Exhibit
10.1


 


Lease (Ross)


 


 


AMENDED AND RESTATED
LEASE AGREEMENT


 


 


dated as of July 23, 2003


 


between


 


 


WACHOVIA DEVELOPMENT
CORPORATION,

as the Lessor,


 


 


and


 


 


ROSS DISTRIBUTION, INC.,

as the Lessee


 


 


Distribution Center

Perris, California


 


 


THE LESSOR’S
INTEREST UNDER THIS LEASE HAS BEEN ASSIGNED TO, AND IS SUBJECT TO A SECURITY
INTEREST IN FAVOR OF, WACHOVIA BANK, NATIONAL ASSOCIATION, AS ADMINISTRATIVE
AGENT, PURSUANT TO EACH ASSIGNMENT OF LEASE DATED AS OF THE DATE HEREOF BETWEEN
THE LESSOR AND SAID ADMINISTRATIVE AGENT. 
INFORMATION CONCERNING SUCH SECURITY INTEREST MAY BE OBTAINED FROM SAID
ADMINISTRATIVE AGENT.


 

















 


Table of
Contents


 


	
  ARTICLE I

  DEFINITIONS; EFFECTIVENESS

  
	
   

  	
   

  
	
  SECTION 1.1

  	
  Definitions

  
	
  SECTION 1.2

  	
  Effectiveness

  
	
   

  	
   

  
	
  ARTICLE II

  LEASE OF PROPERTY

  
	
   

  	
   

  
	
  SECTION 2.1

  	
  Demise and Lease

  
	
  SECTION 2.2

  	
  Nature of Lease

  
	
   

  	
   

  
	
  ARTICLE III

  RENT

  
	
   

  	
   

  
	
  SECTION 3.1

  	
  Base Rent

  
	
  SECTION 3.2

  	
  Supplemental Rent

  
	
  SECTION 3.3

  	
  Method, Time of Payment

  
	
  SECTION 3.4

  	
  Late Payment

  
	
   

  	
   

  
	
  ARTICLE IV

  NET LEASE; THE LESSEE’S ACCEPTANCE OF PROPERTY

  
	
   

  	
   

  
	
  SECTION 4.1

  	
  Net Lease; No Setoff; Etc

  
	
  SECTION 4.2

  	
  Condition of Facility

  
	
   

  	
   

  
	
  ARTICLE V

  THE LESSEE’S PURCHASE OPTION

  
	
   

  	
   

  
	
  SECTION 5.1

  	
  Purchase Option

  
	
   

  	
   

  
	
  ARTICLE VI

  EXTENSION OF LEASE

  
	
   

  	
   

  
	
  SECTION 6.1

  	
  Lease Extension

  
	
   

  	
   

  
	
  ARTICLE VII

  THE LESSEE’S DISPOSITION OF THE LESSOR’S INTERESTS AT LEASE EXPIRATION

  
	
   

  	
   

  
	
  SECTION 7.1

  	
  Disposition of the Lessor’s Interests and
  Distribution of Sale Proceeds

  
	
  SECTION 7.2

  	
  Conditions to the Lessee’s Exercise of the
  Remarketing Option

  
	
   

  	
   

  
	
  ARTICLE VIII

  LIENS

  
	
   

  	
   

  
	
  SECTION 8.1

  	
  The Lessee’s Obligation to Discharge Liens

  
	
  SECTION 8.2

  	
  The Lessor’s Notice to Potential Lienors

  
	
  SECTION 8.3

  	
  The Lessee’s Right to Encumber the Lessee’s
  Property

  



 


i

















 


	
  SECTION 8.4

  	
  Granting of Easements

  
	
   

  	
   

  
	
  ARTICLE IX

  MAINTENANCE; ALTERATIONS; TAXES; LEGAL COMPLIANCE

  
	
   

  	
   

  
	
  SECTION 9.1

  	
  Maintenance and Repair; Utility Charges

  
	
  SECTION 9.2

  	
  Alterations

  
	
  SECTION 9.3

  	
  Title to Alterations

  
	
  SECTION 9.4

  	
  Location

  
	
  SECTION 9.5

  	
  Permitted Contests

  
	
  SECTION 9.6

  	
  Environmental Compliance

  
	
  SECTION 9.7

  	
  Compliance with Applicable Laws

  
	
  SECTION 9.8

  	
  Land Agreements Compliance

  
	
  SECTION 9.9

  	
  The Lessee’s Right to Enforce Warranties

  
	
  SECTION 9.10

  	
  Real Estate Taxes

  
	
   

  	
   

  
	
  ARTICLE X

  USE AND NAMING OF PROPERTY

  
	
   

  	
   

  
	
  SECTION 10.1

  	
  Use

  
	
  SECTION 10.2

  	
  Naming of the Facility

  
	
   

  	
   

  
	
  ARTICLE XI

  INSURANCE

  
	
   

  	
   

  
	
  SECTION 11.1

  	
  Insurance

  
	
  SECTION 11.2

  	
  Risk of Loss

  
	
   

  	
   

  
	
  ARTICLE XII

  RETURN OF LEASED PROPERTY TO THE LESSOR

  
	
   

  	
   

  
	
  SECTION 12.1

  	
  Nature of Return

  
	
  SECTION 12.2

  	
  Site Assessment

  
	
   

  	
   

  
	
  ARTICLE XIII

  [Intentionally omitted]

  
	
   

  	
   

  
	
  ARTICLE XIV

  LOSS DESTRUCTION, CONDEMNATION OR DAMAGE

  
	
   

  	
   

  
	
  SECTION 14.1

  	
  Event of Loss, Casualty or Condemnation

  
	
  SECTION 14.2

  	
  Application of Net Proceeds When Lease
  Continues; Repair and Restoration

  



 


ii

















 


	
  SECTION 14.3

  	
  Application of Proceeds

  
	
  SECTION 14.4

  	
  Application of Proceeds from a Temporary
  Taking

  
	
  SECTION 14.5

  	
  Other Dispositions

  
	
  SECTION 14.6

  	
  Negotiations

  
	
   

  	
   

  
	
  ARTICLE XV

  CONVEYANCE OF THE PROPERTY TO THE LESSEE

  
	
   

  	
   

  
	
  SECTION 15.1

  	
  Terms of Conveyance

  
	
  SECTION 15.2

  	
  Right of the Lessee to Name Designee

  
	
  SECTION 15.3

  	
  Costs of Conveyance

  
	
  SECTION 15.4

  	
  Preference Legal Opinion

  
	
   

  	
   

  
	
  ARTICLE XVI

  SUBLEASE

  
	
   

  	
   

  
	
  SECTION 16.1

  	
  Subleasing Permitted; the Lessee Remains
  Obligated; Other Assignments

  
	
   

  	
   

  
	
  ARTICLE XVII

  INSPECTION

  
	
   

  	
   

  
	
  SECTION 17.1

  	
  Inspection

  
	
   

  	
   

  
	
  ARTICLE XVIII

  LEASE EVENTS OF DEFAULT

  
	
   

  	
   

  
	
  SECTION 18.1

  	
  Lease Events of Default

  
	
  SECTION 18.2

  	
  Remedies

  
	
  SECTION 18.3

  	
  Proceeds of Sale; Deficiency

  
	
  SECTION 18.4

  	
  Grant and Foreclosure on the Lessee’s
  Estate

  
	
  SECTION 18.5

  	
  Receipt of a Sufficient Discharge to
  Purchaser

  
	
  SECTION 18.6

  	
  Sale a Bar Against the Lessee

  
	
  SECTION 18.7

  	
  Liabilities to Become Due on Sale

  
	
  SECTION 18.8

  	
  Provisions Subject to Applicable Law

  
	
  SECTION 18.9

  	
  Survival of the Lessee’s Obligations

  
	
  SECTION 18.10

  	
  Remedies Cumulative; No Waiver; Consents

  
	
  SECTION 18.11

  	
  Right to Perform the Lessee’s Obligations

  
	
  SECTION 18.12

  	
  Determinations With Respect to Certain
  Events

  



 


iii

















 


	
  ARTICLE XIX

  HOLDING OVER

  
	
   

  	
   

  
	
  SECTION 19.1

  	
  Holding Over

  
	
   

  	
   

  
	
  ARTICLE XX

  GRANT OF SECURITY INTEREST

  
	
   

  	
   

  
	
  SECTION 20.1

  	
  Grant of Lien

  
	
  SECTION 20.2

  	
  Assignment of Leases and Rents

  
	
   

  	
   

  
	
  ARTICLE XXI

  COVENANTS OF THE LESSEE

  
	
   

  	
   

  
	
  SECTION 21.1

  	
  No Merger or Sale

  
	
   

  	
   

  
	
  ARTICLE XXII

  COVENANTS OF THE LESSOR

  
	
   

  	
   

  
	
  SECTION 22.1

  	
  Quiet Enjoyment

  
	
   

  	
   

  
	
  ARTICLE XXIII

  MISCELLANEOUS

  
	
   

  	
   

  
	
  SECTION 23.1

  	
  Binding Effect; Successors and Assigns

  
	
  SECTION 23.2

  	
  Notices

  
	
  SECTION 23.3

  	
  Severability

  
	
  SECTION 23.4

  	
  Amendments

  
	
  SECTION 23.5

  	
  Headings, etc

  
	
  SECTION 23.6

  	
  Counterparts; Notice

  
	
  SECTION 23.7

  	
  Governing Law

  
	
  SECTION 23.8

  	
  Apportionments

  
	
  SECTION 23.9

  	
  Priority

  
	
  SECTION 23.10

  	
  No Joint Venture

  
	
  SECTION 23.11

  	
  No Accord and Satisfaction

  
	
  SECTION 23.12

  	
  No Merger

  
	
  SECTION 23.13

  	
  Lessor Bankruptcy

  
	
  SECTION 23.14

  	
  Abandonment

  
	
  SECTION 23.15

  	
  Investments

  
	
  SECTION 23.16

  	
  Further Assurances

  
	
  SECTION 23.17

  	
  Non-recourse

  



 


iv

















 


	
  EXHIBIT A

  	
  Description of Site

  



 


v

















 


LEASE AGREEMENT


 


AMENDED AND RESTATED
LEASE AGREEMENT, dated as of July 23, 2003 (this “Lease”) between
WACHOVIA DEVELOPMENT CORPORATION, as Lessor, and ROSS DISTRIBUTION, INC., a
California corporation, as Lessee.


 


WITNESSETH:


 


A.            Lessee is a party to that certain
Lease Agreement (the “Existing  Lease”), dated as of December 17,
2001, between Lessee and Ross Statutory Trust 2001A, as Lessor (the “Existing
Lessor”).


 


B.            Pursuant to the Participation
Agreement (as defined below) and the Assignment Agreement, dated as of
July 23, 2003, the Existing Notes and Existing Certificates will be
transferred to Lessor and, upon such transfer, the Existing Lessor will be
dissolved, as a result of which, title to the Facility will be transferred to
Lessor and Lessor will succeed to the rights of the Existing Lessor under the
Existing Lease, as amended and restated by this Lease.


 


C.            Subject to the terms and conditions
set forth in the Operative Documents, pursuant to this Lease, Lessor will lease
the Facility to Lessee, and Lessee will lease the Facility from Lessor.


 


NOW, THEREFORE, in
consideration of the mutual agreements herein contained and other good and
valuable consideration, the receipt of which is hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:


 


ARTICLE
I

DEFINITIONS; EFFECTIVENESS


 


SECTION 1.1         Definitions. 
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned thereto in Appendix A of the Participation Agreement, dated
as of July 23, 2003, (as amended, supplemented, amended and restated or
otherwise modified from time to time, the “Participation Agreement”)
among Lessee, the Guarantor, Lessor, the financial institutions named on
Schedule I thereto, as Credit Note Purchasers, the financial institutions named
on Schedule II thereto, as Lessor Lenders and Wachovia Bank, National
Association, as Administrative Agent.  The
rules of construction set forth in said Appendix A shall also be applicable to
this Lease.


 


SECTION 1.2         Effectiveness. 
This Lease shall be effective as of the Advance Date and upon such date
shall amend, completely restate and replace the Existing Lease from and after
such date.  Notwithstanding the
amendment and restatement of the Existing Lease, nothing herein or in the other
Operative Documents shall relieve any party to the Existing Lease or any other
Existing Operative Document of any liability or obligation that accrued under
the Existing Lease prior to the Advance Date. 
Without limitation of the foregoing or of any provision in any Operative
Document to the contrary, Lessor shall not be liable or otherwise have any
obligation to any Person, including Lessee or any other party to the Participation
Agreement or the Existing Participation Agreement arising under or in any way
relating to (a) the Existing Operative Documents, (b) any act or failure to act
by any Person, including the Existing Lessor or any other


 


1

















 


Person party to the
Existing Operative Documents, or (c) which relates to the Facility at any time
prior to the Advance Date.


 


ARTICLE
II

LEASE OF PROPERTY


 


SECTION 2.1         Demise and Lease. 
The Lessee hereby agrees to lease the Facility from the Lessor for the
period commencing on and including the Advance Date and ending on the Lease
Term Expiration Date.  Except as
specifically set forth in the Operative Documents, the demise and lease of the
Facility pursuant to this Article II shall include any additional right,
title or interest in the Facility other than Liens granted pursuant to the
Operative Documents and interest granted to Lessor in the Mortgaged Property,
which may at any time be acquired by the Lessor, the intent being that all
right, title and interest of the Lessor in and to the Facility during the Lease
Term shall be demised and leased hereunder.


 


SECTION 2.2         Nature of Lease. 
The parties hereto intend that (i) for financial accounting purposes
with respect to the Lessee, the Lessor will be treated as the owner and lessor
of the Facility and the Lessee will be treated as the lessee of the Facility
under this Lease, and (ii) for all federal and all state and local income tax
purposes and bankruptcy and commercial law purposes, (A) the Lease will be
treated as a financing arrangement, (B) the Lessor and the other Participants
will be deemed lenders making loans to the Lessee in an amount equal to the sum
of the Investor Amounts and the outstanding principal amount of the Loans,
which loans are secured by the Facility, (C) the Lessee will be treated as the
owner of the Facility for tax purposes and will be entitled to all tax benefits
ordinarily available to an owner of property such as the Facility for such tax
purposes and (D) the obligations of the Lessee to pay the Base Rent and any
part of the Lease Balance shall be treated as payments of interest and
principal, respectively, for federal and state income tax and bankruptcy and
commercial law purposes.  Nevertheless,
each party acknowledges and agrees that no other party has made any
representations or warranties to any other party concerning the tax, accounting
or legal characteristics of the Operative Documents and that each party has
obtained and relied upon such tax, accounting and legal advice concerning the
Operative Documents as it deems appropriate. 
The Lessor shall have a valid and binding security interest in and Lien
on the Facility, free and clear of all Liens other than Permitted Liens, as
security for the obligations of the Lessee under the Operative Documents.


 


ARTICLE
III

RENT


 


SECTION 3.1         Base Rent.  On
each Scheduled Payment Date during the Lease Term, the Lessee shall pay to the
Lessor base rent (“Base Rent”) in an amount equal to the sum of (a) Loan
Base Rent and (b) Investor Base Rent.


 


SECTION 3.2         Supplemental Rent. 
During the Lease Term, the Lessee shall pay to the Lessor, or to such
other Person as shall be entitled thereto in the manner contemplated herein,
any and all Supplemental Rent as the same shall become due and payable.  In the event of the Lessee’s failure to pay
any Supplemental Rent, the Lessor shall have all rights, powers and


 


2

















 


remedies provided for
herein or by law or in equity or otherwise in the case of nonpayment of Base
Rent.


 


SECTION 3.3         Method, Time of Payment.  Rent shall be paid to the Administrative Agent (or in the case of
Excluded Amounts, directly to the Person entitled thereto) to the account of
the Administrative Agent designated on Schedule III to the Participation
Agreement or as the Administrative Agent shall specify in writing to the Lessee
at least ten Business Days prior to the due date therefor.  Each such payment of Rent shall be made by
the Lessee in Dollars which shall be immediately available at the place of
payment not later than 12:00 noon (New York time) on the date such payment is
due hereunder, and the Administrative Agent shall pay such funds paid to it on
such date or, if received after such designated time, then promptly, but not
later than the next Business Day, to each Person entitled thereto in accordance
with Article X of the Participation Agreement. 
Payments received following such time shall be deemed received on the
next Business Day unless the Administrative Agent applies such funds on such
date in accordance with Article X of the Participation Agreement.  Concurrently with each payment of Base Rent
and Supplemental Rent, the Lessee shall provide notice to Administrative Agent
as set forth in Section 11.2(a) of the Participation Agreement.


 


SECTION 3.4         Late Payment. 
If any portion of the Rent due to any Person shall not be paid by the
Lessee on or before the date such payment was due hereunder, the Lessee shall
pay interest thereon from (and including) the date such payment was due
hereunder to (but excluding the date of the appropriate Person’s receipt
thereof) at a rate per annum equal to the Overdue Rate (the “Overdue Rent”).


 


ARTICLE
IV

NET LEASE; THE LESSEE’S ACCEPTANCE OF PROPERTY


 


SECTION 4.1         Net Lease; No Setoff; Etc.  This Lease is a “triple net” lease.  Except to the extent otherwise expressly specified in this Lease,
it is agreed and intended that Base Rent, Supplemental Rent and any other
amounts payable hereunder by the Lessee shall be paid without notice, demand,
counterclaim, setoff, deduction or defense and without abatement, suspension,
deferment, diminution or reduction, free from any charges, assessments,
impositions, withholdings, expenses or reductions, and that the Lessee’s obligation
to pay all such amounts, throughout the Lease Term is absolute and
unconditional.  All costs, expenses and
obligations of every kind and nature whatsoever relating to the Facility and
the appurtenances thereto and the use and occupancy thereof which may arise or
become due and payable with respect to the period which ends on the Lease Term
Expiration Date (whether or not the same shall become payable during the Lease
Term or thereafter) shall be paid by the Lessee except as otherwise expressly
provided herein or in another Operative Document.  The Lessee assumes the sole responsibility for the condition,
use, operation, maintenance, underletting and management of the Facility, and
no Indemnitee shall have any responsibility in respect thereof or any liability
for damage to the property of the Lessee, any subtenant of the Lessee or any
other occupant of the Facility on any account or for any reason whatsoever
other than by reason of, in the case of any particular Indemnitee, such
Indemnitee’s willful misconduct or gross negligence.  Except to the extent otherwise expressly specified in this Lease,
the obligations and liabilities of the Lessee hereunder shall in no way be
released, discharged or otherwise affected for any reason, including:  (a) any defect in the condition,
merchantability, design, quality or fitness for use of


 


3

















 


the Facility or
any part thereof, or the failure of the Facility to comply with all Applicable
Laws, including any inability to occupy or use the Facility by reason of such
noncompliance; (b) any damage to, removal, abandonment, salvage, loss,
scrapping or destruction of or any requisition or taking of the Facility or any
part thereof; (c) any restriction, prevention or curtailment of or interference
with any use of the Facility or any part thereof including eviction; (d) any
defect in title to or rights to the Facility or any Lien on such title or
rights or on the Facility; (e) any change, waiver, extension, indulgence or
other action or omission or breach in respect of any obligation or liability of
or by any Person; (f) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceedings relating to the
Lessee, the Lessor or any other Person, or any action taken with respect to
this Lease by any trustee or receiver of the Lessee, the Lessor or any other
Person, or by any court, in any such proceeding; (g) any claim, set off,
defense or right that the Lessee has or might have against any Person,
including the Lessor, the Administrative Agent (including in its individual
capacity) or any vendor, manufacturer or contractor of or for the Facility; (h)
any failure on the part of the Lessor or any other Person to perform or comply
with any of the terms of this Lease, any other Operative Document or of any
other agreement, whether or not related to the transactions contemplated by the
Operative Documents; (i) any invalidity, unenforceability, illegality or
disaffirmance of this Lease against or by the Lessee or any provision hereof or
any of the other Operative Documents or any provision of any thereof; (j) the
impossibility or illegality of performance by the Lessee or the Lessor, or
both; (k) any action by any court, administrative agency or other Governmental
Authority; (1) any change in or violation of Applicable Laws; (m) any
restriction, prevention or curtailment of or interference with the construction
on, modification of or use of the Facility or any part thereof; or (n) any
other occurrence whatsoever, whether similar or dissimilar to the foregoing,
whether or not the Lessee shall have notice or knowledge of any of the
foregoing.  Except as specifically set
forth in this Lease, this Lease shall not be cancelable by the Lessee for any
reason whatsoever and, except as expressly provided in this Lease, the Lessee,
to the extent now or hereafter permitted by Applicable Laws, waives all rights
now or hereafter conferred by statute or otherwise to quit, terminate or
surrender this Lease.


 


SECTION 4.2         Condition of Facility.  The Facility is demised and let by the Lessor “AS IS” in its
present condition, subject to (a) the rights of any parties in possession
thereof, (b) the state of the title thereto existing at the time the Lessor acquired
its title to the Facility, (c) any state of facts which an accurate survey or
physical inspection might show, (d) all Applicable Laws and (e) any violations
of Applicable Laws which may exist at the commencement of the Lease Term.  The Lessee has examined the Facility and the
Lessor’s title thereto and has found the same to be satisfactory.  THE LESSOR HAS NOT MADE AND SHALL NOT BE
DEEMED TO HAVE MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OR BE
DEEMED TO HAVE ANY LIABILITY WHATSOEVER, AS TO THE VALUE, HABITABILITY,
COMPLIANCE WITH ANY APPLICABLE PLANS AND SPECIFICATIONS FOR THE PROPERTY
CONDITION, LOCATION, USE, DESCRIPTION, MERCHANTABILITY, DESIGN, OPERATION, OR
FITNESS FOR USE OF THE FACILITY (OR ANY PART THEREOF), OR AS TO THE LESSOR’S
TITLE THERETO OR OWNERSHIP THEREOF OR ANY OTHER REPRESENTATION OR WARRANTY
WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE FACILITY (OR ANY PART
THEREOF) AND THE LESSOR SHALL NOT BE LIABLE FOR ANY LATENT, HIDDEN OR PATENT
DEFECT THEREIN, FOR ANY DEFECT IN OR EXCEPTION TO


 


4

















 


TITLE THERETO, OR
FOR THE FAILURE OF THE IMPROVEMENTS TO HAVE BEEN CONSTRUCTED IN ACCORDANCE WITH
THE APPLICABLE PLANS AND SPECIFICATIONS THEREFOR, THE COMPLIANCE OF SUCH PLANS
AND SPECIFICATIONS WITH APPLICABLE LAWS OR THE FAILURE OF THE FACILITY, OR ANY
PART THEREOF, TO OTHERWISE COMPLY WITH ANY APPLICABLE LAWS.  It is agreed that the Lessee has been
afforded full opportunity to inspect the Facility, is satisfied with the
results of its inspections of the Facility and is entering into this Lease
solely on the basis of the results of its own inspections and all risks
incident to the matters discussed in the preceding sentence.  The provisions of this Section 4.2
have been negotiated, and the foregoing provisions are intended to be a
complete exclusion and negation of any representations or warranties by the
Lessor, express or implied, with respect to the Facility, that may arise
pursuant to the UCC (including the UCC as in effect in the State of California)
or any other law now or hereafter in effect, or otherwise.


 


ARTICLE
V

THE LESSEE’S PURCHASE OPTION


 


SECTION 5.1         Purchase Option.


 


(a)           Subject to Section 5.1(b) and (d),
the Lessor hereby grants to the Lessee the exclusive and irrevocable option (the  “Purchase Option”) to purchase the
Facility, as of any date (the “Purchase Date”) following the fifth
anniversary of the Documentation Date (unless the Lessee has exercised the
Remarketing Option), for an amount equal to the Lease Balance plus, without
duplication, any other amounts then due and owing to any Participant or the
Administrative Agent under the Operative Documents, including any Make-Whole
Amounts (collectively the “Purchase Price”).  Such purchase and sale shall be effected in accordance with Article XV.


 


(b)           The Purchase Option shall be
exercisable by notice to the Lessor (and concurrent notice to Administrative
Agent as set forth in Section 11.2(b) of the Participation Agreement) given not
less than 30 days prior to the proposed Purchase Date.  If the Lessee shall not have exercised the
Remarketing Option on or before 180 days prior to the Lease Term Expiration
Date, or the Facility is not sold pursuant to the Remarketing Option, then the
Purchase Option shall be deemed exercised and the Purchase Date shall be the
Lease Term Expiration Date.


 


(c)           On the Purchase Date, the Lessee
shall pay to the Lessor (by payment to the Administrative Agent) the Purchase
Price as the purchase price for the Facility. 
The Purchase Price payable to Lessor (by payment to the Administrative
Agent) hereunder shall be distributed as provided for in Article X of the
Participation Agreement and in the Intercreditor Agreement.


 


(d)           Notwithstanding anything to the
contrary set forth herein, the Lessee shall have the right, at any time, to
exercise the Purchase Option with respect to the entire Facility (but not less
than the entire Facility) within five Business Days following the earlier of
its actual knowledge of or receipt of notice of the occurrence of any Lease
Event of Default.  Notwithstanding the
notice provisions of Section 5.1(b), in the event that the Lessee elects
to exercise the Purchase Option within the five Business Day period following
the earlier of its actual knowledge of or receipt of notice of the occurrence
of a Lease Event of Default, the


 


5

















 


Lessee’s payment
to the Lessor (by payment to the Administrative Agent) of the Purchase Price on
or prior to the fifth Business Day following such earlier date referred to
above shall constitute sufficient notice. 
In the event that the Lessee shall not pay to the Lessor (by payment to
the Administrative Agent) the Purchase Price on or prior to the fifth Business
Day following such earlier date referred to above or in the event that the
Lessee provides the Lessor with written notice of its intention not to exercise
the Purchase Option during such five Business Day period, the Lessee’s ability
to exercise the Purchase Option shall terminate for so long as such Lease Event
of Default continues.  The purchase
option described in Section 5.1 will not be available and shall
terminate automatically and without notice if Lessee elects the Remarketing
Option or upon the occurrence and during the continuance of a Lease Event of
Default arising as a result of an Insolvency Event.


 


ARTICLE
VI

EXTENSION OF LEASE


 


SECTION 6.1         Lease Extension. 
The Lease Term Expiration Date shall be extended on satisfaction of the
terms and conditions set forth in Section 8.5 of the Participation Agreement.


 


ARTICLE
VII

THE LESSEE’S DISPOSITION OF THE LESSOR’S INTERESTS AT LEASE EXPIRATION


 


SECTION 7.1         Disposition of the Lessor’s Interests and Distribution of
Sale Proceeds.  Subject to Section
7.2, the Lessee, on written notice to the Lessor (and concurrent notice to
Administrative Agent as set forth in Section 11.2(d) of the Participation
Agreement) given not less than 180 days nor more than 360 days prior to the
Lease Term Expiration Date, shall have the option (the “Remarketing Option”),
which option will be irrevocable when made as herein provided, to cause a sale
of the Facility in accordance with the following terms:


 


(a)           the Lessee shall act as non-exclusive
agent (and may appoint qualified independent sales agents to work on its
behalf) in connection with such sale and, in such capacity, shall use all
commercially reasonable efforts to solicit bids from bona fide third parties
unrelated to the Lessee and its Affiliates or any Person with whom the Lessee
or any of its Affiliates has an understanding or arrangement pursuant to which
the Lessee or any of its Affiliates would use, possess or own all or a portion
of the Facility.


 


(b)           The Lessee shall attempt to sell the
Facility to the Person submitting an all cash bid that will result in the highest
Net Sale Proceeds, such sale to be effected on the third day immediately
preceding the Lease Term Expiration Date or as soon as reasonably practicable
thereafter but in no event later than the Lease Term Expiration Date (the date
of sale being the “Sale Date”); provided that:


 


(i)            the
Lessee shall be required to obtain the Lessor’s approval of the sale of the
Facility pursuant to any such bid if the sale of the Facility pursuant thereto
together with the payment of the Residual Value Guaranty Amount required to be
made by Lessee pursuant to Section 7.1(c) would result in the
Administrative Agent, Lessor and Debt


 


6

















 


Participants,
as the case may be, not being fully reimbursed pursuant to Article X of the
Participation Agreement for their Investor Amounts and the outstanding
principal amount of the Loans and all other amounts due and owing to the Debt
Participants, Lessor and Administrative Agent under the Operative Documents;


 


(ii)           with
respect to a proposed sale that the Lessee wishes to consummate, the Lessee
shall provide the Lessor with reasonable advance notice of the identity of the
prospective purchaser, its relationship (if any) to any of the other
Participants and a copy of the purchase agreement (including all exhibits and
schedules thereto) for the proposed sale of the Facility; and


 


(iii)          the
Lessee and its Affiliates shall have no right to submit bids for the Facility,
but a Participant or an Affiliate of one or more Participants may bid on the
Facility.


 


(c)           On the Sale Date, the Lessee shall
pay to the Lessor (by payment to the Administrative Agent) an amount equal to
(i) the Residual Value Guaranty Amount plus (ii) all accrued
and unpaid Rent (including Supplemental Rent consisting of all other amounts
hereunder which have accrued or will accrue on or prior to or as of the Lease
Term Expiration Date).


 


(d)           The purchase of the Facility pursuant
to a sale in compliance with the requirements of this Article VII and for
which a bid has been accepted by the Lessor herein shall be consummated on the
Sale Date, and the Lessee shall pay the Gross Proceeds directly to the
Administrative Agent.  If the sum of the
Net Sales Proceeds plus the Residual Value Guaranty Amount received by Lessor
pursuant to clause (c) exceeds the Lease Balance as of the Lease Term
Expiration Date, then, following the payment to the Participants of an amount
equal to the Lease Balance, any excess shall be paid to Lessee on the Lease
Term Expiration Date.  The Residual
Value Guaranty Amount and the Gross Sales Proceeds payable to the Lessor (by
payment to the Administrative Agent) hereunder shall be distributed as provided
for in Article X of the Participation Agreement and the Intercreditor
Agreement.


 


(e)           Concurrently with the payments
contemplated in Section 7.1 (c), after payments of all other amounts due
and owing in respect of Rent, including Supplemental Rent through the payment
date, this Lease shall terminate, and the Lessor and the Lessee shall (except
as otherwise herein provided) have no further rights or obligations (other than
any obligations expressed herein or in any other Operative Document as
surviving the termination of this Lease) under this Lease.


 


SECTION 7.2         Conditions to the Lessee’s Exercise of the Remarketing
Option.  The Lessee’s right to
exercise the Remarketing Option and the consummation of the sale of the
Facility on the Sale Date, as applicable, shall be subject to the following
conditions:


 


(a)           on the Sale Date, the Facility must
be delivered by the Lessee in the condition required under Section 12.1,
subject to the Lessee’s ability to obtain waivers of such condition from the
third-party purchaser;


 


(b)           at least 60 days before the Sale
Date, the Lessee shall have delivered the Environmental Report required under Section
12.2 and demonstrated compliance (to the


 


7

















 


reasonable
satisfaction of the Lessor) with any remediation required pursuant to such
Environmental Report, subject to Lessee’s ability to obtain waivers of such
condition from the third-party purchaser;


 


(c)           as of the exercise of the Remarketing
Option, the Final Completion Work restoration work required to be performed
under Section 9.2(d) (if any) shall have been completed;


 


(d)           as of the exercise of the Remarketing
Option, if there remains to be performed hereunder any restoration work as a
result of an Event of Loss, the Lessee will be able, with the exercise of
reasonable diligence, to complete such work as of the Sale Date; and as of the
Sale Date, such work shall have been completed, subject to Lessee’s ability to
obtain waivers of such condition from the third-party purchaser and which
waiver shall not reduce the bid from such third-party purchaser;


 


(e)           as of the exercise of the Remarketing
Option and the Sale Date, there shall be no Lease Event of Default or
Bankruptcy Default continuing;


 


(f)            as of the exercise of the
Remarketing Option, there shall be no Default pertaining to the events
described in Section 18.1(c) or Section 18.1(h) that has
continued beyond 180 days after the giving of notice to the Lessee by any
Participant or the Administrative Agent;


 


(g)           as of the Sale Date, the Lessee shall
have paid the Residual Value Guaranty Amount;


 


(h)           at least 120 days before the Sale Date,
any Alterations required by Sections 9.1(a) and 9.2(b) shall have
been completed in accordance with the terms hereof, subject to Lessee’s ability
to obtain waivers of such condition from the third-party purchaser and which
waiver shall not reduce the bid from such third party purchaser; and


 


(i)            all subleases with respect to the
Facility shall have been terminated prior to Lessor’s receipt of Lessee’s
election of the Remarketing Option and Lessee shall not enter into any
additional subleases or renew any subleases with respect to the Facility
following Lessee’s election of the Remarketing Option.


 


If, after the Lessee shall have given a notice of its
exercise of the Remarketing Option in accordance with Section 7.1,
Lessee fails to complete a sale in accordance with this Article VII or any of
the foregoing conditions (a) through (i) is not satisfied, in
either case, on or prior to the Sale Date, then a Lease Event of Default shall
have occurred hereunder and the Lessee shall purchase the Facility for the Purchase
Price.


 


ARTICLE
VIII

LIENS


 


SECTION 8.1         The Lessee’s Obligation to Discharge Liens.  The Lessee shall not directly or indirectly
create, incur, assume or suffer to exist any Lien on or with respect to the
Facility, title thereto or any interest therein, which arises for any reason,
including all Liens which arise out of the possession, use, occupancy,
construction, repair or rebuilding of the


 


8

















 


Facility or by
reason of labor or materials furnished or claimed to have been furnished with
respect to the Facility, except Permitted Liens.  The Lessee shall promptly, at its own expense, take such action
as may be necessary to discharge or eliminate any such Lien (other than
Permitted Liens).


 


SECTION 8.2         The Lessor’s Notice to Potential Lienors.  Nothing contained in this Lease shall be
construed as constituting the consent or request of the Lessor, express or
implied, to or for the performance by any contractor, laborer, materialman, or
vendor of any labor or services or for the furnishing of any materials for any
construction, alteration, addition, repair or demolition of or to the Facility
or any part thereof, which would result in any liability of the Lessor for
payment therefor.  Notice is hereby
given that none of the Lessor nor the Debt Participants will be liable for any
labor, services or materials furnished or to be furnished to the Lessee, or to
anyone holding an interest in the Facility or any part thereof through or under
the Lessee, and that no mechanics or other Liens for any such labor, services
or materials shall attach to or affect the interest of the Lessor or the Debt
Participants in and to the Facility.


 


SECTION 8.3         The Lessee’s Right to Encumber the Lessee’s Property.  The Lessee may from time to time own, hold
under lease from Persons other than the Lessor and encumber, grant security
interests in and otherwise hypothecate in favor of Persons other than the
Lessor inventory, furnishings, furniture, trade fixtures, leasehold
improvements, equipment, including Equipment, and other personal property
located on or about the Site (and not constituting Fixtures or purchased from
the Funding) (the “Lessee’s Property”), which shall not be subject to
this Lease or to any Lien in favor of the Lessor (including any such Lien as
may arise by operation of Applicable Laws). 
The Lessor shall from time to time, upon the reasonable request of the
Lessee, promptly acknowledge in writing to the Lessee and other Persons that
the Lessor does not own or have, and waives, any lien or other right or
interest in or to any of the Lessee’s Property.


 


SECTION 8.4         Granting of Easements.  Provided that no Lease Event of Default is continuing, the Lessor
will join with the Lessee from time to time at the request of the Lessee (and
at the Lessee’s sole cost and expense) to (i) subject to the terms of Section
15.3, sell, assign, convey or otherwise transfer an interest in the
Facility to any Person legally empowered to take such interest under the power
of eminent domain, (ii) grant easements, licenses, rights of way and other
rights and privileges in the nature of easements, (iii) release existing
easements and appurtenances which benefit the Facility, (iv) subject to the
terms of Section 15.3, dedicate or transfer unimproved portions of the
Facility for road, highway or other public purposes, (v) execute petitions
to have the Facility annexed to any municipal corporation or utility district,
(vi) execute any amendment, termination or supplement of or to any Land Agreement,
or a new Land Agreement and (vii) execute and deliver any instrument necessary
or appropriate to make or confirm such grants, releases or other actions
described above in this Section 8.4 to any Person; provided that in each case
other than involving transfers required by Applicable Laws pursuant to clause
(i), the Lessor shall not be required to take any such action, and the
Lessee shall not effect any such action or grant, release, dedication, transfer
or amendment, unless the Lessor shall have received a certificate of an
authorized officer of the Lessee stating that such grant or release, or such
dedication, transfer or amendment, as the case may be, shall not adversely
affect the utility, economic useful life or residual value of the Facility or
reduce the fair market value of the Facility below the Lease Balance and the
Facility shall comply with all


 


9

















 


Applicable Laws
after such grant or release, or such dedication, transfer or amendment, as the
case may be.


 


ARTICLE
IX

MAINTENANCE; ALTERATIONS; TAXES; LEGAL COMPLIANCE


 


SECTION 9.1         Maintenance and Repair; Utility Charges.


 


(a)           The Lessee shall at all times, (i)
maintain the Facility and all components thereof in good order, repair and
condition, subject to ordinary wear and tear and in the same manner as other
“Class A” distribution buildings in the locale of the Facility,
(ii) except to the extent Section 9.5 shall apply, maintain the
Facility in accordance with and otherwise comply with all Applicable Laws and
(iii) make any and all repairs of the Facility necessary or appropriate to keep
the same in the condition required by the preceding clauses (i) and (ii),
whether interior or exterior, structural or nonstructural, ordinary or
extraordinary, foreseen or unforeseen and regardless of whether the repair was
caused by a Casualty, breach of warranty, wear and tear or otherwise.


 


(b)           The Lessor shall not be required to
maintain, repair, replace, alter, remove or rebuild all or any part of the
Facility, and the Lessee waives any right that it may now have or hereafter
acquire to require the Lessor to (i) maintain, repair, replace, alter, remove
or rebuild all or any part of the Facility or (ii) make repairs (whether or not
at the expense of the Lessor) pursuant to any Applicable Laws, insurance
requirements, contract, agreement or covenant in effect at any time during the
Lease Term.


 


(c)           The Lessee shall pay or cause to be
paid all charges for electricity, power, gas, oil, water, telephone, sanitary
sewer and all other rents and utilities used in or on the Facility during the
Lease Term.  The Lessee shall be
entitled to receive any credit or refund with respect to any utility charge
paid by the Lessee and received by the Lessor on account thereof, net of the costs
and expenses reasonably incurred by the Lessor in obtaining such credit or
refund (if any), and, upon receipt by the Lessor thereof, such credit or refund
shall be promptly paid over to the Lessee.


 


SECTION 9.2         Alterations.


 


(a)           The Lessee may, without the consent
of the Lessor, at the Lessee’s sole cost and expense, make Alterations to the
Facility, so long as such Alterations do not adversely effect the as-built
value, utility, residual value at the end of the Lease Term or the useful life
of the Facility.  Subject to the terms
of the foregoing proviso, the Lessee shall have the right to change and/or
seek variances, exceptions and other exemptions in respect of the Applicable
Laws (including building and/or zoning laws, regulations and agreements) relating
to the Facility or any portion thereof.


 


(b)           The Lessee shall make all Alterations
to the Facility required so as to cause the same to comply with Applicable
Laws, and the limitations on the Lessee’s right to make Alterations contained
in Section 9.2(a) and Section 9.2(d) shall not be applicable to
such Alterations, regardless of their effect on the as-built value, utility,
residual value at the end of the Lease Term or the useful life of the Facility.


 


10

















 


(c)           The Lessee shall cause any
Alterations to be done and completed in a good and workmanlike manner, free
from faults and defects, and in compliance with all Applicable Laws.  The Lessee shall be responsible for the acts
and omissions of all of its employees and all other Persons performing any of
the Alterations.


 


(d)           No Alterations with costs exceeding
$2,500,000 (hereunder a “Material Alteration”), shall be made or
undertaken except upon not less than thirty (30)(1) days prior written notice
by Lessee to Lessor (a “Notice of Alteration”).  Each Notice of Alteration shall be
accompanied with reasonably detailed plans and specifications.  If the Lessor in good faith determines that
such Alterations would adversely affect the as-built value, utility, residual
value at the end of the Lease Term or the useful life of the Facility, the
Lessor shall give notice of its objection (a “Notice of Objection”)
within 15 Business Days after the Lessor’s receipt of a Notice of
Alterations.  If the Lessor and the Lessee
cannot agree whether or not such Alterations would adversely affect the
as-built value, utility, residual value at the end of the Lease Term or the
useful life of the Facility within 15 Business Days after the Lessee’s receipt
of a Notice of Objection, an Appraiser reasonably acceptable to the Lessor and
the Lessee shall resolve the dispute by appraising the property both with and
without such Alterations.  Lessee shall
pay for the cost of such appraisal together with all reasonable out-of-pocket
costs, including reasonable attorneys’ fees incurred by the parties in
connection with any such dispute between the parties.  If such appraisal indicates that such Alterations would adversely
affect the as-built value, utility, residual value or useful life of the
Facility, the Lessee shall not proceed to make such Alterations, without the
prior written consent of the Lessor.  If
such appraisal does not indicate that such Alterations would have any such
adverse effect on the Facility, no such written consent of the Lessor will be
required for Lessee to make such Alterations.


 


SECTION 9.3         Title to Alterations.  Title to Alterations shall immediately and without further act
vest in the Lessor and shall be deemed to constitute a part of the Facility and
be subject to this Lease in each of the following cases:


 


(a)           such Alteration shall be in
replacement of or in substitution for a portion of the Facility;


 


(b)           such Alteration shall be required to
be made pursuant to the terms of Section 9.1(a) or Section 9.2(b);


 


(c)           such Alteration shall be
Nonseverable; and


 


(d)           such Alteration shall be severable
and paid for (i.e., with debt and/or equity) by the Lessor or any Debt
Participant.


 


The Lessee shall, at the Lessor’s request, execute and
deliver any deeds or assignments reasonably necessary to evidence the vesting
of title in and to such Alterations in the Lessor.  If an Alteration is not within any of the categories set forth in
clauses (a) through (d) of this Section


 












(1)           Note to Ross: Please confirm that the
changes are acceptable.


 


11

















 


9.3, then title to such Alteration,
as well as any item for which substitution or replacement is made as
contemplated in Section 9.3(a), shall vest in the Lessee.  So long as removal thereof shall not result
in the violation of any Applicable Laws or this Lease, all Alterations to which
title shall vest in the Lessee as aforesaid may be removed at any time by the
Lessee, provided
that the Lessee shall, at its expense, repair any material damage to the
Facility caused by the removal of such Alteration and shall restore in all
material respects the affected portion of the Facility in accordance with Section
9.1(a).


 


SECTION 9.4         Location.  The
Lessee shall not remove, or permit to be removed, the Improvements comprising
the Facility or any part thereof without the prior written consent of the
Lessor, except that the Lessee or any other Person may remove (a)  any
Alteration with respect to which title has passed to or remained with the Lessee
in accordance with the provisions of Section 9.3, (b) any part of
the Facility constructed on a temporary basis for the purpose of repair or
maintenance thereof, and (c) any part of the Facility which has been
replaced by another part which has become subject to this Lease and the Lien of
the Mortgages; provided that the Lessee shall repair any material damage to
the Facility caused by such removal.


 


SECTION 9.5         Permitted Contests. 
Provided no Lease Event of Default or Bankruptcy Default is continuing,
the Lessee shall not be required to comply with any Applicable Law so long as
it is engaged in a Permitted Contest with respect thereto.  At the Lessee’s expense, the Lessor shall
cooperate fully with the Lessee in connection with any such test, challenge, appeal
or proceeding and, at the Lessee’s request, will join in the proceedings or
permit the proceedings to be brought in the Lessor’s name.  The terms of this Section 9.5 shall
qualify each provision of this Lease that imposes a compliance obligation on the
Lessee (other than an obligation to any Indemnitee), regardless of whether such
provision shall expressly make reference to this Section 9.5.


 


SECTION 9.6         Environmental Compliance.


 


(a)           The Lessee shall comply at all times
with Environmental Laws with respect to the Facility, and there shall be no
Release of Hazardous Materials and no Hazardous Materials shall be disposed of,
or brought onto, permitted to exist or remain at or upon, or stored (with the
exception of materials used or stored in connection with the operation or
maintenance of the Facility and in compliance with all Environmental Laws) from
or used, at the Facility by the Lessee or any of its employees, agents,
independent contractors, licensees, subtenants or invitees in violation of any
Applicable Laws, or in such manner as would result in any liability under any
Applicable Laws.  The Lessee shall hold
harmless, indemnify and defend the Indemnitees from and against any
Environmental Damages resulting from any breach of the covenants set forth in
this Section 9.6 and from all Environmental Damages.  The Lessee’s indemnification obligation
hereinabove set forth shall survive the expiration or earlier termination of
this Lease and shall be in addition to any other indemnification right the
Participants or Administrative Agent have under the Operative Documents.


 


(b)           The indemnity contained in Section
9.6(a) shall specifically include the direct obligation of the Lessee to
promptly perform any investigatory and/or remedial or other activities required,
ordered or recommended by any Governmental Authority, or as otherwise necessary
to avoid injury or liability to any person or property, to prevent the spread
of any Hazardous


 


12

















 


Materials, or to
provide for the continued safe operation of the Facility (the “Remedial Work”).  Without waiving any of its rights pursuant
to the indemnity described in Section 9.6(a), upon failure of the Lessee
to perform the Remedial Work in a reasonably prompt manner (subject to the
Lessee’s rights under Section 9.5), the Lessor may, at its option and in
its sole discretion, commence such work itself in compliance with Environmental
Laws, and the Lessee shall pay all reasonable costs thereby incurred.


 


(c)           Without limiting the Lessee’s
obligations under Section 9.6(a) or any other provision of this Lease,
the Lessee shall be solely and completely responsible for responding to and
complying with any administrative notice, order, request or demand or any
third-party claim or demand relating to the potential or actual presence of
Hazardous Materials on the Facility, except where the contamination was caused
solely by the Lessor.  The
responsibility conferred under this Section 9.6(c) includes responding
to such orders on behalf of the Lessor and defending against any assertion of
the Lessor’s financial responsibility or individual duty to perform under such
orders.


 


(d)           As used in this Section 9.6, “Environmental
Damages” shall mean all claims, suits, judgments, damages (including
punitive damages), losses, penalties, fines, liabilities (including, but not
limited to, strict liability), encumbrances and Liens, and any other costs and
expenses, of any kind or nature whatsoever, whether direct or indirect, joint
or several, resulting from (i) any Hazardous Material existing, released, or
threatened to be released, on, in, or under the Facility, whether known or
unknown and whether arising from historic or threatened future releases of
Hazardous Materials, or (ii) any Environmental Claim, in either case, including
any attorneys’ fees, disbursements, consultants’ fees and other costs resulting
from (A) investigation and defense of any alleged claim or demand by any third
party, (B) claims or directives, notices or requests of any Governmental
Authorities, whether or not the claims or directives, notices or requests are
groundless, false or fraudulent or ultimately defeated, (C) any settlements or
judgments to which the Lessee is a party, and (D) rendering the Facility in
compliance with Applicable Laws.


 


SECTION 9.7         Compliance with Applicable Laws.  During the Lease Term, at the Lessee’s
expense, the Lessee shall cause the Facility to comply with all Applicable
Laws, whether or not such Applicable Laws shall necessitate structural changes
and/or improvements and/or interfere with the use and enjoyment of such
Facility, subject to Section 9.5. 
The Lessee shall also procure, pay for and maintain all permits,
licenses, approvals, certificates and other authorizations necessary for the
operation of its business at the Facility from time to time and its lawful use
and occupancy of the Facility in connection therewith, subject to Section
9.5.


 


SECTION 9.8         Land Agreements Compliance.  Subject to Section 9.5, the Lessee shall comply with, and
shall fully and promptly, at its own cost and expense, perform all obligations
of the Lessor under any restrictive covenant, deed restriction or easement of
record, as well as any environmental land use restriction recorded against the
Site, to the extent relating to the Facility (collectively, “Land Agreements”),
including the payment of all amounts owed by the Lessor thereunder.  For so long as no Lease Event of Default
shall have occurred and be continuing, the Lessee may exercise all rights,
privileges and remedies available to the Lessor under the Land Agreements.


 


13

















 


SECTION 9.9         The Lessee’s Right to Enforce Warranties.  Provided no Lease Event of Default shall
have occurred and be continuing, the Lessee (including through its designees),
at the Lessee’s expense, shall have the right to assert all of the Lessor’s
rights (if any) under any applicable warranty and any other claim that the
Lessee or the Lessor may have under any agreements pertaining to the construction
and/or modification of the Facility, as well as any other rights and claims
that may exist by operation of law.  The
Lessor agrees to cooperate with the Lessee, at the Lessee’s expense, in
asserting such rights.


 


SECTION 9.10       Real Estate Taxes. 
Subject to Section 9.5, the Lessee shall pay all real estate ad
valorem and personal property taxes owed in respect of the Facility or
any portion thereof, as well as any payments due under any agreement described
in clause (f) of the definition of Permitted Liens.


 


ARTICLE
X

USE AND NAMING OF PROPERTY


 


SECTION 10.1       Use.  The
Facility may be used only for the purposes for which it was designed.  The Lessee shall not use or permit the use
of the Facility or any part thereof for any purpose or in any manner in
violation of any Applicable Laws, subject to the terms of Section 9.5.


 


SECTION 10.2       Naming of the Facility.  The Lessee shall have the sole and exclusive right during the
Lease Term, at any time and from time to time, to select the name or names of
the Facility or any part thereof, as well as the sole and exclusive right to
determine not to use any name in connection with one or more portions of the
Facility, as well as all rights in respect of signage for or in connection with
the Facility.  The Lessor shall not have
or acquire any right or interest with respect to any such name or names used at
any time by the Lessee.


 


ARTICLE
XI

INSURANCE


 


SECTION 11.1       Insurance. 
During the Lease Term, the Lessee shall maintain at the Lessee’s sole
cost and expense, the insurance described in Schedule 11.1
hereto.  In addition, the Lessee shall
from time to time, but in intervals of not less than twelve months nor more
than fifteen months, (i) undertake all actions and due diligence as reasonably
necessary to determine whether the insurance coverage required to be maintained
hereunder is in compliance with the requirements thereunder including any
increases in coverage required as a result of any change in any Applicable Laws
and (ii) if the Lessee determines that such insurance coverage does not
meet such requirements, promptly take all actions and steps necessary to cause
such coverage to comply with such requirements and shall notify the Lessor and
the Administrative Agent of the steps being taken by the Lessee or on its
behalf.  The Lessee shall furnish the
Lessor and the Administrative Agent certificates showing the insurance required
under this Section 11.1 to be in effect and naming the Lessor (and its
beneficial owners), the Debt Participants and Administrative Agent as
additional insureds as their interests may appear and the property insurance
required hereunder shall contain a standard form mortgage endorsement in favor
of the Administrative Agent and shall name the Administrative Agent as loss
payee.


 


14

















 


SECTION 11.2       Risk of Loss. 
During the Lease Term, the Lessee shall bear all risk of loss (including
any Casualty or Condemnation) with respect to the Facility or any portion
thereof.


 


ARTICLE
XII

RETURN OF LEASED PROPERTY TO THE LESSOR


 


SECTION 12.1       Nature of Return. 
Unless the Facility is then being transferred to the Lessee or its
designee pursuant to the Purchase Option, the Lessee shall, on the Lease Term
Expiration Date, and at its own expense, return the Facility to the Lessor by
surrendering the same to the possession of the Lessor: (a) free and clear of
all Liens, except that the Lessee shall have no responsibility or liability in
respect of: (i) the Lessor Liens, (ii) Liens described in clause (a) of the
definition of Permitted Liens (other than rights and interests of the Lessee
under the Operative Documents) and (iii) Liens described in clause (f) of the
definition of “Permitted Liens”; (b) all Alterations shall have been completed
in compliance with the requirements of Article IX; and (c) in the condition
required by Section 9.1(a), 9.1(c), 9.6, 9.7 and 9.10.  All Alterations the title to which has not
been vested in the Lessor hereunder that are not removed by the Lessee at or
prior to the expiration or earlier termination of this Lease shall be deemed
abandoned in place by the Lessee and shall become the property of the
Lessor.  The Lessee shall have no
obligation and shall not be permitted to remove any Alterations (i) required by
Applicable Laws or insurance requirements or (ii) included in such Facility at
the Advance Date or which constitute Final Completion Work.  Except as required under Section 9.2(d)
and as permitted under Section 10.1, the Lessee may not remove any
Nonseverable Alterations.  The Lessee
shall assign to the Lessor any and all assignable warranties, licenses and
permits relating to the property surrendered to the Lessor which extend beyond
the expiration or earlier termination of this Lease, such assignment to be
without representation, warranty or recourse of any sort whatsoever.


 


SECTION 12.2       Site Assessment. 
Not earlier than 270 days and not later than one 180 days prior to the
Lease Term Expiration Date, the Lessee shall, at the Lessee’s expense, deliver
to the Lessor an environmental site investigation and assessment (the “Site
Assessment”) substantially conforming to the requirements of ASTM 1527-E
Phase I or any then successor thereto and the Lessee shall cause to be
performed by the Lease Term Expiration Date such additional testing, reporting
and remediation as is reasonably and specifically recommended by such report
(such report, together with such additional report, if any, shall be
collectively referred to as the “Environmental Report”); provided
that the Lessee shall have no obligation to conduct a Site Assessment or cause
an Environmental Report to be prepared if the Lessee shall have exercised the
Purchase Option.


 


ARTICLE
XIII

[INTENTIONALLY OMITTED]


 


15

















 


ARTICLE
XIV

LOSS DESTRUCTION, CONDEMNATION OR DAMAGE


 


SECTION 14.1       Event of
Loss, Casualty or Condemnation.


 


(a)           If an Event of Loss, Casualty or
Condemnation shall occur, the Lessee shall give the Lessor prompt written
notice of such occurrence, and the Lessee will:


 


(i)            in
the case of an Event of Loss, purchase the Facility on a date occurring on the
first Scheduled Payment Date occurring more than 20 days after such Event of
Loss, for the Purchase Price;


 


(ii)           in
the case of a Casualty or Condemnation, restore and rebuild the Facility using
any Net Proceeds or any of its own funds so as to restore the Facility to its
as-built value, utility, residual value and remaining useful life of the
Facility immediately prior to such Event of Loss; and


 


(iii)          in
the case of any Environmental Claim, or the discovery of any Environmental
Claim, the cost of remediation or assessment of penalties in respect of which,
in the reasonable judgment of Lessor, is expected to exceed $1,000,000,
purchase the Facility on a date occurring on the first Scheduled Payment Date
occurring more than 20 days after Lessor provides Lessee with written notice of
such determination, for the Purchase Price;


 


(b)           All Net Proceeds received in respect
of the Facility shall be paid solely to the Administrative Agent as loss payee,
unless the insurance proceeds are less than $1,000,000 (provided that any insurance
proceeds paid to any Person other than the Administrative Agent shall be
required to be applied in accordance with Sections 9.1(a) and 14.2).  The Lessee’s failure to maintain insurance
shall not relieve the Lessee of any of the Lessee’s obligations hereunder to
restore the Facility following any Casualty or Condemnation or to purchase the
Facility following an Event of Loss.


 


(c)           Nothing in this Article XIV
shall be construed to prevent the Lessee from pursuing and collecting a
condemnation award or other compensation or settlement payment in respect of
its loss and damages resulting from any condemnation or taking.


 


SECTION 14.2       Application of Net Proceeds When Lease Continues; Repair
and Restoration.  Payments (except
for payments under insurance policies maintained by the Lessor) received at any
time by the Lessor or the Lessee from any Governmental Authority, any insurer
or any other Person with respect to a Condemnation or Casualty shall be paid to
the Administrative Agent and Administrative Agent shall apply such proceeds as
follows:


 


(a)           first, to the Lessee, as necessary, for
the repair or restoration of the affected portions of the Facility,


 


(b)           second, to the Lessor, to be distributed
in accordance with Article X of the Participation Agreement.


 


After a Casualty or Condemnation, this Lease shall
continue in full force and effect and the Lessee shall, at the Lessee’s own
cost and expense (including any Net Proceeds) and in accordance with the
applicable provisions of Article IX, proceed with reasonable diligence
and promptness to carry out any necessary demolition and to restore, repair,
replace and/or rebuild the Facility in order to restore the same, to the extent
it is reasonably practicable, to the


 


16

















 


condition, utility and value of the Facility
immediately prior to such Casualty or Condemnation (assuming the Facility is
maintained as required hereunder).  All
such repair and restoration shall be effected by the Lessee in compliance with
the requirements of Section 9.1.


 


SECTION 14.3       Application of Proceeds.  In case of a Condemnation or Casualty, this Lease shall remain in
full force and effect, without any abatement or reduction of Base Rent.


 


SECTION 14.4       Application of Proceeds from a Temporary Taking.  All Net Condemnation Proceeds from a
temporary taking shall, to the extent resulting from the taking of use during
the Lease Term, be paid to the Lessee, and to the extent awarded with respect
to use of the Facility for any time period after the expiration or termination
of the Lease Term shall be paid as follows: (a) if the Lessee has elected to
purchase the Facility, to the Lessee or its designee or (b) if the Lessee has
not elected to purchase the Facility, to the Administrative Agent to be applied
in accordance with Article X of the Participation Agreement, and thereafter to
the Lessee.


 


SECTION 14.5       Other Dispositions. 
Notwithstanding the foregoing provisions of this Article XIV, so
long as a Bankruptcy Default or Lease Event of Default shall be continuing, any
amount that would otherwise be payable to or for the account of, or that would
otherwise be retained by, the Lessee pursuant to this Article XIV or Section
7.2 shall be paid to the Administrative Agent and, at such time thereafter
as the Lease Event of Default shall have been waived in writing or no longer be
continuing, such amount to the extent not applied by Administrative Agent in accordance
with Article X of the Participation Agreement shall be paid promptly in
accordance with this Article XIV.


 


SECTION 14.6       Negotiations. 
In the event any part of the Facility becomes subject to Condemnation,
Casualty or Event of Loss, the Lessee shall control (and have the right to
settle and compromise) the negotiations with the relevant Governmental
Authority or insurance carriers unless a Lease Event of Default or Bankruptcy
Default shall be continuing, in which case the Administrative Agent may elect
to control such negotiations.


 


ARTICLE
XV

CONVEYANCE OF THE PROPERTY TO THE LESSEE


 


SECTION 15.1       Terms of Conveyance. 
Upon the purchase of the Facility by the Lessee, including pursuant to Article
V or Article XIV:


 


(a)           the Lease Term shall end, and the
obligations of the Lessee hereunder (other than any obligations expressed
herein or in any other Operative Document as surviving the termination of this
Lease) shall terminate as of the date of such purchase, and


 


(b)           the Lessor shall execute and deliver
to Lessee, in recordable form and in accordance with local custom and free and
clear of the Lessor Liens (and the Liens of the Mortgages), a grant deed and
bill of sale, and shall thereby convey the Facility to the Lessee (or its
designee), and all rights, title and interest of the Lessor in and to the Net
Proceeds (if any) applicable to the Facility, with a warranty against the
Lessor’s own acts and that the Lessor is conveying all that it received upon
purchase thereof prior to the date of such conveyance and


 


17

















 


otherwise “as is”
without additional representation or warranty, but subject to any Liens created
pursuant to Section 8 or otherwise requested by or expressly consented
to by the Lessee.


 


SECTION 15.2       Right of the Lessee to Name Designee.  In any instance in which this Lease provides
that the Lessee may purchase the Facility including pursuant to Article V,
then the Lessee shall have the right at any time and from time to time to
designate another Person as the purchaser of the Facility; provided that the Lessee may
not convey the Purchase Option itself and may not delegate its obligations in
respect of the payment of the Purchase Price; and provided, further, that the
documentation effectuating the purchase of the Facility shall include language,
for the benefit of and in form and substance reasonably satisfactory to the
Lessor, which provides that the purchaser of the Facility agrees and that
Lessor is not making any representations or warranties (other than the absence
of Lessor Liens attributable to it), that Lessor shall have no liabilities or
obligations with respect to the Facility and that such purchaser is looking
solely to Lessee and its Affiliates with respect to any representation, warranty,
liability, obligation or claim with respect to the Facility.


 


SECTION 15.3       Costs of Conveyance. 
The Lessee shall pay (or cause its designee to pay) all transfer taxes,
title insurance premiums, and other costs, fees and expenses incurred in
connection with any purchase in accordance with Article V or Article
XIV, including the recordation and filing charges for the satisfaction of
the Mortgages.  The Lessee shall pay the
reasonable out-of-pocket costs and expenses of the Administrative Agent, Lessor
and Debt Participants in connection with such purchase (including reasonable
attorneys’ fees and expenses).


 


SECTION 15.4       Preference Legal Opinion.  If, as of the date on which the Lessee purchases the Lessor’s
Interest, there is a Lease Event of Default or Bankruptcy Default then, as a
condition to the closing on the Purchase Option unless waived by the
Participants, the Lessee shall deliver to the Lessor an opinion of outside
counsel that the closing on the Purchase Option would not constitute a preference
under the Bankruptcy Code.


 


ARTICLE
XVI

SUBLEASE


 


SECTION 16.1       Subleasing Permitted; the Lessee Remains Obligated; Other
Assignments.  Except with respect to
a consolidation or merger into any Person or a sale, conveyance, transfer of
all or substantially all of Lessee’s assets permitted pursuant to Section
6.1(u) of the Participation Agreement, a sublease as otherwise permitted
pursuant to this Section 16.1 or assignments and mortgages for the
benefit of the Administrative Agent as contemplated under the Operative
Documents, Lessee shall not assign, mortgage or pledge to any Person, including
any Affiliate at any time, in whole or in part, any of its rights, title or
interests in, to or under this Lease or any portion of the Facility.  Provided no Lease Event of Default or
Bankruptcy Default shall exist at the time a sublease is entered into, the
Lessee may sublease the Facility or any portion or portions thereof to any
Person (each a “Sublease”) (provided, that the Lessee hereby covenants
and agrees that it shall not sublease the Facility or any portion or portions
thereof to any Person that is not generally meeting its obligations as they
become due or is subject to a proceeding under applicable bankruptcy, solvency
or reorganization laws on the date of such Sublease) in each case upon written
notice to the Lessor and the Administrative


 


18

















 


Agent; provided
that each of the following conditions is satisfied:  (A) the obligations of the Lessee under the Lease and in the
other Operative Documents shall continue in full force and effect
notwithstanding such Sublease, (B) no Sublease extends beyond the Lease Term,
(C) each Sublease shall expressly provide for the surrender of the Facility
after termination of the Lease, (D) each Sublease is expressly subject and
subordinate to this Lease.  The Lessee
acknowledges and agrees that Lessor’s interest in this Lease has been assigned
as described on the cover page hereof and (E) no Sublease (individually or in
the aggregate) shall adversely affect the utility, economic useful life or
residual value of the Facility or reduce the fair market value of the Facility
below the Lease Balance.


 


ARTICLE
XVII

INSPECTION


 


SECTION 17.1       Inspection.  The
Lessor shall have the inspection rights as set forth in the Participation
Agreement.


 


ARTICLE
XVIII

LEASE EVENTS OF DEFAULT


 


SECTION 18.1       Lease Events of Default.  The following events shall constitute “Lease Events of Default”
(whether any such event shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
Governmental Authority):


 


(a)           the Lessee shall fail to make any
payment of (i) Base Rent when due and such failure shall continue for five days
or (ii) any other amount payable by the Lessee on the Lease Term Expiration
Date, Lease Balance or the Residual Value Guaranty Amount when due (for which
the Lessor will notify the Lessee if such payment is not received when due, but
the Lessor will have no liability to the Lessee if it fails to deliver such
notice and the Lessor’s failure to provide such notice shall not affect whether
the same is a Lease Event of Default hereunder);


 


(b)           the Lessee shall fail to make payment
of any amount required hereunder, other than any amount described in Section
18.1(a), and such failure shall continue for a period of 10 days after
notice of such failure to the Lessee from the Lessor or the Administrative
Agent;


 


(c)           an Insolvency Event with respect to
the Guarantor, any Significant Subsidiary or the Lessee shall have occurred and
be continuing;


 


(d)           (i) 
the Guarantor or the Lessee shall default in the due performance and
observance of any of its obligations under Section 6.1(t) of the Participation
Agreement, (ii) the Guarantor or any Significant Subsidiary shall fail to
perform, comply with or observe or shall otherwise breach any one or more of
the terms, obligations, covenants or agreements contained in any of Sections
6.1(k)(i), 6.1(k)(ii), 6.1(k)(iii), 6.1(k)(v), 6.1(k)(vi), 6.1(l)(ii),
6.1(l)(iii), 6.1(l)(iv), 6.1(o), 6.1(q)(iii), or Sections 6.1(t) through (ee)
(other than clauses (i) or (ii) of Section 6.1(cc)) of the Participation
Agreement or (iii) the Guarantor or any Significant Subsidiary shall fail to
perform, comply with or observe or shall otherwise breach any one or more of
the terms, covenants, obligations or agreements (other than in respect of
clause (ii)


 


19

















 


above) in Sections
6.1(k) through (cc) of the Participation Agreement and such failure shall
continue for 30 days after notice thereof by the Administrative Agent;


 


(e)           any representation, warranty or
statement made or deemed made by the Guarantor or the Lessee in any Operative
Document, or in any statement or certificate delivered or required to be
delivered pursuant thereto, shall prove to be untrue and misleading in any
material respect on the date as of which made or deemed made, and (i) the
circumstances rendering such representation or warranty or statement incorrect
shall not be remediable or (ii) if such representation or warranty or statement
is remediable and the Guarantor or the Lessee is proceeding diligently so to
remedy, shall continue unremedied for thirty days after the earlier of: (x) the
date on which written notice is delivered by the Lessor or the Administrative
Agent to the Guarantor and the Lessee specifying such circumstances and
demanding that they be remedied and (y) the date on which any Authorized
Officer of the Guarantor or the Lessee has actual knowledge of such
incorrectness; provided that if such default is capable of cure but
cannot be cured by payment of money or cannot be cured by diligent efforts
within such thirty day period but such diligent efforts shall be properly
commenced within the cure period and the Guarantor or the Lessee is diligently
pursuing, and shall continue to pursue diligently, remedy of such failure, the
cure period shall be extended for an additional period of time as may be
necessary to cure, not to exceed an additional one hundred and twenty days and
not to extend beyond the Lease Term Expiration Date;


 


(f)            except as otherwise permitted under
the Operative Documents, any Lien granted by the Lessee pursuant to any
Operative Document affecting any portion of the Facility shall, in whole or in
material part, cease to be a perfected first priority security interest (other
than Permitted Liens), unless such cessation shall be caused by the Administrative
Agent or the Lessor;


 


(g)           the Guarantor or the Lessee shall
default in the due performance or observance by it of any term, covenant,
condition or agreement on its part to be performed or observed under any
Operative Document to which it is a party (not otherwise specified in this Section
18.1) and such default shall have continued unremedied for a period of at
least thirty days after receipt of notice by the Guarantor and the Lessee from
either the Lessor or the Administrative Agent; provided that if such
default is capable of cure but cannot be cured by payment of money or cannot be
cured by diligent efforts within such thirty day period but such diligent
efforts shall be properly commenced within the cure period and the Guarantor or
the Lessee is diligently pursuing, and shall continue to pursue diligently,
remedy of such failure, the cure period shall be extended for an additional
period of time as may be necessary to cure, not to exceed an additional one
hundred and twenty days and not to extend beyond the Lease Term Expiration
Date;


 


(h)           the Lessee shall fail to maintain
insurance required by Section 11;


 


(i)            one or more judgments or orders for
the payment of money in the aggregate amount in excess of $10,000,000 shall be
rendered against the Lessee or the Guarantor, or any of their Affiliates and
such judgment or order shall continue unsatisfied or unstayed for a period of
sixty days;


 


20

















 


(j)            (i) An “event of default” shall
occur in the payment when due (subject to any applicable grace period), whether
by acceleration or otherwise, of any Indebtedness of the Guarantor or any of
its Subsidiaries having a principal amount, individually or in the aggregate,
in excess of $10,000,000, or (ii) a default shall occur (subject to any
applicable grace period) in the performance or observance of any obligation or
condition with respect to such Indebtedness;


 


(k)           the Lease Event of Default described
in the last sentence of Section 7.2 shall have occurred;


 


(l)            a Lessee Change of Control or
Guarantor Change of Control shall occur without the express prior written
consent of the Majority Participants;


 


(m)          the Guarantor, any Significant
Subsidiary or any member of the Controlled Group shall fail to pay when due an
aggregate amount in excess of $10,000,000 which it shall have become liable to
pay to the PBGC or to a Plan under Title IV of ERISA; or notice of intent to
terminate a Plan or Plans in a distress termination under Section 4062 of ERISA
shall be filed by the Guarantor, any Significant Subsidiary or any member of
the Controlled Group; or the PBGC shall institute or have grounds to institute
proceedings under Title IV of ERISA to terminate or to cause a trustee to be
appointed to administer any such Plan or Plans or a proceeding shall be
instituted by a fiduciary of any such Plan or Plans against the Guarantor, any
Significant Subsidiary or any member of the Controlled Group and such
proceedings shall not have been dismissed within 90 days thereafter;


 


(n)           the Guarantor or any other member of
the Guarantor Affiliated Group shall be enjoined, restrained or in any way
prevented by the order of any court or any administrative or regulatory agency
from conducting any material part of the business of the Guarantor and the
Guarantor Affiliated Group taken as a whole and such order shall continue in
effect for more than 60 days, or the Guarantor or any other member of the
Guarantor Affiliated Group shall be indicted for a state or federal crime, or
any criminal action shall otherwise have been brought or threatened against the
Guarantor or any other member of the Guarantor Affiliated Group, a punishment
for which in any such case could include forfeiture of any assets of the
Guarantor Affiliated Group having a fair market value in excess of $10,000,000;


 


(o)           there shall occur the loss,
suspension or revocation of, or failure to renew, any license or permit now
held or hereafter acquired if such loss, suspension, revocation or failure to
renew could reasonably be expected to have a Material Adverse Effect;


 


(p)           (A) any material covenant, agreement
or obligation of the Guarantor or any Significant Subsidiary contained in or
evidenced by any Operative Document to which the Guarantor or such Significant
Subsidiary is a party shall, prior to the date on which such document shall
terminate in accordance with its terms, cease in any material respect to be
legal, valid, binding or enforceable in accordance with the terms thereof, or
(B) any Guarantee shall be terminated without the consent of the Administrative
Agent and each of the Participants prior to payment in full of all Obligations;
or


 


(q)           any Operative Document shall be
canceled, terminated, revoked or rescinded (or any notice of such cancellation,
termination, revocation or rescission given) otherwise than with


 


21

















 


the express prior
written agreement, consent or approval of the Administrative Agent and the
Participants; or any action at law, suit in equity or other legal proceeding to
cancel, revoke, or rescind any Operative Document shall be commenced by or on
behalf of the Guarantor or any other member of the Guarantor Affiliated Group,
or by any court or any other governmental or regulatory authority or agency of
competent jurisdiction; or any court or any other governmental or regulatory
authority or agency of competent jurisdiction shall make a determination that,
or shall issue a judgment, order, decree or ruling to the effect that, any one
or more of the Operative Documents or any one or more of the obligations of the
Guarantor or any other member of the Guarantor Affiliated Group under any one
or more of the Operative Documents are illegal, invalid or unenforceable in
accordance with the terms thereof to such an extent that the Administrative
Agent and the Participants are unable to enforce, in whole or in part, any
material provisions of the Operative Documents, as determined by the
Administrative Agent and the Participants in their sole discretion.


 


SECTION 18.2       Remedies.  Upon
the occurrence of any Lease Event of Default and at any time thereafter so long
as the same shall be continuing, the Lessor may (subject to Section 18.2(j)
below), at its option, by notice to the Lessee declare this Lease to be in
default (and, if such Lease Event of Default is described in Section 18.1(c),
then this Lease shall automatically be in default and no such declaration shall
be required and the terms of Section 18.2(j) shall be applicable) and do
one or more of the following (without duplication of amounts collected) as the
Lessor in its sole discretion shall determine:


 


(a)           The Lessor may, by notice to the
Lessee, terminate this Lease as to all (but not part) of the Facility as of the
date specified in such notice; provided, however, that (i) no
reletting, or taking of possession of the Facility (or any portion thereof) by
the Lessor will be construed as an election on the Lessor’s part to terminate
this Lease unless a written notice of such intention is given to the Lessee,
(ii) notwithstanding any reletting, or taking of possession, the Lessor may at
any time thereafter elect to terminate this Lease for a continuing Lease Event
of Default, and (iii) no act or thing done by the Lessor or any of its agents,
representatives or employees and no agreement accepting a surrender of the
Facility shall be valid unless the same be made in writing and executed by the
Lessor.  A notice given in connection
with unlawful detainer proceedings specifying a time within which to cure a
default shall terminate Lessee’s right to possession if Lessee fails to cure
the default within the time specified in the notice.  Upon termination of Lessee’s right to possession and without
further demand or notice, Lessee shall surrender possession and vacate the
Facility and deliver possession thereof, and Lessor may re-enter the Facility
and remove any Persons in possession thereof. 
Upon such termination of Lessee’s right to possession, this Lease shall
terminate and Lessor may recover from Lessee:


 


(i)            The
worth at the time of award of the unpaid Rent (including Base Rent and
Supplemental Rent) which had been earned at the time of termination;


 


(ii)           The
worth at the time of award of the amount by which the unpaid Rent (including
Base Rent and Supplemental Rent) which would have been earned after termination
until the time of award exceeds the amount of such rental loss that Lessee
proves could have been reasonably avoided;


 


22

















 


(iii)          The worth at the time of award of the amount
by which the unpaid Rent for the balance of the Lease Term after the time of
award exceeds the amount of such rental loss that Lessee proves could be
reasonably avoided;


 


(iv)          Any
other amount necessary to compensate Lessor for all the detriment proximately
caused by Lessee’s failure to perform Lessee’s obligation under this Lease or
which in the ordinary course of things would be likely to result therefrom,
including the costs and expenses (including reasonable attorneys’ fees,
advertising costs and brokers’ commissions) of recovering possession of the
Facility, removing Persons or property therefrom, placing the Facility in good
order, condition, and repair, preparing and altering the Facility for
reletting, and all other costs and expenses of reletting; and


 


(v)           Such
other amounts in addition to or in lieu of the foregoing as may be permitted
from time to time by applicable California law.


 


(b)           The “worth at the time
of award” of the amounts referred to in clauses (i) and (ii) above is computed
by allowing interest at the Overdue Rate. 
The “worth at the time of award” of the amount referred to in clause
(iii) above is computed by discounting such amount at the discount rate of the
Federal Reserve Bank of Charlotte at the time of award plus one percent
(1%).  Notwithstanding any statement
contained in Sections 18.2(a) and (b) to the contrary, in no
event shall the amounts payable for Rent (including Base Rent and Supplemental
Rent) under Section 18.2(a) exceed the amount of the Purchase Price (for
this purpose, “Purchase Price” shall not include any amounts payable under Section
18.2(a)).


 


(c)           The Lessor may, by
notice to the Lessee, terminate this Lease and (i) demand that the Lessee,
and the Lessee shall upon the written demand of the Lessor, return the Facility
promptly to the Lessor in the manner and condition required by, and otherwise
in accordance with all of the provisions of, Section 12.1 as if the
Facility was being returned at the end of the Lease Term, and the Lessor shall
not be liable for the reimbursement of the Lessee for any costs and expenses
incurred by the Lessee in connection therewith, and (ii) without prejudice to
any other remedy which the Lessor may have for possession of the Facility,
enter upon the Facility and (to the exclusion of the Lessee) take immediate
possession of the Facility and expel or remove the Lessee and any other person
who may be occupying the Facility (subject to the terms of any nondisturbance
agreements with the Lessor in favor of any subtenants), by summary proceedings
or otherwise, all without liability to the Lessee for or by reason of such
entry or taking of possession, and, in addition to the Lessor’s other damages,
the Lessee shall be responsible for the reasonable costs and expenses of
reletting, including brokers fees and the costs of any repairs made by the
Lessor.  The provisions of this Section
18.2(c) shall operate as a notice to quit and shall be deemed to satisfy
any other requirement or provisions of Applicable Laws which may require the
Lessor to provide a notice to quit or of the Lessor’s intention to re-enter the
Facility and any such requirements or provisions are hereby waived by the
Lessee.


 


(d)           The Lessor may sell all
or any part of the Lessee Collateral at public or private sale, as the Lessor
may determine, free and clear of any rights of the Lessee and without any duty
to account to the Lessee with respect to such action or inaction or any
proceeds (other than in accordance with the application of proceeds as set
forth in Article X of Participation Agreement) with respect thereto (except to
the extent contemplated in clause (ii) of the next succeeding


 


23

















 


sentence if the
Lessor shall elect to exercise its rights thereunder and as otherwise provided
in the Operative Documents), in which event the Lessee’s obligation to pay Base
Rent hereunder for periods commencing after the date of such sale shall be
terminated or proportionately reduced, as the case may be (except to the extent
that Base Rent is to be included in computations under Section 18.2(e)
if the Lessor shall elect to exercise its rights thereunder).  If the Lessor shall have sold all of the
Lessee Collateral pursuant to the above terms of this Section 18.2(d),
the Lessor, in lieu of exercising its rights under Section 18.2(e), may,
if it shall so elect, demand that the Lessee pay to the Lessor, and the Lessee
shall pay to the Lessor, on the date of such sale, as liquidated damages for
loss of a bargain and not as a penalty (the parties agreeing that the Lessor’s
actual damages would be difficult to predict, but the liquidated damages
described below represent a reasonable approximation of such amount), in lieu
of Base Rent due for periods commencing after such date of sale, an amount
equal to the excess (if any) of (i) the Purchase Price, computed as of such
date of sale, over (ii) the net proceeds of such sale.


 


(e)           The Lessor may hold,
keep idle or lease to others all or any part of the Facility as the Lessor in
its sole discretion may determine, free and clear of any rights of the Lessee
and without any duty to account to the Lessee with respect to such action or
inaction or for any proceeds with respect to such action or inaction, except
that the Lessee’s obligation to pay Base Rent from and after the occurrence of
a Lease Event of Default shall be reduced by the net proceeds, if any, received
by the Lessor from leasing the Facility to any Person, or allowing any Person
(other than the Lessee) to use the Facility for the same periods or any portion
thereof.


 


(f)            The Lessor may,
whether or not the Lessor shall have exercised or shall thereafter at any time
exercise any of its rights under Section 18.2(c) or (e), but only
if the Facility has not been sold under Section 18.2(d), demand, by
written notice to the Lessee specifying a date (the “Final Payment Date”)
not earlier than 10 days after the date of such notice, that the Lessee pay to
the Lessor, and the Lessee shall pay to the Lessor, on the Final Payment Date,
as liquidated damages for loss of a bargain and not as a penalty and in
consideration of the transfer of the Facility (the parties agreeing that the
Lessor’s actual damages would be difficult to predict, but the aforementioned
liquidated damages represent a reasonable approximation of such amount), an
amount equal to the Purchase Price, and upon the Lessor’s receipt of such
payment, the Facility shall be conveyed to the Lessee by grant deed free and
clear of all the Lessor’s Liens and the Lien of the Mortgages and the other Operative
Documents.


 


(g)           The Lessor may retain
and apply against the Lessor’s damages all sums which the Lessor would, absent
such Lease Event of Default, be required to pay to, or turn over to, the Lessee
pursuant to the terms of this Lease.


 


(h)           The Lessor may exercise
any other right or remedy that may be available to it under Applicable Laws or
in equity, or proceed by appropriate court action (legal or equitable) to
enforce the terms hereof or to recover damages for the breach hereof.  Separate suits may be brought to collect any
such damages for any period or periods with respect to which rent shall have
accrued, and such suits shall not in any manner prejudice the Lessor’s right to
collect any such damages for any subsequent period, or the Lessor may defer any
such suit until after the expiration of the Lease Term, in which event such
suit shall be deemed not to have accrued until the expiration of the Lease
Term.


 


24

















 


(i)            Upon the occurrence of
the Lease Event of Default described in Section 18.1(c), whether or not
another Lease Event of Default described in one or more other clauses of Section
18.1 shall have been or thereafter is declared, the Lessee’s rights under
this Lease shall terminate immediately without notice and the Lessee shall
immediately pay to Administrative Agent, on behalf of the Lessor, as and for
liquidated damages, an amount equal to the Lease Balance, together with all
Supplemental Rent payable under the Operative Documents whereupon the Facility
shall be conveyed to the Lessee by grant deed free and clear of all the
Lessor’s Liens and the Lien of the Mortgages and the other Operative Documents.


 


(j)            Notwithstanding
anything to the contrary set forth herein, upon the occurrence of a Lease Event
of Default, the Lessor shall not reenter, take possession, foreclose, or sell
the Facility until the Purchase Option shall have terminated in accordance with
Section 5.1(d).


 


(k)           The Lessor has the
remedy described in California Civil Code Section 1951.4 (lessor may continue
lease in effect after lessee’s breach and abandonment and recover rent as it
becomes due, if lessee has right to sublet or assign, subject only to
reasonable limitations).  Accordingly,
the Lessor may, at its option, elect not to terminate this Lease with respect
to the Facility and continue to collect all Base Rent, Supplemental Rent and
all other amounts due the Lessor (together with all costs of collection) and
enforce the Lessee’s obligations under this Lease as and when the same become
due, or are to be performed.  At the
option of the Lessor, upon any abandonment of the Facility by the Lessee, the
Lessor may, in its sole and absolute discretion, enforce, by suit or otherwise,
all covenants and conditions hereof to be performed and complied with by Lessee
hereunder and to exercise all other remedies permitted by Section 1951.4 of the
California Civil Code (or any amendments thereof or any successor laws which
replace Section 1951.4), or elect not to terminate this Lease and may make any
necessary repairs (and the Lessee shall pay the reasonable costs of such
repairs) in order to relet the Facility, and relet the Facility or any part
thereof (in place, if so elected by Lessor) for such term or terms (which may
be for a term extending beyond the Lease Term of this Lease) and at such rental
or rentals and upon such other terms and conditions as the Lessor in its
reasonable discretion may deem advisable; and upon each such reletting, all
rentals actually received by the Lessor from such reletting shall be applied to
the Lessee’s obligations hereunder and the other Operative Documents in such
order, proportion and priority as the Lessor may elect in the Lessor’s sole and
absolute discretion.  If such rentals
received from such reletting during any period are less than the Rent with
respect to the Facility to be paid during that period by the Lessee hereunder,
the Lessee shall pay any deficiency, as calculated by the Lessor, to the Lessor
on the next Scheduled Payment Date.


 


SECTION 18.3       Proceeds
of Sale; Deficiency.  All payments
received and amounts held or realized by the Lessor at any time when a Lease
Event of Default shall have occurred and be continuing and after the Lease
Balance or the Purchase Price shall have been accelerated pursuant to this
Lease, as well as all payments or amounts then held or thereafter received by
the Lessor, shall be distributed forthwith upon receipt by the Administrative
Agent in accordance with Article X of the Participation Agreement.


 


SECTION 18.4       Grant and
Foreclosure on the Lessee’s Estate. 
Without limiting any other remedies set forth in this Lease, the
following shall apply:


 


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(a)           The Lessor and the
Lessee agree that if a Lease Event of Default shall have occurred and be
continuing, the Lessor may proceed by a suit or suits in equity or at law or
otherwise, whether for a foreclosure hereunder as against all or any part of
the Lessee’s interests in the Facility or for the sale of such interest under
the judgment or decree of a court of competent jurisdiction, or against the
Lessee on a recourse basis for the Lease Balance and all other amounts due from
the Lessee hereunder, or for the specific performance granted, or for the
appointment of a receiver pending any foreclosure hereunder or the sale of the
Lessee Collateral, or for the enforcement of any other appropriate legal or
equitable remedy, and at any sale of the Lessee’s interest in the Facility,
whether pursuant to power of sale, foreclosure or otherwise, the Lessor may
become the purchaser of such interest or any part thereof, and in such case for
the purpose of making settlement for or payment of the purchase price, shall be
entitled to offset any claims for the indebtedness hereunder and under the
Operative Documents in order that they may be credited as paid on the purchase
price, and the Lessor shall be entitled to recover from Lessee all costs
incident to such proceedings, including attorneys’ fees and expenses in such
amounts as may be fixed by the court. 
Upon any such purchase, such purchaser shall acquire good title to the
Facility, free of the Lien of this Lease and free of all rights of redemption
in favor of the Lessee.


 


(b)           This Lease and the
other Operative Documents will be deemed given to secure not only the Lease
Balance, accrued Rent and all other sums due hereunder, but also future
advances made by the Lessor to protect the Lessee Collateral in connection with
the transactions contemplated by the Operative Documents, whether such advances
are obligatory or to be made at the option of the Lessor or otherwise to the
same extent as if such future advances were made on the Advance Date.  To the fullest extent permitted by law, the
Lien of this instrument shall be valid as to all such sums due hereunder,
including all future advances, from the time this instrument is executed.


 


(c)           Without in any way
limiting or restricting any of the Lessor’s rights, remedies, powers and
authorities under this instrument, and in addition to all of such rights,
remedies, powers, and authorities, if a Lease Event of Default shall have
occurred and be continuing, the Lessor shall also have and may exercise any and
all rights, remedies, powers and authorities under Applicable Laws upon default
in the payment of the Lease Balance, accrued Rent and all other sums due
hereunder, including, any right or remedy available to it as a secured party
under the UCC.  Promptly upon the
Lessor’s request, to the extent any portion of the Lessee Collateral
constitutes property subject to the UCC, the Lessor at its option, may give the
Lessee notice of the time and place of any public sale of any such property, or
of the date after which any private sale or other disposition thereof is to be
made, by sending notice by registered or certified first class mail, postage
prepaid, to the Lessee at least 10 days before the time of such sale or other
disposition.  If any notice of any
proposed sale, assignment or transfer by the Lessor of any portion of the
Lessee Collateral or any interest therein is required by law, the Lessee
conclusively agrees that 15 days notice to the Lessee of the date, time and
place (and, in the case of a private sale, the terms) thereof is
reasonable.  Without limiting the
generality of the foregoing, all expenses incurred by the Lessor to the extent
reimbursable under the UCC, whether incurred before or after any decree or
judgment of foreclosure, and whether or not enumerated in any other provision
of this instrument, shall be added to the indebtedness secured by this
instrument and by the judgment of foreclosure.


 


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(d)           The Lessee, for itself
and on behalf of all Persons now or hereafter interested in the Lessee
Collateral, voluntarily and knowingly hereby waives to the fullest extent
permitted by applicable law any and all right to reinstatement or redemption
and any and all other rights under all present and future appraisement,
homestead, moratorium, valuation, exemption, stay, extension, and redemption
statutes, laws or equities now or hereafter existing and all rights or
marshalling in the event of any sale of the Lessee Collateral or any part
hereof or interest therein, and hereby further waives the pleading of any
statute of limitations as a defense to any and all indebtedness secured by this
instrument, and the Lessee agrees that no defense, claim or right based on any
rights and defenses waived in this Section 18.4(d) will be asserted, or
may be enforced, in any action enforcing or relating to this instrument.  Without limiting the generality of the
preceding sentence, the Lessee, for itself and on behalf of each and every
Person acquiring any interest in or title to the Lessee Collateral subsequent
to the date of this instrument, hereby irrevocably waives any and all rights of
reinstatement or redemption from sale under any order, judgment or decree of
foreclosure of this instrument or under any power contained herein or under any
sale pursuant to any statute, order, judgment or decree of foreclosure of any
court.


 


SECTION 18.5       Receipt of
a Sufficient Discharge to Purchaser. 
Upon any sale of the Lessee Collateral, or any part thereof or interest
therein, whether pursuant to power of sale, foreclosure or otherwise, the
receipt of the Lessor or the officer making the sale under judicial proceedings
shall be a sufficient discharge to the purchaser for the purchase money, and
such purchaser shall not be obliged to see to the application thereof.


 


SECTION 18.6       Sale a Bar
Against the Lessee.  Any sale of the
Lessee Collateral, or any part thereof or interest therein, under or by virtue
of this instrument, whether pursuant to a power of sale, foreclosure or
otherwise, shall forever be a bar against the Lessee.


 


SECTION 18.7       Liabilities
to Become Due on Sale.  Upon any
sale of the Lessee Collateral, or any portion thereof or interest therein, by
reason of the Lessor’s exercise of any remedy under or by virtue of this Lease
or any other Operative Document, whether pursuant to power of sale, foreclosure
or other remedy available at law or in equity or by statute or otherwise, at
the option of the Lessor, if the Lease Balance shall not have been previously
declared due and payable, the Purchase Price shall immediately become due and
payable.


 


SECTION 18.8       Provisions
Subject to Applicable Law.  All
rights, powers and remedies provided in this instrument may be exercised only
to the extent that such exercise does not violate any Applicable Law, and are
intended to be limited to the extent necessary in order not to render this
instrument invalid, unenforceable or not entitled to be recorded, registered or
filed under the provisions of any Applicable Law.  If any term of this instrument or any application thereof shall
be invalid or unenforceable, the remainder of this instrument and any other
application of such term shall not be affected thereby.


 


SECTION 18.9       Survival
of the Lessee’s Obligations.  No
repossession of the Facility or exercise of any remedy under Section 18.2,
including termination of this Lease, shall, except as specifically provided
therein, relieve the Lessee of any of its liabilities and obligations
hereunder, including the obligation to pay Base Rent.  In addition, except as specifically provided therein, the Lessee
shall be liable, except as otherwise provided above, for any and all unpaid
Rent due hereunder before, after or during the exercise of any of the foregoing
remedies,


 


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including all
reasonable legal fees and other costs and expenses incurred by the Lessor and
the Administrative Agent by reason of the occurrence of any Lease Event of
Default or the exercise of the Lessor’s remedies with respect thereto, and
including all costs and expenses (excluding internal in-house costs of the Participants’
counsel) incurred in connection with the return of the Facility in the manner
and condition required by, and otherwise in accordance with the provisions of, Article
XII as if the Facility were being returned at the end of the Lease
Term.  At any sale of the Facility or
any part thereof or any other rights pursuant to Section 18.2, any
Participant or the Administrative Agent may bid for and purchase such property.


 


SECTION 18.10     Remedies
Cumulative; No Waiver; Consents.  To
the extent permitted by, and subject to the mandatory requirements of,
Applicable Laws, each and every right, power and remedy herein specifically
given to the Lessor or otherwise in this Lease shall be cumulative and shall be
in addition to every other right, power and remedy herein specifically given or
now or hereafter existing at law, in equity or by statute, and each and every
right, power and remedy whether specifically herein given or otherwise existing
may be exercised from time to time and as often and in such order as may be
deemed expedient by the Lessor, and the exercise or the beginning of the
exercise of any power or remedy shall not be construed to be a waiver of the
right to exercise at the same time or thereafter any other right, power or
remedy.  No delay or omission by the
Lessor in the exercise of any right, power or remedy or in the pursuit of any
remedy shall impair any such right, power or remedy or be construed to be a
waiver of any default on the part of the Lessee or to be an acquiescence
therein.  The Lessor’s consent to any
request made by the Lessee shall not be deemed to constitute or preclude the
necessity for obtaining the Lessor’s consent, in the future, to all similar
requests.  No express or implied waiver
by the Lessor of any Lease Event of Default shall in any way be, or be
construed to be, a waiver of any future or subsequent Lease Event of Default.


 


SECTION 18.11     Right to
Perform the Lessee’s Obligations. 
If a Lease Event of Default shall have occurred and be continuing, the
Lessor may perform or comply with such agreement, and the Lessor shall not
thereby be deemed to have waived any default caused by such failure, and the
amount of payment required to be made by the Lessee hereunder and made by the
Lessor on behalf of the Lessee, and the reasonable out-of-pocket costs and
expenses of the Lessor (including reasonable attorneys’ fees and expenses)
incurred in connection with the performance of or compliance with such
agreement, as the case may be, together with interest thereon at the Overdue
Rate, shall be deemed Supplemental Rent, payable by the Lessee to the Lessor
upon demand.


 


SECTION 18.12     Determinations
With Respect to Certain Events. 
Lessor acknowledges that, to the extent the Lessor is required to
exercise discretion in determining whether an Event of Default has occurred
under Section 18.1(d) (solely with respect to the reference therein to
Section 6.1(k)(vi) of the Participation Agreement), (e), (g), (j)(ii)
or (o), the Lessor shall exercise such discretion in a commercially
reasonable manner.


 


ARTICLE
XIX

HOLDING OVER


 


SECTION 19.1       Holding
Over.  If the Lessee shall for any
reason remain in possession of the Facility after the expiration or earlier
termination of this Lease (unless such Facility is


 


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conveyed to the
Lessee), such possession shall be as a tenancy at sufferance during which time
the Lessee shall continue to pay Supplemental Rent that would be payable by the
Lessee hereunder were the Lease then in full force and effect with respect to
such Facility and the Lessee shall continue to pay Base Rent in an amount equal
to 150% of the Base Rent that would have been payable had the Lease not
terminated or expired for each month or portion thereof after expiration of the
Lease.  Such Base Rent shall be payable
from time to time upon demand by the Lessor. 
During any period of tenancy at sufferance, the Lessee shall, subject to
the second preceding sentence, be obligated to perform and observe all of the
terms, covenants and conditions of this Lease, but shall have no rights
hereunder other than the right, to the extent given by law to tenants at
sufferance, to continue its occupancy and use of such Facility.  Nothing contained in this Article XIX
shall constitute the consent, express or implied, of the Lessor to the holding
over of the Lessee after the expiration or earlier termination of this Lease as
to the Facility (unless such Facility is conveyed to the Lessee) and nothing
contained herein shall be read or construed as preventing the Lessor from
maintaining a suit for possession of such Facility or exercising any other
remedy available to the Lessor at law or in equity.


 


ARTICLE
XX

GRANT OF SECURITY INTEREST


 


SECTION 20.1       Grant of
Lien.  Title to the Facility shall
remain in the Lessor, as security for the obligations of the Lessee under this
Lease and the other Operative Documents, and the Lessee hereby assigns, grants,
pledges, mortgages and warrants to the Lessor, as secured party, for the
benefit of the Lessor and its permitted transferees and assignees a Lien in the
Lessee Collateral to secure the payment and performance of all obligations of
the Lessee now or hereafter existing under this Lease or any other Operative
Document, until such time as the Lessee shall have fulfilled all of its
obligations under the Operative Documents. 
Upon the Lessee’s request, the Lessor shall at such time as all of the
obligations  (other than any contingent
obligations) of the Lessee under this Lease and the other Operative Documents
have been paid or performed in full, execute and deliver termination statements
and other appropriate documentation presented to it in final execution form and
reasonably requested by the Lessee, all at the Lessee’s expense, to evidence
the Lessor’s release of its Lien.  The
Lessee, at its expense, shall execute, acknowledge and deliver all such
instruments and take all such actions as the Lessor may request from time to
time in order to further effectuate the terms of this Lease, to carry out the
terms hereof, or to better assure and confirm the rights, powers and remedies
of the Lessor hereunder.


 


SECTION 20.2       Assignment
of Leases and Rents.  The assignment
and grant of the Lien contained in Section 20.1 above shall constitute
an absolute, present and irrevocable assignment and grant of the subleases,
rents, income, proceeds and benefits of the Facility; provided that so long as no
Lease Event of Default has occurred and is continuing, the Lessor hereby grants
permission to the Lessee to collect, receive and apply such rents, income,
proceeds and benefits as they become due and payable, but not in advance
thereof, and in accordance with all of the other terms, conditions and
provisions hereof and of the leases, contracts, agreements and other
instruments with respect to which such payments are made or such other benefits
are conferred.  Upon the occurrence of a
Lease Event of Default, such permission shall terminate immediately and
automatically, without notice to the Lessee or any other Person.  Such assignment shall be fully effective
without any further action on the part of the Lessee or the


 


29

















 


Lessor and, upon
the occurrence and during the continuance of a Lease Event of Default
hereunder, at the Lessor’s option, the Lessor shall be entitled to collect,
receive and apply all rents, income, proceeds and benefits from the Lessor’s
Interest, including all right, title and interest of the Lessee in any escrowed
sums or deposits or any portion thereof or interest therein, whether or not the
Lessor takes possession of the Lessee Collateral or any part thereof.  The Lessee further grants to the Lessor the
right, at the Lessor’s option, upon the occurrence and during the continuance
of a Lease Event of Default hereunder:


 


(a)           to enter upon and take
possession of the Facility for the purpose of collecting said rents, income,
proceeds and other benefits;


 


(b)           to dispossess by the
customary summary proceedings any tenant, purchaser or other Person;


 


(c)           to let or convey the
Facility or any portion thereof or any interest therein;


 


(d)           to apply such rents,
income, proceeds and other benefits, after the payment of all necessary fees,
charges and expenses, on account of the liabilities secured by this instrument
in accordance with Section 18.3.


 


ARTICLE
XXI

COVENANTS OF THE LESSEE


 


SECTION 21.1       No Merger
or Sale.  If Lessee shall
consolidate with or merge into any other Person or sell, convey, transfer or
lease all or substantially all its assets, then the Person (if other than the
Lessee) formed by such consolidation or into which the Lessee shall be merged
or the Person (other than a sublessee with respect to a Sublease in accordance
with Section 16.1) that shall acquire by sale, conveyance, transfer or
lease all or substantially all the assets of the Lessee shall assume in writing
all of the obligations of the Lessee under the Operative Documents to which the
Lessee is a party.  No such
consolidation, merger or transfer of assets shall occur unless permitted by
Section 6.1(x) of the Participation Agreement and Section 16.1, and the
Lessor, the Administrative Agent and the other Participants have received a
legal opinion of independent counsel to the surviving entity in respect of the
assumption agreement in form and substance reasonably satisfactory to the
Lessor, the Administrative Agent and the other Participants.  Upon any such consolidation or merger, or
any sale, conveyance, transfer or lease of substantially all the assets of the
Lessee in accordance with this Article XXI, the successor Person (other
than a sublessee permitted pursuant to Section 16.1) formed by such
consolidation or into which the Lessee shall be merged or to which such sale,
conveyance, transfer or lease shall be made shall succeed to, and be
substituted for, and may exercise every right and power of, the Lessee under
this Lease and the other Operative Documents to which the Lessee is a party.


 


ARTICLE
XXII

COVENANTS OF THE LESSOR


 


SECTION 22.1       Quiet
Enjoyment.  The Lessor covenants
that it will not interfere in the Lessee’s right to peaceably and quietly hold,
possess and use the Facility hereunder during the Lease Term, so long as no
Lease Event of Default has occurred and is continuing.  The sole


 


30

















 


remedy of the Lessee
for breach of this Section 22.1 shall be to sue for damages for the
breach hereof, and/or sue for a declaratory judgment, injunctive relief or
other specific performance hereof, and such breach shall not affect the
obligations of the Lessee to pay all amounts (including Rent) due under this
Lease, the Participation Agreement and the other Operative Documents, or the
rights of the Lessor, the Administrative Agent and the other Participants to
initiate legal action and otherwise enforce the obligations of the Lessee under
this Lease, the Participation Agreement and the other Operative Documents.  The foregoing covenant shall not require the
Lessor to take any action contrary to, or which would permit the Lessee to use
the Facility for a use not permitted under, the provisions of this Lease.  The parties recognize that any sale,
assignment, transfer or other disposition, or mortgage, pledge or other
encumbrance (each a “disposition”), of any part of the Facility or any of
Lessor’s rights under the Operative Documents is subject to Lessee’s rights, if
any, under the Operative Documents, except any disposition required or
permitted by the Operative Documents following the occurrence and during the
continuation of any Lease Event of Default.


 


ARTICLE
XXIII

MISCELLANEOUS


 


SECTION 23.1       Binding
Effect; Successors and Assigns.  The
terms and provisions of this Lease, and the respective rights and obligations
hereunder of the Lessor and the Lessee, shall be binding upon their respective
successors, legal representatives and assigns (including, in the case of the
Lessor, any Person to whom the Lessor may transfer the Lessor’s Interests or
any interest therein) and inure to the benefit of their respective permitted
successors and assigns.


 


SECTION 23.2       Notices.  All notices, consents, directions,
approvals, instructions, requests, demands or other communications to or upon
the respective parties hereto shall be given in writing in the manner provided
in, shall be sent to the respective addresses set forth in, and the effectiveness
thereof shall be governed by the provisions of Section 12.3 of the
Participation Agreement.


 


SECTION 23.3       Severability.  Any provision of this Lease 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 23.4       Amendments.  Neither this Lease nor any of the terms
hereof may be terminated, amended, supplemented, waived or modified except in
accordance with Section 12.5 of the Participation Agreement.  This Lease and the other Operative Documents
are intended by the parties as a final expression of their agreement and as a
complete and exclusive statement of the terms thereof, all negotiations,
considerations and representations between the parties having been incorporated
herein.  No representations,
undertakings, or agreements have been made or relied upon in the making of this
Lease other than those specifically set forth in this Lease and in the other
Operative Documents.


 


31

















 


SECTION 23.5       Headings,
etc.  The table of contents and
headings of the various Articles and Sections of this Lease are for convenience
of reference only and shall not modify, define, expand or limit any of the
terms or provisions hereof.


 


SECTION 23.6       Counterparts;
Notice.  This Lease may be executed
on any number of separate counterparts and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.  This Lease will be simultaneously executed
in multiple counterparts, each of which, when so executed and delivered, shall
constitute original, fully enforceable counterparts for all purposes except
that only the counterpart stamped or marked “COUNTERPART NUMBER ONE” shall
constitute to the extent applicable, if any, “chattel paper” or other
“collateral” within the meaning of the Uniform Commercial code in effect in any
jurisdiction.  The Administrative agent
shall be the sole authorized holder of COUNTERPART NUMBER ONE.  The Lessee and the Lessor agree that a
memorandum of this Lease shall be executed and recorded in the Official Records
of Riverside County, California.


 


SECTION 23.7       Governing
Law.  OTHER THAN AS SPECIFICALLY SET
FORTH BELOW, THIS LEASE AND THE RIGHTS AND REMEDIES OF THE PARTIES HERETO SHALL
BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES, EXCEPT AS
TO MATTERS RELATING TO THE CREATION OF THE LIEN AND THE INTEREST IN REAL
PROPERTY HEREUNDER (INCLUDING THE POSSESSION, USE, OPERATION, MAINTENANCE,
REPAIR AND SUBLETTING OF THE FACILITY) AND THE EXERCISE OF RIGHTS AND REMEDIES
WITH RESPECT TO THE LIEN AND THE INTEREST IN SUCH REAL PROPERTY, WHICH SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE IN WHICH SUCH
LIEN AND REAL PROPERTY ARE LOCATED.


 


SECTION 23.8       Apportionments.  Upon any termination of this Lease (other
than a termination resulting in delivery of the Lessor’s Interests then subject
to this Lease to the Lessee), except as otherwise set forth herein, there shall
be apportioned, as of the date of such termination, all rents (including water
or sewer rents), real estate taxes, municipal assessments, or other charges
payable with respect to the Facility.


 


SECTION 23.9       Priority.  If a Lease Event of Default shall occur and
be continuing, this Lease shall be subject and subordinate to the Mortgages.


 


SECTION 23.10     No Joint
Venture.  Any intention to create a
joint venture or partnership relation between the Lessor and the Lessee is
hereby expressly disclaimed.


 


SECTION 23.11     No Accord
and Satisfaction.  The acceptance by
the Lessor of any sums from the Lessee (whether as Base Rent or otherwise) in
amounts which are less than the amounts due and payable by the Lessee hereunder
is not intended, nor shall it be construed, to constitute an accord and
satisfaction of any dispute between such parties regarding sums due and payable
by the Lessee hereunder, unless the Lessor specifically acknowledges it as such
in writing.


 


32

















 


SECTION 23.12     No Merger.  There shall be no merger of this Lease or of
the estate hereby with the fee or any other estate or interest or ownership
interest in the Facility or any part thereof by reason of the fact that the
same Person may acquire or own or hold, directly or indirectly, (a) this Lease
or any estate created hereby or any interest in this Lease or in any such
estate, (b) the fee estate or other estate or interest or ownership interest in
the Facility or any part thereof, except as may expressly be stated in a
written instrument duly executed and delivered by the appropriate Person or
(c) a beneficial interest in the Lessor.


 


SECTION 23.13     Lessor
Bankruptcy.  The parties hereto
agree that if the Lessee elects to remain in possession of the Facility after
the rejection of the Lease by the Lessor under Section 365(h) of the Bankruptcy
Code all of the terms and provisions of this Lease shall be effective during
such period of possession by the Lessee, including the Lessee’s Purchase Option
even if the Lessor becomes subject to a case or proceeding under the Bankruptcy
Code prior to the exercise by the Lessee of such purchase rights.


 


SECTION 23.14     Abandonment.  The Lessee shall not abandon the Facility
during the Lease Term.


 


SECTION 23.15     Investments.  Any funds held by the Lessor as security for
the Lessee’s performance of its obligations hereunder shall, until paid to the
Lessee or otherwise applied in accordance herewith, be invested by the Lessor
in Cash Equivalents as selected by the Lessee. 
Any gain (including interest received) realized as a result of any such
investment (net of any fees, commissions, Taxes and other expenses, if any,
incurred in connection with such investment) shall be retained with, and
distributed and re-invested in the same manner, as the original security
amount.  Provided the Lessor invests
such funds in accordance with the preceding sentence, the Lessor shall have no
liability for any losses arising from any such investments or reinvestments.


 


SECTION 23.16     Further
Assurances.  The Lessor and the
Lessee, at the cost and expense of the requesting party, will cause to be
promptly and duly taken, executed, acknowledged and delivered all such further
acts, documents and assurances as any of the others reasonably may request from
time to time in order to carry out more effectively the intent and purposes of
this Lease.  The Lessee, at its own cost
and expense, will cause all financing statements, fixture filings and other
documents to be recorded or filed at such places and times and in such manner,
and will take all such other actions or cause such actions to be taken, as may
be necessary or as may be reasonably requested by the Lessor in order to
preserve and protect the title of the Lessor to the Facility and the Lessor’s  rights
under this Lease.


 


SECTION 23.17     Non-recourse.  Notwithstanding anything contained in this
Lease to the contrary, Lessee agrees to look solely to Lessor’s interest in the
Facility (excluding Excluded Amounts) (and in no circumstance to the
Administrative Agent, the other Participants or otherwise to Lessor) for the
collection of any judgment requiring the payment of money by Lessor in the
event of liability by Lessor, and no deficiency judgment or other money
judgment shall be enforced against Lessor except for Lessor’s interest in the
Facility (excluding Excluded Amounts) and no other property or assets of Lessor
or any shareholder, owner or partner (direct or indirect) in or of Lessor, or
any director, officer, employee, beneficiary or Affiliate of any of the
foregoing shall be subject to levy, execution or other enforcement procedure
for the


 


33

















 


satisfaction of
the remedies of Lessee under or with respect to this Lease, the relationship of
Lessor and Lessee hereunder, Lessee’s use of the Facility or any portion
thereof or any other liability of Lessor to Lessee.  Notwithstanding the provisions of this Section, nothing in any
Operative Document shall: (i) relieve Lessor from liability and responsibility
for (but only to the extent of the damages arising by reason of) active waste
knowingly committed by Lessor with respect to the Facility or any fraud, gross
negligence or willful misconduct on the part of Lessor; (ii) relieve Lessor
from liability and responsibility for (but only to the extent of the moneys
misappropriated, misapplied or not turned over), (A) except for Excluded
Amounts, misappropriation or misapplication by Lessor (i.e., application
in a manner contrary to any of the Operative Documents) of any insurance
proceeds or condemnation award paid or delivered to Lessor by any Person other
than the Administrative Agent or (B) except for Excluded Amounts, any rent or
other income or funds received by Lessor from the Lessee that is not turned
over to the Administrative Agent; or (iii) relieve Lessor from liability and
responsibility (but only to the extent of the damages arising by reason of and
only to the extent such liability or responsibility is attributable to) (A) any
representation or warranty of Lessor contained in Section 5.2 of the
Participation Agreement that was false or inaccurate in any material way when
made or (B) the breach by Lessor of its obligations at Section 6.2(b), (d), (h)
or (i), Section 6.3 or Section 6.4 of the Participation Agreement.


 


[SIGNATURES
APPEAR ON THE FOLLOWING PAGE]


 


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IN WITNESS WHEREOF, the Lessor and the Lessee have
duly authorized, executed and delivered this Lease as of the date first
hereinabove set forth.


 


	
   

  	
  WACHOVIA DEVELOPMENT
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   /s/Evander S.Jones, Jr.

  	
   

  
	
   

  	
   Evander S. Jones, Jr.

  
	
   

  	
   Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ROSS DISTRIBUTION,
  INC., as the Lessee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   /s/J. Call

  	
   

  
	
   

  	
   John G. Call

  
	
   

  	
   Senior Vice President and

  
	
   

  	
   Chief Financial Officer

  
				



 

















 


Exhibit A


 


LEGAL DESCRIPTION


 


That certain real property located in the City of
Perris, County of Riverside, State of California, as more particularly
described as follows:


 


THE NORTH HALF OF THE SOUTHWEST QUARTER OF SECTION 7,
TOWNSHIP 4 SOUTH, RANGE 3 WEST, SAN BERNARDINO BASE AND MERIDIAN;


 


 


EXCEPTING THEREFROM ANY PORTION LYING WITHIN LOT B OF
GOLDEN VALLEY FARMS NO. 3 AS SHOWN BY MAP ON FILE IN BOOK 17 PAGE(S) 22 AND LOT
D OF GOLDEN VALLEY FARMS NO. 4 AS SHOWN BY MAP ON FILE IN BOOK 17 PAGE(S) 23
BOTH OF MAPS, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA.


 


APN: 303-040-01-9


 


A-1

















 


Schedule 11.1


 


Insurance


 


PART A


 


During the Lease Term, Lessee shall maintain insurance
as follows:


 


Facility Insurance:


 


Lessee shall keep the Facility insured on an all-risk
basis against physical loss or damage by fire and all other risks, including
flood, earthquake and windstorm, in amounts no less than the Purchase Price and
on terms that (i) are no less favorable than insurance covering other similar
properties owned by the Lessee, (ii) with no co-insurance provisions; (iii)
with no exclusions for vandalism, malicious mischief, sprinkler leakage, or
acts of hostile groups; provided, however, that Lessee shall not be required to
carry terrorism insurance to the extent that Lessee shall have demonstrated, to
the reasonable satisfaction of Administrative Agent, that such coverage is not
commercially feasible.  The Lessee shall
further procure and carry business interruption insurance in an amount
sufficient to provide for the payment of Rent as and when due upon the
occurrence and during the continuation of any interruption of the Lessee’s
business, whether relating to the Facility or otherwise.  Boiler and Machinery Coverage shall be
procured either by endorsement to the property policy or under a separate
placement.


 


Such insurance shall (a) have an indemnity period not
less than 12 months, (b) include an interim payments (or partial payment)
clause allowing for the monthly payment of a claim pending final determination
of the full claim amount, (c) cover loss sustained when access to the Site is
prevented due to an insured peril at premises in the vicinity of the Site, (d)
cover loss sustained due to the action of a public authority preventing access
to the Site due to imminent or actual loss or destruction arising from an
insured peril at premises in the vicinity of the Site, (e) insure loss caused
by damage or mechanical breakdown to construction plant at the Site not already
insured, (f) not contain any form of a coinsurance provision or include a
waiver of such provision and (g) cover loss sustained due to the interruption
or failure of supplies of electricity, gas, sewers, water or telecommunication
up to the terminal point of the utility supplier with the Site.


 

















 


PART B


 


CONDITIONS


 


All policies of liability insurance required to be
maintained by the Lessee under the Operative Documents shall:


 


•              Be placed with responsible insurance
companies authorized to do business in California (if so required by law or
regulation) with (i) an A.M. Best Insurance Reports rating of “ A” (X) or
better, (ii) and a Standard & Poor’s financial strength rating of “BBB+” or
higher (iii) or other companies acceptable to the Lessor


 


•              Name the Lessor, the Debt Participants
and the Administrative Agent as additional insureds as their interests may
appear;


 


•              Provide a severability of interests and
cross liability exclusion clause;


 


•              Be primary and not excess to or
contributing with any insurance or self-insurance maintained by the Lessor,
Debt Participants, or Administrative Agent.


 


•              Provide a waiver of subrogation in
favor of the Lessor, Administrative Agent and all other Participants.  The Lessee hereby waives any and every claim
for recovery from the Lessor for any and all loss or damage covered by any of
the insurance policies to be maintained under this Lease to the extent that
such loss or damage is recovered under any such policy.  Inasmuch as the foregoing waiver will preclude
the assignment of any such claim to the extent of such recovery, by subrogation
(or otherwise), to an insurance company (or other person), the Lessee shall
give written notice of the terms of such waiver to each insurance company which
has issued, or which may issue in the future, any such policy of insurance (if
such notice is required by the insurance policy) and shall cause each such
insurance policy to be properly endorsed by the issuer thereof to, or to
otherwise contain one or more provisions that, prevent the invalidation of the
insurance coverage provided thereby by reason of such waiver.


 


Loss Notification:  The Lessee shall promptly notify the
Administrative Agent of any single loss or event likely to give rise to a claim
against an insurer for an amount in excess of $5,000,000 covered by any
insurance maintained pursuant to this Lease.


 


Payment of Loss Proceeds:  All policies of insurance required to be
maintained pursuant to Part A shall provide that the proceeds of such policies
shall be payable solely to the Administrative Agent.


 


Loss Adjustment and Settlement:  A loss under any insurance required to be
carried under Part A shall be adjusted with the insurance companies, including
the filing in a timely manner of appropriate proceedings, by the Lessee,
subject to the approval of the Lessor if such loss is in excess of
$5,000,000.  In addition the Lessee may
in its reasonable judgment consent to the settlement of any loss, provided that
in the event that the amount of the loss exceeds $5,000,000 the terms of such
settlement is concurred with by the Administrative Agent.


 

















 


Policy Cancellation, Non-Renewal, or Material
Reduction and Change: 
All policies of insurance required to be maintained pursuant to this Schedule 11.1
shall be endorsed so that if at any time should they be not renewed, canceled,
coverage be reduced (by any party including the insured) which affects the
interests of the Lessor or the Administrative Agent, such non-renewal
cancellation or reduction shall not be effective as to the Lessor for 30 days,
except for non-payment of premium which shall be for 10 days, after receipt by
the Administrative Agent of written notice from such insurer of such
cancellation or reduction.


 


Miscellaneous Policy Provisions:  All policies of insurance required to be
maintained pursuant to Part A shall (i) not include any annual or term
aggregate limits of liability except as regards the insurance applicable to the
perils of flood and earth movement and pollutant clean up of land and water at
the Site, (ii) shall include the Lessor and the other Participants as
additional insureds as their interests may appear and the Administrative Agent
as loss payee, and (iii) include a clause requiring the insurer to make
final payment on any claim within 30  days
after the submission of proof of loss and its acceptance by the insurer.


 


Separation of Interests:  All policies (other than in respect to
liability or workers compensation insurance) shall insure the interests of the
Lessor and the Administrative Agent regardless of any breach or violation by
the Lessee or any other party of warranties, declarations or conditions
contained in such policies, any action or inaction of the Lessee or others.


 


Acceptable Policy Terms and Conditions:  All policies of insurance required to be
maintained pursuant to this Lease shall contain terms and conditions acceptable
to the Lessor.


 


Waiver of Subrogation:  All policies of insurance to be maintained
by the provisions of this Lease shall provide for waivers of subrogation in favor
of the Lessor.


 


Evidence of Insurance:  On the Advance Date and at least 10 days
prior to each policy anniversary, the Lessee shall furnish the Lessor with
certificates of insurance or binders in an Accord form evidencing all of the
insurance required by the provisions of this Lease.  Such certificates of insurance/binders shall be executed by each
insurer or by an authorized representative of each insurer where it is not
practical for such insurer to execute the certificate itself.  Such certificates of insurance/binders shall
identify underwriters, the type of insurance, the insurance limits and the
policy term and shall specifically list the special provisions enumerated for
such insurance required by this Lease. 
Upon request, the Lessee will promptly furnish the Lessor with copies of
all insurance policies, binders and cover notes or other evidence of such
insurance relating to the insurance required to be maintained by the
Lessee.  The schedule of insurance shall
include the name of the insurance company, policy number, type of insurance,
major limits of liability and expiration date of the insurance policies.


 


Reports:  Concurrently with the furnishing of the certification referred to
in the paragraph above, the Lessee shall furnish the Lessor with a report of an
independent broker, signed by an officer of the broker, stating that in the
opinion of such broker, the insurance then carried or to be renewed is in
accordance with the terms of this Schedule and attaching an updated copy of the
schedule of insurance required by part (2) of the preceding paragraph.  In addition the Lessee will advise the
Lessor in writing promptly of any default in the payment of any premium and of
any other act or


 

















 


omission on the part of the Lessee which may invalidate
or render unenforceable, in whole or in part, any insurance being maintained by
the Lessee pursuant to this Lease.


 


No Duty of Agent to Verify or Review:  No provision of this Lease shall impose on
the Lessor or the Administrative Agent any duty or obligation to verify the
existence or adequacy of the insurance coverage maintained by the Lessee, nor
shall the Lessor or the Administrative Agent be responsible for any
representations or warranties made by or on behalf of the Lessee to any
insurance company or underwriter.  Any
failure on the part of the Lessor or the Administrative Agent to pursue or
obtain the evidence of insurance required by this Lease from the Lessee and/or
failure of the Lessor or the Administrative Agent to point out any
non-compliance of such evidence of insurance shall not constitute a waiver of
any of the insurance requirements in this Lease.


 

















 


PA Definitions (Ross)


 


APPENDIX A


to


Participation
Agreement


 


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


 


(a)           any term defined below
by reference to another instrument or document shall continue to have the
meaning ascribed thereto whether or not such other instrument or document
remains in effect;


 


(b)           words importing the
singular, where appropriate, include the plural and vice versa;


 


(c)           words importing a
gender include any gender;


 


(d)           a reference in any
Operative Document to a part, clause, section, exhibit or schedule without
further description is a reference to a part, clause and section of, and
exhibit and schedule to, such Operative Document;


 


(e)           a reference to any
statute, regulation, proclamation, ordinance or law includes all statutes,
regulations, proclamations, ordinances or laws amending, supplementing,
supplanting, varying, consolidating or replacing it, and a reference to a
statute includes all regulations, proclamations and ordinances issued or
otherwise applicable under that statute;


 


(f)            a reference to a
document includes, unless the context thereof otherwise requires, any amendment
or supplement to, or replacement or novation of, that document to the extent
such amendment or supplement to, or replacement or novation of, such document
is not entered into in violation of any of the terms and provisions of the
Operative Documents;


 


(g)           a reference to a party
to a document includes that party’s permitted successors and permitted assigns;


 


(h)           a reference to
“including” means including without limiting the generality of any description
preceding such term and for purposes hereof a general statement followed by or
referable to an enumeration of specific matters shall not be limited to matters
similar to those specifically mentioned; and


 


(i)            the word “until,” when
used in the context of a date for payment, means until (but excluding) such
date for payment.


 


II. 
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 Documents to be construed or interpreted against any
party shall not apply to any construction or interpretation hereof or thereof.


 

















 


III. 
Accounting Terms. 
All accounting terms not specifically defined otherwise herein
shall have the meaning customarily given in accordance with GAAP, and all
financial computations hereunder shall be computed, unless specifically
provided otherwise herein, in accordance with GAAP.


 


IV. 
Defined Terms.  Terms defined herein have the respective
meanings indicated below when used in each Operative Document.


 


“ABR” means,
for any day, a rate per annum (rounded upwards, if necessary, to the next
1/100th of 1%) equal to the higher of (a) the Prime Rate in effect on such
day and (b) the Federal Funds Effective Rate in effect one day prior to
such day plus 1/4 of 1%.  For purposes
hereof:  “Prime
Rate” means the rate of interest per annum publicly announced from
time to time by Wachovia Bank, National Association as its prime rate in effect
at its principal office in Charlotte, North Carolina (the Prime Rate not being
intended to be the lowest rate of interest charged by Wachovia Bank, National
Association in connection with extensions of credit to debtors); and “Federal Funds Effective Rate” means, for any
day, the weighted average of the rates on overnight federal funds transactions
with members of the Federal Reserve System arranged by federal funds brokers,
as published on such day or, if such day is not a Business Day, on the next
preceding Business Day, by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of
the quotations for the day of such transactions received by the Administrative
Agent from three federal funds brokers of recognized standing selected by it.  If for any reason the Administrative Agent
shall have determined (which determination shall be conclusive absent manifest
error) that it is unable to ascertain the Federal Funds Effective Rate for any
reason, including the inability or failure of the Administrative Agent to
obtain sufficient quotations in accordance with the terms thereof, the ABR
shall be determined without regard to clause (b)
of the first sentence of this definition, as appropriate, until the
circumstances giving rise to such inability no longer exist.  Any change in the ABR due to a change in the
Prime Rate or the Federal Funds Effective Rate shall be effective as of the
opening of business on the effective day of such change in the Prime Rate or
the Federal Funds Effective Rate, respectively.


 


“Acceleration” means either a Credit Note
Acceleration or Lessor Loan Acceleration.


 


“Acquisition Costs” means the aggregate amounts
funded by the Participants on the Advance Date (i) for the acquisition by the
Lessor of the Existing Investor Certificates and the Existing Notes pursuant to
and in accordance with the terms and conditions of the Assignment Agreement and
(ii) to reimburse the Lessee for certain costs paid by the Lessee for the
construction of the Improvements for which the Lessee has not received
reimbursement under the Existing Operative Documents and for the payment by the
Lessee of costs previously incurred by the Lessee or its Affiliates to complete
the Final Completion Work.


 


“Adjusted Debt to Total Capitalization Ratio”
means, for any period, the ratio of (i) Consolidated Adjusted Debt as at the
last day of such period to (ii) an amount equal to the sum of Consolidated
Adjusted Debt plus Stockholders’ Equity as at the last day of such period.


 


“Adjusted Interest Coverage Ratio” means, for
any period, the ratio of (i) EBITDAR for such period, to (ii) Consolidated
Total Interest Expense plus Consolidated Rent Expense for such period.


 


2

















 


“Administrative Agent”
means Wachovia Bank, National Association.


 


“Advance Date” means the Business Day on which
the Fundings are made under the Participation Agreement in accordance with
Section 2.3 thereof.


 


“Advance Request” is defined in Section 2.3.1
of the Participation Agreement.


 


“Affiliate” of
any Person means any other Person directly or indirectly controlling,
controlled by or under common control with, such Person.  For purposes of this definition, the term “control” (including the correlative meanings
of the terms “controlling,” “controlled by” and “under common control with”), as used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management policies of such
Person, whether through the ownership of voting securities or by contract or
otherwise, provided (but without
limiting the foregoing) that no pledge of voting securities of any Person
without the current right to exercise voting rights with respect thereto shall
by itself be deemed to constitute control over such Person.


 


“After-Tax Basis” is defined in
Section 9.4(b) of the Participation Agreement.


 


“Alterations”
means, with respect to the Facility, alterations, improvements, modifications
and additions to the Improvements.


 


“Applicable Laws”
means, with respect to any Person or the Facility (as applicable), all existing
and future applicable laws, rules, regulations, 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 Environmental Laws and other laws pertaining to health, safety or
the environment and those pertaining to the construction, use or occupancy of
the Facility) and any restrictive covenant or deed restriction or easement of
record affecting the Facility, and any requirements of applicable insurance
companies or insurance regulatory agencies. 
To the extent the Lessee or any other party obtains an exemption,
variance or similar exception to any Applicable Laws for or in connection with
the Facility, including any zoning or building ordinances or regulations, then
Applicable Laws shall be construed to mean Applicable Laws as so applicable to
the Facility.


 


“Appraiser”
means Curtis-Rosenthal, LLC or such other Person as may be selected by the
Lessor and is reasonably acceptable to the Lessee.


 


“Appurtenant Rights”
means (i) all agreements, easements, rights of way or use, rights of
ingress or egress, privileges, appurtenances, tenements, hereditaments and
other rights and benefits at any time belonging or pertaining to the Site or
the Improvements, including the use of any streets, ways, alleys, vaults or
strips of land adjoining, abutting, adjacent or contiguous to the Site and
(ii) all permits, licenses and rights, whether or not of record,
appurtenant to the Site.


 


“Arranger”
means Wachovia Capital Markets, LLC.


 


3

















 


“Assignment Agreement” means the Assignment
Agreement, to be dated as of the Advance Date, and to be effective on the
Advance Date by and among Ross Distribution, Inc., as lessee, Ross Stores,
Inc., as construction agent, Ross Statutory Trust 2001A, as lessor, Wells Fargo
Bank Northwest, N.A., as trustee, BancBoston Leasing Investments Inc. and
Wachovia Bank, National Association as investors, Breeds Hill Capital Company,
LLC, as conduit loan lender, Fleet National Bank and Wachovia Bank, National
Association, as liquidity providers, Wachovia Bank, National Association, as a
B Lender, Fleet National Bank, as Administrative Agent, Collateral Agent and
Liquidity Agent, the Lessor, as Assignee, the Administrative Agent, and the
Lessor Lenders.


 


“Assignments of Lease”
means, collectively, the First Lien Assignment of Lease and the Second Lien
Assignment of Lease, and each an “Assignment of Lease”.


 


“Authorized Officer”
means with respect to any Person delivering an Operative Document, any officer
(or trustee) of such Person who shall be duly authorized to execute the
Operative Documents.


 


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


 


“Bankruptcy Default”
means, with respect to the Lessee or the Guarantor, an Insolvency Event without
regard to the cure or grace periods provided therein.


 


“Banks” means each of the lending institutions
listed on Schedule 1 to the Revolving Credit Agreement.


 


“Base Rent” is
defined in Section 3.1 of the Lease.


 


“Beneficiaries” means collectively, the
Administrative Agent and the Debt Participants.


 


“Benefitted Lender” is defined in Section 8.8
of the Lessor Loan Agreement.


 


“Benefitted Note Purchaser” is defined in
Section 18.5 of the Credit Note Purchase Agreement.


 


“Board of Directors”
means, with respect to a corporation, either the board of directors or any duly
authorized committee of that board of directors which, pursuant to the by-laws
of such corporation, has the same authority as that board of directors as to
the matter at issue.


 


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


 


“Business Day”
means any day other than a Saturday, Sunday or other day on which commercial
banks in Charlotte, North Carolina and San Francisco, California are authorized
or required by law to close.


 


“Called Principal” shall mean, with respect to
any Note or Investor Amounts, the outstanding principal amount of such Note or
Investor Amounts that is to be prepaid or has become or is declared to be immediately
due and payable, as the context requires.


 


4

















 


“Capitalized Lease” means any lease of real
property by a member of the Guarantor Affiliated Group as lessee which is shown
as a liability on the Consolidated balance sheet of the Guarantor in accordance
with GAAP.


 


“Capitalized Lease Obligations” means, with
respect to any Person, at the time any determination thereof is to be made, the
amount of the liability in respect of a lease that would at such time be so
required to be capitalized on the balance sheet of such Person as lessee
thereof in accordance with GAAP.


 


“Cash Equivalents” means (a) Government
Obligations having maturities of not more than one year from the date of
acquisition, (b) certificates of deposit of any commercial bank incorporated
under the laws of the United States or any state, territory or commonwealth
thereof of recognized standing having capital and unimpaired surplus in excess
of $500,000,000 and whose short-term commercial paper rating at the time of
acquisition is at least A-1 or the equivalent by S& P or at least P-1 or
the equivalent by Moody’s (any such bank, an “Approved Bank”), which
certificates of deposit have maturities of not more than one year from the date
of acquisition, (c) repurchase obligations with a term of not more than 31 days
for underlying securities of the types described in clauses (a), (b)
and (d) of this definition entered into with any Approved Bank which
(i) is secured by a fully perfected security interest in any obligation of
the type described in any of clauses (a), (b) and (d), and
(ii) has a market value at the time such repurchase agreement is entered into
of not less than 100% of the repurchase obligation of such Approved Bank
thereunder, (d) commercial paper or financial company paper issued by any
person incorporated under the laws of the United States, or any state thereof,
and rated at least A-1 or the equivalent by S&P or at least P-1 or the
equivalent by Moody’s, and in each case maturing not more than 9 months from
the date of acquisition and not issued by the Guarantor or any Affiliate of the
Guarantor and (e) investments in money market funds that are registered under
the Investment Company Act, which have assets of at least $100,000,000 and at
least 95% of whose assets consist of investments or other obligations of the
type described in clauses (a) through (d) above and as to which withdrawals are
permitted at least every 30 days.


 


“Casualty”
means an event of damage or casualty relating to all or part of the Facility
that does not constitute an Event of Loss.


 


“Change of Control” means a Lessee Change of
Control or a Guarantor Change of Control.


 


“Claims” means
liabilities, obligations, damages, losses, demands, penalties, interest, fines,
claims, actions, suits, judgments, settlements, utility charges, costs, fees,
expenses and disbursements (including, without limitation, reasonable,
actually-incurred legal fees and expenses and costs of investigation) of any
kind and nature whatsoever.


 


“Code” means
the Internal Revenue Code of 1986, as amended.


 


“Commitment”
means (i) as to any Credit Note Purchaser, its commitment to purchase Credit
Notes on the Advance Date in an aggregate principal amount set forth on
Schedule I to the Participation Agreement, (ii) as to any Lessor Lender, its
commitment to make Lessor Loans to the Borrower on the Advance Date in an
aggregate principal amount set forth on Part A of Schedule II to the
Participation Agreement, and (iii) as to Lessor, its commitment to make


 


5

















 


available Investor
Contributions in an aggregate principal amount set forth on Part B of Schedule
II to the Participation Agreement.


 


“Commitment Percentage” means, as to any
Participant, the percentage set forth opposite such Participant’s name under
the heading “Commitment Percentage” on Schedule I to the Participation
Agreement, with respect to the Credit Note Purchasers, Part A of Schedule II to
the Participation Agreement, with respect to the Lessor Lenders, and Part B of
Schedule II to the Participation Agreement, with respect to the Lessor.


 


“Compliance Certificate” means the report
substantially in the form of Exhibit E to the Revolving Credit Agreement,
delivered by the Guarantor to the Administrative Agent pursuant to Section
4.1(w) and 6.1(k)(iii) of the Participation Agreement.


 


“Condemnation”
means any condemnation, requisition or other taking or sale of the use,
occupancy or title to the Facility or any part thereof in, by or on account of
any eminent domain proceeding or other action by any Governmental Authority or
other Person under the power of eminent domain or otherwise or any transfer in
lieu of or in anticipation thereof, that does not constitute an Event of Loss.


 


“Consolidated” or “Consolidating” shall
have the respective meanings ascribed to such terms under GAAP.


 


“Consolidated Adjusted Debt” means, as at any
date of determination, all Indebtedness of the Guarantor on a Consolidated
basis for borrowed money (including, without limitation but without
duplication, (i) Indebtedness arising under Capitalized Leases, (ii)
Indebtedness arising under Synthetic Leases, (iii) liabilities under Loan
Guarantees, and (iv) liabilities under standby letters of credit (but excluding
liabilities under documentary letters of credit)) plus an amount equal to six
times Consolidated Rent Expense for the twelve-month period ending on such date
of determination.


 


“Consolidated Rent Expense” means, for any
period, the aggregate rental expenses payable by the Guarantor on a
Consolidated basis for such period (including percentage rent) under any
operating Leases classified as such under GAAP but not including any amount
included in the definition of “Consolidated Total Interest Expense.”


 


“Consolidated Subsidiary” means, with respect
to any Person at any date, any Subsidiary of such Person or other entity the
accounts of which would be consolidated with those of such Person in its
consolidated financial statements if such statements were prepared as of such
date in accordance with GAAP.


 


“Consolidated Tangible Net Worth” means, as at
any date of determination, Stockholders’ Equity less any intangible assets,
with intangible assets defined as goodwill, patents, trademarks, tradenames,
lease rights, capitalized pre-opening costs, franchises, organization costs and
property rights.


 


“Consolidated Total Interest Expense” means,
for any period, all interest and all amortization of debt discount and expense
(including commitment fees, letter of credit fees, balance deficiency fees and
similar expenses) on all Indebtedness of the Guarantor on a


 


6

















 


Consolidated basis
(including outstanding letters of credit), all as determined in accordance with
GAAP, together with all interest expense of the Guarantor on a Consolidated
basis under Synthetic Leases.


 


“Construction”
means the construction and installation of all Improvements contemplated by the
Plans and Specifications.


 


“Contingent Liability” means, with respect to
any Person, without duplication, any obligation (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or
collection) guarantying, intended to guaranty, or having the economic effect of
guarantying, any Indebtedness, obligation or any other liability of any other
Person or the payment of dividends or other distributions upon the shares of
any other Persons in any manner, whether direct or indirect, and including
without limitation any obligation, whether or not contingent, (a) to
purchase any such Indebtedness or other obligation or any property constituting
security therefor, (b) to advance or provide funds or other support for
the payment or purchase of such Indebtedness or obligation or to maintain working
capital, solvency or other balance sheet condition of such other Person
(including, without limitation, maintenance agreements, comfort letters, take
or pay arrangements, put agreements or similar agreement or arrangements) for
the benefit of the holder of Indebtedness or other obligation of such other
Person, (iii) to lease or purchase property, securities or services
primarily for the purpose of assuring the owner of such Indebtedness or other
obligation against loss or (iv) to otherwise assure or hold harmless the
owner of such Indebtedness or obligation against loss in respect thereof.  The amount of any Contingent Liability
hereunder shall (subject to any limitations set forth therein) be deemed to be
an amount equal to the outstanding principal amount (or maximum principal
amount, if larger) of the Indebtedness, obligation or liability in respect of
which such Contingent Liability is made.


 


“Control”
means (including the correlative meanings of the terms “controlled by” and
“under common control with”), as used with respect to any Person, the
possession directly or indirectly, of the power to direct or cause the
direction of the management policies of such Person, whether through the
ownership of voting securities or by contract or otherwise, provided (but without limiting the foregoing)
that no pledge of voting securities of any Person without the current right to
exercise voting rights with respect thereto shall by itself be deemed to
constitute control over such Person.


 


“Credit Note Acceleration” means an “Acceleration”
as defined in Section 11 of the Credit Note Purchase Agreement.


 


“Credit Note Balance” means, as of any date of
determination, an amount equal to the sum of the outstanding principal amount
of the Credit Notes of all Credit Note Holders, together with all accrued and
unpaid Interest thereon.


 


“Credit Note Documents” means the Participation
Agreement, the Credit Note Purchase Agreement, the Credit Notes, the Debt
Participants’ Indemnity Agreement, the Intercreditor Agreement, the Guaranties
and the Security Documents.


 


“Credit Note Holder” means, at any time, each
Person that holds a Credit Note.


 


7

















 


“Credit Note Purchase Agreement” means the
Credit Note Purchase Agreement, dated as of the Documentation Date, among
Lessor, as Issuer thereunder, and each Credit Note Purchaser.


 


“Credit Note Purchase Agreement Default” means
any condition, occurrence or event which, after notice or lapse of time, or
both, would constitute a Credit Note Purchase Agreement Event of Default.


 


“Credit Note Purchase Agreement Event of Default”
is defined in Section 11 of the Credit Note Purchase Agreement.


 


“Credit Note Purchaser” means each of the
insurance companies or other financial institutions named on Schedule I to the
Participation Agreement.


 


“Credit Note Rate” means 5.65% per annum.


 


“Credit Notes” is defined in Section 1 of the
Credit Note Purchase Agreement.


 


“Debt Participants” means, collectively, the
Credit Note Holders and the Lessor Lenders.


 


“Debt Participants’ Indemnity Agreement” means
that certain Indemnity Agreement, dated as of the Documentation Date, between
Parent Indemnitor and the Debt Participants.


 


“Debt Rating” means, as of any date of
determination thereof and with respect to any Person, the ratings most recently
published by the Rating Agencies relating to the unsecured, unsupported senior
long-term debt obligations of such Person.


 


“Default” means, collectively, a Lease Default
and a Bankruptcy Default.


 


“Discounted Value” shall mean, with respect to
the Called Principal of any Note or Investor Amounts, the amount obtained by
discounting all Remaining Scheduled Payments with respect to such Called
Principal from their respective scheduled due dates to the Settlement Date, in
accordance with accepted financial practice and at a discount factor (applied
on the same periodic basis as that on which Interest on the Notes or the Yield
on the Investor Amounts, as applicable, is payable) equal to the Reinvestment
Yield with respect to such Called Principal.


 


“Disposition” (or similar words such as “Dispose”)
means any sale, transfer, lease, contribution or other conveyance (including by
way of merger) of the Facility or any portion thereof following the exercise of
remedies by the Participants in a single transaction or series of transactions.


 


“Documentation Date”
is defined in Section 2.1(b) of the Participation Agreement.


 


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


 


“EBITDA” means, in relation to the Guarantor on
a Consolidated basis for any period, an amount equal to the net income for such
period of the Guarantor on a Consolidated basis after deduction of all
expenses, taxes and other proper charges, determined in accordance with GAAP
for such period, but, in determining such Consolidated net income, any GAAP
extraordinary gains during such period shall be excluded from such calculation,
plus the following to the extent


 


8

















 


deducted in computing
such Consolidated net income for such period: 
(i) Consolidated Total Interest Expense for such period, (ii)
Consolidated taxes on income for such period, (iii) Consolidated depreciation
for such period, (iv) Consolidated amortization for such period, and (v)
extraordinary non-cash losses for such period to the extent such losses have
not been and will not become cash losses in a later fiscal period.


 


“EBITDAR” means, in relation to the Guarantor
for any period, an amount equal to EBITDA for such period, plus Consolidated
Rent Expense for such period.


 


“Eligible Lessor Transferee” is defined in
Section 8.1.1 of the Participation Agreement.


 


“Engagement Letter” means the Engagement Letter
from the Arranger to the Guarantor, dated June 3, 2003.


 


“Environmental Audit”
means a Phase One Environmental Site Assessment (the scope and performance of
which meets or exceeds ASTM Standard Practice E1527-93 Standard Practice for
Environmental Site Assessments:  Phase
One Environmental Site Assessment Process (or the most recent version thereof))
of the Facility.


 


“Environmental Claims” means all claims,
however asserted, alleging potential liability or responsibility for violation
of any Environmental Law or for release of Hazardous Materials or injury to the
environment.


 


“Environmental Damages”
has the meaning specified in Section 9.6(d) of the Lease.


 


“Environmental Laws”
means and includes the Resource Conservation and Recovery Act of 1976, (RCRA)
42 U.S.C. §§ 6901-6987, as amended by the Hazardous and Solid Waste Amendments
of 1984, the Comprehensive Environmental Response, Compensation and Liability
Act, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42
U.S.C. §§ 9601- 9657, (CERCLA), the Hazardous Materials Transportation Act
of 1975, 49 U.S.C. §§ 1801-1812, the Toxic Substances Control Act, 15
U.S.C. §§ 2601-2671, the Clean Air Act, 42 U.S.C. §§ 7401 et seq., the Federal
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. §§ 136 et seq. and all
similar federal, state and local environmental laws, ordinances, rules, orders,
statutes, decrees, judgments, injunctions, codes and regulations or sources of
legal liabilities, and any other federal, state or local laws, ordinances,
rules, codes and regulations or sources of legal liabilities relating to the
environment, the impact or affect of Hazardous Materials on natural resources
or the regulation or control of or imposing liability or standards of conduct
concerning Hazardous Materials or the investigation, clean-up or other
remediation of the Facility (including any requirements imposed by common law),
or regulating or restricting the transfer of real property because of the
presence of Hazardous Materials, as any of the foregoing are from time to time
amended, supplemented or supplanted.


 


“Environmental Report”
is defined in Section 12.2 of the Lease.


 


“Equipment”
means all equipment (and software related thereto) described in Schedule V
to the Participation Agreement.


 


9

















 


“ERISA” means
the Employee Retirement Income Security Act of 1974, as amended from time to
time or any successor Federal statute.


 


“ERISA Group”
means the Guarantor, 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 Guarantor, are treated as a single employer under
Section 414(b) or (c) of the Code.


 


“Event of Default”
means (a) a Lease Event of Default or (b) a Loan Event of Default.


 


“Event of Loss”
means (x) the actual or constructive loss of all or substantially all of
the Facility or damage thereto which is uneconomical or impractical to repair,
(y) the taking by Condemnation of title to all or substantially all of the
Facility, or such portion thereof that makes use of the balance uneconomic or
impractical for the Lessee or (z) the taking by Condemnation of the use of
all or substantially all of the Facility, or such portion thereof that makes
use of the balance uneconomic or impractical for the Lessee, for a continuous
period equal to or in excess of one (1) year or the remaining Lease Term (if
the remaining Lease Term is less than one year).


 


“Excluded Amounts”
means:


 


(a)           all indemnity payments
and expenses to which any Indemnitee is entitled pursuant to the Operative
Documents;


 


(b)           any amounts payable
under any Operative Document to reimburse the Lessor, the Administrative Agent
or any other Participant (including the reasonable expenses of any such Person
incurred in connection with any such payment) for performing any of the
obligations of the Lessee under and as permitted by any Operative Document;


 


(c)           any insurance proceeds
(or payments with respect to risks self-insured or policy deductibles) under
liability policies payable to the Lessor, the Administrative Agent or any other
Participant (or any such Person’s successors, assigns, agents, trustees,
officers, directors or employees);


 


(d)           any insurance proceeds
under policies maintained by the Lessor, the Administrative Agent or any other
Participant and not required to be maintained by the Lessee under the Lease;


 


(e)           any amount payable by
the Lessee pursuant to Section 4.1(v) of the Participation Agreement, whether
or not such amounts are or can be characterized as a Supplemental Rent; and


 


(f)            any payments of
interest or yield on payments referred to in clauses (a) through (e)
above.


 


“Excluded Taxes” means any Taxes consisting of
net income and franchise Taxes (and minimum taxes and similar taxes imposed in
lieu thereof) imposed with respect to any Secured Party by any Governmental Authority
under the laws of which such Secured Party is organized


 


10

















 


or in which it maintains
its applicable lending (or investing) office or any political subdivision
thereof.  For purposes of Section 9.3 of
the Participation Agreement, “Excluded Taxes” does not include U.S. withholding
Taxes.


 


“Exculpated Persons” means the Lessor, its
officers, directors, shareholders and partners.


 


“Existing A1 Note” is defined in Recital C to
the Participation Agreement.


 


“Existing B Notes” is defined in Recital C to
the Participation Agreement.


 


“Existing Conduit Loan Lender” is defined in
Recital A to the Participation Agreement.


 


“Existing Conduit Note” is defined in Recital C
to the Participation Agreement


 


“Existing Facility Note” is defined in Recital
C to the Participation Agreement.


 


“Existing Investor Certificates” is defined in
Recital C to the Participation Agreement.


 


“Existing Lease” is defined in Recital A to the
Participation Agreement.


 


“Existing Lenders” means the holders of the
Existing Notes.


 


“Existing Lessor” is defined in Recital A to
the Participation Agreement.


 


“Existing Investors” is defined in Recital A to
the Participation Agreement.


 


“Existing Notes” means the Existing A1 Note,
Existing B Notes, Existing Conduit Note and Existing Facility Note.


 


“Existing Operative Documents” is defined in
Recital A to the Participation Agreement.


 


“Existing Participation Agreement” is defined
in Recital A to the Participation Agreement.


 


“Existing Participation Agreement Amendment” is
defined in Recital B to the Participation Agreement.


 


“Extension Option” is defined in Section 8.5(a)
of the Participation Agreement.


 


“Extension Option Effective Date” is defined in
Section 8.5(a) of the Participation Agreement.


 


“Extension Option Request” is defined in
Section 8.5(a) of the Participation Agreement.


 


“Extension Option Response Date” is defined in
Section 8.5(a) of the Participation Agreement.


 


“Facility” means the Site and the Improvements,
collectively.


 


11

















 


“Facility Documents” is defined in paragraph G
of the Consideration Clause of the Mortgages.


 


“Facility Improvements”
means the “Facility Improvements”, as defined in Appendix A to the Existing
Participation Agreement.


 


“Fair Market Value”
means the amount, which in any event shall not be less than zero, that would be
paid in cash in an arm’s-length transaction between an informed and willing
purchaser and an informed and willing seller, neither of whom is under any
compulsion to purchase or sell, respectively, for the ownership of the
Facility, as set forth in an appraisal. 
The Fair Market Value of the Facility shall be determined based on the
assumption that, except as otherwise expressly set forth in the Operative
Documents, the Lessee is in compliance with the other requirements of the
Operative Documents applicable to the Facility and that the Facility is free
and clear of all Liens.


 


“Fees” means
any amounts payable pursuant to Section 2.6 of the Participation Agreement.


 


“50% FMV Event” is defined in Section 6.2(h) of
the Participation Agreement.


 


“Final Completion Work”
means the punch list items described in Schedule VIII to the Participation
Agreement that needs to be performed to achieve completion of the Facility
Improvements in accordance with the Plans and Specifications.


 


“Final Payment Date”
is defined in Section 18.2(f) of the Lease.


 


“Financing Statements”
means, collectively, the Lessee Financing Statements, and the Lessor Financing
Statements.


 


“First Lien Assignment of Lease” means the
First Lien Assignment of Lease dated as of the Documentation Date from the
Lessor, as assignor, to the Administrative Agent (on behalf of the Lessor
Lenders), as assignee.


 


“First Lien Mortgage”
means the First Lien Deed of Trust, Security Agreement and Fixture Filing dated
as of the Documentation Date made by the Lessor and the Lessee for the benefit
of the Administrative Agent (on behalf of the Lessor Lenders).


 


“Fiscal Quarter” means each of the Lessee’s
four fiscal reporting periods ending, respectively, on March 31, June 30,
September 30 and December 31 of each year.


 


“Fixtures” is
defined in the Granting Clause of each
Mortgage.


 


“Funding” means an advance of funds by the
Participants pursuant to Section 2.3 of the Participation Agreement.


 


“GAAP” means
United States generally accepted accounting principles in effect from time to
time consistently applied.


 


12

















 


“Government Obligations” means readily
marketable direct full faith and credit obligations of the United States of
America or obligations unconditionally guaranteed by the full faith and credit
of the United States of America.


 


“Governmental Action”
means all permits, authorizations, registrations, consents, approvals, waivers,
exceptions, variances, orders, judgments, 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 citings, environmental and operating permits
and licenses that are required for the use, occupancy, zoning and operation of
the Facility.


 


“Governmental Authority”
means any applicable foreign, federal, state, county, municipal or other
government, quasi-government or regulatory authority, agency, board, body,
commission, instrumentality, court or tribunal, or any political subdivision of
any thereof, or arbitrator or panel of arbitrators.


 


“Gross Sales Proceeds”
means the gross proceeds from any sale of the Facility pursuant to the
Remarketing Option.


 


“Guaranties”
means, collectively, the Lessee Guaranty, the Participant Guaranty and, if
delivered pursuant to Section 6.1(l)(iv) to the Participation Agreement, the
Subsidiary Guarantees.


 


“Guarantor”
means Ross Stores, Inc.


 


“Guarantor Affiliated Group” means,
collectively, the Guarantor and each of its Subsidiaries in existence from time
to time.


 


“Guarantor Change of Control” means the
occurrence of any of the following: (i) any Person or “group” (within the
meaning of Section 13(d) of the Securities Exchange Act) of Persons acting in
concert as a partnership or other group shall, as a result of a tender or
exchange offer, open market purchases, privately negotiated purchases or otherwise,
have become, after the date hereof, the “beneficial owner” (within the meaning
of such term under Rule 13d-3 under the Securities Exchange Act) of securities
of the Guarantor representing 35% or more of the combined voting power of the
then outstanding securities of the Guarantor ordinarily (and apart from rights
accruing under special circumstances) having the right to vote in the election
of directors; (ii) the board of directors of the Guarantor shall cease to
consist of a majority of the individuals who constituted the board of directors
as of the date hereof or who shall have become a member thereof subsequent to
the date hereof after having been nominated, or otherwise approved in writing,
by at least a majority of individuals who constituted the board of directors of
the Guarantor as of the date hereof; or (iii) any change in equity ownership of
any Significant Subsidiary of the Guarantor, except as may be expressly
permitted by Section 6.1(x) of the Participation Agreement.


 


“Hazardous Condition”
means any condition that violates or threatens to violate, or that results in
or threatens noncompliance with, any Environmental Law.


 


13

















 


“Hazardous Material”
means any substance, waste or material which is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise
hazardous, including petroleum, its derivatives, by-products and other
hydrocarbons and friable asbestos and is or becomes regulated by any Governmental
Authority, including any agency, department, commission, board or
instrumentality of the United States, the State of California or any political
subdivision thereof.


 


“Hedging Obligations” means, with respect to
any Person, all liabilities of such Person under interest rate or currency swap
agreements, interest or exchange rate cap agreements and interest or exchange
rate collar agreements, and all other agreements or arrangements designed to
protect such Person against fluctuations in interest rates, currency exchange
rates or commodity prices.


 


“Highest Lawful Rate” is defined in Section 3.3
of the Participation Agreement.


 


“Improvements”
means any and all buildings, structures, improvements and Fixtures now or
hereafter situated or located on the Site, including parking structures,
electrical equipment, power plants, storage tanks, heating and/or air
conditioning systems, ventilation systems, mechanical systems, emergency
systems, access ways, recreational areas, vehicle control facilities,
landscaping, and utility and service systems used or procured for use in
connection with the operation and maintenance of such buildings and structures
but excluding the Lessee’s Property.


 


“Indebtedness”, when used with respect to any
Person, and without duplication means:


 


(1)           all indebtedness,
obligations and other liabilities (contingent or otherwise) of such Person for
borrowed money (including obligations of such Person in respect of overdrafts,
foreign exchange contracts, currency exchange agreements, and any loans or
advances from banks, whether or not evidenced by notes or similar instruments)
or evidenced by bonds, debentures, notes or other instruments for the payment
of money, or incurred in connection with the acquisition of any property or
assets (whether or not the recourse of the lender is to the whole of the assets
of such Person or only to a portion thereof), or incurred in connection with
the acquisition of any services (whether or not the recourse of the lender is
to the whole of the assets of such Person or to only a portion thereof), other
than any account payable or other accrued current liability or obligation to
trade creditors incurred in the ordinary course of business in connection with
the obtaining of such property or services;


 


(2)           all reimbursement
obligations and other liabilities (contingent or otherwise) of such Person with
respect to letters of credit, bank guarantees, bankers’ acceptances, surety
bonds, performance bonds or other guaranty of contractual performance;


 


(3)           all obligations and
liabilities (contingent or otherwise) in respect of (a) Capitalized Lease
Obligations; and (b) any lease or related documents (including a purchase
agreement) in connection with any Synthetic Lease Obligations or other lease of
property which provides that such Person is contractually obligated to purchase
or cause a third party to purchase the leased property and thereby guarantee a
minimum residual value of the leased property to the landlord and the
obligations of such Person under such


 


14

















 


lease or related document
to purchase or to cause a third party to purchase the leased property;


 


(4)           all Hedging Obligations
of such Person;


 


(5)           all Contingent
Liabilities of such Person in respect of Indebtedness, obligations or
liabilities of another Person of the kind described in clauses (1) through
(4) above;


 


(6)           any indebtedness or
other obligations described in clauses (1) through (4) above secured by any
mortgage, pledge, lien or other encumbrance existing on property which is owned
or held by such Person, regardless of whether the indebtedness or other
obligation secured thereby shall have been assumed by such Person; and


 


(7)           any and all deferrals,
renewals, extensions and refundings of, or amendments, modifications or
supplements to, any indebtedness, obligation or liability of the kind described
in clauses (1) through (6) above.


 


For all purposes of this Agreement, the Indebtedness
of any Person shall include the Indebtedness of any partnership or joint venture
characterized as a partnership for commercial law purposes in which such Person
is a general partner or a joint venturer. 
The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and the maximum liability of any such Contingent Liabilities at such
date.


 


“Indemnitee”
means each Participant, the Administrative Agent, the Arranger and the
respective successors, permitted assigns, permitted transferees, invitees,
trustees, contractors, servants, employees, officers, directors, shareholders,
members, partners, participants, representatives and agents of the foregoing
Persons; provided, that in no event
shall Lessee or any Affiliate of the Lessee be an Indemnitee.


 


“Indemnity Agreements” means, collectively, the
Debt Participants’ Indemnity Agreement and the Lessee Indemnity Agreement.


 


“Initial Financial Statement” is defined in
Section 5.5(i) of the Participation Agreement.


 


“Insolvency Event”
means, with respect to any Person, any event pursuant to which such Person
makes an assignment of or for the benefit of creditors, files a case or
petition in bankruptcy, petitions or applies to any tribunal for the
appointment of a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or other similar official) for it or for a substantial part of
its property, commences any case or proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction, whether now or hereafter in effect,
consents or acquiesces in the filing of any such petition, application,
proceeding or appointment of or taking possession by the custodian, receiver,
liquidator, assignee, trustee or sequestrator (or other similar official) of
such Person or any substantial part of its property, or admits its inability to
pay its debts generally as they become due, or authorizes any of the foregoing
to be done or taken on behalf of such Person, or any case or petition in
bankruptcy or under any other insolvency law is commenced against such Person


 


15

















 


and is not dismissed
within 90 days after such commencement or results in an order for relief that
is not vacated or set aside within 90 days from the date of entry thereof.


 


“Insolvent” or “Insolvency” means the
occurrence of one or more of the following events with respect to a
Person:  (i) dissolution (except as
permitted by Section 6.1(x) of the Participation Agreement; (ii) termination of
existence (except as permitted by Section 6.1(x) of the Participation
Agreement); (iii) insolvency within the meaning of the Bankruptcy Code or other
comparable foreign or domestic applicable statutes; (iv) such Person generally
not paying its debts as they become due or its inability to pay its debts as
they come due; (v) such Person having unreasonably small capital with which to
engage in its business, (vi) such Person having incurred Indebtedness beyond
its ability to pay such Indebtedness as it matures, (vii) such Person’s failure
to have assets (both tangible and intangible) having a present fair salable
value in excess of the amount required to pay the probable liability on its
then existing debts (whether matured or unmatured, liquidated or unliquidated,
absolute fixed or contingent), (viii) such Person’s application for or consent
to the appointment of, or the taking of possession by, a receiver, custodian,
trustee, liquidator or similar official of itself or of all or a substantial
part of its property, (ix) such Person’s making of a general assignment for the
benefit of its creditors, (x) commencement by such Person of a voluntary case
under the Bankruptcy Code, (xi) the taking or commencement by any Person of any
case or proceeding under any law relating to bankruptcy, insolvency,
reorganization, winding-up or composition or adjustment of debts, or any other
law providing for the relief of debtors, (xii) such Person’s failure to contest
in a timely or appropriate manner, or acquiescence in writing to, any petition
filed against it in an involuntary case under the Bankruptcy Code or other
comparable law, (xiii) such Person’s taking of any action under the laws of its
jurisdiction of incorporation or organization similar to any of the foregoing
or passing any board resolution or taking of any corporate action for the
purpose of effecting any of the foregoing; or (xiv) commencement of a
proceeding or case against such Person, without the application or consent of
such Person, in any court of competent jurisdiction, seeking (x) the
liquidation, reorganization, dissolution, winding up, or composition or
readjustment of such Person’s debts, (y) the appointment of a trustee,
receiver, custodian, liquidator or the like of it or of all or any substantial
part of such Person’s assets, or (z) similar relief in respect of it, under any
law relating to bankruptcy, insolvency, reorganization, winding-up or
composition or adjustment of debts or any other law providing for the relief of
debtors, and such proceeding or case shall continue undismissed, or unstayed
and in effect, for a period of 60 days; or an order for relief shall be entered
in an involuntary case under the Bankruptcy Code, against such Person; or
action under the laws of the jurisdiction of incorporation or organization of
such Person similar to any of the foregoing shall be taken with respect to such
Person and shall continue unstayed and in effect for any period of 60 days.


 


“Insurance Requirements”
means all terms and conditions of any insurance policy either required by the
Lease to be maintained by the Lessee and all requirements of the issuer of any
such policy.


 


“Intercreditor Agreement” means the
Intercreditor Agreement, dated as of the Documentation Date, between the Credit
Note Purchasers, Lessor Lenders, Lessor and Administrative Agent.


 


16

















 


“Interest”
means the interest (including overdue interest) accruing on the Credit Notes
and the Lessor Loans as computed and payable in accordance with the terms of
the Credit Note Purchase Agreement and each Credit Note or the Lessor Loan
Agreement and each Lessor Note, as applicable.


 


“Interest Period”
means, with respect to any Note or any Investor Amounts bearing Interest or
Yield, as applicable, by reference to the Credit Note Rate, Lessor Loan Rate or
the Yield Rate, as applicable, all or any portion of the period from and
including the Advance Date to the next succeeding Scheduled Payment Date and
thereafter from and including a Scheduled Payment Date to but excluding the
next succeeding Scheduled Payment Date during which such Note or Investor
Amounts bear Interest or Yield by reference to such rate.


 


“Investment” means, as applied to any Person,
(i) the purchase or acquisition of any share of capital stock, partnership
interest, limited liability company membership interest, evidence of
indebtedness or other equity security of any other Person, (ii) any loan,
advance or extension of credit to, or contribution to the capital of, any other
Person, (iii) any real estate held primarily for sale or investment, (iv) any
commodities futures contracts held other than in connection with bona fide
hedging transactions, (v) any other investment in any other Person, and (vi)
the making of any commitment or acquisition of any option to perform any of the
acts specified in clauses (i) through (v) of this definition.


 


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


 


“Investor Amounts”
means, as of any date of determination, the aggregate amount of Investor
Contributions, net of any distributions (other than distributions of Yield)
with respect thereto.


 


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


 


“Investor Base Rent”
means, for each Scheduled Payment Date, an amount equal to the Yield accrued on
the Investor Amounts at the Yield Rate during the Interest Period ending on
such date.


 


“Investor Contribution”
means the amount which Lessor is required to fund as its portion of the Funding
pursuant to Section 2.3(a) of the Participation Agreement or any other amount
which Lessor funds under or pursuant to the Operative Documents.


 


“Land” is defined in the Consideration Clause
of the Mortgage.


 


“Land Agreements” is defined in Section 9.8 of
the Lease.


 


“Lease” means
the Amended and Restated Lease Agreement dated, as of the Documentation Date,
between the Lessor, as lessor, and the Lessee, as lessee, in respect of the
Facility.


 


17

















 


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


 


“Lease Default”
means any condition, event or act which, with notice or lapse of time or both,
would become a Lease Event of Default.


 


“Lease Event of Default”
has the meaning specified in Section 18.1 of the Lease.


 


“Lease Term”
means the period commencing on and including the Advance Date and ending on the
Lease Term Expiration Date.


 


“Lease Term Expiration
Date” means July 23, 2013, as that date may be extended pursuant to Section
8.5 of the Participation Agreement.


 


“Leases” means any agreement granting a Person
the right to occupy space in a structure or real estate for any period of time,
and any Capitalized Lease, Synthetic Lease, or other lease of or agreement to
use personal property including machinery, equipment, furniture and fixtures,
whether evidenced by written or oral lease, contract or other agreement no
matter how characterized.


 


“Legal Requirements”
means all Federal, state, county, municipal and other governmental statutes,
laws, rules, orders, regulations, ordinances, judgments, decrees and
injunctions affecting the Facility or any portion thereof or the use or
alteration thereof, whether now or hereafter enacted and in force, including
any that require repairs, modifications or alterations in or to the Facility or
any portion thereof or in any way limit the use and enjoyment thereof and any that
may relate to Environmental Laws, and all permits, certificates of occupancy,
licenses, authorizations and regulations relating thereto, and all covenants,
agreements, restrictions and encumbrances contained in any instruments which
are either of record or known to the Facility affecting the Facility or any
portion thereof.


 


“Lender’s Policies” is defined in Section
4.1(j) of the Participation Agreement.


 


“Lessee” means
Ross Distribution, Inc., a California corporation.


 


“Lessee Change of Control” means the occurrence
of any of the following:


 


(i)            the
acquisition by any Person (other than a direct, wholly owned domestic
Subsidiary of the Guarantor) of beneficial ownership, directly or indirectly,
through a purchase, merger or other acquisition transaction or series of
transactions, of any shares of capital stock of the Lessee; or


 


(ii)           any
consolidation or merger of the Lessee with or into any other Person, any merger
of another Person into the Lessee, or any conveyance, transfer, sale, lease
(other than a sublease permitted under the Lease) or other disposition of all
or substantially all of the properties and assets of the Lessee to another
Person (other than a


 


18

















 


direct, wholly owned domestic Subsidiary of the
Guarantor other than a Significant Subsidiary).


 


(iii)          Beneficial ownership shall be determined in
accordance with Rule 13d-3 promulgated by the SEC under the Securities Exchange
Act.  As used in this definition, the
term “Person” shall include any syndicate or group which would be deemed to be
a “person” under Section 13(d)(3) of the Securities Exchange Act.


 


“Lessee Collateral”
means all of the Lessee’s right, title and interest in and to each of the
following, however arising and whether now existing or hereafter acquired or
arising in:


 


(a)           the
Facility;


 


(b)           all
books and records, data bases (including credit files, software, computer
programs, and other computer materials and records), in addition to all
permits, contract rights and general intangibles, in each case pertaining to or
generated in the operation of, the business conducted or to be conducted at the
Site; and


 


(c)           all
products, excess successions, subleases, rents, issues, profits, products,
returns, income and proceeds of and from the Facility (including proceeds which
constitute property of the type described in clauses
(a) and (b) above, and to the extent not otherwise included,
all payments under insurance (whether or not Lessee is the loss payee thereof)
or any indemnity, warranty or guarantee payable by reason of loss or damage to
or otherwise with respect to any of the foregoing.


 


“Lessee Financing
Statements” means UCC-1 financing statements made by the Lessee, as
debtor, in favor of Lessor, as secured party, appropriately completed and
executed for filing with the offices listed in Part A of Schedule IV to the
Participation Agreement in order to protect the Lessor’s interest with respect
to the Mortgaged Property.


 


“Lessee Guaranty”
means the Guaranty, dated as of the Documentation Date given by Guarantor to
and in favor of the Secured Parties.


 


“Lessee Indemnity Agreement” means that certain
Lessee Indemnity Agreement, dated as of the Documentation Date, between Parent
Indemnitor and the Lessee.


 


“Lessee Obligations” means all obligations
(whether now or hereafter arising) of the Lessee under the Operative Documents.


 


“Lessee Operative
Document” means the Participation Agreement and each other Operative
Document to which the Lessee in any capacity is a party.


 


“Lessee Person”
means the Lessee, the Guarantor or any of their Affiliates in their capacity as
Lessee or Guarantor, and their successors and assigns, and all of their
respective officers, directors, shareholders, partners, employees, agents,
consultants (on the Facility), service-providers (on the Facility), and any
other Person under the supervision of any of the foregoing pursuant to a
written contract or otherwise.


 


19

















 


“Lessee’s Property”
has the meaning given such term in Section 8.3 of the Lease.


 


“Lessor” means
Wachovia Development Corporation, a North Carolina corporation.


 


“Lessor Bankruptcy Event”  means, in respect of the Lessor or the
Parent Indemnitor, a Credit Note Purchase Agreement Event of Default specified
in Section 10(b) of the Credit Note Purchase Agreement or a Lessor Loan
Agreement Event of Default specified in Section 6.1(b) of the Lessor Loan
Agreement.


 


“Lessor Financing
Statements” means UCC-1 financing statements reflecting by the
Lessor, as debtor, in favor of the Administrative Agent, as secured party,
appropriately completed for filing with the offices listed in Part B of
Schedule IV to the Participation Agreement in order to protect the
Administrative Agent’s interest with respect to the Mortgaged Property.


 


“Lessor GAAP Event” means any change in GAAP
occurring following the Documentation Date that in the reasonable judgment of
Lessor adversely affects the financial accounting reporting of the Lessor, as
such reporting relates to the transactions contemplated by the Operative
Documents.


 


“Lessor Lenders” means, collectively, each of
the financial institutions named on Schedule II to the Participation Agreement.


 


“Lessor Liens”
means Liens on or against the Facility or the Lease or any payment of Rent
(a) which result from any act of, or any Claim against, the Lessor, any
owner of a direct or indirect interest in the Lessor, unrelated to its interest
in the Facility or the transaction, or which result from any violation by the
Lessor of any of the terms of the Operative Documents or (b) which result
from Liens in favor of any taxing authority by reason of any Tax owed by the
Lessor, any owner of a direct or indirect interest in the Lessor, except that
Lessor Liens shall not include any Lien resulting from any Tax for which the
Lessee is obligated to indemnify the Lessor.


 


“Lessor Loan Acceleration” is defined in
Section 6.1 of the Lessor Loan Agreement.


 


“Lessor Loan Agreement” means the Lessor Loan
Agreement, dated as of the Documentation Date, among Lessor, as Borrower
thereunder, Administrative Agent, and the Lessor Lenders.


 


“Lessor Loan Agreement Event of Default” is
defined in Section 6.1 of the Lessor Loan Agreement.


 


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


 


“Lessor Loan Commitment” means the commitments
of the Lessor Lenders to make Lessor Loans to the Lessor on the Advance Date in
an aggregate principal amount set forth on Schedule II to the Participation
Agreement.


 


20

















 


“Lessor Loan Default” means any event or
condition which, with the lapse of time or the giving of notice, or both, would
constitute a Lessor Loan Agreement Event of Default.


 


“Lessor Loan Documents” means the Participation
Agreement, Lessor Loan Agreement, the Lessor Notes, the Debt Participants’
Indemnity Agreement, the Intercreditor Agreement, the Guaranties and the
Security Documents..


 


“Lessor Loan Rate” means 6.62% per annum.


 


“Lessor Loans” means the loans made by each
Lessor Lender under and pursuant to Section 2 of the Lessor Loan Agreement.


 


“Lessor Notes” is defined in Section 2.2 of the
Lessor Loan Agreement.


 


“Lessor Notice” is defined in Section 6.2 of
the Participation Agreement.


 


“Lessor’s Interests”
means all of the rights and interests of the Lessor, whether now owned or
hereafter acquired or arising in and to the Facility and the Lessee Collateral.


 


“Lien” means
any mortgage, deed of trust, pledge, security interest, encumbrance, lien,
easement, servitude or charge of any kind, including any irrevocable license,
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, or the filing of, or
agreement to execute as “debtor”, any financing or continuation statement under
the UCC of any jurisdiction or any federal, state or local lien imposed
pursuant to any Environmental Law.


 


“Liquidity Agreement” is defined in Appendix A
to the Existing Participation Agreement.


 


“Loan Agreements” is defined in Appendix A to
the Existing Participation Agreement.


 


“Loan Base Rent”
means on each Scheduled Payment Date, an amount equal to the aggregate Interest
due and payable on such date on the Credit Notes pursuant to the Credit Note
Purchase Agreement and on the Lessor Notes pursuant to the Lessor Loan
Agreement.


 


“Loan Event of Default” means a Credit Note
Purchase Agreement Event of Default or a Lessor Loan Agreement Event of
Default, as applicable.


 


“Loan Guarantees” means, as applied to any
Person, without duplication, all guarantees, endorsements or other contingent
or surety obligations with respect to obligations of others whether or not
reflected on such Person’s Consolidated balance sheet, including any obligation
to furnish funds, directly or indirectly (whether by virtue of partnership
arrangements, by agreement to keep-well or otherwise), through the purchase of
goods, supplies or services, or by way of stock purchase, capital contribution,
advance or loan, or to enter into a contract for any of the foregoing, for the
purpose of payment of obligations of any other Person.


 


21

















 


“Loans” means, collectively, loans made by
Lessor Lenders under the Lessor Loan Agreement and by Credit Note Purchasers
under the Credit Note Purchase Agreement.


 


“Majority Debt Participants” means, at any
time, Debt Participants whose aggregate outstanding principal amount of Credit
Notes or Lessor Loans, as the case may be, represents at least fifty-one
percent (51%) of the aggregate outstanding principal amount of all Credit Notes
and Lessor Loans.


 


“Majority Credit Note Holders” means, at any
time, the Credit Note Holders whose aggregate outstanding principal amount of
Credit Notes represents at least fifty-one percent (51%) of the aggregate
outstanding principal amount of all Credit Notes.


 


“Majority Lessor Lenders” means, at any time,
Lessor Lenders whose outstanding Lessor Loans in the aggregate represents at
least fifty-one percent (51%) of the aggregate outstanding Lessor Loans.


 


“Majority Participants” means, as the context
may require, the Majority Debt Participants, the Majority Credit Note Holders
or the Majority Lessor Lenders as specified in Section 2.2, 3.3, 3.4, 3.6,
3.10, 4.1, 4.2 and 5.1 of the Intercreditor Agreement.


 


“Make-Whole Amount” shall mean, with respect to
any Note or Investor Amounts, an amount equal to the excess, if any, of the
Discounted Value of the Remaining Scheduled Payments with respect to the Called
Principal of such Note or Investor Amounts over the amount of such Called
Principal; provided that the Make-Whole Amount shall in no event be
less than zero.


 


“Material Adverse Effect”
means any change or changes, effect or effects or condition or conditions that
individually or in the aggregate are materially adverse to (i) the
operations, business, properties, condition (financial or otherwise) or
prospects of the Lessee or of the Guarantor, (ii) the ability of Lessee or Guarantor
to perform its obligations under the Operative Documents to which it is a party
or to lease the Facility under the Lease, (iii) the validity or
enforceability of any of the Operative Documents or any Participant’s rights or
remedies under any thereof, (iv) the status, priority or perfection of the
Liens created by the Security Documents or (v) the value or condition of the
Facility.


 


“Material Adverse Change” means any (a)
material adverse change in the business, prospects, operations, results of
operations, assets, liabilities or condition (financial or otherwise) of the
Guarantor Affiliated Group taken as a whole, or (b) material impairment of the
ability of the Guarantor Affiliated Group, taken as a whole, to perform their
obligations under the Operative Documents or of the Administrative Agent’s or
the Participants’ ability to enforce the Obligations.


 


“Material Alteration” is defined in Section
9.2(d) of the Lease.


 


“Material Lease Default”
means any Lease Default described in Section 18.1(d) of the Lease.


 


“Maturity Date”
means July 23, 2013.


 


22

















 


“Memorandum of Lease”
means the Memorandum of Lease and Deed of Trust dated as of the Documentation
Date between Lessor and Lessee.


 


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


 


“Mortgages” means, collectively, the First Lien
Mortgage and the Second Lien Mortgage, and each a “Mortgage”.


 


“Mortgaged Property”
is defined in the Granting Clause of each Mortgage.


 


“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 Casualty Proceeds”
means the compensation and/or insurance payments net of the expenses of
collecting such amounts received by Administrative Agent, the Lessor or the
Lessee in respect of the Facility by reason of and on account of an Event of
Loss described in clause (x) of the definition thereof or a Casualty.


 


“Net Condemnation
Proceeds” means any award or compensation net of the expenses of
collecting such amounts received by Administrative Agent, the Lessor or the
Lessee in respect of the Facility by reason of and on account of an Event of
Loss described in clause (y) or (z) of the definition thereof or a
Condemnation.


 


“Net Proceeds”
means Net Casualty Proceeds and Net Condemnation Proceeds.


 


“Net Sales Proceeds”
means Gross Sale Proceeds less Remarketing Sales Expenses to be paid pursuant
to Section 10.1(d) of the Participation
Agreement.


 


“Non-Consenting
Participant” is defined in Section 8.5(a) of the Participation
Agreement.


 


“Nonseverable”
shall describe an Alteration or part of an Alteration which cannot be readily
removed from the Facility without causing damage (other than that of a de minimis nature) to the Facility.


 


“Non-U.S. Person”
means any Person which is, or under United States tax law is treated as, other
than (i) a citizen or resident of the United States, (ii) a corporation,
partnership, limited liability company or other entity created or organized in
the United States or under the law of the United States or of any state in the
United States or the District of Columbia, (iii) any estate that is subject to
United States federal income taxation on its worldwide income regardless of the
source of its income or (iv) any trust if (x) a court within the United States
is able to exercise primary supervision over the administration of the trust
and (y) one or more Persons set forth in clauses (i) through (iv) above have
the authority to control all substantial decisions of the trust.


 


“Notes” means,
collectively, the Credit Notes and the Lessor Notes.


 


23

















 


“Notice of Alteration”
is defined in Section 9.2(d) of the Lease.


 


“Notice of Default and Election to Sell” is defined
in paragraph 4(b)(iv)(4) of the Mortgage.


 


“Notice of Objection”
is defined in Section 9.2(d) of the Lease.


 


“Obligations” is defined in Section 2.1 of
the Lessee Guaranty, Section 2.1 of the Participant Guaranty or Section 1 of
each Subsidiary Guarantee, as applicable.


 


“Obligor”
means the Lessee and the Guarantor.


 


“Officer’s Certificate”
(i) of a Person (other than the Lessee and the Guarantor) means a certificate
signed by the Chairman of the Board of Directors or the President or any
Executive Vice President or any Senior Vice President or any other Vice
President of such Person signing with the Treasurer or any Assistant Treasurer
or the Controller or any Assistant Controller, Cashier, Assistant Cashier or
the Secretary or any Assistant Secretary (or in the case of the Trustee, any
Financial Services Officer) of such Person, or by any Vice President who is
also Controller, Treasurer or Cashier signing alone and (ii) in respect of
the Lessee and the Guarantor means a certificate signed by any authorized
officer of the Lessee or the Guarantor, as applicable.


 


“Operative Documents”
means, collectively, the following:  (a)
the Participation Agreement, (b) the Assignment Agreement, (c) the Lease,
(d) the Memorandum of Lease, (e) the Credit Note Purchase Agreement,
(f) the Notes, (g) the Lessor Loan Agreement, (h) the Security
Documents, (i) the Intercreditor Agreement, (j) the Guaranties, (k) the
Indemnity Agreements, (l) the Engagement Letter, and each other agreement,
certificate, document or instrument delivered in connection with any Operative
Document, whether or not specifically mentioned herein or therein.


 


“Original Payment”
is defined in Section 9.4(b) of the Participation Agreement.


 


“Overall Transaction”
means the transactions contemplated by the Operative Documents.


 


“Overdue Rate”
means, (a) with respect to any Note or Investor Amounts then outstanding,
the lesser of (i) the Highest Lawful Rate and (ii) the sum of
(x) 2% plus (y) the interest
rate applicable to such Note or the Yield rate applicable to such Investor
Amounts, as the case may be and (b) in the case of any other amounts due
under the Operative Documents, the lesser of (x) Highest Lawful Rate and (y)
ABR plus 2% per annum.


 


“Overdue Rent”
is defined in Section 3.4 of the Lease.


 


“Owner’s Policy” is defined in Section 4.1(j)
of the Participation Agreement.


 


“Parent Indemnitor” means Wachovia Corporation,
a North Carolina corporation.


 


“Participant Balance” means, with respect to
any Participant as of any date of determination:  (i) with respect to any Credit Note Holder, the sum of (x) the
Credit Note


 


24

















 


Balance of such Credit
Note Holder plus (y) all other amounts owing by Lessee or Lessor to such Credit
Note Holder under the Operative Documents (including any accrued and unpaid
Supplemental Rent payable to such Credit Note Holder), (ii) with respect to any
Lessor Lender, the sum of (x) the Lessor Loan Balance of such Lessor Lender
plus (y) all other amounts owing by Lessee or Lessor to such Lessor Lender
under the Operative Documents (including any accrued and unpaid Supplemental
Rent payable to such Lessor Lender), and (iii) with respect to the Lessor, the
sum of (x) the Investor Amounts Balance plus (y) all other amounts owing by Lessee
to the Lessor under the Operative Documents (including any accrued and unpaid
Supplemental Rent payable to the Lessor.


 


“Participant Guaranty”
means the Participant Guaranty dated as of the Documentation Date, given by
Guarantor to and in favor of the Beneficiaries.


 


“Participants”
means collectively, and “Participant”
means individually any one of, the Lessor, the Credit Note Purchasers and the
Lessor Lenders.


 


“Participation Agreement”
means the Participation Agreement dated as of the Documentation Date among the
Lessor, the Lessee, the Guarantor, the Credit Note Purchasers, the Lessor
Lenders and the Administrative Agent.


 


“Payment Office”
means the offices of the Administrative Agent as set forth on Schedule III to
the Participation Agreement or such other office as the Administrative Agent
may designate in writing to Lessee, Lessor and the other Participants.


 


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


 


“Permitted Acquisition” means any Acquisition
by the Guarantor or any other member of the Guarantor Affiliated Group that
meets each of the following criteria: 
(i) the capital stock (or other equity interests) or assets acquired in
such Acquisition relates to a line of business similar to the business in which
the Guarantor Affiliated Group is engaged on the Documentation Date, (ii) the
board of directors (or other comparable governing body) of the Person whose
capital stock (or other equity interests) or assets are being acquired has duly
approved such Acquisition, (iii) in the case of an Acquisition of the capital
stock (or other equity interests) of another Person, such Person shall become a
wholly-owned direct or indirect Subsidiary of the Guarantor or, in the case of a
merger, the Guarantor or another member of the Guarantor Affiliated Group shall
be the surviving entity of the merger with the acquired Person, (iv) the
Guarantor shall notify the Administrative Agent of each such Acquisition, (v)
no Lease Default or Lease Event of Default shall exist, in each case both
before and after giving effect to such Acquisition, and (vi) the aggregate
consideration (including all cash and non-cash consideration and any assumption
of Indebtedness) for all Acquisitions occurring after the Documentation Date
shall not exceed fifteen percent (15%) of the Guarantor’s Consolidated Tangible
Net Worth, determined as of the end of the most recently completed fiscal
quarter of the Guarantor.


 


“Permitted Contest”
means actions taken by a Person to test, challenge, contest, appeal or request
of a proceeding for review of in good faith, by appropriate proceedings timely
initiated and diligently prosecuted, the legality, validity or applicability to
the Facility or any interest therein of any Person of:  (a) any Applicable Law; (b) any
term or condition of, or any


 


25

















 


revocation or amendment
of, or other proceeding relating to, any authorization or other consent,
approval or other action by any Governmental Authority; or (c) any Lien or
Tax; provided that the initiation and
prosecution of such contest would not result in (i) an imminent risk of
sale, forfeiture or loss of the Lien created by the Operative Documents or the
right, title or interest of the Lessor in or to the Facility or any portion
thereof or interruption of all or any portion of the Rent, Lease Balance or any
other amount payable under the Operative Documents by reason of attachment or
other Lien, (ii) a risk of criminal liability being imposed upon any
Participant,  (iii) the enjoinment
of or interference with the use, possession or disposition of the Facility in a
material respect or (iv) materially and adversely affect the Fair Market
Value, use or remaining useful life of the Facility or any portion thereof or
the continued economic operation thereof; and provided,
further, that in any event adequate
reserves in accordance with GAAP are maintained by such Person against any
adverse determination of such contest.


 


“Permitted Encumbrances”
means:


 


(a)           Liens
existing on the Documentation Date and disclosed in Schedule IX to the
Participation Agreement;


 


(b)           Liens
for taxes, fees, assessments and other governmental charges to the extent that
payment of the same may be postponed or is not required, in accordance with the
provisions of Section 6.1(n) of the Participation Agreement, and liens in favor
of customs and revenue authorities arising as a matter of law to secure payment
of customs duties or in connection with the importation of goods in the
ordinary course of business;


 


(c)           landlords’
and lessors’ liens in respect of rent not in default; liens in respect of
pledges or deposits under worker’s compensation, unemployment insurance, social
security laws, or similar legislation (other than ERISA) or in connection with
appeal and similar bonds incidental to litigation; mechanics’, laborers’,
carriers’, warehousemans’, materialmen’s and similar liens, if the obligations
secured by such liens are not then delinquent; liens securing the performance
of bids, tenders, contracts (other than for the payment of money); and
statutory obligations incidental to the conduct of its business and that do not
in the aggregate materially detract from the value of its property or
materially impair the use thereof in the operation of its business;


 


(d)           judgment
liens that shall not have been in existence for a period longer than 30 days
after the creation thereof or, if a stay of execution shall have been obtained,
for a period longer than 30 days after the expiration of such stay;


 


(e)           easements,
rights of way, restrictions, encroachments, covenants running with the land and
other similar charges or Liens relating to real property and not interfering in
a material way with the ordinary conduct of its business;


 


(f)            purchase
money liens and liens on real property securing construction or permanent real
estate financing where:


 


(i)            with
respect to liens on real property under Synthetic Leases, any such lien does
not exceed an amount equal to 100% of the lessor’s (or the lessor’s lender’s)
contribution to the costs of the real property and improvements under


 


26

















 


the Synthetic Lease agreements, including amounts
incurred under such Synthetic Leases on account of bank fees, closing expenses,
capitalized interest and other similar obligations; and


 


(ii)           in
all other cases, the lien does not exceed 100% of the cost of the real property
and all improvements thereon and does not extend beyond the property purchased
or constructed;


 


(g)           security
interests and liens securing charges or obligations of the Guarantor Affiliated
Group in amounts not to exceed $10,000,000 in the aggregate outstanding at any
time in addition to those Liens permitted under subsections (a) through (g) of
the definition of “Permitted Encumbrances”, provided, that with respect
to purchase money liens securing the purchase price of capital assets
(including rights of lessors under capital leases), (A) each such Lien is given
solely to secure the purchase price of, or the lease obligations relating to,
such asset, does not extend to any other property and is given at the time or
within 30 days of the acquisition of such asset, and (B) the Indebtedness
secured thereby does not exceed the lesser of the cost of such asset or its
fair market value at the time such security interest attaches; and


 


(h)           Security
interests in favor of the issuer of any documentary letters of credit for the
account of the Guarantor covering any documents presented in connection with a
drawing under any such letter of credit; all goods which are described in such
documents or any such letter of credit; and the proceeds thereof.


 


“Permitted Exceptions”
means the exceptions set forth in the Owner’s Policy and the Lender’s Policies
on the Advance Date and accepted by the Participants pursuant to Section 4.1(j)
of the Participation Agreement.


 


“Permitted Investments” means all (i) Qualified
Investments, and (ii) Investments in addition to Qualified Investments that do
not in the aggregate at any time exceed five percent (5%) of the Guarantor’s
Consolidated Tangible Net Worth, determined as of the date of its most recently
completed fiscal quarter.


 


“Permitted Liens”
means:


 


(a)           Liens
created pursuant to the Operative Documents and the respective rights and
interests of the Lessee, the Lessor and any Participant and their respective
permitted transferees and assignees, as provided in the Operative Documents;


 


(b)           Lessor
Liens;


 


(c)           Liens
for Taxes either not yet due or being contested in compliance with Section 9.5 of the Lease;


 


(d)           materialmen’s,
mechanics’, workers’, repairmen’s, employees’ or other like Liens on Lessee’s
interest in the Facility for amounts either not yet due or being contested in
compliance with Section 9.5 of the Lease;


 


27

















 


(e)           Liens
arising out of judgments or awards with respect to which at the time an appeal
or proceeding for review is being prosecuted in good faith and either which
have been bonded or for the payment of which adequate reserves shall 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 are being contested pursuant to Section 9.5 of the
Lease;


 


(f)            easements,
rights of way, reservations, servitudes and rights of others against the
Facility which (x) are listed on Schedule B to the Title Policies or (y) are
granted pursuant to Section 8.4 of the Lease; and


 


(g)           the
rights of any assignee, lessee, or sublessee under assignments, leases and
subleases expressly permitted by the Lease.


 


“Person” means
an individual, corporation, partnership, joint venture, limited liability
company, limited liability partnership, association, joint-stock company, trust
(including any beneficial owner thereof), unincorporated organization,
Governmental Authority or other legal entity.


 


“Personal Property” is defined in the Granting
Clause of the Mortgage.


 


“Plan” means
at any time an employee pension benefit plan (other than a Multiemployer Plan)
which is covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the 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.


 


“Plan Assets” means assets of an employee
benefit plan (as defined in Section 3(3) of ERISA) as a plan (as defined in
Section 4975(e)(1) of the Code) within the meaning of United States Department
of Labor Regulation Section 2510.3-101.


 


“Plans and Specifications” means the plans and
specifications for construction of the Improvements prepared and approved in
accordance with the terms and conditions of the Prior Construction Agency
Agreement.


 


“Prescribed Forms”
means duly executed and filed form(s) or statement(s), and in such number of
copies, which may, from time to time, be prescribed by law and which, pursuant
to applicable provisions of (a) an income tax treaty between the United States
and the country of residence of the Participant providing the form(s) or
statement(s), (b) the Code or (c) any applicable rule or regulation under the
Code, permit the Lessee to make payments under any Operative Document free of
deduction or withholding of United States Tax, and shall mean, under the applicable
provisions effective as of the Documentation Date, either Internal Revenue
Service Form W-8BEN (claiming complete exemption under an applicable income tax
treaty, if any) or Internal Revenue Service Form W-8ECI (claiming a complete
exemption as effectively connected income).


 


28

















 


“Prior Construction Agency Agreement” is
defined in Appendix A to the Existing Participation Agreement.


 


“Prohibited Transaction” means a transaction
prohibited by Section 4975 of the Code or Section 406 of ERISA, for which no
statutory or administrative exemption applies.


 


“Purchase Commitment” means, with respect to
any Credit Note Purchaser, its commitment to purchase Credit Notes on the
Advance Date in a principal amount set forth on Schedule I to the Participation
Agreement.


 


“Purchase Date” is defined in
Section 5.1(a) of the Lease.


 


“Purchase Option”
is defined in Section 5.1(a) of the Lease.


 


“Purchase Price” is defined in
Section 5.1(a) of the Lease Agreement.


 


“Qualified Investments” means, as applied to
any member of the Guarantor Affiliated Group, (i) Investments in wholly-owned
Significant Subsidiaries that have executed and delivered to the Administrative
Agent (as defined in the Revolving Credit Agreement) a Subsidiary Guarantee,
(ii) Investments in Subsidiaries of the Guarantor that are not Significant
Subsidiaries in an aggregate amount outstanding not in excess of fifteen
percent (15%) of the Guarantor’s Consolidated Tangible Net Worth determined as
of the end of the most recently completed fiscal quarter of the Guarantor, and
(iii) Investments of the type and subject to the limitations and other
guidelines set forth on Schedule VI to the Participation Agreement.


 


“Rating Agencies”
means S&P and/or Moody’s.


 


“Real Property” or “Real Properties”
means, collectively, those parcels of land together with the improvements now
or hereafter located thereon which are owned or leased by any member of the
Guarantor Affiliated Group.


 


“Reinvestment Yield” shall mean, with respect
to the Called Principal of any Note or Investor Amounts, 0.50% over the yield
to maturity implied by (a) the yields reported, as of 10:00 A.M. (New York City
time) on the third Business Day preceding the Settlement Date with respect to
such Called Principal, on the display designated as “Page USD” of the Bloomberg
Financial Markets Services Screen (or, if not available, any other nationally
recognized trading screen reporting on-line intraday trading in U.S. Treasury
securities) for actively traded U.S. Treasury securities having a maturity
equal to the Remaining Average Life of such Called Principal as of such
Settlement Date, or (b) if such yields are not reported as of such time or the
yields reported as of such time are not ascertainable, the Treasury Constant
Maturity Series Yields reported, for the latest day for which such yields have
been so reported as of the second Business Day preceding the Settlement Date
with respect to such Called Principal, in Federal Reserve Statistical Release
H.15 (519) (or any comparable successor publication) for actively traded U.S.
Treasury securities having a constant maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date.  Such implied yield will be determined, if
necessary, by (i) converting U.S. Treasury bill quotations to bond-equivalent
yields in accordance with accepted financial practice and
(ii) interpolating linearly between (1) the actively traded U.S. Treasury
security with the maturity closest to and greater than the


 


29

















 


Remaining Average Life
and (2) the actively traded U.S. Treasury security with the maturity closest to
and less than the Remaining Average Life.


 


“Release”
means the release, deposit, disposal or leak of any Hazardous Material into or
upon or under any land or water or air, or otherwise into the environment,
including by means of burial, disposal, discharge, emission, injection,
spillage, leakage, seepage, leaching, dumping, pumping, pouring, escaping,
emptying, placement and the like.


 


“Release Request” is defined in Section 13.1 of
the Lease.


 


“Remaining Average Life” shall mean, with
respect to any Called Principal, the number of years (calculated to the nearest
one-twelfth year) obtained by dividing (a) such Called Principal into (b) the
sum of the products obtained by multiplying (i) the principal component of each
Remaining Scheduled Payment with respect to such Called Principal by (ii) the
number of years (calculated to the nearest one-twelfth year) that will elapse
between the Settlement Date with respect to such Called Principal and the
scheduled due date of such Remaining Scheduled Payment.


 


“Remaining Scheduled Payments” shall mean, with
respect to the Called Principal of any Note or Investor Amounts, all payments
of such Called Principal and Interest or Yield thereon that would be due after
the Settlement Date with respect to such Called Principal if no payment of such
Called Principal were made prior to the scheduled due date; provided
that if such Settlement Date is not a date on which Interest or Yield payment
is due to be made with respect to the Notes or Investor Amounts, as applicable,
then the amount of the next succeeding scheduled Interest or Yield payments, as
applicable, will be reduced by the amount of Interest or Yield accrued to such
Settlement Date and required to be paid on such Settlement Date.


 


“Remarketing Option” is defined in Section 7.1
of the Lease.


 


“Remarketing Sales
Expense” means all charges, costs and expenses of the Lessor, the
Lessee and the Participants in connection with any sale pursuant to the
Remarketing Option.


 


“Remedial Work”
is defined in Section 9.6(b) of the Lease.


 


“Renewal Term”
is defined in Section 8.5 (a)(ii) of the Participation Agreement.


 


“Rent” means
Base Rent and Supplemental Rent, collectively.


 


“Replacement Participant” is defined in Section
8.5(b) of the Participation Agreement.


 


“Reportable Event” means, with respect to any
Plan, a reportable event as described in Section 4043(c) of ERISA for which
notice to the PBGC has not been waived.


 


“Residual Value Guaranty
Amount” means an amount equal to the product of the Lease Balance as
of the Lease Term Expiration Date, after giving effect to any Rent paid on such
date, multiplied by eighty percent 80%.


 


30

















 


“Responsible Officer”
means, with respect to the subject matter of any covenant, agreement or
obligation of any party contained in any Operative Agreement, the President, or
any Vice President, Assistant Vice President, Trust Officer or other officer,
who in the normal performance of his or her operational responsibility would
have knowledge of such matters and the requirements with respect thereto.


 


“Restricted Payment” means  (i) any cash or property dividend,
distribution or payment, direct or indirect, by the Guarantor or any of its
Subsidiaries in respect of its capital stock or other equity interests to any
Person who now holds, or who in the future holds, an equity interest in the
Guarantor or any of its Subsidiaries, whether evidenced by a security or not,
other than dividends payable solely in shares of any class of capital stock (or
other equity) to holders of that class, and (ii) any payment on account of the
purchase, repurchase, redemption, retirement or other acquisition for value of
any capital stock of the Guarantor or its Subsidiaries, or any other payment or
distribution made in respect thereof, either directly or indirectly.


 


“Revolving Credit Agreement” means the
Revolving Credit Agreement, dated (and only as in effect) as of August 23,
2001, among the Guarantor, certain lending institutions (including Fleet
National Bank), Fleet National Bank, as administrative agent, First Union
National Bank, as syndication agent, Wells Fargo Bank, National Association and
First Bank, N.A., as co-documentation agents, National City Bank, as managing
agent and Fleet Securities, Inc. as arranger and regardless of whether such
Revolving Credit Agreement is terminated or expires.


 


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


 


“Sale Date” is
defined in Section 7.1(b) of the Lease.


 


“Scheduled Payment Date”
means, as to any Note or Investor Amounts, without duplication, (i) the
twenty-third (23rd) day of each month or if such twenty-third day is not a
Business Day, the immediately succeeding Business Day and (ii) the Lease Term
Expiration Date.


 


“SEC” means
the United States Securities and Exchange Commission.


 


“Second Lien Assignment of Lease” means the
Second Lien Assignment of Lease dated as of the Documentation Date from the
Lessor, as assignor, to the Administrative Agent (on behalf of the Debt
Participants), as assignee.


 


“Second Lien Mortgage”
means the Second Lien Deed of Trust, Security Agreement and Fixture Filing
dated as of the Documentation Date made by the Lessor and the Lessee for the
benefit of the Administrative Agent (on behalf of the Debt Participants).


 


“Secured Parties”
means the Administrative Agent, the Lessor, each of the Debt Participants, each
other Indemnitee and their respective successors and assigns.


 


“Securities Act”
means the Securities Act of 1933 as amended.


 


“Securities Exchange Act”
means the Securities Exchange Act of 1934 as amended.


 


31

















 


“Security Documents”
means, collectively, the Mortgages, the Assignments of Lease, the Financing
Statements and all other security documents hereafter delivered to the
Administrative Agent granting a Lien on any asset or assets of any Person
(i) to secure the obligations and liabilities of the Lessee under the
Lease and other Operative Documents or (ii) to secure the obligations and
liabilities of the Lessor under the Credit Note Purchase Agreement and/or under
any of the other Operative Documents.


 


“Settlement Date” shall mean, with respect to
the Called Principal of any Note or Investor Amounts, the date on which such
Called Principal is to be prepaid or has become or is declared to be
immediately due and payable, as the context requires.


 


“Significant Subsidiaries” means each
“significant” (as defined under Regulation S-X promulgated under the Securities
Exchange Act of 1934, as amended) domestic and foreign Subsidiary of the
Guarantor.


 


“Site” means
the land described in Exhibit A to the Lease, and all Appurtenant Rights
relating to the foregoing.


 


“Site Acquisition Date” means the date a deed
conveying the Facility to Lessor has been recorded in favor of Lessor.


 


“Site Assessment”
is defined in Section 12.2 of the Lease.


 


“Stockholders’ Equity” means the amount
reported as “stockholders’ equity” on the Guarantor’s Consolidated balance
sheet and determined in accordance with GAAP.


 


“Sublease” is defined in Section 16.1 of
the Lease Agreement.


 


“Subsidiary” means of any specified Person, (i)
a corporation, a majority of whose capital stock with voting power, under
ordinary circumstances, to elect directors is, directly or indirectly, at the
date of determination thereof owned by such Person or by such Person and a
Subsidiary or Subsidiaries of such Person or by a Subsidiary or Subsidiaries of
such Person or (ii) any other Person (other than a corporation) in which such
Person or such Person and a Subsidiary or Subsidiaries of such Person has,
directly or indirectly, at the date of determination thereof, at least majority
ownership interest.


 


“Subsidiary Guarantee” means each Subsidiary
Guarantee substantially in the form of Exhibit C to the Participation
Agreement, executed and delivered by each Significant Subsidiary.


 


“Subsidiary Guarantor” means each Significant
Subsidiary that executes and delivers a Subsidiary Guarantee pursuant to the
Operative Documents.


 


“Substantial Completion” means (i) substantial
completion of the Construction of the Improvements on the Site in accordance with
the Plans and Specifications and Applicable Law, (ii) that the Facility
Improvements and related Equipment have been installed at the Site and are
available to perform their respective design functions and (iii) that Lessee
has received all necessary certificates of occupancy and other Governmental
Actions necessary to occupy and use the Facility as contemplated in the Plans
and Specifications and the Appraisal.


 


32

















 


“Supplemental Rent”
means all legal, accounting, administrative and other operating expenses and
taxes incurred by the Lessee (other than Base Rent), any and all amounts,
liabilities and obligations other than Base Rent which the Lessee assumes or
agrees or is otherwise obligated to pay under the Lease or any other Operative
Document (whether or not designated as Supplemental Rent) to, or for the
benefit of any Participant or the Administrative Agent, including, rent,
interest measured by the Overdue Rate, the Lease Balance, Fees, any Make-Whole
Amounts,  and indemnities and damages
for breach of any covenants, representations, warranties or agreements, and all
other costs associated with the condition, use or operation, maintenance,
management and utilities relating to the Facility.


 


“Substitute Transferee” is defined in Section
6.2(h) of the Participation Agreement.


 


“Substitute Transferee Notice” is defined in
Section 6.2(h) of the Participation Agreement.


 


“Synthetic Lease” means any synthetic lease,
tax retention operating lease, off-balance sheet loan or similar off-balance
sheet financing product where such transaction is considered borrowed money
Indebtedness for tax purposes but is classified as an operating lease under
GAAP.


 


“Synthetic Lease Obligation” means, with
respect to any Person that is a lessee under a Synthetic Lease, the outstanding
“lease balance” or other similar amount; i.e., the outstanding principal
amount of any notes of the lessor outstanding with respect to the property
under lease plus the equity investment made with respect to such lease.


 


“Taxes” means
any and all present or future liabilities, losses, expenses and costs of any
kind whatsoever that are fees (including license fees, documentation fees and
registration fees), taxes (including property, ad valorem, real estate, income,
gross or net income, gross or net receipts, sales, use, value added, franchise,
business, transfer, capital property (tangible and intangible), municipal
assessments, excise and stamp taxes and sewer and water rents), levies,
imposts, duties, charges, assessments or withholdings, together with any
penalties, fines or interest thereon or addition thereto, which at any time may
be levied, assessed or imposed by any foreign or federal, state or local taxing
authority.


 


“Tax Indemnitee”
means each of the Lessor, the Administrative Agent, any Debt Participant,
employees, officers, directors, shareholders, members, partners, participants,
and agents of the foregoing Persons and each of their respective successors,
transferees and assigns permitted under the terms of the Operative Documents.


 


“Title Policies”
means, collectively, the Owner’s Policy and Lender’s Policies.


 


“Title Company” means First American Title
Insurance Company.


 


“Total Commitment”
means, at any time, the aggregate amount of the Commitments of Lessor and all
Debt Participants under the Operative Documents at such time.


 


“Transaction Costs”
means:


 


33

















 


(a)           the
fees and expenses of the Appraiser;


 


(b)           the
fees and expenses of (i) Mayer, Brown, Rowe & Maw LLP, and
(ii) Chapman and Cutler LLP, as Credit Note Purchasers’ special counsel,
incurred in connection with the negotiation, documentation and consummation of
the Overall Transaction;


 


(c)           any
and all Taxes and fees incurred in recording, registering or filing any
Operative Document or any other transaction document, any deed, declaration,
Mortgages, security agreement, notice or financing statement with any public
office, registry or governmental agency in connection with the transactions
contemplated by the Operative Documents, unless the Operative Documents
expressly provide that such Taxes or fees are required to be paid by a Person
other than the Lessee;


 


(d)           any
search fees, title fees, premiums and escrow costs and other expenses relating
to title insurance incurred in connection with the closings contemplated by the
Operative Documents;


 


(e)           the
fees and expenses set forth in Section 7.1(c) of the Participation Agreement;


 


(f)            the
Arranger’s costs and expenses, including any costs and expenses incurred by the
Arranger with respect to any syndication;


 


(g)           all
expenses relating to all Environmental Audits and appraisals prepared from time
to time under the Operative Documents;


 


(h)           all costs
and expenses (including premiums) incurred in connection with insurance on the
Facility;


 


(i)            the
Fees; and


 


(j)            without
duplication of the preceding clauses, all fees, costs and expenses (including
all out-of-pocket costs and expenses arising in connection with the Overall
Transaction and any due diligence investigation performed by the Participants
or the Administrative Agent (or any of their respective agents or Affiliates))
arising in connection with the negotiation, preparation, execution or delivery
of the term sheet relating to the Overall Transaction or of the Operative
Documents.


 


“Trust Agreement”
is defined Appendix A to the Existing Participation Agreement.


 


“UCC” means
the Uniform Commercial Code of New York or any other applicable jurisdiction.


 


“WDC Confirmation Letter” means the letter,
dated the Documentation Date, from the Lessee to Lessor, as confirmed by a
Responsible Officer of Lessor and, if requested by the Lessee pursuant to
Section 6.2(j) of the Participation Agreement, each quarterly letter thereafter
in substantially the same form.


 


34

















 


“Yield” means,
for each Interest Period, the amount accrued on the Investor Amounts
outstanding from time to time at the Yield Rate.


 


“Yield Rate”
means 6.62% per annum.


 


35

















 


Participation Agreement (Ross)


 


 


PARTICIPATION AGREEMENT


 


dated as of July 23, 2003


 


among


 


ROSS DISTRIBUTION, INC.,

as Lessee,


 


ROSS STORES, INC.,

as the Guarantor,


 


WACHOVIA DEVELOPMENT CORPORATION,

as Lessor,


 


WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent,


 


THE FINANCIAL INSTITUTIONS NAMED ON SCHEDULE I
HERETO,

as Credit Note Purchasers,


 


and


 


THE FINANCIAL INSTITUTIONS NAMED ON SCHEDULE II
HERETO,

as Lessor Lenders


 


WACHOVIA CAPITAL MARKETS, LLC,

as Arranger


 

















 


Table
of Contents


 


	
  ARTICLE I

  	
  DEFINITIONS; INTERPRETATION

  
	
  ARTICLE II

  	
  CLOSING; FACILITY ACQUISITION; FUNDING

  
	
   

  	
  SECTION  2.1.

  	
  Documentation Date; Funding

  
	
   

  	
  SECTION  2.2.

  	
  Acquisition of Facility;
  Leasing of Facility

  
	
   

  	
  SECTION 
  2.3.

  	
  Funding

  
	
   

  	
  SECTION
  2.3.1.

  	
  Procedures
  for Fundings

  
	
   

  	
  SECTION 2.3.2.

  	
  Use of Funds

  
	
   

  	
  SECTION 2.3.3.

  	
  Investor Amounts and Yield

  
	
   

  	
  SECTION 2.3.4.

  	
  Credit Notes, Lessor Loans and Interest

  
	
   

  	
  SECTION
  2.3.5.

  	
  Certain
  Prepayments

  
	
   

  	
  SECTION  2.4.

  	
  Computations and
  Notice of Rates

  
	
   

  	
  SECTION  2.5.

  	
  Overdue
  Payments

  
	
   

  	
  SECTION 
  2.6.

  	
  Fees

  
	
   

  	
  SECTION  2.7.

  	
  Confirmation of
  Participants and the Other Parties

  
	
  ARTICLE III

  	
  INTENTIONS OF THE PARTIES

  
	
   

  	
  SECTION  3.1.

  	
  Nature
  of Transaction

  
	
   

  	
  SECTION  3.2.

  	
  Amounts Due
  Under Lease and the Guaranties

  
	
   

  	
  SECTION  3.3.

  	
  Highest
  Lawful Rate

  
	
   

  	
  SECTION  3.4.

  	
  Participant
  Obligations

  
	
  ARTICLE IV

  	
  CONDITIONS PRECEDENT

  
	
   

  	
  SECTION 
  4.1.

  	
  Conditions to Funding

  
	
  ARTICLE V

  	
  REPRESENTATIONS AND WARRANTIES

  
	
   

  	
  SECTION  5.1.

  	
  Representations
  and Warranties of the Lessee

  
	
   

  	
  SECTION  5.2.

  	
  Representations
  and Warranties of Lessor

  
	
   

  	
  SECTION  5.3.

  	
  Representations
  of the Debt Participants

  
	
   

  	
  SECTION  5.4.

  	
  Representations
  of the Administrative Agent

  
	
   

  	
  SECTION  5.5.

  	
  Representations
  and Warranties of the Guarantor

  
	
  ARTICLE VI

  	
  COVENANTS AND AGREEMENTS

  
	
   

  	
  SECTION  6.1.

  	
  Covenants of
  the Lessee and the Guarantor

  
	
   

  	
  SECTION  6.2.

  	
  Covenants
  of the Lessor

  
	
   

  	
  SECTION  6.3.

  	
  Quiet
  Enjoyment

  
						



 

















 


	
   

  	
  SECTION  6.4.

  	
  Discharge
  of Liens

  
	
   

  	
  SECTION  6.5.

  	
  Performance of
  Operative Documents

  
	
   

  	
  SECTION 
  6.6.

  	
  Easements

  
	
   

  	
  SECTION  6.7.

  	
  Intercreditor
  Agreement

  
	
  ARTICLE VII

  	
  PAYMENT OF CERTAIN EXPENSES

  
	
   

  	
  SECTION  7.1.

  	
  Payment
  of Transaction Costs and Other Costs

  
	
   

  	
  SECTION 
  7.2.

  	
  Brokers’ Fees

  
	
  ARTICLE VIII

  	
  TRANSFERS OF PARTICIPANTS’ INTERESTS

  
	
   

  	
  SECTION 8.1.1.

  	
  Restrictions on Transfer

  
	
   

  	
  SECTION
  8.1.2.

  	
  [Intentionally
  Omitted]

  
	
   

  	
  SECTION
  8.1.3.

  	
  Effect of
  Transfer

  
	
   

  	
  SECTION  8.2.

  	
  Pledge
  Under Regulation A

  
	
   

  	
  SECTION  8.3.

  	
  Replacement of a
  Debt Participant

  
	
   

  	
  SECTION  8.4.

  	
  Transfers by
  the Lessee, etc

  
	
   

  	
  SECTION  8.5.

  	
  Extension of
  Lease Term Expiration Date

  
	
  ARTICLE IX

  	
  INDEMNIFICATION

  
	
   

  	
  SECTION  9.1.

  	
  General
  Indemnification

  
	
   

  	
  SECTION
  9.1.1.

  	
  General
  Indemnification

  
	
   

  	
  SECTION 9.1.2.

  	
  Exceptions to
  Indemnifications

  
	
   

  	
  SECTION  9.2.

  	
  General
  Tax Indemnity

  
	
   

  	
  SECTION  9.3.

  	
  Withholding
  Tax

  
	
   

  	
  SECTION  9.4.

  	
  Calculation
  of General Tax Indemnity Payments

  
	
   

  	
  SECTION  9.5.

  	
  Environmental
  Indemnity

  	
   

  
	
   

  	
  SECTION  9.6.

  	
  Proceedings in Respect
  of Claims

  
	
   

  	
  SECTION  9.7.

  	
  Indemnity
  Payments in Addition to Lease Obligations

  
	
  ARTICLE X

  	
  DISTRIBUTIONS OF PAYMENTS AND GROSS PROCEEDS

  
	
   

  	
  SECTION 
  10.1.

  	
  Distribution

  
	
  ARTICLE XI

  	
  LESSEE, GUARANTOR DIRECTIONS

  
	
   

  	
  SECTION  11.1.

  	
  Lessee
  Directions

  
	
   

  	
  SECTION  11.2.

  	
  Notice to the
  Administrative Agent

  
	
  ARTICLE XII

  	
  MISCELLANEOUS

  
	
   

  	
  SECTION  12.1.

  	
  Survival
  of Agreements

  
							



 

















 


	
   

  	
  SECTION 
  12.2.

  	
  Brokers

  
	
   

  	
  SECTION  12.3.

  	
  Notices

  
	
   

  	
  SECTION 
  12.4.

  	
  Counterparts

  
	
   

  	
  SECTION 
  12.5.

  	
  Amendments

  
	
   

  	
  SECTION 
  12.6.

  	
  Headings, etc

  
	
   

  	
  SECTION 
  12.7.

  	
  Third Party Beneficiaries

  
	
   

  	
  SECTION 
  12.8.

  	
  Applicable Law

  
	
   

  	
  SECTION 
  12.9.

  	
  Severability

  
	
   

  	
  SECTION  12.10.

  	
  Limitation
  of Liability

  
	
   

  	
  SECTION  12.11.

  	
  Further
  Assurances

  
	
   

  	
  SECTION  12.12.

  	
  Reproduction of Documents

  
	
   

  	
  SECTION  12.13.

  	
  Submission to Jurisdiction

  
	
   

  	
  SECTION 
  12.14.

  	
  Jury Trial

  
	
   

  	
  SECTION  12.15.

  	
  Appointment of
  Administrative Agent

  
	
   

  	
  SECTION  12.16.

  	
  Resignation by
  the Administrative Agent

  
	
   

  	
  SECTION  12.17.

  	
  Role of
  Arranger

  
	
   

  	
  SECTION 
  12.18.

  	
  Binding Effect

  
	
   

  	
  SECTION  12.19.

  	
  Limited
  Liability

  
	
   

  	
  SECTION  12.20.

  	
  Consent to Certain Actions

  
	
   

  	
  SECTION  12.21.

  	
  Estoppel
  Certificates

  
	
  Exhibit A

  	
  Form of Advance Request

  
	
  Exhibit B-1

  	
  Responsible Officer’s
  Certificate of Lessee

  
	
  Exhibit B-2

  	
  Responsible Officer’s
  Certificate of Guarantor

  
	
  Exhibit C

  	
  Form of Subsidiary
  Guarantee

  
	
  Exhibit D

  	
  Form of Opinion of
  Special Counsel to Lessor

  
	
  Exhibit E

  	
  Form of Offeree Letter

  
	
   

  	
   

  
	
  Schedule I

  	
  Credit Note Purchasers and Commitment
  Amounts

  
	
  Schedule II

  	
  Lessor Lenders and Commitment Amounts

  
	
  Schedule III

  	
  Addresses for Payment and Other
  Communications

  
	
  Schedule IV

  	
  Filings and Recordings

  
	
  Schedule V

  	
  Equipment

  
	
  Schedule VI

  	
  Investments

  
	
  Schedule VII

  	
  [Intentionally Omitted]

  
	
  Schedule VIII

  	
  Final Completion Work

  
	
  Schedule IX

  	
  Liens

  
	
  Schedule 5.5(c)

  	
  Organization and
  Qualification

  
				



 

















 


	
  Schedule 5.5(h)

  	
  Franchises, Patents,
  Copyrights, Etc.

  
	
  Schedule 5.5(l)

  	
  Taxes

  
	
  Schedule 5.5(m)

  	
  Litigation

  
	
  Schedule 5.5(n)

  	
  Subsidiaries

  
	
  Schedule 5.5(q)

  	
  Environmental Matters

  
	
  Schedule 5.5(v)

  	
  Certain Transactions

  
	
  Schedule 6.1(t)

  	
  Indebtedness

  
	
  Schedule 6.1(u)

  	
  Loan Guarantees

  
	
   

  	
   

  
	
  Appendix A

  	
  Definitions and Interpretation

  



 

















 


THIS PARTICIPATION AGREEMENT is dated as of July 23,
2003 (as amended, supplemented, amended and restated or otherwise modified from
time to time, this “Participation Agreement”), and is among: ROSS
DISTRIBUTION, INC., a California corporation, as Lessee; ROSS STORES INC., a
Delaware corporation, as Guarantor; WACHOVIA DEVELOPMENT CORPORATION, a North
Carolina corporation, as Lessor; WACHOVIA BANK, NATIONAL ASSOCIATION (the “Administrative
Agent”), as Administrative Agent; the financial institutions listed on Schedule
I hereto as Credit Note Purchasers; and the financial institutions listed
on Schedule II hereto as Lessor Lenders.


 


W I T N E S S E T H:


 


A.            Lessee, Guarantor, as Construction Agent, and certain
other parties named therein entered into that certain Participation Agreement,
dated as of December 17, 2001 (as amended to date, the “Existing
Participation Agreement”), and the other Operative Documents (as defined in
Appendix A to the Existing Participation Agreement, the “Existing Operative
Documents”) pursuant to which (i) financing was provided by the Investors
(as defined in Appendix A to the Existing Participation Agreement, the “Existing
Investors”) and the Conduit Loan Lender (as defined in Appendix A to the
Existing Participation Agreement, the “Existing Conduit Loan Lender”) to
the Lessor (as defined in Appendix A to the Existing Participation Agreement,
the “Existing Lessor”) for the acquisition by the Existing Lessor of a
fee simple interest in the Site (as defined in Appendix A to the Existing
Participation Agreement) and for the construction of the Land Improvements and
the Facility Improvements (as such terms are defined in Appendix A to the Existing
Participation Agreement), (ii) the Facility (as defined in Appendix A to the
Existing Participation Agreement) was leased by the Existing Lessor to Lessee,
as lessee, pursuant to the terms of the Lease (as defined in Appendix A to the
Existing Participation Agreement, the “Existing Lease”), (iii) Guarantor
entered into and delivered the Guaranty (as defined in Appendix A to the
Existing Participation Agreement) pursuant to which, among other things, it
guaranteed the obligations of Lessee under the Existing Operative Documents,
and (iv) the Administrative Agent under, and as defined in, the Existing
Participation Agreement, acting on behalf of, among others, the Existing
Conduit Loan Lender and the Existing Investors, was given under the Mortgage
(as defined in Appendix A to the Existing Participation Agreement), a Lien on
the Facility, the other Collateral (as defined in Appendix A to the Existing
Participation Agreement) and certain other property in order to secure the
payment of amounts due and owing to the Existing Investors and the Existing
Conduit Loan Lender under the Existing Operative Documents.


 


B.            Lessee, Guarantor, as Construction Agent, and certain
other parties named therein entered into that certain Amendment No. 1 to
Participation Agreement, dated as of April 15, 2002 (the “Existing
Participation Agreement Amendment”), pursuant to which (i) the Existing
Participation Agreement and the Existing Operative Documents were amended as
more fully set forth in the Existing Participation Agreement Amendment.  Any reference herein to the Existing
Participation Agreement or any of the Existing Operative Documents shall be a
reference to such documents as they may have been amended by the Existing
Participation Agreement Amendment.


 


C.            Pursuant to the Assignment Agreement, on the Advance Date
(i) the Existing Investors and Existing Lenders will assign to Lessor each
of the Investor Certificates (as defined in Appendix A to the Existing
Participation Agreement, each an “Existing Investor Certificate”),


 


1

















 


the Conduit Note (as defined in Appendix A to the
Existing Participation Agreement, the “Existing Conduit Note”), the B
Notes (as defined in Appendix A to the Existing Participation Agreement, the “Existing
B Notes”), and the Facility Note (as defined in Appendix A to the Existing
Participation Agreement, the “Existing Facility Note”), (ii) the
Existing Lessor will be dissolved resulting in the cancellation of the Existing
Notes and Existing Investor Certificates and the transfer and conveyance by the
Existing Lessor to the Lessor of its rights and interests under the Existing
Operative Documents, including fee simple title to the Facility free and clear
of all Liens, other than Permitted Liens, (iii) the Existing Lease will be
amended and restated by the Lease, and (iv) each of the other Existing
Operative Documents shall terminate and such Existing Operative Documents shall
no longer be in force and effect.


 


D.            Pursuant to the terms and conditions hereof and of the
other Operative Documents, (i) each Credit Note Purchaser has agreed to make
available to Lessor its Purchase Commitment for the purchase of its Credit
Note, each Lessor Lender has agreed to make available to the Lessor its Lessor
Loan Commitment, and Lessor has agreed to make available its Investor
Contribution, in each case by means of a Funding on the Advance Date, and (ii)
the proceeds of the purchase of the Credit Notes, the proceeds of the Lessor
Loan Commitments, and the proceeds of the Investor Contribution will be used by
the Lessor to pay Acquisition Costs and certain Transaction Costs due and
payable on or prior to the Advance Date.


 


F.             Each of the parties hereto desires that the Lease shall
amend, restate and replace Existing Lease, and that all of the other Existing
Operative Documents shall automatically and without further action terminate
and be replaced with the Operative Documents.


 


G.            Pursuant to the terms of the Lease, Lessor has agreed to
lease to the Lessee, and the Lessee has agreed to lease from the Lessor, the
Facility.


 


H.            To induce the Credit Note Purchasers to purchase the
Credit Notes, the Lessor Lenders to make the Lessor Loans, the Lessor to make
the Investor Contribution, and the Lessor to lease the Facility to Lessee, and
to induce the Participants to enter into this Participation Agreement, the
Credit Note Purchase Agreement, the Lessor Loan Agreement and each other
Operative Document and the transactions contemplated hereby and thereby,
Guarantor desires to, and it is a condition to the effectiveness of the Overall
Transaction that Guarantor, enter into and deliver the Guarantees for the
benefit of the Participants and the additional Persons referred to therein.


 


I.              To secure the repayment of the obligations of the Obligors
under the Operative Documents, (i) Lessee will grant to the Lessor and the
Lessor will assign to the Administrative Agent, on behalf of the Debt
Participants, and (ii) each of the Lessee and the Lessor will grant to the
Administrative Agent, on behalf of the Debt Participants, Liens on the Facility  and the other Mortgaged Property.


 


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, and intending to be legally bound hereby, the parties hereto
agree as follows:


 


2

















 


ARTICLE I



DEFINITIONS; INTERPRETATION


 


Capitalized terms used and not defined herein shall
have the meanings assigned thereto in Appendix A hereto for all purposes
hereof; and the rules of interpretation set forth in Appendix A
hereto shall apply to this Participation Agreement.


 


ARTICLE II



CLOSING; FACILITY ACQUISITION; FUNDING


 


SECTION 2.1.  Documentation Date; Funding.


 


(a)           Closing.  All documents and instruments required to be
delivered on or prior to the Advance Date pursuant to this Participation
Agreement shall be deemed to have been delivered in New York City, including if
such documents or instruments are delivered by way of facsimile transmission or
courier.


 


(b)           Documentation
Date.  This Participation Agreement
shall be effective on and as of the earliest date (on or before July 31,
2003) (the “Documentation Date”) on which all of the conditions
precedent set forth in Sections 4.1(b) (other than with respect to
the Assignment Agreement), (c), (e), (f), (o) and (q)
have been satisfied or waived by the applicable parties set forth herein.


 


SECTION 2.2.  Acquisition of Facility;
Leasing of Facility. 
Subject to the terms and conditions of this Participation Agreement, (a)
on the Documentation Date, Lessor and Lessee shall enter into the Lease
pursuant to which Lessor, following its acquisition of the Facility, shall
lease the Facility to Lessee and Lessee shall lease the same from Lessor for
the Lease Term, and (b) on the Advance Date, Lessor shall acquire, through an
assignment of the Existing Certificates and the Existing Notes and the
assumption of certain of the Existing Lessor’s obligations under the Existing
Operative Documents (in each case pursuant to the Assignment Agreement), a fee
simple interest in the Facility, and Lessee shall enter into and record a
Memorandum of Lease and the Security Documents.  Unless the context otherwise requires, references in the
Operative Documents to the acquisition of the Facility by the Lessor on the
Advance Date shall be deemed to refer to the acquisition of fee simple title to
the Facility through the above-described assignment and assumption pursuant to
the Assignment Agreement.


 


SECTION 2.3.  Funding.


 


(a)           Amount of Funding.  Subject to the terms and conditions of this
Participation Agreement and in reliance on the representations and warranties
of each of the parties hereto contained herein or made pursuant hereto, upon
receipt of the Advance Request, on the Advance Date, each Credit Note Purchaser
shall purchase its Credit Notes from Lessor, each Lessor Lender shall make a
Lessor Loan to Lessor, and Lessor shall make an Investor Contribution in each
case by making available to Lessor by wire transfer in accordance with Section 2.3.1
and the instructions set forth in the Advance Request an amount in immediately
available funds on the Advance Date equal to each such Participant’s Commitment
Percentage of


 


3

















 


the aggregate amount of
the requested Funding.  Notwithstanding
the foregoing, the Funding by each Participant on the Advance Date shall not
exceed such Participant’s Commitment. 
No amounts paid or prepaid with respect to any Credit Note, the Lessor
Loans, or the Investor Amounts may be readvanced.


 


(b)           Funding to Administrative Agent.  The Funding required to be made by the
Participants on the Advance Date pursuant to the Operative Documents shall be
made by the Participants making the Funding directly to the Administrative
Agent.


 


SECTION 2.3.1.  Procedures for Fundings.


 


(a)           Advance Request.  With respect to the Fundings required to be
made by the Participants on the Advance Date, Lessee shall give the Lessor, the
Credit Note Purchasers, the Lessor Lenders, and the Administrative Agent prior
written notice not later than 12:00 noon (New York City time) at least three
(but no more than five) Business Days prior to the proposed Advance Date (which
shall be a Business Day), pursuant to an irrevocable written notice
substantially in the form of Exhibit A (the “Advance Request”)
setting forth:


 


(i)            the
proposed Advance Date;


 


(ii)           a
statement of the amount of the requested Funding, including a statement of the
amount thereof, if any, that will be used to Fund (A) Acquisition Costs
(including a statement of the amount of the Acquisition Costs constituting (x)
principal and interest outstanding under each of the Existing Investor
Certificates and the Existing Notes (including, with respect to the Existing
Investor Certificates, the outstanding Certificate Amount (as defined under the
Existing Operative Documents) and Yield (as defined under the Existing
Operative Documents) on and as of the Advance Date) and (y) the construction
costs being funded as part of such Acquisition Costs), and (B) Transaction
Costs;


 


(iii)          a
certification by Lessee that: (A) the Funding complies with the limitations and
conditions set forth in Section 2.3, and (B) all conditions set forth in
Article IV hereof to the Funding have been or, as of the Advance Date
will be, fully satisfied or waived;


 


(iv)          information
regarding construction costs described in clause (ii) of the definition of
“Acquisition Costs” as more particularly described in the Advance Request; and


 


(v)           wire
transfer instructions for the disbursement of funds to the Persons entitled
thereto.


 


All documents and instruments required to be delivered
on the Documentation Date or the Advance Date pursuant to this Participation
Agreement shall be delivered at the offices of Mayer, Brown, Rowe & Maw
LLP, 1675 Broadway, New York, New York 10019, Attention: Gregory Ruback, or at
such other location as the Administrative Agent and Lessee may agree.  On the scheduled Advance Date, and subject
to the satisfaction or waiver of the conditions set forth in Article IV,
the Participants shall disburse the respective amounts of their Commitments


 


4

















 


in accordance with the requirements of this
Participation Agreement by wire transfer directly to the Administrative Agent.


 


(b)           Advance Date.  All remittances made by the Credit Note
Purchasers, the Lessor Lenders, and the Lessor for the Funding shall be made in
immediately available federal funds by wire transfer to the Administrative
Agent, on behalf of Lessor, at Administrative Agent’s office designated on Schedule III
hereto prior to 12:00 noon (New York City time) on the Advance Date.  Promptly, but in no event later than 3:00
p.m. (New York City time), if all such funds are received before 1:00 p.m. (New
York City time) upon the Administrative Agent’s receipt of all such funds from
the Participants, subject to the conditions herein, the Administrative Agent
shall wire such funds in the amounts, and to such Persons so designated in the
Advance Request.  Notwithstanding
anything to the contrary contained herein if the terms and conditions for the
Funding set forth herein have not been satisfied by 1:30 p.m. (New York
City time) on the proposed Advance Date, then no Participant shall be obligated
to maintain the availability of its funds for its portion of the Funding unless
such Participant has received an indemnity from the Lessee, in form and
substance satisfactory to it, for the overnight investment of such funds.


 


(c)           Termination of Commitments.  Notwithstanding anything in this
Participation Agreement to the contrary, the Commitments shall terminate and no
Participant shall be obligated to make its Funding, and the Fundings may not
occur, after 1:30 p.m. (New York City time) on July 23, 2003.


 


SECTION 2.3.2.  Use of Funds.  The proceeds of the Fundings shall be used
solely for payment of the Acquisition Costs and, to the extent that there are
Commitments available after funding all Acquisition Costs, for the payment of
Fees and the payment or reimbursement of Lessee, to the extent amounts have
previously been paid by Lessee and Lessee has not been reimbursed therefor, of
Transaction Costs due and payable on or previously paid by Lessee on or prior
to the Advance Date.  The portion of the
Funding requested in the Advance Request for Acquisition Costs of the type
described in clause (ii) of the definition of the term “Acquisition Costs”
shall be used by Lessee solely to reimburse Lessee for such costs already
incurred and to pay for the costs of the Final Completion Work.


 


SECTION 2.3.3.  Investor Amounts and Yield.


 


(a)           Investor Amounts outstanding from
time to time shall accrue Yield at the Yield Rate, calculated in accordance
with Section 2.4.  If all or any portion of the
Investor Amounts, 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.


 


(b)           Subject to the provisions of the
Operative Documents, Investor Amounts together with all accrued and unpaid
Yield thereon shall be repaid on the Lease Term Expiration Date.


 


(c)           Pursuant to the Assignment of Leases,
the Lessor shall direct (and the Lessor hereby directs) the Lessee to pay to
the Administrative Agent for the account of the Lessor that portion of the Rent
and all other amounts due with respect to the Investor Amounts


 


5

















 


payable by Lessee
under the Lease (other than Excluded Amounts, which the Lessor hereby directs
the Lessee to make directly to the applicable Person entitled thereto)  from time to time, and the Administrative
Agent shall distribute such amounts to the Lessor in accordance with Article X
and the Intercreditor Agreement.  All
payments or other amounts required to be made by Lessee pursuant to any of the
Operative Documents shall be the direct recourse obligations of Lessee.


 


SECTION 2.3.4.  Credit Notes, Lessor Loans and
Interest.


 


(a)           The Funding by a Credit Note
Purchaser shall be evidenced by a separate Credit Note issued to such Credit
Note Purchaser pursuant to, in the form specified in, and shall be payable and
prepayable in accordance with, each Note Purchase Agreement.  Each Credit Note shall be issued in a
principal amount equal to the amount of the Commitment of the related Credit
Note Purchaser.  Each Credit Note shall
accrue interest computed and payable in accordance with the terms of the Credit
Note Purchase Agreement and such Credit Note. 
Subject to the provisions of the Operative Documents, the principal
amount of each Credit Note, together with all accrued and unpaid interest thereon,
shall be repaid in full by Lessor on the Maturity Date as set forth in the
Credit Note Purchase Agreement and such Credit Note.  Any failure to make or error in the calculations described above
shall not affect the obligation of Lessor under such instrument or the
corresponding obligation of Lessee to pay Rent.


 


(b)           Each Lessor Lender’s Lessor Loan
shall be evidenced by a separate Lessor Note issued to such Lessor Lender
pursuant to, in the form specified in, and shall be payable and prepayable in
accordance with, the Lessor Loan Agreement. 
Each Lessor Note shall be issued in a principal amount equal to the
amount of the Commitment of the related Lessor Lender.  Each Lessor Loan shall accrue interest
computed and payable in accordance with the terms of the Lessor Loan
Agreement.  Subject to the provisions of
the Operative Documents, the principal amount of each Lessor Loan, together
with all accrued and unpaid interest thereon, shall be repaid in full by Lessor
on the Maturity Date as set forth in the Lessor Loan Agreement and such Lessor Note.  Any failure to make or error in the
calculations described above shall not affect the obligation of Lessor under
such instrument or the corresponding obligation of Lessee to pay Rent.


 


(c)           Pursuant to the Assignment of Leases,
the Lessor shall direct (and the Lessor hereby directs) the Lessee to pay to
the Administrative Agent for the account of the Debt Participants that portion
of the Rent and all other amounts due with respect to the Credit Notes and the
Lessor Loans payable by Lessee under the Lease (other than Excluded Amounts,
which the Lessor hereby directs the Lessee to make directly to the applicable
Person entitled thereto) from time to time, and the Administrative Agent shall
distribute such amounts to the Participants in accordance with Article X
and the Intercreditor Agreement.


 


SECTION 2.3.5.  Certain Prepayments.


 


(a)           In the event that Lessee pays the
Lease Balance to Lessor in connection with Lessee’s purchase of the Facility in
accordance with Articles V, XIV, or Article XVIII of the Lease, Lessor will
prepay the outstanding principal amount of the Credit Notes, the Lessor Loans
and the Investor Amounts in an amount equal to the Lease Balance and any
Make-Whole


 


6

















 


Amounts then due,
such amounts to be applied in accordance with Article X and the
Intercreditor Agreement.


 


(b)           Any prepayment of the Credit Notes,
the Lessor Loans or the Investor Amounts shall include a Make-Whole Amount
based on the amount of such prepayments, which Make-Whole Amount shall be paid
by Lessee.


 


(c)           Notwithstanding any of the foregoing
to the contrary, no Make-Whole Amounts shall be due and payable in connection
with the prepayment of the Credit Notes, the Lessor Loans or the Investor
Amounts as a result of an Event of Loss which is not caused by any intentional
action of the Lessee or any other member of the Guarantor Affiliated Group.


 


SECTION 2.4.  Computations
and Notice of Rates.


 


(a)           Determination of the Rates.  All computations of Yield and other accrued
amounts in respect of the Investor Amounts shall be made by the Administrative
Agent at the Yield Rate (or the Overdue Rate, if applicable), on the basis of
the actual number of days (including the first day but excluding the last day)
occurring during the period for which such amount is payable over a year
comprised of 360 days.  Computations of
interest (including overdue interest) and other amounts payable in respect of
the Credit Notes and the Lessor Loans shall be made by the Administrative Agent
in accordance with the Credit Note Purchase Agreement and the Lessor Loan
Agreement, respectively.


 


(b)           Notice of Interest and Yield.  No later than the fourth (4th) day prior to
each Scheduled Payment Date, the Administrative Agent shall deliver to the
Lessee and each Participant a calculation of the amount of Interest and Yield,
in each case due and payable on such Scheduled Payment Date to each
Participant; provided that in each case the failure of the
Administrative Agent to provide such notice shall not relieve any Obligor from
any liability that it may have under the Operative Documents to pay any such
amount; provided  further that the Administrative Agent’s failure
to give such notice shall result in no liability to it.


 


(c)           Conclusive Determinations.  Each determination by the Administrative
Agent of any rate or fee, or any other amount due, pursuant to Section
2.4(a) or 2.4(b) hereof shall be conclusive and binding on all
parties hereto, absent manifest error.


 


(d)           Computations of Yield and
Determination of Yield Rate.  Lessor
hereby appoints the Administrative Agent as its agent for purposes of computing
Yield in respect of the Investor Amounts and determining the Yield Rate.


 


SECTION 2.5.  Overdue Payments.  The Participants acknowledge that the Lessee
shall have no liability with respect to overdue payments due under, or in
connection with, the Credit Notes, the Lessor Loans or the Investor Amounts or
any other amount due and owing by the Lessee under the Operative Documents so
long as the Lessee has timely paid Rent in accordance with Article III of the
Lease, or such amounts are otherwise accounted for pursuant to Section 2.3.3
or 2.3.4; provided, that such amounts due under, or in connection
with, the Credit Notes, the Lessor Loans and the Investor Amounts shall be
reinstated and remain outstanding, and the Lessee shall remain liable for such
Rent, if at any time any payment (in whole or in part) of any Rent is
invalidated, declared to be fraudulent or preferential, set aside, rescinded or
must


 


7

















 


otherwise be restored by any Participant or the Administrative Agent,
upon the insolvency, bankruptcy, reorganization (or similar event) of the
Lessee, all as though such payment of Rent had not been made.  Subject to the foregoing provisions of this Section
2.5, the Lessee acknowledges its obligation to pay as Supplemental Rent any
interest computed at the Overdue Rate with respect to the amounts due under, or
in connection with, the Credit Notes, the Lessor Loans or the Investor Amounts.


 


SECTION 2.6.  Fees.  Lessee agrees to pay to the Arranger the
fees set forth in the Engagement Letter, in the amounts and on the dates set
forth therein (the fees payable pursuant to this Section 2.6 are
collectively referred to as the “Fees”).


 


SECTION 2.7.  Confirmation
of Participants and the Other Parties.  Each Participant and each other party to any of the Operative
Documents agrees that the release of its signature pages to Mayer, Brown, Rowe
& Maw LLP upon its instruction shall constitute notice, without further
act, of its confirmation that all conditions to the Advance Date set forth in Section 4.1
were met to the satisfaction of such Participant or other party.


 


ARTICLE III


 


INTENTIONS OF THE PARTIES


 


SECTION 3.1.  Nature of
Transaction.  The parties hereto
intend that (i) for financial accounting purposes with respect to the Lessee,
the Lessor will be treated as the owner and lessor of the Facility, and the
Lessee will be treated as the lessee of the Facility under the Lease and in
connection with the Overall Transaction, and (ii) for all federal and all state
and local income tax purposes and bankruptcy and commercial law purposes, (A)
the Lease and the Overall Transaction will be treated as a financing
arrangement, (B) the Participants will be deemed lenders making loans to the
Lessee in an amount equal to the sum of the Credit Notes, the Lessor Loans and
the Investor Contribution, which deemed loans are secured by the Facility, (C)
the Lessee will be treated as the owner of the Facility for tax purposes and
will be entitled to all tax benefits ordinarily available to an owner of
property such as the Facility for such tax purposes, and (D) the obligations of
the Lessee to pay the Base Rent and any part of the Lease Balance shall be
treated as payments of interest and principal, respectively, for federal and
state income tax and bankruptcy and commercial law purposes.  Nevertheless, each party acknowledges and
agrees that no other party has made any representations or warranties to any
other party concerning the tax, accounting or legal characteristics of the
Operative Documents and that each party has obtained and relied upon such tax,
accounting and legal advice concerning the Operative Documents as it deems
appropriate.  The Lessor (or the
Administrative Agent on behalf of the Lessor) shall have a valid and binding
security interest in and Lien on the Facility, free and clear of all Liens
other than Permitted Liens, as security for the obligations of the Lessee under
the Operative Documents.  Except as
otherwise provided by law or in connection with a settlement, compromise or
adjudication made under the provisions of Section 9.2(b), each of the
parties to this Participation Agreement agrees that it will not, nor will it permit
any Affiliate to at any time, directly or indirectly take any action or fail to
take any action with respect to the preparation or filing of any income tax or
other tax return, including an amended income tax or other 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 3.1.


 


8

















 


Specifically, without limiting the generality of
clause (i) above, the parties hereto intend and agree that in the event of any
insolvency, conservatorship or receivership proceedings or matters or a
petition under the Bankruptcy Code, or any other applicable insolvency,
conservatorship or receivership laws or statute of the United States of America
or any State or Commonwealth thereof affecting the Lessee, the Guarantor, the
Lessor or the other Participants or any collection actions, the transactions
evidenced by the Operative Documents (including the Lease) constitute loans made
directly to the Lessee by the Participants, in each case as unrelated third
party lenders, and that the Lessor holds title to the Facility 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 3.2.  Amounts Due Under
Lease and the Guaranties. 
Notwithstanding anything to the contrary contained in the Operative
Documents, it is the intention of the Lessee, the Guarantor, the Lessor, and
each of the other Participants that: 
(i) the amount and timing of installments of Base Rent due and payable
from time to time from the Lessee under the Lease shall be equal to the
aggregate payments due and payable during the Lease Term on each Scheduled
Payment Date with respect to Interest on the Credit Notes and the Lessor Loans
and to Yield on the Investor Amounts then due, (ii) if Lessee elects a Purchase
Option or becomes obligated or otherwise elects to purchase the Facility under
the Lease, then the Credit Notes, the Lessor Loans, and the Investor Amounts,
and all Interest and Yield thereon (as applicable), any fees and all other
obligations of Lessee owing to the Participants and the Administrative Agent
shall be paid by Lessee as provided in the Lease; (iii) if Lessee properly
elects the Remarketing Option, and subject to Section 7.1 and Article XV of the
Lease, Lessee shall only be required to pay to the Administrative Agent the
proceeds from the sale of the Facility, the Residual Value Guaranty Amount and
any amounts due pursuant to the Assignment of Leases (which aggregate amounts
may be less than the Lease Balance), together with all other amounts due and
payable as Supplemental Rent in respect of the Facility; (iv) upon a Lease
Event of Default resulting in an acceleration of Lessee’s obligation to
purchase the Facility under the Lease at any time during the Lease Term, the
amounts then due and payable by Lessee under the Lease on a recourse basis
shall include all amounts necessary to pay in full the Lease Balance and (v)
any payment made by the Guarantor or any Subsidiary Guarantor under any
Guaranty shall reduce the Lessee’s payment obligations under the Operative
Documents by the amount of such payment.


 


SECTION 3.3.  Highest
Lawful Rate.  It is the
intention of the parties hereto to conform strictly to applicable usury laws
and, notwithstanding anything to the contrary contained in the Operative
Documents other than in this Section 3.3), the obligations of (x) the
Lessee and the Guarantor to Lessor under this Participation Agreement and the
Lease, (y) the Lessor to the Credit Note Holders under the Credit Note Purchase
Agreement and the Credit Notes, and to the Lessor Lenders under the Lessor Loan
Agreement and the Lessor Notes, and (z) either the Lessee or the Guarantor,
Lessor or any other party under any other Operative Agreement shall be subject
to the limitation , if any payment of interest or of other amounts constituting
interest under Applicable Laws (including, any such amounts paid, contracted
for, charged or received or otherwise agreed to be paid for the use,
forbearance or detention of money) under the Operative Documents (such interest
and deemed interest, collectively, “Subject Interest”) would result in the
recipient receiving Subject Interest in excess of the Highest Lawful Rate or
otherwise in contravention of provisions of law applicable to the recipient
limiting rates of interest which may be legally charged or collected by the
recipient (including Federal and state laws of the United


 


9

















 


States of America or of any other jurisdiction whose laws may be
mandatorily applicable; such laws, “Applicable Usury Laws”), then the payment
of any Subject Interest in excess of the Highest Lawful Rate or otherwise in
contravention of Applicable Usury Laws shall not be required.  Accordingly, notwithstanding anything to the
contrary in this Participation Agreement, the Lease, the Credit Note Purchase
Agreement, the Credit Notes, the Lessor Loan Agreement, the Lessor Notes or any
other Operative Agreement, with respect to that portion of any Subject Interest
that would be in excess of the Highest Lawful Rate or otherwise in
contravention of Applicable Usury Laws, it is agreed as follows as to the
recipient of any such amount:


 


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


 


(b)           the aggregate of all Subject Interest
shall under no circumstances exceed the maximum amount of interest allowed by
Applicable Usury 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 Credit Note
Purchase Agreement, the Credit Notes, the Lessor Loan Agreement, the Lessor
Notes and any other Operative Agreement shall be held subject to reduction
based upon such limitation, and: (i) the amount of Subject Interest which would
otherwise be payable to the recipient shall be automatically reduced to the
Highest Lawful Rate, and (ii) any Subject Interest paid to the recipient in
excess of the Highest Lawful Rate shall be credited to the payor by the
recipient (or, if such consideration shall have been paid in full, refunded to
the payor);


 


(c)           all Subject Interest shall, to the
extent permitted by Applicable Usury Laws, be amortized, prorated, allocated
and spread throughout the full term of such indebtedness until payment in full
so that the actual rate of interest is uniform throughout the full term
thereof; and


 


if at any time the Subject Interest that would be
payable exceeds that amount which would have accrued at the Highest Lawful
Rate, then the amount of Subject Interest to accrue to the recipient of such
interest, fees, charges and sums pursuant to the Operative Agreements shall be
limited to that amount which would have accrued at the Highest Lawful Rate for
the recipient; provided, that any subsequent reductions to the Subject
Interest that would otherwise occur by virtue of the provisions of the
Operative Documents (or any of them) shall not reduce the rate at which Subject
Interest will accrue pursuant to the Operative Agreements below the recipient’s
Highest Lawful Rate until the total amount of Subject Interest payable to the
recipient equals the amount of Subject Interest which would have been payable
to the recipient but for the effect of this Section 3.3.


 


SECTION 3.4.  Participant
Obligations.  The obligations of
the Participants under this Participation Agreement and 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 Person under any
Operative Document.  Notwithstanding
anything herein or in any other Operative Document to the contrary, no
Participant nor the Administrative Agent shall be liable or otherwise have any
obligation (including as a result of the Lessor’s purchase and receipt of an


 


10

















 


assignment of the Existing Certificates and the Existing Notes) to any
of the parties to the Existing Participation Agreement.


 


ARTICLE IV


 


CONDITIONS PRECEDENT


 


SECTION 4.1.  Conditions to Funding.  The obligation of each of the Lessee, the
Lessor,  the Administrative Agent and
each of the other Participants to perform its respective obligations on the
Advance Date (if any), shall be subject to the terms and conditions set forth
in Section 2.3 and to the fulfillment to the reasonable satisfaction of
(including, with respect to writings, such writings being in form and substance
reasonably satisfactory to the addressee or beneficiary thereof), or the waiver
by, such Persons, as applicable, of the following conditions precedent set
forth in this Section 4.1:


 


(a)           [Intentionally Omitted]


 


(b)           Certain Documents.  The Lessor, the Lessee, and each of the
other Participants (or respective counsel for each such party) shall have
received a fully executed counterpart of each of the following agreements to
which the applicable entity is a party or a beneficiary thereunder:


 


(i)            this Participation Agreement;


 


(ii)           the Lessee Guarantee and the
Participant Guarantee;


 


(iii)          the Lease and the Memorandum of Lease;


 


(iv)          the Mortgages;


 


(v)           the Assignments of Lease;


 


(vi)          the Credit Note Purchase Agreement;


 


(vii)         the Credit Notes;


 


(viii)        the Lessor Loan Agreement;


 


(ix)           the Lessor Notes;


 


(x)            the Financing Statements; and


 


(xi)           the Assignment Agreement.


 


Each of the aforementioned documents and agreements,
to the extent the same constitutes an agreement or undertaking, shall have been
duly authorized, executed and delivered by each of the parties thereto and
shall be in full force and effect.


 


11

















 


(c)           Certain Other Documents.  Each of the Participants (or respective
counsel for each such party) shall have received a fully executed counterpart
of the Intercreditor Agreement, duly authorized, executed and delivered by each
of the parties thereto.  Each of the
Debt Participants (or respective counsel for each such party) shall have received
a fully executed counterpart of the Debt Participants’ Indemnity Agreement,
duly authorized, executed and delivered by each of the parties thereto.  The Lessee (or its counsel) shall have
received a fully executed counterpart of the Lessee Indemnity Agreement and the
WDC Confirmation Letter, each duly authorized, executed and delivered by each
of the parties thereto.


 


(d)           Filings and Recordation.  All filings and recordings enumerated and
described in Part A, Part B, Part C, Part D and Part E of Schedule IV,
as well as all other filings and recordings necessary or advisable, including
precautionary financing statements, in the opinion of the Lessor, the
Administrative Agent, or any other Participant, to perfect the right, title and
interest of the Lessor, the Administrative Agent, and the other Participants
intended to be created by the Operative Documents shall have been made, or
shall have been arranged to be made promptly thereafter, in the appropriate
places or offices, including any recordings and filings necessary to create,
preserve and protect such Persons’ valid and binding security interests in and
Liens on the Mortgaged Property, subject in each case to Permitted Liens.  All recording and filing fees and Taxes with
respect to any recordings or filings made pursuant to this Section 4.1(d)
or otherwise payable in respect of any Operative Document shall have been paid
in full by the Lessee, and satisfactory evidence thereof shall have been
delivered to the Lessor and the Administrative Agent, or arrangements for such
payment shall have been made to the satisfaction of the Lessor and the
Administrative Agent or evidence satisfactory to the Lessor and the
Administrative Agent of exemption from such filing fees or Taxes shall have
been delivered to the Lessor and the Administrative Agent.


 


(e)           Consents and Approvals.  All approvals and consents required to be
taken, given or obtained, as the case may be, by or from any Governmental
Authority or other Person, or by or from any trustee or holder of any Indebtedness
or other obligation of the Lessee, the Guarantor and Lessor, that are necessary
or, in the reasonable opinion of the Participants, advisable in connection with
the execution, delivery and performance of the Operative Documents by all
parties hereto, shall have been taken, given or obtained as the case may be,
shall be in full force and effect and the time for appeal with respect thereto
shall have expired (or, if an appeal shall have been taken, the same shall have
been dismissed) and shall not be subject to any pending proceedings or appeals
(administrative, judicial or otherwise).


 


(f)            Opinions of Counsel.  The Participants and the Administrative
Agent shall have received the legal opinion of Latham & Watkins LLP,
special counsel to the Lessee, the Guarantor and the Subsidiary Guarantors,
covering such matters as the addressees thereof shall reasonably request (and
by Lessee’s, Guarantor’s and Subsidiary Guarantors’ execution of the Operative
Documents to which each is a party, they expressly instruct such counsel to
execute and deliver such opinion).  The
Credit Note Purchasers shall have received the legal opinion of Mayer, Brown,
Rowe & Maw LLP, special counsel to the Lessor and the Parent Indemnitor,
substantially in the form attached hereto as Exhibit D (and by Lessor’s
execution of the Operative Documents to which each is a party, it expressly
instructs such counsel to execute and deliver such opinion).


 


12

















 


(g)           Corporate Status and Proceedings
of the Lessee, etc.  The
Participants and the Administrative Agent shall have received copies of:


 


(i)            certificates
dated as of a recent date as to the existence and good standing of the Lessee
from the California Secretary of State, as to the existence and good standing
of the Guarantor from the Delaware Secretary of State, and as to the
Guarantor’s authority to transact business as a foreign corporation from the
California Secretary of State;


 


(ii)           a
certificate of the Secretary or an Assistant Secretary of the Lessee and of the
Guarantor, in each case attaching and certifying as to (w) the resolutions of
its Board of Directors duly authorizing the execution, delivery and performance
by it of each Operative Document to which it is or will be a party, (x) its
articles or certificate of incorporation certified as of a recent date by the
Secretary of State of the State of California and Delaware, respectively, (y)
its by-laws and (z) the incumbency and signature of persons authorized to
execute and deliver on its behalf the Operative Documents to which it is a
party;


 


(iii)          a
certificate of an authorized officer of the Lessee and of the Guarantor,
confirming the accuracy of the representations made by it in the Operative
Documents.


 


(h)           Environmental Audit.  The Administrative Agent and the Lessor
shall have received an Environmental Audit, dated November 29, 2001, for the
Site in form and substance acceptable to the Administrative Agent and Lessor,
in their sole discretion, together with a reliance letter, dated July 8, 2003,
for the benefit of the Administrative Agent and the Lessor and their successors
and assigns from ATC Associates Inc.


 


(i)            Survey.  The Lessee shall have delivered to the
Administrative Agent an ALTA/1999 (Urban) Survey of the Facility prepared by a
licensed surveyor and meeting the Minimum Standard Detail Requirements for
ALTA/ASCM Land Title Surveys as adopted by the American Land Title
Association/American Society and American Congress on Surveying and Mapping in
1999 certified to Lessor and the Administrative Agent and the Title Company,
and in form and substance acceptable to the Administrative Agent, in its sole
discretion.


 


(j)            Title Insurance.  (i) The Administrative Agent shall have
received from the Title Company its irrevocable commitment to issue an ALTA
owner’s policy of title insurance (1970 Form) (the “Owner’s Policy”),
reasonably acceptable in form and substance to the Administrative Agent,
insuring that the Lessor has good and marketable fee title to the Facility,
subject to the Permitted Exceptions and such other exceptions to title as are
reasonably acceptable to the Administrative Agent in an amount equal to the
estimated aggregate Lease Balance, together with complete, legible copies (to
the extent obtainable) of all encumbrances, maps and surveys of record, and
together with such reinsurance (with direct access to the reinsurers
thereunder) or coinsurance agreements as the Administrative Agent shall
reasonably require; and (ii) the Administrative Agent, for the benefit of Participants,
shall have received from the Title Company its irrevocable commitment to issue
one or more ALTA form of lender’s policies of title insurance (1970 Form, to
the extent applicable) (the “Lender’s Policies”), acceptable in form and
substance to the Administrative Agent, insuring the creation under the
Mortgages in favor of the Administrative Agent of (i) a valid first priority
Lien against the


 


13

















 


Facility in an
amount equal to the aggregate amount of the Lessor Loans, and (ii) a valid
second priority Lien against the Facility, in an amount equal to the aggregate
amount of the Credit Notes, each of which are subject to Permitted Exceptions
and such exceptions to title as are reasonably acceptable to the Administrative
Agent, together with complete, legible copies (if obtainable) of all
encumbrances and plats of record, and together with such reinsurance (with
direct access to the reinsurers thereunder) or coinsurance agreements as the
Administrative Agent shall reasonably require. 
Such Title Policies shall be dated as of the Site Acquisition Date and
shall (x) contain affirmative endorsements as to mechanics liens, doing
business, usury, zoning, easements and rights-of-way, Form B-1 comprehensive coverage,
encroachments, the nonviolation of covenants and restrictions, rights of access
and survey matters (which endorsements shall be substantially similar as
between the Owner’s Policy and the Lender’s Policies), (y) contain endorsements
regarding the effect of recharacterization, and (z) to the extent available at
reasonable premiums and subject to reasonable, commercially customary
conditions, contain such other endorsements reasonably requested by the
Administrative Agent.


 


(k)           Searches.  The Administrative Agent shall have received
a report (which may be included in the commitment for title insurance prepared
by the Title Company with respect to the following matters other than UCC
filings), as of a current date and reasonably acceptable in form and substance
to the Participants, of judgment liens, lis pendens, and tax lien filings with
respect to Lessee, Guarantor and the Facility filed of record in
Riverside County, California and Uniform Commercial Code filings for Lessee and
Guarantor filed in the Office of the Secretary of State of the State of
California and Delaware and in Riverside County, California.


 


(l)            Recordation.  Lessor and the Administrative Agent shall
have received evidence reasonably satisfactory to it that each of the Lease or
a memorandum thereof, the Mortgages and the Assignments of Lease shall have
been or are being recorded with the appropriate Governmental Authorities in the
order in which such documents are listed in this clause, and the Financing
Statements with respect to the Facility shall have been or are being filed with
the appropriate Governmental Authorities.


 


(m)          Payment of Taxes.  All Taxes payable on or before the Advance
Date, for which the Lessee is responsible and which are payable in connection
with the execution, delivery, recording or filing of any of the Operative
Documents or other documents, and the consummation of any other transactions
contemplated hereby or by any of the other Operative Documents, shall have been
paid in full by the Lessee, or arrangements for such payment shall have been
made to the satisfaction of each Participant and the Administrative Agent
(subject to the Lessee’s right to contest certain Taxes pursuant to Section
9.2(b)).


 


(n)           Representations and Warranties.  Each representation and warranty of each of
the parties hereto contained herein or in any other Operative Document shall be
true and correct in all material respects as though made on and as of the
Documentation Date and as of the Advance Date, except that any such
representation or warranty which is expressly made only as of a specified date
need be true only as of such date.


 


(o)           Litigation.  No action or proceeding shall have been
instituted or threatened nor shall any government action be instituted or
threatened before any Governmental Authority, nor shall any order, judgment or
decree have been issued or proposed to be issued by


 


14

















 


any Governmental
Authority, to set aside, restrain, enjoin or prevent the performance of this
Participation Agreement, any other Operative Document or any transaction
contemplated hereby or by any other Operative Document or which could
reasonably be expected to have a Material Adverse Effect.


 


(p)           No Event of Loss.  No Event of Loss shall have occurred in
respect of the Facility or any portion thereof.  No action shall be pending or threatened by any Governmental
Authority to initiate a Condemnation or a taking by such Governmental Authority
in respect of the Facility or any portion thereof.


 


(q)           Legality, etc.  In the opinion of each of the Participants
and the Administrative Agent, the transactions contemplated by the Operative
Documents shall not violate any Applicable Laws and do not and will not subject
any of the Participants or the Administrative Agent to any materially adverse
regulatory prohibitions or constraints, and no change of Applicable Laws has
occurred or been proposed 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
materially expand the duties, obligations or risks of any of the Participants
or the Administrative Agent.


 


(r)            Proceedings Satisfactory, etc.  All proceedings taken in connection with the
Advance Date, and all documents relating thereto shall be reasonably
satisfactory to the Participants and the Administrative Agent and their
respective counsel, and each such Person shall have received copies of such
documents as they may reasonably request in connection therewith, all in form
and substance reasonably satisfactory to each such Person.


 


(s)           Prescribed Forms.  Each Participant that is a Non-U.S. Person
(if any) shall have delivered to the Lessee, the Administrative Agent and the
Lessor, the Prescribed Forms.


 


(t)            Flood Zone Determination.  The Administrative Agent shall have received
a flood zone determination with respect to the Site that states that no portion
of the Site is located in an area identified as a special flood hazard area by
the Federal Emergency Management Agency or other similar Governmental
Authority.


 


(u)           Facility Appraisal.  Each Participant shall have received a
FIRREA qualified appraisal of the Facility from the Appraiser, which appraisal
shall show the Fair Market Value of the Facility as of the Advance Date.


 


(v)           Transaction Costs.  The Lessee shall have paid all Transaction
Costs due and payable on or prior to the Advance Date or, to the extent funds
are available for such purpose after funding all Acquisition Costs and without
limitation of Section 4.1(ff), such payments shall be made out of the
Funding to the extent such Transaction Costs are invoiced.  The Lessee shall deliver to the Administrative
Agent a copy of all invoices for Transaction Costs.


 


15

















 


(w)          Compliance Certificate.  The Administrative Agent shall have received
a copy of the most recent Compliance Certificate delivered pursuant to the
Revolving Credit Agreement.


 


(x)            Purchase of the Facility.  The Participants shall be satisfied that,
contemporaneously with the Funding on the Advance Date, the Lessor will have
used the proceeds thereof requested for the purpose of funding Acquisition
Costs to purchase the Facility as contemplated in the Assignment Agreement.


 


(y)           [Intentionally omitted.]


 


(z)            Advance Request.  The Administrative Agent shall have received
a fully executed counterpart of the Advance Request, executed by Lessee in
accordance with Section 2.3.1(a). 
The delivery of the Advance Request shall constitute a representation
and warranty by Lessee that on the Advance Date (both immediately before and
after giving effect to the Funding on the Advance Date and the application of
the proceeds thereof), the statements made by Lessee and Guarantor in Sections
5.1 and 5.5, respectively, are true and correct as of the Advance
Date.


 


(aa)         Transfer Documents.  Lessor shall have received a grant deed, and
such other necessary conveyance documents, all in conformity with Applicable
Laws and appropriate for recording (if necessary) with the applicable
Governmental Authorities, conveying fee simple title to the Facility to Lessor,
subject only to Permitted Exceptions.


 


(bb)         Substantial Completion of
Construction.  Lessor and the
Administrative Agent shall have received evidence satisfactory to it that, as
of the Advance Date, Substantial Completion of the Improvements has been
achieved, which evidence shall include, without limitation, all applicable
temporary certificates of completion related to the Facility.


 


(cc)         Advance Date.  The Funding and the Advance Date shall occur
on or prior to July 23, 2003.


 


(dd)         Event of Default.  No Default or Event of Default has occurred
and is continuing or would result from the Funding or from the application of
the proceeds therefrom.


 


(ee)         Responsible Officer’s Certificates
of Lessee and Guarantor.  The
Administrative Agent shall have received a Responsible Officer’s Certificate
from each of Lessee and Guarantor, in substantially the form of Exhibits B-1
and B-2 attached hereto, dated as of the Advance Date, stating on behalf
of Lessee and Guarantor, respectively, that: 
(i) each Operative Document to which Lessee or Guarantor is a party is
in full force and effect with respect to it; and (ii) each of Lessee and
Guarantor has duly performed and complied in all material respects with all
covenants contained herein or in any other Operative Document required to be
performed by it on or prior to the Advance Date.


 


(ff)           Fees.  Arranger shall have received all Fees due
and payable on or prior to the Advance Date pursuant to Section 2.6.


 


(gg)         No Material Adverse Change.  Immediately prior to, and after giving
effect to, the Funding, there shall not have occurred, in the reasonable
judgment of the Lessor and the Majority Participants:  (i) a material adverse change with respect to the Facility or
(ii)


 


16

















 


any change in the
financial condition of Lessee or Guarantor which, in the case of this clause
(ii), could reasonably be expected to have a Material Adverse Effect.


 


(hh)         Offeree Letter.  Administrative Agent shall have received a
certificate, substantially in the form of Exhibit
E, from the Arranger, dated the Documentation Date, with respect to
offerees of the Notes (the “Offeree Letter”).


 


ARTICLE V


 


REPRESENTATIONS AND WARRANTIES


 


SECTION 5.1.  Representations
and Warranties of the Lessee. 
As of the Documentation Date and the Advance Date (provided, that
any representation or warranty made as of a specific date need only be true as
of such date), the Lessee represents and warrants to each of the other parties
hereto that:


 


(a)           General Matters.


 


(i)            The
Lessee is a corporation duly organized, validly existing and in good standing
under the laws of the State of California. 
The Lessee has all necessary corporate power to enter into and perform
its obligations under each Lessee Operative Document and to lease the Facility
from the Lessor under the Lease.


 


(ii)           The
execution, delivery and performance by the Lessee of each Lessee Operative
Document have been duly authorized by all necessary corporate action and will
not (A) violate any provision of its certificate of incorporation or by-laws or
(B) violate any provision of law applicable to the Lessee or by which it or its
property may be bound, or result in the breach of or constitute a default or
require any consent under, or result in the creation of any Lien (except as
provided under the Operative Documents) upon any property or assets of the
Lessee pursuant to any indenture, agreement or instrument to which the Lessee
is a party or by which the Lessee or its property may be bound, in any such
case set forth in this clause (ii)(B) except in instances where non-compliance
is not expected to cause a loss to the Lessee in excess of $1,000,000.  Neither the execution by the Lessee of any
Lessee Operative Document nor the performance by the Lessee of its obligations
under any Lessee Operative Document requires any license, consent or approval
of, or notice to, or filing with, any Governmental Authority (other than
customary building permits obtained in the ordinary course of business which
the Lessee has no reason to believe will not be forthcoming).  Each of the Operative Documents to which
Lessee is or will be a party has been duly executed and delivered (and, in the
case of Operative Documents entered into following the Documentation Date, will
be executed and delivered) by the Lessee and, assuming the due authorization,
execution and delivery by the other parties hereto, constitutes (and, in the
case of Operative Documents entered into following the Documentation Date, when
executed and delivered, will constitute) its legal, valid and binding
obligation, enforceable in accordance with its terms, except as the same may be
limited by insolvency, bankruptcy, reorganization or other laws relating to or
affecting the enforcement of creditors’ rights generally or by general
equitable principles.


 


17

















 


(iii)          The
Lessee is not engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U or X of the Board of Governors
of the Federal Reserve System) and will not use any proceeds of the Funding for
any such purpose.  The Lessee is not an
“investment company” or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act and is otherwise not subject
to any Applicable Laws that would limit its ability to incur Indebtedness.  The receipt by the Lessee of the proceeds of
the Advance, and the use of such proceeds to pay Acquisition Costs and
Transaction Costs, does not violate any Applicable Laws.


 


(iv)          The
outstanding Indebtedness for borrowed money of the Lessee does not, and no
funding under the Operative Documents when made will cause such Indebtedness
to, exceed the amount authorized by the Lessee’s board of directors to be
outstanding.


 


(v)           There
is no action, suit or proceeding (including but not limited to environmental
matters), and no such proceeding before Governmental Authority, is pending, or,
to the knowledge of the Lessee, is threatened against the Lessee which, in the
good faith belief of the Lessee, has a reasonable possibility of being
adversely determined in a manner which would impose an obligation in excess of
$1,000,000.


 


(vi)          Neither
the Lessee nor any of its Affiliates has created, consented to, incurred or
suffered to exist any Lien (other than Permitted Liens) on the Facility in
favor of any Person other than the Lessor, the Debt Participants and the
Administrative Agent, and no Lien, other than the Lien granted to such Persons
hereunder and under the other Operative Documents and Permitted Liens, has
attached to the Facility, or in any manner has affected adversely the rights
and security interest of such Persons therein.


 


(vii)         Neither
the Lessee nor anyone authorized to act on its behalf has, directly or
indirectly, in violation of Section 5 of the Securities Act or any state
securities laws, offered or sold any interest in the Facility, the Lease, the
Investor Contribution or the Notes, or in any security or lease the offering of
which, for purposes of the Securities Act or any state securities laws, would
be deemed to be part of the same offering as the offering of the aforementioned
items, or solicited any offer to acquire any of the aforementioned items from
any Person other than an “accredited investor” (as such term is defined in the
Securities Act).  The foregoing shall
not be deemed an acknowledgment that any of the Notes or Investor Amounts, or
any interest in the Facility or the Lease constitutes a “security”.


 


(viii)        The
execution and delivery by the Lessee of the Lessee Operative Documents does not
require the consent or approval of, or the giving of notice to or registration
with, or the taking of any other action in respect of, any Governmental
Authority or other body governing its business practices, other than (if the
Guarantor so determines) the filing of a Form 8-K with the SEC.


 


(b)           Location
of the Lessee.  The Lessee is a
registered organization as defined in Section 9-102(70) of the UCC, and its
jurisdiction of organization as defined in Section 9-102(50) of
the UCC is the State of California.  The
organizational identification number assigned to the Lessee by the State of
California is set forth on Schedule III hereto.  The sole place of


 


18

















 


business or, if the Lessee has places of business in more than one
state, the chief executive office of the Lessee (as each such term is used in
Section 9-307 of the UCC) is located at 8333 Central Avenue, Newark,
California, 94560-3433.  The Lessee’s true
legal name as registered in its sole jurisdiction of organization is “Ross
Distribution, Inc.” and the Lessee does not use, or transact business under,
any trade name other than its legal name.


 


(c)           Compliance
With Law.  The Facility and the
current use and operation thereof and thereon do not violate any Applicable
Laws, including any thereof relating to occupational safety and health or
Environmental Laws, in a manner or to an extent that could reasonably be
expected to have a Material Adverse Effect. 
Except for such matters as could not reasonably be expected to result in
a Material Adverse Effect, the Facility and the use thereof by it and its
agents, assignees, employees, invitees, lessees, licensees and tenants complies
with Applicable Laws (including, without limitation, all Environmental Laws)
and insurance requirements.  To the
knowledge of the Lessee, there has been no release and there is no threatened
Release of Hazardous Materials, at, on or from the Facility.  Lessee has no knowledge of any past
violations of Environmental Laws involving the Facility.


 


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


 


(e)           Compliance
with ERISA.  Each member of the
ERISA Group has fulfilled its obligations under the minimum funding standards
of ERISA and the Code with respect to each Plan and is in compliance in all
respects with the presently applicable provisions of ERISA and the Code with
respect to each Plan except where such noncompliance would result in penalties
of less than $1,000,000.  No member of
the ERISA Group has (i) sought a waiver of the minimum funding standard under
Section 412 of the Code in respect of any Plan within the preceding five (5)
years, (ii) failed to make any contribution or payment to any Plan, or made any
amendment to any Plan which has resulted or is likely to result in the
imposition of a Lien or the posting of a bond or other security under ERISA or
the Code or (iii) incurred any material liability under Title IV of ERISA other
than a liability to the PBGC for premiums under Section 4007 of ERISA.  No termination of a Plan has occurred and no
steps have been taken to institute the termination of any Plan, which could
reasonably be expected to result in a Material Adverse Effect.  No member of the ERISA Group has any
knowledge of any event that is likely to result in a liability of any such
member to the PBGC, whether under a Plan, a Multiemployer Plan, or otherwise,
other than a liability to the PBGC for premiums under Section 4007 of
ERISA.  No lien in favor of the PBGC or
a Plan has arisen, and there have not been any nor are there now existing any
events or conditions that would permit any Plan to be terminated under
circumstances that would cause the lien provided under Section 4068 of ERISA to
attach to the material assets of Lessee or Guarantor.  The Lessee is not an entity deemed to hold Plan Assets, and,
subject to the accuracy of the representation contained in Section 6.2 of the
Note Purchase Agreement and Sections 5.2(i) and 5.3(b), neither
the execution of the Operative Documents nor the making of the Funding
hereunder gives rise to a prohibited transaction within the meaning of Section
406 of ERISA or Section 4975 of the Code.


 


19

















 


(f)            Defaults.  No Default or Lease Event of Default has occurred
and is continuing.


 


(g)           Subjection
to Government Regulation.


 


(i)            The
Lessee is not subject to regulation under any law, which prohibits, or requires
consent from any Governmental Authority prior to, the incurring by it of
Indebtedness or the entering into of the transactions described herein.


 


(ii)           None
of the Lessor, the Administrative Agent or any Debt Participant will become (A)
solely by reason of entering into the Operative Documents or consummation of
the transactions contemplated thereby (other than upon exercise of remedies
under the Lease or other Operative Document or upon the expiration or
termination thereof) subject to ongoing regulation of its operations by any
Governmental Authority having jurisdiction; or (B) except for regulation the
applicability of which depends upon the status of the Participants as banks or
other regulated financial institutions or upon the existence of facts in
addition to the ownership of, or the holding of any interest in, the Facility
or any interest therein upon the exercise of remedies under the Lease or any
other Operative Document or upon the expiration or termination thereof, subject
to ongoing regulation of its operations by any Governmental Authority having
jurisdiction solely by reason of its business activities contemplated in the
Operative Documents or the nature of the Facility.


 


(h)           Compliance
with Laws, etc.  The use of the
Facility by the Lessee and its agents, assignees, employees, lessees, licensees
and subtenants will comply in all material respects with all Insurance
Requirements and Applicable Laws (including all zoning and land use laws and
Environmental Laws) and the Lessee has obtained all governmental approvals in
respect of the operation and manufacturing processes to be located at the Facility
other than any required at a future date which will be obtained on or before
such date in the ordinary course of business.


 


(i)            Utilities.  All water, sewer, electric, gas, telephone
and drainage facilities and all other utilities required to adequately service
the Facility for its intended use are available pursuant to adequate permits
(including any that may be required under applicable Environmental Laws).  The Facility has available all material
services of public facilities and other utilities necessary for use and
operation of the Facility for its primary intended purposes including adequate
water, gas and electrical supply, storm and sanitary sewerage facilities,
telephone, other required public utilities and means of access between the
Facility and public highways for motor vehicles.  All utilities serving, or proposed to serve, the Facility is
located in, and vehicular access to the Facility are provided by, either public
rights-of-way abutting the Facility or Appurtenant Rights.


 


(j)            No
Casualty.  No fire, other Casualty
or Condemnation with respect to the Facility has occurred, or has been
threatened in the case of Condemnation, which fire, other Casualty or
Condemnation is expected to result in replacement or restoration costs or an
award in excess of $1,000,000.


 


20

















 


(k)           Leasehold Interest.  The Lease is in form and substance
sufficient to convey a valid leasehold estate to the Lessee, subject only to
Permitted Liens.


 


(l)            Flood Hazard Areas.  Except as otherwise identified on the survey
delivered pursuant to Section 4.1(i), no portion of the Facility is
located in an area identified as a special flood hazard area by the Federal
Emergency Management Agency or other applicable agency.  If the Facility or any part thereof is
located in an area identified as a special flood hazard area by the Federal
Emergency Management Agency or other applicable agency, then flood insurance
has been obtained for the Facility in accordance with the Lease and in accordance
with the National Flood Insurance Act of 1968, as amended.


 


(m)          Lease.  (x) The Lessee has unconditionally accepted
the Facility demised under the Lease (provided, that nothing contained
herein shall be deemed a waiver by the Lessee or the Guarantor of any right of
action against Persons (other than the Lessor, the Administrative Agent and the
Debt Participants) with respect to title to and condition of the Facility),
(y) no right of offset exists with respect to any Rent or other sums
payable under the Lease and (z) except as provided in the Operative
Documents, no Rent under the Lease has been prepaid.


 


(n)           Appraisal Data.  The information provided by the Lessee and
its Affiliates to the Appraiser and forming the basis for the conclusions set
forth in the appraisal delivered pursuant to Section 4.1(u), was
true and correct in all relevant respects and did not, when taken as a whole,
omit any information requested by the Appraiser actually known and available to
the Lessee necessary to make the information provided not misleading in any
relevant respect.


 


(o)           Filings.  Except with respect to the filings
identified on Schedule IV, no other filings or recordings are necessary
to convey validly and effectively to the Secured Parties such interest in the Lease,
the Facility and all other Mortgaged Property as contemplated by the Operative
Documents, in each case free of all Liens other than Permitted Liens.


 


(p)           Disclosure.  No representation or warranty (including
those incorporated by reference from any other agreement) contained in any
Operative Document, or in any other document or financial statement furnished
from time to time by the Lessee or its Affiliates pursuant to the terms of any
Operative Document, contains or will contain any untrue statement of a material
fact or omit or will omit to state any material fact necessary to make the
statement herein or therein not misleading in any material respect as of the
date made or deemed to be made.  There
is no fact known to the Lessee, which is having, or is reasonably expected to
have, a Material Adverse Effect.


 


(q)           Substantial Completion of
Improvements and Alterations. 
Substantial Completion of the Improvements has been achieved and each of
the Improvements as so completed complies in all material respects with all
Applicable Laws.  Schedule VIII
sets forth a complete description of the work remaining to complete
construction of the Improvements in accordance with the Plans and
Specifications.  All amounts owing to
third parties for the Construction have been paid in full or will be paid by
Lessee as Supplemental Rent when due and payable.  All Alterations required to be made under and pursuant to, or
which any Obligor elected to make prior to, the Advance Date have been
completed pursuant to and in accordance with the terms and conditions of the
Existing Operative Documents.


 


21

















 


SECTION 5.2.  Representations
and Warranties of Lessor.  The
Lessor represents and warrants to the Lessee, the Guarantor and the Debt
Participants as of the Documentation Date and the Advance Date (except to the
extent any such representation or warranty relates to an earlier date):


 


(a)           Organization.  The Lessor is a corporation duly organized
and validly existing and in good standing under the laws of the State of North
Carolina and is qualified to do business in each jurisdiction necessary to
permit Lessor to own and lease the Facility and perform its obligations under
the Operative Documents to which it is or shall be a party.  Lessor is a multi-purpose, wholly-owned
subsidiary of Wachovia Corporation.


 


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


 


(c)           No Violation.  Neither the execution, delivery and performance
by the Lessor of the Operative Documents to which it is or will be a party nor
compliance with the terms and provisions thereof, nor the consummation by the
Lessor of the transactions contemplated therein (i) will result in a
violation by the Lessor of any applicable provision of any law, statute, rule,
regulation, order, writ, injunction or decree of any Governmental Authority
having jurisdiction over the Lessor or the Facility that would adversely affect
(x) the validity or enforceability of the Operative Documents to which the
Lessor is a party, or the title to, or value or condition of, the Facility, or
(y) the consolidated financial position, business, prospects or
consolidated results of operations of the Lessor or the ability of the Lessor
to perform its obligations under the Operative Documents, (ii) violate or
result in any breach which would constitute a default under, or (other than
pursuant to the Operative Documents) result in the creation or imposition of
(or the obligation to create or impose) any Lien upon any of the property or
assets of the Lessor pursuant to the terms of any indenture, loan agreement or
other agreement for borrowed money to which the Lessor is a party or by which
it or any of its property or assets is bound or to which it may be subject
(other than Permitted Liens), or (iii) will violate any provision of the
certificate of incorporation or by-laws of the Lessor.


 


(d)           No Approvals, etc.  The execution and delivery by the Lessor of
the Operative Documents to which it is a party does not require the consent or
approval of, or the giving of notice to or registration with, or the taking of
any other action in respect of, any Governmental Authority.


 


22

















 


(e)           Litigation.  There is no action, proceeding or
investigation pending or threatened against the Lessor which questions the
validity of any of the Operative Documents, and there is no action, proceeding
or investigation pending or threatened which is likely to result, either in any
case or in the aggregate, in any material adverse change in the ability of the
Lessor to perform its obligations under the Operative Documents.


 


(f)            Lessor Liens.  The Facility and the Operative Documents and
amounts payable thereunder are free of Lessor Liens attributable to it (other
than any Liens granted pursuant to the Operative Documents).


 


(g)           Securities Act.  Neither the Lessor nor any Person authorized
by the Lessor to act on its behalf has offered or sold any interest in the
Notes, the Guaranties or the Lease, or in any similar security relating to the
Facility, or in any security the offering of which for the purposes of the
Securities Act would be deemed to be part of the same offering as the offering
thereof, or solicited any offer to acquire any of the same from, any Person
other than the parties hereto, and neither it nor any Person authorized by it
to act on its behalf will take any action which would subject the issuance or
sale of any interest in the Notes, the Guaranties or the Lease or in any
similar security related to the Facility to the provisions of Section 5 of the
Securities Act or require the qualification of any Operative Document under the
Trust Indenture Act of 1939.  The
foregoing shall not be deemed an acknowledgment that any of the Notes, or any
interest in the Facility or the Lease, constitutes a “security”.


 


(h)           Lessor’s Principal Place of
Business.  Lessor is a registered
organization as defined in Section 9-102(70) of the UCC, and its jurisdiction
of organization as defined in Section 9-102(50) of the UCC is the State of
North Carolina.  The “place of business”
of the Lessor (as such term is used in Section 9-307 of the UCC) is located at
301 S. College St., Charlotte, North Carolina 28288-0166.  The Lessor’s true legal name as registered
in its sole jurisdiction of organization is Wachovia Development Corporation,
its organizational number is NC 0227005, and its Federal Employer
Identification Number is 56-1610288. 
Lessor does not use, or transact any business under, any trade name
other than its legal name.


 


(i)            Employee Benefit Plans.  Lessor is not and will not be making its
Investor Contribution, and is not performing its obligations under the
Operative Documents, with any Plan Assets.


 


(j)            Margin Stock.  Lessor is not engaged principally in, and
does not have as one of its important activities, the business of extending
credit for the purpose of purchasing or carrying any margin stock (within the
meaning of Regulation U).


 


(k)           Investment Company.  Lessor is not an “investment company” or a
company controlled by an “investment company” within the meaning of the
Investment Company Act of 1940.


 


SECTION 5.3.  Representations
of the Debt Participants.  As of
the Documentation Date (or, with respect to any Debt Participant becoming party
hereto after the Documentation Date, as of the date such Debt Participant
becomes party hereto) and, with respect to Section 5.3(b), as of the
Advance Date, each Debt Participant hereby represents and warrants to the


 


23

















 


Lessee, the
Guarantor, the Lessor, the Administrative Agent and each of the other Debt
Participants that:


 


(a)           Securities Act.  The interest being acquired or to be
acquired by such Debt Participant in, as the case may be, the Notes, the
Guaranties and the Debt Participants’ Indemnity Agreement is being acquired for
its own account, without any view to the distribution thereof or any interest
therein, provided that such Debt Participant shall be entitled to
assign, convey or transfer its interest in accordance with Section 8.1.1.  Such Debt Participant is an accredited
investor as that term is defined in Rule 501(a) under the Securities Act.


 


(b)           ERISA.  Such Debt Participant is not and will not be
making its investment hereunder, and is not performing its obligations under
the Operative Documents, with any Plan Assets; provided that no
representation is made under this clause (b) with respect to any funds provided
by any Credit Note Purchaser.


 


SECTION 5.4.  Representations
of the Administrative Agent. 
Wachovia Bank, National Association, in its individual capacity and not
as Administrative Agent or as a Lessor Lender, hereby represents and warrants
to each of the other parties hereto that:


 


(a)           Corporate Existence and Power.  It is a banking association duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization and has all powers and all material governmental licenses,
authorizations and approvals required to perform its obligations hereunder and
under the other Operative Documents to which it is or will be a party.


 


(b)           Binding Effect.  This Participation Agreement and the other
Operative Documents to which it is or will be a party constitute, or will
constitute on the date executed and delivered by it, the legal, valid and
binding obligations of it, enforceable against it in accordance with their
respective terms except as such enforceability may be limited by any applicable
bankruptcy, insolvency or similar laws affecting the enforcement of creditors’
rights generally and by general principles of equity.  It has taken (or will have taken on or before the date on which
any Operative Document to which it is a party is being delivered) all necessary
action to authorize the execution, delivery and performance of this
Participation Agreement and each other Operative Document to which it is or
will be a party and has (or will have on the date delivered) duly executed and
delivered each Operative Document required to be executed and delivered by it.


 


(c)           No Violation.  Neither the execution, delivery and
performance by it of the Operative Documents to which it is or will be a party
nor compliance with the terms and provisions thereof, nor the consummation of
the transactions contemplated therein, (i) will contravene any Applicable Laws
or (ii) will violate any provision of its charter documents or
(iii) conflict with, result in a breach of, constitute a default under
(with or without the giving of notice, the lapse of time or both) or violate
any of the terms, conditions or provisions of 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 is bound or affected, where such conflict,
breach, default or violation would be reasonably likely to materially and
adversely affect the ability of the Administrative Agent to perform its
obligations under the Operative Documents to which it is or will be a party or
could reasonably give rise to a Lessor Lien.


 


24

















 


(d)           No Approvals, etc.  The execution and delivery by it of the
Operative Documents to which it is or will be a party do not require the
consent or approval of, or the giving of notice to or registration with, or the
taking of any other action in respect of, any Governmental Authority having
jurisdiction over it.


 


SECTION 5.5.  Representations
and Warranties of the Guarantor. 
As of the Documentation Date and the Advance Date (provided, that any
representation or warranty made as of a specific date need only be true as of
such date), the Guarantor represents and warrants to each of the other parties
hereto that:


 


(a)           Securities Act.  Neither the Guarantor nor anyone authorized
to act on its behalf has, directly or indirectly, in violation of Section 5 of
the Securities Act or any state securities laws, offered or sold any interest
in the Facility, the Lease, the Investor Amounts or the Notes, or in any
security or lease the offering of which, for purposes of the Securities Act or
any state securities laws, would be deemed to be part of the same offering as
the offering of the aforementioned items, or solicited any offer to acquire any
of the aforementioned items from any Person other than an “accredited investor”
(as such term is defined in the Securities Act).  The foregoing shall not be deemed an acknowledgment that any of
the Notes or Investor Amounts, or any interest in the Facility or the Lease
constitutes a “security”.


 


(b)           Subjection to Government Regulation.  The Guarantor is not subject to regulation
under any law which prohibits or requires consent from any Governmental
Authority prior to the incurring by it of Indebtedness or the entering into of
the transactions described herein.


 


(c)           Organization and Qualification.  The Guarantor and each other member of the
Guarantor Affiliated Group (a) is an entity duly incorporated, organized or
formed, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or other formation as indicated on Schedule
5.5(c) hereto, (b) has all requisite corporate, partnership, limited
liability company or other power to own its property and conduct its business
as now conducted and as presently contemplated, and (c) is duly qualified and
in good standing as a foreign corporation, foreign limited liability company,
foreign limited partnership or other entity and is duly authorized to do
business in California and each other jurisdiction where the nature of its
properties or business requires such qualification, except where the failure to
be so qualified could not reasonably be expected to have a Material Adverse
Change.


 


(d)           Entity Authority.  The execution, delivery and performance of
each of the Operative Documents to which the Guarantor or any other member of
the Guarantor Affiliated Group is or is to become a party and the transactions
contemplated hereby and thereby are within the power and authority of the
Guarantor or such member of the Guarantor Affiliated Group and have been
authorized by all necessary proceedings, and do not and will not (a) require
any consent or approval of any creditors, trustees for creditors, shareholders
or members of the Guarantor or such member of the Guarantor Affiliated Group
(other than any such consent that has been obtained prior to the Documentation
Date and delivered to the Administrative Agent), (b) contravene any provision
of the charter documents or other organizational documents of the Guarantor or
such member of the Guarantor Affiliated Group or any law, rule or regulation
applicable to the Guarantor or such member of the Guarantor Affiliated Group,
(c) contravene any provision of, or constitute an event of default or event
that, but for the requirement that time


 


25

















 


elapse or notice
be given, or both, would constitute an event of default under, any other
agreement, instrument, order or undertaking binding on the Guarantor or such
member of the Guarantor Affiliated Group, or (d) result in or require the imposition
of any Lien on any of the properties, assets or rights of the Guarantor or such
member of the Guarantor Affiliated Group.


 


(e)           Valid Obligations.  Each of the Operative Documents to which the
Guarantor or any other member of the Guarantor Affiliated Group is or is to
become a party and all of their respective terms and provisions are and will be
the legal, valid and binding obligations of the Guarantor or such member of the
Guarantor Affiliated Group enforceable in accordance with their respective terms,
except as limited by bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the enforcement of creditors’ rights generally, and except
as the remedy of specific performance or of injunctive relief is subject to the
discretion of the court before which any proceeding therefor may be brought.


 


(f)            Consents or Approvals.  The execution, delivery and performance of
each of the Operative Documents to which the Guarantor or any other member of
the Guarantor Affiliated Group is or is to become a party and the transactions
contemplated herein and therein do not require any approval or consent of, or
filing or registration with, any governmental or other agency or authority, or
any other party.


 


(g)           Title to Properties; Absence of
Liens.  Each of the Guarantor and
each other member of the Guarantor Affiliated Group has good and marketable
title to all of the properties, assets and rights of every name and nature now
purported to be owned by it, including such properties, assets and rights as
are reflected in the Initial Financial Statement (except such properties,
assets or rights as have been disposed of in the ordinary course of business
since the date thereof), free from all Liens except Permitted Encumbrances,
and, except as so disclosed, free from all defects of title as could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Change. The rights, properties and other assets presently owned, leased
or licensed by the Guarantor and each other member of the Guarantor Affiliated
Group include all rights, properties and other assets necessary to permit the
Guarantor and such member of the Guarantor Affiliated Group to conduct its
businesses in all material respects in the same manner as its businesses have
been conducted prior to the date hereof.


 


(h)           Franchises, Patents, Copyrights,
Etc.  Except as otherwise set forth
on Schedule 5.5(h) hereto, the Guarantor and each other member of the
Guarantor Affiliated Group possesses, licenses or otherwise has rights in or to
all franchises, patents, copyrights, trademarks, trade names, service marks,
licenses and permits material to the conduct of its business as substantially
now conducted without known conflict with any rights of others and, in each
case, free of any Lien that is not a Permitted Encumbrance.


 


(i)            Financial Statements.  The Guarantor has furnished to the
Administrative Agent and the Participants the Consolidated balance sheet of the
Guarantor as of February 1, 2003 and the related Consolidated statements of
earnings, stockholders’ equity and cash flows of the Guarantor Affiliated Group
for the fiscal year then ended, and related footnotes, audited and certified by
Deloitte & Touche LLP, and (b) the unaudited Consolidated balance sheet of
the Guarantor as of May 3, 2003 and the related unaudited Consolidated
statements of earnings, stockholders’ equity and cash flows of the Guarantor
for the fiscal quarter then ended (the foregoing, collectively, the “Initial
Financial Statement”). All such financial statements were


 


26

















 


prepared in
accordance with GAAP (except that the unaudited financial statements are
without footnotes) and present fairly the Consolidated financial position of
the Guarantor as of such dates and the results of the Consolidated operations
of the Guarantor for such periods except, as to the unaudited financial
statements, subject to normal, recurring year-end adjustments.  There are no liabilities, contingent or
otherwise, not disclosed in any of such financial statements that involve a
material amount.


 


(j)            Changes.  Since the dates of the Initial Financial
Statement, no Material Adverse Change has occurred.


 


(k)           Revolving Credit Agreement
Defaults.  As of the date of this
Participation Agreement, no event of default (or event which, with the giving
of notice, the lapse of time or both, would constitute such an event of
default) under the Revolving Credit Agreement exists.


 


(l)            Taxes.  The Guarantor and each other member of the
Guarantor Affiliated Group has filed all material federal, state and other tax
returns required to be filed, and all material taxes, assessments and other
governmental charges due from the Guarantor or such other member of the
Guarantor Affiliated Group have been fully paid or adequate reserves have been
established therefor.  Neither the
Guarantor nor any other member of the Guarantor Affiliated Group has executed
any waiver of limitations in respect of tax liabilities except as disclosed on Schedule
5.5(l).  Each member of the
Guarantor Affiliated Group has established on its books reserves adequate for
the payment of all material federal, state and other tax liabilities.


 


(m)          Litigation.  Except as set forth on Schedule 5.5(m)
hereto, there is no litigation, arbitration, claim, proceeding or investigation
pending or, to the Guarantor’s knowledge, threatened against the Guarantor or
any other member of the Guarantor Affiliated Group that, if adversely
determined, could reasonably be expected to have a Material Adverse Change,
whether through a judgment not fully covered by insurance, forfeiture of
property, or otherwise.


 


(n)           Subsidiaries.  As of the date of this Participation
Agreement, the Guarantor has no direct or indirect Significant Subsidiaries
except as disclosed on Schedule 5.5(n) hereto.


 


(o)           Investment Company Act.  Neither the Guarantor nor any other member
of the Guarantor Affiliated Group is subject to regulation under the Investment
Company Act of l940, as amended.


 


(p)           Compliance with ERISA.  The Guarantor, each Significant Subsidiary
and each member of the ERISA Group have fulfilled their obligations under the
minimum funding standards of ERISA and the Code with respect to each Plan and
are in compliance in all material respects with the applicable provisions of
ERISA and the Code, and have not incurred any material liability to the PBGC or
a Plan under Title IV of ERISA; and no Prohibited Transaction or Reportable
Event (i) has occurred that could, individually or in the aggregate, reasonably
be expected to have a Material Adverse Change or (ii) will occur as a result of
the Overall Transaction.  The Guarantor
is not an entity deemed to hold Plan Assets, and, subject to the accuracy of
the representation contained in Section 6.2 of the Note Purchase Agreement and Sections
5.2(i) and 5.3(b), neither the execution of the Operative Documents
nor the making of


 


27

















 


the Funding
hereunder gives rise to a prohibited transaction within the meaning of Section
406 of ERISA or Section 4975 of the Code.


 


(q)           Environmental Matters.  Except as specifically disclosed in Schedule
5.5(q) hereto, there are no violations by any member of the Guarantor
Affiliated Group of any Environmental Law and no Environmental Claims that
could, individually or in the aggregate, reasonably be expected to have a
Material Adverse Change.


 


(r)            Disclosure.  No representations and warranties made by
any member of the Guarantor Affiliated Group in this Participation Agreement,
any other Operative Document or in any other agreement, instrument, document,
certificate, statement or letter furnished to the Administrative Agent, the
Arranger, or the Participants by or on behalf of any member of the Guarantor
Affiliated Group in connection herewith, and no other factual information
heretofore or contemporaneously furnished by or on behalf of any member of the
Guarantor Affiliated Group to the Administrative Agent, the Arranger or the
Participants, in connection with any of the transactions contemplated by any of
the Operative Documents contains any untrue statement of material fact or omits
to state a material fact necessary in order to make the statements contained
therein not materially misleading in light of the circumstances in which they
are made.  Except as disclosed herein or
therein, there is no fact known to any member of the Guarantor Affiliated Group
which could reasonably be expected to cause a Material Adverse Change.


 


(s)           Solvency.  Both before and after giving effect to all
Indebtedness incurred by the Guarantor on the Advance Date, neither the
Guarantor nor any member of the Guarantor Affiliated Group is Insolvent or will
be rendered Insolvent by the Indebtedness incurred in connection therewith.


 


(t)            Compliance with Statutes, etc.  The Guarantor and each other member of the
Guarantor Affiliated Group is in compliance with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its business
and the ownership of its property, except for such non-compliances as could not
reasonably be expected, in the aggregate, to have a Material Adverse Change.


 


(u)           Labor Relations.  Neither the Guarantor nor any other member
of the Guarantor Affiliated Group is engaged in any unfair labor practice in
violation of any applicable law or order of any court or governmental
authority.  There is (i) no unfair labor
practice complaint pending or, to the Guarantor’s knowledge, threatened against
the Guarantor or any other member of the Guarantor Affiliated Group before the
National Labor Relations Board, and no grievance or arbitration proceeding
arising out of or under any collective bargaining agreement is so pending
against the Guarantor or any other member of the Guarantor Affiliated Group or,
to the knowledge of the Guarantor Affiliated Group, threatened against it, and
(ii) no labor dispute, slowdown or stoppage pending against the Guarantor or
any other member of the Guarantor Affiliated Group or, to the knowledge of the
Guarantor Affiliated Group, threatened against the Guarantor or any other
member of the Guarantor Affiliated Group, that in the case of clauses (i) and
(ii) could reasonably be expected to have a Material Adverse Change.  To the knowledge of the Guarantor, no union
representation question exists with respect to the employees of the Guarantor
or any other member of the Guarantor Affiliated Group and no union organizing
activities are taking place.


 


28

















 


(v)           Certain Transactions.  Except as set forth on Schedule 5.5(v)
hereto, none of the officers, partners, directors, or employees of any member
of the Guarantor Affiliated Group is presently a party to any transaction with
any other member of the Guarantor Affiliated Group (other than for services as
employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, partner, director or such employee or, to the knowledge
of the Guarantor Affiliated Group, any corporation, partnership, trust or other
entity in which any officer, partner, director, or any such employee or natural
person related to such officer, partner, director or employee or other Person
in which such officer, partner, director or employee has a direct or indirect
beneficial interest, has a substantial direct or indirect beneficial interest
or is an officer, director, trustee or partner.


 


(w)          Restrictions on the Guarantor
Affiliated Group.  No member of the
Guarantor Affiliated Group is a party to or bound by any contract, agreement or
instrument, or subject to any charter or other corporate restriction, that is
likely to cause a Material Adverse Change.


 


(x)            Tax Shelter Regulations.  Neither the Guarantor nor the Lessee intends
to treat the Credit Notes, the Lessor Loans and/or the Overall Transaction as
being a “reportable transaction” (within the meaning of Treasury Regulation
Section 1.6011-4).  In the event the
Guarantor or the Lessee determines to take any action inconsistent with such
intention, Guarantor shall or shall cause Lessee to promptly notify the Lessor
and the Administrative Agent thereof. 
If the Guarantor or the Lessee so notifies the Lessor or the
Administrative Agent, the Guarantor acknowledges that one or more of the Debt
Participants may treat its Credit Notes or Lessor Loans, as the case may be, as
part of a transaction that is subject to Treasury Regulation Section
301.6112-1, and such Debt Participant or Debt Participants, as applicable, will
maintain the lists and other records required by such Treasury Regulation.


 


ARTICLE VI


 


COVENANTS AND AGREEMENTS


 


SECTION 6.1.  Covenants of the
Lessee and the Guarantor. 
Except as specifically provided below, the Lessee and the Guarantor
covenant with each of the other parties hereto as follows:


 


(a)           Change of Name or Location.  Each of the Lessee and the Guarantor, as
applicable, shall furnish to the Lessor and the Administrative Agent notice on
or before the thirtieth (30th) day before any relocation of its jurisdiction of
organization, its chief executive office or principal place of business or
change of its name or identity.


 


(b)           Notice of Certain Defaults.  Promptly upon obtaining actual knowledge
thereof, the Lessee and/or the Guarantor shall notify the Lessor and the
Administrative Agent in writing of the existence of a Lease Default or Lease
Event of Default which notice shall describe the nature of such Lease Default
or Lease Event of Default, as applicable.


 


29

















 


(c)           Notice of Proceedings.  Promptly upon the Lessee’s or Guarantor’s
becoming aware of (i) any investigation (existing, pending or threatened) of it
by any Governmental Authority, (ii) any court or administrative proceeding
involving it or (iii) any notice, claim or demand from any Governmental
Authority which alleges that any such Person is in violation of any law or has
failed to comply with any order issued pursuant to any federal, state or local
statute regulating its operation and business, which individually or in the
aggregate is reasonably likely to result in a liability of $2,000,000 or more
or to have a Material Adverse Effect, it shall notify the Lessor and the
Administrative Agent specifying its nature and the action it is taking with
respect thereto.


 


(d)           Environmental Matters.  Subject to the Lessee’s and the Guarantor’s
rights in respect of Permitted Contests, the Lessee shall use and operate the
Facility in compliance with all Environmental Laws, except to the extent that
failure to comply could not reasonably be expected to have a Material Adverse
Effect.  The Lessee shall, as soon as
possible and in any event within ten days after the occurrence of any violation
of an Environmental Law that could reasonably be expected to resulting
liability of $50,000 or more or have a Material Adverse Effect, provide the
Lessor and the Administrative Agent with a statement of an authorized officer
setting forth the details of such violation and the action which Lessee
proposes to take with respect thereto.


 


(e)           Securities.  Neither the Guarantor nor the Lessee shall,
nor shall they permit anyone authorized to act on its behalf to, take any
action which would subject the issuance or sale of any interest in the Lease,
the Investor Contribution, the Notes or any security or lease the offering of
which, for purposes of the Securities Act or any state securities laws, would
be deemed to be part of the same offering as the offering of the aforementioned
items, to the registration requirements of Section 5 of the Securities Act or
any state securities laws.


 


(f)            No Disposition of the Facility.  The Lessee shall not, nor shall it permit
anyone authorized to act on its behalf to, sell, contract to sell, assign,
lease, transfer, convey or otherwise dispose of the Facility or any part
thereof, including the Lessee’s interest in the Lease to Guarantor or
otherwise, in violation of the Operative Documents.


 


(g)           Payment of Taxes, etc.  Subject to the Lessee’s rights to conduct a
Permitted Contest in respect of the following, the Lessee shall pay and
discharge before the same shall become delinquent, (i) all Taxes, assessments
and governmental charges or levies imposed upon the Facility and (ii) all
lawful claims that, if unpaid, might by law become a Lien upon the Facility,
other than Permitted Liens.


 


(h)           Environmental Audit.  During the continuance of any Lease Event of
Default, the Lessee shall, at the request of the Administrative Agent, deliver
to the Participants and the Administrative Agent an Environmental Audit for the
Facility within twenty days of demand therefor (or as complete and
comprehensive a draft of such Environmental Audit as may be reasonably prepared
in such time).


 


(i)            Appraisal.  Upon demand from any Participant or the
Administrative Agent (i) each time as required to satisfy any regulatory
requirements imposed on such Participant or the Administrative Agent and (ii)
during the continuance of a Lease Event of Default (but no more than once
during the continuance of a given Lease Event of Default), the


 


30

















 


Lessee shall
deliver to the Participants and the Administrative Agent an appraisal of the
Facility, prepared by the Appraiser (or another appraiser satisfactory to the
Participants and the Administrative Agent) and in form and substance reasonably
satisfactory to each of them, showing the Fair Market Value of the fee estate of
the Lessor in the Site and Lessor’s interest in the Improvements, dated within
thirty days of the delivery of such appraisal.


 


(j)            Maintenance of Lessee Entity.  In addition to and without limitation of the
restrictions and obligations set forth in Sections 6.1(l) and 6.1(x)
and Section 21.1 of the Lease, the Lessee will not, and the Guarantor will not
permit the Lessee to:


 


(i)            wind-up,
liquidate or dissolve itself (or suffer to exist any of the foregoing),
consolidate or amalgamate with or merge into or with (A) Guarantor or (B) 
any other Person (that would result in a Change of Control);


 


(ii)           issue,
sell, transfer, lease, contribute or otherwise convey (including by way of
merger), or grant any options, warrants or other rights to, any of the Lessee’s
assets to Guarantor or any other Person in a single transaction or series of
transactions unless such transfer is permitted by an Operative Document (and
with respect to the Facility, is to a Person other than the Guarantor) or, in
the case of the Lessee’s capital stock, is to the Guarantor or a domestic,
direct wholly owned subsidiary of the Guarantor; or


 


(iii)          create
or acquire any subsidiaries or make any investments in any other Person.


 


(k)           Financial Statements and other
Reporting Requirements.  The
Guarantor shall furnish to the Administrative Agent and each Participant:


 


(i)            as
soon as available, but in any event within 90 days after the end of each fiscal
year of the Guarantor, a Consolidated balance sheet as of the end of, and a
related Consolidated statement of income, Consolidated statement of
stockholders’ equity and consolidated statement of cash flows for, such year,
prepared in accordance with GAAP and audited and certified without
qualification by Deloitte & Touche LLP or another accounting firm
reasonably satisfactory to the Participants;


 


(ii)           as
soon as available, but in any event within 60 days after the end of each fiscal
quarter of the Guarantor, a Consolidated balance sheet as of the end of, and a
related Consolidated statement of income, Consolidated statement of
stockholders’ equity and consolidated statement of cash flows for, the fiscal
quarter then ended, prepared in accordance with GAAP (without footnotes) and
certified by the chief financial officer or treasurer of the Guarantor, but
subject, however, to normal, recurring year-end adjustments;


 


(iii)          concurrently
with the delivery of each financial statement pursuant to subsections (i) and
(ii) of this Section 6.l(k), a Compliance Certificate signed on behalf
of the Guarantor by the chief financial officer or treasurer of the Guarantor
stating that the signer does not have knowledge of the existence as of the date
of such certificate, of any condition or event which constitutes a Lease
Default or Lease Event of Default or, if any


 


31

















 


such
condition or event existed or exists, specifying the nature and period of the
existence thereof and what action Lessee or Guarantor has taken or is taking or
proposes to take with respect thereto;


 


(iv)          [Intentionally
Omitted]


 


(v)           if
and when the Guarantor or any Significant Subsidiary gives or is required to
give notice to the PBGC of any Reportable Event that might constitute grounds
for a termination of a Plan under Title IV of ERISA, or knows that any member
of the ERISA Group has given or is required to give notice of any Reportable
Event, a copy of the notice of such Reportable Event given or required to be
given to the PBGC or, if such notice is not given to the PBGC, a description of
the content of the notice that would be required to be given;


 


(vi)          immediately
upon becoming aware of the existence of any condition or event (i) that
constitutes a Lease Default or Lease Event of Default, written notice thereof
specifying the nature and duration thereof and the action being or proposed to
be taken with respect thereto, or (ii) affecting the Guarantor or any other
member of the Guarantor Affiliated Group which could reasonably be expected to
have a Material Adverse Change, written notice thereof specifying the nature
thereof and the action being or proposed to be taken with respect thereto; and
(iii) immediately upon receipt thereof, copies of any notice (whether formal or
informal) of any cancellation or termination in any insurance maintained by any
member of the Guarantor Affiliated Group;


 


(vii)         promptly
upon becoming aware of any litigation or any investigative proceedings by any
Person, including, without limitation, any governmental agency or authority,
commenced or threatened against the Guarantor or any other member of the
Guarantor Affiliated Group of which it has notice, or of a material change in
any such existing litigation or proceedings, the outcome of which could
reasonably be expected to have a Material Adverse Change, notice thereof and a
statement of the nature and status of such litigation or proceedings;


 


(viii)        promptly
upon becoming aware of (i) any investigative proceedings by a governmental
agency or authority commenced or threatened against the Guarantor or any other
member of the Guarantor Affiliated Group regarding any Environmental Claim,
(ii) any spill, release, discharge or disposal of any Hazardous Material on any
Real Property owned or leased by any member of the Guarantor Affiliated Group,
or (iii) any violation of any Environmental Law by any member of the Guarantor
Affiliated Group that (with respect to any of the foregoing) could reasonably
be expected to have a Material Adverse Change, written notice thereof, copies
of all correspondence, reports and other materials furnished to or prepared by
any member of the Guarantor Affiliated Group (or its representatives) in
connection therewith and the action being or proposed to be taken with respect
thereto;


 


(ix)           from
time to time, with reasonable promptness, such other financial data and other
information or documents (financial or non-financial) about the Guarantor and
each other member of the Guarantor Affiliated Group (including accountants’


 


32

















 


management
letters and annual budgets) as the Administrative Agent may reasonably request;
and


 


(x)            promptly
following the request by Administrative Agent, documentation and information
relating to the Construction, including the Plans and Specifications.


 


(l)            Conduct of Business.  The Guarantor shall, and shall cause each
other member of the Guarantor Affiliated Group to:


 


(i)            duly
observe and comply in all material respects with all applicable laws and
requirements of any governmental authorities relative to its corporate existence,
rights and franchises, to the conduct of its business and to its property and
assets (including all Environmental Laws and ERISA), and with the material
provisions of all material leases and all other material contracts and
agreements, and shall maintain and keep in full force and effect all licenses
and permits necessary in any material respect to the proper conduct of its
business;


 


(ii)           subject
to Section 6.1(x), maintain its corporate existence (except that
immaterial Subsidiaries may be dissolved (with any remaining assets being
transferred to a member of the Guarantor Affiliated Group); provided,
that in no event shall the foregoing permit the dissolution of the Lessee;


 


(iii)          remain
engaged in substantially the same lines of business as those in which it is now
engaged, except that the Guarantor or any other member of the Guarantor
Affiliated Group may withdraw from any business activity which its Board of
Directors reasonably deems unprofitable or unsound, provided that promptly
after such withdrawal, the Guarantor shall provide the Administrative Agent
with written notice thereof; and


 


(iv)          promptly upon forming any Significant Subsidiary, or
promptly upon any existing Subsidiary satisfying the definition of a
Significant Subsidiary, deliver to the Administrative Agent a Subsidiary
Guarantee and a written legal opinion with respect thereto, addressed and in
form and substance reasonably satisfactory to the Administrative Agent and the
Participants.


 


(m)          Maintenance and Insurance.  Without limiting any provision of the
Operative Documents, the Guarantor shall, and shall cause each other member of
the Guarantor Affiliated Group to, maintain its properties in good repair,
working order and condition (normal wear and tear excepted) as required for the
normal conduct of its business, and from time to time the Guarantor will make
or cause to be made, and cause each other member of the Guarantor Affiliated
Group to make or cause to be made, all necessary and proper repairs, renewals,
replacements, additions and improvements thereto so that the Guarantor and such
other members of the Guarantor Affiliated Group may conduct its business
substantially as conducted on the Documentation Date, and shall maintain or
cause to be maintained all material Leases as may be required for the conduct
of the Guarantor’s and each other member of the Guarantor Affiliated Group’s
business.  Without limiting any
provision of the Operative Documents, the Guarantor shall and shall cause each
other member of the Guarantor Affiliated Group to at all times maintain
liability and casualty insurance with financially sound and reputable insurers
in such


 


33

















 


amounts as the
officers of the Guarantor and such other member of the Guarantor Affiliated
Group in the exercise of their reasonable judgment deem to be adequate.


 


(n)           Taxes.  The Guarantor shall, and shall cause each
other member of the Guarantor Affiliated Group to, pay or cause to be paid all
taxes, assessments or governmental charges on or against it or its properties
on or prior to the time when they become due; provided that this covenant shall
not apply to any tax, assessment or charge that is being contested in good
faith by appropriate proceedings and with respect to which adequate reserves
have been established and are being maintained in accordance with GAAP if no
lien shall have been filed to secure such tax, assessment or charge.


 


(o)           Inspection by the Administrative
Agent.  Without limiting any
provision of the Operative Documents including the inspection rights under the
Lease, the Guarantor shall, and shall cause each other member of the Guarantor
Affiliated Group to, permit the Participants, through the Administrative Agent
or the Administrative Agent’s designee, at such reasonable times during normal
business hours, upon reasonable advance notice to such Person, to visit and
inspect the properties and books and records of the Guarantor and such other
members of the Guarantor Affiliated Group, provided that (i) when a Lease Event
of Default has occurred and is continuing the Administrative Agent or any
Participant (through the Administrative Agent’s designee or such Participant’s
other designee) may do any of the foregoing at any time during normal business
hours and with reasonable advance notice, (ii) except during the existence of a
Lease Event of Default, any such inspections shall be made no more frequently
than once per year, and (iii) unless the Administrative Agent believes that a
Lease Default or Lease Event of Default is reasonably likely to occur based
upon information obtained by or provided to the Administrative Agent, if no
Lease Default or Lease Event of Default exists at the time of any such
inspection, any such inspection shall be at the expense of the Participants.


 


(p)           Maintenance of Books and Records.  Without limiting any provision of the
Operative Documents, the Guarantor shall, and shall cause each other member of
the Guarantor Affiliated Group to, keep adequate books and records of account,
in which true and complete entries will be made reflecting all of its business
and financial transactions, and such entries will be made in accordance with
GAAP and applicable laws.


 


(q)           Pension Plans.  With respect to any Plan, the Guarantor
will, and will cause each Significant Subsidiary and each other member of the
ERISA Group to, (i) fund each Plan as required by the provisions of Section 412
of the Code; (ii) cause each Plan to pay all benefits when due; and (iii)
furnish the Administrative Agent (a) promptly with a copy of any notice of
termination of any Plan sent to the PBGC and (b) no later than the date of
submission to the Department of Labor or to the Internal Revenue Service, as
the case may be, a copy of any request for a material waiver from the funding standards
or extension of the amortization periods required by Section 412 of the Code.


 


(r)            Fiscal Year.  The Guarantor and each other member of the
Guarantor Affiliated Group shall have a fiscal year running concurrently with
the National Retail Federation calendar and shall notify the Administrative
Agent of any change in such fiscal year (whereupon, notwithstanding the
provisions of Section 12.5, the Administrative Agent and the
Participants shall have the right to modify the timing of the financial covenants
hereunder accordingly in order to correspond to any such change in fiscal
year).


 


34

















 


(s)           [Intentionally Omitted.]


 


(t)            Indebtedness.  The Guarantor shall not, and shall not
permit any other member of the Guarantor Affiliated Group to, create, incur,
assume, guarantee or be or remain liable with respect to any Indebtedness other
than the following:


 


(i)            Indebtedness
of the Guarantor to the Administrative Agent or the Participants under any
Operative Document;


 


(ii)           Indebtedness
in respect of accounts payable and accrued expenses for normal recurring
operating items, other than for borrowed money, of the Guarantor Affiliated
Group incurred in the ordinary course of business;


 


(iii)          Indebtedness
for borrowed money (which shall include all Indebtedness referenced in clauses
(i) through (iv) of the definition of Indebtedness and any guarantees thereof),
so long as the material terms of such Indebtedness are no more restrictive with
respect to covenants and events of default or other material provisions than
the terms and conditions set forth herein and in the other Operative Documents,
provided that at the time the Guarantor or any other member of the Guarantor
Affiliated Group incurs such Indebtedness, and after giving effect thereto, no
Lease Default or Lease Event of Default exists (it being agreed that upon the
incurrence of any such Indebtedness in excess of $25,000,000 in one or a series
of transactions, the Guarantor will furnish to the Administrative Agent a
compliance certificate demonstrating compliance with Sections 6.1(y) and
(z) after giving effect to such Indebtedness); and


 


(iv)          Indebtedness
existing on the Documentation Date and disclosed on Schedule 6.1(t)
hereto.


 


(u)           Contingent Liabilities.  The Guarantor shall not, nor shall permit
any other member of the Guarantor Affiliated Group to, create, incur, assume or
remain liable with respect to any Loan Guarantees other than the following:


 


(i)            Guarantees
in favor of the Administrative Agent and the Participants with respect to the
Operative Documents;


 


(ii)           Loan
Guarantees existing on the date of this Participation Agreement and disclosed
on Schedule 6.1(u) hereto;


 


(iii)          Loan
Guarantees resulting from the endorsement of negotiable instruments for collection
in the ordinary course of business;


 


(iv)          Loan
Guarantees with respect to surety, performance and return-of-money and other
similar obligations incurred in the ordinary course of business and consistent
with past practices (exclusive of obligations for the payment of borrowed
money); and


 


(v)           Loan Guarantees of Indebtedness permitted under Section
6.1(t), provided that the aggregate amount of Indebtedness of Subsidiaries
of the Guarantor that are not Significant Subsidiaries guaranteed by the Guarantor
and the Significant Subsidiaries, plus the aggregate amount of Qualified
Investments described in clause (ii) of the


 


35

















 


definition
of “Qualified Investments,” shall not at any time exceed fifteen percent (15%)
of the Guarantor’s Consolidated Tangible Net Worth, determined as of the date
of the most recently completed fiscal quarter.


 


(v)           Sale and Leaseback.  The Guarantor shall not, nor shall permit
any other member of the Guarantor Affiliated Group to, enter into any
arrangement, directly or indirectly, whereby it shall sell or transfer any
property owned by it in order to lease such property or lease other property
that the Guarantor or such other member of the Guarantor Affiliated Group
intends to use for substantially the same purpose as the property being sold or
transferred, except, notwithstanding the provisions of Section 6.1(x),
with respect to any such sale leaseback transaction in which the property sold
is sold at fair market value and on an arms-length basis and the lease of the
property contains market rent (not above-market rent) and is on an arms-length
basis, provided that (i) at the time any such sale leaseback transaction is
consummated and after giving effect thereto, no Lease Default or Lease Event of
Default exists, (ii) the entering into of such sale leaseback transaction could
not reasonably be expected to have a Material Adverse Change and (iii) such
sale leaseback transaction does not involve the Facility.


 


(w)          Liens.  In addition to and without limitation of the
restrictions and obligations set forth in Article VIII of the Lease, the
Guarantor shall not, nor shall permit any other member of the Guarantor
Affiliated Group to, create, incur, assume or suffer to exist any Lien, other
than Permitted Encumbrances.


 


(x)            Merger; Consolidation; Sale or
Lease of Assets; Acquisitions.  In
addition to and without limitation of Section 21.1 of the Lease and Section
6.1(l), the Guarantor shall not, nor shall permit any other member of the
Guarantor Affiliated Group to, (a) sell, lease or otherwise dispose of assets
or properties (valued at the lower of cost or fair market value), other than
(i) sales of inventory in the ordinary course of business, (ii) the disposition
of scrap, waste and obsolete items in the ordinary course of business, and
(iii) sales of assets not in the ordinary course of business so long as the net
book value of all of such assets sold or otherwise disposed of by the Guarantor
and the other members of the Guarantor Affiliated Group in all such
transactions after the Documentation Date shall not exceed an aggregate amount
equal to fifteen percent (15%) of the Guarantor’s Consolidated Tangible Net
Worth, determined as of the end of the most recently completed fiscal quarter of
the Guarantor; and or (b) liquidate, merge or consolidate into or with any
other Person or enter into or undertake any plan or agreement of liquidation,
merger or consolidation with any other Person, provided that the Guarantor may
merge with another company in connection with a permitted acquisition if the
Guarantor is the surviving company, and any wholly-owned Subsidiary of the
Guarantor may merge or consolidate into or with (i) the Guarantor if no Lease
Default or Lease Event of Default has occurred and is continuing or would
result from such merger and if the Guarantor is the surviving company, (ii) any
other wholly-owned Subsidiary of the Guarantor; or (iii) a merger of a
Subsidiary of the Guarantor with another entity in connection with a permitted
acquisition if the Subsidiary is the surviving company, or (c) make any
acquisition of all or substantially all of the capital stock (or other equity
interests) or all or substantially all of the assets of another Person, or of a
division or business unit of a Person, whether or not involving a merger or
consolidation with such Person (an “Acquisition”), except in connection
with a Permitted Acquisition; provided that in no event shall Guarantor
(A) merge or consolidate with the Lessee or (B) acquire the Facility or any
portion thereof from the Lessee including as a result of any liquidation or
dissolution of the Lessee’s assets.


 


36

















 


(y)           Minimum Adjusted Interest Coverage
Ratio.  The Guarantor shall not permit
the Adjusted Interest Coverage Ratio of the Guarantor Affiliated Group as at
the last day of any fiscal quarter, calculated for the four consecutive fiscal
quarters then ending, to be less than the ratio of 2.0 to 1.0.


 


(z)            Maximum Adjusted Debt to Total
Capitalization Ratio.  The Guarantor
shall not permit the Adjusted Debt to Total Capitalization Ratio (expressed as
a percentage) of the Guarantor Affiliated Group as at the last day of any
fiscal quarter to be greater than 75%.


 


(aa)         Restricted
Payments.  The Guarantor shall not,
and shall not permit any other member of the Guarantor Affiliated Group to,
pay, make or declare any Restricted Payment other than a Restricted Payment to
a member of the Guarantor Affiliate Group. 
Notwithstanding the foregoing, the Guarantor’s Subsidiaries may from
time to time make distributions to the Guarantor, and the Guarantor may effect
redemptions and repurchases of its stock and pay dividends to its stockholders,
so long as no Lease Default or Lease Event of Default has occurred or is
continuing, both before and after giving effect to any such distributions,
dividends, redemptions and repurchases. 
Neither the Guarantor nor any other member of the Guarantor Affiliated
Group will enter into any agreement, contract or arrangement (other than the
Operative Documents and the Revolving Credit Agreement and related loan
documents) restricting the ability of any Subsidiary of the Guarantor or any
other member of the Guarantor Affiliated Group to pay or make dividends or
distributions in cash or kind, to make loans, advances or other payments of any
nature or to make transfers or distributions of all or any part of its assets
to the Guarantor or any other member of the Guarantor Affiliated Group.


 


(bb)         Investments.  The Guarantor shall not, nor shall permit
any other member of the Guarantor Affiliated Group to, make or maintain any
Investments other than Permitted Investments.


 


(cc)         ERISA.  Neither the Guarantor, nor any Significant Subsidiary or any
member of the ERISA Group, shall permit any Plan maintained by it to (i) engage
in any Prohibited Transaction that could reasonably be expected to result,
individually or in the aggregate, in a liability to the United States Internal
Revenue Service in excess of $10,000,000, (ii) incur any material “accumulated
funding deficiency” (as defined in Section 302 of ERISA) whether or not waived,
or (iii) terminate any Plan in a manner that could result in the imposition of
a Lien on the assets of the Guarantor or any Significant Subsidiary pursuant to
Section 4068 of ERISA.


 


(dd)         Transactions with Affiliates.  The Guarantor shall not, nor shall permit
any other member of the Guarantor Affiliated Group to, enter into or
participate in any agreements or transactions of any kind with any Affiliate,
except (i) agreements or transactions contemplated, required or allowed by any
Operative Document or, as required or allowed as of the Documentation Date
under the Loan Documents (as defined in the Revolving Credit Agreement);
(ii) agreements or transactions (in each case) in the ordinary course of
business and on an arms-length basis which (A) include only terms which are
fair and equitable to the Guarantor or such other member of the Guarantor
Affiliated Group, (B) do not violate or otherwise conflict with any of the
terms of any of the Operative Documents, and (C) involve terms no less
favorable to the Guarantor or such other member of the Guarantor Affiliated
Group than would be the terms of a similar agreement or transaction with any
Person other than an


 


37

















 


Affiliate; and
(iii) the loans permitted by Section 6.1(ee).  Neither the Guarantor nor any other member of the Guarantor
Affiliated Group will enter into any agreement containing any provision which
would be violated or breached by the performance by the Guarantor or such other
member of the Guarantor Affiliated Group of its obligations hereunder or under
any of the other Operative Documents.


 


(ee)         Loans.  The Guarantor shall not, and shall not permit any other member of
the Guarantor Affiliated Group to, make to any Person any loan, advance or
other transfer with the anticipation of repayment, except as may be otherwise
expressly permitted hereunder and except for loans and advances to employees of
the Guarantor or such other member of the Guarantor Affiliated Group, made in
the ordinary course of business and consistent with past practices.


 


(ff)           Tax Shelter Regulations.  Each Obligor shall deliver to the
Administrative Agent and each Participant, in form and detail satisfactory to
the Administrative Agent and the Majority Participants, promptly after either
Obligor has notified the Administrative Agent or the Lessor of any intention by
either Obligor to treat the Credit Notes, the Lessor Loans, the Investor
Contribution and/or the Overall Transaction as being a “reportable transaction”
(within the meaning of Treasury Regulation Section 1.6011-4), a duly completed
copy of IRS Form 8886 or any successor form.


 


SECTION 6.2.  Covenants of the Lessor.


 


(a)           Cooperation with Lessee and
Guarantor.  The Lessor shall, to the
extent reasonably requested by the Lessee or the Guarantor (but without
assuming additional liability on account thereof and only so long as such
Lessor actions do not adversely affect the “as-built” value, utility, residual
value at the end of the Lease Term or remaining economic life of the Facility),
at the Lessee’s expense, cooperate to allow the Lessee and the Guarantor to (i)
perform their covenants contained in Section 6.1, including at any time
and from time to time, upon the reasonable request of the Lessee or the
Guarantor, promptly and duly to execute and deliver any and all such further
instruments, documents and financing statements (and continuation statements
related thereto) as the Lessee or the Guarantor may reasonably request and as
shall be presented to it in final execution form in order to perform such
covenants and (ii) further the Lessee’s interest as lessee, including the
filing of any statement with respect to any Tax abatements, Permitted Contests
or other requirements.


 


(b)           Discharge of Liens.  The Lessor will not create or permit to
exist at any time, and will, at its own cost and expense, promptly take such
action as may be necessary duly to discharge, or to cause to be discharged, all
Lessor Liens attributable to it, and will cause restitution to be made to the
Lessee Collateral in the amount of any diminution of the value thereof as a
result of its failure to comply with its obligations under this Section
6.2(b).  Notwithstanding the
foregoing, the Lessor shall not be required to so discharge any such Lessor
Lien while the same is subject to a Permitted Contest.


 


(c)           Change of Location.  Other than as a result of a transfer
pursuant to Sections 6.2(h) and 8.1.1, the Lessor shall give at
least 30 days prior written notice to the Lessee, the Debt Participants and the
Administrative Agent of any change in its name or its identity, or if the
Lessor’s location for purposes of the UCC shall cease to be North Carolina, or
if the Lessor’s


 


38

















 


principal place of
business or chief executive office, or the office where the records concerning
the accounts or contract rights relating to the Facility are kept, shall cease
to be located at One Wachovia Center, 301 South College Street, Charlotte,
North Carolina 28288.


 


(d)           Restrictions on and Effect of
Transfer.  The Lessor shall not
sell, assign, transfer or otherwise dispose of, or mortgage, pledge or
otherwise encumber, all or any portion of its right, title or interest in, to
or under any of the Operative Documents other than in accordance with the
provisions of the Operative Documents.


 


(e)           No Plan Assets.  The Lessor shall not cause or permit any of
its property or other assets to constitute Plan Assets.


 


(f)            Securities.  The Lessor shall not, nor shall it permit
anyone authorized to act on its behalf to, take any action which would subject
the issuance or sale of any interest in the Lease, the Investor Contribution,
the Notes or any security or lease the offering of which, for purposes of the
Securities Act or any state securities laws, would be deemed to be part of the
same offering as the offering of the aforementioned items, to the registration
requirements of Section 5 of the Securities Act or any state securities laws.


 


(g)           Compliance with Operative
Documents.  The Lessor shall at all
times observe and perform all of the covenants, conditions and obligations
required to be performed by it (whether in its capacity as the Lessor or in its
individual capacity or otherwise) under each Operative Document to which it is
a party.


 


(h)           Lessor Notice.  The Lessor shall give the Lessee prompt
written notice (a “Lessor Notice”), but in any event promptly upon
receipt of notice from an acquiring Person as provided in the related
underlying transaction documents, of the Lessor’s knowledge that a disposition
of property will occur that would cause the Fair Market Value of the Facility
then subject to the Lease to exceed 50% of the fair market value (based on
appraisals or other information delivered in connection with the consummation
of such underlying transactions) of all of the property owned by the Lessor, as
determined in accordance with GAAP (a “50% FMV Event”).   In
the event that a Lessor Notice is given, the Lessor, at its option, may elect
to (i) obtain additional assets such that the Fair Market Value of the
Facility does not ever constitute more than 50% of the total Fair Market Value
of the assets of the Lessor, (ii) transfer its interests in the Facility to
another affiliate of Lessor such that the representations set forth in the WDC
Confirmation Letter remain correct or (iii) obtain a SAS 97-type letter
reasonably acceptable to Lessee from Lessor’s auditor to certify that the Lessor
is a voting interest entity as defined by FIN 46 (to be renewed as
required).  If none of the options set
forth above is elected by Lessor within sixty (60) days following Lessor’s
delivery of a Lessor Notice, then Lessee may, during the existence of the 50%
FMV Event, cause a transfer of Lessor’s interest to an Eligible Lessor
Transferee selected by Lessee.  If
Lessee elects to cause such transfer, it shall deliver to Lessor a written
notice of such election (a “Substitute Transferee Notice”), which notice
shall identify the proposed transferee (the “Substitute Transferee”) and
the date such transfer will take place. 
The effectiveness of such transfer shall be subject to (i) the Lessee’s
delivery of a Substitute Transferee Notice to Lessor pursuant to the
immediately preceding sentence, (ii) receipt by the Administrative Agent of
such documents, agreements, instruments and opinions (including any guarantees
or indemnities required pursuant to this Section 6.2 or Section
8.1.3(b)) duly executed and delivered by such Substitute Transferee to
effect such


 


39

















 


transfer pursuant
to this Section 6.2(h) and Section 8.1.3(b), and (iii) such
transfer to such Substitute Transferee being completed and effective (including
delivery of each of the documents described in clauses (i) and (ii)
above), within (90) days from the date of the Substitute Transferee
Notice.  Lessor and the Debt
Participants hereby agree to reasonably cooperate in good faith with Lessee, at
Lessor’s sole cost and expense, in Lessee’s efforts to cause any transfer to a
Substitute Transferee as contemplated by this Section
6.2, and Lessor shall reimburse Lessee for its reasonable
out-of-pocket expenses to effectuate such transfer.


 


(i)            Credit Note Purchase Agreement
and Lessor Loan Agreement.  As
between Lessor and Lessee, Lessor and each Debt Participant hereby agree that,
so long as the Lease is in effect, Lessor shall not consent to or permit any
amendment of the terms and provisions of the Credit Note Purchase Agreement,
the Lessor Loan Agreement, the Intercreditor Agreement, any Security Document
or any Note, whether or not any Event of Default shall have occurred and be
continuing, if any such amendment or action would have the effect of increasing
the Obligations of the Lessee or decreasing the rights of the Lessee, in each
case without the prior written consent of Lessee, except that without such
consent, Lessor may waive performance by the Administrative Agent of
Obligations to Lessor, the non-performance of which does not adversely affect
the Lessee.


 


(j)            WDC Confirmation Letter.  Upon Lessee’s prior written request and
receipt by Lessor from Lessee of a WDC Confirmation Letter at least thirty (30)
days prior to the end of each calendar quarter and 60 days prior to the end of
each calendar year, the Lessor shall provide to Lessee, at least 15 days prior
to the end of each calendar quarter and at least 45 days prior to the end of
each calendar year, a confirmed copy of such WDC Confirmation Letter.  The parties hereto agree that the Lessee is
the sole beneficiary of the matters addressed Sections 6.2(h) and 6.2(j)
and as set forth in any WDC Confirmation Letter.


 


SECTION 6.3.  Quiet Enjoyment.  So long as no Lease Event of Default has
occurred and is continuing, neither the Lessor, the Administrative Agent nor
any other Participant shall take, or permit any Person claiming by, through or
under it to take, any affirmative action to interfere with the rights of the
Lessee to full enjoyment of the Facility during the Lease Term in accordance
with the Lease.  The sole remedy of the
Lessee for breach of this Section 6.3 shall be to sue for damages for
the breach hereof, and/or sue for a declaratory judgment, injunctive relief or
other specific performance hereof, and such breach shall not affect the
obligations of the Lessee to pay all amounts (including Rent) due under the
Lease, this Participation Agreement and the other Operative Documents, or the
rights of the Lessor, the Administrative Agent and the other Participants to
initiate legal action and otherwise enforce the obligations of the Lessee under
the Lease, this Participation Agreement and the other Operative Documents.  The foregoing covenant shall not require the
Lessor to take any action contrary to, or which would permit the Lessee to use
the Facility for a use not permitted under, the provisions of this Lease.  The parties recognize that any sale,
assignment, transfer or other disposition, or mortgage, pledge or other
encumbrance (each a “disposition”), of any part of the Facility or any of
Lessor’s rights under the Operative Documents is subject to Lessee’s rights, if
any, under the Operative Documents, except any disposition required or
permitted by the Operative Documents following the occurrence and during the
continuation of any Lease Event of Default.


 


SECTION 6.4.  Discharge of Liens.  Each of the Debt Participants and the
Administrative Agent hereby severally agrees that it will not create or permit
to exist at any time,


 


40

















 


and will, at its
own cost and expense, promptly take such action as may be necessary duly to
discharge, or to cause to be discharged, all Lessor Liens on the Facility (or
on any interest in or proceeds from any of the Operative Documents)
attributable to it.  Notwithstanding the
foregoing, neither the Administrative Agent nor any Debt Participant shall be
required to so discharge any such Lessor Lien while the same is subject to a
Permitted Contest.


 


SECTION 6.5.  Performance of
Operative Documents.  Each party
hereto hereby agrees to observe and perform in all material respects all of the
covenants, conditions and obligations required to be observed or performed by
it in each Operative Document to which it is a party.


 


SECTION 6.6.  Easements.  At the request of the Lessee, so long as no Bankruptcy Default or
Lease Event of Default shall have occurred and be continuing, the Lessor, at
Lessee’s sole cost and expense, shall, from time to time during the Lease Term
and upon at least ten (10) Business Days’ prior written notice from the Lessee,
consent to and join in any easements, licenses, rights-of-way, party wall
rights and other rights in the nature of easements pursuant to Section 8.4 of
the Lease; provided, that each of the conditions set forth in Section
8.4 of the Lease are satisfied or waived by the Administrative Agent (at the
written direction of the Majority Participants).


 


SECTION 6.7.    Intercreditor Agreement.  Each of the Lessee and the Guarantor hereby
acknowledges and consents to all of the terms and conditions of the
Intercreditor Agreement.


 


ARTICLE VII


 


PAYMENT OF CERTAIN EXPENSES


 


SECTION 7.1.  Payment of
Transaction Costs and Other Costs.


 


(a)           Transaction Expenses and
Continuing Expenses As and when any portion of Transaction Costs becomes
due and payable, such Transaction Costs shall be paid by Lessee as Supplemental
Rent.


 


(b)           Payment by Funding.  Subject to the other provisions of this Section
7.1, and without limiting the application of Section 7.1(a), all
Transaction Costs incurred prior to the Advance Date shall be paid by Lessee on
the Advance Date and, subject to the limitations at Section 2.3.2, such
Transactions Costs may be paid from amounts funded for Transaction Costs on the
Advance Date as set forth in the Advance Request, to the extent there are funds
available for such purpose after funding all Acquisition Costs.


 


(c)           Amendments, Supplements and
Appraisal.  Without limitation of
the foregoing or any other provisions set forth in the Operative Documents,
Lessee shall pay to the Participants and the Administrative Agent all costs and
expenses (including reasonable legal fees and expenses of special counsel to
the Administrative Agent, Lessor and Debt Participants; provided that so
long as no Lease Event of Default exists or, solely with respect to clause (ii)
below, so long as no Lease Default or Lease Event of Default exists, Lessee
shall not be liable for the fees and expenses of more than one counsel for each
of Lessor and the Debt Participants) incurred by any of them in connection
with:  (i) any Casualty, Event of Loss
or termination of this Participation Agreement or any other Operative Document,
or any extension, amendment,


 


41

















 


modification or
waiver of or under this Participation Agreement or any other Operative Document
whether or not such extension, amendment, modification or waiver is
consummated; (ii) the negotiation and documentation of any restructuring or
“workout”, whether or not consummated, of any Operative Document; (iii) the
enforcement of the rights or remedies under the Operative Documents arising out
of (x) any Lease Event of Default or (y) any Loan Event of Default; (iv)
further assurances reasonably requested pursuant to Section 12.11 or any
similar provision in other Operative Documents; (v) any transfer by any
Participant of any interest in the Operative Documents during the continuance
of a Lease Event of Default, or by Lessor pursuant to Section 8.1.1
(except as provided in the last sentence of Section 8.1.1(b)); (vi) any
transfer by the Lessor to the Lessee or a third-party purchaser under exercise
of the Remarketing Option of any interest in the Facility (or any portion
thereof permitted by the Operative Documents) in accordance with the Operative
Documents, and (vii) the ongoing fees and expenses for which the Lessee is
obligated under the Operative Documents.


 


SECTION 7.2.  Brokers’ Fees.  Subject to Section 12.2, the
Lessee shall pay or cause to be paid any brokers’ fees, including any interest
and penalties, which are payable in connection with the transactions
contemplated by this Participation Agreement and the other Operative
Documents.  Neither the Administrative
Agent nor any Participant shall be liable for, or be obligated to pay or
advance, any such broker’s fees.


 


ARTICLE VIII


 


TRANSFERS OF PARTICIPANTS’ INTERESTS


 


SECTION 8.1.1.  Restrictions on Transfer.


 


(a)           Each Credit Note Purchaser may
participate, assign or transfer all or a portion of its interest hereunder and
under the other Operative Documents in accordance with Section 11.2 of the
Credit Note Purchase Agreement.  Each
Lessor Lender may participate, assign or transfer all or a portion of its
interest hereunder and under the other Operative Documents in accordance with
Section 8.6 or 8.7 of the Lessor Loan Agreement.


 


(b)           Lessor may (i) if so required by any
Legal Requirement applicable to the Lessor or (ii) following the occurrence of
a Lessor GAAP Event, assign, convey, or transfer all, but not less than all, of
its right, title or interest in or to the Facility, the Lease and the other
Operative Documents (including any right to indemnification thereunder), or any
other document relating to the Facility or any interest in the Facility, and no
consent shall be required from the Administrative Agent, Lessee, Guarantor or
the Debt Participants (but Lessor shall provide forty-five (45) days (or such
shorter period as required by the Legal Requirement giving rise to such
assignment, conveyance, appointment or transfer contemplated by this Section
8.1.1(b) (such 45-day (or shorter, as applicable) notice period, the “Initial
Notice Period”)) written notice to the Administrative Agent and Lessee) in
connection with such assignment, conveyance, appointment or transfer, to any
Person with a minimum net worth of at least $200,000,000 and a rating of “A”
(or higher) by S&P and a rating of “A2” (or higher) by Moody’s; provided,
that if the parent entity of such Person satisfies the foregoing requirements,
such requirements also shall be deemed satisfied by such Person so long as such
parent entity has (x) either unconditionally guaranteed, such guarantee to be
in form and substance reasonably satisfactory to Lessee and the Administrative
Agent, or provided an unconditional indemnity substantially in the form of the


 


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Lessee Indemnity
Agreement with respect to, the obligations of Lessor to Lessee under the
Operative Documents, and (y) executed and delivered to and for the benefit of
the Credit Note Holders an unconditional indemnity in substantially the form of
the Debt Participants’ Indemnity Agreement (any such Person meeting the
foregoing requirements hereinafter referred to as an “Eligible Lessor
Transferee”).  Lessee shall be
responsible for, and if paid by Lessor, shall reimburse Lessor for, any cost or
expense incurred by Lessor in connection with any assignment, conveyance or
transfer by Lessor required by any Legal Requirement pursuant to clause (i)
of this Section 8.1.1(b).  Lessor
shall be responsible for any such cost or expense with respect to any
assignment, conveyance or transfer by Lessor as a result of a Lessor GAAP Event
pursuant to clause (ii) of this Section 8.1.1(b).


 


SECTION 8.1.2.  [Intentionally Omitted]


 


SECTION 8.1.3.  Effect of Transfer.


 


(a)           From and after any transfer by a Debt
Participant effected in accordance with this Article VIII, such Debt
Participant shall be released, to the extent of such transfer, from its
liability hereunder and under the other documents to which it is a party in
respect of obligations to be performed on or after the date of such transfer;
provided, however, that such Debt Participant shall remain liable hereunder and
under such other documents to the extent that the transferee shall not have
assumed the obligations of such Debt Participant thereunder.  From and after any transfer by Lessor
effected in accordance with this Article VIII, Lessor shall be released
from its liability hereunder and under the other documents to which it is a
party in respect of obligations to be performed on or after the date of such
transfer.  Upon any transfer by the
Lessor or a Debt Participant as above provided, any such transferee shall
assume the obligations of the Lessor or, to the extent of such transfer, the
Debt Participant, as the case may be, and shall be deemed the “Lessor” or, to
the extent of such transfer, a “Debt Participant” and, in the case of a Debt
Participant, a “Participant” to the extent of such transfer, as the case may
be, for all purposes of such documents and each reference herein to the
transferor shall thereafter be deemed a reference to such transferee for all
purposes, except as provided in the first sentence of this Section 8.1.3.  Notwithstanding any transfer of all or a
portion of the transferor’s interest as provided in this Article VIII,
the transferor shall be entitled to all benefits accrued and all rights vested
prior to such transfer including rights to indemnification under any such
document.  In the case of any transfer
by Lessor pursuant to this Article VIII, if the transferring Lessor is Wachovia
Development Corporation, the Indemnity Agreements shall automatically, without
further act of any party hereto, terminate, and Wachovia Corporation shall automatically
be deemed to be released by Lessee, Guarantor and each Debt Participant from
any and all of its obligations under the Indemnity Agreements.


 


(b)           Any transfer pursuant to Section
8.1.1 or Section 6.2(h) shall be subject to (x) in the case of a
transfer pursuant to Section 8.1.1, the Eligible Lessor Transferee’s
delivery of and (y) in the case of a transfer pursuant to Section 6.2(h),
the Substitute Transferee’s delivery of (such Eligible Lessor Transferee or
Substitute Transferee, as the case may be, referred to herein as the “Lessor
Transferee”), an agreement in respect of such transfer, which may be an
assignment and assumption agreement, to furnish to the Administrative Agent
promptly, but in no event later than 30 days after the effective date of such
transfer (or, in the case of recorded documents, if later than 30 days,
promptly after its receipt of such recorded documents), (i) a copy of the
assignment and assumption agreement, any indemnity agreements and/or guarantees


 


43

















 


delivered by such
Lessor Transferee or any of its Affiliates in connection with such transfer and
any title conveyance documents or security instruments (including UCC financing
statements) relating to such transfer to which the Lessor or such Lessor
Transferee is a party, (ii) an opinion of counsel of such Lessor Transferee
(which may be in-house counsel) to the effect that such assumption agreement
and security instruments have been duly authorized, executed and delivered and
are valid and binding agreements enforceable in accordance with their terms,
subject to customary assumptions, qualifications and exceptions for opinions of
such nature and, if applicable, (iii) an officer’s certificate of a Responsible
Officer of such Lessor Transferee or its parent confirming that the Lessor
Transferee is a transferee meeting the requirements set forth in Section
8.1.1.  In no event shall any
failure of such Lessor Transferee to furnish any of the foregoing items result
in any claim by any party hereto that such transfer is void or voidable by any
Person, that the Lessor is liable for any damages as a consequence of such
failure or that the Lessor remains liable, primarily or otherwise, for any
obligations to be performed on or after the date of such transfer; provided,
that the foregoing shall not limit any rights of any party hereto, whether
under the Operative Documents or applicable law, against such Lessor Transferee
as a result of any such failure.  The
parties hereto acknowledge and agree that each Debt Participant is a beneficiary of the matters addressed
this Section 8.1.3 (b).


 


SECTION 8.2.  Pledge Under Regulation A.  Anything in this Article VIII or any
other Operative Document to the contrary notwithstanding, any Debt Participant
may, without the consent of Lessee or Lessor, pledge or assign for security
purposes any portion of its Loans or any of its Lessor Loan Documents or Credit
Note Documents, as applicable, to any Federal Reserve Bank.


 


SECTION 8.3.  Replacement of a Debt
Participant.  If (i) any
Debt Participant defaults in any of its material obligations pursuant to the
Operative Documents, (ii) any Loan Event of Default shall occur which does not
result from a Lease Event of Default, or (iii) payments to a Debt
Participant become subject to withholding taxes, then the Lessee shall be
permitted to replace the defaulting party in the case of clause (i) or (ii)
above or the Participant to which payments have become subject to withholding
taxes in the case of clause (iii) above; provided that the
Administrative Agent shall have the right to direct the Lessee to use
commercially reasonable efforts to replace such Participant in any case where clause
(iii) above may be applicable; provided  further, that any
replacement of any party pursuant to this Section 8.3 shall satisfy the
following conditions:  (A) such
replacement shall not conflict with any Applicable Laws, (B) the replaced party
shall have received all amounts owing to it under the Operative Documents that
have accrued on or prior to the effectiveness of such replacement including any
Make-Whole Amounts, (C) the Lessee shall be obligated to pay any reasonable
fees and expenses arising in connection therewith (provided that the
Lessee may exercise and/or shall preserve its rights and remedies as against a
defaulting Debt Participant), and (D) any replacement party shall agree in
writing to assume and be subject to all of the terms and conditions of the
Operative Documents that were applicable to its predecessor-in-interest and
this Participation Agreement.  Each Debt
Participant agrees to reasonably cooperate with the Lessee in its efforts to
arrange replacements as contemplated by this Section 8.3.


 


SECTION 8.4.  Transfers by the Lessee,
etc.  Neither the Lessee nor the Guarantor
shall assign or transfer any of its rights or obligations under the Operative
Documents to which it is a party, the Facility, or the Overall Transaction,
other than in respect of an assignment or transfer


 


44

















 


specifically
permitted by the Operative Documents and any purported transfer not meeting the
terms of the pertinent Operative Document(s) shall be void.


 


SECTION 8.5.  Extension of Lease
Term Expiration Date.


 


(a)           The Lessee may request in writing (an
“Extension Option Request”) to the Participants that the parties hereto
agree


 


(i)            that
the Maturity Date of the Credit Notes, Lessor Loans and Investor Amount that
would otherwise mature on the Lease Term Expiration Date (as such Maturity Date
and Lease Term Expiration Date may have been extended from time to time (in
accordance with the terms of this Section)) be extended for a period of one
year, and


 


(ii)           in
connection with the extension of the Maturity Date, that the Lease Term
Expiration Date also be extended (each such extension referred to as a “Renewal
Term”) for a one-year period from the then existing Lease Term Expiration
Date (in each instance, an “Extension Option”) in the first instance to
follow the term that would otherwise expire on the Lease Term Expiration Date,
and from year to year thereafter, if the first Extension Option is effected, to
follow the immediately preceding Renewal Term.


 


Each Extension Option Request must be delivered in
writing to each Participant not later than 180 days prior to the then effective
Lease Term Expiration Date.  Each
Participant will notify the Administrative Agent in writing of whether or not
it has consented to any Extension Option Request not later than 45 days after
receipt of the related Extension Option Request (the “Extension Option
Response Date”).  Any Participant
who does not so notify the Administrative Agent and the Lessee by the Extension
Option Response Date will be deemed to have not consented to such Extension
Option Request.  Any Participant that
has notified the Administrative Agent and the Lessee that it has not consented
to an Extension Option Request or that is deemed not to have consented, as
provided in the preceding sentence, shall be deemed a “Non-Consenting
Participant”.  Each Participant’s
determination with respect to an Extension Option Request shall be a new credit
determination and within such Participant’s sole and absolute discretion.


 


Each Extension Option shall become binding, if at all,
as of the first date but on or before the Maturity Date addressed by the then
pending Extension Option Request (the “Extension Option Effective Date”
with respect to such Extension Option) on or after the Extension Option
Response Date on which all Participants (other than Non-Consenting Participants
who have been replaced by Replacement Participants in accordance with Section
8.5(b)) and Replacement Participants shall have consented to such Extension
Request; provided that on both the date of the Extension Option Request
and the Extension Option Effective Date, (x) each of the representations and
warranties made by the Lessee in Article V hereof shall be true and
correct in all material respects as if made on and as of each such date (except
as expressly provided otherwise in the Extension Request), (y) no Lease Event
of Default shall have occurred and be continuing, and (z) on each of such dates
the Administrative Agent shall have received a certificate of the Lessee as to
the matters set forth in clauses (x) and (y) above; and provided
further that in no event shall the Extension Option Effective Date occur
unless each of the


 


45

















 


affected Participants (other than Non-Consenting
Participants who have been replaced) and Replacement Participants in accordance
with Section 8.5(b) shall have consented to the Extension Option Request
on or before the Lease Term Expiration Date (as in effect before giving effect
to any extension requested in such Extension Option Request).


 


(b)           At any time after the Extension
Option Response Date, the Lessee shall be permitted to replace any
Non-Consenting Participant with a replacement bank or other financial
institution (a “Replacement Participant”); provided that, in
addition to the requirements set forth in Section 8.1 or 8.3, as applicable,
(i) such Non-Consenting Participant shall sell (without recourse or
representation or warranty of any kind, other than a representation to the
effect that such Non-Consenting Participant is the owner of its respective
Notes free and clear of all Liens, encumbrances and other interests
attributable to it) to the Replacement Participant all Notes of such
Non-Consenting Participant for an amount equal to the aggregate outstanding
principal amount of such Notes plus accrued interest to (but not including) the
date of sale, (ii) such replacement shall be made in accordance with the
provisions of Section 8.3 (provided that the relevant Replacement
Participant or Lessee shall be obligated to pay the reasonable transaction
costs arising in connection therewith, (iii) the Replacement Participant shall
have agreed to be subject to all of the terms and conditions of the Operative
Documents (including the extension of the Maturity Date) that were applicable
to its predecessor-in-interest and (iv) such replacement must be consummated no
later than the then applicable Maturity Date addressed by the then pending
Extension Option Request.  A
Non-Consenting Participant’s rights under the indemnification provisions of the
Operative Documents shall survive any sale of its Notes to a Replacement
Participant; provided, further, that notwithstanding the above,
if the Non-Consenting Participant is the Lessor, the transfer provisions of Section
8.1.1(b) shall apply.


 


ARTICLE IX


 


INDEMNIFICATION


 


SECTION 9.1.  General Indemnification.


 


SECTION 9.1.1.  General Indemnification.  Whether or not any of the transactions
contemplated hereby shall be consummated, the Lessee shall pay and assume
liability for, and does hereby agree to indemnify, protect, defend, save and
keep harmless, on an After-Tax Basis, each Indemnitee from and against any and
all Claims that may be imposed on, incurred by or asserted against such
Indemnitee (whether because of action or omission by such Indemnitee), whether
or not such Claim is covered by any other indemnification under this Article
IX or such Indemnitee shall also be indemnified as to any such Claim by any
other Person, whenever such Claim arises or accrues, including whether or not
such Claim arises or accrues at any time prior to or after the Maturity Date,
in any way arising out of or relating to:


 


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


 


(b)           the purchase and acquisition by the
Lessor of the Existing Investor Certificates and the Existing Notes, the
liquidation of the Trust (as defined in the Existing Operative Documents) and
each of the other transactions contemplated by the Assignment


 


46

















 


Agreement,
including any Claims relating to (a) any of the Existing Operative Documents,
(b) any act or failure to act by any Person, including the Existing Lessor or any
other Person party to the Existing Operative Documents or (c) the Facility at
any time prior the Advance Date;


 


(c)           the Facility or any part thereof or
interest therein;


 


(d)           the purchase, mortgaging by the
Lessee or its Affiliates, design, construction, preparation, installation,
inspection, delivery, non-delivery, acceptance, rejection, purchase, ownership,
possession, rental, lease, sublease, repossession, maintenance, repair,
alteration, modification, addition or substitution, storage, transfer of title,
redelivery, use, financing, refinancing, operation, condition, sale (including
any sale or other transfer pursuant to the Lease), return or other disposition
of all or any part of any interest in the Facility 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:  (i) Claims or penalties arising from any
violation of law or in tort (strict liability or otherwise), (ii) any Claim
resulting from or related to latent or other defects, whether or not
discoverable, (iii) any Claim resulting from or related to the leasing of the
Facility, (iv) 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 Facility or any part thereof, (v) the making of any
Alterations in violation of any standards imposed by any insurance policies
required to be maintained by the Lessee pursuant to this Participation
Agreement or the Lease which are in effect at any time with respect to the
Facility or any part thereof, (vi) any Claim for patent, trademark or copyright
infringement, (vii) Claims arising from any public improvements with respect to
the Facility resulting in any change or special assessments being levied
against the Facility or any plans to widen, modify or realign any street or
highway adjacent to the Facility, or any Claim for utility “tap-in” fees or
(viii) claims arising from any agreement, arrangement or instrument executed to
fulfill, or enhance, develop or facilitate the development or operation of the
Facility;


 


(e)           the offer, issuance, sale, transfer
or delivery of the Notes by the Lessor;


 


(f)            the breach by the Lessee or the
Guarantor of any covenant, representation or warranty made by it or deemed made
by it in any Operative Document or any certificate delivered by it in
connection therewith;


 


(g)           any contract or agreement entered
into by Guarantor, any of its respective designees or Affiliates or, if so
requested, the Lessor, pursuant to the terms of the Construction Agency
Agreement;


 


(h)           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 with respect to a Plan;


 


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


 


(j)            any other agreement entered into or
assumed by the Lessee or Guarantor in connection with the Facility, or (at the
direction or with the consent of the Lessee or of the Guarantor) by the Lessor;
or


 


47

















 


(k)           the ownership of the Facility;


 


(including, in connection with each of the matters
described in this Section 9.1 to which this indemnity shall apply,
matters based on or arising from the negligence of any Indemnitee).  The Lessee agrees to pay indemnification amounts
owing by it pursuant to this Section.


 


SECTION 9.1.2.  Exceptions to
Indemnifications. 
Notwithstanding the provisions of Section 9.1.1 the Lessee shall
not be obligated to indemnify any particular Indemnitee (nor any of its
Affiliates) under Section 9.1.1 for any Claim to the extent resulting
from or arising out of: (i) such Indemnitee’s fraud, gross negligence (it
being understood that the Lessee shall be required to indemnify such Indemnitee
(subject to the other provisions of this Section 9.1.2) even if the
ordinary (but not gross) negligence of such Indemnitee, or any Affiliate
thereof, caused or contributed to such Claim) or willful misconduct (other than
the fraud, gross negligence or willful misconduct imputed as a matter of law to
such Indemnitee solely by reason of entering into the Operative Documents or
the consummation of the transactions contemplated thereby); (ii) the breach by
such Indemnitee or any of its Affiliates of its respective representations and
warranties in this Participation Agreement or any other Operative Document, or
the breach by such Indemnitee or any of its Affiliates of its covenants as set
forth in this Participation Agreement or in any other Operative Document; (iii)
any Claim resulting from the imposition of any Lessor Lien attributable to such
Indemnitee or its Affiliates; (iv) any Claim for environmental liability, which
liability is addressed in Section 9.5; (v) any Claim to the extent
attributable to acts or events which occur after the expiration of the Lease
Term or earlier termination of the Lease and the return by the Lessee of the
Facility in accordance with the terms thereof (except (A) to the extent fairly
attributable to acts, events, liabilities or damages occurring or accruing
prior thereto; (B) Claims arising following the termination or expiration
of the Lease Term so long as the Administrative Agent or any Participant
continues to exercise remedies against the Lessee in respect of the Operative
Documents and (C) Claims arising after the expiration of the Lease Term so long
as the Lessor is remarketing the Facility (or any interest therein) in
accordance with Section 7.1 of the Lease); (vi) any Claim in respect of
Taxes (such claims to be subject to Section 9.2), other than a payment
to make payments under Section 9.1 or 9.1.2 on an after-tax basis
as provided in Section 9.4; (vii) with respect to any Indemnitee, any
expense expressly provided under any of the Operative Documents to be paid or
borne by such Indemnitee or its Affiliate; (viii) any Claim to the extent
resulting from a voluntary transfer by any Indemnitee or its Affiliate
(including a transfer upon a Lessor GAAP Event pursuant to Section 8.1.1(b))
of all or part of its interest in the Lease, the other Operative Documents or
the Facility, (other than (A) while a Lease Event of Default has occurred and
is continuing, (B) such transfer is required (pursuant to an act or omission of
the Lessee or otherwise) under the Lease, or (C) such transfer is made at the
election of Lessee pursuant to Article VIII); or (ix) any Claim to
the extent resulting from a violation of Applicable Law by such Indemnitee or
its Affiliates (other than (A) a violation of Applicable Law imputed as a
matter of law to such Indemnitee or such Affiliate solely by reason of entering
into the Operative Documents or the consummation of the transactions
contemplated thereby and (B) a violation of Applicable Law resulting from the
failure of the Lessee or the Guarantor to perform its obligations under the
Operative Documents).  It is expressly
understood and agreed that the indemnity provided for in Section 9.1.1
shall survive the resignation or removal of any Indemnitee, the expiration or
termination of, and shall be separate and independent from any remedy under,
the Lease or any other Operative Document.


 


48

















 


SECTION 9.2.  General Tax Indemnity.


 


(a)           Tax Indemnity.  The Lessee shall pay, defend and, on written
demand, indemnify and hold harmless on an After-Tax Basis each Tax Indemnitee
from and against any and all Claims for Taxes which may be imposed, on or with
respect to any Tax Indemnitee, the Facility or any portion thereof, any
Operative Document or the Lessee or any sublessee or user of the Facility in
connection with (i) the acquisition, mortgaging, design, construction,
preparation, installation, inspection, delivery, non-delivery, acceptance,
rejection, purchase, ownership, possession, rental, lease, sublease,
repossession, maintenance, repair, alteration, modification, addition or
substitution, storage, transfer of title, redelivery, use, financing,
refinancing, operation, condition, sale (including any sale pursuant to Article
V, VII or XIV of the Lease), return or other disposition of all or any part of
any interest in the Facility or the imposition of any Lien (or incurrence of
any liability to refund or pay over any amount as a result of any Lien)
thereon, (ii) Base Rent or Supplemental Rent or the receipts or earnings
arising from or received with respect to the Facility or any part thereof, or
any interest therein or any applications or dispositions thereof, (iii) any
other amount paid or payable pursuant to any Operative Documents, (iv) the
Facility or any part thereof or any interest therein, (v) all or any of the
Operative Documents, any other documents contemplated thereby and any
amendments and supplements thereto (except to the extent not initiated or
requested by or consented to by the Lessee in writing), (vi) the issuance of
the Notes and making of the Investor Contribution, (vii) any contract
relating to the construction, acquisition or delivery of the Facility or any
interest therein and (viii) otherwise in connection with the transactions
contemplated by the Operative Documents; provided, that the
indemnification obligation of this Section 9.2(a) shall not apply
to (A) Taxes (other than Taxes that are or are in the nature of, sales, use,
rental, transfer, property, stamp, value added or similar Taxes) which are
based upon or measured by the Tax Indemnitee’s net receipts or net income, or
which are in substitution for any actual Tax based upon or measured by such Tax
Indemnitee’s net receipts or net income (including Taxes that are or are in the
nature of minimum Taxes, capital gains, branch profit Taxes, Tax preference
items or alternative minimum Taxes); provided, that such Taxes shall not be
excluded under this clause A to the extent such Taxes would have been
imposed had the location, possession or use of the Facility or any part thereof
or interest therein, the location or the operation of the Lessee in, or the
Lessee’s making payments under the Operative Documents from the jurisdiction
imposing such Taxes been the sole connection between such Tax Indemnitee and
the jurisdiction imposing such Taxes; provided, further, that
this clause A shall not be interpreted to prevent a payment being made
on an After-Tax Basis if such payment is otherwise required to be so made; (B)
Taxes characterized under state or local law as franchise, net worth, or
shareholder’s capital (other than Taxes that are or are in the nature of,
sales, use, rental, transfer, property, stamp, value added or similar Taxes);
(C) if no Lease Event of Default exists, Taxes based upon the voluntary
transfer, assignment or disposition by a Tax Indemnitee or any Affiliate
thereof of any interest in such Tax Indemnitee, or any interest in any of the
Facility, the Notes or the Investor Amount or any part thereof or any interest
therein (other than transfers pursuant to the Security Documents, transfers
pursuant to the Assignment Agreement, transfers pursuant to the exercise of a
Purchase Option, or the Remarketing Option or otherwise pursuant to the Lease
or at the request of the Lessee or the Guarantor), but only as to amounts in
excess of that which would have been payable by the Lessee or Guarantor if no
transfer, assignment or disposition had occurred; (D) Taxes imposed or
payable by a Tax Indemnitee to the extent imposed with respect to any period
after the later of (x) the termination of the Lease


 


49

















 


and (y) the return
of the Facility; (E) any Tax to the extent that such Tax would have been
imposed without regard to the transactions contemplated by the Operative
Documents; (F) Taxes or liability resulting from any prohibited transaction
described in Section 406 or 407 of ERISA or Section 4975(c) of the Code or
any successor provisions thereto that may arise in connection with any
transaction contemplated by the Operative Documents; (G) Taxes imposed against
or payable by a Tax Indemnitee pursuant to Section 3406 of the Code; (H) any
interest, penalties or additions to Tax imposed against or payable by a Tax
Indemnitee that are the result of the failure of such Tax Indemnitee to file
any return properly and timely, unless such failure is caused by the failure of
the Lessee or the Guarantor to forward to such Tax Indemnitee any information
such Tax Indemnitee has reasonably requested from the Lessee or the Guarantor
(other than information reasonably obtainable by, or in the possession of, such
Tax Indemnitee) or to provide such Tax Indemnitee on a timely basis with any
notifications or notices received by the Lessee or the Guarantor with respect
to such return from any applicable Taxing authority; and (I)  except as
set forth in Section 9.3, withholding Taxes.  Notwithstanding the foregoing, (x) the Lessee and the Guarantor
shall not be required to indemnify under this Section 9.2 for (1) as to
any particular Tax Indemnitee, any Claim to the extent resulting from the gross
negligence, willful misconduct or criminal conduct of such Tax Indemnitee
itself (as opposed to such conduct being imputed to such Tax Indemnitee), any
representation or warranty by such Tax Indemnitee in any of the Operative
Documents being incorrect in any material respect, or the breach by such Tax
Indemnitee of any of the provisions of the Operative Documents, except to the
extent such breach is caused by a breach by the Lessee or the Guarantor of any
of its representations and warranties; and (2) any Claim resulting from
Lessor Liens and (y) the Lessee shall be required to indemnify for Taxes
imposed by a jurisdiction outside of the United States as a result of (i) the
payment by the Lessee or the Guarantor of any amount pursuant to this Participation
Agreement or the other Operative Documents from, (ii) the booking by the
Lessee of some or all of the transaction contemplated by the Operative
Documents in, (iii) the location, possession or use of the Facility or any part
thereof or interest therein in, or (iv) the location or the operation of the
Lessee in such jurisdiction.


 


Notwithstanding the foregoing, the exclusions from the
Lessee’s indemnification obligation of this Section 9.2(a) set forth in sub-clauses
(A), (B), (C) and (D) (to the extent that any such
Tax is imposed by its express terms in lieu of or in substitution for a Tax set
forth in subclauses  (A), (B), (C) and (D)
above) 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 the imposition of such
Taxes or such Tax increase (or, if applicable, such decrease in Taxes) would
not have occurred if on the Advance Date the Lessor had advanced funds to the
Lessee in the form of a loan secured by the Facility in an amount equal to the
Funding funded on the Advance Date, with debt service for such loans equal to
the Base Rent payable on each Scheduled Payment Date and a principal balance at
the maturity of such loan in an amount equal to the Purchase Price at the end
of the Lease Term.


 


(b)           Contests.  The Lessee shall pay on or before the time
or times set forth in Section 9.2(c) all Taxes indemnifiable by the
Lessee under Section 9.2(a); provided, however, that the
Lessee shall be under no obligation to pay any such Tax so long as the payment
of such Tax is not delinquent or is being contested by a Permitted Contest
which is being conducted pursuant to the provisions of this Section 9.2(b).  If any written Claim or Claims is or are
made against any Tax Indemnitee for any Tax which is subject to indemnification
as provided in


 


50

















 


Section 9.2(a)
or if any Tax Indemnitee shall determine that any Taxes as to which the Lessee
may have an indemnity obligation pursuant to this Section 9.2 may be
payable, such Tax Indemnitee shall, as soon as practicable, but in no event
more than thirty (30) days after receipt of formal written notice of the Tax or
proposed Tax, notify the Lessee; provided, however, that the
failure to give such notice shall not limit the Lessee’s obligations under Section
9.2(a) except to the extent that such failure effectively precludes the
ability to conduct a contest of any indemnifiable Taxes.  The Tax Indemnitee shall not take any action
with respect to such Claim, proceeding or Tax 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 Tax 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 30 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), to request in writing that such
Tax Indemnitee permit the Lessee to contest the imposition of such Tax, at the
Lessee’s sole cost and expense.  If (x)
such contest can be pursued in the name of the Lessee and independently from
any other proceeding involving a 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 such Tax Indemnitee
reasonably determines that such contest by the Lessee could have an adverse
impact on the business or operations of the Tax Indemnitee and Tax Indemnitee
provides notice to the Lessee of such determination, the Tax Indemnitee may
elect to control or reassert control of the contest.  In all other Claims requested to be contested by the Lessee, the
Tax Indemnitee shall control the contest of such Claim, acting through counsel
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 meaningful risk of the sale, forfeiture or loss of, or the creation of any
Lien (other than a Permitted Lien) on the Facility or any part 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 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 reasonably satisfactory to the
relevant Tax Indemnitee in respect of the Taxes subject to such Claim and any and
all expenses for which the Lessee is responsible hereunder reasonably
foreseeable in connection with the contest of such Claim, (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


 


51

















 


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 Tax that
the Tax Indemnitee is required to pay (with no additional net after-Tax costs
(including Taxes) but taking into account any net Tax savings associated with
such advance 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 shall be
required:  (A) 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
9.2) exceeds $100,000, (B) unless, if requested by the Tax Indemnitee, the
Lessee shall have provided to the Tax Indemnitee an opinion of independent Tax
counsel selected by the Tax Indemnitee and reasonably acceptable to the Lessee)
that there is a “realistic possibility of success” for such contest under
Applicable Laws and the standards of ABA Formal Opinion 85-352 or, in the case
of an adverse judicial determination, that a substantial likelihood exists for
a reversal or substantial modification of such decision on appeal.  In no event shall a Tax Indemnitee be
required to appeal an adverse judicial determination to the United States
Supreme Court and (C) unless Lessee has acknowledged in writing its obligation
to pay the Claim if the contest is not successful.


 


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) but the decisions regarding what actions
to be taken shall be made by the controlling party in its sole judgment, provided,
however, that if the Tax Indemnitee is the controlling party and the Lessee
recommends the acceptance of a settlement offer made by the relevant
Governmental Authority and such Tax Indemnitee rejects such settlement offer,
then the amount for which the Lessee will be required to indemnify such Tax
Indemnitee with respect to the Taxes subject to such offer shall not exceed the
amount which it would have owed if such settlement offer had been
accepted.  In addition, the controlling
party shall keep the non-controlling party reasonably informed as to the
progress of the contest, and shall provide the non-controlling 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 within such Tax Indemnitee’s possession 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
9.2(b), and the Lessee shall promptly reimburse such Tax Indemnitee for the
reasonable out-of-pocket expenses of supplying such information and documents.


 


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 imposition of
any Tax if (i) such Tax Indemnitee shall waive its right to indemnification
under this Section 9.2 with respect to such Claim and shall pay to the
Lessee any amount previously paid or advanced by the Lessee pursuant to this Section
9.2 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 the Lessee provides, at the Lessee’s expense,
an opinion of independent


 


52

















 


Tax counsel reasonably acceptable to such Tax
Indemnitee 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.  Subject to Section 9.2(b), any Tax
indemnifiable under Section 9.2(a) shall be paid directly when due 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 Section 9.2(a) 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 or, in the case of Taxes which are being contested
in accordance with the provisions of Section 9.2(b), the time such
contest is finally resolved.  Any
payments made pursuant to Section 9.2(a) directly to the Tax Indemnitee
entitled thereto or the Lessee, as the case may be, shall be made in
immediately available funds at such bank or to such account as specified by the
payee in written directions to the payor, or, if no such direction shall have
been given, by check of the payor payable to the order of the payee by
certified mail, postage prepaid at its address as set forth in Schedule III.  Subject to Section 9.2(b), 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 (if available) for its payment of such Tax or such
other evidence of payment as is reasonably acceptable to such Tax
Indemnitee.  If the Tax Indemnitee has
actual knowledge of the Lessee’s failure to pay any Tax required to be paid by
the Lessee hereunder, such Tax Indemnitee shall notify the Lessee of such
failure within 30 days of such Tax Indemnitee’s obtaining such actual
knowledge.


 


Upon determination by a Tax Indemnitee, in its sole
reasonable discretion that it has received 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 as set forth in Section 9.4(b), 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 the Lessee under the Lease or the
other Operative Documents; 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 or is
then due from the Lessee, reduced by all prior payments by such Tax Indemnitee
under this Section 9.2(c) 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 from indemnified Taxes
set forth in Section 9.2(a).


 


(d)           Reports.  If any report, return or statement is
required to be filed with respect to any Taxes that are subject to
indemnification under Section 9.2(a); the Lessee shall, if the Lessee is
permitted by Applicable Laws, timely prepare and file such report, return or
statement; provided, however, that if the Lessee is not permitted
by Applicable Laws to file any such report the Lessee will promptly so notify
the appropriate Tax Indemnitee, in which case the Tax Indemnitee will file any
such report after preparation thereof by the Lessee, provided, that in
each case such Tax Indemnitee shall have furnished the Lessee with such
information not within the control of (or otherwise reasonably available to)
the Lessee, as is in such Tax Indemnitee’s control or is reasonably available
to such Tax Indemnitee and necessary to file such filing.  The


 


53

















 


Lessee will
deliver any such return, together with immediately available funds for payment
of any Tax due, to such Tax Indemnitee at least twenty (20) days in advance of
the date such return or payment is due. 
The Lessee agrees that, with respect to Taxes pertaining to the
Facility, the Lessee shall be solely responsible for the accuracy, except to
the extent of any information provided by the Tax Indemnitee, and completeness
of all required forms for execution by the appropriate Person, and Tax
Indemnitee’s sole responsibility shall be to execute all such forms, to the
extent required by Applicable Laws, at the reasonable direction of the
Lessee.  If the Tax Indemnitee has
actual knowledge of the Lessee’s failure to file any report required to be
filed by the Lessee hereunder, such Tax Indemnitee shall notify the Lessee of
such failure within 30 days of obtaining such actual knowledge.  All of the Lessee’s preparation and filing
obligations pursuant to this Section 9.2(d) shall be at Lessee’s sole
cost and expense.


 


(e)           Tax Ownership.  Unless judicially determined to the
contrary, each Participant (and the respective successors, assigns and
transferees of each Participant) covenants, represents and warrants that it
will not claim ownership for United States Tax purposes of (or any Tax
benefits, including depreciation, with respect to ownership of) the Facility
prior to the termination of the Lease, it being understood that the Lessee is
and will remain the owner of the Facility for such income Tax or other Tax
purposes during the term of the Lease. 
Nothing in this Section 9.2 shall require any Participant to
disclose any Tax returns to the Lessee.


 


SECTION 9.3.  Withholding Tax.


 


(a)           On the Advance Date, or in the case
of a Person that actually becomes a Participant after the Advance Date at least
ten (10) Business Days prior to the first date on which any payment is due
hereunder to such Participant, each Participant that is a Non-U.S. Person shall
deliver to each of the Lessee, the Lessor (if such Participant is not the
Lessor) and the Administrative Agent, the Prescribed Forms.  If any Participant that is a Non-U.S. Person
is unable or otherwise fails to so deliver the Prescribed Forms, the Lessee,
the Lessor and the Administrative Agent, or any other appropriate party, shall
be entitled to withhold from any payments to such Participant under this
Participation Agreement and the Administrative Agent shall be entitled to
withhold from any payments to such Participant under the Credit Note Purchase
Agreement and the Lessor Loan Agreement, such amounts of Tax as may be required
by law to be so withheld, after taking into account any reduction in the rate
of applicable withholding Tax to which such Participant may establish its
eligibility by duly filing an IRS Form W-8BEN or W-8ECI (or successor form)
with the Lessee, the Lessor and the Administrative Agent, and none of the
Lessee, the Guarantor, the Lessor or the Administrative Agent shall have any
obligation to pay such Participant for any Taxes so withheld, except as
provided in Section 9.3(b).


 


(b)           If any change occurs after a Non-U.S.
Person becomes a Participant which renders the Prescribed Forms previously
delivered by such Participant inapplicable or, in the case of any Prescribed
Form that is not, by its terms, effective for the Lease Term, which would
prevent such Person from duly completing and delivering any renewal, extension
or continuation of a Prescribed Form previously filed by such Person, such
Participant shall promptly (after obtaining actual knowledge of such change)
advise the Administrative Agent, the Lessee and the Lessor (if such Participant
is not the Lessor) that it is no longer capable of receiving payments without
the withholding of United States Tax and that the Administrative Agent, the
Lessee and the Lessor (if such Participant is not the Lessor) are obligated to
withhold United States Tax


 


54

















 


from payments by
them to such Participant. 
Notwithstanding any other provision of this Participation Agreement to
the contrary, if any such change involves a change in a treaty, law or
regulation (or a published change in the interpretation or application
thereof), the Lessee shall be obligated to pay such Participant, on an
After-Tax Basis, for any United States Tax (other than Excluded Taxes) which
must be withheld from payments made to such Participant under this Participation
Agreement after such Participant notifies the Lessee and the Lessor (if such
Participant is not the Lessor) of such change, but only if and to the extent
that the obligation to withhold such United States Tax arises solely by reason
of a change in treaty, law, or regulation which takes effect after the date on
which such Participant became a Participant.


 


(c)           If and to the extent the Lessor (or
its agent) has in good faith attempted to comply with its obligation to
withhold Taxes and a claim is made against it or another Tax Indemnitee, 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
(or its agent) (without any duplication of indemnification otherwise required
under this Participation Agreement) on an After-Tax Basis against, such claim
to the extent the Lessor (or its agent) has paid funds to any Governmental
Authority with respect to such withholding Taxes or has received a demand
therefor.


 


(d)           Should a Participant determine in its
sole reasonable discretion it has received any refund, credit or deduction from
any Taxing authority to which such Participant would not be entitled but for
the payment by the Lessee of any United States Tax, pursuant to Section
9.3(b), such Participant thereupon shall repay to the Lessee an amount with
respect to such refund, credit or deduction equal to any net reduction in Taxes
actually obtained by such Participant which is attributable to such refund,
credit or deduction (but not in excess of the amount of the related payment
paid by the Lessee to, or for, the Participant pursuant to Section 9.3(b));
provided, however, that as long as an Event of Default is continuing any
such repayment may be applied against any amounts due and owing by the Lessee
under the Lease or other Operative Documents.


 


(e)           Notwithstanding anything herein to
the contrary, the Lessee shall indemnify any Tax Indemnitee against any Taxes
imposed by way of withholding (other than Excluded Taxes) by a jurisdiction
outside of the United States solely as a result of (i) the payment by the
Lessee of any amount pursuant to this Participation Agreement or the other
Operative Documents from, (ii) the booking by the Lessee of some or all of the
transactions contemplated by the Operative Documents in, (iii) the location,
possession or use of the Facility or any part thereof or interest therein in,
or (iv) the location or the operation of the Lessee such jurisdiction.


 


SECTION 9.4.  Calculation of
General Tax Indemnity Payments.


 


(a)           Any payment or indemnity to or for
the benefit of any Tax Indemnitee with respect to a Tax which is subject to
indemnification under Section 9.2(a) shall (A) (other than payment of
Taxes to applicable Governmental Authorities) reflect the actual current net
savings available to such Tax Indemnitee or any Affiliate thereof resulting
from the current deduction of such indemnified Tax or the event or circumstance
giving rise thereto (such current net savings to be determined on an incremental
basis after taking into account all other available deductions of the Tax
Indemnitee) and (B) include, after taking into account the savings 


 


55

















 


described in
clause (A), the amount necessary to hold such Tax Indemnitee harmless on an
After-Tax Basis; provided that, at the request of the Lessee, a Tax
Indemnitee will certify to the Lessee the extent, if any, to which such Tax
Indemnitee was able to use currently such deduction on its Tax return.  If, by reason of any payment made to or for
the account of a Tax Indemnitee by Lessee pursuant to Section 9.2, or
the event or circumstance giving rise to such payment, such Tax Indemnitee or
an Affiliate determines in its sole reasonable discretion it has actually realized
a net Tax benefit, savings, deduction or credit not taken into account in
computing such payment, such Tax Indemnitee shall promptly pay to the Lessee an
amount equal to the sum of (x) the actual net reduction in Taxes, if any,
realized by such Tax Indemnitee or any Affiliate thereof attributable to such
net Tax benefits, savings, deduction or credits and (y) the actual net
reduction in any Taxes realized by such Tax Indemnitee or an Affiliate as the
result of any payment made by such Tax Indemnitee pursuant to this sentence; provided
that, no Tax Indemnitee shall be obligated to make any payment pursuant to clause
(x) of this Section 9.4(a) to the extent that the amount of such
payment would exceed (1) the amount of all prior payments of Tax or payments
under Section 9.2(c) paid by the Lessee to or on behalf of such Tax
Indemnitee pursuant to this Section 9.4 less (2) the amount of all prior
payments pursuant to this Section 9.4(a) and described in clause (x)
by such Tax Indemnitee to the Lessee; but any such excess shall reduce pro
tanto any amount of Taxes under Section 9.2 that the Lessee is
subsequently obligated to pay directly to such Tax Indemnitee (as opposed to
directly to any Taxing authority pursuant to the first sentence of Section
9.2(c)) pursuant to this Section 9.4; provided, further,
that as long as an Event of Default is continuing any such repayment may be
applied against any amounts due and owing by the Lessee under the Lease or
other Operative Documents.


 


(b)           After-Tax Basis.  If a Tax Indemnitee determines in its sole
reasonable discretion it shall not be entitled to corresponding and equal
credits or deductions for United States Tax purposes with respect to any
payment or Tax which the Lessee is required to pay or reimburse under any other
provision of this Article IX (each such payment or reimbursement an “Original
Payment”), in the same Taxable year of such Tax Indemnitee as the year of
inclusion in its Taxable income of such Original Payment, then the Lessee shall
pay to such Tax Indemnitee on demand the amount of such Original Payment on a
grossed-up basis (referred to as the “After-Tax Basis”) such that after
subtracting all United States Taxes imposed on such Tax Indemnitee with respect
to such Original Payment (including any required gross-up), (determined for
this purpose based on the highest marginal federal income tax rate applicable
to corporations for the relevant period or periods and the highest applicable
state or local marginal rates of such taxing authority applicable to
corporations for the relevant period or periods), such payments shall be equal
to the Original Payment (net of any credits, deductions or other Tax benefits
then actually recognized that arise from the payment or deemed payment by such
Tax Indemnitee of any amount, including Taxes, for which the payment received
or deemed received is made).  If a Tax
Indemnitee determines in its sole reasonable discretion it is subsequently
entitled to a corresponding and equal credit or deduction in the same Taxable year
as the year of inclusion in its Taxable income, such Tax Indemnitee shall pay
to the Lessee an amount equal to the amount paid as a gross-up with respect to
such Original Payment; provided, however, that as long as a Lease Event
of Default is continuing any such repayment may be applied against any amounts
due and owing by the Lessee under the Lease or other Operative Documents.


 


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SECTION 9.5.  Environmental Indemnity.  Without limitation of the other provisions
of this Article IX, the Lessee hereby agrees to indemnify, hold harmless
and defend each Indemnitee from and against any and all Claims (including
claims for natural resources damages and third party claims for personal injury
or real or personal property damage), 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 third party costs and
expenses incurred in connection therewith (including, but not limited to,
reasonable and documented attorneys’, paralegals’, experts’ and/or consultant’s
fees and expenses), including, but not limited to, all costs incurred in
connection with any investigation or monitoring of site conditions or any
clean-up, remedial, removal or restoration work by any federal, state or local
government agency, or judicial proceeding, arising in whole or in part, out of:


 


(a)           the presence on or under the Facility
of any Hazardous Materials, or any Releases or discharges, or threatened
Releases or discharges of any Hazardous Materials on, under, from or onto the
Facility, whether from historic or future threatened releases of Hazardous Materials,
and whether or not caused by the Lessee or the Guarantor,


 


(b)           any activity, including construction,
carried on or undertaken on or off the Facility, and whether by the Lessee, the
Guarantor or any predecessor in title or any employees, agents, contractors or
subcontractors of the Lessee, the Guarantor or any predecessor in title, or any
other Person (including such Indemnitee), in connection with the handling,
treatment, removal, storage, decontamination, clean-up, transport or disposal
of any Hazardous Materials that at any time are located or present on or under
or that at any time migrate, flow, percolate, diffuse or in any way move onto
or under the Facility,


 


(c)           loss of or damage to any property or
the environment (including 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
Facility, the Lessee or the Overall Transaction,


 


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


 


(e)           any residual contamination on or
under the Facility, or affecting any natural resources, and to any
contamination of any property or natural resources arising in connection with
the generation, use, handling, storage, transport or disposal of any Hazardous
Materials, and irrespective of whether any of such activities were or will be
undertaken in accordance with Applicable Laws;


 


provided, however, the Lessee
and Guarantor shall not be required to indemnify any Indemnitee under this Section
9.5 for (1) any Claim to the extent resulting from the willful misconduct
or gross negligence of such Indemnitee, or any Affiliate of such Indemnitee (it
being  understood that the Lessee shall be required to indemnify
an Indemnitee even if the ordinary (but not gross) negligence of such
Indemnitee, or any Affiliate of such Indemnitee, caused or contributed to


 


57

















 


such Claim) or (2) 
any Claim to the extent attributable to acts or events which occur after
the expiration of the Lease Term or earlier termination of the Lease and the
return of the Facility by the Lessee in accordance with the terms thereof
(except (A) to the extent fairly attributable to acts, events, liabilities or
damages occurring or accruing prior thereto; (B) Claims arising following the
termination or expiration of the Lease Term so long as the Administrative Agent
or any Participant continues to exercise remedies against the Lessee in respect
of the Operative Documents and (C) Claims arising after the expiration of the
Lease Term so long as the Lessor is remarketing the Facility (or any interest
therein) in accordance with Section 7.1 of the Lease).  It is expressly understood and agreed that
the indemnity provided for herein shall survive the expiration or termination
of, and shall be separate and independent from any remedy under, the Lease or
any other Operative Document.


 


SECTION 9.6.  Proceedings in Respect of
Claims.  With respect to any
amount that the Lessee is requested by an Indemnitee to pay by reason of Section
9.1 or 9.5, such Indemnitee shall, if so requested by the Lessee and
prior to any payment, submit such additional information to the Lessee as the
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 in respect of a Claim covered by the Lessee’s
indemnification obligations, such Indemnitee shall promptly notify the Lessee
of the commencement thereof, 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; provided, however, that 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.  The 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) (x) in the reasonable opinion of such
Indemnitee, such action, suit or proceeding involves any risk of imposition of
criminal liability or creates a material risk of the sale, loss or forfeiture
of the Facility or impairs in any way the payment of Base Rent or Supplemental
Rent or the Lien of the Mortgages or gives rise to the creation of any Lien
other than a Permitted Lien with respect to the Facility or any portion
thereof, (y) in the reasonable opinion of such Indemnitee, the control of such
action, suit or proceeding would involve an actual or potential conflict of
interest (as set forth in a written legal opinion of independent counsel to
such Indemnitee (based on factual determinations set forth in a certificate
furnished by such Indemnitee to its counsel, upon which certificate counsel to
such Indemnitee may rely), which opinion shall be reasonably satisfactory to
the Lessee) or (z) the Lessee requests the change in control more than ninety
(90) days after its receipt of the 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 the Claim
and, in the reasonable opinion of such Indemnitee, the control of such action,
suit or proceeding would cause an actual or potential adverse effect on such
Indemnitee as a result of such Indemnitee (or the Lessee, immediately after
taking control) being unable to respond to or take other timely action in the
course of such action, suit or proceeding due to the change in control, (B)
such proceeding involves material Claims not fully indemnified by the Lessee
which the Lessee and the Indemnitee have been unable to sever from the
indemnified Claim(s), (C) a Default or Lease Event of Default has occurred and
is continuing or (D) the Lessee has not acknowledged in writing that such Claim
is fully indemnified by the Lessee hereunder. 
The


 


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Indemnitee may participate in a reasonable manner at
its own expense with its own counsel in any proceeding conducted by the Lessee
in accordance with the foregoing; provided that the foregoing shall not
limit Lessee’s obligation to reimburse Indemnitee for all reasonable legal
fees, costs and expenses incurred by Indemnitee with respect to any period
during which such proceeding is not being conducted by Lessee in accordance
with this Section 9.6.  The
Lessee may enter into any settlement or other compromise on behalf of the
Indemnitee with respect to any Claim which is entitled to be indemnified under Section
9.1 or 9.5, and which the Lessee has acknowledged its obligation to
indemnify, without the prior written consent of the Indemnitee, except as to
any settlement or compromise requiring the performance of any obligation by the
Indemnitee (unless such obligation can be performed by the Lessor) or an
admission of wrongdoing or liability of such Indemnitee.


 


Each Indemnitee shall, at the sole expense of the
Lessee, supply to the Lessee such information, documents and the identity of
witnesses 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 9.6 and which are reasonably available to such
Indemnitee.  Unless a Bankruptcy
Default, a Lease Event of Default or any other Event of Default caused by a
Lease Default has occurred and is continuing, no Indemnitee shall enter into
any settlement or other compromise with respect to any Claim which is entitled
to be indemnified under Section 9.1 or 9.5 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
9.1 or 9.5 with respect to such Claim, does not admit any criminal
liability or civil liability on behalf of Lessee in connection with such Claim,
and uses reasonable efforts to advise Lessee on the status of proceedings from
time to time during the pendency of such Claim.


 


Upon payment in full of any Claim by the Lessee
pursuant to Section 9.1 or 9.5 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 Lessee and give such further assurances as are
necessary or advisable to enable Lessee vigorously to pursue such claims, all
at the Lessee’s expense.


 


Any amount payable to an Indemnitee pursuant to Section
9.1 or 9.5 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 9.7.  Indemnity Payments
in Addition to Lease Obligations. 
The Lessee acknowledges and agrees that its obligations to make
indemnity payments under this Article IX are separate from, in addition to, and
do not reduce, its obligation to pay Base Rent or any other payment required
hereunder or under any other Operative Document in accordance with the
provisions hereof and thereof.


 


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ARTICLE X


 


DISTRIBUTIONS OF PAYMENTS AND GROSS PROCEEDS


 


SECTION 10.1.  Distribution.


 


(a)           Each
payment of Basic Rent (and any payment of interest on overdue installments of
Basic Rent) received by the Administrative Agent shall be distributed by the
Administrative Agent to the Participants, pro  rata in accordance
with, and for application to, the amount of Interest and Yield (as applicable)
then due on the Credit Notes, the Lessor Loans, and the Investor Amounts, as
well as any overdue interest due to each Credit Note Purchaser, Lessor Lender
and Lessor (to the extent permitted by Applicable Laws).


 


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


 


(i)            the purchase of all of the Facility
in connection with the Lessee’s exercise of its Purchase Option under Section
5.1 of the Lease, or


 


(ii)           the Lessee’s compliance with its
obligation to purchase (or cause its designee to purchase) all of the Facility
in accordance with the Lease, or


 


(iii)          the payment of the Purchase Price in
accordance with Section 14.1 of the Lease, or


 


(iv)          Lessee failing to fulfill one or more
of the conditions to the exercise of the Remarketing Option pursuant to Article
VII of the Lease and the Administrative Agent’s receipt of the Purchase
Price from Lessee pursuant to the last paragraph of Section 7.2 of the Lease,


 


shall be distributed by the Administrative Agent to
the Participants in accordance with the Intercreditor Agreement.


 


(c)           The
payment by the Lessee to the Administrative Agent of the Residual Value
Guaranty Amount in accordance with Section 7.1(c) of the Lease upon the
Lessee’s exercise of the Remarketing Option shall be distributed by the
Administrative Agent to the Participants for application in accordance with the
Intercreditor Agreement to pay in full the Participant Balance of each
Participant.


 


(d)           Any
payments received by the Administrative Agent as Gross Sales Proceeds from the
sale of the Facility pursuant to the Lessee’s exercise of the Remarketing
Option pursuant to Article VII of the Lease shall be distributed by the Administrative
Agent in the funds so received in the following order of priority:


 


first,
so much of such payment or amount as shall be required to reimburse the Lessee,
the Lessor, the Administrative Agent and any other Participant for any
Remarketing Sale Expenses incurred by such Person in connection with such
disposition and approved in advance by Lessor and Lessor Lenders,


 


60

















 


second,
to the Lessor Lenders and the Lessor for application in accordance with the
Intercreditor Agreement to pay in full such Participants’ Participant Balances;
and


 


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


 


(e)           All
payments of Supplemental Rent received by the Administrative Agent (excluding
any amounts payable pursuant to the preceding provisions of this Section 10.1)
shall be distributed promptly by the Administrative Agent upon receipt thereof
to the Persons entitled thereto pursuant to the Operative Documents.


 


(f)            Notwithstanding
any other provision of this Section 10.1, any Excluded Amounts received at any
time by the Administrative Agent shall be distributed promptly to the Person
entitled to receive such Excluded Amounts pursuant to the Operative Documents.


 


(g)           During
the existence of a Lease Event of Default, all payments made by Lessee or
Guarantor and any other amounts received by the Administrative Agent, including
in connection with (x) any sale of all or any part of the Facility as a result
of a Lease Event of Default, or (y) any Casualty or Condemnation after the
occurrence and during the continuance of a Lease Event of Default, shall be
distributed by the Administrative Agent in the following order of priority:


 


first,
to the Participants for application in accordance with the Intercreditor
Agreement to pay in full their respective Participant Balances; and


 


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


 


(h)           (i)            Subject
to Sections 10.1(h)(ii) and 10.1(h)(iii), any payment received by the
Administrative Agent for which no provision as to the application thereof is
made in the Operative Documents or elsewhere in this Section 10.1 shall be
distributed pro rata among the Participants, without priority of one over the
other, in the proportion that the Participant Balance of each bears to the
Lease Balance.


 


(ii)           Except as otherwise provided in
Sections 10.1(a), 10.1(b) and 10.1(g), all payments received and amounts
realized by the Administrative Agent under the Lease or otherwise with respect
to the Facility, or any proceeds thereof, to the extent received or realized at
any time after payment in full of the Participant Balances of all of the
Participants and all other amounts due and owing to the Participants, shall be
distributed forthwith by the Administrative Agent to, or as directed by,
Lessee.


 


(iii)          Any payment received by the
Administrative Agent for which provision as to the application thereof is made
in an Operative Document, but not elsewhere in this Section 10.1, shall be
distributed forthwith by the Administrative Agent to the Person and for the
purpose for which such payment was made in accordance with the terms of such
Operative Document.


 


(i)            Except
to the extent Section 10.1(g) in connection with a Lease Event of Default is
applicable thereto, any amounts payable to the Administrative Agent as a result
of a 


 


61

















 


Casualty or Condemnation in respect of the Facility pursuant to Section
14.1 of the Lease shall be distributed as follows:  all amounts payable to Lessee for the restoration or repair of
damage caused by such Casualty or Condemnation in accordance with Section
14.2(a) of the Lease shall be distributed to, or as directed by, Lessee.


 


ARTICLE XI


 


LESSEE, GUARANTOR DIRECTIONS


 


SECTION 11.1.  Lessee
Directions.  Notwithstanding
anything to the contrary contained in the Operative Documents, the Participants
agree that, so long as no Lease Event of Default has occurred and is continuing
which has caused the acceleration of the maturity of the Notes and the
termination of the Commitments:


 


(a)           Each
of the Guarantor and the Lessee shall have the right to give all prepayment
notices pursuant to the Credit Note Purchase Agreement and the Lessor Loan
Agreement (and the Lessee hereby agrees that the Guarantor is hereby
irrevocably authorized and directed on behalf of the Lessee to deliver such
notices, and that the Participants shall not be liable to the Lessee for any
claims arising out of the Participants’ following the direction or request of
the Guarantor); and


 


(b)           The
Lessee shall have the right to replace a Participant pursuant to Section 8.3.


 


SECTION 11.2.  Notice
to the Administrative Agent.


 


(a)           The
Lessee shall give written notice to the Administrative Agent, concurrently with
making a payment of Base Rent or any Supplemental Rent to the Administrative
Agent.  Such notice shall specify the
amount of the payment that is being made for each of the (a) Base Rent
payable to the Debt Participants, (b) Base Rent payable to the Lessor
and/or (c) Supplemental Rent.


 


(b)           If
the Lessee shall exercise its Purchase Option under Article V of the
Lease, the Lessee shall give the Administrative Agent written notice concurrent
with the notice due to the Lessor pursuant to Section 5.1(b) of the Lease.  Such notice shall specify the amount of the
Lease Balance, and all other amounts owing in respect of Rent, including
Supplemental Rent, accruing through the Purchase Date.


 


(c)           The
Lessee shall give the Administrative Agent notice concurrently with the payment
of any portion of Residual Value Guaranty Amount (and all other amounts due and
owing in respect to Rent (including Supplemental Rent) pursuant to the Section
7.1(c) of the Lease.  Any such notice
shall contain both the amount and the computation of such Residual Value
Guaranty Amount.


 


(d)           If
the Lessee shall exercise its Remarketing Option under Section 7.1 of the
Lease, the Lessee shall give the Administrative Agent notice concurrent with
the notice due to the Lessor pursuant to Section 7.1 of the Lease.  In addition, Lessee shall give the 


 


62

















 


Administrative Agent two (2) Business Days’ notice prior to the Sale
Date, setting forth the amount to be paid to the Administrative Agent pursuant
to Section 7.1(c) of the Lease.


 


(e)           Not
less than two (2) Business Days prior to
any prepayment of any Note or Investor Amount giving rise to the payment of a
Make-Whole Amount, the Lessee (on behalf of the Lessor, in the case of the
Notes) shall deliver to each affected holder of one or more Notes or the Lessor
with respect to its Investor Amounts, as applicable, a certificate of a
Responsible Officer specifying the calculation of the Make-Whole Amount with
respect to such Notes or Investor Amounts, as applicable, as of the specified
prepayment date.  Notwithstanding the
foregoing, no notice requirement set forth in this Article XI shall
limit or reduce any other notice requirements set forth in the Operative
Documents, including any notice required to be given by the Lessee in
connection with the Purchase Option pursuant to the Lease.


 


ARTICLE XII


 


MISCELLANEOUS


 


SECTION 12.1.  Survival of
Agreements.  All
representations, warranties, covenants, indemnities and agreements of the
parties provided for in the Operative Documents (including, without limitation,
the indemnities set forth in Article IX), and the obligations of the
parties under any and all thereof, shall survive the execution and delivery and
the termination or expiration of the Lease and any of the other Operative
Documents, the transfer of the Facility or any portion thereof as provided
herein or in any of the other Operative Documents (and shall not be merged into
any conveyance or transfer document), 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 12.2.  Brokers.  The Lessee, the Guarantor, the Lessor, each
Debt Participant, and the Administrative Agent each represents to the other
that it has not retained or employed any broker, finder or financial advisor to
act on their behalf in connection with the Overall Transaction, nor has it
authorized any other 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 the Lessee, the Guarantor, the Lessor, any Debt Participant or the
Administrative Agent might be subjected by virtue of their entering into the
transactions contemplated by this Participation Agreement.  Any Person who is in breach of this
representation shall indemnify and hold the other Persons harmless from and
against any liability arising out of such breach of this representation.  The provisions of this Section 12.2
shall survive the expiration or termination of this Participation Agreement or
any other Operative Document.


 


SECTION 12.3.  Notices.  Unless otherwise specified herein, all
notices, requests, demands or other communications to or upon the respective
parties hereto shall be by letter, facsimile (with telephonic confirmation),
bank wire or where expressly provided for in the Operative Documents, telephone
(with written confirmation promptly thereafter), and shall be deemed to have
been given, in the case of notice by letter, the earlier of when delivered to
the addressee by hand or courier (including an overnight 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


 


63

















 


requested, addressed as provided on Schedule III and, in the
case of notice by facsimile, telephone or bank wire, when transmitted during
business hours on a Business Day and, if not transmitted during business hours
on a Business Day, the first Business Day thereafter, addressed as provided on Schedule
III, or to such other address as any of the parties hereto may designate by
written notice.  Copies of all notices
given by facsimile or bank wire shall be contemporaneously sent by overnight
courier.  Notwithstanding any other
provision of this Participation Agreement or the Operative Documents, if the
Lessee or the Guarantor is required to deliver notice to one or more of the
parties to the Operative Documents notice to all such parties shall be deemed
to have been duly given by the Lessee or the Guarantor by delivering any such
notice to the Administrative Agent, who shall in turn promptly deliver such
notice to the appropriate party hereto.


 


SECTION 12.4.  Counterparts.  This Participation Agreement and each of the
other Operative Documents may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.


 


SECTION
12.5.  Amendments. 
No Operative Document (other than the Intercreditor Agreement, the
provisions for which are contained therein) nor any of the terms thereof may be
terminated, amended, supplemented, waived or modified without the written
agreement or consent of the Administrative Agent (as directed by the
Participants in accordance with the Intercreditor Agreement) and Lessee (to the
extent any Obligor is a party to such Operative Document and so long as no
Bankruptcy Default or Lease Event of Default shall have occurred and is
continuing); provided, however, notwithstanding the above, no
termination, amendment, supplement, waiver or modification adversely affecting
the Lessee or the Guarantor shall, without the written consent of the Lessee be
made to any Operative Document; and provided, further, that such
termination, amendment, supplement, waiver or modification also shall require
the written agreement or consent of each Participant if such termination,
amendment, supplement, waiver or modification would modify any of the
provisions of this Section 12.5.


 


SECTION 12.6.  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 12.7.  Third Party
Beneficiaries.  Except as expressly
provided herein, none of the provisions of this Participation Agreement or the
other Operative Documents are intended for the benefit of any Person, including
the parties to the Existing Operative Documents, except the parties hereto and
their permitted successors and assigns.


 


SECTION 12.8.  Applicable Law.  THIS PARTICIPATION AGREEMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS
LAW BUT EXCLUDING TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW ALL OTHER
CONFLICTS OF LAWS PRINCIPLES AND CHOICE OF LAW RULES OF NEW YORK.


 


64

















 


SECTION 12.9.  Severability.  Any provision of this Participation
Agreement or any of the Operative Documents 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 or thereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.


 


SECTION 12.10.  Limitation
of Liability.  No Debt
Participant, Administrative Agent or the Lessor, the Lessee or the Guarantor
shall have any obligation to any other Debt Participant, the Administrative
Agent or the Lessor or other party hereto with respect to transactions
contemplated by the Operative Documents, except those obligations of such
Person expressly set forth in the Operative Documents or except as set forth in
the instruments delivered in connection therewith, and no Person and no
stockholder, employee, officer, director, beneficial owner, member, manager or
incorporator thereof 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.  Each party
hereto and its affiliates hereby waives and releases any claims, rights or
causes of action it may have against any other party hereto arising in respect
of the Overall Transaction for punitive or consequential damages.


 


SECTION 12.11.  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 and effectuate the intent and purposes of this Participation
Agreement, the other Operative Documents and the transactions contemplated
hereby and thereby (including to the extent permitted under the Operative
Documents, the preparation, execution and filing of any and all UCC financing
statements, fixture filings and other filings or registrations which the
parties hereto may from time to time request to be filed or effected); provided,
however, that the Lessee shall not be required to pay expenses pursuant
to this Section 12.11 to the extent arising from a breach or alleged
breach by the Lessor or a Participant of any representation, warranty or
agreement unless such breach or alleged breach arose in whole or in part from
an act or omission of the Lessee or the Guarantor.  The Lessee, at its own expense and without need of any prior
request from any other party, shall take such actions as may be necessary
(including any action specified in the preceding sentence), or (if a
Participant shall so request) as so requested, in order to maintain and protect
the Lessor’s interest in the Facility provided for hereunder or under any other
Operative Document.


 


The Lessor shall from time to time execute and deliver
all instruments of further assurance and do such further acts as may be
reasonably necessary or proper to carry out more effectively the purpose of the
Assignments of Lease.


 


At any time and from time to time, upon the reasonable
written request of the Lessor and at the sole expense of the Lessee, each of
the Lessee and the Guarantor shall promptly and duly execute and deliver such
further instruments and documents and take such further actions as the Lessor
or the Administrative Agent reasonably may request for the purposes of
obtaining or preserving the full benefits of the Mortgages and of the rights
and powers granted by the Mortgages.


 


65

















 


Without limiting the foregoing, the Lessee agrees that
it will, at its own cost and expense, cause financing statements (including
precautionary financing statements and continuation statements), fixture
filings and other documents, to be recorded or filed at such places and times
in such manner, and will all such other actions or cause such other actions to
be taken, as may be necessary or as may be reasonably requested by the Lessor or
the Administrative Agent in accordance with this Participation Agreement or the
other Operative Documents in order to establish, continue, perfect and protect
the title of the Lessor to the Facility and the rights of the Lessor and the
Debt Participants under the Lease and the other Operative Documents.  To the extent permitted by Applicable Laws,
the Lessee hereby authorizes any such financing statement and fixture filings
to be filed without the necessity of the signature of the Lessee.


 


SECTION 12.12.  Reproduction
of Documents.  This
Participation Agreement and all other Operative Documents, all documents
constituting Schedules or Exhibits hereto or thereto, and all documents
relating hereto or thereto received by any Participant or party hereto, including:  (a) consents, waivers and alterations that
may hereafter be executed; (b) documents received by such Participant or party
in connection with the receipt and/or acquisition of the Facility; and (c)
financial statements, certificates, and other information previously or
hereafter furnished to such Participant or party may be reproduced by such
Participant or party receiving the same by any photographic, photostatic,
microfilm, micro-card, miniature photographic or other similar process.  Each party 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.


 


SECTION 12.13.  Submission
to Jurisdiction.  Each party to
this Participation Agreement irrevocably and unconditionally:


 


(a)           submits
for itself and its property in any legal action or proceeding relating to this
Participation Agreement or any other Operative Document, or for recognition and
enforcement of any judgment in respect thereof, to the non-exclusive general
jurisdiction of the Courts of the State of New York sitting in the County of
New York, the courts of the United States of America for the Southern District
of New York, and appellate courts from any thereof;


 


(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;


 


(c)           agrees
that service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered or certified mail (or any substantially similar
form of mail), postage prepaid, to such Person at its address set forth on Schedule
III or at such other address of which the other Persons shall have been
notified pursuant to Section 12.3; and


 


(d)           agrees
that nothing herein shall affect the right to effect service of process in any
other manner permitted by law or shall limit the right to sue in any other
jurisdiction.


 


66

















 


SECTION 12.14.  Jury Trial.  EACH PARTY TO THIS PARTICIPATION AGREEMENT
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS UNDER THIS PARTICIPATION AGREEMENT OR ANY OTHER OPERATIVE
DOCUMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR
WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR
ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS PARTICIPATION
AGREEMENT OR ANY OTHER OPERATIVE DOCUMENT AND AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.


 


SECTION 12.15.  Appointment
of Administrative Agent.


 


(a)           Each
Participant hereby irrevocably appoints the Administrative Agent as its agent
hereunder and under the other Operative Documents and hereby authorizes the
Administrative Agent to take such action on its behalf and to exercise such
rights, remedies, powers and privileges hereunder or thereunder as are
specifically authorized to be exercised by the Administrative Agent by the
terms hereof or thereof, together with such rights, remedies, powers and
privileges as are reasonably incidental thereto.  The Administrative Agent may execute any of its duties hereunder
and under the other Operative Documents by or through agents or employees.  The relationship between the Administrative
Agent and each Participant is that of agent and principal only, and nothing
herein shall be deemed to constitute the Administrative Agent a trustee for any
Participant or impose on the Administrative Agent any obligations other than
those for which express provision is made herein or in the other Operative
Documents.


 


(b)           Except
as required by the specific terms of the Operative Documents, the
Administrative Agent shall not have any duty to exercise any right, power,
remedy or privilege granted or assigned to it thereby, or to take any
affirmative action or exercise any discretion hereunder or thereunder, unless
directed to do so by the Majority Participants (and shall be fully protected in
acting or refraining from acting pursuant to such directions which shall be
binding upon the Participants), and shall not, without the prior approval of
the Majority Participants and except as otherwise provided in Section 12.5,
consent to any departure by the Lessee, the Guarantor, the Lessor or the
Participants from the terms of the Lease or any Operative Document, waive any
default on the part of any such party under any such agreement or instrument or
amend, modify, supplement, waive or terminate, or agree to any surrender of,
any such agreement or instrument; provided that the Administrative Agent
shall not be required to take any action which exposes the Administrative Agent
to personal liability or which is contrary to this Participation Agreement, the
other Operative Documents or any Applicable Laws.


 


(c)           Neither
the Administrative Agent nor any of its respective directors, officers, agents
or employees shall be liable to any Participant, the Lessee, the Guarantor or
the Lessor, as the case may be, for any action taken or omitted to be taken by
it or them hereunder, under the other Operative Documents, or in connection
herewith or therewith, except for its or their own gross negligence, willful
misconduct or mishandling of funds, nor shall the Administrative Agent be
responsible to any Participant for the validity, effectiveness, value,
sufficiency or enforceability against the Lessee, the Guarantor, the Lessor,
the Participants, the Administrative Agent, this Participation Agreement, the
other Operative Documents or any other 


 


67

















 


document furnished pursuant hereto or thereto or in connection herewith
or therewith.  Without limitation of the
generality of the foregoing, the Administrative Agent: (i) may consult with
legal counsel (including counsel for the Lessee, the Guarantor or the Lessor),
independent public accountants and other experts selected by it and shall not
be liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (ii) makes
no warranty or representation to any Participant and shall not be responsible
to any Participant for any statements, warranties or representations made in or
in connection with this Participation Agreement, the other Operative Documents
or any other document furnished pursuant hereto or thereto or in connection
herewith or therewith; (iii) shall not have any duty to ascertain or to inquire
as to the performance or observance of any of the terms, covenants or
conditions of this Participation Agreement or the other Operative Documents on
the part of any party hereto or thereto or to inspect the property (including
the books and records) of the Lessee, the Guarantor or the Lessor; (iv) shall
not be responsible to any Participant for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Participation
Agreement, the other Operative Documents or any other instrument or document
furnished pursuant hereto or thereto; and (v) shall incur no liability under or
in respect of the Operative Documents by acting upon any notice, consent,
certificate or other instrument or writing to the extent authorized herein or
therein believed by it to be genuine and signed or sent by the proper party or
parties.


 


(d)           Each
Participant hereby severally agrees, in the ratio that the sum of such
Participant’s Participant Balance (or prior to the Advance Date, Commitment)
bears to the aggregate Lease Balance, to indemnify and hold harmless the
Administrative Agent, from and against any and all losses, liabilities
(including liabilities for penalties), actions, suits, judgments, demands,
damages, costs and expenses of any kind whatsoever (including, without
limitation, reasonable fees and expenses of attorneys, accountants and experts)
incurred or suffered by the Administrative Agent in its capacity as the
Administrative Agent hereunder and under the Operative Documents as a result of
any action taken or omitted to be taken by the Administrative Agent in such
capacity or otherwise incurred or suffered by, made upon, or assessed against
the Administrative Agent in such capacity; provided that no Participant
shall be liable for any portion of any such losses, liabilities (including
liabilities for penalties), actions, suits, judgments, demands, damages, costs
or expenses resulting from or attributable to gross negligence or willful
misconduct on the part of the Administrative Agent.  Without limiting the generality of the foregoing, each
Participant hereby agrees, in the ratio aforesaid, to reimburse the Administrative
Agent promptly following its demand for any reasonable out-of-pocket expenses
(including, without limitation, reasonable attorneys’ fees and expenses)
incurred by the Administrative Agent under the Operative Documents and not
promptly reimbursed to the Administrative Agent by the Lessee, the Guarantor,
the Lessor or the other Participants. 
Each Participant’s obligations under this paragraph shall survive the
termination of the Operative Documents and the discharge of the Lessee’s, the
Guarantor’s, the Lessor’s and each other Participant’s obligations
thereunder.  This indemnity shall
survive the removal or resignation of the Administrative Agent.  In no event shall the Administrative Agent
be liable for special, indirect or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits) under the Operative
Documents, even if the Administrative Agent has been advised of the likelihood
of such loss or damage and regardless of the form of action.


 


68

















 


(e)           The
Participants agree that, with respect to their respective obligation to fund
under the Operative Documents, the Investor Contribution, the Credit Notes or
the Lessor Loans, any Participant acting as Administrative Agent shall have the
same rights and powers hereunder as any other Participant and may exercise the
same as though it were not performing the duties specified herein; and the
terms “Participants” or any similar terms shall, unless the context clearly
otherwise indicates, include the Administrative Agent, and the Administrative
Agent may accept deposits from, lend money to, and generally engage in any kind
of banking, trust or other business with the Lessee, the Guarantor, the Lessor,
each Participant or any of their respective Affiliates as if it were not
performing the duties specified herein, and may accept fees and other
consideration from the Lessee, the Guarantor, the Lessor, each Participant or
any of their respective Affiliates for services in connection with the
Operative Documents and otherwise without having to account for the same to any
Participant.


 


(f)            Each
Participant hereby acknowledges that it has, independent of and without
reliance upon the Administrative Agent or any materials provided by the Administrative
Agent or any other Participant and based on such documents and information as
it has deemed appropriate, made its own credit analysis and decision to enter
into the Operative Documents to which it is a party.  The Administrative Agent shall in no event be liable to any
Participant on account of any materials prepared or provided by it.


 


SECTION 12.16.  Resignation
by the Administrative Agent.


 


(a)           The
Administrative Agent may resign as such at any time upon at least thirty (30)
days’ prior written notice to the Lessee, the Lessor, the other Agents and the
Participants.


 


(b)           In
the event of such resignation, the Majority Participants shall as promptly as
practicable appoint a successor agent to replace the Administrative Agent,
subject to the prior written consent of the Lessee (provided that such
consent shall not (x) be required during the continuance of a Lease Event of
Default or any other Event of Default caused by a Lease Event of Default and
(y) in any event, be unreasonably withheld). 
If no successor Administrative Agent shall have been so appointed by the
Majority Participants, and shall have accepted such appointment, within 30 days
after the retiring Administrative Agent’s giving of notice of resignation, then
the retiring Administrative Agent may petition a court of competent
jurisdiction to appoint a successor Administrative Agent.  Any successor Administrative Agent shall (1)
be a commercial bank organized under the laws of the United States of America
or of any State thereof having a combined capital and surplus of at least
$200,000,000 and (2) have commercial paper ratings of A-1 from S&P and P-1
from Moody’s.  Upon the acceptance of
any appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and
become vested with all the rights, powers, discretion, privileges and duties of
the retiring Administrative Agent, and the retiring Administrative Agent shall
be discharged from its duties and obligations hereunder.  Notwithstanding the resignation of any
Administrative Agent hereunder, the provisions of Section 12.15
shall continue to inure to the benefit of the Administrative Agent in respect
of any action taken or omitted to be taken by the Administrative Agent in its
capacity as such while it was such under the Operative Documents.


 


69

















 


SECTION 12.17.  Role of Arranger.  Each party hereto acknowledges hereby that
it is aware of the fact that Wachovia Capital Markets, LLC has acted as an
“arranger” with respect to the Overall Transaction.  The parties hereto acknowledge and agree that Arranger and its
Affiliates 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
3.1, Section 12.2 and this Section 12.17 are for the express
benefit of Arranger, and Arranger shall be entitled to rely thereon as if it
were a party hereto.


 


SECTION 12.18.  Binding Effect.  This Participation Agreement shall be
binding upon and inure to the benefit of the Lessee, the Guarantor and each
other party hereto and their respective successors and assigns.


 


SECTION 12.19.  Limited
Liability.  Anything to the
contrary contained in any Operative Document notwithstanding, no Exculpated
Person shall be personally liable in any respect for any liability or
obligation arising hereunder or under any other Operative Document, including
the payment of principal of, or interest on, the Notes, or for monetary damages
for the breach of performance of any of the covenants contained in any of the
Operative Documents, except as otherwise expressly set forth in this Section
12.19.  The Debt Participants and
the Administrative Agent agree that, in the event any remedies under any
Operative Document are pursued, neither the Debt Participants nor the
Administrative Agent shall have any recourse against any Exculpated Person, for
any deficiency, loss or Claim for monetary damages or otherwise resulting
therefrom and recourse shall be had solely and exclusively against the Lessor’s
Interests (excluding Excluded Amounts) and the Lessee (with respect to the
Lessee’s obligations under the Operative Documents).  Notwithstanding the provisions of this Section, nothing in any
Operative Document shall:  (i)
constitute a waiver, release or discharge of any indebtedness or obligation
evidenced by the Notes, arising under any Operative Document or secured by any
Operative Document, but the same shall continue until paid or discharged,
provided that in no event shall this clause (i) be deemed to change the
non-recourse nature of the Notes as set forth and provided in the Operative
Documents; (ii) relieve any Exculpated Person from liability and responsibility
for (but only to the extent of the damages arising by reason of), active waste
knowingly committed by any Exculpated Person with respect to the Facility, any
fraud, gross negligence or willful misconduct on the part of any Exculpated Person;
(iii) relieve the Lessor from liability and responsibility for (but only to the
extent of the moneys misappropriated, misapplied or not turned over), (A)
except for Excluded Amounts, misappropriation or misapplication by the Lessor
(i.e., application in a manner contrary to any of the Operative Documents) of
any insurance proceeds or condemnation award paid or delivered to the Lessor by
any Person other than the Administrative Agent or (B) except for Excluded
Amounts, any rent or other income or funds received by the Lessor from the
Lessee that is not turned over to the Administrative Agent; (iv) affect or in
any way limit the Administrative Agent’s rights and remedies under any
Operative Document with respect to the Rents and rights and powers of the Administrative
Agent under the Operative Documents or to obtain a judgment against the
Lessees’ interest in the Facility pursuant to the terms of the Operative
Documents or the Administrative Agent’s rights and powers to obtain a judgment
against the Lessor; or (v) relieve any Exculpated Person from liability and
responsibility (A) with respect to such Person’s 


 


70

















 


obligations concerning Lessor Liens, (B) with respect to Lessor’s
obligation to fund its Investor Contribution pursuant to the terms and
conditions set forth in this Participation Agreement or (C) (but only to the
extent of the damages arising by reason of and only to the extent such
liability or responsibility is attributable to)
any representation or warranty of any Exculpated Person contained in Section
5.2 that was false or inaccurate in any material way when made or the
breach by any Exculpated Person of  its
obligations set forth in Section 6.2(b), (d), (h) or (i),  Section 6.3 or Section 6.4.


 


SECTION 12.20.  Consent
to Certain Actions.  The Lessor
shall transfer the Facility in accordance with Article 15 of the Lease and each
of the Lessor and, if applicable, the Administrative Agent shall execute such
documents and instruments necessary to effect such transfer.  Upon satisfaction in full of the Lessee’s
obligations under the Operative Documents, the Administrative Agent shall
release the Mortgages and the Mortgaged Property, and, together with the Lessor,
execute such instruments and agreements as are necessary to effectuate such
release.  The Lessor and the
Administrative Agent shall enter into nondisturbance agreements.


 


SECTION 12.21.  Estoppel
Certificates.  Each party hereto
agrees that at any time and from time to time at the expense of the Lessee, it
will promptly, but in no event later than ten (10) Business Days after request
by any other party hereto, execute, acknowledge and deliver to such other party
or to any prospective purchaser, assignee or mortgagee or third party
designated by such other party, a certificate stating, to the best of its
knowledge (a) that the Operative Documents are unmodified and in force and
effect (or if there have been modifications, that the Operative Documents are
in force and effect as modified and identifying the modification agreements);
(b) if requested, the amounts of outstanding: 
Interest, Yield, Notes and Investor Amounts; (c) the date to which Base
Rent has been paid; (d) if requested of the Lessor, whether or not there is any
existing default by the Lessee in the payment of Base Rent or any other sum of
money due under the Operative Documents, and whether or not, to the knowledge
of the Lessor or the Administrative Agent, there is any other existing Event of
Default on the part of the Lessee or the Guarantor under the Operative
Documents and, if so, specifying the nature and extent thereof; (e) if
requested of the Lessee, whether or not, to the knowledge of the Lessee, there
is any existing default on the part of the Lessor under the Operative Documents
and, if so, specifying the nature and extent thereof; and (f) whether or not,
to the knowledge of the signer after the due inquiry and investigation, there
are any setoffs, defenses or counterclaims against enforcement of the
obligations to be performed under the Operative Documents existing in favor of
the party executing such certificate.


 


71

















 


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


 


	
   

  	
  ROSS DISTRIBUTION, INC., as Lessee

  
	
   

  	
   

  
	
   

  	
  /s/J. Call

  	
   

  
	
   

  	
  John G. Call

  
	
   

  	
  Senior Vice President
  and

  
	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ROSS STORES, INC., as Guarantor

  
	
   

  	
   

  
	
   

  	
  /s/J. Call

  	
   

  
	
   

  	
  John G. Call

  
	
   

  	
  Senior Vice President
  and

  
	
   

  	
  Chief Financial Officer

  



 


1

















 


	
   

  	
  WACHOVIA DEVELOPMENT CORPORATION,

  as Lessor

  
	
   

  	
   

  
	
   

  	
  /s/Evandor S. Jones,
  Jr.

  	
   

  
	
   

  	
  Evander S. Jones, Jr.

  
	
   

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WACHOVIA BANK, NATIONAL

  ASSOCIATION, as Lessor Lender

  
	
   

  	
   

  
	
   

  	
  /s/Lynwood D. Brewer

  	
   

  
	
   

  	
  Lynwood Brewer

  
	
   

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WACHOVIA BANK, NATIONAL

  ASSOCIATION, as Administrative Agent

  
	
   

  	
   

  
	
   

  	
  /s/Evandor S. Jones,
  Jr.

  	
   

  
	
   

  	
  Evander S. Jones, Jr.

  
	
   

  	
  Vice President

  



 


2

















 


	
   

  	
  Credit Note Purchasers:

  
	
   

  	
   

  
	
   

  	
  AMERICAN FIDELITY ASSURANCE

  COMPANY, as a Credit Note Purchaser

  
	
   

  	
   

  
	
   

  	
  By:  ADVANTUS
  CAPITAL MANAGEMENT,

  INC.

  
	
   

  	
   

  
	
   

  	
  /s/Lynne M. Mills

  	
   

  
	
   

  	
  Lynne M. Mills

  
	
   

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FIRST PENN-PACIFIC LIFE INSURANCE

  COMPANY, as a Credit Note Purchaser

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Delaware Investment Advisers, a series of

  
	
   

  	
   

  	
  Delaware Management Business Trust,

  
	
   

  	
   

  	
  Attorney-In-Fact

  
	
   

  	
   

  
	
   

  	
  /s/Bradley S. Ritter

  	
   

  
	
   

  	
  Bradley S. Ritter

  
	
   

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GE EDISON LIFE INSURANCE COMPANY, as a

  Credit Note Purchaser,

  
	
   

  	
   

  
	
   

  	
  By:  GE Asset
  Management Incorporated, its

  Investment advisor

  
	
   

  	
   

  
	
   

  	
  /s/Morian C. Mooers

  	
   

  
	
   

  	
  Morian C. Mooers

  
	
   

  	
  Vice President –
  Private Investments

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GENERAL ELECTRIC CAPITAL ASSURANCE

  COMPANY, as a Credit Note Purchaser,

  
	
   

  	
   

  
	
   

  	
  By:  GE Asset
  Management Incorporated, its

  Investment advisor

  
	
   

  	
   

  
	
   

  	
  /s/Morian C. Mooers

  	
   

  
	
   

  	
  Morian C. Mooers

  
	
   

  	
  Vice President –
  Private Investments

  
				



 


3

















 


	
   

  	
  GE REINSURANCE CORPORATION, as a Credit

  Note Purchaser,

  
	
   

  	
   

  
	
   

  	
  By:  GE Asset
  Management Incorporated, its

  Investment advisor

  
	
   

  	
   

  
	
   

  	
  /s/Morian C. Mooers

  	
   

  
	
   

  	
  Morian C. Mooers

  
	
   

  	
  Vice President –
  Private Investments

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GREAT WESTERN INSURANCE COMPANY, as

  a Credit Note Purchaser,

  
	
   

  	
   

  
	
   

  	
  By:  ADVANTUS
  CAPITAL MANAGEMENT,

  INC.

  
	
   

  	
   

  
	
   

  	
  /s/Lynne M. Mills

  	
   

  
	
   

  	
  Lynne M. Mills

  
	
   

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LINCOLN LIFE & ANNUITY COMPANY OF

  NEW YORK, as a Credit Note Purchaser

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Delaware Investment Advisers, a series of

  
	
   

  	
   

  	
  Delaware Management Business Trust,

  
	
   

  	
   

  	
  Attorney-In-Fact

  
	
   

  	
   

  
	
   

  	
  /s/Bradley S. Ritter

  	
   

  
	
   

  	
  Bradley S. Ritter

  
	
   

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MINNESOTA LIFE INSURANCE COMPANY, as

  a Credit Note Purchaser,

  
	
   

  	
   

  
	
   

  	
  By:  ADVANTUS
  CAPITAL MANAGEMENT,

  INC.

  
	
   

  	
   

  
	
   

  	
  /s/Lynne M. Mills

  	
   

  
	
   

  	
  Lynne M. Mills

  
				



 


4

















 


	
   

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MLT LIFE INSURANCE COMPANY, as a Credit

  Note Purchaser,

  
	
   

  	
   

  
	
   

  	
  By:  ADVANTUS
  CAPITAL MANAGEMENT,

  INC.

  
	
   

  	
   

  
	
   

  	
  /s/Lynne M. Mills

  	
   

  
	
   

  	
  Lynne M. Mills

  
	
   

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE LINCOLN NATIONAL LIFE INSURANCE

  COMPANY, as a Credit Note Purchaser

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Delaware Investment Advisers, a series of

  
	
   

  	
   

  	
  Delaware Management Business Trust,

  
	
   

  	
   

  	
  Attorney-In-Fact

  
	
   

  	
   

  
	
   

  	
  /s/Bradley S. Ritter

  	
   

  
	
   

  	
  Bradley S. Ritter

  
	
   

  	
  Vice President

  
				



 


5

















 


SCHEDULE I

to Participation Agreement


 


CREDIT NOTE
PURCHASERS/PURCHASE COMMITMENTS 


 


	
  Credit Note Purchaser

  	
   

  	
  Commitment

  	
   

  	
  Commitment

  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  General
  Electric Capital Assurance Company

  	
   

  	
  $

  	
  9,800,000.00

  	
   

  	
  14.000

  	
  %

  
	
  GE
  Edison Life Insurance Company

  	
   

  	
  $

  	
  4,900,000.00

  	
   

  	
  7.000

  	
  %

  
	
  GE
  Reinsurance Corporation

  	
   

  	
  $

  	
  9,800,000.00

  	
   

  	
  14.000

  	
  %

  
	
  The
  Lincoln National Life Insurance Company – Segment 19

  	
   

  	
  $

  	
  3,000,000.00

  	
   

  	
  4.286

  	
  %

  
	
  The
  Lincoln National Life Insurance Company – Segment 74

  	
   

  	
  $

  	
  3,000,000.00

  	
   

  	
  4.286

  	
  %

  
	
  The
  Lincoln National Life Insurance Company – Segment 66

  	
   

  	
  $

  	
  3,000,000.00

  	
   

  	
  4.286

  	
  %

  
	
  The
  Lincoln National Life Insurance Company – Segment 71

  	
   

  	
  $

  	
  2,000,000.00

  	
   

  	
  2.857

  	
  %

  
	
  The
  Lincoln National Life Insurance Company – Segment 73

  	
   

  	
  $

  	
  1,000,000.00

  	
   

  	
  1.429

  	
  %

  
	
  Lincoln
  Life & Annuity Company of New York – Segment 63

  	
   

  	
  $

  	
  2,000,000.00

  	
   

  	
  2.857

  	
  %

  
	
  Lincoln
  Life & Annuity Company of New York – Segment 66

  	
   

  	
  $

  	
  1,000,000.00

  	
   

  	
  1.429

  	
  %

  
	
  First
  Penn-Pacific Life Insurance Company

  	
   

  	
  $

  	
  4,700,000.00

  	
   

  	
  6.714

  	
  %

  
	
  Minnesota
  Life Insurance Company

  	
   

  	
  $

  	
  6,883,335.00

  	
   

  	
  9.833

  	
  %

  
	
  American
  Fidelity Assurance Company

  	
   

  	
  $

  	
  1,966,666.00

  	
   

  	
  2.810

  	
  %

  
	
  MTL
  Insurance Company

  	
   

  	
  $

  	
  1,966,666.00

  	
   

  	
  2.810

  	
  %

  
	
  Great
  Western Insurance Company

  	
   

  	
  $

  	
  983,333.00

  	
   

  	
  1.405

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  Commitment

  	
   

  	
  $

  	
  56,000,000.00

  	
   

  	
  80

  	
  %

  



 


Schedule I-1

















 


SCHEDULE II

to Participation Agreement


 


Part A


 


LESSOR LENDERS/LESSOR LOAN
COMMITMENTS


 


	
  Lessor Lender

  	
   

  	
  Commitment

  	
   

  	
  Commitment

  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wachovia Bank, National
  Association

  	
   

  	
  $

  	
  10,500,000.00

  	
   

  	
  15

  	
  %

  
							



 


Part B


 


	
  Lessor

  	
   

  	
  Investor
  Contribution

  Commitment

  	
   

  	
  Commitment

  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wachovia Development
  Corporation

  	
   

  	
  $

  	
  3,500,000.00

  	
   

  	
  5

  	
  %

  
							



 


Schedule I-1

















 


SCHEDULE III

to Participation Agreement


 


ADDRESSES FOR PAYMENT AND
OTHER COMMUNICATIONS


 


LESSEE
AND GUARANTOR:


 


Guarantor:


 


Ross Stores, Inc.


8311 Central Avenue


Newark, CA 94560


 


	
  Attention:

  	
   

  	
  John G. Call

  
	
  Telephone:

  	
   

  	
  510-505-4315

  
	
  Facsimile:

  	
   

  	
  510-505-4388

  



 


Lessee:


 


Ross Distribution, Inc.


8311 Central Avenue


Newark, CA 94560


 


	
  Attention:

  	
   

  	
  John G. Call

  
	
  Telephone:

  	
   

  	
  510-505-4315

  
	
  Facsimile:

  	
   

  	
  510-505-4388

  



 


Account
Information:


Bank:  Wells Fargo Bank


ABA#:  121-000-248


Account Name: Ross
Stores, Inc.


Account Number:  4103109716


 


LESSOR:


 


Wachovia Development
Corporation


c/o Wachovia Bank,
National Association


301 S. College Street,
TW-16


Charlotte, NC 28288-0174


 


	
  Attention:

  	
   

  	
  Gabrielle Braverman

  
	
  Telephone:

  	
   

  	
  704-383-1967

  
	
  Facsimile:

  	
   

  	
  704-383-8108

  



 


Schedule II-1

















 


Account
Information:


 


Wachovia Bank, National
Association


New York, NY


ABA: 031201467


Acct #: 5030000010450


Account Name: Ross Stores


 


ADMINISTRATIVE AGENT:


 


Wachovia Bank, National
Association


c/o Wachovia Bank,
National Association


301 S. College Street,
TW-16


Charlotte, NC 28288-0174


 


	
  Attention:

  	
   

  	
  Gabrielle Braverman

  
	
  Telephone:

  	
   

  	
  704-383-1967

  
	
  Facsimile:

  	
   

  	
  704-383-8108

  



 


Account
Information:


 


Wachovia Bank, National
Association


New York, NY


ABA: 031201467


Acct #: 5030000010450


Account Name: Ross Stores


 


LESSOR LENDER:


 


Wachovia Bank, National
Association


c/o Wachovia Bank,
National Association


301 S. College Street,
TW-16


Charlotte, NC 28288-0174


 


	
  Attention:

  	
   

  	
  Gabrielle Braverman

  
	
  Telephone:

  	
   

  	
  704-383-1967

  
	
  Facsimile:

  	
   

  	
  704-383-8108

  



 


CREDIT NOTE PURCHASERS:


 


GENERAL
ELECTRIC CAPITAL ASSURANCE COMPANY


Address for Payment:


c/o GE Asset Management


Account:  General Electric Capital Assurance Company


601 Union Street, Suite
2200


Seattle, Washington  98101


 


Schedule II-2

















 


Attention:  Private Placements


Phone Number:  (206) 516-4515


Fax Number:  (206) 516-4578


 


Account Information:


Deutsche Bank


14 Wall Street


New York, New York  10005


SWIFT Code:  BKTR US 33


ABA #021001033


Account Number 99-911-145


FCC:  #097833


Ref:  security description, coupon, maturity, PPN
#, identify principal or interest Notices


All notices with respect
to payments and written confirmation of each such payment, including interest
payments, redemptions, premiums, make wholes, and fees should also be addressed
as above with additional copies addressed to the following:


 


GE Asset Management


Account:  General Electric Capital Assurance Company


3003 Summer Street


Stamford,
Connecticut  06904


Attention:  Investment Accounting (Private Placement
Event)


Phone Number:  (203) 356-2734


Fax Number:  (203) 356-3023


Jennifer.Ficko@corporate.ge.com
(preferred method)


All notices with respect
to payment date changes and floating interest rate changes should also be
addressed as above with additional copies addressed to the following:


 


GE Asset Management


Account:  General Electric Capital Assurance Company


3003 Summer Street


Stamford,
Connecticut  06904


Attention:  Trade Operations – Data Integrity


Phone Number:  (203) 921-2126


Fax Number:  (203) 326-4288


allison.lima@corporate.ge.com


All other notices and
communications (including original note agreement, conformed copy of the note
agreement, amendment requests, financial statements) and other general information
to be addressed as first provided above. 
If available, an electronic copy is additionally requested.  Please send to the following e-mail address:  GEAM.privateplacements@corporate.ge.com


Taxpayer I.D.
Number:  91-6027719


 


GE
REINSURANCE CORPORATION


Address for Payment:


c/o GE Asset Management
Incorporated


 


Schedule II-3

















 


Account:  GE Reinsurance General Fund (GREGF)


Two Union Square, 601
Union Street


Seattle, Washington  98101


Attention:  Investment Department, Private Placements


Phone Number:  (206) 516-4515


Fax Number:  (206) 516-4578


 


Account Information:


Deutsche Bank Trust
Company


16 Wall Street


New York, New York  10005


SWIFT Code:  BKTR US 33


ABA #021-001-033


Account Number 99-911-196


FCC:  GE Reinsurance General Fund (GREGF) #098908


Ref:  security description, coupon, maturity, PPN
#, identify principal or interest Notices


All notices and
communications, including notices with respect to payments and written
confirmation of each such payment, to be addressed as first provided above.


Taxpayer I.D.
Number:  36-2667627


 


GE
EDISON LIFE INSURANCE COMPANY


Address for Payment:


c/o GE Asset Management


Account:  GE Edison Life Insurance Company (VIP
Account)


601 Union Street, Suite
2200


Seattle, Washington  98101


Attention:  Private Placements


Phone Number:  (206) 516-4515


Fax Number:  (206) 516-4578


 


Account
Information:


The Bank of New York,
Brussels


ABA #021-000-018


A/C #8900285451


FFC: GE Capital Edison /
4824068400


Ref:  security description, coupon, maturity, PPN
#, identify principal or interest Notices


All notices with respect
to payments and written confirmation of each such payment, including interest
payments, redemptions, premiums, make wholes, and fees should also be addressed
as above with additional copies addressed to the following:


 


GE Asset Management


 


Schedule II-4

















 


Account:  GE Edison Life Insurance Company (VIP
Account)


3003 Summer Street


Stamford,
Connecticut  06904


Attention:  Investment Accounting (Private Placement
Event)


Phone Number:  (203) 356-2734


Fax Number:  (203) 356-3023


Jennifer.Ficko@corporate.ge.com
(preferred method)


All notices with respect
to payment date changes and floating interest rate changes should also be addressed
as above with additional copies addressed to the following:


 


GE Asset Management


Account:  GE Edison Life Insurance Company (VIP
Account)


3003 Summer Street


Stamford,
Connecticut  06904


Attention:  Trade Operations – Data Integrity


Phone Number:  (203) 921-2126


Fax Number:  (203) 326-4288


allison.lima@corporate.ge.com


All other notices and
communications (including original note agreement, conformed copy of the note
agreement, amendment requests, financial statements) and other general
information to be addressed as first provided above.  If available, an electronic copy is additionally requested.  Please send to the following e-mail
address: 
GEAM.privateplacements@corporate.ge.com


Taxpayer I.D.
Number:  None (Foreign Company)


 


THE
LINCOLN NATIONAL LIFE INSURANCE COMPANY


Address for Payment:


c/o Delaware Investment
Advisers


2005 Market Street, 40th
Floor


Philadelphia,
Pennsylvania  19103


Attention:  Investments/Private Placements


Telefacsimile:  (215) 255-1296 Private Placements


 


Account Information:


The Bank of New York


New York, New York


ABA #021 0000 18


BNF Account:  IOC566


Attention:  Private Placement P&I Dept.


Ref:  PPN
                /Description
of Payment/P-$/I-$)


For the account of:  The Lincoln National Life Insurance Company
Custodial Account Numbers Listed Below


 


Schedule II-5

















 


	
  Principal

  Amount of Notes

  	
   

  	
  Account
  Name

  	
   

  	
  Bank

  Custody Number

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $3,000,000

  	
   

  	
  The Lincoln National
  Life Insurance Company—Segment 19

  	
   

  	
  215718

  	
   

  
	
  $3,000,000

  	
   

  	
  The Lincoln National
  Life Insurance Company—Segment 74

  	
   

  	
  215768

  	
   

  
	
  $3,000,000

  	
   

  	
  The Lincoln National
  Life Insurance Company—Segment 66

  	
   

  	
  215733

  	
   

  
	
  $2,000,000

  	
   

  	
  The Lincoln National
  Life Insurance Company—Segment 71

  	
   

  	
  215734

  	
   

  
	
  $1,000,000

  	
   

  	
  The Lincoln National
  Life Insurance Company—Segment 73

  	
   

  	
  215769

  	
   

  



 


Notices


All notices and
communications, including notices with respect to payments and written
confirmation of each such payment, to be addressed to:


 


Delaware Investment
Advisers


2005 Market Street, 40th
Floor


Philadelphia,
Pennsylvania  19103


Attention:  Fixed Income/Private Placements


Telefacsimile:  (215) 255-1296 — Private Placements


 


and


 


Lincoln National
Corporation


1300 South Clinton
Street, Mail Stop 6H-17


Fort Wayne, Indiana  46802


Attention:  K. Estep — Investment Accounting


Telefacsimile:  (260) 455-2622 — Investment Accounting


 


With duplicate notices
with respect to payments to:


 


The Bank of New York


P. O. Box 19266


Newark, New Jersey  07195


Attention:  Private Placement P&I Department


Reference:  Account Name and PPN Number


Taxpayer I.D.
Number:  35-0472300


 


LINCOLN
LIFE & ANNUITY COMPANY OF NEW YORK


Address for Payment:


c/o Delaware Investment
Advisers


2005 Market Street, 40th
Floor


Philadelphia,
Pennsylvania  19103


Attention:  Investments/Private Placements


Telefacsimile:  (215) 255-1296 Private Placements


 


Schedule II-6

















 


Account Information:


Deutsche Bank


New York, New York


ABA #021001033


Private Placement
Processing


A/C #99-911-145


For further credit to
A/C:  Lincoln Life & Annuity Co of
New York


For the account(s) listed
below:


 


	
  Principal

  Amount of Notes

  	
   

  	
  Account
  Name

  	
   

  	
  Bank
  Custody

  Number

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $2,000,000

  	
   

  	
  Lincoln Life &
  Annuity Company of New York—Segment 63

  	
   

  	
  92989

  	
   

  
	
  $1,000,000

  	
   

  	
  Lincoln Life &
  Annuity Company of New York—Segment 66

  	
   

  	
  98440

  	
   

  



 


Notices


All notices and
communications, including notices with respect to payments and written
confirmation of each such payment, to be addressed to:


 


Delaware Investment
Advisers


2005 Market Street, 40th
Floor


Philadelphia,
Pennsylvania  19103


Attention:  Fixed Income/Private Placements


Telefacsimile:  (215) 255-1296 — Private Placements


 


and


 


Lincoln National
Corporation


1300 South Clinton
Street, Mail Stop 6H-17


Fort Wayne, Indiana  46802


Attention:  K. Estep — Investment Accounting


Telefacsimile:  (260) 455-2622 — Investment Accounting


 


With duplicate notices
with respect to payments to:


 


Deutsche Bank Trust
Company Americas


P. O. Box 998


Bowling Green Station


New York, New York  10004


Attention:  Private Placement Unit


Telefacsimile:  (615) 835-2493 Attn Will Saad – Private
Placements


Reference:  Account Name and PPN/CUSIP #


Taxpayer I.D.
Number:  16-1505436


 


Schedule II-7

















 


FIRST
PENN-PACIFIC LIFE INSURANCE COMPANY


Address for Payment:


c/o Delaware Investment
Advisers


2005 Market Street, 40th
Floor


Philadelphia,
Pennsylvania  19103


Attention:  Investments/Private Placements


Telefacsimile:  (215) 255-1296 Private Placements


 


Account Information:


JPMorgan Chase Bank


New York, New York


ABA #021 00 0021


CHASE NYC/CTR/BNF


A/C 900-9-000200


For Further credit:  First Penn-Pacific Life Insurance Company


Bank Custody #: G-05996


Notices


All notices and
communications, including notices with respect to payments and written
confirmation of each such payment, to be addressed to:


 


Delaware Investment
Advisers


2005 Market Street, 40th
Floor


Philadelphia,
Pennsylvania  19103


Attention:  Fixed Income/Private Placements


Telefacsimile:  (215) 255-1296 — Private Placements


 


and


 


Lincoln National
Corporation


1300 South Clinton
Street, Mail Stop 6H-17


Fort Wayne, Indiana  46802


Attention:  K. Estep — Investment Accounting


Telefacsimile:  (260) 455-2622 — Investment Accounting


 


With duplicate notices
with respect to payments to:


 


JPMorgan Chase Bank


Attention:  Private Placement Servicing Unit


14201 Dallas Parkway,
13th Floor


Dallas, Texas  75254


Telefacsimile:  (469) 477-1904 - Private Placements


Reference:  Account Name and PPN/CUSIP #


Taxpayer I.D. Number for
First Penn-Pacific:  23-2044248


 


Schedule II-8

















 


MINNESOTA
LIFE INSURANCE COMPANY


Address for Payment:


400 Robert Street North


St. Paul, Minnesota  55101


Attention:  Advantus Capital Management, Inc.


Telefacsimile:  (651) 223-5959


 


Account Information:


Deutsche Bank Trust
Company Americas


ABA #021-001-033


DDA #50-189518  FBO Minnesota Life Insurance Company


Ref:  Issuer, Rate, Maturity, CUSIP/PPN, P&I
Breakdown


Notices


All notices and
communications, including notices with respect to payments and written
confirmation of each such payment, to be addressed as first provided above.


Taxpayer I.D.
Number:  41-0417830


 


AMERICAN
FIDELITY ASSURANCE COMPANY


Address for Payment:


c/o Advantus Capital
Management, Inc.


400 Robert Street North


St. Paul, Minnesota  55101


Attention:  Client Administrator


 


Account Information:


Bank One Columbus


ABA #044000037


Account Number:  980401787


 


For further credit
to:  Account Number 7000382500


Account Name:  American Fidelity Assurance Company


Attention:  Custody / Jai Ford (877) 244-1083


Notices


All notices and
communications, including notices with respect to payments and written
confirmation of each such payment, to be addressed as first provided above.


Name of Nominee in which
Notes are to be issued:  Strafe &
Co.


Taxpayer I.D.
Number:  73-0714500


 


MTL
INSURANCE COMPANY


Address for Payment:


c/o Advantus Capital
Management, Inc.


 


Schedule II-9

















 


400 Robert Street North


St. Paul, Minnesota  55101


Attention:  Client Administrator


 


Account Information:


The Northern Chgo/Trust


ABA #071-000-152


for credit to:  Account Number 5186041000


for further credit
to:  MTL Insurance Company


Account Number 26-00621


Attention:  Income Collections


Notices


All notices and communications,
including notices with respect to payments and written confirmation of each
such payment, to be addressed as first provided above.


Taxpayer I.D.
Number:  36-1516780


 


GREAT
WESTERN INSURANCE COMPANY


Address for Payment:


c/o Advantus Capital
Management, Inc.


400 Robert Street North


St. Paul, Minnesota  55101


Attention:  Kay Rasmussen A9-4538


 


Account Information:


Deutsche Bank Trust
Company Americas


ABA #026-001-033


 


For credit to:  Merrill Lynch Pierce Fenner & Smith,
Inc.


Account #00810935


Reference Account
Number:  70G-13700


Reference Name:  Great Western Insurance Company


Contact:  Traci Sabellico (201) 557-3212


Notices


All notices and
communications, including notices with respect to payments and written
confirmation of each such payment, to be addressed as first provided above.


Taxpayer I.D. Number:
87-0395954


 


Schedule II-10

















 


SCHEDULE IV

to Participation Agreement


 


FILINGS AND RECORDINGS


 


	
  Part A
  – Lessee Financing Statements:

  
	
   

  
	
  (1)

  	
   

  	
  Debtor:

  	
   

  	
  Ross Distribution, Inc.

  	
   

  	
  Organizational ID:
  2367189

  
	
   

  	
   

  	
  Assignor:

  	
   

  	
  Wachovia Development
  Corporation, as Lessor

  
	
   

  	
   

  	
  Secured Party:

  	
   

  	
  Wachovia Bank, National
  Association, as Administrative Agent

  
	
   

  
	
  (2)

  	
   

  	
  Debtor:

  	
   

  	
  Ross Distribution,
  Inc., as Lessee

  	
   

  	
   

  
	
   

  	
   

  	
  Secured Party:

  	
   

  	
  Wachovia Bank, National
  Association, as Administrative Agent

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  To be filed in the
  following states and offices:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.  California Secretary of State

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Part B – Lessor
  Financing Statements:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (1)

  	
   

  	
  Debtor:

  	
   

  	
  Wachovia Development
  Corporation, as Lessor, Organizational ID: NC 0227005/ Federal Employer
  Identification Number: 56-1610288

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Secured Party:

  	
   

  	
  Wachovia Bank, National
  Association, as Administrative Agent

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  To be filed in the
  following states and offices:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  North Carolina
  Secretary of State

  
	
   

  
	
  Part C – Memorandum of Lease and Deed of Trust

  
	
   

  
	
  Lessee/Trustor: Ross
  Distributions, Inc.

  
	
  Lessor/Beneficiary:  Wachovia Development Corporation (or
  Administrative Agent on its behalf)

  
	
   

  
	
  Part D – Mortgages, Assignments of Lease and Fixture Filings

  
	
   

  
	
  All to be filed in the
  Riverside County, California Records:

  
	
   

  
	
  North Carolina
  Secretary of State

  
	
   

  
	
  (1)

  	
   

  	
  First Lien Mortgage:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Trustor: Wachovia
  Development Corporation and Ross Distribution, Inc.

  
	
  Beneficiary:  Wachovia Bank, National Association, as
  Administrative Agent (on behalf of Lessor Lenders)

  



 

















 


	
  (2)

  	
   

  	
  Second Lien Mortgage:

  
	
   

  	
   

  	
   

  
	
  Trustor: Wachovia
  Development Corporation and Ross Distribution, Inc.

  
	
  Beneficiary:  Wachovia Bank, National Association, as
  Administrative Agent (on behalf of Debt Participants

  
	
   

  
	
  (3)

  	
   

  	
  First Lien Assignment
  of Lease:

  
	
   

  
	
  Assignor: Wachovia
  Development Corporation

  
	
  Assignee:  Wachovia Bank, National Association, as
  Administrative Agent (on behalf of Lessor Lenders)

  
	
   

  
	
  (4)

  	
   

  	
  Second Lien Assignment
  of Lease:

  
	
   

  
	
  Assignor: Wachovia
  Development Corporation

  
	
  Assignee:  Wachovia Bank, National Association, as
  Administrative Agent (on behalf of Debt Participants)

  
	
   

  	
   

  	
   

  
	
  (5)

  	
   

  	
  Fixture Filings (unless
  covered by Mortgages):  Riverside
  County, California Records

  
	
   

  	
   

  	
   

  
	
  Part E – Deed

  
	
   

  	
   

  	
   

  
	
  (1)

  	
   

  	
  Grant Deed from the
  current owner of fee title to the Facility to Wachovia Development
  Corporation

  



 

















 


APPENDIX A

to Participation Agreement


 


DEFINITIONS AND
INTERPRETATION