Exhibit 10.2

PARTICIPATION AGREEMENT

DATED AS OF DECEMBER 17, 2002

AMONG

QUANTUM CORPORATION,
AS LESSEE

SELCO SERVICE CORPORATION,
AS LESSOR AND AS A PARTICIPANT,

COMERICA BANK-CALIFORNIA,
FLEET NATIONAL BANK AND
KEYBANK NATIONAL ASSOCIATION
AS PARTICIPANTS,

AND

KEYBANK NATIONAL ASSOCIATION,
AS AGENT

SPECIALTY STORAGE PRODUCT GROUP FACILITIES

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TABLE OF CONTENTS

PAGE

SECTION 1

DEFINITIONS; INTERPRETATION

2

 

 

 

SECTION 2

CLOSING DATE

2

 

 

 

SECTION 3

FUNDING OF REFINANCING ADVANCE

2

Section 3.1

Lessor Commitment

2

Section 3.2

Participants' Commitments

2

Section 3.3

Procedures for Refinancing Advance

2

Section 3.4

Intentionally deleted

3

Section 3.5

Allocation of Commitments

3

Section 3.6

Intentionally Deleted

3

Section 3.7

Intentionally Deleted

4

Section 3.8

Interest Rates; Yield; Payment Dates; and Calculations Related to the Initial
Adjustment and the Adjusted Lease Balance.

4

Section 3.9

Computation of Interest and Yield

6

Section 3.10

Allocation and Timing of Payments; the Account

6

Section 3.11

The Initial Adjustment

8

Section 3.12

Basic Rent

9

Section 3.13

Proceeds of a Purchase by Lessee

9

Section 3.14

Residual Value Guarantee Amount Payment by Lessee

10

Section 3.15

Sales Proceeds of Remarketing of Property

10

Section 3.16

Supplemental Rent

10

Section 3.17

Excepted Payments

10

Section 3.18

Distribution of Payments During the Continuation of an Accelerated Purchase
Event

11

Section 3.19

Proceeds from any Foreclosure of the Mortgage

11

Section 3.20

Partial Purchase Option Price

12

Section 3.21

Other Payments

13

Section 3.22

Casualty and Condemnation Amounts

13

 

 

 

SECTION 4

FEES

15

Section 4.1

Administrative Fee

15

Section 4.2

Overdue Fees

15

 

 

 

SECTION 5

CERTAIN INTENTIONS OF THE PARTIES

15

Section 5.1

Nature of Transaction

15

Section 5.2

Amounts Due Under Lease

16

 

 

 

SECTION 6

CONDITIONS PRECEDENT TO REFINANCING ADVANCE

16

Section 6.1

Conditions Precedent--Documentation

16

(a)

Funding Request

17

(b)

Operative Documents

17

(c)

Environmental Certificate

17

(d)

Financial Statements

17

(e)

Survey and Title Insurance

17

(f)

Evidence of Recording and Filing

18

(g)

Evidence of Insurance

18

(h)

Unrestricted Cash Certificate

18

(i)

Taxes

18

(j)

Opinions of Counsel

18

(k)

Approvals

18

(l)

Litigation

18

(m)

Requirements of Law

19

(n)

Responsible Officer's Certificate of Lessee

19

(o)

Lessee's Resolutions and Incumbency Certificate, Etc

19

(p)

Intentionally Deleted

19

(q)

No Material Adverse Effect

19

(r)

Responsible Officer's Certificate of Lessor

19

(s)

Lessor's Resolutions and Incumbency Certificate, Etc

19

(t)

Termination of Liens

20

Section 6.2

Further Conditions Precedent

20

(a)

Representations and Warranties

20

(b)

Performance of Covenants

20

(c)

Title

20

(d)

No Default

20

 

 

 

SECTION 7

SECURITY

20

Section 7.1

Lessee Obligations

20

(a)

Property

20

(b)

Other Collateral

21

(c)

Substitution of Collateral

21

Section 7.2

Lessor Obligations to Participants

22

 

 

 

SECTION 8

REPRESENTATIONS

22

Section 8.1

Representations of Lessor

22

(a)

Due Organization, Etc

22

(b)

Authorization; No Conflict

22

(c)

Enforceability, Etc

22

(d)

Litigation

22

(e)

Assignment

23

(f)

Defaults

23

(g)

Use of Proceeds

23

(h)

Securities Act

23

(i)

Chief Place of Business

23

(j)

Federal Reserve Regulations

23

(k)

Investment Company Act

23

(l)

No Plan Assets

23

(m)

Equity Source

23

Section 8.2

Representations of the Participants

24

(a)

No Plan Assets

24

(b)

Due Organization, Etc

24

(c)

Authorization; No Conflict

24

(d)

Enforceability, Etc

24

(e)

Litigation

24

Section 8.3

Representations of Lessee

25

(a)

Corporate Status

25

(b)

Corporate Power and Authority

25

(c)

No Violation

25

(d)

Litigation

25

(e)

Governmental Approvals

26

(f)

Investment Company Act

26

(g)

Public Utility Holding Company Act

26

(h)

Accuracy of Information Furnished

26

(i)

Taxes

26

(j)

Compliance with ERISA

26

(k)

Environmental and Other Regulations

27

(l)

Offer of Securities, Etc

27

(m)

Financial Statements

27

(n)

No Violation or Default

27

(o)

Title; Possession Under Leases

27

(p)

Patent and Other Rights

28

(q)

Solvency, Etc

28

(r)

Catastrophic Events

28

(s)

Disclosure

28

Section 8.4

Representations of Lessee With Respect to the Property on the Closing Date

28

(a)

Property

28

(b)

Title

29

(c)

Insurance

29

(d)

Lease

29

(e)

Protection of Interests

30

(f)

Flood Hazard Areas

30

(g)

Conditions Precedent

30

 

 

 

SECTION 9

PAYMENT OF CERTAIN EXPENSES

30

Section 9.1

Transaction Expenses

30

Section 9.2

Brokers' Fees and Stamp Taxes

31

 

 

 

SECTION 10

OTHER COVENANTS AND AGREEMENTS

31

Section 10.1

Affirmative Covenants of Lessee

31

(a)

Financial Statements

31

(b)

Certificates, Notices and Other Information

32

(c)

Payment of Taxes

33

(d)

Preservation of Existence

33

(e)

Maintenance of Properties

34

(f)

Maintenance of Insurance

34

(g)

Compliance with Requirements of Law

34

(h)

Inspection Rights

34

(i)

Keeping of Records and Books of Account

34

(j)

Compliance with ERISA

34

(k)

Compliance With Agreements

35

(l)

ALTA Survey

35

Section 10.2

Negative Covenants of Lessee

35

(a)

Indebtedness

35

(b)

Liens

36

(c)

Fundamental Changes

37

(d)

Dispositions

38

(e)

Investments

38

(f)

Restricted Payments

39

(g)

ERISA

40

(h)

Change in Nature of Business

40

(i)

Transactions with Affiliates

40

(j)

Certain Indebtedness Payments, Etc

40

(k)

Financial Covenants

41

(l)

Accounting Changes

42

(m)

No Impairment of Deposits

42

(n)

Tax Losses

42

Section 10.3

Cooperation with Lessee

42

Section 10.4

Covenants of Lessor

42

(a)

Discharge of Liens

42

(b)

Change of Chief Place of Business

43

 

 

 

SECTION 11

PARTICIPATIONS

43

Section 11.1

Amendments; Actions on Default

43

Section 11.2

General

44

Section 11.3

Conflicts

45

Section 11.4

Refusal to Give Consents or Fund

45

Section 11.5

Required Repayments

46

Section 11.6

Indemnification

46

Section 11.7

Required Supplemental Payments

47

Section 11.8

Application of Payments Received From Defaulting Participant As a Cure For
Payment Defaults

47

Section 11.9

Order of Application

47

Section 11.10

Investments Pending Dispute Resolution; Overnight Investments

47

Section 11.11

Agent to Exercise Lessor's Rights

48

Section 11.12

Exculpatory Provisions Regarding Lessor

48

 

 

 

SECTION 12

TRANSFERS OF PARTICIPANTS' INTERESTS

48

Section 12.1

Restrictions on and Effect of Transfer by Participants

48

(a)

Required Notice and Effective Date

49

(b)

Assumption of Obligations

49

(c)

Employee Benefit Plans

49

(d)

Representations

50

(e)

Amounts; Agent's Fee

50

(f)

Applicable Law

50

(g)

Effect

50

Section 12.2

Covenants and Agreements of Participants

50

(a)

Participations

50

(b)

Transferee Indemnities

51

Section 12.3

Future Participants

51

 

 

 

SECTION 13

INDEMNIFICATION

51

Section 13.1

General Indemnification

51

Section 13.2

End of Term Indemnity

53

Section 13.3

Environmental Indemnity

54

Section 13.4

Proceedings in Respect of Claims

56

Section 13.5

General Impositions Indemnity

57

(a)

Indemnification

57

(b)

Payments

57

(c)

Reports and Returns

58

(d)

Income Inclusions

58

(e)

Withholding Taxes

58

(f)

Contests of Impositions

59

(g)

Documentation of Withholding Status

60

(h)

Limitation on Tax Indemnification

61

(i)

Tax Savings

61

Section 13.6

Funding Losses

61

Section 13.7

Regulation D Compensation

62

Section 13.8

Basis for Determining Interest Rate Inadequate or Unfair

62

Section 13.9

Illegality

63

Section 13.10

Increased Cost and Reduced Return

63

Section 13.11

Substitution of Participant

64

Section 13.12

Indemnity Payments in Addition to Residual Value Guarantee Amount

65

 

 

 

SECTION 14

AGENT

65

Section 14.1

Appointment

65

Section 14.2

Delegation of Duties

65

Section 14.3

Exculpatory Provisions

65

Section 14.4

Reliance by Agent

66

Section 14.5

Notice of Default

66

Section 14.6

Non-Reliance on Agent and Other Participants

66

Section 14.7

Indemnification

67

Section 14.8

Agent in its Individual Capacity

67

Section 14.9

Successor Agent

67

 

 

 

SECTION 15

MISCELLANEOUS

68

Section 15.1

Survival of Agreements

68

Section 15.2

No Broker, Etc

68

Section 15.3

Notices

68

Section 15.4

Counterparts

68

Section 15.5

Amendments

68

Section 15.6

Headings, Etc

69

Section 15.7

Parties In Interest

69

Section 15.8

GOVERNING LAW

70

Section 15.9

Severability

70

Section 15.10

Liability Limited

70

Section 15.11

Further Assurances

71

Section 15.12

Submission to Jurisdiction

71

Section 15.13

Confidentiality

71

Section 15.14

WAIVER OF JURY TRIAL

72

Section 15.15

Usury Savings Clause

72

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   THIS PARTICIPATION AGREEMENT, dated as of December 17, 2002 (this
"Participation Agreement"), is entered into by and among QUANTUM CORPORATION, a
Delaware corporation, as Lessee (together with its permitted successors and
assigns, the "Lessee"); SELCO SERVICE CORPORATION, an Ohio corporation, as
Lessor (together with its permitted successors and assigns, the "Lessor")
COMERICA BANK-CALIFORNIA, FLEET NATIONAL BANK and KEYBANK NATIONAL ASSOCIATION
as Participants (together with their permitted successors and assigns and SELCO
SERVICE CORPORATION, in its capacity as a Participant, each a "Participant" and
collectively the "Participants"); and KEYBANK NATIONAL ASSOCIATION (in such
capacity, together with its successors in such capacity, the "Agent") for the
Participants.

 

 

PRELIMINARY STATEMENT

        

A.   

In accordance with the terms of the Participation Agreement dated as of August
22, 1997, among Lessee, Lease Plan North America, Inc., as lessor and a
participant (the "Original Lessor"), ABN AMRO Bank N.V., San Francisco
International Branch, as a participant, and ABN AMRO Bank N.V., San Francisco
International Branch, as agent (the "Original Agent"), as amended by the First
Amendment to Participation Agreement dated as of June 26, 1998, the Second
Amendment to Participation Agreement dated as of December 18, 1998, the Third
Amendment to Participation Agreement dated as of August 31, 1999, and the Fourth
Amendment to Participation Agreement dated as of November 8, 1999 (said
participation agreement, as so amended, the "Original Participation Agreement"),
and the lease and the other operative documents executed thereunder,

 

 

 

 

 

 

(i)   

Original Lessor purchased certain parcels of land designated by Lessee located
in Colorado Springs, Colorado;

 

 

 

 

(ii)   

Using Advances from Original Lessor, Lessee, as Construction Agent, built
administration, manufacturing, design, research and development and warehouse
facilities on such parcels of land for Original Lessor, acquired certain items
of Equipment to be used in connection with such Improvements and leased, as
Lessee, such Equipment, Improvements and Land Interest from Original Lessor; and

 

 

 

 

(iii)   

Original Lessor obtained financing from the Original Participants of the funding
of the costs of acquisition of such Land Interest, the construction of the
Improvements and the acquisition of such Equipment through the purchase of
Participation Interests.

 

 

 

 

B.   

 In accordance with the terms of the Amended and Restated Participation
Agreement dated July 12, 2000, (as amended by the First Amendment to Amended and
Restated Participation Agreement dated as of March 28, 2001, and by the Second
Amendment to Amended and Restated Participation Agreement dated as of April 19,
2002, the "Amended Participation Agreement") Lessee, Lessor, and The Bank of
Nova Scotia, as a participant and as agent (the "Successor Agent"), and Union
Bank of California, N.A., as a participant, and KeyBank National Association, as
a participant, amended the Original Participation Agreement in certain respects,
and at the same time Lessor acquired Original Lessor's interests in the Land
Interest, Improvements, Fixtures and Equipment and Lessor and certain
participants acquired the participation interests of ABN AMRO Bank N.V., San
Francisco International Branch.

 

1.

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C.   

Lessee and Participants have requested that the Amended Participation Agreement
be entirely amended and restated and that the Participants refinance the
existing synthetic lease contemplated therein (the “Existing Synthetic Lease”)
by entering into this Participation Agreement and other Operative Documents.

In consideration of the mutual agreements contained in this Participation
Agreement and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree that the
Amended Participation Agreement shall be amended and restated as of the date
hereof to read in its entirety as follows:

 

 

 

SECTION 1

DEFINITIONS; INTERPRETATION

                          

Unless the context shall otherwise require, capitalized terms used and not
defined herein shall have the meanings assigned thereto in Appendix 1 hereto for
all purposes hereof; and the rules of interpretation set forth in Appendix 1
hereto shall apply to this Participation Agreement.

 

 

SECTION 2

CLOSING DATE

                          

The closing date (the "Closing Date") shall occur on the earliest date on which
all the conditions precedent thereto set forth in Sections 6.1 and 6.2 hereof
shall have been satisfied or waived by the applicable parties as set forth
therein.

 

 

SECTION 3

FUNDING OF REFINANCING ADVANCE

  

Section 3.1   

Lessor Commitment.   Subject to the conditions and terms hereof, Lessor shall on
the Closing Date make the Refinancing Advance (out of funds provided by the
Participants) for the purpose of refinancing the Existing Synthetic Lease.  The
Refinancing Advance will be applied to repay the various holders of interests in
the principal balance of the Existing Synthetic Lease, and on the Closing Date
Lessee will repay any other amounts owed by it under the Existing Synthetic
Lease.

 

 

 

 

Section 3.2

Participants' Commitments.    Subject to the terms and conditions hereof, each
Participant severally shall purchase a Participation Interest in the Refinancing
Advance being made by Lessor at the request of Lessee by making available to
Lessor on the Closing Date an amount in immediately available funds equal to
such Participants' Commitment Percentage of the amount of the Refinancing
Advance being funded on the Closing Date.  Notwithstanding any other provision
hereof, no Participant shall be obligated to purchase its Participation Interest
in the Refinancing Advance if (i) the amount of such purchase would exceed its
Participant's Commitment, or (ii) the Refinancing Advance exceeds $50,000,000 in
aggregate.

 

 

 

 

Section 3.3

Procedures for Refinancing Advance.  Lessee shall give Lessor and Agent prior
written notice not later than 10:00 a.m., San Francisco time, three (3) Business
Days prior to the proposed Closing Date, pursuant to the Funding Request
substantially in the form of Exhibit A (the "Funding Request"), specifying or
confirming with respect to such Refinancing Advance:

 

 

 

 

 

(i)   the proposed Closing Date,

 

 

 

 

 

 

 

(ii)   the amount of the Refinancing Advance ($50,000,000),

 

 

 

 

 

 

(iii)   the initial Offshore Rate Period Election, including the duration of the
first Interest Period,

 

 

 

 

 

 

 

(iv) the Persons to whom the Refinancing Advance is to be paid.

 

 

 

 

 

Agent shall promptly forward a copy of such Funding Request to each
Participant.  Subject to the satisfaction or waiver of the conditions precedent
to the Refinancing Advance set forth in Section 6, each Participant shall
purchase its Participation Interest in the Refinancing Advance by making
available to Lessor its proportionate share of the Refinancing Advance in
immediately available federal funds by wire transfer to Agent for deposit to
Lessee's demand deposit account with Agent not later than 12:00 noon, San
Francisco time, on the Closing Date.  Upon (i) Lessee's receipt of the funds
provided by the Participants with respect to the Refinancing Advance, and (ii)
satisfaction or waiver of the conditions precedent to the Refinancing Advance
set forth in Section 6, Lessee shall pay the Refinancing Advance to the
Successor Agent in accordance with the terms and provisions of the Amended
Participation Agreement.

3.

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

 

 

Section 3.4

Intentionally deleted.

 

 

 

 

Section 3.5

Allocation of Commitments.  Schedule I hereto contains an allocation for each
Participant of (i) the amount of its Commitment to fund the purchase of its
Tranche A Participation Interest ("Tranche A Participation Interest
Commitment"), (ii) the amount of its Commitment to purchase its Tranche B
Participation Interest ("Tranche B Participation Interest Commitment"), (iii) in
the case of Lessor as the Tranche C Participant, the amount of its Commitment to
fund the equity investment representing its Tranche C Participation Interest
("Tranche C Participation Interest Commitment"), (iv) the amount of its
Commitment (and allocation to its Tranche A Participation Interest Commitment,
Tranche B Participation Interest Commitment and, in the case of Lessor, Tranche
C Participation Interest Commitment), and (v) the percentage referred to in the
definition of the term "Participation Interest."  Lessee, Lessor and the other
Participants have approved all such allocations and percentages.  Schedule I
shall be amended as required to reflect changes in the allocations set forth
thereon due to the addition of additional Participants pursuant to Section 12.1.

 

 

 

 

 

Section 3.6

Intentionally deleted.

 

 

 

 

 

Section 3.7

Intentionally deleted.

 

 

 

 

 

Section 3.8

Interest Rates; Yield; Payment Dates; and Calculations Related to the Initial
Adjustment and the Adjusted Lease Balance.

 

 

 

 

 

 

(a)

The nonequity portion of the Adjusted Lease Balance (consisting of the Adjusted
Tranche A Balance and the Tranche B Balance) shall bear interest during each
Interest Period at a rate per annum equal to the Effective Rate for such
Interest Period plus the Applicable Margin.  The equity portion of the Adjusted
Lease Balance (consisting of the Tranche C Balance) shall accrue equity yield
(the "Yield") during each Interest Period at a rate equal to the Effective Rate
plus the Applicable Margin.

 

 

 

 

 

 

 

(b)

If all or a portion of (i) the Adjusted Lease Balance (including the Adjusted
Tranche A Balance, the Tranche B Balance and the Tranche C balance), (ii) any
interest or Yield payable thereon or (iii) any other amount payable by Lessee
hereunder or under the Lease is not paid when due (whether at the stated
maturity, by acceleration or otherwise), such overdue amount shall bear interest
at a rate per annum which is equal to the Overdue Rate.

 

 

 

 

 

(c)

All interest and Yield accruing during each Interest Period shall be due and
payable as Basic Rent in arrears on the last day of such Interest Period, except
as follows:

 

 

 

(i)   Any interest or Yield accruing at the Overdue Rate pursuant to subsection
(c) of this Section 3.8 shall be payable from time to time on demand.

(ii)   Any prepayment of any part of the Adjusted Lease Balance shall be
accompanied by accrued interest and Yield to the date of such prepayment on the
amount of the Adjusted Lease Balance so prepaid.

(iii)   For each Interest Period after Lessee pays the Initial Adjustment, an
amount (the “Initial Adjustment Amortization”) will accrue equal to the sum of
(1) the Adjusted Tranche A (KeyBank) Percentage, times the interest accruing
during such Interest Period on the Adjusted Tranche A Balance, plus (2) the
product of 47.53927% times the interest accruing during such Interest Period on
the Tranche B Balance, plus (3) the Yield accruing during such Interest Period
on the Tranche C Balance.  In no event, however, will the accrual of Initial
Adjustment Amortization for any Interest Period exceed the Remaining Unamortized
Initial Adjustment, if any, determined as of the last day of such period (before
the deduction of such Initial Adjustment Amortization and after any
Proportionate Reductions which may occur on such date as described in the next
clause). The Initial Adjustment Amortization accruing during each Interest
Period will be deducted automatically from the Remaining Unamortized Initial
Adjustment on the Payment Date upon which such Interest Period ends, and at the
same time, a corresponding, equal credit (the “Basic Rent Credit”) against
accrued interest and Yield on the Adjusted Lease Balance will be given as if
Lessee had made an additional timely payment of Basic Rent equal to such Initial
Adjustment Amortization.  Thus, the actual out-of-pocket payment of Basic Rent
required of Lessee for each Interest Period will equal the total interest and
Yield accruing as described in clauses (a) above, less the Initial Adjustment
Amortization which accrues during such Interest Period.

 

 

4.

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(d)

When any Lease Related Payment is applied to reduce the Lease Balance, the
Remaining Unamortized Initial Adjustment will also be reduced automatically by a
percentage equal to a fraction, the numerator of which is the dollar amount of
the reduction of the Lease Balance resulting from such application, and
denominator of which is the Adjusted Lease Balance just prior to the reduction. 
At the same time, the Lease Balance will be deemed further reduced by a sum
equal to the dollar amount (if any) by which the Remaining Unamortized Initial
Adjustment is automatically reduced.  Such further reduction of the Lease
Balance and the corresponding automatic reduction of the Remaining Unamortized
Initial Adjustment when a Lease Related Payment is applied to the Lease Balance
are referenced herein as “Proportionate Reductions.”  (The following examples
are provided only to illustrate the types of calculations required for
Proportionate Reductions:

 

 

 

 

      Example #1:  Assume that prior to the application of property insurance
proceeds resulting from a Casualty, the Lease Balance is $50,000,000 and the
Remaining Unamortized Lease Balance is $2,000,000, leaving an Adjusted Lease
Balance of $48,000,000.  Assume also that $12,000,000 of property insurance
proceeds [i.e., a Lease Related Payment] are paid to Agent and applied against
the Lease Balance, thereby reducing the Lease Balance to $38,000,000 and also
reducing the Adjusted Lease Balance from $48,000,000 to $36,000,000 [a reduction
of 25%].  Under these assumptions, the Remaining Unamortized Initial Adjustment
will be reduced automatically by 25%, from $2,000,000 to $1,5000,000, which is a
reduction of $500,000.  At the same time, the Lease Balance will be further
reduced by $500,000, from $38,000,000 to $37,500,000.  In this example, the
“Proportionate Reductions” are the automatic $500,000 reduction of the Remaining
Unamortized Initial Adjustment and $500,000 reduction of the Lease Balance. 
After giving effect to all of these adjustments, the Adjusted Lease Balance will
equal the $37,500,000 Lease Balance, less the $1,500,000 Remaining Unamortized
Initial Adjustment, or $36,000,000.

 

 

 

 

 

      Example #2:  Assume that immediately following the application of
insurance proceeds as described in the preceding example, Lessee purchases
Lessor’s interest in the Property pursuant to the Lease and pays (in addition to
any Basic Rent or other Supplemental Rent then due) a purchase price equal to
the Adjusted Lease Balance, or $36,000,000.  The $36,000,000 payment will
initially reduce the Lease Balance to $1,500,000 and also reduce the Adjusted
Lease Balance from $36,000,000 to $0 [a reduction of 100%].  Under these
assumptions, the Remaining Unamortized Initial Adjustment will be reduced
automatically by 100%, from $1,500,000 to $0, which is a reduction of
$1,500,000.  At the same time, the Lease Balance will be further reduced by same
dollar amount, from $1,500,000 to $0.  In this example, the “Proportionate
Reductions” are the automatic $1,500,000 reduction of the Remaining Unamortized
Initial Adjustment and $1,500,000 reduction of the Lease Balance.)

 

 

 

 

(e)

As reasonably requested by Lessee from time to time, Lessor will provide Lessee
with a confirmation of the amount of, and a calculation in reasonable detail of,
the Remaining Unamortized Initial Adjustment and of the Lease Balance, the
Tranche A Balance, the Adjusted Lease Balance and allocation of the Adjusted
Lease Balance among the Adjusted Tranche A Balance, the Tranche B Balance and
the Tranche C Balance.

 

5.

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Section 3.9

Computation of Interest and Yield.

 

 

 

 

 

 

(a)

Whenever it is calculated on the basis of the Alternate Base Rate, interest and
Yield shall be calculated on the basis of a 365- (or 366-, as the case may be)
day year for the actual days elapsed; and, otherwise, interest and Yield shall
be calculated on the basis of a 360-day year for the actual days elapsed.  Agent
shall as soon as practicable after the commencement of each Interest Period
notify Lessor, Lessee and the Participants of each determination of a Offshore
Rate.  Any change in the interest rate or Yield rate on the Refinancing Advance
resulting from a change in the Alternate Base Rate or the Eurocurrency Reserve
Requirements shall become effective as of the opening of business on the day on
which such change becomes effective.  Agent shall as soon as practicable notify
Lessor, Lessee and the Participants of the effective date and the amount of each
such change in interest rate or Yield rate.

 

 

 

 

 

 

 

(b)

Each determination of an interest rate or Yield rate by Agent pursuant to any
provision of this Participation Agreement shall be conclusive and binding on
Lessor, Lessee and the Participants in the absence of manifest error.  Agent
shall, at the request of such parties, deliver to such parties a statement
showing the quotations used by Agent in determining any interest rate pursuant
to Section 3.9(a).

 

 

 

 

 

 

Section 3.10

Allocation and Timing of Payments; the Account.

 

 

 

 

 

 

(a)

If, other than by a distribution received from Agent as hereinafter provided,
any Participant (including Lessor) receives any Lease Related Payment, or if any
Participant realizes the equivalent of a Lease Related Payment by way of offset
against other amounts it owes to Lessee, then such Participant must promptly pay
an equal amount to Agent for application and distribution as provided in this
Participation Agreement.  Any such payment to Agent will be considered a payment
on account of the Lessee Obligations, and any such payment received by Agent
from any Participant and any other Lease Related Payment made directly to Agent
shall reduce the Lease Balance, unless and except to the extent applied to
satisfy Lessee’s obligation for Basic Rent or for other Supplemental Rent.

 

 

 

 

 

 

 

(b)

Also, a payment to Agent of any amount made by or on behalf of Lessee on account
of the Lessee Obligations (including payments made by Participants to Agent in
respect of Lease Related Payments as provided above) shall be considered
effective to satisfy Lessee’s liability for such amount (regardless of whether
Lessee owes the amount to Agent, Lessor or another Participant according to the
Operative Documents) upon the date of receipt of the same by Agent in
immediately available funds if such receipt by Agent occurs on a Business Day
before noon San Francisco time, and otherwise on the next following Business Day
after such receipt by Agent.  Without limiting the foregoing, any delay by Agent
following Agent’s receipt of a payment on account of the Lease Obligations in
distributing the payment to Participants (including any delay authorized by the
following provisions of this Section 3 or by Section 11.10 below) will not defer
or impair the effectiveness of the payment for purposes of determining whether
Lessee has satisfied the Lessee Obligations and for purposes of computing Basic
Rent accruals or other amounts owing by Lessee under the Operative Documents.  
Lessor and other Participants agree that Lessee may pay or cause the payment of
any Lease Related Payment directly to Agent for distribution as provided herein,
after which Lessee will have no obligation to account to Lessor or other
Participants for any failure of Agent to distribute such Lease Related Payment
in accordance with the requirements of this Agreement.

 

6.

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(c)

Except as otherwise provided in Sections 3.11--3.23, Agent may apply payments
made to it on account of the Lease Obligations to cover accrued, unpaid Basic
Rent, to repay and reduce the Lease Balance or to cover other Supplemental Rent
then due in any order Agent deems appropriate and in the best interests of
Participants, collectively.

 

 

 

 

 

 

 

(d)

Except as provided in Sections 3.11--3.23, (1) each Lease Related Payment
(including any prepayment) made to Agent or to Lessor which constitutes a
repayment by or on behalf of Lessee of the Adjusted Lease Balance or any part
thereof shall be allocated among, and ratably reduce, the Adjusted Tranche A
Balance, the Tranche B Balance and the Tranche C Balance, and (2) each such
repayment and all other payments representing interest or Yield on the Adjusted
Lease Balance shall be distributed pro rata among the Tranche A Participants,
Tranche B Participants and the Tranche C Participant according to the respective
Participation Interests of each such Participant.  Any such repayment or payment
that is, according to this Participation Agreement, to be applied or distributed
“pro rata” to Tranche A Participants will be made to such Participants without
priority of one over the other (except as provided in the next clause (e),
regarding adjustments required because of the Basic Rent Credits) in the
proportion to their respective Tranche A Participation Interests in such
payment.  Any such repayment or payment that is, according to this Participation
Agreement, to be applied or distributed “pro rata” to Tranche B Participants
will be made to such Participants without priority of one over the other (except
as provided in the next clause (e)) in the proportion to their respective
Tranche B Participation Interests in such payment.  Any such repayment or
payment that is, according to this Participation Agreement, to be applied or
distributed “pro rata” to both Tranche A Participants and Tranche B Participants
will be made to such Participants without priority of one over the other (except
as provided in the next clause (e)) in the proportion to the sum of their
respective Tranche A Participation Interests and Tranche B Participation
Interests in such payment.

 

 

 

 

 

 

 

(e)

For purposes of determining the proper distribution of payments of Basic Rent
among Participants, any Basic Rent Credit given on any Payment Date pursuant to
Section 3.8(c)(iii) will be considered as a receipt or realization of a payment
of Basic Rent equal to such Basic Rent Credit by KeyBank National Association,
in its capacity as a Tranche A Participant and Tranche B Participant.  Thus, on
the Payment Date upon which any Basic Rent Credit becomes effective, KeyBank
National Association will be required by subsection (a) above to pay to Agent an
amount equal to such credit for distribution (along with actual payment of Basic
Rent made by Lessee) as provided in Section 3.12.  In the event KeyBank National
Association fails to pay such amounts to Agent, the remedies of the other
Participants shall be solely against KeyBank National Association and not
against Lessee.  (The following example is provided only to illustrate the types
of calculations required with respect to Basic Rent Credits and the distribution
of Basic Rent among Participants:

 

 

 

 

 

 

      Example:  Assume that the total interest and Yield accruing as described
in Section 3.8(a) on the Adjusted Lease Balance for a given Interest Period is
$100,000, and $52,000 of Initial Adjustment Amortization also accrues for such
Interest Period, resulting in a Basic Rent Credit of $52,000, of which $5,000 is
attributable to Yield accrued on the Tranche C Balance and the remainder is
attributable to interest accrued on the Adjusted Tranche A Balance and on the
Tranche B Balance.  Assume also that Lessee makes a timely payment of Basic Rent
for such Interest Period in the amount of the remaining $48,000 payable by
Lessee (after application of the Basic Rent Credit).  Under these assumptions,
KeyBank National Association, as a Participant, will be deemed to have received
a direct payment of Basic Rent of $52,000, which in accordance with
subsection (a) of this Section must be paid over to Agent.  Such amount,
together with the $48,000 of Basic Rent actually paid by Lessee, will give Agent
$100,000 to be distributed in accordance with Section 3.12.  Section 3.12 will
require that Agent distribute the $47,000 to KeyBank National Association and
$48,000 to other Tranche A Participants and Tranche B Participants, and then
distribute the remaining $5,000 to Lessor as the Tranche C Participant.)

 

 

 

 

7.

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(f)

Subject to any contrary requirements of Applicable Law and to the rights of the
Participants under other provisions of the Operative Documents or provisions of
other agreements binding upon Lessee (including the Loan Documents), if Agent or
Lessor should receive Lease Related Payments in excess of all then outstanding
Lessee Obligations, then Agent or Lessor (as the case may be) must pay such
excess to, or as directed by, Lessee.

 

 

 

 

 

 

 

(g)

If any payment under the Operative Documents, other than the Initial Adjustment
or payments representing the repayment of the Lease Balance or any part thereof,
becomes due and payable on a day other than a Business Day, such payment shall
be extended to the next succeeding Business Day.  If any payment of the Initial
Adjustment or representing a repayment of the Lease Balance or any part thereof
becomes due and payable on a day other than a Business Day, the maturity thereof
shall be extended to the next succeeding Business Day unless the result of such
extension would be to extend such payment into another calendar month, in which
event such payment shall be made on the immediately preceding Business Day.  In
the case of any extension or shortening of the due date of any payment which
will reduce the Adjusted Lease Balance pursuant to the preceding two sentences,
interest or Yield thereon shall be payable at the then applicable rate during
such extension or until such shortened due date, as the case may be.

 

 

 

 

 

 

 

(h)

The Agent may, if it so desires to do so, establish an account (the "Account")
into which Agent shall deposit all Lease Related Payments or other payments,
receipts and other consideration of any kind whatsoever received by Agent
pursuant to this Participation Agreement, the Lease and any other Operative
Document.  Agent shall make distributions of such payments, receipts and other
consideration (and, if an Account is used, from the Account) pursuant to the
requirements of Sections 3.11--3.23 hereof.

 

 

 

 

 

 

Section 3.11

The Initial Adjustment.   The payments of Initial Adjustment will not reduce the
Lease Balance, but will reduce the Adjusted Lease Balance.  The payment of the
Initial Adjustment shall be applied and distributed by Agent as promptly as
possible (it being understood that any such payment received by Agent on a
timely basis and in accordance with the provisions of the Lease shall be applied
and distributed on the date received in the funds so received) to KeyBank
National Association, as a Tranche A Participant, whereupon the entire reduction
in the Adjusted Tranche A Balance resulting from such payment shall be allocated
to and reduce the Participation Interest of KeyBank National Association in the
Adjusted Lease Balance.  As subsequent accruals of Initial Adjustment
Amortization are deducted from the Remaining Unamortized Initial Adjustment,
thereby increasing the Adjusted Lease Balance, the entire amount of the
increases will be allocated to and increase the Participation Interest of
KeyBank National Association in the Adjusted Tranche A Balance.

8.

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Section 3.12

Basic Rent.   Payments of Basic Rent will not reduce the Lease Balance or
Adjusted Lease Balance.  Each payment (or portion thereof) of Basic Rent shall
be applied and distributed by Agent as promptly as possible (it being understood
that any payments of such component of Basic Rent received by Agent on a timely
basis and in accordance with the provisions of the Lease shall be applied and
distributed on the date received in the funds so received) in the following
order of priority:

 

 

 

 

 

 

 

(a)

first, pro rata among the Tranche A Participants and the Tranche B Participants
until the aggregate of all payments of Basic Rent which they have received
equals the aggregate of all interest which has accrued on the Tranche A Balance
and Tranche B Balance pursuant to Section 3.8(a), and

 

 

 

 

 

 

 

(b)

second, to Lessor as the Tranche C Participant as the payment of the Yield on
the Tranche C Participation Interest.

 

 

 

 

 

 

Section 3.13

Proceeds of a Purchase by Lessee.   Any payment of all or part of the Asset
Termination Value received by Agent (whether by way of offset against the Cash
Collateral or by reason of the application of the Cash Collateral or of proceeds
drawn under the Letter of Credit or otherwise) as a result of:

 

 

 

 

 

 

 

(a)

the purchase of Lessor's interest in all of the Property in connection with
Lessee's exercise of its Purchase Option under Section 20.1 of the Lease, or

 

 

 

 

 

 

 

(b)

Lessee's compliance with its obligation to purchase Lessor's interest in the
Property in accordance with Section 20.2 of the Lease, or

 

 

 

 

 

 

 

(c)

the payment of the Asset Termination Value in accordance with Sections 16.2(b),
16.3 or 16.4 of the Lease, or

 

 

 

 

 

 

 

 

(d)

Lessee failing to fulfill one or more of the conditions to exercise of the
Remarketing Option pursuant to Section 22.1 of the Lease and Agent's receipt
pursuant to the next-to-last paragraph of Section 22.1 of the Lease of the Asset
Termination Value in accordance with Section 20.2 of the Lease, shall be applied
and distributed by Agent as promptly as possible (it being understood that any
such payment received by Agent on a timely basis and in accordance with the
provisions of the Lease shall be applied and distributed on the date on which
such funds are so received) in the following order of priority:

 

 

 

 

 

 

 

 

(1)   first, without reduction of the Lease Balance, to cover any Excepted
Payments owed by Lessee, with distributions made in accordance with Section
3.17;

 

 

 

 

 

 

 

 

(2)   second, without reduction of the Lease Balance, to cover any accrued,
unpaid Basic Rent, with distributions made in accordance with Section 3.8;

 

 

9.

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(3)   third, with a corresponding reduction of the Lease Balance, to repay the
Adjusted Tranche A Balance and the Tranche B Balance, with distributions made
pro rata among the Tranche A Participants and the Tranche B Participants until
their Participation Interests in the Adjusted Tranche A Balance and the Tranche
B Balance have been repaid in full, and

 

 

 

 

 

 

 

 

(4)   fourth, with a corresponding reduction to the Lease Balance, to repay the
Tranche C Balance, with distributions to Lessor (as the Tranche C Participant);
and

 

 

 

 

 

 

 

 

(5)   finally, after the Lease Balance has been repaid in full by the foregoing
allocations, any remaining balance of such a payment (e.g., any amounts
attributable to interest accruing on past due payments of Basic Rent) will be
distributed as Agent determines to be appropriate under this Agreement and the
other Operative Documents, taking into account the reasons why such remaining
balance exists.

 

 

 

 

 

 

 

Section 3.14

Residual Value Guarantee Amount Payment by Lessee.  The payment by Lessee of the
Residual Value Guarantee Amount to Agent in accordance with Section 15.4 or
Article XXII of the Lease, in the event of Lessee's exercise of the Remarketing
Option, shall be applied and distributed by Agent as promptly as possible (it
being understood that any such payment received by Agent on a timely basis in
accordance with the provisions of the Lease shall be applied and distributed on
the date on which such funds are so received) to repay the Adjusted Tranche A
Balance, with a corresponding reduction of the Lease Balance and with
distributions made pro rata among the Tranche A Participants.

 

 

 

 

 

 

Section 3.15

Sales Proceeds of Remarketing of Property.  Any payments received by Agent as
proceeds from a sale of the Property because of Lessee's exercise of the
Remarketing Option pursuant to Article XXII of the Lease, together with any
payment made by Lessee as a result of an appraisal pursuant to Section 13.2 of
this Participation Agreement, shall be applied and distributed by Agent as
promptly as possible (it being understood that any such payment received by
Agent on a timely basis and in accordance with the provisions of the Lease shall
be applied and distributed on the date on which the funds are so received) in
the same order of priority and with the same application to the Lease Balance as
is listed in Section 3.13, except that if the aggregate amount of such sales
proceeds and any such payment made by Lessee exceeds the Adjusted Lease Balance
and all amounts otherwise due or owing by Lessee under this Agreement, under the
Lease or under any of the other Operative Documents, then such excess shall be
promptly distributed to, or as directed by, Lessee.

 

 

 

 

 

 

Section 3.16

Supplemental Rent.  All payments of Supplemental Rent received by Agent
(excluding any amounts applied and distributed pursuant to the other provisions
of this Section 3) shall be distributed promptly by Agent upon receipt thereof
to the Persons entitled thereto pursuant to the Operative Documents. 
Supplemental Rent shall not, except as provided in the other provisions of this
Section 3, reduce the Lease Balance or Adjusted Lease Balance.

 

 

 

 

 

 

Section 3.17

Excepted Payments.  Notwithstanding any other provision of this Participation
Agreement or the Operative Documents, any Excepted Payment received at any time
by Agent shall be distributed promptly to the Person entitled to receive such
Excepted Payment pursuant to the Operative Documents.  Excepted Payments shall
not reduce the Lease Balance or Adjusted Lease Balance.

 

10.

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Section 3.18

Distribution of Payments During the Continuation of an Accelerated Purchase
Event.  Notwithstanding the foregoing provisions of Sections 3.11 through 3.15,
this section 3.18 will govern the application of any and all Lease Related
Payments, other than Excepted Payments, paid to or realized by Lessor or Agent
during the continuation of an Accelerated Purchase Event.  All such amounts
shall, if received by Lessor, be paid to Agent as promptly as possible and shall
be applied and distributed by Agent as promptly as possible (it being understood
that any such payment received by Agent on a timely basis and in accordance with
the provisions of the Operative Documents shall be applied and distributed on
the date received in the funds so received) in the following order of priority:

 

 

 

 

 

 

 

(a)

first, without reduction of the Lease Balance, so much of such payment or amount
as shall be required to reimburse Lessor or Agent for any costs incurred by them
to enforce the Operative Documents against Lessee or to or enforce, protect,
preserve or maintain any Security or property covered thereby (including, to the
extent not previously reimbursed, those costs incurred in connection with any
duties of Agent as Agent) and any unpaid ongoing fees of Lessor and Agent shall
be distributed to each of them for its own account;

 

 

 

 

 

 

 

(b)

second, without reduction of the Lease Balance, so much of such payments or
amounts as shall be required to repay the then existing or prior Participants
for payments made by them to reimburse Lessor for costs incurred by Lessor
pursuant to Section 18.1 of the Lease (to the extent such Participants have not
already been repaid such amounts) and to pay such then existing or prior
Participants the amounts payable to them pursuant to any expense reimbursement
or indemnification provisions of the Operative Documents shall be distributed to
each such Participant without priority of one over the other in accordance with
and proportion to the amounts of such payment or payments payable to each such
Person;

 

 

 

 

 

 

 

(c)

third, in the same order of priority and with the same application to the Lease
Balance that is listed in Section 3.13, until the entire Adjusted Lease Balance
has been repaid and all amounts otherwise due or owing by Lessee under this
Agreement, the Lease or any of the other Operative Documents have been paid in
full;

 

 

 

 

 

 

 

 

(d)

lastly, to, or as directed by, Lessee or as otherwise required by Applicable
Law.

 

 

 

 

 

 

 

Section 3.19

Proceeds from any Foreclosure of the Mortgage.   As among Lessor, Agent and
Participants, it is understood and agreed that proceeds of any foreclosure sale
under the Mortgage which are received by Agent shall be applied and distributed
by Agent as promptly as possible (it being understood that any such payment
received by Agent on a timely basis and in accordance with the provisions of the
Operative Documents shall be applied and distributed on the date received in the
funds so received) in the following order of priority:

 

 

 

 

 

 

 

(a)

first, so much of such payment or amount as shall be required to reimburse Agent
for any cost incurred by it in connection with its duties of Agent and for any
unpaid ongoing fees of Agent shall be retained by Agent for its own account;

 

11.

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(b)

second, pro rata among the Tranche A Participants and the Tranche B Participants
until they have been repaid in full their Participation Interests, including
their  Tranche A Participation Interests and the Tranche B Participation
Interests;

 

 

 

 

 

 

 

(c)

lastly, to, or as directed by, Lessor or as otherwise required by law.

With the understanding that any such foreclosure sale will be subject in all
respects to (and thus will not cut off or otherwise affect) the Lease and
Lessee's rights under the other Operative Documents, Lessee agrees that it will
have no claim to or interest in any such foreclosure proceeds.  Further, Lessee
agrees that as between it and Lessor and its successors and assigns (including
the purchaser at any such foreclosure sale), neither the Lease Balance nor the
Adjusted Lease Balance will be reduced by any such foreclosure proceeds.  Thus,
neither Basic Rent, nor Asset Termination Value nor the Residual Value Guarantee
Amount nor any other amount, the calculation of which is dependent upon the
Lease Balance or the Adjusted Lease Balance, will be reduced by reason of any
such foreclosure or distributions made pursuant to this section, and all such
amounts will be calculated after any foreclosure under the Mortgage as if there
had been no foreclosure.  Further, after any such foreclosure, Lessee's
obligations under the Operative Documents will continue to be secured by the
Letter of Credit or any Cash Collateral Agreement to the same extent and in the
same manner as before the foreclosure, and any purchaser at such foreclosure
sale will acquire all rights of Lessor and the Participants under this Agreement
and the Lease, including (1) the right to receive payments of Basic Rent and 
any repayments of the Lease Balance made after the foreclosure by or on behalf
of Lessee pursuant to the Lease or this Agreement, and (2) the right to be
indemnified by Lessee for claims, damages or expenses arising after the
foreclosure to the same extent that Lessor or other Participants would have been
entitled to indemnity hereunder if they had suffered such claims, damages or
expenses and there had been no foreclosure.

 

 

 

 

 

 

 

Section 3.20

Partial Purchase Option Price.   Any Partial Purchase Option Price paid to Agent
shall be applied and distributed by Agent as promptly as possible (it being
understood that any such payment received by Agent on a timely basis and in
accordance with the provisions of the Lease shall be applied and distributed on
the date received in the funds so received) in the following order of priority:

 

 

 

 

 

 

 

(a)

first, without reduction of the Lease Balance, so much of such payment or amount
as shall be required to reimburse Lessor or Agent for any costs incurred by
Lessor or Agent in connection with the sale for which such Partial Purchase
Option Price is paid (to the extent such costs are not otherwise paid or
reimbursed by Lessee as provided in the Lease);

 

 

 

 

 

 

 

(b)

second, without reduction of the Lease Balance, to cover any other amounts
(excluding the Adjusted Lease Balance) then due and payable by Lessee under this
Agreement, the Lease or any of the other Operative Documents, with distributions
made among Lessor and other Participants in accordance with other provisions of
this Section 3, until all such amounts have been paid in full;

 

 

 

 

 

 

 

(c)

third, to prepay the Adjusted Lease Balance and any Basic Rent accrued on the
portion of the Adjusted Lease Balance so prepaid and any Funding Losses
associated with such prepayment, with distributions of said amount made pro rata
among all Participants (including Lessor) in proportion to their Participation
Interests in the amounts so paid, and with any reduction of the Adjusted Lease
Balance applied ratably to each of the Adjusted Tranche A Balance, the Tranche B
Balance and the Tranche C Balance, until the entire Adjusted Lease Balance and
all accrued Basic Rent and any such Funding Losses have been paid in full; and

 

 

12.

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(d)

lastly, the balance, if any, shall be promptly distributed to, or as directed
by, Lessee.

 

 

 

 

 

 

 

Section 3.21

Other Payments.  Any sums received by Agent, Lessor or another Participant for
which provision as to the application thereof is expressly made in an Operative
Document, but not elsewhere in this Section 3, shall be applied and distributed
forthwith by Agent, Lessor or such other Participant (as applicable) to the
Person and for the purpose for which such payment was made in accordance with
the terms of such Operative Document.

 

 

 

 

 

 

Section 3.22

Casualty and Condemnation Amounts.  Any Net Proceeds made to Lessor or Agent as
a result of a Casualty or Condemnation pursuant to Section 15.1 of the Lease
(but excluding any amounts payable pursuant to Section 16.2 of the Lease) shall,
if no Accelerated Purchase Event exists, be paid over to Lessee for (and over
the course of) the rebuilding or restoration of that portion of the Property
affected by such Casualty or Condemnation as necessary to cover the actual,
out-of-pocket cost to Lessee of such rebuilding or restoration.  (Pending the
payment of such amounts to Lessee for rebuilding or restoration or the
application and distribution of such amounts as set forth below in this Section,
any such amounts will be held in an interest bearing deposit account maintained
by Agent, and the interest that accrues on such account pending disbursement
from such account will accrue to the benefit of Lessee and be added to and
applied in the same manner as the principal deposited therein.  So long as Net
Proceeds are held in such an account, they will not be considered Lease Related
Payments for purposes of this Agreement.)  Notwithstanding the foregoing, but
without limiting Lessee's obligation to rebuild and restore the Property as
provided in the Lease, any such amounts shall, upon request by Lessee, be
applied and distributed by Lessor or Agent as set forth below in this Section. 
Also, if an Accelerated Purchase Event exists, then during the continuance of
such Accelerated Purchase Event, all such amounts (not only those in excess of
the cost of rebuilding or restoration) shall, at the option of Agent, either be
held and used for rebuilding or restoration  or applied and distributed as set
forth below in this Section.

Following any determination that any Net Proceeds paid to Lessor or Agent as a
result of a Casualty or Condemnation pursuant to the Lease (but excluding any
amounts payable pursuant to Sections 15.4 or 16.2 of the Lease, the application
and distribution of which will be governed by other provisions of this Section
3) need not and will not be paid to Lessee or held by Agent or Lessor for
rebuilding or restoration as aforesaid; however, all such Net Proceeds which
constitute Lease Related Payments (as provided in the definition thereof), will
be applied and distributed by Agent or Lessor as promptly as possible following
such a determination in the following order of priority:

 

 

 

 

 

 

 

(a)

first, without reduction of the Lease Balance, so much of such amounts as shall
be required to reimburse Lessor or Agent for any costs incurred by Lessor or
Agent in connection with the Casualty or Condemnation which generated such
amounts (to the extent such costs are not otherwise paid or reimbursed by Lessee
as provided in the Lease);

 

13.

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(b)

second, without reduction of the Lease Balance, to cover any other amounts
(excluding the Adjusted Lease Balance) then due and payable by Lessee under this
Agreement, the Lease or any of the other Operative Documents, with distributions
made among Lessor and other Participants in accordance with other provisions of
this Section 3, until all such amounts have been paid in full;

 

 

 

 

 

 

 

(c)

third, to prepay the Adjusted Lease Balance and any Basic Rent accrued on the
portion of the Adjusted Lease Balance so prepaid and any Funding Losses
associated with such prepayment, with distributions of said amount made pro rata
among all Participants (including Lessor) in proportion to their Participation
Interests in the amounts so paid, and with any reduction of the Adjusted Lease
Balance applied proportionately to each of the Adjusted Tranche A Balance, the
Tranche B Balance and the Tranche C Balance, until the entire Lease Balance and
all accrued Basic Rent and any such Funding Losses have been paid in full; and

 

 

 

 

 

 

 

      

(d)

lastly, the balance, if any, shall be promptly distributed to, or as directed
by, Lessee.

 

 

 

 

 

 

 

Section 3.23

Credits for Available Cash Collateral and Letter of Credit
Proceeds.  Notwithstanding any other provision in this Participation Agreement,
the Lease or any other Operative Document to the contrary, Lessee, Agent, the
Participants and Lessor agree that upon the maturity or acceleration of Lessee's
obligation to pay the Asset Termination Value, Residual Value Guarantee Amount
or Purchase Option Price, any and all amounts of Cash Collateral previously
deposited by Lessee pursuant to the Cash Collateral Agreement and any or all
proceeds drawn on the Letter of Credit may be applied by Agent to satisfy
Lessee's obligation to pay the Asset Termination Value, Purchase Option Price or
Residual Value Guarantee, as applicable.  Further, Lessee itself may direct and
require such application of the Cash Collateral or the proceeds of the Letter of
Credit at any time, provided that (1) Lessee gives such direction by an
irrevocable, unconditional written notice to Agent and the Participants
(including Lessor), and (2) no such direction by Lessee will be effective with
regard to such amounts or proceeds which have already been returned or paid to
Lessee or offset or applied by Agent, Lessor or any other Participant against
any Lessee Obligations.  If, at the time Lessee gives any such direction, any
such amounts of Cash Collateral or proceeds of the Letter of Credit which have
not previously been paid or returned to Lessee or offset or applied against
Lessee Obligations are not actually available for payment of the Asset
Termination Value, Purchase Option Price or Residual Value Guarantee for reasons
attributable to Lessor, Agent or any Participant, then Lessee will nonetheless
be entitled to a credit against such payment for such unavailable amounts or
proceeds; provided, however, that Lessee assigns to Agent (for the benefit of
Lessor and Participants) all right, title and interest of Lessee in and to such
unavailable amounts or proceeds.  For purposes of the preceding sentence,
“reasons attributable to Lessor, Agent or any Participant” shall include,
without limitation, any fraud or misapplication of funds by Lessor, Agent or any
Participant or the filing by or against Lessor, Agent or any Participant of any
insolvency, bankruptcy, dissolution, liquidation, reorganization or similar
proceeding.

 

14.

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SECTION 4

FEES

 

Section 4.1   

Administrative Fee.  Lessee shall pay an administrative fee (the "Administrative
Fee") to Agent for its own account payable annually on each anniversary of the
Closing Date as specified in the Fee Letter.

 

 

 

 

Section 4.2

Overdue Fees.  If all or a portion of any fee due hereunder shall not be paid
when due, such overdue amount shall bear interest, payable by Lessee on demand,
at a rate per annum equal to the Default Rate from the date of such nonpayment
until such amount is paid in full (as well after as before judgment).

SECTION 5

CERTAIN INTENTIONS OF THE PARTIES

 

 

 

 

 

Section 5.1   

Nature of Transaction.

 

 

 

 

 

 

      

(a)

It is the intent of the parties hereto that:  (i) the Lease constitutes an
"operating lease" pursuant to Statement of Financial Accounting Standards No.
13, as amended, for purposes of Lessee's financial reporting, and (ii) for
purposes of federal, state and local income or franchise taxes and for any other
tax imposed on or measured by income, the transaction contemplated hereby is a
financing arrangement and preserves ownership in the Property in Lessee. 
Nevertheless, Lessee acknowledges and agrees that neither Agent, Lessor nor any
Participant has made any representations or warranties to Lessee concerning the
tax, accounting or legal characteristics of the Operative Documents and that
Lessee has obtained and relied upon such tax, accounting and legal advice
concerning the Operative Documents as it deems appropriate.  Notwithstanding any
provision of this Participation Agreement to the contrary, the parties hereto
agree and declare that:  (i) the transactions contemplated by the Lease are
intended to have a dual, rather than single, form; and (ii) all references in
this Participation Agreement to the "lease" of the Property which fail to
reference such dual form do so as a matter of convenience only and do not
reflect the intent of the parties hereto as to the true form of such
arrangements.  The parties hereto agree that, in accordance with their
intentions expressed herein and the substance of the transactions contemplated
hereby, Lessee (and not Lessor) shall be treated as the owner of the Property
for federal, state, and local income and property tax purposes and the Lease
shall be treated as a financing arrangement.  Lessee shall be entitled to take
any deduction, credit, allowance or other reporting, filing or other tax
position consistent with such characterizations.  Lessor and the Participants
shall file any federal, state or local income tax returns, reports or other
statements in a manner which is consistent with the foregoing provisions of this
Section 5.1; provided, that Lessor and any Participant may take a position that
is inconsistent with Lessee's status as owner of the Property if:  (x) there has
been a change in law or regulation so requiring as supported by an opinion of
counsel reasonably acceptable to Lessee that there is not substantial authority
for such a consistent reporting position; or (y) (A) there has been an
administrative or judicial holding that Lessee is not the owner of the Property
for such tax purposes, (B) Lessee has no right to contest such holding pursuant
to Section 13.5 of the Participation Agreement, and (C) Lessee's lack of right
to contest is not the result of an Indemnitee's waiver of its right to
indemnification pursuant to [Section 13.5(f)(iii) of the Participation Agreement
or failure of the amount at issue to exceed the minimum amount set forth in
Section 13.5(f)(iv)(B) of the Participation Agreement.

 

15.

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(b)

Specifically, without limiting the generality of subsection (a) of this Section
5.1, the parties hereto intend and agree that with respect to the nature of the
transactions evidenced by the Lease in the context of the exercise of remedies
under the Operative Documents, including, without limitation, in the case 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 Lessee, Lessor
or any Participant or any enforcement or collection actions, (i) the
transactions evidenced by the Operative Documents are loans made by Lessor and
the Participants as unrelated third party lenders to Lessee secured by the
Property and the Collateral, (ii) the obligations of Lessee under the Lease to
pay Basic Rent and Supplemental Rent or Asset Termination Value in connection
with any purchase of the Property pursuant to the Lease shall be treated as
payments of interest on and principal of, respectively, loans from Lessor and
the Participants to Lessee, (iii) the Lease grants a security interest and deed
of trust or lien, as the case may be, in the Property and the collateral
described in the Mortgage to Lessor, Agent and the Participants to secure
Lessee's performance and payment of all amounts under the Lease and the other
Operative Documents.

 

 

 

 

 

 

Section 5.2

Amounts Due Under Lease.  Subject to Section 3.19, but anything else herein or
elsewhere to the contrary notwithstanding, it is the intention of Lessee,
Lessor, the Participants and Agent that:  (i) the amount and timing of
installments of Basic Rent due and payable from time to time from Lessee under
the Lease shall be equal to the aggregate payments due to the Participants in
respect of their Participation Interests on each Payment Date; (ii) if Lessee
elects the Purchase Option or becomes obligated to purchase the Property under
the Lease, the entire Adjusted Lease Balance and the Participants’ Participation
Interests therein, all fees and all of the interest on overdue amounts thereon
and all other obligations of Lessee owing to Lessor, the Participants and Agent
shall be paid in full by Lessee; (iii) if Lessee properly elects the Remarketing
Option, Lessee shall only be required to pay to Lessor the proceeds of the sale
of the Property, the Residual Value Guarantee Amount and any amounts due
pursuant to Section 13 of this Participation Agreement and Section 22.2 of the
Lease (which aggregate amounts may be less than the Asset Termination Value);
and (iv) upon a Lease Event of Default resulting in an acceleration of Lessee's
obligation to purchase the Property under the Lease, the amounts then due and
payable by Lessee under the Lease shall include all amounts necessary to pay in
full the Asset Termination Value, plus all other amounts then due from Lessee to
the Participants, Agent and Lessor under the Operative Documents.

 

 

 

 

 

SECTION 6

CONDITIONS PRECEDENT TO REFINANCING ADVANCE

 

Section 6.1   

Conditions Precedent--Documentation.  The obligation of Lessor to make the
Refinancing Advance in respect of such Property on the Closing Date and the
obligation of each Participant to purchase its Participation Interest in, and to
make available to Lessor its related portion of, the Refinancing Advance on the
Closing Date are subject to satisfaction or waiver of the following conditions
precedent and the conditions precedent set forth in Section 6.2 (it being
understood that Lessor's obligation to make the Refinancing Advance shall not be
subject to the conditions precedent set forth in this Section 6.1 or Section 6.2
to the extent such conditions are actions required of Lessor) on or prior to the
Closing Date:

 

16.

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(a)

Funding Request.  Prior to the Closing Date, Agent and Lessor shall have
received a fully executed counterpart of the Funding Request, appropriately
completed by Lessee, in accordance with Section 3.3.

 

 

 

 

 

 

 

(b)

Operative Documents.  Each of the Operative Documents to be entered into on the
Closing Date shall have been duly authorized, executed and delivered by the
parties thereto, and shall be in full force and effect, including, without
limitation, (i) this Participation Agreement, (ii) the Lease, (iii) the
Mortgage, (v) the Assignment of Lease and Consent to Assignment, (vi) the Cash
Collateral Agreement and (vii) the Letter of Credit.  If Cash Collateral is
selected by Lessee pursuant to Section 7.1, such Cash Collateral shall have been
deposited pursuant to the Cash Collateral Agreement.  No Potential Lease Default
or Lease Event of Default shall exist thereunder and be continuing (both before
and after giving effect to the transactions contemplated by the Operative
Documents), and Lessor, Agent and each Participant shall each have received a
fully executed copy of each of such Operative Documents (other than the Lease,
of which Agent shall receive the original and Lessor and the Participants shall
receive specimens).  On or prior to the Closing Date, the Operative Documents
(or memoranda thereof), any supplements thereto and any financing statements in
connection therewith required under the Uniform Commercial Code shall have been
recorded, registered and filed, if necessary, in such manner as to enable
Lessee's counsel to render its opinion referred to in clauses 6.l(ij(A) and (B)
below.

 

 

 

 

 

 

 

(c)

Environmental Certificate.  Agent, each Participant and Lessor shall have
received an Environmental Certificate substantially in the form of Exhibit C (an
"Environmental Certificate") with respect to the Property, provided that such
Environmental Certificate shall be delivered not less than five (5) Business
Days prior to the Closing Date and shall have been approved by Agent, the
Required Participants and Lessor, and accompanied by the Environmental Audit for
the Property prepared by Harding Lawson Associates, dated August 13, 1997 and a
Phase I Update and Sampling Analysis report by Harding ESE, dated March 9, 2000.

 

 

 

 

 

 

 

(d)

Financial Statements.  Lessee shall have delivered to Agent copies of Lessee's
Financial Statements as described in Section 8.3(m) and an duly executed
Compliance Certificate in the form attached as Exhibit L.

 

 

 

 

 

 

 

(e)

Survey and Title Insurance.  Lessee shall have delivered (i) an ALTA (1992)
owners title insurance policy with extended coverage over the general
exceptions, insuring fee title in Lessor to the Property, subject only to the
Permitted Exceptions and (ii) an ALTA (1992) Loan Policy insuring Agent that the
Lien of the Mortgage is a first and primary lien in Lessor's interest in the
Master Lease and in the fee title to the Property, subject only to the Master
Lease and the Permitted Exceptions, and (iii) an ALTA (1992) Leasehold Policy
insuring leasehold title in Lessee, such policies each in an amount not less
than the Refinancing Advance and to be reasonably satisfactory to Lessor, Agent
and the Participants with extended coverage, access, tax parcel, variable rate,
future advances, usury, comprehensive, doing business, mechanics liens and
zoning endorsements and such other endorsements as and to the extent available
in such jurisdiction where the Property is located, if requested by Agent.

 

17.

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(f)

Evidence of Recording and Filing.  On the Closing Date, Agent shall have
received evidence reasonably satisfactory to it that each of the Lease
Supplement, the Assignment of Leaseand Consent to Assignment and the Mortgage
shall have been or are being recorded with the appropriate Governmental
Authorities in the order in which such documents are listed in this clause, and
the UCC Financing Statements with respect to the Property shall have been or are
being filed with the appropriate Governmental Authorities.

 

 

 

 

 

 

 

(g)

Evidence of Insurance.  Agent, Lessor and each Participant shall have received
evidence of insurance with respect to the Property required to be maintained
pursuant to the Lease, setting forth the respective coverages, limits of
liability, carrier, policy number and period of coverage and naming Lessor as an
additional insured thereunder.

 

 

 

 

 

 

 

(h)

Unrestricted Cash Certificate.  On the Closing Date, Lessee shall have delivered
to Agent, Lessor and each Participant a certificate in form and substance
satisfactory to Agent certifying that Lessee and its Subsidiaries on a
consolidated basis held unrestricted cash (and cash equivalents) of $100,000,000
or more as of the last day of the month immediately preceding the Closing Date.

 

 

 

 

 

 

 

(i)

Taxes.   All taxes, fees and other charges in connection with the execution,
delivery, recording, filing and registration of the Operative Documents shall
have been paid or provisions for such payment shall have been made to the
satisfaction of Agent, each Participant and Lessor.

 

 

 

 

 

 

 

(j)

Opinions of Counsel.  On the Closing Date, (i) Lessee shall have delivered to
Agent, each Participant and Lessor (A) an opinion of Wilson, Sonsini, Goodrich &
Rosati, counsel to Lessee, as to the matters set forth in Exhibit D; and (B) an
opinion of local counsel licensed to practice in the jurisdiction where the
Property is located as to the matters set forth in Exhibit E; and (ii) Lessor
shall have delivered to Agent and each Participant (A) an opinion of special
counsel in the form set forth on Exhibit F; and (B) an opinion of internal
counsel to Lessor to the effect and in the form set forth in Exhibit G.

 

 

 

 

 

 

 

(k)

Approvals.  All necessary (or, in the reasonable opinion of Lessor, the
Participants or Agent or any of their respective counsel, advisable)
Governmental Actions and covenants and approvals of or by any Governmental
Authority or other Person, in each case required by any Requirement of Law,
covenant or restriction affecting the Property or the transactions contemplated
thereby to have been obtained by such date shall have been obtained or made and
be in full force and effect.

 

 

 

 

 

 

 

(l)

Litigation.  No action or proceeding shall have been instituted, nor shall any
action or proceeding be threatened, before any Governmental Authority, nor shall
any order, judgment or decree have been issued or proposed to be issued by any
Governmental Authority (i) to set aside, restrain, enjoin or prevent the full
performance of this Participation Agreement, the Lease or any other Operative
Document or any transaction contemplated hereby or thereby or (ii) which is
reasonably likely to have a Material Adverse Effect.

 

18.

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(m)

Requirements of Law.  In the reasonable opinion of Lessor, the Participants,
Agent and their respective counsel, the transactions contemplated by the
Operative Documents do not and will not violate any Requirement of Law and do
not and will not subject Lessor, Agent or any Participant to any adverse
regulatory or tax prohibitions or constraints.

 

 

 

 

 

 

 

(n)

Responsible Officer's Certificate of Lessee.   On or prior to the Closing Date,
Lessor, each Participant and Agent shall each have received a Responsible
Officer's Certificate, dated as of the Closing Date, of Lessee stating that (i)
each and every representation and warranty of Lessee contained in the Operative
Documents to which it is a party is true and correct on and as of the Closing
Date; (ii) no Potential Lease Default or Lease Event of Default under the Lease
has occurred and is continuing; (iii) each Operative Document to which Lessee is
a party is in full force and effect with respect to it; and (iv) Lessee has duly
performed and complied with all covenants, agreements and conditions contained
herein or in any Operative Document required to be performed or complied with by
it on or prior to the Closing Date.

 

 

 

 

 

 

 

(o)

Lessee's Resolutions and Incumbency Certificate, Etc.  Lessor, each Participant
and Agent shall each have received (i) a certificate of the Secretary or an
Assistant Secretary of Lessee attaching and certifying as to (A) the resolutions
of the Board of Directors of Lessee, duly authorizing the execution, delivery
and performance by Lessee of documents and agreements of the type represented by
each Operative Document to which it is or will be a party, (B) its articles of
incorporation and bylaws, and (C) the incumbency and signature of persons
authorized to execute and deliver on its behalf the Operative Documents to which
it is a party, and (ii)  good standing certificates from the appropriate officer
of the states of California, Colorado and Delaware.

 

 

 

 

 

 

 

(p)

Intentionally Deleted.

 

 

 

 

 

 

 

(q)

No Material Adverse Effect.  As of the Closing Date, there shall not have
occurred any Material adverse change in Lessee's and its Subsidiaries' capital
structure, ownership or consolidated assets, liabilities, results of operations,
or financial condition taken as a whole from that set forth or contemplated in
the most recent Financial Statements referred to in Section 8.3(m), and no event
or condition shall have occurred that would result in a Material Adverse Effect.

 

 

 

 

 

 

 

(r)

Responsible Officer's Certificate of Lessor.  On or prior to the closing Date,
Lessee, Agent and each Participant shall have received a certificate of an
authorized officer of Lessor, dated as of the Closing Date, stating that (i)
each and every representation and warranty of Lessor contained in the Operative
Documents to which it is a party is true and correct on and as of the Closing
Date, (ii) each Operative Document to which Lessor is a party is in full force
and effect with respect to it, and (iii) Lessor has duly performed and complied
with all covenants, agreements and conditions contained herein or in any
Operative Document required to be performed or complied with by it on or prior
to the Closing Date.

 

 

 

 

 

 

 

(s)

Lessor's Resolutions and Incumbency Certificate, Etc.  Lessee, Agent and each
Participant shall have received a certificate of the Secretary or an Assistant
Secretary of Lessor attaching and certifying as to (i) the resolutions of the
Board of Directors duly authorizing the execution, delivery and performance by
Lessor of documents and agreements of the type represented by each Operative
Document to which it is or will be a party, (ii) the pertinent provisions of its
by-laws and (iii) the incumbency and signature of persons authorized to execute
and deliver on its behalf the Operative Documents to which it is a party.

 

19.

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(t)

Termination of Liens.   Agent, each Participant and Lessor shall have received a
pay-off letter from the Successor Agent, together with duly executed UCC-3
termination statements, mortgage releases and such other instruments, in form
and substance satisfactory to Agent, each Participant and Lessor, as shall be
necessary to terminate and satisfy all Liens created pursuant to the Existing
Financing and all other Liens except Permitted Exceptions.

 

 

 

 

 

 

Section 6.2

Further Conditions Precedent.  The obligation of Lessor to make the Refinancing
Advance on the Closing Date and the obligation of each Participant to purchase
its Participation Interest in, and to make available its related portion of,
such Refinancing Advance on the Closing Date are subject to satisfaction or
waiver of the following conditions precedent and to satisfaction on or before
the Closing Date of the conditions precedent set forth in Section 6.1 (it being
understood that Lessor's obligations to make the Refinancing Advance to Lessee
and each Participant's obligation to fund the purchase of its Participation
Interest in the Refinancing Advance shall not be subject to the conditions
precedent set forth in Section 6.1 and this Section 6.2 to the extent such
conditions are actions required of Lessor or such Participant):

 

 

 

 

 

 

 

(a)

Representations and Warranties.  On the Closing Date, the representations and
warranties of Lessee, Lessor and each Participant contained herein and in each
of the other Operative Documents shall be true and correct as though made on and
as of such date, except to the extent such representations or warranties relate
solely to an earlier date, in which case such representations and warranties
shall have been true and correct on and as of such earlier date.

 

 

 

 

 

 

 

(b)

Performance of Covenants.  On the Closing Date, the parties hereto shall have
performed their respective agreements contained herein and in the other
Operative Documents to be performed by them on or prior to such date.

 

 

 

 

 

 

 

(c)

Title.   Title to the Property shall conform to the representations and
warranties set forth in Section 8.4(c).

 

 

 

 

 

 

      

(d)

No Default.  There shall not have occurred and be continuing any Potential Lease
Default, Accelerated Purchase Event  or Lease Event of Default under any of the
Operative Documents, and no Potential Lease Default, Accelerated Purchase Event
or Lease Event of Default under any of the Operative Documents will have
occurred after the making of the Refinancing Advance.

 

 

 

 

 

SECTION 7

SECURITY

 

 

 

 

 

Section 7.1   

Lessee Obligations.

 

 

 

 

 

 

 

(a)

Property.  To the extent that the transaction evidenced by the Lease and the
Operative Documents is treated as a loan by the Participants (through Lessor) to
Lessee secured by the Property, with Lessee as owner of the Property pursuant to
Section V hereof, the Lessee Obligations shall be secured by the Property as
provided in the Lease.

 

20.

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(b)

Other Collateral.  In addition to a security interest in the Property, the
Lessee Obligations shall be secured initially either by (i) a Cash Collateral
Agreement in the form of Exhibit M, duly executed and delivered by Lessee and
Cash Collateral delivered to Agent or its assignee pursuant to the Cash
Collateral Agreement, or (ii) a Letter of Credit in the form of Exhibit N (or
such other form as Agent may approve) issued in favor of Agent or Lessor
(collectively, the "Collateral").  The Collateral shall on the closing date be
in an amount equal to the Lease Balance and at no time shall be less than the
Lease Balance.  Lessee shall select the initial Collateral by notice to Agent
not less than three (3) Business Days before the Closing Date.  If Lessee
delivers a Letter of Credit, Agent shall not draw upon the Letter of Credit
(other than as may be requested or directed by Lessee) until the Expiration Date
or the occurrence of an Accelerated Purchase Event.  In any event, Lessee may
not withdraw any Collateral required to be delivered pursuant to this Section
7.1(b) until the Expiration Date and satisfaction in full of all Lessee
Obligations, but Lessee may require the application of any available Collateral
to satisfy the Obligations on and subject to the conditions set forth in Section
3.23, and Lessee may substitute Collateral to the extent permitted by Section
7.1(c).  At the time Lessee delivers any Cash Collateral to Agent pursuant to
this Section 7.1(b), Lessee also shall deliver to Lessor a favorable written
opinion of its counsel, in form and substance reasonably satisfactory to Lessor
and Agent but subject to customary qualifications and assumptions, to the effect
that the Cash Collateral Agreement is a legal, valid and binding agreement of
Lessee, enforceable in accordance with its terms, and that Lessor has a
perfected security interest in the Cash Collateral.

 

 

 

 

 

 

      

(c)

Substitution of Collateral.  If Lessee has delivered a Cash Collateral Agreement
and Cash Collateral at the Closing Date or has during the Term (subject to the
provisions of this Section 7.1(c)) has substituted a Cash Collateral Agreement
and Cash Collateral for a Letter of Credit, Lessee may at any time thereafter
during the Term so long as no Potential Lease Default exists under any of the
Operative Documents substitute a new Letter of Credit in place of such Cash
Collateral Agreement and Cash Collateral on ten (10) Business Days prior written
notice to Lessor and Agent.  If at the Closing Date or at any time during the
Term Lessee has delivered a Letter of Credit to Lessor in satisfaction of
Lessee's obligations under this Section 7.1, not later than twenty (20) Business
Days before expiration of such Letter of Credit Lessee shall deliver to Lessor a
replacement Letter of Credit.  Notwithstanding the immediately preceding
sentence, if at the Closing Date or at any time during the Term Lessee has
delivered a Letter of Credit to Lessor in satisfaction of Lessee's obligations
under this Section 7.1, Lessee may replace such Letter of Credit with Cash
Collateral under and pursuant to a Cash Collateral Agreement delivered to Agent
not later than one hundred twenty (120) days before expiration of such Letter of
Credit; however, during such one hundred twenty (120) day period, Agent will 
have the benefit of both the Cash Collateral and the Letter of Credit to be
replaced, and if bankruptcy or other legal proceedings are instigated or
continued by or against Lessee during such period, leaving Agent unsure whether
the pledge of the Cash Collateral will be effective to secure Lessee’s
Obligations, then Agent may draw upon such Letter of Credit before it expires. 
Any failure of Lessee to deliver either (i) a replacement Letter of Credit at
least twenty (20) Business Days prior to the expiration of an existing Letter of
Credit or (ii) Cash Collateral pledged pursuant to such a Cash Collateral
Agreement at least one hundred twenty (120) days prior to the expiration of an
existing Letter of Credit will constitute a Lease Event of Default, whereupon
Agent or Lessor may immediately draw upon the existing Letter of Credit.

 

 

 

 

 

 

Section 7.2

Lessor Obligations to Participants.  The obligations of Lessor to the
Participants under the Operative Documents shall be secured by the Mortgage and
the Assignment of Lease.

 

 

 

 

 

21.

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SECTION 8

REPRESENTATIONS

 

 

 

 

 

Section 8.1   

Representations of Lessor.   Lessor represents and warrants to each of the other
parties hereto as follows:

 

 

 

 

 

 

 

(a)

Due Organization, Etc.   It is a corporation duly organized, validly existing
and in good standing under the laws of the State of Ohio and has the corporate
power and authority to enter into and perform its obligations under each of the
Operative Documents to which it is or will be a party and each other agreement,
instrument and document to be executed and delivered by it in connection with or
as contemplated by each such Operative Document to which it is or will be a
party.

 

 

 

 

 

 

 

(b)

Authorization; No Conflict.   The execution, delivery and performance of each
Operative Document to which it is or will be a party has been duly authorized by
all necessary action on its part and neither the execution and delivery thereof,
nor the consummation of the transactions contemplated thereby, nor compliance by
it with any of the terms and provisions thereof (i) does or will require any
approval or consent of any trustee or holders of any of its indebtedness or
obligations, (ii) does or will contravene any current United States, Colorado or
California law, governmental rule or regulation, (iii) does or will contravene
or result in any breach of or constitute any default under, or result in the
creation of any Lien upon any of its property under, its articles of
incorporation or by-laws, or any indenture, mortgage, deed of trust, conditional
sales contract, credit agreement or other agreement or instrument to which it is
a party or by which it or its properties may be bound or affected or (iv) does
or will require any Governmental Action by any Governmental Authority, except
such as have been obtained on Lessee's or Lessor's behalf.

 

 

 

 

 

 

 

(c)

Enforceability, Etc.   Each Operative Document to which Lessor is or will be a
party has been duly executed and delivered by Lessor and each such Operative
Document to which Lessor is a party constitutes, or upon execution and delivery
will constitute, a legal, valid and binding obligation enforceable against
Lessor in accordance with the terms thereof, except as the same may be limited
by insolvency, bankruptcy, reorganization or other laws relating to or affecting
creditors' rights or by general equitable principles.

 

 

 

 

 

 

 

(d)

Litigation.   There is no action or proceeding pending or, to its knowledge,
threatened to which it is a party, before any Governmental Authority that, if
adversely determined, would materially and adversely affect its ability to
perform its obligations under the Operative Documents to which it is a party,
would have a material adverse effect on the financial condition of Lessor or
would question the validity or enforceability of any of the Operative Documents
to which it is or will become a party.

 

22.

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(e)

Assignment.   It has not assigned or transferred any of its right, title or
interest in or under the Lease except to Agent, for the benefit of the
Participants, in accordance with this Participation Agreement and the other
Operative Documents.

 

 

 

 

 

 

 

(f)

Defaults.   No Potential Lease Default or Lease Event of Default under the
Operative Documents attributable to it has occurred and is continuing.

 

 

 

 

 

 

 

(g)

Use of Proceeds.   The proceeds of the purchase of the Participation Interests
shall be applied by Lessor solely in accordance with the provisions of the
Operative Documents.

 

 

 

 

 

 

 

(h)

Securities Act.  Neither Lessor nor any Person authorized by Lessor to act on
its behalf has offered or sold any interest in the Lease, or in any similar
security relating to the Property, or in any security the offering of which for
the purposes of the Securities Act would be deemed to be part of the same
offering as the offering of the aforementioned securities to, or solicited any
offer to acquire any of the same from, any Person other than Agent and the
Participants, and neither Lessor nor any Person authorized by Lessor to act on
its behalf will take any action which would subject the issuance or sale of any
interest in the Lease or the Property to the provisions of Section 5 of the
Securities Act or require the qualification of any Operative Document under the
Trust Indenture Act of 1939, as amended.

 

 

 

 

 

 

 

(i)

Chief Place of Business.   Lessor's chief place of business, chief executive
office and office where the documents, accounts and records relating to the
transactions contemplated by this Participation Agreement and each other
Operative Document are kept are located at 66 Pearl Street, Albany, New York
12207.

 

 

 

 

 

 

 

(j)

Federal Reserve Regulations.  Lessor is not engaged principally in, and does not
have as one of its important activities, the business of extending credit for
the purpose of purchasing or carrying any margin stock (within the meaning of
Regulation U of the Board), and no part of the proceeds of the purchase of the
Participation Interests will be used by it to purchase or carry any margin stock
or to extend credit to others for the purpose of purchasing or carrying any such
margin stock or for any purpose that violates, or is inconsistent with, the
provisions of Regulation T, U, or X of the Board.

 

 

 

 

 

 

 

(k)

Investment Company Act.  Lessor is not an "investment company" or a company
controlled by an "investment company" within the meaning of the Investment
Company Act.

 

 

 

 

 

 

 

(l)

No Plan Assets.  Lessor is not acquiring its interests in the Property with the
assets of any "employee benefit plan" (as defined in Section 3(3) of ERISA)
which is subject to Title I of ERISA, or "plan" (as defined in Section
4975(e)(1) of the Code).

 

 

 

 

 

 

 

(m)

Equity Source.   The source of its 3.5% minimum equity investment in the Tranche
C Participation Interest is full recourse debt, the obligee of which is KeyBank
National Association, the ultimate parent of Lessor; (ii) Lessor will not obtain
residual insurance or any other residual guarantee to ensure recovery of its
equity investment; and (iii) Lessor will bear the loss attributable to any
decline in the fair value of the residual interest (to the extent, if any, such
loss is not recovered from payments required by the terms of the Lease) and has,
and is expected to continue to have during the term of the Lease, other
significant assets, in addition to and of a value that exceeds its equity
investment, that are at risk.

 

23.

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Section 8.2

Representations of the Participants.   Each Participant represents and warrants
to Lessor, each of the other Participants and Lessee as follows:

 

 

 

 

 

 

 

(a)

No Plan Assets.  Such Participant is not and will not be funding its purchase of
a Participation Interest hereunder, and is not performing its obligations under
the Operative Documents, with the assets of an "employee benefit plan" (as
defined in Section 3(3) of ERISA) which is subject to Title I of ERISA, or
"plan" (as defined in Section 4975(e)(1) of the Code).  The advancing of any
amount with respect to its Participation Interest on any Funding Date shall
constitute an affirmation by the subject Participant of the preceding
representation and warranty.

 

 

 

 

 

 

 

(b)

Due Organization, Etc.  It is either (i) a duly organized and validly existing
corporation in good standing under the laws of the state of its incorporation,
or (ii) a national banking association duly organized and validly existing under
the laws of the United States or (iii) a banking corporation duly organized and
validly existing under the laws of the jurisdiction of its organization, and, in
each case, has the corporate power and authority to execute, deliver and carry
out the terms and provisions of the Operative Documents to which it is a party.

 

 

 

 

 

 

 

(c)

Authorization; No Conflict.  The execution, delivery and performance of each
Operative Document to which it is or will be a party has been duly authorized by
all necessary action on its part and neither the execution and delivery thereof,
nor the consummation of the transactions contemplated thereby, nor compliance by
it with any of the terms and provisions thereof (i) does or will require any
approval or consent of any trustee or holders of any of its indebtedness or
obligations, (ii) does or will contravene any current law, governmental rule or
regulation of the United States or the state or country of its organization,
(iii) does or will contravene or result in any breach of or constitute any
default under, or result in the creation of any Lien upon any of its property
under, its certificate of incorporation or bylaws, articles of association or
other organizational documents or any indenture, mortgage, deed of trust,
conditional sales contract, credit agreement or other agreement or instrument to
which it is a party or by which it or its properties may be bound or affected or
(iv) does or will require any Governmental Action by any Governmental Authority.

 

 

 

 

 

 

 

(d)

Enforceability, Etc.  Each Operative Document to which it is a party has been,
or on or before the Closing Date or applicable Funding Date or Land Interest
Acquisition Date will be, duly executed and delivered by it and each such
Operative Document to which it is a party constitutes, or upon execution and
delivery will constitute, a legal, valid and binding obligation enforceable
against it in accordance with the terms thereof, except as the same may be
limited by insolvency, bankruptcy, reorganization or other laws relating to or
affecting creditors' rights or by general equitable principles.

 

 

 

 

 

 

 

(e)

Litigation.  There is no action or proceeding pending or, to its knowledge,
threatened to which it is or will be a party before any Governmental Authority
that is reasonably likely to be adversely determined and, if adversely
determined, would materially and adversely affect its ability to perform its
obligations under the Operative Documents to which it is a party.

 

24.

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Section 8.3

Representations of Lessee.  Lessee represents and warrants to each of the other
parties hereto that:

 

 

 

 

 

 

 

(a)

Corporate Status.  Lessee (i) is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and (ii) has duly
qualified and is authorized to do business and has obtained a certificate of
authority to transact business as a foreign corporation in the States of
California and Colorado and in each other jurisdiction where the failure to so
qualify is reasonably likely to be Material.

 

 

 

 

 

 

 

(b)

Corporate Power and Authority.  Lessee has corporate power and authority to
execute, deliver and carry out the terms and provisions of the Operative
Documents to which it is or will be a party and has taken all necessary
corporate action to authorize the execution, delivery and performance of the
Operative Documents to which it is or will be a party and has or will have duly
executed and delivered each Operative Document required to be executed and
delivered by it and, assuming the due authorization, execution and delivery
thereof on the part of each other party thereto, each such Operative Document
constitutes or will constitute a legal, valid and binding obligation enforceable
against it in accordance with its terms, except as the same may be limited by
insolvency, bankruptcy, reorganization or other laws relating to or affecting
the enforcement of creditors' rights or by general equitable principles.

 

 

 

 

 

 

 

(c)

No Violation.  Neither the execution, delivery and performance by Lessee of the
Operative Documents to which it is or will be a party nor compliance with the
terms and provisions thereof, nor the consummation by Lessee of the transactions
contemplated therein (i) will result in a violation by Lessee of any applicable
provision of any law, statute, rule, regulation, order, writ, injunction or
decree of any court or governmental instrumentality having jurisdiction over
Lessee or the Property that would (x) adversely affect the validity or
enforceability of the Operative Documents to which Lessee is a party, or the
title to, or value or condition of, the Property, or (y) have a Material Adverse
Effect on the consolidated financial position, business or consolidated results
of operations of Lessee, or (z) have an adverse effect on the ability of Lessee
to perform its obligations under the Operative Documents, (ii) will conflict
with or result in any breach under, or (other than pursuant to the Operative
Documents) result in the creation or imposition of (or the obligation to create
or impose) any Lien upon any of the property or assets of Lessee pursuant to the
terms of, any indenture, loan agreement or other agreement for borrowed money to
which Lessee is a party or by which it or any of its property or assets is bound
or to which it may be subject (other than Permitted Liens), or (iii) will
violate any provision of the certificate or articles of incorporation or bylaws
of Lessee.

 

 

 

 

 

 

 

(d)

Litigation.  There are no actions, suits or proceedings pending or, to the
knowledge of Lessee, threatened (i) that are reasonably likely to have a
Material Adverse Effect or (ii) that question the validity of the Operative
Documents or the rights or remedies of Lessor, Agent or the Participants with
respect to Lessee or the Property under the Operative Documents.

 

25.

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(e)

Governmental Approvals.  No Governmental Action by any Governmental Authority
having jurisdiction over Lessee or the Property is required to authorize or is
required in connection with (i) the execution, delivery and performance by
Lessee of any Operative Document or (ii) the legality, validity, binding effect
or enforceability against Lessee of any Operative Document, except for the
filing or recording of the Operative Documents hereof with the appropriate
Governmental Authorities.

 

 

 

 

 

 

 

(f)

Investment Company Act.   Lessee is not an "investment company" or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act.

 

 

 

 

 

 

 

(g)

Public Utility Holding Company Act.  Lessee is not a "holding company, or a
"subsidiary company," or an "affiliate" of a "holding company," or of a
"subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.

 

 

 

 

 

 

 

(h)

Accuracy of Information Furnished.  None of the Operative Documents and none of
the other certificates, statements or information furnished to Lessor, Agent or
any Participant by or on behalf of Lessee or any of its Subsidiaries in
connection with the Operative Documents or the transactions contemplated thereby
(taken together with all such Operative Documents, certificates, statements or
information) contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (it being understood by Lessor, Agent or any Participant that the
projections and forecasts provided by Lessee are not to be viewed as facts and
that actual results during the period or periods covered by such projections and
forecasts may differ from the projected or forecasted results).

 

 

 

 

 

 

 

(i)

Taxes.  All United States federal income tax returns and all other Material tax
returns which are required to have been filed have been or will be prepared in
accordance with applicable law and filed by or on behalf of Lessee by the
respective due dates, including extensions, and all taxes due with respect to
Lessee pursuant to such returns or pursuant to any assessment received by Lessee
have been or will be paid.  The charges, accruals and reserves on the books of
Lessee in respect of taxes or other governmental charges are, in the opinion of
Lessee, adequate.

 

 

 

 

 

 

 

(j)

Compliance with ERISA.  Each member of the ERISA Group has fulfilled its
obligations under the minimum funding standards of ERISA and the Code with
respect to each Plan and is in compliance in all Material respects with the
presently applicable provisions of ERISA and the Code with respect to each
Plan.  No member of the ERISA Group has (i) sought a waiver of the minimum
funding standard under Section 412 of the Code in respect of any Plan, (ii)
failed to make any contribution or payment to any Plan or Multiemployer Plan or
in respect of any Benefit Arrangement, or made any amendment to any Plan or
Benefit Arrangement, which has resulted or could result in the imposition of a
Lien or the posting of a bond or other security under ERISA or the Code or (iii)
incurred any liability under Title IV of ERISA other than a liability to the
PBGC for premiums under Section 4007 of ERISA.

 

26.

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(k)

Environmental and Other Regulations.  Except as set forth in Schedule IV
attached hereto, Lessee and the Property are in compliance with all
Environmental Laws relating to pollution and environmental control or employee
safety in the jurisdiction in which the Property is located and in all other
domestic jurisdictions, other than, with respect to such other jurisdictions,
those Environmental Laws the non-compliance with which would not have a Material
Adverse Effect.

 

 

 

 

 

 

 

(l)

Offer of Securities, Etc.  Neither Lessee nor any Person authorized to act on
their behalf has, directly or indirectly, offered any interest in the Property
or the Lease or any other interest similar thereto (the sale or offer of which
would be integrated with the sale or offer of such interest in the Property or
the Lease), for sale to, or solicited any offer to acquire any of the same from,
any Person other than the Participants, Lessor and other "accredited investors"
(as defined in Regulation D of the Securities and Exchange Commission).

 

 

 

 

 

 

 

(m)

Financial Statements.  The audited Financial Statements of Lessee and its
consolidated Subsidiaries as of March 31, 2002, and the related consolidated
statements of income, shareholder's equity and cash flows for the fiscal year
then ended, reported on by Ernst & Young, LLP, and the unaudited Financial
Statements for the quarter ended September 30, 2002 copies of which have been
delivered to each of Lessor, the Participants and Agent, present fairly in all
material respects, in conformity with generally accepted accounting principles,
the financial position of Lessee as of such date and its results of operations
and cash flows for such fiscal year.  Since the date of the audited Financial
Statements, there has been no event or circumstance which has a Material Adverse
Effect.

 

 

 

 

 

 

 

(n)

No Violation or Default.  Neither Lessee nor any of Lessee's Subsidiaries is in
violation of or in default with respect to (i) any Requirement of Law applicable
to such Person or (ii) any Contractual Obligation of such Person, where, in each
case, such violation or default is reasonably likely to have a Material Adverse
Effect.  Without limiting the generality of the foregoing, neither Lessee nor
any of Lessee's Subsidiaries (A) is in violation of any Environmental Laws, (B)
to the best of Lessee's knowledge, has any liability or potential liability
under any Environmental Laws or (C) has received written notice or other written
communication of an investigation or is under investigation by any Governmental
Authority having jurisdiction over Lessee or any of Lessee's Subsidiaries having
authority to enforce Environmental Laws, where, in each case, such violation,
liability or investigation could reasonably be expected to have a Material
Adverse Effect, nor, to the best of Lessee's knowledge, have any Hazardous
Materials been released or disposed of on any of the properties owned by Lessee
or Lessee's Subsidiaries which, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.  No Lease Event of
Default or Potential Lease Default has occurred and is continuing.

 

 

 

 

 

 

 

(o)

Title; Possession Under Leases.  Lessee and Lessee's Subsidiaries (i) own and
have good title (without regard to minor defects of title), or leasehold
interests in, all their other respective properties and assets which are
material to the business of Lessee and its Subsidiaries taken as a whole as
reflected in the most recent Financial Statements delivered to Agent (except
those assets and properties disposed of since the date of such Financial
Statements in compliance with this Participation Agreement) and (ii) own and
have good title (without regard to minor defects of title) to, or leasehold
interests in, all respective properties and assets acquired by Lessee and
Lessee's Subsidiaries since such date which are material to the business of
Lessee and its Subsidiaries taken as a whole (except those assets and properties
disposed of in compliance with this Participation Agreement).  Such assets and
properties are subject to no Lien, except for Permitted Liens.

 

27.

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(p)

Patent and Other Rights.  Lessee and Lessee's Subsidiaries own or license under
validly existing agreements (or could obtain such ownership, possession or
license on terms not materially adverse to Lessee and its Subsidiaries, taken as
a whole, and under circumstances that could not reasonably be expected to have a
Material Adverse Effect), and have the full right to license without the consent
of any other Person, all patents, licenses, trademarks, trade names, trade
secrets, service marks, copyrights and all rights with respect thereto, which
are material to conduct the businesses of Lessee and its Subsidiaries (taken as
a whole) as now conducted.

 

 

 

 

 

 

 

(q)

Solvency, Etc.  Lessee and each of its Material Subsidiaries is Solvent and,
after the execution and delivery of the Operative Documents and the consummation
of the transactions contemplated thereby, will be Solvent.

 

 

 

 

 

 

 

(r)

Catastrophic Events.  Neither Lessee nor any of Lessee's Subsidiaries and none
of their properties is affected by any fire, explosion, strike, lockout or other
labor dispute, earthquake, embargo or other casualty that is reasonably likely
to have a Material Adverse Effect.  As of the Closing Date, there are no
disputes presently subject to grievance procedure, arbitration or litigation
under any of the collective bargaining agreements, employment contracts or
employee welfare or incentive plans to which Lessee or any of Lessee's
Subsidiaries is a party, an there are no strikes, lockouts, work stoppages or
slowdowns, or, to the best knowledge of Lessee, jurisdictional disputes or
organizing activities occurring or threatened which alone or in the aggregate
are reasonably likely to have a Material Adverse Effect.

 

 

 

 

 

 

 

(s)

Disclosure.  No statement, information, report, representation, or warranty made
by the Lessee in any Operative Document or furnished to the Agent, the Lessor or
any Participant in connection with any Operative Document contains any untrue
statement of a material fact or, when viewed together with the Lessee's periodic
reports filed under the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder, omits to state any material fact
necessary to make the statements herein or therein not misleading.

 

 

 

 

 

 

Section 8.4

Representations of Lessee With Respect to the Property on the Closing
Date.  Lessee hereby represents and warrants as follows:

 

 

 

 

 

 

 

(a)

Property.  The Property consists of the Land Interest, and the Improvements and
Equipment thereon and all Appurtenant Rights thereto.  Such Property is located
in the State of Colorado.  The use of the Property by Lessee and its agents,
assignees, employees, invitees, lessees, licensees, contractors and tenants
complies in all material respects with all Requirements of Law (including,
without limitation, Title III of the Americans with Disabilities Act, all zoning
and land use laws and Environmental Laws) and Insurance Requirements, except for
such Requirements of Law as Lessee shall be contesting in good faith by
appropriate proceedings.  The Improvements on such Property do not encroach in
any manner onto any adjoining land (except as permitted by express written
easements or as insured by appropriate title insurance) and the Property
complies in all Material respects with all applicable Requirements of Law
(including, without limitation, Title III of the Americans with Disabilities
Act, all applicable Environmental Laws and building, planning, zoning and fire
codes).  The Improvements including, without limitation, structural members, the
plumbing, heating, air conditioning and electrical systems thereof, and all
water, sewer, electric, gas, telephone and drainage facilities are, in all
material respects,  in first class working condition and fit for use as
administration, manufacturing design and warehouse facilities, and all other
utilities required to adequately service the Improvements for their intended use
are available and "tapped on" and hooked up pursuant to adequate permits
(including any that may be required under applicable Environmental Laws).  There
is no action, suit or proceeding (including any proceeding in condemnation or
eminent domain or under any Environmental Law) pending or, to the best of
Lessee's knowledge, threatened with respect to Lessee, its Affiliates or such
Property which adversely affects the title to, or the use, operation or value
of, the Property.  As of the Closing Date, no fire or other casualty with
respect to the Property shall have occurred.  The Property has available all
material services of public facilities and other utilities necessary for use and
operation of such facility and the other Improvements for their primary intended
purposes, including, without limitation, adequate water, gas and electrical
supply, storm and sanitary sewerage facilities, telephone, other required public
utilities and means of access to such facility from publicly dedicated streets
and public highways for pedestrians and motor vehicles.  All utilities serving
such Property are located in, and vehicular access to the Improvements on such
Property is provided by, either public rights-of-way abutting such Property or
Appurtenant Rights.  All material licenses, approvals, authorizations, consents,
permits (including, without limitation, building, demolition and environmental
permits, licenses, approvals, authorizations and consents), easements and
rights-of-way, including proof and dedication, required for the use, treatment,
storage, transport, disposal or disposition of any Hazardous Substance on, at,
under or from such Property have either been obtained from the appropriate
Governmental Authorities having jurisdiction or from private parties, as the
case may be, or will be obtained from the appropriate Governmental Authorities
having jurisdiction or from private parties, as the case may be, prior to
commencing any such construction or use and operation, as applicable and will in
each case be maintained by Lessee during the periods for which they are required
by Applicable Law or such Governmental Authorities.

 

28.

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(b)

Title.   Lessor has fee simple title in the Land Interest and any Improvements
and has the right to grant the Mortgage on the Property.

 

 

 

 

 

 

 

(c)

Insurance.  Lessee has obtained insurance coverage covering the Property which
meets the requirements of Article XIV of the Lease, and such coverage is in full
force and effect.

 

 

 

 

 

 

 

(d)

Lease.  On the Closing Date:

(i)     Lessee has a valid leasehold interest in the Property, subject only to
the Permitted Exceptions;

(ii)     Lessee's obligation to pay Rent is an independent covenant and no right
of deduction or offset will exist with respect to any Rent or other sums payable
under the Lease; and

(iii)    no Rent under the Lease has been prepaid and Lessee will have no right
to prepay the Rent, except as specifically set forth in the Lease.

 

29.

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(e)

Protection of Interests.   (i) On the Closing Date, the Assignment of Lease and
Consent to Assignment and the Mortgage are each in a form sufficient, and have
been recorded in all recording offices necessary, to grant perfected first
priority liens on the Property to Agent or Lessor, as the case may be, (ii)
Agent Financing Statements are each in a form sufficient, and have been filed in
all filing offices necessary, to create a valid and perfected first priority
security interest in Lessor's interest in all Equipment, if any, to be located
on the Property and the Improvements; and (iii) Lessor Financing Statements are
each in a form sufficient, and have been filed in all filing offices necessary,
to perfect Lessor's interest under the Lease to the extent the Lease is a
security agreement.

 

 

 

 

 

 

 

(f)

Flood Hazard Areas.  No portion of the Property is located in an area identified
as a special flood hazard area by the Federal Emergency Management Agency or
other applicable agency, or if any portion of the Property is located in an area
identified as a special flood hazard area by the Federal Emergency Management
Agency or other applicable agency, then flood insurance has been obtained for
the Property or such portion thereof in accordance with Section 14.2(b) of the
Lease and in accordance with the National Flood Insurance Act of 1968, as
amended.

 

 

 

 

 

 

      

(g)

Conditions Precedent.  All conditions precedent contained in this Participation
Agreement and in the other Operative Documents relating to the refinancing of
the Property by Lessor have been satisfied in full or waived.

 

 

 

 

 

 

SECTION 9

PAYMENT OF CERTAIN EXPENSES

 

 

 

 

 

Lessee agrees, for the benefit of Lessor, Agent and the Participants, that:

 

 

 

 

 

 

Section 9.1   

Transaction Expenses.

 

 

 

 

 

 

      

(a)

Lessee shall pay, or cause to be paid, from time to time all Transaction
Expenses in respect of the transactions consummated on the Closing Date, it
being understood and agreed that neither Agent, Lessor nor any Participant shall
be required to advance any Transaction Expenses in connection with the closing.

 

 

 

 

 

 

 

(b)

Lessee shall pay or cause to be paid (i) all Transaction Expenses of Lessor,
(ii) the Administrative Fee, (iii) all Transaction Expenses reasonably incurred
by Lessee, Agent or Lessor in entering into any future amendments or supplements
with respect to any of the Operative Documents, whether or not such amendments
or supplements are ultimately entered into, or giving or withholding of waivers
or consents hereto or thereto, in each case (except after the occurrence of a
Lease Event of Default) which have been requested by or approved by Lessee, (iv)
all Transaction Expenses incurred by Lessor, Lessee or Agent in connection with
any purchase of the Property by Lessee or other Person pursuant to Articles XVI,
XVII, XX or XXII of the Lease, and (v) all Transaction Expenses incurred by any
of the other parties hereto in respect of enforcement of any of their rights or
remedies against Lessee in respect of the Operative Documents.

 

 

 

 

 

 

Section 9.2

Brokers' Fees and Stamp Taxes.  Lessee shall pay or cause to be paid any
brokers' fees and any and all stamp, transfer and other similar taxes, fees and
excises, if any, including any interest and penalties, which are payable in
connection with the transactions contemplated by this Participation Agreement
and the other Operative Documents.

 

30.

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SECTION 10

OTHER COVENANTS AND AGREEMENTS

 

Section 10.1   

Affirmative Covenants of Lessee.  So long as this Participation Agreement is in
effect, Lessee shall, and shall (except in the case of Lessee's reporting
covenants set forth in Sections 10.1(a), 10.1(b)(i) and 10.1(b)(ii)) cause each
Subsidiary, to:

 

 

 

 

 

 

 

(a)

Financial Statements.  Deliver to Agent and each Participant, in form and detail
satisfactory to Agent and the Required Participants:

 

 

 

 

 

 

 

(i)     as soon as available, but in any event within (A) ninety (90) days after
the end of each fiscal year of Lessee, or, (B) if Lessee has been granted an
extension by the Securities and Exchange Commission permitting the late filing
by Lessee of any annual report on form 10-K, the earlier of (x) 120 days after
the end of each fiscal year of Lessee or (y) the last day of any such extension,
a consolidated balance sheet of Lessee and its Subsidiaries as at the end of
such fiscal year, and the related consolidated statements of income and cash
flows for such fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail, audited and
accompanied by a report and opinion of an independent certified public
accountant of nationally recognized standing, which report and opinion shall be
prepared in accordance with GAAP and shall not be subject to any qualifications
or exceptions as to the scope of the audit nor to any qualifications and
exceptions not reasonably acceptable to the Required Participants;

(ii)    as soon as available, but in any event within (A) forty-five (45) days
after the end of each of the first three fiscal quarters of each fiscal year of
Lessee, or, (B) if Lessee has been granted an extension by the Securities and
Exchange Commission permitting the late filing by Lessee of any quarterly report
on form 10-Q, the earlier of (x) sixty (60) days after the end of each of the
first three fiscal quarters of each fiscal year of Lessee or (y) the last day of
any such extension, a consolidated balance sheet of Lessee and its Subsidiaries
as at the end of such fiscal quarter, and the related consolidated statements of
income and cash flows for such fiscal quarter and for the portion of Lessee's
fiscal year then ended, setting forth in each case in comparative form the
figures for the corresponding fiscal quarter of the previous fiscal year and the
corresponding portion of the previous fiscal year, all in reasonable detail and
certified by a Responsible Officer of Lessee as fairly presenting the financial
condition, results of operations and cash flows of Lessee and its Subsidiaries
in accordance with GAAP, subject only to normal year-end audit adjustments and
the absence of footnotes; and

(iii)    Reports required to be delivered pursuant to clauses (i) and (ii) of
this Section 10.1(a) shall be deemed to have been delivered on the date on which
Lessee posts such reports on Lessee's website on the Internet at the website
address listed on Schedule III hereof or when such report is posted on the
Securities and Exchange Commission's website at www.sec.gov.; provided that (A)
Lessee shall deliver paper copies of the reports referred to in such clauses (i)
and (ii) of this Section 10.1(a) to Agent or any Participant who requests Lessee
to deliver such paper copies until written request to cease delivering paper
copies is given by Agent or such Participant, (B) Lessee shall notify Agent and
the Participants of the posting of any such new material, and (C) in every
instance Lessee shall provide paper copies of the Compliance Certificates
required by clause (i) of Section 10.1(b) to Agent and each Participant.  Except
for the Compliance Certificates referred to in such clause (i) of Section
10.1(b), Agent shall have no obligation to request the delivery or to maintain
copies of the reports referred to in clauses (i) and (ii) of this Section
10.1(a), and in any event shall have no responsibility to monitor compliance by
Lessee with any such request for delivery, and each Participant shall be solely
responsible for requesting delivery to it or maintaining its copies of such
reports.

 

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(b)

Certificates, Notices and Other Information.  Deliver to Agent and each
Participant, in form and detail satisfactory to Agent and the Required
Participants:

 

 

 

 

 

 

(i)      concurrently with the delivery of the Financial Statements referred to
in clauses (i) and (ii) of Section 10.1(a), a duly completed Compliance
Certificate signed by a Responsible Officer of Lessee;

(ii)     monthly on or before the tenth Business Day of each calendar month,
certified copies of reports or account statements signed by a Responsible
Officer of Lessee detailing (i) the total amount of unrestricted cash (and cash
equivalents) held by Lessee and its Subsidiaries on a consolidated basis as of
the last day of the immediately preceding calendar month. ("Consolidated Cash
Balance"), and (ii) the portion(s) of such Consolidated Cash Balance deposited
in domestic accounts subject to any deposit account control agreement
agreements;

(iii)    promptly after the same are available, copies of each annual report,
proxy or financial statement or other report or communication sent to the
stockholders of Lessee, and copies of all annual, regular, periodic and special
reports and registration statements which Lessee may file or be required to file
with the Securities and Exchange Commission under Sections 13 or 15(d) of the
Securities Exchange Act of 1934, and not otherwise required to be delivered to
Agent pursuant hereto;

(iv)    promptly after the occurrence thereof, notice of any Potential Lease
Default or Lease Event of Default;

(v)     notice of any change in accounting policies or financial reporting
practices by Lessee or any Subsidiary that is material to Lessee or to Lessee
and its Subsidiaries on a consolidated basis;

(vi)    promptly after the commencement thereof, notice of any litigation,
investigation or proceeding affecting Lessee where the reasonably expected
damages to Lessee exceed the Threshold Amount, or in which injunctive relief or
similar relief is sought, which relief, if granted, has a Material Adverse
Effect;

 

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(vii)    promptly after the occurrence thereof, notice of any Reportable Event
with respect to any Plan or the intent to terminate any Plan, or the institution
of proceedings or the taking or expected taking of any other action to terminate
any Plan or withdraw from any Plan;

(viii)   promptly after the occurrence thereof, notice of any Material Adverse
Effect; and

(ix)     promptly, such other data and information as from time to time may be
reasonably requested by Agent, or, through Agent or any Participant. 
Notwithstanding any provision of this Participation Agreement to the contrary,
so long as no Potential Lease Default or Lease Event of Default shall have
occurred and be continuing, neither Lessee nor any of its Subsidiaries shall be
required to disclose, permit the inspection, examination, photocopying or making
extracts of, or discuss, any document, information or other matter that (A)
constitutes non-financial trade secrets or non-financial proprietary
information, or (B) the disclosure of which to any Participant, or their
designated representative, is then prohibited by law or any agreement binding on
Lessee or any of its Subsidiaries that was not entered into by Lessee or any
such Subsidiary for the purpose of concealing information from the Participants.

Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of Lessee setting forth details of the occurrence referred
to therein and stating what action Lessee has taken and proposes to take with
respect thereto.  The annual reports, proxies, financial statements or other
communications required by Section 10.1(b)(iii) above shall be deemed to have
been delivered on the date on which Lessee posts such reports on Lessee’s
website on the Internet at the website address listed on Schedule 10.02 hereof
or when such report is posted on the Securities and Exchange Commission’s
website at www.sec.gov.; provided that (y) Lessee shall deliver paper copies of
the reports referred to in Section 10.1(b)(iii) to Administrative Agent or any
Lender who requests Lessee to deliver such paper copies until written request to
cease delivering paper copies is given by Administrative Agent or such Lender,
and (z) Lessee shall notify Administrative Agent and Lenders of the posting of
any such new material.  Administrative Agent shall have no obligation to request
the delivery or to maintain copies of the reports and communications referred to
in Section 10.1(b)(iii), and in any event shall have no responsibility to
monitor compliance by Lessee with any such request for delivery, and each Lender
shall be solely responsible for requesting delivery to it or maintaining its
copies of such reports and communications.

 

 

 

 

 

 

 

 

(c)

Payment of Taxes.  Pay and discharge when due all material taxes, assessments,
and governmental charges, except for any such tax, assessment, charge, or levy
which is an Ordinary Course Lien under subsection (b) of the definition of such
term and except as otherwise provided in Section 13 hereof or Article XIII of
the Lease.

 

 

 

 

 

 

 

(d)

Preservation of Existence.  Preserve and maintain its existence, licenses,
permits, rights, franchises and privileges necessary or desirable in the normal
conduct of its business, except (i) as permitted by Section 10.2(c), or (ii)
where failure to do so cannot reasonably be expected to have a Material Adverse
Effect.

 

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(e)

Maintenance of Properties.  Maintain, preserve and protect all of its material
properties and equipment necessary in the operation of its business in good
order and condition, subject to wear and tear in the ordinary course of
business, and not permit any waste of its properties, except where failure to do
so would not reasonably be expected to have a Material Adverse Effect.

 

 

 

 

 

 

 

(f)

Maintenance of Insurance.  Maintain liability and casualty insurance with
responsible insurance companies satisfactory to Agent in such amounts and
against such risks as is customary for similarly situated businesses.

 

 

 

 

 

 

 

(g)

Compliance with Requirements of Law.

 

 

 

(i)     Comply with all Requirements of Law, noncompliance with which would not
reasonably to be expected to have a Material Adverse Effect; and

(ii)    conduct its operations and keep and maintain its property in material
compliance with all Environmental Laws.

 

 

 

 

 

 

 

 

(h)

Inspection Rights.  At any time during regular business hours and as often as
reasonably requested upon reasonable notice, permit Agent or any Participant, or
any employee, agent or representative thereof, to examine, audit and make copies
and abstracts from Lessee's records and books of account and to visit and
inspect its properties and to discuss its affairs, finances and accounts with
any of its officers and key employees, and, upon request, furnish promptly to
Agent or any Participant true copies of all financial information and internal
management reports made available to their senior management.  Notwithstanding
any provision of this Agreement to the contrary, so long as no Potential Lease
Default or Lease Event of Default shall have occurred and be continuing, neither
Lessee nor any of its Subsidiaries shall be required to disclose, permit the
inspection, examination, photocopying or making extracts of, or discuss, any
document, information or other matter that (i) constitutes non-financial trade
secrets or non-financial proprietary information, or (ii) the disclosure of
which to the Lessor, Agent or any Participant, or their designated
representative, is then prohibited by law or any agreement binding on Lessee or
any of its Subsidiaries that was not entered into by Lessee or any such
Subsidiary for the purpose of concealing information from the Lessor, Agent or
any Participant.  Lessee shall, however, furnish to Agent such information
concerning Lessee's intellectual property (including, without limitation,
application and registration numbers for any filings in connection with such
intellectual property) as is reasonably necessary to permit Agent (on behalf of
itself and the other Participants) to perfect a security interest in such
intellectual property.

 

 

 

 

 

 

 

(i)

Keeping of Records and Books of Account.  Keep adequate records and books of
account reflecting all financial transactions in conformity with GAAP,
consistently applied, and in material conformity with all applicable
requirements of any Governmental Authority having regulatory jurisdiction over
Lessee or any applicable Subsidiary.

 

 

 

 

 

 

 

(j)

Compliance with ERISA.  Cause, and cause each of its ERISA Affiliates to:  (i)
maintain each Plan in compliance in all material respects with the applicable
provisions of ERISA, the Code and other federal or state law; (ii) cause each
Plan which is qualified under Section 401(a) of the Code to maintain such
qualification; and (iii) make all required contributions to any Plan subject to
Section 412 of the Code.

 

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(k)

Compliance With Agreements.  Promptly and fully comply with all Contractual
Obligations to which any one or more of them is a party, except for any such
Contractual Obligations (i) the nonperformance of which would not cause a
Potential Lease Default or Lease Event of Default, (ii) then being contested by
any of them in good faith by appropriate proceedings, or (iii) if the failure to
comply therewith could not reasonably be expected to have a Material Adverse
Effect.

 

 

 

 

 

 

 

(l)

ALTA Survey.  Not later than January 15, 2003, Lessee shall have delivered to
Agent for the benefit of Lessor and the Participants an ALTA/ACSM (1992)(Urban)
Survey of the Property, including Table A numbers 1, 2, 3, 4, 6, 8, 9, 10 and
11, certified to Lessor, the Participants and the title company and otherwise in
form reasonably acceptable to the Participants, together with endorsements to
the title insurance policies delivered pursuant to Section 6.1(e) hereof
removing any survey exceptions, adding endorsements that the real property shown
on such Survey is identical to the Property and such other endorsements as
Lessor, Agent and the Participants may reasonably require.

 

 

 

 

 

 

Section 10.2

Negative Covenants of Lessee.  So long as this Participation Agreement is in
effect, Lessee shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly:

 

 

 

 

 

 

 

(a)

Indebtedness.  Create, incur, assume or suffer to exist any Indebtedness, except
for the following ("Permitted Indebtedness"):

 

 

 

 

 

 

 

(i)     The obligations of Lessee under the Operative Documents and the Loan
Documents;

(ii)     Indebtedness outstanding on the date hereof and listed on Schedule 10.2
and any refinancings, refundings, renewals or extensions thereof, provided that
the amount of such Indebtedness is not increased at the time of such
refinancing, refunding, renewal or extension except by an amount equal to the
premium or other amount paid, and fees and expenses incurred, in connection with
such refinancing and by an amount equal to any utilized commitments thereunder,
and (ii) the material terms of any such refinanced, refunded, renewed or
extended Indebtedness shall be no less favorable to Lessee than the terms of
such Indebtedness  immediately prior to such refinancing, refunding, renewal or
extension;

(iii)    Ordinary Course Indebtedness;

(iv)    Indebtedness of Lessee under the Convertible Subordinated Debentures;

(v)    Indebtedness of Lessee under any letter of credit facility other than a
Letter of Credit (a "Permitted LC Agreement"); provided that (A) the sum at any
time of the aggregate face amount of all letters of credit issued and
outstanding under all Permitted LC Agreements, plus the aggregate amount of all
unremedied drawings under such letters of credit, does not exceed $10,000,000,
and (B) the Indebtedness of Lessee under any Permitted LC Agreement is at all
times either unsecured or secured by Liens permitted pursuant to Section
10.2(b).

 

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(vi)    Indebtedness of Lessee and its Subsidiaries under loans and Capital
Leases incurred by Lessee or any of its Subsidiaries to finance the acquisition
by such Person of real property, improvements, fixtures, equipment or other
fixed assets (together with attachments, ascensions, additions, "soft costs" and
proceeds thereof), provided that in each case, (A) such Indebtedness is incurred
by such Person at the time of, or not later than six (6) months after, the
acquisition by such Person of the property so financed, and (B) such
Indebtedness does not exceed the purchase price of the property so financed;

(vii)    Indebtedness of Lessee and any of its Subsidiaries under Synthetic
Lease Obligations;

(viii)   Indebtedness of Lessee and its Subsidiaries under initial or successive
refinancings, refundings, renewals or extensions of any Indebtedness permitted
by clauses (v), (vi) and (vii) above, provided that the amount of such
Indebtedness is not increased at the time of such refinancing, refunding,
renewal or extension except by an amount equal to the premium or other amount
paid, and fees and expenses incurred, in connection with such refinancing, and
(ii) the material terms of any such refinanced, refunded, renewed or extended
indebtedness shall be no less favorable to Lessee than the terms of such
Indebtedness immediately prior to such refinancing, refunding, renewal, or
extension;

(ix)    Indebtedness of Lessee to any of Lessee's Subsidiaries, Indebtedness of
any of Lessee's Subsidiaries to Lessee or Indebtedness of any of Lessee's
Subsidiaries to any of Lessee's other Subsidiaries;

(x)     Subordinated Indebtedness of Lessee to any Person, provided that (A)
such Indebtedness contains subordination provisions no less favorable to Agent
and the Participants than those set forth in Exhibit O or as otherwise approved
by the Required Participants and (B) the aggregate principal amount of all
Subordinated Debt of Lessee outstanding (including the Convertible Subordinated
Debentures) does not exceed $350,000,000 at any time, and

(xi)    Other Indebtedness not included in (i) through (xi) above and not
exceeding, in the aggregate at any time, ten percent (10%) of the total
consolidated assets of Lessee and its Subsidiaries determined as of the end of
the most recent fiscal quarter.

 

 

 

 

 

 

 

(b)

Liens.  Incur, assume or suffer to exist, any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired, except for the
following ("Permitted Liens"):

 

 

 

 

 

 

 

(i)     Liens in favor of any of Agent or any Participant securing the
obligations of Lessee under the Operative Documents;

(ii)    Liens existing on the date hereof and listed on Schedule 10.2 and any
renewals or extensions thereof, provided that the property covered thereby is
not increased and any renewal or extension of the obligations secured or
benefited thereby is permitted by Section 10.2(a);

 

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(iii)     Ordinary Course Liens;

(iv)     Liens securing Investments which constitute Permitted Investments under
Section 10.1(p);

(v)      Liens on cash or cash equivalents securing reimbursement obligations of
Lessee under letters of credit (other than any Letters of Credit) in an
aggregate amount of all such cash and cash equivalents not to exceed
$10,000,000;

(vi)     Liens on the property or assets of any corporation which becomes a
Subsidiary of Lessee after the date of this Participation Agreement, provided
that (A) such Liens exist at the time such corporation became a Subsidiary, and
(B) such Liens were not created in contemplation of such acquisition by Lessee;

(vii)    Rights of vendors or lessors under conditional sale agreements, Capital
Leases or other title retention agreements, provided that in each case, (A) such
rights secure or otherwise relate to Permitted Indebtedness, (B) such rights do
not extend to any property other than property acquired with the proceeds of
such Permitted Indebtedness (together with accessions, additions, replacements
and proceeds thereof), and (z) such rights do not secure any Indebtedness other
than Permitted Indebtedness;

(viii)    Liens securing Indebtedness and any related obligations of Lessee or
any of its Subsidiaries which constitutes Permitted Indebtedness under clause
(vi) of Section 10.2(a) (or refinancings of such Indebtedness under clause
(viii) of Section 10.2(a)), provided that such Liens cover only those assets
subject to Synthetic Lease Obligations (together with accessions, additions,
replacements and proceeds thereof);

(ix)     Liens incurred in connection with leases, subleases, licenses and
sublicenses granted to Persons not interfering in any material respect with the
business of Lessee and its Subsidiaries and any interest or title of a lessee or
licensee under any such leases, subleases, licenses or sublicenses;

(x)      Liens in favor of the Lenders in connection with the letter of credit
cash collateral account established in accordance with the Loan Documents;

(xi)     Liens arising in connection with judgments not constituting a Lease
Event of Default; and

(xii)     Liens not otherwise permitted hereunder on the property or assets of
Lessee and any of its Subsidiaries securing (A) borrowed money Indebtedness or
(B) all obligations of Lessee arising other than in connection with any
securitization which are evidenced by bonds, debentures, notes or other similar
instruments, provided that, in each case, the aggregate principal amount of all
Indebtedness secured by such Liens does not exceed at any time ten percent (10%)
of the Consolidated Tangible Net Worth of Lessee and its Subsidiaries determined
as of the end of the fiscal quarter immediately preceding the date of
determination;

 

37.

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(c)

Fundamental Changes.  Merge or consolidate with or into any Person or liquidate,
wind-up or dissolve itself, or permit or suffer any liquidation or dissolution
or sell all or substantially all of its assets, except that:

 

 

 

 

 

 

 

(i)      any Subsidiary may merge with (A) Lessee, provided that Lessee shall be
the continuing or surviving corporation, (B) any one or more Subsidiaries, and
(C) any joint venture, partnership or other Person, so long as such joint
venture, partnership and other Person will, as a result of making such merger
and all other contemporaneous related transactions, become a Subsidiary;

(ii)     any Subsidiary may sell all or substantially all of its assets (upon
voluntary liquidation or otherwise), to Lessee or to another Subsidiary;

(iii)    Lessee may merge into or consolidate with any other Person, provided
that (A) Lessee is the surviving corporation, and (B) immediately after giving
effect to such merger or consolidation, no Potential Lease Default or Lease
Event of Default shall have occurred and be continuing; and

(iv)    any Subsidiary may merge or consolidate with or into any other Person or
sell all or substantially all of its assets to the extent such transaction is a
Disposition otherwise permitted under Section 10.2(d) or an Investment otherwise
permitted under Section 10.2(e) and immediately after giving effect to such
merger or consolidation, no Potential Lease Default or Lease Event of Default
shall have occurred and be continuing.

 

 

 

 

 

 

 

(d)

Dispositions.  Make any Dispositions, except:

 

 

 

 

 

 

 

(i)     Ordinary Course Dispositions;

(ii)    Dispositions permitted by Section 10.2(c);

(iii)    Dispositions permitted by the Lease; and

(iv)    Dispositions not otherwise permitted hereunder provided that such
Dispositions do not exceed in the aggregate 10% of the Consolidated Tangible Net
Worth for the fiscal quarter ending December 31, 2002 as determined in the
financial statements delivered in accordance with Section 10.1(a).

 

 

 

 

 

 

 

(e)

Investments.  Make any Investments, except for the following ("Permitted
Investments"):

 

 

 

 

 

 

 

(i)     Investments existing on September 30, 2002;

(ii)    Ordinary Course Investments;

(iii)    Investments permitted by Section 10.2(a) or Section 10.2(c);

 

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(iv)     Investments arising from rights received by Lessee and its Subsidiaries
upon the required payment of any permitted contingent obligations of Lessee and
its Subsidiaries;

(v)      Investments in the nature of Acquisitions, provided that the aggregate
amount of such Acquisitions in any period of four consecutive fiscal quarters
does not exceed ten percent (10%) of Consolidated Tangible Net Worth as
determined as of the fiscal quarter immediately preceding the date of
determination;

(vi)     Investments of Lessee and its Subsidiaries in Swap Contracts, provided
that all such arrangements are entered into in connection with bona fide hedging
operations and not for speculation;

(vii)    Investments not otherwise permitted hereunder, provided that the
aggregate amount of such other Investments made after September 30, 2002 (less
any return on any such Investments) does not exceed ten percent (10%) of
Consolidated Tangible Net Worth as determined as of the fiscal quarter
immediately preceding the date of determination.

 

 

 

 

 

 

 

(f)

Restricted Payments.  Make any Restricted Payments, except as follows:

 

 

 

 

 

 

 

(i)      Lessee may pay dividends or other distributions payable solely in
shares of capital stock of Lessee or any Subsidiary or payable by any Subsidiary
to Lessee or another Subsidiary;

(ii)     Lessee may distribute rights pursuant to a shareholder rights plan or
redeem such rights, provided that such redemption is in accordance with the
terms of such shareholder rights plan;

(iii)    Lessee may make Restricted Payments in connection with or pursuant to
any of its Employee Benefits Plans or in connection with the employment,
termination or compensation of its employees, officers or directors;

(iv)    Lessee may make Restricted Payments with the Net Security Proceeds
received from a substantially concurrent issuance of Equity Securities or
capital stock or with its Equity Securities or capital stock or Lessee may
convert any Equity Securities in accordance with their terms into other Equity
Securities, provided, however, that the cash amount of any such Restricted
Payment shall be limited to the cash portion of the Net Proceeds received from
the concurrent issuance of Equity Securities or capital stock;

(v)    Lessee may purchase Equity Securities pursuant to one or more stock
repurchase programs, provided that (A) no Potential Lease Default or Lease Event
of Default shall have occurred and be continuing, (B) after giving effect to any
such repurchases Lessee shall be in compliance with Section 10.2(k), and (C)
when combined with the amount of all dividends, purchases or redemptions made
under Section 10.2(f)(vi), the total of all such purchases of Equity Securities
shall not exceed the sum of $5,000,000 in the aggregate over the life of this
Agreement; and

(vi)    Lessee may declare or pay any dividends in respect of its Equity
Securities or purchase or redeem shares of its Equity Securities or make
distributions to shareholders not otherwise permitted hereunder, provided that
(i) the aggregate amount paid or distributed in any period of four consecutive
quarters (excluding any amounts covered by clause (ii) above) does not exceed
five percent (5%) of Consolidated Tangible Net Worth as determined as of the
fiscal quarter immediately preceding the date of determination; and (ii) when
combined with the amount of all purchases of Equity Securities made under
Section 10.2(f)(v), the total of all such dividends, purchases or redemptions
shall not exceed the sum of $5,000,000 in the aggregate over the life of this
Agreement.

 

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(g)

ERISA.  At any time engage in a transaction which could be subject to Sections
4069 or 4212(c) of ERISA, or permit any Pension Plan to (i) engage in any
non-exempt "prohibited transaction" (as defined in Section 4975 of the Code);
(ii) fail to comply with ERISA or any other applicable Requirements of Law; or
(iii) incur any material "accumulated funding deficiency" (as defined in Section
302 of ERISA), which, with respect to each event listed above, has a Material
Adverse Effect.

 

 

 

 

 

 

 

(h)

Change in Nature of Business.  Engage, either directly or indirectly through
Affiliates, in any line of business other than the digital storage business, any
other business incidental or reasonably related thereto, or any businesses that
are, as determined by the Board of Directors of Lessee, appropriate extensions
thereof.

 

 

 

 

 

 

 

(i)

Transactions with Affiliates.   Enter into any transaction of any kind with any
Affiliate (other than transactions among Lessee or any of its Subsidiaries and
any Subsidiary) of Lessee other than arm's-length transactions with Affiliates
that are otherwise permitted hereunder.

 

 

 

 

 

 

 

(j)

Certain Indebtedness Payments, Etc.  Neither Lessee nor any of its Subsidiaries
shall pay, prepay, redeem, purchase, defease or otherwise satisfy in any manner
prior to the scheduled payment thereof any Subordinated Debt except as otherwise
permitted under this Section 10.2(j); amend, modify or otherwise change the
terms of any document, instrument or agreement evidencing Subordinated Debt such
that such amendment, modification or change would (i) cause the outstanding
aggregate principal amount of all such Subordinated Debt so amended, modified or
changed to be increased as a consequence of such amendment, modification or
change, (ii) cause the subordination provisions applicable to such Subordinated
Debt to be less favorable to Agent and the Participants than those set forth on
Exhibit O, (iii) increase the interest rate applicable thereto, or (iv)
accelerate the scheduled payment thereof.  Lessee shall not cause or permit any
of its obligations, except the obligations constituting Senior Indebtedness to
constitute "Designated Senior Indebtedness" under the Indenture governing the
Convertible Subordinated Debentures (it being understood that the obligations of
Lessee under the Operative Documents shall at all times constitute "Designated
Senior Indebtedness" thereunder).  Notwithstanding the foregoing, Lessee may
conduct an exchange offer (whether public, private or on a 3(a)(9) basis) of all
or part of the Lessee’s Convertible Subordinated Debentures for one or more of
the following: (a) new securities (“New Securities”) that are subordinated in
right of payment to the obligations of Lessee under the Operative Documents to
the same extent as the existing Convertible Subordinated Debentures; provided
that (w) the aggregate annual interest obligation of Lessee under the New
Securities shall be equal to or less than the aggregate annual interest
obligation under the existing Convertible Subordinated Debentures, (x) the
maturity date of the New Securities shall not be earlier than the maturity date
of the existing Convertible Subordinated Debentures, (y) the total principal
amount of the obligations represented by Lessee's Subordinated Debt shall not be
increased by means of any exchange of New Securities for all or part of the
Lessee’s Convertible Subordinated Debentures and (z) the New Securities shall
not permit any amortization of the principal amount of the obligations
represented thereby prior to the maturity of the existing Convertible
Subordinated Debentures; or (b) new securities issued by Maxtor ("Maxtor
Securities").  No exchange or series of exchanges of New Securities or Maxtor
Securities for all or any part of Lessee’s Convertible Subordinated Debentures
pursuant to this Section 10.2(j) shall be deemed to permit any reduction in the
amount of Maxtor's reimbursement obligations under the Maxtor Reimbursement
Agreement except on a dollar-for-dollar basis to the extent that the obligations
represented by Lessee's Subordinated Debt are reduced by means of such exchange
or series of exchanges.  Lessee may (A) convert, or honor a conversion request
with respect to, any such Subordinated Debt into Equity Securities of Lessee in
accordance with the terms thereof, (B) pay cash to holders of such Subordinated
Debt in connection with such a conversion but solely to the extent representing
the value of any fractional shares; and (C) make other payments, repayments,
redemptions, purchases, defeasance or other satisfaction of Subordinated Debt
not to exceed $5,000,000 in the aggregate.

 

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(k)

Financial Covenants.

 

 

 

 

 

 

 

(i)  Consolidated Tangible Net Worth.  Permit Consolidated Tangible Net Worth on
the last day of any fiscal quarter commencing with the fiscal quarter ended
December 31, 2002, to be less than $190,000,000.

(ii)  Minimum Quick Ratio.   Permit the Quick Ratio determined as of the last
day of any fiscal quarter of Lessee (commencing with the quarter ending December
31, 2002) to be less than 1.00:1.00.

(iii)  Adjusted Leverage Ratio.  Permit the Adjusted Leverage Ratio, determined
as of the last day of any fiscal quarter of Lessee, commencing with the fiscal
quarter ending June 30, 2003 (measured on a rolling four quarter basis for the
four fiscal quarters ending on such dates), to be greater than the following: 
(i) for the fiscal quarters ending June 30, 2003 and September 30, 2003,
2.50:1.00; and (ii) for the fiscal quarters ending December 31, 2003 and all
fiscal quarters thereafter, 2.00:1.00.

(iv)  Minimum Consolidated EBITDA.  Permit Consolidated EBITDA, determined as of
the last day of any fiscal quarter of Lessee commencing with the fiscal quarter
ending December 31, 2002, to be less than the following: (i) for the fiscal
quarter ending December 31, 2002, $1.00; (ii) for the fiscal quarter ending
March 31, 2003, $18,000,000; (iii) for the fiscal quarter ending June 30, 2003,
$14,000,000; (iv) for the fiscal quarter ending September 30, 2003, $11,000,000;
(v) for the fiscal quarter ending December 31, 2003, $12,500,000; and (vi) for
the fiscal quarter ending March 31, 2004, $13,000,000.

 

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(v)  Maximum Senior Indebtedness.  Permit Lessee's Senior Indebtedness to exceed
at any time the sum of $125,000,000 from the Closing Date through March 31,
2003.

(vi)  Maximum Capital Expenditures.  Permit Lessee's capital expenditures (as
determined pursuant to GAAP) to exceed $10,000,000 for each fiscal quarter of
Lessee or $30,000,000 for each fiscal year of Lessee.

(viii)  Minimum Unrestricted Cash.  Permit Lessee's Consolidated Cash Balance
(as defined in Section 10.1(b)(ii))  at any time to fall below $100,000,000. 
During any period in which the Consolidated Cash Balance is less than
$200,000,000, Lessee shall maintain a minimum Consolidated Cash Balance of
$100,000,000 deposited in domestic accounts subject to a deposit account control
agreement satisfactory to Agent.  During any period in which the Consolidated
Cash Balance is equal to or greater than $200,000,000, Lessee shall maintain a
minimum Consolidated Cash Balance of $50,000,000 deposited in domestic accounts
subject to such deposit account control agreement.  The Consolidated Cash
Balance covenants set forth in this Section 10.2(k)(vii) shall be tested monthly
in accordance with the reports to be delivered to Lessor, Agent and each
Participant pursuant to Section 10.1(b)(ii) of this Agreement.

 

 

 

 

 

 

 

(l)

Accounting Changes.   Change (i) its fiscal year (currently April 1 to March
31), or (ii) its accounting practices except as permitted by GAAP.

 

 

 

 

 

 

 

(m)

No Impairment of Deposits.  Lessee shall not, nor shall it permit any of its
Subsidiaries to, directly or indirectly, enter into or become bound by any
agreement, instrument, indenture or other obligation which could directly or
indirectly restrict, prohibit or require the consent of any Person to the making
by Lessee of any deposit of Cash Collateral or the realization thereon or
utilization thereof (or of any earnings thereon or of any other Collateral) by
Lessor, Agent or any of the Participants.

 

 

 

 

 

 

 

(n)

Tax Losses.  Alone or together with one or more of its Subsidiaries or
Affiliates, incur a Tax Loss the uninsured or unreimbursed portion of which
(individually, or together with all other prior Tax Losses) exceeds the
Threshold Amount, where (i) an "uninsured" Tax Loss means a Tax Loss which is
not the subject of a bona fide insurance policy or contract with an insurer or
syndicate of insurers of national repute or as to which such insurer or insurers
have disputed or disclaimed contractual liability for such Tax Loss or otherwise
breached the terms of such policy or contract, and (ii) an "unreimbursed" Tax
Loss means a Tax Loss not reimbursed by Maxtor in accordance with the terms of
the Maxtor Reimbursement Agreement.[subject to review]

 

 

 

 

 

 

Section 10.3

Cooperation with Lessee.  Lessor, the Participants and Agent shall, to the
extent reasonably requested by Lessee (but without assuming additional
liabilities, duties or other obligations on account thereof), at Lessee's
expense, cooperate with Lessee in connection with its covenants contained herein
including, without limitation, at any time and from time to time, upon the
request of Lessee, to promptly and duly execute and deliver any and all such
further instruments, documents and financing statements (and continuation
statements related thereto) as Lessee may reasonably request in order to perform
such covenants.

 

 

 

 

 

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Section 10.4

Covenants of Lessor.  Lessor hereby agrees that so long as this Participation
Agreement is in effect:

 

 

 

 

 

 

      

(a)

Discharge of Liens.  Lessor will not create or permit to exist at any time, and
will, at its own cost and expense, promptly take such action as may be necessary
duly to discharge, or to cause to be discharged, all Lessor Liens on the
Property attributable to it; provided, however, that Lessor shall not be
required to so discharge any such Lessor Lien while the same is being contested
in good faith by appropriate proceedings diligently prosecuted so long as such
proceedings shall not involve any material danger of impairment of the Liens of
the Lease or the Security Documents or of the sale, forfeiture or loss of, and
shall not interfere with the use or disposition of, the Property or title
thereto or any interest therein or the payment of Rent.

 

 

 

 

 

 

 

(b)

Change of Chief Place of Business.  Lessor shall give prompt notice to Lessee
and Agent if Lessor's chief place of business or chief executive office, or the
office where the records concerning the accounts or contract rights relating to
the Property are kept, shall cease to be located at 66 South Pearl Street,
Albany, New York 12207, or if it shall change its name, identity or corporate
structure.

 

 

 

 

SECTION 11

PARTICIPATIONS

 

Section 11.1   

Amendments; Actions on Default.

 

 

 

 

 

 

     

(a)

Lessor shall have the right to forebear from exercising rights against Lessee to
the extent Lessor shall determine in good faith that such forbearance is
appropriate and is permitted by Section 15.5 and Sections 11.1, 11.2 and 11.3. 
Upon the direction of the Required Participants, Lessor shall execute any
waiver, modification or amendment of the Lease requested by Lessee; provided,
that:  (i) the waiver, modification or amendment is not prohibited by the
forgoing provisions of this Participation Agreement, (ii) the waiver,
modification or amendment does not (A) increase the amount Lessor may be
required to pay to Lessee or anyone else, or (B) reduce or postpone (and cannot
reasonably be expected to reduce or postpone) any payments that Lessor would,
but for such modification or amendment, be expected to receive, or (C) release
Lessor's interest in all or a substantial part of the Property; and (iii) Lessor
is not excused from executing the waiver, modification or amendment by Section
11.3

 

 

 

 

 

 

     

(b)

Lessor will, with reasonable promptness, provide each Participant with copies of
all default notices it sends or receives under the Lease and notify each
Participant of any Lease Event of Default under the Lease of which it is aware
and of any other matters which, in Lessor's reasonable judgment, are likely to
materially affect the payments each Participant will be required to make or be
entitled to receive under this Participation Agreement, but Lessor will not in
any event be liable to any Participant for Lessor's failure to do so unless such
failure constitutes gross negligence or willful misconduct on the part of
Lessor.

 

 

 

 

 

 

 

(c)

Before taking possession of the Property or exercising foreclosure or offset
rights against the Property or filing any lawsuit against Lessee because of any
breach by Lessee of the Operative Documents or if requested in writing by any
Participant at any time when a Lease Event of Default has occurred and is
continuing, Lessor shall promptly call a meeting with each Participant and Agent
to discuss what, if anything, Lessor should do.  Such meeting shall be scheduled
during regular business hours in the offices of Agent, or another appropriate
location in San Francisco, California, not earlier than five (5) and not later
than twenty (20) Business Days after Lessor's receipt of the written request
from a Participant.  If the Required Participants shall direct Lessor in writing
to (a) send any default notices required before a Potential Lease Default can
become a Lease Event of Default, or (b) bring a lawsuit against Lessee to
enforce the Operative Documents when a Lease Event of Default has occurred and
is continuing, then Lessor shall send the notice or bring the suit, and Lessor
shall prosecute any such suit with reasonable diligence using reputable
counsel.  However, if Agent is not a member of the Required Participants voting
pursuant to this subsection 11.1(d) in favor of the giving of any such notice or
the bringing of any such suit, then Lessor may require that it first receive the
written agreement (in form reasonably acceptable to Lessor) of the members of
the Required Participants so voting to indemnify Agent and Lessor from and
against all costs, liabilities and claims that may be incurred by or asserted
against Lessor because of the action the Required Participants direct Agent or
Lessor to take.  In no event shall any Participant instigate any suit or other
action directly against Lessee with respect to the Operative Documents or the
Property, even if such Participant would, but for this Participation Agreement,
be entitled to do so as a third party beneficiary or otherwise under the
Operative Documents.

 

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(d)

In the event Lessee or its designee fails to purchase the Property after any
exercise of its Purchase Option or Expiration Date Purchase Obligation or
following the occurrence and continuance of a Lease Event of Default, Lessor
shall, if the Required Participants shall agree in writing, bring suit against
Lessee to enforce the Operative Documents in such form as shall be recommended
by reputable counsel, and thereafter Lessor shall prosecute the suit with
reasonable diligence in accordance with the advice of reputable counsel.  If
Lessor acquires the interests of Lessee in any of the Property as a result of
such suit or otherwise, Lessor shall thereafter proceed with reasonable
diligence to sell the Property in a commercially reasonable manner to one or
more bona fide third party purchasers and shall in any event endeavor to
consummate the sale of the entire Property (through a single sale of the entire
Property or a series of sales of parts) within five (5) years following the date
Lessor recovers possession of the Property at the best price or prices Lessor
believes are reasonably attainable within such time.  Further, after the
Designated Payment Date and prior to Lessor's sale of the entire Property,
Lessor shall retain a property management company experienced in the area where
the Property is located to manage the operation of the Property and pursue the
leasing of any completed Improvements which are part of the Property.  Lessor
shall not retain an Affiliate of Lessor to act as the property manager except
under a bona fide, arms-length management contract containing commercially
reasonable terms.  Further, after the Designated Payment Date and until Lessor
sells the Property, Lessor shall (i) endeavor in good faith to maintain, or
shall obtain the agreement of one or more of such tenants to maintain, the
Property in good order and repair, (ii) procure and maintain casualty insurance
against risks customarily insured against by owners of comparable properties, in
amounts sufficient to eliminate the effects of coinsurance, (iii) keep and allow
each Participant to review accurate books and records covering the operation of
the Property, and (iv) pay prior to delinquency all taxes and assessments
lawfully levied against the Property.

 

 

 

 

 

 

      

(e)

Notwithstanding the foregoing, Defaulting Participants shall have no voting or
consent rights under this Section 11.1 and no rights to require Lessor to call a
meeting pursuant to Section 11.1(d) until they cease to be Defaulting
Participants.  During any period that any Defaulting Participants have no voting
rights under this Section 11.1, only the Commitment Percentages of the other
Participants that still have voting rights will be considered for purposes of
determining the Required Participants.

 

 

 

 

 

  

Section 11.2

General.  Subject to the limitations set forth in Section 11.1 and Section 14:

 

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(a)

Lessor shall have the exclusive right to take any action and to exercise any
available powers, rights and remedies to enforce the obligations of Lessee under
the Operative Documents, or to refrain from taking any such action or exercising
any such power, right or remedy.

 

 

 

 

 

 

 

(b)

Lessor shall be entitled to (i) give any consent, waiver or approval requested
by Lessee with respect to any construction or other approval contemplated in the
Lease or (ii) waive or consent to any adverse title claims affecting the
Property, provided that, in either case, such action will not have a material
adverse effect on Lessee's obligations or ability to make the payments required
under the Operative Documents, Lessor's rights and remedies under the Operative
Documents or any Participant's rights hereunder.

 

 

 

 

 

 

Section 11.3

Conflicts.  Notwithstanding anything to the contrary herein contained, Lessor
shall be entitled, even over the objection of each Participant or the Required
Participants, (i) to take any action required of Lessor by, or to refrain from
taking any action prohibited by, the Operative Documents or any law, rule or
regulation to which Lessor is subject (provided, that this Section shall not be
construed to authorize Lessor to take any action required by a modification of
the Operative Documents prohibited by Section 11.1), and (ii) after notice to
the Participants, to bring and prosecute a suit against Lessee in the form
recommended by and in accordance with advice of reputable counsel at any time
when a breach of the Operative Documents by Lessee shall have put Lessor (or any
of its officers or employees) at risk of criminal prosecution or significant
liability to third parties or at any time after Lessee or its designee fails to
purchase the Property on the Designated Payment Date.  Nothing herein contained
shall be construed to require Lessor to agree to modify the Operative Documents
or to take any action or refrain from taking any action in any manner that could
increase Lessor's liability to Lessee or others, that could reduce or postpone
payments to which Lessor is entitled thereunder, or that could reduce the scope
and coverage of the indemnities provided for Lessor's benefit therein.

 

 

 

 

 

 

Section 11.4

Refusal to Give Consents or Fund.  If any Participant declines to consent to any
amendment, modification, waiver, release or consent for which such Participant's
consent is requested or required by reason of this Participation Agreement, or
if any Participant fails to pay any amount owed by it hereunder, Lessor shall
have the right, but not the obligation and without limiting any other remedy of
Lessor, to terminate such Participant's rights to receive any further payments
under Section 3 of this Participation Agreement (other than payments required
because of Lessor's collection of any Rent applied by Lessor as reimbursement
for a Defaulted Amount or interest on a Defaulted Amount) by paying such
Participant a termination fee equal to the total of:

 

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(i)     all amounts actually advanced by such Participant to Lessor under
Section 3.3hereof before the termination; excluding, however, any such amounts
that were repaid to such Participant before the termination by actual payments
made to such Participant by Lessor of, or Lessor's offset against, sums
representing:

           (A) Such Participant's Commitment Percentage times any payments of
Rent received by Lessor under the Lease; plus

           (B) Such Participant's Commitment Percentage times any sales proceeds
received by Lessor under the Lease; and

(ii)    Such Participant's Commitment Percentage, times:

           (A) the then accrued but unpaid Basic Rent due under the Lease; plus

           (B) interest on past due amounts described in the preceding clause
(A) computed at the Federal Funds Rate; plus

           (C) interest on any amounts (other than interest itself) past due
from Lessee or its designees under the Operative Documents, computed at the
Federal Funds Rate.

Such Participant's rights to receive payments equal to such Participant's
Commitment Percentage of any Rent applied by Lessor as reimbursement for a
Defaulted Amount or interest on a Defaulted Amount shall not be impaired or
affected by any termination contemplated in this Section 11.4; accordingly,
Lessor shall not, as a condition to such a termination, be required to reimburse
such Participant for any payments such Participant has made in connection with
Defaulted Amounts.

 

 

 

 

 

 

 

Section 11.5

Required Repayments.  Each Participant shall repay to Lessor, upon written
request or demand by Lessor (i) any sums paid by Lessor to such Participant
under this Participation Agreement from, or that were computed by reference to,
any Rent or other amounts which Lessor shall be required to return or pay over
to another party, whether pursuant to any bankruptcy or insolvency law or
proceeding or otherwise and (ii) any interest or other amount that Lessor is
also required to pay to another party with respect to such sums.  Such repayment
by any Participant shall not constitute a release of such Participant's right to
receive such Participant's Commitment Percentage times the amount of any such
Rent or any such other amount (or any interest thereon) that Lessor may later
recover.

 

 

 

 

 

 

Section 11.6

Indemnification.  Each Participant agrees to indemnify and defend Lessor (to the
extent not reimbursed by Lessee within ten (10) days after demand) from and
against such Participant's Commitment Percentage of any and all liabilities,
obligations, claims, expenses or disbursements (including reasonable fees of
attorneys, accountants, experts and advisors) of any kind or nature whatsoever
(in this Section 11.6 collectively called "Covered Liabilities") which to any
extent (in whole or in part) may be imposed on, incurred by or asserted against
Lessor growing out of, resulting from or in any other way associated with the
Property or the Operative Documents (including the enforcement thereof, whether
exercised upon Lessor's own initiative or upon the direction of the Required
Participants) and the transactions and events at any time associated therewith
or contemplated therein.  The foregoing indemnification shall apply whether or
not such Covered Liabilities are in any way or to any extent caused, in whole or
in part, by any negligent act or omission of any kind by Lessor; provided, only
that no Participant shall be obligated under this Section 11.6 to indemnify
Lessor (i) for Covered Liabilities incurred in connection with any transfer or
assignment by Lessor of its right to receive Rent or its rights and interests in
and to the Property, the Operative Documents or this Participation Agreement to
its Affiliates or (ii) for that portion or percentage, if any, of any of the
Covered Liabilities which is proximately caused by:  (A) Lessor's own gross
negligence or willful misconduct; (B) any representation made by Lessor in the
Operative Documents that is false in any material respect and that Lessor knew
was false at the time of Lessor's execution of the Operative Documents; or (C)
Lessor Liens not claimed by, through or under any of the Participants.  After
each Participant has paid its Percentage of any Covered Liabilities, each
Participant shall be entitled to payment from Lessor of an amount equal to the
Adjusted Percentage (as defined below) of any payments subsequently received by
Lessor as Excess Reimbursement (as defined below) for such Covered Liabilities. 
As used in this Section "Adjusted Percentage" shall equal (i) such Participant's
Commitment Percentage, divided by (ii) the sum of the Commitment Percentages of
all Participants who have paid Lessor their respective shares of the Covered
Liabilities at issue.  As used in this Section, the term "Excess Reimbursement"
shall mean, for the Covered Liabilities at issue, amounts reimbursed or paid by
Lessee to or on behalf of Lessor on account of such Covered Liabilities in
excess of (i) such Covered Liabilities, times (ii) the Commitment Percentages of
any Participants that have not paid Lessor their respective Percentages of such
Covered Liabilities.

 

46.

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Section 11.7

Required Supplemental Payments.  In the event that Lessee fails to pay any
Required Supplemental Payment when due (a "Defaulted Amount"), Lessor shall
notify each Participant of such Defaulted Amount, whereupon each Participant
shall pay to Lessor an amount equal to such Participant's Commitment Percentage
times the Defaulted Amount; such payment from Participant to Lessor shall be due
prior to 2:00 p.m., San Francisco time, on the date of such notice if such
notice is given by 12:00 noon, San Francisco time, otherwise prior to 12:00
noon, San Francisco time, on the next Business Day following such notice.  After
payment of a Participant's Commitment Percentage times the Defaulted Amount, any
payments subsequently received by Lessor from Lessee as reimbursement for such
Defaulted Amount, and any interest received by Lessor from Lessee that accrued
on the Defaulted Amount after the date of such Participant's payment of its
Commitment Percentage times the Defaulted Amount, will constitute Supplemental
Rent for purposes of computing payments due such Participant under this
Participation Agreement.

 

 

 

 

 

 

Section 11.8

Application of Payments Received From Defaulting Participant As a Cure For
Payment Defaults.  If after a failure to make a payment required bySection 3.4,
any Defaulting Participant cures such failure, in whole or in part, by paying to
Lessor all or part of such payment and interest thereon at the Late Payment
Rate, then Lessor shall apply the payments so made to Lessor, net of the costs
of collecting such payments (the "Net Cure Proceeds"), or other funds available
to Lessor equal to the Net Cure Proceeds, to make payments to Lessor itself
equal to its Excess Investment (if any) until Lessor shall no longer have any
Excess Investment, before applying the same to any other purpose.

 

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Section 11.9

Order of Application.  For purposes of this Participation Agreement, Lessor
shall be entitled, but not required, to apply any payments received from Lessee
under the Operative Documents to satisfy (1) unpaid Required Supplemental
Payments (and interest thereon) not included in Rent, if any, and (2) costs
incurred by Lessor because of any sale under the Lease before applying such
payments to satisfy Lessee's other obligations, regardless of how Lessee may
have designated such payments.

 

 

 

 

 

 

Section 11.10

Investments Pending Dispute Resolution; Overnight Investments.   Whenever Agent
in good faith determines that it does not have all information needed to
determine how payments to Participants must be made on account of any receipts
by Agent of amounts paid under the Lease, or whenever Agent in good faith
determines that there is any dispute among the Participants about payments which
must be made on account of such receipts, Agent may choose to defer the payments
to Participants which are the subject of such missing information or dispute. 
However, to minimize any such deferral, Agent shall attempt diligently to obtain
any missing information needed to determine how payments to the Participants
must be made.  Also, pending any such deferral, or if Agent is otherwise
required to invest funds pending distribution to the Participants, Agent shall
endeavor to invest the payments at issue for the benefit of such Participants. 
In addition, if payments which are to be distributed to Participants are
received by Agent after 12:00 noon, San Francisco time, and Agent will not
distribute such payments until the next Business Day pursuant to Section 3, then
Agent will endeavor to invest such payments overnight for the benefit of the
Participants; provided, that Agent shall have no liability to any Participant if
Lessor is unable to make such investments.  Investments by Agent shall be in the
overnight federal funds market pending distribution, and the interest earned on
each dollar of principal so invested shall be paid to the Person entitled to
receive such dollar of principal when the principal is paid to such Person.

 

 

 

 

 

 

Section 11.11

Agent to Exercise Lessor's Rights.  Lessor has assigned its interest in the
Lease to Agent, for the benefit of the Participants, pursuant to the Assignment
of Lease.  To the extent provided therein, the rights, remedies, duties and
responsibilities of Lessor contained in this Section 11 and in the other
Operative Documents with respect thereto shall be exercisable by, binding upon
and inure to the benefit of Agent, for the benefit of the Participants.

 

 

 

 

 

 

Section 11.12 

Exculpatory Provisions Regarding Lessor.  Subject to the provisions of Section
11.11, each Participant hereby irrevocably authorizes Lessor to take such
actions on its behalf as are expressly vested in or delegated to Lessor by the
terms of this Participation Agreement and the other Operative Documents,
together with such powers as are reasonably incidental thereto.  The provisions
of the following Sections of this Participation Agreement are hereby
incorporated by reference into this Section 11.12, substituting the word
"Lessor" for "Agent" therein:

(i)   Section 14.1--second sentence.

(ii)   Section 14.2--all.

(iii)  Section 14.3--all.

(iv)  Section 14.4--all.

(v)   Section 14.5--first sentence.

(vi)  Section 14.6--last sentence.

 

 

 

 

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SECTION 12

TRANSFERS OF PARTICIPANTS' INTERESTS

 

Section 12.1   

Restrictions on and Effect of Transfer by Participants.  No Participant may
(without the prior written consent of Agent and Lessee (not to be unreasonably
withheld)) assign, convey or otherwise transfer (including pursuant to a
participation) all or any portion of its right, title or interest in, to or
under its Participation Interest or any of the Operative Documents or the
Property, provided that (x) any Participant may pledge its interest without the
consent of Agent or Lessee to any Federal Reserve Bank, (y) without the prior
written consent of Agent, any Participant may transfer all or any portion of its
interest to any Affiliate of such Participant or to any other existing
Participant and (z) Lessor may not transfer its Tranche C Participation Interest
in the absence of a Lease Event of Default; provided; further, that in the case
of any transfer (other than to such Affiliate) each of the following conditions
and any other applicable conditions of the other Operative Documents are
satisfied:

 

 

 

 

 

 

     

(a)

Required Notice and Effective Date.  Any Participant desiring to effect a
transfer of its interest shall give written notice of each such proposed
transfer to Lessee, Agent and each other Participant at least five (5) Business
Days prior to such proposed transfer, setting forth the name of such proposed
transferee, the percentage or interest to be retained by such Participant, if
any, and the date on which such transfer is proposed to become effective.  All
reasonable out-of-pocket costs (including, without limitation, legal expenses)
incurred by Lessor, Agent or any Participant in connection with any such
disposition by a Participant under this Section 12.1 shall be borne by such
transferring Participant.  In the event of a transfer under this Section 12.1,
any expenses incurred by the transferee in connection with its review of the
Operative Documents and its investigation of the transactions contemplated
thereby shall be borne by such transferee or the relevant Participant, as they
may determine, but shall not be considered costs and expenses which Lessee is
obligated to pay or reimburse under Section 9.  Any such proposed transfer shall
become effective upon the later of (i) the date proposed in the transfer notice
referred to above and (ii) the date on which all conditions to such transfer set
forth in this Section 12.1 shall have been satisfied.

 

 

 

 

 

 

     

(b)

Assumption of Obligations.  Any transferee pursuant to this Section 12.1 shall
execute and deliver to Agent and Lessee an Assignment and Acceptance in
substantially the form attached as Exhibit H ("Assignment and Acceptance"), duly
executed by such transferee and the transferring Participant, and a letter in
substantially the form of the Participant's Letter attached hereto as Exhibit I
("Participant's Letter"), and thereupon the obligations of the transferring
Participant under the Operative Documents shall be proportionately released and
reduced to the extent of such transfer.  Upon any such transfer as above
provided, the transferee shall be deemed to be bound by all obligations (whether
or not yet accrued) under, and to have become a party to, all Operative
Documents to which its transferor was a party, shall be deemed the pertinent
"Participant" for all purposes of the Operative Documents and shall be deemed to
have made that portion of the payments pursuant to this Participation Agreement
previously made or deemed to have been made by the transferor represented by the
interest being conveyed; and each reference herein and in the other Operative
Documents to the pertinent "Participant" shall thereafter be deemed a reference
to the transferee, to the extent of such transfer, for all purposes.  Upon any
such transfer, Agent shall deliver to each Participant, Lessor and Lessee a new
Schedule I and Schedule II to this Participation Agreement, revised to reflect
the relevant information for such new Participant and the Commitment of such new
Participant (and the revised Commitment of the transferor Participant if it
shall not have transferred its entire interest).

 

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(c)

Employee Benefit Plans.  No Participant may make any such assignment, conveyance
or transfer to or in connection with any arrangement or understanding in any way
involving any employee benefit plan (or its related trust), as defined in
Section 3(3) of ERISA, or with the assets of any such plan (or its related
trust), as defined in Section 4975(e)(1) of the Code.

 

 

 

 

 

 

     

(d)

Representations.  Notwithstanding anything to the contrary set forth above, no
Participant may assign, convey or transfer its interest to any Person, unless
such Person shall have delivered to Agent and Lessee a certificate confirming
the accuracy of the representations and warranties set forth in Section 8 with
respect to such Person (other than as such representation or warranty relates to
the execution and delivery of Operative Documents) and representing that such
Person has, independently and without reliance upon Agent, any other Participant
or, except to the extent of Lessee's representations made under the Operative
Documents when made, Lessee, and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into this
transaction, the Property and Lessee and made its own decision to enter into
this transaction.

 

 

 

 

 

 

     

(e)

Amounts; Agent's Fee.   Any transfer of a Tranche A or B Participation Interest
shall be in a principal amount which is equal to or greater than $5,000,000 or,
if permitted to be transferred under Section 12.1, a Tranche C Participation
Interest.  Each transferring Participant shall pay to Agent a transfer fee of
$3,500.

 

 

 

 

 

 

     

(f)

Applicable Law.   Such transfer shall comply with Applicable Law and shall not
require registration under any securities law applicable thereto.

 

 

 

 

 

 

     

(g)

Effect.  From and after any transfer of its Participation Interest the
transferring Participant shall be released, to the extent assumed by the
transferee, from its liability and obligations hereunder and under the other
Operative Documents to which such transferor is a party in respect of
obligations to be performed on or after the date of such transfer.  Upon any
transfer by a Participant as above provided, any such transferee shall be deemed
a "Participant" for all purposes of such documents and each reference herein to
a Participant shall thereafter be deemed a reference to such transferee for all
purposes to the extent of such transfer, except as the context may otherwise
require.  Notwithstanding any transfer as provided in this Section 12.1, the
transferor shall be entitled to all benefits accrued and all rights vested prior
to such transfer, including, without limitation, rights to indemnification under
this Participation Agreement or any other Operative Document.

 

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Section 12.2

Covenants and Agreements of Participants.

 

 

 

 

 

 

     

(a)

Participations.  Each Participant covenants and agrees that it will not grant
Participations in its Participation Interest to any Person (a "Sub-Participant")
unless such participation complies with Applicable Law and does not require
registration under any securities law applicable thereto and such
Sub-Participant (i) is a bank or other financial institution and (ii) represents
and warrants, in writing, to such Participant for the benefit of the
Participants, Lessor and Lessee that (A) no part of the funds used by it to
acquire an interest in any Participation Interest constitutes assets of any
"employee benefit plan" (as defined in Section 3(3) of ERISA) which is subject
to Title I of ERISA, or "plan" (as defined in Section 4975(e)(1) of the Code)
and (B) such Sub-Participant is acquiring its interest for investment purposes
without a view to the distribution thereof.  Any such Person shall require any
transferee of its interest in its Participation Interest to make the
representations and warranties set forth in the preceding sentence, in writing,
to such Person for its benefit and the benefit of the Participants, Lessor and
Lessee.  In the event of any such sale by a Participant of a participating
interest in its Participation Interest to a Sub-Participant, such Participant's
obligations under this Participation Agreement and under the other Operative
Documents shall remain unchanged, such Participant shall remain solely
responsible for the performance thereof, such Participant shall remain the
holder of its Participation Interest, for all purposes under this Participation
Agreement and under the other Operative Documents, and Lessor, Agent and, except
as set forth in Section 12.2(b), Lessee shall continue to deal solely and
directly with such Participant in connection with such Participant's rights and
obligations under this Participation Agreement and under the other Operative
Documents.

 

 

 

 

 

 

     

(b)

Transferee Indemnities.  Each Sub-Participant shall be entitled to the benefits
of Sections 13.5, 13.6, and 13.7 and 13.10 with respect to its participation in
the Participation Interests outstanding from time to time; provided that no
Sub-Participant shall be entitled to receive any greater amount pursuant to such
Sections than the transferor Participant would have been entitled to receive in
respect of the amount of the participation transferred by such transferor
Participant to such Sub-Participant had no such transfer or participation
occurred.

 

 

 

 

 

 

Section 12.3   

Future Participants.  Each Participant shall be deemed to be bound by and, upon
compliance with the requirements of this Section 12, will be entitled to all of
the benefits of the provisions of, this Participation Agreement.

 

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SECTION 13

INDEMNIFICATION

 

Section 13.1   

General Indemnification.  Lessee agrees, whether or not any of the transactions
contemplated hereby shall be consummated, to assume liability for, and to
indemnify, protect, defend, save and keep harmless each Indemnitee, on an After
Tax Basis, from and against, any and all Claims that may be imposed on, incurred
by or asserted against such Indemnitee (whether because of action or omission by
such Indemnitee or otherwise), whether or not such Indemnitee shall also be
indemnified as to any such Claim by any other Person and whether or not such
Claim arises or accrues prior to the Closing Date or after the Expiration Date,
in any way relating to or arising out of:

 

 

 

 

 

 

     

(a)

any of the Operative Documents or any of the transactions contemplated thereby
or any violation thereof, and any amendment, modification or waiver in respect
thereof;

 

 

 

 

 

 

     

(b)

the Property, the Lease or any part thereof or interest therein;

 

 

 

 

 

 

     

(c)

the purchase, design, construction, preparation, installation, inspection,
delivery, non-delivery, acceptance, rejection, ownership, management,
possession, operation, rental, lease, sublease, repossession, maintenance,
repair, alteration, modification, addition or substitution, storage, transfer of
title, redelivery, use, financing, refinancing, disposition, operation,
condition, sale (including, without limitation, any sale pursuant to Sections
16.2, 16.3, 16.4, 17.2(c), 17.2(e) or 17.4 of the Lease or any sale pursuant to
Articles XX or XXII of the Lease, return or other disposition of all or any part
or any interest in the Property or the imposition of any Lien (or incurring of
any liability to refund or pay over any amount as a result of any Lien) thereon,
including, without limitation:  (1) Claims or penalties arising from any
violation of federal, state or local law, rule, regulation or order or in tort
(strict liability or otherwise), (2) latent or other defects, whether or not
discoverable, (3) any Claim based upon a violation or alleged violation of the
terms of any restriction, easement, condition or covenant or other matter
affecting title to the Property, (4) the making of any Modifications in
violation of any standards imposed by any insurance policies required to be
maintained by Lessee pursuant to the Lease which are in effect at any time with
respect to the Property or any part thereof, (5) any Claim for patent, trademark
or copyright infringement, and (6) Claims arising from any public improvements
with respect to the Property resulting in any charge or special assessments
being levied against the Property or any plans to widen, modify or realign any
street or highway adjacent to the Property;

 

 

 

 

 

 

     

(d)

the offer, issuance or sale of the Participation Interests, provided that (i)
Lessor shall not be entitled to indemnification under this clause (d) if it
shall have been determined by a court of competent jurisdiction to have breached
its representation set forth in Section 8.1(h), (ii) no Participant shall be
entitled to indemnification under this clause (d) if it shall have been
determined by a court of competent jurisdiction to have breached its
representation set forth in Section 8.2(f) and (iii) neither Lessor nor any
Participant shall be entitled to indemnification under this clause (d) with
respect to any Claim which a court of competent jurisdiction determines to have
arisen out of the gross negligence or willful misconduct of Lessor, Agent or any
Participant or its agents, employees or contractors (other than Lessee) or any
misrepresentation of a material fact made by Lessor, Agent or such Participant,
unless the misrepresentation was made in reliance upon and in conformity with
information furnished to Lessor or such Participant, as applicable, by Lessee or
its agents, employees or contractors;

 

 

 

 

 

 

     

(e)

the breach by Lessee of any covenant, representation or warranty made by it or
deemed made by it in any Operative Document or any certificate required to be
delivered by any Operative Document;

 

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(f)

the retaining or employment of any broker, finder or financial advisor by Lessee
to act on its behalf in connection with this Participation Agreement, or the
incurring of any fees or commissions to which Lessor might be subjected by
virtue of entering into the transactions contemplated by this Participation
Agreement;

 

 

 

 

 

 

     

(g)

the existence of any Lien on or with respect to the Property, the Improvements,
the Equipment, any Basic Rent or Supplemental Rent, title thereto, or any
interest therein including any Liens which arise out of the possession, use,
occupancy, construction, repair or rebuilding of the Property or by reason of
labor or materials furnished or claimed to have been furnished to Lessee, the
Existing Owner, Lessor or any of their contractors or agents or by reason of the
financing of the Property or any personalty or equipment purchased or leased by
Lessee or Improvements or Modifications constructed by Lessee, except Lessor
Liens and Liens in favor of Agent or Lessor;

 

 

 

 

 

 

     

(h)

the transactions contemplated by Lessee hereby or by any other Operative
Document, in respect of the application of Parts 4 and 5 of Subtitle B of Title
I of ERISA and any prohibited transaction described in Section 4975(c) of the
Code (other than any Claim resulting from a breach of representation or warranty
of Lessor or any Participant); or

 

 

 

 

 

 

     

(i)

the Existing Financing, any documentation relating thereto, the Existing
Participants, the Existing Owner, or any matters arising therefrom or related
thereto; provided, however, Lessee shall not be required to indemnify (x) Lessor
for any Claim to the extent arising from any misrepresentation by Lessor under
Section 8.1(e) or (l) or from the failure by Lessor to comply with Section
10.4(a), or (y) any Indemnitee under this Section 13.1 for any of the following:

 

 

 

 

 

 

     

(i)   any Claim to the extent resulting from the willful misconduct or gross
negligence of such Indemnitee or its agents, employees or contractors (other
than Lessee and its agents, employers or contractors) (it being understood that
Lessee shall be required to indemnify an Indemnitee even if the ordinary (but
not gross) negligence of such Indemnitee caused or contributed to such Claim),

(ii)   any Claim resulting from Lessor Liens which Lessor is responsible for
discharging under the Operative Documents,

(iii)   any Claim to the extent attributable to acts or events occurring after
the expiration of the Term or the termination of Lessee's right to possess and
control the Property (but not any claim to the extent attributable to acts or
events occurring prior to or during the Term or occurring at any time that
Lessee is in actual possession or control of the Property),

(iv)   any Imposition or other claims for Taxes, and

(v)   any Claims of the type(s) described in Sections 13.2 (only with respect to
claims in respect of a decline in the Fair Market Sales Value of the Property as
a result of an event described in Section 13.2(b) and Lessee's exercise of the
Remarketing Option), 13.6, 13.7, 13.8 and 13.10.  It is expressly understood and
agreed that the indemnity provided for herein shall survive the expiration or
termination of and shall be separate and independent from any remedy under the
Lease or any other Operative Document.  Without limiting the express rights of
any Indemnitee under this Section 13.1, this Section 13.1 shall be construed as
an indemnity only and not a guaranty of residual value of the Property or as a
guaranty of the Participation Interests.

 

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Section 13.2

End of Term Indemnity.

 

 

 

 

 

 

     

(a)

If Lessee elects the Remarketing Option and there would, after giving effect to
the proposed remarketing transactions, be a Shortfall Amount, then prior to the
Maturity Date and as a condition to Lessee's right to complete the remarketing
of the Property pursuant to Section 22.1 of the Lease, Lessee shall cause to be
delivered to Lessor at least thirty (30) days prior to the earlier of the
Expiration Date or the last day of the Remarketing Period, at Lessee's sole cost
and expense, a report from an appraiser selected by Lessor and reasonably
satisfactory to Agent and the Required Participants in form and substance
satisfactory to Lessor, Agent and the Required Participants (the "End of the
Term Report") which shall state the appraiser's conclusions as to the reason for
any decline in the Fair Market Sales Value of the Property from that stated in
the Appraisal by CB Richard Ellis, Inc. Valuaton and Advisory Services dated
March 15, 2002 and delivered to the Agent and Lessor prior to the Closing Date.

 

 

 

 

 

 

     

(b)

Prior to the Expiration Date, Lessee shall pay to Lessor an amount (not to
exceed the Shortfall Amount) equal to the portion of the Shortfall Amount that
the End of the Term Report demonstrates was the result of a decline in the Fair
Market Sales Value of the Property due to:

 

 

 

 

 

 

     

(i)   extraordinary wear and tear, excessive usage, failure to maintain, to
repair, to restore, to rebuild or to replace, failure to comply with the Lease
and all applicable laws, failure to use, workmanship, method of installation or
removal or maintenance, repair, rebuilding or replacement (excepting in each
case ordinary wear and tear);

(ii)   any Modification made to, or any rebuilding of, the Property or any part
thereof by Lessee or any sublessee; or

(iii)   the existence of any Hazardous Activity, Hazardous Substance or
Environmental Violations; or any restoration or rebuilding carried out by Lessee
or any sublessee; or

(iv)   any condemnation of any portion of the Property pursuant to Article XV of
the Lease; or

(v)   any use of the Property or any part thereof by Lessee or any sublessee
other than as permitted by the Operative Documents; or

(vi)   any grant, release, dedication, transfer, annexation or amendment made
pursuant to Section 12.2 of the Lease; or

(vii)   the failure of Lessor to have good and marketable fee title to the
Property free and clear of all Liens (including Permitted Liens and Permitted
Exceptions) and exceptions to title, except (A) such Liens or exceptions to
title that existed on the Closing Date and were disclosed in the policy of title
insurance delivered pursuant to Section 6.1; (B) Lessor Liens; and (C) to the
extent any such liability arising as a result of a title defect is offset by the
proceeds of title insurance.

 

54.

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Section 13.3

Environmental Indemnity.  Without limitation of the other provisions of this
Section 13, Lessee hereby agrees to indemnify, hold harmless and defend each
Indemnitee from and against any and all claims (including without limitation
third party claims for personal injury or real or personal property damage),
losses (including but not limited to any loss of value of the Property),
damages, liabilities, fines, penalties, charges, administrative and judicial
proceedings (including informal proceedings) and orders, judgments, remedial
action, requirements, enforcement actions of any kind, and all reasonable and
documented costs and expenses incurred in connection therewith (including but
not limited to reasonable and documented attorneys' and/or paralegals' fees and
expenses), including, but not limited to, all costs incurred in connection with
any investigation or monitoring of site conditions or any clean-up, remedial,
removal or restoration work by any federal, state or local government agency,
which such Indemnitee becomes subject to because of its involvement with the
Property, the transactions contemplated by the Operative Documents or any other
matter referred to in paragraphs (a) through (i) of Section 13.1 arising in
whole or in part, out of:

 

 

 

 

 

 

     

(a)

the presence on or under the Property of any Hazardous Substances, or any
Releases or discharges of any Hazardous Substances on, under, from or onto the
Property;

 

 

 

 

 

 

     

(b)

any activity, including, without limitation, construction, carried on or
undertaken on or off the Property, and whether by Lessee, Lessor, the Existing
Owner or any predecessor in title or any employees, agents, contractors or
subcontractors of Lessee, Lessor (if such activity was undertaken with the
consent or at the direction of Lessee), the Existing Owner or any predecessor in
title, or any other Persons (including such Indemnitee), in connection with the
handling, treatment, removal, storage, decontamination, cleanup, transport or
disposal of any Hazardous Substances that at any time are located or present on
or under or that at any time migrate, flow, percolate, diffuse or in any way
move onto or under the Property;

 

 

 

 

 

 

     

(c)

loss of or damage to any property or the environment (including, without
limitation, cleanup costs, response costs, remediation and removal costs, cost
of corrective action, costs of financial assurance, fines and penalties and
natural resource damages), or death or injury to any Person, and all expenses
associated with the protection of wildlife, aquatic species, vegetation, flora
and fauna, and any mitigative action required by or under Environmental Laws;

 

 

 

 

 

 

     

(d)

any claim concerning lack of compliance with Environmental Laws, or any act or
omission causing an environmental condition that requires remediation or would
allow any Governmental Authority to record a Lien on the land records;

 

 

 

 

 

 

     

(e)

any residual contamination on or under the Property, or affecting any natural
resources, or any contamination of any property or natural resources arising in
connection with the generation, use, handling, storage, transport or disposal of
any such Hazardous Substances, and irrespective of whether any of such
activities were or will be undertaken in accordance with applicable
Environmental Laws; or

 

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(f)

any material inaccuracies, misrepresentations, misstatements, and omissions and
any conflicting information contained in or omitted from the Environmental
Audit; provided, however, Lessee shall not be required to indemnify any
Indemnitee under this Section 13.3 for (1) any Claim to the extent resulting
from the willful misconduct or gross negligence of such Indemnitee or its
agents, employees and contractors (other than Lessee and its agents, employees
and contractors) (it being understood that Lessee shall be required to indemnify
an Indemnitee even if the ordinary (but not gross) negligence of such Indemnitee
caused or contributed to such Claim), (2) subject to the provisions Section 15.2
of the Lease, any Claim to the extent attributable to acts or events occurring
after the expiration of the Term or the termination of Lessee's right to possess
and control the Property (but not any claim to the extent attributable to acts
or events occurring prior to or during the Term or occurring at any time that
Lessee is in actual possession or control of the Property), (3) any Imposition
or other claims for Taxes of the type(s) described in Section 13.5 or (4) any
Claims of the type(s) described in Sections 13.2 (only with respect to claims in
respect of a decline in the Fair Market Sales Value of the Property and Lessee's
exercise of the Remarketing Option), 13.6, 13.7, 13.8 and 13.10.  It is
expressly understood and agreed that the indemnity provided for herein shall
survive the expiration or termination of and shall be separate and independent
from any remedy under the Lease or any other Operative Document.

 

 

 

 

 

 

Section 13.4

Proceedings in Respect of Claims.

 

 

 

 

 

 

     

(a)

With respect to any amount that Lessee is requested by an Indemnitee to pay by
reason of Section 13.1 or 13.3, such Indemnitee shall, if so requested by Lessee
and prior to any payment, submit such additional information to Lessee as Lessee
may reasonably request and which is in the possession of such Indemnitee to
substantiate properly the requested payment.

 

 

 

 

 

 

     

(b)

In case any action, suit or proceeding shall be brought against any Indemnitee,
such Indemnitee shall notify Lessee of the commencement thereof, and Lessee
shall be entitled, at its expense, to participate in, and, to the extent that
Lessee desires to, assume and control the defense thereof; provided, however,
that Lessee shall have acknowledged in writing its obligation to fully indemnify
such Indemnitee in respect of such action, suit or proceeding, and Lessee shall
keep such Indemnitee fully apprised of the status of such action, suit or
proceeding and shall provide such Indemnitee with all information with respect
to such action, suit or proceeding as such Indemnitee shall reasonably request,
and provided further, that Lessee shall not be entitled to assume and control
the defense of any such action, suit or proceeding if and to the extent that,
(A) in the reasonable opinion of such Indemnitee, (x) such action, suit or
proceeding involves any possibility of imposition of criminal liability or any
risk of material civil liability on such Indemnitee or will involve a material
risk of the sale, forfeiture or loss of, or the creation of any Lien (other than
a Permitted Exception) on the Property or any part thereof unless, in the case
of civil liability or Lien, Lessee shall have posted a bond or other security
satisfactory to the relevant Indemnitee in respect to such risk or (y) the
control of such action, suit or proceeding would involve an actual or potential
conflict of interest, (B) such proceeding involves Claims not fully indemnified
by Lessee which Lessee and the Indemnitee have been unable to sever from the
indemnified claim(s), or (C) a Lease Event of Default under the Lease has
occurred and is continuing.  The Indemnitee may participate in a reasonable
manner at its own expense and with its own counsel in any proceeding conducted
by Lessee in accordance with the foregoing.  Lessee shall not enter into any
settlement or other compromise with respect to any Claim which is entitled to be
indemnified under Section 13.1 or 13.3 without the prior written consent of the
Indemnitee which consent shall not be unreasonably withheld in the case of a
money settlement not involving an admission of liability of such Indemnitee.

 

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(c)

Each Indemnitee shall at the expense of Lessee cooperate with and supply Lessee
with such information and documents reasonably requested by Lessee as are
necessary or advisable for Lessee to participate in any action, suit or
proceeding to the extent permitted by Section 13.1 or 13.3.  Unless a Lease
Event of Default under the Lease shall have occurred and be continuing, no
Indemnitee shall enter into any settlement or other compromise with respect to
any Claim which is entitled to be indemnified under Section 13.1 or 13.3 without
the prior written consent of Lessee, which consent shall not be unreasonably
withheld, unless such Indemnitee waives its right to be indemnified under
Section 13.1 or 13.3 with respect to such Claim.

 

 

 

 

 

 

     

(d)

Upon payment in full of any Claim by Lessee pursuant to Section 13.1 or 13.3 to
or on behalf of an Indemnitee, Lessee, without any further action, shall be
subrogated to any and all claims that such Indemnitee may have relating thereto
(other than claims in respect of insurance policies maintained by such
Indemnitee at its own expense), and such Indemnitee shall execute such
instruments of assignment and conveyance, evidence of claims and payment and
such other documents, instruments and agreements as may be necessary to preserve
any such claims and otherwise cooperate with Lessee and give such further
assurances as are necessary or advisable to enable Lessee vigorously to pursue
such claims.

 

 

 

 

 

 

     

(e)

Any amount payable to an Indemnitee pursuant to Section 13.1 or 13.3 shall be
paid to such Indemnitee promptly upon receipt of a written demand therefor from
such Indemnitee, accompanied by a written statement describing in reasonable
detail the basis for such indemnity and the computation of the amount so payable
and, if requested by Lessee, such determination shall be verified by a
nationally recognized independent accounting firm mutually acceptable to Lessee
and the Indemnitee at the expense of Lessee.

 

 

 

 

 

 

Section 13.5

General Impositions Indemnity.

 

 

 

 

 

 

     

(a)

Indemnification.  Lessee shall pay and assume liability for, and does hereby
agree to indemnify, protect and defend the Property and all Indemnitees, and
hold them harmless against, all Impositions on an After Tax Basis.

 

 

 

 

 

 

     

(b)

Payments.

 

 

 

 

 

 

 

(i)   Subject to the terms of Section 13.5(f), Lessee shall pay or cause to be
paid all Impositions directly to the taxing authorities where feasible and
otherwise to the Indemnitee, as appropriate, and Lessee shall at its own
expense, upon such Indemnitee's reasonable request, furnish to such Indemnitee
copies of official receipts or other satisfactory proof evidencing such payment.

(ii)   In the case of Impositions for which no contest is conducted pursuant to
Section 13.5(f) and which Lessee pays directly to the taxing authorities, Lessee
shall pay such Impositions prior to the latest time permitted by the relevant
taxing authority for timely payment.  In the case of Impositions for which
Lessee reimburses an Indemnitee, Lessee shall do so within twenty (20) days
after receipt by Lessee of demand by such Indemnitee describing in reasonable
detail the nature of the Imposition and the basis for the demand (including the
computation of the amount payable), but in no event shall Lessee be required to
pay such reimbursement prior to ten (10) days before the latest time permitted
by the relevant taxing authority for timely payment.  In the case of Impositions
for which a contest is conducted pursuant to Section 13.5(f), Lessee shall pay
such Impositions or reimburse such Indemnitee for such Impositions, to the
extent not previously paid or reimbursed pursuant to subsection (a), prior to
the latest time permitted by the relevant taxing authority for timely payment
after conclusion of all contests under Section 13.5(f).

 

 

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(iii)   At Lessee's request, the amount of any indemnification payment by Lessee
pursuant to subsection (a) shall be verified and certified by an independent
public accounting firm mutually acceptable to Lessee and the Indemnitee.  The
fees and expenses of such independent public accounting firm shall be paid by
Lessee unless such verification shall result in an adjustment in Lessee's favor
of five percent (5%) or more of the payment as computed by the Indemnitee, in
which case such fee shall be paid by the Indemnitee.

 

 

 

 

 

 

 

     

(c)

Reports and Returns.  Lessee shall be responsible for preparing and filing any
real and personal property or ad valorem tax returns in respect of the
Property.  In case any other report or tax return shall be required to be made
with respect to any obligations of Lessee under or arising out of subsection (a)
and of which Lessee has knowledge or should have knowledge, Lessee, at its sole
cost and expense, shall notify the relevant Indemnitee of such requirement and
(except if such Indemnitee notifies Lessee that such Indemnitee intends to file
such report or return) (A) to the extent required or permitted by and consistent
with Applicable Law, make and file in its own name such return, statement or
report; and (B) in the case of any other such return, statement or report
required to be made in the name of such Indemnitee, advise such Indemnitee of
such fact and prepare such return, statement or report for filing by such
Indemnitee or, where such return, statement or report shall be required to
reflect items in addition to any obligations of Lessee under or arising out of
subsection (a), provide such Indemnitee at Lessee's expense with information
sufficient to permit such return, statement or report to be properly made with
respect to any obligations of Lessee under or arising out of subsection (a). 
Such Indemnitee shall, upon Lessee's request and at Lessee's expense, provide
any data maintained by such Indemnitee (and not otherwise available to or within
the control of Lessee) with respect to the Property which Lessee may reasonably
require to prepare any required tax returns or reports.  Each Indemnitee agrees
to use its best efforts to send to Lessee a copy of any written request or other
notice that the Indemnitee receives with respect to any reports or returns
required to be filed with respect to the Property or the transactions
contemplated by the Operative Documents, it being understood that no Indemnitee
shall have any liability for failure to provide such copies.

 

 

 

 

 

 

     

(d)

Income Inclusions.  If as a result of the payment or reimbursement by Lessee of
any expenses of Lessor or the payment of any Transaction Expenses incurred in
connection with the transactions contemplated by the Operative Documents, Lessor
or any Participant shall suffer a net increase in any federal, state or local
income tax liability, Lessee shall indemnify such Persons (without duplication
of any indemnification required by subsection (a)) on an After Tax Basis for the
amount of such increase.  The calculation of any such net increase shall take
into account any current or future tax savings realized or reasonably expected
to be realized by such person in respect thereof, as well as any interest,
penalties and additions to tax payable by Lessor, or any Participant or such
Affiliate, in respect thereof.

 

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(e)

Withholding Taxes.  As between Lessee on one hand, and Lessor or Agent and any
Participant on the other hand, Lessee shall be responsible for, and, subject to
the provisions of Sections 13.5(g) and (h), Lessee shall indemnify and hold
harmless Lessor, Agent and the Participants (without duplication of any
indemnification required by subsection (a)) on an After Tax Basis against, any
obligation for United States or foreign withholding taxes imposed in respect of
payments with respect to the Participation Interests or with respect to Rent
payments under the Lease or payments of the Asset Termination Value or Purchase
Option Price (and, if Lessor, Agent or any Participant receives a demand for
such payment from any taxing authority, Lessee shall discharge such demand on
behalf of Lessor, Agent or such Participant).  Notwithstanding the foregoing
provisions of this Section 13.5(e) or any other provision of any Operative
Document to the contrary, Lessee shall not be responsible for and shall not be
required to indemnify or otherwise hold harmless any Person from or against any
withholding tax imposed as a collection device for, or in substitution or lieu
of, an income, franchise or similar tax to the extent such income, franchise or
similar tax would not otherwise be subject to indemnification pursuant to this
Section 13.5 (a "Qualified Withholding Tax").  As used herein, Qualified
Withholding Taxes include, without limitation, any withholding taxes arising
under Section 871, 881, 1441 or 1442 of the Code and any similar taxes arising
under state, local or foreign law as well as any withholding tax imposed as a
collection device for, or in substitution or lieu of the Imposition that
qualifies as an "income tax" within the meaning of United States Treasury
Regulation Section 1.901-2.

 

 

 

 

 

 

     

(f)

Contests of Impositions.

 

 

 

 

 

 

 

(i)   If a written claim is made against any Indemnitee or if any proceeding
shall be commenced against such Indemnitee (including a written notice of such
proceeding), for any Impositions, such Indemnitee shall promptly notify Lessee
in writing and shall not take action with respect to such claim or proceeding
without the consent of Lessee for thirty (30) days after the receipt of such
notice by Lessee; provided, however, that, in the case of any such claim or
proceeding, if action shall be required by law or regulation to be taken prior
to the end of such 30-day period, such Indemnitee shall, in such notice to
Lessee, inform Lessee of such shorter period, and no action shall be taken with
respect to such claim or proceeding without the consent of Lessee before two (2)
days before the end of such shorter period; provided, further, that the failure
of such Indemnitee to give the notices referred to this sentence shall not
diminish Lessee's obligation hereunder except to the extent such failure
precludes Lessee from contesting all or part of such claim.

(ii)   If, within thirty (30) days of receipt of such notice from the Indemnitee
(or such shorter period as the Indemnitee has notified Lessee is required by law
or regulation for the Indemnitee to commence such contest), Lessee shall request
in writing that such Indemnitee contest such Imposition, the Indemnitee shall,
at the expense of Lessee, in good faith conduct and control such contest
(including, without limitation, by pursuit of appeals) relating to the validity,
applicability or amount of such Impositions (provided, however, that (A) if such
contest involves a tax other than a tax on net income and can be pursued
independently from any other proceeding involving an unindemnified tax liability
of such Indemnitee, the Indemnitee, at Lessee's request, shall allow Lessee to
conduct and control such contest and (B) in the case of any contest, the
Indemnitee may request Lessee to conduct and control such contest) by, in the
sole discretion of the Person conducting and controlling such contest, (1)
resisting payment thereof, (2) not paying the same except under protest, if
protest is necessary and proper, (3) if the payment be made, using reasonable
efforts to obtain a refund thereof in appropriate administrative and judicial
proceedings, or (4) taking such other action as is reasonably requested by
Lessee from time to time.

 

 

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(iii)   The party controlling any contest shall consult in good faith with the
non-controlling party and shall keep the non-controlling party reasonably
informed as to the conduct of such contest; provided, that all decisions
ultimately shall be made in the sole discretion of the controlling party except
that no decision shall be made to concede an indemnified issue without the prior
consent of Lessee (which consent shall not be unreasonably withheld).  The
parties agree that an Indemnitee may at any time decline to take further action
with respect to the contest of any Imposition and may settle such contest if
such Indemnitee shall waive its rights to any indemnity from Lessee that
otherwise would be payable in respect of such claim (and any future claim by any
taxing authority, the contest of which is precluded by reason of such resolution
of such claim) and shall pay to Lessee any amount previously paid or advanced by
Lessee pursuant to this Section 13.5 by way of indemnification or advance for
the payment of an Imposition other than expenses of such contest.

(iv)   Notwithstanding the foregoing provisions of this Section 13.5, an
Indemnitee shall not be required to take any action and Lessee shall not be
permitted to contest any Impositions in its own name or that of the Indemnitee
unless (A) Lessee shall have agreed such Imposition is subject to indemnity
hereunder and shall pay to such Indemnitee on demand and on an After Tax Basis
all reasonable costs, losses and expenses that such Indemnitee actually incurs
in connection with contesting such Impositions, including, without limitation,
all reasonable legal, accounting and investigatory fees and disbursements, (B)
in the case of a claim that must be pursued in the name of an Indemnitee (or an
Affiliate thereof), the amount of the potential indemnity (taking into account
all similar or logically related claims that have been or could be raised in any
audit involving such Indemnitee for which Lessee may be liable to pay an
indemnity under this Section 13.5) exceeds $10,000, (C) the Indemnitee shall
have reasonably determined that the action to be taken will not result in any
material danger of sale, forfeiture or loss of the Property, or any part thereof
or interest therein, will not interfere with the payment of Rent, and will not
result in risk of criminal liability, (D) if such contest shall involve the
payment of the Imposition prior to the contest, Lessee shall provide to the
Indemnitee an interest-free advance in an amount equal to the Imposition that
the Indemnitee is required to pay (with no additional net after-tax cost to such
Indemnitee), (E) in the case of a claim that must be pursued in the name of an
Indemnitee (or an Affiliate thereof), Lessee shall have provided to such
Indemnitee an opinion of independent tax counsel selected by the Indemnitee and
reasonably satisfactory to Lessee stating that a reasonable basis exists to
contest such claim (or, in the case of an appeal of an adverse judicial
determination, an opinion of such counsel to the effect that there is
substantial authority for the position asserted in such appeal) and (F) no Lease
Event of Default hereunder shall have occurred and be continuing.  In no event
shall an Indemnitee be required to appeal an adverse judicial determination to
the United States Supreme Court.  In addition, an Indemnitee shall not be
required to contest any claim in its name (or that of an Affiliate) if the
subject matter thereof shall be of a continuing nature and shall have previously
been decided adversely by a court of competent jurisdiction pursuant to a
contest completed in accordance with the provisions of this Section 13.5, unless
there shall have been a change in law (or interpretation thereof) and the
Indemnitee shall have received, at Lessee's expense, an opinion of independent
tax counsel selected by the Indemnitee and reasonably acceptable to Lessee
stating that as a result of such change in law (or interpretation thereof), it
is more likely than not that the Indemnitee will prevail in such contest.

 

 

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(g)

Documentation of Withholding Status.  Each Participant (or any successor thereto
or transferee thereof) that is organized under the laws of a jurisdiction
outside of the United States of America and each Lessor that is organized under
the laws of a jurisdiction outside of the United States of America shall:

 

 

 

 

 

 

 

(i)   on or before the date it becomes a party to any Operative Document,
deliver to Lessee any certificates, documents, or other evidence that shall be
required by the Code or Treasury Regulations issued pursuant thereto to
establish its exemption from United States Federal withholding requirements,
including (A) two valid, duly completed, original copies of Internal Revenue
Service Form W-8BEN or Form W-8ECI or successor applicable form, properly and
duly executed, certifying in each case that such party is entitled to receive
payments pursuant to the Operative Documents without deduction or withholding of
United States Federal income taxes, or (B) a valid, duly completed, original
copy of Internal Revenue Service Form W-8 or Form W-9 or applicable successor
form, properly and duly executed, certifying that such party is entitled to an
exemption from United States of America backup withholding tax; and

(ii)   so long as it shall be legally entitled to do so, on or before the date
that any such form described above expires or becomes obsolete, or after the
occurrence of any event requiring a change in the most recent such form
previously delivered to Lessee, deliver to Lessee two further valid, duly
completed, original copies of any such form or certification, properly and duly
executed.

 

 

 

 

 

 

 

     

(h)

Limitation on Tax Indemnification.  Lessee shall not be required to indemnify
any Indemnitee, or to pay any increased amounts to any Indemnitee or tax
authority with respect to any Impositions pursuant to this Section 13.5 to the
extent that (i) such Imposition is attributable to such Indemnitee's failure to
comply with the provisions of Section 13.5(g); or (ii) to the extent such
Imposition constitutes or is collected by means of a Qualified Withholding Tax.

 

 

 

 

 

 

     

(i)

Tax Savings.  In the event an Indemnitee receives a refund (or similar tax
savings) in respect of any Imposition paid or reimbursed by Lessee which was not
considered in calculating the After Tax Basis with respect to such payment or
reimbursement by Lessee, such Indemnitee shall within thirty (30) days
thereafter remit the amount of such refund (or tax savings) to Lessee, provided
that the amount so remitted shall not exceed the lesser of:  (i) the amount
received by such Indemnitee as a refund (or tax savings) net of all reasonable
costs and expenses incurred by such Indemnitee in connection with obtaining and
paying such amount; and (ii) (a) the amount of all prior payments by Lessee to
such Indemnitee with respect to Impositions, plus any refunded interest, less
(b) the amount of all prior payments by the Indemnitee to Lessee under this
Section 13.5(i).

 

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Section 13.6

Funding Losses.  If any repayment of any Advance is made on any day other than
the last day of an Interest Period applicable thereto, Lessee shall reimburse
each Participant within fifteen (15) days after demand for any Funding Losses
provided that such Participant shall have delivered to Lessee a certificate as
to the amount of such loss or expense, which certificate shall be conclusive in
the absence of manifest error, and provided further that such loss payable to
any Participant shall in no event exceed the interest or Yield on the Advances
which would have been payable to such Participant for the balance of such
Interest Period or other period, less the amount actually earned by such
Participant on such Advances.  Such Participant will, at the request of Lessee,
furnish such additional information concerning the determination of such loss as
Lessee may reasonably request.

 

 

 

 

 

 

Section 13.7

Regulation D Compensation.  For so long as any Participant is required by a
Change of Law to increase its existing reserve percentage above that applicable
under existing law as of the Effective Date against "Eurocurrency Liabilities"
(or any other category of liabilities which include deposits by reference to
which the Offshore Rate is determined or any category of extensions of credit or
other assets which includes loans by a non-United States office of such
Participant to United States residents), and, as a result, the cost to such
Participant (or its Funding Office) of purchasing or maintaining its
Participation Interest is increased, then such Participant may require Lessee to
pay, contemporaneously with each payment of interest or Yield, an additional
amount on the Participation Interest of such Participant computed at a rate per
annum up to but not exceeding the excess of (i) (A) the applicable Offshore Rate
divided by (B) one minus the Eurocurrency Reserve Requirements and (ii) the
applicable Offshore Rate.  Any Participant wishing to require payment of such
additional amount (x) shall so notify Lessee and Agent, in which case such
additional interest on its Participation Interest shall be payable to such
Participant by Lessee at the place indicated in such notice with respect to each
Interest Period commencing at least three (3) Business Days after the giving of
such notice and (y) shall furnish to Lessee at least five (5) Business Days
prior to each date on which interest is payable on the Advance an officer's
certificate setting forth the amount to which such Participant is then entitled
under this Section (which shall be consistent with such Participant's good faith
estimate of the level at which the related reserves are maintained by it).  Each
such certificate shall be accompanied by such information as Lessee may
reasonably request as to the computation set forth therein.

 

 

 

 

 

 

Section 13.8

Basis for Determining Interest Rate Inadequate or Unfair.   If on or prior to
the first day of any Interest Period either:

 

 

 

 

 

 

     

(a)

deposits in dollars (in the applicable amounts) are not being offered to Agent
in the relevant market for such Interest Period or any Participants shall advise
Agent that the Effective Rate will not adequately and fairly reflect the cost to
such Participant of funding or maintaining its Participation Interest in the
Lease Balance for such Interest Period; or

 

 

 

 

 

 

     

(b)

any Participant determines that, and advises Agent that, by reason of the
adoption, on or after the date of this Participation Agreement, of any
applicable law, rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Participant (or its Funding Office) with any
request or directive (whether or not having the force of law) of any such
authority, central bank or governmental agency, it is restricted, directly or
indirectly, in the amount it may hold of (i) a category of liabilities that
includes deposits by reference to which, or on the basis of which, the Effective
Rate is directly or indirectly determined, or (ii) the category of assets which
includes its Participation Interest; then

Agent shall forthwith give notice thereof to Lessee and the Participants,
whereupon until Agent notifies Lessee that the circumstances giving rise to such
suspension no longer exist, each outstanding Advance shall begin to bear
interest on the last day of the then current Interest Period applicable thereto
at a rate per annum equal to the sum of (i) the Participants' average cost of
funds (expressed as a per annum rate) employed to fund or maintain their
Participation Interests, as calculated by Agent on the basis of notices of such
costs provided to Agent and Lessee by the Participants, plus (ii) the Applicable
Margins used to calculate interest and Yield when the Effective Rate equals the
Offshore Rate.

 

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Section 13.9

Illegality.  If, on or after the date of this Participation Agreement, the
adoption of any applicable law, rule or regulation, or any change therein, or
any change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Participant (or its Funding Office)
with any request or directive (whether or not having the force of law) of any
such authority, central bank or comparable agency (a "Charge of Law"), shall
make it unlawful or impossible for any Participant (or its Funding Office) to
purchase, maintain or fund its Participation Interest and such Participant shall
so notify Agent, Agent shall forthwith give notice thereof to the other
Participants and Lessee, whereupon until such Participant notifies Lessee and
Agent that the circumstances giving rise to such suspension no longer exist,
such Participant will have the right to accelerate the obligations of Lessee
under Articles 19, 20 and 22 of the Lease by directing and requiring Lessor to
deliver an Early Termination Notice as provided in Section 16.3 of the Lease. 
However, before giving any such direction to Lessor, such Participant shall, if
practicable, with the consent of Lessee (which consent shall not unreasonably be
withheld), designate a different Funding Office if such designation will avoid
the need for giving such notice and will not, in the judgment of such
Participant, be otherwise disadvantageous to such Participant.  If such notice
is given, Lessee may request a reasonable explanation by such Participant of the
factors underlying such notice, and Lessee may exercise its Purchase Option
under Section 20.1 of the Lease upon not less than ten (10) days' written notice
to Lessor, Agent and the Participants.

 

 

 

 

 

 

Section 13.10

Increased Cost and Reduced Return.

 

 

 

 

 

 

     

(a)

In the event that the adoption of any applicable law, rule or regulation, or any
change therein or in the interpretation or application thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof or compliance by any Participant with
any request or directive after the date hereof (whether or not having the force
of law) of any such authority, central bank or comparable agency, after the
Effective Date:

 

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(i)   does or shall subject such Participant to any additional tax of any kind
whatsoever with respect to the Operative Documents or such Participant's
Participation Interest, or change the basis or the applicable rate of taxation
of payments to such Participant in respect of its Participation Interest or any
other amount payable hereunder (except for the imposition of or change in (x)
any tax on or measured by the overall net income of such Participant including,
without limitation, any tax that qualifies as an "income tax" within the meaning
of United States Treasury Regulation Section 1.901-2 and which is not an
Imposition or (y) any Qualified Withholding Tax);

(ii)   does or shall impose, modify or hold applicable any reserve, special
deposit, insurance assessment, compulsory loan or similar requirement against
assets held by, or deposits or other liabilities in or for the account of,
advances or loans by, or other credit extended by, or any other acquisition of
funds by, any office of such Participant which are not otherwise included in
determination of the Effective Rate ; or

(iii)   does or shall impose on such Participant any other condition; and

(iv)   the result of any of the foregoing described in clauses (i), (ii) or
(iii) of this Section 13.10(a) is to increase the cost to such Participant of
purchasing or maintaining its Participation Interest or to reduce any amount
receivable hereunder with respect thereto, then in any such case, Lessee shall
promptly pay such Participant, upon its demand, any additional amounts necessary
to compensate such Participant for such increased cost or reduced amount
receivable which such Participant deems to be material as determined by such
Participant; provided, however, that Lessee shall not be obligated to pay any
Participant for any such increased costs or reduced amounts incurred more than
sixty (60) days prior to the date of such Participant's demand for payment if
such demand was made more than sixty (60) days after the latest of (A) the date
such Participant received actual notice of such increased cost or reduced
amount, or (B) the effective date of such change or the date such change
occurred or was enacted.

 

 

 

 

 

 

 

     

(b)

If any Participant shall have determined that the adoption of any applicable
law, rule or regulation, after the date hereof, regarding capital adequacy, or
any change therein, or any change in the interpretation or administration
thereof by any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration thereof, or any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency has or would have the effect of
reducing the rate of return on capital of such Participant (or any entity
directly or indirectly controlling such Participant) as a consequence of such
Participant's Participation Interest to a level below that which such
Participant (or any entity directly or indirectly controlling such Participant)
could have achieved but for such adoption, change, request or directive (taking
into consideration its policies with respect to capital adequacy) by an amount
deemed by such Participant to be material, then from time to time, within
fifteen (15) days after demand by such Participant (with a copy to Agent),
Lessee shall pay to such Participant such additional amount or amounts as will
compensate such Participant (or its parent) for such reduction.

 

 

 

 

 

 

     

(c)

Each Participant will promptly notify Lessee and Agent of any event of which it
has knowledge, occurring after the date hereof, which will entitle such
Participant to compensation or to accelerate the termination of the Lease
pursuant to this Section and will, if practicable, with the consent of Lessee
(which consent shall not unreasonably be withheld), designate a different
Funding Office or take any other reasonable action if such designation or action
will avoid the need for, or reduce the amount of, such compensation or eliminate
the need for such acceleration and will not, in the judgment of such
Participant, be otherwise disadvantageous to such Participant.  A certificate of
any Participant claiming compensation under this Section and setting forth in
reasonable detail its computation of the additional amount or amounts to be paid
to it hereunder shall be conclusive in the absence of manifest error.  In
determining such amount, such Participant may use any reasonable averaging and
attribution methods.  This Section shall survive the termination of this
Participation Agreement and payment of the outstanding Advances and
Participation Interests.

 

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Section 13.11

Substitution of Participant.  If (i) any Participant claims a right to
accelerate the Expiration Date pursuant to this Section 13, or (ii) any
Participant has demanded compensation or given notice of its intention to demand
compensation under Sections 13.1, 13.2, 13.5 or 13.10, Lessee shall have the
right, with the assistance of Agent, to seek one or more mutually satisfactory
substitute banks or financial institutions (which may be one or more of the
Participants) to replace such Participant under the Operative Documents.

 

 

 

 

 

 

Section 13.12

Indemnity Payments in Addition to Residual Value Guarantee Amount.  Lessee
acknowledges and agrees that its obligations to make indemnity payments under
this Section 13 are separate from, in addition to, and do not reduce, its
obligation to pay the Residual Value Guarantee Amount under the Lease; provided,
that except as otherwise set forth in Section 13.2 hereof, the Shortfall Amount
payable by Lessee in connection with the Remarketing Option under the Lease
shall not be increased under this Section 13.

 

 

 

 

 

SECTION 14

AGENT

 

Section 14.1   

Appointment.  Each Participant hereby irrevocably designates and appoints Agent
as Agent of such Participant under this Participation Agreement and the other
Operative Documents, and each Participant irrevocably authorizes Agent, in such
capacity, to take such action on its behalf under the provisions of this
Participation Agreement and the other Operative Documents and to exercise such
powers and perform such duties as are expressly delegated to Agent by the terms
of this Participation Agreement and the other Operative Documents, together with
such other powers as are reasonably incidental thereto.  Notwithstanding any
provision to the contrary elsewhere in this Participation Agreement, Agent shall
not have any duties or responsibilities, except those expressly set forth
herein, or any fiduciary relationship with any Participant or any other party to
the Operative Documents, and no implied covenants, functions, responsibilities,
duties, obligations or liabilities shall be read into this Participation
Agreement or any other Operative Document or otherwise exist against Agent.

 

 

 

 

 

 

Section 14.2

Delegation of Duties.  Agent may execute any of its duties under this
Participation Agreement and the other Operative Documents by or through agents
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties.  Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.

 

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Section 14.3

Exculpatory Provisions.  Neither Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates shall be (a) liable for any
action lawfully taken or omitted to be taken by it or such Person under or in
connection with this Participation Agreement or any other Operative Document
(except for its or such Person's own gross negligence or willful misconduct) or
(b) responsible in any manner to any of the Participants or any other party to
the Operative Documents for any recitals, statements, representations or
warranties made by Lessor or Lessee or any officer thereof contained in this
Participation Agreement or any other Operative Document or in any certificate,
report, statement or other document referred to or provided for in, or received
by Agent under or in connection with, this Participation Agreement or any other
Operative Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Participation Agreement or any other
Operative Document or for any failure of Lessor or Lessee to perform its
obligations hereunder or thereunder.  Agent shall not be under any obligation to
any Participant or any other party to the Operative Documents to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, this Participation Agreement or any other Operative
Document, or to inspect the properties, books or records of Lessor or Lessee.

 

 

 

 

 

 

Section 14.4

Reliance by Agent.  Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telecopy, telex or teletype message, statement,
order or other document or conversation believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel (including, without limitation, counsel
to Lessor or Lessee), independent accountants and other experts selected by
Agent.  Agent shall be fully justified in failing or refusing to take any action
under this Participation Agreement or any other Operative Document unless it
shall first receive such advice or concurrence of the Required Participants as
it deems appropriate or it shall first be indemnified to its satisfaction by the
Participants against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action.  Agent shall in
all cases be fully protected in acting, or in refraining from acting, under this
Participation Agreement and the other Operative Documents in accordance with a
request of the Required Participants, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Participants.

 

 

 

 

 

 

Section 14.5

Notice of Default.  Agent shall not be deemed to have knowledge or notice of the
occurrence of any Potential Lease Default or Lease Event of Default unless Agent
has received notice from a Participant, Lessor or Lessee describing such
Potential Lease Default or Lease Event of Default and stating that such notice
is a "notice of default."  In the event that Agent receives such a notice, Agent
shall give notice thereof to the other parties hereto.  Subject to the
provisions of Section 11 and Section 15.5 hereof, Agent shall take such action
with respect to such Potential Lease Default or Lease Event of Default as shall
be reasonably directed by the Required Participants; provided that unless and
until Agent shall have received such directions, Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Potential Lease Default or Lease Event of Default as it shall deem
advisable in the best interests of the Participants.

 

 

 

 

 

 

Section 14.6

Non-Reliance on Agent and Other Participants.  Each Participant expressly
acknowledges that neither Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates has made any representations or
warranties to it and that no act by Agent hereinafter taken, including any
review of the affairs of Lessor or Lessee, shall be deemed to constitute any
representation or warranty by Agent to any Participant.  Each Participant
represents to Agent that it has, independently and without reliance upon Agent
or any other Participant, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of Lessor, Lessee and the Property and made its own decision to
purchase its Participation Interest hereunder and enter into this Participation
Agreement.  Each Participant also represents that it will, independently and
without reliance upon Agent, Lessor or any other Participant, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking or not taking
action under this Participation Agreement and the other Operative Documents, and
to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of Lessor and Lessee.  Except for notices, reports and other
documents expressly required to be furnished to the Participants by Agent
hereunder, Agent shall not have any duty or responsibility to provide any
Participant with any credit or other information concerning the business,
operations, property, condition (financial or otherwise), prospects or
creditworthiness of Lessor or Lessee which may come into the possession of Agent
or any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates.

 

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Section 14.7

Indemnification.  The Participants agree to indemnify Agent in its capacity as
such (to the extent not reimbursed by Lessee and without limiting the obligation
of Lessee to do so), ratably according to their respective Commitment
Percentages in effect on the date on which indemnification is sought under this
Section 14.7 (or, if indemnification is sought after the date upon which the
Commitments shall have terminated and the Participation Interests shall have
been paid in full, ratably in accordance with their Commitment Percentages
immediately prior to such date), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the
Participation Interests) be imposed on, incurred by or asserted against Agent in
any way relating to or arising out of, the Commitments, this Participation
Agreement, the Property, any of the other Operative Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by any of them
under or in connection with any of the foregoing; provided that no Participant
shall be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting solely from the gross negligence or willful misconduct
of Agent.  The agreements in this Section 14.7 shall survive the payment of the
Participation Interests and all other amounts payable hereunder.

 

 

 

 

 

 

Section 14.8

Agent in its Individual Capacity.  Agent and its Affiliates may make loans to,
accept deposits from and generally engage in any kind of business with Lessor or
Lessee as though Agent were not Agent hereunder and under the other Operative
Documents.  With respect to its Participation Interest purchased by it, Agent
shall have the same rights and powers under this Participation Agreement and the
other Operative Documents as any Participant and may exercise the same as though
it were not Agent, and the terms "Participant" and "Participants" shall include
Agent in its individual capacity.

 

 

 

 

 

 

Section 14.9

Successor Agent.  Agent may resign as Agent upon twenty (20) days' notice to the
Participants, Lessor or Lessee.  If Agent shall resign as Agent under this
Participation Agreement and the other Operative Documents, then the Required
Participants shall appoint a successor agent for the Participants, which
successor agent shall be a commercial bank organized under the laws of the
United States of America or any State thereof or under the laws of another
country which is doing business in the United States of America and having a
combined capital, surplus and undivided profits of at least $100,000,000 (and if
no Potential Lease Default or Lease Event of Default exists, shall be approved
by Lessee (which consent shall not be unreasonably withheld)), whereupon such
successor agent shall succeed to the rights, powers and duties of Agent, and the
term "Agent" shall mean such successor agent effective upon such appointment and
approval, and the former Agent's rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent or any of the parties to this Participation Agreement.  If no successor
Agent has accepted appointment as Agent by the date which is twenty (20) days
following a resigning Agent's notice of resignation, the resigning Agent's
resignation shall nevertheless thereupon become effective and the Participants
shall perform all of the duties of Agent hereunder until such time, if any, as
the Required Participants appoint a successor Agent as provided above.  After
any retiring Agent's resignation as Agent, all of the provisions of this Section
14 shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Participation Agreement and the other Operative
Documents.

 

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SECTION 15

MISCELLANEOUS

 

Section 15.1   

Survival of Agreements.   The representations, warranties, covenants,
indemnities and agreements of the parties provided for in the Operative
Documents, and the parties' obligations under any and all thereof, shall survive
the execution and delivery of this Participation Agreement, the transfer of the
Property to Lessor, the construction of any Improvements, any disposition of any
interest of Lessor in the Property or any Improvements, payment of the Advances
and the Participation Interests and any disposition thereof and shall be and
continue in effect notwithstanding any investigation made by any party and the
fact that any party may waive compliance with any of the other terms, provisions
or conditions of any of the Operative Documents.  Except as otherwise expressly
set forth herein or in other Operative Documents, the indemnities of the parties
provided for in the Operative Documents shall survive the expiration or
termination of any thereof.

 

 

 

 

 

 

Section 15.2

No Broker, Etc.  Each of the parties hereto represents to the others that it has
not retained or employed any broker, finder or financial adviser to act on its
behalf in connection with this Participation Agreement or the transactions
contemplated herein, nor has it authorized any broker, finder or financial
adviser retained or employed by any other Person so to act.  Any party who is in
breach of this representation shall indemnify and hold the other parties
harmless from and against any liability arising out of such breach of this
representation.

 

 

 

 

 

 

Section 15.3

Notices.  Unless otherwise specifically provided herein, all notices, consents,
directions, approvals, instructions, requests and other communications required
or permitted by the terms hereof to be given to any Person shall be given in
writing and delivered (i) personally, (ii) by a nationally recognized overnight
courier service, (iii) by mail (by registered or certified mail, return receipt
requested, postage prepaid) or (iv) by facsimile, in each case directed to the
address of such Person as indicated on Schedule III.  Any such notice shall be
effective upon receipt or refusal.  From time to time any party may designate a
new address for purposes of notice hereunder by written notice to each of the
other parties hereto in accordance with this Section.

 

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Section 15.4

Counterparts.  This Participation Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.

 

 

 

 

 

 

Section 15.5

Amendments.  Subject to the provisions of Section 11 hereof, no Operative
Document nor any of the terms thereof may be terminated, amended, supplemented,
waived or modified with respect to Lessee, Lessor, Agent or any Participant,
except (a) in the case of a termination, amendment, supplement, waiver or
modification to be binding on Lessee, Lessor or Agent, with the written
agreement or consent of such party, and (b) in the case of a termination,
amendment, supplement, waiver or modification to be binding on the Participants,
with the written agreement or consent of the Required Participants; provided,
however, that (x) no such termination, amendment, supplement, waiver or
modification shall without written agreement or consent of each Participant:

 

 

 

 

 

 

(i)   modify any of the provisions of Section 11 of this Participation Agreement
or this Section 15.5, change the definition of "Required Participants" or modify
or waive any provision of an Operative Agreement requiring action by the
foregoing;

(ii)   amend, modify, waive or supplement any of the provisions of Sections
3.10--3.21 of this Participation Agreement or the representations of such
Participant in Section 8 or the covenants in Section 10 of this Participation
Agreement;

(iii)   reduce, modify, amend or waive any fees or indemnities in favor of any
Participant, including without limitation amounts payable pursuant to Section 13
(except that any Person may consent to any reduction, modification, amendment or
waiver of any indemnity or fee payable to it);

(iv)   modify, postpone, reduce or forgive, in whole or in part, any payment of
Rent (other than pursuant to the terms of any Operative Agreement), any payment
in respect of its Participation Interest, or any payment of the Asset
Termination Value, Residual Value Guarantee Amount, amounts due pursuant to
Section 22.2 of the Lease, or interest or, subject to clause (iii) above, any
other amount payable under the Lease or this Participation Agreement, or modify
the definition or method of calculation of Rent (other than pursuant to the
terms of any Operative Agreement), Participation Interest, Lease Balance, Asset
Termination Value, Shortfall Amount, Residual Value Guarantee Amount, Required
Supplemental Payments, Participant Balance, Tranche A Balance, Tranche B
Balance,or any other definition which would affect the amounts to be advanced or
which are payable under the Operative Documents; or

(v)   consent to any assignment of the Lease, releasing Lessee from its
obligations in respect of the payments of Rent and the Asset Termination Value
or changing the absolute and unconditional character of such obligation; and (y)
no other termination, amendment, supplement, waiver or modification shall,
without the written agreement or consent of Lessor and the Required
Participants, be made to the Lease or Section 6 of this Participation Agreement
or the definition of "Lease Event of Default."

 

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Section 15.6

Headings, Etc.  The Table of Contents and headings of the various Sections of
this Participation Agreement are for convenience of reference only and shall not
modify, define, expand or limit any of the terms or provisions hereof.

 

 

 

 

 

 

Section 15.7

Parties In Interest.  Except as expressly provided herein, none of the
provisions of this Participation Agreement are intended for the benefit of any
Person except the parties hereto.  Subject to the provisions of Section 25.1 of
the Lease, Lessee shall not assign or transfer any of its rights or obligations
under the Operative Documents without the prior written consent of Lessor, Agent
and the Participants, except that Lessee may without such consent assign rights
or obligations of Lessee under the Operative Documents to an Affiliate of
Lessee, provided that Lessee remains primarily liable with respect to such
obligations and provides its full unconditional and irrevocable guaranty of such
Subsidiary's obligations under the Operative Documents, such guaranty to be in
form and substance reasonably satisfactory to the Required Participants.  If
Lessor, Agent and the Participants consent to any such assignment or transfer to
a Person not an Affiliate of Lessee, Lessee shall remain primarily liable with
respect to such obligations and provide its full and unconditional guaranty of
such Person's obligations under the Operative Documents, such guaranty to be in
form and substance reasonably satisfactory to the Required Participants.

 

 

 

 

 

 

Section 15.8

GOVERNING LAW.  THIS PARTICIPATION AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED
BY THE LAW OF THE STATE OF CALIFORNIA (EXCLUDING ANY CONFLICT-OF-LAW OR
CHOICE-OF-LAW RULES WHICH MIGHT LEAD TO THE APPLICATION OF THE INTERNAL LAWS OF
ANY OTHER JURISDICTION) AS TO ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE.

 

 

 

 

 

 

Section 15.9

Severability.  Any provision of this Participation Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

 

 

 

 

 

 

Section 15.10

Liability Limited.

 

 

 

 

 

 

     

(a)

The parties hereto agree that Lessor shall have no personal liability whatsoever
to Lessee, Agent or any Participant or their respective successors and assigns
for any claim based on or in respect of the Lease or any of the other Operative
Documents or arising in any way from the transactions contemplated hereby or
thereby; provided, however, that Lessor shall be liable in its individual
capacity (a) for its own willful misconduct or gross negligence (or negligence
in the handling of funds), (b) for liabilities that may result from its breach
of the covenant to remove Lessor Liens set forth in Section 10.3, or (c) for any
Tax based on or measured by any fees, commission or compensation received by it
for acting as Lessor as contemplated by the Operative Documents.  It is
understood and agreed that, except as provided in the preceding proviso:  (i)
Lessor shall have no personal liability under any of the Operative Documents;
(ii) all obligations of Lessor to Lessee, Agent and the Participants are solely
nonrecourse obligations and shall be enforceable solely against the interest of
Lessor in the Property; and (iii) all such personal liability of Lessor is
expressly waived and released as a condition of, and as consideration for, the
execution and delivery of the Operative Documents by Lessor.  Notwithstanding
anything contained herein, the limitations on liability stated in the preceding
provisions of this Section 15.10(a) shall not apply to liability of Lessor
arising because of a breach of Lessor's obligation to remove Lessor Liens or
because of its receiving Advances and failing to disburse Advances to Lessee in
accordance with the Operative Documents, or failure to disburse proceeds from
the sale of the Property in accordance with the Lease and this Participation
Agreement.

 

 

 

 

 

 

     

(b)

No Participant shall have any obligation to any other Participant or to Lessee,
Lessor or Agent with respect to transactions contemplated by the Operative
Documents, except those obligations of such Participant expressly set forth in
the Operative Documents or except as set forth in the instruments delivered in
connection therewith, and no Participant shall be liable for performance by any
other party hereto of such other party's obligations under the Operative
Documents except as otherwise so set forth.

 

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Section 15.11

Further Assurances.  The parties hereto shall promptly cause to be taken,
executed, acknowledged or delivered, at the sole expense of Lessee, all such
further acts, conveyances, documents and assurances as the other parties may
from time to time reasonably request in order to carry out and effectuate the
intent and purposes of this Participation Agreement, the other Operative
Documents, and the transactions contemplated hereby and thereby (including,
without limitation, the preparation, execution and filing of any and all Uniform
Commercial Code financing statements and other filings or registrations which
the parties hereto may from time to time request to be filed or effected). 
Lessee, at its own expense and without need of any prior request from any other
party, shall take such action as may be necessary (including any action
specified in the preceding sentence), or (if Lessor shall so request) as so
requested, in order to maintain and protect all security interests provided for
hereunder or under any other Operative Document.

 

 

 

 

 

 

Section 15.12

Submission to Jurisdiction.  Lessee hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Northern District of
California and of any California state court sitting in San Francisco County for
purposes of all legal proceedings arising out of or relating to the Operative
Documents or the transactions contemplated hereby.  Lessee irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such proceeding brought in such
a court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum.

 

 

 

 

 

 

Section 15.13

Confidentiality.  Lessor, Agent and each Participant shall use any confidential
non-public information concerning Lessee and its Subsidiaries that is furnished
to Agent or such Participant by or on behalf of Lessee and its Subsidiaries in
connection with the Operative Documents (collectively, “Confidential
Information”) solely for the purpose of evaluating and providing products and
services to them and administering and enforcing the Operative Documents, and it
will hold the Confidential Information in confidence.  Notwithstanding the
foregoing, Agent and each Participant may disclose Confidential Information (a)
to their Affiliates or any of their or their Affiliates’ directors, officers,
employees, advisors, or representatives (collectively, the “Representatives”)
whom it determines need to know such information for the purposes set forth in
this Section; (b) to any bank or financial institution or other entity to which
such Participant has assigned or desires to assign an interest or participation
in the Operative Documents or the Obligations, provided that any such foregoing
recipient of such Confidential Information agrees to keep such Confidential
Information confidential as specified herein; (c) to any governmental agency or
regulatory body having or claiming to have authority to regulate or oversee any
aspect of Agent’s or such Participant’s business or that of its Representatives
in connection with the exercise of such authority or claimed authority; (d) to
the extent necessary or appropriate to effect or preserve Agent’s or such
Participant’s or any of their Affiliates’ security (if any) for any Obligation
or to enforce any right or remedy or in connection with any claims asserted by
or against Agent or such Participant or any of their Representatives; and (e)
pursuant to any subpoena or any similar legal process.  For purposes hereof, the
term “Confidential Information” shall not include information that (x) is in
Agent’s or a Participant’s possession prior to its being provided by or on
behalf of the Lessee Parties, provided that such information is not known by
Agent or such Participant to be subject to another confidentiality agreement
with, or other legal or contractual obligation of confidentiality to, Lessee,
(y) is or becomes publicly available (other than through a breach hereof by
Agent or such Participant), or (z) becomes available to Agent or such
Participant on a nonconfidential basis, provided that the source of such
information was not known by Agent or such Participant to be bound by a
confidentiality agreement or other legal or contractual obligation of
confidentiality with respect to such information.

 

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Section 15.14

WAIVER OF JURY TRIAL.  EACH OF LESSEE, AGENT, LESSOR, AND EACH PARTICIPANT
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THE OPERATIVE DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

 

 

 

 

 

 

Section 15.15

Usury Savings Clause.  Nothing contained in this Participation Agreement or the
other Operative Documents shall be deemed to require the payment of interest or
other charges by Lessee or any other Person in excess of the amount which may be
may lawfully be charged under any applicable usury laws.  In the event that
Lessor or any other Person shall collect moneys under the Participation
Agreement or any other Operative Document which are deemed to constitute
interest (including, without limitation, the Basic Rent or Supplemental Rent)
which would increase the effect interest rate to a rate in excess of that
permitted to be charged by applicable law, all such sums deemed to constitute
interest in excess of the legal rate shall, upon such determination, at the
option of the Person to whom such payment was made, be returned to the Person
making such payment or credited against other amounts owed by the person making
such payment.

 

[Signature Pages Follow]

 

 

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

SELCO SERVICE CORPORATION, as Lessor

By: /s/Lawrence Cooper
Name: Lawrence Cooper
Title:  Assistant Secretary

QUANTUM CORPORATION, as Lessee

By:  /s/Michael J. Lambert
Name:  Michael J. Lambert
Title: Executive Vice President and CFO

FLEET NATIONAL BANK
As a Participant

By:  /s/Greg Roux
Name:  Greg Roux
Title:  Director

COMERICA BANK CALIFORNIA
As a Participant

By:  /s/Rob Ways
Name:  Rob Ways
Title:  Vice President

SELCO SERVICE CORPORATION, as a Participant

By: /s/Lawrence Cooper
Name: Lawrence Cooper
Title:  Assistant Secretary

KEYBANK NATIONAL ASSOCIATION, as a Participant

By: /s/Robert W. Boswell
Name:  Robert W. Boswell
Title:  Vice President

KEYBANK NATIONAL ASSOCIATION, as Agent

By: /s/Robert W. Boswell
Name:  Robert W. Boswell
Title:  Vice President

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