Exhibit 10.2


 




 





 


PARTICIPATION
AGREEMENT


 


dated
as of March 30, 2006


 


among


 


SILICON
LABORATORIES INC.,

as Lessee,


 


BAL
INVESTMENT & ADVISORY, INC.,

as Lessor,


 


WELLS
FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,

not in its individual capacity, except as expressly

stated herein, but solely as Collateral Agent,


 


 


and


 


 


THE
FINANCIAL INSTITUTIONS NAMED ON SCHEDULE II HERETO,

as Lenders


 




 





 


BANC OF AMERICA LEASING & CAPITAL, LLC,

As Sole Lead Arranger

and Sole Book Runner


 

















 


TABLE OF CONTENTS


 


	
  SECTION

  	
   

  	
  HEADING

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
   

  	
  DEFINITIONS;
  INTERPRETATION

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 1.1.

  	
   

  	
  Definitions;
  Interpretation

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  	
  CLOSING DATE

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 2.1.

  	
   

  	
  Effectiveness of Agreement

  	
   

  	
  2

  
	
   

  	
  Section 2.2.

  	
   

  	
  Acquisition of Facility
  and Leasehold Interest in Land; Grants of Liens; Assignment of Related
  Agreements

  	
   

  	
  2

  
	
  ARTICLE III

  	
   

  	
  FUNDING OF ADVANCE

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 3.1.

  	
   

  	
  Funding

  	
   

  	
  3

  
	
   

  	
  Section 3.2.

  	
   

  	
  [Intentionally Omitted]

  	
   

  	
  4

  
	
   

  	
  Section 3.3.

  	
   

  	
  Advance Request

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  	
  YIELD, INTEREST

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 4.1.

  	
   

  	
  Yield

  	
   

  	
  5

  
	
   

  	
  Section 4.2.

  	
   

  	
  Interest on Loans

  	
   

  	
  5

  
	
   

  	
  Section 4.3.

  	
   

  	
  Computations

  	
   

  	
  5

  
	
   

  	
  Section 4.4.

  	
   

  	
  Payments of Rent; Payments
  and Prepayments of Loans and Lessor Amount

  	
   

  	
  5

  
	
   

  	
  Section 4.5.

  	
   

  	
  Fees

  	
   

  	
  6

  
	
   

  	
  Section 4.6.

  	
   

  	
  Obligations Several

  	
   

  	
  6

  
	
   

  	
  Section 4.7.

  	
   

  	
  Highest Lawful Rate

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  	
  CERTAIN INTENTIONS OF THE
  PARTIES

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 5.1.

  	
   

  	
  Nature of Transaction

  	
   

  	
  8

  
	
   

  	
  Section 5.2.

  	
   

  	
  Amounts Due Under Lease

  	
   

  	
  9

  
	
   

  	
  Section 5.3.

  	
   

  	
  Distribution

  	
   

  	
  9

  
	
   

  	
  Section 5.4.

  	
   

  	
  Adjustment

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
   

  	
  CONDITIONS PRECEDENT TO
  CLOSING DATE AND ADVANCE

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 6.1.

  	
   

  	
  Conditions Precedent to
  the Closing Date and the Advance

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  	
  [INTENTIONALLY OMITTED]

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  	
  REPRESENTATIONS

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 8.1.

  	
   

  	
  Representations of the
  Lenders

  	
   

  	
  20

  
	
   

  	
  Section 8.2.

  	
   

  	
  Warranties and
  Representations of the Lessee

  	
   

  	
  21

  
	
   

  	
  Section 8.3.

  	
   

  	
  [Intentionally Omitted]

  	
   

  	
  31

  



 


i

















 


	
   

  	
  Section 8.4.

  	
   

  	
  Representations and
  Warranties of Lessor

  	
   

  	
  31

  
	
   

  	
  Section 8.5.

  	
   

  	
  Representations and
  Warranties of Wells Fargo Bank Northwest, National Association, individually
  and as Collateral Agent

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
   

  	
  COVENANTS OF LESSEE

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 9.1.

  	
   

  	
  Lessee Covenants

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
   

  	
  OTHER COVENANTS AND
  AGREEMENTS

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 10.1.

  	
   

  	
  Covenants of the
  Participants and the Collateral Agent

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
   

  	
  LESSEE’S RIGHT OF QUIET
  ENJOYMENT

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII

  	
   

  	
  TRANSFERS OF PARTICIPANTS’
  INTERESTS

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 12.1.

  	
   

  	
  Assignments

  	
   

  	
  40

  
	
   

  	
  Section 12.2.

  	
   

  	
  Participations

  	
   

  	
  42

  
	
   

  	
  Section 12.3.

  	
   

  	
  Withholding Taxes;
  Disclosure of Information; Pledge Under Regulation A

  	
   

  	
  43

  
	
   

  	
  Section 12.4.

  	
   

  	
  Lessee Directions

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIII

  	
   

  	
  INDEMNIFICATION

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 13.1.

  	
   

  	
  Indemnification

  	
   

  	
  44

  
	
   

  	
  Section 13.2.

  	
   

  	
  End of Term Indemnity

  	
   

  	
  46

  
	
   

  	
  Section 13.3.

  	
   

  	
  Proceedings in Respect of
  Claims

  	
   

  	
  47

  
	
   

  	
  Section 13.4.

  	
   

  	
  General Tax Indemnity.

  	
   

  	
  48

  
	
   

  	
  Section 13.5.

  	
   

  	
  After Tax Basis

  	
   

  	
  54

  
	
   

  	
  Section 13.6.

  	
   

  	
  Environmental Indemnity

  	
   

  	
  54

  
	
   

  	
  [Intentionally Omitted.]

  	
   

  	
  56

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XV

  	
   

  	
  CONTINGENT RENT AND OTHER
  COSTS

  	
   

  	
  56

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 15.1.

  	
   

  	
  LIBO Rate Lending Unlawful

  	
   

  	
  56

  
	
   

  	
  Section 15.2.

  	
   

  	
  Deposits Unavailable

  	
   

  	
  56

  
	
   

  	
  Section 15.3.

  	
   

  	
  Increased Costs, etc

  	
   

  	
  56

  
	
   

  	
  Section 15.4.

  	
   

  	
  Funding Losses

  	
   

  	
  57

  
	
   

  	
  Section 15.5.

  	
   

  	
  Increased Capital Costs

  	
   

  	
  58

  
	
   

  	
  Section 15.6.

  	
   

  	
  After Tax Basis

  	
   

  	
  58

  
	
   

  	
  Section 15.7.

  	
   

  	
  Applicability of Certain
  Sections and Payments

  	
   

  	
  58

  
	
   

  	
  Section 15.8.

  	
   

  	
  Funding Office; Mitigation
  of Costs

  	
   

  	
  58

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XVI

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  59

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 16.1.

  	
   

  	
  Survival of Agreements

  	
   

  	
  59

  
	
   

  	
  Section 16.2.

  	
   

  	
  No Broker, etc

  	
   

  	
  59

  
	
   

  	
  Section 16.3.

  	
   

  	
  Notices

  	
   

  	
  59

  



 


ii

















 


	
   

  	
  Section 16.4.

  	
   

  	
  Counterparts

  	
   

  	
  59

  
	
   

  	
  Section 16.5.

  	
   

  	
  Amendments

  	
   

  	
  60

  
	
   

  	
  Section 16.6.

  	
   

  	
  Loan Agreement and Related
  Obligations

  	
   

  	
  60

  
	
   

  	
  Section 16.7.

  	
   

  	
  Headings, etc

  	
   

  	
  61

  
	
   

  	
  Section 16.8.

  	
   

  	
  Parties in Interest

  	
   

  	
  61

  
	
   

  	
  Section 16.9.

  	
   

  	
  Governing Law

  	
   

  	
  61

  
	
   

  	
  Section 16.10.

  	
   

  	
  Severability

  	
   

  	
  61

  
	
   

  	
  Section 16.11.

  	
   

  	
  Liability Limited

  	
   

  	
  61

  
	
   

  	
  Section 16.12.

  	
   

  	
  Further Assurances

  	
   

  	
  61

  
	
   

  	
  Section 16.13.

  	
   

  	
  Submission to Jurisdiction

  	
   

  	
  62

  
	
   

  	
  Section 16.14.

  	
   

  	
  Waiver of Jury Trial

  	
   

  	
  62

  
	
   

  	
  Section 16.15.

  	
   

  	
  Confidentiality

  	
   

  	
  62

  
	
   

  	
  Section 16.16.

  	
   

  	
  Limited Liability of
  Lessor

  	
   

  	
  63

  
	
   

  	
  Section 16.17.

  	
   

  	
  Limited Liability of
  Collateral Agent

  	
   

  	
  63

  
	
   

  	
  Section 16.18.

  	
   

  	
  Payment of Transaction
  Expenses and Other Costs

  	
   

  	
  63

  
	
   

  	
  Section 16.19.

  	
   

  	
  Reproduction of Documents

  	
   

  	
  64

  
	
   

  	
  Section 16.20.

  	
   

  	
  Role of Banc of America
  Leasing & Capital, LLC

  	
   

  	
  64

  
	
   

  	
  Section 16.21.

  	
   

  	
  Deliveries to Participants

  	
   

  	
  64

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XVII

  	
   

  	
  THE COLLATERAL AGENT

  	
   

  	
  65

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 17.1.

  	
   

  	
  Appointment

  	
   

  	
  65

  
	
   

  	
  Section 17.2.

  	
   

  	
  Delegation of Duties

  	
   

  	
  65

  
	
   

  	
  Section 17.3.

  	
   

  	
  Exculpatory Provisions

  	
   

  	
  65

  
	
   

  	
  Section 17.4.

  	
   

  	
  Reliance by Collateral
  Agent

  	
   

  	
  65

  
	
   

  	
  Section 17.5.

  	
   

  	
  Notice of Default

  	
   

  	
  66

  
	
   

  	
  Section 17.6.

  	
   

  	
  Non-Reliance on Collateral
  Agent and Other Participants

  	
   

  	
  66

  
	
   

  	
  Section 17.7.

  	
   

  	
  Indemnification

  	
   

  	
  67

  
	
   

  	
  Section 17.8.

  	
   

  	
  Collateral Agent in Its
  Individual Capacity

  	
   

  	
  67

  
	
   

  	
  Section 17.9.

  	
   

  	
  Successor Collateral Agent

  	
   

  	
  67

  
	
   

  	
  Section 17.10.

  	
   

  	
  Release of Collateral

  	
   

  	
  68

  



 


iii

















 


	
  APPENDICES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  APPENDIX 1

  	
   

  	
  DEFINITIONS AND
  INTERPRETATION

  
	
   

  	
   

  	
   

  
	
  SCHEDULES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULE I

  	
   

  	
  Lessor Commitment

  
	
  SCHEDULE II

  	
   

  	
  Lenders’ Commitments

  
	
  SCHEDULE III

  	
   

  	
  Notice Information,
  Payment Offices and Applicable Lending Offices

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 6.1(s)

  	
   

  	
  Filings and Recordings

  
	
  SCHEDULE 8.2

  	
   

  	
  Disclosure Schedule

  
	
  SCHEDULE 8.2(ff)

  	
   

  	
  Agreements to be
  Terminated

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT A

  	
   

  	
  Form of Advance Request

  
	
  EXHIBIT B-1

  	
   

  	
  Form of Opinion of Special
  Counsel to the Participants

  
	
  EXHIBIT B-2

  	
   

  	
  Form of Opinion of Special
  Counsel to Lessee

  
	
  EXHIBIT C

  	
   

  	
  Form of Assignment of
  Lease and Rent and Security Agreement

  
	
  EXHIBIT D

  	
   

  	
  Form of Responsible
  Officer’s Certificate of Lessee

  
	
  EXHIBIT F

  	
   

  	
  Form of Assignment
  Agreement

  
	
  EXHIBIT G

  	
   

  	
  [Intentionally Omitted]

  
	
  EXHIBIT H-1

  	
   

  	
  Form of Officer’s
  Certificate of Lessee

  
	
  EXHIBIT H-2

  	
   

  	
  Form of Officer’s
  Certificate of Lessor

  
	
  EXHIBIT L

  	
   

  	
  Form of Offeree Letter

  
	
  EXHIBIT M

  	
   

  	
  Form of Ground Lessor
  Estoppel Certificate

  



 


iv

















 


PARTICIPATION AGREEMENT


 


THIS PARTICIPATION AGREEMENT
(this “Participation Agreement”),
dated as of March 30, 2006, is entered into by and among SILICON
LABORATORIES INC., a Delaware corporation, as Lessee (together with its
permitted successors and assigns, in its capacity as the Lessee, the “Lessee”); BAL INVESTMENT &
ADVISORY, INC., as Lessor (the “Lessor”);
WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, not in its individual
capacity, except as expressly stated herein, but solely as Collateral Agent
(the “Collateral Agent”); and the
financial institutions listed on Schedule II hereto as Lenders (together
with their permitted successors, assigns and transferees, each a “Lender”, and collectively, the “Lenders”).


 


W I T N E S S E T H


 


A.            Lessee, Collateral Agent, the Lenders and the
Lessor desire to enter into this Participation Agreement and the other
Operative Documents for the purpose of financing the Leased Property, title to
which will be held by Lessor, to secure Lessee’s performance under the Operative
Documents.


 


B.            The Ground Lessor is the fee simple owner of
the Land.


 


C.            The Ground Lessor and the Seller have
previously entered into the Ground Lease pursuant to which the Ground Lessor
leased to Seller, and Seller leased from the Ground Lessor, the Land.


 


D.            On the date hereof, pursuant to the
Assignment of Ground Lease the Seller will assign to Lessor its right, title
and interest as ground lessee under the Ground Lease and Lessor will assume
certain obligations thereunder.


 


E.             On the date hereof, the Seller will (i)
pursuant to the Deed, convey to Lessor its right, title and interest in and to
the Facility, (ii) pursuant to the Assignment of Subleases, fully assign
to Lessor its right, title and interest as lessor or sublessor under the Related
Agreements which constitute leases and Lessor shall assume certain obligations
thereunder, and (iii) pursuant to (x) the Assignment of Purchase
Agreement, (y) the Assignment of Ground Lease and (z) the Assignment of
Related Agreements, fully assign to Lessor its right, title and interest as
lessor, sublessor or interested party, as the case may be, under the other
Related Agreements and Lessor shall assume certain obligations thereunder.


 


F.             On the date hereof, Collateral Agent, on
behalf of Lessor, using amounts Funded by the Lessor and the Lenders, will
provide funds to pay Lessor for acquisition of the Subject Property and other
costs (including transaction costs) related to the Subject Property and the
Overall Transaction.


 

















 


G.            Subject to the terms and conditions of this
Participation Agreement and the other Operative Documents, on the Closing Date,
among other things, Lessee and Lessor will enter into the Lease pursuant to
which Lessor will agree to lease to Lessee, and Lessee will agree to lease from
Lessor, the Leased Property pursuant to the Lease.


 


H.            To secure the repayment of the Lessor’s and
Lenders’ respective Lessor Amount and Loans, the Collateral Agent, on behalf of
the Participants, will have the benefit of a Lien on the Subject Property and
the other Lessor Collateral.


 


NOW, THEREFORE, in
consideration of the mutual agreements contained in this Participation
Agreement and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:


 


ARTICLE I



DEFINITIONS; INTERPRETATION


 


Section 1.1.           Definitions; Interpretation. Unless the context shall otherwise require,
capitalized terms used and not defined herein shall have the meanings assigned
thereto in Appendix 1 hereto for all purposes hereof; and the rules of
interpretation set forth in Appendix 1 hereto shall apply to this Participation
Agreement.


 


ARTICLE II



CLOSING DATE


 


Section 2.1.           Effectiveness of Agreement. (a) This Participation Agreement shall
be effective as of March 30, 2006 (the “Closing
Date”), subject to the satisfaction or waiver as set forth herein of
all of the conditions precedent set forth in Article VI.


 


(b)           Subject to the conditions set forth in this
Participation Agreement and pursuant to the terms hereof, on the Closing Date, inter alia, Lessor and Lessee will enter
into the Lease pursuant to which Lessor shall lease to Lessee, and Lessee shall
lease from Lessor, the Leased Property for the Term.


 


(c)           Except for any documents to be executed and
delivered by Seller, Lessee and Lessor pursuant to the Purchase Agreement,
which shall be delivered through the Escrow, all documents and instruments
required to be delivered on the Closing Date and in connection with the Advance
pursuant to this Participation Agreement shall be delivered at the offices of
Chapman and Cutler LLP, 111 West Monroe Street, Chicago, Illinois 60603,
or at such other location as the Collateral Agent and the Lessee may mutually
agree.


 


Section 2.2.           Acquisition of Facility and Leasehold Interest in Land;
Grants of Lien; Assignment of Related Agreements. Subject to the terms and conditions of this
Participation Agreement, on the Closing Date, (i) Seller and Lessor shall
enter into the Assignment of Ground


 


2

















 


Lease pursuant to which Seller shall assign to Lessor and Lessor shall
assume, Seller’s right, title and interest as ground lessee under the Ground
Lease, (ii) Seller shall convey to Lessor its right, title and interest in
the Facility pursuant to the Deed, (iii) Lessor and Seller shall enter
into the Assignment of Subleases pursuant to which Seller shall assign to
Lessor and Lessor shall assume Seller’s right, title and interest in the
Related Agreements which constitute leases, (iv) Lessor and Seller shall
enter into (x) the Assignment of Purchase Agreement and (y) the Assignment of
Related Agreements pursuant to which Seller shall assign to Lessor and Lessor
shall assume, Seller’s right, title and interest in the other Related Agreements,
(v) Lessor and Lessee shall enter into the Lease pursuant to which Lessor
shall lease to Lessee, and the Lessee shall lease from Lessor, the Leased
Property for the Term, and (vi) Lessee, Lessor and Collateral Agent, as
applicable, shall enter into and/or record the Assignment of Ground Lease, the
Assignment of Related Agreements, the Deed of Trust, the Memorandum of Lease,
the Assignment of Leases and Rents and memoranda thereof and the UCC Financing
Statements.


 


ARTICLE III



FUNDING OF ADVANCE


 


Section
3.1.           Funding.


 


(a)           Amount of Funding. Subject to the terms and conditions of this
Participation Agreement and in reliance on the representations and warranties
made as of the Closing Date of each of the parties hereto contained herein or
made pursuant hereto, upon receipt of the Advance Request, on the Closing Date
the Collateral Agent (on behalf of the Lessor) shall, to the extent it has
received amounts from the Participants, make the requested Advance and each
Participant will Fund the Advance, as and to the extent provided herein, in
each case by making available to Lessor or Collateral Agent (on behalf of the
Lessor) by wire transfer of immediately available funds in accordance with the
instructions set forth in the Advance Request, an amount equal to (i) with
respect to the Lenders, such Lender’s Loan Commitment and (ii) with
respect to the Lessor, the Lessor Commitment. Notwithstanding the foregoing,
the Funding by each Participant on the Closing Date shall not exceed such
Participant’s Commitment. The Lessor shall not issue Notes or, except as
otherwise expressly permitted by the Operative Documents, otherwise incur
indebtedness secured by the Subject Property or any portion thereof in an
amount in excess of the Aggregate Commitment Amount. No amounts paid or prepaid
with respect to any Lessor Amount or the Loans may be readvanced.


 


(b)           Notes and Lessor Amount. Each Lender’s Loans shall be evidenced by a
single Note issued to such Lender and repayable in accordance with, and with
Interest accruing pursuant to, the terms of the Loan Agreement. The Lessor
Amount shall accrue Yield at the Yield Rate. Each Lender is authorized and
entitled to make notations on its Notes in accordance with the Loan Documents,
each of which notations shall constitute prima
facie evidence of the accuracy of the information so noted, absent
manifest error.


 


(c)           Funding. The Advance required to be made by the
Collateral Agent (on behalf of the Lessor) on the Closing Date shall be funded
by the Participants making a Funding directly to the Collateral Agent. Such
Funding by the Participants to the Collateral Agent with respect to


 


3

















 


the Advance shall be deemed to constitute the required Funding from the
Participants to Lessor, and the corresponding payment by the Collateral Agent
for the purposes provided in Section 3.1(d).


 


(d)           Use of Proceeds. Pursuant to Section 3.3, the Funding
shall be used by the Collateral Agent on behalf of the Lessor solely
(i) to Advance the Aggregate Commitment Amount for the Subject Property
and (ii) to pay Transaction Expenses.


 


(e)           Advance. All remittances made by the Participants for
the Funding of the Advance shall be made in immediately available federal funds
by wire transfer to the Collateral Agent at the Collateral Agent’s address
referred to in Schedule III hereto prior to 12:00 noon (New York City time) on
the Closing Date; provided, that
if the terms and conditions for the Advance set forth herein have not been
satisfied by 10:00 a.m. New York time on the Closing Date, no Participant shall
be obligated to maintain the availability of its funds for the Advance unless
such Participant has received a satisfactory indemnity for the overnight
investment of such funds. Promptly upon Collateral Agent’s receipt of such
funds from the Participants, subject to the conditions herein, Collateral Agent
shall wire such funds on the Closing Date to the Persons entitled thereto as
provided for in the Advance Request. The Funding by each Participant to the
Collateral Agent of its respective portion of the Advance shall constitute
authorization and direction by such party to Collateral Agent to make the
Advance pursuant to this Article III.


 


Section 3.2.           [Intentionally Omitted].


 


Section
3.3.           Advance Request.


 


(a)           Notice and Closing. At least two (2) Business Days prior to the
Closing Date, Lessee shall deliver to Collateral Agent (which shall promptly
forward a copy of such Advance Request to each Participant) an irrevocable
written notice substantially in the form of Exhibit A (an “Advance Request”), setting forth:


 


(i)            the proposed Closing Date;


 


(ii)           a statement of the amount of the requested
Advance setting forth (A) a description of the use of proceeds of such Advance,
indicating which portions of such Advance will be used to pay the purchase
price for the Subject Property and which portion of such Advance will be used
to pay Transaction Expenses, and the identity of the Persons entitled to such
payments; and


 


(iii)          wire transfer instructions for the
disbursement of the appropriate amount of funds to Lessee or to such other
Persons as may be entitled to the Advance.


 


(b)           On the Closing Date, and subject to the
satisfaction of the conditions set forth in Article VI, Participants shall, as
and to the extent provided herein, Fund the Advance by wire transfer directly
to Collateral Agent.


 


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(c)           Concurrent with the making of the Advance,
all deposits previously made by Lessee under the Purchase Agreement and held in
escrow shall be refunded to Lessee.


 


ARTICLE IV



YIELD, INTEREST


 


Section 4.1.           Yield. The
Lessor Amount shall accrue Yield at the Yield Rate, calculated using the actual
number of days elapsed and, during the initial Interest Period and when the
Yield Rate is based on the LIBO Rate (Reserve Adjusted), a 360-day year basis
and, at all other times, a 365-day (or, if applicable, 366-day) year basis. If
all or any portion of the Lessor Amount, any Yield payable thereon or any other
amount payable hereunder shall not be paid when due (whether at stated
maturity, acceleration thereof or otherwise), such overdue amount shall bear
interest at a rate per annum which is equal to the Overdue Rate.


 


Section 4.2.           Interest on Loans. Each Loan shall accrue Interest computed and payable in accordance with
the terms of the Loan Agreement.


 


Section
4.3.           Computations. Computations of Interest and other amounts
payable in respect of the Notes shall be made by Collateral Agent in accordance
with the Loan Agreement and this Article IV. Lessor hereby appoints Collateral
Agent as its agent for purposes of computing the Yield in respect of the
Lessor’s Interest and determining the Yield Rate. No later than thirty
(30) days prior to each Payment Date, Collateral Agent shall deliver to
Lessee and each Participant a written statement of the amount of Interest and
Yield then due, the due date therefor and the calculation thereof; provided that in each case, the failure of
Collateral Agent to provide such notice shall not relieve Lessee from any
liability that it may have under the Operative Documents to pay any such
amount; and provided, further
that Collateral Agent’s failure to give such notice shall result in no
liability to it.


 


Section 4.4.           Payments of Rent; Payments and Prepayments of Loans and
Lessor Amount. (a) Notwithstanding
any provisions in the Lease to the contrary, the Lessor hereby directs the
Lessee to pay to the Collateral Agent all Basic Rent payable from time to time
by Lessee and all Supplemental Rent to the extent such Supplemental Rent is
payable to Lessor under the Lease (other than Excepted Payments or Supplemental
Rent that is payable to Persons other than Lessor, which the Lessor hereby
directs the Lessee to make directly to the applicable Person entitled thereto).


 


(b)           In the event that the Lessee pays the Lease
Balance to the Lessor in connection with the Lessee’s purchase of the Subject
Property in accordance with any of Sections 15.1, 16.2(e), 18.1 or 18.2 of
the Lease or Article XIX of the Lease, the Lessor will prepay the entire
outstanding principal amount of the Loans and the Lessor Amount. Each of the
Participants hereby acknowledges that its Loans or the Lessor Amount, as the
case may be, may be so prepaid without any prepayment premium (other than Break
Costs, if any).


 


5

















 


Section 4.5.           Fees. If
and only if the Advance is made and Lessor consummates the purchase of the
Subject Property on the Closing Date, Lessee agrees to pay the fees set forth
in this Section 4.5 (collectively, the “Fees”).


 


(i)            Upfront Fees. Lessee agrees to pay to the Collateral Agent
on behalf of the Participants an up front fee payable on the Closing Date to
each Participant in an amount equal to, for each Lender or Lessor, the product
of (a) the aggregate amount of the Loan Commitment or Lessor Commitment of such
Lender or Lessor, as applicable, multiplied by (b) 0.25%.


 


(ii)           Other Fees. The Lessee also agrees to pay (x) to
the Collateral Agent, for its own account, the fees set forth in the Collateral
Agent Fee Letter, payable in the amounts and on the dates set forth therein and
(y) to the Arranger, the fees set forth in the Arrangement Fee Letter
payable in the amounts and on the dates set forth therein.


 


Section
4.6.           Obligations Several. The obligations of the Participants hereunder
or elsewhere in the Operative Documents shall be several and not joint; and no
Participant shall be liable or responsible for the acts or defaults of any
other party hereunder or under any other Operative Document.


 


Section
4.7.           Highest Lawful Rate. It is the intention of the parties hereto to
conform strictly to applicable usury laws and, anything herein to the contrary
notwithstanding, the obligations of (x) Lessee to Lessor under this
Participation Agreement and the Lease, (y) Lenders under the Loan
Agreement and the Notes and (z) either Lessee or Lessor or any other party
under any other Operative Document shall, in each case, be subject to the
limitation that payments of interest or of other amounts constituting interest
under Applicable Laws shall not be required to the extent that receipt thereof
would be in excess of the Highest Lawful Rate, or otherwise contrary to
provisions of law applicable to the recipient limiting rates of interest which
may be contracted for, charged, received, taken or reserved by the recipient.
Accordingly, if the transactions or the amount paid or otherwise agreed to be
paid for the use, forbearance or detention of money under this Participation
Agreement, the Lease, the Loan Agreement, the Notes, the Lessor Amount or any
other Operative Document would exceed the Highest Lawful Rate or otherwise be
usurious under Applicable Laws (including, without limitation, the federal and
state laws of the United States of America, or of any other jurisdiction whose
laws may be mandatorily applicable) with respect to the recipient of any such
amount, whether due to the acceleration of the maturity of the Lease Balance,
the optional or mandatory purchase of the Leased Property or otherwise, then, in
that event, notwithstanding anything to the contrary in this Participation
Agreement, the Lease, the Loan Agreement, the Notes, the Lessor Amount or any
other Operative Document, it is agreed as follows as to the recipient of any
such amount:


 


(a)           the provisions of this Section 4.6 shall
govern and control over any other provision in this Participation Agreement,
the Lease, the Loan Agreement, the Notes, the Lessor Amount and any other
Operative Document, and each provision set forth therein is hereby so limited;


 


6

















 


(b)           the aggregate of all consideration which
constitutes interest under Applicable Laws that is contracted for, charged or
received under this Participation Agreement, the Lease, the Loan Agreement, the
Notes, the Lessor Amount or any other Operative Document shall under no
circumstances exceed the maximum amount of interest allowed by Applicable Laws
(such maximum lawful interest rate, if any, with respect to such recipient
herein called the “Highest Lawful Rate”),
and all amounts owed under this Participation Agreement, the Lease, the Loan
Agreement, the Notes, the Lessor Amount and any other Operative Document shall
be held subject to reduction and: (i) the amount of interest which would
otherwise be payable to the recipient hereunder and under the Lease, the Loan
Agreement, the Notes, the Lessor Amount and any other Operative Document shall
be automatically reduced to the amount allowed under Applicable Laws, and
(ii) any interest paid in excess of the Highest Lawful Rate shall be
credited to the Lease Balance (or, if such consideration shall have been paid
in full, refunded to the Lessee);


 


(c)           all sums paid, or agreed to be paid for the
use, forbearance and detention of the money under this Participation Agreement,
the Lease, the Loan Agreement, the Notes, the Lessor Amount or any other
Operative Document shall, to the extent permitted by Applicable Laws, be
amortized, prorated, allocated and spread throughout the full term of such
indebtedness until payment in full so that the rate or computation of interest
on such indebtedness does not exceed the applicable usury ceiling;


 


(d)           if at any time the interest, together with
any other fees, late charges and other sums payable pursuant to or in connection
with this Participation Agreement, the Lease, the Loan Agreement, the Notes,
the Lessor Amount and any other Operative Document executed in connection
herewith or therewith and deemed interest under Applicable Laws, exceeds that
amount which would have accrued at the Highest Lawful Rate, the amount of
interest and any such fees, charges and sums to accrue to the recipient of such
interest, fees, charges and sums pursuant to the Operative Documents shall be
limited, notwithstanding anything to the contrary in the Operative Documents,
to that amount which would have accrued at the Highest Lawful Rate for the
recipient, but any subsequent reductions in the otherwise applicable rate of
interest or yield, as applicable, shall not reduce the interest to accrue
pursuant to the Operative Documents to an amount below the recipient’s Highest
Lawful Rate until the total amount of interest payable to the recipient
(including all consideration which constitutes interest) equals the amount of
interest which would have been payable to the recipient (including all
consideration which constitutes interest), but for the effect of this
Section 4.6; and


 


(e)           the right to accelerate the maturity of the
Lease Balance or to require the purchase of the Subject Property pursuant to
the Operative Documents does not include the right to accelerate any interest
(as determined under Applicable Law) which has not otherwise accrued on the
date of such acceleration or mandatory purchase.


 


7

















 


ARTICLE V



CERTAIN INTENTIONS OF THE PARTIES


 


Section 5.1.           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 FASB Statement No. 13;


 


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


 


(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 Lien,
as the case may be, in the Lessee’s interest in the Leased Property and the
other Lessee Collateral, in favor of the Lessor, and for the benefit of the
Participants, to secure Lessee’s payment and performance of its Obligations
under the Operative Documents; and


 


(iii)          the Security Instruments create Liens on and
security interests in the Subject Property and the other Lessor Collateral and
Lessee Collateral for the benefit of all of the Participants to secure Lessor’s
and Lessee’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 5.1.


 


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.


 


8

















 


Specifically, without
limiting the generality of the foregoing, the parties hereto intend and agree
that in the event of any insolvency, conservatorship or receivership
proceedings or matters or a petition under the United States bankruptcy laws,
or any other applicable insolvency, conservatorship or receivership laws or
statute of the United States of America or any State thereof affecting Lessee,
Lessor, or the Lenders or any collection actions, the transactions evidenced by
the Operative Documents (including, without limitation, the Lease) shall be
regarded as loans made directly to Lessee by the Participants, in each case as
unrelated third party lenders, and that Lessor holds title to the Subject
Property for the benefit of the Participants to secure Lessee’s obligations to
repay such loans to the Participants and all other amounts due under any of the
Operative Documents.


 


Section 5.2.           Amounts Due Under Lease. Anything else herein or elsewhere to the contrary notwithstanding, it
is the intention of the Lessee, the Lessor and the Lenders that:  (i) the amount and timing of
installments of Basic Rent due and payable from time to time under the Lease
shall be equal to the aggregate payments due and payable as Interest on the
Loans and Yield on the Lessor Amount due on each Payment Date; (ii) if the
Lessee elects the Early Termination Option, the Purchase Option or becomes
obligated or otherwise elects to purchase the Subject Property under the Lease,
then the Loans, the Lessor Amount, all accrued and unpaid Interest and Yield
thereon, any Fees and all other obligations of the Lessee owing to the Lessor
and the Participants shall be paid in full by the Lessee; (iii) if the
Lessee properly elects the Sale Option with respect to the Subject Property and
subject to Articles XX and XXI of the Lease, the Lessee shall only be
required to pay to the Collateral Agent the proceeds of the sale of the Subject
Property, the Sale Option Recourse Amount with respect to the Leased Property
and any amounts due pursuant to Section 20.2 of the Lease (which amounts may be less
than the aggregate amount of the unpaid principal of the Notes and Lessor
Amount), together with all other amounts due and payable under
Article XIII; and (iv) subject to the limitation in Section 16.5
of the Lease, upon an Event of Default resulting in an acceleration of the
Lessee’s obligation to purchase the Subject Property under the Lease, the
amounts then due and payable by the Lessee under the Lease shall include all
amounts necessary to pay in full the Lease Balance, plus all other amounts then due from the Lessee to the
Participants under the Operative Documents.


 


Section 5.3.           Distribution.
(a) Each payment of Basic Rent (and any payment of interest on overdue
installments of Basic Rent) received by the Collateral Agent shall be
distributed by the Collateral Agent to the Participants pro-rata, in accordance
with, and for application to, the amount of Interest and Yield then due on the
Loans and the Lessor Amount, respectively, as well as any overdue Interest or
Yield due to each Lender or Lessor (to the extent permitted by Applicable
Laws).


 


(b)           Any payment received by the Collateral Agent
as a result of:


 


(i)            the purchase of all of the Subject Property
in connection with the Lessee’s exercise of its Early Termination Option under
Section 18.1 of the Lease or its Purchase Option under Section 19.1 of the Lease or pursuant to the
penultimate paragraph of Section 20.1 of the Lease, or


 


9

















 


(ii)           the payment of the Lease Balance in
accordance with Section 15.1 of the Lease,


 


shall be distributed by the
Collateral Agent to pay in full, on a pro-rata basis, as applicable, the
Participant Balance of each Participant and the balance, if any, of such
payment or amounts shall be promptly distributed to, or as directed by, the
Lessee.


 


(c)           Any payments received by the Collateral Agent
as Sale Option Recourse Amount in accordance with Section 20.1(i) of the
Lease upon the Lessee’s exercise of the Sale Option shall be distributed by the
Collateral Agent in the following amounts and order of priority:


 


first,        on a pro rata basis based on their respective
shares of the Loan Balance, to the Lenders for application to pay in full the
Loan Balance owing to them;


 


second,  to the Lessor to pay in full the Lessor
Balance; and


 


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


 


(d)           (i) 
Any payments received by the Collateral Agent as Net Sales Proceeds from
the sale of the Subject Property on or before the Expiration Date pursuant to
the Lessee’s exercise of the Sale Option pursuant to Article XX of the Lease,
together with any payment made as a result of the valuation process conducted
pursuant to Section 13.2 hereof shall be distributed by the Collateral Agent
from the funds so received in the following order of priority:


 


first,        so much of such amount as shall be required
to reimburse Lessor and Collateral Agent for any Lessor Marketing Costs;


 


second,  to the Lessor for application to pay in full
the Lessor Balance;


 


third,      on a pro rata basis based on their respective
shares of the sum of the outstanding Loan Balance, if any, to the Lenders for
application to pay in full the outstanding Loan Balance;


 


fourth,    to Lessee to pay in full the Sale Option
Recourse Amount to the extent previously paid by Lessee; and


 


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


 


(ii)           If possession of the Leased Property is
delivered to Lessor pursuant to Section 20.3 of the Lease, then at the end of
each calendar month following the Expiration Date, but prior to the last day of
the Extended Remarketing Period, any payments received by the Collateral Agent
during the calendar month then ended as Net Sales Proceeds from the sale of the
Subject Property or proceeds from the rental, or other disposition of the
Subject Property and any


 


10

















 


insurance proceeds paid in connection with a Casualty or Condemnation
relating to the Subject Property shall be distributed by the Collateral Agent
in the following order of priority:


 


first,        so much of such amount as shall be required
to reimburse Lessor and Collateral Agent for Lessor Marketing Costs;


 


second,  to the Lessor for application to pay in full
the Lessor Balance as of the Expiration Date;


 


third,      solely with respect to a sale of the Subject
Property prior to the two-year anniversary of the Expiration Date, to Lessee to
pay any unreimbursed Sale Option Recourse Amount to the extent previously paid
by Lessee on the Expiration Date together with interest at the Lessee Interest
Rate on the portion of the unreimbursed Sale Option Recourse Amount distributed
to Lessee on such date, accruing from the Expiration Date to, but not
including, the date of such distribution pursuant to this Section 5.3(d)(ii);
and


 


fourth,    the balance, if any, shall be promptly
distributed to, or as directed by the Lessor.


 


(iii)          Except as provided in
Section 5.3(g)(ii), any payments received by the Collateral Agent pursuant
to the sixth sentence of Section 14.1(a) of the Lease, shall be
distributed by the Collateral Agent, on the Payment Date immediately following
the receipt by the Collateral Agent of any such payment, in the funds so
received in the following order of priority:


 


first,        on a pro rata basis based on their respective
shares of the sum of the outstanding principal amount of the Loans and Lessor
Amount, as the case may be, to the Participants for application to pay in full
the outstanding principal amount of the Loans and Lessor Amount;


 


second,  on a pro rata basis based on the amount of
accrued Interest and Yield payable to each Participant, to the Participants for
application to pay all accrued Interest and Yield; and


 


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


 


(e)           All payments of Supplemental Rent received by
the Collateral Agent (excluding any amounts payable pursuant to the preceding
provisions of this Section 5.3) shall be distributed promptly by the Collateral
Agent upon receipt thereof to the Persons entitled thereto pursuant to the
Operative Documents.


 


(f)            Notwithstanding any other provision of this
Section 5.3, any Excepted Payment received at any time by the Collateral Agent
shall be distributed promptly to the Person entitled to receive such Excepted
Payment pursuant to the Operative Documents.


 


11

















 


(g)           (i) 
All amounts received by the Collateral Agent in connection with any
sale, lease or other disposition of all or any part of the Subject Property as
a result of, or following, an Event of Default (including a Limited Recourse
Event Default) or any Event of Loss or Significant Environmental Event after
the occurrence and during the continuance of an Event of Default shall be
distributed by the Collateral Agent in the following order of priority:


 


first,        so much of such payments or amounts as shall
be required in accordance with the Operative Documents to pay or reimburse
Collateral Agent for any costs or fees incurred or owing as a result of such
Event of Default;


 


second,  so much of such payments or amounts as shall
be required to pay the then existing or prior Participants the amounts payable
to them pursuant to any expense reimbursement or indemnification provisions of
the Operative Documents or any other amount (including, without limitation,
Fees, but not including amounts referred to in second
and third below) due pursuant to
the Operative Documents shall be distributed to each such Participant without
priority of one over the other in accordance with the amount of such payment or
payments payable to each such Person;


 


third,      on a pro rata basis based on their respective
shares of the Participant Balance, to the Participants for application to pay
in full the Participant Balance; and


 


fourth,    the balance, if any, of such payment or
amounts remaining thereafter shall be promptly distributed to, or as directed
by, the Lessee.


 


(ii)           All payments received and amounts realized
(other than payments or amounts described in clause (g)(i) above) by the
Collateral Agent as a result of, or following, an Event of Default (including a
Limited Recourse Event of Default) shall, if received by the Collateral Agent,
be distributed by the Collateral Agent in the following order of priority:


 


first,        so much of such payment or amounts as shall
be required in accordance with the Operative Documents to pay or reimburse
Collateral Agent for any costs or fees incurred or owing as a result of such
Event of Default;


 


second,  so much of such payments or amounts as shall
be required to pay the then existing or prior Participants the amounts payable
to them pursuant to any expense reimbursement or indemnification provisions of
the Operative Documents or any other amount (including, without limitation,
Fees, but not including amounts referred to in second
and third below) due pursuant to
the Operative Documents shall be distributed to each such Participant without
priority of one over the other in accordance with the amount of such payment or
payments payable to each such Person;


 


third,      on a pro rata basis based on their respective
shares of the Participant Balance, to the Participants for application to pay
in full the Participant Balance; and


 


fourth,    the balance, if any, of such payment or
amounts remaining thereafter shall be promptly distributed to, or as directed
by, the Lessee.


 


12

















 


(iii)          During the occurrence and continuance of an
Event of Default, all amounts (other than Excepted Payments) received or
realized by the Collateral Agent and otherwise distributable pursuant to
Section 5.3(a) shall be distributed as provided for in clause (g)(ii) above.


 


(h)           (i) 
Any payment received by the Collateral Agent for which no provision as
to the application thereof is made in the Operative Documents or elsewhere in
this Section 5.3 shall be distributed in accordance with Section 5.3(g)(ii).


 


(ii)           Except as otherwise provided in Section
5.3(f), all payments received and amounts realized by the Collateral Agent
under the Lease or otherwise with respect to the Subject Property, or any
proceeds thereof, to the extent received or realized at any time after an
indefeasible payment in full of the Participant Balances of all of the
Participants and all other amounts due and owing to the Collateral Agent or the
Participants, shall be distributed forthwith by the Collateral Agent in the
order of priority set forth in Section 5.3(g)(ii), except that such payment
shall be distributed omitting clause “third” of such Section 5.3(g)(ii).


 


(i)            Any payment received by the Collateral Agent
for which provision as to the application thereof is made in an Operative
Document, but not elsewhere in this Section 5.3, shall be distributed forthwith
by the Collateral Agent to the Person and for the purpose for which such
payment was made in accordance with the terms of such Operative Document.


 


(j)            Except to the extent clause (b) or (g)
is applicable thereto, all amounts payable to the Lessee for the repair of
damage caused by such Casualty or Condemnation in accordance with Section
14.1(a) of the Lease shall be distributed to, or as directed by, the Lessee in
accordance with Section 14.1 of the Lease.


 


(k)           Except as contemplated by
Sections 5.3(d)(ii) or 5.3(d)(iii), to the extent any payment made to any
Participant, personally, is insufficient to pay in full the Participant Balance
of such Participant plus all accrued Interest and Yield, as the case may be,
owing to such Participant, then each such payment which is payable to a Lender
shall first be applied to accrued Interest and then to principal outstanding on
the Loans and each such payment which is payable to Lessor shall first be
applied to accrued Yield and then to the Lessor Amount, as applicable.


 


Section 5.4.           Adjustments.
(a) If any Participant (a “Benefited
Participant”) shall at any time receive any payment of all or part
of its Loans or Lessor Amount, as applicable, or Interest or Yield thereon, as
applicable, or receive any of the collateral in respect thereof (whether
voluntarily or involuntarily, by setoff, or otherwise), in an amount greater
than the amount to which such Participant was entitled pursuant to Section 5.3,
such Participant shall return such amount or collateral to the Collateral Agent
for distribution to the Person(s) entitled thereto in accordance with Section
5.3; provided, however, that if all or any portion of
such excess payment or benefits is thereafter recovered from such Benefited
Participant so that the excess payment or benefits returned by such Benefited
Participant exceed the remaining excess payment or benefits held by such
Benefited Participant, the excess payment or benefits, as applicable, returned
by such Benefited Participant shall be restored to the Benefited Participant,
to the extent of such recovery, but without interest.


 


13

















 


ARTICLE VI



CONDITIONS PRECEDENT TO CLOSING DATE AND
ADVANCE


 


Section 6.1.           Conditions Precedent to the Closing Date and the Advance. The obligations of the Lessor (which may be
performed by the Collateral Agent to the extent and in the manner set forth in
this Participation Agreement) to make the Advance on the Closing Date, the
obligations of the Lessor to Fund the related Lessor Amount on the Closing Date
and the obligation of the Lenders to make the related Funding of their Loans on
the Closing Date are subject to the satisfaction or waiver by the Participants
on or prior to the Closing Date of each of the following conditions precedent,
each of which shall be deemed fully satisfied or waived by the Participants and
the Collateral Agent if the Advance is made and such Advance is released by the
Participants from the escrow arrangement contemplated on the Closing Date:


 


(a)           Authorization, Execution
and Delivery of Documents; No Default. Each of the Operative Documents shall have been duly authorized,
executed and delivered by each of the other parties thereto, shall (to the
extent the form and substance thereof shall not be prescribed hereby) be in
form and substance satisfactory to each Participant and an executed counterpart
of each thereof (except for the Notes, originals of which shall only be
delivered to the applicable Lender, and for each Fee Letter, originals and
copies of which shall only be delivered to the parties thereto) shall have been
received by each of the Participants and the Collateral Agent. Each Lender
shall have received an original, duly executed Note, registered in such
Lender’s name. Each of the Operative Documents listed in this clause (a) shall
be in full force and effect as to all other parties and no Default, Event of
Default or Loan Agreement Event of Default shall have occurred or be
continuing.


 


(b)           Legality, Etc. In the opinion of each Participant, the
Overall Transaction shall not violate any Applicable Laws and no change shall
have occurred or been proposed in Applicable Laws that would make it uneconomic
or illegal for any party to any Operative Document to participate in any of the
transactions contemplated by the Operative Documents or otherwise would
prohibit the consummation of any transaction contemplated by the Operative
Documents or expand the duties, obligations and risks of such Participant.


 


(c)           Fees and Expenses. The Collateral Agent shall be prepared to
pay and (concurrently with the closing hereunder) shall pay, using the proceeds
of the Advance, to the Persons entitled thereto, all Transaction Expenses and
Fees accrued as of the Closing Date pursuant to and as set forth in Section
4.5.


 


(d)           Lessee’s Resolutions and
Incumbency Certificate, Etc.
The Lessee shall have delivered to the Collateral Agent and each Participant
(i) a good standing certificate with respect to Lessee from the secretary
of state of Lessee’s state of organization, issued by such office no earlier
than thirty (30) days prior to the Closing Date and (ii) a
Responsible Officer’s Certificate of Lessee substantially in the form of
Exhibit H-1, attesting and certifying as to (A) the authority for the
execution, delivery and


 


14

















 


performance by Lessee of
each Operative Document to which it is or will be a party, (B) its
organizational documents, (C) its constituent documents and (D) the
incumbency and signature of persons authorized to execute and deliver on its behalf
the Operative Documents to which it is a party.


 


(e)           Funding Indemnity Letter. The Collateral Agent and the Participants
shall have received a funding indemnity letter executed by Lessee dated the
Closing Date, and in form and substance satisfactory to each Participant (the “Funding Indemnity Letter”).


 


(f)            Certificate of Lessor. The Collateral Agent shall have received a
secretary’s certificate signed by an authorized signatory of the Lessor
substantially in the form of Exhibit H-2 and customarily provided by
Lessor in transactions of this type.


 


(g)           Opinion of Special Counsel
to the Participants. Each
Participant shall have received an opinion of Chapman and Cutler LLP, special
counsel to the Participants, as to the matters set forth in Exhibit B-1, which
opinion shall be reasonably acceptable in form and substance to such
Participant.


 


(h)           Opinions of Special Counsel
to Lessee. The Collateral
Agent and each Participant shall have received an opinion of DLA Piper Rudnick
Gray Cary, special counsel and special local counsel to the Lessee, as to the
matters set forth in Exhibit B-2, which opinion shall be reasonably
acceptable in form and substance to the Participants.


 


(i)            Taxes. All taxes, fees and other charges payable in
connection with the execution, delivery, recording, filing and registration of
the Operative Documents, if any, and the transactions to consummated on the
Closing Date, or the provisions for such payments, shall have been made by the
Lessee to the satisfaction of the Collateral Agent.


 


(j)            Appraisal. The Collateral Agent and each Participant
shall have received an Appraisal (the “Appraisal”)
performed by the Appraiser and in form and substance satisfactory to each
Participant which shall establish (by the use of appraisal methods reasonably
satisfactory to each Participant) the Fair Market Value of the Leased Property
as of the Closing Date and as of the end of the Term.


 


(k)           Requirements of Law. The Overall Transaction does not and will
not violate in any material respect any Applicable Laws and does not and will
not subject any such Person to any material adverse regulatory prohibitions or
constraints or cause any such Person to violate any Applicable Laws.


 


(l)            [Intentionally Omitted.]


 


(m)          Offeree Letter. Collateral Agent and Lessee shall have
received a certificate, substantially in the form of Exhibit L, from the
Arranger, dated the Closing Date, with respect to offerees of the Notes (the “Offeree Letter”).


 


15

















 


(n)           Environmental Report. At least four (4) Business Days prior to
the Closing Date, an Environmental Audit satisfactory to each Participant with
respect to the Land shall have been received by Collateral Agent and each
Participant, and Collateral Agent and each Participant shall receive a letter
from the consultant performing the Environmental Audit which allows Collateral
Agent and the Participants to rely on such report.


 


(o)           Acquisition of Facility and
Leasehold Interest in Land; Assumption of Related Agreements.


 


(i)            Lessor and Seller shall have deposited with
the Escrow Agent a fully executed original of the Assignment of Ground Lease
pursuant to which the Seller shall have assigned to Lessor, and Lessor shall
have assumed, Seller’s right, title and interest as ground lessee, in and to
the Ground Lease;


 


(ii)           Seller and Lessor shall have deposited with
the Escrow Agent a fully executed original of the special warranty deed (the “Deed”), executed by the Seller and dated
the Closing Date with respect to the Facility and fixtures existing on the
Leased Property, sufficient to convey to Lessor good and marketable fee simple
title thereto free of all Liens, other than Permitted Liens;


 


(iii)          Lessor shall have deposited with the Escrow
Agent a fully executed original of the Assignment of Subleases pursuant to
which the Seller shall have assigned to Lessor and Lessor shall have assumed,
Seller’s right, title and interest in and to the Related Agreements which
constitute leases;


 


(iv)          Seller and Lessor shall have deposited with
the Escrow Agent a fully executed original of (x) the Assignment of Purchase
Agreement and (y) the Assignment of Related Agreements pursuant to which Seller
shall have assigned to Lessor, and Lessor shall have assumed, Seller’s right,
title and interest in and to the Related Agreements (other than those Related
Agreements covered by clause (iii) above); and


 


(v)           Collateral Agent shall have received evidence
reasonably satisfactory to it that the Deed, the Lease or memoranda thereof,
the Ground Lease or memoranda thereof, the Assignment of Ground Lease, the
Assignment of Subleases, the Assignment of Related Agreements, the Deed of
Trust and the Assignment of Leases and Rents or any memoranda thereof shall
have been or in connection with the Advance are being recorded with the
appropriate Governmental Authorities in an order satisfactory to the Collateral
Agent (and the issuance of the title insurance policies in Section 6.1(r)
shall be satisfactory evidence of the foregoing), and the UCC Financing
Statements shall have been or are being filed with the appropriate Governmental
Authorities.


 


(p)           Searches. Collateral Agent and each Participant shall
have received reports, acceptable to the Collateral Agent and Lessor, as to the
Lessee and Seller by the


 


16

















 


appropriate county and state
filing or recording offices of the state and county in which (i) each of the
Lessee’s and Seller’s chief executive office is located and (ii) each of Lessee
and Seller is organized, in each case dated not earlier than fifteen (15)
Business Days prior to the Closing Date, of the results of a search of the
applicable UCC files and any indices of Liens maintained by such offices
(including, if applicable, indices of judgment, revenue and tax liens).


 


(q)           Survey. Lessee shall have, or shall have caused to
be, delivered and certified to Collateral Agent, each Participant and to the
Title Insurance Company an “as built” ALTA survey of the Subject Property, (i)
dated a satisfactory date to the Collateral Agent and each Participant,
(ii) in a form reasonably satisfactory to Collateral Agent, each
Participant and the Title Insurance Company, (iii) including any
applicable flood zone designation with property annotations based on Federal
Flood Insurance Rate Maps, (iv) enabling the Title Insurance Company to
delete any standard printed survey exception contained in the applicable title
policy and to issue the Title Policies, (v) in accordance with the Minimum
Standard Detail Requirements for Land Title Surveys jointly established and
adopted by the American Land Title Association and the National Society of
Professional Surveyors in 2005 and (vi) the location of all improvements
thereon. Without limiting the generality of the foregoing, there shall be surveyed
and shown on such survey, as applicable, the following:  (A) the locations of any established
building setback lines; (B) the lines of streets abutting the Subject
Property and width thereof; (C) all access and other easements appurtenant
to the Land necessary to use the Subject Property; (D) all roadways,
paths, driveways, easements, encroachments and overhanging projections and
similar encumbrances affecting the Subject Property, whether recorded, apparent
from a physical inspection of the Subject Property or otherwise known to the
surveyor; (E) any encroachments on any adjoining property; (F) if the
Subject Property is described as being on a filed map, a legend relating the
survey to said map and (G) a vicinity sketch showing the closest
thoroughfare intersection.


 


(r)            Title and Title Insurance. (i) Lessor and Collateral Agent shall have
received from the Title Insurance Company a Texas Form (T-1 Rev. 4-02) Owner’s
Policy of Title Insurance (the “Owner’s
Policy”) in form and substance acceptable to Collateral Agent,
insuring that Lessor has a good and marketable fee simple title to the Subject
Property, subject, in each case, to the Related Agreements which constitute
leases, such exceptions to title as are acceptable to Collateral Agent, in an
amount equal to the aggregate Loan Commitment, together with complete, legible
copies of all encumbrances, maps and surveys of record, (ii) Collateral Agent,
for the benefit of the Participants, shall have received from the Title
Insurance Company, a Texas Form (T-2 Rev. 1-1-93) Mortgagee Policy of Title
Insurance (the “Lenders’ Policy”;
together with the Owner’s Policy, the “Title
Policies”), in form and substance acceptable to Collateral Agent,
insuring the Lien of the Deed of Trust as a valid first priority Lien against
the Subject Property subject to such exceptions to title as are acceptable to
Collateral Agent, in an amount equal to the Aggregate Commitment Amount,
together with complete, legible copies of all encumbrances and plats of record,
and (iii) the Title Policies shall be dated as of the Closing Date and, to
the extent permitted under Applicable Laws, shall (to


 


17

















 


the extent available under
Texas law): (w) contain affirmative endorsements as to mechanics’ liens,
doing business, usury, zoning, comprehensive coverage, encroachments, the
nonviolation of covenants and restrictions, rights of access and survey
matters, (x) delete the creditors’ rights and survey exclusions,
(y) contain endorsements regarding the effect of recharacterization and
(z) contain such other endorsements reasonably requested by Collateral
Agent.


 


(s)           Filings and Recordings. All filings or recordings enumerated in
Schedule 6.1(s), as well as all other filings and recordings necessary or
advisable, including precautionary financing statements and/or mortgage
filings, reasonably deemed necessary by Collateral Agent, to perfect the
rights, titles and interests of the Participants and the Collateral Agent
intended to be created by the Operative Documents shall have been made in the
appropriate places or offices, including any recordings and filings necessary
to create, perfect, preserve and protect: (i) Lessor’s interest in the
Lessee Collateral, and (ii) first priority liens for the benefit of
Collateral Agent and the Participants on the Lessor Collateral and Lessee
Collateral, subject only to Permitted Liens.


 


(t)            Insurance. Insurance complying with, and to the extent
required to be in place on the Closing Date pursuant to the provisions of Article XIII
of the Lease shall be in full force and effect as evidenced by certificates of
insurance, broker’s reports or insurance binders delivered to Collateral Agent
and Lessor, all in form and substance reasonably satisfactory to the Participants.


 


(u)           Advance Request. The Collateral Agent shall have received a
fully executed copy of the Advance Request, executed by the Lessee, in
accordance with Section 3.3(a).


 


(v)           Representation and
Warranties. On the Closing
Date, the representations and warranties of the Lessee herein and in each of
the other Operative Documents shall be true and correct in all material
respects as though made on and as of such date, except to the extent such
representations or warranties relate solely to an earlier date, in which case
such representations and warranties shall have been true and correct in all
material respects on and as of such earlier date.


 


(w)          Litigation. No action or proceeding shall have been
instituted, nor shall any action or proceeding be threatened, before any
Governmental Authority, nor shall any order, judgment or decree have been
issued or proposed to be issued by any Governmental Authority (i) to set aside,
restrain, enjoin or prevent the full performance of this Participation
Agreement, any other Operative Document or any transaction contemplated as part
of the Overall Transaction, (ii) that questions the validity of the Operative
Documents or the rights or remedies of the Collateral Agent or the Participants
with respect to the Lessee, the Subject Property or the other Lessor Collateral
under the Operative Documents, or (iii) which in the reasonable judgment of the
Required Participants may have a Material Adverse Effect.


 


18

















 


(x)            Defaults and Other Events. There shall not have occurred and be
continuing any Default or Event of Default. There shall not have occurred and
be continuing any Event of Loss or Significant Environmental Event for which
the Lessor has given a Termination Notice pursuant to Section 15.1(a) of
the Lease. There shall not have occurred and be continuing any Event of Loss or
Significant Environmental Event, unless the period given Lessor for delivery of
a Termination Notice pursuant to Section 15.1(a) of the Lease has expired
without delivery of such Termination Notice and all insurance proceeds and
condemnation awards received in connection with such Event of Loss or
Significant Environmental Event have been applied toward the payment of the
repair, rebuilding or reconstruction of the Leased Property under Section
14.1(d) and (e) of the Lease. No Default or Event of Default will have occurred
after giving effect to the making of the Advance requested by the Advance
Request.


 


(y)           Consents and Approvals. All Governmental Actions and other approvals,
consents, licenses and easements required to be taken, given or obtained, as
the case may be, by or from any Governmental Authority or another Person
(including, but not limited to, the Ground Lessor and the other parties to the
Related Agreements), or by or from any trustee or holder of any indebtedness or
obligation of Lessee, and its affiliates, in each case that are necessary in
connection with the execution and delivery of the Operative Documents and the
consummation of the transactions contemplated thereby by such persons and that
are necessary to have been obtained by such persons prior to the Closing Date
in connection with any portion of the Overall Transaction shall have been
taken, given or obtained, as the case may be and shall be in full force and
effect, except for any such governmental actions, approvals, consents, licenses
or easements the failure of which to obtain or maintain could not reasonably be
expected to cause a Material Adverse Effect.


 


(z)            Ground Lessor Estoppel
Certificate. The Collateral
Agent and each Participant shall have received the Estoppel Certificate
executed by the Ground Lessor in the form of Exhibit M hereto.


 


(aa)         Related Agreements. The Collateral Agent and each Participant
shall have received an executed version of the Ground Lease and each of the
Related Agreements, in each case certified by Lessee to its knowledge as true,
correct and complete.


 


(bb)         Purchase Agreement. The Collateral Agent and each Participant
shall have received an executed version of the Purchase Agreement and the other
documents and certificates delivered pursuant thereto and evidence satisfactory
to it that each of the conditions contained in Section 7 of the Purchase
Agreement have been satisfied in full.


 


19

















 


ARTICLE VII



[INTENTIONALLY OMITTED]


 


ARTICLE VIII



REPRESENTATIONS


 


Section 8.1.           Representations of the Lenders. Each Lender represents and warrants,
severally and only as to itself, to the other Lenders, Lessor, the Collateral
Agent and the Lessee that as of the date hereof and as of the Closing Date:


 


(a)           ERISA. Such Lender is not and will not be making
its Loans hereunder, and is not performing its obligations under the Operative
Documents, with the assets of an “employee benefit plan” (as defined in Section
3(3) of ERISA) which is subject to Title I of ERISA or “plan” (as defined in
Section 4975(e)(1) of the Code).


 


(b)           Status. Such Lender is a commercial bank, branch or
agency of a bank or other similar financial institution, or an Affiliate
thereof.


 


(c)           Power and Authority. Such Lender has the requisite power and
authority to enter into and perform its obligations under the Operative
Documents to which it is a party.


 


(d)           Lessor Liens. There are no Lessor Liens attributable to such
Lender on the Lease or the Leased Property.


 


(e)           Organization, Etc. Such Lender is a corporation, limited
liability company or banking association validly organized and existing and in
good standing under the laws of the State or jurisdiction of its creation.


 


(f)            Investment. The Note being acquired by such Lender is
being acquired by such Lender for investment and not with a view to the resale
or distribution of such interest or any part thereof, but without prejudice,
however, to the right of such Lender at all times, subject to Article XII,
to sell or otherwise dispose of all or any part of such interest under a
registration available under the Securities Act or under an exemption from such
registration available under the Securities Act, it being understood that the
disposition by such Lender of the Note to be purchased by such Lender shall, at
all times, remain within its control, subject to Article XII.


 


(g)           Offer of Securities, Etc. Neither such Lender nor any Person
authorized to act on its behalf has, directly or indirectly, offered to sell
the Notes or any other similar securities (the sale or offer of which would be
integrated with the sale or offer of the Notes), for sale to, or solicited any
offer to acquire any of the same from, any Person.


 


20

















 


(h)           No Registration. Such Lender understands and acknowledges
that the Notes have not been and will not be registered under the Securities
Act in reliance upon the exemption provided in Section 4(2) of the Securities
Act or any other applicable exemption, that the Notes have not and will not be
registered or qualified under the securities or “blue sky” laws of any
jurisdiction, that the Notes may be resold or otherwise transferred only if so
registered or qualified or if an exemption from registration or qualification
is available, that none of the Lessee, the Lessor or the Collateral Agent is
required to register the Notes and that any transfer must comply with the
provisions of the Operative Documents relating thereto. Such Lender will comply
with all applicable federal and state securities laws in connection with any
subsequent resale of the Notes held by it.


 


(i)            Institutional Investor. Such Lender is a sophisticated
institutional investor and an “accredited investor” as defined in paragraph
(1), (2), (3) or (7) of Rule 501(a) of the Securities Act, and has
knowledge and experience in financial and business matters and is capable of
evaluating the merits and risks of its investment in the Notes and is able to
bear the economic risk of such investment. Such Lender has been given such
information concerning the Notes, the other Operative Documents, the Leased
Property, the Lessor and the Lessee as it has requested.


 


(j)            [Intentionally Omitted.]


 


(k)           Legend. Such Lender understands and acknowledges
that the Note which it is acquiring will bear a legend as set forth in the form
Note included in the Loan Agreement.


 


The making of any Loan on
the Closing Date or the assignment of any interests therein pursuant to
Article XII shall constitute an affirmation by the subject assignee or
acquiring Lender of the preceding representations and warranties.


 


Section 8.2.           Warranties and Representations of the Lessee. The Lessee warrants and represents to each of
the other parties that, except as set forth in Schedule 8.2 attached
hereto, as of the date hereof and as of the Closing Date:


 


(a)           Existence and Power. The Lessee is a corporation duly organized
and validly existing under the laws of the jurisdiction of its incorporation,
is duly qualified to do business as a foreign corporation in the State of Texas
and is in good standing in the State of Texas and in all other jurisdictions,
except where the failure to be so qualified would not have a Material Adverse
Effect, and has full corporate power and authority and all necessary licenses
and permits to carry on its present business and operations, to own or lease
its properties and to execute, deliver and perform its obligations under the
Operative Documents to which it is a party.


 


(b)           Authorization;
Enforceability. The
Operative Documents to which the Lessee is a party have been duly authorized,
executed and delivered by the Lessee and constitute legal, valid and binding
obligations of the Lessee enforceable against the


 


21

















 


Lessee in accordance with
the respective terms thereof, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors’ rights generally and general equitable principles
(whether in equity or at law).


 


(c)           No Contravention; Consents
and Approvals. (i) The
execution and delivery by the Lessee of each of the Operative Documents to
which it is a party and compliance by the Lessee with all of the provisions
thereof do not and will not contravene any law, governmental rule or regulation
or any order of any court or Governmental Authority or agency applicable to or
binding on the Lessee or contravene the provisions of, or constitute a default
under, or result in the creation (except as contemplated by the Operative
Documents) of any Lien upon the property of the Lessee under, its charter or
by-laws or any indenture, mortgage, contract or other agreement or instrument
to which the Lessee is a party or by which it or any of its properties may be
bound or affected.


 


(ii)           No authorization, consent, approval, license,
exemption of, or filing or registration with, any Government Authority, or
approval or consent of any other Person, is required for the due execution,
delivery or performance by Lessee of any of the Operative Documents or the
consummation of the Overall Transaction, except those which have been obtained
or made and are in full force and effect.


 


(d)           Litigation. Except as disclosed in the Lessee’s financial
statements described in Section 8.2(h)(i), there are no proceedings
pending or, to the knowledge of the Lessee, threatened against the Lessee in
any court or before any Governmental Authority or arbitration board or tribunal
as to which there exists a substantial likelihood of an adverse determination
which is reasonably likely, individually or in the aggregate (and after
consideration of payments made under any insurance policies then in effect),
when resolved, to have a Material Adverse Effect. The Lessee is not in default
with respect to any order of any court or Governmental Authority or arbitration
board or tribunal.


 


(e)           Registrations; Filings. Lessee has obtained all consents, approvals
and authorizations and made or obtained all filings, registrations or
qualifications required for the parties to consummate the transactions
contemplated by the Operative Documents.


 


(f)            Title to the Subject
Property. Subject at all
times to Section 5.1 hereof, the Lessor will on the Closing Date have good
and marketable recorded title to the Subject Property, free and clear of all
Liens other than Permitted Liens.


 


(g)           No Violations. None of the transactions contemplated by the
Operative Documents (including, without limitation, the funding by the Lessor
of the Lessor Amount and the purchase by the Lenders of the Notes) will result
in a violation of Section 7 of the Securities Exchange Act of 1934, as
amended, or any regulations issued pursuant thereto, including, without
limitation, Regulations T, U and X issued by the Board of Governors of the
Federal Reserve System. The proceeds of the sale of the


 


22

















 


Notes and the funding of the
Lessor Amount will be used only for the purpose of financing (i) the
acquisition of the Subject Property, (ii) the payment of the Transaction
Expenses incurred in connection therewith and (iii) such other purposes, if
any, as may be indicated on the closing statements prepared by the Escrow Agent
or the Advance Request. None of the proceeds from the Notes or the funding of
the Lessor Amount will be used to purchase or carry (or refinance any borrowing
the proceeds of which were used to purchase or carry) any “security” within the
meaning of the Securities Exchange Act of 1934, as amended.


 


(h)           Financial Information. (i) The audited consolidated balance sheets
of the Lessee and its Subsidiaries as of December 31, 2005 and the related
audited consolidated statements of income, stockholder equity and cash flows
for the fiscal year ending December 31, 2005, accompanied by a report
thereof containing an opinion unqualified as to scope limitations imposed by
the Lessee and otherwise without qualification (copies of which are available
on EDGAR), have been prepared in accordance with GAAP consistently applied, and
correctly set forth in all material respects the financial condition of the
Lessee and its Subsidiaries as of such date and the results of its operations,
earnings and cash flows for the period then ended.


 


(ii)           Since December 31, 2005, there has been
no event, circumstance or condition which could reasonably be expected to have
a Material Adverse Effect.


 


(i)            Creation of Liens;
Permitted Liens. (i) On
the Closing Date, (i) all filings necessary or reasonably requested by the
Required Participants to establish and perfect the Lessor’s title to and
interest in the Subject Property and the Lessee Collateral as against the
Lessee and any third parties and to perfect the lien and security interest of
the Lessor under the Lease in the Leased Property and the other Lessee
Collateral as against creditors of and purchasers from the Lessee have been
duly made, and the Lease will on the Closing Date create a valid and perfected
first priority lien and security interest in the Leased Property and the other
Lessee Collateral effective as against creditors of and purchasers from the
Lessee securing the payment of all obligations of the Lessee under the
Operative Documents, and (ii) all filings necessary or reasonably requested
by the Required Participants to perfect the lien and security interest of the
Collateral Agent under the Assignment of Leases and Rents and the Deed of Trust with respect to the Subject Property and
the other Lessee Collateral and Lessor Collateral as against creditors of and
purchasers from the Lessee and the Lessor have been duly made, and the
Assignment of Leases and Rents and the Deed of Trust will on the Closing Date
create a valid and perfected first priority lien and security interest in the
Subject Property and the other Lessee Collateral and Lessor Collateral
effective as against creditors of and purchasers from the Lessee and Lessor
securing the payment of all obligations of the Lessee and Lessor under the
Operative Documents; and


 


(ii)           The Subject Property is free and clear of all
Liens other than Permitted Liens.


 


23

















 


(j)            Insurance. On the
Closing Date, the Subject Property will be covered by the insurance required by
Section 13.1 of the Lease to the extent set forth therein.


 


(k)           Absence of Defaults; Fulfillment
of Master Agreement. (A)(i) No Default or Event of Default
has occurred and is continuing, (ii) the Lessee is not or, but for the
passage of time, would be in violation in any material respect of any term of
any charter instrument or by-law to which it is a party or by which it may be
bound, (iii) the Lessee is not or, but for the passage of time, would be
in violation in any respect of any term of any agreement or instrument to which
it is a party or by which it may be bound, except as would not have a Material
Adverse Effect, (iv) the Lessee is in compliance with all laws,
ordinances, governmental rules and regulations to which it is subject, the
failure to comply with which would have a Material Adverse Effect and
(v) the Lessee has obtained all licenses, permits, franchises and other
governmental authorizations material to the conduct of its business, except
where the failure to so obtain would not have a Material Adverse Effect;


 


(B)           No default
has occurred or is continuing (i) with respect to the Tenant, under and as
defined in, the Ground Lease, (ii) with respect to the Seller under any
Related Agreement or (iii) with respect to any other party under any
Related Agreement which, in the case of this clause (iii) only, would
have a Material Adverse Effect; and


 


(C)           All
obligations of CSC under, and as defined in, the Master Agreement have been
fully discharged.


 


(l)            Sale of Notes and Funding of
Lessor Amount. The execution and delivery of this
Agreement and the issue and sale of the Notes and the funding of Lessor Amount
under the Operative Documents will not involve any transaction which is subject
to the prohibitions of Section 406 of ERISA or in connection with which a
tax could be imposed pursuant to Section 4975 of the Code. The
representation by the Lessee in the preceding sentence is made in reliance upon
and subject to the accuracy of the representations of the Participants in
Section 8.1(a).


 


(m)          No Transfer Taxes. On the
Closing Date, all sales, use or transfer taxes payable required to be paid as
of the Closing Date upon the acquisition by the Lessor of the Subject Property
and on the lease of the Leased Property to the Lessee will have been paid (or
provision for the payment thereof shall have been made) or such transactions
will then be exempt from any such taxes and no taxes, fees or other charges in
connection with the execution and delivery of the Operative Documents or the
issuance and sale of the Notes and the funding of Lessor Amount are payable.


 


(n)           Taxes. The Lessee has filed all tax returns that
are required to have been filed by it in any jurisdiction, or has timely filed
extension requests with respect thereto, and has paid all taxes shown to be due
and payable on such returns and all other taxes and assessments levied upon it
or its properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent,
except for any taxes and assessments (i) the amount of which if not paid


 


24

















 


would not
result in a Material Adverse Effect or (ii) the amount, applicability or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which the Lessee has established adequate
reserves in accordance with GAAP. The Lessee knows of no basis for any other
tax or assessment that could reasonably be expected to have a Material Adverse
Effect on any of them. The charges, accruals and reserves on the books of the
Lessee in respect of Federal, state or other taxes for all fiscal periods are adequate.


 


(o)           Solvency. The Lessee
is Solvent.


 


(p)           Location of Chief Executive
Office and Principal Place of Business; Formation. The Lessee’s
chief executive office and principal place of business is 7000 West William
Cannon Drive, Austin, TX 78735, and the place where its records concerning
the Leased Property and all documents relating thereto are kept, is either
(i) 7000 West William Cannon Drive, Austin, TX 78735 or
(ii) 4635 Boston Lane, Austin, TX 78735. The Lessee is only formed in the
State of Delaware and “Silicon Laboratories Inc.” is the name as it appears in
the official filings in the State of Delaware.


 


(q)           Title to Property; Leases. (i) The
Lessee has good and marketable title to all of the properties and other assets
(real or personal, tangible, intangible or mixed) it owns or purports to own,
except for such defects in title as, in the aggregate, would not have a
Material Adverse Effect on any of them.


 


(ii)           Leases. All leases
to which the Lessee is a party as lessee or sublessee are in full force and
effect, except for such defects in title and such invalidity or
unenforceability of leases as, in the aggregate, would not have a Material
Adverse Effect on any of them.


 


(r)            Not an Investment Company/Public
Utility Holding Company. The Lessee is not an “investment company”
or a company “controlled” by an “investment company” as defined in, or subject
to regulation under, the Investment Company Act of 1940 or subject to
regulation under the Public Utility Holding Company Act of 1935.


 


(s)           Full Disclosure. No
information, report, financial statement, exhibit or schedule furnished by or
on behalf of the Lessee to the Lenders and the Lessor in connection with the
negotiation of any Operative Document or included therein or delivered pursuant
thereto contained or contains any material misstatement of fact or omitted or
omits to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were, are or will be made, not
misleading.


 


(t)            Compliance with ERISA. (i) The
Lessee and each other member of the ERISA Group have operated and administered
each Plan in compliance with all applicable laws except for such instances of
noncompliance as have not resulted in and could not reasonably be expected to result
in a Material Adverse Effect on any of them. Neither the Lessee nor any other
member of the ERISA Group has incurred any liability with respect to any Plan
pursuant to Title I or IV of ERISA (other than routine benefit


 


25

















 


claims in
accordance with Plan provisions) or the penalty or excise tax provisions of the
Code relating to employee benefit plans (as defined in Section 3 of
ERISA), and no event, transaction or condition has occurred or exists that could
reasonably be expected to result in the incurrence of any such liability by the
Lessee or any other member of the ERISA Group, or in the imposition of any Lien
on any of the rights, properties or assets of the Lessee or any ERISA Group, in
either case pursuant to Title I or IV of ERISA or to such penalty or excise tax
provisions or to Section 401(a)(29) or 412 of the Code, other than such
liabilities or Liens as would not individually or in the aggregate result in a
Material Adverse Effect.


 


(ii)           The present
value of the aggregate benefit liabilities under each of the Plans (other than
Multiemployer Plans), determined as of such Plan’s most recently ended plan
year for which an actuarial report has been prepared on the basis of the
actuarial assumptions specified for funding purposes in such Plan’s most recent
actuarial valuation report, did not exceed the aggregate current value of the
assets of such Plan allocable to such benefit liabilities by more than $0 on a
non-termination basis in the case of any single Plan and by more than $0 on a
non-termination basis in the aggregate for all Plans. The term “benefit
liabilities” has the meaning specified in section 4001 of ERISA and the
terms “current value” and “present value” have the meanings specified in section 3
of ERISA. All calculations shall be made under Section 302 of ERISA.


 


(iii)          The Lessee
and the other member of the ERISA Group have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are Material.


 


(iv)          The expected
post-retirement benefit obligation (determined as of the last day of the Lessee’s
most recently ended fiscal year in accordance with Financial Accounting
Standards Board Statement No. 106, without regard to liabilities attributable
to continuation coverage mandated by section 4980B of the Code) of the
Lessee has been disclosed in the most recent Annual Report on Form 10-K
filed by the Lessee with the Securities and Exchange Commission.


 


(u)           [Intentionally Omitted.]


 


(v)           Environmental Matters.


 


(i)            In the
ordinary course of its business, the Lessee from time to time conducts reviews
of the effect of Environmental Laws on its business, operations and properties,
in the course of which it attempts to identify and evaluate associated
liabilities and costs. On the basis of this review, the Lessee has concluded
that it is not subject to any Environmental Claims under Environmental Laws in
effect as of the Closing Date that are likely to have a Material Adverse
Effect;


 


26

















 


(ii)           As of the
Closing Date, to the knowledge of the Lessee, no Environmental Claims,
investigation or written inquiry exists, and the Lessee is not aware of any
circumstances which would warrant or give rise to such an Environmental Claim,
investigation or inquiry, with regard to the Lessee or any facility owned,
leased or operated by the Lessee, under CERCLA, Environmental Laws in effect on
the Closing Date that are likely to have a Material Adverse Effect;


 


(iii)          except as
otherwise could not reasonably be expected to have a Material Adverse Effect,
the Subject Property (including soils,
surface waters, groundwaters on, at or under the Subject Property) does not
contain and is not otherwise affected by, and to the Lessee’s knowledge (other
than certain Hazardous Substances that previously have been cleaned up or
remediated in accordance with applicable commercial laws and which do not have
a Material Adverse Effect) has not previously contained or been affected by,
any Hazardous Substances in amounts or concentrations which (1) constitute
or constituted a violation of applicable Environmental Laws or (2) could
give rise to liability or obligation under applicable Environmental Laws;


 


(iv)          except as
otherwise could not reasonably be expected to have a Material Adverse Effect,
the Subject Property and all operations conducted in connection therewith are
in compliance, and have been in compliance, with all applicable Environmental
Laws, and there are no Hazardous Substances at, under or about the Subject
Property or such operations which could reasonably be expected to interfere
with the continued operation of the Subject Property;


 


(v)           except as
otherwise could not reasonably be expected to have a Material Adverse Effect,
the Lessee has obtained, is in compliance with, and has made all appropriate
filings for issuance or renewal of, all environmental permits with respect to
the Subject Property, and all such environmental permits are in full force and
effect;


 


(vi)          except as
otherwise could not reasonably be expected to have a Material Adverse Effect,
Lessee has not received any notice of violation, alleged violation,
noncompliance, liability or potential liability regarding environmental matters
or compliance with Environmental Laws, in each case, with respect to the
Subject Property, nor does Lessee have knowledge or reason to believe that, any
such notice has been received by Seller or will be received or is being
threatened;


 


(vii)         except as
otherwise could not reasonably be expected to have a Material Adverse Effect,
Hazardous Substances have not been transported or disposed of from the Subject
Property in violation of, or in a manner or to a location which could
reasonably be expected to give rise to liability under, applicable
Environmental Laws, nor have any Hazardous Substances been generated, treated,
stored or disposed of at, on or under the Subject Property in


 


27

















 


violation of,
or in a manner which could reasonably be expected to give rise to liability
under, any applicable Environmental Laws;


 


(viii)        except as
otherwise could not reasonably be expected to have a Material Adverse Effect,
no judicial proceedings or governmental or administrative action is pending, or
threatened, under any applicable Environmental Law with respect to the Subject
Property, nor are there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or judicial
requirements outstanding under any applicable Environmental Law with respect to
the Subject Property; and


 


(ix)           except as
otherwise could not reasonably be expected to have a Material Adverse Effect,
there has been no release, or threat of release, of Hazardous Substances at or
from the Subject Property, in violation of or in amounts or in a manner that
could reasonably be expected to give rise to liability under applicable
Environmental Laws.


 


(w)          Applicable Law. The Subject
Property and the contemplated use thereof is in material compliance with all
Applicable Law (including, without limitation, all zoning and land use laws and
Environmental Laws) and Insurance Requirements, except for Applicable Laws as
it shall be contesting in good faith by appropriate proceedings. There is no
action, suit or proceeding (including any proceeding in condemnation or eminent
domain or under any Environmental Law) pending or, to the best of its
knowledge, threatened with respect to it, or the Subject Property which could
reasonably be expected to have a Material Adverse Effect.


 


(x)            USA Patriot Act. Neither
Lessee nor any Subsidiary (A) is a Person described or designated in the
Specially Designated Nationals and Blocked Persons List of the Office of
Foreign Assets Control or in Section 1 of the Anti-Terrorism Order or
(B) engages in any material dealings or transactions with any such Person.
Lessee and its Subsidiaries are in compliance with the USA Patriot Act.


 


(y)           Flood Hazard Area. No portion
of the Subject Property is located in an area identified as a special flood
hazard area by the Federal Emergency Management Agency or other applicable
agency.


 


(z)            [Intentionally Omitted].


 


(aa)         Purchase Agreement. To Lessee’s
actual knowledge, as of the Closing Date each of the representations and
warranties of the Seller set forth in the Purchase Agreement is true and
correct.


 


(bb)         Rights in Respect of the Subject
Property.


 


(i)            The Subject
Property is located in City of Austin, Travis County, Texas. The
Subject Property and any present use and presently anticipated future


 


28

















 


use
thereof by Lessee and its agents, assignees, employees, invitees, lessees,
licensees and tenants comply with all Requirements of Law (including zoning and
land use laws) and Insurance Requirements, except for such instances of
non-compliance that could not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect. No notices, complaints or orders
of violation or non-compliance or liability have been issued to the Lessee or,
to the best of its knowledge, threatened by any Person with respect to the
Subject Property or the present or intended future use thereof, except
for such violations and instances of non-compliance as could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect,
and Lessee is not aware of any circumstances which could give rise to the
issuance of any such notices, complaints or orders;


 


(ii)           The
Improvements are located wholly within the boundaries of the Land (other than
as indicated in the survey delivered pursuant to Section 6.1(q) hereof)
and comply with applicable building restrictions and requirements, and setback
and sideyard lines and will not encroach on or interfere with existing
easements (whether on, above or below ground), conditions or restrictions
affecting the Subject Property and that there are
no encroachments (other than as indicated in the survey delivered pursuant to
Section 6.1(q) hereof) from the Subject Property extending to adjacent
property or from adjacent property onto the Subject Property nor are there any
gapes or gores;


 


(iii)          The zoning
classification applicable to the Land on which the Subject Property is located
(which zoning classification and the governmental bodies have jurisdiction
thereof shall be described) permits the use of the Leased Property as
contemplated by the Operative Documents. All licenses, permits and approvals
necessary for the operation and use of the Leased Property have been obtained
and are in full force and effect and that the Subject Property and the
operation of the Leased Property as contemplated by the Operative Documents
will comply with all Requirements of Law in existence as of the Closing Date,
except where non-compliance would not result in a Material Adverse Effect;


 


(iv)          Adequate
ingress and egress to and from the Subject Property is available over dedicated
and accepted public streets and rights-of-way;


 


(v)           Adequate
utility facilities are available to the Subject Property over dedicated and
accepted public streets and rights of way; and


 


(vi)          Any
exceptions to the title of the Lessor to the Subject Property do not
individually or in the aggregate materially have a Material Adverse Effect.


 


(cc)         Casualties and Condemnations. As of the
Closing Date, no Casualty has occurred and is continuing and there is no action
pending or, to the best of the Lessee’s knowledge, threatened by any
Governmental Authority to initiate a Condemnation.


 


29

















 


(dd)         Subjection to Government
Regulation. As of the Closing Date, to the Lessee’s
knowledge neither Collateral Agent nor any Participant will, solely by reason
of entering into the Operative Documents or consummating the transactions
contemplated thereby, (i) become subject to ongoing regulation of its
operations by any Governmental Authority; or (ii) become subject to ongoing
regulation of its operations by any Governmental Authority upon exercise of
remedies (other than the operation of the Subject Property) under the Operative
Documents or upon the expiration thereof; or (iii) be required to qualify to do
business in any jurisdiction.


 


(ee)         Appraisal Data. To the Lessee’s
knowledge, the written information provided by Lessee to the Appraiser, taken
as a whole, was true and correct in all material respects on the date so given
and did not omit any information known and available to Lessee necessary to
make the information provided not misleading.


 


(ff)           Related Agreements. (i)
Schedule I to the Deed of Trust sets forth a complete and accurate list as
of the Closing Date of each Related Agreement; and


 


(ii)           Except for
the agreements set forth on Schedule 8.2(ff) which may terminate, as of
the Closing Date, (x) the Ground Lease and (y) except as would not
have a Material Adverse Effect, each other Related Agreement is in all material
respects valid, binding and in full force and effect and is enforceable by Lessor
against the other parties thereto in accordance with its terms, except as
affected by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws affecting creditors’ rights generally and general
equitable principles (whether in equity or at law). As of the Closing Date, no
party (A) under the Ground Lease or, (B) except as would not have a
Material Adverse Effect or except with regard to the agreements set forth on
Schedule 8.2(ff) hereto, under any other Related Agreement has given notice
of termination of, or taken any action inconsistent with the continuation of,
the Ground Lease or any other Related Agreement. As of the Closing Date, none
of such other parties will have any presently exercisable right to terminate
the Ground Lease or, except as would not have a Material Adverse Effect or
except with regard to the agreements set forth on Schedule 8.2(ff) hereto,
any other Related Agreement for any reason, including as a result of the
execution, delivery or performance of the Operative Documents.


 


(gg)         Offer of Securities, Etc. Neither
the Lessee nor (assuming the accuracy of the representations of the
Participants set forth in Sections 8.1(i) and 8.4(g) hereof) any Person
authorized to act on its behalf has, directly or indirectly, offered to sell
the Notes, the Lessor’s Interest or any other similar securities (the sale or
offer of which would be integrated with the sale or offer of the Notes or the
Lessor’s Interest), for sale to, or solicited any offer to acquire any of the
same from, any Person other than the Participants and other “accredited investors” (as defined in Regulation D of the
Securities and Exchange Act).


 


(hh)         Subleases; Assignments. Other than
the subleases that constitute Related Agreements and assignments that are referenced
in the definition of Related Agreements, as of the Closing Date, there are no
other subleases or assignments in effect with respect


 


30

















 


to
the Subject Property, other than such other subleases or assignments which do
not have a Material Adverse Effect.


 


Section 8.3.           [Intentionally Omitted].


 


Section 8.4.           Representations and Warranties of Lessor. Lessor
hereby represents and warrants to each of the other parties hereto as that as
of the date hereof and as of the Closing Date:


 


(a)           Power and Authority. The Lessor
has the requisite power and authority to enter into and perform its obligations
under the Operative Documents to which it is a party.


 


(b)           Lessor Liens. There are
no Lessor Liens attributable to Lessor on the Leased Property or the other
Lessor Collateral.


 


(c)           Organization, Etc. The Lessor
is a corporation validly organized and existing and in good standing under the
laws of the State of Delaware.


 


(d)           Investment. The Lessor’s
Interest being acquired by the Lessor as of the Closing Date is being acquired
by Lessor for investment and not with a view to the resale or distribution of
such interest or any part thereof, but without prejudice, however, to the right
of Lessor at all times, subject to Article XII, to sell or otherwise
dispose of all or any part of such interest under a registration available
under the Securities Act or under an exemption from such registration available
under the Securities Act, it being understood that the disposition by Lessor of
the Lessor’s Interest to be purchased by Lessor shall, at all times, remain
within its control, subject to Article XII.


 


(e)           Offer of Securities, Etc. Neither
the Lessor nor any Person authorized to act on its behalf has, directly or
indirectly, offered to sell the Lessor’s Interest or any other similar
securities (the sale or offer of which would be integrated with the sale or
offer of the Lessor’s Interest), for sale to, or solicited any offer to acquire
any of the same from, any Person.


 


(f)            No Registration. The Lessor
understands and acknowledges that the Lessor’s Interest has not been and will
not be registered under the Securities Act in reliance upon the exemption
provided in Section 4(2) of the Securities Act or any other applicable exemption,
that the Lessor’s Interest has not and will not be registered or qualified
under the securities or “blue sky” laws of any jurisdiction, that the Lessor’s
Interest may be resold or otherwise transferred only if so registered or
qualified or if an exemption from registration or qualification is available,
that none of the Lessee, the Lenders or the Collateral Agent is required to
register the Lessor’s Interest and that any transfer must comply with the
provisions of the Operative Documents relating thereto. The Lessor will comply
with all applicable federal and state securities laws in connection with any
subsequent resale of the Lessor’s Interest held by it.


 


31

















 


(g)           Institutional Investor. The Lessor
is a sophisticated institutional investor and an “accredited investor” as
defined in paragraph (1), (2), (3) or (7) of Rule 501(a) of the Securities
Act, and has knowledge and experience in financial and business matters and is
capable of evaluating the merits and risks of its investment in the Lessor’s
Interest and is able to bear the economic risk of such investment. The Lessor
has been given such information concerning the Lessor’s Interest, the other
Operative Documents, the Leased Property, the Collateral Agent, the Lenders and
the Lessee as it has requested.


 


(h)           ERISA. Lessor is
not and will not be Funding the Lessor Amount with the assets of an “employee
benefit plan” (as defined in Section 3(3) of ERISA) which is subject to Title I
of ERISA, or a “plan” (as defined in Section 4975(e)(1) of the Code.


 


(i)            Enforceability, Etc. Each
Operative Document to which Lessor is a party constitutes the legal, valid and
binding obligation of Lessor enforceable against it in accordance with the
terms thereof, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
the enforcement of creditors’ rights generally and by general equitable
principles.


 


Section 8.5.           Representations and Warranties of Wells Fargo Bank Northwest, National
Association, individually and as Collateral Agent. Collateral
Agent and Wells Fargo Bank Northwest, National Association, in its individual
capacity and not in its capacity as Collateral Agent, each severally hereby
represents and warrants to each of the other parties hereto that as of the date
hereof and as of the Closing Date:


 


(a)           Organization and Authority. It is duly
organized as a national banking association under the laws of the United
States, and has the power and authority to enter into and perform its
obligations under the Operative Documents.


 


(b)           Authorization; Binding Effect. The
Operative Documents to which Collateral Agent is or will be a party have been
or will be, on the date required to be delivered hereby, duly authorized,
executed and delivered by the Collateral Agent. This Participation Agreement
is, and each such other Operative Document is, or, when so executed and
delivered by the Collateral Agent will be, the valid, legal and binding
obligation of the Collateral Agent, enforceable against the Collateral Agent in
accordance with their respective terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors’ rights generally and by general
principles of equity.


 


(c)           Non-Contravention. Neither
the execution and delivery by the Collateral Agent of the Operative Documents
to which it is or will be a party, either in its individual capacity, or as
Collateral Agent, or both, nor compliance with the terms and provisions
thereof, conflicts with, results in a breach of, constitutes a default under
(with or without the giving of notice or lapse of time or both), or violates
any of the terms, conditions or provisions of: 
(i) its charter documents or bylaws; (ii) any bond, debenture,
note, mortgage, indenture, agreement, lease or other instrument to which it is
now a party or by which it or its property, either in its individual capacity,
or as Collateral Agent, or both, is


 


32

















 


bound
or affected, where such conflict, breach, default or violation would be
reasonably likely to materially and adversely affect the ability of the
Collateral Agent, either in its individual capacity, or as Collateral Agent, or
both, to perform its obligations under any Operative Document to which it is or
will be a party, either in its individual capacity, or as Collateral Agent, or
both; or (iii) any of the terms, conditions or provisions of any law,
rule, regulation, order, injunction or decree of any United States Governmental
Authority governing the banking or trust powers of Wells Fargo Bank Northwest,
National Association or Governmental Authority of the State of Utah, either in
its individual capacity or as Collateral Agent, or both, where such conflict,
breach, default or violation would be reasonably likely to materially and
adversely affect the ability of the Collateral Agent, either in its individual
capacity or as the Collateral Agent or both, to perform its obligations under
any Operative Document to which it is or will be a party.


 


(d)           Absence of Litigation, etc. There is
no litigation (including derivative actions), arbitration or governmental
proceedings pending or, to the best knowledge of the Collateral Agent,
threatened against it which would be reasonably likely to have material adverse
effect on the Collateral Agent’s ability to perform its obligations under the
Operative Documents to which it is or will be a party.


 


(e)           Governmental Actions. No action,
consent or approval of, registration or filing with or any other action by any
United States Governmental Authority governing the banking or trust powers of
Wells Fargo Bank Northwest, National Association, is or will be required for
the execution, delivery or performance by the Collateral Agent of the Operative
Documents to which it is a party, either in its individual capacity or as the
Collateral Agent or both or in connection with the Overall Transaction, except
those which have been made or obtained or will be obtained on a timely basis in
the ordinary course of the Collateral Agent’s business, and which are and shall
remain in full force and effect.


 


ARTICLE IX



COVENANTS OF LESSEE


 


Section 9.1.           Lessee Covenants. The Lessee covenants that, until such
time as the earlier to occur of the date when: 
(i) the Lease Balance has been paid in full or (ii) Lessee returns the
Leased Property to the Lessor pursuant to Section 20.3 of the Lease, the Lessee
will comply with the following provisions:


 


(a)           Statutory Compliance. Lessee
will comply in all material respects with all valid and applicable statutes,
laws, ordinances, zoning and building codes and other rules and regulations of
the United States of America, of the states and territories thereof and their
counties, municipalities and other subdivisions and of any foreign country or
other jurisdictions applicable to such Person, unless failure to comply would
not have a Material Adverse Effect.


 


(b)           [Intentionally Omitted.]


 


33

















 


(c)           Fiscal Year, Financial Statements Etc.


 


(i)            Date of Annual Financial
Statements. The annual financial statements of the
Lessee will be dated as of December 31 if such date occurs on a Saturday
or, if not, as of the Saturday nearest to December 31 in each year, unless
Lessee changes its fiscal year.


 


(ii)           Annual Financial Statements;
Compliance Certificate. The Lessee will furnish to each
Participant and the Collateral Agent as soon as available, and in any event
within 90 days after the end of each fiscal year, the consolidated balance
sheets and statements of income, stockholders’ equity and cash flows of the
Lessee as at the end of such fiscal year (in reasonable detail), setting forth
in comparative form the corresponding figures for the previous fiscal year and
accompanied by (A) a report of independent certified public accountants of
recognized national standing which are acting as the Lessee’s auditors stating
that such financial statements have been prepared in accordance with GAAP and
fairly present the consolidated financial position and results of operations of
the Lessee as at the end of and for such fiscal year, and without an
explanatory paragraph for a going concern uncertainty (provided
that so long as the Lessee is a reporting company under the Securities Exchange
Act of 1934, as amended, the Participants shall be deemed to have been
furnished the foregoing financial statements to the extent such financial
statements are posted within such time period on EDGAR) and (B) a
certificate of the Lessee signed by a Financial Officer to the effect that the
Financial Officer has no knowledge of any Default, or if such Financial Officer
has such knowledge, specifying such Default and the nature thereof, and what
action the Lessee has taken, are taking or propose to take with respect
thereto, together with a schedule, in form reasonably satisfactory to the
Participants, of the computations used by the Lessee in determining compliance
with the covenants contained in Sections 9.1(p) and (q).


 


(iii)          Quarterly Financial Statements;
Compliance Certificate. The Lessee will furnish to each
Participant and the Collateral Agent as soon as available and, in any event,
within 45 days after the end of each of the first three fiscal quarters of the
Lessee, the internally prepared consolidated balance sheets and statements of
income and cash flows of the Lessee as of the end of such fiscal quarter, in
all comparative form (provided that
so long as the Lessee is a reporting company under the Securities Exchange Act
of 1934, as amended, the Participants shall be deemed to have been furnished
the foregoing financial statements to the extent such financial statements are
posted within such time period on EDGAR) accompanied by a certificate of the
Lessee signed by a Financial Officer to the effect that such financial
statements have been prepared in accordance with GAAP (subject to normal year-end
adjustments), together with a schedule in form reasonably satisfactory to the
Participants, of the computations by the Lessee in determining compliance with
the covenants contained in Sections 9.1(p) and (q).


 


34

















 


(iv)          Notice of Litigation, Defaults,
Etc. The Lessee will, subject to Section 16.15,
(A) promptly furnish to each Participant written notice of any litigation
or any administrative or arbitration proceeding (x) which creates a
material risk of resulting, after giving effect to any applicable insurance, in
the payment by Lessee of more than $20,000,000, or (y) which has, or
creates a material risk of having, a Material Adverse Effect and
(B) promptly, and in any event within ten (10) Business Days of a
Responsible Officer acquiring knowledge thereof, notify each Participant in
writing of the existence of any Default or Event of Default, specifying the
nature thereof and what action the Lessee has taken, is taking or propose to
take with respect thereto.


 


(v)           Other Information. The Lessee
will maintain accurate books, accounts and records of the financial affairs of
the Lessee and its Subsidiaries sufficient to permit the preparation of
financial statements therefrom in accordance with GAAP and will prepare all
financial statements required hereunder in accordance with GAAP and in compliance
with the regulations of any Governmental Authority having jurisdiction thereof.
The Lessee will provide copies to each Participant, promptly after the sending,
making available or filing of all reports and financial statements which the
Lessee sends or makes available to its stockholders, and all registration
statements and amendments thereto, and all reports on Form 8-K or any similar
form hereafter in use which the Lessee files with the Securities and Exchange
Commission; provided that so long as the Lessee is a
reporting company under the Securities and Exchange Act of 1934, as amended,
the Participants shall be deemed to have been furnished with the foregoing
reports, financial statements, registration statements and amendments thereto,
reports on Form 8-K or any similar form to the extent such documents are posted
within such time period on EDGAR. At any time (i) the Lessee ceases to be
a reporting company under the Securities and Exchange Act of 1934, as amended,
or (ii) an Event of Default has occurred or is continuing, (A) from
time to time at reasonable intervals upon the request of any authorized officer
of any Participant and subject to Section 16.15, Lessee will furnish to
each Participant such other information regarding the business, assets,
financial condition, income or prospects of the Lessee as such officer may
reasonably request and (B) subject to Section 16.15, Lessee will
permit, representatives and independent contractors of the Collateral Agent or
any Participant to visit and inspect any of its properties, to examine its
corporate, financial and operating records, and make copies thereof or
abstracts therefrom, and to discuss its affairs, finances and accounts with its
directors, officers, and independent public accountants, all at the expense of
Lessee and at such reasonable times during normal business hours and as often
as may be reasonably desired, upon reasonable advance notice to Lessee, in each
case at the expense of Lessee at any time during normal business hours and
without advance notice.


 


35

















 


(d)           Transactions with Affiliates. Lessee will
not effect any transaction with any of its respective Affiliates on a basis
less favorable to Lessee than would be the case if such transaction had been
effected with a non-Affiliate.


 


(e)           Environmental Laws.


 


(1)           Compliance with Law and Permits. Lessee
will use and operate the Subject Property in compliance with all Environmental
Laws, keep all necessary permits, approvals, certificates, licenses and other
authorizations relating to environmental matters in effect and remain in
compliance therewith, and handle all Hazardous Substances in compliance with
all applicable Environmental Laws, other than an immaterial violation of which
could not reasonably be expected to have a Material Adverse Effect.


 


(2)           Notice of Claims, Etc. Lessee
will immediately notify each Participant, and provide copies upon receipt, of
all written material claims, complaints, notices or inquiries from governmental
authorities received by Lessee relating to the condition of the Subject
Property or compliance with Environmental Laws. The Lessee will promptly cure
and diligently defend any actions and proceedings relating to compliance of the
Subject Property with Environmental Laws by the Lessee.


 


(f)            Payment of Taxes, Etc. Lessee will file all tax returns
required to be filed in any jurisdiction and pay and discharge, before the same
become delinquent, (i) all Taxes, assessments and governmental charges or
levies imposed upon it or upon its property and (ii) all lawful claims
that, if unpaid, might by law become a Lien upon its property; provided, however, that unless and until any Lien resulting
therefrom attaches to its property and becomes enforceable against its other
creditors, no payment will be required if such Tax, assessment, charge, levy or
claim is being contested in good faith and by proper proceedings for which
adequate reserves determined in accordance with GAAP have been established (and
as to which property subject to any such Lien is not yet subject to
foreclosure, sale or loss on account thereof) or where the failure to make such
payment would not have a Material Adverse Effect.


 


(g)           Preservation of Existence, Etc. Lessee
will preserve and maintain (i) its existence, good standing, legal
structure and state of incorporation necessary or desirable in the normal
conduct of its business and (ii) except as could not be reasonably
expected to have a Material Adverse Effect, its rights (charter and statutory),
permits, licenses, approvals, privileges and franchises.


 


(h)           Compliance with Terms of Related Agreements; Notices. (i) Lessee,
on behalf of Lessor, will be responsible for and comply with and perform all
obligations agreements and covenants of Lessor set forth in the Related
Agreements or as may otherwise be required to be performed by Lessor with
respect to the Subject Property pursuant to Applicable Law, Governmental
Actions or third parties with respect to the property subject thereto,
including without limitation, the payment of all rents and any


 


36

















 


other
amounts payable by the Lessor thereunder and (ii) upon receipt thereof,
Lessee will promptly provide each Participant with copies of any and all
(x) notices of default, (y) notices of termination and (z) any
other information that could reasonably be expected to have a Material Adverse
Effect, in each case, received by Lessee under any of the Related Agreements.


 


(i)            Use of Proceeds. Lessee will use the proceeds of the
Advance hereunder exclusively for the purposes set forth herein and as
described in the Advance Request.


 


(j)            Changes in Accounting. Lessee will not make any material change
in accounting treatment or reporting practices, except as required or permitted
by GAAP.


 


(k)           [Intentionally Omitted.]


 


(l)            [Intentionally Omitted.]


 


(m)          Compliance with ERISA; Notices. (i) Lessee
will, and shall cause each ERISA Group Person to: (A) maintain each Plan in
compliance in all material respects with the applicable provisions of ERISA,
the Code and other federal or state law; (B) cause each Plan which is
qualified under Section 401(a) of the Code to maintain such qualification; and
(C) make all required contributions to any Plan subject to Section 412 of the
Code; and


 


(ii)           As soon as
possible and in any event within 30 days after receipt thereof by any Lessee
or, to the extent Lessee has knowledge thereof, by any ERISA Group Person, the
Lessee will deliver to each Participant copies of each notice from the PBGC
stating its intention to terminate any Plan or to have a trustee appointed to
administer a Plan. As soon as possible and in event within 30 days after
receipt thereof by Lessee or, to the extent Lessee has knowledge thereof, by
any ERISA Group Person from the sponsor of a Multiemployer Plan, copies of each
notice concerning (A) the imposition of withdrawal liability by any such
Multiemployer Plan, (B) the reorganization or termination, within the
meaning of Title IV of ERISA, of any such Multiemployer Plan, or (C) the
amount of liability incurred, or that may be incurred, by Lessee or ERISA Group
Person in connection with any event described in clause (A) or (B).


 


(n)           [Intentionally Omitted.]


 


(o)           Consolidation and Merger. The Lessee
will not merge, consolidate, liquidate, wind up or dissolve itself (or suffer
any liquidation or dissolution); provided that
notwithstanding the foregoing provisions of this clause (o), if after giving
effect to a merger or consolidation no Default or Event of Default exists, the
Lessee may merge or consolidate with any other Person if either (A) the Lessee
shall be the continuing or surviving corporation or (B) the Lessee shall not be
the continuing or surviving corporation and the corporation or other legal
entity so continuing or surviving (x) is a corporation or other legal entity
organized and duly existing under the law of any state of the United States and
(y) executes and delivers to the Collateral Agent and the


 


37

















 


Participants
an instrument in form and substance reasonably satisfactory to the Required
Participants pursuant to which it expressly assumes all of the obligations of
the Lessee under the Operative Documents, and procures for the Collateral Agent
and each Participant an opinion in form reasonably satisfactory to the Required
Participants and from counsel reasonably satisfactory to the Required
Participants in respect of the due authorization, execution, delivery and
enforceability of such instrument.


 


(p)           Cash. Lessee will not permit its Cash on a
consolidated basis at any time to be less than $75,000,000.


 


(q)           Funded Debt to EBITDAR. The Lessee will maintain
on a consolidated basis as of the last day of each fiscal quarter a ratio of
Funded Debt to EBITDAR for the four consecutive fiscal quarters ended as of
such day of not more than 1.50 to 1.00.


 


ARTICLE X



OTHER COVENANTS AND AGREEMENTS


 


Section 10.1.        Covenants of the Participants and the Collateral Agent.


 


(a)           Lessor Liens. Each of
the Participants (severally and not jointly with any other Participants) and
the Collateral Agent hereby agrees that so long as this Participation Agreement
is in effect it:


 


(i)            will not
create, incur, assume or suffer to exist any Lessor Lien attributable to it
upon the Lease or the Leased Property (other than as contemplated by any of the
Operative Documents); and


 


(ii)           will remove
any Lessor Lien created or incurred by it and use its best efforts to remove
any Lessor Lien attributable to it assumed or suffered to exist by it upon the
Lease or the Leased Property (other than the Liens of the Security Instruments
and such other Liens as are contemplated by any of the Operative Documents); provided, however, that any action taken pursuant to this
clause (ii) shall not limit the Lessee’s rights or remedies under any of the
Operative Documents.


 


(b)           Acceptance of Provisions of Lease. The
Participants and the Collateral Agent hereby acknowledge and accept the terms
of the Lease, including the provisions of Sections 15.2, 19.1, 19.2 and
20.1 of the Lease.


 


(c)           Depreciation. With
respect to any taxable year or portion thereof, prior to the Expiration Date,
neither the Lessor nor any Lender shall claim any federal or state or local tax
attributes or benefits (including depreciation) relating to the Subject
Property or any Modifications or otherwise claim ownership of the Subject
Property or any Modifications for federal, state or local tax purposes unless
required to do so by an appropriate taxing authority or after a clearly
applicable change in Applicable Laws or as a protective response to a proposed
adjustment by a Governmental Authority; provided, however,
that if an appropriate taxing


 


38

















 


authority shall require
Lessor or any Lender to claim any such federal or state tax attributes or
benefits or if it proposes to claim any such federal or state tax attributes or
benefits as a protective response, such Person shall promptly notify Lessee
thereof and shall permit Lessee to contest such requirement in a manner similar
to the contest rights provided in, and subject to any applicable limitation to
a contest contained in, Section 13.4(b).


 


(d)           Insolvency Proceedings. Each of
the Lenders, Lessor and Collateral Agent, in its individual capacity, the
Lessee covenants as to itself, not jointly with any other Person, that it shall
not (i) commence or join in any action, proceeding or other case with respect
to the Lessor under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, arrangement,
winding up, liquidation, dissolution, composition or other relief with respect
to indebtedness, (ii) seek appointment of a receiver, trustee, custodian or
other similar official with respect to the Lessor and for all or any
substantial benefit of the creditors of the Lessor, or (iii) take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in,
any of the acts set forth in this Section 10.1(h), except in each case, as
expressly permitted pursuant to the Loan Agreement upon the occurrence of a
Loan Agreement Event of Default.


 


(e)           Release of Documents. The
Collateral Agent hereby agrees that, upon a sale of the Subject Property
pursuant to Sections 15.1, 16.2, 18.1 or 20.1 of the Lease, payment of all
amounts due and owing from the Lessee under the Operative Documents or
repayment in full of all Loans and Lessor Amount and all other amounts due and
owing from Lessee under the Operative Documents to Collateral Agent and the Participants,
the Collateral Agent shall execute and deliver to the Lessee a release of any
Security Instrument, and releases of all other Liens created by the Operative
Documents, and termination statements for any financing statements relating to
the Subject Property or any of the Lessor Collateral which are then of record
naming the Collateral Agent as secured party or assignee thereof.


 


(f)            Release of Liens. Collateral
Agent hereby agrees with the Lessee (so long as no Event of Default shall have
occurred and be continuing) and the Lenders, except as otherwise expressly
authorized or otherwise permitted under the Operative Documents, not to release
the Lien of any of the Security Instruments on the Lessor Collateral.


 


(g)           Requested Information. From time to
time at Lessee’s request, Lessor shall provide Lessee with information similar
to the information provided by Lessor to Lessee on or before the Closing Date
with respect to ownership and control of the Lessor.


 


ARTICLE XI

LESSEE’S RIGHT OF QUIET ENJOYMENT


 


Notwithstanding anything
contained herein to the contrary, the provisions of Section 4.1 of the Lease
shall be applicable to the Participants and Collateral Agent under this
Participation Agreement and each Participant and Collateral Agent hereby agrees
to be bound by the provisions of such Section 4.1 of the Lease and to recognize
the Lessee’s rights to purchase the Subject Property as set forth in the Lease.


 


39

















 


ARTICLE XII



TRANSFERS OF PARTICIPANTS’ INTERESTS


 


Section 12.1.        Assignments. (a) All or any part of the
interest of any Lender in, to or under this Participation Agreement, the other
Operative Documents, the Leased Property and its Notes, Loans and Commitment
may be sold, assigned or transferred by such Lender at any time to any Person; provided, however, that (i) each such assignment shall
be of a constant, and not a varying, percentage of all such rights and
obligations being assigned, (ii) unless both parties to the assignment are
Participants immediately prior to giving effect to the assignment, the amount
of the Commitment of the assigning Lenders being assigned pursuant to each such
assignment shall not be less than $1,000,000 (or if less, the entire amount of
such Lender’s Commitment) and shall be an integral multiple of $100,000 (or
such Lender’s entire Commitment), (iii) each such assignment shall be to
an Eligible Assignee, (iv) the Lessor shall have received from the
assignee/transferee or the assignor/transferor a transfer fee in the amount of
$1,500, (v) each assignee or transferee shall have complied, as of the
date of the transfer or assignment, with the delivery requirements of
Section 12.3(a), and (vi) each assignee or transferee shall
(A) acknowledge in writing, addressed and delivered to each of the parties
to this Participation Agreement, that the obligations otherwise to be performed
by the assignor or transferor from and after the date of such transfer or
assignment under this Participation Agreement and all other Operative Documents
are its obligations, including the obligations imposed by this
Section 12.1(a) (and the transferor and transferee Lender shall deliver to
the Lessee, the Collateral Agent and the Lessor an Assignment Agreement, in
substantially the form of Exhibit F, executed by the assignee or
transferee) and (B) represent and warrant to Collateral Agent, each
Participant and the Lessee in writing each of the representations and
warranties as set forth in Section 8.1 and that:


 


(w)          it has the
requisite power and authority to accept such assignment or transfer and to
engage in the Overall Transaction;


 


(x)            it will not
take any action with respect to such Note that would violate any applicable
securities laws;


 


(y)           it will not
assign or transfer any interest in its Note except in compliance with this
Section 12.1; and


 


(z)            it will not
transfer any Note unless the proposed transferee makes the foregoing
representations and covenants.


 


Any transfer or
assignment made in violation of the above requirements shall not be effective
against the other parties to this Participation Agreement until such
requirements are satisfied. Lessee shall not be responsible for any costs or
expenses in connection with any such sale, assignment or other transfer.


 


(b)           Lessor may
sell, assign or transfer all, but not less than all, of the Lessor’s Interest
at any time to any Person; provided, however,
that (i) each such assignment shall be to an


 


40

















 


Eligible Assignee,
(ii) the Lessor shall give the Lessee, Collateral Agent and the Lenders at
least thirty (30) days’ prior written notice of such transfer, which notice
shall be conspicuously captioned “NOTICE OF TRANSFER: URGENT ATTENTION REQUIRED.
YOUR FAILURE TO RESPOND TO THIS NOTICE IN A TIMELY MANNER MAY RESULT IN A
TRANSFER OF THE LESSOR’S INTEREST IN THE SUBJECT PROPERTY WITHOUT YOUR CONSENT”,
shall make specific reference to the Lease and this Section 12.1(b) in
particular and shall include the name of the assignee or transferee,
(iii) each assignee or transferee shall have complied with the delivery
requirements of Section 12.3(a), and (iv) each assignee or transferee
shall (A) acknowledge in writing, addressed and delivered to each of the
parties to this Participation Agreement, that the obligations otherwise to be
performed by the assignor or transferor from and after the date of such
transfer or assignment under this Participation Agreement and all other
Operative Documents are its obligations, including the obligations imposed by
this Section 12.1(b) (and the transferor and transferee shall deliver to
the Lessee and Collateral Agent an Assignment and Assumption Agreement in the
form of Exhibit F, executed by the assignee or transferee) and
(B) further represent and warrant to the Lessee, the Collateral Agent and
each Participant in writing each of the representations and warranties as set
forth in Section 8.1 and that:


 


(w)          it meets the
criteria of an Eligible Assignee, and it has the requisite power and authority
to accept such assignment or transfer and to engage in the Overall Transaction;


 


(x)            it will not
take any action with respect to its Lessor’s Interest that would violate any
applicable securities laws;


 


(y)           it will not
assign or transfer its Lessor’s Interest except in compliance with this
Section 12.1(b); and


 


(z)            it will not
transfer its Lessor’s Interest unless the proposed transferee makes the
foregoing representations and covenants.


 


Notwithstanding anything
contained in the foregoing to the contrary, so long as no Event of Default exists, such assignment shall not be made if (1) in the
reasonable opinion of Lessee, such assignment would cause Lessee to be required
to cease reporting this Lease as an operating lease in Lessee’s financial
statements and (2) Lessee provides the
Collateral Agent and the Participants written notice of such determination
within ten (10) Business Days of (A) Lessee’s receipt of the notice
described in clauses (b)(iii) above and (B) Lessee’s receipt of all
information needed regarding the proposed assignee as may be reasonably
requested by Lessee or Lessee’s independent public accountants, which request
shall be made within 10 Business Days after Lessee’s receipt of the notice
described in clause (b)(iii) above. In the event Lessee has objected in
writing to the proposed assignee above, Lessee hereby agrees to cooperate with
Lessor to restructure the proposed assignment or find a replacement assignee
which shall be an Eligible Assignee and which shall comply with the terms and
conditions set forth above and to which Lessee shall not have objected in
writing pursuant to the terms hereof. The parties hereto and any such assignee
will execute such documents and make such filings and recordings as are
reasonably requested by the Lessor or the Collateral Agent to maintain the
interests of the parties, preserve, protect and perfect the interest of
Collateral Agent and Lessor in the Leased


 


41

















 


Property, the Lessor Collateral and the Lessee
Collateral and/or any Participant’s rights under this Participation Agreement
and the other Operative Documents. Notwithstanding any of the foregoing, Lessor
shall at all times be permitted, without the consent of Lessee, to transfer the
Lessor’s Interest to an Eligible Assignee to effectuate compliance with any
law, rule, regulation or order issued by any federal or state regulatory
authority having jurisdiction over the Lessor (other than any such law, rule,
regulation or order that was published and effective prior to March 1, 2006). In
such event, Lessor shall, to the extent possible in Lessor’s sole good faith
judgment, notify Lessee of such proposed transfer and shall, to the extent
possible in Lessor’s sole good faith, judgment, work in good faith with Lessee
to cause the Lessor’s Interest to be transferred to an Eligible Assignee in a
manner such that, to the extent possible in Lessee’s sole good faith judgment,
Lessee shall not be required to cease reporting the Lease as an operating
lease.


 


Any transfer or
assignment made in violation of the above requirements shall not be effective
against the other parties to this Participation Agreement until such
requirements are satisfied.


 


Section 12.2.        Participations. Any Lender may at any time sell to one
or more commercial banks or other Persons (each of such commercial banks and
other Persons being herein called a “Sub-Participant”)
participating interests in all or a portion of its rights and obligations under
this Participation Agreement, the other Operative Documents and its Notes
(including, without limitation, all or portion of the Rent owing to it); provided, however, that:


 


(a)           no
participation contemplated in this Section 12.2 shall relieve such Lender from
its obligations hereunder or under any other Operative Document;


 


(b)           such Lender
shall remain solely responsible for the performance of its obligations
hereunder and under any Operative Document;


 


(c)           the Lessee,
the Lessor and the Collateral Agent shall continue to deal solely and directly
with such Lender in connection with such Lender’s rights and obligations under
this Participation Agreement and each of the other Operative Documents;


 


(d)           each such
Sub-Participant will make representations and warranties to the Participant
that are consistent with Section 8.1, mutatis mutandis;


 


(e)           no
Sub-Participant, unless such Sub-Participant is an Affiliate of such Lender, or
is itself a Lender, shall be entitled to require such Lender to take or refrain
from taking any action hereunder or under any other Operative Document, except
for matters requiring consent of all Participants; and


 


(f)            the Lessee
shall not be required to pay any amount under this Participation Agreement that
is greater than the amount which it would have been required to pay had no
participating interest been sold.


 


42

















 


Section 12.3.        Withholding Taxes; Disclosure of Information; Pledge Under
Regulation A. (a) If any Participant or any
assignee of, or Sub-Participant in, any Funding each such assignee or
Sub-Participant, a “Transferee”)
is organized under the laws of any jurisdiction other than the United States or
any State thereof, then such Lessor, Lender or Transferee, as applicable, shall
(as a condition precedent to acquiring or participating in any Funding) (i)
furnish to the Collateral Agent and the Lessee (unless such Participant or
Transferee is unable to so furnish due to a Change in Law, first effective
after such Participant or Transferee becomes a Participant or Transferee, as
applicable) in duplicate, for each taxable year of such Participant or
Transferee during the Term, a properly completed and executed copy of either
Internal Revenue Service Form W-8 ECI or Internal Revenue Service Form W-8 BEN
and Internal Revenue Service Form W-8 or Internal Revenue Service Form W-9 and
any additional form (or such other form) as is necessary to claim complete
exemption from United States withholding taxes on all payments hereunder, and
(ii) provide to the Lessor, the Collateral Agent and the Lessee a new
Internal Revenue Service Form W-8 ECI or Internal Revenue Service Form W-8 BEN
and Internal Revenue Service Form W-8 or Internal Revenue Service Form W-9 and
any such additional form (or any successor form or forms) upon the expiration
or obsolescence of any previously delivered form and comparable statements in
accordance with applicable United States laws and regulations and amendments
duly executed and completed by such Participant or Transferee, and to comply at
all times such Participant or Transferee shall beneficially own a Note or
Lessor’s Interest with all applicable United States laws and regulations and
all provisions of any applicable tax treaty with regard to such withholding tax
exemption unless any Change in Law has occurred subsequent to the date such
Participant or Transferee became a Participant or Transferee as applicable and
prior to the date on which any such delivery otherwise would be required which
renders such form inapplicable or which would prevent such Participant or
Transferee from duly completing and delivering any such forms and such Lender
or Transferee so advises the Lessee; provided, however,
that if Lessor or any Participant or Transferee is not the beneficial owner of
a payment, as defined in Treasury Regulation §1.1441-1(c)(6), and therefore is
unable to provide a Form W-8BEN or W-8ECI, then such Person may provide
(i) one duly completed and executed copy of Internal Service Form W-8IMY
(in lieu of the Form W-8BEN or W-8ECI), and all additional forms or
certifications, as provided in Treasury Regulation §1.1441-1(e)(3), required to
be attached to such Form W-8IMY, necessary to establish that such party is
entitled to receive payments hereunder without deduction or withholding of any
United States Federal income taxes, and (ii) any other form for other
taxing jurisdictions confirming that such Person is exempt from withholding
from such jurisdiction. By its acceptance of a participation or assignment of a
Participant’s Note or Lessor’s Interest, each Transferee shall be deemed bound
by the provisions set forth in this Article XII. Notwithstanding anything to
the contrary in the Operative Documents, the Lessee shall not be required to
gross-up any payment for withholding taxes imposed on any Tax Indemnitee which
has failed to comply with its obligations under this Section 12.3 if such
compliance would have avoided such withholding taxes, and the Lessee shall be
entitled to withhold from any payments to such Tax Indemnitee under this
Participation Agreement or any other Operative Document such amounts of
withholding taxes as may be required by law to be withheld.


 


(b)           Anything in
this Article XII to the contrary notwithstanding, any Participant may, without
the consent of the Lessee, assign and pledge all or any portion of the Notes or
Lessor’s


 


43

















 


Interest held by it to
any Federal Reserve Bank as collateral security pursuant to Regulation A of the
F.R.S. Board.


 


Section 12.4.        Lessee Directions. Each of the Participants and the Lessee
hereby agree that:


 


(a)           the Lessee
shall have the right to replace any Participant (i) with respect to which,
(A) the right to pay Interest or Yield by reference to the LIBO Rate shall
be suspended under Section 15.1 or 15.2, or (B) there are or would be any
claim to reimbursement or compensation under Section 15.3 or 15.5 or (ii)
that fails to consent to any amendment, extension or waiver requested by
Lessee, in each case with an Eligible Assignee selected by the Lessee and
reasonably acceptable to the Collateral Agent and which Eligible Assignee shall
comply with the terms of clause (vi) of Section 12.1(a) or
clause (iv) of Section 12.1(b), as applicable;


 


(b)           the Lessee
shall have the exclusive right to exercise the right under Section 12.4(a)
above upon not less than three (3) Business Days’ prior written notice from the
Lessee to the Collateral Agent and each Participant ; and


 


(c)           the
Collateral Agent and each Participant hereby agree to cooperate with the
Lessee, at Lessee’s sole cost and expense in Lessee’s efforts to arrange one or
more replacement Participants as contemplated by Section 12.4(a).


 


ARTICLE XIII



INDEMNIFICATION


 


Section 13.1.        Indemnification.


 


(a)           General Indemnification. Subject to
Sections 13.1(b) and 13.3, whether or not any of the transactions contemplated
hereby shall be consummated, Lessee shall pay and assume liability for, and
does hereby agree to indemnify, protect, defend, save and keep harmless each
General Indemnitee on an After Tax Basis from and against any and all Claims
that may be imposed on, incurred by or asserted against such General Indemnitee
(whether because of action or omission by such General Indemnitee), whether or
not such Claim is covered by any other indemnification under this Article XIII
or such General Indemnitee shall also be indemnified as to any such Claim by
any other Person, and whether or not such Claim arises or accrues after the
Expiration Date, in each case under this Section 13.1(a), arising out of
or in any way relating to:


 


(i)            any of the
Operative Documents, any of the transactions contemplated thereby or any
investigation, litigation or proceeding in connection therewith, and any
amendment, modification or waiver in respect thereof;


 


(ii)           the Subject
Property, or any part thereof or interest therein;


 


44

















 


(iii)          the
purchase, manufacturing, mortgaging, design, construction, preparation,
installation, inspection, delivery, non-delivery, acceptance, rejection,
purchase, ownership, possession, use, rental, lease, sublease, repossession,
maintenance, repair, alteration, modification, addition or substitution,
storage, transfer of title, redelivery, use, financing, refinancing, operation,
condition, sale (including, without limitation, any sale or other transfer
pursuant to Section 15.1, 16.2, 18.1 or 18.2 of the Lease or any sale or
transfer pursuant to Articles XX or XXI of the Lease), return or other
disposition of all or any part of any interest in the Subject Property or the
imposition of any Lien (or incurring of any liability to refund or pay over any
amount as a result of any Lien) thereon, including, without limitation:  (A) Claims or penalties arising under
any agreements or obligations from any violation of law or in tort (strict
liability or otherwise) by Lessee, Collateral Agent, Lessor, any Lender or any
other Person or with respect to the use, ownership, possession, operation or
maintenance of the Subject Property, (B) any Claim resulting from or
related to latent or other defects, whether or not discoverable relating to the
Subject Property, (C) any Claim resulting from or related to the purchase,
acquisition, lease or transfer of the Subject Property, (D) any Claim
based upon a violation or alleged violation of the terms of any restriction,
easement, condition or covenant or other matter affecting title to the Subject
Property or (E) the making of any Modifications in violation of any
standards imposed by any insurance policies required to be maintained by the
Lessee pursuant to the Lease which are in effect at any time with respect to
the Subject Property or any part thereof;


 


(iv)          the offer,
issuance, sale, transfer or delivery of the Notes or Lessor’s Interest in
accordance with the terms of the Participation Agreement;


 


(v)           the breach
by Lessee of any representation or warranty made by it in any Operative
Document or any certificate delivered by it with respect to any agreement
relating thereto;


 


(vi)          the
transactions contemplated hereby or by any other Operative Document, in respect
of the application of Parts 4 and 5 of Subtitle B of Title I of ERISA and any
prohibited transaction described in Section 4975(c) of the Code;


 


(vii)         the
retaining or employment of any broker, finder or financial advisor by the
Lessee to act on its behalf in connection with this Participation Agreement; or


 


(viii)        any other
agreement entered into or assumed by Lessee or its Affiliate in connection with
the Subject Property (including, in connection with each of the matters
described in this Section 13.1 to which this indemnity shall apply, matters
based on or arising from the negligence of any General Indemnitee).


 


It is expressly understood and agreed that the indemnities provided for
herein shall, except as otherwise provided in Section 13.1(b), survive the
expiration or termination of and shall be separate and independent from any
remedy under the Lease or any other Operative Document.


 


45

















 


(b)           Exclusions from Indemnities. Notwithstanding
the foregoing provisions of this Article XIII, Lessee shall not be obligated to
indemnify a General Indemnitee under Section 13.1(a) for any Claim to the
extent that such Claim is attributable to: (i) acts, events or
circumstances occurring after (but only to the extent not attributable to or
constituting acts, events or circumstances occurring prior to), (A) the
expiration or earlier termination of the Lease and (B) delivery of
possession of the Subject Property to Lessee, Lessor pursuant to
Article XX of the Lease or, solely with respect to a Limited Recourse
Event of Default, Article XVI of the Lease, or to a third party;
(ii) criminal acts of such Indemnitee or the gross negligence or willful
misconduct of such Indemnitee, 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 Law,
Governmental Action or third parties with respect to the Subject Property shall
not be deemed gross negligence or willful misconduct; (iii) any Claim resulting
from the imposition of any Lessor Lien which such Indemnitee is responsible for
discharging under the Operative Documents; (iv) any Claim for Taxes or
Impositions other than those relating to a Claim of the type described at
clause (iv) of Section 13.1(a) above or the obligation of Lessee to pay
amounts under this Section 13.1 on an After Tax Basis (it being understood
that Claims for Taxes or Impositions are dealt with in Sections 13.4, 13.5 and
15.3 and in such provisions as require payments by Lessee to be made on an
After Tax Basis); (v) in the event that the Lessee has exercised the Sale
Option in accordance with Article XX of the Lease or Lessor or the
Collateral Agent has exercised remedies under Section 16.2 of the Lease
solely as a result of a Limited Recourse Event of Default, any Claim for the
costs of selling or marketing the Subject Property in excess of the amount of
such costs Lessee would be obligated to pay under the Lease in connection with
the exercise of the Sale Option and (vi) breach by such General Indemnitee of
its representations and warranties in Section 8.1 or 8.4, as the case may be,
or the breach by such General Indemnitee of its covenants as set forth in this
Participation Agreement or the Lease; provided, however,
that nothing in the foregoing clauses (i) through (v) shall be deemed to
exclude or limit any remedy under or right to damages pursuant to Article XVI
of the Lease.


 


Section 13.2.        End of Term Indemnity. In the event that (a) Lessee
elects the Sale Option; and (b) after paying to Collateral Agent or
Lessor, as the case may be, for the benefit of the Participants, any amounts
due under Articles XX, XXI and XXII of the Lease, the Lease Balance shall
not have been reduced to zero, then Lessee shall deliver a report from neutral
MAI appraiser selected by the Lessor having at least five (5) years of
experience in the appraisal of commercial properties comparable to the Leased
Property. The report shall be in form and substance satisfactory to the Lessor.
The appraisal shall use customary and usual appraisal methods to determine the
Fair Market Value of the Leased Property as of the Expiration Date (the “Expiration Date Fair Market Value”). If the appraiser
concludes in his or her professional judgment that the reasons for the Expiration
Date Fair Market Value of the Leased Property being less than the Fair Market
Value as of the date of the Appraisal were due to any of the following events,
circumstances or conditions, then Lessee shall promptly pay over to Collateral
Agent or Lessor, as the case may be, any amount by which the Fair Market Value
of the Leased Property as specified in the Appraisal exceeds the Expiration
Date Fair Market Value to the extent attributable to any of the following
events:  (i) excessive use of the
Leased Property; (ii) the failure to maintain the Leased Property as
required by the Lease and the other Operative Documents, and in at least as
good a condition as it was as of the commencement of the Term, ordinary wear
and tear excepted; (iii) any Modification to or restoration or rebuilding
of the


 


46

















 


Leased Property, whether
or not permitted pursuant to the Operative Documents, except for Required
Modifications performed in accordance with Article X of the Lease;
(iv) the existence on or before the Expiration Date of any adverse
environmental condition at or affecting the Leased Property; or (v) any
other cause or condition within the power of Lessee or any Affiliate to control
or affect, other than ordinary wear and tear.


 


Section 13.3.        Proceedings in Respect of Claims. With
respect to any amount that the Lessee is requested by an Indemnitee to pay by
reason of Section 13.1(a) or 13.2, such Indemnitee shall, if so requested
by the Lessee and prior to any payment, submit such additional information to
the Lessee as Lessee may reasonably request and which is in the possession of
such Indemnitee to substantiate properly the requested payment.


 


In case any action, suit
or proceeding shall be brought against any Indemnitee, such Indemnitee shall,
within a reasonable period notify the Lessee in writing of the commencement
thereof provided that failure to notify Lessee shall not alter such Indemnitee’s
rights under this Section 13.3, except to the extent such failure precludes
or materially impairs Lessee’s ability to conduct a defense, and the Lessee
shall be entitled, at its expense, to participate in, and, to the extent that
the Lessee desires to, assume and control the defense thereof through its own
counsel, which shall be subject to the reasonable approval of the Indemnitee; provided, however, that the Lessee shall have acknowledged
in writing its obligation to fully indemnify such Indemnitee in respect of such
action, suit or proceeding and, at the request of the Indemnitee, provide an
indemnity and, if requested by such Indemnitee, collateral security, reasonably
satisfactory to the Indemnitee, and, the Lessee shall keep such Indemnitee
fully apprised of the status of such action, suit or proceeding and shall provide
such Indemnitee with all information with respect to such action, suit or
proceeding as such Indemnitee shall reasonably request. Lessee must indicate
its election to assume such defense by written notice to the Indemnitee within
90 days following receipt of Indemnitee’s notice of the Claim, or in the case
of a third party claim which requires a shorter time for response then within
such shorter period as specified in the Indemnitee’s notice of Claim, provided
that such Indemnitee has given Lessee notice thereof. Lessee shall not be
entitled to assume and control the defense of any such action, suit or
proceeding if and to the extent that, (A) in the reasonable opinion of such
Indemnitee, (x) such action, suit or proceeding involves any risk of imposition
of criminal liability or any material risk of imposition of material civil
liability on such Indemnitee or will involve a material risk of the sale,
forfeiture or loss of, or the creation of any Lien (other than a Permitted
Lien) on the Leased Property unless, in the case of civil liability, the Lessee
shall have posted a bond or other security reasonably satisfactory to the
relevant Indemnitees in respect to such risk or (y) the control of such action,
suit or proceeding would involve an actual or potential conflict of interest,
(B) such proceeding involves Claims not fully indemnified by the Lessee which
the Lessee and the Indemnitee have been unable to sever from the indemnified
Claim(s), or (C) an Event of Default has occurred and is continuing. The Indemnitee
may participate in a reasonable manner at its own expense and with its own
counsel in any proceeding conducted by the Lessee in accordance with the
foregoing. The Lessee shall not enter into any settlement or other compromise
with respect to any Claim which is entitled to be indemnified under
Section 13.1 or 13.2, as applicable, without the prior written consent of
the Indemnitee, which consent shall not be unreasonably withheld or delayed in
the case of a money settlement not involving an admission of liability of such
Indemnitee.


 


47

















 


The party controlling
the defense shall consult in good faith with the other party and its counsel
with respect to the defense and shall keep the non-controlling party reasonably
informed as to the progress of the defense. Each Indemnitee shall supply the
Lessee with such information and documents reasonably requested by the Lessee
as are necessary or advisable for the Lessee to participate in any action, suit
or proceeding to the extent permitted by Section 13.1 or 13.2, as applicable,
and Lessee shall reimburse the Indemnitee for the reasonable out-of-pocket
expenses of supplying such information and documents. Except during the
occurrence of an Event of Default where Lessee shall have failed to provide
indemnity and, if requested by an Indemnitee, collateral security, both in
form, substance and in such amounts reasonably satisfactory to each Indemnitee,
no Indemnitee shall enter into any settlement or other compromise with respect
to any Claim which is entitled to be indemnified under Section 13.1 or
13.2, as applicable, without the prior written consent of the Lessee, which
consent shall not be unreasonably withheld, unless such Indemnitee waives its
right to be indemnified under Section 13.1 or 13.2, as applicable, with
respect to such Claim, does not admit any criminal liability or civil liability
on behalf of the Lessee in connection with such Claim, and uses reasonable
efforts to advise the Lessee on the status of proceedings from time to time
during the pendency of such Claim.


 


Upon payment in full or
other satisfaction of any Claim by the Lessee pursuant to Section 13.1 or 13.2,
as applicable, to or on behalf of an Indemnitee, the Lessee, without any
further action, shall be subrogated to any and all claims that such Indemnitee
may have relating thereto (other than claims in respect of insurance policies
maintained by such Indemnitee at its own expense), and such Indemnitee shall
execute such instruments of assignment and conveyance, evidence of claims and
payment and such other documents, instruments and agreements as may be
necessary to preserve any such claims and otherwise cooperate with the Lessee
and give such further assurances as are necessary or advisable to enable the
Lessee vigorously to pursue such claims.


 


Any amount payable to an
Indemnitee pursuant to Section 13.1 or 13.2 shall be paid to such Indemnitee
promptly upon receipt of a written demand therefor from such Indemnitee,
accompanied by a written statement describing in reasonable detail the basis
for such indemnity and the computation of the amount so payable.


 


Section 13.4.        General Tax Indemnity.


 


(a)           Indemnification. Without
limitation on the rights of any Tax Indemnitee under any other indemnification
provision of this Article XIII, the Lessee shall pay and assume liability
for, and does hereby agree to indemnify, protect and defend the Subject
Property and all Tax Indemnitees, and hold it and them harmless against, all
Impositions relating to the Subject Property or the Overall Transaction on an
After Tax Basis.


 


(b)           Contests. If any
claim shall be made against any Tax Indemnitee or if any proceeding shall be
commenced against any Tax Indemnitee (including a written notice of such
proceeding) for any Imposition as to which the Lessee may have an indemnity
obligation pursuant to this Section 13.4, or if any Tax Indemnitee shall
determine that any Imposition for which the Lessee may have an indemnity
obligation pursuant to this Section 13.4 may be payable, such Tax Indemnitee
shall promptly and in any event, within 30 days after a


 


48

















 


Responsible Officer of
such Tax Indemnitee has actual knowledge thereof notify the Lessee in writing
provided that failure to so notify the Lessee within 30 days after a
Responsible Officer of such Tax Indemnitee has actual knowledge thereof shall
not alter such Tax Indemnitee’s rights under this Section 13.4, except to the
extent such failure precludes or materially adversely affects the ability to
conduct a contest of any indemnified Taxes) and shall not take any action with
respect to such claim, proceeding or Imposition without the written consent of
the Lessee (such consent not to be unreasonably withheld or unreasonably
delayed) for 30 days after the receipt of such notice by the Lessee; provided, however, that in the case of any such claim or
proceeding, if such Tax Indemnitee shall be required by law or regulation to
take action prior to the end of such 30-day period, such Tax Indemnitee shall
in such notice to the Lessee, so inform the Lessee, and such Tax Indemnitee
shall not take any action with respect to such claim, proceeding or Imposition
without the consent of the Lessee (such consent not to be unreasonably withheld
or unreasonably delayed) for 10 days after the receipt of such notice by the
Lessee, unless the Tax Indemnitee shall be required by law or regulation to
take action prior to the end of such 10-day period.


 


The Lessee shall be
entitled for a period of 60 days from receipt of such notice from the Tax
Indemnitee (or such shorter period as the Tax Indemnitee has notified the
Lessee is required by law or regulation for the Tax Indemnitee to commence such
contest), subject to the immediately following sentence, to assume control of
such contest or if such contest is of a type that must be pursued, if at all,
in the name of such Tax Indemnitee, require that such Tax Indemnitee pursue
such contest. If (x) such contest can be pursued in the name of the Lessee and
independently from any other proceeding involving a Tax liability of such Tax
Indemnitee for which the Lessee has not agreed to indemnify such Tax
Indemnitee, (y) such contest must be pursued in the name of the Tax Indemnitee,
but can be pursued independently from any other proceeding involving a Tax
liability of such Tax Indemnitee for which the Lessee has not agreed to
indemnify such Tax Indemnitee or (z) the Tax Indemnitee so requests, then the
Lessee shall be permitted to control the contest of such claim, provided that
in the case of a contest described in any of clause (x), (y) or (z) if the Tax
Indemnitee determines reasonably and in good faith that such contest by the
Lessee could have a material adverse effect on the business or operations of the
Tax Indemnitee and provides a written explanation to the Lessee of such
determination, the Tax Indemnitee may elect to control or reassert control of
the contest, and provided, that by taking control of the contest, Lessee
acknowledges that it is responsible for the Imposition ultimately determined to
be due by reason of such claim, and provided, further, that in determining the
application of clauses (x) and (y) of the preceding sentence, each Tax
Indemnitee shall take any and all reasonable steps to segregate claims for any
Taxes for which the Lessee indemnifies hereunder from Taxes for which the
Lessee is not obligated to indemnify hereunder, so that the Lessee can control
the contest of the former. In all other claims requested to be contested by the
Lessee, the Tax Indemnitee shall control the contest of such claim, acting
through counsel of its selection reasonably acceptable to the Lessee. In no
event shall the Lessee be permitted to contest (or the Tax Indemnitee required
to contest) any claim, (A) if such Tax Indemnitee provides the Lessee with a
legal opinion of independent counsel that such action, suit or proceeding
involves a risk of imposition of criminal liability or will involve a material
risk of the sale, forfeiture or loss of, or the creation of any Lien (other
than a Permitted Lien) on the Subject Property or any part of any thereof
unless the Lessee shall have posted and maintained a bond or other security
reasonably satisfactory to the relevant Tax Indemnitee in respect to such


 


49

















 


risk, (B) if an Event of
Default has occurred and is continuing, unless the Lessee shall have posted and
maintained a bond or other security satisfactory to the relevant Tax Indemnitee
in respect of the Taxes subject to such claim and any and all expenses for
which Lessee is responsible hereunder, (C) unless the Lessee shall have
agreed to pay and shall pay to such Tax Indemnitee on demand all reasonable
out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur in
connection with contesting such Imposition, including all reasonable legal,
accounting and investigatory fees and disbursements as well as the Impositions
which are the subject of such claim to the extent the contest is unsuccessful,
or (D) if such contest shall involve the payment of the Tax prior to the
contest, unless the Lessee shall provide to the Tax Indemnitee an interest-free
advance in an amount equal to the Imposition that the Indemnitee is required to
pay (with no additional net after-tax costs (including Taxes) to such Tax
Indemnitee). In addition for Tax Indemnitee controlled contests and claims
contested in the name of the Tax Indemnitee in a public forum, no contest by a
Tax Indemnitee shall be required: 
(1) unless the amount of the potential indemnity (taking into
account all similar or logically related claims that have been or could be
raised in any audit involving such Tax Indemnitee for which the Lessee may be
liable to pay an indemnity under this Section 13.4(b)) exceeds $50,000 and
(2) unless, if requested by the Tax Indemnitee, the Lessee shall have
provided to the Tax Indemnitee an opinion from counsel or a tax accountancy
firm selected by the Lessee and reasonably acceptable to the Tax Indemnitee
confirming that a reasonable basis exists to contest such claim (or in the case
of an appeal of an adverse determination, an opinion of such counsel to the
effect that it is more likely than not that the determination may be reversed
on appeal). In no event shall a Tax Indemnitee be required to appeal an adverse
judicial determination to the United States Supreme Court.


 


The party conducting the
contest shall consult in good faith with the other party and its counsel with
respect to the contest of such claim for Taxes (or claim for refund). In
addition, the controlling party shall keep the noncontrolling party reasonably
informed as to the progress of the contest, and shall provide the
noncontrolling party with a copy of (or appropriate excerpts from) any reports
or claims issued by the relevant auditing agents or taxing authority to the
controlling party thereof, in connection with such claim or the contest
thereof.


 


Each Tax Indemnitee
shall supply the Lessee with such information and documents reasonably
requested by the Lessee as are necessary or advisable for the Lessee to
participate in any action, suit or proceeding to the extent permitted by this
Section 13.4(b), and the Lessee shall promptly reimburse such Indemnitee for
the reasonable out-of-pocket expenses of supplying such information and
documents. Except during the occurrence of an Event of Default where Lessee
shall have failed to provide indemnity and, if requested by an Indemnitee,
collateral security, both in form, substance and in such amounts reasonably
satisfactory to each Indemnitee, no Tax Indemnitee shall enter into any
settlement or other compromise or fail to appeal an adverse ruling with respect
to any claim which is entitled to be indemnified under this Section 13.4 (and
with respect to which contest is required under this Section 13.4(b)) without
the prior written consent of the Lessee, unless such Tax Indemnitee waives its
right to be indemnified under this Section 13.4 with respect to such claim.


 


Notwithstanding anything
contained herein to the contrary, a Tax Indemnitee will not be required to
contest (and the Lessee shall not be permitted to contest) a claim with respect
to the


 


50

















 


imposition of any Tax if
(i) such Tax Indemnitee shall waive its right to indemnification under this
Section 13.4 with respect to such claim (and any claim with respect to such
year or any other taxable year, the contest of which is materially adversely
affected as a result of such waiver) or (ii) such Tax is the sole result of a
claim of a continuing and consistent nature, which claim has previously been
resolved against the relevant Tax Indemnitee (unless a change in law or facts
has occurred since such prior adverse resolution and Lessee provides an opinion
of independent tax counsel to the effect that it is more likely than not that
such change in law or facts will result in a favorable resolution of the claim
at issue).


 


(c)           Payments.


 


(i)            To or For the Account of a Tax Indemnitee. Any
Imposition indemnifiable under this Section 13.4 shall be paid directly when
the liability of the Tax Indemnitee has been finally determined to the
applicable taxing authority if direct payment is practicable and permitted. If
direct payment to the applicable taxing authority is not permitted or is
otherwise not made, any amount payable to a Tax Indemnitee pursuant to this
Section 13.4 shall be paid within thirty (30) days after receipt of a written
demand therefor from such Tax Indemnitee, accompanied by a written statement
describing in reasonable detail the amount so payable, but not before two
Business Days prior to the date that the relevant Taxes are due. Any payments
made pursuant to this Section 13.4 shall be made directly to the Tax Indemnitee
entitled thereto in immediately available funds at such bank or to such account
as specified by the Tax Indemnitee in written directions to the Lessee, or, if
no such direction shall have been given, by check of the Lessee payable to the
order of the Tax Indemnitee by certified mail, postage prepaid at its address
as set forth in this Participation Agreement. Upon the request of any Tax
Indemnitee with respect to a Tax that the Lessee is required to pay, the Lessee
shall furnish to such Tax Indemnitee the original or a certified copy of a
receipt for the Lessee’s payment of such Tax or such other evidence of payment
as is reasonably acceptable to such Tax Indemnitee.


 


(ii)           To the Lessee. (x) If
any Tax Indemnitee actually shall realize a Tax benefit (whether by way of
deduction, credit, allocation or apportionment or otherwise) with respect to a
Tax not indemnifiable hereunder which would not have been realized but for any
Tax with respect to which the Lessee has reimbursed or indemnified such Tax
Indemnitee pursuant to the Operative Documents, which benefit was not
previously taken into account in determining the amount of the Lessee’s payment
to such Tax Indemnitee, such Tax Indemnitee shall pay to the Lessee an amount
equal to the amount of such Tax benefit, increased by any actual Tax savings
realized by such Tax Indemnitee and net of any additional Taxes actually borne
by such Tax Indemnitee as a result of such payment (a “Grossed-Up
Basis”); provided, however,
that as long as an Event of Default is continuing any such amounts may be
applied against any amounts due and owing by Lessee under the Lease; provided further, however, that no Tax Indemnitee shall be
required to pay to the Lessee any Tax benefit to the extent such payment would
be greater than the amount of such Taxes in respect of which the reimbursement
or indemnification was paid by the Lessee, reduced by all prior payments by
such Tax Indemnitee under this Section 13.4(c)(ii)(x) in respect of such
amount; any payment to the Lessee which is so limited shall, to the extent of
such unpaid excess, be carried over and shall be available to offset any future
obligations of the Lessee under this Section 13.4. If such repaid Tax benefit
is thereafter


 


51

















 


lost, the additional Tax
payable shall be treated as a Tax indemnifiable hereunder without regard to the
exclusions set forth in clauses (i) through (x) of the definition of
Impositions.


 


(y)           Upon receipt
by a Tax Indemnitee of a refund or credit of all or part of any Taxes paid or
indemnified against by the Lessee, which refund or credit was not previously
taken into account in determining the amount of the Lessee’s payment to such
Tax Indemnitee, such Tax Indemnitee shall pay to the Lessee, on a Grossed-Up
Basis, an amount equal to the amount of such refund, plus any interest received
by or credited to such Tax Indemnitee with respect to such refund; provided, however, that as long as an Event of Default is
continuing any such amounts may be applied against any amounts due and owing by
Lessee under the Lease; provided, further,
however, that no Tax Indemnitee shall be required to pay to the
Lessee any refund or credit to the extent such refund or credit is greater than
the amount of Taxes in respect of which payment or indemnification was made by
the Lessee, reduced by all prior payments by such Tax Indemnitee under this
Section 13.4(c)(ii)(y) in respect of such amount. If such repaid refund or
credit is thereafter lost, the additional Tax payable shall be treated as a Tax
indemnifiable hereunder without regard to the exclusions set forth in clauses
(i) through (x) of the definition of Impositions.


 


(d)           Reports. In the
case of any report, return or statement required to be filed with respect to
any Taxes that are subject to indemnification under this Section 13.4 and of
which the Lessee has knowledge, the Lessee shall promptly notify the Tax
Indemnitee of such requirement and, at the Lessee’s expense (i) if the Lessee
is permitted (unless otherwise requested by the Tax Indemnitee) by Applicable
Laws, timely file such report, return or statement in its own name or (ii) if
such report, return or statement is required to be in the name of or filed by
such Tax Indemnitee or the Tax Indemnitee otherwise requests that such report,
return or statement be filed in the name of or by such Tax Indemnitee, the
Lessee shall prepare such report, return or statement for filing by such Tax
Indemnitee in such manner as shall be satisfactory to such Tax Indemnitee and
send the same to the Tax Indemnitee for filing no later than 15 days prior to
the due date therefor. In any case in which the Tax Indemnitee will file any
such report, return or statement, the Lessee shall, upon written request of
such Tax Indemnitee, provide such Tax Indemnitee with such information as is reasonably
necessary to allow the Tax Indemnitee to file such report, return or statement.


 


(e)           Withholding Taxes.


 


(i)            The Lessor
or its agent shall withhold any Taxes required by Applicable Laws to be
withheld on any payment to the Lessor or any Lender, except to the extent that
the Lessor or any Lender has furnished such information to the Lessor or its
agent as set forth in Section 12.3 and such information is sufficient under
Applicable Laws to entitle such Person to an exemption from withholding Taxes. Except
to the extent set forth in Section 13.6, the amount payable to the Lessor, the
Lenders, any other Participant or any Sub-Participant shall be reduced by the
amount of any withholding Taxes required to be withheld by the Lessor or its
Collateral Agent pursuant to the preceding sentence, and except with respect to
such withholding Taxes for which Lessee is liable pursuant to Section 15.3, the
Lessee and the Lessor shall have no liability or obligation to the Lessor or
the Lenders with respect to any such withholding Taxes. To the extent that the
Lessor


 


52

















 


is
required to withhold such withholding Taxes as the result of a Change in Law
(only if such Change in Law occurs after the relevant Participant has become a
party to this Participation Agreement), Lessee shall be responsible for, and
shall indemnify and hold harmless Lessor (without duplication of any
indemnification required in Section 13.4(a)), on an After Tax Basis
against, any claims regarding such withholding taxes made against the Lessor,
to the extent, but only to the extent, Lessor has actually paid funds to a
taxing authority with respect to such withholding Taxes or receives a demand
for such payments from any taxing authority. In accepting and carrying out its
duties with respect to withholding Taxes pursuant to this Section 13.4(e),
Lessor shall act as the duly authorized agent of Lessee under the withholding
provisions of Chapter 3 of the Code. Lessee shall file notice of such
appointment with the Director of Foreign Operations District of the Internal
Revenue Service in accordance with Treas. Reg. §1.1441-7(c). Such agency shall
terminate in the event that there is a Change in Law as to release Lessee of
the obligation to withhold Taxes with respect to payments made by Lessee under
the Lease and in any event upon termination or expiration of the Lease.


 


(ii)           If and to
the extent the Lessor or its agent has in good faith reasonably attempted to
comply with its obligation to withhold Taxes in accordance with clause (i)
and a claim regarding withholding Taxes is made against the Lessor or its
agent, as between the Lessee and the Lessor (or its agent), the Lessee shall be
responsible for, and the Lessee shall indemnify and hold harmless the Lessor
(and its agent) (without duplication of any indemnification required by
subsection (a)) on an After Tax Basis against, such claim to the extent, but
only to the extent, the Lessor or its agent has actually paid funds to a taxing
authority with respect to such withholding taxes or receives a demand for such
payment from any taxing authority.


 


(iii)          Each Lender
agrees to reimburse the Lessor and Collateral Agent for any withholding Taxes
for which the Lessor or Collateral Agent becomes liable and, except with
respect to such Taxes for which Lessee is liable pursuant to Section 15.3, to
reimburse the Lessee for any Taxes or other amounts paid by the Lessee (A)
pursuant to clause (ii) hereof and (B) to the extent Lessee has otherwise paid
funds to a taxing authority with respect to any withholding taxes or receives a
demand for such payment from any taxing authority.


 


(iv)          For purposes
of this Section 13.4(e), it shall be assumed that the Lease constitutes a loan
for United States federal income tax purposes (as is the parties’ intention).


 


(f)            Disclosure. The
parties agree that any party to this Participation Agreement (and each
employee, representative, or other agent of such party) may disclose the tax
aspects of the transactions contemplated by this Participation Agreement and
the structural aspects of these transactions as they relate to such tax aspects
without limitation of any kind on such disclosure.


 


(g)           Verification. At the
Lessee’s request, the amount of any indemnity payment by the Lessee or any payment
by an Indemnitee to the Lessee pursuant to this Section 13.4 shall be
verified and certified by an independent public accounting firm mutually
acceptable to the


 


53

















 


Lessee and such
Indemnitee. The costs of such verification shall be borne by the Lessee. In no
event shall the Lessee have the right to review such Indemnitee’s tax returns
or receive any other confidential information from such Indemnitee in
connection with such verification. Any information provided to such accountants
by any Person shall be and remain the exclusive property of such Person and
shall be deemed by the parties to be (and the accountants will confirm in
writing that they will treat such information as) the private, proprietary and
confidential property of such Person, and no Person other than such Person and
the accountants shall be entitled thereto and all such materials shall be
returned to such Person. Such accounting firm shall be requested to make its
determination within 30 days of the Lessee’s request for verifications and the
computations of the accounting firm shall be final, binding and conclusive upon
the Lessee and such Indemnitee. The parties agree that the sole responsibility
of the independent public accounting firm shall be to verify the amount of a
payment pursuant to the Lease and that matters of interpretation of the Lease
are not within the scope of the independent accounting firm’s responsibilities.


 


Section 13.5.        After Tax Basis. If an Indemnitee shall not be entitled
to a corresponding and equal deduction with respect to any payment or Tax which
Lessee is required to pay or reimburse under any other provision of this
Article XIII (each such payment or reimbursement under this Article XIII,
an “Original Payment”) and which Original
Payment constitutes income to such Indemnitee when accrued or received, then
Lessee shall pay to, or for the account of, such Indemnitee on demand the
amount of such Original Payment on an After Tax Basis.


 


Section 13.6.        Environmental Indemnity. (A) Without limitation of the
other provisions of this Article XIII, the Lessee hereby agrees to
indemnify, hold harmless and defend each Indemnitee from and against any and
all claims, losses, damages, liabilities, fines, penalties, charges, administrative
and judicial proceedings (including informal proceedings) and orders,
judgments, remedial action, requirements, enforcement actions of any kind, and
all reasonable and documented costs and expenses incurred in connection
therewith (including reasonable and documented attorneys’, expert consultants’,
expert witnesses’, and/or paralegals’ fees and expenses), including all costs
incurred in connection with any investigation or monitoring of the condition of
the Subject Property or any clean-up, remedial, removal or restoration work by
any Governmental Authority relating to the Subject Property (collectively, “Environmental Claims”), and whether or not such
Environmental Claim arises or occurs after the Expiration Date, in each case
under this Section 13.6, arising in whole or in part, out of:


 


(a)           the presence
on, under or around the Subject Property or any portion thereof of any
Hazardous Substance, or any releases or discharges of any Hazardous Substance
on, under, from, onto or around the Subject Property or any portion thereof,


 


(b)           any
activity, including, without limitation, construction carried on or undertaken
on or off the Subject Property or any portion thereof, and whether by Lessee or
any of its Affiliates or any predecessor in title or any employees, agents,
sublessees, contractors or subcontractors of the Lessee, any of its Affiliates
or any predecessor in title, or any other Persons (including such Indemnitee),
in connection with the handling, treatment, removal, storage, decontamination,
clean-up, transport or disposal of any Hazardous Substance that at any time are
located or present on, under or around, or that


 


54

















 


at
any time migrate, flow, percolate, diffuse or in any way move onto or under the
Subject Property or any portion thereof,


 


(c)           loss of or
damage to any property or the environment arising from, or in any way related
to, the Subject Property or Lessee or any of its Affiliates (including, without
limitation, clean-up costs, response costs, remediation and removal costs, cost
of corrective action, costs of financial assurance, fines and penalties and
natural resource damages), or death or injury to any Person, and all expenses
associated with the protection of wildlife, aquatic species, vegetation, flora
and fauna, and any mitigative action required by or under Environmental Laws,
in each case arising from, or in any way related to, the Subject Property,
Lessee or the Overall Transaction or any portion thereof,


 


(d)           any claim
concerning lack of compliance with Environmental Laws in connection with the
Subject Property (including, without limitation, any claim arising from the
failure or alleged failure to obtain or comply with any permit required by any
Environmental Laws for the construction or operation of the Subject Property),
or any act or omission causing an environmental condition that requires
remediation or would allow any Governmental Authority to record a Lien against
the Subject Property or any portion thereof, or


 


(e)           any residual
contamination on or under any of the Subject Property, or adversely affecting
any natural resources, and any contamination of any property or natural
resources arising in connection with the generation, use, handling, storage,
transport or disposal of any such Hazardous Substance, in each case arising
from, or in any way related to, the Subject Property, Lessee or the Overall
Transaction or any portion thereof, and irrespective of whether any of such
activities were or will be undertaken in accordance with Applicable Laws.


 


(B)           Notwithstanding
the foregoing provisions of this Section 13.6, Lessee shall not be
obligated to indemnify an Indemnitee under this Section 13.6 for any Claim
or Environmental Claim to the extent that such Claim or Environmental Claim is
attributable to (i) the gross negligence or willful misconduct of such
Indemnitee; provided that a default under, or the
failure of Lessor to perform any covenant or agreement in, any Related
Agreement or otherwise required by Applicable Law, Governmental Action or third
parties with respect to the property subject thereto or (ii) acts, events
or circumstances occurring after, and to the extent not attributable to or
constituting acts, events or circumstances occurring prior to (1) the
expiration or earlier termination of the Lease and (2) delivery of
possession of the Subject Property to Lessee, Lessor pursuant to
Article XX of the Lease or, solely with respect to a Limited Recourse
Event of Default, Article XVI of the Lease, or to a third party or (iii)
any breach by such Indemnitee of its representations and warranties in Section
8.1 or 8.4, as the case may be, or the breach by such Indemnitee of its
covenants as set forth in this Participation Agreement or the Lease.


 


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ARTICLE XIV




[INTENTIONALLY OMITTED.]


 


ARTICLE XV




CONTINGENT RENT AND OTHER COSTS


 


Section 15.1.                         LIBO Rate
Lending Unlawful. If, after the Closing Date, any Participant shall
reasonably determine (which determination shall, upon notice thereof to the Lessee
and the Participants, be conclusive and binding on the Lessee and which notice
shall be withdrawn whenever the applicable circumstances no longer exist) that
the introduction of or any change in or in the interpretation of any Applicable
Law makes it unlawful, or any central bank or other Governmental Authority
asserts that it is unlawful, for such Participant to make available, continue
or maintain any Loan or Lessor Amount that bears Interest or Yield based upon
the LIBO Rate, as the case may be, the obligation of such Participant to
make available, continue or maintain any such Loan or Lessor Amount, as the
case may be, shall, upon such determination, forthwith be suspended until
such Participant shall notify the Lessee and the Lessor that the circumstances
causing such suspension no longer exist and, to the extent required by any such
introduction of or change in or in the interpretation of any law, all Loans, or
Lessor Amount, as the case may be, of such Participant shall automatically
bear Interest or accrue Yield at the Alternate Base Rate either (a) on the
last day of the then current Interest Period applicable to such Loan or Lessor
Amount, as the case may be, if such Participant may lawfully continue
to maintain and fund such Loan or Lessor Amount, or (b) immediately if
such Participant shall determine that it may not lawfully continue to
maintain and fund such Loan or Lessor Amount, as the case may be, to such
day thereto or sooner, if required by such law or assertion.


 


Section 15.2.                         Deposits
Unavailable.                       If
any of the Participants shall have determined that:


 


(a)                                  Dollar deposits in
the relevant amount and for the relevant Interest Period are not available to
such Participant in its relevant market; or


 


(b)                                 by reason of
circumstances affecting such Participant’s relevant market, adequate means do
not exist for ascertaining the LIBO Rate applicable to such Participant’s Loans
or Lessor Amount,


 


then, upon
notice from such Participant to the Lessee and the other Participants, each
outstanding Loan or Lessor Amount, as the case may be, of the affected
Participant shall begin to bear Interest or accrue Yield at the Alternate Base
Rate on the last day of the then current Interest Period applicable thereto.


 


Section 15.3.                         Increased
Costs, Etc.                               If
any change in, or the introduction, adoption, effectiveness, interpretation,
reinterpretation or phase-in of any law or regulation, directive, guideline,
decision or request (whether or not having the force of law) of any court,
central bank, regulator or other Governmental Authority after the Closing Date
hereof increases or would increase the cost (other than in respect of Taxes,
except for withholding taxes imposed as the


 


56

















 


result of any
change in law, regulation or treaty first enacted, promulgated or signed after
the later of the Closing Date and the date such Participant becomes a
Participant (and without limiting the Lessee’s obligations pursuant to Sections
13.4, 13.5 or 15.6 hereof)), to any Participant of, or reduces or would reduce
the amount of any sum receivable by, such Participant in respect of making
available, continuing or maintaining (or of its obligation to make available,
continue or maintain) or prevents or would prevent any Participant from being
legally entitled to a complete exemption from withholding as described in Section 12.3
with respect to, any Loans or Lessor Amount, as the case may be,  then the Lessee shall from time to time,
within thirty (30) days of demand by such Participant together with the
certificate referred to below (with a copy of such demand and certificate to
the Collateral Agent), pay to the Collateral Agent for the account of such
Participant additional amounts sufficient to compensate such Participant for
such increased cost or reduced amount receivable; provided, that no Participant shall be entitled to demand
such compensation more than ninety (90) days following the last day of the
Interest Period in respect of which such demand is made; provided further, however, that the
foregoing provision shall in no way limit the right of any Participant to
demand or receive such compensation to the extent that such compensation
relates to the retroactive application of any law, regulation, guideline or
request if such demand is made within ninety (90) days after the implementation
of such retroactive law, interpretation, guideline or request. A reasonably
detailed certificate as to the nature and amount of such increased cost,
submitted to the Lessee and the Collateral Agent by such Participant in good
faith, shall be conclusive and binding for all purposes, absent manifest error.


 


Section 15.4.                         Funding
Losses.        In the event any
Participant shall incur any loss or out-of-pocket expense (including any Break
Costs and any loss or out-of-pocket expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such
Participant to make available, continue or maintain any portion of the
principal amount of any Loan or Lessor Amount, as the case may be) as a
result of:


 


(a)                                  any repayment or
prepayment of the principal amount of any Loans or Lessor Amount, as the case may be,
on a date other than the scheduled last day of the Interest Period applicable
thereto; or


 


(b)                                 any Loans or Lessor
Amount, as the case may be, not being made in accordance with the Advance
Request therefor (unless such failure to make such Loans or fund such Lessor
Amount, as the case may be, constitutes a breach by the applicable
Participant of its obligations under Article III),


 


then, upon the
written notice of such Participant to the Lessee, the Lessee shall, within five
days of its receipt thereof, pay directly to such Participant as Supplemental
Rent such amount (determined on the basis of such Participant’s standard
practices) as will reimburse such Participant for such loss or out-of-pocket
expense. Such written notice (which shall include calculations in sufficiently
reasonable detail to indicate the incurrence and amount of such loss and out-of-pocket
expense) shall be presumed correct and binding on the Lessee absent manifest
error.


 


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Section 15.5.                         Increased
Capital Costs.          If any
Participant reasonably determines that compliance with any law or regulation or
any guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law) issued, promulgated or made, as the
case may be, after the Closing Date (or, if later, the date on which such
Participant becomes a Participant) affects or would affect the amount of
capital required or expected to be maintained by such Participant or any
corporation controlling such Participant and that the amount of such capital is
increased by or based upon the existence of such Participant’s commitment
hereunder or under the Loan Agreement and other commitments of this type or the
Loans or Lessor Amount, then, within 30 days of demand by such Participant
together with the certificate referred to below (with a copy of such demand and
certificate to the Collateral Agent), the Lessee shall pay to the Collateral
Agent for the account of such Participant, from time to time as specified by
such Participant, additional amounts sufficient to compensate such Participant
or such corporation in the light of such circumstances, to the extent that such
Participant determines such increase in capital to be allocable to the
existence of such Participant’s commitment hereunder or under the Loan
Agreement or the Fundings made by such Participant hereunder, provided, that no
Participant shall be entitled to demand such compensation more than
90 days following the last day of the fiscal year of such Participant
during which such capital requirement was applicable and in respect of which
such Participant is seeking compensation; provided
further, however, that the foregoing proviso shall in no way limit
the right of any Participant to demand or receive such compensation to the
extent that such compensation relates to the retroactive application of any
law, regulation, guideline or request described above if such demand is made
within 90 days after the implementation of such retroactive law,
interpretation, guidelines or request. A reasonably detailed certificate as to
such amounts submitted to the Lessee and the Collateral Agent by such
Participant in good faith shall be conclusive and binding for all purposes,
absent manifest error.


 


Section 15.6.                         After Tax
Basis.            Lessee shall pay all
amounts owing under this Article XV on an After Tax Basis.


 


Section 15.7.                         Applicability
of Certain Sections and Payments.                           The
provisions of Sections 15.1 through 15.6 are applicable to the Lenders and
the Lessor in connection with any funding by reference to the LIBO Rate, and
not otherwise.


 


Section 15.8.                         Funding
Office; Mitigation of Costs.                                            If
the Lessee is required to pay additional amounts to or for the account of any
Participant pursuant to Sections 15.1 through 15.3, and 15.5 to the extent
applicable, then such Participant will agree to use reasonable efforts to
reduce or eliminate any claim for compensation thereunder, including, without
limitation, to change the jurisdiction of its Applicable Lending Office so as
to eliminate or reduce any such additional payment which may thereafter
accrue if such change, in the sole judgment of such Participant, is not
otherwise disadvantageous to such Participant.


 


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ARTICLE XVI




MISCELLANEOUS


 


Section 16.1.                         Survival
of Agreements.                The
representations and warranties made as of the date hereof and as of the Closing
Date and the parties’ obligations under any and all the covenants, indemnities
and agreements of the parties provided for in the Operative Documents, arising
from events commencing prior to the expiration or earlier termination of this
Participation Agreement and any other Operative Document, shall survive the
execution and delivery and the termination or expiration of this Participation
Agreement and any of the other Operative Documents, the transfer of the
interest in the Leased Property as provided herein or in any other Operative
Documents (and shall not be merged into any conveyance or transfer document),
any disposition of any interest of Lessor in the Leased Property, the purchase
and sale of the Notes or Lessor’s Interest, payment therefor and any
disposition thereof, and shall be and continue in effect notwithstanding any
investigation made by any party hereto or to any of the other Operative
Documents and the fact that any such party may waive compliance with any
of the other terms, provisions or conditions of any of the Operative Documents.


 


Section 16.2.                         No
Broker, Etc.            Except
for the Lessee’s dealing with Banc of America Leasing & Capital, LLC,
as Arranger, each of the parties hereto represents to the others that it has
not retained or employed any arranger, broker, finder or financial advisor to
act on its behalf in connection with this Participation Agreement, nor has it
authorized any arranger, broker, finder or financial adviser retained or
employed by any other Person so to act, nor has it incurred any fees or
commissions to which Collateral Agent or any Participant might be subjected by
virtue of their entering into the Overall Transaction. Any party who is in
breach of this representation shall indemnify and hold the other parties harmless
from and against any liability arising out of such breach of this
representation.


 


Section 16.3.                         Notices.    Unless otherwise specified
herein, all notices, requests, demands or other communications to or upon the
respective parties hereto shall be in writing and shall be deemed to have been
duly given and shall be effective:  (i) in
the case of notice by letter, the earlier of when delivered to the addressee by
hand or courier if delivered on a Business Day and, if not delivered on a
Business Day, the first Business Day thereafter or on the third Business Day
after depositing the same in the mails, registered or certified mail, postage
prepaid, return receipt requested, (ii) in the case of a prepaid delivery
to a reputable national overnight air courier service, on the Business Day
following such date of delivery, and (iii) in the case of notice by
facsimile or bank wire, when receipt is confirmed if delivered on a Business
Day and, if not delivered on a Business Day, the first Business Day thereafter,
addressed as provided on Schedule III hereto, or to such other address as
any of the parties hereto may designate by written notice.


 


Section 16.4.                         Counterparts.                    This
Participation Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.


 


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Section 16.5.                         Amendments.                         No
Operative Document (other than the Related Agreements pursuant to and in
accordance with Section 6.2 of the Lease) nor any of the terms thereof may be
terminated, amended, supplemented, waived or modified without the written
agreement or consent of Lessor and the Required Participants; provided that Section 16.20 hereof may not
be terminated, amended, supplemented, waived or modified without the written
agreement or consent of the Arranger; provided,
further, that such termination,
amendment, supplement, waiver or modification shall require the written
agreement or consent of each Participant if such termination, amendment,
supplement, waiver or modification would:


 


(a)                                  modify any of the
provisions of this Section 16.5, change the definition of “Required
Participants” or “Required Lenders” or modify or waive any provision of an
Operative Document requiring action by each Participant (including, without
limitation, Section 4.7 hereof);


 


(b)                                 (i) amend,
modify, waive or supplement any of the provisions of Section 4.1, 4.2 or
5.3 hereof or Section 2.5, 2.6 or 2.7 of the Loan Agreement or (ii) extend
the maturity date of any Note or extend the Expiration Date;


 


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


 


(d)                                 modify, postpone,
reduce or forgive, in whole or in part, any payment of Rent (other than
pursuant to the terms of the Operative Documents), any Loan or Lessor Amount or
any amount payable in respect of the Lease Balance, the Loan Balance, Sale
Option Recourse Amount, amounts due pursuant to Article XX of the Lease,
Interest or Yield, subject to clause (c) above, any other amount payable
to it under the Lease or this Participation Agreement, or modify the definition
or method of calculation of Rent (other than pursuant to the terms of the
Operative Documents), Loans or Lessor Amount, Lease Balance, Loan Balance,
Lessor Balance, Sale Option Recourse Amount, Participant Balance or any other
definition which would affect the amounts to be advanced or which are payable
under the Operative Documents;


 


(e)                                  consent to any
assignment of the Lease by the Lessee, releasing the Lessee from its
obligations in respect of the payments of Rent, Loan Balance, Lessor Balance or
Lease Balance or changing the absolute and unconditional character of such
obligations; or


 


(f)                                    release of any Lien
granted by the Lessee or the Lessor under the Operative Documents, except as
provided in the Operative Documents.


 


Section 16.6.                         Loan
Agreement and Related Obligations.           The
Lessee shall pay, as Supplemental Rent, when due, all costs, expenses and other
amounts (other than principal and Interest on the Loans which are payable to
the extent otherwise required by the Operative


 


60

















 


Documents)
required to be paid by the Lessor under the Loan Agreement and any Security
Instrument.


 


Section 16.7.                         Headings,
Etc.                 The Table of
Contents and headings of the various Articles and Sections of this
Participation Agreement are for convenience of reference only and shall not
modify, define, expand or limit any of the terms or provisions hereof.


 


Section 16.8.                         Parties
in Interest.                                            Except
as provided in Section 16.20 and as otherwise expressly provided herein,
none of the provisions of this Participation Agreement is intended for the
benefit of any Person except the parties hereto. Except as otherwise
specifically provided for in the Lease or any Operative Document, the Lessee
shall not assign or transfer any of its rights or obligations under the
Operative Documents without the prior written consent of the Required
Participants. Except as provided in Section 12.1, the Participants shall
not assign or transfer any of their respective rights or obligations under the
Operative Documents.


 


Section 16.9.                         Governing
Law.         This Participation
Agreement shall in all respects be governed by the internal law of the State of
New York as to all matters of construction, validity and performance, without
regard to conflicts of law principles to the extent permitted by Applicable
Law.


 


Section 16.10.                  Severability.                           Any
provision of this Participation Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.


 


Section 16.11.                  Liability
Limited.  No Participant shall have any
obligation to any other Participant or to the Lessee or the Collateral Agent
with respect to the Overall Transaction, except those obligations of such
Participant expressly set forth in the Operative Documents or except as set
forth in the instruments delivered in connection therewith, and no Participant
shall be liable for performance by any other party hereto of such other party’s
obligations under the Operative Documents, except as otherwise so set forth.


 


Section 16.12.                  Further
Assurances.                                   The
parties hereto shall promptly cause to be taken, executed, acknowledged or
delivered, at the sole expense of the Lessee, all such further acts,
conveyances, documents and assurances as the other parties may from time
to time reasonably request in order to carry out more effectively the intent
and purposes of this Participation Agreement and the other Operative Documents and
the Overall Transaction, including, without limitation to establish, preserve,
protect and perfect the interest of Lessor in the Subject Property and the
Lessee Collateral, the Lien of Lessor in the Lessee Collateral and Collateral
Agent in the Lessor Collateral and Lessee Collateral, and/or any Participant’s
rights under this Participation Agreement and the other Operative Documents
(including, without limitation, the preparation, execution and filing of any
and all UCC Financing Statements (including precautionary financing statements)
and other filings or registrations which the parties hereto may from time
to time reasonably request to be filed or effected). The Lessee, at its own
expense and without the need of any prior request from any other party, shall
take such action as may be necessary


 


61

















 


(including any
action specified in the preceding sentence), or (if the Lessor shall so
request) as so requested, in order to maintain and protect all Liens and
security interests provided for hereunder or under any other Operative
Document.


 


Section 16.13.                  Submission to
Jurisdiction.    Lessee hereto
irrevocably and unconditionally:


 


(a)                                  submits to the
nonexclusive jurisdiction of the state courts of the State of New York and to
the nonexclusive general jurisdiction of the United States District Court for
the Southern District of New York and of any New York state court sitting in
the borough of Manhattan, and appellate courts from any thereof, for the
purpose of any suit, action or other proceeding relating to or arising out of
this Participation Agreement or any other Operative Documents, or for
recognition and enforcement of any judgment in respect thereof; and


 


(b)                                 consents that any such
action or proceedings may be brought to such courts, and waives any
objection that it may now or hereafter have to the venue of any such
action or proceeding in any such court or that such action or proceeding was
brought in an inconvenient court and agrees not to plead or claim the same.


 


SECTION 16.14.      WAIVER OF JURY TRIAL.     THE PARTIES HERETO
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS PARTICIPATION AGREEMENT OR ANY OTHER OPERATIVE DOCUMENT,
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF ANY OF THE PARTIES HERETO AND THERETO. THE PARTIES
HERETO HEREBY AGREE THAT THEY WILL NOT SEEK TO CONSOLIDATE ANY SUCH LITIGATION
WITH ANY OTHER LITIGATION IN WHICH A JURY TRIAL HAS NOT OR CANNOT BE WAIVED. THE
PROVISIONS OF THIS SECTION 16.14 HAVE BEEN FULLY NEGOTIATED BY THE PARTIES
HERETO AND SHALL BE SUBJECT TO NO EXCEPTIONS. THE LESSEE ACKNOWLEDGES AND
AGREES THAT THEY HAVE RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS
PROVISION (AND EACH OTHER PROVISION OF EACH OTHER OPERATIVE DOCUMENT TO WHICH
THEY ARE A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
PARTICIPANTS ENTERING INTO THIS PARTICIPATION AGREEMENT AND EACH OTHER
OPERATIVE DOCUMENT.


 


Section 16.15.                  Confidentiality.          Each party hereto shall
keep confidential, and shall not disclose, any information not otherwise
publicly available it obtains about the Lessee or the books and records of
Lessee and each of its Affiliates or relating to the Leased Property, except
that such party may disclose such information (i) as required by
Applicable Laws, (ii) to its attorneys, auditors, accountants and other
professional advisors which have been informed as to the confidential nature of
such information, (iii) in connection with the enforcement of the
Operative Documents, (iv) to any transferee or potential transferee
permitted by the Operative Documents, provided such transferee or potential transferee
agrees to the terms of this sentence and (v) to any federal or state
banking authority or other regulatory authority having jurisdiction over any
Participant or Collateral Agent or any of their respective Affiliates.


 


62

















 


Section 16.16.                  Limited
Liability of Lessor.   The parties
hereto agree that Lessor shall have no liability whatsoever to 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 Participation
Agreement 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 Law, Governmental Action or third parties with respect
to the Subject Property shall not be deemed gross negligence or willful
misconduct, (b) any Lessor Lien attributable to it, (c) for
liabilities that may result from the inaccuracy or incorrectness of any
representation or warranty expressly made by it in Section 8.4 of this
Participation Agreement or (d) for the failure of Lessor to perform the
covenants and agreements set forth in the Lease and this Participation
Agreement.


 


Section 16.17.                  Limited
Liability of Collateral Agent.   The
parties hereto agree that Collateral Agent, in its individual capacity, shall
have no personal liability whatsoever to Lessee, the Lessor, the Lenders or any
of their respective successors and assigns for any Claim based on or in respect
of this Participation Agreement or any of the other Operative Documents or
arising in any way from the Overall Transaction; provided, however, that Collateral Agent shall be liable in
its individual capacity:  (a) for
its own willful misconduct or gross negligence (or negligence in the handling
of funds) and, to each Participant for the breach of its obligations to such
Participant in respect of the Operative Documents and the Leased Property, (b) for
liabilities that may result from the incorrectness of any representation
or warranty expressly made by it in this Participation Agreement or from its
failure to perform the covenants and agreements set forth in this
Participation Agreement or any other Operative Document, or (c) for any
Tax based on or measured by any fees, commission or compensation received by it
for actions contemplated by the Operative Documents. It is understood and
agreed that, except as provided in the preceding proviso, Collateral Agent
shall have no personal liability under any of the Operative Documents as a result
of acting pursuant to and consistent with any of the Operative Documents.


 


Section 16.18.                  Payment of
Transaction Expenses and Other Costs


 


(a)                                  Transaction Expenses and Continuing Expenses.
Subject to clause (b) below, as and when any portion of Transaction
Expenses becomes due and payable, including the continuing fees, expenses and
disbursements (including reasonable counsel fees and expenses) of Lessor, as
Lessor under the Lease, with respect to the Collateral Agent under the
Operative Documents, such Transaction Expenses shall be paid by Lessee as
Supplemental Rent.


 


(b)                                 Amendments, Supplements and Appraisal. In
accordance with the terms herein applicable to the payment of Transaction
Expenses, Lessee agrees to pay to the Participants and Collateral Agent all
reasonable costs and expenses (including reasonable legal fees and expenses of
one special counsel to the Collateral Agent and one special counsel to Lessor
and one special counsel for the Lenders) incurred by any of them in connection
with:  (i) the considering,
evaluating, investigating, negotiating and entering into or giving or
withholding of any amendments or supplements or waivers or consents with
respect to any Operative Document (other than with respect to amendments,
supplements, waivers or consents not requested by 


 


63

















 


Lessee); (ii) any
Event of Loss or termination of the Lease or any other Operative Document; (iii) the
negotiation and documentation of any restructuring or “workout”, whether or not
consummated, of any Operative Document; (iv) the enforcement of the rights
or remedies under the Operative Documents; or (v) any transfer by Lessor
or a Lender of any interest in the Operative Documents during the continuance
of an Event of Default.


 


Section 16.19.                  Reproduction of
Documents.   This Participation
Agreement, all documents constituting an Appendix, Schedule or Exhibit hereto,
and all documents relating hereto received by a party hereto, including,
without limitation:  (a) consents,
waivers and modifications that may hereafter be executed; (b) documents
received by the Participants in connection with the receipt and/or acquisition
of the Leased Property; and (c) financial statements, certificates, and
other information previously or hereafter furnished to Lessor, Collateral Agent
or any Lender may be reproduced by the party receiving the same by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. Each of the parties hereto agrees and stipulates that,
to the extent permitted by law, any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by such party in the regular course of business) and
that, to the extent permitted by law, any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence. This
Section 16.19 shall not prohibit the Lessee or any other party hereto from
contesting any such reproduction to the same extent that it could contest the
original, or from introducing evidence to demonstrate the inaccuracy of any
such reproduction.


 


Section 16.20.                  Role of Banc of
America Leasing & Capital, LLC.                     Each party hereto acknowledges
hereby that it is aware of the fact that Banc of America Leasing &
Capital, LLC has acted and is acting as an “arranger” with respect to the
Overall Transaction. The parties hereto acknowledge and agree that Arranger and
its Affiliates, including Bank of America, have not made any representations or
warranties concerning, and that they have not relied upon Arranger as to, the
tax, accounting or legal characterization or validity of (i) the Operative
Documents or (ii) any aspect of the Overall Transaction. The parties
hereto acknowledge and agree that Arranger has no duties, express or implied,
under the Operative Documents in its capacity as Arranger. The parties hereto
further agree that Section 5.1, Section 17.6, Section 16.2, the
first proviso in the first sentence of Section 16.5, Section 16.18(a) and
this Section 16.20 are for the express benefit of Arranger, and Arranger
shall be entitled to rely thereon as if it were a party hereto.


 


Section 16.21.                  Deliveries to
Participants.                                                 Lessee
may fulfill its obligations hereunder and under each of the other
Operative Documents to provide any item (other than any notices) to any
Participant or other party hereto by providing sufficient copies of such item
directly to the Collateral Agent, with instructions to the Collateral Agent to
deliver such item to such Participant.


 


64

















 


ARTICLE XVII




THE COLLATERAL AGENT


 


Section 17.1.                         Appointment.                       Each
Participant hereby irrevocably designates and appoints the Collateral Agent as
the Collateral Agent of such Participant under this Participation Agreement and
the other Operative Documents, and each such Participant irrevocably authorizes
the Collateral Agent, in such capacity, to take such action on its behalf under
the provisions of this Participation Agreement and the other Operative
Documents and to exercise such powers and perform such duties as are
expressly delegated to the Collateral Agent by the terms of this Participation
Agreement and the other Operative Documents, together with such other powers as
are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Participation Agreement, the Collateral Agent shall
not have any duties or responsibilities, except those expressly set forth
herein and in the other Operative Documents, or any fiduciary relationship with
any Participant or any other party to the Operative Documents, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities
shall be read into this Participation Agreement or any other Operative Document
or otherwise exist against the Collateral Agent.


 


Section 17.2.                         Delegation
of Duties.                             The
Collateral Agent may execute any of its duties under this Participation
Agreement and the other Operative Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties.


 


Section 17.3.                         Exculpatory
Provisions.             Except
as provided in Section 16.17, neither the Collateral Agent (in its
capacity as such) nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates shall be (a) liable for any action
lawfully taken or omitted to be taken by it or such Person under or in connection
with this Participation Agreement or any other Operative Document, except for
its or such Person’s own willful misconduct or gross negligence (or negligence
in the handling of funds) or (b) responsible in any manner to any of the
Participants or any other party to the Operative Documents for any recitals,
statements, representations or warranties made by the Lessor or the Lessee or
any officer thereof contained in this Participation Agreement or any other
Operative Document or in any certificate, report, statement or other document
referred to or provided for in, or received by the Collateral Agent under or in
connection with, this Participation Agreement or any other Operative Document,
or for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Participation Agreement or any other Operative Document or
for any failure of the Lessor or the Lessee to perform their respective
obligations hereunder or thereunder. The Collateral Agent shall not be under
any obligation to any Participant or any other party to the Operative Documents
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Participation Agreement or any
other Operative Document, or to inspect the properties, books or records of the
Lessor or the Lessee.


 


Section 17.4.                         Reliance
by Collateral Agent.                              The
Collateral Agent shall be entitled to rely, and shall be fully protected in
relying, upon any Note, Lessor’s Interest, writing, resolution, notice,
consent, certificate, affidavit, letter, facsimile message, statement, order or
other


 


65

















 


document or
other written communication believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to the
Lessor or the Lessee), independent accountants and other experts selected by
the Collateral Agent. The Collateral Agent may deem and treat the payee of
any Note or Lessor’s Interest as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been
filed with the Collateral Agent, in accordance with the Loan Agreement. The
Collateral Agent shall be fully justified in failing or refusing to take any
action under this Participation Agreement or any other Operative Document
unless it shall first receive the advice or concurrence of the Required
Participants and it shall first be indemnified to its satisfaction by the
applicable Participants against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action. The
Collateral Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Participation Agreement and the other
Operative Documents in accordance with a request of the Required Participants,
and such request and any action taken or failure to act pursuant thereto shall
be binding upon all the Participants and all future holders of the applicable
Notes or Lessor’s Interest. Wherever in the Operative Documents the consent or
approval of the Collateral Agent is required, in giving any such consent or
approval the Collateral Agent may rely upon, or make its approval subject
to, and if the Required Participants provide direction then Collateral Agent
shall consent or approve or withhold its consent or approval consistent with,
the directions of or consent or approval from the Required Participants.


 


Section 17.5.                         Notice of
Default.   The Collateral Agent shall
not be deemed to have knowledge or notice of the occurrence of any Default or
Event of Default unless the Collateral Agent has received notice from a
Participant or the Lessor referring to this Participation Agreement, describing
such Default or Event of Default and stating that such notice is a “notice of
default”. In the event that the Collateral Agent receives such a notice, the
Collateral Agent shall promptly give notice thereof to the Participants, the
Lessor and the Lessee. The Collateral Agent shall take such action with respect
to such Default or Event of Default as shall be directed by the Required
Participants or, except as set forth in Section 5.2 of the Loan Agreement,
the Required Lenders; provided, however,
that unless and until the Collateral Agent shall have received such directions,
the Collateral Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Participants.


 


Section 17.6.                         Non-Reliance
on Collateral Agent and Other Participants.   Each Participant expressly acknowledges that
neither the Collateral Agent, nor the Arranger, nor any of their respective
officers, directors, employees, agents, attorneys-in-fact or Affiliates, has
made any representations or warranties to it and that no act by the Collateral
Agent or the Arranger hereinafter taken, including any review of the affairs of
the Lessor or the Lessee, shall be deemed to constitute any representation or
warranty by the Collateral Agent or the Arranger to any Participant. Each
Participant represents to the Collateral Agent and the Arranger that it has,
independently and without reliance upon the Collateral Agent, the Arranger or
any other Participant, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of the Lessor and the Lessee and made its own decision to
enter


 


66

















 


into this
Participation Agreement. Each Participant also represents that it will,
independently and without reliance upon the Collateral Agent, the Arranger or
any other Participant, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this
Participation Agreement and the other Operative Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Lessor and the Lessee. Except for notices, reports and other documents
expressly required to be furnished to the Participants by the Collateral Agent
hereunder, neither the Collateral Agent nor the Arranger shall have any duty or
responsibility to provide any Participant with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Lessor or the Lessee which may come
into the possession of the Collateral Agent, the Arranger or any of their
respective officers, directors, employees, agents, attorneys-in-fact or
Affiliates.


 


Section 17.7.                         Indemnification.       Other than with respect to
indemnification provided to the Collateral Agent in accordance with Section 17.4,
the Collateral Agent agrees to look solely to the Lessee under Article XIII,
and not to any other party hereto, for any claim for indemnification which may arise
hereunder or under any other Operative Document.


 


Section 17.8.                         Collateral
Agent in Its Individual Capacity.  Each
Participant acknowledges that Wells Fargo Bank Northwest, National Association
is acting as Collateral Agent hereunder. Wells Fargo Bank Northwest, National
Association and its Affiliates may make loans to, issue letters of credit
for the account of, accept deposits from, acquire equity interests in and
generally engage in any kind of banking, trust, financial advisory,
underwriting or other business with the Lessor, the Lessee and their Affiliates
as though it was not the Collateral Agent hereunder and under the other
Operative Documents and without notice to or consent of the Participants. Each
Participant acknowledges that, pursuant to such activities, Wells Fargo Bank
Northwest, National Association or its Affiliates may receive information
regarding the Lessee, the Lessor or their respective Affiliates (including
information that may be subject to confidentiality obligations in favor of
the Lessee, the Lessor or their respective Affiliates) and acknowledges that
such Persons shall be under no obligation to provide such information to them.


 


Section 17.9.                         Successor
Collateral Agent.   The Collateral
Agent may resign at any time by giving not less than 30 days’ prior
written notice thereof to the Participants and the Lessee and may be
removed at any time with or without cause by the Required Participants. Upon
any such resignation or removal, the Required Participants shall have the right
to appoint a successor Collateral Agent. If no successor Collateral Agent shall
have been so appointed by the Required Participants, and shall have accepted
such appointment, within thirty (30) days after the retiring Collateral Agent’s
giving of notice of resignation or the Required Participants’ removal of the
retiring Collateral Agent, then the retiring Collateral Agent may, on behalf of
the Participants, appoint a successor Collateral Agent, which shall be a
commercial bank described in clause (i) or (ii) of the definition of “Eligible
Assignee” and having a combined capital and surplus of at least $150,000,000. Upon
the acceptance of any appointment as Collateral Agent hereunder by a successor
Collateral Agent, such successor Collateral Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Collateral Agent, and the retiring Collateral Agent shall be
discharged from its duties and obligations under this 


 


67

















 


Participation
Agreement. After any retiring Collateral Agent’s resignation or removal hereunder
as Collateral Agent, the provisions of this Article XVII shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Collateral Agent under this Agreement. Notwithstanding the foregoing if no
Event of Default and no Default, shall have occurred and be continuing, then no
successor Collateral Agent shall be appointed under this Section 17.9 without the prior
written consent of the Lessee, which consent shall not be unreasonably withheld
or delayed.


 


Section 17.10.                  Release of
Collateral.   Collateral Agent and
the Participants acknowledge and agree that Lessee shall be a third party
beneficiary of Section 6.2 of the Loan Agreement, pursuant to which the
Subject Property shall be released from all Liens in favor of the Collateral
Agent or any Participant upon Lessee’s purchase of the Subject Property in
accordance with the Lease.


 


[END OF PAGE]


[SIGNATURE PAGES FOLLOW]


 


68

















 


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


 


	
  LESSEE:

  	
  SILICON
  LABORATORIES INC., as Lessee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jonathan D. Ivester

  	
   

  	 

	
   

  	
   

  	
  Name:

  	
  Jonathan D.
  Ivester

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President of Worldwide Operations

  
							



 

















 


	
  LESSOR:

  	
  BAL
  INVESTMENT & ADVISORY INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sonia T. Delen

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Sonia T.
  Delen

  
	
   

  	
   

  	
  Title:

  	
  Principal

  
						



 

















 


	
  LENDERS:

  	
  COMERICA
  BANK, as Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles
  T. Johnson

  	
   

  
	
   

  	
   

  	
  Name:
  Charles T. Johnson

  
	
   

  	
   

  	
  Title: Vice
  President

  
					



 

















 


	
   

  	
  HSBC BANK
  USA, NATIONAL ASSOCIATION, as 

  
	
   

  	
  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stewart
  Kapnick

  	
   

  
	
   

  	
   

  	
  Name:
  Stewart Kapnick

  
	
   

  	
   

  	
  Title:
  Senior Vice President

  
					



 

















 


	
   

  	
  MIZUHO
  CORPORATE BANK, LTD., as Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Betram
  Tang

  	
   

  
	
   

  	
   

  	
  Name: Betram
  Tang

  
	
   

  	
   

  	
  Title:
  Senior Vice President & Team Leader

  
					



 

















 


	
   

  	
  BANK
  HAPOALIM B.M., as Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Shaun
  Breidbart

  	
   

  
	
   

  	
   

  	
  Name: Shaun
  Breidbart

  
	
   

  	
   

  	
  Title: Vice
  President

  
					



 


 


	
   

  	
  By:

  	
  /s/ Charles
  McLaughlin

  	
   

  
	
   

  	
   

  	
  Name:
  Charles McLaughlin

  
	
   

  	
   

  	
  Title: Senior
  Vice President

  
					



 

















 


	
  COLLATERAL
  AGENT:

  	
  WELLS FARGO
  BANK NORTHWEST, NATIONAL

  
	
   

  	
  ASSOCIATION, not in its individual
  capacity, 

  
	
   

  	
  except as expressly stated herein, but
  solely 

  
	
   

  	
  as Collateral Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Val T.
  Orton

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Val T. Orton

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  
						



 

















 


DEFINITIONS


 


APPENDIX 1


(to Participation Agreement)


 

















 


LESSOR COMMITMENT


 


	
  LESSOR

  	
   

  	
  COMMITMENT AMOUNT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  BAL
  Investment & Advisory, Inc.

  	
   

  	
  $

  	
  9,000,000

  	
   

  
					



 


SCHEDULE I


(to Participation
Agreement)


 

















 


LENDERS’ COMMITMENTS


 


	
  Lender

  	
   

  	
  Commitment Amounts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Bank
  Hapoalim B.M.

  	
   

  	
  $

  	
  5,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Comerica

  	
   

  	
  $

  	
  5,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  HSBC Bank
  USA, National Association

  	
   

  	
  $

  	
  15,250,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Mizuho
  Corporate Bank, Ltd.

  	
   

  	
  $

  	
  10,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total Loan
  Commitments:

  	
   

  	
  $

  	
  35,250,000.00

  	
   

  



 


SCHEDULE II


(to Participation
Agreement)


 

















 


NOTICE INFORMATION, PAYMENT OFFICES 

AND APPLICABLE LENDING OFFICES


 


LESSEE


 


SILICON
LABORATORIES INC.


4635 Boston
Lane


Austin, TX
78735


Attention:
Corporate Treasurer


Telephone:
512-464-9422


Facsimile:
512-464-9479


 


With a copy
to:


 


SILICON
LABORATORIES INC.


Attention:  Chief Financial Officer


4635 Boston
Lane


Austin, TX
78735


Telephone:
512-464-9260


Facsimilie:
512-428-1666


 


SILICON
LABORATORIES INC.


Attention:  Chief Legal Counsel


4635 Boston
Lane


Austin, TX
78735


Telephone:
512-464-9295


Facsimile:
512-428-1504


 


SILICON
LABORATORIES INC.


Attention:  Worldwide Facilities Manager


4635 Boston
Lane


Austin, TX
78735


Telephone:
512-464-9448


Facsimile:
512-464-9341


 


Wire
Instructions:


 


Bank Name: Bank
of America, N.A.


ABA No.:
0260-0959-3


Account No.:
004797976867


Account Name:
Silicon Laboratories Inc.


Swift Code:
BOFAUS3N


Reference: 400
West Ceasar Chavez


 


SCHEDULE III


(to Participation
Agreement)


 

















 


LESSOR


 


BAL INVESTMENT &
ADVISORY, INC.


One Financial
Plaza


RI1-537-02-02


Providence, RI
02903


Attention:  Cheryl Valcourt SVP-Operations


Telephone:  401-278-7241


Facsimile:  401-278-7207


 


Wire
Instructions:


Bank of
America


Concord, Ca


ABA No.:  026-009-593


Account
Of:  Banc of America Leasing &
Capital LLC


Account No. 12334-01992


Reference:  Silicon Labs


 


2

















 


COLLATERAL
AGENT


 


WELLS FARGO
BANK NORTHWEST, NATIONAL ASSOCIATION


299 South Main
Street, 12th Floor


Corporate
Trust Services


Salt Lake
City, Utah 84111


Attention:
DeAnn Madsen


Telephone:
(801) 246-5809


Facsimile:
(801) 246-5053


 


Wire
Instructions:


Wells Fargo
Bank, N.A.


ABA No.:
12100248


CR:  Corporate Trust Department


A/C.:
0510922115


Re: Silicon
Laboratories


 


3

















 


LENDERS


 


BANK HAPOALIM
B. M.


 


New York
Branch


1177 Avenue of
the Americas


New York, NY
10036


 


	
  Credit Contact:

  	
   

  	
  Operations Contact:

  
	
  Attention:
  Sean Breidbart

  	
   

  	
  Attention:
  Donna Gindoff

  
	
  Telephone:
  (212) 782-2186

  	
   

  	
  Telephone:
  (212) 782-2179

  
	
  Facsimile:
  (212) 782-2382

  	
   

  	
  Facsimile:
  (212) 782-2187

  



 


Wire
Instructions:


Bank:  Federal Reserve Bank of New York


ABA No.:  026-008-866


Account
No.:  011756-00000


Tax I.D.#
13-2775750


Attention:
Commercial Loan Operations


Reference: 
Silicon Labs


 


COMERICA BANK


 


	
  Credit
  Contacts:

  	
   

  	
  Administrative
  Contacts:

  
	
  910
  Louisiana St, Suite 400

  	
   

  	
  4100 Spring
  Valley Road, Suite 400

  
	
  Houston, TX
  77002

  	
   

  	
  Dallas, TX
  75265-0282

  
	
  Attention:
  Charles T. Johnson

  	
   

  	
  Attention:
  Pat Britton

  
	
  Telephone:
  (713) 220-5662

  	
   

  	
  Telephone:
  (972) 361-2598

  
	
  Fax: (713)
  220-5631

  	
   

  	
  Fax: (972)
  361-2519

  



 


Loan Wire
Instructions:


Bank:  Comerica Bank


ABA No.:
072000096


Account
No.:  21585-90010


Account
Name:  Commercial Loan Servicing


Reference:
Silicon Laboratories Inc.


Tax I.D. #
38-0477375


 


4

















 


HSBC BANK USA, NATIONAL ASSOCIATION


 


	
  Credit
  Contacts:

  	
   

  	
  Administrative
  Contact:

  
	
  425 Fifth
  Avenue, Tower 5

  	
   

  	
  One HSBC
  Center, 29th Floor

  
	
  New York, NY
  10018

  	
   

  	
  Buffalo, New
  York 14203

  
	
  Attention:
  Stewart Kapnick

  	
   

  	
  Attention:
  Maria Moncada

  
	
  Telephone:
  (212) 525-5266

  	
   

  	
  Telephone:
  (212) 525-8786

  
	
  Facsimile:
  (212) 525-8370

  	
   

  	
  Facsimile:
  (212) 525-8370

  



 


Wire
Instructions:


Bank:  HSBC Bank USA, National Association


ABA No.:
021001088


Account No.:
713-006-382


Account
Name:  AFS Wire Account


Attention:
Stewart Kapnick


Reference:
Silicon Labs


Tax I.D. #
20-1177241


 


MIZUHO CORPORATE BANK, LTD.


 


	
  Credit
  Contacts:

  	
   

  	
  Administrative
  Contacts:

  
	
  1251 Avenue
  of the Americas

  	
   

  	
  1800 Plaza
  Ten

  
	
  New York, NY
  10020-1104

  	
   

  	
  Harbor
  Financial Center

  
	
  Attention:
  Paulo Ferrera - AVP

  	
   

  	
  Jersey City,
  NJ 07311

  
	
  Telephone:
  (212) 282-4390

  	
   

  	
  Attention:
  Noreen Young

  
	
  Facsimile:
  (212) 282-4488

  	
   

  	
  Telephone:
  (202) 626-9341

  
	
   

  	
   

  	
  Facsimile:
  (202) 626-9941

  



 


	
  Secondary

  	
   

  	
  Secondary

  
	
  Attention:
  Bertram Tang - SVP

  	
   

  	
  Attention:
  Shirly Wu

  
	
  Telephone:
  (212) 282-3486

  	
   

  	
  Telephone:
  (202) 626-9416

  
	
  Facsimile:
  (212) 282-4488

  	
   

  	
  Facsimile:
  (202) 626-9941

  



 


Wire
Instructions:


Bank:  Mizuho Corporate Bank, Ltd., New York Branch


Address:  1251 Avenue of the Americas, New York, NY
10020-1104


ABA No.: 026
004 307


Account
No.:  H79-740-222205


Account
Name:  LAU-ISA


Attention:
Noreen Young


Reference:
Banc of America Leasing & Capital / Silicon Laboratories


Tax I.D. #  TBD


 


5

















 


CERTAIN FILINGS AND RECORDINGS


 


1.                                       The
Memorandum of Second Amendment to Ground Lease Agreement dated March 30,
2006 between the City of Austin and Computer Sciences Corporation for filing in
the appropriate offices of the County of Travis, Texas;


 


2.                                       The
Memorandum of Sixth Amendment to the Master Agreement dated March 30, 2006
between City of Austin and Computer Sciences Corporation for filing in the
appropriate offices of the County of Travis, Texas;


 


3.                                       The
Special Warranty Deed dated March 30, 2006 from Computer Sciences
Corporation to BAL Investment & Advisory, Inc. for filing in the
appropriate offices of the County of Travis, Texas;


 


4.                                       The
Assignment and Assumption of Ground Lease dated March 30, 2006 from
Computer Sciences Corporation to BAL Investment & Advisory, Inc.
for filing in the appropriate offices of the County of Travis, Texas;


 


5.                                       The
General Assignment dated March 30, 2006 from Computer Sciences Corporation
to BAL Investment & Advisory, Inc. for filing in the appropriate
offices of the County of Travis, Texas;


 


6.                                       The
Assignment of Leases, Security Deposits and Prepaid Rents dated March 30,
2006 from Computer Sciences Corporation to BAL Investment & Advisory, Inc.
for filing in the appropriate offices of the County of Travis, Texas;


 


7.                                       The
Memorandum of Lease, Deed of Trust and Security Agreement dated as of March 30,
2006 between BAL Investment & Advisory, Inc., as Lessor, and
Silicon Laboratories Inc., as Lessee for filing in the appropriate offices of
the County of Travis, Texas;


 


8.                                       The
Leasehold Deed of Trust, Security Agreement and Fixture Filing with Assignment
of Rents dated as of March 30, 2006 from BAL Investment &
Advisory, Inc., as Lessor, to Gary S. Farmer, as Trustee, the Deed of
Trust Trustee named therein, for the benefit of Wells Fargo Bank Northwest, National
Association, as Collateral Agent, as beneficiary, with Joinder by Silicon
Laboratories Inc. for filing in the appropriate offices of the County of
Travis, Texas;


 


9.                                       The
Assignment of Leases and Rents and Security Agreement dated as of March 30,
2006 from BAL Investment & Advisory, Inc., to Wells Fargo Bank
Northwest, National Association, as Collateral Agent, with Joinder by Silicon
Laboratories Inc. for filing in the appropriate offices of the County of
Travis, Texas;


 


10.                                 The
Assignment of Purchase Agreement dated as of March 30, 2006 from Silicon
Laboratories Inc. to BAL Investment & Advisory, Inc. for filing
in the appropriate offices of the County of Travis, Texas;


 


SCHEDULE 6.1(s)


(to Participation Agreement)


 

















 


11.                                 One
(1) UCC-1 Financing Statement from the Lessee, as debtor to the Lessor, as
secured party (relating to the Lease) for filing with the Secretary of State of
the State of Delaware; and


 


12.                                 One
(1) UCC-1 Financing Statement from the Lessor, as debtor to the Collateral
Agent, as secured party (relating to the Assignment of Leases and Rents) for
filing with the Secretary of State of the State of Delaware.


 


2

















 


DISCLOSURE SCHEDULE


 


Notwithstanding anything to the contrary contained in Section 8.2(h) of
the Participation Agreement, the Lessee hereby acknowledges that it may reclassify
approximately $155 million of variable rate demand notes from “Cash and Cash
Equivalents” to “Short-term Investments” and make the related adjustments to the
consolidated statement of cash flows.


 


SCHEDULE 8.2


(to Participation Agreement)


 






 













 


Agreements to be
Terminated


 


1.             Office Lease dated
February 11, 2002 between Seller and Microsoft Corporation.


 


2.             Amended and Restated Underground
Tunnel Agreement dated as January 31, 2002 between Seller and the City of
Austin, Texas.


 


3.             View Corridor Easement Agreement
dated as of February 15, 2000 between the City of Austin, Texas and the
Seller.


 


Schedule
8.2(ff)


(to Participation Agreement)


 

















 


Form of Advance
Request


 


Exhibit A


(to Participation Agreement)


 

















 


Form of Opinion of
Special Counsel to the Participants


 


Exhibit B-1


(to Participation Agreement)


 

















 


Form of Opinion of
Special Counsel to Lessee


 


Exhibit B-2


(to Participation Agreement)


 

















 


Form of Assignment of
Lease and Rent and Security Agreement


 


Exhibit C


(to Participation Agreement)


 

















 


Form of Responsible
Officer’s Certificate of Lessee


 


Exhibit D


(to Participation Agreement)


 

















 


Form of Assignment
Agreement


 


Exhibit F


(to Participation Agreement)


 

















 


[Intentionally
Omitted]


 


Exhibit G


(to Participation Agreement)


 

















 


Form of Officer’s
Certificate of Lessee


 


Exhibit H-1


(to Participation Agreement)


 

















 


Form of Officer’s
Certificate of Lessor


 


Exhibit H-2


(to Participation Agreement)


 

















 


Form of Offeree Letter


 


Exhibit L


(to Participation Agreement)


 

















 


Form of Ground Lessor
Estoppel Certificate


 


Exhibit M


(to Participation Agreement)


 

















 


Appendix 1


to


Participation
Agreement


 


Definitions and
Interpretation


 


A.            Interpretation.  In each Operative Document, unless a clear
contrary intention appears:


 


(i)         the singular number includes the plural
number and vice versa;


 


(ii)        reference to any Person includes such
Person’s successors and assigns but, if applicable, only if such successors and
assigns are permitted by the Operative Documents, and reference to a Person in
a particular capacity excludes such Person in any other capacity or
individually;


 


(iii)       reference to any gender includes the
other gender;


 


(iv)       reference to any agreement (including any
Operative Document), document or instrument means such agreement, document or
instrument as amended or modified and in effect from time to time in accordance
with the terms thereof and, if applicable, the terms of the other Operative
Documents, and reference to any promissory note includes any promissory note
which is an extension or renewal thereof or a substitute or replacement
therefor;


 


(v)        reference to any Applicable Laws means
such Applicable Laws as amended, modified, codified, replaced or reenacted, in
whole or in part, and in effect from time to time, including rules and
regulations promulgated thereunder and reference to any section or other
provision of any Applicable Laws means that provision of such Applicable Laws
from time to time in effect and constituting the substantive amendment,
modification, codification, replacement or reenactment of such section or other
provision;


 


(vi)       reference in any Operative Document to
any Article, Section, Appendix, Schedule or Exhibit means such Article or
Section thereof or Appendix, Schedule or Exhibit thereto;


 


(vii)      “hereunder”, “hereof”, “hereto” and words
of similar import shall be deemed references to an Operative Document as a
whole and not to any particular Article, Section or other provision thereof;


 


(viii)     “including” (and with correlative meaning “include”)
means including without limiting the generality of any description preceding
such term;


 


2

















 


(ix)       relative to the determination of any
period of time, “from” means “from and including,” “to” and “until” each mean “to
but excluding;” and


 


(x)        with respect to any rights and
obligations of the parties under the Operative Documents, all such rights and
obligations shall be construed to the extent permitted by Applicable Law.


 


B.            Accounting Terms.  In each Operative Document, unless expressly
otherwise provided, accounting terms shall be construed and interpreted, and
accounting determinations and computations shall be made, and all financial
statements required to be delivered thereunder shall be prepared, in accordance
with GAAP, applied on a basis consistent (except for changes concurred in by
the Lessee’s independent public accountants or otherwise required by a change
in GAAP ) with the most recent audited consolidated financial statements of the
Lessee and its Consolidated Subsidiaries delivered to the Participants.


 


C.            Conflict in Operative
Documents.  If there is any
conflict between any Operative Documents, such Operative Document shall be
interpreted and construed, if possible, so as to avoid or minimize such
conflict, but, to the extent (and only to the extent) of such conflict, the
Participation Agreement shall prevail and control.


 


D.            Legal Representation of
the Parties.  The Operative
Documents were negotiated by the parties with the benefit of legal
representation and any rule of construction or interpretation otherwise
requiring the Operative Document to be construed or interpreted against any
party shall not apply to any construction or interpretation hereof or thereof.


 


E.             Defined Terms.  Unless a clear contrary intention appears, terms
defined herein have the respective indicated meanings when used in each
Operative Document.


 


“Acceleration” is defined
in Section 5.2(a)(ii) of the Loan Agreement.


 


“Advance” means the
advance by the Collateral Agent (on behalf of the Lessor) to the Seller to
purchase the Subject Property and of funds to pay Transaction Expenses, which
shall be Funded by the Participants pursuant to Article III of the
Participation Agreement.


 


“Advance Request” is defined
in Section 3.3(a) of the Participation Agreement.


 


“Affiliate” means, with
respect to any Person, any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with such Person.  For purposes of this definition, “control”,
when used with respect to any Person, means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms “controlling”
and “controlled” have meanings correlative to the foregoing.


 


“After Tax Basis” means, with
respect to any payment to be received (to the extent the receipt of such
payment constitutes taxable income to such recipient), the amount of such
payment increased so that, after deduction of the amount of all Taxes
(including any Taxes


 


3

















 


payable by reason of
inclusion of such amount in income otherwise excluded by the definition of
Impositions, and assuming for this purpose that the recipient of such payment
is subject to taxation at the highest Federal and applicable state and local
marginal rates applicable to such recipient for the year in which such income
is taxable) required to be paid by the recipient (less any tax savings,
credits, deductions or other quantifiable tax benefits realized, utilizing the
same tax rate assumptions as set forth in the immediately preceding
parenthetical phrase, and the present value of any tax savings projected,
utilizing the same tax rate assumptions as set forth in the immediately
preceding parenthetical phrase, to be realized by the recipient as a result of
such payment) with respect to the receipt by the recipient of such amounts,
such increased payment (as so reduced) is equal to the payment otherwise
required to be made.


 


“Aggregate Commitment Amount” means
$44,250,000.


 


“ALTA” means the
American Land Title Association.


 


“Alternate Base Rate” means, on
any date with respect to any Loan or Lessor Amount, a fluctuating rate of
interest per annum equal to the higher of (A) the rate of interest most
recently announced by Bank of America at its principal lending office in the
United States from time to time as its “prime rate,” which need not be the
lowest interest rate charged by Bank of America, and (B) the Federal Funds
Effective Rate most recently determined by Bank of America plus .50% per
annum.  If either of the aforesaid rates
or their equivalent changes from time to time after the Closing Date, the
Alternate Base Rate shall be automatically increased or decreased, if appropriate
and as the case may be, without notice to Lessee or the Lessor, as of the
effective time of each change.


 


“Applicable Lessor Margin” means, at
any time of determination of the LIBO Rate, 2.00%.


 


“Applicable Laws” at any time
means all then existing applicable laws, rules, regulations (including
Environmental Laws) statutes, treaties, codes, ordinances, permits,
certificates, orders and licenses of and interpretations by any Governmental
Authority, and applicable judgments, decrees, injunctions, writs, orders or
like action of any court, arbitrator or other administrative, judicial or
quasi-judicial tribunal or agency of competent jurisdiction (including those
pertaining to health, safety or the environment (including, without limitation,
wetlands)).


 


“Applicable Lender Margin” means, at
any time of determination of the LIBO Rate, 0.875%.


 


“Applicable Lending Office” means, for
each Participant, the office of such Participant set forth as the Applicable
Lending Office for such Participant on Schedule III to the Participation
Agreement, or such other office of such Participant (or of an Affiliate of such
Participant) as such Participant may from time to time specify to the
Collateral Agent and Lessee by written notice as the office from which its
Loans or Lessor Amount, as applicable, accruing Interest or Yield, as
applicable, at the LIBO Rate (Reserve Adjusted) are made available and
maintained.


 


4

















 


“Appraisal” means the “Appraisal”
as defined in Section 6.1(j) of the Participation Agreement.


 


“Appraiser” means the
AEGIS Group, Inc. or any independent MAI appraiser selected by the Collateral
Agent.


 


“Appurtenant Rights” means, with
respect to the Land, (i) all agreements, easements, rights of way or use,
rights of ingress or egress, privileges, appurtenances, tenements, and other
rights and benefits at any time belonging or pertaining to the Land or the
Improvements thereon, including, without limitation, the use of any streets,
ways, alleys, vaults or strips of land adjoining, abutting, adjacent or
contiguous to the Land and (ii) all permits, licenses and rights, whether
or not of record, appurtenant to the Land.


 


“Arrangement Fee Letter” means that
certain letter agreement dated February 28, 2006, between Arranger and
Lessee.


 


“Arranger” means Banc
of America Leasing & Capital, LLC.


 


“Assignee” is defined
in the caption of the Assignment of Leases and Rents to mean the Collateral
Agent.


 


“Assignment Agreement” means an
Assignment Agreement, substantially in the form of Exhibit F to the
Participation Agreement, as amended or modified from time to time.


 


“Assignment of Ground Lease” means the
Assignment and Assumption of Ground Lease dated as of March 30, 2006 from
the Seller to Lessor.


 


“Assignment of Related Agreements” means the
General Assignment in the form of Exhibit M to the Purchase Agreement
dated as of March 30, 2006 and executed by Seller and Lessor.


 


“Assignment of Leases and Rents” means the
Assignment of Leases and Rents and Security Agreement dated as of
March 30, 2006 from Lessor to Collateral Agent, as amended, modified or
other supplemented from time to time.


 


“Assignment of Purchase Agreement” means the
Assignment of Purchase Agreement dated as of March 30, 2006 between the
Lessee and the Lessor.


 


“Assignment of Subleases” means the
Assignment of Leases, Security Deposits and Prepaid Rents in the form of
Exhibit L to the Purchase Agreement dated as of March 30, 2006 and
executed by Seller and Lessor.


 


“Assignor” is defined
in the caption of the Security Agreement to mean the Lessor.


 


“Authorized Officer” means any
officer of Lessor who shall be duly authorized to execute the Operative
Documents.


 


5

















 


“Bank of America” means Bank
of America, National Association.


 


“Bankruptcy Code” means the
Bankruptcy Reform Act of 1978, as amended.


 


“Basic Rent” means, for
any Payment Date on which Basic Rent is due, an amount equal to the sum of the
aggregate amount of Interest and Yield payable under the Operative Documents on
such date on the Notes and the Lessor Amount in respect of the applicable
Interest Period.


 


“Benefited Lender” is defined
in Section 8.6 of the Loan Agreement.


 


“Benefited Participant” is defined
in Section 5.4 of the Participation Agreement.


 


“Borrower” means
Lessor, in its capacity as borrower under the Loan Agreement.


 


“Break Costs” means an
amount equal to the amount, if any, required to compensate Lessor or any Lender
for any additional losses (including, without limitation, any loss, cost or expense
incurred by reason of the liquidation or reemployment of deposits or funds
acquired by Lessor or any Lender to fund its obligations under the Operative
Documents) it may reasonably incur as a result of (x) the Lessee’s payment
of Basic Rent other than on a Payment Date, (y) the Advance not being made
on the date specified therefor in the Advance Request (other than as a result
of a breach by Lessor or such Lender, as the case may be, of its obligation
under Section 3.1 of the Participation Agreement to make the Advance to
the Lessee or make Lessor Amount or Loans available to the Lessor) or
(z) any conversion of the LIBO Rate during an Interest Period pursuant to
and in accordance with the Operative Documents. 
A statement as to the amount of such loss, cost or expense, prepared in
good faith and in reasonable detail and submitted by Lessor or any Lender, as
the case may be, to the Lessee, shall be presumed correct absent demonstrable
error.


 


“Business Day” means
(i) each Monday, Tuesday, Wednesday, Thursday and Friday, which is not a
day on which banks in New York, New York, Austin, Texas, Salt Lake City, Utah
or Providence, Rhode Island are generally authorized or obligated, by law or
executive order, to close and (ii) in connection with the LIBO Rate, any day
which is a Business Day under clause (i) and is also a day on which
dealings in Dollars are carried on in the London interbank eurodollar market.


 


“Bylaws” means all
written bylaws, rules, regulations and all other documents relating to the management,
governance or internal regulation of any Person other than an individual or
interpretive of the Charter of such Person, all as from time to time in effect.


 


“Capitalized Leases” means, in
the case of any Person, (a) all leases that have been, should be or are
expected to be recorded as capital leases on a balance sheet of such Person in
accordance with GAAP, and (b) the principal balance outstanding under any
synthetic lease, tax retention operating lease, off-balance sheet loan or
similar off balance sheet financing transaction where such transaction is
considered borrowed money indebtedness for tax purposes but is classified as an
operating lease in accordance with GAAP.


 


6

















 


“Cash” means the sum of (i) cash and cash equivalents, plus (ii) short-term investments as stated on Lessee’s
financial statements rated at least A/A2 by S&P and Moody’s, respectively,
that are included as current assets in the Lessee’s financial statements
prepared in accordance with GAAP, in each case, which are not subject to any
Lien of any kind.


 


“Casualty” means an
event of damage or destruction relating to all or any portion of the Leased
Property.


 


“CERCLA” means the
federal Comprehensive Environmental Response, Compensation and Liability Act of
1980.


 


“Certificate of Deposit Rate” means the
highest rate of return for certificates of deposit issued by Bank of America
and having a maturity of one month.


 


“Change in Law” means any
change or proposed change in or any introduction of or interpretation (whether
or not having the force of law and whether or not failure to comply therewith
would be unlawful) after the Closing Date of Applicable Law or any regulations,
policies, directives or guidelines issued by any governmental body, central
bank or other fiscal or monetary or accounting authority or other national,
international, state or local organization which purports to regulate or
otherwise affects a Participant.


 


“Charter” means the
articles of organization, certificate of incorporation, statute, constitution,
joint venture agreement, partnership agreement, trust indenture, limited
liability company agreement or other charter document of any Person other than
an individual, each as from time to time in effect.


 


“City of Austin” means the
City of Austin, Texas, a home rule city and municipal corporation.


 


“Claims” means any
and all obligations, liabilities, losses, actions, suits, judgments, penalties,
fines, claims, demands, settlements, costs and expenses (including, without limitation,
reasonable legal fees and expenses) of any nature whatsoever; provided, however, “Claims” shall not include Taxes.


 


“Closing Date” is defined
in Section 2.1 of the Participation Agreement.


 


“Code” means the
Internal Revenue Code of 1986, as amended, reformed or otherwise modified from
time to time, or any successor statute thereto.


 


“Collateral Agent” means Wells
Fargo Bank Northwest, National Association, in its capacity as Collateral
Agent, or any successor Collateral Agent designated in accordance with the
Operative Documents.


 


“Collateral Agent Fee Letter” means the
fee letter dated March 30, 2006, between Lessee and Collateral Agent.


 


7

















 


“Commitment” means
(i) as to any Lender, its Loan Commitment, and (ii) as to Lessor, its
Lessor Commitment.


 


“Condemnation” means any
condemnation, requisition, confiscation, seizure or other taking or sale of the
use or title to the Subject Property or any part thereof (temporarily or
permanently) in, by or on account of any eminent domain proceeding or other
action by any Governmental Authority under the power of eminent domain or
otherwise or any transfer in lieu of or in anticipation thereof.  A Condemnation shall be deemed to have “occurred”
on the earliest of the dates that use or title is taken or transferred.


 


“Consolidated” means, with
respect to any Person’s accounts, the accounts of the Person and all of its
Subsidiaries, or such of its Subsidiaries as may be specified, consolidated (or
combined) in accordance with GAAP.


 


“Credit Exposure” means
(i) in the case of a Participant that is the Lessor, the outstanding
amount of the Lessor Amount owed to the Lessor, and (ii) in the case of a
Participant that is a Lender, the aggregate outstanding amount of Loans made by
such Lender.


 


“Deed” is defined
in Section 6.1(o) of the Participation Agreement.


 


“Deed of Trust” means the
Leasehold Deed of Trust, Security Agreement and Fixture Filing with Assignment
of Rents dated as of March 30, 2006, from Lessor in favor of the Deed of
Trust Trustee for the benefit of Collateral Agent.


 


“Deed of Trust Trustee” means
Gary S. Farmer, together with his successor in trust pursuant to the Deed
of Trust.


 


“Default” means any
condition, occurrence or event which, after notice or lapse of time or both,
would constitute an Event of Default.


 


“Dollars” and “$” mean dollars in lawful currency of the United States of
America.


 


“Early Termination Option” means the
Lessee’s option to purchase the Subject Property in accordance with the provisions
of Section 18.1 of the Lease.


 


“EBITDAR” means, for
any period, the sum of (a) Net Income for such period (excluding the effect of
any extraordinary gains), plus (b) an amount which, in the determination of Net
Income for such period, has been deducted for (i) Interest Expense for such
period, and (ii) total federal, state and other income taxes for such period,
and (iii) all depreciation and amortization for such period, and (iv) total
expenses associated with the non-cash portion of all employee bonus plans for
such period, and (v) stock compensation expense in connection with stock
options or stock awards, and (vi) write-offs of in-process or acquired research
and development costs, and (vii) impairment charges related to intangible
assets, and (viii) impairment of tangible assets other than investments, and
(ix) restructuring charges (other than cash costs relating to such charges),
and (x) Lease Expense for such period, all as determined in accordance with
GAAP.


 


8

















 


“EDGAR” means the
SEC’s Electronic Data Gathering, Analysis and Retrieval System or any successor
system.


 


“Eligible Assignee” means
(i) a commercial bank organized under the laws of the United States, or
any State thereof; (ii) a commercial bank organized under the laws of any
other country that is a member of the OECD or has concluded special lending
arrangements with the International Monetary Fund associated with its general
arrangements to borrow, or a political subdivision of any such country, provided that such bank is acting through a branch or agency
located in the United States; (iii) a finance company, leasing company or
other financial institution or fund (whether a corporation, partnership or
other entity) primarily engaged in making, purchasing or otherwise investing in
commercial loans or lease transactions in the ordinary course of its business;
(iv) the central bank of any country that is a member of the OECD; or
(v) any Affiliate of any Participant; provided, however,
that any such Person described in clause (i), (ii), (iii), (iv) or
(v) above shall have, or be a subsidiary of an entity (and such entity
shall guarantee such subsidiary’s obligations under the Operative Documents)
that has, a combined capital and surplus (as established in its most recent
report of condition to its primary regulator) of not less than $75,000,000 (or
its equivalent in foreign currency).


 


“Environmental Audit” means a
Phase One environmental site assessment (the scope and performance of which meets
or exceeds ASTM Standard Practice E1527-00 Standard Practice for Environmental
Site Assessments:  Phase One
Environmental Site Assessment Process) of the Land.


 


“Environmental Claims” is defined
in Section 13.6 of the Participation Agreement.


 


“Environmental Laws” means any
and all applicable federal, state and local statutes, laws, judicial decisions,
regulations, ordinances, rules, judgments, orders, decrees, injunctions,
permits, concessions, grants, licenses, agreements and other governmental restrictions
relating to the environment, the effect of the environment on human health or
to emissions, discharges or releases of pollutants, contaminants, Hazardous
Substances or wastes into the environment including, without limitation,
ambient air, surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, Hazardous Substances or
wastes or the clean-up or other remediation thereof in effect in any
jurisdiction in which the Lessee is conducting or have conducted business or
where the Subject Property is located.


 


“Environmental Violation” means, with
respect to the Subject Property, any activity, occurrence or condition that
violates or results in non-compliance with any Environmental Law.


 


“ERISA” means the
Employee Retirement Income Security Act of 1974, as amended from time to time,
and the regulations promulgated and rulings issued thereunder, each as in
effect and amended and modified from time to time.


 


“ERISA Event” means
(a) a Reportable Event with respect to a Plan; (b) a withdrawal by an
ERISA Group Person from a Plan subject to Section 4063 of ERISA during a
plan year in which it was a substantial employer (as defined in
Section 4001(a)(2) of ERISA) or a cessation


 


9

















 


of operations which is
treated as such a withdrawal under Section 4062(e) of ERISA; (c) a
complete or partial withdrawal by an ERISA Group Person from a Multiemployer
Plan or notification that a Multiemployer Plan is in reorganization;
(d) the filing, of a notice of intent to terminate under
Section 4041(c) of ERISA, the treatment of a Plan amendment as a
termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Plan or Multiemployer Plan; (e) an
event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of
a trustee to administer, any Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than PBGC premiums
due but not delinquent under Section 4007 of ERISA, upon an ERISA Group
Person.


 


“ERISA Group” means the
Lessee and all members of a controlled group of corporations and all trades or
businesses (whether or not incorporated) under common control which, together
with the Lessee, are treated as a single employer under Section 414 of the
Internal Revenue Code.


 


“Escrow” is defined
in Section 3 of the Purchase Agreement.


 


“Escrow Agent” means
Heritage Title Insurance Company of Austin, Inc.


 


“Estoppel Certificate” means the
Ground Lessor Estoppel Certificate dated the Closing Date and executed by the
City of Austin in the form of Exhibit M to the Participation Agreement.


 


“Event of Default” is defined
at Section 16.1 of the Lease.


 


“Event of Loss” means any
Significant Casualty or Significant Condemnation.


 


“Excepted Payments” means:


 


(a)        all indemnity payments (including
indemnity payments made pursuant to Article XIII of the Participation
Agreement) to which any Participant or any of their respective Affiliates,
agents, officers, directors or employees is entitled pursuant to the Operative
Documents;


 


(b)        any amounts (other than Basic Rent or
amounts payable by Lessee pursuant to Section 15.2 or Articles XVI,
XVIII, XIX or XX of the Lease) payable under any Operative Document to
reimburse the Lessor or any of its respective Affiliates (including the
reasonable expenses of the Lessor or such Affiliates incurred in connection
with any such payment) for performing or complying with any of the obligations
of the Lessee under and as permitted by any Operative Document;


 


(c)        any amount payable to any Participant by
any transferee permitted under the Operative Documents of the interest of any
Participant as the purchase price of the Participant’s interest (or a portion
thereof);


 


10

















 


(d)        any insurance proceeds (or payments with
respect to self-insured risks or policy deductibles) under liability policies,
other than such proceeds or payments payable to any Participant or Collateral
Agent;


 


(e)        any insurance proceeds under policies
maintained by the Collateral Agent or any Participant in accordance with
Section 13.4 of the Lease;


 


(f) Transaction Expenses, Contingent Rent or Fees
paid or payable to or for the benefit of the Collateral Agent, Arranger or any
Participant;


 


(g)        all right, title and interest of the
Lessor to the Subject Property or any portion thereof or any other property to
the extent any of the foregoing has been released from the Liens of the
Security Instruments following the payment of the Lease Balance; and


 


(h)        any payments in respect of interest to
the extent attributable to payments referred to in clauses (a) through (g)
above.


 


“Excess Sales Proceeds” means
proceeds received upon a sale of any or all of the Subject Property in excess
of the amounts required to pay the Lease Balance and other amounts then due and
owing under the Participation Agreement and the other Operative Documents.


 


“Exchange Act” means the
Securities Exchange Act of 1934, and the regulations promulgated thereunder, in
each case as amended from time to time.


 


“Expiration Date” means the
date which is eighty-four (84) months after the Closing Date.


 


“Extended Remarketing Period” is defined
in Section 20.3 of the Lease.


 


“Facility” means (i)
the six story, approximately 220,000 square foot, office and retail building
located at 400 W. Cesar Chavez in Austin, Texas, (ii) the other
Improvements and (iii) the Appurtenant Rights.


 


“Fair Market Value” means with
respect to the Subject Property or any portion thereof, as of the date of the
determination, the amount (which in any event shall not be less than zero) as
determined by an independent MAI appraiser chosen by the Collateral Agent (at
the direction of the Lessor) and reasonably acceptable to Lessee that would be
paid in an arm’s-length transaction between an informed and willing buyer
(other than a buyer currently in possession) and an informed and willing
seller, neither of whom is under any compulsion to buy or sell, and neither of
which is related to Lessor, Collateral Agent, Lessee or any Affiliate thereof,
for the purchase of the Subject Property or such portion thereof, as
applicable.  Such Fair Market Value shall
be calculated assuming that the Leased Property is in the condition and state
of repair required to be maintained by the terms of the Lease (unless such Fair
Market Value is being determined for purposes of evaluating the items described
in the End of Term Indemnity in Section 13.2 of the Participation
Agreement, in which case this assumption shall not be made).


 


11

















 


“FASB Statement No. 13” means Statement
of Financial Accounting Standards No. 13, Accounting for Leases, of the
Financial Accounting Standards Board or any applicable successor provision or
regulating body for purposes of establishing standards of financial accounting
and reporting for Leases by Lessees.


 


“Federal Funds Effective Rate” means, for
any day, the rate set forth in the weekly statistical release designated as
H.15(519), or any successor publication, published by the Federal Reserve Bank
of New York (including any such successor, “H.15(519)”) on the preceding
Business Day opposite the caption “Federal Funds (Effective)”; or, if for any
relevant day such rate is not so published on any such preceding Business Day,
the rate for such day will be the arithmetic mean as determined by the
Collateral Agent, of the rate for the last transaction in overnight Federal
funds arranged prior to 9:00 a.m. (New York City time) on that day by each of
three leading brokers of Federal funds transactions in New York City selected
by Collateral Agent.


 


“Fee Letters” means,
collectively, the Arrangement Fee Letter and the Collateral Agent Fee Letter.


 


“Fees” is defined
in Section 4.5 of the Participation Agreement.


 


“Financial Officer” means the
Lessee’s chief executive officer, chief financial officer, chief operating
officer, controller, assistant treasurer, president, treasurer or any of its
vice presidents whose primary responsibility is for its financial affairs, all
of whose incumbency and signatures have been certified to the Participants by
the secretary or other appropriate attesting officer of the Lessee.


 


“Funded Debt” means any
of the following items:


 


(a)        borrowed money;


 


(b)        Capitalized Lease obligations;


 


 (c)        all
scheduled payment obligations under any operating lease having a term of greater
than one year;


 


 (d)        reimbursement
obligations, whether contingent or matured, with respect to letters of credit,
bankers acceptances, other financial guarantees and interest rate protection
agreements (without duplication of other Funded Debt supported or guaranteed
thereby); and


 


 (e)        all
Guarantees in respect of Funded Debt of the type described in clauses (a)
through (d) above.


 


“FIRREA” means the
Financial Institution Reform, Recovery and Enforcement Act of 1989, as amended,
and all regulations promulgated pursuant thereto.


 


12

















 


“F.R.S. Board” means the
Board of Governors of the Federal Reserve System or any successor thereto.


 


“Fund,” “Funded” or “Funding” means
each funding by a Participant of a portion of the principal under its Note or a
portion of its Lessor Amount (as the case may be) constituting a portion of the
Advance as described in Article III of the Participation Agreement.


 


“Funding Indemnity Letter” is defined
in Section 6.1(e) of the Participation Agreement.


 


“GAAP” means
United States generally accepted accounting principles (including principles of
consolidation), in effect from time to time.


 


“General Indemnitee” or “Tax Indemnitee” means each Lender, the Lessor, the
Collateral Agent (in its individual capacity and as agent), the Arranger, any
additional, separate or co-trustee or co-agent appointed in accordance with the
terms of the Participation Agreement and the respective Affiliates, successors,
permitted assigns, permitted transferees, employees, officers, directors,
shareholders, partners, participants, representatives and agents of each of the
foregoing Persons; provided, however,
that in no event shall Lessee or any of its Affiliates be a General Indemnitee
or Tax Indemnitee.


 


“Governmental Action” means all
permits, authorizations, registrations, consents, approvals, waivers,
exceptions, variances, orders, judgments, written interpretations, decrees,
licenses, exemptions, publications, filings, notices to and declarations of or
with, or required by, any Governmental Authority, or required by any Applicable
Laws, and shall include, without limitation, all environmental and operating
permits and licenses that are required for the full use and operation of the
Subject Property.


 


“Governmental Authority” means any
nation or government, any state or other political subdivision thereof and any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, including, without
limitation, the City of Austin, Texas (each, an “Authority”),
and having jurisdiction over the Subject Property, the Lessee or any Indemnitee
or the Operative Documents, as applicable; provided, however,
with respect to Impositions and Tax indemnification obligations, the term “Governmental
Authority” shall not include any Authority of a jurisdiction outside of the
United States of America.


 


“Grossed-Up Basis” is defined
in Section 13.4(c)(ii) of the Participation Agreement.


 


“Gross Proceeds” means the
gross proceeds realized from the sale of the Subject Property pursuant to
Article XX of the Lease (i.e., without
deductions for any marketing, closing, sales or other costs, taxes, expenses,
fees, prorations or commissions).


 


“Ground Lease” means the
Ground Lease Agreement dated as of February 15, 2000 between Seller, as ground
lessee and the Ground Lessor, as the same has been and may be amended, modified
or supplemented from time to time.


 


“Ground Lessor” means the
City of Austin.


 


13

















 


“Guarantee” means, with
respect to a specified Person:


 


 (a)        any
guarantee by the specified Person of the payment of any Funded Debt of any
primary obligor;


 


 (b)        any
other arrangement whereby credit is extended to a primary obligor on the basis
of any obligation of the specified Person to a creditor or prospective creditor
of such primary obligor, to pay the Funded Debt of such primary obligor; and


 


 (c)        reimbursement
obligations, whether contingent or matured, of the specified Person with
respect to letters of credit, bankers acceptances, other financial guarantees
and interest rate protection agreements;


 


in each case whether or
not any of the foregoing are reflected on the balance sheet of the specified
Person or in a footnote thereto.


 


“Hazardous Substances” means any
toxic, radioactive, caustic or otherwise hazardous substance, including
petroleum, its derivatives, by-products and other hydrocarbons, or any
substance having any constituent elements displaying any of the foregoing characteristics
to the extent such substance is regulated under applicable Environmental Laws.


 


“Highest Lawful Rate” is defined
in Section 4.6(b) of the Participation Agreement.


 


“Impositions” means any
and all liabilities, losses, expenses and costs of any kind whatsoever for
fees, taxes, levies, imposts, duties, charges, assessments or withholdings of
any nature whatsoever and imposed by a Governmental Authority (“Taxes”) (including (i) real property taxes and
personal property taxes on any property covered by the Lease that is classified
by Governmental Authorities as personal property, and real estate or ad valorem
taxes in the nature of property taxes; (ii) sales taxes, use taxes and
other similar taxes; (iii) any excise taxes; (iv) real estate
transfer taxes, conveyance taxes, mortgage taxes, intangible taxes, stamp taxes
and documentary recording taxes and fees; (v) taxes that are or are in the
nature of franchise, income, value added, gross receipts, privilege and doing
business taxes, license and registration fees; and (vi) assessments on the
Land, including all assessments for public improvements or benefits, whether or
not such improvements are commenced or completed within the Term), and in each
case all interest, additions to tax and penalties thereon, which at any time
may be levied, assessed or imposed by a Governmental Authority upon or with
respect to (a) any Tax Indemnitee, the Subject Property or any part
thereof or interest therein, or the Lessee or any sublessee or user of the
Subject Property; (b) the financing, refinancing, demolition,
construction, substitution, subleasing, assignment, control, condition,
servicing, maintenance, repair, ownership, possession, purchase, rental, lease,
activity conducted on, delivery, insuring, use, operation, improvement,
transfer, return or other disposition of the Subject Property or any part
thereof or interest therein; (c) the Notes or Lessor’s Interest or other
indebtedness with respect to the Subject Property or any part thereof or interest
therein or transfer thereof; (d) the rentals, receipts or earnings arising
from the Subject Property or any part thereof or interest therein; (e) the
Operative Documents or any payment made or accrued pursuant thereto;
(f) the income or other proceeds received with respect to the Subject
Property or any part thereof or


 


14

















 


interest therein upon
the sale or disposition thereof; (g) any contract relating to the
construction, acquisition or delivery of the Subject Property or any part
thereof or interest therein; (h) the issuance of the Notes and Lessor’s
Interest; or (i) otherwise in connection with the Overall Transaction.


 


Notwithstanding anything
in the first paragraph of this definition (except as provided in the final paragraph
of this definition) the term “Impositions” shall not mean or include:


 


(i)         Taxes and impositions imposed upon a
Tax Indemnitee (other than Taxes that are, or are in the nature of, sales, use,
value added, rental, transfer, property or ad valorem taxes with respect to the
Subject Property or any transfer thereof) that are imposed by any Governmental
Authority and that are based upon or measured by the gross or net income or
gross or net receipts (including, without limitation, any minimum taxes, income
or capital gains taxes, or taxes on, measured by, with respect to, or in the
nature of capital, net worth, excess profits, items of tax preference, capital
stock, franchise, business privilege or doing business taxes or any taxes in
the nature of an intangibles tax, an ad valorem tax or property tax imposed on
a Participant, Subparticipant, or any holder of a Note or Lessor’s Interest by
reason of owning or holding a Note or Lessor’s Interest); provided
that this clause (i) shall not be interpreted to prevent a payment from
being made on an After Tax Basis if the payment is otherwise required to be so
made; provided further that this clause
(i) shall not apply to Taxes and Impositions imposed on a Tax Indemnitee
as a result of Lessee’s activities or the location of the Subject Property in
the jurisdiction imposing such Taxes or Impositions;


 


(ii)        any Tax or imposition to the extent, but
only to such extent, it relates to any act, event or omission that occurs, or
relates to a period, after the termination of the Lease (but not any Tax or
imposition to the extent, but only to such extent, that it relates to any
period prior to the termination of the Lease with respect to the Subject
Property to which such Tax or Imposition relates);


 


(iii)       any Tax or imposition for so long as, but
only for so long as, it is being contested in accordance with the provisions of
Section 13.4(b) of the Participation Agreement, provided
that the foregoing shall not limit the Lessee’s obligation under
Section 13.4(b) of the Participation Agreement to advance to such Tax
Indemnitee amounts with respect to Taxes or impositions that are being
contested in accordance with Section 13.4(b) of the Participation
Agreement or any expenses incurred by such Tax Indemnitee in connection with such
contest;


 


(iv)       any Taxes or impositions imposed upon a
Tax Indemnitee with respect to any transfer, sale, financing or other
disposition of any interest in the Subject Property or any part thereof, or any
interest therein or any interest or obligation under the Operative Documents or
any Note or Lessor’s Interest, or from any sale, assignment, transfer or other
disposition of any interest in a Tax Indemnitee or any Affiliate thereof,
(other than any transfer in connection with (1) the exercise by the Lessee
of its Early Termination Option or any termination option or other purchase of
the Subject Property by the Lessee or the exercise by Lessee of the Sale
Option, (2) the occurrence of an Event of Default,


 


15

















 


(3) a Casualty or
Condemnation affecting the Leased Property or (4) any assignment, sublease,
modification or addition of or to the Leased Property by the Lessee);


 


(v)           any Taxes or impositions imposed on a
Tax Indemnitee to the extent such Tax Indemnitee actually receives a credit (or
otherwise has a reduction in a liability for Taxes) in respect thereof against
Taxes that are not indemnified under the Participation Agreement (but only to
the extent such credit is not taken into account in calculating the indemnity
payment on an After Tax Basis);


 


(vi)          any Taxes imposed against or payable
by a Tax Indemnitee resulting from, or that would not have been imposed but
for, the gross negligence or willful misconduct of such Tax Indemnitee or its
Affiliates, 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 Law, Governmental Action or third parties with respect
to the Subject Property shall not be deemed gross negligence or willful
misconduct;


 


(vii)         Taxes imposed on or payable by a Tax
Indemnitee to the extent such Taxes would not have been imposed but for a
breach by such Tax Indemnitee or any Affiliate thereof of any representations,
warranties contained in Section 8.1 or 8.4 of the Participation Agreement or
covenants set forth in the Participation Agreement or the Lease (unless such
breach is caused by the Lessee’s breach of its representations, warranties or
covenants set forth in the Operative Documents);


 


(viii)        Taxes to the extent resulting from a Tax
Indemnitee’s failure to comply with the provisions of Section 13.4(b) of the
Participation Agreement, which failure precludes the ability to conduct a
contest pursuant to Section 13.4(b) of the Participation Agreement (unless such
failure is caused by the Lessee’s breach of its obligations);


 


(ix)           [Intentionally Omitted];


 


(x)            Taxes imposed on or with respect to
or payable as a result of activities of a Tax Indemnitee unrelated to the
Overall Transaction;


 


(xi)           any interest, additions to tax or
penalties imposed on an Indemnitee as a result of such Indemnitee’s or an
Affiliate’s failure to file any return or other documents provided to it
pursuant to Section 13.4(d) of the Participation Agreement on a timely basis;
provided that this clause (xi) shall not apply if such interest or penalties
arise as a result of a position taken (or requested to be taken) by the Lessee
in a contest controlled by the Lessee under Section 13.4(b) of the
Participation Agreement;


 


(xii)          Taxes imposed on or with respect to or
payable by an Indemnitee resulting directly from, or that would not have been
imposed but for the existence of, any Lessor Lien created by or through such
Indemnitee or an Affiliate thereof, unless caused by acts or omissions of
Lessee;


 


16

















 


(xiii)         any Tax imposed against or payable by
an Indemnitee that is a transferee from another Indemnitee to the extent that,
under the law in effect on the date of transfer, the amount of such Tax exceeds
the amount of such Tax that would have been imposed against or payable by the
transferor; provided, however,
that this exclusion (xiii) shall not apply to any transferee that acquires its
interest while an Event of Default is continuing; and


 


(xiv)        Taxes imposed on or with respect to or
payable by an Indemnitee that would not have been imposed but for an amendment,
supplement, modification, consent or waiver to any Operative Document not
initiated, requested or consented to by Lessee unless such amendment,
supplement, modification, consent or waiver (1) arises due to, or in connection
with there having occurred, an Event of Default or (2) is required by the terms
of the Operative Documents or is executed in connection with any amendment to
the Operative Documents required by law.


 


Notwithstanding the foregoing, the exclusions from the
definition of “Impositions” set forth in clauses (i), (ii), (iv) and (x) shall
not apply (but the other exclusions shall apply) to any Taxes or any increase
in Taxes imposed on a Tax Indemnitee net of any decrease in Taxes realized by
such Tax Indemnitee, to the extent that such tax increase or decrease would not
have occurred if on the Closing Date the Participants had advanced funds to the
Lessee in the form of a loan secured by the Subject Property in an amount equal
to the amount Funded on the Closing Date, with debt service for such loan equal
to the Basic Rent payable on each Payment Date and a principal balance at the
maturity of such loan in an amount equal to the then outstanding amount of the
Loans and Lessor Amount at the end of the Term of the Lease.


 


“Improvements”
means all buildings, structures, facilities, fixtures, tunnels, parking areas,
garages and lots, plaza, common areas and other improvements of every kind
existing at any time and from time to time on or under the Land and within any
easements for offsite improvements benefiting the Land, including, without
limitation, related attached heating, electrical, switch gear, uninterrupted
power supply, and mechanical equipment, lighting, switchboards, plumbing,
ventilation, air conditioning and air-cooling apparatus, refrigerating and
incinerating equipment, escalators, generators, elevators, loading and
unloading equipment and systems, communications systems (including satellite
dishes and antennae), sprinkler systems and other fire prevention and
extinguishing apparatus and materials, security systems, motors, engines,
machinery, pipes, pumps, tanks, conduits, fittings, fixtures, HVAC and other
building systems attached to any buildings or improvements presently existing
on the Land or to the Subject Property, and including all modifications and
other additions to or changes in the Improvements at any time.


 


“Indemnitee”
means any General Indemnitee or a Tax Indemnitee, as applicable.


 


“Industry
Standards” means the latest edition or revision of all
industry codes, standards or regulations (hereinafter referred to collectively
in this definition as “codes”) applicable to the operation, use, maintenance,
repair or modification of the Subject Property or any portion thereof, as such
codes may be changed from time to time.


 


17

















 


“Insolvency
Event” means an event described in Section 16.1(g) of
the Lease.


 


“Inspecting
Parties” is defined in Section 4.2(a) of the Lease.


 


“Insurance
Requirements” means all terms and conditions of any insurance
policy required by Article XIII of the Lease to be maintained by the
Lessee.


 


“Interest”
means the interest accruing on the Loans as computed and payable in accordance
with the terms of the Loan Agreement and the Participation Agreement.


 


“Interest
Expense” means, for any period, total interest expense
(including the interest component of any Capitalized Leases) of the Lessee,
determined in accordance with GAAP.


 


“Interest
Period” means with respect to any Loan or Lessor Amount
bearing Interest or Yield, respectively, by reference to the LIBO Rate or the
Alternate Base Rate, initially the period commencing on (and including) the
Closing Date and ending on (but excluding) the next succeeding Payment Date
thereafter, and thereafter each period commencing on (and including) a Payment
Date and ending on (but excluding) the next succeeding Payment Date.


 


“Interest
Rate” means (i) with respect to any Loan, for each
Interest Period, a rate per annum equal to the LIBO Rate plus the Applicable
Lender Margin, and (ii) with respect to any Loan at any time that any
Lender shall not have received two (2) Business Days advance notice of the
Advance Request or sale or funding or the provisions of Section 15.1 or
Section 15.2 of the Participation Agreement shall apply, the Alternate Base
Rate until the date which is three (3) Business Days after such Lender has received
such notice or Section 15.1 or Section 15.2 of the Participation
Agreement shall not apply, as the case may be.


 


“Investment
Company Act” means the Investment Company Act of 1940, as
amended, together with the rules and regulations promulgated thereunder.


 


“Land”
means the approximately 1.773 acres of real property in Austin, Texas described
on Exhibit A to the Lease, and the Appurtenant Rights.


 


“Lease”
means the Lease, Deed of Trust and Security Agreement dated as of
March 30, 2006, among the Lessor, the Lessee and the Deed of Trust
Trustee, as amended, supplemented or modified from time to time.


 


“Lease
Balance” means, as of any date of determination, an amount
equal to the sum, without duplication, of the Loan Balance and the Lessor
Balance and all other amounts owing by the Lessee under the Operative Documents
(including, without limitation, accrued and unpaid Rent).


 


“Lease
Expense” means, for any period, total lease expense under all
operating and capital leases of the Lessee, determined in accordance with GAAP.


 


18

















 


“Leased
Property” means the Subject Property, but excluding
(i) any Improvements owned by the sublessee (or its successors, assigns or
sublessees) under the Schneider Lease or the Retail Sublease, (ii) the
Schneider Building and the portion of the Land on which the Schneider Building
is located and (iii) the portion of the ground floor of the Facility that
is subject to the Retail Sublease.


 


“Leased
Property Records” means those maintenance and other records
relating to the maintenance and operation of the Leased Property in the
possession of Lessee.


 


“Lenders”
means the financial institutions party to the Loan Agreement and the
Participation Agreement and listed as Lenders on the signature pages thereto
and their permitted successors and assigns.


 


“Lenders’
Policy” is defined in Section 6.1(r) of the
Participation Agreement.


 


“Lessee”
means Silicon Laboratories, Inc., a Delaware corporation, together with its
permitted successors and assigns, in its capacities as Lessee under the Lease.


 


“Lessee
Collateral” is defined in Section 24.2 of the Lease.


 


“Lessee
Improvement” is defined in Section 10.2(b) of the Lease.


 


“Lessee
Interest Rate” means the Certificate of Deposit Rate for the
Interest Period commencing as of the Closing Date.


 


“Lessor”
means BAL Investment & Advisory, Inc., a Delaware corporation.


 


“Lessor
Amount” means, with respect to Lessor as of any date of
determination, the aggregate amount advanced by Lessor from its Lessor
Commitment pursuant to Section 3.1 of the Participation Agreement, net of
any distributions (other than distributions of Yield) with respect thereto, in
an aggregate principal amount, with respect to Lessor, not to exceed Lessor’s
Commitment.


 


“Lessor
Balance” means as of any date of determination an amount
equal to the sum of the outstanding Lessor Amount of Lessor, together with all
accrued and unpaid Yield thereon.


 


“Lessor
Collateral” is defined in Section 2 of the Security
Agreement.


 


“Lessor
Commitment” means the Commitment of the Lessor to make
available funds in an aggregate principal amount not to exceed the amount set
forth on Schedule I of the Participation Agreement, as revised pursuant to
Article XI or Article XII of the Participation Agreement.


 


“Lessor
Lien” means any Lien, true lease or sublease or disposition
or other transfer of title to or any interest in the Leased Property or rights
in the Operative Documents arising as a result of (a) any claim against
the Collateral Agent or any Participant not resulting from the


 


19

















 


Overall Transaction or otherwise contemplated by the
Operative Documents, (b) any act or omission of the Collateral Agent or
any Participant which is not required or permitted by the Operative Documents
or is in violation of any of the terms of the Operative Documents, (c) any
claim against the Collateral Agent or any Participant with respect to Taxes or
Transaction Expenses against which Lessee is not required to indemnify or has
indemnified the Collateral Agent or any Participant, in its individual
capacity, pursuant to Article XIII of the Participation Agreement,
(d) any claim against the Lessor or the Collateral Agent arising out of
any transfer by the Lessor or the Collateral Agent of all or any portion of the
interest of the Lessor or the Collateral Agent in the Subject Property or the
Operative Documents other than the transfer of title to or possession of the
Subject Property by the Lessor pursuant to and in accordance with the Lease or
the other Operative Documents or pursuant to the exercise of the remedies set
forth in the Operative Documents, or (e) any claim against any Participant
arising out of any transfer by such Participant of any Note or Lessor’s
Interest, or any interest therein, other than in accordance with the
Participation Agreement and, in the case of a transfer of any Note, the Loan
Agreement, in all cases, excluding, all rights, title and interest of the other
parties under the Related Agreements and any Liens created or suffered to exist
by such parties.


 


“Lessor
Marketing Costs” means all Marketing Costs incurred by
Collateral Agent or Lessor in an aggregate amount not to exceed $50,000.


 


“Lessor’s
Interest” means all rights and interests of Lessor in the
Subject Property, the Operative Documents, the Lessor Amount and the Excepted
Payments.


 


“LIBO
Rate” means with respect to any Interest Period at any time,
the applicable London interbank offered rate per annum for deposits in Dollars
appearing on Bloomberg LIBO Page as of 11:00 a.m. (London time) two (2)
Business Days prior to the first day of such Interest Period, and having a
maturity approximately equal to such Interest Period; or if no London interbank
offered rate of such maturity then appears on Bloomberg LIBO Page , then the
rate equal to the London interbank offered rate per annum for deposits in
Dollars maturing immediately before or immediately after such maturity,
whichever is higher, as determined by the Collateral Agent from Bloomberg LIBO
Page; or if Bloomberg LIBO Page is not available, the applicable LIBO Rate for
the relevant Interest Period shall be the rate per annum determined by the
Collateral Agent to be the arithmetic average of the rates at which Bank of
America offers to place deposits in Dollars with first-class banks in the
London interbank market at approximately 11:00 a.m. (London time) two (2)
Business Days prior to the first day of such Interest Period, in the
approximate amount of Bank of America’s or its Affiliate’s relevant portion of
the aggregate outstanding principal amount of the Notes and Lessor Amount and
having a maturity approximately equal to such Interest Period.


 


“LIBO
Rate (Reserve Adjusted)” means, relative to any Loan or
Lessor Amount for any Interest Period, a rate per annum (rounded up and to the
nearest 1/100 of 1%) determined pursuant to the following formula:


 


	
  LIBO Rate

  	
  =

  	
  LIBO Rate

  
	
  (Reserve Adjusted)

  	
  1.00 - LIBOR Reserve Percentage

  



 


20

















 


The LIBO Rate (Reserve
Adjusted) for any Interest Period will be determined by the Collateral Agent,
on the basis of the LIBOR Reserve Percentage in effect on, and the applicable
LIBO Rate obtained by the Collateral Agent, two Business Days before the first
day of such Interest Period.


 


“LIBOR
Reserve Percentage” means, relative to any Interest Period,
the reserve percentage (expressed as a decimal) equal to the maximum aggregate
reserve requirements for a member bank of the Federal Reserve System (including
all basic, emergency, supplemental, marginal and other reserves and taking into
account any transitional adjustments or other scheduled changes in reserve
requirements) specified under regulations issued from time to time by the
F.R.S. Board and then applicable to assets or liabilities consisting of and
including “Eurocurrency Liabilities”, as currently defined in Regulation D
of the F.R.S. Board, having a term approximately equal or comparable to such
Interest Period.


 


“Lien”
means any mortgage, hypothecation, deed of trust, pledge, security interest,
encumbrance, lien, easement, declaration or servitude of any kind, including,
without limitation, any irrevocable license, interest of a vendor, conditional
sale or other title retention agreement, any lease in the nature thereof, or any
other right of or arrangement with any creditor to have its claim satisfied out
of any specified property or asset with the proceeds therefrom prior to the
satisfaction of the claims of the general creditors of the owner thereof,
whether or not filed or recorded; provided
that, solely for purposes of Section 9.1 of the Participation Agreement,
the term “Lien” means with
respect to any specified Person, (a) any lien, encumbrance, mortgage, pledge,
charge or security interest of any kind upon any property or assets of the
specified Person, whether now owned or hereafter acquired, or upon the income
or profits therefrom, (b) the purchase of, or the agreement to purchase, any
property or asset upon conditional sale or subject to any other title retention
agreement device or arrangement (including a Capitalized Lease), and (c) the
sale, assignment, pledge or transfer for security of any accounts, general
intangibles or chattel paper of the specified Person, with or without recourse.


 


“Limited
Recourse Default” means any condition, occurrence or event
which, after notice or lapse of time or both, would constitute a Limited
Recourse Event of Default.


 


“Limited
Recourse Event of Default” means any of the following Events
of Default:


 


(a)           an Event of Default occurring under
Section 16.1(f) of the Lease solely as a result of a breach by Lessee of
the representations set forth in (1) Section 8.2(h)(ii),
(2) Section 8.2(k)(A)(iii), (3) Section 8.2(k)(A)(iv),
(4) Section 8.2(k)(A)(v), (5) 8.2(k)(B), (6) 8.2(k)(C),
(7) Section 8.2(s) or (8) Section 8.2(ff)(ii) of the
Participation Agreement;


 


(b)           an Event of Default occurring under
Section 16.1(e) of the Lease solely as a result of a breach of the covenant set
forth in (1) Sections 9.1(c)(iv)(A)(y) of the Participation Agreement or
(2) Section 9.1(c)(iv)(B) (but only to the extent such Event of Default is
based solely upon the failure by Lessee to provide notice of any Limited
Recourse Event of Default) of the Participation Agreement; or


 


21

















 


(c)           an Event of Default occurring under
Section 16.1(j)(ii) of the Lease.


 


“Loan”
or “Loans” is defined in
Section 2.1(b) of the Loan Agreement.


 


“Loan
Agreement” means the Loan Agreement dated as of
March 30, 2006, among Lessor, as Borrower thereunder, Collateral Agent and
the Lenders, as amended, supplemented or otherwise modified from time to time.


 


“Loan
Agreement Event of Default” is defined in Section 5.1 of
the Loan Agreement.


 


“Loan
Balance” means, as of any date of determination, an amount
equal to the sum of the principal amount outstanding under all the Loans of all
Lenders, together with all accrued and unpaid Interest thereon.


 


“Loan
Commitment” means with respect to a Lender, the Commitment of
such Lender to make a Loan to the Lessee on the Closing Date in an aggregate
principal amount not to exceed the amount opposite such Lender’s name on
Schedule II to the Participation Agreement, as it may be revised pursuant
to Articles XI or XII of Participation Agreement.


 


“Loan
Documents” means the Loan Agreement, the Note and the
Security Instruments.


 


“Loan
Termination Date” is defined in Section 2.1(b) of the
Loan Agreement.


 


“Marketing
Costs” means, with respect to the Subject Property to be sold
pursuant to Article XX of the Lease, all charges, costs and expenses
incurred in marketing and preparing for sale all or any portion of the Subject
Property, including without limitation, all legal fees and expenses and all
advertising costs and all costs incurred in connection with the delivery of an
appraisal, a survey and an environmental audit, but excluding (i) any
Sales Costs and (ii) any costs incurred to bring the Leased Property to
the condition required by the Lease.


 


“Marketing
Costs Cap” is defined Section 20.1(h) of the Lease.


 


“Master
Agreement” means the Master Agreement dated February 1,
2000 between the Seller and the City of Austin, as the same has been or may be
amended, modified or supplemented from time to time.


 


“Material
Adverse Effect” means a materially adverse effect on (i) the
assets, business, operations, properties, income or financial condition or
prospects of the Lessee, (ii) the validity or enforceability of any of the
Operative Documents of the type described in clauses (a) through (h),
inclusive, and clauses (j) through (k), inclusive and (m) through (q),
inclusive, of the definition thereof or any rights or remedies under any
thereof, (iii) the rights or interests of Lessor, the Collateral Agent or
any Lender in and to the Subject Property or (iv) the Fair Market Value,
use, utility, useful life or residual value of the Subject Property.


 


“Material
Environmental Violation” is defined in Section 14.3 of
the Lease.


 


22

















 


“Material
Plan” means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $5,000,000.


 


“Material
Subsidiary” means any Subsidiary representing not less than
5% of the Lessee’s Consolidated Net Income, total stockholders’ equity, or
EBITDAR, all as determined as of the last day of each fiscal quarter, for the
four consecutive fiscal quarters ended as of such day.


 


“Maturity
Date” means the Expiration Date.


 


“Memorandum
of Lease” means the Memorandum of Lease dated as of
March 30, 2006, among the Lessor, the Lessee and the Deed of Trust
Trustee, as amended, supplemented or modified from time to time.


 


“Modifications”
is defined in Section 10.1(a) of the Lease.


 


“Moody’s”
means Moody’s Investor Service, Inc., or any successor thereto.


 


“Multiemployer
Plan” means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA Group during such
five year period.


 


“Net
Income” means, for any period, the net income (or loss) after
taxes for such period of the Lessee, determined in accordance with GAAP.


 


“Net
Sales Proceeds” means the difference between (i) Gross
Proceeds and (ii) Sales Costs.


 


“Nonseverable”
means a Modification or part of a Modification the removal of which from the
Leased Property would materially impair the Fair Market Value, utility, useful
life or residual value thereof as set forth in the Appraisal.


 


“Notes”
is defined in Section 2.2(b) of the Loan Agreement.


 


“Obligations”
means all obligations (monetary or otherwise) of the Lessee arising under or in
connection with any of the Operative Documents.


 


“OECD”
means the Organization for Economic Cooperation and Development.


 


“Offeree
Letter” is defined in Section 6.1(m) of the
Participation Agreement.


 


“Operative
Documents” means the following:


 


(a)           the Participation Agreement;


 


23

















 


(b)           the Lease and any memoranda thereof;


 


(c)           the Deed of Trust;


 


(d)           the Ground Lease and any memoranda
thereof;


 


(e)           the Loan Agreement;


 


(f)            the Notes;


 


(g)           the Security Instruments;


 


(h)           the Assignment of Ground Lease and any
memoranda thereof;


 


(i)            the Related Agreements;


 


(j)            the Assignment of Related Agreements
and any memoranda thereof;


 


(k)           the Assignment of Leases and Rents
and any memoranda thereof;


 


(l)            the Purchase Agreement;


 


(m)          the Estoppel Certificate;


 


(n)           the Fee Letters;


 


(o)           the Deed;


 


(p)           the Assignment of Subleases; and


 


(q)           the Assignment of Purchase Agreement.


 


“Overall
Transaction” means all the transactions and activities
referred to in or contemplated by the Operative Documents.


 


“Overdue
Rate” means, with respect to any Loan or Lessor Amount, the
LIBO Rate or Alternate Base Rate then in effect for such Loan or Lessor Amount,
plus 2.0% per annum.


 


“Owner’s
Policy” is defined in Section 6.1(r) of the
Participation Agreement.


 


“Participant
Balance” means, with respect to any Participant as of any
date of determination:  (i) with
respect to any Lender, the Loan Balance held by such Lender or (ii) with
respect to the Lessor, the Lessor Balance.


 


“Participants”
means, collectively, the Lessor and the Lenders.


 


24

















 


“Participation
Agreement” means the Participation Agreement dated as of
March 30, 2006, among the Lessee, as Lessee; the Lessor; the Lenders; and
the Collateral Agent; as amended, supplemented or otherwise modified from time
to time.


 


“Payment
Date” means (i) the 30th day of each March, June,
September and December, or, in each case, if such 30th day is not a Business
Day, the next succeeding Business Day unless the result would be that the
Payment Date would be in the next succeeding calendar month, in which case such
Payment Date shall be on the next preceding Business Day, and (ii) in any
case, the Maturity Date.


 


“Payment
Default” means the failure of Lessee to make any payment of
(i) Basic Rent when due and such failure shall continue for a period of
five (5) days or (ii) any amounts due pursuant to Sections 15.1,
18.1, 18.2, 19.1(b) or Article XX of the Lease when due.


 


“Payment
Office” means the office of each Participant and the
Collateral Agent identified on Schedule III to the Participation Agreement
as its Payment Office.


 


“PBGC”
means the Pension Benefit Guaranty Corporation and any entity succeeding to any
or all of its functions under ERISA.


 


“Permitted
Investments” means (i) full faith and credit obligations
of the United States of America, or fully guaranteed as to interest and
principal by the full faith and credit of the United States of America,
maturing in not more than one year from the date such investment is made,
(ii) certificates of deposit having a final maturity of not more than one
year after the date of issuance thereof of a Participant or of any other
commercial bank incorporated under the laws of the United States of America or
any state thereof or the District of Columbia, which bank is a member of the
Federal Reserve System and has a combined capital and surplus of not less than
$100,000,000 and with a senior unsecured debt credit rating of at least “P-1”
by Moody’s and “A” by S&P, (iii) commercial paper of the Participants
having a remaining term until maturity of not more than 180 days from the date
such investment is made, (iv) commercial paper of companies, banks, trust
companies or national banking associations (in each case excluding Lessee and
its Affiliates) incorporated or doing business under the laws of the United
States or one of the States thereof, in each case having a remaining term until
maturity of not more than 180 days from the date such investment is made and
rated “P-1” by Moody’s or at least “A-1” by S&P, (v) repurchase
agreements maturing within one year with any financial institution having
combined capital and surplus of not less than $100,000,000 with any of the
obligations described in clauses (i) through (iv) as collateral so long as
title to the underlying obligations pass to Collateral Agent and such
underlying securities shall be segregated in a custodial or trust account for
the benefit of Collateral Agent and (vi) investments, classified in
accordance with GAAP as current assets, in money market investment programs
registered under the Investment Company Act of 1940, as amended, which are
administered by any financial institution having a combined capital and surplus
of not less than $100,000,000 or an Affiliate of any such financial institution
and the portfolios of which are limited to any of the obligations described in
clauses (i) through (iv). The Lessor and the Collateral Agent, as
applicable, are hereby authorized in making or disposing of any Permitted
Investment to deal with themselves (in their individual capacities) or with any
one or more of their Affiliates whether or not they or such Affiliates are
acting as an


 


25

















 


agent of the Lessor or Collateral Agent or for any
third person or dealing as a principal for their own accounts.


 


“Permitted
Liens” means any of the following:


 


(i)            the respective rights and interests
of the parties to the Operative Documents as provided in the Operative
Documents;


 


(ii)           the rights of any sublessee under a
sublease permitted by the terms of the Lease;


 


(iii)          Liens for Taxes that either are not
yet subject to interest or penalties or are being contested in accordance with
the provisions of Section 12.1 of the Lease;


 


(iv)          Liens arising by operation of law,
materialmen’s, mechanics’, workers’, repairmen’s, employees’, carriers’,
warehousemen’s and other like Liens relating to the construction of the
Improvements or in connection with any Modifications or arising in the ordinary
course of business for amounts that either are not more than 60 day past due or
are being diligently contested in good faith by appropriate proceedings, so
long as such proceedings to contest satisfy all applicable conditions for the
continuation of proceedings set forth in Section 12.1 of the Lease;


 


(v)           Liens of any of the types referred to
in clause (iv) above that have been bonded for not less than the full
amount in dispute (or as to which other security arrangements satisfactory to
the Lessor have been made), which bonding (or arrangements) shall comply with
Applicable Laws, and has effectively stayed any execution or enforcement of
such Liens;


 


(vi)          Liens arising out of judgments or
awards with respect to which appeals or other proceedings for review are being
prosecuted in good faith and for the payment of which adequate reserves have
been provided as required by GAAP or other appropriate provisions have been
made, so long as such proceedings have the effect of staying the execution of
such judgments or awards and satisfy the conditions for the continuation of
proceedings set forth in Section 12.1 of the Lease;


 


(vii)         easements, rights of way and other
encumbrances on title to real property pursuant to Section 11.2 of the
Lease;


 


(viii)        Lessor’s Liens; and


 


(ix)           Liens described on the title
insurance policy delivered with respect to the Subject Property pursuant to
Section 12.1 of the Participation Agreement, other than Liens described in
clause (iv) or (vi) above that are not removed within forty (40) days of
their discovery by the Lessee.


 


“Permitted
Modifications” is defined in Section 10.1(a) of Lease.


 


26

















 


“Person”
means an individual, partnership, limited liability company, corporation
(including a business trust), firm, joint stock company, trust, unincorporated
association, enterprise, joint venture or other entity, or a government or any
political subdivision or agency thereof.


 


“Plan” means
at any time an employee pension benefit plan which is covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of the
Internal Revenue Code and either (i) is maintained, or contributed to, by any
member of the ERISA Group for employees of any member of the ERISA Group or
(ii) has at any time within the preceding five years been maintained, or
contributed to, by any Person which was at such time a member of the ERISA
Group for employees of any Person which was at such time a member of the ERISA
Group.


 


“Post-Closing
Sales Costs” means the actual costs and expenses incurred by
or charged to the Lessor, the Collateral Agent or any Lender to sell all or any
portion of the Subject Property, including all broker or sales commissions and
fees, transfer, filing and document taxes and fees, legal fees, escrow fees,
fees and costs incurred for any reports required to be delivered to the
purchaser of such property, and any other costs incurred and which would
customarily be charged to a seller and reflected in a closing statement
produced in consummating a sale of real property located in the State of Texas.


 


“Post-Expiration
Date Balance” means the sum of (i) the aggregate of the
remaining Lease Balance, after application of the Sale Option Recourse Amount
actually paid to Lessor on the Expiration Date pursuant to Section 20.3 of
the Lease, plus (ii) all
reasonable costs and expenses incurred by or payable to Lessor (including
management, supervisory or any remarketing fees payable to any Person)
following the Expiration Date to maintain, lease or sell the Subject Property
(including any allocated internal costs of Lessor), plus (iii) an amount equal to the amount of Property
Carrying Costs accruing during the period following the Expiration Date through
the date Lessor recovers Gross Proceeds equal to the sum of items (i) and
(ii) above.


 


“Proceeds
Account” is defined in Section 14.1(a) of the Lease.


 


“Property
Carrying Costs” means, as of any date of determination, for
the period commencing on the Expiration Date and ending on the date of such
determination, (i) the product of (A) the Yield Rate and (B) the
outstanding Lessor Amount as of the Expiration Date, in each case after giving
effect to the amount of Basic Rent paid by Lessee on the Expiration Date and
actually distributed to the Lessor by the Collateral Agent pursuant to Section 5.3
of the Participation Agreement and (ii) the number of days in such period.


 


“Purchase
Acceleration Notice” is defined at Section 18.1 of the
Lease.


 


“Purchase
Agreement” means the Purchase Agreement With Joint Escrow
Instructions dated as of February 10, 2006 by and between Seller and
Lessee, as the same may be amended, supplemented or otherwise modified from
time to time.


 


27

















 


“Purchase
Amount” means, as of any date of determination, the sum of
(a) the Lease Balance, plus (b) other sums then due and payable under
the Operative Documents by Lessee, including, without limitation, all accrued
and unpaid Supplemental Rent and any liquidated amounts of money due and owing
pursuant to Article XIII of the Participation Agreement.


 


“Purchase
Notice” means an irrevocable written notice by the Lessee
delivered to the Lessor pursuant to Section 18.1 of the Lease, notifying
the Lessor of the Lessee’s intention to exercise its Early Termination Option,
and the proposed purchase date therefor.


 


“Purchase
Option” is defined in Section 19.1(b) of the Lease.


 


“Regulation
U, T, or X”
means Regulation U, T, or X, respectively, of the F.R.S. Board as from time to
time in effect and any successor to all or a portion thereof.


 


“Related
Agreements” means, collectively, the agreements listed on
Schedule I to the Assignment of Leases and Rents.


 


“Release”
means any release, pumping, pouring, emptying, injecting, escaping, leaching,
dumping, seepage, spill, leak, flow, discharge, disposal or emission of a
Hazardous Substance into the environment, including, without limitation,
ambient air, surface water, ground water or land.


 


“Remediation”
is defined in Section 14.2 of the Lease.


 


“Rent”
means, collectively, the Basic Rent and the Supplemental Rent, in each case
payable under the Lease.


 


“Replacement
Participant” means Persons who become Participants pursuant
to the terms of Section 12.4 of the Participation Agreement.


 


“Reportable
Event” means an event that is reportable under Section 4043(c)(1),
(2), (3), (4), (5), (6), (7), (10), (11), (12) or (13) of ERISA and for which a
waiver is not available.


 


“Required
Lenders” means Lenders whose aggregate Credit Exposures
constitute more than 51% of the aggregate Credit Exposure of all Lenders at
such time.


 


“Required
Modifications” is defined in Section 10.1(a) of the Lease.


 


“Required
Participants” means Participants whose aggregate Credit
Exposures constitute more than 51% of the aggregate Credit Exposure of all
Participants at such time.


 


“Requirement
of Law” means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person
or any of its property or to which the Person or any of its property is
subject, including without limitation Environmental Laws.


 


28

















 


“Responsible
Officer” means, (i) relative to the Lessee, those of its
officers responsible for the Leased Property whose signature and incumbency or
position shall have been certified to the Participants and the chief financial
officer, vice president of worldwide operations or the corporate treasurer,
(ii) relative to the Collateral Agent, any officer within the corporate trust
department of the Collateral Agent, including any vice president, assistant
vice present, assistant secretary, assistant treasurer, trust officer or any
other officer of the Lessor who customarily performs functions similar to those
performed by the Persons who at the time shall be such officers, respectively,
or to whom any corporation trust matter is referred because of such person’s
knowledge of and familiarity with the particular subject and who shall have
direct responsibility for the administration of this Participation Agreement or
Operative Documents relating thereto and (iii) relative to any other
Person, including Lessor, the President, the Treasurer or comptroller of such
Person.


 


“Responsible
Officer’s Certificate” means a certificate signed by an
applicable Responsible Officer, which certificate shall certify as true and
correct the subject matter being certified to in such certificate.


 


“Retail
Sublease” means the Retail Sublease Agreement dated as of
February 15, 2000 between Seller and the City of Austin, Texas, as the same may
be amended, supplemented, assigned, transferred or otherwise modified from time
to time.


 


“S&P”
means Standard & Poor’s Rating Services, a division of the McGraw-Hill
Companies, Inc. or any successor thereto.


 


“Sale
Option” is defined in Section 19.1(b) of the Lease.


 


“Sale
Option Recourse Amount” means, as of any date of
determination, the product of (i) 79.66% 
multiplied by (ii) Lease Balance.


 


“Sales
Costs” means the actual expenses, credits, costs, fees and
Impositions incurred by or charged to the Subject Property, Lessor, Collateral
Agent, any Lender, Lessee or any other Person arising from the sale of the
Subject Property, including, without limitation, all broker or sales
commissions, recording fees, escrow fees, filing fees, title insurance fees and
any and all document, documentary, transfer, sale and other taxes incurred as a
result of the actual sale of the Subject Property.


 


“Schneider
Building” is defined in Exhibit C to the Schneider
Sublease.


 


“Schneider
Sublease” is defined in clause (iv) of the Recitals of
the Purchase Agreement.


 


“SEC”
means the Securities and Exchange Commission.


 


“Secured
Obligations” is defined in Section 2.2 of the Security
Agreement.


 


“Securities
Act” means the Securities Act of 1933, as amended, together
with the rules and regulations promulgated thereunder.


 


29

















 


“Security
Instruments” means the Deed of Trust, the Assignment of
Leases and Rents, the related UCC filings and any other documents granting a
Lien to the Collateral Agent or any Participant.


 


“Seller”
means Computer Sciences Corporation, a Nevada corporation.


 


“Significant
Casualty” means that the Leased Property shall suffer
(i) damage or destruction resulting in an insurance settlement on the
basis of an actual, constructive or compromised total loss,
(ii) destruction or damage beyond repair, or (iii) damage which, in
Lessee’s good faith judgment, makes repair uneconomic or renders the Leased
Property unfit for commercial use.


 


“Significant
Condemnation” means that (i) (x) title to all or
any material portion of the Leased Property shall be taken or appropriated by a
Governmental Authority under the power of eminent domain or otherwise,
(y) all or any material portion of the Leased Property shall be taken,
confiscated, seized or requisitioned for use by any Governmental Authority
under the power of eminent domain or otherwise, and such taking, confiscation,
seizure or requisition for use pursuant to this clause (y) is for a period
that exceeds 180 days or, if less, the remaining portion of the Term, or
(ii) as a result of any rule, regulation, order or other action by any
Governmental Authority, the use of the Leased Property in commercial operation
shall have been prohibited, directly or indirectly, for a period of 60 days.


 


“Significant
Environmental Event” means an Environmental Violation the
cost of Remediation of which, in the reasonable judgment of an independent
environmental legal counsel would exceed $2,000,000.


 


“Solvent”
means with respect to any Person on a particular date, that
on such date (i) the fair value of the property of such Person is greater
than the total amount of liabilities, including, without limitation, contingent
liabilities of such Person, (ii) the present fair saleable value of the
assets of such Person is not less than the amount that will be required to pay
the probable liability of such Person on its debts as they become absolute and
matured, (iii) such Person is able to realize upon its assets and pay its
debts and other liabilities, contingent obligations and other commitments as
they mature in the normal course of business, (iv) such Person does not
intend to, and does not believe that it will, incur debts or liabilities beyond
such Person’s ability to pay as such debts and liabilities mature, and
(v) such Person is not engaged in business or a transaction, and is not
about to engage in business or a transaction, for which such Person’s property
would constitute unreasonably small capital after giving due consideration to
the prevailing practice in the industry in which such Person is engaged. In
computing the amount of contingent liabilities at any time, it is intended that
such liabilities will be computed at the amount which, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability taking into
account any subrogation and contribution rights.


 


“Subject
Property” means, collectively, (i) the Facility and
(ii) Lessor’s rights in and to (x) the Land, (y) the Ground
Lease and (z) the other Related Agreements.


 


30

















 


“Sub-Participant”
is defined in Section 12.2 of the Participation Agreement.


 


“Subsidiary”
means, for any Person, (i) any corporation more than 50% of whose stock of
any class or classes having by the terms thereof ordinary voting power to elect
a majority of the directors of such corporation (irrespective of whether or not
at the time stock of any other class or classes of such corporation shall have
or might have voting power by reason of the happening of any contingency) is at
the time owned by such Person directly or indirectly through one or more other
Subsidiaries, and (ii) any partnership, association, joint venture or
other entity in which such Person, directly or indirectly through one or more
other Subsidiaries has a greater than 50% equity interest at the time.


 


“Supplemental
Rent” means all amounts, liabilities and obligations for the
payment of money (other than Basic Rent) which Lessee assumes or agrees to pay
or is otherwise obligated to pay under the Lease or any other Operative
Document (whether or not designated as Supplemental Rent) to Collateral Agent,
any Participant or any other Person, including, without limitation, Break
Costs, any Sale Option Recourse Amount and any Lease Balance.


 


“Tax
Indemnitee” or “General
Indemnitee” means each Participant, the Collateral Agent (in its
individual capacity and as agent), the Arranger, any additional, separate or
co-trustee or co-agent appointed in accordance with the terms of the
Participation Agreement, and the respective Affiliates, successors, permitted
assigns, permitted transferees, employees, officers, directors, shareholders,
partners, participants, representatives and agents of each of the foregoing
Persons; provided, however, that
in no event shall Lessee or any of its Affiliates be a General Indemnitee or
Tax Indemnitee.


 


“Taxes”
is defined in the definition of Impositions.


 


“Term”
is defined in Section 2.2 of the Lease.


 


“Termination
Date” means such date as the Lease may be terminated pursuant
to the terms thereof, including without limitation, of Sections 15.2 or
18.1 of the Lease.


 


“Termination
Notice” is defined in Section 15.1(a) of the Lease.


 


“Title
Insurance Company” means Chicago Title Insurance Company or
another a title insurance company selected by Lessee and satisfactory to the
Collateral Agent.


 


“Title
Policies” is defined in Section 6.1(r) of the
Participation Agreement.


 


“Transaction
Expenses” means all reasonable costs and expenses incurred in
connection with the preparation, execution and delivery of the Operative
Documents and the transactions contemplated by the Operative Documents including
without limitation:


 


(a)           the reasonable fees and expenses of
Chapman and Cutler LLP, as special document counsel;


 


31

















 


(b)           the Arranger’s Fee (which shall be
payable if and only if the Advance is made and the transactions contemplated by
the Operative Documents are consummated) and Arranger’s reasonable costs and
expenses, in connection with the consummation of the Overall Transaction on the
Closing Date and distribution and syndication costs;


 


(c)           the initial and ongoing fees and
reasonable expenses of the Collateral Agent and its special counsel;


 


(d)           all title insurance premiums and
applicable appraisal fees and reasonable expenses;


 


(e)           search fees, recording fees and
filing fees incurred in connection with Lien searches and the filing of UCC
Financing Statements, memoranda of lease and ground lease, and any and all
mortgages or deeds of trust, including fees and expenses of the title company;


 


(f)            the fees and costs of the
environmental consultant;


 


(g)           insurance premiums with respect to
the residual value insurance obtained by the Lessor to insure Lessor’s capital
lease treatment of the Overall Transaction;


 


(h)           costs and expenses for the survey of
the Land; and


 


(i)            any other reasonable out-of-pocket
expenses of the Collateral Agent and the Lessor incurred in connection with the
consummation of the Overall Transaction on the Closing Date.


 


“Transferee”
is defined in Section 12.3(a) of the Participation Agreement.


 


“UCC
Financing Statements” means UCC financing statements
appropriately completed and executed for filing in the applicable jurisdiction
in order to (i) protect the Lessor’s interest in the Lessee Collateral under
the Lease to the extent the Lease is a security agreement and (ii) perfect (assuming
compliance with the UCC) a security interest in favor of the Collateral Agent
for the benefit of the Participants in the Lessor Collateral.


 


“Unfunded
Liabilities” means, with respect to any Plan at any time, the
amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumption prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the PBGC
or any other Person under Title IV of ERISA.


 


“Uniform
Commercial Code” and “UCC”
means the Uniform Commercial Code as in effect in any applicable jurisdiction.


 


32

















 


“United
States” means the United States of America.


 


“Upfront
Fees” means fees referred to in Section 4.4(i) of the
Participation Agreement.


 


“Yield”
means, with respect to each day of the applicable Interest Period (a) the
Yield Rate for such Interest Period multiplied by (b) the aggregate Lessor
Amount outstanding divided by 360 or 365, as determined in accordance with
Section 4.1 of the Participation Agreement.


 


“Yield
Rate” means, with respect to any Interest Period,
(a) the sum of the LIBO Rate (Reserve Adjusted) for such Interest Period,
plus the Applicable Lessor Margin, or (b) if the Lessor Amount accrues
Yield pursuant to Section 15.1 or 15.2 of the Participation Agreement, at
the Alternative Base Rate.


 


33