KMART CORP, S-3, 1994-11-15

KMART CORP
S-3, 1994-11-15
VARIETY STORES

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<PAGE> 1

As filed with the Securities and Exchange Commission on November 14, 1994
Registration No.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

KMART CORPORATION
(Exact Name of Registrant as Specified in its Charter)

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

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 Robert E. Buckholz, Jr.
Dickinson, Wright, Moon, Arthur S. Adler
Van Dusen & Freeman Sullivan & Cromwell
500 Woodward Avenue, Suite 4000 125 Broad Street
Detroit, Michigan 48226 New York, New York 10004

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

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. / /

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
PROPOSED
MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH SERIES OF AMOUNT BEING OFFERING PRICE AGGREGATE OFFERING REGISTRATION
SECURITIES BEING REGISTERED REGISTERED PER SHARE PRICE FEE
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pass Through Certificates............... $180,000,000 100% $180,000,000 $62,068.97
Aggregate
Principal
Amount
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
</TABLE>

The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2

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 BE 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 NOVEMBER 14, 1994

$180,000,000

KMART CORPORATION
PASS THROUGH TRUSTS
PASS THROUGH CERTIFICATES 1994-K-1
PASS THROUGH CERTIFICATES 1994-K-2
---------------------

Each Certificate offered hereby will evidence an undivided interest in one
of two separate Kmart Pass Through Trusts to be formed pursuant to separate
trust agreements between Kmart and , as trustee of Pass Through
Trust 1994-K-1, and , as trustee of Pass Through Trust 1994-K-2.
The Trust Property of each Pass Through Trust will consist of Mortgage Notes
issued as non-recourse obligations of the Owner Trust (as defined herein), to
finance the Sale-Leaseback Transactions described herein. Each Mortgage Note
will be secured by (i) an assignment of certain of the Owner Trust's rights as
lessor under the Leases described herein, including the right to receive rentals
and certain other payments from Kmart, and (ii) a first mortgage on the Property
acquired by the Owner Trust and leased to Kmart, subject to the rights of Kmart
under the related Lease, as described more fully herein. See "Description of the
Mortgage Notes". Each Certificate will evidence a fractional undivided interest
in the related Pass Through Trust and will have no rights, benefits or interest
in respect of the other Pass Through Trust or the Trust Property held in the
other Pass Through Trust.

The Mortgage Notes issued in respect of each Property will be issued in two
series by the Owner Trust. Each Pass Through Trust will purchase Mortgage Notes
having the same maturity date and having an interest rate corresponding to the
interest rate on the Certificates evidencing interests in such Pass Through
Trust. The maturity date of the Mortgage Notes acquired by each Pass Through
Trust will correspond to the final scheduled distribution date for the
Certificates evidencing interests in such Pass Through Trust.
(Cover page continued on following page.)
---------------------

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.
---------------------

<TABLE>
<CAPTION>
INITIAL SCHEDULED FINAL SCHEDULED INITIAL PUBLIC
PASS THROUGH PRINCIPAL INTEREST PRINCIPAL PRINCIPAL OFFERING
TRUST AMOUNT RATE DISTRIBUTION DATE DISTRIBUTION DATE PRICE(1)(2)
- ----------------------------- ------------ -------- ----------------- ----------------- --------------
<S> <C> <C> <C> <C> <C>
1994-K-1..................... $ % 100%
1994-K-2..................... 100
------------ -------- -----
Total................... $180,000,000 100%
</TABLE>

- ---------------
(1) Plus accrued interest, if any, at the applicable rate from December ,
1994.

(2) The underwriting commission varies by Pass Through Trust and aggregates
$ , which constitutes 0. % of the initial principal amount of the
Certificates. The underwriting commission and certain other expenses
relating to the offering, estimated at $ , will be paid by the Owner
Trust (other than certain expenses to be paid directly by Kmart). All of the
proceeds from the sale of the Certificates will be used to purchase the
Mortgage Notes from the Owner Trust. Kmart has agreed to indemnify Goldman,
Sachs & Co. against certain liabilities, including liabilities under the
Securities Act of 1933.
---------------------

The Certificates are offered by Goldman, Sachs & Co., as specified herein,
subject to receipt and acceptance by them and subject to their right to reject
any order in whole or in part. It is expected that certificates will be ready
for delivery in book-entry form only through the facilities of The Depository
Trust Company on or about December , 1994, against payment therefor in
immediately available funds.

GOLDMAN, SACHS & CO.
---------------------

The date of this Prospectus is December , 1994.
<PAGE> 3

(Cover page continued)

Neither the Certificates nor the Mortgage Notes are direct obligations of
or guaranteed by Kmart (except to the extent that it may assume the obligations
of the Owner Trust under any of the Mortgage Notes). The amounts unconditionally
payable by Kmart under the Leases, however, will be sufficient to pay in full,
when due, all payments required to be made on the Mortgage Notes held in each
Pass Through Trust, except upon certain optional redemptions by the Owner Trust.

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
[SEMIANNUAL INTEREST PAYMENT DATE] and [SEMIANNUAL INTEREST PAYMENT DATE] of
each year, commencing [FIRST INTEREST PAYMENT DATE], 1995, at the rate per annum
set forth on the cover page hereof for such Pass Through Trust until the final
distribution date for such Pass Through Trust. Scheduled payments of principal
on the Mortgage Notes held in each Pass Through Trust will be passed through to
the Certificateholders of such Pass Through Trust in the amounts and on the
dates described herein, commencing on the date specified on the cover page
hereof, unless such Mortgage Notes are earlier redeemed, until the final
distribution date for such Pass Through Trust. Any such redemption will be at a
redemption price equal to the unpaid principal amount thereof or the portion
thereof to be redeemed, plus accrued interest thereon and, in certain
circumstances, the Make-Whole Premium, if any. Because the Mortgage Notes are
subject to optional redemption under certain circumstances, the final
distribution date for the Certificates evidencing interests in a Pass Through
Trust may occur significantly earlier than the applicable date specified below.
See "Description of the Mortgage Notes -- Redemption".

The Certificates will be represented by global certificates registered in
the name of The Depository Trust Company's nominee. Interests in the global
certificates will be shown in and transfers thereof will be effected only
through records maintained by The Depository Trust Company and its participants.
Except as provided herein, Certificates in definitive form will not be issued.
The Certificates will trade in The Depository Trust Company's Same-Day Funds
Settlement System until maturity, and secondary market activity for the
Certificates will therefore settle in immediately available funds. See
"Description of the Certificates".

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<PAGE> 4

AVAILABLE INFORMATION

Kmart Corporation ("Kmart" or the "Company") is subject to the
informational requirements of the Securities Exchange Act of 1934 (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 Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, IL
60661 and 7 World Trade Center, 13th Floor, New York, NY 10048. Copies of such
material can be obtained from the Public Reference Section of the Commission,
450 Fifth Street, N.W., Washington D.C. 20549, 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. Reports, proxy statements and other
information can be inspected and copied at the New York Stock Exchange, 20 Broad
Street, New York, NY 10005 and the Pacific Stock Exchange, 301 Pine Street, San
Francisco, CA 94104.

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. For further information, reference is hereby made to the
Registration Statement. 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 BY THE TRUSTEE

Unless and until Definitive Certificates are issued, , as trustee
of Pass Through Trust 1994-K-1, and , as trustee of Pass Through Trust
1994-K-2, will send to Cede & Co., the nominee of The Depository Trust Company,
as registered holder of the Certificates, certain periodic statements concerning
distributions made with respect to the Pass Through Trusts. See "Description of
the Certificates -- Book-Entry Registration" and "-- Reports to
Certificateholders".
---------------------------

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed with the Commission (File No. 1-00327)
pursuant to the Exchange Act are incorporated herein by reference:

1. The Company's Annual Report on Form 10-K for the fiscal year ended
January 26, 1994;

2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
April 27, 1994 and July 27, 1994;

3. The Company's Current Reports on Form 8-K filed June 8, 1994 and August
19, 1994; and

4. All other documents filed by the Company pursuant to Section 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 this Prospectus, or
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

3
<PAGE> 5

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 documents) of any or all documents
incorporated by reference in this Prospectus. Requests for such copies should be
addressed to the Corporate Reporting Department, Kmart Corporation, 3100 West
Big Beaver Road, Troy, MI 48084 (telephone no. (810) 643-1093).
---------------------------

IN CONNECTION WITH THIS OFFERING, GOLDMAN, SACHS & CO. MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
CERTIFICATES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL
IN THE OPEN MARKET. SUCH STABILIZING MAY BE EFFECTED IN THE OPEN MARKET OR
OTHERWISE, AND IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

4
<PAGE> 6

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by reference to the more
detailed information contained elsewhere in, or incorporated by reference in,
this Prospectus. Certain capitalized terms used in this summary are defined
elsewhere in this Prospectus or in the Glossary of Terms.

THE COMPANY

Kmart is one of the world's largest mass merchandise retailers and operates
stores in each of the 50 states, Puerto Rico, Canada, the Czech Republic and
Slovakia and has joint ventures in Mexico and Singapore. See "The Company".

THE CERTIFICATES

PASS THROUGH TRUSTS........... Each of the two Kmart Pass Through Trusts
("Pass Through Trust 1994-K-1" and "Pass
Through Trust 1994-K-2," respectively, and,
collectively, the "Pass Through Trusts") is to
be formed pursuant to one of two Pass Through
Trust Agreements (the "Agreements") between
Kmart and , as trustee of Pass
Through Trust 1994-K-1, and , as
trustee of Pass Through Trust 1994-K-2
(collectively, the "Trustees"). Each Pass
Through Trust will be a separate entity.

TRUST PROPERTY................ The property of each of the Pass Through Trusts
(the "Trust Property") will consist of mortgage
notes (the "Mortgage Notes") issued on a
nonrecourse basis by one or more Owner Trusts
(collectively, the "Owner Trust") to finance
the sale-leaseback and other transactions
described herein (collectively, the
"Sale-Leaseback Transactions"). Each Pass
Through Trust will acquire Mortgage Notes
having the same maturity date and having an
interest rate corresponding to the interest
rate on the Certificates evidencing interests
in such Pass Through Trust. The maturity date
of the Mortgage Notes acquired by each Pass
Through Trust will correspond to the final
scheduled distribution date applicable to the
Certificates evidencing interests in such Pass
Through Trust. The aggregate principal amount
of the Mortgage Notes held in each Pass Through
Trust will be the same as the aggregate
principal amount of the Certificates evidencing
interests in such Pass Through Trust. See
"Structure of the Transaction," "Description of
the Certificates -- Trust Property" and
"Description of the Mortgage Notes --
Security".

BOOK-ENTRY REGISTRATION....... The Certificates will be issued in fully
registered form only. 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 "Certificate Owner") will be
entitled to receive a Definitive Certificate
representing such person's interest in the
related Pass Through Trust, except in the event
that Definitive Certificates are issued under
the limited circumstances described herein. See
"Description of the Certificates

5
<PAGE> 7

-- General," "-- Book Entry Registration" and
"-- Definitive Certificates".

DENOMINATIONS................. The Certificates will be issued in minimum
denominations of $1,000 initial principal
amount and integral multiples of $1,000 in
excess thereof. The denomination of each
Certificate signifies a Certificate Owner's pro
rata share of the aggregate principal amount of
the Mortgage Notes held in the related Pass
Through Trust. See "Description of the
Certificates".

REGULAR DISTRIBUTION DATES.... and , commencing
, 1995.

SPECIAL DISTRIBUTION DATES.... The day of any month.

RECORD DATES.................. The fifteenth day preceding a Regular
Distribution Date or a Special Distribution
Date.

DISTRIBUTIONS................. All payments of principal, premium, if any, and
interest received by the Trustee on the
Mortgage Notes held in a Pass Through Trust
will be distributed by the Trustee to the
holders of Certificates evidencing interests in
such Pass Through Trust on the dates referred
to below, except in certain cases where such
Mortgage Notes have been redeemed or are in
default. Scheduled payments of interest and
principal on the Mortgage Notes held in each
Pass Through Trust are due in specified amounts
on and commencing, in
the case of interest, on , 1995
and, in the case of principal, on the
applicable Initial Scheduled Principal
Distribution Date set forth on the cover page
hereof, and will be distributed to the holders
of Certificates evidencing interests in such
Pass Through Trust on the corresponding Regular
Distribution Date. Interest paid on the
Mortgage Notes will be passed through on the
Certificates at the applicable rate per annum
indicated on the cover page hereof, which will
be equal to the interest rate borne by the
Mortgage Notes held in the related Pass Through
Trust. Interest on the Mortgage Notes will be
calculated on the basis of a 360-day year
consisting of twelve 30-day months. See
"Description of the Certificates -- General".
Payments of principal, premium, if any, and
interest on the Mortgage Notes held in each
Pass Through Trust resulting from any
redemption thereof, or from actions taken in
connection with an Indenture Default, will be
distributed on a Special Distribution Date,
upon not less than 20 days' notice from the
Trustee to the holders of the related
Certificates. See "Description of the
Certificates -- Events of Default and Certain
Rights Upon an Event of Default" and
"Description of the Mortgage Notes --
Redemption".

METHOD OF DISTRIBUTIONS....... So long as the Certificates are registered in
the name of Cede as nominee of DTC,
distributions by the Trustee with respect to a
Pass Through Trust will be made in same day
funds to DTC, which will in turn make
distributions to participants in DTC ("DTC
Participants") holding positions in the
Certificates evidencing interests in such Pass
Through Trust

6
<PAGE> 8

in clearing-house or next-day funds. The final
distribution of principal with respect to the
Certificates evidencing interests in a Pass
Through Trust will be made by DTC to DTC
Participants in same day funds. Distributions
by DTC Participants to Certificate Owners will
be the responsibility of such DTC Participants
and will be made in accordance with customary
industry practices. See "Description of the
Certificates -- Payments and Distributions". At
such time, if any, as Definitive Certificates
are issued, distributions by the Trustee to
Certificateholders, other than the final
distribution, will be made by check mailed to
each Certificateholder of record on the
applicable record date at its address appearing
on the register. The final distribution with
respect to the Certificates evidencing
interests in a Pass Through Trust will be made
only upon surrender and presentation thereof at
the office or agency of the Trustee of such
Pass Through Trust. See "Description of the
Certificates -- Payments and Distributions".

THE MORTGAGE NOTES

INTEREST PAYMENTS............. Interest will be payable on the Mortgage Notes
on the unpaid principal amount thereof on
and in each year
commencing , 1995.

SCHEDULED PRINCIPAL
PAYMENTS...................... Principal on the Mortgage Notes held in each
Pass Through Trust will be payable in scheduled
amounts, commencing on the applicable Initial
Scheduled Principal Distribution Date set forth
on the cover page hereof in accordance with the
principal repayment schedule set forth herein
under "Description of the Mortgage Notes --
Principal Payments".

REDEMPTION.................... All of the Mortgage Notes held in any Pass
Through Trust or all of the Mortgage Notes
secured by any Property will be subject to
redemption in whole by the Owner Trust on any
Special Distribution Date, at a redemption
price equal to the unpaid principal amount
thereof, together with accrued interest thereon
to the date of the redemption, plus the
applicable Make-Whole Premium, if any,
calculated in the manner described herein. See
"Description of the Mortgage Notes --
Redemption -- Optional Redemption".

The Mortgage Notes relating to a Property will
also be subject to redemption, in whole, in the
event that (a) on or after the fifth year of
the base term of the Lease, the Property has
become obsolete, no longer economic for Kmart's
use or surplus to Kmart's requirements and
Kmart exercises its right to terminate the
Lease with respect to such Property (the
"Termination Right"); (b) the Owner Participant
becomes a competitor of Kmart during the term
of the Lease and Kmart elects to acquire the
Owner Trust's interest in the Property (the
"Competitor Option"); or (c) an Event of Loss
occurs with respect to such Property. Each such
redemption will be at a price equal to the
unpaid

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<PAGE> 9

principal amount of such Mortgage Note and
accrued interest thereon, together with, in the
case of redemption described in clauses (a) and
(b) above, the applicable Make-Whole Premium,
but without premium or other prepayment penalty
of any kind in the case of a redemption
described in clause (c) above. In addition, a
redemption of the Mortgage Notes described in
clause (a) or (b) above will be subject to the
right of Kmart to assume, on a full recourse
basis, the obligations with respect to the
Mortgage Notes. In addition, a redemption of
the Mortgage Notes described in clause (a) or
(c) above will be subject to the right of Kmart
to substitute a property for the Property in
question (the "Substitution Right").

The Mortgage Notes relating to a Property will
also be subject to redemption, in whole or in
part, at a redemption price equal to the unpaid
principal amount thereof (or the portion
thereof to be redeemed) plus accrued interest
thereon, but without premium, upon the
occurrence of certain condemnations or
casualties, to the extent of any excess
condemnation awards or excess casualty
insurance proceeds.

In addition, the Mortgage Notes issued under
any particular Indenture by the Owner Trust
will be subject to redemption by the Owner
Trust (except during any period during which
the Company is the Owner Participant or
otherwise controls the Owner Trust), in whole,
but not in part, if under such Indenture a
Lease Event of Default (other than a Lease
Event of Default related to Excepted Payments)
shall have occurred and be continuing; provided
that there is no Indenture Default resulting
other than from such Lease Event of Default.
Such redemption will be at the Redemption Price
plus the Make-Whole Premium if effected prior
to the earlier of acceleration of the
applicable Mortgage Notes or, in the case of a
Lease Event of Default arising from a Monetary
Default, the expiration of a period of 180 days
following the occurrence of such Lease Event of
Default. Such redemption will be at the
Redemption Price without premium if effected
after (i) delivery by the Indenture Trustees of
a notice of acceleration of the applicable
Mortgage Notes or (ii) the expiration of a
period of 180 days following the occurrence of
such Lease Event of Default.

See "Description of the Mortgage Notes --
Redemption -- Optional Redemption" and "--
Redemption Upon an Event of Loss or Other
Condemnation or Casualty" and "Description of
the Leases -- Condemnation and Casualty" and
"-- Early Termination".

SECURITY...................... Two Mortgage Notes will initially be issued by
the Owner Trust under an indenture, mortgage
and deed of trust, assignment of rents and
security agreement (an "Indenture") affecting
each Property. The Mortgage Notes issued with
respect to each Property will be secured by (i)
an assignment

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<PAGE> 10

to the Indenture Trustees of certain of the
Owner Trust's rights under the Lease with
respect to such Property, including the right
to receive rentals and certain other amounts
payable thereunder by Kmart, and (ii) a first
mortgage on the Property acquired by the Owner
Trust and leased to Kmart, subject to the
rights of Kmart under the related Lease. One of
the Properties is subject to a subordinated
ground lease and one is subject to an
unsubordinated ground lease. Upon an Indenture
Default, the Indenture Trustees may exercise
their rights with respect to the related Trust
Estate for the equal and ratable benefit of all
of the Mortgage Notes issued under or secured
by that Indenture. See "Structure of the
Transaction," "Description of the Certificates"
and "Description of the Mortgage Notes --
Security" and "-- Indenture Defaults, Notice
and Waiver".

Although the Mortgage Notes are not direct
obligations of, or guaranteed by, Kmart (except
to the extent that Kmart may assume the
obligations of the Owner Trust thereunder, as
described under "Description of the Mortgage
Notes -- Assumption of Obligations by Kmart"),
the amounts unconditionally payable by Kmart
under the Leases will be sufficient to pay in
full when due all payments required to be made
on the Mortgage Notes except upon certain
optional redemptions by the Owner Trust. See
"Description of the Mortgage Notes --
Redemption -- Optional Redemption," "--
Redemption -- Make-Whole Premium" and "--
Security". Neither the Trustee, the
Certificateholders nor the Indenture Trustees
will have recourse in respect of the Mortgage
Notes against the Owner Trustee or the Owner
Participant. See "Description of the Mortgage
Notes -- General".

USE OF PROCEEDS

The Certificates are being issued in order to facilitate the financing by
the Owner Trust of its purchase of the Properties. Proceeds from the sale of the
Certificates will be used by the Trustees to purchase the Mortgage Notes issued
by the Owner Trust which, in turn, will use the proceeds to purchase the
Properties. See "Structure of the Transaction".

The net proceeds to be received by the Company from the Sale-Leaseback
Transactions will be used for general corporate purposes.

TRUSTEES AND INDENTURE TRUSTEE

will act as trustee, paying agent and registrar for the
Certificates evidencing interests in Pass Through Trust 1994-K-1 and
will act as trustee, paying agent and registrar for the Certificates evidencing
interests in Pass Through Trust 1994-K-2. will act as the Corporate
Indenture Trustee under the Indentures.

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<PAGE> 11

FEDERAL INCOME TAX CONSEQUENCES

In the opinion of counsel to Kmart, each Pass Through Trust will be
classified as a grantor trust for federal income tax purposes, and each holder
of an interest in the Certificates will be treated as the owner of a pro rata
undivided interest in each of the Mortgage Notes and any other property held in
the Pass Through Trust in which the Certificates held by such holder evidence an
interest and will be required to report on its federal income tax return its pro
rata share of income from such Mortgage Notes and other property in accordance
with such holder's method of accounting. See "Certain Federal Income Tax
Consequences".

ERISA CONSIDERATIONS

A fiduciary considering purchasing Certificates for or on behalf of an
employee benefit plan should consider the issues discussed in "ERISA
Considerations".

LEGAL INVESTMENT

Institutions whose investment activities are 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".

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<PAGE> 12

THE COMPANY

Kmart Corporation ("Kmart" or "Company") is one of the world's largest mass
merchandise retailers. The predominant portion of Kmart's business consists of
U.S. Kmart stores. As of July 27, 1994, Kmart operated 2,326 Kmart discount
stores with locations in each of the 50 United States and Puerto Rico, and Kmart
international operations consisted primarily of 125 Kmart stores in Canada and
13 department stores located in the Czech Republic and Slovakia. As part of its
international expansion strategy, Kmart has formed joint ventures in Mexico and
Singapore and as of July 27, 1994, had opened three joint venture stores: two in
Mexico and one in Singapore. Kmart also holds a significant equity interest in
substantially all of the Meldisco subsidiaries of Melville Corporation, which
operate the footwear departments in domestic Kmart stores.

As of July 27, 1994, Kmart Specialty Retail operations consisted of the
Borders-Walden, Builders Square, OfficeMax and The Sports Authority
subsidiaries. Borders-Walden is a leading U.S. book retailer and is comprised of
the Company's Borders, Inc. ("Borders") and Walden Book Company, Inc. ("Walden")
subsidiaries. As of July 27, 1994, Borders-Walden operated 1,169 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 management in order to realize synergies in
certain areas, including in the development of inventory control systems and in
merchandise distribution. See "-- Recent Developments" for a discussion of an
announcement regarding a potential Borders-Walden initial public offering.
Builders Square operated 181 home improvement stores at July 27, 1994. 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 services to repair, remodel, redecorate and maintain both home and
garden. Following an initial public offering of OfficeMax common shares, Kmart
on November 9, 1994 reduced its equity interest in OfficeMax, Inc. ("OfficeMax")
from over 90% to 25%. OfficeMax is one of the largest operators of high-volume,
deep discount office products superstores in the United States, and operated 332
superstores as of July 27, 1994. Kmart currently holds a 100% equity interest in
The Sports Authority ("TSA"), but expects that this ownership interest will be
reduced upon completion of the initial public offering of TSA common shares
discussed below under "-- Recent Developments". TSA is the largest operator of
large format sporting goods stores in the United States in terms of both sales
and number of stores. It is also the largest full-line sporting goods retailer
in the United States in terms of sales and operated 85 sporting goods megastores
at July 27, 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

As part of the restructuring plan announced by the Board of Directors on
January 5, 1994, Kmart announced on September 8, 1994 the closing in January and
February of 1995 of 110 Kmart stores which currently do not meet Kmart's sales,
profit and return on investment requirements. During the next 18 to 24 months,
it is anticipated that Kmart's management work force will be reduced by 10%,
including a reduction of management positions, as a result of the announced
store closings.

On November 4, 1994, the Company completed the sale of its 21.5 percent
equity interest in Coles Myer Ltd., the Australian retailer. The Company
received the equivalent of A$4.55 per share for its Coles Myer shares with the
total proceeds amounting to A$1.26 billion (equivalent to U.S. $928 million). As
part of the transaction, the Company extended its long-term license that allows
Coles Myer to use the "Kmart" name in Australia and New Zealand.

11
<PAGE> 13

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, Borders-Walden, OfficeMax and TSA, through Initial
Public Offerings ("IPOs").

As a result of the completion of the IPO of common shares of OfficeMax, the
Company's ownership in OfficeMax was reduced to 25%. Proceeds from the sale of
OfficeMax common shares were approximately $642 million. A registration
statement has been filed with the Commission to register 12.3 million common
shares of TSA to be sold in an IPO. Upon completion of this IPO, the Company
expects that its ownership interest in TSA will be reduced to approximately 39
percent, or to approximately 30 percent if the underwriters' over-allotment
option on approximately 1.845 million shares is exercised in full. Kmart also
expects to undertake an IPO of common shares of Borders-Walden, the timing of
which will depend upon market and other 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.

USE OF PROCEEDS

The net proceeds of $ million to be received by the Company from the
Sale-Leaseback Transactions will be used for general corporate purposes.

12
<PAGE> 14

SELECTED FINANCIAL INFORMATION

The following is a summary of certain selected consolidated financial
information of the Company. This summary should be read in conjunction with the
related consolidated financial statements and notes thereto included or
incorporated by reference in the Company's Annual Report on Form 10-K for the
fiscal year ended January 26, 1994 and Quarterly Report on Form 10-Q for the
quarter ended July 27, 1994 incorporated herein by reference. See "Incorporation
of Certain Documents by Reference". The information presented below for, and as
of the end of, each of the fiscal years in the five-year period ended January
26, 1994 (except for the ratio of earnings from continuing retail operations to
fixed charges) is derived from the consolidated financial statements of the
Company, which financial statements have been audited by Price Waterhouse LLP,
independent accountants. In the opinion of the Company, the unaudited financial
information presented for the 26 weeks ended July 27, 1994 and July 28, 1993
contains all adjustments necessary for a fair statement of the results for the
interim periods. All adjustments were of a normal and recurring nature. Results
for interim periods are not necessarily indicative of results for the full year.

<TABLE>
<CAPTION>
26 WEEKS ENDED
-------------------
JULY 27, JULY 28,
1989(1) 1990 1991 1992 1993(2) 1994 1993
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
Summary of Operations
Sales............................... $ 27,670 $ 28,133 $ 29,042 $ 31,031 $ 34,156 $ 16,638 $ 15,791
Cost of merchandise sold............ 20,310 20,614 21,243 22,800 25,646 12,477 11,775
Selling, general and administrative
expenses.......................... 6,277 6,435 6,603 6,875 7,636 3,916 3,669
Interest expense -- net............. 353 384 384 414 477 240 247
Income (loss) from continuing retail
operations before income taxes.... 444 1,070 1,189 1,327 (550) 171 263
Net income (loss) from continuing
retail operations................. 282 712 789 882 (328) 112 183
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 $ 3,743 $ 4,393
Merchandise inventories............. 6,933 6,891 7,546 8,752 7,252 8,328 9,437
Total assets........................ 13,145 13,899 15,999 18,931 17,504 18,522 20,189
Long-term debt...................... 1,480 1,701 2,287 3,237 2,227 2,042 2,979
Capital leases...................... 1,549 1,598 1,638 1,698 1,720 1,791 1,876
Shareholders' equity................ 4,972 5,384 6,891 7,536 6,093 6,011 7,424
</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 July 28, 1993 was
2.5. The deficiency of income from continuing retail operations versus fixed
charges was $681 million for the 52 weeks ended July 27, 1994.

13
<PAGE> 15

THIRD QUARTER 1994 FINANCIAL RESULTS

Net income from continuing retail operations for the 13 weeks ended October
26, 1994 declined to $39 million from $104 million for the 13 weeks ended
October 27, 1993 as restated to exclude the businesses of PACE Membership
Warehouse, Inc. and PayLess Drug Stores Northwest, Inc., which were discontinued
and divested, respectively, as of January 1994. Third-quarter sales reached
$8.79 billion, an increase of 8.6% from $8.10 billion for the same period in
1993.

Net income for the 39 weeks of 1994 declined to $151 million from $287
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 6.5% to $25.43 billion from $23.89 billion for the same 39-week
period of 1993.

KMART CORPORATION
SALES AND OPERATING INCOME
39 WEEKS ENDED OCTOBER 26, 1994 AND OCTOBER 27, 1993
(MILLIONS)

<TABLE>
<CAPTION>
39 WEEKS ENDED
--------------------------
OCTOBER 26, OCTOBER 27,
1994 1993
----------- -----------
<S> <C> <C>
Sales................................................................ $25,432 $23,889
Cost of merchandise sold............................................. 19,134 17,762
Selling, general and administrative expenses......................... 5,952 5,567
Interest expense -- net.............................................. 373 369
Income from continuing retail operations before income taxes......... 230 439
Net income from continuing retail operations......................... 151 287
</TABLE>

STRUCTURE OF THE TRANSACTION

Concurrently with the issuance of the Certificates, Kmart will sell or
cause the sale of 20 buildings currently used as Kmart stores together with (i)
a 25-year estate-for-years interest in the land on which 18 of the Stores are
situated (the "Estate-for-Years Interest") and (ii) a leasehold interest in
excess of 25 years in the land on which the remaining 2 Stores are situated (the
"Leasehold Interest"; the Estate-for-Years Interest and the Leasehold Interest
are collectively referred to as (the "Land") for an aggregate price of
approximately $ to one or more owner trusts (the "Owner Trust"), for which
(the "Corporate Owner Trustee") and an
officer or employee of , where required
by state law (the "Individual Owner Trustee"), are acting as owner trustees (the
Corporate Owner Trustee and the Individual Owner Trustee, collectively, the
"Owner Trustees") under a trust agreement (the "Owner Trust Agreement") for an
institutional investor (the "Owner Participant"). Ten of these Properties will
be conveyed to the Owner Trust by developers of the Properties pursuant to
assignment by the Company of its rights under the agreements with each developer
pursuant to which the developer agreed to construct the Store and Kmart agreed
to purchase the Property upon completion of the Store. Simultaneously with such
sale, Kmart will sell a remainder interest in the Land following expiration of
the Owner Trust's Estate-For-Years Interest to an institutional investor (the
"Remainderman"). The Owner Trust will immediately lease or sublease each parcel
of Land and the Store thereon back to Kmart pursuant to leases (each, a "Lease")
for an initial term expiring , 2019. The Owner Trust's estate
for years or leasehold interest in each parcel of Land, together with the Owner
Trust's fee simple title to the Store located on such land, is referred to as a
"Property".

A portion of the purchase price to be paid by the Owner Trust for each
Property will be obtained from the equity investment of the Owner Participant.
The Mortgage Notes will be issued by the Owner Trust on a non-recourse basis to
finance the remainder of the purchase price. The Mortgage Notes will be acquired
from the Owner Trust by the Trustees with the proceeds from the sale of the
Certificates.

14
<PAGE> 16

The Mortgage Notes will be issued under a separate indenture, mortgage and
deed of trust, assignment of rents and security agreement (each, an "Indenture")
with respect to each Property. Two Mortgage Notes will initially be issued under
each Indenture. Each Indenture will be entered into by and among (the
"Corporate Indenture Trustee") and (the "Individual Indenture
Trustee"), as trustees thereunder (the Corporate Indenture Trustee and the
Individual Indenture Trustee, in such capacities, the "Indenture Trustees"), and
the Owner Trust. Neither the Owner Trust nor the Owner Participant will be
personally liable for any amount payable under the related Indenture or the
Mortgage Notes issued thereunder.

The Mortgage Notes issued under each Indenture will be secured by an
assignment of certain of the Owner Trust's rights as lessor under the Lease with
respect to the Property securing such Mortgage Notes, including the right to
receive base rentals and certain other payments from Kmart (excluding Excepted
Payments), and a first mortgage on the Property, subject to the rights of Kmart
under the related Lease (with respect to each such Indenture, the "Trust
Estate"). The Mortgage Notes issued under an Indenture with respect to a
Property acquired by the Owner Trust will not be secured by any of the
Properties securing Mortgage Notes issued under any other Indenture and will not
be cross-defaulted with Mortgage Notes issued under any other Indenture.

The amounts unconditionally payable by Kmart under the Leases will be
sufficient to pay in full, when due, all payments required to be made on the
Mortgage Notes, except upon certain optional redemptions by the Owner Trust. See
"Description of the Mortgage Notes -- Redemption -- Make-Whole Premium". The
Mortgage Notes will not be recourse obligations of the Owner Participant or of
the Owner Trust, but will be payable solely from base rents and other amounts
paid under the Lease (excluding Excepted Payments) of the Property securing such
Mortgage Notes and amounts realized from the exercise of the Indenture Trustees'
remedies under the Indenture against the related Trust Estate.

A more detailed description of the transaction is set forth below under
"Diagram of Payments," "Description of the Certificates," "Description of the
Mortgage Notes" and "Description of the Leases".

The Pass Through Trusts will be formed pursuant to two separate Pass
Through Trust Agreements (in each case, an "Agreement"), between , as
trustee of Pass Through Trust 1994-K-1, or , as trustee of Pass
Through Trust 1994-K-2 (collectively, in such capacity, the "Trustees"), and
Kmart. Concurrently with the execution and delivery of the Agreements, each
Trustee, on behalf of the related Pass Through Trust, will purchase the Mortgage
Notes to be held in the related Pass Through Trust from the Owner Trust. Each
Trustee, on behalf of the related Pass Through Trust, will purchase those
Mortgage Notes having the same maturity date and an interest rate equal to the
interest rate applicable to the Certificates evidencing interests in such Pass
Through Trust. The maturity date of the Mortgage Notes acquired by each Pass
Through Trust will correspond to the final scheduled Distribution Date
applicable to the Certificates evidencing an interest in such Pass Through
Trust. Each Trustee will distribute all payments of principal, premium, if any,
and interest received by it as holder of the Mortgage Notes to the holders of
Certificates evidencing an interest in the Pass Through Trust in which such
Mortgage Notes are held. See "Description of the Certificates" and "Description
of the Mortgage Notes".

15
<PAGE> 17

DIAGRAM OF PAYMENTS

The following diagram illustrates certain aspects of the payment flows
among Kmart, the Owner Trust, the Owner Participant, the Indenture Trustees, the
Trustees and the holders of the Pass Through Certificates.

Kmart will lease each Property from the Owner Trust under a separate Lease.
Two Mortgage Notes will initially be issued under each Indenture by the Owner
Trust, one with a final scheduled principal payment due and the other
with a final scheduled principal payment due . Rent will be payable
under each Lease to the Owner Trustees; however, as a result of the assignment
of such Lease to the applicable Indenture Trustees, Kmart will make rental
payments thereunder directly to the Corporate Indenture Trustee. From such
rental payments, the Corporate Indenture Trustee will, on behalf of the Owner
Trust, make payments on the Mortgage Notes held in each Pass Through Trust to
the related Trustee and will pay the balance to the Owner Trust for distribution
to the Owner Participant. Each Trustee will distribute payments received on the
Mortgage Notes held in the related Pass Through Trust to the related
Certificateholders. In the event that the Corporate Indenture Trustee does not
receive the full amounts payable with respect to both Mortgage Notes issued
under an Indenture, the Corporate Indenture Trustee will be required, pursuant
to the terms of such Indenture, to distribute the amounts received on a pro rata
basis in accordance with the respective amounts due and payable on such Mortgage
Notes.

[FLOW CHART]

- -------------------------
(1) There will be a separate Indenture with respect to each Property.

16
<PAGE> 18

DESCRIPTION OF THE CERTIFICATES

The Certificates will be issued pursuant to two separate Agreements, each
of which is to be entered into between Kmart and one of the Trustees, on behalf
of the related Pass Through Trust. Each Agreement will contain substantially the
same terms, except that the interest rates, scheduled payments of principal and
maturity dates applicable to the Mortgage Notes held in each Pass Through Trust,
the aggregate principal amount of Mortgage Notes held in each Pass Through
Trust, and the final distribution date applicable to each Pass Through Trust
will differ. The statements under this caption are a summary of the terms of the
Certificates and the Agreements and do not purport to be complete. The summary
makes use of terms defined in and is qualified in its entirety by reference to
all of the provisions of the Agreements and the Certificates, the forms of which
have been filed as exhibits to the Registration Statement of which this
Prospectus is a part. Except as otherwise indicated, the following summary
relates to each of the Agreements, the Pass Through Trusts formed thereby and
the Certificates issued by each Pass Through Trust. Citations to the relevant
sections of the Agreements appear below in parentheses. References to the
Trustee or the Agreement, with respect to any Certificates, means, respectively,
the Trustee under the related Agreement or the Agreement under which such
Certificates are issued.

GENERAL

The Certificates will be issued in fully registered form only. Each
Certificate will represent a fractional undivided interest in the Pass Through
Trust created by the Agreement pursuant to which such Certificate was issued.
The property of each Pass Through Trust will include the Mortgage Notes held in
such Pass Through Trust, all monies at any time paid thereon and all monies due
and to become due thereunder and funds from time to time deposited with the
Trustee in the accounts established pursuant to the related Agreement. Each
Certificate will correspond to a pro rata share of the outstanding principal
amount of the Mortgage Notes held in the related 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. (Agreements, Sections 2.01 and 2.06) 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 "Certificate Owner") will be entitled to receive a
certificate representing such person's interest in the Certificates, except as
set forth below under "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 Certificate Owners in accordance with DTC
procedures. (Agreements, Section 2.11) See "Book-Entry Registration".

Interest paid on the Mortgage Notes held in a Pass Through Trust will be
passed through to holders of Certificates evidencing interests in such Pass
Through Trust at the applicable rate per annum set forth on the cover page of
this Prospectus, which will be calculated on the basis of a 360-day year of
twelve 30-day months.

Each Certificate will represent a fractional undivided interest in the
related Pass Through Trust and will not have any rights, benefits or interest in
respect of the other Pass Through Trust or in the property held by the other
such Pass Through Trust. All payments and distributions on the Certificates will
be made only from the property of the Pass Through Trust in which such
Certificates evidence an interest. (Agreements, Section 3.05) The Certificates
do not represent an interest in or obligation of Kmart, the Trustee, the Owner
Trust, any Owner Trustee in its individual capacity, the Owner Participant, or
any of their respective affiliates. Each Certificateholder by its acceptance of
a Certificate agrees to look solely to the income and proceeds from the Trust
Property to the extent available for distribution as provided in the Agreements.

17
<PAGE> 19

None of the Agreements, the Indentures or the Leases includes financial
covenants or "event risk" provisions that would afford Certificateholders
protection in the event of a highly leveraged or other transaction involving
Kmart. The Certificateholders will have the benefit of a lien on the Property
and the other property in each Trust Estate securing the Mortgage Notes held in
the related Pass Through Trust, as discussed under "Description of the Mortgage
Notes -- Security". However, in the event that Kmart assumes the obligations of
the Owner Trust under a Mortgage Note, the Property securing such Mortgage Note
may, upon compliance with certain conditions set forth in the Indenture, be
released from the lien of the related Indenture and not subjected to the lien of
any Company Indenture, in which event Certificateholders could look only to
Kmart for payment thereof. See "Description of the Mortgage Notes -- Release of
Security" and "-- Assumption of Obligations by Kmart".

BOOK-ENTRY REGISTRATION

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 (including Goldman, Sachs & Co.), 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").

Certificate 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, Certificate Owners will receive all distributions of
principal and interest from the Trustee through DTC Participants and Indirect
Participants. In addition, Certificate 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, Certificate Owners
may experience some delay in their receipt of payments, since such payments will
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 Certificate Owners, as the case may be, in accordance with
customary industry practices. The forwarding of such distributions to the
Certificate Owners will be the responsibility of such DTC Participants. The only
"Certificateholder" of a Pass Through Trust will be Cede, as nominee of DTC.
Certificate Owners will not be recognized by the Trustee as Certificateholders,
as such term is used in the Agreements, and Certificate 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. DTC Participants and Indirect
Participants with which Certificate 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 Certificate Owners.
Accordingly, although Certificate Owners will not possess Certificates, the
Rules provide a mechanism by which Certificate 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 Certificate 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
lack of a physical certificate for such Certificates.

18
<PAGE> 20

DTC has advised the Company that it will take any action permitted to be
taken by a Certificateholder under the Agreements only at the direction of one
or more DTC Participants to whose accounts with DTC the Certificates are
credited. Additionally, DTC has advised the Company that it will take such
actions with respect to any percentage of Certificateholders of each Pass
Through Trust only at the direction of and on behalf of DTC Participants whose
holdings include undivided interests that satisfy any such percentage. DTC may
take conflicting actions with respect to other undivided interests to the extent
that such actions are taken on behalf of DTC Participants whose holdings include
such undivided interests.

Neither the Company nor the Trustees 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 Kmart believes to be reliable, but Kmart has
not independently verified such information.

DEFINITIVE CERTIFICATES

The Certificates will be issued in fully registered, certificated form
("Definitive Certificates") to Certificate Owners or their nominees, rather than
to DTC or its nominee, only if (i) Kmart advises the Trustee in writing that DTC
is no longer willing or able to discharge properly its responsibilities as
depository with respect to the Certificates and Kmart is unable to appoint a
qualified successor or (ii) Kmart, at its option, elects to terminate the
book-entry system through DTC. (Agreements, Section 2.11)

Upon the occurrence of any event described in the immediately preceding
paragraph, the Trustee will be required to notify all Certificate Owners through
DTC Participants of the availability of Definitive Certificates. Upon surrender
by DTC of the global certificates representing the Certificates and receipt of
instructions for re-registration, the Trustee will reissue the Certificates as
Definitive Certificates to Certificate Owners. (Agreements, Section 2.11)

Definitive Certificates will be freely transferable and exchangeable at the
office of the Trustee upon compliance with requirements set forth in the
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 shall be required. (Agreements, Section 2.07)

SAME-DAY SETTLEMENT AND PAYMENT

So long as the Certificates are registered in the name of Cede, as nominee
of DTC, all payments made by Kmart to the Corporate Indenture Trustee under the
Leases will be in immediately available funds and, to the extent such payments
are allocable to the Mortgage Notes, will be passed through 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.

PAYMENTS AND DISTRIBUTIONS

Payments of principal, premium, if any, and interest on the Mortgage Notes
held in each Pass Through Trust received by the Trustee will be distributed by
the Trustee to holders of Certificates evidencing interests in such Pass Through
Trust on the date such receipt is confirmed, except in certain cases when some
or all of such Mortgage Notes are in default. See "Events of Default and

19
<PAGE> 21

Certain Rights Upon an Event of Default". Payments of interest on the unpaid
principal amount of the Mortgage Notes held in each Pass Through Trust are
scheduled to be received by the Trustee on and of
each year commencing , 1995, and payments of principal on the
Mortgage Notes held in each Pass Through Trust are scheduled to be received by
the Trustee commencing on the date specified on the front cover page of this
Prospectus for such Pass Through Trust (each such date, an "Initial Scheduled
Principal Distribution Date"), until the final distribution date for such Pass
Through Trust (such scheduled payments of interest and principal on the Mortgage
Notes held by a Pass Through Trust are herein referred to as "Scheduled
Payments," and and of each year are herein
referred to as "Regular Distribution Dates"). The Trustee will distribute on
each Regular Distribution Date to the holders of Certificates evidencing
interests in a Pass Through Trust all Scheduled Payments on the Mortgage Notes
held in such Pass Through Trust, upon receipt. Each such distribution of
Scheduled Payments will be made by the Trustee to the holders of record of the
Certificates evidencing interests in the Pass Through Trust holding the Mortgage
Notes to which such Scheduled Payments relate on the fifteenth day next
preceding the applicable Regular Distribution Date, subject to certain
exceptions. (Agreements, Sections 5.01 and 5.02) If a Scheduled Payment is not
received by the Trustee on a Regular Distribution Date but is received within
ten Business Days thereafter, it will be distributed on the date received to
such holders of record. If it is received after such ten Business Day period, it
will be treated as a Special Payment and distributed as described below.

Each Certificateholder will be entitled to receive a pro rata share of any
distribution in respect of Scheduled Payments of principal and interest made on
the Mortgage Notes held in the Pass Through Trust in which the Certificate held
by such holder evidences an interest. The Regular Distribution Dates on which,
and the amounts in which, Scheduled Payments of principal on the Mortgage Notes
held in each Pass Through Trust are payable are set forth below under
"Description of the Mortgage Notes -- Principal Payments".

Payments of principal, premium, if any, and interest received by the
Trustee on account of the redemption, if any, of the Mortgage Notes held in a
Pass Through Trust, and payments received by the Trustee following a default in
respect of the Mortgage Notes held in a Pass Through Trust (including payments
received by the Trust on account of the purchase by the Owner Trustee of such
Mortgage Notes or payments received on account of the sale of such Mortgage
Notes by the Trustee) ("Special Payments"), will be distributed on the day
of a month (each, a "Special Distribution Date"). The Trustee will mail notice
to the holders of record of the Certificates evidencing interests in the related
Pass Through Trust not less than 20 days prior to the Special Distribution Date
on which any Special Payment is scheduled to be distributed by the Trustee in
the event the Mortgage Notes are to be redeemed prior to their maturity and, in
all other instances, as soon as practicable after the Trustee has received the
Special Payment. The notice will specify the anticipated Special Distribution
Date, the amount of such anticipated Special Payment, the reason for the Special
Payment and the total amount to be distributed if such Special Distribution Date
is the same date as a Regular Distribution Date. Each distribution of a Special
Payment, other than a final distribution, on a Special Distribution Date for a
Pass Through Trust will be made by the Trustee to the holders of record of the
Certificates evidencing interests in such Pass Through Trust on the fifteenth
day next preceding such Special Distribution Date. (Agreements, Section 5.02)
See "Description of the Mortgage Notes -- Redemption" and "-- Events of Default
and Certain Rights Upon an Event of Default".

Each Agreement requires that the Trustee establish and maintain, for the
benefit of the holders of Certificates evidencing interests in the Pass Through
Trust created by such Agreement, one or more non-interest bearing accounts (with
respect to each such Pass Through Trust, the "Certificate Account") for the
deposit of payments representing Scheduled Payments on the Mortgage Notes held
in such Trust. (Agreements, Section 5.01) Each Agreement also requires that the
Trustee establish and maintain, for the benefit of the holders of Certificates
evidencing interests in the Pass Through Trust created by such Agreement, one or
more non-interest bearing accounts (with

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<PAGE> 22

respect to each such Pass Through Trust, the "Special Payments Account") for the
deposit of payments representing Special Payments. Pursuant to the terms of each
Agreement, the Trustee is required to deposit any Scheduled Payments on the
Mortgage Notes held in the applicable Pass Through Trust received by it in the
Certificate Account for such Pass Through Trust and to deposit any Special
Payments so received by it in the Special Payments Account for such Pass Through
Trust. (Agreements, Section 5.01) All amounts so deposited will be distributed
by the Trustee on a Regular Distribution Date or a Special Distribution Date, as
the case may be, to the holders of Certificates evidencing interests in such
Pass Through Trust. (Agreements, Section 5.02)

At such time, if any, as Definitive Certificates are issued, distributions
by the Trustee to Certificateholders, other than a final distribution, will be
made by check mailed to each Certificateholder of record on the applicable
record date at its address appearing on the register. (Agreements, Section 5.02)
The final distribution with respect to the Certificates evidencing interests in
a Pass Through Trust, however, will be made only upon presentation and surrender
of such Certificate at the office or agency of the Trustee specified in the
notice given by the Trustee of such final distribution. The Trustee will mail
such notice of the final distribution to the Certificateholders, specifying the
date set for such final distribution and the amount of such distribution.
(Agreements, Section 11.01) See "Termination of the Pass Through Trusts".

If any Regular Distribution Date or Special Distribution Date is not a
Business Day, distributions scheduled to be made on such Regular Distribution
Date or Special Distribution Date may be made on the next succeeding Business
Day without interest.

POOL FACTORS

Unless there has been an early redemption, or a default, in respect of one
or more Mortgage Notes held in a Pass Through Trust, as described under
"Description of the Mortgage Notes -- Redemption" and "-- Events of Default and
Certain Rights Upon an Event of Default," the Pool Factor for each Pass Through
Trust will decline in proportion to the Scheduled Payments of principal on the
Mortgage Notes held in such Pass Through Trust as described under "Description
of the Mortgage Notes -- Principal Payments". In the event of such redemption or
default, the Pool Factor and the Pool Balance of each Pass Through Trust
affected thereby will be recomputed after giving effect thereto and notice
thereof will be mailed to the holders of Certificates evidencing interests in
such Pass Through Trust. Each Pass Through Trust will have a separate Pool
Factor.

The "Pool Balance" for each Pass Through Trust will indicate, as of any
date, the aggregate unpaid principal amount of the Mortgage Notes held in such
Pass Through Trust on such date plus any amounts in respect of principal on such
Mortgage Notes held by the Trustee and not yet distributed. The Pool Balance for
each Pass Through Trust as of any Regular Distribution Date or Special
Distribution Date will be computed after giving effect to the payment of
principal, if any, on the Mortgage Notes held in such Pass Through Trust and the
distribution thereof to be made on that date.

The "Pool Factor" for each Pass Through Trust as of any Regular
Distribution Date or Special Distribution Date will be the quotient (rounded to
the seventh decimal place) computed by dividing the then outstanding Pool
Balance by the aggregate original principal amount of the Mortgage Notes held in
such Pass Through Trust. The Pool Factor for each Pass Through Trust will
initially be 1.0000000; thereafter, the Pool Factor for each Pass Through Trust
will decline to reflect reductions in the Pool Balance resulting from
distributions in respect of principal on the Certificates. The amount of a
Certificateholder's pro rata share of the Pool Balance of the Pass Through Trust
in which the Certificates held by such Certificateholder evidence an interest
can be determined by multiplying the original denomination of the holder's
Certificate by the Pool Factor for such Pass Through Trust as of the applicable
Regular Distribution Date or Special Distribution Date. The Pool Factor and the
Pool Balance for a Pass Through Trust will be mailed to record holders of
Certificates

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<PAGE> 23

evidencing interests in such Pass Through Trust on each Regular Distribution
Date and Special Distribution Date.

As of the date of acquisition by the Trustees of the Mortgage Notes held in
the related Pass Through Trusts and assuming that no early redemption,
delinquency or default in respect of any Mortgage Notes occurs, the Scheduled
Payments of principal on such Mortgage Notes, and the resulting Pool Factors for
the Pass Through Trusts after giving effect to each such payment, are set forth
below.

<TABLE>
<CAPTION>
PASS THROUGH PASS THROUGH
TRUST 1994-K-1 TRUST 1994-K-2
SCHEDULED PASS THROUGH SCHEDULED PASS THROUGH
PRINCIPAL TRUST 1994-K-1 PRINCIPAL TRUST 1994-K-2
REGULAR DISTRIBUTION DATE PAYMENTS POOL FACTOR PAYMENTS POOL FACTOR
- --------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
</TABLE>

To the extent that the Mortgage Notes held in a Pass Through Trust are
redeemed or a delinquency or default in respect thereof occurs, the timing (and,
in the case of defaults, the amount) of distributions in respect of principal on
the Certificates evidencing an interest in such Pass Through Trust will differ
from that set forth above.

REPORTS TO CERTIFICATEHOLDERS

On each Regular Distribution Date and Special Distribution Date for a Pass
Through Trust, the Trustee will include with each distribution of a Scheduled
Payment or Special Payment to holders of record of the Certificates evidencing
interests in such Pass Through Trust a statement, giving effect to such
distribution to be made on such Regular Distribution Date or Special
Distribution Date, setting forth the following information (per $1,000 aggregate
principal amount, as to (i) and (ii) below):

(i) the amount of such distribution allocable to principal and the
amount allocable to premium, if any;

(ii) the amount of such distribution allocable to interest; and

(iii) the Pool Balance and the Pool Factor for such Pass Through
Trust.

(Agreements, Section 5.03(a))

So long as the Certificates are registered in the name of Cede, as nominee
for DTC, on the Record Date prior to each Regular Distribution Date and Special
Distribution Date for a Pass Through Trust, 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 the Certificates evidencing
interests in such Pass Through Trust on such Record Date. On each Regular
Distribution Date and Special Distribution Date for a Pass Through Trust, 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 Certificate Owners.

In addition, after the end of each calendar year, the Trustee will prepare
for each holder of record of Certificates evidencing interests in such Pass
Through Trust at any time during the preceding calendar year a report containing
the sum of the amounts determined pursuant to

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<PAGE> 24

clauses (i) and (ii) above with respect to such Pass Through Trust for such
calendar year or, in the event such person was a Certificateholder of record
during a portion of such calendar year, for the applicable portion of such
calendar year. (Agreements, Section 5.03(b)) Such report and such other items
shall be prepared on the basis of information supplied to the Trustee by the DTC
Participants, and shall be delivered by the Trustee to such DTC Participants to
be available for forwarding by such DTC Participants to Certificate Owners in
the manner described above.

At such time, if any, as Definitive Certificates are issued, the Trustee
will prepare and deliver the information described above to each holder of
record of Certificates evidencing interests in such Pass Through Trust as the
name of such Certificateholder appears on the records of the Trustee.

Kmart is required to furnish annually to the Trustee a certificate as to
its compliance with the conditions and covenants under the Agreements during the
preceding year. (Agreements, Section 4.03)

VOTING OF MORTGAGE NOTES

The Trustee, as holder of the Mortgage Notes held in such Pass Through
Trust, will have the right to vote and give consents and waivers in respect of
such Mortgage Notes under the Indentures. Each Agreement sets forth the
circumstances in which the Trustee shall direct any action or cast any vote as
the holder of the Mortgage Notes held in the applicable Pass Through Trust at
its own discretion and the circumstances in which the Trustee shall seek
instructions from the holders of the Certificates evidencing interests in such
Pass Through Trust. Under each Agreement, the principal amount of the Mortgage
Notes held in the related Pass Through Trust directing any action or being voted
for or against any proposal shall be in proportion to the principal amount of
Certificates held by the holders of Certificates evidencing interests in such
Pass Through Trust taking the corresponding position. (Agreements, Sections
7.01, 10.02 and 10.08)

EVENTS OF DEFAULT AND CERTAIN RIGHTS UPON AN EVENT OF DEFAULT

An event of default under an Agreement (an "Event of Default") is defined
as the occurrence and continuance of an event of default under one or more of
the Indentures (an "Indenture Default"). See "Description of the Mortgage Notes
- -- Indenture Defaults, Notice and Waiver" for a description of the Indenture
Defaults. Since each Pass Through Trust will hold Mortgage Notes issued pursuant
to each of the Indentures, a continuing Indenture Default under any one
Indenture will result in an Event of Default under each of the Agreements and
therefore will affect each of the Pass Through Trusts. The Indentures and the
related Mortgage Notes issued thereunder do not contain cross-default
provisions, and events resulting in an Indenture Default under any of such
Indentures will not necessarily result in an Indenture Default occurring under
any other Indenture. See "Description of the Mortgage Notes -- General". If an
Indenture Default occurs under fewer than all of the Indentures, the Mortgage
Notes issued pursuant to the Indenture or Indentures with respect to which an
Indenture Default has not occurred will continue to be held in the Pass Through
Trusts and payments of principal, premium, if any, and interest on such Mortgage
Notes will continue to be distributed to the holders of the Certificates as
received.

The Owner Trust (except during any period during which Kmart is the Owner
Participant or otherwise controls the Owner Trust) will have the right, under
certain circumstances, to cure Indenture Defaults that result from the
occurrence of a Lease Event of Default under a Lease of a Property. If the Owner
Trust chooses to exercise such cure right, the Indenture Default, and
consequently the Event of Default under each Agreement, will be deemed to be
cured. In addition, if under any Indenture a Lease Event of Default shall have
occurred, the Owner Trust (except during any period during which Kmart is the
Owner Participant or otherwise controls the Owner Trust) may, subject to certain
conditions specified in such Indenture, elect to redeem all of the then
outstanding Mortgage Notes issued under such Indenture, at a price equal to the
Redemption Price, together with, in the cases described herein, the applicable
Make-Whole Premium, if any. (Indentures,

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<PAGE> 25

Sections 6.02(c) and 8.02) See "Description of the Mortgage Notes -- Redemption"
and "-- Indenture Defaults, Notice and Waiver".

The Indenture Trustees' right to exercise remedies under each Indenture is
subject, in certain circumstances, to having exercised or to being concurrently
exercising one or more remedies under the related Lease as to which a Lease
Event of Default shall have occurred. (Indentures, Section 7.02) See
"Description of the Mortgage Notes -- Remedies".

Each Agreement provides that, as long as an Indenture Default under any
Indenture shall have occurred and be continuing, the Trustee may vote all of the
Mortgage Notes issued under such Indenture that are held in the Pass Through
Trust and, upon the direction of the holders of Certificates, shall vote a
corresponding percentage of such Mortgage Notes in favor of directing the
Indenture Trustees to declare the unpaid principal amount of all Mortgage Notes
issued under such Indenture and any accrued and unpaid interest thereon to be
due and payable. Each Agreement in addition provides that, if an Indenture
Default under any Indenture shall have occurred and be continuing, the Trustee
may, and upon the direction of the holders of Certificates evidencing fractional
undivided interests aggregating not less than a majority in interest of the
related Pass Through Trust shall, vote a corresponding percentage of the
Mortgage Notes issued under such Indenture that are held in such Pass Through
Trust in favor of directing the Indenture Trustees as to the time, method and
place of conducting any proceeding for any remedy available to the Indenture
Trustees or of exercising any trust or power conferred on the Indenture Trustees
under such Indenture. (Agreements, Sections 7.01 and 7.09)

Each Indenture provides that, if an Indenture Default shall occur and be
continuing thereunder, the Corporate Indenture Trustee (subject to certain
limitations specified in the Indenture) may, or upon the instructions of the
holders of a majority in principal amount of the Mortgage Notes outstanding
under such Indenture shall, declare the unpaid principal amount of the Mortgage
Notes issued under such Indenture to be immediately due and payable, together
with any accrued and unpaid interest thereon. Further, in the case of an
Indenture Default resulting from bankruptcy or insolvency of Kmart or the Owner
Trust, such Mortgage Notes shall immediately become due and payable. Each
Indenture further provides that, if an Indenture Default shall occur and be
continuing thereunder, the holders of a majority in aggregate outstanding
principal amount of the Mortgage Notes issued under such Indenture may direct
the Indenture Trustees with respect to the exercise of remedies thereunder. See
"Description of the Mortgage Notes -- Remedies". Accordingly, the ability of the
holders of the Certificates evidencing interests in a Pass Through Trust to
cause the Indenture Trustees to accelerate the Mortgage Notes issued under an
Indenture or to direct the exercise of remedies by the Indenture Trustees under
an Indenture will depend, in part, upon the proportion of the aggregate
outstanding principal amount of the Mortgage Notes issued under such Indenture
held in such Pass Through Trust to the aggregate outstanding principal amount of
all Mortgage Notes issued under such Indenture. If, for example, the Mortgage
Notes held in a Pass Through Trust constituted only 45% of the outstanding
principal balance of the Mortgage Notes issued under such Indenture even if all
of the holders of Certificates evidencing interests in such Pass Through Trust
were to direct the Indenture Trustees to accelerate such Mortgage Notes, the
Mortgage Notes so voted by the Pass Through Trustee would not be sufficient
under the terms of the Indenture to compel the Indenture Trustees to act.
Moreover, there can be no assurance that the holders of Certificates evidencing
interests in the other Pass Through Trust would at such time instruct the Pass
Through Trustee to vote such Mortgage Notes in favor of such acceleration. Each
Pass Through Trust will hold Mortgage Notes with different interest rates,
maturity dates, initial principal amounts and amortization schedules than the
Mortgage Notes held in the other Pass Through Trust, and therefore the holders
of Certificates evidencing interests in a Pass Through Trust may have interests
that diverge from or conflict with those of the holders of Certificates
evidencing interests in the other Pass Through Trust. In addition, because the
Mortgage Notes held in Pass Through Trust 1994-K-1 will amortize more quickly
than those held by Pass Through Trust 1994-K-2, as principal payments are
received on the Mortgage Notes held in Pass Through

24
<PAGE> 26

Trust 1994-K-1, the relative voting power of the holders of the Certificates
evidencing interests in such Pass Through Trust will diminish.

As an additional remedy, if an Indenture Default under an Indenture shall
have occurred and be continuing, each Agreement provides that after the Mortgage
Notes issued under such Indenture have been accelerated the Trustee may, and
upon the direction of the holders of Certificates evidencing fractional
undivided interests aggregating not less than a majority in interest of the
related Pass Through Trust shall, sell all or part of the Mortgage Notes issued
under such Indenture that are held in such Pass Through Trust for cash.
(Agreements, Section 7.01) Any proceeds received by the Trustee upon any such
sale shall be deposited in the related Special Payments Account and shall be
distributed on the next succeeding Special Distribution Date to holders of
Certificates evidencing interests in such Pass Through Trust. (Agreements,
Section 7.02) The market for Mortgage Notes in default is likely to be very
limited and there can be no assurance that they could be sold for a price equal
to the unpaid principal amount thereof and accrued interest thereon, or any
other price, if at all. If the Trustee sells any of the Mortgage Notes held in a
Pass Through Trust with respect to which an Indenture Default exists for less
than its outstanding principal amount and accrued interest thereon, the amount
of distributions made to holders of the Certificates evidencing interests in
such Pass Through Trust will be less than would otherwise be the case.

Any amount distributed to the Trustee by the Corporate Indenture Trustee
under any Indenture on account of the Mortgage Notes held in a Pass Through
Trust following an Indenture Default under such Indenture will be deposited in
the Special Payments Account and distributed to the related Certificateholders
on the next succeeding Special Distribution Date. In addition, if following an
Indenture Default under any Indenture, the Owner Trust exercises its option to
redeem the outstanding Mortgage Notes issued under such Indenture as described
below under "Description of the Mortgage Notes -- Redemption -- Optional
Redemption," the price paid by the Owner Trust to the Trustee for the Mortgage
Notes issued under such Indenture and held in a Pass Through Trust will be
deposited in the Special Payments Account for such Pass Through Trust and
distributed to the related Certificateholders on the Special Distribution Date
in respect of which such funds were deposited, which shall occur not less than
20 days after the date of notice of such Special Payment. (Agreements, Sections
5.01 and 5.02)

Any funds representing payments received by the Trustee with respect to any
defaulted Mortgage Notes held in a Pass Through Trust, or the proceeds from the
sale by the Trustee of any such Mortgage Notes received by the Trustee, will be
deposited in the Special Payments Account for such Pass Through Trust and
(except when received on a Special Distribution Date as to which notice has been
timely given), to the extent practicable, invested and reinvested by the Trustee
in Permitted Investments pending the distribution of such funds on the next
succeeding Special Distribution Date. Permitted Investments are defined in the
Agreements as obligations of the United States maturing no later than the
Special Distribution Date. (Agreements, Article I and Section 5.04) It is not
anticipated that the Trustee will be able to invest in Permitted Investments
generating sufficient income to pay the interest that would otherwise be paid on
such Mortgage Notes. To the extent the Trustee is unable to do so, the amount of
interest distributable in respect of the Certificates will be reduced.

Each Agreement provides that the Trustee shall, within 90 days after the
occurrence of a default in respect of the Pass Through Trust, give notice,
transmitted by mail, to the holders of the Certificates evidencing interests in
such Pass Through Trust of all uncured or unwaived defaults under such Agreement
known to it; provided that, except in the case of a default in the payment of
principal, premium, if any, or interest on the Mortgage Notes held in such Pass
Through Trust, the Trustee need not give such notice if the Trustee makes a good
faith determination that it is in the interests of the holders of the
Certificates to withhold such notice. The term "default," for the purpose of the
provision described in this paragraph only, shall mean the occurrence of any
Event of Default specified above, except that, in determining whether any such
Event of Default has

25
<PAGE> 27

occurred, any grace period or notice in connection therewith shall be
disregarded. (Agreements, Section 7.11)

Each Agreement contains a provision entitling the Trustee, subject to the
duty of the Trustee during a default to act with the required standard of care,
to be indemnified by the holders of the Certificates evidencing interests in the
related Pass Through Trust before proceeding to exercise any right or power
under such Agreement at the request of such Certificateholders. (Agreements,
Section 8.03)

In certain cases, the holders of Certificates evidencing fractional
undivided interests aggregating not less than a majority in interest of a Pass
Through Trust may, on behalf of the holders of all Certificates evidencing
interests in such Pass Through Trust, waive any past default or Event of Default
under the related Agreement and thereby annul any direction given by such
holders to the Indenture Trustees with respect thereto (provided that any such
waiver will be effective only if the corresponding Indenture Event of Default
has been waived under the related Indenture by the requisite holders of the
Mortgage Notes outstanding thereunder), except (i) a default in payment of the
principal, premium, if any, or interest on any of the Mortgage Notes held in
such Pass Through Trust and (ii) a default in respect of any covenant or
provision of the related Agreement that cannot be modified or amended without
the consent of each holder of a Certificate evidencing an interest in such Pass
Through Trust affected thereby. (Agreements, Section 7.10) See "Modifications of
the Agreements". Each Indenture provides that, with certain exceptions, the
holders of a majority in aggregate outstanding principal amount of the Mortgage
Notes issued thereunder may, on behalf of all such holders, waive any past
default or Indenture Default thereunder. (Indentures, Section 7.14) In the event
of a waiver under an Agreement as described above, the principal amount of the
Mortgage Notes issued under the applicable Indenture and held in the related
Pass Through Trust shall be counted as waived in the determination of the
requisite percentage of Mortgage Notes required to waive a default or an
Indenture Default under such Indenture. Therefore, if the holders of
Certificates evidencing interests in a Pass Through Trust waive a past default
or Event of Default under the respective Agreement with the result that the
principal amount of Mortgage Notes held in such Pass Through Trust constitutes
the required majority in aggregate unpaid principal amount under the applicable
Indenture, such past default or Indenture Default under such Indenture shall be
waived. For a discussion of waivers of Indenture Defaults under the Indentures,
see "Description of the Mortgage Notes -- Indenture Defaults, Notice and
Waiver".

MODIFICATIONS OF THE AGREEMENTS

Each Agreement contains provisions permitting Kmart and the Trustee to
enter into a supplement to the Agreement, without the consent of the holders of
any of the Certificates evidencing an interest in the Pass Through Trust created
thereby, (i) to evidence the succession of another corporation to Kmart and the
assumption by such corporation of Kmart's obligations under such Agreement, (ii)
to add to the covenants of Kmart for the benefit of the holders of such
Certificates, (iii) to cure any ambiguity, to correct or supplement any
defective or inconsistent provision of such Agreement or any supplement, or to
make any other provisions with respect to matters or questions arising under
such Agreement or any supplement, provided such action shall not adversely
affect the interests of the holders of such Certificates, (iv) to correct or
amplify the description of any property constituting property of the Pass
Through Trust, (v) to surrender any rights or powers conferred upon Kmart or add
to the rights of the holders of any Certificates, (vi) to evidence or provide
for a successor Trustee or to add or change any provision of such Agreement as
may be necessary to provide for or facilitate the administration of the Pass
Through Trust created thereby by more than one Trustee, or (vii) to add,
eliminate or change any provision under such Agreement to the extent necessary
to continue the qualification of the Agreement under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"), or to add certain provisions
expressly permitted by the Trust Indenture Act; provided, that in each case such
supplement does not cause the Pass Through Trust to become taxable as an
association within the meaning of Treasury Regulation

26
<PAGE> 28

Section 301.7701-4 and, provided, further, that no such supplement may require
the Company to have any direct or indirect obligation (other than pursuant to
the Lease or the Owner Participation Agreement, to the extent that the Company
has assumed the obligations of the Owner Trust thereunder) to pay to, guarantee,
or otherwise provide for the receipt by, the Pass Through Trustee or any
Certificateholder of any of the amounts payable in respect of the Mortgage Notes
or the Certificates. (Agreements, Section 10.01)

Each Agreement also contains provisions permitting Kmart and the Trustee,
with the consent of the holders of Certificates evidencing fractional undivided
interests aggregating not less than a majority in interest of the Pass Through
Trust created thereby, to execute supplements thereto adding any provisions to
or changing or eliminating any of the provisions of the Agreement or modifying
the rights of the Certificateholders thereunder (subject to the provisos to the
preceding paragraph), except that no such supplement may, without the consent of
the holder of each Certificate so affected, (a) reduce the amount or extend the
time of payment of any amount owing or payable on the Mortgage Notes or
distributions to be made on any Certificate, or alter the currency in which any
amount payable under any such Certificate is to be paid, or impair the right of
any Certificateholder to commence legal proceedings to enforce a right to
receive payment under the Agreement, (b) reduce the percentage of the aggregate
fractional undivided interests of the Pass Through Trust provided for in such
Agreement, the consent of the holders of Certificates evidencing which is
required for any such supplement or for any waiver provided for in such
Agreement, (c) create or permit the creation of any lien on the Mortgage Notes
or deprive any Certificateholder of the benefit of the Pass Through Trust with
respect to the Mortgage Notes, whether by disposition or otherwise, except as
provided in such Agreement, or (d) modify the provisions in (a), (b) or (c) or
the provisions requiring the Trustee to provide notice of the occurrence of a
default or modify the definitions of "majority in interest of
Certificateholders" and "outstanding" contained in the Agreement. (Agreements,
Section 10.02)

MODIFICATION OF LEASES AND OTHER DOCUMENTS

In the event that the Trustee, as the holder of the Mortgage Notes held in
a Pass Through Trust, receives a request for its consent to any amendment,
modification or waiver under the Indenture, any Lease or any other related
document relating to such Mortgage Notes, the Trustee shall mail a notice of
such proposed amendment, modification or waiver to each record holder of a
Certificate evidencing an interest in such Pass Through Trust as of the date of
such notice. The Trustee shall request instructions from such Certificateholders
as to whether or not to consent to such amendment, modification or waiver, and
shall vote or consent with respect to the Mortgage Notes held in such Pass
Through Trust in the same proportion as the Certificates were actually voted by
the holders thereof. Notwithstanding the foregoing, if an Event of Default under
the related Agreement shall have occurred and be continuing, the Trustee may in
its own discretion consent to such amendment, modification or waiver, and may so
notify the Indenture Trustee under the Indenture to which such consent relates.
(Agreements, Section 10.08)

TERMINATION OF THE PASS THROUGH TRUSTS

The obligations of Kmart and the Trustee created by an Agreement will
terminate upon the distribution to holders of Certificates evidencing interests
in the Pass Through Trust created by such Agreement of all amounts required to
be distributed to them pursuant to the Agreement and the disposition of all
property held in such Pass Through Trust. The Trustee will mail to each holder
of record of a Certificate evidencing an interest in such Pass Through Trust
notice of the termination thereof, the amount of the proposed final payment and
the proposed date for the distribution of such final payment. The final
distribution to any holder of a Certificate will be made only upon surrender of
such holder's Certificates at the office or agency of the Trustee specified in
such notice of termination. (Agreements, Section 11.01)

27
<PAGE> 29

THE TRUSTEES

is the Trustee for Pass Through Trust
1994-K-1 and is the Trustee for Pass Through Trust
1994-K-2. Each Trustee and any agent of such Trustee may hold Certificates in
their own names. (Agreement, Section 8.05) With certain exceptions, the Trustees
will make no representations as to the validity, legality or enforceability of
the Agreements, the Certificates, the Mortgage Notes, the Indentures, the
Leases, the Owner Participation Agreement or other related documents.
(Agreements, Section 3.04)

A Trustee may resign with respect to the related Pass Through Trust at any
time upon at least 90 days' prior written notice, in which event the Company
will be obligated to appoint a successor trustee. If a Trustee ceases to be
eligible to continue as Trustee under an Agreement or becomes incapable of
acting as Trustee or becomes insolvent, the Company may remove such Trustee, or
any holder of Certificates evidencing an interest in the Pass Through Trust
created thereby for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the removal
of such Trustee and the appointment of a successor trustee (which shall not be
the Trustee of the other Pass Through Trust). In addition, the holders of
Certificates evidencing fractional undivided interests aggregating not less than
a majority in interest of such Pass Through Trust may at any time remove the
Trustee without cause by delivering an instrument in writing to Kmart, the
Trustee, the Owner Trustees and the Indenture Trustees. Any resignation or
removal of the Trustee of a Pass Through Trust and appointment of a successor
trustee for such Pass Through Trust will not become effective until acceptance
of the appointment by the successor trustee. (Agreements, Section 8.09)

Each Agreement provides that the Company will pay the Trustee's fees and
expenses. Each Agreement further provides that the Trustee will be entitled to
indemnification by the Company for, and will be held harmless against, any loss,
liability or expense incurred by the Trustee (other than through its own willful
misconduct, bad faith or negligence or by reason of a breach of any of its
representations or warranties set forth in such Agreement). (Agreements, Section
8.08 and Article IX)

DESCRIPTION OF THE MORTGAGE NOTES

The statements under this caption are summaries of the terms of the
Mortgage Notes and the Indentures and do not purport to be complete. The
summaries make use of terms defined in and are qualified in their entirety by
reference to all of the provisions of the Mortgage Notes and the Indentures, the
forms of which have been filed as exhibits to the Registration Statement of
which this Prospectus is a part. Except as otherwise indicated, the following
summaries relate to the Mortgage Notes and the Indenture relating to each
Property in respect of which such Mortgage Notes are to be issued.

GENERAL

Two Mortgage Notes will initially be issued under each Indenture and each
Indenture will relate to a single Property. Each Indenture will be between the
Owner Trust and the Indenture Trustees. Mortgage Notes issued pursuant to each
Indenture relating to the Properties will be secured only by the Property to
which such Indenture relates and will not have cross-default or
cross-collateralization provisions.

The Owner Trust will lease each Property to Kmart. Kmart will be obligated
under the Leases to make or cause to be made rental and other payments to the
Owner Trust in amounts that will be at least sufficient to pay when due all
payments required to be made on the Mortgage Notes except in certain cases of
optional redemption by the Owner Trust. The Mortgage Notes will not, however, be
direct obligations of, or guaranteed by, Kmart (except to the extent that Kmart
may assume the obligations of the Owner Trust thereunder). Payments under the
Leases in excess of the amounts

28
<PAGE> 30

required to make required payments on the Mortgage Notes will be paid by the
Indenture Trustees to the Owner Trust, for distribution to the Owner Participant
and will not be available for distributions on the Certificates, except in
certain cases upon an Indenture Default. Excepted Payments will not be available
for distribution even upon an Indenture Default. See "Remedies". Kmart's rental
obligations under each Lease will be general obligations of Kmart.

PRINCIPAL PAYMENTS

The aggregate principal amounts of the Mortgage Notes issued with respect
to each Property, as such Mortgage Notes are held in each of the Pass Through
Trusts, are as follows:

<TABLE>
<CAPTION>
PASS THROUGH TRUST PASS THROUGH TRUST
1994-K-1 % 1994-K-2 %
PROPERTY NO. MORTGAGE NOTES MORTGAGE NOTES TOTAL
- ---------------------------------------------- ------------------ ------------------ --------
<S> <C> <C> <C>
1.............................................
2.............................................
3.............................................
4.............................................
5.............................................
6.............................................
7.............................................
8.............................................
9.............................................
10............................................
11............................................
12............................................
13............................................
14............................................
15............................................
16............................................
17............................................
18............................................
19............................................
20............................................
------------- ------------- ---------
Total.................................... $ $ $
============= ============= =========
</TABLE>

Interest will be payable on each Mortgage Note at the rate borne by such
Mortgage Note on the unpaid principal amount thereof on and
in each year, commencing ,

29
<PAGE> 31

1995. Such interest will be computed on the basis of a 360-day year of twelve
30-day months. The principal of each Mortgage Note held in a Pass Through Trust
will be payable as set forth below:

PASS THROUGH TRUST 1994-K-1
% MORTGAGE NOTES

<TABLE>
<CAPTION>
SCHEDULED PRINCIPAL PAYMENT DATES TOTAL
----------------------------------------------------------------- ----------
<S> <C>
$

Total....................................................... $
==========
</TABLE>

PASS THROUGH TRUST 1994-K-2
% MORTGAGE NOTES

<TABLE>
<CAPTION>
SCHEDULED PRINCIPAL PAYMENT DATES TOTAL
----------------------------------------------------------------- ----------
<S> <C>
$

Total....................................................... $
==========
</TABLE>

If any date scheduled for any payment of principal, premium, if any, or
interest on the Mortgage Notes is not a Business Day, such payment may be made
on the next succeeding Business Day without interest.

REDEMPTION

REDEMPTION UPON AN EVENT OF LOSS OR OTHER CONDEMNATION OR CASUALTY

The Mortgage Notes issued with respect to each Property will be subject to
redemption, in whole, but not in part, at a redemption price equal to the unpaid
principal amount thereof together with accrued interest thereon to the date of
redemption (the principal of the Mortgage Notes, or the portion thereof, being
redeemed, and all interest thereon to the date of redemption, are collectively
called the "Redemption Price"), upon the occurrence of an Event of Loss (as
defined under "Description of the Leases -- Condemnation and Casualty") with
respect to such Property. (Indentures, Section 6.02(a))

The Mortgage Notes with respect to each Property will also be subject to
redemption, in whole or in part, at the Redemption Price (i) upon the occurrence
of a condemnation with respect to such Property, to the extent that the
condemnation proceeds exceed the actual cost of restoration of the Property or
(ii) upon the occurrence of a casualty with respect to such Property, to the
extent that the casualty proceeds exceed the cost of restoration of the Property
and are actually disbursed to the Owner Trust. See "Description of the Leases --
Condemnation and Casualty". In the case of any partial redemption, the principal
amount of the Mortgage Notes issued with respect to the Property in question
will be redeemed ratably, in the proportion that the unpaid principal amount of
each such Mortgage Note bears to the unpaid principal amount of all such
Mortgage Notes. (Indentures, Section 6.02(a))

If, prior to the date of any casualty or condemnation, Kmart exercised the
Termination Right with respect to the affected Property, then the redemption
procedures described above will not apply, but rather Kmart will proceed to
consummate such Termination Right, which will result in redemption pursuant to
the terms thereof. See "Redemption Upon Termination". In addition, upon the
occurrence of an Event of Loss or in lieu of exercising its Termination Right,
Kmart may exercise

30
<PAGE> 32

a Substitution Right with respect to the affected Property, in which event the
Mortgage Notes will not be redeemed and Kmart will proceed to consummate the
Substitution Right. (Indentures, Article XIV) See "Description of the Leases --
Substitution".

REDEMPTION UPON TERMINATION

If Kmart exercises the Termination Right with respect to any Property or if
Kmart exercises the Competitor Option, then the Mortgage Notes issued with
respect to such Property (or, in the case of the exercise of the Competitor
Option, all of the Mortgage Notes) will be redeemed at a price equal to the
Redemption Price plus a Make-Whole Premium. (Indentures, Section 6.02(e))

OPTIONAL REDEMPTION

The Owner Trust, with the consent of Kmart, may redeem all of the Mortgage
Notes issued by it or all of the Mortgage Notes issued with respect to a
Property, at a price equal to the Redemption Price, plus a Make-Whole Premium.
(Indentures, Section 6.02(b))

Further, Kmart may cause a redemption by the Owner Trust of all of the
Mortgage Notes held in either or both of the Pass Through Trusts at a price
equal to the Redemption Price, plus a Make-Whole Premium. (Indentures, Section
6.02(d))

The Mortgage Notes issued under any particular Indenture by the Owner Trust
will be subject to redemption by the Owner Trust (except during any period
during which the Company is the Owner Participant or otherwise controls the
Owner Trust), in whole, but not in part, if under such Indenture a Lease Event
of Default (other than a Lease Event of Default related to Excepted Payments)
shall have occurred and be continuing; provided that there is no Indenture
Default resulting other than from such Lease Event of Default. Such redemption
will be at the Redemption Price plus the Make-Whole Premium if effected prior to
the earlier of acceleration of the applicable Mortgage Notes or, if such Lease
Event of Default arises from a default described in clauses (i), (ii) or (v) of
the definition of Lease Event of Default (a "Monetary Default"), the expiration
of a period of 180 days following the occurrence of such Lease Event of Default.
Such redemption will be at the Redemption Price without premium if effected
after (i) acceleration of the applicable Mortgage Notes or (ii) in the event of
a Monetary Default, the expiration of such period of 180 days. Upon any Lease
Event of Default (other than a Lease Event of Default related to Excepted
Payments), the Indenture Trustees will be entitled to accelerate the Mortgage
Notes and terminate the Lease (or the Company's right to possession of the
Property) only upon 20 days' prior notice to the Owner Trust. See "Description
of the Leases -- Remedies". (Indentures, Sections 6.02(c) and 8.02)

REDEMPTION DATES

Any redemption of the Mortgage Notes shall occur on the respective date of
redemption (the "Redemption Date") fixed in accordance with the related
Indentures. The Redemption Date shall be the date designated in the notice of
redemption given by the Owner Trust (or by Kmart pursuant to the Lease) to the
related Indenture Trustee. Any such notice must be given not less than 45 days
prior to the Redemption Date. The Redemption Date designated may be any Special
Distribution Date occurring not less than 25 days after the date of delivery of
such notice. (Indentures, Section 6.03) See "Description of the Leases -- Early
Termination".

MAKE-WHOLE PREMIUM

The "Make-Whole Premium," if any, on any Mortgage Note (or portion thereof)
to be redeemed will be calculated by an independent investment banking
institution of national standing selected by the Owner Trust. The Make-Whole
Premium shall be determined as of the third Business Day prior to the applicable
Redemption Date and shall equal the excess, if any, of (i) the sum of the
present values of all the remaining Scheduled Payments on such Mortgage Note (or
the portion of each such Scheduled Payment corresponding to the portion of such
Mortgage Note to be

31
<PAGE> 33

redeemed) from the Redemption Date to the maturity date of such Mortgage Note,
discounted semi-annually on each interest payment date for such Mortgage Note at
a rate equal to the Treasury Yield plus fifty basis points (0.50%), based on a
360-day year of twelve 30-day months over (ii) the aggregate unpaid principal
amount of such Mortgage Note (or the then unpaid portion thereof to be redeemed)
plus accrued but unpaid interest thereon (excluding, for this purpose, any
accrued interest in default).

The Treasury Yield means, with respect to each Mortgage Note (or the
portion thereof) to be redeemed, a per annum rate determined as of the date of
determination of the Make-Whole Premium equal to the weekly average yield to
maturity of United States Treasury Notes having a constant maturity as set forth
in the most recent weekly statistical release (or any successor release)
published by the Federal Reserve Bank of New York and designated "H.15 (519)
Selected Interest Rates" (the "H.15 Statistical Release"), corresponding to the
weighted average life of the Mortgage Note (calculated to the nearest 1/12 of a
year) (the "Weighted Average Life"). The Treasury Yield will be calculated by
the independent investment banking institution of national standing selected by
the Owner Trust, by interpolation (unless the Weighted Average Life of the
Mortgage Note equals a constant maturity set forth in the H.15 Statistical
Release) on a straight-line basis, between the weekly average yields (rounded,
if necessary, to the nearest 1/100 of 1%, with any figure 1/200 of 1% or above
rounded upward) on (a) the United States Treasury Notes with a constant maturity
closest to and greater than the Weighted Average Life and (b) the United States
Treasury Notes with a constant maturity closest to and less than the Weighted
Average Life, or if such weekly average yields are not available, by
interpolation of comparable rates selected by the independent investment banking
institution. (Indentures, Article I)

ISSUANCE OF REFINANCING MORTGAGE NOTES

In the event of any optional redemption of any Mortgage Notes issued under
an Indenture, one or more new series of mortgage notes (the "Refinancing
Mortgage Notes") may be issued under such Indenture; provided that: (w) no
Material Default has occurred and is continuing; (x) if after such redemption
any Mortgage Notes issued under such Indenture remain outstanding, the
Refinancing Mortgage Notes (i) shall be denominated and payable in United States
dollars and shall not be in a principal amount greater than the Mortgage Notes
redeemed, (ii) shall not rank senior in any respect to the Mortgage Notes that
remain outstanding, and (iii) shall not have a maturity date after or have a
weighted average life longer than the Mortgage Notes redeemed if any of the
Mortgage Notes remaining outstanding have (a) a maturity date after or
concurrent with the maturity date of the Mortgage Notes redeemed or (b) a
weighted average life longer than the weighted average life of the Mortgage
Notes redeemed; (y) that amounts payable under the Lease (other than Excepted
Payments) shall be sufficient to pay when due the principal of, premium (other
than any premium for which the Company was not previously liable under the
Lease), if any, and interest on such Refinancing Mortgage Notes and any
outstanding Mortgage Notes (including previously issued Refinancing Mortgage
Notes) when due; and (z) if Mortgage Notes remain outstanding under such
Indenture, the issuance of such Refinancing Mortgage Notes shall not result by
itself in the downgrading of the rating assigned to the Certificates at such
time by Moody's Investors Service, Inc. or Standard & Poor's Ratings Group.
(Indentures, Section 15.02) The Refinancing Mortgage Notes shall be secured pari
passu by the related Indenture.

SECURITY

Two Mortgage Notes will initially be issued by the Owner Trust under each
Indenture, and will be secured by (i) an assignment to the Indenture Trustees of
certain of the Owner Trust's rights under the Lease with respect to the Property
subject to such Indenture, including the right to receive rentals and certain
other amounts payable thereunder by Kmart, and (ii) a first mortgage on the
related Property (subject to the rights of Kmart under the related Lease). The
Mortgage Notes issued under an Indenture will not be secured by any of the
Properties securing Mortgage Notes

32
<PAGE> 34

issued under any other Indenture and will not have cross-default provisions,
with the result that an Indenture Default under any Indenture will not
necessarily constitute an Indenture Default under any other Indenture. Unless
and until an Indenture Default has occurred and is continuing, payments under
the Lease with respect to such Property in excess of the amount required to pay
amounts owed in respect of the related Mortgage Notes will be paid to the Owner
Trust for distribution to the Owner Participant and, accordingly, no such excess
payments distributed prior to an Indenture Default will be available to satisfy
any deficiency in the amount available to pay the related Mortgage Note in full.

Unless and until an Indenture Default has occurred and is continuing and
the related Mortgage Notes have been declared due and payable, the Indenture
Trustees may not exercise any of the rights of the Owner Trust under the related
Lease, except the right to receive payments of rent due thereunder (other than
Excepted Payments). (Indentures, Granting Clause) The assignment by the Owner
Trust to the Indenture Trustees of its rights under each Lease will exclude,
among other things, rights of the Owner Trust and the Owner Participant relating
to indemnification by Kmart of the Owner Trust, the Owner Trustees or the Owner
Participant for certain matters, insurance proceeds payable to the Owner
Trustees in their individual capacities and to the Owner Participant under
liability insurance maintained by Kmart under such Lease or by the Owner
Trustees or the Owner Participant, insurance proceeds payable to the Owner Trust
or to the Owner Participant under certain casualty insurance maintained by the
Owner Trustees or the Owner Participant and certain reimbursement payments made
by Kmart to the Owner Trust (collectively, "Excepted Payments"), as well as
claim, consent and other rights relating to the foregoing. (Indentures, Granting
Clause)

Funds, if any, held from time to time by the Indenture Trustees with
respect to any Property, including funds held as the result of an Event of Loss
with respect to such Property or termination of the Lease relating thereto, will
be invested and reinvested in certain Permitted Investments selected by the
Corporate Indenture Trustee. The Corporate Indenture Trustee will not be
obligated to pay the amount of any loss resulting from any such investment
directed by it. (Indentures, Section 5.08)

RELEASE OF SECURITY

In certain circumstances, Kmart will have the right to terminate the Leases
with respect to the Properties. See "Redemption" and "Description of the Leases
- -- Early Termination". If Kmart were to exercise the Termination Right, and
redeem the Mortgage Notes issued with respect to a Property, the Indenture
provides that the Indenture Trustees will release such Property from the lien of
the Indenture upon receipt of, among other things, an officer's request from the
Company and the Corporate Owner Trustee describing the Property to be released,
an officer's certificate from the Company and the Corporate Owner Trustee
stating that no Material Default under the Lease has occurred and is continuing,
the Property is required or permitted to be sold, disposed of or released
pursuant to the Lease and the Indenture, and all conditions in the Indenture and
the Lease relating to such release have been complied with.

Kmart will also have the right under each Lease, if a Property becomes
uneconomic or is subject to a condemnation or casualty, to substitute a property
for the Property leased thereunder. See "Description of the Leases --
Substitution Right". In connection therewith, each Indenture provides that the
Indenture Trustees will release the Property or Properties substituted therefor
upon compliance with the provisions described in the preceding paragraph and the
delivery of all documents and instruments required by the Indenture Trustees to
subject the substitute property or properties to the lien of such Indenture.
(Indentures, Section 14.01)

Kmart will also be entitled, upon certain terminations of the Lease with
respect to a Property, to assume, on a full recourse basis, under certain
circumstances, the Owner Trustees' obligations under the Mortgage Notes issued
with respect to the affected Property, (Indentures, Section 3.08) See
"Assumption of Obligations by Kmart". In such a case, the Property may be
released from the

33
<PAGE> 35

lien of the Indenture, upon satisfaction of the conditions described above and
under "Assumption of Obligations by Kmart".

LIMITATION OF LIABILITY

The Mortgage Notes are not direct obligations of, or guaranteed by, Kmart
(except to the extent that it assumes the obligations of the Owner Trust under
any of the Mortgage Notes) or the Owner Trust. Neither the Owner Trust, the
Owner Trustees, the Owner Participant nor the Indenture Trustees, nor any
affiliate thereof, shall be personally liable to any holder of a Mortgage Note
or to the Indenture Trustees for any amounts payable under the Mortgage Notes or
for any liability under such Indenture. All payments of principal, premium, if
any, and interest on the Mortgage Notes issued with respect to any Property will
be made only from the assets subject to the lien of the Indenture or the income
and proceeds received by the Indenture Trustees therefrom (including Basic Rent
and Additional Rent payable by Kmart under the related Lease). (Indentures,
Section 2.05)

No Owner Trustee acting in its individual capacity, Owner Participant or
any director, officer, employee, stockholder, agent or affiliate of the Owner
Trustee or Owner Participant (the "Exculpated Person") will have any obligation,
duty or liability of any kind whatsoever to the Indenture Trustee or any holder
of a Mortgage Note in connection with the exercise by any Exculpated Person of
any rights of the Owner Trust under the Lease and the other Operative Documents,
or the taking of any action or the failure to take any action, in each case in
connection with any rights of the Owner Trust under the Lease and the other
Operative Documents. (Indentures, Section 18.01)

INDENTURE DEFAULTS, NOTICE AND WAIVER

Indenture Defaults under each Indenture include: (a) the occurrence of any
Lease Event of Default under a Lease of Property securing the Mortgage Notes
issued under such Indenture (other than a Lease Event of Default related to
Excepted Payments), (b) failure by the Owner Trust, other than by reason of any
Lease Default or Lease Event of Default, to pay any principal, premium, if any,
or interest on any Mortgage Note issued thereunder when due, (c) any termination
or revocation of the Owner Trust Agreement, (d) failure by the Owner Trust
(other than by reason of a Lease Event of Default or any event or condition
which, with notice or lapse of time or both, if uncured, would constitute a
Lease Event of Default) or the Owner Participant to perform in any material
respect any other material covenants contained in the Indenture, the Mortgage
Notes issued under such Indenture or the Owner Participation Agreement, which
continues unremedied for a period of 30 days (or such longer period (but in no
event more than 180 days) if such failure has a material adverse effect on the
Holders of the Mortgage Notes and is capable of being remedied within a
reasonable period of time (but not within such 30-day period) if within such
30-day period the Owner Trust or Owner Participant, as applicable, promptly
commences and thereafter prosecutes with diligence and good faith efforts to
effect a cure) after notice to the Owner Trust by the Corporate Indenture
Trustee or to the Owner Trust and the Corporate Indenture Trustee by the holders
of at least a majority in unpaid principal amount of outstanding Mortgage Notes
issued under such Indenture, (e) any representation or warranty made by the
Owner Trust, the Owner Trustees (in their individual capacities) or the Owner
Participant in the Indenture, the Owner Participation Agreement or in any
related document or certificate furnished to the Indenture Trustees pursuant
thereto being incorrect in any material respect as of the date made, and such
inaccuracy is and continues to be material to the holders of Mortgage Notes
issued under such Indenture, which continues unremedied for a period of 30 days
(or such longer period (but in no event more than 60 days) if such falseness or
inaccuracy is susceptible to being remedied within a reasonable period of time
(but not within such 30-day period) if within such 30-day period the Owner
Trust, the Owner Trustees or Owner Participant, as applicable, promptly
commences and thereafter prosecutes with diligence and good faith efforts to
effect a cure) after notice to the Owner Trust by the Corporate Indenture
Trustee or to the Owner Trust and the Corporate Indenture

34
<PAGE> 36

Trustee by the holders of at least a majority in unpaid principal amount of
outstanding Mortgage Notes issued under such Indenture, and (f) the occurrence
of certain events of bankruptcy, reorganization or insolvency of the Owner
Trust. (Indentures, Section 7.01)

In the event Kmart fails to make any semi-annual basic rental payment, and
such failure shall constitute or become a Lease Event of Default, within 10
days' written notice of such failure the Owner Trust may furnish to the
Indenture Trustees the amount of such rental payment, in which event the
Indenture Trustees and the holders of outstanding Mortgage Notes issued under
such Indenture may not exercise any remedies otherwise available under such
Indenture or the Lease securing the Mortgage Notes issued thereunder as the
result of such failure to make such rental payment, unless the Owner Trust shall
have previously effected on behalf of Kmart three such consecutive payments or
five such payments cumulatively. The Owner Trust may also cure any other default
by Kmart in the performance of its obligations under any Lease which can be
cured solely by the payment of money, within 10 days after the expiration of the
grace period, if any, specified in the Lease. (Indentures, Section 8.03) In
addition, the Owner Trust may cure any default by Kmart in the performance of
its obligations under any Lease other than those which can be cured by the
payment of money alone, within 30 days after the expiration of the notice or
grace period provided with respect to such default on the part of the Company
under the Lease (or, such longer period, not to exceed 90 days, if the Owner
Trust or the Owner Participant promptly commences and thereafter pursues to
conclusion such cure). During these periods, the Indenture Trustees may not
exercise any rights under the Lease and the Mortgage Notes may not be
accelerated. The value of the Properties or the ability of Kmart to perform
under the Leases could decline during any period when the exercise of remedies
under an Indenture has been prevented through the exercise of cure rights. The
cure rights described above will not apply during any period during which Kmart
is the Owner Participant or otherwise controls the Owner Trust.

Each Indenture provides that the Corporate Indenture Trustee must, within
30 days after any event resulting in the occurrence of an Indenture Default
known by it, give notice thereof to the holders of the Mortgage Notes issued
thereunder, unless such Indenture Default has been cured or waived or it
determines (except in the case of a default in the payment of the principal of,
premium, if any, or interest on the Mortgage Notes) that withholding such notice
is in the best interests of the holders of the Mortgage Notes. (Indentures,
Section 9.03)

The holders of a majority in principal amount of the outstanding Mortgage
Notes issued under an Indenture, by notice to the Indenture Trustees thereunder,
may on behalf of all holders waive any past default under such Indenture except
a default in the payment of the principal, premium, if any, or interest on any
such Mortgage Note or a default in respect of any covenant or provision of such
Indenture that cannot be modified or amended without the consent of each holder
of a Mortgage Note affected thereby. (Indentures, Section 7.14)

REMEDIES

Upon the occurrence of an Indenture Default resulting from the bankruptcy,
insolvency or reorganization of the Owner Trust, or a Lease Event of Default
resulting from the bankruptcy, insolvency or reorganization of Kmart, the unpaid
principal amount of the Mortgage Notes issued under such Indenture, together
with interest accrued but unpaid thereon without premium, and all other amounts
due thereunder and under such Indenture, shall become due and payable.
(Indentures, Section 7.02(b)) Upon the occurrence of any other Indenture
Default, the Indenture Trustees may, or when instructed by the holders of at
least a majority in aggregate outstanding principal amount of the Mortgage Notes
issued under such Indenture shall, declare the principal of all the Mortgage
Notes outstanding under such Indenture, together with the interest accrued but
unpaid thereon, but without premium, and all other amounts due thereunder and
under such Indenture, immediately due and payable. (Indentures, Section 7.02(c))

35
<PAGE> 37

The Indenture Trustees' right to exercise remedies under each Indenture is
subject to acceleration of the Mortgage Notes and, with respect to an Indenture
Default occurring solely by reason of a Lease Event of Default, concurrent
action to terminate the Lease or dispossess the Company or otherwise seeking to
effect a comparable remedy under the related Lease as to which a Lease Event of
Default shall have occurred.

The holders of a majority in aggregate principal amount of outstanding
Mortgage Notes issued under an Indenture may rescind any declaration of
acceleration by the Indenture Trustees, whether made on their own accord or as
directed by holders of such Mortgage Notes, at any time prior to the sale of the
Trust Estate if (i) there has been paid or deposited with the Corporate
Indenture Trustee an amount sufficient to pay all overdue installments of
interest on all such Mortgage Notes and the principal on any Mortgage Notes that
has been due otherwise than by such declaration, all sums paid or advanced by
the Indenture Trustees under such Indenture and certain other expenses, (ii) the
rescission would not conflict with any judgment or decree and (iii) all
Indenture Defaults under such Indenture, other than the non-payment of principal
that has become due solely because of such acceleration, have been cured or
waived. (Indentures, Section 7.02(c)) Such rescission will be binding upon all
holders of the Mortgage Notes; however, no such rescission will affect any
subsequent default or impair any right or remedy consequent thereon.

Each Indenture provides that, subject to the Owner Trust's right, if any,
to cure certain defaults or to redeem the Mortgage Notes, if any Indenture
Default has occurred and is continuing thereunder, following acceleration of the
Mortgage Notes the Indenture Trustees may, and when required by the provisions
of the Indentures relating to their duties as Indenture Trustees shall, exercise
certain rights or remedies available to them under applicable law, including
taking possession of the Trust Estate and foreclosing the lien of the Indenture,
including the lien on the Property included in the Trust Estate, subject to the
terms of the Lease. In addition, the Indenture Trustees may not sell any part of
the Trust Estate unless the related Mortgage Notes have been accelerated.
(Indentures, Section 7.02(a)) If a Lease Event of Default has occurred, the
Indenture Trustees as assignees of the Owner Trust may also exercise remedies
afforded to the Owner Trust by such Leases for a Lease Event of Default
thereunder. See "Description of the Leases -- Remedies".

In certain circumstances, the Mortgage Notes issued with respect to a
Property may be accelerated even if no default exists under the related Lease.
In such case, notwithstanding any acceleration, Kmart would not be obligated to
pay more than the amounts of rent required to be paid periodically under the
Lease (in the absence of Lease defaults). Also, although the Lease provides that
upon default thereunder Kmart can be required to pay damages in an amount at
least equal to the principal and interest on the related Mortgage Notes, it is
possible that a court would nonetheless apply a measure of damages yielding a
lesser amount.

The right of any holder of a Mortgage Note to institute an action for any
remedy under the Indenture pursuant to which such Mortgage Note was issued
(including the right to enforce payment of the principal, premium, if any, and
interest on such Mortgage Note when due) will be subject to certain conditions
precedent, including a request to the Indenture Trustees by the holders of at
least 25% in aggregate principal amount of Mortgage Notes then outstanding under
such Indenture to take action (unless a majority in interest of the
Certificateholders object to such action within 30 days of such request), and an
offer to the Indenture Trustees of reasonable indemnification against the costs,
expenses and liabilities incurred by it in doing so. (Indentures, Sections 7.08
and 7.09)

During the continuance of an Indenture Default the holders of a majority in
aggregate principal amount of Mortgage Notes outstanding under an Indenture may
(i) require the Indenture Trustees to enforce such Indenture, either by judicial
proceedings for the enforcement of payment of the Mortgage Notes and the
foreclosure of the Indenture and the sale of the Property subject to the lien of
the Indenture or, at the election of the Indenture Trustees, by the exercise of
the power of entry

36
<PAGE> 38

and/or sale or other remedies conferred under such Indenture, and (ii) direct
the time, method and place of conducting any proceeding for any remedy available
to the Indenture Trustees or of exercising any trust or power conferred on the
Indenture Trustees, provided that such direction does not conflict with any
applicable law or such Indenture and does not unduly prejudice the rights of
holders of such Mortgage Notes other than those constituting such majority, and
the Indenture Trustees may take any other action not inconsistent with such
direction which is deemed proper by the Indenture Trustees. (Indentures, Section
7.13)

If an Indenture Default under any Indenture occurs and is continuing and
the Mortgage Notes are accelerated, any sums held or received by the Indenture
Trustees may be applied to reimburse the Indenture Trustees for any tax, expense
or other loss incurred by them and to pay any other amounts due to the Indenture
Trustees prior to any payments to holders of the Mortgage Notes issued under
such Indenture. (Indentures, Section 5.03)

There are certain aspects of mortgage loans that may affect the
enforceability thereof or the ability to realize on the security, including the
scarcity of buyers at foreclosure, environmental risks relating to the
underlying property, anti-deficiency or single-action legislation and bankruptcy
laws that may limit the ability of a mortgage lender to enforce the loan and
related security agreements or affect the value of such mortgage loans. If the
Owner Trust were the subject of a bankruptcy petition, the right to exercise
virtually all remedies against the Owner Trust would be stayed (including the
right to collect payments under the Leases). In addition, the bankruptcy court
could permit the use or disposition of Lease payments and the Properties for
purposes other than making payments on the Mortgage Notes and could reduce the
amount and modify the time of payments due under the Mortgage Notes, subject to
certain procedural and substantive safeguards for the benefit of the holders of
the Mortgage Notes. Although attempts will be made to structure the Owner Trust
as a bankruptcy-remote entity (for instance, its business will be limited to
participating in the Sale-Leaseback Transactions), there can be no assurance
that the Owner Trust will not become the subject of a bankruptcy proceeding,
including by reason of the bankruptcy of the Owner Participant and the
consolidation of the assets and liabilities of the Owner Trust with the assets
and liabilities of the Owner Participant. The Owner Participant currently
engages in other businesses and is not subject to any limitations on the conduct
of its business. See also "Description of the Leases -- Consequences of Kmart's
Bankruptcy".

MODIFICATION OF INDENTURES AND OTHER DOCUMENTS

Without the consent of holders of the Mortgage Notes outstanding under any
Indenture, the provisions of the Leases, the Owner Participation Agreement or
the Owner Trust Agreement may not be amended or modified, except: (i) if
expressly so provided for in the provisions thereof; or (ii) if such
modification or amendment, as set forth in an opinion of counsel of the party
requesting such modification or amendment, does not materially adversely affect
the interest of any holder of the Mortgage Notes under such Indenture; provided,
however, that the restrictions on amendments to the Owner Trust Agreement are
limited to certain specific provisions thereof. The Indenture Trustees may give
any consent, waiver, authorization or approval under the Owner Participation
Agreement, the Owner Trust Agreement and the Leases, if as set forth in an
opinion of counsel from the Owner Trustees or the Company, such action does not
materially adversely affect the interest of any holder of the Mortgage Notes
under such Indenture.

The consent of neither the Indenture Trustees nor any of the holders of the
Mortgage Notes is required to make certain adjustments to the payments under the
Leases, in compliance with the provisions thereof, except that, without the
consent of the holder of each Mortgage Note affected thereby, no such
modification or waiver may extend the time for any payment under any Lease or
reduce the amount thereof below the amount necessary to pay principal, premium,
if any, and interest on the Mortgage Notes. (Indentures, Section 12.07)

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Each Indenture contains provisions permitting the Owner Trust and the
Indenture Trustees, with the consent of the holders of a majority in outstanding
unpaid principal amount of the Mortgage Notes issued thereunder, to add, modify
or eliminate any provision of the Indenture, except that, without the consent of
the holder of each Mortgage Note outstanding under any Indenture affected
thereby, no amendment or modification of such Indenture may (a) reduce the
amount or extend the time of payment of any amount owing or payable on the
Mortgage Notes, reduce the rate of interest on the Mortgage Notes, change the
order of priorities in which distributions under the Indenture are to be made or
with respect to the amount or time of payment of any such distribution, change
the circumstances under which any premium becomes payable or the manner in which
such premium is calculated, change the currency in which payments under any
Mortgage Note are to be made, or impair the right of any holder of any Mortgage
Note to institute suit for the enforcement of payment thereof; (b) reduce or
modify any indemnities in favor of any holder of any Mortgage Note; (c) create
or permit the creation of any lien on the Indenture Estate ranking prior to or
on a parity (other than Refinancing Mortgage Notes) with the lien of the
Indenture; (d) reduce the percentage of the aggregate outstanding unpaid
principal amount of the Mortgage Notes issued thereunder, the consent of the
holders of Mortgage Notes evidencing which is required for any such supplement
or any waiver provided for in such Indenture; or (e) modify the provisions in
(a), (b), (c) or (d) or the conditions under which holders of the Mortgage Notes
may institute suit for the enforcement of any payment. (Indentures, Section
12.02)

Kmart has the right under the Owner Participation Agreement to consent to
certain Indenture amendments and other actions and to require that the Owner
Trust takes certain actions under the Indentures.

DISCHARGE OF LIEN

Each Indenture will cease to be of further effect when, among other things,
either (a) all Mortgage Notes have been delivered to the Indenture Trustee for
cancellation, or (b)(i) all Mortgage Notes not theretofore delivered to the
Indenture Trustees for cancellation will mature or are to be called for
redemption such that they will be due and payable within one year, and (ii) the
Owner Trust has deposited with the Corporate Indenture Trustee in trust an
amount sufficient to pay such Mortgage Notes, including principal, premium, if
any, and interest to the date of such maturity or redemption, together with all
other sums then due and payable thereunder. (Indentures, Section 13.01)

ASSUMPTION OF OBLIGATIONS BY KMART

Upon exercise of the Termination Right or the Competitor Option, Kmart may
assume on a full recourse basis all of the obligations of the Owner Trust under
an Indenture, including the obligations to make payments relating to the
Mortgage Notes allocable to the related Lease, provided that, prior to such
assumption, Kmart shall have delivered to the Corporate Indenture Trustee an
opinion of independent legal counsel of recognized standing to the effect that
(i) the assumption will not constitute a sale or exchange of the Mortgage Notes
within the meaning of Internal Revenue Code section 1001 and the regulations
thereunder, and (ii) the assumption will not otherwise adversely affect the
Federal income taxation of holders of the Certificates, and subject to certain
other limitations contained in the Indenture, and in connection therewith shall
execute a supplemental indenture to the related Indenture (such supplemental
indenture, together with the related indenture, the "Company Indenture"). See
"Description of the Leases -- Early Termination". The Property will continue to
be subject to the lien of the Company Indenture, and the Company Indenture will
incorporate certain relevant provisions of the Lease or Leases so terminated,
including (among others) provisions relating to maintenance, possession and use
of the related Property or Properties, liens, insurance and events of default;
provided, however, that if legal opinions are delivered to the effect that if
the Mortgage Notes so assumed by Kmart were unsecured, the Pass Through Trusts
would not be required to register as "investment companies"

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under the Investment Company Act of 1940, as amended, and that the prohibited
transaction exemption granted to Goldman, Sachs & Co. (as it may be amended,
modified, added to or succeeded) (see "ERISA Considerations") would continue to
be applicable with respect to the Pass Through Trusts and the Certificates, the
lien and the related Property to be released and the Mortgage Notes will be
unsecured obligations of Kmart. In that event the Company Indenture will contain
terms substantially the same as the Indenture between Kmart and The Bank of New
York, dated as of February 1, 1985, which has been filed with the Commission.

DESCRIPTION OF THE LEASES

The statements under this caption are summaries of the terms of the Leases
and do not purport to be complete. The summaries make use of terms defined in
and are qualified in their entirety by reference to all of the provisions of
each Lease, the form of which has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part. Except as otherwise indicated, the
following summaries relate to each of the Leases securing the Mortgage Notes.

TERM AND RENT

The Owner Trust will lease each Property to Kmart pursuant to a Lease for
an interim term from , 1994 until , and a base term of
years commencing on . Kmart will have the option to extend each
Lease for at least six consecutive terms of five years each. (Lease, Articles 2
and 8). Because the Mortgage Notes and the Certificates are scheduled to be
retired during the base term of the Lease, any such extensions should not affect
the interests of the Certificateholders. So long as no Lease Event of Default
(as defined herein) exists with respect to the Lease, Kmart, as lessee
thereunder, will be entitled to undisturbed possession of the related Property,
even if there exists a default (other than a Lease Event of Default) under the
related Indenture or under an Agreement. Rents are required to be paid by Kmart
under the Leases in immediately available funds on each 1 and
1, commencing on 1, 1995 (the "Rent Payment Dates"). On each
Rent Payment Date, the aggregate amount of rents payable under the Leases will
be at least equal to the aggregate scheduled amount of principal, interest and
any Make-Whole Premium required to be paid on the outstanding Mortgage Notes on
such date, except in certain cases of optional redemption by the Owner Trust.
See "STRUCTURE OF THE TRANSACTION". Kmart is obligated under each Lease to pay
interest on any late payments of rent, which shall accrue at a rate equal to the
sum of 1% plus the weighted average of the interest rates of the Mortgage Notes
from the relevant payment date to the date such payments are actually received
by the Indenture Trustee (the "Default Rate"). (Lease, Article 3).

NET LEASES; NO SET-OFF

The obligations of Kmart under each Lease are those of a lessee under a
"net lease." Kmart's obligation to pay rent is absolute and unconditional, and
payments of rent under the Leases are to be made without notice, demand,
counterclaim, setoff, deduction, defense, abatement, or reduction. (Lease,
Article 4).

Each Lease also provides that it shall not be terminable by Kmart
thereunder, except under the limited circumstances as described therein, nor
shall Kmart be entitled to any abatement or reduction, with respect to any
payment of rent or other obligation under any Lease, by reason of: (i) any
damage to or destruction of a leased Property; (ii) any taking of a Property or
any part thereof by eminent domain or otherwise; (iii) any prohibition,
limitation, restriction , interference with or prevention of Kmart's use,
occupancy or enjoyment of all or any part of a Property; (iv) any default by an
Owner Trust under any Lease; (v) any eviction by a holder of paramount title or
otherwise; (vi) any purported merger of estates resulting from Kmart's
acquisition of all or any part of a Property; or (vii) any other cause whether
similar or dissimilar to the foregoing, any present or future law to the
contrary notwithstanding. (Lease, Article 4).

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REPAIRS AND MAINTENANCE

Each Lease requires Kmart to make and pay for all maintenance, replacement,
alteration and repair, both structural and non-structural, of the Property on a
timely basis, whether such maintenance, replacement, alteration and repair is
foreseeable or not foreseeable, which may be required to keep the Property in
good repair and condition, ordinary wear and tear excepted, consistent with the
standard of maintenance employed by Kmart as of the date of the Lease with
respect to similar properties owned or leased by Kmart and located in the
general geographic area where the Property is located, and in compliance with
applicable laws and health and safety standards. (Lease, Article 9). In no event
is the Owner Trust required to repair, rebuild or maintain any of the
Properties.

ALTERATIONS AND ADDITIONAL CONSTRUCTION

If no Material Default (as defined under "Events of Default") or Lease
Event of Default has occurred and is continuing, Kmart may, at its own expense,
make such alterations and additions, structural or otherwise, in or to its
buildings and erect or construct additional buildings or structures on the
Property, which alterations, additions and additional buildings and structures
shall be subject to the lien of the related Indenture, provided that the fair
market value or remaining useful life of such Property shall not be diminished
thereby except to an insignificant extent and that the Property shall not, as a
result, be characterized as "limited use property". In connection with any
alterations, additions or erection of additional improvements, Kmart shall
perform and complete all work in a first-class, workmanlike manner in compliance
with applicable laws. Kmart shall maintain at all times during construction all
risk builders insurance and comprehensive general liability insurance naming the
Owner Trust and the Indenture Trustee as additional insureds. All such
additional improvements shall be and remain the property of the Owner Trust and
shall be subject to all of the terms and provisions of the Lease. (Lease,
Article 10). All trade fixtures and furniture installed at the expense of Kmart
shall remain the property of Kmart, not subject to the lien of the related
Indenture, and shall be removed from the premises by Kmart, at its expense, at
the expiration of the term of the Lease; provided, however, that Kmart shall
have the option, during the term of the Lease, to relinquish its property rights
with respect to such trade fixtures and, after the exercise of such option, the
property specified shall be the property of the Owner Trust, subject to the lien
of the related Indenture. (Lease, Article 27).

LIENS

Kmart, as lessee, covenants that it shall not, during the term of any
Lease, directly or indirectly create, incur, assume, suffer or permit any lien
on or with respect to the related Property or any part hereof, any rent, title
thereto or interest therein, up to and including the date of the end of such
Lease term, other than Permitted Liens. "Permitted Liens" are: (i) the
respective rights and interests of Kmart, the Owner Trust, the Owner
Participant, the Remainderman, the Indenture Trustee, and the Trustee; (ii)
certain liens resulting from acts of, or claims against, the Owner Trust or the
Remainderman; (iii) liens for taxes and assessments that either are not yet due
and payable or are being contested in good faith and by appropriate proceedings
diligently conducted, so long as such proceedings do not (a) subject the
Property to foreclosure, forfeiture or loss or result in the sale of the
Property, (b) interfere other than to an insignificant extent with the use,
possession or disposition of the Property, (c) interfere with the payment of
rents or (d) involve any risk of loss of the priority of the lien of the
Indenture relating thereto; (iv) materialmen's, mechanics', workers',
repairmen's, employees' or other like liens arising after the date of the Lease
in the ordinary course of business for amounts either not yet due or being
contested in good faith and by appropriate proceedings so long as such
proceedings shall not involve any risk of the sale, forfeiture or loss of any
part of the Property and shall not materially interfere with the use, occupancy
or disposition of the Property or interfere with the payment of rents or involve
any risk of loss of the priority of the lien of the Indenture; (v) liens arising
after the date of the Lease out of judgments or awards with

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respect to which at the time an appeal or proceedings for review is being
prosecuted diligently and in good faith and that either have been bonded to the
satisfaction of the Owner Trust and the Indenture Trustee or the enforcement of
which has been continuously stayed pending such appeal or review; (vi)
easements, rights-of-way, reservations, servitudes and rights of others against
the Property which (a) are listed as Permitted Exceptions in the Purchase
Agreement (the "Purchase Agreement") dated as of the date of the Lease or (b)
are granted pursuant to the specific provisions of such Lease; and (vii)
assignments, leases and subleases expressly permitted by the Operative Documents
(as defined in the Purchase Agreement). (Lease, Article 19).

Kmart shall promptly, but no later than 30 days after the attachment
thereof, at its own expense, discharge, eliminate or bond any lien that is not a
Permitted Lien in a manner satisfactory to the Owner Trust. In the event such
lien is not so discharged, eliminated or bonded, the Owner Trust may pay and
discharge any such lien, and Kmart shall reimburse the Owner Trust upon demand
for the amount so paid together with interest thereon at the Default Rate.
(Lease, Article 19).

ASSIGNMENT OR SUBLEASING; USE; NO CONTINUOUS OPERATION

Kmart may assign, or sublease all or any part of, its leasehold interest in
the Properties without the prior written consent of the Owner Trust, provided
that (i) no Lease Event of Default or Material Default has occurred and is
continuing, (ii) such assignment or sublease shall be expressly subject and
subordinate to the relevant Lease, and (iii) Kmart shall remain fully and
primarily liable for the performance of its obligations under the Lease and the
other Operative Documents. Kmart's liability under any Lease shall continue
notwithstanding the rejection of such Lease or sublease pursuant to Title 11 of
the United States Code (the "Bankruptcy Code"). In the event Kmart assigns the
Lease and it is thereafter rejected in a bankruptcy or similar proceeding, a new
lease identical to the rejected Lease shall be reinstituted as between the Owner
Trustee and Kmart without further act by either party. Kmart is prohibited from
mortgaging or otherwise encumbering its interest under the Lease. (Lease,
Article 17).

Each Property may be used for any lawful purpose; provided that no use of
any Property may be made by Kmart or an assignee or sublessee of Kmart that
would: (i) be a public nuisance; (ii) cause a Property to become a "tax-exempt
use property" within the meaning of Section 168(h) of the Code, or any successor
statute thereto, or to become a "tax-exempt bond financed property" within the
meaning of Section 168(g)(5) of the Code; (iii) void any certificate of
occupancy required for such Property; (iv) cancel or make it impossible to
obtain the issuance of any insurance policy required for such Property by the
related Lease; or (v) increase the Owner Trust's risk of environmental
liability; provided that any retail or office use shall not be deemed to
increase the risk of environmental liability for this purpose. (Lease, Article
17).

At Kmart's request, the Owner Trust is required, subject to certain
limitations and conditions, to grant easements, release existing easements, make
dedications, execute annexation petitions and amend covenants and restrictions
in respect of any Property that do not impair (other than to an insignificant
extent) the usefulness of the Property for the purposes contemplated and
permitted by the Lease, or reduce the fair market value or remaining useful life
of the Property and shall not cause such Property to be characterized as
"limited use property" for certain federal income tax purposes. (Lease, Article
13).

Kmart is not obligated under the Lease to operate a business at the
Property, except as required by law or by other agreement binding on the
Property. (Lease, Article 5).

INSURANCE

Under each Lease, Kmart is required, at its own cost and expense, to carry
workers' compensation insurance with limits of no less than $5,000,000,
insurance against loss by fire and other casualties included under
extended-coverage, all-risk endorsements, in an amount not less than 100% of the
full insurable replacement value of the improvements constituting part of the

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Property, comprehensive general liability insurance with minimum coverage of
$5,000,000 with respect to injury of any one person, $5,000,000 with respect to
any one accident or disaster and $5,000,000 with respect to damage to property.
In no event shall the deductible amount under such casualty insurance policies
exceed $100,000. In the event that Kmart fails to obtain or maintain such
insurance, the Owner Trust may obtain such coverage and will be reimbursed by
Kmart for the cost thereof, plus interest at the Default Rate from the date
incurred by the Owner Trust. The Owner Trust shall have no obligation to
maintain insurance of any type on the Properties and Kmart shall not have any
rights to direct actions or subrogation against any insurance policy obtained by
the Owner Trust. Kmart may elect to self-insure any leased Property against
casualty, workers' compensation and liability risks; provided that Kmart
maintains a consolidated tangible net worth of at least $750,000,000 calculated
in accordance with generally accepted accounting principles (the "Net Worth
Standard"). (Lease, Articles 7 and 14).

CONDEMNATION AND CASUALTY

In the event of a condemnation or casualty affecting any Property, Kmart
will be obligated to continue paying rent and to restore such Property at its
own expense as nearly as practicable to the condition as existed immediately
before the condemnation or casualty occurred, provided that in the event of
casualty, no Material Default or Lease Event of Default has occurred and is
continuing. Under the Lease, Kmart is obligated to complete such restorations
prior to the expiration of the term of the Lease or as soon as possible
following the termination of the Lease. If Kmart meets the Net Worth Standard at
the time of the condemnation or casualty, or if insurance proceeds or a
condemnation award due to such occurrence are less than $250,000 and no Material
Default or Lease Event of Default has occurred and is continuing, any such
insurance proceeds or condemnation awards shall be payable to Kmart for
restoration and repair of the Property. If Kmart does not meet the Net Worth
Standard at the time of such loss, and if such condemnation award or casualty
proceeds are in excess of $250,000, however, the net proceeds of such insurance
claim or condemnation award shall, if the related Indenture is outstanding, be
deposited with the Indenture Trustee and shall be disbursed to Kmart upon
progress of completion of restoration, repair, replacement or rebuilding,
subject to certain provisions set forth in the related Lease. In the event that
condemnation proceeds exceed the actual cost of restoration, the Indenture
Trustee shall have the right to retain the excess proceeds and apply the same in
accordance with the related Indenture. (Lease, Articles 14, 15, and 16).

Notwithstanding the foregoing, in the event of a casualty affecting a
substantial portion of a Property (each, a "Casualty"), Kmart may either (i)
restore the Property as set forth above or (ii) give written notice to the Owner
Trust of its intention to terminate the Lease and make a rejectable purchase
offer to the Owner Trustee within 30 days of such damage or destruction. In the
event of a permanent or temporary condemnation of the Property or any
substantial portion thereof that in Kmart's judgment renders the Property
unsuitable for its occupancy and use, or in the event of a condemnation of the
points of ingress and egress of the Property such that they shall be materially
impaired (with no reasonable replacement points of ingress-egress provided) so
that the Property is rendered unsuitable for its intended use (any such event
referred to in this sentence or any Casualty constituting an "Event of Loss"),
Kmart shall be obligated to make such a rejectable offer to purchase the
Property within 30 days of such condemnation (or, with respect to a partial
condemnation, within 90 days after the entry of a final order of taking) for a
price at least equal to the principal of and interest due on the related
Mortgage Notes. If such offer is accepted, the purchase shall be effected on the
next scheduled Rent Payment Date occurring not less than 100 days after the
Owner Trust's receipt of such offer. (Lease, Articles 14, 15 and 40).

If Kmart makes such a rejectable offer to purchase a Property, the Owner
Trust will have 60 days to decide whether to accept such offer. The Owner Trust
may not reject Kmart's purchase offer unless the Owner Trust makes satisfactory
provisions with the Indenture Trustee for the redemption of the related Mortgage
Notes, which provisions shall include the escrowing of cash or

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cash equivalents in amounts sufficient to redeem the Mortgage Notes. If Kmart's
offer is rejected and the Owner Trust makes satisfactory arrangements with the
Indenture Trustee, Kmart shall, on the Rent Payment Date on which Kmart's
purchase would otherwise have occurred, pay to the Owner Trust all basic rent
under the Lease ("Basic Rent") and any other payment under the Lease
("Additional Rent") accrued and owing under the Lease as of such Rent Payment
Date, at which time the Lease shall terminate and the Owner Trust shall receive
all attendant insurance or condemnation proceeds. If, on the other hand, Kmart's
offer is accepted and the Owner Trust makes satisfactory arrangements with the
Indenture Trustee, the sale of the affected Property shall be closed on the next
scheduled Rent Payment Date, and the purchase price (which shall be at least
sufficient to redeem the Mortgage Notes) and all Basic Rent and Additional Rent
accrued and owing on such date shall be paid in cash to the Owner Trust. In the
event of any such sale, any attendant insurance or condemnation proceeds will be
paid to Kmart, and title to the affected Property shall be conveyed to Kmart.
All costs and expenses in connection with such sale shall be paid by Kmart.
(Lease, Article 40).

EARLY TERMINATION RIGHTS

Kmart may exercise its Termination Right with respect to a Lease on any
Rent Payment Date on or after the fifth year of the base term of the Lease
(provided that no Lease Event of Default or Material Default has occurred and is
continuing) if it determines that the Property has become obsolete or may no
longer be economic for Kmart's use or surplus to Kmart's needs, by providing at
least 12 months' and not more than 18 months' notice to the Owner Trust. In such
event, the Property may be (i) transferred to Kmart for an amount sufficient to
retire the related Mortgage Notes (including the Make-Whole Premium thereon)
(the "Retirement Price"), (ii) sold to a third party, with the excess of the
Retirement Price over the net sale price being contributed by Kmart or (iii)
retained by the Owner Trust, provided that the Owner Trust makes satisfactory
provisions with the Indenture Trustee for the redemption of the related Mortgage
Notes, which provisions shall include the escrowing of the Retirement Price for
such Mortgage Notes in cash or cash equivalents, and the Property shall
thereupon be released from the liens of the related Indenture. Under certain
circumstances, Kmart may elect to assume the obligations of the Owner Trust
under the related Mortgage Notes upon exercise of a Termination Right with
respect to the Property. See "Description of the Mortgage Notes -- Assumption of
Obligations by Kmart." (Lease, Article 39).

Pursuant to the Competitor Option, Kmart has the right to acquire the Owner
Participant's interest in the Properties for a price equal to the specified
termination values set forth in the Lease (which shall be at least equal to the
Redemption Price due in respect of the Mortgage Notes) plus, if the Mortgage
Notes are redeemed, a Make-Whole Premium. Kmart, at its election, may exercise
the Competitor Option by either (i) paying such amounts to the Owner Trust, in
which case the Mortgage Notes will be redeemed (with a Make-Whole Premium) and
the Properties will be released from the lien of the Indenture, or (ii), in
accordance with and subject to the terms of the Indenture, taking title to the
Properties, assuming the Mortgage Notes, and paying the difference between the
liabilities assumed and the purchase price to the Owner Trust, in which case the
Mortgage Notes will not be redeemed.

EVENTS OF DEFAULT

The following are events of default under each Lease ("Lease Events of
Default"):

(i) the failure by Kmart to pay any installment of Basic Rent when due
within five days after notice to Kmart of non-payment;

(ii) the failure by Kmart to make any payment constituting Additional
Rent when due within 15 days after notice to Kmart of non-payment;

(iii) the failure by Kmart to maintain insurance as required by the
Lease;

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(iv) the failure by Kmart to perform any of its other covenants or
obligations under the Lease or any of the other Operative Documents (other
than the Tax Indemnification Agreement (as defined in the Lease)) within 30
days after notice thereof; provided that any non-monetary default that is
curable but is not susceptible to a cure within 30 days shall not be deemed
a default if a cure is commenced within 30 days after such notice and is
diligently pursued thereafter; provided further that in no event shall such
cure period for a non-monetary default exceed 180 days;

(v) certain events of bankruptcy, insolvency, reorganization pursuant
to bankruptcy or similar laws, receivership, dissolution or liquidation of
Kmart or a tenant other than Kmart, as the case may be, provided that such
events, if occurring to such other tenant, shall not affect the Lease or
permit its termination so long as (i) no Material Default or other Lease
Event of Default has occurred and is occurring and (ii) the covenants to be
performed under the Lease shall be performed by Kmart or another party
claiming under Kmart;

(vi) any representation or warranty by Kmart in the Lease or any of
the other Operative Documents (other than the Tax Indemnification
Agreement) or in any certificate expressly required to be delivered
pursuant thereto shall have been false or incorrect when made in any
respect material to the Owner Trust or the Owner Participant and such
falseness or incorrectness is material to the Owner Trust or the Owner
Participant and continues to be material, and shall not have been cured
within 30 days after receipt of written notice by Kmart from the Owner
Trust, unless the default is curable and Kmart shall be diligently
proceeding to correct such default; provided that in no event shall such
cure period exceed 60 days; and

(vii) termination of any Ground Lease or judicial determination that
any Ground Lease is invalid, unenforceable or ineffective, unless such
judgment is appealed and the enforcement of such judgment is stayed during
such appeal.

For purposes of each Lease, a "Material Default" shall mean an event of the
type described in clauses (i) and (v) above that, with the passage of time or
the giving of notice, or both, would become a Lease Event of Default.

To the extent that any failure by Kmart to perform any covenant or
obligation or any breach of a representation or a warranty relates solely to a
Property or Properties other than the Property subject to a particular Lease,
such failure or breach shall not give rise to an Event of Default under such
Lease.

The occurrence of a Lease Event of Default under any one Lease shall not
affect the obligations of Kmart and the Owner Trust under the other Leases, it
being expressly provided that the Lease obligations are in no way
cross-defaulted. (Lease, Article 20).

REMEDIES

If a Lease Event of Default has occurred with respect to any Lease and is
continuing beyond any applicable cure periods, the Owner Trust may (i) terminate
such Lease and recover damages from Kmart as described below, (ii) re-enter the
Property without terminating such Lease to remove Kmart and its property, all at
Kmart's expense, with Kmart remaining liable for the balance of rents accruing
to the end of the base term of such Lease (less the amount received by the Owner
Trust with respect to reletting the Property net of the Owner Trust's expenses
in connection therewith) and/or (iii) sell all or part of the Property at public
or private sale, free and clear of any rights of Kmart therein, and Kmart's
obligation to pay Basic Rent with respect to the Property, or the part thereof
that has been sold, for any periods commencing after the date of such sale shall
terminate. If a Lease is terminated upon the occurrence of a Lease Event of
Default thereunder, damages permitted to be recovered by the Owner Trust from
Kmart include: (i) all rents and other payments due under such Lease as of the
date on which the Lease shall be terminated and all other amounts due on the
related Mortgage Notes, plus (ii) at the option of the Owner Trust, any one of:
(a) the

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difference between the amount required to redeem the related Mortgage Notes and
the present value of the fair market rental value of the Property, discounted
semiannually at a % annual percentage rate for the remainder of the term of
the Lease; or (b) the difference between the present value of all rents,
discounted semiannually at a % annual percentage rate, for the remainder of
the base or applicable renewal term of the Lease (the "Discounted Basic Rents")
and the present value of the fair market rental value of the Property for the
remainder of such term, discounted semi-annually at a % annual interest rate;
or (c) an amount equal to the greater of the fair market value of the Property,
the Discounted Basic Rents and the amount required to redeem the related
Mortgage Notes. Fair market values are determined by agreement between Kmart and
the Owner Trust or by appraisal; or (d) the difference between the amount
required to redeem the related Mortgage Notes and the fair market sales value of
the Property. If the Owner Trust receives the sum of the amounts described in
clauses (i) and (ii)(c) above, the Owner Trust will convey the Property to
Kmart. Because the Owner Trust has assigned certain of its rights under each
Lease to the Indenture Trustee, only the Indenture Trustee, and not the Owner
Trust, may exercise remedies following a Lease Event of Default. The
above-described amounts will accrue interest at the Default Rate from the final
payment date specified in the Owner Trust's notice of default and termination of
a Lease to the date of actual payment by Kmart. (Lease, Article 21).

SUBSTITUTION

In lieu of the acquisition by Kmart of the Property in accordance with the
Lease, provided that no Material Default or Lease Event of Default has occurred
and is continuing, Kmart shall be entitled to substitute a retail store (the
"Substitute Property") for the Property provided that as of the date of such
substitution (i) the fair market value of the Substitute Property is not less
than the fair market value of the Property, (ii) the useful life of the
Substitute Property is not less than the useful life of the Property, (iii)
Kmart shall make the same representations and warranties with respect to the
Substitute Property as it had previously made with respect to the Property, (iv)
Kmart shall deliver an environmental assessment report, survey and title search
report, each of which shall be satisfactory, to the Owner Trustee and the
Indenture Trustee and (v) the substitution shall not reduce any rents due under
the Lease. Kmart shall not be entitled to substitute a Property unless (i) the
long-term senior debt securities of Kmart shall have been rated at least BBB- by
at least two nationally recognized statistical rating organizations and (ii)
Kmart agrees to either restructure the substitution transaction to avoid any
material adverse tax consequences identified in an opinion of independent tax
counsel or indemnify the Owner Trust and the Owner Participant against such
adverse tax consequences. All other terms and conditions of the Lease shall
apply to the Substitute Property. If such substitution occurs, the Substitute
Property shall replace the Property as security for the Mortgage Notes and
Certificates. (Lease, Article 41).

CONSEQUENCES OF KMART'S BANKRUPTCY

In the event a bankruptcy proceeding is instituted by or against Kmart
under the Title 11 of the United States Code (the "Bankruptcy Code"), Kmart, as
debtor-in-possession, or its trustee in bankruptcy, would have the right,
subject to bankruptcy court approval to assume or reject the Leases. If any
Lease were rejected, payments thereunder would terminate, thereby leaving the
Owner Trust without cash flow to make payments on the Mortgage Notes issued in
respect of the Property leased thereunder. In the event a Lease were rejected,
the Owner Trust (and by virtue of the Indentures, the Indenture Trustees) would
have an unsecured non-priority claim for damages against Kmart's bankruptcy
estate but, under Section 502(b)(6) of the Bankruptcy Code, such claim 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 the Lease (plus rent already due but unpaid). By
contrast, this limitation under Section 502(b)(6) would not apply to holders of
debt securities issued by Kmart. Therefore, except during the final year of the
Lease term, if Kmart were the subject of proceedings under the Bankruptcy Code
and any Lease were rejected, the damages that could be claimed for rejection,

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<PAGE> 47

even assuming full recovery on such claim (which may not occur), would not be
sufficient to satisfy the outstanding amount of the Mortgage Notes issued in
respect of the Property leased thereunder. Kmart also may have the right in a
bankruptcy to assume and assign the Lease (but only if adequate assurance of
future performance by the assignee is provided) and thereby be relieved of
liability for any breach of such Lease occurring after such assignment.
Moreover, it is possible that a bankruptcy court could treat the transactions
described herein not as a leasing transaction but instead as a secured loan to
Kmart, in which case the bankruptcy court could permit Kmart to use or dispose
of the Properties, subject to providing "adequate protection" (such as a lien on
substitute collateral) to the Owner Trust, and to modify and to adversely affect
the rights of the Owner Trust, including reduction of the amount and
modification of the timing of payments that would otherwise have been payable by
Kmart under the Leases (in which event, however, the above-described limitation
under Section 502(b)(6) of the Bankruptcy Code would not be applicable). The
occurrence of any of the foregoing events may have a material adverse effect on
the holders of the Certificates.

THE PROPERTIES

The Properties consist of 20 Kmart store locations (including 10
combination general-merchandise and grocery Super Kmart Centers). Certain
information regarding each of the Properties is set forth in the following
table:

<TABLE>
<CAPTION>
FACILITY
SIZE LOT SIZE
KMART STORE LOCATIONS (SQ.FT.) (ACRES) OPENING DATE
- ----------------------------------------------------------- -------- -------- ------------
<S> <C> <C> <C>
Antioch, CA................................................ 91,266 7.7 04/17/94
El Cajon, CA............................................... 107,806 10.9 02/10/94
Morgan Hill, CA............................................ 107,806 8.1 02/17/94
Mission Viejo, CA.......................................... 119,128 10.85 03/03/94
Highland, CA............................................... 107,806 9.5 02/17/94
Lafayette, GA.............................................. 94,841 17.9 03/03/94
Sidney, NY................................................. 117,162 22.3 07/24/94
Mankato, MN................................................ 121,890 12.8 09/11/94
McKinleyville, CA.......................................... 94,841 7.5 09/25/94
Hilliard, OH............................................... 121,890 12.0 10/23/94
</TABLE>

<TABLE>
<CAPTION>
FACILITY
SIZE LOT SIZE
SUPER KMART STORE LOCATIONS (SQ.FT.) (ACRES) OPENING DATE
- ----------------------------------------------------------- -------- -------- ------------
<S> <C> <C> <C>
Fresno, CA................................................. 187,072 16.7 08/24/94
Mentor, OH................................................. 191,008 25.0 05/01/94
Bradley, IL................................................ 163,822 13.3 02/10/94
Hattiesburg, MS............................................ 167,318 22.3 06/19/94
Sherman, TX................................................ 167,318 23.85 05/08/94
Lafayette, LA.............................................. 191,008 20.5 07/31/94
Amsterdam, NY.............................................. 166,160 26.0 09/18/94
Chillicothe, OH............................................ 167,318 25.6 09/04/94
Waco, TX................................................... 191,008 29.9 09/11/94
San Antonio, TX............................................ 169,986 22.36 10/30/94
</TABLE>

LEASEHOLD ESTATES

The Properties in Mentor, Ohio and Bradley, Illinois are subject to ground
leases, the latter of which is subordinated with a non-disturbance and
attornment agreement. Under the related Leases, Kmart will agree during the term
of the Lease to pay the rent due under the applicable ground leases and to
comply with all obligations of the ground lessee thereunder.

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<PAGE> 48

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

In the opinion of Dickinson, Wright, Moon, Van Dusen & Freeman, counsel to
Kmart, the following discussion accurately describes the material federal income
tax consequences of the ownership and disposition of Certificates. This opinion
is based on laws, regulations, rulings and decisions now in effect, all of which
are subject to change or different interpretation. This opinion does not purport
to address federal income tax consequences applicable to particular categories
of investors, some of which (for example, insurance companies and foreign
investors) may be subject to special rules.

PROSPECTIVE 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 CERTIFICATES, INCLUDING THE ADVISABILITY
OF MAKING ANY ELECTION DISCUSSED BELOW.

The Pass Through Trusts will not be indemnified for any federal income
taxes that may be imposed upon them, and the imposition of any such taxes could
result in a reduction in the amounts available for distribution to the holders
of Certificates evidencing interests in the affected Pass Through Trust.

GENERAL

Based upon an interpretation of analogous authorities under currently
applicable law, the Pass Through Trusts created by the Agreements will not be
classified as associations taxable as corporations, but, rather will be
classified as grantor trusts under Subpart E, Part I, Subchapter J of Chapter 1
of the Internal Revenue Code of 1986, as amended (the "Code"). Each
Certificateholder will be treated as the owner of a pro rata undivided interest
in each of the Mortgage Notes or any other property held in the Pass Through
Trust in which the Certificate held by such holder evidences an interest.

In reaching the conclusion that each of the Pass Through Trusts will be
classified as a grantor trust, counsel considered whether the Pass Through
Trusts could be recharacterized as "taxable mortgage pools" which are treated as
corporations 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 with terms similar to debt
obligations) with two or more maturities. Because each Pass Through Trust will
issue only one class of beneficial interest having only one maturity date, the
Pass Through Trusts could be treated as "taxable mortgage pools" only if the two
Pass Through Trusts are integrated (i.e. treated as one trust). While there is
no authority directly on point, in rendering its opinion that the Pass Through
Trusts will be treated as grantor trusts, counsel concluded that the Pass
Through Trusts should be respected as separate entities, in part, because (i)
each Pass Through Trust will own separate assets, (ii) each Pass Through Trust
will have separate independent Trustees, (iii) each Pass Through Trust will have
separate sets of Certificateholders and (iv) each Pass Through Trust will have
independent economic substance.

Each Certificateholder, 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 the Mortgage Notes or any other property held in
the related Pass Through Trust and may deduct its pro rata share of the
deductible expenses of the related Pass Through Trust, at the same time and to
the same extent as if it held directly a pro rata interest in the assets of the
Pass Through Trust and received and paid directly the amounts received and paid
by the Pass Through Trust. A Certificateholder who is an individual, trust or
estate will be allowed a deduction for certain itemized deductions only to the
extent they exceed, in the aggregate, 2% of the Certificateholder's adjusted
gross income and such amounts will not be deductible in computing such
taxpayer's alternative minimum tax liability if any.

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<PAGE> 49

A purchaser of a Certificate will be treated as purchasing an interest in
each Mortgage Note and any other property in the related Pass Through Trust at a
price determined by allocating the purchase price paid for the Certificate among
such Mortgage Notes and other property in proportion to their fair market values
at the time of purchase of the Certificate.

SALES OF CERTIFICATES

A Certificateholder that sells a Certificate will recognize gain or loss
(in the aggregate) equal to the difference between its adjusted tax basis in the
Certificate and the amount realized on the sale (except to the extent
attributable to accrued interest, which should be taxable as interest income).
Subject to the market discount provisions of the Code (described below), any
such gain or loss will be capital gain or loss if the Certificate was held as a
capital asset and will be long-term capital gain or loss if the Certificate was
held for more than one year.

MARKET DISCOUNT

A purchaser of a Certificate will be considered to have acquired an
interest in a Mortgage Note at a "market discount" to the extent the remaining
principal amount of the Mortgage Note allocable to the Certificate exceeds the
Certificateholder'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 Certificateholder 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.

In the case of a sale or certain other disposition of indebtedness subject
to the market discount rules, section 1276 of the Code requires that gain, if
any, from such sale or disposition be treated as ordinary income to the extent
such gain does not exceed the market discount that has accrued on such
indebtedness during the period in which it was held.

In the case of a partial principal payment on indebtedness subject to the
market discount rules, section 1276 of the Code requires that such payment be
included in gross income as ordinary income to the extent such payment does not
exceed the market discount that has accrued on such indebtedness during the
period in which it was held. The amount of any accrued discount later required
to be included in income upon a disposition, or a subsequent partial principal
payment, will be reduced by the amount of such partial principal payment
previously included in income.

Generally, market discount accrues under a straight line method, or, at the
election of the taxpayer, a constant interest method. However, in the case of
installment obligations (such as the Mortgage Notes), the manner in which market
discount is to be accrued has been left to Treasury regulations not yet issued.
Until such Treasury regulations are issued, the Conference Report indicates that
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) as follows:
the amount of market discount that is deemed to accrue is the amount of market
discount that bears the same ratio to the total amount of market discount
remaining that the amount of stated interest paid in the accrual period bears to
the total amount of stated interest remaining to be paid on the installment
obligation as of the beginning of such period.

Under section 1277 of the Code, if in any taxable year interest paid or
accrued on indebtedness incurred or continued to purchase or carry market
discount indebtedness exceeds the interest currently includible in income with
respect to such market discount indebtedness, deduction of such excess interest
must be deferred to the extent of the market discount allocable to the portion
of the taxable year in which such market discount indebtedness was held by the
taxpayer. The deferred portion of such interest will generally be deductible
when such market discount is included in income upon the sale or other
disposition (including repayment) of the indebtedness.

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<PAGE> 50

Section 1278 of the Code allows a taxpayer to make an election to include
market discount in his gross income currently. If such election is made, the
rules of sections 1276 and 1277 (described above) will not apply to the
taxpayer. Such an election shall apply to all debt instruments with market
discount acquired by the taxpayer on or after the first day of the first taxable
year to which the election applies. The election shall apply to all subsequent
taxable years and may not be revoked without the consent of the Secretary of
Treasury.

PREMIUM

A Certificateholder will generally be considered to have acquired an
interest in a Mortgage Note at a premium to the extent the purchaser's tax basis
allocable to such interest exceeds the remaining principal amount of the
Mortgage Note allocable to such interest. In that event, a Certificateholder
that holds a Certificate as a capital asset may elect to amortize that premium
as an offset to interest income under section 171 of the Code with corresponding
reductions in the Certificateholder's tax basis in that Mortgage Note.
Generally, such amortization is on a constant yield basis. However, in the case
of installment obligations (such as the Mortgage Notes), the Conference Report
indicates a Congressional intent that amortization be in accordance with the
rules that apply to the accrual of market discount on installment obligations.
See "Market Discount". Such an election shall apply to all debt instruments with
amortizable bond premium (other than debt instruments the interest on which is
excludible from gross income) held by the Certificateholder as of the beginning
of the taxable year for which the election applies or thereafter acquired. The
election will apply to all subsequent taxable years, and may not be revoked
without the consent of the Secretary of the Treasury.

Since the Mortgage Notes may be redeemed at a premium prior to maturity,
amortizable bond premium may be determined by reference to an early redemption
date. Due to the complexities of the amortizable premium rules, particularly
where there is more than one possible redemption date and the amount of any
premium is uncertain, Certificateholders are urged to consult their own tax
advisors as to the amount of any such amortizable premium.

ORIGINAL ISSUE DISCOUNT

It is anticipated that, subject to the aggregation rules discussed below,
the Mortgage Notes will be not be issued with original issue discount. Treasury
regulations (the "Regulations") have been issued under section 1275 of the Code
which contain certain aggregation rules which could be interpreted to require
that, where one investor purchases an interest in more than one Pass Through
Trust, certain of that investor's interest in the Mortgage Notes in those Pass
Through Trusts must be treated together as a single debt instrument, which, for
purposes of calculating and amortizing any original issue discount has a single
issue price, maturity date, stated redemption price at maturity, and yield to
maturity. If the Proposed Regulations were applicable in this way, a
Certificateholder that purchases an interest in more than one Pass Through Trust
could have original issue discount. Generally, a holder of a debt instrument
issued with original issue discount that is not de minimis must include original
issue discount in income for federal income tax purposes as it accrues, in
advance of the receipt of the cash attributable to such income, using a method
that takes into account the compounding of interest. Certificateholders are
urged to consult their own tax advisors regarding the application of the
proposed aggregation rules.

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 Certificateholder complies with certain
reporting procedures or is an exempt recipient under Section 6049(b)(4) of the
Code. Any such withheld amount will be allowed as a credit against the
Certificateholder's federal income tax.

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<PAGE> 51

CERTAIN TAXES

The Trustee for Pass Through Trust 1994-K-1 is a national banking
association with its corporate trust office in and the Trustee for Pass
Through Trust 1994-K-2 is a national banking association with its corporate
trust office in - , counsel to the Trustees, has advised Kmart
that, in its opinion, under currently applicable law, assuming that the Pass
Through Trusts will not be taxable as corporations, but, rather, will be
classified as grantor trusts under subpart E, Part I of Subchapter J of the
Code, (i) Pass Through Trusts will not be subject to any tax (including, without
limitation, net or gross income, tangible or intangible property, net worth,
capital franchise or doing business tax), fee or other governmental charge under
the laws of the State of or , respectively, or any political
subdivision thereof and (ii) Certificateholders that are not residents of or
otherwise subject to tax in or will not be subject to any tax
(including, without limitation, or gross income, tangible or intangible
property, net worth, capital, franchise or doing business tax), fee or other
governmental charge under the laws of the State of or ,
respectively, or any political subdivision thereof as a result of purchasing,
holding (including receiving payments with respect to, or selling a Certificate.
Neither the Pass Through Trusts nor the Certificateholders will be indemnified
for any state or local taxes imposed on them, and the imposition of any such
taxes on a Pass Through Trust could result in a reduction in the amounts
available for distribution by the holders of Certificates evidencing interests
in such Pass Through Trust. In general, should a Certificateholder or a Pass
Through Trust be subject to any state or local tax which would not be imposed if
the Trustee were located in a different jurisdiction in the United States, the
Trustee will resign and a new Trustee in such other jurisdiction will be
appointed.

ERISA CONSIDERATIONS

The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes certain restrictions on covered employee benefit plans, including
corporate pension and profit sharing plans ("Plans"), and on persons who are
parties in interest or disqualified persons ("Parties in Interest") with respect
to such Plans. ERISA also imposes certain duties on persons who are fiduciaries
of Plans and prohibits non-exempt transactions between a Plan and its Parties in
Interest. Governmental plans and certain church plans are not subject to ERISA.
Certain plans not subject to ERISA, such as individual retirement accounts,
certain Keogh plans, and governmental or church plans qualified under Section
401(a) of the Code, are subject to separate prohibitions in the Code against
non-exempt transactions with Parties in Interest.

Investments by Plans are subject to ERISA's general fiduciary requirements,
including the requirement of investment prudence and diversification and the
requirement that a Plan's investments be made in accordance with the documents
governing the Plan. Moreover, each Plan fiduciary should determine whether,
under the general fiduciary standards of investment prudence and
diversification, an investment in the Certificates is appropriate for the Plan,
taking into account the overall investment policy of the Plan and the
composition of the Plan's investment portfolio.

Plan fiduciaries must also determine whether the acquisition and holding of
the Certificates and the operations of the Pass Through Trusts and the Owner
Trust (collectively, the "Trust Funds") would result in direct or indirect
prohibited transactions. The operations of the Trust Funds could result in
prohibited transactions if Plans that purchase the Certificates are deemed to
own an interest in the underlying assets of one or more of the Trust Funds.
There may also be an improper delegation of the responsibility to manage Plan
assets if Plans that purchase the Certificates are deemed to own an interest in
the underlying assets of the Trust Funds.

The Department of Labor (the "DOL") has granted to Goldman, Sachs & Co. an
administrative exemption, Prohibited Transaction Exemption 89-88 (the
"Exemption"), from certain of the prohibited transaction rules of ERISA with
respect to the initial purchase, the holding and the subsequent resale by Plans
of certificates representing interests in asset-backed pass-through

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<PAGE> 52

trusts that consist of certain receivables, loans and other obligations that
meet the conditions and requirements of the Exemption. The obligations covered
by the Exemption appear to include obligations such as the Mortgage Notes. The
Exemption may apply to the acquisition, holding and resale of the Certificates
by a Plan, depending upon whether certain conditions (some of which are outside
the control of Goldman, Sachs & Co., the Owner Trusts, the Trustees and Kmart)
are met.

Among the conditions which must be satisfied for the Exemption to apply are
the following:

(1) the acquisition of the Certificates by a Plan is on terms
(including the price for the Certificates) that are at least as favorable
to the Plan as they would be in an arm's-length transaction with an
unrelated party;

(2) the rights and interests evidenced by the Certificates acquired by
the Plan are not subordinated to the rights and interests evidenced by
other certificates of the Pass Through Trust;

(3) the Certificates acquired by the Plan have received a rating at
the time of such acquisition that is in one of the three highest generic
rating categories from S&P, Moody's, Duff & Phelps Inc. ("D&P") or Fitch
Investors Service, Inc. ("Fitch");

(4) the sum of all payments made to Goldman, Sachs & Co. in connection
with the distribution of the Certificates represents not more than
reasonable compensation for underwriting the Certificates. The sum of all
payments made to and retained by the Owner Trustee pursuant to the sale of
the Mortgage Notes to the Pass Through Trusts represents not more than the
fair market value of such Mortgage Notes. The sum of all payments made to
and retained by a Servicer (as defined below) represents not more than
reasonable compensation for the Servicer's services under the Trust Funds
and reimbursement of the Servicer's reasonable expenses in connection
therewith;

(5) the Trustees must not be an affiliate of any member of the
Restricted Group (as defined below); and

(6) the Plan investing in the Certificates is an "accredited investor"
as defined in Rule 501(a)(1) of Regulation D under the Securities Act of
1933.

The Pass Through Trusts also must meet the following requirements:

(i) the corpus of the Pass Through Trusts must consist solely of
assets of the type which have been included in other investment pools;

(ii) certificates in such other investment pools must have been rated
in one of the three highest rating categories of S&P, Moody's, D&P, or
Fitch for at least one year prior to the Plan's acquisition of
Certificates; and

(iii) certificates evidencing interests in such other investment pools
must have been purchased by investors other than Plans for at least one
year prior to any Plan's acquisition of Certificates.

Moreover, the Exemption provides relief from certain self-dealing
prohibited transactions if a Plan fiduciary causes a Plan to acquire
Certificates in a Pass Through Trust in which the fiduciary or its affiliate is
an obligor on no more than 5% of the fair market value of the receivables held
in the trust, provided that, among other requirements: (i) in the case of an
acquisition in connection with the initial issuance of Certificates, at least
50% of each class of Certificates in which Plans have invested is acquired by
persons independent of the Restricted Group; (ii) the Plan's investment in
Certificates does not exceed 25% of all the Certificates outstanding at the time
of the acquisition; and (iii) immediately after the acquisition, no more than
25% of the assets of the Plan managed or advised by the fiduciary are invested
in certificates representing an interest in one or more trusts containing assets
sold or serviced by the same entity. The Exemption does not apply to Plans

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<PAGE> 53

sponsored by Kmart, Goldman, Sachs & Co., the Owner Trustee, the Trustees, the
Servicers, or any affiliate of such parties (the "Restricted Group").

The Exemption also covers generally transactions in connection with the
servicing, management and operation of the Pass Through Trusts if such
transactions are entered into pursuant to a binding pooling or servicing
agreement provided or described in all material respects to the Plans prior to
their purchase of Certificates.

The DOL has issued a final regulation (29 C.F.R. Section 2510.3-101) (the
"Plan Assets Regulation") providing that, as a general rule, the underlying
assets and properties of corporations, partnerships, trusts and certain other
entities (other than operating companies) in which a Plan makes an equity
investment will be deemed for purposes of ERISA and Section 4975 of the Code to
be assets of the investing Plan, unless certain exceptions apply. Accordingly,
if a Plan purchases the Certificates, the related Pass Through Trusts and
possibly the Owner Trust will be deemed to hold plan assets unless one of the
exceptions under the Plan Assets Regulation is applicable to the Trust Funds.
Because it is not believed that the Certificates will be held by at least 100
holders independent of Kmart and each other, the only exception that may be
available is an exception applicable if less than 25% of equity interests
(determined after each sale or transfer of a Certificate) of the Certificates in
a Pass Through Trust is held at all times by "benefit plan investors," which
include Plans, IRAs and Keogh plans, governmental plans and certain other plans
not subject to ERISA. However, there can be no assurance that this exception set
forth in the Plan Assets Regulation will apply to the Trust Funds, since the
level of benefit plan investment will not be monitored.

Under the terms of the Plan Assets Regulation, if the Trust Funds were
deemed to hold Plan assets by reason of a Plan's investment in a Certificate,
such Plan assets would include an undivided interest in the Mortgage Notes in
the Pass Through Trusts and possibly the assets in the Owner Trust. In such an
event, the Trustees and servicers providing services with respect to the assets
of the Trust Funds ("Servicers") may be subject to the fiduciary responsibility
provisions of Title I of ERISA. Violation of fiduciary duties by a Trustee or
Servicer could result in liability not only for the Trustee or Servicer but also
for the trustee or other fiduciary of an investing Plan, who under the
circumstances could be held liable for breaches of fiduciary standards by its
co-fiduciaries.

In addition, if the Trust Funds were deemed to hold Plan assets, the
Trustees and Servicers may be subject to the prohibited transaction provisions
of ERISA and Section 4975 of the Code with respect to transactions involving
such assets unless those transactions are subject to a statutory or
administrative exemption. Among the administrative class exemptions that may be
available in addition to the Exemption discussed above are: Prohibited
Transaction Class Exemption ("PTE") 75-1, which exempts certain securities
transactions involving employee benefit plans and certain broker-dealers and
banks; PTE 91-38 (formerly PTE 80-51), which exempts certain transactions
between bank collective investment funds and parties in interest; PTE 90-1
(formerly PTE 78-19), which exempts certain transactions with insurance company
pooled separate accounts; or PTE 84-14, which exempts certain transactions
effected on behalf of a plan by a "qualified professional asset manager".

Any Plan fiduciary which proposes to cause a Plan to purchase Certificates
should consult with its counsel with respect to the potential applicability of
ERISA and the Code (including the Plan Assets Regulation) to such investments,
whether any prohibited transaction exemptions would be applicable, and whether
all conditions of any potentially applicable prohibited transaction exemption
have been satisfied. Additionally, the Plan fiduciary should consult its counsel
with respect to any valuation issues which may be presented by an investment in
Certificates.

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<PAGE> 54

LEGAL INVESTMENT CONSIDERATIONS

The Certificates will not constitute "mortgage related securities" under
the Secondary Mortgage Market Enhancement Act of 1984. The appropriate
characterization of the Certificates under various legal investment
restrictions, and thus the ability of investors subject to these restrictions to
purchase Certificates, may be subject to significant interpretive uncertainties.
All investors whose investment authority is subject to legal restrictions should
consult their own legal advisors to determine whether, and to what extent, the
Certificates will constitute legal investments for them.

UNDERWRITING

Subject to the terms and conditions set forth in the Underwriting
Agreement, Kmart has agreed to cause the Trustees to sell to Goldman, Sachs &
Co., and Goldman Sachs & Co. have agreed to purchase, the entire principal
amount of the Certificates.

Under the terms and conditions of the Underwriting Agreement, Goldman,
Sachs & Co. are committed to take and pay for all of the Certificates, if any
are taken.

Goldman, Sachs & Co. propose to offer the Certificates evidencing interests
in each Pass Through Trust in part directly to retail purchasers at the public
offering price for such Certificates set forth on the cover page of this
Prospectus and in part to certain securities dealers at such price less the
concession of % of the principal amount of the Certificates relating to the
Pass Through Trust 1994-K-1 and % of the principal amount of the
Certificates relating to the Pass Through Trust 1994-K-2 Certificates. Goldman,
Sachs & Co. may allow, and such dealers may reallow, a concession not to exceed
% of the principal amount of the Certificates relating to the Pass Through
Trust 1994-K-1 and % of the principal amount of the Certificates relating
to the Pass Through Trust 1994-K-2. After the Certificates are released for sale
to the public, the offering price and other selling terms may from time to time
be varied by Goldman, Sachs & Co.

The Certificates are a new issue of securities with no established trading
market. Kmart has been advised by Goldman, Sachs & Co. that Goldman, Sachs & Co.
intend to make a market in the Certificates but are not obligated to do so and
may discontinue market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for the Certificates.

Kmart has agreed to indemnify Goldman, Sachs & Co. against certain
liabilities, including liabilities under the Securities Act of 1933.

Goldman, Sachs & Co. perform investment banking services for Kmart in the
ordinary course of business and have performed certain services to Kmart in
connection with the sale of the Properties to the Owner Trust.

RATING

It is a condition to the issuance of the Certificates that they be
rated by the Standard & Poor's Ratings Group and by Moody's
Investors Service, Inc. The rating by Moody's Investors Service, Inc. will not
address the receipt of the Make-Whole Premium, if any, payable upon the
occurrence of an Event of Default.

A security rating is not a recommendation to buy, sell or hold securities,
may be subject to revision or withdrawal at any time by the assigning rating
agency, and should be evaluated independently of any other rating.

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VALIDITY OF THE CERTIFICATES

The validity of the Certificates will be passed upon for Kmart by
Dickinson, Wright, Moon, Van Dusen & Freeman, Detroit, Michigan, and for
Goldman, Sachs & Co. by Sullivan & Cromwell, New York, New York.

EXPERTS

The consolidated financial statements and schedules of Kmart appearing in
or incorporated by reference to the Annual Report on Form 10-K of Kmart for the
year ended January 26, 1994, have been so incorporated in reliance on the report
of Price Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting.

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GLOSSARY OF CERTAIN TERMS

The following is a glossary of certain terms used in this Prospectus. The
definitions of terms used in this glossary that are also used in the Agreements,
Indentures, Leases, Owner Trust Agreement and Owner Participation Agreement are
qualified in their entirety by reference to the definitions of such terms
contained therein.

"Agreement" means each of the two separate Pass Through Trust Agreements
between Kmart and the Trustees, pursuant to which the Pass Through Trusts will
be formed.

"Additional Rent" shall have the meaning described under "Description of
the Leases -- Events of Default".

"Bankruptcy Code" means the United States Bankruptcy Code of 1978, as
amended.

"Business Day" means any day other than Saturday or Sunday or other day on
which banking institutions in the States of New York or Michigan, the States in
which the principal offices of the Trustees, Corporate Owner Trustee or
Corporate Indenture Trustees are authorized or required by law to close.

"Cede" means Cede & Co., as nominee of DTC.

"Certificate" means any of the Pass Through Certificates to be issued under
either of the Agreements.

"Certificate Account" means one or more non-interest bearing accounts
established and maintained by the Trustees for the Pass Through Trusts and for
the benefit of Certificateholders for the deposit of payments representing
Scheduled Payments on the Mortgage Notes.

"Certificate Owner" means, for any Pass Through Trust, any person acquiring
a beneficial interest in any Certificate issued by such Pass Through Trust.

"Certificateholder" means the registered holder of any Certificate issued
by a Pass Through Trust.

"Code" means the United States Internal Revenue Code of 1986, as amended.

"Commission" means the Securities and Exchange Commission.

"Company" means Kmart Corporation.

"Corporate Indenture Trustee" means , a [national banking
association,] in its capacity as indenture trustee under each Indenture, and any
successor thereunder.

"Corporate Owner Trustee" means , a trust company, in its
capacity as owner trustee under the Owner Trust Agreement, and any successor
thereunder.

"Definitive Certificates" means Certificates issued in fully registered,
certificated form to Certificate Owners or their nominees, rather than to DTC or
its nominee.

"DTC" means The Depository Trust Company.

"DTC Participants" means those participants for whom DTC holds securities
on deposit.

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

"Event of Default" means, with respect to each Pass Through Trust, the
occurrence and continuance of an Indenture Default under one or more of the
Indentures pursuant to which the Mortgage Notes constituting Trust Property of
such Pass Through Trust will be issued.

"Event of Loss" means, for any Property, any Casualty or condemnation as
described in "Description of the Leases -- Condemnation and Casualty."

A-1
<PAGE> 57

"Excepted Payments" means rights of the Owner Trust and the Owner
Participant relating to indemnification by Kmart of the Owner Trust, the Owner
Trustees or the Owner Participant for certain matters, insurance proceeds
payable to the Owner Trustees in their individual capacities and to the Owner
Participant under liability insurance maintained by Kmart under such Lease or by
the Owner Trustees or the Owner Participant, insurance proceeds payable to the
Owner Trust or to the Owner Participant under certain casualty insurance
maintained by the Owner Trustees or the Owner Participant and certain
reimbursement payments made by Kmart to the Owner Trust.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Indenture" means each of the separate Indenture, Mortgage and Deed of
Trust, Assignment of Rents and Security Agreements among the Indenture Trustees
and the Owner Trust, in each case pursuant to which the Owner Trust will issue
the Mortgage Notes, as such Indenture may be modified, supplemented or amended
from time to time.

"Indenture Default" means, for any Indenture, each of the events designated
as an event of default in such Indenture. See "Description of the Mortgage Notes
- -- Indenture Defaults, Notice and Waiver."

"Indenture Trustees" means the Corporate Indenture Trustee, in its capacity
as an Indenture Trustee under each Indenture, and its successors and assigns
thereunder, and , in his capacity as an Indenture Trustee under each
Indenture, and his successors and assigns thereunder.

"Indirect Participants" means those persons that clear through or maintain
a custodial relationship with a DTC Participant either directly or indirectly.

"Initial Scheduled Principal Distribution Date" means the date when the
first scheduled payment of principal on the Mortgage Notes held in each Pass
Through Trust are to be received by the Trustees, such date to be specified on
the front cover page of this Prospectus for such Pass Through Trust.

"Land" means each of the separate parcels of land upon which a Store
subject to the lien of an Indenture is located.

"Lease" means each of the Leases between Kmart and the Owner Trust, in each
case pursuant to which Kmart will lease a Store and lease or sublease the
related Land, as such Lease may from time to time be modified, supplemented or
amended.

"Lease Event of Default" means, for any Lease, each of the events
designated as an event of default in such Lease. For a description of the events
constituting Lease Events of Default, see "Description of the Leases -- Events
of Default".

"Make-Whole Premium" shall have the meaning as described under the caption
"Description of the Mortgage Notes -- Make-Whole Premium".

"Material Default" shall have the meaning as described under "Description
of the Leases -- Events of Default."

"Monetary Default" means a Lease Event of Default caused by (a) the failure
by Kmart to pay any installment of Basic Rent when due within five days after
notice to Kmart of non-payment; (b) the failure by Kmart to make any payment
constituting Additional Rent when due within 15 days after notice to Kmart of
non-payment; and (c) certain events of bankruptcy, insolvency, reorganization
pursuant to bankruptcy or similar laws, receivership, dissolution or liquidation
of Kmart.

"Mortgage Notes" means any of the Mortgage Notes (including any Mortgage
Notes issued in exchange, replacement or substitution therefor), issued pursuant
to any Indenture.

"Owner Participant" means the institutional investor for whose benefit the
Owner Trust owns an undivided interest in the Properties leased to Kmart
pursuant to a Lease, and its permitted successors and assigns.

A-2
<PAGE> 58

"Owner Participation Agreement" means the Owner Participation Agreement,
among Kmart, the Owner Trust, the Owner Participant, the Owner Trustees, the
Remainderman and the Indenture Trustees.

"Owner Trust" means the Owner Trust created pursuant to the Owner Trust
Agreement.

"Owner Trust Agreement" means the Owner Trust Agreement, dated as of
, 1994, between the Owner Participant and the Owner Trustees,
pursuant to which the Owner Trust will be created.

"Pass Through Trust" means Pass Through Trust 1994-K-1 or Pass Through
Trust 1994-K-2, each to be formed pursuant to the respective Agreement.

"Pool Balance" means, for any Pass Through Trust, as of any date of
determination, the aggregate unpaid principal amount of the Mortgage Notes that
constitute Trust Property of such Pass Through Trust on such date plus the
amount of the principal payments on such Mortgage Notes held by the Trustee and
not yet distributed (other than earnings thereon and without giving effect to
any losses on investments thereof). The Pool Balance as of any Regular
Distribution Date or Special Distribution Date shall be computed after giving
effect to the payment of principal, if any, on such Mortgage Notes and the
distribution thereof being made on that date.

"Pool Factor" means, for any Pass Through Trust, as of any date of
determination, the quotient (rounded to the seventh decimal place) computed by
dividing (i) the Pool Balance by (ii) the aggregate original principal amount of
the Mortgage Notes held in such Pass Through Trust.

"Property" means the Owner Trust's estate for years or leasehold interest
in each parcel of Land, together with the Owner Trust's fee simple title to the
Store located thereon.

"Purchase Agreement" means the Agreement for Sale of Real Estate among
Kmart, the Owner Participant, the Owner Trust and the Remainderman with respect
to the sale of the Properties and the remainder interest.

"Regular Distribution Date" means, for each Pass Through Trust,
and of each year, commencing , 1995.

"Remainderman" means .

"Rules" means the rules, regulations and procedures creating and affecting
DTC and its operations.

"Scheduled Payments" means each payment of principal of and/or interest on
a Mortgage Note held in a Pass Through Trust scheduled to be received by the
Trustee on a Regular Distribution Date.

"Special Distribution Date" means the date on which a Special Payment will
be distributed, which date will be the day of a month.

"Special Payment" means, for any Pass Through Trust, any payments of
principal, premium, if any, and interest received by the Trustee on account of
redemption, if any, of the Mortgage Notes and payments received by the Trustee
following a default in respect of the Mortgage Notes (including payments
received by the Trustee on the account of the purchase by the Owner Trust of
such Mortgage Notes or payments received on account of the sale of such Mortgage
Notes by the Trustee).

"Special Payments Account" means one or more non-interest bearing accounts
established and maintained pursuant to each Pass Through Trust for the benefit
of Certificateholders, for the deposit of payments representing Special Payments
and certain other amounts.

"Store" means the buildings, structures, alterations, modifications and
other additions to and changes in such buildings and site improvements located
on the Land.

A-3
<PAGE> 59

"Trust Estate" shall have the meaning described under "Structure of the
Transaction"

"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.

"Trust Property" means, for any Pass Through Trust, all money, instruments,
including the related Mortgage Notes, and other property held as the property of
the Pass Through Trust, including all distributions thereon and proceeds
thereof.

"Trustee" means each of , in its capacity as trustee under
Pass Through Trust 1994-K-1, and its successors and assigns thereunder, and
, in its capacity as trustee under Pass Through Trust 1994-K-2,
and its successors and assigns thereunder.

A-4
<PAGE> 60

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

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR THE SOLICITATION OF
AN OFFER IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................... 3
Reports to Certificateholders by the
Trustee............................... 3
Incorporation of Certain Documents by
Reference............................. 3
Prospectus Summary...................... 5
The Company............................. 11
Use of Proceeds......................... 12
Selected Financial Information.......... 13
Structure of the Transaction............ 14
Diagram of Payments..................... 16
Description of the Certificates......... 17
Description of the Mortgage Notes....... 28
Description of the Leases............... 39
The Properties.......................... 46
Certain Federal Income Tax
Consequences.......................... 47
Certain Taxes........................... 50
ERISA Considerations.................... 50
Legal Investment Considerations......... 53
Underwriting............................ 53
Rating.................................. 53
Validity of the Certificates............ 54
Experts................................. 54
Glossary of Terms....................... A-1
</TABLE>

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

KMART CORPORATION
PASS THROUGH TRUST
PASS THROUGH CERTIFICATES 1994-K-1
PASS THROUGH CERTIFICATES 1994-K-2

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

PROSPECTUS
------------------

GOLDMAN, SACHS & CO.
- ---------------------------------------------------------
- ---------------------------------------------------------
<PAGE> 61

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCES AND DISTRIBUTION.*

The following expenses are expected to be incurred in connection with this
Registration Statement:

<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee.............. $62,068.97
Printing Fee..................................................... **
Blue Sky Fees and Expenses....................................... **
Accounting Fees.................................................. **
Rating Agency Fees............................................... **
Legal Fees....................................................... **
Trustees' Fees and Expenses...................................... **
Miscellaneous.................................................... **
----------
Total.......................................................
==========
</TABLE>

- -------------------------
* All of the above items except the registration fee are estimated.

** To be filed by amendment.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

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 (the "Act"). In addition, the Registrant maintains
directors' and officers' liability insurance which, under certain circumstances,
would cover alleged violations of the Act. Insofar as indemnification for
liabilities arising under the Act may be permitted to officers and directors
pursuant to the foregoing provisions, the Registrant has been informed 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.
Therefore, in the event that a claim for such indemnification is asserted by any
officer or director the Registrant (except insofar as such claim seeks
reimbursement by the Registrant of expenses paid or incurred by an officer or
director in the successful defense of any action, suit or proceeding) will,
unless the matter has theretofore been adjudicated by precedent deemed by the
Registrant to be controlling, submit to a court of appropriate jurisdiction the
question of whether or not indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.

S-1
<PAGE> 62

ITEM 16. EXHIBITS.

<TABLE>
<S> <C>
1 Form of Underwriting Agreement.*
4.1 Form of Pass-Through Trust Agreement.
4.2 Form of Indenture, Mortgage & Deed of Trust, Assignment of Rents and Security
Agreement.+
4.3 Form of Pass-Through Certificate -- included as part of Exhibit 4.1.
4.4 Form of Note -- included as part of Exhibit 4.2.
4.5 Form of Owner Participation Agreement.*
4.6 Form of Lease.+
5.1 Opinion of Dickinson, Wright, Moon, Van Dusen & Freeman as to the legality of the
securities being registered.*
8.1 Opinion of Dickinson, Wright, Moon, Van Dusen & Freeman as to tax matters.*
12 Statement of Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Dickinson, Wright, Moon, Van Dusen & Freeman -- included in Exhibit 5.1
and Exhibit 8.1.*
24 Power of Attorney. (included on page S-4)
25 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of the Pass-
Through Trustee. (one for each)*
</TABLE>

- -------------------------
* To be filed by amendment.

+ Separate Trust Indentures and Leases will be entered into with respect to each
Property.

ITEM 17. UNDERTAKINGS.

A. UNDERTAKING PURSUANT TO RULE 430A

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 that time shall be deemed to be
the initial bona fide offering thereof.

B. FILINGS INCORPORATING SUBSEQUENT EXCHANGE ACT DOCUMENTS BY REFERENCE

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 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 offering
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

C. INDEMNIFICATION

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

S-2
<PAGE> 63

the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 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 by such
director, officer or controlling person in connection with the Pass Through
Certificates 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 Securities Act of 1933 and will be
governed by the final adjudication of such issue.

S-3
<PAGE> 64

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 that the security rating requirement
will be met by the time of sale and has duly caused this Registration Statement
or amendment thereto to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Troy and State of Michigan on November 14, 1994.

KMART CORPORATION

By /s/ JOSEPH E. ANTONINI
--------------------------------------
(JOSEPH E. ANTONINI)
Chairman of the Board, President
and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Anthony N. Palizzi or Nancie W. LaDuke,
or either of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for and in his name, place and stead,
in any and all capacities, to sign any or all amendments (including post-
effective amendments) to this Registration Statement, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as might or could be done in
person hereby ratifying and confirming all that said attorneys-in-fact and
agents or either of them, or their substitute or substitutes may lawfully do or
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on November 14, 1994.

<TABLE>
<CAPTION>
SIGNATURE TITLE SIGNATURE TITLE
- --------------------------------- --------------------------------- --------------------------------- ---------
<S> <C> <C> <C>
/s/ JOSEPH E. ANTONINI Chairman of the Board, /s/ DAVID B. HARPER Director
- -------------------------------- President (Principal Executive --------------------------------
(JOSEPH E. ANTONINI) Officer) and Director (DAVID B. HARPER)

/s/ THOMAS F. MURASKY Executive Vice President /s/ F. JAMES MCDONALD Director
- -------------------------------- (Principal Financial and --------------------------------
(THOMAS F. MURASKY) Accounting Officer) (F. JAMES MCDONALD)

/s/ LILYAN H. AFFINITO Director /s/ J. RICHARD MUNRO Director
- -------------------------------- --------------------------------
(LILYAN H. AFFINITO) (J. RICHARD MUNRO)

/s/ JOSEPH A. CALIFANO, JR. Director /s/ DONALD S. PERKINS Director
- -------------------------------- --------------------------------
(JOSEPH A. CALIFANO, JR.) (DONALD S. PERKINS)

/s/ WILLIE D. DAVIS Director /s/ GLORIA M. SHATTO Director
- -------------------------------- --------------------------------
(WILLIE D. DAVIS) (GLORIA M. SHATTO)

/s/ ENRIQUE C. FALLA Director /s/ JOSEPH R. THOMAS Director
- -------------------------------- --------------------------------
(ENRIQUE C. FALLA) (JOSEPH R. THOMAS)

/s/ JOSEPH P. FLANNERY Director
- --------------------------------
(JOSEPH P. FLANNERY)
</TABLE>

S-4

<PAGE> 1
EXHIBIT 4.1
Draft of November 8, 1994

PASS THROUGH TRUST AGREEMENT-1994-K-[1/2]

Dated as of
December 15, 1994

Between

[PASS THROUGH TRUSTEE [1/2]],
as Pass Through Trustee,

and

KMART CORPORATION

<PAGE> 2
CROSS REFERENCE SHEET

Between

Provisions of the Trust Indenture Act of 1939, as amended,
and the Pass Through Trust Agreement:

<TABLE>
<CAPTION>
Section of
Section of the Act the Agreement
- ------------------ -------------
<S> <C>
310(a) (1) and (2) . . . . . . . . . . . . . . . 8.11
310(a) (3) . . . . . . . . . . . . . . . . . . . 8.14
310(a) (4) . . . . . . . . . . . . . . . . . . . *
310(a) (5) . . . . . . . . . . . . . . . . . . . *
310(b) (i)-(iii) . . . . . . . . . . . . . . . . 8.09, 8.10, 8.12
310(b) (remainder) . . . . . . . . . . . . . . . *
310(c) . . . . . . . . . . . . . . . . . . . . . Inapplicable
311(a) . . . . . . . . . . . . . . . . . . . . . *
311(b) . . . . . . . . . . . . . . . . . . . . . *
311(c) . . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . . 4.01
312(b) . . . . . . . . . . . . . . . . . . . . . *
312(c) . . . . . . . . . . . . . . . . . . . . . 4.02
313(a) . . . . . . . . . . . . . . . . . . . . . 4.04
313(b) (1) . . . . . . . . . . . . . . . . . . . *
313(b) (2) . . . . . . . . . . . . . . . . . . . *
313(c) . . . . . . . . . . . . . . . . . . . . . 4.04
313(d) . . . . . . . . . . . . . . . . . . . . . 4.04
314(a) . . . . . . . . . . . . . . . . . . . . . 4.03
314(b) . . . . . . . . . . . . . . . . . . . . . 4.03
314(c) (1) and (2) . . . . . . . . . . . . . . . 12.07
314(c) (3) . . . . . . . . . . . . . . . . . . . *
314(d) (1) . . . . . . . . . . . . . . . . . . . *
314(d) (2) . . . . . . . . . . . . . . . . . . . *
314(d) (3) . . . . . . . . . . . . . . . . . . . *
314(e) . . . . . . . . . . . . . . . . . . . . . 12.07
314(f) . . . . . . . . . . . . . . . . . . . . . *
315(a), (c) and (d) . . . . . . . . . . . . . . . *
315(b) . . . . . . . . . . . . . . . . . . . . . 7.11
315(e) . . . . . . . . . . . . . . . . . . . . . *
316(a) (1) . . . . . . . . . . . . . . . . . . . 7.09, 7.10
316(a) (2) . . . . . . . . . . . . . . . . . . . *
316(a) (last sentence) . . . . . . . . . . . . . 6.04
316(b) . . . . . . . . . . . . . . . . . . . . . 7.08
316(c) . . . . . . . . . . . . . . . . . . . . . 6.01(b)
317(a) . . . . . . . . . . . . . . . . . . . . . 7.03, 7.05
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
317(b) . . . . . . . . . . . . . . . . . . . . . Inapplicable
318(a) . . . . . . . . . . . . . . . . . . . . . 12.08
</TABLE>

________________

* Intentionally deleted.
<PAGE> 4
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE I

DEFINITIONS

ARTICLE II

DECLARATION OF TRUST;
ISSUANCE OF PASS THROUGH CERTIFICATES;
ACQUISITION OF MORTGAGE NOTES

SECTION 2.01. Designations; Aggregate Amount;
Declaration of Trust . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.02. Payment and Delivery . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.03. Limitation of Powers . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.04. Execution of Pass Through Certificates . . . . . . . . . . . . . 9
SECTION 2.05. Certificate of Authentication . . . . . . . . . . . . . . . . . . 10
SECTION 2.06. Form of Pass Through Certificates . . . . . . . . . . . . . . . . 10
SECTION 2.07. Registration, Transfer and Exchange . . . . . . . . . . . . . . . 10
SECTION 2.08. Mutilated, Destroyed, Lost and
Stolen Pass Through Certificates . . . . . . . . . . . . . . . 11
SECTION 2.09. Cancellation of Pass Through Certificates;
Destruction Thereof . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.10. Temporary Pass Through Certificates . . . . . . . . . . . . . . . 12
SECTION 2.11. Pass Through Certificates Issuable in the
Form of a Registered Global Security . . . . . . . . . . . . . 13

ARTICLE III

CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS

SECTION 3.01. Covenants of the Company . . . . . . . . . . . . . . . . . . . . 15
SECTION 3.02. Offices for Payments; Registrar . . . . . . . . . . . . . . . . . 16
</TABLE>

Note: This Table of Contents shall not, for any purpose, be deemed to be a
part of the Indenture.

i
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 3.03. Representations and Warranties of the Pass
Through Trustee . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.04. No Representations or Warranties as to
Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.05. Payments from Trust Property Only . . . . . . . . . . . . . . . . 17
SECTION 3.06. Limitation of the Company's Liability . . . . . . . . . . . . . . 17

ARTICLE IV

CERTIFICATEHOLDER LISTS AND REPORTS BY
THE COMPANY AND THE PASS THROUGH TRUSTEE

SECTION 4.01. Certificateholder Lists; Ownership of Pass
Through Certificates . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.02. Disclosure of Certificateholder Lists . . . . . . . . . . . . . . 18
SECTION 4.03. Reports by the Company . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.04. Reports by the Pass Through Trustee . . . . . . . . . . . . . . . 19

ARTICLE V

RECEIPT AND DISTRIBUTION OF INCOME
AND PROCEEDS FROM THE TRUST PROPERTY

SECTION 5.01. Certificate Account and Special Payments Account . . . . . . . . 20
SECTION 5.02. Distributions from Certificate Account and
Special Payments Account . . . . . . . . . . . . . . . . . . . 20
SECTION 5.03. Statements to Certificateholders . . . . . . . . . . . . . . . . 22
SECTION 5.04. Investment of Special Payment Moneys . . . . . . . . . . . . . . 23
SECTION 5.05. Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . 23

ARTICLE VI

CONCERNING THE CERTIFICATEHOLDERS

SECTION 6.01. Evidence of Action Taken by Certificateholders . . . . . . . . . 24
</TABLE>

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SECTION 6.02. Proof of Execution of Instruments and of Holding
of Certificates . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 6.03. Certificateholders to Be Treated as Owners . . . . . . . . . . . 25
SECTION 6.04. Pass Through Certificates Owned by the Company,
Owner Trust, Remainderman, Owner Trustees and
Owner Participant Deemed Not Outstanding . . . . . . . . . . . 25
SECTION 6.05. Right of Revocation of Action Taken . . . . . . . . . . . . . . . 26

ARTICLE VII

REMEDIES OF PASS THROUGH TRUSTEE
AND CERTIFICATEHOLDERS

SECTION 7.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 7.02. Incidents of Sale of Mortgage Notes . . . . . . . . . . . . . . . 28
SECTION 7.03. Pass Through Trustee May Prove Debt . . . . . . . . . . . . . . . 28
SECTION 7.04. Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 7.05. Suits for Enforcement . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 7.06. Discontinuance of Proceedings . . . . . . . . . . . . . . . . . . 30
SECTION 7.07. Limitations on Suits by Certificateholders . . . . . . . . . . . 30
SECTION 7.08. Unconditional Right of Certificateholders to Receive
Principal, Interest and Premium, and to Institute
Certain Suits . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 7.09. Control by Certificateholders . . . . . . . . . . . . . . . . . . 32
SECTION 7.10. Waiver of Past Events of Default . . . . . . . . . . . . . . . . 32
SECTION 7.11. Notice of Pass Through Defaults . . . . . . . . . . . . . . . . . 32

ARTICLE VIII

CONCERNING THE PASS THROUGH TRUSTEE

SECTION 8.01. Acceptance by Pass Through Trustee . . . . . . . . . . . . . . . 33
SECTION 8.02. Pass Through Trustee's Liens . . . . . . . . . . . . . . . . . . 33
SECTION 8.03. Certain Rights of the Pass Through Trustee . . . . . . . . . . . 33
SECTION 8.04. Pass Through Trustee Not Responsible for Recitals . . . . . . . . 35
SECTION 8.05. Pass Through Trustee and Agents May Hold Pass
Through Certificates; Collections . . . . . . . . . . . . . . . 35
</TABLE>

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SECTION 8.06. Moneys Held by Pass Through Trustee . . . . . . . . . . . . . . . 35
SECTION 8.07. Right of Pass Through Trustee to Rely on Officer's
Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 8.08. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 8.09. Resignation and Removal of Pass Through Trustee;
Appointment of Successor . . . . . . . . . . . . . . . . . . . 36
SECTION 8.10. Disqualification; Conflicting Interests . . . . . . . . . . . . . 38
SECTION 8.11. Persons Eligible for Appointment as Pass Through
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 8.12. Acceptance of Appointment by Successor Trustee . . . . . . . . . 38
SECTION 8.13. Merger, Conversion, Consolidation or Succession to
Business of Pass Through Trustee . . . . . . . . . . . . . . . 39
SECTION 8.14. Appointment of Separate Pass Through Trustees . . . . . . . . . . 40

ARTICLE IX

INDEMNIFICATION OF PASS THROUGH
TRUSTEE BY THE COMPANY . . . 42

ARTICLE X

SUPPLEMENTS AND AMENDMENTS TO THIS PASS
THROUGH AGREEMENT AND OTHER DOCUMENTS

SECTION 10.01. Supplemental Agreements Without Consent of
Certificateholders . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 10.02. Supplemental Agreements With Consent of
Certificateholders . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 10.03. Effect of Supplemental Agreements . . . . . . . . . . . . . . . . 46
SECTION 10.04. Documents to Be Given to Pass Through Trustee . . . . . . . . . . 46
SECTION 10.05. Notation on Pass Through Certificates in Respect
of Supplemental Agreements . . . . . . . . . . . . . . . . . . 46
SECTION 10.06. Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 10.07. Revocation and Effect of Consents . . . . . . . . . . . . . . . . 46
SECTION 10.08. Amendments, Waivers, etc., of
Indenture Documents . . . . . . . . . . . . . . . . . . . . . . 47
</TABLE>

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ARTICLE XI

TERMINATION OF PASS THROUGH TRUSTS;
UNCLAIMED MONEYS

SECTION 11.01. Termination of Pass Through Trust . . . . . . . . . . . . . . . . 47
SECTION 11.02. Application by Pass Through Trustee of Funds
Deposited for Payment of Pass Through Certificates . . . . . . 48
SECTION 11.03. Transfer of Moneys Held by Pass Through Trustee
and Paying Agent Unclaimed for Two Years and

Eleven Months . . . . . . . . . . . . . . . . . . . . . . . . . 48

ARTICLE XII

MISCELLANEOUS

SECTION 12.01. Capacity in Which Acting . . . . . . . . . . . . . . . . . . . . 48
SECTION 12.02. No Legal Title to Trust Property in
Certificateholders . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 12.03. Certificates Nonassessable and Fully Paid . . . . . . . . . . . . 49
SECTION 12.04. Pass Through Agreement for the Benefit of the
Company, the Pass Through Trustee and the
Certificateholders . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 12.05. Limitation on Rights of Certificateholders . . . . . . . . . . . 49
SECTION 12.06. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 12.07. Officer's Certificates and Opinions of Counsel;
Statements to Be Contained Therein . . . . . . . . . . . . . . 50
SECTION 12.08. Conflict of Any Provision of Pass Through Agreement
with the Trust Indenture Act . . . . . . . . . . . . . . . . . 52
SECTION 12.09. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 12.10. No Oral Modifications or Continuing Waivers . . . . . . . . . . . 52
SECTION 12.11. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 52
SECTION 12.12. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 12.13. Normal Commercial Relations . . . . . . . . . . . . . . . . . . . 52
SECTION 12.14. Governing Law; Counterpart Form . . . . . . . . . . . . . . . . . 53
SECTION 12.15. Tax Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 12.16. Distributions Due on Days Other than Business Days . . . . . . . 53
</TABLE>

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SCHEDULE A-I - Schedule of Mortgage Notes to be Acquired

EXHIBIT A - Form of Pass Through Certificate

EXHIBIT B - Letter of Representations
</TABLE>

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part of the Indenture.

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PASS THROUGH TRUST AGREEMENT-1994-K-[1/2], dated as of December 15,
1994, between KMART CORPORATION, a Michigan corporation ("the "Company"), and
[PASS THROUGH TRUSTEE [1/2]], a _______________ organized under the laws of
_______________________, as Pass Through Trustee (the "Pass Through Trustee").

RECITALS

WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;

WHEREAS, pursuant hereto the Company and the Pass Through Trustee do
hereby declare the creation of a Pass Through Trust for the benefit of the
Certificateholders of Pass Through Certificates to be issued pursuant to such
Pass Through Trust, and the initial Certificateholders as the grantors of the
Pass Through Trust, by their respective acceptances of such Pass Through
Certificates, will join in the creation of such Pass Through Trust;

WHEREAS, the Pass Through Certificates will evidence fractional
undivided interests in the Pass Through Trust pursuant to which they will be
issued, and will have no rights, benefits or interest in respect of any other
separate Pass Through Trust or the Trust Property held in any such other Pass
Through Trust;

WHEREAS, the Trust Property will include Mortgage Notes issued by the
Owner Trust pursuant to the Indentures, which Mortgage Notes are of the same
tenor as the Pass Through Certificates to be issued in respect of such Pass
Through Trust, and the Pass Through Trustee will hold such Mortgage Notes in
trust as Trust Property for the benefit of the Certificateholders;

WHEREAS, the Company has duly authorized the execution and delivery of
this Pass Through Agreement as the "issuer," as such term is defined in and
solely for purposes of the Securities Act, of the Pass Through Certificates to
be issued in respect of each Pass Through Trust and as the "obligor," as such
term is defined in and solely for purposes of the Trust Indenture Act, with
respect to all such Pass Through Certificates, and is undertaking to perform
certain administrative and ministerial duties hereunder and is also undertaking
to pay the fees and expenses of the Pass Through Trustee;

WHEREAS, this Pass Through Agreement, as it may be supplemented from
time to time, is subject to the provisions of the Trust Indenture Act and
shall, to the extent applicable, be governed by such provisions;

IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto
as follows:

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ARTICLE I

DEFINITIONS

The following terms (except as otherwise expressly provided) for all
purposes of this Pass Through Agreement have the respective meanings specified
in this Section. All other terms used in this Pass Through Agreement that are
defined in the Trust Indenture Act (as defined below) or the definitions of
which in the Securities Act (as defined below) which are referred to in the
Trust Indenture Act (except as herein otherwise expressly provided), have the
meanings assigned to such terms in the Trust Indenture Act and in the
Securities Act as in force at the date of this Pass Through Agreement. All
accounting terms used and not expressly defined herein have the meanings given
to them in accordance with generally accepted accounting principles, and the
term "generally accepted accounting principles" means the accounting principles
that are generally accepted at the date or time of any computation or otherwise
at the date hereof. The words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Pass Through Agreement as a whole and not
to any particular Article, Section or other subdivision. References to
designated "Articles," "Sections," "subsections" and other subdivisions of this
Pass Through Agreement are to the designated Articles, Sections, subsections
and other subdivisions of this Pass Through Agreement as originally executed.
The terms defined in this Article include the plural as well as the singular.

"Affiliate" has, for any Person, the meaning specified in Rule 0-2 under
the Trust Indenture Act.

"Business Day" means any day other than Saturday, Sunday or other day
on which banking institutions in the States of New York or Michigan are
authorized or required by law or executive order to close.

"Certificate Account" means the account or accounts created and
maintained for the Pass Through Trust pursuant to Section 5.01(a).

"Certificate Owner" means any Person acquiring a beneficial interest
in a Registered Global Certificate, which ownership shall be reflected on the
books of the Depository or on those of a participant in such Depository.

"Certificateholder" means the registered holder of any Pass Through
Certificate as evidenced on the Register.

"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Exchange Act, or if at any time after
the execution and delivery of this Pass Through Agreement such Commission is
not existing and performing

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<PAGE> 12
the duties now assigned to it under the Trust Indenture Act, then the body
performing such duties on such date.

"Company" means Kmart Corporation, a Michigan corporation, and its
permitted successors and assigns hereunder.

"Corporate Trust Office" means the corporate trust office of the Pass
Through Trustee located at ________________________________________________, or
such other office at which the Pass Through Trustee's corporate trust business
shall be administered and which the Pass Through Trustee shall have specified
by notice in writing to the Company and the Certificateholders.

"Corporate Indenture Trustee" has the meaning specified in the
Indentures.

"Corporate Owner Trustee" has the meaning specified in the Indentures.

"Depository" means the depository of the Registered Global
Certificates, if any, representing the Pass Through Certificates and any
successor to such depository appointed by the Company pursuant hereto. Such
depository initially shall be The Depository Trust Company, a New York
corporation.

"Distribution Date" means any Regular Distribution Date or Special
Distribution Date, or both.

"Dollars"and "$" mean lawful currency of the United States of America.

"Event of Default" has the meaning specified in Section 7.01 hereof.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Fractional Undivided Interest" means, for any Pass Through
Certificate, the fractional undivided interest in the Pass Through Trust that
is evidenced thereby.

"Government Obligations" means direct obligations of the United States
of America which are not callable, redeemable or payable prior to maturity, in
whole or in part, directly or indirectly, by any Person.

"Indenture" means each Indenture, Mortgage and Deed of Trust,
Assignment of Rents and Security Agreement dated as of December 15, 1994 among
the Indenture Trustees and the Owner Trust, pursuant to which each Mortgage
Note is issued, as such agreement may be modified, supplemented or amended from
time to time in accordance with the Indenture Documents. In the event the
Company assumes the obligations of the Owner Trust and the Remainderman under
any Indenture pursuant to Section 3.08 thereof by the execution and

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<PAGE> 13
delivery of a Company Indenture (as defined in the Indenture), such Company
Indenture shall be included within the meaning of Indenture as used in this
Agreement.

"Indenture Documents" means, for any Mortgage Note, the related
Indenture, the related Trust Agreement, the Owner Participation Agreement, the
related Lease, [OTHERS?] and such Mortgage Notes, in each case as defined in
such Indenture.

"Indenture Event of Default" means, for any Indenture, any event or
condition defined as an "Indenture Event of Default" in such Indenture.

"Indenture Trustees" means the Persons defined as such in the
Indentures.

"Initial Regular Distribution Date" means the first Regular
Distribution Date following the Issuance Date for such Pass Through Trust.

"Issuance Date" means the date of the issuance of the Pass Through
Certificates which shall be the date defined as the Closing Date in the
Underwriting Agreement.

"Lease" means, for any Mortgage Note, the related agreement between the
Company, as lessee, and the [related] Owner Trust, as lessor, dated as of the
date hereof.

"Letter of Representations" means a letter from the Company and the
Pass Through Trustee to, and accepted by, the Depository substantially in the
form attached as Exhibit B hereto, as such letter may be modified or
supplemented, or any successor letter thereto.

"Lien" means any mortgage, pledge, lien, charge, disposition of title,
encumbrance, lease or security interest.

"Majority in Interest of Certificateholders" means, on any date, Pass
Through Certificates then Outstanding (or the proxy therefor) representing in
the aggregate not less than a majority of the aggregate Fractional Undivided
Interests of the Pass Through Certificates then Outstanding.

"Mortgage Note" means any of the Mortgage Notes (including any
mortgage notes issued in exchange, replacement or substitution therefor),
issued pursuant to the Indentures and described herein, or on a schedule
attached hereto, which are to be held by the Pass Through Trustee as part of
the Trust Property. The Mortgage Notes are listed on Schedule A hereto. In
the event that the Company assumes the obligations of the [related] Owner Trust
under any Mortgage Note by the issuance of Company Mortgage Notes (as defined
in the Indentures) in substitution therefor, the Company Mortgage Notes shall
be deemed to be included within the meaning of Mortgage Notes as used in this
Agreement.

"Officer's Certificate" means a certificate signed by a Responsible
Officer of the Company, the Corporate Indenture Trustee or the Corporate Owner
Trustee, as the case may

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<PAGE> 14
be, delivered to the Pass Through Trustee. Each such certificate shall include
the statements provided for in Section 12.07.

"Opinion of Counsel" means a written opinion of legal counsel to the
Company or an Owner Trust or the Indenture Trustees, as the case may be,
designated by the Company or such Owner Trust or the Indenture Trustees, as the
case may be, and reasonably satisfactory to the Pass Through Trustee.

"Outstanding" means, when used with respect to Pass Through
Certificates, as of the date of determination and subject to the provisions of
Section 6.04, all Pass Through Certificates theretofore authenticated and
delivered under this Pass Through Trust Agreement, with the exception of the
following:

(i) Pass Through Certificates theretofore cancelled by
the Pass Through Trustee or delivered to the Pass Through Trustee for
cancellation pursuant to Section 2.09;

(ii) All Pass Through Certificates if money in the amount
required to make the final distribution thereon in accordance with
Section 11.01 has been theretofore deposited with the Pass Through
Trustee in trust for the Certificateholders pending such final
distribution; and

(iii) Pass Through Certificates which have been paid
pursuant to Section 2.09 or in exchange for or in lieu of which other
Pass Through Certificates have been authenticated and delivered
pursuant to Article II hereof other than any such Pass Through
Certificates in respect of which then shall have been presented to the
Pass Through Trustee proof satisfactory to it that such Pass Through
Certificates are held by a bona fide purchaser.

"Overdue Scheduled Payment" means, for any Pass Through Trust,
any Scheduled Payment that is not received within ten Business Days after the
Regular Distribution Date applicable to such Scheduled Payment.

"Owner Participant" means the Person defined as such in the
Owner Participation Agreement.

"Owner Participation Agreement" means the agreement, dated as
of the date hereof, among the Company, the Owner Participant, the Owner Trust
and the Indenture Trustees.

"Owner Trust" is as defined in the Indentures.

"Owner Trustees" is as defined in the Indentures.

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<PAGE> 15
"Pass Through Agreement," "this Pass Through Agreement" and
other like words mean this Pass Through Trust Agreement as the same may be
modified, supplemented or amended from time to time in accordance with the
provisions hereof.

"Pass Through Certificate" means any of the Certificates
executed, authenticated and delivered by the Pass Through Trustee, in
accordance with and pursuant to this Pass Through Agreement.

"Pass Through Default" means an Event of Default or an event
or condition that, with the giving of notice or the lapse of time or both,
would become an Event of Default.

"Pass Through Trust" means the trust created in accordance
with this Pass Through Agreement, the rest of which consists of the Trust
Property.

"Pass Through Trustee" means [PASS THROUGH TRUSTEE 1/2], a
__________ ___________________, not in its individual capacity except as
expressly stated herein, but solely in its capacity as Pass Through Trustee
under this Pass Through Agreement, and its successors and assigns as Pass
Through Trustee hereunder.

"Permitted Investments" means any Government Obligations.

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

"Pool Balance" means, as of any date of determination, the
aggregate unpaid principal amount of the Mortgage Notes that constitute Trust
Property on such date plus the amount of the principal payments on such
Mortgage Notes held by the Pass Through Trustee and not yet distributed (other
than earnings thereon and without giving effect to any losses on investments
thereof). The Pool Balance as of any Regular Distribution Date or Special
Distribution Date shall be computed after giving effect to the payment of
principal, if any, on such Mortgage Notes and the distribution thereof being
made on that date.

"Pool Factor" means, as of any date of determination, the
quotient (rounded to the seventh decimal place) computed by dividing (i) the
Pool Balance by (ii) the aggregate original principal amount of the Mortgage
Notes.

"Record Date" means for any Regular Distribution Date and any
Special Distribution Date, the 15th day preceding such Regular Distribution
Date or Special Distribution Date, as the case may be, in any event, whether or
not such date is a Business Day.

"Register" has the meaning set forth in Section 3.02 hereof.

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<PAGE> 16
"Registered Global Certificate" means the Pass Through
Certificate, if any, issued to the Depository in accordance with Article II and
bearing the legend prescribed in Section 2.11(a).

"Registrar" has the meaning set forth in Section 3.02 hereof.

"Regular Distribution Date" means any date specified in
Section 5.02(a) for the distribution of any Scheduled Payment to the
Certificateholders.

"Remainderman" shall mean [REMAINDERMAN], together with its
successors and assigns as the holder of the remainderman interest in respect of
certain of the Properties.

"Responsible Officer" means the president or any other officer
with authority of at least a vice president; or, in the case of the Pass
Through Trustee, an officer or assistant officer of the Pass Through Trustee in
its Corporate Trust Department.

"Scheduled Payment" means any scheduled payment of interest on
or principal of and interest on any Mortgage Note that constitutes Trust
Property hereof to be made in the amounts and on the dates set forth for such
payment in such Mortgage Note, but does not include any Overdue Scheduled
Payment.

"Securities Act" means the Securities Act of 1933, as amended.

"Special Distribution Date" means the date specified in
Section 5.02(a) on which a Special Payment is to be distributed to the
Certificateholders.

"Special Payment" means any payment (including any Overdue
Scheduled Payment) other than a Scheduled Payment on any Mortgage Note that
constitutes Trust Property, or any proceeds from the sale of such Mortgage Note
pursuant to Article VII.

"Special Payments Account" means the account or accounts
created and maintained pursuant to Section 5.01(b).

"Trust Agreement" means the agreement (including any
supplemental agreement) between the Owner Trustees and the Owner Participant.

"Trust Indenture Act" means (except as otherwise provided in
Sections 10.01, and 10.06) the Trust Indenture Act of 1939, as in force at the
date as of which this Pass Through Agreement was first qualified under such
Act; provided, however, that in the event the Trust Indenture Act of 1939 is
amended after such date, "Trust Indenture Act" means, to the extent required by
any such amendment, the Trust Indenture Act of 1939 as so amended.

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<PAGE> 17
"Trust Property" means all money, instruments, including the
Mortgage Notes, and other property held as the property of the Pass Through
Trust, including all monies at any time paid thereon and all monies due and to
become due thereunder and proceeds thereof.

"Underwriters" means the several Underwriters named in the
Underwriting Agreement.

"Underwriting Agreement" means the Underwriting Agreement
dated ___________, 1994 between the Company and Goldman, Sachs & Co. as
Underwriters.

ARTICLE II

DECLARATION OF TRUST;
ISSUANCE OF PASS THROUGH CERTIFICATES;
ACQUISITION OF MORTGAGE NOTES

SECTION 2.01. Designations; Aggregate Amount; Declaration of Trust.
(a) The Pass Through Trust created hereby shall be designated Kmart
Corporation Pass Through Trust-1994-K-[1/2] (herein sometimes called the "Pass
Through Trust"). The Pass Through Certificates evidencing Fractional Undivided
Interests in such Pass Through Trust shall be designated as the "Kmart
Corporation-1994-K-[1/2] Pass Through Certificates" (herein sometimes called
the "Pass Through Certificates"). The aggregate amount of Pass Through
Certificates that may be authenticated, executed, delivered and Outstanding in
accordance with this Pass Through Agreement is limited to $[______________].
All Pass Through Certificates shall be substantially identical except as to
denomination. The Pass Through Certificates will evidence Fractional Undivided
Interests in the Pass Through Trust created hereby, and will have no rights,
benefits or interest in respect of any other separate pass through trust, if
any, or the Trust Property, if any, held in such other pass through trust. All
Pass Through Certificates shall be in all respects equally and ratably entitled
to the benefits of the Pass Through Trust without preference, priority, or
distinction on account of the actual time or times of authentication and
delivery, all in accordance with the terms and provisions of this Pass Through
Agreement.

(b) Each initial Certificateholder, by its payment for and
acceptance of any Pass Through Certificate is hereby deemed, (1) as grantor, to
join in the creation and declaration of this Pass Through Trust, and (2) as
beneficiary of this Pass Through Trust, to authorize and direct the Pass
Through Trustee to execute and deliver all documents to which the Pass Through
Trustee is a party that may be necessary or desirable to consummate the

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<PAGE> 18
transactions contemplated hereby and to exercise its rights and perform its
duties under this Pass Through Agreement.

The Pass Through Trustee hereby acknowledges and accepts this grant of
trust and declares that it will hold the Trust Property for the use and benefit
of the Certificateholders.

SECTION 2.02. Payment and Delivery. Subject to the terms set forth
herein, on the Issuance Date (i) the Underwriters shall execute a wire transfer
or intra-bank transfer, or deliver a federal funds check to the Corporate Owner
Trustee or as the Corporate Owner Trustee may direct on behalf of the Pass
Through Trustee in the amount of the total proceeds payable by such
Underwriters pursuant to the Underwriting Agreement with respect to the Pass
Through Certificates and (ii) the Pass Through Trustee shall deliver the
executed and authenticated Pass Through Certificates to the Underwriters as
provided in the Underwriting Agreement upon receipt by the Corporate Owner
Trustee on behalf of the Pass Through Trustee of such proceeds.

SECTION 2.03. Limitation of Powers. The Pass Through Trust is hereby
constituted solely for the purpose of making the investment in the Mortgage
Notes provided for herein, and, except as set forth herein, the Pass Through
Trustee shall not be authorized or empowered to acquire any other investments
or engage in any other activities and, in particular, the Pass Through Trustee
shall not be authorized or empowered to do anything that would cause such Pass
Through Trust to fail to qualify as a "grantor trust" for federal income tax
purposes (including as subject to this restriction, acquiring any Property (as
defined in the respective Indenture) by bidding for such Mortgage Notes or
otherwise, or taking any action with respect to any such Property once
acquired).

SECTION 2.04. Execution of Pass Through Certificates. The Pass
Through Certificates shall be signed on behalf of the Pass Through Trustee by
an authorized officer of the Pass Through Trustee. Such signatures may be the
manual or facsimile signatures of such officer.

If any officer of the Pass Through Trustee who signs any of the Pass
Through Certificates subsequently ceases to be such officer before the Pass
Through Certificate so signed is authenticated and delivered by the Pass
Through Trustee, such Pass Through Certificate nevertheless may be
authenticated and delivered as though the person who signed such Pass Through
Certificate had not ceased to be such officer of the Pass Through Trustee; and
any Pass Through Certificate may be signed on behalf of the Pass Through
Trustee by such person or persons as, at the actual date of the execution of
such Pass Through Certificate, are the proper officers of the Pass Through
Trustee, although at

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the date of the execution and delivery of this Pass Through Agreement any such
person was not such officer.

SECTION 2.05. Certificate of Authentication. The Pass Through
Trustee shall duly authenticate and deliver Pass Through Certificates in
authorized denominations equalling, in the aggregate, the aggregate principal
amount of the Mortgage Notes, and evidencing the entire ownership of the Pass
Through Trust. Only such Pass Through Certificates as shall bear thereon a
certificate of authentication substantially in the form set forth in Exhibit A,
executed by the Pass Through Trustee by manual or facsimile signature of one of
its authorized officers, shall be entitled to the benefits of this Pass Through
Trust Agreement or be valid or obligatory for any purpose. Such certificate of
authentication executed by the Pass Through Trustee upon any Pass Through
Certificate shall be conclusive evidence that the Pass Through Certificate has
been duly authenticated and delivered hereunder and that the Certificateholder,
is entitled to the benefits of the Pass Through Trust.

SECTION 2.06. Form of Pass Through Certificates. The Pass Through
Certificates shall be substantially in the form set forth in Exhibit A hereto.
Subject to the provisions of Section 2.11 hereof, the Pass Through Certificates
shall be issuable as registered securities without coupons and shall be
numbered, lettered, or otherwise distinguished from one another. The Pass
Through Certificates shall be issued in denominations of $1,000 initial
principal amount and any integral multiple thereof and shall be dated the date
of their authentication.

The Pass Through Certificates may be issued with appropriate
insertions, omissions, substitutions and variations, and may have imprinted or
otherwise reproduced thereon such legend or legends, not inconsistent with the
provisions of this Pass Through Agreement, as may be required to comply with
any law or with any rules or regulations pursuant thereto, or with the rules of
any securities exchange on which such Pass Through Certificates are admitted to
trading, or to conform to general usage.

SECTION 2.07. Registration, Transfer and Exchange. The Pass Through
Trustee shall keep at each office or agency to be maintained for the purpose as
provided in Section 3.02, a Register or Registers in which, subject to such
reasonable regulations as it may prescribe, it shall register, and shall
register the transfer of, Pass Through Certificates as provided in this
Article. Such Register shall be in written form in the English language or in
any other form capable of being converted into such form within a reasonable
time.

Upon due presentation for registration of transfer of any Pass Through
Certificate at any such office or agency, the Pass

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Through Trustee shall execute, authenticate and deliver in the name of the
transferee or transferees a new Pass Through Certificate or Pass Through
Certificates in authorized denominations and evidencing a like aggregate
Fractional Undivided Interest.

Any Pass Through Certificate or Pass Through Certificates may be
exchanged for a Pass Through Certificate or Pass Through Certificates in other
authorized denominations. Pass Through Certificates to be exchanged shall be
surrendered at any office or agency to be maintained by the Pass Through
Trustee for the purpose as provided in Section 3.02, and the Pass Through
Trustee shall execute, authenticate and deliver in exchange therefor the Pass
Through Certificate or Pass Through Certificates which the Certificateholder
making the exchange shall be entitled to receive, bearing numbers not
contemporaneously or previously outstanding.

All Pass Through Certificates presented for registration of transfer,
exchange, redemption or payment shall (if so required by the Pass Through
Trustee) be duly endorsed by, or be accompanied by a written instrument or
instruments of transfer in form satisfactory to the Pass Through Trustee duly
executed by, the Certificateholder or his attorney-in-fact duly authorized in
writing.

The Pass Through Trustee may require payment from the
Certificateholder of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any exchange or registration of
transfer of Pass Through Certificates. No service charge to the
Certificateholder shall be made for any such transaction.

All Pass Through Certificates issued upon any transfer or exchange of
Pass Through Certificates shall evidence ownership in the Pass Through Trust
and be entitled to the same benefits under this Pass Through Agreement as the
Pass Through Certificates surrendered upon such transfer or exchange.

SECTION 2.08. Mutilated, Destroyed, Lost and Stolen Pass Through
Certificates. If any mutilated Pass Through Certificate is surrendered to the
Pass Through Trustee, the Pass Through Trustee shall execute, authenticate and
deliver in exchange therefor a new Pass Through Certificate bearing a number
not contemporaneously outstanding.

If there shall be delivered to the Pass Through Trustee and any agent
of the Pass Through Trustee (i) evidence to their satisfaction of the
destruction, loss or theft of any Pass Through Certificate and (ii) such
security or indemnity as may be required by them to save each of them and the
Company harmless,

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<PAGE> 21
then, in the absence of notice to the Pass Through Trustee that such Pass
Through Certificate has been acquired by a bona fide purchaser, the Pass
Through Trustee shall execute, authenticate and deliver, in lieu of any such
destroyed, lost or stolen Pass Through Certificate, a new Pass Through
Certificate bearing a number not contemporaneously outstanding.

If, at the time a notice of termination has been given pursuant to
Section 11.01, any Pass Through Certificate becomes mutilated, destroyed, lost
or stolen, the Pass Through Trustee in its discretion may, instead of issuing a
new Pass Through Certificate, pay such Pass Through Certificate.

Upon the issuance of any new Pass Through Certificate under this
Section, the Pass Through Trustee may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
therewith.

Every new Pass Through Certificate issued pursuant to this Section in
lieu of any destroyed, lost or stolen Pass Through Certificate shall constitute
conclusive evidence of the Fractional Undivided Interest evidenced by the Pass
Through Certificate that it replaces, whether or not the destroyed, lost or
stolen Pass Through Certificate may be enforceable at any time by anyone, and
shall be entitled to all the benefits of this Pass Through Trust Agreement
equally and proportionately with any and all other Pass Through Certificates
duly issued hereunder.

The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Pass Through
Certificates.

SECTION 2.09. Cancellation of Pass Through Certificates; Destruction
Thereof. All Pass Through Certificates surrendered for payment, redemption,
registration of transfer or exchange, if surrendered to any agent of the Pass
Through Trustee, shall be delivered to the Pass Through Trustee for
cancellation or, if surrendered to the Pass Through Trustee, shall be cancelled
by it; and no Pass Through Certificates shall be issued in lieu thereof except
as expressly permitted by any of the provisions of this Pass Through Agreement.
The Pass Through Trustee shall destroy cancelled Pass Through Certificates held
by it.

SECTION 2.10. Temporary Pass Through Certificates. Pending the
preparation of definitive Pass Through Certificates, the Pass Through Trustee
may execute, authenticate and deliver temporary Pass Through Certificates
(printed, lithographed, typewritten or otherwise reproduced, in each case in
form satisfactory to the executing officer of the Pass Through Trustee, as
evidenced by such officer's execution thereof). Such temporary Pass Through

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<PAGE> 22
Certificates shall be issuable as registered Pass Through Certificates without
coupons, of any authorized denomination, and substantially in the form of the
definitive Pass Through Certificates but with such omissions, insertions and
variations as may be appropriate for temporary Pass Through Certificates, all
as may be determined by the executing officer of the Pass Through Trustee, as
evidenced by such officer's execution thereof. Temporary Pass Through
Certificates may contain such reference to any provisions of this Pass Through
Agreement as may be appropriate. Every such temporary Pass Through Certificate
shall be executed and authenticated by the Pass Through Trustee upon the same
conditions and in substantially the same manner, and with like effect, as the
definitive Pass Through Certificates. Without unreasonable delay, the Company
shall furnish definitive Pass Through Certificates and thereupon temporary Pass
Through Certificates shall be surrendered in exchange therefor without charge
at any office or agency to be maintained by the Pass Through Trustee for such
purpose pursuant to Section 3.02, and the Pass Through Trustee shall execute,
authenticate and deliver in exchange for such temporary Pass Through
Certificates such definitive Pass Through Certificates evidencing a like
aggregate Fractional Undivided Interest in authorized denominations. Until so
exchanged, temporary Pass Through Certificates shall be entitled to the same
benefits hereunder as definitive Pass Through Certificates.

SECTION 2.11. Pass Through Certificates Issuable in the Form of a
Registered Global Security. (a) The Pass Through Trustee shall, in accordance
with this Article, execute, authenticate and deliver, Registered Global
Certificates which, in the aggregate, (i) shall represent, and shall be
denominated, in an initial principal amount equal to the original Pool Balance,
(ii) shall be registered in the name of the Depository or its nominee, and
(iii) shall bear a legend substantially to the following effect: "Unless this
Certificate is presented by an authorized representative of The Depository
Trust Company, a New York corporation ("DTC"), to the Pass Through Trustee or
its agent for registration of transfer, exchange or payment, and any
Certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein."

(b) Notwithstanding any other provision of this Section or of
Section 2.07, the Registered Global Certificates may be transferred, in whole
but not in part and in the manner provided in Section 2.07, by the Depository
to a nominee of such Depository or by a nominee of such Depository to such
Depository

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<PAGE> 23
or another nominee of such Depository or by such Depository or any such nominee
to a successor Depository selected or approved by the Company upon notice to
the Pass Through Trustee or to a nominee of such successor Depository.

(c) The Depository shall be a clearing agency registered under the
Exchange Act and any other applicable statute or regulation.

(d) If (i) at any time the Company advises the Pass Through
Trustee in writing that the Depository is no longer willing or able to properly
discharge its responsibilities or if at any time the Depository shall no longer
be eligible under subsection (c) above, and the Company is unable to appoint a
qualified successor within 90 days after the Company receives such notice or
becomes aware of such condition, as the case may be, or (ii) the Company at any
time and in its sole discretion determines that the Pass Through Certificates
shall no longer be represented by Registered Global Certificates and that the
provisions of this Section shall no longer apply to such Pass Through
Certificates, then this Section shall no longer be applicable to the Pass
Through Certificates. In such event, (x) the Pass Through Trustee shall notify
all Certificate Owners, through the Depository, of the occurrence of any such
event and of the availability of Pass Through Certificates in definitive
registered form and (y) upon surrender of the Registered Global Certificates to
the Pass Through Trustee, accompanied by reregistration instructions from the
Depository, the Pass Through Trustee shall execute, authenticate and deliver
Pass Through Certificates in definitive registered form without coupons, in
authorized denominations, and in an aggregate Fractional Undivided Interest
equal to the Fractional Undivided Interest evidenced by the Registered Global
Certificates then outstanding in exchange for such Registered Global
Certificates. Upon the exchange of the Registered Global Certificates for such
Pass Through Certificates in definitive registered form without coupons, in
authorized denominations, such Registered Global Certificates shall be
cancelled by the Pass Through Trustee. The Company shall bear all costs of the
preparation, execution, authentication and delivery of such Pass Through
Certificates. Such Pass Through Certificates in definitive registered form
issued in exchange for the Registered Global Certificate pursuant to this
subsection (d) shall be registered in the names and in authorized denominations
set forth in the registration instructions. The Pass Through Trustee shall
deliver such Pass Through Certificates to the Persons in whose names such Pass
Through Certificates are so registered.

(e) As long as the Pass Through Certificates are represented by
the Registered Global Certificates, all distributions shall be made to the
holders of such Registered Global Certificates as the Certificateholders, or to
such Persons

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<PAGE> 24
as such holders may designate, by wire transfer of immediately available funds
on the date such distributions are due, and the Company shall or shall cause
the Pass Through Trustee to provide to the Depository any notices referred to
in the Letter of Representations in accordance with the Letter of
Representations.

(f) Unless and until Pass Through Certificates in definitive
registered form are issued pursuant to paragraph (d) above, on the Record Date
prior to each Regular Distribution Date and Special Distribution Date, the Pass
Through Trustee will request from the Depository a securities position listing
setting forth the names of all participants in such Depository reflected on the
Depository's books as holding interests in the Certificates on such Record
Date. The Pass Through Trustee shall mail to each such Depository participant
the statements described in Section 5.03.

ARTICLE III

CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS

SECTION 3.01. Covenants of the Company.

(a) The Company shall not (i) consolidate with or merge into any
other corporation under circumstances in which the Company is not the surviving
corporation or (ii) convey, transfer or lease all or substantially all of its
assets as an entirety to any Person, unless the corporation formed by such
consolidation or into which the Company is merged or the Person which acquired
by conveyance, transfer or lease substantially all of the assets of the Company
as an entirety shall be a corporation organized and existing under the laws of
the United States of America or any State or the District of Columbia, and
shall execute and deliver to the Pass Through Trustee an agreement reasonably
satisfactory in form and substance to the Pass Through Trustee containing an
effective assumption by such successor corporation of the due and punctual
performance and observance of each covenant and condition to be performed or
observed by the Company hereunder.

(b) Upon any consolidation or merger, or any conveyance, transfer
or lease of substantially all the assets of the Company as an entirety, the
successor corporation formed by such consolidation or the Person into which the
Company is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Agreement with the same effect as if such successor
corporation or such Person, as the case may be, had been named as the Company
herein and therein. No such conveyance, transfer or lease of substantially all
of the assets

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<PAGE> 25
of the Company as an entirety shall have the effect of releasing the Company or
any successor corporation which shall theretofore have become such in the
manner prescribed in this Section from its liability hereunder.

(c) An Officer's Certificate and an Opinion of Counsel of the
Company shall be conclusive evidence that any consolidation, merger, sale,
lease or conveyance, and any assumption complies with the provisions of this
Section and the Pass Through Trustee shall be entitled to rely upon the same
for all purposes hereof.

SECTION 3.02. Offices for Payments; Registrar. So long as any Pass
Through Certificates remain outstanding, the Pass Through Trustee will maintain
the following: (a) an office or agency where such Pass Through Certificates
may be presented for payment and (b) a facility or agency in New York, New York
where such Pass Through Certificates may be presented for registration of
transfer and for exchange and for redemption as provided in this Pass Through
Agreement (the "Registrar"). The Registrar shall keep a register (the
"Register") with respect to the Pass Through Certificates and their transfer
and exchange. The Pass Through Trustee may appoint one or more co-registrars
("Co-Registrars") and may terminate any such appointment at any time upon
written notice. The term "Registrar" includes any Co-Registrar.

The Pass Through Trustee shall initially act as Registrar and shall
initially serve as an office where Pass Through Certificates can be presented
for payment.

SECTION 3.03. Representations and Warranties of the Pass Through
Trustee. The Pass Through Trustee, in its individual capacity, represents,
warrants and agrees that:

(i) it is a validly existing __________________ duly
organized under the laws of ________________, holding a valid
certificate to do business as ___________ _________________ with
banking and trust powers and has the corporate power and authority to
enter into and perform its obligations under this Pass Through
Agreement;

(ii) this Pass Through Agreement has been duly authorized
by all necessary corporate action on its part, and neither the
execution and delivery hereof nor its performance of any of the terms
and provisions hereof will violate any Federal or state law or
regulation relating to its banking or trust powers or contravene or
result in any breach of, or constitute any default under its articles
of association, or by-laws or the provisions of any indenture,
mortgage, contract or other agreement to which it is a party

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<PAGE> 26
or by which it or its properties may be bound or affected; and

(iii) this Pass Through Agreement has been duly executed and
delivered by it and, assuming that this Pass Through Agreement is the
legal, valid and binding obligation of the Company, is the legal,
valid and binding obligation of the Pass Through Trustee, enforceable
against the Pass Through Trustee in accordance with its terms except
as limited by bankruptcy, insolvency, moratorium, reorganization,
receivership, fraudulent conveyance or similar laws or equitable
principles of general application to or affecting the enforcement of
creditors' rights and remedies generally from time to time in effect,
regardless of whether such enforceability is considered in a
proceeding in equity or at law.

SECTION 3.04. No Representations or Warranties as to Documents. The
Pass Through Trustee neither makes nor shall be deemed to have made any
representation or warranty as to the validity, legality or enforceability of
this Pass Through Agreement, any Pass Through Certificates or any Indenture
Documents or as to the correctness of any statement contained in any thereof,
except for the representations and warranties of the Pass Through Trustee made
in its individual capacity under this Pass Through Agreement or in any other
Indenture Documents.

SECTION 3.05. Payments from Trust Property Only. All payments to be
made by the Pass Through Trustee shall be made only from the income and the
proceeds from the Trust Property and only to the extent that the Pass Through
Trustee shall have sufficient income or proceeds from the Trust Property to
enable the Pass Through Trustee to make distributions of the amounts due in
respect of the Pass Through Certificates thereunder. Each Certificateholder by
its acceptance of a Pass Through Certificate agrees that it will look solely to
the income and proceeds from the Trust Property to the extent available for
distribution to it as provided herein and that the Pass Through Trustee is not
personally liable to such Certificateholder for any amounts payable under such
Pass Through Trust except as expressly provided herein.

SECTION 3.06. Limitation of the Company's Liability. The Company is a
party to this Pass Through Agreement solely for purposes of meeting the
requirements of the Securities Act and the Trust Indenture Act, and therefore
shall not be liable hereunder, except as otherwise expressly provided herein,
or under the terms of Pass Through Certificates, except as otherwise expressly
provided therein.

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ARTICLE IV

CERTIFICATEHOLDER LISTS AND REPORTS BY
THE COMPANY AND THE PASS THROUGH TRUSTEE

SECTION 4.01. Certificateholder Lists; Ownership of Pass Through
Certificates. (a) The Pass Through Trustee shall preserve in as current a form
as is reasonably practicable the most recent list available to it of the names
and addresses of the Certificateholders. If the Pass Through Trustee is not
the Registrar, the Company shall cause the Registrar to furnish to the Pass
Through Trustee semi-annually not more than 15 days after each Record Date, as
of such Record Date, or at such other times as the Pass Through Trustee may
request in writing, a list, in such form and as of such date as the Pass
Through Trustee may reasonably require, containing all the information in the
possession or control of the Registrar as to the names and addresses of the
Certificateholders and the amounts of the Pass Through Certificates held by
such Certificateholders.

(b) Ownership of the Pass Through Certificates shall be proved by
the Register kept by the Registrar.

SECTION 4.02. Disclosure of Certificateholder Lists. Each and every
Certificateholder, by receiving and holding such Pass Through Certificate,
agrees with the Company and the Pass Through Trustee that neither the Company,
the Pass Through Trustee, the Pass Through Trustee in its individual capacity
nor any agent of any of the foregoing shall be held accountable by reason of
the disclosure of any such information as to the names and addresses of any
Certificateholders in accordance with the provisions of Section 312 of the
Trust Indenture Act, regardless of the source from which such information was
derived, and that the Pass Through Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under Section 312(b)
of the Trust Indenture Act.

SECTION 4.03. Reports by the Company. The Company covenants:

(i) to file with the Pass Through Trustee, within 30 days
after the Company is required to file the same with the Commission,
copies of the annual reports and of the information, documents, and
other reports (or copies of such portions of any of the foregoing as
the Commission may from time to time by rules and regulations
prescribe) which the Company may be required to file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act or, if
the Company is not required to file information, documents, or reports
pursuant to either of such Sections of the Exchange Act, then to file
with the Pass Through Trustee and the

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<PAGE> 28
Commission, in accordance with rules and regulations prescribed from
time to time by the Commission, such of the supplementary and periodic
information, documents, and reports which may be required pursuant to
Section 13 of the Exchange Act, in respect of a security listed and
registered on a national securities exchange, as may be prescribed
from time to time in such rules and regulations;

(ii) to file with the Pass Through Trustee and the
Commission, in accordance with rules and regulations prescribed from
time to time by the Commission, such additional information,
documents, and reports with respect to compliance by the Company with
the conditions and covenants provided for in this Pass Through
Agreement as may be required from time to time by such rules and
regulations;

(iii) to transmit to the Certificateholders in the manner and
to the extent required by Section 313(c) of the Trust Indenture Act,
such summaries of any information, documents and reports required to
be filed by the Company pursuant to subsections (i) and (ii) of this
Section 4.03 as may be required by rules and regulations prescribed
from time to time by the Commission;

(iv) to furnish to the Pass Through Trustee, on or before
April 30 of each calendar year commencing 1995, a brief certificate
from the principal executive officer, principal financial officer or
principal accounting officer of the Company as to his or her knowledge
of the Company's compliance with all conditions and covenants under
this Pass Through Agreement. For purposes of this subsection (iv),
such compliance shall be determined without regard to any period of
grace or requirement of notice provided under this Pass Through
Agreement; and

(v) to furnish to the Pass Through Trustee such opinions
as may be required by Section 314(b) of the Trust Indenture Act.

SECTION 4.04. Reports by the Pass Through Trustee.

(a) On or before March 31 of each calendar year commencing in
1995, the Pass Through Trustee shall transmit to Certificateholders such
reports concerning the Pass Through Trustee and its actions under this Pass
Through Trust Agreement as may be required pursuant to the Trust Indenture Act
at the times and in the manner provided pursuant thereto.

(b) A copy of each such report shall, at the time of such
transmission to Certificateholders, be filed by the Pass Through Trustee with
each stock exchange upon which the Pass Through

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<PAGE> 29
Certificates are listed, with the Commission and with the Company. The Company
will notify the Pass Through Trustee when the Pass Through Certificates are
listed on any stock exchange, in accordance with Section 313(c) of the Trust
Indenture Act.

ARTICLE V

RECEIPT AND DISTRIBUTION OF INCOME
AND PROCEEDS FROM THE TRUST PROPERTY

SECTION 5.01. Certificate Account and Special Payments Account. (a)
The Pass Through Trustee shall establish and maintain for the Pass Through
Trust, on behalf of the Certificateholders, a Certificate Account as one or
more non-interest bearing accounts. The Pass Through Trustee shall hold such
Certificate Account in trust for the benefit of the Certificateholders, and
shall make or permit withdrawals therefrom only as provided in this Pass
Through Agreement. Upon receipt of any Scheduled Payment, the Pass Through
Trustee shall immediately deposit such Scheduled Payment in the Certificate
Account.

(b) The Pass Through Trustee shall establish and maintain for the
Pass Through Trust, on behalf of the Certificateholders, a separate Special
Payments Account, as one or more non-interest bearing accounts. The Pass
Through Trustee shall hold such Special Payments Account in trust for the
benefit of the Certificateholders and shall make or permit withdrawals
therefrom only as provided in this Pass Through Agreement. Upon receipt of any
Special Payment, the Pass Through Trustee shall immediately deposit such
Special Payment in the Special Payments Account.

(c) The Pass Through Trustee shall present any Mortgage Note to
the Corporate Indenture Trustee on the date of its stated final maturity, or on
such earlier date as such Mortgage Note is to be redeemed in whole pursuant to
the relevant Indenture.

SECTION 5.02. Distributions from Certificate Account and Special
Payments Account. (a) The Regular Distribution Dates shall be ___________ and
___________, commencing on __________, 1995, or if any such day is not a
Business Day, the next succeeding Business Day. The Special Distribution Date
for any month in which a Special Payment is to be distributed shall be the
______________ day of such month.

(b) On each related Regular Distribution Date, upon receipt of any
Scheduled Payment due on the Mortgage Notes on such Regular Distribution Date,
the Pass Through Trustee shall distribute out of the Certificate Account the
entire amount deposited therein pursuant to Section 5.01(a) by paying to each

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<PAGE> 30
Certificateholder of record at the close of business on the Record Date for
such Regular Distribution Date (except as provided in Section 11.01 concerning
the final distribution), at the address for such Certificateholder appearing in
the Register, such Certificateholder's pro rata share (based on the aggregate
Fractional Undivided Interest in the Pass Through Trust held by such
Certificateholder) of the aggregate amount in the Certificate Account.

(c) On each Special Distribution Date, upon receipt of any Special
Payment on the Mortgage Notes or realized upon the sale of any such Mortgage
Notes, the Pass Through Trustee shall distribute out of the Special Payments
Account the entire amount of such Special Payment deposited therein pursuant to
Section 5.01(b) by paying to each Certificateholder of record at the close of
business on the Record Date for such Special Distribution Date (except as
provided in Section 11.01 concerning the final distribution), at the address
for such Certificateholder appearing in the Register, such Certificateholder's
pro rata share (based on the aggregate Fractional Undivided Interest in the
Pass Through Trust held by such Certificateholder) of the aggregate amount in
the Special Payments Account on account of such Special Payment.

(d) The Pass Through Trustee shall, at the expense of the Company,
notify each Certificateholder by mail at its address as it appears in the
Register of each Special Payment. If the Mortgage Notes are to be redeemed or
purchased in whole prior to their maturity, such notice shall be mailed not
less than 20 days prior to the date any such Special Payment is scheduled to be
distributed. For any other Special Payment, such notice shall be mailed as
soon as practicable after the Pass Through Trustee has received such Special
Payment. Such notices of Special Payments shall set forth:

(i) the Special Distribution Date and the Record Date
therefor (except as otherwise provided in Section 11.01);

(ii) the amount of the Special Payment for each $1,000
initial principal amount and the amount thereof constituting
principal, premium, if any, and interest on the Mortgage Notes;

(iii) the reason for the Special Payment; and

(iv) if the Special Distribution Date is the same date as
a Regular Distribution Date, the total amount to be received on such
date for each $1,000 initial principal amount.

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<PAGE> 31
If the amount of premium, if any, payable upon the redemption or purchase in
whole of a Mortgage Note has not been calculated at the time that the Pass
Through Trustee mails the notice of the related Special Payment, it shall be
sufficient if the notice sets forth the other amounts to be distributed and
states that any premium received will also be distributed.

(e) Any Scheduled Payment or Special Payment to be distributed
pursuant to this Article shall be payable at the Corporate Trust Office of the
Pass Through Trustee or at any office or agency maintained for such purpose
pursuant to Section 3.02, provided that any Scheduled Payment may be payable at
the option of the Pass Through Trustee or the Paying Agent by mailing checks
for such Scheduled Payment payable to or upon the written order of the
Certificateholders entitled thereto as they appear on the Register.
Notwithstanding the foregoing to the contrary, so long as all of the
Outstanding Pass Through Certificates are held by a Depository (or its
nominee), each Scheduled Payment and Special Payment shall be made by wire
transfer of funds in accordance with the agreement with such Depository.

SECTION 5.03. Statements to Certificateholders. (a) On each Regular
Distribution Date and Special Distribution Date, the Pass Through Trustee shall
include with each distribution to Certificateholders a statement, giving effect
to such distribution to be made on such Regular Distribution Date or Special
Distribution Date, as the case may be, setting forth the following information
(as to (i) and (ii) below, for each $1,000 initial principal amount Pass
Through Certificate):

(i) The amount of such distribution allocable to
principal and the amount allocable to premium, if any, on the Mortgage
Notes;

(ii) The amount of such distribution allocable to interest
on the Mortgage Notes; and

(iii) The Pool Balance and the Pool Factor.

(b) Within a reasonable period of time after the end of each
calendar year but not later than the latest date permitted by law, the Pass
Through Trustee shall furnish to each Person who at any time during such
calendar year was a Certificateholder a statement containing the sum of the
amounts determined pursuant to clauses (a)(i) and (a)(ii) of this Section for
such calendar year or, in the event such Person was a Certificateholder during
a portion of such calendar year, for the applicable portion of such year.

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<PAGE> 32
SECTION 5.04. Investment of Special Payment Moneys. Any money
received by the Pass Through Trustee pursuant to Section 5.01(b) representing a
Special Payment that is not to be promptly distributed shall, to the extent
practicable, be invested in Permitted Investments by the Pass Through Trustee
pending distribution of such Special Payment pursuant to Section 5.02. Any
investment made pursuant to this Section 5.04 shall be in such Permitted
Investments having maturities not later than the date that such moneys are
required to be used to make the payment required under Section 5.02 on the
applicable Special Distribution Date and the Pass Through Trustee shall hold
any such Permitted Investments until maturity. The proceeds upon maturity of
any Permitted Investment shall not be reinvested pending distribution. The
Pass Through Trustee shall have no liability with respect to any investment
made pursuant to this Section, other than by reason of its own negligent
action, its own negligent failure to act or its own willful misconduct. All
income and earnings from such investments shall be distributed on such Special
Distribution Date as part of such Special Payment.

SECTION 5.05. Withholding Taxes. The Pass Through Trustee shall
withhold any taxes required to be withheld under applicable law, regulation or
rule, including any interest or penalty in connection therewith, on payments to
any Certificateholder except to the extent that such Certificateholder has
furnished evidence satisfactory to the Pass Through Trustee of any exemption
from or reduction in withholding claimed by such Certificateholder and such
withholding on payments shall constitute a payment to the Certificateholder.
In the event that such evidence furnished by such Certificateholder to
establish its withholding exemption is false, inaccurate or no longer true, the
Certificateholder shall be liable for such amounts necessary to indemnify the
Company and the Pass Through Trustee for expenses attributable to such false,
inaccurate or untrue evidence and any related contests or disputes and the same
may be withheld from distributions otherwise distributable to such Holder. To
the extent that the Pass Through Trustee fails, with respect to any
Certificateholder, to withhold and pay over any such taxes to the appropriate
taxing authority, the Pass Through Trustee shall, upon a claim being made for
such taxes by such authority, take all reasonable steps to recover such taxes
from such Certificateholder, including, without limitation, withholding the
amount of such taxes from subsequent distributions, if any, to such
Certificateholder.

The Pass Through Trustee agrees (i) that it will timely pay the
amounts withheld pursuant to this Section 5.05 to the appropriate authority,
(ii) that it will file any necessary withholding tax returns or statements when
due and (iii) that, as promptly as possible after the payment of such amounts,
it will deliver to the Company, the Indenture Trustees and the Owner

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Trusts appropriate documentation showing the payment of such amounts, together
with such additional documentary evidence as the Company may reasonably request
from time to time. The Pass Through Trustee agrees to file any other
information reports as it may be required to file under United States law.

ARTICLE VI

CONCERNING THE CERTIFICATEHOLDERS

SECTION 6.01. Evidence of Action Taken by Certificateholders. (a)
Any request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Pass Through Agreement to be given or taken by
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or
by an agent duly appointed in writing, and, except as otherwise expressly
provided herein, such action shall become effective when such instrument or
instruments are delivered to the Pass Through Trustee. Proof of execution of
any instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Pass Through Agreement and (subject to Sections 8.02
and 8.03) conclusive in favor of the Pass Through Trustee, if made in the
manner provided in this Article.

(b) For the purpose of determining the Certificateholders entitled to
vote or consent to any direction, waiver or other action of such
Certificateholders under Section 7.09 or 7.10, the Company may set a record
date for such vote or consent by specifying such record date in an Officer's
Certificate delivered to the Pass Through Trustee. Notwithstanding Section
316(c) of the Trust Indenture Act, such record date shall be a date not more
than 15 days prior to the first solicitation of such vote or consent.

SECTION 6.02. Proof of Execution of Instruments and of Holding of
Certificates. The fact and date of the execution by any Certificateholder of
any instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgements of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Certificateholder executing the same, may also
be proved in any other manner which the Pass Through Trustee deems sufficient.
The holding of Pass

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<PAGE> 34
Through Certificates shall be proved by the Register or by a certificate of the
Registrar.

SECTION 6.03. Certificateholders to Be Treated as Owners. Prior to
due presentment for registration of transfer of any Pass Through Certificate,
the Indenture Trustees, the Pass Through Trustee, the Registrar, if any, and
the Company, and any agent of the Indenture Trustees, the Pass Through Trustee,
the Registrar or the Company may deem and treat the Person in whose name such
Pass Through Certificate shall be registered upon the Register as the absolute
owner of such Pass Through Certificate (whether or not such Pass Through
Certificate shall be overdue and notwithstanding any notation of ownership or
other writing thereon) for the purpose of receiving payment on account of the
principal payable with respect to and, subject to the provisions of this Pass
Through Agreement, interest payable with respect to such Pass Through
Certificate and for all other purposes; and none of the Indenture Trustees, the
Pass Through Trustee, nor any such agent, the Registrar or the Company shall be
affected by any notice to the contrary. All such payments so made to any such
person, or upon his order, shall be valid, and, to the extent of the sum or
sums so paid, effectual to satisfy and discharge the liability for moneys
payable upon any such Pass Through Certificate.

SECTION 6.04. Pass Through Certificates Owned by the Company, Owner
Trust, Remainderman, Owner Trustees and Owner Participant Deemed Not
Outstanding. In determining whether the Certificateholders of the requisite
aggregate Fractional Undivided Interest have given or concurred in any request,
demand, authorization, direction, consent or waiver under this Pass Through
Agreement, Pass Through Certificates that are owned by the Company, an Owner
Trust, the Remainderman, an Owner Trustee or an Owner Participant or any
obligor on the Mortgage Notes or by any Affiliate of any of the foregoing shall
be disregarded and deemed not to be Outstanding for the purpose of any such
determination; provided that for the purpose of determining whether the Pass
Through Trustee shall be protected in relying on any such request, demand,
authorization, direction, consent or waiver, only if a Responsible Officer of
the Pass Through Trustee has actual knowledge that certain Pass Through
Certificates are so owned shall such Pass Through Certificates be so
disregarded; and provided further that if all Pass Through Certificates that
would be deemed Outstanding in the absence of the foregoing provision are owned
by the Company, an Owner Trust, the Remainderman, an Owner Trustee or an Owner
Participant or any obligor on such Mortgage Notes or by any Affiliate of any of
the foregoing, then such Pass Through Certificates shall be deemed Outstanding
for the purpose of any such determination. Pass Through Certificates so owned
that have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes

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<PAGE> 35
to the satisfaction of the Pass Through Trustee the pledgee's right so to act
with respect to such Pass Through Certificates and that the pledgee is not the
Company, the Owner Trust, the Remainderman, an Owner Trustee or the Owner
Participant or any obligor upon the Mortgage Notes or any Affiliate of any of
the foregoing. In case of a dispute as to such right, the advice of counsel
shall be full protection in respect of any decision made by the Pass Through
Trustee in accordance with such advice. Upon request of the Pass Through
Trustee, the Company, the Remainderman, each Owner Trustee and the Owner
Participant shall furnish to the Pass Through Trustee promptly an Officer's
Certificate listing and identifying all Pass Through Certificates, if any,
known by the Company, the Remainderman, the Owner Trustees or the Owner
Participants, as the case may be, to be owned or held by or for the account of
any of the above-described persons; and, subject to Section 8.03, the Pass
Through Trustee shall be entitled to accept such Officer's Certificates as
conclusive evidence of the facts set forth therein and of the fact that all
Pass Through Certificates not listed therein are Outstanding for the purpose of
any such determination.

SECTION 6.05. Right of Revocation of Action Taken. At any time prior
to (but not after) the evidencing to the Pass Through Trustee, as provided in
Section 6.01, of any action taken by the Certificateholders of the percentage
in aggregate of Fractional Undivided Interests specified in this Pass Through
Agreement in connection with such action, any Certificateholder of a Pass
Through Certificate, the serial number of which is shown by the evidence to be
included among the serial numbers of the Pass Through Certificates, the
Certificateholders of which have consented to such action, may, by filing
written notice at the Corporate Trust Office and upon proof of holding as
provided in this Article, revoke such action so far as concerns such Pass
Through Certificate. Except as aforesaid, any such action taken shall be
conclusive and binding upon such Certificateholder and upon all future
Certificateholders and owners of such Pass Through Certificate and of any Pass
Through Certificates issued in exchange or substitution therefor or in lieu
thereof, irrespective of whether or not any notation in regard thereto is made
upon any such Pass Through Certificate or otherwise. Any action taken by such
Certificateholders of the percentage in aggregate of Fractional Undivided
Interests specified in this Pass Through Agreement in connection with such
action shall be conclusively binding upon the Pass Through Trustee and all the
Certificateholders.

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<PAGE> 36
ARTICLE VII

REMEDIES OF PASS THROUGH TRUSTEE
AND CERTIFICATEHOLDERS

SECTION 7.01. Events of Default. If an Indenture Event of Default
relating to any Mortgage Note that constitutes Trust Property (an "Event of
Default") shall occur and be continuing, then, and in each and every case, the
Pass Through Trustee may vote all of such Mortgage Notes, and upon the
direction of a Majority In Interest of Certificateholders, the Pass Through
Trustee shall vote a corresponding percentage of such Mortgage Notes in favor
of directing the related Indenture Trustees to declare the unpaid principal of
such Mortgage Notes then outstanding, together with interest accrued but unpaid
thereon and all other amounts due under such Mortgage Notes and the related
Indenture, to be due and payable under, and in accordance with the provisions
of, such Indenture. In addition, if such Indenture Event of Default shall have
occurred and be continuing, the Pass Through Trustee may, in accordance with
such related Indenture, vote such Mortgage Notes to direct the Indenture
Trustees regarding the exercise of such remedies provided in such Indenture.
An Event of Default with respect to one Indenture will not constitute a default
under any other Indenture and will not give rise to any right of the Indenture
Trustee or the Pass Through Trustee (i) to exercise any remedies with respect
to such unrelated Indenture or (ii) to vote any Mortgage Notes issued pursuant
to such other Indenture in favor of exercising any such remedies.

If an Event of Default shall have occurred and be continuing, and
after the Mortgage Notes shall have become due and payable under Section
7.02(b) or 7.02(c) of the related Indenture, the Pass Through Trustee also may
in its discretion, and upon the direction of a Majority In Interest of
Certificateholders shall, by such officer or agent as it may appoint, sell,
convey, transfer and deliver any Mortgage Notes held in the Pass Through Trust,
without recourse to or warranty by the Pass Through Trustee or any
Certificateholder, to any Person. In any such case, but subject to compliance
with the Securities Act and other applicable laws and regulations, the Pass
Through Trustee shall sell, assign, contract to sell or otherwise dispose of
and deliver any such Mortgage Notes in one or more parcels at public or private
sale or sales, at any location or locations at the option of the Pass Through
Trustee, all upon such terms and conditions as it may reasonably deem advisable
and at such prices as it may reasonably deem advisable, for cash. The Pass
Through Trustee may, in its discretion, at any such sale restrict the
prospective bidders or purchasers as to their number, nature of business and
investment intention, including, without limitation, a requirement that the
persons

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<PAGE> 37
making such purchases represent and agree to the satisfaction of the Pass
Through Trustee that they are purchasing the Mortgage Notes for their account,
for investment, and not with a view to the distribution or resale of any
thereof. If the Pass Through Trustee so decides or is required to sell or
otherwise dispose of any Mortgage Notes pursuant to this Section, the Pass
Through Trustee shall take such of the actions described above as it may
reasonably deem most effective to complete the sale or other disposition of
such Mortgage Notes, so as to provide for the payment in full of all amounts
due with respect to such Mortgage Notes. Notwithstanding the foregoing, any
action taken by the Pass Through Trustee under this Section shall not, in the
reasonable judgment of the Pass Through Trustee, be adverse to the best
interests of the Certificateholders.

SECTION 7.02. Incidents of Sale of Mortgage Notes. Upon any sale of
all or any part of the Mortgage Notes held in the Pass Through Trust made
either under the power of sale given under this Pass Through Agreement or
otherwise for the enforcement of this Pass Through Agreement, the following,
subject to compliance with securities laws and the provisions of Section 7.01,
shall be applicable:

(1) Certificateholders or Pass Through Trustee May
Purchase Mortgage Notes. Any Certificateholder, the Pass Through
Trustee in its individual or, subject to Section 2.03, any other
capacity or any other Person may bid for and purchase any of the
Mortgage Notes, and upon compliance with the terms of sale, may hold,
retain, possess and dispose of such Mortgage Notes in its or their own
absolute right without further accountability.

(2) Discharge of Purchaser. The receipt of the Pass
Through Trustee or of the officer making such sale shall be a
sufficient discharge to any purchaser for his purchase money, and,
after paying such purchase money and receiving such receipt, such
purchaser or its personal representative or assigns shall not be
obliged to see to the application of such purchase money, or be in any
way answerable for any loss, misapplication or non-application
thereof.

(3) Application of Moneys Received upon Sale. Any moneys
collected by the Pass Through Trustee upon any sale made either under
the power of sale given by this Pass Through Agreement or otherwise
for the enforcement of the Pass Through Trust, shall be deposited and
distributed as a Special Payment as provided in Article V.

SECTION 7.03. Pass Through Trustee May Prove Debt. If any amount
payable under any Mortgage Note held by the Pass Through Trust is not paid when
due and payable, and such non-payment

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<PAGE> 38
constitutes an Indenture Event of Default, the Pass Through Trustee, in its own
name and as trustee of an express trust, as holder of such Mortgage Note shall
be, to the extent permitted by and in accordance with the terms of the
Indenture Documents, entitled and empowered to institute any action or
proceedings at law or in equity for the collection of the sums so due and
unpaid, and may prosecute any such action or proceedings to judgment or final
decree, and, subject to the terms of the Indenture, may enforce any such
judgment or final decree against the Owner Trust or other obligor upon such
Mortgage Notes or against the Remainderman and collect in the manner provided
by law out of the property of the Owner Trust or other obligor upon such
Mortgage Notes, wherever situated, the moneys adjudged or decreed to be
payable.

All rights of action and of asserting claims under this Pass Through
Agreement, or under any of the Pass Through Certificates, may be prosecuted and
enforced by the Pass Through Trustee without the possession of any of such Pass
Through Certificates or the production thereof in any trial or other
proceedings relative thereto, and any such action or proceedings instituted by
the Pass Through Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment, subject to the payment of the
expenses, disbursements and compensation of the Pass Through Trustee, each
predecessor Pass Through Trustee and their respective agents and attorneys,
shall be for the ratable benefit of the Certificateholders.

In any proceedings brought by the Pass Through Trustee (and also any
proceedings involving the interpretation of any provision of this Pass Through
Agreement) the Pass Through Trustee shall be held to represent all the
Certificateholders, and it shall not be necessary to make any such
Certificateholders parties to any such proceedings.

SECTION 7.04. Remedies Cumulative. Each and every right, power and
remedy given to the Pass Through Trustee specifically or otherwise hereunder
shall be cumulative and shall be in addition to every other right, power and
remedy specifically given thereunder or now or hereafter existing at law, in
equity or by statute, and each and every right, power and remedy whether
specifically given hereunder or otherwise existing may be exercised from time
to time and as often and in such order as may be deemed expedient by the Pass
Through Trustee or the Certificateholders, and the exercise or the beginning of
the exercise of any power or remedy shall not be construed to be a waiver of
the right to exercise at the same time or thereafter any other right, power or
remedy. No delay or omission by the Pass Through Trustee or of any such
Certificateholder in the exercise of any right, remedy or power or in the
pursuance of any remedy shall impair any such right, power or remedy or be

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<PAGE> 39
construed to be a waiver of any default on the part of an Owner Trust, the
Remainderman, or the Company or to be an acquiescence therein. Every right and
remedy given by this Article or by law to the Pass Through Trustee or to the
Certificateholders may be exercised from time to time, and as often as may be
deemed expedient, by the Pass Through Trustee or by the Certificateholders, as
the case may be.

SECTION 7.05. Suits for Enforcement. If an Event of Default has
occurred, has not been waived and is continuing, the Pass Through Trustee may
in its discretion and subject to its rights of appropriate indemnification
under Sections 7.07 and 8.03 and Article IX hereof, to the extent permitted by
and in accordance with the Indenture Documents, proceed to protect and enforce
its rights and rights of the Certificateholders by such appropriate judicial
proceedings as the Pass Through Trustee shall deem most effectual to protect
and enforce any of such rights, either at law or in equity or in bankruptcy or
otherwise, whether for the specific enforcement of any covenant or agreement
hereunder or in aid of the exercise of any power granted hereunder or to
enforce any other legal or equitable right vested in the Pass Through Trustee
or the Certificateholders hereunder or by law; provided that any sale of any
portion of the Trust Property shall be done in accordance with Section 7.02.

SECTION 7.06. Discontinuance of Proceedings. If the Pass Through
Trustee or any Certificateholder institutes any proceeding to enforce any
right, power or remedy hereunder, and such proceeding is discontinued or
abandoned for any reason or is determined adversely to the Pass Through Trustee
or such Certificateholder, then and in every such case the Owner Trust, the
Remainderman, Indenture Trustees, the Pass Through Trustee, the
Certificateholders and the Company shall, subject to any determination in such
proceeding, be restored to their former positions and rights under the Pass
Through Trust with respect to the Trust Property and all rights, remedies and
powers of the Pass Through Trustee and such Certificateholders shall continue
as if no such proceeding had been instituted.

SECTION 7.07. Limitations on Suits by Certificateholders. No
Certificateholder shall have any right by virtue or by availing of any
provision hereof to institute any action or proceeding at law or in equity or
in bankruptcy or otherwise upon or under or with respect to the Pass Through
Trust, or for the appointment of a trustee, receiver, liquidator, custodian or
other similar official or for any other remedy thereunder, unless:

(1) such Certificateholder previously has notified the
Pass Through Trustee in writing of an Event of Default and of the
continuance thereof, as provided herein;

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<PAGE> 40
(2) the Certificateholders of the Pass Through
Certificates then Outstanding (or proxies therefor) representing in
the aggregate not less than 25% of the aggregate Fractional Undivided
Interests then Outstanding have requested in writing that the Pass
Through Trustee institute such action or proceedings in its own name
as trustee hereunder (unless the Holders of a Majority in Interest of
the aggregate Fractional Undivided Interests then Outstanding shall
object in writing within 30 days of such request);

(3) such Certificateholders have offered to the Pass
Through Trustee reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request;

(4) the Pass Through Trustee for 60 days after its
receipt of such notice, request and offer of indemnity has failed to
institute any such action or proceedings; and

(5) no direction inconsistent with such written request
has been given to the Pass Through Trustee during such 60-day period
pursuant to Section 7.09;

it being understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Pass Through
Trustee, that no one or more Certificateholders shall have any right in any
manner whatever to affect, disturb or prejudice the rights of any other
Certificateholder or to obtain or seek to obtain priority over or preference to
any other Certificateholder or to enforce any right hereunder or under the Pass
Through Certificates, except in the manner provided herein and therein and for
the equal, ratable and common benefit of all Certificateholders. For the
protection and enforcement of the provisions of this Section, each and every
Certificateholder and the Pass Through Trustee shall be entitled to such relief
as can be given either at law or in equity.

SECTION 7.08. Unconditional Right of Certificateholders to Receive
Principal, Interest and Premium, and to Institute Certain Suits.
Notwithstanding any other provision in this Pass Through Agreement or any Pass
Through Certificate issued pursuant hereto, the right of any Certificateholder
to receive distributions on such Pass Through Certificate of Scheduled Payments
or Special Payments pursuant to Article V on or after the respective due dates
set forth herein, or, subject to Section 7.07, to institute suit for the
enforcement of any such distribution on or after such respective dates as
provided herein, or therein shall not be impaired or affected without the
consent of such Certificateholder, except as to a postponement of an interest
payment consented to as provided in Section 7.11.

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<PAGE> 41
SECTION 7.09. Control by Certificateholders. A Majority In Interest
of Certificateholders shall have the right to direct the Pass Through Trustee
as to the time, method, and place of conducting any proceeding for any remedy
available to the Pass Through Trustee, or exercising any trust or power
conferred on the Pass Through Trustee under the Pass Through Trust; provided
that such direction is not otherwise than in accordance with law and the
provisions hereof and the Pass Through Trustee has received, to the extent
provided in Sections 7.07 and 8.03 and Article IX hereof, such reasonable
indemnification as it may require against the costs, expenses and liabilities
to be incurred by the Pass Through Trustee.

Nothing in this Pass Through Agreement shall impair the right of the
Pass Through Trustee in its discretion to take any action deemed proper by the
Pass Through Trustee and which is not inconsistent with such direction by
Certificateholders.

SECTION 7.10. Waiver of Past Events of Default. Upon written
instructions from a Majority in Interest of Certificateholders, the Pass
Through Trustee shall waive any past Event of Default and its consequences and
thereby annul any directive given by the Pass Through Trustee on behalf of such
holders to the Indenture Trustees and, upon such waiver, such Event of Default
will cease to exist and any Event of Default arising therefrom will be deemed
to have been cured for every purpose, but no such waiver will extend to any
subsequent or other Event of Default or impair any right consequent thereon;
provided that any such waiver will be effective to waive any such past Event of
Default and its consequences as described above if, but only if, the
correlative Indenture Event of Default has been waived under the related
Indenture by the requisite holders of the Mortgage Notes outstanding under such
related Indenture; and provided further that in the absence of written
instructions from all Certificateholders (or the proxy therefor), the Pass
Through Trustee shall not waive any Event of Default (i) consisting of the
failure to pay any principal of, or premium, if any, or interest on, or other
amounts due under, any Mortgage Note and the consequent failure to distribute
any Scheduled Payment or Special Payment pursuant to Article V on or after the
respective due date therefor or (ii) in respect of a covenant or provision
hereunder that, under Article X hereof, cannot be modified or amended without
the consent of each Certificateholder (or the proxy therefor).

SECTION 7.11. Notice of Pass Through Defaults. The Pass Through
Trustee shall, in the manner and to the extent required by Section 313(c) of
the Trust Indenture Act, notify the Certificateholders of any Pass Through
Defaults within 90 days from the occurrence thereof, unless such Pass Through
Defaults have been cured before the giving of such notice; provided that

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<PAGE> 42
under no circumstances shall the Pass Through Trustee give such notice until
the earlier of the time at which such Pass Through Default becomes an Event of
Default or the expiration of a period of 30 days from the occurrence of such
Pass Through Default; and provided, further, that except in the case of a Pass
Through Default resulting from the failure to pay the principal, premium, if
any, or interest on any Mortgage Note that constitutes part of the Trust
Property, the Pass Through Trustee shall not be required to provide such notice
if it in good faith determines that the withholding of such notice is in the
interests of the Certificateholders.

ARTICLE VIII

CONCERNING THE PASS THROUGH TRUSTEE

SECTION 8.01. Acceptance by Pass Through Trustee. The Pass Through
Trustee hereby accepts the trusts imposed upon it by this Pass Through
Agreement and acknowledges its acceptance of all right, title, and interest in
and to the Mortgage Notes conveyed pursuant to Section 2.01, and hereby
declares that it holds and will hold such right, title, and interest, together
with all other property constituting the Trust Property, for the benefit of all
then present and future Certificateholders, upon the trusts set forth herein.

SECTION 8.02. Pass Through Trustee's Liens. The Pass Through Trustee
agrees that it will, in its individual capacity and at its own cost and expense
(but without any right of indemnity in respect of any such cost or expense
under Article IX hereof) promptly take such action as may be necessary to duly
discharge all Liens on any part of the Trust Property that result from claims
against it in its individual capacity not related to the administration of such
Trust Property or any other transaction pursuant to this Pass Through
Agreement.

SECTION 8.03. Certain Rights of the Pass Through Trustee. Subject to
Section 315 of the Trust Indenture Act:

(a) the Pass Through Trustee may rely and shall be
protected in acting or refraining from acting upon any resolution,
Officer's Certificate or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture,
note, coupon, security or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;

(b) any request of the Indenture Trustees or an Owner
Trust or the Remainderman shall be sufficiently evidenced by

33
<PAGE> 43
an Officer's Certificate and any resolution of the Board of Directors
of the Corporate Indenture Trustee or the Corporate Owner Trustees, as
the case may be, may be sufficiently evidenced by a copy of the
applicable board resolution included as part of the Officer's
Certificate.

(c) the Pass Through Trustee may consult with counsel and
the written advice of such counsel or Opinion of Counsel shall be full
and complete authorization and protection in respect of any action
taken, suffered or omitted to be taken by it hereunder in good faith
and in accordance with such written advice or Opinion of Counsel;

(d) the Pass Through Trustee shall not be obligated to
exercise any of the trusts or powers vested in it hereunder at the
request, order or direction of the Certificateholders in accordance
with the provisions thereof, unless such Certificateholders have
offered to the Pass Through Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred
therein or thereby;

(e) the Pass Through Trustee shall not be liable for any
action taken or omitted by it in good faith hereunder in accordance
with the direction of the holders of the applicable principal amount
specified hereunder of the aggregate Fractional Undivided Interests
then outstanding;

(f) prior to the occurrence of an Event of Default
hereunder and after the curing or waiving of all Events of Default
hereunder, the Pass Through Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, appraisal, bond, debenture, note, coupon,
security, or other paper or document unless requested in writing to do
so by the Majority in Interest of Certificateholders; but the Pass
Through Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit;

(g) the Pass Through Trustee may execute any of the
trusts or powers under the Pass Through Trust or perform any duties
thereunder either directly or by or through agents or attorneys not
regularly in its employ and the Pass Through Trustee shall not be
responsible for any misconduct or negligence on the part of any such
agent or attorney appointed by it with due care; and

(h) the Pass Through Trustee shall not be required to
expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties

34
<PAGE> 44
or in the exercise of any of its rights or powers hereunder, if the
Pass Through Trustee has determined in good faith that the repayment
of such funds or adequate indemnity against such liability is not
reasonably assured to it.

SECTION 8.04. Pass Through Trustee Not Responsible for Recitals. The
Pass Through Trustee assumes no responsibility for the correctness of the
recitals contained herein or in any Pass Through Certificates, except for the
execution and authentication of such Pass Through Certificates by the Pass
Through Trustee in accordance with Section 2.04 and 2.05, respectively and its
representations and warranties in Section 3.03 hereof.

SECTION 8.05. Pass Through Trustee and Agents May Hold Pass Through
Certificates; Collections. The Pass Through Trustee and any agent of the Pass
Through Trustee, in its individual or any other capacity, may become the owner
or pledgee of Pass Through Certificates with the same rights it would have if
it were not the Pass Through Trustee or such agent, subject to Section 8.10
and, subject to the applicable provisions of the Trust Indenture Act, may
otherwise deal with the Company, the Indenture Trustees, the Owner Trust or the
Remainderman and receive, collect, hold and retain collections therefrom with
the same rights it would have if it were not the Pass Through Trustee or such
agent (subject to the provisions of Section 6.04 hereof).

SECTION 8.06. Moneys Held by Pass Through Trustee. Subject to
Sections 5.04 and 11.03 hereof, all moneys received by the Pass Through Trustee
shall, until used or applied as provided herein, be held in trust for the
purposes for which they were received, but need not be segregated from other
funds except to the extent required by mandatory provisions of law. Subject to
Section 5.04, neither the Pass Through Trustee nor any agent thereof shall be
under any liability for interest on any moneys received by it hereunder.

SECTION 8.07. Right of Pass Through Trustee to Rely on Officer's
Certificate. Subject to Section 8.03, whenever in the administration of the
Pass Through Trust, the Pass Through Trustee shall deem it necessary or
desirable that a matter be proved or established prior to taking or suffering
or omitting any action thereunder, such matter (unless other evidence in
respect thereof is specifically prescribed herein) may, in the absence of bad
faith on the part of the Pass Through Trustee, be deemed to be conclusively
proved and established by an Officer's Certificate delivered to the Pass
Through Trustee by the Company, the Indenture Trustees, the Owner Trust or the
Remainderman, as the case may be, and such certificate, in the absence of bad
faith on the part of the Pass Through Trustee, shall be full warrant to the
Pass Through Trustee for any action taken,

35
<PAGE> 45
suffered or omitted by it under the provisions of this Pass Through Agreement
upon the faith thereof.

SECTION 8.08. Compensation. The Company covenants and agrees to pay,
and the Pass Through Trustee shall be entitled to receive, reasonable
compensation and payment or reimbursement for its reasonable advances, expenses
and disbursements (including the reasonable compensation and expenses and
disbursements of its counsel, agents and other persons not regularly in its
employ) in connection with its services rendered hereunder or in any way
relating to or arising out of the administration of the Pass Through Trust or
the Trust Property, except any such advance, expense or disbursement
attributable to the Pass Through Trustee's negligence, willful misconduct or
bad faith or incurred as a result of the breach of its representation and
covenant set forth in Section 8.02.

SECTION 8.09. Resignation and Removal of Pass Through Trustee;
Appointment of Successor. (a) No resignation or removal of the Pass Through
Trustee and no appointment of a successor Pass Through Trustee pursuant to this
Article shall become effective until the acceptance of appointment by the
successor Pass Through Trustee under Section 8.12 hereof.

(b) The Pass Through Trustee may resign as such at any time
without cause by giving at least 90 days prior written notice to the Company,
the Indenture Trustees and the Owner Trust, such resignation to be effective
upon the acceptance of the trusteeship by a successor Pass Through Trustee. In
addition, a Majority in Interest of Certificateholders may at any time remove
the Pass Through Trustee without cause by an instrument in writing delivered to
the Company, the Remainderman, the Owner Trust, the Indenture Trustees and the
Pass Through Trustee, and the Pass Through Trustee shall promptly notify each
Certificateholder of such removal in writing, such removal to be effective upon
the acceptance of the trusteeship by a successor Pass Through Trustee. In the
case of the resignation or removal of the Pass Through Trustee, a Majority in
Interest of Certificateholders may appoint a successor Pass Through Trustee by
an instrument signed by such Certificateholders. If a successor Pass Through
Trustee shall not have been appointed within 120 days after such notice of
resignation or removal, the Pass Through Trustee, the Company or any
Certificateholder may apply to any court of competent jurisdiction to appoint a
successor Pass Through Trustee to act until such time, if any, as a successor
shall have been appointed as provided above. The successor Pass Through
Trustee so appointed by such court shall immediately and without further act be
superseded by any successor Pass Through Trustee appointed as provided above
within one year from the date of the appointment by such court.

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(c) If at any time any of the following events occur:

(i) the Pass Through Trustee fails to comply with the
requirements of Section 310 of 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) the Pass Through Trustee ceases to be eligible in
accordance with the provisions of Section 8.11 to act as Pass Through
Trustee and fails to resign after written request for such resignation
by the Company or by any such bona fide Certificateholder; or

(iii) the Pass Through Trustee becomes incapable of acting,
or shall be adjudged a bankrupt or insolvent, or a receiver or
liquidator of the Pass Through Trustee or of its property shall be
appointed, or any public officer takes charge or control of the Pass
Through Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;

then, in any such case, (1) the Company may remove the Pass Through Trustee and
appoint a successor trustee by written instrument, in duplicate, executed by a
Responsible Officer of the Company, one copy of which instrument shall be
delivered to the Pass Through Trustee so removed and one copy to the successor
trustee, or (2) subject to the provisions of Section 7.07, any
Certificateholder who has been a bona fide Certificateholder for at least six
months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the removal of the Pass Through Trustee
and the appointment of a successor trustee. Such court may thereupon, after
such notice, if any, as it may deem proper and prescribe, remove the Pass
Through Trustee and appoint a successor trustee, which removal and appointment
shall become effective upon acceptance of appointment by the successor trustee
as provided in Section 8.12. The successor Pass Through Trustee so appointed
by such court shall immediately and without further act be superseded by any
successor Pass Through Trustee appointed by the Certificateholders as provided
in subsection (a) above within one year from the date of appointment by such
court.

(d) In the event that a Responsible Officer of the Pass Through
Trustee has actual knowledge, or receives notice that a Certificateholder or
the Pass Through Trust has become subject to any state or local tax which would
not be imposed if the Corporate Trust Office were located in a jurisdiction
within the United States other than the jurisdiction in which the Corporate
Trust Office is then located, the Pass Through Trustee shall

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resign immediately in the manner and with the effect specified in this Section.

(e) All of the provisions of this Section 8.09 except paragraphs
(c)(i) and (d) shall apply to any Paying Agent.

SECTION 8.10. Disqualification; Conflicting Interests. If the Pass
Through Trustee has or shall acquire a conflicting interest within the meaning
of the Trust Indenture Act, the Pass Through Trustee shall either eliminate
such interest or resign, to the extent and in the manner provided by, and
subject to the provisions of, the Trust Indenture Act and this Pass Through
Agreement.

SECTION 8.11. Persons Eligible for Appointment as Pass Through
Trustee. The Pass Through Trust shall at all times have a Pass Through Trustee
which shall be a corporation eligible to act as trustee under Section 310(a) of
the Trust Indenture Act and shall be a corporation organized and doing business
under the laws of the United States of America or of any State or the District
of Columbia having a combined capital and surplus of at least $100,000,000, or
a direct or indirect subsidiary of such a corporation, or a member of a bank
holding company group, having a combined capital and surplus of at least
$100,000,000 and such subsidiary or member itself having a capital and surplus
of at least $10,000,000, which corporation is authorized under such laws to
exercise corporate trust powers and is subject to supervision of examination by
Federal, State or District of Columbia authority; provided, that the Pass
Through Trustee shall not be the trustee under Pass Through Trust
Agreement-1994-K-_. If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Pass Through Trustee ceases to be
eligible in accordance with the provisions of this Section to act as trustee
hereunder, the Pass Through Trustee shall resign immediately as Pass Through
Trustee in the manner and with the effect specified in Section 8.09.

SECTION 8.12. Acceptance of Appointment by Successor Trustee. Any
successor trustee appointed as provided in Section 8.09 shall execute and
deliver to the Company and to its predecessor trustee an instrument accepting
such appointment and thereupon the resignation or removal of the predecessor
trustee shall become effective and such successor trustee, without any further
act, deed or conveyance, shall become vested with all rights, powers, duties
and obligations of its predecessor, as if such successor trustee were
originally named as trustee

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hereunder. Notwithstanding the foregoing, on the written request of the
Company or the successor trustee, the trustee ceasing to act shall, upon
payment of its charges then unpaid and subject to Section 11.04, duly assign,
transfer and deliver to the successor trustee all properties and moneys at the
time held by it with respect to such Pass Through Trust and shall execute and
deliver an instrument transferring to such successor trustee all such rights,
powers, duties and obligations. Upon request of any such successor trustee,
the Company shall execute any and all instruments in writing for more fully and
certainly vesting in and confirming to such successor trustee all such rights
and powers.

No successor trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 8.11 to act as trustee hereunder.

Upon acceptance of appointment by a successor trustee as provided in
this Section, the successor trustee shall notify the Certificateholders of such
appointment by first-class mail at their last addresses as they shall appear in
the Register, and shall mail a copy of such notice to the Company, the
Indenture Trustees, the Remainderman and the Owner Trusts. If the acceptance
of appointment is substantially contemporaneous with the resignation, then the
notice called for by the preceding sentence may be combined with the notice
called for by Section 8.09.

SECTION 8.13. Merger, Conversion, Consolidation or Succession to
Business of Pass Through Trustee. Any corporation into which the Pass Through
Trustee may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Pass Through Trustee shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of the Pass Through Trustee,
shall be the successor of the Pass Through Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Pass Through Certificates shall have
been authenticated, but not delivered, by the Pass Through Trustee then in
office, any successor by merger, conversion or consolidation to such
authenticating Pass Through Trustee may adopt such authentication and deliver
the Pass Through Certificates so authenticated with the same effect as if such
successor Pass Through Trustee had itself authenticated the Pass Through
Certificates.

SECTION 8.14. Appointment of Separate Pass Through Trustees. (a)
With the prior consent of the Company, which

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consent shall not be unreasonably withheld or delayed, at any time or times,
for the sole purpose of meeting any legal requirements of any jurisdiction in
which any part of the Trust Property of the Pass Through Trust may at the time
be located or in which any action of the Pass Through Trustee may be required
to be performed or taken, the Pass Through Trustee, by an instrument in writing
signed by it, may appoint one or more individuals or corporations to act as
separate trustee or separate trustees or co-trustee, acting jointly with the
Pass Through Trustee, of all or any part of such Trust Property, limited to the
full extent that local law makes it necessary for such separate trustee or
separate trustees or co-trustee acting jointly with the Pass Through Trustee to
act.

(b) The Pass Through Trustee and, at the request of the Pass
Through Trustee, the Company, shall execute, acknowledge and deliver all such
instruments as may be required by the legal requirements of any jurisdiction or
by any such separate trustee or separate trustees or co-trustee for the purpose
of more fully confirming such title, rights or duties to such separate trustee
or separate trustees or co-trustee. Upon the acceptance in writing of such
appointment by any such separate trustee or separate trustees or co-trustee,
it, he, she or they shall be vested with such title to such Trust Property or
any part thereof, and with such rights, powers, duties and obligations, as
shall be specified in the instrument of appointment, and such rights, powers,
duties and obligations shall be conferred or imposed upon and exercised or
performed by the Pass Through Trustee, or the Pass Through Trustee and such
separate trustee or separate trustees or co-trustee jointly with the Pass
Through Trustee subject to all the terms of this Pass Through Agreement, except
to the extent that under any law of any jurisdiction in which any particular
act or acts are to be performed the Pass Through Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations shall be exercised and performed by such separate
trustee or separate trustees or co-trustee, as the case may be. Any separate
trustee or separate trustees or co-trustee may, at any time by an instrument in
writing, constitute the Pass Through Trustee its, her or his attorney-in-fact
and agent with full power and authority to do all acts and things and to
exercise all discretion on its, her or his behalf and in its, her or his name.
In case any such separate trustee or co-trustee shall die, become incapable of
acting, resign or be removed, the title to any Trust Property and all assets,
property, rights, powers, duties and obligations and duties of such separate
trustee or co-trustee shall, so far as permitted by law, vest in and be
exercised by the Pass Through Trustee, without the appointment of a successor
to such separate trustee or co-trustee unless and until a successor is
appointed.

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(c) All provisions of this Pass Through Agreement which are for
the benefit of the Pass Through Trustee (including without limitation Article
IX hereof) shall extend to and apply to each separate trustee or co-trustee
appointed pursuant to the foregoing provisions of this Section 8.14.

(d) Every additional trustee and separate trustee hereunder shall,
to the extent permitted by law, be appointed and act and the Pass Through
Trustee shall act, subject to the following provisions and conditions:

(i) all powers, duties, obligations and rights conferred
upon the Pass Through Trustee in respect of the receipt, custody,
investment and payment of moneys shall be exercised solely by the Pass
Through Trustee;

(ii) all other rights, powers, duties and obligations
conferred or imposed upon the Pass Through Trustee shall be conferred
or imposed and exercised or performed by the Pass Through Trustee and
such additional trustee or trustees and separate trustee or trustees
jointly except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed, the Pass Through
Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust Property in any such
jurisdiction) shall be exercised and performed by such additional
trustee or trustees or separate trustee or trustees;

(iii) no power hereby given to, or exercisable by, any such
additional trustee or separate trustee shall be exercised hereunder by
such additional trustee or separate trustee except jointly with, or
with the consent of, the Pass Through Trustee; and

(iv) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder.

If at any time the Pass Through Trustee shall deem it no longer necessary or
prudent in order to conform to any such law, the Pass Through Trustee shall
execute and deliver all instruments and agreements necessary or proper to
remove any additional trustee or separate trustee.

(e) Any request, approval or consent in writing by the Pass
Through Trustee to any additional trustee or separate trustee shall be
sufficient warrant to such additional trustee or separate trustee, as the case
may be, to take such action as may be so requested, approved or consented to.

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(f) Notwithstanding any other provision of this Section 8.14, the
powers of any additional trustee or separate trustee shall not exceed those of
the Pass Through Trustee hereunder.

ARTICLE IX

INDEMNIFICATION OF PASS THROUGH
TRUSTEE BY THE COMPANY

The Company hereby agrees, whether or not any of the transactions
contemplated hereby shall be consummated, to assume liability for, and does
hereby indemnify, protect, save and keep harmless the Pass Through Trustee, in
its individual capacity, and its successors, assigns, agents and servants, with
respect to the claims of the Pass Through Trustee for payment or reimbursement
under Section 8.08 and from and against any and all liabilities, obligations,
losses, damages, penalties, taxes (excluding any taxes payable by the Pass
Through Trustee on or measured by any compensation received by the Pass Through
Trustee for its services under this Pass Through Agreement), claims, actions,
suits, costs, expenses or disbursements (including legal fees and expenses) of
any kind and nature whatsoever which may be imposed on, incurred by or asserted
against the Pass Through Trustee in its individual capacity (whether or not
also agreed to be indemnified against by any other Person under any other
document) in any way relating to or arising out of this Pass Through Agreement,
or the enforcement of any of the terms hereof, or in any way relating to or
arising out of the administration of the Pass Through Trust or the Trust
Property or the action or inaction of the Pass Through Trustee hereunder,
except only (i) in the case of willful misconduct, negligence or bad faith of
the Pass Through Trustee in the performance of its duties hereunder or (ii) as
otherwise provided in Section 8.02 and 8.08 hereof. The indemnities contained
in this Article IX shall survive the termination of this Pass Through Agreement
or the Pass Through Trust and the resignation or removal of the Pass Through
Trustee hereunder or thereunder.

ARTICLE X

SUPPLEMENTS AND AMENDMENTS TO THIS
PASS THROUGH AGREEMENT AND OTHER DOCUMENTS

SECTION 10.01. Supplemental Agreements Without Consent of
Certificateholders. The Company and the Pass Through Trustee may enter into an
agreement or agreements supplemental hereto for one or more of the following
purposes:

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(a) to evidence the succession of another Person to the
Company, or successive successions, and the assumption by the
successor of the covenants, agreements and obligations of the Company
herein;

(b) to add to the covenants of the Company such further
covenants, restrictions, conditions or provisions as the Pass Through
Trustee shall consider to be for the protection of the
Certificateholders;

(c) to surrender any rights or power conferred upon the
Company herein or to add to the rights of the Certificateholders;

(d) to correct or amplify the description of any property
at any time that constitutes Trust Property or better to assure,
convey and confirm unto the Pass Through Trustee any such property to
be included in any such Trust Property;

(e) to evidence and provide for the acceptance and
appointment hereunder of a successor trustee and to add to or change
any of the provisions hereof as may be necessary to provide for or
facilitate the administration of the Pass Through Trust by more than
one trustee, pursuant to the requirements of Section 8.12;

(f) to modify, eliminate or add to the provisions of this
Pass Through Agreement to the extent necessary to continue the
qualification of this Pass Through Agreement (including any
supplemental agreement) under the Trust Indenture Act, or under any
similar Federal statute enacted after the date hereof, and to add to
this Pass Through Agreement such other provisions as may be expressly
permitted by the Trust Indenture Act, excluding, however, the
provisions referred to in Section 316(a)(2) of the Trust Indenture Act
as in effect on the date hereof or any corresponding provision in any
similar Federal statute enacted after the date hereof; or

(g) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Pass Through Trust Agreement, provided
that such action pursuant to this Section 10.01(g) shall not adversely
affect the interests of the Certificateholders;

provided that no such agreement or supplemental agreement shall cause the Pass
Through Trust to become taxable as an association within the meaning of
Treasury Regulation Section 301.7701-4; and

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provided further that no such agreement or supplemental agreement may require
the Company to have any direct or indirect obligation (other than pursuant to
the Lease or the Owner Participation Agreement) to pay or guarantee or
otherwise provide for the receipt by, the Pass Through Trustee or any
Certificateholder of any of the amounts payable in respect of the Mortgage
Notes and/or the Pass Through Certificates.

The Pass Through Trustee is hereby authorized to join in the execution
of any such supplemental agreement, to make any further appropriate agreements
and stipulations that may be contained therein and to accept the conveyance,
transfer, assignment, mortgage or pledge of any property thereunder, but the
Pass Through Trustee shall not be obligated to enter into any such supplemental
agreement that adversely affects the Pass Through Trustee's own rights, duties
or immunities under this Pass Through Agreement or otherwise, whether in its
official or individual capacity.

Any supplemental agreement authorized pursuant to this Section may be
executed without the consent of the Certificateholders of the outstanding Pass
Through Certificates, notwithstanding any of the provisions of Section 10.02.

SECTION 10.02. Supplemental Agreements With Consent of
Certificateholders. With the consent (evidenced as provided in Article VI) of
the Majority in Interest of Certificateholders, the Company and the Pass
Through Trustee may, from time to time and at any time, enter into an agreement
or agreements supplemental hereto for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this Pass
Through Agreement or of modifying in any manner the rights of the
Certificateholders; provided that no such agreement or supplemental agreement
shall cause the Pass Through Trust to become taxable as an association within
the meaning of Treasury Regulation Section 301.7701-4; and provided further
that no such agreement or supplemental agreement may require the Company to
have any direct or indirect obligation (other than pursuant to the Lease or the
Owner Participation Agreement) to pay or guarantee or otherwise provide for the
receipt by, the Pass Through Trustee or any Certificateholder of any of the
amounts payable in respect of the Mortgage Notes and/or the Pass Through
Certificates; and provided further that, without the consent of each
Certificateholder (or the proxy therefor) affected thereby, no such amendment
of or supplement to this Pass Through Agreement or modification of the terms
of, or consent under, any thereof, shall (aa) modify any of the provisions of
Section 7.11 or this Section 10.02, or the definitions of "Majority in Interest
of Certificateholders" and "Outstanding" as set forth in Article I hereof, (bb)
reduce the percentage of the Outstanding Pass Through Certificates, the consent
of holders of which is required

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for any such supplement to this Pass Through Trust Agreement, or the consent of
the holders of which is required for any waiver (of compliance with certain
provisions hereof or certain defaults hereunder and their consequences)
provided for in this Pass Through Agreement, (cc) reduce the amount or extend
the time of payment of any amount owing or payable on the Mortgage Notes or
distributions to be made on any Pass Through Certificate pursuant to Article V,
or alter the currency in which any amount payable under any such Pass Through
Certificate is to be paid, or impair the right of any Pass Through
Certificateholder to commence legal proceedings to enforce a right to receive
payment hereunder, or (dd) 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 Pass Through Trust with respect to the Trust Property, whether
by disposition of such Trust Property or otherwise, except as provided in
Section 7.02 or in connection with the exercise of remedies under Article VII.

Upon the request of the Company and upon the filing with the Pass
Through Trustee of evidence of the consent of the Certificateholders required
under this Section and the other documents, if any, required by Section 6.01,
the Pass Through Trustee shall join with the Company in the execution of such
supplemental agreement unless such supplemental agreement affects the Pass
Through Trustee's own rights, duties or immunities under this Pass Through
Agreement or otherwise, in which case the Pass Through Trustee may in its
discretion, but shall not be obligated to, enter into such supplemental
agreement.

It shall not be necessary for the consent of the Certificateholders
under this Section to approve the particular form of any proposed supplemental
agreement, but it shall be sufficient if such consent shall approve the
substance thereof.

Promptly after the execution by the Company and the Pass Through
Trustee of any supplemental agreement pursuant to the provisions of this
Section, the Pass Through Trustee shall mail a notice thereof by first-class
mail to the Certificateholders at their addresses as they shall appear on the
Register, setting forth in general terms the substance of such supplemental
agreement. Any failure of the Pass Through Trustee to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any such supplemental agreement.

SECTION 10.03. Effect of Supplemental Agreements. Upon the execution
of any supplemental agreement pursuant to the provisions hereof, this Pass
Through Agreement shall be and be deemed to be modified and amended in
accordance therewith and the respective rights, limitations of rights,
obligations, duties and immunities hereunder of the Pass Through Trustee, the
Company and the Certificateholders shall thereafter be determined, exercised

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and enforced hereunder and thereunder, subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental agreement shall be and be deemed to be part of the terms and
conditions of this Pass Through Agreement and Pass Through Trust for any and
all purposes.

SECTION 10.04. Documents to Be Given to Pass Through Trustee. The
Pass Through Trustee, subject to the provisions of Sections 8.02, 8.03 and
8.07, may receive an Officer's Certificate and an Opinion of Counsel as
conclusive evidence that any such supplemental agreement complies with the
applicable provisions of this Pass Through Agreement.

SECTION 10.05. Notation on Pass Through Certificates in Respect of
Supplemental Agreements. Pass Through Certificates authenticated and delivered
after the execution of any supplemental agreement pursuant to the provisions of
this Article may bear a notation in form approved by the Pass Through Trustee
as to any matter provided for by such supplemental agreement. If the Company
or the Pass Through Trustee shall so determine, new Pass Through Certificates
so modified as to conform, in the opinion of the Company and the Pass Through
Trustee, to any modification of this Pass Through Agreement contained in any
such supplemental agreement may be provided by the Company, executed and
authenticated by the Pass Through Trustee and delivered in exchange for the
Outstanding Pass Through Certificates.

SECTION 10.06. Trust Indenture Act. Any supplemental agreement
executed pursuant to the terms of this Article shall on the date of the
execution thereof conform to the provisions of the Trust Indenture Act as in
force on such date.

SECTION 10.07. Revocation and Effect of Consents. Until an amendment
or waiver becomes effective, a consent to it by a Certificateholder is a
continuing consent by such Certificateholder and every subsequent
Certificateholder of the related Pass Through Certificate, even if notation of
the consent is not made on such Pass Through Certificate. However, any such
Certificateholder or subsequent Certificateholder may revoke the consent as to
his Pass Through Certificate if the Pass Through Trustee receives the notice of
revocation before the date the amendment or waiver becomes effective. After an
amendment or waiver becomes effective, it shall bind every Certificateholder
affected by such amendment or waiver.

SECTION 10.08. Amendments, Waivers, etc., of Indenture Documents. If
the Pass Through Trustee, as holder of any Mortgage Note in trust for the
benefit of the Certificateholders, receives a request for a consent to any
modification, amendment or supplement to the Indenture or other Indenture
Document or to

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give any consent, waiver, authorization or approval under the Indenture or such
other Indenture Documents, the Pass Through Trustee shall forthwith notify each
Certificateholder as shown on the Register as of such date, of such request.
Such notice shall request instructions from such Certificateholders with
respect to such request. Subject to Section 7.10, the Pass Through Trustee
shall, as the holder of such Mortgage Note, consent or vote with respect
thereto in the same proportion as so instructed by the respective
Certificateholders. Notwithstanding the foregoing, but subject to Sections
7.01 and 7.09, if an Event of Default shall have occurred and be continuing,
the Pass Through Trustee may, in its own discretion and at its own direction,
consent and notify the Indenture Trustees of such consent to any modification,
amendment, supplement or waiver under any Indenture Document.

ARTICLE XI

TERMINATION OF PASS THROUGH TRUSTS;
UNCLAIMED MONEYS

SECTION 11.01. Termination of Pass Through Trust. The Pass Through
Trust and the respective obligations and responsibilities of the Company and
the Pass Through Trustee hereunder shall terminate upon the distribution to all
Certificateholders and the Pass Through Trustee of all amounts required to be
distributed to them pursuant to this Pass Through Agreement and the disposition
of all property held as part of the Trust Property of such Pass Through Trust;
provided, however that in no event shall the Pass Through Trust created by this
Pass Through Agreement continue beyond the expiration of 21 years from the
death of the last survivor of the descendants of Joseph P. Kennedy, the late
ambassador to the Court of St. James, living on the date of this Pass Through
Agreement.

Notice of termination of the Pass Through Trust, specifying the
applicable Distribution Date upon which the Certificateholders may surrender
their Pass Through Certificates to the Pass Through Trustee for payment of the
final distribution and cancellation thereof, shall be mailed promptly by the
Pass Through Trustee to such Certificateholders not less than 20 days prior to
such final distribution specifying (i) the Distribution Date upon which such
final distribution will be made and that such distribution will be made only
upon presentation and surrender of the related Pass Through Certificates at the
office or agency of the Pass Through Trustee specified therein, (ii) the amount
of any such final distribution, and (iii) that the Record Date otherwise
applicable to such Distribution Date is not applicable. The Pass Through
Trustee shall notify the Registrar at the time such Certificateholders are
notified of such final distribution. Upon presentation and surrender of the
Pass

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Through Certificates, the Pass Through Trustee shall distribute all amounts
distributable on such Pass Through Certificates on such Distribution Date
pursuant to Section 5.02.

SECTION 11.02. Application by Pass Through Trustee of Funds Deposited
for Payment of Pass Through Certificates. Subject to Section 11.03, all moneys
deposited with the Pass Through Trustee for payment pursuant to Section 11.01
shall be held in trust and applied by it to the prompt payment in accordance
with the provisions of the Pass Through Certificates and this Pass Through
Agreement, to the Certificateholders of all sums due and to become due thereon,
but such money need not be segregated from other funds except to the extent
required by law.

SECTION 11.03. Transfer of Moneys Held by Pass Through Trustee and
Paying Agent Unclaimed for Two Years and Eleven Months. Any moneys deposited
with or paid to the Pass Through Trustee to be distributed on any Pass Through
Certificate and not applied but remaining unclaimed for two years and eleven
months after the date upon which such amount has become due and payable, shall,
unless otherwise required by mandatory provisions of applicable escheat or
abandoned or unclaimed property law, be paid to the Indenture Trustees by the
Pass Through Trustee and the applicable Certificateholder shall, unless
otherwise required by mandatory provisions of applicable escheat or abandoned
or unclaimed property laws, thereafter look only to the Indenture Trustees for
any payment which such Certificateholder may be entitled to collect, and all
liability of the Pass Through Trustee with respect to such moneys shall
thereupon cease.

ARTICLE XII

MISCELLANEOUS

SECTION 12.01. Capacity in Which Acting. The Pass Through Trustee
acts hereunder not in its individual capacity but solely as trustee except as
expressly provided herein.

SECTION 12.02. No Legal Title to Trust Property in
Certificateholders. No Certificateholder shall have legal title to any part of
the Trust Property. No transfer, by operation of law or otherwise, of any Pass
Through Certificate or other right, title and interest of any Certificateholder
in and to such Trust Property shall operate to terminate the Pass Through Trust
or entitle such Certificateholder or any successor or transferee of such
Certificateholder to an accounting or to the transfer to it of legal title to
any part of the Trust Property.

SECTION 12.03. Certificates Nonassessable and Fully Paid. No
Certificateholder shall be personally liable for obligations

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of the Pass Through Trust, the Pass Through Certificates shall be nonassessable
for any losses or expenses of the Pass Through Trust or for any reason
whatsoever, and upon authentication of such Pass Through Certificates by the
Pass Through Trustee pursuant to Section 3.02, such Pass Through Certificates
will be and shall be deemed fully paid. No Certificateholder shall have any
right (except as expressly provided herein) to vote or in any manner otherwise
control the operation and management of the Trust Property, the Pass Through
Trust, or the obligations of the parties hereto, nor shall anything set forth
herein in the Pass Through Certificates be construed so as to constitute the
Certificateholders from time to time as partners or members of an association.

SECTION 12.04. Pass Through Agreement for the Benefit of the Company,
the Pass Through Trustee and the Certificateholders. Nothing in this Pass
Through Agreement or in any Pass Through Certificate, whether express or
implied, shall be construed to give to any person other than the Company, the
Pass Through Trustee, as trustee and in its individual capacity, and the
Certificateholders any legal or equitable right, remedy or claim under or in
respect of this Pass Through Agreement, the Pass Through Trust or any such Pass
Through Certificate.

SECTION 12.05. Limitation on Rights of Certificateholders. The death
or incapacity of any Certificateholder shall not operate to terminate the Pass
Through Trust, nor entitle such Certificateholder's legal representatives or
heirs to claim an accounting or to take any action or commence any proceeding
in any court for a partition or winding up of the Pass Through Trust, or
otherwise affect the rights, obligations, and liabilities of the parties hereto
or any of them. No Certificateholder shall be entitled to revoke the Pass
Through Trust.

SECTION 12.06. Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all notices, requests, demands, authorizations,
directions, consents, waivers or documents provided or permitted by this Pass
Through Agreement to be made, given, furnished or filed shall be in writing,
mailed by certified mail, postage prepaid, or by confirmed telex or telecopy,
and (i) if to the Pass Through Trustee, at its office at ________
_______________________________________ (telecopier (___) ___________),
Attention: Corporate Trust Department (with a copy to
___________________________________ at _______________________ (telecopier
(___) ______________, Attention: Corporate Trust Department) or (ii) if to the
Company, addressed to it at its Corporate Offices, 3100 West Big Beaver Road,
Troy, Michigan 48084 (telecopier (801) 643-____), Attention: ____________ (with
a copy to the General Counsel at the same address). Any party hereto may
change the address to

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which notices to such party will be sent by giving notice of such change to the
other party to this Pass Through Agreement.

Where this Pass Through Agreement provides for notice to
Certificateholders, such notice shall be sufficiently given (unless otherwise
expressly provided herein) if in writing and mailed, first-class postage
prepaid, to each such Certificateholder entitled thereto, at his last address
as it appears in the Register. In any case where notice to Certificateholders
is given by mail, neither the failure to mail such notice, nor any defect in
any notice so mailed, to any particular Certificateholder shall affect the
sufficiency of such notice with respect to other Certificateholders. Where
this Pass Through Agreement provides for notice in any manner, such notice may
be waived in writing by the person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Certificateholders shall be filed with the Pass
Through Trustee, but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such waiver.

In case, by reason of the suspension of or irregularities in regular
mail service, it shall be impracticable to mail notice to any
Certificateholders when such notice is required to be given pursuant to any
provision of this Pass Through Agreement, then any manner of giving such notice
as shall be satisfactory to the Pass Through Trustee shall be deemed to be a
sufficient giving of such notice.

SECTION 12.07. Officer's Certificates and Opinions of Counsel;
Statements to Be Contained Therein. Upon any application or demand by the
Company to the Pass Through Trustee to take any action, the Company shall
furnish to the Pass Through Trustee (i) an Officer's Certificate stating that
all conditions precedent, if any, provided for in this Pass Through Agreement
relating to the proposed action have been complied with and that the proposed
action is in conformity with the requirements of this Pass Through Agreement,
and (ii) an Opinion of Counsel stating that in the opinion of such counsel all
such conditions precedent, if any, have been complied with, except that in the
case of any such application or demand as to which the furnishing of such
documents is specifically required by any provision of this Pass Through
Agreement relating to such particular application or demand, no additional
certificate or opinion need be furnished.

Each certificate or opinion required by this Pass Through Agreement
and delivered to the Pass Through Trustee with respect to compliance with a
condition or covenant provided for in this Pass Through Agreement, except for
the certificate required by Section 4.03(iv) shall include (a) a statement that
the person

50
<PAGE> 60
making such certificate or opinion has read such covenant or condition, (b) a
brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion
are based, (c) a statement that, in the opinion of such person, he has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with and (d) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.

Any certificate, statement or Opinion of Counsel may be based, insofar
as it relates to factual matters or information with respect to which is in the
possession of the Company, upon the certificate, statement or opinion of or
representations by an officer or officers of the Company unless such counsel
knows that the certificate, statement or opinion or representations with
respect to the matters upon which his certificate, statement or opinion may be
based as aforesaid are erroneous, or in the exercise of reasonable care should
know that the same are erroneous.

Any certificate, statement or opinion of an officer of the Company or
of counsel thereto may be based, insofar as it relates to accounting matters,
upon a certificate or opinion of or representations by an accountant or firm of
accountants employed by the Company unless such officer or counsel, as the case
may be, knows that the certificate or opinion or representations with respect
to the accounting matters upon which his certificate, statement or opinion may
be based as aforesaid are erroneous, or in the exercise of reasonable care
should know that the same are erroneous.

Any certificate or opinion of any independent firm of public
accountants filed with the Pass Through Trustee shall contain a statement that
such firm is independent.

SECTION 12.08. Conflict of Any Provision of Pass Through Agreement
with the Trust Indenture Act. If and to the extent that any provision of this
Pass Through Agreement limits, qualifies or conflicts with another provision
included in this Pass Through Agreement by operation of Sections 310 to 317,
inclusive, of the Trust Indenture Act (an "incorporated provision"), such
incorporated provision shall control.

SECTION 12.09. Severability. Any provision of this Pass Through
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
thereof, and any such prohibition or unenforceability in any jurisdiction shall

51
<PAGE> 61
not invalidate or render unenforceable such provision in any other
jurisdiction.

SECTION 12.10. No Oral Modifications or Continuing Waivers. No terms
or provisions of this Pass Through Agreement or any Pass Through Certificates
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party or other person against whom
enforcement of the change, waiver, discharge or termination is sought; and any
waiver of the terms hereof or thereof shall be effective only in the specific
instance and for the specific purpose given.

SECTION 12.11. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of
the parties hereto and the successors and permitted assigns of each, all as
herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by any Certificateholder shall bind the successors and
assigns of such Certificateholder.

SECTION 12.12. Headings. The headings of the various Articles and
Sections herein and in the table of contents hereto are for the convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.

SECTION 12.13. Normal Commercial Relations. Anything contained in
this Pass Through Agreement to the contrary notwithstanding, the Pass Through
Trustee and any Certificateholder, or any bank or other affiliate of any such
party, may conduct any normal banking or other financial transactions, and have
normal banking or other commercial relationships, with the Company fully to the
same extent as if this Pass Through Agreement were not in effect including,
without limitation, the making of loans or other extensions of credit to the
Company for any purpose whatsoever, whether related to any of the transactions
contemplated hereby or otherwise.

SECTION 12.14. Governing Law; Counterpart Form. THIS PASS THROUGH
AGREEMENT AND EACH PASS THROUGH CERTIFICATE SHALL IN ALL RESPECTS BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Pass
Through Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.

SECTION 12.15. Tax Intent. The execution and delivery of this Pass
Through Agreement shall constitute an acknowledgement by the Company and the
Pass Through Trustee on behalf of the Certificateholders that they intend to
establish (for Federal tax

52
<PAGE> 62
purposes) a grantor trust of which the Certificateholders are the
beneficiaries, rather than an association taxable as a corporation. The powers
granted and obligations undertaken in this Pass Through Agreement shall be
construed so as to further such intent.

SECTION 12.16. Distributions Due on Days Other than Business Days.
If any Distribution Date is not a Business Day, then such distribution need not
be made on such date, but may be made on the next succeeding Business Day with
the same force and effect as if made on the applicable Distribution Date, and
no interest shall accrue for the intervening period.

IN WITNESS WHEREOF, the parties hereto have caused this Pass Through
Agreement to be duly executed this day of 1994 by their
respective officers thereunto duly authorized, and acknowledge that this Pass
Through Agreement has been made and delivered in the City of New York, and this
Pass Through Agreement shall be effective only upon such execution and
delivery.

[PASS THROUGH TRUSTEE], as Pass Through
Trustee

By: __________________________________
Title:

KMART CORPORATION

By: __________________________________
Title:

53
<PAGE> 63
Exhibit A to Pass Through Trust Agreement-1994-K-[1/2]

FORM OF 1994-K-[1/2] PASS THROUGH CERTIFICATE

Unless this Pass Through Certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC")
to the Pass Through Trustee or its agent for registration or transfer, exchange
or payment, and any certificate issued is registered in the name of Cede & Co.
or in such other name as is requested by an authorized representative of DTC
(and any payment is made to Cede & Co. or to such other entity as is requested
by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE
THEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein. [This paragraph
is required only if the Pass Through Certificates are to be represented by the
Registered Global Certificate.]

CUSIP No. ____________

PASS THROUGH TRUST-1994-K-[1/2]

____% Pass Through Certificate

Final Scheduled Regular Distribution Date: ___________, 20__

evidencing a fractional undivided interest in a pass through trust,
the property of which includes certain Mortgage Notes, each secured by
a Property or Properties leased to Kmart Corporation.

Certificate No. ____

$___________ Fractional Undivided Interest representing ________% of the Trust
per $1,000 face amount.

THIS CERTIFIES THAT _____________, for value received, is the registered owner
of a $_________ (_____________ dollars) Fractional Undivided Interest in the
Kmart Corporation Pass Through Trust-1994-K-[1/2] (the "Pass Through Trust")
created by [PASS THROUGH TRUSTEE], as trustee (the "Pass Through Trustee"),
pursuant to the Pass Through Trust Agreement-1994-K-_ dated as of
______________, 1994 (the "Pass Through Agreement"), between the Pass Through
Trustee and Kmart Corporation, a corporation incorporated under Michigan law
(the "Company"), a summary of certain of the pertinent provisions of which is
set forth below. To the extent not otherwise defined herein, the capitalized
terms used herein have the meanings assigned to them in the Pass

A-1
<PAGE> 64
Through Agreement. This Certificate is one of the duly authorized Certificates
designated as "Kmart Corporation-1994-K-[1/2] Pass Through Certificates". This
Pass Through Certificate is issued under and is subject to the terms,
provisions, and conditions of the Pass Through Agreement, to which the
Certificateholder of this Pass Through Certificate by virtue of the acceptance
hereof assents and by which such Certificateholder is bound. The property of
the Pass Through Trust (the "Trust Property") includes certain Mortgage Notes
(the "Mortgage Notes"). As of the date hereof, each of the Mortgage Notes is
secured by a Property or Properties leased to the Company and an assignment of
certain rents payable by the Company.

The Pass Through Certificates represent fractional undivided interests
in the Pass Through Trust and the Trust Property, and have no rights, benefits
or interest in respect of any other separate trust established pursuant to the
terms of any other Pass Through Agreement or other Pass Through Certificates
issued pursuant thereto.

Subject to and in accordance with the terms of the Pass Through
Agreement, from funds then available to the Pass Through Trustee, there will be
distributed on each ________ and ___________ (a "Regular Distribution Date"),
commencing on _______, 1995, to the Person in whose name this Pass Through
Certificate is registered at the close of business on the fifteenth day
preceding the applicable Regular Distribution Date, an amount in respect of the
Scheduled Payments on the Mortgage Notes due on such Regular Distribution Date,
the receipt of which has been confirmed by the Pass Through Trustee, equal to
the product of the percentage interest in the Pass Through Trust evidenced by
this Pass Through Certificate and an amount equal to the sum of such Scheduled
Payments. Subject to and in accordance with the terms of the Pass Through
Agreement, if Special Payments on the Mortgage Notes are received by the Pass
Through Trustee, from funds then available to the Pass Through Trustee, there
shall be distributed on the applicable Special Distribution Date, to the Person
in whose name this Pass Through Certificate is registered at the close of
business on the fifteenth day preceding such Special Distribution Date, an
amount in respect of such Special Payments on the Mortgage Notes, the receipt
of which has been confirmed by the Pass Through Trustee, equal to the product
of the percentage interest in the Pass Through Trust evidenced by this Pass
Through Certificate and an amount equal to the sum of such Special Payments so
received. If a Distribution Date is not a Business Day, distribution shall be
made on the immediately following Business Day with the same force and effect
as if made on such Distribution Date and no interest shall accrue during the
intervening period. The Special Distribution Date shall be the ___________ day
of the month determined as provided in the Pass Through Agreement. The Pass
Through Trustee shall

A-2
<PAGE> 65
mail notice of each Special Payment and the Special Distribution Date therefor
to the Certificateholder of this Pass Through Certificate.

Distributions on this Pass Through Certificate will be made by the
Pass Through Trustee to the Person entitled thereto, without the presentation
or surrender of this Pass Through Certificate or the making of any notation
hereon. Except as otherwise provided in the Pass Through Agreement and
notwithstanding the above, the final distribution on this Pass Through
Certificate will be made after notice mailed by the Pass Through Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Pass Through Certificate at the office or agency of the Pass Through Trustee
specified in such notice.

Reference is hereby made to the further provisions of this Pass
Through Certificate set forth on the reverse hereof, which further provisions
shall for all purposes have the same effect as if set forth at this place.

This Pass Through Certificate shall be governed by and construed in
accordance with the laws of the State of New York.

Unless the certificate of authentication hereon has been executed by
the Pass Through Trustee, by manual signature, this Pass Through Certificate
shall not be entitled to any benefit under the Pass Through Trust or be valid
for any purpose.

IN WITNESS WHEREOF, the Pass Through Trustee has caused this Pass
Through Certificate to be duly executed.

PASS THROUGH TRUST-1994-K-[1/2]

By: [PASS THOUGH TRUSTEE], as
Pass Through Trustee

By: ______________________________
Title:

A-3
<PAGE> 66
[FORM OF PASS THROUGH TRUSTEE'S CERTIFICATE OF AUTHENTICATION]

Dated: ______________, 1994

This is one of the Pass Through Certificates referred to in the
within-mentioned Pass Through Agreement.

[PASS THROUGH TRUSTEE], as Pass
Through Trustee

By: ____________________________
Authorized Officer

A-4
<PAGE> 67
[Reverse]

The Pass Through Certificates do not represent an obligation of, or an
obligation guaranteed by, or an interest in, the Company, the Pass Through
Trustee or any affiliate thereof. The Pass Through Certificates are limited in
right of payment, all as more specifically set forth on the face hereof and in
the Pass Through Agreement. All payments or distributions made to
Certificateholders under the Pass Through Agreement shall be made only from the
Trust Property and only to the extent that the Pass Through Trustee shall have
sufficient income or proceeds from the Trust Property to make such payments in
accordance with the terms of the Pass Through Agreement. Each
Certificateholder of this Pass Through Certificate, by its acceptance hereof,
agrees that it will look solely to the income and proceeds from the Trust
Property to the extent available for distribution to such Certificateholder as
provided in the Pass Through Agreement. This Pass Through Certificate does not
purport to summarize the Pass Through Agreement and reference is made to the
Pass Through Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds, and duties evidenced hereby. A copy of the
Pass Through Agreement may be examined during normal business hours at the
principal office of the Pass Through Trustee, and at such other places, if any,
designated by the Pass Through Trustee, by any Certificateholder upon request.

The Pass Through Agreement permits, with certain exceptions provided
therein, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Certificateholders under the
Pass Through Trust at any time by the Company and the Pass Through Trustee with
the consent of the Majority In Interest of Certificateholders in the Pass
Through Trust. Any such consent by the Certificateholder of this Pass Through
Certificate shall be conclusive and binding on such Certificateholder and upon
all future Certificateholders of this Pass Through Certificate and of any Pass
Through Certificate issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this Pass
Through Certificate. The Pass Through Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the
Certificateholders of any of the Pass Through Certificates.

As provided in the Pass Through Agreement and subject to certain
limitations set forth therein, the transfer of this Pass Through Certificate is
registrable in the Register upon surrender of this Pass Through Certificate for
registration of transfer at the facilities or agencies maintained by the Pass
Through Trustee in its capacity as Registrar, or by any successor Registrar,
duly endorsed or accompanied by a written instrument of transfer in

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<PAGE> 68
form satisfactory to the Pass Through Trustee and the Registrar duly executed
by the Certificateholder hereof or such Certificateholder's attorney-in-fact
duly authorized in writing, and thereupon one or more new Pass Through
Certificates of authorized denominations evidencing the same aggregate
Fractional Undivided Interest in the Pass Through Trust will be issued to the
designated transferee or transferees.

The Pass Through Certificates are issuable only as registered Pass
Through Certificates without coupons in minimum denominations of $1,000
Fractional Undivided Interest and integral multiples thereof. As provided in
the Pass Through Agreement and subject to certain limitations set forth
therein, Pass Through Certificates are exchangeable for new Pass Through
Certificates of authorized denominations evidencing the same aggregate
Fractional Undivided Interest in the Pass Through Trust, as requested by the
Certificateholder surrendering the same.

No service charge will be made for any such registration of transfer
or exchange, but the Pass Through Trustee may require payment of a sum
sufficient to cover any tax or governmental charge payable in connection
therewith.

The Pass Through Trustee, the Indenture Trustees, the Registrar, and
the Company and any agent of the Pass Through Trustee, the Indenture Trustees,
the Registrar, or the Company may treat the person in whose name this Pass
Through Certificate is registered as the owner hereof for all purposes, and
neither the Pass Through Trustee, the Indenture Trustees, the Registrar, or the
Company nor any such agent shall be affected by any notice to the contrary.

The obligations and responsibilities created by the Pass Through
Agreement and the Pass Through Trust created thereby shall terminate upon the
distribution to Certificateholders of all amounts required to be distributed to
them pursuant to the Pass Through Agreement and the disposition of all property
held as part of the Trust Property.

A-6

<PAGE> 1
EXHIBIT 4.2
Draft of November 11, 1994

Kmart Store No.: [STORE NO.]~
[TOWN, STATE]~

THIS INDENTURE IS A MORTGAGE, DEED OF TRUST AND SECURITY AGREEMENT OF BOTH REAL
AND PERSONAL PROPERTY, INCLUDING GOODS THAT ARE OR ARE TO BECOME FIXTURES ON
THE REAL ESTATE DESCRIBED HEREIN. THIS INDENTURE CONTAINS AFTER-ACQUIRED
PROPERTY PROVISIONS. THIS INDENTURE IS TO BE FILED FOR RECORD IN THE RECORDS
WHERE MORTGAGES OR DEEDS OF TRUST OF REAL PROPERTY ARE RECORDED. THIS
INDENTURE SHOULD ALSO BE APPROPRIATELY INDEXED AS A FIXTURE FINANCING STATEMENT
UNDER THE UNIFORM COMMERCIAL CODE. THIS INDENTURE SECURES OBLIGATIONS
CONTAINING PROVISIONS FOR MODIFICATIONS IN THE TERMS OF THE SECURED
OBLIGATIONS.

INDENTURE, MORTGAGE AND DEED OF TRUST,
ASSIGNMENT OF RENTS AND SECURITY AGREEMENT

Dated as of December 15, 1994

Among

[OWNER TRUST], a Delaware business trust,
Owner Trust

and

[CORPORATE INDENTURE TRUSTEE] and
[INDIVIDUAL INDENTURE TRUSTEE],
Indenture Trustees*

When recorded return to:
[CORPORATE INDENTURE TRUSTEE]
[Address]
Attention: [INDIVIDUAL INDENTURE TRUSTEE]

_________________
* Revise, as required, if Remainderman will be a party.
<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
GRANTING CLAUSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

ARTICLE I

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

ARTICLE II

ISSUE, EXECUTION, FORM AND
REGISTRATION OF THE MORTGAGE NOTES

SECTION 2.01. Authentication and Delivery of
Mortgage Notes . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.02. Execution of Mortgage Notes . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.03. Certificate of Authentication . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.04. Form and Terms of Mortgage Notes;
Payments of Principal, Premium
and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.05. Payments from Indenture Estate Only . . . . . . . . . . . . . . . . . . . 20
SECTION 2.06. Registration, Transfer and Exchange . . . . . . . . . . . . . . . . . . . 21
SECTION 2.07. Mutilated, Defaced, Destroyed, Lost
and Stolen Mortgage Notes . . . . . . . . . . . . . . . . . . . 23
SECTION 2.08. Cancellation of Mortgage Notes;
Destruction Thereof . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.09. Termination of Interest in
Indenture Estate . . . . . . . . . . . . . . . . . . . . . . . . 24

ARTICLE III

COVENANTS

SECTION 3.01. Payment of Principal, Premium
and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.02. Offices for Payments, etc. . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>

i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 3.03. Appointment to Fill a Vacancy in Office
of Corporate Indenture Trustee . . . . . . . . . . . . . . . . . 25
SECTION 3.04. [Intentionally Omitted] . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.05. Covenants of the Trust Company and
the Owner Trust . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.06. Property Alterations and Substitutions
of the Indenture Estate . . . . . . . . . . . . . . . . . . . . 29
SECTION 3.07. Further Assurances; Financing
Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 3.08. Assumption of Obligations of Owner
Trust by the Company . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 3.09. No Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 3.10. Ground Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

ARTICLE IV

HOLDER LISTS; OWNERSHIP OF NOTES

SECTION 4.01. Holder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.02. Ownership of Mortgage Notes . . . . . . . . . . . . . . . . . . . . . . . 33

ARTICLE V

RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE INDENTURE ESTATE

SECTION 5.01. Basic Rent Distribution . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.02. Event of Loss and Replacement;
Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.03. Payment After Indenture Event of
Default, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5.04. Certain Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.05. Other Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.06. Payments to Owner Trust . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 5.07. Application of Payments . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 5.08. Investment of Amounts Held by
Indenture Trustees . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 5.09. Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>

ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
ARTICLE VI

REDEMPTION OF MORTGAGE NOTES

<S> <C> <C>
SECTION 6.01. No Redemption or Prepayment Prior
to Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.02. Redemption of Mortgage Notes . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.03. Redemption; Notice to Indenture
Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.04. Mortgage Notes Redeemed in Part . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.05. Notice of Redemption to Holders . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.06. Right to Reject Tenant's Purchase
Offer or Notice of Termination . . . . . . . . . . . . . . . . 42
SECTION 6.07. Mortgage Notes Payable on
Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . 42

ARTICLE VII

REMEDIES OF INDENTURE TRUSTEES
AND HOLDERS

SECTION 7.01. Indenture Event of Default . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.02. Remedies; Acceleration of Maturity;
Rescission . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 7.03. Exercise of Remedies, and Suits for
Enforcement, by Indenture Trustees;
Owner Trust's Right to Redeem the
Mortgage Notes . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7.04. Additional Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 7.05. Indenture Trustees May File Proofs
of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 7.06. Indenture Trustees May Enforce Claims
Without Possession of the Mortgage
Notes; Represent Holders . . . . . . . . . . . . . . . . . . . . 51
SECTION 7.07. Application of Money Collected . . . . . . . . . . . . . . . . . . . . . 51
SECTION 7.08. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 7.09. Unconditional Right of Holders to
Receive Principal, Premium, if any,
and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 7.10. Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . 52
</TABLE>

iii
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 7.11. Rights and Remedies Cumulative and
Subject to Applicable Law . . . . . . . . . . . . . . . . . . . 52
SECTION 7.12. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 7.13. Control by Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 7.14. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 7.15. Waiver of Appraisement; Laws . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 7.16. Special State Law Addendum . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 7.17. No Cross-Collateralization . . . . . . . . . . . . . . . . . . . . . . . 55

ARTICLE VIII

RIGHTS OF THE OWNER TRUST
AND THE OWNER PARTICIPANT

SECTION 8.01. Certain Rights of Owner Trust and Owner
Participant . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 8.02. Owner Trust's Right to Elect to Redeem
and to Provide for Payment . . . . . . . . . . . . . . . . . . . 57
SECTION 8.03. Certain Rights of Owner Trust and
Owner Participant . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 8.04. Company Ownership of Owner Trust . . . . . . . . . . . . . . . . . . . . 61

ARTICLE IX

THE INDENTURE TRUSTEES

SECTION 9.01. Acceptance of Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 9.02. Duties and Responsibilities of the
Indenture Trustees . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 9.03. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 9.04. Certain Rights of the Indenture
Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 9.05. Issuance of Mortgage Notes
or Recording; Warranty . . . . . . . . . . . . . . . . . . . . . 66
SECTION 9.06. Indenture Trustees, Owner Trustees
and Agents May Hold Mortgage Notes;
Collections, etc. . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 9.07. Moneys Held by Indenture Trustees . . . . . . . . . . . . . . . . . . . . 66
SECTION 9.08. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 9.09. The Co-Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . 67
</TABLE>

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<TABLE>
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SECTION 9.10. Co-Indenture Trustee Acting with
Corporate Indenture Trustee . . . . . . . . . . . . . . . . . . 68
SECTION 9.11. Easements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 9.12. Resignation and Removal; Appointment
of Successor . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 9.13. Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . 69
SECTION 9.14. Merger, Conversion, Consolidation or
Succession to Business . . . . . . . . . . . . . . . . . . . . . 69
SECTION 9.15. Persons Eligible for Appointment as
Corporate Indenture Trustee . . . . . . . . . . . . . . . . . . 70
SECTION 9.16. Appointment of Separate Trustees . . . . . . . . . . . . . . . . . . . . 70
SECTION 9.17. Trustees' Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

ARTICLE X

CONCERNING THE HOLDERS

SECTION 10.01. Evidence of Action Taken by Holders . . . . . . . . . . . . . . . . . . . 72
SECTION 10.02. Proof of Execution of Instruments
and of Holding of the Mortgage Notes . . . . . . . . . . . . . . 73
SECTION 10.03. Holders to Be Treated as Owners . . . . . . . . . . . . . . . . . . . . . 73
SECTION 10.04. Mortgage Notes Owned by Owner Trust,
Owner Trustees, Owner Participant
and the Company Deemed
Not Outstanding . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 10.05. Right of Revocation of Action Taken . . . . . . . . . . . . . . . . . . . 74
SECTION 10.06. Voting Rights of Pass Through Trustee . . . . . . . . . . . . . . . . . . 74

ARTICLE XI

INDEMNIFICATION OF INDENTURE TRUSTEES
BY OWNER TRUST
</TABLE>

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<TABLE>
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ARTICLE XII

SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS

SECTION 12.01. Supplemental Indentures Without Consent
of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 12.02. Supplemental Indentures With Consent
of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 12.03. Effect of Supplemental Indenture . . . . . . . . . . . . . . . . . . . . 79
SECTION 12.04. Documents to Be Given to Indenture
Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 12.05. Notation on Mortgage Notes in
Respect of Supplemental Indentures . . . . . . . . . . . . . . . 79
SECTION 12.06. No Request Necessary for Lease
Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 12.07 Amendments, Waivers, etc. of Other
Indenture Documents . . . . . . . . . . . . . . . . . . . . . . 79

ARTICLE XIII

SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS

SECTION 13.01. Satisfaction and Discharge of Indenture;
Termination of Indenture . . . . . . . . . . . . . . . . . . . . 81
SECTION 13.02. Application by Indenture Trustees of
Funds Deposited for Payment of
Mortgage Notes . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 13.03. Transfer of Moneys Held by Indenture
Trustees Unclaimed
for Two Years and Eleven Months . . . . . . . . . . . . . . . . 82
</TABLE>

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ARTICLE XIV

SUBSTITUTIONS AND RELEASES

SECTION 14.01. Substitution of Property Included
in the Indenture Estate During
Continuation of Lease . . . . . . . . . . . . . . . . . . . . . 83
SECTION 14.02. Execution of Releases . . . . . . . . . . . . . . . . . . . . . . . . . . 84

ARTICLE XV

ISSUANCE OF REFINANCING MORTGAGE NOTES

SECTION 15.01. Creation and Forms of Refinancing
Mortgage Notes . . . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 15.02. Issuance of Refinancing Mortgage
Notes After Redemption . . . . . . . . . . . . . . . . . . . . . 84

ARTICLE XVI

ASSIGNMENT OF LEASES AND RENTS

SECTION 16.01. Making of Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 16.02. Receipt of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 16.03. Irrevocability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 16.04. Owner Trust Remains Liable . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 16.05. Ongoing Right to Collect Rents;
Receivers . . . . . . . . . . . . . . . . . . . . . . . . . . . 88

ARTICLE XVII

SECURITY AGREEMENT AND FINANCING STATEMENT

SECTION 17.01. Security Agreement and Financing
Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
</TABLE>

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ARTICLE XVIII

MISCELLANEOUS

SECTION 18.01. Exculpation and Release of Liability . . . . . . . . . . . . . . . . . . 91
SECTION 18.02. Capacity in Which Acting . . . . . . . . . . . . . . . . . . . . . . . . 91
SECTION 18.03. No Legal Title to Indenture Estate
in Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
SECTION 18.04. Sale of Indenture Estate by
Indenture Trustees is Binding . . . . . . . . . . . . . . . . . 91
SECTION 18.05. Indenture for Benefit of Owner
Trust, Indenture Trustees and
Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
SECTION 18.06. No Action Contrary to the Company's
Rights Under the Lease . . . . . . . . . . . . . . . . . . . . . 92
SECTION 18.07. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
SECTION 18.08. Compliance Certificates and Opinions . . . . . . . . . . . . . . . . . . 93
SECTION 18.09. Form of Documents Delivered to
Indenture Trustees . . . . . . . . . . . . . . . . . . . . . . . 93
SECTION 18.10. Act of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
SECTION 18.11. Effect of Headings and Table of
Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
SECTION 18.12. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . 94
SECTION 18.13. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
SECTION 18.14. Governing Law; Interpretation . . . . . . . . . . . . . . . . . . . . . . 95
SECTION 18.15. Estoppel Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . 95
SECTION 18.16. Company Not a Party . . . . . . . . . . . . . . . . . . . . . . . . . . 95
SECTION 18.17. Special State Law Addendum . . . . . . . . . . . . . . . . . . . . . . . 96

EXHIBIT A-1 - Form of Mortgage Note due [Maturity Date K-1]

EXHIBIT A-2 - Form of Mortgage Note due [Maturity Date K-2]

SCHEDULE I - Description of Land
</TABLE>

viii
<PAGE> 10
INDENTURE, MORTGAGE AND DEED OF TRUST, ASSIGNMENT OF RENTS AND
SECURITY AGREEMENT (this "Indenture") dated as of December 15, 1994 between
[OWNER TRUST], a Delaware business trust (the "Owner Trust") created under the
Trust Agreement (as hereinafter defined) whose principal place of business and
mailing address are set forth in Section 18.06, of which [CORPORATE OWNER
TRUSTEE] (together with its permitted successors and assigns, the "Corporate
Owner Trustee") and [INDIVIDUAL OWNER TRUSTEE] (together with his or her
permitted successors and assigns, the "Individual Owner Trustee"), acting not
individually, except as otherwise provided herein (when acting in such
individual capacity, the "Trust Company" and "[INDIVIDUAL OWNER TRUSTEE]",
respectively), but solely as trustees for the Owner Trust (the Corporate Owner
Trustee and the Individual Owner Trustee collectively in such capacities, the
"Owner Trustees"), and [CORPORATE INDENTURE TRUSTEE], a [__________] organized
and existing under the laws of [___________], whose principal place of business
and mailing address are set forth in Section 18.06, and [INDIVIDUAL INDENTURE
TRUSTEE], whose residence and mailing address are set forth in Section 18.06,
as Corporate Indenture Trustee and Co-Indenture Trustee, respectively,
hereunder (collectively, together with their permitted successors and assigns,
the "Indenture Trustees").

RECITALS

WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof, and in particular, the
following terms shall have the following meanings:

Aggregate Initial Principal Amount of $[TOTAL PRINCIPAL AMOUNT]~
the Mortgage Notes:

Initial Principal Amount of Mortgage $[K-1 PRINCIPAL AMOUNT]~
Note K-1:

Initial Principal Amount of Mortgage $[K-2 PRINCIPAL AMOUNT]~
Note K-2:

WHEREAS, the Owner Trust has concurrently herewith acquired from the
Company, or from a Person under an agreement with the Company to construct
certain Improvements and sell the Property to the Company, (a) an estate for
years in and to the parcel of land (the "Land") more fully described in
Schedule I hereto (or if so indicated in Schedule I, in the leasehold title in
such Property) and (b) fee title in and to the Improvements; and

WHEREAS, the Owner Trust and the Indenture Trustees desire to enter
into, execute and deliver this Indenture, pursuant to which the Owner Trust
will initially execute and deliver and the Corporate Indenture Trustee will
initially authenticate two Mortgage Notes in the forms of
<PAGE> 11
Exhibit A-1 and Exhibit A-2, respectively, in the principal amounts of Initial
Principal Amount of Mortgage Note K-1 and the Initial Principal Amount of
Mortgage Note K-2, respectively; and

WHEREAS, the Owner Trust desires by this Indenture to provide, among
other things, (i) for the issuance by the Owner Trust of the Mortgage Notes,
(ii) for the assignment, mortgage and pledge by the Owner Trust to the
Indenture Trustees, as part of the Indenture Estate hereunder, among other
things, of all of the Owner Trust's right, title and interest in and to the
Property and the Indenture Documents and all payments and other amounts
received hereunder or thereunder in accordance with the terms hereof (other
than Excepted Rights and Payments), as security for, among other things, the
Owner Trust's obligations to the Holders and for the ratable benefit and
security of such Holders; and

WHEREAS, all things have been done to make the Mortgage Notes, when
executed by the Owner Trust, and authenticated, issued and delivered hereunder,
the valid obligations of the Owner Trust; and

WHEREAS, all things necessary to make this Indenture the valid,
binding and legal obligation of the Owner Trust enforceable in accordance with
its terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity or except as limited by
applicable laws which may affect the remedies provided for in this Indenture,
have been done and performed and have happened;

NOW, THEREFORE, THIS INDENTURE WITNESSETH, that, (A) to secure (i) the
payment of the principal of, and interest on and all other amounts in respect
of the Mortgage Notes from time to time Outstanding (including any Refinancing
Mortgage Notes hereafter issued and from time to time Outstanding), and (ii)
the performance and observance of the covenants herein contained and the
performance and observance by the Owner Trust of all of its covenants and
provisions contained herein and (only with respect to the Property encumbered
hereby) in the Indenture Documents to which it is a party for the benefit of
the Holders and the Indenture Trustees, and (iii) all future advances and
readvances that may subsequently be made to the Owner Trust by the Indenture
Trustees, evidenced by the Mortgage Notes, and all renewals and extensions
thereof, provided, however, nothing contained herein shall create an obligation
on the part of the Indenture Trustees to make future advances or readvances to
the Owner Trust and (iv) all fees of the Indenture Trustees and charges and
expenses of collection incurred by the Indenture Trustees, including court
costs and reasonable attorneys' fees, and (B) in consideration of the premises
and of the purchase of the Mortgage Notes by the purchasers thereof, the Owner
Trust has executed and delivered this Indenture; and the Owner Trust has
irrevocably granted, and by these presents and by the execution and delivery
hereof and of the Mortgage Notes, and the Owner Trust does hereby irrevocably
grant, bargain, convey, warrant, assign, collaterally assign, mortgage, pledge,
sell, alien, remise, release, transfer, hypothecate, deliver, set over and
confirm (the foregoing acts being referred to herein as simply the "Grant"), to
and for the benefit of the Indenture Trustees and their successors and assigns
forever, in trust upon the terms

2
<PAGE> 12
herein set forth, (x) for the benefit and security of the Holders of the
Mortgage Notes, without priority of any over the others, and (y) upon the
issuance of any Refinancing Mortgage Notes, for the benefit of the Holders of
such Refinancing Mortgage Notes (on a parity with the Holders of the Mortgage
Notes hereafter issued and Outstanding), all right, title and interest of the
Owner Trust (but only to the extent conveyed to the Owner Trust under the
Operative Documents and only to the extent assigned by operation of this
Indenture) in and to its interest in, to and under all of the property, rights,
privileges and franchises described in the following Granting Clauses,
exclusive, however of all Excepted Rights and Excepted Payments (collectively,
described as the "Indenture Estate"), to wit:

Granting Clause First

The Owner Trust's estate for years interest in the Land (or, if so
stated in Schedule I, the Owner Trust's leasehold interest arising under and by
virtue of the Ground Lease), together with the Owner Trust's right, title and
interest in all and singular the tenements, hereditaments, easements, rights of
way, rights, privileges and appurtenances in and to the Land, belonging or in
any way appertaining thereto, including any streets, ways, alleys, gores or
strips of land adjoining the Land and all sewer rights, waters, water courses,
water rights and powers, mineral rights, air rights and all development rights
whatsoever in any way belonging, relating or appertaining to any of the
Property and/or Improvements, or which hereafter shall in any way belong,
relate or be appurtenant thereto and whether now owned or hereafter acquired by
the Owner Trust; all claims or demands of the Owner Trust at law or in equity,
in possession or expectancy of, in and to the Land; and subject to the
provisions of this Indenture, all rents, income, revenues, issues, awards,
proceeds, deposits, tenders, profits and other benefits from and in respect of
the property described in this Granting Clause First and/or Granting Clause
Second or from any business, if any, conducted thereon by the Owner Trust, in
each case whether now existing or hereafter arising or acquired by the Owner
Trust, it being the intention of the parties hereto that, so far as may be
permitted by law, all property of the character hereinabove described that is
now owned or held or is hereafter acquired by the Owner Trust and affixed,
attached and annexed to the Property shall be and remain or become and
constitute a portion of the Indenture Estate and the security covered by and
subject to the lien hereof; further, if Owner Trust's interest in the Land is
indicated on Schedule I to be a leasehold, all of the Owner Trust's right,
title and interest in and to any right pursuant to Section 365(h) of the
Federal Bankruptcy Code (or any successor to such section) (i) to possession or
any statutory term of years derived from or incident to the Ground Lease, or
(ii) to treat the Ground Lease as terminated (subject to the provisions of
Section 3.10 below).

Granting Clause Second

The entire right, title and interest of the Owner Trust in the
Improvements, including the Owner Trust's right, title and interest in all
Alterations and other additions to or changes in the Improvements now located
or at any time hereafter constructed or placed upon the Land and all

3
<PAGE> 13
building equipment, fixtures and goods of every kind and nature to become
fixtures on the Land or in any such Improvements.

Granting Clause Third

All Basic Rent and Additional Rent (including amounts payable under
[ARTICLES 37 AND 38] of the Lease and Trustee Expenses); all payments, receipts
and other consideration of any sort whatsoever payable under the Lease,
including any of the same payable to the Owner Trust, as lessor under the
Lease, as a result of or in respect of any casualty, condemnation or economic
obsolescence relating to the Property, any termination of the Lease, whether by
reason of the Company's default thereunder or otherwise, including any property
delivered in substitution of the Property; and all other right, title and
interest of the Owner Trust, as lessor under the Lease (including all extended
and renewal terms under the Lease) and such other rights, title and interest as
are described in Article XVI, subject to application of certain monies in
accordance with Article V hereof.

Granting Clause Fourth

All of the Owner Trust's right, title and interest in, to and
under (a) all general intangibles relating to design, development, operation,
management and use of the Property, (b) all certificates of occupancy, zoning
variances, building, use or other permits, approvals, authorizations and
consents obtained from and all materials prepared for filing or filed with any
governmental agency in connection with the development, use, operation or
management of the Property (except for any such permits and approvals that are
not transferable by law), (c) all construction, service, architectural and
other similar contracts concerning the design, construction, management,
operation, occupancy and/or use of the Property, (d) all architectural
drawings, plans, specifications, soil tests, feasibility studies, appraisals,
engineering reports and similar materials relating to any portion of or all of
the Property and (e) all payment and performance bonds or warranties or
guarantees relating to the Property;

Granting Clause Fifth

Proceeds of all of the foregoing and any and all other moneys and
property which may from time to time become subject to the Lien hereof or which
may come into the possession or be subject to the control of the Indenture
Trustees pursuant to this Indenture or any other instrument included in the
Indenture Estate (other than Excepted Rights and Payments), including casualty
insurance proceeds and all awards which may at any time be made to the Owner
Trust for the taking by eminent domain of the whole or any part of the
Indenture Estate or any interest therein and other property, if any, delivered
to the Indenture Trustees by or on behalf of the Owner Trust, it being the
intention of the Owner Trust and it being hereby agreed that all property
hereafter acquired by the Owner Trust and required to be subjected to the Lien
of this Indenture or intended so to be (other than Excepted Rights and
Payments) shall forthwith upon the acquisition thereof by the Owner Trust be
subject to the Lien of this Indenture as if such

4
<PAGE> 14
property were at the date hereof owned by the Owner Trust and were specifically
described in this Indenture and such Lien were granted hereby or pursuant
hereto.

PROVIDED, HOWEVER, that the foregoing Granting Clauses shall not
subject to the Lien of this Indenture any Excepted Rights and Payments, and

PROVIDED FURTHER, HOWEVER, the Lien of this Indenture shall be
subordinate to the leasehold estate created in favor of the Company under the
Lease.

TO HAVE AND TO HOLD the Indenture Estate and all parts thereof unto
the Indenture Trustees and their successors and assigns to their own use and
benefit forever, but in trust, nevertheless for the benefit and security of the
Holders for the use and purposes and with the power and authority and subject
to the terms and conditions mentioned and set forth in this Indenture,

WITH POWER OF SALE, to the extent permitted by applicable law, upon
the terms and conditions herein set forth for the benefit and security of the
Outstanding Mortgage Notes and for the enforcement of the payment of the
principal of and interest on the Outstanding Mortgage Notes in accordance with
their terms, and all other sums payable hereunder or thereunder and the
performance and observance of the provisions of the Outstanding Mortgage Notes,
this Indenture and any other Indenture Document, all as herein set forth.

BUT IN TRUST, NEVERTHELESS, for the equal and proportionate benefit
and security of the Holders from time to time of the Mortgage Notes Outstanding
hereunder without any priority of any one over any other,

AND UPON THE TRUSTS and subject to the covenants and conditions
hereinafter set forth:

IT IS HEREBY COVENANTED AND AGREED that anything herein contained to
the contrary notwithstanding, the Owner Trust shall remain liable under the
Indenture Documents to perform all of its respective obligations thereunder,
all in accordance with and pursuant to the terms and provisions thereof, and
the Indenture Trustees and the Holders shall have no obligation or liability
under any thereof by reason of or arising out of the assignment hereunder, nor
shall the Indenture Trustees or any Holder be required or obligated in any
manner to perform or fulfill any obligations of the Owner Trust under or
pursuant to any of the Indenture Documents to make any payment, or to make any
inquiry as to the nature or sufficiency of any payment received by it, or
present or file any claim, or take any action to collect or enforce the payment
of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.

Effective upon the occurrence and continuance of an Indenture Event of
Default, and subject to the terms hereof, each of the Owner Trust does hereby
appoint and constitute the

5
<PAGE> 15
Indenture Trustees, and each of them, the true and lawful attorneys of the
Owner Trust, irrevocably, with full power (in the name of the Owner Trust, or
otherwise) to ask, require, demand and receive any and all moneys and claims
for moneys (in each case including insurance and requisition proceeds) due and
to become due under or arising out of the Indenture Documents (other than
Excepted Rights and Payments) and all other property which now or hereafter
constitutes part of the Indenture Estate, to endorse any checks or other
instruments or orders in connection therewith and to file any claims or to take
any action or to institute any proceedings which the Indenture Trustees may
deem to be necessary or advisable in the premises. Under the Lease, the
Company is directed to make all payments of Basic Rent and all other amounts
which are required to be paid to or deposited with the Lessor pursuant to the
Lease (other than Excepted Rights and Payments) directly to the Indenture
Trustees at such address or addresses or account as the Indenture Trustees
shall specify, for application as provided in this Indenture.1/ The Owner
Trust agrees that, promptly on receipt thereof, it will transfer to the
Indenture Trustees any and all moneys (other than Excepted Rights and Payments)
from time to time received by it constituting part of the Indenture Estate, for
distribution by the Indenture Trustees pursuant to this Indenture, except that
the Owner Trust may accept for distribution pursuant to the Trust Agreement any
amounts distributed to it by the Indenture Trustees under this Indenture.

The Owner Trust agrees that at any time and from time to time, upon
the written request of the Indenture Trustees, it will promptly and duly
execute and deliver or cause to be duly executed and delivered any and all such
further instruments and documents as the Indenture Trustees may reasonably deem
necessary or desirable in obtaining the full benefits of the Grant made
hereunder and of the rights and powers granted herein.

The Owner Trust (sometimes herein referred to as "Grantor") does
hereby warrant and represent that it has not mortgaged, assigned or pledged,
and hereby covenants that it will not mortgage, assign or pledge, so long as
this Indenture shall remain in effect and shall not have been terminated
pursuant to Section 13.01 hereof, any of its estate, right, title or interest
hereby assigned, to anyone other than the Indenture Trustees. With respect to
such estate, right, title and interest hereby assigned, the Grantor will not,
except as provided in this Indenture or with respect to Excepted Rights and
Payments, (i) enter into any agreement terminating, amending or supplementing
any of the Indenture Documents, or execute any waiver or modification of, or
consent under, the terms of any of the Indenture Documents (or, if Grantor's
interest in the Land is a leasehold, surrender its interest under the Ground
Lease) or accept a surrender of the Company's interest under the Lease or
subordinate the Lease, (ii) accept any payment from the Company under any
Indenture Document, (iii) settle or compromise any claim arising under any of
the Indenture Documents or (iv) submit or consent to the submission of any
dispute, difference or other matter arising under or in respect of any of the
Indenture Documents to arbitration thereunder. For purposes of subsequent
references herein, this paragraph shall be regarded as the seventh paragraph
following the Habendum Clause.

______________
1/ Please add to Lease draft.

6
<PAGE> 16
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto
as follows:

ARTICLE I

DEFINITIONS

The following terms (except as otherwise expressly provided) for all
purposes of this Indenture and of any indenture supplemental hereto have the
respective meanings specified in this Article. All accounting terms used and
not expressly defined herein have the meanings given to them in accordance with
generally accepted accounting principles, and the term "generally accepted
accounting principles" means such accounting principles which are generally
accepted at the date or time of any computation or otherwise at the date
hereof. The words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision. The terms defined in this Article
include the plural as well as the singular. For all purposes of this Indenture,
capitalized terms used but not defined herein have the respective meanings
assigned thereto in the Lease [OR, IF NOT DEFINED THEREIN, IN THE OWNER
PARTICIPATION AGREEMENT]. The terms "Property", "Improvements" and "Land"
shall mean all or any portion of the Property, Improvements and Land,
respectively. The term "including" shall be deemed followed by the phrase
"without limitation".

"Acceleration Date" means the date as of which the unpaid principal of
all Outstanding Mortgage Notes, together with interest accrued by unpaid
thereon, premium, if any, and all other amounts due thereunder shall become due
and payable under either Section 7.02(b) or 7.02(c) hereof.

"Additional Leases" shall have the meaning given such term in Section
16.01.

"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
when used with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.

"Alterations" means all alterations, additions, additional buildings
and structures on or to the Improvements.

"Business Day" means any day other than Saturday, Sunday or other day
on which banking institutions in the States of New York and Michigan are
authorized or required by law to close.

7
<PAGE> 17
"Co-Indenture Trustee" means [INDIVIDUAL INDENTURE TRUSTEE] of [CITY,
STATE] and, subject to the provisions of Article IX hereof, his successors in
the trusts hereby created.

"Company" means Kmart Corporation, a Michigan corporation, and subject
to the provisions hereof and the Lease, its successors and assigns.

"Company Indenture" has the meaning set forth in Section 3.08(a).

"Company Mortgage Notes" has the meaning set forth in Section 3.08(a).

"Conveyancing Documents" means ________________ (not defined) see
definition of "Operative Documents."

"Corporate Indenture Trustee" means [CORPORATE INDENTURE TRUSTEE], a
[_______________] organized and existing under the laws of [__________________]
and, subject to the provisions of Article IX hereof, its successors in the
trusts hereby created.

"Corporate Owner Trustee" means [CORPORATE OWNER TRUSTEE], a Delaware
banking corporation, acting not in its individual capacity but solely as
trustee and, subject to the provisions of the Trust Agreement, its successors
in the trusts thereby created.

"Corporate Trust Office" means the corporate trust office of the
Corporate Indenture Trustee located at [CORPORATE INDENTURE TRUSTEE ADDRESS] or
such other office at which the Corporate Indenture Trustee's corporate trust
business shall be administered that the Corporate Indenture Trustee shall have
specified by notice in writing to the Company, the Owner Trust, the Owner
Participant and the Holders.

"Distribution Date" has the meaning set forth in the Pass Through
Trust Agreements.2/

"Dollars" and "$" mean lawful currency of the United States of America.

"Excepted Payments" means (i) any and all indemnity payments and
interest thereon (including special tax indemnities, general tax indemnities
and other general indemnities, whether or not such payments are denominated as
Additional Rent) paid or payable by the Company to the Owner Participant, the
Owner Trust, the Trust Company or [INDIVIDUAL OWNER TRUSTEE] in their
individual capacities, or any other Person pursuant to the Lease, the Owner
Participation Agreement, this Indenture, the Indenture Documents, the Tax
Indemnity Agreement or any other Operative Document as a result of claims made
or losses suffered by any such Person, (ii) any payment in respect of insurance
(other than casualty insurance maintained by the Company pursuant to the Lease)
by any Person, or amounts payable by the Company in respect of

______________
2/ Conform as required.

8
<PAGE> 18
deductibles or self-insurance in effect (other than for casualty losses), in
each case, payable as a result of insurance claims made, or losses suffered, by
the Owner Trust, the Trust Company, [INDIVIDUAL OWNER TRUSTEE] or the Indenture
Trustees in their respective individual capacities or by the Owner Participant
or any other Person, (iii) any payment in respect of insurance maintained by or
for the benefit of the Owner Participant (whether directly or through the Owner
Trust) and not required to be maintained by the Company under the Lease, (iv)
fees, disbursements or expenses payable by the Company to the Trust Company or
[INDIVIDUAL OWNER TRUSTEE] (or any successor trustee or co-trustee) in their
respective individual capacities for acting as trustees of the Owner Trust;
(v) any out-of-pocket costs and expenses incurred by the Owner Trustees, as
trustees or in their respective individual capacities, which are reimbursable
by the Company to them or to the Owner Trust or the Owner Participant by virtue
of any transactions which are contemplated by the Lease or any other Operative
Document; and (vi) all rights of the Owner Trust or the Owner Participant or
any other Person under the Operative Documents, whether or not a Lease Event of
Default, an unmatured Lease Default, an Indenture Event of Default or an
Indenture Default has occurred and is continuing, to demand, collect, sue for,
give notices, make determinations, exercise all rights with respect to and
otherwise obtain all amounts from the Company due the Owner Trust, the Owner
Trustees or the Owner Participant, on account of any such indemnities or
payments referred to in clauses (i) through (v) above; provided, however, that
the rights referred to in this clause (vi) shall not be deemed to include the
exercise of any remedy to terminate the Lease or to terminate the Company's
right to possession thereunder (except upon release of the Property from the
Lien of this Indenture) but shall include the right to proceed by appropriate
court action or actions, either at law or in equity, to enforce performance by
the Company of the applicable covenants and terms referenced above or to
recover damages for the breach thereof.

"Excepted Rights" has the meaning set forth in Section 8.01 hereof.

"Excepted Rights and Payments" has the meaning specified in Section
8.01.

"Federal Bankruptcy Code" means Title 11 of the United States Code, as
amended.

"Grantor" shall have the meaning given such term hereinabove.

"Ground Lease" means (if the Owner Trust's interest in the Land, as
indicated on Schedule I, is a leasehold), the Ground Lease (if any) described
on Schedule I, as the same may be modified, supplemented or amended from time
to time in accordance with the provisions thereof and hereof (and if no such
Ground Lease is so indicated on Schedule I, then the term "Ground Lease" herein
and any provisions, to the extent (but only to the extent, the same relate to
the Ground Lease, shall be given no effect).

"Holder" means each registered holder or holders from time to time of
the Mortgage Notes as evidenced on the Register.

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<PAGE> 19
"Indebtedness" of any Person means at any time, without duplication,
(i) all obligations of such Person for borrowed money or the deferred purchase
price of property, or evidenced by bonds, debentures, notes or other similar
instruments, or arising under leases that are properly capitalized under
generally accepted accounting principles applicable to such Person and (ii) all
guarantees by such Person of such obligations described in clause (i) above.

"Indenture", "this Indenture" and other like words mean this Indenture
as the same may be modified, supplemented or amended from time to time in
accordance with the provisions hereof.

"Indenture Default" means an Indenture Event of Default or an event or
condition that, with the giving of notice or the lapse of time or both, would
become an Indenture Event of Default.

"Indenture Documents" means the Owner Participation Agreement (only to
the extent that such document relates to the Property unless the context
clearly requires the contrary), the Lease, the Ground Lease (if any), [OTHERS],
this Indenture and the Mortgage Notes.

"Indenture Estate" means the property and rights subject to the Lien
hereof pursuant to the Granting Clauses of this Indenture; provided, however,
that the term "Indenture Estate" does not include any Excepted Rights and
Payments.

"Indenture Event of Default" has the meaning specified in Section 7.01
hereof.

"Indenture Trustees" means the Corporate Indenture Trustee and the
Co-Indenture Trustee.

"Independent Investment Banker" means an independent investment
banking institution of national standing appointed by the Owner Trust that is
independent in fact, does not have any direct financial interest, or any
material indirect financial interest, in the Company or the Owner Participant
or any Affiliate of the Company or the Owner Participant, and is not connected
with the Company or the Owner Participant or any Affiliate of the Company or
the Owner Participant as an officer, employee, promoter, underwriter, trustee,
partner, director or Person performing similar functions; provided, that if the
Corporate Indenture Trustee shall not have received written notice of such an
appointment at least 10 days prior to a Redemption Date or if an Indenture
Event of Default which is caused by a Lease Event of Default shall have
occurred and be continuing, "Independent Investment Banker" shall mean such an
institution appointed by the Corporate Indenture Trustee.

"Individual Owner Trustee" means [INDIVIDUAL OWNER TRUSTEE], acting
not in his or her individual capacity but solely as trustee, and, subject to
the provisions of the Trust Agreement, his successors in the trusts thereby
created.

10
<PAGE> 20
"Initial Principal Amount of Mortgage Note K-1" and "Initial Principal
Amount of Mortgage Note K-2" have the meanings given such terms in the first
Recital hereof.

"Installment Payment Amount" means, with respect to each Mortgage
Note, the amount of the installment payment of principal, if any, due and
payable on each Installment Payment Date, which amount shall be equal to the
product of the original principal amount of such Mortgage Note and the
Installment Payment Percentage for such Installment Payment Date; provided,
however, that in the event of a partial redemption of the Mortgage Notes as
provided in Article VI, each subsequent Installment Payment Amount shall,
effective as of the Installment Payment Date immediately following the
Redemption Date, be reduced as provided in Section 6.02(a).

"Installment Payment Date" means each date on which an installment of
principal of a Mortgage Note is due and payable under the terms of such
Mortgage Note, as set forth in Exhibit A-1 or A-2 hereto, as applicable.

"Installment Payment Percentage" means, with respect to each
Installment Payment Date, the percentage set forth opposite such Installment
Payment Date in Exhibit A-1 or A-2 hereto, as applicable.

"Interest Payment Date" means each date on which interest is due and
payable under the terms of a Mortgage Note, as set forth in Exhibit A-1 or A-2
hereto, as applicable.

"Lease" means the Lease, dated as of December 15, 1994, between the
Owner Trust and the Company, with respect to the Property, as the same may be
modified, supplemented or amended from time to time in accordance with the
provisions thereof and hereof.

"Lease Default" means any event or condition which, with notice or
lapse of time or both, if uncured, would constitute a Lease Event of Default.

"Lease Event of Default" means any "Event of Default" as defined in
[ARTICLE 20 OF THE LEASE].

"Lessor" means the lessor under the Lease.

"Lien" means any mortgage, pledge, lien, charge, disposition of title,
encumbrance, lease or security interest.

"Make-Whole Premium" means, with respect to the principal amount of
any Mortgage Note to be redeemed or to be paid by reason of redemption or
acceleration, the amount which an Independent Investment Banker determines as
of the third Business Day prior to the applicable Redemption Date or
Acceleration Date equals the excess, if any, of (i) the sum of the present
values of all the remaining scheduled payments of principal of and interest on
such

11
<PAGE> 21
Mortgage Note as of the Redemption Date (or the portion of each such scheduled
payment corresponding to the portion of such Mortgage Note to be redeemed),
from the Redemption Date or Acceleration Date to the stated Maturity Date of
such Mortgage Note, discounted semi-annually on each Interest Payment Date at a
rate equal to the Treasury Yield plus fifty basis points (0.50%), based on a
360-day year of twelve 30-day months, over (ii) the aggregate unpaid principal
amount of such Mortgage Note (or the then unpaid portion to be redeemed) plus
accrued and unpaid interest thereon (excluding, for this purpose, any accrued
interest in default.)

"Maturity Date" means, with respect to each Mortgage Note, the date
specified therein as the date on which all of the remaining unpaid principal
and accrued but unpaid interest payable under the applicable Mortgage Note is
scheduled to be paid in full.

"Moody's" has the meaning set forth in Section 3.05(c) hereof.

"Mortgage Notes" means the Mortgage Notes originally issued by the
Owner Trust hereunder and any Mortgage Notes issued in connection with the
transfer, assignment, partial redemption or replacement of any Mortgage Note
pursuant to this Indenture. The term "Mortgage Notes" shall also include, as
the context may require, Refinancing Mortgage Notes.

"Officer's Certificate" and "Officer's Request" and "Officer's Order"
mean, respectively, a certificate or request or order signed by a Responsible
Officer of the Corporate Owner Trustee or the Company, as the case may be,
delivered to the Indenture Trustees.

"Operative Documents" shall mean the Indenture Documents, the Tax
Indemnity Agreement, the Purchase Agreement and the Conveyancing Documents,
including the Deeds (as defined in the ____________), [OTHERS], the Pass
Through Trust Agreements and the Pass Through Certificates.

"Opinion of Counsel" means a written opinion of legal counsel to the
Company or the Owner Trust, as the case may be, designated by the Company or
the Owner Trust, as the case may be, and reasonably satisfactory to the
Corporate Indenture Trustee and the Owner Trust and addressed to the party or
parties to whom it is to be delivered, which opinion may include reasonable
assumptions, limitations, qualifications and exclusions.

"Other Indentures" means the various instruments titled "Indenture,
Mortgage and Deed of Trust, Assignment of Rents and Security Agreement", dated
the date hereof, entered into by [the related] the Owner Trust[s] and the
Indenture Trustees, provided, however, an "Other Indenture" shall cease to be
an "Other Indenture" at such time as the obligations thereunder are assumed
under provisions of Section 3.08(a) thereof.

"Other Leases" has the meaning set forth in Section 7.17 hereof.

12
<PAGE> 22
"Other Mortgage Notes" means those mortgage notes issued by the
[Other] Owner Trusts pursuant to the Other Indentures, including any
refinancing mortgage notes which may be issued thereunder.

["Other Owner Trusts" means those several Delaware business trusts,
each established pursuant to a Trust Agreement, dated as of December ___, 1994,
among the Trust Company, the Individual Owner Trustee and the Owner
Participant.]3/

"Outstanding" means, when used with respect to the Mortgage Notes, as
of the date of determination, and subject to the provisions of Section 10.04
hereof, all Mortgage Notes theretofore executed and delivered under this
Indenture, with the exception of the following:

(i) Mortgage Notes theretofore canceled by the Corporate
Indenture Trustee or delivered to the Corporate Indenture Trustee for
cancellation pursuant to Section 2.08 of this Indenture or otherwise;

(ii) Mortgage Notes for which payment or redemption money in
the necessary amount has been theretofore deposited with the Corporate
Indenture Trustee in trust for the Holders of such Notes pursuant to
Section 13.01 hereof;provided, that if such Mortgage Notes are to be
redeemed, notice of such redemption has been duly given pursuant to
this Indenture or provision therefor satisfactory to the Corporate
Indenture Trustee has been made; and

(iii) Mortgage Notes in exchange for or in lieu of which
other Mortgage Notes have been executed and delivered pursuant to
Article II hereof.

"Owner Participant" means [OWNER PARTICIPANT], a [STATE] corporation,
and also includes any Person to which such corporation (or any successor)
transfers its right, title and interest in and to the Trust Estate in
accordance with the Trust Agreement, the Owner Participation Agreement, the
Lease and this Indenture.

"Owner Participation Agreement" means the Owner Participation
Agreement dated as of December 15, 1994, among the Owner Participant, the
Company, the Owner Trust, the Owner Trustees, the Indenture Trustees, and the
Remainderman as the same may be amended, modified or supplemented from time to
time in accordance with the terms thereof and hereof.

"Owner Trust" means [OWNER TRUST], the Delaware business trust formed
under the Trust Agreement. Such term shall, as the context may require or
permit, include any successor or successors to the Owner Trust the owner of the
Property and Lessor under the Lease, to the extent permitted under this
Indenture.

______________
3/ Possible multiple owner trusts.

13
<PAGE> 23
"Owner Trustees" means, collectively, the Corporate Owner Trustee and
the Individual Owner Trustee in their respective trust capacities under the
Trust Agreement unless otherwise specifically provided.

"Pass Through Certificate" means any of the Pass Through Certificates
issued pursuant to either of the Pass Through Trust Agreements.

"Pass Through Trust" means either or both (as the context may require)
of the Pass Through Trusts created pursuant to the respective Pass Through
Trust Agreements.

"Pass Through Trust Agreement" means either or both (as the context
may require) of (a) Pass Through Trust Agreement, dated as of December 15,
1994, between the Company and [PASS THROUGH TRUSTEE K-1], as trustee under Pass
Through Trust Agreement-1994-K-1, and (b) Pass Through Trust Agreement, dated
as of December 15, 1994, between the Company and [PASS THROUGH TRUSTEE K-2], as
trustee under Pass Through Trust Agreement-1994-K-2, as either of such
agreements may from time to time be supplemented or amended.4/

"Pass Through Trustees" means collectively the trustees under Pass
Through Trust Agreement-1994-K-1 and Pass Through Trust Agreement-1994-K-2,
respectively.

"Permitted Investments" means:

(a) (i) Direct obligations of, or obligations the principal
of and interest on which are unconditionally guaranteed by, the United
States of America; (ii) obligations of agencies of the United States
of America which are unconditionally guaranteed by or otherwise
afforded the full faith and credit of the United States of America;
and (iii) time deposits secured exclusively by any of the obligations
described in (i) or (ii) above, provided that all of the foregoing
shall have maturities of less than one year; and

(b) Demand and time deposits in, certificates of deposit of,
or bankers' acceptances issued by, any depository institution or trust
company incorporated or organized under the laws of the United States
of America or any state thereof which is a member in good standing of
the Federal Reserve System and has a combined capital, surplus, and
undivided profits of not less than $100,000,000, so long as at the
time of investment or the contractual commitment providing for such
investment the commercial paper or other short-term debt obligations
of such depository institution or trust company are rated at least
"A-1+" by Standard & Poor's and "P-1" by Moody's, and the long-term
debt obligations of such depository institution or trust company are
rated at least "AA" by Standard & Poor's and "Aa2" by Moody's (and,
subject to all of the foregoing conditions, may include the Corporate
Indenture Trustee in its individual capacity).

______________
4/ Conform to the number of tranches.

14
<PAGE> 24
Any such investments shall have a maturity or be redeemable without penalty on
or before any date on which the funds invested therein are reasonably expected
to be required to be applied as provided in this Indenture.

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

"Property" means the interest in the Land and the Improvements now
owned or hereafter acquired by Owner Trust, including all of Lessor's right,
title and interest in all Alterations now or hereafter made, and in all
building equipment, fixtures and goods of every nature and kind that are now or
become fixtures on the Land or on any such Improvements and Alterations.

"Record Date" means the 15th day preceding an Interest Payment Date,
Installment Payment Date or Redemption Date, whether or not such date is a
Business Day.

"Redemption Date" means, when used with respect to any Mortgage Note
(or portion thereof) to be redeemed, the date fixed for such redemption by or
pursuant to Section 6.03 of this Indenture.

"Redemption Price" when used with respect to any Mortgage Note to be
redeemed, means 100% of the unpaid principal amount thereof (or when used with
respect to any Mortgage Notes which is to be partially redeemed, the portion of
the principal balance thereof to be redeemed) plus accrued interest to the
Redemption Date and, where specifically provided for herein, the applicable
Make-Whole Premium, if any.

"Refinancing Mortgage Notes" means any mortgage notes issued pursuant
to Article XV hereof to refinance the indebtedness represented by the Mortgage
Notes.

"Register" has the meaning set forth in Section 3.02 hereof.

"Registrar" has the meaning set forth in Section 3.02 hereof.

"Relevant Date" has the meaning set forth in Section 3.08 hereof.

["Remainderman" means , together with its
successors and assigns.]

"Responsible Officer" means the president or any other officer with
authority of at least a vice president; or, in the case of the Corporate
Indenture Trustee, an officer of the Corporate Indenture Trustee in its
corporate trust department; or, in the case of the Corporate Owner Trustee, an
officer of the Corporate Owner Trustee in its Corporate Trust Administration
department.

15
<PAGE> 25
"Securities Act" means the Securities Act of 1933, as amended.

"Special State Law Addendum" means that addendum, if any, to this
Indenture setting forth special granting clauses, provisions regarding remedies
of the Indenture Trustees and certain other provisions which are necessary or
appropriate to reflect the laws and regulations of the state in which the
Property is located.

"Standard & Poor's" has the meaning set forth in Section 3.05(c)
hereof.

"Tax Indemnity Agreement" means the Tax Indemnity Agreement, dated as
of December 15, 1994, between the Company and the Owner Participant.

"Treasury Yield" means, with respect to the calculation of the
Make-Whole Premium, a per annum rate determined as of the date of determination
of the Make-Whole Premium equal to the weekly average yield to maturity of
United States Treasury Notes having a constant maturity as set forth in the
most recent weekly statistical release (or any successor release) published by
the Federal Reserve Bank of New York and designated "H.15(519) Selected
Interest Rates" (the "H.15 Statistical Release"), corresponding to the weighted
average life of the Mortgage Note (calculated to the nearest 1/12 of a year)
(the "Weighted Average Life"); such yield described in this clause to be
calculated by the Independent Investment Banker, by interpolation (unless the
Weighted Average Life of the Mortgage Note equals a constant maturity set forth
in the H.15 Statistical Release) on a straight-line basis, between the weekly
average yields (rounded, if necessary, to the nearest 1/100 of 1% with any
figure of 1/200 of 1% or above rounded upward) on (a) the United States
Treasury Notes with a constant maturity closest to and greater than the
Weighted Average Life and (b) the United States Treasury Notes with a constant
maturity closest to and less than the Weighted Average Life, or if such weekly
average yields are not available, by interpolation of comparable rates selected
by the Independent Investment Banker.

"Trust Agreement" means the Trust Agreement, dated as of December 15,
1994, between the Owner Participant and the Owner Trustees, as the same may be
modified, supplemented or amended from time to time in accordance with the
provisions thereof, hereof and of the Owner Participation Agreement.

"Trust Company" means [CORPORATE OWNER TRUSTEE], a Delaware banking
corporation, in its individual capacity and not as an Owner Trustee, and its
successors under the Trust Agreement, in their respective individual capacities
and not as Owner Trustees.

16
<PAGE> 26
ARTICLE II

ISSUE, EXECUTION, FORM AND
REGISTRATION OF THE MORTGAGE NOTES

SECTION 2.01. Authentication and Delivery of Mortgage Notes.
Forthwith upon the execution and delivery of this Indenture, Mortgage Notes in
the respective principal amounts of the Initial Principal Amount of Mortgage
Note K-1 and the Initial Principal Amount of Mortgage Note K-2, and which, in
the aggregate, do not exceed the amount specified in Section 2.04 (except as
otherwise provided in Sections 2.06 and 2.07) shall be executed by the Owner
Trust and delivered to the Corporate Indenture Trustee for authentication, and
the Corporate Indenture Trustee shall thereupon authenticate and deliver said
Mortgage Notes signed by an authorized officer of the Corporate Owner Trustee
on behalf of the Owner Trust, without any further action by the Owner Trust,
and register such Mortgage Notes in the name of a Pass Through Trustee as
directed by the Corporate Owner Trustee pursuant to an Officer's Order
delivered to the Corporate Indenture Trustee.

SECTION 2.02. Execution of Mortgage Notes. The Mortgage Notes shall
be executed by the Corporate Owner Trustee, on behalf of the Owner Trust, by
its Chairman of the Board, its President or one of its Vice Presidents or
Assistant Vice Presidents under its corporate seal reproduced thereon and
attested by its Secretary or one of its Assistant Secretaries or its Assistant
Cashier. The signature of any of the officers of the Corporate Owner Trustee
on the Mortgage Notes may be manual or facsimile. A Mortgage Note bearing the
manual or facsimile signatures of individuals who were at any time the proper
officers of the Corporate Owner Trustee shall bind the Owner Trust,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Mortgage Note or did
not hold such offices at the respective dates of such Mortgage Note. At any
time and from time to time after the execution and delivery of this Indenture,
the Owner Trust may deliver Mortgage Notes executed by the Corporate Owner
Trustee on behalf of Owner Trust to the Corporate Indenture Trustee for
authentication, together with instructions from a Responsible Officer of the
Corporate Owner Trustee for the authentication and delivery of such Mortgage
Notes, and the Corporate Indenture Trustee in accordance therewith shall
authenticate and deliver such Mortgage Notes in accordance with the terms of
this Indenture and not otherwise.

SECTION 2.03. Certificate of Authentication. Only if a Mortgage Note
shall bear thereon a certificate of authentication substantially in the form
set forth in Exhibit A-1 or A-2, as applicable, executed by the Corporate
Indenture Trustee by manual signature of one of its authorized officers, shall
it be entitled to the security and benefits of this Indenture or be valid or
obligatory for any purpose. Such certificate by the Corporate Indenture
Trustee shall be conclusive evidence that the Mortgage Note so authenticated
has been duly authenticated and delivered hereunder and that the Holder
thereof, as evidenced on the Register, is entitled to the security and benefits
of this Indenture.

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<PAGE> 27
SECTION 2.04. Form and Terms of Mortgage Notes; Payments of
Principal, Premium and Interest. The Mortgage Notes and the Corporate
Indenture Trustee's certificate of authentication shall be substantially in the
forms set forth in Exhibits A-1 and A-2 hereto respectively. The Mortgage
Notes shall be issuable as registered securities without coupons and shall be
numbered, lettered, or otherwise distinguished in such manner or in accordance
with such plans as the Owner Trust may determine with the approval of the
Corporate Indenture Trustee.

The aggregate principal amount of Mortgage Notes (except with respect
to Refinancing Mortgage Notes, which shall be limited as provided in Article XV
hereof, and as otherwise provided in Sections 2.06 and 2.07) that may be
authenticated and delivered under this Indenture is limited to the Initial
Principal Amount of Mortgage Note K-1 and Initial Principal Amount of Mortgage
Note K-2. Each Mortgage Note shall be issued in registered form only and in
denominations of $1,000,000 initial principal amount and any integral multiple
thereof (provided that one Mortgage Note maturing on each Maturity Date may be
in a different principal amount in order to represent the balance of the
principal indebtedness evidenced by all Mortgage Notes maturing on such
Maturity Date), shall be dated the date of its authentication, shall have the
scheduled Installment Payment Dates, Interest Payment Dates and Maturity Date,
and shall bear interest at the rate per annum, specified in the forms of
Mortgage Notes attached hereto as Exhibit A-1 and A-2, respectively.

Any of the Mortgage Notes may be issued with appropriate insertions,
omissions, substitutions and variations, and may have imprinted or otherwise
reproduced thereon such legend or legends, not inconsistent with the provisions
of this Indenture, as may be required to comply with any law or with any rules
or regulations pursuant thereto, or with the rules of any securities exchange
on which the Mortgage Notes are admitted to trading, or to conform to general
usage.

Each Mortgage Note shall bear interest from the date of issuance
thereof or from the most recent date to which interest has been paid and duly
provided for, as the case may be, which shall be payable on the Interest
Payment Dates until the principal thereof is paid to the Corporate Indenture
Trustee or made available to the Corporate Indenture Trustee for payment in the
manner herein provided. Interest shall be calculated on the basis of a 360-day
year of twelve 30-day months.

The principal of each Mortgage Note shall be payable in installments,
on each Installment Payment Date and the Maturity Date, in amounts equal to the
Installment Payment Amount for such Installment Payment Date and the Maturity
Date.

The principal of, and premium, if any, and interest on, the Mortgage
Notes shall be payable to or at the direction of the Holders thereof in
immediately available funds by wire transfer to an account in the United States
designated by the respective Holder.

18
<PAGE> 28
The Refinancing Mortgage Notes shall have the terms set forth in the
indenture supplements pursuant to which they are issued.

The Holders at the close of business on any Record Date with respect
to any Installment Payment Date or Interest Payment Date shall be entitled to
receive the Installment Payment Amount or interest, if any, payable on such
Installment Payment Date or Interest Payment Date notwithstanding any transfer
or exchange of such Mortgage Note subsequent to the Record Date and prior to
such Installment Payment Date or Interest Payment Date. Any Installment
Payment Amount payable on an Installment Payment Date, or any interest payable
on the Mortgage Note which is not punctually paid or duly provided for on any
Interest Payment Date (herein called, respectively, a "Defaulted Installment"
and "Defaulted Interest") shall forthwith cease to be payable to the registered
Holder on the relevant Record Date by virtue of his having been such Holder;
and such Defaulted Interest shall be paid by the Owner Trust, at its election
in each case, as provided in clause (1) or (2) below:

(1) the Owner Trust shall make payment of any Defaulted
Installment or Defaulted Interest to the Persons in whose names the
Mortgage Notes are registered at the close of business on a special
record date for the payment of such Defaulted Interest, which shall be
fixed in the following manner. The Owner Trust shall notify the
Corporate Indenture Trustee in writing of the amount of the Defaulted
Installment or Defaulted Interest proposed to be paid on the Mortgage
Notes and the date of the proposed payment, and at the same time the
Owner Trust shall deposit with the Corporate Indenture Trustee an
amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Installment or Defaulted Interest as of the
special record date established as provided below, or shall make
arrangements satisfactory to the Corporate Indenture Trustee for such
deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the persons entitled
to such Defaulted Installment or Defaulted Interest as in this clause
provided. No interest shall continue to accrue on the amount of the
Defaulted Installment from and after the date on which such Defaulted
Installment is so deposited. Thereupon the Corporate Indenture
Trustee shall fix a special record date for the payment of such
Defaulted Installment or Defaulted Interest which shall be not more
than 15 days and not less than 10 days after the receipt by the
Corporate Indenture Trustee of the notice of the proposed payment.
The Corporate Indenture Trustee shall promptly notify the Owner Trust
and the Registrar of such special record date and, in the name of the
Owner Trust, shall cause notice of the proposed payment of such
Defaulted Installment or Defaulted Interest and the special record
date therefor to be mailed, first- class postage prepaid, to each
Holder at its address as it appears in the Register, not less than 10
days prior to such special record date. Notice of the proposed
payment of such Defaulted Installment or Defaulted Interest and the
special record date therefor having been mailed as aforesaid, such
Defaulted Installment or Defaulted Interest shall be paid to the
Persons in whose names the Mortgage Notes are registered on such
special record date and shall no longer be payable pursuant to the
following clause (2); or

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(2) the Owner Trust shall make, or cause to be made, payment
of any Defaulted Installment or Defaulted Interest in any other lawful
manner not inconsistent with the requirements of any securities
exchange on which the Pass Through Certificates may be listed, and
upon such notice as may be required by such exchange, if, after notice
given by the Owner Trust to the Corporate Indenture Trustee of the
proposed payment pursuant to this clause, such payment shall be deemed
practicable by the Corporate Indenture Trustee.

Subject to the foregoing provisions of this Section, any Mortgage Note
issued upon registration of transfer of, or in exchange for or in lieu of, any
other Mortgage Note shall carry the rights to interest and Installment Payment
Amounts accrued and unpaid, and interest to accrue, which were carried by such
other Mortgage Note, and each such Mortgage Note shall bear interest from
whatever date shall be necessary so that neither gain nor loss in interest
shall result from such transfer, exchange or replacement.

SECTION 2.05. Payments from Indenture Estate Only. (a) The terms of
this Section 2.05 shall apply for all purposes of this Indenture (except as
provided in Section 3.08(a)(iii)) and the other Indenture Documents, including
any agreement or instrument required or contemplated to be delivered hereunder,
notwithstanding anything herein or therein that may be construed to the
contrary (and regardless whether any particular provision hereof or thereof
makes reference to this Section 2.05).

(b) The Owner Trust shall not be required to make any payments under
this Indenture except from the Indenture Estate. Each Holder, by its
acceptance of a Mortgage Note, agrees it will look solely to the Indenture
Estate as provided herein and that none of the Owner Participant, the Owner
Trust, the Trust Company, [INDIVIDUAL OWNER TRUSTEE], nor the Indenture
Trustees is personally liable to such Holder for any amounts payable under this
Indenture or such Mortgage Note or for any amounts payable or liability under
any Mortgage Note or this Indenture, except as expressly provided herein in the
case of the Trust Company, [INDIVIDUAL OWNER TRUSTEE], the Owner Trust or the
Indenture Trustees, or in the case of the Owner Participant, except as
expressly provided in the Owner Participation Agreement or in the case of the
Owner Trustees, except to the extent of the willful misconduct or gross
negligence of the Owner Trustees.

(c) It is expressly understood and agreed by and among the parties
hereto, for themselves and their respective successors and assigns, that
nothing herein contained shall be construed as creating any liability of the
Owner Trust or any beneficiary of the Owner Trust or any of their respective
affiliates or any of their respective officers, directors, shareholders,
partners, venturers, trustees (except for the Owner Trustees which shall be
governed by Section 2.05(d) hereof), beneficiaries, employees or agents (the
Owner Trust and such other Persons being collectively called "Lessor Parties"),
individually or personally, for breach of any representation or warranty or to
observe or perform any agreement or covenants, either express or implied,
contained herein (except with respect to the Owner Participant in respect of
those

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<PAGE> 30
representations, warranties, undertakings and agreements made by the Owner
Participant, in its individual capacity, in an Indenture Document), all such
liability, if any, being expressly waived by each other party hereto and by
each and every person now or hereafter claiming by, through or under any of the
other parties hereto, and that, so far as any Lessor Party, individually or
personally, is concerned, each other party hereto and any person claiming by,
through or under any of the other parties hereto shall look solely to the
right, title and interest of the Owner Trust in the Indenture Estate for the
performance of any obligation under this Indenture and the satisfaction of any
liability arising therefrom.

(d) It is expressly understood and agreed by the parties hereto that
(i) this Indenture is executed and delivered by the Trust Company and
[INDIVIDUAL OWNER TRUSTEE], not individually or personally but solely as Owner
Trustees on behalf of the Owner Trust under the Trust Agreement, in the
exercise of the powers and authority conferred and vested in them as the
Corporate Owner Trustee and the Individual Owner Trustee, as the case may be,
(ii) each of the representations, undertakings and agreements herein made on
the part of the Owner Trust (other than those specifically made by the Trust
Company in its individual capacity) is made and intended not as personal
representations, undertakings and agreements by the Trust Company or
[INDIVIDUAL OWNER TRUSTEE], as the case may be, but is made and intended for
the purpose for binding only the Trust Estate (as defined in the Trust
Agreement) created by the Trust Agreement, (iii) nothing herein contained shall
be construed as creating any liability on the part of the Trust Company or
[INDIVIDUAL OWNER TRUSTEE], individually or personally, to perform any covenant
either expressed or implied contained herein, all such liability, if any, being
expressly waived by the Indenture Trustees and by any Person claiming by,
through or under the Indenture Trustees and (iv) under no circumstances shall
the Trust Company (except in respect of those representations, warranties,
undertakings and agreements made by the Trust Company in its individual
capacity) or [INDIVIDUAL OWNER TRUSTEE] be personally liable for the payment of
any Indebtedness or expenses of the Owner Trustees or the Owner Trust or be
liable for the breach or failure of any obligation, representation, warranty or
covenant made or undertaken by the Owner Trustees or the Owner Trust under this
Indenture or the other Indenture Documents.

SECTION 2.06. Registration, Transfer and Exchange. The Corporate
Indenture Trustee shall keep, on behalf of the Owner Trust, and make available
to the Owner Trust upon its request, at each office or agency to be maintained
for the purpose as provided in Section 3.02, a Register or Registers on which,
subject to such reasonable regulations as it may prescribe, it shall register,
and shall register the transfer of, Mortgage Notes as provided in this Article.
Such Register shall be in written form in the English language or in any other
form capable of being converted into such form within a reasonable time and
shall show the name and address of each Holder and the principal amount held by
such Holder.

Upon due presentation for registration of transfer of any Mortgage
Note at any such office or agency, the Corporate Owner Trustee shall execute on
behalf of the Owner Trust and the Corporate Indenture Trustee shall
authenticate and deliver in the name of the transferee or

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<PAGE> 31
transferees a new Mortgage Note or Mortgage Notes having the same Maturity
Date, Installment Payment Dates, scheduled aggregate Installment Payment
Amounts, Interest Payment Dates and interest rate and in authorized
denominations and the same aggregate principal amount as the Mortgage Notes
being transferred.

Any Mortgage Note or Mortgage Notes may be exchanged for a Mortgage
Note or Mortgage Notes having the same Maturity Date, Installment Payment
Dates, scheduled aggregate Installment Payment Amounts, Interest Payment Dates
and interest rate but in other authorized denominations, in an equal aggregate
principal amount. Mortgage Notes to be exchanged shall be surrendered at any
office or agency to be maintained by the Corporate Indenture Trustee for the
purpose as provided in Section 3.02, and, upon the surrender of such Mortgage
Notes for exchange, the Corporate Owner Trustee on behalf of the Owner Trust
shall execute and the Corporate Indenture Trustee shall authenticate and
deliver in exchange therefor, the Mortgage Note or Mortgage Notes which the
Holder making the exchange shall be entitled to receive, bearing numbers not
contemporaneously or previously outstanding.

All Mortgage Notes presented for registration of transfer, exchange,
redemption or payment shall (if so required by the Owner Trust or the Corporate
Indenture Trustee) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Owner Trust
and the Corporate Indenture Trustee duly executed by, the Holder or its
attorney-in-fact duly authorized in writing. As a condition to any transfer,
the Corporate Indenture Trustee shall require evidence satisfactory to it as to
the compliance of any such transfer with the Securities Act and shall not
permit any transfer if, in the opinion of counsel to the Company or the Owner
Trust, the transfer would be required to be registered thereunder.

The Corporate Indenture Trustee may require payment from the Holder of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any exchange or registration of transfer of Mortgage
Notes. No service charge to the Holder shall be made for any such transaction.

The Corporate Indenture Trustee shall not be required to exchange or
register a transfer of any Mortgage Note (a) for a period of 15 days
immediately preceding the first mailing of notice of redemption in full of the
Mortgage Notes pursuant to Section 6.02 or (b) with respect to which notice of
redemption in full has been given pursuant to Section 6.03 and such notice has
not been revoked.

All Mortgage Notes issued upon any registration of transfer or
exchange of Mortgage Notes shall be valid obligations of the Owner Trust,
evidencing the same debt, and entitled to the same security and benefits under
this Indenture, as the Mortgage Notes surrendered upon such registration of
transfer or exchange.

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<PAGE> 32
SECTION 2.07. Mutilated, Defaced, Destroyed, Lost and Stolen Mortgage
Notes. If any Mortgage Note shall become mutilated or defaced or be destroyed,
lost or stolen, the Owner Trust in its discretion may execute, and upon the
oral or written request of any officer of the Corporate Owner Trustee, the
Corporate Indenture Trustee shall authenticate and deliver, a new Mortgage Note
having the same Maturity Date, Installment Payment Dates, Interest Payment
Dates, scheduled aggregate Installment Payment Amounts, Interest Payment Dates
and interest rate, bearing a number not contemporaneously or previously
outstanding, in exchange and substitution for the mutilated or defaced Mortgage
Note, or in lieu of and substitution for the Mortgage Note so destroyed, lost
or stolen. If the Mortgage Note being replaced has been defaced or mutilated,
such Mortgage Note shall be surrendered to the Corporate Indenture Trustee. If
the Mortgage Note being replaced has been destroyed, lost or stolen, the
applicant for a substitute Mortgage Note shall furnish to the Owner Trust and
to the Indenture Trustees and any agent of the Owner Trust or the Indenture
Trustees such security or indemnity as may be reasonably required by them to
indemnify and defend and to save each of them harmless and, in every case of
destruction, loss or theft, evidence to their satisfaction of the destruction,
loss or theft of such Mortgage Note and of the ownership thereof; provided,
however, the unsecured indemnity of a Pass Through Trustee, in its capacity as
Holder of a Mortgage Note, shall be sufficient to obtain the issuance of a
substitute Mortgage Note hereunder.

Upon the issuance of any substitute Mortgage Note, the Owner Trust or
the Corporate Indenture Trustee may require payment from the Holder of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other reasonable expenses (including the reasonable
fees and expenses of the Corporate Indenture Trustee) connected therewith. In
case any Mortgage Note which has matured or is about to mature, or has been
called for redemption in full, shall become mutilated or defaced or be
destroyed, lost or stolen, the Owner Trust may, instead of issuing a substitute
Mortgage Note, pay or authorize the payment of the same (without surrender
thereof except in the case of a mutilated or defaced Mortgage Note), if the
applicant for such payment shall furnish to the Owner Trust and to the
Indenture Trustees and any agent of the Owner Trust or the Indenture Trustees
such security or indemnity as any of them may reasonably require to save each
of them harmless; provided, however, the unsecured indemnity of a Pass Through
Trustee, in its capacity as Holder of a Mortgage Note, shall be sufficient to
obtain such payment hereunder, and, in every case of destruction, loss or
theft, the applicant shall also furnish to the Owner Trust and the Indenture
Trustees and any agent of the Owner Trust or the Indenture Trustees evidence to
their satisfaction of the apparent destruction, loss or theft of such Mortgage
Note and of the ownership thereof.

Every substitute Mortgage Note issued pursuant to the provisions of
this Section shall constitute an original additional contractual obligation of
the Owner Trust, whether or not the destroyed, lost or stolen Mortgage Note
shall be enforceable at any time by anyone, and shall be entitled to all the
security and benefits of (but shall be subject to all the limitations of rights
set forth in) this Indenture equally and proportionately with any and all other
Mortgage Notes duly authenticated and delivered hereunder. All Mortgage Notes
shall be held and owned upon

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<PAGE> 33
the express condition that, to the extent permitted by law, the foregoing
provisions are exclusive with respect to the replacement or payment of
mutilated, defaced, or destroyed, lost or stolen Mortgage Notes and shall
preclude any and all other rights or remedies notwithstanding any law or
statute existing or hereafter enacted to the contrary with respect to the
replacement or payment of negotiable instruments or other securities without
their surrender.

SECTION 2.08. Cancellation of Mortgage Notes; Destruction Thereof.
All Mortgage Notes surrendered for payment, redemption, registration of
transfer or exchange, if surrendered to the Owner Trust or any agent of the
Owner Trust or the Indenture Trustees, shall be delivered to the Corporate
Indenture Trustee for cancellation or, if surrendered to the Corporate
Indenture Trustee, shall be canceled by it; and no Mortgage Notes shall be
issued in lieu thereof except as expressly permitted by any of the provisions
of this Indenture. The Corporate Indenture Trustee shall destroy canceled
Mortgage Notes held by it and deliver a certificate of destruction to the Owner
Trust. If the Owner Trust shall acquire any of the Mortgage Notes, such
acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented by such Mortgage Notes unless and until the same are
delivered to the Corporate Indenture Trustee for cancellation.

SECTION 2.09. Termination of Interest in Indenture Estate. A Holder
shall not, as such, have any further interest in, or other right with respect
to, the Indenture Estate when and if the principal amount of and premium, if
any, and interest on and other amounts due under all Mortgage Notes held by
such Holder and all other sums payable to such Holder hereunder shall have been
paid in full.

ARTICLE III

COVENANTS

SECTION 3.01. Payment of Principal, Premium and Interest. Subject to
Section 2.05, the Owner Trust covenants and agrees that it will duly and
punctually pay or cause to be paid the principal of, and interest, premium and
all other amounts due on, the Mortgage Notes at the place or places, at the
respective times and in the manner provided in this Indenture and in the
Mortgage Notes.

Principal and interest and other amounts due from the Owner Trust
hereunder or under the Mortgage Notes shall be payable in Dollars on the due
date thereof, by wire transfer of immediately available funds to an account in
the United States designated by the Corporate Indenture Trustee such that the
Corporate Indenture Trustee shall be in receipt of immediately available funds
at or before 12:00 noon (New York City time) on the date on which such amount
is due hereunder and under the terms of the Mortgage Notes, or such earlier
date or time as may be necessary to ensure timely payment on the Pass Through
Certificates. If any amount payable under the Mortgage Notes or under this
Indenture falls due, or is permitted thereunder or

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<PAGE> 34
hereunder to be paid, on a day which is not a Business Day, then such sum shall
be payable on the next succeeding Business Day, without additional interest
thereon for the period of such extension.

SECTION 3.02. Offices for Payments, etc. So long as the Mortgage
Notes remain Outstanding, the Corporate Indenture Trustee will maintain an
office or agency in New York, New York, where the Mortgage Notes may be
presented for payment, registration of transfer and exchange as provided in
this Indenture (the "Registrar"). The Registrar shall keep a register (the
"Register") with respect to the Mortgage Notes and their transfer and exchange.
The Corporate Indenture Trustee may appoint one or more co-registrars
("Co-Registrars") for the Mortgage Notes and may terminate any such appointment
at any time upon written notice. The term "Registrar" includes any
Co-Registrar.

The Corporate Indenture Trustee shall initially act as Registrar.

SECTION 3.03. Appointment to Fill a Vacancy in Office of Corporate
Indenture Trustee. The Owner Trust, whenever necessary to avoid or fill a
vacancy in the office of the Corporate Indenture Trustee, shall appoint, in the
manner provided in Section 9.12, a successor Corporate Indenture Trustee, so
that there shall at all times be a Corporate Indenture Trustee hereunder.

SECTION 3.04. [Intentionally Omitted].

SECTION 3.05. Covenants of the Trust Company and the Owner Trust.

(a) The Trust Company and [INDIVIDUAL OWNER TRUSTEE] each, as to
itself only, hereby covenants and agrees that (i) it will not directly or
indirectly create, incur, assume or suffer to exist any Liens on or with
respect to the Indenture Estate or any of the properties or assets of the
Indenture Estate resulting from the acts or omissions of or claims against the
Trust Company or [INDIVIDUAL OWNER TRUSTEE] in their individual capacity
(including the nonpayment of any taxes based on or measured by the revenues or
income of the Trust Company or [INDIVIDUAL OWNER TRUSTEE]), except (x) to the
extent arising in connection with any obligation required to be satisfied by
the Company pursuant to any Indenture Document, and (y) any Lien resulting from
the non-payment of any tax which the Company has agreed in any Indenture
Document to pay or reimburse, and (ii) it will perform its covenants under the
Indenture Documents. In the event the [INDIVIDUAL OWNER TRUSTEE] or a
Responsible Officer of the Corporate Owner Trustee shall have actual knowledge
of an Indenture Default, prompt written notice of such Indenture Default will
be given to the Indenture Trustees, the Company and the Owner Participant.
Neither the Trust Company nor [INDIVIDUAL OWNER TRUSTEE] will knowingly take
any action which would violate any of the covenants set forth below, provided,
however, that neither the Trust Company nor [INDIVIDUAL OWNER TRUSTEE] shall be
responsible for the performance, enforcement or monitoring of any of the Owner
Trust's covenants set forth below.

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(b) The Owner Trust hereby covenants and agrees as follows:

(i) the Owner Trust has, and shall continue to have, full
power and lawful authority to grant, release, convey, assign,
transfer, mortgage, pledge, hypothecate and otherwise create the Lien
and security interest vested hereby;

(ii) the Owner Trust will perform its obligations under the
Lease and the Owner Participation Agreement;

(iii) the Owner Trust will furnish to the Corporate Indenture
Trustee, promptly upon receipt thereof, duplicates or copies of all
reports, notices, requests, demands, certificates, financial
statements and other instruments furnished to the Owner Trust under
the Lease, to the extent it shall reasonably appear to the Owner Trust
that the same shall not already have been furnished to the Corporate
Indenture Trustee under any of the Indenture Documents;

(iv) the Owner Trust will not enter into or engage in any
business or other activity, directly or indirectly, other than the
business of owning and operating the Property [and the other property
which at any time is the subject of the Other Leases,] the leasing
thereof to the Company and the carrying out of the transactions
contemplated hereby and by the Lease, the Ground Lease, if any, the
Trust Agreement and the other Indenture Documents [and the Other
Indentures;]

(v) the Owner Trust will not directly or indirectly create,
incur or assume any Lien on or against the Indenture Estate (other
than the Lien of this Indenture) or any part thereof resulting from
the acts or omissions of or claims against the Owner Trust (including
the nonpayment of any taxes based on or measured by the revenues or
income of the Owner Trust), except (x) to the extent arising in
connection with any obligation required to be satisfied by the Company
pursuant to any Indenture Document, and (y) any Lien resulting from
the non-payment of any such tax which the Company has agreed in any
Indenture Document to pay or reimburse;

(vi) the Owner Trust will not:

(A) sell, lease, transfer, convey, assign or
otherwise dispose of its interest in the Indenture Estate or any part
thereof, except as expressly contemplated by [ARTICLES 39 AND 40 OF
THE LEASE] or as permitted below in Section 3.05(c) or 3.05(e) or
Article XIV hereof, or as required below by this Section 3.05; or

(B) permit or suffer to permit the Owner Participant
(or if the successor or assignee of the Owner Trust hereunder shall be
a partnership, any general partner therein) to sell, transfer, convey,
assign or otherwise dispose of its interest in the Owner Trust or any
part thereof, except as permitted by the Owner Participation
Agreement;

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(vii) the Owner Trust shall not, except as provided in any
Indenture Document, (A) make or permit to remain outstanding any loan
or advance by the Owner Trust to any Person; (B) own or acquire any
stock or securities of any Person or guarantee any obligation of any
Person; (C) create, assume or suffer to exist any Indebtedness other
than the Mortgage Notes [and the Other Mortgage Notes;] (D) make loans
or advances to Affiliates of the Owner Trust or any Owner Participant;
or (E) commingle its assets with the assets of any of its Affiliates
or any Affiliate of the Owner Participant;

(viii) the Owner Trust shall at all times maintain the
following procedures to avoid or minimize any risk of substantive
consolidation of the Owner Trust with the bankruptcy or reorganization
of the Owner Participant or any other Person: (A) maintenance of books
and records and bank accounts separate from those of any other Person;
(B) filing or causing to be filed tax returns separate from the Owner
Participant or any of its Affiliates (except to the extent required by
applicable law, rule or regulation or to the extent permitted by
applicable law to be included in a consolidated or unitary group, as
appropriate); (C) except as specifically provided in the Trust
Agreement, conducting business with Affiliates of the Owner Trust or
the Owner Participant (or any Affiliate thereof) on an arm's-length
basis; (D) observance of trust (or similar organizational)
formalities; and (E) holding the Owner Trust out to the public as a
legal entity separate and distinct from any of the Owner Trust's
Affiliates and from the Owner Participant or any Affiliate thereof
(The Trust Agreement (or similar organizational documents) shall
incorporate the restrictions and covenants contained in clauses (iv)
through (viii) of this Section 3.05(b)); and

(ix) the Owner Trust will transfer the Property [or any other
property that is subject to the lien of any Other Indenture]
concurrently with the termination of the Lease as to such property,
other than upon a termination of the Lease with respect to such
property by reason of a "Lease Event of Default" (as defined in such
Other Indenture), to any other Person (including the Owner Participant
or the Trust Company or [INDIVIDUAL OWNER TRUSTEE] (or either of
them), as trustees of a trust which is separate and distinct from the
Owner Trust).

(c) Notwithstanding anything to the contrary contained in Section
3.05(b), but subject to the provisions of the Owner Participation Agreement,
the Owner Trust shall have the right, from time to time, to convey all (but not
less than all) of the assets constituting the Indenture Estate, subject to the
Lien of this Indenture, provided that [(EXCEPT WITH RESPECT TO A CONVEYANCE BY
THE OWNER TRUST TO THE COMPANY IN ACCORDANCE WITH SECTION ____ OF THE OWNER
PARTICIPATION AGREEMENT)]5/, as a condition to such conveyance, (i) the
Indenture Trustees shall have received written confirmation from each of
Standard & Poor's Ratings Group or its successor ("Standard & Poor's") and
Moody's Investors Service, Inc. or its successor ("Moody's") to the effect that
such conveyance, by itself, would not result in a withdrawal or

______________
5/ Include if applicable.

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<PAGE> 37
downgrading of the credit rating assigned to the Pass Through
Certificates then outstanding, (ii) the Corporate Indenture Trustee
shall have received an Opinion of Counsel for the Owner Trust that, in
the event the owner participant or other beneficiary, or a shareholder
of or partner in such transferee were to file a petition or otherwise
be adjudged a bankrupt under the Federal Bankruptcy Code, the
bankruptcy court having jurisdiction over the case would not
substantively consolidate the assets of such transferee with the
assets of any such owner participant without the consent of the
interested parties (which include the Indenture Trustees and the
Holders) so that their respective assets and liabilities would not be
dealt with as if the assets were held and the liabilities incurred by
a single entity, and (iii) the owner participant or beneficiary shall
enter into covenants in favor of the Indenture Trustees comparable to
the above terms of this Section 3.05(b). Upon any such transfer, the
transferee shall enter into an indenture supplemental hereto pursuant
to which the transferee will assume the obligations of the transferor
hereunder, and the provisions hereof shall be appropriately amended
(subject to Article XII hereof) to reflect such transfer and
assumption.

(d) Any transfer or attempted transfer by the Owner Trust of all or
any part of the Indenture Estate, except in compliance with the terms hereof,
shall be null and void and of no force or effect.

(e) In the case of any appointment of a co-Owner Trustee or a
successor to an Owner Trustee or a co-Owner Trustee pursuant to the Trust
Agreement or any merger, conversion, consolidation or sale of substantially all
of the corporate trust business of the Corporate Owner Trustee in a manner
permitted by the Trust Agreement, the Owner Trustee or successor Owner Trustee,
as the case may be, shall give prompt written notice thereof to the Indenture
Trustees and Section 3.05(c) and (d) shall not apply to any transfer to such
co-Owner Trustee or successor Owner Trustee.

(f) The Owner Trust will deliver to the Corporate Indenture Trustee,
within 120 days after the end of each fiscal year, a written statement signed
by the President or a Vice President or a corporate trust officer of the
Corporate Owner Trustee, stating, as to the signer thereof, that:

(1) a review of the files held by the Owner Trust regarding
the activities of the Owner Trust during such year and of performance
by the Owner Trust of its obligations under this Section 3.05 and the
seventh paragraph following the Habendum Clause has been made under
his or her supervision; and

(2) to the best of his or her knowledge, based on such
review, the Owner Trust has fulfilled all its obligations under this
Section 3.05 and the seventh paragraph following the Habendum Clause
throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known
to him or her and the nature and status thereof.

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(g) THE TRUST COMPANY, IN ITS INDIVIDUAL CAPACITY AND AS OWNER
TRUSTEE, MAKES (i) NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE
TITLE, VALUE, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, OPERATION,
MERCHANTABILITY, FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT OR FITNESS FOR
USE OF THE PREMISES (OR ANY PART THEREOF) OR ANY OTHER REPRESENTATION OR
WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE LAND AND
IMPROVEMENTS (OR ANY PART THEREOF), except that the Owner Trustee hereby
represents and warrants that on the Closing Date the Owner Trustee shall have
received whatever title and rights to the land and improvements conveyed to it
by the Operative Documents delivered on such Closing Date, and (ii) no
representation or warranty as to the validity, sufficiency, legality or
enforceability of any Operative Document, or as to the correctness of any
statement contained therein except, in the case of the Trust Company, to the
extent that any such statement in this Indenture, the Lease, the Purchase
Agreement or the Owner Participation Agreement or any other Operative Document
was or is expressly made by the Trust Company in its individual capacity, and
except that the Trust Company, as and to the extent that such documents are
executed by it, hereby represents and warrants in its individual capacity that
it has the requisite corporate power and authority to execute and deliver the
Operative Documents to which it is a party and that such Operative Documents
have been, and the Notes, upon execution and delivery, will have been, duly
executed and delivered by one or more of the Authorized Officers of the Owner
Trustee.

SECTION 3.06. Property Alterations and Substitutions of the Indenture
Estate. (a) Upon the making of any Alterations title to which vests in the
Owner Trust, such Alterations shall be deemed to be a part of the Property and
covered by the Lien of this Indenture. Any part of the Improvements which are
demolished by the Company, and any Alterations the title to which becomes
vested in the Company as lessee, as permitted under the terms of the Lease,
shall be deemed to be no longer a part of the Property or covered by the Lien
of this Indenture.

(b) If the Company elects to substitute a new property for the
Property in accordance with and subject to the terms and conditions of [ARTICLE
41 OF THE LEASE], the Property shall be released from the Lien of this
Indenture upon compliance with the provisions of said [ARTICLE 41] and Section
14.01 hereof.

(c) The Owner Trust and Indenture Trustees covenant and agree, at the
Company's expense, to enter into such releases, supplements or amendments to
the Indenture as may be necessary or appropriate to effect the changes,
substitutions, releases and other modifications contemplated by this Section
3.06 or as may be required by Article XIV hereof, and to deliver such opinions,
instruments and certificates as may reasonably be requested in connection
therewith.

SECTION 3.07. Further Assurances; Financing Statements. At any time
and from time to time, upon the reasonable request of the Indenture Trustees,
the Owner Trust shall promptly and duly execute and deliver any and all such
further instruments and documents (provided to

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the Owner Trust in execution form) as may be reasonably specified in such
request and as are necessary or desirable to perfect, preserve or protect the
Liens and assignments created or intended to be created hereby, or to obtain
for the Indenture Trustees the full benefit of the specific rights and powers
granted herein, including the execution and delivery of Uniform Commercial Code
financing statements and continuation statements with respect thereto, or
similar instruments relating to the perfection of the Liens or assignments
created or intended to be created hereby.

SECTION 3.08. Assumption of Obligations of Owner Trust by the Company.
(a) The Company shall have the right to assume all of the rights and
obligations of the Owner Trust under this Indenture in respect of the Mortgage
Notes in accordance with and pursuant to [ARTICLE[S] 39(__) __ OF THE LEASE]
[OR SECTION ___ OF THE OWNER PARTICIPATION AGREEMENT] (any date on which such
assumption is permitted being referred to hereinafter as the "Relevant Date"),
provided the Company shall have delivered to the Corporate Indenture Trustee,
on or prior to the Relevant Date, an opinion of independent legal counsel of
recognized standing to the effect that (i) the assumption will not constitute a
sale or exchange of the Mortgage Notes within the meaning of Internal Revenue
Code Section 1001 and the regulations thereunder, and (ii) the assumption will
not otherwise adversely affect the Federal income taxation of holders of Pass
Through Certificates and, if on or prior to the Relevant Date:

(i) the Company shall have delivered to the Corporate
Indenture Trustee a certificate, dated the Relevant Date, of a
Responsible Officer stating that the Company has paid to the Owner
Trust all amounts required to be paid to the Owner Trust pursuant to
the Lease or the Owner Participation Agreement, as the case may be, in
connection with such assumption;

(ii) no Lease Default arising under Article 20(i), 20(ii) or
20(v) of the Lease shall have occurred and be continuing as of the
proposed assumption and the Corporate Indenture Trustee shall have
received an Officer's Certificate, dated the Relevant Date, from the
Company to such effect;

(iii) the Indenture Trustees and the Company shall have
executed and delivered to each other and to the Owner Trust a
supplement to this Indenture (which shall be in the form of [EXHIBIT
___ TO THE OWNER PARTICIPATION AGREEMENT] except as otherwise provided
in Section 3.08(b) below) pursuant to which the Company shall assume
all of the liabilities and obligations of the Owner Trust hereunder on
a full recourse basis (i.e., without the protection of Section 2.05(a)
or other similar provisions hereof), and the Company shall have duly
executed an assumption of the Mortgage Notes (from and after the
execution and delivery of such supplement and such assumption, this
Indenture, as supplemented, shall be referred to as the "Company
Indenture" and the Mortgage Notes shall be referred to as the "Company
Mortgage Notes") and shall have delivered such assumption to the
Holders of record of the Mortgage Notes on the Relevant Date;

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<PAGE> 40
(iv) the Corporate Indenture Trustee shall have received, on
or prior to the Relevant Date, evidence of all filings, recordings and
other action referred to in the Opinion or Opinions of Counsel
referred to below; and

(v) the Corporate Indenture Trustee shall have received an
Opinion or Opinions of Counsel for the Company, dated the Relevant
Date, and which shall be to the effect that, after giving effect to
the Company Indenture and the Company Mortgage Notes:

(A) each of the Company Indenture and the Company
Mortgage Notes constitute the legal, valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms, except as the same may be limited
by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors
generally and by general principles of equity, and except as
limited by applicable laws which may affect the remedies
provided for in the Company Indenture, which laws, however, do
not in the opinion of such counsel make the remedies provided
for in the Company Indenture inadequate for the practicable
realization of the rights and benefits provided for in the
Company Indenture; and

(B) unless the form of Company Indenture shall be as
provided in Section 3.08(b), the Lien on the Property created
by this Indenture will, upon effecting all filings, recordings
and other actions specified therein, continue on the Property
under the Company Indenture and that the priority of such Lien
will not be adversely affected thereby (provided, that in lieu
of an opinion as to the priority of the Lien there may be
provided title insurance to such effect);

then, automatically and without the requirement of further action by any
Person, effective as of the Relevant Date, the Owner Trust and the Owner
Trustees shall be released from all of their liabilities and obligations under
this Indenture in respect of the Mortgage Notes or otherwise hereunder (other
than any obligations or liabilities of the Owner Trustees in their individual
capacities incurred on or prior to the Relevant Date or arising out of or based
upon events occurring on or prior to the Relevant Date, which obligations and
liabilities shall remain the sole responsibility of the respective Owner
Trustees in their individual capacities). In such event, the Mortgage Notes so
assumed by the Company shall become Company Mortgage Notes and shall cease to
be "Other Mortgage Notes" as such term is used in any Other Indenture and this
Indenture shall cease to be an "Other Indenture" under any Other Indenture.
The Owner Trust may request and the Indenture Trustees shall provide
documentary evidence (in form and substance reasonably satisfactory to the
Owner Trust and the Owner Participant) confirming the release referred to in
the second preceding sentence.

(b) Notwithstanding the provisions of Section 3.08(a)(iii) to the
contrary, if the Opinion of Counsel referred to in Section 3.08(a)(v) includes
opinions (which opinions shall also be delivered to the Owner Trust and the
Owner Participant) to the effect that, if the Company

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<PAGE> 41
Mortgage Notes were unsecured obligations of the Company and, in the case of
clause (ii) below, the exemption referred to in said clause (ii) were
applicable with respect to the Pass Through Trusts and the Pass Through
Certificates immediately prior to the assumption of the Mortgage Notes by the
Company (it being agreed that such exemption shall be assumed to be applicable
unless such Opinion of Counsel concludes to the contrary),

(i) neither of the Pass Through Trusts will be required to
register as an "investment company" under the Investment Company Act
of 1940, as amended; and

(ii) the Prohibited Transaction Exemption 89-88 granted to
Goldman, Sachs & Co. by the United States Department of Labor (and any
amendment, modification, addition or successor to such exemption) with
respect to certain of the prohibited transaction restrictions of
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended, and of Section 4975 of the Internal Revenue Code of 1986, as
amended, will continue to be applicable with respect to the Pass
Through Trusts and the Pass Through Certificates even if the Company
Mortgage Notes were not secured by the lien of the Company Indenture
on the Property;

then the supplement to the Indenture resulting in the Company Indenture shall
effect a restatement of the Indenture so that it contains essentially the same
terms and conditions (other than provisions relating particularly to the
amounts payable with respect to the Mortgage Notes, the manner of payment and
restrictions on transfer, which shall be the same as those included herein
except to the extent necessary to reflect the fact that the Mortgage Notes are
no longer secured by the Property) as that certain Indenture dated as of
February 1, 1985, by and between the Company and The Bank of New York, as
trustee, and the Lien on the Property will be released (upon compliance with
the applicable provisions of Section 14.01 hereof) and the Company Mortgage
Notes will be unsecured general obligations of the Company. In such instance
and at the request and expense of the Company, the Indenture Trustees will join
in the execution, delivery and recording of a separate supplement to this
Indenture for recording purposes which will reflect the release of the Lien on
the Property.

SECTION 3.09. No Merger. Except with the consent of the Holders of
100% in principal amount of the Outstanding Mortgage Notes, the remainderman
interest, the estate for years and leasehold estate, as well as the ground
leasehold interest (if any), shall not merge but shall always be kept separate
and distinct, notwithstanding the union of said estates or any part thereof in
the Owner Trust, the Company, the Remainderman, the ground lessor under the
Ground Lease (if any) or any other party, whether by purchase or otherwise.

SECTION 3.10. Ground Lease. If the Owner Trust's interest in the
Land is a leasehold estate, as indicated on Schedule I hereto, then the
following shall apply:

(a) Promptly after Owner Trust's receipt of any notice of any
motion, application or effort to reject the Ground Lease by the ground
lessor or any bankruptcy trustee

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<PAGE> 42
arising from or in connection with any case, proceeding or other
action commenced or pending by or against the Company under the
Federal Bankruptcy Code or any successor statutes, the Owner Trust
shall give notice thereof to the Indenture Trustees. The Owner Trust
hereby (i) assigns to the Indenture Trustees any and all of the Owner
Trust's rights as lessee under Section 365(h) of the Federal
Bankruptcy Code or any successor statute, (ii) covenants that it shall
not elect to treat the Ground Lease as terminated pursuant to Section
365(h) of the Federal Bankruptcy Code or any such successor statute
without the prior written consent of the Indenture Trustees, and (iii)
agrees that any such election by the Owner Trust without such consent
shall be null and void. The Owner Trust hereby irrevocably appoints
the Indenture Trustees as its true and lawful attorneys-in-fact, which
power of attorney shall be coupled with an interest, for the purpose
of exercising the Owner Trust's rights pursuant to Section 365(h) of
the Federal Bankruptcy Code or any successor to said Section 365(h):
(A) to retain for the benefit of Owner Trust a right to possession or
statutory term of years derived from or incident to the Ground Lease,
or (B) to treat the Ground Lease as terminated.

(b) If the Ground Lease is canceled or terminated by reason
of an event of default by the ground lessee thereunder or the
bankruptcy of such ground lessee, and if the Indenture Trustee or its
designee or nominee shall acquire an interest in any new lease of the
property leased thereunder, the Owner Trust shall have no right, title
or interest in or to such new lease or the leasehold estate created
thereby.

ARTICLE IV

HOLDER LISTS; OWNERSHIP
OF NOTES

SECTION 4.01. Holder Lists. The Corporate Indenture Trustee shall
preserve in as current a form as is reasonably practicable the most recent list
available to it of the names and addresses of the Holders. If the Corporate
Indenture Trustee (or its agent) is not the Registrar, the Owner Trust shall
cause the Registrar to furnish to the Corporate Indenture Trustee semi-annually
not more than 15 days after each Record Date, as of such Record Date, or at
such other times as the Corporate Indenture Trustee may request in writing, a
list, in such form and as of such date as the Corporate Indenture Trustee may
reasonably require, containing all the information in the possession or control
of the Registrar as to the names and addresses of the Holders and the amounts
and Maturity Date of the Mortgage Notes held by such Holders.

SECTION 4.02. Ownership of Mortgage Notes. Ownership of the Mortgage
Notes shall be proved by the Register.

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<PAGE> 43
ARTICLE V

RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE INDENTURE ESTATE

SECTION 5.01. Basic Rent Distribution. (a) Except as otherwise
provided in Section 5.03 hereof, each installment of Basic Rent and any payment
of interest on overdue installments of Basic Rent (each of which shall be
deemed paid upon receipt by the Corporate Indenture Trustee pursuant to Section
3.01), and any payment received by the Indenture Trustees pursuant to Section
8.03(a) hereof in respect of Basic Rent or interest on overdue installments of
Basic Rent shall be promptly distributed in the following order of priority:

first, so much of such installment or payment as shall be
required to pay in full the aggregate amount of the payment or
payments of principal, premium (if any), interest and other amounts
(as well as any interest on overdue principal and premium) then due
under all the Mortgage Notes shall be distributed to the Holders
ratably, without priority of one over the other, in the proportion
that the amount of such payment or payments then due under each such
Mortgage Note bears to the aggregate amount of the payments then due
under all such Mortgage Notes, and

second, the balance, if any, of such installment or payment
remaining thereafter shall be distributed to the Owner Trust, or as
the Owner Trust may request.

(b) Subject to Section 5.03, if, at the time of receipt by the
Indenture Trustee of an installment of Basic Rent (whether or not then
overdue), there shall have occurred and be continuing an Indenture Event of
Default, then the Indenture Trustee shall retain such payment (to the extent
the Indenture Trustee is not then required to distribute such amount pursuant
to clause "first" of Section 5.01(a)) as part of the Indenture Estate and shall
not distribute any such payment pursuant to clause "second" of Section 5.01(a)
until the earliest of (i) the first Business Day occurring more than 180 days
following (A) in the case of an Indenture Event of Default under Section
7.01(b), the date of the occurrence of such Indenture Event of Default and (B)
in the case of any other Indenture Event of Default, the date on which the
Indenture Trustee shall have received notice of such Indenture Event of
Default, whereupon such payment shall be distributed pursuant to clause
"second" of Section 5.01(a) and no further withholding of Rent on account of
such Indenture Event of Default shall be effected, (ii) such time as the Notes
shall have been declared, or shall have become, due and payable pursuant to
Section 7.02(a), in which case such payment shall be distributed pursuant to
Section 5.03 and (iii) such time as such Indenture Event of Default shall no
longer be continuing, in which case such payment shall be distributed pursuant
to clause "second" of Section 5.01(a).

SECTION 5.02. Event of Loss and Replacement; Redemption. (a) Except
as otherwise provided in Section 5.03 hereof, any payment (other than Excepted
Rights and Payments) received by the Indenture Trustees from payments in
respect of Additional Rent payable under

34
<PAGE> 44
[ARTICLE 40 OF THE LEASE] or as the result of redemption of the Mortgage Notes
pursuant to Section 6.02 (other than Section 6.02(c)) hereof, shall be
distributed by the Corporate Indenture Trustee in the following order of
priority:

first, so much of such payments or amounts remaining as shall
be required to pay in full the aggregate unpaid principal amount of
the Mortgage Notes then due and payable, all accrued but unpaid
interest thereon to the Redemption Date therefor, and all other
amounts due thereunder whether by acceleration or otherwise (other
than premium or interest thereon), shall be distributed to the
Holders, and if the aggregate amount so to be distributed shall be
insufficient to pay all such amounts in full as aforesaid, then such
amount shall be distributed ratably, without priority of one over the
other, in the proportion that the aggregate unpaid principal amount of
all Mortgage Notes then due and payable held by each such Holder, the
accrued but unpaid interest thereon to the Redemption Date therefor
and all other amounts due thereunder, bears to the aggregate unpaid
principal amount of all Outstanding Mortgage Notes, the accrued but
unpaid interest thereon to the Redemption Date therefor and all other
amounts due thereunder (other than premium or interest thereon); and

second, as provided in clause "third" of Section 5.03 hereof;

(b) Any payments received in respect of the [equity portion of Basic
Rent and of Termination Value, when the debt is assumed directly] pursuant to
[ARTICLE _____ OF THE LEASE] shall be distributed by the Corporate Indenture
Trustee in the manner provided in clause "third" of Section 5.03 hereof.

SECTION 5.03. Payment After Indenture Event of Default, etc. Except
as otherwise provided in Section 5.04(b) hereof, all payments received and all
amounts held or realized by the Indenture Trustees (including amounts of excess
moneys referred to in Section 7.04(e)) (i) after (x) an Indenture Event of
Default shall have occurred and so long as such an Indenture Event of Default
shall be continuing, and (y) the Indenture Trustees have initiated action under
Section 7.02(a), or (ii) after the Mortgage Notes shall have become due and
payable as provided in Section 7.02(b) or (c) hereof, shall be promptly
distributed by the Corporate Indenture Trustee in the following order of
priority:

first, so much of such payments or amounts as shall be
required to reimburse the Indenture Trustees for any tax (other than
income tax on, or measured by, fees payable to the Indenture Trustees
in their individual capacities pursuant to any Indenture Document),
expense, charge or other loss (including all amounts to be expended at
the expense of, or charged upon the tolls, rents, issues, profits,
products, revenues and other income of the Indenture Estate pursuant
to Section 7.03(a) hereof) incurred by the Indenture Trustees in the
protection, exercise or enforcement of any right, power or remedy
under this Indenture for the benefit of the Holders (to the extent not
previously reimbursed),

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<PAGE> 45
including the reasonable expenses of any sale, taking or other
proceeding, reasonable attorneys' fees and expenses, court costs, and
any other reasonable expenditures incurred or reasonable expenditures
or advances made by the Indenture Trustees under this Indenture or any
damages sustained by the Indenture Trustees in connection therewith,
upon such Indenture Event of Default, shall be applied by the
Indenture Trustees in reimbursement of such expenses and payment of
such fees;

second, so much of such payments or amounts remaining as shall
be required to pay in full the aggregate unpaid principal amount of
the Mortgage Notes then due and payable, all accrued but unpaid
interest thereon to the date of distribution and all other amounts due
thereunder (including any premium, if any), whether by acceleration or
otherwise, shall be distributed to the Holders, and if the aggregate
amount so to be distributed shall be insufficient to pay all such
amounts in full as aforesaid, then such amount shall be distributed
ratably, without priority of one over the other, in the proportion
that the aggregate unpaid principal amount of all Outstanding Mortgage
Notes then due and payable held by each such Holder, the accrued but
unpaid interest thereon to the date of distribution and all other
amounts due thereunder, bears to the aggregate unpaid principal amount
of all Outstanding Mortgage Notes, accrued but unpaid interest thereon
to the date of distribution and all other amounts due thereunder; and

third, the balance, if any, of such payments or amounts
remaining shall be distributed to the Owner Trust for distribution
pursuant to the Trust Agreement.

SECTION 5.04. Certain Payments. (a) Except as otherwise provided in
this Indenture, any payments received by the Indenture Trustees which are to be
applied according to any provision in any other Indenture Document shall be
applied thereunder in accordance therewith.

(b) Notwithstanding anything herein to the contrary, the Indenture
Trustees will distribute, promptly upon receipt, any Excepted Rights and
Payments and any indemnity or other payment received by them from the Owner
Trust or the Company pursuant to [ARTICLE 6 OF THE LEASE]6/ and Section __ of
the Owner Participation Agreement or as Additional Rent, directly to the Person
(which may include the Owner Participant, the Owner Trustees or the Indenture
Trustees in their individual capacities) entitled thereto.

SECTION 5.05. Other Payments. Any payments received by the Indenture
Trustees for which no provision as to the application thereof is made elsewhere
in this Indenture or in any other Indenture Document shall be distributed by
the Corporate Indenture Trustee (a) except as otherwise provided in Section
5.03, to the extent received or realized at any time prior to the

______________
6/ When added to the lease, general indemnity provisions should be
referred to here.

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<PAGE> 46
payment in full of all obligations to the Holders, in the order of priority
specified in Section 5.01 hereof, and (b) to the extent received or realized at
any time after payment in full of all obligations to the Holders, in the manner
provided in clause "third" of Section 5.03 hereof.

SECTION 5.06. Payments to Owner Trust. Any amounts distributed
hereunder by the Corporate Indenture Trustee to the Owner Trust shall be paid
to the Owner Trust by wire transfer of immediately available funds at [OWNER
TRUST WIRE INSTRUCTIONS] or at such office and to such account or accounts of
such entity or entities as shall be designated by notice from the Owner Trust
to the Corporate Indenture Trustee from time to time.

SECTION 5.07. Application of Payments. Each payment made in respect
of the Mortgage Notes (exclusive of premium) shall, except as otherwise
provided herein, be applied, first, to the payment of interest on such Mortgage
Note due and payable to the date of such payment, as provided in such Mortgage
Note, as well as any interest on overdue principal due thereunder, second, to
the payment of any other amount (other than the principal of such Mortgage
Note) due hereunder to the Holder of such Mortgage Note or under such Mortgage
Note, third, to the payment of the principal of such Mortgage Note if then due
hereunder or under such Mortgage Note, and fourth, the balance, if any,
remaining thereafter, to the payment of the principal of such Mortgage Note
remaining unpaid (provided that such Mortgage Note shall not be subject to
prepayment without the consent of the affected Holder except as permitted by
Sections 6.02, 6.06 and 8.02 hereof). Any amounts received in respect of the
Make-Whole Premium (including interest on overdue payments thereof) shall be
applied only to the obligation to pay the Make- Whole Premium (and interest on
overdue payments thereof) as provided hereunder, and if the aggregate amount so
to be distributed shall be insufficient to pay all premium due and payable in
full, then such amount shall be distributed ratably, without priority of one
over the other, in the proportion that the aggregate unpaid premium of all
Mortgage Notes then due and payable held by each such Holder bears to the
aggregate unpaid premium of all Outstanding Mortgage Notes then due thereunder.

SECTION 5.08. Investment of Amounts Held by Indenture Trustees.
Amounts held by the Indenture Trustees pursuant to Section 5.01 hereof,
pursuant to Section 5.02 hereof or pursuant to any provision of any Indenture
Document providing for investment of sums pursuant to this Section 5.08 shall
be invested by the Corporate Indenture Trustee from time to time in Permitted
Investments selected by or on behalf of the Owner Trust. In the event that the
Owner Trust shall not select Permitted Investments, such Permitted Investments
shall be selected by the Corporate Indenture Trustee from those described in
clause (a)(i) of the definition of Permitted Investments. Unless otherwise
expressly provided in this Indenture, any income realized as a result of any
such investment, net of the Corporate Indenture Trustee's reasonable fees and
expenses in making such investment, shall be held as a part of the Indenture
Estate and applied by the Corporate Indenture Trustee in the same manner as the
principal amount of such investment is to be applied and any losses, net of
earnings and such reasonable fees and expenses, shall be charged against the
principal amount invested. The Corporate Indenture Trustee shall not be liable
for any loss resulting from any investment made by it other than by

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<PAGE> 47
reason of its willful misconduct or gross negligence, and any such investment
may be sold (without regard to its maturity) by the Corporate Indenture Trustee
without instructions whenever the Corporate Indenture Trustee reasonably
believes such sale is necessary to make a distribution required by this
Indenture.

SECTION 5.09. Withholding Taxes. The Corporate Indenture Trustee
shall withhold any taxes required to be withheld under applicable law,
regulation or rule, including any interest or penalty in connection therewith,
on payments to any Holder except to the extent that such Holder has furnished
evidence satisfactory to the Corporate Indenture Trustee of any exemption from
or reduction in withholding claimed by such Holder and such withholding on
payments shall constitute a payment to the Holder. In the event that such
evidence furnished by such Holder to establish its withholding exemption is
false, inaccurate or no longer true, the Holder shall be liable for such
amounts necessary to indemnify the Corporate Indenture Trustee, for expenses
attributable to such false, inaccurate or untrue evidence and any related
contests or disputes, and the same may be withheld from distributions otherwise
distributable to such Holder. To the extent that the Corporate Indenture
Trustee fails, with respect to any Holder, to withhold and pay over any such
taxes to the appropriate taxing authority, the Corporate Indenture Trustee
shall, upon a claim being made for such taxes by such authority, take all
reasonable steps to recover such taxes from such Holder, including withholding
the amount of such taxes from subsequent distributions, if any, to such Holder.
Neither the Owner Trustee nor the Owner Participant shall have any liability
for the failure of the Corporate Indenture Trustee to withhold taxes in the
manner provided for herein.

The Corporate Indenture Trustee agrees (i) that it will timely pay the
amounts withheld pursuant to this Section 5.09 to the appropriate authority,
(ii) that it will file any necessary withholding tax returns or statements when
due and (iii) that, as promptly as possible after the payment of such amounts,
it will deliver to the Owner Trust and the Company appropriate documentation
showing the payment of such amounts, together with such additional documentary
evidence as the Owner Trust or the Company may reasonably request from time to
time. The Corporate Indenture Trustee agrees to file any other information
reports as it may be required to file under United States law.

ARTICLE VI

REDEMPTION OF MORTGAGE NOTES

SECTION 6.01. No Redemption or Prepayment Prior to Maturity. Except
as provided in Sections 6.02 and 8.02 hereof, the Mortgage Notes may not be
redeemed or prepaid prior to their respective Maturity Dates.

SECTION 6.02. Redemption of Mortgage Notes. The Outstanding Mortgage
Notes shall be redeemed:

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<PAGE> 48
(a) At the Redemption Price, without premium:

(1) in whole, in connection with the occurrence of a
substantial or total casualty at the Property and the Company's
resultant delivery under [ARTICLE 14(F) OF THE LEASE] of a Tenant's
Purchase Offer in accordance with [ARTICLE 40 OF THE LEASE], unless
the Company exercises its right to substitute another property in lieu
of the Property in accordance with [ARTICLE 41 OF THE LEASE], in which
case, the terms of Sections 3.06 and 14.01 hereof shall govern;

(2) in whole, in connection with the occurrence of a
Condemnation described in the first sentence of [ARTICLE 15(A) OF THE
LEASE] and the Company's resultant delivery under [SAID ARTICLE 15(A)]
of a Tenant's Purchase Offer in accordance with [ARTICLE 40 OF THE
LEASE], unless the Company exercises its right to substitute another
property in lieu of the Property in accordance with [ARTICLE 41 OF THE
LEASE], in which case, the terms of Sections 3.06 and 14.01 hereof
shall govern;

(3) in whole or in part, to the extent of the amount actually
to be disbursed to the Owner Trust pursuant to [ARTICLE 16(C) OF THE
LEASE] in connection with the occurrence of damage or destruction of
the Property; or

(4) in whole or in part, to the extent of the "excess
proceeds" described in [THE FOURTH SENTENCE OF ARTICLE 15(D) OF THE
LEASE] arising as a result of a Condemnation.

In the case of any partial redemption pursuant to this Section 6.02(a), (i)
each Outstanding Mortgage Note shall be redeemed ratably, without priority of
one over the other, in the proportion that the aggregate unpaid principal
amount of the Mortgage Notes held by each Holder bears to the aggregate unpaid
principal amount of all Outstanding Mortgage Notes, and (ii) each subsequent
Installment Payment Amount payable in respect of any such Mortgage Note shall,
effective as of the Installment Payment Date immediately following the
Redemption Date, be reduced (but not below zero) by the percentage that the
principal portion of the Redemption Price bears to the total aggregate unpaid
principal amount of such Mortgage Note immediately before such redemption.

(b) Other than as provided elsewhere in this Section 6.02, in whole,
if the Owner Trust, with the consent of the Company (as evidenced by an
Officer's Certificate), gives notice of redemption to the Indenture Trustees,
at the Redemption Price which shall include the applicable Make-Whole Premium.

(c) In whole, if the Owner Trust, at the direction of the Owner
Participant at any time gives notice of redemption to the Indenture Trustees
pursuant and subject to Section 8.02(a) hereof, at a price equal to the
Redemption Price, which shall include the Make-Whole Premium in the
circumstances expressly providing for the Make-Whole Premium in Section
8.02(b), and otherwise without premium.

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<PAGE> 49
(d) In whole or in part, with the consent of the Company (as
evidenced by an Officer's Certificate), if the Owner Trust gives at least 25
days' prior irrevocable notice to the Indenture Trustees specifying the
Mortgage Notes and all Other Mortgage Notes having the Maturity Date to be
redeemed (which shall be the Mortgage Notes and Other Mortgage Notes having the
same Maturity Date) and provided all Outstanding Mortgage Notes, Other Mortgage
Notes, Company Mortgage Notes and other notes then held in the same Pass
Through Trust, whether or not issued by the Owner Trust, are simultaneously
being redeemed, at the Redemption Price, which shall include the applicable
Make-Whole Premium.

(e) In whole, at the Redemption Price, which shall include the
applicable Make-Whole Premium, in connection with the Company's exercise of its
termination right pursuant to [ARTICLE 39 OF THE LEASE], unless the Company
elects to assume the Mortgage Notes pursuant to [ARTICLE 39(___)] OF THE
LEASE]7/ and Section 3.08 hereof or to substitute a property in lieu of the
Property. The Redemption Date for the redemption of Mortgage Notes pursuant to
this Section shall be the date determined in accordance with Section 6.03
hereof.

SECTION 6.03. Redemption; Notice to Indenture Trustees. In case of
any redemption of Mortgage Notes, the Owner Trust shall, at least 45 days prior
to the Redemption Date, notify the Indenture Trustees and the Registrar by an
Officer's Order of (1) such Redemption Date (subject, to the extent applicable,
to Section 8.02(a)), (2) the principal amount of Mortgage Notes to be redeemed,
and (3) the basis upon which, pursuant to this Indenture, such principal amount
and Make-Whole Premium, if any, has been or will be computed and an estimate of
the amount of the Make-Whole Premium. Any notice delivered to the Indenture
Trustee which, under the terms of the Lease is characterized as a Redemption
Notice, shall be considered to be a notice of redemption hereunder. The notice
of redemption shall be revocable if it is given more than 45 days prior to the
Redemption Date, but it shall state a date on which it shall be irrevocable
(which shall not be less than 25 days prior to the Redemption Date). If not
otherwise provided and not previously revoked, any redemption notice shall
become irrevocable on the 25th day prior to the Redemption Date stated therein.
The Redemption Date shall be any Distribution Date occurring not less than 25
days after the giving of such notice. Any delivery by the Company of a
Tenant's Purchase Offer under [ARTICLE 14(F) OR ARTICLE 15(A) OF THE LEASE] or
a Notice of Termination under [ARTICLE 39(A) OF THE LEASE] (unless accompanied
with a notice by the Company that it will assume the Mortgage Notes in
accordance with [ARTICLE 39(E) OF THE LEASE] and Section 3.08 hereof) shall
automatically constitute the Owner Trust's Officer's Order under this Section
6.03, subject to revocation as provided in this Section 6.03 (which revocation
shall automatically be deemed made upon the Owner Trust's notice and deposit of
funds under Section 6.06 hereof if such notice is given and deposit made prior
to the date that the Company notice shall have become irrevocable, in which
case the Owner Trust's notice under Section 6.06 shall constitute the notice of
redemption under this Section 6.03). Any other notice by the Owner Trust under
Section 6.06 shall automatically constitute a notice of

______________
7/ When added to the Lease, provisions allowing Lessee to assume the debt
upon an Economic Abandonment should be referred to here.

40
<PAGE> 50
redemption under this Section 6.03, as long as the deposit due under
said Section 6.06 shall have been timely made. Further, any notice of
redemption pursuant to Section 6.02(b) or 6.02(d) that is not to
effect the consummation of the Company's exercise of its right to
effectuate a refinancing under [SECTION ____ OF THE OWNER
PARTICIPATION AGREEMENT] (which exercise shall be evidenced by the
delivery of a notice to that effect from the Company), shall not be
effective unless, concurrently with such notice, the Owner Trust shall
deposit with the Corporate Indenture Trustee an amount sufficient to
pay the Redemption Price together with the Make-Whole Premium.

SECTION 6.04. Mortgage Notes Redeemed in Part. For all purposes of
this Indenture, unless the context otherwise requires, all provisions relating
to the redemption of Mortgage Notes shall relate, in the case of any Mortgage
Note redeemed or to be redeemed only in part, to the portion of the principal
of such Mortgage Note which has been or is to be redeemed. Any Mortgage Note
which is to be redeemed only in part shall be so redeemed by the payment to the
Holder (without the necessity of presentation or surrender on the part of the
Holder) of the amount necessary to effect such redemption in accordance with
this Article VI and the Corporate Indenture Trustee shall note on its records
the fact of such payment and the amount of the principal amount of, and of each
remaining Installment Payment Amount of, said Mortgage Note remaining unpaid
after such payment. Such notification, in the absence of manifest error, shall
be conclusive evidence of the amount of such payment and the remaining unpaid
principal amount of, and of each remaining Installment Payment Amount of, such
Mortgage Note and shall be binding upon the Holder and all subsequent Holders
of any Mortgage Note issued upon registration of a transfer thereof or in
exchange therefor.

SECTION 6.05. Notice of Redemption to Holders. (a) Notice of
redemption shall be given by the Corporate Indenture Trustee by first- class
mail, postage prepaid, mailed not less than 20 nor more than 30 days prior to
the Redemption Date to each Holder of Mortgage Notes to be redeemed, at the
Holder's address appearing in the Register (unless, in the case of Mortgage
Notes held by a Pass Through Trustee, a different method shall be acceptable to
the Holder). No such notice shall be given until such time as the redemption
notice given or deemed given by the Owner Trust, or by the Company, as lessee
under the Lease, on behalf of the Owner Trust, shall have become irrevocable.

All notices of redemption to Holders shall state:

(1) the Redemption Date,

(2) the Redemption Price,

(3) if less than all Outstanding Mortgage Notes are to be
redeemed, the principal amount of the particular Mortgage Notes to be
redeemed,

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(4) that on the Redemption Date the Redemption Price will
become due and payable upon each such Mortgage Note (or the portion
thereof to be redeemed), and that interest thereon (or on the portion
thereof to be redeemed) shall cease to accrue on and after said date
(unless the Redemption Price shall not be paid as required hereunder),
and

(5) in the case of a redemption in whole of a Mortgage Note,
the place or places where such Mortgage Note is to be surrendered for
payment of the Redemption Price.

SECTION 6.06. Right to Reject Tenant's Purchase Offer or Notice of
Termination. If the Owner Trust desires (i) to reject Tenant's Purchase Offer
made under [ARTICLE 14(F) OR ARTICLE 15(A) OF THE LEASE], or (ii) to decline
the Company's Notice of Termination issued pursuant to [ARTICLE 39 OF THE
LEASE], then if the Owner Trust so notifies the Corporate Indenture Trustee and
deposits with the Corporate Indenture Trustee, contemporaneously with the
giving of such notice, an amount sufficient to pay the Redemption Price,
without premium, of the Mortgage Notes to be redeemed under Section 6.02(a) or
Section 6.02(e) hereof, as the case may be, the Corporate Indenture Trustee
shall give, promptly on receipt of the amount referred to above but in no event
more than five days thereafter, the written confirmation for the benefit of the
Company necessary for the Owner Trust to take any such action under the Lease.
The Owner Trust shall have no right to take the actions described in any of
clauses (i) and (ii) above, except as provided above in this Section 6.06, or
any other action that would result in the termination of the Lease.

SECTION 6.07. Mortgage Notes Payable on Redemption Date. On the
Redemption Date, the Outstanding Mortgage Notes (or the portion thereof) to be
redeemed shall become due and payable, and from and after such Redemption Date
(unless there shall be a default in the payment of the Redemption Price) such
Mortgage Notes (or the portion thereof to be redeemed) shall cease to bear
interest. On the Redemption Date (or upon surrender of the Mortgage Note if it
is to be redeemed in whole) such Mortgage Note (or the portion thereof to be
redeemed) shall be paid at the Redemption Price.

If any Mortgage Note (or portion thereof) called for redemption shall
not be so paid on the Redemption Date (or upon surrender thereof for redemption
if it is to be redeemed in whole), the principal amount to be redeemed shall,
until deposited with the Corporate Indenture Trustee, continue to bear interest
from the Redemption Date at the interest rate applicable to such Mortgage Note.

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ARTICLE VII

REMEDIES OF INDENTURE TRUSTEES
AND HOLDERS

SECTION 7.01. Indenture Event of Default. "Indenture Event of
Default" means any of the following events (whatever the reason for such
Indenture Event of Default and whether such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body):

(a) any Lease Event of Default (other than a Lease Event of
Default relating solely to Excepted Rights and Payments) shall have
occurred and be continuing; or

(b) the failure of the Owner Trust other than by reason of a
Lease Default or Lease Event of Default to pay when due any payment of
principal of or premium, if any, or interest on any Mortgage Note; or

(c) any representation or warranty made by the Owner
Participant, the Trust Company, [INDIVIDUAL OWNER TRUSTEE] or the
Owner Trust herein or in the Owner Participation Agreement, any other
Indenture Document or in any document or certificate furnished to the
Indenture Trustees in connection herewith or pursuant hereto shall
prove to have been false or incorrect when made in any respect
material to the Holders, and such falseness or incorrectness is
material to such Holders, and continues to be material and if capable
of remedy, is not remedied for 30 days (or such longer period (but in
no event more than 60 days) if such falseness or incorrectness is
susceptible of being remedied within a reasonable period of time (but
not within such 30-day period) and if within such 30-day period the
Owner Trust, the Trust Company, [INDIVIDUAL OWNER TRUSTEE] or the
Owner Participant, as applicable, promptly commences, and thereafter
prosecutes with diligence and good faith to completion, efforts to
effect such remedy) after there has been given to the Owner Trust, by
registered or certified mail, a written notice specifying such breach
and requiring it to be remedied and stating that such notice is a
"Notice of Indenture Default" hereunder, by the Corporate Indenture
Trustee or to the Owner Trust and the Corporate Indenture Trustee by
the Holders of not less than a majority in aggregate unpaid principal
amount of Outstanding Mortgage Notes; or

(d) any termination or revocation of the Trust Agreement; or

(e) any failure by the Owner Trustees (other than by reason
of a Lease Default or a Lease Event of Default), in their individual
capacities or on behalf of the Owner Trust, to observe or perform in
any material respect any other

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material covenant or obligation of the Owner Trustees, individually,
or the Owner Trust contained in this Indenture or any failure by the
Owner Participant to observe or perform in any material respect any
other material covenant or obligation of the Owner Participant
contained in the Owner Participation Agreement which, in either case,
has a material adverse effect on the Holders and is not remedied
within a period of 30 days (or such longer period (but in no event
more than 180 days) if such failure is susceptible of being remedied
within a reasonable period of time (but not within such 30-day period)
and if within such 30-day period the Owner Trust or the Owner
Participant, as applicable, promptly commences and thereafter
prosecutes with diligence and good faith to completion efforts to
effect such remedy) after there has been given to the Owner Trust by
registered or certified mail, a written notice specifying such breach
and requiring it to be remedied and stating that such notice is a
"Notice of Indenture Default" hereunder, by the Corporate Indenture
Trustee or to the Owner Trust and the Corporate Indenture Trustee by
the Holders of not less than a majority in aggregate unpaid principal
amount of Outstanding Mortgage Notes; or

(f) if the Owner Trust shall file a petition in bankruptcy or
for reorganization or for an arrangement pursuant to any federal or
state bankruptcy law or any similar federal or state law, or shall be
adjudicated a bankrupt or become insolvent or shall make an assignment
for the benefit of creditors or shall admit in writing its inability
to pay its debts generally as they become due; or

(g) if a petition or answer proposing the adjudication of the
Owner Trust as a bankrupt or its reorganization pursuant to any
federal or state bankruptcy law or any similar federal or state law
shall be filed in any court and the Owner Trust shall consent to or
acquiesce in the filing thereof or such petition or answer shall not
be discharged or denied within 90 days after the filing thereof.

SECTION 7.02. Remedies; Acceleration of Maturity; Rescission. (a)
If an Indenture Event of Default shall have occurred and be continuing and so
long as the same shall be continuing unremedied, then and in every such case,
after the Mortgage Notes shall have become due and payable under Section
7.02(b) or 7.02(c), the Indenture Trustees may, and when required by the
provisions of Article IX hereof shall, exercise (subject to the provisions
hereof expressly restricting the Indenture Trustees' rights or remedies herein,
including Sections 8.02 and 8.03), any or all of the rights and powers and
pursue any or all of the remedies with respect to any or all of the Indenture
Estate accorded to the Owner Trust in [ARTICLE 21 OF THE LEASE], if a Lease
Event of Default shall have occurred and be continuing, and may, subject to the
terms of the Lease, take possession of all or any part of the Indenture Estate
subject to the Lien hereof or pursuant hereto and may exclude the Owner Trust
and, subject to the terms of the Lease, the Company and all persons claiming
by, through or under any of them wholly or partly therefrom, and (subject to
the provisions hereof expressly restricting the Indenture Trustees' rights or
remedies herein) the Indenture Trustees may exercise any other right or remedy
in lieu of or in

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addition to the foregoing which may be available to it under applicable law or
proceed by appropriate court action to enforce the terms hereof, of the Lease
or both, to recover damages for the breach hereof, of the Lease or both;
provided, however, that the foregoing shall not be construed as modifying the
parties' agreement that the Lien hereof shall be subordinate to the leasehold
estate of the Lessee under the Lease; provided further, however, that
notwithstanding any provision herein to the contrary, the Indenture Trustees
shall not sell any of the Indenture Estate unless a declaration of acceleration
has been made pursuant to Section 7.02(c) or the Mortgage Notes have become due
and payable pursuant to Section 7.02(b). Notwithstanding the foregoing, the
Indenture Trustees shall not be entitled to exercise any remedy hereunder as a
result of an Indenture Event of Default occurring solely by reason of one or
more Lease Events of Default unless the Corporate Indenture Trustee shall be
concurrently taking action under [ARTICLE 21 OF THE LEASE] to terminate the
Lease or dispossess the Company or otherwise seeking to effect a comparable
remedy.

(b) If an Indenture Event of Default referred to in paragraph (f) or
(g) of Section 7.01 hereof shall have occurred, or if a Lease Event of Default
referred to in Article 20(v) of the Lease shall have occurred and be continuing
at such time as the Indenture Trustees are still constrained from terminating
the Lease or the Company's right to possession, then and in every such case the
unpaid principal of all Outstanding Mortgage Notes, together with interest
accrued but unpaid thereon, premium, if any, and all other amounts due
thereunder and hereunder shall immediately and without further act become due
and payable, without presentment, demand, protest or notice, all of which are
hereby waived.

(c) If any Indenture Event of Default or Lease Event of Default not
described in the preceding paragraph (b) shall have occurred and be continuing,
then and in every such case, the Indenture Trustees may on their own accord or
at the direction of Holders of not less than a majority in aggregate unpaid
principal amount of Outstanding Mortgage Notes at any time (but subject to the
provisions hereof expressly restricting the Indenture Trustees' rights or
remedies herein including Sections 8.02 and 8.03), by written notice or notices
to the Owner Trust and the Company, declare the principal of all the Mortgage
Notes to be due and payable, whereupon the unpaid principal of all Outstanding
Mortgage Notes, together with accrued but unpaid interest thereon, and premium,
if any, and all other amounts due thereunder, shall immediately become due and
payable without presentment, demand, protest or other notice, all of which are
hereby waived. At any time after such declaration and prior to the sale or
disposition of the Indenture Estate, however, the Holders of not less than a
majority in aggregate unpaid principal amount of Outstanding Mortgage Notes, by
notice to the Indenture Trustees and the Owner Trust, may rescind such
declaration, whether made by the Indenture Trustees on their own accord or as
directed, if (x) there has been paid or deposited with the Corporate Indenture
Trustee a sum sufficient to pay all overdue installments of interest on all
Mortgage Notes and premium, if any, due otherwise than by virtue of such
declaration of acceleration, principal on any Mortgage Notes that have become
due otherwise than by such declaration of acceleration, all sums paid or
advanced by the Indenture Trustees hereunder and the reasonable compensation,
expenses, disbursements and advances of the Indenture Trustees, their agents
and counsel, (y) the

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rescission would not conflict with any judgment or decree and (z) all other
Indenture Defaults and Indenture Events of Default (other than the nonpayment
of principal that has become due solely because of such acceleration) have been
either cured (or will be cured as a result thereof, or with regard to an
Indenture Default or Lease Default, are being cured in accordance with the
applicable provisions hereof or of the Lease) or waived. No such rescission
shall affect any subsequent default or impair any right consequent thereon.

SECTION 7.03. Exercise of Remedies, and Suits for Enforcement, by
Indenture Trustees; Owner Trust's Right to Redeem the Mortgage Notes. (a) At
any sale of any or all of the Indenture Estate pursuant to the exercise by the
Indenture Trustees of any of the remedies afforded by this Article, the
Indenture Trustees, the Owner Trust, the Owner Participant and the Company may
bid for and purchase such property. To the extent permitted by applicable law,
the Owner Trust hereby waives any rights now or hereafter conferred by statute
or otherwise by applicable law which may require the Indenture Trustees to
sell, lease or otherwise use any portion of the Indenture Estate in mitigation
of the damages as set forth in this Section or which may otherwise limit or
modify any of the Indenture Trustees' or Holders' rights or remedies under this
Section.

Whenever, prior to any sale of the Indenture Estate, or any part
thereof, all arrears of interest upon the Mortgage Notes, together with all
sums paid or advanced by the Indenture Trustees under any provision hereof and
the reasonable and proper charges, expenses and liabilities of the Corporate
Indenture Trustee, its agents and counsel, and all other sums then payable by
the Owner Trust hereunder, including the outstanding principal of, together
with all other accrued unpaid interest, if any, on the Mortgage Notes which
shall then be due and payable (otherwise than upon declaration of acceleration
pursuant to Section 7.02(c) hereof), shall be paid by or for the account of the
Owner Trust and/or collected out of the Indenture Estate or provision
satisfactory to the Indenture Trustees shall be made for such payment, and all
Indenture Defaults and Indenture Events of Default shall be cured or waived,
then, so long as no declaration of acceleration has been made pursuant to
Section 7.02(c) hereof or, if such a declaration has been made, upon rescission
and annulment thereof pursuant to Section 7.02(c) hereof, the Indenture
Trustees shall surrender to the Owner Trust, its successors or assigns,
possession of the Indenture Estate (subject to the Lien of this Indenture) and
shall pay over at the direction of the Owner Trust to the Person specified in
such direction the amount of any tolls, rents, issues, profits, products,
revenues and other income of the Indenture Estate arising from the exercise of
any remedies by the Indenture Trustees hereunder then remaining unexpended in
the hands of the Indenture Trustees and thereupon the Owner Trust and the
Indenture Trustees shall be restored to their former positions and rights
hereunder in respect of the Indenture Estate, but no such surrender shall
extend to or affect any subsequent Indenture Default or Indenture Event of
Default or impair any right consequent thereon. Upon every taking of
possession of any portion of the Indenture Estate pursuant to this Article, the
Indenture Trustees may, from time to time, at the expense of the Indenture
Estate, make all such expenditures for maintenance, insurance, repairs,
replacements, alterations, additions and improvements to and of the Indenture
Estate, as they may deem proper. In each such case,

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subject to the terms of the Lease, the Indenture Trustees shall have the right
to use, operate, lease, control or manage the Indenture Estate, and to exercise
all rights and powers of the Owner Trust relating to the Indenture Estate, as
the Indenture Trustees shall deem appropriate, including the right to enter
into any and all such agreements with respect to the use, operation, leasing,
control or management of the Indenture Estate or any part thereof, as the
Indenture Trustees may determine; and the Indenture Trustees shall be entitled
to collect and receive directly all tolls, rents (including Basic Rent),
issues, profits, products, revenues and other income of the Indenture Estate
and every part thereof, without prejudice, however, to the right of the
Indenture Trustees under any provision of this Indenture to collect and receive
all cash held by, or required to be deposited with, the Indenture Trustees
hereunder. In accordance with the terms of Section 5.03 hereof, such tolls,
rents, issues, profits, products, revenues and other income shall be applied to
pay the expenses of using, operating, leasing, controlling or managing the
Indenture Estate, and of all maintenance, insurance, repairs, replacements,
alterations, additions and improvements, and to make all payments which the
Indenture Trustees may be required or may elect to make, if any, for taxes,
assessments, insurance or other proper charges upon the Indenture Estate or any
part thereof (including the employment of appraisers, engineers and accountants
in accordance with Section 9.04(g) hereof), and all other payments which the
Indenture Trustees may be required or authorized to make under any provision of
this Indenture, including Section 5.03 hereof, as well as just and reasonable
compensation for the services of the Indenture Trustees, and of all persons
properly engaged and employed by the Indenture Trustees.

(b) Subject to Sections 8.02, 8.03 and 9.02 hereof, if an Indenture
Event of Default occurs and is continuing and the Indenture Trustees shall have
obtained possession of or title to any or all of the Indenture Estate, the
Indenture Trustees shall not be obligated to use or operate any of the
Indenture Estate or cause any of the Indenture Estate to be used or operated
directly or indirectly by itself or through agents or other representatives or
to lease, license or otherwise permit or provide for the use or operation of
any or all of the Indenture Estate by any other person unless (i) the Indenture
Trustees shall have been able to obtain insurance in kinds, at rates and in
amounts satisfactory to them in their discretion to protect the Indenture
Estate and the Indenture Trustees, as Indenture Trustees and individually,
against any and all liability for loss or damage to the Indenture Estate and
for public liability and property damage resulting from use or operation of the
Indenture Estate and (ii) funds are available in the Indenture Estate to pay
for all such insurance or, in lieu of such insurance, the Indenture Trustees
are furnished with indemnification from the Holders or any other Person upon
terms and in amounts satisfactory to the Indenture Trustees in their discretion
to protect the Indenture Estate and the Indenture Trustees, as Indenture
Trustees and individually, against any and all such liabilities.

(c) If, after the expiration of all applicable notice and cure
periods, and subject to Sections 8.02 and 8.03, there shall be a failure to
make a scheduled payment of the principal of any Mortgage Note when due, or of
the Redemption Price upon call for redemption, or if there shall be a failure
to pay the premium, if any, or interest on any Mortgage Note when the same
becomes due and payable, then (subject to the provisions hereof expressly
restricting the

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Indenture Trustees' rights or remedies herein), the Indenture Trustees may
institute, in their own names and as trustees of an express trust, a judicial
proceeding for the collection of the sums so due and unpaid on the Mortgage
Note, and may prosecute such proceeding to judgment or final decree, and may
enforce such judgment or final decree with respect to the whole amount of any
such sums so due and unpaid.

If an Indenture Event of Default occurs and is continuing, then
(subject to the provisions hereof expressly restricting the Indenture Trustees'
rights or remedies herein), the Indenture Trustees may in their discretion
proceed to protect and enforce their rights and the rights of the Holders by
such appropriate judicial proceedings as the Indenture Trustees shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.

SECTION 7.04. Additional Remedies. In addition to the remedies
provided for in Sections 7.02 and 7.03 hereof, upon the occurrence of an
Indenture Event of Default, the Indenture Trustees (subject to the provisions
hereof expressly restricting the Indenture Trustee's rights or remedies herein)
may take any or all of the following actions, at the same or at different times
(subject to the provisions hereof expressly restricting the Indenture Trustees'
rights or remedies herein):

(a) Subject to the rights of the Company under the Lease, enter upon
and take possession of any or all of the Indenture Estate, and lease and let
the Indenture Estate, or any part thereof, and receive all the rents (including
Basic Rent), issues and profits thereof which are overdue, due or to become
due, and apply the same, after payment of all reasonably necessary charges and
expenses, on account of the Mortgage Notes, and the Indenture Trustees are
hereby given and granted full power and authority to do any act or thing which
the Owner Trust might or could do in connection with the management and
operation of any or all of the Indenture Estate. This covenant shall become
effective either with or without any action brought to foreclose this Indenture
and without applying at any time for a receiver of such rents.

(b) Institute an action of mortgage foreclosure, or take other action
as the law may allow, at law or in equity, for the enforcement of this
Indenture, and proceed thereon to final judgment and execution of the entire
unpaid balance of the Mortgage Notes which are then due and payable including
costs of suit, interest and reasonable attorneys' fees. In case of any sale of
the Indenture Estate by virtue of judicial proceedings, the Indenture Estate
may be sold in one parcel and as an entirety or in such parcels, manner or
order as the Indenture Trustees in their sole discretion may elect. Subject to
the rights of the Company under the Lease, the failure to make any tenants
parties defendant to a foreclosure proceeding and to foreclose their rights
will not be asserted by the Owner Trust as a defense in any proceeding
instituted by the Indenture Trustees to realize upon the Indenture Estate.

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(c) Appoint a receiver of the rents, issues and profits of the
Indenture Estate without the necessity of proving either the depreciation or
the inadequacy of the value of the security or the insolvency of the Owner
Trust or any Person who may be legally or equitably liable to pay moneys
secured hereby, or any other statutory grounds for such appointment, and the
Owner Trust and each such Person waive such proof and hereby consent to the
appointment of a receiver.

(d) In the event that during the pendency of any Indenture Event of
Default, the Owner Trust, Owner Participant, or any Affiliate of any of them,
is in fact (not constructively) physically occupying the Indenture Estate, or
any part thereof, it is hereby agreed that the Owner Trust shall pay such
reasonable rental monthly in advance as the Indenture Trustees shall demand for
the Indenture Estate, or the part so occupied, and the use of personal
property covered by this Indenture, such amounts to be applied in accordance
with Section 5.03 of this Indenture.

(e) Apply on account of the Mortgage Notes and the interest and
premium, if any, thereon or on account of any arrearages of interest thereon,
or on account of any balance due pursuant to the Mortgage Notes or after a
foreclosure sale of the Indenture Estate, or any part thereof, all in
accordance with the provisions of Section 5.03, any unexpended moneys other
than Excepted Rights and Payments still retained by the Corporate Indenture
Trustee that were paid to the Corporate Indenture Trustee by the Company
pursuant to the Lease or otherwise or by the Owner Trust for the payment of, or
as security for the payment of, taxes, assessments, municipal or governmental
rates, charges, liens, water or sewer rents, or insurance premiums, if any, or
in order to secure the performance of some other act by or obligation of the
Owner Trust or the Company.

(f) Exercise any and all other rights and remedies granted under this
Indenture or now or hereafter existing in equity, at law, by virtue of statute
or otherwise.

(g) With or without entry, personally or by their agents or
attorneys, sell the Indenture Estate and all estate, right, title, interest,
claim and demand therein and right of redemption thereof at one or more private
or public sales, as an entirety or in parcels and at such times and places and
upon such terms as may be specified in the notice or notices of sale to be
given to the Owner Trust or as may be required by law. Any number of sales may
be conducted from time to time. The power of sale shall not be exhausted by
any one or more such sales as to any part of the Indenture Estate remaining
unsold, but shall continue unimpaired until all of the Indenture Estate shall
have been sold or the Mortgage Notes and all indebtedness of the Owner Trust
secured hereby shall have been paid. In addition, as to each Property, the
Indenture Trustees will have the statutory power of sale, if any, as may be
provided by the law of the state in which such Property is located. As to each
Property this Indenture is made upon the statutory conditions provided for by
the laws of the state in which such Property is located. The Indenture
Trustees may postpone the sale of the Indenture Estate by public announcement
at the

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time and place of such sale, and from time to time thereafter may further
postpone such sale by public announcement made at the time of sale fixed by the
preceding postponement.

(h) Notwithstanding anything to the contrary provided or implied in
any of the Indenture Documents, if either of the Indenture Trustees is or
becomes a competitor to the Company, it shall not be barred or restricted in
any manner in enforcing any of the remedies provided in this Indenture.

SECTION 7.05. Indenture Trustees May File Proofs of Claim. In case
of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon the Lease or the
Owner Trust or any other obligor on the Mortgage Notes or the property of the
Company, the Owner Trust or of such other obligor or their creditors, the
Indenture Trustees (irrespective of whether the principal of the Mortgage Notes
shall then be due and payable as therein expressed or by declaration in
accordance with Section 7.02 hereof, or otherwise, and irrespective of whether
the Indenture Trustees shall have made any demand for the payment of overdue
principal, premium, if any, or interest) shall be entitled and empowered, by
intervention in such proceeding or otherwise,

(i) to file and prove such proofs of claim and to file such
other papers or documents as may be necessary or advisable in order to
have the claims of the Indenture Trustees (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Indenture Trustees, their agents and counsel) and of the Holders
allowed in such judicial proceeding, and

(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator (or
other similar official) in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Indenture Trustees, and in the event
that the Indenture Trustees shall consent to the making of such payments
directly to the Holders, to pay to the Indenture Trustees any amount due to
them for the reasonable compensation, expenses, disbursements and advances of
the Indenture Trustees, their agents and counsel, and any other amounts due to
the Indenture Trustees in connection therewith.

Nothing herein contained shall be deemed to authorize the Indenture
Trustees to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting
the Mortgage Notes or the rights of any Holder thereof, or to authorize the
Indenture Trustees to vote in respect of the claim of any Holder in any such
proceeding.

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SECTION 7.06. Indenture Trustees May Enforce Claims Without
Possession of the Mortgage Notes; Represent Holders. All rights of action and
claims under this Indenture or the Mortgage Notes may be prosecuted and
enforced by the Indenture Trustees without the possession of any of the
Mortgage Notes or the production thereof in any proceeding relating thereto,
and any such proceeding instituted by the Indenture Trustees shall be brought
in their own names as trustees of an express trust, and any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Indenture Trustees, their agents
and counsel, be for the ratable benefit of the Holders of the Mortgage Notes.
In any proceedings brought by the Indenture Trustees (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Indenture Trustees shall be a party) the Indenture Trustees shall be held to
represent all the Holders, and it shall not be necessary to make any Holders
parties to such proceedings.

SECTION 7.07. Application of Money Collected. Subject to the
provisions of Section 7.03(a) hereof, any money collected by the Indenture
Trustees pursuant to this Article (other than Excepted Rights and Payments)
shall be promptly applied as specified in Section 5.03 hereof at, in the case
of payment to the Holders, the date or dates fixed by the Corporate Indenture
Trustee which shall in no event be later than the next succeeding Distribution
Date and, in case of the distribution of such money on account of principal,
premium, if any, or interest, upon surrender thereof if fully paid.

SECTION 7.08. Limitation on Suits. No Holder of a Mortgage Note
shall have any right to institute any proceeding, judicial or otherwise, with
respect to this Indenture, or for the appointment of a receiver or trustee, or
for any other remedy hereunder, unless:

(1) such Holder has previously given written notice to the
Indenture Trustees of a continuing Indenture Event of Default;

(2) the Holders of 25% in unpaid principal amount of the
Outstanding Mortgage Notes shall have made written request to the
Indenture Trustees to institute proceedings in respect of such
Indenture Event of Default in their own names as Indenture Trustees
hereunder (unless the Holders of a majority in aggregate unpaid
principal amount of the Outstanding Mortgage Notes shall object in
writing to such proceedings within 30 days of such request);

(3) such Holder or Holders have offered to the Indenture
Trustees reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request;

(4) the Indenture Trustees for 60 days after their receipt of
such notice, request and offer of indemnity have failed to institute
any such proceeding; and

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(5) no direction inconsistent with such written request has
been given to the Indenture Trustees during such 60 day period by the
Holders of a majority in Outstanding principal amount of the Mortgage
Notes;

it being understood and intended that no one or more Holders of the Mortgage
Notes shall have any right in any manner whatever by virtue of, or by availing
of, any provision of this Indenture to affect, disturb or prejudice the rights
of any other Holders of the Mortgage Notes, or to obtain or to seek to obtain
priority or preference over any other Holders or to enforce any right under
this Indenture, except in the manner herein provided and for the ratable
benefit of all the Holders.

SECTION 7.09. Unconditional Right of Holders to Receive Principal,
Premium, if any, and Interest. Notwithstanding any other provision in this
Indenture, but subject to Section 2.05, any Holder shall have the right, which
is absolute and unconditional, to receive payment of the principal of and
(subject to Section 2.04 hereof) interest on its Mortgage Notes as expressed
therein (or, in the case of redemption, on the Redemption Date) and of the
premium, if any, on such Mortgage Notes from such source when due and payable
and to institute suit for the enforcement of any such payment, and such right
shall not be impaired without the consent of such Holder, provided that no
Holder shall have the right to enforce any judgment or otherwise exercise
remedies against any Excepted Rights and Payments, it being understood and
intended that no one or more Holders of the Mortgage Notes shall have any right
in any manner whatever by virtue of, or by availing of, any provision of this
Indenture to affect, disturb or prejudice the rights of any other Holders of
the Mortgage Notes or to obtain or to seek to obtain priority or preference
over any other Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the ratable benefit of all the Holders.

SECTION 7.10. Restoration of Rights and Remedies. If the Indenture
Trustees have, or any Holder has, instituted any proceeding to enforce any
right or remedy or in the exercise of any power under this Indenture by
foreclosure, entry or otherwise and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Indenture
Trustees or to such Holder, then and in every case the Owner Trust and the
Holders shall, subject to any determination in such proceeding, be restored
severally and respectively to their former positions and rights hereunder,
including the position and rights of the Indenture Trustees with respect to the
Indenture Estate, and thereafter all rights, powers and remedies of the
Indenture Trustees and the Holders shall continue as though no such proceeding
had been instituted.

SECTION 7.11. Rights and Remedies Cumulative and Subject to
Applicable Law. Except as may otherwise expressly be provided to the contrary
herein, no right, power or remedy herein conferred upon or reserved to the
Indenture Trustees or to the Holders is intended to be exclusive of any other
right, power or remedy and every right, power and remedy shall, to the extent
permitted by law, be cumulative and concurrent and in addition to every other
right, power and remedy given hereunder or now or hereafter existing at law or
in equity or

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otherwise and may be exercised from time to time and as often and in such order
as may be deemed expedient by the Indenture Trustees or the Holders. The
exercise of any right, power or remedy shall not be construed as a waiver of
the right to exercise at the same time or thereafter any other right, power or
remedy. The exercise of any right, power or remedy shall be subject to
applicable law.

SECTION 7.12. Delay or Omission Not Waiver. (a) No delay or omission
of the Indenture Trustees or of any Holder to exercise any right, power or
remedy accruing upon any Indenture Event of Default shall impair any such
right, power or remedy or constitute a waiver of any such Indenture Event of
Default or an acquiescence therein. Every right, power and remedy given by
this Article or by law to the Indenture Trustees or the Holders may be
exercised from time to time, and as often as may be deemed expedient, by the
Indenture Trustees or by the Holders, as the case may be.

(b) Notwithstanding anything to the contrary contained herein, so
long as a Pass-Through Trustee is the registered Holder of any Mortgage Note
hereunder, the Indenture Trustees shall not be authorized or empowered to
acquire title to all or any portion of the Indenture Estate or to take any
action with respect to all or any portion of the Indenture Estate so acquired
by it if such acquisition or action would cause the related Pass-Through Trust
to fail to qualify as a "grantor trust" for Federal income tax purposes.

SECTION 7.13. Control by Holders. The Holders of a majority of the
aggregate unpaid principal amount of the Outstanding Mortgage Notes shall have
the right, during the continuance of an Indenture Event of Default,

(1) to require the Indenture Trustees to proceed to enforce
this Indenture, either by judicial proceedings for the enforcement of
the payment of the Mortgage Notes and the foreclosure of this
Indenture and the sale of the Indenture Estate or, at the election of
the Indenture Trustees, by the exercise of the power of entry and/or
sale or other remedies hereby conferred, and

(2) to direct the time, method and place of conducting any
proceeding for any remedy available to the Indenture Trustees or
exercising any trust or power conferred on the Indenture Trustees;
provided that

(A) such direction shall not be in conflict with any
rule of law or with this Indenture and shall not unduly
prejudice the rights of Holders other than those constituting
such majority, and

(B) the Indenture Trustees may take any other action
deemed proper by the Indenture Trustees which is not
inconsistent with such direction.

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SECTION 7.14. Waiver of Past Defaults. The Holders of not less than
a majority of the aggregate unpaid principal amount of the Outstanding Mortgage
Notes may on behalf of all Holders waive any past default hereunder and its
consequences, except a default

(1) in the payment of the principal of, premium, if any, or
interest on the Mortgage Notes; or

(2) in respect of a covenant or provision hereof which
expressly under this Indenture cannot be modified or amended without
the consent of each Holder affected thereby.

Upon any such waiver, such default shall cease to exist, and any
Indenture Event of Default arising therefrom shall be deemed to have been cured
for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.

SECTION 7.15. Waiver of Appraisement; Laws. (a) The Owner Trust
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any appraisement, valuation, stay, extension or
redemption law wherever enacted, now or at any time hereafter in force, in
order to prevent or hinder the enforcement of this Indenture or the absolute
sale of the Indenture Estate, or any part thereof, or the possession thereof by
any purchaser at any sale under this Article; and the Owner Trust, for itself
and all who may claim under it, so far as it now or hereafter lawfully may,
hereby waives the benefit of all such laws.

(b) Subject to the rights of the Company under the Lease, the Owner
Trust, for itself and all who may claim under it, so far as it now or hereafter
lawfully may, hereby waives and releases:

(i) All benefit that might accrue to the Owner Trust by
virtue of any present or future law exempting the Indenture Estate, or
any part of the proceeds arising from any sale of the Indenture
Estate, from attachment, levy or sale on execution; and

(ii) Exemption from civil process; and

(iii) Redemption or extension of time for payment; and

(iv) Any right to have the Indenture Estate marshalled.

The Owner Trust further agrees that any court having jurisdiction to
foreclose this Indenture may order the sale of the Indenture Estate as an
entirety.

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(c) If any law in this Section referred to and now in force, of which
the Owner Trust or its successors might take advantage despite this Section,
shall hereafter be repealed or cease to be in force, such law shall not
thereafter be deemed to constitute any part of the contract herein contained or
to preclude the application of this Section.

SECTION 7.16. Special State Law Addendum. In addition to the
remedies set forth above and elsewhere herein, the Indenture Trustees shall
have those additional rights and remedies set forth in the Special State Law
Addendum, if any.

SECTION 7.17. No Cross-Collateralization. Notwithstanding anything
in this Indenture to the contrary, although the parties hereto have entered
into the Other Indentures pursuant to which the Other Mortgage Notes were
issued and the Owner Trust's interests as lessor under leases with the Company
were assigned (the "Other Leases") and which contain similar or identical
provisions, the parties hereto and thereto desire and intend that (i) each of
such documents (or any documents executed in furtherance thereof or pursuant
thereto) shall be, and shall be deemed to be, separate and independent from
this Indenture and the Mortgage Notes secured hereby (or any documents executed
in furtherance hereof or pursuant hereto), and (ii) none of such documents (or
any documents executed in furtherance thereof or pursuant thereto) or the real
or personal property encumbered thereby shall be, or shall be deemed to be,
cross-collateralized or cross-defaulted with this Indenture (or any documents
executed in furtherance hereof or pursuant hereto), the Mortgage Notes secured
hereby or the Property encumbered hereby.

In the event that the Indenture Trustees receive any payments or funds
from the Company which are not specifically identified by the Company, or
specifically sought by the Indenture Trustees, for application to the
obligations owed under or secured by this Indenture, any Other Indenture or any
Company Indenture, and such payment(s) or funds are insufficient to satisfy all
amounts due under this Indenture, all Other Indentures and any Company
Indentures, said payment(s) or funds shall be applied pro rata among the
obligations then due and payable under this Indenture, the Other Indentures and
any Company Indentures, based on the amounts payable under each such Indenture,
the Other Indentures and any Company Indentures.

ARTICLE VIII

RIGHTS OF THE OWNER TRUST
AND THE OWNER PARTICIPANT

SECTION 8.01. Certain Rights of Owner Trust and Owner Participant.
Notwithstanding any other provision of this Indenture, including the Granting
Clauses or any of the other Indenture Documents, but subject always to the
final paragraph of Sections 8.01 and 12.07(c), the following rights ("Excepted
Rights", collectively with Excepted Payments herein referred to as "Excepted
Rights and Payments") shall be reserved to the Owner Trust or the Owner

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Participant, as the case may be (as separate and independent rights), to the
extent described herein:

(a) at all times prior to the completion of the foreclosure
of the Lien of this Indenture, the Owner Trust shall have the right,
independently of, and not to the exclusion of, the Indenture Trustees,
(i) to receive from the Company all notices, certificates, reports,
filings, opinions of counsel and other documents and all information
which the Company is permitted or required to give or furnish to the
Owner Trust pursuant to any Indenture Document, (ii) to inspect the
Property to the extent provided in the Lease and to enforce
performance or observance by the Company of any such rights by the
exercise of the right to proceed by appropriate court actions, either
at law or in equity or to recover damages for the breach thereof,
(iii) to receive estoppel certificates from the Company under the
Lease, (iv) to give notices of non-performance under the Lease and (v)
to seek legal or equitable remedies to require the Company to maintain
required insurance coverage under the Lease;

(b) so long as no Indenture Event of Default shall have
occurred and be continuing (other than an Indenture Event of Default
caused by a Lease Event of Default or a Lease Default) and there shall
have occurred no acceleration of the Mortgage Notes, the Owner Trust
shall have the right to the exclusion of the Indenture Trustees to do
all of the following with respect to the Property: (i) select or
approve as satisfactory any accountants, engineers or counsel to
render services for or issue opinions to the Owner Trust pursuant to
express provisions of the Indenture Documents and to make all
decisions and determinations and take all actions in respect of its
tax options under any of the Indenture Documents; (ii) provided that
the Owner Trust shall have complied with Section 6.06, to make any
determination with respect to the Company's purchase options under the
Lease (including the right to accept or reject Tenant's Purchase Offer
or Notice of Termination); and (iii) to grant and release easements,
licenses, rights of way, or releases of the Property that satisfy the
criteria set forth in [CLAUSES (I)-(V), INCLUSIVE, OF ARTICLE 13 OF
THE LEASE];

(c) provided no Indenture Event of Default has occurred and
is continuing, the right of the Owner Trust, (but not to the exclusion
of the Indenture Trustees and only with the prior agreement from the
Indenture Trustee), to request payment of rent (other than Basic Rent)
due and owing to the Owner Trust or the Owner Participant;

(d) provided no Indenture Event of Default shall have
occurred and be continuing, the right to request payment of (i) any
portion of Basic Rent due and payable under the Lease in excess of the
amount thereof necessary to pay regularly scheduled payments of
principal and interest on the Mortgage Notes and (ii) any portion of
the purchase price payable by the Company under [ARTICLE 40 OF THE
LEASE] upon the closing under the Tenant's Purchase Offer and any
portion of the amount payable by the Company under [ARTICLE 39 OF THE
LEASE], in each case to the extent the same exceeds

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the amount required to pay all principal and interest due and owing on
the Mortgage Notes as of the related Redemption Date and the expenses
of the Indenture Trustees in connection therewith;

(e) subject to Section 3.10, and upon the agreement of the
Indenture Trustees and the Owner Trust, prior to acceleration of the
Mortgage Notes, the rights of the Owner Trust to make petitions,
motions and decisions in any bankruptcy, insolvency or similar
proceedings involving the Company;

(f) prior to the completion of the foreclosure of the Lien of
this Indenture, the Owner Trust shall have the right to do all of the
following with respect to the Property: (i) enter into with or
provide to the Company or any other Person, certificates and other
documents or information which is required by any Indenture Documents
to be given by the Owner Trust; and (ii) to make Rental Adjustments in
accordance with [ARTICLE 3(C) OF THE LEASE], subject, in all cases, to
the requirement set forth in said [ARTICLE 3(C)] that regard the
sufficiency of the Company's obligations under the Lease to satisfy
amounts required to be paid hereunder and under the other Indenture
Documents; and

(g) each of the Owner Trust, the Trust Company, [INDIVIDUAL
OWNER TRUSTEE] and the Owner Participant shall have the right, to the
exclusion of the Indenture Trustees, to demand, collect, sue for, give
notices, make determinations, exercise all rights with respect to or
otherwise receive and enforce the payment of Excepted Rights and
Payments (but, with respect to Excepted Rights, only for so long as
the same constitute Excepted Rights) due and payable to it and to seek
legal or equitable remedies to require the Company to perform or
comply with any of its obligations which otherwise constitute Excepted
Rights and Payments (but, with respect to Excepted Rights, only for so
long as the same constitute Excepted Rights).

Notwithstanding the foregoing provisions of this Section 8.01, but subject
always to the right of the Owner Trust or the right of the Owner Participant on
behalf of the Owner Trust under Sections 8.02 and 8.03 hereof, the Indenture
Trustees shall at all times have the right, to the exclusion of the Owner Trust
and the Owner Participant, to (A) demand, collect, sue for or otherwise receive
and enforce the payment of all Basic Rent and Additional Rent due and payable
under the Lease (other than any thereof constituting an Excepted Payment), and
to bring an action thereon, (B) declare the Lease to be in default and (C)
subject only to the provisions of Section 7.02(a) hereof, exercise the remedies
set forth in [ARTICLE 21 OF THE LEASE] and in Article VII hereof.

SECTION 8.02. Owner Trust's Right to Elect to Redeem and to Provide
for Payment. (a) The Owner Trust may, but shall be under no obligation to,
redeem all but not less than all of the Mortgage Notes then Outstanding at any
time after a Lease Event of Default (other than a Lease Event of Default
related to Excepted Payments) has occurred and is continuing and

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provided that no Indenture Event of Default (that does not arise out of such
Lease Event of Default) has occurred and is continuing.

Such redemption shall be effected by the Owner Trust (1) notifying the
Indenture Trustees of such election, which notice in order to be effective
shall state that it is irrevocable and shall designate the Redemption Date
(which date shall be the next occurring Distribution Date following such notice
to the Indenture Trustees, unless such date is less than 25 days after the
giving of such notice, in which event the Redemption Date shall be the second
occurring Distribution Date after the giving of such notice), and (2)
irrevocably depositing with the Corporate Indenture Trustee, at the time of the
delivery of such notice and in the manner provided for in Section 6.06 hereof,
as the case may be, the sum of amounts contemplated by clause "first" under
Section 5.03 and the aggregate unpaid principal amount of and accrued and
unpaid interest (through the Redemption Date) on all such Mortgage Notes,
together with the Make-Whole Premium if provided for in Section 8.02(b), after
taking into account amounts then held by the Indenture Trustees for
distribution under Section 5.03. The Indenture Trustees shall notify each
Holder of such redemption in the manner provided for in Section 6.05 hereof.
If the Owner Trust shall not cause the redemption of the Mortgage Notes to
occur and all or a portion of the Indenture Estate is liquidated through
foreclosure or otherwise, all amounts received from the sale of the Indenture
Estate shall be paid and distributed in the manner provided in Section 5.03.
Further, and without limiting the foregoing, if a Lease Event of Default shall
have occurred and be continuing, provided that no Indenture Event of Default
that does not arise out of a Lease Event of Default has occurred and is
continuing, the Corporate Indenture Trustee shall not accelerate the Mortgage
Notes and shall not terminate the Lease or terminate the Company's right to
possession of the Property until the expiration of 20 days after notice to the
Owner Trust of the Corporate Indenture Trustee's intention to do so, and if the
Owner Trust shall deliver the notice of redemption and shall deposit the
applicable redemption amount pursuant to this Section 8.02(a) and the Mortgage
Notes shall be redeemed, the Corporate Indenture Trustee shall not accelerate
the Mortgage Notes and shall not terminate the Lease or terminate the Company's
right to possession of the Property.

(b) The Redemption Price payable by the Owner Trust in connection
with a redemption described in Section 8.02(a) shall include the Make-Whole
Premium only if the Owner Trust's notice of such redemption (and the concurrent
deposit of the Redemption Price) in accordance with Section 8.02(a) is given
prior to the earlier of (i) acceleration of the Mortgage Notes pursuant to
Section 7.02 hereof or (ii) in any case involving a Lease Event of Default
described in clauses (i), (ii) or (v) of Article 20 of the Lease (a "Monetary
Default"), the expiration of a period of 180 days following the occurrence of
the Lease Event of Default. If the redemption of the Mortgage Notes is effected
after (i) such acceleration or (ii) in the case of a Monetary Default, the
expiration of such 180 day period, whichever is earlier, then the Redemption
Price shall be the amounts described in Section 8.02(a), but without the
Make-Whole Premium, and shall be effected by the same form of notice (and
concurrent deposit of the Redemption Price (other than the Make-Whole Premium)
described in Section 8.02(a)). The Owner Participant may, on behalf of the
Owner Trust, give the notice of redemption, and make

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payments permitted to be made by the Owner Trust, under this Section 8.02.
Notwithstanding anything to the contrary herein or in any other Indenture
Documents, it is acknowledged and agreed by the Owner Trust that the Company
shall have no obligation under the Lease or any other Indenture Document for
any Make-Whole Premium payable under this Section 8.02(b) for any redemption by
the Owner Trust pursuant to Section 8.02(a) even if such premium shall be paid
by the Owner Trust.

(c) From and after the deposit by the Owner Trust of the applicable
Redemption Price (and any other amounts required to be deposited under Section
8.02(a) and (b)) with the Corporate Indenture Trustee, the Indenture Trustees
shall not declare the Lease in default or exercise any of the rights, powers or
remedies pursuant to [ARTICLE 21 THEREOF].

SECTION 8.03. Certain Rights of Owner Trust and Owner Participant.
(a) If (i) the Company shall fail to make any payment of Basic Rent under the
Lease and such failure shall constitute a Lease Event of Default, and (ii) the
Owner Trust shall not have previously effected on behalf of the Company three
such consecutive payments or five such payments cumulatively, then the Owner
Trust may (but need not) pay to the Indenture Trustees, at any time prior to
the expiration of a period of 10 days from Owner Trust's receipt of written
notice of such failure (prior to the expiration of which 10 day period the
Indenture Trustees by virtue of such default shall not exercise any of the
rights, power or remedies pursuant to [ARTICLE 21 OF THE LEASE] or Article VII
hereof), an amount equal to the full amount of such payment of Basic Rent,
together with any interest due thereon on account of the delayed payment
thereof, and such payment by the Owner Trust shall be deemed to cure any
Indenture Event of Default which arose from such failure of the Company (but
such cure shall not relieve the Company of any of its obligations).
(b) If the Company shall fail to perform or observe any covenant,
condition or agreement to be performed or observed by it under the Lease,
including any payment of rent or other sums due and payable other than Basic
Rent, which failure constitutes a Lease Event of Default, and if (but only if)
the performance or observance thereof can be effected by the payment of money
alone (it being understood that actions such as the obtaining of insurance and
the procurement of maintenance services can be so effected), then the Owner
Trust may (but need not) pay to the Indenture Trustees (or to such other person
as may be entitled to receive the same), at any time prior to the expiration of
a period of 10 days after the expiration of the notice or grace period, if any,
provided with respect to such failure on the part of the Company in [ARTICLE 20
OF THE LEASE] (prior to the expiration of which 10-day period the Indenture
Trustees by virtue of such Lease Event of Default shall not exercise any of the
rights, powers or remedies pursuant to [ARTICLE 21 THEREOF] or Article VII
hereof), all sums necessary to effect the performance or observance of such
covenant or agreement of the Company, together with any interest due thereon on
account of the delayed payment thereof, and such payment by the Owner Trust
shall be deemed to cure any Indenture Event of Default which arose from such
failure of the Company (but such cure shall not relieve the Company of any of
its obligations).

(c) If the Company shall fail to perform or observe any covenant,
condition or agreement to be performed or observed by it under the Lease other
than those which can be effected by the

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payment of money alone and such failure constitutes a Lease Event of Default
and the same is reasonably susceptible to cure by the Owner Trust, then the
Owner Trust may (but need not) take such action at any time prior to the
expiration of a period of 30 days after the expiration of the notice or grace
period, if any, provided with respect to such failure on the part of the
Company in [ARTICLE 20 OF THE LEASE]; provided, however, that if within such
grace or cure period, the Owner Trust promptly commences to cure and thereafter
pursues to conclusion the curing of such default, diligently in good faith
(such period, which shall in no event exceed 90 days, the "Extended Cure
Period"), then the Indenture Trustees will not take any action to exercise any
of their remedies (including acceleration of the Mortgage Notes) or take any
action to effect a termination of the Lease or reenter or take possession of
the Property as a consequence of such default during the period of such cure
(prior to the expiration of which 30-day period and, if applicable, the
Extended Cure Period, the Indenture Trustees by virtue of such Lease Event of
Default shall not exercise any of the rights, powers or remedies pursuant to
[ARTICLE 21 OF THE LEASE] or Article VII hereof), necessary to effect the
performance or observance of such covenant or agreement of the Company, and
such action shall be deemed to cure any Indenture Event of Default which arose
from such failure of the Company (but such cure shall not relieve the Company
of any of its obligations).

(d) Upon any payment of Basic Rent by the Owner Trust in accordance
with Section 8.03(a), or upon any payment of any other sums or incurrence of
any expenses by the Owner Trust in accordance with Section 8.03(b) or (c), the
Owner Trust shall, to the extent of such payments, be subrogated, in the case
of any such payment in accordance with Section 8.03(a), to the rights of the
Indenture Trustees as assignee hereunder of the Owner Trust, or, in the case of
any payment or the incurrence of any expenses, in accordance with Section
8.03(b) or (c), to the rights of the Indenture Trustees or such other Person,
as the case may be, which actually received such payment or for whose benefit
such expenses were incurred, as the case may be (and in the case of a payment,
any interest due thereon on account of the delayed payment thereof), and shall
be entitled to receive such payment or reimbursement upon its receipt by the
Indenture Trustees or such other Person, as aforesaid (but in each case only if
all amounts of principal of, and premium and interest on, the Mortgage Notes at
the time due and payable, together with interest due thereon on account of the
delayed payment thereof shall have been paid in full); provided that the Owner
Trust shall not attempt to recover any such amount paid by it on behalf of the
Company pursuant to this Section 8.03 except by demanding of the Company
payment of such amount or by commencing an action against the Company to
require the payment of such amount, and not by the exercise of remedies under
[ARTICLE 21 OF THE LEASE].

(e) Notwithstanding the foregoing provisions of this Section 8.03 or
anything else that may be contained herein or in any other Indenture Document
(or that may be available at law or equity) to the contrary, it is agreed that
except as expressly stated in Article VII or this Section 8.03, in
consideration for the rights expressly granted above in this Section 8.03 and
elsewhere in this Indenture and the other Indenture Documents, no other cure
periods shall be provided to the Owner Trust with respect to any Indenture
Event of Default (including any Lease

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Event of Default), regardless of whether the same is attributable in whole or
in part to the Company's default under the Lease. Without limiting the
foregoing but subject to Section 8.02, it is acknowledged that the Owner Trust
shall not have the right to cure or attempt to cure any event described in
[ARTICLE 20(V) OF THE LEASE].

(f) Provided that no Indenture Event of Default that does not
arise out of a Lease Event of Default has occurred and is continuing, (i) prior
to the expiration of the 10-day period referred to in Section 8.03(a) (provided
there remains any cure right available to the Owner Trust under Section
8.03(a)), (ii) prior to the expiration of the 10-day period referred to in
Section 8.03(b), and (iii) prior to the expiration of the Extended Cure Period,
in each case to the extent applicable, the Indenture Trustees shall not
accelerate the Mortgage Notes or take any action to terminate the Lease or
dispossess the Company from the Property.

SECTION 8.04 Company Ownership of Owner Trust. Notwithstanding
anything herein to the contrary, if the Company shall become the Owner
Participant or shall otherwise control the Owner Trust, whether pursuant to the
terms of any Indenture Document or otherwise, then the rights afforded to the
Owner Trust under Sections 8.01, 8.02 and 8.03 shall not be applicable.

ARTICLE IX

THE INDENTURE TRUSTEES

SECTION 9.01. Acceptance of Trusts. The Indenture Trustees hereby
accept the trusts imposed upon them by this Indenture, and covenant and agree
to perform the same as expressed herein and agree to receive and disburse all
moneys constituting part of the Indenture Estate in accordance with the terms
hereof.

SECTION 9.02. Duties and Responsibilities of the Indenture Trustees.

(a) Except during the continuance of an Indenture Event of Default,

(1) the Indenture Trustees undertake to perform such duties
and only such duties as are specifically set forth in this Indenture,
and no implied covenants or obligations shall be read into this
Indenture against the Indenture Trustees, and the Indenture Trustees
agree that they will not manage, control, use, sell, dispose of or
otherwise deal with any part of the Indenture Estate, except as
required by the terms of the Lease and as otherwise provided herein;
and

(2) in the absence of bad faith on their part, the Indenture
Trustees may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Indenture Trustees and

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conforming to the requirements of this Indenture; but in the case of
any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Indenture Trustees, the
Indenture Trustees shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Indenture.

(b) In case an Indenture Event of Default has occurred and is
continuing, the Indenture Trustees shall exercise such of the rights and powers
vested in them by this Indenture, and shall use the same degree of care and
skill in their exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.

(c) No provision of this Indenture, including Section 9.04, shall be
construed to relieve the Indenture Trustees from liability for their own
negligent action, their own negligent failure to act, or their own bad faith or
willful misconduct, except that

(1) this subsection (c) shall not be construed to limit the
effect of subsection (a) of this Section;

(2) the Indenture Trustees shall not be liable for any error
of judgment made in good faith by a Responsible Officer of the
Corporate Indenture Trustee, unless it shall be proved that the
Corporate Indenture Trustee was negligent in ascertaining the
pertinent facts;

(3) the Indenture Trustees shall not be liable with respect
to any action taken or omitted to be taken by them in good faith in
accordance with the direction of the Holders of not less than a
majority (or such other amount as may be specified herein) of the
aggregate unpaid principal amount of the Outstanding Mortgage Notes
relating to the time, method and place of conducting any proceeding
for any remedy available to the Indenture Trustees, or exercising any
trust or power conferred upon the Indenture Trustees, under this
Indenture; and

(4) no provision of this Indenture shall require the
Indenture Trustees to expend or risk their own funds or otherwise
incur any financial liability in the performance of any of their
duties hereunder, or in the exercise of any of their rights or powers,
if they shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to them.

(d) Whether or not herein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Indenture Trustees shall be subject to the
provisions of this Section.

SECTION 9.03. Notice of Defaults. Upon the occurrence of any
Indenture Default hereunder actually known to it, the Corporate Indenture
Trustee shall (x) promptly send notice thereof to the Company, the Owner Trust
and the Owner Participant, and (y) within 30 days

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after the occurrence thereof, transmit by mail notice of such Indenture
Default to all Holders, as their names and addresses appear in the Register,
unless such Indenture Default shall have been cured or waived; provided, that
in the case of any default of the character specified in Section 7.01(c) or
7.01(e) hereof no such notice to Holders shall be given until at least 30 days
after the occurrence thereof, and provided further, that, except in the case of
a default in the payment of the principal of, premium, if any, or interest on
the Mortgage Notes or in the payment of any other amounts due with respect to
the Mortgage Notes, the Corporate Indenture Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee or a trust committee of directors and/or Responsible Officers of the
Corporate Indenture Trustee in good faith determines that the withholding of
such notice is in the interest of the Holders. Copies of notices of any
Indenture Events of Default arising under Section 7.01(a) or (b) hereof shall
be provided to Moody's and Standard & Poor's at their respective principal
offices in New York, New York.

SECTION 9.04. Certain Rights of the Indenture Trustees.

(a) The Indenture Trustees may rely and shall be protected in acting
or refraining from acting upon any resolution, Officer's Certificate or any
other certificate, statement, instrument, opinion, report, notice, request,
consent, order, bond, debenture, note, coupon, security or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties.

(b) Any request, direction, order or demand of the Owner Trust
mentioned herein shall be sufficiently evidenced by an Officer's Certificate
(unless other evidence in respect thereof be herein specifically prescribed)
upon which the Indenture Trustees may rely, subject to the provisions of
Section 9.02 and the other provisions of this Section, to prove or establish a
matter set forth therein.

(c) The Indenture Trustees may consult with counsel and any advice or
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted to be taken by it hereunder in
good faith and in accordance with such advice or Opinion of Counsel.

(d) The Indenture Trustees shall be under no obligation to exercise
any of the trusts or powers vested in them by this Indenture at the request,
order or direction of any of the Holders pursuant to the provisions of this
Indenture, unless such Holders shall have offered to the Indenture Trustees
reasonable security or indemnity against the costs, expenses and liabilities
which might be incurred therein or thereby.

(e) The Indenture Trustees shall not be liable for any action taken
or omitted by them in good faith and believed by them to be authorized or
within the discretion, rights or powers conferred upon them by this Indenture.

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(f) Prior to the occurrence of an Indenture Event of Default
hereunder and after the curing or waiving of all Indenture Events of Default,
the Indenture Trustees shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, appraisal, bond,
debenture, note, coupon, security, or other paper or document unless requested
in writing to do so by the Holders of not less than a majority in aggregate
unpaid principal amount of the Outstanding Mortgage Notes; provided that, if
the payment within a reasonable time to the Corporate Indenture Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of
such investigation is, in the opinion of the Corporate Indenture Trustee, not
reasonably assured to the Corporate Indenture Trustee by the security afforded
to it by the terms of this Indenture, the Corporate Indenture Trustee may
require reasonable indemnity against such expenses or liabilities as a
condition to proceeding. The reasonable expenses of every such examination
shall be paid by the Owner Trust or, if paid by the Indenture Trustees or any
predecessor trustee, shall be repaid by the Owner Trust upon demand.

(g) The Indenture Trustees may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys not regularly in its employ and the Indenture Trustees
shall not be responsible for any misconduct or negligence (other than
misconduct or negligence in the handling and transfer of funds or holding of
investments hereunder) on the part of any such agent or attorney appointed with
due care by it hereunder.

(h) None of the provisions contained in this Indenture shall require
the Indenture Trustees to expend or risk their own funds or otherwise incur
personal financial liability in the performance of any of their duties or in
the exercise of any of their rights or powers, if the Indenture Trustees shall
have determined in good faith that the repayment of such funds or adequate
indemnity against such liability is not reasonably assured to them.

SECTION 9.05. Issuance of Mortgage Notes or Recording; Warranty. The
Indenture Trustees make no representation as to the value or condition of the
Indenture Estate or any part thereof, as to the title of the Owner Trust
thereto or as to the security afforded thereby or hereby, or as to the validity
or genuineness of any securities at any time pledged or deposited with the
Indenture Trustees hereunder (other than, in the case of the Corporate
Indenture Trustee, Permitted Investments with the Corporate Indenture Trustee
in its individual capacity). In addition, the Indenture Trustees make no
representation or warranty as to the validity, sufficiency, legality or
enforceability of the Trust Agreement, this Indenture, the Mortgage Notes, the
Lease, the Owner Participation Agreement or any other Indenture Document or as
to the correctness of any statement contained in any thereof, except to the
extent that any such statement was or is expressly made by the Indenture
Trustees, provided that the Indenture Trustees hereby represent and warrant
that this Indenture has been executed and delivered by the Indenture Trustees
(in the case of the Corporate Indenture Trustee, by one of its officers who is
duly authorized to execute and deliver such document on its behalf). Subject
to Section 9.13 hereof, the Indenture Trustees shall have no responsibility
with respect to the recording,

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rerecording, filing or re-filing, under the laws of any jurisdiction, of this
Indenture or any other document or statement that may be required or permitted
to be recorded, rerecorded, filed or refiled under any such laws to protect the
security interests created by or pursuant to the Granting Clauses of this
Indenture or Article XVI or XVII hereof.

SECTION 9.06. Indenture Trustees, Owner Trustees and Agents May Hold
Mortgage Notes; Collections, etc. Any of the Indenture Trustees or Owner
Trustees, in their individual capacities, or any agent or affiliate of the
Owner Trustees or the Indenture Trustees, in its individual or any other
capacity, may become the owner or pledgee of any Mortgage Notes with the same
rights they would have if they were not the Indenture Trustees, the Owner
Trustees or such agent or affiliate and may otherwise deal with the Owner Trust
and receive, collect, hold and retain collections from the Owner Trust with the
same rights they would have if they were not the Indenture Trustees, the Owner
Trustees or such agent or affiliate (subject to the provisions of Section
10.04).

SECTION 9.07. Moneys Held by Indenture Trustees. Subject to Sections
5.08 and 13.03 hereof, all moneys received by the Indenture Trustees (or their
agent or attorney-in-fact) shall, until used or applied as herein provided, be
held in trust for the purposes for which they were received, but need not be
segregated from other funds except to the extent required by mandatory
provisions of law. Neither the Owner Trust nor, subject to Section 5.08, the
Indenture Trustees nor any agent thereof shall be under any liability for
interest on any moneys received by it hereunder except, in the case of the
Corporate Indenture Trustee, Permitted Investments with the Corporate Indenture
Trustee in its individual capacity. All Permitted Investments shall be held in
the name of the Corporate Indenture Trustee on behalf of the Holders, and, to
the extent possible, the Corporate Indenture Trustee shall take and maintain
possession of Permitted Investments.

SECTION 9.08. Compensation. The Owner Trust covenants and agrees to
pay, and the Indenture Trustees shall be entitled to receive, reasonable
compensation and payment or reimbursement for their reasonable advances,
expenses and disbursements (including the reasonable compensation and expenses
and disbursements of their counsel, agents and other persons not regularly in
their employ) in connection with their services rendered hereunder or in any
way relating to or arising out of the administration of the Indenture Estate;
provided that, so long as the Company is obligated to pay such amounts under
the Lease, the Indenture Trustees shall not have or make any claim for payment
under this Section against the Owner Trust unless demand shall have first been
made on the Company for payment of such claim and 15 days shall have lapsed
without satisfaction of such demand, provided no such demand shall be required
to be made to the extent the Indenture Trustees are constrained by law or court
order from doing so. The Indenture Trustees agree that they shall have no
right against any Holder, the Trust Company or [INDIVIDUAL OWNER TRUSTEE] in
their individual capacities, or the Owner Participant for any fee as
compensation for its services as trustee under this Indenture.

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SECTION 9.09. The Co-Indenture Trustee. (a) Notwithstanding
anything herein to the contrary, the Co-Indenture Trustee hereby appoints the
Corporate Indenture Trustee as its agent or attorney, with full power and
authority, insofar as permitted by law, to exercise any and all rights, powers,
duties and obligations conferred upon the Co-Indenture Trustee by this
Indenture. The Corporate Indenture Trustee hereby acknowledges and accepts
such appointment.

(b) The Corporate Indenture Trustee, at any time, by an instrument in
writing executed by it, may remove the Co-Indenture Trustee, and in such event,
by an instrument in writing executed by it, may appoint a successor or
successors to the Co-Indenture Trustee, anything contained herein to the
contrary notwithstanding. The Co-Indenture Trustee shall at all times be an
officer of the Corporate Indenture Trustee.

SECTION 9.10. Co-Indenture Trustee Acting with Corporate Indenture
Trustee. Notwithstanding anything herein to the contrary, the rights, powers,
duties and obligations conferred or imposed upon the Indenture Trustees or any
of them shall be conferred or imposed upon and exercised or performed by the
Corporate Indenture Trustee, or the Corporate Indenture Trustee and the
Co-Indenture Trustee jointly, except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed, the
Corporate Indenture Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations shall
be exercised and performed by the Co-Indenture Trustee.

SECTION 9.11. Easements. The rights of the Indenture Trustees
hereunder shall be subject to the rights of the Owner Trust to grant, release,
make or permit such easements, licenses, rights of way, changes in zoning,
Alterations, subdivisions, releases of Land and similar matters as required by
the Lease and, at the request of the Owner Trust and the expense of the
Company, the Indenture Trustees shall join in any such grant or release.

SECTION 9.12. Resignation and Removal; Appointment of Successor. (a)
No resignation or removal of any Indenture Trustee and no appointment of a
successor Indenture Trustee pursuant to this Article shall become effective
until the acceptance of appointment by the successor Indenture Trustee under
Section 9.13 hereof.

(b) An Indenture Trustee may resign at any time by giving at least 30
days' prior written notice thereof to the Owner Trust. If an instrument of
acceptance by a successor Indenture Trustee shall not have been delivered to
the Owner Trust and such Indenture Trustee within 30 days after the giving of
such notice of resignation, the resigning Indenture Trustee, the Owner Trust or
Holders holding a majority in aggregate unpaid principal amount of the
Outstanding Mortgage Notes may petition any court of competent jurisdiction for
the appointment of a successor Indenture Trustee.

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(c) An Indenture Trustee may be removed at any time by act of the
Holders of a majority in aggregate unpaid principal amount of the Outstanding
Mortgage Notes delivered to such Indenture Trustee and to the Owner Trust.

(d) If at any time the Corporate Indenture Trustee shall cease to be
eligible under Section 9.15 hereof and shall fail to resign after written
request therefor by the Owner Trust, or by any Holder, or if at any time the
Corporate Indenture Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent, or a receiver of the Corporate Indenture
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Corporate Indenture Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then,
in any such case, (i) the Owner Trust may remove such Corporate Indenture
Trustee, or (ii) any Holder of a Mortgage Note may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Corporate Indenture Trustee and the appointment of a
successor Corporate Indenture Trustee.

(e) If an Indenture Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Indenture
Trustee for any cause, the Owner Trust shall promptly appoint a successor
Indenture Trustee. If, within one year after such resignation or removal or
the occurrence of such vacancy or incapability, a successor Indenture Trustee
shall be appointed by act of the Holders of a majority in aggregate unpaid
principal amount of the Outstanding Mortgage Notes delivered to the Owner Trust
and the retiring Indenture Trustee, the successor Indenture Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Indenture Trustee and supersede the successor Indenture Trustee
appointed by the Owner Trust. If no successor Indenture Trustee shall have
been so appointed by the Owner Trust or the Holders and accepted appointment in
the manner hereinafter provided, any Holder of a Mortgage Note may, on behalf
of himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Indenture Trustee.

(f) The Corporate Indenture Trustee shall give notice of each
resignation and each removal of an Indenture Trustee and each appointment of a
successor Indenture Trustee by mailing written notice of such event by
first-class mail, postage prepaid, to the Owner Trust, the Company and to the
Holders of Mortgage Notes as their names and addresses appear in the Register.
Each notice shall include the name of the successor Indenture Trustee and, if
the successor is a successor Corporate Indenture Trustee, the address of its
Corporate Trust Office or, if the successor is a successor Co-Indenture
Trustee, the address of the Co-Indenture Trustee, as the case may be.

SECTION 9.13. Acceptance of Appointment by Successor. Every
successor Indenture Trustee appointed hereunder shall execute, acknowledge and
deliver to the Owner Trust, the Company and to the retiring Indenture Trustee
an instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Indenture Trustee shall become effective and such
successor Indenture Trustee, without any further act, deed or conveyance, shall
become

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vested with all the estates, properties, rights, powers, trusts and duties of
the retiring Indenture Trustee; and the retiring Indenture Trustee shall
execute and deliver an instrument conveying and transferring to such successor
Indenture Trustee upon the trusts herein expressed all the estates, properties,
rights, powers and trusts of the retiring Indenture Trustee, and shall duly
assign, transfer and deliver to such successor Indenture Trustee all property
and money held by such retiring Indenture Trustee hereunder, subject to the
Lien provided by Article XI hereof. Upon request of any such successor
Indenture Trustee, the Owner Trust, the Company and the remaining Indenture
Trustee shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Indenture Trustee all such estates,
properties, rights, powers and trusts.

No successor Indenture Trustee shall accept its appointment unless at
the time of such acceptance such successor Indenture Trustee shall be eligible
under this Article.

SECTION 9.14. Merger, Conversion, Consolidation or Succession to
Business. Any corporation into which the Corporate Indenture Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Corporate
Indenture Trustee shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of the Corporate Indenture
Trustee, shall be the successor of the Corporate Indenture Trustee hereunder,
provided such corporation shall be otherwise eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Mortgage Notes shall have been
authenticated, but not delivered, by the Corporate Indenture Trustee then in
office, any successor by merger, conversion or consolidation to such
authenticating Corporate Indenture Trustee may adopt such authentication and
deliver the Mortgage Notes so authenticated with the same effect as if such
successor Corporate Indenture Trustee had itself authenticated such Mortgage
Notes.

SECTION 9.15. Persons Eligible for Appointment as Corporate Indenture
Trustee. There shall at all times be a Corporate Indenture Trustee hereunder
which shall be a corporation organized and doing business under the laws of the
United States of America or of any State or the District of Columbia having a
combined capital and surplus of at least $250,000,000, or a direct or indirect
subsidiary of such a corporation, or a member of a bank holding company group,
having a combined capital and surplus of at least $250,000,000 and such
subsidiary or member itself (unless the parent or an affiliated member who,
together with such subsidiary, has the required combined capital and surplus,
guarantees the obligations of such subsidiary or member) having capital and
surplus, in the case of the original Corporate Indenture Trustee or an
affiliate of the original Corporate Indenture Trustee, of at least $100,000,000
and in any other case of at least $150,000,000. Such Corporate Indenture
Trustee shall be authorized under such laws to exercise corporate trust powers
and shall be subject to supervision or examination by Federal, State or
District of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus

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of such corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. No corporation
shall be eligible to serve as Corporate Indenture Trustee if such corporation
is an obligor upon the Mortgage Notes or under any other Indenture Document or
is an Affiliate of such an obligor. In case at any time the Corporate
Indenture Trustee shall cease to be eligible in accordance with the provisions
of this Section, the Corporate Indenture Trustee shall resign immediately in
the manner and with the effect specified in Section 9.12. Notwithstanding
anything contained herein to the contrary, the Corporate Indenture Trustee (or
any successor) hereunder must be the corporate indenture trustee under the
Other Indentures and any Company Indenture.

SECTION 9.16. Appointment of Separate Trustees. (a) At any time or
times, for the purpose of meeting any legal requirements of any jurisdiction in
which any part of the Indenture Estate may at the time be located or in which
any action of the Corporate Indenture Trustee may be required to be performed
or taken and which are not met by the appointment of the Indenture Trustee
hereunder, the Corporate Indenture Trustee, by an instrument in writing signed
by it, may appoint one or more individuals or corporations to act as separate
trustee or separate trustees or co-trustee, acting jointly with the Corporate
Indenture Trustee, of all or any part of the Indenture Estate, to the full
extent that local law makes it necessary for such separate trustee or separate
trustees or co-trustee acting jointly with the Corporate Indenture Trustee to
act.

(b) The Indenture Trustees and, at the reasonable request of the
Indenture Trustees, the Owner Trust and the Company shall execute, acknowledge
and deliver all such instruments as may be required by the legal requirements
of any jurisdiction or by any such separate trustee or separate trustees or
co-trustee for the purpose of more fully confirming such title, rights or
duties to such separate trustee or separate trustees or co-trustee. Upon the
acceptance in writing of such appointment by any such separate trustee or
separate trustees or co-trustee, it, he or they shall be vested with such title
to the Indenture Estate or any part thereof, and with such rights, powers,
duties and obligations, as shall be specified in the instrument of appointment,
and such rights, powers, duties and obligations shall be conferred or imposed
upon and exercised or performed by the Indenture Trustees, or the Indenture
Trustees and such separate trustee or separate trustees or co-trustee jointly
with the Indenture Trustees subject to all the terms of this Indenture, except
to the extent that under any law of any jurisdiction in which any particular
act or acts are to be performed the Indenture Trustees shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations shall be exercised and performed by such separate
trustee or separate trustees or co-trustee, as the case may be. Any separate
trustee or separate trustees or co-trustee may at any time by an instrument in
writing constitute the Corporate Indenture Trustee its or his attorney-in-fact
and agent with full power and authority to do all acts and things and to
exercise all discretion on its or his behalf and in its or his name. In case
any such separate trustee or co-trustee shall die, become incapable of acting,
resign or be removed, the title to the Indenture Estate and all assets,
property, rights, powers, duties and obligations and duties of such separate
trustee or co-trustee shall, so far as permitted by law, vest in and be
exercised by the Indenture Trustees, without

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the appointment of a successor to such separate trustee or co-trustee unless
and until a successor is appointed.

(c) All provisions of this Indenture which are for the benefit of the
Indenture Trustees (including Article XI hereof) shall extend to and apply to
each separate trustee or co-trustee appointed pursuant to the foregoing
provisions of this Section 9.16.

(d) Every additional trustee and separate trustee hereunder shall, to
the extent permitted by law, be appointed and act and the Indenture Trustees
shall act, subject to the following provisions and conditions:

(i) all powers, duties, obligations and rights conferred upon
the Indenture Trustees in respect of the receipt, custody, investment
and payment of moneys shall be exercised solely by the Corporate
Indenture Trustee;

(ii) all other rights, powers, duties and obligations
conferred or imposed upon the Indenture Trustees shall be conferred or
imposed and exercised or performed by the Indenture Trustees and such
additional trustee or trustees and separate trustee or trustees
jointly except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed, both of the
Indenture Trustees shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Indenture Estate in
any such jurisdiction) shall be exercised and performed by such
additional trustee or trustees or separate trustee or trustees;

(iv) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder.

If at any time the Indenture Trustees shall deem it no longer necessary or
prudent in order to conform to any local law referred to in Section 9.16(a),
the Indenture Trustees shall execute and deliver an indenture supplemental
hereto and all other instruments and agreements necessary or proper to remove
any additional trustee or separate trustee.

(e) Any request, approval or consent in writing by the Indenture
Trustees to any additional trustee or separate trustee shall be sufficient
warrant to such additional trustee or separate trustee, as the case may be, to
take such action as may be so requested, approved or consented to.

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(f) Notwithstanding any other provision of this Section 9.16, the
powers of any additional trustee or separate trustee shall not exceed those of
the Indenture Trustees hereunder.

SECTION 9.17. Trustees' Liens. The Indenture Trustees in their own
individual capacities agree that they will at their own cost and expense
promptly take such action as may be necessary to duly discharge and satisfy in
full all Liens on the Indenture Estate which are either (i) attributable to
either Indenture Trustee in its individual capacity and which are unrelated to
the transaction contemplated by the Indenture Documents, or (ii) which are
attributable to either Indenture Trustee as a trustee hereunder or in its
individual capacity and which arise out of acts or omissions which are contrary
to the express terms of this Indenture.

ARTICLE X

CONCERNING THE HOLDERS

SECTION 10.01. Evidence of Action Taken by Holders. (a) Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by Holders may be embodied in
and evidenced by one or more instruments of substantially similar tenor signed
by such Holders in person or by an agent duly appointed in writing, and, except
as otherwise expressly provided herein, such action shall become effective when
such instrument or instruments are delivered to the Corporate Indenture Trustee
and, if expressly required herein, to the Co-Indenture Trustee or the Owner
Trust. Proof of execution of any instrument or of a writing appointing any
such agent shall be sufficient for any purpose of this Indenture and (subject
to Sections 9.02 and 9.04) conclusive in favor of the Indenture Trustees and
the Owner Trust, if made in the manner provided in this Article.

(b) For the purpose of determining the Holders entitled to vote or
consent to any direction, waiver or other action of such Holders under this
Indenture, the Owner Trust may set a record date for such vote or consent by
specifying such record date in an Officer's Certificate delivered to the
Indenture Trustees. Such record date shall be a date not more than 15 days
prior to the first solicitation of such vote or consent.

SECTION 10.02. Proof of Execution of Instruments and of Holding of
the Mortgage Notes. Subject to Sections 9.02 and 9.04, the execution of any
instrument by a Holder or his agent or proxy may be proved in accordance with
such reasonable rules and regulations as may be prescribed by the Corporate
Indenture Trustee. The holding of the Mortgage Notes shall be proved by the
Register or by a certificate of the Registrar.

SECTION 10.03. Holders to Be Treated as Owners. Prior to due
presentment for registration of transfer of a Mortgage Note, the Owner Trust,
the Indenture Trustees, any agent of the Owner Trust or the Indenture Trustees,
and the Registrar shall deem and treat the Person in whose name such Mortgage
Note shall be registered upon the Register as the absolute owner of such
Mortgage Note (whether or not such Mortgage Note shall be overdue and

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notwithstanding any notation of ownership or other writing thereon) for the
purpose of receiving payment of or on account of and, subject to the provisions
of this Indenture, interest and Installment Payment Amounts on such Mortgage
Note and for all other purposes; and neither the Owner Trust nor the Indenture
Trustees (nor any agent of the Owner Trust or the Indenture Trustees), if any,
nor the Registrar shall be affected by any notice to the contrary. All such
payments so made to any such person, or upon his order, shall be valid, and, to
the extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for moneys payable upon any such Mortgage Note.

SECTION 10.04. Mortgage Notes Owned by Owner Trust, Owner Trustees,
Owner Participant and the Company Deemed Not Outstanding. In determining
whether the Holders of the requisite aggregate unpaid principal amount of the
Outstanding Mortgage Notes have given or concurred in any direction, consent or
waiver under this Indenture, Mortgage Notes which are owned by the Owner Trust,
any Owner Trustee, any Owner Participant, the Company or by any Affiliate of
any of the foregoing shall be disregarded and deemed not to be Outstanding for
the purpose of any such determination; provided that for the purpose of
determining whether the Indenture Trustees shall be protected in relying on any
such direction, consent or waiver, only if a Responsible Officer of the
Corporate Indenture Trustee has actual knowledge that certain Mortgage Notes
are so owned shall such Mortgage Notes be so disregarded; provided further that
if all Mortgage Notes which would be deemed Outstanding in the absence of the
foregoing provision are owned by the Owner Trust, any Owner Trustee, any Owner
Participant, or the Company or by any Affiliate of any of the foregoing, then
such Mortgage Notes shall be deemed Outstanding for the purpose of any such
determination. Mortgage Notes so owned which have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction
of the Indenture Trustees the pledgee's right so to act with respect to such
Mortgage Notes and that the pledgee is not the Owner Trust, any Owner Trustee,
the Owner Participant or the Company or any Affiliate of any of the foregoing.
In case of a dispute as to such right, the advice of counsel shall be full
protection in respect of any decision made by the Indenture Trustees in
accordance with such advice. Upon request of the Indenture Trustees, each of
the Owner Trust, the Owner Trustees and the Owner Participant, shall furnish to
the Indenture Trustees promptly an Officer's Certificate listing and
identifying all Mortgage Notes, if any, known by the Owner Trust, the Owner
Trustees or the Owner Participant, as the case may be, to be owned or held by
or for the account of it or any of its Affiliates; and, subject to Sections
9.02 and 9.04, the Indenture Trustees shall be entitled to accept such
Officer's Certificates as conclusive evidence of the facts set forth therein
and of the fact that all Mortgage Notes not listed therein are Outstanding for
the purpose of any such determination.

SECTION 10.05. Right of Revocation of Action Taken. At any time
prior to (but not after) the evidencing to the Indenture Trustees, as provided
in Section 10.01, of the taking of any action by the Holders of the percentage
in aggregate unpaid principal amount of the Outstanding Mortgage Notes
specified in this Indenture in connection with such action, any Holder of a
Mortgage Note, the serial number of which is shown by the evidence to be
included among the serial numbers of the Mortgage Notes the Holders of which
have consented to such

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action, may, by filing written notice at the Corporate Trust Office and upon
proof of holding as provided in this Article, revoke such action so far as
concerns such Mortgage Note. Except as aforesaid, any such action taken by the
Holder shall be conclusive and binding upon such Holder and upon all future
Holders and owners of such Mortgage Note and of any Mortgage Notes issued in
exchange or substitution therefor or in lieu thereof, irrespective of whether
or not any notation in regard thereto is made upon any such Mortgage Note or
otherwise. Any action taken by the Holders of the percentage in aggregate
unpaid principal amount of the Mortgage Notes specified in this Indenture in
connection with such action shall be conclusively binding upon the Owner Trust,
the Owner Trustees, the Owner Participant, the Indenture Trustees and the
Holders of all the Mortgage Notes.

SECTION 10.06. Voting Rights of Pass Through Trustee. So
long as a Mortgage Note is held by a Pass Through Trustee, the Pass Through
Trustee may vote differing percentages of such Mortgage Notes in respect of any
action hereunder in accordance with instructions received by it from a
corresponding percentage of holders of the Pass Through Certificates, as
provided in the related Pass Through Trust Agreement.

ARTICLE XI

INDEMNIFICATION OF INDENTURE
TRUSTEES BY OWNER TRUST

The Owner Trust hereby agrees to assume liability for, and does hereby
indemnify, protect, save and keep harmless the Indenture Trustees from and
against any and all liabilities, obligations, losses, damages, penalties,
claims, actions, suits, costs, expenses or disbursements (including legal fees
and expenses) of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Indenture Trustees in any way relating to
or arising out of this Indenture, or any other Indenture Documents and any
taxes payable in connection with the protection, exercise or enforcement of any
right, power or remedy hereunder or any other Indenture Document (but in no
event including any taxes payable by the Indenture Trustees on or measured by
any compensation received by the Indenture Trustees for its services under this
Indenture), except (i) in the case of bad faith, willful misconduct or gross
negligence (simple negligence in the case of its handling and transfer of funds
or holding of investments hereunder) of the Indenture Trustees in the
performance of their duties hereunder or breach by the Indenture Trustees of
their duties hereunder, or (ii) as may result from the inaccuracy of any
representation or warranty of the Indenture Trustees herein or in any other
Indenture Document, or (iii) as otherwise provided in Section 9.02(c) or 9.17
hereof, or (iv) those for which the Company is not obligated to indemnify the
Indenture Trustees under the Lease or the Owner Participation Agreement;
provided that so long as the Lease is in effect, or if the Lease is not in
effect for reasons other than a default thereunder but the Company shall
continue to be obligated to pay or indemnify the Indenture Trustees under the
Lease, Owner Participation Agreement or under the other Indenture Documents,
the Indenture Trustees shall not have or

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make any claim under this Article XI for any claim or expense indemnified by
the Company under the Lease or Owner Participation Agreement without first
making demand on the Company for payment thereof and 15 days shall have elapsed
after the making of such demand without payment unless and to the extent they
are constrained by law or court order. The Indenture Trustees shall be
entitled to indemnification, from the Indenture Estate, subject to the
foregoing exceptions, for any liability, obligation, loss, damage, penalty,
claim, action, suit, cost, expense or disbursement indemnified against pursuant
to this Article XI to the extent not reimbursed by the Company or others, but
without releasing any of them from their respective agreements of
reimbursement. The indemnities contained in this Article XI shall survive the
termination of this Indenture and the resignation or removal of the Indenture
Trustees.

ARTICLE XII

SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS

SECTION 12.01. Supplemental Indentures Without Consent of Holders.
The Owner Trust (when authorized by the Owner Participant), and the Indenture
Trustees, at any time and from time to time, without the consent of Holders,
may enter into one or more indentures supplemental hereto for one or more of
the following purposes:

(a) to convey, transfer, assign, mortgage or pledge any
property or assets to the Indenture Trustees as security for the
Mortgage Notes;

(b) to evidence the succession of another Person to the Owner
Trust, or successive successions, and the assumption by the successor
of the covenants, agreements and obligations of the Owner Trust herein
and in the Mortgage Notes in accordance with the terms of the Trust
Agreement and this Indenture;

(c) to add to the covenants of the Owner Trust such further
covenants, restrictions, conditions or provisions as consented (in the
case of the Owner Trust) to by the Owner Participant and as the Owner
Trust and the Indenture Trustees shall consider to be for the
protection of the Holders, and to make the occurrence, or the
occurrence and continuance, of a default in any such additional
covenants, restrictions, conditions or provisions an Indenture Event
of Default permitting the enforcement of all or any of the several
remedies provided herein;provided that in respect of any such
additional covenant, restriction, condition or provision such
supplemental indenture may provide for a particular period of grace
after default (which period may be shorter or longer than that allowed
in the case of other defaults) or may provide for an immediate
enforcement upon such an Indenture Event of Default or may limit the
remedies available to the Indenture Trustees upon such an Indenture
Event of Default or may limit the right

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of the Holders of a majority in aggregate unpaid principal amount of
the Outstanding Mortgage Notes to waive such an Indenture Event of
Default;

(d) to surrender any rights or power conferred herein upon
the Owner Trust or the Owner Participant or to add to the rights of
the Holders of the Mortgage Notes;

(e) (i) to correct or supplement any provision contained
herein, in any supplemental indenture or in the Mortgage Notes which
may be defective or inconsistent with any other provision contained
herein or in any supplemental indenture or in the Mortgage Notes; or
(ii) to make such other provisions in regard to matters or questions
arising under this Indenture or under any supplemental indenture as
the Owner Trust may deem necessary or desirable, provided that in the
case of (i) and (ii) above, such change does not materially adversely
affect the interests of any Holder or (iii) to cure any ambiguity or
to correct any mistake;

(f) to correct or amplify the description of any property at
any time subject to the Lien of this Indenture or better to assure,
convey and confirm unto the Indenture Trustees any property subject or
required to be subject to the Lien of this Indenture or to subject
property substituted for any property to the Lien of this Indenture in
accordance with the provisions hereof and of the Lease or to release
from the Lien of this Indenture property that has been substituted or
removed in accordance with the terms of this Indenture and the Lease;

(g) to add, eliminate or change any provision hereunder so
long as such action shall not materially adversely affect the
interests of any Holder;

(h) to provide for the assumption by the Company of the
obligations of the Owner Trust hereunder in accordance with the terms
and conditions applicable thereto specified in Section 3.08 hereof;

(i) in the event of a transfer of the interest in the
Indenture Estate as permitted by the terms and conditions of Section
3.05 hereof, to provide for the assumption by the transferee of such
interest of the obligations hereunder of the transferor; and

(j) to issue any Refinancing Mortgage Notes as authorized by
Section 15.02 hereof.

The Indenture Trustees are hereby authorized to join in the execution
of any such supplemental indenture, to make any further appropriate agreements
and stipulations which may be contained therein and to accept the conveyance,
transfer, assignment, mortgage or pledge of

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any property thereunder, but the Indenture Trustees shall not be obligated to
enter into any such supplemental indenture which adversely affects the
Indenture Trustees' own rights, duties or immunities under this Indenture or
otherwise, whether in their trust or individual capacities.

SECTION 12.02. Supplemental Indentures With Consent of Holders. With
the consent (evidenced as provided in Article X) of the Holders of not less
than a majority in aggregate unpaid principal amount of the Outstanding
Mortgage Notes, the Owner Trust and the Indenture Trustees may, from time to
time and at any time, enter into an indenture or indentures supplemental hereto
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of any supplemental
indenture or of modifying in any manner the rights of the Holders; provided,
however, without the consent of each Holder affected thereby, no such amendment
of or supplement to this Indenture or any indenture supplemental hereto, or
modification of the terms of, or consent under, any thereof, shall:

(a) modify any of the provisions of Section 7.09 or 10.04 or
this Section 12.02;

(b) reduce the amount or extend the time of payment of any
amount owing or payable under the Mortgage Notes or reduce the
interest payable on the Mortgage Notes or alter or modify the
provisions of Article V hereof with respect to the order of priorities
in which distributions thereunder shall be made as between the Holder
and the Owner Trust or with respect to the amount or time of payment
of any such distribution, or alter or modify the circumstances under
which a premium shall be payable or change the manner in which such
premium is calculated, or alter the currency in which any amount
payable under any Mortgage Note is to be paid, or impair the right of
any Holder to commence legal proceedings to enforce a right to receive
payment hereunder;

(d) create or permit the creation of any Lien on the
Indenture Estate or any part thereof prior to or pari passu with the
Lien of this Indenture, except as expressly permitted herein, or
deprive any Holder of the benefit of the Lien of this Indenture on the
Indenture Estate except as provided in Article XIV hereof; or

(e) reduce the percentage of the unpaid principal amount of
the Outstanding Mortgage Notes the consent of the Holders of which is
required for any such supplement, or the consent of the Holders of
which is required for any waiver (of compliance with certain
provisions hereof or certain defaults hereunder and their
consequences) provided for in this Indenture.

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This Section 12.02 shall not apply to any indenture or indentures
supplemental hereto permitted by, and complying with, the terms of Section
12.06 hereof.

Upon the request of the Owner Trust (at the direction of the Owner
Participant) and upon the filing with the Indenture Trustees of evidence of the
consent of the Holders and the other documents, if any, required by Section
10.01, the Indenture Trustees shall join with the Owner Trust in the execution
of such supplemental indenture unless such supplemental indenture affects the
Indenture Trustees' own rights, duties or immunities under this Indenture or
otherwise, in which case the Indenture Trustees may in their discretion, but
shall not be obligated to, enter into such supplemental indenture.

It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such consent shall approve the substance thereof.

Promptly after the execution by the Owner Trust and the Indenture
Trustees of any supplemental indenture pursuant to the provisions of this
Section, the Corporate Indenture Trustee shall mail a notice thereof by
first-class mail to the Holders at their addresses as they shall appear on the
registry books of the Registrar, setting forth in general terms the substance
of such supplemental indenture. Any failure of the Corporate Indenture Trustee
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture.

SECTION 12.03. Effect of Supplemental Indenture. Upon the execution
of any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith and
the respective rights, limitations of rights, obligations, duties and
immunities under this Indenture of the Indenture Trustees, the Owner Trust and
the Holders shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments, and all the terms
and conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.

SECTION 12.04. Documents to Be Given to Indenture Trustees. The
Indenture Trustees, subject to the provisions of Sections 9.02 and 9.04, may
receive an Officer's Certificate and an Opinion of Counsel as conclusive
evidence that any such supplemental indenture complies with the applicable
provisions of this Indenture.

SECTION 12.05. Notation on Mortgage Notes in Respect of Supplemental
Indentures. A Mortgage Note authenticated and delivered after the execution of
any supplemental indenture pursuant to the provisions of this Article may bear
a notation in form approved by the Indenture Trustees as to any matter provided
for by such supplemental indenture. If the Owner Trust or the Indenture
Trustees shall so determine, new Mortgage Notes so modified as to conform, in
the opinion of the Owner Trust and the Indenture Trustees, to any modification
of this Indenture

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contained in any such supplemental indenture may be prepared and executed by
the Owner Trust, authenticated by the Indenture Trustees and delivered in
exchange for the Mortgage Note.

SECTION 12.06. No Request Necessary for Lease Supplement.
Notwithstanding anything contained in Section 12.02 hereof, no written request
or consent of the Indenture Trustees or any Holder pursuant to Section 12.02
hereof shall be required to enable the Owner Trust to enter into any supplement
to the Lease with the Company pursuant to the terms of the Lease to subject
other property thereto or to execute and deliver an indenture supplement in
accordance with and subject to the terms of Articles XIV and XV hereof.

SECTION 12.07. Amendments, Waivers, etc. of Other Indenture
Documents. (a) Except for Excepted Rights and Payments, without the consent of
the Holders of not less than a majority in aggregate unpaid principal amount of
the Outstanding Mortgage Notes, the respective parties to the Owner
Participation Agreement, the Lease or the Trust Agreement may not modify, amend
or supplement the Lease, [SECTIONS ______ OF THE TRUST AGREEMENT], or [SECTIONS
___ OF THE OWNER PARTICIPANT AGREEMENT], [OTHERS] or give any consent, waiver,
authorization or approval under any of the Indenture Documents for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions thereof or of modifying in any manner the rights of the respective
parties thereunder; provided, however, that the actions specified in Sections
8.01 and 8.02 or in subsection (b) of this Section 12.07 may be taken without
the consent of any Holder.

(b) The Owner Participation Agreement, the Lease and the Trust
Agreement may, at any time and from time to time, be amended or supplemented
without the consent of any Holder:

(i) to effect any modification, amendment, addition or
deletion expressly contemplated in and provided for in the Lease, the
Owner Participation Agreement or the Trust Agreement (it being
acknowledged that any provision regarding the procedure for effecting
any modification, amendment, addition or deletion shall not be a
provision within the meaning of this clause (i)); or

(ii) to effect any modification or amendment of, addition to
or deletion from the Lease, the Owner Participation Agreement or the
Trust Agreement if, as set forth in an Opinion of Counsel rendered by
counsel to the party requesting such action addressed to the other
parties to the applicable agreement, such modification, amendment,
addition or deletion shall not materially adversely affect the
interests of any Holder.

The Indenture Trustees may, without the consent of any Holder, give
any consent, waiver, authorization or approval under any Indenture Document,
whether or not provided for therein, if, as reflected in an Opinion of Counsel,
such consent, waiver, authorization or approval does not materially adversely
affect the interests of any Holder.

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The consent of neither the Indenture Trustees nor any of the Holders
shall be required for any amendment or supplement to the Lease necessary to
make Rental Adjustments or Termination Value adjustments, provided that such
Rental Adjustments and Termination Value adjustments shall in all instances
comply with the terms of [ARTICLE 3(C) OF THE LEASE] and Section 12.07(c) of
this Indenture.

(c) No modification, amendment, supplement, consent, waiver,
authorization or approval with respect to the Lease, whether effected pursuant
to subsection (a) or pursuant to subsection (b) of this Section 12.07 and
anything in such subsections or elsewhere in this Indenture or in the other
Indenture Documents to the contrary notwithstanding, shall, without the consent
of the Holder of each Outstanding Mortgage Note directly or indirectly affected
thereby, reduce the amount of, or change the timing of payment of, any payment:
such that (x) the Basic Rent payable pursuant to the Lease on any Installment
Payment Date shall be less than the Installment Payment Amount plus interest
due on such Installment Payment Date, (y) the Termination Values applicable on
any Purchase Offer Termination Date or Termination Date, as applicable,
together with the Basic Rent, if any, due and unpaid to and including the
Purchase Offer Termination or the Termination Date (as applicable), shall be
insufficient to satisfy in full the scheduled outstanding principal amount of
the Mortgage Notes as of such date, together with all interest accrued but
unpaid thereon to such date, and (z) the Make-Whole Premium and other premium,
if any, payable by the Company pursuant to the Lease shall be less than the
Make-Whole Premium and other premium, if any, due under this Indenture.

(d) Prior to the foreclosure of the interest of the Owner Trust in
respect of the Property (or deed in lieu thereof), the Indenture Trustee shall
not, without the consent of the Owner Trust, modify, amend or supplement any
Indenture Document so as to release the Company from any of its obligations in
respect of the payment of Basic Rent, Additional Rent, Termination Value or any
other payments in respect of the Demised Premises as set forth in the Lease, or
reduce the amount of, or change the time or manner of payment of or the
absolute and unconditional character of, such obligations, or impose or create
any obligation on the part of the Owner Trustee or the Owner Participant under
the Lease, or extend or shorten the duration of the Term or any Renewal Term of
the Lease, or extend or shorten the duration of the term of the Ground Lease
if any, or in any manner amend the covenants of or defaults applicable to the
Owner Trustee or the Owner Participant under or in respect of the Ground Lease,
if any.

ARTICLE XIII

SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS

SECTION 13.01. Satisfaction and Discharge of Indenture; Termination
of Indenture. If at any time after (a) the Owner Trust shall have delivered to
the Indenture Trustees for cancellation all Mortgage Notes theretofore
authenticated (other than any Mortgage Notes which shall have been mutilated,
defaced, destroyed, lost or stolen and which shall have been replaced

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or paid as provided in Section 2.07 and Mortgage Notes for the payment of which
money held in trust hereunder has been paid and discharged from such trust as
provided in Section 13.03) or (b) (i) all Mortgage Notes not theretofore
delivered to the Indenture Trustees for cancellation shall have become due and
payable, or are by their terms to become due and payable within one year or are
to be called for redemption such that they will become due and payable within
one year under arrangements satisfactory to the Indenture Trustees for the
giving of notice of redemption by the Indenture Trustees in the name and at the
expense of the Owner Trust, and (ii) the Owner Trust shall have irrevocably
deposited or caused to be deposited with the Corporate Indenture Trustee as
trust funds an amount sufficient to pay at the Maturity Date or on such
Redemption Date all such Mortgage Notes (and any Installment Payment Amounts on
such Mortgage Notes) not theretofore delivered to the Indenture Trustees for
cancellation, including principal and interest due or to become due on or prior
to the Maturity Date or Redemption Date, as the case may be, and if, in any
such case, the Owner Trust shall also pay or cause to be paid all other sums
then payable hereunder by the Owner Trust, then this Indenture shall cease to
be of further effect (except as to (i) rights of registration of transfer and
exchange, (ii) substitution of mutilated, defaced, destroyed, lost or stolen
Mortgage Notes, (iii) rights of Holders to receive payments of principal
thereof and interest thereon, upon the original stated due dates therefor (but
not upon acceleration), (iv) the rights, obligations, indemnities and
immunities of the Indenture Trustees hereunder, (v) the rights of the Holders
with respect to any premium payable with respect to the Mortgage Notes as
provided in the next succeeding paragraph, and (vi) the rights of the Holders
as beneficiaries hereof with respect to the property so deposited with the
Indenture Trustees payable to all or any of them), and the Indenture Trustees,
on demand of the Owner Trust accompanied by an Officer's Certificate and an
Opinion of Counsel (with respect to the foregoing conditions, including the
irrevocability of the funds deposited) and at the cost and expense of the Owner
Trust, shall execute proper instruments acknowledging such satisfaction of and
discharging this Indenture.

Upon (or at any time after) payment in full to the Corporate Indenture
Trustee, as trust funds, of an amount sufficient to pay, when due, the
principal of and interest on and all other amounts due under all Mortgage
Notes, and provided that there shall then be no other amounts due to the
Holders and the Indenture Trustees hereunder or under any of the other
Indenture Documents or otherwise secured hereby (in all cases, other than any
premium payable by the Company under the Lease), the Owner Trust shall direct
the Indenture Trustees to execute and deliver to or as directed in writing by
the Owner Trust an appropriate instrument releasing the Property and other
property forming a part of the Indenture Estate from the Lien of this Indenture
and releasing the Indenture Documents from the assignment thereof hereunder,
and the Indenture Trustees shall execute and deliver such instrument as
aforesaid and, at the Owner Trust's expense, will execute and deliver such
other instruments or documents as may be reasonably requested by the Owner
Trust to give effect to such release; provided, however, that this Indenture
and the trusts created hereby shall terminate earlier and this Indenture shall
be of no further force or effect upon any sale or other final disposition by
the Indenture Trustees of all property forming a part of the Indenture Estate
and the final distribution by the Indenture Trustees of all moneys or other
property or proceeds constituting part of the Indenture Estate

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in accordance with the terms hereof. Except as aforesaid otherwise provided,
this Indenture and the trusts created hereby shall continue in full force and
effect in accordance with the terms hereof.

SECTION 13.02. Application by Indenture Trustees of Funds Deposited
for Payment of Mortgage Notes. Subject to Section 13.03, all moneys deposited
with the Corporate Indenture Trustee pursuant to Section 13.01 shall be held in
trust and applied by it to the prompt payment in accordance with the provisions
of the Mortgage Notes and this Indenture to the Holders of the particular
Mortgage Notes for the payment or redemption of which such moneys have been
deposited with the Corporate Indenture Trustee, of all sums due and to become
due thereon for principal and interest; but such money need not be segregated
from other funds except to the extent required by law.

SECTION 13.03. Transfer of Moneys Held by Indenture Trustees
Unclaimed for Two Years and Eleven Months. Any moneys deposited with or paid
to the Corporate Indenture Trustee for the payment of the principal of or
interest on the Mortgage Note and not applied but remaining unclaimed for two
years and eleven months after the date upon which such principal or interest
shall have become due and payable, shall, unless otherwise required by
mandatory provisions of applicable escheat or abandoned or unclaimed property
law, be paid to the Owner Trust by the Indenture Trustees and the Holders of
the Mortgage Notes, as general unsecured creditors, shall, unless otherwise
required by mandatory provisions of applicable escheat or abandoned or
unclaimed property laws, thereafter look only to the Owner Trust for any
payment which such Holders may be entitled to collect, and all liability of the
Indenture Trustees with respect to such moneys shall thereupon cease.

ARTICLE XIV

SUBSTITUTIONS AND RELEASES

Section 14.01. Substitution of Property Included in the
Indenture Estate During Continuation of Lease. So long as the Lease is in
effect, if the Company exercises its substitution right pursuant to [ARTICLE 41
OF THE LEASE], then upon satisfaction of all conditions to such substitution
specified in said [ARTICLE 41], the Owner Trust shall have the right to obtain,
in accordance with the provisions of this Indenture and the Lease, a release of
the Property from the Lien of this Indenture, but only upon satisfaction of the
following:

(a) Receipt by and deposit with the Indenture Trustees of an
Officer's Request from the Company and the Corporate Owner Trustee
describing the Property and the substitute property (as such term is
used in said [ARTICLE 41]);

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(b) The Owner Trust shall have executed and delivered to the
Indenture Trustees a new indenture (in form and substance as similar
to this Indenture as reasonably practical) subjecting the substitute
property to the Lien of this Indenture;

(c) Receipt by and deposit with the Indenture Trustees of a
favorable Opinion of Counsel as to the validity and perfection of the
mortgage and security interest in the substitute property upon
effecting the filing, recordation and other action referred to
therein;

(d) Receipt by and deposit with the Indenture Trustees of an
Officer's Certificate from the Company and the Corporate Owner Trustee
dated not more than five days prior to the application for such
release, setting forth in substance that such Property is required or
permitted to be so sold, disposed of or released from the Lien hereof
pursuant to the Lease and that all conditions precedent herein and in
the Lease provided for relating to such release have been complied
with;

(e) Receipt by and deposit with the Indenture Trustees of an
(i) Opinion of Counsel delivered by the Company to the Indenture
Trustees and the Owner Trust stating that the certificates, opinions
and other instruments which have been or are therewith delivered to
and deposited with the Indenture Trustees conform to the requirements
of this Indenture and the Lease and that the Property to be released
as contemplated hereby may be lawfully released from the Lien of this
Indenture, and (ii) Officer's Certificate to the effect that all
conditions precedent herein provided for relating to such release have
been duly complied with; and

(f) Satisfaction of such conditions as are set forth in
[ARTICLE 41 OF THE LEASE].

SECTION 14.02. Execution of Releases. Upon any release provided for
under Sections 3.08 and 14.01, the Indenture Trustees shall execute and deliver
to the Owner Trust an instrument releasing their Lien in and to the Property
(to the extent provided for under Section 3.08 or Section 14.01) and shall
execute for recording in public offices, at the expense of the Company, such
instruments in writing as the Owner Trust or the Company shall reasonably
request and as shall be reasonably acceptable to the Indenture Trustees in
order to make clear upon public records that such Lien has been released under
the laws of the applicable jurisdiction. The Owner Trust hereby waives and
releases any and all rights existing or that may be acquired to any penalties,
forfeit or damages from or against the Indenture Trustees for failure to
execute and deliver any document in connection with the release of a Lien or to
file any certificate in compliance with any law or statute requiring the filing
of the same in connection with the release of a Lien, except for failure by the
Indenture Trustees to execute and deliver any document or to file any
certificate as may be specifically requested in writing by the Owner Trust or
the Company.

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ARTICLE XV

ISSUANCE OF REFINANCING MORTGAGE NOTES

SECTION 15.01. Creation and Forms of Refinancing Mortgage Notes.
Refinancing Mortgage Notes shall be created by an indenture supplemental hereto
authorized by the Owner Trust, as evidenced by an Officer's Certificate of the
Corporate Owner Trustee and establishing the terms and provisions of such
Mortgage Notes and the form of such Mortgage Notes. Each series of Refinancing
Mortgage Notes may differ from the Mortgage Notes initially issued hereunder
and as between series in any respect not in conflict with the provisions of
this Indenture and as may be prescribed in the supplemental indenture creating
such Mortgage Notes.

SECTION 15.02. Issuance of Refinancing Mortgage Notes After
Redemption. Following a redemption of the Mortgage Notes of any Maturity Date
in accordance with Sections 6.02(b), 6.02(c) or 6.02(d) hereof, so long as no
Lease Default arising under [ARTICLE 20(I), 20(II) OR 20(V)] of the Lease shall
have occurred and be continuing, the Owner Trust, with the consent of the
Company, may issue and sell, and the Corporate Indenture Trustee shall
authenticate and deliver, one or more new series of Mortgage Notes
("Refinancing Mortgage Notes") in an aggregate principal amount up to the
aggregate principal amount of the Mortgage Notes then being redeemed and having
such terms and provisions (including interest rate, amortization schedule,
maturity date and redemption provisions) as the Owner Trust shall deem
appropriate and as shall be approved by the Company; provided that if after
such redemption any Mortgage Notes remain outstanding, the Refinancing Mortgage
Notes:

(i) shall be denominated and payable in United States Dollars
and shall not be in a principal amount greater than the Mortgage Notes
redeemed;

(ii) shall not rank senior in any respect to the Mortgage
Notes which remain outstanding; and

(iii) shall not have a maturity after or have a weighted
average life longer than the Mortgage Notes redeemed if any of the
Mortgage Notes which remain outstanding have (x) a Maturity Date after
or concurrent with the Maturity Date of the Mortgage Notes redeemed or
(z) a weighted average life longer than the weighted average life of
the Mortgage Notes redeemed;

provided further that it shall be a condition to such issuance that (x) the
Basic Rent payable pursuant to the Lease on any Installment Payment Date shall
be not less than the Installment Payment Amount plus interest due on such
Installment Payment Date, (y) the Termination Values applicable on any Purchase
Offer Termination Date or Termination Date, as applicable, together with the
Basic Rent, if any, due and unpaid to and including the Purchase Offer
Termination or the Termination Date (as applicable), shall be at least
sufficient to satisfy in full the scheduled outstanding principal amount of the
Mortgage Notes as of such date, together with

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all interest accrued but unpaid thereon to such date, and (z) the Make-Whole
Premium and other premium, if any, payable by the Company pursuant to the Lease
shall be not less than the Make-Whole Premium and other premium, if any, due
under this Indenture; provided further, that prior to authentication and
delivery of such Refinancing Mortgage Notes, the Indenture Trustees shall have
received written evidence from Standard & Poor's and Moody's to the effect that
the issuance of such Refinancing Mortgage Notes, by itself, would not result in
a withdrawal or downgrading of the credit rating assigned to the Pass Through
Certificates that will be outstanding immediately after such issuance.

ARTICLE XVI

ASSIGNMENT OF LEASES AND RENTS

SECTION 16.01. Making of Assignment. The Owner Trust by these
presents does hereby irrevocably assign, transfer, set over and convey to the
Indenture Trustees, all the following-described properties, whether now owned
or held or hereafter acquired, exclusively and without any reservation thereof
unto the Indenture Trustees (except as herein otherwise expressly provided),
exclusive, however, of all Excepted Payments and Rights and only to the extent
the same have been conveyed to the Owner Trust pursuant to the Operative
Documents:

(a) All of the estate, right, title, interest, benefits, powers and
privileges of the Owner Trust, as Lessor, under the Lease, other than Excepted
Rights and Payments, including, but not by way of limitation, (i) the immediate
and continuing right to make claim for, receive, collect and receipt for all
rents, income, revenues, issues, profits, insurance proceeds, condemnation
awards and other sums payable to or receivable by the Owner Trust under the
Lease, or pursuant to any provisions thereof, whether as rent or as the
purchase price for any interest in the Property or otherwise (except sums
payable directly to any person other than the Lessor under the Lease)
(collectively, the "Lease Rents"), including all cash, securities or letters of
credit delivered or deposited pursuant thereto to secure performance by the
Company of its obligations thereunder, (ii) the right and power (which right
and power are coupled with an interest) upon the purchase by the Company of the
interest of the Owner Trust in the Property in accordance with the Lease to
execute and deliver as attorney-in-fact of the Owner Trust an appropriate
special warranty deed or other instrument necessary to convey the interest of
the Owner Trust therein, or to pay over or assign to such purchaser those
insurance proceeds and condemnation awards to which it is entitled under
[ARTICLES 14 AND 15 OF THE LEASE] if such purchaser becomes obligated to
purchase the interest of the Owner Trust in the Property and to perform all
other necessary or appropriate acts as said agent and attorney-in-fact with
respect to any such purchase and conveyance at any time when the Owner Trust
fails to deliver any such document after 10 Business Days notice to a
Responsible Officer of the Corporate Owner Trustee, but only if such failure
shall continue for 10 Business Days after the giving by the Corporate Indenture
Trustee to the Corporate Owner Trustee of a second notice therefor, (iii) the
right to declare a Lease Event of Default under the Lease to be in default
under ARTICLE 20 THEREOF, (iv) the right to

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exercise remedies under or with respect to the Lease, including ARTICLE 21
THEREOF, (v) the right to give all notices, and, after a Lease Event of Default
(subject to Sections 7.02(a) and 8.02), give all consents, releases and other
instruments, (vi) the right to give all notices of default and to take all
action upon the happening of a default under the Lease, including the
commencement, conduct and consummation of proceedings as shall be permitted
under any provision of the Lease, or by law or in equity, (vii) the right, not
to the exclusion of the Owner Trust, to receive copies of all notices sent to
the Owner Trust, as Lessor under the Lease, (ix) the Owner Trust's interest
under the Lease in the Company's tangible and intangible property used or
arising in connection with the Property, including, but not limited to,
permits, licenses, contract rights and prepaid expenses, and (x) the right to
do any and all other things whatsoever which the Owner Trust or any lessor is,
or may be entitled to do under the Lease, it being understood and agreed that
the assignment of the right to receive any amounts payable under the Lease in
respect of any Make-Whole Premium is an absolute, unconditional and irrevocable
assignment, not intended or to be construed as a collateral assignment and that
the Owner Trust reserves no right, interest or remedy in or to such amounts,
except if such amounts have been paid by the Owner Trust.

(b) All of the Owner Trust's estate, right, title, interest,
benefits, powers and privileges, to and under all other leases, subleases or
licenses of the Property, any license, concession, management, mineral or other
agreements of a similar kind that permit the use or occupancy of the Property
or any part thereof for any purpose in return for any payment, or permit the
extraction or taking of any gas, oil, water or other minerals from the Property
or any part thereof in return for payment of any fee, rent or royalty, now or
hereafter entered into by the Owner Trust (collectively, the "Additional
Leases" and, together with the Lease, the "Leases"), together with all estate,
rights, title, interest, benefits, powers and privileges of the Owner Trust, as
lessor, under the Additional Leases including, but not by way of limitation,
the immediate and continuing right to make claim for, receive, collect and
receipt for all charges, fees, income, issues, profits, receipts, rents,
revenues or royalties payable under any of the Additional Leases (collectively,
the "Additional Lease Rents") and all right, title and interest of the Owner
Trust thereunder, including all cash, securities or letters of credit delivered
or deposited thereunder to secure performance by the lessees of their
obligations thereunder.

(c) All of the Owner Trust's estate, right, title, interest,
benefits, powers and privileges, to and under all agreements or contracts
(other than the Lease) for the sale or other disposition of all or any part of
the Property, now or hereafter entered into by the Owner Trust (collectively,
the "Contracts") together with all estate, rights, title, interest, benefits,
powers and privileges of the Owner Trust under the Contracts including, but not
by way of limitation, the immediate and continuing right to make claim for,
receive, collect and receipt for all charges, fees, income, issues, profits,
receipts, rents, revenues or royalties payable under any of the Contracts
(collectively, the "Contract Rents" and, together with the Lease Rents and the
Additional Lease Rents, the "Rents") and all right, title and interest of the
Owner Trust thereunder, including all cash, securities or letters of credit
deposited thereunder to secure performance by the lessees of their obligations
thereunder; provided, however, no provision of

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this Article XVI shall be deemed to imply that such Contracts are permitted
under this Indenture or any other Indenture Document.

(d) All of the Owner Trust's right, title and interest in and to all
claims and rights to the payment of money at any time arising in connection
with any rejection or breach of the Lease by the Company or a trustee of the
Company (or any Additional Lease by any lessee thereunder or trustee of any
such lessee) under Section 365 of the Federal Bankruptcy Code, including all
rights to recover damages arising out of such breach or rejection, all rights
to charges payable by the Company or such trustee (or by such lessee or
trustee) in respect of the Property or any portion thereof following the entry
of an order for relief under the Federal Bankruptcy Code in respect of such
lessee and all rentals and other charges outstanding under the Lease (or
Additional Lease) as of the date of entry of such order for relief.

SECTION 16.02. Receipt of Payments. The Owner Trust hereby
designates the Indenture Trustees to receive all payments of Rents, purchase
prices and other sums payable to the Lessor under the Lease or any Additional
Lease (but not Excepted Rights and Payments), and designates the Indenture
Trustees to receive (in addition to, and not to the exclusion of, the Owner
Trust) duplicate originals of all notices, undertakings, demands, statements,
documents, financial statements and other communications which the Company or
any other lessee is required or permitted to give, make, deliver to or serve
pursuant to the Lease or any Additional Lease. The Owner Trust agrees to
direct the Company and such other lessees to deliver to the Indenture Trustees,
at its address set forth above or at such other address or to such other Person
as the Indenture Trustees shall designate, all such payments and sums and
duplicate originals of all such notices, undertakings, demands, statements,
documents, financial statements and other communications, and no delivery
thereof by the Company or such other lessee shall be of any force or effect
unless, in the case of such payments and sums, made to the Indenture Trustees
and, in the case of such notices, undertakings, demands, statements, documents
and other communications, made to the Owner Trust and also made to the
Indenture Trustees, in each case, as herein provided.

SECTION 16.03. Irrevocability. The Owner Trust agrees that this
assignment and the designation and direction to the Lessee hereinabove set
forth is irrevocable and that it will not take any action as Lessor under the
Lease or otherwise which is inconsistent with this Indenture.

SECTION 16.04. Owner Trust Remains Liable. Subject at all times to
the terms and conditions of this assignment, the Owner Trust will at all times
promptly and faithfully perform in all material respects, or cause to be
performed in all material respects, all of the covenants, conditions and
agreements contained in the Lease or any Additional Lease of the Property now
or hereafter existing on the part of the Lessor thereunder to be kept and
performed with respect to the Property.

SECTION 16.05. Ongoing Right to Collect Rents; Receivers. If
notwithstanding the terms of this assignment, a petition or order for
sequestration of rents, or the appointment of

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a receiver or some similar judicial action or order is deemed required under
applicable state law to allow the Indenture Trustees to continue to collect the
moneys described in paragraphs (a), (b), (c) and (d) of Section 16.01 hereof,
then it is agreed by the Owner Trust that any proof of claim or similar
document filed by the Indenture Trustees in connection with the breach or
rejection of the Lease by the Company thereunder or the trustee of any such
lessee under Section 365 of the Federal Bankruptcy Code shall for the purpose
of perfecting the Indenture Trustees' rights conferred in said paragraph (d) be
deemed to constitute action required under such state law. Upon an Indenture
Event of Default, the Owner Trust hereby consents to the appointment of a
receiver for the Property as a matter of right and without any requirement for
notice to the Owner Trust and without regard to the solvency of the Owner Trust
or to the collateral that may be available for the satisfaction of the Mortgage
Notes and all other obligations under the Indenture Documents.

ARTICLE XVII

SECURITY AGREEMENT AND FINANCING STATEMENT

SECTION 17.01. Security Agreement and Financing Statement. (a) From
the date of its separate recording in the real estate records and the fixture
filing records, this Indenture shall be effective as a security agreement and
financing statement by and between the Owner Trust, as debtor, and the
Indenture Trustees, as secured parties, filed as a security agreement and
financing statement pursuant to the Uniform Commercial Code in the State in
which the Property is located with respect to all goods constituting part of
the Indenture Estate which are or are to become fixtures related to the Land
and Improvements. For this purpose, the address of the debtor is the address
of the Owner Trust set forth in Section 18.06 hereof, and the address of the
secured party is the address of the Corporate Indenture Trustee set forth in
Section 18.06 hereof. This Indenture covers goods which are or are to become
fixtures.

(b) The Owner Trust hereby grants the Indenture Trustees a security
interest in such portions of the Trust Estate which may be subject to a
security interest under Article 9 of the Uniform Commercial Code, as enacted in
the jurisdiction in which the Property is located, and in all additions
thereto, substitutions therefor and proceeds thereof, for the purpose of
securing all indebtedness now or hereafter secured by this Indenture. The
Owner Trust agrees, at the expense of the Company, to execute and deliver
financing and continuation statements covering such Property from time to time
and in such form as the Indenture Trustees may reasonably require to perfect
and continue the perfection of the Indenture Trustees' lien or security
interest with respect to the Property. Subject to Sections 7.11, 8.02 and
8.03, upon the occurrence of any Indenture Event of Default hereunder, the
Indenture Trustees shall have the rights and remedies of a secured party under
the Uniform Commercial Code, as enacted in the jurisdiction in which the
Property is located, and, at the Indenture Trustees' option, the Indenture
Trustees may also invoke the remedies provided elsewhere in this Indenture as
to such Property, subject to the terms hereof.

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(c) This Indenture constitutes a financing statement filed as a
fixture filing under the Uniform Commercial Code as enacted in the jurisdiction
in which the Property is located, filed in the fixture filing records of the
county in which the Property is located with respect to any and all fixtures
included within the term "Indenture Estate" and with respect to any goods or
other personal property that may now be or hereafter become such a fixture.
PARTS OF THE COLLATERAL ARE, OR ARE TO BECOME, FIXTURES ON THE REAL ESTATE.

(d) The Owner Trust and the Indenture Trustees agree that the filing
of any such financing statement or statements in the records normally having to
do with personal property shall not in any way affect the agreement of the
Owner Trust and the Indenture Trustees that everything used by the Owner Trust,
its agents, employees, and contractors and owned by the Owner Trust in
connection with the production of income from the Property or adapted for use
therein or which is described or reflected in this Indenture is, and at all
times and for all purposes and in all proceedings, legal or equitable, shall
be, regarded as part of the real estate conveyed hereby regardless of whether
(i) any such item is physically attached to the improvements, (ii) serial
numbers are used for the better identification of certain items, or (iii) any
such item is referred to or reflected in any such financing statement or
statements so filed at any time. Similarly, the mention in any such financing
statement or statements of the rights in and to (i) the proceeds of any fire
and/or hazard insurance policy, or (ii) any award in eminent domain proceedings
for a taking or for loss of value, or (iii) the Owner Trust's interest as
lessor in any present or future lease or the rights of the Owner Trust to
income growing out of the use and/or occupancy of the Property, whether
pursuant to lease or otherwise, shall not in any way alter any of the rights of
the Indenture Trustees as determined by this Indenture or affect the priority
of the Indenture Trustees' security interest granted hereby or by any other
recorded document, it being understood and agreed that such mention in such
financing statement or statements is solely for the protection of the Indenture
Trustees in the event any court shall at any time hold with respect to the
foregoing clauses (i), (ii), or (iii) of this sentence, that notice of the
Indenture Trustees' priority of interest, to be effective against a particular
class of persons, must be filed in the Uniform Commercial Code Records.

(e) The Owner Trust warrants that the Owner Trust's name, identity or
legal structure and principal place of business are as set forth in Section
18.06 hereof. The Owner Trust covenants and agrees that the Owner Trust will
furnish the Indenture Trustees with notice of any change in the matters
addressed by the first sentence of this subsection (e) within thirty (30) days
after the effective date of any such change and the Owner Trust, at the
Indenture Trustees' request, will promptly execute any financing statements or
other instruments reasonably deemed necessary by the Indenture Trustees to
prevent any filed financing statement from losing its perfected status.

(f) The information contained in this Article is provided in order
that this Indenture shall comply with the requirements of the Uniform
Commercial Code, as enacted in States in which the Property is located, for
instruments to be filed as financing statements. The "Debtor" is the Owner
Trust and the "Secured Party" is the Indenture Trustees, collectively; the
identities or

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structure and residence or principal places of business of "Debtor" is set
forth above; the mailing address of the "Secured Party" from which information
concerning the security interest may be obtained, and the mailing address of
"Debtor" are as set forth above; and a statement indicating the types, or
describing the terms, of collateral is set forth in the Granting Clauses above.
The respective Maturity Dates of the Mortgage Notes are as set forth in
Exhibits A-1 and A-2 hereto.

ARTICLE XVIII

MISCELLANEOUS

SECTION 18.01. Exculpation and Release of Liability. Without in any
way affecting the limitations on liability set forth in the Operative
Documents, the Indenture Trustee, and each Holder by accepting a Mortgage Note
hereunder, hereby acknowledge and agree that none of the Trust Company,
[Individual Owner Trustee], the Owner Participant, or any director, officer,
employee, stockholder, agent or affiliate of the Trust Company, [Individual
Owner Trustee] or the Owner Participant (the "Exculpated Persons") shall have
any obligation, duty or liability of any kind whatsoever to the Indenture
Trustee or any such Holder in connection with the exercise by any Exculpated
Person of any rights of the Owner Trust or the taking of any action or the
failure to take any action by any Exculpated Person in connection with any
rights of the Owner Trust under the Operative Documents and each such Holder
hereby waives and releases, to the extent permitted by Applicable Law, each
Exculpated Person of any and all such obligations, duties or liabilities.

SECTION 18.02. Capacity in Which Acting. Each of the Owner Trustees
(or their permitted successors or assigns) and the Indenture Trustees (or their
permitted successors) acts hereunder not in its individual capacity but solely
as trustee except as expressly provided herein and in the other Indenture
Documents, and, in the case of Trust Company and Individual Owner Trustee (or
their respective permitted successors or assigns), in the Trust Agreement.

SECTION 18.03. No Legal Title to Indenture Estate in Holders. No
Holder in its capacity as a Holder shall have legal title to any part of the
Indenture Estate. No transfer, by operation of law or otherwise, of any
Mortgage Note or other right, title and interest of any Holder in and to the
Indenture Estate or hereunder shall operate to terminate this Indenture or
entitle such Holder or any successor or transferee of such Holder to an
accounting or to the transfer to it of legal title to any part of the Indenture
Estate.

SECTION 18.04. Sale of Indenture Estate by Indenture Trustees is
Binding. Any sale or other conveyance of all or any part of the Indenture
Estate by the Indenture Trustees made pursuant to the terms of this Indenture
and of the Lease shall bind the Company, the Owner Trust, the Holders and the
Owner Participant and shall be effective to transfer or convey all right, title
and interest of the Indenture Trustees, the Owner Trust, the Owner Participant
and such Holders therein and thereto. No purchaser or other grantee shall be
required to inquire as

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to the authorization, necessity, expediency or regularity of such sale or
conveyance or as to the application of any sale or other proceeds with respect
thereto by the Indenture Trustees.

SECTION 18.05. Indenture for Benefit of Owner Trust, Indenture
Trustees and Holders. Nothing in this Indenture, whether express or implied,
shall be construed to give to any person other than the Trust Company,
[INDIVIDUAL OWNER TRUSTEE], the Owner Trust, the Company, the Indenture
Trustees, as trustees and in their individual capacities, and the Holders, and
their respective successors and permitted assigns, any legal or equitable
right, remedy or claim under or in respect of this Indenture.

SECTION 18.06. No Action Contrary to the Company's Rights Under the
Lease. Notwithstanding any of the provisions of this Indenture to the
contrary, so long as no Lease Event of Default shall have occurred and be
continuing, it is agreed that the Company shall be entitled to have peaceable
and quiet enjoyment of the Property during the term of the Lease as against any
claims by the Indenture Trustees, or any Persons claiming by, through or under
any of them. For purposes of this Section, the Owner Trust shall not be deemed
to claim by, through or under the Indenture Trustees.

SECTION 18.07. Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all notices, requests, demands, approvals,
authorizations, directions, consents, waivers or documents provided or
permitted by this Indenture to be made, given, furnished or filed shall be in
writing, transmitted by hand delivery or by a nationally recognized overnight
courier or by mailing the same by registered or certified mail, return receipt
requested, and (i) if to the Owner Trust, addressed to the Owner Trust in care
of [CORPORATE OWNER TRUSTEE], as Corporate Owner Trustee, at its office at
[CORPORATE OWNER TRUSTEE ADDRESS] (with a copy to the Owner Participant at the
address provided for notice pursuant to [SECTION ___ OF THE OWNER PARTICIPATION
AGREEMENT]) and (ii) if to the Indenture Trustees, to the Corporate Indenture
Trustee at its office at [CORPORATE INDENTURE TRUSTEE ADDRESS], (with a copy to
the Owner Participant at the address provided for notice pursuant to [SECTION
___ OF THE OWNER PARTICIPATION AGREEMENT]). Any party hereto may change the
address to which notices to such party will be sent by giving notice of such
change to the other parties to this Indenture. All such notices shall be
deemed given upon receipt. The inability to make delivery because of a changed
address of which no notice was given, or rejection or refusal to accept any
notice offered for delivery, shall be deemed to be receipt of the notice as of
the date of such inability to deliver or rejection or refusal to accept.

Where this Indenture provides for notice to Holders, such notice shall
be sufficiently given (unless otherwise expressly provided herein) if in
writing and mailed, first-class postage prepaid, to each Holder entitled
thereto, at his last address as it appears in the Register. In any case where
notice to Holders is given by mail, neither the failure to mail such notice,
nor any defect in any notice so mailed, to any particular Holder shall affect
the sufficiency of such notice with respect to other Holders. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the person entitled to receive such notice, either before or

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after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with the Indenture Trustees, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.

In case, by reason of the suspension of or irregularities in regular
mail service, it shall be impracticable to mail notice to the Owner Trust and
Holders when such notice is required to be given pursuant to any provision of
this Indenture, then any manner of giving such notice as shall be satisfactory
to the Indenture Trustees shall be deemed to be a sufficient giving of such
notice.

SECTION 18.08. Compliance Certificates and Opinions. Upon any
application or request by the Owner Trust to the Indenture Trustees to take any
action under any provision of this Indenture, the Owner Trust shall furnish to
the Indenture Trustees an Officer's Certificate, stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or request as to
which the furnishing of documents is specifically required by any provision of
this Indenture relating to such particular application or request, no
additional certificate or opinion need be furnished.

Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:

(1) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;

(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;

(3) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and

(4) a statement as to whether or not, in the opinion of each
such individual, such condition or covenant has been complied with.

SECTION 18.09. Form of Documents Delivered to Indenture Trustees. In
any case where several matters are required to be certified by, or covered by
an opinion of, any specified Person, it is not necessary that all such matters
be certified by, or covered by the opinion of, only one such Person, or that
they be so certified or covered by only one document, but one such Person may
certify or give an opinion with respect to some matters and one or more other

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such Persons as to other matters, and any such Person may certify or give an
opinion as to such matters in one or several documents.

Any certificate or opinion of an officer of the Company or of the
Corporate Owner Trustee may, insofar as it relates to legal matters, be based
upon a certificate or opinion of, or representations by, counsel, unless such
officer knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to the matters upon
which his certificate or opinion is based are erroneous. Any such certificate
or any Opinion of Counsel may, insofar as it relates to factual matters, be
based upon a certificate or opinion of, or representations by, an officer or
officers of the Company or of any Owner Trustee stating that the information
with respect to such factual matters is in the possession of the Company or of
the Corporate Owner Trustee, unless such counsel knows or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous. Any Officer's Certificate,
Officer's Request or Officer's Order shall be signed by a Responsible Officer
who is generally familiar with the terms of and the transactions contemplated
by this Indenture and the other Indenture Documents and, to the extent that
there are any statements of factual matters contained therein, be limited to
such factual matters which are within the personal knowledge of such
Responsible Officer.

Whenever any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, he may, but need not, consolidate such
instruments into one.

SECTION 18.10. Act of Holders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Holders may be embodied in and evidenced
by one or more instruments of substantially similar tenor signed by such
Holders in person or by an agent duly appointed in writing; and, except as
herein or in the Owner Participation Agreement otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustees and, if hereby expressly required, to the
Owner Trust. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 9.02 hereof) conclusive in favor of the Indenture
Trustees and the Owner Trust if made in the manner provided in this Section.

(b) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Mortgage Note shall bind the Holder
of every Mortgage Note issued upon the registration of transfer thereof, or in
exchange therefor or in lieu thereof, in respect of anything done or suffered
to be done by the Indenture Trustees or the Owner Trust in reliance thereon,
whether or not notation of such action is made upon such Mortgage Note.

SECTION 18.11. Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.

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SECTION 18.12. Successors and Assigns. All covenants, agreements,
representations and warranties in this Indenture by the Indenture Trustees and
the Owner Trust shall bind and, to the extent permitted hereby, shall inure to
the benefit of and be enforceable by their respective successors and assigns,
whether or not so expressed.

SECTION 18.13. Severability. In the event any provision in this
Indenture or in the Mortgage Notes shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.

SECTION 18.14. Governing Law; Interpretation. This Indenture and
each of the Mortgage Notes are being executed and delivered in the State of New
York and, except as provided below, the provisions hereof and of the Mortgage
Notes (including all provisions thereof regarding the contracting for, charging
or receiving of interest) shall be construed in accordance with and governed by
the laws of the State of New York, except that at all times the provisions for
the creation, perfection and enforcement of the liens and security interests
created hereunder shall be governed by and construed according to the laws from
time to time in effect in the State in which the Property is situated.

In any jurisdiction in which this Indenture shall be deemed to be a
deed of trust the beneficiaries thereof shall be deemed to be the Holders of
the Mortgage Notes issued and Outstanding hereunder.

SECTION 18.15. Estoppel Certificates. The Indenture Trustees, from
time to time (but not more frequently than twice during any calendar year),
upon not less than 15 days' prior notice (a "Request Notice") from the Owner
Trust, shall execute, acknowledge and deliver a certificate (an "Estoppel
Certificate") to such party as directed by the Owner Trust stating that to the
actual knowledge of the party providing such Estoppel Certificate (i) this
Indenture is unmodified and in full force and effect (or, if there have been
modifications or supplements, that this Indenture is in full force and effect
as modified or supplemented, and setting forth such modifications and
supplements) (ii) the aggregate unpaid principal amount and any accrued but
unpaid interest (as of the date of the Estoppel Certificate) evidenced by the
Outstanding Mortgage Notes and the dates to which scheduled Installment Payment
Amounts and interest have been paid and (iii) the amount of Basic Rent
received, it being intended that an Estoppel Certificate may be relied upon by
such party or any prospective purchaser or mortgagee of its estate specified in
the related Request Notice.

SECTION 18.16. Company Not a Party. No reference to the Company in
this Indenture shall mean that the Company has any obligations under this
Indenture, all obligations of the Company being as set forth in the Indenture
Documents to which it is a party (including, however, provisions thereof that
create obligations of the Company by reference to this Indenture).

93
<PAGE> 103
SECTION 18.17. Special State Law Addendum. The provisions contained
in the Special State Law Addendum are hereby incorporated herein and made a
part hereof.

IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed and, by parties in corporate form, by their
respective officers thereunto duly authorized, and their respective corporate
seals to be hereunto affixed and attested, all as of the day and year first
above written.

[SEAL] [OWNER TRUST], a Delaware business trust

By: [CORPORATE OWNER TRUSTEE], not in its
individual capacity, except as otherwise
provided, but solely as
Corporate Owner Trustee,

Attest: By: Name: _________________
Title: Vice President

________________________
Name:___________________
Assistant Secretary
By:
[INDIVIDUAL OWNER TRUSTEE], not in his
individual capacity, except as otherwise
provided, but solely as Individual
Owner Trustee
WITNESSES

______________________
PRINT NAME:

94
<PAGE> 104

[CORPORATE SEAL] [CORPORATE INDENTURE TRUSTEE], as
Corporate Indenture Trustee

Attest: By:
Name: _________________
Title: Vice President
________________________
Name:___________________
Assistant Secretary

[INDIVIDUAL INDENTURE TRUSTEE]

as Co-Indenture Trustee
WITNESSES

____________________
PRINT NAME:

This document prepared by:

SULLIVAN & CROMWELL
250 Park Avenue
New York, New York 10177
Attn: Arthur S. Adler, Esq.

95
<PAGE> 105
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )

Know all men by these presents that before me, the below-named Notary
Public in and for the State and County named above duly commissioned to take
acknowledgments, there personally appeared [___________________] and
[______________________], each of whom is personally known to me to be a person
named in and who signed the legal instrument to which this acknowledgment is
attached and which was produced to me in the State and County aforesaid, and
being by me first duly sworn each did acknowledge before me, depose and say to
me that he is, respectively, [assistant] vice president and
[__________________] of [CORPORATE OWNER TRUSTEE], a Delaware state banking
association, in its capacity as Trustee named as one of the parties to the
aforementioned legal instrument; that he knows the seal of said corporation;
that the seal imprinted on the legal instrument to which this acknowledgement
is attached is an imprint of the true seal of said corporation; that after
being duly informed of the contents and import of such legal instrument he had
signed and caused the seal of such corporation in its capacity as Trustee to be
imprinted on such legal instrument as the officer of such corporation indicated
above; that he had signed and sealed the same in the name of and on behalf of
such corporation in such capacity by the authority, order and resolution of its
Board of Directors; that he had signed his name thereto on behalf of said
corporation in such capacity by like order; that the execution of said legal
instrument was the free and voluntary act and deed of said corporation in such
capacity for the consideration, purposes, and uses set forth in such legal
instrument; that he had delivered such legal instrument to the other parties
thereto as such; and that on behalf of said corporation in such capacity he had
received a true copy of such legal instrument without charge.

IN WITNESS WHEREOF, I have signed and imprinted my official notarial
seal on this acknowledgment in the State and County named above on the ___ day
of December, 1994.

My commission expires:

______________________________
Notary Public

Print Name:_________________________

<PAGE> 106
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )

Know all men by these presents that before me, the below-named Notary
Public in and for the State and County named above duly commissioned to take
acknowledgments, there personally appeared [INDIVIDUAL OWNER TRUSTEE], who is
personally known to me to be a person named in and who signed the legal
instrument to which this acknowledgment is attached and which was produced to
me in the State and County aforesaid, and being by me first duly sworn did
acknowledge before me, depose and say to me that he is a trustee of [OWNER
TRUST], a Delaware business trust, named as one of the parties to the
aforementioned legal instrument; that after being duly informed of the contents
and import of such legal instrument he had signed such legal instrument as the
trustee of such trust indicated above; that he had signed the same in the name
of and on behalf of such trust; that the execution of said legal instrument was
the free and voluntary act and deed of said trust for the consideration,
purposes, and uses set forth in such legal instrument; that he had delivered
such legal instrument to the other parties thereto as such; and that on behalf
of said trust he had received a true copy of such legal instrument without
charge.

IN WITNESS WHEREOF, I have signed and imprinted my official notarial
seal on this acknowledgment in the State and County named above on the ____ day
of December, 1994.

My commission expires:

______________________________
Notary Public

Print Name:_________________________

<PAGE> 107
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )

Know all men by these presents that before me, the below-named Notary
Public in and for the State and County named above duly commissioned to take
acknowledgments, there personally appeared ____________________________ and
_______________________, each of whom is personally known to me to be a person
named in and who signed the legal instrument to which this acknowledgment is
attached and which was produced to me in the State and County aforesaid, and
being by me first duly sworn each did acknowledge before me, depose and say to
me that he is, respectively, vice president and assistant secretary of
[CORPORATE INDENTURE TRUSTEE], named as one of the parties to the
aforementioned legal instrument; that he knows the seal of said corporation;
that the seal imprinted on the legal instrument to which this acknowledgement
is attached is an imprint of the true seal of said corporation; that after
being duly informed of the contents and import of such legal instrument he had
signed and caused the seal of such corporation to be imprinted on such legal
instrument as the officer of such corporation indicated above; that he had
signed and sealed the same in the name of and on behalf of such corporation by
the authority, order and resolution of its Board of Directors; that he had
signed his name thereto on behalf of said corporation by like order; that the
execution of said legal instrument was the free and voluntary act and deed of
said corporation for the consideration, purposes, and uses set forth in such
legal instrument; that he had delivered such legal instrument to the other
parties thereto as such; and that on behalf of said corporation he had received
a true copy of such legal instrument without charge.

IN WITNESS WHEREOF, I have signed and imprinted my official notarial
seal on this acknowledgment in the State and County named above on the ____ day
of December, 1994.

My commission expires:

______________________________
Notary Public

Print Name:_________________________

<PAGE> 108
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )

Know all men by these presents that before me, the below-named Notary
Public in and for the State and County named above duly commissioned to take
acknowledgments, there personally appeared [INDIVIDUAL INDENTURE TRUSTEE], who
is personally known to me to be a person named in and who signed the legal
instrument to which this acknowledgment is attached and which was produced to
me in the State and County aforesaid, and being by me first duly sworn did
acknowledge before me, depose and say to me that after being duly informed of
the contents and import of such legal instrument he had signed such legal
instrument as his free and voluntary act and deed for the consideration,
purposes, and uses set forth in such legal instrument; that he had delivered
such legal instrument to the other parties thereto as such; and that he had
received a true copy of such legal instrument without charge.

IN WITNESS WHEREOF, I have signed and imprinted my official notarial
seal on this acknowledgment in the State and County named above on the ____ day
of December, 1994.

My commission expires:

______________________________
Notary Public

Print Name:_________________________

<PAGE> 109
SCHEDULE I

[INSERT IF APPLICABLE --

THIS PROPERTY IS SUBJECT TO A GROUND LEASE, dated ______________,
19___ (the "Ground Lease"), dated [__________________], between the
____________________ ("Ground Lessor") and the Company (assigned to
the Owner Trust pursuant to the Assignment dated as December 15,
1994), conveying a leasehold interest in the Land to the lessee
thereunder.]

<PAGE> 1
EXHIBIT 4.6
FORM OF LEASE

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
KMART CORPORATION,

Tenant,

and

[_________________________________]

(solely as Owner Trustee under Trust
Agreement with _______________________, a __________________,
as Owner Participant)

Landlord.

LEASE

Kmart Store No.: ____
Location: _______________________
Owner Trust No.: _______________

Dated as of ______________, 1994

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

Master

<PAGE> 2
TABLE OF CONTENTS

Article Page
- ------- ----
1. DEMISED PREMISES . . . . . . . . . . . . . . . . . . . . . 1

2. TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

3. BASIC AND ADDITIONAL RENT . . . . . . . . . . . . . . . . 2

4. NET LEASE; NON-TERMINATION . . . . . . . . . . . . . . . . 4

5. NO CONTINUOUS OPERATION . . . . . . . . . . . . . . . . . 5

6. REAL ESTATE TAXES . . . . . . . . . . . . . . . . . . . . 5

7. LIABILITY INSURANCE . . . . . . . . . . . . . . . . . . . 14

8. OPTIONS TO EXTEND LEASE . . . . . . . . . . . . . . . . . 15

9. REPAIRS AND MAINTENANCE . . . . . . . . . . . . . . . . . 17

10. ALTERATIONS AND ADDITIONAL CONSTRUCTION . . . . . . . . . 18

11. UTILITIES . . . . . . . . . . . . . . . . . . . . . . . . 19

12. GOVERNMENTAL REGULATIONS . . . . . . . . . . . . . . . . . 19

13. LANDLORD TO GRANT EASEMENTS, DEDICATIONS, ETC. . . . . . . 21

14. INSURANCE; DAMAGE TO DEMISED PREMISES . . . . . . . . . . 22

15. EMINENT DOMAIN . . . . . . . . . . . . . . . . . . . . . . 24

16. INSURANCE PROCEEDS, CLAIMS SETTLEMENT . . . . . . . . . . 26

17. USE, ASSIGNMENT AND SUBLETTING . . . . . . . . . . . . . . 28

18. SIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . 29

19. INGRESS AND EGRESS; LIENS . . . . . . . . . . . . . . . . 30

20. TENANT DEFAULTS . . . . . . . . . . . . . . . . . . . . . 31

21. LANDLORD REMEDIES . . . . . . . . . . . . . . . . . . . . 32

22. BANKRUPTCY . . . . . . . . . . . . . . . . . . . . . . . . 36

23. COVENANT OF TITLE . . . . . . . . . . . . . . . . . . . . 37

-i-

<PAGE> 3
<TABLE>
<S> <C> <C>
24. LANDLORD EXCULPATION . . . . . . . . . . . . . . . . . . . 37

25. REMEDIES CUMULATIVE . . . . . . . . . . . . . . . . . . . 37

26. ESTOPPEL LETTERS . . . . . . . . . . . . . . . . . . . . . 37

27. CONDITION OF PREMISES AT TERMINATION . . . . . . . . . . . 38

28. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . 39

29. NOTICE OF ENVIRONMENTAL MATTERS . . . . . . . . . . . . . 40

30. ENTRY BY LANDLORD . . . . . . . . . . . . . . . . . . . . 40

31. CAPTIONS AND DEFINITIONS . . . . . . . . . . . . . . . . . 41

32. SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . 41

33. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . 41

34. INDEPENDENT COVENANTS . . . . . . . . . . . . . . . . . . 41

35. CHOICE OF LAW . . . . . . . . . . . . . . . . . . . . . . 41

36. WAIVER AND MODIFICATIONS . . . . . . . . . . . . . . . . . 41

37. MEMORANDUM OF LEASE . . . . . . . . . . . . . . . . . . . 42

38. HAZARDOUS MATERIALS . . . . . . . . . . . . . . . . . . . 42

39. ECONOMIC ABANDONMENT . . . . . . . . . . . . . . . . . . . 43

40. TENANT'S PURCHASE OFFER . . . . . . . . . . . . . . . . . 45

41. PROPERTY SUBSTITUTION . . . . . . . . . . . . . . . . . . 46

42. LANDLORD'S RIGHT TO CURE TENANT'S DEFAULT . . . . . . . . 48

43. NO MERGER OF TITLE . . . . . . . . . . . . . . . . . . . . 48

44. OWNERSHIP OF THE LEASED PROPERTY . . . . . . . . . . . . . 48

45. PROCEDURE FOR APPRAISALS . . . . . . . . . . . . . . . . . 48

46. SURVIVAL OF TENANT'S OBLIGATIONS . . . . . . . . . . . . . 50

47. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . 50

48. LIABILITIES OF LANDLORD . . . . . . . . . . . . . . . . . 50

49. NOTE INDENTURE . . . . . . . . . . . . . . . . . . . . . . 50
</TABLE>

-ii-

<PAGE> 4
SCHEDULES AND EXHIBITS

Exhibit A Legal Description

Exhibit B Depiction of Site

Exhibit C Rents and Rent Payment Dates

Exhibit C-1 Landlord's Debt

Exhibit C-2 Rental Adjustment Certificate

Exhibit D Termination Value

Exhibit E Form of Estoppel Letter

<PAGE> 5

LEASE

THIS LEASE made and entered into as of this ____ day of
______________________, 1994, between __________________________, a national
banking association, not in its individual capacity, except as expressly stated
herein, but solely as Owner Trustee under Trust Agreement with
______________________________, a ____________________, of even date herewith,
having its principal office at ________________________ ("Landlord"), and KMART
CORPORATION, a Michigan corporation having its principal office at 3100 West Big
Beaver Road, Troy, Michigan 48084 ("Tenant" as tenant hereunder, and "Kmart" in
its individual capacity).

RECITALS:

A. By Agreement for Sale of Real Estate of even date herewith
("Purchase Agreement"), Tenant has sold [assigned in the case of a ground leased
property] to Landlord for the benefit of _______________________, a
______________________ ("Owner Participant"), an Estate for Years interest in
certain properties including the Land (as hereinafter defined) and a fee
interest in the site and building improvements and certain personalty thereon,
and has sold to __________, a _______________________ ("Remainder Purchaser") a
remainder interest in such Land (the "Remainder Interest") [all of Tenant's
right, title and interest in and to the ground leasehold interest in certain
properties including the Ground Lease as herein defined and a fee interest in
the site and building improvements and certain personalty thereon];

B. Tenant desires and Landlord has agreed to lease back the Demised
Premises (as hereinafter defined) to Tenant on the terms and conditions
hereinafter set forth.

NOW, THEREFORE, in consideration of the rents, covenants and conditions
herein set forth, Landlord and Tenant do hereby covenant, promise and agree as
follows:

1. Demised Premises.

(a) Landlord demises unto Tenant and Tenant does take from
Landlord for the lease term all of Landlord's right, title and interest in the
following property: the land as legally described in Exhibit A, attached hereto
and made a part hereof, and situated in the City of ___________, County of
___________, State of _______________ and depicted on Exhibit B attached hereto
and made a part hereof ("Land"), the building (designated Kmart), personalty and
all site improvements now or hereafter constructed or located thereon, together
with all licenses, rights,

<PAGE> 6
privileges and easements appurtenant thereto. (The Land, building, personalty
and site improvements being collectively referred to as the "Demised
Premises")

(b) Tenant hereby acknowledges and agrees that the Demised
Premises are let by Landlord in an "as is" condition without any warranty,
express or implied, of habitability or fitness for any particular purpose and
without representation or warranty with regard to any latent or patent faults or
defects therein or as to the value or operation thereof.

2. Term.

The interim term of this Lease ("Interim Term") shall commence on
the date hereof and shall terminate on ____________, 199_ and the base term of
this Lease ("Base Term") shall commence on ____________, 199_ and terminate on
______________, 20__; provided, however, the Lease Term may be extended as
provided in Article 8 hereof. The phrase "Lease Term," as used in this Lease,
shall be the Interim Term and Base Term of this Lease together with any
extension thereof pursuant to Article 8.

3. Basic and Additional Rent.

(a) Tenant shall pay by wire transfer of funds to Landlord or its
designee, at such place as Landlord shall designate in writing from time to
time, (i) rent during the Interim Term ("Interim Rent") on the first day of each
month ("Interim Rent Payment Dates") as set forth in Exhibit C attached hereto
and made a part hereof; and (ii) rent during the Base Term and during any
extended term pursuant to Article 8 ("Basic Rent") in such amounts and
semiannually on such dates ("Rent Payment Dates") as set forth in Exhibit C. No
Basic Rent shall be due and payable during the Interim Term. Tenant shall also
pay during the Lease Term all amounts of Additional Rent as and when due.
Interim Rent, Basic Rent and Additional Rent are referred to herein collectively
as "Rent."

"Additional Rent" shall mean: (i) all other monetary obligations
of Tenant hereunder or under any of the other Operative Documents of any nature
or type whatsoever, including but not limited to payment of taxes, insurance,
expenses for repairs, maintenance and replacements and an amount equal to any
Make-Whole Premium (each as hereinafter defined) expressly required to be paid
under this Lease, (ii) Tenant's share of expenses under the REA (as hereinafter
defined), [and any rental payable under the Ground Lease referred to in Article
3A below], (iii) Trustee Expenses (as defined below), and (iv) amounts due and
payable by Tenant under that certain Master Indemnification Agreement and that
certain Tax Indemnification Agreement, each of even date herewith (collectively,
"Indemnification Agreements"). Notwithstanding the foregoing sentence, to the
extent that any amounts relate solely to a property or properties other than the
Demised Premises, such amounts shall not be treated as Additional Rent
hereunder.

-2-
<PAGE> 7
Trustee Expenses shall mean (i) the ordinary and extraordinary
fees and expenses of Landlord as Owner Trustee ("Owner Trustee") under that
certain Trust Agreement with Owner Participant of even date herewith ("Trust
Agreement"), but not including fees and expenses incurred as a result of Owner
Participant's or Owner Trustee's breach of their obligations under the Operative
Documents as defined in the Purchase Agreement (except to the extent caused by
Tenant's default hereunder or under any other Operative Document); (ii) the
ordinary and extraordinary fees and expenses of ________________________, as
trustee ("Indenture Trustee") under that certain Indenture, Mortgage and Deed of
Trust, Assignment of Rents and Security Agreement with Landlord of even date
herewith ("Note Indenture"), but excluding any principal, interest, prepayment
premium or penalties on Landlord's indebtedness evidenced by the Note Indenture
("Landlord's Debt" or "Notes"); and (iii) the ordinary and extraordinary fees
and expenses of each of the Pass Through Trustees (being herein collectively
referred to as the "Pass Through Trustee") under those certain separate Pass
Through Trust Agreements 1994-A-[1/2] of even date herewith (collectively
referred to as the "Pass Through Trust Agreement") with Tenant, but excluding
any principal, interest, prepayment premiums or penalties on the Pass Through
Certificates issued under the Pass Through Trust Agreement except as provided in
the Pass Through Trust Agreement.

(b) In the event any Rent payable to Landlord is not received by
Landlord on the due date therefor, a late charge shall be incurred and shall be
paid as Additional Rent hereunder on the amount due from the due date therefor
to the date of payment thereof in an amount equal to (i) one percent (1%) above
the weighted average annual coupon rate of interest on such portion of Rent
equal to the then due principal, interest and premium thereon on the Notes and
(ii) in the case of such portion of Rent not described in clause (i), interest
on any other Rent not paid when due at a rate per annum equal to the rate of
interest publically announced by Citibank, N.A., in New York, New York from time
to time at its "prime rate" for United States dollar loans plus two percent
(2%). Such charges at such rates are referred to herein collectively as the
"Default Rate."

(c) Tenant covenants to Landlord and Indenture Trustee that (i)
as of the date hereof and as of the date of each Rental Adjustment (as
referenced below), each installment of Interim Rent and Basic Rent as of the due
date of such installment as set forth on Exhibit C hereto is, and shall be, at
least equal to the amount of principal and interest on the Landlord's Debt as
set forth on Exhibit C-1 required to be paid by Landlord under the Note
Indenture (as in effect on the date hereof) on the corresponding due date of
such installment of Interim Rent and Basic Rent; and (ii) as of the date hereof,
the date of each Rental Adjustment (as referenced below) and the date of each
Termination Value adjustment pursuant to Article 15(d), the sum of all Interim
Rent and Basic Rent payable in arrears on such date together with each
Termination Value set forth on Exhibit D hereto is, and shall be, sufficient to
enable Landlord to pay in full, as of the date of payment thereof, the aggregate
unpaid principal of the outstanding Landlord's Debt required to be paid by

-3-
<PAGE> 8
Landlord as of such date under the Note Indenture (as in effect on the date
hereof), together with all unpaid interest thereon accrued to the date on which
such amount is paid.

(d) In the event that a Rental Adjustment shall be required
pursuant to and in accordance with Section ____ of the Purchase Agreement,
Landlord and Tenant shall execute and deliver (i) to each other and to Indenture
Trustee a supplement to the Lease, to reflect such adjustment, provided that
such adjustment shall be effective for all purposes of this Lease regardless of
whether such supplement is actually executed and delivered, and (ii) to
Indenture Trustee, a certificate substantially in the form of Exhibit C-2
hereto. "Rental Adjustment" shall have the meaning set forth in Section ____ of
the Purchase Agreement and shall include adjustment of Termination Values
pursuant to such Section.

[3A. Ground Lease. Tenant shall also pay all additional rent, basic
rent and percentage rent, each as defined under that certain Ground Lease dated
_______________, 199__, as amended by _____________________ dated
_________________, 199__, between Kmart Corporation, as Ground Lessee, and
________________________, as Ground Lessor (as amended, the "Ground Lease"),
directly to the Ground Lessor, as such rents become due thereunder during the
Base Term of this Lease and each renewal term of this Lease that is exercised by
Tenant. This Lease is subject and subordinate to the terms and conditions of
the Ground Lease and any further amendments thereto.

During the term of this Lease, Tenant shall also comply with all
of the covenants, conditions and restrictions of the Lessee contained in the
Ground Lease. In the event the obligations and duties of the Lessee under the
Ground Lease conflict with the obligations and duties of Tenant hereunder, any
actions of Tenant in connection therewith taken in compliance with the Ground
Lease shall not give rise to or create a default by Tenant under this Lease. If
and to the extent that the Ground Lease imposes greater or additional
obligations upon the Lessee thereunder, Tenant covenants and agrees to perform
the same.]

4. Net Lease; Non-Termination.

(a) Tenant acknowledges and agrees that this Lease is an
absolute net lease. All monetary obligations under this Lease, including, but
not limited to, payment of all Rent shall be paid by Tenant without notice,
demand, setoff, counterclaim, abatement, deduction or defense. Tenant shall
have no right to terminate this Lease (except as expressly provided in Articles
5, 14, 15 and 39 hereof) nor shall Tenant be entitled to any abatement or
reduction of Rent hereunder (except to the extent this Lease is terminated as
expressly provided in Articles 14, 15 and 39 hereof), nor shall the obligations
of Tenant under this Lease be affected, by reason of: (i) any damage to or
destruction of all or any part of the Demised Premises from whatever cause, (ii)
the taking of the Demised Premises or any portion thereof by eminent domain or
other taking by a party empowered with the authority of eminent domain, (iii)
the

-4-
<PAGE> 9
prohibition, limitation or restriction of Tenant's use of all or any part of
the Demised Premises, or any interference with such use, (iv) any default on
the part of Landlord under this Lease, (v) any eviction by a holder of
paramount title or otherwise, (vi) any purported merger of estates resulting
from Tenant's acquisition or ownership of all or any part of the Demised
Premises otherwise than as expressly provided herein, or (vii) any other cause
whether similar or dissimilar to the foregoing, any present or future law to
the contrary notwithstanding.

(b) Tenant agrees that it will remain obligated under this Lease
in accordance with its terms, and that it will not take any action to terminate,
rescind or void this Lease, notwithstanding (i) the bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution or
winding-up or other proceeding affecting Landlord or its successors in interest,
or (ii) any action with respect to this Lease which may be taken by any trustee
or receiver of Landlord or its successor in interest or by any court in any such
proceeding.

5. No Continuous Operation.

Nothing contained in this Lease shall be construed to be a
covenant or other obligation on the part of Tenant, either express or implied,
to operate a business at the Demised Premises, except as the same may be
required by Laws or by any agreement Tenant is required to comply with pursuant
to Article 9(b) hereof.

6. Real Estate Taxes.

(a) Tenant shall pay and discharge all ad valorem real estate
taxes or other taxes in the nature thereof and all assessments, general or
specific (regardless how named or denominated), levied or imposed against or
with respect to (i) the Demised Premises or any part thereof or interest therein
or any addition, alteration, modification or improvement thereto, (ii) the
Remainder Interest, (iii) the Rent, or (iv) Landlord's interest in this Lease or
in the Demised Premises, including, in each case, any interest, penalties and
additions to tax relating to such taxes or assessments (collectively referred to
as "Property Assessments") at any time prior to, during or with respect to any
period ending on or prior to, or resulting from or attributable in any respect
to acts or events occurring on or prior to or relating to payments made by
Tenant under the Operative Documents (as defined in the Purchase Agreement) at
any time prior to or after, the later of (x) the expiration or earlier
termination of the Lease and (y) Tenant's actual return of possession of the
Demised Premises in accordance with this Lease.

(b) Tenant shall also pay and discharge all taxes, levies,
charges, licenses, fees, imposts, duties, withholdings, liabilities, costs,
expenses or assessments of the United States of America or any state or
political subdivision or taxing authority thereof or therein (including any
interest, penalties and additions to tax thereon or thereto), which are

-5-
<PAGE> 10
levied, assessed or imposed on or with respect to Landlord, Tenant, the Demised
Premises or any part thereof or interest therein or any addition, alteration,
modification or improvements thereto, the Remainder Interest or the Rent
payable hereunder including, without limitation, taxes or such other amounts
that are or are in the nature of sales, use, rental, value added, filing,
recording and transfer taxes, and any and all water, sewer or other such
charges, excises, levies, fees, licenses, duties, withholdings, permits,
inspections, real property franchise charges and other governmental charges of
every character (in each case, regardless how named or denominated) which, at
any time prior to, during or with respect to any period ending on or prior to,
or resulting from or attributable in any respect to acts or events occurring on
or prior to or relating to payments made by the Tenant under the Operative
Documents at any time prior to or after, the later of (x) the expiration or
earlier termination of the Lease and (y) the Tenant's actual return of
possession of the Demised Premises in accordance with this Lease, may be
levied, assessed or imposed on or in connection with or with respect to (i) the
Demised Premises, or any estate, right, title or interest therein, or any
construction, preparation, installation, inspection, delivery, non-delivery,
acceptance, rejection, purchase, ownership, condition, maintenance, repair,
storage, abandonment, retirement, substitution, transfer, occupancy, operation,
leasing, subleasing, use or possession of, or sales from, or other activity
conducted on the Demised Premises, any part thereof or any addition,
alteration, modification or improvement thereto, (ii) the Remainderman
Interest, (iii) this Lease, (iv) the Rent or receipts or earnings arising from
or received by a party entitled to the benefits of this Article 6 with respect
to the Demised Premises or any part thereof or any interest therein or any
dispositions thereof, (v) any other amount paid or payable pursuant to the
Lease or any document, amendment, supplement, waiver or consent relating
thereto or (vi) otherwise with respect to or in connection with the
transactions contemplated by this Lease. Any such taxes, levies, charges,
assessments or other amounts payable by Tenant hereunder together with Property
Assessments payable by Tenant hereunder shall be referred to as "Assessments"
for all purposes of this Lease.

(c) Nothing in paragraphs (a) and (b) shall require Tenant to
pay or reimburse Landlord for the payment of (w) any federal, state or municipal
net income tax (including any interest, penalties and additions to tax thereon
or thereto), or any net profit, inheritance, estate, succession, gift, or
franchise tax (regardless how named or denominated) except for any such tax (i)
which is in Direct Substitution (which Direct Substitution is documented by
published administrative regulation, fiat or other official ruling, notice or
release of any kind and/or in a statutory enactment or legislative history
thereof by the state or political subdivision which enacted and/or levied any
such tax) for any Assessment which Tenant is obligated to pay under this Lease,
(ii) which is, or is in the nature of, a real property franchise charge, or a
sales, use, rental, property, value added, transfer, stamp or license tax, (iii)
which is necessary to make any payments hereunder on an After-Tax Basis (as
defined in the Master Indemnification Agreement), (x) any transfer tax imposed
upon the sale of all or a part of the Demised Premises by Landlord except for

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<PAGE> 11
(i) a sale and transfer pursuant to Tenant's Purchase Offer set forth or in
Articles 14, 15 or 40 hereof or any sale to a third party under Article 39,
hereof, (ii) any disposition or transfer resulting in connection with Articles
9, 10, 13, 21 or 41 hereof, and (iii) a transfer in connection with an Event of
Default hereunder, (y) any tax, assessment, charge or levy imposed or levied
upon or assessed against any property, any income or any business activity of
Landlord solely to the extent such tax, assessment, charge or levy would have
been imposed or levied in the absence of the transactions contemplated by the
Operative Documents (including any intangibles tax imposed with respect to any
debt or investment paper of the Landlord that is unrelated to the transactions
contemplated by the Operative Documents or the Owner Participant's Financing
(as defined in the Master Indemnification Agreement) or (z) with respect to
Landlord, any tax resulting from the willful misconduct (including tax fraud)
or gross negligence of Landlord.

(d) The date of levy of all Assessments shall be deemed to be the
earlier of the due date for such Assessment or the date specified by each
applicable taxing jurisdiction on which such taxes shall become a lien on the
Demised Premises. Tenant's liability and obligation hereunder to pay such
Assessments shall be fully accrued, fixed and final on the date of levy thereof
subject to the rights to contest any such Assessments provided in this Article
6. In the event any such Assessments shall under law be payable to the
applicable taxing authority in a lump sum or on an installment basis, so long as
no Material Default or Event of Default shall have occurred and be continuing,
Tenant shall have the sole right to elect the basis of legal payment. If Tenant
shall elect to pay such Assessments on the installment basis, then Tenant shall
pay those installments which relate to Assessments payable by Tenant hereunder
directly to the applicable taxing authority.

(e) (1) If any written claim shall be made against Landlord
or if any proceeding shall be commenced against Landlord (including a written
notice of such proceeding) for any Assessments as to which Tenant may be
obligated pursuant to this Article 6, Landlord shall promptly notify Tenant in
writing and shall not take any action with respect to such claim, proceeding or
Assessments without the written consent of Tenant, which consent shall not be
unreasonably withheld or delayed, for 60 days after the receipt of such notice
by Tenant; provided, however, that, in the case of any such claim, proceeding or
Assessment, if Landlord shall be required by law or regulation to take action
prior to the end of such 60-day period, Landlord shall in such notice to Tenant,
so inform Tenant, and Landlord shall not take any action with respect to such
claim, proceeding or Assessment without the written consent of Tenant, which
consent shall not be unreasonably withheld or delayed, for 10 days after the
receipt of such notice by Tenant unless Landlord shall be required by law or
regulation to take action prior to the end of such 10-day period, in which case
Landlord may take any action with respect to such claim, proceeding or
Assessment prior to the end of such 10-day period, provided Landlord has not, at
the time of taking such action, received a written request contemplated by
6(e)(2), below.

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<PAGE> 12
(2) If requested by Tenant within 60 days or such shorter period
as specified in 6(e)(1) above, after receipt by Tenant of the required notice
with respect to the claim or proceeding that is the subject of such notice, or,
in the case of any claim or proceeding with respect to which Tenant (as opposed
to Landlord) receives notice, upon the request of Tenant, Landlord either (i) in
the case of an Assessment which may be contested in the name of Tenant and
independently (without joinder, contribution or otherwise) from any claim,
proceeding or Assessment that is not subject to indemnification by Tenant, shall
permit the Tenant to control or, in the case of any claim, proceeding or
Assessment, may request the Tenant to control, or (ii) in the case of a claim,
proceeding or Assessment which must be contested in the name of Landlord, but
which may be contested independently (without joinder, contribution or
otherwise) from any claim, proceeding or Assessment that is not subject to
indemnification by Tenant, may, upon prior written consent by Landlord which
consent shall be in its sole discretion, exercised in good faith, permit Tenant
to control (so long as, in the good faith judgment of Owner Participant, there
is no reasonable possibility that the Tenant's direction of such contest could
have any adverse impact on the financial or public relations interests of
Landlord or Owner Participant, in which case, Landlord may assert or reassert
control of the contest; provided, however, the foregoing right to assert or
reassert control shall not apply to any ad valorem real estate or personal
property tax contest) (any contest of any claim, proceeding or Assessment
("Contest") described in the foregoing clauses (i) or (ii) and for so long as
Tenant controls the Contest being hereinafter referred to as a
"Tenant-Controlled Contest,") or (iii) in the case of an Assessment the Contest
of which is not a Tenant- Controlled Contest, shall itself, contest in good
faith (including, without limitation, by pursuit of appeals and administrative
procedures) the validity, applicability or amount of such Assessments.

(3) No matter who is in control, a Contest, at the election of
the Controlling Party (as defined herein), may include, without limitation, a
challenge to the validity, applicability or amount of such Assessment by:

(i) resisting payment thereof;

(ii) not paying the same except under protest (which protest
must be pursued using reasonable efforts in appropriate administrative and/or
judicial proceedings) if protest shall be necessary and proper; or

(iii) if payment shall be made, using reasonable efforts to
obtain a refund thereof in appropriate administrative and/or judicial
proceedings

(it being understood that Tenant may appeal or require Landlord to appeal to
any appropriate administrative or judicial appeal body; provided, however, that
no appeal shall be permitted or required hereunder to the United States Supreme
Court.)

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<PAGE> 13

(4) In no event shall such Contest be required or permitted
unless:

(i) in the case of a contest (A) which must be contested in the
name of Landlord or (B) which is contested by Landlord in the name of Tenant,
the amount at issue (taking into account all similar and logically related
claims with respect to the transactions contemplated by the Operative
Documents to the extent relating to the Demised Premises that have been or
could be raised in an audit by the taxing authority in question for any other
taxable period with respect to which an assessment of a tax deficiency is not
barred by a statute of limitations, including, without limitation, such
claims that may arise in future periods) exceeds $25,000;

(ii) Tenant shall have agreed in writing to pay Landlord and
shall pay on an After-Tax Basis (as defined in the Master Indemnification
Agreement) as incurred all reasonable out-of-pocket costs and expenses Owner
Participant and Landlord shall incur in connection with the contest of such
claim (including, without limitation, all reasonable costs, expenses, legal
and accounting fees and disbursements);

(iii) Landlord shall have determined in its sole discretion,
exercised in good faith, that the action to be taken will not result in any
material danger of sale, forfeiture or loss of any of the Demised Premises,
the Remainder Interest or any part thereof or interest therein or the
creation of any lien on any of the Demised Premises, the Remainder Interest
or any part thereof or interest therein, other than any Permitted Liens and
that there is no risk of criminal liability that may be imposed on or with
respect to Landlord or Owner Participant;

(iv) if such Contest is to be effected by payment of the claim,
Tenant shall advance the amount thereof plus, as applicable, interest,
penalties and additions to tax with respect thereto on an interest-free basis
(at no additional net after-tax cost to Landlord but taking into account any
net tax savings associated with such advance);

(v) no Material Default or Event of Default shall have occurred
and be continuing;

(vi) in the case of a Contest which must be contested in the
name of Landlord or which is contested by Landlord in the name of Tenant,
(A) prior to initiating the Contest, Tenant shall have furnished Landlord
with an opinion of independent tax counsel selected by the Tenant and
reasonably acceptable to Landlord ("Tax Counsel"), which opinion shall be
furnished solely at Tenant's expense, to the effect that a Reasonable Basis
(as defined in the Master Indemnification Agreement) exists for such Contest
and (B)

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<PAGE> 14
prior to the appeal of any adverse judicial determination, Tenant shall
have furnished Landlord with an opinion of Tax Counsel, which opinion shall
be furnished solely at Tenant's expense, to the effect that there is a
Reasonable Basis for concluding that there will be a reversal or other
substantial favorable modification of such determination on appeal; and

(vii) After the completion of an administrative proceeding of
first instance and prior to any administrative appeal, Tenant shall have
acknowledged in writing its obligation to indemnify Landlord for the
Assessment hereunder in the event the Contest is unsuccessful (in whole or in
part) or shall, in good faith, have notified Landlord of the reasons Tenant
is not or may not be liable for the Assessment if the Contest is unsuccessful
(in whole or in part). Notwithstanding the foregoing, Tenant shall have
acknowledged in writing its obligation to indemnify (in whole or in part)
Landlord for the Assessment hereunder in the event that the Contest is
unsuccessful (in whole or in part) prior to any petition or complaint to a
court. Any such acknowledgment hereunder shall not preclude Tenant from
raising a defense to liability under this Article 6 if a court of competent
and proper jurisdiction has rendered a decision that the cause of the claim
is not one for which Tenant is responsible to pay an Assessment hereunder or
an indemnity under [Section 2] of the Master Indemnification Agreement.]

(5) In no event shall Landlord be required to contest any claim,
proceeding or Assessment if the subject matter of such claim, proceeding or
Assessment shall be of a continuing nature and shall have previously been the
subject of an adverse final determination hereunder or under the Master
Indemnification Agreement after exercise by Tenant of its rights pursuant to
this Article 6 or under the Master Indemnification Agreement, unless Tenant
shall have delivered to Landlord at Tenant's expense an opinion of Tax Counsel
to the effect that as a result of a change in law or fact it is more likely than
not that Landlord will prevail in the contest of such claim.

(6) Tenant shall conduct any Tenant-Controlled Contest and
Landlord shall control any Contest other than a Tenant- Controlled Contest. The
party conducting the Contest ("Controlling Party") shall consult in good faith
with the other party ("Noncontrolling Party") and its counsel with respect to
such Contest but the decisions regarding what actions to be taken shall be made
by the Controlling Party in its sole judgment (exercised in good faith). In
addition, the Controlling Party shall keep the Noncontrolling Party reasonably
informed as to the progress of the Contest, and shall provide the Noncontrolling
Party with a copy of (or appropriate excerpts from) any reports or claims issued
by the relevant auditing agents or taxing authority to the Controlling Party or
any affiliate thereof, in connection with such claim, proceeding or Assessment
and/or the contest thereof.

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<PAGE> 15
(7) Except as provided in the next sentence hereof, Landlord
shall not settle any Contest hereunder without the consent of Tenant, which
consent shall not be unreasonably withheld. Notwithstanding anything contained
in this Article 6, Landlord shall not be required to contest any claim or permit
Tenant to contest any claim and may settle any Contest without the consent of
Tenant if Landlord (i) shall waive its right to reimbursement or indemnity under
this Article 6 and under the Master Indemnification Agreement or otherwise with
respect to such claim for such claim, proceeding or Assessment (and any claim
made by the claiming taxing authority or any other taxing authority with respect
to the same or any other taxable periods that are based, in whole or in part,
upon the resolution of such claim), and (ii) shall pay to Tenant any amount
previously paid or advanced by Tenant pursuant to this Article 6 or under the
Master Indemnification Agreement with respect to such claim for such Assessment
or the contest of such Assessment other than the costs and expenses of the
contest of such claim paid by Tenant in accordance with clause (2) of the first
proviso of Article 6(e)(2) hereof or [clause 2 of the first proviso of Section
2(4)(b)] of the Master Indemnification Agreement.

(f) (1) Any amount payable by Tenant to Landlord pursuant to this
Article 6 shall be paid within 30 days after receipt by Tenant of a written
demand therefor from Landlord accompanied by a written statement describing in
reasonable detail the amount so payable, but (except as provided in this Article
6) shall in no event be payable before the date such Assessment is due. Any
payments made pursuant to this Article 6 shall be made directly to Landlord or
to Tenant, as the case may be, in immediately payable funds at such bank or to
such account as specified by the payee in written directions to the payor, or,
if no such direction shall have been given, by check of the payor payable to the
order of the payee and mailed to the payee by certified mail, postage prepaid at
its address as set forth herein, or in the Purchase Agreement or as provided to
the payor from time to time in writing. Any Assessments which are the
obligation of Tenant hereunder shall be payable by Tenant, to the extent
allowed, directly to the appropriate taxing authority on or before the time, and
in the manner, prescribed by applicable Laws without the necessity of any prior
demand by Landlord.

(2) In the event Tenant fails to make any payment required under
this Article 6, and Landlord makes a payment with respect to any such
Assessments that are due and payable at the time of such payment (other than
with funds advanced to Landlord on an interest-free basis by Tenant pursuant to
this Article 6) Tenant shall pay to Landlord interest on the amount of such
payment at the Default Rate (as defined in Article 1(b)(ii)) from (A) the date
of payment by Landlord if it notifies Tenant that such payment has been made
within 5 days of making such payment, or (B) from the date Landlord notifies
Tenant of such payment in all other cases, in either case to the date of
payment by Tenant to Landlord hereunder. Any amount payable under this Article
6 that is not paid when due shall bear interest at the Default Rate (as defined
in Article 1(b)(ii)).

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<PAGE> 16
(3) Any amount payable to Tenant pursuant to this Article 6
shall not be paid or retained by Tenant if at the time of such payment or
retention a Material Default or Event of Default shall have occurred and be
continuing. At such time as there shall not be continuing any such Material
Default or Event of Default, such amounts shall be paid to Tenant to the extent
not previously paid to Tenant.

(g) If any report, return or statement ("Filing") is required to be
filed with respect to any Assessment that is subject to reimbursement or
indemnification under this Article 6 or otherwise, Tenant shall promptly notify
Landlord of such requirement in writing and, if permitted by applicable Laws and
regulations to do so, Tenant shall timely file or cause to be filed such Filing
with respect to such Assessment (except for any such Filing that Landlord has
notified Tenant in writing that Landlord intends to file) and will (if ownership
of the Demised Premises or any part thereof or interest therein is required to
be shown on such Filing) show the ownership of the Demised Premises in the name
of Landlord and send a copy of such Filing to Landlord; provided, however, that
Landlord, at Tenant's written request, shall have furnished Tenant with such
information, not within the control of Tenant, as is in Landlord's control or is
reasonably available to Landlord and necessary to file such Filing; provided,
however, Tenant shall pay all out-of-pocket expenses of Landlord and Owner
Participant in connection therewith. If Tenant is not permitted by applicable
Laws to file any such Filing, Tenant will promptly notify Landlord of such
requirement in writing and prepare and deliver to Landlord a proposed form of
such Filing within a reasonable time, and in all events at least 15 days prior
to the time such Filing is required to be filed. In the case of any Filing
either required to reflect items in addition to Assessments imposed on Tenant
under this Article 6 (or indemnified against by Kmart under [Section 2] of the
Master Indemnification Agreement) or which Landlord has notified Tenant in
writing that it will prepare and file, Tenant shall, at its expense, upon the
written request of Landlord, provide Landlord with such information as is within
Tenant's reasonable control or access. Tenant shall hold Landlord harmless from
and against any liabilities, including, but not limited to penalties, additions
to tax, fines and interest, arising out of any insufficiency or inaccuracy in
any such Filing, if such insufficiency or inaccuracy is attributable to Tenant.

(h) Tenant's obligations provided for in this Article 6 shall be those
of a primary obligor whether or not Landlord may also be indemnified with
respect to the same matter under the terms of the Purchase Agreement, the Trust
Agreement, the Master Indemnification Agreement or any other document or
instrument and Landlord may in seeking reimbursement or indemnification from
Tenant proceed directly against Tenant without seeking to enforce any other
right of indemnification (it being agreed that the foregoing is not intended to
grant Landlord any right to any double recovery or double indemnity with respect
to any claim, proceeding or Assessment hereunder of amounts for which Landlord
has received under such other document or instrument (and is entitled to retain
full indemnification). If Tenant shall have fully reimbursed or indemnified

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<PAGE> 17
Landlord, then Tenant shall be subrogated to the rights of Landlord with
respect to any such reimbursed or indemnified claim. Tenant further
acknowledges and agrees that nothing contained herein is intended to reduce or
impair any rights of Landlord or any other Tax Indemnitee (as defined in the
Master Indemnification Agreement) or any obligations of Tenant under [Section
2] of the Master Indemnification Agreement (including, without limitation,
Tenant's obligations with respect to contest preconditions).

(i) If Landlord shall receive a refund of all or part of any
Assessments paid, reimbursed or advanced by Tenant with respect to any Contest
under this Article 6, then, provided no Material Default or Event of Default
shall have occurred and be continuing, Landlord shall pay to Tenant within 30
days of such receipt an amount equal to the lesser of (A) the amount of such
refund of such Assessment plus or minus any net tax benefit or cost (taking into
account any Assessments incurred by Landlord by reason of the receipt or accrual
of such refund) realized by Landlord as a result of any payment made pursuant to
this sentence (including this clause (A)), and (B) the amount of such Assessment
paid, reimbursed or advanced by Tenant to Landlord, it being intended that
Landlord shall retain a net tax benefit pursuant to this Article 6 only if
Tenant shall first have been reimbursed for all Assessments it paid to Landlord
pursuant to this Article 6. If, in addition to such refund, Landlord shall
receive an amount representing interest on the amount of such refund, Landlord
shall pay Tenant within 30 days of receipt, that portion of such interest that
shall be fairly attributable to Assessments paid, reimbursed or advanced by
Tenant prior to the receipt of such refund. Any subsequent denial, loss,
repayment or recapture of such refund will be treated as an Assessment for which
the Tenant is responsible hereunder subject to Tenant's rights to contest such
denial, loss, repayment or recapture under, and in accordance with, Article 6(e)
as though it were a new claim, proceeding or Assessment hereunder.

(j) Any payment or indemnity to or for the benefit of Landlord with
respect to any Assessment which is subject to payment and indemnification under
this Article 6 shall (A) reflect the current combined net savings actually
realized by Landlord resulting from the current deduction of such indemnified
Assessment and (B) include, after taking into account the savings described in
clause (A), the amount necessary to hold Landlord harmless on an After-Tax Basis
(as defined in the Master Indemnification Agreement). If, by reason of any
Assessment payment made to or for the account of Landlord by or on behalf of
Tenant pursuant to this Article 6 (or the circumstances or event giving rise
thereto), Landlord actually realizes a net tax benefit, refund, saving,
deduction or credit against Assessments not indemnified by Tenant under any
Operative Document, which benefit, refund, saving, deduction or credit was not
previously taken into account in computing such payment, provided no Material
Default or Event of Default has occurred and is continuing, Landlord shall
promptly pay to Tenant an amount equal to the sum of (I) the actual net
reduction in Assessments, if any, realized by Landlord which is attributable to
such net tax benefit, refund, saving, deduction or credit and (II) the actual
net reduction in Assessments, if any, realized by

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<PAGE> 18
Landlord as the result of any payment made by Landlord pursuant to this
sentence. Notwithstanding the foregoing, Landlord shall not be required to
make any payment to Tenant pursuant to this Article 6 to the extent such
payment would exceed, in the aggregate at any time, the amount of all prior
payments made by or on behalf of Tenant to Landlord of the Assessment giving
rise to such tax savings less the amount of all prior payments made by Landlord
to Tenant of tax savings in respect of such Assessment pursuant to this Article
6, but any such excess shall reduce pro tanto any amount that Tenant is
subsequently obligated to pay Landlord pursuant to this Article 6. If any
amount otherwise payable to Tenant is not payable by reason of the occurrence
and continuation of a Material Default or an Event of Default, such amount
shall be payable when such Material Default or Event of Default is no longer
continuing. The disallowance or reduction of any tax benefit, refund, savings,
deduction or credit with respect to which Landlord has made a payment to Tenant
under this Article 6 or which was taken into account in calculating any such
payment under this Article 6 shall be treated as an Assessment as to which
Tenant is obligated to pay or reimburse Landlord hereunder subject to Tenant's
rights to contest such Assessment under, and in accordance with, Article 6(e)
as though it were a new claim, proceeding or Assessment hereunder.

7. Liability Insurance.

(a) During the Lease Term, Tenant at its sole expense shall keep
Landlord, Landlord's mortgagees, Landlord's ground lessor, if any, and Tenant
insured, under an insurance policy of comprehensive general liability with broad
form (including contractual liability) coverage on an occurrence form basis,
against liabilities of any nature or type whatsoever for damage to persons or
property including loss of life sustained by any person or persons within or
arising out of the Demised Premises, including parking areas, sidewalks and
driveways (hereinafter referred to as "Common Areas"), whether caused by
Landlord's or Tenant's negligence or otherwise, in a policy or policies with
minimum coverage of Five Million and No/100 Dollars ($5,000,000) with respect to
injury to any one person and Five Million and No/100 Dollars ($5,000,000.00)
with respect to any one accident or disaster, and Five Million and No/100
Dollars ($5,000,000.00) with respect to damage to property.

(b) All policies of insurance shall be issued by an insurance
company licensed to do business in the state where the Demised Premises are
located, rated in the Best's Insurance Guide as not less than an A+ "rating
classification," and with a XII "financial size category," or better, or a
comparable rating by any successor agency. All such policies shall bear
endorsements to the effect that Landlord, Landlord's mortgagee, ground lessor,
if any, and Tenant are named as additional insureds as their interests may
appear and that all such parties shall be notified not less than thirty (30)
days in advance of any termination, expiration, modification or cancellation
thereof. Said policy or policies shall expressly provide that it or they are
primary insurance and not excess over or contributory with any valid, existing
or applicable insurance in effect for or on behalf of Landlord.

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<PAGE> 19
Copies of such policies, so endorsed, or certificates evidencing
the existence thereof, shall be promptly delivered to Landlord and Landlord's
mortgagee, and/or ground lessor, if any, prior to the commencement date of this
Lease and at least thirty (30) days prior to the expiration of any policy. In
the event Tenant fails to effect or maintain such insurance, Landlord may obtain
such insurance and Tenant shall reimburse Landlord for the cost thereof with
interest at the Default Rate from the date incurred by Landlord.

(c) Tenant also agrees to maintain and keep in force, during the
term hereof, statutory worker's compensation insurance coverage meeting all
state and local requirements, including insurance for employer's liability with
limits of no less than Five Million and No/100 Dollars ($5,000,000.00).

(d) Tenant shall be entitled to self-insure the aforesaid
insurance obligations (including its workers' compensation insurance to the
extent permitted by law) at any time that Kmart has and maintains a consolidated
tangible net worth of at least Seven Hundred Fifty Million and No/100 Dollars
($750,000,000.00) calculated in accordance with generally accepted accounting
principles ("Net Worth Standard"). Tenant shall at all times maintain in effect
such insurance coverages as to the Demised Premises as maintained by Kmart with
respect to similar properties owned or leased by Kmart and located in the state
and general geographic area where the Demised Premises is located.

8. Options to Extend Lease.

(a) Provided that no Material Default or Event of Default
hereunder has occurred and is continuing, Tenant shall have six (6) successive
options to extend the term of this Lease for an additional period of five (5)
years on each such option, such extended term(s) to begin respectively upon the
expiration of the prior term(s). The same terms and conditions as herein set
forth shall apply to each such extended term except that the Basic Rent for each
such extended term shall be eighty percent (80%) of the average Basic Rent paid
during the Base Term as set forth in Exhibit C hereto (inclusive of any Rental
Adjustment made pursuant to Article 3(d) hereof) and shall be payable
semiannually in arrears in equal installments on each ________________ and
_____________, and the Termination Value shall be that in effect on the last day
of the Base Term. If Tenant shall elect to exercise the aforesaid options, it
shall do so by notice in writing and otherwise in accordance with the
requirements of Article 28 hereof given to Landlord not less than nine (9)
months prior to the expiration of the Base Term of this Lease or of the Lease
Term as extended. The Tenant shall notify Landlord not less than twelve (12)
months prior to such expiration of its intention to extend or not to extend the
Lease Term, provided such notice shall not be binding on Tenant and Tenant's
failure to give such notice shall not be a default under this Lease. If Tenant
shall fail to exercise an option to extend the term of this Lease, this Lease
shall expire upon the expiration of the then current term and Tenant shall not
have any further option to extend the Lease Term.

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<PAGE> 20
Notwithstanding the foregoing, (i) Tenant shall not have the right
to extend the term of the Lease beyond the Base Term unless it shall have
exercised its initial option to extend the Base Term for five (5) years for not
less than twenty-five percent (25%) of the leases for Properties originally
covered by the Purchase Agreement and in effect on the date such option is
exercised ("Leases" for purposes of this paragraph) and (ii) if Tenant has
exercised its initial option to extend the Base Term for more than twenty-five
percent (25%) of such Leases but less than fifty percent (50%) of such Leases,
the Basic Rent for each extended term shall be one hundred percent (100%) of the
average Basic Rent paid during the Base Term as set forth in Exhibit C hereto
(inclusive of any Rental Adjustment made pursuant to Article 3(d) hereof)
payable as set forth above. If the product of the calculation under (i) or (ii)
above is a fraction, the fraction shall be rounded up to the next whole number.

(b) Provided that no Material Default or Event of Default
hereunder has occurred and is continuing, prior to the expiration of the last
extended term provided for in paragraph (a) above, Tenant may, at its expense,
obtain an appraisal in accordance with the next succeeding sentence to determine
the end of the extended term uninflated fair market value and remaining economic
life of the building, site improvements and personalty. Based upon the
determination of remaining economic life and uninflated residual value, Tenant
shall be granted a number of additional successive five (5) year extended terms
(or such shorter period as is appropriate in the case of the last such extended
term) up to the maximum number of years (not to exceed twenty (20) years)
(taking into account the Tenant's right to extend the Lease under paragraph (c)
below) (i) which, taken together with the Interim Term and Base Term and all
prior extended terms provided for in paragraph (a) above, does not exceed eighty
percent (80%) of the sum of the remaining economic life of the building, site
improvements and personalty and the prior number of years of the Lease Term
(including the Interim Term, Base Term and all extended terms provided for in
paragraph (a) above) and (ii) at the end of which the remaining fair market
value (without taking into account inflation or deflation, but taking into
account any costs to the Landlord to obtain possession of such property) of the
building, site improvements and personalty equals or exceeds twenty percent
(20%) of Owner Participant's Purchase Price applicable thereto as set forth in
Schedule C of the Purchase Agreement. Such appraisal shall be completed prior
to the sixth (6th) month after Tenant's notice of its intent to exercise an
option to extend. Basic Rent for each of the first two additional extended
terms pursuant to this paragraph (b) shall equal the Basic Rent payable during
the last year of the Base Term. Basic Rent for each of the remaining additional
extended terms shall be fair market value rent. Termination Value for each of
the additional renewal terms pursuant to this paragraph (b) shall be that in
effect on the last day of the Base Term.

(c) In the event Tenant has elected not to renew the Lease upon
the expiration of the Base Term or any renewal term, Tenant shall have the
one-time option to extend the last term of this Lease for such period of time as
shall cause the last day of the last term of this Lease to be

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the January 31 next succeeding the date upon which the term of this Lease would
expire but for the exercise of this option. This option shall be deemed to
have been exercised by Tenant unless Landlord shall have received notice from
Tenant to the contrary not less than six (6) months prior to the expiration of
the last term of this Lease. Basic Rent during this additional option period
shall be the same rental payable under the terms of this Lease during the
immediately preceding term except that Basic Rent shall be prorated upon a
daily basis for the additional period.

9. Repairs and Maintenance.

(a) Tenant shall make and pay for all maintenance, replacement,
alteration and repair of the Demised Premises on a timely basis whether
foreseeable or not foreseeable, including roof repair and replacement, necessary
to keep all of the Demised Premises, both structural and non-structural
portions, in a good state of repair and tenantable condition, ordinary wear and
tear excepted, consistent with the standard of maintenance employed by Tenant as
of the date of this Lease with respect to similar properties owned or leased by
Kmart and located in the general geographic area where the Demised Premises is
located, applicable Laws, Environmental Laws (as defined in Article 12),
standards of health and safety required by applicable public authorities and
private insurers, and in keeping with the objective of preserving the fair
market value and useful life of the Demised Premises.

Tenant shall pay for all of the costs of maintaining the Common
Areas and common facilities located on the Demised Premises, including, but not
limited to, the following: All amounts paid for (1) cleaning and re-striping
the parking areas, sidewalks and driveways; (2) repairing, maintaining and
replacing paved areas; (3) maintaining, repairing and replacing planted or
landscaped areas; (4) lighting of parking lot including repair, replacements and
maintenance of bulbs and lighting standards within said Common Areas and
lighting fixtures affixed to any building; (5) paying all wages and salaries of
persons directly and actually performing services described herein; (6) removing
rubbish; and (7) removing of ice, snow and mud.

(b) During the Lease Term, notwithstanding that fee [or
leasehold] title to the Demised Premises has been transferred to Landlord,
Tenant acknowledges and agrees that, in addition to Tenant's obligations under
this Lease, Tenant shall comply with all of the terms and conditions of, perform
all obligations of the owner of the Demised Premises and pay all expenses which
the owner of the Demised Premises shall be required to pay in accordance with
(i) all of the Permitted Exceptions as defined in the Purchase Agreement,
including without limitation that [insert reference to applicable easement or
operating agreements] and (ii) the Permitted Liens defined in Article 19(f)
hereof ( (i) and (ii) herein collectively referred to as the "REA"). Without
limiting the foregoing, in the event the responsible party fails to perform its
obligations under the REA with respect to the Common Areas, Tenant shall perform
such obligations and shall charge the responsible party with the obligations
thereunder.

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Tenant agrees to provide notice to the responsible parties under
the REA such that the responsible parties shall also notify Landlord of any
event which triggers an obligation to provide Tenant with notice under the terms
of the REA.

Tenant shall be entitled to retain any and all sums paid to it as
result of performing the duties and obligations of the responsible party under
the REA. Tenant's obligations under this Article 9(b) shall extend to any
amendments or modifications of the REA, but only to the extent Tenant has
consented to such amendments or modifications.

10. Alterations and Additional Construction.

(a) Provided no Material Default or Event of Default hereunder
has occurred and is continuing, Tenant may, at its own expense, from time
to time make such alterations and additions, structural or otherwise, in and to
its building as it may deem necessary or suitable and erect or construct
additional buildings or structures on and within any portion of the
Demised Premises; provided, however, that Tenant shall not have the right to
make any such alterations, additions, or erect or construct additional
buildings or additional structures which would other than to an insignificant
extent diminish the fair market value or remaining useful life of the Demised
Premises or cause the Demised Premises to be characterized as limited use
property (as described in Section 4.09 of Revenue Procedure 75-28 or Revenue
Procedure 76-30); and provided further that Tenant shall provide written notice
to Landlord together with its drawings and specifications for structural
alterations, additions or additional buildings or structures and certify that:
(i) the new structures shall be built under the supervision of a certified
architect, (ii) the structural integrity of the existing buildings will not be
impaired by such work, (iii) Tenant is complying with all applicable Laws and
the requirements of the Permitted Exceptions as defined in the Purchase
Agreement, (iv) Tenant has obtained any licenses or permits required, copies of
which shall be delivered to Landlord upon request, and (v) such structural
alterations, additions or additional buildings or structures will not encroach
upon any adjacent premises. Tenant shall be entitled to proceed with such
structural alterations, additions or additional buildings or structures unless
Landlord shall have notified Tenant within fifteen (15) days after its receipt
of Tenant's notice that, in Landlord's reasonable opinion, such structural
alterations, additions or additional buildings or structures would other than
to an insignificant extent diminish the fair market value or remaining useful
life of the Demised Premises or cause the Demised Premises to be characterized
as limited use property (as described in Section 4.09 of Revenue Procedure
75-28 or Revenue Procedure 76-30). In the event of a dispute with regard to
the dimunition of fair market value or remaining useful life, an appraisal
shall be performed in accordance with the procedures of Article 45 hereof, and
the result of the appraisal as to the expected dimunition, if any, of fair
market value or remaining useful life shall be binding upon the parties. The
term "structural alterations," as used herein, shall not include moving of
non-load bearing partitions, minor plumbing and

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<PAGE> 23
electrical work, or modification and rearrangement of Tenant's fixtures or
other minor changes of a similar nature. Landlord, at Tenant's cost, shall
cooperate with Tenant in securing building and other permits or authorizations
required from time to time for any work permitted hereunder or installations by
Tenant.

(b) The provisions of this Lease shall apply to and shall govern
Tenant's rights and obligations with respect to all such alterations, additions,
additional buildings or structures and the same shall be considered part of the
Demised Premises. All Assessments levied thereon shall be paid by Tenant as
provided in this Lease. Tenant shall be required to maintain liability and
property insurance on said additional improvements (or to self-insure) in the
same manner as is required in this Lease. In the event Tenant constructs any
such additions or additional buildings or structures, Landlord shall not be
obligated to furnish additional parking areas in substitution of areas thereby
built over.

(c) In connection with any alterations, additions or erection of
additional improvements, Tenant shall perform and complete all work in a first
class workmanlike manner in compliance with applicable Laws. Tenant shall
maintain at all times during construction all risk builders insurance and
comprehensive general liability insurance naming Landlord and Landlord's
mortgagee as additional insureds.

Tenant shall be entitled to self-insure with respect to the
insurance required by the immediately preceding paragraph during such time that
Kmart meets the Net Worth Standard.

(d) All alterations, additions or additional buildings or
structures made or erected by Tenant on the Demised Premises shall without
further act become the property of Landlord (except for the assignment of
Condemnation proceeds expressly provided herein in the second paragraph of
Article 15(d)) and Landlord shall not be required to compensate Tenant therefor;
provided, however, Tenant may claim all tax benefits and incidents attendant
thereto as lessee thereof which Tenant is entitled to claim under applicable tax
law. Tenant will execute any necessary deed or bill of sale required to convey
title thereto to Landlord.

11. Utilities.

Tenant shall pay all charges for all utilities (including, without
limitation, gas, water, oil, sewage, telephone and electricity) furnished to the
Demised Premises during the Lease Term. Tenant acknowledges and agrees that it
shall obtain and use its reasonable efforts to maintain service with respect to
all such utilities at the Demised Premises.

12. Governmental Regulations.

(a) Tenant shall observe and comply (other than to an
insignificant extent) in all respects with all requirements of laws, rules,

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codes, orders and regulations of the federal, state and municipal governments
or other duly constituted public or quasi-public authority applicable to the
Demised Premises, including, but not limited to, all Environmental Laws (as
defined below) and the Americans With Disabilities Act ("ADA"), as amended from
time to time, together with all regulations promulgated thereunder
(collectively, "Laws"). Tenant shall make all alterations or changes to the
Demised Premises, subject to Article 10 hereof, as may be required from time to
time to comply with applicable Laws. Such alterations or changes shall be made
in compliance with and shall be governed by Article 10(b), (c) and (d) and
title thereto shall immediately vest in Landlord.

(b) Tenant shall also comply (other than to an insignificant
extent) in all respects with all Environmental Laws now or hereafter applicable
to the Demised Premises, or the use, modification, maintenance or operation
thereof, and shall have sole responsibility for the expenses, including legal
and other professional fees and expenses and costs of investigation associated
with such compliance, including compliance with any such Environmental Law
directed to Landlord or to which Landlord may become subject with respect to the
Demised Premises. For purposes of this Lease, Environmental Laws shall mean all
federal, state, and local laws, ordinances, rules, regulations, requirements,
permits, authorizations, licenses, approvals, criteria, guidelines, and judicial
and administrative orders, decrees, or judgments, now or hereafter in effect,
and in each case as amended, and any judicial or administrative interpretation
thereof, relating to the regulation and protection of human health, safety, the
environment and natural resources including, without limitation, laws (and all
other items recited above) relating to emissions, discharges, releases,
threatened releases or remediation of, or any other response action related to,
Hazardous Materials (as defined in Article 38) or otherwise relating to the
generation, use, treatment, storage, recycling, disposal, transport, or handling
of or exposure to Hazardous Materials. Environmental Laws include but are not
limited to the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980 ("CERCLA"); the Resource Conservation and Recovery Act ("RCRA"); the
Federal Insecticide, Fungicide, and Rodenticide Act; the Toxic Substances
Control Act; the Clean Air Act; the Federal Water Pollution Control Act; the Oil
Pollution Act of 1990; the Endangered Species Act; the National Environmental
Policy Act; the Hazardous Materials Transportation Act; the Occupational Safety
and Health Act; and the Safe Drinking Water Act; each as amended from time to
time, and each of their state and local counterparts or equivalents.

For purposes of this Lease, Environmental Claims shall mean any
and all administrative, regulatory or judicial actions or causes of action,
suits, obligations, liabilities, losses, proceedings, decrees, judgments,
penalties, fees, demands, demand letters, orders, directives, claims (including
any claims involving liability in tort, strict, absolute or otherwise), liens,
notices of non-compliance or violation, and legal fees or costs of
investigations or proceedings, relating in any way to any Environmental Law or
arising from the presence or release (or alleged presence or release) into the
environment of any Hazardous Materials (as

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defined in Article 38) (hereinafter "Claims") including, without limitation,
and regardless of the merit of such Claim, any and all Claims by any
governmental or regulatory authority or by any third party for enforcement,
cleanup, removal, containment, restoration, corrective action, response,
remedial or other actions or damages, contribution, indemnification, cost
recovery, compensation or injunctive relief pursuant to any Environmental Law
or any alleged injury or threat of injury to human health, safety, the
environment or natural resources.

13. Landlord to Grant Easements, Dedications, Etc.

Provided that no Event of Default hereunder has occurred and is
continuing, Landlord does hereby and shall, from time to time, upon thirty (30)
days' prior written notice to Landlord and at the request of Tenant and at
Tenant's cost and expense, irrevocably appoint Tenant the attorney-in-fact of
Landlord during the term of this Lease, subject to the proviso contained in this
sentence and the provisions of the succeeding sentence, to (i) grant easements
and other rights in the nature of easements, (ii) release existing easements or
other rights in the nature of easements which are for the benefit of the Demised
Premises, (iii) dedicate or transfer unimproved portions of the Demised Premises
for road, highway or other public purposes, (iv) execute petitions to have the
Demised Premises annexed to any municipal corporation or utility district, (v)
execute amendments to any covenants and restrictions affecting the Demised
Premises, and Landlord shall execute and deliver to any person any instrument
appropriate to confirm or effect such grants, releases, dedications and
transfers (to the extent of its interest in the Demised Premises); provided,
however, that the rights granted to Tenant pursuant to the provisions of this
paragraph are subject to thirty (30) days' prior written notice to Landlord
which notice shall include (x) a certificate of an authorized officer of Tenant
(A) describing such grant, release, dedication, transfer, petition or amendment,
(B) stating that such grant, release, dedication, transfer, petition or
amendment is not detrimental to the proper conduct of the business of Tenant on
the Demised Premises and does not, other than to an insignificant extent, impair
the usefulness of the Demised Premises for the purposes contemplated and
permitted hereby, or reduce the fair market value or remaining useful life of
the Demised Premises, or impair the Landlord's or Owner Participant's or any of
their respective assignees interest in the Demised Premises, or cause the
Demised Premises to be characterized as limited use property (as described in
Section 4.09 of the Revenue Procedure 75-28 or Revenue Procedure 76-30, and (C),
the consideration, if any, being paid for such grant, release, dedication,
transfer, petition or amendment and (y) duly authorized and binding
unconditional undertakings of Tenant that it will remain obligated hereunder to
the same extent as if such grant, release, dedication, transfer, petition or
amendment had not been made (including, without limitation, the obligation to
pay all Rent in accordance with the terms hereof), and that Tenant will perform
all obligations of Landlord under such instrument. In the case of those grants,
releases, dedications, transfers or amendments referred to in subparagraphs (i),
(iii) and (v) of the preceding sentence, the prior written approval of Landlord
shall be

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required (which approval shall not be unreasonably withheld or delayed),
provided if Tenant requests such approval in writing and Landlord has not
approved or disapproved the same within thirty (30) days of such request, it
shall be deemed approved, and provided further, if such grants, releases,
dedications, transfers or amendments do not by their respective terms extend
beyond the expiration or earlier termination of this Lease, the approval of
Landlord shall not be required. The consideration, if any, received by
Landlord or Tenant for such grant, release, dedication, transfer, petition or
amendment shall be applied pursuant to Article 15, as if such consideration
were net proceeds from an event of Condemnation.

14. Insurance; Damage to Demised Premises.

(a) From and after the commencement of the Lease Term, Tenant
shall insure the buildings and improvements on the Demised Premises, including
Tenant's buildings, against damage or destruction by fire and other casualties
under a policy of insurance including broad form, extended coverage all risk
endorsements (without exclusions), including but not limited to fire, theft,
flood, water damage, collapse, earthquake, windstorm, hail, boiler & machinery
(if objects exist), lightning, explosion, falling objects (i.e. aircraft),
back-up & seepage of sewers and drains, and business interruption to the extent
maintained by Tenant with respect to similar properties owned or leased by
Tenant and located in the state and general geographic area where the Demised
Premises is located. Such endorsements shall be subject to annual review by
Landlord to identify additional coverages payable by Tenant made necessary by
market conditions or made available by insurers of similar improvements for
risks now or hereafter deemed commercially reasonable to insure. Said insurance
shall be in an amount equal to not less than one hundred percent (100%) of the
full insurable replacement value of the Demised Premises. At any time during
the term of this Lease that Tenant is not self-insuring pursuant to the terms of
this Article, Tenant shall obtain at its sole cost and expense and deliver to
Landlord every three (3) years during the Lease Term an independent appraiser's
or engineer's certification of the full replacement cost of the Demised
Premises. In no event shall the deductible amount under such policies of
insurance exceed One Hundred Thousand and No/100 Dollars ($100,000.00) in the
aggregate.

(b) Landlord and Landlord's mortgagee (including the Indenture
Trustee) shall be named as loss payees and additional insureds thereunder. All
required insurance policies shall bear endorsements to the effect that Landlord
and Landlord's mortgagee and ground lessor (if any) shall be notified not less
than thirty (30) days in advance of modification or cancellation thereof and
that Tenant has waived any right of recovery from Landlord. Such policies shall
contain no condition to disbursement of proceeds based on actual restoration of
the Demised Premises and shall provide that such insurance is primary insurance
and not excess over or contributory with any valid, existing or applicable
insurance in effect for or on behalf of Landlord. Copies of such insurance
policies or certificates evidencing the existence thereof so endorsed, or a
certificate of self-insurance evidencing Tenant's election to self-insure such

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obligations, shall be promptly delivered to Landlord prior to commencement of
the Lease Term and at least thirty (30) days prior to the expiration of any
policy. Any policy of insurance shall be issued by an insurance company
licensed to do business in the state where the Demised Premises are located
rated in the Best's Insurance Guide as not less than an A+ "rating
classification" and with a XII "financial size category," or better or rated by
a successor agency at comparable ratings. At any time during the term of this
Lease that either respective rating shall fall below A+ or XII (or such
comparable ratings of any successor agency), Tenant shall obtain insurance from
a replacement insurer carrying an A+ and XII rating or comparable rating.

(c) Tenant shall be entitled to self-insure its aforesaid
insurance obligations at any time that Tenant or Kmart meets the Net Worth
Standard.

(d) Irrespective of the cause thereof, Landlord shall not be
liable for any loss or damage to said buildings resulting from fire, explosion
or any other casualty. In the event of Tenant's failure to obtain or maintain
the insurance called for under this Lease, Landlord shall have the right,
together with Landlord's remedies set forth herein, to obtain the policies of
insurance required under this Lease and to bill Tenant for the premium payments
therefor, together with interest at the Default Rate. Landlord shall have no
obligation to maintain insurance of any nature or type whatsoever on the Land
described in Exhibit A, any improvements thereon owned by Landlord or Tenant or
the Demised Premises and neither Tenant nor Tenant's insurer shall have any
rights to direct actions or subrogation against any policy of insurance obtained
by Landlord.

(e) In the event that, at any time during the Lease Term, the
building and/or site improvements included in the Demised Premises shall be
damaged or destroyed (partially or totally) by fire, the elements or any other
casualty, whether insured or not, and provided further that no Material Default
or Event of Default hereunder has occurred and is continuing, Tenant shall
without abatement of Rent, at its expense, promptly and with due diligence
repair, rebuild and restore the same as nearly as practicable to the condition
existing just prior to such damage or destruction consistent with the
maintenance and repair obligations of Tenant in Article 10 of this Lease. At
any time that Tenant or Kmart meets the Net Worth Standard or in the event of a
loss below Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00),
insurance proceeds shall be released to Tenant for restoration and repair;
otherwise the Indenture Trustee shall have the right to receive any insurance
settlement fund in escrow subject to disbursement pursuant to the terms set
forth in Article 16 hereof. Tenant shall complete such restoration prior to the
expiration of the current term of this Lease, but if additional time is required
to complete such work and Tenant otherwise does not extend the term of this
Lease as provided in Article 8 hereof, Tenant shall use diligent and reasonable
effort to complete such work as soon as possible following the termination of
this Lease.

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(f) Notwithstanding the foregoing paragraph, in the event of a
substantial or total casualty of such building or improvements, Tenant may give
written notice to Landlord within thirty (30) days after such damage or
destruction of its intention to terminate this Lease and Tenant shall
simultaneously make and deliver to Landlord Tenant's Purchase Offer in
accordance with Article 40 hereof. In the event Landlord rejects Tenant's
Purchase Offer pursuant to Article 40, all proceeds of insurance or
self-insurance, as the case may be, shall be paid to Landlord on the Purchase
Offer Termination Date together with all other amounts specified in Article
40(c). In the event Landlord accepts Tenant's Purchase Offer, all such
insurance proceeds shall be paid to Tenant on the Purchase Offer Termination
Date.

15. Eminent Domain.

(a) In the event of (i) a permanent Condemnation of all of the
Demised Premises, (ii) a temporary Condemnation of all or any portion of the
Demised Premises, or a permanent Condemnation of any substantial portion of the
Demised Premises (which, in either case, is sufficient in Tenant's judgment to
render the Demised Premises unsuitable for the use and occupancy of Tenant), or
(iii) a Condemnation of the points of ingress-egress to the public roadways in
existence on the date hereof such that they shall be materially impaired (with
no reasonable replacement points of ingress-egress provided so as to render the
Demised Premises unsuitable for its intended use), Tenant shall deliver to
Landlord Tenant's Purchase Offer in accordance with Article 40 hereof within
thirty (30) days (or, with respect to a Condemnation of less than all the
Demised Premises, ninety (90) days) after the entry of a final order of taking.
In the event Landlord rejects Tenant's Purchase Offer pursuant to Article 40 and
provided that the parties have satisfied their obligations under Article 40, the
Condemnation proceeds shall be paid to Landlord on the Purchase Offer
Termination Date, together with all other amounts specified in Article 40(c)
(except as otherwise provided in paragraph (d) below). In the event Landlord
accepts Tenant's Purchase Offer pursuant to Article 40 and provided that the
parties have satisfied their obligations under Article 40, Landlord shall assign
the Condemnation proceeds to Tenant on the Purchase Offer Termination Date.

For purposes hereof, a "Condemnation" shall mean a condemnation,
confiscation, seizure, requisition or other taking or sale of the use or
occupancy of, or title to the Demised Premises pursuant to the power of eminent
domain or through a deed in lieu of condemnation.

(b) In the event of a taking of any portion of the Demised
Premises constituting less than a substantial portion, this Lease shall continue
as to that portion of the Demised Premises which shall not have been taken, in
which event Tenant shall promptly and with due diligence restore the Demised
Premises to as nearly as practicable the condition

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which existed just prior to such taking, consistent with the maintenance and
repair obligations of Tenant under Article 9 hereof. At any time that Tenant
or Kmart meets the Net Worth Standard or in the event of an award of less than
Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00) the Condemnation
award shall be released to Tenant for restoration; otherwise the Indenture
Trustee shall take possession of such award to disburse payment to Tenant
pursuant to the terms set forth in Article 16 hereof. Tenant shall complete
such restoration prior to the expiration of the current term of this Lease, but
if additional time is required to complete such work and Tenant otherwise does
not extend the term of this Lease as provided in Article 8 hereof, Tenant shall
use diligent and reasonable effort to complete such work as soon as possible
following the termination of this Lease.

(c) Without limiting the foregoing, in the event a portion of
the Land shall be subject to a permanent Condemnation by public or quasi-public
authority, Tenant shall make reasonable efforts to substitute equivalent and
similarly improved lands contiguous to and properly integrated with the
remainder of the site depicted on Exhibit B. Any substitute land together with
the remaining Demised Premises shall meet the standards set forth in Article 41
hereof. Tenant shall be entitled to receive the Condemnation award to the
extent required to acquire substitute land subject to the rights of Landlord's
mortgagee as above stated. Any such land acquired by Tenant shall be part of
the Demised Premises subject to this Lease, and an Estate for Years interest
therein shall vest in Landlord subject to this Lease. Tenant shall take all
actions necessary to vest title to such land in Landlord.

If Tenant shall be unable to substitute such lands and if one or
more Condemnations shall in total deprive Tenant of any substantial portion of
the Demised Premises which is sufficient in Tenant's judgment to render the
remaining portion thereof unsuitable for the use or occupancy of Tenant, then,
in such event, subsection (a) of this Article 15 above shall apply.

(d) Tenant's obligation to restore the Demised Premises in the
event of a partial taking is not conditioned upon the adequacy of the
Condemnation proceeds to complete such restoration. In the event of an
inadequate award, the amount of such award held by the Proceeds Trustee shall be
disbursed pro rata until completion of restoration pursuant to the terms set
forth in Article 16 hereof. Tenant shall fund the deficits in the pro rata
progress payments disbursed by the Proceeds Trustee in accordance with Article
16 hereof. In the event the Condemnation proceeds exceed the actual cost of
restoration, the Proceeds Trustee shall have the right to retain the excess
proceeds and apply the same in accordance with the Note Indenture or, if
Landlord's Debt is no longer outstanding, such excess proceeds shall be paid to
Landlord. Termination Values hereunder shall be correspondingly reduced by an
amount equal to such excess proceeds; provided that no adjustment shall be
required hereunder unless the excess proceeds exceed One Hundred Thousand and
No/100 Dollars ($100,000).

In the event that at the time of any Condemnation of the buildings
on the Demised Premises, Tenant shall not have fully amortized

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expenditures which it may have made on account of any improvements, alterations
or changes to such buildings after the date hereof or if Tenant shall have
suffered a loss of business, Landlord shall assign to Tenant that portion of
any award payable as a result of such taking as shall be expressly attributed
by the terms of such award (i) to such loss of business or (ii) to the
unamortized portion of Tenant's expenditures; provided that in no event shall
the award otherwise payable to Landlord be diminished in any manner by an
amount allocated to Tenant.

Any excess Condemnation award remaining after the payments above
provided for in this Article 15(d) shall be paid to Landlord and Tenant as
provided in the terms of such award, or if not provided for, then equitably
apportioned to compensate each for the loss of their respective interests in
the Demised Premises.

16. Insurance Proceeds, Claims Settlement.

(a) In the event of loss or damage to the Demised Premises,
Tenant shall promptly notify Landlord thereof in writing and shall prepare and
present timely claims (unless Tenant is at the time self-insuring the risk for
which such claim would be presented) to the appropriate insurers on behalf of
Tenant, Landlord and Landlord's mortgagee. Tenant shall adjust and settle such
non-self-insured claim, provided that if Tenant has failed to settle such claims
within three (3) years of the event of loss or damage, then Landlord and/or its
mortgagee shall have the right to adjust and settle such claims. At any time
(i) Tenant or Kmart does not meet the Net Worth Standard and the claim for
damage to the Demised Premises involves net proceeds of more than Two Hundred
Fifty Thousand and No/100 Dollars ($250,000.00), or (ii) if a Material Default
has occurred and is continuing, no settlement shall be made without Landlord's
consent, which will not be unreasonably withheld or delayed, and Landlord and
its mortgagee shall be entitled to participate in the adjustment process.

(b) In the event the net proceeds of any such claim are not in
excess of Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00), and
provided further that no Material Default hereunder has occurred and is
continuing, such proceeds shall be payable to Tenant. In the event the net
proceeds are in excess of Two Hundred Fifty Thousand and No/100 Dollars
($250,000.00) and Tenant or Kmart does not meet the Net Worth Standard, such sum
shall be paid to Indenture Trustee, or at such time as Landlord's Debt is no
longer outstanding, to such other person mutually agreeable to Landlord and
Tenant (herein called the "Proceeds Trustee") as trustee for Landlord and Tenant
and disbursed in the manner hereinafter provided. Insurance proceeds shall be
deposited in an interest bearing account and shall be distributed to Tenant upon
progress of completion of restoration, repair, replacement or rebuilding,
provided no Material Default or Event of Default has occurred and is continuing
hereunder. Insurance proceeds shall be disbursed to Tenant by the Proceeds
Trustee upon receipt by Landlord and Proceeds Trustee of the following:

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(1) A certificate signed by Tenant, dated not more than thirty
(30) days prior to the application for such disbursement, setting forth in
substance the following:

(i) that the sum then requested to be disbursed either has
been paid by Tenant or is justly due to contractors,
subcontractors, materialmen, engineers, architects or other persons
who have rendered and furnished certain labor and materials for the
work; giving a brief description of such services and materials and
the principal subdivisions or categories thereof and the amounts so
paid or due to each of said persons in respect thereof, and stating
the progress of the work up to the date of said certificate;

(ii) that the sum then requested to be disbursed, plus all
sums previously disbursed, does not exceed the cost of the work as
actually accomplished up to the date of such certificate;

(iii) that except for the amounts, if any, stated in said
certificate pursuant to the foregoing clause (i) of this paragraph
to be due for services or materials, there is no outstanding
indebtedness known to the person signing the certificate, after due
inquiry, which is then due and payable for work, labor, services
and materials in connection with the work, which, if unpaid, might
become the basis of a vendor's, mechanic's, laborer's,
materialman's statutory or similar lien upon Tenant's leasehold
estate or Tenant's or Landlord's interest in the Demised Premises
or any part thereof;

(iv) that all materials and all property described in the
certificate are free and clear of all liens and encumbrances except
for Permitted Liens (as hereinafter defined); and

(v) that the amount remaining in the possession of the
Proceeds Trustee after disbursement of the sum then requested at
least equals the estimated unpaid costs to complete work (and if
insufficient funds remain, Tenant shall deposit additional funds
with the Proceeds Trustee sufficient to enable Tenant to make the
foregoing certification).

(2) Evidence reasonably satisfactory to the Proceeds Trustee and
Landlord showing that there has not been filed with respect to Tenant's
leasehold estate or Tenant's or Landlord's interest in the Demised Premises
or any part thereof any vendor's, mechanic's, laborer's or materialmen's
statutory or similar lien which has not been discharged of record other than
Permitted Liens, except such as will be discharged upon payment of the amount
then requested to be disbursed, or affirmative title insurance coverage over
such liens.

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(3) Lien waivers from each person entitled to a mechanics' or
materialmen's lien against the Premises by reason of such work, or
affirmative title insurance over all such inchoate liens.

Upon compliance with the foregoing provisions, the Proceeds Trustee
shall, out of the deposited sums, disburse to the persons named in the
certificate the respective amounts stated in said certificate to be due to
them and/or shall disburse to Tenant the amount stated in said certificate to
have been paid by Tenant.

(c) At any time after the completion in full of the work, the
whole balance of the deposited sums not theretofore disbursed pursuant to the
foregoing provisions of this Article 16 shall be disbursed to or upon the order
of Tenant, upon receipt by the Proceeds Trustee of (1) a certificate signed by
Tenant, dated not more than thirty (30) days prior to the application of such
disbursement, setting forth in substance the following to the best knowledge of
Tenant, after due inquiry, (i) that the work has been completed in full in
compliance with this Lease; (ii) that all amounts which Tenant is or may be
entitled to have disbursed under the foregoing provisions of this Article 16 on
account of services rendered or materials furnished in connection with the work
have been disbursed under said provisions, and (iii) that all amounts for whose
payment Tenant is or may become liable in respect of the work have been paid in
full except to the extent, if any, of any retainage and which retainage shall be
applied to the final payments of the amounts due, (2) a copy of the final plans
and specifications of the improvements on the Demised Premises, which plans and
specifications shall be delivered to Landlord, (3) an official search or a
certificate of a title company reasonably satisfactory to the Proceeds Trustee
showing that there has not been filed with respect to Tenant's leasehold estate
or Tenant's or Landlord's interest in the Demised Premises or any part thereof,
any vendor's, mechanic's, laborer's or materialmen's statutory or similar lien
or other than Permitted Liens which have not been discharged of record or for
which affirmative insurance has not been provided, and (4) a final certificate
of occupancy or equivalent governmental approval.

Any insurance proceeds remaining after completion of the
reconstruction as specified shall be paid to Tenant. If the conditions for the
release of money to Tenant are not met after a period of three (3) years after
the date of completion of reconstruction (such three-year period to be extended
by the length of any delay caused by reasons beyond the control of Tenant), any
funds held by the Proceeds Trustee shall be disbursed to the Indenture Trustee
to be used for the prorata prepayment of the Notes pursuant to the Note
Indenture.

17. Use, Assignment and Subletting.

The Demised Premises may be used for any lawful purposes except
that no use may be made (whether by Tenant or any assignee or subtenant of
Tenant or otherwise) which: (1) is a public nuisance, (ii) causes the Demised
Premises to become "tax-exempt use property" within the

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meaning of Section 168(h) of the Internal Revenue Code, as amended, or any
successor statute thereto ("Code") or "tax-exempt bond financed property"
within the meaning of Section 168 (g)(5) of the Code, (iii) would void any
certificate of occupancy required for the Demised Premises, (iv) makes it
impossible to obtain or results in the cancellation of policies of insurance
required by this Lease, or (v) increases the risk of environmental liability to
Landlord; provided, however, (but without limiting Tenant's obligations under
Articles 12 and 38) that any retail or office use shall not be deemed to
increase the risk of environmental liability for purposes of this provision.

Tenant may assign this Lease or sublet the whole or any part of the
Demised Premises provided (i) no Material Default or Event of Default hereunder
has occurred and is continuing, (ii) that such assignment or sublease shall be
expressly subject and subordinate to this Lease, and (iii) that Tenant shall
remain fully and primarily liable for the performance of Tenant's obligations
hereunder and in respect of any of its obligations under any of the other
Operative Documents. Tenant's liability hereunder shall continue
notwithstanding the rejection of this Lease or any sublease of this Lease
pursuant to Section 365 of Title 11 of the United States Code or any similar law
relating to bankruptcy, insolvency, reorganization or the rights of creditors,
which arises subsequent to such assignment. In the event Tenant assigns this
Lease and it shall thereafter be rejected in a bankruptcy or similar proceeding
affecting such assignee, a new lease identical to this Lease shall be deemed
reinstituted as between Landlord and the original-named Tenant without further
act of either party. Nothing herein shall be construed to permit Tenant to
mortgage, pledge, hypothecate or encumber in any manner or nature whatsoever
Tenant's interest under this Lease in whole or in part. Tenant shall provide
notice to Landlord of such assignment or sublease within fifteen (15) days prior
to the effective date thereof.

18. Signs.

(a) The Demised Premises shall be referred to only by such
designation as Tenant may indicate. Landlord expressly recognizes that the
service mark and trademark "Kmart" is the valid and exclusive property of
Tenant, and Landlord agrees that it shall not either during the term of this
Lease or thereafter directly or indirectly contest the validity of said mark
"Kmart," or any of Tenant's registrations pertaining thereto in the United
States or elsewhere, nor adopt or use said mark or any term, word, mark or
designation which is in any aspect similar to the mark of Tenant. Landlord
further agrees that it will not at any time do or cause to be done any act or
thing directly or indirectly, contesting or in any way impairing or tending to
impair any part of Tenant's right, title and interest in the aforesaid mark, and
Landlord shall not in any manner represent that it has an ownership interest in
the aforesaid mark or registrations therefor, and specifically acknowledges that
any use thereof pursuant to this Lease shall not create in Landlord any right,
title or interest in the aforesaid mark.

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(b) Tenant shall have the option to erect, subject to applicable
Laws and matters of title to which this Lease is subordinate, and at its sole
cost and expense, upon any portion of the Demised Premises signs of such height
and other dimensions, bearing such legend or inscription as Tenant shall
determine. Tenant shall have the option to utilize the lighting standards in
the parking lot for advertising purposes by attaching, or causing to be
attached, signs advertising any and all products and services as Tenant shall
elect provided same are in compliance with all applicable Laws. Provided no
Event of Default hereunder has occurred and is continuing, Tenant shall be
entitled to remove any signs, billboards or posters to which it has not
consented in writing and to prohibit the same to be displayed on any portion of
the Demised Premises.

19. Ingress and Egress; Liens.

Tenant covenants and agrees that it shall not, during the Lease
Term, directly or indirectly create, incur, assume, suffer or permit any lien on
or with respect to the Demised Premises or any part thereof, any Rent, title
thereto or interest therein except for Permitted Liens (as herein defined).
Tenant shall promptly, but no later than thirty (30) days after the attachment
thereof, at its own expense, discharge or eliminate or bond in a manner
satisfactory to Landlord any such lien. In the event such lien is not so
discharged, eliminated or bonded, Landlord may pay and discharge the same and
relieve the Demised Premises therefrom, and Tenant agrees to repay and reimburse
Landlord upon demand for the amount so paid by Landlord together with interest
thereon at the Default Rate.

"Permitted Liens" shall mean (a) the respective rights and
interests of Tenant, Landlord, Owner Participant, Remainder Purchaser, Indenture
Trustee, and Pass Through Trustee as provided in the Operative Documents; (b)
Lessor Liens and Remainder Purchaser Liens; (c) liens for taxes and assessments
that either are not yet due and payable or are being contested in good faith and
by appropriate proceedings diligently conducted, so long as such proceedings do
not (i) subject the Demised Premises or interest therein to foreclosure,
forfeiture or loss or result in the sale of the Demised Premises or interest
therein, (ii) interfere other than to an insignificant extent with the use,
possession or disposition of the Demised Premises or any interest therein, (iii)
interfere with the payment of Rent or (iv) involve any risk of loss of the
priority of the lien of the Note Indenture; (d) materialmen's, mechanics',
workers', repairmen's, employees' or other like liens arising after the date
hereof in the ordinary course of business for amounts either not yet due or
being contested in good faith and by appropriate proceedings so long as such
proceedings shall not involve any risk of the sale, forfeiture or loss of any
part of the Demised Premises, the Trust Estate, title thereto or any interest
therein and shall not materially interfere with the use, occupancy or
disposition of the Demised Premises or the Trust Estate or interfere with the
payment of Rent or involve any risk of loss of the priority of the lien of the
Note Indenture; (e) Liens arising after the date hereof out of judgments or
awards with respect to which at the time an appeal or proceeding for review is
being prosecuted diligently and in good

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faith and which either have been bonded to the satisfaction of Landlord and
Indenture Trustee or the enforcement of which has been continuously stayed
pending such appeal or review; (f) easements, rights-of-way, reservations,
servitudes and rights of others against the Land which (i) are defined as
Permitted Exceptions in the Purchase Agreement or (ii) are granted pursuant to
the specific provisions of the Lease; and (g) assignments, leases and subleases
expressly permitted by the Operative Documents.

For purposes of this Lease, "Lessor Liens" shall mean liens on or
against the Property, the Lease, the Trust Estate (as defined in the Purchase
Agreement) or any payment of Rent (a) which result from any act of, or any claim
against, Landlord (in its individual capacity or in its trust capacity) or Owner
Participant unrelated to the transactions contemplated by the Purchase
Agreement, or (b) which result from any violation by Landlord (in its individual
capacity or in its trust capacity) or Owner Participant of any of the terms of
the Operative Documents, or (c) which result from liens in favor of any taxing
authority by reason of any Tax owed by Landlord (in its individual capacity or
in its trust capacity) or Owner Participant, the payment of which is not the
obligation of Tenant or Kmart under the Operative Documents, or (d) which
evidence or secure Landlord's Debt.

For purposes of this Lease, "Remainder Purchaser Liens" shall mean
Liens on or against the Property, the Lease or any payment of Rent (a) which
result from any act of, or any claim against, Remainder Purchaser unrelated to
the transactions contemplated by the Purchase Agreement or which result from any
violation by Remainder Purchaser of any of the terms of the Operative Documents
or (b) which result from Liens in favor of any taxing authority by reason of any
Tax owed by Remainder Purchaser, the payment of which is not the obligation of
Tenant or Kmart under the Operative Documents.

20. Tenant Defaults.

The following shall constitute an Event of Default by Tenant under
this Lease (whatever the reason for such event and whether it shall be voluntary
or involuntary, or come about or be effected by operation of law, or be pursuant
to or in compliance with any applicable Law or Governmental Action), and any
such event shall continue to be an Event of Default if and for so long as it
shall not have been remedied, cured or waived (each, herein referred to as an
"Event of Default"): (i) failure to pay any installment of Basic Rent within
five (5) days after notice to Tenant and Kmart the same is due; (ii) failure to
make any payment constituting Additional Rent within fifteen (15) days after
notice of non-payment to Tenant and Kmart; (iii) failure to maintain any
insurance required to be maintained hereunder, (iv) Tenant's failure to perform
any of its other covenants or obligations under this Lease or Kmart's failure to
perform any of its covenants or obligations under any of the other Operative
Documents (other than the Tax Indemnification Agreement) within thirty (30) days
after notice thereof to Tenant and Kmart provided that any non-monetary default
that is curable but is not susceptible to a cure

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<PAGE> 36
within thirty (30) days shall not be deemed a default if a cure is commenced
within thirty (30) days after notice and is diligently pursued thereafter;
provided further that in no event shall such cure period for a non-monetary
default exceed one hundred and eighty (180) days; (v) Tenant or Kmart shall
commence a voluntary case or proceeding seeking liquidation, reorganization or
other relief 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 Tenant or Kmart, or Tenant
or Kmart shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other proceeding
commenced against it, or shall make a general assignment for the benefit of
creditors; or an involuntary case or other proceeding shall be commenced
against Tenant or Kmart 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 and such involuntary
case or other proceeding shall remain undismissed or unstayed for a period of
ninety (90) consecutive days; (vi) any termination or any judicial
determination that the Ground Lease is invalid, unenforceable or ineffective
unless such judgment is appealed and the enforcement of such judgment is stayed
during the pendancy of such appeal; and (vi) any representation or warranty by
Tenant or Kmart in this Lease or any of the other Operative Documents (other
than the Tax Indemnification Agreement) to or in any document or certificate
expressly required to be delivered pursuant hereto or thereto which shall have
been false or incorrect when made in any respect material to Landlord, Owner
Participant or any of their respective assignees, and such falseness or
incorrectness is material to Landlord, Owner Participant or any of their
respective assignees, and continues to be material and which shall not have
been cured within thirty (30) days after receipt of written notice by Tenant
and Kmart from Landlord, unless the default is curable and Tenant or Kmart
shall be diligently proceeding to correct such failure; provided that in no
event shall such cure period extend beyond sixty (60) days from the date of
such notice.

For purposes of this Lease, a "Material Default" shall mean an
event of the type specified under clauses (i) or (v) in the foregoing paragraph
which with the passage of time or the giving of notice, or both, would become an
Event of Default.

Notwithstanding anything stated herein to the contrary, to the
extent any failure by Tenant or Kmart to perform any covenant or obligation or
breach of a representation or warranty relates solely to a property or
properties other than the Demised Premises, it shall not give rise to an Event
of Default hereunder.

21. Landlord Remedies.

If an Event of Default has occurred and is continuing beyond any
applicable cure periods, Landlord at its option may, by notice to Tenant,
declare this Lease to be in default, and at any time thereafter

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following the expiration of the applicable cure period (unless all Events of
Default shall have been remedied, cured or waived), or if there shall exist an
Event of Default described in Section 20(v) hereof, Landlord may, to the extent
permitted by applicable law, exercise one or more of the following remedies,
except as hereinbelow expressly otherwise set forth, as Landlord in its sole
discretion may elect:

(a) Re-enter the Demised Premises without terminating the Lease
and remove Tenant from possession of the Demised Premises and all of Tenant's
property therefrom at Tenant's expense, and Tenant shall remain liable for the
equivalent of the amount of Rent reserved for the balance of the Lease Term less
the avails of reletting by Landlord, if any, after deducting therefrom the
reasonable cost of arrears, alterations necessary to prepare for reletting and
for leasing commissions payable in procuring the substitute lease.

(b) Landlord may sell the Demised Premises or any part thereof,
together with any interest of Landlord under the Deed (subject to the rights of
the Remainderman and subject to any sublease entered into under Article 17 of
this Lease), at public or private sale, conducted in accordance with applicable
Law, as Landlord may determine, free and clear of any rights of Tenant therein
and without any duty to account to Tenant with respect to such sale or for the
proceeds thereof (except to the extent required by clause (d) below if Landlord
shall elect to exercise its rights thereunder), in which event Tenant's
obligation to pay Basic Rent with respect to the Demised Premises or the part
thereof that has been sold, as the case may be, for periods commencing after the
date of such sale shall terminate (except to the extent that Basic Rent is to be
included in computations under clause (d) below if Landlord shall elect to
exercise its rights thereunder).

(c) Landlord may terminate Tenant's right to possession of the
Demised Premises by any lawful means, in which case this Lease and the Lease
Term shall terminate and Tenant shall immediately surrender possession of the
Demised Premises to Landlord. In addition, and regardless of whether Landlord
shall elect to terminate Tenant's right to possession, Landlord shall be
entitled to recover from Tenant: the sum of (A)(I) if the Final Payment Date (as
defined below) is a Rent Payment Date, all accrued and unpaid Basic Rent payable
in arrears and due and unpaid as of the Final Payment Date or (II) if the Final
Payment Date is not a Rent Payment Date, the arrears Basic Rent accrued as of
such Final Payment Date (it being understood, in the case of clauses (I) and
(II) above, that Tenant shall pay when due any Basic Rent in arrears due on a
Rent Payment Date which occurs on or after the Event of Default but prior to the
Final Payment Date), plus (B) all Additional Rent due and payable, plus (C) all
other amounts due on Landlord's Debt as of the Final Payment Date which shall
not be covered by payments made pursuant to clauses (A) or (B) above, plus the
amount pursuant to Article 21(d) hereof.

(d) Unless Landlord shall have sold the Demised Premises
pursuant to clause (b) above, Landlord may, whether or not Landlord shall

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have exercised or shall thereafter at any time exercise its rights under clause
(a), (c) or (e) of this Article 21(d), by written notice to Tenant specifying a
date ("Final Payment Date") not earlier than ten (10) days after the date of
such notice, demand that Tenant pay to Landlord, and Tenant shall pay to
Landlord, on the Final Payment Date, (A) as liquidated damages for loss of a
bargain and not as a penalty (the parties agreeing that Landlord's actual
damages would be difficult to predict and the liquidated damages amounts below
represent a reasonable approximation of such amount) (in lieu of Rent due after
the Final Payment Date) and (B) in the case of a payment pursuant to Article
21(d)(iv), as consideration for the obligation to transfer the Demised Premises
to Tenant and to surrender the Estate for Years interest, any unpaid Rent due
as of the Final Payment Date, plus whichever one of the following amounts
Landlord, in its sole discretion, shall specify in such notice (together with
interest on such amount at the Default Rate from the Final Payment Date
specified in such notice to the date of actual payment):

(i) an amount equal to the excess, if any, of the Termination
Value for the Demised Premises computed as of the Final Payment Date, over
the fair market sales value of the Demised Premises as of the Final Payment
Date (such fair market sales value to be determined by mutual agreement of
Landlord and Tenant or, if they cannot agree within ten (10) days after such
notice, by an appraisal); or

(ii) an amount equal to the excess, if any, of the Termination
Value for the Demised Premises computed as of the Final Payment Date over the
present value of the fair market rental value for the Demised Premises for
the balance of the Lease Term discounted semiannually at a _____ percent
(__%) annual interest rate (such fair market rental value to be determined by
mutual agreement of Landlord and Tenant or, if they cannot agree within ten
(10) days of such notice, by an appraisal); or

(iii) an amount equal to the excess of (A) the present value as
of the Final Payment Date of all installments of Basic Rent through the end
of the Base Term or the then applicable renewal term, discounted semiannually
at a _____ percent (__%) annual interest rate over (B) the present value as
of such Final Payment Date of the fair market rental value of the Demised
Premises (such fair market rental value to be determined by mutual agreement
of Landlord and Tenant or, if they cannot agree within ten (10) days of such
notice, by an appraisal) through the end of the Base Term or the then
applicable renewal term, discounted

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semiannually at a ______ percent (__%) annual interest rate; or

(iv) an amount equal to the greater of (A) Termination Value
determined as of the Final Payment Date, (B) the discounted Basic Rent
computed as of the Final Payment Date as set forth in clause (iii) of this
Article and (C) the fair market sales value computed as of the Final Payment
Date as set forth in clause (d)(i) of this Article; provided, if the fair
market sales value is greater than Termination Value, a pro rata portion of
Basic Rent accruing from the last Rent Payment Date to the Final Payment Date
(in each case other than Basic Rent to be paid in advance payable on or
before such Rent Payment Date relating to any period after such Final Payment
Date) if Landlord shall have received an amount equal to fair market sales
value of the Demised Premises pursuant to this Article 21(d)(iv),

Upon payment of the amounts set forth in Article 21(c) hereof
and this Article 21(d)(iv), and any other amounts payable by Tenant under
the Operative Documents, Landlord shall convey to Tenant all of Landlord's
right, title and interest in and to the Demised Premises, without recourse or
warranty, subject to all matters of record other than Lessor Liens.

(e) If Landlord shall have sold the Demised Premises or any part
thereof pursuant to clause (b) of this Article 21, Landlord, if it shall so
elect by notice to Tenant, may demand that Tenant pay to Landlord, and Tenant
shall pay to Landlord, on the date of such sale, as liquidated damages for loss
of bargain and not as a penalty (in lieu of Basic Rent due for periods
commencing after the next Rent Payment Date following the date of such sale),
any unpaid Rent due as of the next Rent Payment Date following the date of such
sale, plus the amount of any deficiency between the Sale Proceeds (as defined
below) and Termination Value, computed as of such Rent Payment Date, together
with interest at the Default Rate, on the amount of such Rent and such
deficiency from the date of such sale until the date of actual payment. "Sale
Proceeds" shall mean, with respect to any sale of any Demised Premises or any
part thereof by Landlord, the gross proceeds of such sale paid in cash, less all
reasonable costs and expenses incurred by Landlord, the Indenture Trustee, the
Remainderman and/or the Owner Participant in connection therewith.

(f) In the event that Landlord rescinds or terminates this
Lease, (i) no reletting, reentry or taking of

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possession of the Demised Premises by Landlord will be construed as an election
on landlord's part to terminate this Lease unless a written notice of such
intention is given to Tenant, (ii) notwithstanding any reletting, reentry, or
taking of possession, Landlord may at any time thereafter elect to terminate
this Lease for a continuing Event of Default and (iii) no act or thing done by
Landlord or any of its agents, representatives or employees shall be deemed an
acceptance of a surrender of the Demised Premises, and no agreement accepting a
surrender of the Demised Premises shall be valid unless the same be made in
writing and be executed by Landlord.

(g) Landlord may, as a matter of right and without notice to
Tenant or anyone claiming under Tenant, apply to any court having jurisdiction
to appoint a receiver or receivers of the Demised Premises, and Tenant hereby
irrevocably consents to such appointment and waives notice of any application
therefor. Any such receiver or receivers shall have all the usual powers and
duties of receivers in like or similar cases, including, without limitation, the
right to collect rents, and the rights to perform any acts which it deems
necessary or desirable to preserve the value, marketability or rentability of
the Demised Premises, or part thereof or interest therein.

(h) Landlord may (A) demand that Tenant, at Tenant's expense,
return possession of the Demised Premises promptly to Landlord in the manner and
condition required by, and otherwise in accordance with provisions of, Article
27, and (B) without prejudice to any other remedy Landlord may have for
possession (to the exclusion of Tenant) of the Demised Premises and expel or
remove Tenant and any other Person who may be occupying the Demised Premises or
any part therof, all without liability to Landlord, except for Landlord's gross
negligence or willful misconduct, for or by reason of such entry or taking of
possession, whether for the restoration of damage to property caused by such
taking or otherwise.

22. Bankruptcy.

If an Event of Default described in Article 20(v) occurs to Tenant
(other than Kmart), then Landlord may terminate this Lease by giving notice to
Tenant and Kmart of its intention so to do; provided, however, neither
bankruptcy, insolvency, an assignment for the benefit of creditors nor the
appointment of a receiver shall affect this Lease or permit its termination so
long as (i) no Material Default or other Event of Default has occurred and is
continuing and (ii) the covenants to be performed under this Lease shall be
performed by Kmart or a person or entity claiming under Kmart. In the event
Basic Rent and Additional Rent are not paid as herein provided after the filing
of a petition in bankruptcy or any arrearage in Rent is not made whole, the
Lease shall be immediately terminated and Landlord shall be free to pursue its
remedies set forth in Article 21.

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23. Covenant of Title.

Landlord covenants that it and any person rightfully claiming by,
through or under Landlord, shall not interfere with Tenant's quiet enjoyment and
use of the Demised Premises and all rights, easements, appurtenances and
privileges belonging or in any way appertaining thereto during the Lease Term,
provided that no Event of Default shall have occurred and be continuing.

24. Landlord Exculpation.

Anything to the contrary in this Lease notwithstanding, the
covenants contained in this Lease to be performed by Landlord shall not be
binding personally, but instead said covenants are made for the purpose of
binding only all of Landlord's right, title and interest in and to the Demised
Premises and the Option Agreement (as defined in the Purchase Agreement) with
respect to the Land and Landlord shall have no liability under this Lease in
excess of, and Tenant shall have no recourse against Landlord except with
respect to, Landlord's interest in the Demised Premises and the Option
Agreement.

25. Remedies Cumulative.

To the extent permitted by, and subject to the mandatory
requirements of, applicable Laws, each and every right, power and remedy herein
specifically given to Landlord or otherwise in this Lease shall be cumulative
and shall be in addition to every other right, power and remedy herein
specifically given or now or hereafter existing at law, in equity or by statute,
and each and every right, power and remedy whether specifically herein given or
otherwise existing may be exercised from time to time and as often and in such
order as may be deemed expedient by Landlord. No delay or omission by Landlord
in the exercise of any right, power or remedy or in the pursuit of any remedy
shall impair any such right, power or remedy or be construed to be a waiver of
any default on the part of Tenant or to be an acquiescence therein. Landlord's
consent to any request made by Tenant shall not be deemed to constitute or
preclude the necessity for obtaining Landlord's consent, in the future, to all
similar requests. No waiver by Landlord of any default shall in any way be, or
be construed to be, a waiver of any future or subsequent default.

26. Estoppel Letters.

Tenant will execute, acknowledge and deliver to Landlord, within
fifteen (15) days of a good faith request by Landlord and Landlord will execute,
acknowledge and deliver to Tenant, within fifteen (15) days of a good faith
request by Tenant a certificate in the form attached hereto as Exhibit E and
incorporated by reference herein executed by an authorized officer of Tenant or
Landlord, certifying (a) that this Lease is unmodified and in full force and
effect (or, if there have been modifications, that this Lease is in full force
and effect, as modified, and stating the modifications); (b) that Tenant has
accepted possession of the Demised

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Premises and the date on which the Lease Term commenced and will expire; (c) as
to the amount of any prepaid Rent or any credit due to Tenant hereunder; and
(d) as to whether, to the best of such party's knowledge, information and
belief, the requesting party is then in default in performing any of its
obligations hereunder (and, if so, specifying the nature of each such default);
and (e) as to any other fact or condition reasonably requested by the
requesting party.

27. Condition of Premises at Termination.

(a) Unless the Demised Premises have been purchased by Tenant
pursuant to Articles 14, 15, 21, or 39, at the expiration or earlier
termination of the Lease Term Tenant shall surrender the Demised Premises to
Landlord or its designee, together with all alterations, additions and
improvements then existing thereon, in good order and condition except for
ordinary wear and tear consistent with the provisions of Articles 9 and 19
hereof and free and clear of all liens or encumbrances of any type whatsoever,
except for Permitted Liens of the type specified in clauses (a), (b), (e) (but
only if such liens do not impair or restrict the use or sale of the Demised
Premises and are satisfactory to Landlord, in its reasonable discretion) and
(f) of the definition of "Permitted Liens" in Article 19 hereof, and such other
liens or encumbrances for which Tenant has provided assurance of full payment
or complete discharge and adequate assurance that such lien will not impair the
fair market value of the Demised Premises to Landlord or its designee to
Landlord's and such designee's satisfaction. All furniture and trade fixtures
installed in said buildings at the expense of Tenant or other occupant shall
remain the property of Tenant or such other occupant and shall be removed by
Tenant at its expense prior to the expiration or earlier termination of the
Lease; provided, however, Tenant shall, at any time and from time to time
during the Lease Term, have the option to relinquish its property rights with
respect to such trade fixtures, which option shall be exercised by notice of
such relinquishment to Landlord, and from and after the exercise of said option
the property specified in said notice shall be the property of Landlord.

(b) With respect to environmental matters, not more than one
hundred eighty (180) days nor less than sixty (60) days prior to the expiration
or upon the earlier termination of the Lease Term (except where Tenant is
purchasing the Demised Premises hereunder) Tenant shall, at its sole cost and
expense, provide to Landlord an environmental site assessment report performed
by a reputable environmental consultant selected by Tenant and satisfactory to
Landlord, in its reasonable discretion, stating that it appears that Hazardous
Materials (as defined in Article 38) have not been generated, produced,
manufactured, processed, distributed, maintained, used, handled, treated,
managed, stored, contained, recycled, transported, released, emitted,
discharged, deposited or disposed of on, in, to or from the Demised Premises
other than in compliance with applicable Environmental Laws. If such is not the
case, the report shall set forth recommendations for such additional
investigation or remedial or other response action relating to the Demised
Premises as may be deemed necessary or advisable by the consultant. If any
reporting requirements must be complied with under

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applicable Environmental Laws with respect to the Demised Premises, then it
shall be the sole responsibility and cost of Tenant to comply with these
requirements. In the event the report recommends any investigation or remedial
or other response action, it shall be Tenant's obligation, at Tenant's sole
cost and expense, to timely develop and implement in compliance with all
relevant Environmental Laws such remedial action plan. If it is required by
applicable Environmental Laws, such remedial action plan shall be submitted by
Tenant to the appropriate governmental agency for review and approval. Any
investigation, recommendations for remedial or other response, or remedial
action plan shall include, but shall not be limited to, plans for full
response, remediation, cleanup, removal, containment, restoration or other
corrective action, and the protection, or mitigative action associated, as
appropriate, with the protection of natural resources including wildlife,
aquatic species, and vegetation associated with the Demised Premises, as
required by applicable Environmental Laws.

28. Notices.

Notices required under this Lease shall be in writing and shall be
deemed to be properly served on receipt thereof if sent by certified or
registered mail to Landlord at the following address (include fax and telephone
number):

_______________________________
_______________________________
_______________________________

Telephone No. _________________
Telecopy No. _________________
Attn: _________________________

with a copy to:

_______________________________
_______________________________
_______________________________

Telephone No. _________________
Telecopy No. _________________

or to Tenant at the following address (include fax and telephone number):

Kmart Corporation
3100 West Big Beaver Road
Troy, Michigan 48084
Attn: Vice President - Real Estate
Telephone No. (810) 637-8950
Telecopy No. (810) 643-2689

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<PAGE> 44
with a copy to:

Erik J. Stone, Esq.
Dickinson, Wright, Moon, Van Dusen & Freeman
525 North Woodward Avenue
Bloomfield Hills, Michigan 48304
Telephone No. (810) 433-7236
Telecopy No. (810) 433-7274

or to any subsequent address which Tenant or Landlord shall designate for such
purpose in writing in accordance with this Article. Notices sent by overnight
delivery or by hand delivery shall be deemed received upon delivery. Notices
sent by facsimile machine shall be deemed received one (1) day after facsimile
transmission provided that telephonic confirmation is received of the
transmission.

29. Notice of Environmental Matters.

Tenant shall provide Landlord with prompt written notice of any
pending Environmental Claim in connection with the Demised Premises. Tenant
also shall provide Landlord with prompt written notice of any threatened
Environmental Claim in connection with the Demised Premises made by a reputable
environmental group. All such notices shall describe in detail the nature of
the Environmental Claim and Tenant's response thereto. In addition, Tenant
shall promptly provide to Landlord copies of all written communications with
any governmental authority relating to any Environmental Law in connection with
the Demised Premises. Tenant shall promptly provide such reasonably detailed
reports of any such Environmental Claims as may be reasonably requested by
Landlord.

Tenant shall provide Landlord with prompt written notification of
any known (i) violation or non-compliance with any applicable Environmental Law
with respect to the Demised Premises, and (ii) release of Hazardous Materials
on, in, at or from the Demised Premises which is required to be reported to any
governmental agency pursuant to applicable Environmental Laws. Tenant shall
also promptly provide Landlord with copies of all correspondence, reports and
other documentation relating to such violation or release and Tenant's remedial
or response action.

30. Entry by Landlord.

From time to time during the term of this Lease, Landlord shall
have the right during normal business hours after twenty-four (24) hours' notice
to Tenant or without notice in the event of emergency or if an Event of Default
shall have occurred and is continuing to enter the Demised Premises for the
purpose of: (i) inspecting the condition of the Demised Premises, (ii) showing
the Demised Premises to prospective purchasers or mortgagees, (iii) inspecting
for compliance with such matters as Tenant is obligated for (including
compliance with Environmental Laws), (iv) advertising the Demised Premises for
rent or sale during the final year of the Base Term or any renewal term or in
accordance with Article 21.

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Landlord acknowledges and agrees that Landlord will not interfere with the
conduct of Tenant's business to the extent reasonably practicable in
re-entering the Demised Premises for the purposes set forth herein, provided,
if an Event of Default has occurred and is continuing, Landlord shall be
entitled to exercise the remedies upon default herein provided for.

31. Captions and Definitions.

Captions of Articles of this Lease are solely for convenience of
reference and shall not in any way limit or amplify the terms and provisions
thereof. The necessary grammatical changes which shall be required to make the
provision of this Lease apply (a) in the plural sense if there shall be more
than one Landlord, and (b) to any landlord which shall be either a corporation,
an association, a partnership, or an individual, male or female, shall in all
instances be assumed as though in each case fully expressed.

32. Successors and Assigns.

The conditions, covenants and agreements contained in this Lease
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, successors and assigns. All
covenants and agreements of this Lease shall run with the Land.

33. Severability.

If any one or more of the provisions contained herein shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality, unenforceability shall not affect any other provision
of this Lease, but this Lease shall be construed as if such invalid, illegal or
unenforceable provision had not been contained herein.

34. Independent Covenants.

The covenants of Landlord and Tenant herein are independent and
several covenants and the performance of any covenant is not conditioned upon
the performance or compliance with any other covenant of this Lease.

35. Choice of Law.

This Lease shall be construed and enforced in accordance with the
laws of the state where the Demised Premises are located without regard to
provisions governing conflict of laws. The language in all parts of this Lease
shall in all cases be construed as a whole according to its fair meaning and
not strictly for or against either Landlord or Tenant.

36. Waiver and Modifications.

The failure of either party to insist in any one or more instances
upon the strict performance of any one or more of the agreements,

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<PAGE> 46
terms, covenants, conditions or obligations of this Lease, or to exercise any
rights, remedy or election herein contained, shall not be construed as a waiver
or relinquishment for the future of the performance of such agreements, terms,
covenants, conditions or obligations of this Lease or of the right to exercise
such right, remedy or election, but the same shall continue and remain in full
force and effect with respect to any subsequent breach, act or omission. This
Lease may be changed or amended only by a writing signed by the party against
whom enforcement thereof is sought.

37. Memorandum of Lease.

The parties hereto have simultaneously with the execution and
delivery of this Lease executed and delivered a memorandum of Lease in form and
content mutually agreeable to Landlord and Tenant which Tenant shall at its sole
expense cause to be recorded.

38. Hazardous Materials.

For purposes of this Lease, Hazardous Materials are defined as (i)
"hazardous substances," as defined by CERCLA, as amended from time to time and
any regulations promulgated thereunder; (ii) "hazardous wastes," as defined by
RCRA, as amended from time to time and any regulations promulgated thereunder;
(iii) any pollutant or contaminant or hazardous, restricted, dangerous or toxic
chemicals, materials, wastes or substances within the meaning of any
Environmental Law; (iv) any chemical, material, substance, or waste, the
presence, use, generation, treatment, release, emission, discharge, transport,
storage, or disposal of which is now or hereafter prohibited, limited or
regulated by any Environmental Law; (v) any substance, material, product,
chemical, derivative, compound, mixture, mineral, waste, gas, medical waste,
contaminant or pollutant which would require investigation, response or
remediation as a result of any public or private action brought pursuant to any
Environmental Law; and (vi) any radioactive material, asbestos in any form or
condition, petroleum or petroleum products, flammable explosives, urea
formaldehyde foam insulation, polychlorinated biphenyls, and radon gas.

Tenant agrees that it shall not cause or permit any Hazardous
Material to exist on or be brought upon, generated, produced, manufactured,
processed, distributed, maintained, handled, treated, managed, contained,
recycled, transported, deposited, used, stored, released, disposed of, emitted
or discharged from, at, on or to the Demised Premises during the term of this
Lease except in compliance with applicable Environmental Laws.

Tenant shall assume any and all costs and expenses incurred in
connection with, and shall promptly and diligently undertake, any investigation
of site conditions or any clean up, response, remedial, removal, containment,
corrective action or restoration work required pursuant to any applicable
Environmental Law or by any federal, state or local government or political
subdivision thereto because of Hazardous Material present in, on, under or at
the soil, surface water, ground water, sediment, air or any other media
associated with the Demised Premises.

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<PAGE> 47
Without limiting the foregoing, if the presence of any Hazardous Material at
the Demised Premises results in contamination of the Demised Premises, Tenant
shall promptly take all actions at its sole expense as are necessary to return
the Demised Premises to the condition existing prior to the introduction of any
such Hazardous Material to the Demised Premises, provided, however, that in the
event the Demised Premises are contaminated by a release from a source not upon
the Demised Premises, Tenant shall not be obligated promptly to undertake any
remedial action, unless otherwise required to do so pursuant to applicable
Environmental Laws. Without limiting Tenant's obligations hereunder, Tenant
may seek environmental response costs from any third party not a party to this
Lease or the Purchase Agreement (and not related to any party to this Lease or
the Purchase Agreement), and Landlord shall cooperate to a reasonable extent in
any such effort.

39. Economic Abandonment.

(a) Notwithstanding anything contained in this Lease to the
contrary, Landlord and Tenant acknowledge that it is possible that, during the
Base Term of this Lease, due to changes in the conduct of Tenant's business or
other factors, the Demised Premises may become obsolete or may no longer be
economic for Tenant's use or surplus to the Tenant's needs. Therefore, on any
Rent Payment Date on and after the 5th year and before the expiration of the
Base Term upon determination by Tenant in good faith that the Demised Premises
are obsolete or are no longer economic because of reasons as stated hereinabove
or surplus to the Tenant needs, provided no Material Default or Event of
Default has occurred and is continuing, Tenant may, by providing at least
twelve (12) months and not more than eighteen (18) months notice to Landlord
("Notice of Termination"), terminate this Lease on the Rent Payment Date
specified in such notice ("Termination Date"). Such notice (which for purposes
of the Note Indenture will be a "Redemption Notice") may be revoked by Tenant
on not more than one occasion during the Lease Term provided such revocation
shall have been made not less than ninety (90) days prior to the Termination
Date and provided further that Landlord shall not have accepted Tenant's
request to terminate the Lease and to return the Demised Premises to Landlord
by delivering written notice of acceptance to Tenant within one hundred (100)
days after its receipt of Notice of Termination ("Landlord's Acceptance"). No
purported Landlord's Acceptance shall be valid unless accompanied by the
Indenture Trustee's written confirmation of receipt of deposited funds pursuant
to Section ___ of the Indenture. Tenant's Notice of Termination shall be
accompanied by a certificate, signed and sworn to by a duly authorized and
acting Senior Financial Officer of Tenant, stating that Tenant has made the
determination that the Demised Premises are obsolete or are no longer economic
for Tenant's use or surplus to the Tenant's needs and reciting the reasons for
such determination.

(b) If Landlord's Acceptance has not been made, Tenant, as
non-exclusive agent for Landlord, shall use its reasonable efforts at its own
expense on behalf of Landlord to obtain cash bids for the purchase of all of
Landlord's right, title and interest in the Demised Premises from

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<PAGE> 48
persons other than Tenant or any of its affiliates. Landlord shall also have
the right to obtain cash bids for the purchase thereof, either directly or
through Landlord's agents. Tenant shall certify to Landlord in writing the
amount and terms of each bid received by Tenant and the name and address of the
person submitting a bid.

(c) If Landlord's Acceptance has not been made, on the
Termination Date Landlord shall (subject to Tenant's receipt in immediately
available funds of the net sales price on such date for the benefit of Landlord
and Tenant's payment of all additional payments specified in clauses (A), (B),
(C), (D) and (E) below), without recourse or warranty, sell all of its right,
title and interest in the Demised Premises to the bidder which shall have
submitted the highest all cash bid prior to such date. On the Termination Date,
the total sales price realized at such sale net of all expenses incurred by
Landlord shall be paid to Tenant and Tenant shall pay to Landlord (or, in the
case of Additional Rent, to Landlord or the person entitled thereto) the sum of
(A) the Termination Value of the Demised Premises determined as of the
Termination Date, plus (B) the excess, if any, of the net sales price of the
Demised Premises over such Termination Value, plus (C) all Basic Rent due and
unpaid to and including the Termination Date (other than any portion of Basic
Rent payable in advance on the Termination Date), plus (D) all Additional Rent
owing by Tenant to and including the Termination Date, plus (E) an amount equal
to the Make-Whole Premium, if any, on Landlord's Debt.

(d) In the event Landlord's Acceptance has been made, on the
Termination Date Tenant shall pay to Landlord solely the amounts set forth in
clauses (C), (D) and (E) of the preceding paragraph. Upon receipt by Landlord
of such amounts and upon compliance by Tenant with Article 27 hereof, this Lease
shall terminate.

Landlord shall use its best efforts to determine any
non-compliance with Article 27 hereof and shall give notice of any such non-
compliance within thirty (30) days after Landlord's Acceptance. Any such notice
or any failure to give such notice shall not impair Landlord's right to give
Tenant further notices of non-compliance with Article 27 until the Lease
terminates in accordance with the immediately preceding paragraph.

(e) If Landlord's Acceptance has not been made and a sale shall
not have occurred as of the Termination Date, Landlord shall have the option of
either (i) transferring the Demised Premises on the Termination Date without
recourse or warranty to Tenant in which event Tenant shall pay to Landlord (or,
in the case of Additional Rent, to Landlord or the person entitled thereto) the
amounts set forth in clauses (C), (D) and (E) of paragraph (c) above together
with the higher of the (x) then fair market sales value of the Demised Premises
as agreed to by the parties or as determined by an appraisal reasonably
satisfactory to Landlord and Tenant obtained at Landlord's sole cost and
expense, to be performed in accordance with Article 45 hereof, or (y)
Termination Value of the Demised Premises determined as of the Termination Date,
or (ii) retaining the Demised Premises on the Termination Date, in which case
Tenant shall pay to

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<PAGE> 49
Landlord on such date solely the amounts set forth in clauses (C), (D) and (E)
of paragraph (c) above, provided that Landlord may not exercise the option
described in clause (ii) unless it shall have deposited funds with the
Indenture Trustee pursuant to Section ___ of the Indenture. Upon receipt by
Landlord of such amounts and upon compliance by Tenant with Article 27 hereof,
this Lease shall terminate. In the event Landlord elects to transfer the
Demised Premises to Tenant on the Termination Date, it shall transfer all of
its right, title and interest in the Demised Premises in an "as is" condition
without warranty, except that the Demised Premises shall be free and clear of
Lessor Liens.

Notwithstanding the foregoing, if Tenant shall elect to
exchange full recourse securities for the Notes pursuant to Section 13 of the
Owner Participation Agreement, the amount payable to Landlord pursuant to clause
(e)(i) above shall be reduced by an amount equal to the unpaid principal balance
of such Notes.

(f) Landlord shall be under no duty to solicit bids, or to
inquire into the efforts of Tenant to obtain bids or otherwise to take any
action in connection with any sale hereunder other than to sell the Demised
Premises to the highest independent third party bidder in accordance with the
terms hereof. In the event that Tenant terminates this Lease under this Article
39, and Tenant purchases the Demised Premises pursuant to Article 39(e)(i), the
Tenant covenants that it shall not use the Demised Premises for any purpose.

40. Tenant's Purchase Offer.

(a) At any time that a Tenant's Purchase Offer shall have been
made pursuant to Articles 14 or 15 of this Lease, Landlord shall notify Tenant
within sixty (60) days of Tenant's Purchase Offer whether Landlord accepts or
rejects such offer. Failure by Landlord to notify Tenant of Landlord's election
within such sixty (60) day period shall be deemed acceptance of Tenant's
Purchase Offer. No purported rejection of such offer shall be valid unless
accompanied by the Indenture Trustee's confirmation of receipt of deposited
funds pursuant to Section ___ of the Indenture.

(b) In the event Landlord accepts Tenant's Purchase Offer and
subject to the satisfaction of the conditions set forth in this Article 40, the
Lease shall terminate on the next scheduled Rent Payment Date occurring not
less than one-hundred (100) days from the date of Tenant's Purchase Offer
("Purchase Offer Termination Date"). On the Purchase Offer Termination Date,
Tenant shall pay to Landlord (or in the case of Additional Rent to Landlord or
the person entitled thereto) an amount equal to the sum of (A) the Termination
Value of the Demised Premises determined as of the Purchase Offer Termination
Date, (B) all Basic Rent due and unpaid to and including the Purchase Offer
Termination Date (other than any portion of Basic Rent payable in advance on
the Purchase Offer Termination Date), plus (C) all Additional Rent owing by
Tenant to and including the Purchase Offer Termination Date (other than any
portion payable in advance

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on the Purchase Offer Termination Date). In addition, any Basic Rent paid in
advance and not yet accrued as of the Purchase Offer Termination Date shall be
refunded to Tenant on such date.

On the Purchase Offer Termination Date, and subject to the receipt
by Landlord of the amounts specified in the preceding paragraph, Landlord shall
convey all of its right, title and interest in and to the Demised Premises by
limited warranty deed in an "as is" condition without warranty, except that the
Demised Premises shall be free and clear of Lessor Liens.

Tenant shall pay, on an After-Tax Basis (as defined in the Master
Indemnification Agreement), all costs and expenses incurred in connection with
the sale of the Demised Premises to Tenant pursuant to Tenant's Purchase Offer,
including, without limitation, real estate transfer taxes. In addition, in the
event of a sale pursuant to Articles 14, 15, and 39 hereof, Tenant shall also
pay an amount equal to the Make-Whole Premium, if any, as defined in the Note
Indenture.

(c) In the event Landlord rejects Tenant's Purchase Offer, on the
Purchase Offer Termination Date Tenant shall pay to Landlord (or in the case of
Additional Rent to Landlord or the person entitled thereto) an amount equal to
the sum of clauses (B) and (C) of the second sentence of paragraph (b) above and
the Lease shall thereupon terminate. Any Rent and other charges paid in advance
and not yet accrued as of the Purchase Offer Termination Date shall be refunded
to Tenant on such date.

41. Property Substitution.

(a) Provided no Material Default or Event of Default has
occurred and is continuing, at any time Tenant shall be entitled or required to
acquire the Demised Premises pursuant to Articles 14, 15 or 39 hereunder, Tenant
shall be entitled in lieu thereof to substitute a retail store (the "substituted
property") for the Demised Premises provided that (i) the fair market value of
the substitute property as determined by appraisal procedures set forth in
Article 45 hereof shall be not less than the fair market value of the Demised
Premises immediately prior to the event which gave rise to the substitution;
(ii) the useful life of the substitute property as determined by appraisal
procedures set forth in Article 45 hereof shall be not less than the useful life
of the Demised Premises immediately prior to the event which gave rise to the
substitution; (iii) the representations and warranties of Kmart made with
respect to the Demised Premises shall be remade and true with respect to the
substitute property on the effective date of substitution; and (iv) an
environmental due diligence report, survey and title report, each in form and
substance satisfactory to Landlord and Indenture Trustee, concerning the land
and property to be substituted, shall have been provided in sufficient time for
appropriate review by Landlord and Indenture Trustee prior to the effective date
of such substitution. In the event a Phase I environmental due diligence report
recommends further environmental analysis in connection with the substitute
property, Tenant shall determine

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in its sole discretion whether to undertake such further analysis or to
substitute another retail store for the Demised Premises, pursuant to the terms
of this paragraph.

(b) On the substitution date, the substitute property will be
subjected to the terms and conditions of this Lease and Landlord shall convey
all of its right, title and interest in and to the Demised Premises, to Tenant
by limited warranty deed in an "as is" condition except that it shall be free
and clear of Lessors Liens upon delivery by Tenant to Landlord of all of the
following:

[(i) those documents and conditions with respect to the
substitute property which are set forth in Sections _________ of the
Purchase Agreement.]

(ii) an amendment to this Lease and any memorandum hereof duly
executed and acknowledged in form and substance reasonably
satisfactory to Landlord and Tenant to replace the description of the
Land with the description of all land included in the substitute
property and make such other changes herein as may be reasonably
necessary or appropriate under the circumstances; provided, however,
that in no event shall the Basic Rent be reduced, deferred or abated;

(iii) a copy of a final as-built survey of the substitute
property, dated a recent date, reasonably satisfactory in form and
substance to Landlord and meeting the survey requirements for the
Demised Premises set forth in the Purchase Agreement;

(iv) counterparts of an ALTA owner's and loan policies of
title insurance (or such other form of loan policy as may be
prescribed by statute in a particular state) covering the substitute
property (or the valid, binding, unconditional commitment therefor),
dated the substitution date, in form and substance reasonably
satisfactory to Landlord and Indenture Trustee, issued to them by a
title insurance company reasonably satisfactory to Landlord;

(v) certificates of insurance, if any, required with respect
to the substitute property pursuant to Articles 7 and 14 hereof;

(vi) a copy of the appraisal required hereunder; and

(vii) such other certificates, documents, opinions of counsel,
surveys, certified copies of duly adopted resolutions of the
respective boards of directors of Landlord and Tenant authorizing the
substitution of the substitute property and the documents executed in
connection therewith, and any other instruments as may be reasonably
required by either of them.

Notwithstanding the foregoing the Tenant shall not be
permitted to exercise its substitution rights (i) unless the long-term senior
debt securities of Kmart shall have been rated at least BBB- by at least two
nationally recognized statistical rating organizations

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and (ii) if within sixty (60) days of receipt by Landlord of a written notice
setting forth in reasonable detail all of the material terms and conditions of,
together with all other material information and documentation relating to, the
substitution and the substitute property, the Owner Participant shall have
delivered to the Tenant an opinion of independent tax counsel selected by the
Owner Participant and reasonably acceptable to the Tenant that there is a
reasonable basis to believe that the substitution could result in material
adverse tax consequences to the Landlord, the Owner Participant or with respect
to the transactions contemplated by the Operative Documents which are not
indemnified by the Tenant pursuant to the Operative Documents unless the Tenant
shall agree either to restructure the substitution transaction in a form and
manner which in the opinion of Owner Participant and its tax counsel would
eliminate the risk of any material adverse tax consequences to Landlord, Owner
Participant or with respect to the transactions contemplated by the Operative
Documents or to indemnify the Landlord and the Owner Participant for such
adverse tax consequences in a form and manner satisfactory to the Owner
Participant.

42. Landlord's Right to Cure Tenant's Default.

If Tenant shall be in default of any of its obligations (after
applicable notice and cure periods) under this Lease, Landlord, without waiving
or releasing any obligation or default, may (but shall be under no obligation
to) at any time thereafter make such payment or perform such act for the account
and at the expense of Tenant, and may enter upon the Demised Premises for such
purpose and take all such action thereon as, in Landlord's opinion, may be
necessary or appropriate therefor. No such entry shall be deemed an eviction of
Tenant. All sums so paid by Landlord and all costs and expenses (including,
without limitation, attorneys' fees and expenses) so incurred, together with a
late charge thereon (to the extent permitted by law) at the Default Rate (or at
the maximum rate permitted by law, whichever is the lesser) from the date on
which such sums or expenses are paid or incurred by Landlord, shall be paid by
Tenant to Landlord on demand.

43. No Merger of Title.

There shall be no merger of this Lease or of the leasehold estate
created hereby by reason of the fact that the same person, firm, corporation or
other entity may acquire, own or hold, directly or indirectly, (a) this Lease or
the leasehold estate created hereby or any interest in this Lease or such
leasehold estate and (b) the fee estate in the Demised Premises or any interest
therein.

44. Ownership of the Leased Property.

Tenant acknowledges that the Demised Premises are the property of
Landlord and that Tenant has only the right to the possession and use of the
Demised Premises upon the terms and conditions of this Lease.

45. Procedure for Appraisals.

In each instance under this Lease where an appraisal shall be
required (except with respect to an appraisal required by Article 22), such
appraisal shall be conducted as follows:

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(a) The party desiring such appraisal shall give notice to that
effect to the other party, specifying therein the name and address of the person
designated to act as appraiser on its behalf. Within fifteen (15) days after
the service of such notice, the other party shall give notice to the first party
specifying the name and address of the person designated to act as appraiser on
its behalf. If such party fails to notify the other party of the appointment of
its appraiser within or by the time above specified, then the other party, on
behalf of both, may apply to a court in the county where the Demised Premises is
located for the appointment of such appraiser, and such party shall not raise
any question as to the court's full power and jurisdiction to entertain the
application and make the appointment.

(b) The appraisers so chosen shall meet within ten (10) days
after the second appraiser is appointed and if within thirty (30) days of such
first meeting the two appraisers agree on the value which they have been
appointed to determine, such agreed upon value shall be the appraised value for
the purposes for which the appraisal was required. If within thirty (30) days
after such first meeting the two appraisers shall be unable to agree upon such
valuation within fifteen (15) days thereafter they shall appoint a third
appraiser who shall be competent and impartial. Within thirty (30) days after
the appointment of such third appraiser, the third appraiser shall deliver its
appraisal. With respect to the three appraisals, the appraisal most different
from the average of the other two shall be discarded and such average shall be
binding on Landlord and Tenant; provided that if the highest appraisal and the
lowest appraisal are equidistant from the third appraisal, the third appraisal
shall be binding on Landlord and Tenant.

(c) In the event the two appraisers are unable to agree upon the
appointment of a third appraiser within fifteen (15) days after their being
unable to agree upon a valuation, such third appraiser shall be selected by the
parties themselves if they can agree thereon within a further period of fifteen
(15) days. If the parties do not so agree, then either party may apply to the
court as provided in paragraph (a) above.

(d) Any appraiser appointed pursuant to this Article shall be an
appraiser who is a member of the American Institute of Real Estate Appraisers
(or a successor organization), and shall have been doing business as such for a
period of at least ten (10) years before the date of his appointment. All
appraisers chosen or appointed pursuant to this Article shall be sworn fairly
and impartially to perform their duties as such appraiser. In the event of the
failure, refusal or inability of any appraiser to act, his successor shall be
appointed within ten (10) days by the party who originally appointed him or in
the event such party shall fail so to appoint such successor, or in the case of
the third appraiser, his successor shall be appointed as provided in paragraph
(a) above.

(e) Unless otherwise expressly provided herein, each party shall
pay the fees and expenses of its respective appraiser and both shall share the
fees and expenses of the third appraiser, if any. Each party

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<PAGE> 54
shall be responsible for the fees and expenses of its own attorneys and other
representatives. Photocopies of the reports of all appraisers shall be
provided to all the parties. In rendering their decision, the appraisers shall
have no power to modify or reform any of the provisions of this Lease.

(f) In the event of an appraisal under Article 21, Landlord shall
appoint an appraiser who meets the requirements of subparagraph (d) above.

46. Survival of Tenant's Obligations.

No termination of this Lease shall relieve Tenant or Kmart of any
of its liabilities and obligations hereunder arising or occurring prior to such
termination.

47. Counterparts.

This Lease may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument.

48. Liabilities of Landlord.

Landlord is entering into this Lease solely in its capacity as
owner trustee under the Trust Agreement and not in its individual capacity, and
in no event whatsoever shall [Owner Trustee] (or any entity acting
as successor trustee, co-trustee or separate trustee under the Trust Agreement)
be liable on, or for any loss in respect of, any of Landlord's statements,
representations, warranties, agreements or obligations (except those explicitly
entered into in its individual capacity) hereunder or under any of the other
Operative Documents, or any other document executed by Landlord in connection
herewith for any reason whatsoever, all as to which the parties agree to look
solely to the Trust Estate (as defined in the Purchase Agreement).

49. Note Indenture.

In order to secure the Notes, Landlord provides in the Note
Indenture, among other things, for the assignment (to the extent provided
therein) by Landlord to Indenture Trustee of its right, title and interest to
this Lease. Tenant hereby:

(i) consents to such assignment pursuant to the terms of the Note
Indenture;

(ii) covenants to pay directly to Indenture Trustee (or, after
receipt of notice from Indenture Trustee stating that the Note Indenture
has been satisfied and discharged, to Landlord) Basic Rent and Additional
Rent due to Landlord hereunder or under

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<PAGE> 55
any other Operative Document which shall be required to be paid to
Indenture Trustee pursuant to the Note Indenture or any other Operative
Document;

(iii) agrees that the right of Indenture Trustee to such payments
hereunder shall be absolute and unconditional and shall not be affected
by any circumstances whatsoever; and

(iv) agrees that until release of the Note Indenture as to the
Property, except with respect to Excepted Rights and Payments, (p) the
Indenture Trustee shall have such right to enforce the provisions of this
Lease as is provided in the Note Indenture; (q) Landlord shall not, for
any reason, seek to recover from the Indenture Trustee any moneys paid to
the Indenture Trustee by virtue of the Note Indenture; (r) all sums
payable to the Indenture Trustee pursuant to the Note Indenture shall be
paid by bank wire transfer in such manner that on the date on which sums
are due and payable, as of 12:00 noon (New York City time), or such
earlier date or time as may be necessary to ensure timely payments on the
Certificates, the Indenture Trustee shall be in actual receipt of
immediately available funds; (s) Tenant shall deliver to the Indenture
Trustee duplicate originals of all notices and other instruments which
Tenant may deliver pursuant to this Lease (and no payment of such sums or
delivery of such notices or other instruments by Tenant shall be of any
force or effect unless, with respect to payments, paid in accordance with
written directions from Indenture Trustee and, with respect to notices,
delivered to Landlord and the Indenture Trustee as provided above); (t)
Tenant shall not pay any Basic Rent or Additional Rent payable to
Landlord more than ten (10) days prior to such payment's scheduled due
date under this Lease; (u) any notice, approval, estoppel, consent or
other delivery purportedly delivered or given (or deemed delivered or
given) by or on behalf of Landlord to Tenant pursuant to this Lease shall
be of no force or effect unless in writing and executed also by the
Indenture Trustee; (v) Tenant shall not enter into any agreement
subordinating or (except as expressly permitted by the terms of this
Lease as in effect on the date hereof) terminating this Lease without the
prior written consent of the Indenture Trustee, and any such attempted
subordination or termination without such consent shall be void, and,
except as otherwise provided in Section 12.07 of the Note Indenture and
except with respect to Excepted Rights and Payments, Tenant shall not
enter into any amendment or modification of this Lease without the prior
written consent of the Indenture Trustee, and any such attempted
amendment or modification without such consent shall be void; (w) if this
Lease shall be amended, it shall continue to be subject to the provisions
of the Note Indenture without the necessity of any further act by
Landlord, Tenant or the Indenture Trustee; (x) Tenant shall not take any
action to terminate, rescind or avoid this Lease, notwithstanding, to the
fullest extent permitted by

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<PAGE> 56
law, the bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution or other proceeding affecting
Landlord or any assignee of Landlord and notwithstanding any action with
respect to this Lease which may be taken by an assignee, trustee or
receiver of Landlord or of any such assignee or by any court in any such
proceedings; (y) if Tenant shall purchase Landlord's interest in the
Property pursuant to the terms of this Lease, Tenant shall accept an
instrument conveying such interest which is executed and delivered by the
Indenture Trustee, pursuant to its power of attorney by Landlord
contained in Section [16.01(a)] of the Note Indenture; and (z) in the
event of a foreclosure under the Note Indenture by the Indenture Trustee,
or conveyance in lieu thereof, Tenant shall attorn hereunder to the
purchaser at foreclosure or recipient of a conveyance in lieu thereof, as
applicable, and notwithstanding anything herein that may be construed to
the contrary, if the Notes are deemed cancelled, paid or otherwise
satisfied (in whole or in part) by reason of such foreclosure or
conveyance in lieu thereof, then provisions of this Lease relating to
Tenant's obligations with respect to amounts payable to Landlord in
excess of amounts payable under the Note Indenture shall continue
unaffected and shall be construed for all purposes as if the Notes and
the Note Indenture were still in full force and effect and that payments
made hereunder by Tenant were applied to the reduction of the
indebtedness evidenced by the Notes in the manner and at the times
provided for in the Note Indenture. The Indenture Trustee is an express
third party beneficiary of the agreements contained in this Article.

Tenant, at Tenant's expense, shall cause the Note Indenture, a
memorandum at this Lease and all necessary financing statements and
continuation statements under the Uniform Commercial Code (including,
without limitation, financing statements with respect to fixtures
included within the Units) to be recorded, registered and filed from
time to time in such manner and in such places as may be required by law
and shall take all such other actions as may be required in order to
make effective, perfect and maintain perfection of the rights, liens and
security interests intended to be created in connection with this Lease
and the Note Indenture, in each case, promptly after the execution and
delivery thereof.

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<PAGE> 57
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

WITNESSES: "LANDLORD"

[OWNER TRUSTEE], a national banking
association, not in its individual
capacity, except as expressly stated
herein, but solely as Owner Trustee
aforesaid

_____________________________ By:________________________________

Its:_____________________________
_____________________________

"TENANT"

KMART CORPORATION, a Michigan corporation

_____________________________ By:________________________________
M. L. Skiles
Its: Senior Vice President

_____________________________

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<PAGE> 58
ACKNOWLEDGMENTS

STATE OF MICHIGAN )
) SS
COUNTY OF _________)

The foregoing instrument was acknowledged before me this ____ day of
_________, 1994 by __________________________, the _____________________ of
________________________ a national banking association, not in its individual
capacity, except as expressly stated herein, but solely as Owner Trustee under
Trust Agreement aforesaid of even date herewith, on behalf of said association.

_________________________________________
Notary Public, ___________ County
State of Michigan
My Commission Expires:

STATE OF MICHIGAN )
) SS
COUNTY OF ________ )

The foregoing instrument was acknowledged before me this ____ day of
__________________, 1994 by M. L. Skiles, the Senior Vice President of KMART
CORPORATION, a Michigan corporation, on behalf of the Corporation.

_________________________________________
Notary Public, ______________ County
State of Michigan
My Commission Expires:

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<PAGE> 59
EXHIBIT A

Legal Description

[Exhibit A Intentionally Omitted]

<PAGE> 60
EXHIBIT B

Depiction of Site

[Exhibit B Intentionally Omitted]

<PAGE> 61
EXHIBIT C

Rents and Rent Payment Dates

[Exhibit C Intentionally Omitted]

<PAGE> 62
EXHIBIT C-1

Landlord's Debt

[Exhibit C-1 Intentionally Omitted]

<PAGE> 63
EXHIBIT C-2

Rental Adjustment Certificate

[Exhibit C-2 Intentionally Omitted]

<PAGE> 64
EXHIBIT D

Termination Value

[Exhibit D Intentionally Omitted]

<PAGE> 65
EXHIBIT E

Form of Estoppel Letter

[Exhibit E Intentionally Omitted]

<PAGE> 1
KMART CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT 12 - INFORMATION ON RATIO OF EARNINGS
TO FIXED CHARGES COMPUTATION
Restated to exclude discontinued operations

<TABLE>
<CAPTION>
Fiscal Year Ended Trailing 52 Weeks Ended
----------------------------------------- --------------------------
January 29, January 27, January 26, July 27, July 28,
(Millions) 1992 1993 1994 1994 1993
----------- ------------ ----------- --------- ---------
<S> <C> <C> <C> <C> <C>
Pre-tax income from continuing
operations (1) $1,189 $1,327 $(550) $ (642) $1,191

Equity income of unconsolidated affiliated
retail companies that exceeds distributions (26) (12) (20) (28) (22)

Fixed charges per below 582 664 763 761 778
Less interest capitalized during the period (10) (14) (11) (11) (20)
------ ------ ----- ------ ------
Earnings from continuing operations 1,735 1,965 182 80 1,927
====== ====== ===== ====== ======
Fixed Charges:
Interest expense 398 442 490 489 513
Rent expense - portion of operating rentals
representative of the interest factor 172 206 260 259 249

Other 12 16 13 13 16
------ ------ ----- ------ ------
582 664 763 761 778
====== ====== ===== ====== ======
Ratio of earnings to fixed charges (2) 3.0 3.0 N/A N/A $ 2.48
====== ====== ===== ====== ======
</TABLE>

(1) Pre-tax income from continuing operations for 1993 includes a pre-tax
provision of $1,348 million for store restructuring and other charges.

(2) The deficiency of income from continuing retail operations versus fixed
charges was $581 million for the fiscal year ended January 26, 1994 and $681
million for the 52 weeks ended July 27, 1994.

<PAGE> 1

Exhibit 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectus
constituting part of this 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.

Price Waterhouse LLP

Detroit, Michigan 48243
November 14, 1994