Document:

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                         COVENANT ASSET MANAGEMENT, INC.
                            COVENANT TRANSPORT, INC.

                                   $25,000,000

                7.39% Guaranteed Senior Notes due October 1, 2005

                                PPN: 22283# AA 6

                             NOTE PURCHASE AGREEMENT

                            Dated as of May 15, 2000
                           Closing Date: June 6, 2000

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<PAGE>

                                TABLE OF CONTENTS

Section                                                                     Page

1.       BACKGROUND; AUTHORIZATION OF NOTES....................................1
         1.1.     Background...................................................1
         1.2.     Authorization of Notes.......................................1

2.       SALE AND PURCHASE OF NOTES............................................2

3.       CLOSING...............................................................2

4.       CONDITIONS TO CLOSING.................................................2
         4.1.     Representations and Warranties...............................2
         4.2.     Performance; No Default......................................3
         4.3.     Compliance Certificates......................................3
         4.4.     Opinions of Counsel..........................................3
         4.5.     Purchase Permitted By Applicable Law, etc....................3
         4.6.     Sale of Other Notes..........................................4
         4.7.     Payment of Purchasers' Counsel Fees..........................4
         4.8.     Private Placement Number.....................................4
         4.9.     Changes in Corporate Structure...............................4
         4.10.    Prepayment of Outstanding Notes..............................4
         4.11.    Subsidiary Guaranty..........................................4
         4.12.    Intercreditor Agreement......................................4
         4.13.    Bank Loan Agreement..........................................4
         4.14.    Transaction Fee..............................................5
         4.15.    Proceedings and Documents....................................5

5.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................5
         5.1.     Organization; Power and Authority............................5
         5.2.     Authorization, etc...........................................5
         5.3.     Disclosure...................................................6
         5.4.     Organization and Ownership of Shares of Subsidiaries;
                  Affiliates...................................................6
         5.5.     Financial Statements.........................................7
         5.6.     Compliance with Laws, Other Instruments, etc.................7
         5.7.     Governmental Authorizations, etc.............................8
         5.8.     Litigation; Observance of Agreements, Statutes and Orders....8
         5.9.     Taxes........................................................8
         5.10.    Title to Property; Leases....................................8
         5.11.    Licenses, Permits, etc.......................................9
         5.12.    Compliance with ERISA........................................9
         5.13.    Private Offering by the Company.............................10
         5.14.    Use of Proceeds; Margin Regulations.........................10
         5.15.    Existing Indebtedness; Future Liens.........................11
         5.16.    Foreign Assets Control Regulations, etc.....................11
         5.17.    Status under Certain Statutes...............................11
         5.18.    Environmental Matters.......................................11
         5.19.    Solvency....................................................12

6.       REPRESENTATIONS OF THE PURCHASERS....................................12
         6.1.     Purchase for Investment.....................................12
         6.2.     Source of Funds.............................................12
         6.3.     Authorization, etc..........................................14

7.       INFORMATION AS TO COMPANY............................................14
         7.1.     Financial and Business Information..........................14
         7.2.     Officer's Certificate.......................................17
         7.3.     Inspection..................................................17

8.       PREPAYMENT OF THE NOTES..............................................18
         8.1.     Required Prepayments........................................18
         8.2.     Optional Prepayments with Make-Whole Amount.................18
         8.3.     Allocation of Partial Prepayments...........................19
         8.4.     Maturity; Surrender, etc....................................19
         8.5.     Purchase of Notes...........................................19
         8.6.     Make-Whole Amount...........................................19

9.       AFFIRMATIVE COVENANTS................................................22
         9.1.     Compliance with Law.........................................22
         9.2.     Insurance...................................................22
         9.3.     Maintenance of Properties...................................23
         9.4.     Payment of Taxes and Claims.................................23
         9.5.     Corporate Existence, etc....................................23
         9.6.     Compliance with Parent Guarantee............................24

10.      NEGATIVE COVENANTS...................................................24
         10.1.    Transactions with Affiliates................................24
         10.2.    Merger, Consolidation, etc..................................24
         10.3.    Sales of Assets.............................................25
         10.4.    Disposal of Ownership of a Subsidiary.......................25
         10.5.    Sale-and-Leaseback Transactions.............................26
         10.6.    Maintenance of Consolidated Tangible Net Worth..............26
         10.7.    Limitation on Total Debt; Limitation on Funded Debt
                      Incurrence..............................................26
         10.8.    Restricted Payments.........................................27
         10.9.    Restricted Investments......................................27
         10.10.   Fixed Charges Coverage......................................27
         10.11.   Liens.......................................................27
         10.12.   Line of Business............................................29
         10.13.   Subsidiary Guaranty.........................................30

11.      EVENTS OF DEFAULT....................................................30

12.      REMEDIES ON DEFAULT, ETC.............................................32
         12.1.    Acceleration................................................32
         12.2.    Other Remedies..............................................33
         12.3.    Rescission..................................................33
         12.4.    No Waivers or Election of Remedies, Expenses, etc...........33

13.      REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES........................34
         13.1.    Registration of Notes.......................................34
         13.2.    Transfer and Exchange of Notes..............................34
         13.3.    Replacement of Notes........................................34

14.      PAYMENTS ON NOTES....................................................35
         14.1.    Place of Payment............................................35
         14.2.    Home Office Payment.........................................35

15.      EXPENSES, ETC........................................................35
         15.1.    Transaction Expenses........................................35
         15.2.    Survival....................................................36

16.      SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.........36

17.      AMENDMENT AND WAIVER.................................................36
         17.1.    Requirements................................................36
         17.2.    Solicitation of Holders of Notes............................37
         17.3.    Binding Effect, etc.........................................37
         17.4.    Notes held by Company, etc..................................37

18.      NOTICES..............................................................38

19.      REPRODUCTION OF DOCUMENTS............................................38

20.      CONFIDENTIAL INFORMATION.............................................38

21.      SUBSTITUTION OF PURCHASER............................................39

22.      MISCELLANEOUS........................................................40
         22.1.    Successors and Assigns......................................40
         22.2.    Payments Due on Non-Business Days...........................40
         22.3.    Severability................................................40
         22.4.    Construction................................................40
         22.5.    Counterparts................................................40
         22.6.    Governing Law...............................................41

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SCHEDULE A                 --       Information Relating To Purchasers

SCHEDULE B                 --       Defined Terms

SCHEDULE 4.9               --       Changes in Corporate Structure

SCHEDULE 5.3               --       Disclosure Materials

SCHEDULE 5.4               --       Subsidiaries of the Company and Ownership of
                                    Subsidiary Stock

SCHEDULE 5.5               --       Financial Statements

SCHEDULE 5.8               --       Certain Litigation

SCHEDULE 5.11              --       Patents, etc.

SCHEDULE 5.14              --       Use of Proceeds

SCHEDULE 5.15              --       Existing Indebtedness

SCHEDULE 10.9              --       Restricted Investments

SCHEDULE 10.11             --       Liens

EXHIBIT 1.2                --       Form of 7.39% Guaranteed Senior Note due
                                    October 1, 2005

EXHIBIT 4.4(a)             --       Form of Opinion of Counsel for the Company
                                    and the Parent

EXHIBIT 4.4(b)             --       Form of Opinion of Special Counsel for the
                                    Purchasers

EXHIBIT 4.11               --       Form of Subsidiary Guaranty

EXHIBIT 4.12               --       Form of Intercreditor Agreement

EXHIBIT 9.6                --       Parent Guarantee

<PAGE>

                         COVENANT ASSET MANAGEMENT, INC.
                           639 ISBELL ROAD, SUITE 390
                               RENO, NEVADA 89509

                7.39% GUARANTEED SENIOR NOTES DUE OCTOBER 1, 2005

                                                        Dated as of May 15, 2000

TO EACH OF THE PURCHASERS LISTED IN
         THE ATTACHED SCHEDULE A:

Ladies and Gentlemen:

         Each  of  Covenant  Asset  Management,  Inc.,   a  Nevada   corporation
(the  "Company"),  and  Covenant  Transport,  Inc.,  a Nevada  corporation  (the
"Parent"), agrees with you as follows:

1.       BACKGROUND; AUTHORIZATION OF NOTES.

1.1.     Background.

         You  and  each  of the  Other  Purchasers  are  the  holders  of  7.39%
Guaranteed Senior Notes due October 1, 2005 (the "Old Notes") issued by Covenant
Transport,  Inc., a Tennessee  corporation  ("CTI").  The Old Notes are secured,
pari passu with the Bank  Lenders,  pursuant to the Security  Documents  and the
Master Collateral and Intercreditor Agreement dated as of October 15, 1995 among
you and the Other  Purchasers and the Bank Lenders,  as heretofore  amended.  In
order to permit a reorganization of the Parent and its Subsidiaries, you and the
Other  Purchasers have agreed to the prepayment of the Old Notes at the price of
100% of the principal amount thereof,  plus interest accrued thereon to the date
of prepayment.  The prepayment will be financed in part through the issuance and
sale by the Company of new senior notes, as hereafter  provided,  to you and the
Other Purchasers. For purposes of the Collateral,  this Agreement is intended to
be the successor to the separate Note  Purchase  Agreements  dated as of October
15, 1995 among CTI, the Parent and the purchasers named therein.

1.2.     Authorization of Notes.

         The Company will authorize the issue and sale of $25,000,000  aggregate
principal amount of its 7.39%  Guaranteed  Senior Notes due October 1, 2005 (the
"Notes",  such term to include any such notes  issued in  substitution  therefor
pursuant to Section 13 of this  Agreement  or the Other  Agreements).  The Notes
will be  guaranteed  by the Parent and by each of the  Subsidiaries  and will be
substantially  in the form set out in Exhibit 1.2, with such changes  therefrom,
if any,  as may be  approved  by you and the  Company.  The  Notes  also will be
secured,  pari passu with the Bank  Lenders,  by the  Collateral  pursuant to an
amendment of the Security  Documents  and an amendment  and  restatement  of the
Master Collateral and Intercreditor Agreement to so provide. Certain capitalized
terms  used in this  Agreement  are  defined  in  Schedule  B;  references  to a
"Schedule" or an "Exhibit" are, unless otherwise specified,  to a Schedule or an
Exhibit attached to this Agreement.

2.       SALE AND PURCHASE OF NOTES.

         Subject to the terms and conditions of this Agreement, the Company will
issue and sell to you and you will  purchase  from the  Company,  at the Closing
provided for in Section 3, Notes in the principal amount specified opposite your
name in  Schedule  A at the  purchase  price  of 100%  of the  principal  amount
thereof.  Contemporaneously  with entering into this  Agreement,  the Company is
entering  into  separate  Note  Purchase  Agreements  (the  "Other  Agreements")
identical  with  this  Agreement  with  each of the  other  purchasers  named in
Schedule A (the "Other  Purchasers"),  providing for the sale at such Closing to
each of the Other Purchasers of Notes in the principal amount specified opposite
its name in Schedule A. Your  obligation  hereunder and the  obligations  of the
Other   Purchasers  under  the  Other  Agreements  are  several  and  not  joint
obligations  and you shall have no obligation  under any Other  Agreement and no
liability  to any Person for the  performance  or  non-performance  by any Other
Purchaser thereunder.

3.       CLOSING.

         The sale and purchase of the Notes to be purchased by you and the Other
Purchasers  shall occur at the offices of  Gardner,  Carton & Douglas,  at 10:00
a.m.,  New York time,  at a closing (the  "Closing")  on June 6, 2000 or on such
other  Business Day thereafter on or prior to June 9, 2000 as may be agreed upon
by the Company and you and the Other Purchasers. At the Closing the Company will
deliver to you the Notes to be purchased by you in the form of a single Note (or
such greater  number of Notes in  denominations  of at least $100,000 as you may
request)  dated the date of the Closing and  registered  in your name (or in the
name of your  nominee),  against  delivery by you to the Company or its order of
immediately available funds in the amount of the purchase price therefor by wire
transfer  of  immediately  available  funds for the  account  of the  Company to
account  number  6728004257 at First Union National Bank,  ABA#  053000219,  for
credit to Covenant  Asset  Management,  Inc. If at the Closing the Company shall
fail to tender such Notes to you as provided  above in this Section 3, or any of
the  conditions  specified  in Section 4 shall not have been  fulfilled  to your
satisfaction,   you  shall,  at  your  election,  be  relieved  of  all  further
obligations  under this  Agreement,  without  thereby waiving any rights you may
have by reason of such failure or such nonfulfillment.

4.       CONDITIONS TO CLOSING.

         Your  obligation to purchase and pay for the Notes to be sold to you at
the Closing is subject to the fulfillment to your  satisfaction,  prior to or at
the Closing, of the following conditions:

4.1.     Representations and Warranties.

         The  representations  and  warranties  of the Company and the Parent in
this Agreement shall be correct when made and at the time of the Closing.

4.2.     Performance; No Default.

         The Company and the Parent shall have  performed  and complied with all
agreements and conditions  contained in this Agreement  required to be performed
or complied  with by them prior to or at the Closing and after giving  effect to
the issue and sale of the Notes (and the application of the proceeds  thereof as
contemplated  by  Schedule  5.14) no  Default  or Event of  Default  shall  have
occurred and be continuing.  The Company, the Parent or any Subsidiary shall not
have entered into any  transaction  since the date of the most recent  financial
statements  referred  to in  Schedule  5.5 that  would have been  prohibited  by
Section 10 had such Section applied since such date.

4.3.     Compliance Certificates.

(a)      Officer's  Certificate.  Each of the Company and the Parent  shall have
         delivered  to you an  Officer's  Certificate,  dated  the  date  of the
         Closing,  certifying that the conditions specified in Sections 4.1, 4.2
         and 4.9 have been fulfilled.

(b)      Secretary's  Certificate.  Each of the  Company  and the  Parent  shal
         have  delivered to you a certificate  certifying as to the  resolutions
         attached  thereto  and  other  corporate  proceedings  relating  to the
         authorization, execution and delivery of the Notes and the Agreements.

4.4.     Opinions of Counsel.

         You shall have received opinions in form and substance  satisfactory to
you,  dated the date of the Closing (a) from Scudder Law Firm P.C.,  counsel for
the  Company and the Parent,  covering  the matters set forth in Exhibit  4.4(a)
(and each of the Company and the Parent  instructs  its counsel to deliver  such
opinion to you) and (b) from Gardner,  Carton & Douglas, your special counsel in
connection  with  such  transactions,  substantially  in the form  set  forth in
Exhibit 4.4(b) and covering such other matters incident to such  transactions as
you may reasonably request.

4.5.     Purchase Permitted By Applicable Law, etc.

         On the  date  of the  Closing  your  purchase  of  Notes  shall  (i) be
permitted  by the laws and  regulations  of each  jurisdiction  to which you are
subject,  without recourse to provisions (such as Section  1405(a)(8) of the New
York  Insurance  Law)  permitting  limited  investments  by insurance  companies
without restriction as to the character of the particular  investment,  (ii) not
violate  any  applicable  law  or  regulation  (including,  without  limitation,
Regulation  T, U or X of the Board of Governors of the Federal  Reserve  System)
and (iii) not subject you to any tax,  penalty or liability under or pursuant to
any applicable  law or regulation,  which law or regulation was not in effect on
the date  hereof.  If  requested  by you,  you shall have  received an Officer's
Certificate  certifying as to such matters of fact as you may reasonably specify
to enable you to determine  whether such purchase is so  permitted.  On the date
hereof,  you  represent  that there would be no  violation  of this Section 4.5,
based upon your present knowledge.

4.6.     Sale of Other Notes.

         Contemporaneously  with the Closing the Company shall sell to the Other
Purchasers and the Other  Purchasers shall purchase the Notes to be purchased by
them at the Closing as specified in Schedule A.

4.7.     Payment of Purchasers' Counsel Fees.

         Without limiting the provisions of Section 15.1, the Company shall have
paid on or before  the  Closing  the fees,  charges  and  disbursements  of your
special  counsel  referred  to in  Section  4.4 to  the  extent  reflected  in a
statement  of such  counsel  rendered to the Company at least one  Business  Day
prior to the Closing.

4.8.     Private Placement Number.

         A Private  Placement  number  issued by Standard & Poor's CUSIP Service
Bureau (in  cooperation  with the  Securities  Valuation  Office of the National
Association of Insurance  Commissioners)  shall have been obtained for the Notes
by Gardner, Carton & Douglas.

4.9.     Changes in Corporate Structure.

         Except as specified in Schedule 4.9, neither the Company nor the Parent
shall have  changed its  jurisdiction  of  incorporation  or been a party to any
merger or  consolidation  and  neither  the  Company  nor the Parent  shall have
succeeded to all or any substantial part of the liabilities of any other entity,
at any time following the date of the most recent financial  statements referred
to in Schedule 5.5.

4.10.    Prepayment of Outstanding Notes.

         CTI shall have prepaid its outstanding  7.39%  Guaranteed  Senior Notes
due October 1, 2005 in the principal amount of $25,000,000 at a price of 100% of
such principal amount, plus interest accrued to the date of such prepayment.

4.11.    Subsidiary Guaranty.

         Each  Subsidiary  shall have  executed  and  delivered  the  Subsidiary
Guaranty in substantially the form of the attached Exhibit 4.11.

4.12.    Intercreditor Agreement.

         The Bank  Lenders and you and the Other  Purchasers  shall have entered
into an amendment and  restatement of the Master  Collateral  and  Intercreditor
Agreement  in  substantially   the  form  of  the  attached  Exhibit  4.12  (the
"Intercreditor Agreement").

4.13.    Bank Loan Agreement.

         The Company shall have  delivered to you a correct and complete copy of
the Bank Loan Agreement.

4.14.    Transaction Fee.

         The  Company  shall  have  paid a  transaction  fee of  $10,000  in the
aggregate  to you and the Other  Purchasers,  by wire  transfer  of  immediately
available  funds to Chase  NYC/CTR/BNF=CIGNA  Private  Placements/AC=9009001802,
ABA#021000021.

4.15.    Proceedings and Documents.

         All corporate and other proceedings in connection with the transactions
contemplated  by this  Agreement and all documents and  instruments  incident to
such transactions  shall be satisfactory to you, and you shall have received all
such counterpart originals or certified or other copies of such documents as you
or they may reasonably request.

5.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         Each of the Company and the Parent represents and warrants to you that:

5.1.     Organization; Power and Authority.

         Each of the Company  and the Parent is a  corporation  duly  organized,
validly  existing and in good  standing  under the laws of its  jurisdiction  of
incorporation,  and is duly  qualified as a foreign  corporation  and is in good
standing in each  jurisdiction in which such  qualification  is required by law,
other than those  jurisdictions as to which the failure to be so qualified or in
good  standing  could  not,  individually  or in the  aggregate,  reasonably  be
expected to have a Material  Adverse Effect.  Each of the Company and the Parent
has the corporate  power and authority to own or hold under lease the properties
it purports to own or hold under  lease,  to transact  the business it transacts
and proposes to transact,  to execute and deliver this  Agreement  and the Other
Agreements and the Notes and to perform the provisions hereof and thereof.

5.2.     Authorization, etc.

         This  Agreement and the Other  Agreements  and the Notes have been duly
authorized by all necessary  corporate action on the part of each of the Company
and the Parent, and

(a)      this Agreement  constitutes,  and upon  execution and delivery  thereof
         each Note will constitute, a legal, valid and binding obligation of the
         Company  enforceable  against the Company in accordance with its terms,
         and

(b)      this Agreement,  including the Parent  Guarantee,  constitutes a legal,
         valid and  binding  obligation  of the Parent  enforceable  against the
         Parent in accordance with its terms,

except (in each case) as such  enforceability  may be limited by (i)  applicable
bankruptcy,  insolvency,  reorganization,   moratorium  or  other  similar  laws
affecting  the  enforcement  of  creditors'  rights  generally  and (ii) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

         The  Subsidiary  Guaranty  has been duly  authorized  by all  necessary
corporate  action on the part of each Subsidiary and upon execution and delivery
thereof  will  constitute  the  legal,  valid  and  binding  obligation  of each
Subsidiary,  enforceable  against each  Subsidiary in accordance with its terms,
except as such  enforceability  may be  limited  by (i)  applicable  bankruptcy,
insolvency,  reorganization,  moratorium  or other  similar laws  affecting  the
enforcement of creditors' rights generally and (ii) general principles of equity
(regardless  of whether such  enforceability  is  considered  in a proceeding in
equity or at law).

5.3.     Disclosure.

         Except as disclosed in Schedule 5.3,  this  Agreement,  the  documents,
certificates  or other writings  delivered to you by or on behalf of the Company
in connection with the transactions  contemplated hereby (including the Parent's
annual report for the year ended December 31, 1999, its proxy  statement for the
2000  annual  meeting  of  stockholders,  and all  forms  10-Q  filed  with  the
Securities and Exchange Commission  subsequent to December 31, 1999 and prior to
the date of Closing) and the financial  statements listed in Schedule 5.5, taken
as a whole,  do not contain any untrue  statement of a material  fact or omit to
state any material fact necessary to make the statements  therein not misleading
in light of the  circumstances  under which they were made.  Except as expressly
described in Schedule  5.3, or in one of the  documents,  certificates  or other
writings identified  therein, or in the financial  statements listed in Schedule
5.5,  since  December  31,  1999,  there  has been no  change  in the  financial
condition,  operations,  business,  properties or prospects of the Company,  the
Parent or any Subsidiary  except changes that  individually  or in the aggregate
could not reasonably be expected to have a Material Adverse Effect.  There is no
fact known to the Company that could  reasonably  be expected to have a Material
Adverse Effect that has not been set forth herein or in the Memorandum or in the
other  documents,  certificates  and other  writings  delivered  to you by or on
behalf of the Company  specifically  for use in connection with the transactions
contemplated hereby.

5.4.     Organization and Ownership of Shares of Subsidiaries; Affiliates.

(a)      Schedule 5.4 contains  (except as noted  therein)  complete and correct
         lists (i) of the  Subsidiaries,  showing,  as to each  Subsidiary,  the
         correct  name  thereof,  the  jurisdiction  of  its  organization,  the
         percentage  of shares of each  class of its  capital  stock or  similar
         equity interests  outstanding  owned by the Parent (or the Company,  as
         the case may be) and each other  Subsidiary,  (ii) of the Company's and
         the  Parent's  Affiliates,  other than  Subsidiaries,  and (iii) of the
         Company's and the Parent's directors and senior officers.

(b)      All of the  outstanding  shares  of  capital  stock or  similar  equity
         interests  of each  Subsidiary  shown in Schedule 5.4 as being owned by
         the Company,  the Parent and the Subsidiaries have been validly issued,
         are fully  paid and  nonassessable  and are owned by the  Company,  the
         Parent or  another  Subsidiary  free and clear of any Lien  (except  as
         otherwise disclosed in Schedule 5.4).

(c)      Each   Subsidiary  identified  in  Schedule  5.4  is a  corporation  or
         other  legal  entity  duly  organized,  validly  existing  and in  good
         standing under the laws of its  jurisdiction  of  organization,  and is
         duly qualified as a foreign corporation or other legal entity and is in
         good  standing  in each  jurisdiction  in which such  qualification  is
         required by law, other than those jurisdictions as to which the failure
         to be so qualified or in good standing  could not,  individually  or in
         the  aggregate,  reasonably  be  expected  to have a  Material  Adverse
         Effect.  Each such  Subsidiary  has the  corporate  or other  power and
         authority to own or hold under lease the  properties it purports to own
         or hold under  lease and to transact  the  business  it  transacts  and
         proposes to transact.

(d)      No  Subsidiary  is a  party  to,  or  otherwise  subject  to any  legal
         restriction or any agreement (other than this Agreement, the agreements
         listed on Schedule 5.4 and customary  limitations  imposed by corporate
         law  statutes)  restricting  the  ability  of  such  Subsidiary  to pay
         dividends  out of profits or make any other  similar  distributions  of
         profits to the Company or any of its Subsidiaries that owns outstanding
         shares of capital stock or similar equity interests of such Subsidiary.

5.5.     Financial Statements.

         The  Company  and the  Parent  have  delivered  to you and  each  Other
Purchaser copies of the consolidated  financial statements of the Parent and its
Subsidiaries listed on Schedule 5.5. All of said financial statements (including
in each case the related  schedules  and notes)  fairly  present in all material
respects the consolidated  financial position of the Parent and its Subsidiaries
as of the  respective  dates  specified in such  Schedule  and the  consolidated
results  of their  operations  and cash  flows  for the  respective  periods  so
specified and have been prepared in accordance  with GAAP  consistently  applied
throughout  the  periods  involved  except  as set  forth in the  notes  thereto
(subject,  in the case of any interim financial  statements,  to normal year-end
adjustments).

5.6.     Compliance with Laws, Other Instruments, etc.

         The execution,  delivery and  performance by the Company and the Parent
of this  Agreement and the Notes will not (i)  contravene,  result in any breach
of, or  constitute  a default  under,  or result in the  creation of any Lien in
respect of any property of the Company,  the Parent or any Subsidiary under, any
indenture,  mortgage, deed of trust, loan, purchase or credit agreement,  lease,
corporate charter or by-laws,  or any other agreement or instrument to which the
Company,  the Parent or any  Subsidiary  is bound or by which the  Company,  the
Parent or any Subsidiary or any of their  respective  properties may be bound or
affected,  (ii)  conflict  with  or  result  in a  breach  of any of the  terms,
conditions or provisions of any order, judgment, decree, or ruling of any court,
arbitrator or Governmental  Authority  applicable to the Company,  the Parent or
any  Subsidiary  or (iii)  violate any provision of any statute or other rule or
regulation of any Governmental  Authority  applicable to the Company, the Parent
or any Subsidiary.

         The  execution,  delivery and  performance  by each  Subsidiary  of the
Subsidiary  Guaranty  will not (i)  contravene,  result  in any  breach  of,  or
constitute a default under,  or result in the creation of any Lien in respect of
any property of such Subsidiary  under, any agreement,  or corporate  charter or
by-laws, to which such Subsidiary is bound or by which such Subsidiary or any of
its  properties  may be bound or  affected,  (ii)  conflict  with or result in a
breach of any of the terms,  conditions or  provisions  of any order,  judgment,
decree, or ruling of any court,  arbitrator or Governmental Authority applicable
to such  Subsidiary  or (iii) violate any provision of any statute or other rule
or regulation of any Governmental Authority applicable to such Subsidiary.

5.7.     Governmental Authorizations, etc.

         No consent,  approval or authorization  of, or registration,  filing or
declaration with, any Governmental  Authority is required in connection with the
execution,  delivery  or  performance  by the  Company  and the  Parent  of this
Agreement  or the  Notes  or the  execution,  delivery  or  performance  by each
Subsidiary of the Subsidiary Guaranty.

5.8.     Litigation; Observance of Agreements, Statutes and Orders.

(a)      Except as disclosed  in Schedule  5.8,  there are no actions,  suits or
         proceedings  pending or, to the knowledge of the Company or the Parent,
         threatened  against  or  affecting  the  Company,  the  Parent  or  any
         Subsidiary or any property of the Company, the Parent or any Subsidiary
         in any court or before any  arbitrator  of any kind or before or by any
         Governmental  Authority that,  individually or in the aggregate,  could
         reasonably be expected to have a Material Adverse Effect.

(b)      None of the Company,  the Parent and any Subsidiary is in default under
         any term of any  agreement or  instrument  to which it is a party or by
         which it is  bound,  or any  order,  judgment,  decree or ruling of any
         court,  arbitrator or Governmental  Authority or is in violation of any
         applicable  law,  ordinance,  rule  or  regulation  (including  without
         limitation  Environmental  Laws) of any Governmental  Authority,  which
         default  or  violation,   individually  or  in  the  aggregate,   could
         reasonably be expected to have a Material Adverse Effect.

5.9.     Taxes.

         The  Parent,  the  Company  and their  Subsidiaries  have filed all tax
returns that are required to have been filed in any jurisdiction,  and have paid
all taxes  shown to be due and  payable on such  returns and all other taxes and
assessments levied upon them or their properties,  assets, income or franchises,
to the extent such taxes and assessments  have become due and payable and before
they have become delinquent, except for any taxes and assessments (i) the amount
of which is not  individually  or in the aggregate  Material or (ii) the amount,
applicability or validity of which is currently being contested in good faith by
appropriate  proceedings and with respect to which the Company,  the Parent or a
Subsidiary,  as the case may be, has established adequate reserves in accordance
with GAAP.  Neither the Company nor the Parent  knows of any basis for any other
tax or assessment that could  reasonably be expected to have a Material  Adverse
Effect.  The charges,  accruals  and  reserves on the books of the Company,  the
Parent and the Subsidiaries in respect of Federal,  state or other taxes for all
fiscal periods are adequate.  The Federal  income tax  liabilities of the Parent
have been  determined  by the Internal  Revenue  Service and paid for all fiscal
years up to and including the fiscal year ended December 31, 1996.

5.10.    Title to Property; Leases.

         The Company,  the Parent and the Subsidiaries  have good and sufficient
title to their respective  properties that  individually or in the aggregate are
Material,  including all such  properties  reflected in the most recent  audited
balance  sheet  referred to in Section 5.5 or purported to have been acquired by
the  Company,  the Parent or any  Subsidiary  after said date (except as sold or
otherwise disposed of in the ordinary course of business), in each case free and
clear of Liens prohibited by this Agreement.  All leases that individually or in
the  aggregate are Material are valid and  subsisting  and are in full force and
effect in all material respects.

5.11.    Licenses, Permits, etc.

         Except as disclosed in Schedule 5.11,

(a)      the Company,  the Parent and the  Subsidiaries own or use all licenses,
         permits,  franchises,  authorizations,   patents,  copyrights,  service
         marks, trademarks and trade names, or rights thereto, that individually
         or in the  aggregate  are  Material,  without  known  conflict with the
         rights of others;

(b)      to the best knowledge of the Company and the Parent,  no product of the
         Company or the Parent or their  Subsidiaries  infringes in any material
         respect  any  license,  permit,   franchise,   authorization,   patent,
         copyright,  service mark, trademark, trade name or other right owned by
         any other Person; and

(c)      to the  best  knowledge  of the  Company  and the  Parent,  there is no
         Material  violation  by any  Person  of any right of the  Company,  the
         Parent  or  any  of  the  Subsidiaries  with  respect  to  any  patent,
         copyright,  service mark, trademark, trade name or other right owned or
         used by the Company, the Parent or any of the Subsidiaries.

5.12.    Compliance with ERISA.

(a)      The Company,  the Parent and  each ERISA  Affiliate  have  operated and
         administered  each Plan in compliance  with all applicable  laws except
         for such instances of  noncompliance  as have not resulted in and could
         not  reasonably  be  expected to result in a Material  Adverse  Effect.
         Neither the Company or the Parent nor any ERISA  Affiliate has incurred
         any  liability  pursuant  to Title I or IV of ERISA or the  penalty  or
         excise tax  provisions of the Code  relating to employee  benefit plans
         (as  defined  in  Section 3 of  ERISA),  and no event,  transaction  or
         condition  has occurred or exists that could  reasonably be expected to
         result in the  incurrence  of any such  liability by the  Company,  the
         Parent or any ERISA Affiliate,  or in the imposition of any Lien on any
         of the rights,  properties or assets of the Company,  the Parent or any
         ERISA  Affiliate,  in either case pursuant to Title I or IV of ERISA or
         to such penalty or excise tax  provisions  or to Section  401(a)(29) or
         412 of the Code,  other than such  liabilities or Liens as would not be
         individually or in the aggregate Material.

(b)      The present value of the aggregate  benefit  liabilities  under each of
         the Plans (other than  Multiemployer  Plans), if any,  determined as of
         the end of such  Plan's most  recently  ended plan year on the basis of
         the actuarial assumptions specified for funding purposes in such Plan's
         most recent actuarial  valuation  report,  did not exceed the aggregate
         current  value of the  assets of such Plan  allocable  to such  benefit
         liabilities.  The term "benefit  liabilities" has the meaning specified
         in section  4001 of ERISA and the terms  "current  value" and  "present
         value" have the meaning specified in section 3 of ERISA.

(c)      The  Company,  the Parent and the ERISA  Affiliates  have not  incurred
         withdrawal  liabilities  (and are not subject to contingent  withdrawal
         liabilities)  under  section  4201 or  4204  of  ERISA  in  respect  of
         Multiemployer Plans that individually or in the aggregate are Material.

(d)      The expected  postretirement  benefit obligation  (determined as of the
         last day of the Company's most recently ended fiscal year in accordance
         with Financial  Accounting  Standards Board Statement No. 106,  without
         regard to liabilities attributable to continuation coverage mandated by
         section  4980B  of the  Code)  of  the  Company,  the  Parent  and  the
         Subsidiaries is not Material.

(e)      The execution and delivery of this  Agreement and the issuance and sale
         of the Notes hereunder will not involve any transaction that is subject
         to the prohibitions of section 406 of ERISA or in connection with which
         a tax could be imposed  pursuant  to section  4975(c)(1)(A)-(D)  of the
         Code. The  representation  by the Company in the first sentence of this
         Section 5.12(e) is made in reliance upon and subject to the accuracy of
         your  representation in Section 6.2 as to the sources of the funds used
         to pay the purchase price of the Notes to be purchased by you.

5.13.    Private Offering by the Company.

         Neither the  Company nor the Parent nor anyone  acting on behalf of the
Company or the Parent has offered the Notes or any similar  securities  for sale
to, or solicited any offer to buy any of the same from, or otherwise  approached
or negotiated in respect  thereof with,  any person other than you and the Other
Purchasers.  Neither the  Company nor the Parent nor anyone  acting on behalf of
the Company or the Parent has taken, or will take, any action that would subject
the issuance or sale of the Notes to the registration  requirements of Section 5
of the Securities Act.

5.14.     Use of Proceeds; Margin Regulations.

         The  Company  will apply the  proceeds  of the sale of the Notes as set
forth in  Schedule  5.14.  No part of the  proceeds  from the sale of the  Notes
hereunder  will be used,  directly or  indirectly,  for the purpose of buying or
carrying  any margin  stock  within the meaning of  Regulation U of the Board of
Governors  of the  Federal  Reserve  System (12 CFR 221),  or for the purpose of
buying or carrying or trading in any securities  under such  circumstances as to
involve the Company in a violation of Regulation X of said Board (12 CFR 224) or
to involve any broker or dealer in a violation of Regulation T of said Board (12
CFR 220).  Margin stock does not constitute any of the value of the consolidated
assets of the Company  and its  Subsidiaries  and the Company  does not have any
present  intention  that margin stock will  constitute  any of the value of such
assets. As used in this Section, the terms "margin stock" and "purpose of buying
or carrying" shall have the meanings assigned to them in said Regulation U.

5.15.    Existing Indebtedness; Future Liens.

(a)      Except as  described  therein,  Schedule 5.15  sets  forth  a  complete
         and correct list of all outstanding  Indebtedness  of the Company,  the
         Parent and the  Subsidiaries  as of March 31,  2000,  since  which date
         there has been no  Material  change  in the  amounts,  interest  rates,
         sinking funds,  installment  payments or maturities of the Indebtedness
         of the Company or its  Subsidiaries.  Neither the Company or the Parent
         nor any  Subsidiary  is in default and (except as  contemplated  by the
         Intercreditor  Agreement)  no waiver of default is currently in effect,
         in the payment of any principal or interest on any  Indebtedness of the
         Company, the Parent or such Subsidiary and no event or condition exists
         with  respect to any  Indebtedness  of the  Company,  the Parent or any
         Subsidiary that would permit (or that with notice or the lapse of time,
         or both,  would permit) one or more Persons to cause such  Indebtedness
         to become due and  payable  before its  stated  maturity  or before its
         regularly scheduled dates of payment.

(b)      Except as disclosed in Schedule 5.15,  neither the Company,  the Parent
         nor any  Subsidiary  have agreed or consented to cause or permit in the
         future (upon the happening of a contingency  or otherwise) any of their
         property,  whether now owned or hereafter acquired,  to be subject to a
         Lien not permitted by Section 10.11.

5.16.    Foreign Assets Control Regulations, etc.

         Neither the sale of the Notes by the Company  hereunder  nor its use of
the proceeds thereof will violate the Trading with the Enemy Act, as amended, or
any of the foreign  assets  control  regulations  of the United States  Treasury
Department  (31  CFR,  Subtitle  B,  Chapter  V,  as  amended)  or any  enabling
legislation or executive order relating thereto.

5.17.    Status under Certain Statutes.

         None of the  Company,  the  Parent  or any  Subsidiary  is  subject  to
regulation  under the  Investment  Company Act of 1940,  as amended,  the Public
Utility  Holding  Company Act of 1935, as amended,  or the Federal Power Act, as
amended.

5.18.    Environmental Matters.

         None of the Company,  the Parent or any Subsidiary has knowledge of any
claim or has  received  any  notice of any  claim,  and no  proceeding  has been
instituted  raising  any claim  against  the  Company,  the Parent or any of the
Subsidiaries  or any of their  respective real properties now or formerly owned,
leased or operated by any of them or other  assets,  alleging  any damage to the
environment or violation of any Environmental  Laws,  except, in each case, such
as could not reasonably be expected to result in a Material Adverse Effect.

(a)      None of the Company,  the Parent or any Subsidiary has knowledge of any
         facts  which  would  give  rise to any  claim,  public or  private,  of
         violation of Environmental Laws or damage to the environment  emanating
         from,  occurring  on or in any way  related to real  properties  now or
         formerly owned, leased or operated by any of them or to other assets or
         their  use,  except,  in each  case,  such as could not  reasonably  be
         expected to result in a Material Adverse Effect.

(b)      None of the Company,  the Parent or any  Subsidiary  has (i) stored any
         Hazardous Materials on real properties now or formerly owned, leased or
         operated by any of them (ii) disposed of any  Hazardous  Materials in a
         manner contrary to any  Environmental  Laws, in each case in any manner
         that could  reasonably  be  expected  to result in a  Material  Adverse
         Effect.

(c)      All buildings on all real  properties now owned,  leased or operated by
         the  Company,  the  Parent or any  Subsidiary  are in  compliance  with
         applicable Environmental Laws, except where failure to comply could not
         reasonably be expected to result in a Material Adverse Effect.

5.19.    Solvency.

         The  Parent,   the  Company  and  each  Subsidiary  (after  giving  due
consideration  to any  rights of  contribution  among  such  Persons)  have each
received fair  consideration and reasonably  equivalent value for the incurrence
of its obligations  hereunder or as contemplated  hereby. After giving effect to
the transactions  contemplated  herein, (i) the fair value of the assets of each
of the Parent,  the Company and each  Subsidiary  (both at fair valuation and at
present fair saleable value) exceeds its  liabilities,  (ii) each of the Parent,
the  Company  and each  Subsidiary  is able to and expects to be able to pay its
debts as they  mature,  and  (iii)  each of the  Parent,  the  Company  and each
Subsidiary  has capital  sufficient to carry on its business as conducted and as
proposed to be conducted.

6.       REPRESENTATIONS OF THE PURCHASERS.

6.1.     Purchase for Investment.

         You represent that you are purchasing the Notes for your own account or
for one or more separate accounts maintained by you or for the account of one or
more  pension or trust  funds and not with a view to the  distribution  thereof,
provided that the  disposition  of your or their  property shall at all times be
within  your or their  control.  You  understand  that the  Notes  have not been
registered  under the Securities Act and similar State  securities laws, and may
be resold only if registered  pursuant to the  provisions of the  Securities Act
and such State laws or if an exemption from  registration  is available,  except
under  circumstances  where neither such  registration  nor such an exemption is
required by law, and that the Company is not required to register the Notes. You
represent that you are an "accredited investor" as defined in Regulation 230.501
issued pursuant to the Securities Act.

6.2.     Source of Funds.

         You  represent  that at least  one of the  following  statements  is an
accurate  representation  as to each source of funds (a  "Source") to be used by
you to pay the purchase price of the Notes to be purchased by you hereunder:

(a)      the Source does not include  assets  allocated to any separate  account
         maintained  by you in which any  employee  benefit plan (or its related
         trust)  has  any  interest,  other  than a  separate  account  that  is
         maintained solely in connection with your fixed contractual obligations
         under which the amounts payable,  or credited,  to such plan and to any
         participant or  beneficiary of such plan  (including any annuitant) are
         not  affected  in any  manner  by  the  investment  performance  of the
         separate account

(b)      the Source is an "insurance  company  general  account" as such term is
         defined in the  Department of Labor  Prohibited  Transaction  Exemption
         ("PTE")  95-60  (issued July 12, 1995) ("PTE 95-60") and as of the date
         of this Agreement  there is no "employee  benefit plan" with respect to
         which the  aggregate  amount of such  general  account's  reserves  and
         liabilities  for the  contracts  held by or on behalf of such  employee
         benefit plan and all other  employee  benefit  plans  maintained by the
         same employer (and affiliates  thereof as defined in Section V(a)(1) of
         PTE  95-60)  or  by  the  same  employee  organization  (in  each  case
         determined in accordance  with the provisions of PTE 95-60) exceeds 10%
         of the total  reserves  and  liabilities  of such  general  account (as
         determined under PTE 95-60) (exclusive of separate account liabilities)
         plus  surplus as set forth in the  National  Association  of  Insurance
         Commissioners Annual Statement filed with your state of domicile; or

(c)      the Source is either (i) an insurance  company pooled separate account,
         within the meaning of PTE 90-1  (issued  January 29,  1990),  or (ii) a
         bank  collective  investment  fund,  within  the  meaning  of PTE 91-38
         (issued July 12, 1991) and, except as you have disclosed to the Company
         in writing  pursuant to this paragraph (b), no employee benefit plan or
         group of plans maintained by the same employer or employee organization
         beneficially  owns more than 10% of all assets allocated to such pooled
         separate account or collective investment fund; or

(d)      the  Source  constitutes  assets of an  "investment fund"  (within  the
         meaning  of  Part V of the  QPAM  Exemption)  managed  by a  "qualified
         professional  asset manager" or "QPAM" (within the meaning of Part V of
         the  QPAM  Exemption),  no  employee  benefit  plan's  assets  that are
         included in such investment  fund, when combined with the assets of all
         other  employee  benefit  plans  established  or maintained by the same
         employer or by an affiliate  (within the meaning of Section  V(c)(1) of
         the  QPAM   Exemption)  of  such  employer  or  by  the  same  employee
         organization  and managed by such QPAM,  exceed 20% of the total client
         assets managed by such QPAM, the conditions of Part I(c) and (g) of the
         QPAM Exemption are satisfied, neither the QPAM nor a person controlling
         or  controlled  by the QPAM  (applying  the  definition of "control" in
         Section V(e) of the QPAM  Exemption)  owns a 5% or more interest in the
         Company  and (i) the  identity  of such  QPAM and (ii) the names of all
         employee  benefit  plans whose assets are  included in such  investment
         fund have been  disclosed  to the  Company in writing  pursuant to this
         paragraph (c); or

(e)      the Source is a governmental plan; or

(f)      the Source is one or more employee benefit plans, or a separate account
         or trust fund comprised of one or more employee benefit plans,  each of
         which has been  identified  to the Company in writing  pursuant to this
         paragraph (e); or

(g)      the Source is the assets of one or more employee benefit plans that are
         managed by an "in-house  asset manager," as that term is defined in PTE
         96-23 and such  purchase  and holding of the Notes is exempt  under PTE
         96-23; or

(h)      the Source does not include assets of any employee  benefit plan, other
         than a plan exempt from the coverage of ERISA.

As used in this Section 6.2, the terms  "employee  benefit plan",  "governmental
plan",  "party in interest" and  "separate  account"  shall have the  respective
meanings assigned to such terms in Section 3 of ERISA.

6.3.     Authorization, etc.

         This  Agreement has been duly  authorized  by all  necessary  corporate
action  by you,  and this  Agreement  constitutes  a legal,  valid  and  binding
obligation  of you  enforceable  against  the you in  accordance  with its terms
except as such  enforceability  may be  limited  by (i)  applicable  bankruptcy,
insolvency,  reorganization,  moratorium  or other  similar laws  affecting  the
enforcement of creditors' rights generally and (ii) general principles of equity
(regardless  of whether such  enforceability  is  considered  in a proceeding in
equity or at law).

7.       INFORMATION AS TO COMPANY.

7.1.     Financial and Business Information.

         The  Parent  shall   deliver  to  each  holder  of  Notes  that  is  an
Institutional  Investor (if any),  provided that the Parent (as the case may be)
shall have been  notified  of the  identity  of such  holder and shall have been
provided the proper address for notice:

(a)      Quarterly  Statements -- within 60 days after the end of each quarterly
         fiscal  period in each fiscal  year of the Parent  (other than the last
         quarterly fiscal period of each such fiscal year), duplicate copies of,

(i)      a consolidated  balance sheet of the Parent and its  Subsidiaries as at
         the end of such quarter, and

(ii)     consolidated  statements of income,  changes in  stockholders' equity
         and cash flows of the Parent and its  Subsidiaries for such quarter and
         (in the case of the second and third  quarters)  for the portion of the
         fiscal year ending with such quarter,

         setting  forth in each case in  comparative  form the  figures  for the
         corresponding  periods in the previous  fiscal year,  all in reasonable
         detail,  prepared  in  accordance  with GAAP  applicable  to  quarterly
         financial  statements  generally,  and certified by a Senior  Financial
         Officer as fairly presenting,  in all material respects,  the financial
         position  of the  companies  being  reported  on and their  results  of
         operations and cash flows,  subject to changes  resulting from year-end
         adjustments,  provided that delivery  within the time period  specified
         above of copies of the Parent's  Quarterly Report on Form 10-Q prepared
         in  compliance  with  the  requirements  therefor  and  filed  with the
         Securities  and  Exchange  Commission  shall be deemed to  satisfy  the
         requirements of this Section 7.1(a) with respect to the Parent;

(b)      Annual Statements -- within 100 days after the end of each fiscal  yea
         of the Company and the Parent, duplicate copies of,

(i)      a consolidated balance sheet of the Parent and  its Subsidiaries, as at
         the end of such year, and

(ii)     consolidated  statements of income, changes in shareholders' equity and
         cash flows of the Parent and its Subsidiaries, for such year,

         setting  forth in each case in  comparative  form the  figures  for the
         previous fiscal year, all in reasonable detail,  prepared in accordance
         with GAAP, and accompanied

(A)      by an opinion  thereon  of  independent  certified  public  accountants
         of recognized  national  standing,  which opinion shall state that such
         financial  statements  present fairly,  in all material  respects,  the
         financial  position  of the  companies  being  reported  upon and their
         results  of  operations  and cash  flows  and  have  been  prepared  in
         conformity with GAAP, and that the  examination of such  accountants in
         connection  with such financial  statements has been made in accordance
         with  generally  accepted  auditing  standards,  and  that  such  audit
         provides a reasonable basis for such opinion in the circumstances, and

(B)      a certificate  of such  accountants  stating  that they  have  reviewed
         this Agreement and stating further whether, in making their audit, they
         have become  aware of any  condition or event that then  constitutes  a
         Default or an Event of  Default,  and,  if they are aware that any such
         condition or event then exists, specifying the nature and period of the
         existence  thereof (it being understood that such accountants shall not
         be liable, directly or indirectly,  for any failure to obtain knowledge
         of any Default or Event of Default unless such accountants  should have
         obtained  knowledge  thereof  in  making  an audit in  accordance  with
         generally accepted auditing standards or did not make such an audit),

         provided that the delivery  within the time period  specified  above of
         the Parent's  Annual Report on Form 10-K for such fiscal year (together
         with the  Parent's  annual  report to  shareholders,  if any,  prepared
         pursuant to Rule 14a-3 under the Exchange  Act)  prepared in accordance
         with the  requirements  therefor  and  filed  with the  Securities  and
         Exchange  Commission,   together  with  the  accountant's   certificate
         described  in  clause  (B)  above,  shall  be  deemed  to  satisfy  the
         requirements of this Section 7.1(b);

(c)      SEC and Other Reports -- promptly upon their  becoming  available,  one
         copy of (i) each financial statement, report, notice or proxy statement
         sent by the  Parent  or any  Subsidiary  to public  securities  holders
         generally,  and (ii) each regular or periodic report, each registration
         statement  (without  exhibits  except as  expressly  requested  by such
         holder),  and each  prospectus and all amendments  thereto filed by the
         Company,  the Parent or any Subsidiary with the Securities and Exchange
         Commission  and  of  all  press  releases  and  other  statements  made
         available generally by the Company, the Parent or any Subsidiary to the
         public concerning developments that are Material;

(d)      Notice of Default or Event of  Default  --  promptly,  and in any event
         within five Business Days after a Responsible Officer becoming aware of
         the existence of any Default or Event of Default or that any Person has
         given any notice or taken any action with respect to a claimed  default
         hereunder  or that any  Person has given any notice or taken any action
         with  respect to a claimed  default of the type  referred to in Section
         11(f), a written  notice  specifying the nature and period of existence
         thereof and what action the  Company or the Parent (as  applicable)  is
         taking or proposes to take with respect thereto;

(e)      ERISA  Matters --  promptly,  and in any event within five days after a
         Responsible  Officer becoming aware of any of the following,  a written
         notice  setting forth the nature  thereof and the action,  if any, that
         the Parent or an ERISA Affiliate proposes to take with respect thereto:

(i)      with respect to any Plan, any reportable  event, as defined in section
         4043(b)  of ERISA and the  regulations  thereunder,  for  which  notice
         thereof has not been waived  pursuant to such  regulations as in effect
         on the date hereof; or

(ii)     the  taking  by  the  PBGC  of  steps  to  institute,  or  the
         threatening  by the  PBGC  of the  institution  of,  proceedings  under
         section 4042 of ERISA for the  termination  of, or the appointment of a
         trustee to  administer,  any Plan,  or the receipt by the Company,  the
         Parent or any ERISA  Affiliate  of a notice from a  Multiemployer  Plan
         that  such  action  has been  taken by the PBGC  with  respect  to such
         Multiemployer Plan; or

(iii)    any event, transaction or condition that could result in the incurrence
         of any liability by the Parent or any ERISA Affiliate pursuant to Title
         I or IV of ERISA or the  penalty or excise tax  provisions  of the Code
         relating to employee benefit plans, or in the imposition of any Lien on
         any of the  rights,  properties  or assets  of the  Parent or any ERISA
         Affiliate  pursuant to Title I or IV of ERISA or such penalty or excise
         tax  provisions,  if such  liability or Lien,  taken  together with any
         other such  liabilities  or Liens then  existing,  could  reasonably be
         expected to have a Material Adverse Effect;

(f)      Notices  from  Governmental  Authority  --  promptly,  and in any event
         within 30 days of receipt thereof,  copies of any notice to the Parent,
         the Company or any  Subsidiary  from any Federal or state  Governmental
         Authority  relating  to any  order,  ruling,  statute  or other  law or
         regulation that could reasonably be expected to have a Material Adverse
         Effect;

(g)      Requested  Information -- with reasonable  promptness,  such other data
         and  information  relating  to  the  business,   operations,   affairs,
         financial condition, assets or properties of the Parent, the Company or
         any  Subsidiary or relating to the ability of the Parent or the Company
         to perform its  obligations  hereunder and under the Notes as from time
         to time may be reasonably requested by any such holder of Notes; and

(h)      Rule 144A  Information  -- promptly  upon request,  such  financial and
         other  information  as  such  Institutional   Investor  may  reasonably
         determine  to be  necessary  in order  to  permit  compliance  with the
         information  requirements of Rule 144A under the Securities Act (or any
         successor provision) in connection with the resale of the Notes, except
         at such times as the Parent is subject to the reporting requirements of
         Section 13 or 15(d) of the Exchange Act.

7.2.     Officer's Certificate.

         Each  set of  financial  statements  delivered  to a  holder  of  Notes
pursuant  to  Section  7.1(a)  or  Section  7.1(b)  shall  be  accompanied  by a
certificate  of a Senior  Financial  Officer  of the Parent (as the case may be)
setting forth:

(a)      Covenant   Compliance   --   the   information    (including   detailed
         calculations)  required in order to establish whether the Parent was in
         compliance with the  requirements of Section 10 during the quarterly or
         annual period covered by the statements then being furnished (including
         with respect to each such Section,  where applicable,  the calculations
         of the maximum or minimum amount, ratio or percentage,  as the case may
         be,  permissible under the terms of such Sections,  and the calculation
         of the amount, ratio or percentage then in existence); and

(b)      Event of  Default -- a statement  that such officer  has  reviewed  the
         relevant terms hereof and has made, or caused to be made,  under his or
         her  supervision,  a review of the  transactions  and conditions of the
         Parent,  the Company and the  Subsidiaries  from the  beginning  of the
         quarterly  or  annual  period  covered  by the  statements  then  being
         furnished to the date of the certificate and that such review shall not
         have  disclosed  the  existence  during such period of any condition or
         event that constitutes a Default or an Event of Default or, if any such
         condition  or event  existed  or exists  (including  any such  event or
         condition  resulting from the failure of the Parent, the Company or any
         Subsidiary to comply with any Environmental Law), specifying the nature
         and period of  existence  thereof and what action the Parent shall have
         taken or proposes to take with respect thereto.

7.3.    Inspection.

         Each of the Parent and the Company shall permit the  representatives of
each holder of Notes that is an Institutional Investor:

(a)      No Default -- if no Default or Event of  Default  then  exists,  at the
         expense of such holder and upon  reasonable  prior notice to the Parent
         to visit the principal  executive office of the Parent and the Company,
         to discuss the  affairs,  finances  and  accounts  of the  Parent,  the
         Company  and the  Subsidiaries  with  the  Parent's  and the  Company's
         officers,  and (with the consent of the Parent,  which consent will not
         be unreasonably  withheld) their independent  public  accountants,  and
         (with the consent of the Parent, which consent will not be unreasonably
         withheld) to visit the other offices and properties of the Parent,  the
         Company and each Subsidiary,  all at such reasonable times and as often
         as may be reasonably requested in writing; and

(b)      Default -- if a Default or Event of Default then exists, at the expense
         of the Parent to visit and inspect any of the offices or  properties of
         the  Parent,  the  Company  or any  Subsidiary,  to  examine  all their
         respective books of account, records, reports and other papers, to make
         copies and extracts therefrom, and to discuss their respective affairs,
         finances and accounts with their  respective  officers and  independent
         public  accountants  (and by this provision the Parent  authorizes said
         accountants  to discuss  the  affairs,  finances  and  accounts  of the
         Parent,  the  Company  and the  Subsidiaries),  all at such  reasonable
         business times and as often as may be reasonably requested.

8.       PREPAYMENT OF THE NOTES.

8.1.     Required Prepayments.

         On October 1, 2001 and on each  October 1 thereafter  to and  including
October 1, 2004 the Company  will prepay  $5,000,000  principal  amount (or such
lesser  principal  amount as shall then be  outstanding) of the Notes at par and
without payment of the Make-Whole Amount or any premium,  provided that upon any
partial  prepayment  of the Notes  pursuant  to Section  8.2 or  Section  8.7 or
purchase  of the Notes  permitted  by Section 8.5 the  principal  amount of each
required  prepayment  of the Notes  becoming  due under this  Section 8.1 on and
after the date of such  prepayment  or  purchase  shall be  reduced  in the same
proportion as the aggregate unpaid principal amount of the Notes is reduced as a
result of such prepayment or purchase.

8.2.     Optional Prepayments with Make-Whole Amount.

         The Company may, at its option,  upon notice as provided below,  prepay
at any time all,  or from time to time any part of, the Notes,  in an amount not
less than  $1,000,000  in aggregate  principal  amount of Notes in the case of a
partial  prepayment,  at 100% of the  principal  amount  so  prepaid,  plus  the
Make-Whole  Amount  determined  for the  prepayment  date with  respect  to such
principal  amount.  The Company will give each holder of Notes written notice of
each  optional  prepayment  under this  Section 8.2 not less and 20 days and not
more than 60 days prior to the date fixed for such prepayment.  Each such notice
shall  specify  such date,  the  aggregate  principal  amount of the Notes to be
prepaid on such date,  the principal  amount of each Note held by such holder to
be prepaid  (determined in accordance  with Section 8.3), and the interest to be
paid on the prepayment date with respect to such principal amount being prepaid,
and shall be accompanied by a certificate  of a Senior  Financial  Officer as to
the  estimated   Make-Whole  Amount  due  in  connection  with  such  prepayment
(calculated  as if the date of such  notice  were  the date of the  prepayment),
setting forth the details of such  computation.  Two Business Days prior to such
prepayment, the Company shall deliver to each holder of Notes a certificate of a
Senior Financial Officer specifying the calculation of such Make-Whole Amount as
of the specified prepayment date.

8.3.     Allocation of Partial Prepayments.

         In the case of each  partial  prepayment  of the Notes,  the  principal
amount of the Notes to be prepaid  shall be allocated  among all of the Notes at
the time outstanding in proportion, as nearly as practicable,  to the respective
unpaid principal amounts thereof not theretofore called for prepayment.

8.4.     Maturity; Surrender, etc.

         In the case of each prepayment of Notes pursuant to this Section 8, the
principal  amount of each Note to be  prepaid  shall  mature  and become due and
payable on the date fixed for such  prepayment,  together  with interest on such
principal amount accrued to such date and the applicable  Make-Whole  Amount, if
any.  From and after  such  date,  unless  the  Company  shall  fail to pay such
principal  amount  when so due and  payable,  together  with  the  interest  and
Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall
cease to accrue.  Any Note paid or prepaid in full shall be  surrendered  to the
Company and cancelled and shall not be reissued,  and no Note shall be issued in
lieu of any prepaid principal amount of any Note.

8.5.     Purchase of Notes.

         The Company  will not and will not permit any  Affiliate  to  purchase,
redeem,  prepay  or  otherwise  acquire,  directly  or  indirectly,  any  of the
outstanding  Notes  except  upon  the  payment  or  prepayment  of the  Notes in
accordance  with the terms of this  Agreement  and the Notes.  The Company  will
promptly  cancel  all Notes  acquired  by it or any  Affiliate  pursuant  to any
payment,  prepayment  or purchase of Notes  pursuant  to any  provision  of this
Agreement  and no Notes may be issued in  substitution  or exchange for any such
Notes.

8.6.     Make-Whole Amount.

         The term "Make-Whole Amount" means, with respect to any Note, an amount
equal to the excess, if any, of the Discounted Value of the Remaining  Scheduled
Payments  with  respect to the Called  Principal of such Note over the amount of
such Called  Principal,  provided that the Make-Whole  Amount may in no event be
less than zero.  For the purposes of  determining  the  Make-Whole  Amount,  the
following terms have the following meanings:

         "Called  Principal"  means,  with respect to any Note, the principal of
such Note that is to be  prepaid  pursuant  to  Section  8.2 or has become or is
declared to be  immediately  due and payable  pursuant to Section  12.1,  as the
context requires.

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

         "Reinvestment Yield" means, with respect to the Called Principal of any
Note, 0.50% over the yield to maturity implied by (i) the yields reported, as of
10:00  A.M.  (New York City  time) on the  second  Business  Day  preceding  the
Settlement Date with respect to such Called Principal, on the display designated
as the "PX  Screen" on the  Bloomberg  Financial  Market  Service (or such other
display as may replace the PX Screen on Bloomberg  Financial Market Service) for
actively  traded  U.S.  Treasury  securities  having  a  maturity  equal  to the
Remaining  Average Life of such Called  Principal as of such Settlement Date, or
(ii) if such yields are not  reported as of such time or the yields  reported as
of such time are not ascertainable, the Treasury Constant Maturity Series Yields
reported,  for the latest day for which such  yields have been so reported as of
the second  Business Day  preceding  the  Settlement.  Date with respect to such
Called  Principal,  in Federal  Reserve  Statistical  Release H.15 (519) (or any
comparable  successor  publication) for actively traded U.S. Treasury securities
having a constant  maturity  equal to the Remaining  Average Life of such Called
Principal as of such Settlement Date. Such implied yield will be determined,  if
necessary,  by (a) converting U.S.  Treasury bill quotations to  bond-equivalent
yields in accordance  with  accepted  financial  practice and (b)  interpolating
linearly  between  (1) the  actively  traded  U.S.  Treasury  security  with the
Remaining  Average Life closest to and greater than the  Remaining  Average Life
and (2) the actively traded U.S.  Treasury security with the duration closest to
and less than the Remaining Average Life.

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

         "Remaining  Scheduled  Payments"  means,  with  respect  to the  Called
Principal  of any Note,  all  payments of such  Called  Principal  and  interest
thereon that would be due after the Settlement  Date with respect to such Called
Principal  if no  payment  of such  Called  Principal  were  made  prior  to its
scheduled due date, provided that if such Settlement Date is not a date on which
interest  payments  are due to be made  under the terms of the  Notes,  then the
amount of the next succeeding  scheduled interest payment will be reduced by the
amount of interest  accrued to such  Settlement  Date and required to be paid on
such Settlement Date pursuant to Section 8.2 or 12.1.

         "Settlement  Date" means,  with respect to the Called  Principal of any
Note,  the date on which such  Called  Principal  is to be prepaid  pursuant  to
Section  8.2 or has become or is  declared  to be  immediately  due and  payable
pursuant to Section 12.1, as the context requires.

8.7.     Change in Control.

(a)      Notice of Change in Control or Control Event. The Company will,  within
         five Business Days after any  Responsible  Officer has knowledge of the
         occurrence  of any Change in Control or  Control  Event,  give  written
         notice of such  Change in Control or  Control  Event to each  holder of
         Notes.  In the case that a Change in Control has occurred,  such notice
         shall  contain and  constitute an offer to prepay Notes as described in
         subparagraph  (b) of this Section 8.7 and shall be  accompanied  by the
         certificate described in subparagraph (e) of this Section 8.7.

(b)      Offer to  Prepay  Notes.  The  offer to prepay  Notes  contemplated  by
         subparagraph  (a) of this  Section 8.7 shall be an offer to prepay,  in
         accordance with and subject to this Section 8.7, all, but not less than
         all,  the Notes held by each  holder (in this case  only,  "holder"  in
         respect of any Note registered in the name of a nominee for a disclosed
         beneficial owner shall mean such beneficial  owner) on a date specified
         in such offer (the "Proposed Prepayment Date") that is not less than 10
         days and not more  than 30 days  after  the date of such  offer (if the
         Proposed  Prepayment  Date shall not be  specified  in such offer,  the
         Proposed  Prepayment  Date shall be the 30th day after the date of such
         offer).

(c)      Rejection.  A holder of Notes  may  accept  the  offer to  prepay  made
         pursuant to this Section 8.7 by causing a notice of such  acceptance to
         be  delivered  to the Company at least five days prior to the  Proposed
         Prepayment  Date. A failure by a holder of Notes to respond to an offer
         to  prepay  made  pursuant  to this  Section  8.7  shall be  deemed  to
         constitute a rejection of such offer by such holder.

(d)      Prepayment.  Prepayment  of the Notes to be  prepaid  pursuant  to this
         Section  8.7 shall be at 100% of the  principal  amount of such  Notes,
         together with interest on such Notes accrued to the date of prepayment.
         The prepayment shall be made on the Proposed Prepayment Date.

(e)      Officer's Certificate.  Each offer to prepay the Notes pursuant to this
         Section 8.7 shall be accompanied by a certificate, executed by a Senior
         Financial  Officer  of the  Company  and dated the date of such  offer,
         specifying:  (i) the Proposed  Prepayment Date; (ii) that such offer is
         made pursuant to this Section 8.7;  (iii) the principal  amount of each
         Note offered to be prepaid; (iv) the interest that would be due on each
         Note offered to be prepaid,  accrued to the Proposed  Prepayment  Date;
         (v) that the  conditions of this Section 8.7 have been  fulfilled;  and
         (vi) in  reasonable  detail,  the  nature  and  date of the  Change  in
         Control.

(f)      "Change  in  Control"   Defined.  "Change  in  Control"  means  any  of
         the following events or  circumstances:  if any person (as such term is
         used in section  13(d) and section  14(d)(2) of the  Exchange Act as in
         effect on the date of the Closing) or related  persons  constituting  a
         group (as such term is used in Rule  l3d-5  under  the  Exchange  Act),
         other than the Parker Family, either (i) become the "beneficial owners"
         (as such term is used in Rule l3d-3 under the Exchange Act as in effect
         on the date of the Closing),  directly or indirectly,  of more than 50%
         of the  total  voting  power of all  classes  then  outstanding  of the
         Company's  or the  Parent's  voting  stock or (ii) shall have  acquired
         substantially all the assets of the Company or the Parent.

(g)      "Control Event"  Defined.  "Control  Event" means: (i) the execution by
         the Company,  the Parent or any of their  Subsidiaries or Affiliates of
         any  agreement  or  letter  of  intent  with  respect  to any  proposed
         transaction  or  event or  series  of  transactions  or  events  which,
         individually or in the aggregate,  may reasonably be expected to result
         in a Change in Control,  (ii) the  execution  of any written  agreement
         which,  when fully performed by the parties thereto,  would result in a
         Change in  Control,  or (iii) the  making of any  written  offer by any
         person (as such term is used in section  13(d) and section  14(d)(2) of
         the  Exchange  Act as in effect on the date of the  Closing) or related
         persons  constituting a group (as such term is used in Rule l3d-5 under
         the  Exchange  Act as in  effect  on the  date of the  Closing)  to the
         holders of the common  stock of the  Company or the Parent (as the case
         may be), which offer,  if accepted by the requisite  number of holders,
         would result in a Change in Control.

(h)      "Parker  Family"  Defined.   "Parker  Family"  means  David  R.  Parker
         (President  and  Chairman  of the  Board of the  Parent  on the date of
         Closing),  Jacqueline  Parker and Clyde M.  Fuller  (collectively,  the
         "Founders"),  in respect of any  individual,  (i) the heirs,  legatees,
         descendants and blood relatives to the third-degree of consanguinity of
         the Founders and (ii) any trusts for the  exclusive  benefit of, or any
         corporation,  partnership or limited  partnership  that is wholly-owned
         by, any such  individual  referred to in clause (i), and his/her spouse
         and lineal  descendants,  so long as such  individual has the exclusive
         right to control each such trust,  corporation,  partnership or limited
         partnership.

All calculations contemplated in this Section 8.7 involving the capital stock of
any Person, shall be made with the assumption that all convertible Securities of
such Person then  outstanding and all convertible  Securities  issuable upon the
exercise of any warrants, options and other rights outstanding at such time were
converted  at such time and that all  options,  warrants  and similar  rights to
acquire shares of capital stock of such Person were exercised at such time.

9.       AFFIRMATIVE COVENANTS.

         Each of the Parent and the Company (as the case may be) covenants  that
so long as any of the Notes are outstanding:

9.1.     Compliance with Law.

         The  Company  and  the  Parent  will  and  will  cause  each  of  their
Subsidiaries  to  comply  with all laws,  ordinances  or  governmental  rules or
regulations  to which each of them is subject,  including,  without  limitation,
Environmental  Laws,  and will  obtain  and  maintain  in effect  all  licenses,
certificates,   permits,   franchises  and  other  governmental   authorizations
necessary to the ownership of their  respective  properties or to the conduct of
their respective businesses, in each case to the extent necessary to ensure that
non-compliance  with such laws,  ordinances or governmental rules or regulations
or  failures  to  obtain or  maintain  in effect  such  licenses,  certificates,
permits,   franchises   and  other   governmental   authorizations   could  not,
individually  or in the  aggregate,  reasonably  be  expected to have a Material
Adverse Effect.

9.2.     Insurance.

         The  Company  and  the  Parent  will  and  will  cause  each  of  their
Subsidiaries  to  maintain,  with  financially  sound  and  reputable  insurers,
insurance with respect to their  respective  properties  and businesses  against
such  casualties  and  contingencies,  of such types,  on such terms and in such
amounts (including  deductibles,  co-insurance and  self-insurance,  if adequate
reserves are  maintained  with  respect  thereto) as is customary in the case of
entities of established  reputations  engaged in the same or a similar  business
and similarly situated.

9.3.     Maintenance of Properties.

         The  Company  and  the  Parent  will  and  will  cause  each  of  their
Subsidiaries  to maintain and keep,  or cause to be maintained  and kept,  their
respective  properties in good repair,  working order and condition  (other than
ordinary wear and tear), so that the business carried on in connection therewith
may be properly  conducted at all times,  provided  that this Section  shall not
prevent  the  Company,  the  Parent or any  Subsidiary  from  discontinuing  the
operation and the maintenance of any of its properties if such discontinuance is
desirable  in the conduct of its  business and the Company or the Parent (as the
case may be) has concluded that such discontinuance  could not,  individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.

9.4.     Payment of Taxes and Claims.

         The  Company  and  the  Parent  will  and  will  cause  each  of  their
Subsidiaries  to file all tax returns  required to be filed in any  jurisdiction
and to pay and  discharge  all taxes shown to be due and payable on such returns
and all other taxes,  assessments,  governmental  charges,  or levies imposed on
them or any of their  properties,  assets,  income or franchises,  to the extent
such taxes and  assessments  have  become due and  payable  and before they have
become delinquent and all claims for which sums have become due and payable that
have or might become a Lien on properties  or assets of the Company,  the Parent
or any Subsidiary,  provided that the Company, the Parent or any Subsidiary need
not pay any such tax or assessment or claims if (i) the amount, applicability or
validity thereof is contested by the Company,  the Parent or such Subsidiary (as
the case may be) on a timely basis in good faith and in appropriate proceedings,
and the  Company,  the  Parent  or such  Subsidiary  (as  the  case  may be) has
established  adequate  reserves therefor in accordance with GAAP on the books of
the  Company,  the  Parent or such  Subsidiary  (as the case may be) or (ii) the
nonpayment  of all  such  taxes  and  assessments  in the  aggregate  could  not
reasonably be expected to have a Material Adverse Effect.

9.5.     Corporate Existence, etc.

         The Company and the Parent will at all times  preserve and keep in full
force and effect its corporate existence.  Subject to Sections 10.2 through 10.5
(inclusive),  the Company and the Parent will at all times  preserve and keep in
full  force and  effect  the  corporate  existence  of each of its  Subsidiaries
(unless  merged into the Company or a Subsidiary  of the Company) and all rights
and franchises of the Company,  the Parent and the Subsidiaries  unless,  in the
good faith  judgment  of the  Company  or the  Parent (as the case may be),  the
termination  of or failure to  preserve  and keep in full force and effect  such
corporate  existence,  right or  franchise  could  not,  individually  or in the
aggregate, have a Material Adverse Effect.

9.6.     Compliance with Parent Guarantee.

         The  Parent  will at all  times  comply  with the  terms of the  Parent
Guarantee.

10.      NEGATIVE COVENANTS.

         Each of the Company and the Parent covenants that so long as any of the
Notes are outstanding:

10.1.    Transactions with Affiliates.

         Each of the  Company  and the  Parent  will not and will not permit any
Subsidiary  to enter into  directly or indirectly  any  transaction  or Material
group of related transactions (including without limitation the purchase, lease,
sale or exchange of properties of any kind or the rendering of any service) with
any Affiliate (other than the Parent, the Company or another Subsidiary), except
in the  ordinary  course and  pursuant  to the  reasonable  requirements  of the
Company's or such  Subsidiary's  business and upon fair and reasonable  terms no
less favorable to the Company or such  Subsidiary  than would be obtainable in a
comparable arm's-length transaction with a Person not an Affiliate.

10.2.    Merger, Consolidation, etc.

         Each of the Company and the Parent will not, and will not permit any of
the  Subsidiaries to,  consolidate  with or merge with any other  corporation or
convey,  transfer  or  lease  substantially  all  of  its  assets  in  a  single
transaction  or series of  transactions  to any Person (except that a Subsidiary
(other than the  Company)  may (x)  consolidate  with or merge with,  or convey,
transfer or lease  substantially  all of its assets in a single  transaction  or
series of  transactions  to, a  Wholly-Owned  Subsidiary  of the  Company or the
Parent and (y) convey,  transfer or lease all of its assets in  compliance  with
the provisions of Section 10.3),  provided that the foregoing  restriction  does
not apply to the  consolidation  or merger of the Company or the Parent with, or
the  conveyance,  transfer  or lease of  substantially  all of the assets of the
Company or the Parent in a single  transaction or series of transactions to, any
Person so long as:

(a)      the  successor  formed by such  consolidation  or the  survivor of such
         merger or the Person  that  acquires by  conveyance,  transfer or lease
         substantially  all of the  assets of the  Company  or the  Parent as an
         entirety, as the case may be (the "Successor Corporation"),  shall be a
         solvent corporation organized and existing under the laws of the United
         States of America, any State thereof or the District of Columbia;
(b)      if the Company or the Parent,  as the case may be, is not the Successor
         Corporation, such corporation shall have executed and delivered to each
         holder of Notes its assumption of the due and punctual  performance and
         observance  of each  covenant and  condition of this  Agreement and the
         Notes (if applicable); and

(c)      immediately after giving effect to such transaction no Default or Even
         of Default would exist.

No such conveyance,  transfer or lease of substantially all of the assets of the
Company or the Parent shall have the effect of releasing the Company, the Parent
or any  Successor  Corporation  from its liability  under this  Agreement or the
Notes.

10.3.    Sales of Assets.

         The Company and the Parent will not, and will not permit any Subsidiary
to, make any Transfer, provided that the foregoing restriction does not apply to
a Transfer if:

(a)      the property  that is the subject of such Transfer  constitutes  either
         (i) inventory held for sale, or (ii) equipment,  fixtures,  supplies or
         materials  no longer  required in the  operation of the business of the
         Parent, the Company or such Subsidiary or that is obsolete, and, in the
         case of any  Transfer  described  in clause  (i) or clause  (ii),  such
         Transfer is in the  ordinary  course of business (an  "Ordinary  Course
         Transfer");

(b)      either (i) such  Transfer  is from a  Subsidiary  to the Company or the
         Parent or to a Wholly-Owned  Subsidiary,  or (ii) such Transfer is from
         the  Company or the  Parent to a  Wholly-Owned  Subsidiary,  so long as
         immediately  before  and  immediately  after the  consummation  of such
         transaction,  and after giving effect  thereto,  no Default or Event of
         Default  exists or would  exist  (each such  Transfer,  an  "Intergroup
         Transfer"); and

(c)      such  Transfer is not  an  Ordinary  Course  Transfer or an  Intergroup
         Transfer  (such  transfers   collectively   referred  to  as  "Excluded
         Transfers"),  and  all of the  following  conditions  shall  have  been
         satisfied with respect  thereto (the date of the  consummation  of such
         Transfer  of  property  being  referred  to  herein  as  the  "Property
         Disposition  Date"):  (i) such  Transfer does not involve a Substantial
         Portion of the property of the Parent and its Subsidiaries, (ii) in the
         good faith  opinion of the Company and the Parent,  the  Transfer is in
         exchange for  consideration  with a Fair Market Value at least equal to
         that of the  property  exchanged,  and is in the best  interests of the
         Company and the Parent,  and (iii)  immediately  after giving effect to
         such transaction no Default or Event of Default would exist.

         "Substantial  Portion" means, with respect to any Transfer of property,
any portion of property of the Parent and its  Subsidiaries,  if the Disposition
Value of such  property,  when  added  to the  Disposition  Value  of all  other
property  of the  Parent  and its  Subsidiaries  that was  subject to a Transfer
(other than an Excluded  Transfer)  during the period  commencing on the date of
Closing  and  ending on and  including  the  Property  Disposition  Date of such
property exceeds an amount equal to 10% of Consolidated  Assets determined as of
the end of the then most recently ended fiscal quarter of the Parent.

10.4.    Disposal of Ownership of a Subsidiary.

         The Company and the Parent will not, and will not permit any Subsidiary
to, sell or otherwise  dispose of any shares of Subsidiary  Stock,  nor will the
Company or the Parent  permit any such  Subsidiary  to issue,  sell or otherwise
dispose of any shares of its own Subsidiary  Stock,  provided that the foregoing
restrictions do not apply to:

(a)      the issue of directors' qualifying shares by any such Subsidiary;

(b)      any such Transfer of Subsidiary Stock constituting an Intergroup
         Transfer;

(c)      any such Transfer of Subsidiary Stock that does not constitute a
         Restricted Payment; and

(d)      the Transfer of all of the  Subsidiary  Stock of  a Subsidiary  of  the
         Company or the Parent  owned by the Company or the Parent,  as the case
         may be, and their other  Subsidiaries  if: (i) such Transfer  satisfies
         the  requirements  of Section  10.3(c),  (ii) in  connection  with such
         Transfer the entire  Investment  (whether  represented by stock,  Debt,
         claims or  otherwise)  of the  Company or the  Parent  and their  other
         Subsidiaries  in such  Subsidiary  is sold,  transferred  or  otherwise
         disposed of to a Person  other than (A) the Company or the Parent,  (B)
         another  Subsidiary  not being  simultaneously  disposed  of, or (C) an
         Affiliate, and (iii) the Subsidiary being disposed of has no continuing
         Investment in any other Subsidiary not being simultaneously disposed of
         or in the Company or the Parent.

10.5.    Sale-and-Leaseback Transactions.

         The Company and the Parent will not, and will not permit any Subsidiary
to, enter into any Sale-and-Leaseback  Transaction other than Sale-and-Leaseback
Transactions  covering not more than  $25,000,000  of over the road equipment in
the aggregate in any fiscal year.

10.6.     Maintenance of Consolidated Tangible Net Worth.

         The Company and the Parent will not permit  Consolidated  Tangible  Net
Worth at any time to be less than the sum of

(a)      $136,000,000 plus

(b)      an aggregate  amount equal to 50% of  Consolidated  Net Income (but, in
         each case, only if a positive  number) for each completed  fiscal year,
         beginning with the fiscal year ended 1999.

10.7.    Limitation on Total Debt; Limitation on Funded Debt Incurrence.

(a)      The Company  and the Parent  will not permit the ratio of  Consolidated
         Total Debt to Consolidated EBITDAR to exceed 3.0 to 1.0 at any time.

(b)      The Company and the Parent will not, and will not permit any Subsidiary
         to,  incur any  Funded  Debt for  borrowed  money  unless the lender or
         holder  of  such   Funded  Debt  shall  have  become  a  party  to  the
         Intercreditor  Agreement,  provided that the  restriction  set forth in
         this clause (b) shall not apply to Funded Debt  evidenced by a purchase
         money security  interest in property  acquired with such Funded Debt or
         to any Capital Leases of revenue equipment or other property.

10.8.    Restricted Payments.

(a)      The Company and the Parent will not, and will not permit any Subsidiary
         to, at any time,  declare or make, or incur any liability to declare or
         make, any Restricted Payment, unless immediately after giving effect to
         such action:

(i)      the aggregate amount of Restricted  Payments of the Company, the Parent
         and the Subsidiaries  declared or made during the period  commencing on
         the date of Closing,  and ending on the date such Restricted Payment is
         declared or made, inclusive, would not exceed the sum of

(A)      $25,000,000, plus

(B)      50%  of  Consolidated  Net  Income  for  each  fiscal  quarter
         commencing  after December 31, 1999 (or minus 100% of Consolidated  Net
         Income  for such  fiscal  quarter if  Consolidated  Net Income for such
         fiscal quarter is a loss); and

(ii)     no Default or Event of Default would exist.

(b)      The  Company  and the  Parent  will  not,  nor  will  they  permit  any
         Subsidiary  to,  authorize  a  Restricted  Payment  that is not payable
         within 60 days of authorization.

10.9.    Restricted Investments.

         The Company and the Parent will not, and will not permit any Subsidiary
to,  make any  Restricted  Investment,  except  that the  Parent  may  invest in
Transplace.com,  directly or through a  newly-created  Subsidiary of the Parent,
not  more  than  $7,000,000  in  the  form  of  cash  and  the  non-asset  based
transportation   logistics  business   (consisting  of  customer  lists,  office
furniture,  computer  hardware and  software,  lease,  trade names,  trademarks,
goodwill, know-how and employee relationships) of Terminal Truck Broker, Inc., a
Wholly-Owned Subsidiary of Parent.

10.10.   Fixed Charges Coverage.

         The Company and the Parent will not permit the Fixed  Charges  Coverage
Ratio to be less than 2.0 to 1.0 at any time.

10.11.   Liens.

         The Company and the Parent will not, and will not permit any Subsidiary
to, directly or indirectly  create,  incur,  assume or permit to exist (upon the
happening  of a  contingency  or  otherwise)  any Lien on or with respect to any
property or asset  (including  any document or instrument in respect of goods or
accounts receivable) of the Company, the Parent or any such Subsidiary,  whether
now owned or held or  hereafter  acquired,  or any income or  profits  therefrom
(whether  or not  provision  is made for the equal and  ratable  securing of the
Notes in accordance with the last paragraph of this Section 10.11), or assign or
otherwise convey any right to receive income or profits, except:

(a)       Liens  existing  on the  date  of  this  Agreement  and  securing Debt
         of the Parent and its Subsidiaries  referred to in item (a) of Schedule
         10.11;

(b)      Liens for taxes, assessments or other  governmental charges the payment
         of which is not at the time required by Section 9.4;

(c)      statutory  Liens of  landlords  and  Liens of  carriers,  warehousemen,
         mechanics,  materialmen and other similar Liens, in each case, incurred
         in the ordinary  course of business for sums not yet due or the payment
         of which is not at the time required by Section 9.4;

(d)      Liens (other than any Lien  imposed by ERISA) incurred or deposits made
         in the ordinary  course of business  (i) in  connection  with  workers'
         compensation, unemployment insurance and other types of social security
         or  retirement  benefits,  or (ii) to secure  (or to obtain  letters of
         credit that secure) the performance of tenders,  statutory obligations,
         surety bonds, appeal bonds (not in excess of $2,500,000),  bids, leases
         (other than Capital Leases), performance bonds, purchase,  construction
         or sales  contracts  and other  similar  obligations,  in each case not
         incurred  or made in  connection  with  the  borrowing  of  money,  the
         obtaining of advances or credit or the payment of the deferred purchase
         price of property;

(e)      any  attachment  or judgment  Lien,  unless the judgment it secures (i)
         shall not, within 30 days after the entry thereof, have been discharged
         or execution  thereof  stayed  pending  appeal,  or shall not have been
         discharged within 30 days after the expiration of any such stay or (ii)
         exceeds $2,500,000;

(f)      leases  or  subleases  granted  to  others,  easements,  rights-of-way,
         restrictions  and other similar charges or  encumbrances,  in each case
         incidental to, and not  interfering  with, the ordinary  conduct of the
         business  of the  Company,  the  Parent  or  any  of the  Subsidiaries,
         provided that such Liens do not, in the aggregate,  materially  detract
         from the value of such property;

(g)      Liens on property or assets of the Company or the Parent or any
         Subsidiary  securing  Debt owing to the  Company,  the Parent or to any
         Wholly-Owned Subsidiary;

(h)      any  Lien  existing on  property of  a  Person immediately prior to its
         being  consolidated  with or merged into the  Company,  the Parent or a
         Subsidiary  or its becoming a  Subsidiary,  or any Lien existing on any
         property  acquired by the Company,  the Parent or any Subsidiary at the
         time such  property  is so acquired  (whether  or not the Debt  secured
         thereby shall have been assumed),  provided that (i) no such Lien shall
         have been created or assumed in contemplation of such  consolidation or
         merger or such Person's  becoming a Subsidiary or such  acquisition  of
         property,  and (ii) each such Lien shall  extend  solely to the item or
         items of  property  so  acquired  and,  if required by the terms of the
         instrument  originally  creating such Lien,  other property which is an
         improvement to or is acquired for specific use in connection  with such
         acquired property;

(i)      any  Lien  renewing,  extending  or  refunding  any Lien  permitted  by
         paragraphs  (a) or (h) of this  Section  10.11,  provided  that (i) the
         principal amount of Debt secured by such Lien immediately prior to such
         extension,  renewal  or  refunding  is not  increased  or the  maturity
         thereof reduced,  (ii) such Lien is not extended to any other property,
         and (iii)  immediately  after such  extension,  renewal or refunding no
         Default or Event of Default would exist;

(j)      a Lien on the headquarters building and the real estate upon which such
         building is situated  which Lien is confined  solely to such assets and
         secures Debt  permitted to be incurred as  Headquarters  Financing Debt
         pursuant to Section 10.7(a); and

(k)      other Liens not  otherwise  permitted  by  paragraphs  (a) through (j),
         provided that  immediately  after giving effect to any such other Lien,
         the sum of (i) the amount  secured by the  additional  Liens under this
         paragraph  (k) plus (ii) the  amount of Debt  then  outstanding  of the
         Subsidiaries  (exclusive of Debt of any Subsidiary owed to the Company,
         the Parent or to any Wholly-Owned  Subsidiary),  shall not at such time
         exceed 40% of Consolidated Tangible Net Worth.

For the purposes of this Section 10.11,  any Person becoming a Subsidiary  after
the date of this  Agreement  shall be  deemed to have  incurred  all of its then
outstanding Liens at the time it becomes a Subsidiary, and any Person extending,
renewing  or  refunding  any Debt  secured  by any Lien  shall be deemed to have
incurred such Lien at the time of such extension, renewal or refunding.

         If,  notwithstanding  the  prohibition  contained  herein,  either  the
Company or the Parent shall create,  assume or permit to exist any Lien upon any
of its property or assets, or the property or assets of any Subsidiary,  whether
now owned or hereafter acquired, other than those permitted by the provisions of
paragraphs  (a) through (j) of this Section  10.11,  it will make or cause to be
made effective  provision  whereby the Notes will be secured equally and ratably
with any and all other obligations thereby secured, such security to be pursuant
to agreements  reasonably  satisfactory to the Required Holders and, in any such
case,  the Notes shall have the benefit,  to the fullest  extent that,  and with
such priority as, the holders of the Notes may be entitled under applicable law,
of an equitable Lien on such property. Such violation of this Section 10.11 will
constitute  an Event of Default,  whether or not  provision is made for an equal
and ratable Lien  pursuant to this Section  10.11,  provided,  however,  that an
Event of  Default  shall not occur if the  holder of such Lien is a party to the
Intercreditor  Agreement  and provision for an equal and ratable Lien shall have
been  made  to  the  holders  of  Notes  as  contemplated  by the  terms  of the
Intercreditor Agreement.

10.12.   Line of Business.

         Each of the Company and the Parent will not, and will not permit any of
the Subsidiaries to, engage in any business if, as a result,  the general nature
of the business in which the Company, the Parent and the Subsidiaries,  taken as
a whole,  would then be engaged would be substantially  changed from the general
nature of the  business in which the Company,  the Parent and the  Subsidiaries,
taken as a whole, are engaged on the date of this Agreement.

10.13.   Subsidiary Guaranty.

         The  Company  will  not  create  or  acquire  any  Subsidiary   unless,
immediately  upon  such  creation  or  acquisition,   the  Company  causes  such
Subsidiary to become a signatory to the Subsidiary Guaranty.

11.      EVENTS OF DEFAULT.

         An "Event of Default" shall exist if any of the following conditions or
events shall occur and be continuing:

(a)      the  Company  defaults in the payment of any  principal  or  Make-Whole
         Amount,  if any,  on any Note when the same  becomes  due and  payable,
         whether at maturity or at a date fixed for prepayment or by declaration
         or otherwise;

(b)      the Company defaults in the  payment of any  interest on  any Note  for
         more than five days after the same becomes due and payable;

(c)      the  Company or the Parent (as the case may be)  defaults  in the
         performance of or compliance with any term contained in Sections 7.1(d)
         and 10.1 through 10.13 (inclusive);

(d)      the  Company  or the  Parent  (as  the  case  may be)  defaults  in the
         performance of or compliance with any term contained herein (other than
         those  referred to in  paragraphs  (a), (b) and (c) of this Section 11,
         but including  Section 9.6) and such default is not remedied  within 30
         days after the earlier of (i) a Responsible  Officer  obtaining  actual
         knowledge of such default and (ii) the Company or the Parent  receiving
         written  notice  of such  default  from any  holder of a Note (any such
         written  notice to be  identified as a "notice of default" and to refer
         specifically to this paragraph (d) of Section 11);

(e)      any  representation  or warranty made in writing by or on behalf of the
         Company,  the  Parent  or  any  Subsidiary,  or by any  officer  of the
         Company, the Parent or any Subsidiary in this Agreement, the Subsidiary
         Guaranty  or  in  any  writing   furnished  in   connection   with  the
         transactions contemplated hereby proves to have been false or incorrect
         in any material respect on the date as of which made;

(f)      (i) the  Company,  the Parent or any  Subsidiary  is in default (as
         principal  or as  guarantor  or other  surety)  in the  payment  of any
         principal  of or  premium  or  make-whole  amount  or  interest  on any
         Indebtedness that is outstanding in an aggregate principal amount of at
         least  $2,500,000  beyond any  period of grace  provided  with  respect
         thereto,  or (ii) the  Company,  the  Parent  or any  Subsidiary  is in
         default  in the  performance  of or  compliance  with  any  term of any
         evidence of any  Indebtedness  in an  aggregate  outstanding  principal
         amount of at least  $2,500,000 or of any  mortgage,  indenture or other
         agreement  relating  thereto or any other  condition  exists,  and as a
         consequence of such default or condition such  Indebtedness has become,
         or has been  declared  (or one or more  Persons are entitled to declare
         such Indebtedness to be), due and payable before its stated maturity or
         before  its  regularly  scheduled  dates  of  payment,  or  (iii)  as a
         consequence of the occurrence or continuation of any event or condition
         (other  than  the  passage  of  time  or the  right  of the  holder  of
         Indebtedness to convert such Indebtedness into equity  interests),  (x)
         the  Company,  the Parent or any  Subsidiary  has become  obligated  to
         purchase or repay  Indebtedness  before its regular  maturity or before
         its regularly  scheduled  dates of payment in an aggregate  outstanding
         principal  amount of at least  $2,500,000,  or (y) one or more  Persons
         have the right to require the Company,  the Parent or any Subsidiary so
         to purchase or repay such Indebtedness;

(g)      the Company,  the Parent or any Subsidiary (i) is generally not paying,
         or admits in writing  its  inability  to pay,  its debts as they become
         due,  (ii)  files,  or consents  by answer or  otherwise  to the filing
         against it of, a petition for relief or  reorganization  or arrangement
         or any  other  petition  in  bankruptcy,  for  liquidation  or to  take
         advantage of any bankruptcy, insolvency, reorganization,  moratorium or
         other similar law of any  jurisdiction,  (iii) makes an assignment  for
         the benefit of its  creditors,  (iv) consents to the  appointment  of a
         custodian,  receiver, trustee or other officer with similar powers with
         respect to it or with respect to any substantial  part of its property,
         (v) is  adjudicated  as  insolvent or to be  liquidated,  or (vi) takes
         corporate action for the purpose of any of the foregoing;

(h)      a court or governmental authority of competent  jurisdiction  enters an
         order  appointing,  without  consent by the Company,  the Parent or any
         Subsidiary,  a  custodian,  receiver,  trustee  or other  officer  with
         similar  powers with respect to it or with  respect to any  substantial
         part of its property,  or constituting an order for relief or approving
         a  petition  for  relief or  reorganization  or any other  petition  in
         bankruptcy or for liquidation or to take advantage of any bankruptcy or
         insolvency  law of  any  jurisdiction,  or  ordering  the  dissolution,
         winding-up  or  liquidation  of  the  Company,  the  Parent  or  any of
         Subsidiary,  or any such  petition  shall be filed against the Company,
         the Parent or any  Subsidiary  and such petition shall not be dismissed
         within 60 days;

(i)      a final  judgment or judgments for the payment of money  aggregating in
         excess of $2,500,000  are rendered  against one or more of the Company,
         the Parent and the  Subsidiaries and which judgments are not, within 30
         days after entry thereof, bonded,  discharged or stayed pending appeal,
         or are not discharged within 30 days after the expiration of such stay;
         or

(j)      if (i) any Plan shall fail to satisfy  the  minimum  funding  standards
         of ERISA or the Code for any plan year or part  thereof  or a waiver of
         such  standards or extension  of any  amortization  period is sought or
         granted  under  section  412 of the  Code,  (ii) a notice  of intent to
         terminate  any Plan shall  have been or is  reasonably  expected  to be
         filed with the PBGC or the PBGC shall have instituted proceedings under
         ERISA section 4042 to terminate or appoint a trustee to administer  any
         Plan or the PBGC shall have  notified  the  Company,  the Parent or any
         ERISA  Affiliate  that  a  Plan  may  become  a  subject  of  any  such
         proceedings,   (iii)  the   aggregate   "amount  of  unfunded   benefit
         liabilities" (within the meaning of section 4001(a)(18) of ERISA) under
         all Plans,  determined  in  accordance  with  Title IV of ERISA,  shall
         exceed $2,500,000,  (iv) the Company, the Parent or any ERISA Affiliate
         shall have  incurred or is  reasonably  expected to incur any liability
         pursuant  to  Title I or IV of  ERISA  or the  penalty  or  excise  tax
         provisions  of the Code  relating to employee  benefit  plans,  (v) the
         Company,   the  Parent  or  any  ERISA  Affiliate  withdraws  from  any
         Multiemployer  Plan, or (vi) the Company,  the Parent or any Subsidiary
         establishes or amends any employee  welfare  benefit plan that provides
         post-employment  welfare  benefits in a manner that would  increase the
         liability of the Company, the Parent or any Subsidiary thereunder;  and
         any such event or events  described  in clauses (i) through (vi) above,
         either  individually  or together  with any other such event or events,
         could reasonably be expected to have a Material Adverse Effect.
(k)      any Subsidiary  defaults in the  performance of or compliance  with any
         term  contained in the Subsidiary  Guaranty or the Subsidiary  Guaranty
         ceases to be in full  force and effect as a result of acts taken by the
         Company,  the Parent or any  Subsidiary  or is  declared to be null and
         void in whole or in material part by a court or other  governmental  or
         regulatory   authority   having   jurisdiction   or  the   validity  or
         enforceability  thereof  shall be contested by any of the Company,  the
         Parent or any  Subsidiary  or any of them  renounces any of the same or
         denies that it has any or further liability thereunder.

As used in  Section  11(j),  the terms  "employee  benefit  plan" and  "employee
welfare benefit plan" shall have the respective  meanings assigned to such terms
in Section 3 of ERISA.

12.      REMEDIES ON DEFAULT, ETC.

12.1.    Acceleration.

(a)      If an Event of  Default  with  respect  to the  Company  or the  Parent
         described in paragraph (g) or (h) of Section 11 (other than an Event of
         Default described in clause (i) of paragraph (g) or described in clause
         (vi)  of  paragraph  (g)  by  virtue  of  the  fact  that  such  clause
         encompasses  clause (i) of paragraph  (g)) has occurred,  all the Notes
         then  outstanding  shall  automatically   become  immediately  due  and
         payable.

(b)      If any other  Event of Default  has  occurred  and is  continuing,  any
         holder or holders of more than 50% in principal  amount of the Notes at
         the time outstanding may at any time at its or their option,  by notice
         or notices to the  Company or the  Parent,  declare  all the Notes then
         outstanding to be immediately due and payable.

(c)      If any Event of Default described in paragraph (a) or (b) of Section 11
         has occurred and is  continuing,  any holder or holders of Notes at the
         time outstanding  affected by such Event of Default may at any time, at
         its or their option, by notice or notices to the Company or the Parent,
         declare  all the  Notes  held by it or them to be  immediately  due and
         payable.

        Upon any Notes becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Notes will forthwith mature and the entire
unpaid principal amount of such Notes,  plus (x) all accrued and unpaid interest
thereon and (y) the  Make-Whole  Amount  determined in respect of such principal
amount  (to  the  full  extent  permitted  by  applicable  law),  shall  all  be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice,  all of which are hereby waived.  Each of the Company
and the Parent acknowledges, and the parties hereto agree, that each holder of a
Note has the right to maintain its  investment in the Notes free from  repayment
by the Company or the Parent  (except as herein  specifically  provided for) and
that the  provision  for  payment of a  Make-Whole  Amount by the Company or the
Parent  (as the case may be) in the  event  that the Notes  are  prepaid  or are
accelerated  as a  result  of an  Event  of  Default,  is  intended  to  provide
compensation for the deprivation of such right under such circumstances.

12.2.    Other Remedies.

         If any Default or Event of Default has occurred and is continuing,  and
irrespective of whether any Notes have become or have been declared  immediately
due and  payable  under  Section  12.1,  the  holder  of any  Note  at the  time
outstanding  may  proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate  proceeding,  whether for the
specific performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof,  or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.

12.3.    Rescission.

         At any time after any Notes have been declared due and payable pursuant
to  clause  (b) or (c) of  Section  12.1,  the  holders  of not less than 51% in
principal  amount  of the  Notes  then  outstanding,  by  written  notice to the
Company,  may rescind and annul any such declaration and its consequences if (a)
the Company or the Parent (as the case may be) has paid all overdue  interest on
the Notes, all principal of and Make-Whole Amount, if any, on any Notes that are
due and payable and are unpaid other than by reason of such declaration, and all
interest on such overdue  principal and Make-Whole  Amount,  if any, and (to the
extent  permitted  by  applicable  law) any  overdue  interest in respect of the
Notes,  at the Default Rate, (b) all Events of Default and Defaults,  other than
non-payment   of  amounts  that  have  become  due  solely  by  reason  of  such
declaration, have been cured or have been waived pursuant to Section 17, and (c)
no  judgment  or decree  has been  entered  for the  payment  of any  monies due
pursuant  hereto or to the Notes. No rescission and annulment under this Section
12.3 will  extend to or affect  any  subsequent  Event of  Default or Default or
impair any right consequent thereon.

12.4.    No Waivers or Election of Remedies, Expenses, etc.

         No course of dealing and no delay on the part of any holder of any Note
in exercising  any right,  power or remedy shall operate as a waiver  thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power or
remedy  conferred by this Agreement or by any Note upon any holder thereof shall
be exclusive of any other right,  power or remedy  referred to herein or therein
or now or  hereafter  available  at law,  in equity,  by  statute or  otherwise.
Without limiting the obligations of the Company and the Parent under Section 15,
the Company will pay to the holder of each Note on demand such further amount as
shall be  sufficient to cover all  reasonable  costs and expenses of such holder
incurred in any  enforcement  or  collection  under this Section 12,  including,
without limitation, reasonable attorneys' fees, expenses and disbursements.

13.      REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

13.1.    Registration of Notes.

         The Company shall keep at its principal executive office a register for
the registration and registration of transfers of Notes. The name and address of
each holder of one or more Notes, each transfer thereof and the name and address
of each  transferee of one or more Notes shall be  registered in such  register.
Prior to due presentment for registration of transfer,  the Person in whose name
any Note shall be registered shall be deemed and treated as the owner and holder
thereof for all purposes  hereof,  and the Company  shall not be affected by any
notice or knowledge to the  contrary.  The Company shall give to any holder of a
Note  that is an  Institutional  Investor  promptly  upon  request  therefor,  a
complete and correct copy of the names and addresses of all  registered  holders
of Notes.

13.2.   Transfer and Exchange of Notes.

        Upon  surrender  of any Note at the  principal  executive  office of the
Company for registration of transfer or exchange (and in the case of a surrender
for  registration  of  transfer,  duly  endorsed  or  accompanied  by a  written
instrument of transfer duly  executed by the  registered  holder of such Note or
his  attorney  duly  authorized  in writing and  accompanied  by the address for
notices of each  transferee  of such Note or part  thereof),  the Company  shall
execute and deliver, at the Company's expense (except as provided below), one or
more new Notes (as requested by the holder thereof) in exchange therefor,  in an
aggregate  principal  amount  equal  to  the  unpaid  principal  amount  of  the
surrendered  Note.  Each such new Note shall be  payable to such  Person as such
holder may request and shall be  substantially  in the form of Exhibit 1.2. Each
such new Note shall be dated and bear interest  from the date to which  interest
shall  have  been  paid  on the  surrendered  Note  or  dated  the  date  of the
surrendered  Note if no interest  shall have been paid thereon.  The Company may
require  payment  of a sum  sufficient  to cover any  stamp tax or  governmental
charge  imposed in respect of any such  transfer  of Notes.  Notes  shall not be
transferred in denominations of less than $1,000,000, provided that if necessary
to enable the  registration  of  transfer  by a holder of its entire  holding of
Notes,  one  Note  may  be  in a  denomination  of  less  than  $1,000,000.  Any
transferee,  by its acceptance of a Note  registered in its name (or the name of
its  nominee),  shall be deemed to have  made the  representations  set forth in
Section 6.2.

13.3.    Replacement of Notes.

         Upon receipt by the Company of evidence  reasonably  satisfactory to it
of the ownership of and the loss,  theft,  destruction or mutilation of any Note
(which evidence shall be, in the case of an Institutional Investor,  notice from
such Institutional Investor of such ownership and such loss, theft,  destruction
or mutilation), and

(a)      in the case of loss,  theft or  destruction,  of  indemnity  reasonably
         satisfactory  to it (provided that if the holder of such Note is, or is
         a nominee for, an original Purchaser or another holder of a Note with a
         minimum net worth of at least $50,000,000,  such Person's own unsecured
         agreement of indemnity shall be deemed to be satisfactory), or

(b)      in the case of mutilation, upon surrender and cancellation thereof,

the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost,  stolen,  destroyed or mutilated  Note if no interest shall have been paid
thereon.

14.      PAYMENTS ON NOTES.

14.1.    Place of Payment.

         Subject to Section 14.2,  payments of principal,  Make-Whole Amount, if
any,  and  interest  becoming  due and payable on the Notes shall be made in New
York,  New York at the  offices  of the  Purchasers  in such  jurisdiction.  The
Company may at any time, by notice to each holder of a Note, change the place of
payment  of the  Notes so long as such  place of  payment  shall be  either  the
principal office of the Company in such  jurisdiction or the principal office of
a bank or trust company in such jurisdiction.

14.2.    Home Office Payment.

         So long as you or your  nominee  shall be the  holder of any Note,  and
notwithstanding  anything  contained  in  Section  14.1 or in  such  Note to the
contrary,  the  Company  or the  Parent  (as the  case may be) will pay all sums
becoming due on such Note for principal, Make-Whole Amount, if any, and interest
by the method and at the address  specified  for such purpose below your name in
Schedule A, or by such other  method or at such other  address as you shall have
from time to time  specified  to the  Company or the Parent in writing  for such
purpose, without the presentation or surrender of such Note or the making of any
notation  thereon,  except  that  upon  written  request  of  the  Company  made
concurrently with or reasonably  promptly after payment or prepayment in full of
any Note, you shall surrender such Note for  cancellation,  reasonably  promptly
after any such request,  to the Company at its principal  executive office or at
the place of payment most recently designated by the Company pursuant to Section
14.1.  Prior to any sale or other  disposition  of any Note  held by you or your
nominee  you will,  at your  election,  either  endorse  thereon  the  amount of
principal paid thereon and the last date to which interest has been paid thereon
or  surrender  such  Note to the  Company  in  exchange  for a new Note or Notes
pursuant to Section  13.2.  The Company will afford the benefits of this Section
14.2 to any Institutional  Investor that is the direct or indirect transferee of
any  Note  purchased  by you  under  this  Agreement  and that has made the same
agreement relating to such Note as you have made in this Section 14.2.

15.      EXPENSES, ETC.

15.1.    Transaction Expenses.

         Whether or not the  transactions  contemplated  hereby are consummated,
the Company will pay all costs and  expenses  (including  reasonable  attorneys'
fees of a special counsel and, if reasonably  required,  local or other counsel)
incurred  by you and each  Other  Purchaser  or  subsequent  holder of a Note in
connection with such transactions and in connection with any amendments, waivers
or consents  under or in respect of this  Agreement or the Notes (whether or not
such amendment,  waiver or consent becomes effective),  including: (a) the costs
and expenses  incurred in enforcing or defending (or determining  whether or how
to enforce or defend) any rights under this Agreement, the Notes, the Subsidiary
Guaranty or the  Security  Documents or in  responding  to any subpoena or other
legal process or informal  investigative  demand issued in connection  with this
Agreement,  the Notes, the Subsidiary Guaranty or the Security Documents,  or by
reason of being a holder of any Note, and (b) the costs and expenses,  including
financial  advisors'  fees,  incurred  in  connection  with  the  insolvency  or
bankruptcy of the Company or any  Subsidiary or in connection  with any work-out
or restructuring of the transactions  contemplated  hereby and by the Notes. The
Company  will pay,  and will save you and each other  holder of a Note  harmless
from,  all claims in respect of any fees,  costs or  expenses if any, of brokers
and finders (other than those retained by you).

15.2.    Survival.

         The  obligations  of the Company under this Section 15 will survive the
payment or transfer of any Note,  the  enforcement,  amendment  or waiver of any
provision of this Agreement or the Notes, and the termination of this Agreement.

16.      SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

         All representations  and warranties  contained herein shall survive the
execution and delivery of this Agreement, the Notes, the Subsidiary Guaranty and
the Security  Documents,  the purchase or transfer by you of any Note or portion
thereof or interest  therein and the payment of any Note, and may be relied upon
by any subsequent holder of a Note,  regardless of any investigation made at any
time by or on  behalf  of you or any  other  holder  of a Note.  All  statements
contained in any  certificate or other  instrument  delivered by or on behalf of
the  Company  or  the  Parent   pursuant  to  this  Agreement  shall  be  deemed
representations and warranties of the Company or the Parent (as the case may be)
under this Agreement.  Subject to the preceding sentence, this Agreement and the
Notes embody the entire agreement and  understanding  among you, the Company and
the Parent and supersede all prior agreements and understandings relating to the
subject matter hereof.

17.      AMENDMENT AND WAIVER.

17.1.    Requirements.

         This Agreement,  the Subsidiary  Guaranty and the Notes may be amended,
and the observance of any term hereof or of the Subsidiary Guaranty or the Notes
may be waived (either retroactively or prospectively),  with (and only with) the
written consent of the Company, the Parent and the Required Holders, except that
(a) no amendment or waiver of any of the  provisions of Section 1, 2, 3, 4, 5, 6
or 21 hereof, or any defined term (as it is used therein),  will be effective as
to you unless  consented  to by you in writing,  and (b) no  amendment or waiver
may,  without  the  written  consent  of the  holder  of each  Note at the  time
outstanding  affected  thereby,  (i)  subject  to the  provisions  of Section 12
relating  to  acceleration  or  rescission,  change  the  amount  or time of any
prepayment  or payment of principal of, or reduce the rate or change the time of
payment or method of computation of interest or of the Make-Whole Amount on, the
Notes,  (ii)  change the  percentage  of the  principal  amount of the Notes the
holders of which are  required to consent to any such  amendment  or waiver,  or
(iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20.

17.2.    Solicitation of Holders of Notes.

(a)      Solicitation.   The  Company  will  provide  each holder of  the  Notes
         (irrespective  of the amount of Notes then owned by it) with sufficient
         information,  sufficiently  far in advance  of the date a  decision  is
         required,  to enable  such holder to make an  informed  and  considered
         decision with respect to any proposed  amendment,  waiver or consent in
         respect of any of the provisions hereof or of the Notes. The Company or
         the Parent (as  applicable)  will deliver  executed or true and correct
         copies of each amendment,  waiver or consent  effected  pursuant to the
         provisions  of this  Section  17 to each  holder of  outstanding  Notes
         promptly  following  the date on which it is executed and delivered by,
         or receives the consent or approval of, the requisite holders of Notes.

(b)      Payment. Neither the Company nor the Parent will directly or indirectly
         pay  or  cause  to  be  paid  any  remuneration,   whether  by  way  of
         supplemental  or additional  interest,  fee or otherwise,  or grant any
         security,  to  any  holder  of  Notes  as  consideration  for  or as an
         inducement to the entering into by any holder of Notes or any waiver or
         amendment  of  any of the  terms  and  provisions  hereof  unless  such
         remuneration is concurrently paid, or security is concurrently granted,
         on the same  terms,  ratably to each  holder of Notes then  outstanding
         even if such holder did not consent to such waiver or amendment.

17.3.    Binding Effect, etc.

         Any  amendment  or waiver  consented  to as provided in this Section 17
applies  equally to all holders of Notes and is binding  upon them and upon each
future holder of any Note and upon the Company and the Parent  without regard to
whether such Note has been marked to indicate such amendment or waiver.  No such
amendment  or  waiver  will  extend  to  or  affect  any  obligation,  covenant,
agreement, Default or Event of Default not expressly amended or waived or impair
any right  consequent  thereon.  No course of dealing between the Company or the
Parent  and the  holder  of any Note  nor any  delay in  exercising  any  rights
hereunder  or under any Note  shall  operate  as a waiver  of any  rights of any
holder of such Note. As used herein,  the term "this  Agreement"  and references
thereto  shall  mean this  Agreement  as it may from time to time be  amended or
supplemented.

17.4.    Notes held by Company, etc.

         Solely  for the  purpose  of  determining  whether  the  holders of the
requisite percentage of the aggregate principal amount of Notes then outstanding
approved or consented to any amendment, waiver or consent to be given under this
Agreement  or the Notes,  or have  directed  the  taking of any action  provided
herein  or in the  Notes to be taken  upon the  direction  of the  holders  of a
specified   percentage  of  the  aggregate   principal   amount  of  Notes  then
outstanding,  Notes directly or indirectly  owned by the Company,  the Parent or
any of their Affiliates shall be deemed not to be outstanding.

18.      NOTICES.

         All notices  and  communications  provided  for  hereunder  shall be in
writing  and  sent  (a) by  telecopy  if the  sender  on the  same  day  sends a
confirming  copy of such  notice  by a  recognized  overnight  delivery  service
(charges  prepaid),  or (b) by registered or certified  mail with return receipt
requested (postage prepaid),  or (c) by a recognized  overnight delivery service
(with charges prepaid). Any such notice must be sent:

(i)      if to you or your  nominee,  to you or it at the address  specified for
         such  communications  in Schedule A, or at such other address as you or
         it shall have specified to the Company in writing,

(ii)     if to any other  holder of any Note,  to such holder at such address as
         such other holder shall have specified to the Company in writing, or

(iii)    if to the Company or the  Parent,  to the address set forth at  the
         beginning hereof to the attention of the Chief Financial Officer, or at
         such other  address  as the  Company or the Parent (as the case may be)
         shall have specified to the holder of each Note in writing.

Notices under this Section 18 will be deemed given only when actually received.

19.      REPRODUCTION OF DOCUMENTS.

         This  Agreement  and all  documents  relating  thereto,  including  (a)
consents,  waivers  and  modifications  that  may  hereafter  be  executed,  (b)
documents received by you at the Closing (except the Notes themselves),  and (c)
financial statements, certificates and other information previously or hereafter
furnished to you, may be  reproduced  by you by any  photographic,  photostatic,
microfilm,  microcard,  miniature  photographic or other similar process and you
may destroy any  original  document so  reproduced.  Each of the Company and the
Parent agrees and stipulates  that, to the extent  permitted by applicable  law,
any such reproduction  shall be admissible in evidence as the original itself in
any  judicial or  administrative  proceeding  (whether or not the original is in
existence  and whether or not such  reproduction  was made by you in the regular
course of business) and any  enlargement,  facsimile or further  reproduction of
such  reproduction  shall  likewise be admissible  in evidence.  This Section 19
shall not  prohibit  the  Company,  the Parent or any other holder of Notes from
contesting  any such  reproduction  to the same extent that it could contest the
original, or from introducing evidence to demonstrate the inaccuracy of any such
reproduction.

20.      CONFIDENTIAL INFORMATION.

         For the purposes of this Section 20,  "Confidential  Information" means
information  delivered to you by or on behalf of the Company,  the Parent or any
Subsidiary  in connection  with the  transactions  contemplated  by or otherwise
pursuant to this  Agreement  that is  proprietary in nature and that was clearly
marked or labeled or otherwise  adequately  identified  when  received by you as
being confidential information of the Company or such Subsidiary,  provided that
such term does not include  information that (a) was publicly known or otherwise
known to you  prior to the time of such  disclosure,  (b)  subsequently  becomes
publicly  known  through no act or omission by you or any person  acting on your
behalf,  (c) otherwise becomes known to you other than through disclosure by the
Company,  the Parent or any Subsidiary or (d) constitutes  financial  statements
delivered to you under Section 7.1 that are otherwise  publicly  available.  You
will maintain the confidentiality of such Confidential information in accordance
with procedures adopted by you in good faith to protect confidential information
of third  parties  delivered to you,  provided  that you may deliver or disclose
Confidential  Information to (i) your directors,  officers,  employees,  agents,
attorneys and affiliates (to the extent such  disclosure  reasonably  relates to
the  administration  of the  investment  represented  by your Notes),  (ii) your
financial   advisors  and  other   professional   advisors  who  agree  to  hold
confidential the Confidential  Information  substantially in accordance with the
terms  of this  Section  20,  (iii)  any  other  holder  of any  Note,  (iv) any
Institutional  Investor to which you sell or offer to sell such Note or any part
thereof or any participation therein (if such Person has agreed in writing prior
to its receipt of such Confidential Information to be bound by the provisions of
this  Section  20), (v) any Person from which you offer to purchase any security
of the Company or the Parent (if such Person has agreed in writing  prior to its
receipt of such  Confidential  Information to be bound by the provisions of this
Section 20), (vi) any federal or state regulatory  authority having jurisdiction
over you,  (vii) the  National  Association  of Insurance  Commissioners  or any
similar  organization,  or any nationally recognized rating agency that requires
access to information about your investment portfolio or (viii) any other Person
to which such  delivery or  disclosure  may be necessary or  appropriate  (w) to
effect compliance with any law, rule, regulation or order applicable to you, (x)
in response to any subpoena or other legal process,  (y) in connection  with any
litigation  to which you are a party or (z) if an Event of Default has  occurred
and is continuing,  to the extent you may reasonably determine such delivery and
disclosure  to be  necessary  or  appropriate  in the  enforcement  or  for  the
protection of the rights and remedies under your Notes and this Agreement.  Each
holder of a Note, by its acceptance of a Note,  will be deemed to have agreed to
be bound by and to be entitled to the  benefits of this  Section 20 as though it
were a party to this  Agreement.  On  reasonable  request by the  Company or the
Parent in  connection  with the delivery to any holder of a Note of  information
required to be  delivered  to such holder  under this  Agreement or requested by
such  holder  (other  than a  holder  that is a party to this  Agreement  or its
nominee),  such  holder  will enter into an  agreement  with the  Company or the
Parent (as the case may be) embodying the provisions of this Section 20.

21.      SUBSTITUTION OF PURCHASER.

         You shall have the right to  substitute  any one of your  Affiliates as
the  purchaser  of the Notes  that you have  agreed to  purchase  hereunder,  by
written notice to the Company, which notice shall be signed by both you and such
Affiliate,  shall  contain  such  Affiliate's  agreement  to be  bound  by  this
Agreement and shall  contain a  confirmation  by such  Affiliate of the accuracy
with respect to it of the  representations  set forth in Section 6. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than in
this Section 21),  such word shall be deemed to refer to such  Affiliate in lieu
of you.  In the event  that such  Affiliate  is so  substituted  as a  purchaser
hereunder and such Affiliate  thereafter  transfers to you all of the Notes then
held by such Affiliate,  upon receipt by the Company of notice of such transfer,
wherever  the word "you" is used in this  Agreement  (other than in this Section
21), such word shall no longer be deemed to refer to such  Affiliate,  but shall
refer to you,  and you shall  have all the rights of an  original  holder of the
Notes under this Agreement.

22.      MISCELLANEOUS.

22.1.    Successors and Assigns.

         All covenants and other agreements contained in this Agreement by or on
behalf  of any of the  parties  hereto  bind and inure to the  benefit  of their
respective successors and assigns (including, without limitation, any subsequent
holder of a Note) whether so expressed or not.

22.2.    Payments Due on Non-Business Days.

         Anything   in   this   Agreement   or  the   Notes   to  the   contrary
notwithstanding, any payment of principal of or Make-whole Amount or interest on
any Note that is due on a date other  than a  Business  Day shall be made on the
next  succeeding  Business Day without  including the additional days elapsed in
the computation of the interest payable on such next succeeding Business Day.

22.3.    Severability.

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

22.4.    Construction.

         Each  covenant  contained  herein  shall be construed  (absent  express
provision to the contrary) as being independent of each other covenant contained
herein,  so that  compliance  with any one  covenant  shall not (absent  such an
express  contrary  provision)  be  deemed to  excuse  compliance  with any other
covenant. Where any provision herein refers to action to be taken by any Person,
or which  such  Person  is  prohibited  from  taking,  such  provision  shall be
applicable whether such action is taken directly or indirectly by such Person.

22.5.    Counterparts.

         This Agreement may be executed in any number of  counterparts,  each of
which  shall be an  original  but all of which  together  shall  constitute  one
instrument.  Each  counterpart  may consist of a number of copies  hereof,  each
signed by less than all, but together signed by all, of the parties hereto.

22.6.    Governing Law.

         This Agreement shall be construed and enforced in accordance  with, and
the rights of the parties  shall be governed  by, the law of the State of Nevada
excluding  choice-of-law  principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.

                                    * * * * *

                   REMAINDER OF PAGE INTENTIONALLY BLANK

<PAGE>

         If you are in  agreement  with the  foregoing,  please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company,  whereupon the foregoing shall become a binding  agreement between you,
the Company and the Parent.

                                Very truly yours,

                                COMPANY:

                                COVENANT ASSET MANAGEMENT, INC.,
                                a Nevada corporation

                                By: /s/  Joey B. Hogan
                                    Name:  Joey B. Hogan
                                    Title:  Chief Financial Officer & Treasurer

                                PARENT:

                                COVENANT TRANSPORT, INC.,
                                a Nevada corporation

                                By: /s/  Joey B. Hogan
                                    Name:  Joey B. Hogan
                                    Title:  Chief Financial Officer & Treasurer

<PAGE>

The foregoing is agreed to as of the date thereof.

CONNECTICUT GENERAL LIFE INSURANCE COMPANY,
ON BEHALF OF ONE OR MORE SEPARATE ACCOUNTS

By:  CIGNA Investments, Inc.

     By:  /s/  Stephen A. Osborn
          Name:  Stephen A. Osborn
          Title:  Managing Director

CONNECTICUT GENERAL LIFE INSURANCE COMPANY

By:  CIGNA Investments, Inc.

     By:  /s/  Stephen A. Osborn
          Name:  Stephen A. Osborn
          Title:  Managing Director

 LIFE INSURANCE COMPANY OF NORTH AMERICA

 By: CIGNA Investments, Inc.

     By:  /s/  Stephen A. Osborn
          Name:  Stephen A. Osborn
          Title:  Managing Director

<PAGE>

SCHEDULE A                 --       Information Relating To Purchasers

SCHEDULE B                 --       Defined Terms

SCHEDULE 4.9               --       Changes in Corporate Structure

SCHEDULE 5.3               --       Disclosure Materials

SCHEDULE 5.4               --       Subsidiaries of the Company and Ownership of
                                    Subsidiary Stock

SCHEDULE 5.5               --       Financial Statements

SCHEDULE 5.8               --       Certain Litigation

SCHEDULE 5.11              --       Patents, etc.

SCHEDULE 5.14              --       Use of Proceeds

SCHEDULE 5.15              --       Existing Indebtedness

SCHEDULE 10.9              --       Restricted Investments

SCHEDULE 10.11             --       Liens

EXHIBIT 1.2                --       Form of 7.39% Guaranteed Senior Note due
                                    October 1, 2005

EXHIBIT 4.4(a)             --       Form of Opinion of Counsel for the Company
                                    and the Parent

EXHIBIT 4.4(b)             --       Form of Opinion of Special Counsel for the
                                    Purchasers

EXHIBIT 4.11               --       Form of Subsidiary Guaranty

EXHIBIT 4.12               --       Form of Intercreditor Agreement

EXHIBIT 9.6                --       Parent Guarantee

<PAGE>

                                                                      SCHEDULE A

                       INFORMATION RELATING TO PURCHASERS

                                                           Principal Amount of
Name and Address of Purchaser                              Notes to be Purchased
-----------------------------                              ---------------------

CONNECTICUT GENERAL LIFE INSURANCE                                    $5,000,000
  COMPANY, on behalf of one or more separate accounts                  5,000,000
Nominee Name in which Notes are to be issued:  CIG & Co.

(1)      All payments by Federal Funds wire transfer  of  immediately  available
         funds to:

                  Chase NYC/CTR/
                  BNF=CIGNA Private Placements/AC=9009001802
                  ABA# 021000021

         with the following accompanying information:

                  OBI=Covenant  Asset  Management,  Inc. 7.39% Guaranteed Senior
                  Notes due October 1, 2005;  PPN 22283# AA 6; [and  application
                  (as among principal, premium and interest of the payment being
                  made); contact name and phone]

(2)      Notices related to payments:

                  CIG & Co.
                  c/o CIGNA Investments, Inc.
                  Attention:  Securities Processing - S-206
                  900 Cottage Grove Road
                  Hartford, CT  06152-2309

         with a copy to:

                  Chase Manhattan Bank
                  Private Placement Servicing
                  P.O. Box 1508
                  Bowling Green Station
                  New York, NY 10081
                  Attention:  CIGNA Private Placements
                  Fax:  (212) 552-3107/1005

(3)      All other communications:

                  CIG & Co.
                  c/o CIGNA Investments, Inc.
                  Attention:  Private Securities Division - S-307
                  900 Cottage Grove Road
                  Hartford, CT 06152-2307
                  Fax:  (860) 726-7203

Tax ID #13-3574027

<PAGE>

                                                                      SCHEDULE A

                       INFORMATION RELATING TO PURCHASERS

                                                           Principal Amount of
Name and Address of Purchaser                              Notes to be Purchased
-----------------------------                              ---------------------

CONNECTICUT GENERAL LIFE INSURANCE                                    $5,000,000
  COMPANY                                                              5,000,000

Nominee Name in which Notes are to be issued:  CIG & Co.

(1)      All payments by Federal  Funds wire  transfer  of immediately available
         funds to:

                  Chase NYC/CTR/
                  BNF=CIGNA Private Placements/AC=9009001802
                  ABA# 021000021

         with the following accompanying information:

                  OBI=Covenant  Asset  Management,  Inc. 7.39% Guaranteed Senior
                  Notes due October 1, 2005;  PPN 22283# AA 6; [and  application
                  (as among principal, premium and interest of the payment being
                  made); contact name and phone]

(2)      Notices related to payments:

                  CIG & Co.
                  c/o CIGNA Investments, Inc.
                  Attention:  Securities Processing - S-206
                  900 Cottage Grove Road
                  Hartford, CT  06152-2309

         with a copy to:

                  Chase Manhattan Bank
                  Private Placement Servicing
                  P.O. Box 1508
                  Bowling Green Station
                  New York, NY 10081
                  Attention:  CIGNA Private Placements
                  Fax:  (212) 552-3107/1005

(3)      All other communications:

                  CIG & Co.
                  c/o CIGNA Investments, Inc.
                  Attention:  Private Securities Division - S-307
                  900 Cottage Grove Road
                  Hartford, CT 06152-2307
                  Fax:  (860) 726-7203

Tax ID #13-3574027

<PAGE>

                                                                      SCHEDULE A

                       INFORMATION RELATING TO PURCHASERS

                                                           Principal Amount of
Name and Address of Purchaser                              Notes to be Purchased
-----------------------------                              ---------------------

LIFE INSURANCE COMPANY OF NORTH AMERICA                               $5,000,000

Nominee Name in which Notes are to be issued:  CIG & Co.

(1)      All payments  by  Federal  Funds wire transfer of immediately available
         funds to:

                  Chase NYC/CTR/
                  BNF=CIGNA Private Placements/AC=9009001802
                  ABA# 021000021

         with the following accompanying information:

                  OBI=Covenant  Asset  Management,  Inc. 7.39% Guaranteed Senior
                  Notes due October 1, 2005;  PPN 22283# AA 6; [and  application
                  (as among principal, premium and interest of the payment being
                  made); contact name and phone]

(2)      Notices related to payments:

                  CIG & Co.
                  c/o CIGNA Investments, Inc.
                  Attention:  Securities Processing - S-206
                  900 Cottage Grove Road
                  Hartford, CT  06152-2309

         with a copy to:

                  Chase Manhattan Bank
                  Private Placement Servicing
                  P.O. Box 1508
                  Bowling Green Station
                  New York, NY 10081
                  Attention:  CIGNA Private Placements
                  Fax:  (212) 552-3107/1005

(3)      All other communications:

                  CIG & Co.
                  c/o CIGNA Investments, Inc.
                  Attention:  Private Securities Division - S-307
                  900 Cottage Grove Road
                  Hartford, CT 06152-2307
                  Fax:  (860) 726-7203

Tax ID #13-3574027

<PAGE>
                                                                      SCHEDULE B

                                  DEFINED TERMS

                  As used  herein,  the  following  terms  have  the  respective
meanings set forth below or set forth in the Section hereof following such term:

                  "Affiliate"  means,  at any  time,  and  with  respect  to any
Person,  (a) any other Person that at such time directly or  indirectly  through
one or more  intermediaries  Controls,  or is Controlled by, or, is under common
Control  with,  such first  Person,  and (b) any Person  beneficially  owning or
holding,  directly or  indirectly,  10% or more of any class of voting or equity
interests  of the  Company or any  Subsidiary  or any  corporation  of which the
Company  and  its  Subsidiaries  beneficially  own or  hold,  in the  aggregate,
directly or indirectly,  10% or more of any class of voting or equity interests.
As used  in  this  definition,  "Control"  means  the  possession,  directly  or
indirectly,  of the power to direct or cause the direction of the management and
policies of a Person,  whether  through the ownership of voting  securities,  by
contract  or  otherwise.  Unless the context  otherwise  clearly  requires,  any
reference to an "Affiliate" is a reference to an Affiliate of the Company.

                  "Bank Loan  Agreement"  means the Amended and Restated  Credit
Agreement,  dated as of June 18,  1999  between  the  Company,  CTI,  the  banks
signatory  thereto  and ABN AMRO Bank N.V as Agent,  as  further  amended  by an
Amendment to Amended and Restated Credit  Agreement dated as of June 6, 2000, as
such agreement may hereafter be amended or modified.

                  "Bank  Lenders" means the banks from time to time party to the
Bank Loan Agreement.

                  "Business Day" means (a) for the purposes of Section 8.6 only,
any day other than a Saturday,  a Sunday or a day on which  commercial  banks in
New York City are required or authorized to be closed,  and (b) for the purposes
of any other  provision  of this  Agreement,  any day other than a  Saturday,  a
Sunday or a day on which commercial banks in New York, Connecticut or Nevada are
required or authorized to be closed.

                  "Capital  Lease"  means,  at any time, a lease with respect to
which the lessee is required  concurrently  to recognize the  acquisition  of an
asset and the incurrence of a liability in accordance with GAAP.

                  "Capital Lease  Obligation"  means, with respect to any Person
and a Capital  Lease,  the amount of the obligation of such Person as the lessee
under such  Capital  Lease which would,  in  accordance  with GAAP,  appear as a
liability on a balance sheet of such Person.

                  "Change in Control" has the meaning set forth in Section 8.7.

                  "Closing" is defined in Section 3.

                  "Code"  means the Internal  Revenue  Code of 1986,  as amended
from time to time, and the rules and  regulations  promulgated  thereunder  from
time to time.

                  "Collateral" is defined in the Intercreditor Agreement.

                  "Company"  means  Covenant  Asset  Management,  Inc., a Nevada
corporation.

                  "Consolidated Assets" means the total assets of the Parent and
its Subsidiaries  that would be shown as assets on a consolidated  balance sheet
of the Company and its  Subsidiaries  prepared in  accordance  with GAAP,  after
eliminating all amounts properly attributable to minority interests,  if any, in
the stock and surplus of Subsidiaries.

                  "Consolidated  Income  Available for Fixed Charges" means, for
any period, Consolidated Net Income for such period plus all amounts deducted in
the computation thereof on account of (a) Fixed Charges and (b) taxes imposed on
or measured by income or excess profits.

                  "Confidential Information" is defined in Section 20.

                  "Consolidated  Net  Income"  means,  for any  period,  the net
income (or loss) of the Parent and its  Subsidiaries for such period (taken as a
cumulative  whole), as determined in accordance with GAAP, after eliminating all
offsetting  debits and credits between the Parent and its  Subsidiaries  and all
other  items  required  to be  eliminated  in the course of the  preparation  of
consolidated  financial  statements  of  the  Parent  and  its  Subsidiaries  in
accordance with GAAP, provided that there shall be excluded:

                  (a) the income (or loss) of any  Person  accrued  prior to the
date it becomes a Subsidiary or is merged into or  consolidated  with the Parent
or a Subsidiary,  and the income (or loss) of any Person,  substantially  all of
the assets of which have been  acquired  in any  manner,  realized by such other
Person prior to the date of acquisition,

                  (b)  the  income  (or  loss)  of  any  Person  (other  than  a
Subsidiary)  in which the Parent or any  Subsidiary  has an ownership  interest,
except to the extent  that any such  income has been  actually  received  by the
Company  or such  Subsidiary  in the  form of cash  dividends  or  similar  cash
distributions,

                  (c) the undistributed earnings of any Subsidiary to the extent
that the  declaration or payment of dividends or similar  distributions  by such
Subsidiary  is not at the time  permitted  by the  terms of its  charter  or any
agreement,  instrument,  judgment,  decree, order, statute, rule or governmental
regulation applicable to such Subsidiary,

                  (d) any  restoration  to  income of any  contingency  reserve,
except to the extent  that  provision  for such  reserve  was made out of income
accrued during such period,

                  (e) excepted as permitted by GAAP, any aggregate net gain (but
not  any  aggregate  net  loss)  during  such  period  arising  from  the  sale,
conversion,  exchange  or other  disposition  of  capital  assets  (such term to
include,   without   limitation,   (i)  all  non-current   assets  and,  without
duplication,  (ii) the  following,  whether or not  current:  all fixed  assets,
whether  tangible or  intangible,  all inventory  sold in  conjunction  with the
disposition of fixed assets, and all Securities),

                  (f) except as permitted by GAAP, any gains  resulting from any
write-up of any assets (but not any loss  resulting  from any  write-down of any
assets),

                  (g) any net gain from the  collection  of the proceeds of life
insurance policies,

                  (h) any gain arising from the acquisition of any Security,  or
the extinguishment, under GAAP, of any Debt, of the Parent or any Subsidiary,

                  (i) any deferred credit  representing  the excess of equity in
any  Subsidiary at the date of  acquisition  over the cost of the  investment in
such Subsidiary,

                  (j) in the case of a successor to the Parent by  consolidation
or merger or as a  transferee  of its  assets,  any  earnings  of the  successor
corporation prior to such consolidation, merger or transfer of assets, and

                  (k) any  portion  of such net  income  that  cannot  be freely
converted into United States Dollars.

                  "Consolidated Tangible Net Worth" means, at any time,

                  (a) the total assets of the Parent and its  Subsidiaries  that
would be shown as assets on a  consolidated  balance sheet of the Parent and its
Subsidiaries as of such time prepared in accordance with GAAP, after eliminating
all amounts properly  attributable to minority  interests,  if any, in the stock
and surplus of Subsidiaries, minus

                  (b) the total  liabilities of the Parent and its  Subsidiaries
that would be shown as liabilities on a consolidated balance sheet of the Parent
and its Subsidiaries as of such time prepared in accordance with GAAP, minus

                  (c) the net book  amount of all  assets of the  Parent and its
Subsidiaries  (after  deducting any reserves  applicable  thereto) that would be
shown as intangible assets on a consolidated balance sheet of the Parent and its
Subsidiaries as of such time prepared in accordance with GAAP.

                  "Consolidated   Total   Debt"   means,   as  of  any  date  of
determination,  the  total  of all  Debt  of the  Parent  and  its  Subsidiaries
outstanding on such date,  after  eliminating all offsetting  debits and credits
between  the Parent and its  Subsidiaries  and all other  items  required  to be
eliminated in the course of the preparation of consolidated financial statements
of the Parent and its Subsidiaries in accordance with GAAP,  provided,  however,
that  Consolidated  Total Debt shall not  include the first  $13,000,000  of any
Headquarters Financing Debt that may be outstanding at such time.

                  "Control Event" has the meaning set forth in Section 8.7.

                  "CTI" is defined in Section 1.1.

                  "Debt" means, with respect to any Person, without duplication,

                  (a) its liabilities for borrowed money;

                  (b) its liabilities  evidenced by bonds,  debentures,  note or
other similar instruments;

                  (c)  its  liabilities  for  the  deferred  purchase  price  of
property or services acquired by such Person (excluding accounts payable arising
in the ordinary  course of business and payable on  customary  trade terms,  but
including all liabilities created or arising under any conditional sale or other
title retention agreement with respect to any such property);

                  (d) its Capital Lease Obligations;

                  (e) its  redemption  obligations  in  respect  of  mandatorily
redeemable Preferred Stock;

                  (f) its  obligations to purchase  securities or other property
that arise out of or in  connection  with the sale of the same or  substantially
similar securities or property;

                  (g) its obligations, whether fixed or contingent, to reimburse
any  other  Person  for  amounts  paid  under a  letter  of  credit  or  similar
instrument;

                  (h) its  obligations  in respect of interest rate and currency
swaps  and  similar  obligations   obligating  it  to  make  payments,   whether
periodically  or  upon  the  happening  of a  contingency,  except  that  if any
agreement  relating  to such  obligations  provides  for the  netting of amounts
payable by and to such Person  thereunder or if any such agreement  provides for
the  simultaneous  payment of amounts by and to such  Person,  then in each such
case, the amount of such obligations shall be the net amount thereof;

                  (i) all  liabilities  for borrowed  money  secured by any Lien
with respect to any property owned by such Person (whether or not it has assumed
or otherwise become liable for such liabilities);

                  (j) any  Guaranty  of such  Person  of  liabilities  of a type
described in any of clauses (a) through (i) hereof; and

Debt of any Person shall include all obligations of such Person of the character
described in clauses (a) through (j) to the extent such Person  remains  legally
liable in respect thereof  notwithstanding that any such obligation is deemed to
be extinguished under GAAP.

                  "Default"  means an  event  or  condition  the  occurrence  or
existence  of which  would,  with the  lapse of time or the  giving of notice or
both, become an Event of Default.

                  "Default  Rate"  means  that rate of  interest  that is 2% per
annum above the rate of interest  stated in clause (a) of the first paragraph of
the Notes.

                  "Disposition  Value" means,  at any time,  with respect to any
property

                  (a)  in  the  case  of  property  that  does  not   constitute
         Subsidiary  Stock,  the book value thereof,  valued at the time of such
         disposition in good faith by the Parent, and

                  (b) in the case of property that constitutes Subsidiary Stock,
         an amount equal to that  percentage  of book value of the assets of the
         Subsidiary  that issued such stock as is equal to the  percentage  that
         the book value of such Subsidiary Stock represents of the book value of
         all of the outstanding capital stock of such Subsidiary  (assuming,  in
         making such  calculations,  that all Securities  convertible  into such
         capital   stock  are  so  converted  and  giving  full  effect  to  all
         transactions  that would occur or be required in  connection  with such
         conversion)  determined at the time of the disposition thereof, in good
         faith by the Parent.

                  "Distribution"   means,   in  respect   of  any   corporation,
association or other business entity:

                  (a)  dividends or other  distributions  or payments on capital
         stock or other  equity  interest of such  corporation,  association  or
         other  business  entity  (except  distributions  in such stock or other
         equity interest); and

                  (b) the  redemption  or  acquisition  of such  stock  or other
         equity  interests or of warrants,  rights or other  options to purchase
         such stock or other  equity  interests  (except when solely in exchange
         for   such   stock   or   other   equity    interests)   unless   made,
         contemporaneously,  from the net  proceeds  of a sale of such  stock or
         other equity interests.

                  "EBITDAR" means,  for any period,  Consolidated Net Income for
such period plus, to the extent deducted in determining  such  Consolidated  Net
Income, (i) Interest Charges, (ii) depreciation,  (iii) amortization, (iv) Lease
Rentals and (v)  consolidated tax expense.  In addition,  EBITDAR for any period
shall include the net income plus interest charges, depreciation,  amortization,
lease  rentals  (other  than  Capital  Leases) and tax expense of any entity the
capital  stock,  assets  business  or other  ownership  interests  of which were
acquired by the Parent of any of its  Subsidiaries  during such period (with pro
forma adjustments from the date of such acquisition).

                  "Environmental Laws" means any and all Federal,  state, local,
and foreign statutes, laws, regulations,  ordinances,  rules, judgments, orders,
decrees,  permits,  concessions,  grants,  franchises,  licenses,  agreements or
governmental  restrictions  relating  to  pollution  and the  protection  of the
environment or the release of any materials into the environment,  including but
not limited to those related to hazardous  substances  or wastes,  air emissions
and discharges to waste or public systems.

                  "ERISA" means the Employee  Retirement  Income Security Act of
1974, as amended from time to time,  and the rules and  regulations  promulgated
thereunder from time to time in effect.

                  "ERISA  Affiliate" means any trade or business (whether or not
incorporated)  that is treated  as a single  employer  together  with the Parent
under section 414 of the Code.

                  "Event of Default" is defined in Section 11.

                  "Exchange Act" means the  Securities  Exchange Act of 1934, as
amended.

                  "Excluded Transfer" is defined in Section 10.3.

                  "Fair Market Value" means, at any time and with respect to any
property,  the  sale  value  of such  property  that  would  be  realized  in an
arm's-length  sale at such time  between an informed  and  willing  buyer and an
informed and willing seller (neither being under a compulsion to buy or sell).

                  "Fixed Charges" means, with respect to any period,  the sum of
(a) Interest Charges for such period and (b) Lease Rentals for such period.

                  "Fixed Charges  Coverage  Ratio" means, at any time, the ratio
of (a)  Consolidated  Income  Available for Fixed Charges for the period of four
consecutive  fiscal  quarters of the Parent  ending on, or most  recently  ended
prior to, such time to (b) Fixed Charges for such period.

                  "Funded Debt" means,  with respect to any Person,  all Debt of
such Person  that by its terms or by the terms of any  instrument  or  agreement
relating thereto matures,  or that is otherwise  payable or unpaid,  one year or
more from, or is directly or indirectly renewable or extendible at the option of
the obligor in respect  thereof to a date one year or more  (including,  without
limitation,  an option  of such  obligor  under a  revolving  credit or  similar
agreement obligating the lender or lenders to extend credit over a period of one
year or more) from, the date of the creation thereof,  provided that Funded Debt
shall include,  as at any date of  determination,  current  maturities of Funded
Debt.

                  "GAAP" means generally  accepted  accounting  principles as in
effect from time to time in the United States of America.

                  "Governmental Authority" means

                  (a)      the government of

                           (i) the  United  States  of  America  or any  State
                  or  other political subdivision thereof, or

                           (ii)    any  jurisdiction  in which the Parent or any
                  Subsidiary conducts  all or any part of its business, or whic
                  asserts jurisdiction over any  properties of the Parent or any
                  Subsidiary, or

                  (b) any entity exercising  executive,  legislative,  judicial,
         regulatory or  administrative  functions of, or pertaining to, any such
         government.

                  "Guaranty" means,  with respect to any Person,  any obligation
(except  the  endorsement  in the  ordinary  course of  business  of  negotiable
instruments for deposit or collection) of such Person  guaranteeing or in effect
guaranteeing any Indebtedness,  dividend or other obligation of any other Person
in any manner,  whether directly or indirectly,  including (without  limitation)
obligations  incurred  through an agreement,  contingent  or otherwise,  by such
Person:

                  (a)  to  purchase  such  Indebtedness  or  obligation  or  any
         property constituting security therefor;

                  (b) to advance or supply funds (i) for the purchase or payment
         of such  indebtedness  or  obligation,  or (ii) to maintain any working
         capital  or other  balance  sheet  condition  or any  income  statement
         condition of any other Person or otherwise to advance or make available
         funds for the purchase or payment of such Indebtedness or obligation;

                  (c) to lease properties or to purchase  properties or services
         primarily for the purpose of assuring the owner of such Indebtedness or
         obligation  of the ability of any other  Person to make  payment of the
         Indebtedness or obligation; or

                  (d)  otherwise  to assure  the owner of such  Indebtedness  or
         obligation against loss in respect thereof.

In any computation of the Indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.

                  "Hazardous  Material" means any and all  pollutants,  toxic or
hazardous  wastes or any other  substances that might pose a hazard to health or
safety,  the removal of which may be required  or the  generation,  manufacture,
refining, production,  processing, treatment, storage, handling, transportation,
transfer, use, disposal, release, discharge, spillage, seepage, or filtration of
which is or shall be  restricted,  prohibited or penalized by any applicable law
(including, without limitation,  asbestos, urea formaldehyde foam insulation and
polycholorinated biphenyls).

                  "Headquarters  Financing  Debt"  means  the Debt  incurred  to
finance the Headquarters Transaction:

                  (a)  in  a  single   transaction   (or  series  of  integrated
         transactions),

                  (b)      prior to October 31, 1997,

                  (c)  in an  aggregate  principal  amount  up  to  $15,000,000;
         provided  that only  $13,000,000  of such amount shall be excluded from
         the definition of "Consolidated Total Debt,"

                  (d) that (if unsecured) is subject to a Headquarters Financing
         Intercreditor Agreement, and

                  (e) no Default or Event of Default existed at the time of such
         incurrence or  immediately  after giving  effect to such  incurrence of
         Debt;

provided  that  any  Sale-and-Leaseback   Transaction  in  connection  with  the
Headquarters Transaction shall be deemed to be Headquarters Financing Debt.

                  For  purposes of this  definition  of  Headquarters  Financing
Debt,  the  term  "Headquarters  Financing  Intercreditor  Agreement"  means  an
intercreditor  agreement (in form and substance acceptable to the holders of the
Notes) among the holder(s) of such  Headquarters  Financing Debt and the holders
of  Notes,  the Bank  Lenders  and each  other  party  who may be a party to the
Intercreditor  Agreement at the time of the incurrence of Headquarters Financing
Debt,  provided,   however,  that  such  Headquarters  Financing   Intercreditor
Agreement shall not provide for the sharing of any collateral held by or for the
benefit of the  holders  of Notes,  the Bank  Lenders or any other  party to the
Intercreditor Agreement.

                  "Headquarters Transaction" means the financing of the Parent's
headquarters facility constructed at Highway 11 and New Cummings Road, Tiftonia,
Tennessee.

                  "Holder" means,  with respect to any Note, the Person in whose
name such Note is registered in the register  maintained by the Company pursuant
to Section 13.1.

                  "Indebtedness"  with respect to any Person means, at any time,
without duplication,

                  (a) its  liabilities  for  borrowed  money and its  redemption
         obligations in respect of mandatorily redeemable Preferred Stock;

                  (b)  its  liabilities  for  the  deferred  purchase  price  of
         property acquired by such Person (excluding accounts payable arising in
         the ordinary course of business but including all  liabilities  created
         or  arising  under  any  conditional  sale  or  other  title  retention
         agreement with respect to any such property);

                  (c)  all  liabilities   appearing  on  its  balance  sheet  in
         accordance with GAAP in respect of Capital Leases;

                  (d) all  liabilities  for borrowed  money  secured by any Lien
         with  respect to any property  owned by such Person  (whether or not it
         has assumed or otherwise become liable for such liabilities);

                  (e) all its  liabilities  in  respect  of letters of credit or
         instruments  serving a similar  function  issued  or  accepted  for its
         account  by banks  and other  financial  institutions  (whether  or not
         representing obligations for borrowed money);

                  (f)      Swaps of such Person; and

                  (g) any Guaranty of such Person with respect to liabilities of
         a type described in any of clauses (a) through (f) hereof.

Indebtedness  of any Person shall include all  obligations of such Person of the
character described in clauses (a) through (g) to the extent such Person remains
legally liable in respect  thereof  notwithstanding  that any such obligation is
deemed to be extinguished under GAAP.

                  "Institutional Investor" means (a) any original purchaser of a
Note, (b) any holder of a Note holding more than 10% of the aggregate  principal
amount of the Notes then outstanding,  and (c) any bank, trust company,  savings
and loan  association  or other  financial  institution,  any pension plan,  any
investment  company,  any insurance company,  any broker or dealer, or any other
similar financial institution or entity, regardless of legal form.

                  "Intercreditor Agreement" is defined in Section 4.12.

                  "Interest  Charges"  means,  for any period,  the sum (without
duplication) of the following (in each case,  eliminating all offsetting  debits
and credits between the Parent and its Subsidiaries and all other items required
to be  eliminated in the course of the  preparation  of  consolidated  financial
statements of the Parent and its  Subsidiaries in accordance with GAAP): (a) all
interest  in  respect  of Debt of the  Parent  and its  Subsidiaries  (including
imputed  interest  on  Capital  Lease   Obligations)   deducted  in  determining
Consolidated Net Income for such period,  together with all interest capitalized
or deferred during such period and not deducted in determining  Consolidated Net
Income for such  period,  and (b) all debt  discount  and expense  amortized  or
required to be amortized in the  determination  of  Consolidated  Net Income for
such period.

                  "Intergroup Transfer" is defined in Section 10.3.

                  "Investment" means any investment, made in cash or by delivery
of property, by the Parent or any of its Subsidiaries (i) in any Person, whether
by acquisition of stock,  indebtedness  or other  obligation or Security,  or by
loan,  Guaranty,  advance,  capital  contribution  or otherwise,  or (ii) in any
property.

                  "Lease Rentals" means, with respect to any period,  the sum of
the rental and other  obligations  required to be paid during such period by the
Parent or any Subsidiary as lessee under all leases of real or personal property
(other than Capital  Leases),  excluding  any amount  required to be paid by the
lessee  (whether or not therein  designated as rental or  additional  rental) on
account of maintenance and repairs, insurance,  taxes, assessments,  water rates
and similar charges,  provided that, if at the date of  determination,  any such
rental  or  other  obligations  are  contingent  or  not  otherwise   definitely
determinable by the terms of the related lease,  the amount of such  obligations
(i) shall be assumed to be equal to the prorated amount of such  obligations for
the period of 12 consecutive  calendar months immediately  preceding the date of
determination  or (ii)  if the  related  lease  was not in  effect  during  such
preceding  12-month period,  shall be the amount estimated by a Senior Financial
Officer on a reasonable basis and in good faith.

                  "Lien" means, with respect to any Person, any mortgage,  lien,
pledge, charge, security interest or other encumbrance, or any interest or title
of any vendor,  lessor, lender or other secured party to or of such Person under
any conditional sale or other title retention  agreement or Capital Lease,  upon
or with respect to any property or asset of such Person  (including  in the case
of stock,  stockholder  agreements,  voting  trust  agreements  and all  similar
arrangements).

                  "Make-Whole Amount" is defined in Section 8.6.

                  "Material"   means  material  in  relation  to  the  business,
operations,  affairs,  financial condition,  assets, properties, or prospects of
the Parent and its Subsidiaries taken as a whole.
                  "Material  Adverse Effect" means a material  adverse effect on
(a) the business, operations, affairs, financial condition, assets or properties
of the Parent and its  Subsidiaries  taken as a whole, or (b) the ability of the
Company or the Parent to perform its  obligations  under this  Agreement and the
Notes, or (c) the ability of any Subsidiary to perform its obligations under the
Subsidiary  Guaranty,  or (d) the validity or  enforceability of this Agreement,
the Notes or the Subsidiary Guaranty.

                  "Multiemployer  Plan" means any Plan that is a  "multiemployer
plan" (as such term is defined in section 4001(a)(3) of ERISA).

                  "Notes" is defined in Section 1.

                  "Officer's  Certificate"  means  a  certificate  of  a  Senior
Financial  Officer or of any other  officer of the Company or the Parent (as the
case  may be)  whose  responsibilities  extend  to the  subject  matter  of such
certificate.

                  "Ordinary  Course  Transfer"  has the  meaning  set  forth  in
Section 10.3.

                  "Other Agreements" is defined in Section 2.

                  "Other Purchasers" is defined in Section 2.

                  "Parent" means Covenant Transport, Inc., a Nevada corporation.

                  "Parent  Guarantee"  means  the  guarantee  by the  Parent  in
accordance with the terms specified in Exhibit 9.6 to this Agreement.

                  "Parker Family" is defined in Section 8.7.

                  "PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA or any successor thereto.

                  "Person"  means  an  individual,   partnership,   corporation,
limited liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.

                  "Plan" means an "employee benefit plan" (as defined in section
3(3) of ERISA) that is or, within the preceding five years, has been established
or  maintained,  or to which  contributions  are or, within the  preceding  five
years,  have  been  made or  required  to be made,  by the  Parent  or any ERISA
Affiliate  or with respect to which the Parent or any ERISA  Affiliate  may have
any liability.

                  "Preferred  Stock"  means  any  class  of  capital  stock of a
corporation  that is  preferred  over any other  class of capital  stock of such
corporation  as to the  payment of  dividends  or the payment of any amount upon
liquidation or dissolution of such corporation.

                  "property"   or   "properties"    means,    unless   otherwise
specifically  limited,  real or  personal  property  of any  kind,  tangible  or
intangible, choate or inchoate.

                  "Property Disposition Date" is defined in Section 10.3.

                  "QPAM Exemption" means Prohibited  Transaction Class Exemption
84-14 issued by the United States Department of Labor.

                  "Required Holders" means, at any time, the holders of at least
51% in principal amount of the Notes at the time outstanding (exclusive of Notes
then owned by the Parent or any of its Affiliates).

                  "Responsible  Officer" means any Senior Financial  Officer and
any other  officer of the Company or the Parent (as the context  requires)  with
responsibility for the administration of the relevant portion of this agreement.

                  "Restricted  Investments"  means all  Investments  except  the
following:

                  (a) property to be used in the ordinary  course of business of
         the Parent and its Subsidiaries;

                  (b) current assets arising from the sale of goods and services
         in the ordinary course of business of the Parent and its Subsidiaries;

                  (c) Investments in one or more Subsidiaries or any Person that
         concurrently with such Investment becomes a Subsidiary;

                  (d)  Investments  existing  on the  date  of the  Closing  and
         disclosed in Schedule 10.9;

                  (e)  Investments  in United  States  Governmental  Securities,
         provided that such obligations  mature within 365 days from the date of
         acquisition thereof;

                  (f)  Investments  in  certificates  of  deposit  issued  by an
         Acceptable Bank,  provided that such obligations mature within 365 days
         from the date of acquisition thereof;

                  (g)  Investments in commercial  paper given the highest rating
         by a credit rating agency of recognized  national standing and maturing
         not more than 270 days from the date of creation thereof;

                  (h)      Investments in Repurchase Agreements;

                  (i) Investments in tax-exempt  obligations of any state of the
         United States of America,  or any  municipality  of any such state,  in
         each case  rated "A" or better by S&P,  "A2" or better by Moody's or an
         equivalent  rating  by any other  credit  rating  agency of  recognized
         national  standing,  provided that such  obligations  mature within 365
         days from the date of acquisition thereof; and

                  (j) Investments in fuel hedging agreements entered into in the
         ordinary course of business solely for the purpose of hedging  exposure
         to fuel costs.

For purposes of this Agreement,  an Investment  shall be valued at the lesser of
(i) cost and (ii) the value at which such Investment is to be shown on the books
of the Company and its Subsidiaries in accordance with GAAP.

         As used in this definition of "Restricted Investments":

         "Acceptable Bank" means any bank or trust company (i) that is organized
         under the laws of the United  States of  America or any State  thereof,
         (ii) that has capital,  surplus and undivided  profits  aggregating  at
         least   $100,000,000,   and  (iii)  whose   long-term   unsecured  debt
         obligations  (or the long-term  unsecured debt  obligations of the bank
         holding  company  owning all of the capital stock of such bank or trust
         company)  shall have been given a rating of "A" or better by S&P,  "A2"
         or better by Moody's or an equivalent rating by any other credit rating
         agency of recognized national standing.

         "Acceptable Broker-Dealer" means any Person other than a natural person
         (i) which is registered as a broker or dealer  pursuant to the Exchange
         Act and (ii) whose long-term unsecured debt obligations shall have been
         given a rating of "A" or better by S&P, "A2" or better by Moody's or an
         equivalent  rating  by any other  credit  rating  agency of  recognized
         national standing.

         "Moody's" means Moody's Investors Service, Inc.

         "Repurchase Agreement" means any written agreement.

                           (a) that provides for (i) the transfer of one or more
                  United   States   Governmental   Securities  in  an  aggregate
                  principal  amount at least equal to the amount of the transfer
                  price  to  the  Parent  or any of  its  Subsidiaries  from  an
                  Acceptable  Bank  or an  Acceptable  Broker-Dealer  against  a
                  transfer of funds (the "Transfer Price") by the Parent or such
                  Subsidiary   to   such    Acceptable    Bank   or   Acceptable
                  Broker-Dealer, and (ii) a simultaneous agreement by the Parent
                  or such Subsidiary, in connection with such transfer of funds,
                  to   transfer   to  such   Acceptable   Bank   or   Acceptable
                  Broker-Dealer the same or substantially  similar United States
                  Governmental Securities for a price not less than the Transfer
                  Price plus a reasonable  return  thereon at a date certain not
                  later than 365 days after such transfer of funds,

                           (b) in respect of which the Parent or such Subsidiary
                  shall  have the right,  whether by  contract  or  pursuant  to
                  applicable   law,  to  liquidate   such   agreement  upon  the
                  occurrence of any default thereunder, and

                           (c) in  connection  with  which  the  Parent  or such
                  Subsidiary,  or an agent thereof,  shall have taken all action
                  required by applicable law or regulations to perfect a Lien in
                  such United States Governmental Securities.

         "S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill,
Inc.

         "United States  Governmental  Security" means any direct obligation of,
         or  obligation  guaranteed  by, the United  States of  America,  or any
         agency controlled or supervised by or acting as an  instrumentality  of
         the  United  States of America  pursuant  to  authority  granted by the
         Congress of the United States of America, so long as such obligation or
         guarantee  shall  have the  benefit of the full faith and credit of the
         United  States of America  which  shall have been  pledged  pursuant to
         authority granted by the Congress of the United States of America.

                  "Restricted  Payment" means any Distribution in respect of the
Parent or any  Subsidiary  of the Parent (other than on account of capital stock
or other equity interests of a Subsidiary of Parent), including any Distribution
resulting in the acquisition by the Parent of Securities  that would  constitute
treasury stock, provided that any Distribution of shares of Transplace.com or of
any Subsidiary  Stock (where the only  substantial  asset of such  Subsidiary is
equity interests of  Transplace.com)  to stockholders of the Parent shall not be
deemed a Restricted Payment.  For purposes of this Agreement,  the amount of any
Restricted  Payment made in property shall be the greater of (x) the Fair Market
Value of such  property (as  determined  in good faith by the board of directors
(or equivalent governing body) of the Person making such Restricted Payment) and
(y) the net book  value  thereof  on the  books  of such  Person,  in each  case
determined as of the date on which such Restricted Payment is made.

                  "Sale-and-Leaseback Transaction" means a transaction or series
of  transactions  pursuant to which the Parent or any  Subsidiary  shall sell or
transfer to any Person  (other than the Parent or a  Subsidiary)  any  property,
whether now owned or hereafter acquired, and, as part of the same transaction or
series of  transactions,  the  Parent or any  Subsidiary  shall rent or lease as
lessee (other than pursuant to a Capital Lease),  or similarly acquire the right
to  possession  or use of,  such  property  or one or more  properties  which it
intends to use for the same  purpose or  purposes  as such  property,  provided,
however,  that  the  Headquarters   Transaction  shall  not  be  included  as  a
"Sale-and-Leaseback Transaction".

                  "Securities  Act" means the Securities Act of 1933, as amended
from time to time.

                  "Security(ies)"  has the meaning set forth in section  2(l) of
the Securities Act of 1933, as amended.

                  "Security  Documents" means the Intercreditor  Agreement,  the
Amended and Restated Borrower  Security  Agreement dated as of June 6, 2000 made
by the Company in favor of First Union National Bank, the Consolidating  Amended
and Restated  Guarantor Security Agreement dated as of June 6, 2000 made by each
Subsidiary  in favor of First Union  National  Bank,  the  Amended and  Restated
Parent Stock Pledge and Security  Agreement dated as of June 6, 2000 made by the
Parent in favor of First Union  National  Bank,  the Guarantor  Stock Pledge and
Security  Agreement dated as of June 6, 2000 made by CTI in favor of First Union
National Bank, and the Amended and Restated  Trademark  Security Agreement dated
as of June 6, 2000 made by CIP, Inc.  (formerly known as  Intellectual  Property
Co.), a Nevada corporation, in favor of First Union National Bank.

                  "Senior Financial  Officer" means the chief financial officer,
principal  accounting  officer,  treasurer or  comptroller of the Company or the
Parent (as the context requires).

                  "Subsidiary"   means,  as  to  any  Person,  any  corporation,
association or other business  entity in which such Person or one or more of its
Subsidiaries or such Person and one or more of its Subsidiaries  owns sufficient
equity or voting interests to enable it or them (as a group) ordinarily,  in the
absence of  contingencies,  to elect a majority  of the  directors  (or  Persons
performing similar functions) of such entity, and any limited liability company,
partnership  or joint  venture  if more than a 50%  interest  in the  profits or
capital  thereof is owned by such Person or one or more of its  Subsidiaries  or
such Person and one or more of its Subsidiaries (unless such partnership can and
does ordinarily  take major business  actions without the prior approval of such
Person or one or more of its Subsidiaries). Unless the context otherwise clearly
requires,  any reference to a "Subsidiary" is a reference to a Subsidiary of the
Company or the Parent.

                  "Subsidiary   Guaranty"  means  the  Subsidiary   Guaranty  in
substantially the form of the Attached Exhibit 4.11.

                  "Subsidiary  Stock"  means,  with  respect to any Person,  the
stock  (or any  options  or  warrants  to  purchase  stock or  other  Securities
exchangeable for or convertible into stock) of any Subsidiary of such Person.

                  "Successor Corporation" is defined in Section 10.2.

                  "Substantial Portion" is defined in Section 10.3.

                  "Swap" means, with respect to any Person,  payment obligations
with  respect to interest  rate swaps,  currency  swaps and similar  obligations
obligating  such  Person  to make  payments,  whether  periodically  or upon the
happening of a contingency.  For the purposes of this  Agreement,  the amount of
the obligation under any Swap shall be the amount  determined in respect thereof
as of the end of the then most  recently  ended  fiscal  quarter of such Person,
based on the assumption  that such Swap had terminated at the end of such fiscal
quarter,  and in making such  determination,  if any agreement  relating to such
Swap  provides  for  the  netting  of  amounts  payable  by and to  such  Person
thereunder or if any such  agreement  provides for the  simultaneous  payment of
amounts  by and to such  Person,  then in each  such  case,  the  amount of such
obligation shall be the net amount so determined.

                  "Transfer" means, with respect to any Person,  any transaction
in which such Person sells, conveys,  transfers or leases (as lessor) any of its
property,  including,  without limitation,  Subsidiary Stock, provided, however,
that the Headquarters Transaction shall not be included as a "Transfer".

                  "Wholly-Owned  Subsidiary" means any Subsidiary of the Parent,
all of the equity securities (except director's  qualifying shares) of which are
owned by the Parent and/or the Parent's other Wholly-Owned Subsidiaries.<PAGE>

                                                                 EXHIBIT 10.01
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                         Page
  <S>                                                                                                    <C>
  ARTICLE 1  DEFINITIONS.................................................................................   2

        1.1  Definitions.................................................................................   2

  ARTICLE 2  PROPERTY AND TERM...........................................................................   2

        2.1  Property....................................................................................   2

        2.2  Lease Term..................................................................................   2

        2.3  Title.......................................................................................   2

        2.4  Lease Supplement............................................................................   2

  ARTICLE 3  RENT........................................................................................   2

        3.1  Rent........................................................................................   2

        3.2  Payment of Basic Rent.......................................................................   3

        3.3  Supplemental Rent...........................................................................   3

        3.4  Performance on a Non-Business Day...........................................................   3

        3.5  Method of Payment...........................................................................   3

  ARTICLE 4  IMPOSITIONS AND UTILITY CHARGES.............................................................   4

        4.1  Impositions; Utility Charges................................................................   4

  ARTICLE 5  QUIET ENJOYMENT.............................................................................   4

        5.1  Quiet Enjoyment.............................................................................   4

  ARTICLE 6  NET LEASE...................................................................................   4

        6.1  Net Lease; No Setoff; Etc...................................................................   4

        6.2  No Termination or Abatement.................................................................   6

  ARTICLE 7  OWNERSHIP OF PROPERTY.......................................................................   6

        7.1  Ownership of the Property...................................................................   6

        7.2  Liens and Security Interests................................................................   6

  ARTICLE 8  CONDITION OF PROPERTY.......................................................................   9

        8.1  Condition of the Property...................................................................   9

        8.2  Possession and Use of the Property..........................................................   9

  ARTICLE 9  COMPLIANCE..................................................................................   9

        9.1  Compliance with Legal Requirements and Insurance Requirements...............................   9

  ARTICLE 10  MAINTENANCE AND REPAIR.....................................................................  10

       10.1  Maintenance and Repair; Return..............................................................  10
</TABLE>
<PAGE>

                               TABLE OF CONTENTS
                                  (CONTINUED)

<TABLE>
<CAPTION>
                                                                                                         Page
  <S>                                                                                                    <C>
       10.2  Right of Inspection.........................................................................  11

       10.3  Environmental Inspection....................................................................  11

 ARTICLE 11  MODIFICATIONS...............................................................................  11

       11.1  Modifications, Substitutions and Replacements...............................................  11

       11.2  Initial Renovations.........................................................................  12

 ARTICLE 12  TITLE.......................................................................................  14

       12.1  Warranty of Title...........................................................................  14

       12.2  Grants and Releases of Easements............................................................  14

 ARTICLE 13  PERMITTED CONTESTS..........................................................................  15

       13.1  Permitted Contests Other Than in Respect of Impositions.....................................  15

 ARTICLE 14  INSURANCE...................................................................................  15

       14.1  Public Liability and Workers' Compensation Insurance........................................  15

       14.2  Hazard and Other Insurance..................................................................  16

       14.3  Coverage....................................................................................  16

 ARTICLE 15  CASUALTY AND CONDEMNATION...................................................................  17

       15.1  Casualty and Condemnation...................................................................  17

       15.2  Environmental Matters.......................................................................  18

       15.3  Notice of Environmental Matters.............................................................  18

 ARTICLE 16  LEASE TERMINATION...........................................................................  19

       16.1  Termination upon Certain Events.............................................................  19

       16.2  Termination Procedures......................................................................  20

 ARTICLE 17  DEFAULT.....................................................................................  20

       17.1  Lease Events of Default.....................................................................  20

       17.2  Final Liquidated Damages....................................................................  22

       17.4  Waiver of Certain Rights....................................................................  27

       17.5  Assignment of Rights Under Contracts........................................................  27

       17.6  Power of Sale and Foreclosure...............................................................  27

       17.7  Remedies Cumulative.........................................................................  31

       17.8  Lessee's Purchase Option....................................................................  31

 ARTICLE 18  LESSORS RIGHT TO CURE.......................................................................  31
</TABLE>

                                      ii
<PAGE>

                               TABLE OF CONTENTS
                                  (CONTINUED)

<TABLE>
<CAPTION>
                                                                                                         Page
  <S>                                                                                                    <C>
       18.1  Agent Lessor's Right to Cure Lessee's Lease Defaults........................................  31

 ARTICLE 19  LEASE TERMINATION...........................................................................  31

       19.1  Provisions Relating to Lessee's Termination of this Lease or Exercise of Purchase Options...  31

 ARTICLE 20  PURCHASE OPTION.............................................................................  32

       20.1  Purchase Option.............................................................................  32

       20.2  Maturity Date Purchase Option...............................................................  32

       20.3  Extension of Expiration Date................................................................  32

 ARTICLE 21  SALE OF PROPERTY............................................................................  32

       21.1  Sale Procedure..............................................................................  32

       21.2  Application of Proceeds of Sale.............................................................  33

       21.3  Indemnity for Excessive Wear................................................................  33

       21.4  Appraisal Procedure.........................................................................  34

       21.5  Certain Obligations Continue................................................................  34

 ARTICLE 22  HOLDING OVER................................................................................  35

       22.1  Holding Over................................................................................  35

 ARTICLE 23  RISK OF LOSS................................................................................  35

       23.1  Risk of Loss................................................................................  35

       24.1  Subletting and Assignment...................................................................  35

       24.2  Subleases...................................................................................  36

       24.3  Existing Tenancies..........................................................................  36

 ARTICLE 25  ESTOPPEL CERTIFICATES.......................................................................  36

       25.1  Estoppel Certificates.......................................................................  36

 ARTICLE 26  NO WAIVER...................................................................................  36

       26.1  No Waiver...................................................................................  36

 ARTICLE 27  ACCEPTANCE OF SURRENDER.....................................................................  37

       27.1  Acceptance of Surrender.....................................................................  37

 ARTICLE 28  NO MERGER OF TITLE..........................................................................  37

       28.1  No Merger of Title..........................................................................  37

 ARTICLE 29  NOTICES.....................................................................................  37
</TABLE>

                                      iii
<PAGE>

                               TABLE OF CONTENTS
                                  (CONTINUED)

<TABLE>
<CAPTION>
                                                                                                         Page
  <S>                                                                                                    <C>
       29.1  Notices.....................................................................................  37

 ARTICLE 30  MISCELLANEOUS...............................................................................  38

       30.1  Miscellaneous...............................................................................  38

       30.2  Amendments and Modifications................................................................  38

       30.3  Successors and Assigns......................................................................  38

       30.4  Headings and Table of Contents..............................................................  39

       30.5  Counterparts................................................................................  39

       30.6  Governing Law...............................................................................  39

       30.7  Limitations on Recourse.....................................................................  39

       30.8  Recordation of Lease........................................................................  39

       30.9  Priority....................................................................................  39
</TABLE>

 EXHIBIT A   1
 SCHEDULE 1  1
 EXHIBIT B   1
 SCHEDULE 1  1

                                      iv
<PAGE>

                                     LEASE

                                    between

                        IBJTC LEASING CORPORATION-BSC,
                       as Agent Lessor for the Lessors,

                                      and

                            KEYNOTE SYSTEMS, INC.,
                                   as Lessee

--------------------------------------------------------------------------------
                           Dated as of July 11, 2000
--------------------------------------------------------------------------------

This Lease is subject to a security interest in favor of The Industrial Bank of
Japan, Limited as agent (the "Agent"), under a Credit Agreement, dated as of
July 11, 2000, among IBJTC Leasing Corporation-BSC, the several Lenders from
time to time parties thereto, and the Agent, as amended or supplemented.  This
Lease has been executed in several counterparts. To the extent, if any, that
this Lease constitutes chattel paper (as such term is defined in the Uniform
Commercial Code of the State of California), no security interest in this Lease
may be created through the transfer or possession of any counterpart other than
the original counterpart containing the receipt therefor executed by the Agent
on the signature page hereof.
<PAGE>

     LEASE (this "Lease"), dated as of July 11, 2000, between IBJTC LEASING
CORPORATION-BSC, a New York corporation, having its principal office at 1251
Avenue of the Americas, New York, NY 10020 as agent for the Lessors (in such
capacity, the "Agent Lessor"), and KEYNOTE SYSTEMS, INC., a Delaware
corporation, having its principal office at 2855 Campus Drive, San Mateo,
California, 94403, as lessee (the "Lessee").

     In consideration of the mutual agreements herein contained, and of other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

                            ARTICLE 1 DEFINITIONS

     1.1  Definitions.  Capitalized terms used but not otherwise defined in this
Lease have the respective meanings specified in Annex A to the Participation
Agreement dated as of the date hereof among Lessee, the Lessors, Agent, the
Lenders named therein and the Agent Lessor.

                         ARTICLE 2 PROPERTY AND TERM

     2.1  Property.  Subject to the terms and conditions hereinafter set forth
and contained in each Lease Supplement relating to the Property, Agent Lessor
hereby leases to Lessee, and Lessee hereby leases from Agent Lessor, the
Property, subject to the rights of any third parties under any existing
agreements granting rights of tenancy in the Property ("Existing Leases").

     2.2  Lease Term.  The Property is leased for the Term, unless extended or
earlier terminated in accordance with the provisions of this Lease.

     2.3  Title.  The Property is leased to Lessee without any representation or
warranty, express or implied, by Agent Lessor and subject to the rights of
parties in possession, the existing state of title (including, without
limitation, the Permitted Exceptions), and all applicable Legal Requirements.
Subject to Section 9.2(a) of the Participation Agreement, Lessee shall in no
event have any recourse against Agent Lessor for any defect in title to the
Property.

     2.4  Lease Supplement.  On the Closing Date, Lessee and Agent Lessor shall
each execute and deliver a Lease Supplement Land and a Lease Supplement
Improvements for the Property to be leased on such date in the form of Exhibit A
and Exhibit B respectively and thereafter the Property shall be subject to the
terms of this Lease.

                                ARTICLE 3 RENT

     3.1  Rent.

          (a)  On each applicable Scheduled Interest Payment Date during the
Term and on any date when this Lease shall terminate, Lessee shall pay Basic
Rent for the Property.

                                       2
<PAGE>

           (b)  Basic Rent shall be due and payable in lawful money of the
United States and shall be paid by wire transfer of immediately available funds
on the due date therefor to such account or accounts at such bank or banks or to
such other Person or in such other manner as Agent Lessor shall from time to
time direct.

          (c)  Neither Lessee's inability or failure to take possession of all,
or any portion, of the Property when delivered by Agent Lessor, nor Agent
Lessor's inability or failure to deliver all or any portion of the Property to
Lessee, whether or not attributable to any act or omission of Lessee or any act
or omission of Agent Lessor, or for any other reason whatsoever, shall delay or
otherwise affect Lessee's obligation to pay Rent in accordance with the terms of
this Lease.

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

     3.3  Supplemental Rent.

          (a)  Lessee shall pay to Agent Lessor or the Person entitled thereto
any and all Supplemental Rent promptly as the same shall become due and payable,
and if Lessee fails to pay any Supplemental Rent, Agent Lessor shall have all
rights, powers and remedies provided for herein or by law or equity or otherwise
in the case of nonpayment of Basic Rent. Lessee shall pay to Agent Lessor as
Supplemental Rent, among other things, on demand, to the extent permitted by
applicable Requirements of Law, interest at the applicable Overdue Rate on any
installment of Basic Rent not paid when due for the period for which the same
shall be overdue and on any payment of Supplemental Rent not paid when due or
demanded by Agent Lessor for the period from the due date or the date of any
such demand, as the case may be, until the same shall be paid. The expiration or
other termination of Lessee's obligations to pay Basic Rent hereunder shall not
limit or modify the obligations of Lessee with respect to Supplemental Rent.
Unless expressly provided otherwise in this Lease or any other Operative
Agreement, in the event of any failure on the part of Lessee to pay and
discharge any Supplemental Rent as and when due, Lessee shall also promptly pay
and discharge any fine, penalty, interest or cost which may be assessed or added
for nonpayment or late payment of such Supplemental Rent, all of which shall
also constitute Supplemental Rent.

     (b)  Lessee shall make a payment of Supplemental Rent equal to the Maximum
Residual Guarantee Amount in accordance with Section 21.1(c) hereof.

     3.4  Performance on a Non-Business Day. If any payment is required
hereunder on a day that is not a Business Day, then such payment shall be due on
the next succeeding Business Day (subject to the definition of the term
"Interest Period").

     3.5  Method of Payment.  Each payment of Rent payable by Lessee to Agent
Lessor under this Lease or any other Operative Agreement shall be made by Lessee
to Agent Lessor under the Assignment of Lease prior to 2:00 p.m. New York City
time to the Account in immediately available funds consisting of lawful currency
of the United States of America on the date when such payment shall be due.
Payments received after 2:00 p.m. New York City time on

                                       3
<PAGE>

the date due shall for the purpose of Section 17.1 be deemed received on such
day; provided, however, that for the purposes of the second sentence of Section
3.3, such payments shall be deemed received on the next succeeding Business Day
and shall accrue interest at the Overdue Rate as provided in such Section 3.3.

                  ARTICLE 4 IMPOSITIONS AND UTILITY CHARGES

     4.1  Impositions; Utility Charges. Lessee shall pay, or cause to be paid,
all Impositions and/or the use, occupancy, operation, repair, access,
maintenance or operation thereof, and all charges for electricity, power, gas,
oil, water, telephone, sanitary sewer service and all other rents and utilities
used in or on the Property during the Term. Upon Lessor's request made from time
to time, Lessee shall provide Lessor with evidence of all such payments
referenced in the foregoing sentence. Unless an Event of Default shall have
occurred and be continuing, Lessee shall be entitled to receive any credit or
refund with respect to any Imposition or utility charge paid by Lessee and the
amount of any credit or refund received by Agent Lessor on account of any
utility charges paid by Lessee, net of the costs and expenses incurred by Lessor
in obtaining such credit or refund, shall be promptly paid over to Lessee. If an
Event of Default shall have occurred and be continuing, Lessor shall elect to do
any or all of the following: (i) apply any such credit or refund to amounts then
due and owing by Lessee hereunder, to the extent that such action would not
adversely affect Lessor's rights and remedies under the Operative Agreements;
(ii) hold such credits or refunds as additional collateral, or (iii) return such
amounts to Lessee. All charges for Impositions or utilities imposed with respect
to the Property for a billing period during which this Lease expires or
terminates shall be adjusted and prorated on a daily basis between Agent Lessor
and Lessee, and each party shall pay or reimburse the other for each party's pro
rata share thereof.

                          ARTICLE 5 QUIET ENJOYMENT

     5.1  Quiet Enjoyment.  Subject to the rights of Lessor contained in this
Lease and the other Operative Agreements, and so long as no Lease Event of
Default shall have occurred and be continuing, Lessee shall peaceably and
quietly have, hold and enjoy the Property for the Term, free of any claim or
other action by Agent Lessor or the Lessors or anyone rightfully claiming by,
through or under Agent Lessor or the Lessors with respect to any matters arising
from and after the Closing Date.  Such right of quiet enjoyment is independent
of, and shall not affect the rights of Agent Lessor or the Lessors (or anyone
claiming by, through or under Agent Lessor or the Lessors) otherwise to initiate
legal action to enforce, the obligations of Lessee under this Lease.

                             ARTICLE 6 NET LEASE

     6.1  Net Lease; No Setoff; Etc.  This Lease shall constitute a net lease
and, notwithstanding any other provision of this Lease, it is intended that
Basic Rent and Supplemental Rent shall be paid without counterclaim, setoff,
deduction or defense of any kind and without abatement, suspension, deferment,
diminution or reduction of any kind, and Lessee's

                                       4
<PAGE>

obligation to pay all such amounts, throughout the Term, is absolute and
unconditional. The obligations and liabilities of Lessee hereunder shall in no
way be released, discharged or otherwise affected for any reason, including,
without limitation, to the maximum extent permitted by law: (a) any defect in
the condition, merchantability, design, construction, quality or fitness for use
of any portion of the Property, or any failure of the Property to comply with
all Legal Requirements, including any inability to occupy or use the Property by
reason of such noncompliance; (b) any damage to, abandonment, loss,
contamination of or Release from or destruction of or any requisition or taking
of the Property or any part thereof, including eviction; (c) any restriction,
prevention or curtailment of or interference with any use of the Property or any
part thereof, including eviction; (d) any defect in title to or rights to the
Property or any Lien on such title or rights or on the Property; (e) any change,
waiver, extension, indulgence or other action or omission or breach in respect
of any obligation or liability of or by any Lessor, Agent Lessor, Agent or any
Lender; (f) any bankruptcy, insolvency, reorganization, composition, adjustment,
dissolution, liquidation or other like proceedings relating to Lessee, any
Lessor, Agent Lessor, Agent, any Lender or any other Person, or any action taken
with respect to this Lease by any trustee or receiver of Lessee, any Lessor,
Agent Lessor, Agent, any Lender or any other Person, or by any court, in any
such proceeding; (g) any claim that Lessee has or might have against any Person,
including, without limitation, any Lessor, Agent Lessor, Agent or any Lender;
(h) any failure on the part of Agent Lessor or any other Lessor to perform or
comply with any of the terms of this Lease, any other Operative Agreement or of
any other agreement; (i) any invalidity or unenforceability or disaffirmance
against or by Lessee of this Lease or any provision hereof or any of the other
Operative Agreements or any provision of any thereof; (j) the impossibility or
illegality of performance by Lessee, Agent Lessor, Lessors or all of them; (k)
any action by any court, administrative agency or other Governmental Authority;
any restriction, prevention or curtailment of or any interference with the
construction on or any use of the Property or any part thereof; or (m) any other
occurrence whatsoever, whether similar or dissimilar to the foregoing, whether
or not Lessee shall have notice or knowledge of any of the foregoing. This Lease
shall be noncancellable by Lessee for any reason whatsoever except as expressly
provided herein, and Lessee, to the extent permitted by Legal Requirements,
waives all rights now or hereafter conferred by statute or otherwise to quit,
terminate or surrender this Lease, or to any diminution, abatement or reduction
of Rent payable by Lessee hereunder. If for any reason whatsoever this Lease
shall be terminated in whole or in part by operation of law or otherwise, except
as otherwise expressly provided herein, Lessee shall, unless prohibited by any
Requirements of Law, nonetheless pay to Agent Lessor (or, in the case of
Supplemental Rent, to whomever shall be entitled thereto) an amount equal to
each Rent payment at the time and in the manner that such payment would have
become due and payable under the terms of this Lease if it had not been
terminated in whole or in part, and in such case, so long as such payments are
made and no Lease Event of Default shall have occurred and be continuing, Agent
Lessor will deem this Lease to have remained in effect. Each payment of Rent
made by Lessee hereunder shall be final and, absent manifest error in the
computation of the amount thereof, Lessee shall not seek or have any right to
recover all or any part of such payment from any Lessor, Agent Lessor, Agent,
any Lender or any party to any agreements related thereto for any reason
whatsoever. Lessee assumes the sole responsibility for the condition, use,
operation, maintenance, and management of the Property and neither Agent Lessor
nor any Lessor shall have any responsibility in respect thereof or any liability
for damage to the property of Lessee or any subtenant of Lessee on any account
or for any reason whatsoever.

                                       5
<PAGE>

     6.2  No Termination or Abatement.  Lessee shall remain obligated under this
Lease in accordance with its terms and shall not take any action to terminate,
rescind or avoid this Lease, notwithstanding any action for bankruptcy,
insolvency, reorganization, liquidation, dissolution, or other proceeding
affecting any Participant, or any action with respect to this Lease which may be
taken by any trustee, receiver or liquidator of any Participant or by any court
with respect to any Participant, except as otherwise expressly provided herein.
Lessee hereby waives all right (i) to terminate or surrender this Lease, except
as otherwise expressly provided herein, or (ii) to avail itself of any
abatement, suspension, deferment, reduction, setoff, counterclaim or defense
with respect to any Rent. Lessee shall remain obligated under this Lease in
accordance with its terms and Lessee hereby waives any and all rights now or
hereafter conferred by statute or otherwise to modify or to avoid strict
compliance with its obligations under this Lease. Notwithstanding any such
statute or otherwise, Lessee shall be bound by all of the terms and conditions
contained in this Lease.

                       ARTICLE 7 OWNERSHIP OF PROPERTY

     7.1  Ownership of the Property.  The parties hereto intend that (i) for
financial accounting purposes with respect to Lessee, Agent Lessor, the Lessors
and the Lenders (A) this Lease will be treated as an "operating lease" pursuant
to Statement of Financial Accounting Standards (SFAS) No. 13, as amended, (B)
Agent Lessor will be treated as the owner and lessor of the Property and (C)
Lessee will be treated as the lessee of the Property, but (ii) for federal,
state and local income tax and all other purposes (A) this Lease will be treated
as a financing arrangement, (B) the Lessors and the Lenders will be treated as
lenders making loans to Lessee in an amount equal to the sum of the Lessor
Contributions and the outstanding principal amount of the Loans, which loans are
secured by the Property, and (C) Lessee will be treated as the owner of the
Property and will be entitled to all tax benefits ordinarily available to an
owner of land and property like the Property for such tax purposes.

     7.2  Liens and Security Interests.

          (a)  The parties hereto further intend and agree that, for the purpose
of securing Lessee's obligations for the repayment of all sums due under this
Lease, including the above-described loans, (i) this Lease shall also be deemed
to be a security agreement, fixture filing and financing statement within the
meaning of Article 9 of the Uniform Commercial Code and a real property mortgage
or deed of trust, as applicable; (ii) the conveyance provided for in Article II
shall be deemed a grant of a security interest in and a mortgage lien on
Lessee's beneficial ownership interest in the Property (including the right to
exercise all remedies as are contained in the Deed of Trust upon the occurrence
of a Lease Event of Default) and all proceeds of the conversion, voluntary or
involuntary, of the foregoing into cash, investments, securities or other
property, whether in the form of cash, investments, securities or other
property, for the benefit of the Agent Lessor to secure Lessee's payment of all
amounts owed by Lessee under this Lease and the other Operative Agreements and
Agent Lessor holds title to the Property so as to create and grant a first lien
and prior security interest in the Property (A) pursuant to this Lease for the
benefit of the Agent under the Assignment of Lease, to secure to the Agent the
obligations of Lessee under the Lease and (B) pursuant to the Deed of Trust to
secure to Agent the obligations of the Agent Lessor under the Deed of Trust and
the Notes; (iii) the possession by

                                       6
<PAGE>

Agent Lessor or any of its agents of notes and such other items of property as
constitute instruments, money, negotiable documents or chattel paper shall be
deemed to be "possession by the secured party" for purposes of perfecting the
security interest pursuant to Section 9-305 of the Uniform Commercial Code; and
(iv) notifications to Persons holding such property, and acknowledgments,
receipts or confirmations from financial intermediaries, bankers or agents (as
applicable) of Lessee shall be deemed to have been given for the purpose of
perfecting such security interest under applicable law. The parties hereto
shall, to the extent consistent with this Lease, take such actions as may be
necessary to ensure that, if this Lease were deemed to create a security
interest in the Property in accordance with this Section, then such security
interest would be deemed to be a perfected security interest of first priority
under applicable law and will be maintained as such throughout the Term.
Nevertheless, Lessee acknowledges and agrees that neither any Lessor, Agent
Lessor, Agent, nor any Lender has provided or will provide tax, accounting or
legal advice to Lessee regarding this Lease, the Operative Agreements or the
transactions contemplated hereby and thereby, or made any representations or
warranties concerning the tax, accounting or legal characteristics of the
Operative Agreements, and that Lessee has independently obtained and relied upon
such tax, accounting and legal advice concerning the Operative Agreements as it
deems appropriate.

          (b)  The parties hereto further intend and agree that in the event of
any insolvency or receivership proceedings or a petition under the United States
bankruptcy laws or any other applicable insolvency laws or statute of the United
States of America or any State or Commonwealth thereof affecting any party
hereto, the transactions evidenced by this Lease shall be regarded as loans made
by an unrelated third party lender to Lessee.

          (c)  Specifically, but without limiting the foregoing or the
generality of Section 7.1, Lessee hereby grants, bargains, sells, warrants,
conveys, aliens, remises, releases, assigns, sets over and confirms to Agent
Lessor all of Lessee's right, title, and interest in and to the following
(collectively, the "Mortgaged Property"): (i) the Property and Appurtenant
Rights relating thereto and all proceeds, both cash and noncash thereof; (ii)
all easements, rights-of-way, strips and gores of land, vaults, streets, ways,
alleys, passages, sewer rights, waters, water courses, water rights, minerals,
flowers, shrubs, crops, trees, timber and other emblements now or hereafter
located on the Land or under or above the same or any part or parcel thereof,
and all estates, rights, titles, interests, tenements, hereditaments and
appurtenances, reversions and remainders whatsoever, in any way belonging,
relating or appertaining to the Land or the Property or any part thereof, or
which hereafter shall in any way belong, relate or be appurtenant thereto,
whether now owned or hereafter acquired by Lessee; (iii) to the extent now,
heretofore or hereafter acquired with any proceeds of the Advances, all right,
title and interest of Lessee in all furnishings, furniture, fixtures, machinery,
apparatus, Equipment, fittings, appliances, building supplies and materials,
chattels, goods, consumer goods, farm products, inventory, warranties, chattel
paper, documents, accounts, general intangibles, trade names, trademarks,
servicemarks, logos (including any names or symbols by which the Property is
known) and goodwill related thereto, and all other articles of personal property
of every kind and nature whatsoever, tangible or intangible and now, heretofore
or hereafter (A) arising out of or related to the ownership of the Property, or
(B) located in, on or about the Property, or (C) used or intended to be used
with or in connection with the construction, use, operation or enjoyment of the
Property; (iv) all right, title and interest of Lessee in any and all leases,
rental agreements and arrangements of any sort now or hereafter affecting the
Property or any portion thereof and

                                       7
<PAGE>

providing for or resulting in the payment of money to Lessee for the use of the
Property or any portion thereof, whether the user enjoys the Property or any
portion thereof as tenant for years, licensee, tenant at sufferance or
otherwise, and irrespective of whether such leases, rental agreements and
arrangements be oral or written, and including any and all extensions, renewals
and modifications thereof (the "Subject Leases") and guaranties of the
performance or obligations of any tenants or lessees thereunder, together with
all income, rents, issues, profits and revenues from the Subject Leases
(including all tenant security deposits and all other tenant deposits, whether
held by Lessee or in a trust account, and all other deposits and escrow funds
relating to any Subject Leases),  and all the estate, right, title, interest,
property, possession, claim and demand whatsoever at law, as well as in equity,
of Lessee of, in and to the same; provided, however, that although this Lease
contains (and it is hereby agreed that this Lease contains) a present, current,
unconditional and absolute assignment of all of said income, rents, issues,
profits and revenues, Lessee shall collect and apply such rental payments and
revenues as provided in the Lease and the other Operative Agreements (v) all
right, title and interest of Lessee to and under all agreements, management
contracts, consents, authorizations, certificates and other rights of every kind
and character of any Governmental Authority affecting the Property, to the
extent the same are transferable, service contracts, utility contracts, leases
of equipment, documents and agreements relating to the construction of any
Initial Renovations or Modifications (including any and all construction
contracts, architectural contracts, engineering contracts, designs, plans,
specifications, drawings, surveys, tests, reports, bonds and governmental
approvals) and all other contracts, licenses and permits now or hereafter
affecting the Property or any part thereof and all guaranties and warranties
with respect to any of the foregoing (the "Subject Contracts"); (vi) all right,
title and interest of Lessee in any insurance policies or binders now or
hereafter relating to the Property, including any unearned premiums thereon, as
further provided in this Lease; (vii) all right, title and interest of Lessee in
any and all awards, payments, proceeds and the right to receive the same, either
before or after any foreclosure hereunder, as a result of any temporary or
permanent injury or damage to, taking of or decrease in the value of the
Property by reason of casualty, condemnation or otherwise as further provided in
this Lease; (viii) all right, title and interest of Lessee in all utility,
escrow and all other deposits (and all letters of credit, certificates of
deposit, negotiable instruments and other rights and evidence of rights to cash)
now or hereafter relating to the Property or the purchase, construction or
operation thereof; (ix) all claims and causes of action arising from or
otherwise related to any of the foregoing, and all rights and judgments related
to any legal actions in connection with such claims or causes of action; and (x)
all Modifications, extensions, additions, improvements, betterments, renewals
and replacements, substitutions, or proceeds of any of the foregoing, and all
inventory, chattel paper, documents, instruments, Equipment, fixtures, farm
products, consumer goods, general intangibles and other property of any nature
constituting proceeds acquired with proceeds of any of the property described
hereinabove; all of which foregoing items are hereby declared and shall be
deemed to be a portion of the security for the indebtedness and Advances herein
described, a portion of the above described collateral being located upon the
Land.

                                       8
<PAGE>

                       ARTICLE 8 CONDITION OF PROPERTY

     8.1  Condition of the Property.  LESSEE ACKNOWLEDGES AND AGREES THAT IT IS
RENTING THE PROPERTY "AS IS" WITHOUT REPRESENTATION, WARRANTY OR COVENANT
(EXPRESS OR IMPLIED) BY AGENT LESSOR AND SUBJECT TO (A) THE EXISTING STATE OF
TITLE, (B) THE RIGHTS OF ANY PARTIES IN POSSESSION THEREOF, (C) ANY STATE OF
FACTS WHICH AN ACCURATE SURVEY OR PHYSICAL INSPECTION MIGHT SHOW AND (D)
VIOLATIONS OF LEGAL REQUIREMENTS WHICH MAY EXIST ON THE DATE HEREOF.  NEITHER
ANY LESSOR, AGENT LESSOR, AGENT NOR ANY LENDER HAS MADE OR SHALL BE DEEMED TO
HAVE MADE ANY REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED,
INCLUDING THE CONDITION OF ANY IMPROVEMENTS THEREON, THE SOIL CONDITION, OR ANY
ENVIRONMENTAL OR HAZARDOUS MATERIAL CONDITION) OR SHALL BE DEEMED TO HAVE ANY
LIABILITY WHATSOEVER AS TO THE TITLE, VALUE, HABITABILITY, USE, CONDITION,
DESIGN, OPERATION, OR FITNESS FOR USE OF THE PROPERTY (OR ANY PART THEREOF), OR
ANY OTHER REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER, EXPRESS OR IMPLIED,
WITH RESPECT TO THE PROPERTY (OR ANY PART THEREOF) AND NEITHER ANY LESSOR, AGENT
LESSOR, AGENT NOR ANY LENDER SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT
DEFECT THEREIN OR THE FAILURE OF THE PROPERTY, OR ANY PART THEREOF, TO COMPLY
WITH ANY LEGAL REQUIREMENT.

     8.2  Possession and Use of the Property.  The Property shall be used at all
times in compliance with all applicable municipal, state and federal and other
governmental statutes, rules, requirements, regulations, laws and ordinances,
including zoning ordinances and regulations, and covenants, easements and
restrictions of record governing and relating to the use, occupancy or
possession of the Property.  Subject to the foregoing, the Property shall be
used as office buildings.  Lessee shall pay, or cause to be paid, all charges
and costs required in connection with the use of the Property. Lessee shall not
commit or permit any waste of the Property or any part thereof.

                             ARTICLE 9 COMPLIANCE

     9.1  Compliance with Legal Requirements and Insurance Requirements.
Subject to the terms of Article 13 relating to permitted contests, Lessee, at
its sole cost and expense, shall (a) comply with all Legal Requirements
(including all Environmental Laws) and Insurance Requirements relating to the
Property, including the use, construction, operation, maintenance, repair and
restoration thereof, whether or not compliance therewith shall require
structural or extraordinary changes in the Improvements or interfere with the
use and enjoyment of the Property, and (b) procure, maintain and comply in all
material respects with all licenses, permits, orders, approvals, consents and
other authorizations required for the construction, renovation, use, maintenance
and operation of the Property and for the use, operation, maintenance, repair
and restoration of the Improvements.

                                       9
<PAGE>

                      ARTICLE 10 MAINTENANCE AND REPAIR

     10.1 Maintenance and Repair; Return.

          (a)  Lessee, at its sole cost and expense, shall maintain the Property
in good condition and make all necessary repairs thereto, of every kind and
nature whatsoever, whether interior or exterior, ordinary or extraordinary,
structural or nonstructural or foreseen or unforeseen, in each case as required
by all Legal Requirements and Insurance Requirements and on a basis reasonably
consistent with the operation and maintenance of commercial properties
comparable in type and location to the Property subject, however, to the
provisions of Article 15 with respect to Condemnation and Casualty.

          (b)  Agent Lessor shall under no circumstances be required to build
any Improvements on the Property, make any repairs, replacements, alterations or
renewals of any nature or description to the Property, make any expenditure
whatsoever in connection with this Lease or maintain the Property in any way.
Agent Lessor shall not be required to maintain, repair or rebuild all or any
part of the Property, and Lessee waives the right to (i) require Agent Lessor to
maintain, repair, or rebuild all or any part of the Property, or (ii) make
repairs at the expense of Agent Lessor pursuant to any Legal Requirement,
Insurance Requirement, contract, agreement, covenants, condition or restriction
at any time in effect.

          (c)  Lessee shall, upon the expiration or earlier termination of the
Term with respect to the Property not including a purchase thereof by Lessee,
vacate, surrender and transfer the Property to Agent Lessor or, at Agent
Lessor's request, the independent purchaser thereof, at Lessee's own expense,
free and clear of all tenancies, free and clear of all Liens other than
Permitted Liens and Lessor Liens, in as good condition as it was on the
commencement of the Term together with all Initial Renovations thereon, ordinary
wear and tear during the Term excepted, and in compliance with all Legal
Requirements and the other requirements of this Lease (and in any event without
(x) any asbestos installed or maintained in any part of the Property, (y) any
polychlorinated byphenyls (PCBs) in, on or used, stored or located at the
Property, and (z) any other Hazardous Substances). Lessee shall cooperate with
any independent purchaser of the Property in order to facilitate the ownership
or leasing and operation by such purchaser of the Property after such expiration
or earlier termination of the Term, including providing all books, reports and
records regarding the maintenance, repair and ownership of the Property and all
data and technical information relating thereto, granting or assigning all
licenses necessary for the operation and maintenance of the Property and
cooperating in seeking and obtaining all necessary licenses, permits and
approvals of Governmental Authorities. Lessee shall have also paid the total
cost for the completion of all Modifications commenced prior to such expiration
or earlier termination of the Term. The obligation of Lessee under this Section
10.1(c) shall survive the expiration or termination of this Lease.

          (d)  If any component of the Property becomes worn out, lost,
destroyed, damaged beyond repair or otherwise permanently rendered unfit for
use, Lessee, at its own expense, within a reasonable time will replace such
component with a replacement component which is free and clear of all Liens
(other than Permitted Liens and Lessor Liens) and has a value, utility and
useful life at least equal to the component replaced (assuming the component

                                       10
<PAGE>

replaced had been maintained and repaired in accordance with the requirements of
this Lease). All components which are added to the Property shall immediately
become the property of (and title thereto shall vest in) Lessor and shall be
deemed incorporated in the Property and subject to the terms of this Lease as if
originally leased hereunder.

     10.2 Right of Inspection.  During the Term, Agent Lessor, any Lessor, Agent
or any Lender may, at reasonable times and with reasonable prior notice, enter
upon, inspect and examine at its own cost and expense (unless a Lease Event of
Default exists, in which case the out-of-pocket costs and expenses of such
parties shall be paid by Lessee), the Property. Upon Agent Lessor's request,
Lessee shall furnish to Agent Lessor statements, no more than once per year,
accurate in all material respects, regarding the condition and state of repair
of the Property. Agent Lessor shall have no duty to make any such inspection or
inquiry and shall not incur any liability or obligation by reason of not making
any such inspection or inquiry.

     10.3 Environmental Inspection.  Upon surrender of possession of the
Property, on not more than 120 days nor less than 30 days prior to the
Expiration Date or earlier termination of the Term (unless Lessee has previously
irrevocably exercised the Purchase Option or Maturity Date Purchase Option),
Lessee shall, at its sole cost and expense, provide to Agent Lessor a report by
an environmental consultant selected by Lessee and reasonably satisfactory to
Agent Lessor certifying that Hazardous Substances have not at any time during
the Term been generated, used, treated or stored on, transported to or from,
Released at, on or from or deposited at or on the Property other than (i) as
necessary to use, operate, maintain, repair and restore the Property and (ii) in
full compliance with all Environmental Laws, and no portion of the Property has
been used for such purposes other than in full compliance with all Environmental
Laws.  If such is not the case, the report shall set forth a remedial response
plan relating to the Property (which remedial response plan, if required by any
Environmental Law or Governmental Authority, shall be approved by the
appropriate Governmental Authority).  Such remedial response plan shall include,
but shall not be limited to, plans for full response, remediation, removal, or
other corrective action, and the protection, or mitigative action associated
with the protection, of natural resources including wildlife, aquatic species,
and vegetation associated with the Property, as required by all applicable
Environmental Laws. If such report includes a remedial response plan, Lessee
shall promptly deposit funds in escrow with the Agent sufficient to ensure the
full execution and implementation of such plan.

                          ARTICLE 11   MODIFICATIONS

     11.1 Modifications, Substitutions and Replacements.  So long as no Lease
Event of Default has occurred and is continuing, Lessee, at its sole cost and
expense, may at any time and from time to time make alterations, renovations,
improvements and additions to the Property or any part thereof (collectively,
"Modifications"); provided, that: (i) except for any Modification required to be
made pursuant to a Legal Requirement or an Insurance Requirement, no
Modification, individually, or when aggregated with any (A) other Modification
or (B) grant, dedication, transfer or release pursuant to Section 12.2, shall
materially impair the value of the Property or the utility or useful life of the
Property from that which existed immediately prior to such Modification; (ii)
the Modification shall be performed expeditiously and in a good and workmanlike
manner; (iii) Lessee shall comply with all Legal Requirements (including all

                                       11
<PAGE>

Environmental Laws) and Insurance Requirements applicable to the Modification,
including the obtaining of all permits and certificates of occupancy, and the
structural integrity of the Property shall not be adversely affected; (iv)
Lessee shall maintain or cause to be maintained builders' risk insurance at all
times when a Modification is in progress, except if such Modifications have a
cost less than $10,000; (v) subject to the terms of Article XIII relating to
permitted contests, Lessee shall pay all costs and expenses and discharge any
Liens arising with respect to the Modification; (vi) such Modifications shall
comply with Sections 8.2 and 10.1 and shall not change the primary character of
the Property; and (vii) no Improvements shall be demolished.  All Modifications
(other than those that may be readily removed without impairing the value,
utility or remaining useful life of the Property) shall remain part of the
Improvements and shall be subject to this Lease, and title thereto shall
immediately vest in Agent Lessor. So long as no Lease Event of Default has
occurred and is continuing, Lessee may place upon the Property any inventory,
trade fixtures, machinery, equipment or other property belonging to Lessee or
third parties and may remove the same at any time during the term of this Lease;
provided that such inventory, trade fixtures, machinery, equipment or other
property, or their respective operations, do not materially impair the value,
utility or remaining useful life of the Property.

          (a) Other than the Initial Renovations, Lessee shall notify Agent
Lessor of the undertaking of any construction, repairs or alterations to the
Property the cost of which is anticipated to exceed $500,000. Prior to
undertaking any such construction or alterations, Lessee shall deliver to Agent
Lessor (i) a brief narrative of the work to be done and a copy of the plans and
specifications relating to such work; and (ii) an Officer's Certificate stating
that such work when completed will not impair the value, utility or remaining
useful life of the Property. Agent Lessor, by itself or its agents, shall have
the right, but not the obligation, from time to time to inspect such
construction to ensure that the same is completed consistent with such plans and
specifications.

          (b) Other than the Initial Renovations, Lessee shall not without the
consent of Agent Lessor undertake any construction or alterations to the
Property if such construction or alterations cannot, in the reasonable judgement
of Agent Lessor, be completed on or prior to the date that is twelve months
prior to the Expiration Date.

     11.2 Initial Renovations.

          (a) The initial Loans and Lessor Contributions made on the Closing
Date (the "Initial Advance") include a sum paid to Lessee, which Lessee will
expend for Agent Lessor, to cover the cost of renovating, remodeling, improving
and furnishing existing Improvements as described generally in Schedule 11.2
(collectively, the "Initial Renovations"). The Initial Renovations shall become
and remain part of the Improvements and owned by Agent Lessor as provided
herein. To the extent, if any, that funds received by Lessee from the Initial
Advance for the Initial Renovations exceed the actual cost thereof, such excess
shall for the benefit of Agent Lessor be paid by Lessee to Agent Lessor no later
than the first day of the first Specified Interest Payment Date to commence
after the second anniversary of the Closing Date.

          (b) Any Initial Renovations that Lessee elects to undertake must be
completed by Lessee no later than the second anniversary of the Closing Date (a)
in a safe and good and workmanlike manner, (b) in accordance with all
Requirements of Law, (c) in compliance with

                                       12
<PAGE>

the other provisions of this Lease and the other Operative Agreements, and (d)
in a manner that, upon completion and taken as a whole, enhances the value of
the Property by an amount commensurate with the funds from the Initial Advance
used by Lessee to pay the cost thereof.

          (c) Subject to the other terms and conditions set forth in this Lease,
Lessee shall have the sole right to initiate and control all Initial Renovations
undertaken by it, including the means, methods, sequences and procedures
implemented to accomplish the design and construction involved in making the
Initial Renovations.

          (d) Agent Lessor has made and will make no representations as to the
adequacy of any budgets, site plans, renderings, plans, drawings or
specifications for the Initial Renovations, and no modification of any such
budgets, site plans, renderings, plans, drawings or specifications that may be
required from time to time will entitle Lessee to any adjustment in the amount
that has been paid to Lessee as an Initial Advance.

          (e) Lessee is familiar with the conditions of the Land and any
existing Improvements on the Land. Lessee shall have no claim for damages
against Agent Lessor or for any additional payment from Agent Lessor by reason
of any condition (concealed or otherwise) of or affecting the Land or
Improvements.

          (f) Upon the completion of all such work, Lessee will remove all waste
material and rubbish from and about the Land, as well as all tools, construction
equipment, machinery and surplus materials. Lessee will keep the Land and the
Improvements thereon in a reasonably safe and sightly condition as such work
progresses.

          (g) Lessee shall have no claim for damages against Agent Lessor or for
any additional payment from Agent Lessor by reason of any delay in the work
required to accomplish the Initial Renovations. Nor shall Lessee have any claim
for an extension of the deadline specified in subparagraph (b) for completing
any Initial Renovations because of any such period of delay, unless, however,
such delay has been caused by Agent Lessor's intentional interference with such
work. In the event (and only to the extent) that any such intentional
interference by Agent Lessor continues after Lessee provides written notice to
cease, Lessee shall be entitled to an extension of such deadline. Agent Lessor's
exercise of its rights and remedies permitted under this Lease or the other
Operative Agreements will not be construed as intentional interference with
Lessee's performance of any such work.

          (h) Lessee shall have no claim for any fee or other compensation or
for any reimbursement of internal administrative or overhead expenses of Lessee
by reason of the Initial Renovations (or any other services provided by Lessee
under this Lease or other Operative Agreements), it being understood that Lessee
is executing this Lease in consideration of the rights expressly granted to it
herein.

                                       13
<PAGE>

                              ARTICLE 12 TITLE

     12.1 Warranty of Title.

          (a) Lessee agrees that, except as otherwise provided herein and
subject to the terms of Article 13 relating to permitted contests, Lessee shall
not directly or indirectly create or allow to remain, and shall promptly
discharge at its sole cost and expense, any Lien, defect, attachment, levy,
title retention agreement or claim upon the Property or any Modifications or any
Lien, attachment, levy or claim with respect to the Rent or with respect to any
amounts held by Agent or the Depositary Bank pursuant to the Credit Agreement or
the Cash Collateral Agreement, other than, with respect to the Property only,
Permitted Liens. Lessee shall promptly notify Agent Lessor in the event it
receives actual knowledge that a Lien (other than a Permitted Lien) exists with
respect to the Property or that a Lien exists with respect to the Rent or the
Collateral.

          (b) Nothing contained in this Lease shall be construed as constituting
the consent or request of Agent Lessor, expressed or implied, to or for the
performance by any contractor, mechanic, laborer, materialman, supplier or
vendor of any labor or services or for the furnishing of any materials for any
construction, alteration, addition, repair or demolition of or to the Property
or any part thereof. NOTICE IS HEREBY GIVEN THAT NEITHER AGENT LESSOR, AGENT,
ANY LESSOR NOR ANY LENDER IS OR SHALL BE LIABLE FOR ANY LABOR, SERVICES OR
MATERIALS FURNISHED OR TO BE FURNISHED TO LESSEE, OR TO ANYONE HOLDING THE
PROPERTY OR ANY PART THEREOF THROUGH OR UNDER LESSEE, AND THAT NO MECHANIC'S OR
OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT
THE INTEREST OF LESSOR IN AND TO THE PROPERTY.

     12.2 Grants and Releases of Easements.  Provided that no Lease Event of
Default shall have occurred and be continuing and subject to the provisions of
Articles 8, 9, 10 or 11, Agent Lessor and each Lessor hereby consents to the
following actions by Lessee, in the name and stead of Agent Lessor and the
Lessors, but at Lessee's sole cost and expense: (a) the granting (prior to the
Lien of the Deed of Trust) of easements, licenses, rights-of-way and other
rights and privileges in the nature of easements reasonably necessary or
desirable for the construction, use, repair, renovation or maintenance of the
Property as herein provided; (b) the release (free and clear of the Lien of the
Deed of Trust) of existing easements or other rights in the nature of easements
which are for the benefit of the Property or adjacent properties (owned by the
Lessee); (c) the dedication or transfer (prior to the Lien of the Deed of Trust)
of unimproved portions of the Property for road, highway or other public
purposes; (d) the execution of petitions to have the Property annexed to any
municipal corporation or utility district; and (e) the execution of amendments
to any covenants and restrictions affecting the Property; provided, that in each
case Lessee shall have delivered to Agent Lessor an Officer's Certificate
stating that: (i) such grant, release, dedication or transfer does not
materially impair the value, utility or remaining useful life of the Property,
(ii) such grant, release, dedication or transfer is necessary or appropriate in
connection with the construction, use, maintenance, alteration, renovation or
improvement of the Property or adjacent properties (owned by the Lessee), (iii)
Lessee shall remain obligated under this Lease and under any instrument executed
by Lessee consenting to the assignment of Agent

                                       14
<PAGE>

Lessor's or any Lessor's interest in this Lease as security for indebtedness, in
each such case in accordance with their terms, as though such grant, release,
dedication or transfer, had not been effected and (iv) Lessee shall pay and
perform any obligations of Agent Lessor or any Lessor under such grant, release,
dedication or transfer. Without limiting the effectiveness of the foregoing,
provided that no Lease Event of Default shall have occurred and be continuing,
Agent Lessor shall, upon the request of Lessee, and at Lessee's sole cost and
expense, execute and deliver any instruments necessary or appropriate to confirm
any such grant, release, dedication or transfer to any Person permitted under
this Section.

                         ARTICLE 13 PERMITTED CONTESTS

     13.1 Permitted Contests Other Than in Respect of Impositions.  Except to
the extent otherwise provided for in Section 12.2 of the Participation
Agreement, Lessee, on its own or on Agent Lessor's and the Lessors' behalf but
at Lessee's sole cost and expense, may contest, by appropriate administrative or
judicial proceedings conducted in good faith and with due diligence, the amount,
validity or application, in whole or in part, of any Legal Requirement,
Imposition, or utility charges payable pursuant to Section 4.1 or any Lien,
attachment, levy, encumbrance or encroachment, and Agent Lessor agrees not to
pay, settle or otherwise compromise any such item, provided that (a) the
commencement and continuation of such proceedings shall suspend the collection
thereof from, and suspend the enforcement thereof against, the Property, the
Rent, the Collateral, any Lessor, Agent, Agent Lessor and the Lenders; (b) there
shall be no risk of the imposition of a Lien (other than a Permitted Lien) on
the Property, or any Lien on any Rent or the Collateral, and no part of the
Property nor any Rent or any of the Collateral would be in any danger of being
sold, forfeited, lost or deferred; (c) at no time during the permitted contest
shall there be a risk of the imposition of criminal liability or civil liability
on any Lessor, Agent, Agent Lessor or any Lender for failure to comply
therewith; and (d) in the event that, at any time, there shall be a material
risk of extending the application of such item beyond the Expiration Date, then
Lessee shall deliver to Agent Lessor an Officer's Certificate certifying as to
the matters set forth in clauses (a), (b) and (c) of this Section 13.1.  Agent
Lessor, at Lessee's sole cost and expense, shall execute and deliver to Lessee
such authorizations and other documents as may reasonably be required in
connection with any such contest and, if reasonably requested by Lessee, shall
join as a party therein at Lessee's sole cost and expense.

                             ARTICLE 14 INSURANCE

     14.1 Public Liability and Workers' Compensation Insurance.  During the
Term, Lessee shall procure and carry, at Lessee's sole cost and expense,
commercial general liability insurance for claims for injuries or death
sustained by persons or damage to property while on the Property. Such insurance
shall be on terms and in amounts that are no less favorable than insurance
maintained by owners of similar properties, that are in accordance with normal
industry practice. The policy shall be endorsed to name each Lessor, Agent
Lessor, Agent and each Lender as additional insureds. The policy shall also
specifically provide that the policy shall be considered primary insurance which
shall apply to any loss or claim before any contribution by any insurance which
any Lessor, Agent Lessor, Agent or any Lender may have in force.

                                       15
<PAGE>

Lessee shall, in the operation of the Property, comply with the applicable
workers' compensation laws and protect each Lessor, Agent Lessor, Agent and each
Lender against any liability under such laws.

     14.2 Hazard and Other Insurance.

          (a) During the Term, Lessee shall keep the Property insured against
loss or damage by fire and other risks on terms and in amounts that are no less
favorable than insurance maintained by owners of similar properties, that are in
accordance with normal industry practice, are in amounts equal to the actual
replacement cost of the Improvements. So long as no Lease Event of Default
exists, any loss payable under the insurance policy required by this Section
will be paid to and adjusted solely by Lessee, subject to Article 15. So long as
no Lease Event of Default exists, any loss payable under any title insurance
policy covering the Property will be paid to and adjusted solely by Lessee,
subject to Article 15.

          (b) If at any time during the Term the area in which the Property is
located is designated a "flood-prone" area pursuant to the Flood Disaster
Protection Act of 1973 or any amendments or supplements thereto, then Lessee
shall comply with the National Flood Insurance Program as set forth in the Flood
Disaster Protection Act of 1973, as may be amended. In addition, Lessee will
fully comply with the requirements of the National Flood Insurance Act of 1968
and the Flood Disaster Protection Act of 1973, as each may be amended from time
to time, and with any other Legal Requirement concerning flood insurance to the
extent that it applies to the Property.

     14.3 Coverage.  Lessee shall furnish Agent Lessor with certificates showing
the insurance required under Sections 14.1 and 14.2 to be in effect and naming
Agent Lessor as loss payee with respect to property insurance and Agent, the
Lenders, Agent Lessor and the Lessors as an additional insured with respect to
liability insurance and showing the mortgagee endorsement required by Section
14.3(b).  All such insurance shall be at the cost and expense of Lessee.  Such
certificates shall include a provision in which the insurer agrees to provide
thirty (30) days' advance written notice by the insurer to Agent Lessor and
Agent in the event of cancellation or modification of such insurance.  If a
Lease Event of Default has occurred and is continuing and Lessor so requests,
Lessee shall deliver to Agent Lessor copies of all insurance policies required
by this Lease.

          (a) Lessee agrees that the insurance policy or policies required by
this Lease shall include an appropriate clause pursuant to which such policy
shall provide that it will not be invalidated should Lessee waive, in writing,
prior to a loss, any or all rights of recovery against any party for losses
covered by such policy. Lessee hereby waives any and all such rights against
each Lessor, Agent Lessor, Agent and each Lender to the extent of payments made
under such policies.

          (b) All insurance policies required by Section 14.2 shall include a
"New York" or standard form mortgagee endorsement in favor of the Agent.

          (c) Neither Agent Lessor nor any Lessor shall carry separate insurance
concurrent in kind or form or contributing in the event of loss with any
insurance required under

                                       16
<PAGE>

this Lease except that Agent Lessor and any Lessor may carry separate liability
insurance so long as (i) Lessee's insurance is designated as primary and in no
event excess or contributory to any insurance such party may have in force which
would apply to a loss covered under Lessee's policy and (ii) each such insurance
policy will not cause Lessee's insurance required under this Lease to be subject
to a coinsurance exception of any kind.

          (d) Lessee shall pay as they become due all premiums for the insurance
required by this Lease, shall renew or replace each policy prior to the
expiration date thereof and shall promptly deliver to Agent Lessor and Agent
certificates for renewal and replacement policies.

                     ARTICLE 15 CASUALTY AND CONDEMNATION

     15.1 Casualty and Condemnation.

          (a) Subject to the provisions of this Article 15 and Article 16 (in
the event Lessee delivers, or is obligated to deliver, a Termination Notice),
and prior to the occurrence and continuation of a Lease Event of Default, Lessee
shall be entitled to receive (and Agent Lessor and each Lessor hereby
irrevocably assigns to Lessee all of Agent Lessor's and such Lessor's right,
title and interest during such time in) any award, compensation or insurance
proceeds to which Lessee or Agent Lessor may become entitled by reason of their
respective interests in the Property (i) if all or a portion of the Property is
damaged or destroyed in whole or in part by a Casualty or (ii) if the use,
access, occupancy, easement rights or title to the Property or any part thereof
is the subject of a Condemnation; provided, however, if a Default shall have
occurred and be continuing such award, compensation or insurance proceeds shall
be paid directly to Agent Lessor or, if received by Lessee, shall be held in
trust for Agent Lessor, and shall be paid over by Lessee to Agent Lessor, and
provided further that in the event of any Casualty or Condemnation, the
estimated cost of restoration of which is in excess of $3,000,000, any such
award, compensation or insurance proceeds shall be paid directly to Agent
Lessor, or if received by Lessee, shall be held in trust for Agent Lessor and
shall be paid over by Lessee to Agent Lessor.

          (b) So long as no Lease Event of Default has occurred and is
continuing, Lessee may appear in any proceeding or action to negotiate,
prosecute, adjust or appeal any claim for any award, compensation or insurance
payment on account of any such Casualty or Condemnation and shall pay all
expenses thereof; provided that if the estimated cost of restoration of the
Property or the payment on account of such title defect is in excess of
$3,000,000, then Agent Lessor shall be entitled to participate in any such
proceeding or action. At Lessee's reasonable request, and at Lessee's sole cost
and expense, Agent Lessor and Agent shall participate in any such proceeding,
action, negotiation, prosecution or adjustment which the Lessee is entitled to
control. Agent Lessor, each Lessor and Lessee agree that this Lease shall
control the rights of Agent Lessor, the Lessors and Lessee in and to any such
award, compensation or insurance payment.

                                       17
<PAGE>

          (c) If any party shall receive notice of a Casualty or a possible
Condemnation of the Property or any interest therein, such party, as the case
may be, shall give notice thereof to Agent Lessor, Lessee and to Agent promptly
after the receipt of such notice.

          (d) In the event of a Casualty or receipt of notice by Lessee or Agent
Lessor of a Condemnation, Lessee shall, not later than thirty (30) days after
such occurrence, deliver to Agent Lessor and the Agent an Officer's Certificate
stating that either (i) (x) such Casualty is not a Significant Casualty or (y)
such Condemnation is neither a Total Condemnation nor a Significant Condemnation
and that this Lease shall remain in full force and effect with respect to the
Property and, at Lessee's sole cost and expense, Lessee shall promptly and
diligently restore the Property in accordance with the terms of Section 15.1 (e)
or (ii) this Lease shall terminate with respect to the Property in accordance
with Section 16.1.

          (e) If pursuant to this Section 15.1, this Lease shall continue in
full force and effect following a Casualty or Condemnation, then Lessee shall,
at its sole cost and expense, promptly and diligently repair any damage to the
Property caused by such Casualty or Condemnation in conformity with the
requirements of Sections 10.1 and 11.1 using the as-built plans and
specifications for the Property (as modified to give effect to any subsequent
Modifications, any Condemnation affecting the Property and all applicable Legal
Requirements) so as to restore the Property to the same condition, operation,
function and value as existed immediately prior to such Casualty or
Condemnation. In such event, title to the Property shall remain with Agent
Lessor.

          (f) In no event shall a Casualty or Condemnation with respect to which
this Lease remains in full force and effect under this Section 15.1 affect
Lessee's obligations to pay Rent pursuant to Section 3.1.

     15.2 Environmental Matters.  Promptly upon Lessee's actual knowledge of the
presence of Hazardous Substances in any portion of the Property in
concentrations and conditions that constitute an Environmental Violation, Lessee
shall notify Agent Lessor and Agent in writing of such condition. In the event
of such Environmental Violation, Lessee shall, not later than thirty (30) days
after Lessee has actual knowledge of such Environmental Violation, either
deliver to Agent Lessor and Agent an Officer's Certificate and a Termination
Notice with respect to the Property pursuant to Section 16.1, if applicable, or,
at Lessee's sole cost and expense, promptly and diligently undertake any
response, clean up, remedial or other action necessary to remove, cleanup or
remediate the Environmental Violation in accordance with the terms of Section
9.1.  If Lessee does not deliver a Termination Notice with respect to the
Property pursuant to Section 16.1, Lessee shall, upon completion of remedial
action by Lessee, cause to be prepared by an environmental consultant reasonably
acceptable to Agent Lessor and Agent a report describing the Environmental
Violation and the actions taken by Lessee (or its agents) in response to such
Environmental Violation, and a statement by the consultant that the
Environmental Violation has been remedied in full compliance with applicable
Environmental Laws.

     15.3 Notice of Environmental Matters.  Promptly, but in any event within
five (5) Business Days from the date Lessee has actual knowledge thereof, Lessee
shall provide to Agent Lessor and Agent written notice of any material pending
or threatened claim, action or

                                       18
<PAGE>

proceeding involving any Environmental Law or any Release on or in connection
with the Property. All such notices shall describe in reasonable detail the
nature of the claim, action or proceeding and Lessee's proposed response
thereto. In addition, Lessee shall provide to Agent Lessor and Agent, within
five (5) Business Days of receipt, copies of all written communications with any
Governmental Authority relating to any Environmental Violation in connection
with the Property. Lessee shall also promptly provide such detailed reports of
any such environmental claims as reasonably may be requested by Agent Lessor and
Agent.

                         ARTICLE 16 LEASE TERMINATION

     16.1 Termination upon Certain Events.  If either: (i) Agent Lessor, any
Lessor or Lessee shall have received notice of a Total Condemnation; or (ii)
Lessee or Agent Lessor or any Lessor shall have received notice of a
Condemnation, and Lessee shall have delivered to Agent Lessor and Agent an
Officer's Certificate that such Condemnation is a Significant Condemnation; or
(iii) a Casualty occurs, and Lessee shall have delivered to Agent Lessor and
Agent an Officer's Certificate that such Casualty is a Significant Casualty; or
(iv) an Environmental Violation occurs or is discovered and Lessee shall have
delivered to Lessor an Officer's Certificate stating that, in the reasonable,
good-faith judgment of Lessee, the cost to remediate the same will exceed
$3,000,000; or (v) a Casualty occurs with respect to the Property or Lessee
receives notice of a Condemnation with respect to the Property, and following
such Casualty or Condemnation, the Property cannot reasonably be restored on or
before the date which is twelve months prior to the Maturity Date to
substantially the same condition as existed immediately prior to such Casualty
or Condemnation or before such day the Property is not in fact so restored, and
Lessee shall have delivered an Officer's Certificate to Agent Lessor and Agent
to such effect; then, Lessee shall, within thirty (30) days after Lessee
receives notice of a Total Condemnation pursuant to the preceding clause (i) or
simultaneously with the delivery of the Officer's Certificate pursuant to the
preceding clause (ii), (iii) (iv) or (v) deliver a notice of termination of this
Lease to Agent Lessor (a "Termination Notice"):

          (a) in the case of an event described in (i) clause (i), (ii) (iii) or
(v) above which occurs due to fraud, misapplication of funds, illegal acts or
willful misconduct or bankruptcy of Lessee or (ii) clause (iv) above, Lessee
shall be obligated to purchase Agent Lessor's interest in the Property on or
prior to the earlier of the Maturity Date and the date occurring one hundred
eighty (180) days after the date of the Termination Notice by paying Agent
Lessor, for the account of Lessors, an amount (offsetting, at the option of
Lessee, against such amount the aggregate amount of the Cash Collateral) equal
to (x) the Lease Balance on such termination date plus (y) all accrued and
unpaid Basic Rent due and owing on such date, plus (z) all Supplemental Rent due
and owing on such date and Agent Lessor shall, as set forth in Section 16.2,
transfer to Lessee on such date of payment all of Agent Lessor's interest in the
Property;

          (b) in the case of an event described in clause (i), (ii), (iii) or
(v) above which is not due to fraud, misapplication of funds, illegal acts or
willful misconduct or bankruptcy of Lessee, then Lessee shall be obligated to
pay to Agent Lessor, for the account of Lessors, on or prior to the earlier of
the Maturity Date and the date occurring one hundred eighty (180) days after the
date of the Termination Notice, an amount (offsetting, at the option of Lessee,
against such amount the aggregate amount of the Cash Collateral) equal to (x)
all accrued and unpaid

                                       19
<PAGE>

Basic Rent due and owing on such date plus (y) all Supplemental Rent due and
owing on such date, plus (z) at the option of Lessee (1) the Lease Balance on
such date (in which case Agent Lessor shall, as set forth in Section 19.1,
transfer to Lessee on such date all of Agent Lessor's interest in the Property),
or (2) if during the Term, the Maximum Residual Value Guarantee Amount plus all
amounts due under Section 21.3 of this Lease for excessive wear and tear, which
sum shall equal the Lease Balance on such date, in which event Lessee shall
remarket the Property for Lessors, at the request of Agent Lessor, in accordance
with Section 21.1(b) of the Lease and, if Lessee shall have paid an amount equal
to the Lease Balance pursuant to the above, then Agent Lessor shall convey the
Property to Lessee (or its designee), all in accordance with Section 19.1; and

          (c) on the case of an event described in clause (i), (ii) or (iii)
above which occurs from the fraud, misapplication of funds, illegal acts or
willful misconduct of Lessee, then Lessee shall make payments to Agent Lessor,
for the account of Lessors, on or prior to the date occurring one hundred eighty
(180) days after date of the Termination Notice, of an amount (offsetting, at
the option of Lessee, against such amount the aggregate amount of the Cash
Collateral) equal to the sum of (x) all Supplemental Rent due and owing on such
date plus (y) at Lessee's option, if it wishes to purchase Agent Lessor's
interest in the Property, the Lease Balance on such date (in which case Agent
Lessor shall, as set forth in Section 16.2, transfer to Lessee on such date all
of Agent Lessor's interest in the Property); provided that if Lessee elects not
to purchase Agent Lessor's interest in the Property, Lessee shall return the
Property to Agent Lessor (or to any other Person specified by Agent Lessor in
compliance with Section 10.1(c)) and Agent Lessor shall be entitled to retain
all insurance and condemnation proceeds with respect to such Significant
Casualty or Significant Condemnation and Lessee shall remarket the Property for
Lessors, if requested by Agent Lessor, in accordance with Section 21.1(b) of
this Lease.

     16.2 Termination Procedures.  On the date of the payment by Lessee of the
Lease Balance and all other amounts due in accordance with the Termination
Notice or in accordance with Section 16.1 (such date, the "Termination Date"),
this Lease shall terminate and Agent Lessor shall convey the property to Lessee
(or Lessee's designee) all in accordance with Section 19.1.

                              ARTICLE 17 DEFAULT

     17.1 Lease Events of Default.  If any one or more of the following events
(each a "Lease Event of Default") shall occur:

          (a) Lessee shall fail to make payment of (i) any Basic Rent or any
Supplemental Rent representing amounts owed under the Credit Agreement or the
other Credit Documents within five (5) Business Days after the same has become
due and payable or (ii) any Maximum Residual Guarantee Amount, Purchase Option
Price or Termination Value after the same has become due and payable; or

          (b) Lessee shall fail to make payment of any other Supplemental Rent
due and payable within five (5) Business Days after receipt of notice thereof;
or

                                       20
<PAGE>

     (c) Lessee shall fail to maintain insurance as required by Article 14 of
this Lease; or

     (d) Lessee shall fail to observe or perform any term, covenant or condition
of Lessee under the Lease, the Participation Agreement or any other Operative
Agreement to which it is a party (other than those set forth in Section 17.1(a),
(b), (c), (e) or (k) hereof) which failure, if capable of cure, continues for
thirty (30) days (or five (5) Business Days in the case of Lessee's failure to
observe or perform the terms, covenants and conditions contained in Section 3(a)
of the Cash Collateral Agreement) after written notice thereof to Lessee by
Agent Lessor;  or any representation or warranty by Lessee set forth in this
Lease or in any other Operative Agreement or in any document entered into in
connection herewith or therewith or in any document, certificate or financial or
other statement delivered in connection herewith or therewith shall be false or
inaccurate in any material way unless capable of cure and cured within thirty
(30) days after written notice thereof to Lessee by Agent Lessor; or

     (e) If, after the date hereof, and other than as permitted by Section
9.5(g) of the Participation Agreement, any person or group of persons (within
the meaning of Section 13 or 14 of the Securities Exchange Act of 1934 (as
amended, the "Exchange Act")) acting in concert shall acquire (A) beneficial
ownership (within the meaning of Rule 13d-3 promulgated by the Securities and
Exchange Act) of fifty percent (50%) or more of the outstanding equity
securities of Lessee entitled to vote for members of the board of directors, or
(B) all or substantially all of the assets of Lessee; or during any period of
twelve (12) consecutive calendar months, individuals who are directors of Lessee
on the first day of such period ("Initial Directors") and any directors of
Lessee who are specifically approved by two-thirds of the Initial Directors and
previously-approved directors shall cease to constitute a majority of the Board
of Directors of Lessee before the end of such period; or

     (f) Lessee shall (i) admit in writing its inability to pay its debts
generally as they become due, (ii) file a petition under the United States
bankruptcy laws or any other applicable insolvency law or statute of the United
States of America or any State or Commonwealth thereof, (iii) make a general
assignment for the benefit of its creditors, (iv) consent to the appointment of
a receiver of itself or the whole or any substantial part of its property, (v)
fail to cause the discharge of any custodian, trustee or receiver appointed for
Lessee or the whole or a substantial part of its property within sixty (60) days
after such appointment, or (vi) file a petition or answer seeking or consenting
to reorganization under the United States bankruptcy laws or any other
applicable insolvency law or statute of the United States of America or any
State or Commonwealth thereof; or

     (g) insolvency proceedings or a petition under the United States bankruptcy
laws or any other applicable insolvency law or statute of the United States of
America or any State or Commonwealth thereof shall be filed against Lessee and
not dismissed within sixty (60) days from the date of its filing, or a court of
competent jurisdiction shall enter an order or decree appointing, without the
consent of Lessee, a receiver of Lessee or the whole or a substantial part of
its property, and such order or decree shall not be vacated or set aside within
sixty (60) days from the date of the entry thereof; or

                                       21
<PAGE>

     (h) there shall be entered against Lessee or any Subsidiary one or more
judgments or decrees in an aggregate amount at any one time outstanding in
excess of $3,000,000, and such judgments or decrees shall not have been
satisfied, vacated, discharged, or stayed or bonded pending appeal within thirty
(30) days from entry thereof; or

     (i) with respect to any Plan (other than a Multiemployer Plan) as to which
Lessee or any ERISA Affiliate of Lessee may have any liability, there shall
exist, for a period of thirty (30) days, a deficiency which is $3,000,000 or
more in the Plan assets available to satisfy the benefits guaranteeable under
ERISA with respect to such Plan, and (i) steps are undertaken to terminate such
Plan or (ii) such Plan is terminated or (iii) any Reportable Event which
presents a material risk of termination with respect to such Plan shall occur;
or

     (j) the Lessee or any of its Subsidiaries (i) shall default in the payment
when due, whether at stated maturity or otherwise, of principal, interest or
rent in respect of Indebtedness or Off Balance Sheet Debt of $3,000,000 or more;
or (ii) shall fail to perform or observe any other condition or covenant, or any
other event shall occur or condition exist, under any agreement or instrument
relating to any Indebtedness or Off Balance Sheet Debt, if any such failure,
event or condition results in the holder or holders of such Indebtedness or Off
Balance Sheet Debt or beneficiary or beneficiaries of such Indebtedness or Off
Balance Sheet Debt (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) declaring such Indebtedness or Off Balance Sheet
Debt to be due and payable prior to its stated maturity, or cash collateral in
respect thereof to be demanded;

     then, in any such event, Agent Lessor may, in addition to the other rights
and remedies provided for in this Article 17 and in Section 18.1, terminate the
Commitments and rescind or terminate this Lease by giving Lessee five (5)
Business Days' notice of such termination, and this Lease and the Commitments
shall terminate. Lessee shall, to the fullest extent permitted by law, pay as
Supplemental Rent all costs and expenses incurred by or on behalf of Lessor,
including fees and expenses of counsel, as a result of any Lease Event of
Default hereunder.

  17.2    Final Liquidated Damages.  If a Lease Event of Default shall have
occurred and be continuing, Agent Lessor shall have the right to recover, by
demand to Lessee and at Agent Lessor's election, and Lessee shall pay to Agent
Lessor, as and for final liquidated damages, but exclusive of the indemnities
payable under Section 12 of the Participation Agreement, and in lieu of all
damages beyond the date of such demand, the sum of (a) the Termination Value,
plus (b) all other amounts owing in respect of Rent and Supplemental Rent
theretofore accruing under this Lease (offsetting, at the option of Agent
Lessor, against such amount the aggregate amount of the Cash Collateral).
Notwithstanding the foregoing, if such liquidated damages are payable solely on
the basis of a Lease Event of Default under Section 17.1(e) above, then Lessee
shall only be obligated to pay the Maximum Residual Guarantee Amount upon
termination of the Lease, but the Security Documents shall continue and remain
in full force and effect in accordance with their terms with respect to payment
of the remainder of the Termination Value.  Upon payment of the amount specified
pursuant to the first sentence of this Section 17.2, Lessee shall be entitled to
receive from Agent Lessor, at Lessee's request and cost, an assignment of Agent
Lessor's right, title and interest in the Property, the Improvements, Initial
Renovations, Fixtures and Modifications, in each case in recordable form and
otherwise in conformity with local custom and free and clear of the Lien of the
Deed of Trust and any Lessor Liens.  The

                                       22
<PAGE>

Property shall be conveyed to Lessee (or Lessee's designee) "AS IS" and in its
then present physical condition. If any statute or rule of law shall limit the
amount of such final liquidated damages to less than the amount agreed upon,
Agent Lessor shall be entitled to the maximum amount allowable under such
statute or rule of law; provided, that Lessee shall not be entitled to receive
an assignment of Lessor's interest, if any, or in the Property, the
Improvements, the Initial Renovations, the Fixtures and the Modifications unless
Lessee shall have paid in full the Termination Value of the Property and all
such Rent and Supplemental Rent.

  17.3    Lease Remedies. Agent Lessor and Lessee intend that for income tax and
bankruptcy law purposes, this Lease will be treated as a financing arrangement,
as set forth in Article 7. If, as a result of applicable state law, which cannot
be waived, this Lease is deemed to be a lease of the Property, rather than a
financing arrangement, and Agent Lessor is unable to enforce the remedies set
forth in Section 17.2, the following remedies shall be available to Agent
Lessor:

          (a) Surrender of Possession.  If a Lease Event of Default shall have
occurred and be continuing, and whether or not this Lease shall have been
terminated pursuant to Section 17.1, Lessee shall, upon thirty (30) days written
notice, surrender to Agent Lessor possession of the Property and Lessee shall
quit the same. After such thirty (30) day period, Agent Lessor may enter upon
and repossess the Property by such means as are available at law or in equity,
and may remove Lessee and all other Persons and any and all personal property
and Lessee's equipment and personalty and severable Modifications from the
Property. Agent Lessor shall have no liability by reason of any such entry,
repossession or removal performed in accordance with applicable law.

          (b) Reletting.  If a Lease Event of Default shall have occurred and be
continuing, and whether or not this Lease shall have been terminated pursuant to
Section 17.1, Agent Lessor may after the thirty (30) day period for Lessee to
surrender, but shall be under no obligation to, relet all, or any portion, of
the Property, for the account of Lessee or otherwise, for such term or terms
(which may be greater or less than the period which would otherwise have
constituted the balance of the Term) and on such conditions (which may include
concessions or free rent) and for such purposes as Agent Lessor may reasonably
determine, and Agent Lessor may collect, receive and retain the rents resulting
from such reletting which rents shall be applied against amounts owing by
Lessee. Agent Lessor shall not be liable to Lessee for any failure to relet the
Property or for any failure to collect any rent due upon such reletting.

          (c) Damages.  None of (a) the termination of this Lease pursuant to
Section 17.1; (b) the repossession of the Property; or (c) except to the extent
required by applicable law, the failure of Agent Lessor to relet all, or any
portion, of the Property, the reletting of all or any portion thereof, nor the
failure of Agent Lessor to collect or receive any rentals due upon any such
reletting shall relieve Lessee of its liability and obligations hereunder, all
of which shall survive any such termination, repossession or reletting. If any
Lease Event of Default shall have occurred and be continuing and notwithstanding
any termination of this Lease pursuant to Section 17.1, Lessee shall forthwith
pay to Agent Lessor all Basic Rent and other sums due and payable hereunder or
under the Operative Agreements to and including the date of such termination.
Thereafter, on the days on which the Basic Rent, or Supplemental Rent, as
applicable, are payable under this Lease or would have been payable under this
Lease if the same

                                       23
<PAGE>

had not been terminated pursuant to Section 17.1 and until the end of the Term
or what would have been the Term in the absence of such termination, Lessee
shall pay Agent Lessor, as current liquidated damages (it being agreed that it
would be impossible accurately to determine actual damages) an amount equal to
the Basic Rent and Supplemental Rent that are payable under this Lease or under
the Operative Agreements or would have been payable by Lessee hereunder or under
the Operative Agreements if this Lease had not been terminated pursuant to
Section 17.1, less the net proceeds, if any, which are actually received by
Agent Lessor with respect to the period in question of any reletting of the
Property or any portion thereof (offsetting, at the option of Agent Lessor,
against such amount the aggregate amount of the Cash Collateral); provided that
Lessee's obligation to make payments of Basic Rent and Supplemental Rent under
this Section 17.3(c) shall continue only so long as Agent Lessor shall not have
received the amounts specified in Section 17.2 or Section 17.3(d). In
calculating the amount of such net proceeds from reletting, there shall be
deducted all of Agent Lessor's, Agent's and any Lender's expenses in connection
therewith, including repossession costs, brokerage commissions, fees and
expenses for counsel and any necessary repair or alteration costs and expenses
reasonably incurred in preparation for such reletting. To the extent Agent
Lessor receives any damages pursuant to this Section 17.3(c), such amounts shall
be regarded as amounts paid on account of Rent.

          (d) Acceleration of Rent. If a Lease Event of Default shall have
occurred and be continuing, and this Lease shall not have been terminated
pursuant to Section 17.1, and whether or not Agent Lessor shall have collected
any current liquidated damages pursuant to Section 17.3(c), Agent Lessor may
upon written notice to Lessee accelerate all payments of Basic Rent due
hereunder and, upon such acceleration, Lessee shall immediately pay Agent
Lessor, as and for final liquidated damages and in lieu of all current
liquidated damages on account of such Lease Event of Default beyond the date of
such acceleration (it being agreed that it would be impossible accurately to
determine actual damages) an amount equal to the sum of (a) all Basic Rent
(assuming interest at a rate per annum equal to the Overdue Rate), as
applicable, due from the date of such acceleration until the end of the Term,
plus (b) the Maximum Residual Guarantee Amount that would be payable under
Section 21.1(c), which sum is then discounted to present value at a rate equal
to the rate then being paid on United States treasury securities with maturities
corresponding to the then remaining Term (offsetting, at the option of Agent
Lessor, against such amount the aggregate amount of the Cash Collateral).
Following payment of such amount by Lessee, Lessee will be permitted to stay in
possession of the Property for the remainder of the Term, subject to the terms
and conditions of this Lease, including the obligation to pay Supplemental Rent,
provided that no further Lease Event of Default shall occur and be continuing,
following which Agent Lessor shall have all the rights and remedies set forth in
this Article XVII (but not including those set forth in this Section 17.3). If
any statute or rule of law shall limit the amount of such final liquidated
damages to less than the amount agreed upon, Agent Lessor shall be entitled to
the maximum amount allowable under such statute or rule of law.

          (e) Subletting of the Property.  In addition to the other rights and
remedies set forth herein, Agent Lessor shall have the right to continue this
Lease in effect and, as permitted by Section 1951.4 of the California Civil
Code, to enforce, by suit or otherwise, all covenants and conditions hereof to
be performed or complied with by Lessee and exercise all of Agent Lessor's
rights and remedies under this Lease, including, without limitation, the right
to recover Basic Rent and Supplemental Rent from Lessee as it becomes due under
this Lease, even

                                       24
<PAGE>

though Lessee shall have breached this Lease and abandoned the Property. Acts of
maintenance or preservation, or efforts by Agent Lessor or on Agent Lessor's
behalf to relet the Property, or the appointment of a receiver upon the
initiative of Agent Lessor to protect Agent Lessor's interest under this Lease
shall not constitute a termination of Lessee's right to possession of the
Property; provided, however, that the foregoing enumeration shall not be
construed as in any way limiting the actions Agent Lessor may take without
terminating Lessee's right to possession. In furtherance of the rights hereby
granted to Agent Lessor, and to the extent, permitted by law, Lessee hereby
appoints Agent Lessor its agent and attorney-in-fact, which appointment shall be
deemed to be coupled with an interest and is irrevocable, with power of
substitution, to enter the Property upon a Lease Event of Default hereunder and
remove therefrom all persons and property (with the right to store such property
on the Property in a public warehouse or elsewhere at the cost and risk and for
the account of Lessee) and to alter the Property in such manner as Agent Lessor
may deem necessary or advisable so as to put the Property in good order and to
make the same rentable and from time to time sublet the Property or any part
thereof for such term or terms whether or not extending beyond the then current
term of this Lease (but such sublease may provide for a new and successive lease
to commence immediately upon the termination of this Lease), at such rentals and
upon such other terms as Agent Lessor in its sole discretion may deem advisable,
and with the right to make alterations and repairs to the Property; and Lessee
agrees to pay to Agent Lessor on demand all reasonable expenses incurred by
Agent Lessor in such subletting, and in altering, repairing and putting the
Property in good order and condition, and in reletting the same, including fees
of attorneys and architects, and all other reasonable expenses or commissions.
Agent Lessor shall be Lessee's agent and representative on the Property in
respect of all matters arising under or in connection with any such sublease
made for Lessee by Agent Lessor. Under each such sublease, Lessee shall retain
the right to enter upon and use the Property, subject to the terms and
conditions of such sublease and the rights of the sublessee thereunder. Lessee
further agrees to pay to Agent Lessor, following the date of such subletting, to
and including the date provided in this Lease for the expiration of the Lease
Term, the sums of money which would have been payable by Lessee as Basic Rent
and Supplemental Rent, deducting only the net amount of rent, if any, which
Agent Lessor shall actually receive (after deducting from the gross receipts the
expenses, costs and payments of Agent Lessor which in accordance with the terms
of this Lease would have been borne by Lessee) in the meantime from and by any
such subletting of the Property, and Lessee hereby agrees to remain liable for
all sums otherwise payable by Lessee under this Lease, including, but not
limited to, the expenses of Agent Lessor aforesaid, as well as for any
deficiency aforesaid. Agent Lessor shall have the right from time to time to
begin and maintain successive actions or other legal proceedings against Lessee
for the recovery of such deficiency, expenses or damages or for a sum equal to
any installments of Basic Rent or Supplemental Rent and other sums payable
hereunder, and to recover the same upon the liability of Lessee herein provided,
which liability it is expressly covenanted shall survive the commencement or
determination of any action to secure possession of the Property. Nothing herein
contained shall be deemed to require Agent Lessor to wait to begin such action
or other legal proceedings until the date when this Lease would have expired by
limitation had there been no such Lease Event of Default. Notwithstanding any
such subletting without termination, pursuant to the terms hereof, Agent Lessor
shall retain the right to and may at any time thereafter elect to terminate this
Lease or Lessee's right to possession of the Property for any previous breach
which remains uncured or for any subsequent breach by giving Lessee written
notice thereof as herein provided, and in

                                       25
<PAGE>

such event Lessee shall forfeit any rights or interest under any such sublease
and thereafter the obligations of any such sublessee shall run directly to Agent
Lessor for its own account. Upon application by Agent Lessor, a receiver may be
appointed to take possession of the Property, exercise all rights granted to
Agent Lessor as agent and attorney-in-fact for Lessee set forth in this Section
17.3(e) and apply any rentals collected from the Property as hereinabove
provided. No taking of possession of the Property or other act by Agent Lessor
as the agent and attorney-in-fact for Lessee pursuant to the foregoing
provisions, nor any subletting by Agent Lessor for Lessee pursuant to the
foregoing provisions, nor any such appointment of a receiver shall constitute or
be construed as an election by Agent Lessor to terminate this Lease or Lessee's
right to possession of the Property unless a written notice of such intention be
given to Lessee.

          (f) Repossession and Recoverable Amounts.  In the event of any
termination of the Term or as permitted by law and upon thirty (30) days written
notice as provided for in Section 17.3(a), Lessee shall quit and surrender the
Property to Agent Lessor, and Agent Lessor may without further notice enter
upon, reenter, possess and repossess the same by summary proceedings, ejectment
or otherwise, and again have, repossess and enjoy the same as if this Lease had
not been made, and in any such event neither Lessee nor any Person claiming
through or under Lessee by virtue of any law or an order of any court shall be
entitled to possession or to remain in possession of the Property but shall
forthwith quit and surrender the Property, and Agent Lessor shall,
notwithstanding any other provision of this Lease, be entitled to recover from
Lessee the aggregate of all amounts Agent Lessor is permitted to recover from
Lessee, including without limitation:

               (i)   the worth at the time of award, as computed below, of the
unpaid rent (including, without limitation, Basic Rent and Supplemental Rent)
which had been earned at the time of termination of this Lease;

               (ii)   the worth at the time of award of the amount by which the
unpaid rent (including, without limitation, Basic Rent and Supplemental Rent)
which would have been earned after the time of termination of this Lease until
the time of award exceeds the amount of such rental loss that Lessee proves
could have been reasonably avoided;

               (iii)  the worth at the time of award of the amount by which the
unpaid rent (including, without limitation, Basic Rent and Supplemental Rent)
for the balance of the Term after the time of award exceeds the amount of such
rental loss for said balance of the Term that Lessee proves could be reasonably
avoided; and

               (iv)   any other amount necessary to compensate Agent Lessor and
each Lessor for all the detriment proximately caused by Lessee's failure to
perform its obligations under this Lease or which in the ordinary course of
things would be likely to result therefrom; including without limitation any
loss or damage arising out of the failure of Agent Lessor or any Lessor to
receive the benefit of the performance by Lessee of any obligation to purchase
the Property under the provisions of this Lease. Lessee acknowledges and agrees
that, in reliance upon this Lease and Lessee's covenants and agreements
hereunder and the creditworthiness and financial condition of Lessee, Agent
Lessor has entered into certain special transactions to finance the costs of
leasing the Land and constructing the Initial Renovations and, in connection
with such financing transactions, Agent Lessor and each Lessor have incurred and
will continue

                                       26
<PAGE>

to incur indebtedness and liabilities under and pursuant to the Participation
Agreement and the other Operative Agreements. Lessee acknowledges and agrees
that a Lease Event of Default will cause Agent Lessor and each Lessor
substantial damage and detriment due to its obligations and liabilities under
the Participation Agreement and the other Operative Agreements, including,
without limitation, the failure of Agent Lessor and each Lessor to be fully
compensated for the Advances made to Lessee. Accordingly, in order to compensate
Agent Lessor for all detriment proximately caused by Lessee's failure to perform
its obligations under this Lease, Agent Lessor shall be permitted to recover
from Lessee, without limitation, all amounts necessary for Agent Lessor to be
fully compensated for all of the Advances made to the Lessee.

     The "worth at the time of award," of the amounts referred to in the
foregoing subsections 17.3(f) (i) and (ii) shall be computed by allowing
interest at the Overdue Rate (or at the highest rate permitted by applicable
law, whichever is less) on each rental installment from the date the same was
due hereunder to the time of award.  The "worth at the time of award" of the
amount referred to in the foregoing subparagraph (iii) shall be computed by
discounting such amount at the discount rate of the Federal Reserve Bank of New
York at the time of the award plus one percent (1%).  As used herein, the term
"time of award" shall mean either (A) the date upon which Lessee pays to Agent
Lessor the amount recoverable by Agent Lessor as hereinabove set forth or (B)
the date of entry of any determination, order or judgment of any court, other
legally constituted body, or any arbitrator(s), determining the amount
recoverable, whichever first occurs.  If the time of award is determined under
clause (B), above, then the amount recoverable by Agent Lessor hereunder shall
bear interest from the time of award until paid at the Overdue Rate (or at the
highest rate permitted by applicable law, whichever is less).  Nothing herein
contained shall limit or prejudice the right of Agent Lessor, and Agent Lessor
is hereby expressly granted the right, in any bankruptcy or reorganization or
insolvency proceedings, to prove for and obtain as damages by reason of such
termination, an amount equal to the maximum allowed by any statute or rule of
law whether such amount shall be greater or less than the amounts referred to
above.

  17.4    Waiver of Certain Rights.  If this Lease shall be terminated pursuant
to Section 17.1, Lessee waives, to the fullest extent permitted by law, (a) any
notice of re-entry or the institution of legal proceedings to obtain re-entry or
possession; (b) any right of redemption, re-entry or repossession; (c) the
benefit of any laws now or hereafter in force exempting property from liability
for rent or for debt; and (d) any other rights which might otherwise limit or
modify any of Agent Lessor's rights or remedies under this Article XVII.

  17.5    Assignment of Rights Under Contracts.  If a Lease Event of Default
shall have occurred and be continuing, and whether or not this Lease shall have
been terminated pursuant to Section 17.1, Lessee shall upon Agent Lessor's
demand immediately assign, transfer and set over to Agent Lessor all of Lessee's
right, title and interest in and to each agreement executed by Lessee in
connection with the construction, renovation, development, use or operation of
the Property (including, without limitation, all right, title and interest of
Lessee with respect to all warranty, performance, service and indemnity
provisions), as and to the extent that the same relate to the construction,
renovation, and operation of the Property.

  17.6    Power of Sale and Foreclosure.  Subject to Article 21 below, in the
event that a court of competent jurisdiction rules that this Lease constitutes a
mortgage, deed of trust or other

                                       27
<PAGE>

secured financing, and subject to the availability of such remedy under
applicable law, then the Agent Lessor and the Lessee agree that the Lessee
hereby mortgages and grants to Agent Lessor a Lien against the Property WITH
POWER OF SALE, for the purpose of securing all of Lessee's obligations hereunder
(including the payment of Basic Rent, Supplemental Rent and the Termination
Value or Purchase Option Price) (collectively, the "Lease Payment Obligations").
In each case, upon the occurrence of any Lease Event of Default which is
continuing, the Agent Lessor shall have the power and authority, to the extent
provided by law, to exercise the following rights and remedies:

          (a) To declare the Lease Payment Obligations immediately due and
payable;

          (b) With or without notice, and without releasing Lessee from any
obligation hereunder, to cure any default of Lessee and, in connection
therewith, to enter upon the Property and to perform such acts and things as
Agent Lessor deems necessary or desirable to inspect, investigate, assess and
protect the Property, including, without limitation of any of its other rights:
to obtain a court order to enforce Agent Lessor's right to enter and inspect the
Property pursuant to California Civil Code Section 2929.5, to which the decision
of Agent Lessor as to whether there exists a release or threatened release of a
Hazardous Substance onto the Property shall be deemed reasonable and conclusive
as between the parties hereto; to have a receiver appointed pursuant to
California Code of Civil Procedure Section 564 to enforce Agent Lessor's right
to enter and inspect the Property for Hazardous Substances; to appear in and
defend any action or proceeding purporting to affect the Property or the rights
or powers of Agent Lessor hereunder; to pay, purchase, contest or compromise any
encumbrance, charge, lien or claim of lien which, in the judgment of Agent
Lessor, is prior or superior hereto, the judgment of Agent Lessor being
conclusive as between the parties hereto; to pay any premiums or charges with
respect to insurance required to be carried hereunder; and to employ counsel,
accountants, contractors and other appropriate persons to assist Agent Lessor;

          (c) To commence and maintain an action or actions in any court of
competent jurisdiction to foreclose this instrument as a mortgage or to obtain
specific enforcement of the covenants of Lessee hereunder, and Lessee agrees
that such covenants shall be specifically enforceable by injunction or any other
appropriate equitable remedy and that for the purposes of any suit brought
hereunder, Lessee waives the defense of laches and any applicable statute of
limitations;

          (d) Agent Lessor or its employees, acting by themselves or through a
court-appointed receiver, may enter upon, possess, manage, operate, dispose of
and contract to dispose of the Property or any part thereof; negotiate with
governmental authorities with respect to the Property's environmental compliance
and remedial measures; contract for goods and services, hire agents, employees
and counsel, make repairs, alterations and improvements to the Property
necessary, in Agent Lessor's judgment, to protect or enhance the security
hereof; to incur the risks and obligations ordinarily incurred by owners of
property (without any personal obligation on the part of the receiver); and/or
to take any and all other actions which may be necessary or desirable to comply
with Lessee's obligations hereunder and under the Operative Agreements. All sums
realized by Agent Lessor under this Section 17.6(d), less all costs and expenses
incurred by it under this Section 17.6(d), including attorneys' fees, and less
such sums as Agent Lessor deems appropriate as a reserve to meet future expenses
under this Section 17.6(d), shall

                                       28
<PAGE>

be applied on any Lease Payment Obligations secured hereby in such order as
Agent Lessor shall determine. Neither application of said sums to said
indebtedness nor any other action taken by Agent Lessor under this Section
17.6(d) shall cure or waive any Lease Event of Default or notice of default
hereunder or nullify the effect of any such notice of default. Agent Lessor, or
any employee or agent of Agent Lessor, or a receiver appointed by a court, may
take any action or proceeding hereunder without regard to (i) the adequacy of
the security for the indebtedness secured hereunder, (ii) the existence of a
declaration that the indebtedness secured hereby has been declared immediately
due and payable, or (iii) the filing of a notice of default;

          (e) To execute a written notice of such Lease Event of Default and of
its election to cause the Property to be sold to satisfy the obligations secured
hereby. Agent Lessor shall give and record such notice as the law then requires
as a condition precedent to a nonjudicial foreclosure sale. When the minimum
period of time required by law after such notice has elapsed, Agent Lessor,
without notice to or demand upon Lessee except as otherwise required by law,
shall sell the Property at the time and place of sale fixed by it in the notice
of sale and in such order as it or Agent Lessor may determine, at public auction
to the highest bidder for cash, in lawful money of the United States, payable at
time of sale (the Lease Payment Obligations hereby secured being the equivalent
of cash for purposes of said sale). If the Land and/or the Property consist of
several lots, parcels, or items of property, Agent Lessor may: (i) designate the
order in which such lots, parcels, or items shall be offered for sale or sold,
or (ii) elect to sell such lots, parcels or items through a single sale, through
two or more successive sales, or in any other manner Agent Lessor deems in its
best interest. Lessee shall have no right to direct the order in which the
Property is sold. Agent Lessor may postpone sale of all or any portion of the
Property by public announcement at such time and place of sale, and from time to
time thereafter may postpone such sale by public announcement at such time fixed
by the preceding postponement. Agent Lessor shall deliver to the purchaser at
such sale a deed or other appropriate transfer instrument conveying the Property
or portion thereof so sold, but without any covenant or warranty, express or
implied. The recitals in such deed of any matters or facts shall be conclusive
proof of the truthfulness thereof. Any person, including Agent Lessor or Lessee
may purchase at such sale.

     In connection with any sale or sales hereunder, Agent Lessor may elect to
treat any of the Property which consists of a right in action or which is
property that can be severed from the real property covered hereby or any
improvements thereon without causing structural damage thereto as if the same
were personal property or a fixture, as the case may be, and dispose of the same
in accordance with applicable law, separate and apart from the sale of real
property.  Any sale of any personal property or fixtures hereunder shall be
conducted in any manner permitted by the UCC.

     After deducting all costs, fees and expenses of Agent Lessor and of this
trust, including all costs of evidence of title and attorneys' fees in
connection with sale, Agent Lessor shall apply the proceeds of sale to payment
of all sums so expended under the terms hereof not then repaid; the payment of
all other sums then secured hereby; and the remainder, if any, to the person or
persons legally entitled thereto;

          (f) To resort to and realize upon the Property and any other security
now or hereafter held by Agent Lessor in such order and manner as Agent Lessor
may, in its sole

                                       29
<PAGE>

discretion, determine; and resort to any or all such security may be taken
concurrently or successively and in one or several consolidated or independent
judicial actions or lawfully taken non-judicial proceedings, or both;

          (g) To commence and maintain an action or actions in any court of
competent jurisdiction pursuant to California Code of Civil Procedure Section
736, whether commenced prior to foreclosure of the Property or after foreclosure
of the Property, and to seek the recovery of any and all costs, damages,
expenses, fees, penalties, fines, judgments, indemnification payments to third
parties, and other out-of-pocket costs or expenses actually incurred by Agent
Lessor (collectively, the "Environmental Costs") incurred or advanced by Agent
Lessor relating to the cleanup, remediation or other response action required by
Applicable Law or which Agent Lessor believes necessary to protect its interest
in the Property, it being conclusively presumed between Agent Lessor and Lessee
that all such Environmental Costs incurred or advanced by Agent Lessor relating
to the cleanup, remediation or other response action of or to the Property were
made by Agent Lessor in good faith. All Environmental Costs incurred by Agent
Lessor pursuant to this Section 17.6(g) (including, without limitation, court
costs, consultants' fees and attorneys' fees, whether incurred in litigation or
not and whether before or after judgment) shall bear interest at the Overdue
Rate from the date of expenditure until said sums have been paid. Agent Lessor
shall be entitled to bid, at the sale of the Property held pursuant to Section
17.6(e) above, the amount of said costs, expenses and interest in addition to
the amount of the other Lease Payment Obligations hereby secured as a credit
bid, the equivalent of cash. For the purposes of any action brought under this
Section 17.6(g), Lessee hereby waives the defense of laches and any applicable
statute of limitations; and

          (h) To waive its lien against the Property or any portion thereof,
whether fixtures or personal property, to the extent such property is found to
be environmentally impaired in accordance with California Code of Civil
Procedure Section 726.5 and to exercise any and all rights and remedies of an
unsecured creditor against Lessee and all of Lessee's assets and property for
the recovery of any deficiency and Environmental Costs, including, but not
limited to, seeking an attachment order pursuant to California Code of Civil
Procedure Section 483.010. As between Agent Lessor and Lessee, for purposes of
California Code of Civil Procedure Section 726.5, Lessee shall have the burden
of proving that Lessee or any related party (or any affiliate or agent of Lessee
or any related party) was not in any way negligent in permitting the release or
threatened release of the Hazardous Substance. For the purposes of any action
brought under this paragraph, Lessee hereby waives the defense of laches and any
applicable statute of limitations.

          (i) All costs and expenses incurred by Agent Lessor pursuant to this
Section 17.6 (including without limitation court costs, consultants' fees and
attorneys' fees, whether incurred in litigation or not and whether before or
after judgment) shall bear interest at the Overdue Rate, from the date of
expenditure until said sums have been paid.  Agent Lessor shall be entitled to
bid, at the sale of the Property held pursuant to subsection 17.4(e) above, the
amount of said costs, expenses and interest in addition to the amount of the
other Lease Payment Obligations hereby secured as a credit bid, which shall be
deemed the equivalent of cash.

          (j) Lessee hereby waives any right to require that any security given
hereunder or under any other agreement securing the Lease Payment Obligations be
marshalled

                                       30
<PAGE>

and further waives any right otherwise available in respect to marshalling of
assets which secure any Lease Payment Obligation or to require Agent Lessor to
pursue its remedies against any such assets.

     17.7   Remedies Cumulative. The remedies herein provided shall be
cumulative and in addition to (and not in limitation of) any other remedies
available at law, equity or otherwise.

     17.8   Lessee's Purchase Option. Notwithstanding any provision contained in
this Lease or any other Operative Agreement or any termination of this Lease, if
a Lease Event of Default has occurred and is continuing, Lessee shall have the
right to exercise its Purchase Option at any time prior to such time as a
foreclosure upon or sale of the Property to a buyer unrelated to the Agent has
been completed.

                       ARTICLE 18 LESSORS RIGHT TO CURE

     18.1   Agent Lessor's Right to Cure Lessee's Lease Defaults. Agent Lessor,
without waiving or releasing any obligation or Lease Event of Default, may (but
shall be under no obligation to) remedy any Lease Event of Default for the
account and at the sole cost and expense of Lessee, including the failure by
Lessee to maintain any insurance required by Article 14, and may, to the fullest
extent permitted by law, and notwithstanding any right of quiet enjoyment in
favor of Lessee, enter upon the Property for such purpose and take all such
action thereon as may be necessary or appropriate therefor. No such entry shall
be deemed an eviction of Lessee. All out-of-pocket costs and expenses so
incurred (including the fees and expenses of counsel), together with interest
thereon at the Overdue Rate from the date on which such sums or expenses are
paid by Lessor, shall be paid by Lessee to Agent Lessor on demand as
Supplemental Rent.

                         ARTICLE 19 LEASE TERMINATION

     19.1   Provisions Relating to Lessee's Termination of this Lease or
Exercise of Purchase Options. In connection with any termination of this Lease
with respect to the Property pursuant to the terms of Section 16.1 or 16.2 or
Article 17 if the Property is being purchased by Lessee (or its designee), or in
connection with Lessee's exercise of its Purchase Option or Maturity Date
Purchase Option, upon the date on which this Lease is to terminate with respect
to the Property or upon the Expiration Date with respect to the Property, and
upon tender by Lessee of the Lease Balance and the other amounts set forth in
Section 16.1, 17.2, 20.1 or 20.2, as applicable:

            (a) Lessor shall assign and convey to Lessee (or to Lessee's
designee) at Lessee's cost and expense, Agent Lessor's entire interest in the
Property by appropriate instrument, in conformity with local law and custom and
free and clear of the Lien of the Deed of Trust and any Lessor Liens and shall
provide usual and customary certifications in respect of withholding and
transfer taxes; and

            (b) The Property shall be conveyed to Lessee or its designee "AS IS"
and in its then present physical condition.

                                       31
<PAGE>

                          ARTICLE 20 PURCHASE OPTION

     20.1   Purchase Option. Subject to Article 17 Lessee shall have the option
(exercisable by giving Agent Lessor irrevocable written notice (the "Purchase
Notice") of Lessee's election to exercise such option not less than thirty (30)
days prior to the date of purchase pursuant to such option) to purchase the
Property on the date specified in such Purchase Notice at a price equal to the
Termination Value plus any costs and expenses incurred by the Agent following
Lessee's election of its option to remarket the Property pursuant to Section
21.1 in connection with such remarketing (offsetting, at the option of Lessee,
to the extent permitted by law, without adversely affecting Agent Lessor's
rights and remedies under the Operative Agreements, against such amount the
aggregate amount of the Cash Collateral) (the "Purchase Option Price") (which
the parties do not intend to be a "bargain" purchase price) of the Property. If
Lessee exercises its option to purchase the Property pursuant to this Section
20.1 (the "Purchase Option"), Lessor shall transfer to Lessee or Lessee's
designee all of Agent Lessor's right, title and interest in and to the Property
as of the date specified in the Purchase Notice upon receipt of the Purchase
Option Price and all Rent and other amounts then due and payable under this
Lease and any other Operative Agreement, in accordance with Section 19.1.

     20.2   Maturity Date Purchase Option. Not less than twelve months prior to
the Maturity Date, Lessee may give Agent Lessor and Agent irrevocable written
notice (the "Maturity Date Election Notice") that Lessee is electing to exercise
the Maturity Date Purchase Option or its option to remarket the Property
pursuant to Section 21.1. If Lessee does not give a Maturity Date Election
Notice on or before the date twelve months prior to the Maturity Date, then
Lessee shall be deemed to have exercised its Maturity Date Purchase Option. If
Lessee has elected, or is deemed to have elected, to exercise the Maturity Date
Purchase Option, then on the Maturity Date Lessee shall pay to Agent Lessor an
amount equal to the Termination Value for the Property (offsetting, at the
option of Lessee, to the extent permitted by law, without adversely affecting
Lessor's rights and remedies under the Operative Agreements, against such amount
the aggregate amount of the Cash Collateral) (which the parties do not intend to
be a "bargain" purchase price) and, upon receipt of such amount plus all Rent
and other amounts then due and payable under this Lease and any other Operative
Agreement, Agent Lessor shall transfer to Lessee or Lessee's designee all of
Agent Lessor's right, title and interest in and to the Property in accordance
with Section 19.1.

     20.3   Extension of Expiration Date.  Lessee may extend the Expiration Date
and the Maturity Date subject to, and in accordance with, the terms and
conditions of Section 15 of the Participation Agreement.

                                       32
<PAGE>

                          ARTICLE 21 SALE OF PROPERTY

     21.1   Sale Procedure.

            (a) (i) Provided that no Lease Default or Lease Event of Default
shall have occurred and be continuing, at the expiration of the Term, unless
Lessee shall have (A) elected to extend the Expiration Date, (B) elected (or be
deemed to have elected) to purchase the Property and paid the Purchase Option
Price with respect thereto, or (C) otherwise terminated this Lease with respect
thereto and paid the Termination Value or Lease Balance with respect thereto,
Lessee may elect to remarket the Property as provided in Section 20.2, or (ii)
if Lessee elects or is required to remarket the Property pursuant to Section
16.1 of this Lease, then Lessee shall (x) pay to Agent Lessor the Maximum
Residual Guarantee Amount for the Property (offsetting, at the option of Lessee,
to the extent permitted by law, without adversely affecting Lessor's rights and
remedies under the Operative Agreements, against such amount the aggregate
amount of the Cash Collateral), and (y) sell the Property to one or more third
parties for cash in accordance with Section 21.1(b).

            (b) During the Marketing Period, Lessee, as nonexclusive broker for
Agent Lessor, shall use its best efforts to obtain bids for the cash purchase of
the Property for the highest price available in the relevant market, shall
notify Agent Lessor promptly of the name and address of each prospective
purchaser and the cash price which each prospective purchaser shall have offered
to pay for the Property and shall provide Agent Lessor with such additional
information about the bids and the bid solicitation procedure as Agent Lessor
may request from time to time. Agent Lessor may reject any and all bids and may
assume sole responsibility for obtaining bids by giving Lessee written notice to
that effect; provided, however, that notwithstanding the foregoing, Agent Lessor
may not reject a bid if such bid is greater than or equal to the sum of the
Limited Recourse Amount and all costs and expenses of sale and is a bona fide
offer by a third party purchaser who is not an Affiliate of Lessee. If the price
which a prospective purchaser shall have offered to pay for all or any of the
Property is less than the sum of the Limited Recourse Amount and all costs and
expenses of sale, Agent Lessor may elect to retain the Property by giving Lessee
at least two Business Days' prior written notice of Agent Lessor's election to
retain the Property, and upon receipt of such notice, Lessee shall surrender the
Property to Agent Lessor pursuant to Section 10.1(c). Unless Agent Lessor shall
have elected to retain the Property pursuant to the preceding sentence, Agent
Lessor shall sell the Property free of any Lessor Liens attributable to it,
without recourse or warranty, for cash to the purchaser or purchasers identified
by Lessee or Agent Lessor, as the case may be, and Lessee shall surrender the
Property to such purchaser in the condition specified in Section 10.1.

            (c) On the date during the Marketing Period on which the Property is
sold pursuant to Section 21.1(b), or on the Maturity Date if the Property
remains unsold, Lessee shall pay to Agent Lessor the Maximum Residual Guarantee
Amount for the Property (after taking into account the application of the
proceeds of such sale pursuant to the terms of this Lease, the Credit Agreement
and the Participation Agreement and offsetting, at the option of Lessee, to the
extent permitted by law, without adversely affecting Lessor's rights and
remedies under the Operative Agreements, against such amount the aggregate
amount of the Cash Collateral) plus

                                       33
<PAGE>

all accrued and unpaid Basic Rent plus any Supplemental Rent due and owing on
such date of purchase.

     21.2   Application of Proceeds of Sale. Agent Lessor shall apply the
proceeds of sale of the Property pursuant to the provisions of the Participation
Agreement.

     21.3   Indemnity for Excessive Wear.  If the proceeds of the sale described
in Section 21.1(b) with respect to the Property, less all expenses incurred by
Agent Lessor in connection with such sale, shall be less than the Limited
Recourse Amount for the Property at the time of such sale and if it shall have
been determined (pursuant to the Appraisal Procedure) that the Fair Market Sales
Value of the Property shall have been impaired by greater than expected wear and
tear during the Term, Lessee shall pay to Agent Lessor within ten (10) days
after receipt of Lessor's written statement (i) the amount of such excess wear
and tear determined by the Appraisal Procedure or (ii) the amount of the Net
Sale Proceeds Shortfall, whichever amount is less;  provided, that in the case
of a remarketing during the Term pursuant to Section 16.1(b)(z)(2)(A) the amount
of such excess wear and tear shall be equal to the Net Sales Proceeds Shortfall,
if any, and Lessee shall pay such amount to Agent Lessor.

     21.4   Appraisal Procedure.  For determining the Fair Market Sales Value of
the Property or any other amount which may, pursuant to any provision of any
Operative Agreement, be determined by an appraisal procedure, Agent Lessor and
Lessee shall use the following procedure (the "Appraisal Procedure").  Agent
Lessor and Lessee shall endeavor to reach a mutual agreement as to such amount
for a period of ten (10) days from commencement of the Appraisal Procedure, and
if they cannot agree within ten (10) days, then two qualified appraisers, one
chosen by Lessee and one chosen by Agent Lessor, shall mutually agree thereupon,
but if either party shall fail to choose an appraiser within twenty (20) days
after notice from the other party of the selection of its appraiser, then the
appraisal by such appointed appraiser shall be binding on Lessee and Agent
Lessor.  If the two appraisers cannot agree within twenty (20) days after both
shall have been appointed, then a third appraiser shall be selected by the two
appraisers or, failing agreement as to such third appraiser within thirty (30)
days after both shall have been appointed, by the American Arbitration
Association. The decisions of the three appraisers shall be given within twenty
(20) days of the appointment of the third appraiser and the decision of the
appraiser most different from the average of the other two shall be discarded
and such average shall be binding on Agent Lessor and Lessee; provided that if
the highest appraisal and the lowest appraisal are equidistant from the third
appraisal, the third appraisal shall be binding on Agent Lessor and Lessee. The
fees and expenses of all of the appraisers shall be paid by Lessee.

     21.5   Certain Obligations Continue.  During the Marketing Period, the
obligation of Lessee to pay Rent with respect to the Property (including the
installment of Basic Rent due on the Maturity Date) shall continue undiminished
until payment in full to Agent Lessor of the sale proceeds, the Maximum Residual
Guarantee Amount, if any, the amount due under Section 21.3, if any, and all
other amounts due to Agent Lessor with respect to the Property.  Agent Lessor
shall have the right, but shall be under no duty, to solicit bids, to inquire
into the efforts of Lessee to obtain bids or otherwise to take action in
connection with any such sale, other than as expressly provided in this Article
21.

                                       34
<PAGE>

                            ARTICLE 22 HOLDING OVER

     22.1   Holding Over.  If Lessee shall for any reason, other than due to
Lessor's failure to convey the Property to Lessee following Lessee's exercise of
the Purchase Option in accordance with Article 20 hereof, remain in possession
of the Property after the expiration or earlier termination of this Lease
(unless the Property is conveyed to Lessee), such possession shall be as a
tenancy at sufferance during which time Lessee shall continue to pay
Supplemental Rent that would be payable by Lessee hereunder were the Lease then
in full force and effect with respect to the Property and Lessee shall continue
to pay Basic Rent at an annual rate equal to the rate payable hereunder
immediately preceding such expiration or earlier termination; provided, however,
that from and after the sixtieth (60th) day Lessee shall remain in possession of
the Property after such expiration or earlier termination, Lessee shall pay
Basic Rent at an annual rate equal to two hundred percent (200%) of the Basic
Rent payable hereunder immediately preceding such expiration or earlier
termination. Such Basic Rent shall be payable from time to time upon demand by
Agent Lessor. During any period of tenancy at sufferance, Lessee shall, subject
to the second preceding sentence, be obligated to perform and observe all of the
terms, covenants and conditions of this Lease, but shall have no rights
hereunder other than the right, to the extent given by law to tenants at
sufferance, to continue its occupancy and use of the Property. Nothing contained
in this Article 22 shall constitute the consent, express or implied, of Agent
Lessor to the holding over of Lessee after the expiration or earlier termination
of this Lease as to the Property and nothing contained herein shall be read or
construed as preventing Agent Lessor from maintaining a suit for possession of
the Property or exercising any other remedy available to Agent Lessor at law or
in equity.

                            ARTICLE 23 RISK OF LOSS

     23.1   Risk of Loss. During the Term, the risk of loss of or decrease in
the enjoyment and beneficial use of the Property as a result of the damage or
destruction thereof by Casualty, Condemnation, Environmental Violations or
otherwise is assumed by Lessee, and Agent Lessor shall in no event be answerable
or accountable therefor.

           ARTICLE 24 SUBLETTING AND ASSIGNMENT; EXISTING TENANCIES

     24.1   Subletting and Assignment. Lessee may not assign this Lease or any
of its rights or obligations hereunder in whole or in part. Lessee may, without
the consent of Agent Lessor, sublease the Property or a portion thereof to any
Person. No sublease or other relinquishment of possession of the Property shall
in any way discharge or diminish any of Lessee's obligations to Agent Lessor
hereunder and Lessee shall remain directly and primarily liable under this Lease
as to the Property, or any portion thereof, so sublet. Any sublease of the
Property shall be made subject to and subordinate to this Lease and to the
rights of Agent Lessor hereunder, and shall expressly provide for the surrender
of the Property after a Lease Event of Default hereunder.

                                       35
<PAGE>

     24.2   Subleases.  Promptly following the execution and delivery of any
sublease permitted by this Article 24, Lessee shall deliver a copy of such
executed sublease to Agent Lessor and Agent.

     24.3   Existing Tenancies. Lessor hereby appoints Lessee as agent for
Lessor to perform all of the terms, covenants, conditions and obligations of
Lessor, as "Landlord", under all Existing Leases, and Lessee hereby agrees to
perform all of such terms, covenants, conditions and obligations during the
Term. Lessor hereby grants a revocable license to Lessee to collect and retain
the rents, profits, or other sums due under any Existing Leases, such license
being revocable by the Lessor in the circumstances described in the following
sentence. Notwithstanding the foregoing in the event of (i) a Lease Event of
Default, Lessor may, at its sole option, do either or both of the following: (A)
terminate such agency relationship, and/or (B) revoke such license, and (ii) any
default of Lessee in its capacity as Landlord under any Existing Leases, Lessor
may, at its sole option, do any or all of the following: (A) terminate such
agency relationship, (B) revoke such license, and/or (C) consider such a Lease
Event of Default if not cured by Lessee within any applicable cure period. In
the event that the Lessor has revoked the license and collects rents, profits
and other sums due under any Existing Leases, Lessor shall elect to do any or
all of the following: (i) apply any such sums to amounts then due and owing by
Lessee hereunder, to the extent that such action would not adversely affect
Lessor's rights and remedies under the Operative Agreements; (ii) hold such sums
as additional collateral, or (iii) return such sums to Lessee.

                       ARTICLE 25 ESTOPPEL CERTIFICATES

     25.1   Estoppel Certificates.  At any time and from time to time upon not
less than twenty (20) days' prior request by Agent Lessor, Lessee shall furnish
to Agent Lessor a certificate signed by an individual having the office of vice
president or higher in Lessee certifying that this Lease is in full force and
effect (or that this Lease is in full force and effect as modified and setting
forth the modifications); the dates to which the Basic Rent and Supplemental
Rent have been paid; to the best knowledge of the signer of such certificate,
whether or not Agent Lessor is in default under any of its obligations hereunder
(and, if so, the nature of such alleged default); and such other matters under
this Lease as Agent Lessor may reasonably request. Any such certificate
furnished pursuant to this Article 25 may be relied upon by Agent Lessor, and
any existing or prospective mortgagee, purchaser or lender, and any accountant
or auditor, of, from or to Agent Lessor (or any Affiliate thereof).

                             ARTICLE 26 NO WAIVER

     26.1   No Waiver.  No failure by Agent Lessor or Lessee to insist upon the
strict performance of any term hereof or to exercise any right, power or remedy
upon a default hereunder, and no acceptance of full or partial payment of Rent
during the continuance of any such default, shall constitute a waiver of any
such default or of any such term. To the fullest extent permitted by law, no
waiver of any default shall affect or alter this Lease, and this Lease shall
continue in full force and effect with respect to any other then existing or
subsequent default.

                      ARTICLE 27 ACCEPTANCE OF SURRENDER

     27.1   Acceptance of Surrender.  Except as otherwise expressly provided in
this Lease, no surrender to Agent Lessor of this Lease or of all or any portion
of the Property or of any interest therein shall be valid or effective unless
agreed to and accepted in writing by Agent Lessor and, prior to the payment or
performance of all obligations under the Credit Documents, Agent, and no act by
Agent Lessor or Agent or any representative or agent of Agent Lessor or Agent,
other than a written acceptance, shall constitute an acceptance of any such
surrender.

                                       36
<PAGE>

                         ARTICLE 28 NO MERGER OF TITLE

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

                              ARTICLE 29 NOTICES

     29.1   Notices. Unless otherwise specifically provided herein, all notices,
consents, directions, approvals, instructions, requests and other communications
required or permitted by the terms hereof to be given to any Person shall be
given in writing and any such notice shall become effective five Business Days
after being deposited in the mails, certified or registered with appropriate
posted prepaid or one Business Day after delivery to a nationally recognized
courier service specifying overnight delivery and shall be directed to the
address of such Person as indicated:

     If to Lessee:

     Keynote Systems, Inc.
     2855 Campus Drive
     San Mateo, California  94403
     Attention: Chief Financial Officer
     Telephone No.: (650) 522-1017
     Telecopy No.:  (650) 522-1099

                                       37
<PAGE>

     If to Agent Lessor:

     IBJTC Leasing Corporation-BSC
     1251 Avenue of the Americas
     New York, NY 10020-1104
     Attention: Virginia Fino
     Telephone No.: (212) 282-3588
     Telecopy No.: (212) 282-4492

     with a copy to the Agent:

     The Industrial Bank of Japan, Limited
     1251 Avenue of the Americas
     New York, NY 10020-1104
     Attention: Richard Emmich, Credit Administration #1 Department
     Telephone No.: (212) 282-3000
     Telecopy No.: (212) 282-4478

or such additional parties and/or other address as any party may hereafter
designate from time to time by notice to each of the other parties hereto.

                           ARTICLE 30 MISCELLANEOUS

     30.1   Miscellaneous. Anything contained in this Lease to the contrary
notwithstanding, all claims against and liabilities of Lessee or Agent Lessor
arising from events commencing prior to the expiration or earlier termination of
this Lease shall survive such expiration or earlier termination. If any term or
provision of this Lease or any application thereof shall be declared invalid or
unenforceable, the remainder of this Lease and any other application of such
term or provision shall not be affected thereby. If any right or option of
Lessee provided in this Lease, including any right or option described in
Articles 15, 16, 20 or 21, would, in the absence of the limitation imposed by
this sentence, be invalid or unenforceable as being in violation of the rule
against perpetuities or any other rule of law relating to the vesting of an
interest in or the suspension of the power of alienation of property, then such
right or option shall be exercisable only during the period which shall end
twenty-one (21) years after the date of death of the last survivor of the
descendants of Franklin D. Roosevelt, the former President of the United States,
Henry Ford, the deceased automobile manufacturer, and John D. Rockefeller, the
founder of the Standard Oil Company, known to be alive on the date of the
execution and delivery of this Lease.

     30.2   Amendments and Modifications.  Neither this Lease nor any provision
hereof may be amended, waived, discharged or terminated except by an instrument
in writing signed by Agent Lessor and Lessee.

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

                                       38
<PAGE>

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

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

     30.6   Governing Law.  THIS LEASE HAS BEEN DELIVERED IN, AND SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN
SUCH STATE.

     30.7   Limitations on Recourse.  Except as expressly set forth in the
Operative Agreements, Lessee agrees to look solely to Agent Lessor's estate and
interest in the Property, the proceeds of sale thereof, any insurance proceeds
or any other award or any third party proceeds received by Agent Lessor in
connection with the Property for the collection of any judgment requiring the
payment of money by Agent Lessor in the event of liability by Agent Lessor, and
no other property or assets of Agent Lessor, the Lessors or any shareholder,
owner or partner (direct or indirect) thereof, or any director, officer,
employee, beneficiary, Affiliate of any of the foregoing shall be subject to
levy, execution or other enforcement procedure for the satisfaction of Lessee's
remedies under or with respect to this Lease, the relationship of Agent Lessor
and Lessee hereunder or Lessee's use of the Property or any other liability of
Agent Lessor to Lessee; provided that nothing in this Section shall be construed
to impair or limit the rights of Lessee against Agent Lessor under the Operative
Agreements. Nothing in this Section shall be interpreted so as to limit the
terms of Section 6.1 or 6.2.

     30.8   Recordation of Lease.  This Lease and each Memorandum of Lease
Supplement shall be recorded in the jurisdiction in which the Property covered
by each Lease Supplement is located, at Lessee's sole cost and expense.

     30.9   Priority. On and prior to the Maturity Date, the Deed of Trust shall
be subject and subordinate to this Lease and following the Maturity Date, the
Deed of Trust shall be senior to this Lease without any further act by any
Person.

                           [signature page follows]

                                       39
<PAGE>

     In Witness Whereof, the parties have caused this Lease be duly executed and
delivered as of the date first above written.

KEYNOTE SYSTEMS, INC.,
as Lessee

By: _______________________
Name: _____________________
Title: ____________________

IBJTC LEASING CORPORATION-BSC,
as Agent Lessor for the Lessors

By: _______________________
Name: _____________________
Title: ____________________

                                    [Lease]

                                       40
<PAGE>

                                   EXHIBIT A
                             LEASE SUPPLEMENT LAND

     This Lease Supplement Land (this "Lease Supplement Land") dated as of July
11, 2000 between IBJTC LEASING CORPORATION-BSC, as Agent Lessor for the Agent
Lessors (the "Agent Lessor"), and KEYNOTE SYSTEMS, INC., a Delaware corporation,
as lessee (the "Lessee").

     Whereas, Agent Lessor is the owner or will be the owner of the Land
described on Schedule 1 hereto (the "Leased Property") and wishes to lease the
same to Lessee;

     Now, Therefore, in consideration of the premises and the mutual agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

     Section 1.  Definitions; Rules of Usage.  For purposes of this Lease
Supplement Land, capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to them in Annex A to the Participation
Agreement dated as of July 11, 2000.

     Section 2.  The Property.  Attached hereto as Schedule 1 is the a legal
description of the Land.  Effective upon the execution and delivery of this
Lease Supplement Land by Agent Lessor and Lessee, the Land shall be subject to
the terms and provisions of the Lease.

     This Lease Supplement Land shall constitute a mortgage, deed of trust,
security agreement and financing statement under the laws of the state in which
the Property is situated.  The maturity date of the obligations secured hereby
shall be July 11, 2005 unless extended to not later than July 11, 2007.

     For purposes of provisions of the Lease and this Lease Supplement Land
related to the creation and enforcement of the Lease and this Lease Supplement
Land as a security agreement and a fixture filing, Lessee is the debtor and
Agent Lessor is the secured party.  The mailing addresses of the debtor (Lessee
herein) and of the secured party (Agent Lessor herein) from which information
concerning security interests hereunder may be obtained are set forth on the
signature pages hereto.  A carbon, photographic or other reproduction of the
Lease and this Lease Supplement Land or of any financing statement related to
the Lease and this Lease Supplement Land shall be sufficient as a financing
statement for any of the purposes referenced herein.

     Section 3.  Use of Property.  At all times during the Term with respect to
the Property, Lessee will comply with all obligations under and (to the extent
no Event of Default exists and provided that such exercise will not impair the
value of such Property) shall be permitted to exercise all rights and remedies
under, all operation and easement agreements and related or similar agreements
applicable to the Property.

     Section 4.  Ratification; Incorporation by Reference.  Except as
specifically modified hereby, the terms and provisions of the Lease and the
Operative Agreements are hereby ratified

                                       1
<PAGE>

and confirmed and remain in full force and effect. The Lease is hereby
incorporated herein by reference as though restated herein in its entirety.

     Section 5.  Original Lease Supplement Land.  The single executed original
of this Lease Supplement Land marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED
COUNTERPART" on the signature page thereof and containing the receipt of the
Agent therefor on or following the signature page thereof shall be the original
executed counterpart of this Lease Supplement Land (the "Original Executed
Counterpart").  To the extent that this Lease Supplement Land 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
Supplement Land may be created through the transfer or possession of any
counterpart other than the Original Executed Counterpart.

     Section 6.  GOVERNING LAW.  THIS LEASE SUPPLEMENT LAND SHALL BE GOVERNED BY
AND CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE
OF CALIFORNIA.

     Section 7. Grant of Mortgage Lien and Security Interest; Assignment of
Rents.  To secure to the Agent Lessor the payment of all amounts owed to Agent
Lessor by Lessee under the Lease and the other Operative Agreements, and without
limiting any other remedies set forth in the Lease, Lessee and Agent Lessor
agree as follows:

          (a)  In the event that a court of competent jurisdiction rules that
the Lease constitutes a mortgage, deed of trust or other secured financing as is
the intent of the parties, then Agent Lessor and Lessee agree that Lessee has
caused Agent Lessor to hold title to the Property and Lessee does hereby
mortgage, grant, bargain, sell, convey, assign, transfer and set over to the
Agent Lessor, WITH POWER OF SALE, to the extent permitted by applicable law: (i)
all of the Lessee's right, title and interest in the Property, if any; (ii) all
rights and benefits of whatever nature derived or to be derived by the Lessee
under or by virtue of the Lease; and (iii) all of the Lessee's right, title and
interest in and to all proceeds of the conversion, whether voluntary or
involuntary, of any of the above-described property into cash or other liquid
claims, including, without limitation, all awards, payments or proceeds,
including interest thereon, and the right to receive the same, which may be made
as a result of casualty, any exercise of the right of eminent domain or deed in
lieu thereof, the alteration of the grade of any street and any injury to or
decrease in the value thereof, the foregoing being referred to hereinafter as
the "Security Property."

          TO HAVE AND TO HOLD the Security Property, subject however to
Permitted Liens, unto the Agent Lessor, its successors and assigns IN TRUST,
forever, for the uses and purposes herein expressed, but not otherwise.

          (b) Subject to the terms and conditions of the Lease as supplemented
by this Lease Supplement Land (including, without limitation, the Lessee's
rights hereunder and thereunder so long as no lease Event of Default has
occurred and is continuing), the Lessee hereby grants to the Agent Lessor a
security interest in that portion of the Security Property (the "UCC Property")
subject to the Uniform Commercial Code of the State in which the Security
Property is located (the "UCC").  The Lease, as supplemented by this Lease
Supplement Land,

                                       2
<PAGE>

shall also be deemed to be a security agreement and fixture filing and shall
support any financing statement showing the Agent Lessor's interest as a secured
party with respect to any portion of the UCC Property described in such
financing statement. The Lessee agrees, at its sole cost and expense, to
execute, deliver and file from time to time such further instruments as may be
requested by the Agent Lessor to confirm and perfect the lien of the security
interest in the collateral described in this Lease Supplement Land.

          (c) The Lessee hereby irrevocably assigns, conveys, transfers and sets
over unto the Agent Lessor (subject, however, to the Lease and the rights of the
Lessee thereunder and hereunder) all and every part of the rents, issues and
profits (collectively, the "Profits") that may from time to time become due and
payable on account of any and all subleases or other occupancy agreements now
existing, or that may hereafter come into existence with respect to the Property
or any part thereof, including any guaranties of such subleases or other
occupancy agreements (collectively, the "Subleases").  Upon request of the Agent
Lessor, the Lessee shall execute and cause to be recorded, at its expense,
supplemental or additional assignments of any Subleases of the Property.  Upon
the occurrence and during the continuance of a Lease Event of Default and
subject to the provisions of subsection 5(d) hereof, the Agent Lessor is hereby
fully authorized and empowered in its discretion (in addition to all other
powers and rights herein granted), and subject to the Lease and the rights of
the Lessee thereunder and hereunder, to apply for and collect and receive all
such Profits and enforce such guaranty or guaranties, and all money so received
under and by virtue of this assignment shall be held and applied as further
security for the payment of the loan(s) secured hereby.

          (d) Notwithstanding that this Lease Supplement Land is an absolute
assignment of the Profits and the Subleases and not merely the collateral
assignment of, or the grant of a lien or security interest in the Profits and
the Subleases, Agent Lessor grants to Lessee a revocable license to collect and
receive the Profits and to retain, use and enjoy such Profits.  Such license
shall be automatically revoked upon the occurrence and during the continuance of
any Lease Event of Default.

     Section 8.  Counterpart Execution.  This Lease Supplement Land may be
executed in any number of counterparts and by each of the parties hereto in
separate counterparts, all such counterparts together constituting but one (1)
and the same instrument.  For purposes of the provisions of this Lease
Supplement Land concerning this Lease Supplement Land constituting a security
agreement and fixture filing, the addresses of the debtor (Lessee herein) and
the secured party (Agent Lessor herein), from whom information may be obtained
about this Lease Supplement Land, are as set forth on the signature pages
hereto.

                                       3
<PAGE>

     In Witness Whereof, each of the parties hereto has caused this Lease
Supplement Land to be duly executed by an officer thereunto duly authorized as
of the date and year first above written.

                                    AGENT LESSOR:

                                    IBJTC LEASING CORPORATION-BSC

                                    By:_________________________________
                                    Name: ______________________________
                                    Title:______________________________

                                    LESSEE:

                                    KEYNOTE SYSTEMS, INC., a   Delaware
                                    corporation

                                    By:_________________________________
                                    Name: ______________________________
                                    Title:______________________________

                            [Lease Supplement Land]
<PAGE>

                                   SCHEDULE 1

                            To Lease Supplement Land

                               Legal Description

The land referred to below is situated in the State of California, County of San
Mateo, City of San Mateo and is described as follows:

PARCEL I:
---------

Parcel "C" as shown on that certain map entitled "MARINERS ISLAND UNIT NO. 4,
BEING A SUBDIVISION OF LOTS 2 & 3 BLOCK 4 AND LOT 1 BLOCK 5, MARINERS ISLAND
UNIT NO. 2 RECORDED IN VOLUME 64 OF MAPS AT PAGES 31 TO 35 INCLUSIVE, LOTS 1, 2,
3, & 4, BLOCKS 1 MARINERS ISLAND UNIT NO. 3, RECORDED IN VOLUME 67 OF MAPS AT
PAGES 19 TO 27 INCLUSIVE, AND ADJOINING ACREAGE BEING A PORTION OF LANDS
DESCRIBED IN GRANT DEED RECORDED ON MARCH 30, 1977 IN BOOK 7424 AT PAGE 182, SAN
MATEO COUNTY RECORDS, CITY OF SAN MATEO, SAN MATEO COUNTY, CALF.", filed in the
office of the County Recorder of San Mateo County, State of California, on April
4, 1979 in Book 99 of Maps at page(s) 35 to 38 inclusive.

PARCEL II:
----------

A NON-EXCLUSIVE EASEMENT for employee, invitees and customer traffic for the
purpose only of ingress and egress to and from Parcel C as shown on that map
(the "Final Map") recorded April 4, 1979 in Volume 99 of Maps at pages 35, 36,
37 and 38 in the Official Records of the County of San Mateo, California; over
and across a strip of land not exceeding at any point a width of 44 feet as more
particularly described on the Final map as the "44' access easement".

Said easement is appurtenant to Parcel I above and was created by reservation in
Deed recorded April 6, 1979 in Reel 7836 of Official Records at page 443.  (File
No. 92543-AN), Records of San Mateo County, California and by dedication on
Certificate Sheet of the subdivision map of Mariners Island Unit No. 4
hereinabove referred to.
<PAGE>

                                   EXHIBIT B
                         LEASE SUPPLEMENT IMPROVEMENTS

     This Lease Supplement Improvements (this "Lease Supplement Improvements")
dated as of July 11, 2000 between IBJTC LEASING CORPORATION-BSC, as Agent Lessor
for the Agent Lessors (the "Agent Lessor"), and KEYNOTE SYSTEMS, INC., a
Delaware corporation, as lessee (the "Lessee").

     Whereas, Agent Lessor is the owner or will be the owner of the Improvements
described on Schedule 1 hereto (the "Leased Property") and wishes to lease the
same to Lessee;

     Now, Therefore, in consideration of the premises and the mutual agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

     Section 1.  Definitions; Rules of Usage.  For purposes of this Lease
Supplement Improvements, capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to them in Annex A to the Participation
Agreement dated as of July 11, 2000.

     Section 2.  The Properties.  Attached hereto as Schedule 1 is the
description of the Improvements.  Effective upon the execution and delivery of
this Lease Supplement Improvements by Agent Lessor and Lessee, the Improvements
shall be subject to the terms and provisions of the Lease.  Without further
action, any and all additional Equipment funded under the Operative Agreements
and any and all Initial Renovations or Modifications made to the Property shall
be deemed to be titled to the Agent Lessor and subject to the terms and
conditions of the Lease and this Lease Supplement Improvements.

     This Lease Supplement Improvements shall constitute a mortgage, deed of
trust, security agreement and financing statement under the laws of the state in
which the Property is situated.  The maturity date of the obligations secured
hereby shall be July 11, 2005 unless extended to not later than [July 11], 2007.

     For purposes of provisions of the Lease and this Lease Supplement
Improvements related to the creation and enforcement of the Lease and this Lease
Supplement Improvements as a security agreement and a fixture filing, Lessee is
the debtor and Agent Lessor is the secured party.  The mailing addresses of the
debtor (Lessee herein) and of the secured party (Agent Lessor herein) from which
information concerning security interests hereunder may be obtained are set
forth on the signature pages hereto.  A carbon, photographic or other
reproduction of the Lease and this Lease Supplement Improvements or of any
financing statement related to the Lease and this Lease Supplement Improvements
shall be sufficient as a financing statement for any of the purposes referenced
herein.

     Section 3.  Use of Property.  At all times during the Term with respect to
the Property, Lessee will comply with all obligations under and (to the extent
no Event of Default exists and provided that such exercise will not impair the
value of such Property) shall be permitted to

                                       1
<PAGE>

exercise all rights and remedies under, all operation and easement agreements
and related or similar agreements applicable to the Property.

     Section 4.  Ratification; Incorporation by Reference.  Except as
specifically modified hereby, the terms and provisions of the Lease and the
Operative Agreements are hereby ratified and confirmed and remain in full force
and effect.  The Lease is hereby incorporated herein by reference as though
restated herein in its entirety.

     Section 5.  Original Lease Supplement Improvements.  The single executed
original of this Lease Supplement Improvements marked "THIS COUNTERPART IS THE
ORIGINAL EXECUTED COUNTERPART" on the signature page thereof and containing the
receipt of the Agent therefor on or following the signature page thereof shall
be the original executed counterpart of this Lease Supplement Improvements (the
"Original Executed Counterpart").  To the extent that this Lease Supplement
Improvements 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 Supplement Improvements may be created through the
transfer or possession of any counterpart other than the Original Executed
Counterpart.

     Section 6.  GOVERNING LAW.  THIS LEASE SUPPLEMENT IMPROVEMENTS SHALL BE
GOVERNED BY AND CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAW
OF THE STATE OF CALIFORNIA.

     Section 7. Grant of Mortgage Lien and Security Interest; Assignment of
Rents.  To secure to the Agent Lessor the payment of all amounts owed to Agent
Lessor by Lessee under the Lease and the other Operative Agreements, and without
limiting any other remedies set forth in the Lease, Lessee and Agent Lessor
agree as follows:

          (a)  In the event that a court of competent jurisdiction rules that
the Lease constitutes a mortgage, deed of trust or other secured financing as is
the intent of the parties, then Agent Lessor and Lessee agree that Lessee has
caused Agent Lessor to hold title to the Property and Lessee does hereby
mortgage, grant, bargain, sell, convey, assign, transfer and set over to the
Agent Lessor, WITH POWER OF SALE, to the extent permitted by applicable law: (i)
all of the Lessee's right, title and interest in the Property, if any; (ii) all
rights and benefits of whatever nature derived or to be derived by the Lessee
under or by virtue of the Lease; and (iii) all of the Lessee's right, title and
interest in and to all proceeds of the conversion, whether voluntary or
involuntary, of any of the above-described property into cash or other liquid
claims, including, without limitation, all awards, payments or proceeds,
including interest thereon, and the right to receive the same, which may be made
as a result of casualty, any exercise of the right of eminent domain or deed in
lieu thereof, the alteration of the grade of any street and any injury to or
decrease in the value thereof, the foregoing being referred to hereinafter as
the "Security Property."

          TO HAVE AND TO HOLD the Security Property, subject however to
Permitted Liens, unto the Agent Lessor, its successors and assigns IN TRUST,
forever, for the uses and purposes herein expressed, but not otherwise.

                                       2
<PAGE>

          (b) Subject to the terms and conditions of the Lease as supplemented
by this Lease Supplement Improvements (including, without limitation, the
Lessee's rights hereunder and thereunder so long as no lease Event of Default
has occurred and is continuing), the Lessee hereby grants to the Agent Lessor a
security interest in that portion of the Security Property (the "UCC Property")
subject to the Uniform Commercial Code of the State in which the Security
Property is located (the "UCC").  The Lease, as supplemented by this Lease
Supplement Improvements, shall also be deemed to be a security agreement and
fixture filing and shall support any financing statement showing the Agent
Lessor's interest as a secured party with respect to any portion of the UCC
Property described in such financing statement.  The Lessee agrees, at its sole
cost and expense, to execute, deliver and file from time to time such further
instruments as may be requested by the Agent Lessor to confirm and perfect the
lien of the security interest in the collateral described in this Lease
Supplement Improvements.

          (c) The Lessee hereby irrevocably assigns, conveys, transfers and sets
over unto the Agent Lessor (subject, however, to the Lease and the rights of the
Lessee thereunder and hereunder) all and every part of the rents, issues and
profits (collectively, the "Profits") that may from time to time become due and
payable on account of any and all subleases or other occupancy agreements now
existing, or that may hereafter come into existence with respect to the Property
or any part thereof, including any guaranties of such subleases or other
occupancy agreements (collectively, the "Subleases").  Upon request of the Agent
Lessor, the Lessee shall execute and cause to be recorded, at its expense,
supplemental or additional assignments of any Subleases of the Property.  Upon
the occurrence and during the continuance of a Lease Event of Default and
subject to the provisions of subsection 5(d) hereof, the Agent Lessor is hereby
fully authorized and empowered in its discretion (in addition to all other
powers and rights herein granted), and subject to the Lease and the rights of
the Lessee thereunder and hereunder, to apply for and collect and receive all
such Profits and enforce such guaranty or guaranties, and all money so received
under and by virtue of this assignment shall be held and applied as further
security for the payment of the loan(s) secured hereby.

          (d) Notwithstanding that this Lease Supplement Improvements is an
absolute assignment of the Profits and the Subleases and not merely the
collateral assignment of, or the grant of a lien or security interest in the
Profits and the Subleases, Agent Lessor grants to Lessee a revocable license to
collect and receive the Profits and to retain, use and enjoy such Profits.  Such
license shall be automatically revoked upon the occurrence and during the
continuance of any Lease Event of Default.

     Section 8.  Counterpart Execution.  This Lease Supplement Improvements may
be executed in any number of counterparts and by each of the parties hereto in
separate counterparts, all such counterparts together constituting but one (1)
and the same instrument.  For purposes of the provisions of this Lease
Supplement Improvements concerning this Lease

Supplement Improvements constituting a security agreement and fixture filing,
the addresses of the debtor (Lessee herein) and the secured party (Agent Lessor
herein), from whom information may be obtained about this Lease Supplement
Improvements, are as set forth on the signature pages hereto.

                                       3
<PAGE>

     In Witness Whereof, each of the parties hereto has caused this Lease
Supplement Improvements to be duly executed by an officer thereunto duly
authorized as of the date and year first above written.

                                   AGENT LESSOR:
                                   IBJTC LEASING CORPORATION-BSC

                                   By:__________________________________
                                   Name:________________________________
                                   Title: ______________________________

                                   LESSEE:

                                   KEYNOTE SYSTEMS, INC., a
                                   Delaware corporation

                                   By:__________________________________
                                   Name:________________________________
                                   Title: ______________________________

                                       2
<PAGE>

                                   SCHEDULE 1

                        To Lease Supplement Improvements

The Improvements located on the real property described as:

The land referred to below is situated in the State of California, County of San
Mateo, City of San Mateo and is described as follows:

PARCEL I:
---------

Parcel "C" as shown on that certain map entitled "MARINERS ISLAND UNIT NO. 4,
BEING A SUBDIVISION OF LOTS 2 & 3 BLOCK 4 AND LOT 1 BLOCK 5, MARINERS ISLAND
UNIT NO. 2 RECORDED IN VOLUME 64 OF MAPS AT PAGES 31 TO 35 INCLUSIVE, LOTS 1, 2,
3, & 4, BLOCKS 1 MARINERS ISLAND UNIT NO. 3, RECORDED IN VOLUME 67 OF MAPS AT
PAGES 19 TO 27 INCLUSIVE, AND ADJOINING ACREAGE BEING A PORTION OF LANDS
DESCRIBED IN GRANT DEED RECORDED ON MARCH 30, 1977 IN BOOK 7424 AT PAGE 182, SAN
MATEO COUNTY RECORDS, CITY OF SAN MATEO, SAN MATEO COUNTY, CALF.", filed in the
office of the County Recorder of San Mateo County, State of California, on April
4, 1979 in Book 99 of Maps at page(s) 35 to 38 inclusive.

PARCEL II:
----------

A NON-EXCLUSIVE EASEMENT for employee, invitees and customer traffic for the
purpose only of ingress and egress to and from Parcel C as shown on that map
(the "Final Map") recorded April 4, 1979 in Volume 99 of Maps at pages 35, 36,
37 and 38 in the Official Records of the County of San Mateo, California; over
and across a strip of land not exceeding at any point a width of 44 feet as more
particularly described on the Final map as the "44' accesseasement".

Said easement is appurtenant to Parcel I above and was created by reservation in
Deed recorded April 6, 1979 in Reel 7836 of Official Records at page 443.  (File
No. 92543-AN), Records of San Mateo County, California and by dedication on
Certificate Sheet of the subdivision map of Mariners Island Unit No. 4
hereinabove referred to.

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