Corporation, a Michigan corporation.

"Lease": Each Lease by and between a Tenant and a Borrower pursuant to
which such Borrower will lease a Facility to the Tenant described in the
Prospectus Supplement for each Series.

"Lease Guaranty": Each Lease Guaranty Agreement by and between Kmart and a
Borrower pursuant to which Kmart will guarantee to such Borrower the obligations
of a Tenant which is a Subsidiary under the related Lease.

"Lease Guaranty Termination": The giving of notice by Kmart or a Subsidiary
to the Borrower and the Trustee, or the Collateral Trustee if applicable, that
Kmart or the Subsidiary has elected to terminate the related Lease Guaranty
because such Subsidiary which is a Tenant under the related Lease, the new
tenant pursuant to an assignment of the related Lease, or a new guarantor of the
performance of such Lease, as the case may be, has achieved Investment Grade
Status and provided that certain other conditions are satisfied.

"Lease Payments": The annual rental and additional rent payable by a Tenant
under a Lease, other than real estate taxes and amounts payable directly to a
third party, which will be payable in accordance with such Lease.

"Loan Agreement": Each Loan Agreement between a Borrower and the Depositor
pursuant to which the Depositor will loan funds to a Borrower to provide
permanent financing for, or to finance the acquisition or acquisition and
construction of, a Facility described in the Prospectus Supplement for each
Series of Certificates.

"Loan Documents": Collectively, each Loan Agreement, Mortgage, Assignment
of Leases and Rents, Lease, Lease Guaranty, if applicable, Construction Fund
Disbursement Agreement, Construction Fund Disbursement Agreement - Common Area,
and Note Put Agreement related to a Mortgage Loan, and any other document
identified in any Loan Agreement as a Loan Document.

"Make-Whole Premium": With respect to any amount of Called Principal of a
Mortgage Note, an amount equal to the positive excess, if any, as of the
Purchase Date of the Discounted Prepayment Value of the Called Principal of such
Mortgage Note over such Called Principal.

"Moody's": Moody's Investors Service, Inc., a corporation organized and
existing under the laws of the State of Delaware, its successors and assigns.

"Mortgage": Each Mortgage, Security Agreement, Assignment of Leases and
Rents and Fixture Filing by and between the Depositor and a Borrower which will
create a first lien priority interest in the Facility securing each Mortgage
Note.

"Mortgage Loan": Each loan from the Depositor to a Borrower evidenced by
one or more Mortgage Notes and secured by a Mortgage and other Collateral.

"Mortgage Note": Each promissory note executed and delivered by a Borrower
to the Depositor which evidences all or a portion of a Mortgage Loan, which is
sold and assigned by the Depositor to the Trustee or Pass-Through Trustee and
which is the subject of a Trust Agreement or Pass-Through Trust Agreement
pursuant to which a Series of Certificates is issued.

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<PAGE> 71

"Mortgage Note Account": Each Mortgage Note Account created and maintained
pursuant to a Collateral Trust Agreement.

"Mortgaged Property": The real and personal property securing a Mortgage
Note.

"Note Put Agreement": Each Note Put Agreement by and among a Tenant, Kmart
(if the Tenant is a Subsidiary) and a Depositor pursuant to which the Tenant and
Kmart agree to purchase the related Mortgage Note at the Purchase Price upon the
occurrence of a Triggering Event.

"Pass-Through Trust": A grantor trust created pursuant to a Pass-Through
Trust Agreement.

"Pass-Through Trustee": The bank, trust company or other fiduciary named in
a Prospectus Supplement for a Series of Certificates as the trustee under a
Pass-Through Trust Agreement pursuant to which such Series is issued.

"Pass-Through Trust Agreement": A Trust Agreement when Mortgage Notes of
different maturities are issued pursuant to one or more Loan Agreements.

"Pass-Through Trust Property": The corpus of a Pass-Through Trust created
by a Pass-Through Trust Agreement for a Series of Certificates, consisting of
(i) one or more Mortgage Notes; and (ii) all assets deposited in the Certificate
Account, including investments of funds in such account.

"Percentage Interest": (i) In the case of property held in a Trust (other
than a Collateral Trust) the percentage of the whole undivided beneficial
interest in such property held by a holder of one or more Certificates of such
Trust and evidenced by such Certificates, and (ii) in the case of property held
in a Collateral Trust, the percentage of the whole undivided beneficial interest
in such property held indirectly by a holder of one or more Certificates in a
Pass-Through Trust having an interest in such Collateral Trust. When used in
connection with the exercise of any right which by its terms can be exercised
only by holders of Certificates of a single Pass-Through Trust, such term shall
mean the percentage of the whole undivided interest in the Mortgage Note(s)
owned by such Trust held by a holder of one or more Certificates in such
Pass-Through Trust and evidenced by such Certificates.

"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, limited liability company,
unincorporated organization or government or any agency or political subdivision
thereof.

"Purchase Date": With respect to the Called Principal of a Mortgage Note or
with respect to the purchase of a Mortgage Note pursuant to a Note Put
Agreement, the date on which such Called Principal is to be paid or prepaid or
is declared to be immediately due and payable under any of the related Loan
Documents or the date on which such Mortgage Note is to be purchased.

"Purchase Price": The sum of the Called Principal plus the Make-Whole
Premium and accrued interest with respect to the Called Principal to the
Purchase Date, except that if a Mortgage Note is being purchased pursuant to a
Note Put Agreement as a consequence of a Lease Guaranty Termination, the
Purchase Price will include the Termination Premium instead of the Make-Whole
Premium.

"Record Date": The close of business on the fifteenth day preceding the
related Remittance Date, except that the Record Date with respect to Scheduled
Payments received after the Due Date shall mean the close of business on the
fifteenth day preceding the Remittance Date such Scheduled Payments would have
been distributable to the Certificateholders if they had been paid on such Due
Date.

"Reinvestment Yield": With respect to the Called Principal of a Mortgage
Note, the sum of (x) the yield to maturity implied by the following: (i) the
yields reported, as of 10:00 a.m. (New York City time) on the third Business Day
preceding the Purchase Date with respect to such Called Principal, on the
display designated as "Page 678" on the Telerate Service (or such other display
as may replace Page 678 on the Telerate Service) for actively traded U.S.
Treasury securities having a maturity equal (as nearly as practicable) to the
Remaining Average Life of the Called Principal being paid or prepaid as of such
Purchase Date, or (ii) if such yields have been reported as of such time or the
yields reported as of such time are not ascertainable, the Treasury Constant
Maturity Series yields reported, for the latest day for which such yields

57
<PAGE> 72
have not been so reported as of the third Business Day preceding the Purchase
Date with respect to such Called Principal, in Federal Reserve Statistical
Release H.15 (519) (or any comparable successor publication) for actively traded
U.S. Treasury securities having a constant maturity equal (as nearly as
practicable) to the Remaining Average Life of the Called Principal being paid or
prepaid as of such Purchase Date; and (y) 50 basis points. Such implied yield
will be determined, if necessary, by (a) converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between reported yields.

"Remaining Average Life": With respect to any amount of Called Principal of
a Mortgage Note, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (i) such Called Principal into (ii) the sum of the
products obtained by multiplying (a) each Remaining Scheduled Payment of such
Called Principal (excluding interest thereon) by (b) the number of years
(calculated to the nearest one-twelfth year) which will elapse between the
Purchase Date with respect to such Called Principal and the scheduled due date
of such Remaining Scheduled Payment.

"Remaining Scheduled Payments": With respect to the Called Principal, all
payments of such Called Principal and interest thereon that would be due on or
after the Purchase Date with respect to such Called Principal if no payment of
such Called Principal were made prior to its maturity date.

"Remittance Date": Each date specified in the Prospectus Supplement for
each Series of Certificates on which principal of, and/or interest on, the
Mortgage Notes is distributable to the Certificateholder or such other date on
which a distribution is made to Certificateholders as a result of the prepayment
or other liquidation of a Mortgage Note or as a result of the sale of a Mortgage
Note pursuant to the related Note Put Agreement.

"Rental Payment Account": Each Rental Payment Account created and
maintained pursuant to a Trust Agreement or a Collateral Trust Agreement if
applicable.

"Scheduled Payments": Payments of principal of, if any, and interest on, a
Mortgage Note held in a Trust or a Pass-Through Trust which will be scheduled to
be received by the Trustee or Collateral Trustee on each Due Date.

"Securities Act": The Securities Act of 1933, as amended.

"Series": A group of Certificates issued by a separate Trust or
Pass-Through Trust.

"Standard & Poor's" or "S&P": Standard & Poor's Ratings Group or its
successor in interest.

"Subsidiary": One or more of the following subsidiaries of Kmart identified
in the related Prospectus Supplement as the Tenant under a related Lease:
Borders, Inc.; Walden Book Company Inc.; Builders Square, Inc.; OfficeMax Inc.;
or The Sports Authority, Inc.

"Tenant": The lessee under each Lease named in the Prospectus Supplement
for each Series of Certificates, which lessee will be either Kmart or a
Subsidiary.

"Termination Premium": With respect to any Mortgage Note, an amount equal
to the unpaid principal balance of such Mortgage Note multiplied by a percentage
as set forth in the related Prospectus Supplement.

"Triggering Event": With respect to a Note Put Agreement, (a) (i) the
failure by a Tenant to pay when due any related Lease Payment within 10 days (or
30 days if the Tenant is Kmart) after notice to such Tenant of such default and
(ii) if the Tenant is a Subsidiary, the failure by Kmart to pay such Lease
Payment within 30 days after notice to Kmart of such Subsidiary's failure to do
so (which notice may be given concurrently with the corresponding notice to such
Subsidiary), (b) completion of construction of the Facility to be leased to the
Tenant does not occur prior to the related Completion Date, or (c) if the Tenant
is a Subsidiary, a Lease Guaranty Termination occurs.

"Trust": A grantor trust created pursuant to a Trust Agreement.

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<PAGE> 73

"Trust Agreement": An agreement between the Depositor and the Trustee
pursuant to which a Series of Certificates will be issued and, if Mortgage Notes
having the same maturity are issued pursuant to a Loan Agreement, pursuant to
which the Collateral with respect to the related Mortgage Notes will be held.

"Trust Indenture Act": The Trust Indenture Act of 1939, as amended.

"Trust Property": The corpus of the Trust created by a Trust Agreement for
each Series of the Certificates, consisting of (i) one or more Mortgage Notes;
and (ii) all assets deposited in the Certificate Account, including the
investment of funds in such account. If Mortgage Notes of the same maturity are
issued pursuant to the related Loan Documents, then any Trust Property will also
include: (i) all rights which secure the obligations of the Borrowers of the
proceeds of such Mortgage Notes, (ii) all related Loan Documents and any rights
thereunder of holders of the Mortgage Notes; (iii) property which secured the
related Mortgage and which has been acquired by foreclosure or deed in lieu of
foreclosure; and (iv) Insurance Proceeds, Condemnation Proceeds and any other
amounts receivable under any related Loan Document.

"Trustee": The bank, trust company or other fiduciary named in a Prospectus
Supplement for a Series of Certificates as the trustee under a Trust Agreement
pursuant to which such Series is issued.

"Trustee's Fee": The amount of the annual fee(s) paid to the Pass-Through
Trustees, if applicable, or the Trustee for its ordinary fees and expenses
arising under the Pass-Through Trust Agreements, if applicable, or the Trust
Agreement.

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- ---------------------------------------------------------------
- ---------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN
THE CERTIFICATES OFFERED HEREBY, NOR AN OFFER OF THE CERTIFICATES IN ANY STATE
OR JURISDICTION IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER WOULD BE
UNLAWFUL. THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR ANY PROSPECTUS AT ANY
TIME DOES NOT IMPLY THAT INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE; HOWEVER, IF ANY MATERIAL CHANGE OCCURS WHILE THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IS REQUIRED BY LAW TO BE DELIVERED, THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS WILL BE AMENDED OR SUPPLEMENTED
ACCORDINGLY.
------------------
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Summary Information............................ S-3
Use of Proceeds................................ S-6
The Certificates............................... S-6
The Pass-Through Trusts and The Collateral
Trust........................................ S-8
The Mortgage Notes............................. S-8
The Facilities and The Leases.................. S-10
Plan of Distribution........................... S-12
Legal Matters.................................. S-13
Ratings........................................ S-13
PROSPECTUS
Available Information.......................... 2
Reports to Certificateholders.................. 2
Incorporation of Certain Documents by
Reference.................................... 2
Prospectus Summary............................. 3
Special Considerations......................... 8
Kmart.......................................... 10
The Depositor.................................. 14
Use of Proceeds................................ 14
Diagrams of Transaction Structure.............. 15
Structure of the Financings.................... 19
The Certificates............................... 20
The Trusts, Pass-Through Trusts and Collateral
Trusts....................................... 26
The Mortgage Notes, the Loan Agreements and
Related Documents............................ 35
The Note Put Agreements........................ 39
The Leases, the Lease Guaranties and Related
Documents.................................... 40
The Borrowers.................................. 46
Consequences of Bankruptcy of a Tenant or a
Borrower..................................... 46
Certain Federal Income Tax
Consequences................................. 47
State and Local Tax Considerations............. 50
ERISA Considerations........................... 50
Legal Investment Considerations................ 52
Plan of Distribution........................... 52
Legal Matters.................................. 52
Experts........................................ 52
Glossary....................................... 53
</TABLE>

UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT ALL DEALERS
EFFECTING TRANSACTIONS IN THE CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS SUPPLEMENT AND A
PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.

- ---------------------------------------------------------------
- ---------------------------------------------------------------

---------------------------------------------------------------
---------------------------------------------------------------

$85,000,000*

KMART
CORPORATION

MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1994A-1
SERIES 1994A-2

------------------------------------------------
PROSPECTUS SUPPLEMENT
------------------------------------------------

SUTRO & CO. INCORPORATED

AUGUST , 1994

* Preliminary subject to change.

---------------------------------------------------------------
---------------------------------------------------------------
<PAGE> 75

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

<TABLE>
<S> <C>
SEC Filing Fee................................................................ $ 86,206.90
Printing and Engraving........................................................ 130,000.00*
Legal Fees and Expenses....................................................... 2,500,000.00*
Trustee Fees and Expenses..................................................... 60,000.00**
Blue Sky Fees and Expenses (including fees and expenses of counsel)........... 30,000.00*
Rating Agency Fees............................................................ 250,000.00*
Miscellaneous Expenses........................................................ 100,000.00*
-------------
Total.................................................................... $3,156,206.90
============
</TABLE>

- -------------------------
* Estimated.

** Estimated; does not include annual Trustee expense.

ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS

The Registrant's By-Laws and the Michigan Business Corporation Act permit
the Registrant's officers and directors to be indemnified under certain
circumstances for expenses, and in some instances, for judgments, fines or
amounts paid in settlement of civil, criminal, administrative and investigative
suits or proceedings, including those involving alleged violations of the
Securities Act of 1933. In addition, the Registrant maintains directors' and
officers' liability insurance which, under certain circumstances, would cover
alleged violations of the Securities Act of 1933.

ITEM 16. EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
1.1 Form of Underwriting Agreement*
3.1 Certificate of Incorporation of National Tenant Finance Corporation
3.2 By-Laws of National Tenant Finance Corporation
4.1 Form of Trust Agreement between the Depositor and the Trustee
4.2 Form of Pass-Through Trust Agreement between the Depositor and the Pass-Through
Trustee
4.3 Form of Collateral Trust Agreement between the Depositor and the Collateral
Trustee
4.4 Form of Certificate used with Trust Agreement (included in 4.1)
4.5 Form of Certificate used with Pass-Through Trust Agreement (included in 4.2)
4.6 Form of Loan Agreement*
4.7 Form of Mortgage Note
4.8 Form of Leases
4.9 Form of Lease Guaranty*
4.10 Form of Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture
Filing
4.11 Form of Assignment of Leases and Rents
4.12 Form of Construction Fund Disbursement Agreement
4.13 Form of Construction and Disbursement Agreement -- Common Area
4.14 Form of Note Put Agreement*
4.15 Form of Consent and Agreement
</TABLE>

II-1
<PAGE> 76

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
5.1 Opinion of Squire, Sanders & Dempsey regarding validity of Certificates,
including consent
8.1 Opinion of Squire, Sanders & Dempsey as to certain tax matters, including consent
12 Computation of Ratio of Earnings to Fixed Charges
23.1 Consent of Price Waterhouse*
23.2 Consent of Squire, Sanders & Dempsey (included in Exhibit 5.1)
23.3 Consent of Squire, Sanders & Dempsey (included in Exhibit 8.1)
24.1 Power of Attorney (included as part of signature page of this Registration
Statement)
25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of
Trustee
</TABLE>

- -------------------------

* Filed with this Amendment No. 2

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:

(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933 unless the information required to be included in
such post-effective amendment is contained in a periodic report filed by
the Registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 and incorporated herein by reference;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement unless the information required to be
included in such post-effective amendment is contained in a periodic
report filed by the Registrant pursuant to section 13 or section 15(d)
of the Securities Exchange Act of 1934 and incorporated herein by
reference;

(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

If the Trustee is not identified until after the Registration Statement is
declared effective, the undersigned registrant hereby undertakes to file an
application for the purpose of determining the eligibility of the trustee to

II-2

<PAGE> 77

act under subsection (a) of section 310 of the Trust Indenture Act of 1939, as
amended (the "TIA"), in accordance with the rules and regulations prescribed by
the Commission under section 305(b)(2) of the TIA.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted against the Registrant by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at the
time shall be deemed to be the initial bona fide offering thereof.

II-3
<PAGE> 78

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 2 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Troy and State of Michigan on August
17, 1994.

KMART CORPORATION

By: /s/ JOSEPH E. ANTONINI*

------------------------------------
Joseph E. Antonini
Chairman of the Board, President
and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed below by the following
persons in the capacities indicated on August 17, 1994.

<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ---------------------------------------
<S> <C>
/s/ JOSEPH E. ANTONINI* Chairman of the Board, President
- --------------------------------------------- (Principal Executive Officer) and
Joseph E. Antonini Director
/s/ THOMAS F. MURASKY* Executive Vice President
- --------------------------------------------- (Principal Financial and Accounting
Thomas F. Murasky Officer)
/s/ LILYAN H. AFFINITO* Director
- ---------------------------------------------
Lilyan H. Affinito
/s/ JOSEPH A. CALIFANO, JR.* Director
- ---------------------------------------------
Joseph A. Califano, Jr.
/s/ WILLIE D. DAVIS* Director
- ---------------------------------------------
Willie D. Davis
/s/ ENRIQUE C. FALLA* Director
- ---------------------------------------------
Enrique C. Falla
/s/ JOSEPH P. FLANNERY* Director
- ---------------------------------------------
Joseph P. Flannery
/s/ DAVID B. HARPER* Director
- ---------------------------------------------
David B. Harper
/s/ F. JAMES MCDONALD* Director
- ---------------------------------------------
F. James McDonald
</TABLE>

II-4
<PAGE> 79

<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----

<S> <C>
/s/ RICHARD S. MILLER* Director
- ---------------------------------------------
Richard S. Miller

/s/ J. RICHARD MUNRO* Director
- ---------------------------------------------
J. Richard Munro

Director
- ---------------------------------------------
Donald S. Perkins

/s/ GLORIA M. SHATTO* Director
- ---------------------------------------------
Gloria M. Shatto

/s/ JOSEPH R. THOMAS* Director
- ---------------------------------------------
Joseph R. Thomas

*By: /s/ NANCIE W. LaDUKE
- ------------------------------------------------------
Nancie W. LaDuke
Attorney-in-Fact
</TABLE>

II-5
<PAGE> 80

EXHIBIT INDEX

<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGES
- ----------- ----------- ------------
<S> <C> <C>
1.1 Form of Underwriting Agreement*
3.1 Certificate of Incorporation of National Tenant Finance Corporation
3.2 By-Laws of National Tenant Finance Corporation
4.1 Form of Trust Agreement between the Depositor and the Trustee
4.2 Form of Pass-Through Trust Agreement between the Depositor and the
Pass-Through Trustee
4.3 Form of Collateral Trust Agreement between the Depositor and the
Collateral Trustee
4.4 Form of Certificate used with Trust Agreement (included in 4.1)
4.5 Form of Certificate used with Pass-Through Trust Agreement (included
in 4.2)
4.6 Form of Loan Agreement*
4.7 Form of Mortgage Note
4.8 Form of Leases
4.9 Form of Lease Guaranty*
4.10 Form of Mortgage, Security Agreement, Assignment of Leases and Rents
and Fixture Filing
4.11 Form of Assignment of Leases and Rents
4.12 Form of Construction Fund Disbursement Agreement
4.13 Form of Construction and Disbursement Agreement -- Common Area
4.14 Form of Note Put Agreement*
4.15 Form of Consent and Agreement
4.16 Form of Indemnity Agreement
5.1 Opinion of Squire, Sanders & Dempsey regarding validity of
Certificates, including consent
8.1 Opinion of Squire, Sanders & Dempsey as to certain tax matters,
including consent
12 Computation of Ratio of Earnings to Fixed Charges
23.1 Consent of Price Waterhouse*
23.2 Consent of Squire, Sanders & Dempsey (included in Exhibit 5.1)
23.3 Consent of Squire, Sanders & Dempsey (included in Exhibit 8.1)
24.1 Power of Attorney (included as part of signature page of this
Registration Statement)
25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939 of Trustee
</TABLE>

- -------------------------

* Filed with this Amendment No. 2

<PAGE> 1
EXHIBIT 1.1

UNDERWRITING AGREEMENT

__________, 19__

Sutro & Co. Incorporated
555 South Flower Street, 46th Floor
Los Angeles, CA 90071

Dear Sirs:

National Tenant Finance Corporation ("Depositor") proposes to
cause United States Trust Company of New York, as trustee ("Trustee") under [a
Trust Agreement dated as of , 199 ] [the several trust agreements
(collectively, "Trust Agreements," and each a "Trust Agreement") identified in
the Schedule of Trust Agreements annexed hereto as Exhibit A] to issue, and
Depositor proposes to sell to you, as [manager of the several] underwriter[s],
$__________ aggregate principal amount of Mortgage Pass-Through Certificates,
in series, as more particularly described in the Schedule of Mortgage
Pass-Through Certificates annexed hereto as Exhibit [A] [B] (the
"Certificates"), for which you, as [manager of the several] underwriter[s],
shall pay the aggregate amount of $ , less the amounts to be
deducted pursuant to Section 6 of this Underwriting Agreement. Capitalized
terms used and not otherwise defined herein shall have the meanings ascribed
to them in the registration statement, dated June 8, 1994, filed by or on
behalf of Kmart Corporation ("Kmart") (Registration No. 33-54043)] as from
time to time amended and supplemented.

The Certificates of each series will represent fractional
undivided beneficial ownership interests in a single separate trust (a "Trust")
established for the benefit of the Certificateholders of such series. Each
Certificate will represent a fractional undivided beneficial ownership interest
in the assets of one Trust and will have no rights, benefits or interests in
respect of any other Trust or the assets held in any other trust. [The] [Each]
Trust will hold [a] [one or more] Mortgage Note[s] evidencing [a] [one or more]
Mortgage Loan[s]. [The] [Each] Mortgage Loan will be made by the Depositor to
a separate borrower (each a "Borrower") pursuant to a separate Loan Agreement
to finance the [acquisition,] [or] [acquisition and construction,] of a
separate Facility, [or] [to provide permanent financing for a Facility] and to
pay Borrower's proportionate share of the costs of issuing and marketing the
Certificates, including the underwriting discount and the expenses provided for
in Section 6 of this Underwriting Agreement. If a Loan Agreement provides for
a Mortgage Loan evidenced by Mortgage Notes of one maturity, then pursuant to
a single Trust Agreement, the Depositor will convey to the Trustee all of its
right, title and interest in and to such Mortgage Loan and the related
Mortgage Notes and Loan Documents. In some cases a Loan Agreement may provide
that a Mortgage Loan will be evidenced

<PAGE> 2
2

by two or more Mortgage Notes having different maturities. In such event, (i)
each such Mortgage Note (and, if Mortgage Notes of different maturities are
issued pursuant to two or more Loan Agreements, all of such Mortgage Notes
having the same maturity) will be held by a separate Pass-Through Trust, and,
in the case of Mortgage Notes issued under two or more Loan Agreements, all
Mortgage Notes held by each separate Pass-Through Trust will have the same
maturity, (ii) each Certificate will evidence a fractional undivided beneficial
ownership interest in the assets of the related Pass-Through Trust and will
have no rights, benefits or interests in respect of any other Pass-Through
Trust Property held in any other Pass-Through Trust, and (iii) the Collateral
securing such Mortgage Notes will be held by a Collateral Trustee for the
benefit, pari passu, of all Pass-Through Trusts holding any of the Mortgage
Notes secured by such Collateral. The assets held by either a Trust or a
Collateral Trust will generally include with respect to each Facility the
following collateral for the Mortgage Note[s] relating to such Facility: (i) a
Mortgage on such Facility; (ii) all of the Depositor's rights under the Loan
Agreement pursuant to which the related Mortgage Note[s] were issued; (iii) an
assignment of the related Lease, Lease Payments and, if the related Tenant is a
subsidiary of Kmart (a "Subsidiary"), a Lease Guaranty by Kmart of the lease
obligations of such Tenant; (iv) a pledge of certain moneys held in certain
funds established pursuant to the Trust Agreement, or Collateral Trust
Agreement if applicable; (v) a Note Put Agreement requiring the Tenant and
Kmart (if the Tenant is a Subsidiary) to purchase the related Mortgage
Note(s) upon the occurrence of a Triggering Event; (vi) an assignment of the
Borrower's right, title and interest in and to any Construction Fund
Disbursement Agreement and any Construction Fund Disbursement Agreement-Common
Area related to such Facility; (vii) a pledge of certain investments of fund
balances held in the Trust or the Collateral Trust, if applicable and income
earned thereon; and (viii) any other Loan Documents. The Trust Agreement, the
Loan Agreement, the Mortgage, the Mortgage Note, the Lease, the Lease Guaranty,
the Note Put Agreement, the Pledge Agreement, the Construction Fund
Disbursement Agreement and any other Loan Document are referred to herein as
the "Transaction Documents."

[We understand that you are acting as manager (the "Manager")
on behalf of yourself and the underwriters named below (such underwriter or
underwriters being referred to herein as the "Underwriters").] Subject to the
terms and conditions set forth or incorporated by reference herein, Kmart
agrees to cause the Depositor to sell and the Depositor agrees to sell, and
[you] [the Underwriters] agree to purchase, [severally and not jointly,] the
[respective] principal amounts of Certificates [of each series] set forth
<PAGE> 3
3

opposite [your] [their] name[s] in the Schedule of Underwriters annexed hereto
as Exhibit [B] [C] at the purchase price (expressed as a percentage of the
principal amount of each series of Certificates) set forth in such schedule.

[You] [The Underwriters] will pay for the Certificates in
immediately available funds upon delivery thereof at [location], 10:00 a.m.
(New York time) on _________ or at such other time, not later than 5:00 p.m.
(New York time) on _____________ as shall be designated by [you] [the Manager]
and Kmart. The time and date of such payment and delivery are hereinafter
referred to as the "Closing Date."

The Certificates shall have the terms set forth in the
Prospectus dated _________, as modified by the Definitive Prospectus Supplement
[to be] dated ____________.

1. Representations and Warranties of Kmart. Kmart
represents and warrants to, and agrees with, [you] [each Underwriter] as
follows:

(a) Kmart meets the requirements for the use of
Form S-3 under the Securities Act of 1933, as amended (the "Act"), and
has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (Registration No. 33-54043) on
such Form (as amended and supplemented, the "Registration Statement"),
including a basic prospectus (the "Basic Prospectus"), for
registration under the Act of the offering and sale of mortgage pass
through certificates, including the Certificates. Kmart has filed
[number] amendments and supplements thereto [and has used a
Preliminary Prospectus], each of which has previously been furnished
to [you] [the Manager]. The Registration Statement has become
effective. No stop order suspending the effectiveness of the
Registration Statement is in effect, and no proceedings for such
purpose are pending before, or, to Kmart's knowledge, are threatened
by the Commission. Although the Basic Prospectus does not include all
the information with respect to the Certificates and the offering
thereof required by the Act and the rules thereunder, the Basic
Prospectus includes all such information required by the Act and the
rules and regulations thereunder to be included therein as of the
Effective Date. Kmart will next file with the Commission pursuant to
Rule 424(b)(2) or (5) a definitive prospectus supplement (the
"Definitive Prospectus Supplement") to the form of Basic Prospectus
included in such registration statement relating to the Certificates
and the offering thereof. As filed, such Definitive Prospectus
Supplement, together with the Basic Prospectus, shall
<PAGE> 4
4

include all such required information with respect to the
Certificates and the offering thereof and, except to the extent [you]
[the Manager] shall agree in writing to a modification, shall be in
all substantive respects in the form furnished to [you] [the Manager]
prior to the Execution Time or, to the extent not completed at the
Execution Time, shall contain only such specific additional
information and other changes (beyond those contained in the Basic
Prospectus and any Preliminary Prospectus) as Kmart has advised you,
prior to the Execution Time, will be included or made herein.

(b) The terms which follow, when used in this
Agreement, shall have the meanings indicated. The term "Effective
Date" shall mean each date that the Registration Statement and any
post-effective amendment or amendments thereto became or become
effective. "Execution Time" shall mean the date and time that this
Agreement is executed and delivered by the parties hereto. "Basic
Prospectus" shall mean the prospectus referred to in paragraph (a)
above contained in the Registration Statement at the Effective Date.
"Preliminary Prospectus" shall mean any preliminary prospectus
supplement to the Basic Prospectus which describes the Certificates
and the offering thereof and is used prior to filing of the Definitive
Prospectus Supplement. "Prospectus" shall mean the Definitive
Prospectus Supplement relating to the Certificates that is first filed
pursuant to Rule 424(b) after the Execution Time, together with the
Basic Prospectus. "Registration Statement" shall mean the
registration statement referred to in paragraph (a) above, including
incorporated documents, exhibits and financial statements, as amended
at the Execution Time (or, if not effective at the Execution Time, in
the form in which it shall become effective) and, in the event any
post-effective amendment thereto becomes effective prior to the
Closing Date (as defined above), shall also mean such registration
statement as so amended. Such term shall include any Rule 430A
Information deemed to be included therein at the Effective Date as
provided by Rule 430A. "Rule 415," "Rule 424," "Rule 430A" and
"Regulation S-K" refer to such rules or regulations under the Act.
"Rule 430A Information" means information with respect to the
Certificates and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule
430A. Any reference herein to the Registration Statement, the Basic
Prospectus, any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 which were filed under the
Securities Exchange Act of 1934, as

<PAGE> 5
5

amended (the "Exchange Act"), on or before the Effective Date or the
issue date of the Basic Prospectus, any Preliminary Prospectus or the
Prospectus, as the case may be; and any reference herein to the terms
"amend," "amendment" or "supplement" with respect to the Registration
Statement, the Basic Prospectus, any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the filing of any
document under the Exchange Act after the Effective Date or the issue
date of the Basic Prospectus, any Preliminary Prospectus or the
Prospectus, as the case may be, deemed to be incorporated therein by
reference.

(c) (i) Each document, if any, filed or to be
filed by Kmart pursuant to the Exchange Act prior to the termination
of the offering of the Certificates complied or will comply when so
filed in all material respects with the Exchange Act and the
applicable rules and regulations thereunder; (ii) each part of the
Registration Statement, when such part became effective, did not
contain, and each such part, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that
the representations and warranties set forth in this Section 1(c) do
not apply to statements or omissions in the Registration Statement or
the Prospectus based upon information furnished to Kmart in writing by
or on behalf of [you] [an Underwriter through the Manager] expressly
for use therein or to that part of the Registration Statement that
shall constitute the statement of eligibility and qualification under
the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act") of any Trustee on Form T-1; (iii) on the Effective Date, and
when the Definitive Prospectus Supplement is first filed (if required)
in accordance with Rule 424(b), and on the Closing Date (X) the
Registration Statement and the Prospectus (and each preliminary
prospectus or prospectus supplement filed as part of any amendment to
the Registration Statement) did and will comply in all material
respects with the applicable requirements of the Act and the Exchange
Act and the respective rules thereunder and (Y) at the Closing Date,
the Trust Agreement complied in all material respects with the
requirements of the Trust Indenture Act and the rules thereunder; and
(iv) each of the Transaction Documents to which Kmart is, or is to be,
a party conforms in all material respects to the description thereof
in the Prospectus.

<PAGE> 6
6

(d) Kmart is a corporation duly incorporated, is
validly existing as a corporation in good standing under the laws of
the State of Michigan, has the full power and authority and legal
right to own and lease the property used by it, to conduct its
business as described in the Prospectus and to execute and deliver
this Agreement and each Transaction Document to which it is a party
and to perform its obligations under this Agreement and each
Transaction Document to which it is a party, and is duly qualified to
transact business and is in good standing in each jurisdiction in
which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a
material adverse effect on Kmart and its subsidiaries, taken as a
whole.

(e) This Agreement and each Transaction Document
to which Kmart is a party have been duly authorized, executed and
delivered by Kmart and are legal, valid and binding agreements of
Kmart, enforceable against Kmart in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).

(f) The execution, delivery and performance by
Kmart of this Agreement and each Transaction Document to which it is a
party and the consummation by Kmart of the transactions contemplated
hereby and thereby (i) do not and will not violate the articles of
incorporation or by-laws of Kmart or any order, injunction, ruling or
decree by which Kmart is bound, (ii) do not and will not constitute a
breach of or a default under any material agreement, indenture,
mortgage, lease, note, instrument or arrangement to which Kmart is a
party or by which Kmart is bound, and (iii) do not and will not
contravene or constitute a material violation of any law, statute,
ordinance, rule or regulation to which Kmart is subject, and (iv) have
been duly authorized by all necessary corporate action on the part of
Kmart, and do not require any stockholder approval.

(g) Neither the authorization, execution or
delivery by Kmart of this Agreement or any Transaction Document to
which it is a party in accordance with the provisions hereof and
thereof, nor the consummation by Kmart of any of the transactions
contemplated hereby or

<PAGE> 7
7

thereby, requires the consent or the approval of, the giving of notice
to, or the registration with, or the taking of any other action in
respect of, any federal or state governmental authority or agency,
other than (i) registration of the issuance and sale of the
Certificates under the Act and under the securities laws of any state
in which the Certificates may be offered for sale if the laws of such
state requires such action, (ii) the qualification of [each of] the
Trust Agreement[s] under the Trust Indenture Act and (iii) the
granting of the application in respect of the Trustee pursuant to
Section 305(b)(2) of the Trust Indenture Act.

(h) Price Waterhouse, who certified the
consolidated financial statements of Kmart and its consolidated
subsidiaries for the year ended January 26, 1994, incorporated by
reference in the Registration Statement and Prospectus, are
independent public accountants as required by the Act and the rules
thereunder.

(i) The financial statements filed as part of the
Registration Statement or included in, or incorporated by reference
into, the Basic Prospectus or the Prospectus or Definitive Prospectus
Supplement present fairly, and will present fairly, the financial
condition and results of operations of the entities purported to be
shown thereby, at the dates and for the periods indicated, and have
been, and, in the case of financial statements subsequently
incorporated by reference, will be, prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved, except as approved by Price
Waterhouse.

(j) There has not occurred any material adverse
change, to Kmart's knowledge, in the condition, financial or
otherwise, or in the earnings, business or operations of Kmart and its
subsidiaries, taken as a whole, from that set forth in either the most
recent annual report on Form 10-K or the most recent quarterly report
on Form 10-Q or Form 8-K filed by Kmart with the Commission or the
Prospectus.

(k) There are no legal or governmental
proceedings pending or, to Kmart's knowledge, threatened to which
Kmart or any of its subsidiaries is or may become a party or to which
any of their respective properties is or may be subject that are
required to be described in the Registration Statement or the
Prospectus and are not so described or any statutes, regulations,
contracts or other documents that are

<PAGE> 8
8

required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement
that are not described or filed as required.

2. Representations and Warranties of the Depositor. The
Depositor represents and warrants to, and agrees with, [you] [each Underwriter]
as follows:

(a) The Depositor is a corporation duly
incorporated, is validly existing as a corporation in good standing
under the laws of the State of Delaware, has the full power and
authority and legal right to own and lease the property used by it, to
conduct its business as described in the Prospectus and to execute and
deliver this Agreement and each Transaction Document to which it is a
party and to perform its obligations under this Underwriting Agreement
and each Transaction Document to which it is a party, and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification.

(b) This Underwriting Agreement and each
Transaction Document to which it is a party, including [each of] the
Trust Agreement[s], have been duly authorized, executed and delivered
by the Depositor and are legal, valid and binding agreements of the
Depositor, enforceable against the Depositor in accordance with their
respective terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject to
general principles of equity (regardless of whether enforcement is
sought in a proceeding at law or in equity).

(c) The Certificates have been duly authorized
and, when executed and authenticated in accordance with the Trust
Agreement[s] and delivered to and duly paid for by [you] [the
Underwriters] in accordance with the terms hereof, will be entitled to
the benefits of the Trust Agreement[s], will be validly issued under
the Trust Agreement[s] and will be legal, valid and binding
obligations of the Trust[s], enforceable in accordance with their
respective terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject to
general principles of equity (regardless of whether enforcement is
sought in a proceeding at law or in equity).

<PAGE> 9
9

(d) The execution, delivery and performance by
the Depositor of this Underwriting Agreement and each Transaction
Document to which it is a party, including [each of] the Trust
Agreement[s], and the consummation by the Depositor of the
transactions contemplated hereby and thereby (A) do not and will not
violate the certificate of incorporation or by-laws (or similar
governing instruments) of the Depositor or any order, injunction,
ruling or decree by which the Depositor is bound, (B) do not and will
not constitute a breach of or a default under any agreement,
indenture, mortgage, lease, note, instrument or arrangement to which
the Depositor is a party (there being none other than the Transaction
Documents and other similar transaction documents described in the
Basic Prospectus) or by which the Depositor or any of its property is
bound, and (C) do not and will not contravene or constitute a
violation of any law, statute, ordinance, rule or regulation to which
the Depositor or any of its property is subject, and (D) have been
duly authorized by all necessary corporate action on the part of the
Depositor, and do not require any stockholder approval or approval or
consent of any trustee or holder of any indebtedness or obligations of
the Depositor (there being none).

(e) Neither the authorization, execution or
delivery by the Depositor of this Underwriting Agreement or any
Transaction Document to which it is a party in accordance with the
provisions hereof or thereof, nor the consummation by the Depositor of
any of the transactions contemplated hereby or thereby, requires the
consent or the approval of, the giving of notice to, or the
registration with, or the taking of any other action in respect of,
any federal or state governmental authority or agency, other than (i)
registration of the issuance and sale of the Certificates under the
Act and under the securities laws of any state in which the
Certificates may be offered for sale if the laws of such state
requires such action, (ii) the qualification of [each of] the Trust
Agreement[s] under the Trust Indenture Act and (iii) the granting of
the application in respect of the Trustee pursuant to Section
305(b)(2) of the Trust Indenture Act.

(f) There are no legal or governmental
proceedings pending or, to the knowledge of Depositor, threatened to
which the Depositor is or may become a party or to which any of its
properties is or may be subject.

<PAGE> 10
10

3. Public Offering. Kmart and the Depositor are advised
by [you] [the Manager] that [you] [the Underwriters] propose to make a public
offering of [their respective portions of] the Certificates as soon after this
Agreement has been entered into as in [your] [the Manager's] judgment is
advisable. The terms of the public offering of the Certificates are set forth
in the Prospectus.

4. Purchase and Delivery. Except as otherwise provided
in this Section 4, payment for the Certificates shall be made by wire transfer
or certified or official bank check or checks payable to the order of the
Trustee in immediately available funds at the time and place set forth above,
upon delivery to [The Depository Trust Company ("Cede") for] [your account]
[the respective accounts of the several Underwriters] [you] [the Manager for
the respective accounts of the several Underwriters] of the Certificates,
registered in [the name of Cede] [such names and in such denominations as [you]
[the Manager] shall request in writing not less than two full business days
prior to the date of delivery, with any transfer taxes payable in connection
with the transfer of the Certificates to [[you] [the Underwriters]] duly paid.]

5. Covenants of Kmart and the Depositor. In further
consideration of [your] [the] agreements [of the Underwriters] contained
herein, Kmart and the Depositor severally covenant as follows:

(a) To furnish [you] [the Manager], without
charge, a copy of the Registration Statement (including exhibits
thereto and documents incorporated by reference therein) as originally
filed electronically in compliance with Regulation S-T of the Act [and
a sufficient number of conformed copies of the Registration Statement
(without exhibits thereto) for delivery by the Manager to each of the
other Underwriters], and, during the period mentioned in paragraph (c)
below, as many copies of the Prospectus, any documents incorporated by
reference therein and any supplements and amendments thereto or to the
Registration Statement as [you] [the Manager] may reasonably request.

(b) Before amending or supplementing the
Registration Statement or the Prospectus with respect to the
Certificates, to furnish to [you] [the Manager], a reasonable amount
of time prior to filing such amendment or supplement, a copy of each
such proposed amendment or supplement; provided, however, that the
foregoing requirement shall not apply to any of Kmart's periodic
filings with the Commission required to be filed pursuant to Section
13(a), 13(c), 14 or 15(d) of

<PAGE> 11
11

the Exchange Act, all of which required filings Kmart hereby agrees
timely to make during the period when the Prospectus relating to the
Certificates is required to be delivered under the Act, and copies of
which filings Kmart will upon request cause to be delivered to [you]
[the Manager] promptly after being filed with the Commission.

(c) Subject to the provisions of Section 5(b),
if, during such period after the first date of the public offering of
the Certificates that the Prospectus is required by law to be
delivered in connection with sales by [you] [an Underwriter] or a
dealer, any event shall occur or condition exist as a result of which
it would be necessary to amend or supplement the Prospectus so that
the Prospectus as so amended or supplemented will not contain an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary to amend or supplement the Prospectus, Kmart shall forthwith
prepare, file with the Commission and furnish, at its own expense, to
[you] [the Underwriters], and to the dealers (whose names and
addresses [you] [the Manager] will furnish to Kmart) to which
Certificates may have been sold by [you] [the Underwriters] and to any
other dealer upon request, such amendments or supplements to the
Prospectus so that the Prospectus as so amended or supplemented will
not contain an untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein, in the
light of the circumstances under which they are made, not misleading
or so that the Prospectus, as so amended or supplemented, will comply
with law.

(d) To endeavor to qualify the Certificates for
offer and sale under the securities or Blue Sky laws of such
jurisdictions as [you] [the Manager] shall reasonably request, to
endeavor to maintain such qualification for so long as the laws of
such jurisdictions so require and to notify [you] [the Manager] of any
termination of such qualifications; provided, however, that neither
Kmart nor the Depositor shall be obligated so to qualify the
Certificates if such qualification requires it to file any general
consent to service of process or to qualify as a foreign corporation
in any jurisdiction in which it is not so qualified.

(e) Kmart will promptly advise [you] [the
Manager] (i) when, prior to the termination of the offering of the
Certificates, any amendment to the Registration Statement shall have
been filed or become

<PAGE> 12
12

effective, (ii) of any request by the Commission for any amendment to
the Registration Statement or supplement to the Prospectus or for
additional information, (iii) the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement
or the institution or threatening of any proceedings for that purpose
and (iv) of the receipt by Kmart of any notification with respect to
the suspension of the qualification of the Certificates for sale in
any jurisdiction with the initiation or threatening of any proceeding
for such purpose. Kmart will use its best efforts to prevent the
issuance of any stop order and, if issued, to obtain as soon as
possible the withdrawal thereof.

6. Expenses.

6.1 Sutro & Co. Incorporated ("Sutro") has
advanced or incurred, or shall advance or incur, expenses incident to the shelf
registration by Kmart of $250,000,000 of securities (of which the Certificates
covered by this Underwriting Agreement are a part), including (i) those
incurred in connection with preparation and filing of the Registration
Statement and first amendment thereto, the Basic Prospectus (and preliminary
version thereof), and all exhibits thereto (including the basic forms of
underwriting agreement and Transaction Documents), (ii) the filing fee paid to
the Commission in respect of such registration, (iii) the related fees,
disbursements and other charges of Kmart's counsel, (iv) the related fees,
disbursements and other charges of special counsel to the Depositor, (v) the
related fees, disbursements and other charges of special counsel to Sutro, and
(vi) the printing and delivery to [you] [each Underwriter] in quantities as
hereinabove stated of copies of the Registration Statement, the first amendment
thereto and the Basic Prospectus. Sutro shall be reimbursed for the expenses
advanced or incurred by it by the allowance to Sutro of a shelf filing expense
recovery fee of [ %] of the principal amount of all securities included in
the shelf registration. Such allowance shall be deducted from the purchase
price of all such securities and be retained by, and/or paid to, Sutro.

6.2 In addition to the expenses to be deducted
pursuant to Section 6.1, the following expenses incident to the proposed sale
of Certificates contemplated by this Underwriting Agreement, including (i)
expenses in connection with the preparation of any amendments to the
Registration Statement that relate specifically to the sale of such
Certificates, the Definitive Prospectus Supplement (and any preliminary
versions thereof) and any exhibits to any thereof (including, without
limitation, this Underwriting Agreement), (ii) the preparation, issuance and

<PAGE> 13
13

delivery of such Certificates, (iii) the fees, disbursements and other charges
of Kmart's counsel, (iv) the fees, disbursements and other charges of special
counsel to the Depositor, (v) the fees, disbursements and other charges of
local counsel, (vi) the first year's fees of the Trustee(s), (vii) any fees
charged by rating agencies for the rating of such Certificates, (viii) the
printing and delivery to [you] [each Underwriter] in quantities as hereinabove
stated of copies of the relevant amendments to the Registration Statement and
of the Definitive Prospectus Supplement (and any preliminary versions thereof)
and any amendments or supplements thereto, and (ix) the printing and delivery
to [you] [each Underwriter] of copies of [each of] the Trust Agreement[s] and
any Blue Sky Memorandum, shall be deducted and paid from the proceeds of sale
of the Certificates; provided, however, that the maximum amount of expenses so
to be deducted and paid pursuant to this Section 6.2 shall be $50,000
multiplied by the number of projects to be financed by the sale of such
Certificates.

6.3 The Depositor shall cause each Borrower to whom a
Mortgage Loan is made to bear its proportionate share of the costs of issuance
of the Certificates (i.e., the underwriting discount, the shelf expense
recovery fee provided for in Section 6.1 and the expenses to be deducted
pursuant to Section 6.2). Each Borrower as a condition to receiving a Mortgage
Loan shall authorize the Depositor to apply a portion of the related Mortgage
Loan amount to payment of the Borrower's proportionate share of such costs of
issuance by agreeing that [you] [the Manager] may withhold from the proceeds of
sale of the Certificates, such Borrower's proportionate share of the
underwriting discount and the amounts provided for in Section 6.1 and 6.2.

7. Conditions to Closing. The several obligations of
[you] [the Underwriters] will be subject to the accuracy of the representations
and warranties on the part of Kmart and the Depositor herein on the date hereof
and on the Closing Date, to the accuracy of the statements of officers of Kmart
and the Depositor made in each certificate furnished pursuant to the provisions
hereof, to the performance and observance by Kmart, the Subsidiary, the Trustee
and the Depositor of all covenants and agreements contained in the Transaction
Documents on their part to be performed and observed and to the following
additional conditions precedent:

(a) Subsequent to the execution and delivery of
this Agreement and the most recent quarterly report on Form 10-Q filed
by Kmart with the Commission and prior to the Closing Date,

(i) no stop order suspending the
effectiveness of the Registration Statement shall be in effect
and no proceedings for that purpose shall have been instituted
or threatened;

(ii) there shall not have occurred any
change, or any event reasonably likely to result in any
change, in (x) the letter or letters referred to in Section
7(e) or (y) the condition, financial or otherwise, or in the
earnings, business or operations, of Kmart and its
subsidiaries, taken as a whole, from that set forth in such
Form 10-K, Form 10-Q, Form 8-K or the Prospectus, as amended
or supplemented through the date hereof that, in [your] [the]
reasonable

<PAGE> 14
14

judgment [of the Manager], is material and adverse and
that makes it, in [your] [the] reasonable judgment [of the
Manager], impracticable to market the Certificates on the
terms and in the manner contemplated in the Prospectus, as so
amended or supplemented;

(iii) there shall not have occurred any
(A) suspension or material limitation of trading, either
generally or of any securities of Kmart, on or by, as the case
may be, the New York Stock Exchange or the Chicago Stock
Exchange, (B) suspension of trading of any securities of Kmart
on any exchange or in any over-the-counter market, (C)
declaration of a general moratorium on commercial banking
activities in New York by either Federal or New York State
authorities or (D) any outbreak or escalation of hostilities
or any change in financial markets or any calamity or crisis
that, in [your] [the] reasonable judgment [of the Manager], is
material and adverse and, in the case of any of the events
described in clauses (iii)(A) through (D), such event, singly
or together with any other event, makes it, in [your] [the]
reasonable judgment [of the Manager], impracticable to market
the Certificates on the terms and in the manner contemplated
by the Prospectus, as amended or supplemented; and

(iv) other than as disclosed in the
Prospectus, there shall not have been any downgrading, nor any
notice given of any intended or potential downgrading, or
review or possible change that does not indicate the direction
of the possible change, in the rating accorded any of Kmart's
securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule
436(g)(2) under the Act.

(b) [You] [The Manager] shall have received on
the Closing Date:

(i) An opinion of A.N. Palizzi, Esq.,
Executive Vice President and General Counsel of Kmart, dated
as of such date, addressed to [you] [the Manager] in form and
substance satisfactory to [you] [the Manager] to the effect
that:

(1) Kmart is a corporation duly
organized and validly existing as a corporation in
good standing under the laws of the State of
Michigan.
<PAGE> 15
15

(2) Kmart is duly authorized by its
Articles of Incorporation, as amended, to conduct the
business which it is described in the Prospectus (or
in any document incorporated therein by reference) as
conducting.

(3) The Transaction Documents to
which Kmart is a party and this Agreement have each
been duly authorized, executed and delivered by
Kmart.

(4) To such counsel's knowledge, no
further approval, authorization, consent or other
order of any governmental body (other than in
connection or compliance with the provisions of the
securities or blue sky laws of any jurisdiction) is
legally required to permit the execution, delivery
and performance by Kmart of the Transaction Documents
to which it is a party and this Agreement.

(5) The execution, delivery and
performance by Kmart of each of the Transaction
Documents to which it is a party and this Agreement
(A) will not violate any provision of Kmart's
Articles of Incorporation or By-laws, each as
amended, (B) will not, to such counsel's knowledge,
violate any provisions of, or constitute a default
under, or (except as contemplated by the Transaction
Documents) result in the creation or imposition of
any lien, charge or encumbrance on, or security
interest in, any of the assets of Kmart pursuant to
the provision of, any mortgage, indenture, contract,
agreement or other undertaking to which Kmart is a
party or which purports to be binding upon Kmart and
which is, or is required to be, filed by Kmart with
the Commission pursuant to the Act or the Exchange
Act and (C) to such counsel's knowledge will not
violate any provision of any state law or regulation
applicable to Kmart (other than state securities or
blue sky laws, upon which such counsel need not pass)
or, to such counsel's knowledge, any provision of any
order, writ, judgment or decree of any governmental
instrumentality applicable to Kmart.

(ii) An opinion of Dickinson, Wright,
Moon, Van Dusen & Freeman, counsel for Kmart, dated as of such
date, addressed to [you] [the

<PAGE> 16
16

Manager] in form and substance satisfactory to [you] [the Manager] to
the effect that:

(1) Each of the Transaction
Documents to which Kmart or a Subsidiary is a party
conforms in all material respects to the descriptions
thereof contained in the Prospectus.

(2) Except as to the financial
statements and other financial or statistical data
contained or incorporated by reference therein and in
the Statement[s] of Eligibility and Qualification
under the Trust Indenture Act (each a "Form T-1") of
the Trustee(s), and the sections contained in the
Registration Statement and Prospectus under the
headings "CERTAIN FEDERAL INCOME TAX CONSEQUENCES"
and "PROSPECTUS SUMMARY - Federal Income Tax
Consequences," upon which such counsel is not
required to state a belief, the Registration
Statement, at the time it became effective, and the
Prospectus complied as to form in all material
respects with the applicable requirements of the
Securities Act and (except with respect to the parts
of the Registration Statement that constitute the
statements of eligibility and qualification of the
Trustee[s] under the Trust Agreement[s], upon which
such counsel need not opine) the Trust Indenture Act,
and the applicable instructions, rules and
regulations promulgated by the Commission thereunder
or pursuant to said instructions, rules and
regulations are deemed to comply therewith; and, with
respect to the documents or portions thereof filed
with the Commission pursuant to the Exchange Act, and
incorporated by reference in the Prospectus pursuant
to Item 12 of Form S-3, such documents or portions
thereof, on the date first filed with the Commission,
complied as to form in all material respects with the
applicable provisions of the Exchange Act, and the
applicable instructions, rules and regulations
promulgated by the Commission thereunder or pursuant
to said instructions, rules and regulations are
deemed to comply therewith; the Registration
Statement has become and is effective under the
Securities Act; and, to the best knowledge of such
counsel, no stop order suspending the effectiveness
of

<PAGE> 17
17

the Registration Statement has been issued and
no proceedings for a stop order with respect thereto
are pending or threatened under Section 8(d) of the
Act.

Such opinion may state that in passing upon
the forms of the Registration Statement and the Prospectus,
such counsel assumes the correctness, completeness and
fairness of the statements made by Kmart and the Depositor and
information included or incorporated by reference in the
Registration Statement and the Prospectus and any
representations of Kmart or the Depositor contained in this
Agreement and that they take no responsibility therefor. The
opinion should also state that, in connection with the
preparation of the Registration Statement and the Prospectus,
such counsel has had discussions with certain of Kmart's
officers and representatives, with other counsel for Kmart,
with counsel for the Depositor, with Price Waterhouse, the
independent certified public accountants who audited certain
of the financial statements incorporated by reference in the
Registration Statement, and with the Underwriters'
representatives, and that such counsel's examination of the
Registration Statement and the Prospectus and its discussions
did not disclose to them any information which gives them
reason to believe that, at the Effective Date, the
Registration Statement contained any untrue statement of a
material fact or omitted to state any material fact required
to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they
were made, not misleading or that the Prospectus, as of the
date thereof and the date hereof, included or includes any
untrue statement of a material fact or omitted or omits to
state any material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading. Such counsel need not
express any belief or opinion as to the financial statements
or other financial or statistical data contained or
incorporated by reference in the Registration Statement or the
Prospectus, applicable antitrust laws, the Form(s) T-1, or the
sections of the Prospectus under the heading "CERTAIN FEDERAL
INCOME TAX CONSEQUENCES" and "PROSPECTUS SUMMARY - Federal
Income Tax Consequences."

(iii) An opinion of in-house counsel
satisfactory to [you] [the Manager] for each
<PAGE> 18
18

Subsidiary that is a party to any of the Transaction Documents, dated
as of such date, addressed to [you] [the Manager], in form and
substance satisfactory to [you] [the Manager] to the effect that:

(1) The Subsidiary is a corporation
duly organized and validly existing as a corporation
in good standing under the laws of the State of its
incorporation.

(2) The Subsidiary is duly
authorized by its [Articles] [Certificate] of
Incorporation, as amended, to conduct the business
which it is described in the Prospectus (or in any
document incorporated therein by reference) as
conducting.

(3) The Transaction Documents to
which such Subsidiary is a party have each been duly
authorized, executed and delivered by such
Subsidiary.

(4) To such counsel's knowledge, no
further approval, authorization, consent or other
order of any governmental body is legally required to
permit the execution, delivery and performance by
such Subsidiary of the Transaction Documents to which
it is a party.

(5) The execution, delivery and
performance by such Subsidiary of each of the
Transaction Documents to which it is a party will not
violate any provision of such Subsidiary's [Articles]
[Certificate] of Incorporation or By-laws, each as
amended.

(iv) An opinion of Squire, Sanders &
Dempsey, special counsel for the Depositor, dated as of such
date, addressed to [you] [the Manager], in form and substance
satisfactory to [you] [the Manager] to the effect that:

(1) The Depositor is a corporation
duly incorporated and validly existing in good
standing under the laws of the State of Delaware.

(2) This Agreement, and also each
of the Transaction Documents governed by New York law
to which any one or more of

<PAGE> 19
19

Kmart, any Subsidiary or the Depositor is a
party, constitutes the valid and binding agreement of
Kmart, such Subsidiary and/or the Depositor, as the
case may be, enforceable against Kmart, such
Subsidiary and/or the Depositor, as the case may be,
in accordance with the respective terms thereof,
except, in each case, as enforcement thereof may be
limited by bankruptcy, insolvency or other laws
affecting enforcement of creditors' rights generally,
and subject to general principles of equity
(regardless of whether enforcement is sought in a
proceeding at law or in equity). In giving the
opinion specified in the preceding sentence, Squire,
Sanders & Dempsey may state that they have read and
relied upon the opinion of A.N. Palizzi, Esq.
referred to in Section 7(b)(i), and the opinions of
counsel to the Subsidiar[y] [ies] referred to in
Section 7(b)(iii), to the extent that such opinions
are relevant in forming the opinions required by the
next preceding sentence.

(3) The Transaction Documents to
which the Depositor is a party have been duly
authorized, executed and delivered by the Depositor.

(4) The Certificates and the
Transaction Documents to which the Depositor is a
party conform in all material respects to the
descriptions thereof contained in the Prospectus.

(5) The statements and legal
conclusions contained in the Prospectus under the
caption "CERTAIN FEDERAL INCOME TAX CONSEQUENCES" are
correct, and the discussion thereunder does not omit
any considerations that are material to purchasers or
holders of the Certificates with respect to the
matters covered.

(6) Except as to the financial
statements and other financial or statistical data
contained or incorporated by reference therein and in
the Statement[s] of Eligibility and Qualification
under the Trust Indenture Act (each a "Form T-1") of
the Trustee(s), and the sections contained in the
Registration Statement and Prospectus under the
headings "AVAILABLE INFORMATION,"

<PAGE> 20
20

"INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE," "PROSPECTUS SUMMARY -- The Company,"
"PROSPECTUS SUMMARY -- Erisa Considerations,"
"KMART," "KMART CORPORATION SELECTED FINANCIAL
INFORMATION" "ERISA CONSIDERATIONS," "PLAN OF
DISTRIBUTION" and "EXPERTS," upon which such counsel
is not required to state a belief, the Registration
Statement, at the time it became effective, and the
Prospectus complied as to form in all material
respects with the applicable requirements of the Act
and (except with respect to the parts of the
Registration Statement that constitute the Statements
of Eligibility and Qualification of the Trustee[s]
under the Trust Agreement[s], upon which such counsel
need not opine) the Trust Indenture Act, and the
applicable instructions, rules and regulations
promulgated by the Commission thereunder or pursuant
to said instructions, rules and regulations are
deemed to comply therewith; the Registration
Statement has become and is effective under the Act;
and, to the best knowledge of such counsel, no stop
order suspending the effectiveness of the
Registration Statement has been issued and no
proceedings for a stop order with respect thereto are
pending or threatened under Section 8(d) of the Act.

of the circumstances under which they were made, not misleading or
that the Prospectus, as of the date thereof and the date hereof,
included or includes any untrue statement of a material fact or
omitted or omits to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which
they were made, not misleading. Such counsel need not express any
belief or opinion as to the financial statements or other financial or
statistical data contained or incorporated by reference in the
Registration Statement or the Prospectus, applicable antitrust laws,
the Form(s) T-1 or the sections of the Prospectus under the headings
"AVAILABLE INFORMATION," "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE," "PROSPECTUS SUMMARY -- The Company," "PROSPECTUS SUMMARY
-- Erisa Considerations," "KMART," "KMART CORPORATION SELECTED
FINANCIAL INFORMATION" "ERISA CONSIDERATIONS," "PLAN OF DISTRIBUTION"
and "EXPERTS."

(v) An opinion of local counsel
licensed to practice in the jurisdiction, the laws of which
govern any Transaction Document that is not governed by New
York law, and satisfactory to [you] [the Manager], dated as of
such date, addressed to [you] [the Manager] and satisfactory
in form and substance to [you] [the Manager], which, among
other things, shall be to the effect that each of the
Transaction Documents governed by the laws of such
jurisdiction to which any one or more of Kmart, any Subsidiary
or the Depositor is a party, constitutes the valid and binding
agreement of Kmart, such Subsidiary and/or the Depositor, as
the case may be, enforceable against Kmart, such Subsidiary
and/or the Depositor, as the case may be, in accordance with
the respective terms thereof, except, in each case, as
enforcement thereof may be limited by bankruptcy, insolvency
or other laws affecting enforcement of creditors' rights
generally, and subject to general principles of equity
(regardless of whether enforcement is sought in a proceeding
at law or in equity). In giving the opinion specified in the
preceding sentence, such counsel may state that they have read
and relied upon the opinion of A.N. Palizzi, Esq. referred to
in Section 7(b)(i), the opinions of counsel to the
Subsidiar[y] [ies] referred to in Section 7(b)(iii), and the
opinion of Squire, Sanders & Dempsey referred to in Section
7(b)(iv), to the extent that such opinions are relevant in
forming the opinions required by the next preceding sentence.
<PAGE> 22
22

(vi) The favorable opinion of Brown &
Wood, counsel for the Trustee, dated as of such date,
addressed to [you] [the Manager] and to Kmart, in form and
substance satisfactory to [you] [the Manager] and Kmart to the
effect that:

(1) The Trustee has been duly
incorporated and is validly existing as a banking
corporation in good standing under the laws of the
State of New York.

(2) The Trustee has full corporate
trust power and authority to enter into and perform
its obligations under the Trust Agreement[s] and, on
behalf of the Trust[s], the obligations under the
Transaction Documents to which such Trust[s] [is a
party] [are parties].

(3) The execution and delivery of
the Trust Agreement[s] and, on behalf of the
Trust[s], each of the Transaction Documents to which
a Trust is a party and the performance by the Trustee
of the Trustee's obligations under the Trust
Agreement[s], and the Transaction Documents, have
been duly authorized by all necessary corporate
action of the Trustee, and each has been duly
executed and delivered by the Trustee.

(4) The Trust Agreement[s] and each
of the Transaction Documents to which a Trust is a
party constitute valid and binding agreements of the
Trustee, enforceable against the Trustee in
accordance with their terms, subject, as to
enforcement of remedies, to applicable bankruptcy,
insolvency, reorganization, and other similar laws
affecting the rights of creditors generally and to
general principles of equity (regardless of whether
such enforceability is considered in a proceeding in
equity or at law).

(5) The execution and delivery by
the Trustee of the Trust Agreement[s] and, on behalf
of the Trust[s], each of the Transaction Documents to
which the Trust is a party, and the performance by
the Trustee of its obligations thereunder do not
conflict with, result in a breach or violation of or
constitute a default under, the Certificate of
Incorporation or By-laws of the Trustee.
<PAGE> 23
23

(6) The Certificates have been duly
and validly authorized, executed, authenticated and
issued by the Trust[s] and, when delivered, the
Certificates have been validly issued and are
entitled to the benefits of the Trust Agreement[s].

(vii) An opinion of counsel to each
Borrower, dated as of such date, addressed to you, Kmart and
the Depositor in form and substance satisfactory to [you] [the
Manager], Kmart and the Depositor.

(viii) An opinion of Paul, Weiss,
Rifkind, Wharton & Garrison, [your] counsel [to the
Underwriters], dated as of such date, in a form acceptable to
[you] [the Manager]. Such opinion may state that in passing
upon the forms of the Registration Statement and the
Prospectus, such counsel assumes the correctness, completeness
and fairness of the statements made by Kmart and the Depositor
and information included or incorporated by reference in the
Registration Statement and the Prospectus and any
representations of Kmart or the Depositor contained in this
Agreement and that they take no responsibility therefor. The
opinion should also state that, in connection with the
preparation of the Registration Statement and the Prospectus,
such counsel has had discussions with certain of Kmart's
officers and representatives, with counsel for Kmart and the
Depositor, with Price Waterhouse, the independent certified
public accountants who audited certain of the financial
statements incorporated by reference in the Registration
Statement, and with the Underwriters' representatives, and
that such counsel's examination of the Registration Statement
and the Prospectus and its discussions did not disclose to
them any information which gives them reason to believe that,
at the Effective Date, the Registration Statement contained
any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary
to make the statements therein, in the light of the
circumstances under which they were made, not misleading or
that the Prospectus, as of the date thereof and the date
hereof, included or includes any untrue statement of a
material fact or omitted or omits to state any material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. Such counsel need not express any belief or
opinion as to the financial statements

<PAGE> 24
24

or other financial or statistical data contained or
incorporated by reference in the Registration Statement or the
Prospectus, applicable antitrust laws, the Trust Indenture
Act, the Form(s) T-1, or the sections of the Prospectus under
the headings "CERTAIN FEDERAL INCOME TAX CONSEQUENCES,"
"PROSPECTUS SUMMARY - Federal Income Tax Consequences," or
"ERISA CONSIDERATIONS."

(c) [You] [The Manager] shall have received, on
the Closing Date, certificates of Kmart and the Depositor,
respectively, signed by their respective Chairman of the Board,
President, Treasurer or other Chief Financial Officer, or in the case
of the Depositor, any Vice President, dated as of the Closing Date,
and in the case of the certificate of the Depositor, addressed to both
you and Kmart, to the effect that the signer of such certificate has
examined the Registration Statement, the Basic Prospectus, the
Prospectus, the Definitive Prospectus Supplement and this Agreement
and that:

(i) the representations and warranties
of Kmart or the Depositor, as the case may be, in this
Agreement and each of the other Transaction Documents to which
it is a party are true and correct in all material respects
(except for those representations and warranties that are
already subject to a materiality or similar qualification,
which shall be true and correct in all respects as so
qualified) on and as of the date of such certificate, and
Kmart or the Depositor, as the case may be, has complied with
all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to the date of
such certificate;

(ii) no stop order suspending the
effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or,
to the knowledge of Kmart or the Depositor, as the case may
be, threatened;

(iii) there has been no change or any
event reasonably likely to result in any change, in the
condition, financial or otherwise, or in the earnings,
business or operations, of Kmart or the Depositor, as the case
may be, and its subsidiaries, if any, taken as a whole, from
that set forth in the Prospectus, as amended or supplemented
through the date hereof, or the most recent quarterly report
of Kmart on Form 10-Q filed with the Commission, that is
material and adverse; and
<PAGE> 25
25

(iv) no event has occurred that constitutes or is
reasonably likely to result in a default under a Lease or a
Lease Guaranty or any other Transaction Document to which
Kmart or the Depositor, as the case may be, is a party.

(d) [You] [The Manager] shall have received from
each Subsidiary that is a party to any of the Transaction Documents, a
Closing Date certificate signed by its Chairman of the Board,
President or any Vice President, and by its Treasurer or other Chief
Financial Officer, in the form annexed hereto as Exhibit [C] [D].

(e) [You] [The Manager] shall have received on
the Closing Date, from Price Waterhouse, Kmart's independent certified
public accountants, a letter or letters, dated as of the Closing Date,
addressed to both you and Kmart, in form and substance satisfactory to
[you] [the Manager] confirming that they are independent accountants
within the meaning of the Act and the Exchange Act and the respective
applicable published rules and regulations thereunder, and containing
statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in or
incorporated by reference into the Registration Statement and the
Prospectus, including, without limitation, those set forth on Exhibit
[D] [E].

(f) The Depositor shall have received a letter
from Standard & Poor's rating the Certificates "[ ]" and true copies
thereof shall have been provided to [you] [the Manager].

(g) All conditions specified in each of the
Transaction Documents to be performed or satisfied on or prior to the
Closing Date shall have been so performed or satisfied on the Closing
Date and [you] [the Manager] shall have received executed copies of
all documents delivered in connection therewith.

(h) [You] [The Manager] shall have received on
the Closing Date, such appropriate further information, certificates
and documents as [you] [the Manager] may reasonably request.

(i) Each of the transactions contemplated herein
or in the Prospectus as occurring on or before the Closing Date shall
have occurred as anticipated.
<PAGE> 26
26

If any of the conditions specified in this Section 7 shall not
have been fulfilled in all material respects when and as provided in this
Underwriting Agreement, or if any of the opinions and certificates mentioned
above or elsewhere in this Underwriting Agreement shall not be in all material
respects reasonably satisfactory in form and substance to [you] [the Manager]
and to [your] [the Underwriters'] counsel, this Agreement and all of [your]
[the Underwriters'] obligations hereunder may be canceled at, or at any time
prior to, the Closing Date by [you] [the Manager]. Notice of such cancellation
shall be given to Kmart and the Depositor in writing or by telephone or
telegraph confirmed in writing.

8. Indemnification and Contribution.

(a) Kmart agrees to indemnify and hold harmless
[you] [each Underwriter] and each person, if any, who controls [you] [such
Underwriter] within the meaning of either Section 15 of the Act or Section 20
of the Exchange Act from and against any and all losses, claims, damages or
liabilities (including, without limitation, the reasonable fees and expenses of
counsel in connection with any investigation or proceeding), whether or not
arising from third party claims, arising out of or based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement as originally filed or in any amendment or supplement
thereto, or the Prospectus as originally filed or in any amendment or
supplement thereto, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (ii) any breach of
a representation or warranty or covenant or agreement herein of Kmart;
provided, however, that Kmart will not be liable in any such case to the extent
that such losses, claims, damages or liabilities are caused by any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein based upon and in conformity with information furnished in writing to
Kmart by or on behalf of [you] [such Underwriter through the Manager] expressly
for use therein; and provided, further, that the indemnity agreement described
in this subsection shall not inure to the benefit of [you] [any Underwriter] or
of any person controlling [you] [such Underwriter] on account of any such
losses, claims, damages, liabilities, expenses or actions arising from the sale
of Certificate to any person in respect of the Prospectus, as supplemented or
amended (excluding, however, any document then incorporated or deemed
incorporated by reference therein pursuant to Item 12 of Form S-3) furnished by
[you] [such Underwriter] to a person to whom any of the Certificates were sold,
insofar as such indemnity relates to any untrue or misleading statement

<PAGE> 27
27

or omission made in a Preliminary Prospectus or the Prospectus but eliminated
or remedied prior to the consummation of such sale in the Prospectus, or any
amendment or supplement thereto furnished pursuant to Section 5 hereof,
[respectively,] unless a copy of such amendment or supplement is furnished by
[you] [such Underwriter] to such person (i) with or prior to the written
confirmation of the sale involved or (ii) as soon as available after such
written confirmation.

(b) [You] [Each Underwriter] agree[s], severally
and not jointly, to indemnify and hold harmless Kmart, its directors, its
officers who signed the Registration Statement and each person, if any, who
controls Kmart within the meaning of either Section 15 of the Act or Section 20
of the Exchange Act to the same extent as the foregoing indemnity from Kmart to
[you] [such Underwriter], but only with reference to the respective information
relating to [you] [such Underwriter], as the case may be, furnished in writing
by or on behalf of [you] [such Underwriter] expressly for use in the
Registration Statement, the Prospectus or any amendments or supplements
thereto.

(c) If any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either paragraph (a) or (b) above, such
person (the "indemnified party") shall promptly notify the person against whom
such indemnity may be sought (the "indemnifying party") in writing of the
institution of such proceeding and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
parties to any such proceeding (including any impleaded parties) include both
the indemnifying party (or any other person represented by such counsel) and
the indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. Except as provided in the preceding sentence, it is understood that the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm (in addition to any local counsel) for
all such indemnified parties and that all such fees and expenses as are

<PAGE> 28
28

reimbursable hereunder shall be reimbursed as they are incurred. In the case
of parties indemnified pursuant to paragraph (a) above, such separate firm
shall be designated in writing by [you] [the Manager], and by Kmart in the case
of parties indemnified pursuant to paragraph (b) above. The indemnifying party
shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.

(d) If the indemnification provided for in
paragraph (a) or (b) of this Section 8 is unavailable to an indemnified party
or insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then each indemnifying party under such paragraph, in lieu
of indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (i) in such proportion as is appropriate to
reflect the relative benefits received by Kmart on the one hand and [you] [the
Underwriters] on the other from the offering of the Certificates or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of Kmart on the one
hand and of [you] [the Underwriters] on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by Kmart (and the Trust) on the one hand and [you]
[the Underwriters] on the other in connection with the offering of the
Certificates shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Certificates (before deducting expenses)
received by Kmart bears to the total commissions received by [you] [the
Underwriters] in respect thereof. The relative fault of Kmart on the one hand
and of [you] [the Underwriters] on the other, shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by or on behalf of Kmart or by or on behalf of
[you] [the

<PAGE> 29
29

Underwriters] and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
For purposes of this Section 8, each person who controls [any of] you within
the meaning of the Act shall have the same rights to contribution as [any of]
you, and each person who controls Kmart within the meaning of either the Act or
the Exchange Act, each officer of Kmart who shall have signed the Registration
Statement and each director of Kmart shall have the same rights to contribution
as Kmart, subject in each case to the provisions of this paragraph (d) and
paragraph (e). Any party entitled to contribution will, promptly after receipt
of notice of commencement of any action, suit or proceeding (including any
governmental investigation) against such party in respect of which a claim for
contribution may be made against another party or parties under this paragraph
(d), notify such party or parties from whom contribution may be sought, but the
omission to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any other obligation it or
they may have hereunder or otherwise than under this paragraph (d), except and
only to the extent that the party or parties is materially prejudiced thereby.

(e) Kmart and [you] [the Underwriters] agree that
it would not be just and equitable if contribution pursuant to this Section 8
were determined by pro rata allocation [(even if the Underwriters were treated
as one entity for such purpose)] or by any other method of allocation that does
not take account of the considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages and liabilities referred to in paragraph (d) above
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8, [you] [no Underwriter] shall
[not] be required to contribute any amount in excess of the amount by which the
total price at which the Certificates underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages that [you
have] [such Underwriter has] otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. [The Underwriters' obligations to
contribute pursuant to this Section 8 are several in proportion to the total
commissions received by each Underwriter pursuant to this Agreement and not
joint.] The remedies provided for in this Section 8 are not exclusive

<PAGE> 30
30

and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.

The indemnity and contribution provisions contained in this
Section 8 and the representations and warranties and covenants and agreements
of Kmart and the Depositor contained herein shall remain operative and in full
force and effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on [your] behalf [of any Underwriter], or any person
controlling [you] [any Underwriter] or by or on behalf of Kmart, its directors
or officers or any person controlling Kmart and (iii) acceptance and payment
for any of the Certificates.

9. Termination. This Agreement shall be subject to
termination, by notice given by [you] [the Manager] to Kmart, if after the
execution and delivery of this Agreement and prior to the Closing Date (i)
there has been any material adverse change in the condition, financial or
otherwise, or in the earnings, business or operations of Kmart and its
subsidiaries, taken as a whole, or (ii) there has occurred any outbreak or
escalation of hostilities or other calamity or crisis the effect of which on
the financial markets of the United States is such as to make it, in [your]
[the Manager's] judgment, impracticable to market the Certificates, or (iii)
trading in securities, either generally or of Kmart, on the New York Stock
Exchange has been suspended or materially limited or if a general moratorium on
commercial banking activities has been declared by either Federal or New York
State authorities, or (iv) except as disclosed in the Prospectus, there has
been any downgrading, or any notice given of any intended or potential
downgrading, in the rating accorded any of Kmart's securities by any
"nationally recognized statistical rating organization," as such term is
defined for purposes of Rule 436(g)(2) under the Act, or (v) all of the
conditions of Section 7 shall not have been fulfilled.

[10. Defaulting Underwriters. If, on the Closing Date, any
one or more of the Underwriters shall fail or refuse to purchase Certificates
that it has or they have agreed to purchase hereunder on such date, and the
aggregate amount of Certificates which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than
one-tenth of the aggregate amount of the Certificates to be purchased on such
date, the other Underwriters shall be obligated severally in the proportions
that the amount of Certificates set forth opposite their respective names in
Exhibit [B] [C] bears to the aggregate amount of Certificates set forth
opposite the names of all such non- defaulting Underwriters, or in such other
proportions as the Manager may specify, to purchase the Certificates which such

<PAGE> 31
31

defaulting Underwriter or Underwriters agreed but failed or refused to purchase
on such date; provided, that in no event shall the amount of Certificates that
any Underwriter has agreed to purchase pursuant to this Agreement be increased
pursuant to this Section 10 by an amount in excess of one-ninth of such amount
of Certificates without the written consent of such Underwriter. If, on the
Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase
Certificates and the aggregate amount of Certificates with respect to which
such default occurs is more than one-tenth of the aggregate amount of
Certificates to be purchased on such date, and arrangements satisfactory to the
Manager and Kmart for the purchase of such Certificates is not made within 36
hours after such default, this Agreement shall terminate without liability on
the part of any nondefaulting Underwriter or Kmart. In any such case the
Manager or Kmart shall have the right to postpone the Closing Date but in no
event for longer than seven days, in order that the required changes, if any,
in the Registration Statement and in the Prospectus or in any other documents
or arrangements may be effected. Any action taken under this paragraph shall
not relieve any defaulting Underwriter from liability in respect of any default
of such Underwriter under this Agreement.

If this Agreement shall be terminated by the Underwriters, or
any of them, because of any failure or refusal on the part of Kmart or the
Depositor to comply with the terms or to fulfill any of the conditions of this
Agreement, or if for any reason Kmart shall be unable to perform its
obligations under this Agreement, Kmart or the Depositor will reimburse the
Underwriters or such Underwriters as have so terminated this Agreement with
respect to themselves, severally, for all out-of-pocket expenses (including the
fees and disbursements of their counsel) reasonably incurred by such
Underwriters in connection with this Agreement or the offering of the
Certificates.]

11. Miscellaneous. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.

This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.

12. Notices. All communications hereunder will be in
writing and effective only on receipt, and, if sent to you at the address set
forth above (telecopy no.:_______); if sent to Kmart, will be mailed, delivered
or telecopied to it at 3100 West Big Beaver Road, Troy, Michigan 48084
(telecopy no.________), attention of Executive Vice President and Chief
Financial Officer (with a copy to the General

<PAGE> 32
32

Counsel); and if sent to the Depositor, will be mailed, delivered or telecopied
to it at __________ (telecopy no. ____________), attention of ______________,
with a copy to Squire Sanders & Dempsey, 40 North Central Avenue, Suite 2700,
Phoenix, Arizona 85004, attention of Norman C. Storey, Esq.

13. Successors. This Agreement will inure to the benefit
of and be binding upon the parties hereto and their respective successors and
the officers and directors and controlling persons referred to in Section 8
hereof, and no other person will have any right or obligation hereunder.

14. Headings. The headings of the sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed a part of this Agreement.

Please confirm your agreement by having an authorized officer
sign a copy of this Agreement in the space set forth below.

Very truly yours,

KMART CORPORATION

By:____________________________________
Name:
Title:

NATIONAL TENANT FINANCE CORPORATION

By:____________________________________
Name:
Title:

Accepted:

SUTRO & CO. INCORPORATED[,]
[On behalf of itself and the several
Underwriters named in Exhibit [B] [C] hereto]

By:_________________________________
Name:
Title:
<PAGE> 33
EXHIBIT [C] [D]

OFFICERS' CERTIFICATE

We, ______________, [Chairman] [President] [a Vice President],
and _______________________, [Treasurer] [Other] and Chief Financial Officer,
of [Name of Subsidiary] (the "Subsidiary"), deliver this certificate in
accordance with Section 7(d) of the Underwriting Agreement (the "Underwriting
Agreement"), dated _________, 199_, among Sutro & Co. Incorporated ("Sutro")
[on behalf of itself and the other underwriters identified in the exhibit
thereto], Kmart Corporation ("Kmart") and National Tenant Finance Corporation
(the "Depositor"), relating to the sale of $___________ aggregate principal
amount of Mortgage Pass-Through Certificates (the "Certificates") pursuant to a
registration statement on Form S-3 (Registration No. 33-54043) (as amended and
supplemented, the "Registration Statement") filed by Kmart with the Securities
and Exchange Commission.

Capitalized terms used, but not otherwise defined, herein have
the meanings ascribed to them in the Underwriting Agreement or, if not defined
therein, in the Registration Statement.

We hereby certify as follows:

(a) The Subsidiary has been duly incorporated, is
validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, has full power and authority
and legal right to own and lease the property used by it, to conduct
its business as described in the Prospectus and the Definitive
Prospectus Supplement and to execute and deliver, and to perform its
obligations under, each Transaction Document to which it is a party.
The Subsidiary is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Subsidiary.

(b) Each Transaction Document to which the
Subsidiary is a party has been duly authorized, executed and delivered
by the Subsidiary and is a legal, valid and binding agreement of the
Subsidiary, enforceable against the Subsidiary in accordance with its
terms except as the enforcement thereof may be limited by bankruptcy,
insolvency or other laws affecting
<PAGE> 34
2

enforcement of creditors' rights generally, and subject to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).

(c) The execution, delivery and performance by
the Subsidiary of any Transaction Document to which it is a party and
the consummation by the Subsidiary of the transactions contemplated
thereby (i) do not and will not violate the [Articles] [Certificate]
of Incorporation or by-laws of the Subsidiary or any order,
injunction, ruling or decree by which the Subsidiary is bound, (ii) do
not and will not constitute a breach of or a default under any
material agreement, indenture, mortgage, lease, note, instrument or
arrangement to which the Subsidiary is a party or by which the
Subsidiary is bound, (iii) do not and will not contravene or
constitute a violation of any law, statute, ordinance, rule or
regulation to which the Subsidiary or any of its property is subject
and (iv) have been duly authorized by all necessary corporate action
on the part of the Subsidiary and do not require any stockholder
approval or approval or consent of any trustee or holder of any
indebtedness or obligations of the Subsidiary.

(d) Neither the authorization, execution or
delivery by the Subsidiary of any Transaction Document to which it is
a party in accordance with the provisions thereof nor the consummation
by the Subsidiary of any of the transactions contemplated thereby
requires the consent or the approval of, the giving of notice to, or
the registration with, or the taking of any other action in respect
of, any federal or state governmental authority or agency.

IN WITNESS WHEREOF, we have executed this certificate on the
____ day of ___________, 199_.

[Name of Subsidiary]

By:__________________________
Name:
Title:

By:__________________________
Name:
Title:
(Chief Financial Officer)

<PAGE> 1
EXHIBIT 4.6

-----------------------------------------------------------------

--------------

LOAN AGREEMENT

Among

---------------------------------------
("BORROWER")

[---------------------------------------]
[("GENERAL PARTNER")]

and

----------------------------------------
("LENDER")

-------------------------------------

Dated as of: , 19
---------- --

-----------------------------------------------------------------

<PAGE> 2

TABLE OF CONTENTS

SECTION 1. RECITALS. . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Demised Premises . . . . . . . . . . . . . . . . . 1
1.2 Note[s] and Loan Documents . . . . . . . . . . . . 1
1.3 Note Put Agreement . . . . . . . . . . . . . . . . 2
1.4 Making the Loan . . . . . . . . . . . . . . . . . 2
1.5 Sale and Assignment of Loan . . . . . . . . . . . 2

SECTION 2. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 3

SECTION 3. PREPAYMENT OF NOTE[S]; APPLICATION OF PROCEEDS . . . . . 11
3.1 Optional Prepayment . . . . . . . . . . . . . . . 11
3.2 Notice of Prepayment . . . . . . . . . . . . . . 11
3.3 Mandatory Prepayments . . . . . . . . . . . . . . 11
3.4 Other Prepayments . . . . . . . . . . . . . . . . 11
3.5 Application of Proceeds . . . . . . . . . . . . . 12

SECTION 4. LOAN TERMS . . . . . . . . . . . . . . . . . . . . . . . 12
4.1 Maturity . . . . . . . . . . . . . . . . . . . . 12
4.2 Interest Rate; Payments . . . . . . . . . . . . . 13
4.3 No Deductions . . . . . . . . . . . . . . . . . . 13

SECTION 5. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . 13
5.1 Status of Borrower [and General Partner] . . . . . 13
5.2 Authority; Enforceability . . . . . . . . . . . . 14
5.3 Consents . . . . . . . . . . . . . . . . . . . . 15
5.4 Liens, Security Interests and Assignments . . . . 15
5.5 Noncontravention; Material Default . . . . . . . 16
5.6 No Actions, Suits or Proceedings;
Violation or Default . . . . . . . . . . . . . . 16
5.7 Financial Condition . . . . . . . . . . . . . . . 16
5.8 Taxes, Etc . . . . . . . . . . . . . . . . . . . 17
5.9 Licenses, Permits and Approvals . . . . . . . . . 17
5.10 Use of Proceeds . . . . . . . . . . . . . . . . 17
5.11 Other Agreements . . . . . . . . . . . . . . . . 17
5.12 ERISA . . . . . . . . . . . . . . . . . . . . . 17
5.13 Investment Company . . . . . . . . . . . . . . . 17
5.14 Lease Documents . . . . . . . . . . . . . . . . 18
5.15 Land Ingress and Egress . . . . . . . . . . . . 18
5.16 Subdivision of Land . . . . . . . . . . . . . . 18
5.17 Compliance . . . . . . . . . . . . . . . . . . . 18
5.18 Insolvency . . . . . . . . . . . . . . . . . . . 18
5.19 Title to Land; Liens . . . . . . . . . . . . . . 18
5.20 Borrower Activities . . . . . . . . . . . . . . 18
5.21 Environmental Legal Requirements . . . . . . . . 19
5.22 No Reliance . . . . . . . . . . . . . . . . . . 19
5.23 Full Disclosure; Survival of
Representations and Warranties . . . . . . . . . 19

<PAGE> 3
SECTION 6. CONDITIONS PRECEDENT TO LOAN DISBURSEMENT . . . . . . . . 20
6.1 Conditions Precedent to Loan . . . . . . . . . . . 20
6.2 Opinion of Counsel . . . . . . . . . . . . . . . . 24
6.3 Satisfactory Proceedings . . . . . . . . . . . . . 25
6.4 Representations and Warranties . . . . . . . . . . 25
6.5 No Defaults . . . . . . . . . . . . . . . . . . . 25
6.6 Rating . . . . . . . . . . . . . . . . . . . . . . 25

SECTION 7. DISBURSEMENTS. . . . . . . . . . . . . . . . . . . . . . . 25
7.1 Advance by Lender . . . . . . . . . . . . . . . . . 25
7.2 [Capitalized Debt Service Reserve] . . . . . . . . . 25

SECTION 8. [THE CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . 26
8.1 Time for Completion . . . . . . . . . . . . . . . . 26
8.2 Changes in Plans and Specifications or
Cost Budget . . . . . . . . . . . . . . . . . . . . 27
8.3 Contractor/Materialmen Lists . . . . . . . . . . . 27
8.4 Incorporation in Land and Improvements . . . . . . 27
8.5 Completion of Project . . . . . . . . . . . . . . . 27
8.6 No Liens Permitted . . . . . . . . . . . . . . . . 28
8.7 Certification/Acceptance] . . . . . . . . . . . . . 28
[8.8] Additional Covenants [Regarding Construction] . . . 29

SECTION 9. ADDITIONAL BORROWER AND GENERAL PARTNER COVENANTS . . . . 30
9.1 Borrower and General Partner Existence . . . . . . 30
9.2 Information; Financial Reports . . . . . . . . . . 31
9.3 Restriction of Borrower Activities . . . . . . . . 32
9.4 Ownership of Project; No Encumbrances . . . . . . . 33
9.5 Recording . . . . . . . . . . . . . . . . . . . . . 34
9.6 Termination of the Lease Documents . . . . . . . . 34
9.7 Amendments to Lease or Lease Guaranty . . . . . . . 35
9.8 Litigation; Default . . . . . . . . . . . . . . . . 35
9.9 Insurance . . . . . . . . . . . . . . . . . . . . . 35
9.10 Partnership Matters of Borrower . . . . . . . . . . 36
9.11 [Corporate Matters of the General Partner] . . . . . 37
9.12 Change in Entity or Management . . . . . . . . . . 37
9.13 Reimbursement of Certain Legal Expenses . . . . . . 37
9.14 Tenant Estoppels. . . . . . . . . . . . . . . . . . 38

SECTION 10. DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.1 Events of Default . . . . . . . . . . . . . . . . . 38
10.2 Lender's Remedies . . . . . . . . . . . . . . . . . 41
10.3 Inspections of Improvements, Events of Default . . 41
10.4 Reimbursement of Lender . . . . . . . . . . . . . . 41
10.5 Cumulative Remedies . . . . . . . . . . . . . . . . 42
10.6 Inspection of Books and Record . . . . . . . . . . 42
10.7 Recapture . . . . . . . . . . . . . . . . . . . . . 43

<PAGE> 4
SECTION 11. BORROWER LIABILITY . . . . . . . . . . . . . . . . . . . . 43
11.1 Recourse Limitation . . . . . . . . . . . . . . . . 43
11.2 Loss of Limited Recourse . . . . . . . . . . . . 44
11.3 Judicial or Other Proceedings . . . . . . . . . . . 44

SECTION 12. WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . . 45
12.1 Waiver by Borrower and General Partner . . . . . . 45
12.2 Waiver by Lender . . . . . . . . . . . . . . . . . 45
12.3 Waiver of Jury Trial . . . . . . . . . . . . . . . 45

SECTION 13. ACTION UPON AGREEMENT; ENTIRE AGREEMENT; AGREEMENT
FOR PARTIES' BENEFIT . . . . . . . . . . . . . . . . . . . 45

SECTION 14. SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . 46
14.1 General . . . . . . . . . . . . . . . . . . . . . . 46
14.2 Consent to Assignment . . . . . . . . . . . . . . . 46

SECTION 15. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . 48
15.1 Registered Note[s] . . . . . . . . . . . . . . . . 48
15.2 Exchange of Notes . . . . . . . . . . . . . . . . . 48
15.3 Loss, Theft, Etc., of Note . . . . . . . . . . . . 48
15.4 Time of Essence; Counterparts . . . . . . . . . . . 49
15.5 Governing Effect . . . . . . . . . . . . . . . . . 49
15.6 Notices . . . . . . . . . . . . . . . . . . . . . . 49
15.7 Lender as Borrower's Attorney-in-Fact . . . . . . . 49
15.8 Lender's Rights . . . . . . . . . . . . . . . . . . 50
15.9 [Posting Financing Sign] . . . . . . . . . . . . . . 50
15.10 Borrower Indemnification . . . . . . . . . . . . . 50
15.11 Controlling Provision . . . . . . . . . . . . . . . 50
15.12 Section Headings . . . . . . . . . . . . . . . . . 51
15.13 Applicable Law . . . . . . . . . . . . . . . . . . 51
15.14 Submission to Jurisdiction . . . . . . . . . . . . 52
15.15 Severability . . . . . . . . . . . . . . . . . . . 52
15.16 Further Assurances . . . . . . . . . . . . . . . . 52

<PAGE> 5

LOAN AGREEMENT

BY THIS AGREEMENT ("Agreement"), made and entered into as of the ____
day of _____, 19__ by and among ____________________
("Borrower"), a ____________ limited [partnership] [liability company],
[_______________________________ ("General Partner"), a _______ __ corporation
and the sole general partner of the Borrower,] and NATIONAL TENANT FINANCE
CORPORATION ("Lender"), a Delaware corporation, each of Borrower[, General
Partner] and Lender hereby confirms and agrees as follows.

SECTION 1. RECITALS.

1.1 Demised Premises. Borrower shall borrow funds pursuant to this
Agreement in Borrower's own name to [provide refinancing for an interim loan
used to] pay (i) the portion of the costs of issuance of the Certificates
allocable to Borrower, (ii) the costs of acquisition of [fee title ownership]
[a ground leasehold interest] in certain real property described in Exhibit
1.1A attached hereto and incorporated herein ("Land"), [and] (iii) the costs of
constructing on the Land certain Improvements, as defined in the Lease referred
to below, [and (iv) the costs of constructing a portion of the Common Area (as
defined in the Lease)] which comprise part or all of the "Demised Premises" as
defined in the Lease (as defined below) [all in accordance with (a) this
Agreement, the Lease, the Approved Drawings and Specifications and the
Approved Site Improvement Drawings and Specifications (as defined in the
Lease) prepared by an architect engaged by Borrower and more fully described
in Exhibit 1.1B attached hereto and incorporated herein as they may be
modified by change orders permitted pursuant to this Agreement and the
Construction Fund Disbursement Agreement[s] (as hereinafter defined)
(collectively, "Plans and Specifications"), and (b) all requirements of the
governmental entities having jurisdiction of the Land and Improvements
(construction of the Improvements [and a portion of the Common Area] in
accordance with the foregoing, collectively "Construction")]. The lease
pursuant to which __________, a tenant ("Tenant") will occupy the Demised
Premises Project ("Lease") is described and identified on Exhibit 1.1C attached
hereto together with a lease guaranty ("Lease Guaranty"), and related indemnity
agreement ("Indemnity Agreement") in favor of Lender dated as of even date
herewith and executed by Kmart Corporation ("Kmart"), a Michigan corporation,
in favor of Borrower, also described on Exhibit 1.1C (Lease, Lease Guaranty,
Indemnity Agreement, and the following documents which are defined hereafter,
Note Put Agreement[, Construction Fund Disbursement Agreement[s]] and Consent
and Agreement, collectively, "Lease Documents").

1.2 Note[s] and Loan Documents. Contemporaneously with the
delivery of this Agreement to Lender, Borrower has executed and delivered one
or more Promissory Notes (individually, "Note", and, collectively, "Notes")
substantially in the form of Exhibit 1.2A attached hereto in favor of Lender in
the aggregate principal amount of $___________ ("Loan Amount") to evidence the
indebtedness incurred by Borrower hereunder in connection with the loan
("Loan") described in this Agreement and secured in accordance with various

<PAGE> 6
loan documents more particularly described in this Section 1.2, (collectively,
"Loan Documents"), including this Agreement, a Mortgage, Security Agreement,
Assignment of Leases and Rents and Fixture Filing ("Mortgage") dated as of the
date hereof covering the Demised Premises and certain other collateral, more
particularly described therein (collectively, "Mortgaged Estate"), an
Assignment of Leases and Rents ("Lease Assignment") dated as of the date hereof
and a Pledge Agreement ("Pledge Agreement") dated as of the date hereof, and
those certain additional assignments and documents listed on Exhibit 1.2B in
favor of Lender. The collateral security for the Loan ("Security") is as
provided for in the Loan Documents. Subject to the provisions of this
Agreement[,][and] the Pledge Agreement [and the Construction Fund Disbursement
Agreement-Improvements [and Construction Fund Disbursement Agreement-Common
Area] ([individually,] "Construction Fund Disbursement Agreement" [and,
collectively, "Construction Fund Disbursement Agreements"]) dated as of even
date herewith among Tenant, Kmart, Borrower, the Construction Monitor named
therein [and] the Escrow Agent [and certain other tenants] named therein,
attached hereto as Exhibit 1.2C], the Loan Amount shall be advanced to Borrower.

1.3 Note Put Agreement. As a special and further inducement to
Lender to make the Loan, Kmart and Tenant shall execute and deliver to Lender a
Note Put Agreement ("Note Put Agreement") dated as of the date hereof in the
form attached hereto as Exhibit 1.3.

1.4 Making the Loan. Subject to full and strict compliance with
and satisfaction of the terms and conditions of this Agreement, Lender is
willing to make the Loan to Borrower.

1.5 Sale and Assignment of Loan. Simultaneously with the
funding of the Loan contemplated hereunder, Lender will [(i) sell, convey, and
transfer and absolutely assign all its right, title and interest in, under and
to the Note maturing _________, ("Series A Note") to United States Trust
Company of New York, a New York banking corporation, as Series A Note Pass-
Through Trustee (together with its successors in trust and assigns, "Series A
Pass-Through Trustee") under that certain Series A Pass-Through Trust Agreement
dated as of even date herewith between Lender and Series A Pass-Through Trustee
(as the same shall be amended from time to time, "Series A Pass-Through Trust
Agreement"); (ii) sell, convey, transfer and absolutely assign all its right,
title and interest in, under and to the Note maturing ___________ ("Series B
Note") to United States Trust Company of New York, a New York banking
corporation, as Series B Pass-Through Trustee (together with its successors in
trust and assigns "Series B Pass-Through Trustee") under that certain Series B
Pass-Through Trust Agreement dated as of even date herewith between Lender and
Series B Pass-Through Trustee (as the same shall be amended from time to time
"Series B Pass-Through Trust Agreement"); and (iii)] sell, convey, transfer and
absolutely assign all its right, title and interest in, under and to [the Note
and] all Loan Documents to United States Trust Company of New York, a New York
banking corporation, as

2
<PAGE> 7
[Collateral] Trustee (together with its successors and assigns, "Trustee")
under that certain [Collateral] Trust Agreement dated as of even date herewith
between Lender and Trustee (as the same shall be amended from time to time,
"[Collateral] Trust Agreement"). From and after the date of such sale,
conveyance, transfer and absolute assignment by Lender, for all purposes
hereof, references herein to Lender shall be deemed to be Trustee [, provided
that, with respect to either Note, reference to the Lender shall be deemed to
be the holder of the Note]; and, accordingly, Trustee shall have the sole right
to exercise all rights, privileges and remedies which by the terms of this
Agreement or any other Loan Document or by applicable law are permitted or
provided to be exercised by the Lender [, provided that, as set forth in the
Series A Pass-Through Trust Agreement and the Series B Pass-Through Trust
Agreement, the holders of the Notes shall be entitled to exercise the rights,
privileges and remedies thereof].

SECTION 2. DEFINITIONS. For purposes of this Agreement, the following
terms shall have the following meanings:

"Advance or Prepaid Rents" shall have the meaning assigned to it in
Section 11.1.

"Affiliates" as used in this Agreement shall mean any person or entity
controlling, controlled by or under common control with any other person or
entity.

"Agreement" shall have the meaning assigned to it in the Preamble.

"Annual Rental" shall have the meaning assigned to it in the Lease.

"Borrower" shall have the meaning assigned to it in the Preamble.

"Business Day" means any day other than (i) Saturday or Sunday, or
(ii) a day on which banks in New York or California are required by law to be
closed or are customarily closed.

"Called Principal" means the principal of the Note[s] that is to be
paid or prepaid or accelerated in any way pursuant to Section 3 or, Section
10.2, as the context requires.

["Capitalized Debt Service Reserve" means an amount equal to all
interest and principal payments due under the Certificates through and
including the Rental Commencement Date, plus the annual Trustee[s] Fee[s] for
the period commencing on the Closing Date and ending on the day preceding the
Rental Commencement Date which Lender is authorized to disburse from the Loan
Amount pursuant to Section 7 and which shall be used in the manner described
in Section 7.2.]

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<PAGE> 8
"Certificate of the Borrower" shall have the meaning set forth in
Section 6.1(d).

"Certificate of the General Partner" shall have the meaning set forth
in Section 6.1(d).

"Certificate of Occupancy" means the temporary or final certificate
issued by the [insert City, County, etc.] of [name of City, County, etc.], [
State ] authorizing the occupancy of a building constructed on the Land, such
occupancy to be in accordance with all applicable ordinances, building codes,
zoning and other laws and regulations.

"Certificates" shall have the meaning assigned to it in Section 14.2.

"Closing" shall have the meaning assigned to it in Section 7.

"Closing Date" shall have the meaning assigned to it in Section 7.

"[Collateral Trust Agreement" shall have the meaning assigned to it in Section
1.5.]

["Completion of Construction" shall have the meaning assigned to it in
Section 8.1.]

"Consent and Agreement" shall have the meaning assigned to it in
Section 6.1(s).

["Construction" shall have the meaning assigned to it in Section 1.1.]

["Construction Fund Disbursement Agreement[s]" shall have the meaning
assigned to it [them] in Section 1.2.]

["Cost Budget" shall have the meaning assigned to it in Section
6.1(j).]

"Default" shall mean any event or condition the occurrence of which
would, with the giving of notice or the passage of time or both, if applicable,
constitute an Event of Default.

"Demised Premises" shall have the meaning assigned to it in the Lease.

"Discounted Prepayment Value" means, with respect to any amount of
Called Principal, the amount obtained by (i) discounting all Remaining
Scheduled Payments with respect to such Called Principal from their respective
scheduled due dates to the Redemption Date with respect to such Called
Principal, in accordance with generally accepted financial practice and at a
discount factor (applied on a semiannual basis) equal to the

4
<PAGE> 9
Reinvestment Yield and (ii) adding together such discounted Remaining Scheduled
Payments.

"Environmental Legal Requirement" shall mean any international,
Federal, state, local or other governmental statute, law, regulation, order,
consent decree, judgment, permit, license, code, covenant, deed restriction,
common law, treaty, convention, ordinance or other requirement relating to
public health, safety, the environment, pollution, conservation, or waste
disposal, now or hereafter in effect, including, without limitation, those
relating to releases, discharges or emissions to air, water, land or
groundwater, to the withdrawal or use of groundwater, to the use and handling
of polychlorinated biphenyls or asbestos, to the disposal, treatment, storage
or management of hazardous or solid waste, or Hazardous Materials, including
without limitation the following: the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986, the Solid Waste Disposal Act, as amended by
the Resource Conservation and Recovery Act of 1976 and the Hazardous and Solid
Waste Amendments of 1984, the Hazardous Materials Transportation Act, as
amended, the Federal Water Pollution Control Act, as amended by the Clean Water
Act of 1977, the Safe Drinking Water Act, the Clean Air Act of 1966, as
amended, the Toxic Substances Control Act of 1977, the Occupational Safety and
Health Act of 1977, as amended, the Emergency Planning and Community
Right-to-Know Act of 1986, the National Environmental Policy Act of 1969, the
Oil Pollution Act of 1990, and similar or implementing state law, statute,
order, rules or regulations now existing or hereafter amended relating to the
subject matter described above.

["Escrow Agent" means the escrow agent named in the Construction Fund
Disbursement Agreement[s] with which any funds subject to such Construction
Fund Disbursement Agreement[s] are deposited.]

"Event of Default" shall have the meaning assigned to it in Section
10.1.

"Filing Agencies" shall have the meaning assigned to it in Section 5.3.

"Forms UCC-1" shall have the meaning assigned to it in Section 5.3.

"General Partner" shall have the meaning assigned to it in the
Preamble ["Ground Lease" means the Ground Lease dated _____ between _____ as
the Ground Lessor and Borrower as the Ground Lessee with respect to the Land.]

["Ground Lease" means the Ground Lease dated __________ between
__________ as the Ground Lessor and Borrower as the Ground Lessee with respect
to the Land.]

"Hazardous Material" and "Hazardous Materials" shall mean any
hazardous or toxic chemical, substance, product, waste or other material,
including, without limitation:

(i) any "hazardous substance" as defined in, or for
purposes of, the Comprehensive Environmental Response, Compensation

5
<PAGE> 10
and Liability Act, 42 U.S.C.A. Section Section 9601 & 9602, as may be amended
from time to time, or any other so-called "superfund" or "superlien" law and
any judicial interpretation of any of the foregoing;

(ii) any "regulated substance" as defined pursuant to 40
C.F.R. Part 280;

(iii) any "pollutant or contaminant" as defined in 42
U.S.C.A. Section 9601(33);

(iv) any "hazardous waste" as defined in, or for purposes
of, the Resource Conservation and Recovery Act;

(v) any "hazardous chemical" as defined in 29 C.F.R. Part
1910;

(vi) any "hazardous material" as defined in, or for
purposes of, the Hazardous Materials Transportation Act;

(vii) any "toxic substance" as defined in the Toxic
Substance Control Act, 15 U.S.C. Section 2601 et seq.

(viii) any related material as defined in any applicable
state statute, the Clean Water Act, 33 U.S.C. Section 1251 et seq., the Clean
Air Act, 42 U.S.C. Section 7401 et seq. and any other contaminants,
pollutants, substances and materials
which are hazardous or toxic or which upon release or discharge would be
injurious to the Mortgaged Estate; or

(ix) any material, waste or substance that contains
petroleum or any fraction thereof, asbestos, or polychlorinated biphenyls, or
that is flammable, explosive or radioactive.

"Hazardous Materials Indemnity Agreement" shall have the meaning
assigned to it in Section 6.1(q).

"Improvements" shall have the meaning assigned to it in the Lease.

"Indemnity Agreement" shall have the meaning assigned to it in Section
6.1(s).

"Insurance Schedule" shall have the meaning assigned to it in Section
6.1(a).

"Kmart" shall have the meaning assigned to it in Section 1.1.

"Land" shall have the meaning assigned to it in Section 1.1.

"Lease" shall have the meaning assigned to it in Section 1.1.

"Lease Assignment" shall have the meaning assigned to it in Section
1.2.

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<PAGE> 11
"Lease Documents" shall have the meaning assigned to it in Section 1.1.

"Lease Guaranty" shall have the meaning assigned to it in Section 1.1.

"Lender" shall have the meaning assigned to it in the Preamble.

"Lender Defenses" shall have the meaning assigned to it in Section
14.2(i).

"Loan" shall have the meaning assigned to it in Section 1.2.

"Loan Amount" shall have the meaning assigned to it in Section 1.2.

"Loan Documents" shall have the meaning assigned to it in Section 1.2.

"Loan Value" shall have the meaning assigned to it in Section 3.3.

"Make-Whole Premium" means, with respect to any amount of Called
Principal, an amount equal to the positive excess, if any, as of the
Redemption Date of the Discounted Prepayment Value of the Called Principal
over such Called Principal.

"Material Adverse Effect"

(a) with respect to the Borrower means:

(i) any event or condition which individually or in the
aggregate has a material adverse effect on the financial condition,
business or operations, or assets of Borrower, or on the condition, value or
use of the Mortgaged Estate or on the ability of Borrower to perform its
obligations under this Agreement, the Note[s] or any other Loan Document; or

(ii) a material adverse effect individually or in the
aggregate on the legality, validity or enforceability of Borrower's obligations
under this Agreement or the Note[s] or the other Loan Documents or a material
impairment of the first priority liens or security interest granted under the
Loan Documents; or

(b) [with respect to the General Partner means:]

(i) any event or condition which individually or in the
aggregate has a material adverse effect on the financial condition, business or
operations, or assets of the General Partner, or of the General Partner and its
Affiliates taken as a whole, or on the condition, value or use of the Mortgaged
Estate or

7
<PAGE> 12
on the ability of the General Partner to perform its obligations under this
Agreement or any other Loan Document; or

(ii) a material adverse effect individually or in the
aggregate on the legality, validity or enforceability of General Partner's
obligations under this Agreement or the Note[s] or the other Loan Documents or
a material impairment of the first priority liens or security interest granted
under the Loan Documents.] [Intentionally omitted]

"Maturity Date" shall have the meaning assigned to it in Section 4.1.

"Mortgage" shall have the meaning assigned to it in Section 1.2.

"Mortgaged Estate" shall have the meaning assigned to it in Section
1.2.

"Note" and "Notes" shall have the meaning assigned in Section 1.2.

"Note Payment Dates" means the dates specified in the Note[s] and upon
which dates interest or interest and principal are due and payable pursuant to
the Note[s].

"Note Put Agreement" shall have the meaning assigned to it in Section
1.3.

["Outside Possession Date" shall have the meaning assigned to it in the
Lease.]

"Pass-Through Trustees" mean the Series A Pass-Through Trustee and the
Series B Pass-Through Trustee.

"Partnership Agreement" means Attachment I to the Certificate of
Borrower, as amended.

"Permitted Encumbrances" shall have the meaning assigned thereto in
the Mortgage.

["Plans and Specifications" shall have the meaning assigned to it in
Section 1.1.]

"Pledge Agreement" shall have the meaning assigned to it in Section
1.2.

"Put" means exercise of the right of the Lender to require Tenant to
purchase the Note[s] pursuant to the Note Put Agreement, or, in the event
Tenant fails to purchase the Note[s], to require Kmart to purchase the Note[s]
pursuant to the Note Put Agreement.

"Recordable Documents" shall have the meaning assigned to it in
Section 9.5(a).

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<PAGE> 13
"Recorder" shall have the meaning assigned to it in Section 5.3.

"Redemption Date" means the Business Day on which the Redemption Price
is to be paid pursuant to Section 3 or is declared to be immediately due and
payable pursuant to Section 10.2, as the context requires.

"Redemption Price" means the sum of the unpaid principal balance of
the Called Principal, accrued interest thereon to the Redemption Date and the
Make-Whole Premium.

"Reinvestment Yield" means with respect to the Called Principal, the
sum of (x) the yield to maturity implied by the following: (i) the yields
reported, as of 10:00 a.m. (New York City time) on the third Business Day
preceding the Redemption Date with respect to such Called Principal, on the
display designated as "Page 678" on the Telerate Service (or such other display
as may replace Page 678 on the Telerate Service) for actively traded U.S.
Treasury securities having a maturity equal (as near as practicable) to the
Remaining Average Life of the Called Principal being paid or prepaid as of such
Redemption Date, or (ii) if such yields shall not be reported as of such time
or the yields reported as of such time shall not be ascertainable, the Treasury
Constant Maturity Series yields reported, for the latest day for which such
yields shall have been so reported as of the third Business Day preceding the
Redemption Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor publication) for
actively traded U.S. Treasury securities having a constant maturity equal (as
near as practicable) to the Remaining Average Life of the Called Principal
being paid or prepaid as of such Redemption Date and (y) fifty (50) basis
points. Such implied yield shall be determined, if necessary, by (a)
converting U.S. Treasury bill quotations to bond-equivalent yields in
accordance with accepted financial practice and (b) interpolating linearly
between reported yields.

"Release" shall mean any release, spill, emission, leaking, pumping,
pouring, emptying, escaping, injection, deposit, disposal, discarding,
discharge, dispersal, leaching or migration into the indoor or outdoor
environment or into or out of, or in any manner otherwise affecting any
property, including the passive migration or other movement of Hazardous
Materials through or in the air, soil, surface water, groundwater or property.

"Remaining Average Life" means, with respect to any amount of Called
Principal, the number of years (calculated to the nearest one-twelfth year)
obtained by dividing (i) such Called Principal into (ii) the sum of the
products obtained by multiplying (a) each Remaining Scheduled Payment of such
Called Principal (excluding the interest thereon) by (b) the number of years
(calculated to the nearest one-twelfth year) which will elapse between the
Redemption Date with respect to such Called Principal and the scheduled due
date of such Remaining Scheduled Payment.

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<PAGE> 14
"Remaining Scheduled Payments" means, with respect to any amount of
the Called Principal, all payments of such Called Principal and interest
thereon that would be due on or after the Redemption Date with respect to such
Called Principal if no payment of such Called Principal were made prior to its
Maturity Date.

"Rent" shall mean Annual Rental and Additional Rent pursuant to the
Lease.

"Rental Commencement Date" shall have the meaning assigned to it in
the Lease.

"Second Mortgage" shall have the meaning assigned to it in Section
9.4(c).

"Security" shall have the meaning assigned to it in Section 1.2.

["Series A Note" and "Series B Note" shall have the meaning assigned
to them in Section 1.5.]

["Series A Pass-Through Trust Agreement" and "Series B Pass-Through
Trust Agreement" shall have the meaning assigned to them in Section 1.5.]

["Series A Pass-Through Trustee" and "Series B Pass-Through Trustee"
shall have the meaning assigned to them in Section 1.5.]

"Settlement Statement" shall have the meaning assigned to it in
Section 7.1.

"Title Commitment" shall have the meaning assigned to it in Section
6.1(b).

"Title Insurance Company" shall have the meaning assigned to it in
Section 6.1(b).

"Title Policy" shall have the meaning assigned to it in Section 6.1(b).

["Trust Agreement" shall have the meaning assigned to it in Section
1.5.]

["Trust Agreements" means the Collateral Trust Agreement, the Series A
Pass-Through Trust Agreement and the Series B Pass-Through Trust Agreement.]

"Trustee" shall have the meaning assigned to it in Section 1.5.

["Trustees" means the Trustee, the Series A Pass-Through Trustee and
the Series B Pass-Through Trustee.]

"Trustee[s] Fee[s]" means [the aggregate of] the Trustee's Fee as
defined in the [Collateral] Trust Agreement [, the Pass-Through Trustee's Fee
as defined in the Series A Pass-Through Trust Agreement and the Pass-Through
Trustee's Fee as defined in the Series B Pass-Through Trust Agreement].

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<PAGE> 15
SECTION 3. PREPAYMENT OF NOTE[S]; APPLICATION OF PROCEEDS. No prepayment
of the Note[s] may be made except to the extent and in the manner expressly
provided in this Agreement and the Note[s].

3.1 Optional Prepayment. Upon compliance with Section 3.2,
Borrower shall have the option at any time and from time to time of prepaying
the Note[s], either in whole or in part (but if in part, then in units of U.S.
[$1,000,000] or an integral multiple of [$100,000] in excess thereof) by payment
of the Redemption Price.

3.2 Notice of Prepayment. Borrower shall give written notice of
any prepayment of the Note[s] pursuant to Section 3.1 to the holder thereof not
less than 45 days nor more than 60 days before the date fixed for such
prepayment. Notices required by this Section 3.2 shall specify (a) the
Redemption Date, (b) the Called Principal, and (c) the estimated Redemption
Price. Notice of prepayment having been so given, the Redemption Price shall
become due and payable on the Redemption Date set forth in such notice.
Borrower shall also give written notice to the holder of the Note[s] [and the
Collateral Trustee], by telecopy or other same day written communication,
setting forth the computation and amount of the Redemption Price payable in
connection with a prepayment pursuant to Section 3.1 on the third Business Day
preceding the Redemption Date.

3.3 Mandatory Prepayments. In the event of a termination of the
Lease by the Tenant pursuant to the provisions of Article 3(a), 17(c) or 18(a)
or (b) of the Lease, on the date of such termination the Borrower shall prepay
and apply, and there shall become due and payable, the unpaid principal amount
of the Note[s] on such date and all accrued and unpaid interest thereon,
together with the Make-Whole Premium with respect thereto. In the event of an
expropriation of a portion of the Demised Premises resulting in a reduction in
the Annual Rental (as defined in the Lease) pursuant to Article 18(e) of the
Lease, on the date of such expropriation the Borrower shall prepay and apply,
and, subject to the proviso set forth hereafter, there shall become due and
payable, a principal amount of the Note[s] equal to the Loan Value of such
reduction and all accrued and unpaid interest thereon, together with the
Make-Whole Premium with respect thereto; provided, however, if the proceeds
payable to the Borrower with respect to such expropriation are insufficient to
pay such amount, (i) the Borrower shall be required to prepay only the amount
of such proceeds (which amount shall be allocated between principal and the
Make-Whole Premium with respect thereto), (ii) the scheduled interest and
principal payments pursuant to the Note[s] shall be reduced in the same
proportion as the Annual Rental has been abated pursuant to the Lease, and such
scheduled payments shall be reallocated [pro-rata among the Notes in proportion
to their respective principal balances] [and with respect to each such Note
reallocated] between principal and interest to first pay interest due and
then pay the balance to reduce principal, (iii) if the amount of any scheduled
payment is insufficient to pay all interest due, the unpaid interest will, to
the extent permitted by law, be added to principal semiannually on the date of
such scheduled payment, (iv) any amounts added to principal pursuant to clause
(iii) shall bear interest at the rate provided in the Notes[s], and (v) all
principal and interest accrued and unpaid hereunder and under the Note[s]
shall be due and payable on the Maturity Date [on the latest of the Maturity
Dates of all Notes executed and delivered pursuant to this Agreement]. For
purposes of this Agreement, the "Loan Value" in respect of any such reduction
of Annual Rental shall be an amount equal to the product of (i) a fraction, the
numerator of which is the aggregate amount of such reduction of Annual Rental
throughout the Primary Term (as defined in the Lease) of the Lease, and the
denominator of which is the aggregate amount of Annual Rental which shall be
due and payable under the Lease during the Primary Term before giving effect to
such reduction, times (ii) the unpaid principal amount of the Note[s]
immediately prior to the prepayment provided for in this Section 3.3. In the
event Lender receives proceeds payable to Lender pursuant to the Title Policy,
such proceeds shall be treated as a voluntary prepayment.

3.4 Other Prepayments. In the event that Borrower shall be
required to prepay the Note[s] in full pursuant to any Loan Document then,
within the time provided in such Loan Document (i) the holder of the Note[s]
shall be required to surrender the

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<PAGE> 16
Note[s], duly endorsed without recourse or assigned without recourse to
Borrower or in blank, at the Corporate Trust office of the Trustee, (ii) the
Trustee shall hold the Note[s] in trust for the benefit of the holder of the
Note[s] until payment in full of the Redemption Price shall have been made to
such holder and shall then and thereupon surrender such Note[s] to Borrower,
and (iii) Borrower shall irrevocably pay and deposit the Redemption
Price with Trustee, by wire transfer or immediately available funds in lawful
currency of the United States of America to the same depositary institution and
account number set forth in the wire transfer instruction specified in Section
4.1 of the Consent and Agreement.

3.5 Application of Proceeds.

(a) Annual Rental. So long as no Event of Default has
occurred and is continuing, the amounts from time to time received by Lender
which constitute payment of the installments of Annual Rental (as defined in
the Lease) under the Lease (and any amounts in respect of overdue Annual Rental
payable under the Lease) and any payment under the Lease Guaranty in respect
thereof shall be applied first, to the payments and required prepayments of
principal and interest (and, in each case, first to interest and then to
principal) on the Note[s] which have become due and payable or will become due
and payable on the next succeeding Note Payment Date and the payment of any
other obligations of Borrower pursuant to the Trust Agreement[s], [a copy]
[copies] of which Borrower hereby acknowledges receipt of, and second, the
balance, if any, of such amounts shall be paid to or upon the order of Borrower
pursuant to the provisions of the [Collateral] Trust Agreement.

(b) Event of Default. If any Event of Default, other
than the failure to make any payments required pursuant to this Agreement, the
Note[s] or any other Loan Document, has occurred and is continuing, all
amounts from time to time received by Lender which constitute payments under
the Lease and any payment under the Lease Guaranty in respect thereof shall be
held by Lender and applied first, to the payments and required prepayments of
principal and interest (and, in each case, first to interest and then to
principal) on the Note[s] which have become due and payable or will become due
and on the next succeeding Note Payment Date and the payment of any other
obligations of Borrower pursuant to the Trust Agreement[s], and second, the
balance, if any, of such amounts shall be held by Lender and applied in
accordance with Section 3.01 of the Mortgage and Section 8(e) of the Lease
Assignment. If an Event of Default involving the failure to make any payments
required pursuant to this Agreement, the Note[s] or any other Loan Document
has occurred and is continuing and any such amounts have not been paid
pursuant to the Lease or the Lease Guaranty (including any applicable cure
periods), all amounts from time to time received by Lender which constitute
payments under the Lease and any payment under the Lease Guaranty in respect
thereof shall be held by Lender and applied in accordance with the terms of
Section 8(e) of the Lease Assignment and Section 3.01 of the Mortgage.

3.6 Application of Prepayments. All prepayments pursuant to
Sections 3.1, 3.2, 3.3 and 3.4 shall be applied in the following order of
priority: payment of accrued interest on the Note[s], payment of the Make-Whole
Premium and payment of the outstanding principal balance of the Note[s]. [All
such principal prepayments of the Notes and the related Make-Whole Premium
shall be applied on all outstanding Notes ratably in accordance with the unpaid
principal amounts thereof.] [The] [Such] principal portion of any
prepayments shall, except as otherwise provided in Section 3.3, reduce
remaining mandatory payments of principal set forth in Exhibit A attached to
the Note[s] in inverse order of maturity.

SECTION 4. LOAN TERMS.

4.1 Maturity. The Note[s] shall mature on the earlier of the date
stated in the Note[s] ("Maturity Date") or the date on which the entire
principal balance, accrued interest and Make-Whole Premium become due and
payable pursuant to the provisions of any

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<PAGE> 17
Loan Document by acceleration, upon the occurrence of an Event of Default, by
any required prepayment or otherwise.

4.2 Interest Rate; Payments.

(a) The interest rate, payment dates as to principal and
interest and other Loan repayment terms (including prepayment privileges and
applicable premiums) shall be as set forth in the Note[s] and in Section 3.

(b) Notwithstanding any other provision in this Agreement
or the Note[s], Borrower shall cause all payments of principal, Make-Whole
Premium (if any) and interest on the Note[s] to be made in the manner and to
the account specified in Section 3.4 or in such other manner or to such other
address as the holder of the Note[s] may hereafter designate in writing.

4.3 No Deductions. All payments of principal or interest or
premium, if any, under the Note[s] shall be made without deduction of any
present and future taxes, levies, imposts, deductions, charges, or
withholdings, which amount shall be paid by Borrower. Borrower will pay the
amounts necessary, such that the gross amount of the principal and interest or
premium, if any, received by Lender is not less than that required by the
Note[s]. If Borrower shall be required by law to deduct any such amounts from
or in respect of any principal or interest or premium, if any, payable under
the Note[s], then (i) the sum payable to Lender shall be increased as may be
necessary, so that after making all required deductions (including deductions
applicable to additional sums payable under this provision) Lender receives an
amount equal to the sum it would have received had no deductions been made,
(ii) Borrower shall make such deductions, and (iii) Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law. All stamp, documentary, and other
transaction-related taxes shall be paid by Borrower. If notwithstanding the
foregoing, Lender pays such taxes, Borrower will reimburse Lender for the
amount paid and the repayment thereof shall be secured by the Security.
Borrower will furnish Lender official tax receipts or other evidence of payment
of all taxes within thirty (30) days following the date upon which such taxes
are due and payable.

SECTION 5. REPRESENTATIONS AND WARRANTIES.

Borrower [and the General Partner] represent[s] and warrant[s] to
Lender as follows:

5.1 Status of Borrower [and General Partner.]

[(a)] Borrower is a duly organized and validly existing limited
[partnership] [liability company] formed under the laws of the State
of ____________ and is in good standing and qualified to transact business in
such State and under the laws of the State in which the Demised Premises are
located. Borrower has full power and authority to own its

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<PAGE> 18
properties and assets and to carry on its business as now being conducted.
Borrower is not a "foreign corporation," "foreign partnership," "foreign
trust," or "foreign estate," as those terms are defined in the Internal Revenue
Code and the regulations promulgated thereunder. Borrower's U.S. Employer
Identification Number is as set forth in the Certificate of Non-Foreign Status
attached as Exhibit 5.1A.

(b) [General Partner is a duly organized and validly existing
corporation formed under the laws of the State of ____________ and is in good
standing and qualified to transact business in such State and under the laws of
the State in which the Demised Premises are located. General Partner has full
power and authority to own its properties and assets and to carry on its
business as now being conducted. General Partner is not a "foreign
corporation", "foreign partnership", "foreign trust", or "foreign estate" as
those terms are defined in the Internal Revenue Code and the regulations
promulgated thereunder. General Partner's U.S. Employer Identification Number
is as set forth in the Certificate of Non-Foreign Status attached as Exhibit
5.1B.] [Intentionally omitted.]

5.2 Authority; Enforceability.

(a) Borrower has the power and is duly authorized by all
necessary [partnership] [limited liability company] action to enter into this
Agreement, the Note[s], the other Loan Documents and Lease Documents to be
executed by Borrower, to execute any and all documentation required herein and
therein, to borrow the amounts contemplated in the Note[s] and the Loan
Documents to be executed by Borrower upon the terms set forth herein and
therein and to perform its obligations pursuant to the terms of this Agreement,
the Note[s], and of the other Loan Documents and Lease Documents to be executed
by Borrower, none of which are in conflict with any provision of law or
regulation applicable to Borrower. This Agreement, the Note[s], and each of
the other Loan Documents and Lease Documents to be executed by Borrower
constitute valid and binding legal obligations of Borrower, enforceable in
accordance with their respective terms.

(b) [The General Partner has the corporate power and is
duly authorized by all necessary corporation action to enter into: (i) the
Partnership Agreement, (ii) this Agreement on its own behalf and on behalf of
Borrower, and (iii) the Note[s] and the other Loan Documents and Lease
Documents to be executed on behalf of Borrower and any and all documentation
required herein or therein and to perform its obligations pursuant to the terms
of the foregoing documents, none of which are in conflict with any provision of
law or regulation applicable to the General Partner or the articles or bylaws
of the General Partner. The Partnership Agreement and this Agreement
constitute valid and binding legal obligations of the General Partner, and this
Agreement, the Note[s] and each of the other Loan Documents and Lease Documents
to be executed by the General Partner constitute valid and binding legal

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<PAGE> 19
obligations of the General Partner enforceable in accordance with their terms.]
[Intentionally omitted.]

(c) The signatures of the parties to this Agreement, the
Note[s], and each other Loan Document and Lease Document other than of Lender,
Kmart and Tenant are all the signatures necessary to bind each such party to
this Agreement, the Note[s], and each other Loan Document and Lease Document,
respectively, and, subject to Section 11, to bind all of the assets of such
party (including but not limited to the Security) as are shown in the financial
statement of such party, delivered to Lender in connection with the Loan.

5.3 Consents. No consent, approval or authorization of or
declaration, registration or filing with or payment to any governmental body or
any nongovernmental person is required to be obtained or made on or prior to
the execution, delivery and performance by the Borrower [or General Partner] of
this Agreement, the Note[s] and the other Loan Documents and Lease Documents or
the transactions contemplated hereby or thereby or as a condition to the
legality, validity or enforceability of the Borrower's [or General Partner's]
obligations under this Agreement, the Note[s] or the other Loan Documents or
Lease Documents or the fulfillment of or compliance with the terms and
provisions of the Note[s], this Agreement or the other Loan Documents or Lease
Documents, except for the recording of the Mortgage and Lease Assignment with
the ____________________ ("Recorder") of __________, ____________ and the
filing of Form UCC-1 Financing Statements ("Forms UCC-1") in the offices of the
Recorder and the office of the Secretary of the State of ____________
(collectively "Filing Agencies"), such other filings or recordings as are set
forth on Exhibit 5.3 attached hereto and the payment of nominal filing fees.

5.4 Liens, Security Interests and Assignments.

(a) The liens, security interests and assignments created
by the Loan Documents will, when granted and duly recorded and filed or
recorded, as applicable, constitute valid, effective, properly perfected and
enforceable first priority liens, first priority security interests and
assignments.

(b) (i) No effective financing statements are on record
or filed in favor of a secured party other than Lender naming Borrower as
debtor and describing any of the Security as collateral at Closing and the
exact time the respective UCC-1s are filed in such offices by Borrower; (ii)
the recordation of the Mortgage with the Recorder and the Forms UCC-1 in the
appropriate office therefor and the office of the Filing Agencies are the only
recordation or filing of such documents required to perfect the lien or
security interests to be created thereby; and (iii) unless thirty days (30)
prior written notice is provided by Borrower to Lender, Borrower's principal
place of business and chief executive office are located in the State of
____________ and shall continue to be so located so long as any portion of the
Note[s] remains unpaid or unperformed.

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<PAGE> 20
5.5 Noncontravention; No Material Default.

(a) The execution, delivery and performance by Borrower
[and the General Partner] of and under this Agreement, the Note[s], the other
Loan Documents and Lease Documents to be executed by Borrower [and the General
Partner] and all other documents and instruments relating to the Loan will not
result in any breach of the terms or conditions of or constitute a default
under any agreement or instrument under which Borrower [or the General Partner]
is a party or is obligated, nor will it violate any legal requirement affecting
Borrower, [its General Partner,] the [partnership] [limited liability company],
or the Project.

(b) There exists no violation of or default by Borrower
[or its General Partner] and no event has occurred that with the passage of time
or the giving of notice would constitute such a default or violation with
respect to (i) the terms of the Note[s] or any Loan Document, (ii) any Lease
Document or other agreement affecting the Project to which Borrower [or its
General Partner] is a party or is bound or any other agreement to which Borrower
[or its General Partner] is a party or to which either is bound, (iii) any
license, permit, statute, ordinance, law, judgment, order, writ, injunction,
decree, rule, or regulation of any governmental authority or other legal
requirement or any determination or award of any arbitrator to which Borrower
[or its General Partner] may be bound, or (iv) any mortgage, instrument,
agreement, or document by which Borrower[, its General Partner] or the Project
is bound: (A) which involves the Note[s] or any Loan Document or Lease Document,
(B) which involves the Project or the Borrower [or its General Partner] and is
not adequately covered by insurance, (C) which might have a Material Adverse
Effect on the Borrower [or its General Partner], (D) which might have a Material
Adverse Effect on the priority of the liens or security interests created by
any of the Loan Documents, or (E) which could have a Material Adverse Effect on
Borrower's financial condition [or that of its General Partner].

5.6 No Actions, Suits or Proceedings; Violation or Default.

(a) No actions, suits or proceedings are pending or
threatened against Borrower [or its General Partner].

(b) There is no legal action pending or, to the knowledge
of Borrower, threatened against or affecting Borrower [or its General Partner]
questioning the validity or the enforceability of this Agreement, the Note[s]
or any of the other Loan Documents or Lease Documents.

5.7 Financial Condition. All Borrower's [and General Partner's]
financial statements, profit and loss statements, statements as to ownership,
and other statements or reports relating to Borrower [or General Partner]
previously or hereafter given to Lender by Borrower are and shall be true and
correct in all material respects as of the date thereof. There has been no

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<PAGE> 21
Material Adverse Effect on Borrower [or General Partner] since the date of the
latest financial statements given to Lender.

5.8 Taxes, Etc. Borrower [and General Partner] [have] [has] filed
all federal, state and local tax returns and have paid all current obligations
before they became delinquent, including all federal, state and local taxes and
all other payments required under federal, state or local law.

5.9 Licenses, Permits and Approvals. All licenses, permits,
consents, approvals and authorizations necessary or appropriate for the
[Construction and] operation of the Demised Premises which by law or regulation
must be obtained by Borrower and can be obtained as to the Improvements [prior
to completion of Construction thereof] or which are to be obtained by Borrower
pursuant to the Lease have been obtained and shall be maintained in full force
and effect and Borrower shall provide copies thereof to Lender upon request.

5.10 Use of Proceeds. The Loan Amount will be disbursed in
accordance with Section 7. Borrower will not require and will not avail itself
of any additional extension of credit for such purposes. No part of the Loan
Amount will be used directly or indirectly by Borrower[, General Partner] or
[their] [its] Affiliates for the purpose of purchasing, carrying or
refinancing any"margin stock" within the meaning of Regulations G, T or X of
the Board of Governors of the Federal Reserve System. The assets of the
Borrower do not include, carrying or refinancing any "margin stock".

5.11 Other Agreements. Except as provided in the Lease, Borrower
has not entered into or otherwise acquired by assignment or assumed any
agreements with any managers or supervisors relating to the maintenance,
repair, leasing, management or operation of the Demised Premises other than
those assigned to Lender. [Neither] Borrower [nor General Partner] is [not]
in default in the payment of principal or interest on any indebtedness and,
except as provided herein, neither have any knowledge that [either] [it] is a
party to any instrument or instruments or agreements under and subject to
which any indebtedness has been issued.

5.12 ERISA. In reliance on the facts stated in Exhibit 5.12, the
consummation of the transactions contemplated by this Agreement, the Note[s],
the other Loan Documents and the Lease Documents, and compliance by Borrower [or
General Partner] with the provisions thereof as executed and delivered thereby
will not constitute a prohibited transaction within the meaning of the
Employment Retirement Income Security Act of 1974, as amended, or Section 4975
of the Internal Revenue Code of 1986, as amended.

5.13 Investment Company. [Neither] Borrower [nor General Partner]
is [not] an "investment company" within the meaning of the Investment Company
Act of 1940, as amended, and [neither] is [not] directly or indirectly
controlled by an "investment company." [Neither] Borrower [nor General
Partner] is [not] a "holding company" or a "subsidiary

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<PAGE> 22
company" of a holding company or an "affiliate" of a "holding company" or a
"public utility company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.

5.14 Lease Documents. Each of the Lease Documents which has been
executed and delivered by Borrower, is valid, binding and enforceable against
Borrower in accordance with its terms, and is in full force and effect. All
conditions to the effectiveness or continuing effectiveness of the Lease
Documents required to be satisfied by Borrower have been satisfied.

5.15 Land Ingress and Egress. All roads providing ingress or
egress to or from the Demised Premises necessary for the full utilization of
the Demised Premises in accordance with the Lease have been completed, [have
been] [will be] conveyed to the appropriate governmental authority and [have
been] [will be] dedicated to public use and accepted by such governmental
authority.

5.16 Subdivision of Land. The Land is not part of a larger tract
of land owned by Borrower.

5.17 Compliance. [Neither] Borrower [nor its General Partner]
[have] [has not] received nor [do] [does] [they] [it] have a reasonable basis
to expect to receive any order or notice of violation or claim of violation of
any law, ordinance, rule, or
regulation.

5.18 Insolvency. [Neither] Borrower [or its General Partner are]
[is not] now, [or] [nor] will at the Closing as a result of the Loan or
otherwise be, "insolvent" within the meaning of that term as defined in
Section 1 of the United States Bankruptcy Code.

5.19 Title to Land; Liens. Borrower on the Closing Date shall be
the sole owner of [a ground lessee's interest in the Land] and shall have good
and marketable title to [a leasehold interest in] the Demised Premises, free
and clear of any lien, security interest, or encumbrance of any kind
whatsoever, excepting only (i) the Permitted Encumbrances, (ii) liens,
security title and security interests in favor of Lender, (iii) the Lease [and
the Ground Lease], and (iv) other matters which have been approved in writing
by Lender and the Trustee. At Closing Borrower shall be the true and lawful
owner of all rights in and to all existing agreements, permits, and licenses
relating to the Project other than those obtained and retained by Tenant in
connection with the Construction or required by applicable law or regulation to
be owned by Tenant as a tenant under the Lease. Borrower's interest in all
such agreements, permits, and licenses is not subject to any present claim of
set off or deduction other than in the ordinary course of business.

5.20 Borrower Activities.

(a) Borrower (i) has not engaged, and, as of the date
hereof, does not engage, in any business or investment activities other than
those necessary for, incident to, connected with or arising out of owning and
leasing the Demised Premises (including

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<PAGE> 23
any additions or alterations thereto provided for in the Lease), (ii) has not
incurred, and, as of the date hereof, does not have, any indebtedness (other
than the Loan), (iii) is adequately capitalized for its business purpose, (iv)
maintains and shall maintain separate books and records from those of its
Affiliates, (v) keeps and shall keep separate bank accounts from those of its
Affiliates, (vi) does not and shall not commingle its assets with the assets of
any of its Affiliates, (vii) will at all times hold itself out to the public as
a legal entity separate and distinct from any of its Affiliates, (viii) will
either file its own tax returns, or, if part of a consolidated group, will join
in such consolidated group tax return as a separate member of such group, and
(ix) will observe the requirements of law and its Partnership Agreement in
carrying on its business.

(b) [General Partner (i) has not engaged, and, as of the
date hereof, does not engage, in any business or investment activities other
than those necessary for, incident to, connected with or arising out of
serving as General Partner of Borrower, (ii) has not incurred, and, as of the
date hereof, does not have, any indebtedness, and (iii) shall cause its
management (x) to meet regularly to carry on the business of General Partner
and (y) to keep minutes of such meetings.] [Intentionally omitted]

5.21 Environmental Legal Requirements. Borrower to the best of its
knowledge after due inquiry (i) is not in violation of any Environmental Legal
Requirement, and (ii) has received all permits, licenses and other governmental
approvals required for its intended uses by any Environmental Legal
Requirement.

5.22 No Reliance. Borrower: (i) has been advised by the Lender
that the Borrower should be represented by Legal Counsel of Borrower's choice
in the transactions contemplated by this Agreement; (ii) is fully aware and
clearly understands all of the terms and provisions contained in this
Agreement; (iii) has voluntarily, with full knowledge and without coercion or
duress of any kind, entered into this Agreement, the Note[s] and the other Loan
Documents; (iv) is not relying on any representation, either written or oral,
express or implied, made by the Lender other than as set forth in this
Agreement, the Note[s] or the other Loan Documents; and (v) has received actual
and adequate consideration to enter into this Agreement.

5.23 Full Disclosure; Survival of Representations and Warranties.

(a) None of the statements, representations, or
warranties furnished by Borrower [or General Partner] to Lender verbally or in
writing in connection with this Agreement contains or will contain any untrue
statement or omits or will omit a material fact necessary to make the
statements contained therein or herein, in light of the circumstances when
made, not misleading. There is no fact which Borrower [or General Partner] has
not disclosed to Lender which materially affects adversely or, to the

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<PAGE> 24
extent Borrower [or General Partner] presently can reasonably foresee, will have
a Material Adverse Effect on Borrower [or General Partner].

(b) Each of the representations and warranties of
Borrower [or its General Partner] contained in the Note[s] or any of the other
Loan Documents is true and correct in all respects.

(c) All representations and warranties made herein shall
survive the execution of this Agreement, all advances hereunder and the
execution and delivery of all other documents and instruments in connection
with the Loan and until the Note[s] has been paid in full and fully discharged.

SECTION 6. CONDITIONS PRECEDENT TO LOAN DISBURSEMENT.

Lender shall lend to or for the benefit of Borrower, in the manner and
on the terms and conditions provided herein, amounts not to exceed in the
aggregate the Loan Amount, provided that Borrower shall be in full compliance
with and shall have satisfied the following conditions precedent, as
applicable, to the making of the Loan or any disbursement pursuant to this
Agreement by Lender.

6.1 Conditions Precedent to Loan.

(a) Borrower shall purchase and maintain or cause to be purchased
and maintained insurance satisfying the requirements set forth in Section 9.9
and on Exhibit 6.1A attached hereto ("Insurance Schedule"). All policies
purchased by Borrower, if any, must show Borrower as the named insured and
whether purchased by Borrower or Tenant shall name Lender and any holder of a
lien evidenced by a mortgage or deed of trust on the Demised Premises or any
part thereof, or any purchaser, transferee or assignee of the rights of any
such holder (or person holding a beneficial interest in the rights of any such
purchaser, transferee or assignee), as additional named insured. So long as
Tenant (or Kmart) is the tenant under the Lease and is eligible to self-insure,
such self-insurance shall be acceptable to Lender or, if not eligible to
self-insure, the insurance provided by Tenant pursuant to the terms of the
Lease shall be deemed to satisfy insurance requirements set forth herein unless
otherwise provided herein.

(i) All policies shall be issued through an insurer
licensed to do business in the State in which the Demised Premises are located,
and listed in "Best's Insurance Key Rating Guide" published by A. M. Best
Company and rated at least "A", Class X or better and have a Standard & Poor's
Ratings Group claims paying rating of BBB or better.

(ii) All policies and bonds shall provide for thirty (30)
days notice of cancellation to Lender and all other additional insureds.

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(iii) All such insurance policies which Borrower maintains
may be in the form of blanket policies in form and substance satisfactory to
Lender. Each policy shall contain a replacement cost endorsement, a chattel
mortgage loss payable clause, a standard Lender's Loss Payable Endorsement made
payable to Trustee and such other endorsements sufficient to prevent Borrower
and Lender and all other additional insureds from becoming co-insurers within
the terms of such insurance with respect to the Improvements. No policy
required hereunder shall have a deductible in excess of $__________ unless
approved in writing by Lender. All such insurance shall be subject to the
approval of the Lender as to insurance companies, amounts, content and forms of
policies and expiration dates.

(iv) Lender shall have received certificates of insurance
and, upon request by Lender or Trustee, certified copies of policies fulfilling
the requirements set forth above.

(b) Lender and Trustee shall be furnished with a binding ALTA
Commitment for Title Insurance ("Title Commitment") from
_____________________________ ("Title Insurance Company") satisfying the
requirements set forth on Exhibit 6.1B attached hereto unconditionally
committing [(subject to a "pending disbursements" clause acceptable to Lender)]
to issue a Mortgagee's Policy of Title Insurance ("Title Policy") with extended
coverage or endorsement and such other endorsements as Lender may require. The
Title Policy shall be in the amount of $____________ (which includes the
principal amount of the Note[s] and the present estimated amount of the
Make-Whole Premium), issued by Title Insurance Company and committing to insure
that the Mortgage when recorded will be a valid first priority lien on [the
Borrower's leasehold interest pursuant to the Ground Lease in] all of
the Demised Premises, and that the Demised Premises are free and clear of all
liens, encumbrances and exceptions, except for the Permitted Encumbrances.
Lender shall not be obligated to disburse any portion of the Loan until after
the recordation of the documents as required by the Title Commitment to permit
the Title Insurance Company to insure the Mortgage as a valid first lien.
Borrower shall take all necessary steps to cause and enable the Title Insurance
Company to issue the Title Policy to Lender in accordance with this Agreement.

(c) Lender and Trustee shall have been provided with an appraisal
of the Demised Premises satisfactory to the Lender and Trustee by an appraiser
acceptable to Lender and Trustee showing (i) the amount of the Loan does not
exceed 100% of the fair market value of the Demised Premises as evidenced by
such appraisal, and (ii) the amount of the Certificates does not exceed 100% of
the fair market value of the Demised Premises as evidenced by such appraisal.

(d) Borrower shall deliver to Lender the Borrower's Certificate
[and the General Partner's Certificate which are attached hereto as Exhibit
6.1C [and Exhibit 6.1D].

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<PAGE> 26
(e) Borrower shall have executed (or caused to be executed or
issued) and delivered to Lender the Note[s] and the Loan Documents, all in form
satisfactory to Lender. Borrower shall have (i) fully cooperated in causing
the Mortgage, Lease Assignment, other Loan Documents at Lender's request and
all required Uniform Commercial Code Financing Statements to be duly recorded
and/or filed in the manner required by the laws of the State in which the
Demised Premises are located, the State in which Borrower's principal place of
business is located, if applicable, and any other applicable jurisdiction, (ii)
paid or caused to be paid all filing fees and recording charges, taxes or
assessments incurred in connection therewith and such recordings and filings
shall be satisfactory to the Lender.

(f) Lender shall be furnished with a current ALTA ["boundary"] ["as
built"] survey of the property depicting the location of any Improvements upon
the Land and the location of all easements and other matters affecting the Land
and otherwise satisfying the requirements set forth on Exhibit 6.1E attached
hereto and the Surveyor's Certificate attached hereto as Exhibit 6.1F. The
survey shall be delivered to Lender by Borrower, at Borrower's sole cost and
expense, and shall be acceptable to Lender and the Title Insurance Company, and
show no state of facts objectionable to Lender or the Title Insurance Company.
Lender may request the Title Insurance Company to issue any appropriate Title
Policy Endorsements within fourteen (14) days after Borrower's delivery of such
survey. The survey shall be prepared for and certified to Lender and Tenant
and each assignee of Lender by a registered land surveyor or registered
engineer approved by Lender.

(g) [No work shall have commenced on the Land and no construction
of any Improvements shall begin without the express written consent of Lender
or, in the alternative, the Title Insurance Company shall have agreed to issue
the policy insuring Lender's first priority lien position.] [Intentionally
omitted.]

(h) [Borrower shall provide Lender with a construction contract
acceptable in form and content to Lender with a contractor or contractors
acceptable to Lender providing for construction of the proposed Improvements
[and Common Area], complete with all onsite and offsite improvements and
Borrower shall provide Lender with an assignment of the contract in form and
content satisfactory to Lender. The financial stability of the contractor
shall be satisfactory to Lender and Borrower shall, upon Lender's request,
provide financial statements for contractor's prior two fiscal years. Lender
shall be provided with a Certificate of Good Standing for the contractor.]
[Intentionally omitted.]

(i) Lender shall have received evidence whether the Land or any
part thereof lies within a "special flood hazard area" as designated on maps
prepared by the Department of Housing and Urban Development and if so
designated, a national flood insurance association standard flood insurance
policy, plus insurance from a private insurance carrier, if necessary, for the
duration of the

22
<PAGE> 27
Loan in the amount of the full insurable value of the completed improvements,
naming Lender as a loss payee.]

(j) [Borrower shall provide Lender with a detailed budget ("Cost
Budget") with cost breakdowns for all onsite, offsite and indirect costs for
the [acquisition of the Land and the] Construction, certified to be correct to
the knowledge and belief of Borrower and the general contractor and site
contractor with respect to their own portion of the Construction and approved
in writing by Tenant.] [Intentionally omitted]

(k) [Borrower shall provide Lender with, and Lender shall approve,
the final Plans and Specifications described in Exhibit 1.1B attached hereto,
prepared by an architect acceptable to Lender (including, in Lender's sole
discretion, working drawings) and Borrower shall provide Lender with an
assignment of the Plans and Specifications in form and content acceptable to
Lender.] [Intentionally omitted]

(l) [The general contractor shall, at no expense to Lender,
provide payment and performance bonds in the amount of the full contract price,
issued by a bonding company acceptable to Lender, such bonds to run in favor of
Borrower and Lender as their interests may appear.] [Intentionally omitted]

(m) Lender shall be furnished with satisfactory copies of all
soil, subsoil, geotechnical and other such tests and reports for the Land as
Lender may require, prepared by a registered engineer qualified to do such
testing and acceptable to Lender.

(n) Lender shall have received satisfactory evidence upon Lender's
request (including source and method) that there is adequate ingress and egress
to the Land for its proposed use, public water service available or an adequate
water supply available for the proposed development, that public storm and
sanitary sewer service is available, that fire protection is available and that
necessary arrangements have been made for connection and delivery of each of
the foregoing and electric power, gas and telephone service to the Demised
Premises.

(o) Lender shall have received evidence of payment in full of all
installments of special taxes or assessments, service charges, development
fees, water, sewer and other charges or hookup fees, private maintenance
charges, and other prior lien charges by whatever name called, assessed,
levied, imposed or billed, whether then due on the Closing Date or payable
thereafter, and all installments of general real estate taxes due or payable
must be paid in full.

(p) Borrower shall furnish Lender with certificates from
appropriate public officials and agencies, if available, or other evidence
satisfactory to Lender showing that the Improvements [to be constructed] conform
to all existing Environmental Legal Requirements, and that no conditions exist
in, on or beneath the surface of the Demised Premises that are or might become
Hazardous

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<PAGE> 28
Materials. Lender shall be furnished satisfactory evidence, including but not
limited to a Phase I Environmental Report from a company acceptable to Lender,
showing that there has been no unremediated violation of an Environmental Legal
Requirement or storage, disposal or Release of any Hazardous Materials other
than in compliance with Environmental Legal Requirements. The Phase I
Environmental Report shall be based upon a complete and thorough visual
inspection of the Demised Premises and a review of relevant environmental
regulatory agency files, to confirm the absence of any known Hazardous
Materials on or beneath the surface of the Land or adjacent lands. Borrower
shall also furnish a history of the Demised Premises, listing its prior uses.
Borrower shall furnish Lender with the Hazardous Materials Indemnity Agreement
("Hazardous Materials Indemnity Agreement") in the form attached to this
Agreement as Exhibit 6.1G, executed by Borrower, General Partner and the other
Indemnitors identified therein.

(q) [Borrower shall provide Lender with a Critical Path Schedule in
form satisfactory to Lender setting forth the estimated dates projected for the
various stages of Construction.] [Intentionally omitted]

(r) Borrower shall provide Lender with an inventory of any
personal property owned by Borrower located or to be located on the Land, if
any, including fixtures, furnishings, equipment and all other personal property
used in the operation of the Demised Premises.

(s) Borrower shall deliver to Lender the Lease[, Ground Lease] and
a Consent and Agreement (which shall be executed by Trustee, Lender, Borrower,
Tenant and Kmart), all in form and content acceptable to Lender duly executed
by all parties thereto, and the Lease Guaranty and Indemnity Agreement, each in
the form attached hereto as Exhibit 6.1H duly executed by Kmart.

(t) [Borrower shall provide Lender with copies of any and all
permits or other governmental approvals or consents required to commence and
complete Construction.] [Intentionally omitted]

(u) Kmart and Tenant shall execute and deliver to Lender the Note
Put Agreement.

(v) Borrower shall provide Lender with each of the other Loan
Documents described in Exhibit 6.1I attached hereto, each in form and content
acceptable to Lender.

(w) [Borrower shall provide Lender with a Maintenance Agreement
pursuant to which the Tenant has made arrangements satisfactory with Lender to
pay its prorata share of all Common Area expenses and to maintain and insure
the Common Area.] [Intentionally omitted]

[(x)] Borrower shall provide Lender with [a subordination
agreement from the holder of any encumbrance on the fee subordinating such
encumbrance to the ground lease] [Estoppel Certificate] from Ground Lessor
satisfactory in form and content to Lender.

(y) Lender, Borrower and Tenant shall have approved the Settlement
Statement in writing.

(z) Borrower shall satisfy all other applicable conditions set out
in this Agreement.

6.2 Opinions of Counsel. Borrower, Tenant and Kmart shall each
furnish at the time of execution of the Note[s] and Loan

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<PAGE> 29
Documents and prior to any disbursement an opinion of each of their respective
counsel or special local counsel, addressed to Lender and such other parties as
Lender shall specify and bearing the same date as the Note[s], in substantially
the forms attached hereto as Exhibits 6.2(a), 6.2(b) and 6.2(c) unless
otherwise approved by Lender.

6.3 Satisfactory Proceedings. All proceedings taken in connection
with the transactions contemplated by this Agreement and all documents
necessary for the consummation thereof shall be satisfactory in form and
content to Lender and Lender shall have received a copy (executed or certified,
as may be appropriate) of all legal documents or proceedings taken in
connection with the consummation of such transactions.

6.4 Representations and Warranties. All representations and
warranties by Borrower and General Partner hereunder shall be true and correct.

6.5 No Defaults. There shall exist no condition or event
constituting a Default or an Event of Default under this Agreement or a default
under the Note[s] or any of the other Loan Documents [or the Ground Lease].

6.6 Rating. The Certificates (as defined in Section 14.2), shall
have a Standard & Poor's Ratings Group rating of "BBB-" or better or a Moody's
Investors Services Inc. rating of "Baa3" or better, and Lender shall have
received written evidence thereof.

SECTION 7. DISBURSEMENTS.

7.1 Advance by Lender. Subject to compliance by Borrower with the
terms and conditions provided in Section 6 of this Agreement, Lender shall
disburse an/or apply the entire Loan Amount as a single advance for the benefit
of Borrower in accordance with the terms of this Agreement to the parties named
in and to be used for the items set forth in the settlement statement
("Settlement Statement") attached hereto as Exhibit 7. The Borrower authorizes
the Lender to apply a portion of such Loan Amount to payment of those costs of
issuance of the Certificates allocable to Borrower and designated "Costs of
Issuance" on Exhibit 7 by causing such amount to be withheld from the proceeds
of sale of the Certificates and applied to the payment thereof. The date of
the advance pursuant to this Section 7 shall be deemed the "Closing Date" for
purposes of this Agreement. The delivery of the documents, certificates and
other items required as conditions under Section 6 to such advance and the
subsequent disbursement of the advance shall be deemed the "Closing" for
purposes of this Agreement.

7.2 [Capitalized Debt Service Reserve. The Capitalized Debt
Service Reserve shall be deemed to be fully disbursed by Lender to Borrower as
of the date of disbursement of all other funds pursuant to Section 7.1 and
shall be applied against the interest and principal payments due under the
Note[s] and shall be used by Trustee as provided in this Section 7.2 to pay all
interest and principal payments due under [the Notes] [the Certificates]
through and including _________, 19__, [and such amount shall be applied in
respect of the principal and interest payments due under the Note[s] through
and including

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<PAGE> 30
_________, 19__]. Lender shall cause Trustee to deduct and pay from
the Capitalized Debt Service Reserve such interest payments and principal
payments. Lender may, in its discretion, refuse to pay such interest or
principal from the Capitalized Debt Service Reserve if, at the time any such
payment is due, disbursements to Tenant have been suspended or halted under
the terms of [either of] the Construction Fund Disbursement Agreement[s] other
than for reasons set forth in Section 8.1(b). If Lender elects not to disburse
interest or principal from the Capitalized Debt Service Reserve for any of the
above mentioned reasons, Lender shall so notify Borrower and thereupon Tenant
shall pay such interest or principal to Lender without the use of the
Capitalized Debt Service Reserve in the manner and at the times provided in the
Note[s]. If no Default or Event of Default exists hereunder, under the Note[s]
or under any other Loan Document, and, if all payments of principal and
interest due under the Certificates through and including _________, 19__ have
been paid, then any funds in the Capitalized Debt Service Reserve remaining
after payment of interest and principal payments due under the Note[s] for
which such Capitalized Debt Service Reserve was established may be applied by
Lender to pay any sum then due and payable pursuant to the Note[s] or any of
the Loan Documents and the balance, if any, shall be disbursed to Tenant.

SECTION 8. [THE CONSTRUCTION.] [ADDITIONAL CONDITIONS PRECEDENT TO LOAN.]

8.1 [Time for Completion.

(a) Borrower shall cause the Construction to be commenced
on or before _________, 199__ ("Construction Commencement Date") prosecuted
with diligence, continuously without cessation or delay (unless excused
pursuant to Section 8.1(b)) and in accordance with the Plans and
Specifications, Sections 8.5 and 8.6, the Lease and the Construction Fund
Disbursement Agreement[s] and shall cause the Construction to be completed
pursuant to all of the foregoing ("Completion of Construction") on or before
the Outside Possession Date (as defined in the Lease. Borrower shall strictly
enforce all contracts for the Construction of the Improvements and not agree
to any alterations or amendments thereof to the end that all contractors
promptly and diligently perform all of the obligations on their part to be
performed thereunder, such performance to be in a manner preserving to Lender
its security in the Land and Improvements thereon.

(b) The cessation or delay of Construction with respect
to the Demised Premises under the Lease shall be excused if Borrower has
secured the consent of Tenant and: (i) the cessation of or delay in
construction shall have been caused by Landlord's Force Majeure (as defined in
the Lease); (ii) Borrower shall have made adequate provision acceptable to
Lender for the protection of materials stored on-site and off-site and for the
protection of the Improvements to the extent then constructed against
deterioration and against other loss or damage or theft; (iii) Borrower shall

26
<PAGE> 31
furnish to Lender satisfactory evidence that such cessation of construction
will not adversely affect or jeopardize the rights of Borrower under material
contracts or subcontracts relating to the construction of the Improvements or
under any Lease; and (iv) Borrower shall furnish to Lender satisfactory
evidence that the Completion of Construction can be accomplished on or before
the Outside Possession Date for such Demised Premises as extended by Landlord's
Force Majeure.

(c) Tenant has agreed pursuant to Lease to accept from
Borrower a completed shell building and Tenant shall complete the Construction
with respect to the Improvements necessary to its occupancy pursuant to the
Lease. Borrower has agreed pursuant to the Lease to provide Tenant an
allowance specified in the Lease which will be used by Tenant to complete such
Construction. Borrower shall be excused from the obligations set forth in
Sections 8.1(a) and 8.5 with respect to that portion of the Construction Tenant
has agreed to complete pursuant to the Lease.] [Intentionally omitted.]

8.2 [Changes in Plans and Specifications or Cost Budget. Any and
all changes in or to the Plans and Specifications or any increase in the Cost
Budget shall be made in compliance with the terms and conditions of the Lease
and the Construction Fund Disbursement Agreement[s], and must be approved by
Lender.] [Intentionally omitted.]

8.3 [Contractor/Materialmen Lists. Borrower shall furnish to
Lender promptly upon request of Lender from time to time correct lists of all
contractors, subcontractors, suppliers or materialmen employed or retained in
connection with the Construction. Each such list shall show the name, address
and telephone number of each such person, a general statement of the nature of
the work to be done, the labor and materials to be supplied, the names of
materialmen if known and the approximate dollar value of such labor or work
with respect to each. Lender shall have the right to telephone or otherwise
communicate with each contractor, subcontractor and materialman to verify the
facts disclosed by such list or by any request for disbursement, or for any
other purpose. All contracts let by Borrower or its contractors relating to
the Construction shall require disclosure to Lender of information sufficient
to make such verification.] [Intentionally omitted.]

8.4 [Incorporation in Land and Improvements. No materials,
equipment, fixtures or any other part of the Improvements or articles of
personal property placed in the Improvements shall be purchased or installed
under any security agreement or other arrangements wherein the seller reserves
or purports to reserve the right to remove or to repossess any such items or to
consider them personal property after their incorporation in the Project unless
authorized by Lender in writing.] [Intentionally omitted.]

8.5 [Completion of Project. Borrower shall cause the Completion of
Construction pursuant to the requirements of the Lease, entirely on the Land
and shall not encroach upon or interfere with any easement, right-of-way or
other property. All

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<PAGE> 32
work on the Improvements shall be performed in strict compliance with all
applicable laws, ordinances, statutes, rules and regulations, including zoning
laws, of federal, state, county or municipal governments or agencies now in
force or that may be enacted hereafter, with all directions, rules, regulations
and codes of the fire marshal, health officer, building inspector or other
officers of every governmental agency now having or hereafter acquiring
jurisdiction, and with all covenants and restrictions running with the Land.]
[Intentionally omitted.]

8.6 [No Liens Permitted. Borrower shall fully pay and discharge
all claims for labor performed and material and services furnished in
connection with the Construction and take all other reasonable steps to
forestall the assertion of claims (i) of liens against the Land, any part
thereof or right or interest appurtenant thereto, the Improvements, any
personal property and fixtures located on or used in connection with, the Land
or the Improvements, or (ii) against the Loan. Nothing herein contained shall
require Borrower to pay any claims for labor, materials or services which
Borrower in good faith disputes and which Borrower, at its own expense, is
currently and diligently contesting, provided however, that Borrower shall,
within thirty (30) days after filing or assertion of any claim or lien that is
disputed or contested by Borrower, obtain and record, if required by Lender, a
surety bond sufficient to release such claim or lien, or provide Lender with an
endorsement to the Title Policy insuring Lender either that the lien and
security interests created pursuant to its Mortgage are and shall continue to
be first and prior to any such claim or lien, or against any loss incurred or
which may be incurred if such lien and security interest are not first and
prior to any such claim or lien. Borrower shall provide Lender copies of all
Requests (as defined in the Construction Fund Disbursement Agreement[s]) and
any and all related documentation submitted in connection therewith.]
[Intentionally omitted.]

8.7 [Certification/Acceptance.

(a) Upon Completion of Construction, Borrower will
promptly furnish Lender evidence of the final certification and/or acceptance
of the Improvements upon the Land by any municipality, utility, county or other
governmental entity whose certification or acceptance thereof is required, and
evidence of all such certifications and/or acceptances and, if required by
Lender, an unqualified Certificate of Substantial Completion on A.I.A. Form G
704 signed by the architect employed by Borrower, who shall first have been
approved by Lender, certifying to the completion of the Improvements, shall be
delivered to Lender promptly thereafter.

(b) Upon Completion of Construction, Borrower will
furnish to Lender full unconditional lien waivers from all persons or entities
for all labor performed and materials supplied in connection with the
Construction in form and content satisfactory to Lender unless Borrower
contests such liens in the manner described and subject to the terms and
conditions of Section 8.6.] [Intentionally omitted.]

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<PAGE> 33
[8.8] Additional Covenants [Regarding Construction]. [Not
later than thirty (30) days after the Completion of Construction,] [As
additional conditions precedent to Lender making the Loan to Borrower, Borrower
shall be in full compliance with and shall have satisfied the following
conditions precedent.] Borrower shall have performed its obligations under each
of the covenants set forth in this Section 8.8.

(a) Borrower shall provide Lender with copies of all
final site plans approved by agencies with jurisdiction over such approval,
building permits and all other permits necessary for construction of the
Demised Premises, along with a certification to Lender from the licensed
project architect or engineer or legal counsel for Borrower acceptable to
Lender stating that the Demised Premises, as designed, meets all local zoning,
platting and permitting requirements, and, that such zoning, platting and
permitting is final and not subject to change. Borrower shall provide Lender
with a copy of the recorded plat of the Land, if any.

(b) Borrower shall provide Lender with an inventory of
all personal property owned by Borrower located or to be located on the Land,
including fixtures, furnishings, equipment and all other personal property used
in the operation of the Demised Premises.

(c) Lender shall be provided with final as-built drawings
and specifications that include all modifications and changes that have been
included in the Plans and Specifications.

(d) All Improvements shall have been constructed within
the boundary lines of the Land as established by a survey which shall be
subject to the approval of Lender. Lender shall be furnished with an ALTA "as
built" survey of the Land prepared for and certified to Lender and each
transferee, purchaser and assignee of Lender by a registered land surveyor or
registered engineer approved by Lender and each such transferee, purchaser and
assignee. The survey shall comply with the requirements set forth on Exhibit
6.1E and shall be accompanied by the Surveyor's Certificate attached hereto as
Exhibit 6.1F.

(e) Lender shall be provided with a certification from a
licensed architect, engineer or construction management/inspection professional
nominated and paid for by Borrower and approved in writing by Lender,
certifying without qualification: (i) that he has regularly inspected the
Improvements [which as to the Demised Premises shall refer to the construction
by Borrower as described in the Lease] during the course of construction, and
(ii) as to the matters set forth in A.I.A. Form G 704.

(f) Borrower shall provide Lender with a certificate from
the project architect and/or engineer stating that the Improvements [which as
to the Demised Premises shall refer to the construction by Borrower as
described in the Lease] are constructed in substantial compliance with all
applicable ordinances, building codes and zoning, environmental and ecological
laws and regulations and are free from encroachment upon building lines,
easements and

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<PAGE> 34
property lines. In the event such certificate or certificates are unavailable,
Borrower shall provide Lender with other evidence of such substantial
compliance satisfactory to Lender in its sole discretion.

(g) Lender shall be provided with a copy of the
Certificate of Occupancy for the Demised Premises to be issued by the [City,
County, etc.] of [name of City, County, etc.], [State].

(h) If the Security shall have suffered any material
damage or destruction, the damaged or destroyed portion of the Security must
have been restored or replaced consistent with the Plans and Specifications
used for the original construction or arrangements satisfactory to Lender shall
have been made for restoration or replacement.

(i) Borrower shall provide Lender with a collateral
assignment of all of Borrower's right, title and interest in and to any utility
contracts, deposits and refundable fees, in form satisfactory to Lender.

[(j) Borrower shall provide Lender with an appraisal of
the Demised Premises as completed in the same form as that required by Section
6.1(c) by an appraiser acceptable to Lender showing the fair market value of
Demised Premises.]

SECTION 9. ADDITIONAL BORROWER [AND GENERAL PARTNER] COVENANTS.

9.1 Borrower [and General Partner] Existence.

(a) Borrower will do or cause to be done all things
necessary to (i) keep in full force and effect Borrower's existence as a
[limited partnership] [limited liability company] and comply with all
applicable laws, statutes, regulations, rules, orders and all applicable
restrictions imposed by any governmental or regulatory body, except
those being contested in good faith by appropriate proceedings and except where
the failure so to comply would not have a Material Adverse Effect on Borrower
and would not result in the forfeiture or sale of the Land, and (ii) maintain
all licenses and permits necessary properly to conduct Borrower's business or
own Borrower's properties, except where the failure to do so would not have a
Material Adverse Effect on Borrower.

(b) [General Partner will do or cause to be done all
things necessary to (i) keep in full force and effect General Partner's
existence and good standing as a corporation and comply with all applicable
laws, statutes, regulations, rules, orders and all applicable restrictions
imposed by any governmental or regulatory body except those being contested in
good faith by

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<PAGE> 35
appropriate proceedings and except where the failure so to comply would not
have a Material Adverse Effect on the Borrower or the General Partner and would
not result in the forfeiture or sale of the Land, and (ii) maintain all
licenses and permits necessary properly to conduct General Partner's business
or own General Partner's properties except where the failure to do so would not
have a Material Adverse Effect on the Borrower or the General Partner.]
[Intentionally omitted.]

9.2 Information; Financial Reports.

(a) Borrower shall promptly: (i) furnish to Lender such
data and information, financial and otherwise, concerning the Improvements as
Lender may from time to time reasonably request; (ii) furnish to Lender each
and every quarterly and annual financial statement of Kmart filed with the
Securities and Exchange Commission during the term of the Lease, including, but
not limited to, balance sheets, income statements, statements of cash flows and
related financial data; (iii) notify Lender of any condition or event which
constitutes a Default or Event of Default or breach, default or repudiation of
any covenant, condition, warranty, representation or provision of the Note[s]
or any of the Loan Documents, the Lease Documents, occurrence of a Triggering
Event (as defined under the Note Put Agreement), and of any material adverse
change in the financial condition of Borrower or, to Borrower's knowledge,
Kmart; and (iv) permit any authorized representative of Lender upon prior
notice to inspect, in Borrower's principal office, the books of account of
Borrower (and to make extracts or copies therefrom) and to discuss the affairs,
finances and accounts of Borrower; and (v) provide Lender on request any and
all information, including but not limited to, the information described in
Section 9.2 (b), with respect to Borrower, its Affiliates, the Demised Premises
and any and all related real property, and any and all information with respect
to any of the foregoing, all of which Lender shall be entitled to rely upon in
preparation of any filings with the Securities and Exchange Commission and
any applicable state securities agency in compliance with applicable law.

(b) Borrower shall furnish or cause to be furnished to
Lender:

(i) Upon Lender's request after an Event of
Default within ten (10) days after the end of each month, the following
statements reflecting the financial condition of Borrower at the end of such
month and the results of its operations for such month: (A) a balance sheet;
(B) an income statement; (C) a statement of cash flows; (D) a statement of
changes in partners' equity, and (E) a statement of amounts due to or from
Borrower from or to any individual or entity directly or indirectly related to
Borrower, all in reasonable detail and duly certified as complete and correct
by the [General Partner] [__________] of Borrower. Such financial statement
shall be accompanied by a statement of [the General Partner] [________] to the
effect that, to the best of its knowledge, there exists no condition or event
which constitutes a Default or an Event of Default under this Agreement or
specifying the nature and period of existence of any such condition or event
and the action Borrower is taking or proposes to take with respect thereto.

(ii) As soon as practicable after the end of each
fiscal year of Borrower, and in any event within ninety (90) days thereafter,
the following financial statements reflecting the

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<PAGE> 36
financial condition of Borrower at the end of such year and the results of its
operations: (A) A balance sheet, (B) an income statement, (C) a statement of
cash flows, (D) a statement of changes in [partners'] [members'] equity, (E) a
statement of changes in financial position, (F) a statement of amounts due to
or from Borrower from or to any entity directly or indirectly related to
Borrower, and (G) a statement of contingent liabilities not otherwise reflected
in such financial statements or the notes thereto; setting forth in each case
in comparative form figures from the previous fiscal year, all in reasonable
detail. The information required by clauses (A), (B), (C), (D) and (E) shall
be certified as complete and correct by the [General Partner] [________] of
Borrower, provided that, if an Event of Default has occurred, such information
shall be audited and certified by an independent certified public accountant as
fairly presenting the financial condition or results of operation of the
Borrower. All such financial statements and reports shall be accompanied by a
statement by the [General Partner] [________] of Borrower that, to the best of
its knowledge, there exists no condition or event which constitutes a Default
or an Event of Default under this Agreement, or specifying the nature or period
of existence of any such condition or event and the action Borrower is taking
or proposes to take with respect thereto.

(iii) Within ten (10) days after the filing of same
with the Internal Revenue Service, copies of the timely filed federal income
tax returns (together with all amended returns relating thereto) of Borrower.

(iv) Promptly upon receipt thereof, copies of all
other detailed financial reports, if any, submitted to Borrower by independent
accountants in connection with any annual or interim compilation or review of
the affairs or the books of Borrower made by such accountants.

(c) Nothing in this Section 9.2 shall be interpreted to
modify, reduce or limit in any manner the provisions of Section 9.3.

9.3 Restriction of Borrower Activities.

(a) Until the Note[s] [has] [have] been paid in full and
fully discharged, Borrower will not, on or after the date of execution of this
Agreement, (i) engage in any business or investment activities other than those
necessary for, incident to, connected with or arising out of owning and leasing
the Demised Premises (including any additions or alterations thereto provided
for in the Lease), (ii) except as may be provided herein or contemplated
hereby, incur any indebtedness (other than the Loan), (iii) amend, or propose
to the [limited partners] [members] of Borrower for their consent any amendment
of, the [Partnership] [Operating] Agreement of Borrower (or, if Borrower by any
means complying with the provisions of this Agreement shall be a successor to
the person named as the Borrower in this Agreement, amend, consent to

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amendment or propose any amendment of the governing instruments of such
successor) without giving notice thereof in writing, not less than thirty nor
more than ninety days prior to the date on which such amendment is to become
effective, to Lender and without first obtaining the written consent of Lender
which shall not be unreasonably withheld, or (iv) take any action or omit to
take any action, which action or omission results in a breach of the
representations and warranties set forth in Section 5.20(a). In the event of
any modification or amendment of the [Partnership] [Operating] Agreement of
Borrower, Lender may impose all such documentary, title insurance, opinion of
counsel or recording and filing conditions and requirements as Lender may
determine in its sole discretion are reasonably required on a conservative
basis or are prudent to assure that Lender's rights under this Agreement, the
Note[s] and the other Loan Documents and Lease Documents will be maintained in
full force and effect and will not be impaired.

(b) [Until the Note[s] [has] [have] been paid in full and
fully discharged, the General Partner will not, on or after the date of
execution of this Agreement, (i) engage in any business or investment
activities other than those necessary for, incident to, connected with or
arising out of serving as General Partner of Borrower; (ii) except as may be
provided herein or contemplated hereby, incur any indebtedness (other than the
Loan), (iii) amend, or propose to its shareholders for their consent any
amendment of, its Articles of Incorporation or Bylaws (or, if the General
Partner by any means complying with the provisions of this Agreement shall be a
successor to the entity named as the General Partner in this Agreement, amend
or consent to amendment or propose any amendment of the governing instruments
of such successor) without giving notice thereof in writing not less than
thirty (30) nor more than ninety (90) days prior to the date on which such
amendment is to become effective to Lender and without first obtaining the
written consent of Lender, which shall not be unreasonably withheld, or (iv)
take any action or omit to take any action, which action or omission results in
a breach of the representations and warranties set forth in Section 5.20(b).
In the event of any modification or amendment of such Articles of Incorporation
or Bylaws, Lender may impose all such documentary title insurance, opinion of
counsel and/or recording and filing conditions and requirements as Lender may
determine in its sole discretion are reasonably required on a conservative
basis or are prudent to assure that Lender's rights under this Agreement, the
Note[s] and other Loan Documents will be maintained in full force and effect
and will not be impaired.] [Intentionally omitted.]

9.4 Ownership of Project; No Encumbrances.

(a) Borrower (i) has and will have full power and
authority to mortgage and pledge its interest in the Mortgaged Estate in the
manner and form granted in the Mortgage or intended and such grant is valid and
effective, (ii) will preserve its title to the Mortgaged Estate, subject only
to Permitted Encumbrances, (iii) will forever warrant and defend the same to
Lender against the claims of all persons claiming by, through or under
Borrower,

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<PAGE> 38
except claims arising from Permitted Encumbrances, and (iv) will take all
action to insure the Mortgage constitutes a valid first lien interest in
Borrower's [fee] [leasehold] interests in the Mortgaged Estate (subject only to
Permitted Encumbrances) and a first priority security interest on all
Borrower's personal property included within the Mortgaged Estate.

(b) Except as otherwise expressly provided in this Agreement
or any other Loan Document, Borrower will not (i) permit any lien (other than
the Permitted Encumbrances), levy, attachment, or restraint to be made or filed
against the Mortgaged Estate or any portion thereof or interest therein by
reason of its own act or omission, or permit any receiver, trustee, or assignee
for the benefit of creditors to be appointed, to take possession of any of
Borrower's assets or any portion of any of the foregoing, or (ii) encumber or
allow the encumbrance of the Mortgaged Estate or any portion of the Mortgaged
Estate or any personal property owned by Borrower and used in connection with
the use, occupancy, or operation of the Project in any way, including any of
the Security, without prior written consent of the Lender.

(c) When available, pursuant to the Mortgage, Security
Agreement and Assignment of Rents ("Second Mortgage"), Borrower shall request
and obtain the discharge and release provided for pursuant to Section 29 of the
Second Mortgage.

9.5 Recording.

(a) Borrower will, upon the execution and delivery hereof
and thereafter from time to time following satisfaction of the requirements of
Section 6.1(e), cause or cooperate with Lender to the extent requested in
causing the Mortgage, Lease Assignment and such other instruments as may be
required and financing statements with respect thereto (collectively,
"Recordable Documents") to be filed, registered and recorded as may be required
by present or future law, to publish notice thereof and create, perfect and
protect the lien and security interest of the Recordable Documents upon the
Mortgaged Estate, Lease and other items comprising the Security and as may be
required by present or future law to publish notice of and protect the validity
of this Agreement, the Lease, the Lease Guaranty, the Mortgage, the Note[s] and
other Loan Documents and Lease Documents.

(b) Borrower will from time to time perform or cause to
be performed any other act required by law and will execute or cause to be
executed any and all further instruments (including financing statements,
continuation statements and similar statements with respect to the Note[s] and
any of the Loan Documents) reasonably requested by the Lender for such
creation, perfection, publication and protection. Borrower shall pay or cause
to be paid all filing, registration and recording taxes and fees incident
thereto and all expenses, taxes, assessments and other governmental charges
incident to or in connection with the preparation, execution, delivery or
acknowledgement of the Recordable Documents, any instruments of further
assurance, the Note[s] and the Loan Documents.

9.6 Termination of the Lease Documents. Until the Note[s] [is]
[are] paid in full and fully discharged and the Mortgage has

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<PAGE> 39
been terminated pursuant to its terms, Borrower (i) hereby waives any
present or future right to terminate the Lease, [Ground Lease], Lease Guaranty,
[Consent and Agreement], and (ii) shall not exercise any such termination
right, whether or not permitted by the express provisions of such documents,
without the prior written consent of Lender. If Tenant terminates the Lease,
Borrower may re-lease the Demised Premises only with the prior written consent
of Lender, which consent shall be given in the sole and absolute discretion of
Lender and as such may be unreasonably withheld.

9.7 Amendments to Lease or Lease Guaranty. Borrower will not
enter into any Material Modification (as defined in the Consent and Agreement)
of the Lease or enter into any amendment or modification of the [Ground Lease,]
Lease Guaranty or other Lease Documents without the prior written consent of
Lender.

9.8 Litigation; Default. Borrower will give or cause to be given
to Lender prompt notice of:

(a) any litigation or claims of which Borrower has actual
knowledge which might have a Material Adverse Effect on the Borrower [or the
General Partner];

(b) all complaints and charges filed by any federal,
state, county, city or other political subdivision of any of the foregoing of
which Borrower has actual knowledge which now or hereafter has jurisdiction
over Borrower or all or any portion of the Demised Premises (i) which may have
a Material Adverse Effect on the Borrower [or the General Partner] or (ii) may
result in such governmental body exercising supervision or control of Borrower
or its business or assets which may delay or require changes in construction or
occupancy of the Improvements or impair the Security or adversely affect any of
Lender's rights under the Note[s] or the Loan Documents;

(d) any breach by Tenant under the Lease, by Kmart under
the Lease Guaranty or by either of them under any other Lease Document, of
which Borrower has actual knowledge.

9.9 Insurance.

(a) From and after the date hereof, Borrower will carry
and maintain (or cause to be carried or maintained) in full force and effect
insurance which satisfies the requirements of the Lease, shall prepay all
premiums in respect thereof through the Rental Commencement Date, and, for any
lease other than the Lease, which satisfies the requirements set forth in
Exhibit 6.1A.

(b) In the event of any loss or claim known to Borrower,
Borrower will give immediate written notice thereof to Lender and,

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<PAGE> 40
subject to the Lease, Lender may make proof of loss if not made promptly by
Borrower. Subject to the terms of the Lease, each insurance company is hereby
authorized and directed to make payment for such loss directly to Lender
instead of to Borrower. Subject to the terms of the Lease, insurance proceeds
or any part thereof may be applied by Lender at its option, either to the
reduction or repayment of the Note[s], including the Make-Whole Premium, or to
the repair, rebuilding and restoration of the Improvements lost, damaged or
destroyed, but Lender shall not be obligated to see to the proper application
of any amount paid over to Borrower; provided, however, that Lender shall apply
such insurance proceeds to the prepayment of the Note[s] required pursuant to
Section 3.3 hereof in the event of a termination of the Lease with respect to
the Demised Premises thereunder by the Tenant pursuant to the provisions of
Article 17(c) of the Lease. Notwithstanding the foregoing sentence: (i) if no
Default or Event of Default exists hereunder and no default exists under the
Note[s] or the Loan Documents, (ii) if the Lease has not been terminated in
whole or in part as a result of the loss in respect of which such proceeds are
paid, and (iii) subject to the terms of the Lease, in the case of any such
loss, damage or destruction of the Improvements as to which rebuilding or
repair of the Improvements can be accomplished prior to the Maturity Date,
Lender shall allow Borrower to elect within thirty (30) days of the date of any
such loss or claim by written notification of Lender and Trustee to utilize
insurance proceeds to the extent necessary to effect the repair, rebuilding or
restoration of the portion of the Demised Premises. In the event that Lender
allows or is required to permit proceeds to be used for the repair, rebuilding
and restoration of the portion of the Demised Premises, Lender may, to the
extent permitted under the Lease, direct that insurance proceeds be placed in a
segregated account with Lender, Tenant or an escrow agent approved by each with
such insurance proceeds to be used for the repair, rebuilding and restoration
of the insured loss through the procedures set forth herein, and with such
other safeguards and procedures for release of such proceeds and payment of the
relevant construction and related expenses as institutional lenders normally
impose for advances of construction loan funds (which may include requirements
that Borrower first expend any difference between such proceeds and the total
cost of repair, rebuilding and restoration). In the event proceedings have
been commenced for foreclosure of the Mortgage or in the event Lender shall
take possession of the Land, all right, title and interest of Borrower in and
to any insurance policies then in force, including any right to unearned
premium, shall inure to the benefit of and pass to Lender or the purchaser of
the Demised Premises upon foreclosure, as the case may be. At Lender's
election, evidence of such insurance satisfactory to it shall be delivered to
it in lieu of such policy or policies.

9.10 [Partnership] [Limited Liability Company] Matters of Borrower.
Borrower [and the General Partner], by executing this Agreement: (a) approves
and ratif[y][ies] the terms and provisions of this Agreement, the Note[s] and
the other Loan Documents; (b) waives all conflicting provisions of the
Borrower's [Partnership] [Operating] Agreement as among Borrower, [the General
Partner]

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<PAGE> 41
and Lender; and (c) agree that Lender shall have no duty to inquire into the
powers of Borrower, [General Partner] or other persons acting or purporting to
act on Borrower's behalf and shall have no responsibility whatsoever to
determine or be concerned with any provisions of the [Partnership] [Operating]
Agreement or any fiduciary or other duty of Borrower [or General Partner] to
any other person or entity. Nothing in this Section 9.10 shall affect any
powers, rights or obligations by or between or among Borrower and any entities
or individuals other than Lender. The sole purpose of this Section 9.10 is for
Borrower [and the General Partner] to waive and eliminate any duty or
obligation of Lender to determine or be concerned with any such powers, rights
or obligations.

9.11 [Corporate Matters of the General Partner. The General
Partner, by executing this Agreement: (a) approves and ratifies the terms and
provisions of this Agreement, the Note[s] and the other Loan Documents; (b)
waives all conflicting provisions of the Articles of Incorporation and Bylaws
of the General Partner as among Borrower, the General Partner and Lender; and
(c) agrees that Lender shall have no duty to inquire into the powers of the
General Partner or the persons acting or purporting to act on its behalf and
shall have no responsibility whatsoever to determine or be concerned with any
provisions of such Articles of Incorporation and Bylaws or any fiduciary or
other duty of Borrower, the General Partner or any director, officer or
shareholder thereof to any other person or entity. Nothing in this Section
9.11 shall affect any powers, rights and obligations by and between or among
the General Partner and any entities or individuals other than Lender. The
sole purpose of this Section 9.11 is for the General Partner to waive and
eliminate any duty or obligation of Lender to determine or be concerned with
any such powers or obligations.] [Intentionally omitted.]

9.12 Change in Entity or Management. Except as permitted under
Section 6.09 of the Mortgage, until payment in full of the Note[s] [neither]
Borrower [nor the General Partner] shall [not] dissolve or liquidate or merge
or consolidate with or into any other entity or turn over the control or
management (other than pursuant to a property management agreement subordinate
to the Mortgage) or operation of its property, assets or business to any other
person, firm or corporation [or permit the [General Partner] [Manager] or
[shareholders] [members] of 25% or more of its outstanding [voting stock]
[equity interest] to withdraw or cease to be the General Partner or such
shareholders members or permit any other person to become an additional
[general partner] [Manager] of the Borrower; provided, however, the [General
Partner] [Manager] or the then existing [shareholders] [equity interest owners]
of the [General Partner] [Manager] may acquire the interest of any
[shareholder] [member] who dies, becomes incompetent or becomes bankrupt or
insolvent [or permit any other person to become the ___________ of Borrower, or
permit 25% or more of the ownership interest of __________ in the Borrower to
be transferred].

9.13 Reimbursement of Certain Legal Expenses. Borrower shall
reimburse Lender on demand for any and all reasonable legal fees and other
out-of-pocket expenses Lender incurs in connection with the preparation,
execution and delivery of any modification, amendment, alteration or consent
to any of the terms or provisions of this Agreement, the Note[s] or any other
Loan Document, including,

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without limitation, the reasonable charges and disbursements of Lender's
counsel, any special counsel or any special local counsel.

9.14 Tenant Estoppels. Upon request by Lender Borrower shall
request of Tenant an Estoppel Certificate addressed to Landlord and Lender
complying with the provisions of the Lease [and Ground Lease].

SECTION 10. DEFAULT.

10.1 Events of Default. In the event of a Default in the
performance by the Borrower of any provisions hereunder, Borrower in some
cases may be entitled to notice and opportunity to cure the Default or
Defaults. In those circumstances when Borrower is entitled to notice and
opportunity to cure, the specific time period shall be provided or referred to
in this Section below, provided, however, that no such notice or opportunity to
cure any such Default shall be required if the granting of such notice or
opportunity to cure such Default would, in the reasonable judgment of Lender,
jeopardize Lender's position in the Security, or otherwise jeopardize
collection of the Note[s] in accordance with its [their] terms. If there is no
time period provided or referred to in this Section below then Borrower is not
entitled to written notice prior to the acceleration of the Note[s]. The term
"Event of Default", as used in this Agreement, shall mean the occurrence or
happening, at any time and from time to time, of any one or more of the
following events:

(a) default in payment or prepayment of the principal of,
Make-Whole Premium, if any, or interest on, the Note[s] when and as the same
shall become due and payable, whether at the due date thereof or at the date
fixed for prepayment or by acceleration or otherwise;

(b) at any time the lien of the Mortgage may be impaired
by any lien, encumbrance or other defect, and, except as provided in Section
8.6, either (i) such lien, encumbrance or other defect is not corrected within
thirty (30) days after notice to Borrower, or (ii) Borrower shall fail or
refuse to obtain insurance or bonding over any such lien, encumbrance or other
defect to Lender's satisfaction within such 30 days;

(c) Borrower assigns this Agreement or any advance to be
made hereunder, or any interest in either, without the prior written consent of
Lender;

(d) [there is any cessation of Construction for any period
after the date of commencement in excess of fifteen (15) days, unless excused
pursuant to Section 8.1(b), or if Construction is abandoned, or if Borrower
is in default under the terms of [either of] the Construction Fund Disbursement
Agreement[s], or the Construction is not completed in compliance with this
Agreement on or before the Outside Possession Date except as extended
pursuant to Section 8.1(b)]; [Intentionally omitted.]

(e) [Borrower executes any security agreement on any
materials, fixtures or articles used in the Construction or on articles of
personal property located on the Land or to be

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<PAGE> 43
incorporated into the Demised Premises, except as permitted by the Mortgage, or
any such materials, fixtures or articles are not substantially in accordance
with the Plans and Specifications, or are purchased pursuant to any conditional
sales contract or other security agreement so the ownership thereof will not
vest unconditionally in Borrower free from liens or encumbrances other than
those granted Lender, or Borrower does not furnish to Lender within ten (10)
days of request therefor the contracts, bills of sale, statements, receipted
vouchers and agreements or any of them under which Borrower claims title to
such materials, fixtures or articles]; [Intentionally omitted]

(f) [Lender determines that the estimated cost to complete
the Construction and pay the items described in Section 7.1 is in excess of the
Loan Amount available to Borrower to complete and pay for such Construction and
items]; [Intentionally omitted]

(g) [Borrower does not disclose to Lender within five (5)
days after demand therefor the names of all contractors, subcontractors,
persons, firms and corporations with whom Borrower contracted or intends to
contract for the Construction or the furnishing of labor or materials or fails
to deliver to Lender upon request copies of all such contracts;

(h) any representation or warranty contained herein, in
the Note[s] or in the Loan Documents or any representation to Lender concerning
the financial condition or credit standing of Borrower or any other Indemnitor
that is a party to the Hazardous Materials Indemnity Agreement proves to have
been false or misleading in any material respect when made]; [Intentionally
omitted]

(i) the Borrower [or General Partner] shall commence a
voluntary case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in any involuntary
case or other proceeding commenced against it, or shall make a general
assignment for the benefit of creditors, or shall fail generally to pay its
debts as they become due, or shall take any action to authorize any of the
foregoing;

(j) an involuntary case or other proceeding shall be
commenced against the Borrower [or General Partner] seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed for
a period of 60 days;

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<PAGE> 44
(k) the insurance required herein and under the Mortgage
is cancelled, and replacement insurance satisfactory to Lender is not obtained
by the effective date of cancellation;

(l) any governmental approval, right or license which
Borrower is required by applicable law or regulation to obtain to [construct or]
operate the Demised Premises, and the loss of which will have a Material
Adverse Effect, is suspended, revoked or terminated, or Borrower fails to
obtain and/or maintain such approval, right or license in full force and effect
(collectively, "Appealable Event"), provided, however, if such Appealable Event
is promptly and diligently appealed in accordance with applicable law or
regulation and Lender, in its reasonable judgment, determines that such
Appealable Event shall not have a Material Adverse Effect on the Borrower or
the Mortgaged Estate prior to the completion of such appeal, the occurrence of
the Appealable Event shall only be deemed an Event of Default upon completion
of the appeal resulting in a decision which in the reasonable judgment of
Lender has a Material Adverse Effect on Borrower;

(m) a default under any of the other Loan Documents
(other than the Lease, Lease Guaranty, Indemnity Agreement and Note Put
Agreement) [or the Ground Lease] occurs and is continuing beyond any applicable
grace period; provided, however, a default under Section 6.09 of the Mortgage
shall constitute an Event of Default which is not subject to cure;

(n) a default exists under the Lease which is not cured
within any applicable grace period, and Kmart is in default pursuant to the
Lease Guaranty or the Indemnity Agreement with respect to the Lease default, or
a default or event of default otherwise exists under the Lease Guaranty or the
Indemnity Agreement and is not cured within any applicable grace period;

(o) Lender exercises the Put, and Kmart defaults in the
performance of its obligations pursuant to the Note Put Agreement, and such
default is not cured within any applicable grace period; or

(p) failure of Borrower [or General Partner] to timely
and properly observe, keep or perform any term, covenant, condition, agreement,
or obligation required to be observed, kept or performed herein, in the Note[s]
or in any of the other Loan Documents which has not been specifically referred
to in the Subsections above.

Borrower [or General Partner] shall have thirty (30) days after notice
under this Agreement within which to cure any default arising under this
Section 10.1 except for a default: (i) in payment of any sum pursuant to
[the] [any] Note or any other payment due and payable pursuant to any of the
Loan Documents which is not cured within any applicable grace period provided
in such Loan Documents; (ii) under [the] [any] Note or under any of the Loan
Documents for which a different cure period is specified therein; or (iii)
under Subsection (b), Subsection (c), Subsection (d), Subsection (h),
Subsection (i), Subsection (j), Subsection (k),

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<PAGE> 45
Subsection (l), Subsection (m) or (n) except as otherwise provided therein, or
Subsection (o).

10.2 Lender's Remedies. If any Event of Default occurs, Lender
may, in addition to all remedies at law or in equity under the Mortgage, the
Note[s] and other Loan Documents, at its option, declare the whole of the
unpaid principal and unpaid accrued interest evidenced by the Note[s] and, to
the extent not prohibited by applicable law, an amount as liquidated damages
for the loss of the bargain evidenced hereby (and not as a penalty) equal to
the Make-Whole Premium to be immediately due and payable, without, except as
provided above, notice of any kind, including, but not limited to, notice of
intent to accelerate and notice of acceleration, or demand, and Lender shall be
entitled to commence proceedings for immediate foreclosure of the Mortgage and
may, additionally or alternatively, subject to the provisions of Section 11,
avail itself of any other relief or remedy to which Lender may be legally or
equitably entitled under the Note[s], the other Loan Documents or otherwise.

10.3 [Inspections of Improvements. Lender or its agents at all
times shall have the right, but not the obligation, to enter upon the Demised
Premises during the period of Construction. Any inspection by Lender of the
Demised Premises is for the purpose of protecting the Lender's position in the
Security, and no such inspection shall be a representation by Lender that there
has been a strict compliance upon the part of the general contractor or any
subcontractor with the Plans and Specifications or that the Construction is
free from faulty material or workmanship, nor shall any inspection by Lender
constitute approval of any certification given to Lender or relieve any person
making such certification of responsibility therefor.] [Intentionally
omitted.]

10.4 Reimbursement of Lender. In the event of any conflict, claim
or dispute between the parties hereto affecting or relating to the purpose or
subject matter of this Agreement, Lender shall be entitled to receive all
expenses, including but not limited to,

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<PAGE> 46
reasonable attorneys' fees and disbursements actually incurred or
expended, and accounting fees actually incurred or expended. All monies
advanced by Lender under the terms of this Agreement and all amounts paid,
suffered or incurred by Lender in exercising any authority or rights granted
herein, including attorneys' fees and disbursements and accounting fees as
stated above, shall be added to the amounts payable under the Note[s], shall be
secured by the Mortgage and other Loan Documents, shall bear interest at the
Overdue Rate (as defined in the Note[s]) until paid and shall be due and
payable by Borrower to Lender immediately without demand.

10.5 Cumulative Remedies. All remedies of Lender provided for in
this Agreement are cumulative and shall be in addition to any and all other
rights and remedies provided in the Note[s], the Loan Documents, any other
instrument executed by Borrower in connection with the Loan, or by law. The
exercise of any remedy hereunder shall not in any way constitute a cure or
waiver of an Event of Default, or invalidate any act done pursuant to any
notice of an Event of Default, or prejudice Lender in the exercise of any of
its rights hereunder or elsewhere unless, in the exercise of such rights,
Lender realizes all amounts owed to it under the Note[s], the Mortgage and any
other Loan Document. The rights and remedies provided Lender by this
Agreement, the Note[s] and the Loan Documents shall be cumulative. All rights,
powers and remedies granted Lender herein or otherwise available to Lender are
for the sole benefit and protection of Lender, and Lender may exercise any such
right, power or remedy at its option and in its sole and absolute discretion
without any obligation to do so. In addition, if under the terms hereof
Lender is given two or more alternative courses of action, Lender may elect any
alternative or combination of alternatives, at its option and in its sole and
absolute discretion.

10.6 Inspection of Books and Records. Lender, through its
officers, agents or employees, shall have the right at all times upon prior
notice, if Borrower is not in default, and without notice, if Borrower is in
default, to inspect, examine, copy and make extracts of the books, records,
accounting data and other documents, including without limitation all permits,
licenses, consents and approvals issued to Borrower of all governmental
authorities having jurisdiction over Borrower, the Construction or the Demised
Premises. Such books, records and documents shall be made available to Lender
at Borrower's office promptly upon demand therefor. Lender shall have no, and
is not assuming any, responsibility or duty to supervise or to inspect any
books and records, nor shall any inspection or verification by Lender
constitute approval of any certification given to Lender, such inspections and
verifications (specifically including inspections and verifications under
Section 5) being for the exclusive benefit and protection of Lender. Lender
shall in no event have any obligation to take any action pursuant to this
Section 10 or any other provision of this Agreement, the Note[s] or any of the
other Loan Documents or to mitigate any damages. Further, Lender shall have no
obligation to inspect or take any action with respect to

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the Demised Premises, and shall not be subject to any liability for any failure
to inspect or to take any other action pursuant to this Agreement, the Note[s],
or any other Loan Document or with respect to the Demised Premises. [Failure
to inspect the Construction or any part thereof shall not constitute a waiver
of any of Lender's rights hereunder.] Inspection not followed by a notice
of Default shall not constitute a waiver of any Event of Default then existing.

10.7 Recapture. To the extent any holder of [the] [a] Note
receives any payment by or on behalf of Borrower, which payment or any part
thereof is subsequently invalidated, declared to be fraudulent or preferential,
set aside or required to be repaid to Borrower or its respective trustee,
receiver, custodian, liquidator or any other party under bankruptcy law, state
or federal law, common law or equitable cause, then to the extent of such
payment or repayment, the obligation or part thereof which has been paid,
reduced or satisfied by the amount so repaid shall be reinstated and shall be
included within the liabilities of Borrower to the holder of [the] [such] Note
as of the date such initial payment, reduction or satisfaction occurred.

SECTION 11. BORROWER LIABILITY.

11.1 Recourse Limitation. Notwithstanding anything to the contrary
contained herein, in the Note[s] or in any Loan Documents, but without in any
manner affecting the validity of the Note[s] or the lien of the Mortgage or any
other instrument securing the Note[s], upon the occurrence of an Event of
Default under [the] [a] Note or under the terms of any of the other Loan
Documents, or upon the maturity of [the] [a] Note, whether by acceleration or
the passage of time or otherwise, the recourse of Lender as it relates to
Borrower or its partners shall be (i) solely by judicial foreclosure or other
remedies set forth in the Mortgage, the Note[s] or other Loan Documents, (ii)
as set forth in Section 10, including, without limitation, the appointment of a
receiver for the collection of any rents, income and profits, and (iii) as set
forth in the Lease Documents. Subject to the limitations set forth below,
there shall be no personal liability of Borrower or its [partners] [members]
for the payment of principal or interest or other amounts which may become due
and payable on or under the terms of the Note[s], this Agreement or any other
Loan Documents. Subject to the limitations set forth below, Lender shall look
solely to the Security upon foreclosure of the lien or security interests under
any of the Loan Documents, and no deficiency judgment for amounts unsatisfied
after the application of such Security and the proceeds thereof shall ever be
instituted, sought, taken or obtained against Borrower or its [partners]
[members] for any amounts which become due and owing. Nothing contained in
this Section shall be deemed to prejudice the rights of Lender to recover all:
(a) funds, damages or costs (including without limitation, attorneys' fees and
disbursements) incurred by Lender as a result of fraud, willful misconduct,
intentional misrepresentation or intentional breach of any representation or
warranty by or on behalf of Borrower; (b)

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<PAGE> 48
condemnation or insurance proceeds, or other similar funds or payments
attributable to the Security or any other property or collateral held as
security for the Note[s], which under the terms of any Loan Document should
have been paid to Lender but which has been retained by Borrower or an
Affiliate of Borrower; (c) unpaid principal balance of the Note[s], Make-Whole
Premium and accrued interest in the event the Mortgage, Lease Assignment or
Pledge Agreement fails to create and perfect a first and prior lien or security
interest upon the Land, Improvements or other Security; (d) any present or
future tenant security deposits, Advance or Prepaid Rents or other rents, or
other similar sums paid to and held by or for the account of Borrower at the
time of any default under the Note[s] or other Loan Documents or upon the
maturity of [the] [a] Note by acceleration or otherwise; (e) amounts
recoverable under the Hazardous Materials Indemnity Agreement executed and
delivered by the Borrower and any of the other required parties thereto
pursuant to this Agreement; (f) damages in any tort action arising out of
conversion, waste, fraud, misappropriation or other tortious conduct of
Borrower [or the General Partner]; (g) any protective advances that shall have
been made or enforcement costs that shall have been incurred by Lender pursuant
to the provisions of the Note[s] or the Loan Documents; and (h) costs and
attorneys' fees and disbursements that may be incurred by Lender pursuant to
the terms of the Note[s] or the Loan Documents. "Advance or Prepaid Rents"
shall mean all rents properly allocable to a period subsequent to the date
received and unearned under the terms of the Lease. In addition, nothing
contained herein shall (x) be, or be deemed to be, a release or impairment of
any part of the indebtedness evidenced by the Note[s], or of the lien or
security interest of any Loan Document, or (y) limit or otherwise prejudice in
any way the rights of Lender to foreclose the Mortgage or, subject to the
recourse limitation set forth in this Section 11.1, to enforce any of its other
rights or remedies under the Note[s] or under any other Loan Document.

11.2 Loss of Limited Recourse. Notwithstanding any other provision
hereof, of the Note[s] or of the Loan Documents, nothing contained herein or
therein shall limit or otherwise prejudice in any way, the recourse of Lender
against Borrower in the event the presence of Hazardous Materials are
discovered in, on or beneath the surface of the Land and are not remediated to
the satisfaction of Lender in its sole discretion prior to the commencement of
any action or proceeding seeking such recourse which recourse is limited to the
greater of the actual cost of such remediation or the diminution in value of
the Demised Premises if such remediation cannot be completed; provided,
however, this provision shall in no event be construed to limit or modify
Lender's recourse under the Hazardous Materials Indemnity Agreement.

11.3 Judicial or Other Proceedings. Nothing contained in Section
11.1 shall prevent Lender from naming or joining Borrower [or the General
Partner] against whom recourse is limited in any judicial or other proceeding
which the Lender determines in good faith is necessary because of any
jurisdictional or notice or

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<PAGE> 49
procedural law or rule, provided that any judgment obtained shall not (except
as otherwise provided in Section 11.1) be satisfied from any property of such
party that has not been given as Security.

SECTION 12. WAIVERS.

12.1 Waiver by Borrower [and General Partner]. In respect of the
Note[s] and the Loan Documents, Borrower [and the General Partner] waive
presentment, demand, protest and notices of protest, nonpayment, partial
payment and all other notices and formalities, except as expressly provided for
in this Agreement. Borrower [and the General Partner] further consent to and
waive notice of (i) the granting of indulgences or extensions of time or
payment, (ii) the taking or releasing of security, and (iii) the addition or
release of persons who may be or become primarily or secondarily liable for the
Loan or any other indebtedness or any part thereof secured by the Mortgage or
other Loan Documents, all in such a manner and at such time or times as Lender
may deem advisable.

12.2 Waiver by Lender. Lender may waive any requirement herein.
No delay or omission by Lender in exercising any right, power or remedy
hereunder and no indulgence given to Borrower or to any other party with
respect to any conditions set forth herein shall impair any right, power or
remedy of Lender under this Agreement or be construed as Lender's waiver of or
acquiescence in any Event of Default. No such delay, omission or indulgence by
Lender shall be construed as a variation or waiver of any of the terms,
conditions or provisions of this Agreement. No purported waiver of any Event
of Default shall be effective unless it is written and signed by an authorized
representative of Lender. No waiver by Lender of any Event of Default shall
constitute a waiver of any other prior or subsequent Event of Default or of the
same Event of Default after notice to Borrower demanding strict performance.
No single or partial exercise of any right, power or remedy shall preclude any
other or further exercise thereof or of any other right, power or remedy. All
rights, powers and remedies existing under this Agreement, the Note[s] and the
other Loan Documents are in addition to and not exclusive of any rights, powers
or remedies otherwise available. Lender shall not be estopped to take, or from
taking, any action with respect to any Event of Default because of any delay by
Lender in giving notice of Default or in exercising any remedy based thereon.

12.3 Waiver of Jury Trial. Borrower and Lender hereby irrevocably
and unconditionally waive all right to trial by jury in any action, suit,
proceeding or claim that relates to or arises out of the Note[s] or any of the
Loan Documents or the acts or failure to act of or by the parties in the
enforcement of any of the provisions of the Note[s] or any of the Loan
Documents.

SECTION 13 ACTION UPON AGREEMENT; ENTIRE AGREEMENT; AGREEMENT FOR PARTIES'
BENEFIT. This Agreement is made for the sole protection and benefit of the
parties and no other person or persons shall

45
<PAGE> 50
have any right of action hereon, provided that Lender may freely assign or
transfer its rights under this Agreement. Other than as provided in the
Mortgage, Borrower may not assign, sell or otherwise transfer any of its rights
under this Agreement and any such purported assignment, sale or transfer shall
be void and constitute an Event of Default which is incapable of cure. This
Agreement embodies the entire agreement of the parties in relation to the
subject matter hereof. There are no prior or contemporaneous representations,
promises, warranties, understandings or agreements, expressed or implied, oral
or otherwise, in relation to the subject matter of this Agreement, except those
expressly referred to or set forth herein, in the Note[s] or in the Loan
Documents. Borrower acknowledges that the execution and delivery of this
Agreement is its free and voluntary act and deed, and that such execution and
delivery have not been induced by, nor done in reliance upon, any
representations, promises, warranties, understandings or agreements made by
Lender, its agents, officers, employees or representatives. No promise,
representation, warranty or agreement made subsequent to the execution and
delivery hereof by either party hereto, and no revocation, partial or
otherwise, or change, amendment, addition, alteration or modification of this
Agreement shall be valid unless the same be in writing signed by all parties
hereto or by their duly authorized agents.

SECTION 14. SUCCESSORS AND ASSIGNS.

14.1 General. This Agreement shall be binding upon the Borrower
(and its respective successors and assigns) and shall be binding upon, and
inure to the benefit of, Lender, and Lender's successors and assigns, including
[the Trustee and] each successive holder or holders of the Note[s]. [The
Trustee and] each successive holder or holders of the Note[s], [including the
Trustee,] and the holders of the Certificates (defined in Section 14.2) shall
have all rights and privileges of the "Lender" hereunder.

14.2 Consent to Assignment. Notwithstanding any other provision of
this Agreement, Borrower [and General Partner each] hereby acknowledges and
consents to the sale, conveyance, transfer and absolute assignment
simultaneously with the Closing by Lender of all of its right, title and
interest in and under [this Agreement and under the Note, the Mortgage and all
other Loan Documents to Trustee pursuant to the Trust Agreement under which the
Mortgage Pass-Through Certificates ("Certificates") will be issued] [(I) the
Series A Note to the Series A Pass-Through Trustee pursuant to the Series A
Pass-Through Trust Agreement under which the Series A Mortgage Pass-Through
Certificates (________________) will be issued; (ii) the Series B Note to the
Series B Pass-Through Trustee pursuant to the Series B Pass-Through Trust
Agreement under which the Series B Mortgage Pass-Through Certificates
(_____________) will be issued (the Series A Certificates and Series B
Certificates collectively, "Certificates"); and (iii) this Agreement, the
Mortgage and other Loan Documents to the Trustee

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<PAGE> 51
pursuant to the Collateral Trust Agreement]. Trustee shall have the sole right
to exercise all rights, privileges and remedies (either in its own name or in
the name of the Lender for the use and benefit of the Trustee) which by the
terms of this Agreement or by applicable law are permitted or provided to be
exercised by the Lender [, provided that, as set forth in the Series A Pass-
Through Trust Agreement and the Series B Pass-Through Trust Agreement, the
holders of the Notes shall be entitled to exercise the rights, privileges and
remedies thereof]. Borrower [and General Partner each] further acknowledges
and agrees that all Borrower's [and General Partner's] representations,
warranties, covenants, agreements and other obligations hereunder and under the
Note[s], the Mortgage and the other Loan Documents are made for the benefit of
[the Trustee and] each successive holder or holders of the Note[s], including
but not limited to [the Pass-Through] Trustee[s] and the holders of the
Certificates, and [the] Trustee[s] accept[s] the sale, conveyance, transfer and
absolute assignment in reliance upon the Borrower's [and General Partner's]
representations, warranties, covenants, agreements and other obligations
hereunder and under the Note[s], the Mortgage and the other Loan Documents. In
order to further induce [the Trustee and] any such successive holder or holders
of the Note[s], including but not limited to [the Pass-Through] Trustee[s] and
the holders of the Certificates, to accept such assignment, Borrower [and
General Partner each] hereby makes the following representations, warranties,
covenants and agreements:

(a) to the best of [its] [their] knowledge, Borrower [and
General Partner] [do] [does] not have any right, including any claim,
counterclaim, right of set off or deduction or other defense of any kind to
withhold payment or performance of any of their respective obligations
hereunder, under the Note[s] or under any of the other Loan Documents ("Lender
Defenses");

(b) in the event Borrower [or General Partner] becomes aware
of any Lender Defenses, Borrower [and General Partner each] hereby waives and
agrees not to assert the same against the Trustee[s], the holders of the
Certificates or any other holder[s] of the Note[s];

(c) upon consummation of the sale, conveyance, transfer and
absolute assignment to Trustee[s], Borrower hereby waives any right to
challenge the status of the [Pass-Through] Trustee[s] as [a] bona fide
purchaser[s] of the Note[s] for value and [a] holder[s] of the Note[s] [or to
challenge the status of Trustee as holder of the Collateral (as defined in the
Collateral Trust Agreement) in trust for the benefit of the holders of the
Notes];

(d) Trustee[s] [is] [are] [a] third party beneficiar[y] [ies]
of this Agreement and the other Loan Documents entered into between Borrower
and Lender; and

(e) upon consummation of the sale, conveyance, transfer
and absolute assignment to Trustee, Trustee shall be deemed to be Lender
hereunder, and shall succeed to all of the rights of Lender

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<PAGE> 52
hereunder [to hold and exercise for the benefit of the holders of the Notes].

SECTION 15. GENERAL.

15.1 Registered Note[s].

(a) The Borrower shall cause to be kept at its principal
office a register for the registration and transfer of the Note[s] (the "Note
Register") and the Borrower will register or transfer or cause to be registered
or transferred as hereinafter provided any Note issued pursuant to this
Agreement.

(b) At any time and from time to time the registered
holder of any Note which has been duly registered as hereinabove provided may
transfer such Note upon surrender thereof at the principal office of the
Borrower duly endorsed or accompanied by a written instrument of transfer duly
executed by the registered holder of such Note or its attorney duly authorized
in writing.

(c) The persons in whose name any registered Note shall
be registered shall be deemed and treated as the owner and holder thereof for
all purposes of this Agreement. Payment of or on account of the principal,
Make-Whole Premium, if any, and interest on any registered Note shall be made
to or upon the written order of such registered holder.

15.2 Exchange of Notes. At any time and from time to time, upon
surrender of such Note at its office, the Borrower will deliver in exchange
therefor, without expense to such holder, except as set forth below, a Note for
the same aggregate principal amount as the then unpaid principal amount of the
Note so surrendered, or Notes in the denomination of $100,000 or any amount in
excess thereof as such holder shall specify, dated as of the date to which
interest has been paid on the Note so surrendered or, if such surrender is
prior to the payment of any interest thereon, then dated as of the date of
issue, registered in the name of such person or persons as may be designated by
such holder, and otherwise of the same form and tenor as the Note so
surrendered for exchange. The Borrower may require the payment of a sum
sufficient to cover any stamp tax or governmental charge imposed upon such
exchange or transfer.

15.3 Loss, Theft, Etc., of Note. Upon receipt of evidence
satisfactory to the Borrower of the loss, theft, mutilation or destruction of
any Note, and in the case of any such loss, theft or destruction upon delivery
of a bond of indemnity in such form and amount as shall be reasonably
satisfactory to the Borrower, or in the event of such mutilation upon
surrender and cancellation of such Note, the Borrower will make and deliver
without expense to the holder thereof, a new Note, of like tenor, in lieu of
such lost, stolen, destroyed or mutilated Note. If the Lender or any
subsequent institutional investor is the owner of any such lost, stolen or
destroyed Note, then the affidavit of an authorized

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<PAGE> 53
officer of such owner, setting forth the fact of loss, theft or destruction and
of its ownership of such Note at the time of such loss, theft or destruction
shall be accepted as satisfactory evidence thereof and no further indemnity
shall be required as a condition to the execution and delivery of a new Note
other than the written agreement of such owner to indemnify the Borrower.

15.4 Time of Essence; Counterparts. Time and the exactitude of
each of the terms, conditions and provisions herein are expressly made of the
essence of this Agreement. This Agreement may be executed in counterparts by
the parties but all such counterparts together shall constitute one and the
same document.

15.5 Governing Effect. This Agreement is not intended to
supersede the provisions of the Mortgage, the Note[s] or any other Loan
Documents, but shall be construed as supplemental thereto. In the event of any
inconsistency between the provisions hereof and the Mortgage or the other
Security documents, it is intended and agreed that this Agreement shall control
on all matters other than the creation, perfection and priority of the security
interests and liens granted thereby or other than as expressly provided
otherwise in the Mortgage or the other Security documents.

15.6 Notices. All notices, requests, demands or other
communications under this Agreement, [a] [the] Note or any other Loan Document
(unless expressly provided otherwise therein) shall be in writing and shall be
addressed, in the case of Borrower, to __________________________
_________________________, Attention:
__________________________________________________, with a copy to
_________________________________________________________________; in the case
of Lender, to 40 North Central Avenue, Suite 2700, Phoenix, Arizona 85004,
Attention: Norman C. Storey; and, in the case of [any of the] Trustee[s], to
United States Trust Company of New York, c/o U.S. Trust Company of California,
N.A., 555 South Flower Street, Suite 2700, Los Angeles, California 90071,
Attention: Corporate Trust Division, or to such other address as either party
may designate in writing. All notices hereunder shall be effective: (a) three
(3) days after deposit in the U. S. Mail, postage prepaid, registered or
certified mail, return receipt requested; (b) upon delivery, if delivered in
person to the address set forth above; or (c) upon delivery, if sent by
overnight courier, such as Federal Express; except that notices of change of
address shall be effective ten (10) days after the effective date of all other
notices hereunder. Borrower shall forward to Lender, without delay, any
notices, letters or other communications delivered to the Demised Premises or
to Borrower naming Lender or the "Construction Lender" as addressee, or which
could reasonably be deemed to have a Material Adverse Effect on the
construction of the Project or the ability of Borrower to perform its
obligations to Lender.

15.7 Lender as Borrower's Attorney-in-Fact. Borrower irrevocably
appoints, designates and authorizes Lender as its attorney-in-fact with full
power of substitution (which

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<PAGE> 54
appointment, designation and authorization is coupled with an interest and
shall be irrevocable) in the event Borrower fails to timely do so to file for
record any notices of completion, cessation of labor or any other notice that
Lender deems necessary or desirable to protect its interest hereunder or under
the Note[s] or Mortgage or any other Loan Document.

15.8 Lender's Rights. Lender shall have the right to commence,
appear in or defend any action or proceeding purporting to affect the rights,
duties or liabilities of the parties hereunder or the disbursement or use of
the Loan Amount or any portion thereof.

15.9 [Posting Financing Sign. Lender or its agents shall have the
right to post a sign on the Land until the Outside Possession Date to indicate
the source of financing.] [Intentionally omitted.]

15.10 Borrower Indemnification. Except for liabilities, expenses,
and damages to which the provisions of the Hazardous Materials Indemnity
Agreement applies, to the fullest extent permitted by law, Borrower [and
General Partner each] shall protect, indemnify, defend, and save harmless
Lender, its directors, officers, agents, shareholders, representatives and
employees from and against any and all liability, expense, or damage of any
kind or nature and from any suits, claims, or demands, including reasonable
legal fees and expenses actually incurred on account of any matter or thing or
action or failure to act by Lender, whether in suit or not, arising out of this
Agreement or in connection herewith, unless such liability, expense, suit,
claim, or damage is caused by the willful misconduct of Lender, its directors,
officers, agents, shareholders, representatives and employees, or unless such
liability, expense, suit, claim, or damage is deemed by a court of competent
jurisdiction in a final non-appealable judgment or order to be the liability of
Lender as a result of wilful misconduct by Lender, its directors, officers,
agents, shareholders, representatives or employees, or unless, with respect to
any such liability, expense, suit or claim which is settled by Lender, it is
determined finally in a judicial or arbitration proceeding that such loss,
evidenced by such settlement, is the liability of Lender as a result of wilful
misconduct by Lender, its directors, officers, agents, shareholders,
representives or employees. Upon receiving knowledge of any suit, claim, or
demand asserted by a third party that Lender believes is covered by this
indemnity, Lender shall give Borrower prompt notice of the matter and an
opportunity to defend it at Borrower's sole cost and expense, with legal
counsel satisfactory to Lender. Lender may also require Borrower [and General
Partner each] to so defend the matter to the extent this indemnity is
applicable. The obligations on the part of Borrower [and General Partner]
under this Section 15.10 shall survive the Closing Date and the repayment of
the Loan.

15.11 Controlling Provision. All agreements between Borrower and
Lender are expressly limited so that, and Borrower and Lender intend and agree
that, in no contingency or event whatsoever, whether by reason of advancement
of the proceeds of the Note[s], acceleration of maturity of the unpaid
principal balance thereof,

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<PAGE> 55
or otherwise, shall the amount paid or agreed to be paid to Lender for the use,
forbearance or detention of the money to be advanced hereunder exceed the
highest lawful rate permissible under applicable usury law. In the
determination of the rate of interest under this provision, any charges which
are determined to be interest shall be spread over the term of the Loan in
ascertaining whether the interest rate has exceeded the highest lawful rate
permissible under applicable law. If, from any circumstances whatsoever,
fulfillment of any provision of the Note[s] or of the Mortgage securing the
Note[s], or any other agreement referred to therein or otherwise relating to
the Note[s], at the time performance of such provision shall be due, shall
involve transcending the limit of validity prescribed by law which a court of
competent jurisdiction may deem applicable thereto, then ipso facto, the
obligation to be fulfilled shall be reduced to the limit of such validity, and
if, from any circumstance, Lender shall ever receive as interest an amount
which would exceed the highest lawful rate, such amount which would be
excessive interest shall be applied to the reduction of the unpaid principal
balance due as of the date such amount is received or deemed to be received by
Lender and not to the payment of interest. This provision shall control every
other provision of all agreements between Borrower and Lender. However, in the
event an amount determined to be excessive interest is applied against the
unpaid principal balance, and thereafter the rate of interest accruing under
the Note[s] decreases, the Note[s] shall, in fact accrue interest at the
highest lawful rate until such time that an amount accrues equal to the amount
of excessive interest previously applied against principal. Notwithstanding
the foregoing, if the provisions of any law or regulation of the United States
or any agency or instrumentality thereof, as amended, which validly superseded
any restriction of the State of New York, would permit Lender to charge or
receive a rate of interest with respect to the indebtedness evidenced by the
Note[s] in excess of the maximum rate of interest (if any) permitted to be
charged or received by Lender under applicable law of the State of New York,
the less restrictive provisions of any such United States law or regulation
shall apply in determining the rate of interest permitted to be charged or
received.

15.12 Section Headings. Section headings are not to be considered
a part of this Agreement and are included solely for convenience of reference
and are not intended to be full or accurate descriptions of the contents
hereof. All persons, firms and/or entities identified by the designation
"Borrower" herein shall be jointly and severally liable to Lender for the
faithful performance of the terms hereof.

15.13 Applicable Law. This Agreement shall be construed and
enforced under the law of the State of New York without giving effect to the
choice of law principles thereof, unless preempted by the laws or regulations
of the United States.

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15.14 Submission to Jurisdiction. Borrower [and General Partner
each] hereby consents to the jurisdiction of any state or federal court located
within the County of New York, State of New York, and irrevocably agrees that
all actions or proceedings relating to this Agreement, the Note[s], and the
other Loan Documents may be litigated in such courts, and the Borrower [and
General Partner each] waives any objection which [it] [they] may have based on
improper venue or forum non conveniens to the conduct of any proceeding in any
such court, waives personal service of any and all process upon them, and
consents that all such service of process be made by registered or certified
mail (return receipt requested) or messenger to it at its address set forth in
Section 15.6, above, or to its agent, referred to below, at such agent's
address, set forth below, and that service so made shall be deemed to be
completed in accordance with Section 15.6. Borrower [and General Partner
each] hereby appoint the CT Corporation System, Inc., with an office on the
date hereof at _____________________________ New York, New York ________ as
[its] [their] agent for the purpose of accepting service of any process within
the State of New York and shall execute any confirmation thereof requested by
Lender. Nothing contained in this Section shall affect the right of any
holder[s] of the Note[s] to serve legal process in any other manner permitted
by law, to bring any action or proceeding in the courts of any jurisdiction
against the Borrower [or General Partner], or to enforce a judgment obtained in
the courts of any other jurisdiction.

15.15 Severability. Should any provision of this Agreement, [a]
[the] Note or any of the other Loan Documents for any reason be declared
unenforceable by a court of competent jurisdiction (sustained on appeal, if
any), such unenforceability shall not affect the enforceability of any other
provision hereof or thereof, all of which shall remain in force and effect as
if this Agreement, [such] [the] Note or such other Loan Document had been
executed with the unenforceable provision thereof eliminated. It is the
intention of the parties hereto that they would have executed the remaining
provisions of this Agreement without including therein any such part, parts or
portion which may for any reason be hereafter declared unenforceable, provided
that, if any provision of this Agreement, [a] [the] Note or any of the other
Loan Documents shall be unenforceable by reason of a final judgment of a court
of competent jurisdiction based upon a court's ruling (sustained on appeal, if
any) that such provision is unenforceable because of the excessive degree or
magnitude of the obligation imposed thereby on any party, that unenforceable
obligation shall be reduced in magnitude or degree by the minimum degree or
magnitude necessary in order to permit the provision to be enforceable by
Lender. In the event the provisions of the immediately preceding sentence
apply, the parties shall make appropriate adjustment to the provisions of this
Agreement, the Note[s] and the other Loan Documents to give effect to the
benefits intended to be conferred upon the parties hereby.

15.[16] Further Assurances. Borrower [and General Partner each]
shall, after the execution of this Agreement, at the request of Lender, execute,
acknowledge and deliver such other documents or instruments and take any other

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or further acts as may be reasonably required to evidence or confirm the
transaction contemplated hereby or as may otherwise be necessary to carry out
or to fulfill Borrower's [or General Partner's] covenants and obligations
hereunder.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

NATIONAL TENANT FINANCE CORPORATION,
a Delaware corporation

By
------------------------------
Its
------------------------------
(LENDER)

-------------------------------,
a ------------ limited [partnership]
[liability company]

By -------------------------------
[a ------------ corporation,] its
[sole General Partner] [________]

[By
------------------------
Its
------------------------]
(BORROWER)

[----------------------------------, a
------------ corporation

By
---------------------------------
Its
-----------------------------]
(GENERAL PARTNER)

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<PAGE> 58
EXHIBITS TO LOAN AGREEMENT

EXHIBIT 1.1A Legal Description of Land

EXHIBIT 1.1B Plans & Specifications

EXHIBIT 1.1C Description of Lease and Lease Guaranty

EXHIBIT 1.2A Promissory Note[s]

EXHIBIT 1.2B Loan Documents

EXHIBIT 1.2C [Construction Fund Disbursement Agreement[s]] [Intentionally
Omitted]

EXHIBIT 1.3 Note Put Agreement

EXHIBIT 5.1A Borrower's Certificate of Non-Foreign Status

EXHIBIT 5.1B [General Partner's Certificate of Non-Foreign Status]
[Intentionally Omitted]

EXHIBIT 5.3 Documents to be Filed or Recorded

EXHIBIT 5.12 Facts Relied On

EXHIBIT 6.1A Insurance Requirements

EXHIBIT 6.1B Title Insurance Requirements

EXHIBIT 6.1C Borrower's Certificate

EXHIBIT 6.1D General Partner's Certificate] [Intentionally Omitted]

EXHIBIT 6.1E Survey Requirements

EXHIBIT 6.1F Surveyor's Certificate

EXHIBIT 6.1G Hazardous Materials Indemnity Agreement

EXHIBIT 6.1H Lease Guaranty and Indemnity Agreement

EXHIBIT 6.1I Other Loan Documents

EXHIBIT 6.2 Form of Opinion of Borrower's Counsel

EXHIBIT 7 Settlement Statement

<PAGE> 1
EXHIBIT 4.9

LEASE GUARANTY AGREEMENT

THIS AGREEMENT ("Agreement") dated as of ________, 199_, among
______________________________________________, a _________ limited
[partnership] [liability company] ("Landlord"), having an address at
________________________________________ and KMART CORPORATION, a Michigan
corporation ("Guarantor"), having its principal office at 3100 West Big Beaver
Road, Troy, Michigan 48084, and ______________ ("Tenant"), a ____________
corporation, having an address at _____________, solely for purposes of Section
5 of this Agreement,

W I T N E S S E T H :

Contemporaneously herewith, Landlord, as landlord, is entering into a
certain lease ("Lease") dated as of ________, 19__, for certain demised
premises defined in the Lease ("Demised Premises") located on real property in
the City of ________, County of ________, State of _________, which property is
more particularly described in Exhibit A attached thereto, with
Tenant, as tenant. Pursuant to a Loan Agreement of even date
herewith between Landlord, as Borrower, and National Tenant Finance
Corporation, a Delaware corporation, as Lender ("Lender"), Landlord is
obtaining the funds necessary to acquire the Demised Premises [and construct
the Tenant Improvements thereon]. Guarantor owns a controlling interest in the
outstanding capital stock of Tenant and is executing this Agreement as an
inducement to the Landlord to enter into the Lease and to Lender to enter into
the Loan Agreement. All capitalized terms used but not otherwise defined
herein shall have the meaning assigned to such terms in the Lease.

NOW, THEREFORE, in consideration of the premises, the parties agree as
follows:

1. Guarantor hereby absolutely and unconditionally guarantees to the
Landlord the full and punctual payment (and not merely collectability),
performance and observance by the Tenant of all of the terms, conditions,
covenants and obligations to be performed and observed by the Tenant under the
Lease (collectively, "Guaranteed Obligations"). Unless sooner terminated
pursuant to Section 5, this Agreement shall terminate with respect to
Guaranteed Obligations which arise, or are incurred solely with respect to
events occurring, after the earlier of the expiration of the Primary Term of
the Lease or the Loan Payoff.

2. Guarantor hereby assents to all of the provisions of the Lease and
waives demand, protest, notice of any indulgences or extensions granted to
Tenant, any requirement of diligence or promptness on the part of the Landlord
in the enforcement of the Lease and any notice thereof, any requirement that
Landlord take any action whatsoever against the Tenant or any other party or
against the assets of Tenant or any other party or file any claim in the
bankruptcy of the Tenant and any other notice to Guarantor, provided, however,
Guarantor shall be furnished with a copy of the

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<PAGE> 2
notice of or relating to default under or termination of the Lease to which
Tenant is entitled or which is served upon Tenant at the time the same is sent
to or served upon Tenant. Any failure of notice shall not affect Guarantor's
liability hereunder, provided, however, that the time for Guarantor's
performance hereunder shall not commence until such notice is given to
Guarantor pursuant to Section 8.

3. Except as otherwise provided herein, the liability of Guarantor
hereunder is irrevocable, continuing, absolute, independent and unconditional
and shall in no way be affected by any circumstance which may constitute a
defense or legal or equitable discharge, in whole or in part, including,
without limitation, (a) the release or discharge of Tenant or the impairment or
modification of its liability in any creditors', receivership, or bankruptcy
proceeding or from any other cause whatsoever, (b) any alteration of or
amendment to the Lease which alteration or amendment has been consented to in
writing by the Guarantor; (c) any sale, assignment, sublease, pledge or
mortgage of the rights or obligations of Tenant under the Lease; (d) any
application or release of any security or other guaranty given for the
performance and observance of the covenants and conditions in the Lease on
Tenant's part to be performed and observed, provided, however, that any
application of any security given with respect to Tenant's performance under
the Lease shall reduce pro tanto the liability of Guarantor hereunder; (e) any
termination of the Lease except as expressly provided in the next succeeding
sentence; (f) any (i) defect in compliance with specifications, condition of
the Demised Premises, design, operation or fitness for use of the Demised
Premises which result from the construction of the Improvements which comprise
a part of the Demised Premises or, (ii) any damage to or loss or destruction of
the Demised Premises or any interruption or cessation in the use of the Demised
Premises or any portion thereof by Tenant, whether or not without fault on the
part of Tenant or any other person; or (g) any defense to enforcement of this
Guaranty that Guarantor is entitled to assert and Guarantor hereby waives the
right to assert any such defense including, but not limited to, those based on
(i) failure of Tenant to qualify to do business in the jurisdiction where the
property subject to the Lease is located, (ii) lack of Tenant of corporate
authority to enter into the Lease or to carry out the provisions of the Lease,
(iii) lack of Tenant's due authorization, execution and delivery of the Lease,
(iv) unenforceability of the Lease against Tenant in accordance with its terms,
(v) any charter or bylaw provision or agreement, statute, rule or regulation
binding on Tenant which conflicts with the Lease or the performance of any
obligation of Tenant under the Lease, or (vi) any stay or other impediment to
the exercise of Landlord's rights hereunder resulting from any bankruptcy or
other insolvency proceeding and in this respect Guarantor recognizes Landlord's
right to receive interest on any obligations guaranteed hereby after the
commencement of any such bankruptcy or insolvency proceeding. Notwithstanding
Sections 3(a) and (f)(ii) above, Guarantor shall be relieved of all future
liability with respect to Guaranteed Obligations which arise or are

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<PAGE> 3
incurred solely with respect to events occurring after (x) the rejection of the
Lease by the trustee or debtor-in-possession in Landlord's bankruptcy
proceeding, as a result of which the Lease is terminated and, notwithstanding
Tenant's compliance with the provisions of Article 23(c) of the Lease, the
Tenant is deprived thereby of its possessory rights pursuant to the Lease, or
(y) the Lease is properly terminated by Tenant pursuant to Articles 17 or 18
thereof. The obligation and liability of Guarantor hereunder shall not be
impaired, diminished, abated or otherwise affected by any setoff, defense or
counterclaim that Tenant or any other person may have or claim to have, at any
time or from time to time. There shall be no condition precedent to
Guarantor's obligations hereunder that Landlord at any time demand or resort
for payment or performance to Tenant, its properties or assets or to any
security, property or other rights or remedies whatsoever, and Landlord shall
have the right to enforce this Agreement irrespective of whether or not legal
proceedings or other enforcement efforts against Tenant are pending. Without
limiting the foregoing, it is understood that repeated and successive demands
may be made and recoveries may be had hereunder as and when, from time to time,
Tenant shall default under the terms of the Lease.

4. Guarantor hereby acknowledges and consents to the present assignment
by Landlord of all of its right, title and interest herein to
______________________ ("Lender"), a ___________ corporation, and hereby
further acknowledges and consents to the sale, conveyance, transfer and
absolute assignment by Lender of such right, title and interest to
__________________________ ("Trustee") pursuant to the [Collateral] Trust
Agreement dated as of ________, 19__ [under which the Trustee holds this
Agreement and the rights hereunder for the benefit of the Pass-Through Trustees
(as defined in the Collateral Trust Agreement) pursuant to the Pass-Through
Trust Agreements (as defined in the Collateral Trust Agreement)] under which
the Mortgage Pass-Through Certificates (_____________________________) Series
_____ [and Series _______]("Certificates") are issued. Upon such sale,
conveyance, transfer and absolute assignment to Trustee, Trustee shall be
deemed to be Lender and shall succeed to all to rights of Lender. No amendment
or modification of, or waiver by or consent of the Landlord in respect of, any
of the provisions of this Agreement shall be effective unless Trustee shall have
joined in such amendment, modification, waiver or consent or shall have given
its prior written consent thereto. Trustee shall have the sole right to
exercise all rights, privileges and remedies (either in its own name or in the
name of Landlord for the use and benefit of Trustee) which by the terms of this
Agreement or by applicable law are permitted or provided to be exercised by the
Landlord.

5. (a) Certain Definitions.

(i) "Affiliate" shall mean any person or entity controlling,
controlled by or under common control with any other person or entity.

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<PAGE> 4

(ii) "Indemnity Agreement" shall mean that certain Indemnity
Agreement dated as of , 199 , made by and between Guarantor and
Lender.

(iii) "Investment Grade" shall mean a credit rating issued by
Standard & Poor's ("S&P") which is equal to or greater than the existing
S&P rating of BBB- and is not on credit watch or a credit rating
issued by Moody's Investor Services ("Moody's") which is equal to or greater
than the existing Moody's Investors Service rating of Baa3 and is not on credit
watch.

(iv) "Investment Grade Status" shall mean that the long term
senior unsecured debt of the entity issuing such debt has been continuously
rated Investment Grade for a period of not less than twelve (12) full calendar
months immediately prior to the occurrence of the Termination Event.

(v) "New Guarantor" shall mean an entity which is an Affiliate
of the Assignee or Purchaser and which on or before an Effective Date or
Closing Date, whichever is applicable, executes and delivers to Landlord and
Trustee a New Lease Guaranty Agreement.

(vi) "New Lease Guaranty Agreement" shall mean a lease guaranty
agreement in form and content, except as provided in Section 5(d), the same as
this Agreement, which has a term equal to the remaining period during which
this Agreement would apply to the Guaranteed Obligations but for the
application of Section 5(c).

(vii) "New Note Put Agreement" shall mean a note put agreement
between Trustee, Tenant, Assignee (if an Assumption Agreement has been
executed), and New Guarantor, if applicable, in form and content the same as
the Note Put Agreement, revised as necessary to reflect the omission of New
Guarantor pursuant to Section 5(c)(iv) and to omit any provisions relating to
"Lease Guaranty Termination" as a Triggering Event.

(viii) "Note Put Agreement" shall mean the Note Put Agreement
dated as of even date with this Agreement by and among Lender, Tenant and
Guarantor.

(ix) "Put" shall have the meaning assigned to it in the Note
Put Agreement.

(x) "Qualified Assignment" shall mean that Tenant assigns the
Lease to a third party other than Guarantor or an Affiliate of Guarantor
("Assignee") and (i) Assignee executes an assumption agreement ("Assumption
Agreement") in form and content acceptable to Landlord and Trustee pursuant
to which Assignee absolutely and unconditionally assumes all of the
obligations of the Tenant pursuant to the Lease arising from and after the date
("Effective Date") upon which the Assignment is effective, and (ii) Assignee is
an entity which has achieved Investment Grade Status or Assignee delivers or
causes to be delivered, together with its Assumption Agreement, a New Lease
Guaranty Agreement by the New Guarantor which has achieved Investment Grade
Status. If, as of the Effective Date, the requirements of (i) above are
satisfied but not the requirements of (ii) above, and, thereafter the
requirements of (ii) are satisfied,

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<PAGE> 5
then, effective as of any later date that either Assignee or the New Guarantor
achieves Investment Grade Status and not before, a Qualified Assignment shall
be deemed to have occurred.

(xi) "Qualified Sale of Tenant" shall mean a sale to a third
party other than Guarantor or an Affiliate of Guarantor ("Purchaser")
of more than a fifty percent (50%) interest in all of the issued and
outstanding capital stock of the Tenant and in connection therewith Tenant or
Guarantor delivers to Landlord a New Lease Guaranty Agreement executed by a New
Guarantor, which on the date of acquisition of such interest in the Tenant's
capital stock ("Closing Date"), is an entity which has achieved Investment
Grade Status. If, as of the Closing Date, the New Guarantor has not achieved
Investment Grade Status, then, effective as of any later date that the New
Guarantor achieves Investment Grade Status and not before, a Qualified Sale of
Tenant shall be deemed to have occurred.

(xii) "Put Exercise Notice" shall have the meaning assigned to it
in Section 5(b).

(xiii) "Tenant Achieves Investment Grade Status" shall mean
Tenant, independent of its corporate parent, any subsidiary or Affiliate or
any of them, and independent of any credit support or enhancement provided by
any one or more of them, has achieved Investment Grade Status.

(xiv) "Termination Event" shall mean the occurrence of either
a "Qualified Assignment", a "Qualified Sale of Tenant", or "Tenant Achieves
Investment Grade Status".

(xv) "Termination Notice" shall have the meaning assigned to it
in Section 5(b).

(xvi) "Triggering Event" shall have the meaning assigned to it in
the Note Put Agreement.

(b) At any time following the occurrence of a Termination Event,
Guarantor or Tenant may elect to deliver notice ("Termination Notice") by
Guarantor or Tenant to Landlord and the Trustee of the occurrence of a
Termination Event specifying the nature of the Termination Event and the date
of its occurrence accompanied by evidence of such occurrence. Upon receipt of
the Termination Notice the Trustee shall (i) notify the Certificate Holders of
[the] [each Pass-Through] Trust [which has an interest in this Agreement] that
a Triggering Event has occurred, and (ii) the Trustee shall have the right on
the terms and conditions set forth in the applicable Trust Agreement to
exercise the Put which is exercisable pursuant to the Note Put Agreement as a
result of the occurrence of a Triggering Event.

(c) In the event Guarantor delivers the Termination Notice, and
after the Trustee gives the notice thereof to the Certificate Holders pursuant
to Section 5(b), then, if the Trustee is instructed by the

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<PAGE> 6
Certificate Holders pursuant to the provisions of any applicable Trust
Agreement[s] not to exercise the Put, the Note Put Agreement shall terminate,
and the Indemnity Agreement and this Agreement shall terminate, with respect to
all Claims (as defined in the Indemnity Agreement), or Guaranteed Obligations,
respectively, which arise, or are incurred solely with respect to events
occurring after the later of the completion of the foregoing or the
satisfaction of each of the following conditions precedent which is applicable:

(i) in all cases, no uncured default by Tenant then exists
pursuant to the Lease or the Note Put Agreement and no uncured default
by Guarantor exists pursuant to this Agreement or the Note Put Agreement;

(ii) with respect to a Qualified Assignment or a Qualified Sale
of Tenant, Trustee shall have received such documents as it may request from
Borrower necessary to grant an existing, perfected first security interest in
favor of Trustee in the New Lease Guaranty Agreement;

(iii) with respect to a Qualified Assignment or a Qualified Sale
of Tenant, whichever of Guarantor or Tenant delivers the Termination Notice
shall deliver to Landlord and Trustee a legal opinion addressed to Landlord and
Trustee from legal counsel acceptable to Landlord and Trustee and in form and
content acceptable to Landlord and Trustee, that (1) any Assumption Agreement
or New Lease Guaranty Agreement is duly authorized, has been duly executed and
delivered by Assignee or New Guarantor, as applicable, is enforceable in
accordance with its terms and conditions, and covering such other matters
relating to the Assumption Agreement, New Lease Guaranty Agreement and
transaction resulting in the Qualified Assignment or the Qualified Sale of
Tenant as Landlord and Trustee shall reasonably request, and (2) Trustee has an
existing validly perfected lien and security interest in the New Lease Guaranty
Agreement;

(iv) in all cases, the Tenant, if Tenant has achieved Investment
Grade Status, or the Assignee, if Assignee is an entity which has
achieved Investment Grade Status and if not, the New Guarantor, shall deliver
to Trustee (1) a New Note Put Agreement defining "Lease Default" or
"Lease/Lease Guaranty Default" (as defined therein), as applicable, with
respect to a default pursuant to the Lease and the New Lease Guaranty, if
applicable, and the new indemnity agreement, if applicable, and (2) a legal
opinion addressed to Trustee from counsel and in form and content, all of
which are acceptable to Trustee, that the New Note Put Agreement is duly
authorized, has been duly executed and delivered by Tenant, Assignee or the
New Guarantor, is enforceable in accordance with its terms and conditions and
covering such other matters relating to the New Note Put Agreement as Trustee
shall reasonably request.

(v) in all cases, the party upon whose rating the Termination
Event is based, either the Tenant, Purchaser, Assignee or New Guarantor, has
achieved Investment Grade Status and Guarantor has provided Trustee with
evidence thereof from S&P or Moody's publications.

(d) Notwithstanding anything in this Section 5 to the contrary, a
termination of Guarantor's obligations pursuant to this Lease Guaranty
Agreement upon the occurrence of a Termination Event

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<PAGE> 7
in compliance with this Section 5 shall not apply to any New Guarantor. Any
New Lease Guaranty Agreement shall not contain this Section 5 or any provision
similar to this Section 5 providing a means for any New Guarantor to terminate
its obligations pursuant to this Lease Guaranty Agreement.

(e) Whichever of Guarantor or Tenant delivers the Termination Notice
shall reimburse Trustee for any and all expenses, including but not
limited to expenses incurred in retaining legal counsel, incurred by Trustee in
connection with the exercise by such party of its rights under this Section 5.

6. This Agreement shall inure to the benefit of the Landlord and its
successors and assigns including, but not limited to, Lender and Trustee and
any assignee of the Landlord's interest in the Lease including, but not limited
to, Lender and Trustee. This Agreement shall be binding upon Guarantor and its
respective successors and assigns; provided that Guarantor shall not delegate
any of its obligations hereunder without the prior written consent of the
Trustee; and provided further that no delegation of any of its obligations
hereunder shall relieve Guarantor thereof and Guarantor shall remain primarily
and originally liable thereon.

7. This Agreement may not be changed or terminated orally, but only by a
written instrument signed by the party against whom enforcement of any change
or termination is sought.

8. Notices required pursuant to this Agreement shall be in writing and
deemed to be property served on receipt thereof if personally delivered, sent
by certified or registered mail (return receipt requested, postage prepaid) or
by overnight courier service which delivers only upon signed receipt of the
addressee: (i) to Landlord at _____________________________, Attention:
____________, with a copy to ______________ or (ii) to Kmart Corporation at
3100 West Big Beaver Road, Troy Michigan 48084, Attention: Vice President-Real
Estate. A copy of any notices hereunder shall be sent to United States Trust
Company of New York, c/o U.S. Trust Company of California, N.A., 555 South
Flower Street, Suite 2700, Los Angeles, California 90071, Attention: Corporate
Trust Division. The parties to receive notice and the addresses for notice may
be changed by the party entitled to notice by giving notice of such change
pursuant to this Section. The date of notice shall be the date of receipt of
notice or the date of attempted delivery of the notice by the overnight courier
service or the U.S. Postal Service to the addressee or its agent.

9. In the event of any dispute between the parties hereto in regard to
the subject matter hereof, the prevailing party shall be entitled to recover
its reasonable costs, including attorney's fees and expenses at all trial and
appellate levels.

10. The Guarantor hereby agrees that any indebtedness of the Tenant now
or hereafter held by the Guarantor is hereby subordinated in right of payment
to the Guaranteed Obligations, and any such indebtedness of the Tenant to the
Guarantor collected or

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<PAGE> 8
received by the Guarantor after a default under the Lease has occurred and is
continuing shall be held in trust for the Trustee and shall be paid over to the
Trustee as payments become due under the Lease to be credited and applied
against the Guaranteed Obligations, in such order as the Loan Agreement
provides, provided, however, if a default by Guarantor pursuant to this
Agreement has occurred and is continuing, any such payments may be credited
and applied against the Guaranteed Obligations in such order as the Trustee
may determine, without in either event in any way affecting, impairing or
limiting the liability of the Guarantor under this Guaranty.

11. This Agreement shall be construed and enforced in accordance with the
laws of the State of New York.

12. Guarantor hereby (i) consents to the jurisdiction of any state or
federal court located within the County of New York, State of New York and
irrevocably agrees that all actions or proceedings relating to this Agreement
may be litigated in such courts, (ii) waives any objection which it may have
based on improper venue or forum non conveniens to the conduct of any
proceeding in any such court, (iii) waives personal service of any and all
process upon it, and consents that all such service or process be made by
registered or certified mail (return receipt requested) or messengered to it
at its address set forth in Section 8 or to its Agent referred to below at such
Agent's address set forth below, and, that service so made shall be deemed to
be completed in accordance with Section 8. Guarantor hereby appoints CT
Corporation System with an office on the date hereof at 1633 Broadway, New
York, New York 10019 as its Agent for the purpose of accepting service of any
process within the State of New York. Upon Landlord's request Guarantor shall
take any action reasonably necessary to confirm such appointment of Agent.
Nothing contained in this Section shall affect the right of Landlord to serve
legal process in any other manner permitted by law, to bring any action or
proceeding in the courts of any jurisdiction against Guarantor, or to enforce a
judgment obtained in the courts of any other jurisdiction.

IN WITNESS WHEREOF, each of the parties has duly executed this Agreement
by a duly authorized person and Guarantor has caused its corporate seal to be
hereunder affixed as of the day and year first above written.

KMART CORPORATION

By
---------------------------
Its
-----------------------

TENANT

By
---------------------------
Its
-----------------------

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<PAGE> 9
Accepted by:

,
-------------------------------
a limited
---------
[partnership] [liability company]

By: ,
--------------------------
[a corporation,]
---------
its [General Partner]
[ ]
-----------------

[By
-------------------------
Its
---------------------]

ACKNOWLEDGEMENT

STATE OF )
---------
) ss.
County of )
--------

The foregoing instrument was acknowledged before me this day of
--
, 199 by , of KMART CORPORATION, a
- ------- - --------------------- ---------------
Michigan corporation, on behalf of the corporation.

------------------------------
Notary Public

My Commission Expires:

- ----------------------

ACKNOWLEDGEMENT

STATE OF )
---------
) ss.
County of )
--------

The foregoing instrument was acknowledged before me this day of
--
, 199 by , , of [TENANT], a
- ------- - --------------------- ---------------
corporation, on behalf of the corporation.

------------------------------
Notary Public

My Commission Expires:

- ----------------------

9
<PAGE> 10
STATE OF )
---------
) ss.
County of )
--------

The foregoing instrument was acknowledged before me this day of
--
, 199 by , [of , a
- ------ - --------------------- -----------------------------
corporation], the [sole general partner] [ ] of
- --------- -------
, a limited [partnership] [liability
- --------------------------- -------------
company], on behalf of the .
---------------------------

------------------------------
Notary Public

My Commission Expires:

- ----------------------

<PAGE> 1
EXHIBIT 4.14

NOTE PUT AGREEMENT

THIS NOTE PUT AGREEMENT ("Agreement") is made as of the ___ day of
_______, 19__, by and [among] [between] KMART CORPORATION [("Kmart")]
[Tenant], a Michigan corporation, [__________________ ("Tenant"), a _______
corporation,] and NATIONAL TENANT FINANCE CORPORATION ("Lender"), a Delaware
corporation, each of which confirms and agrees as follows:

SECTION 1: RECITALS

1.1 Loan. Pursuant to the Loan Agreement ("Loan Agreement") dated as
of even date herewith, between Lender and _________ _________("Borrower"), a
___________ limited [partnership] [liability company], Lender has agreed to
make Borrower the Loan, to be evidenced by the Note[s]. The proceeds of the
Loan will be used pursuant to the Loan Agreement to finance the acquisition,
construction or development of the Demised Premises. As a material inducement
to Lender to make the Loan, Tenant, as the Tenant of the Demised Premises
pursuant to the Lease, [and Kmart, as the Guarantor of the Lease pursuant to the
Lease Guaranty Agreement, have each] [has] agreed to enter into this Agreement.

1.2 Terms; Governing Document. All capitalized terms used herein,
unless otherwise expressly provided, shall have the meaning set forth in the
Loan Agreement. In the event of any conflict between the terms and provisions
of this Agreement and the Loan Agreement, the terms and conditions of this
Agreement shall govern and prevail.

SECTION 2: PURCHASE OF NOTE

2.1 Certain Additional Definitions. For purposes of this Section 2,
the following terms shall have the following meanings:

"Business Day" means any day other than (i) Saturday or Sunday,
or (ii) a day on which banks in New York are required by law to be closed or
are customarily closed.

"Called Principal" means the unpaid principal balance of the
Note[s] to be paid as part of the Purchase Price upon exercise of the Put.

"Certificate Balance" shall have the meaning assigned to it in
the [Collateral] Trust Agreement.

"Certificates" shall have the meaning assigned to it in Section
3.2.

"[Collateral Trust Agreement" shall have the meaning assigned
to it in the Loan Agreement.]

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<PAGE> 2
"Completion Date" means the second anniversary of the date of
the Note or Notes with respect to which the Put is exercised.

"Completion of Construction" shall have the meaning assigned to
it in Section 8.1 of the Loan Agreement.

"Consent and Agreement" means the Consent and Agreement dated as
of even date herewith among [Kmart,] Lender, Borrower, Tenant and Trustee
relating to the Lease, [Lease Guaranty,] this Agreement and certain other
related matters.

"Demised Premises" shall have the meaning assigned to it in the
Lease pursuant to which the Tenant is a Tenant.

"Discounted Prepayment Value" means, with respect to any amount
of Called Principal, the amount obtained by (i) discounting all Remaining
Scheduled Payments with respect to such Called Principal from their respective
scheduled due dates to the Purchase Date with respect to such Called Principal,
in accordance with generally accepted financial practice and at a discount
factor (applied on a semiannual basis) equal to the Reinvestment Yield and (ii)
adding together such discounted Remaining Scheduled Payments.

"Facility" means the Demised Premises.

"Failure of Completion" means Completion of Construction of the
Facility does not occur on or before the Completion Date.

["Indemnity Agreement" means the Indemnity Agreement dated as of
even date herewith by and between Kmart and Lender, executed by Kmart to induce
Lender to accept the Lease Guaranty in the form offered by Kmart.]

["Investment Grade Status" shall have the meaning assigned to it
in the Lease Guaranty.]

["Kmart Purchase Date" means the Business Day first occurring
fifteen (15) Business Days after Lender or the Trustee gives the Tenant
Default Notice to Kmart and Tenant.]

"Lease" means the Lease executed by Tenant described in Exhibit
1.1C to the Loan Agreement.

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<PAGE> 3
["Lease Guaranty" means that certain Lease Guaranty Agreement,
described in Exhibit 1.1C to the Loan Agreement, executed by Kmart which
guarantees the payment and performance of the Tenant under the Lease.]

["Lease Guaranty Termination" means the occurrence of a
Termination Event pursuant to the terms of the Lease Guaranty with respect to
which a Termination Notice is given by Kmart or Tenant pursuant to Section
5(b) of the Lease Guaranty. ]

"Lease[/Lease Guaranty] Default" means: [(i)] with respect to
the Lease [and Lease Guaranty] described in Exhibit 1.1C to the Loan Agreement,
the failure of (x) the Tenant under the Lease to pay when due any Annual Rental
or Additional Rent as defined in the Lease due under such Lease for a period of
[ten (10)] [thirty (30)] days after notice to the Tenant of such default [and
(y) Kmart to pay any such Annual Rental or Additional Rent pursuant to the
terms of an existing related Lease Guaranty, if any, within thirty (30) days
after notice to Kmart of the Tenant's initial failure to do so; provided that,
the notices required pursuant to clause (x) and clause (y) may be given
concurrently, and,] provided [further] that, no notice referred to in the
foregoing clause [(x) or clause (y)] shall be required in the event that
Landlord or Trustee shall be stayed or prohibited by operation of law or
otherwise from the giving of such notice[, and, (ii) with respect to the
Indemnity Agreement, the occurrence of an Event of Default (as defined therein)
which continues beyond the expiration of any applicable cure period].

"Lender" means National Tenant Finance Corporation, a Delaware
corporation, and any of its successors and assigns.

"Make-Whole Premium" means, with respect to any amount of Called
Principal, an amount equal to the positive excess, if any, as of
the Purchase Date of the Discounted Prepayment Value of the Called Principal
over such Called Principal.

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<PAGE> 4

"Maturity Date" means ___________, 20__ , for Note Number ,
and , 20 , for Note Number .

"Note" or "Notes" means the Note or Notes issued pursuant to the
Loan Agreement and designated as Note Number _______ [and Note Number _______]
and any replacement therefor pursuant to the Loan Agreement.

"Pass-Through Trustees" shall have the meaning assigned to it in
the Loan Agreement.

"Purchase Date" means Tenant Purchase Date [or Kmart Purchase
Date, as applicable].

"Purchase Price" means [with respect to any Note] the sum of the
unpaid principal balance of [the] [such] Note, accrued interest thereon to the
relevant Purchase Date plus [(i) if the Triggering Event is a Lease [/Lease
Guaranty] Default or a Failure of Completion,] the Make-Whole Premium [ ,or,
(ii) if the Triggering Event is a Lease Guaranty Termination, the lesser of
the Termination Premium or the Make-Whole Premium]. In the event the
unpaid principal balance of the Note or Notes, accrued interest thereon
to the applicable Purchase Date or Make-Whole Premium are released, discharged,
impaired or modified in the manner contemplated by Section 3.2(vii), the
Purchase Price shall be calculated without giving effect to any such release,
discharge, impairment or modification.

"Purchaser shall have the meaning assigned to it in Section
2.2(d).

"Put" means exercise of the right of Lender or the Trustee to
require the Tenant to purchase the Note or Notes pursuant to Section 2.2 of
this Agreement [,and, in the event of the Tenant's failure to do so, to require
Kmart to purchase the Note or Notes pursuant to Section 2.2 of this Agreement].

"Put Notice" means the notice given by the Lender or the
Trustee pursuant to Section 2.2(c) of its election to exercise the Put.

"Reinvestment Yield" means with respect to the Called Principal,
the sum of (x) the yield to maturity implied by the following: (i) the yields
reported as of 10:00 a.m. (New York City time) on the third Business Day
preceding the Purchase Date with respect to such Called Principal, on the
display designated as "Page 678" on the Telerate Service (or such other display
as may replace Page 678 on the Telerate Service) for actively traded U.S.
Treasury securities having a maturity equal (as near as practicable) to the
Remaining Average Life of the Called Principal being paid or prepaid as of such
Purchase Date, or (ii) if such yields shall not be reported as of such time or
the yields reported as of such time shall not be ascertainable, the Treasury
Constant Maturity Series yields reported, for the latest day for which such
yields shall have been so reported as of the third Business Day preceding the
Purchase Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor publication) for
actively traded U.S. Treasury securities having a constant maturity equal (as
near as practicable) to the Remaining Average Life of the Called Principal
being paid or prepaid as of such Purchase Date, and (y) fifty (50) basis
points. Such implied yield shall be determined, if necessary, by (a)
converting U.S. Treasury bill quotations to bond-equivalent yields in
accordance with accepted financial practice and (b) interpolating linearly
between reported yields.

"Remaining Average Life" means, with respect to Called Principal
of [the] [a] Note, the number of years (calculated

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<PAGE> 5
to the nearest one-twelfth year) obtained by dividing (i) such Called Principal
into (ii) the sum of the products obtained by multiplying (a) each Remaining
Scheduled Payment of such Called Principal (but not of the interest thereon) by
(b) the number of years (calculated to the nearest one-twelfth year) which will
elapse between the Purchase Date with respect to such Called Principal and the
scheduled due date of such Remaining Scheduled Payment.

"Remaining Scheduled Payments" means, with respect to Called
Principal, all payments of such Called Principal and interest thereon that
would be due on or after the Purchase Date with respect to such Called
Principal if no payment of such Called Principal were made prior to the
[applicable] Maturity Date.

["Tenant Default Notice" means the notice given by Lender or the
trustee to Kmart and Tenant in the event Tenant fails to purchase the Note on
the teanant Purchase Date.]

"Termination Notice" shall have the meaning assigned in Section
5(b) of the Lease Guaranty.

"Tenant Purchase Date" means the Business Day first occurring
fifteen (15) Business Days after Lender or the Trustee gives the Put Notice to
[Kmart and] Tenant.

["Termination Premium" means the Amount equal to (i) the
product of the unpaid principal balance of the Note or Notes multiplied by the
following factors: (v) prior to the first anniversary of the date of the Note
or Notes __, (w) on or after the first anniversary of the Note of the Note
or Notes but before the second anniversary thereof __, (x) on or after the
second anniverary of the date of the Note or Notes but before the third
anniversary thereof __, (y) on or after the third anniversary of the date of
the Note or Notes but before the fourth anniversary thereof __, or, (z) on or
after the fourth anniversary of the date of the Note or Notes but before the
[respective] Maturity Date[s] __; less (ii) the unpaid principal balance of the
Note or Notes.]

"Triggering Event" means (i) a Lease [/Lease Guaranty] Default,
[or] (ii) a Failure of Completion [, or (iii) a Lease Guaranty Termination].

["Trust Agreement" shall have the meaning assigned to it in the
Loan Agreement.]

"Trustee" shall have the meaning assigned in Section 3.2.

2.2 Purchase of Note Following a Triggering Event.

(a) If a Triggering Event occurs, Trustee will have the right
to require Tenant to purchase the Note or Notes in whole but not in part on
the Tenant Purchase Date at the Purchase Price [and, in the event of the
Tenant's failure to do so, the right to require Kmart to purchase the Note or
Notes in whole but not in part on the Kmart Purchase Date at the Purchase
Price].

(b) If a Triggering Event occurs without a purchase of the Note
or Notes pursuant to Section 2.2(a), and subsequent to such Triggering Event
another Triggering Event occurs, Lender will again have the rights, and Tenant
[and Kmart] again will have the obligations, set forth in this Section 2.2.
[Kmart's and] Tenant's obligations shall continue pursuant to this Agreement so
long as the Note or Notes remain[s] outstanding.

(c) In the event Trustee elects to exercise the Put, Lender or
Trustee shall do so by causing a notice to be mailed to Kmart and Tenant ("Put
Notice"), which Put Notice shall state (i) the occurrence of a Triggering
Event, (ii) the Tenant Purchase Date, (iii) the estimated Purchase Price, (iv)
the manner in which the Purchase Price has been determined, and (v) that Lender
elects to have Tenant purchase the Note or Notes on the Tenant Purchase Date
[or, in the event of Tenant's failure to do so, to have Kmart purchase the Note
on the Kmart Purchase Date.] Upon receipt of the Put Notice, Tenant shall
purchase the Note or Notes in accordance

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<PAGE> 6
with the provisions of this Agreement on the Tenant Purchase Date [and, in the
event the Tenant fails to purchase the Note or Notes as required by this
Agreement, upon receipt of the Tenant Default Notice Kmart shall purchase the
Note or Notes on the Kmart Purchase Date in accordance with the provisions of
this Agreement.] Tenant [or Kmart] shall not be excused from any obligation
either may have under this Agreement by reason of any notice required hereunder
not being timely given or being defective, provided, however, [Kmart's and]
Tenant's time for performance shall be extended by a period equal to any
period of delay in receiving such notice or caused by the correction of such
notice, if defective.

(d) In connection with the purchase of the Note or Notes
pursuant to this Section 2.2, (i) Lender or [the Series A Pass-Through Trustee
or the Series B Pass-Through] Trustee, as appropriate, shall, on or before the
Tenant Purchase Date, duly endorse the Note or Notes in blank without recourse
or assign the Note or Notes in blank without recourse and assign in blank
without recourse all right, title and interest of Lender under the Loan
Documents; and (ii) Tenant shall on or before 2:00 p.m. (New York City time)
on the Tenant Purchase Date, [or, in the event of Tenant's failure to do so,
Kmart shall, on or before 2:00 p.m. (New York City time) on the Kmart Purchase
Date,] pay the Purchase Price to Trustee, by wire transfer of immediately
available funds in lawful currency of the United States of America at
___________, ABA #__________ for credit to Account Number __________ (Mortgage
Pass-Through Certificates (___________________________) Series ____). The
Trustee shall hold the Note or Notes until payment in full of the Purchase
Price to the Trustee and shall then and thereupon surrender the Note or Notes,
the Loan Documents and the assignments thereof to [whichever of] Tenant [or
Kmart is the purchaser] ("Purchaser") and has paid such Purchase Price. In
addition, Trustee [and the Pass-Through Trustees] shall execute and deliver to
the Tenant, on or before the Tenant Purchase Date, [or to Kmart, if Kmart is the
Purchaser, on or before the Kmart Purchase Date], such other documents as may be
reasonably required by the Purchaser and/or the Title Company in order to
permit the Title Company to ensure valid transfer of the interest of the
Trustee [and the Pass-Through Trustees] in the Note and/or the Loan Documents
to the Purchaser as required herein.

SECTION 3. SUCCESSORS AND ASSIGNS

3.1 General. This Agreement shall be binding upon [Kmart,] Tenant
and [their] [its] respective successors and assigns; provided that [Kmart and]
Tenant shall not delegate any of [their] [its] respective obligations hereunder
without the prior written consent of Trustee; and, provided further that, no
delegation of any of such obligations hereunder shall relieve [Kmart or] Tenant
thereof, and the party so delegating such obligation shall remain primarily and
originally liable thereon. Each successive holder or holders of the Note[s]
shall have all rights and privileges of [the Pass-Through] Trustee[s] hereunder.

3.2 Consent to Assignment. [Kmart and] Tenant [each] hereby
acknowledges and consents to the sale, conveyance, transfer

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<PAGE> 7
and absolute assignment by Lender of all of its right, title and
interest under this Agreement, [in the Note or Notes] and any and all
Loan Documents to _________________________________ ("Trustee") as Trustee,
pursuant to the [Collateral] Trust Agreement [with respect to this Agreement
and the other Loan Documents] under which the Trustee holds the foregoing for
the benefit of the Pass-through Trustees (as defined below) as holders of the
Notes. [Kmart and] Tenant [each] hereby acknowledges and consents to the sale,
conveyance, transfer and absolute assignment by Lender of all of its right,
title and interest in the Notes to the Pass-Through Trustees pursuant to the
Series A Pass-Through Trust Agreement [and the Series B Pass-Through Trust
Agreement] under which the Mortgage Pass-Through Certificates
(___________________________________________) Series ____ [and Series ___]
("Certificates") will be issued. Upon such sale, conveyance, transfer and
absolute assignment to Trustee [and to the Pass-through Trustees], Trustee
shall be deemed to be Lender hereunder and shall succeed to all rights and
obligations of Lender hereunder. Trustee shall have the sole right to exercise
all rights, privileges and remedies (either in its own name[,] or in the name
of the Lender for the use and benefit of Trustee [or in the name of or for and
on behalf of the Pass-Through Trustees for the use and benefit of such
Pass-Through Trustees.]) which by the terms of this Agreement or by applicable
law are permitted or provided to be exercised by the Lender. [Kmart and] Tenant
[each] further acknowledges and agrees that each successive holder or holders of
the Note or Notes, including but not limited to Lender, accepts transfer of the
Note or Notes in reliance upon [Kmart's and] Tenant's representations,
warranties, covenants, agreements and other obligations hereunder. In order to
further induce any such successive holder or holders of the Note or Notes,
including but not limited to, Lender, to accept such assignment and its
obligations under this Agreement, [Kmart and] Tenant [each] hereby makes the
following representations, warranties, covenants and agreements:

(i) [neither Kmart nor] Tenant has [no] [any] right, including
any claim, counterclaim, right of setoff or deduction or other defense of any
kind (including but not limited to any defenses available to a surety or
guarantor) to withhold performance of its obligations hereunder (collectively,
"Put Defenses"),

(ii) in the event [Kmart or] Tenant becomes aware of any Put
Defenses, [Kmart and] Tenant [each] hereby waives and agrees not to assert the
same against the Trustee, [the Pass-Through Trustees] or any other holder of
the Note[s], provided that nothing herein shall (i) prevent Tenant or Kmart
from asserting, as a Put Defense, that a Triggering event has not occurred, or
that a Trustee has failed to comply with the requirements hereof or of a Trust
Agreement in connection with the exercise of its right hereunder, or that a
Trustee has otherwise violated the provisions hereof or of a Trust Agreement to
the extent such violation constitutes a Put Defense, or (ii) prevent Tenant or
Kmart from contesting a Trustee's computation of the Purchase Price;

(iii) upon consummation of the sale, conveyance, transfer and
absolute assignment to Trustee [and to the Pass-Through Trustees], [Kmart and]
Tenant [each] waives any right to challenge the status of [the Pass-Through]
Trustee[s] as [a] bonafide purchaser[s] of the Note[s] for value and holder[s]
in due course [or to challenge the status of Trustee as holder of the
Collateral (as defined in the Collateral Trust Agreement), including this
Agreement, in trust for the benefit of the Pass-Through Trustees as holders of
the Notes];

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<PAGE> 8
(iv) the Trustee[, the Pass-Through Trustees] and each holder of
the Note or Notes are and shall be third-party beneficiaries of this Agreement;

(v) upon consummation of the sale, conveyance, transfer and
absolute assignment to Trustee [and the Pass-Through Trustees], Trustee and its
successors and assigns shall be deemed to be the Lender hereunder, and shall
succeed to all rights of Lender hereunder;

(vi) [Kmart and] Tenant [each] hereby acknowledges and agrees
that any and all rights hereunder granted to Trustee may be exercised and
enforced by Trustee, including pursuant to legal process (and that any such
exercise and enforcement by Trustee shall have the same force and effect as
the exercise and enforcement by Lender); and

(vii) no release or discharge of Borrower from any liability of
Borrower pursuant to [the] [a] Note, nor any impairment or modification of any
such liability, in any bankruptcy or insolvency proceeding filed by or against
Borrower nor the waiver by Lender of or the existence of any default by
Borrower under any of the Loan Documents shall diminish or excuse [Kmart or]
Tenant's obligation to pay the Purchase Price pursuant to this Agreement with
respect to an exercise of the Put.

SECTION 4. [KMART'S] [TENANT'S] REPRESENTATIONS AND WARRANTIES.

4.1 [Kmart's] [Tenant's] Representations and Warranties. [Kmart]
[Tenant] represents and warrants that (i) it is a corporation duly organized,
validly existing and in good standing under the laws of the State of Michigan
and is duly qualified and in good standing as a foreign corporation authorized
to do business in the state in which the Demised Premises are located, (ii) it
has full power, authority and legal right to execute and deliver, and to
perform and observe the provisions of the [Lease Guaranty,] [the Indemnity
Agreement,] the Consent and Agreement, this Agreement and any other document
relating to the Loan or the Lease executed by [Kmart] [Tenant], (iii) there has
been no material adverse change in the business or condition, financial or
otherwise, of [Kmart] [Tenant] since the date of [Kmart's] [Tenant's] last
audited financial report, (iv) there are no actions, proceedings or
investigations pending or threatened against or affecting [Kmart] [Tenant] (or
any basis therefor known to [Kmart] [Tenant] before any court, arbitrator,
administrative agency or other governmental authority, which if adversely
decided would materially and adversely affect the financial condition or
operations of [Kmart] [Tenant], or its ability to carry out any of the terms,
covenants and conditions of the Lease, [the Lease Guaranty, the Indemnity
Agreement], the Consent and Agreement, this Agreement or any other document
relating to the Loan or the Lease (executed by [Kmart or] Tenant), (v) the
execution and delivery by [Kmart] [Tenant] of the Lease [Guaranty,] the Consent
and Agreement, this Agreement, or any of the other documents relating to the
Loan or the Lease (executed by [Kmart or] Tenant) have been duly authorized by
all necessary corporate action and each is enforceable in accordance with its
terms, (vi) neither the execution and delivery of the Lease

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<PAGE> 9
[Guaranty], the Consent and Agreement, this Agreement or any other
document relating to the Loan or the Lease (executed by [Kmart or] Tenant), nor
compliance with the terms and provisions thereof, conflicts or will conflict
with or result in a breach of any of the terms, conditions or provisions of the
Articles of Incorporation or Bylaws of [Kmart] [Tenant], or of any law,
rule, regulation, order, writ, injunction, judgment or decree of any court,
arbitration or administering agency or governmental authority, or of any
agreement or other instrument to which [Kmart] [Tenant] is a party or by which
it or its assets is bound or subject, or constitutes or will constitute a
default thereunder, and (vii) [Kmart] [Tenant] is not in default under any
judgment, order, decree, rule or regulation of any court, arbitrator,
administrative agency or other governmental authority to which it may be
subject.

4.2 [Tenant's Representations and Warranties. The Tenant
represents and warrants that (i) it is a corporation duly organized, validly
existing and in good standing under the laws of the State of ____________ and
is duly qualified and in good standing as a foreign corporation authorized to
do business in the state in which the Demised Premises are located, (ii) it has
full power, authority and legal right to execute and deliver, and to perform
and observe the provisions of the Lease, the Consent and Agreement, this
Agreement or any other document relating to the Loan or the Lease (executed by
Tenant) (iii) there has been no material adverse change in the business or
condition, financial or otherwise, of the Tenant since the date of Tenant's
last audited financial report, (iv) there are no actions, proceedings or
investigations pending or threatened against or affecting the Tenant (or any
basis therefor actually known to the Tenant) before any court, arbitrator,
administrative agency or other governmental authority, which if adversely
decided would materially and adversely affect the financial condition or
operations of the Tenant, or its ability to carry out any of the terms,
covenants and conditions of the Lease, the Consent and Agreement, this
Agreement or any other document relating to the Loan or the Lease (executed by
Tenant), (v) the execution and delivery by the Tenant of the Lease, the
Consent and Agreement, this Agreement or any other document relating to the
Loan or the Lease (executed by Tenant) have been duly authorized by all
necessary corporate action and each is enforceable in accordance with its
terms, (vi) neither the execution and delivery of the Lease, the Consent and
Agreement, this Agreement or any other document relating to the Loan or the
Lease (executed by Tenant) nor compliance with the terms and provisions
thereof, conflicts or will conflict with or result in a breach of any of the
terms, conditions or provisions of the Certificate of Incorporation or By-Laws
of the Tenant, or of any law, order, writ, injunction or decree of any court
or governmental authority, or of any agreement or other instrument to which the
Tenant is a party or by which it is bound, or constitutes or will constitute a
default thereunder, and (vii) the Tenant is not in default under any
judgment, order, decree, rule or regulation of any court, arbitrator,
administrative agency or other governmental authority to which it may be
subject.] [Intentionally Omitted.]

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<PAGE> 10
SECTION 5. GENERAL

5.1 Counterparts. This Agreement may be executed in counterparts by
the parties but all such counterparts together shall constitute one and the
same document.

5.2 Notices. All notices, requests, demands or other communications
pursuant to this Agreement shall be in writing and shall be deemed to be
properly served on receipt thereof if personally delivered, sent by certified
or registered mail (postage prepaid, return receipt requested) addressed, in
the case of [Kmart] [Tenant], to Kmart, 3100 West Big Beaver Road, Troy,
Michigan 48084-3163, Attention: Senior Vice President, Real Estate Department;
[in the case of Tenant, to Tenant, _____________________________,
Attention:______________;] in the case of Lender, to National Tenant Finance
Corporation, 40 N. Central Avenue, Suite 2700, Phoenix, Arizona 85004
Attention: Norman C. Storey; in the case of Trustee, which shall receive
copies of all communications hereunder, to United States Trust Company of New
York, c/o U.S. Trust Company of California, N.A., Suite 2700, 555 South Flower
Street, Los Angeles, California 90071, Attention: Corporate Trust Division; or
to such other address as any party may designate in writing. The date of
notice shall be the date of receipt of notice or the date of attempted delivery
of the notice by the overnight courier service or the U.S. Postal Service to
the addressee or its agent at the address specified.

5.3 Section Headings. Section headings are not to be considered a
part of this Agreement and are included solely for convenience of reference and
are not intended to be full or accurate descriptions of the contents thereof.

5.4 Applicable Law. This Agreement shall be construed and enforced
under the laws of the State of New York without giving effect to the choice of
law principles thereof.

5.5 Severability. Should any provision of this Agreement for any
reason be declared unenforceable by a court of competent jurisdiction
(sustained on appeal, if any), such unenforceability shall not affect the
enforceability of any other provision hereof or thereof, all of which shall
remain in force and effect as if this Agreement had been executed with the
unenforceable provisions thereof eliminated and it is hereby declared the
intention of the parties hereto that they would have executed the remaining
provision of this Agreement without including therein any such part, parts or
portion which may for any reason be hereafter declared unenforceable, provided
that, if any provision of this Agreement shall be unenforceable by reason of a
final judgment of a court of competent jurisdiction based on a court's ruling
(sustained on appeal, if any) that such provision is unenforceable because of
the excessive degree of magnitude of the obligation imposed thereby on any
party, that unenforceable obligation shall be reduced in magnitude or degree by
the minimum degree or magnitude necessary in order to permit the provision to
be enforceable by Lender. In the event the provisions of the immediately
preceding sentence apply, the parties shall make

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<PAGE> 11
appropriate adjustment to the provisions of this Agreement to give effect to
the benefits intended to be conferred upon the parties hereby.

5.6 Waiver. No delay or omission by Lender or Trustee in exercising
any right hereunder shall impair any right of such party under this Agreement
or be construed as such party's waiver of or acquiescence in any breach. No
such delay or omission by a party shall be construed as a variation or waiver
of any of the terms, conditions or provisions of this Agreement. No purported
waiver of any right of a party hereunder shall be effective unless it is
written and signed by an authorized representative of a such party. No waiver
by a party of any breach shall constitute a waiver of any other prior or
subsequent breach or of the same breach after notice to a party demanding
strict performance. A party shall not be estopped to take or from taking any
action with respect to any breach because of any delay by a party in giving
notice of such breach or exercising any remedy based thereon.

5.7 Submission to Jurisdiction. Lender, Trustee, [Kmart] and Tenant
each hereby consents to the jurisdiction of any state or federal court located
within the County of New York, State of New York and irrevocably agrees that
all actions or proceedings relating to this Agreement may be litigated in such
courts and [Kmart and] Tenant each waives any objection which it may have based
on improper venue or forum nonconveniens to the conduct of any proceeding in
any such court, waives personal service of any and all process upon it, and
consents that all such service or process be made by registered or certified
mail (return receipt requested) or messengered to it at its address set forth
in Section 5.2 or to its Agent referred to below at such Agent's address set
forth below, and, that service so made shall be deemed to be completed in
accordance with Section 5.2. [Kmart and] Tenant [each] hereby appoints CT
Corporation System, Inc. with an office on the date hereof at
_____________________________ as its Agent for the purpose of accepting service
of any process within the State of New York. Upon Lender's or Trustee's
request [Kmart and] Tenant shall each take any action reasonably necessary to
confirm such appointment of Agent. Nothing contained in this Section shall
affect the right of Lender to serve legal process in any other manner permitted
by law, to bring any action or proceeding in the courts of any jurisdiction
against Kmart, or to enforce a judgment obtained in the courts of any other
jurisdiction.

5.8 Amendments. This Agreement may be amended or modified only
with the written consent of all parties hereto or, if applicable, their
successors and assigns.

5.9 Expenses. [Kmart and] Tenant shall pay or cause to be paid and
save the Lender and Trustee harmless against liability for the payment of
reasonable out-of-pocket expenses, including counsel fees and disbursements,
incurred or paid by the Lender or Trustee in connection with (i) any
amendments, waivers or consents pursuant

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<PAGE> 12
to the provisions hereof and thereof; or (ii) the enforcement of this
Agreement.

5.10 Further Assurances. Lender, in favor of Tenant [or Kmart],
shall, after the execution of this Agreement, at the request of Tenant [or
Kmart], execute, acknowledge and deliver such other documents or instruments and
take any other or further acts as may be reasonably required to evidence or
confirm the transaction contemplated hereby or as may otherwise be necessary to
carry out or to fulfill Lender's covenants and obligations hereunder.

IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date first above set forth.

[KMART CORPORATION,
a Michigan corporation

By:
--------------------------------

Its:
---------------------------

(KMART)]

------------------------------------,
a corporation
------------------

By:
--------------------------------
Its:
---------------------------,

(TENANT)

NATIONAL TENANT FINANCE CORPORATION,
a Delaware corporation

By:
-------------------------------
Its:
--------------------------,

(LENDER)

<PAGE> 1
EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Amendment No. 2 to the Registration Statement on
Form S-3 of our report dated March 15, 1994, which appears on Annex V page
V-21 of Kmart Corporation's definitive Proxy Statement dated April 28, 1994,
which is incorporated by reference in Kmart Corporation's Annual Report on Form
10-K for the year ended January 26, 1994. We also consent to the incorporation
by reference of our report on the Financial Statement Schedules, which appears
on page 11 of such Annual Report on Form 10-K. We also consent to the
reference to us under the heading "Experts" in such Prospectus.

/s/ PRICE WATERHOUSE
Price Waterhouse

Detroit, Michigan 48243

August 10, 1994