Exhibit 10.1

 

 

 

LEASE, DEED OF TRUST AND
SECURITY AGREEMENT

 

Dated as of March 30, 2006

among

SILICON LABORATORIES INC.,
as Lessee

and

BAL INVESTMENT & ADVISORY, INC.,

as Lessor

and

GARY S. FARMER,
as the Deed of Trust Trustee pursuant to Section 24.2 hereof

 

 

 

This Lease, Deed of Trust and Security Agreement has been executed in multiple
counterparts. To the extent, if any, that this Lease, Deed of Trust and Security
Agreement constitutes chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no lien on this
Lease, Deed of Trust and Security Agreement may be created through the transfer
or possession of any counterpart hereof other than counterpart “Number 1,” which
shall be identified as the counterpart containing the receipt therefor executed
by Wells Fargo Bank Northwest, National Association, as Collateral Agent, on or
following the signature page thereof.

 

This counterpart is [not] the original counterpart.

 

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TABLE OF CONTENTS

 

SECTION

HEADING

PAGE

 

 

 

ARTICLE I

DEFINITIONS

2

 

 

 

ARTICLE II

LEASE OF LEASED PROPERTY; LEASE TERM

3

 

 

 

Section 2.1.

Leased Property

3

Section 2.2.

Term

4

Section 2.3.

Title

4

 

 

 

ARTICLE III

PAYMENT OF RENT

5

 

 

 

Section 3.1.

Rent

5

Section 3.2.

Payment of Basic Rent

5

Section 3.3.

Supplemental Rent

6

Section 3.4.

Method of Payment

7

 

 

 

ARTICLE IV

QUIET ENJOYMENT; RIGHT TO INSPECT

8

 

 

 

Section 4.1.

Non-Interference

8

Section 4.2.

Inspection and Reports

9

 

 

 

ARTICLE V

NET LEASE, ETC.

10

 

 

 

Section 5.1.

Net Lease, Etc

10

Section 5.2.

No Termination or Abatement

13

 

 

 

ARTICLE VI

ASSIGNMENTS, SUBLEASES AND DELEGATIONS

14

 

 

 

Section 6.1.

Assignment and Subletting

14

Section 6.2.

Assignment of Related Agreements

17

 

 

 

ARTICLE VII

LESSEE ACKNOWLEDGEMENTS

20

 

 

 

Section 7.1.

CONDITION OF THE LEASED PROPERTY

20

Section 7.2.

Risk of Loss

21

Section 7.3.

Certain Duties and Responsibilities of Lessor

22

 

 

 

ARTICLE VIII

POSSESSION AND USE OF THE PROPERTY, ETC.

23

 

 

 

Section 8.1.

Possession and Use of the Leased Property

23

Section 8.2.

Compliance with Requirements of Law and Insurance Requirements

25

 

 

 

ARTICLE IX

MAINTENANCE AND REPAIR; REPORTS

25

 

 

 

Section 9.1.

Maintenance

25

Section 9.2.

Maintenance Costs and Warranties

27

 

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Section 9.3.

Lessor Not Obligated to Maintain or Repair

28

Section 9.4.

Maintenance and Repair Reports

28

 

 

 

ARTICLE X

MODIFICATIONS, ETC.

29

 

 

 

ARTICLE XI

COVENANTS WITH RESPECT TO LIENS AND EASEMENTS

34

 

 

 

Section 11.1.

Covenants with Respect to Liens

34

Section 11.2.

Lessee’s Grants and Releases of Easements; Lessor’s Waivers

36

 

 

 

ARTICLE XII

PERMITTED CONTESTS

39

 

 

 

Section 12.1.

Permitted Contests in Respect of Applicable Laws

39

 

 

 

ARTICLE XIII

INSURANCE

41

 

 

 

Section 13.1.

Required Coverages

41

Section 13.2.

Insurance Coverage

42

Section 13.3.

Delivery of Insurance Certificates

44

Section 13.4.

Insurance by Lessor, Collateral Agent or any Lender

45

 

 

 

ARTICLE XIV

CASUALTY AND CONDEMNATION

45

 

 

 

Section 14.1.

Casualty and Condemnation

45

Section 14.2.

Environmental Matters

51

Section 14.3.

Notice of Environmental Matters

51

 

 

 

ARTICLE XV

TERMINATION OF LEASE

53

 

 

 

Section 15.1.

Termination upon Certain Events; Lessee Assumption of Related Agreements

53

Section 15.2.

Termination Procedures

54

 

 

 

ARTICLE XVI

EVENTS OF DEFAULT

55

 

 

 

Section 16.1.

Events of Default

55

Section 16.2.

Remedies

63

Section 16.3.

Waiver of Certain Rights

73

Section 16.4.

Deed of Trust Remedies

74

Section 16.5.

Limitation on Recourse

75

 

 

 

ARTICLE XVII

LESSOR’S RIGHT TO CURE

76

 

 

 

Section 17.1.

The Lessor’s Right to Cure the Lessee’s Defaults

76

 

 

 

ARTICLE XVIII

PURCHASE PROVISIONS

78

 

 

 

Section 18.1.

Early Termination Options

78

Section 18.2.

Acceleration of Subject Property Purchase

79

 

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ARTICLE XIX

END OF TERM OPTIONS

80

 

 

 

Section 19.1.

End of Term Options

80

Section 19.2.

Election of Options

82

 

 

 

ARTICLE XX

SALE OPTION

83

 

 

 

Section 20.1.

Sale Option Procedures

83

Section 20.2.

Certain Obligations Continue

91

Section 20.3.

Failure to Sell Subject Property

92

 

 

 

ARTICLE XXI

PROCEDURES RELATING TO PURCHASE OR SALE OPTION

97

 

 

 

Section 21.1.

Provisions Relating to Conveyance of the Subject Property Upon Purchase by the
Lessee, Sales or Certain Other Events

97

 

 

 

ARTICLE XXII

ACCEPTANCE OF SURRENDER

102

 

 

 

Section 22.1.

Acceptance of Surrender

102

 

 

 

ARTICLE XXIII

NO MERGER OF TITLE

103

 

 

 

Section 23.1.

No Merger of Title

103

 

 

 

ARTICLE XXIV

INTENT OF THE PARTIES

104

 

 

 

Section 24.1.

Nature of Transaction

104

Section 24.2.

Liens and Security Interests

108

 

 

 

ARTICLE XXV

MISCELLANEOUS

123

 

 

 

Section 25.1.

Survival; Severability; Etc

123

Section 25.2.

Amendments and Modifications

124

Section 25.3.

No Waiver

124

Section 25.4.

Notices

125

Section 25.5.

Successors and Assigns

125

Section 25.6.

Headings and Table of Contents

125

Section 25.7.

Counterparts

125

Section 25.8.

Governing Law

125

Section 25.9.

Original Lease

126

Section 25.10.

The Deed of Trust Trustee

126

Section 25.11.

Limitations on Recourse

127

Section 25.12.

Recordation of Memorandum of Lease

128

 

 

 

ARTICLE I

DEFINITIONS

3

 

 

 

ARTICLE II

LEASE OF LEASED PROPERTY; LEASE TERM; PURCHASE OPTION

4

 

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Section 2.1.

Leased Property

4

Section 2.2.

Term

4

Section 2.3.

Title

4

Section 2.4.

 

5

 

 

 

ARTICLE III

NET LEASE, ETC.

5

 

 

 

Section 3.1.

Net Lease, Etc

5

Section 3.2.

CONDITION OF THE LEASED PROPERTY

5

 

 

 

ARTICLE IV

INTENT OF THE PARTIES

6

 

 

 

Section 4.1.

Nature of Transaction

6

Section 4.2.

Liens and Security Interests

11

 

 

 

ARTICLE V

MISCELLANEOUS

26

 

 

 

Section 5.1

Incorporation of Reference

26

Section 5.2

Conflict of Lease

26

Section 5.3.

Assignment of Lease

26

Section 5.4.

Notices

26

Section 5.5.

Successors and Assigns

27

Section 5.6.

Headings and Table of Contents

27

Section 5.7.

Counterparts

27

Section 5.8.

Governing Law

27

Section 5.9.

Original Lease

28

Section 5.10.

The Deed of Trust Trustee

28

Section 5.11.

Limitations on Recourse

29

 

iv

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SCHEDULES

 

SCHEDULE 10.1

—

 

Modifications

 

EXHIBITS

 

EXHIBIT A

—

 

Legal Description of Land

EXHIBIT B

—

 

Memorandum of Lease, Deed of Trust and Security Agreement

 

v

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LEASE, DEED OF TRUST AND SECURITY AGREEMENT

 

This Lease, Deed of Trust and Security Agreement dated as of March 30, 2006 (as
amended, supplemented, or otherwise modified from time to time, this “Lease”),
among BAL INVESTMENT & ADVISORY, INC., a Delaware corporation, having its
principal office at One Financial Plaza, 2nd Floor, Mail Code:  RI1-537-02-02,
Providence, Rhode Island 02903, as Lessor (“Lessor”) and SILICON LABORATORIES
INC., a Delaware corporation, having its principal office at 4635 Boston Lane,
Austin, Texas 78735, as Lessee (“Lessee”), and GARY S. FARMER, a resident of
Travis County, Texas, as the Deed of Trust Trustee for the use and benefit of
the Lessor, whose office is located at 401 Congress Avenue, Suite 1500, Austin,
Texas 78701 (the “Deed of Trust Trustee”).

 

W I T N E S S E T H:

 

A.            The parties are entering into the Operative Documents pursuant to
which the Participants agree to provide financing for the acquisition of the
Leased Property.

 

B.            On the Closing Date, Lessor, solely using the Lessor Amount and
the Advance funded by the Lenders, will, inter alia, (i) purchase the Facility
from the Seller and (ii) assume all of the Seller’s right, title and interest in
and to (A) the Ground Lease pursuant to the Assignment of Ground Lease, (B) the
Related Agreements which constitute leases pursuant to the Assignment of
Subleases, and (C) the other Related Agreements pursuant to the Assignment of
Related Agreements.

 

C.            Pursuant to this Lease, Lessor will lease the Leased Property to
Lessee and Lessee will lease the Leased Property from Lessor.

 

NOW, THEREFORE, in consideration of the foregoing, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

 

ARTICLE I

DEFINITIONS

 

For all purposes hereof, the capitalized terms used herein and not otherwise
defined shall have the meanings assigned thereto in Appendix 1 to that certain
Participation Agreement dated as of even date herewith, among Lessee, as Lessee;
Lessor; Wells Fargo Bank Northwest, National Association, not in its individual
capacity except as expressly stated therein, but solely as Collateral Agent; and
the financial institutions listed on Schedule II thereto, as Lenders (as
amended, supplemented or otherwise modified from time to time pursuant thereto,
the “Participation Agreement”); and the rules of interpretation set forth in
Appendix 1 to the Participation Agreement shall apply to this Lease. Except as
otherwise expressly provided in Section 16.5 hereof, all obligations imposed on
the Lessee under this Lease shall be the full recourse liability of Lessee.

 

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ARTICLE II

LEASE OF LEASED PROPERTY; LEASE TERM

 

Section 2.1.           Leased Property. (a) Lessor hereby agrees to lease all of
Lessor’s interest in the Leased Property to Lessee hereunder, and Lessee hereby
agrees, expressly for the direct benefit of Lessor, to lease all of the Leased
Property from Lessor for the Term. The Lessor and the Lessee acknowledge that
the Lessee shall be purchasing certain equipment directly from the Seller and
none of such equipment purchased by Lessee shall be deemed part of the Leased
Property.

 

(b)           In the event that either the Schneider Sublease or the Retail
Sublease are terminated for any reason whatsoever, Lessee and Lessor hereby
agree that this Lease and the Memorandum thereof and the Participation Agreement
shall be amended by the parties hereto, at the expense of the Lessee, to include
within the definition of “Leased Property” all Improvements under the Schneider
Sublease and the Retail Sublease.

 

Section 2.2.           Term. Unless earlier terminated, the term of this Lease
shall consist of a term (the “Term”) commencing on the Closing Date and ending
on but not including the earlier of (i) the date which is eighty-four months
immediately following the Closing Date or (ii) any Termination Date.

 

Section 2.3.           Title. The Leased Property is leased to the Lessee
without any representation or warranty, express or implied, by the Lessor and
subject to the rights of parties in possession, the existing state of title with
respect thereto (including, without limitation, all Liens other than Lessor
Liens) and all Applicable Laws and any violations thereof. The Lessee shall in
no event have any recourse against the Lessor for any defect in or exception to
title to the Leased Property other than resulting from Lessor Liens created by
Lessor.

 

ARTICLE III

PAYMENT OF RENT

 

Section 3.1.           Rent. (a) During the Term, the Lessee shall pay to Lessor
Basic Rent (i) on each Payment Date and (ii) on the date required under
Section 20.1(i) in connection with the Lessee’s exercise of the Sale Option.

 

(b)           The Lessee’s inability or failure to take possession of all or any
portion of the Leased Property when accepted or deemed accepted hereunder,
whether or not attributable to any act or omission of the Lessee or any act or
omission of the Lessor, shall not delay or otherwise affect the Lessee’s
obligation to pay Rent in accordance with the terms of this Lease.

 

Section 3.2.           Payment of Basic Rent. Basic Rent shall be paid
absolutely net to the Lessor so that this Lease shall yield to the Lessor the
full amount thereof, without setoff, deduction or reduction.

 

2

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Section 3.3.           Supplemental Rent. The Lessee shall pay to the Lessor or
the Person entitled thereto any and all Supplemental Rent promptly as the same
shall become due and payable, and if the Lessee fails to pay any Supplemental
Rent, the Lessor shall have all rights, powers and remedies provided for herein
or by law or equity or otherwise in the case of nonpayment of Basic Rent;
provided that Supplemental Rent (other than Supplemental Rent payable to the
Lessor, any Lender, the Collateral Agent or the Person entitled thereto
consisting of any of the Lease Balance, the Sale Option Recourse Amount, the
Purchase Amount, Break Costs and any amounts payable at the Overdue Rate and any
amounts payable under Article XIII of the Participation Agreement) shall not be
deemed due and payable by Lessee to the Person entitled thereto unless such
amount is not paid within 30 days after Lessee has received written notice of
such Supplemental Rent from Lessor, any Lender or the Collateral Agent or the
Person entitled thereto. Lessee shall pay to the Lessor, as Supplemental Rent,
among other things, on demand, to the extent permitted by Applicable Laws,
interest at the applicable Overdue Rate on any installment of Basic Rent not
paid when due for the period for which the same shall be overdue and on any
payment of Supplemental Rent payable to the Lessor or any Indemnitee not paid
when due and payable as provided above for the period from the due date until
the same shall be paid. The expiration or other termination of the Lessee’s
obligations to pay Basic Rent hereunder shall not limit or modify the
obligations of the Lessee with respect to Supplemental Rent. Unless expressly
provided otherwise in this Lease, in the event of any failure on the part of the
Lessee to pay and discharge any Supplemental Rent as and when due, the Lessee
shall also promptly pay and discharge any fine, penalty, interest or cost which
may be assessed or added under any agreement with a third party for nonpayment
or late payment of such Supplemental Rent, all of which shall also constitute
Supplemental Rent.

 

Section 3.4.           Method of Payment. Subject to Section 3.1(b) hereof, each
payment of Rent shall be paid by wire transfer by the Lessee to the Collateral
Agent (or in the case of Excepted Payments directly to the Person entitled
thereto) prior to 1:00 P.M., New York City time, to the account of the
Collateral Agent designated on Schedule III to the Participation Agreement in
funds consisting of lawful currency of the United States of America which shall
be immediately available on the scheduled date when such payment shall be due,
unless such scheduled date shall not be a Business Day, in which case such
payment shall be made on the next succeeding Business Day unless the result of
such extension would be to carry into another calendar month, in which case such
payment shall be made on the immediately preceding Business Day. Payments
received after 1:00 P.M., New York City time, on the date due shall, for the
purpose of Section 16.1 hereof, be deemed received on such day; provided,
however, that for the purposes of the second sentence of Section 3.3 hereof,
such payments shall be deemed received on the next succeeding Business Day and
subject to interest at the Overdue Rate as provided in such Section 3.3.

 

ARTICLE IV

QUIET ENJOYMENT; RIGHT TO INSPECT

 

Section 4.1.           Non-Interference. Subject to Section 4.2 hereof and
subject to Lessor’s cure rights, as provided for in Section 17.1 and the rights
of Ground Lessor under the Ground Lease

 

3

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and the parties under the other Related Agreements, Lessor covenants that it
will not interfere in Lessee’s use or possession of the Leased Property during
the Term, so long as no Event of Default has occurred and is continuing, it
being agreed that Lessee’s remedies for breach of the foregoing covenant shall
be limited to a claim for damages or the commencement of proceedings to enjoin
such breach, as applicable. Such right is independent of and shall not affect
Lessee’s obligations hereunder and under the other Operative Documents or
Lessor’s rights otherwise to initiate legal action to enforce the obligations of
Lessee under this Lease. The foregoing covenant shall not require Lessor to take
any action contrary to, or which would permit Lessee to use the Leased Property
for a use not permitted under the provisions of this Lease.

 

Section 4.2.           Inspection and Reports. (a) Upon three (3) Business Days
prior notice (such notice being waived by Lessee during the existence of an
Event of Default) to Lessee and subject to the provisions of Section 16.15 of
the Participation Agreement, Lessor or the Collateral Agent (collectively, the
“Inspecting Parties”) at any time during the Term may inspect (i) the Leased
Property and (ii) the Leased Property Records and make copies and abstracts
therefrom and may discuss the affairs, finances and accounts with respect to the
Leased Property with Lessee’s officers. All such inspections shall be during
Lessee’s normal business hours, shall be subject to Lessee’s customary safety
and security provisions and shall be at the expense and risk of the Inspecting
Parties, except that if an Event of Default or Default has occurred and is
continuing and, subject to Section 16.5 hereof, Lessee shall reimburse the
Inspecting Parties for the reasonable costs of such inspections and, except for
the Inspecting Party’s gross negligence or willful misconduct, such inspection
shall be at Lessee’s risk. No inspection shall unreasonably interfere with
Lessee’s operations. None of the Inspecting Parties shall have any duty to make
any such inspection or inquiry. None of the Inspecting Parties shall incur any
liability or obligation by reason of making any such inspection or inquiry
unless and to the extent such Inspecting Party causes damage to the Leased
Property or any property of Lessee or any other Person during the course of such
inspection.

 

(b)           To the extent permissible under Applicable Laws, during the Term
Lessee shall prepare and file, or cause to be prepared and filed, in a timely
fashion, or, where Lessor shall be required to file, Lessee shall prepare, or
cause to be prepared, and make available to Lessor within a reasonable time
period prior to the date for filing and Lessor shall file, any reports with
respect to the condition or operation of the Leased Property that shall be
required to be filed with any Governmental Authority.

 

ARTICLE V

NET LEASE, ETC.

 

Section 5.1.           Net Lease, Etc. This Lease shall constitute a net lease
and Lessee’s obligations hereunder to pay Rent shall be absolute and
unconditional under any and all circumstances. Any present or future law to the
contrary notwithstanding, this Lease shall not terminate, nor shall the Lessee
be entitled to any abatement, suspension, deferment, reduction, setoff,
counterclaim, or defense with respect to the Rent, nor shall the obligations of
the Lessee hereunder be affected (except as expressly herein permitted and by
performance of the

 

4

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obligations in connection herewith) by reason of: (i) any defect in the
condition, merchantability, design, construction, quality or fitness for use of
the Subject Property or any part thereof, or the failure of the Subject Property
or any part thereof to comply with all Applicable Laws, including any inability
to use the Subject Property or any part thereof by reason of such
non-compliance; (ii) any damage to, removal, abandonment, salvage, loss,
contamination of, or Release from, scrapping or destruction of or any
requisition or taking of the Subject Property or any part thereof; (iii) any
restriction, prevention or curtailment of or interference with any use of the
Subject Property or any part thereof or any termination of the Ground Lease;
(iv) any defect in title to or rights to the Subject Property or any part
thereof or any Lien on such title or rights or on the Subject Property or any
part thereof (provided, that the foregoing shall not relieve any Person from its
responsibility to remove Lessor Liens attributable to it); (v) any change,
waiver, extension, indulgence or other action or omission or breach in respect
of any obligation or liability of or by the Lessor, the Collateral Agent or any
Lender; (vi) to the fullest extent permitted by Applicable Laws, any bankruptcy,
insolvency, reorganization, composition, adjustment, dissolution, liquidation or
other like proceedings relating to the Lessee, the Lessor, the Collateral Agent,
any Lender or any other Person, or any action taken with respect to this Lease
by any trustee or receiver of the Lessee, the Lessor, the Collateral Agent, any
Lender or any other Person, or by any court, in any such proceeding; (vii) any
claim that the Lessee has or might have against any Person, including without
limitation any Participant, or any vendor, manufacturer, contractor of or for
the Subject Property or any part thereof; (viii) any failure on the part of the
Lessor to perform or comply with any of the terms of this Lease, of any other
Operative Document or of any other agreement; (ix) any invalidity or
unenforceability or illegality or disaffirmance of this Lease against or by the
Lessee or any provision hereof or any of the other Operative Documents or any
provision of any thereof; (x) the impossibility or illegality of performance by
the Lessee, the Lessor or both; (xi) any action by any court, administrative
agency or other Governmental Authority; (xii) any restriction, prevention or
curtailment of or interference with the use of the Subject Property or any part
thereof; (xiii) the failure of Lessee or any of its Affiliates to achieve any
accounting or tax benefits or the characterization of the transaction intended
by the parties as set forth at Section 24.1 hereof and Section 5.1 of the
Participation Agreement; or (xiv) any other cause or circumstances whether
similar or dissimilar to the foregoing and whether or not the Lessee shall have
notice or knowledge of any of the foregoing. The Lessee’s agreement in the
preceding sentence shall not affect any claim, action or right the Lessee may
have against any Person. The parties intend that the obligations of the Lessee
hereunder shall be covenants and agreements that are separate and independent
from any obligations of the Lessor hereunder or under any other Operative
Documents and the obligations of the Lessee shall continue unaffected unless
such obligations shall have been modified or terminated in accordance with an
express provision of this Lease.

 

Section 5.2.           No Termination or Abatement. The Lessee shall remain
obligated under this Lease in accordance with its terms and the terms of the
other Operative Documents and shall not take any action to terminate, rescind or
avoid this Lease (except as provided herein) to the fullest extent permitted by
Applicable Laws, notwithstanding any action for bankruptcy, insolvency,
reorganization, liquidation, dissolution, or other proceeding affecting the
Lessor, the Collateral Agent or any Lender, or any action with respect to this
Lease which may be taken by any trustee, receiver or liquidator of the Lessor,
the Collateral Agent or any Lender or by any

 

5

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court with respect to the Lessor, the Collateral Agent or any Lender. The Lessee
hereby waives all right to terminate or surrender this Lease (except as provided
herein) or to avail itself of any abatement, suspension, deferment, reduction,
setoff, counterclaim or defense with respect to any Rent. The Lessee shall
remain obligated under this Lease in accordance with its terms and the terms of
the other Operative Documents and the Lessee hereby waives any and all rights
now or hereafter conferred by statute or otherwise to modify or to avoid strict
compliance with its obligations under this Lease. Notwithstanding any such
statute or otherwise, the Lessee shall be bound by all of the terms and
conditions contained in this Lease.

 

ARTICLE VI

ASSIGNMENTS, SUBLEASES AND DELEGATIONS

 

Section 6.1.           Assignment and Subletting. Except for assignments and
subleases permitted by this Article VI, Lessee, during the Term, may not assign,
sublease, mortgage, pledge or otherwise transfer to any Person, at any time, in
whole or in part, any of its right, title or interest in, or obligations to or
under this Lease, any other Operative Document or to any portion of the Leased
Property; provided that so long as no Event of Default has occurred and is
continuing, Lessee may, without the consent of the Collateral Agent, the Lessor
or the Lenders, (i) assign all, but not less than all, of its rights in the
Operative Documents to any Affiliate of Lessee and (ii) sublease all or any part
of its rights, title and interest in the Leased Property to any Person; provided
further that:  (a) no sublease or assignment shall in any way discharge or
diminish any of the obligations of Lessee to Lessor, the Collateral Agent or any
Lender under any Operative Document; (b) Lessee shall remain directly and
primarily liable under this Lease and the Operative Documents with respect to
all the Leased Property; (c) each such sublease and assignment of the Leased
Property shall be made expressly subject to and subordinated to this Lease and
to the rights of Lessor, the Collateral Agent and the Lenders (provided that (1)
the limitation in clause (c) above shall not apply to any sublease or assignment
in effect as of the Closing Date or any renewals or extensions thereof resulting
from the exercise by any sublessee of any extension or renewal rights existing
thereunder as of the Closing Date which are at the sole option of such sublessee
and (2) with respect to subleases in effect as of the Closing Date, the Lessor
shall enter into a commercially reasonable recognition and non-disturbance
agreement pursuant to which Lessor acknowledges that it will not interfere in
such sublessee’s use or possession of the portion of the Leased Property subject
to such sublease or assignment (so long as such sublessee is not in default
thereunder); and (d) except with respect to any sublease or assignment in effect
as of the Closing Date or any extension or renewal thereof pursuant to extension
or renewal rights existing as of the Closing Date and which are at the sole
option of the sublessee thereunder, each such sublease and assignment shall
expressly provide for the termination prior to the last day of the Term (unless
otherwise agreed and consented to by the Lessor); provided further that Lessee
shall not assign or sublease any portion of the Leased Property to, or permit
the assignment or the sublease of any portion of the Leased Property by, any
Person who at the time of such sublease or assignment shall then be the subject
of any proceeding for relief under any bankruptcy or insolvency law or laws
relating to the relief of debtors.

 

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Lessee shall give Lessor prompt written notice of any assignment or sublease
permitted under this Article VI, and shall promptly provide Lessor with a fully
executed copy of each document evidencing such assignment or sublease.

 

Section 6.2.           Assignment of Related Agreements. Lessor and Lessee
acknowledge that effective as of the Closing Date, Seller has assigned to Lessor
and delegated to Lessor, and Lessor has assumed, all obligations on the part of
Seller under the Related Agreements. Additionally, during the Term, to the
extent permitted by the Related Agreements, Lessor hereby assigns to Lessee all
rights and benefits conferred to Lessor under the Related Agreements, including
without limitation all rights to receive rent or other payments by any
sublessees or to enforce any rights and remedies against each Person that is a
party to the Related Agreements. Lessee hereby assumes and agrees to perform all
obligations of the Lessor under the Related Agreements pursuant to
Section 9.1(h) of the Participation Agreement and to diligently enforce any
rights and remedies against each Person or related party under the Related
Agreements. Lessor further grants to Lessee the right to grant or withhold any
consents, waivers, extensions, and indulgences under the Related Agreements and
to amend, supplement, restate, and otherwise make modifications to the Related
Agreements as Lessee may determine to be necessary or appropriate in Lessee’s
sole discretion. Notwithstanding the foregoing, Lessee may not exercise and
enforce any such rights or remedies against such Person or related party under
the Related Agreements or amend, supplement, waive, extend, restate or otherwise
modify the Related Agreements if such exercise or enforcement of rights or
remedies or amendment, supplement, waiver, extension, restatement or
modification (i) would cause a violation of any of Lessee’s obligations under
this Lease or the other Operative Documents, (ii) would increase any of the
Lessor’s obligations under any Operative Document, or (iii) would have a
Material Adverse Effect. Lessor hereby constitutes Lessee as the agent and
attorney-in-fact of Lessor for the purpose of exercising and enforcing, and with
full right, power and authority to perform the obligations of Lessor and to
exercise and to enforce, all of the right, title, interest and remedies of the
Lessor in, under and to the Related Agreements and any other agreements and
arrangements concerning the use, operation, and repair of the Leased Property.
Lessor agrees, at Lessee’s expense, to execute and deliver or to join in the
execution of such further instruments as may be necessary to enable the Lessee
to perform Lessor’s obligations under the Related Agreements during the Term and
to exercise and enforce the rights, remedies and obligations conferred to or
delegated to Lessee pursuant to this paragraph. Upon termination of the Lease
and delivery of possession of the Subject Property to Lessor pursuant to
Article XVI (as a result of a Limited Recourse Event of Default only) or
Article XX of the Lease or to a third party, the Lessee shall have no further
obligation to perform obligations under the Related Agreements pursuant to this
paragraph. Lessee consents to Lessor’s execution and delivery of the transfer
and assignment documents to which Lessor is a party, delivered pursuant to the
Purchase Agreement on the Closing Date.

 

Notwithstanding the foregoing, the Lessor may, at any time that an Event of
Default has occurred and is continuing, revoke the rights of Lessee granted in
this Section 6.2 (i) to exercise or enforce any rights or remedies under the
Related Agreements, (ii) to grant or withhold any consents, waivers, extensions,
and indulgences under the Related Agreements or (iii) to amend, supplement,
waive, extend, restate or otherwise modify the Related Agreements; provided that

 

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such revocation shall not affect Lessee’s obligations under Section 9.1(h) of
the Participation Agreement.

 

ARTICLE VII

LESSEE ACKNOWLEDGEMENTS

 

Section 7.1.           CONDITION OF THE LEASED PROPERTY. THE LESSEE ACKNOWLEDGES
AND AGREES THAT IT IS LEASING THE LEASED PROPERTY “AS IS” WITHOUT
REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED) BY THE LESSOR, THE
COLLATERAL AGENT OR THE LENDERS AND IN EACH CASE SUBJECT TO (a) THE EXISTING
STATE OF TITLE (EXCLUDING LESSOR LIENS), (b) THE RIGHTS OF ANY PARTIES IN
POSSESSION THEREOF, (c) ANY STATE OF FACTS WHICH AN ACCURATE SURVEY OR A
PHYSICAL INSPECTION MIGHT SHOW, (d) VIOLATIONS OF REQUIREMENTS OF LAW WHICH MAY
EXIST ON THE DATE HEREOF ON OR AT ANY TIME HEREAFTER AND (e) THE RIGHTS OF
GROUND LESSOR UNDER THE GROUND LEASE AND THE OTHER PARTIES UNDER THE RELATED
AGREEMENTS. NONE OF THE LESSOR, THE COLLATERAL AGENT OR ANY OF THE LENDERS HAS
MADE OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION, WARRANTY OR COVENANT
(OTHER THAN AS IN SECTION 4.1 HEREOF) (EXPRESS OR IMPLIED) OR SHALL BE DEEMED TO
HAVE ANY LIABILITY WHATSOEVER AS TO THE TITLE (OTHER THAN FOR LESSOR LIENS),
VALUE, HABITABILITY, USE, CONDITION, DESIGN, OPERATION, OR FITNESS FOR USE OF
THE LEASED PROPERTY (OR ANY PART THEREOF), OR ANY OTHER REPRESENTATION, WARRANTY
OR COVENANT WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE LEASED PROPERTY
(OR ANY PART THEREOF) AND NONE OF THE LESSOR, THE COLLATERAL AGENT OR THE
LENDERS SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT THEREIN (OTHER
THAN FOR LESSOR LIENS) OR THE FAILURE OF THE LEASED PROPERTY, OR ANY PART
THEREOF, TO COMPLY WITH ANY APPLICABLE LAWS. All risks incident to the matters
discussed in the preceding sentences, as between the Lessor, the Collateral
Agent and the Lenders, on the one hand, and Lessee, on the other, are to be
borne by Lessee. The provisions of this Section 7.1 have been negotiated, and,
except to the extent otherwise expressly stated, the foregoing provisions are
intended to be a complete exclusion and negation of any representations or
warranties by any of the Lessor, the Collateral Agent or the Lenders, express or
implied, with respect to the Leased Property (or any interest therein), other
than the obligation to remove Lessor Liens attributable to it, that may arise
pursuant to any law now or hereafter in effect or otherwise.

 

Section 7.2.           Risk of Loss. During the Term, as between Lessee and
Lessor, the risk of loss of or decrease in the enjoyment and beneficial use of
the Leased Property as a result of the damage or destruction thereof by fire,
the elements, casualties, thefts, riots, wars or otherwise is assumed by the
Lessee, and the Lessor shall in no event be answerable or accountable therefor.

 

Section 7.3.           Certain Duties and Responsibilities of Lessor. Lessor
undertakes to perform such duties and only such duties as are specifically set
forth herein and in the other Operative Documents (other than the Related
Agreements with respect to any time prior to the termination of the Lease and
the transfer of possession of the Leased Property to Lessor pursuant to
Article XVI (as a result of a Limited Recourse Event of Default only) or
Article XX of the Lease, or a third party), and no implied covenants or
obligations shall be read into this Lease

 

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against Lessor, and Lessor agrees that it shall not, nor shall it have a duty
to, manage, control, use, sell, maintain, insure, register, lease, operate,
modify, dispose of or otherwise deal with the Subject Property in any manner
whatsoever, except as required by the terms of the Operative Documents and as
otherwise provided herein. Lessee hereby agrees that none of Lessor, the
Collateral Agent or any Lender shall be obligated to perform any covenant or
agreement set forth herein or in the other Operative Documents or permit the
exercise by Lessee of any right set forth herein or in the other Operative
Documents if such agreement or covenant or the exercise of such right is
prohibited by or conflicts with the terms of any Related Agreement.

 

ARTICLE VIII

POSSESSION AND USE OF THE PROPERTY, ETC.

 

Section 8.1.           Possession and Use of the Leased Property. Lessee agrees
that the Leased Property will be used as a Class “A” office building in a manner
consistent with this Lease and the other Operative Documents and applying
standards of use no lower than the standards applied by the Lessee for other
comparable properties owned or leased by the Lessee. At all times during the
Term, the Leased Property shall remain in the possession and control of Lessee
or its permitted assignees or sublessees; Lessee warrants that the Leased
Property will at all times be used and operated under and in compliance in all
material respects with the terms of the Ground Lease and the other Related
Agreements which relate to the Leased Property. Lessee shall not use the Leased
Property or any part thereof for any purpose or in any manner that would
materially adversely affect the Fair Market Value, utility, remaining useful
life or residual value of the Leased Property, ordinary wear and tear excepted.
Lessee assumes and agrees to pay all fees, charges, costs, assessments,
impositions, utilities and other amounts which relate to or arise in connection
with the purchase, disposition, ownership, lease or use of any real or personal
property, Governmental Actions and other rights, privileges or entitlements
required to be paid in connection with the Leased Property. All such charges for
utilities imposed with respect to the Leased Property for a billing period
during which this Lease expires or terminates (except when Lessee purchases the
Subject Property in accordance with the terms of this Lease, in which case
Lessee shall be solely responsible for all such charges) shall be adjusted and
prorated on a daily basis between Lessee, Lessor (but solely as a result of the
return of the Subject Property in connection with the exercise by Lessee of the
Sale Option pursuant to Article XX hereof or as a result of a Limited Recourse
Event of Default under Section 16.5 hereof) and any purchaser of the Subject
Property, and each party shall pay or reimburse the other for each party’s pro
rata share thereof; provided, that in no event shall Lessor have any liability
therefor. Lessee shall be entitled to receive any credit or refund received by
the Lessor on account of any utility charges paid by Lessee, net of the costs
and expenses reasonably incurred by the Lessor in obtaining such credit or
refund, and the amount of such credit or refund shall be promptly paid over to
Lessee.

 

Section 8.2.           Compliance with Requirements of Law and Insurance
Requirements. Subject to the terms of Article XII relating to permitted
contests, the Lessee, at its sole cost and expense, shall (a) comply with all
Applicable Laws (including all Environmental Laws) and Insurance Requirements
relating to the Leased Property, including the use, operation, maintenance,
repair and restoration thereof and any sale thereof pursuant to Section 19.1(b),

 

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whether or not compliance therewith shall require structural or extraordinary
changes in the Facility or interfere with the use and enjoyment of the Leased
Property, and (b) procure, maintain and comply with all licenses, permits,
orders, approvals, consents and other authorizations required for the use,
operation, maintenance, repair and restoration of the Leased Property and for
the use, operation, maintenance, repair and restoration of the Facility.

 

ARTICLE IX

MAINTENANCE AND REPAIR; REPORTS

 

Section 9.1.           Maintenance. Lessee, at its sole cost and expense, shall
maintain, service and repair (a) the Leased Property to keep it (i) in good
working order and (ii) in such condition as the Lessee would, in the prudent
management of its own properties, maintain, service and repair similar property
owned or leased by the Lessee and, in any event, to the extent required to
maintain the Leased Property in good condition and repair (which shall include,
without limitation, repairs required to any structural element of the Leased
Property and replacement of any component or mechanical system of the Leased
Property) and in compliance with the Ground Lease, any other Related Agreements,
all Applicable Laws, Industry Standards and Insurance Requirements,
noncompliance with which might result in the imposition of a penalty on any
Indemnified Party or materially adversely affect the Leased Property or the
operation thereof and, in any event in accordance with prudent industry
practice, and (b) the Leased Property to keep it maintained as a Class “A”
office building. In the event of any damage or destruction other than a
Significant Casualty with respect to the Leased Property, the Lessee shall, at
its own expense, with reasonable promptness, repair or restore the same so that
upon the completion of such repair or restoration the Leased Property shall be
in the condition required by the provisions of this Section 9.1 and so that the
value, utility and useful life of the Property shall be at least equal to the
value, utility and useful life of the Leased Property immediately prior to the
occurrence of such damage or destruction.

 

Section 9.2.           Maintenance Costs and Warranties. The Lessee agrees to
pay all costs, expenses, fees and charges incurred in connection with (i) the
use and operation of the Leased Property by the Lessee during the Term,
including but not limited to repairs, maintenance, storage and servicing as
provided in Article X and this Article IX and (ii) the preserving and protecting
of the Leased Property, and the repairing, maintaining and servicing of the
Leased Property as provided in Article X and this Article IX, during the period
after a termination of the Lessee’s right of possession of the Leased Property
pursuant to Section 16.2 (subject to Section 16.5) and prior to the interest of
the Lessor in the Leased Property being sold to a third person by the Lessor. So
long as no Event of Default has occurred and is continuing, the Lessor hereby
constitutes the Lessee as the agent and attorney-in-fact of the Lessor for the
purpose of exercising and enforcing, and with full right, power and authority to
exercise and to enforce, all of the right, title and interest of the Lessor in,
under and to the warranties and obligations of any supplier of goods or services
in respect of the Leased Property and agrees to execute and deliver such further
instruments as may be necessary to enable the Lessee to obtain goods or services
furnished for the Leased Property by said suppliers. The Lessor shall have no
other obligation or duty with respect to any of such matters. So long as no
Event of Default has occurred and is

 

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continuing, any proceeds obtained by the Lessee from the enforcement of the
warranties and obligations of any supplier of goods or services in respect of
the Leased Property shall be held by the Lessee and applied from time to time to
the repair and maintenance of the Leased Property, and any balance thereof
remaining at the expiration of the Term shall be paid over to the Lessor or as
it may direct, subject to Section 5.2 of the Participation Agreement.

 

Section 9.3.           Lessor Not Obligated to Maintain or Repair. The Lessor
shall not under any circumstances be required to build any improvements on the
Leased Property, make any repairs, replacements, Modifications or renewals of
any nature or description to the Leased Property, make any expenditure
whatsoever in connection with this Lease or maintain the Leased Property in any
way. The Lessee waives any right to (i) require the Lessor to maintain or repair
all or any part of the Leased Property or (ii) make repairs at the expense of
the Lessor pursuant to any Applicable Laws, contract, agreement, or covenant,
condition or restriction in effect at any time during the Term.

 

Section 9.4.           Maintenance and Repair Reports. Lessee shall keep
maintenance and repair records in sufficient detail, at least on the same basis
as records are kept for similar properties owned or leased by Lessee, to
indicate the nature and date of major work done at or to the Leased Property.
Such records shall be kept on file by Lessee and shall be made available to
Lessor upon reasonable request. Lessee shall give written notice to Lessor of
any Event of Loss promptly after Lessee has knowledge thereof.

 

ARTICLE X

MODIFICATIONS, ETC.

 

Section 10.1.        Modifications and Lessee Improvements. (a)(i) Lessee, at
Lessee’s own cost and expense, shall make alterations, renovations, improvements
and additions to the Leased Property or any part thereof and substitutions and
replacements therefor (collectively, “Modifications”) which are (A) necessary to
repair or maintain the Leased Property in the condition required by Section 9.1;
(B) necessary in order for the Leased Property to be in compliance with
Applicable Laws in all material respects; (C) necessary for the Leased Property
to constitute a Class “A” office building; and (D) necessary or advisable to
restore the Leased Property to its condition existing prior to a Casualty or
Condemnation to the extent required pursuant to Article XIV (collectively, the
“Required Modifications”); and (ii) so long as no Event of Default or Default
has occurred and is continuing, Lessee, at Lessee’s sole discretion and cost and
expense, may undertake Modifications to the Leased Property so long as such
Modifications comply with Applicable Laws in all material respects and with
Section 9.1 and subsection (b) of this Section 10.1 (collectively, the
“Permitted Modifications”).

 

(b)           The making of any Modifications must be in compliance with the
following requirements:

 

(i)            No such Modification (other than Lessee Improvements or
Modifications described in Schedule 10.1 hereof) with a cost exceeding
$2,000,000 for any such

 

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Modification, shall be made or undertaken without the prior written consent of
Lessor and the Collateral Agent (which consent shall not unreasonably be
withheld).

 

(ii)           No Modifications shall be undertaken in violation in any material
respect of the terms of the Ground Lease, any other Related Agreement or any
restriction, easement, condition, covenant or other similar matter affecting
title to or binding on the Leased Property unless Lessee shall have obtained, so
far as the same may be required from time to time, all material permits,
consents, waivers or other authorizations relating to such Modifications from
the applicable Governmental Authorities or third Persons. Lessor, at Lessee’s
expense, shall join in the application for any such permit or authorization and
execute and deliver any document in connection therewith, whenever such joinder
is necessary or advisable.

 

(iii)          All Modifications (other than Lessee Improvements) shall be
completed in a good and workmanlike manner and in compliance in all material
respects with the Ground Lease, the Related Agreements, all Applicable Laws and
Insurance Requirements and all Modifications (other than Lessee Improvements)
must be located solely on the Land or Lessee or Lessor must have obtained by no
later than the commencement of such Modifications (other than Lessee
Improvements) access rights reasonably satisfactory to the Collateral Agent.

 

(iv)          All Modifications shall, when completed, be of such a character as
to not materially adversely affect the Fair Market Value, utility, remaining
economic useful life or residual value of the Leased Property from the Fair
Market Value, utility, remaining economic useful life or residual value thereof
immediately prior to the making thereof (assuming the Leased Property was then
in the condition required by this Lease) or, in the case of Modifications being
made by virtue of a Casualty or Condemnation, immediately prior to the
occurrence of such Casualty or Condemnation (assuming the Leased Property was
then in the condition required by this Lease).

 

Section 10.2.        Title to Modifications. (a) Title to the following
described Modifications shall, without further act, vest in Lessor and shall be
deemed to constitute a part of the Leased Property and be subject to this Lease:

 

(i)            Modifications that are in replacement of or in substitution for a
portion of any item of Leased Property;

 

(ii)           Required Modifications; or

 

(iii)          Modifications that are Nonseverable.

 

If requested by Lessor, Lessee shall execute and deliver any deeds, bills of
sale, assignments, lease supplements or other documents of conveyance reasonably
necessary to evidence the vesting of title in and to such Modifications to
Lessor.

 

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(b)           If Modifications are not within any of the categories set forth in
clauses (i) through (iii) of Section 10.2(a) (each, a “Lessee Improvement”),
then title to such Lessee Improvements shall vest in Lessee and such Lessee
Improvements shall not be deemed to be Modifications which are part of the
Leased Property.

 

(c)           All Lessee Improvements may, so long as removal thereof (i) shall
not result in the violation of any Applicable Laws, (ii) shall not adversely
affect the Lessee’s ability to comply with its obligations under this Lease or
any other Operative Document, and (iii) no Event of Default is continuing, be
removed at any time by Lessee. Lessee agrees to notify Lessor in writing at
least 30 days before it removes any Lessee Improvement or Lessee Improvements
which individually or in the aggregate had an original cost exceeding
$2,000,000, and Lessee shall at its expense repair any damage to the Leased
Property caused by the removal of such Lessee Improvement. Lessor (or the
purchaser of the Leased Property) may purchase from Lessee any such Lessee
Improvement (if not already owned by Lessor) that Lessee intends to remove from
the Leased Property prior to the return of the Leased Property to Lessor
pursuant to Section 20.3 hereof or sale of the Leased Property to a third party,
which purchase shall be at the Fair Market Value of such Lessee Improvement as
determined by the Appraiser at the time of such purchase. Title to any such
Lessee Improvement shall vest in Lessor (or the purchaser of the applicable
Leased Property) if not removed from the Leased Property by Lessee prior to the
return of the Leased Property to Lessor or sale of the Leased Property to a
third party.

 

ARTICLE XI

COVENANTS WITH RESPECT TO LIENS AND EASEMENTS

 

Section 11.1.        Covenants with Respect to Liens. (a) During the Term,
Lessee will not directly or indirectly create, incur, assume or suffer to exist
any Lien (other than Permitted Liens) on or with respect to any portion of the
Subject Property, Lessor’s title thereto, or any interest of Lessor, Collateral
Agent or the Lenders therein. Lessee, at its own expense, will promptly pay,
satisfy and otherwise take such actions as may be necessary to keep the Leased
Property free and clear of, and duly to discharge, eliminate or bond in a manner
reasonably satisfactory to Lessor and the Collateral Agent, any such Lien (other
than Permitted Liens or Lessor Liens) if the same shall arise at any time.

 

(b)           Nothing contained in this Lease shall be construed as constituting
the consent or request of the Lessor, express or implied, to or for the
performance by any contractor, mechanic, laborer, materialman, supplier or
vendor of any labor or services or for the furnishing of any materials for any
construction, alteration, addition, repair, restoration or demolition of or to
the Leased Property or any part thereof. NOTICE IS HEREBY GIVEN THAT NONE OF THE
LESSOR, THE COLLATERAL AGENT OR ANY OF THE LENDERS IS OR SHALL BE LIABLE FOR ANY
LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO THE LESSEE, OR TO
ANYONE HOLDING THE LEASED PROPERTY OR ANY PART THEREOF THROUGH OR UNDER THE
LESSEE, AND THAT NO MECHANIC’S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR
MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF THE LESSOR, THE COLLATERAL
AGENT OR ANY LENDER IN AND TO THE LEASED PROPERTY.

 

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Section 11.2.        Lessee’s Grants and Releases of Easements; Lessor’s
Waivers. Provided that no Event of Default shall have occurred and be
continuing, and subject to the provisions of Articles VII, IX and X and
Section 8.2, the Lessor hereby consents in each instance to the following
actions by the Lessee in the name and stead of the Lessor and the Lessor hereby
appoints the Lessee as the true and lawful attorney-in-fact of the Lessor with
full power and authority to execute documents on behalf of the Lessor for the
following purposes, but at the Lessee’s sole cost and expense:  (a) the granting
of, or entry into agreements in connection with, easements, licenses,
rights-of-way, building and use restrictions and covenants and other rights and
privileges in the nature of easements or similar interests and burdens
reasonably necessary or desirable for the use, repair, maintenance or protection
of the Leased Property as herein provided; (b) the release of existing easements
or other rights in the nature of easements which are for the benefit of, or
burden to, the Leased Property; (c) the execution of amendments to, or waivers
or releases of, any easements, licenses or covenants and restrictions affecting
the Leased Property; and (d) the filing and processing of any and all permit
applications, authorizations, entitlements, agreements with any Governmental
Authority or amendments thereof, or other documents reasonably required or
beneficial for construction or installation of Modifications which could not
reasonably be expected to adversely affect the rights of the Lessor, the
Collateral Agent or any Lender under the Operative Documents; provided, however,
that in each case (i) such grant, release, dedication, transfer, amendment,
agreement or other action does not materially impair the value, utility,
residual value or remaining useful life of the Subject Property, (ii) such
grant, release, transfer, amendment, agreement or, other action in the Lessee’s
judgment is, subject to Articles VIII, IX and X hereof, reasonably necessary or
desirable in connection with the use, operation, repair, maintenance, alteration
or improvement of the Leased Property, (iii) such grant, release, dedication,
transfer, amendment, agreement or other action will not cause the Subject
Property or any portion thereof to fail to comply with the provisions of this
Lease or any other Operative Documents and all Applicable Laws (including,
without limitation, all applicable zoning, planning, building and subdivision
ordinances, all applicable restrictive covenants and all applicable
architectural approval requirements); (iv) all governmental consents or
approvals required prior to such grant, release, dedication, transfer,
amendment, agreement or other action have been obtained, and all filings with
any Governmental Authorities required prior to such action have been made;
(v) the Lessee shall remain obligated under this Lease and under any instrument
executed by the Lessee consenting to the assignment of the Lessor’s interest in
this Lease as security for indebtedness, in each such case in accordance with
their terms, as though such grant, release, dedication, transfer, amendment,
agreement or other action had not been effected; (vi) during the Term, the
Lessee shall timely pay and perform any obligations of the Lessor under such
grant, release, dedication, transfer, amendment, agreement or other action; and
(vii) with respect to any action described in Section 11.2(a) through
Section 11.2(d), inclusive, no such action described in such sections could
reasonably be expected to have a Material Adverse Effect. Without limiting the
effectiveness of the foregoing, provided, that no Default or Event of Default
shall have occurred and be continuing, the Lessor shall, upon the request of the
Lessee, and at the Lessee’s sole cost and expense, execute and deliver any
instruments delivered to it that are necessary or appropriate to confirm any
such grant, release, dedication, transfer, amendment, agreement or other action
to any Person permitted under this Section.

 

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ARTICLE XII

PERMITTED CONTESTS

 

Section 12.1.        Permitted Contests in Respect of Applicable Laws. Except to
the extent otherwise provided in Section 13.4(b) of the Participation Agreement
with respect to Taxes and Impositions, if, to the extent and for so long as
(x) a test, challenge, contest, appeal or proceeding for review, as applicable,
of (A) any Applicable Law relating to the Leased Property or any part thereof or
the obligation to comply therewith or (B) any Supplemental Rent payable to any
Person other than Lessor, Collateral Agent or any Lender, shall be prosecuted
diligently and in good faith in appropriate proceedings by the Lessee or (y)
compliance with such Applicable Law or payment shall have been excused or
exempted by a valid nonconforming use, variance, permit, waiver, extension or
forbearance, Lessee shall not be required to comply with such Applicable Law or
to make such payment but only if and so long as any such test, challenge,
contest, appeal, proceeding, waiver, extension, forbearance or noncompliance
shall not, in the reasonable opinion of the Lessor and the Collateral Agent,
involve (A) any risk of criminal liability being imposed on the Lessor, the
Collateral Agent, any Lender or any item of Subject Property or (B) any material
risk of (1) foreclosure, forfeiture or loss of the Subject Property, or any
material part thereof, (2) the nonpayment of Rent to Lessor, Collateral Agent or
any Lender, (3) any sale of, or the creation of any Lien (other than a Permitted
Lien) on, any part of the Subject Property (provided, however, nothing herein
shall be deemed to reduce or diminish Lessee’s obligations at Section 11.1), (4)
civil or criminal liability being imposed on the Lessor, the Collateral Agent,
any Lender or any part of the Subject Property for which the Lessee is not
obligated to indemnify such parties under the Operative Documents or
(5) enjoinment of, or interference with, the use, possession or disposition of
the Subject Property in any material respect. Subject to Article XIII of the
Participation Agreement, Lessee shall also have a right to contest and appeal
any Taxes or Impositions.

 

None of the Lessor, the Collateral Agent or any Lender will be required to join
in any proceedings pursuant to this Section 12.1 unless a provision of any
Applicable Law requires that such proceedings be brought by or in the name of
such party; and in that event such party will join in the proceedings or permit
them or any part thereof to be brought in its name if and so long as (i) the
Lessee has not elected the Sale Option and (ii) the Lessee agrees in writing to
pay, and pays, all related expenses (including attorneys’ fees) and agrees in
writing to indemnify the Lessor, the Collateral Agent and the Lenders, in form
and substance reasonably satisfactory to each of the respective Indemnitees, in
respect of any claim relating thereto.

 

ARTICLE XIII

INSURANCE

 

Section 13.1.        Required Coverages. During the Term, Lessee will maintain
at all times:

 

(a)           General Liability Insurance. Combined single limit insurance
against claims for third-party bodily injury, including death, and third-party
property damage occurring as a result

 

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of the ownership, use, maintenance or operation of the Subject Property in an
amount at least equal to $5,000,000 per occurrence. Such coverage may be subject
to deductibles or self-insured retentions up to an amount that is consistent
with Lessee’s insurance program for similar property owned or leased by Lessee
and in keeping with prudent industry practice.

 

(b)           Property Insurance. Insurance against loss of or damage to the
Leased Property, or any portion thereof by reason of any insurable peril in an
amount consistent with Lessee’s insurance program for similar property owned or
leased by Lessee, in keeping with prudent industry practice (subject to such
deductibles and/or self-insurance in such minimum amounts as is consistent with
Lessee’s insurance program for similar property owned or leased by Lessee, in
keeping with prudent industry practice); provided, however, that at no time
shall the amount of such coverage be less than the replacement cost of the
Leased Property, including any costs that may be required to cause the Leased
Property to be restored in accordance with then current Applicable Laws.

 

(c)           Other Insurance. Such other insurance, in each case as is
generally carried by Lessee for similar properties owned or leased by it in such
amounts and against such risks as are then customary for Lessee. Lessee shall
also cause to be in place in the amounts and at the times required the insurance
required to be carried by Lessor under the Ground Lease and the other Related
Agreements, to the extent such Related Agreements impose insurance requirements
in excess of those required by this Article XIII.

 

Section 13.2.        Insurance Coverage. The insurance coverage required in
Section 13.1 shall be written by reputable insurance companies that are
financially sound and solvent and otherwise reasonably appropriate considering
the amount and type of insurance being provided by such companies. Any insurance
company selected by Lessee shall be rated in A.M. Best’s Insurance Guide or any
successor thereto (or if there be none, an organization having a similar
national reputation) and shall have a general policyholder rating of “A” (or
comparable rating for a rating by an organization other than A.M. Best) and a
financial rating of at least “X” (or comparable rating for a rating by an
organization other than A.M. Best) or be otherwise acceptable to the
Participants. In the case of liability insurance maintained by Lessee, it shall
name the Collateral Agent and each of the Participants as additional insureds
and, in the case of property insurance maintained by Lessee covering the Leased
Property, it shall name the Collateral Agent as mortgagee and sole loss payee.
Each policy referred to in Section 13.1 shall provide that:  (i) it will not be
canceled or amended with regard to reduction of limits, reduction or elimination
of coverages, or increase in the amount of any deductible, retained limit, or
self-insured retention, or allowed to lapse without renewal, except after not
less than 30 days prior written notice (10 days for nonpayment of premium) to
Lessor and Collateral Agent; (ii) the interests of Lessor, Collateral Agent and
any Lender shall not be invalidated by any act or negligence of or breach of
warranty or representation by Lessee or any other Person having an interest in
the Leased Property; (iii) such insurance is primary with respect to any other
insurance carried by or available to Lessor, Collateral Agent or any Lender;
(iv) with respect to such other insurance the insurer shall waive any right of
subrogation, setoff, counterclaim, or other deduction, whether by attachment or
otherwise, against Lessor; and (v) any such liability policy shall contain a
cross-liability clause providing for coverage of Collateral Agent and each
Participant, as if separate policies had been issued to each of them. Lessee
will notify Lessor and Collateral Agent

 

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promptly of any policy cancellation, reduction in policy limits, modification or
amendment which has or could have an adverse effect on, or in any way impair,
any insurance coverage provided for herein or in Section 13.1.

 

Section 13.3.        Delivery of Insurance Certificates. On or before the
Closing Date, Lessee shall deliver to Collateral Agent and Lessor certificates
of insurance satisfactory to Collateral Agent and Lessor evidencing the
existence of all insurance required to be maintained hereunder and setting forth
the respective coverages, limits of liability, carrier, policy number and period
of coverage. Thereafter, throughout the Term, at the time each of Lessee’s
insurance policies is renewed (but in no event less frequently than once each
year) or upon written request by Lessor following an Event of Default, Lessee
shall deliver to Collateral Agent and Lessor certificates of insurance
evidencing that all insurance required by Sections 13.1 and 13.2 to be
maintained by Lessee is in effect.

 

Section 13.4.        Insurance by Lessor, Collateral Agent or any Lender. Each
of the Lessor, the Collateral Agent or any Lender may at its own expense carry
insurance with respect to its interest in the Leased Property, and any insurance
payments received from policies maintained by the Collateral Agent or any
Participant shall be retained by Lessor, such Collateral Agent or such Lender,
as the case may be, without reducing or otherwise affecting Lessee’s obligations
hereunder.

 

ARTICLE XIV

CASUALTY AND CONDEMNATION

 

Section 14.1.        Casualty and Condemnation. (a) Subject to the provisions of
this Article XIV, if all or any portion of the Leased Property suffers a
Casualty (other than a Significant Casualty as to which a Termination Notice has
been given), Lessee shall control the negotiations with the relevant insurer
and, except as otherwise provided in this Section 14.1, any insurance proceeds
payable with respect to such Casualty shall be paid directly to the Lessee, or
if received by the Collateral Agent or any Participant, shall be paid over to
the Lessee and shall be used by Lessee solely for the reconstruction,
restoration and repair of such Leased Property, and if the use of, access to,
occupancy of or title to the Leased Property or any part thereof is the subject
of a Condemnation (other than a Significant Condemnation as to which a
Termination Notice has been given), then any award or compensation relating
thereto shall be paid, except as otherwise provided in the Ground Lease and the
other Related Agreements, and this Section 14.1, to the Lessee and shall be used
by Lessee solely for the restoration of the Leased Property. Any insurance
proceeds or condemnation award or compensation in excess of $2,000,000 for any
single Casualty or Condemnation which are payable with respect to a Casualty or
Condemnation (whether or not a Significant Casualty or a Significant
Condemnation, respectively) shall be held in trust by the Collateral Agent in a
segregated account (the “Proceeds Account”) for reimbursement to the Lessee from
time to time during the course of the Lessee’s restoration of the Leased
Property and compliance with the provisions of Article IX hereof. Any such
amounts held by the Collateral Agent shall be invested by the Collateral Agent
in Permitted Investments at the direction of the Lessee from time to time, with
all interest and earnings on such investments

 

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being payable to the Lessee promptly upon receipt thereof by the Collateral
Agent from time to time. All amounts held by the Lessor, the Collateral Agent or
any of the Lenders on account of any award, compensation or insurance proceeds
paid directly to or otherwise received by the Lessor, the Collateral Agent or
any of the Lenders shall promptly be remitted to the Lessee (or if the
immediately preceding sentence is applicable, the Collateral Agent) to be
applied in accordance with this Section 14.1. Each of the Lessee and the Lessor
shall, prior to any deposit contemplated by this Section 14.1 in the Proceeds
Account, and thereafter from time to time as reasonably requested by the
Collateral Agent, take any and all actions (including, without limitation, the
execution of such security and other agreements and UCC financing statements as
the Collateral Agent shall reasonably request) reasonably requested by the
Collateral Agent in order to grant to the Collateral Agent (on behalf of the
Participants) a first priority perfected Lien on and security interest in the
Proceeds Account and any and all amounts and other property from time to time on
deposit therein. To the extent that Lessor has Funded amounts for the repair,
rebuilding and reconstruction of the Leased Property, and insurance proceeds or
condemnation awards are received thereafter, such proceeds and awards in amounts
equal to such Fundings by Lessor shall be paid to the Collateral Agent and
applied in accordance with Section 5.3(d)(iii) of the Participation Agreement.
Notwithstanding the foregoing, if any Event of Default shall have occurred and
be continuing, all awards, compensations or insurance proceeds shall be paid
directly to the Collateral Agent or, if received by the Lessee, shall be held in
trust for the Participants and shall be paid over by the Lessee to the
Collateral Agent. All amounts held by the Lessor or the Collateral Agent on
account of any award, compensation or insurance proceeds either paid directly to
the Lessor or the Collateral Agent or turned over to the Lessor or the
Collateral Agent, in each case after the occurrence and during the continuance
of an Event of Default, shall at the option of the Lessor (at the direction of
the Participants) either be (A) paid to the Lessee for the repair of damage
caused by such Casualty or Condemnation in accordance with this clause (a), or
(B) applied pursuant to Section 5.3 of the Participation Agreement to the Lease
Balance and any other amounts owed by Lessee under the Operative Documents in
accordance with Article XVI hereof and Section 5.3(j) of the Participation
Agreement.

 

(b)           In the event any part of the Leased Property becomes subject to
condemnation or requisition proceedings during the Term, Lessee shall give
notice thereof to Lessor promptly after Lessee has knowledge thereof and, to the
extent permitted by Applicable Laws, Lessee shall control the negotiations with
the relevant Governmental Authority unless an Event of Default exists or such
condemnation or requisition could result in a Significant Condemnation in which
case Lessor shall be entitled to control such negotiations; provided, that in
any event, Lessor may participate at Lessor’s expense (if an Event of Default
exists Lessor may control or participate at Lessee’s expense, subject to
Section 16.5 hereof) in such negotiations; and provided in all cases, that no
settlement will be made without Lessor’s prior written consent (which consent
shall not be unreasonably withheld, conditioned or delayed). Lessee shall give
to Lessor such information, and copies of such documents, which relate to such
proceedings, or which relate to the settlement of amounts due under insurance
policies required by Article XIII, and are in the possession of Lessee, as are
reasonably requested by Lessor. If the proceedings relate to a Significant
Condemnation, Lessee shall act diligently in connection therewith. Nothing
contained in this Section 14.1(b) shall diminish Lessor’s rights with respect to
condemnation awards and property insurance proceeds under Articles XIII or XIV.

 

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(c)           In no event shall a Casualty or Condemnation affect the Lessee’s
obligations to pay Rent pursuant to Section 3.1 or to perform its obligations
and pay any amounts due on the Expiration Date or pursuant to Articles XVIII and
XXI.

 

(d)           If, pursuant to this Article XIV, this Lease shall continue in
full force and effect following a Casualty or Condemnation, the Lessee shall, at
its sole cost and expense (and, without limitation, if any award, compensation
or insurance payment is not sufficient to restore the Leased Property in
accordance with this clause (d), pay the shortfall) and promptly and diligently
repair any damage to the Leased Property caused by such Casualty or Condemnation
in conformity with the requirements of Sections 9.1 and 10.1 so as to restore
the Leased Property to at least the same condition and value as existed
immediately prior to such Casualty or, in the case of Condemnation, to as close
to the same condition as possible. In such event, title to the Leased Property
shall remain with the Lessor subject to the terms of this Lease. Upon completion
of such restoration, the Lessee shall, if the actual cost of such restoration
exceeds $2,000,000, furnish to Lessor a Responsible Officer’s Certificate
confirming that such restoration has been completed pursuant to this Lease.

 

Section 14.2.        Environmental Matters. At Lessee’s sole cost and expense,
Lessee shall in a reasonably prompt and diligent manner undertake or cause to be
undertaken any response, clean up, remedial or other action necessary to remove,
clean up or remediate any Environmental Violation to the extent required by
Applicable Laws with respect to the Leased Property (a “Remediation”).

 

Section 14.3.        Notice of Environmental Matters. Lessee shall promptly
provide to Lessor written notice of any pending or threatened claim, action or
proceeding involving any Environmental Violation of which Lessee has knowledge
or any Release of which Lessee has knowledge on, at, under or from the Land,
which violation or Release could, in Lessee’s reasonable judgment, require in
excess of $500,000 in costs for Remediation, or which could result in the
imposition of criminal penalties upon Lessor, Collateral Agent or any Lender
(any such violation, claim, action, proceeding or Release, a “Material
Environmental Violation”). All such notices shall describe the nature of the
Material Environmental Violation, including any claims, actions or proceedings
in respect thereof, and Lessee’s proposed response thereto. In addition, Lessee
shall provide to Lessor, within ten (10) Business Days of receipt, copies of all
significant written communications with any Governmental Authority relating to
any such Material Environmental Violation. Lessee shall also promptly provide
such detailed reports of any such Material Environmental Violations as may
reasonably be requested by Lessor or the Collateral Agent. Upon completion of
the Remediation of such Material Environmental Violation by Lessee, Lessee shall
cause to be prepared by an environmental consultant reasonably acceptable to
Lessor and Collateral Agent a report describing the Material Environmental
Violation and the actions taken by Lessee (or its agents) in response to such
Material Environmental Violation, and a statement by the consultant that in such
consultant’s opinion after due inquiry, the Material Environmental Violation has
been remediated in compliance in all material respects with applicable
Environmental Law. The Remediation of each such Material Environmental Violation
shall be completed prior to the Expiration Date unless the Subject Property has
been purchased by Lessee in accordance with Article XV or

 

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Article XVIII. Nothing in this Article XIV shall reduce or limit Lessee’s
obligations elsewhere in this Lease or under the Participation Agreement.

 

ARTICLE XV

TERMINATION OF LEASE

 

Section 15.1.        Termination upon Certain Events; Lessee Assumption of
Related Agreements. (a) If an Event of Loss with respect to the Leased Property
or Significant Environmental Event with respect to the Subject Property occurs
during the Term with respect to the Subject Property, then the Lessor may elect
to terminate the Lease by giving written notice (a “Termination Notice”) to the
Lessee, but in any event no later than sixty (60) days following Lessee’s
written notice to Lessor and Collateral Agent of the occurrence of such Event of
Loss or Significant Environmental Event as a consequence of such Event of Loss
or Significant Environmental Event, the Lease is to be terminated on the Payment
Date specified in Section 15.1(b).

 

(b)           Following the Lessee’s receipt of the Termination Notice, the
Lessee shall be obligated to purchase the Lessor’s interest in all, but not less
than all, of the Subject Property on or prior to the next occurring Payment Date
(but in no event any earlier than sixty (60) days from the date the Lessee
receives the applicable Termination Notice) by paying the Lessor an amount equal
to the Purchase Amount.

 

Section 15.2.        Termination Procedures. In connection with the purchase of
the Subject Property in accordance with Section 15.1(b), this Lease shall
terminate and, concurrent with the Lessor’s receipt of the Purchase Amount:

 

(a)           the Lessor and Lessee shall comply with the provisions of Sections
21.1(i) through 21.1(v); and

 

(b)           the Lessor shall convey to the Lessee any net proceeds (that is,
after deducting all costs and expenses incurred by the Lessor, the Collateral
Agent or any Lender(s) incident to collecting any such proceeds of the Event of
Loss or Significant Environmental Event, including, without limitation,
reasonable fees and expenses for counsel) with respect to the Event of Loss or
Significant Environmental Event giving rise to the termination of this Lease
theretofore received by the Lessor or, at the request of the Lessee, to the
extent actually received and if acceptable to Lessor in its sole judgment,
Lessor shall apply such amounts against sums due hereunder.

 

(c)           Lessee hereby agrees that upon a termination of this Lease
pursuant to this Article XV, Article XVIII or Section 19.1(a) hereof, Lessee
shall enter into an assignment and assumption agreement with Lessor in form and
substance satisfactory to Lessor, pursuant to which Lessor shall assign to
Lessee, and Lessee shall so assume, any and all obligations of the Lessor under
the Related Agreements.

 

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ARTICLE XVI

EVENTS OF DEFAULT

 

Section 16.1.                         Events of Default. The occurrence of any
one or more of the following events (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) shall constitute an
“Event of Default”:

 

(a)                                  the occurrence of a Payment Default; or

 

(b)                                 the Lessee shall fail to make payment of any
Supplemental Rent (other than Supplemental Rent referred to in clause (a) of
this Section 16.1) within five (5) Business Days after such Supplemental Rent is
due and payable; or

 

(c)                                  the Lessee shall fail to maintain insurance
as required by Article XIII of this Lease (but not including the requirement set
forth in Section 13.3 of this Lease); or

 

(d)                                 the Lessee shall fail to observe, perform or
comply with (i) Section 9.1(h) (after giving effect to any applicable notice or
grace period in the applicable Related Agreement), Section 9.1(o),
Section 9.1(p) or Section 9.1(q) of the Participation Agreement or
(ii) Section 11.1 or Article XVIII, XIX or XX hereof; or

 

(e)                                  the Lessee shall fail to observe or perform
any term, covenant or condition applicable to it under any Operative Document to
which it is party (other than those described in Section 16.1(a), (b), (c) or
(d) hereof) and, in each such case, such failure shall have continued unremedied
for thirty (30) days after the earlier of Lessee’s knowledge thereof or written
notice thereof has been given to the Lessee by the Lessor, the Collateral Agent
or any Lender; provided however that if such failure is capable of cure but
cannot be cured by diligent efforts within such thirty (30) day period but such
diligent efforts shall be properly commenced within such thirty (30) day cure
period and the Lessee is diligently pursuing, and shall continue to pursue
diligently, remedy of such failure, the cure period shall be extended for an
additional one hundred twenty (120) days, but not to extend beyond the
Expiration Date; or

 

(f)                                    any representation or warranty made by
the Lessee in any Operative Document to which it is a party or which is
contained in any certificate, document or financial statement or other statement
furnished at any time under or in connection with any Operative Document shall
prove to have been incorrect, false or misleading in any material respect on or
as of the date made; or

 

(g)                                 (i) the Lessee or any of its Material
Subsidiaries shall commence any case, proceeding or other action (A) under any
existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of

 

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debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian, conservator or other similar official for it or
for all or any substantial part of its assets, or the Lessee or any of its
Material Subsidiaries shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against the Lessee or any of its
Material Subsidiaries in any case, proceeding or other action of a nature
referred to in clause (i) above which (A) results in the entry of an order for
relief or any such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of sixty (60) days; or (iii) there shall
be commenced against the Lessee or any of its Material Subsidiaries in any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, restraint or similar process against all or any substantial part of
its assets which results in the entry of an order for any such relief which
shall not have been vacated, discharged, or stayed or bonded pending appeal
within sixty (60) days from the entry thereof; or (iv) the Lessee or any of its
Material Subsidiaries shall in writing consent to, approve, or acquiesce to, any
of the acts set forth in clause (i), (ii) or (iii) above; or (v) the Lessee or
any of its Material Subsidiaries shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they become due; or

 

(h)                                 any Operative Document of the type described
in clause (a), (b), (c), (d), (e), (f), (g), (h), (k), (m), (n), (o) or (q) of
the definition thereof or the security interest or Lien granted under this Lease
or any other Operative Document shall, in whole or in material part, terminate,
cease in whole or in material part to be effective or (other than as expressly
provided therein) cease to be the legal, valid and binding enforceable
obligation of the parties thereunder; or Lessee, directly or indirectly,
contests in any manner in any court the effectiveness, validity, binding nature
or enforceability thereof; or any security interest or Lien securing Lessee’s or
Lessor’s obligations under the Operative Documents, in whole or in part, ceases
to be a perfected first priority security interest and Lien (subject only to
Permitted Liens); or

 

(i)                                     the Lessee shall contest the
effectiveness, validity, binding nature or enforceability of any Operative
Document of the type described in clause (a), (b), (c), (d), (e), (f), (g), (h),
(k), (m), (n), (o) or (q) of the definition thereof or any Lien granted under
any Operative Document which secures the Lessee’s obligations under the
Operative Documents; or

 

(j)                                     (i) the Lessee or any Material
Subsidiary shall fail to make any scheduled payment of principal, interest or
rent (whether as primary obligor or as guarantor or other surety) under any
agreement under which Funded Debt having a principal amount in excess of
$20,000,000 is outstanding, when due (after giving effect to any applicable
notice or grace period), or (ii) except as otherwise provided in clause (i)
above, Funded Debt of Lessee or any Material Subsidiary with a principal amount
in excess of $20,000,000 has been accelerated for any reason whatsoever; or

 

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(k)                                  (i) any member of the ERISA Group shall
fail to pay when due an amount or amounts aggregating in excess of $20,000,000
which it shall have become liable to pay under Title IV of ERISA; or (ii) notice
of intent to terminate a Material Plan shall be filed under Title IV of ERISA by
any member of the ERISA Group, any plan administrator or any combination of the
foregoing; or (iii) any member of the ERISA Group has been notified in writing
that the PBGC has instituted proceedings under Title IV of ERISA to terminate,
to impose liability (other than for premiums under Section 4007 of ERISA) in
respect of, or to cause a trustee to be appointed to administer any Material
Plan; or (iv) a condition shall exist by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any Material Plan must be
terminated; or (v) any of the events described in clause (iii) above shall occur
with respect to any Plan or Plans (other than a multiemployer plan within the
meaning of Section 4001(a)(3) of ERISA) (A) that have aggregate Unfunded
Liabilities in excess of $20,000,000 and (B) with respect to which either
(1) one or more members of the ERISA Group have engaged in a transaction or
transactions described in Section 4069 of ERISA or (2) one or more members of
the ERISA Group is a member of the “controlled group” under Section 412(c)(11)
of the Code or Section 4001(a)(14) of ERISA; or (vi) there shall occur a
complete or partial withdrawal from, or a default, within the meaning of
Section 4219(c)(5) of ERISA, with respect to, one or more (A) multiemployer
plans, within the meaning of Section 4001(a)(3) of ERISA, with respect to which
a member of the ERISA Group shall have engaged, within the previous five plan
years, in a transaction described in Section 4212(c) of ERISA, or
(B) Multiemployer Plans, which could reasonably be expected to result in the
incurrence by one or more members of the ERISA Group of a current payment
obligation in excess of $20,000,000; provided that no Event of Default shall
occur under clause (v) or (vi) if (A) the Unfunded Liabilities of the Other
Plans in respect of which events described in clause (v) have occurred, together
with the current payment obligations that could reasonably be expected to result
from complete or partial withdrawals or defaults described in clause (vi), shall
not exceed $20,000,000 and (B) each member of the ERISA Group that could
reasonably be expected to be liable for such Unfunded Liabilities or current
payment obligations is diligently contesting, in good faith, by appropriate
proceedings, the imposition of such liabilities or obligations; or

 

(l)                                     (i) one or more judgments or orders for
the payment, in the aggregate, of money in excess of $20,000,000 shall be
rendered against the Lessee or any of its Material Subsidiaries and such
judgments or orders shall continue unsatisfied and unstayed for a period of
thirty (30) days or (ii) one or more judgments or orders shall be rendered
against the Lessee or any Material Subsidiary, which judgments or orders shall
be stayed on condition that a bond or collateral equal to or greater than, in
the aggregate, $20,000,000 be posted or provided, and such judgments or orders
shall not be bonded, overturned or lifted within a period of thirty (30) days.

 

Section 16.2.                         Remedies. Upon the occurrence of any Event
of Default and at any time thereafter, the Lessor may, so long as such Event of
Default is continuing, do one or more of the following as the Lessor in its sole
discretion shall determine, without limiting any other right or remedy the
Lessor may have on account of such Event of Default, including, without
limitation,

 

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the right to compel the Lessee to purchase the Subject Property as set forth in
Section 18.2, but subject to the rights of the Lessee to purchase the Subject
Property pursuant to the terms and within the time periods as set forth in
Section 18.1 and Section 18.2:

 

(a)                                  The Lessor may, by notice to the Lessee,
rescind or terminate this Lease as to any or all of the Leased Property as of
the date specified in such notice; provided, however, (i) no reletting, or
taking of possession of the Leased Property (or any portion thereof) by the
Lessor will be construed as an election on the Lessor’s part to terminate this
Lease unless a written notice of such intention is given to the Lessee,
(ii) notwithstanding any reletting, or taking of possession, the Lessor may at
any time thereafter elect to terminate this Lease for a continuing Event of
Default and (iii) no act or thing done by the Lessor or any of its agents,
representatives or employees and no agreement accepting a surrender of the
Leased Property shall be valid unless the same be made in writing and executed
by the Lessor;

 

(b)                                 The Lessor may (i) demand that the Lessee,
and the Lessee shall upon the written demand of the Lessor, return the Leased
Property promptly to the Lessor in the manner and condition required by, and
otherwise in accordance with all of the provisions of the Participation
Agreement and Article IX and Sections 8.2 and 14.2 hereof, and Lessee shall
comply with the requirements at Section 15.2(b) to the extent requested by
Lessor, as if the Leased Property were being returned at the end of the Term,
and the Lessor shall not be liable for the reimbursement of the Lessee for any
costs and expenses incurred by the Lessee in connection therewith and
(ii) without prejudice to any other remedy which the Lessor may have for
possession of the Leased Property, and to the extent and in the manner permitted
by Applicable Laws, enter upon the Leased Property in accordance with all
Applicable Laws and take immediate possession of (to the exclusion of the
Lessee) the Leased Property or any part thereof and expel or remove the Lessee,
by summary proceedings or otherwise, all without liability to the Lessee for or
by reason of such entry or taking of possession (provided, however, Lessor shall
remain liable for actual damages caused by its gross negligence or willful
misconduct), whether for the restoration of damage to property caused by such
taking or otherwise and, in addition to the Lessor’s other damages, the Lessee
shall be responsible for all costs and expenses incurred by the Lessor and the
Lenders in connection with any reletting, including, without limitation,
reasonable brokers’ fees and all costs of any alterations or repairs made by the
Lessor;

 

(c)                                  The Lessor may (i) sell all or any part of
the Subject Property at public or private sale, as the Lessor may determine,
free and clear of any rights of the Lessee (except that Excess Sales Proceeds
are payable to and shall be paid to the Lessee) with respect thereto (except to
the extent required by clause (ii) below if the Lessor shall elect to exercise
its rights thereunder) in which event the Lessee’s obligation to pay Basic Rent
hereunder for periods commencing after the date of such sale shall be
terminated; and (ii) if the Lessor shall so elect, demand that the Lessee pay to
the Lessor, and the Lessee shall pay to the Lessor, on the date of such sale, as
damages for loss of a bargain and not as a penalty (in lieu of Basic Rent due
for periods commencing on or after the Payment Date

 

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coinciding with such date of sale (or, if the sale date is not a Payment Date,
the Payment Date next preceding the date of such sale)), an amount equal to (A)
the excess, if any, of (1) the Purchase Amount calculated as of such Payment
Date (including all Rent due and unpaid to and including such Payment Date),
over (2) the net proceeds of such sale (that is, after deducting all costs and
expenses incurred by the Lessor or any Lender incident to such conveyance,
including, without limitation, repossession costs, brokerage commissions,
prorations, transfer taxes, fees and expenses for counsel, title insurance fees,
survey costs, recording fees and any repair costs); plus (B) interest at the
Overdue Rate on the foregoing amount from such Payment Date until the date of
payment;

 

(d)                                 The Lessor may, at its option, (i) elect not
to terminate this Lease with respect to the Leased Property and continue to
collect all Basic Rent, Supplemental Rent and all other amounts due the Lessor
(together with all costs of collection) and enforce the Lessee’s obligations
under this Lease as and when the same become due, or are to be performed, and
(ii) upon any abandonment of the Leased Property by the Lessee, elect not to
terminate this Lease and may make the necessary repairs (and the Lessee shall
pay the reasonable costs of such repairs) in order to relet the Subject
Property, and relet the Subject Property or any part thereof (in place, if so
elected by Lessor) for such term or terms (which may be for a term extending
beyond the Term of this Lease) and at such rental or rentals and upon such other
terms and conditions as the Lessor in its reasonable discretion may deem
advisable; and upon each such reletting all rentals actually received by the
Lessor from such reletting shall be applied to the Lessee’s obligations
hereunder and the other Operative Documents in such order, proportion and
priority as the Lessor may elect in the Lessor’s sole and absolute discretion.
If the rentals received from the reletting pursuant to this Section 16.2(d)
during any period are less than the Rent with respect to the Leased Property to
be paid during that period by the Lessee hereunder, the Lessee shall pay any
deficiency, as calculated by the Lessor on the next Payment Date;

 

(e)                                  Unless the Subject Property has been sold
in its entirety, the Lessor may, whether or not the Lessor shall have exercised
or shall thereafter at any time (subject to the Lessee’s prior performance in
full under this clause) exercise any of its rights under clause (b), (c) or (d)
with respect to the Leased Property or any portions thereof, demand, by written
notice to the Lessee specifying the Termination Date (which shall be a date not
earlier than ten (10) Business Days after the date of such notice) that the
Lessee purchase, on or before such Termination Date, the Subject Property (or
any remaining portion thereof) in the manner provided in Section 18.2 and in
accordance with the provisions of Article XXI;

 

(f)                                    By written notice to Lessee, the Lessor
may declare the aggregate outstanding Lease Balance to be immediately due and
payable (such declaration shall be deemed to have occurred upon an Event of
Default under Section 16.1(g));

 

(g)                                 The Lessor may exercise any other right or
remedy that may be available to it under Applicable Laws, or proceed by
appropriate court action (legal or equitable) to enforce the terms hereof or to
recover damages for the breach hereof. Separate suits may

 

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be brought to collect any such damages for any period(s), and such suits shall
not in any manner prejudice the Lessor’s right to collect any such damages for
any subsequent period(s), or the Lessor may defer any such suit until after the
expiration of the Term, in which event such suit shall be deemed not to have
accrued until the expiration of the Term;

 

(h)                                 The Lessor may retain and apply against the
Lease Balance and all other amounts due and owing by the Lessee under the
Operative Documents, in accordance with Section 5.3 of the Participation
Agreement, all sums which the Lessor would, absent such Event of Default, be
required to pay to, or turn over to, the Lessee pursuant to the terms of this
Lease and upon payment in full of the Lease Balance and all such amounts
described above in this clause (h), the Subject Property shall be conveyed to
Lessee in accordance with Section 21.1 of this Lease; or

 

(i)                                     If an Event of Default shall have
occurred and be continuing, the Lessor, as a matter of right and with notice to
the Lessee, shall have the right to apply to any court having jurisdiction to
appoint a receiver or receivers of the Leased Property, and the Lessee hereby
irrevocably consents to any such appointment. Any such receiver(s) shall have
all of the usual powers and duties of receivers in like or similar cases and all
of the powers and duties of the Lessor in case of entry onto the Land, and shall
continue as such and exercise such powers until the date of confirmation of the
sale of the Subject Property unless such receivership is sooner terminated.

 

To the maximum extent permitted by law, the Lessee hereby waives (x) the benefit
of any appraisement, valuation, stay, extension, reinstatement and redemption
laws now or hereafter in force and all rights of marshaling in the event of any
sale of the Subject Property or any interest therein and (y) any rights now or
in the future conferred by statute or otherwise which may require the Lessor to
sell, lease or otherwise use the Subject Property in mitigation of the Lessor’s
damages or which may otherwise limit or modify any remedy of damages.

 

The Lessor shall be entitled to enforce payment of the Loans and Lessor Amount
and the performance of the obligations secured hereby and to exercise all rights
and powers under this instrument or under any of the other Operative Documents
or other agreement or any laws now or hereafter in force, notwithstanding some
or all of the obligations secured hereby may now or hereafter be otherwise
secured, whether by mortgage, security agreement, pledge, lien, assignment or
otherwise. Neither the acceptance of this instrument nor its enforcement, shall
prejudice or in any manner affect the Lessor’s right to realize upon or enforce
any other security now or hereafter held by the Lessor, it being agreed that the
Lessor shall be entitled to enforce this instrument and any other security now
or hereafter held by the Lessor in such order and manner as the Lessor may
determine in its absolute discretion. No remedy herein conferred upon or
reserved to the Lessor is intended to be exclusive of any other remedy herein or
by law provided or permitted, but each shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute. Every power or remedy given by any of the
Operative Documents to the Lessor or to which it may otherwise be entitled, may
be exercised, concurrently or independently, from time to time and as

 

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often as may be deemed expedient by the Lessor. Without limiting the foregoing,
each of the powers, rights and remedies as set forth or otherwise permitted
pursuant to this Article XVI are independent of the provisions of Article XIII
of the Participation Agreement and shall not be affected by any exclusion set
forth at Section 13.1(b) of the Participation Agreement.

 

The proceeds derived from any sale of Subject Property and other amounts
recovered pursuant to the foregoing remedies after an Event of Default shall be
distributed pursuant to Section 5.3(g) of the Participation Agreement. The
amount realized by the Lessor upon a sale of the Subject Property shall be net
of Lessor’s and Lessee’s sale expenses (including reasonable attorneys’ fees and
expenses) and other expenses reasonably and customarily incurred by the Lessor
or Lessee in connection with the Lessor holding and owning such Subject Property
until such time as the Subject Property is sold. The obligation to deliver to
the Lessee, in accordance with Section 5.3(g) of the Participation Agreement,
any Excess Sales Proceeds in connection with any sale of the Subject Property
shall survive this Lease.

 

Section 16.3.                         Waiver of Certain Rights. (a) To the
maximum extent permitted by law, the Lessee hereby waives the benefit of any
appraisement, valuation, stay, extension, reinstatement and redemption laws now
or hereafter in force and all rights of marshalling in the event of any sale of
the Subject Property or any interest therein, and (b) if this Lease shall be
terminated pursuant to Section 16.2, the Lessee waives, to the fullest extent
permitted by law, (i) any notice of re-entry or the institution of legal
proceedings to obtain re-entry or possession; (ii) any right of redemption,
re-entry or repossession; (iii) the benefit of any laws now or hereafter in
force exempting property from liability for rent or for debt or limiting the
Lessor with respect to the election of remedies; and (iv) any other rights which
might otherwise limit or modify any of the Lessor’s rights or remedies under
this Article XVI.

 

Section 16.4.                         Deed of Trust Remedies. Without limiting
any other remedies set forth in this Lease, and also, without limiting the
generality of Article XXIV hereof, the Deed of Trust Trustee, for the benefit
and at the direction of the Lessor, may proceed by a suit or suits in equity or
at law, whether for a foreclosure hereunder, or (to the extent permitted by law)
for the sale of the Subject Property, or against the Lessee on a recourse basis
for the Lease Balance, or for the specific performance of any covenant or
agreement contained herein or in aid of the execution of any power granted
herein, or for the appointment of a receiver pending any foreclosure hereunder
or the sale of the Subject Property, or for the enforcement of any other
appropriate legal or equitable remedy. The Deed of Trust Trustee and the Lessor
shall have all rights available to a deed of trust trustee or a beneficiary of a
deed of trust under the laws of the State of Texas, including, without
limitation, all rights granted a mortgage holder or deed of trust beneficiary
under applicable Texas law. In the event that any provisions of this Lease shall
be inconsistent with Texas law, the provisions of such Texas law shall take
precedence over such provision of this Lease, but shall not invalidate or render
unenforceable any other provision of this Lease that can be construed in a
manner consistent with such Texas law. If any provision of this Lease shall
grant the Deed of Trust Trustee and the Lessor any rights or remedies upon
default of the Lessee which are more limited than the rights that would
otherwise be vested in the Deed of Trust Trustee and the Lessor under such Texas
law in the absence of such provision, the Deed of Trust

 

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Trustee and the Lessor shall be vested with the rights granted in such Texas law
to the full extent permitted by law.

 

Section 16.5.                         Limitation on Recourse. (a) 
Notwithstanding anything to the contrary contained in this Lease or any other
Operative Document, in the event and only in the event a Limited Recourse Event
of Default occurs and is continuing and no other Event of Default has occurred
and is continuing and the Lessee has returned possession of the Subject Property
to Lessor in accordance with, and otherwise in the condition required by, this
Lease, Lessee’s recourse liability under the Operative Documents (except as set
forth in clause (b) below) will not exceed the sum of the Sale Option Recourse
Amount, plus any overdue amounts accruing thereon if such amount is not paid
when due.

 

(b)                                 The limitation on Lessee’s recourse
liability set forth in Section 16.5(a) shall not apply with respect to the
rights of Lessor, Collateral Agent or any Lender (A) to seek (i) the recovery of
all damages, (ii) the recovery of any portion of the Lease Balance in excess of
the Sale Option Recourse Amount and (iii) the recovery of any other amounts due
and payable by Lessee under the Operative Documents, in each case, from the
proceeds of the sale, lease, foreclosure, repossession or other disposition of
the Subject Property or any other Lessee Collateral or (B) to any claim for
indemnity under Article XIII of the Participation Agreement,  except in the case
of this clause (B), any claim under such Article XIII of the Participation
Agreement for the Lease Balance in excess of the Sale Option Recourse Amount.

 

ARTICLE XVII

LESSOR’S RIGHT TO CURE

 

Section 17.1.                         The Lessor’s Right to Cure the Lessee’s
Defaults. The Lessor, without waiving or releasing any obligation or Event of
Default, may (but shall be under no obligation to), upon five (5) Business Days’
prior notice to the Lessee in the case of any Event of Default, remedy any Event
of Default or default by Lessee under Section 9.1(h) of the Participation
Agreement that has occurred and is continuing for the account and at the sole
cost and expense of the Lessee, including (i) the failure by the Lessee to
maintain the insurance required by Article XIII and (ii) the failure by Lessee
to perform the obligations under the Related Agreements pursuant to and in
accordance with Section 9.1(h) of the Participation Agreement, and may, to the
fullest extent permitted by law and the Related Agreements, and notwithstanding
any right of quiet enjoyment in favor of the Lessee, enter upon the Subject
Property for such purpose and take all such action thereon as may be necessary
or appropriate therefor. No such entry shall be deemed an eviction of Lessee.
All reasonable out-of-pocket costs and expenses so incurred (including fees and
expenses of counsel), together with interest thereon at the Overdue Rate from
the date on which such sums or expenses are paid by the Lessor, shall be paid by
the Lessee to the Lessor on demand as Supplemental Rent.

 

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ARTICLE XVIII

PURCHASE PROVISIONS

 

Section 18.1.                         Early Termination Options. Subject to the
conditions contained herein and without limitation of Lessee’s purchase
obligation pursuant to Section 18.2, on (a) any Business Day during the Term,
provided Lessee has not elected the Sale Option, or (b) on any Business Day
after the occurrence of an Event of Default, Lessee may, at its option, purchase
all, but not less than all, of the Subject Property (the “Early Termination
Option”) at a price equal to the Purchase Amount. The Early Termination Option
shall terminate automatically and without notice upon the occurrence of an Event
of Default arising as a result of an Insolvency Event. Upon the occurrence of
any other Event of Default, Lessee shall be permitted to purchase the Subject
Property so long as Lessee pays the Collateral Agent or Lessor the Purchase
Amount and Lessee executes such documents as are necessary to consummate such
purchase within 10 Business Days after Lessee’s receipt of written notice of the
Lessor’s exercise of any remedy under Section 16.2 hereof or Section 24.2(d)
hereof. Except as provided for in the preceding sentence, in order to exercise
the Early Termination Option, Lessee shall deliver to Lessor and the Collateral
Agent, a written notice (the “Purchase Notice”) not less than thirty (30) days’
prior to the date upon which it intends to consummate the Early Termination
Option, which Purchase Notice shall be irrevocable when made. If the Lessee
exercises the Early Termination Option then, upon the Lessor’s receipt of all
amounts due in connection therewith, the Lessor shall transfer to the Lessee all
of the Lessor’s right, title and interest in and to the Subject Property in
accordance with the procedures set forth in Section 21.1, such transfer to be
effective as of the date specified in the Purchase Notice. The Lessor agrees
that it shall cooperate with the Lessee in effecting any transfer to a designee
of the Lessee pursuant to this Section 18.1.

 

Section 18.2.                         Acceleration of Subject Property Purchase.
(a) The Lessee shall be obligated to purchase for an amount equal to the
Purchase Amount the Lessor’s interest in the Subject Property (notwithstanding
any prior election to exercise its Early Termination Option pursuant to
Section 18.1) (i) automatically and without notice upon the occurrence of an
Event of Default described in Section 16.1(g), whether or not another Event of
Default described in one or more other clauses of Section 16.1 shall have been
or thereafter is declared, and (ii) as provided for at Section 16.2(e), upon
written demand of the Lessor upon any other Event of Default.

 

(b)                                 Any purchase under this Section 18.2 shall
be in accordance with the procedures for transfer set forth in Section 21.1.

 

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ARTICLE XIX

END OF TERM OPTIONS

 

Section 19.1.                         End of Term Options. Before the Expiration
Date, Lessee shall, by delivery of written notice to Lessor and Collateral Agent
at least 120 days before the Expiration Date, exercise one of the following
options:

 

(a)                                  Purchase for an amount in immediately
available funds equal to the Purchase Amount all, but not less than all, of the
Subject Property on or before the last day of the Term (the “Purchase Option”);
and if Lessee shall have elected to purchase the Subject Property, (1) Lessee
may (A) assign its right to purchase the Subject Property hereunder to a third
party, in which case such third party shall consummate the purchase of the
Subject Property on or before the last day of the Term, provided that if such
third party fails to consummate the purchase of the Subject Property on or
before the last day of the Term, Lessee shall consummate the purchase of the
Subject Property on the last day of the Term or (B) designate a third party to
acquire title to the Subject Property, without assigning Lessee’s rights to
purchase the Subject Property hereunder and (2) Lessor shall, upon the payment
to Lessor of the Purchase Amount then due and payable by Lessee under the
Operative Documents, transfer all of Lessor’s right, title and interest in and
to the Subject Property (including, to the extent permitted thereby, the Related
Agreements) to Lessee or such other party designated by Lessee pursuant to
Section 21.1; or

 

(b)                                 Sell on behalf of Lessor for cash to a
single purchaser not in any way affiliated with Lessee or any of its Affiliates
all, but not less than all, of the Subject Property on the last day of the Term
(the “Sale Option”); provided, however, that Lessee’s right to sell the Subject
Property pursuant to the Sale Option shall be conditioned upon and subject to
the fulfillment by Lessee of each of the terms and conditions set forth in
Article XX. All subleases with respect to the Subject Property (other than those
that constitute Related Agreements or any subleases entered into by the tenants
under the Related Agreements in accordance with the terms thereof) shall have
been terminated prior to consummation of the Sale Option. Lessee shall not enter
into any additional subleases or renew any subleases with respect to the Subject
Property following Lessee’s election of the Sale Option. Following Lessee’s
election of the Sale Option, Lessee shall not remove any Modifications (other
than Lessee Improvements) or commence any Modifications (other than Required
Modifications) without the consent of the Required Participants.

 

Section 19.2.                         Election of Options. Unless (i) Lessee
shall have affirmatively elected the Sale Option within the time period provided
for in Section 19.1 and satisfied each of the requirements in Articles XX and
XXI, or (ii) Lessee shall have elected to purchase the Subject Property pursuant
to Section 18.1, Lessee shall be deemed to have elected the Purchase Option. In
addition, the Sale Option shall automatically be revoked if there exists a
Default (other than a Limited Recourse Default), Event of Default (other than a
Limited Recourse Event of Default),

 

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Significant Environmental Event, Significant Casualty or Significant
Condemnation at any time after the Sale Option is properly elected or Lessee
fails to comply with each of the terms and conditions set forth at Articles XX
and XXI and in such event Lessor shall be entitled to exercise all rights and
remedies provided in Article XVI. Lessee may not elect the Sale Option if there
exists on the date the election is made a Default (other than a Limited Recourse
Default), an Event of Default (other than a Limited Recourse Event of Default),
Significant Environmental Event, Significant Casualty or Significant
Condemnation. Any election by Lessee of the Purchase Option pursuant to
Section 19.1(b) shall be irrevocable at the time made.

 

ARTICLE XX

SALE OPTION

 

Section 20.1.                         Sale Option Procedures. The Lessee’s
effective exercise and consummation of the Sale Option with respect to the
Subject Property shall be subject to the due and timely fulfillment of each of
the following provisions as to the Subject Property as of the dates set forth
below.

 

(a)                                  (i) the Lessee shall have given to the
Lessor and the Collateral Agent written notice of the Lessee’s exercise of the
Sale Option in accordance with Section 19.1 and (ii) Lessee shall have obtained
all authorizations, consents and approvals from any Governmental Authority and
any Person (including, without limitation, the counterparties to the Related
Agreements) required to be obtained to effectively consummate the Sale Option.

 

(b)                                 No Event of Default (other than a Limited
Recourse Event of Default), Default (other than a Limited Recourse Default),
Significant Environmental Event, Significant Casualty or Significant
Condemnation shall have occurred and be continuing on or at any time following
the date of Lessee’s notice of exercise of the Sale Option.

 

(c)                                  Upon surrender of the Leased Property, (i)
the Leased Property shall be in the condition required by Section 9.1 and (ii)
the Lessee shall have completed or caused to be completed and paid the cost of
all Modifications commenced prior to the Expiration Date, and Lessee shall have
caused to be completed prior to the Expiration Date the repair and rebuilding of
the affected portions of the Leased Property suffering a Casualty or
Condemnation.

 

(d)                                 The Lessee shall, as nonexclusive agent for
the Lessor, use commercially reasonable efforts to obtain the highest cash
purchase price for the Subject Property. Subject to clause (h) below, the Lessee
will be responsible for hiring brokers and making the Subject Property available
for inspection by prospective purchasers, and all marketing of the Subject
Property shall be at Lessee’s expense. The Lessee shall, upon reasonable notice
during normal business hours (subject to Lessee’s customary security and safety
measures), upon request, permit inspection of the Subject Property and any
Leased Property Records by the Lessor, the Collateral Agent, any Lender and any
potential purchasers, and shall otherwise do all things reasonably necessary to
sell and deliver possession of the Subject Property to any purchaser.

 

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(e)                                  The Lessee shall use commercially
reasonable efforts to procure bids from one or more bona fide prospective
purchasers to purchase the Subject Property. No such purchaser shall be the
Lessee or any Affiliate of the Lessee.

 

(f)                                    The Lessee shall submit all bids to the
Lessor, the Collateral Agent and the Lenders, and the Lessor will have the right
to review the same and if directed to submit any one or more bids. All bids
shall be on an all-cash basis unless the Lessor and the Lenders shall otherwise
agree in their sole discretion and shall be for an amount not less than the Fair
Market Value of the Subject Property. The Lessee shall use commercially
reasonable efforts to deliver to the Lessor and the Lenders not less than ninety
(90) days prior to the Expiration Date a binding written unconditional (except
as set forth below), irrevocable offer by such purchaser or purchasers offering
the highest all cash bid to purchase all, but not less than all, of the Subject
Property (unless otherwise agreed to by the Lessor and the Lenders). Lessor and
the Lenders (A) shall have the sole authority to determine whether to accept the
highest all cash bid for the Subject Property; provided, however, that to the
extent the sum of the Sale Option Recourse Amount (reduced by any amounts to be
distributed to Collateral Agent or any Participant pursuant to clause first of
Section 5.3(d)(i) of the Participation Agreement) and the all cash Net Sales
Proceeds for the Subject Property equals or exceeds the Lease Balance and all
other amounts due and owing herein, Lessor and the Lenders shall be deemed to
have accepted such bid and (B) if accepted or deemed accepted by Lessor and the
Lenders, Lessee shall sell the Subject Property on the Expiration Date in
accordance with the terms of such bid to the purchaser submitting such bid and
comply with and satisfy the requirements and covenants of clause (v) of
Section 21.1, and on the Expiration Date, Lessee shall pay to Collateral Agent
all such amounts and the Gross Proceeds as are required to be paid on such date
pursuant to Sections 20.1(i), 20.1(j) and 20.1(k). If, within 45 days prior to
the Expiration Date, the all-cash Net Sales Proceeds for the Subject Property
offered in the bids submitted by Lessee for Lessor’s and the Lenders’ acceptance
together with the Sale Option Recourse Amount (reduced by any amounts to be
distributed to Collateral Agent or any Participant pursuant to clause first of
Section 5.3(d)(i) of the Participation Agreement) do not equal or exceed the
then outstanding Lease Balance and all such bids were not previously accepted
(or deemed accepted), then Lessor or the Lenders may in their respective sole
and absolute discretion accept or reject such bids.

 

(g)                                 In connection with any such sale of the
Subject Property, the Lessee will provide to the purchaser all customary
“seller’s” indemnities (including, without limitation, an environmental
indemnity to the extent the same is required by the purchaser), representations
and warranties regarding title, absence of Liens (except Lessor Liens and
Permitted Liens of the type described in clauses (a) (excluding Liens relating
to the interest or rights of Lessee), (b), (c) or (h) of the definition of
“Permitted Liens”) and the condition of the Subject Property (including, without
limitation, compliance with all Environmental Laws). The Lessee shall have
obtained, at its cost and expense, all required governmental and regulatory
consents and approvals and shall have made all filings as required by Applicable
Laws in order to carry out and complete the transfer of the Subject Property so
that the Leased Property can be operated for its intended use as an office and
retail facility. As to the Lessor, any such sale shall be made on an “as is,
where is, with all faults” basis without representation or warranty by the
Lessor, other than the absence

 

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of Lessor Liens. Any agreement as to such sale shall be in form and substance
reasonably satisfactory to the Lessor.

 

(h)                                 All Sales Costs shall be paid from the Gross
Proceeds of the Subject Property. The Lessee shall pay or cause to be paid
directly, and not from the sale proceeds of the Subject Property, all Marketing
Costs which, in aggregate, do not exceed $100,000 (the “Marketing Costs Cap”).

 

(i)                                     Whether or not a sale of the Subject
Property is completed on the Expiration Date, the Lessee shall pay to the Lessor
on or prior to the Expiration Date (or in the case of Supplemental Rent, to the
Person entitled thereto) an amount equal to (i) the Sale Option Recourse Amount
plus (ii) all accrued and unpaid Rent (including Supplemental Rent, if any) and
all other amounts hereunder which have accrued or will accrue prior to or as of
the Expiration Date, in the type of funds specified in, and in accordance with,
Section 3.4 hereof.

 

(j)                                     The Lessee shall pay to the Lessor on or
prior to the Expiration Date the amounts, if any, required to be paid pursuant
to Article XIII of the Participation Agreement.

 

(k)                                  If a sale of the Subject Property shall be
consummated on or before the Expiration Date, Lessee shall pay or cause to be
paid (i) Sales Costs out of the Gross Proceeds from the sale of the Subject
Property, (ii) Marketing Costs (not to exceed the Marketing Costs Cap) to the
Person entitled thereto and (iii) to Lessor, the Net Sales Proceeds of such sale
of the Subject Property, which Net Sales Proceeds shall be applied pursuant to
Section 5.3(d) of the Participation Agreement.

 

(1)                                  The Lessee shall, to the extent permitted
by Applicable Laws, assign, and shall cooperate with all reasonable requests of
the Lessor or the purchaser for obtaining any and all licenses, permits,
approvals and consents of any Governmental Authorities or other Persons that are
or will be required to be obtained by the Lessor or such purchaser in connection
with its use, operation, control or maintenance of the Subject Property in
compliance with Applicable Laws.

 

(m)                               Prior to the Expiration Date, Lessee shall,
subject to the Marketing Costs Cap, furnish to the Lessor, the Collateral Agent,
and each Lender and, if the Subject Property is to be sold on the Expiration
Date, the independent purchaser hereunder a reasonably current Environmental
Audit dated no earlier than forty-five (45) days prior to the Expiration Date
and addressed to each such party. Such Environmental Audit shall be prepared by
an environmental consultant selected by the Collateral Agent and the Lessor and
reasonably acceptable to the Lessee and shall contain conclusions satisfactory
to the Participants and such purchaser as to the environmental status of the
Subject Property. If the Subject Property is sold during the Extended
Remarketing Period pursuant to Section 20.3, such Environmental Audit shall be
updated to a date not later than forty-five (45) days prior to the date of such
sale and be subject to the reevaluation of the Lessor and the Lenders and if
applicable, the independent purchaser on the same basis as provided in the
preceding sentence. If any such Environmental Audit indicates any Remediation is
required or that a Phase II environmental assessment is required, Lessee shall
undertake such Remediation or obtain such Phase II environmental assessment and
undertake any

 

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Remediation indicated in such Phase II environmental assessment, and prior to
the Expiration Date shall obtain a written statement by such environmental
consultant indicating in his or her opinion that all remedial actions indicated
in such environmental assessment or further environmental assessment have been
undertaken and completed in compliance with Applicable Laws.

 

If one or more of the foregoing provisions of this Section 20.1 shall not be
fulfilled as of the date set forth above, then the Lessor shall declare by
written notice to the Lessee the Sale Option to be null and void (whether or not
it has been theretofore exercised by the Lessee), in which event all of the
Lessee’s rights under this Section 20.1 shall immediately terminate and the
Lessee shall be obligated to purchase the Subject Property pursuant to
Section 19.1(a) on the Expiration Date.

 

Except as expressly set forth herein, the Lessee shall have no right, power or
authority to bind any Participant in connection with any proposed sale of the
Subject Property.

 

Section 20.2.                         Certain Obligations Continue. During the
period following Lessee’s exercise of the Sale Option up to and including the
Expiration Date, the obligation of the Lessee hereunder, including the
obligation to pay Rent with respect to the Leased Property (including the
installment of Rent due on the Expiration Date), shall continue undiminished.
The Lessor shall have the right, but shall be under no duty, to solicit bids, to
inquire into the efforts of the Lessee to obtain bids or otherwise to take
action in connection with any such sale, other than as expressly provided in
this Article XX.

 

Section 20.3.                         Failure to Sell Subject Property. If
Lessee shall exercise the Sale Option and shall fail to sell the Subject
Property on the Expiration Date in accordance with and subject to the provisions
of Section 20.1, then Lessee and Lessor hereby agree as follows:

 

(a)                                  Lessee shall, if requested by Lessor,
continue to use reasonable commercial efforts as non-exclusive agent for Lessor
to sell the Subject Property on behalf of Lessor in accordance with this Article
XX for the period (the “Extended Remarketing Period”) commencing on the
Expiration Date and ending on the earlier of (i) the sale of the Subject
Property in accordance with the provisions of this Article XX or such earlier
date as Lessor has received payment in full of the Lease Balance and all accrued
and unpaid Rent and (ii) the date that is two years after the Expiration Date.
Without limiting the foregoing, all of the provisions of Section 20.1 (excluding
subsections (a)(i), (b)(i) (other than with respect to obligations of the Lessee
that survive the termination of this Lease pursuant to Section 20.3(b) below),
(m) and (k) thereof) shall be applicable to the Extended Remarketing Period and
any sale during such period. Lessor’s appointment of Lessee as Lessor’s
nonexclusive agent to use its reasonable commercial efforts to obtain the
highest all-cash price for the purchase of the Subject Property shall not
restrict Lessor’s right to market or lease the Subject Property or to retain one
or more sales agents or brokers at Lessee’s sole cost and expense (subject to
Section 20.1(h)), or the right of any Participant to submit or cause to be
submitted bids for the Subject Property in the manner contemplated by
Section 20.1.

 

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(b)                                 On the Expiration Date, Lessee shall return
possession of the Leased Property to Lessor in accordance with and otherwise, in
the condition required by, this Lease (including each of the requirements and
conditions set forth at Section 20.1(c), Section 20.1(i) and Section 20.1(m)).
Thereafter, this Lease shall terminate, except with respect to any obligations
of Lessee pursuant to Article XIII of the Participation Agreement and
Section 25.1 of this Lease that expressly survive such termination and the
obligations of Lessee under this Section 20.3 and Section 21.1 of this Lease,
and Lessee shall have no further obligation to pay Rent which would otherwise
accrue after the date of such termination or to perform any other obligations
under the Lease. Following the Expiration Date, Lessor shall be free to sell or
lease all or any portion of the Subject Property to any party at such reasonable
times and for such amounts as Lessor deems commercially reasonable and
appropriate in order to maximize Lessor’s opportunity to recover the
Post-Expiration Date Balance. Sales Costs shall be paid out of the Gross
Proceeds of the sale of the Subject Property and Net Sales Proceeds from the
sale of the Subject Property shall be applied as provided in Section 5.3(d)(ii)
of the Participation Agreement. Following the Expiration Date, Lessor shall have
the right to enter into leases for all or any portion of the Subject Property at
fair market rentals and otherwise on commercially reasonable terms, and the net
operating cash flow therefrom shall be payable to Lessor in reduction of the
Lessor Balance.

 

(c)                                  Lessor reserves all rights under this Lease
and the other Operative Documents arising out of Lessee’s breach of any
provisions of this Lease (including this Article XX), occurring prior to or on
the Expiration Date, including the right to sue Lessee for damages.

 

(d)                                 To the greatest extent permitted by
Applicable Laws and subject to Section 20.3(e) below, Lessee hereby
unconditionally and irrevocably waives, and releases Lessor from, any right to
require Lessor, the Collateral Agent and the Lenders during the Extended
Remarketing Period to sell the Subject Property in a timely manner or for any
minimum purchase price or on any particular terms and conditions, Lessee hereby
agreeing that if Lessee shall elect the Sale Option, its ability to sell the
Subject Property on or prior to the Expiration Date and to cause any Person to
submit a bid to Lessor pursuant to Section 20.1 shall constitute full and
complete protection of Lessee’s interest hereunder.

 

(e)                                  If the Subject Property has not been sold
by the Expiration Date, Lessor shall obtain an appraisal from an independent MAI
real estate appraiser selected by Lessor, Lessee and the Collateral Agent which
shall establish the Fair Market Value of the Subject Property as of the
Expiration Date. If the Subject Property has not been sold by the two-year
anniversary of the Expiration Date, then Lessor shall pay to Lessee the lesser
of (x) the Sale Option Recourse Amount and (y) the positive difference, if any,
between the Fair Market Value of the Leased Property and the sum of the
outstanding Lease Balance (as of the Expiration Date after giving effect to any
payments by Lessee or third parties (including, without limitation, proceeds of
insurance or Condemnation) on or before such date which reduced the Lease
Balance) plus an amount equal to the estimated Post-Closing Sales Costs assuming
an actual sale to a third party in an arm’s-length

 

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transaction had occurred on the two-year anniversary of the Expiration Date (as
of the two-year anniversary of the Expiration Date). The amount to be paid to
Lessee pursuant to the immediately preceding sentence shall include interest on
such amount at the Lessee Interest Rate accruing from the Expiration Date until
but not including the date of such payment. The estimate of Post-Closing Sales
Costs as provided for above shall be made by Lessor based on available
information relating to similar commercial real estate sales of real property
located in the State of Texas and the county where the Subject Property is
located.

 

(f)                                    In the event that the Subject Property is
not sold within two (2) years after the Expiration Date and upon payment by
Lessor of the amount, if any, required in clause (e) above at the end of such
two-year period, Lessee shall have no further right, title or interest in and to
the Subject Property or any proceeds thereof, which in each case shall remain
the sole and exclusive property of the Lessor.

 

ARTICLE XXI

PROCEDURES RELATING TO PURCHASE OR SALE OPTION

 

Section 21.1.                         Provisions Relating to Conveyance of the
Subject Property Upon Purchase by the Lessee, Sales or Certain Other Events. In
connection with any termination of this Lease pursuant to the terms of
Article XV, any purchase of the Subject Property in accordance with
Article XVIII or in connection with the Lessee’s obligations under
Section 16.2(e), any other conveyance or purchase of the Subject Property made
pursuant to the terms of this Lease then, upon the date on which this Lease is
to terminate with respect to the Leased Property and upon tender by the Lessee
of the amounts set forth in Article XV, Sections 16.2(e), 18.1 or 18.2, as
applicable:

 

(i)                                     subject to clause (vi) of this
Section 21.1, the Lessor shall execute and deliver to the Lessee (or to the
Lessee’s designee) at the Lessee’s cost and expense and subject to clause (vi)
of this Section 21.1, (x) a special warranty deed (warranting as to Lessor Liens
only) with respect to the Subject Property, (y) a quitclaim assignment of the
entire interest of the Lessor in the Subject Property (which shall include an
assignment of all of the right, title and interest of the Lessor in and to any
insurance proceeds of condemnation award with respect to the Subject Property
not previously received by the Lessor and an assignment of leases of the Subject
Property) and the Related Agreements in each case in recordable form, and (z) a
FIRPTA Affidavit, in each case, otherwise in conformity with local custom and
without any representation or warranty of any kind except as to the absence of
any Lessor Liens;

 

(ii)                                  subject to clause (vi) of this
Section 21.1, the Subject Property shall be conveyed to the Lessee (or to the
Lessee’s designee) “AS IS, WHERE IS” and in its then present physical condition;

 

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(iii)                               subject to clause (vi) of this Section 21.1,
the Lessor shall execute and deliver to Lessee (or its designee) and the
Lessee’s title insurance company an affidavit as to the Lessor’s title and
Lessor’s Liens attributable to it and shall execute and deliver to the Lessee a
statement of termination of this Lease.

 

(iv)                              subject to clause (vi) of this Section 21.1,
the Lessor shall execute and deliver to Lessee a statement of termination of
this Lease and shall cause the Collateral Agent to execute and deliver releases
of any Liens created by the Operative Documents attributable to the Collateral
Agent or the Lessor, and termination statements for any financing statements
which are then of record naming the Collateral Agent or the Lessor as the
secured party;

 

(v)                                 if the Lessee properly exercises the Sale
Option, then, subject to Section 20.3, the Lessee shall, on the Expiration Date,
and at its own cost, transfer possession of the Subject Property to the
independent purchaser thereof, by surrendering the Subject Property into the
possession of the Lessor or such purchaser, as the case may be, free and clear
of all Liens other than Permitted Liens of the type described in clauses (i)
(excluding Liens relating to the rights and interests of Lessee), (ii), (iii),
(vii) or (ix) of the definition of “Permitted Liens”, in good condition (as
modified by Modifications permitted by this Lease), ordinary wear and tear
excepted, and in compliance in all material respects with Applicable Laws and
the provisions of this Lease, and the Lessee shall execute and deliver to the
purchaser at the Lessee’s cost and expense a deed and bill of sale with respect
to the Subject Property, in each case in recordable form and otherwise in
conformity with local custom, warranting that such Subject Property is free and
clear of all Liens (other than Permitted Liens of the type described in clauses
(i) (relating to the rights and interests of Lessee), (ii), (iii), (iv), (vii)
or (ix) of the definition of “Permitted Liens”), the Lessee shall execute and
deliver to the purchaser and the purchaser’s title insurance company an
affidavit as to the absence of any Liens (other than Permitted Liens), and such
other affidavits and certificates reasonably requested by any title insurance
company insuring title to the Subject Property, as well as a FIRPTA affidavit,
and an instrument in recordable form declaring this Lease to be terminated on
the date of closing of the sale of the Subject Property. The Lessee shall, on
and within a reasonable time before and up to one year after the Expiration
Date, cooperate reasonably with the Lessor and the purchaser of the Subject
Property in order to facilitate the purchase and use by such purchaser of the
Subject Property, which cooperation shall include the following, all of which
the Lessee shall do on or before the Expiration Date or as soon thereafter as is
reasonably practicable: providing all Subject Property Records and all know-how,
data and technical information relating thereto, granting or assigning (to the
extent assignable) all licenses necessary for the operation and maintenance of
the Subject Property, and cooperating reasonably in seeking and obtaining all
necessary Governmental Action. The obligations of the Lessee under this
paragraph shall survive the expiration or termination of this Lease; and

 

(vi)                              Lessee shall cause, (A) to the extent required
to consummate the sale, all counterparties to the Related Agreements to execute
written consents to any such transfer,

 

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purchase or conveyance of the Subject Property and the Related Agreements and
(B) Lessee or such third party purchaser, as applicable, to assume all
obligations of Lessor under the Related Agreements. Upon such sale, Lessor will
be discharged and relieved of all obligations under the Related Agreements.

 

ARTICLE XXII

ACCEPTANCE OF SURRENDER

 

Section 22.1.                         Acceptance of Surrender. No surrender to
the Lessor of this Lease or of the Leased Property or of any part of any thereof
or of any interest therein shall be valid or effective unless agreed to and
accepted in writing by the Lessor and, prior to the payment or performance of
all obligations under the Loan Agreement, the Lenders, and no act by the Lessor
or the Lenders or any representative or agent of the Lessor or the Lenders,
other than a written acceptance, shall constitute an acceptance of any such
surrender.

 

ARTICLE XXIII

NO MERGER OF TITLE

 

Section 23.1.                         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 may acquire, own or hold, directly or indirectly, in
whole or in part, (a) this Lease or the leasehold estate created hereby or any
interest in this Lease or such leasehold estate, (b) title to the Subject
Property, except as may expressly be stated in a written instrument duly
executed and delivered by the appropriate Person or (c) a beneficial interest in
the Lessor.

 

ARTICLE XXIV

INTENT OF THE PARTIES

 

Section 24.1.                         Nature of Transaction. It is the intention
of the parties that:

 

(a)                                  the Overall Transaction constitutes an
operating lease from Lessor to Lessee for purposes of Lessee’s financial
reporting, including, without limitation, under Financial Accounting Standards
Board Statement No. 13;

 

(b)                                 for purposes of all federal, state and local
income, franchise, transfer and other taxes, and bankruptcy, insolvency,
conservatorships and receiverships (including the substantive law upon which
bankruptcy, conservatorship, insolvency and receivership proceedings are based)
real estate law, commercial law and UCC:

 

(i)                                     the Overall Transaction constitutes a
financing by the Participants to Lessee and preserves beneficial ownership in
the Subject Property in Lessee, Lessee will be entitled to all tax benefits with
respect to the Subject Property

 

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ordinarily available to owners of property similar to the Subject Property for
tax purposes and the obligations of Lessee to pay Basic Rent shall be treated as
payments of principal, if any, and interest to the Participants, and the payment
by Lessee of any amounts in respect of the Lease Balance shall be treated as
payments of principal to the Participants;

 

(ii)                                  this Lease grants a security interest or a
Lien, as the case may be, in the Lessee’s interest in the Leased Property and
the other Lessee Collateral in favor of the Lessee and Lessor, and for the
benefit of the Participants to secure payment and performance of the
Obligations; and

 

(iii)                               the Security Instruments create Liens and
security interests in the Subject Property and the other Lessee Collateral and
Lessor Collateral in favor of the Collateral Agent for the benefit of all of the
Participants to secure Lessee’s and Lessor’s payment and performance of its
obligations under the Operative Documents.

 

Each of the parties hereto agrees that it will not, nor will it permit any
Affiliate to at any time, take any action or fail to take any action with
respect to the preparation, filing or audit of any income tax return, including
an amended income tax return, to the extent that such action or such failure to
take action would be inconsistent with the intention of the parties expressed in
this Section 24.1.

 

Nevertheless, Lessee acknowledges and agrees that none of the Lessor, the
Collateral Agent, Arranger or any Lender has made any representations or
warranties concerning the tax, accounting or legal characteristics of the
Operative Documents or any aspect of the Overall Transaction and that Lessee has
obtained and relied upon such tax, accounting and legal advice concerning the
Operative Documents and the Overall Transaction as it deems appropriate.

 

(c)                                  Specifically, but without limiting the
generality of subsection (a) of this Section 24.1, the Lessor and the Lessee
intend and agree that for the purpose of securing the Lessee’s obligations for
the repayment of the Obligations, (i) the Lease shall also be deemed to be a
security agreement and financing statement within the meaning of Article 9 of
the Uniform Commercial Code; (ii) the conveyance provided for hereby shall be
deemed to be a grant by the Lessee to the Lessor, for the benefit of the
Participants, of a Lien (including the Lessee’s Mortgage) on and security
interest in all of the Lessee’s present and future right, title and interest in
and to the Leased Property and the Lessee Collateral, including but not limited
to the Lessee’s leasehold estate therein and all proceeds of the conversion,
voluntary or involuntary, of the foregoing into cash, investments, securities or
other property, whether in the form of cash, investments, securities or other
property to secure such loans, effective on the date hereof, to have and to hold
such interests in the Leased Property unto the Lessor, for the benefit of the
Participants; (iii) the possession by the Lessor of notes and such other items
of property as constitute instruments, money, negotiable documents or chattel
paper shall be deemed

 

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to be “possession by the secured party” for purposes of perfecting the security
interest pursuant to Section 9-313 of the UCC; and (iv) notifications to Persons
holding such property, and acknowledgments, receipts or confirmations from
financial intermediaries, bankers or agents (as applicable) of the Lessee shall
be deemed to have been given for the purpose of perfecting such security
interest under Applicable Laws. The Lessor and the Lessee shall, to the extent
consistent with the Lease, take such actions and execute, deliver, file and
record such other documents, financing statements, mortgages and deeds of trust
as may be necessary to ensure that, if the Lease were deemed to create a
security interest in the Leased Property in accordance with this
Section 24.1(c), such security interest would be deemed to be a perfected
security interest in the Leased Property and the Lessee Collateral with priority
over all Liens, other than Permitted Liens, under Applicable Laws and will be
maintained as such throughout the Term. Lessee hereby authorizes Lessor to file
any and all financing statements covering the Leased Property or any part
thereof that Lessor may require.

 

Section 24.2.                         Liens and Security Interests.
(a) Specifically, without limiting the generality of Section 24.1, the Lessor
and the Lessee intend and agree that in the event of any insolvency or
receivership proceedings or a petition under the United States bankruptcy laws
or any other applicable insolvency laws or statute of the United States of
America or any State or Commonwealth thereof affecting the Lessee, the Lessor,
the Collateral Agent or any Lender or any collection actions, the transactions
evidenced by the Operative Documents shall be regarded as loans and advances
made by the Participants as unrelated third party lenders to the Lessee secured
by the Subject Property and the Lessee Collateral. To secure such loans and
advances and other Obligations, the Lessee has GRANTED, BARGAINED, SOLD,
WARRANTED, CONVEYED and CONFIRMED, and hereby GRANTS, BARGAINS, SELLS, WARRANTS,
CONVEYS and CONFIRMS the Leased Property and the Lessee Collateral unto the Deed
of Trust Trustee, its successors and assigns (for the benefit of the
Participants) IN TRUST WITH POWER OF SALE AND RIGHT OF ENTRY AND POSSESSION AND
HEREBY GRANTS unto the Lessor, its successors and assigns a security interest in
the Leased Property and the Lessee Collateral.

 

(b)                                 Specifically, but without limiting the
generality of Section 24.1, the Lessor and the Lessee further intend and agree
that, for the purpose of securing the obligation of the Lessee for the repayment
of the above-described loans to the Lessee, (i) this Lease shall also be deemed
to be a security agreement and financing statement within the meaning of
Article 9 of the Uniform Commercial Code and a real property mortgage and deed
of trust; (ii) the conveyance provided for hereby and in Section 2 of this Lease
shall be deemed to be a grant by the Lessee to the Deed of Trust Trustee and its
successors and assigns in trust for the use and benefit of the Lessor (for the
benefit of the Participants) of a mortgage lien and security interest in all of
the right, title and interest of the Lessee in and to the Leased Property, the
Lessee Collateral and all proceeds of the conversion, voluntary or involuntary,
of the foregoing into cash, investments, securities or other property (it being
understood that the Lessee hereby grants and warrants and grants a security
interest in the Leased Property and all proceeds thereof to the Deed of Trust
Trustee and its successors and assigns in Trust, for the use and benefit of the
Lessor (for the benefit of the Participants), to secure the loans and advances
described in Section 24.2(a)); (iii) the possession by the Lessor or any of its
agents of notes and such other items of property as constitute

 

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instruments, money, negotiable documents or chattel paper shall be deemed to be
“possession by the secured party” for purposes of perfecting the security
interest pursuant to Section 9-305 of the Uniform Commercial Code; and
(iv) notifications to Persons holding such property, and acknowledgments,
receipts or confirmations from financial intermediaries, bankers or agents (as
applicable) of the Lessee shall be deemed to have been given for the purpose of
perfecting such security interest under all Applicable Laws. The Lessor and the
Lessee shall, to the extent consistent with this Lease, take such actions and
execute, deliver, file and record such other documents and financing statements
as may be necessary to ensure that, if this Lease was deemed to create a
security interest in the Leased Property in accordance with this Section 24.2,
such security interest would be deemed to be a perfected security interest
(subject only to Permitted Liens) and will be maintained as such throughout the
Term. Lessee hereby authorizes Lessor to file any and all financing statements
covering the Leased Property or any part thereof that Lessor may require.

 

Certain of the personal property covered by this Lease is or will become
fixtures on the real property which is a part of the Leased Property, and this
Lease (or a memorandum thereof) upon being filed for record in the real estate
records of the county wherein such fixtures are situated shall operate also as a
financing statement filed as a fixture filing in accordance with the applicable
provisions of the Uniform Commercial Code of the State of Texas upon such of the
property which are or may become fixtures. The mailing address of Lessee (as
debtor) and the address of Lessor (as secured party) from which information may
be obtained are set forth in the introductory paragraph of this Lease. The
Lessee has an interest of record in such real property. The identification
number of the Lessee in Delaware is 2653461.

 

(c)                                  Specifically, but without limiting the
foregoing or the generality of Section 24.1, Lessee hereby grants, bargains,
sells, warrants, conveys, aliens, remises, releases, assigns, sets over and
confirms to the Deed of Trust Trustee and its successors and assigns in trust
WITH POWER OF SALE AND RIGHT OF ENTRY AND POSSESSION, for the use and benefit of
the Lessor, its successors and assigns, and grants Lessor, its successors and
assigns a security interest in all of Lessee’s right, title, and interest,
whether now owned or hereafter acquired, in and to the following (collectively,
the “Lessee Collateral”): (i) the Leased Property, (ii) the real estate lying
and being in the County of Travis in the State of Texas (the “State”) more
particularly described in Exhibit A attached hereto and made a part hereof (the
“Land”), together with and including but not limited to the leasehold estate
interest in such real estate created under and pursuant to the Ground Lease,
this Lease, or any other lease or sublease; all estate, right and title of
Lessee in possession or expectancy in and to such property or any part thereof;
and all Appurtenant Rights relating thereto; (iii) all buildings and
improvements (including but not limited to the Improvements) of every kind and
description heretofore or hereafter erected or placed on the Land; (iv) all
materials intended for construction, reconstruction, alteration and repairs of
the buildings and improvements now or hereafter erected thereon, all of which
materials shall be deemed to be included within the premises immediately upon
the delivery thereof; (v) all fixtures attached to the Land or Improvements and
all equipment used in connection with the operation, protection and maintenance
of the Land and the Improvements attached to the Land and the buildings and
improvements now or hereafter located thereon including but not limited to all
heating, lighting, plumbing, ventilating, air conditioning, refrigerating, water
cooling, incinerator,

 

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compacting, elevator, escalator, cleaning systems, sprinkler systems and other
fire prevention and extinguishing apparatus used in connection with the
operation, protection and maintenance of the Land and the Improvements; (vi) all
renewals or replacements thereof or articles in substitution therefor, whether
or not the same are or shall be attached to the Land, buildings or improvements
in any manner; it being mutually agreed, intended and declared that all the
aforesaid property shall, so far as permitted by law, be deemed to form a part
and parcel of the real estate and, for the purpose of this Lease, to be real
estate and covered by this Lease; and as to the balance of the property
aforesaid, this Deed of Trust is hereby deemed to be as well a Security
Agreement under the provisions of the Uniform Commercial Code of the State for
the purpose of creating hereby a security interest in said property, which is
hereby granted by Lessee as debtor to Lessor as secured party, securing the
Obligations hereby secured; (vii) this Lease and the memorandum thereof, all
rent payable under this Lease, and all other rents, income, payments, purchase
prices, receipts, revenues, issues and profits payable under this Lease or any
other Operative Document, (viii) all ground leases, leases, subleases, estates,
tenements, hereditaments, privileges, licenses, franchises, appurtenances,
agreements, contracts, reversions and remainders whatsoever, in any way
belonging, relating or appertaining to the Leased Property or any part thereof
(including but not limited to the Related Agreements); (ix) all easements,
rights-of-way, strips and gores of land, vaults, streets, ways, alleys, tunnels,
passages, sewer rights, waters, water courses, water rights, minerals, flowers,
shrubs, crops, trees and other emblements now or hereafter located on the Land
or under or above the Land or any part or thereof; (x) all rental agreements and
arrangements of any sort now or hereafter affecting the Leased Property or any
portion thereof and providing for or resulting in the payment of money for the
use of the Leased Property or any portion thereof, whether the user enjoys the
Leased Property or any portion thereof as tenant for years, licensee, tenant at
sufferance or otherwise, and irrespective of whether such agreements and
arrangements be oral or written, and including any and all extensions, renewals
and modifications thereof and guaranties of the performance or obligations of
any tenants or lessees thereunder; (xi) all reversions, income, rents, issues,
revenues and profits thereof, including all interest in all rents, issues and
profits of the aforementioned property and all rents, issues, profits, revenues,
royalties, bonuses, rights and benefits due, payable or accruing (including all
deposits of money as advanced rent or for security) under any and all leases or
subleases and renewals thereof, or under any contracts or options for the sale
of all or any part of, said property (including during any period allowed by law
for the redemption of said property after any foreclosure or other sale),
together with the right, but not the obligation, to collect, receive and receipt
for all such rents and other sums and apply them to the Obligations hereby
secured and to demand, sue for and recover the same when due or payable;
provided that the assignments made hereby shall not impair or diminish the
obligations of Lessee under the provisions of such leases, subleases, or other
agreements nor shall such obligations be imposed upon the Deed of Trust Trustee
or Lessor; (xii) all books and records relating to or used in connection with
the operation of the Leased Property or any part thereof; (xiii) all consents,
licenses, building permits, certificates of occupancy and other governmental
approvals relating to construction, completion, occupancy, use or operation of
the Leased Property or any part thereof; and (xiv) all management contracts,
service contracts, utility contracts, documents and agreements relating to the
construction of any improvements (including any and all construction contracts,
architectural contracts, engineering contracts, designs, plans, specifications,
drawings, surveys, tests, reports, bonds and governmental approvals) and all
other contracts, licenses and permits now or hereafter

 

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affecting the Leased Property or any part thereof and all guaranties and
warranties with respect to any of the foregoing; (xv) all insurance policies
(including title insurance policies) required to be maintained under the
Operative Documents, including the right to collect and receive such proceeds,
and including any unearned premiums thereon; (xvi) all utility, escrow and all
other deposits and all letters of credit, certificates of deposit, negotiable
instruments and other rights and evidence of rights to cash now or hereafter
relating to the Leased Property; (xvii) all judgments, awards of damages,
settlements, payments, and other compensation heretofore or hereafter made
resulting from condemnation proceedings or the taking of the Leased Property or
any part thereof or any building or other improvement now or at any time
hereafter located thereon or any easement or other appurtenance thereto under
the power of eminent domain, or any similar power or right (including any award
from the United States Government at any time after the allowance of the claim
therefor, the ascertainment of the amount thereof and the issuance of the
warrant for the payment thereof), whether permanent or temporary, or for any
damage (whether caused by such taking or otherwise) to said property or any part
thereof or the improvements thereon or any part thereof, or to any rights
appurtenant thereto, including severance and consequential damage, and any award
for change of grade of streets; (xviii) all property and rights, if any, which
are by the express provisions of this Lease required to be subjected to the lien
hereof and any additional property and rights that may from time to time
hereafter, by installation or writing of any kind, be subjected to the lien
hereof by Lessee or by anyone in Lessee’s behalf; (xix) all rights in and to
common areas and access roads on adjacent properties and any after-acquired
title or reversion in and to the beds of any ways, roads, streets, avenues and
alleys adjoining the Leased Property or any part thereof; (xx) all claims and
causes of action arising from or otherwise related to any of the foregoing, and
all rights and judgments related to any legal actions in connection with such
claims or causes of action; (xxi) all modifications, extensions, additions,
improvements, betterments, renewals and replacements, substitutions, or proceeds
of any of the foregoing; and (xxii) proceeds (both cash and non-cash) of the
conversion, voluntary or involuntary, of any of the foregoing into cash or other
liquidated claims, including, without limitation, all proceeds of insurance, all
of which foregoing items are hereby declared and shall be deemed to be a portion
of the security for the indebtedness and Obligations herein described, a portion
of the above described collateral being located upon the Land.

 

(d)                                 Power of Sale. Without limiting any other
remedies set forth herein, in the event that a court of competent jurisdiction
rules that this Lease constitutes a mortgage, deed of trust, security agreement
or other secured financing with respect to the Leased Property as is the intent
of the parties pursuant to Section 24 hereof, then the Lessor and the Lessee
agree that (i) the Lessee hereby grants to the Deed of Trust Trustee and its
successor and assigns in trust for the use and benefit of the Lessor (for the
benefit of the Participants) the Leased Property (including the fee simple
estate therein) and Lessee Collateral WITH POWER OF SALE AND RIGHT OF ENTRY AND
POSSESSION to the extent permitted by law, and that, upon the occurrence and
during the continuance of any Event of Default, the Deed of Trust Trustee may,
and is hereby irrevocably empowered to, with or without entry, and to the extent
permitted by Applicable Laws, sell or cause the sale of the Subject Property and
Lessee Collateral or any part or parts thereof at one or more public auctions as
an entirety or in parcels as the Deed of Trust Trustee may elect free from any
equity of redemption for cash, on credit, or for other property, for immediate
or future

 

43

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delivery, and on such terms as the Deed of Trust Trustee shall deem advantageous
and proper, such sale or sales to be made in such manner and upon such notice
and advertisement as may be required by Applicable Laws, or in the absence of
any such requirements, as the Deed of Trust Trustee may deem appropriate, and to
make conveyance to the purchaser or purchasers. The Lessor (or, to the extent
required by law, the Deed of Trust Trustee) may, if at the time such action may
be lawful and always subject to compliance with any mandatory legal
requirements, by filing its notice of election and demand for sale with the Deed
of Trust Trustee direct the Deed of Trust Trustee to enforce its trust and to
sell the Subject Property and the Lessee Collateral, as an entirety or in
parcels, by one sale or by several sales, held at one time or at different
times, all as the Deed of Trust Trustee may elect, each sale to be held at the
location set forth in the notice of such proposed sale and the Deed of Trust
Trustee shall have given notices of the proposed sale in the manner hereinafter
set forth, and to make due conveyance to the purchaser or purchasers, with
special warranty of title or no warranty of title to such purchaser or
purchasers binding upon the Lessee and its heirs, executors, administrators, and
successors. Such sale must begin at the time stated in the notice referred to
below in this Section or as otherwise permitted by Applicable Laws. The Lessee,
for itself, its heirs and assigns, and for anyone who may claim by, through or
under the Lessee, hereby expressly and specifically waives all rights to a
marshaling of the assets of the Lessee, including the Subject Property and the
Lessee Collateral, or to a sale in inverse order of alienation.

 

The Deed of Trust Trustee (or a person or persons selected by the Deed of Trust
Trustee) shall promptly comply with all notice and other requirements of the
laws of Texas then in force with respect to such sales, and shall give the
required public notice of the time and place of such sale by advertisement
weekly in some newspaper of general circulation then published in the County or
City and County in which the Subject Property is located. No notice of such sale
or sales other than the notices hereinabove provided shall be required to be
given to the Lessee (or anyone who may claim by, through or under the Lessee) or
any other persons and any other notice (including, without limitation, any
notice of acceleration of, or intent to accelerate, the unpaid balance of any
Obligation) is expressly waived.

 

The provisions of this Section with respect to posting, serving, filing, and
giving notices of sale are intended to comply with the provisions of Texas law.
In the event the requirement for any notice, or the posting, serving, filing, or
giving thereof, under Texas law shall be eliminated or the prescribed manner of
posting, serving, filing, or giving same is modified by future amendment to
Texas law, the requirement for such particular notice shall be stricken from, or
the manner of posting, serving, filing, or giving any notice hereunder modified
in, this Deed of Trust in conformity with such amendment. The manner herein
prescribed for posting, serving, filing, or giving any notice, other than that
to be posted and filed or caused to be posted or filed by the Deed of Trust
Trustee, shall not be deemed exclusive but such notice or notices may be posted,
served, filed, or given in any other manner which may be permitted by Applicable
Laws. Further, in relation to this Deed of Trust and the exercise of any power
of sale by the Deed of Trust Trustee hereunder, if Texas law shall be amended or
modified to require any other notice or the posting, filing, serving, or giving
thereof or any statute hereafter enacted shall require any other notice or the
posting, filing, serving, or giving thereof, the Deed of Trust Trustee or the
person selected by him is hereby authorized and empowered by the Lessee to give
such notice or

 

44

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make such posting, filing, serving, or giving thereof; provided, however, the
Lessee waives such other notice or the posting, filing, serving, or giving
thereof to the full extent the Lessee may lawfully so do.

 

In addition to any other remedies granted in this Deed of Trust to the Lessor or
the Deed of Trust Trustee (including specifically, but not limited to, the right
to proceed against all the Lessee Collateral in accordance with the rights and
remedies in respect to those portions of the Collateral which are real property
pursuant to Section 9.501(d) of the Uniform Commercial Code), the Lessor may
proceed under the Uniform Commercial Code as to all or any part of the personal
property (tangible or intangible) and fixtures included with the Lessee
Collateral (such portion of the Lessee Collateral being referred to herein as
the “Personalty”) and shall have and may exercise with respect to the Personalty
all the rights, remedies, and powers of a secured party under the Uniform
Commercial Code, including, without limitation, the right and power to sell, at
one or more public or private sales, or otherwise dispose of, lease, or utilize
the Personalty and any part or parts thereof in any manner authorized or
permitted under the Uniform Commercial Code after default by a debtor, and to
apply the proceeds thereof toward payment of any costs and expenses and
attorney’s fees and legal expenses thereby incurred by the Lessor, and toward
payment of the Obligations hereby secured in such order or manner as provided
herein.

 

ARTICLE XXV

MISCELLANEOUS

 

Section 25.1.                         Survival; Severability; Etc. Anything
contained in this Lease to the contrary notwithstanding, all claims against and
liabilities of the Lessee or the Lessor arising from events commencing prior to
the expiration or earlier termination of this Lease shall survive such
expiration or earlier termination. If any term or provision of this Lease or any
application thereof shall be declared invalid or unenforceable, the remainder of
this Lease and any other application of such term or provision shall not be
affected thereby. If any right or option of the Lessee provided in this Lease,
including any right or option described in Articles XIV, XV, XVIII, XIX or XX,
would, in the absence of the limitation imposed by this sentence, be invalid or
unenforceable as being in violation of the rule against perpetuities or any
other rule of law relating to the vesting of an interest in or the suspension of
the power of alienation of property, then such right or option shall be
exercisable only during the period which shall end twenty-one (21) years after
the date of death of the last survivor of the descendants of Franklin D.
Roosevelt, the former President of the United States, Henry Ford, the deceased
automobile manufacturer, and John D. Rockefeller, the founder of the Standard
Oil Company, known to be alive on the date of the execution, acknowledgment and
delivery of this Lease.

 

Section 25.2.                         Amendments and Modifications. Subject to
the requirements, restrictions and conditions set forth in the Participation
Agreement, neither this Lease nor any provision hereof may be amended, waived,
discharged or terminated except by an instrument in writing, in recordable form,
signed by the Lessor and the Lessee.

 

Section 25.3.                         No Waiver. No failure by the Lessor or the
Lessee to insist upon the strict performance of any term hereof or to exercise
any right, power or remedy upon a default

 

45

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hereunder, and no acceptance of full or partial payment of Rent during the
continuance of any such default, shall constitute a waiver of any such default
or of any such term. To the fullest extent permitted by law, no waiver of any
default shall affect or alter this Lease, and this Lease shall continue in full
force and effect with respect to any other then existing or subsequent default.

 

Section 25.4.                         Notices. All notices, demands, requests,
consents, approvals and other communications hereunder shall be in writing and
directed to the address described in, and deemed received in accordance with the
provisions of, Section 16.3 of the Participation Agreement.

 

Section 25.5.                         Successors and Assigns. All the terms and
provisions of this Lease shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns.

 

Section 25.6.                         Headings and Table of Contents. The
headings and table of contents in this Lease are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.

 

Section 25.7.                         Counterparts. This Lease may be executed
in any number of counterparts, each of which shall be an original, but all of
which shall together constitute one and the same instrument.

 

Section 25.8.                         Governing Law. This Lease shall be
governed by and construed in accordance with the laws of the State of New York
except that the provisions for the creation, perfection, priority, enforcement
and foreclosure of the liens and security interests created hereunder will be
governed by and construed according to the laws of the State of Texas.

 

Section 25.9.                         Original Lease. The single executed
original of this Lease marked “THIS COUNTERPART IS THE ORIGINAL EXECUTED
COUNTERPART” on the signature page thereof and containing the receipt thereof of
Collateral Agent, on or following the signature page thereof shall be the
original executed counterpart of this Lease. To the extent that this Lease
constitutes chattel paper, as such term is defined in the Uniform Commercial
Code, no security interest in this Lease may be created through the transfer or
possession of any counterpart other than such original executed counterpart.

 

Section 25.10.                  The Deed of Trust Trustee. The Deed of Trust
Trustee is appointed hereunder solely for the purpose of effecting the
intentions of the parties set forth in Section 24.2 hereof in the State of
Texas. The Deed of Trust Trustee shall at all times act pursuant to the
directions of the Lessor, and the Lessee shall have no power to control or
direct the Deed of Trust Trustee. The Deed of Trust Trustee may be removed or
replaced in the sole discretion of the Lessor. The Lessee shall pay all fees and
expenses of the Deed of Trust Trustee in connection with this Lease and the
transactions contemplated hereby, including all fees and expenses incurred in
the exercise of any remedies hereunder.

 

Section 25.11.                  Lessor Limitations on Recourse. The parties
hereto agree that, except as specifically set forth in the Lease or in any other
Operative Document, Lessor shall have no

 

46

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

 

liability whatsoever to the Lessee, the Lenders, Collateral Agent or any of
their respective successors and assigns or any other Person for any claim based
on or in respect of this Lease or any of the other Operative Documents or
arising in any way from the Overall Transaction; provided, however, that Lessor
shall be liable (a) for its own willful misconduct or gross negligence (or
negligence in the handling of funds), provided that a default under, or the
failure of Lessor to perform any obligation, covenant or agreement in, any
Related Agreement or otherwise required by Applicable Laws, Governmental Action
or third parties with respect to the Subject Property shall not be deemed gross
negligence or willful misconduct, (b) Lessor Liens on the Leased Property which
are attributable to it or (c) for liabilities that may result from the
inaccuracy or incorrectness of any representations or warranties expressly made
by it in Section 8.4 of the Participation Agreement or (d) for its failure to
perform the covenants and agreements set forth in the Lease and the
Participation Agreement.

 

Section 25.12.                  Recordation of Memorandum of Lease. On the
Closing Date, the parties hereto will execute and record with the appropriate
recording office located in Travis County, Texas a Memorandum of Lease in the
form of Exhibit B hereto.

 

[SIGNATURE PAGES FOLLOW]

 

47

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IN WITNESS WHEREOF, the parties have caused this Lease be duly executed and
delivered as of the date first above written.

 

 

 

SILICON LABORATORIES INC., as Lessee

 

 

 

 

 

By:

/s/ Jonathan D. Ivester

 

 

 

Name:

Jonathan D. Ivester

 

 

Title:

Vice President of Worldwide Operations

 

 

 

Address:

4635 Boston Lane

 

 

Austin, TX 78735

 

 

Attention: Chief Legal and

 

 

 Intellectual Property Counsel

 

STATE OF TEXAS

)

 

 

) SS.:

 

COUNTY OF TRAVIS

)

 

 

This instrument was acknowledged before me on the 24 day of March, 2006, by
Jonathan D. Ivester, Vice President of Worldwide Operations of Silicon
Laboratories Inc., a Delaware corporation, on behalf of said corporation.

 

 

Melissa Alcantara

 

Notary Public State of Texas

 

 

 

My Commission expires:

10-04-2009

 

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

 

 

BAL INVESTMENT & ADVISORY, INC., as Lessor

 

 

 

By:

 /s/ Sonia T. Delen

 

 

 

 Name:  Sonia T. Delen

 

 

 Title:  Principal

 

STATE OF CALIFORNIA

)

 

 

) SS.:

 

COUNTY OF SAN FRANCISCO

)

 

 

This instrument was acknowledged before me on the 24 day of March, 2006, by
Sonia T. Delen, Principal of BAL Investment & Advisory, Inc., a Delaware
corporation, on behalf of said corporation.

 

 

Yvette Montalvo Baron

 

Notary Public State of California

 

My Commission expires:

9-23-2008

 

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

 

THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART.

 

Receipt of this original counterpart of the foregoing Lease is hereby
acknowledged as of the date hereof.

 

 

 

WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, not in its individual
capacity, but solely as Collateral Agent

 

 

 

 

 

By:

 /s/ Val T. Orton

 

 

 

Name:Val T. Orton

 

 

Title:Vice President

 

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

 

SCHEDULE 10.1 TO LEASE

 

MODIFICATIONS

 

Lessee shall have the right without further consent or approval from Lessor or
the Collateral Agent to remodel and renovate the Facility affecting
approximately 140,000 square feet of space and having a projected total cost of
approximately $5,000,000 (the “Initial Fit-Up Work”), provided the Initial
Fit-Up Work otherwise shall comply with the requirements in Section 10.1(b)(ii),
(iii), and (iv) and the other provisions of this Lease. The Initial Fit-Up Work
shall include the following work:  (i) demolition of existing interior
walls, (ii) erecting office and conference room walls and interior doors and
windows; (iii) modifying the existing ductwork to provide heating, ventilation
and air conditioning service to the offices, conference rooms and other areas
within the Facility; (iv) installing electrical, audiovisual, telephone and data
outlets, (v) relocating lighting fixtures, (vi) installation of carpeting and
other floor coverings, (vii) installation of interior and exterior signage,
(viii) installation and/or modification of life safety and security systems, and
(ix) installation of furniture, fixtures and equipment.

 

48

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EXHIBIT A
TO LEASE

 

LEGAL DESCRIPTION OF LAND

 

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

 

EXHIBIT B
TO LEASE

 

When recorded return to:

 

Susan E. Rollins, Esq.
Chapman and Cutler LLP
111 West Monroe Street
Chicago, Illinois 60603-4080

 

 

 

MEMORANDUM OF
LEASE, DEED OF TRUST AND
SECURITY AGREEMENT

Dated as of March 30, 2006

among

SILICON LABORATORIES INC.,
as Lessee

and

BAL INVESTMENT & ADVISORY, INC.,
as Lessor

and

GARY S. FARMER,
as the Deed of Trust Trustee

 

 

 

400 West Cesar Chavez Street

Austin, Texas 78701

 

This Memorandum of Lease, Deed of Trust and Security Agreement has been executed
in multiple counterparts. To the extent, if any, that this Memorandum of Lease,
Deed of Trust and Security Agreement constitutes chattel paper (as such term is
defined in the Uniform Commercial Code as in effect in any applicable
jurisdiction), no lien on this Memorandum of Lease, Deed of Trust and Security
Agreement may be created through the transfer or possession of any counterpart
hereof other than counterpart “Number 1,” which shall be identified as the
counterpart containing the receipt therefor executed by Wells Fargo Bank
Northwest, National Association, as Collateral Agent, on or following the
signature page thereof.

 

This counterpart is [not] the original counterpart.

 

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

 

TABLE OF CONTENTS

 

SECTION

 

HEADING

 

PAGE

 

 

 

 

 

ARTICLE I

 

DEFINITIONS

 

1

 

 

 

 

 

ARTICLE II

 

LEASE OF LEASED PROPERTY; LEASE TERM; PURCHASE OPTION

 

2

 

 

 

 

 

 

 

Section 2.1.

 

Leased Property

 

2

 

Section 2.2.

 

Term

 

2

 

Section 2.3.

 

Title

 

2

 

Section 2.4.

 

 

 

2

 

 

 

 

 

 

ARTICLE III

 

NET LEASE, ETC.

 

2

 

 

 

 

 

 

 

Section 3.1.

 

Net Lease, Etc

 

2

 

Section 3.2.

 

CONDITION OF THE LEASED PROPERTY

 

3

 

 

 

 

 

 

ARTICLE IV

 

INTENT OF THE PARTIES

 

3

 

 

 

 

 

 

 

Section 4.1.

 

Nature of Transaction

 

3

 

Section 4.2.

 

Liens and Security Interests

 

4

 

 

 

 

 

 

ARTICLE V

 

MISCELLANEOUS

 

10

 

Section 5.1

 

Incorporation of Reference

 

10

 

Section 5.2

 

Conflict of Lease

 

10

 

Section 5.3.

 

Assignment of Lease

 

10

 

Section 5.4.

 

Notices

 

10

 

Section 5.5.

 

Successors and Assigns

 

10

 

Section 5.6.

 

Headings and Table of Contents

 

10

 

Section 5.7.

 

Counterparts

 

10

 

Section 5.8.

 

Governing Law

 

10

 

Section 5.9.

 

Original Lease

 

10

 

Section 5.10.

 

The Deed of Trust Trustee

 

11

 

Section 5.11.

 

Limitations on Recourse

 

11

 

EXHIBITS

EXHIBIT A

—

Legal Description of Land

 

 

 

SCHEDULE I

—

Related Agreements

 

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

 

MEMORANDUM OF
LEASE, DEED OF TRUST AND SECURITY AGREEMENT

 

This Memorandum of Lease, Deed of Trust and Security Agreement dated as of
March 30, 2006 (as amended, supplemented, or otherwise modified from time to
time, this “Memorandum”), among BAL INVESTMENT & ADVISORY, INC., a Delaware
corporation, having its principal office at One Financial Plaza, Mail
Code: RI1-537-05-02, Providence, RI 02903, Attention: Gina Cabral, as Lessor
(“Lessor”) and SILICON LABORATORIES INC., a Delaware corporation, having its
principal office at 4635 Boston Lane, Austin, Texas 78735, as Lessee (“Lessee”),
and GARY S. FARMER, a resident of Travis County, Texas, as the Deed of Trust
Trustee for the use and benefit of the Lessor, whose office is located at 401
Congress Avenue, Suite 1500, Austin, Texas 78701 (the “Deed of Trust Trustee”).

 

W I T N E S S E T H:

 

A.            The parties are entering into the Operative Documents pursuant to
which the Participants agree to provide financing for the acquisition of the
Leased Property.

 

B.            On the Closing Date, Lessor, solely using the Lessor Amount and
the Advance funded by the Lenders, will, inter alia, (i) purchase the Facility
from the Seller and (ii) assume all of the Seller’s right, title and interest in
and to (A) the Ground Lease pursuant to the Assignment of Ground Lease, (B) the
Related Agreements which constitute leases pursuant to the Assignment of
Subleases, and (C) the other Related Agreements pursuant to the Assignment of
Related Agreements.

 

C.            Pursuant to the Lease, Deed of Trust and Security Agreement dated
as of the date hereof among the Lessor, the Lessee and the Deed of Trust
Trustee, Lessor leases the Leased Property to Lessee and Lessee leases the
Leased Property from Lessor, and Lessee GRANTS, BARGAINS, SELLS, WARRANTS,
CONVEYS and CONFIRMS unto the Deed of Trust Trustee, its successors and assigns
(for the benefit of the Participants) IN TRUST WITH POWER OF SALE AND RIGHT OF
ENTRY AND POSSESSION AND HEREBY GRANTS unto the Lessor, its successors and
assigns a security interest in the Leased Property and the Lessee Collateral.

 

NOW, THEREFORE, in consideration of the foregoing, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree to enter into this Memorandum:

 

ARTICLE I

DEFINITIONS

 

For all purposes hereof, the capitalized terms used herein and not otherwise
defined shall have the meanings assigned thereto in Appendix 1 to that certain
Participation Agreement dated as of even date herewith, among Lessee, as Lessee;
Lessor; Wells Fargo Bank Northwest, National Association, not in its individual
capacity except as expressly stated therein, but solely

 

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

 

Silicon Laboratories Inc.

 

Memorandum of Lease, Deed of Trust and
Security Agreement

 

as Collateral Agent; and the financial institutions listed on Schedule II
thereto, as Lenders (as amended, supplemented or otherwise modified from time to
time pursuant thereto, the “Participation Agreement”); and the rules of
interpretation set forth in Appendix 1 to the Participation Agreement shall
apply to this Memorandum. All obligations imposed on the Lessee under the Lease
and this Memorandum shall be the full recourse liability of Lessee.

 

ARTICLE II

LEASE OF LEASED PROPERTY; LEASE TERM; PURCHASE OPTION

 

Section 2.1.           Leased Property. (a) Lessor hereby agrees to lease all of
Lessor’s interest in the Leased Property to Lessee hereunder, and Lessee hereby
agrees, expressly for the direct benefit of Lessor, to lease all of the Leased
Property from Lessor for the Term.

 

(b)           In the event that either the Schneider Sublease or the Retail
Sublease is terminated for any reason whatsoever, Lessee and Lessor hereby agree
that the Lease and this Memorandum and the Participation Agreement shall be
amended by the parties hereto, at the expense of the Lessee, to include within
the definition of “Leased Property” all Improvements under the Schneider
Sublease and the Retail Sublease.

 

Section 2.2.           Term. Unless earlier terminated, the term of the Lease
shall consist of a term (the “Term”) commencing on the Closing Date and ending
on but not including the earlier of (i) the date which is eighty-four months
immediately following the Closing Date or (ii) any Termination Date.

 

Section 2.3.           Title. The Leased Property is leased to the Lessee
without any representation or warranty, express or implied, by the Lessor and
subject to the rights of parties in possession, the existing state of title with
respect thereto (including, without limitation, all Liens other than Lessor
Liens) and all Applicable Laws and any violations thereof. The Lessee shall in
no event have any recourse against the Lessor for any defect in or exception to
title to the Leased Property other than resulting from Lessor Liens created by
Lessor.

 

Section 2.4.           The Lease contains certain purchase rights enforceable
against and in favor of Lessee during the Term, and certain rights in Lessee to
market and sell the Leased Property during the Term, all on terms more fully set
forth in the Lease.

 

ARTICLE III

NET LEASE, ETC.

 

Section 3.1.           Net Lease, Etc. The Lease shall constitute a net lease
and Lessee’s obligations hereunder to pay Rent shall be absolute and
unconditional under any and all circumstances.

 

B-2

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

 

Section 3.2.           CONDITION OF THE LEASED PROPERTY. THE LESSEE ACKNOWLEDGES
AND AGREES THAT IT IS LEASING THE LEASED PROPERTY “AS IS” WITHOUT
REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED) BY THE LESSOR, THE
COLLATERAL AGENT OR THE LENDERS AND IN EACH CASE SUBJECT TO (a) THE EXISTING
STATE OF TITLE (EXCLUDING LESSOR LIENS), (b) THE RIGHTS OF ANY PARTIES IN
POSSESSION THEREOF, (c) ANY STATE OF FACTS WHICH AN ACCURATE SURVEY OR A
PHYSICAL INSPECTION MIGHT SHOW AND (d) VIOLATIONS OF REQUIREMENTS OF LAW WHICH
MAY EXIST ON THE DATE HEREOF ON OR AT ANY TIME HEREAFTER.

 

ARTICLE IV

INTENT OF THE PARTIES

 

Section 4.1.           Nature of Transaction. It is the intention of the parties
that:

 

(a)           the Overall Transaction constitutes an operating lease from Lessor
to Lessee for purposes of Lessee’s financial reporting, including, without
limitation, under Financial Accounting Standards Board Statement No. 13;

 

(b)           for purposes of all federal, state and local income, franchise,
transfer and other taxes, and bankruptcy, insolvency, conservatorships and
receiverships (including the substantive law upon which bankruptcy,
conservatorship, insolvency and receivership proceedings are based) real estate
law, commercial law and UCC:

 

(i)            the Overall Transaction constitutes a financing by the
Participants to Lessee and preserves beneficial ownership in the Subject
Property in Lessee, Lessee will be entitled to all tax benefits with respect to
the Subject Property ordinarily available to owners of property similar to the
Subject Property for tax purposes and the obligations of Lessee to pay Basic
Rent shall be treated as payments of principal, if any, and interest to the
Participants, and the payment by Lessee of any amounts in respect of the Lease
Balance shall be treated as payments of principal to the Participants;

 

(ii)           the Lease grants a security interest or a Lien, as the case may
be, in the Lessee’s interest in the Leased Property and the other Lessee
Collateral in favor of the Lessee and Lessor, and for the benefit of the
Participants to secure payment and performance of the Obligations; and

 

(iii)          the Security Instruments create Liens and security interests in
the Subject Property and the other Lessor Collateral in favor of the Collateral
Agent for the benefit of all of the Participants to secure Lessee’s and Lessor’s
payment and performance of its obligations under the Operative Documents.

 

Each of the parties hereto agrees that it will not, nor will it permit any
Affiliate to at any time, take any action or fail to take any action with
respect to the preparation, filing or audit of any income tax return, including
an amended income tax return, to the extent

 

B-3

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

 

that such action or such failure to take action would be inconsistent with the
intention of the parties expressed in this Section 4.1.

 

Nevertheless, Lessee acknowledges and agrees that none of the Lessor, the
Collateral Agent, Arranger or any Lender has made any representations or
warranties concerning the tax, accounting or legal characteristics of the
Operative Documents or any aspect of the Overall Transaction and that Lessee has
obtained and relied upon such tax, accounting and legal advice concerning the
Operative Documents and the Overall Transaction as it deems appropriate.

 

(c)           Specifically, but without limiting the generality of
subsection (a) of this Section 4.1, the Lessor and the Lessee intend and agree
that for the purpose of securing the Lessee’s obligations for the repayment of
the Obligations, (i) the Lease and this Memorandum shall also be deemed to be a
security agreement and financing statement within the meaning of Article 9 of
the Uniform Commercial Code; (ii) the conveyance provided for hereby is and
shall be deemed to be a grant by the Lessee to the Lessor, for the benefit of
the Participants, of a Lien (including the Lessee’s Mortgage) on and security
interest in all of the Lessee’s present and future right, title and interest in
and to the Leased Property and the Lessee Collateral, including but not limited
to the Lessee’s leasehold estate therein and all proceeds of the conversion,
voluntary or involuntary, of the foregoing into cash, investments, securities or
other property, whether in the form of cash, investments, securities or other
property to secure such loans, effective on the date hereof, to have and to hold
such interests in the Leased Property unto the Lessor, for the benefit of the
Participants; (iii) the possession by the Lessor of notes and such other items
of property as constitute instruments, money, negotiable documents or chattel
paper shall be deemed to be “possession by the secured party” for purposes of
perfecting the security interest pursuant to Section 9-313 of the UCC; and (iv)
notifications to Persons holding such property, and acknowledgments, receipts or
confirmations from financial intermediaries, bankers or agents (as applicable)
of the Lessee shall be deemed to have been given for the purpose of perfecting
such security interest under Applicable Laws. The Lessor and the Lessee shall,
to the extent consistent with the Lease and this Memorandum, take such actions
and execute, deliver, file and record such other documents, financing
statements, mortgages and deeds of trust as may be necessary to ensure that, if
the Lease were deemed to create a security interest in the Leased Property in
accordance with this Section 4.1(c), such security interest would be deemed to
be a perfected security interest in the Leased Property and the Lessee
Collateral with priority over all Liens, other than Permitted Liens, under
Applicable Laws and will be maintained as such throughout the Term. Lessee
hereby authorizes Lessor to file any and all financing statements covering the
Leased Property or any part thereof that Lessor may require.

 

Section 4.2.           Liens and Security Interests. (a) Specifically, without
limiting the generality of Section 4.1, the Lessor and the Lessee intend and
agree that in the event of any insolvency or receivership proceedings or a
petition under the United States bankruptcy laws or any other applicable
insolvency laws or statute of the United States of America or any State or

 

B-4

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Commonwealth thereof affecting the Lessee, the Lessor, the Collateral Agent or
any Lender or any collection actions, the transactions evidenced by the
Operative Documents shall be regarded as loans and advances made by the
Participants as unrelated third party lenders to the Lessee secured by the
Subject Property and the Lessee Collateral. To secure such loans and advances
and other Obligations, the Lessee has GRANTED, BARGAINED, SOLD, WARRANTED,
CONVEYED and CONFIRMED, and hereby GRANTS, BARGAINS, SELLS, WARRANTS, CONVEYS
and CONFIRMS the Leased Property and the Lessee Collateral unto the Deed of
Trust Trustee, its successors and assigns (for the benefit of the Participants)
IN TRUST WITH POWER OF SALE AND RIGHT OF ENTRY AND POSSESSION AND HEREBY GRANTS
unto the Lessor, its successors and assigns a security interest in the Leased
Property and the Lessee Collateral.

 

(b)           Specifically, but without limiting the generality of Section 4.1,
the Lessor and the Lessee further intend and agree that, for the purpose of
securing the obligation of the Lessee for the repayment of the above-described
loans to the Lessee, (i) the Lease and this Memorandum shall also be deemed to
be a security agreement and financing statement within the meaning of Article 9
of the Uniform Commercial Code and a real property mortgage and deed of trust;
(ii) the conveyance provided in this Memorandum shall be deemed to be a grant by
the Lessee to the Deed of Trust Trustee and its successors and assigns in trust
for the use and benefit of the Lessor (for the benefit of the Participants) of
the Leased Property and the Lessee Collateral and a grant or a security interest
in all of the right, title and interest of the Lessee in and to the Leased
Property, the Lessee Collateral and all proceeds of the conversion, voluntary or
involuntary, of the foregoing into cash, investments, securities or other
property (it being understood that the Lessee hereby grants and warrants and
grants a security interest in the Leased Property and all proceeds thereof to
the Deed of Trust Trustee and its successors and assigns in Trust, for the use
and benefit of the Lessor (for the benefit of the Participants), to secure the
loans and advances described in Section 4.2(a)); (iii) the possession by the
Lessor or any of its agents of notes and such other items of property as
constitute instruments, money, negotiable documents or chattel paper shall be
deemed to be “possession by the secured party” for purposes of perfecting the
security interest pursuant to Section 9-305 of the Uniform Commercial Code; and
(iv) notifications to Persons holding such property, and acknowledgments,
receipts or confirmations from financial intermediaries, bankers or agents (as
applicable) of the Lessee shall be deemed to have been given for the purpose of
perfecting such security interest under all Applicable Laws. The Lessor and the
Lessee shall, to the extent consistent with the Lease and this Memorandum, take
such actions and execute, deliver, file and record such other documents and
financing statements as may be necessary to ensure that, if the Lease and this
Memorandum was deemed to create a security interest in the Leased Property in
accordance with this Section 4.2, such security interest would be deemed to be a
perfected security interest (subject only to Permitted Liens) and will be
maintained as such throughout the Term. Lessee hereby authorizes Lessor to file
any and all financing statements covering the Leased Property or any part
thereof that Lessor may require.

 

Certain of the personal property covered by this Memorandum is or will become
fixtures on the real property which is a part of the Leased Property, and this
Memorandum upon being filed for record in the real estate records of the county
wherein such fixtures are situated shall operate also as a financing statement
filed as a fixture filing in accordance with the applicable

 

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provisions of the Uniform Commercial Code of the State of Texas upon such of the
property which are or may become fixtures. The mailing address of Lessee (as
debtor) and the address of Lessor (as secured party) from which information may
be obtained are set forth in the introductory paragraph of this Memorandum. The
Lessee has an interest of record in such real property. The identification
number of the Lessee in Delaware is 2653461.

 

(c)           Specifically, but without limiting the foregoing or the generality
of Section 4.1, Lessee hereby grants, bargains, sells, warrants, conveys,
aliens, remises, releases, assigns, sets over and confirms to the Deed of Trust
Trustee and its successors and assigns in trust WITH POWER OF SALE AND RIGHT OF
ENTRY AND POSSESSION, for the use and benefit of the Lessor, its successors and
assigns, and grants Lessor, its successors and assigns a security interest in
all of Lessee’s right, title, and interest, whether now owned or hereafter
acquired, in and to the following (collectively, the “Lessee Collateral”): (i)
the Leased Property; (ii) the real estate lying and being in the County of
Travis in the State of Texas (the “State”) more particularly described in
Exhibit A attached hereto and made a part hereof (the “Land”), together with and
including but not limited to the leasehold estate interest in such real estate
created under and pursuant to the Ground Lease, the Lease and this Memorandum,
or any other lease or sublease; all estate, right and title of Lessee in
possession or expectancy in and to such property or any part thereof; and all
Appurtenant Rights relating thereto; (iii) all buildings and improvements
(including but not limited to the Improvements) of every kind and description
heretofore or hereafter erected or placed on the Land (legally described on
Exhibit A attached hereto and made a part hereof; (iv) all materials intended
for construction, reconstruction, alteration and repairs of the buildings and
improvements now or hereafter erected thereon, all of which materials shall be
deemed to be included within the premises immediately upon the delivery thereof;
(v) all fixtures attached to the Land or Improvements and all equipment used in
connection with the operation, protection and maintenance of the Land or
Improvements attached to the Land and the buildings and improvements now or
hereafter located thereon including but not limited to all heating, lighting,
plumbing, ventilating, air conditioning, refrigerating, water cooling,
incinerator, compacting, elevator, escalator, cleaning systems, sprinkler
systems and other fire prevention and extinguishing apparatus used in connection
with the operation, protection and maintenance of the Land and the Improvements;
(vi) all renewals or replacements thereof or articles in substitution therefor,
whether or not the same are or shall be attached to the Land, buildings or
improvements in any manner; it being mutually agreed, intended and declared that
all the aforesaid property shall, so far as permitted by law, be deemed to form
a part and parcel of the real estate and, for the purpose of the Lease and this
Memorandum, to be real estate and covered by the Lease and this Memorandum; and
as to the balance of the property aforesaid, this Memorandum is hereby deemed to
be as well a Security Agreement under the provisions of the Uniform Commercial
Code of the State for the purpose of creating hereby a security interest in said
property, which is hereby granted by Lessee as debtor to Lessor as secured
party, securing the Obligations hereby secured; (vii) the Lease and this
Memorandum, all rent payable under the Lease, and all other rents, income,
payments, purchase prices, receipts, revenues, issues and profits payable under
the Lease or any other Operative Document; (viii) all ground leases, leases,
subleases, estates, tenements, hereditaments, privileges, licenses, franchises,
appurtenances, reversions and remainders whatsoever, in any way belonging,
relating or appertaining to the Leased Property or any part thereof, (including
but not limited to the Related Agreements identified on Schedule I

 

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attached hereto and made a part hereof); (ix) all easements, rights-of-way,
strips and gores of land, vaults, streets, ways, alleys, tunnels, passages,
sewer rights, waters, water courses, water rights, minerals, flowers, shrubs,
crops, trees and other emblements now or hereafter located on the Land or under
or above the Land or any part or thereof; (x) all rental agreements and
arrangements of any sort now or hereafter affecting the Leased Property or any
portion thereof and providing for or resulting in the payment of money for the
use of the Leased Property or any portion thereof, whether the user enjoys the
Leased Property or any portion thereof as tenant for years, licensee, tenant at
sufferance or otherwise, and irrespective of whether such agreements and
arrangements be oral or written, and including any and all extensions, renewals
and modifications thereof and guaranties of the performance or obligations of
any tenants or lessees thereunder; (xi) all reversions, income, rents, issues,
revenues and profits thereof, including all interest in all rents, issues and
profits of the aforementioned property and all rents, issues, profits, revenues,
royalties, bonuses, rights and benefits due, payable or accruing (including all
deposits of money as advanced rent or for security) under any and all leases or
subleases and renewals thereof, or under any contracts or options for the sale
of all or any part of, said property (including during any period allowed by law
for the redemption of said property after any foreclosure or other sale),
together with the right, but not the obligation, to collect, receive and receipt
for all such rents and other sums and apply them to the Obligations hereby
secured and to demand, sue for and recover the same when due or payable;
provided that the assignments made hereby shall not impair or diminish the
obligations of Lessee under the provisions of such leases, subleases, or other
agreements nor shall such obligations be imposed upon the Deed of Trust Trustee
or Lessor; (xii) all books and records relating to or used in connection with
the operation of the Leased Property or any part thereof; (xiii) all consents,
licenses, building permits, certificates of occupancy and other governmental
approvals relating to construction, completion, occupancy, use or operation of
the Leased Property or any part thereof and (xiv) all management contracts,
service contracts, utility contracts, documents and agreements relating to the
construction of any improvements (including any and all construction contracts,
architectural contracts, engineering contracts, designs, plans, specifications,
drawings, surveys, tests, reports, bonds and governmental approvals) and all
other contracts, licenses and permits now or hereafter affecting the Leased
Property or any part thereof and all guaranties and warranties with respect to
any of the foregoing; (xv) all insurance policies (including title insurance
policies) required to be maintained under the Operative Documents, including the
right to collect and receive such proceeds, and including any unearned premiums
thereon; (xvi) all utility, escrow and all other deposits and all letters of
credit, certificates of deposit, negotiable instruments and other rights and
evidence of rights to cash now or hereafter relating to the Leased Property;
(xvii) all judgments, awards of damages, settlements, payments, and other
compensation heretofore or hereafter made resulting from condemnation
proceedings or the taking of the Leased Property or any part thereof or any
building or other improvement now or at any time hereafter located thereon or
any easement or other appurtenance thereto under the power of eminent domain, or
any similar power or right (including any award from the United States
Government at any time after the allowance of the claim therefor, the
ascertainment of the amount thereof and the issuance of the warrant for the
payment thereof), whether permanent or temporary, or for any damage (whether
caused by such taking or otherwise) to said property or any part thereof or the
improvements thereon or any part thereof, or to any rights appurtenant thereto,
including severance and consequential damage, and any award for change of grade
of streets; (xviii) all

 

B-7

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property and rights, if any, which are by the express provisions of the Lease
required to be subjected to the lien hereof and any additional property and
rights that may from time to time hereafter, by installation or writing of any
kind, be subjected to the lien hereof by Lessee or by anyone in Lessee’s behalf;
(xix) all rights in and to common areas and access roads on adjacent properties
and any after-acquired title or reversion in and to the beds of any ways, roads,
streets, avenues and alleys adjoining the Leased Property or any part thereof;
(xx) all claims and causes of action arising from or otherwise related to any of
the foregoing, and all rights and judgments related to any legal actions in
connection with such claims or causes of action; (xxi) all modifications,
extensions, additions, improvements, betterments, renewals and replacements,
substitutions, or proceeds of any of the foregoing; and (xxii) proceeds (both
cash and non-cash) of the conversion, voluntary or involuntary, of any of the
foregoing into cash or other liquidated claims, including, without limitation,
all proceeds of insurance, all of which foregoing items are hereby declared and
shall be deemed to be a portion of the security for the indebtedness and
Obligations herein described, a portion of the above described collateral being
located upon the Land.

 

(d)           Power of Sale. Without limiting any other remedies set forth
herein or in the Lease, in the event that a court of competent jurisdiction
rules that the Lease and this Memorandum constitutes a mortgage, deed of trust,
security agreement or other secured financing with respect to the Leased
Property as is the intent of the parties pursuant to Section 4 hereof, then the
Lessor and the Lessee agree that (i) the Lessee hereby grants to the Deed of
Trust Trustee and its successor and assigns in trust for the use and benefit of
the Lessor (for the benefit of the Participants) the Leased Property (including
the fee simple estate therein) and Lessee Collateral WITH POWER OF SALE AND
RIGHT OF ENTRY AND POSSESSION to the extent permitted by law, and that, upon the
occurrence and during the continuance of any Event of Default, the Deed of Trust
Trustee may, and is hereby irrevocably empowered to, with or without entry, and
to the extent permitted by Applicable Laws, sell or cause the sale of the
Subject Property and Lessee Collateral or any part or parts thereof at one or
more public auctions as an entirety or in parcels as the Deed of Trust Trustee
may elect free from any equity of redemption for cash, on credit, or for other
property, for immediate or future delivery, and on such terms as the Deed of
Trust Trustee shall deem advantageous and proper, such sale or sales to be made
in such manner and upon such notice and advertisement as may be required by
Applicable Laws, or in the absence of any such requirements, as the Deed of
Trust Trustee may deem appropriate, and to make conveyance to the purchaser or
purchasers. The Lessor (or, to the extent required by law, the Deed of Trust
Trustee) may, if at the time such action may be lawful and always subject to
compliance with any mandatory legal requirements, by filing its notice of
election and demand for sale with the Deed of Trust Trustee direct the Deed of
Trust Trustee to enforce its trust and to sell the Subject Property and Lessee
Collateral, as an entirety or in parcels, by one sale or by several sales, held
at one time or at different times, all as the Deed of Trust Trustee may elect,
each sale to be held at the location set forth in the notice of such proposed
sale and the Deed of Trust Trustee shall have given notices of the proposed sale
in the manner hereinafter set forth, and to make due conveyance to the purchaser
or purchasers, with special warranty of title or no warranty of title to such
purchaser or purchasers binding upon the Lessee and its heirs, executors,
administrators, and successors. Such sale must begin at the time stated in the
notice referred to below in this Section or as otherwise permitted by Applicable
Laws. The Lessee, for itself, its heirs and

 

B-8

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assigns, and for anyone who may claim by, through or under the Lessee, hereby
expressly and specifically waives all rights to a marshaling of the assets of
the Lessee, including the Subject Property and the Lessee Collateral, or to a
sale in inverse order of alienation.

 

The Deed of Trust Trustee (or a person or persons selected by the Deed of Trust
Trustee) shall promptly comply with all notice and other requirements of the
laws of Texas then in force with respect to such sales, and shall give the
required public notice of the time and place of such sale by advertisement
weekly in some newspaper of general circulation then published in the County or
City and County in which the Subject Property and Lessee Collateral is located.
No notice of such sale or sales other than the notices hereinabove provided
shall be required to be given to the Lessee (or anyone who may claim by, through
or under the Lessee) or any other persons and any other notice (including,
without limitation, any notice of acceleration of, or intent to accelerate, the
unpaid balance of any Obligation) is expressly waived.

 

The provisions of this Section with respect to posting, serving, filing, and
giving notices of sale are intended to comply with the provisions of Texas law.
In the event the requirement for any notice, or the posting, serving, filing, or
giving thereof, under Texas law shall be eliminated or the prescribed manner of
posting, serving, filing, or giving same is modified by future amendment to
Texas law, the requirement for such particular notice shall be stricken from, or
the manner of posting, serving, filing, or giving any notice hereunder modified
in, this Deed of Trust in conformity with such amendment. The manner herein
prescribed for posting, serving, filing, or giving any notice, other than that
to be posted and filed or caused to be posted or filed by the Deed of Trust
Trustee, shall not be deemed exclusive but such notice or notices may be posted,
served, filed, or given in any other manner which may be permitted by Applicable
Laws. Further, in relation to this Deed of Trust and the exercise of any power
of sale by the Deed of Trust Trustee hereunder, if Texas law shall be amended or
modified to require any other notice or the posting, filing, serving, or giving
thereof or any statute hereafter enacted shall require any other notice or the
posting, filing, serving, or giving thereof, the Deed of Trust Trustee or the
person selected by him is hereby authorized and empowered by the Lessee to give
such notice or make such posting, filing, serving, or giving thereof; provided,
however, the Lessee waives such other notice or the posting, filing, serving, or
giving thereof to the full extent the Lessee may lawfully so do.

 

In addition to any other remedies granted in the Lease or this Memorandum to the
Lessor or the Deed of Trust Trustee (including specifically, but not limited to,
the right to proceed against all the Lessee Collateral in accordance with the
rights and remedies in respect to those portions of the Collateral which are
real property pursuant to Section 9.501(d) of the Uniform Commercial Code), the
Lessor may proceed under the Uniform Commercial Code as to all or any part of
the personal property (tangible or intangible) and fixtures included with the
Lessee Collateral (such portion of the Lessee Collateral being referred to
herein as the “Personalty”) and shall have and may exercise with respect to the
Personalty all the rights, remedies, and powers of a secured party under the
Uniform Commercial Code, including, without limitation, the right and power to
sell, at one or more public or private sales, or otherwise dispose of, lease, or
utilize the Personalty and any part or parts thereof in any manner authorized or
permitted under the Uniform Commercial Code after default by a debtor, and to
apply the proceeds thereof

 

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toward payment of any costs and expenses and attorney’s fees and legal expenses
thereby incurred by the Lessor, and toward payment of the Obligations hereby
secured in such order or manner as provided herein.

 

ARTICLE V

MISCELLANEOUS

 

Section 5.1            Incorporation by Reference. All of the terms, provisions
and conditions of the Lease shall be incorporated herein by reference and this
Memorandum shall serve as record notice of such terms, provisions and
conditions.

 

Section 5.2            Conflict of Lease. In the event of any conflict between
the terms and provisions of this Memorandum and the terms and provisions of the
Lease, the terms and provisions of the Lease shall be controlling.

 

Section 5.3.           Assignment of Lease. Lessee acknowledges and agrees that
all of Lessor’s interest in the Lease has been assigned, transferred, conveyed
and set over by Lessor to the Collateral Agent for the benefit of the
Participants.

 

Section 5.4.           Notices. All notices, demands, requests, consents,
approvals and other communications hereunder shall be in writing and directed to
the address described in, and deemed received in accordance with the provisions
of, Section 16.3 of the Participation Agreement.

 

Section 5.5.           Successors and Assigns. All the terms and provisions of
the Lease and this Memorandum shall inure to the benefit of the parties hereto
and their respective successors and permitted assigns.

 

Section 5.6.           Headings and Table of Contents. The headings and table of
contents in this Memorandum are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.

 

Section 5.7.           Counterparts. This Memorandum may be executed in any
number of counterparts, each of which shall be an original, but all of which
shall together constitute one and the same instrument.

 

Section 5.8.           Governing Law. This Memorandum shall be governed by and
construed in accordance with the laws of the State of New York except that the
provisions for the creation, perfection, priority, enforcement and foreclosure
of the liens and security interests created hereunder will be governed by and
construed according to the laws of the State of Texas.

 

Section 5.9.           Original Lease. The single executed original of this
Memorandum marked “THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART” on the
signature page thereof and containing the receipt thereof of Collateral Agent,
on or following the signature page thereof shall be the original executed
counterpart of this Memorandum. To the extent that this

 

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Memorandum constitutes chattel paper, as such term is defined in the Uniform
Commercial Code, no security interest in this Memorandum may be created through
the transfer or possession of any counterpart other than such original executed
counterpart.

 

Section 5.10.        The Deed of Trust Trustee. The Deed of Trust Trustee
appointed hereunder is solely for the purpose of effecting the intentions of the
parties set forth in Section 4.2 hereof in the State of Texas. The Deed of Trust
Trustee shall at all times act pursuant to the directions of the Lessor, and the
Lessee shall have no power to control or direct the Deed of Trust Trustee. The
Deed of Trust Trustee may be removed or replaced in the sole discretion of the
Lessor. The Lessee shall pay all fees and expenses of the Deed of Trust Trustee
in connection with the Lease and the transactions contemplated hereby, including
all fees and expenses incurred in the exercise of any remedies hereunder.

 

Section 5.11.        Lessor Limitations on Recourse. The provisions of
Section 25.11 of the Lease are hereby incorporated by reference.

 

[SIGNATURE PAGES FOLLOW]

 

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IN WITNESS WHEREOF, the parties have caused this Memorandum of Lease, Deed of
Trust and Security Agreement be duly executed and delivered as of the date first
above written.

 

 

SILICON LABORATORIES, INC., as Lessee

 

 

 

 

 

By:

 

/s/ Jonathan D. Ivester

 

 

 

Name:  Jonathan D. Ivester

 

 

Title:  Vice President of Worldwide Operations

 

 

 

 

Address:

 

4635 Boston Lane

 

 

Austin, TX 78735

 

 

Attention: Chief Legal and

 

 

Intellectual Property Counsel

 

STATE OF TEXAS

)

 

) SS.:

COUNTY OF TRAVIS

)

 

 

This instrument was acknowledged before me on the 24 day of March, 2006, by
Jonathan D. Ivester, Vice President of Worldwide Operations of Silicon
Laboratories Inc., a Delaware corporation, on behalf of said corporation.

 

 

Melissa Alcantara

 

Notary Public State of Texas

 

 

 

My Commission expires:

10-04-2009

 

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BAL INVESTMENT & ADVISORY, INC., as Lessor

 

 

 

 

 

By:

 

/s/ Sonia T. Delen

 

 

 

Name:  Sonia T. Delen

 

 

Title:  Principal

 

STATE OF CALIFORNIA

)

 

) SS.:

COUNTY OF SAN FRANCISCO

)

 

 

This instrument was acknowledged before me on the 24 day of March, 2006, by
Sonia T. Delen, Principal of BAL Investment & Advisory, Inc., a Delaware
corporation, on behalf of said corporation.

 

 

Yvette Montalvo Baron

 

Notary Public State of California

 

My Commission expires:

9-23-2008

 

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

 

THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART.

 

Receipt of this original counterpart of the foregoing Memorandum is hereby
acknowledged as of the date hereof.

 

 

WELLS FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION, not in its individual capacity,
but solely as Collateral Agent

 

 

 

 

By:

/s/ Val T. Orton

 

 

Name: Val T. Orton

 

Title:   Vice President

 

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EXHIBIT A

 

LEGAL DESCRIPTION OF LAND

 

Lots 1, 2, 3, 4, 7 and 8, Block 2, of the Original City of Austin, Travis
County, Texas, according to the map or plat recorded in the General Land Office
of the State of Texas, and (i) Lot(s) 5 and 6, AMENDMENT OF THE AMENDED PLAT OF
LOTS 5 AND 6, OF THE ORIGINAL CITY OF AUSTIN, a subdivision in Travis County,
Texas, according to the map or plat thereof, recorded under Document No.
200200047 of the Official Public Records of Travis County, Texas, (ii) together
with the area within the alley traversing said Block which was vacated by
Ordinance of record in Volume 5651, Page 936 of the Deed Records of Travis
County, Texas, (iii) and across a tract of 59 square feet as described in
Ordinance recorded under Document No. 2005143364 of the Official Public Records
of Travis County, Texas, and Memorandum recorded under Document No. 2005143365
of the Official Public Records of Travis County, Texas said 1.773 acres being
the same property more particularly described by metes and bounds as follows:

 

BEING A 1.773 ACRE TRACT OF LAND SITUATED IN THE ORIGINAL CITY AUSTIN, IN TRAVIS
COUNTY, TEXAS, BEING ALL OF LOTS 1, 2, 3, 4, 7, AND 8, BLOCK 2, OF THE ORIGINAL
CITY OF AUSTIN, ACCORDING TO THE MAP OR PLAT RECORDED IN THE GENERAL LAND OFFICE
OF THE STATE OF TEXAS, ALL OF LOTS 5 AND 6, AMENDMENT OF THE AMENDED PLAT OF
LOTS 5 AND 6, OF THE ORIGINAL CITY OF AUSTIN, BLOCK 2, A SUBDIVISION RECORDED IN
DOCUMENT NO. 200200047 OF THE OFFICIAL PUBLIC RECORDS OF SAID COUNTY, ALL OF A
VACATED 20 FOOT WIDE ALLEY AND RECORDED IN VOLUME 5651, PAGE 936 OF THE OFFICIAL
PUBLIC RECORDS OF SAID COUNTY, AND ALL OF A VACATION OF 59 SQUARE FEET AND
RECORDED IN DOCUMENT NO. 2005143364 AND DOC. NO. 2005143365 OF THE OFFICIAL
PUBLIC RECORDS OF SAID COUNTY, 1.773 ACRE TRACT AS SHOWN ON THE ACCOMPANYING
LAND TITLE SURVEY IS MORE PARTICULARLY DESCRIBED BY METES AND BOUNDS AS FOLLOWS:

 

BEGINNING FOR REFERENCE at a calculated point at the intersection of the
centerline of Guadalupe Street (80 foot right-of-way width) and the centerline
of West 2nd Street (80 foot right-of-way width), having state plane coordinates
of N = 10,069,712.59’, E = 3,112,799.57’ and from which point a 1/2” iron rod
found at the intersection of the north right-of-way line of West 3rd Street (80
foot right-of-way width) and the centerline of said Guadalupe Street bears, N
16° 33’ 50” E for a distance of 396.26 feet;

 

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

 

THENCE with the centerline of said Guadalupe Street, S 16° 34’ 45” W for a
distance of 40.00 feet to a calculated point on the south right-of-way line of
said West 2nd Street;

 

THENCE with the south right-of-way line of said West 2nd Street, N 73° 25’ 15” W
for a distance of 39.46 feet to a MAG nail set with “Baker-Aicklen” washer for
the northeast corner of said vacation of 59 square foot tract, same being the
intersection of the west right-of-way line of said Guadalupe Street and the
south right-of-way line of said West 2nd Street, for the northeast corner and
POINT OF BEGINNING hereof;

 

THENCE with the east line of said vacation of 59 square foot tract, same being
the west right-of-way line of said Guadalupe Street, the following two (2)
courses and distances:

 

(1)           S 16° 10’ 27” W for a distance of 73.56 feet to a MAG nail set
with “Baker-Aicklen” washer for the southeast corner of said vacation of 59
square foot tract, for an angle point hereof, and

 

(2)           N 73° 48’ 39” W for a distance of 1.06 feet to a MAG nail set with
“Baker-Aicklen” washer for the southwest corner of said vacation of 59 square
foot tract, being on the east line of said Lot 5, for an angle point hereof;

 

THENCE with the east line of said Block 2, in part with the east line of said
Lots 5 and 6, same being the west right-of-way line of said Guadalupe Street, S
16° 34’ 45” W for a distance of 203.08 feet to a calculated point on an electric
manhole for the southeast corner of said Block 2, same being the intersection of
the west right-of-way line of said Guadalupe Street and the north right-of-way
line of West 1st Street, for the southeast corner hereof, from which a
calculated point at the intersection of the centerline of said Guadalupe Street
and the centerline of said West 1st Street, have state plane coordinates of N =
10,069,370.79’, E = 3,112,697.81’ bears, S 73° 25’ 15” E for a distance of 40.00
feet and S 16° 34’ 45” W for a distance of 40.00 feet;

 

THENCE with the south line of said Block 2, same being the north right-of-way
line of said West 1st Street, N 73° 21’ 23” W for a distance of 279.00 feet to a
MAG nail set with “Baker-Aicklen” cap for the southwest corner of said Block 2,
same being the intersection of the north right-of-way line of said West 1st
Street and the east right-of-way line of San Antonio Street (80 foot
right-of-way width), for the southwest corner hereof;

 

THENCE with the west line of said Block 2, same being the east right-of-way line
of said San Antonio Street, N 16° 34’ 45” E for a distance of 276.65 feet to a
MAG nail set with “Baker-Aicklen” cap for the northwest corner of said Block 2,
same being the intersection of the east right-of-way line of said San Antonio
Street and the south right-of-way line of said West 2nd Street, for the
northwest corner hereof, from which a MAG nail found at the intersection of the
centerline of Nueces Street and the centerline of said West 3rd Street bears, N
16° 34’ 45” E for a distance of 436.30 feet, N 73° 21’ 23” W for a distance of
399.92 feet, and S 16° 38’ 37” W for a distance of 40.00 feet; and

 

2

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THENCE with the north line of said Block 2, same being the south right-of-way
line of said West 2nd Street, S 73° 21’ 23” E for a distance of 279.54 feet to
the POINT OF BEGINNING hereof and containing 1.773 acre of land.

 

3

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SCHEDULE 2

 

RELATED AGREEMENTS

 

Ground Lease Agreement dated February 15, 2000 between Computer Sciences
Corporation (the “Seller”) and the City of Austin, Texas,

 

Master Agreement dated February 1, 2000 between Seller and the City of Austin,
Texas,

 

Lease dated June 28, 2004 between Seller and Page Southerland Page, LLP,

 

Schneider Building Sublease Agreement dated February 15, 2000 between Seller and
the City of Austin, Texas.

 

Retail Sublease Agreement dated as of February 15, 2000 between Seller and the
City of Austin, Texas,

 

Managed Growth Agreement dated as of February 15, 2000 between the City of
Austin, Texas and the Seller,

 

Agreement Concerning Project Area Design Standards, dated as of February 15,
2000 between the City of Austin, Texas and the Seller,

 

Agreement dated February 22, 2000 between Seller and Hensel Phelps Construction
Co., and

 

Purchase Agreement with Joint Escrow Instructions dated February 10, 2006
between Seller and Lessee and any and all agreements assigned by Seller to
Lessor pursuant thereto.

 

All as the same may be amended, modified, supplemented and/or assigned from time
to time.

 

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