<PAGE>   1
                                                                  EXHIBIT 10.10


                        SECOND AMENDED AND RESTATED LEASE

                         dated as of December 19, 1996,

                                     between

                                  1994 VCM INC.

                                                                  Lessor,

                                       and

                                THE GEON COMPANY,

                                                                  Lessee

THIS LEASE HAS BEEN MANUALLY EXECUTED IN COUNTERPARTS NUMBERED CONSECUTIVELY
FROM l TO 13. TO THE EXTENT, IF ANY, THAT THIS LEASE CONSTITUTES CHATTEL PAPER
(AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY
APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS LEASE MAY BE CREATED
THROUGH THE TRANSFER OR POSSESSION OF ANY COUNTERPART OF THIS LEASE OTHER THAN
COUNTERPART NO. 1.

                           This is Counterpart No. ___
<PAGE>   2
                                TABLE OF CONTENTS
                            (Not a part of the Lease)
<TABLE>
<CAPTION>
Paragraph                                                                                                   Page
---------                                                                                                   ----
<C>                                                                                                           <C>
 1.      Lease of Property; Title and Condition...........................................................     1

 2.      Use; Quiet Enjoyment; Hazardous Materials........................................................     2

 2A.     Construction; Financing..........................................................................     4

 3.      Term ............................................................................................     4

 4.      Rent ............................................................................................     5

 5.      Net Lease; Non-Terminability.....................................................................     6

 6.      Taxes and Assessments; Compliance with Law; Certain

              Agreements..................................................................................     7

 7.      Matters of Title; Assignability..................................................................     8

 8.      [Intentionally Omitted]..........................................................................     9

 9.      Maintenance and Repair...........................................................................    10

10.      Additional Improvements; Removal.................................................................    11

11.      Lessee's Right to Contest Real Property Taxes....................................................    12

12.      Condemnation and Casualty........................................................................    13

13.      Environmental Event..............................................................................    17

14.      Offer to Purchase................................................................................    19

14A.     HCL Termination Notice...........................................................................    19

15.      Procedure Upon Purchase..........................................................................    19

16.      Insurance........................................................................................    21

17.      Subletting.......................................................................................    24

18.      Permitted Contests...............................................................................    25

18A.     Unwind Fee.......................................................................................    26

19.      Default Provisions...............................................................................    26

20.      Additional Rights; Mortgage......................................................................    31
</TABLE>

                                       i
<PAGE>   3
<TABLE>
<CAPTION>
Paragraph                                                                                                   Page
---------                                                                                                   ----

<C>                                                                                                           <C>
21.      Notices, Demands and Other Instruments ..........................................................    34

22.      No Default Certificate...........................................................................    34

23.      Surrender........................................................................................    35

24.      Separability; Binding Effect; Governing Law; Non-
              Recourse....................................................................................    36

25.      Headings and Table of Contents...................................................................    37

26.      Lessor's Right to Cure Lessee's Default..........................................................    37

27.      Lessee's Options Upon Expiration.................................................................    38

28.      Limitations on Amounts Payable...................................................................    39

29.      Waiver of Trial by Jury..........................................................................    39

30.      No Merger of Title...............................................................................    40

31.      Payments to the Trustee..........................................................................    40
</TABLE>

Schedule A - Description of the Parcel
Schedule A-1 - Description of the Chlorine Facility Easement
Schedule A-2 - HCL Parcel
Schedule B - Fixed Rent and Additional Rent Schedule
Schedule C - Termination Value

                                       ii
<PAGE>   4
                  SECOND AMENDED AND RESTATED LEASE dated as of December 19,
1996 (this "Lease") between 1994 VCM INC., a Texas corporation (the "Lessor"),
having an address at c/o State Street Bank and Trust Company of Connecticut,
N.A., 750 Main Street, Hartford, Connecticut 06103 and THE GEON COMPANY, a
Delaware corporation (the "Lessee"), having an address at One Geon Center, Avon
Lake, Ohio 44012. Schedules A, A-1, A-2, B and C referred to in this Lease are
hereby incorporated by reference herein. Capitalized terms used but not defined
herein shall have the respective meanings set forth in the Second Amended and
Restated Participation Agreement dated as of the date hereof by and among the
Lessee, the Lessor, State Street Bank and Trust Company of Connecticut, National
Association, not in its individual capacity but solely as Trustee under the
Declaration, the financial institutions and Persons named therein and Citibank,
N.A. as Agent (as the same may be further amended, modified or supplemented from
time to time, the "Participation Agreement").

                              Preliminary Statement

                  Lessor has acquired a leasehold interest in the Parcel
described on Schedule A hereto, an easement to the parcel described on Schedule
A-1 hereto and title to the Original Improvements.

                  Lessor and Lessee entered into a Lease dated as of August 16,
1994 which was amended pursuant to the First Amendment to Lease dated as of
December 1, 1994 and the Amended and Restated Lease dated as of November 9, 1995
(as amended, the "Original Lease").

                  The parties desire to further amend and restate the Original
Lease to extend the term of the Lease and add the HCL Parcel and the HCL
Improvements to the Property.

                  NOW, THEREFORE, the parties do hereby agree as follows:

                  1. Lease of Property; Title and Condition. (a) In
consideration of the rents and covenants herein stipulated to be paid and
performed by the Lessee and upon the terms and conditions herein specified, (i)
the Lessor hereby subleases to Lessee the Ground Lease Property, and leases to
Lessee all of the Improvements, and (ii) the Lessee hereby subleases from the
Lessor the Ground Lease Property and leases from the Lessor the Improvements.
The Property is subleased or leased, as the case may be, to the Lessee subject
to (x) all applicable Legal Requirements and all of the insurance requirements
set forth in paragraphs 16(a) through (c) hereof (collectively, the "Insurance
Requirements") now or hereafter
<PAGE>   5
in effect; (y) all Permitted Encumbrances; and (z) the terms, covenants and
provisions of this Lease. The Lessee has examined the Property and title thereto
and has found the same satisfactory for all purposes of this Lease.

                  (b) THE LESSOR MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, WITH RESPECT TO THE PROPERTY OR ANY FIXTURE OR OTHER ITEM CONSTITUTING
A PORTION THEREOF, OR THE LOCATION, USE, DESCRIPTION, DESIGN, MERCHANTABILITY,
SUITABILITY, FITNESS FOR USE FOR ANY PARTICULAR PURPOSE, CONDITION OR DURABILITY
THEREOF OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, OR AS TO
THE LESSOR'S TITLE THERETO OR OWNERSHIP THEREOF OR OTHERWISE, IT BEING AGREED
THAT ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY THE LESSEE. IN THE EVENT OF
ANY DEFECT OR DEFICIENCY OF ANY NATURE IN THE PROPERTY OR ANY FIXTURE OR OTHER
ITEM CONSTITUTING A PORTION THEREOF, WHETHER PATENT OR LATENT, THE LESSOR SHALL
HAVE NO RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO. THE PROVISIONS OF THIS
PARAGRAPH 1(b) HAVE BEEN NEGOTIATED AND ARE INTENDED TO BE A COMPLETE EXCLUSION
AND NEGATION OF ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED, BY THE LESSOR WITH
RESPECT TO THE PROPERTY OR ANY FIXTURE OR OTHER ITEM CONSTITUTING A PORTION
THEREOF, WHETHER ARISING PURSUANT TO THE UCC OR ANY OTHER LAW, NOW OR HEREAFTER
IN EFFECT.

                  2. Use; Quiet Enjoyment; Hazardous Materials. (a) The Lessee
shall use the Property solely as a vinyl chloride monomer production facility,
storage facilities and related business offices, in a first class and reputable
manner. The Lessee covenants that it will cause the Improvements at all times to
be located on the Ground Lease Property. The Lessee's use of the Property shall
be subject to the same terms and conditions contained in paragraph 4(a) of the
Ground Lease as the Ground Lessee thereunder is subject to.

                  (b) During the Term, or any Extended Term (as defined below),
the Lessor covenants that, unless an Event of Default, Unwind Event or
Environmental Trigger has occurred and is continuing, it will not, and will not
permit any party claiming by or under the Lessor to, interfere with the peaceful
and quiet possession and enjoyment of the Property by the Lessee; provided,
however, that the Lessor, the Trustee, the Agent, the Independent Engineer, the
Environmental Consultant, the Appraiser and their respective successors,
assigns, representatives and agents (the "Lessor Group"), at Lessor's sole cost
and expense, may, upon advance written notice to the Lessee (unless the Lessor
in its sole discretion has reason to believe that a Default or an Event of
Default has occurred or other exigent or emergency conditions exist, in which
case, such entrance and examination shall be at Lessee's sole cost and expense
and no such notice shall be



                                        2
<PAGE>   6
necessary), enter upon and examine the Property or any part thereof at
reasonable times in compliance with and subject to Lessee's standard safety and
security procedures, in effect from time to time; provided, further, that if an
Event of Default, Unwind Event or Environmental Trigger has occurred or if the
Lessee has exercised its option to terminate this Lease pursuant to clause (i)
or (ii) of paragraph 27(a), then Lessee shall give the Lessor Group such
additional access to the Property and to Lessee's books and records relating to
the operation, use, maintenance, construction or occupancy of the Property as it
may require for any purpose, including, without limitation, for marketing,
selling, operating or otherwise disposing of the Property.

                  (c) Lessor, at Lessee's sole cost and expense, shall cooperate
or assist with Lessee's efforts to obtain all services, Permits and contracts
necessary and useful for the construction of the Improvements and the
acquisition, operation and maintenance of the Property for the intended purposes
thereof, and the Lessor may, and to the extent required in paragraph 7(c) shall,
execute such documents or papers as may be reasonably necessary for such
purposes. Lessee further covenants that it shall at its own cost and expense on
behalf of and in the name of the Lessor, apply for, obtain and maintain all
Permits required in order to permit the lawful ownership of the Property by the
Lessor during the Term or any Extended Term.

                  (d) Any failure by the Lessor or such other Person to comply
with the foregoing provisions of this paragraph 2 or any other provisions of
this Lease shall not give the Lessee any right to cancel or terminate this
Lease, or to abate, reduce or make deduction from or offset against any Fixed
Rent, Additional Rent or other sum payable under this Lease, or to fail to
perform or observe any other covenant, agreement or obligation hereunder.

                  (e) The Lessee shall, and it shall require and ensure that any
and all sublessees, employees, contractors, subcontractors, agents,
representatives, affiliates, consultants, occupants and any and all other
Persons, (i) comply in all material respects with all applicable Environmental
Laws, and (ii) use, employ, process, emit, generate, store, handle, transport,
dispose of and/or arrange for the disposal of any and all Hazardous Materials
in, on or, directly or indirectly, related to or in connection with the Property
or any part thereof in a manner consistent with prudent industry practice and in
material compliance with all applicable Environmental Laws, and in a manner
which does not then pose a significant recognized risk to human health, safety
(including occupational health and safety) or the environment.


                                       3
<PAGE>   7
                  2A. Construction; Financing. (a) The Lessee has entered into
the Agency Agreement with the Lessor pursuant to which the Lessee as
Construction Agent has agreed to complete the construction of the HCL
Improvements. The HCL Improvements shall, as the construction of same is
completed upon the Parcel, become a part of the Improvements, and title thereto
shall remain in the Lessor.

                  (b) In order to finance the acquisition by the Lessor of its
interest in the HCL Parcel, work in process pertaining to the HCL Improvements
and to finance the cost of construction of the HCL Improvements, the Note
Purchasers, as contemplated by the Participation Agreement, will advance to the
Trustee the Actual HCL Project Costs up to their respective Interim Note (HCL)
Commitments and the Certificate Purchaser will make a HCL Investment in the 1994
VCM Plant Trust equal to its Certificate (HCL) Commitment, and in consideration
therefor, the Trustee will issue the Interim Notes (HCL Series) to the Note
Purchasers and the Certificates (HCL Series) to the Certificate Purchasers
pursuant to the Declaration. The Trustee will loan to the Lessor the aggregate
proceeds of the HCL Advances and the HCL Investment and in consideration
therefor, the Lessor will execute and deliver to the Trustee the VCMI Note and
the VCMI Mortgage.

                  (c) On the Interim Note (HCL) Maturity Date, the Interim Notes
(HCL Series) will, as provided in the Participation Agreement, be refinanced
through the issuance of a specified proportion of A-Notes and B-Notes to be
issued under the Declaration in an aggregate principal amount equal to the
aggregate principal amount of, and accrued but unpaid interest on, the Interim
Notes (HCL Series). The Lessee agrees to execute and deliver such supplements,
amendments, certificates and other documents which shall reasonably be necessary
to effect the issuance of the A-Notes and B-Notes.

                  3. Term. The Property is leased for a primary term (the
"Primary Term") which (other than in the case of the HCL Improvements) commenced
on June 10, 1996 and in the case of the HCL Improvements shall commence on the
Interim Note (HCL) Maturity Date and which in each case shall end on December
19, 2001 (the "Expiration Date"), or such earlier date as this Lease shall be
terminated pursuant to any provision hereof; provided, however, that the HCL
Improvements will also be leased for a period of construction (the "Construction
Period" and, collectively with the Primary Term, the "Term") which shall
commence on the Second Refinancing Date and shall end on the Interim Note (HCL)
Maturity Date; and provided, further that this Lease may be extended for
Extended Terms pursuant to paragraph 27(d) hereof.


                                       4
<PAGE>   8
                  4. Rent. (a) During the Term, Lessee shall pay to the Trustee,
on behalf of the Lessor, Fixed Rent on each Payment Date in the amounts
determined in accordance with Schedule B hereto.

                  (b) All amounts that the Lessee is required to pay to the
Lessor (or to the Trustee on behalf of the Lessor) pursuant to this Lease (other
than Fixed Rent), including, but not limited to, (i) unpaid Charges and all
amounts set forth in paragraph 4(e)(ii) hereof, (ii) all sums, costs and
expenses pursuant to paragraphs 23 and 26 hereof, (iii) all costs and expenses
relating to the Property or the Lessee's use or the Lessor's leasehold interest
therein or ownership thereof, (iv) any and all amounts payable upon transfer or
purchase of (or otherwise relating to) the Property, together with every fine,
penalty, interest and cost that may be added for non-payment or late payment
thereof and (v) Additional Costs, shall constitute "Additional Rent". The
Trustee shall give Lessee notice of any Additional Rent due hereunder promptly
after it has knowledge of such Additional Rent, and shall use reasonable efforts
to notify Lessee in advance of the due date and amount of such Additional Rent;
provided that failure to give such prompt notice shall not relieve the Lessee of
its obligation to pay such Additional Rent, subject to, as applicable, the
Lessee's rights, if any, under paragraph 18 hereof.

                  (c) The Lessee shall pay to the Trustee, on behalf of the
Lessor, within 5 Business Days of demand therefor, interest at the Default Rate
on all amounts payable by it to the Lessor (or the Trustee on behalf of the
Lessor) hereunder from the due date thereof until paid in full.

                  (d) All amounts payable by the Lessee hereunder shall be paid
in lawful money of the United States of America and in immediately available
funds by 11:00 a.m. (New York City time) on the applicable Payment Date or on
the date when due, unless any such due date is not a Business Day in which case
payment shall be due and payable on the next succeeding Business Day, on behalf
of the Lessor at the Trustee's address as set forth in the Participation
Agreement, or at such other address or to such other person in the United States
of America or in such other manner as the Trustee from time to time may
designate to the Lessee by written instructions.

                  (e) The Lessee shall perform all of its obligations under this
Lease at its sole cost and expense and shall pay, when due and without notice or
demand (except as otherwise provided in this Lease), all amounts due hereunder.
The Lessee agrees to pay within 5 Business Days of demand therefor (i) all
Charges (subject to Lessee's rights pursuant to paragraphs 11 and 18) and (ii)
all indemnity obligations and


                                       5
<PAGE>   9
all charges, reasonable fees, expenses and out-of-pocket costs of the Lessor,
the Trustee, the Purchasers and the Agent, including, without limitation, the
fees and expenses of the Trustee's Counsel, the Special Counsel, the Certificate
Purchasers' Counsel, the Appraiser, the Environmental Consultant, the
Independent Engineer and the Special Environmental Counsel (and in the case of
(iii) below, attorneys' fees and expenses of other counsel to the Purchasers),
in connection with or arising out of:

                   (i) the preparation, execution, delivery, administration,
         performance, modification and amendment of this Lease and the other
         Operative Documents and any other documents to be delivered in
         connection herewith or therewith or delivered to any person who is a
         party to the Operative Documents in connection with the Certificate
         Purchasers' Investment (solely to the extent such expenses are caused
         by the preparation, execution, delivery, administration, performance,
         modification or amendment of this Lease and the other Operative
         Documents);

                  (ii) any refinancing or refunding of the transactions
         contemplated by the Operative Documents, with respect to advising any
         of them as to their respective rights and responsibilities hereunder or
         thereunder; and

                 (iii) the enforcement (whether through negotiations, legal
         proceedings or otherwise) of the Operative Documents and such other
         documents.

                  5. Net Lease; Non-Terminability. (a) This Lease is a net lease
and, except as otherwise expressly provided in this Lease, any present or future
Law to the contrary notwithstanding, shall not terminate, nor shall the Lessee
be entitled to any abatement, reduction, set-off, counterclaim, defense or
deduction with respect to any Fixed Rent, Additional Rent or other sum payable
hereunder. Except as otherwise expressly provided in this Lease, the obligations
of the Lessee shall not be affected by reason of: (i) any damage to or
destruction of the Parcel or the Property or any part thereof by any cause
whatsoever (including, without limitation, by fire, Casualty or act of God or
enemy or any other force majeure event); (ii) any Condemnation, including,
without limitation, a temporary Condemnation of the Parcel or the Property or
any part thereof; (iii) any prohibition, limitation, restriction or prevention
of the Lessee's use, occupancy or enjoyment of the Parcel or the Property or any
part thereof by any Person; (iv) any matter affecting title to the Parcel or the
Property or any part thereof; (v) any eviction of the Lessee from, or loss of
possession by the


                                       6
<PAGE>   10

Lessee of, the Parcel or the Property or any part thereof, by reason of title
paramount or otherwise; (vi) any default by the Lessor or the Trustee hereunder
or under any other agreement; (vii) the invalidity or unenforceability of any
provision hereof or the impossibility or illegality of performance by the Lessor
or the Lessee or both; (viii) any action of any Federal, state or local
governmental authority; or (ix) any other cause or occurrence whatsoever,
whether similar or dissimilar to the foregoing. The parties intend that the
obligations of the Lessee hereunder shall continue unaffected unless such
obligations shall have been modified or terminated pursuant to an express
provision of this Lease.

                  (b) The Lessee shall remain obliged under this Lease in
accordance with its terms and shall not take any action to terminate, rescind or
avoid this Lease, notwithstanding any bankruptcy, insolvency, reorganization,
liquidation, dissolution or other proceeding affecting the Lessor or any action
with respect to this Lease which may be taken by any trustee, receiver or
liquidator or by any court. Except as expressly permitted in this Lease, the
Lessee waives all rights to terminate or surrender this Lease, or to any
abatement or deferment of Fixed Rent, Additional Rent or other sums payable
hereunder. The Lessee shall remain obliged under this Lease in accordance with
its terms, and the Lessee hereby waives any and all rights now or hereafter
conferred by Law or otherwise to modify or to avoid strict compliance with its
obligations under this Lease. All payments made to or for the benefit of the
Lessor hereunder as required hereby shall be final, and the Lessee shall not
seek to recover any such payment or any part thereof for any reason whatsoever,
absent manifest error.

                  6. Taxes and Assessments; Compliance with Law; Certain
Agreements. (a) The Lessee shall pay or cause to be paid, subject to paragraph
18, all Charges before any fine, penalty, interest or cost may be added or any
default may be claimed or any termination or foreclosure or forfeiture
procedures for nonpayment may be commenced. If any Property Charge may legally
be paid in installments, such Property Charge may be so paid in installments
provided that, if the Lessee has not paid the Offer Purchase Price and purchased
the Property pursuant to the terms hereof, the Lessee shall pay all such
installments that may be due from time to time (whether before or after the
Expiration Date) on or before the Expiration Date or earlier termination of this
Lease.

                  (b) The Lessee shall comply, and cause the Property to comply,
in all material respects, with all Legal Requirements. "Legal Requirements"
means (i) all Laws, foreseen or unforeseen, ordinary or extraordinary, or
arising from any restriction of record or otherwise, which now or at


                                       7
<PAGE>   11
any time hereafter may be applicable to the Lessor, as owner of the
Improvements; the Lessor, as Ground Lessee; the Lessee, as Ground Lessor; the
Lessee, as lessee and sublessee hereunder; or the Parcel, the Property or any
part thereof, or any of the adjoining sidewalks, or the ownership, construction,
operation, mortgaging, occupancy, possessing, use, non-use or condition of the
Parcel, the Property or any part thereof and any other governmental rules,
orders and determinations now or hereafter enacted, made or issued, and
applicable to the Lessor, as owner of the Improvements and Ground Lessee, the
Lessee, as lessee and sublessee hereunder and Ground Lessor, or the Property or
any part thereof or the ownership, construction, operation, mortgaging,
occupancy, possession, use, non-use or condition thereof whether or not
presently contemplated; and (ii) all agreements (including, without limitation,
all Facility Agreements), Permits, covenants, and restrictions applicable to the
Parcel, the Property or any part thereof or the ownership, construction,
operation, mortgaging, occupancy, possession, use, non-use or conditions
thereof.

                  (c) The Lessee shall, and (unless a Default, Environmental
Trigger, Unwind Event or Event of Default has occurred and is continuing and
Lessor has revoked such authority) is hereby authorized by Lessor to, fully and
promptly keep, observe, perform and satisfy, on behalf of Lessor, any and all
obligations, conditions, covenants and restrictions of or on the Lessor under
any and all Facility Agreements so that there will be no default thereunder and
so that the other parties thereunder shall be and remain at all times obliged to
perform their obligations thereunder, and the Lessee, to the extent within its
control, shall not permit to exist any condition, event or fact that could allow
or serve as a basis or justification for any such Person to avoid such
performance.

                  7. Matters of Title; Assignability. (a) The Lessee shall not
create or permit to be created or exist, and shall promptly remove and
discharge, any Lien upon this Lease, the Ground Lease Property, the Parcel or
the Property or any part thereof or interest therein, or upon any Fixed Rent,
Additional Rent or other sum paid hereunder, which Lien arises for any reason,
including, without limitation, any and all Liens which arise out of the
ownership, use, condition, occupancy, construction, possession, repair or
rebuilding of the Property or any part thereof (including, without limitation,
by reason of construction and start-up of the Improvements) or by reason of
labor or materials furnished or claimed to have been furnished to the Lessee or
for the Property or any part thereof, but excluding Permitted Encumbrances.
Lessee's obligation to remove any of the above-described Liens arising prior to
the termination of this Lease


                                       8
<PAGE>   12
(or arising due to circumstances occurring prior to the termination of this
Lease) shall survive the termination of this Lease. Nothing contained in this
Lease shall be considered 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 Property or any part thereof. NOTICE IS HEREBY GIVEN THAT THE LESSOR IS
NOT AND SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO
BE FURNISHED TO THE LESSEE, OR TO ANYONE HOLDING OR POSSESSING THE PROPERTY OR
ANY PART THEREOF THROUGH OR UNDER THE LESSEE, AND THAT NO MECHANIC'S OR OTHER
SIMILAR STATUTORY LIENS FOR ANY LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR
AFFECT THE LESSOR'S INTEREST OR ESTATE IN THE PROPERTY OR ANY PART THEREOF.

                  (b) The Lessor shall not create any Lien upon this Lease, the
Ground Lease, the Parcel or the Property or any part thereof except (i) the
Permitted Encumbrances, (ii) those created or permitted by the Participation
Agreement, the Ground Lease, the Bills of Sale, the HCL Bill of Sale, this
Lease, the VCMI Mortgage or the Declaration, and (iii) in respect of any action
taken by the Lessor, the Trustee or the Holders from time to time of the
Instruments in connection with the enforcement of any rights under any Operative
Document.

                  (c) Lessor agrees that Lessee during the Term shall have the
exclusive right (so long as no Environmental Trigger, Unwind Event or Event of
Default has occurred and is continuing and no Termination Notice has been
delivered or has been deemed to have been delivered) to secure subdivision
approvals, site plan approvals, annexation or de-annexation approvals, zoning
variances and Permits necessary or desirable for the development, use,
operation, maintenance or condition of the Property or any part thereof;
provided that the fair market value or use of the Property is not materially
lessened by such action taken as a whole with the actions referred to in
paragraphs 9(a), 10(a) and 10(b) hereof. Lessor agrees to execute such documents
and take all other actions as shall be reasonably necessary, and otherwise
cooperate with Lessee, in connection with the matters described above; provided,
however, that all costs and expenses incurred by the Lessor in connection
therewith shall be borne by Lessee and that Lessor shall not be required to
execute any documents which would, in the reasonable opinion of the Agent,
adversely affect the value or use of the Property or otherwise adversely affect
the transactions contemplated by the Operative Documents or the interests of the
Lessor, the Trustee or the Holders from time to time of the Instruments.


                                       9
<PAGE>   13
                  8. [Intentionally Omitted].

                  9. Maintenance and Repair. (a) The Lessee, at its own cost and
expense, will manage and maintain the Property in good mechanical condition and
repair, in accordance with prudent industry practice and in a manner consistent
with that of other similar properties owned or operated by it or its Affiliates,
and will take all action, and will make all changes and repairs, structural and
nonstructural, foreseen and unforeseen, ordinary and extraordinary, which may be
required to maintain the Property in good mechanical condition and repair, in
accordance with prudent industry practice, or which may be required pursuant to
any Legal Requirement or Insurance Requirement at any time in effect. Lessee
shall, in accordance with prudent industry practice, repair or replace each item
constituting the Improvements that shall have become worn out, damaged,
inoperative or obsolete in whole or in part; provided, however, that (i) the
fair market value or use of the Property shall not be materially lessened by
such replacements and repairs taken as a whole with the actions referred to in
paragraphs 7(c), 10(a) and 10(b) hereof, and (ii) such replacements shall be of
a type suitable for use in the industry for the same purpose and having a useful
life at least as long as that of the Improvements (or any part thereof) repaired
or replaced (prior to obsolescence, loss or damage and the like). All repairs,
replacements and rebuilding by the Lessee hereunder, to the extent permitted by
Law, shall immediately become and shall remain part of the Property of the
Lessor, subject to this Lease. The Lessor shall not be required to, and Lessee
hereby waives any right to require the Lessor to, manage, maintain, replace,
repair or rebuild the Property or any part thereof and the Lessee waives any and
all rights it may now or hereafter have to make any repairs at the cost and
expense of the Lessor pursuant to any Legal Requirement, Insurance Requirement,
or otherwise, at any time in effect.

                  (b) Except for Permitted Encumbrances, in the event that all
or any part of the Improvements shall encroach upon any property or right-of-way
adjoining or adjacent to the Parcel or any part thereof, or shall violate any
agreements or conditions affecting the Parcel or the Property or any part
thereof, or shall obstruct any easement or right-of-way to which the Parcel or
the Property or any part thereof may be subject, then the Lessee shall, at its
sole cost and expense, either (i) contest such matter pursuant to paragraph 18
hereof, (ii) obtain valid and effective Permits for or consents to such
encroachments and/or violations (without any liability to Lessor, the Trustee,
the Agent or the Holders of the Instruments for which such parties are not
indemnified by the Lessee) or waivers or settlements of all claims,


                                       10
<PAGE>   14
liabilities and damages resulting therefrom, or (iii) make such changes,
including alteration or removal, to the Improvements and take such other action
as shall be reasonably necessary to rectify such encroachments, violations,
hindrances, obstructions or impairments, subject to the Lessor's consent if and
to the extent required by paragraph 10(a) hereof.

                  (c) The Lessee shall give the Lessor and the Paying Agent
prompt notice of any scheduled maintenance or reconditioning which requires
shutdown of operations of the Lessee's vinyl chloride monomer production
facility to be located on the Parcel for a period of time in excess of five (5)
Business Days and shall state the specific reasons for such shutdown.

                  10. Additional Improvements; Removal. (a) At any time, so long
as no Default, Unwind Event, Environmental Trigger or Event of Default shall
have occurred and be continuing and no Termination Notice has been delivered or
has been deemed to have been delivered, the Lessee may, at its own cost and
expense, make Additional Improvements to the Property or any part thereof;
provided, however, that (i) the fair market value of the Property shall not be
materially lessened by such Additional Improvements taken as a whole; (ii) such
Additional Improvements taken as a whole with the actions referred to in
paragraphs 7(c), 9(a) and 10(b) hereof shall not materially diminish the
capacity, efficiency or useful life of the Improvements; and (iii) such work
shall be completed in a good and workmanlike manner free and clear of any Liens
for labor, services or materials (other than Permitted Encumbrances) and in
compliance with all applicable Legal Requirements and Insurance Requirements.
"Additional Improvements" means additions to, alterations of or replacements 
for the Improvements or any part thereof (other than in connection with the 
completion of construction of the Improvements contemplated by the HCL
Construction Plans as of the date hereof) made by or for the Lessee, excluding
any replacements installed as part of scheduled maintenance procedures.

                  (b) The Lessee shall be permitted at any time during, or upon
the expiration or termination of, the Term, and at its sole cost and expense, to
remove or demolish any portion or part of the Additional Improvements in
accordance with prudent industry practices; provided, however, that, such
removal taken as a whole with the actions referred to in paragraphs 7(c), 9(a)
and 10(a) hereof shall not (i) materially impair the intended use or reduce the
fair market value of the Property or any part thereof below its fair market
value at the commencement of the Primary Term with respect to the HCL
Improvements; (ii) materially diminish the


                                       11
<PAGE>   15
capacity, efficiency or useful life of the Improvements or any part thereof
below the capacity, efficiency or useful life as of the commencement of the
Primary Term; or (iii) cause a violation of any Legal Requirement or Insurance
Requirement or significantly increase any risk of liability under any
Environmental Law or any risk to human health or the environment. Any damage to
the Property or any part thereof caused by such removal shall promptly be
repaired by the Lessee and the Property or any part thereof shall be restored to
its condition (or the reasonable equivalent thereof) as it existed immediately
prior to the construction of such removed Additional Improvements, at the
Lessee's sole cost and expense. The Lessee may place upon the Property or any
part thereof any inventory, fixtures, machinery, equipment or other property
belonging to the Lessee or third parties and remove the same at any time during
the Term and Lessee may, and at the request of the Lessor shall, remove the same
at the expiration or termination hereof unless the Lessee shall have paid the
Offer Purchase Price and purchased the Property pursuant to the terms of this
Lease; provided that any damage to the Property or any part thereof caused by
such removal shall promptly be repaired by the Lessee, and the Property or such
part thereof restored to its condition (or the reasonable equivalent thereof) as
it existed immediately prior to the placement of any such property upon the
Parcel, all at the Lessee's sole cost and expense.

                  (c) The Lessee shall notify the Lessor of any Additional
Improvements, the cost of which is anticipated to exceed in the aggregate $1
million in any calendar year with respect to the Property, which notice shall
include a reasonably detailed description of the work that will be done. All
Additional Improvements shall become and remain Property of the Lessor and shall
be subject to this Lease, unless and until removed by the Lessee in accordance
with subparagraph 10(b).

                  11. Lessee's Right to Contest Real Property Taxes. The Lessee,
at its own cost and expense and in compliance with paragraph 18, shall have the
sole right, at any time, to seek, in good faith, a reduction in the assessed
valuation of the Property or any part thereof or to contest, in good faith, any
real or personal property taxes for the Property or the Additional Improvements,
or any part thereof. Lessor shall not be required to join in any proceeding or
contest brought by Lessee unless the provisions of any Legal Requirement require
that the proceeding or contest be brought by or in the name of the owner of the
Property. In that case Lessor shall join in the proceeding or contest or permit
it to be brought in Lessor's name as long as Lessee reimburses the Lessor for
any and all costs and expenses incurred by Lessor in connection therewith.
Lessee, on a final non-appealable



                                       12
<PAGE>   16
determination of the proceeding or contest, shall immediately pay, discharge and
satisfy any decision or judgment rendered, together with all costs, interest and
penalties incidental to the decision or judgment.

                  12. Condemnation and Casualty. (a) General. The Lessee hereby
irrevocably assigns to the Trustee, on behalf of the Lessor, any award or
compensation or insurance payment or other proceeds to which the Lessee may
become entitled by reason of its interest in the Property or any part thereof if
(i) the Parcel, the Ground Lease Property, the Improvements or the Property or
any part thereof is damaged or destroyed by fire or other casualty (each, a
"Casualty") or (ii) the use, occupancy or title of the Parcel, the Ground Lease
Property or the Improvements or any part thereof is taken or requisitioned or
sold in, or on account of any actual or threatened condemnation or eminent
domain proceedings, or other action by any Person having the power of eminent
domain (each, a "Condemnation").

                  The Lessee shall promptly notify the Lessor in writing of any
such Casualty or Condemnation and shall appear in any proceeding or action to
defend, negotiate, prosecute or adjust any claim for any award or compensation
or insurance payment on account of any Casualty or Condemnation and shall take
all appropriate action in connection with any Casualty or Condemnation,
including the employment of counsel reasonably satisfactory to the Lessor. The
Lessor shall have the right to appear and participate and to employ counsel in
any such proceeding or action, and the fees and expenses of such counsel shall
be paid by the Lessee. If the Lessee shall elect not to appear or shall fail to
prosecute diligently, the Lessor may assume the prosecution thereof and the
Lessee shall pay all of the costs and expenses of the Lessor (including, but not
limited to, fees and expenses of Lessor's counsel) and the fees and expenses of
the Special Counsel. No settlement of any such proceeding or action shall be
made by the Lessee or the Lessor without the written consent of the other party
hereto, which consent shall not unreasonably be withheld or delayed.

                  Any and all amounts representing proceeds paid in connection
with any such Condemnation or Casualty, as the case may be (collectively, the
"Proceeds"), shall be paid over to the Proceeds Trustee (as defined below) to be
held in trust by such Proceeds Trustee and distributed pursuant to this
paragraph 12 and paragraph 15 hereof or pursuant to the Declaration of Trust, as
appropriate (all such Proceeds, less the costs and expenses incurred by the
Lessor and the Lessee in collecting such amounts, but including any
reimbursement by the Lessee for costs and expenses in connection therewith to
which the Lessor, the Trustee and the Purchasers are entitled


                                       13
<PAGE>   17
pursuant to this Lease, are the "Net Proceeds"). Any and all Proceeds received
by the Lessee in connection with any such proceeding or action shall be received
by the Trustee and held in trust for the benefit of the Trustee and the Lessor,
shall be segregated from other funds of the Trustee and shall be forthwith paid
over to the Proceeds Trustee. The Lessee agrees that this Lease shall control
the rights of the Lessor and the Lessee in any such Proceeds, and any present or
future Law to the contrary is hereby waived. Any and all reasonable charges,
fees and expenses of the Proceeds Trustee shall be paid from the Net Proceeds.
"Proceeds Trustee" shall mean SSBTC or such title company or other independent
bank or trust company as may be designated by the Lessor.

                      (b)  Condemnation or Casualty with Termination.

                  (i) If a Casualty or a Condemnation shall in the good faith
         opinion of an Officer of Lessee affect the Property in such manner as
         to render it unsuitable for restoration or for continued use, in whole,
         or in part and occupancy by the Lessee for the intended purposes
         thereof, then the Lessee may deliver to the Lessor, not later than
         thirty (30) days after such occurrence a written notice (herein called
         a "Termination Notice") describing the event giving rise to such
         termination and describing the status of any proceeding or action and
         the amount of any Proceeds received or expected to be received in
         connection therewith, together with the date, or estimated date, of
         such receipt.

                  (ii) If a Casualty or Condemnation occurs during the Primary
         Term (or any Extended Term) and the Lessor has received an opinion,
         which shall be at the Lessee's sole cost and expense, of the
         Independent Engineer to the effect that the restoration of the Property
         could not be expected to restore and rebuild the Property to its
         previous capacity, efficiency and useful life or such restoration and
         rebuilding could not be expected to be completed in full prior to the
         Expiration Date or that the cost of such restoration or rebuilding
         would exceed 25% of the fair market value of the Property immediately
         prior to such Casualty or Condemnation, then the Lessor may, in its
         sole discretion, deliver a notice ("Lessor Termination Notice")
         declaring Lessor's intention to terminate this Lease and the Lessee
         shall be deemed to have delivered a Termination Notice with respect to
         the Property to the Lessor as of the date of the Lessor Termination
         Notice.

                 (iii) Simultaneous with the delivery of a Termination Notice
         pursuant to (i) above (or a deemed delivery of a Termination Notice
         pursuant to (ii) above), the Lessee


                                       14
<PAGE>   18
         shall deliver (or shall be deemed to have delivered in the case of (ii)
         above) to the Lessor an Offer to Purchase in accordance with paragraphs
         14 and 15.

                  (c) Condemnation or Casualty Without Termination. If, after a
Casualty or Condemnation, the Lessee has not given a Termination Notice and the
Lessor has not given a Lessor Termination Notice in accordance with subparagraph
12(b), then this Lease shall continue in full force and effect, and the Lessee
shall, at its sole cost and expense, promptly commence and diligently pursue to
completion the rebuilding, replacement or repair of any damage to the Property
caused by such event in conformity with the requirements of paragraph 9 or 10,
as applicable, in order to restore the Property (in the case of a Condemnation,
as nearly as practicable) to the value and operating condition thereof
immediately prior to such event. In connection with such restoration the Lessee
shall, before beginning such restoration, submit plans and specifications for
such restoration, together with an estimate of the cost thereof, and all
necessary construction contracts therefor for the Lessor's and the Independent
Engineer's approval, which will not be unreasonably withheld; provided that (i)
the capacity, efficiency and useful life of the Improvements, shall not, after
all such restoration taken as a whole, be materially less than the capacity,
efficiency and useful life prior to such Casualty or Condemnation; (ii) the fair
market value of the Property shall not, after all such restoration taken as a
whole, be materially less than its fair market value prior to such Casualty or
Condemnation; and (iii) if the estimated cost to complete such restoration
exceeds the amount of Net Proceeds, the Lessor is, in its sole judgment,
satisfied that the Lessee shall have sufficient funds (the "Excess Funds")
available to pay such excess, which Excess Funds shall be deposited by the
Lessee with the Proceeds Trustee and distributed to the Lessee as hereinafter
provided. Such work shall be completed in a good and workmanlike manner free and
clear of all Liens for labor, services or materials and in compliance with all
applicable Legal Requirements and Insurance Requirements. All fees and expenses
of the Independent Engineer in connection with any rebuilding and restoration
shall be at the Lessee's sole cost and expense.

                  The Lessee shall be entitled to receive payment from the Net
Proceeds or the Excess Funds, as the case may be, from time to time as such work
of rebuilding, replacement or repair progresses, but only after presentation of
certificates of the Independent Engineer, delivered by the Lessee to the
Proceeds Trustee (with a copy to the Lessor) from time to time as such work of
rebuilding, replacement or repair progresses. Each such certificate of the
Independent Engineer shall describe the work for which the Lessee is requesting
permission to pay or requesting payment and the cost incurred by the Lessee in


                                       15
<PAGE>   19
connection therewith and shall state that such work has been properly completed
and that the Lessee has not theretofore received payment for such work, and
shall be accompanied by (i) an Officer's Certificate of the Lessee certifying
that no Default, Environmental Trigger, Unwind Event or Event of Default has
occurred and is continuing and that the Net Proceeds and Excess Funds held by
the Proceeds Trustee are adequate to complete such rebuilding, replacement or
repair in accordance with this paragraph 12(c), and (ii) duly executed Lien
waivers executed by each materialman or mechanic furnishing materials or labor
for which the Lessee is requesting permission to pay. The Proceeds Trustee shall
deliver, or cause to be delivered, payment within ten (10) days after its
receipt of the certificates required above. In connection with such payments,
the Proceeds Trustee shall first apply the Excess Funds to the cost of such
restoration prior to the disbursement of any Net Proceeds by the Proceeds
Trustee for such purpose. Upon receipt by the Proceeds Trustee (with a copy to
the Lessor) of an Officer's Certificate from the Lessee, to the effect that
final payment has been made for any such work and stating that the rebuilding,
replacement or repair has been completed in compliance with the terms and
conditions of this Lease, the remaining amount of such Net Proceeds shall be
paid to the Lessee. The Lessee shall be responsible for the cost of any such
repair, rebuilding or restoration in excess of such Net Proceeds and Excess
Funds, for which cost the Lessee shall make adequate provision acceptable to the
Lessor.

                  Notwithstanding the foregoing, any Net Proceeds paid to the
Proceeds Trustee in connection with any Condemnation or Casualty affecting both
the Parcel, Property or any part thereof and the Company Plant in excess of the
lesser of (i) Termination Value and (ii) the cost of the repair, rebuilding or
restoration of the Parcel, the Property or any part thereof as certified by the
Independent Engineer shall be paid to the Lessee for restoration of the Company
Plant. If the Independent Engineer has determined that the cost of restoration
of the Property would exceed Termination Value, the Lessor may either deliver a
Lessor Termination Notice pursuant to paragraph 12(b)(ii) or allow the Lessee to
restore the Property at the Lessee's cost and expense as to any costs in excess
of the Net Proceeds.

                  (d) Temporary Condemnation or Lease Termination.
Notwithstanding any provision to the contrary contained in this paragraph 12, in
the event of any temporary Condemnation this Lease shall remain in full force
and effect, and provided no Default or Event of Default, Unwind Event or
Environmental Trigger has occurred and is continuing, the Lessee shall be
entitled to receive the Net Proceeds allocable to such temporary Condemnation,
except that if this Lease shall expire


                                       16
<PAGE>   20
or terminate during such temporary Condemnation, then Lessee shall be entitled
to the Net Proceeds allocable to the period after the termination or expiration
of this Lease only if it has paid the Offer Purchase Price for the Property.

                  13. Environmental Event. (a) The Lessee shall promptly, but in
any case within five (5) Business Days, notify the Lessor, the Agent, the
Trustee and the Purchasers if (i) any environmental event has occurred or any
environmental condition is discovered in, on, beneath, from or involving the
Property or any part thereof (including, but not limited to, the presence,
emission or release of Hazardous Materials or the violation of any applicable
Environmental Law) that could reasonably be anticipated to result in penalties
or other liabilities in excess of $75,000, (ii) the Lessee has received
notification that it, the Property or any part thereof is the subject of a
proceeding that could reasonably be expected to result in any ordered
remediation or corrective action or other liability related to an environmental
event or condition the cost of which liability is reasonably expected to exceed
$100,000 or (iii) the Lessee has received notification from any governmental
agency or authority that the air permit no. R-3855B does not authorize
construction or operation of the Improvements (each of (i), (ii) and (iii) an
"Environmental Event").

                  (b) Following the receipt of a notice pursuant to (a) above,
the Lessor, the Agent, the Holders of the B-Notes and the Certificate Holder, in
each case in their sole discretion, may require the Lessee to conduct, or cause
to be conducted, an environmental audit of the Property, the scope of which
audit shall be limited to confirming the magnitude and anticipated cost of the
liability resulting in the Environmental Event and to provide a copy of the
Environmental Consultant's report on its audit to the Lessor, the Agent, the
Trustee and the Purchasers. Notwithstanding the foregoing, if a pattern, in the
opinion of the Lessor and the Holders of the B-Notes and Certificates, of such
Environmental Events exists, the Lessor may conduct a more comprehensive
environmental audit of the Property to determine the scope and nature of such
pattern and its effect on the Property. If it is the opinion of the Agent and
the Environmental Consultant that an Environmental Event has occurred or exists
and a Permitted Remediation is not available or the Environmental Event cannot
be cured through a Permitted Remediation or the Environmental Event will result
in the cessation of operation of the Improvements for 90 days or more (each an
"Environmental Trigger"), the Lessor, the Agent and the Purchasers shall have
the option, each in its sole discretion, to require the Lessee to purchase the
Property for the Offer Purchase Price in the manner provided in paragraphs 14
and 15 hereof. A "Permitted Remediation" means any remediation of an
Environmental Event


                                       17
<PAGE>   21
(a) the cost of which remediation is not anticipated, in the sole opinion of the
Agent and the Environmental Consultant (the cost and expense of which
Environmental Consultant shall be borne by the Lessee), to exceed $1,000,000,
(b) during and after which such Environmental Event could not be expected to
result in any additional environmental liability incurred by Lessor for which
Lessor, the Trustee, the Agent and the Purchasers have not received additional
indemnification in an amount and from a Person satisfactory to the Lessor, the
Agent and the Holders of the B-Notes and the Certificates in their sole and
absolute discretion and (c) permitted and effected in compliance with all
applicable Environmental Laws. If the Lessee is required to purchase the
Property due to an Environmental Trigger, and so long as no Default or Event of
Default has occurred and is continuing, a portion of the Offer Purchase Price
equal to the then-outstanding principal balance of the Notes may be paid by the
pro rata issuance by the Lessee of unsecured senior promissory notes (which
shall be at least pari passu with the Lessee's other unsecured senior debt) to
the Noteholders in the aggregate amount of the outstanding principal amount of
the Notes and with the same maturity and rate of interest as the A-Notes and
upon the same representations and warranties (other than those representations
and warranties that cannot be given by virtue of the events resulting in the
Environmental Trigger) as those made in connection with the A-Notes and
otherwise in form and substance satisfactory to the Noteholders, in their sole
discretion. The remainder of the Offer Purchase Price shall be paid in full in
cash.

                  (c) Irrespective of whether an Environmental Trigger has
occurred, Lessee shall immediately initiate, at its sole cost and expense, such
actions as may be necessary to comply in all material respects with all
applicable Environmental Laws and to alleviate any significant risk to human
health or the environment if the same arises from a condition on or in respect
of the Property or any part thereof, whether existing prior to, on or after the
date of this Lease. Without limiting the generality of the foregoing, if
necessary the Lessee's obligations under this paragraph shall extend even to the
providing or obtaining of emissions offsets under federal or state air quality
Laws to the extent necessary to satisfy new source review requirements for the
construction and operation of the Improvements. Once Lessee commences such
actions, Lessee shall thereafter diligently and expeditiously proceed to comply
materially and in a timely manner with all Environmental Laws and to eliminate
any significant risk to human health or the environment and shall, at the
request of the Lessor or the Agent during the Term or any Extended Term, give
periodic progress reports on its compliance efforts and actions.


                                       18
<PAGE>   22
                  14. Offer to Purchase. (a) At any time during the Term but
prior to exercising its options pursuant to paragraph 27(a) hereof, Lessee may
(unless otherwise required to do so, in which case it shall) deliver to Lessor
and the Agent a written offer to purchase the Property (an "Offer to Purchase")
upon and subject to the applicable terms of this Lease.

                  (b) Any Offer to Purchase delivered or deemed to be delivered
by the Lessee hereunder shall, notwithstanding anything to the contrary set
forth therein, be irrevocable and unconditional and shall set forth the
Termination Value to be paid by Lessee.

                  (c) The Lessor shall be deemed to have accepted such Offer to
Purchase the Property on the date Lessor receives the same. The procedure for
the purchase of the Property and the purchase price therefor shall be governed
by paragraph 15 hereof.

             14A. HCL Termination Notice. (a) At any time during the Term but
prior to exercising its options pursuant to paragraph 27(a) hereof, the Lessee
may deliver to the Lessor and the Agent an irrevocable written offer to purchase
the HCL Improvements and to assign or terminate the Ground Lease with respect to
VCMI's leasehold interest in the HCL Parcel (an "HCL Termination Notice")
subject to the applicable terms of this Lease and the Ground Lease (an "HCL
Termination")

                  (b) Any HCL Termination Notice delivered or deemed to be
delivered by the Lessee hereunder shall, notwithstanding anything to the
contrary set forth therein, be irrevocable and unconditional and shall set forth
the Closing Date and Allocated Termination Value to be paid by the Lessee.

                  (c) The Lessor shall be deemed to have accepted such HCL
Termination Notice on the date the Lessor receives the same. The procedure for
the purchase of the HCL Improvements and the purchase price therefor shall be
governed by paragraph 15 hereof.

                  15. Procedure Upon Purchase. (a) The date of the closing of
the Lessee's purchase of the Property (the "Closing Date") shall be (i) on the
Expiration Date pursuant to paragraph 27 hereof or (ii) if the Lessee shall
deliver (or shall be deemed to have delivered) an Offer to Purchase pursuant to
paragraph 14(a) hereof or an HCL Termination Notice pursuant to paragraph 14A(a)
hereof, on the next scheduled Payment Date following the date of Lessor's
acceptance or deemed acceptance of such Offer to Purchase, (iii) if the Lessee
shall deliver (or be deemed to have


                                       19
<PAGE>   23
delivered) an Offer to Purchase pursuant to paragraphs 12(b) or 13(b) hereof or
Section 7.04 of the Participation Agreement, on the fifteenth day following the
date of Lessor's acceptance or deemed acceptance of such Offer to Purchase, or
(iv) if the Lessee shall deliver (or be deemed to have delivered) an Offer to
Purchase pursuant to paragraph 19(h), on the fifth day following the date of
Lessor's acceptance or deemed acceptance of such Offer to Purchase. On the
Closing Date, upon receipt by the Trustee (on behalf of the Lessor) of the Offer
Purchase Price (or in the case of an HCL Termination, the HCL Purchase Price),
the Lessor shall convey, or cause to be conveyed, the Property (or portion
thereof) (or, in the case of Casualty or Condemnation, the remaining portion
thereof) to the Lessee or its designee by an appropriate recordable assignment
or termination of the Ground Lease (or appropriate portion thereof) and an
appropriate recordable deed and bill of sale to the Improvements, in each case
containing no representation or warranty (expressed or implied) except that the
Property is free and clear of any conveyance, mortgage, lease or Lien or other
adverse interest of any kind created or caused by the Lessor or any person
claiming by, through or under the Lessor (except Permitted Encumbrances and as
consented to or created or caused by the Lessee and except as to any interest
created by the Lessor upon the exercise of any right hereunder upon any Default,
Event of Default, Unwind Event, Environmental Trigger or upon the delivery of a
Termination Notice or a Lessor Termination Notice).

                  (b) On the Closing Date, the Lessee shall pay, or cause to be
paid, to the Trustee (on behalf of the Lessor) (i) in the case of an Offer to
Purchase, the Termination Value for the Property, as specified in the Offer to
Purchase related thereto, and all Fixed Rent, Additional Rent and other sums
then due and payable hereunder relating to the Property up to and including such
Closing Date (such amounts, plus all Closing Costs, are herein referred to as
the "Offer Purchase Price") and (ii) in the case of an HCL Termination, the
Allocated Termination Value for the HCL Improvements and VCMI's leasehold
interest in the HCL Parcel, and all Fixed Rent, Additional Rent and other sums
then due and payable hereunder and under the other Operative Documents relating
to such portion of the Property up to and including the Closing Date (such
amounts, plus all Closing Costs, are herein referred to as the "HCL Purchase
Price"). The Lessor shall simultaneously (i) deliver to the Lessee or its
designee the instruments referred to in paragraph 15(a) above with respect to
the Property and any other instruments reasonably necessary to assign and convey
to the Lessee or its designee the Property (or in the case of an HCL
Termination, the HCL Improvements and VCMI's leasehold interest in the HCL
Parcel) and assign all Facility Agreements related to the Property (or

                                       20
<PAGE>   24
portion thereof, as the case may be) (other than any rights of the Lessor to any
indemnities thereunder) and any other related property then required to be
assigned pursuant hereto, and (ii) convey, or cause to be conveyed, to the
Lessee or its designee any Net Proceeds related to the Property (or portion
thereof, as the case may be) and/or the right to receive the same.

                  (c) On the Closing Date, the Trustee shall (i) apply, pursuant
to the VCMI Loan Agreement, the Offer Purchase Price to the amount due to the
Trustee from VCMI, in full satisfaction of VCMI's obligations under the VCMI
Note and (ii) execute a discharge and satisfaction of the VCMI Mortgage.

                  (d) Upon the completion of any purchase of the Property (or
portion thereof) pursuant to this paragraph 15, but not prior thereto, this
Lease shall terminate with respect to such Property (or portion thereof) except
with respect to obligations and liabilities of the Lessee actual or contingent
which have arisen with respect to the Property on or prior to such date of
purchase, and except as elsewhere expressly provided herein.

                  16. Insurance. (a) The Lessee will purchase and maintain, or
cause to be purchased and maintained, insurance with respect to the Property of
the following types and in the following amounts (or in such greater amounts as
may become necessary from time to time to prevent the Lessor, the Lessee, the
Trustee, the Agent and the Holders from time to time of the Instruments from
becoming co-insurers of any loss), and in no event in amounts less than those
maintained by the Lessee or its Affiliates for other similar facilities owned
and/or operated by them:

                   (i) Property Insurance: Insurance against physical damage to
         the Property (with sublimits and deductibles as are acceptable to
         Lessor and with a maximum self-insured retention allowable of
         $5,000,000) caused by perils now or hereafter embraced by or defined in
         a manuscript "all risks" insurance policy, including flood, earth
         movement, earthquake, subsidence and collapse, business
         interruption/extra expense and boiler and machinery coverage;

                  (ii) Builder's Risk Insurance: During the Construction Period
         and during the construction of any Additional Improvements, builder's
         "all risks" and "general risks" insurance (with sublimits and
         deductibles as are acceptable to Lessor), including flood, earth
         movement, earthquake, subsidence and collapse, business
         interruption/extra expense and boiler and machinery

                                       21
<PAGE>   25
         coverage with respect to the Property and any on-site and off-site work
         and materials related thereto protecting the Lessee, the Lessor and all
         contractors and subcontractors, in an amount not less than the full
         replacement cost of the Property and such on-site and off-site work;

                 (iii) General Liability Insurance: Comprehensive general
         liability (including contractual, completed operations and product
         liability) insurance against claims for bodily injury (including
         death), personal injury and property damage occurring on, in or in
         respect of the Property or resulting from activities on or related to
         the Property, in the minimum combined single limit amount of $100
         million in the annual aggregate and $100 million, for each occurrence
         for bodily injury (or death) and/or property damage with a maximum
         self-insured retention allowable of $5,000,000;

                  (iv)    Workers' Compensation Insurance:  Workers'
         compensation insurance at statutory levels and employers'
         liability insurance, with a limit of $1,000,000, in the
         aggregate; and

                   (v) Other Insurance: Such other insurance, including
         automobile liability, in such amounts and against such risks, as is
         either (x) customarily carried by companies owning, operating or
         leasing property or conducting businesses similar and/or similarly
         situated to the Property and/or the Lessee, or (y) reasonably requested
         from time to time by Lessor.

                  Such insurance shall be written by companies that are
nationally recognized (including Lloyd's of London or other recognized
international insurers with an ISI rating of not less than BBB); primary
insurance shall be written by companies rated at least AXI in the most recent
edition of Best's Key Rating Guide, or as otherwise agreed to by the Agent, the
Lessor and the Purchasers, selected by the Lessee and, other than the insurance
specified in paragraph 16(a)(i)-(ii) and (iv), shall name Lessor, SSBTC (in its
individual capacity and as Trustee) and the Agent, on its own behalf and on
behalf of the Holders from time to time of the Instruments and their assignees,
as additional insureds, as their interests may appear. Notwithstanding the
foregoing, insurance coverage shall continue to be based on market conditions,
capacity and costs and in no event will the Lessee be required to maintain
coverage in amounts in excess of those maintained for businesses similar in
size, nature and creditworthiness to the Lessee under prevailing market
conditions.


                                       22
<PAGE>   26
                  (b) The insurance referred to in paragraph 16(a)(i) and (ii)
for the Property may be a blanket policy and shall (i) at all times be in an
amount at least equal to the greater of (x) one hundred percent (100%) of the
full replacement cost value (without depreciation) of the Property and the
Lessee's leasehold improvements and (y) Termination Value; (ii) include a
lenders' loss payable endorsement in favor of the Lessor and any loss or damage
under such insurance policies shall be payable solely to the Trustee on behalf
of the Lessor, as Lessor's interest may appear, to be held and applied pursuant
to the terms of this Lease; (iii) provide that the interests of the Lessor, the
Trustee, the Agent and the Holders from time to time of the Instruments shall be
insured regardless of any breach or violation by the Lessee of any warranties,
declarations or conditions contained in such insurance; (iv) provide that such
insurance shall not be invalidated by any act, omission or negligence of the
Lessee, the Lessor, the Trustee, the Agent or the Holders from time to time of
the Instruments, nor by any foreclosure or other proceedings or notices thereof
relating to the Property or any part thereof, nor by legal title to, or
ownership of the Property or any part thereof becoming vested in or by Lessor or
its agents, nor by occupancy or use of the Property or any part thereof for
purposes more hazardous than permitted by such policy; and (v) provide that all
insurance claims pertaining to the Property or any part thereof shall be
adjusted by the insurers thereunder with the Lessee but that the Lessor must
consent to any such adjusted claim.

                  All policies of insurance required to be maintained pursuant
to paragraph 16(a)(iii) which cover liability for bodily injury or property
damage shall provide that all provisions of such insurance, except the limits of
liability (which shall be applicable to all insureds as a group) and liability
premiums (which shall be solely a liability of the Lessee), shall operate in the
same manner as if there were a separate policy covering each such insured and/or
additional insured, without right of contribution from any other insurance which
may be carried by an insured and/or additional insured.

                  Every policy required under paragraph 16(a) shall (i)
expressly provide that it will not be canceled or terminated except upon 60
days' written notice to the Lessor and the Lessee, except in the case of
cancellation or termination due to a lapse for non-payment, in which case only
30 days' written notice shall be required; (ii) include a waiver of all rights
of subrogation against the Lessor, the Trustee, the Agent and the Holders from
time to time of the Instruments and any recourse against the Lessor, the
Trustee, the Agent or the Holders from time to time of the Instruments for
payment of any premiums or assessments under any policy;


                                       23
<PAGE>   27
and (iii) not contain a provision relieving the insurer thereunder of liability
for any loss by reason of the existence of other policies of insurance covering
the Property or any part thereof against the peril involved, whether collectible
or not, if such other policies do not name the Lessor, the Trustee, the Agent
and the Holders from time to time of the Instruments as additional insureds with
loss payable as provided in the Lease. The Lessee shall advise the Lessor
promptly of any policy cancellation or any change adversely affecting the
coverage provided thereby.

                  (c) The Lessee shall deliver to the Lessor the certificates of
insurance and any other documentation required by the Lessor evidencing the
existence of all insurance which is required to be maintained by the Lessee
hereunder including descriptions of the previously mentioned Insurance
Requirements, such delivery to be made (i) as provided in Section 2.01(k) of the
Participation Agreement, (ii) within twenty-one (21) days of the issuance of any
additional policies or amendments or supplements to any of such insurance, and
(iii) at least twenty-one (21) days prior to the expiration date of any such
insurance. The Lessee shall notify Lessor and Agent of any nonrenewal of any
policy required hereunder and shall cause each insurer under each policy
required hereunder to give the Lessor notice of any lapse under any such policy.
The Lessee shall not obtain or carry separate insurance concurrent in form, or
contributing in the event of loss, with that required by this paragraph 16
unless the Lessor, the Trustee, the Agent and the Holders from time to time of
the Instruments are named as additional insureds therein, with loss payable as
provided in this Lease. The Lessee shall immediately notify the Lessor, the
Trustee, the Agent and the Holders from time to time of the Instruments whenever
any such separate insurance is obtained and shall deliver to the Lessor the
certificates of insurance and any other documentation (other than blanket
policies) required by Lessor evidencing the same as is required hereunder.

                  (d) The requirements of subparagraphs (a) through (c) of this
paragraph 16 shall not be construed to negate or modify the Lessee's obligations
under Section 9.15 of the Participation Agreement.

                  17. Subletting. (a) The Lessee shall not sublet the Property
or any part thereof, unless (i) at the time of any such sublease, no Default,
Environmental Event, Unwind Event or Event of Default shall have occurred and be
continuing and no Termination Notice has been delivered or has been deemed to
have been delivered; (ii) any such sublease shall by its terms be expressly made
subject and subordinate to the terms of this Lease (and the Ground Lease and the
VCMI Mortgage); (iii) the Lessee shall provide the Lessor sixty


                                       24
<PAGE>   28
(60) days prior to the effective date of such sublease with notice of such
sublease; (iv) the Lessee shall provide the Lessor 5 Business Days prior to the
effective date of such sublease with a conformed copy of the instrument creating
such sublease; (v) the Lessor has consented to such sublease; and (vi) the Final
Completion Date shall have occurred.

                  (b) No sublease pursuant to this paragraph 17 shall modify or
limit any right or power of the Lessor hereunder or affect or reduce any
obligation of the Lessee hereunder, and all such obligations of the Lessee shall
continue in full force and effect as obligations of a principal and not of a
guarantor or surety, as though no subletting had been made or occupancy
permitted.

                  (c) If the Lessee shall request, in connection with any
sublease, that the Lessor execute an attornment and non-disturbance agreement
with respect to such sublease, the Lessor shall consider each such sublease on a
case-by-case basis and may give its consent to its execution and delivery of an
attornment and non-disturbance agreement. The Lessee shall not mortgage, pledge
or otherwise encumber its interest in and to this Lease or in and to any
sublease or the rentals payable thereunder without the prior written consent of
the Lessor. Any sublease made, and any mortgage, pledge or assignment of the
Lessee's interest hereunder or under any such sublease granted, otherwise than
as expressly permitted by this paragraph 17, shall be null and void and of no
force or effect.

                  18. Permitted Contests. (a) So long as (w) no Unwind Event,
Environmental Trigger or Event of Default has occurred, (x) no Termination
Notice has been delivered or been deemed to have been delivered, (y) the Lessee
shall not have notified the Lessor pursuant to paragraph 27(a)(ii) that it is
terminating this Lease and abandoning the Property or (z) the Lessee shall not
have otherwise surrendered or be required to surrender the Property to the
Lessor for any reason (including, without limitation, pursuant to paragraph
23(a)), the Lessee shall not be required, nor shall the Lessor have the right,
to pay, discharge or remove any Charges or to comply or cause the Property or
any part thereof to comply with any applicable Legal Requirement or to pay any
materialman's, laborer's or undischarged or unremoved Lien, as long as the
Lessee shall at its sole cost and expense contest, or cause to be contested,
diligently and in good faith, the existence, amount or validity thereof by
appropriate proceedings, which shall (i) in the case of an unpaid Property
Charge or undischarged or unremoved Lien, prevent the collection thereof from
the Lessor or against the Property or any part thereof, (ii) prevent the sale,
forfeiture or loss of the Property or any part thereof, and (iii) in the case of
a


                                       25
<PAGE>   29
Legal Requirement, not subject the Lessor, the Agent, the Trustee or the Holders
from time to time of the Instruments to the risk of any criminal liability or
civil liability for failure to comply therewith. The Lessee shall give such
assurances as may be reasonably demanded by the Lessor to insure ultimate
payment of such Charges or the discharge or removal of any such materialman's,
laborer's or mechanic's Lien or to insure compliance with such Legal Requirement
and to prevent any sale or forfeiture of the Property or any part thereof, or
any interference with or deductions from any Fixed Rent, Additional Rent or any
other sum required to be paid by the Lessee hereunder by reason of such
non-payment, non-discharge, non-removal or non-compliance.

                  (b) The Lessor shall cooperate with the Lessee in any contest
and shall allow the Lessee to conduct such contest (in the name of the Lessor,
if necessary) at the Lessee's sole cost and expense. The Lessee shall notify the
Lessor of each such proceeding at least ten days prior to the commencement
thereof, which notice shall describe such proceeding in reasonable detail.

                  (c) The Lessee shall, promptly after the final determination
(including appeals) of any contest brought by it pursuant to this paragraph 18,
pay and discharge all amounts which shall be determined to be payable therein
and shall be entitled to receive and retain for its own account all amounts
refunded and/or rebated as a result of any such contest and if the Lessor
receives any amount as a result of such contest to which it is not otherwise
entitled pursuant to this Lease, it shall promptly return such amount to the
Lessee.

                  (d) Except as otherwise specifically provided in this Lease,
this paragraph 18 shall not apply in the case of Charges upon, or in respect of,
any Person other than the Lessor or in respect of the property or income of any
such Person.

                  18A. Unwind Fee. Upon payment by the Lessee of the Unwind Fee
and the surrender of the Property to the Lessor pursuant to the conditions set
forth in Section 7.05 of the Participation Agreement, this Lease shall
terminate.

                  19. Default Provisions. (a) Any of the following occurrences
or acts shall constitute an event of default (each, an "Event of Default") under
this Lease:

                   (i) if the Lessee shall fail to pay (a) any Fixed Rent within
         five days or Additional Rent within ten days after the date on which
         payment is due or (b) any other sum required to be paid hereunder on
         the date on which such payment is due;


                                       26
<PAGE>   30
                  (ii) subject to the terms of paragraphs 11 and 18 relating to
         permitted contests, if the Lessee shall fail to pay any Charges when
         such payment shall become due or within any grace period provided for
         payment of such Charges;

                 (iii) if the Lessee shall fail to comply with any
         Insurance Requirement;

                  (iv) if the Lessee shall fail to comply with the requirements
         of paragraph 27(b) within the time periods provided therein;

                   (v) if the Lessee shall grant, suffer to exist or create any
         Lien (other than Permitted Encumbrances) upon the Parcel, this Lease,
         the Ground Lease, or the Property or any part thereof or interest
         therein or upon any Fixed Rent, Additional Rent or other sum paid
         hereunder;

                  (vi) if the Lessee shall fail to observe or perform any other
         covenant, condition or other provision hereof and such failure shall
         continue for fifteen (15) days after the earlier of (i) the date on
         which the Lessee becomes aware of such failure or (ii) notice by the
         Lessor, the Agent or the Trustee to the Lessee of such failure
         provided, however, that if such failure is of such nature that it
         cannot be corrected by the payment of money or otherwise within such
         15-day period, such failure shall not constitute an Event of Default so
         long as (x) curative action reasonably satisfactory to the Lessor is
         instituted within such period and diligently pursued to completion
         thereafter and (y) periodic progress reports thereon are delivered to
         the Lessor;

                 (vii) if an "Event of Default" (as defined in any such other
         Operative Document, but excluding any Unwind Event) under the
         Participation Agreement or any other Operative Document shall have
         occurred;

                (viii) if the Lessee has elected not to purchase the Lessor's
         interest in the Property pursuant to paragraph 27(a)(ii), and if, ten
         (10) Business Days before the Expiration Date, either (a) the Lessee is
         then rebuilding or restoring, or would be required by the terms hereof
         to rebuild or restore, the Property pursuant to paragraph 12(c) hereof
         or (b) a temporary Condemnation has occurred and is scheduled to
         continue after the Expiration Date;

                  (ix) if any Operative Document shall for any reason no longer
         be in full force and effect (except if such is the result of a purchase
         of the Property by the Lessee pursuant to this Lease);


                                       27
<PAGE>   31
                   (x) if the Lessee shall have abandoned the Ground Lease
         Property or the Improvements or if the Ground Lease Property or the
         Improvements become vacant for a period of thirty (30) consecutive
         days.

                  (b) The Lessor may take all steps to protect and enforce the
rights of the Lessor or obligations of the Lessee hereunder, whether by action,
suit or proceeding at law or in equity (for the specific performance of any
covenant, condition or agreement contained in this Lease, or in aid of the
execution of any power herein granted or for any foreclosure, or for the
enforcement of any other appropriate legal or equitable remedy) or otherwise as
the Lessor shall deem necessary or advisable.

                  (c) (i) If an Event of Default shall have occurred and be
continuing, including an Event of Default arising from the breach of a covenant,
condition or other provision hereof, then upon five (5) Business Days' prior
written notice by the Lessor to the Lessee, in addition to all other rights,
remedies or recourses available, the Lessor may either (A) terminate this Lease
or (B) terminate the Lessee's right to possession of the Property or any part
thereof. If Lessor should elect to terminate this Lease as provided in
subparagraph (c)(i)(A) above, then this Lease and the estate hereby granted
shall expire and terminate at midnight on the fifth (5th) Business Day (or such
later date as may be specified therein) after the date of such notice, as fully
and completely and with the same effect as if such date was the date herein
fixed for the expiration of the Term and all rights of the Lessee shall
terminate, but the Lessee shall remain liable as hereinafter provided.

                   (ii) Should the Lessor elect not to terminate this Lease,
this Lease shall continue in effect and Lessor may enforce all Lessor's rights
and remedies under this Lease including the right to recover the Fixed and
Additional Rent as each becomes due under this Lease. For the purposes hereof,
the following do not constitute a termination of this Lease:

                           (A) Acts of maintenance or preservation of the
         Property or any part thereof or efforts to relet the Property or any
         part thereof, including, without limitation, termination of any
         sublease of the Property to a third party and removal of such subtenant
         from the Property; and/or

                           (B) The appointment of a receiver upon initiative of
         the Lessor to protect the Lessor's interest under this Lease.



                                       28
<PAGE>   32
                  (d) If an Event of Default shall have occurred and be
continuing, and the Lessor has elected to terminate this Lease or terminate the
Lessee's right to possession of the Property or part thereof, upon five (5)
Business Days' notice, Lessor shall have (i) the right, whether or not this
Lease shall have been terminated pursuant to paragraph 19(c) hereof, to re-enter
and repossess the Property or any part thereof, as the Lessor may elect, by
summary proceedings, ejectment, any other legal action or in any other lawful
manner the Lessor determines to be necessary or desirable and (ii) the right to
remove all Persons and property therefrom. The Lessor shall be under no
liability by reason of any such re-entry, repossession or removal. No such
re-entry or repossession of the Property or any part thereof shall be construed
as an election by the Lessor to terminate this Lease unless a notice of such
termination is given to the Lessee pursuant to paragraph 19(c) hereof, or unless
such termination is decreed by a court or other governmental tribunal of
competent jurisdiction. Should the Lessor elect to re-enter the Property as
herein provided or should the Lessor take possession pursuant to legal
proceedings or pursuant to any notice provided for by Law or upon termination of
this Lease of the Lessee's right to possession of the Property or any part
thereof pursuant to paragraph 19(c) hereof or otherwise as permitted by Law, the
Lessee shall peaceably quit and surrender the Property or any part thereof to
the Lessor. In any such event, neither the Lessee nor any Person claiming
through or under the Lessee, by virtue of any Law, shall be entitled to
possession or to remain in possession of the Property or any such part thereof,
but shall forthwith quit and surrender the Property to the Lessor.

                  (e) At any time or from time to time after the re-entry or
repossession of the Property or any part thereof pursuant to paragraph 19(d)
hereof, whether or not this Lease shall have been terminated pursuant to
paragraph 19(c) hereof, the Lessor may (but shall be under no obligation to)
relet the Property or any part thereof, for the account of the Lessee, without
notice to the Lessee, for such term or terms and on such conditions and for such
uses as the Lessor, in its sole and absolute discretion, may determine. The
Lessor may collect and receive any rents payable by reason of such reletting.
The Lessor shall not be liable for any failure to relet the Property or any part
thereof or for any failure to collect any rent due upon any such reletting.

                  (f) No termination of this Lease or of the Lessee's right to
possession of the Property or any part thereof pursuant to paragraph 19(c)
hereof, or by operation of Law, and no re-entry or repossession of the Property
or any part thereof, pursuant to paragraph 19(d) hereof, and no reletting of the
Property or any part thereof pursuant to paragraph


                                       29
<PAGE>   33
19(e) hereof, shall relieve the Lessee of its liabilities and obligations
hereunder, all of which shall survive such termination, re-entry, repossession
or reletting.

                  (g) In the event of any termination of this Lease or of the
Lessee's right to possession of the Property or any part thereof by reason of
the occurrence of any Event of Default, the Lessee shall pay to the Lessor all
Fixed Rent, Additional Rent and other sums required to be paid to and including
the date of such termination of this Lease or of the Lessee's right to
possession; and thereafter, until the end of the Term or the Extended Term, as
applicable, whether or not the Property or any part thereof shall have been
relet, the Lessee to the extent permitted by applicable Law shall be liable to
the Lessor for, and shall pay to the Lessor, on the days on which such amounts
would be payable under this Lease in the absence of such termination, re-entry
or repossession, as agreed current damages and not as a penalty: all Fixed Rent,
Additional Rent and other sums which would be payable under this Lease by the
Lessee, in the absence of such termination, re-entry or repossession, and all
costs (including attorneys' fees and expenses incurred by the Lessor hereunder
(payable on demand)) and all costs of any environmental remediation required by
Environmental Law. To the extent permitted by Law, at such time after the
termination or expiration of this Lease as the Lessee shall have paid all
amounts required to be paid by it under this Lease and the Lessor shall have
discharged any and all obligations to the Holders from time to time of the
Instruments, then the Lessor shall pay to the Lessee, when received, the net
proceeds, if any, of any reletting effected for the account of the Lessee
pursuant to paragraph 19(e), after deducting from such proceeds all of the
Lessor's expenses in connection with such reletting (including, but not limited
to, all repossession costs, brokerage commissions, attorneys' fees and expenses,
employees' expenses, alteration costs and expenses of preparation for such
reletting and all costs at any environmental remediation required by
Environmental Law).

                  (h) Notwithstanding the foregoing, if an Event of Default
shall have occurred, the Lessee may within five (5) Business Days of the
earliest of the Lessor's, Agent's or Trustee's notice of such occurrence
thereafter pay to the Lessor an amount equal to the Offer Purchase Price in
which event the Lessor shall be obliged to convey the Property to Lessee in
compliance with paragraph 15.

                  (i) At any time after such termination of the Term (or
Extended Term) of this Lease or re-entry or repossession of the Property by
reason of the occurrence of an Event of Default, the Lessor shall be entitled to
recover from the


                                       30
<PAGE>   34
Lessee, and the Lessee will pay to the Lessor on demand, in lieu of all
liquidated damages in respect of Fixed Rent beyond the date of such demand (but
in addition to any claim for current damages in respect of Fixed Rent prior to
the date of such demand), an amount equal to the Termination Value.

                  (j) In the event of foreclosure of the lien of the VCMI
Mortgage or if the Property or any part thereof is conveyed to the Trustee by
deed in lieu of foreclosure, the Lessee shall attorn to the Trustee as landlord
under the Lease. Such attornment shall be effective and self-operative without
the execution of any further instrument by the parties hereto.

                  20. Additional Rights; Mortgage. (a) No right or remedy
hereunder shall be exclusive of any other right or remedy, but shall be
cumulative and in addition to any other right or remedy hereunder or now or
hereafter existing by Law or in equity and the exercise by the Lessor of any one
or more of such rights, powers or remedies shall not preclude the simultaneous
exercise of any or all of such other rights, powers or remedies. Failure to
insist upon the strict performance of any provision hereof or to exercise any
option, right, power or remedy contained herein shall not constitute a waiver or
relinquishment thereof for the future. Receipt by the Lessor (or by the Trustee
on behalf of the Lessor) of any Fixed Rent, Additional Rent or other sum payable
hereunder with knowledge of the breach by Lessee of any provision hereof shall
not constitute waiver of such breach, and no waiver by the Lessor or the Trustee
of any provision hereof shall be deemed to have been made unless made in
writing. The Lessor and the Trustee shall be entitled to injunctive relief in
case of the violation or attempted or threatened violation of any of the
provisions hereof, a decree compelling performance of any of the provisions
hereof or any other remedy allowed to the Lessor by Law or in equity.

                  (b) The Lessee hereby waives and surrenders for itself and all
those claiming under it, including creditors of all kinds, (i) any right and
privilege which they may have to redeem the Property or any part thereof or to
have a continuance of this Lease after termination of the Lessee's right of
occupancy by Law or by any legal process or writ, or under the terms of this
Lease, or after the termination of the term of this Lease as herein provided and
(ii) the benefits of any Law which exempts property from liability for debt or
for distress for rent.

                  (c) If an Event of Default exists hereunder, the Lessee shall
pay to the Trustee, on behalf of the Lessor, all fees and out-of-pocket expenses
incurred by the Lessor or the


                                       31
<PAGE>   35
Trustee in enforcing its rights under this Lease, including attorneys' fees and
expenses.

                  (d) Lessor and Lessee intend that the Lessee shall treat this
Lease, for accounting purposes, as an operating lease. If a court of competent
jurisdiction determines that the transaction represented by this Lease and the
other Operative Documents will be treated as a financing transaction, then in
such event it is the intention of the parties hereto (i) that this Lease be
treated as a deed of trust and security agreement or other similar instrument
with a power of sale (the "Mortgage") from Lessee, as mortgagor, to the Trustee
for the benefit of Lessor, as mortgagees, encumbering the Property, and that the
Lessee, as mortgagor, hereby (A) grants, bargains and sells, in trust, with
power of sale to the Trustee for the benefit of the Lessor and the Trustee, as
mortgagee, or any successor thereto, for the use and benefit of the Holders of
the Applicable B Percentage of the Interim Notes, the Holders of the B-Notes and
the Holders of the Certificates, as beneficiaries, a first and paramount Lien on
the Property, and (B) grants a security interest to the Lessor and the Trustee
in the Property, (ii) that Lessor and the Trustee shall have, as a result of
such determination, all of the rights, powers and remedies of a mortgagee and/or
secured party available under applicable Law to take possession of and sell
(whether by foreclosure, power of sale or otherwise) the Property, (iii) that
the effective date of the Mortgage shall be the effective date of this Lease,
(iv) that the recording of an instrument referencing this provision shall be
deemed to be the recording of the Mortgage and (v) that the obligations secured
by the Mortgage shall be the Secured Obligations.

                  (e) If this Lease shall hereafter be treated as the Mortgage
as provided in subparagraph 20(d) above, then the following provisions shall
apply in respect of the Lessor's and Trustee's enforcement of their rights under
such Mortgage: (i) Upon request by the Lessor or the Trustee, the Trustee shall
proceed to sell the Property and any and every part thereof, at public venue, to
the highest bidder, at the customary time and place in the county where the
Property is located, and at the time, place, and under the terms designated in
said notice of sale for cash, first giving the public notice and notice to the
Lessee required by law of the time, terms and place of sale, and of the property
to be sold; and upon such sale shall execute and deliver a deed of conveyance of
the Property sold to the purchaser or purchasers thereof, and any statement or
recital of fact in such deed in relation to the nonpayment of money hereby
secured to be paid, existence of the indebtedness so secured, notice of
advertisement, sale, receipt of money, and the happening of any of the events
whereby any successor Trustee became


                                       32
<PAGE>   36
successor as herein provided, shall be prima facie evidence of the truth of such
statement or recital; and the Trustee shall receive the proceeds of such sale,
out of which the Trustee shall pay, first the cost and expenses of executing
this trust, including attorneys' fees and compensation to the Trustee for its
services, and next to the Lessor or its endorsees or assignees, upon the usual
vouchers therefor, all monies paid pursuant to or under any provisions set forth
herein or in the Operative Documents; and next all monies due and owing as to
the Secured Obligations then due and unpaid (with interest and Distributions at
the Default Rate on any overdue amounts) up to the time of such payment, and if
not enough therefor, then apply what remains; and next to all other unpaid sums
secured hereby in such order as the Lessor may elect; and the balance of such
proceeds, if any, shall be paid to the person or persons legally entitled
thereto; and the Trustee covenants faithfully to perform the trust herein
created; (ii) Until a sale shall be held hereunder, the Trustee hereby lets the
Property to the Lessee, upon the following terms and conditions, to-wit: the
Lessee, and every and all persons claiming or possessing the Property, and any
part thereof, by, through, or under it, shall or will pay rent therefor during
said term at the rate of one cent per month, payable monthly upon demand, and
shall and will surrender peaceable possession of the Property, and any and every
part thereof, to the Trustee, its successors, assignees, or purchasers thereof,
without notice or demand therefor, upon the occurrence of said sale; (iii) Upon
any sale or sales made hereunder, whether made under the power of sale herein
granted or under or by virtue of judicial proceedings or of a judgment or decree
of foreclosure and sale, the Lessor or the Trustee may bid for and acquire the
Property or any part thereof and, in lieu of paying cash therefor, may make
settlement for the purchase price by crediting upon the Secured Obligations the
net sales price after deducting therefrom the expenses of sale and the cost of
the action and any other sums which the Lessor is authorized to deduct under
this Lease, and, in such event, this Lease and the Operative Documents
evidencing the Secured Obligations may be presented to the persons or person
conducting the sale in order that the amount so used or applied may be credited
upon the Secured Obligations as having been paid; (iv) the Lessor and the
Trustee shall have the option to proceed with foreclosure in satisfaction of any
part of the Secured Obligations without declaring the whole of the Secured
Obligations as immediately due and payable, and such foreclosure may be made
subject to the part of the Secured Obligations not due and payable, and it is
agreed that such foreclosure, if so made, shall not in any manner affect the
part of the Secured Obligations, but as to such part this Lease, as treated as
the Mortgage, as well as the other Operative Documents, shall remain in full
force and effect just as though no foreclosure had been made. Several


                                       33
<PAGE>   37
foreclosures may be made without exhausting the right of foreclosure for any
part of the Secured Obligations not due and payable, it being the purpose to
provide for a foreclosure and sale of the security for any due and payable
portion of the Secured Obligations without exhausting the power of foreclosure
and power to sell the Property for any other part of the Secured Obligations;
and (v) the Lessor and the Trustee may, from time to time, substitute another
trustee in place of the Trustee herein named. Upon such appointment, and without
conveyance to the successor trustee, the latter shall be vested with all the
titles, estates, rights, powers and trusts conferred upon the Trustee herein
named. Such appointment shall be made by written instrument executed by the
Lessor and the Trustee which shall be recorded among the public records in the
county where the Property is located, and shall be conclusive proof of the
proper appointment of the successor trustee.

                  (f) In the exercise of any of the Lessor's and the Trustee's
rights under this paragraph 20, the Lessor and the Trustee shall comply with all
applicable requirements of Section 51.002 of the Texas Property Code, as the
same may be amended from time to time.

                  2l. Notices, Demands, and Other Instruments. All notices,
offers, consents and other instruments given pursuant to this Lease shall be
sent to the parties hereto at the addresses set forth on Schedule I to the
Participation Agreement and shall be given in the manner and shall be effective
at the times and under the terms set forth in Section 9.02 of the Participation
Agreement; provided that each of the Lessor and the Lessee may from time to time
specify, by giving not less than 15 days' prior written notice thereof to the
other party (i) any other address in the United States as its address for
purposes of this Lease and (ii) any other Person that is to receive copies of
notices, offers, consents and other instruments hereunder; and provided that
neither party shall be entitled to designate more than two other Persons to
receive copies of notices hereunder. The Lessee shall send to the Trustee
copies of all notices, offers, consents, advices and other instruments
hereunder sent to the Lessor. Notwithstanding anything to the contrary herein
or in the Operative Documents, all notices, consents and other instruments
required to be given by the Lessor hereunder may alternatively be given by the
Trustee on the Lessor's behalf.

                  22. No Default Certificate. Each party hereto shall, at the
reasonable request of the other party hereto, deliver to such other party a
certificate stating whether such first party has knowledge of, or has received
notice from any


                                       34
<PAGE>   38
person of, any Casualty, Condemnation, Default, Environmental Trigger, Unwind
Event or Event of Default.

                  23. Surrender. (a) If upon the expiration or termination of
the Term (or the Extended Term, as the case may be) or the termination of
Lessee's possession of the Property, Lessee or its designee has not purchased
the Property as provided hereunder, the Lessee shall surrender (i) the Ground
Lease Property to the Lessor in the condition in which the Ground Lease Property
was upon the commencement of the Term hereof (subject to Improvements and other
alterations and maintenance made in accordance herewith) together with such
additional easements, rights of way or other rights as Lessor may require to
assure unrestricted access to the Property for the remaining term of the Ground
Lease and (ii) the Improvements in the operating condition, efficiency and with
the useful life, they were or had upon the commencement of the Primary Term,
except as repaired, rebuilt, altered, added to or built as permitted or required
hereby and except for ordinary wear and tear. To the extent that the Property is
not in compliance with the above upon such expiration or termination (except as
a consequence of a Casualty or Condemnation, as to which paragraph 12 applies),
the Lessee shall pay to the Trustee on behalf of the Lessor such additional
amounts as are required to place it in compliance therewith.

                  (b) The Lessee shall also surrender the Property to the Lessor
free and clear of all Liens, easements, consents and restrictive covenants and
agreements affecting the Property which the Lessee is obliged hereunder to
remove.

                  (c) The Lessee shall also surrender the Property in a
condition such that the Property is in compliance with all applicable
Environmental Laws at surrender (irrespective of whether the deadline for such
compliance would otherwise expire before the end of the Term). Nothing contained
in this paragraph 23 shall relieve or discharge or in any way affect the
obligation of the Lessee to cure promptly pursuant to this Lease any violations
of Legal Requirements referred to in this Lease, or to pay and discharge any
Liens and Impositions against the Property, subject, however, to the right of
the Lessee to contest the same pursuant to the provisions of paragraphs 11 and
18. Lessee shall cooperate, to the fullest extent, with the Lessor, its
subsequent lessees, operators or purchasers to effect the transfer of all of
Lessee's Applicable Permits for the Property to such Persons.

                  (d) The Lessee, at its sole cost and expense, shall remove
from the Property on or prior to such expiration or termination all property
situated thereon which is not owned by the Lessor and shall repair any damage
caused by such


                                       35
<PAGE>   39
removal and shall restore the Property to the condition and working order (or
reasonable equivalent thereof) in which they existed immediately prior to the
installation of such property, except for ordinary wear and tear. Lessee shall
indemnify and hold harmless the Lessor, its successors and assigns against any
loss, liability or claim arising out of the Lessee's removal of such property
from the Property including, without limitation, any environmental liability
arising therefrom. Any such property of the Lessee not so removed shall become
the property of the Lessor, and the Lessor may cause such property to be removed
from the Property and disposed of, and the cost of any such removal and
disposition of the Lessee's property and of repairing any damage caused by such
removal and of the restoration of the Property to the condition and working
order (or reasonable equivalent thereof) in which it existed immediately prior
to the installation of such property, ordinary wear and tear excepted, shall be
borne by the Lessee.

                  (e) The Lessee shall comply with the conditions set forth in
Section 7.05(b) of the Participation Agreement in addition to those set forth in
this paragraph 23.

                  (f) The obligations of the Lessee under this paragraph 23
shall survive the expiration or any termination of this Lease (whether by
operation of Law or otherwise) for all matters described in this paragraph 23
which occur or arise prior to such expiration or termination or arise out of or
result from facts, events, claims, liabilities, actions or conditions occurring,
arising or existing on or before such expiration or termination.

                  24. Separability; Binding Effect; Governing Law; Non-Recourse.
(a) Except as expressly provided otherwise in this Lease, each provision hereof
shall be separate and independent and the breach of any such provision by the
Lessor shall not discharge or relieve the Lessee from its obligations to perform
each and every covenant to be performed by the Lessee hereunder. If any
provision hereof or the application thereof to any Person or circumstance shall
be invalid or unenforceable, the remaining provisions hereof, or the application
of such provision to persons or circumstances other than those as to which it is
invalid or unenforceable, shall not be affected thereby, and each provision
hereof shall be valid and shall be enforceable to the extent permitted by Law.

                  (b) All provisions contained in this Lease shall be binding
upon, inure to the benefit of, and be enforceable by, the respective permitted
successors and assigns of the Lessor and the Lessee to the same extent as if
each successor and assignee were named as a party hereto. Except for subleases


                                       36
<PAGE>   40
permitted or created in accordance with paragraph l7 hereof, the Lessee may not
assign its rights hereunder or any interest herein without the prior written
consent of the Lessor. Subject to the provisions of the other Operative
Documents, the Lessor may assign all or any part of the Property and/or its
rights under this Lease. This Lease may not be changed, modified or discharged
except by a writing signed by the Lessor and the Lessee. Any change,
modification or discharge made otherwise than as expressly permitted by this
paragraph 24 shall be null and void.

                  (c) THIS LEASE SHALL BE GOVERNED BY AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.

                  (d) This Lease, when delivered, shall constitute an original,
fully enforceable counterpart for all purposes except that only the counterpart
stamped or marked "COUNTERPART NUMBER ONE" or "COUNTERPART NUMBER l" shall
constitute, to the extent applicable, "chattel paper" or other "collateral"
within the meaning of the Uniform Commercial Code in effect in any jurisdiction.

                  (e) No recourse shall be had against the Lessor, the Agent,
the Trustee, SSBTC or any Holder of any Instrument or their respective
successors, assigns, directors, officers, employees, agents or shareholders, for
any claim based on any failure by the Lessor in the performance or observance of
any of the agreements, covenants or provisions contained in this Lease and in
the event of any such failure, recourse shall be had solely against the
Property; provided, however, that nothing contained in this Lease shall be taken
to prevent enforcement of any claim against the Lessor or any other Person
arising out of or in connection with this Lease based on fraud, gross negligence
or willful misconduct of the Lessor and nothing shall prevent enforcement
against any other Person to which any part thereof shall have been transferred,
or obligations undertaken or assumed in writing by such Person.

                  25. Headings and Table of Contents. The table of contents and
the headings of the various paragraphs and schedules of this Lease are for
convenience only and shall not affect the meaning of the terms and conditions of
this Lease.

                  26. Lessor's Right to Cure Lessee's Default. If the Lessee
shall fail to make any payment or perform any act required to be made or
performed under this Lease, the Lessor, without waiving any default or releasing
Lessee from any obligation, may (but shall be under no obligation to) make such
payment or perform such act for the account and at the cost and expense of the
Lessee, and may enter upon the Property for such purpose and take all such
action thereon as, at the Lessor's sole discretion, may be necessary or


                                       37
<PAGE>   41
appropriate therefor. No such entry shall be deemed an eviction of the Lessee or
a breach of the Lessor's covenant for quiet possession pursuant to paragraph
2(b). All sums so paid by the Lessor and all costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses so incurred,
together with interest thereon to the extent permitted by Law) shall be paid by
the Lessee to the Lessor on demand as Additional Rent.

                  27. Lessee's Options Upon Expiration. (a) In addition to its
rights under paragraphs l2 and 14 hereof, Lessee shall, by notice given not less
than nine (9) months prior to the Expiration Date, elect either to (i) deliver
an Offer to Purchase the Property and purchase the Property on the Expiration
Date upon payment of an amount equal to the Offer Purchase Price, in which case
the transfer of the Property shall be governed by the terms of paragraphs 14 and
15 (and in which case, this Lease (with the exception of paragraph 24(e) or any
other provision hereof under which the Lessee indemnifies the Lessor or others
from liability in connection with this Lease) shall terminate on the Closing
Date); or (ii) subject to the satisfaction of the conditions set forth in
paragraph 27(b) hereof, terminate this Lease, abandon the Property as of the
Expiration Date and pay to the Trustee, on behalf of the Lessor on the
Expiration Date, in addition to any Fixed Rent, Additional Rent and any other
amounts then due and payable to the Lessor hereunder, the Residual Guaranty; or
(iii) subject to the conditions set forth in paragraph 27(d) hereof, extend the
Lease for an Extended Term.

                  (b) Upon the election of the Lessee to terminate this Lease
pursuant to paragraph 27(a)(ii) hereof, Lessee shall provide, or cause to be
provided or accomplished, at the sole cost and expense of the Lessee, to or for
the benefit of the Lessor and the holders of the Instruments, at least thirty
(30) days but not more than sixty (60) days prior to the Expiration Date each of
the items set forth in Section 7.05 of the Participation Agreement.

                  (c) Upon the Lessee's election to terminate this Lease
pursuant to and in compliance with paragraph 27(a)(ii) hereof, the Trustee (on
behalf of the Lessor) shall have the sole and exclusive right to sell or dispose
of the Property and, as of the Expiration Date, the Lessee shall have no further
claim thereto. The proceeds of any sale or disposition of the Property pursuant
to this paragraph 27 (herein called a "Qualified Sale") shall be applied by the
Trustee on the Lessor's behalf as follows: first, to pay all Closing Costs in
connection with the Qualified Sale; and second, as provided in the Declaration.


                                       38
<PAGE>   42
                  (d) By written notice given to the Agent at least 10 months
prior to the Expiration Date (or the expiration of any Extended Term ending on a
date less than 5 years after the Expiration Date, as the case may be) the Lessee
may request, in its sole discretion and if there exists no Default, Event of
Default, Environmental Trigger or Unwind Event, an extension of this Lease for a
maximum of 5 successive one-year terms (each an "Extended Term"). The Lessor and
the Lessee shall determine the Applicable Rate for each Extended Term,
consistent with the terms outlined below in this paragraph 27(d), and the Lessee
shall undertake to enter into all amendments and supplements to the Operative
Documents and such other agreements as the Lessor in its sole discretion
determines to be necessary and appropriate in connection therewith. If the Lease
is extended for an Extended Term, the Lessee shall pay the Agent a remarketing
fee the amount of which shall be determined prior to the commencement of each
Extended Term. Fixed Rent during each Extended Term shall be paid monthly in
advance, and include an annual amount to be applied in a manner acceptable to
each Purchaser, to the outstanding principal amount of the Notes, such annual
amount to be equal to 20% (or such lower percentage as the Purchasers in their
sole discretion may agree to) of the outstanding principal amount of the Notes
at the Expiration Date. Within ten (10) days of receipt of Lessee's request to
extend this Lease pursuant to this paragraph 27, the Agent shall, after
consultation with the Purchasers, notify the Lessee of the Applicable Rate
agreed upon by the Purchasers for such Extended Term. Within 5 days of such
notice, the Lessee shall notify the Agent of whether the Lessee wishes to extend
the Lease on the proposed terms. If a Purchaser fails to agree to extend this
Lease on terms acceptable to the Lessee, the Agent shall use all reasonable
efforts to locate a replacement lender or investor, as the case may be,
provided, however, that if the Agent fails to locate a replacement lender or
investor within fifteen (15) days of the aforesaid notice, the Lessee shall
either (i) give notice of its election pursuant to paragraph 27(a) (i) hereof or
(ii) agree to extend the Lease at the highest Applicable Rate enforceable at
law.

                  28. Limitations on Amounts Payable. Notwithstanding anything
to the contrary contained in this Lease or any of the other Operative Documents,
the amounts which the Lessee is obliged to pay pursuant to this Lease and the
other Operative Documents, and the amounts which Lessor, the Trustee, Agent and
the Note and Certificate Purchasers are entitled to receive pursuant to this
Lease and other Operative Documents, are subject to limitations pursuant to
Section 9.18 of the Participation Agreement.

                  29.      Waiver of Trial by Jury.  IN ANY ACTION OR
PROCEEDING UNDER OR RELATED TO THIS AGREEMENT, THE OPERATIVE


                                       39
<PAGE>   43
DOCUMENTS OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH
MAY IN THE FUTURE BE DELIVERED IN CONNECTION WITH THE FOREGOING, THE LESSOR AND
THE LESSEE HEREBY AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE
A COURT AND NOT BEFORE A JURY, IRRESPECTIVE OF WHICH PARTY COMMENCES SUCH ACTION
OR PROCEEDING.

                  30. No Merger of Title. There shall be no merger of this Lease
nor of the leasehold estate created by this Lease with the fee ownership of the
Parcel by reason of the fact that the same Person may acquire, own or hold,
directly or indirectly, this Lease or the leasehold estate created by this Lease
or any interest in this Lease or interest in the fee or leasehold ownership of
the Parcel, and no such merger shall occur unless and until all Persons having
any interest in (x) the leasehold estate created by this Lease and the Ground
Lease and (y) the indefeasible fee ownership of the Parcel or any part thereof
shall join in a written instrument effecting such merger and shall duly record
the same.

                  31. Payments to the Trustee. The Lessee hereby acknowledges,
and the Lessor hereby directs, that all payments of Fixed Rent, Additional Rent
and other sums due to the Lessor hereunder shall be made to the Trustee, on
behalf of the Lessor, to the account specified for the Trustee in Schedule I to
the Participation Agreement.

                                       40
<PAGE>   44
IN WITNESS WHEREOF, the parties hereto have caused this Lease to be duly
executed by their respective Officers thereunto duly authorized as of the date
hereof.

                                             LESSOR:

                                             1994 VCM INC.

Attest:A.M. HORN                             By:\S\MARK A. FERRUCCI
                                                Name:Mark A. Ferrucci
         [Seal]                                 Title:President

                                             LESSEE:

                                             THE GEON COMPANY

Attest:Joe. A. Powell                        By:\S\JEAN M. MIKLOSKO
                                                Name:Jean M. Miklosko
                                                Title:Assistant Treasurer

               [Seal]


                                       41
<PAGE>   45
                                   SCHEDULE A

                            Description of the Parcel

LAND IN THE CITY OF LAPORTE, HARRIS COUNTY, TEXAS, legally described as follows:


                                      A-1
<PAGE>   46
                                  SCHEDULE A-1

                  Description of the Chlorine Facility Easement



                                       A-2
<PAGE>   47
                                  SCHEDULE A-2

                          Description of the HCL Parcel

                                       A-3
<PAGE>   48
                                   SCHEDULE B

                     Fixed Rent and Additional Rent Schedule

                  Capitalized terms used herein and not defined herein shall
have the meanings assigned to them in the Lease (including terms defined by
reference in the Lease to the other Operative Documents).

I.       Fixed Rent

         A.       Fixed Rent

                  "Fixed Rent" shall be an amount equal to the sum of Variable
                  Rent and Basic Rent. Fixed Rent shall be due and payable in
                  arrears on each Payment Date.

         B.       Variable Rent

                  1.       The "Original Capitalized Cost" of the Property at
                           any time is equal to the sum of the then outstanding
                           aggregate principal amounts of the A-Notes and the
                           B-Notes plus the then outstanding aggregate stated
                           amount of the Certificates.

                           The "Series A Portion" of the Original Capitalized
                           Cost at any time is equal to the then outstanding
                           aggregate principal amount of the A-Notes.

                           The "Series B Portion" of the Original Capitalized
                           Cost at any time is equal to the then outstanding
                           aggregate principal amount of the B-Notes.

                           The "Series C Portion" of the Original Capitalized
                           Cost at any time is equal to the then outstanding
                           aggregate stated amount of the Certificates.

                  2.       Variable Rent.

                           Variable Rent shall be due and payable in arrears on
                           each Payment Date in the amounts set forth below.

                                       B-1
<PAGE>   49
                           (a)      Construction Period:

                                    For the portion of the Construction Period
                                    during which interest on the Interim Notes
                                    (HCL Series) can be paid from HCL Advances
                                    under Section 1.04(c) of the Participation
                                    Agreement, "Variable Rent" calculated with
                                    regard to the Interim Notes (HCL Series)
                                    shall be $0.00.

                                    For the balance of the Construction Period,
                                    Variable Rent calculated with regard to the
                                    Interim Notes (HCL Series) shall be equal to
                                    the product of the aggregate principal
                                    amount of the Interim Notes (HCL Series)
                                    times the Applicable Rate, all calculated on
                                    the basis of a 360-day year and prorated for
                                    the actual number of days of such period.

                                    If the Interim Notes (HCL Series) are
                                    refinanced on a day which is not a regular
                                    Payment Date, Fixed Rent shall be
                                    proportionately adjusted to such date of
                                    exchange, and any additional costs incurred
                                    by the Lessor in connection with such
                                    refinancing shall also be payable on such
                                    date as Additional Rent under this Lease, a
                                    certificate as to the amount of such costs
                                    submitted to the Lessee by the Lessor shall
                                    be conclusive and binding for all purposes,
                                    absent manifest error.

                           (b)      Primary Term and Extended Term:

                                    "Variable Rent" for each Payment Date during
                                    the Primary Term and Extended Term, if any,
                                    shall equal the sum of (A) an amount equal
                                    to the product of the Series A Portion of
                                    the Original Capitalized Cost of the
                                    Property times the Applicable Rate,
                                    calculated on the basis of a 360-day year
                                    and prorated for the actual number of days
                                    of such period, and (B) an amount equal to
                                    the product of the Series B Portion of the
                                    Original Capitalized Cost of the Property
                                    times the Applicable Rate, calculated on the
                                    basis of a 360-day year and prorated for the
                                    actual number of days of such period.

                                       B-2
<PAGE>   50
         C.       Basic Rent.

                  Basic Rent shall accrue on a daily basis and shall be due and
                  payable in arrears on each Payment Date to the extent, in the
                  manner and in the amounts set forth below.

                  (a)      Construction Period:

                           For the portion of the Construction Period during
                           which Distributions on the Certificates (HCL Series)
                           can be paid from HCL Investments under Section
                           1.04(c) of the Participation Agreement, "Basic Rent"
                           shall be $0.00.

                           For the balance of the Construction Period, Basic
                           Rent shall be equal to the product of the aggregate
                           stated amount of the Certificates (HCL Series) times
                           the Applicable Rate, all calculated on the basis of a
                           360-day year and prorated for the actual number of
                           days of such period.

                  (b)      Primary Term and Extended Term:

                           (1) "Basic Rent" for each Payment Date shall be equal
                           to the product of (a) the aggregate stated amount of
                           the Certificates (excluding the Certificates (HCL
                           Series) during the Construction Period) times (b) the
                           Applicable Rate, calculated on the basis of a 360-day
                           year and prorated for the actual number of days of
                           such period.

II.      Additional Rent

         In addition to such Additional Rent as may otherwise be payable under
         the Lease, Lessee shall pay within thirty (30) days of a demand
         therefor but subject in all cases to Lessee's rights under the
         Operative Documents, as Additional Rent, without duplication, all Break
         Costs, Funding Costs, Reserve Costs, Increased Costs and Illegality
         Costs (collectively, "Additional Costs").

         Promptly after Lessor receives notice from any holder of Instruments of
         any Additional Costs to be payable as Additional Rent Lessor shall
         supply (i) a copy of the same to the Lessee; provided, however, that
         the failure to provide such notice of any Additional Costs shall not
         affect the Lessor's right to recover Additional Rent for the same but
         shall merely affect the timing of such recovery; and (ii) a certificate
         in reasonable detail

                                       B-3
<PAGE>   51
         setting forth the basis for and the amount of such Additional Costs
         submitted by the Lessor (on behalf of a holder) to the Lessee which
         notice shall be conclusive and binding for all purposes, absent
         manifest error.

                                       B-4
<PAGE>   52
                                   SCHEDULE C

                Termination Value and Allocated Termination Value

         A.       Termination Value.

                  The "Termination Value" of the Property as of any date shall
be an amount equal to the Adjusted Capitalized Cost of the Property and any
Closing Costs incurred in connection with the payment of such Adjusted
Capitalized Cost and/or the sale of the Property.

         B.       Adjusted Capitalized Cost:

                  The "Adjusted Capitalized Cost" of the Property, at any time,
as a whole is the sum of the Series A Portion, Series B Portion and Certificate
Portion of the Adjusted Capitalized Cost, plus, if determined prior to the
consummation of the refinancing of the Interim Notes (HCL Series) contemplated
by Article III of the Participation Agreement, the sum of the then outstanding
aggregate principal amount of the Interim Notes (HCL Series), together with
interest accrued and unpaid and all other amounts due thereon or with respect
thereto.

                  The "Series A Portion" of the Adjusted Capitalized Cost at any
time shall be equal to the then outstanding aggregate principal amount of the
A-Notes together with interest accrued and unpaid and all other amounts due
thereon or with respect thereto;

                  The "Series B Portion" of the Adjusted Capitalized Cost at any
time shall be equal to the then outstanding aggregate principal amount of the
B-Notes, together with interest accrued and unpaid and all other amounts due
thereon or with respect thereto; and

                  The "Certificate Portion" of the Adjusted Capitalized Cost at
any time shall be equal to the then outstanding aggregate stated amount of the
Certificates together with Distributions and all other amounts due thereon or
with respect thereto.

         C.       Allocated Termination Value:

                  The "Allocated Termination Value" of the Property, at any
time, as a whole is the sum of the Series A (HCL) Portion, Series B (HCL)
Portion and Certificate (HCL) Portion of the Adjusted Capitalized Cost, or, if
determined prior to the consummation of the refinancing of the Interim Notes
(HCL Series) contemplated by Article III of the Participation Agreement, the sum
of the then outstanding

                                      C-1
<PAGE>   53
aggregate principal amount of the Interim Notes (HCL Series), together with
interest accrued and unpaid and all other amounts due thereon or with respect
thereto.

                  The "Series A (HCL) Portion" of the Adjusted Capitalized Cost
at any time shall be equal to the then outstanding aggregate principal amount of
the A-Notes (HCL Series) together with interest accrued and unpaid and all other
amounts due thereon or with respect thereto;

                  The "Series B (HCL) Portion" of the Adjusted Capitalized Cost
at any time shall be equal to the then outstanding aggregate principal amount of
the B-Notes (HCL Series), together with interest accrued and unpaid and all
other amounts due thereon or with respect thereto; and

                  The "Certificate (HCL) Portion" of the Adjusted Capitalized
Cost at any time shall be equal to the then outstanding aggregate stated amount
of the Certificates (HCL Series) together with Distributions and all other
amounts due thereon or with respect thereto.

                  Capitalized terms used herein and not defined herein shall
have the meanings ascribed to them in the Lease (and the other Schedules
thereto) to which this Schedule C is attached, including terms defined by
reference in the Lease to the other Operative Documents.

                                       C-2