Document:

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                                                                 EXHIBIT 10.19.2

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Recording requested by, and when
recorded, please return to:
McGuireWoods LLP
77 West Wacker Drive
Suite 4500
Chicago, Illinois 60601
ATTN: W. Kirk Grimm, Esq.
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                        (Space Above This Line Reserved for Recorder's Use Only)

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                                      LEASE

                                     between

                       DEUTSCHE BANK AG, NEW YORK BRANCH,

                        as Agent Lessor for the Lessors,

                                       and

                               MCDATA CORPORATION

                                    as Lessee

                          DATED AS OF FEBRUARY 9, 2001

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This Lease is subject to a security interest in favor of Deutsche Bank AG, New
York and/or Cayman Islands Branch as agent (the "Agent"), under a Credit
Agreement, dated as of February 9, 2001, among Deutsche Bank AG, New York
Branch, the Lenders, 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 any jurisdiction), 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.

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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
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<S>                                                                                                   <C>
ARTICLE I................................................................................................1
       1.1  Definitions..................................................................................1
ARTICLE II...............................................................................................1
       2.1  Property.....................................................................................1
       2.2  Lease Term...................................................................................1
       2.3  Title........................................................................................1
       2.4  Lease Supplement.............................................................................1
ARTICLE III..............................................................................................2
       3.1  Rent; Capitalized Interest; Capitalized Commitment Fees......................................2
       3.2  Payment of Basic Rent........................................................................2
       3.3  Supplemental Rent............................................................................2
       3.4  Performance on a Non-Business Day............................................................3
       3.5  Method of Payment............................................................................3
ARTICLE IV...............................................................................................3
       4.1  Utility Charges..............................................................................3
ARTICLE V................................................................................................3
       5.1  Quiet Enjoyment..............................................................................3
ARTICLE VI...............................................................................................4
       6.1  Net Lease; No Setoff; Etc....................................................................4
       6.2  No Termination or Abatement..................................................................5
       6.3  Lessee's Rights..............................................................................5
ARTICLE VII..............................................................................................5
       7.1  Ownership of the Property....................................................................5
       7.2  Liens and Security Interests.................................................................5
ARTICLE VIII.............................................................................................8
       8.1  Condition of the Property....................................................................8
       8.2  Possession and Use of the Property...........................................................9
ARTICLE IX...............................................................................................9
       9.1  Compliance with Legal Requirements and Insurance Requirements................................9
ARTICLE X................................................................................................9
       10.1 Maintenance and Repair; Return...............................................................9
       10.2 Right of Inspection.........................................................................10
       10.3 Environmental Inspection....................................................................10
</TABLE>

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<TABLE>
<S>                                                                                                     <C>
ARTICLE XI..............................................................................................11
       11.1 Modifications, Substitutions and Replacements...............................................11
ARTICLE XII.............................................................................................12
       12.1 Warranty of Title...........................................................................12
       12.2 Grants and Releases of Easements............................................................12
ARTICLE XIII............................................................................................13
       13.1 Permitted Contests Other Than in Respect of Impositions.....................................13
ARTICLE XIV.............................................................................................13
       14.1 Public Liability and Workers' Compensation Insurance........................................13
       14.2 Hazard and Other Insurance..................................................................14
       14.3 Coverage....................................................................................14
ARTICLE XV..............................................................................................15
       15.1 Casualty and Condemnation...................................................................15
       15.2 Environmental Matters.......................................................................16
       15.3 Notice of Environmental Matters.............................................................17
ARTICLE XVI.............................................................................................17
       16.1 Termination upon Certain Events.............................................................17
       16.2 Termination Procedures......................................................................19
ARTICLE XVII............................................................................................19
       17.1 Lease Events of Default.....................................................................19
       17.2 Final Liquidated Damages....................................................................21
       17.3 Lease Remedies..............................................................................23
       17.4 Waiver of Certain Rights....................................................................25
       17.5 Assignment of Rights Under Contracts........................................................25
       17.6 Foreclosure.................................................................................25
       17.7 Remedies Cumulative.........................................................................28
       17.8 Lessee's Right to Cure......................................................................28
ARTICLE XVIII...........................................................................................28
       18.1 Agent Lessor's Right to Cure Lessee's Lease Defaults........................................28
ARTICLE XIX.............................................................................................28
       19.1 Provisions Relating to Lessee's Termination of this Lease or Exercise of Purchase Options...28
ARTICLE XX..............................................................................................29
       20.1 Purchase Option.............................................................................29
       20.2 Maturity Date Purchase Option...............................................................30
       20.3 Extension of Expiration Date................................................................31
ARTICLE XXI.............................................................................................31
       21.1 Sale Procedure..............................................................................31
</TABLE>

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<TABLE>
<S>                                                                                                     <C>
       21.2 Application of Proceeds of Sale.............................................................32
       21.3 Indemnity for Excessive Wear................................................................32
       21.4 Appraisal Procedure.........................................................................32
       21.5 Certain Obligations Continue................................................................33
ARTICLE XXII............................................................................................33
       22.1 Holding Over................................................................................33
ARTICLE XXIII...........................................................................................33
       23.1 Risk of Loss................................................................................33
ARTICLE XXIV............................................................................................34
       24.1 Subletting and Assignment...................................................................34
       24.2 Subleases...................................................................................34
ARTICLE XXV.............................................................................................34
       25.1 Estoppel Certificates.......................................................................34
ARTICLE XXVI............................................................................................34
       26.1 No Waiver...................................................................................34
ARTICLE XXVII...........................................................................................35
       27.1 Acceptance of Surrender.....................................................................35
ARTICLE XXVIII..........................................................................................35
       28.1 No Merger of Title..........................................................................35
ARTICLE XXIX............................................................................................35
       29.1 Notices.....................................................................................35
ARTICLE XXX.............................................................................................36
       30.1 Miscellaneous...............................................................................36
       30.2 Amendments and Modifications................................................................37
       30.3 Successors and Assigns......................................................................37
       30.4 Headings and Table of Contents..............................................................37
       30.5 Counterparts................................................................................37
       30.6 GOVERNING LAW...............................................................................37
       30.7 Limitations on Recourse.....................................................................37
       30.8 Recordation of Lease........................................................................37
       30.9 Priority....................................................................................37
</TABLE>

EXHIBITS

Exhibit A         Form of Lease Supplement

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         LEASE (this "Lease"), dated as of February 9, 2001, between DEUTSCHE
BANK AG, NEW YORK BRANCH, a duly licensed branch of Deutsche Bank AG, a German
corporation, having its principal office at 31 West 52nd Street, New York, New
York, 10019 as agent for the Lessors (in such capacity, the "Agent Lessor"),
McDATA CORPORATION, a Delaware corporation, having its principal office at 310
Interlocken Parkway, Broomfield, Colorado 80021, 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 I

         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, Agent Lessor and the Arranger.

                                   ARTICLE II

         2.1 PROPERTY. Subject to the terms and conditions hereinafter set forth
and contained in the Lease Supplement relating to the Property, (i) on the
initial Funding Date, the Existing Owner shall convey to Agent Lessor and Agent
Lessor shall accept delivery of the Land, together with any Improvements
thereon, (ii) Agent Lessor shall demise and lease to Lessee hereunder for the
Term Agent Lessor's interest in the Property and (iii) Lessee hereby agrees,
expressly for the direct benefit of Lessors, to lease from Agent Lessor for the
Term, Agent Lessor's interest in the Property.

         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.
Lessee shall in no event have any recourse against Agent Lessor for any defect
in title to the Property, except for Lessor Liens.

         2.4 LEASE SUPPLEMENT. On the initial Funding Date, Lessee and Agent
Lessor shall each execute and deliver a Lease Supplement for the Property to be
leased on such date in substantially the form of Exhibit A hereto and thereafter
the Property shall be subject to the terms of this Lease.

<PAGE>   6

                                   ARTICLE III

         3.1 RENT; CAPITALIZED INTEREST; CAPITALIZED COMMITMENT FEES. (a) (i)
Capitalized Interest and Capitalized Commitment Fees shall be due and payable
during the Construction Period, on each applicable Payment Date and on any date
which this Lease shall terminate, in the manner set forth in Sections 2.3, 2.4
and 2.11 of Credit Agreement and Sections 2.7 and 2.10 of the Participation
Agreement and (ii) thereafter, Basic Rent shall be due and payable on each
applicable Payment Date during the Term after the Construction Period and on any
date after the Construction Period when this Lease shall terminate 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.

                  (b) 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 (i) the accrual of Capitalized Interest or
Capitalized Commitment Fees during the Construction Period or (ii) Lessee's
obligation to pay Basic Rent after the Construction Period 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 or the Construction Period Maximum
Recourse Amount in accordance with Section 21.1(c) hereof or Article IV or V of
the Construction Agency Agreement, if applicable.

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<PAGE>   7

         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 as assignee of Agent Lessor under the Assignment of Lease (or, if the
Loans and all other amounts owing to the Lenders under the Credit Agreement and
the other Operative Agreements have been paid in full and all Commitments of the
Lenders have been permanently terminated, to Agent Lessor) prior to 2:00 p.m.,
New York 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 time on 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 IV

         4.1 UTILITY CHARGES. Lessee shall pay, or cause to be paid, 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 Construction
Period and the Term, provided, that such charges paid during the Construction
Period shall be reimbursable as Project Costs through Advances subject to the
terms and conditions of the Operative Agreements. Lessee shall be entitled to
receive any credit or refund with respect to any 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. All charges for 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 V

         5.1 QUIET ENJOYMENT. 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
Property 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.

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<PAGE>   8

                                   ARTICLE VI

         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 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; (l) 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

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<PAGE>   9

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.

         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.

         6.3 LESSEE'S RIGHTS. Notwithstanding Sections 6.1 and 6.2, Lessee shall
at all times retain its right to: (i) bring legal action in an appropriate forum
to enforce Agent Lessor's obligations under this Lease (including, without
limitation, Agent Lessor's covenant of quiet enjoyment) and (ii) collect from
Agent Lessor directly (but not by offset against Rent hereunder) any damages
that may be awarded to Lessee in such a proceeding.

                                   ARTICLE VII

         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 transfer and other tax purposes and for purposes of
bankruptcy, insolvency, conservatorship and receivership law (including the
substantive law upon which bankruptcy, conservatorship, insolvency and
receivership proceedings are based), creditor's rights and other commercial law
purposes (A) this Lease will be treated as a financing arrangement, (B) Lessors
and 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 Land and the Property, and (C) Lessee
will be treated as the owner of the Land and the Property and will be entitled
to all tax benefits ordinarily available to an owner of land and property like
the Land and 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 the above-described

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<PAGE>   10

loans, and all other amounts owing to the Participants under the Operative
Agreements, (i) this Lease shall also be deemed to be a security agreement,
financing statement and fixture filing within the meaning of Article 9 of the
Uniform Commercial Code and a real property mortgage or deed of trust, as
applicable; (ii) this Lease grants a security interest in and a mortgage lien on
Lessee's beneficial ownership interest in the Land and 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
all amounts owing to the Participants under the Operative Agreements, including
amounts payable from the sale or disposition of the Property 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 all amounts owing to the Participants under the
Operative Agreements, including amounts payable from the sale or disposition of
the Property 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 and all
amounts owing to the Participants under the Operative Agreements, including
amounts payable from the sale or disposition of the Property; (iii) the
possession by 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, 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, or 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 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 for purposes of securing Lessee's obligations for the
above-described loans, Lessee hereby grants, bargains, sells, mortgages,
conveys, aliens, remises, releases, assigns, sets over

                                       6
<PAGE>   11

and confirms to Agent Lessor all of Lessee's right, title, and interest in and
to the following (collectively, the "Mortgaged Property"): (i) the Land and 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 and 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) 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, now, heretofore or hereafter acquired with any proceeds of the
Advances 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, subleases, rental agreements and arrangements of
any sort now or hereafter affecting the Property or any portion thereof and
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
Improvements (including any and all construction contracts, architectural
contracts, engineering contracts, designs, plans, specifications, drawings,
surveys, tests, reports, bonds and governmental approvals) and all other
contracts, licenses and permits now or hereafter affecting the 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,

                                       7
<PAGE>   12

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; provided
always that these presents are upon the express condition that, if all amounts
due under this Lease and the other Operative Agreements shall have been paid and
satisfied in full, then this instrument and the estate hereby granted shall
cease and terminate and the Agent Lessor shall execute and deliver to the Lessee
such documents as may be reasonably required to release all of such security of
record and all documents reasonably necessary to convey and release the Property
to the Lessee as provided in Section 20.1(a).

                                  ARTICLE VIII

         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 (EXCEPT FOR THE ABSENCE OF LESSOR LIENS), 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
<PAGE>   13

         8.2 POSSESSION AND USE OF THE PROPERTY. The Property shall be used in a
manner consistent with the Construction Agency Agreement and, after the
Completion Date as office building space, as part of a corporate headquarters
campus, and uses reasonably incidental thereto and in compliance with this
Lease. 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 IX

         9.1 COMPLIANCE WITH LEGAL REQUIREMENTS AND INSURANCE REQUIREMENTS.
Subject to the terms of Article XIII relating to permitted contests, Lessee, at
its sole cost and expense, shall (a) comply with all Legal Requirements
(including all Environmental Laws), Insurance Requirements and tax reporting
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; provided
that costs incurred by the Lessee during the Construction Period under this
Section 9.1 shall be reimbursable as Project Costs through Advances, subject to
the terms and conditions of the Operative Agreements.

                                    ARTICLE X

         10.1 MAINTENANCE AND REPAIR; RETURN. (a) Lessee, at its sole cost and
expense, shall maintain the Property in good condition (ordinary wear and tear
excepted) 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 XV 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 or the Construction Period with respect to the Property not
including a purchase thereof by Lessee,

                                       9
<PAGE>   14

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 Liens other than Lessor Liens, in as good condition as it
was on the Completion of the Improvements thereon or on such termination date,
if during the Construction Period, ordinary wear and tear during the Term
excepted, and in compliance with all Legal Requirements and the other
requirements of this Lease and the Construction Agency Agreement (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 or the Construction Period,
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.

         10.2 RIGHT OF INSPECTION. During the Construction Period and the Term,
Agent Lessor, any Lessor, Agent or any Lender may, each not more than twice each
year unless a Lease Event of Default exists, 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.
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 or the Construction Period
(unless Lessee has previously irrevocably exercised the Purchase Option or
Maturity Date Purchase Option or the Construction Period is being followed by
the Term), 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 or the Construction Period 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

                                       10
<PAGE>   15

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 XI

         11.1 MODIFICATIONS, SUBSTITUTIONS AND REPLACEMENTS. (a) 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 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; (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, unless required by Legal Requirements or Insurance
Requirements) 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.

                  (b) Following the Completion Date with respect to the
Property, 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 $1,000,000. 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.

                  (c) Following the Completion Date with respect to the
Property, Lessee shall not without the consent of Agent Lessor undertake any
construction or alterations to the Property

                                       11
<PAGE>   16

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
Maturity Date.

                                   ARTICLE XII

         12.1 WARRANTY OF TITLE. (a) Lessee agrees that, except as otherwise
provided herein and subject to the terms of Article XIII 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 Defeasance Deposit Depositary
Bank pursuant to the Credit Agreement, the Defeasance Deposit Agreement or the
Control Agreement, other than with respect to the Property only, Permitted Liens
and Lessor Liens. Lessee shall promptly notify Agent Lessor in the event it
receives actual knowledge that a Lien (other than a Permitted Lien or Lessor
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 VIII, IX, X and XI, 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 platting and replatting
of the Property and the recording of the initial covenants and restrictions
affecting the Property consistent with the uses thereof permitted under this
Lease; (b) 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; (c) 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); (d) 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; (e) the execution of petitions to have
the Property annexed to any municipal corporation or utility district; and (f)
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 platting, replatting,
recording, grant, release, dedication or

                                       12
<PAGE>   17

transfer does not materially impair the value, utility or remaining useful life
of the Property, (ii) such platting, replatting, recording, grant, release,
dedication or transfer is necessary 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 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
platting, replatting, recording, 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 platting, replatting, recording, 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 platting, replatting, recording, grant, release, dedication or transfer
to any Person permitted under this Section.

                                  ARTICLE XIII

         13.1 PERMITTED CONTESTS OTHER THAN IN RESPECT OF IMPOSITIONS. Except to
the extent otherwise provided for in Section 12.3(f) 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, 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 XIV

         14.1 PUBLIC LIABILITY AND WORKERS' COMPENSATION INSURANCE. During the
Term following the Construction Period, 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. During the Construction Period Lessee's

                                       13
<PAGE>   18

obligations with respect to insurance are governed by Article VI of the
Construction Agency Agreement. 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. 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 following the
Construction Period, 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 and 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 XV. 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 XV.

                  (b) If at any time during the Term the area in which the
Improvements are 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. (a) 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(c). All such insurance shall be at the cost and expense of Lessee. Such
certificates shall include a provision in which the insurer agrees to endeavor
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 Lessor so requests, Lessee shall deliver to Agent Lessor copies of all
insurance policies required by this Lease.

                  (b) 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.

                                       14
<PAGE>   19

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

                  (d) 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 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.

                  (e) 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 XV

         15.1 CASUALTY AND CONDEMNATION. (a) Subject to the provisions of this
Article XV and Article XVI (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, during the Term following the Construction Period
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 during the Term all or a portion of
the Property is damaged or destroyed in whole or in part by a Casualty or (ii)
if during the Term 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 or if a Casualty or
Condemnation occurs during the Construction Period, 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 during the Term following the Construction Period, the estimated
cost of restoration of which is in excess of $5,000,000, 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. Unless the Lease has been terminated pursuant to
Article XVI, following a Casualty or Condemnation during the Construction
Period, the Lessee shall comply with the provisions of Section 3.3 of the
Construction Agency Agreement and, unless a Default shall have occurred and be
continuing, Agent Lessor shall pay over to Lessee any such award, compensation
or insurance proceeds to be applied to the cost of construction or restoration
of the Property.

                  (b) So long as no Lease Event of Default has occurred and is
continuing, during the Term following the Construction Period, 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

                                       15
<PAGE>   20

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 $5,000,000, 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.

                  (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) and Section 3.3 of the Construction Agency Agreement 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 (i) a Casualty which occurs during
the Construction Period and which arises from a Full Recourse Construction
Period Event of Default or (ii) a Casualty or Condemnation which occurs at any
time thereafter during the Term, 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 and Agent Lessor shall pay over to
Lessee any award, compensation or insurance proceeds to be applied to the cost
of such restoration, subject to Section 15.1(a) .

                  (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,
as between Lessee and Agent Lessor, at Lessee's sole cost and expense, promptly
and diligently undertake any

                                       16
<PAGE>   21

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 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 XVI

         16.1 TERMINATION UPON CERTAIN EVENTS. (a) If either: (i) Agent Lessor,
Agent 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 or, if
during the Construction Period, Agent Lessor shall have delivered to Lessee 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 or, if during the Construction Period, Agent Lessor shall
have delivered to Lessee 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 Agent Lessor an Officer's
Certificate stating that, in the reasonable, good-faith judgment of Lessee, the
cost to remediate the same will exceed $5,000,000; or (v) if during the Term a
Casualty occurs with respect to the Property or Lessee or Agent Lessor 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, (A) 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 by Lessee pursuant
to the preceding clause (ii), (iii), (iv) or (v) deliver a notice of termination
of this Lease to Agent Lessor (a "Termination Notice") or (B) if during the
Construction Period, Agent Lessor may deliver to Lessee and Agent a Termination
Notice.

                                       17
<PAGE>   22

                  (b) In the case of an event described in (i) clause (i), (ii),
(iii) or (v) of Section 16.1(a) which occurs during the Term following the
Construction Period due to any cause or, if during the Construction Period, due
to a Full Recourse Construction Period Event of Default or (ii) clause (iv) of
Section 16.1(a), which occurs at any time during the Construction Period or the
Term, Lessee shall be obligated to pay Agent Lessor, for the account of the
Participants, on or prior to the earlier of the Maturity Date and the date
occurring thirty (30) days after the date of the Termination Notice, an amount
(offsetting, at the option of Agent Lessor, against such amount the aggregate
amount of the Defeasance Deposit Collateral) equal to (x) all accrued and unpaid
Capitalized Interest and 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 16.2 and 19.1, transfer to Lessee all of Agent Lessor's
interest in the Property, or (2) the Permitted Lease Investment Balance on such
date, provided that (A) if such amount is less than the Lease Balance on such
date, subsection (e) shall apply and (B) if such amount equals the Lease
Balance, Agent Lessor shall, as set forth in Section 16.2 and 19.1, transfer to
Lessee on such date of payment all of Agent Lessor's interest in the Property.

                  (c) In the case of an event described in clause (i), (ii) or
(iii) of Section 16.1(a) which occurs during the Construction Period and which
arises from the acts or omissions of Lessee or any Lessee Person (other than for
any reasons set forth in clause (b) above), while located on, in the possession
of, controlling, or acting or failing to act with respect to the Property,
Lessee shall be obligated to pay to Agent Lessor, for the account of the
Participants, on or prior to the date occurring thirty (30) days after the date
of the Termination Notice, an amount (offsetting, at the option of Agent Lessor,
against such amount the aggregate amount of the Defeasance Deposit Collateral)
equal to (x) all accrued and unpaid Capitalized Interest and 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 16.2 and 19.1, transfer to
Lessee on such date all of Agent Lessor's interest in the Property) or (2) an
amount equal to the Construction Period Maximum Recourse Amount on such date, in
which event subsection (e) shall apply.

                  (d) In the case of an event described in clause (i), (ii) or
(iii) of Section 16.1(a) which occurs during the Construction Period and which
is not covered by Section 16.1(b) or (c) above, Lessee shall make payments to
Agent Lessor, for the account of the Participants, on or prior to the date
occurring thirty (30) days after date of the Termination Notice, of an amount
(offsetting, at the option of Agent Lessor, against such amount the aggregate
amount of the Defeasance Deposit Collateral) equal to the sum of (x) all
Supplemental Rent otherwise 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 and 19.1, transfer to Lessee on such date all of Agent Lessor's
interest in the Property); and if Lessee does not elect to purchase Agent
Lessor's interest in the Property under clause (y), subsection (e) shall apply.

                  (e) If Lessee elects not to purchase Agent Lessor's interest
in the Property pursuant to any of Sections 16.1(b), (c) or (d), Lessee shall
return the Property to Agent Lessor (or to any other Person specified by Agent
Lessor in compliance with Section 10.1(c)); Agent

                                       18
<PAGE>   23

Lessor shall be entitled to retain all insurance and condemnation proceeds with
respect to such Significant Casualty, Significant Condemnation or Environmental
Violation; and Agent Lessor shall either require Lessee to remarket the Property
for Lessors or undertake to remarket the Property itself in accordance with
Section 21.1(b) of this Lease. Any proceeds received shall be applied in the
manner set forth in Section 13.4 of the Participation Agreement.

         16.2 TERMINATION PROCEDURES. On the date of the payment by Lessee of
the Lease Balance and all other amounts due in accordance with a 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 XVII

         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 Capitalized
Interest, Basic Rent or any Supplemental Rent (other than as referred to in
clauses (a)(ii) or (b) of this Section 17.1) representing amounts owed under the
Credit Agreement or the other Credit Documents within five (5) days after the
same has become due and payable or (ii) any Construction Period Maximum Recourse
Amount, Maximum Residual Guarantee Amount, Permitted Lease Investment Balance,
Purchase Option Price, Partial 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 ten (10) days after receipt of notice
thereof; or

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

                  (d) Lessee shall fail to observe or perform any obligation or
covenant of Lessee (other than those specifically referred to in this Section
17.1), 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
obligations or covenants contained in Section 3(a) of the Defeasance Deposit
Agreement) after the earlier of (i) Lessee's having knowledge thereof or (ii)
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 the earlier of (i)
Lessee's having knowledge thereof or (ii) written notice thereof to Lessee by
Agent Lessor; or

                  (e) a Construction Agency Agreement Event of Default shall
have occurred and be continuing; or

                                       19
<PAGE>   24

                  (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

                  (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 $10,000,000, 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
$10,000,000 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
$10,000,000 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 such Indebtedness or Off Balance
Sheet Debt of $10,000,000 or more, if the effect of any such failure, event or
condition is to cause, or to permit 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) to cause such Indebtedness or Off
Balance Sheet Debt to be declared 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 XVII 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; provided that, in the event of the termination of this Lease

                                       20
<PAGE>   25

pursuant to this Section 17.1, in lieu of the statutory right of redemption
which is applicable in the event of the foreclosure of liens in Colorado, Lessee
shall have the right to acquire the Property from Agent Lessor, which right may
be exercised by Lessee by paying the Termination Value to Agent Lessor at any
time prior to the end of the seventy-five (75) day period commencing on the date
when all of the three following actions have occurred: (i) this Lease has been
terminated; (ii) Agent Lessor (or a receiver appointed at the instance of Agent
Lessor) has recovered the possession of the Property from Lessee; and (iii)
Agent Lessor has given written notice to Lessee that this Lease has been
terminated and that the possession of the Property has been recovered from
Lessee; and, upon the making of such payment, Agent Lessor shall be required to
convey the Property to Lessee in the manner provided in Section 20.1(a), except
that all performances required of Lessee shall have been satisfied by the
payment of the Termination Value. 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.

                  (a) If a Lease Event of Default shall have occurred and be
continuing, Agent Lessor shall have the right (subject to applicable law and the
provisions of Section 5.4 of the Construction Agency Agreement if the Lease
Event of Default is a Construction Agency Agreement Event of Default) 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 Permitted
Lease Investment Balance, plus (b) the Nonrecourse Portion (subject to the
proviso at the end of this sentence), plus (c) all other amounts owing in
respect of Rent and Supplemental Rent theretofore accruing under this Lease
(offsetting, at the option of Agent Lessor, or at the option of Lessee, with the
consent of Agent Lessor, against such amount the aggregate amount of the
Defeasance Deposit Collateral); provided, that notwithstanding anything
contained in this Lease or elsewhere in the Operative Agreements, the
Nonrecourse Portion shall not be a recourse obligation of the Lessee but shall
be recourse only to the Property and the other Collateral and shall be payable
in the manner set forth in Section 13.6 of the Participation Agreement.

                  Notwithstanding the foregoing, and subject, in the case of a
Lease Event of Default that occurs during the Construction Period to clause (v)
below, (i) if this Lease is being terminated on the basis of a Lease Event of
Default under Section 17.1(d) or 17.1(i)(iii) arising out of the failure to
perform an obligation or covenant or the breach of a representation or warranty,
or, in the case of Section 17.1(i)(iii), the existence of a Lease Event of
Default, the performance of which covenant or obligation or the truth of which
representation or warranty, or in the case of Section 17.1(i)(iii), the
existence of such Lease Event of Default, is qualified by the words "material,"
or "Material Adverse Effect" or "in all material respects" or a similar
non-objective qualifier, Lessee shall be required to pay the Permitted Lease
Investment Balance and the Nonrecourse Portion under clauses (a) and (b)
(subject, in the case of clause (b), to the proviso at the end of the first
sentence of Section 17.1(a)) of the first sentence of this Section 17.2(a) if
Agent Lessor or the Person enforcing such Lease Event of Default applied
commercially reasonable standards in determining that such Lease Event of
Default occurred;

                                       21
<PAGE>   26

otherwise, Lessee shall only be required to pay the Maximum Residual Guarantee
Amount (or, if such Lease Event of Default occurs during the Construction
Period, the Construction Period Maximum Recourse Amount) under such clause (a);
(ii) if this Lease is being terminated on the basis of a Lease Event of Default
under (A) Section 17.1(j)(i) or (B) Section 17.1(j)(ii) and the other
Indebtedness or Off-Balance Sheet Debt referred to in clause (ii) of Section
17.1(j) has been accelerated or been declared to be due and payable prior to its
stated maturity (or cash collateral in respect thereof has been demanded),
Lessee shall be required to pay the Permitted Lease Investment Balance and the
Nonrecourse Portion under clauses (a) and (b) (subject, in the case of clause
(b), to the proviso at the end of the first sentence of Section 17.1(a)) of the
first sentence of this Section 17.2(a); (iii) if this Lease is being terminated
on the basis of a Lease Event of Default under Section 17.1(j)(ii) when clause
(ii)(B) of this sentence does not apply, then, (A) such Indebtedness or
Off-Balance Sheet Debt must exist on the Closing Date and (B) if the basis on
which such other Indebtedness or Off-Balance Debt could be (but has not yet
been) accelerated or declared to be due and payable would be through an
application of commercially reasonable standards in determining that such
Indebtedness or Off-Balance Sheet Debt could be required to be due and payable
prior to its stated maturity or cash collateral in respect thereof could be
demanded, Lessee shall be required to pay the Permitted Lease Investment Balance
and the Non-Recourse Portion under clauses (a) and (b) (subject, in the case of
clause (b), to the proviso at the end of the first sentence of Section 17.1(a))
of the first sentence of this Section 17.2(a); otherwise Lessee shall only be
required to pay the Maximum Residual Guarantee Amount (or, if such Lease Event
of Default occurs during the Construction Period, the Construction Period
Maximum Recourse Amount); (iv) if such Lease Event of Default occurs under
Section 17.1(f) or (g) the amount referred to in clauses (a) and (b) (subject,
in the case of clause (b), to the proviso at the end of the first sentence of
Section 17.1(a)) of the first sentence of Section 17.2(a), together with the
amount referred to in clause (c) of such first sentence, shall automatically
become due and payable without notice or demand; and (v) notwithstanding
anything contained herein or in any other Operative Agreement to the contrary,
upon the occurrence and during the continuance during the Construction Period of
a Lease Event of Default the provisions of Sections 5.3 through 5.5 of the
Construction Agency Agreement shall apply and are incorporated herein by
reference, substituting the term "Lease Event of Default" for "Construction
Agency Agreement Event of Default".

                  (b) Upon payment of the amount specified in Section 17.2(a),
(i) if the amount paid under clauses (a) and (b) equals the Termination Value,
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, 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 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 in
the Property, the Improvements, 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.

                                       22
<PAGE>   27

                  (c) Agent Lessor shall (i) market, on behalf of the Lessors,
the Property to third party purchasers in accordance with Section 21.1(b) or
(ii) direct the Lessee to, and the Lessee will, use its commercial best efforts,
as non-exclusive agent of Agent Lessor, to market on behalf of the Lessors, the
Property to third party purchasers in accordance with Section 21.1(b). Any
proceeds received from a sale or remarketing of the Property shall be applied in
the manner set forth in Section 13.6 of the Participation Agreement.

         17.3 LEASE REMEDIES. Agent Lessor and Lessee intend that for commercial
law and bankruptcy law purposes, this Lease will be treated as a financing
arrangement, as set forth in Article VII. 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 (subject to applicable law and the provisions of Section 5.3 and
5.4 of the Construction Agency Agreement if the Lease Event of Default occurs
during the Construction Period):

                  (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. 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, 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 Capitalized Interest and Basic Rent and
other sums due and payable to the Participants hereunder or under the Operative
Agreements to and including the date of such termination. Thereafter, on the
days on which the Basic Rent, Capitalized Interest or Supplemental Rent, as
applicable, are payable under this Lease or would have been payable under this
Lease if the same had not been terminated pursuant to Section 17.1

                                       23
<PAGE>   28

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, an amount equal to the
Capitalized Interest, 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 Defeasance Deposit
Collateral), and subject to the limits set forth in Section 17.2(a); provided
that Lessee's obligation to make payments of Basic Rent, Capitalized Interest
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 Capitalized Interest
and 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 an amount equal to the sum of (and subject to the
limits set forth in Section 17.2(a)) (a) all Capitalized Interest and 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 or Construction Period Maximum
Recourse Amount that would be payable under Section 21.1(c) or under Section
5.3(c) of the Construction Agency Agreement assuming the proceeds of the sale
pursuant to such Section 21.1(c) are equal to zero, which sum is then discounted
to present value at a rate equal to the blended Lessor Yield and the interest on
the Loans applicable to the Property on such date (offsetting, at the option of
Agent Lessor, against such amount the aggregate amount of the Defeasance Deposit
Collateral). Following payment of such amount by Lessee, (i) if during the Term,
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), and (ii) if during the Construction
Period, the provisions of Sections 5.3, 5.4 and 5.5 of the Construction Agency
Agreement shall control.

                  (e) Repossession and Recoverable Amounts. In the event of any
termination of the Term or the Construction Agency Agreement pursuant to Section
17.1 or Article V of the Construction Agency Agreement or as permitted by law,
Lessee shall quit and surrender the Property to Agent Lessor, and Agent Lessor
may without further notice enter upon, reenter,

                                       24
<PAGE>   29

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,
subject to Lessee's right of redemption set forth in Section 17.1 above, 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.

         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,
except for the rights of redemption specifically provided for herein; (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 Construction Contract and each other
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 FORECLOSURE. Subject to Article XXI below, in the event that a
court of competent jurisdiction rules that this Lease constitutes a mortgage,
deed of trust or other 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 the Agent Lessor, for the benefit
of the Participants, a Lien against the Land and the Property, for the purpose
of securing all of the obligations hereunder and under the other Operative
Agreements (including the payment of Capitalized Interest, Basic Rent,
Supplemental Rent and the Termination Value, Permitted Lease Investment Balance,
the Nonrecourse Portion, Purchase Option Price or Partial 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 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

                                       25
<PAGE>   30

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 may foreclose the Lien in accordance with
applicable laws and rules of court. Any sale conducted upon foreclosure of this
Lien shall be held at the front door of the county courthouse for the County or
City and County in which the Land and Property is located, or on the Land, or at
such other place as similar sales are then customarily held in such County or
City and County, provided that the actual place of sale shall be specified in
the notice of sale. The proceeds of any sale shall be applied first to the fees
and expenses of the officer conducting the sale, and then to the reduction or
discharge of the Lease Payment Obligations in such order as is set forth in
Section 13.6 of the Participation Agreement; any surplus remaining shall be paid
over to Lessee or to such other person or persons as may be lawfully entitled to
such surplus. At the conclusion of any foreclosure sale, the officer conducting
the sale shall execute and deliver to the purchaser at the sale a certificate of
purchase which shall describe the property sold to such purchaser and shall
state that upon the expiration of the applicable periods for redemption, the
holder of such certificate will be entitled to a deed to the property described
in the certificate. After the expiration of all applicable periods of
redemption, unless the property sold has been redeemed by Lessee, the officer
who conducted such sale shall, upon request, execute and deliver an appropriate
deed to the holder of the certificate of purchase or the last certificate of
redemption, as the case may be, and such deed shall operate to divest Lessee and
all persons claiming under Lessee of all right, title and interest, whether
legal or equitable, in the property described in the deed. Nothing in this
provision dealing with foreclosure procedures or specifying particular actions
to be taken by Agent Lessor or by any judicial officer shall be deemed to
contradict or add to the requirements and procedures now or hereafter specified
by Colorado law, and any such inconsistency shall be resolved in favor of
Colorado law applicable at the time of foreclosure.

                  (e) 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 Land and 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),

                                       26
<PAGE>   31

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 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;

                  (f) 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.

                  (g) 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 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.

                  (h) 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 Section 17.6(d) 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.

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

         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.

                                       27
<PAGE>   32

         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 RIGHT TO CURE. Notwithstanding any provision contained in
this Lease or any other Operative Agreement, if a Lease Event of Default has
occurred and is continuing, Lessee shall have the right to cure such Lease Event
of Default by exercising its Purchase Option at any time prior to such time as a
foreclosure upon or sale of the Property has been completed.

                                 ARTICLE XVIII

         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 XIV, 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 XIX

         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 XVII if the Property is being purchased by Lessee (or its designee), or
in connection with Lessee's exercise of its Purchase Option, Partial 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) Agent Lessor shall execute and deliver to Lessee (or to
Lessee's designee) at Lessee's cost and expense an assignment or transfer of
Agent Lessor's entire right, title and interest in the Property (or applicable
portion thereof), 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; and

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

                                       28
<PAGE>   33

                                   ARTICLE XX

         20.1 PURCHASE OPTION.

                  (a) Subject to Article XVII, 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, which date shall be a
Scheduled Interest Payment Date, at a price equal to the Termination Value plus
all accrued and unpaid Capitalized Interest and Basic Rent plus any Supplemental
Rent due and owing on such date of purchase (the "Purchase Option Price")
(offsetting, at the option of Agent Lessor, against such amount the aggregate
amount of the Defeasance Deposit Collateral) (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 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.

                  (b) Subject to Article XVII, Lessee shall have the option,
from time to time, to purchase a portion or portions of the Land not improved
with Buildings (each a "Partial Purchase Option") in connection with a plan for
development of one or more additional buildings which, in Lessee's good faith
judgment, are consistent with sound development practices (exercisable on each
occasion, by giving Agent Lessor an irrevocable 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) on the date specified in such Purchase
Notice, which date shall be a Scheduled Interest Payment Date, at a price equal
to the Termination Value of such portion of the Land plus all accrued and unpaid
Capitalized Interest and Basic Rent plus any Supplemental Rent due and owing on
such date of purchase of such portion of the Land not including the Buildings,
calculated based on the value of the Land not including the value of the
Buildings on a pro rata basis in proportion to the area of Land in relation to
the area of the portion of Land being purchased (the "Partial Purchase Option
Price") (offsetting, at the option of Agent Lessor against such amount an amount
of Defeasance Deposit Collateral equal to such portion of the Termination Value)
(which the parties do not intend to be a "bargain" purchase price). The transfer
of any portion of Land pursuant to an exercise of each Partial Purchase Option
shall be subject to compliance with the following conditions, all at Lessee's
expense, on or prior to the date of transfer:

                  (i) Lessee shall have paid the Partial Purchase Option Price;

                  (ii) The portion of the Land remaining after the option to
         purchase has been exercised shall be separately subdivided, with
         adequate parking rights, adequate access and adequate utility service,
         the subdivision of which does not hinder the use of the Improvements
         existing thereon;

                  (iii) Lessee shall have delivered to Agent Lessor with the
         Purchase Notice an Appraisal satisfactory to Agent Lessor of the
         Property remaining subject to this Lease

                                       29
<PAGE>   34

         showing that, as of the purchase date and the Expiration Date, the Fair
         Market Value of the remaining Property is not less than the remaining
         unpaid Termination Value as of such dates and the utility of, and
         access to, the remaining Property shall not have been impaired;

                  (iv) Lessee or the third party purchaser of such portion of
         the Land shall grant to the Lessor any easements reasonably determined
         by Agent Lessor to be necessary for the benefit of the Property
         remaining subject to this Lease;

                  (v) The parties to the Operative Agreements shall have
         executed, delivered, filed and recorded such amendments to the
         Operative Agreements as Agent Lessor shall consider reasonably
         necessary to reflect the impact of such purchase and preserve and
         protect Lessors', Agent's and the Participants' interests in the
         retained Property and Liens securing the same;

                  (vi) Lessee shall have furnished Agent Lessor with an update
         to the title insurance policy or the unconditional obligation of the
         Title Company to issue such update, and survey being delivered pursuant
         to Section 6.1 of the Participation Agreement satisfactory to Agent
         Lessor reflecting the impact of such purchase upon the Property and
         showing no Liens not permitted by the Operative Agreements; and

                  (vii) Lessee shall: (A) upon demand of Agent Lessor, pay all
         transaction expenses incurred by Agent Lessor in connection with each
         such exercise of a Partial Purchase Option, including but not limited
         to reasonable attorneys' fees and other professional fees incurred by
         Agent Lessor in connection with each such exercise of a Partial
         Purchase Option; and (B) for each exercise of a Partial Purchase Option
         following Lessee's first exercise of a Partial Purchase Option, on or
         prior to the date of transfer, Lessee shall pay Agent Lessor an
         administrative fee of $10,000.00 for such exercise of a Partial
         Purchase Option.

Upon satisfaction of such conditions, Agent Lessor shall transfer to Lessee or
Lessee's designee all of Lessor's right, title and interest in and to such
portion of the Land as of the date specified in the Purchase Notice in
accordance with Section 19.1.

         20.2 MATURITY DATE PURCHASE OPTION. Not less than eighteen (18) 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 have the Property
remarketed pursuant to Section 21.1. If Lessee does not give a Maturity Date
Election Notice on or before the date eighteen (18) 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 Purchase Option Price plus any Supplemental
Rent due and owing on such date of purchase (offsetting, at the option of Agent
Lessor, against such amount the aggregate amount of the Defeasance Deposit
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

                                       30
<PAGE>   35

designee all of Agent Lessor's and the Lessors' right, title and interest in and
to the Property in accordance with Section 19.1.

         20.3 EXTENSION OF EXPIRATION DATE. Lessee may request an extension of
the Expiration Date and the Maturity Date subject to, and in accordance with,
the terms and conditions of Section 15 of the Participation Agreement.

                                  ARTICLE XXI

         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 and the
Expiration Date shall have been so extended, (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 have the Property remarketed, and (ii) if Lessee elects to have the
Property remarketed or is required to remarket the Property pursuant to Section
4.2 or 5.5 of the Construction Agency Agreement or Section 16.1 or 17.2 of this
Lease, in each case Lessee shall (x) pay to Agent Lessor the Maximum Residual
Guarantee Amount, Construction Period Maximum Recourse Amount or Permitted Lease
Investment Balance, as the case may be, for the Property (offsetting, at the
option of Agent Lessor, against such amount the aggregate amount of the
Defeasance Deposit 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, if Lessee elects to have the
Property remarketed pursuant to this Section or is required to remarket the
Property pursuant to Sections 4.2 or 5.5 of the Construction Agency Agreement or
Sections 16.1 or 17.2 of this Lease, Agent Lessor shall either remarket the
Property itself or direct Lessee to conduct the remarketing. If Agent Lessor so
directs, Lessee, as nonexclusive broker for Agent Lessor, shall use its best
commercial 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 and conducting the remarketing by giving
Lessee written notice to that effect; provided, however, that (x)
notwithstanding the foregoing, Agent Lessor may not reject a bid if such bid is
greater than or equal to the difference between (i) the Permitted Lease
Investment Balance and (ii) the Construction Period Maximum Recourse Amount,
Maximum Residual Guarantee Amount or Permitted Lease Investment Balance, if any,
as the case may be, paid or to be paid by the Lessee or the Construction Agent
pursuant to Sections 4.2, 5.3 or 5.5 of the Construction Agency Agreement or
Sections 16.1, 17.2 or 21.1 of this Lease and all costs and expenses of sale
(including, if applicable, the Lessor Remarketing Fee) (such amount, the
"Minimum Bid Amount"), and is a bona fide offer by a third party purchaser who
is not an Affiliate of Lessee, and (y) the Agent Lessor need not accept and
consummate any bids until the end of the Marketing Period. If the price which a
prospective purchaser shall have offered to pay for all or

                                       31
<PAGE>   36

any of the Property is less than the Minimum Bid Amount, or if no bid is
received, Agent Lessor may elect to retain the Property after the end of the
Marketing Period 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, or on the date demanded by Agent Lessor pursuant to
Section 4.2 or Article V of the Construction Agency Agreement following a
Construction Agency Agreement Event of Default or pursuant to Section 17.2
following a Lease Event of Default, or on the date required by Section 16.1 in
connection with a termination of this Lease pursuant to Section 16.1, Lessee
shall pay to Agent Lessor the Maximum Residual Guarantee Amount, Construction
Period Maximum Recourse Amount or Permitted Lease Investment Balance, as the
case may be, for the Property (offsetting, at the option of Agent Lessor,
against such amount the aggregate amount of the Defeasance Deposit Collateral)
plus all accrued and unpaid Capitalized Interest and Basic Rent plus any
Supplemental Rent due and owing on such date of purchase or payment.

         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.

         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

                                       32
<PAGE>   37

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
XXI.

                                  ARTICLE XXII

         22.1 HOLDING OVER. If Lessee shall for any reason 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 to
possession 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 XXII 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 XXIII

         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. During the Construction Period, the risk

                                       33
<PAGE>   38

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 shall be assumed by the Lessee to the
extent provided in Articles XV and XVI.

                                  ARTICLE XXIV

         24.1 SUBLETTING AND ASSIGNMENT. Lessee may not assign this Lease or any
of its rights or obligations hereunder in whole or in part without Lessor's
prior written consent, which consent may be withheld in its sole discretion.
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, shall be terminable upon
any termination of this Lease unless the Lessee shall have purchased the
Property pursuant to Article XX and shall expressly provide for the surrender of
the Property after a Lease Event of Default hereunder.

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

                                   ARTICLE XXV

         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 XXV 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 XXVI

         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,

                                       34
<PAGE>   39

and this Lease shall continue in full force and effect with respect to any other
then existing or subsequent default.

                                  ARTICLE XXVII

         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.

                                 ARTICLE XXVIII

         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, or (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.

                                  ARTICLE XXIX

         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 by nationally recognized courier service and
any such notice shall become effective one Business Day after delivery to such
nationally recognized courier service specifying overnight delivery and shall be
directed to the address of such Person as indicated:

                  If to the Lessee, to it at:

                  MCDATA CORPORATION
                  310 Interlocken Parkway
                  Broomfield, Colorado 80021
                  Attention: Tom McGimpsey
                  Telephone No.: (303) 460-4348
                  Telecopy No.: (303) 460-3235

                                       35
<PAGE>   40

                  with a copy to:

                  Cooley Godward LLP
                  Five Palo Alto Square
                  3000 El Camino Real
                  Palo Alto, CA 94306
                  Attn: Pamela J. Martinson
                  Telephone No: (650) 843-5000
                  Facsimile No.: (650) 857-0663

                  If to the Agent Lessor, to it at:

                  Deutsche Bank AG, New York Branch
                  31 West 52nd Street
                  New York, New York 10019
                  Attention: John Ulrich, Global Asset Finance & Leasing
                  Telephone No.: 212-469-8721
                  Telecopy No.: 212-469-7398

                  with a copy to:

                  Deutsche Bank AG, New York and/or Cayman Islands Branch
                  130 Liberty Street
                  New York, New York 10006
                  Attention: Claudia Zou, Corporate Finance Services
                  Telephone No.: 212-250-5391
                  Telecopy No.: 212-669-1706

or such additional parties and/or other address as such party may hereafter
designate.

                                   ARTICLE XXX

         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 XV, XVI, XX or XXI, 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, alive on the date of the execution and
delivery of this Lease.

                                       36
<PAGE>   41

         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.

         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 NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN
SUCH STATE, EXCEPT AS TO MATTERS RELATING TO THE CREATION, PERFECTION AND
ENFORCEMENT OF LIENS AND SECURITY INTERESTS AND THE EXERCISE OF REMEDIES WITH
RESPECT THERETO, WHICH SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED.

         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/or each Lease Supplement
shall be recorded in the jurisdiction in which the Property covered by such
Lease Supplement is located, at Lessee's sole cost and expense.

         30.9 PRIORITY. On and prior to the Expiration Date or earlier
Termination Date, the Deed of Trust shall be subject and subordinate to this
Lease.

                            [signature page follows]

                                       37
<PAGE>   42

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

                                          MCDATA CORPORATION

                                          By: /s/ John F. McDonnell
                                             ------------------------------
                                              Name: John F. McDonnell
                                              Title: President and CEO

                                          DEUTSCHE BANK AG, NEW YORK BRANCH
                                          as Agent Lessor for the Lessors

                                          By: /s/ Karen Keane
                                             ------------------------------
                                              Name: Karen Keane
                                              Title: Vice President

                                          By: /s/ John Ulrich
                                             ------------------------------
                                              Name: John Ulrich
                                              Title: Asst. Vice President

<PAGE>   43

--------------------------------------------------------------------------------
Recording requested by, and when
recorded, please return to:
McGuireWoods LLP
77 West Wacker Drive
Suite 4500
Chicago, Illinois 60601
ATTN: W. Kirk Grimm, Esq.
--------------------------------------------------------------------------------
                        (Space Above This Line Reserved for Recorder's Use Only)

                             LEASE SUPPLEMENT NO. 1

                  THIS LEASE SUPPLEMENT NO. 1 (this "Lease Supplement") dated as
of February 9, 2001, between Deutsche Bank AG, New York Branch, a duly licensed
branch of Deutsche Bank AG, a German corporation, having its principal office at
31 West 52nd Street, New York, New York 10019, as agent for the Lessors (in such
capacity, the "Agent Lessor"), and McData Corporation, a Delaware corporation,
having its principal office at 310 Interlocken Parkway, Broomfield, Colorado
80021, as lessee (the "Lessee").

                  WHEREAS, Agent Lessor is the owner of a fee interest in the
Land described on Schedule I hereto and will be the owner of the Buildings and
other Improvements to be constructed thereon; and

                  WHEREAS, simultaneously with the execution hereof, Agent
Lessor and Lessee have entered into the Lease ("Lease") pursuant to which Agent
Lessor has leased the Leased Property to Lessee and and has granted Lessee an
option to purchase the Leased Property.

                  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:

                  1. Definitions; Rules of Usage. For purposes of this Lease
Supplement, capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to them in Appendix A to the Participation Agreement,
dated as of February 9, 2001, among Lessee, the Lessors, Agent Lessor, Agent,
the Lenders and the Arranger.

                  2. The Leased Property Attached hereto as Schedule I is the
description of the Land, which, together with all improvements and fixtures now
or hereafter located thereon and all appurtenances thereto is the "Leased
Property." Effective upon the execution and delivery of this Lease Supplement by
Agent Lessor and Lessee, the Leased Property shall be subject to the terms and
provisions of the Lease.

                  3. Lease; Renewal; Option to Purchase. As provided in the
Lease, Agent Lessor hereby leases the Leased Property to Lessee for a term of 78
months commencing on the date hereof, which term may be extended in accordance
with the provisions of the Lease. Agent

<PAGE>   44

Lessor hereby grants Lessee the option to purchase all or portions of the Leased
Property during the term or any renewal term of the Lease on the terms and
provisions provided in the Lease.

                  4. Intent of Agent Lessor and Lessee as to Ownership of the
Leased Property; Mortgage.

                           a. Agent Lessor and Lessee intend that (i) for
financial accounting purposes with respect to Lessee, Agent Lessor, the Lessors
and the Lenders (A) the 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 Leased Property and
(C) Lessee will be treated as the lessee of the Leased Property, but (ii) for
federal, state and local income transfer and other tax purposes and for purposes
of bankruptcy, insolvency, conservatorship and receivership law (including the
substantive law upon which bankruptcy, conservatorship, insolvency and
receivership proceedings are based), creditor's rights and other commercial law
purposes (A) this Lease will be treated as a financing arrangement, (B) Lessors
and 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 Land and the Property, and (C) Lessee
will be treated as the owner of the Leased Property and will be entitled to all
tax benefits ordinarily available to an owner of land and property like the
Leased Property.

                           b. Agent Lessor and Lessee further intend and agree
that, for the purpose of securing Lessee's obligations for the repayment of the
above-described loans, and all other amounts owing to the Participants under the
Operative Agreements, (i) this Lease shall also be deemed to be a security
agreement, financing statement and fixture filing within the meaning of Article
9 of the Uniform Commercial Code and a real property mortgage as applicable;
(ii) the Lease grants a security interest in and a mortgage lien on Lessee's
beneficial ownership interest in the Leased Property for the benefit of Agent
Lessor to secure Lessee's payment of all amounts owed by Lessee under this Lease
and the other Operative Agreements and all amounts owing to the Participants
under the Operative Agreements, including amounts payable from the sale or
disposition of the Leased Property. 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 statutes 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. Lessee hereby grants, bargains, sells, mortgages,
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 Leased 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 Leased 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;

                                       2
<PAGE>   45

(iii) 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 Leased Property is known) and goodwill related thereto, and all other
articles of personal property of every kind and nature whatsoever, tangible or
intangible, now, heretofore or hereafter acquired with any proceeds of the
Advances and now, heretofore or hereafter (A) arising out of or related to the
ownership of the Leased Property, or (B) located in, on or about the Leased
Property, or (C) used or intended to be used with or in connection with the
construction, use, operation or enjoyment of the Leased Property; (iv) all
right, title and interest of Lessee in any and all leases, subleases, rental
agreements and arrangements of any sort now or hereafter affecting the Leased
Property or any portion thereof and providing for or resulting in the payment of
money to Lessee for the use of the Leased Property or any portion thereof,
whether the user enjoys the Leased Property or any portion thereof as tenant for
years, licensee, tenant at sufferance or otherwise, and irrespective of whether
such 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 Leased Property, to the extent the same are
transferable, service contracts, utility contracts, leases of equipment,
documents and agreements relating to the construction of any Improvements
(including any and all construction contracts, architectural contracts,
engineering contracts, designs, plans, specifications, drawings, surveys, tests,
reports, bonds and governmental approvals) and all other contracts, licenses and
permits now or hereafter affecting the Leased Property or any part thereof and
all guaranties and warranties with respect to any of the foregoing (the "Subject
Contracts"); (vi) all right, title and interest of Lessee in any insurance
policies or binders now or hereafter relating to the Leased 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 Leased 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 Leased
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

                                       3
<PAGE>   46

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
Leased Property, provided always that these presents are upon the express
condition that, if all amounts due under this Lease and the other Operative
Agreements shall have been paid and satisfied in full, then this instrument and
the estate hereby granted shall cease and terminate and the Agent Lessor shall
execute and deliver to the Lessee such documents as may be reasonably required
to release all of such security of record and all documents reasonably necessary
to convey and release the Leased Property to the Lessee.

                           d. Subject to the provisions of the Lease, in the
event that a court of competent jurisdiction rules that the Lease constitutes a
mortgage or other secured financing, and subject to the availablity of such
remedy under applicable law, then Agent Lessor and Lessee agree that Lessee
hereby mortgages and grants to Agent Lessor, for the benefit of the
Participants, a Lien against the Leased Property for purposes of securing all of
the obligations under the Lease and under the operative documents, with the
power to foreclose such Lien in accordance with applicable laws and rules of
court.

                           e. For purposes of a fixture filing, Lessee is the
debtor, Agent Lessor is the secured party, the addresses of the parties are set
forth in the first paragraph hereof and the debtor's FEIN is 13-2944988.

                           f. In the event of termination of the Lease on
account of the default of Lessee thereunder, Lessee shall have the right, for a
period of 75 days after termination of the Lease, to redeem the Leased Property
by paying to Agent Lessor the amount specified in the Lease, whereupon Agnet
Lessor will be required to convey the Leased Property in the manner provided in
the Lease.

                  5. Ratification. Except as specifically modified hereby, the
terms and provisions of the Lease are hereby ratified and confirmed and remain
in full force and effect.

                  6. Effect. This Lease Supplement has been recorded for the
purpose of giving notice of certain terms and provisions of the Lease. This
Lease Supplement is not intended to modify or amend the terms and provisions of
the Lease, which shall continue in full force and effect. In the event of any
inconsistency between this Lease Supplement and the Lease, the terms of the
Lease shall control.

                  7. Original Lease Supplement. The single executed original of
this Lease Supplement 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 (the "Original Executed
Counterpart"). To the extent that this Lease Supplement constitutes chattel
paper, as such term is defined in the Uniform Commercial Code

                                       4
<PAGE>   47

as in effect in any applicable jurisdiction, no security interest in this Lease
Supplement may be created through the transfer or possession of any counterpart
other than the Original Executed Counterpart.

                  8. 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 NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY
WITHIN SUCH STATE, EXCEPT AS TO MATTERS RELATING TO THE CREATION, PERFECTION AND
ENFORCEMENT OF LIENS AND SECURITY INTERESTS AND THE EXERCISE OF REMEDIES WITH
RESPECT THERETO, WHICH SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED.

                  9. Counterpart Execution. This Lease Supplement 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 and
the same instrument.

                  10. Recordation. Agent Lessor and Lessee agree that this Lease
Supplement No. 1 shall be recorded at Lessee's sole cost and expense as required
under the Lease.

                            [signature page follows]

                                       5
<PAGE>   48

         IN WITNESS WHEREOF, the parties have caused this Lease Supplement No. 1
be duly executed and delivered as of the date first above written.

                                MCDATA CORPORATION

                                By:
                                    --------------------------------------------
                                    Name:
                                    Title:

                                DEUTSCHE BANK AG, NEW YORK BRANCH
                                as Agent Lessor for the Lessors

                                By:
                                    --------------------------------------------
                                    Name:
                                    Title:

                                By:
                                    --------------------------------------------
                                    Name:
                                    Title:

<PAGE>   49

                                   SCHEDULE I

                                LEGAL DESCRIPTION

Lots 1 and 2,
Great Western Park - Filing No. 1,
City of Broomfield, County of Jefferson, State of Colorado,

Lot 2,
Great Western Park - Filing No. 2,
City of Broomfield, County of Jefferson, State of Colorado.

<PAGE>   50

                                                                         ANNEX A

                         RULES OF USAGE AND DEFINITIONS
                                 RULES OF USAGE

         The following rules of usage shall apply to this Annex A and the
Operative Agreements (and each appendix, schedule, exhibit and annex to the
foregoing) unless otherwise required by the context or unless otherwise defined
therein:

         1. Except as otherwise expressly provided, any definitions defined
herein or in any other document shall be equally applicable to the singular and
plural forms of the terms defined.

         2. Except as otherwise expressly provided, references in any document
to articles, sections, paragraphs, clauses, annexes, appendices, schedules or
exhibits are references to articles, sections, paragraphs, clauses, annexes,
appendices, schedules or exhibits in or to such document.

         3. The headings, subheadings and table of contents used in any document
are solely for convenience of reference and shall not constitute a part of any
such document nor shall they affect the meaning, construction or effect of any
provision thereof.

         4. References to any Person shall include such Person, its successors
and permitted assigns and transferees.

         5. Except as otherwise expressly provided, reference to any agreement
means such agreement as amended, modified, extended or supplemented from time to
time in accordance with the applicable provisions thereof.

         6. Except as otherwise expressly provided, references to any law
includes any amendment or modification to such law and any rules or regulations
issued thereunder or any law enacted in substitution or replacement therefor.

         7. When used in any document, words such as "hereunder", "hereto",
"hereof" and "herein" and other words of like import shall, unless the context
clearly indicates to the contrary, refer to the whole of the applicable document
and not to any particular article, section, subsection, paragraph or clause
thereof.

         8. References to "including" means including without limiting the
generality of any description preceding such term and for purposes hereof the
rule of ejusdem generis shall not be applicable to limit a general statement,
followed by or referable to an enumeration of specific matters, to matters
similar to those specifically mentioned.

         9. Each of the parties to the Operative Agreements and their counsel
have reviewed and revised, or requested revisions to, the Operative Agreements,
and the usual rule of construction that any ambiguities are to be resolved
against the drafting party shall be inapplicable in the construing and
interpretation of the Operative Agreements and any amendments or exhibits
thereto.

                                      -2-
<PAGE>   51

                                   DEFINITIONS

         "ABR" shall mean, for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate
in effect on such day, (b) the Base CD Rate in effect on such day plus 1% and
(c) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. For
purposes hereof, "Prime Rate" shall mean the rate of interest per annum publicly
announced from time to time by the Agent as its prime rate in effect at its
principal office in New York City (the Prime Rate not being intended to be the
lowest rate of interest charged by Agent in connection with extensions of credit
to debtors); each change in the Prime Rate shall be effective on the date such
change is publicly announced as effective. "Base CD Rate" shall mean the sum of
(a) the product of (i) the Three-Month Secondary CD Rate and (ii) Statutory
Reserves and (b) the C/D Assessment Rate. "Three-Month Secondary CD Rate" shall
mean, for any day, the Secondary market rate for three-month certificates of
deposit reported as being in effect on such day (or, if such day shall not be a
Business Day, the next preceding Business Day) by the Board through the public
information telephone line of the Federal Reserve Bank of New York (which rate
will, under the current practices of the Board, be published in Federal Reserve
Statistical Release H.15(519) during the week following such day), or, if such
rate shall not be so reported on such day or such next preceding Business Day,
the average of the Secondary market quotations for three month certificates of
deposit of major money center banks in New York City received at approximately
10:00 a.m., New York City time, on such day (or, if such day shall not be a
Business Day, on the next preceding Business Day) by the Agent from the New York
City negotiable certificate of deposit dealers of recognized national standing
selected by it. "Federal Funds Effective Rate" shall mean, for any day, the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for the day of such transactions received by the
Agent from three Federal funds brokers of recognized national standing selected
by it. If for any reason the Agent shall have determined that it is unable to
ascertain the Base CD Rate or the Federal Funds Effective Rate or both for any
reason, including the inability or failure of the Agent to obtain sufficient
quotations in accordance with the terms thereof, the Alternate Base Rate shall
be determined without regard to clauses (b) or (c) of the first sentence of this
definition, as appropriate, until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to a change
in the Prime Rate, the Three Month Secondary CD Rate or the Federal Funds
Effective Rate shall be effective on the effective date of such change in the
Prime Rate, the Three Month Secondary CD Rate or the Federal Funds Effective
Rate, respectively.

         "ABR Loans" shall mean Loans the rate of interest applicable to which
is based upon the ABR.

         "ABR Lessor Contributions" shall mean Lessor Contributions the Yield
applicable to which is based upon the ABR.

         "Acceleration" shall have the meaning set forth in Section 6.1 of the
Credit Agreement.

         "Account" shall have the meaning set forth in Section 8.1(a) of the
Credit Agreement.

                                      -3-
<PAGE>   52

         "Adjusted Eurodollar Rate" shall mean, as applicable to any Interest
Period a rate per annum equal to the quotient obtained (rounded upwards, if
necessary, to the next higher 1/100th of it) by dividing (i) the applicable
Eurodollar Rate for such Interest Period by (ii) 1.00 minus a percentage
(expressed as a decimal) equal to the then current maximum Eurocurrency Reserve
Requirements.

         "Advance" shall mean an advance of Loans by the Lenders and an advance
of Lessor Contributions by the Lessors, in each case pursuant to Section 6 of
the Participation Agreement to pay Project Costs.

         "Affiliate" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified.

         "After Tax Basis" shall mean, with respect to any payment to be
received, the amount of such payment increased so that, after deduction of the
amount of all taxes required to be paid (calculated at the maximum marginal rate
then generally applicable to U.S. corporations) by the recipient (less any tax
savings realized and the present value of any tax savings projected to be
realized by the recipient as a result of the payment of the indemnified amount)
with respect to the receipt by the recipient of such amounts, such increased
payment (as so reduced) is equal to the payment otherwise required to be made.

         "Agent" shall mean Deutsche Bank AG, New York and/or Cayman Islands
Branch, as the agent for the Lenders under the Credit Agreement and the other
Operative Agreements, or any successor agent appointed in accordance with the
terms of the Credit Agreement.

         "Agent Lessor" shall mean Deutsche Bank AG, New York Branch, as the
agent for the Lessors under the Participation Agreement and the other Operative
Agreements, or any successor agent appointed in accordance with the terms of the
Participation Agreement.

         "Aggregate Commitment Amount" shall mean, on any date, $60,000,000, as
such amount may have been reduced or increased pursuant to the Participation
Agreement or the Construction Agency Agreement.

         "Applicable Margin" shall mean as to any Loan, twenty (20) basis points
per annum and as to any Lessor Contribution, forty-five (45) basis points per
annum.

         "Appraisal" shall mean, with respect to the Property, an appraisal,
prepared by a reputable independent appraiser acceptable to the Agent, of the
Property as if improved in accordance with the Plans and Specifications, which
in the judgment of counsel to the Agent, as of the Closing Date, complies with
all of the provisions of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended, the rules and regulations adopted pursuant
thereto, and all other applicable Legal Requirements. The appraisal shall state
the amount of the Fair Market Sales Value of the Land with the Improvements
existing thereon at the Closing Date, the amount of the Projected Completion
Value of the Improvements and an estimate of the value of the Property at the
end of the Term of the Lease.

                                      -4-
<PAGE>   53

         "Appraisal Procedure" shall have the meaning given such term in Section
21.4 of the Lease.

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

         "Arranger" shall mean Deutsche Banc Alex. Brown Inc.

         "Arranger's Fee Letter" shall mean that certain fee letter between the
Lessee and the Arranger.

         "Assignment and Acceptance" shall have the meaning set forth in Section
11.1 of the Participation Agreement.

         "Assignment of Lease" shall mean the Assignment of Leases and Rents
dated as of the Closing Date from the Agent Lessor to the Agent for the benefit
of the Lenders, as amended, supplemented or otherwise modified from time to time
in accordance with the terms thereof or of any other Operative Agreement.

         "Assignment of Purchase Agreement" shall mean the Assignment of
Purchase Agreement dated as of the Closing Date between the Lessee and the Agent
Lessor.

         "Available Commitments" shall mean the sum of the Available Loan
Commitments and the Available Lessor Commitments.

         "Available Lessor Commitment" shall mean, as to any Lessor at any time,
an amount equal to the excess, if any, of (a) the amount of such Lessor's Lessor
Commitment over (b) the aggregate amount of all Lessor Contributions made by
such Lessor as of such date (whether or not any such Lessor Contributions have
been repaid).

         "Available Loan Commitment" shall mean, as to any Lender at any time,
an amount equal to the excess, if any, of (a) the amount of such Lender's Loan
Commitment over (b) the aggregate principal amount of all Loans made by such
Lender as of such date (whether or not any such Loans have been repaid).

         "Bankruptcy Event" means a Default or an Event of Default described in
Sections 17.1 (f) or (g) of the Lease.

         "Basic Rent" shall mean the sum of (i) the Notes Basic Rent and (ii)
the Lessor Basic Rent, calculated as of the applicable date on which Basic Rent
is due.

         "Basic Term" shall mean the period commencing on the Closing Date and
ending on the date immediately prior to the seventy-eighth (78th) monthly
anniversary of the Closing Date.

                                      -5-
<PAGE>   54

         "Benefit Arrangement" shall mean, at any time, an employee benefit plan
within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by the
Lessee or any of its ERISA Affiliates.

         "Benefitted Lender" shall have the meaning set forth in Section 9.7 of
the Credit Agreement.

         "Board" shall mean the Board of Governors of the Federal Reserve System
of the United States (or any successor).

         "Borrower" shall mean Agent Lessor, in its capacity of borrower under
the Credit Agreement.

         "Budget" shall mean, with respect to the Property, the Estimated
Project Costs to be incurred in connection therewith, attached as Schedule II to
the Construction Agency Agreement, as modified from time to time in accordance
with the terms of the Construction Agency Agreement.

         "Budgeted Total Property Cost" shall mean, at any date of
determination, an amount equal to the aggregate amount which the Construction
Agent in good faith expects to be expended in order to achieve Completion with
respect to the Property (including amounts expected to be expended to pay
Construction Period interest and Construction Period Lessor Yield).

         "Buildings" shall mean the Lessee's office building, as part of a
corporate headquarters campus to be constructed on the Land.

         "Business Day" shall mean any day other than a Saturday, Sunday or
other day on which commercial banks in New York City or Denver, Colorado are
authorized or required by law to close, and in the case of a Eurodollar Loan or
Eurodollar Lessor Contribution, any day on which dealings in U.S. dollar
deposits are carried on in the interbank Eurodollar market and on which
commercial banks are open for domestic and international business in New York
and London.

         "Capital Lease" shall mean, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is, or is required to be, accounted for as a capital lease
on the balance sheet of that Person.

         "Capitalized Commitment Fees" shall mean, as of any date, an amount
equal to Lessor Commitment Fees or Lender Commitment Fees which have been
capitalized pursuant to Section 2.7 of the Participation Agreement and 2.3(b) of
the Credit Agreement, respectively.

         "Capitalized Interest" shall mean, as of any date, an amount equal to
Lessor Yield or interest on the Loans which has been capitalized pursuant to
Section 2.7 of the Participation Agreement and Section 2.3(b) of the Credit
Agreement, respectively.

          "Capitalized Lease Obligations" shall mean all obligations under
Capital Leases of any Person, in each case taken at the amount thereof accounted
for as liabilities in accordance with GAAP.

                                      -6-
<PAGE>   55

         "Casualty" shall mean any damage or destruction of all or any portion
of the Property as a result of fire or other casualty.

         "C/D Assessment Rate" shall mean for any date the annual rate (rounded
upwards, if necessary, to the next 1/100 of 1%) identified by the Agent (or, if
need be, reasonably estimated by the Agent) as the then current net annual
assessment rate that will be employed in determining amounts payable by the
Agent to the Federal Deposit Insurance Corporation (or any successor) for
insurance by such Corporation (or such successor) of time deposits made in
dollars at the Agent's offices in the United States.

         "CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of-1980, 42 U.S.C. Section Section 9601 et seq.,
as amended by the Superfund Amendments and Reauthorization Act of 1986.

         "Claims" shall mean any and all actions, suits, penalties, claims and
demands and reasonable out-of-pocket liabilities, losses, costs and expenses
(including, without limitation, reasonable attorney's fees and expenses) of any
nature whatsoever.

         "Closing Date" shall mean the date on which the conditions precedent
set forth in Section 6.1 of the Participation Agreement are satisfied or waived.

         "CMLTD" shall mean, for the Lessee and its Subsidiaries on a
consolidated basis at any date, the amount of their Consolidated Long Term
Liabilities (including noncollateralized Off Balance Sheet Debt) maturing within
one year of such date.

         "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, or any successor statute thereto.

         "Collateral" shall mean all assets of the Agent Lessor and the Lessee,
now owned or hereafter acquired, upon which a Lien is purported to be created by
the Security Documents, and shall include all Collateral and Defeasance Deposit
Collateral under the Defeasance Deposit Agreement.

         "Commitment" shall mean, (i) as to any Lender, the obligation of such
Lender to make Loans (its "Loan Commitment") to the Agent Lessor under the
Credit Agreement in an aggregate principal amount at any one time outstanding
not to exceed the amount set forth opposite such Lender's name on Schedule 2.1
of the Credit Agreement and (ii) as to any Lessor, the obligation of such Lessor
to make Lessor Contributions (its "Lessor Commitment") to the Agent Lessor under
the Participation Agreement in an aggregate amount at any one time outstanding
not to exceed the amount set forth opposite such Lessor's name on Schedule 2.1
to the Participation Agreement.

         "Commitment Fees" shall mean the Lessor Commitment Fees and the Lender
Commitment Fees.

         "Commitment Percentage" shall mean, as to any Participant at any time,
the percentage which such Participant's Commitment then constitutes of the
aggregate Commitments (or, at any time after the Commitments shall have expired
or terminated, the percentage which the aggregate

                                      -7-
<PAGE>   56

principal amount of such Participant's Loans or aggregate amount of such
Participant's Lessor Contributions then outstanding constitutes of the aggregate
principal amount of all Loans and aggregate amount of all Lessor Contributions
then outstanding).

         "Commitment Period" shall mean the period from and including the
Closing Date to but not including the earliest of (i) the Completion Date, (ii)
the Outside Completion Date, (iii) the date on which an Acceleration occurs or
(iv) the Commitments are terminated pursuant to Article IV or V of the Agency
Agreement or Article XVI or XVII of the Lease.

         "Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with the Lessee within the meaning
of Section 4001 of ERISA or is part of a group which includes the Lessee and
which is treated as a single employer under Section 414(b) or (c) of the Code
or, solely for purposes of determining liability under Section 412 of the Code,
which is treated as a single employer under Section 414(b), (c), (m) or (o) of
the Code.

         "Completion" shall mean, with respect to a Building or other
Improvements, such time as the conditions set forth in Section 6.3 of the
Participation Agreement shall have been satisfied.

         "Completion Date" shall mean, with respect to the Property, the date on
which Completion has occurred.

         "Condemnation" shall mean any taking or sale of the use, access,
occupancy, easement rights or title to the Property or any part thereof, wholly
or partially (temporarily or permanently), by or on account of any actual
eminent domain proceeding or other taking of action by any Person having the
power of eminent domain, including an action by a Governmental Authority to
change the grade of, or widen the streets adjacent to, the Property, or alter
the pedestrian or vehicular traffic flow to the Property so as to result in a
change in access to such Property, or by or on account of an eviction by
paramount title or any transfer made in lieu of any such proceeding or action.

         "Consent to Assignment" shall mean the Consent to Assignment dated as
of the Closing Date from the Lessee to the Agent, as amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof or of
any other Operative Agreement.

         "Consent to Contract Assignment" shall mean the Consent to Contract
Assignment dated as of the Closing Date from the Construction Agent to the
Agent, as amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof or of any other Operative Agreement.

         "Consolidated Capital Expenditures" shall mean, for the Lessee and its
Subsidiaries on a consolidated basis for any period, all expenditures which
should be capitalized in accordance with GAAP, including, without duplication,
all such expenditures with respect to fixed or capital assets (including,
without limitation, expenditures for maintenance and repairs which should be
capitalized in accordance with GAAP), and the amount of all Capitalized Lease
Obligations incurred (as reflected on such Person's statement of cash flows for
such period) by such Persons.

                                      -8-
<PAGE>   57

         "Consolidated Current Liabilities" shall mean, for the Lessee and its
Subsidiaries on a consolidated basis at any date, those liabilities of the
Lessee and its Subsidiaries which are required to be classified as current
liabilities on a balance sheet of the Lessee and its Subsidiaries in accordance
with GAAP.

         "Consolidated Fixed Charge Ratio" shall mean, for the Lessee and its
Subsidiaries on a consolidated basis at any date, the quotient of (a) the sum of
(i) Consolidated Net Income, plus (ii) Consolidated Interest Expense, plus (iii)
Consolidated Income Tax Expense, plus (iv) Consolidated Lease Rental Expense,
plus (v) depreciation expense, divided by (b) the sum of (x) CMLTD, plus (y)
Consolidated Interest Expense plus (z) Consolidated Lease Rental Expense. For
purposes of determining the Consolidated Fixed Charge Ratio as of any date of
determination, each of the items utilized in the formula set forth in the
previous sentence shall be based on the results of the two fiscal quarters
ending on the date of determination, except for CMLTD which shall be determined
as of the most recently completed fiscal quarter for which financial results are
available.

         "Consolidated Income Tax Expense" shall mean, for the Lessee and its
Subsidiaries on a consolidated basis for any period, the amount required to be
classified as income tax expense on an income statement of the Lessee and its
Subsidiaries in accordance with GAAP.

         "Consolidated Intangible Assets" shall mean, for the Lessee and its
Subsidiaries on a consolidated basis at any date, the aggregate amount of any
intangible assets of the Lessee and its Subsidiaries, including, without
limitation, goodwill, franchises, licenses, patents, patent applications,
trademarks, trade names, copyrights, service marks, capitalized research and
development expense, unamortized debt discount and expense reserves not already
deducted from Consolidated Total Assets.

         "Consolidated Interest Expense" shall mean, for the Lessee and its
Subsidiaries on a consolidated basis at any date, the amount required to be
classified as interest expense on an income statement of the Lessee and its
Subsidiaries in accordance with GAAP.

         "Consolidated Lease Rental Expense" shall mean, for the Lessee and its
Subsidiaries on a consolidated basis for any period, the amount required to be
shown as rental expense in respect of operating leases on an income statement of
the Lessee and its Subsidiaries in accordance with GAAP.

         "Consolidated Long Term Liabilities" shall mean, for the Lessee and its
Subsidiaries on a consolidated basis at any date, Indebtedness which by the
terms of the agreement governing or instrument evidencing such Indebtedness
matures more than one year from or is directly or indirectly renewable or
extendible at the option of the obligor under a revolving credit or similar
agreement obligating the lender or lenders to extend credit over a period of
more than one year from the date of creation thereof, including, without
limitation, Indebtedness arising under or in connection with any Interest Rate
Agreement, and revolving credit and short-term debt extendible beyond one year
at the option of the debtor, and including in each instance current maturities
of long term debt (and the current portion of long term debt in the last year of
its term).

                                      -9-
<PAGE>   58

         "Consolidated Net Income" shall mean, for the Lessee and its
consolidated Subsidiaries for any period, the net income of the Lessee and its
Subsidiaries as determined in accordance with GAAP.

         "Consolidated Net Worth" shall mean, for the Lessee and its
Subsidiaries on a consolidated basis at any date, the difference between (a)
Consolidated Total Assets and (b) Consolidated Total Liabilities.

         "Consolidated Tangible Net Worth" shall mean, for the Lessee and its
Subsidiaries on a consolidated basis at any date, the difference between (a)
Consolidated Net Worth and (b) Consolidated Intangible Assets.

         "Consolidated Total Assets" shall mean, for the Lessee and its
Subsidiaries on a consolidated basis at any date, the sum of all assets less
depreciation, amortization and other reserves of the Lessee and its Subsidiaries
determined in accordance with GAAP.

         "Consolidated Total Liabilities" shall mean, for the Lessee and its
Subsidiaries on a consolidated basis at any date, the sum of (i) Consolidated
Current Liabilities, plus (ii) Consolidated Long Term Liabilities but excluding
in each instance current maturities of long term debt (and the current portion
of long term debt in the last year of its term) plus (iii) the total amount of
Off-Balance Sheet Debt.

         "Construction Agent" shall mean McDATA Corporation, a Delaware
corporation, as construction agent under the Construction Agency Agreement.

         "Construction Agency Agreement" shall mean the Construction Agency
Agreement dated as of the Closing Date between the Construction Agent and the
Agent Lessor, as amended, supplemented or otherwise modified from time to time
in accordance with the terms thereof or of any other Operative Agreement.

         "Construction Agency Agreement Event of Default" shall have the meaning
set forth in Section 5.1 of the Construction Agency Agreement.

         "Construction Commencement Date" shall mean, with respect to the
Property, the date on which construction of the Buildings and Improvements to be
built thereon commences.

         "Construction Contract" shall mean each contract or agreement relating
to the construction of the Property or the procurement and/or supply of
equipment or supplies utilized in connection therewith entered into by Lessee,
Construction Agent or any Lessee Person.

         "Construction Period" shall mean, with respect to the Property, the
period commencing on the Property Closing Date and ending on the earlier to
occur of (i) the Completion Date and (ii) the Outside Completion Date.

         "Construction Period Maximum Recourse Amount" shall mean, as of any
date with respect to the Property, an amount equal to (A) land acquisition
costs, if any, plus (B) 89.95% of the Property Costs properly capitalized as
"Project Costs" under GAAP incurred as of such date (after having adjusted
Property Costs for any Force Majeure Costs as provided in the definition

                                      -10-
<PAGE>   59

of "Force Majeure Cost" and for the remediation of any Force Majeure Event)
minus the sum of (i) any payments previously paid by the Construction Agent
which have been future valued to such point in time and (ii) the present value
of any future payments that the Construction Agent is obligated to make but in
each case excluding payments that are not required to be included in the
calculation of the Lessee's maximum guaranty amount under EITF 97-10.

         "Contingency Reserve" means, with respect to the Budget, line items
identified as the "contingency reserve" for the Property.

         "Contingent Obligations" shall mean, as to any Person, any obligation
of such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other monetary obligations ("primary obligations") of any other
Person (the "primary obligations") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (a) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (b) to advance or
supply funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (d) otherwise to assure or hold
harmless the owner of such primary obligation against loss in respect thereof;
provided, however, that the term Contingent Obligation shall not include (x)
endorsements of instruments for deposit or collection in the ordinary course of
business or (y) guarantees made by a Person of the obligations of a Subsidiary
or Affiliate of such Person which do not constitute Indebtedness of such
Subsidiary or Affiliate and are incurred in the ordinary course of business of
such Subsidiary or Affiliate. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof (assuming such Person is required to perform thereunder) as determined
by such Person in good faith.

         "Contract Assignment" shall mean the Assignment of Contracts dated as
of the Closing Date from the Agent Lessor to the Agent for the benefit of the
Lenders, as amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof or of any other Operative Agreement.

         "Contractual Obligation" shall mean, as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.

         "Control" shall mean (including the correlative meanings of the terms
"controlled by" and "under common control with"), as used with respect to any
Person, the possession directly or indirectly, of the power to direct or cause
the direction of the management policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.

                                      -11-
<PAGE>   60

         "Control Agreement" shall mean a control agreement providing for the
control of the account(s) established and maintained under the Defeasance
Deposit Agreement, to be executed by Lessee, Agent, Agent Lessor and the
Defeasance Deposit Depositary Bank.

         "Covered Matters" shall have the meaning set forth in Section 12.11(b)
of the Participation Agreement.

         "Credit Agreement" shall mean the Credit Agreement dated as of the
Closing Date among the Agent Lessor, the Agent and the Lenders, as amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof or of any other Operative Agreement.

         "Credit Agreement Default" shall mean any event or condition which,
with the lapse of time or the giving of notice, or both, would constitute a
Credit Agreement Event of Default.

         "Credit Agreement Event of Default" shall mean any event or condition
defined as an "Event of Default" in Section 6.1 of the Credit Agreement.

         "Credit Documents" shall mean the Credit Agreement, the Notes, the
Lease, the Participation Agreement and the Security Documents.

         "Deed" shall mean the Deed dated as of the Closing Date conveying the
Property by the Existing Owner to the Agent Lessor.

         "Deed of Trust" shall mean, with respect to the Property, a Deed of
Trust made by the Agent Lessor to the Public Trustee for the County of
Jefferson, Colorado, for the benefit of the Agent for the benefit of the
Lenders, in substantially the form of Exhibit D to the Participation Agreement.

         "Default" shall mean any event or condition which, with the lapse of
time or the giving of notice, or both, would constitute an Event of Default.

         "Defeasance Deposit" shall have the meaning set forth in Section 5.3 of
the Participation Agreement.

         "Defeasance Deposit Agreement" shall mean the Defeasance Deposit
Agreement, dated as of the Closing Date, among the Lessee, the Agent Lessor and
the Agent in the form of Exhibit H to the Participation Agreement.

         "Defeasance Deposit Collateral" shall have the meaning set forth in
Section 1 of the Defeasance Deposit Agreement.

         "Defeasance Deposit Depositary Bank" shall have the meaning set forth
in Section 1 of the Defeasance Deposit Agreement.

         "Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.

                                      -12-
<PAGE>   61

         "Eligible Transferee" shall mean (a) a commercial bank organized under
the laws of the United States, or any State thereof, and having combined capital
and surplus of $100,000,000; (b) a commercial bank organized under the laws of
any other country which is a member of the Organization for Economic Cooperation
and Development ("OECD"), or a political subdivision of any such country, and
having a combined capital and surplus of $100,000,000; provided, however, that
such bank is acting through a branch or agency located in the country in which
it is organized or another country which is also a member of the OECD or the
Cayman Islands; (c) the central bank of any country which is a member of the
OECD; (d) a finance company or other financial institution or fund (whether a
corporation, partnership, trust or other entity) organized under the laws of the
United States, or any state thereof, that is engaged in making, purchasing or
otherwise investing in commercial loans in the ordinary course of its business
and having a combined capital and surplus of $100,000,000; (e) an insurance
company organized under the laws of the United States, or any state thereof, and
having a combined capital and surplus of $100,000,000; (f) any Lender party to
this Agreement; (g) any Affiliate of a Lender; and (h) any other Person approved
by the Agent, Agent Lessor and Lessee, such approval not to be unreasonably
withheld.

         "Employee Benefit Plan" shall mean an employee benefit plan (within the
meaning of Section 3(3) of ERISA, including any multiemployer plan (within the
meaning of Section 3(37)(A) of ERISA)), or any "plan" as defined in Section
4975(e)(1) of the Code and as interpreted by the Internal Revenue Service and
the Department of Labor in rules, regulations, releases or bulletins in effect
on the Closing Date.

         "Environmental Audit" shall mean the Phase I Environmental Site
Assessment Update dated October 11, 2000, prepared by the Environmental Engineer
and any additional environmental studies or audits prepared by the Environmental
Engineer relating to the Property.

         "Environmental Engineer" shall mean Paragon Consulting Group, Inc.

         "Environmental Law" shall mean, whenever enacted or promulgated, any
federal, state, county or local law, statute, ordinance, code, rule, regulation,
license, permit, authorization, approval, covenant, administrative or court
order, judgment, decree, injunction, code or requirement or any agreement with a
Governmental Authority applicable to the Property:

                  (x) relating to pollution (or the cleanup, removal,
         remediation or encapsulation thereof, or any other response thereto),
         or the regulation or protection of human health, safety or the
         environment, including air, water vapor, surface water, groundwater,
         drinking water, land (including surface or subsurface), plant, aquatic
         and animal life, or

                  (y) concerning exposure to, or the use, containment, storage,
         recycling, treatment, generation, discharge, emission, Release or
         threatened Release, transportation, processing, handling, labeling,
         containment, production, disposal or remediation of any Hazardous
         Substance, Hazardous Condition or Hazardous Activity,

in each case as amended and as now or hereafter in effect, and any common law or
equitable doctrine (including, without limitation, injunctive relief and tort
doctrines such as negligence,

                                      -13-
<PAGE>   62

nuisance, trespass and strict liability) that may impose liability or
obligations for injuries (whether personal or property) or damages due to or
threatened as a result of the presence of, exposure to, or ingestion of, any
Hazardous Substance, whether such common law or equitable doctrine is now or
hereafter recognized or developed. Applicable laws include, but are not limited
to, CERCLA; the Resource Conservation and Recovery Act of 1976, 42 U.S.C.
Section 6901 et seq.; the Federal Water Pollution Control Act, 33 U.S.C. Section
1251 et seq.; the Clean Air Act, 42 U.S.C. Section Section 7401 et seq.; the
National Environmental Policy Act, 42 U.S.C. Section 4321; the Refuse Act, 33
U.S.C. Section Section 401 et seq.; the Hazardous Materials Transportation Act
of 1975, 49 U.S.C. Section 1801-1812; the Toxic Substances Control Act, 15
U.S.C. Section 2601 et seq.; the Federal Insecticide, Fungicide, and Rodenticide
Act, 7 U.S.C. Section Section 136 et seq.; the Safe Drinking Water Act, 42
U.S.C. Section Section 300 f et seq.; and the Occupational Safety and Health Act
of 1970, and their state and local counterparts or equivalents.

         "Environmental Violation" shall mean any activity, occurrence or
condition that violates or results in non-compliance with any Environmental Law
or results in a written complaint or other written claim from a Governmental
Authority with respect to any applicable Environmental Law.

         "Equipment" shall mean equipment, apparatus, furnishings, fittings and
personal property of every kind and nature whatsoever purchased, leased or
otherwise acquired by using the proceeds of the Loans and the Lessor
Contributions and now or subsequently attached to, contained in or used or
usable in any way in connection with any operation or letting of the Property,
including but without limiting the generality of the foregoing, all screens,
awnings, shades, blinds, curtains, draperies, artwork, toilets, carpets, rugs,
storm doors and windows, shelving, furniture and furnishings, heating,
electrical, and mechanical equipment, lighting, switchboards, plumbing,
ventilation, air conditioning and air-cooling apparatus, refrigerating, and
incinerating equipment, escalators, elevators, loading and unloading equipment
and systems, stoves, ranges, laundry equipment, cleaning systems (including
window cleaning apparatus), telephones, communication systems (including
satellite dishes and antennae), televisions, computers, sprinkler systems and
other fire prevention and extinguishing apparatus and materials, security
systems, motors, engines, machinery, pipes, pumps, tanks, conduits, appliances,
fittings and fixtures of every kind and description.

         "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.

         "ERISA Affiliate" shall mean each entity required to be aggregated with
the Lessee pursuant to the requirements of Section 414(b) or (c) of the Code.

         "ERISA Group" shall mean the Lessee and its ERISA Affiliates.

         "Estimated Project Costs" shall mean an amount equal to the aggregate
amount which the Construction Agent in good faith expects to be expended in
order to achieve Completion with respect to Improvements for the Property,
including Project Costs comprised of Capitalized Interest and Lessor Yield
during the Construction Period.

                                      -14-
<PAGE>   63

         "Eurocurrency Reserve Requirements" shall mean for any day as applied
to a Eurodollar Loan or Eurodollar Lessor Contribution, the aggregate (without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on such day (including, without limitation, basic,
supplemental, marginal and emergency reserves under any regulations of the Board
or other Governmental Authority having jurisdiction with respect thereto)
dealing with reserve requirements prescribed for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board)
maintained by a member bank of the Federal Reserve System.

         "Eurodollar Lessor Contribution" shall mean Lessor Contributions the
Yield applicable to which is based upon the Eurodollar Rate.

         "Eurodollar Loans" shall mean Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.

         "Eurodollar Rate" shall mean with respect to an Interest Period for
each Eurodollar Loan or Eurodollar Lessor Contribution, the rate per annum equal
to the rate at which the Agent is offered Dollar deposits two Business Days
prior to the beginning of such Interest Period in the London interbank market at
or about 11:00 A.M., London time, for delivery on the first day of such Interest
Period for the number of days comprised therein and in an amount comparable to
the amount of such Eurodollar Loan or Eurodollar Lessor Contribution.

         "Event of Default" shall mean a Lease Event of Default or a Credit
Agreement Event of Default.

         "Excepted Payments" shall mean:

                  1. all indemnity payments (including indemnity payments made
         pursuant to Section 12 of the Participation Agreement), whether made by
         adjustment to Basic Rent or otherwise, to which any Indemnified Person
         is entitled; provided, that during the Construction Period, indemnity
         payments made to the Agent Lessor pursuant to Sections 12.1(b), 12.2,
         12.3(a)(i), 12.6(a) and 12.8(a) of the Participation Agreement for
         Losses of the Agent Lessor arising out of its indemnification
         obligations under Section 12.11 of the Participation Agreement shall
         not constitute Excepted Payments;

                  2. any amounts (other than Basic Rent, Termination Value,
         Lease Balance, Permitted Lease Investment Balance or Purchase Option
         Price) payable under any Operative Agreement to reimburse the Agent
         Lessor or any Lessor, or any of their respective Affiliates (including
         the reasonable expenses of the Agent Lessor or any Lessor incurred in
         connection with any such payment) for performing or complying with any
         of the obligations of the Lessee under and as permitted by any
         Operative Agreement;

                  3. any amount payable to any Lessor by any transferee of the
         interest of such Lessor as the purchase price of such Lessor's interest
         in the Lessor Contributions (or a portion thereof);

                                      -15-
<PAGE>   64

                  4. any insurance proceeds (or payments with respect to risks
         self-insured or policy deductibles) under liability policies other than
         such proceeds or payments payable to the Lessor or the Agent;

                  5. any insurance proceeds under policies maintained by any
         Lessor;

                  6. Transaction Expenses or other amounts or expenses paid or
         payable to or for the benefit of the Agent Lessor or any Lessor;

                  7. all right, title and interest of the Agent Lessor or any
         Lessor to the Property, any portion thereof or any other property to
         the extent any of the foregoing has been released from the Liens of the
         Deed of Trust and the Assignment of Lease pursuant to the terms thereof
         and not otherwise purchased by the Lessee or a third party pursuant to
         the terms of the Lease;

                  8. all payments in respect of the Lessor Contributions and the
         Lessor Yield;

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

                  10. any rights of the Agent Lessor or any Lessor to demand,
         collect, sue for or otherwise receive and enforce payment of any of the
         foregoing amounts.

         "Excepted Rights" shall mean the rights retained by the Agent Lessor
pursuant to Section 8.2(a)(i) of the Credit Agreement and all right, title and
interest of the Agent Lessor in the Shared Rights.

         "Exculpated Persons" shall have the meaning set forth in Section 9.15
of the Credit Agreement.

         "Existing Owner" shall mean Lake Powell Land Company.

         "Expiration Date" shall mean, with respect to the Lease, the earlier of
the date the Lease shall have been terminated in accordance with the provisions
of the Lease or any of the other Operative Agreements and the Maturity Date.

         "Facility" shall mean a facility used for the treatment, storage or
disposal of Hazardous Substances.

         "Fair Market Sales Value" shall mean the amount, which in any event
shall not be less than zero, that would be paid in cash in an arm's-length
transaction between an informed and willing purchaser and an informed and
willing seller, neither of whom is under any compulsion to purchase or sell,
respectively, for the ownership of the Property. Fair Market Sales Value shall
be determined based on the assumption that, except for purposes of Section 21.3
of the Lease, the Property is in the condition and state of repair required
under Section 10.1 of the Lease and that the Lessee is in compliance with the
other requirements of the Operative Agreements.

                                      -16-
<PAGE>   65

         "Federal Funds Effective Rate" shall have the meaning set forth in the
definition of ABR above.

         "Fixtures" shall mean all fixtures relating to the Buildings or the
other Improvements, including all components thereof, located in or on the
Buildings or the other Improvements, together with all replacements,
modifications, alterations and additions thereto.

         "Force Majeure Costs" shall mean all losses, costs and expenses arising
out of a Force Majeure Event, less the amount of all proceeds paid to Lessors or
Agent under any builder's risk or force majeure insurance policies maintained
under the Construction Agency Agreement with respect to such Force Majeure
Event.

         "Force Majeure Event" shall mean the occurrence of one or more of the
following events during the Construction Period that causes damage to the
Property or delay in the construction of the Improvements and that (i) occur
beyond the direct or indirect control of the Lessee (including any
subcontractors or Lessee Persons acting as the Lessee's agents), (ii) are
unrelated to the construction of this Property, and (iii) could not have been
avoided by the Lessee or any Lessee Person, including but not limited to: fire,
flood, earthquake, hurricane, cyclone, tornado or other acts of God, civil
unrest, insurrection or other acts of the public enemy.

         "Full Recourse Construction Period Event of Default" means the
occurrence of any of the following:

                  (a) any fraudulent or illegal act or omission of Lessee,
         Construction Agent, any Lessee Person or any of their respective
         Affiliates in connection with (x) the negotiation, execution, delivery,
         consummation and/or performance of any Operative Agreement or any
         Construction Contract; or (y) the acquisition, design, development,
         construction, installation or operation of the Leased Property;

                  (b) the misapplication of any Advance or any portion thereof
         or any other funds made available to Lessee or Construction Agent or
         any of their respective Affiliates under any Operative Agreement;

                  (c) a Bankruptcy Event; or

                  (d) Lessee, Construction Agent or any Lessee Person or any of
         their respective Affiliates shall willfully breach any of their
         respective obligations, covenants, representations or warranties under
         any Operative Agreement or any Construction Contract or other
         contractual agreement or Governmental Action relating to the Property,
         or any construction or development thereof.

         "Funding Date" shall mean a Business Day on which the Construction
Agent, on behalf of the Agent Lessor, requests the Lenders to make Loans and the
Lessor, to make Lessor Contributions, in each case, to the Agent Lessor in
accordance with the Participation Agreement and the Credit Agreement in order to
fund Project Costs.

         "GAAP" shall mean United States generally accepted accounting
principles (including principles of consolidation), in effect from time to time,
consistently applied.

                                      -17-
<PAGE>   66

         "Governmental Action" shall mean all permits, authorizations,
registrations, consents, approvals, waivers, exceptions, variances, orders,
judgments, written interpretations, decrees, licenses, exemptions, publications,
filings, notices to and declarations of or with, or required by, any
Governmental Authority, or required by any Legal Requirement, and shall include,
without limitation, all environmental and operating permits and licenses that
are required for the full use, occupancy, zoning and operation of the Property.

         "Governmental Authority" shall mean any Federal, state, county,
municipal or other local governmental authority or judicial or regulatory
agency, board, body, commission, instrumentality, court or quasi-governmental
authority.

         "Hazardous Activity" shall mean any activity, process, procedure or
undertaking that directly or indirectly (i) produces, generates or creates any
Hazardous Substance, (ii) causes or results in the Release of any Hazardous
Substance into the environment (including air, water vapor, surface water,
groundwater, drinking water, land (including surface or subsurface), plant,
aquatic and animal life); (iii) involves the containment or storage of any
Hazardous Substance, or (iv) would be regulated as hazardous waste treatment,
storage or disposal within the meaning of any Environmental Law.

         "Hazardous Condition" shall mean any condition that violates or that
results in noncompliance with any Environmental Law.

         "Hazardous Substance" shall mean any of the following: (i) any
petroleum or petroleum product, explosives, radioactive materials, asbestos,
formaldehyde, polychlorinated biphenyls, lead and radon gas; or (ii) any
substance, material, product, derivative, compound or mixture, mineral,
chemical, waste, gas, medical waste or pollutant that would support the
assertion of any claim under any Environmental Law, whether or not defined as
hazardous as such under any Environmental Law.

         "Impositions" shall mean, except to the extent described in the
following sentence, any and all liabilities, losses, expenses, costs, charges
and Liens of any kind whatsoever for fees, taxes, levies, imposts, duties,
charges, assessments or withholdings ("Taxes") including (i) real and personal
property taxes, including personal property taxes on any property covered by the
Lease that is classified by Governmental Authorities as personal property, and
real estate or ad valorem taxes in the nature of property taxes; (ii) sales
taxes, use taxes and other similar taxes (including rent taxes and intangibles
taxes); (iii) any excise taxes; (iv) real estate transfer taxes, mortgage taxes,
conveyance taxes, stamp taxes and documentary recording taxes and fees; (v)
taxes that are or are in the nature of franchise, income, value added, privilege
and doing business taxes, license and registration fees; (vi) assessments on the
Property, including all assessments for public improvements or benefits, whether
or not such improvements are commenced or completed within the Term; and (vii)
any tax, Lien, assessment or charge asserted, imposed or assessed by the PBGC or
any governmental authority succeeding to or performing functions similar to, the
PBGC, and in each case all interest, additions to tax and penalties thereon,
which at any time prior to, during or with respect to the Term or in respect of
any period for which the Lessee shall be obligated to pay Supplemental Rent, may
be levied, assessed or imposed by any Governmental Authority upon or with
respect to (a) the Property or any part thereof or interest therein; (b) the
purchase, sale, leasing, subleasing, financing, refinancing, demolition,

                                      -18-
<PAGE>   67

construction, alteration, substitution, subleasing, assignment, control,
condition, occupancy, servicing, maintenance, repair, ownership, possession,
activity conducted on, delivery, insuring, use, operation, improvement, transfer
of title, return or other disposition of the Property or any part thereof or
interest therein; (c) the Loans or Lessor Contributions or any part thereof or
interest therein; (d) the rentals, receipts or earnings arising from the
Property or any part thereof or interest therein; (e) the Operative Agreements,
the performance thereof, or any payment made or accrued pursuant thereto; (f)
the income or other proceeds received with respect to the Property or any part
thereof or interest therein upon the sale or disposition thereof; (g) any
contract (including the Agency Agreement) relating to the construction,
acquisition or delivery of the Improvements or any part thereof or interest
therein; or (h) otherwise in connection with the transactions contemplated by
the Operative Agreements.

         The term "Imposition" shall not mean or include the following (except
to the extent that such Taxes apply in consequence of the Lease being treated
other than as a loan for such Tax purposes and exceed the amount of such Taxes
that would have applied if the Lease had been so treated as a loan):

                  (e) Taxes and impositions (other than Taxes that are, or are
         in the nature of, sales, use, transfer or property taxes) that are
         imposed on an Indemnified Person by the United States federal or any
         foreign government that are based on or measured by the net income
         (including taxes based on capital gains and minimum taxes) of such
         Person; provided, that this clause (i) shall not be interpreted to
         prevent a payment from being made on an After Tax Basis if such payment
         is otherwise required to be so made;

                  (f) Taxes and impositions (other than Taxes that are, or are
         in the nature of, sales, use, transfer or property taxes) that are
         imposed by any state or local jurisdiction or taxing authority within
         any state or local jurisdiction and that are franchise taxes or are
         based upon or measured by net income or net receipts; provided, that
         this clause (ii) shall not be interpreted to prevent a payment from
         being made on an After Tax Basis if such payment is otherwise required
         to be so made (anything to the contrary notwithstanding, nothing in the
         Operative Agreements shall be construed to impose upon Lessee any
         liability for Taxes imposed upon an Indemnified Person to the extent
         imposed with respect to any activities of such Indemnified Person other
         than under the transactions contemplated by the Operative Agreements);

                  (g) any Tax or imposition for so long as, but only for so long
         as, it is being contested in accordance with the provisions of Section
         12.3 of the Participation Agreement;

                  (h) any Taxes which are imposed on an Indemnified Person as a
         result of the gross negligence or wilful misconduct of such Indemnified
         Person itself (as opposed to gross negligence or wilful misconduct
         imputed to such Indemnified Person), but not Taxes imposed as a result
         of ordinary negligence of such Indemnified Person;

                  (i) any Tax or imposition to the extent, but only to such
         extent, it relates to any act, event or omission that occurs after the
         termination of the Lease and redelivery or

                                      -19-
<PAGE>   68

         sale of the Property in accordance with the terms of the Lease (but not
         any Tax or imposition that relates to any period prior to such
         termination and redelivery);

                  (j) any interest, additions to tax or penalties imposed on an
         Indemnified Person as a result of a breach by such Indemnified Person
         of its obligations under Section 12.3(c) of the Participation Agreement
         or as a result of an Indemnified Person's failure to file any return or
         other documents timely and as prescribed by applicable law;

                  (k) any Impositions imposed upon an Indemnified Person with
         respect to any voluntary transfer, sale, financing or other voluntary
         disposition of any interest in the Property or any part thereof, or any
         interest therein or any interest or obligation under the Operative
         Agreements or from any sale, assignment, transfer or other disposition
         of any interest in an Indemnified Person or any Affiliate thereof
         (other than any transfer in connection with (1) the exercise by the
         Lessee of its Purchase Option or any termination option or other
         purchase of the Property by the Lessee, (2) the occurrence of an Event
         of Default, (3) a Casualty or Condemnation affecting the Property or
         any part thereof, or (4) any sublease, modification or addition to the
         Property by the Lessee);

                  (l) Taxes imposed on or with respect to or payable by an
         Indemnified Person that would not have been imposed but for an
         amendment, supplement, modification, consent or waiver to any Operative
         Agreement not initiated, requested or consented to by the Lessee unless
         such amendment, supplement, modification, consent or waiver (A) arises
         due to, or in connection with there having occurred, an Event of
         Default or (B) is required by the terms of the Operative Agreements or
         is executed in connection with any amendment to the Operative
         Agreements required by law; or

                  (m) Taxes imposed on or with respect to or payable by an
         Indemnified person or any Affiliate because such Indemnified Person or
         any Affiliate thereof is not a United States person within the meaning
         of Section 7701(a)(30) of the Code.

         "Improvements" shall mean the Buildings and all other buildings,
structures, Fixtures, Equipment, and other improvements of every kind existing
at any time and from time to time on or under the Land, together with any and
all appurtenances to such buildings, structures or improvements, including
sidewalks, utility pipes, conduits and lines, parking areas and roadways, and
including all additions to or changes in the Improvements at any time.

         "In Balance" means that, with respect to the Budget, (i) the
undisbursed portion of the Budget shall be sufficient to complete construction
of the Property pursuant to the Construction Contracts prior to the Outside
Completion Date and to pay all Project Costs, and (2) the undisbursed portion of
each item described in the Budget, plus the reserve for that item, plus the
Contingency Reserve for the Property (to the extent such reserve or Contingency
Reserve has not theretofore been set aside by the Construction Agent for the
payment of overruns in other cost categories or change orders or amendments
permitted pursuant to Section 3.2 of the Construction Agency Agreement) shall be
sufficient to pay in full the costs to which each such amount in the Budget is
allocated and to complete construction of each such item in accordance with the
Construction Contracts.

                                      -20-
<PAGE>   69

         "Indebtedness" shall mean as to any Person, (a) all indebtedness of
such Person for borrowed money, (b) the deferred purchase price of assets or
services which in accordance with GAAP would be shown on the liability side of
the balance sheet of such Person, (c) the face amount of all letters of credit
issued for the account of such Person and, without duplication, all drafts drawn
thereunder, (d) all indebtedness of a second Person secured by any Lien on any
property owned by such first Person, whether or not such indebtedness has been
assumed, (e) all Capitalized Lease Obligations of such Person, (f) all
obligations of such Person to pay a specified purchase price for goods or
services whether or not delivered or accepted, e.g., take-or-pay and similar
obligations, (g) all obligations of such Person under Interest Rate Agreements,
and (h) without duplication, all Contingent Obligations of such Person, provided
that Indebtedness shall not include trade payables and accrued expenses relating
to employees, in each case arising in the ordinary course of business.

         "Indemnification Sections" shall have the meaning set forth in Section
12.11(b) of the Participation Agreement.

         "Indemnified Person" shall mean the Agent Lessor, the Agent, the
Arranger, each Lessor, each Lender, the Defeasance Deposit Depositary Bank and
their respective successors, assigns, directors, shareholders, partners,
officers, employees, agents and Affiliates.

         "Insurance Requirements" shall mean all terms and conditions of any
insurance policy required by the Lease to be maintained by the Lessee and all
requirements of the issuer of any such policy.

         "Insolvent" shall mean, with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.

         "Interest Period" shall mean, with respect to any Eurodollar Loan or
Eurodollar Lessor Amount:

                  (a) initially, the period commencing on the funding date with
         respect to such Eurodollar Loan or Eurodollar Lessor Amount and ending
         one month thereafter; and

                  (b) thereafter, each period commencing on the last day of the
         immediately preceding Interest Period applicable to such Eurodollar
         Loan or Eurodollar Lessor Amount and ending (i) during the Construction
         Period, one month thereafter or (ii) during the Base Term or any
         Renewal Term, ending one month or three months thereafter;

         provided that, the foregoing provisions relating to Interest Periods
are subject to the following:

                  (i) if any Interest Period pertaining to a Eurodollar Loan or
         Eurodollar Lessor Amount would otherwise end on a day that is not a
         Business Day, such Interest Period shall be extended to the next
         succeeding Business Day unless the result of such extension would be to
         carry such Interest Period into another calendar month in which event
         such Interest Period shall end on the immediately preceding Business
         Day;

                                      -21-
<PAGE>   70

                  (ii) any Interest Period that would otherwise extend beyond
         the Maturity Date shall end on the Maturity Date; and

                  (iii) any Interest Period that begins on the last Business Day
         of a calendar month (or on a day for which there is no numerically
         corresponding day in the calendar month at the end of such Interest
         Period) shall end on the last Business Day of a calendar month.

         "Interest Rate Agreement" shall mean any interest rate swap agreement,
interest rate cap agreement, interest rate dollar agreement, interest rate
futures contract, interest rate option contract or other similar agreement or
arrangement designed to protect any Person against fluctuations in interest
rates.

         "Investment Company Act" shall mean the Investment Company Act of 1940,
as amended, together with the rules and regulations promulgated thereunder.

         "Land" shall mean the parcel of real property described on Schedule I
of the Lease Supplement and all Appurtenant Rights attached thereto.

         "Lease" shall mean the Lease dated as of the Closing Date between the
Agent Lessor and the Lessee, together with any Lease Supplements thereto, as
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof or of any other Operative Agreement.

         "Lease Balance" shall mean, as of any date of determination, an amount
equal to the sum of the Loan Balance and the Lessor Balance and all other
amounts owing by Lessee under the Operative Agreements (including without
limitation, accrued and unpaid Basic Rent, Capitalized Commitment Fees,
Capitalized Interest and Supplemental Rent, if any).

         "Lease Default" shall mean any event or condition which, with the lapse
of time or the giving of notice, or both, would constitute a Lease Event of
Default.

         "Lease Event of Default" shall have the meaning set forth in Section
17.1 of the Lease.

         "Lease Payment Obligations" shall have the meaning set forth in Section
17.6 of the Lease.

         "Lease Supplement" shall mean the Lease Supplement substantially in the
form of Exhibit A to the Lease together with all attachments and schedules
thereto, as such Lease Supplement may be supplemented, amended or modified from
time to time.

         "Legal Requirements" shall mean all Federal, state, county, municipal
and other governmental statutes, laws, rules, orders, regulations, ordinances,
judgments, decrees and injunctions affecting the Property or the demolition,
construction, renovation, use or alteration thereof, whether now or hereafter
enacted and in force, including any that require repairs, modifications or
alterations in or to the Property or in any way limit the use and enjoyment
thereof (including all building, zoning and fire codes and the Americans with
Disabilities Act of 1990, 42 U.S.C. Section 12101 et. seq. and any other similar
Federal, state or local laws or ordinances

                                      -22-
<PAGE>   71

and the regulations promulgated thereunder) and any that may relate to
environmental requirements (including all Environmental Laws), and all permits,
certificates of occupancy, licenses, authorizations and regulations relating
thereto, and all covenants, agreements, restrictions and encumbrances contained
in any instruments which are either of record or known to the Lessee affecting
the Property, the Appurtenant Rights and any easements, licenses or other
agreements entered into pursuant to Section 12.2 of the Lease.

         "Lender Commitment" shall have the meaning set forth in the definition
of the term "Commitment".

         "Lender Commitment Fees" shall mean a fee calculated by applying a rate
per annum of 0.07% to the aggregate Available Lender Commitments outstanding
from time-to-time.

         "Lender Financing Statements" shall mean UCC financing statements
appropriately completed and executed for filing in the appropriate state and
county offices in Colorado and Delaware in order to perfect a security interest
in favor of the Agent in the Equipment located on the Property.

         "Lenders" shall mean the several banks and other financial institutions
from time to time lenders under the Credit Agreement.

         "Lessee" shall mean McDATA Corporation, a Delaware corporation, as
lessee under the Lease.

         "Lessee Person" means Lessee, Construction Agent, any of their
Affiliates and any other Person having direct or indirect control or supervisory
responsibility in respect of the construction of the Property, and all
contractors and subcontractors under any Construction Contract.

         "Lessors" shall mean, collectively, each of the Persons that are or may
from time to time become identified as a "Lessor" party to the Participation
Agreement.

         "Lessor Balance" shall mean, as of any date of determination, an amount
equal to the sum of the outstanding Lessor Contributions (including Capitalized
Interest) together with all accrued and unpaid Yield thereon.

         "Lessor Basic Rent" shall mean the Lessor Yield payable on any Payment
Date under the Participation Agreement and the Lease.

         "Lessor Commitment" shall have the meaning set forth in the definition
of the term "Commitment".

         "Lessor Commitment Fees" shall mean a fee calculated by applying a rate
per annum of 0.15% to the aggregate Available Lessor Commitments from
time-to-time.

         "Lessor Contribution" shall have the meaning set forth in Section 2.1
of the Participation Agreement.

                                      -23-
<PAGE>   72

         "Lessor Financing Statements" shall mean UCC financing statements
appropriately completed and executed for filing in the appropriate state and
county offices in Colorado, Delaware and Illinois in order to protect the Agent
Lessor's interest under the Lease to the extent the Lease is a security
agreement.

         "Lessor Lien" shall mean any Lien, true lease or sublease or
disposition of title arising as a result of (a) any claim against the Agent
Lessor or any Lessor, not resulting from the transactions contemplated by the
Operative Agreements, (b) any act or omission of the Agent Lessor or any Lessor,
which is not required by the Operative Agreements or is in violation of any of
the terms of the Operative Agreements, (c) any claim against the Agent Lessor or
any Lessor, with respect to Taxes or Transaction Expenses against which the
Lessee is not required to indemnify the Agent Lessor or such Lessor pursuant to
the Participation Agreement or (d) any claim against the Agent Lessor or any
Lessor arising out of any transfer by the Agent Lessor or such Lessor of all or
any portion of the interest of the Agent Lessor or such Lessor in the Property
or the Operative Agreements other than the transfer of title to or possession of
the Property by the Agent Lessor pursuant to and in accordance with the Lease,
the Credit Agreement or the Participation Agreement or pursuant to the exercise
of the remedies set forth in Article XVII of the Lease.

         "Lessor Party" shall have the meaning set forth in Section 12.1 of the
Participation Agreement.

         "Lessor Remarketing Fee" means, in the event the Lessor elects to
remarket the Property on behalf of the Lessee following an election by the
Lessee to, or requirement by the Lessor that the Lessee shall, remarket the
Property under any of Sections 16.1, 17.2 or 21.1 of the Lease or Sections
4.2(b), 5.3 or 5.5 of the Construction Agency Agreement, an amount equal to six
percent (6%) of the projected Fair Market Value of the Property, as improved
pursuant to the Plans and Specifications, shown on the Appraisal delivered
pursuant to Section 6.1 of the Participation Agreement.

         "Lessor Yield" shall mean Yield.

         "Lien" shall mean, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement relating to such asset and
(c) in the case of securities, any purchase option, call or similar right of a
third party (excluding rights of first refusal) with respect to such securities.

         "Limited Recourse Amount" shall mean, with respect to the Property on
any date, the amount equal to the Termination Value with respect to the Property
on such date, less the Maximum Residual Guarantee Amount as of such date with
respect to the Property.

         "Loan Balance" shall mean, as of any date of determination, an amount
equal to the sum of the outstanding Loans together with all accrued and unpaid
interest and Capitalized Interest thereon pursuant to the Credit Agreement.

         "Loan Commitment" shall have the meaning set forth in the definition of
the term "Commitment".

                                      -24-
<PAGE>   73

         "Loans" shall have the meaning set forth in Section 2.1(a) of the
Credit Agreement.

         "Losses" shall have the meaning set forth in Section 12.11(b) of the
Participation Agreement.

         "Marketing Period" shall mean, if the Lessee has not given the Maturity
Date Election Notice in accordance with Section 20.2 of the Lease and if no
Renewal Term has been negotiated pursuant to Section 15.1 of the Participation
Agreement, (i) the period commencing on the date eighteen (18) months prior to
the Maturity Date and ending on the Maturity Date or (ii) in connection with a
remarketing of the Property pursuant to the Construction Agency Agreement or
Article XVI of the Lease, the period commencing on the date selected by the
Agent Lessor and ending eighteen (18) months thereafter.

         "Material Adverse Effect" shall mean (a) a materially adverse effect on
the business, assets, operations or condition, financial or otherwise, of the
Lessee and its Subsidiaries taken as a whole, (b) material impairment of the
ability of Lessee to perform any of its obligations under any Operative
Agreement to which it is or will be a party or (c) material impairment of the
rights of or benefits available to the Lenders, the Lessors, the Agent and the
Agent Lessor under any Operative Agreement. The term "Material Adverse Effect"
shall not include the disposition of the Class A Common Stock of the Lessee held
by EMC, Inc.

         "Maturity Date" shall mean, with respect to the Loans and the Lessor
Contributions, the seventy-eighth (78th) monthly anniversary of the Closing
Date, unless such Maturity Date is extended pursuant to Section 2.10 of the
Credit Agreement and Section 15.1 of the Participation Agreement.

         "Maturity Date Election Notice" shall have the meaning set forth in
Section 20.2 of the Lease.

         "Maturity Date Purchase Option" shall mean the Lessee's Purchase Option
to purchase the Property on the Maturity Date in accordance with Section 20.2 of
the Lease.

         "Maximum Residual Guarantee Amount" for the Property shall mean an
amount equal to (i) the product of (x) that portion of Property Cost properly
capitalized as "Project Costs" under GAAP as of the Completion Date multiplied
by (y) the Maximum Residual Percentage for the Property minus (ii) the future
value, as of the Expiration Date, of the sum of any payments the Construction
Agent is obligated to make during the Construction Period (including
Construction Period rents) other than for Full Recourse Construction Period
Events of Default.

         "Maximum Residual Percentage" shall mean, at any date of determination,
with respect to the Property, 85%.

         "Minimum Bid Amount" shall have the meaning set forth in Section
21.1(b) of the Lease.

         "Modifications" shall have the meaning set forth in Section 11.1(a) of
the Lease.

         "Mortgaged Property" shall have the meaning set forth in Section 7.2(c)
of the Lease.

                                      -25-
<PAGE>   74
         "Multiemployer Plan" shall mean a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.

         "Net Proceeds" shall mean all amounts paid in connection with any
Casualty or Condemnation, and all interest earned thereon, less the expense of
claiming and collecting such amounts, including all reasonable costs and
expenses in connection therewith for which the Agent and the Agent Lessor or
Lessor are entitled to be reimbursed pursuant to the Lease.

         "Net Sale Proceeds Shortfall" shall mean the amount by which the
proceeds of a sale of the Property described in Section 21.1 of the Lease (net
of all expenses of sale) are less than the Limited Recourse Amount for the
Property.

         "Non-Consenting Participant" shall have the meaning set forth in
Section 15.1(b) of the Participation Agreement.

         "Non-Lessor Party" shall have the meaning set forth in Section 12.11(a)
of the Participation Agreement.

         "Nonrecourse Portion" shall mean that portion of the Termination Value,
if any, equal to the aggregate of all Force Majeure Costs; provided, that
notwithstanding anything contained in the Lease or elsewhere in the Operative
Agreements, the Nonrecourse Portion shall not be a recourse obligation of Lessee
but shall be recourse only to the Property and the other Collateral.

         "Note" shall have the meaning set forth in Section 2.2 of the Credit
Agreement.

         "Notes Basic Rent" shall mean the interest due on the Loans on any
Specified Interest Payment Date pursuant to the Credit Agreement (but not
including interest on overdue amounts under Section 2.7(c) of the Credit
Agreement or otherwise).

         "Obligations" shall mean the collective reference to (i) the unpaid
principal of and interest on the Notes and all other obligations and liabilities
of the Borrower to the Agent or the Lenders (including interest accruing at the
then applicable rate provided in the Credit Agreement after the maturity of the
Loans and interest accruing at the then applicable rate provided in the Credit
Agreement after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to the Borrower,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding), whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter incurred, which may arise under, out of,
or in connection with, the Credit Agreement, the Notes, the other Credit
Documents or any other document made, delivered or given in connection
therewith, whether on account of principal, interest, reimbursement obligations,
fees, indemnities, costs, expenses or otherwise (including all reasonable fees
and disbursements of counsel to the Agent or to the Lenders that are required to
be paid by the Borrower pursuant to the terms of the Credit Agreement or any
other Credit Document), (ii) all amounts payable by the Lessee under any of the
Operative Agreements (including indemnities) to the Agent and/or the Lenders,
the Agent Lessor and the Lessors and (iii) all amounts owing by the Lessee to
the Agent Lessor and the Lessors in respect of accrued and unpaid Lessor Yield
and outstanding fundings of the Lessor Contributions.

                                      -26-
<PAGE>   75

         "Off-Balance Sheet Debt" shall mean, for the Lessee and its
Subsidiaries at any date, the maximum amount of that portion of the rental
payments (including basic, supplemental and additional rent) representing
payments of principal or equity contributions and not interest required to be
made by the Lessee and any of its Subsidiaries under any synthetic lease or
other off-balance sheet financing arrangement, including in the amount of such
payments the maximum amount of all payments (including payments of termination
value) representing payments of principal or equity contributions and not
interest required to be made in connection with any purchase of the property or
assets subject thereto by the Lessee or any of its Subsidiaries at the
expiration of the term of such lease or arrangement.

         "Officer's Certificate" shall mean a certificate signed by any
individual holding the office of vice president or higher, which certificate
shall certify as true and correct the subject matter being certified to in such
certificate.

         "Operative Agreements" shall mean the following:

         1.       the Participation Agreement;

         2.       the Notes;

         3.       the Deed;

         4.       the Lease and the Lease Supplement;

         5.       the Assignment of Lease;

         6.       the Consent to Assignment;

         7.       the Credit Agreement;

         8.       the Deed of Trust;

         9.       the UCC Financing Statements;

         10.      the Property Purchase Agreement;

         11.      the Assignment of Purchase Agreement;

         12.      the Construction Contracts;

         13.      the Contract Assignment;

         14.      the Construction Agency Agreement;

         15.      the Defeasance Deposit Agreement;

         16.      the Control Agreement; and

         17.      the Requisitions.

                                      -27-
<PAGE>   76

         "Outside Completion Date" with respect to the Property shall mean the
twenty-fourth (24th) monthly anniversary of the Closing Date.

         "Overdue Interest" shall mean any interest payable pursuant to Section
2.7(c) of the Credit Agreement.

         "Overdue Rate" shall mean (i) with respect to Notes Basic Rent and any
other amount owed under or with respect to the Credit Agreement or the Security
Documents, the rate set forth in Section 2.7(c) of the Credit Agreement, (ii)
with respect to Lessor Yield and the Lessor Contributions, 2% in excess of the
Lessor Yield then in effect and (iii) with respect to any other amount, the
amount referred to in of Section 2.7(c) of the Credit Agreement.

         "Partial Purchase Option" shall have the meaning set forth in Section
20.1(b) of the Lease.

         "Partial Purchase Option Price" shall have the meaning set forth in
Section 20.1(b) of the Lease.

         "Participants" shall mean, collectively, each Lender and each Lessor,
and their successors and assigns.

         "Participant Balance" shall mean, with respect to any Participant as of
any date of determination: (i) with respect to any Lender, an amount equal to
the aggregate outstanding Loans of such Lender, together with all accrued and
unpaid interest thereon or (ii) with respect to any Lessor, an amount equal to
the aggregate outstanding Lessor Contributions of such Lessor, together with all
amounts of accrued and unpaid Yield thereon.

         "Participation Agreement" shall mean the Participation Agreement dated
as of the Closing Date among the Lessee, the Lessors, the Agent Lessor, the
Agent and the Lenders, as it may be amended, supplemented or otherwise modified
from time to time in accordance with the terms thereof or of any other Operative
Agreement.

         "Payment Date" shall mean each Specified Interest Payment Date and each
Specified Commitment Fee Payment Date and any other date on which a payment is
otherwise due under the terms of the Credit Agreement or the Participation
Agreement or, if all amounts due under the Credit Agreement have been paid in
full and the Credit Agreement has been terminated, the first Business Day of
each calendar month during the Term.

         "PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.

         "Permitted Exceptions" shall mean: (i) Liens of the types described in
clauses (i), (iii), (v) and (vii) of the definition of Permitted Liens; and (ii)
all non-monetary encumbrances, exceptions, restrictions, easements, rights of
way, servitudes, encroachments and irregularities in title, other than Liens
which do not, in the reasonable assessment of the Agent, materially impair the
use of the Property for its intended purpose.

                                      -28-
<PAGE>   77

         "Permitted Lease Investment Balance" shall mean, as of any date of
determination, the difference between (i) the Termination Value and (ii) (A) to
the extent funded by the Participants under the Construction Agency Agreement
and the Participation Agreement, the sum of all Force Majeure Costs, plus (B) to
the extent not so funded, the sum of all Force Majeure Costs, as determined
pursuant to an Appraisal by an appraiser acceptable to the Agent Lessor;
provided, that American Appraisal Associates, Inc. and Deloitte & Touche are
acceptable to the Agent Lessor. Such Appraisal shall show the diminution in the
Fair Market Sales Value of the Property resulting from the Force Majeure Event
giving rise to such Force Majeure Costs; provided that such diminution shall not
exceed the cost to repair any damage to the affected portion of the Property
resulting from such Force Majeure Event.

         "Permitted Liens" shall mean: (i) the respective rights and interests
of the parties to the Operative Agreements as provided in the Operative
Agreements; (ii) the rights of any sublessee or assignee under a sublease or an
assignment expressly permitted by the terms of the Lease; (iii) Liens for Taxes
that either are not yet due or are being contested in accordance with the
provisions of Section 12.3 of the Participation Agreement; (iv) Liens arising by
operation of law, materialmen's, mechanics', workmen's, repairmen's, employees',
carriers', warehousemen's and other like Liens in connection with any
Modifications or arising in the ordinary course of business for amounts that
either are not more than 30 days past due or are being diligently contested in
good faith by appropriate proceedings, so long as such proceedings satisfy the
conditions for the continuation of proceedings to contest Taxes set forth in
Section 12.3 of the Participation Agreement; (v) Liens of any of the types
referred to in clause (iv) above that have been bonded for not less than the
full amount in dispute (or as to which other security arrangements satisfactory
to the Agent Lessor have been made), which bonding (or arrangements) shall
comply with applicable Legal Requirements, and shall have effectively stayed any
execution or enforcement of such Liens; (vi) Liens arising out of judgments or
awards with respect to which appeals or other proceedings for review are being
prosecuted in good faith and for the payment of which adequate reserves have
been provided as required by GAAP or other appropriate provisions have been
made, so long as such proceedings have the effect of staying the execution of
such judgments or awards and satisfy the conditions for the continuation of
proceedings to contest Taxes set forth in Section 12.3 of the Participation
Agreement; and (vii) easements, rights of way and other encumbrances on title to
real property pursuant to Section 12.2 of the Lease.

         "Person" shall mean any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization, governmental authority or any other entity.

         "Plan" shall mean an Employee Benefit Plan.

         "Plans and Specifications" shall mean the plans and specifications for
the Buildings to be constructed on the Property, as such Plans and
Specifications may be amended, modified or supplemented from time to time in
accordance with the terms of the Operative Agreements.

         "Project Costs" shall mean all costs and expenses incurred by the
Construction Agent or Agent Lessor or otherwise expended prior to the Completion
Date in connection with the acquisition and development of the Land and the
design and construction of the Buildings and

                                      -29-
<PAGE>   78

any other Improvements, including Property Acquisition Costs, all professional
fees and other soft costs incurred in connection therewith, Transaction Expenses
and other pre-closing and closing costs incurred by Construction Agent or Agent
Lessor in connection with the transactions contemplated by the Operative
Agreements and Capitalized Interest on the Loans and capitalized Lessor Yield
during the Construction Period, as the same are reflected in the Budget prepared
in accordance with the Construction Agency Agreement.

         "Projected Completion Value" shall mean the estimated value of any
Improvements assuming such Improvements are completed in accordance with the
Plans and Specifications, as established by an Appraisal.

         "Property" shall mean the collective reference to the Agent Lessor's
fee interest in the Land and Agent Lessor's fee interest in all of the Buildings
and Improvements at any time located on or under such Land.

         "Property Acquisition Cost" shall mean the cost to the Agent Lessor to
purchase the Land and other costs incurred in connection therewith, including,
without limitation, all professional fees and permitting, survey, title and
other similar costs.

         "Property Cost" shall mean with respect to the Property the aggregate
amount of the Loans and Lessor Contributions made to finance the Project Costs.

         "Property Purchase Agreement" shall mean the Option to Purchase
Agreement, as amended, for the Land dated as of June 16, 2000 between the
Existing Owner and the Lessee.

         "Purchase Notice" shall have the meaning set forth in Section 20.1 of
the Lease.

         "Purchase Option" shall have the meaning set forth in Section 20.1 of
the Lease.

         "Purchase Option Price" shall have the meaning set forth in Section
20.1 of the Lease.

         "Register" shall have the meaning set forth in Section 9.6(a) of the
Credit Agreement.

         "Release" shall mean any release, pumping, pouring, emptying,
injecting, escaping, leaching, dumping, seepage, spill, leak, flow, discharge,
disposal or emission of a Hazardous Substance.

         "Renewal Term" shall have the meaning set forth in Section 15.1(a) of
the Participation Agreement.

         "Rent" shall mean, collectively, the Basic Rent and the Supplemental
Rent, in each case payable under the Lease.

         "Replacement Participant" shall have the meaning set forth in Section
15.1(b) of the Participation Agreement.

         "Reportable Event" shall mean a "reportable event" described in Section
4043(b) of ERISA as to which the thirty (30) day notice period has not been
waived.

                                      -30-
<PAGE>   79

         "Required Lenders" shall mean, at any time, Lenders the Commitment
Percentages of which aggregate at least 51% of the Commitment Percentages of all
Lenders.

         "Required Lessors" shall mean, at any time, Lessors the Commitment
Percentages of which aggregate at least 51% of the Commitment Percentages of all
Lessors.

         "Requirement of Law" shall mean, as to any Person, the Certificate of
Incorporation, By-Laws, Articles of Association or other organizational or
governing documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.

         "Requisition" shall have the meaning set forth in Section 5.2 of the
Participation Agreement.

         "Restricted Payment" shall mean (i) the declaration or payment of any
dividend or the incurrence of any liability to make any payment or distribution
of cash or other property or assets in respect of a Person's stock, (ii) any
payment on account of the purchase, redemption, defeasance or other retirement
of a Person's stock or any other payment or distribution made in respect
thereof, either directly or indirectly, or (iii) any payment, loan,
contribution, or other transfer of funds or other property to any stockholder of
such Person.

         "Scheduled Commitment Fee Payment Date" shall mean the date any
Commitment Fee is payable.

         "Scheduled Interest Payment Date" shall mean (a) as to any ABR Loan or
ABR Lessor Contribution, the last day of each month to occur while such Loan is
outstanding and the Maturity Date, (b) as to any Eurodollar Loan or Eurodollar
Lessor Contribution, the last day of each Interest Period.

         "Securities Act" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.

         "Security Documents" shall mean the collective reference to the Deed of
Trust, the Lease, the Assignment of Lease, the Contract Assignment, the
Defeasance Deposit Agreement, the Control Agreement and all other security
documents hereafter delivered to the Agent granting a Lien on any asset or
assets of any Person to secure the obligations and liabilities of the Agent
Lessor under the Credit Agreement and/or under any of the other Credit Documents
or the Obligations of the Lessee or to secure any guarantee of any such
obligations and liabilities.

         "Shared Rights" shall mean the rights retained by the Agent Lessor, but
not to the exclusion of the Agent, pursuant to Section 8.2(a)(ii) of the Credit
Agreement.

         "Single Employer Plan" shall mean any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.

         "Significant Casualty" shall mean a Casualty that in the reasonable,
good faith judgment of the Lessee (as evidenced by an Officer's Certificate)
(or, if occurring during the Construction

                                      -31-
<PAGE>   80

Period, of the Agent Lessor) either (a) renders the Property unsuitable for
continued use as a commercial property of the type of the Property immediately
prior to such Casualty or (b) is so substantial in nature that restoration of
the Property to substantially its condition as existed immediately prior to such
Casualty would be impracticable or impossible.

         "Significant Condemnation" shall mean a Condemnation that in the
reasonable, good faith judgment of the Lessee (as evidenced by an Officer's
Certificate) (or, if occurring during the Construction Period, of the Agent
Lessor) either (a) renders the Property unsuitable for continued use as
commercial property of the type of the Property immediately prior to such
Condemnation or (b) is such that restoration of the Property to substantially
its condition as existed immediately prior to such Condemnation would be
impracticable or impossible.

         "Significant Event" shall mean (i) a Significant Casualty, (ii) a
Significant Condemnation, (iii) an event where the restoration of the Property
subject to a Casualty or Condemnation shall not be completed prior to the
earlier of (A) the 180th day prior to the Expiration Date or (B) twelve (12)
months following the occurrence of such Casualty or Condemnation or (iv) the
occurrence of an Environmental Violation where the costs to clean up or
remediate the same are reasonably estimated by the Lessee (or, if occurring
during the Construction Period, the Lessor) to exceed $5,000,000.

         "Specified Interest Payment Date" shall mean (a) any Scheduled Interest
Payment Date and (b) any date on which interest is payable pursuant to Section
2.7(d) of the Credit Agreement and Section 2.2(c) of the Participation Agreement
in connection with any prepayment of the Loans or Lessor Contributions.

         "Specified Commitment Fee Payment Date" shall have the meaning set
forth in Section 2.10 of the Participation Agreement.

         "Statutory Reserves" shall mean a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority to which the Agent is
subject for new negotiable nonpersonal time deposits in dollars of over $100,000
with maturities approximately equal to the applicable Interest Period. Statutory
Reserves shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage.

         "Structuring Fee" shall have the meaning set forth in the Arranger's
Fee Letter.

         "Subject Contracts" shall have the meaning set forth in Section 7.2(c)
of the Lease.

         "Subject Leases" shall have the meaning set forth in Section 7.2(c) of
the Lease.

         "Subsidiary" shall mean, with respect to any Person (herein referred to
as the "parent"), any corporation, partnership, association or other business
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or more
than 50% of the general partnership interests are, at the time any determination
is being made, owned, controlled or held, or (b) which is, at the time any

                                      -32-
<PAGE>   81

determination is made, otherwise Controlled by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.

         "Supplemental Amounts" shall have the meaning set forth in Section 9.15
of the Credit Agreement.

         "Supplemental Rent" shall mean all amounts, liabilities and obligations
(other than Basic Rent) which the Construction Agent or the Lessee assumes or
agrees to pay under the Participation Agreement or any other Operative Agreement
to the Agent Lessor or to any other party to the Operative Agreements or to an
Indemnified Person including, without limitation pursuant to Section 12 of the
Participation Agreement or pursuant to Section 8.1(c) or Section 8.2 of the
Participation Agreement, or in respect of Transaction Expenses included in
paragraph (a) (but excluding payments to counsel to the Lessee), (b) (but
excluding payments to counsel to the Lessee), (d), (e), (f), (g), (h), (i), (j)
and (k) of the definition of Transaction Expenses. Except in circumstances where
Section 5.3(a) of the Construction Agency Agreement is applicable, during the
Construction Period, the aggregate amount paid by the Lessee as Supplemental
Rent shall not exceed the Construction Period Maximum Recourse Amount; provided,
that, payments pursuant to Sections 12.1, 12.2 and 12.3 of the Participation
Agreement shall be excluded for this purpose.

         "Tax Registration Indemnitee" shall have the meaning set forth in
Section 12.9 of the Participation Agreement.

         "Taxes" shall have the meaning set forth in the definition of
"Impositions".

         "Term" shall mean the Basic Term and any Renewal Term.

         "Termination Date" shall have the meaning set forth in Section 16.2(a)
of the Lease.

         "Termination Notice" shall have the meaning set forth in Section
16.1(a) of the Lease.

         "Termination Value" shall mean with respect to the Property, as of any
determination date, an amount equal to the sum of (i) the aggregate outstanding
principal of the Notes, accrued and unpaid interest on the Notes and any other
amounts due under the Credit Agreement, plus (ii) the aggregate outstanding
amount of the Lessor Contributions, and all accrued amounts due on account of
the Lessor Yield, plus (iii) other amounts owing to the Participants under the
Operative Agreements.

         "Title Company" shall mean First American Heritage Title Company or
such other title insurance company reasonably acceptable to the Agent and the
Agent Lessor.

         "Total Condemnation" shall mean a Condemnation that involves a taking
of the Agent Lessor's entire title to the Property.

         "Transaction Expenses" shall mean:

                  11. the reasonable fees, out-of-pocket expenses and
         disbursements of counsel for the Agent Lessor, counsel for the Lenders
         and counsel for the Lessee (including local counsel) in

                                      -33-
<PAGE>   82

         connection with negotiating the terms of the Operative Agreements and
         the other transaction documents, preparing for the closing under, and
         rendering opinions in connection with, such transactions and in
         rendering other services customary for counsel representing parties to
         transactions of the types involved in the transactions contemplated by
         the Operative Agreements;

                  12. the reasonable fees, out-of-pocket expenses and
         disbursements of counsel for the Agent Lessor, counsel for the Lenders
         and counsel for the Lessee (including local counsel) in connection with
         the transactions contemplated to occur on the Property Closing Date and
         each other Funding Date;

                  13. the Structuring Fee;

                  14. any and all Taxes and fees incurred in recording,
         registering or filing any Operative Agreement, any other transaction
         document, any deed, declaration, deed of trust, security agreement,
         notice or financing statement with any public office, registry or
         governmental agency in connection with the transactions contemplated by
         the Operative Agreements;

                  15. all reasonable fees, expenses and disbursements of special
         New York counsel;

                  16. all costs and expenses relating to surveys and the
         Environmental Audits required on or prior to the Closing Date to be
         delivered under the Operative Agreements;

                  17. fees and other expenses relating to the appraisals
         required to be delivered on or prior to the Closing Date by the
         Operative Agreements;

                  18. with respect to builder's "all risk" insurance required to
         be maintained under Section 6.1(b) of the Construction Agency Agreement
         during the Construction Period, insurance premiums incurred by the
         Construction Agent or the Agent Lessor for such insurance and any
         amount not included in amounts payable to the Agent Lessor under any
         such insurance policy as a result of the "deductible" included in such
         policy;

                  19. the reasonable fees and expenses of the Agent's
         independent real estate consultant, if any;

                  20. all title insurance and escrow fees in connection with the
         transaction contemplated by the Operative Agreements; and

                  21. the Commitment Fees.

         "Transactions" shall have the meaning set forth in Section 7.3(d) of
the Participation Agreement.

         "Transferee" shall have the meaning set forth in Section 11.3 of the
Participation Agreement.

                                      -34-
<PAGE>   83

         "Type" shall mean, as to any Loan or Lessor Contribution, its nature as
an ABR Loan or Lessor Contribution or a Eurodollar Loan or Lessor Contribution.

         "UCC Financing Statements" shall mean collectively the Lender Financing
Statements and the Lessor Financing Statements.

         "Uniform Commercial Code" and "UCC" shall mean the Uniform Commercial
Code as in effect in any applicable jurisdiction.

         "Value" shall have the meaning set forth in Section 1 of the Defeasance
Deposit Agreement.

         "Yield" shall have the meaning set forth in Section 2.2(a) of the
Participation Agreement.

         "Yield Rate" shall mean (i) the sum of the Adjusted Eurodollar Rate
plus the Applicable Margin, or (ii) if, pursuant to the Participation Agreement,
the Lessor Contributions may not bear Yield based upon the Eurodollar Rate, the
ABR.

                                      -35-<PAGE>   1
                                                               EXHIIBIT 10.19.3

================================================================================
                             PARTICIPATION AGREEMENT

                                      among

                               MCDATA CORPORATION
                        as Lessee and Construction Agent,

                       DEUTSCHE BANK AG, NEW YORK BRANCH,
                        as Agent Lessor and as a Lessor,

                                DEUTSCHE BANK AG,
                     NEW YORK AND/OR CAYMAN ISLANDS BRANCH,
                                as Agent for the
                            Lenders and as a Lender,

                                       and

                         DEUTSCHE BANC ALEX. BROWN INC.
                                   as Arranger

                          Dated as of February 9, 2001

================================================================================

<PAGE>   2

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                    PAGE
<S>                                                                                 <C>
SECTION 1 THE LOANS................................................................   1
SECTION 2 LESSOR CONTRIBUTIONS.....................................................   2
       Section 2.1 Lessor Contributions............................................   2
       Section 2.2 Yield...........................................................   2
       Section 2.3 Interest on Loans...............................................   3
       Section 2.4 Interest Periods................................................   3
       Section 2.5 Prepayments.....................................................   3
       Section 2.6 Structuring Fee.................................................   4
       Section 2.7 Construction Period Lessor Yield and Lessor Commitment Fees.....   4
       Section 2.8 Payments........................................................   4
       Section 2.9 Lessee Prepaid Rent.............................................   4
       Section 2.10 Commitment Fees................................................   4
SECTION 3 SUMMARY OF THE TRANSACTIONS..............................................   5
       Section 3.1 Operative Agreements............................................   5
       Section 3.2 Property Acquisition............................................   5
       Section 3.3 Construction of Improvements; Lease of Property.................   5
SECTION 4 THE CLOSING..............................................................   5
       Section 4.1 Closing Date....................................................   5
       Section 4.2 Subsequent Funding Dates........................................   5
SECTION 5 FUNDING OF ADVANCES......................................................   5
       Section 5.1 General.........................................................   5
       Section 5.2 Procedures for Funding..........................................   6
       Section 5.3 Defeasance Deposit..............................................   6
SECTION 6 CONDITIONS OF THE CLOSING AND ADVANCES...................................   7
       Section 6.1 Conditions to Lessors' and Lenders' Obligations to Make
                   Loans and Lessor Contributions on the Initial Funding Date......   7
       Section 6.2 Conditions to the Lessors' and the Lenders' Obligations
                   to Make Advances to Pay Project Costs for Construction
                   on the Property.................................................  12
       Section 6.3 Completion Date Conditions......................................  14
</TABLE>

                                       i
<PAGE>   3

<TABLE>
<CAPTION>
                                                                                    PAGE
<S>                                                                                 <C>
SECTION 7 REPRESENTATIONS AND WARRANTIES...........................................  14
       Section 7.1 Representations and Warranties of the Lessors
                   on the Closing Date.............................................  14
       Section 7.2 Representations and Warranties of the Agent
                   Lessor on the Closing Date......................................  15
       Section 7.3 Representations and Warranties of the Lessee
                   on the Closing Date.............................................  16
       Section 7.4 Representations and Warranties of the Lessee
                   Upon each Funding Date..........................................  22
       Section 7.5 Representations and Warranties of the Agent Lessor
                   Upon each Funding Date..........................................  24
       Section 7.6 Representations and Warranties of the Lessors
                   Upon Funding Dates..............................................  24
SECTION 8 PAYMENT OF CERTAIN EXPENSES..............................................  24
       Section 8.1 Payment of Costs and Expenses...................................  24
       Section 8.2 Brokers' Fees and Stamp Taxes...................................  25
       Section 8.3 Credit Agreement and Related Obligations........................  25
SECTION 9 OTHER COVENANTS AND AGREEMENTS...........................................  25
       Section 9.1 Cooperation with the Lessee.....................................  25
       Section 9.2 Covenants of the Agent Lessor and the Lessors...................  26
       Section 9.3 Amendment of Certain Documents..................................  26
       Section 9.4 Proceeds of Casualty............................................  27
       Section 9.5 Covenants of the Lessee.........................................  27
SECTION 10 CREDIT AGREEMENT........................................................  30
       Section 10.1 Lessee's Credit Agreement Rights...............................  30
SECTION 11 TRANSFER OF INTEREST....................................................  31
       Section 11.1 Assignments....................................................  31
       Section 11.2 Participations.................................................  31
       Section 11.3 Disclosure of Information; Pledge Under Regulation A...........  32
SECTION 12 INDEMNIFICATION.........................................................  33
       Section 12.1 General Indemnity..............................................  33
       Section 12.2 Environmental Indemnity........................................  34
       Section 12.3 General Impositions Indemnity..................................  35
       Section 12.4 Eurodollar Rate Lending Unlawful...............................  40
       Section 12.5 Deposits Unavailable...........................................  40
       Section 12.6 Increased Costs, etc...........................................  41
       Section 12.7 Funding Losses.................................................  42
</TABLE>

                                       ii
<PAGE>   4

<TABLE>
<CAPTION>
                                                                                    PAGE
<S>                                                                                 <C>
       Section 12.8 Capital Adequacy...............................................  43
       Section 12.9 Special Tax Indemnity..........................................  44
       Section 12.10 Indemnity Payments in Addition to Lease Obligations...........  45
       Section 12.11 Lessor Indemnification........................................  45
SECTION 13 DISTRIBUTION............................................................  47
       Section 13.1 Basic Rent.....................................................  47
       Section 13.2 Payments by the Lessee.........................................  47
       Section 13.3 Payment of Participant Balances................................  47
       Section 13.4 Sales Proceeds of Remarketing of Property......................  48
       Section 13.5 Supplemental Rent..............................................  48
       Section 13.6 Distribution of Payments after Lease Event of Default..........  48
       Section 13.7 Other Payments.................................................  50
       Section 13.8 Casualty and Condemnation Amounts..............................  50
       Section 13.9 Order of Application...........................................  50
SECTION 14 THE AGENT LESSOR........................................................  51
       Section 14.1 Appointment and Authorization..................................  51
       Section 14.2 Delegation of Duties...........................................  51
       Section 14.3 Agent Lessor and Affiliates....................................  51
       Section 14.4 Action by Agent Lessor.........................................  51
       Section 14.5 Consultation with Experts......................................  51
       Section 14.6 Exculpatory Provisions.........................................  52
       Section 14.7 Reliance on Communications.....................................  52
       Section 14.8 Notice of Default..............................................  52
       Section 14.9 Non-Reliance on Agent Lessor and Other Participants............  52
       Section 14.10 Indemnification...............................................  53
       Section 14.11 Failure to Act................................................  53
       Section 14.12 Resignation and Removal.......................................  53
       Section 14.13 Distributions.................................................  54
SECTION 15 RENEWALS................................................................  54
       Section 15.1 Extensions of Maturity Date and Expiration Date;
                    Replacement of Participants....................................  54
SECTION 16 MISCELLANEOUS..........................................................   55
       Section 16.1 Survival of Agreements........................................   55
       Section 16.2 No Broker, etc................................................   56
       Section 16.3 Notices.......................................................   56
       Section 16.4 Counterparts..................................................   57
       Section 16.5 Amendments and Termination....................................   57
       Section 16.6 Headings, etc.................................................   57
       Section 16.7 Parties in Interest...........................................   57
</TABLE>

                                      iii
<PAGE>   5

<TABLE>
<CAPTION>
                                                                                    PAGE
<S>                                                                                 <C>
       Section 16.8 GOVERNING LAW.................................................   58
       Section 16.9 Severability..................................................   58
       Section 16.10 Liability Limited............................................   58
       Section 16.11 Further Assurances...........................................   58
       Section 16.12 Successors and Assigns.......................................   59
       Section 16.13 Agent Lessor to Hold Property on Behalf of Other Lessors.....   59
</TABLE>

                                       iv

<PAGE>   6

SCHEDULES

Schedule 2.1      Lessor Commitments
Schedule 2.8      Payment Instructions

EXHIBITS

Exhibit A         Form of Construction Agency Agreement
Exhibit B         Form of Assignment of Lease  and Consent to Assignment
Exhibit C         Form of Contract Assignment and Consent to Contract Assignment
Exhibit D         Form of Deed of Trust
Exhibit E         Form of Requisition
Exhibit F         Form of Opinion of Special Counsel to Lessee
Exhibit G         Form of Lessee Completion Certificate
Exhibit H         Form of Defeasance Deposit Agreement and Control Agreement
Exhibit I         Form of Assignment and Acceptance
Exhibit J         Form of Assignment of Purchase Agreement
Exhibit K         Form of Compliance Certificate

                                       v
<PAGE>   7

         PARTICIPATION AGREEMENT, dated as of February 9, 2001 (this
"Agreement"), among MCDATA CORPORATION, a Delaware corporation, as Lessee and
Construction Agent (in its capacity as Lessee, the "Lessee" and in its capacity
as Construction Agent, the "Construction Agent"); DEUTSCHE BANK AG, NEW YORK
BRANCH, a duly licensed branch of Deutsche Bank AG, a German corporation, as
Agent Lessor for the Lessors (in such capacity, the "Agent Lessor"), and as a
Lessor (together with any permitted successors and assigns, each a "Lessor" and
collectively the "Lessors"), DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN ISLANDS
BRANCH, as a Lender (together with the other financial institutions as may from
time to time become lenders, (the "Lenders")) under the Credit Agreement and as
Agent for the Lenders (in such capacity, the "Agent"), and DEUTSCHE BANC ALEX.
BROWN INC., as Arranger (the "Arranger"). Capitalized terms used but not
otherwise defined in this Agreement shall have the meanings set forth in Annex A
hereto.

                              PRELIMINARY STATEMENT

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

                                    SECTION 1

                                    THE LOANS

    The Lenders have agreed to make loans to the Agent Lessor in an aggregate
principal amount of up to $51,000,000 in order for the Agent Lessor to acquire
the Land together with any Improvements thereon, to develop the Land and
construct the Improvements in accordance with the Construction Agency Agreement
(in the form set forth on Exhibit A hereto), and to pay other Project Costs, and
in consideration of the receipt of the proceeds of such Loans, the Agent Lessor
will issue the Notes.

         The Loans shall be made and the Notes shall be issued pursuant to the
Credit Agreement. Pursuant to this Agreement and the Credit Agreement, the Loans
will be made to the Agent Lessor from time to time at the request of the
Construction Agent in consideration for the Construction Agent's agreeing for
the benefit of the Lessors, pursuant to the Construction Agency Agreement, to
purchase the Land together with any Improvements thereon and to develop the Land
and construct the Improvements in accordance with the Plans and Specifications.

         The Loans and the obligations of the Agent Lessor under the Credit
Agreement shall be secured by, inter alia, (i) a first priority assignment of
the Lease, granted pursuant to the Assignment of Lease and consented to by the
Lessee pursuant to the Consent to Assignment (in each case in the respective
forms set forth on Exhibit B hereto), (ii) a first priority assignment of the
Construction Agency Agreement, granted pursuant to the Contract Assignment and
consented to by the Construction Agent pursuant to the Consent to Contract
Assignment (in each case in the respective forms set forth on Exhibit C hereto);
(iii) a first priority mortgage lien subject to the Permitted Exceptions,
including the Lien of the Lease on the Property pursuant to a

<PAGE>   8

Deed of Trust joined by the Lessee in the form set forth on Exhibit D hereto and
the Lease Supplement; and (iv) a first priority assignment of the Agent Lessor's
security interest in the Collateral (as defined in the Defeasance Deposit
Agreement) granted pursuant to the Defeasance Deposit Agreement in the form set
forth on Exhibit H hereto.

                                   SECTION 2

                              LESSOR CONTRIBUTIONS

         2.1 LESSOR CONTRIBUTIONS. Subject to the terms and conditions of this
Agreement, and in reliance on the representations and warranties of each of the
parties hereto contained herein or made pursuant hereto, on each Funding Date
each Lessor shall make available to the Agent Lessor (each, a "Lessor
Contribution") an amount equal to such Lessor's Commitment Percentage of the
amount of the Advance requested by the Construction Agent in the Requisition for
such Funding Date. The aggregate amount of Lessor Contributions made by the
Lessors shall not exceed the aggregate of all Lessor Commitments as set forth in
Schedule 2.1 hereto. The aggregate outstanding amounts of the Loans and the
Lessor Contributions shall not exceed the Aggregate Commitment Amount and the
Lease Balance shall not exceed the lesser of (x) 110 percent of the Estimated
Project Costs and (y) the Fair Market Sales Value of the Property as set forth
in the Appraisal of the Property delivered pursuant to Section 6.1 hereof.
Notwithstanding any other provision hereof, no Lessor shall be obligated to make
available any Lessor Contribution if, after giving effect to the proposed Lessor
Contribution, the outstanding aggregate amount of the Lessor Contributions of
such Lessor would exceed such Lessor's Lessor Commitment. The Agent Lessor shall
use the Lessor Contributions to pay a portion of the Project Costs
simultaneously and pro rata with the fundings by the Lenders.

         2.2 YIELD.

The amount of the Lessor Contributions outstanding from time to time shall
accrue yield ("Yield") at the Yield Rate, calculated using the actual number of
days elapsed and, when the Yield Rate is based on the Adjusted Eurodollar Rate,
a 360-day year basis and, if calculated at the ABR, a 360-day year basis if the
ABR is calculated at the Base CD Rate or the Federal Funds Effective Rate, and a
365-, or, if applicable, 366-, day year basis if the ABR is calculated at the
Prime Rate. If all or any portion of the Lessor Contributions, any Yield payable
thereon or any other amount payable hereunder shall not be paid when due
(whether at stated maturity, acceleration thereof or otherwise), such overdue
amount shall bear interest at a rate per annum which is equal to the Overdue
Rate. Upon the occurrence, and during the continuance of a Lease Event of
Default, the amount of and, to the extent permitted by law, interest on (or
Yield on) the Lessor Contributions and any other amounts owing hereunder or
under the other Operative Agreements shall bear interest, payable on demand, at
a per annum rate which is equal to the Overdue Rate.

The Agent shall distribute, in accordance with Section 13.1, the Lessor Basic
Rent and all other amounts due with respect to the Lessor Contributions paid to
the Agent by the Lessee under the Lease or the other Operative Agreements from
time to time.

                                       2
<PAGE>   9

Yield on outstanding Lessor Contributions shall be due and payable by Lessors
during the Construction Period as provided in Section 2.7 and thereafter by
Lessee in cash on each Scheduled Interest Payment Date, provided, that (i)
interest or Yield accruing at the Overdue Rate pursuant to paragraph (a) of this
Section 2.2 shall be payable from time to time on demand and (ii) each
prepayment of Lessor Contributions shall be accompanied by accrued Yield to the
date of such prepayment on the amount prepaid and breakage costs, if any.

If not repaid sooner, the outstanding aggregate Lessor Contributions shall be
repaid in full on the Maturity Date.

         2.3 INTEREST ON LOANS.

Each Loan shall accrue interest computed and payable in accordance with the
terms of the Credit Agreement. Each Loan shall become due and payable at the
dates and times provided under the Credit Agreement.

The Agent shall distribute, in accordance with Section 13, the Notes Basic Rent
and all other amounts due with respect to the Loans paid to the Agent by the
Lessee under the Lease from time to time.

         2.4 INTEREST PERIODS. During the Construction Period, each Interest
Period shall be one month, subject to the exceptions set forth in the definition
of Interest Period. Thereafter, an Interest Period may be one month or three
months in duration, as selected by Lessee in a notice by Lessee to Agent,
subject to the exceptions set forth in the definition of Interest Period. Such
notice shall (i) be delivered at least three (3) Business Days prior to the
first day of the applicable Interest Period, (ii) contain a statement that it is
an Interest Period Selection Notice, (iii) indicate the applicable amount of
Loans or Lessor Contributions to which such notice is subject, and (iv) indicate
the requested Interest Period or Interest Periods.

         2.5 PREPAYMENTS.

Voluntary Prepayments. The Lessee shall have the right to prepay an amount equal
to the aggregate outstanding Lease Balance in whole, and in connection with the
exercise of the Partial Purchase Option permitted under the Lease, in part in an
amount equal to Partial Purchase Option Price, pursuant to the exercise of the
purchase options permitted under the Lease or the Construction Agency Agreement
without premium or penalty.

Mandatory Prepayments.

                  (b) If at any time the sum of the aggregate amount of
outstanding Loans and Lessor Contributions shall exceed the Aggregate Commitment
Amount, the Lessee shall immediately make payment on the Loans or Lessor
Contributions in an amount sufficient to eliminate such excess. Payments
required to be made hereunder shall be applied first to ABR Loans or ABR Lessor
Contributions and second to Eurodollar Loans or Eurodollar Lessor Contributions
in direct order of their Interest Period maturities.

                                       3
<PAGE>   10

                  (c) The Lessor shall prepay or repay the Loans and the Lessor
Contributions with the proceeds of all amounts payable by the Lessee pursuant to
Article XV, XVI, XVII, XX or XXI of the Lease or Articles IV or V of the
Construction Agency Agreement, and such prepayments or repayments shall be
applied to the Loans and the Lessor Contributions in the manner set forth in
Section 13.

Notice. The Lessee will provide irrevocable notice to the Agent of any
prepayment of Lessor Contributions at least three (3) Business Days prior to the
date of prepayment.

         2.6 STRUCTURING FEE. The Agent Lessor agrees to pay to the Arranger the
Structuring Fee in accordance with the Arranger's Fee Letter, which fee shall be
capitalized as provided in Section 8.1(c).

         2.7 CONSTRUCTION PERIOD LESSOR YIELD AND LESSOR COMMITMENT FEES. During
the Construction Period, on each date which is one Business Day prior to any
date on which the Lessors are entitled to a payment on account of Lessor Yield
or Lessor Commitment Fees, the Construction Agent shall be deemed to have
requested that the Lessors make Lessor Contributions in an amount equal to their
respective Commitment Percentages of the Lessor Yield or Lessor Commitment Fees
due and payable on such date, as the case may be, with an Interest Period of one
month solely for the purpose of paying such Lessor Yield or Lessor Commitment
Fees which are then due and payable, which Lessor Contributions shall not be
paid to the Construction Agent or any third party under the Operative Agreements
but shall be capitalized as part of Project Costs.

         2.8 PAYMENTS. All payments (including prepayments) to be made by the
Lessee hereunder and under the Lease or the Credit Agreement and the Notes,
whether on account of Lessor Contributions, Lessor Yield, Loans or interest
thereon or otherwise, shall be made without setoff or counterclaim and shall be
made prior to 2:00 p.m., New York City time, on the due date thereof to the
Agent for the account of the Lenders and the Lessors, at the Agent's office
specified in Schedule 2.8 hereto, in Dollars and in immediately available funds.

         2.9 LESSEE PREPAID RENT. Notwithstanding any provision of this
Agreement or any other Operative Agreement to the contrary, neither Construction
Agent nor Lessee shall have the right to fund or advance any amounts under any
of the Operative Agreements which would otherwise be treated or deemed prepaid
Rent hereunder or thereunder if such amounts would exceed $500,000.00 in the
aggregate, without the prior written consent of the Agent Lessor, which consent
may be withheld in Agent Lessor's sole discretion.

         2.10 COMMITMENT FEES. During the Construction Period each Lessor shall
be entitled to receive its pro rata share of the Lessor Commitment Fees and each
Lender shall be entitled to its pro rata share of the Lender Commitment Fees.
Such fees shall be payable (i) monthly on each monthly anniversary of the
Closing Date and on the last day of the Commitment Period (each, a "Specified
Commitment Fee Payment Date") and (ii) in the case of the Lessor Commitment Fee,
pursuant to Section 2.7 and in the case of the Lender Commitment Fee, pursuant
to Section 2.3(b) of the Credit Agreement.

                                       4
<PAGE>   11

                                   SECTION 3

                           SUMMARY OF THE TRANSACTIONS

         3.1 OPERATIVE AGREEMENTS. On the Closing Date, each of the respective
parties thereto shall execute and deliver this Agreement, the Lease, the Deed,
the Construction Agency Agreement, the Notes, the Credit Agreement, the
Defeasance Deposit Agreement, the Control Agreement, the Assignment of Lease,
the Consent to Assignment, the Contract Assignment, the Consent to Contract
Assignment and such other documents, instruments, certificates and opinions of
counsel as are required by the terms hereof or agreed to by the parties hereto.

         3.2 PROPERTY ACQUISITION. On the initial Funding Date and subject to
the terms and conditions of this Agreement, (a) the Lessors will make Lessor
Contributions in accordance with Section 2 hereof, (b) the Lenders will make
Loans in accordance with Section 5 hereof and the terms and provisions of the
Credit Agreement, and (c) the Agent Lessor will acquire by Deed the Land
together with the Improvements thereon identified by the Construction Agent
pursuant to the Construction Agency Agreement.

         3.3 CONSTRUCTION OF IMPROVEMENTS; LEASE OF PROPERTY. On the Closing
Date, the Agent Lessor and Construction Agent will execute and deliver a Lease
Supplement pursuant to which the Agent Lessor will lease, commencing on the
first day of the Basic Term, all of its right, title and interest in the Land
and the other Improvements to the Lessee. During the Construction Period, the
Lessee, as Construction Agent, will construct the Improvements on the Land as
required by Section 5.1.

                                    SECTION 4

                                   THE CLOSING

         4.1 CLOSING DATE. All documents and instruments required to be
delivered on the Closing Date shall be delivered at the offices of McGuireWoods
LLP, 77 West Wacker Drive, Suite 4500, Chicago, Illinois 60601, or at such other
location as may be determined by the Agent and the Lessee.

         4.2 SUBSEQUENT FUNDING DATES. The Construction Agent shall deliver to
the Agent Lessor and the Agent a Requisition appropriately completed, in
connection with each Funding Date.

                                    SECTION 5

                              FUNDING OF ADVANCES

         5.1 GENERAL. To the extent funds have been made available to the Agent
Lessor as Loans and Lessor Contributions, the Agent Lessor will make advances of
such funds to the Construction Agent from time to time in accordance with the
terms and conditions of this

                                       5
<PAGE>   12

Agreement and the other Operative Agreements in order to provide sufficient
funds to: (i) allow the Agent Lessor, at the direction of the Lessee, to acquire
the Land together with the Improvements thereon in accordance with the terms of
this Agreement and the other Operative Agreements; (ii) allow the Agent Lessor,
on behalf of the Lessee, to pay Transaction Expenses; (iii) permit the
Construction Agent to construct the Buildings and other Improvements in
accordance with the Plans and Specifications and the terms of the Construction
Contract, the Construction Agency Agreement, the Lease and the other Operative
Agreements; and (iv) pay all other Project Costs. The Participants shall have no
obligation to fund Loans or Lessor Contributions, and the Agent Lessor shall
have no obligation to fund, any Advance to pay for construction of any
Improvements or other Project Costs (other than the Property Acquisition Costs
and Transaction Expenses payable on the Closing Date) until the conditions
precedent set forth in Section 6.2, including without limitation, Section
6.2(a)(viii) and (ix), have been satisfied.

         5.2 PROCEDURES FOR FUNDING.

Not less than three (3) Business Days prior to each proposed Funding Date other
than the initial Advance to be made on the initial Funding Date, where such
Advance is to bear interest and Yield at a rate equal to the ABR and notice may
be given on the initial Funding Date, the Construction Agent shall deliver to
the Agent Lessor and the Agent a requisition (a "Requisition"), appropriately
completed, in the form of Exhibit E hereto.

Each Requisition shall: (i) be irrevocable; and (ii) request funds in an amount
of at least $500,000 (or such lesser amount as shall be equal to the total
aggregate of the Available Loan Commitments plus the Available Lessor
Commitments at such time) for the payment of Property Acquisition Costs or other
Project Costs which will be incurred during the thirty (30) day period following
the requested Funding Date and were not the subject of and funded pursuant to a
prior Requisition, in each case as specified in the Requisition. The Lessee
shall not request more than one Funding Date during any calendar month.

So long as no Default or Event of Default has occurred and is continuing and
subject to the Agent Lessor and the Agent having each received the materials
required by Section 6.1, 6.2 and/or 6.3, as applicable, on each Funding Date (i)
the Lenders shall make Loans to the Agent Lessor in an aggregate amount equal to
85% of the funds specified in any Requisition, up to an aggregate principal
amount equal to the Available Loan Commitments; (ii) the Lessors shall make
available to the Agent Lessor, Lessor Contributions in an amount equal to 15% of
the funds specified in any Requisition, up to an amount equal to the Available
Lessor Commitments; and (iii) the total amount of such Loans and Lessor
Contributions made on such date shall be paid to the Construction Agent to pay
the Project Costs.

         The Construction Agent agrees that it cannot incur Project Costs (i)
unless the Lessee, as Construction Agent, has complied with the applicable
provisions of Section 6 or (ii) which would result in the Lease Balance
exceeding the Aggregate Commitment Amount.

         5.3 DEFEASANCE DEPOSIT. Prior to 2:00 p.m., New York City time, on (i)
each Funding Date requested pursuant to Section 4.2 or deemed requested pursuant
to Section 2.7

                                       6
<PAGE>   13

hereof or Section 2.3 of the Credit Agreement, and (ii) the fifth day of each
calendar month during the Construction Period and the Term, for so long as any
Obligations remain outstanding (or if such date is not a Business Day, the next
succeeding Business Day) (the "Deposit Date") where the Value of the Defeasance
Deposit Collateral as of the conclusion of the calendar month immediately
preceding such Deposit Date is less than 105% of the aggregate outstanding
Advances, the Lessee shall deliver a portion of the Defeasance Deposit
Collateral to the Defeasance Deposit Depositary Bank (x) in the case of a
Funding Date in an amount equal to 105% of the aggregate Advance so requested
(or deemed requested) on such Funding Date pursuant to the Defeasance Deposit
Agreement plus an amount, if any, required to maintain the Value of all such
deposits equal to 105% of the outstanding Advances and (y) in the case of a
Deposit Date which is not a Funding Date, an amount, if any, required to
maintain the Value of the Defeasance Deposit Collateral at a level equal to 105%
of the aggregate outstanding Advances. The Lessee covenants to maintain the
Value of the Defeasance Deposit Collateral at a level equal to 105% of the
aggregate outstanding Advances, and in addition to the deliveries required to be
made on Funding Dates and Deposit Dates, upon receipt of notice from Agent that
the Value of the Defeasance Deposit Collateral is less than 105% of the
aggregate outstanding Advances, Lessee shall be obligated to deliver a portion
of the Defeasance Deposit Collateral in an amount required to maintain the Value
of the Defeasance Deposit Collateral at a level equal to 105% of the aggregate
outstanding Advances. Each such deposit (collectively, the "Defeasance Deposit")
shall be the property of the Defeasance Deposit Depositary Bank and shall be
held and administered in accordance with the Defeasance Deposit Agreement.

                                   SECTION 6

                     CONDITIONS OF THE CLOSING AND ADVANCES

         6.1 CONDITIONS TO LESSORS' AND LENDERS' OBLIGATIONS TO MAKE LOANS AND
LESSOR CONTRIBUTIONS ON THE INITIAL FUNDING DATE. The agreement of each Lender
to make Loans, and each Lessor to make Lessor Contributions on the initial
Funding Date, and the agreement of the Agent Lessor to acquire the Land and
existing Improvements on the initial Funding Date, is subject to the
satisfaction, immediately prior to or concurrently with the making of such Loans
and Lessor Contributions, of the following conditions precedent:

Operative Agreements. Each of the Operative Agreements to be entered into on the
Closing Date or subsequently shall have been duly authorized and each of the
Operative Agreements to be entered into on the Closing Date or the initial
Funding Date shall have been executed, acknowledged and delivered by the parties
thereto and shall be in full force and effect, and no default shall exist
thereunder (both before and after giving effect to the transactions contemplated
by the Operative Agreements), and the Agent and the Agent Lessor shall have
received a fully executed copy of each of such executed Operative Agreements
(other than the Notes of which the Agent shall have received the originals).

Taxes. All taxes, fees and other charges in connection with the execution,
delivery, and, where applicable, recording, filing and registration of the
Operative Agreements shall have been paid

                                       7
<PAGE>   14

or provisions for such payment shall have been made to the reasonable
satisfaction of the Agent and the Agent Lessor.

Governmental Approvals. All Governmental Actions necessary (or, in the
reasonable opinion of the Agent, the Agent Lessor and their respective counsel,
advisable) as described in Section 6.1(k) shall have been obtained or made and
be in full force and effect.

Litigation. No action or proceeding shall have been instituted before any
Governmental Authority, nor shall any order, judgment or decree have been issued
or proposed to be issued by any Governmental Authority (i) to set aside,
restrain, enjoin or prevent the full performance of this Agreement, any other
Operative Agreement or any of the transactions contemplated hereby or thereby or
(ii) which is reasonably likely to have a Material Adverse Effect.

Legal Requirements. In the opinion of the Agent, the Agent Lessor and their
respective counsel, the transactions contemplated by the Operative Agreements do
not and will not violate in any material respect any Legal Requirements and do
not and will not subject the Agent, any Lender, the Agent Lessor or any Lessor
to any adverse regulatory prohibitions or constraints.

Corporate Proceedings of the Lessee. The Agent and the Agent Lessor shall have
received a copy of the resolutions or minutes, in form and substance reasonably
satisfactory to the Agent and the Agent Lessor, of the Board of Directors of the
Lessee authorizing the execution, delivery and performance of this Agreement and
the other Operative Agreements to which it is a party, certified by the
Secretary or an Assistant Secretary of the Lessee as of the Closing Date, which
certificate shall be in form and substance reasonably satisfactory to the Agent
and the Agent Lessor and shall state that the resolutions or minutes thereby
certified have not been amended, modified, revoked or rescinded.

Lessee Incumbency Certificate. The Agent and the Agent Lessor shall have
received a certificate of the Lessee, dated the Closing Date, as to the
incumbency and signature of the officers of the Lessee and the Construction
Agent executing any Operative Agreement reasonably satisfactory in form and
substance to the Agent and the Lessor, executed by the President or any Vice
President and the Secretary or any Assistant Secretary of the Lessee.

Lessee's Officer's Certificate. The Agent and the Agent Lessor shall each have
received an Officer's Certificate, dated as of the Closing Date, of the Lessee
and the Construction Agent stating that (i) each and every representation and
warranty of the Lessee and the Construction Agent contained in the Operative
Agreements to which it is a party is true and correct on and as of the Closing
Date; (ii) no Default or Event of Default has occurred and is continuing under
any Operative Agreement; (iii) each Operative Agreement to which the Lessee and
the Construction Agent is a party is in full force and effect with respect to
it; and (iv) the Lessee and the Construction Agent has duly performed and
complied with all covenants, agreements and conditions contained herein or in
any Operative Agreement required to be performed or complied with by it on or
prior to the Closing Date.

Agent Lessor Incumbency Certificate. The Agent and the Lessee shall have
received a certificate of the Agent Lessor, dated the Closing Date, as to the
incumbency and signature of the

                                       8
<PAGE>   15

officers of the Agent Lessor executing any Operative Agreements reasonably
satisfactory in form and substance to the Agent and the Lessee, executed by
internal counsel to the Agent Lessor.

Corporate Documents. The Agent and the Agent Lessor shall have received true and
complete copies of the certificate or articles of incorporation and by-laws of
the Lessee, certified as of the Closing Date as complete and correct copies
thereof by the Secretary or an Assistant Secretary of the Lessee.

Consents, Licenses and Approvals. The Agent and the Agent Lessor shall have
received a certificate of the President or a Vice President of the Lessee
stating that all consents, authorizations and filings required to consummate the
transaction contemplated by this Agreement are in full force and effect. The
Lessee shall have obtained from the proper officials of Broomfield, Colorado,
approval of the subdivision agreement and master development agreement governing
the Land and the development and construction of Improvements thereon. Such
agreements shall permit development of the Land and construction of the
Improvements as contemplated by the Plan and Specifications for the Property.

Legal Opinions. The Agent and the Agent Lessor shall have received the executed
legal opinions of Cooley Godward LLP, special counsel to the Lessee, Davis
Graham & Stubbs, special Colorado counsel to the Lessee, and of Cadwalader,
Wickersham & Taft, special New York counsel to the Lessee, substantially in the
form of Exhibit F hereto.

Lien Searches. The Agent and the Agent Lessor shall have received the results of
a recent search by a Person reasonably satisfactory to the Agent, of the Uniform
Commercial Code, judgment and tax lien filings which may have been filed in the
State of Colorado and the Province of Ontario with respect to personal property
of the Lessee, and the results of such search shall be satisfactory to the Agent
and the Agent Lessor.

Insurance. The Agent and the Agent Lessor shall have received evidence in form
and substance satisfactory to them that all of the requirements of Article XIV
of the Lease and Article VI of the Construction Agency Agreement shall have been
satisfied, except for insurance coverages required to be obtained on or prior to
the initial Funding Date for Project Costs to finance the construction of
Improvements pursuant to Section 6.2.

Representations and Warranties. The representations and warranties of the
Lessors, the Lessee and the Agent Lessor contained herein and in each of the
other Operative Agreements shall be true and correct.

Performance of Agreements. The parties hereto and thereto shall have performed
their respective agreements to be performed on or prior to the initial Funding
Date contained herein and in the other Operative Agreements on or prior to the
initial Funding Date.

Requisition. The Agent and the Agent Lessor shall have received a fully executed
counterpart of a Requisition, appropriately completed.

                                       9
<PAGE>   16

Appraisal. The Agent and the Agent Lessor shall have received an Appraisal of
the Property, which Appraisal shall show as of the projected Completion Date,
the Fair Market Sales Value of the Property, and meet the other applicable
requirements set forth in the definition of the term "Appraisal" contained in
Annex A.

Deed. The Existing Owner shall have executed the Deed with respect to the Land
and Improvements being acquired on the initial Funding Date, and the Deed shall
have been delivered to the Title Company for recording.

Title. Title to the Property being acquired on the initial Funding Date shall
conform to the representations and warranties set forth in Section 7.4(b).

Lease Supplement. The Lessee shall have delivered to the Agent a Lease
Supplement executed by the Lessee and the Agent Lessor with respect to the
Property.

Deed of Trust. The Agent Lessor shall have delivered to the Agent the Deed of
Trust, executed by the Agent Lessor and Lessee, with respect to the Property.

Structuring Fee. The Agent and the Arranger shall have received the Structuring
Fee pursuant to the Arranger's Fee Letter on the initial Funding Date.

Consent. The Lessee shall have delivered to the Agent a consent to the
Assignment of Lease executed by the Lessee with respect to the Property.

Environmental Audit. The Agent and the Agent Lessor shall have received prior to
the Closing Date an Environmental Audit with respect to the Property, prepared
by the Environmental Engineer, and the results of the Environmental Audit shall
be in form and substance satisfactory to the Agent and the Agent Lessor, it
being understood and agreed that the Lessee agrees to remedy any environmental
conditions requiring further action indicated in the Environmental Audit within
ninety (90) days following the Closing Date and to deliver to the Agent and the
Agent Lessor upon completion of such remedial action a written statement by the
Environmental Engineer which prepared the Environmental Audit indicating that
all such environmental conditions have been remedied in compliance with
Environmental Laws; and the Agent and the Agent Lessor shall have received
letters from the Environmental Engineer stating, among other things, that the
Agent, the Lenders, the Agent Lessor and the Lessors may rely on the
Environmental Audit and other environmental reports with respect to the Property
which have been prepared by such firm as if they were addressed to them in all
respects.

No Default. There shall not have occurred and be continuing any Default or Event
of Default under any of the Operative Agreements and no Default or Event of
Default under any of the Operative Agreements will have occurred after giving
effect to the Advance requested by such Requisition.

No Material Adverse Change. There shall not have occurred any Material Adverse
Effect.

                                       10
<PAGE>   17

Survey. The Agent shall have received, and the Title Company shall have
received, a survey of the Property being acquired on the initial Funding Date,
certified to the Agent, the Agent Lessor and the Title Company in a manner
satisfactory to them, dated as of a date within three months of the initial
Funding Date, by an independent professionally licensed land surveyor
satisfactory to the Agent, which survey shall be made in accordance with the
Minimum Standard Detail Requirements for Land Title Surveys jointly established
and adopted by the American Land Title Association and the American Congress on
Surveying and Mapping in 1999, and, without limiting the generality of the
foregoing, there shall be surveyed and shown on such survey the following: (i)
the locations on such Property of all the buildings, structures and other
improvements, if any, and the established building setback lines; (ii) the lines
of streets abutting such Property; (iii) all access and other easements
appurtenant to such Property; (iv) all roadways, paths, driveways, easements,
encroachments and overhanging projections and similar encumbrances affecting
such Property, whether recorded, apparent from a physical inspection of the
Property or otherwise known to the surveyor; (v) any encroachments on any
adjoining property by the building, structures and improvements on such
Property; and (vi) if such Property is described as being on a filed map, a
legend relating the survey to said map.

Lenders' Title Insurance. The Agent shall have received with respect to the Deed
of Trust a mortgage title policy or an unconditional written undertaking of the
Title Company to issue such insurance dated the initial Funding Date; such
policies shall (i) be in an amount equal to the aggregate amount of the Loans
and the Lessor Contributions (with a pending disbursements clause); (ii) be
issued at ordinary rates; (iii) insure that the Deed of Trust insured thereby
creates a valid first Lien (subject to recharacterization of the Lease) on the
Agent Lessor's fee title to the Land and Improvements, free and clear of all
defects and encumbrances, except Permitted Exceptions; (iv) name the Agent for
the benefit of the Lenders as the insured thereunder; (v) be in the form of ALTA
Loan Policy - 1992; (vi) contain such endorsements and affirmative coverage as
the Agent may reasonably request; and (vii) be issued by the Title Company; and
the Agent shall have received evidence reasonably satisfactory to it that all
premiums in respect of such policy, and all charges for mortgage recording tax
with respect to the Deed of Trust have been paid or provision made therefor.

Documents. The Agent and the Agent Lessor shall have received a copy of all
recorded documents referred to, or listed as exceptions to title in, the title
policy referred to above.

Owner's Title Insurance. The Agent Lessor shall have received an owner's title
policy, or an unconditional written undertaking of the Title Company to issue
such insurance, dated the initial Funding Date, insuring fee title to the
Property in the Agent Lessor, subject to recharacterization of the Lease, in
which event insuring that the Lien created by the Lease is a first Lien in the
Lessee's interest in the Improvements and the Land; and the Agent Lessor shall
have received evidence reasonably satisfactory to it that all premiums in
respect of such policy have been paid or provision made therefor.

Actions to Transfer Ownership and Perfect Liens. Each of the Deed, the Lease
Supplement, the Assignment of Lease, the Consent to the Assignment of Lease and
the Deed of Trust shall have been delivered to the Title Company which shall
have undertaken an obligation to promptly record the same with the appropriate
Governmental Authorities in the order set forth in this

                                       11
<PAGE>   18

paragraph, and the UCC Financing Statements with respect to the Property shall
have been delivered to the Title Company which shall have undertaken an
obligation to promptly file the same with the appropriate Governmental
Authorities. The Agent shall have received evidence in form and substance
satisfactory to it that arrangements have been made for the completion of all
filings, recordings, registrations and other actions, including, without
limitation, the filing of duly executed financing statements on form UCC-1, and
the Deed of Trust, necessary or, in the opinion of the Agent, desirable to
perfect the Liens created by the Security Documents shall have been completed.

Sufficient Funds. Based on the Budget, the Available Loan Commitments and the
Available Lessor Commitments will be sufficient to finance the purchase of the
Land with the Improvements thereon and the construction of the Improvements and
to pay the other Project Costs.

         6.2 CONDITIONS TO THE LESSORS' AND THE LENDERS' OBLIGATIONS TO MAKE
ADVANCES TO PAY PROJECT COSTS FOR CONSTRUCTION ON THE PROPERTY.

Lessor's Conditions. The obligations of the Lessors to make Lessor Contributions
to the Agent Lessor and of the Agent Lessor to advance the proceeds of Loans
from the Lenders and Lessor Contributions from the Lessors on a Funding Date for
the purpose of providing funds to or at the direction of the Construction Agent
necessary to pay for the construction of the Improvements or the payment of
Transaction Expenses, or other Project Costs (other than Property Acquisition
Costs and Transaction Expenses payable on the initial Funding Date) are subject
to the satisfaction or waiver of the following conditions precedent:

                  (b) Representation and Warranties. On such date, the
representations and warranties of the Lessee and the Construction Agent
contained herein and in each of the other Operative Agreements shall be true and
correct in all material respects, unless such representations or warranties
speak as of a particular date, in which case they shall be true and correct as
of such date.

                  (c) Performance of Agreements. The Lessee and the Construction
Agent shall have performed their respective agreements contained herein and in
the other Operative Agreements on or prior to such Funding Date.

                  (d) Requisition. The Agent and Agent Lessor shall have
received a fully executed counterpart of a Requisition, appropriately completed.

                  (e) Sufficient Funds; Progress of Construction. Based upon the
Budget, (i) the Available Loan Commitments and the Available Lessor Commitments
will be sufficient to complete the Improvement or Improvements for which the
Requisition relates and (ii) the Budget is In Balance. Based on the construction
schedule (i) no delays in construction attributable to Force Majeure Events have
occurred, (ii) Construction is proceeding as planned in the construction
schedule and (iii) Completion will be achieved on or prior to the Outside
Completion Date.

                                       12
<PAGE>   19

                  (f) No Default. There shall not have occurred and be
continuing any Default or Event of Default under any of the Operative Agreements
attributable to the Lessee or the Construction Agent and no such Default or
Event of Default under any of the Operative Agreements will have occurred after
giving effect to the Advance requested by such Requisition.

                  (g) Lien Waivers. The Agent shall have received copies of lien
waivers, in form and substance reasonably satisfactory to the Agent, from each
contractor, subcontractor, supplier and materialman which the Lessee reasonably
believes will receive total compensation for services rendered or materials
supplied in connection with the construction of the related Improvements of
$250,000 or more; each such lien waiver shall evidence that such contractor,
subcontractor, supplier or materialmen has been paid in full for all work
performed or materials supplied to the date of the request for such Advance,
other than work which is the subject of such request.

                  (h) Permits. On or prior to the initial Funding Date for the
payment of Project Costs for the construction of any Improvements, Lessee shall
have received all required building and other permits and authorizations
permitting construction of the Improvements on the Land in accordance with the
Plans and Specifications.

                  (i) Insurance. On or prior to the initial Funding Date for the
payment of Project Costs for the construction of any Improvements, Lessee, as
Construction Agent, shall have obtained the hazard and builder's risk insurance
policies insuring the construction of the Property required by Article VI of the
Construction Agency Agreement.

                  (j) Construction Schedule. The Agent shall have received a
copy of the schedule prepared by or at the direction of the Construction Agent
showing the estimated (i) timetable for construction of the initial Building to
be constructed on the Land, including construction milestones in critical path
form; and (ii) timetable for the making of Loans and Lessor Contributions.

                  (k) Budget. The Agent and the Agent Lessor shall have received
a copy of the Budget with respect to the construction of the initial Building
and other Improvements to be constructed on the Land, and such Budget shall be
in form and substance reasonably satisfactory to the Agent and the Agent Lessor.

                  (l) Plans. The Agent and the Agent Lessor shall have received
a copy of the Plans and Specifications with respect to the initial Building to
be constructed on the Land.

Lenders' Conditions. The obligations of the Lenders to make Loans to the Agent
Lessor on a Funding Date for the purpose of providing funds to the Agent Lessor
necessary to pay for the construction of Improvements or the payment of
Transaction Expenses or other Project Costs (other than Property Acquisition
Costs) are subject to satisfaction or waiver by the Lenders of the conditions
precedent set forth in Section 6.1(a) hereof and Section 4.2 of the Credit
Agreement.

Return of Funds if No Funding. If the conditions set forth in Section 6.2(a) are
not satisfied or waived with respect to a particular Funding Date but the
conditions set forth in Section 6.2(b) are

                                       13
<PAGE>   20

satisfied or waived with respect to such Funding Date and the Lenders have
funded their respective Loans to the Agent Lessor, the Agent Lessor shall return
such funds to the Lenders funding the same, together with interest at the
Federal Funds Effective Rate for each day beyond the proposed Funding Date until
such funds are returned.

         6.3 COMPLETION DATE CONDITIONS. The occurrence of the Completion Date
shall be subject to the fulfillment to the satisfaction of, or waiver by, the
Required Lenders and the Required Lessors of the following conditions precedent
at which time "Completion" shall be deemed to have occurred:

Construction Completion. The construction of the Improvements shall have been
completed substantially in accordance with the Plans and Specifications and in
compliance with all material Legal Requirements and Insurance Requirements, and
the Property shall be ready for occupancy and use. This shall require, without
limiting the generality of the preceding sentence, that (i) all utilities to
adequately service the Improvements for their intended use are available and
"tapped on" and hooked up pursuant to adequate permits (including any that may
be required under applicable Environmental Laws) and (ii) access to the
Improvements for pedestrians and motor vehicles from publicly dedicated streets
and public highways is available.

Lessee Certification. The Lessee shall have furnished the Agent Lessor and the
Agent with a completion certificate substantially in the form attached hereto as
Exhibit G.

                                   SECTION 7

                         REPRESENTATIONS AND WARRANTIES

         7.1 REPRESENTATIONS AND WARRANTIES OF THE LESSORS ON THE CLOSING DATE.
Each Lessor as to itself represents and warrants to each of the other parties
hereto as of the Closing Date as follows:

Due Organization, etc. It is a duly organized and validly existing corporation
in good standing under the laws of the jurisdiction of its organization and has
the power and authority to carry on its business as now conducted and to enter
into and perform its obligations under this Agreement, each Operative Agreement
to which it is a party and each other agreement, instrument and document
executed and delivered by it on the Closing Date in connection with or as
contemplated by each such Operative Agreement to which it is or will be a party.

Authorization; No Conflict. The execution, delivery and performance of each
Operative Agreement to which it is a party has been duly authorized by all
necessary action on its part and neither the execution and delivery thereof by
such Lessor, nor the consummation of the transactions contemplated thereby by
such Lessor, nor compliance by it with any of the terms and provisions thereof
(i) requires or will require any approval of (which approval has not been
obtained) the shareholders of, or approval or consent of any trustee or holders
of any indebtedness or obligations of such Lessor, (ii) contravenes or will
contravene any Legal Requirement applicable to or binding on it as of the date
hereof, (iii) does or will contravene or

                                       14
<PAGE>   21

result in any breach of or constitute any default under, or result in the
creation of any Lessor Lien upon the Property or any of the Improvements, its
articles of incorporation or by-laws or equivalent documents or (iv) does or
will require any Governmental Action by any Governmental Authority.

Enforceability, etc. Each Operative Agreement to which it is a party has been
duly executed and delivered by it and constitutes a legal, valid and binding
obligation enforceable against it in accordance with the terms thereof, subject,
in each case, as to enforceability, bankruptcy, insolvency, reorganization and
other similar laws affecting enforcement of creditor rights generally and, as to
the availability of specific performance or other injunctive relief, subject to
the discretionary power of a court to deny such relief and to general equitable
principles.

ERISA. Such Lessor is making its Lessor Contribution contemplated to be made by
it hereunder for its own account and with its general corporate assets in the
ordinary course of its business, and no part of such amount constitutes the
assets of any Employee Benefit Plan.

         7.2 REPRESENTATIONS AND WARRANTIES OF THE AGENT LESSOR ON THE CLOSING
DATE. The Agent Lessor represents and warrants to each of the other parties
hereto as of the Closing Date as follows:

Litigation. No litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or threatened by or against the
Agent Lessor (a) with respect to any of the Operative Agreements or any of the
transactions contemplated hereby or thereby, or (b) which could reasonably be
expected to have a material adverse effect on the assets, liabilities,
operations, business or financial condition of the Agent Lessor.

Assignment. It has not assigned or transferred any of its right, title or
interest in or under the Lease, any Operative Agreement or the Property, except
in accordance with the other Operative Agreements.

No Default. The Agent Lessor is not in default under or with respect to any of
its Contractual Obligations in any respect which could have a material adverse
effect on the assets, liabilities, operations, business or financial condition
of the Agent Lessor. No Default or Event of Default attributable to it has
occurred and is continuing.

Use of Proceeds. The proceeds of the Loans and the Lessor Contributions shall be
applied by the Agent Lessor solely in accordance with the provisions of the
Operative Agreements.

Chief Place of Business. The Agent Lessor's chief place of business, chief
executive office and office where the documents, accounts and records relating
to the transactions contemplated by this Agreement and each other Operative
Agreement are kept are located at 31 West 52nd Street, New York, New York 10019.

Federal Reserve Regulations. The Agent Lessor is not engaged principally in, and
does not have as one of its most important activities, the business of extending
credit for the purpose of purchasing or carrying any margin stock (within the
meaning of Regulation U of the Board), and

                                       15
<PAGE>   22

no part of the proceeds of the Loans will be used by it to purchase or carry any
margin stock or to extend credit to others for the purpose of purchasing or
carrying any such margin stock or for any purpose that violates, or is
inconsistent with, the provisions of Regulations T, U or X of the Board.

Investment Company Act. The Agent Lessor is not an "investment company" or a
company controlled by an "investment company" within the meaning of the
Investment Company Act.

Representations and Warranties; No Default. The representations and warranties
of the Agent Lessor set forth in the Operative Agreements are true and correct.
The Agent Lessor is in compliance with its respective obligations under the
Operative Agreements and there exists no Default or Event of Default
attributable to it under any of the Operative Agreements. No Default or Event of
Default attributable to it will occur under any of the Operative Agreements as a
result of, or after giving effect to, the Advance requested by the Requisition
on such Closing Date.

Authorization by the Agent Lessor. The execution and delivery of each of the
Lease Supplement, Deed of Trust and each other Operative Agreement delivered by
the Agent Lessor on the Closing Date and the performance of the obligations of
the Agent Lessor under such Lease Supplement, Deed of Trust and other Operative
Agreement have been duly authorized by all requisite action of the Agent Lessor.

Execution and Delivery by the Agent Lessor. Each of the Lease Supplement, Deed
of Trust and each other Operative Agreement delivered by the Agent Lessor on the
Closing Date have been duly executed and delivered by the Agent Lessor.

Valid and Binding Obligations. Each of the Lease Supplement, Deed of Trust,
Assignment of Lease and each other Operative Agreement delivered by the Agent
Lessor on the Closing Date is a legal, valid and binding obligation of the Agent
Lessor, enforceable against the Agent Lessor in accordance with its terms,
subject, in each case, as to enforceability, bankruptcy, insolvency,
reorganization and other similar laws affecting enforcement of creditor rights
generally and, as to the availability of specific performance or other
injunctive relief, subject to the discretionary power of a court to deny such
relief and to general equitable principles.

         7.3 REPRESENTATIONS AND WARRANTIES OF THE LESSEE ON THE CLOSING DATE.
The Lessee (in its capacity as Lessee or as Construction Agent, as the case may
be) represents and warrants to each of the other parties hereto as of the
Closing Date as follows:

Organization; Powers. Each of the Lessee and its Subsidiaries (i) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (ii) has all requisite power and authority to
own its property and assets and to carry on its business as now conducted and as
proposed to be conducted, (iii) is qualified to do business in every
jurisdiction where such qualification is required, except where the failure so
to qualify would not result in a Material Adverse Effect, and (iv) has the power
and authority to execute, deliver and perform its obligations under each of the
Operative Agreements and each other agreement or instrument contemplated thereby
to which it is or will be a party. The Lessee is incorporated under the laws of
the State of Delaware.

                                       16
<PAGE>   23

Authorization. The execution, delivery and performance by the Lessee of each of
the Operative Agreements to which it is a party (a) have been duly authorized by
all requisite action, including, if required, stockholder action on the part of
the Lessee and (b) will not (i) violate (A) any provision of law, statute, rule
or regulation applicable to the Lessee, or of the certificate or articles of
incorporation or other constitutive documents or by-laws of the Lessee or any
Subsidiary, (B) any order of any Governmental Authority or (C) any provision of
any indenture, agreement or other instrument to which the Lessee or any
Subsidiary is a party or by which any of them or any of their property is or may
be bound, (ii) be in conflict with, result in a breach of or constitute (alone
or with notice or lapse of time or both) a default under any such indenture,
agreement or other instrument or (iii) result in the creation or imposition of
any Lien upon or with respect to any property or assets now owned or hereafter
acquired by the Lessee or any Subsidiary except in accordance with the Operative
Agreements.

Enforceability. This Agreement and each of the other Operative Agreements to
which the Lessee is a party has been duly executed and delivered by the Lessee
and constitutes, a legal, valid and binding obligation of the Lessee enforceable
against the Lessee in accordance with its terms, subject, in each case, as to
enforceability, bankruptcy, insolvency, reorganization and other similar laws
affecting enforcement of creditor rights generally and, as to the availability
of specific performance or other injunctive relief, subject to the discretionary
power of a court to deny such relief and to general equitable principles.

Governmental Approvals. No action, consent or approval of, registration or
filing with or any other action by any Governmental Authority is or will be
required by the Lessee in connection with the purchase, leasing or financing of
the Property (the "Transactions"), except such as have been made or obtained and
are in full force and effect.

Financial Statements. The consolidated balance sheet of the Lessee and its
Subsidiaries as at December 31, 1999, and the related consolidated statements of
income and cash flows of the Lessee and its Subsidiaries for the fiscal year
then ended, accompanied by an opinion of Price Waterhouse Coopers LLP,
independent accountants, and the consolidated balance sheet of the Lessee and
its Subsidiaries as at September 30, 2000, and the related consolidated
statements of income and cash flows of the Lessee and its Subsidiaries for the
nine months then ended, duly certified by the chief financial officer of the
Lessee, copies of which have been furnished to the Agent and the Agent Lessor,
fairly present, subject, in the case of said balance sheet as at September 30,
2000, and said statements of income and cash flows for the nine months then
ended, to year-end audit adjustments, the consolidated financial condition of
the Lessee and its Subsidiaries as at such dates and the consolidated results of
the operations of the Lessee and its Subsidiaries for the periods ended on such
dates, all in accordance with GAAP consistently applied. Since December 31,
1999, no event has occurred which could have a Material Adverse Effect.

[Intentionally Deleted]

[Intentionally Deleted]

                                       17
<PAGE>   24

Litigation, Compliance with Laws.

                  (b) There are not any actions, suits or proceedings at law or
in equity or by or before any Governmental Authority now pending or, to the
Lessee's knowledge, threatened against the Lessee or any Subsidiary or any
business, property or rights of any such person (A) which involve any Operative
Agreements or the Transactions or (B) which is reasonably likely to have a
Material Adverse Effect.

                  (c) Neither the Lessee nor any of its Subsidiaries is in
violation of any law, rule or regulation, or in default with respect to any
judgment, writ, injunction or decree of any Governmental Authority, where such
violation or default could reasonably be anticipated to result in a Material
Adverse Effect.

Agreements. Neither the Lessee nor any of its Subsidiaries is in default in any
manner under any provision of any indenture or other agreement or instrument
evidencing Indebtedness, or any other material agreement or instrument to which
it is a party or by which it or any of its properties or assets are or may be
bound, where such default could reasonably be anticipated to result in a
Material Adverse Effect.

Federal Reserve Regulations. Neither the Lessee nor any of its Subsidiaries is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying Margin Stock.

Investment Company Act; Public Utility Holding Company Act. Neither the Lessee
nor any of its Subsidiaries is (i) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940 or (ii) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.

Tax Returns. Each of the Lessee and its Subsidiaries has filed or caused to be
filed all Federal, state, local and foreign tax returns required to have been
filed by it and has paid or caused to be paid all taxes shown to be due and
payable on such returns or on any assessments received by it, except taxes that
are being contested in good faith by appropriate proceedings and for which the
Lessee or such Subsidiary shall have set aside on its books adequate reserves.

No Material Misstatements. No information, report, financial statement, exhibit
or schedule furnished by or on behalf of the Lessee to the Agent or any Lender
or any Lessor in connection with the negotiation of any Operative Agreement or
included therein or delivered pursuant thereto contained, contains or will
contain any misstatement of a material fact or omitted, omits or will omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were, are or will be made, not misleading.

Employee Benefit Plans. Each of the Lessee and its ERISA Affiliates is in
compliance in all material respects with the applicable provisions of ERISA and
the regulations and published interpretations thereunder. No Reportable Event
has occurred as to which the Lessee or any ERISA Affiliate was required to file
a report with the PBGC, and the present value of all benefit liabilities under
each Plan (based on those assumptions used to fund such Plan) did not, as of the

                                       18
<PAGE>   25

last annual valuation date applicable thereto, exceed by more than $1,000,000
the value of the assets of such Plan. Neither the Lessee nor any ERISA Affiliate
has incurred any Withdrawal Liability which remains unpaid and that could result
in a Material Adverse Effect. Neither the Lessee nor any ERISA Affiliate has
received any notification that any Multiemployer Plan is in reorganization or
has been terminated within the meaning of Title IV of ERISA, and to the best
knowledge of the Lessee no Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated, where such reorganization or termination has
resulted or could reasonably be expected to result, through increases in the
contributions required to be made to such Plan or otherwise, in a Material
Adverse Effect.

Environmental Matters. Except as set forth in the Environmental Audit, the
Property is free of contamination from any Release of Hazardous Substances.
Neither the Lessee nor any of its Subsidiaries has any material contingent
liability related to noncompliance with any Environmental Laws, or related to
any Release or threatened Release of a Hazardous Substance or the generation,
use, storage or disposal of Hazardous Substances associated with the Property.
The Lessee and each Subsidiary is conducting its respective business in
compliance with all applicable Environmental Laws. Neither the Lessee nor any of
its Subsidiaries has received notice of any failure to so comply. The Lessee's
and its Subsidiaries' facilities do not manage any hazardous wastes, hazardous
substances, hazardous materials, toxic substances, toxic pollutants or
substances similarly denominated, as those terms or similar terms are used in
the Environmental Laws, in violation of any such law or any regulations
promulgated pursuant thereto. Neither the Lessee nor any of its Subsidiaries has
caused or suffered to occur any Release with respect to any Hazardous Substance
at, under, above or upon any real property which it owns or leases or to which
it transported, disposed or arranged for disposal of Hazardous Substances that
would result in a Material Adverse Effect. Neither the Lessee nor any of its
Subsidiaries is involved in operations which are reasonably likely to result in
the imposition of any material liability on the Lessee or any of its
Subsidiaries under any Environmental Law, and neither the Lessee nor any of its
Subsidiaries has permitted any tenant or occupant of such premises to engage in
any such activities.

Insurance. The Lessee has obtained insurance coverage covering the Property
which meets the requirements of Section 14.1 of the Lease and Section 6.1 of the
Construction Agency Agreement before commencing construction, repairs or
modifications, as the case may be, and such coverage is in full force and
effect.

Representations and Warranties; No Default. The representations and warranties
of the Construction Agent and the Lessee set forth in the Operative Agreements
are true and correct. The Construction Agent and the Lessee are in compliance
with their respective obligations under the Operative Agreements and there
exists no Lease Default or Lease Event of Default under any of the Operative
Agreements. No Lease Default or Lease Event of Default will occur under any of
the Operative Agreements as a result of, or after giving effect to, the Advance
requested by the Requisition on the Closing Date.

Nature of the Property. The Lessee, as Construction Agent on behalf of the Agent
Lessor, shall construct a four story office building on the Land substantially
in accordance with the Plans and Specifications. The Lessee has performed all
actions necessary to ensure that it and all other

                                       19
<PAGE>   26

Lessee Persons will be able to obtain, and the Lessee and all other Lessee
Persons will obtain, all subdivision, platting, zoning, construction,
environmental and other permits, licenses, consents, approvals and
authorizations from all Governmental Authorities in connection with the
acquisition of the Land and the development and construction of the Improvements
in accordance with the Plans and Specifications when required to be obtained.
The Lessee, as Construction Agent, has performed all examinations and made all
inquiries necessary to ensure that each of the other Lessee Persons, and each of
the other contractors, subcontractors and suppliers that will be involved in the
development and construction of the Property, is capable of, and each of them
will, obtain all necessary materials, supplies and labor at the points in time
required by the construction schedule for the Property in order to enable them
to Complete construction of the Property in accordance with the Plans and
Specifications and the requirements of such construction schedule. There is no
local opposition to any of the proposed or approved development plans for the
Property that would have any effect on the ability of the Construction Agent to
construct the Improvements or obtain the permits and other authorizations from
Governmental Authorities for the Improvements.

Authorization by the Lessee. The execution and delivery of each of the Lease,
Lease Supplement, Consent to Assignment and each other Operative Agreement
delivered by the Lessee on the Closing Date and the performance of the
obligations of the Lessee under such Lease, Lease Supplement, Consent to
Assignment and other Operative Agreements have been duly authorized by all
requisite corporate action of the Lessee.

Execution and Delivery by the Lessee. Each of the Lease, Lease Supplement,
Consent to Assignment and each other Operative Agreement delivered on Closing
Date by the Lessee have been duly executed and delivered by the Lessee.

Valid and Binding Obligations. Each of the Lease, Lease Supplement, Consent to
Assignment and each other Operative Agreement delivered by the Lessee on the
Closing Date is a legal, valid and binding obligation of the Lessee, enforceable
against the Lessee in accordance with its respective terms, subject, in each
case, as to enforceability, bankruptcy, insolvency, reorganization and other
similar laws affecting enforcement of creditor rights generally and, as to the
availability of specific performance or other injunctive relief, subject to the
discretionary power of a court to deny such relief and to general equitable
principles.

Intentionally Deleted.

Priority of Liens. (i) Upon proper recordation, the Deed of Trust and the
Assignment of Lease delivered on the Closing Date will constitute a valid and
perfected first lien on the Lessor's interest and the Lessee's interest in the
Property and the Improvements located thereon, subject only to the Permitted
Exceptions including the Lien of the Lease, and (ii) upon proper filing, the
Lessor Financing Statements will perfect the Lessor's interest under the Lease
to the extent the Lease is a security agreement governed by Article 9 of the
Uniform Commercial Code, and to the extent the security interest can be
perfected by filing a financing statement under Article 9 of the Uniform
Commercial Code.

                                       20
<PAGE>   27

Flood Zone. No portion of the Improvements being constructed on the Land is
located in an area identified as a special flood hazard area by the Federal
Emergency Management Agency or other applicable agency, or if the Property is
located in an area identified as a special flood hazard area by the Federal
Emergency Management Agency or other applicable agency, then flood insurance has
been obtained for such Improvements in accordance with Section 14.2(b) of the
Lease and in accordance with the National Flood Insurance Act of 1968, as
amended.

Legal Requirements. The Property being acquired by the Agent Lessor on the
Closing Date complies with all Legal Requirements (including all zoning and land
use laws and Environmental Laws).

Consents, etc. All consents, licenses and building permits required by all Legal
Requirements for construction, completion, occupancy and operation of the
Property have been or will be obtained and are or will be in full force and
effect by the time required by such Legal Requirements.

Title to the Property. Upon the acquisition of the Property on the Closing Date,
the Agent Lessor will have good and marketable title to the Land and the
Improvements thereon, subject only to the Permitted Exceptions including the
Lien of the Lease and Lessor Liens. Upon the acquisition of title to the Land
and the Improvements thereon on Closing Date, the Agent Lessor will have the
right to grant the Deed of Trust on the Property. The Agent Lessor will at all
times have good and marketable title to the Land, Building and any other
Improvements, subject only to Permitted Exceptions including the Lien of the
Lease and Lessor Liens.

Conditions Precedent in Operative Agreements. All conditions precedent contained
in this Agreement and in the other Operative Agreements to be satisfied by the
Lessee relating to the acquisition of the Property by the Agent Lessor have been
satisfied in full.

Offering. Neither Lessee nor anyone acting on behalf of the Lessee has directly
or indirectly offered any interest in the Property or the Notes for sale to, or
solicited any offer to acquire any of the same from, anyone other than the
Lessors, the Lenders, and other institutions, each of which is believed capable
of evaluating and bearing the risks of investment in the transactions
contemplated hereby.

Tax Registration. The transactions contemplated hereby are either (i) not
required to be registered pursuant to Code Section 6111 and any regulations
promulgated thereunder or (ii) required to be registered pursuant to Code
Section 6111, and, if so required, Lessee will properly and timely register such
transaction in accordance with Code Section 6111 and any regulations promulgated
thereunder and will provide the correct registration number to Lessor. No
inference is to be drawn from this Section 7.3(dd) or Section 12.9 that (i) the
transactions contemplated by the Operative Agreements (or any provision thereof)
are a confidential corporate tax shelter subject to registration within the
meaning of Code Section 6111 (and the regulations thereunder), a "potentially
abusive tax shelter" within the meaning of Code Section 6112 (and the
regulations thereunder) or a transaction requiring a disclosure statement under
Temporary Regulation Section 1.6011-4T or (ii) Lessee or any other signatory to
this Participation Agreement or any other Operative Agreement is a promoter,
organizer, manager,

                                       21
<PAGE>   28

seller or investor in a corporate tax shelter, as any of those terms are defined
under Code Section 6111 or 6112 (and any other regulations thereunder). It is
understood and agreed that the representations, warranties and covenants
contained in this Section 7.3(dd) are for the purpose of Section 12.9 hereof.

No Confidential Offers. Each Participant or other offeree (and each employee,
representative, or other agent of such Participant or offeree) shall be
permitted to disclose the structure as it relates to the tax aspects of the
transaction contemplated by the Operative Agreements to any and all Persons,
without limitation of any kind on such disclosure.

         7.4 REPRESENTATIONS AND WARRANTIES OF THE LESSEE UPON EACH FUNDING
DATE. The Lessee and the Construction Agent hereby represent and warrant as of
each Funding Date as follows:

Representations and Warranties. The representations and warranties of the
Construction Agent and the Lessee set forth in the Operative Agreements are true
and correct in all material respects (with respect to Funding Dates following
the initial Funding Date) on and as of such Funding Date. The Construction Agent
and the Lessee are in compliance with their respective obligations under the
Operative Agreements and there exists no Default or Event of Default
attributable to the Lessee or Construction Agent under any of the Operative
Agreements. No Default or Event of Default attributable to the Lessee or
Construction Agent will occur under any of the Operative Agreements as a result
of, or after giving effect to, the Advance requested by the related Requisition
on such date.

Title to Property. As of the Funding Date, the Agent Lessor has good and
marketable title to the Land, subject only to the Permitted Exceptions including
the Lien of the Lease and Lessor Liens. The Agent Lessor has good and marketable
title to any Improvements theretofor financed under the Operative Agreements,
subject only to Permitted Exceptions including the Lien of the Lease and Lessor
Liens.

Priority of Liens. Assuming proper recordation, the Deed of Trust and the
Assignment of Lease and the Lease Supplement constitute a valid and perfected
first lien on the Property and the Improvements, subject only to Permitted
Exceptions, including the Lien of the Lease.

Execution and Delivery by the Construction Agent. The execution and delivery of
each Operative Agreement delivered by the Construction Agent on such date and
the performance of the Construction Agent's obligations under such Operative
Agreements have been duly authorized by all requisite corporate action of the
Construction Agent.

Valid and Binding Obligations of the Construction Agent. Each Operative
Agreement delivered by the Construction Agent on such date is a legal, valid and
binding obligation of the Construction Agent, enforceable against the
Construction Agent in accordance with its terms, subject, in each case, as to
enforceability, bankruptcy, insolvency, reorganization and other similar laws
affecting enforcement of creditor rights generally and, as to the availability
of specific performance or other injunctive relief, subject to the discretionary
power of a court to deny such relief and to general equitable principles.

                                       22
<PAGE>   29

Insurance. The Construction Agent has obtained insurance coverage covering the
Property which meets the requirements of the Construction Agency Agreement and
the other Operative Agreements before commencing construction, repairs or
Modifications, as the case may be, and such coverage is in full force and
effect.

Property-Related Matters. The Property, as improved in accordance with the Plans
and Specifications, will comply with all Legal Requirements (including all
applicable zoning and land use laws and Environmental Laws) in all material
respects and all Insurance Requirements. The Plans and Specifications have been
or will be prepared in accordance with all applicable Legal Requirements
(including all applicable Environmental Laws and building, planning, zoning and
fire codes) and upon completion of the applicable Improvements in accordance
with the Plans and Specifications, such Improvements on the Property will not
encroach in any manner onto any adjoining land (except as permitted by express
written easements or variance) and such Improvements and the use thereof by the
Lessee and its agents, assignees, employees, invitees, lessees, licensees and
tenants will comply with all applicable Legal Requirements (including all
applicable Environmental Laws and building, planning, zoning and fire codes).
Upon completion of such Improvements in accordance with the Plans and
Specifications, (i) there will be no defects to such Improvements including,
without limitation, the plumbing, heating, air conditioning and electrical
systems thereof and (ii) all water, sewer, electric, gas, telephone and drainage
facilities and all other utilities required to adequately service such
Improvements for their intended use will be available pursuant to adequate
permits (including any that may be required under applicable Environmental
Laws). There is no action, suit or proceeding (including any proceeding in
condemnation or eminent domain or under any applicable Environmental Law)
pending or threatened which adversely affects the title to, or the use,
operation or value of, the Property. No fire or other casualty with respect to
the Property has occurred which fire or other casualty has had a material
adverse effect on the Lessee's ability to perform its obligations under the
Construction Agency Agreement and the other Operative Agreements. All utilities
serving the Property, or proposed to serve the Property in accordance with the
Plans and Specifications, are located in, and in the future will be located in,
and vehicular access to the Improvements on the Property is provided by, either
public rights-of-way abutting the Property or Appurtenant Rights. All applicable
licenses, approvals, authorizations, consents, permits (including, without
limitation, building, demolition and environmental permits, licenses, approvals,
authorizations and consents), easements and rights-of-way, including proof of
dedication, required for (i) the use, treatment, storage, transport, disposal or
disposition of any Hazardous Substance on, at, under or from the Property during
the construction of the Improvements thereon and the use and operation of the
Improvements following such construction, (ii) the construction of the
Improvements in accordance with the Plans and Specifications and the
Construction Agency Agreement and (iii) the use and operation of the
Improvements following such construction as permitted pursuant to the Lease have
been obtained from the appropriate Governmental Authorities having jurisdiction
or from private parties.

Lease Requirements. The Improvements, when completed, will comply with all
requirements and conditions set forth in the Lease and all other conditions and
requirements of the Operative Agreements.

                                       23
<PAGE>   30
Conditions Precedent contained in the Operative Agreements. All conditions
precedent contained in this Agreement and in the other Operative Agreements to
be satisfied by the Construction Agent relating to the relevant Advance have
been satisfied in full.

         7.5 REPRESENTATIONS AND WARRANTIES OF THE AGENT LESSOR UPON EACH
FUNDING DATE. The Agent Lessor hereby represents and warrants as of each Funding
Date as follows:

Representations and Warranties. The representations and warranties of the Agent
Lessor set forth in the Operative Agreements are true and correct in all
material respects (with respect to Fundings following the initial Funding Date).
The Agent Lessor is in compliance with its respective obligations under the
Operative Agreements.

Authority of the Agent Lessor. The execution and delivery of each Operative
Agreement delivered by the Agent Lessor on such date and the performance of the
obligations of the Agent Lessor under each such Operative Agreement has been
duly authorized by all requisite action of the Agent Lessor.

Execution and Delivery by the Agent Lessor. Each Operative Agreement delivered
by the Agent Lessor on such date has been duly executed and delivered by the
Agent Lessor.

Valid and Binding Obligations of the Agent Lessor. Each Operative Agreement
delivered by the Agent Lessor on such date is a legal, valid and binding
obligation of the Agent Lessor, enforceable against the Agent Lessor in
accordance with its terms, subject, in each case, as to enforceability,
bankruptcy, insolvency, reorganization and other similar laws affecting
enforcement of creditor rights generally and, as to the availability of specific
performance or other injunctive relief, subject to the discretionary power of a
court to deny such relief and to general equitable principles.

         7.6 REPRESENTATIONS AND WARRANTIES OF THE LESSORS UPON FUNDING DATES.
Each Lessor as to itself hereby represents and warrants as of each Funding Date
that: (a) the representations and warranties of such Lessor set forth in the
Operative Agreements are true and correct in all material respects (with respect
to Fundings following the initial Funding Date)and (b) such Lessor is in
compliance with its obligations under the Operative Agreements.

                                   SECTION 8

                           PAYMENT OF CERTAIN EXPENSES

         The Lessee agrees, for the benefit of the Agent Lessor, each of the
Lessors, the Agent and each of the Lenders, that:

         8.1 PAYMENT OF COSTS AND EXPENSES. The Construction Agent/Lessee shall
pay (on behalf of the Agent Lessor in the case of amounts incurred by the Agent
Lessor) all amounts described in this Section 8.1 as set forth herein; provided,
however, that (i) the amounts set forth in clauses (a) through (d) below will,
so long as the conditions set forth herein for an Advance

                                       24
<PAGE>   31

are satisfied, be paid with the proceeds of Advances and capitalized as part of
Project Cost and (ii) the Construction Agent's obligations during the
Construction Period to pay such amounts directly are subject to the second
sentence of the definition of Supplemental Rent:

Transaction Expenses not otherwise referenced in this Section 8.1 which shall be
payable from time to time.

All reasonable expenses of the Agent Lessor, the Lessors, the Lenders and the
Agent (including the reasonable fees, charges and disbursements of legal counsel
and of local counsel, if any, who may be retained by such legal counsel;
provided that the Lenders, the Agent Lessor, the Lessors and the Agent agree to
use the same counsel with respect to items referred to in clause (1) of this
subsection) in connection with (1) the negotiation, preparation, execution and
delivery of any amendment, supplement or other modification to this
Participation Agreement or any other Operative Agreement, whether or not such
amendment, supplement or modification is ultimately entered into, or giving or
withholding of waivers or consents hereto or thereto requested by the Lessee or
(2) any enforcement of any rights or remedies against the Lessee in respect of
the Operative Agreements, including in connection with any workout,
restructuring or negotiations in respect thereof, which shall be payable within
ten (10) Business Days of demand.

The Structuring Fee.

The Commitment Fees.

         8.2 BROKERS' FEES AND STAMP TAXES. The Lessee shall pay or cause to be
paid any brokers' fees and any and all stamp, transfer and other similar taxes,
fees and excises, if any, including any interest and penalties, which are
payable in connection with the transactions contemplated by this Participation
Agreement and the other Operative Agreements.

         8.3 CREDIT AGREEMENT AND RELATED OBLIGATIONS. The Lessee shall pay,
before the due date thereof, all costs and expenses (other than principal and
interest on the Loans, but including breakage costs and interest on overdue
amounts pursuant to Section 2.7(c) of the Credit Agreement and Section 12.6
hereof or otherwise) required to be paid by the Agent Lessor under the Credit
Agreement, the Deed of Trust, the Assignment of Lease and the Contract
Assignment to the extent such costs and expenses are attributable to an action
or inaction of the Lessee or by the Lessee hereunder.

                                   SECTION 9

                         OTHER COVENANTS AND AGREEMENTS

         9.1 COOPERATION WITH THE LESSEE. The Agent Lessor and the Agent shall,
to the extent reasonably requested by the Lessee (but without assuming
additional liabilities on account thereof), at the Lessee's expense, cooperate
with the Lessee in connection with its covenants contained herein or in any of
the Operative Agreements, including, without limitation, at any time and from
time to time, upon the request of the Lessee, to promptly and duly execute and

                                       25
<PAGE>   32

deliver any and all such further instruments, documents and financing statements
(and continuation statements related thereto) as the Lessee may reasonably
request in order to perform such covenants. The Agent Lessor agrees that, to the
extent it shall obtain actual knowledge of the occurrence of a Lease Default or
a Credit Agreement Default caused by the Agent Lessor or any of its Affiliates,
it shall promptly notify the Lessee describing the same in reasonable detail.
The Agent agrees that, to the extent it shall obtain actual knowledge of the
occurrence of a Lease Default or a Credit Agreement Default it shall promptly
notify the Lessee describing the same in reasonable detail.

         9.2 COVENANTS OF THE AGENT LESSOR AND THE LESSORS. Each of the Agent
Lessor and the Lessors hereby agrees as to itself that so long as this Agreement
is in effect:

Discharge of Liens. Each of the Agent Lessor and each Lessor will not create or
permit to exist at any time, and will, at its own cost and expense, promptly
take such action as may be necessary duly to discharge, or to cause to be
discharged, all Lessor Liens on the Property attributable to it or any of its
Affiliates; provided, however, that the Agent Lessor and each Lessor shall not
be required to so discharge any such Lessor Lien while the same is being
contested in good faith by appropriate proceedings diligently prosecuted so long
as such proceedings shall not involve any material danger of impairment of the
Liens of the Security Documents or of the sale, forfeiture or loss of, and shall
not interfere with the use or disposition of, the Property or title thereto or
any interest therein or the payment of Rent.

Change of Chief Place of Business. The Agent Lessor shall give prompt notice to
the Lessee and the Agent if the Agent Lessor's chief place of business or chief
executive office, or the office where the records concerning the accounts or
contract rights relating to the Property are kept, shall cease to be located at
31 West 52nd Street, New York, New York 10019 or if it shall change its name.

Loan Documents. So long as the Lease is in effect, none of the Lenders, the
Lessors, the Agent nor the Agent Lessor shall consent to or permit any
amendment, supplement, waiver or other modification of the terms and provisions
of the Credit Agreement, the Notes or the Security Documents, in each case if
such could reasonably be anticipated to have the effect of modifying the rights,
remedies or obligations of Lessee or could reasonably be anticipated to
otherwise adversely affect Lessee, in each case without the prior written
consent of the Lessee.

         9.3 AMENDMENT OF CERTAIN DOCUMENTS. The Agent, for itself and on behalf
of the Lenders, hereby agrees for the benefit of the Lessors and the Agent
Lessor that it will not amend, alter or otherwise modify, or consent to any
amendment, alteration or modification of, the Lease (including the definitions
of any terms used in such document) without the prior written consent of the
Lessors and the Agent Lessor as the case may be, if such amendment, alteration
or modification would materially and adversely affect the interests of the
Lessors or the Agent Lessor. Provisions requiring consent include, without
limitation, any amendment, alteration or modification that would release the
Lessee from any of its obligations in respect of the payment of Basic Rent,
Supplemental Rent, Termination Value, Maximum Residual Guarantee Amount,
Purchase Option Price or Partial Purchase Option Price or any other payments in
respect of the Property as set forth in the Lease, or amend the provisions of
Section 8 of the Credit Agreement,

                                       26
<PAGE>   33

or reduce the amount of, or change the time or manner of payment of, obligations
of the Lessee as set forth in the Lease, or create or impose any obligation on
the part of the Lessors or the Agent Lessor under the Lease, or extend or
shorten the duration of the Term, or modify the provisions of this Section 9.3.

         9.4 PROCEEDS OF CASUALTY. The Lessors and the Agent Lessor agree, for
the benefit of the Agent and the Lenders, that if at any time either any Lessor
or the Agent Lessor receives any proceeds as a result, directly or indirectly,
of any Casualty with respect to the Property which the Agent Lessor is entitled
to retain and hold in accordance with the terms of the Lease, the Lessors and
the Agent Lessor agree that they will promptly deposit such amounts in an
account with the Agent. The Lessors and the Agent Lessor also agree that they
will execute and deliver such documents and instruments as the Agent may request
in order to grant the Agent, for the benefit of the Lenders, a valid and
perfected, first priority security interest in such proceeds.

         9.5 COVENANTS OF THE LESSEE. The Lessee hereby agrees that so long as
this Agreement is in effect:

Information. The Lessee will deliver to the Agent Lessor, the Lessors, the
Lenders and the Agent:

                  (b) as soon as available and in any event within one hundred
five (105) days after the end of each fiscal year of the Lessee, a statement of
financial position of the Lessee and its consolidated subsidiaries as of the end
of such fiscal year and the related consolidated statements of income,
shareholder's equity and cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous fiscal year, all reported
on by independent accountants of nationally recognized standing, together with
an Officer's Certificate from the chief financial officer of the Lessee
substantially in the form of Exhibit K hereto containing a computation of, and
showing compliance with, each of the financial ratios and restrictions contained
in this Section 9.5 and stating that no Default or Event of Default has occurred
or is continuing, or if any Default or Event of Default has occurred and is
continuing, describing it and the steps if any, being taken to cure it

                  (c) as soon as available and in any event within fifty (50)
days after the end of each of the first three quarters of each fiscal year of
the Lessee, an unaudited consolidated statement of financial position of the
Lessee as of the end of such period and the related consolidated statements of
income, shareholders' equity and cash flows for such period and for the portion
of the Lessee's fiscal year ended at the end of such period, together with an
Officer's Certificate of the chief financial officer of the Lessee substantially
in the form of Exhibit K hereto containing a computation of, and showing
compliance with, each of the financial ratios and restrictions contained in this
Section 9.5 and stating that no Default or Event of Default has occurred or is
continuing or, if any Default or Event of Default has occurred and is
continuing, describing it and the steps, if any, being taken to cure it;

                  (d) promptly after the filing thereof, if applicable, copies
of all reports on Forms 10-K, 10-Q and 8-K (or their equivalents), which the
Lessee shall have filed with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended;

                                       27
<PAGE>   34

                  (e) if and when any member of the ERISA Group (1) gives or is
required to give notice to the PBGC of any "reportable event" (as defined in
Section 4043 of ERISA) with respect to any Plan which might constitute grounds
for a termination of such Plan under Title IV or ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event given or
required to be given to the PBGC; (2) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any Multiemployer
Plan is in reorganization, is insolvent or has been terminated, a copy of such
notice; (3) receives notice from the PBGC under Title IV of ERISA of an intent
to terminate, impose liability (other than for premiums under Section 4007 of
ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of
such notice; (4) applies for a waiver of the minimum funding standard under
Section 412 of the Code, a copy of such application; (5) gives notice of intent
to terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and
other information filed with the PBGC; (6) gives notice of withdrawal from any
Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (7) fails to
make any payment or contribution to any Plan or Multiemployer Plan or in respect
of any Benefit Arrangement or makes any amendment to any Plan or Benefit
Arrangement which has resulted in the imposition of a Lien or the posting of a
bond or other security, a certificate of the chief financial officer or the
chief accounting officer of the Lessee setting forth details as to such
occurrence and action, if any, which the Lessee or applicable member of the
ERISA Group is required or proposes to take;

                  (f) promptly after the occurrence of any Default or Event of
Default, notice thereof in writing, together with information regarding the
steps, if any, being taken to cure it; and

                  (g) from time to time such additional information regarding
the Lessee or the Property as the Agent Lessor or the Agent, at the request of
any Lessor or Lenders, may reasonably request;

provided, however, for purposes of the delivery of any report on Forms 10-K,
10-Q or 8-K required under this Section 9.1(a) (but not Officer's Certificates
required under this Section 9.1(a)), any such reports shall be deemed delivered
to the Agent Lessor, the Lessors, the Lenders and the Agent upon the filing of
such report with the Securities and Exchange Commission.

Compliance with Laws. The Lessee will, and will cause its Subsidiaries to,
comply with all applicable laws, ordinances, rules, regulations, orders and
requirements of governmental authorities (including, without limitation,
Environmental Laws and ERISA and the rules and regulations thereunder) except
where the necessity of compliance therewith is contested in good faith by
appropriate proceedings and noncompliance will not result in costs in excess of
$5,000,000.

Further Assurances. The Lessee shall take or cause to be taken from time to time
all action necessary to assure during the Construction Period and the Term that
title to the Property remains in the Agent Lessor as contemplated by Section
12.1 of the Lease, that the Agent Lessor holds a perfected Lien on the Property
securing the Lease Balance as contemplated by Section 7.1

                                       28
<PAGE>   35

of the Lease, and that the Agent holds a perfected Lien on the Property and the
Lease securing the repayment of the Loans.

Existence; Franchises; Businesses. Except as otherwise expressly permitted in
this Agreement, the Lessee shall, and shall cause each Subsidiary to (i)
maintain in full force and effect its separate existence and all rights,
licenses, leases and franchises reasonably necessary to the conduct of its
business, and (ii) continue doing business as a whole in the lines of business
in which they were engaged on the Closing Date and businesses reasonably related
thereto.

Books and Records. The Lessee shall, and shall cause each Subsidiary to,
maintain its books and records in accordance with GAAP, and permit the Lessors
and the Lenders to make or cause to be made inspections and audits of any books,
records and papers of the Lessee and its Subsidiaries and to make extracts
therefrom at all such reasonable times and as often as any such Person may
reasonably require.

Minimum Consolidated Tangible Net Worth. At no time will the Lessee's
Consolidated Tangible Net Worth be less than $200,000,000.

Minimum Consolidated Fixed Charge Ratio. The Lessee shall maintain at all times
a minimum Consolidated Fixed Charge Ratio at least equal to the following for
the periods indicated below, such ratio to be measured at the end of each fiscal
quarter:

<TABLE>
<CAPTION>
                PERIOD                               RATIO
                ------                               -----
<S>                                                 <C>
        Closing Date through 12/31/02               2.0:1.0
        1/01/03 through 12/31/03                    2.5:1.0
        Thereafter                                  3.0:1.0
</TABLE>

Fundamental Changes. The Lessee shall not, nor shall it permit any Subsidiary
to, enter into any merger, consolidation or amalgamation, where it is not the
surviving entity, or liquidate, wind-up or dissolve itself (or suffer any
liquidation or dissolution); convey, sell, assign, transfer or otherwise dispose
of all or substantially all of the property, business or assets of the Lessee
and its Subsidiaries; provided, however, that if (i) at least thirty (30) days
prior to the consummation of such transaction the Lessee shall have furnished to
the Lessor, the Participants and the Agent an Officer's Certificate of the chief
financial officer of the Lessee that no Default or Event of Default shall occur
after giving effect thereto, and (ii) no Default or Event of Default shall have
occurred before or after giving effect thereto:

                  (1) any Subsidiary of the Lessee may be merged or consolidated
         with or into the Lessee (provided, however, that the Lessee shall be
         the continuing or surviving corporation) or with or into any one or
         more wholly-owned Subsidiaries of the Lessee (provided, however, that
         the wholly-owned Subsidiary or Subsidiaries shall be the continuing or
         surviving corporation); and

                  (2) any wholly-owned Subsidiary may sell, lease, transfer or
         otherwise dispose of any or all of its assets (upon voluntary
         liquidation or otherwise) to the Lessee or any other wholly-owned
         Subsidiary of the Lessee.

                                       29
<PAGE>   36

No Impairment of Deposits. The Lessee shall not, nor shall it permit any of its
Subsidiaries to, directly or indirectly, enter into or become bound by any
agreement, instrument, indenture or other obligation which could directly or
indirectly restrict, prohibit or require the consent of any Person to the making
by the Lessee of any deposit constituting part of the Defeasance Deposit or the
realization thereon or utilization thereof (or of any earnings thereon or of any
other Collateral) by the Agent Lessor, the Agent or any of the Lenders or
Lessors.

                                   SECTION 10

                                CREDIT AGREEMENT

         10.1 LESSEE'S CREDIT AGREEMENT RIGHTS. Notwithstanding anything to the
contrary contained in the Credit Agreement, the Agent, the Lessee, the Agent
Lessor and the Lessors hereby agree that:

the Lessee shall have the right to give the notice referred to in Section 2.3 of
the Credit Agreement;

the Lessee shall have the right to continue Loans and select Interest Periods in
accordance with Section 2.5 of the Credit Agreement;

the Lessee shall have the right to receive copies of all notices delivered to
the Agent Lessor or the Lessors under the Credit Agreement and the other
Operative Agreements and such notices shall not be effective until received by
the Lessee;

the Lessee shall have the right to give notice of prepayment of the Loans in
accordance with Section 2.4 of the Credit Agreement;

the Lessee shall have the right to cure, to the extent susceptible to a cure,
any Default or Event of Default of the Agent Lessor under the Credit Agreement;
provided, that (except with respect to an Event of Default under Section 6.1(a)
of the Credit Agreement or Section 17.1(a) of the Lease) such right to cure any
Default or Event of Default shall extend thirty (30) days beyond the grace
periods contained in the Credit Agreement;

the Lessee shall have the right to approve any successor Agent pursuant to
Section 7.9 of the Credit Agreement; and

without limiting the foregoing clauses (a) through (f), and in addition thereto,
(x) in the absence of a continuing Lease Event of Default, the Agent Lessor
shall not exercise any right under the Credit Agreement without giving the
Lessee at least ten (10) Business Days' prior written notice (or such shorter
period as may be required but in no case less than three (3) Business Days) and,
following such notice, the Agent Lessor shall take such action, or forbear from
taking such action, as the Lessee shall direct and (y) in the absence of a
continuing Lease Event of Default, the Lessee shall have the right to exercise
any other right of the Agent Lessor under the Credit Agreement upon not less
than two (2) Business Days' prior written notice from the Lessee to the

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<PAGE>   37

Agent Lessor. Notwithstanding the foregoing, the Agent Lessor and the Lessors
shall retain the exclusive right to the exercise of the Excepted Rights.

                                   SECTION 11

                              TRANSFER OF INTEREST

         11.1 ASSIGNMENTS. Each Participant may, without the consent of the
Lessee, assign all or a portion of its rights and obligations hereunder pursuant
to an assignment agreement substantially in the form of Exhibit I (an
"Assignment and Acceptance") to one or more Eligible Transferees, with respect
to Loan Commitments and Loans or Lessor Commitments and Lessor Contributions,
provided, that each such assignment shall be of a constant, not varying,
percentage of all of the assigning Participant's rights and obligations under
the Operative Agreements. In the case of assignments made by a Lender, any such
assignment shall be in a minimum aggregate amount of $5,000,000 of its Loan
Commitment (or the balance of such Loan Commitment, if less) and the aggregate
remaining Loan Commitment of the assigning Lender shall, after giving effect to
the proposed assignment, be at least $5,000,000 or if less, zero. In the case of
assignments made by a Lessor, any such assignment shall be in a minimum
aggregate amount of $500,000 of its Lessor Commitment (or the balance of such
Lessor Commitment, if less) and the aggregate remaining Lessor Commitment of the
assigning Lessor shall, after giving effect to the proposed assignment, be at
least $500,000 or if less, zero. Any assignment hereunder shall be effective
upon delivery to the Agent and the Agent Lessor of written notice of the
assignment together with a transfer fee of $2,500 payable by the assignor
Participant or the assignee Participant to the Agent for its own account. The
assigning Participant will give prompt notice to the Agent of any such
assignment. Upon the effectiveness of any such assignment (and after notice to
and consent of the Lessee, the Agent and the Agent Lessor, as provided herein),
the assignee shall become a "Lender" or "Lessor", as the case may be, for all
purposes of the Operative Agreements and, to the extent of such assignment, the
assigning Participant shall be relieved of its obligations hereunder to the
extent of the Loans or Lessor Contributions, as the case may be, and Commitment
components being assigned. The Agent agrees that upon notice of any such
assignment and surrender of the appropriate Note or Notes it will promptly
provide to the assigning Lender and to the assignee separate promissory notes in
the amount of their respective interests substantially in the form of the
original Note (but with notation thereon that it is given in substitution for
and replacement of the original Note or any replacement notes thereof). The
Lessee shall not be responsible for any costs or expenses incurred by any
Participant in connection with an assignment of all or any of its rights and
obligations in connection with an assignment pursuant to this Section 11.1.

         11.2 PARTICIPATIONS. Each Participant may sell, transfer, grant or
assign participations in all or any part of such Participant's interests and
obligations hereunder; provided, that (i) any such sub-participant shall be an
Eligible Transferee, (ii) the selling Participant shall remain a "Lender" or
"Lessor", as the case may be, for all purposes under the Operative Agreements
(such selling Participant's obligations under the Operative Agreements remaining
unchanged) and the sub-participant shall not constitute a Lender or a Lessor, as
the case may be, hereunder, (iii) no such sub-participant shall have, or be
granted, rights to approve any amendment or waiver

                                       31
<PAGE>   38

relating to the Operative Agreements except to the extent any such amendment or
waiver would (A) reduce the principal of or rate of interest on or fees in
respect of any Loans or Lessor Contributions in which the sub-participant is
participating, (B) postpone the date fixed for any payment of principal
(including extension of the Expiration Date or the date of any mandatory
prepayment), interest or fees in which the sub-participant is participating, or
(C) release all or substantially all of the collateral or guarantees (except as
expressly provided in the Operative Agreements) supporting any of the Loans or
Lessor Contributions or Commitments in which the sub-participant is
participating, and (iv) sub-sub-participations by the sub-participant (except to
an Affiliate, parent company or Affiliate of a parent company of the
participant) shall be prohibited. In the case of any such participation, the
sub-participant shall not have any rights under the Operative Agreements (the
sub-participants rights against the selling Participant in respect of such
participation to be those set forth in the participation agreement with such
Participant creating such participation) and all amounts payable by the Lessee
hereunder shall be determined as if such Participant had not sold such
participation; provided, however, that such sub-participant shall be entitled to
receive additional amounts under Sections 12.3 and 12.7 on the same basis as if
it were a Participant (but only to the extent that the Participant would have
been entitled to receive such additional amounts with respect to the interest
participated had it not sold such participation). The Lessee shall not be
responsible for any costs or expenses incurred by any Participant in connection
with a sale, transfer, grant or assignment of participations pursuant to this
Section 11.2.

         11.3 DISCLOSURE OF INFORMATION; PLEDGE UNDER REGULATION A.

Any Participant may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 11, disclose to
such assignee or participant or proposed assignee or participant, any
information relating to Lessee or the Transactions, provided, that prior to such
disclosure such proposed assignee or participant shall have agreed in writing to
keep any such information confidential substantially on the terms of Section
11.3(b).

The Agent and the Agent Lessor understand that some of the information and
documents furnished to it pursuant to the Operative Agreements may be
confidential and each of them agrees that it will keep all non-public
information, documents and agreements so furnished to it confidential and will
make no disclosure to other Persons of such information or agreements until it
shall have become public, except disclosure may be made (i) to the extent
required in connection with matters involving operations under or enforcement or
amendment of the Operative Agreements; (ii) to the Lenders' and the Lessors'
examiners and auditors or in accordance with the Lenders' or Lessors'
obligations under law or regulations or pursuant to subpoenas or other process
to make information available to governmental agencies and examiners or to
others; (iii) to any corporate affiliate of any Participant so long as such
affiliate agrees to accept such information or agreement subject to the
restrictions provided in this Section 11.3(b); (iv) to the Participant's counsel
and other professional advisors so long as such Persons are instructed to keep
such information confidential in accordance with the provisions of this Section
11.3(b); (v) to proposed assignees and participants in accordance with Section
11.3(a); and (vi) with the prior written consent of the Lessee.

                                       32
<PAGE>   39

Anything in this Section 11 to the contrary notwithstanding, any Participant may
without the consent of Lessee, the Agent or the Agent Lessor, assign and pledge
all or any portion of the Notes held by it to any Federal Reserve Bank, the
United States Treasury or to any other financial institution as collateral
security pursuant to Regulation A of the Federal Reserve Board and any operating
circular issued by the Federal Reserve System and/or the Federal Reserve Bank or
otherwise; provided, any payment by Lessee for the benefit of the assigning or
pledging Participant shall be deemed to satisfy Lessee's obligations with
respect thereto.

                                   SECTION 12

                                 INDEMNIFICATION

         12.1 GENERAL INDEMNITY.

The Lessee, whether or not any of the transactions contemplated hereby shall be
consummated, hereby assumes liability for and agrees to defend, indemnify and
hold harmless each Indemnified Person on an After Tax Basis from and against any
Claims arising from events occurring during the Basic Term following the
Construction Period, any Renewal Term and thereafter which may be imposed on,
incurred by or asserted against an Indemnified Person (whether because of action
or omission of such Indemnified Person or otherwise, whether or not such
Indemnified Person shall also be indemnified as to any such Claim by any other
Person and whether or not such Claim arises or occurs prior to the Closing Date
or after the Expiration Date, in any way relating to or arising or alleged to
arise out of (i) the financing, refinancing, purchase, acceptance, rejection,
ownership, design, construction, delivery, nondelivery, leasing, subleasing,
possession, use, operation, repair, maintenance, modification, transportation,
condition, sale, return, repossession (whether by summary proceedings or
otherwise), or any other disposition of the Property or any part thereof, (ii)
any latent or other defects in any property whether or not discoverable by an
Indemnified Person or the Lessee; (iii) a violation of any Legal Requirement or
Requirement of Law (other than with respect to Lessor Liens); (iv) the Operative
Agreements, or any transaction contemplated thereby; (v) any breach by the
Lessee of any of its representations or warranties under the Operative
Agreements or failure by the Lessee to perform or observe any covenant or
agreement to be performed by it under any of the Operative Agreements; (vi)
personal injury, death or property damage relating to the Property, including
Claims based on strict liability in tort; (vii) the existence of any Lien on or
with respect to the Property, the Improvements, the Equipment, any Basic Rent or
Supplemental Rent, title thereto, or any interest therein, including any Liens
which arise out of the possession, use, occupancy, construction, repair or
rebuilding of the Property or by reason of labor or materials furnished or
claimed to have been furnished to the Lessee, the Agent Lessor, the Construction
Agent or any of their contractors or agents or by reason of the financing of the
Property or any personality or equipment purchased or leased by the Lessee or
Improvements or Modifications constructed by the Lessee, except Lessor Liens and
Liens in favor of the Agent or the Lessor; and (viii) the Transactions
contemplated hereby or by any other Operative Agreement, in respect of the
application of Parts 4 and 5 of Subtitle B of Title I of ERISA and any
prohibited transaction described in Section 4975(c) of the Code; but in any
event excluding (A) Claims to the extent such Claims arise solely out of events
occurring after the expiration of the Term and after the

                                       33
<PAGE>   40

Lessee's discharge of all its obligations under the Lease and the other
Operative Agreements or (B) as to any Indemnified Person, any Claim to the
extent resulting from the willful misconduct or gross negligence of such
Indemnified Person. The Lessee shall be entitled to control, and shall assume
full responsibility for the defense of, any Claim; provided, however, that any
Indemnified Person named in such Claim may retain separate counsel reasonably
acceptable to the Lessee at the expense of the Lessee in the event of and to the
extent of a conflict. The Lessee and each Indemnified Person agree to give each
other prompt written notice of any Claim hereby indemnified against but the
giving of any such notice by an Indemnified Person shall not be a condition to
the Lessee's obligations under this Section 12.1, except to the extent failure
to give such notice materially prejudices Lessee's rights hereunder. After an
Indemnified Person has been fully indemnified for a Claim pursuant to this
Section 12.1, and so long as no Lease Event of Default under the Lease shall
have occurred and be continuing, the Lessee shall be subrogated to any right of
such Indemnified Person with respect to such Claim. None of the Indemnified
Persons shall settle a Claim without the consent of the Lessee, which consent
shall not be unreasonably withheld or delayed.

The Construction Agent agrees to assume liability for, and to indemnify,
protect, defend, save and keep harmless the Agent Lessor and the Lessors (the
"Lessor Parties") on an After Tax Basis (which right to indemnity may be
assigned by the Lessor Parties), from and against any and all Claims (including
Losses (as defined in Section 12.11)) arising from events occurring during the
Construction Period that may be imposed on, incurred by or asserted against the
Lessor Parties, whether or not the Lessor Parties shall also be indemnified as
to any such Claim by any other Person and whether or not such claim arises or
accrues prior to the Closing Date, in any way relating to or arising out of the
circumstances described in clauses (i) through (viii) of Section 12.1(a) but
only to the extent (1) such Claims result from acts or omissions of the
Construction Agent or any Lessee Person and (2)(A) are not related to
construction completion, or (B) if such Claims are related to construction
completion, the Lessee's recourse liability for such Claims shall not exceed the
Construction Period Maximum Recourse Amount. The Construction Agent acknowledges
and agrees in this connection that the Property is in its control and possession
during the Construction Period, that it is responsible as Construction Agent for
the acts and omissions of its subcontractors and agents and all Lessee Persons
and that it has agreed to maintain the Property free from injury or mishap to
third persons; provided, however, that the occurrence of injury or mishap to
third persons shall not give rise to a Construction Agency Agreement Event of
Default or a Lease Event of Default.

         12.2 ENVIRONMENTAL INDEMNITY. Without limitation of the other
provisions of this Section 12, during the Construction Period, the Lessee hereby
agrees to indemnify, hold harmless and defend each Lessor Party, and during the
Basic Term following the Construction Period, any Renewal Term and thereafter,
each Indemnified Person, on an After Tax Basis from and against any and all
Claims (including, without limitation, third party Claims for personal injury or
real or personal property damage), losses (including, but not limited to, to the
extent the Lease Balance and all other Obligations have not been fully paid, any
loss of value of the Property), damages, liabilities, fines, penalties, charges,
and all reasonable costs and expenses incurred in connection therewith
(including, but not limited to, reasonable consultants' and attorneys' fees and
expenses), including, but not limited to, all costs incurred in connection with

                                       34
<PAGE>   41

any investigation or monitoring of site conditions or any clean-up, remedial
removal or restoration work, arising in whole or in part, out of:

the presence on or under the Property of any Hazardous Substances, or any
Release of any Hazardous Substances on, under, from or onto the Property,

any activity, including, without limitation, construction, carried on at the
Property, and whether by the Lessee or any predecessor in title or any
employees, agents, contractors or subcontractors of the Lessee or any
predecessor in title, or any other Persons (including such Indemnified Person),
in connection with the handling, treatment, removal, storage, decontamination,
clean-up, transport or disposal of any Hazardous Substances that at any time are
located or present on or under the Property,

loss of or damage to the Property or the environment (including, without
limitation, clean-up costs, response costs, remediation and removal costs, cost
of corrective action, costs of financial assurance, fines and penalties and
natural resource damages), or death or injury to any Person, and all expenses
associated with the protection of wildlife, aquatic species, vegetation, flora
and fauna, and any mitigative action required by or under Environmental Laws, in
each case arising from activities on or conditions with respect to the Property,

any claim concerning lack of compliance with Environmental Laws, or any act or
omission causing an environmental condition that requires remediation or would
allow any Governmental Authority to record a Lien on the land records, in each
case arising from activities on or conditions with respect to the Property, or

any residual contamination on or under any parcel of Land, or affecting any
natural resources, and any contamination of any property or natural resources
arising in connection with the generation, use, handling, storage, transport or
disposal of any such Hazardous Substances from any parcel of Land, and
irrespective of whether any of such activities were or will be undertaken
accordance with all Requirements of Law;

provided, however, the Lessee shall not be required to indemnify any Indemnified
Person under this Section 12.2 for (1) Claims to the extent such Claims arise
solely out of events occurring after the expiration of the Term and after the
Lessee's discharge of all its obligations under the Lease and the other
Operative Agreements or (2) as to any Indemnified Person, any Claim to the
extent resulting from the willful misconduct or gross negligence of such
Indemnified Person. It is expressly understood and agreed that the indemnity
provided for herein shall survive the expiration or termination of, and shall be
separate and independent from, any remedy under the Lease or any other Operative
Agreement.

         12.3 GENERAL IMPOSITIONS INDEMNITY.

Indemnification. During the Construction Period, the Lessee shall pay and assume
liability for, and does hereby agree to indemnify, protect and defend the
Property and all Lessor Parties (but not, with respect to property taxes imposed
on the Property, in excess of the Construction Period Maximum Recourse Amount),
and the Agent Lessor agrees to pay and assume liability for and

                                       35
<PAGE>   42

does hereby indemnify, protect and defend the other Indemnified Persons (for
which obligation the Construction Agent agrees to indemnify the Agent Lessor),
and hold it and them harmless against, all Impositions on an After Tax Basis.
During the Basic Term following the Construction Period, and any Renewal Term,
the Lessee shall pay and assume liability for, and does hereby agree to
indemnify, protect and defend the Property and each Indemnified Person, and hold
it and them harmless against, all Impositions on an After Tax Basis.

Payments.

         (b) Subject to the terms of Section 12.3(f), the Lessee shall pay or
cause to be paid all Impositions directly to the taxing authorities where
feasible and otherwise to the Indemnified Person, as appropriate, and the Lessee
shall at its own expense, upon such Indemnified Person's reasonable request,
furnish to such Indemnified Person copies of official receipts or other
satisfactory proof evidencing such payment.

         (c) In the case of Impositions for which no contest is conducted
pursuant to Section 12.3(f) and which the Lessee pays directly to the taxing
authorities, the Lessee shall pay such Impositions fifteen (15) Business Days
prior to the latest time permitted by the relevant taxing authority for timely
payment. In the case of Impositions for which the Lessee reimburses an
Indemnified Person, the Lessee shall do so within twenty (20) days after receipt
by the Lessee of demand by such Indemnified Person describing in reasonable
detail the nature of the Imposition and the basis for the demand (including the
computation of the amount payable), but in no event shall the Lessee be required
to pay such reimbursement prior to fifteen (15) Business Days before the latest
time permitted by the relevant taxing authority for timely payment. In the case
of Impositions for which a contest is conducted pursuant to Section 12.3(f), the
Lessee shall pay such Impositions or reimburse such Indemnified Person for such
Impositions, to the extent not previously paid or reimbursed pursuant to
subsection (a), fifteen (15) Business Days prior to the latest time permitted by
the relevant taxing authority for timely payment after conclusion of all
contests under Section 12.3(f).

         (d) Impositions imposed with respect to the Property for a billing
period during which the Lease expires or terminates (unless a Renewal Term is to
apply or the Lessee has exercised the Purchase Option or the Maturity Date
Purchase Option with respect to the Property) shall be adjusted and prorated on
a daily basis between the Lessee and the Lessors, whether or not such Imposition
is imposed before or after such expiration or termination and each party shall
pay or reimburse the other for each party's pro rata share thereof.

         (e) At the Lessee's request, the amount of any indemnification payment
by the Lessee pursuant to subsection (a) shall be verified and certified by an
independent public accounting firm mutually acceptable to the Lessee and the
Indemnified Person. The fees and expenses of such independent public accounting
firm shall be paid by the Lessee unless such verification shall result in an
adjustment in the Lessee's favor of 10% or more of the payment as computed by
the Indemnified Person, in which case such fee shall be paid by the Indemnified
Person.

                                       36
<PAGE>   43

Reports and Returns. (i) The Lessee shall be responsible for preparing and
filing any real and personal property or ad valorem tax returns in respect of
the Property. In case any other report or tax return shall be required to be
made with respect to any obligations of the Lessee under or arising out of
subsection (a) and of which the Lessee has knowledge or should have knowledge,
the Lessee, at its sole cost and expense, shall notify the relevant Indemnified
Person of such requirement and (except if such Indemnified Person notifies the
Lessee that such Indemnified Person intends to file such report or return) (A)
to the extent required or permitted by and consistent with Requirements of Law,
make and file in its own name such return, statement or report; and (B) in the
case of any other such return, statement or report required to be made in the
name of such Indemnified Person, advise such Indemnified Person of such fact and
prepare such return, statement or report for filing by such Indemnified Person
or, where such return, statement or report shall be required to reflect items in
addition to any obligations of the Lessee under or arising out of subsection
(a), provide such Indemnified Person at the Lessee's expense with information
sufficient to permit such return, statement or report to be properly made with
respect to any obligations of the Lessee under or arising out of subsection (a).
Such Indemnified Person shall, upon the Lessee's request and at the Lessee's
expense, provide any data maintained by such Indemnified Person (and not
otherwise available to or within the control of the Lessee) with respect to the
Property which the Lessee may reasonably require to prepare any required tax
returns or reports. Each Indemnified Person agrees to use commercially
reasonable efforts to send to the Lessee a copy of any written request or other
notice that the Indemnified Person receives with respect to any reports or
returns required to be filed with respect to the Property or the transactions
contemplated by the Operative Agreements, it being understood that no
Indemnified Person shall have any liability for failure to provide such copies.

Income Inclusions. If as a result of the payment or reimbursement by the Lessee
of any expenses of any Lessor or the payment of any Transaction Expenses
incurred in connection with the transactions contemplated by the Operative
Agreements, any Lessor or any Lender or any of their respective Affiliates shall
suffer a net increase in any federal, state or local income tax liability, the
Lessee shall indemnify such Persons (without duplication of any indemnification
required by subsection (a)) on an After Tax Basis for the amount of such
increase. The calculation of any such net increase shall take into account any
current or future tax savings realized or reasonably expected to be realized by
such person in respect thereof, as well as any interest, penalties and additions
to tax payable by such Lessor, such Lender or such Affiliate, in respect
thereof.

Withholding Taxes. As between the Lessee on one hand, and the Lessor or the
Agent or any Participant on the other hand, the Lessee shall be responsible for,
and, subject to the provisions of Sections 12.3(g) and (h), the Lessee shall
indemnify and hold harmless the Agent Lessor, the Agent and the Participants
(without duplication of any indemnification required by subsection (a)) on an
After Tax Basis against, any obligation for United States or foreign withholding
taxes imposed in respect of payments with respect to the Loans or Lessor
Contributions or with respect to Rent payments under the Lease or payments of
the Termination Value, Permitted Lease Investment Balance, Purchase Option Price
or Partial Purchase Option Price (and, if the Agent Lessor, the Agent or any
Participant receives a demand for such payment from any taxing

                                       37
<PAGE>   44

authority, the Lessee shall discharge such demand on behalf of the Agent Lessor,
the Agent or such Participant).

Contests of Impositions.

         (f) If a written claim is made against any Indemnified Person or if any
proceeding shall be commenced against such Indemnified Person (including a
written notice of such proceeding), for any Impositions, such Indemnified Person
shall promptly notify the Lessee in writing and shall not take action with
respect to such claim or proceeding without the consent of the Lessee for thirty
(30) days after the receipt of such notice by the Lessee; provided, however,
that, in the case of any such claim or proceeding, if action shall be required
by law or regulation to be taken prior to the end of such 30-day period, such
Indemnified Person shall, in such notice to the Lessee, inform the Lessee of
such shorter period, and no action shall be taken with respect to such claim or
proceeding without the consent of the Lessee before two days before the end of
such shorter period; provided, further, that the failure of such Indemnified
Person to give the notices referred to in this sentence shall not diminish the
Lessee's obligation hereunder except to the extent such failure precludes the
Lessee from contesting, or otherwise materially adversely affects the Lessee's
ability to contest, all or part of such claim.

         (g) If, within thirty (30) days of receipt of such notice from the
Indemnified Person (or such shorter period as the Indemnified Person has
notified the Lessee is required by law or regulation for the Indemnified Person
to commence such contest), the Lessee shall request in writing that such
Indemnified Person contest such Imposition, the Indemnified Person shall, at the
expense of the Lessee, in good faith conduct and control such contest
(including, without limitation, by pursuit of appeals) relating to the validity,
applicability or amount of such Impositions (provided, however, that (A) if such
contest involves a tax other than a tax on net income and can be pursued
independently from any other proceeding involving a tax liability of such
Indemnified Person, the Indemnified Person, at the Lessee's request, shall allow
the Lessee to conduct and control such contest and (B) in the case of any
contest, the Indemnified Person may request the Lessee to conduct and control
such contest) by, in the sole discretion of the Person conducting and
controlling such contest, (1) resisting payment thereof, (2) not paying the same
except under protest, if protest is necessary and proper or (3) if the payment
be made, using reasonable efforts to obtain a refund thereof in appropriate
administrative and judicial proceedings.

         (h) The party controlling any contest shall consult in good faith with
the non-controlling party and shall keep the non-controlling party reasonably
informed as to the conduct of such contest; provided, that all decisions
ultimately shall be made in the sole discretion of the controlling party. The
parties agree that an Indemnified Person may at any time decline to take further
action with respect to the contest of any Imposition and may settle such contest
if such Indemnified Person shall waive its rights to any indemnity from the
Lessee that otherwise would be payable in respect of such claim and shall pay to
the Lessee any amount previously paid or advanced by the Lessee pursuant to this
Section 12.3 by way of indemnification or advance for the payment of an
Imposition other than expenses of such contest.

                                       38
<PAGE>   45

         (l) Notwithstanding the foregoing provisions of this Section 12.3, an
Indemnified Person shall not be required to take any action and the Lessee shall
not be permitted to contest any Impositions in its own name or that of the
Indemnified Person unless (A) the Lessee shall have agreed to pay in writing and
shall pay to such Indemnified Person on demand and on an After Tax Basis all
reasonable costs, losses and expenses that such Indemnified Person actually
incurs in connection with contesting such Impositions, including, without
limitation, all reasonable legal, accounting and investigatory fees and
disbursements and the contested claim if ultimately required to be paid, (B) in
the case of a claim that must be pursued in the name of an Indemnified Person
(or an Affiliate thereof), the amount of the potential indemnity exceeds
$50,000, (C) the Indemnified Person shall have reasonably determined that the
action to be taken will not result in any material danger of sale, forfeiture or
loss of the Property or the Defeasance Deposit Collateral, or any part thereof
or interest therein, will not interfere with the payment of Rent, and will not
result in risk of criminal liability, (D) if such contest shall involve the
payment of the Imposition prior to the contest, the Lessee shall provide to the
Indemnified Person an interest-free advance in an amount equal to the Imposition
that the Indemnified Person is required to pay (with no additional net after-tax
cost to such Indemnified Person), (E) the Lessee shall have provided to such
Indemnified Person an opinion of independent tax counsel selected by the Lessee
and reasonably satisfactory to the Indemnified Person stating that a reasonable
basis exists to contest such claim (or, in the case of an appeal of an adverse
determination, an opinion of such counsel to the effect that the position
asserted in such appeal will more likely than not prevail) and (F) no Event of
Default shall have occurred and be continuing. In no event shall an Indemnified
Person be required to appeal an adverse judicial determination to the United
States Supreme Court. In addition, an Indemnified Person shall not be required
to contest any claim in its name (or that of an Affiliate) if the subject matter
thereof shall be of a continuing nature and shall have previously been decided
adversely by a court of competent jurisdiction pursuant to the contest
provisions of this Section 12.3, unless there shall have been a change in law
(or interpretation thereof) and the Indemnified Person shall have received, at
the Lessee's expense, an opinion of independent tax counsel selected by the
Indemnified Person and reasonably acceptable to the Lessee stating that as a
result of such change in law (or interpretation thereof), it is more likely than
not that the Indemnified Person will prevail in such contest.

Documentation of Withholding Status. Each Participant (or any successor thereto
or Transferee thereof) that is organized under the laws of a jurisdiction
outside of the United States of America shall:

         (j) on or before the date it becomes a party to any Operative
Agreement, deliver to the Lessee any certificates, documents, or other evidence
that shall be required by the Code or Treasury Regulations issued pursuant
thereto to establish its exemption from United States Federal withholding
requirements, including (A) two valid, duly completed, original copies of
Internal Revenue Service Form W-8BEN or Form W-8ECI or successor applicable
form, properly and duly executed, certifying in each case that such party is
entitled under Section 1442 of the Code or any other applicable provisions
thereof or under any applicable tax treaty or convention to receive payments
pursuant to the Operative Agreements without deduction or withholding of any
United States federal income taxes and is a foreign person thereby entitled to

                                       39
<PAGE>   46

an exemption from United States backup withholding taxes, and any such
additional form (or any successor form or forms required) upon the expiration or
obsolescence of any previously delivered form; and

         (k) comply from time to time with all applicable United States laws and
regulations with regard to such withholding tax exemption.

Limitation on Tax Indemnification. Subject to Section 12.6, the Lessee shall not
be required to indemnify any Indemnified Person, or to pay any increased amounts
to any Indemnified Person or tax authority with respect to any Impositions
pursuant to this Section 12.3 to the extent that (i) any obligation to withhold,
deduct, or pay amounts with respect to Tax existed on the date such Indemnified
Person became a party to any Operative Agreement (and, in such case, the Lessee
may deduct and withhold such Tax from payments pursuant to the Operative
Agreements), or (ii) such Indemnified Person fails to comply with the provisions
of Section 12.3(g) (and, in such case, the Lessee may deduct and withhold all
Taxes required by law as a result of such noncompliance from payments made by
the Lessee pursuant to the Operative Agreements). With respect to any transferee
of any Participant (including a transfer resulting from any change in the
designation of the lending office of a Participant), the transferee shall not be
entitled to any greater payment or indemnification under this Section 12.3 than
the transferor would have been entitled to.

         12.4 EURODOLLAR RATE LENDING UNLAWFUL. Notwithstanding any other
provision herein, if the adoption of or any change in any Requirement of Law or
in the interpretation or application thereof occurring after the Closing Date
shall make it unlawful for any Participant to make, continue or maintain
Eurodollar Loans or Eurodollar Lessor Contributions as contemplated by the
Operative Agreements, (i) such Participant shall promptly give written notice of
such circumstances to the Lessee, the Lessor Agent and the Agent (which notice
shall be withdrawn whenever such circumstances no longer exist), (ii) the
commitment of such Lender or Lessor, as the case may be, hereunder to make,
continue or maintain Eurodollar Loans or Eurodollar Lessor Contributions shall
forthwith be canceled and, until such time as it shall no longer be unlawful for
such Participant to make, continue or maintain Eurodollar Loans or Eurodollar
Lessor Contributions, such Participant shall then have a commitment only to make
or maintain ABR Loans or ABR Lessor Contributions when a Eurodollar Loan or
Eurodollar Lessor Contribution is requested and (c) such Participant's Loans and
Lessor Contributions then outstanding as Eurodollar Loans or Eurodollar Lessor
Contributions, if any, shall be converted automatically to ABR Loans or ABR
Lessor Contributions on the respective last days of the then current Interest
Periods with respect to such Loans and Lessor Contributions or within such
earlier period as required by law. If any such conversion of Eurodollar Loans or
Eurodollar Lessor Contributions occurs on a day which is not the last day of the
then current Interest Period with respect thereto, the Lessee and/or the Agent
Lessor shall pay to the Agent Lessor and/or such Participant such amounts, if
any, as may be required pursuant to Section 12.7. In any such case, interest and
principal (if any) shall be payable contemporaneously with the related
Eurodollar Loans or Eurodollar Lessor Contributions of the other Participants.

         12.5 DEPOSITS UNAVAILABLE. If any of the Participants shall have
determined that:

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<PAGE>   47

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

         (c) by reason of circumstances affecting the Participant's relevant
market, adequate means do not exist for ascertaining the interest rate or Yield,
as the case may be, applicable to such Participant's Eurodollar Loans or
Eurodollar Lessor Contributions;

then, upon notice from such Participant to the Lessee, the Lessor Agent, the
Agent and the other Participants, (x) the obligations of the Participants to
make or continue any Loans or Lessor Contributions as, or to convert any Loans
or Lessor Contributions into, Eurodollar Loans or Eurodollar Lessor
Contributions shall be suspended, and (y) each outstanding Eurodollar Loan or
Eurodollar Lessor Contribution shall automatically convert into an ABR Loan or
ABR Lessor Contribution on the last day of the current Interest Period
applicable thereto.

         12.6 INCREASED COSTS, ETC.

If the adoption of or any change in a Requirement of Law or in the
interpretation or application thereof applicable to any Participant, or
compliance by any Participant with any request or directive (whether or not
having the force of law) from any central bank or other Governmental Authority,
in each case made subsequent to the Closing Date (or, if later, the date on
which such Participant becomes a Participant):

                  (b) shall subject such Participant to any Tax of any kind
whatsoever with respect to any Eurodollar Loans or Eurodollar Lessor
Contributions made, continued or maintained by it or its obligation to make,
continue or maintain Eurodollar Loans or Eurodollar Lessor Contributions, or
change the basis of taxation of payments to such Participant in respect thereof
(including, without limitation, any change in the basis of taxation of payments
to such Participant that prevents or would prevent such Participant from being
legally entitled to a complete exemption from withholding as described in
Section 12.3(g) with respect to any Loans or Lessor Contributions); or

                  (c) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, Loans and Lessor
Contributions, loans or other extensions of credit by, or any other acquisition
of funds by, any office of such Participant which is not otherwise included in
the determination of the Adjusted Eurodollar Rate hereunder; or

                  (d) shall impose on such Participant any other condition
(excluding any Tax of any kind) whatsoever in connection with the Operative
Agreements;

and the result of any of the foregoing is to increase the cost to such
Participant, by an amount which such Participant reasonably deems to be
material, of making, continuing or maintaining Eurodollar Loans or Eurodollar
Lessor Contributions or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, upon notice to the Lessee and the Lessor from
such Participant, through the Agent and/or the Agent Lessor, in accordance
herewith, during the Construction Period the Participants shall fund through
Advances and capitalize, and

                                       41
<PAGE>   48

during the Basic Term following the Construction Period and any Renewal Term the
Lessee shall pay such Participant, any additional amounts necessary to
compensate such Participant for such increased cost or reduced amount
receivable; provided, that, in any such case, the Lessee may elect to convert
the Eurodollar Loans or Eurodollar Lessor Contributions made by such Participant
hereunder to ABR Loans or ABR Lessor Contributions by giving the Agent at least
one Business Day's notice of such election, in which case during the
Construction Period, the Agent Lessor, and during the Term, the Lessee, shall
promptly pay to such Participant, upon demand, without duplication, such
amounts, if any, as may be required pursuant to Section 12.7. All payments
required by this Section 12.6(a) shall be made by the Agent Lessor or the Lessee
within 10 Business Days after demand by the affected Participant. The Agent
Lessor or the Lessee shall not be obligated to reimburse any Participant for any
increased cost or reduced return incurred more than 120 days after the date that
such Participant receives actual notice of such increased cost or reduced return
unless such Participant gives notice thereof to the Agent Lessor and the Lessee
in accordance with this Section 12.6 during such 120 day period. If any
Participant becomes entitled to claim any additional amounts pursuant to this
subsection, it shall provide prompt notice thereof to the Agent Lessor or the
Lessee, through the Agent and/or the Agent Lessor, certifying (x) that one of
the events described in this clause (a) has occurred and describing in
reasonable detail the nature of such event, (y) as to the increased cost or
reduced amount resulting from such event and (z) as to the additional amount
demanded by such Participant and a reasonably detailed explanation of the
calculation thereof (including the method by which such Participant allocated
such amounts to the applicable Lessee or Lessees). Such a certificate as to any
additional amounts payable pursuant to this clause submitted by such
Participant, through the Agent and/or the Agent Lessor, to the Agent Lessor or
the Lessee shall be conclusive in the absence of manifest error. This covenant
shall survive the termination of this Agreement and the payment of the Loans and
Lessor Contributions and all other amounts payable hereunder.

Each Participant shall use its reasonable efforts to reduce or eliminate any
claim for compensation pursuant to this Section 12.6, including, without
limitation, a change in the office of such Participant at which its obligations
related to this Participation Agreement are maintained if such change will avoid
the need for or reduce the amount of, such compensation and will not, in the
reasonable judgment of such Participant, be otherwise disadvantageous to it. If
any such claim for compensation shall not be eliminated or waived, the Lessee
shall have the right to replace the affected Participant with a new financial
institution that shall succeed to the rights of such Participant under this
Participation Agreement; provided, that such Participant shall not be replaced
hereunder until it has been paid in full such claim and all other amounts owed
to it hereunder.

         12.7 FUNDING LOSSES. During the Construction Period, the Lessee agrees
to indemnify and hold harmless each Lessor Person and the Agent Lessor agrees to
indemnify and hold harmless each other Indemnified Person (but not to exceed the
Construction Period Maximum Recourse Amount), and thereafter the Lessee agrees
to indemnify and hold harmless each Indemnified Person, on an After Tax Basis,
from any loss or expense which such Indemnified Person may sustain or incur
(other than through such Person's own gross negligence or willful misconduct) as
a consequence of (a) default by the Lessee in making a borrowing of or

                                       42
<PAGE>   49

continuation of Loans or Lessor Contributions which are Eurodollar Loans or
Eurodollar Lessor Contributions after Lessee has given a notice requesting the
same in accordance with the provisions of this Agreement, (b) default by the
Lessee in making any prepayment of a Loan or Lessor Contribution which is a
Eurodollar Loan/Lessor Contribution after the Lessee has given a notice thereof
in accordance with the provisions of this Agreement, or (c) the making of a
prepayment of Loans or Lessor Contributions which are Eurodollar Loans or
Eurodollar Lessor Contributions on a day which is not the last day of an
Interest Period with respect thereto.

         12.8 CAPITAL ADEQUACY.

If the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Participant with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, in each case made subsequent to the Closing Date, has or will
have the effect of reducing the rate of return on any Participant's or its
parent company's capital by an amount such Participant reasonably deems to be
material, as a consequence of its commitments or obligations hereunder to a
level below that which such Participant or its parent company could have
achieved but for such adoption, effectiveness, change or compliance (taking into
consideration such Participant's or its parent company's policies with respect
to capital adequacy), then, upon notice from such Participant, (i) during the
Construction Period the Participants shall fund through Advances and capitalize,
and (ii) thereafter, the Lessee shall pay to such Participant, such additional
amount or amounts as will compensate such Participant and its parent company on
or After Tax Basis for such reduction (it being understood that such parent
company shall not be reimbursed to the extent its subsidiary Participant is
reimbursed by the Lessee in connection with the same or a similar law, rule,
regulation, change, request or directive applicable to such Participant). All
payments required by this Section 12.8 shall be made by the Lessee within 10
Business Days after demand by the affected Participant. The Lessee shall not be
obligated to reimburse any Participant for any reduced return incurred more than
120 days after the date that such Participant receives actual notice of such
reduced return unless such Participant gives notice thereof to the Lessee in
accordance with this Section 12.8 during such 120 day period. If any Participant
becomes entitled to claim any additional amounts pursuant to this Section, it
shall provide prompt notice thereof to the Lessee, through the Agent and/or the
Agent Lessor, certifying (x) that one of the events described in this clause (a)
has occurred and describing in reasonable detail the nature of such event, (y)
as to the increased cost or reduced amount resulting from such event and (z) as
to the additional amount demanded by such Participant and a reasonably detailed
explanation of the calculation thereof. Such a certificate as to any additional
amounts payable pursuant to this clause submitted by such Participant, through
the Agent and/or the Agent Lessor, to the Lessee shall be conclusive in the
absence of manifest error. This covenant shall survive the termination of this
Participation Agreement and the other Operative Agreements and the payment of
the Loans, Lessor Contributions and all other amounts payable hereunder and
thereunder.

Each Participant shall use its commercially reasonable efforts to reduce or
eliminate any claim for compensation pursuant to this Section 12.8, including,
without limitation, a change in the

                                       43
<PAGE>   50

office of such Participant at which its obligations related to the Operative
Agreements are maintained if such change will avoid the need for, or reduce the
amount of, such compensation and will not, in the reasonable judgment of such
Participant, be otherwise disadvantageous to it. If any such claim for
compensation shall not be eliminated or waived, the Lessee shall have the right
to replace the affected Participant with a new financial institution that shall
succeed to the rights of such Participant under the Operative Agreements;
provided, however, that such Participant shall not be replaced hereunder until
it has been paid in full such claim and all other amounts owed to it hereunder.

         12.9 SPECIAL TAX INDEMNITY.

Lessee shall pay and assume all liability for and does hereby agree to indemnify
each Indemnified Person and, in each case, their accountants, lawyers, and other
advisors (each, a "Tax Registration Indemnitee") on an After Tax Basis for any
tax, addition to tax, penalty or other cost as a result of a breach, inaccuracy
or incorrectness of the representation found in Section 7.3(dd); provided,
however, that this indemnity shall not apply to any tax, additional tax, penalty
or other cost arising from (i) the gross negligence or willful misconduct of
such Tax Registration Indemnitee; (ii) the inaccuracy or incompleteness of any
information provided by such Tax Registration Indemnitee to Lessee to the extent
such information is included in the registration form or other related materials
and to the extent such failure results in the imposition of increased taxes,
additions to tax, penalties or other costs; or (iii) the activities of such Tax
Registration Indemnitee unrelated to the transactions contemplated herein that
result in the transactions contemplated herein being deemed to be a confidential
corporate tax shelter if the transactions contemplated herein would not
otherwise have been deemed to be a confidential corporate tax shelter.

If a written claim is made or any proceeding is commenced by the Internal
Revenue Service against any Tax Registration Indemnitee for any amount as to
which Lessee has an indemnity obligation pursuant to this Section 12.9, such Tax
Registration Indemnitee agrees to notify the Lessee promptly in writing of such
proposed claim or proceeding, but the failure to provide such notice shall not
release Lessee from its indemnity obligation hereunder except to the extent that
it is materially adversely affected thereby. Lessee shall be entitled, at its
expense, to require that any amount for which it may be obligated to indemnify a
Tax Registration Indemnitee pursuant to this Section 12.9 be contested and to
withhold payment during pendency of such contest (if such forbearance is
permitted by law), provided that Lessee will pay any cost, expense, interest or
penalty associated with such forbearance. A Tax Registration Indemnitee shall
have control over any contest commenced pursuant to this Section 12.9(b) but
Lessee shall have, upon request, the right to participate (including its
counsel) in all proceedings and such Tax Registration Indemnitee shall keep
Lessee informed as to all material developments in such contest and afford
Lessee an opportunity to discuss with such Tax Registration Indemnitee Lessee's
interests with respect to such contest.

Lessee and each Tax Registration Indemnitee agree to cooperate with each other
with respect to maintaining any required documentation or other information in
connection with the tax shelter registration provisions of Code Section 6111,
the investor list provisions of Code Section 6112

                                       44
<PAGE>   51

and the disclosure statement provisions of Code Section 6011 (and any of the
regulations thereunder).

         12.10 INDEMNITY PAYMENTS IN ADDITION TO LEASE OBLIGATIONS. The
Construction Agent/Lessee acknowledges and agrees that the Construction
Agent/Lessee's obligations to make indemnity payments under this Section 12 are
separate from, in addition to, and do not reduce the Construction Agent/Lessee's
obligations under the Lease.

         12.11 LESSOR INDEMNIFICATION.

Indemnified Losses. During the Construction Period, the Agent Lessor, for and on
behalf of the Lessor Parties, shall pay, indemnify, protect, defend, save and
keep harmless each Indemnified Person (other than the Lessor Parties, their
Affiliates, successors, assigns, directors, shareholders, partners, officers,
employees and agents) (a "Non-Lessor Party") on an After Tax Basis from and
against any Losses (as hereinafter defined) arising from Covered Matters (as
hereinafter defined), subject to the limitations set forth in this Section
12.11.

Definitions. For purposes of this Section 12.11, the following terms shall have
the meanings set forth below:

                           "Covered Matters" means each of the matters set forth
                  in Section 12.1(b) or under any of Sections 12.2, 12.3(a) or
                  12.7 ("Indemnification Sections").

                           "Losses" means each of the Claims, costs, losses or
                  Impositions indemnified against pursuant to any of the
                  Indemnification Sections and arising during the Construction
                  Period.

No Indemnification for Certain Matters. The Agent Lessor shall not be required
to indemnify or hold harmless any Non-Lessor Party hereunder against any matter
referred to in clause (a) of this Section 12.11 (i) to the extent such party
would be required to be indemnified by the Construction Agent pursuant to any
Indemnification Section for such matter or (ii) to the extent of the exceptions
or exclusions from indemnification contained in any of the Indemnification
Sections or in Section 12.1(a).

Limitations on Indemnification by Lessor Parties. The Agent Lessor's obligation
to indemnify and hold harmless any Non-Lessor Party under this Section 12.11:

                  (b) is not an individual or personal obligation of the Agent
Lessor, but solely its obligation in its capacity as a Lessor, and nothing
herein shall be construed as creating any liability on any Lessor Party,
individually or personally, to pay, indemnify or hold harmless any Non-Lessor
Party under this Section;

                  (c) is not an obligation binding on the Agent Lessor, except
to the extent of any payments received by the Lessor Parties pursuant to an
Indemnification Section;

                  (d) shall be paid and discharged solely and exclusively from
amounts received by the Agent Lessor pursuant to an Indemnification Section and
it is expressly agreed by each Non-

                                       45
<PAGE>   52

Lessor Party that the sole recourse of each such Person for payment or discharge
of the indemnification obligations created under this Section 12.11 shall be to
such amounts paid by the Construction Agent pursuant to an Indemnification
Section; and

                  (e) is the sole and exclusive right of each Non-Lessor Party
against the Lessor Parties, and any right to proceed against any Lessor Party
individually or otherwise under common law, federal or state securities laws or
otherwise for indemnification or contribution in connection with the matters
covered by this Section 12.11 is hereby expressly waived by each Non-Lessor
Party (other than claims that may be made against any Lessor Party, individually
or personally, for fraud, gross negligence or willful misconduct).

Nothing in this Section 12.11 is intended as or should be construed as a
limitation on the right of any Non-Lessor Party to make indemnification,
contribution or other claims of any kind against the Construction Agent, to the
extent that such claims otherwise may be made, with respect to any matter,
including indemnification for Losses of the type referred to in this Section
12.11.

Repayment to the Lessor Parties. To the extent that any payments made pursuant
to any Indemnification Section are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid by the Agent
Lessor to a trustee, debtor in possession, receiver or other Person under any
bankruptcy law, common law or equitable cause, then to such extent, the
Non-Lessor Parties who received any such payments from the Agent Lessor (or any
portion thereof) shall repay any such amounts to the Agent Lessor, or as may
otherwise be directed by a court of competent jurisdiction.

Survival, Reinstatement. The indemnification obligations of the Agent Lessor
under this Section 12.11 shall survive and be reinstated to the same extent, for
the same period and in the same manner as the indemnification obligations of the
Construction Agent under the applicable Indemnification Section.

Indemnification Procedures. The right of any Non-Lessor Party to seek
indemnification from the Agent Lessor under this Section 12.11 is subject to and
conditioned upon compliance by any such Non-Lessor Party with the notice,
cooperation, appointment of counsel, contest rights and other provisions in the
Indemnification Sections as fully as if such Sections were set forth herein,
except (i) that any reference in the Indemnification Sections to the
Construction Agent/Lessee shall be deemed to be a reference to the Agent Lessor
or, if the Agent Lessor so directs in any case, the Agent Lessor and/or the
Construction Agent for purposes of this Section 12.11 and (ii) the limitation in
the Indemnification Sections on the number of counsel that may be engaged to
represent Non-Lessor Parties shall be deemed to be a reference to the same
number of counsel acting on behalf of Non-Lessor Parties rather than Indemnified
Persons under the Indemnification Sections, to the extent such costs are
recoverable pursuant to the applicable Indemnification Section.

                                       46
<PAGE>   53

                                   SECTION 13

                                  DISTRIBUTION

         13.1 BASIC RENT. Each payment of Basic Rent (and any payment of
interest on overdue installments of Basic Rent) received by the Agent shall be
distributed by the Agent to the Lessors and the Lenders pro rata in accordance
with, and for application to, the Basic Rent then due, as well as any overdue
interest or Yield due to the Lessors or the Lenders (to the extent permitted by
applicable law) in the following order of priority:

                  First, to the Lenders pro rata to pay the Notes Basic Rent;
         and

                  Second, to the Lessors pro rata to pay the Lessor Basic Rent.

         13.2 PAYMENTS BY THE LESSEE. Any payment received by the Agent as a
result of:

the purchase of the Property in connection with the exercise of the Purchase
Option, Partial Purchase Option or Maturity Date Purchase Option under Section
20.1 or 20.2 of the Lease or Section 4.2(b) or Article V of the Construction
Agency Agreement, or

compliance with the obligation to purchase the Property in accordance with
Section 17.2 of the Lease or Section 4.2(b) or Article V of the Construction
Agency Agreement, or

the payment of the Lease Balance in accordance with Section 16.1 of the Lease,
or

the payment of the Termination Value or Lease Balance in accordance with Article
V of the Construction Agency Agreement,

shall be distributed by the Agent to the Lessors and the Lenders in the
following order of priority:

                  first, to the Lenders pro rata to pay the Participant Balance
                  of each Lender; and

                  second, to the Lessors pro rata to pay the Participant Balance
                  of each Lessor.

         13.3 PAYMENT OF PARTICIPANT BALANCES. In accordance with Section 21.1
of the Lease upon the exercise of the remarketing option or upon a return of the
Property to the Agent Lessor or a remarketing thereof pursuant to Sections
4.2(b), 5.3 or 5.5 of the Construction Agency Agreement or Section 16.1 of the
Lease, the payment of the Maximum Residual Guarantee Amount, the Construction
Period Maximum Recourse Amount or the Permitted Lease Investment Balance to the
Agent shall be distributed to the Lenders for application to pay in full the
Participant Balance of each Lender, pro rata among the Lenders without priority
of one over the other in the proportion that the Participant Balance of each
such Lender bears to the aggregate Participant Balances of all Lenders. Any
excess shall be distributed to the Lessors pro rata based upon their respective
Participant Balances as Lessors.

                                       47
<PAGE>   54

         13.4 SALES PROCEEDS OF REMARKETING OF PROPERTY. Any payments received
by the Agent as proceeds from the sale of the Property sold pursuant to the
exercise of the remarketing option pursuant to Article XXI of the Lease or in
connection with termination of the Lease under Section 16.1 of the Lease, or
pursuant to any remarketing under Section 4.2(b), 5.3 or 5.5 of the Construction
Agency Agreement, together with any payment made as a result of an appraisal
pursuant to Section 21.3 of the Lease, shall be distributed by the Agent in the
funds so received in the following order of priority:

                  first, to cover the costs and expenses of such sale including,
         if applicable, the Lessor Remarketing Fee;

                  second, an amount equal to the difference between (x) the
         Permitted Lease Investment Balance and (y) the Construction Period
         Maximum Recourse Amount, Maximum Residual Guarantee Amount or Permitted
         Lease Investment Balance, if any, as the case may be, previously paid
         by Lessee shall be distributed: (i) first, to the Lenders to be applied
         to the unpaid Loan Balance remaining after the application of Section
         13.3; and (ii) second, to the Lessors to be applied to the unpaid
         Lessor Balance;

                  third, to the Lessee to the extent of the Construction Period
         Maximum Recourse Amount, Maximum Residual Guarantee Amount or Permitted
         Lease Investment Balance, as the case may be, previously paid to the
         Lessors;

                  fourth, (i) first, to the Lenders to be applied to the Loan
         Balance remaining unpaid; and (ii) second, to the Lessors to be applied
         to the Lessor Balance remaining unpaid and which, in the case of
         clauses (i) and (ii) shall include the Nonrecourse Portion, if any; and

                  fifth, the balance, if any, shall be returned to the Lessee.

         13.5 SUPPLEMENTAL RENT. All payments of Supplemental Rent received by
the Agent (excluding any amounts payable pursuant to the preceding provisions of
this Section 13) shall be distributed promptly by the Agent upon receipt thereof
to the Persons entitled thereto pursuant to the Operative Agreements.

         13.6 DISTRIBUTION OF PAYMENTS AFTER LEASE EVENT OF DEFAULT.

During the continuance of a Lease Event of Default and subject to clause (b)
below, all proceeds from the sale of the Property and the Defeasance Deposit
Collateral and all payments from the Lessee shall be distributed by the Agent in
the following order of priority:

                  first, so much of such payment or amount as shall be required
         to pay or reimburse the Agent and the Agent Lessor for any tax, fees,
         expense, indemnification or other loss incurred by the Agent or the
         Agent Lessor (to the extent incurred in connection with any duties as
         the Agent or Agent Lessor, as the case may be, and to the extent the
         Lessee is permitted to pay such items under the Operative Agreements),
         shall be distributed to the

                                       48
<PAGE>   55

         Agent and the Agent Lessor without priority of one over the other for
         their own accounts in accordance with the amount of such payment or
         amount payable to such Person;

                  second, so much of such payments or amounts as shall be
         required to pay the Lenders and the Lessors the amounts payable to them
         pursuant to any expense reimbursement or indemnification provisions of
         the Operative Agreements, and to the extent the Lessee is permitted to
         pay such items under the Operative Agreements, shall be distributed to
         each such Lender and Lessor without priority of one over the other in
         accordance with the amount of such payment or payments payable to each
         such Person;

                  third, in the case of a sale of the Property following a Lease
         Event of Default, as provided in Section 13.4; otherwise, to the
         Lenders for application to pay in full the Loan Balance, pro rata among
         the Lenders without priority of one over the other in the proportion
         that the Participant Balance of each such Lender bears to the aggregate
         Participant Balances of all Lenders and, in the case where the amounts
         so distributed shall be insufficient to pay in full as aforesaid, then
         pro rata among the Lenders without priority of one over the other in
         the proportion that the Participant Balance of each such Lender bears
         to the aggregate Participant Balances of all Lenders;

                  fourth, to the Lessors in an amount equal to the aggregate
         Lessor Balance shall be distributed to the Lessors for application to
         the Participant Balance of each Lessor, pro rata among the Lessors
         without priority of one over the other in the proportion that the
         Participant Balance of each such Lessor bears to the aggregate
         Participant Balances of all Lessors and, in the case where amounts so
         distributed shall be insufficient to pay in full as aforesaid, then pro
         rata among the Lessors without priority of one over the other in the
         proportion that the Participant Balance of each such Lessor bears to
         the aggregate Participant Balances of all Lessors; and

                  fifth, the balance, if any, of such payment or amounts
         remaining thereafter shall be returned to the Lessee.

All payments received and amounts realized by the Agent in connection with any
Casualty or Condemnation during the continuance of a Lease Default shall be
distributed by the Agent as follows:

                  (b) in the event that the Agent Lessor (at the direction of
the Lessors) and the Agent elect to pay all or a portion of such amounts to the
Lessee for the repair of damage caused by such Casualty or Condemnation, then
such amounts shall be distributed to the Lessee, and

                  (c) in the event that the Agent Lessor (at the direction of
the Lessors) and the Agent elect to apply all or a portion of such amounts to
the purchase price of the Property, then such amounts shall be distributed in
accordance with clause (a).

                                       49
<PAGE>   56

         13.7 OTHER PAYMENTS.

Except as otherwise provided in Sections 13.1, 13.2, 13.6 and clause (b) below,
any payment received by the Agent for which no provision as to the application
thereof is made in the Operative Agreements or elsewhere in this Section 13
(including any balance remaining after the application in full of amounts to
satisfy any expressed provision) shall be distributed pro rata among the Lenders
and the Lessors without priority of one over the other, in the proportion that
the Participant Balance of each bears to the aggregate of all the Participant
Balances.

Except as otherwise provided in Sections 13.1, 13.2 and 13.6, all payments
received and amounts realized by the Agent or the Agent Lessor under the Lease
or otherwise with respect to the Property to the extent received or realized at
any time after the indefeasible payment in full of the Participant Balances of
all of the Lenders and the Lessors and any other amounts due and owing to the
Lenders or the Lessors, shall be distributed forthwith by the Agent or the Agent
Lessor, as the case may be, in the order of priority set forth in Section
13.6(a).

Except as otherwise provided in Sections 13.1 and 13.2, any payment received by
the Agent or the Agent Lessor for which provisions as to the application thereof
is made in an Operative Agreement but not elsewhere in this Section 13 shall be
distributed forthwith by the Agent Lessor or the Agent to the Person and for the
purpose for which such payment was made in accordance with the terms of such
Operative Agreement.

         13.8 CASUALTY AND CONDEMNATION AMOUNTS. Subject to Section 13.6(b), any
amounts payable to the Agent as a result of a Casualty or Condemnation pursuant
to Section 15.1 of the Lease and the Assignment of Lease shall be distributed as
follows:

all amounts payable to the Lessee for the repair of damage caused by such
Casualty or Condemnation in accordance with Section 15.1(a) of the Lease shall
be distributed to the Lessee, and

all other amounts shall be distributed by the Agent to the Lenders and the
Lessors in the following order of priority:

                  first, to the Lenders, pro rata, to pay the Participant
                  Balance of each Lender; and

                  second, to the Lessors, pro rata, to pay the Participant
                  Balance of each Lessor.

         13.9 ORDER OF APPLICATION. Each payment payable to the Lenders or to
the Lessors shall be payable pro rata among the Lenders or the Lessors, as the
case may be, based upon their respective outstanding Loan Balances or Lessor
Balances prior to the application of such payment. To the extent any payment
made to any Lender or any Lessor pursuant to Sections 13.2, 13.3, 13.4, 13.6,
13.7 or 13.8 is insufficient to pay in full the Participant Balance of such
Lender or Lessor, then each such payment shall first be applied to accrued
interest or Yield and then to principal on the Loans or the Lessor
Contributions, as applicable.

                                       50
<PAGE>   57

                                   SECTION 14

                                THE AGENT LESSOR

         14.1 APPOINTMENT AND AUTHORIZATION. Each Lessor irrevocably appoints
and authorizes Deutsche Bank AG, New York Branch as Agent Lessor (in such
capacity as Agent Lessor hereunder and under the other Operative Agreements, the
"Agent Lessor") of such Lessor to enter into the Operative Agreements
(including, without limitation, the Lease and the Lease Supplement) on behalf of
such Lessor and to act as specified herein and in the other Operative
Agreements, and each such Lessor hereby authorizes the Agent Lessor as agent for
such Lessor, to take such action on its behalf under the provisions of this
Participation Agreement and the other Operative Agreements and to exercise such
powers and perform such duties as are expressly delegated by the terms hereof
and thereof, together with such other powers as are reasonably incidental
thereto (including, without limitation, the execution and delivery from time to
time in accordance with the provisions and terms hereof of the Lease Supplement,
the Assignment of Lease Supplement and the various other documents, conveyances,
terminations, assignments and instruments contemplated herein to be delivered by
the Agent Lessor on behalf of the Lessors). Each action taken by the Agent
Lessor under any Operative Agreement shall be deemed to be on behalf of each of
the Lessors, unless otherwise indicated. Notwithstanding any provision to the
contrary elsewhere herein or in the other Operative Agreements, the Agent Lessor
shall not have any duties or responsibilities, except those expressly set forth
herein and therein, or any fiduciary relationship with any Lessor, and no
applied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any of the other Operative
Agreements, or shall otherwise exist against the Agent Lessor.

         14.2 DELEGATION OF DUTIES. The Agent Lessor may execute any of its
duties hereunder or under the other Operative Agreements by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent Lessor shall not be responsible for
the negligence or misconduct of any agents or attorneys in fact selected by it
with reasonable care.

         14.3 AGENT LESSOR AND AFFILIATES. The Agent Lessor shall have the same
rights and powers under this Agreement and under the other Operative Agreements
as any other Lessor, and may exercise or refrain from exercising the same as
though it were not the Agent Lessor.

         14.4 ACTION BY AGENT LESSOR. The obligations of the Agent Lessor
hereunder and under the other Operative Agreements are only those expressly set
forth herein and therein. Without limiting the generality of the foregoing, the
Agent Lessor shall not be required to take any action with respect to any
Default or Event of Default, except as expressly provided herein and in the
other Operative Agreements.

         14.5 CONSULTATION WITH EXPERTS. The Agent Lessor may consult with legal
counsel (who may be counsel for Lessee, a Participant, the Agent, or any
Affiliate of any of them), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken by it in good faith in accordance with the advice of such counsel,
accountants or experts.

                                       51
<PAGE>   58

         14.6 EXCULPATORY PROVISIONS. Neither the Agent Lessor nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates shall be
responsible for or have any duty to ascertain, inquire into or verify (a) any
statement, warranty or representation made in connection with the Operative
Agreements; (b) the performance or observance of any of the covenants or
agreements of Lessee; (c) the satisfaction of any condition precedent specified
herein or in any other Operative Agreement; (d) the validity, effectiveness or
genuineness of any of the Operative Agreements or any other instrument or
writing furnished in connection herewith or therewith; (e) the use of the
proceeds of any Advance; (f) the existence of any Default or Event of Default;
or (g) the properties, books or records of Lessee.

         14.7 RELIANCE ON COMMUNICATIONS. The Agent Lessor shall be entitled to
rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation reasonably believed by it to be genuine and correct and
to have been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel (including, without limitation, counsel
to Lessee, independent accountants and other experts selected by the Agent
Lessor). The Agent Lessor may deem and treat the Participants as the owner of
their respective interests hereunder and under the other Operative Agreements
for all purposes unless a written notice of assignment, negotiation or transfer
thereof shall have been filed with the Agent Lessor in accordance with Section
11. The Agent Lessor, acting in its capacity as Agent Lessor, shall be fully
justified in failing or refusing to take any action under this Agreement or
under any of the other Operative Agreements unless it shall first receive such
advice or concurrence of the Lessors as it deems appropriate or it shall first
be indemnified to its satisfaction by the Participants against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent Lessor shall in all cases be fully
protected in acting, or in refraining from acting, hereunder or under any of the
other Operative Agreements in accordance with a request of the Lessors and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all the Participant's (including their successors and assigns).

         14.8 NOTICE OF DEFAULT. The Agent Lessor shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent Lessor has received notice from a Participant or
Lessee referring to the Operative Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default." In the event that
the Agent Lessor receives such a notice, the Agent Lessor shall give prompt
notice thereof to the Participants. The Agent Lessor shall take such action with
respect to such Default or Event of Default as shall be reasonably directed by
the Required Lessors.

         14.9 NON-RELIANCE ON AGENT LESSOR AND OTHER PARTICIPANTS. Each
Participant expressly acknowledges that neither the Agent Lessor (other than in
its role as Participant) nor any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates has made any representations or warranties to it
and that no act by the Agent Lessor or any affiliate thereof hereafter taken,
including any review of the affairs of Lessee, shall be deemed to constitute any
representation or warranty by the Agent Lessor to any Participant. Each
Participant represents to the Agent Lessor that it has, independently and
without reliance upon the Agent Lessor or any other Participant, and based on
such documents and information as it has deemed appropriate,

                                       52
<PAGE>   59

made its own appraisal of and investigation into the business, assets,
operations, property, financial, and other conditions, prospects and
creditworthiness of Lessee and made its own decision to make its proportionate
share of the Advances hereunder and under the other Operative Agreements and
enter into this Participation Agreement and the other Operative Agreements. Each
Participant also represents that it will, independently and without reliance
upon the Agent Lessor or any other Participant, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Participation Agreement, and to make such investigation as it deems
necessary to inform itself as to the business, assets, operations, property,
financial and other conditions, prospects and creditworthiness of Lessee. Except
for notices, reports and other documents expressly required to be furnished to
the Participant's by the Agent Lessor hereunder, the Agent Lessor shall not have
any duty or responsibility to provide any Participant with any credit or other
information concerning: the business, operations, assets, property, financial or
other conditions, prospects or creditworthiness of Lessee which may come into
the possession of the Agent Lessor or any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates.

         14.10 INDEMNIFICATION. The Lessors agree to indemnify the Agent Lessor
in its capacity as such (to the extent not reimbursed by Lessee and without
limiting the obligation of Lessee to do so), ratably according to their
respective Commitments, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including without
limitation at any time following the payment of the Obligations) be imposed on,
incurred by or asserted against the Agent Lessor in its capacity as such in any
way relating to or arising out of this Participation Agreement or the other
Operative Agreements or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by the Agent Lessor under or in connection with any of the foregoing;
provided, that no Lessor shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the gross negligence or willful
misconduct of the Agent Lessor. If any indemnity furnished to the Agent Lessor
for any purpose shall, in the opinion of the Agent Lessor, be insufficient or
become impaired, the Agent Lessor may call for additional indemnity and cease,
or not commence, to do the acts indemnified against until such additional
indemnity is furnished. The agreements in this Section shall survive the payment
in full of the Obligations and all other amounts payable hereunder and under the
other Operative Agreements.

         14.11 FAILURE TO ACT. Except for action expressly required of the Agent
Lessor hereunder, the Agent Lessor shall in all cases be fully justified in
failing or refusing to act hereunder unless it shall be indemnified to its
satisfaction by the Lessors against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.

         14.12 RESIGNATION AND REMOVAL. The Agent Lessor may resign at any time
upon at least 30 days' prior notice to Lessee and the Participants, and may be
removed for cause at any time by vote of the Required Lessors and notice to the
retiring Agent Lessor, the Administrative Agent and the Lessee. In the event of
any such resignation or removal, the Required Lessors

                                       53
<PAGE>   60

shall as promptly as practicable (but with five Business Days' prior written
notice being given to Lessee) appoint a successor Agent Lessor, provided that
such successor Agent Lessor shall be approved by Lessee, Administrative Agent,
and, unless an Event of Default is continuing, be approved by the Lessee (which
approval shall not be unreasonably withheld or delayed) and, if the Lessee has
not responded within such five Business Day period, the Lessee shall be deemed
to have approved such new Agent Lessor. If no successor Agent Lessor shall have
been so appointed and shall have accepted such appointment within 30 days after
either the retiring Agent Lessor's giving of notice of resignation or the
Required Lessors' vote to remove the retiring Agent Lessor, then the retiring
Agent Lessor may, on behalf of the Lessors, appoint a successor Agent Lessor,
which shall be a commercial bank organized under the laws of the United States
of America or of any State thereof or under the laws of another country that is
doing business in the United States and having a combined capital, surplus and
undivided profits of at least $100,000,000, or a wholly owned subsidiary of such
bank. Upon its acceptance of its appointment, such successor Agent Lessor shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent Lessor, and the retiring Agent Lessor shall be
discharged from all further duties and obligations as Agent Lessor under this
Participation Agreement and under the other Operative Agreements. After any
retiring Agent Lessor's resignation or removal hereunder as Agent Lessor, the
provisions of this Participation Agreement and of the other Operative Agreements
shall continue to inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent Lessor under this Participation Agreement. No
resignation or renewal of the Agent Lessor may become effective until a
successor Agent Lessor has been appointed as provided above.

         14.13 DISTRIBUTIONS. The Agent Lessor shall, as promptly as
practicable, distribute to each Participant its appropriate portion, if any, of
payments received (in good, collected funds) by the Agent Lessor from the Lessee
for the account of the Participants.

                                   SECTION 15

                                    RENEWALS

         15.1 EXTENSIONS OF MATURITY DATE AND EXPIRATION DATE; REPLACEMENT OF
PARTICIPANTS.

So long as the Lessee has not elected the remarketing option, the Lessee may,
not later than eighteen (18) months prior to the Maturity Date, direct a written
request to the Agent Lessor and the Agent that the Expiration Date then in
effect under the Lease be extended to the date occurring one year after such
Expiration Date and concurrently therewith request that the Agent and the Agent
Lessor direct a written request to the Lessors and the Lenders that the
applicable Maturity Date be extended to the same date (each such additional
year, a "Renewal Term"). Each Participant may grant or deny its consent to a
Renewal Term in its sole discretion by notifying the Agent and the Agent Lessor
in writing (with copy to the Lessee); provided, however, any Participant that
fails to respond to such request for a Renewal Term within sixty (60) days after
its receipt thereof shall be deemed to have denied such request for a Renewal
Term.

                                       54
<PAGE>   61

In connection with a written request of the Lessee for a Renewal Term, upon the
request of the Lessee, the Agent and the Agent Lessor shall be permitted to
replace any non-consenting Participant and any Participant that fails to respond
to the Agent's and the Agent Lessor's written request for a Renewal Term within
the time period specified in clause (a) above (each, a "Non-Consenting
Participant") with a replacement bank or other financial institution (a
"Replacement Participant") satisfactory to the Lessee, the Lessors and the
Lenders, with such replacement to be effective as of the Expiration Date and
Maturity Date in effect prior to the requested Renewal Term; provided, however,
that (i) such replacement does not conflict with any Requirement of Law, (ii)
the Replacement Participant shall purchase from the Non-Consenting Participant
(A) at par, all Loans, in the case of a Lender, and all Lessor Contributions, in
the case of a Lessor, (B) all accrued interest, in the case of a Lender, and all
accrued Yield, in the case of a Lessor, and (C) all other amounts owing to such
Non-Consenting Participant on or prior to the date of replacement, in each case,
(iii) the Lessee shall be liable to such Non-Consenting Participant under
Section 12.6 if any Loan or Lessor Amount, as the case may be, owing to such
Non-Consenting Participant shall be prepaid (or purchased) other than on the
last day of the Interest Period or Interest Periods relating thereto, (iv) such
replacement shall be made in accordance with the provisions of Section 11
(provided that the Lessee or the relevant Replacement Participant shall be
obligated to pay the Transaction Expenses arising in connection therewith), and
(v) the Replacement Participant shall have agreed to be subject to all of the
terms and conditions of the applicable Operative Agreements (including the
extension of the Maturity Date contemplated by the relevant request for a
Renewal Term and the related extension). The Agent and the Agent Lessor hereby
agree to cooperate with the Lessee in its efforts to arrange one or more
Replacement Participants as contemplated by this Section 15.1(b).

Any Renewal Term and extension of the Maturity Date and the Expiration Date as
contemplated by Section 15.1(a) shall be effective only upon the consent of all
Participants after giving effect to the provisions of Section 15.1(b). Except as
otherwise provided in this Section 15.1, all other terms of the Operative
Agreements shall remain unchanged and with the same force and effect.

                                   SECTION 16

                                  MISCELLANEOUS

         16.1 SURVIVAL OF AGREEMENTS. The representations, warranties,
covenants, indemnities and agreements of the parties provided for in the
Operative Agreements, and the parties' obligations under any and all thereof,
shall survive the execution and delivery of this Agreement, the construction of
any Improvements, any disposition of any interest of the Agent Lessor or the
Lessors in the Property or the Improvements, the payment of the Notes and any
disposition thereof and shall be and continue in effect notwithstanding any
investigation made by any party and the fact that any party may waive compliance
with any of the other terms, provisions or conditions of any of the Operative
Agreements. Except as otherwise expressly set forth herein or in other Operative
Agreements, the indemnities of the parties provided for in the Operative
Agreements shall survive the expiration or termination of any thereof.

                                       55
<PAGE>   62

         16.2 NO BROKER, ETC. Each of the parties hereto represents to the
others that it has not retained or employed any broker, finder or financial
adviser to act on its behalf in connection with this Agreement, nor has it
authorized any broker, finder or financial adviser retained or employed by any
other Person so to act, except that the Lessee represents that it has engaged
the Arranger and Lund Financial Corporation, the fees of which shall be paid by
the Lessee. Any party who is in breach of this representation shall indemnify
and hold the other parties harmless from and against any liability arising out
of such breach of this representation.

         16.3 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 by nationally recognized courier service and
any such notice shall become effective five Business Days after being deposited
in the mails, certified or registered with appropriate postage 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 the Lessee, to it at:

                  MCDATA CORPORATION
                  310 Interlocken Parkway
                  Broomfield, Colorado  80021
                  Attention:  Tom McGimpsey
                  Telephone No.: (303) 460-4348
                  Facsimile No.: (303) 460-3235

                  with a copy to:

                  Cooley Godward LLP
                  Five Palo Alto Square
                  3000 El Camino Real
                  Palo Alto, CA  94306
                  Attention:  Pamela J. Martinson
                  Telephone No.: (650) 843-5000
                  Facsimile No.: (650) 857-0663

If to any Lessor, to it at such address as may be specified in writing to the
other parties hereto.

                  If to the Agent Lessor, to it at:

                  Deutsche Bank AG, New York Branch
                  31 West 52nd Street
                  New York, New York 10019
                  Attention:  John Ulrich, Global Asset Finance & Leasing
                  Telephone No.: 212-469-8721
                  Telecopy No.:  212-469-7398

                                       56
<PAGE>   63

                  with a copy to:

                  Deutsche Bank AG, New York and/or Cayman Islands Branch
                  130 Liberty Street
                  New York, New York 10006
                  Attention:  Claudia Zou, Corporate Finance Services
                  Telephone No.: 212-250-5391
                  Telecopy No.:  212-669-1706

                  If to the Agent, to it at:

                  Deutsche Bank AG, New York Branch
                  31 West 52nd Street
                  New York, New York 10019
                  Attention:  John Ulrich, Global Asset Finance & Leasing
                  Telephone No.: 212-469-8721
                  Telecopy No.:  212-469-7398

                  with a copy to:

                  Deutsche Bank AG, New York and/or Cayman Islands Branch
                  130 Liberty Street
                  New York, New York 10006
                  Attention:  Claudia Zou, Corporate Finance Services
                  Telephone No.: 212-250-5391
                  Telecopy No.:  212-669-1706

From time to time any party may designate a new address for purposes of notice
hereunder by notice to each of the other parties hereto.

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

         16.5 AMENDMENTS AND TERMINATION. Neither this Agreement nor any of the
terms hereof may be terminated, amended, supplemented, waived or modified except
by an instrument in writing signed by the party against which the enforcement of
the termination, amendment, supplement, waiver or modification shall be sought.
This Agreement may be terminated by an agreement signed in writing by the
parties hereto and the Lenders.

         16.6 HEADINGS, ETC. The Table of Contents and headings of the various
Sections and Subsections of this Agreement are for convenience of reference only
and shall not modify, define, expand or limit any of the terms or provisions
hereof.

         16.7 PARTIES IN INTEREST. Except as expressly provided herein, none of
the provisions of this Agreement are intended for the benefit of any Person
except the parties hereto.

                                       57
<PAGE>   64

         16.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

         16.9 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 not invalidate or render
unenforceable such provision in any other jurisdiction.

         16.10 LIABILITY LIMITED.

The parties hereto agree that except as specifically set forth herein or in any
other Operative Agreement, no Lessor shall have any personal liability
whatsoever to any Participant or their respective successors and assigns for any
claim based on or in respect hereof or any of the other Operative Agreements or
arising in any way from the transactions contemplated hereby or thereby and
recourse, if any, shall be solely had against such Lessor's interest in the
Property; provided, however, that each Lessor shall be liable in its individual
capacity (a) for its own willful misconduct or gross negligence, (b) breach of
any of its representations, warranties or covenants under the Operative
Agreements, or (c) for any Tax based on or measured by any fees, commission or
compensation received by it for acting as a Lessor as contemplated by the
Operative Agreements. It is understood and agreed that, except as provided in
the preceding sentence: (i) no Lessor shall have any personal liability under
any of the Operative Agreements as a result of acting pursuant to and consistent
with any of the Operative Agreements; (ii) all obligations of each Lessor to any
Lender are solely nonrecourse obligations except to the extent that such Lessor
has received the proceeds to the Loans); and (iii) all such personal liability
of any Lessor is expressly waived and released as a condition of, and as
consideration for, the execution and delivery of the Operative Agreements by
such Lessor.

No Participant shall have any obligation to any other Participant or to Lessee,
the Lessors or the Lenders with respect to transactions contemplated by the
Operative Agreements, except those obligations of such Participant expressly set
forth in the Operative Agreements or except as set forth in the instruments
delivered in connection therewith, and no Participant shall be liable for
performance by any other party hereto of such other party's obligations under
the Operative Agreements except as otherwise so set forth.

         16.11 FURTHER ASSURANCES. The parties hereto shall promptly cause to be
taken, executed, acknowledged or delivered, at the sole expense of the Lessee,
all such further acts, conveyances, documents and assurances as the other
parties may from time to time reasonably request in order to carry out and
effectuate the intent and purposes of this Agreement, the other Operative
Agreements and the transactions contemplated hereby and thereby (including,
without limitation, the preparation, execution and filing of any and all Uniform
Commercial Code financing statements and other filings or registrations which
the parties hereto may from time to time request to be filed or effected). The
Lessee, at its own expense, shall take such action as may be reasonably
requested in order to maintain and protect all security interests provided for
hereunder or under any other Operative Agreement.

                                       58
<PAGE>   65

         16.12 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.

         16.13 AGENT LESSOR TO HOLD PROPERTY ON BEHALF OF OTHER LESSORS. The
Agent Lessor hereby confirms that it is holding the Property on behalf of the
Lessors.

                            [signature pages follow]

                                       59
<PAGE>   66

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

                                            MCDATA CORPORATION,
                                            as Lessee and Construction Agent

                                            By:      /s/ John F. McDonnell
                                               ---------------------------------
                                            Name:    John F. McDonnell
                                                 -------------------------------
                                            Title:   President and CEO
                                                  ------------------------------

                                            DEUTSCHE BANK AG, NEW YORK BRANCH,
                                            as Agent Lessor for the Lessors
                                            and as a Lessor

                                            By:      /s/ Karen Keane
                                               ---------------------------------
                                            Name:    Karen Keane
                                                 -------------------------------
                                            Title:   Vice President
                                                  ------------------------------

                                            By:      /s/ John Ulrich
                                               ---------------------------------
                                            Name:    John Ulrich
                                                 -------------------------------
                                            Title:   Asst. Vice President
                                                  ------------------------------

                                            DEUTSCHE BANK AG, NEW YORK AND/OR
                                            CAYMAN ISLANDS BRANCH, as a Lender
                                            and as Agent for the Lenders

                                            By:      /s/ John Ulrich
                                               ---------------------------------
                                            Name:    John Ulrich
                                                 -------------------------------
                                            Title:   Asst. Vice President
                                                  ------------------------------

                                            By:      /s/ Karen Keane
                                               ---------------------------------
                                            Name:    Karen Keane
                                                 -------------------------------
                                            Title:   Vice President
                                                  ------------------------------
<PAGE>   67

                                            DEUTSCHE BANC ALEX. BROWN INC.,
                                            as Arranger

                                            By:    /s/ Robert Martorano
                                               ---------------------------------
                                            Name:      Robert Martorano
                                                 -------------------------------
                                            Title:     Director
                                                  ------------------------------

                                            By:    /s/ Gennaro R. D'Agostino
                                               ---------------------------------
                                            Name:      Gennaro R. D'Agostino
                                                 -------------------------------
                                            Title:     Asst. Vice President
                                                  ------------------------------

<PAGE>   68

                                  SCHEDULE 2.1

                               LESSOR COMMITMENTS

<TABLE>
<CAPTION>
Name and Address of Lessor                        Amount of Lessor Commitment
--------------------------                        ---------------------------
<S>                                               <C>
Deutsche Bank AG, New York Branch
31 West 52nd Street
New York, New York 10019                                  $9,000,000.00
</TABLE>

<PAGE>   69

                                  SCHEDULE 2.8

                              PAYMENT INSTRUCTIONS

Deutsche Bank AG, New York
ABA No.: 026003780
Account No.:  101018730008
Reference:  McDATA Synthetic Lease, Attn: Claudia Zou

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