Exhibit 10.1


 




 





 


LEASE,
DEED OF TRUST AND 

SECURITY AGREEMENT


 


Dated
as of March 30, 2006



among



SILICON LABORATORIES INC.,

as Lessee



and



BAL INVESTMENT & ADVISORY, INC.,


as
Lessor



and



GARY S. FARMER,

as the Deed of Trust Trustee pursuant to Section 24.2 hereof


 




 





 


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


 


This
counterpart is [not] the original counterpart.


 

















 


TABLE OF CONTENTS


 


	
  SECTION

  	
  HEADING

  	
  PAGE

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
  DEFINITIONS

  	
  2

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  LEASE OF LEASED PROPERTY;
  LEASE TERM

  	
  3

  
	
   

  	
   

  	
   

  
	
  Section 2.1.

  	
  Leased Property

  	
  3

  
	
  Section 2.2.

  	
  Term

  	
  4

  
	
  Section 2.3.

  	
  Title

  	
  4

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  PAYMENT OF RENT

  	
  5

  
	
   

  	
   

  	
   

  
	
  Section 3.1.

  	
  Rent

  	
  5

  
	
  Section 3.2.

  	
  Payment of Basic Rent

  	
  5

  
	
  Section 3.3.

  	
  Supplemental Rent

  	
  6

  
	
  Section 3.4.

  	
  Method of Payment

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  QUIET ENJOYMENT; RIGHT TO
  INSPECT

  	
  8

  
	
   

  	
   

  	
   

  
	
  Section 4.1.

  	
  Non-Interference

  	
  8

  
	
  Section 4.2.

  	
  Inspection and Reports

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  NET LEASE, ETC.

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 5.1.

  	
  Net Lease, Etc

  	
  10

  
	
  Section 5.2.

  	
  No Termination or Abatement

  	
  13

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  ASSIGNMENTS, SUBLEASES AND
  DELEGATIONS

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section 6.1.

  	
  Assignment and Subletting

  	
  14

  
	
  Section 6.2.

  	
  Assignment of Related Agreements

  	
  17

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  LESSEE ACKNOWLEDGEMENTS

  	
  20

  
	
   

  	
   

  	
   

  
	
  Section 7.1.

  	
  CONDITION OF THE LEASED PROPERTY

  	
  20

  
	
  Section 7.2.

  	
  Risk of Loss

  	
  21

  
	
  Section 7.3.

  	
  Certain Duties and Responsibilities of Lessor

  	
  22

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
  POSSESSION AND USE OF THE
  PROPERTY, ETC.

  	
  23

  
	
   

  	
   

  	
   

  
	
  Section 8.1.

  	
  Possession and Use of the Leased Property

  	
  23

  
	
  Section 8.2.

  	
  Compliance with Requirements of Law and Insurance
  Requirements

  	
  25

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
  MAINTENANCE AND REPAIR;
  REPORTS

  	
  25

  
	
   

  	
   

  	
   

  
	
  Section 9.1.

  	
  Maintenance

  	
  25

  
	
  Section 9.2.

  	
  Maintenance Costs and Warranties

  	
  27

  



 

















 


	
  Section 9.3.

  	
  Lessor Not Obligated to Maintain or Repair

  	
  28

  
	
  Section 9.4.

  	
  Maintenance and Repair Reports

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
  MODIFICATIONS, ETC.

  	
  29

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
  COVENANTS WITH RESPECT TO
  LIENS AND EASEMENTS

  	
  34

  
	
   

  	
   

  	
   

  
	
  Section 11.1.

  	
  Covenants with Respect to Liens

  	
  34

  
	
  Section 11.2.

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

  	
  36

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII

  	
  PERMITTED CONTESTS

  	
  39

  
	
   

  	
   

  	
   

  
	
  Section 12.1.

  	
  Permitted Contests in Respect of Applicable Laws

  	
  39

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIII

  	
  INSURANCE

  	
  41

  
	
   

  	
   

  	
   

  
	
  Section 13.1.

  	
  Required Coverages

  	
  41

  
	
  Section 13.2.

  	
  Insurance Coverage

  	
  42

  
	
  Section 13.3.

  	
  Delivery of Insurance Certificates

  	
  44

  
	
  Section 13.4.

  	
  Insurance by Lessor, Collateral Agent or any Lender

  	
  45

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIV

  	
  CASUALTY AND CONDEMNATION

  	
  45

  
	
   

  	
   

  	
   

  
	
  Section 14.1.

  	
  Casualty and Condemnation

  	
  45

  
	
  Section 14.2.

  	
  Environmental Matters

  	
  51

  
	
  Section 14.3.

  	
  Notice of Environmental Matters

  	
  51

  
	
   

  	
   

  	
   

  
	
  ARTICLE XV

  	
  TERMINATION OF LEASE

  	
  53

  
	
   

  	
   

  	
   

  
	
  Section 15.1.

  	
  Termination upon Certain Events; Lessee Assumption of
  Related Agreements

  	
  53

  
	
  Section 15.2.

  	
  Termination Procedures

  	
  54

  
	
   

  	
   

  	
   

  
	
  ARTICLE XVI

  	
  EVENTS OF DEFAULT

  	
  55

  
	
   

  	
   

  	
   

  
	
  Section 16.1.

  	
  Events of Default

  	
  55

  
	
  Section 16.2.

  	
  Remedies

  	
  63

  
	
  Section 16.3.

  	
  Waiver of Certain Rights

  	
  73

  
	
  Section 16.4.

  	
  Deed of Trust Remedies

  	
  74

  
	
  Section
  16.5.

  	
  Limitation on Recourse

  	
  75

  
	
   

  	
   

  	
   

  
	
  ARTICLE XVII

  	
  LESSOR’S RIGHT TO CURE

  	
  76

  
	
   

  	
   

  	
   

  
	
  Section 17.1.

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

  	
  76

  
	
   

  	
   

  	
   

  
	
  ARTICLE XVIII

  	
  PURCHASE PROVISIONS

  	
  78

  
	
   

  	
   

  	
   

  
	
  Section 18.1.

  	
  Early Termination Options

  	
  78

  
	
  Section 18.2.

  	
  Acceleration of Subject Property Purchase

  	
  79

  



 


ii

















 


	
  ARTICLE XIX

  	
  END OF TERM OPTIONS

  	
  80

  
	
   

  	
   

  	
   

  
	
  Section 19.1.

  	
  End of Term Options

  	
  80

  
	
  Section 19.2.

  	
  Election of Options

  	
  82

  
	
   

  	
   

  	
   

  
	
  ARTICLE XX

  	
  SALE OPTION

  	
  83

  
	
   

  	
   

  	
   

  
	
  Section 20.1.

  	
  Sale Option Procedures

  	
  83

  
	
  Section 20.2.

  	
  Certain Obligations Continue

  	
  91

  
	
  Section 20.3.

  	
  Failure to Sell Subject Property

  	
  92

  
	
   

  	
   

  	
   

  
	
  ARTICLE XXI

  	
  PROCEDURES RELATING TO
  PURCHASE OR SALE OPTION

  	
  97

  
	
   

  	
   

  	
   

  
	
  Section 21.1.

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

  	
  97

  
	
   

  	
   

  	
   

  
	
  ARTICLE XXII

  	
  ACCEPTANCE OF SURRENDER

  	
  102

  
	
   

  	
   

  	
   

  
	
  Section 22.1.

  	
  Acceptance of Surrender

  	
  102

  
	
   

  	
   

  	
   

  
	
  ARTICLE XXIII

  	
  NO MERGER OF TITLE

  	
  103

  
	
   

  	
   

  	
   

  
	
  Section 23.1.

  	
  No Merger of Title

  	
  103

  
	
   

  	
   

  	
   

  
	
  ARTICLE XXIV

  	
  INTENT OF THE PARTIES

  	
  104

  
	
   

  	
   

  	
   

  
	
  Section 24.1.

  	
  Nature of Transaction

  	
  104

  
	
  Section 24.2.

  	
  Liens and Security Interests

  	
  108

  
	
   

  	
   

  	
   

  
	
  ARTICLE XXV

  	
  MISCELLANEOUS

  	
  123

  
	
   

  	
   

  	
   

  
	
  Section 25.1.

  	
  Survival; Severability; Etc

  	
  123

  
	
  Section 25.2.

  	
  Amendments and Modifications

  	
  124

  
	
  Section 25.3.

  	
  No Waiver

  	
  124

  
	
  Section 25.4.

  	
  Notices

  	
  125

  
	
  Section 25.5.

  	
  Successors and Assigns

  	
  125

  
	
  Section 25.6.

  	
  Headings and Table of Contents

  	
  125

  
	
  Section
  25.7.

  	
  Counterparts

  	
  125

  
	
  Section 25.8.

  	
  Governing Law

  	
  125

  
	
  Section 25.9.

  	
  Original Lease

  	
  126

  
	
  Section
  25.10.

  	
  The Deed of Trust Trustee

  	
  126

  
	
  Section 25.11.

  	
  Limitations on Recourse

  	
  127

  
	
  Section 25.12.

  	
  Recordation of Memorandum of Lease

  	
  128

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
  DEFINITIONS

  	
  3

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  LEASE OF LEASED PROPERTY;
  LEASE TERM; PURCHASE OPTION

  	
  4

  



 


iii

















 


	
  Section 2.1.

  	
  Leased Property

  	
  4

  
	
  Section 2.2.

  	
  Term

  	
  4

  
	
  Section 2.3.

  	
  Title

  	
  4

  
	
  Section 2.4.

  	
   

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  NET LEASE, ETC.

  	
  5

  
	
   

  	
   

  	
   

  
	
  Section 3.1.

  	
  Net Lease, Etc

  	
  5

  
	
  Section 3.2.

  	
  CONDITION OF THE LEASED PROPERTY

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  INTENT OF THE PARTIES

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section 4.1.

  	
  Nature of Transaction

  	
  6

  
	
  Section 4.2.

  	
  Liens and Security Interests

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  MISCELLANEOUS

  	
  26

  
	
   

  	
   

  	
   

  
	
  Section 5.1

  	
  Incorporation of Reference

  	
  26

  
	
  Section 5.2

  	
  Conflict of Lease

  	
  26

  
	
  Section 5.3.

  	
  Assignment of Lease

  	
  26

  
	
  Section 5.4.

  	
  Notices

  	
  26

  
	
  Section 5.5.

  	
  Successors and Assigns

  	
  27

  
	
  Section 5.6.

  	
  Headings and Table of Contents

  	
  27

  
	
  Section
  5.7.

  	
  Counterparts

  	
  27

  
	
  Section 5.8.

  	
  Governing Law

  	
  27

  
	
  Section 5.9.

  	
  Original Lease

  	
  28

  
	
  Section
  5.10.

  	
  The Deed of Trust Trustee

  	
  28

  
	
  Section 5.11.

  	
  Limitations on Recourse

  	
  29

  



 


iv

















 


SCHEDULES


 


	
  SCHEDULE 10.1

  	
  —

  	
   

  	
  Modifications

  



 


EXHIBITS


 


	
  EXHIBIT A

  	
  —

  	
   

  	
  Legal Description of Land

  
	
  EXHIBIT B

  	
  —

  	
   

  	
  Memorandum of Lease, Deed of Trust and Security Agreement

  



 


v

















 


LEASE, DEED OF TRUST AND SECURITY AGREEMENT


 


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


 


W I T N E S S E T H:


 


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


 


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


 


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


 


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


 


ARTICLE I



DEFINITIONS


 


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


 

















 


ARTICLE II



LEASE OF LEASED PROPERTY; LEASE TERM


 


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


 


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


 


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


 


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


 


ARTICLE III



PAYMENT OF RENT


 


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


 


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


 


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


 


2

















 


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


 


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


 


ARTICLE IV



QUIET ENJOYMENT; RIGHT TO INSPECT


 


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


 


3

















 


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


 


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


 


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


 


ARTICLE V



NET LEASE, ETC.


 


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


 


4

















 


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


 


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


 


5

















 


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


 


ARTICLE VI



ASSIGNMENTS, SUBLEASES AND DELEGATIONS


 


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


 


6

















 


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


 


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


 


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


 


7

















 


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


 


ARTICLE VII



LESSEE ACKNOWLEDGEMENTS


 


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


 


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


 


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


 


8

















 


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


 


ARTICLE VIII



POSSESSION AND USE OF THE PROPERTY, ETC.


 


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


 


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


 


9

















 


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


 


ARTICLE IX



MAINTENANCE AND REPAIR; REPORTS


 


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


 


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


 


10

















 


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


 


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


 


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


 


ARTICLE X



MODIFICATIONS, ETC.


 


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


 


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


 


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


 


11

















 


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


 


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


 


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


 


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


 


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


 


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


 


(ii)           Required Modifications; or


 


(iii)          Modifications that are Nonseverable.


 


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


 


12

















 


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


 


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


 


ARTICLE XI



COVENANTS WITH RESPECT TO LIENS AND EASEMENTS


 


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


 


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


 


13

















 


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


 


14

















 


ARTICLE XII



PERMITTED CONTESTS


 


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


 


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


 


ARTICLE XIII



INSURANCE


 


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


 


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


 


15

















 


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


 


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


 


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


 


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


 


16

















 


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


 


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


 


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


 


ARTICLE XIV



CASUALTY AND CONDEMNATION


 


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


 


17

















 


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


 


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


 


18

















 


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


 


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


 


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


 


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


 


19

















 


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


 


ARTICLE XV



TERMINATION OF LEASE


 


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


 


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


 


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


 


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


 


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


 


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


 


20

















 


ARTICLE XVI



EVENTS OF DEFAULT


 


Section 16.1.                         Events of Default. The occurrence of any one or more of
the following events (whether such event shall be voluntary or involuntary or
come about or be effected by operation of law or pursuant to or in compliance
with any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body) shall constitute an “Event
of Default”:


 


(a)                                  the
occurrence of a Payment Default; or


 


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


 


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


 


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


 


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


 


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


 


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


 


21

















 


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


 


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


 


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


 


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


 


22

















 


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


 


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


 


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


 


23

















 


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


 


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


 


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


 


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


 


24

















 


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


 


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


 


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


 


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


 


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


 


25

















 


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


 


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


 


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


 


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


 


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


 


26

















 


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


 


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


 


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


 


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


 


27

















 


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


 


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


 


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


 


ARTICLE XVII



LESSOR’S RIGHT TO CURE


 


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


 


28

















 


ARTICLE XVIII



PURCHASE PROVISIONS


 


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


 


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


 


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


 


29

















 


ARTICLE XIX



END OF TERM OPTIONS


 


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


 


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


 


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


 


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


 


30

















 


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


 


ARTICLE XX



SALE OPTION


 


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


 


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


 


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


 


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


 


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


 


31

















 


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


 


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


 


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


 


32

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


33

















 


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


 


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


 


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


 


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


 


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


 


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


 


34

















 


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


 


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


 


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


 


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



 


35

















 


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


 


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


 


ARTICLE XXI



PROCEDURES RELATING TO PURCHASE OR SALE OPTION


 


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


 


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


 


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


 


36

















 


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


 


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


 


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


 


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


 


37

















 


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


 


ARTICLE XXII



ACCEPTANCE OF SURRENDER


 


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


 


ARTICLE XXIII



NO MERGER OF TITLE


 


Section 23.1.                         No Merger of Title. There shall be no merger of this Lease
or of the leasehold estate created hereby by reason of the fact that the same
Person may acquire, own or hold, directly or indirectly, in whole or in part,
(a) this Lease or the leasehold estate created hereby or any interest in this
Lease or such leasehold estate, (b) title to the Subject Property, except as
may expressly be stated in a written instrument duly executed and delivered by
the appropriate Person or (c) a beneficial interest in the Lessor.


 


ARTICLE XXIV



INTENT OF THE PARTIES


 


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


 


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


 


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


 


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


 


38

















 


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


 


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


 


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


 


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


 


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


 


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


 


39

















 


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


 


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


 


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


 


40

















 


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


 


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


 


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


 


41

















 


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


 


42

















 


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


 


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


 


43

















 


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


 


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


 


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


 


44

















 


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


 


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


 


ARTICLE XXV



MISCELLANEOUS


 


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


 


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


 


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


 


45

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


46

















 


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


 


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


 


[SIGNATURE PAGES FOLLOW]


 


47

















 


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


 


 


	
   

  	
  SILICON
  LABORATORIES INC., as Lessee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Jonathan D. Ivester

  	
   

  
	
   

  	
   

  	
  Name:
  

  	
  Jonathan
  D. Ivester

  
	
   

  	
   

  	
  Title:
  

  	
  Vice
  President of Worldwide Operations

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  4635
  Boston Lane

  
	
   

  	
   

  	
  Austin, TX 78735

  
	
   

  	
   

  	
  Attention: Chief Legal and

  
	
   

  	
   

  	
   Intellectual Property Counsel

  
						



 


	
  STATE OF TEXAS

  	
  )

  	
   

  
	
   

  	
  ) SS.:

  	
   

  
	
  COUNTY OF TRAVIS

  	
  )

  	
   

  



 


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


 


	
   

  	
  Melissa
  Alcantara

  
	
   

  	
  Notary
  Public State of Texas

  
	
   

  	
   

  
	
   

  	
  My
  Commission expires:

  	
  10-04-2009

  



 

















 


	
   

  	
  BAL
  INVESTMENT & ADVISORY, INC., as Lessor

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Sonia T. Delen

  	
   

  
	
   

  	
   

  	
   Name:  Sonia
  T. Delen

  
	
   

  	
   

  	
   Title:  Principal

  



 


	
  STATE OF CALIFORNIA

  	
  )

  	
   

  
	
   

  	
  ) SS.:

  	
   

  
	
  COUNTY OF SAN FRANCISCO

  	
  )

  	
   

  



 


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


 


	
   

  	
  Yvette
  Montalvo Baron

  
	
   

  	
  Notary
  Public State of California

  
	
   

  	
  My
  Commission expires:

  	
  9-23-2008

  



 

















 


THIS COUNTERPART IS THE
ORIGINAL EXECUTED COUNTERPART.


 


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


 


 


	
   

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

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Val T. Orton

  	
   

  
	
   

  	
   

  	
  Name:Val
  T. Orton

  
	
   

  	
   

  	
  Title:Vice
  President

  



 

















 


SCHEDULE 10.1 TO LEASE


 


MODIFICATIONS


 


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


 


48

















 


EXHIBIT A

TO LEASE


 


LEGAL
DESCRIPTION OF LAND


 

















 


EXHIBIT B

TO LEASE


 


When recorded return to:


 


Susan E. Rollins, Esq.

Chapman and Cutler LLP

111 West Monroe Street

Chicago, Illinois 60603-4080


 




 





 


MEMORANDUM OF

LEASE, DEED OF TRUST AND 

SECURITY AGREEMENT



Dated as of March 30, 2006



among



SILICON LABORATORIES INC.,

as Lessee



and



BAL INVESTMENT & ADVISORY, INC.,

as Lessor



and



GARY S. FARMER,

as the Deed of Trust Trustee


 




 





 


400 West Cesar Chavez Street


Austin, Texas 78701


 


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


 


This counterpart is [not]
the original counterpart.


 

















 


TABLE OF
CONTENTS


 


	
  SECTION

  	
   

  	
  HEADING

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
   

  	
  DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  	
  LEASE OF LEASED PROPERTY; LEASE TERM; PURCHASE
  OPTION

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 2.1.

  	
   

  	
  Leased Property

  	
   

  	
  2

  
	
   

  	
  Section 2.2.

  	
   

  	
  Term

  	
   

  	
  2

  
	
   

  	
  Section 2.3.

  	
   

  	
  Title

  	
   

  	
  2

  
	
   

  	
  Section 2.4.

  	
   

  	
   

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  	
  NET LEASE, ETC.

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 3.1.

  	
   

  	
  Net Lease, Etc

  	
   

  	
  2

  
	
   

  	
  Section 3.2.

  	
   

  	
  CONDITION OF THE LEASED PROPERTY

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  	
  INTENT OF THE PARTIES

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 4.1.

  	
   

  	
  Nature of Transaction

  	
   

  	
  3

  
	
   

  	
  Section 4.2.

  	
   

  	
  Liens and Security Interests

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  10

  
	
   

  	
  Section 5.1

  	
   

  	
  Incorporation of Reference

  	
   

  	
  10

  
	
   

  	
  Section 5.2

  	
   

  	
  Conflict of Lease

  	
   

  	
  10

  
	
   

  	
  Section 5.3.

  	
   

  	
  Assignment of Lease

  	
   

  	
  10

  
	
   

  	
  Section 5.4.

  	
   

  	
  Notices

  	
   

  	
  10

  
	
   

  	
  Section 5.5.

  	
   

  	
  Successors and Assigns

  	
   

  	
  10

  
	
   

  	
  Section 5.6.

  	
   

  	
  Headings and Table of Contents

  	
   

  	
  10

  
	
   

  	
  Section 5.7.

  	
   

  	
  Counterparts

  	
   

  	
  10

  
	
   

  	
  Section 5.8.

  	
   

  	
  Governing Law

  	
   

  	
  10

  
	
   

  	
  Section 5.9.

  	
   

  	
  Original Lease

  	
   

  	
  10

  
	
   

  	
  Section 5.10.

  	
   

  	
  The Deed of Trust Trustee

  	
   

  	
  11

  
	
   

  	
  Section 5.11.

  	
   

  	
  Limitations on Recourse

  	
   

  	
  11

  



 


EXHIBITS


	
  EXHIBIT A

  	
  —

  	
  Legal Description of Land

  
	
   

  	
   

  	
   

  
	
  SCHEDULE I

  	
  —

  	
  Related Agreements

  



 

















 


MEMORANDUM
OF

LEASE, DEED OF TRUST AND SECURITY AGREEMENT


 


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


 


W I T N
E S S E T H:


 


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


 


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


 


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


 


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


 


ARTICLE I



DEFINITIONS


 


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


 

















 


	
  Silicon
  Laboratories Inc.

  	
   

  	
  Memorandum of Lease, Deed of Trust and

  Security Agreement

  



 


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


 


ARTICLE II



LEASE OF LEASED PROPERTY; LEASE TERM; PURCHASE OPTION


 


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


 


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


 


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


 


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


 


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


 


ARTICLE III



NET LEASE, ETC.


 


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


 


B-2

















 


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


 


ARTICLE IV



INTENT OF THE PARTIES


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


B-3

















 


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


 


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


 


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


 


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


 


B-4

















 


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


 


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


 


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


 


B-5

















 


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


 


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


 


B-6

















 


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


 


B-7

















 


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


 


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


 


B-8

















 


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


 


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


 


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


 


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


 


B-9

















 


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


 


ARTICLE V



MISCELLANEOUS


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


B-10

















 


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


 


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


 


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


 


[SIGNATURE PAGES FOLLOW]


 


B-11

















 


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


 


	
   

  	
  SILICON LABORATORIES, INC., as Lessee

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Jonathan D. Ivester

  	
   

  
	
   

  	
   

  	
  Name:  Jonathan D. Ivester

  
	
   

  	
   

  	
  Title:  Vice President of Worldwide
  Operations

  
	
   

  	
   

  	
   

  
	
   

  	
  Address: 

  	
   

  	
  4635 Boston Lane

  
	
   

  	
   

  	
  Austin, TX 78735

  
	
   

  	
   

  	
  Attention: Chief Legal and

  
	
   

  	
   

  	
  Intellectual Property Counsel

  
								



 


	
  STATE OF TEXAS

  	
  )

  
	
   

  	
  ) SS.:

  
	
  COUNTY OF TRAVIS

  	
  )

  



 


 


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


 


	
   

  	
  Melissa Alcantara

  
	
   

  	
  Notary Public State of Texas

  
	
   

  	
   

  
	
   

  	
  My Commission expires:

  	
  10-04-2009

  



 

















 


	
   

  	
  BAL INVESTMENT & ADVISORY, INC., as Lessor

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Sonia T. Delen

  	
   

  
	
   

  	
   

  	
  Name:  Sonia T. Delen

  
	
   

  	
   

  	
  Title:  Principal

  
					



 


	
  STATE OF CALIFORNIA

  	
  )

  
	
   

  	
  ) SS.:

  
	
  COUNTY OF SAN FRANCISCO

  	
  )

  



 


 


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


 


	
   

  	
  Yvette Montalvo Baron

  
	
   

  	
  Notary Public State of California

  
	
   

  	
  My Commission expires:

  	
  9-23-2008

  



 

















 


THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART.


 


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


 


	
   

  	
  WELLS FARGO BANK
  NORTHWEST, NATIONAL

  ASSOCIATION, not in its individual capacity,

  but solely as Collateral Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/ Val T. Orton

  	
   

  
	
   

  	
  Name: Val T. Orton

  
	
   

  	
  Title:   Vice President

  



 

















 


EXHIBIT A


 


LEGAL
DESCRIPTION OF LAND


 


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


 


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


 


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


 

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


2

















 


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


 


3

















 


SCHEDULE 2


 


RELATED
AGREEMENTS


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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