Document:

Exhibit 4 (ix)

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                             PARTICIPATION AGREEMENT

                         Dated as of September 26, 2001

                                      among

         TOYS "R" US, INC., as the Construction Agent and as the Lessee,

                      FIRST UNION DEVELOPMENT CORPORATION,
                       as the Borrower and as the Lessor,

      THE VARIOUS FINANCIAL INSTITUTIONS AND OTHER INSTITUTIONAL INVESTORS
                  WHICH ARE PARTIES HERETO FROM TIME TO TIME,
                        as the Tranche A Note Purchasers,

       THE VARIOUS BANKS AND OTHER LENDING INSTITUTIONS WHICH ARE PARTIES
               HERETO FROM TIME TO TIME, as the Tranche B Lenders,

       THE VARIOUS BANKS AND OTHER LENDING INSTITUTIONS WHICH ARE PARTIES
         HERETO FROM TIME TO TIME, as the Cash Collateral Lenders,

                                      and

                           FIRST UNION NATIONAL BANK,
                 as the Agent for the Primary Financing Parties
                     and, respecting the Security Documents,
                      as the Agent for the Secured Parties

                                       and

                           FIRST UNION NATIONAL BANK,
                               as the Escrow Agent

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                                TABLE OF CONTENTS

                                                                            Page

SECTION 1.  THE FINANCING......................................................1

SECTION 2.  [RESERVED].........................................................2

SECTION 3.  SUMMARY OF TRANSACTIONS............................................2
      3.1.   Operative Agreements..............................................2
      3.2.   Property Purchase.................................................2
      3.3.   Construction of Improvements; Commencement of Basic Rent..........2

SECTION 4.  THE CLOSING........................................................3
      4.1.   Closing Date......................................................3
      4.2.   Closing Date; Acquisition Advance; Construction Advances..........3

SECTION 5.  FUNDING OF ADVANCES; CONDITIONS PRECEDENT; REPORTING REQUIREMENTS
              ON COMPLETION DATE; THE LESSEE'S DELIVERY OF NOTICES;
              RESTRICTIONS ON LIENS............................................3
      5.1.   General...........................................................3
      5.2.   Procedures for Funding............................................4
      5.3.   Conditions Precedent for the Lessee, the Lessor, the Agent
               and the Primary Financing Parties Relating to the Closing
               Date and the Advance of Funds for the Acquisition of the
               Property........................................................6
      5.4.   Conditions Precedent for the Lessor, the Agent and the
               Tranche B Lenders Relating to the Advance of Funds after
               the Acquisition Advance........................................11
      5.5.   Additional Reporting and Delivery Requirements on
               Completion Date................................................12
      5.6.   The Construction Agent Delivery of Construction
               Budget Modifications...........................................13
      5.7.   Restrictions on Liens............................................14
      5.8.   [Reserved].......................................................14
      5.9.   Extension of Construction Period Termination Date................14
      5.10.  Payments.........................................................14
      5.11.  Cash Collateral Account..........................................14
      5.12.  Escrow Account...................................................15
      5.13.  Partial Funding of Unreimbursed Costs Following an
               Agency Agreement Event of Default..............................17
      5.14.  Rights of Tranche A Note Purchasers Upon Merger
               of the Lessee..................................................17

SECTION 6.  REPRESENTATIONS AND WARRANTIES....................................18
      6.1.   Representations and Warranties of the Borrower...................18
      6.2.   Representations and Warranties of the Lessee.....................20

SECTION 7. PAYMENT OF CERTAIN EXPENSES........................................27
      7.1.   Transaction Expenses.............................................27
      7.2.   No Broker, etc...................................................28
      7.3.   Certain Fees and Expenses........................................28
      7.4.   [Reserved].......................................................29
      7.5.   Administrative Fee...............................................29
      7.6    Payment of Certain Expenses During Construction Period...........29

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SECTION 8.  OTHER COVENANTS AND AGREEMENTS....................................29
      8.1.   Cooperation with the Construction Agent or the Lessee............29
      8.2.   Covenants of the Lessor..........................................30
      8.3.   Lessee Covenants, Consent and Acknowledgment.....................30
      8.3A   Affirmative Covenants............................................36
             8.3A.1   Financial Statements....................................36
             8.3A.2   Certificates; Other Information.........................37
             8.3A.3   Legal Existence.........................................37
             8.3A.4   Taxes...................................................38
             8.3A.5   Observance of Legal Requirements........................38
             8.3A.6   Inspection of Property; Books and Records;
                         Discussions..........................................38
      8.3B   Negative Covenants...............................................38
             8.3B.1   Merger or Consolidation, Etc:...........................38
             8.3B.2   Subsidiary Indebtedness.................................39
             8.3B.3   Liens, Etc..............................................40
             8.3B.4   Change in Nature of Business............................41
             8.3B.5   Use of Proceeds.........................................41
             8.3B.6   Fixed Charge Coverage Ratio.............................41
             8.3B.7   Funded Indebtedness to Capitalization Ratio.............41
      8.4.   Sharing of Certain Payments......................................42
      8.5.   Grant of Easements, etc..........................................42
      8.6.   Appointment of the Agent by the Primary Financing Parties
               and the Lessor.................................................42
      8.7.   Collection and Allocation of Payments and Other Amounts..........47
      8.8.   Release of Properties, etc.......................................50
      8.9.   Limitation of Lessor's Obligations...............................51
      8.10.  No Representations or Warranties as to the Property or
               Operative Agreements...........................................52
      8.11.  Reliance; Advice of Counsel......................................52
      8.12   [Reserved].......................................................53
      8.13.  Subdivision of the Property; Sale of Excess Land.................53
      8.14.  Non Disturbance..................................................54

SECTION 9.  TRANCHE B CREDIT AGREEMENT, CASH COLLATERAL CREDIT
             AGREEMENT AND NOTE PURCHASE AGREEMENT............................55
      9.1.   The Construction Agent's and the Lessee's Tranche B
               Credit Agreement, Cash Collateral Credit Agreement
               and Note Purchase Agreement Rights.............................55

SECTION 10. TRANSFER OF INTEREST..............................................56
      10.1.  Restrictions on Transfer.........................................56
      10.2.  Effect of Transfer...............................................58

SECTION 11. INDEMNIFICATION...................................................58
      11.1.  General Indemnity................................................58
      11.2.  General Tax Indemnity............................................61
      11.3.  Increased Costs, Illegality, etc.................................66
      11.4.  Funding/Contribution Indemnity...................................67
      11.5.  EXPRESS INDEMNIFICATION FOR ORDINARY NEGLIGENCE,
               STRICT LIABILITY, ETC..........................................68
      11.6.  Additional Provisions Regarding Environmental
               Indemnification................................................68

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      11.7.  Indemnity Prior to Completion Date...............................69

SECTION 12. MISCELLANEOUS.....................................................69
      12.1.  Survival of Agreements...........................................69
      12.2.  Notices..........................................................70
      12.3.  Counterparts.....................................................71
      12.4.  Terminations, Amendments, Waivers, Etc...........................71
      12.5.  Headings, etc....................................................72
      12.6.  Parties in Interest..............................................72
      12.7.  GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER
               OF JURY TRIAL; VENUE...........................................72
      12.8.  Severability.....................................................73
      12.9.  Liability Limited................................................73
      12.10. Rights of the Lessee.............................................74
      12.11. Further Assurances...............................................75
      12.12. Calculations under Operative Agreements..........................75
      12.13. Confidentiality..................................................75
      12.14. Financial Reporting/Tax Characterization.........................77
      12.15. Set-off..........................................................77

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EXHIBITS

A - Form of Requisition - Sections 4.2, 5.2, 5.3 and 5.4

B - [Reserved]

C - Form of Secretary's Certificate - Section 5.3(z)

D - Form of Officer's Certificate - Section 5.3(aa)

E - Form of Secretary's Certificate - Section 5.3(cc)

F - Form of Officer's Certificate - Section 5.3(dd)

G - [Reserved]

H - [Reserved]

I - Form of Officer's Certificate - Section 5.5

J - [Reserved]

K - Description of Material Litigation - Section 6.2(d)

L - State of  Incorporation/Formation  and  Principal  Place of  Business of the
    Lessee - Section 6.2(i)

Appendix A - Rules of Usage and Definitions

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                             PARTICIPATION AGREEMENT

      THIS PARTICIPATION AGREEMENT,  dated as of September 26, 2001 (as amended,
modified,  extended,  supplemented  and/or  restated  from  time to  time,  this
"Agreement")  is by and among TOYS "R" US,  INC.,  a Delaware  corporation  (the
"Lessee" or the "Construction  Agent"); FIRST UNION DEVELOPMENT  CORPORATION,  a
North  Carolina  corporation  (the  "Borrower"  or the  "Lessor");  the  various
financial  institutions  and other  institutional  investors  which are  parties
hereto  from time to time as  holders  of the  Tranche A Notes  (subject  to the
definition of Tranche A Note  Purchasers in Appendix A hereto,  individually,  a
"Tranche A Note Purchaser" and collectively,  the "Tranche A Note  Purchasers");
the various banks and other lending  institutions  which are parties hereto from
time to time as  Tranche B  Lenders  (subject  to the  definition  of  Tranche B
Lenders  in  Appendix  A  hereto,   individually,   a  "Tranche  B  Lender"  and
collectively,  the "Tranche B  Lenders");  the various  banks and other  lending
institutions  which are  parties  hereto  from  time to time as Cash  Collateral
Lenders  (subject to the  definition  of Cash  Collateral  Lenders in Appendix A
hereto,  individually a "Cash  Collateral  Lender" and  collectively,  the "Cash
Collateral  Lenders") (each Tranche A Note Purchaser,  each Tranche B Lender and
each Cash  Collateral  Lender  may be  referred  to  individually  as a "Primary
Financing Party" and  collectively as the "Primary  Financing  Parties");  FIRST
UNION  NATIONAL  BANK,  a  national  banking  association,  as the agent for the
Primary Financing Parties and, respecting the Security  Documents,  as the agent
for the  Secured  Parties  (in such  capacity,  the  "Agent");  and FIRST  UNION
NATIONAL BANK, a national banking association,  as the escrow agent (the "Escrow
Agent").  Capitalized  terms used but not  otherwise  defined in this  Agreement
shall have the meanings set forth in Appendix A hereto.

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

                            SECTION 1. THE FINANCING.

      Subject  to the  terms  and  conditions  of this  Agreement  and the other
Operative  Agreements and in reliance on the  representations  and warranties of
each of the parties hereto contained herein or made pursuant hereto, the Primary
Financing  Parties have agreed to make Tranche B Loans or Cash Collateral  Loans
to the Lessor or purchase  the Tranche A Notes issued by the Lessor from time to
time in an  aggregate  principal  amount  of up to the  aggregate  amount of the
Primary  Financing  Parties'  Commitments in order for the Lessor to acquire the
Land, and to renovate,  develop and construct certain Improvements in accordance
with the Agency Agreement and the terms and provisions  hereof and for the other
purposes  described  herein.  The Tranche B Loans shall be made  pursuant to the
Tranche B Credit Agreement.  The Cash Collateral Loans shall be made pursuant to
the Cash  Collateral  Credit  Agreement.  The  Tranche  A Note  Purchasers  will
purchase  the  Tranche A Notes  pursuant  to the Note  Purchase  Agreement.  The
proceeds  received  by the  Lessor  from the sale of the  Tranche  A Notes  (the
"Tranche A Proceeds")  will be deposited in the Escrow  Account and disbursed to
the Lessor pursuant to the terms of the Operative Agreements. The obligations of
the Lessor under the Tranche A Notes

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and the Tranche B Notes shall be secured by the Collateral  (other than the Cash
Collateral). The obligations of the Lessor under the Cash Collateral Notes shall
be secured by the Cash Collateral and the Excess Land, if any.

                             SECTION 2. [RESERVED].

                       SECTION 3. SUMMARY OF TRANSACTIONS.

      3.1. Operative Agreements.

      On the Closing Date,  each of the  respective  parties  hereto and thereto
shall execute and deliver this Agreement,  the Lease, the Agency Agreement,  the
Note Purchase  Agreement,  the Tranche B Credit  Agreement,  the Cash Collateral
Credit Agreement,  the Notes, the Security  Agreement,  each applicable Mortgage
Instrument and such other documents,  instruments,  certificates and opinions of
counsel as agreed to by the parties hereto.

      3.2. Property Purchase.

      On the  Closing  Date and  subject  to the  terms and  conditions  of this
Agreement  (a) the Agent will  disburse a portion of the Tranche A Proceeds from
the Escrow  Account in  accordance  with  Section 5 of this  Agreement,  (b) the
Tranche B Lenders will each make Tranche B Loans in accordance with Section 5 of
this Agreement and the terms and  provisions of the Tranche B Credit  Agreement,
(c) the  Cash  Collateral  Lenders  will  each  make  Cash  Collateral  Loans in
accordance  with Section 5 of this Agreement and the terms and provisions of the
Cash Collateral Credit Agreement,  and (d) the Lessor will acquire the Property,
pay other  Project  Costs,  as  applicable,  and  grant  the Agent  Liens on the
Property by execution of the required Security Documents.

      3.3. Construction of Improvements; Commencement of Basic Rent.

      Construction Advances will be made with respect to particular Improvements
to be repaired,  replaced, installed and/or constructed on the Property and with
respect to ongoing Work regarding the Equipment and Improvements,  in each case,
pursuant to the terms and conditions of this Agreement and the Agency Agreement.
The Construction  Agent will act as a construction agent on behalf of the Lessor
respecting   the  Work  regarding  the  Equipment  and   Improvements   and  the
expenditures  of  the  Construction  Advances  related  to  the  foregoing.  The
Construction  Agent shall promptly notify the Lessor upon Completion of the Work
regarding the Improvements and the Lessee shall commence to pay Basic Rent as of
the Rent Commencement Date.

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                             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 Moore & Van Allen PLLC,  Charlotte,  North
Carolina,  or at such other  location as may be  determined  by the Lessor,  the
Agent and the Lessee.

      4.2. Closing   Date;   Acquisition  Advance;   Construction  Advances.

      The  Construction  Agent  shall  deliver  to the  Agent a  requisition  (a
"Requisition"),  in the form attached  hereto as Exhibit A or in such other form
as is  satisfactory to the Agent,  in its reasonable  discretion,  in connection
with (a) the  Transaction  Expenses and other fees,  expenses and  disbursements
payable,  pursuant to Section 7.1, by the Lessor,  (b) the  Acquisition  Advance
pursuant to Section 5.3 and (c) each  Construction  Advance  pursuant to Section
5.4.

         SECTION 5. FUNDING OF ADVANCES; CONDITIONS PRECEDENT; REPORTING
           REQUIREMENTS ON COMPLETION DATE; THE LESSEE'S DELIVERY OF
                        NOTICES; RESTRICTIONS ON LIENS.

      5.1. General.

      To the extent  funds have been  advanced  to the Lessor  pursuant  to this
Section 5, the Lessor will use such funds from time to time in  accordance  with
the terms and  conditions of this Agreement and the other  Operative  Agreements
for the following purposes (costs expended for the following purposes are herein
referred to as the "Project  Costs") (i) at the  direction  of the  Construction
Agent to acquire the Land in accordance  with the terms of this  Agreement,  the
Agency  Agreement and the other Operative  Agreements,  (ii) to make Advances to
the  Construction  Agent  to  permit  the  acquisition,   testing,  engineering,
installation,  development, construction,  modification, design, and renovation,
as applicable,  of the Property (or components  thereof) in accordance  with the
terms of the Agency Agreement and the other Operative  Agreements,  (iii) during
the  Construction  Period,  to pay  interest  to the  Tranche A Note  Purchasers
pursuant to the Tranche A Notes,  interest to the Tranche B Lenders  pursuant to
the Tranche B Notes,  interest to the Cash  Collateral  Lenders  pursuant to the
Cash Collateral Notes,  Transaction Expenses,  and reasonable fees, expenses and
other disbursements  payable under Section 7; provided,  however, that Tranche A
Non-GAAP  Interest Expense and any other Non-GAAP  Expenses shall be included as
an amount to be paid in connection  with a Requisition and shall be paid on each
Scheduled  Interest Payment Date, as applicable,  during the period prior to the
Rent  Commencement  Date out of the proceeds of the Tranche B Loans made on such
date, and (iv)  Supplemental  Rent  constituting  Transaction  Expenses  payable
during the Construction Period.

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<PAGE>

      5.2. Procedures for Funding.

            (a) Except as expressly  provided herein,  Advances  hereunder shall
      only be made on the  Closing  Date and on the first  day of each  calendar
      month,  unless  such day is not a Business  Day, in which case on the next
      occurring  Business  Day after the first day of such month.  Not less than
      (i) three (3)  Business  Days prior to the Closing Date and (ii) three (3)
      Business  Days  prior to the  date on which  any  Acquisition  Advance  or
      Construction  Advance is to be made, the Construction  Agent shall deliver
      to the Agent,  with respect to the Closing Date, the  Acquisition  Advance
      and each Construction  Advance,  a Requisition as described in Section 4.2
      hereof (including  without  limitation Tranche A Non-GAAP Interest Expense
      and any other Non-GAAP  Expenses) in a form  reasonably  acceptable to the
      Agent.

            (b) Each Requisition  shall: (i) be irrevocable,  (ii) request funds
      in an amount that is not in excess of the total aggregate of the Available
      Tranche  B Lender  Commitments  plus the  balance  of funds in the  Escrow
      Account at such time plus,  in the case of the  initial  Requisition,  the
      Cash  Collateral  Lender  Commitments,  and (iii)  request  that the Agent
      disburse funds out of the Escrow Account,  that the Tranche B Lenders make
      Tranche B Loans and that the Cash Collateral  Lenders make Cash Collateral
      Loans  (in the case of the  Acquisition  Advance)  to the  Lessor  for the
      payment of Transaction  Expenses,  Property Acquisition Costs (in the case
      of the  Acquisition  Advance)  or other  Project  Costs  (in the case of a
      Construction  Advance)  that have  previously  been  incurred or are to be
      incurred  on the date of such  Advance to the extent such were not subject
      to a prior Requisition, in each case as specified in the Requisition.

            (c) Subject to the  satisfaction  of the  conditions  precedent  set
      forth in Section 5.3 or 5.4, as  applicable,  (i) on the Closing Date, the
      Tranche A Note Purchasers shall purchase the Tranche A Notes, the proceeds
      from  which  shall be  deposited  in the  Escrow  Account,  based on their
      respective  Tranche A  Commitments,  (ii) on the  Closing  Date,  the Cash
      Collateral  Lenders  shall  make  Cash  Collateral  Loans  based  on their
      respective Cash Collateral Commitments,  (iii) on the Closing Date and the
      date on which each Construction Advance is to be made, as applicable,  the
      Tranche B Lenders  shall make  Tranche B Loans  based on their  respective
      Tranche B Commitments to the Lessor in an aggregate amount,  together with
      the  Tranche A Proceeds  disbursed  by the Agent  and,  in the case of the
      Closing Date, with the Cash  Collateral  Loans made by the Cash Collateral
      Lenders toward any Requisition, equal to the amount of the Requested Funds
      specified in such  Requisition (up to an aggregate  principal amount equal
      to the aggregate of the Available Tranche B Lender Commitments),  and (iv)
      the total  amount of  Tranche A  Proceeds  disbursed  by the  Agent,  Cash
      Collateral  Loans made by the Cash Collateral  Lenders and Tranche B Loans
      made by the Tranche B Lenders on such date shall (x) be used by the Lessor
      to pay Project Costs including  Transaction Expenses or (y) be advanced by
      the Lessor on the date of such  Advance to the  Construction  Agent or the
      Lessee to pay  Project  Costs,  as  applicable.  Except as provided in the
      following  sentence with respect to the Closing Date, the Requested  Funds
      shall be funded with Tranche A Proceeds and Tranche B Loans,  (I) with the
      Agent  disbursing  an amount equal to the product of the  Requested  Funds
      (less any Non-GAAP Expenses) set forth in such

                                       4
<PAGE>

      Requisition  times  seventy-four  and  eighty-four  one  hundredths of one
      percent  (74.84%)  out of the Escrow  Account  and (II) with the Tranche B
      Lenders  advancing  the sum of (A) an amount  equal to the  product of the
      Requested Funds (less any Non-GAAP Expenses) set forth in such Requisition
      times  twenty-five and sixteen one hundredths of one percent (25.16%) plus
      (B) the total  amount of  Non-GAAP  Expenses  requested  pursuant  to such
      Requisition in the form of Tranche B Loans; provided,  however,  except as
      expressly  provided in the immediately  following  proviso,  to the extent
      that the aggregate Available Tranche B Lender Commitments are insufficient
      to fund any amount as set forth in this Section 5.2(c), such amounts shall
      be funded out of the Escrow Account; provided,  further, in no event shall
      funds  from  the  Escrow  Account  be  used  to  fund  Non-GAAP  Expenses.
      Notwithstanding the foregoing,  in the case of the Requisition  requesting
      an Advance on the Closing Date, the Requested  Funds shall be funded first
      with Cash Collateral  Loans from each Cash Collateral  Lender in an amount
      equal to the aggregate Cash Collateral  Commitments of the Cash Collateral
      Lenders,  which  amount shall be allocated to the cost of the Excess Land,
      and second with Tranche A Proceeds and Tranche B Loans, (I) with the Agent
      disbursing  an amount equal to the product of the balance of the Requested
      Funds (less any Non-GAAP  Expenses)  set forth in such  Requisition  times
      seventy-four and eighty-four one hundredths of one percent (74.84%) out of
      the Escrow  Account and (II) with the Tranche B Lenders  advancing the sum
      of (A) an amount  equal to the  product of the  balance  of the  Requested
      Funds (less any Non-GAAP  Expenses)  set forth in such  Requisition  times
      twenty-five  and sixteen one  hundredths of one percent  (25.16%) plus (B)
      the  total  amount  of  Non-GAAP  Expenses   requested  pursuant  to  such
      Requisition  in the  form of  Tranche  B Loans.  Notwithstanding  that the
      Operative  Agreements state that Advances shall be directed to the Lessor,
      each Advance shall in fact be directed to the Construction  Agent (for the
      benefit of the  Lessor)  and  applied by the  Construction  Agent (for the
      benefit of the Lessor) pursuant to the requirements  imposed on the Lessor
      under the Operative Agreements.

            (d) [Reserved].

            (e)  All  Operative  Agreements  which  are to be  delivered  to the
      Lessor,  the Agent or the Primary  Financing Parties shall be delivered to
      the Agent,  on behalf of the Lessor,  the Agent or the  Primary  Financing
      Parties,  and such items  (except for Notes,  Bills of Sale,  the Deed and
      chattel paper originals, with respect to which in each case there shall be
      only one original)  shall be delivered with  originals  sufficient for the
      Lessor,  the Agent and each Primary  Financing Party. The Agent shall then
      deliver such Operative Agreements to the Lessor and each Primary Financing
      Party. All other items which are to be delivered to the Lessor,  the Agent
      or the Primary  Financing  Parties  shall be  delivered  to the Agent,  on
      behalf of the  Lessor,  the Agent or the  Primary  Financing  Parties,  or
      directly to such party as required by the Operative Agreements.  Except as
      otherwise  noted,  copies shall be sufficient for any other  deliveries to
      parties  other than the Agent  required  under Section 5.3, 5.4 or 5.5. To
      the extent any such other items  delivered  to the Agent are  requested in
      writing from time to time by the Lessor or any Primary  Financing Party or
      are required to be delivered by the Agent pursuant to Section 8.6(g),  the
      Agent shall  provide a copy of such item to the party  requesting it or to
      the parties entitled thereto, as applicable.

                                       5
<PAGE>

            (f) The Agent  hereby  agrees that it will  calculate  the amount of
      Tranche A Non-GAAP  Interest  Expense  during  each period  referenced  in
      Section  5.2(a),  and will provide prompt written notice of such amount to
      the  Construction  Agent, for inclusion in the Requisition for such period
      referenced in Section 5.2(a).

      5.3.  Conditions  Precedent for the Lessee,  the Lessor, the Agent and the
            Primary  Financing  Parties  Relating  to the  Closing  Date and the
            Advance of Funds for the Acquisition of the Property.

      The  obligations  (i) on the Closing Date of the Lessee,  the Lessor,  the
Agent  and  the  Primary  Financing  Parties  to  enter  into  the  transactions
contemplated by this Agreement,  including without  limitation the obligation to
execute and deliver the applicable Operative Agreements to which each is a party
on the  Closing  Date  and,  in the case of the  Tranche A Note  Purchasers,  to
purchase the Tranche A Notes (the  proceeds from which shall be deposited in the
Escrow  Account),  (ii) on the Closing  Date of the Agent to disburse  Tranche A
Proceeds from the Escrow Account to the Lessor and the Tranche B Lenders to make
Tranche B Loans in order to pay Transaction  Expenses,  fees, expenses and other
disbursements  payable by the Lessor under Section  7.1(a) of this Agreement and
(iii) on the  Closing  Date of the Agent to  disburse  Tranche A  Proceeds,  the
Tranche B Lenders  to make  Tranche B Loans and the Cash  Collateral  Lenders to
make Cash  Collateral  Loans for the  purpose of  providing  funds to the Lessor
necessary  to acquire the Property  (the  "Acquisition  Advance"),  in each case
(with regard to the foregoing  Sections  5.3(i),  (ii) and (iii)) are subject to
the satisfaction or waiver of the following  conditions precedent on or prior to
the Closing Date (to the extent such conditions  precedent  require the delivery
of any agreement, certificate,  instrument,  memorandum, legal or other opinion,
appraisal,  commitment,  title  insurance  commitment,  lien report or any other
document of any kind or type,  such shall be in form and substance  satisfactory
to the Agent and the Primary Financing Parties, in their reasonable  discretion;
notwithstanding  the  foregoing,  the  obligations  of each  party  shall not be
subject to any conditions contained in this Section 5.3 which are required to be
performed by such party):

            (a) the correctness in all material respects of the  representations
      and warranties of the parties to this Agreement  contained herein, in each
      of the other Operative Agreements and each certificate  delivered pursuant
      to any Operative Agreement;

            (b) the  performance  by the  parties  to this  Agreement  of  their
      respective   agreements  contained  herein  and  in  the  other  Operative
      Agreements to be performed by them on or prior to such date;

            (c) the Agent and the Primary  Financing Parties shall have received
      fully  executed  counterpart  copies  of  the  Requisition,  appropriately
      completed;

            (d) title to the Property shall conform to the  representations  and
      warranties set forth in Section 6.2(l) hereof;

                                       6
<PAGE>

            (e) the Construction Agent shall have delivered to the Agent and the
      Primary Financing Parties a good standing certificate for the Construction
      Agent in the state where the Property is located, the Deed with respect to
      the Land and  existing  Improvements  (if any),  and a copy of the Bill of
      Sale  with  respect  to the  Equipment  (if any),  respecting  such of the
      foregoing  as are being  acquired  on such date with the  proceeds  of the
      Loans;

            (f) there shall not have occurred and be  continuing  any Default or
      Event of Default  and no Default  or Event of Default  will have  occurred
      between the date of delivery of the  Requisition  and  disbursement of the
      Advance or after giving effect to any such Advance;

            (g) the Construction Agent shall have delivered to the Agent and the
      Primary  Financing  Parties  separate title insurance  commitments for the
      Tranche A Proceeds  and the Tranche B Loans to issue  policies  respecting
      the  Property,  with  such  endorsements  as the  Agent  and  the  Primary
      Financing  Parties deem reasonably  necessary,  in favor of the Lessor and
      the Agent from a title  insurance  company  reasonably  acceptable  to the
      Agent  and the  Primary  Financing  Parties,  but  only  with  such  title
      exceptions  thereto as are set forth as  Permitted  Encumbrances,  as such
      term is used in the Purchase  Agreement,  or as are  otherwise  reasonably
      acceptable to the Agent and the Primary Financing Parties;

            (h) the Construction Agent shall have delivered to the Agent and the
      Primary Financing Parties an environmental site assessment  respecting the
      Property  prepared by an independent  recognized  professional  reasonably
      acceptable to the Agent and the Primary  Financing  Parties and evidencing
      no  pre-existing  environmental  condition  with respect to which there is
      more than a remote risk of loss to the Lessee;

            (i) the Construction Agent shall have delivered to the Agent and the
      Primary   Financing   Parties  an  ALTA  survey   (with  a  flood   hazard
      certification)  respecting  the  Property  prepared by (i) an  independent
      recognized professional reasonably acceptable to the Agent and the Primary
      Financing  Parties and (ii) in a manner and including such  information as
      is reasonably required by the Agent and the Primary Financing Parties;

            (j) the Construction  Agent shall have caused to be delivered to the
      Agent and the Primary Financing Parties a legal opinion in such form as is
      reasonably  acceptable to the Agent and the Primary Financing Parties with
      respect to local law real property  issues  respecting  the state in which
      the Property is located addressed to the Lessor, the Agent and the Primary
      Financing Parties, from counsel located in the state where the Property is
      located,  prepared by counsel  reasonably  acceptable to the Agent and the
      Primary Financing Parties;

            (k) [Reserved];

            (l) the Construction Agent shall have delivered to the Agent and the
      Primary Financing  Parties invoices for, or other reasonably  satisfactory
      evidence of, the various

                                       7
<PAGE>

      Transaction Expenses and other fees, expenses and disbursements referenced
      in Section 7 of this Agreement, as appropriate;

            (m) the Construction  Agent shall have caused to be delivered to the
      Agent and the Primary Financing Parties Mortgage Instruments (in such form
      as is  reasonably  acceptable  to the  Agent  and  the  Primary  Financing
      Parties,  with revisions as necessary to conform to applicable state law),
      Lessor  Financing   Statements  and  Primary   Financing  Party  Financing
      Statements  respecting the Property,  all fully executed and in recordable
      form;

            (n)  with  respect  to  the  Acquisition  Advance,  the  sum  of the
      Available Tranche B Lender Commitment plus the Cash Collateral  Commitment
      plus the Tranche A Proceeds in the Escrow  Account (after giving effect to
      the  Acquisition  Advance) will be  sufficient to pay all amounts  payable
      therefrom;

            (o) the Lessee shall have delivered to the Agent with respect to the
      Property  a Lease  Supplement  and a  memorandum  (or  short  form  lease)
      regarding the Lease and such Lease  Supplement  (such  memorandum or short
      form lease to be in the form attached to the Lease as Exhibit B or in such
      other form as is acceptable to the Agent, with  modifications as necessary
      to conform to applicable state law, and in form suitable for recording);

            (p) [Reserved];

            (q) the  Construction  Agent  shall  have  delivered  to the Agent a
      preliminary Construction Budget for the Property;

            (r) the Construction Agent shall have provided evidence to the Agent
      and the  Primary  Financing  Parties  of  insurance  with  respect  to the
      Property as provided in the Lease;

            (s) the Construction Agent shall have caused an Appraisal  regarding
      the Property to be provided to the Agent and the Primary Financing Parties
      from an  appraiser  satisfactory  to the Agent and the  Primary  Financing
      Parties;

            (t) the Construction  Agent shall cause (i) Uniform  Commercial Code
      lien searches,  tax lien searches and judgment lien searches regarding the
      Lessor and the Lessee to be conducted  (and copies thereof to be delivered
      to the Agent and the Primary Financing  Parties) in such  jurisdictions as
      determined  by  the  Agent  by  a  nationally  recognized  search  company
      acceptable  to the  Agent  and  (ii) the  liens  referenced  in such  lien
      searches  which are  objectionable  to the Agent to be either  removed  or
      otherwise handled in a manner satisfactory to the Agent;

            (u) all  taxes,  fees  and  other  charges  in  connection  with the
      execution,  delivery,  recording, filing and registration of the Operative
      Agreements  and/or  documents

                                       8
<PAGE>

      related  thereto shall have been paid or provisions for such payment shall
      have been made to the satisfaction of the Agent;

            (v) in the reasonable opinion of the Agent and the Primary Financing
      Parties and their respective counsel, the transactions contemplated by the
      Operative  Agreements do not and will not subject the Lessor,  the Primary
      Financing  Parties or the Agent to any  adverse  regulatory  prohibitions,
      constraints, penalties or fines;

            (w) each of the Operative Agreements to be entered into on such date
      shall have been duly  authorized,  executed  and  delivered by the parties
      thereto,  and  shall be in full  force and  effect,  and the Agent and the
      Primary  Financing  Parties shall have  received a fully  executed copy of
      each of the Operative Agreements;

            (x) [Reserved];

            (y) the Agent and the Primary  Financing Parties shall have received
      an Officer's  Certificate,  dated as of the Closing Date, of the Lessee in
      the  form  attached  hereto  as  Exhibit  C or in  such  other  form as is
      reasonably  acceptable  to the Agent  and the  Primary  Financing  Parties
      stating that (i) each and every  representation and warranty of the Lessee
      contained in the  Operative  Agreements to which it is a party is true and
      correct in all material  respects on and as of the Closing  Date;  (ii) no
      Lease  Default or Lease Event of Default has  occurred  and is  continuing
      under any Operative Agreement; (iii) each Operative Agreement to which the
      Lessee is a party is in full force and effect with respect to it except as
      the same may be limited by applicable bankruptcy,  insolvency,  fraudulent
      transfer or conveyance,  reorganization,  moratorium or other similar laws
      relating to or  affecting  creditors'  or lessors'  rights  generally  and
      general  principles of equity;  and (iv) the Lessee 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;

            (z) the Agent and the Primary  Financing Parties shall have received
      (i) a  certificate  of the  Secretary  or an  Assistant  Secretary  of the
      Lessee,  dated as of the  Closing  Date,  in the form  attached  hereto as
      Exhibit D or in such other form as is  reasonably  acceptable to the Agent
      and the Primary  Financing  Parties attaching and certifying as to (1) the
      resolutions of the Board of Directors of the Lessee duly  authorizing  the
      execution, delivery and performance by the Lessee of each of the Operative
      Agreements  to  which  it is or  will be a  party,  (2)  the  articles  of
      incorporation of the Lessee certified as of a recent date by the Secretary
      of  State  of its  state  of  incorporation  and its  by-laws  and (3) the
      incumbency  and signature of persons  authorized to execute and deliver on
      behalf of the Lessee the Operative  Agreements to which it is or will be a
      party and (ii) a good standing  certificate (or local equivalent) from the
      respective states where the Lessee is incorporated and where the principal
      place of business of the Lessee is located as to its good standing in each
      such state;

            (aa) there shall not have  occurred any material  adverse  change in
      the consolidated assets,  liabilities,  operations,  business or condition
      (financial or otherwise)

                                       9
<PAGE>

      of the Lessee (on a  consolidated  basis)  from that set forth in the most
      recent audited consolidated  financial statements of the Lessee which have
      been provided to the Agent;

            (bb) the Agent, the Lessee,  and the Primary Financing Parties shall
      have  received  an  Officer's  Certificate  of the Lessor  dated as of the
      Closing  Date in the form  attached  hereto as  Exhibit E or in such other
      form as is reasonably acceptable to the Agent and the Lessee, stating that
      (i) each and every  representation and warranty of the Lessor contained in
      the Operative Agreements to which it is a party is true and correct on and
      as of the Closing Date, (ii) each Operative  Agreement to which the Lessor
      is a party is in full  force and  effect  with  respect  to it,  (iii) the
      Lessor 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 and (iv)
      no Default or Event of Default  attributable solely to Lessor has occurred
      and is continuing under any Operative Agreement;

            (cc) the Agent, the Lessee,  and the Primary Financing Parties shall
      have received (i) a certificate of the Secretary or an Assistant Secretary
      of the  Lessor in the form  attached  hereto as Exhibit F or in such other
      form as is reasonably  acceptable  to the Agent and the Lessee,  attaching
      and  certifying as to (A) the signing  resolutions  duly  authorizing  the
      execution, delivery and performance by the Lessor of each of the Operative
      Agreements  to  which  it is or  will be a  party,  (B)  its  articles  of
      association or other equivalent charter documents and its by-laws,  as the
      case may be,  certified as of a recent date by an  appropriate  officer of
      the Lessor and (C) the incumbency  and signature of persons  authorized to
      execute and deliver on its behalf the Operative  Agreements to which it is
      a  party  and  (ii) a  good  standing  certificate  from  the  appropriate
      governmental  authority in the  jurisdiction of the Lessor's  organization
      and in New Jersey;

            (dd)  counsel  for the  Lessor  acceptable  to the Agent  shall have
      issued to the  Lessee,  the  Primary  Financing  Parties and the Agent its
      opinion  in such  form as is  reasonably  acceptable  to the Agent and the
      Primary Financing Parties and the Lessee;

            (ee) the Construction Agent shall have caused to be delivered to the
      Agent and the Primary Financing Parties a legal opinion in such form as is
      reasonably  acceptable  to the Agent and the  Primary  Financing  Parties,
      addressed to the Lessor, the Agent and the Primary Financing Parties, from
      counsel reasonably acceptable to the Agent;

            (ff) the  Tranche A Note  Purchasers  shall have  obtained a private
      placement  number  for the  Tranche A Notes from  Standard & Poor's  CUSIP
      Service Bureau;

            (gg) no Casualty and no  Condemnation  respecting the Property shall
      have occurred which would permit the buyer under the Purchase Agreement to
      terminate  the  Purchase  Agreement  and no  action  shall be  pending  or
      threatened by a  Governmental  Authority to initiate a  Condemnation  with
      respect to the  Property  which would  permit the buyer under the Purchase
      Agreement to terminate the Purchase Agreement;

                                       10
<PAGE>

            (hh)  Lessee,  Lessor and the Tranche A Note  Purchasers  shall have
      received a  certificate  from the Placement  Agent,  in form and substance
      satisfactory to them,  dated the Closing Date, with respect to offerees of
      the Tranche A Notes;

            (ii)  the   Construction   Agent  shall  have   deposited  good  and
      immediately  available funds, in Dollars, into the Cash Collateral Account
      in a  sufficient  amount so that  after  giving  effect  to the  requested
      Advance the Construction Agent is in compliance with Section 5.11 hereof;

            (jj) each Tranche A Note  Purchaser  requesting  the same in writing
      shall  receive  from  the  Lessee  and  Lessor  a  certificate  reasonably
      satisfactory to each of such Tranche A Note Purchaser,  the Lessee and the
      Lessor,  dated within ten (10) days of the Closing  Date,  with respect to
      conflicts of interest with such Tranche A Note Purchaser;

            (kk) at least three  Business Days prior to the Closing  Date,  each
      Tranche A Note  Purchaser  shall have  received  from the  Lessor  written
      instructions  directing  the manner of the  payment  of funds and  setting
      forth  (i)  the  name  and  address  of the  transferee  bank,  (ii)  such
      transferee's  bank's ABA number,  (iii) the  account  name and number into
      which the purchase price for the Tranche A Notes is to be deposited,  (iv)
      the name and telephone  number of the account  representative  responsible
      for verifying receipt of such funds and (v) the Closing Date; and

            (ll) contemporaneously on the Closing Date, the Lessor shall sell to
      each of the Tranche A Note Purchasers,  and such Tranche A Note Purchasers
      shall purchase, the Tranche A Notes to be purchased by them on the Closing
      Date as specified in Schedule A to the Note Purchase Agreement.

      5.4.  Conditions  Precedent  for the  Lessor,  the Agent and the Tranche B
            Lenders  Relating  to the  Advance  of Funds  after the  Acquisition
            Advance.

      The obligations of the Agent to make Construction Advances from the Escrow
Account,  and the Tranche B Lenders to make Tranche B Loans in  connection  with
all requests for Advances for Project Costs subsequent to the acquisition of the
Property  (and  to pay  the  Transaction  Expenses,  fees,  expenses  and  other
disbursements payable under Section 7 of this Agreement in connection therewith)
are subject to the satisfaction or waiver of the following  conditions precedent
(to the extent such conditions  precedent require the delivery of any agreement,
certificate,   instrument,   memorandum,  legal  or  other  opinion,  appraisal,
commitment, title insurance commitment, lien report or any other document of any
kind or type, such shall be in form and substance  satisfactory to the Agent, in
its reasonable  discretion;  notwithstanding  the foregoing,  the obligations of
each party shall not be subject to any conditions  contained in this Section 5.4
which are required to be performed by such party):

            (a) the  correctness  in all  material  respects on such date of the
      representations  and warranties of the parties to this Agreement contained
      herein, in each of the other Operative  Agreements and in each certificate
      delivered  pursuant to any Operative  Agreement,  except to the extent any
      such representation or warranty relates to an earlier

                                       11
<PAGE>

      date, in which case such  representation  or warranty shall have been true
      and correct in all material respects as of such earlier date;

            (b) [Reserved];

            (c) the Agent and the Primary  Financing Parties shall have received
      a fully executed counterpart of the Requisition, appropriately completed;

            (d) based upon the  Construction  Budget  which  shall  satisfy  the
      requirements of this Agreement,  the sum of the Available Tranche B Lender
      Commitments  plus  the  balance  of funds in the  Escrow  Account  will be
      sufficient to complete the Improvements;

            (e) there shall not have occurred and be  continuing  any Default or
      Event of Default and no Default or Event of Default will have  occurred as
      a result of and after giving effect to the Construction  Advance requested
      by the applicable Requisition;

            (f) the title  insurance  policies  delivered in connection with the
      requirements  of Section 5.3(g) shall provide for (or shall be endorsed to
      provide for)  insurance  in an amount at least equal to the maximum  total
      Property Cost indicated by the applicable  Construction Budget referred to
      in  subparagraph  (d) above  (divided  between such policy in favor of the
      Tranche A Note  Purchasers  and the other policy in favor of the Tranche B
      Lenders  based on the  percentages  for  Advances  as set forth in Section
      5.2(c))  and  there  shall  be no title  change  or  exception  reasonably
      objectionable to the Agent;

            (g) the Construction  Agent shall have delivered to the Agent copies
      of the Construction Documents;

            (h) [Reserved];

            (i) the  Construction  Agent shall have  delivered,  or caused to be
      delivered,  to the  Agent,  Bills  of Sale or other  documents  reasonably
      requested by the Agent in order to perfect the interest of the Lessor,  in
      each case with regard to any Equipment or other components of the Property
      then being acquired with the proceeds of the Loans; and

            (j) all  taxes,  fees  and  other  charges  in  connection  with the
      execution,  delivery,  recording, filing and registration of the Operative
      Agreements  shall have been paid or provisions for such payment shall have
      been made to the reasonable satisfaction of the Agent.

      5.5.  Additional Reporting and Delivery Requirements on Completion Date.

      Within  ten (10) days  after the  Completion  Date for the  Property,  the
Construction  Agent shall deliver to the Agent and the Primary Financing Parties
an Officer's  Certificate  in the form  attached  hereto as Exhibit I or in such
other form as is reasonably  acceptable to the Agent  specifying  the Completion
Date for the Property and the aggregate Property Cost for the Property, and that
all  representations and warranties of the Construction Agent and Lessee in

                                       12
<PAGE>

each of the Operative Agreements and each certificate delivered pursuant thereto
are true and correct in all material  respects as of the  Completion  Date.  The
Agent  shall  have the  right  to  contest  the  information  contained  in such
Officer's Certificate.  Furthermore,  on or prior to the Completion Date for the
Property,  the Construction  Agent shall deliver or cause to be delivered to the
Agent and the Primary  Financing  Parties  (unless  previously  delivered to the
Agent and the Primary Financing  Parties) the following,  each of which shall be
in form and substance acceptable to the Agent, in its reasonable discretion: (v)
a title insurance  endorsement regarding the title insurance policy delivered in
connection with the requirements of Section 5.3(g),  but only to the extent such
endorsement is necessary to provide for insurance in an amount at least equal to
the maximum total  Property  Cost  (divided  between such policy in favor of the
Tranche A Note Purchasers and the other policy in favor of the Tranche B Lenders
based on the  percentages  for Advances as set forth in Section  5.2(c)) and, if
endorsed,  the  endorsement  shall  not  include  a title  change  or  exception
reasonably  objectionable to the Agent; (w) an as-built survey for the Property,
(x) insurance  certificates  respecting such Property as required  hereunder and
under the Lease and (y) if reasonably requested by the Agent,  amendments to the
Lessor Financing Statements executed by the appropriate parties. In addition, on
the  Completion  Date,  the  Construction  Agent  covenants  and agrees that the
recording fees,  documentary  stamp taxes or similar amounts required to be paid
in connection with the related Mortgage  Instruments  shall have been paid in an
amount required by applicable law, subject, however, to the obligation that such
costs be  funded  from  Tranche A  Proceeds  or  Tranche  B Loans to the  extent
required pursuant to Section 7.1.

      5.6.  The Construction Agent Delivery of Construction Budget
            Modifications.

            (a) The  Construction  Agent  covenants and agrees to deliver to the
      Agent each month  notification  of any  modification  to the  Construction
      Budget regarding the Property if such  modification  increases the cost to
      construct  the  Property  over the  Construction  Budget as of the Closing
      Date;  provided no  Construction  Budget may be  increased  unless (a) the
      title insurance policies referenced in Section 5.3(g) are also modified or
      endorsed,  if  necessary,  to  provide  for  insurance  in an amount  that
      satisfies the  requirements  of Section  5.4(f) of this  Agreement and (b)
      after giving effect to any such amendment, the Construction Budget remains
      in compliance with the requirements of Section 5.4(d) of this Agreement.

            (b) In the event any such  modification to the  Construction  Budget
      regarding the Property that is not caused by any acts or failure to act of
      the  Construction  Agent  increases  the cost to construct the Property by
      such amount as would cause the Available Tranche B Lender Commitments plus
      the balance of funds remaining in the Escrow Account to be insufficient to
      complete the Improvements,  at the request of the Construction  Agent, the
      Agent  shall  use  all  reasonable  efforts  to  find  lenders,  financial
      institutions  or  other   institutional   investors   (including   without
      limitation any existing Tranche B Lenders) willing to fund such additional
      amounts with the consent of each of the Tranche A Noteholders.

                                       13
<PAGE>

      5.7.  Restrictions on Liens.

      On the Closing  Date,  the  Construction  Agent  shall cause the  Property
acquired  by the  Lessor on such  date to be free and clear of all Liens  except
those referenced in Sections 6.2(r)(i) and 6.2(r)(ii), such other Liens that are
expressly set forth as title exceptions on the title commitment or policy issued
under Section 5.3(g) with respect to the Property,  Liens for Taxes that are not
yet due and payable and such other  Liens that have been  expressly  approved or
agreed to by the Agent. On the date the Property is either sold to a third party
(other than the Lessee or any Affiliate or designee of the Lessee) in accordance
with the terms of the Operative  Agreements or,  pursuant to Section  22.1(a) of
the Lease Agreement, retained by the Lessor, the Lessee shall cause the Property
to be free and clear of all Liens  (other  than Lessor  Liens,  such other Liens
that are  expressly  set forth as title  exceptions  on the title  commitment or
policy issued under Section  5.3(g) with respect to the Property,  to the extent
such title  commitment has been approved by the Agent,  Liens for Taxes that are
not yet due and payable and such other Liens that have been  expressly  approved
or agreed to by the Agent).

      5.8.  [Reserved].

      5.9.  Extension of Construction Period Termination Date.

      The parties hereto agree that, so long as no Agency  Agreement  Default or
Agency  Agreement  Event of Default shall have occurred and be  continuing,  the
Construction  Agent shall have the right upon thirty (30) days written notice to
the  Agent,  the  Lessor  and  the  Primary  Financing  Parties  to  extend  the
Construction Period Termination Date from September 26, 2003 to March 26, 2004.

      5.10. Payments.

      All payments of Rent, and other amounts  payable to any Financing Party to
be made by the  Construction  Agent or the Lessee  under this  Agreement  or any
other  Operative  Agreements  (excluding  Excepted  Payments which shall be paid
directly to the party to whom such payments are owed) shall be made to the Agent
at the office  designated  by the Agent  from time to time by written  notice as
provided herein in Dollars and in immediately  available funds,  without setoff,
deduction,  or counterclaim.  Subject to the definition of "Interest  Period" in
Appendix A attached  hereto,  whenever any payment  under this  Agreement or any
other  Operative  Agreements  shall be  stated  to be due on a day that is not a
Business Day, such payment may be made on the next succeeding  Business Day, and
such  extension  of time in such case shall be  included in the  computation  of
interest and fees payable  pursuant to the Operative  Agreements,  as applicable
and as the case may be; provided,  that in the case of the Tranche A Notes, such
extension of time shall not be included in the  computation of interest  payable
on such next succeeding Business Day.

      5.11. Cash Collateral Account.

            (a) On  the  Closing  Date  and  pursuant  to  the  Cash  Collateral
      Agreement,  the  Construction  Agent  shall  pledge to the Agent,  for the
      benefit  of  the  Cash  Collateral

                                       14
<PAGE>

      Lenders, as security for the Cash Collateral  Obligations,  by delivery to
      the  Intermediary  or by  otherwise  depositing  into the Cash  Collateral
      Account,  Cash  Collateral in an amount such that the fair market value of
      the Cash  Collateral in the Cash  Collateral  Account after such pledge or
      deposit on such date is equal to or greater  than one hundred five percent
      (105%) of the outstanding  aggregate  principal  amount of Cash Collateral
      Loans on such date.

            (b) If on any date the fair market value of the Cash  Collateral  in
      the Cash  Collateral  Account  shall be less than one hundred five percent
      (105%) of the outstanding  aggregate  principal  amount of Cash Collateral
      Loans on such date, then the Construction Agent or the Lessee shall pledge
      to the Agent, for the benefit of the Cash Collateral  Lenders, by delivery
      to the  Intermediary  or by otherwise  depositing into the Cash Collateral
      Account, additional Cash Collateral in an amount such that the fair market
      value of the Cash  Collateral  in the Cash  Collateral  Account after such
      pledge or  deposit on such date is equal to or  greater  than one  hundred
      five percent (105%) of the outstanding  aggregate principal amount of Cash
      Collateral Loans on such date.

            (c)  Beginning  on the date thirty (30) days after the Closing  Date
      (unless  such  day is not a  Business  Day,  then  on the  next  occurring
      Business  Day)  and on the  same  calendar  day of each  month  thereafter
      (unless  such  day is not a  Business  Day,  then  on the  next  occurring
      Business  Day, or unless  there is no such  corresponding  calendar day in
      such  month,  then on the next  occurring  Business  Day in the  following
      month), the Lessee shall furnish to the Agent an Officer's  Certificate in
      the form of Schedule  5.11  setting  forth the  Lessee's  calculation,  in
      reasonable  detail,  demonstrating  compliance  by  the  Lessee  with  the
      provisions of this Section 5.11 as of such date.

            (d)  The  Lessor,  the  Construction  Agent  and the  Lessee  hereby
      acknowledge  and  agree  that the Cash  Collateral  Account  (and the Cash
      Collateral on deposit  therein from time to time)  constitutes  additional
      Collateral  to  secure  any and all Cash  Collateral  Obligations  and the
      Lessor, the Lessee and the Construction Agent agree to execute and deliver
      any  agreements,  financing  statements,  instruments  or other  documents
      reasonably  requested by the Agent to perfect the security interest of the
      Cash Collateral  Lenders in the Cash Collateral Account (including without
      limitation the Cash Collateral  Agreement and the Cash Collateral  Control
      Agreement).

            (e)  Notwithstanding  any provision contained herein or in any other
      Operative Agreement to the contrary, upon payment in full of the principal
      of and interest on the Cash Collateral Notes and all other Cash Collateral
      Obligations then due and owing to the Cash Collateral  Lenders,  the Agent
      shall,  upon the written request of the Lessee,  cause all amounts then on
      deposit in the Cash Collateral Account to be returned to the Lessee.

      5.12. Escrow Account.

      (a) On the Closing  Date,  the Borrower  shall cause the proceeds from the
sale of the Tranche A Notes to be deposited with the Escrow Agent in cash in the
Escrow Account, in the name of the Agent, for the benefit of the Borrower, which
will be  available  to pay amounts

                                       15
<PAGE>

requested to be paid on the Closing Date and for Construction Advances requested
in accordance with Section 4 and Sections 5.3 and 5.4.

      (b) Upon receipt by the Agent of a Requisition from the Construction Agent
in  accordance  with Sections 4.2 and 5.2(a) and (b), and upon  satisfaction  or
express  waiver  of  the  conditions  set  forth  in  Sections  5.3 or  5.4,  as
applicable,  the Agent shall disburse from the Escrow Account Tranche A Proceeds
to the Construction  Agent (on the Lessor's behalf) in the manner and in amounts
as set forth in  Section  5.2(c).  In the event the  Tranche A  Proceeds  in the
Escrow Account from which such disbursements  shall be made are invested in more
than one type of Cash Equivalents,  the Construction  Agent shall provide to the
Agent (together with the Requisition) written  instructions  specifying the Cash
Equivalents  to be  liquidated  in order to fund the Advance  requested  in such
Requisition. In the absence of such written instructions, the Agent (in its sole
discretion)  shall fund such Advance  with the  proceeds  from any funds then on
deposit in the Escrow Account.  The Lessor and the Construction  Agent expressly
acknowledge  and agree to  release  and hold the Agent  harmless  from any Claim
arising out of the funding of any Advance pursuant to the immediately  preceding
sentence.

      (c) From the Closing Date until the  Completion  Date (so long as no Lease
Event of Default shall have occurred and be continuing),  the Agent shall invest
any Tranche A Proceeds held in the Escrow  Account in cash or Cash  Equivalents,
as the Construction Agent shall direct by furnishing a written notice; provided,
if a Lease Event of Default  shall have  occurred  and be  continuing  or in the
absence of written  instructions  from the  Construction  Agent,  all  Tranche A
Proceeds  then on  deposit  in the  Escrow  Account  shall be  invested  in Cash
Equivalents  of the type  described  in clause  (e) of the  definition  of "Cash
Equivalents".  Any  interest  or  income  earned  on  amounts  invested  in Cash
Equivalents pursuant to this Section 5.12 shall be added to the balance of funds
in the Escrow Account.  The Lessor and the  Construction  Agent  acknowledge and
agree that neither the Agent nor the Escrow Agent shall be liable or responsible
for the loss or  diminishment  of all or any  portion of the  Tranche A Proceeds
deposited  from time to time in the  Escrow  Account  resulting  from any cause,
except to the extent  such loss or  diminishment  is  attributable  to the gross
negligence or willful misconduct of the Agent or the failure of the Escrow Agent
to use ordinary care in the handling of funds.

      (d) On the  Completion  Date  respecting  the Property  (provided no Lease
Default or Lease Event of Default  shall have occurred and be  continuing),  the
Agent shall (i) disburse to the Construction Agent (on behalf of the Lessor) any
Tranche  A  Proceeds  remaining  in  the  Escrow  Account  to  be  used  by  the
Construction  Agent  for the  construction  or  purchase  of  additional  tenant
improvements  and other  personal  property  to be used in  connection  with the
Property as Lessee's corporate  headquarters  building and related facilities or
(ii) upon the request of the Construction  Agent,  apply such Tranche A Proceeds
remaining  in the Escrow  Account  (and any  earnings  thereon)  on such date in
partial  payment of the  Tranche A Notes then  outstanding  in  accordance  with
Section 8.2(a) of the Note Purchase Agreement.

      (e) The Lessor and the  Construction  Agent hereby  acknowledge  and agree
that the Escrow Account (and the Tranche A Proceeds on deposit therein from time
to time) constitutes  additional Collateral to secure any and all obligations of
the Lessor and the Construction Agent to the Tranche A Note Purchasers,  and the
Lessor and the  Construction  Agent agree to execute

                                       16
<PAGE>

and deliver any agreements, financing statements, instruments or other documents
reasonably  requested  by the Agent to  perfect  the  security  interest  of the
Tranche A Note Purchasers in the Escrow Account  (including  without  limitation
the Assignment of Escrow Account and the Escrow Account Control Agreement).

      (f) The Escrow Agent  acknowledges  and agrees to the provisions set forth
in this Section 5.12 as such provisions relate to the Escrow Account.

      5.13. Partial Funding of Unreimbursed  Costs Following an Agency Agreement
            Event of Default.

      Notwithstanding  any provision in any Operative Agreement to the contrary,
each  Tranche B Lender  agrees  that,  following  an Agency  Agreement  Event of
Default and upon the payment by the  Construction  Agent of all amounts required
to be paid by the  Construction  Agent  pursuant  to  Section  5.4 of the Agency
Agreement  (if the  Construction  Agent  has not  elected  to cure  such  Agency
Agreement Event of Default by purchasing the Property pursuant to Section 5.3(c)
of the Agency  Agreement),  such Tranche B Lender will make a Tranche B Loan (up
to such  Tranche  B  Lender's  Available  Tranche  B Lender  Commitment)  to the
Construction  Agent,  on behalf of the Borrower,  in an amount equal to 10.1% of
the accreted value of any  unreimbursed  costs actually paid by the Construction
Agent in connection with the construction of the Property; provided, however, no
Tranche B Lender  shall be  required  to make such a Tranche B Loan  unless  the
Construction  Agent shall have  submitted to the Agent a Requisition  adequately
describing the costs for which the Construction Agent is seeking  reimbursement,
together with evidence  reasonably  satisfactory  to the Agent that such amounts
have in fact been paid by the Construction Agent.

      5.14. Rights of Tranche A Note Purchasers Upon Merger of the Lessee.

      Notwithstanding  any provision to the contrary in any Operative  Agreement
(including without  limitation Section 8.3B.1),  if, as of the Rent Commencement
Date under the Lease or any time thereafter,  a consolidation or merger,  or any
conveyance or transfer of all or substantially all of the Property of the Lessee
permitted in accordance  with Section  8.3B.1(a) has occurred  since the Closing
Date and the  Successor  Person is not a corporation  or other entity  organized
under the laws of any state of the United  States or the  District of  Columbia,
then any Tranche A Note Purchaser shall have the right,  but not the obligation,
within sixty (60) days thereafter to require the Lessee to pay to such Tranche A
Note  Purchaser  an amount  equal to the  principal  amount  outstanding  on the
Tranche A Note held by such Tranche A Note  Purchaser,  together  with  interest
accrued  thereon to the date of such payment and all other amounts  attributable
to such Tranche A Note but without any Make Whole  Amount,  and, upon receipt of
such amount from the Lessee, such Tranche A Note Purchaser shall transfer all of
its  right,  title and  interest  in and to its  Tranche  A Note to the  Lessee.
Following any such transfer,  solely for the purpose of determining  whether the
holders of the requisite percentage of the aggregate principal amount of Tranche
A Notes then  outstanding  approved or  consented  to any  amendment,  waiver or
consent to be given  under this  Agreement,  the Note  Purchase  Agreement,  the
Tranche A Notes or any other Operative Agreement, or have directed the taking of
any  action  provided  herein  or in the  Tranche  A Notes to be taken  upon the
direction of the holders of a

                                       17
<PAGE>

specified  percentage of the aggregate  principal amount of Tranche A Notes then
outstanding,  Tranche A Notes directly or indirectly  owned by the Lessee or any
Affiliate of the Lessee shall be deemed not to be outstanding.

                   SECTION 6. REPRESENTATIONS AND WARRANTIES.

      6.1.  Representations and Warranties of the Borrower.

      The Borrower  represents  and warrants to each of the other parties hereto
that as of the Closing Date and the date of each  Advance  (except to the extent
any such representation or warranty relates to an earlier date):

            (a) It is a corporation  duly organized and validly  existing and in
      good standing under the laws of the State of North Carolina,  is qualified
      to do business in New Jersey and in each jurisdiction  necessary to permit
      the  Borrower to own and lease the  Property  and perform its  obligations
      under the  Operative  Agreements  and has the power and authority to enter
      into and perform its obligations under each of the Operative Agreements to
      which it is or will be a party and each other  agreement,  instrument  and
      document to be executed and delivered by it on or before such Closing Date
      in connection with or as contemplated by each such Operative  Agreement to
      which  the  Borrower  is or  will  be a  party,  and  is a  multi-purpose,
      Wholly-Owned Entity of First Union Corporation;

            (b) The  execution,  delivery  and  performance  of  each  Operative
      Agreement  to which it is or will be a party has been duly  authorized  by
      all  necessary  action on its part and neither the  execution and delivery
      thereof,  nor the consummation of the transactions  contemplated  thereby,
      nor compliance by it with any of the terms and provisions thereof (i) does
      or will  require any  approval or consent of any trustee or holders of any
      of its  indebtedness  or obligations or any other consent or approval that
      has not previously  been obtained,  (ii) does or will contravene any Legal
      Requirement,  (iii) does or will  contravene or result in any breach of or
      constitute any default  under,  or result in the creation of any Lien upon
      any of its  property  under,  (A)  its  charter  or  by-laws,  or (B)  any
      indenture,  mortgage,  chattel mortgage, deed of trust,  conditional sales
      contract,  bank loan or credit  agreement or other agreement or instrument
      to which it is a party  or by which it or its  properties  may be bound or
      affected,  which contravention,  breach,  default or Lien under clause (B)
      could  reasonably  be  expected to  materially  and  adversely  affect its
      ability to perform its obligations under the Operative Agreements to which
      it is a party or would question the validity or  enforceability  of any of
      the  Operative  Agreements  to which it is or will  become a party or (iv)
      does  or  will  require  any  Governmental   Action  by  any  Governmental
      Authority;

            (c) Each  Operative  Agreement to which the Borrower is or will be a
      party have been, or on or before such Closing Date or date of Advance will
      be, duly  executed  and  delivered  by the  Borrower,  and each  Operative
      Agreement to which the Borrower is a party constitutes,  or upon execution
      and  delivery  will  constitute,  a legal,  valid and

                                       18
<PAGE>

      binding obligation enforceable against the Borrower in accordance with the
      terms thereof;

            (d) There is no action or proceeding  pending or, to its  knowledge,
      threatened  to  which  it is or will be a party  before  any  Governmental
      Authority that, if adversely  determined,  would  materially and adversely
      affect  its  ability  to  perform  its  obligations  under  the  Operative
      Agreements  to  which  it is a party or would  question  the  validity  or
      enforceability  of any of the Operative  Agreements to which it is or will
      become a party;

            (e) The Borrower has not assigned or  transferred  any of its right,
      title or  interest  in or under the  Lease,  the Agency  Agreement  or its
      interest in the Property or any portion thereof, except in accordance with
      the Operative Agreements;

            (f) No Default or Event of Default  under the  Operative  Agreements
      attributable to it has occurred and is continuing;

            (g) Except as otherwise  contemplated  in the Operative  Agreements,
      the proceeds of the Advances  shall not be applied by the Borrower for any
      purpose  other  than  the  purchase  and/or  lease  of the  Property,  the
      acquisition,  installation  and  testing  of the  Equipment,  the  repair,
      replacement,  renovation  and/or  construction  of  Improvements  and  the
      payment of interest, Transaction Expenses and the fees, expenses and other
      disbursements  referenced in the Operative Agreements,  in each case which
      accrue prior to the Rent Commencement Date with respect to the Property;

            (h) Neither the Borrower nor any Person  authorized  by the Borrower
      to act on its behalf has offered or sold any  interest  in the  Borrower's
      Interest  or  the  Notes,  or in  any  similar  security  relating  to the
      Property, or in any security the offering of which for the purposes of the
      Securities  Act  would be deemed  to be part of the same  offering  as the
      offering of the  aforementioned  securities  to, or solicited any offer to
      acquire any of the same from,  any Person  other than,  in the case of the
      Notes, the Agent and eighty-five (85) other institutions,  and neither the
      Borrower  nor any Person  authorized  by the Borrower to act on its behalf
      will take any  action  which  would  subject,  as a direct  result of such
      action  alone,  the  issuance or sale of any  interest  in the  Borrower's
      Interest or the Notes to the provisions of Section 5 of the Securities Act
      or require the  qualification  of any Operative  Agreement under the Trust
      Indenture Act of 1939, as amended;

            (i) The  Borrower's  principal  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 One  First  Union  Center,  301 South
      College Street, Charlotte, Mecklenburg County, North Carolina 28288-5604;

            (j) The Borrower is not engaged principally in, and does not have as
      one (1) of its important activities,  the business of extending credit for
      the purpose of purchasing or carrying any margin stock (within the meaning
      of Regulation U), and no part of the proceeds of the Loans will be used by
      it to purchase or carry any margin stock or to

                                       19
<PAGE>

      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;

            (k)  The  Borrower  is  not an  "investment  company"  or a  company
      controlled by an "investment company" within the meaning of the Investment
      Company Act;

            (l) The Property is free and clear of all Lessor Liens  attributable
      to the Lessor;

            (m) [Reserved].

            (n) The Borrower's true legal name as registered in the jurisdiction
      of its organization is First Union Development Corporation and its Federal
      Employer  Identification Number is 56-1610288.  The Borrower does not use,
      or transact any business under,  any trade name other than its legal name;
      and

            (o) The  Borrower  has filed all tax returns and all other  material
      reports that are required under applicable Law to be filed by them and has
      paid all taxes or other charges of any Governmental Authority due pursuant
      to such returns or other  reports,  except for any taxes or other  charges
      that  are  being  diligently   contested  in  good  faith  by  appropriate
      proceedings  and for which  adequate  reserves  have been set aside on the
      books and records of the Borrower.

      6.2.  Representations and Warranties of the Lessee.

      Lessee represents and warrants to each of the other parties hereto that as
of the Closing Date and the date of each Advance  (except to the extent that any
such representation or warranty relates to an earlier date):

            (a) The Lessee and each  Subsidiary  of Lessee is duly  organized or
      formed  and  validly  existing  in good  standing  under  the  laws of the
      jurisdiction  of  its  incorporation  or  formation,  is  qualified  to do
      business and is in good standing in each  jurisdiction in which the nature
      of its business makes such qualification  necessary, and has all requisite
      power and authority to own its  properties and to carry on its business as
      now conducted,  except in the case of Subsidiaries where the failure to be
      so organized, formed or qualified, or to have such power and authority, or
      to own such properties,  or to carry on such business,  individually or in
      the aggregate, could not reasonably be expected to have a Material Adverse
      Effect;

            (b) (i) The  Lessee  has the power and  authority  to enter into and
      perform its  obligations  under the Operative  Agreements to which it is a
      party or will be a party and has the corporate  power and authority to act
      as the Construction Agent and the Lessee;

                  (ii)  The  execution  and  delivery  by  the  Lessee  of  this
      Agreement  and the  other  applicable  Operative  Agreements  to which the
      Lessee is a party as of such date and

                                       20
<PAGE>

      the performance by the Lessee of its obligations  under this Agreement and
      the other applicable  Operative  Agreements to which the Lessee is a party
      are within the corporate  powers of the Lessee,  have been duly authorized
      by all  necessary  corporate  action on the part of the Lessee  (including
      without  limitation  any  necessary  shareholder  action),  have been duly
      executed and delivered, have received all necessary governmental approval,
      and do not and will not (A) violate any Legal Requirement which is binding
      on the Lessee,  (B) contravene or conflict with, or result in a breach of,
      any  provision  of  the  Articles  of  Incorporation,   By-Laws  or  other
      organizational  documents  of the Lessee or of any  agreement,  indenture,
      instrument or other  document which is binding on the Lessee or (C) result
      in, or  require,  the  creation  or  imposition  of any Lien  (other  than
      pursuant  to the terms of the  Operative  Agreements)  on any asset of the
      Lessee;

            (c) This Agreement and the other applicable  Operative Agreements to
      which the Lessee is a party,  executed  prior to or as of such date by the
      Lessee,  constitute the legal, valid and binding obligation of the Lessee,
      enforceable  against the Lessee,  in accordance with their terms except as
      the same may be limited by applicable bankruptcy,  insolvency,  fraudulent
      transfer or conveyance,  reorganization,  moratorium or other similar laws
      relating to or  affecting  creditors'  or lessors'  rights  generally  and
      general principles of equity;

            (d) Except as set forth on EXHIBIT K, there are no actions, suits or
      proceedings  pending or, to  Lessee's  knowledge,  threatened  against the
      Lessee or any of its  Subsidiaries in any court or before any Governmental
      Authority (nor shall any order, judgment or decree have been issued or, to
      the  knowledge  of the Lessee,  proposed to be issued by any  Governmental
      Authority against the Lessee to set aside, restrain, enjoin or prevent the
      full   performance   of  any  Operative   Agreement  or  any   transaction
      contemplated  thereby) that (i) concern the Property or Lessee's  interest
      therein,  (ii)  question the validity or  enforceability  of any Operative
      Agreement  to  which  the  Lessee  is a party or the  overall  transaction
      described in the  Operative  Agreements  to which the Lessee is a party or
      (iii) have or could  reasonably  be  expected  to have a Material  Adverse
      Effect;

            (e) No Governmental  Action by any  Governmental  Authority or other
      authorization,  registration,  consent,  approval, waiver, notice or other
      action by, to or of any other Person pursuant to any Legal  Requirement or
      any contract,  indenture,  instrument or agreement or for any other reason
      is  required  to  authorize  or is  required  in  connection  with (i) the
      execution, delivery or performance by Lessee of any Operative Agreement to
      which the Lessee is a party, (ii) the legality,  validity,  binding effect
      or enforceability  against Lessee of any Operative  Agreement to which the
      Lessee  is  a  party,  (iii)  the  acquisition,  ownership,  construction,
      completion,  occupancy,  operation, leasing or subleasing by Lessee of the
      Property or (iv) the Construction Agent's request for any Advance, in each
      case,  except  those  which have been  obtained  and are in full force and
      effect  or those  which the  failure  to obtain  could not  reasonably  be
      expected to have a Material Adverse Effect;

                                       21
<PAGE>

            (f) Upon the execution  and delivery of the Lease  Supplement to the
      Lease,  (i) the Lessee will have  unconditionally  accepted  the  Property
      subject  to the Lease  Supplement,  and (ii) no  offset  will  exist  with
      respect to any Rent or other sums payable under the Lease;

            (g) [Reserved];

            (h) All information  with respect to Lessee or any of its Affiliates
      heretofore or  contemporaneously  herewith  furnished in writing by Lessee
      (or  any of its  Affiliates)  to the  Agent,  the  Lessor  or any  Primary
      Financing  Party for purposes of or in connection  with this Agreement and
      the  transactions  contemplated  hereby  is true  and  accurate  in  every
      material  respect  on the date as of which  such  information  is dated or
      certified, and such information,  taken as a whole, does not omit to state
      any material fact  necessary to make such  information,  taken as a whole,
      not misleading;  provided,  that no representation is made with respect to
      competitor, market, forward - looking or any other information provided to
      the Lessee by third parties unrelated to the Lessee and attributed to such
      third party;

            (i) The  location  of the  Construction  Agent  and the  Lessee  for
      purposes  of the  UCC is  Delaware.  Prior  to the  Completion  Date,  the
      principal  place of  business,  chief  executive  office and office of the
      Construction  Agent and the  Lessee  where  the  documents,  accounts  and
      records  relating to the  transactions  contemplated by this Agreement and
      each  other  Operative  Agreement  are kept are  located at 461 From Road,
      Paramus,  New Jersey 07652.  Following the Completion  Date, the principal
      place of business,  chief executive  office and office of the Construction
      Agent and the Lessee  where such  documents,  amounts and records  will be
      kept will be located at the address of the Property;

            (j) The representations and warranties of Lessee set forth in any of
      the  Operative  Agreements  are true and  correct.  There  exists no Lease
      Default or Lease Event of Default  under any of the  Operative  Agreements
      which is  continuing  and which has not been cured  within any cure period
      expressly granted under the terms of the applicable Operative Agreement or
      otherwise waived in accordance with the applicable Operative Agreement;

            (k) The  Property  being  financed  consists  of Land  and  existing
      Improvements  thereon which Improvements are either suitable for occupancy
      at the  time  of  acquisition  or  will be  demolished,  renovated  and/or
      modified in accordance with the terms of this Agreement;

            (l) The  Lessor  has good and  marketable  fee  simple  title to the
      Property,  subject only to (i) such Liens  referenced in Sections  5.3(g),
      6.2(r)(i)  and  6.2(r)(ii) on the Closing Date and (ii) subject to Section
      5.7, Permitted Liens and Lessor Liens after the Closing Date;

                                       22
<PAGE>

            (m) No portion of the Property 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 Property in accordance  with Section 14.2(b) of the
      Lease and in accordance  with the National Flood Insurance Act of 1968, as
      amended;

            (n) [Reserved];

            (o) [Reserved];

            (p) [Reserved];

            (q) [Reserved];

            (r)  (i)  The  Security   Documents  create,  as  security  for  the
            Obligations  (as such term is  defined in the  Security  Agreement),
            valid and  enforceable  security  interests in, and Liens on, all of
            the  Collateral,  in  favor of the  Agent,  for the  benefit  of the
            Secured Parties and such security interests and Liens are subject to
            no other  Liens  other than Liens  that are  expressly  set forth as
            title exceptions on the title  commitment  issued in accordance with
            Section 5.3(g) with respect to the Property; and

                  (ii)  The  Lease  Agreement  creates,   as  security  for  the
            obligations  of the  Lessee  under  the Lease  Agreement,  valid and
            enforceable security interests in, and Liens on, the Property leased
            thereunder,  in favor of the Lessor, and such security interests and
            Liens are  subject  to no other  Liens  other  than  Liens  that are
            expressly  set forth as title  exceptions  on the  title  commitment
            issued  in  accordance  with  Section  5.3(g)  with  respect  to the
            Property;

            (s) (i)  Neither  Lessee  nor any  Subsidiary  of Lessee is  engaged
            principally,  or as one of its  more  important  activities,  in the
            business of extending  credit for the purposes of buying or carrying
            Margin Stock (as defined in Regulation U); and

                  (ii) No part of the  proceeds  of any  Advance  will be  used,
            whether   directly   or   indirectly,   and   whether   immediately,
            incidentally or ultimately, for any purpose that entails a violation
            of, or that is inconsistent  with, the provisions of the Regulations
            of the Board including Regulation T, U or X;

            (t) Except as otherwise  could not  reasonably be expected to have a
            Material Adverse Effect, to Lessee's knowledge:

                  (i) Except with  respect to those  environmental  matters (the
            "Existing  Environmental  Matters")  disclosed in that certain Final
            Phase I and Phase II  Environmental  Site  Assessment  of  Pointview
            Corporate  Park, One Cyanamid

                                       23
<PAGE>

            Drive, Wayne, New Jersey prepared by ATC Associates Inc. dated as of
            May 24,  2001 (the  "Environmental  Reports")  with  respect  to the
            Property  delivered to the Lessor and the Primary  Financing Parties
            on or before the Closing Date as such Existing Environmental Matters
            relate to clause (e) of the definition of "Material Adverse Effect",
            the Property (including soils,  surface waters,  groundwaters on, at
            or  under  the  Property)  does  not  contain  and is not  otherwise
            affected by, and to Lessee's knowledge has not previously  contained
            or  been  affected  by,  any  Hazardous   Substance  in  amounts  or
            concentrations  which (A)  constitute or  constituted a violation of
            applicable Environmental Laws or (B) could give rise to liability or
            obligation under applicable Environmental Laws;

                  (ii) Except with respect to the Existing Environmental Matters
            as such Existing  Environmental  Matters relate to clause (e) of the
            definition  of  "Material  Adverse  Effect",  the  Property  and all
            operations conducted in connection therewith are in compliance,  and
            have been in compliance, with all applicable Environmental Laws, and
            there are no Hazardous Substances at, under or about the Property or
            such operations which could reasonably be expected to interfere with
            the continued operation of the Property;

                  (iii) Lessee and all Subsidiaries of Lessee have obtained, are
            in  compliance  with,  and have  made all  appropriate  filings  for
            issuance or renewal of, all  environmental  permits  with respect to
            the Property,  and all such environmental  permits are in full force
            and effect;

                  (iv) Neither  Lessee nor any  Subsidiary  thereof has received
            any notice of violation, alleged violation, noncompliance, liability
            or potential liability regarding environmental matters or compliance
            with Environmental Laws, in each case, with respect to the Property,
            nor does Lessee have  knowledge  or reason to believe  that,  except
            with respect to the Existing  Environmental Matters as such Existing
            Environmental  Matters  relate to clause  (e) of the  definition  of
            "Material  Adverse  Effect",  any such notice will be received or is
            being threatened;

                  (v) Except with respect to the Existing  Environmental Matters
            as such Existing  Environmental  Matters relate to clause (e) of the
            definition of "Material Adverse Effect",  Hazardous  Substances have
            not been  transported  or disposed of from the Property in violation
            of,  or in a manner  or to a  location  which  could  reasonably  be
            expected to give rise to liability under,  applicable  Environmental
            Laws, nor have any Hazardous  Substances  been  generated,  treated,
            stored or disposed of at, on or under the Property in violation  of,
            or in a manner  which could  reasonably  be expected to give rise to
            liability under, any applicable Environmental Laws;

                  (vi) No judicial proceedings or governmental or administrative
            action is pending, or threatened, under any applicable Environmental
            Law with respect to the  Property to which Lessee or any  Subsidiary
            thereof  has been or will be named as a  party,  nor are  there  any
            consent  decrees or other decrees,  consent

                                       24
<PAGE>

            orders,   administrative   orders   or   other   orders,   or  other
            administrative or judicial  requirements  binding upon or applicable
            to  Lessee  or  any  Subsidiary  outstanding  under  any  applicable
            Environmental Law with respect to the Property;

                  (vii)  Except  with  respect  to  the  Existing  Environmental
            Matters as such Existing  Environmental Matters relate to clause (e)
            of the definition of "Material  Adverse  Effect",  there has been no
            release,  or threat of release,  of Hazardous  Substances at or from
            the  Property,  in  violation  of or in amounts or in a manner  that
            could  reasonably  be  expected  to  give  rise to  liability  under
            applicable Environmental Laws; and

                  (viii)  Neither  Lessee nor any Subsidiary of Lessee has, with
            respect to the  Property,  (A) failed to comply with any  applicable
            Environmental  Law  or  to  obtain,  maintain  or  comply  with  any
            applicable  permit,  license or other  approval  required  under any
            applicable   Environmental   Law  or  (B)  become   subject  to  any
            Environmental Law or (C) become subject to any Environmental Claim;

            (u) The  issuance,  sale and delivery of the Tranche A Notes and the
      interests in the Operative Agreements under the circumstances contemplated
      hereby do not require the  registration or qualification of such Tranche A
      Notes or interests under the Securities Act, any state securities laws, or
      the Trust Indenture Act of 1939.  Neither Lessee nor anyone  authorized to
      act on the Lessee's  behalf has,  directly or  indirectly,  solicited  any
      offers to  acquire,  offered or sold:  (i) any  interest  in the Tranche A
      Notes, the Property, the Lease or the Operative Agreements in violation of
      Section 5 of the Securities Act or any state  securities laws, or (ii) any
      interest in any security or lease the  offering of which,  for purposes of
      the Securities  Act or any state  securities  laws,  would be deemed to be
      part of the same offering as the offering of the aforementioned interests.
      Neither the Lessee nor anyone authorized to act on its behalf was involved
      in (y)  offering  or  soliciting  offers  for the  Tranche A Notes (or any
      similar  securities)  or (z) selling Notes (or any similar  securities) to
      any Person other than the Tranche A Note  Purchasers and Tranche B Lenders
      identified  and  contacted  by  the  Agent  and  eighty-five   (85)  other
      institutional investors;

            (v) The Property is located in Wayne,  New Jersey.  The Property and
      any present use and presently anticipated future use thereof by Lessee and
      its agents, assignees, employees, invitees, lessees, licensees and tenants
      comply  with all Legal  Requirements  (including  zoning and land use laws
      (subject  to any  rezoning,  variances  and  approvals  obtained  or to be
      obtained by the Construction Agent or the Lessee) and Environmental  Laws)
      and Insurance  Requirements,  except for such instances of  non-compliance
      that could not  reasonably  be  expected to have,  individually  or in the
      aggregate, a Material

                                       25
<PAGE>

      Adverse  Effect.  No  notices,   complaints  or  orders  of  violation  or
      non-compliance or liability have been issued to the Lessee or, to the best
      of its knowledge, threatened by any Person with respect to the Property or
      the present or intended future use thereof, except for such violations and
      instances of  non-compliance  as could not reasonably be expected to have,
      individually or in the aggregate, a Material Adverse Effect, and Lessee is
      not aware of any  circumstances  which could give rise to the  issuance of
      any such notices, complaints or orders;

            (w) The Property  has been  acquired in an  arms-length  transaction
      and, to the best of Lessee's knowledge (based on the Appraisal,  a copy of
      which  has  been  delivered  to the  Lessor,  the  Agent  and the  Primary
      Financing Parties), at a price that is not in excess of fair market value;

            (x) The  consolidated  balance  sheet and  income  statement  of the
      Lessee and its Consolidated Subsidiaries as of February 3, 2001 and May 5,
      2001,  together with related  consolidated  statements  of operations  and
      retained  earnings  and of cash  flows as of  February  3, 2001 and May 5,
      2001, fairly present in all material  respects the consolidated  financial
      condition of the Lessee and its Consolidated Subsidiaries as at such dates
      and the  consolidated  results  of the  operations  of the  Lessee and its
      Consolidated  Subsidiaries  for the  period  ended on such  dates,  all in
      accordance  with GAAP,  subject with respect to the May 5, 2001  financial
      statements,  to changes  resulting  from  audit and normal  year end audit
      adjustments;

            (y)  Neither  the Lessee nor any of its  Subsidiaries  is in default
      with respect to any judgment, order, writ, injunction,  decree or decision
      of any  Governmental  Authority which default could reasonably be expected
      to have a Material Adverse Effect. Each of the Lessee and its Subsidiaries
      is complying  in all material  respects  with all  statutes,  regulations,
      rules and  orders  applicable  to it of all  Governmental  Authorities,  a
      violation of which could reasonably be expected to have a Material Adverse
      Effect;

            (z) Each of the Lessee and its  Subsidiaries  has filed or caused to
      be filed all tax returns  required  to be filed and has paid,  or has made
      adequate  provision  for the  payment  of,  all taxes  shown to be due and
      payable on said returns or in any assessments  made against it, except (a)
      any  Taxes  that  are  being   contested  in  good  faith  by  appropriate
      proceedings  and for which the Lessee or such  Subsidiary,  as applicable,
      has set aside on its books adequate reserves or (b) to the extent that the
      failure to do so could not  reasonably be expected to result in a Material
      Adverse Effect;

            (aa) The  Lessee is not  subject  to  regulation  under  the  Public
      Utility Holding Company Act of 1935, as amended,  the Federal Power Act or
      the Investment Company Act of 1940, as amended,  nor is the Lessee subject
      to  any  statute  or  regulation   which   prohibits  the   incurrence  of
      indebtedness  under  this  Agreement  or the other  Operative  Agreements,
      including, without limitation,  statutes or regulations relative to common
      or contract  carriers or to the sale of electricity,  gas,  steam,  water,
      telephone, telegraph or other public utility services;

            (bb) There has been no material  adverse change in the  consolidated
      assets,  liabilities,  operations,  business or  conditions  (financial or
      otherwise)  of the Lessee  and its  Consolidated  Subsidiaries  taken as a
      whole  from  that set  forth in the  financial  statements  referenced  in
      Section 6.2(x);

                                       26
<PAGE>

            (cc) The execution and delivery of the Operative Agreements will not
      involve any transaction that is subject to the prohibitions of Section 406
      of ERISA or in  connection  with which a tax could be imposed  pursuant to
      Section 4975(c)(1)(A)-(D) of the Code. The representation by the Lessee in
      the first  sentence of this Section  6.2(cc) is made in reliance  upon and
      subject  to the  accuracy  of the  representations  of the  Tranche A Note
      Purchasers in Section 6.2 of the Note Purchase Agreement as to the sources
      of the funds used to pay the  purchase  price of the Tranche A Notes to be
      purchased by them thereunder; and

            (dd) Lessee's true legal name as registered in the  jurisdiction  of
      its  organization  is  "Toys  "R"  Us,  Inc.,"  and its  federal  employer
      identification number is 22-3260693.  Lessee does not use, or transact any
      business under, any trade name other than its legal name.

                     SECTION 7. PAYMENT OF CERTAIN EXPENSES.

      7.1.  Transaction Expenses.

            (a) The Lessor  agrees on the Closing  Date,  to pay, or cause to be
      paid, all Transaction  Expenses  arising from the Closing Date,  including
      without  limitation all reasonable  fees,  expenses and  disbursements  of
      Moore & Van Allen,  PLLC,  as counsel  for the Agent and the  Lessor,  and
      Chapman and Cutler,  as counsel  for the  Tranche A Note  Purchasers  (but
      excluding  the  fees,  expenses  and  disbursements  of  counsel  for  any
      individual  Tranche  A Note  Purchaser),  the  Lessor  and  the  Agent  in
      connection with the transactions  contemplated by the Operative Agreements
      and  incurred  in  connection  with  such  Closing  Date,  the  reasonable
      out-of-pocket expenses of the Lessor due and payable on such Closing Date,
      all fees, taxes and expenses for the recording, registration and filing of
      documents  and all  other  reasonable  fees,  expenses  and  disbursements
      incurred in connection  with such Closing  Date;  provided,  however,  the
      Lessor  shall be required to pay such  amounts  described  in this Section
      7.1(a) only if (i) such  amounts are properly  described in a  Requisition
      delivered on or before the Closing Date, and (ii) funds are made available
      by the  Tranche B Lenders  and by the Agent  (from the Escrow  Account) in
      connection  with such  Requisition  in an amount  sufficient to allow such
      payment. On the Closing Date after delivery and receipt of the Requisition
      referenced  in  Section  4.2(a)  hereof  and  satisfaction  of  the  other
      conditions  precedent  for such  date,  the  Tranche B Lenders  shall make
      Tranche  B Loans,  and the  Agent  shall  advance  funds  from the  Escrow
      Account, to the Lessor to pay for the Transaction Expenses, fees, expenses
      and other  disbursements  referenced  in this Section  7.1(a).  The Lessee
      agrees to timely pay all amounts referred to in this Section 7.1(a) to the
      extent the Lessor is not required to pay such amounts.

            (b) Assuming no Default or Event of Default  shall have occurred and
      be continuing and only for the period prior to the Rent Commencement Date,
      the  Lessor  agrees  on the date of any  Construction  Advance  and on the
      Completion  Date to pay,  or cause to be paid,  all  Transaction  Expenses
      including   without   limitation   all  reasonable   fees,   expenses  and
      disbursements  of Moore & Van Allen PLLC, as counsel for the Agent

                                       27
<PAGE>

      and the Lessor,  and Chapman and Cutler, as counsel for the Tranche A Note
      Purchasers (but excluding the fees,  expenses and disbursements of counsel
      for any  individual  Tranche A Note  Purchaser),  in  connection  with the
      transactions  contemplated  by the  Operative  Agreements  and  billed  in
      connection  with  such  Advance  or  such  Completion  Date,  all  amounts
      described  in  Section  7.1(a)  of this  Agreement  which  have  not  been
      previously paid, the reasonable  out-of-pocket expenses of the Lessor, all
      fees,  expenses  and  disbursements  incurred  with respect to the various
      items  referenced  in  Sections  5.3,  5.4 and/or 5.5  (including  without
      limitation any premiums for title  insurance  policies and charges for any
      updates to such policies),  all fees, expenses and disbursements  incurred
      with  respect to  obtaining  a rating  from the  National  Association  of
      Insurance  Commissioners  and all  other  reasonable  fees,  expenses  and
      disbursements  in  connection  with such Advance or such  Completion  Date
      including without  limitation all expenses relating to and all fees, taxes
      and expenses for the recording,  registration  and filing of documents and
      during the Commitment Period,  all fees,  expenses and costs referenced in
      Sections 7.3(a),  7.3(b),  7.3(d) and 7.5; provided,  however,  the Lessor
      shall be required to pay such amounts  described  in this  Section  7.1(b)
      only if (i) such amounts are properly described in a Requisition delivered
      on the applicable  date and (ii) funds are made available by the Tranche B
      Lenders and by the Agent (from the Escrow  Account),  in  connection  with
      such  Requisition  in an amount  sufficient to allow such payment.  On the
      date of any Construction Advance or the Completion Date, after delivery of
      the applicable Requisition and satisfaction or express waiver of the other
      conditions  precedent  for such date,  the Agent shall  advance  Tranche A
      Proceeds  from the Escrow  Account  and the  Tranche B Lenders  shall make
      Tranche B Loans to the Lessor to pay for the Transaction  Expenses,  fees,
      expenses and other  disbursements  referenced in this Section 7.1(b).  The
      Lessee agrees to timely pay all amounts referred to in this Section 7.1(b)
      to the extent the Lessor is not required to pay such amounts.

            (c) All fees payable  pursuant to the Operative  Agreements shall be
      calculated  on the basis of a year of three  hundred  sixty (360) days for
      the actual days elapsed.

      7.2.  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  the  Operative   Agreements  or  the  transactions
contemplated  thereby,  nor has it  authorized  any broker,  finder or financial
adviser retained or employed by any other Person so to act.

      7.3.  Certain Fees and Expenses.

      The  Lessee  agrees  to  pay  or  cause  to be  paid  (a)  all  reasonable
out-of-pocket  expenses of the Lessor (including without  limitation  reasonable
counsel  fees  and  expenses)  incurred  in  connection  with  the  transactions
contemplated  hereby and by the other  Operative  Agreements  (b) all reasonable
out-of-pocket  costs and expenses incurred by the Lessee, the Agent, the Primary
Financing  Parties or the Lessor in entering into any Lease  Supplement  and any
future amendments, modifications,  supplements, restatements and/or replacements
with  respect  to any of the  Operative  Agreements,  whether  or not such Lease
Supplement, amendments,

                                       28
<PAGE>

modifications,  supplements,  restatements  and/or  replacements  are ultimately
entered into, or giving or withholding of waivers or consents hereto or thereto,
which have been requested by the Lessee, (c) all reasonable  out-of-pocket costs
and expenses incurred by the Lessee, the Agent, the Primary Financing Parties or
the Lessor in  connection  with any  exercise  of remedies  under any  Operative
Agreement or any purchase of the Property pursuant to the terms of the Operative
Agreements  by the  Construction  Agent,  the Lessee or its designee and (d) all
reasonable  out-of-pocket  costs and expenses incurred by the Lessee, the Agent,
any Primary  Financing  Party or the Lessor in  connection  with any transfer or
conveyance  of the  Property  to the Lessee or its  designee  or any third party
pursuant to the terms of the Operative Agreements,  whether or not such transfer
or conveyance is ultimately  accomplished,  but in all cases excluding the fees,
expenses  and  disbursements  of  counsel  for  any  individual  Tranche  A Note
Purchaser or Tranche B Lender or Cash Collateral Lender.

      7.4.  [Reserved].

      7.5.  Administrative Fee.

      The  Lessee  shall  pay or cause to be paid an  administrative  fee to the
Agent (for its individual account) in the amount of $65,000.00 per year (or such
other  amount as may be agreed  upon by the  Lessee  and the Agent  from time to
time)  which  shall be paid on the  Closing  Date and  each  annual  anniversary
thereof and such amount  shall be deemed to be earned in full by the Agent as of
such Closing Date or annual anniversary thereof, as applicable.

      7.6.  Payment of Certain Expenses During Construction Period.

      During the  Construction  Period,  Lessee shall, in its capacity as Lessee
under the Lease and as Construction Agent pursuant to the Agency Agreement,  pay
the Transaction  Expenses and other fees and expenses referenced in Section 7.1,
7.3(a), 7.3(b), 7.3(d) and 7.5 with the proceeds of one or more Advances made in
accordance with the provisions of the Operative Agreements and upon satisfaction
or express waiver of the conditions applicable to such Advance, and such amounts
shall be added to the Property Cost respecting the Property.

                   SECTION 8. OTHER COVENANTS AND AGREEMENTS.

      8.1.  Cooperation with the Construction Agent or the Lessee.

      The Primary  Financing  Parties,  the Lessor and the Agent  shall,  at the
expense of and to the extent reasonably  requested by the Construction  Agent or
the Lessee (but without assuming  additional  liabilities on account thereof and
only to the extent such is  acceptable  to the Primary  Financing  Parties,  the
Lessor  and/or  the  Agent,  as  applicable,  in their  reasonable  discretion),
cooperate  with the  Construction  Agent or the  Lessee in  connection  with the
Construction Agent or the Lessee satisfying its covenant  obligations  contained
in the Operative  Agreements  including without  limitation at any time and from
time to  time,  promptly  and duly  executing  and  delivering  any and all such
further  instruments,  documents  and  financing  statements  (and  continuation
statements related thereto).

                                       29
<PAGE>

      8.2.  Covenants of the Lessor.

      The Lessor hereby agrees that so long as this Agreement is in effect:

            (a) The Lessor  will not create or permit to exist at any time,  and
      it 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;

            (b) [Reserved];

            (c) The Lessor shall not (i) commence any case,  proceeding or other
      action under any existing or future law of any  jurisdiction,  domestic or
      foreign, relating to bankruptcy, insolvency, reorganization,  arrangement,
      winding-up,  liquidation,  dissolution,  composition  or other relief with
      respect  to it or its  debts,  or (ii)  seek  appointment  of a  receiver,
      trustee,  custodian or other similar  official for all or any  substantial
      benefit of the creditors of the Lessor;  and the Lessor shall not take any
      action in furtherance  of, or indicating  its consent to,  approval of, or
      acquiescence in, any of the acts set forth in this paragraph;

            (d) The Lessor shall give prompt written  notice to the Lessee,  the
      Primary Financing Parties and the Agent if the Lessor's principal 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 One First  Union  Center,  301 South
      College Street, Charlotte,  Mecklenburg County, North Carolina 28288-5604;
      and

            (e) The Lessor  shall take or refrain  from taking such  actions and
      grant  or  refrain  from  granting  such  approvals  with  respect  to the
      Operative  Agreements  and/or  relating  to the  Property  in each case as
      directed  in  writing  by the Agent or, in  connection  with  Section  8.5
      hereof, the Lessee; provided,  however, that notwithstanding the foregoing
      provisions of this subparagraph (e) the Lessor,  the Agent and the Primary
      Financing  Parties each  acknowledge,  covenant and agree that neither the
      Lessor nor the Agent shall act or refrain from acting except in accordance
      with the provisions of the  Intercreditor  Agreement;  provided,  further,
      that each of the  Agent,  the  Primary  Financing  Parties  and the Lessee
      acknowledges, covenants and agrees that it will not instruct the Lessor to
      take any action in violation of the terms of any Operative Agreement.

      8.3.  Lessee Covenants, Consent and Acknowledgment.

            (a) The Lessee  acknowledges and agrees that the Borrower,  pursuant
      to the terms and  conditions  of the Security  Agreement  and the Mortgage
      Instruments,  shall create Liens  respecting  the Property,  Equipment and
      Improvements  described  therein in favor of the Agent.  The Lessee hereby
      irrevocably  consents to the creation,  perfection and maintenance of such
      Liens. The Lessee shall, to the extent reasonably  requested by any of the
      other parties hereto,  cooperate with the other parties in connection with
      their

                                       30
<PAGE>

      covenants herein or in the other Operative  Agreements and shall from time
      to time duly  execute and  deliver  any and all such  future  instruments,
      documents and financing  statements (and continuation  statements  related
      thereto) as any other party hereto may reasonably request.

            (b) The Lessor hereby  instructs  the Lessee,  and the Lessee hereby
      acknowledges  and  agrees,  that  until such time as the Notes are paid in
      full and the Liens  evidenced by the Security  Agreement  and the Mortgage
      Instruments  have been released (i) any and all Rent  (excluding  Excepted
      Payments)  and any and all other  amounts of any kind or type under any of
      the  Operative  Agreements  due and owing or payable  to any Person  shall
      instead be paid directly to the Agent (excluding  Excepted Payments) or as
      the Agent may direct from time to time for allocation and  distribution in
      accordance  with the procedures set forth in Section 8.7 hereof,  (ii) all
      rights of the Lessor  under the Lease shall be  exercised by the Agent and
      (iii)  the  Lessee  shall  cause  all  notices,  certificates,   financial
      statements,  communications and other information which are delivered,  or
      are required to be delivered, to the Lessor, to be delivered to the Agent,
      as Lessor's agent.

            (c) The Lessee  shall not consent to any  amendment,  supplement  or
      other  modification of the terms or provisions of any Operative  Agreement
      to which it is a party  except in  accordance  with  Section  12.4 of this
      Agreement.

            (d) The Lessee hereby  covenants and agrees that (except for amounts
      payable as Basic Rent,  payments made in connection with the  satisfaction
      or  removal  of  Lessor  Liens,  certain  Transaction  Expenses  funded by
      Advances pursuant to the Operative Agreements,  principal and interest due
      and owing under the Notes or the Note  Purchase  Agreement,  the Tranche B
      Credit Agreement or the Cash Collateral Credit  Agreement,  any Make-Whole
      Amount, prepayment premiums and other amounts payable under the Notes, the
      Note  Purchase  Agreement,  the  Tranche  B Credit  Agreement  or the Cash
      Collateral  Credit  Agreement that arise solely as a result of an Event of
      Default  attributable  to the Borrower,  amounts  expressly  excluded from
      indemnification  pursuant to Sections 11.1, 11.2 and 11.7, amounts due and
      owing or  otherwise  payable or incurred  as a result of or in  connection
      with  any  voluntary  assignment,  transfer  or  sale  of a  participation
      interest  by Lessor or any  Tranche A Note  Purchaser  (other  than as set
      forth  in  Section  5.14 of this  Agreement  or  Section  13.2 of the Note
      Purchase  Agreement),  Tranche B Lender or Cash Collateral  Lender,  legal
      expenses of any individual  Tranche A Note Purchaser,  Tranche B Lender or
      Cash Collateral  Lender,  costs incurred by any individual  Tranche A Note
      Purchaser,  Tranche B Lender or Cash  Collateral  Lender in determining to
      participate in the transaction  contemplated  by the Operative  Agreements
      (including costs and expenses of reviewing the Operative Agreements and/or
      private placement  memorandum),  and payment  obligations of one Financing
      Party to  another  Financing  Party  other than those set forth in Section
      13.2 of the Note Purchase Agreement) any and all payment obligations owing
      from time to time  under the  Operative  Agreements  by any  Person to the
      Agent, the Lessor,  the Escrow Agent,  any Primary  Financing Party or any
      other Person shall (without  further  action) be deemed to be Supplemental
      Rent  obligations  payable by the Lessee;  provided,  however,  during the
      period prior to the Completion Date, the  Construction  Agent may submit a
      Requisition

                                       31
<PAGE>

      for  such   Supplemental  Rent  obligations  and  such  Supplemental  Rent
      obligations  shall be payable by the Construction  Agent with the proceeds
      of one or more  Advances  made in  accordance  with the  provisions of the
      Operative  Agreements  and upon  satisfaction  or  express  waiver  of the
      conditions  applicable to such Advance, and such amounts shall be added to
      the Property Cost respecting the Property; provided, further, in the event
      the  Construction  Agent  shall fail to comply with the  requirements  set
      forth in the  immediately  preceding  proviso  or shall  fail to  submit a
      Requisition for such Supplemental Rent obligations, the Construction Agent
      shall pay such  Supplemental  Rent  obligation to such Person from its own
      funds.  Without  limitation,  such  Supplemental  Rent  obligations of the
      Lessee shall include (except to the extent specifically  excluded pursuant
      to the first sentence of this Section  8.3(d)) any amounts  payable by the
      Lessor   pursuant  to  Section  13.2  of  the  Note  Purchase   Agreement,
      administrative  fees, breakage costs,  indemnities,  other reasonable fees
      and transaction expenses incurred by the parties hereto in connection with
      the transactions contemplated by the Operative Agreements.

            (e) The Lessee hereby  covenants and agrees to cause an Appraisal or
      reappraisal  (in form and substance  reasonably  satisfactory to the Agent
      and from an appraiser  selected by the Agent) to be issued  respecting the
      Property as requested by the Agent from time to time (i) at each and every
      time as such shall be  required  to satisfy  any  regulatory  requirements
      imposed on the Agent,  the Lessor and/or any Primary  Financing  Party and
      (ii)  after the  occurrence  of a Lease  Event of  Default,  the costs and
      expenses of which  shall be deemed to be a  Supplemental  Rent  obligation
      payable in accordance with the provisions of Section 8.3(d).

            (f) [Reserved].

            (g) At any time  the  Lessor  or the  Agent is  entitled  under  the
      Operative  Agreements  to  possession  of the  Property  or any  component
      thereof,  each of the  Construction  Agent and the Lessee hereby covenants
      and agrees, at its own cost and expense, to assemble and make the Property
      or such component, as applicable, available to the Agent (on behalf of the
      Lessor).

            (h) The Lessee hereby covenants and agrees that Equipment respecting
      the Property shall at no time constitute in excess of ten percent (10%) of
      the aggregate  Advances  respecting the Property funded at such time under
      the Operative Agreements.

            (i) [Reserved].

            (j) The Lessee hereby covenants and agrees that it shall give prompt
      notice to the Agent if the Lessee's  principal  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 the locations set forth in Section 6.2(i) or if it shall change
      its name.

            (k) [Reserved].

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<PAGE>

            (l) [Reserved].

            (m) The Lessee  hereby  covenants  and agrees that the rights of the
      Lessee under this  Agreement  and the Lease shall not impair or in any way
      diminish the  obligations of the  Construction  Agent and/or the rights of
      the Lessor under the Agency Agreement.

            (n) [Reserved].

            (o)  Lessee  shall  promptly  notify  the  Agent  and  each  Primary
      Financing Party, or cause the Agent and each Primary Financing Party to be
      promptly  notified,  upon a  Responsible  Officer of such  Lessee  gaining
      knowledge of the  occurrence  of any Default or Event of Default  which is
      continuing at such time and describing the same in reasonable  detail with
      a  description  of the  action the  Lessee or any  Affiliate  has taken or
      proposes to take with respect thereto.  In any event, such notice shall be
      provided to the Agent within five (5) days of when a  Responsible  Officer
      of Lessee gains such knowledge.

            (p) [Reserved].

            (q) [Reserved].

            (r) [Reserved].

            (s) Promptly after obtaining any required architectural approvals by
      any  business  park  or  any  other   applicable   entity  with  oversight
      responsibility  for the applicable  Improvements,  the Construction  Agent
      shall deliver to the Agent copies of the same.

            (t) Except as otherwise  contemplated  by the Operative  Agreements,
      the  Construction  Agent shall not use the proceeds of any Advance for any
      purpose  other  than  the  acquisition  or  lease  of  the  Property,  the
      acquisition,  installation  and  testing  of the  Equipment,  the  repair,
      replacement,  renovation  and/or  construction  of  Improvements  and  the
      payment of interest, Transaction Expenses and the fees, expenses and other
      disbursements  by the Lessee or the  Lessor  referenced  in any  Operative
      Agreement, and other Project Costs, in each case which accrue prior to the
      Rent Commencement Date with respect to the Property.

            (u) The Plans and  Specifications  for the Property will be prepared
      prior  to  the   commencement  of  construction  in  accordance  with  all
      applicable Legal Requirements (including without limitation all applicable
      Environmental Laws and building,  planning, zoning and fire codes), except
      to the extent  the  failure to comply  therewith,  individually  or in the
      aggregate,  shall not have and could not  reasonably be expected to have a
      Material  Adverse  Effect.  Upon  completion of the  Improvements  for the
      Property in accordance with the applicable Plans and Specifications,  such
      Improvements  will be within any building  restriction  lines and will not
      encroach in any manner onto any

                                       33
<PAGE>

      adjoining land (except as permitted by express  written  easements,  which
      have been approved by the Agent).

            (v) The  Property  shall be  improved  in all  material  respects in
      accordance  with the  applicable  Plans and  Specifications  in a good and
      workmanlike manner and shall be operational.

            (w) The Lessee shall  deliver (or cause to be  delivered)  an annual
      certificate  evidencing  the  insurance  required to be  maintained by the
      Lessee under Article XIV of the Lease on the date such  certificate is due
      thereunder.

            (x) The  Property  shall  comply  with  all  Insurance  Requirements
      (unless the failure to comply with such  Insurance  Requirements  will not
      result in a denial of coverage under any insurance  policy  required to be
      maintained  hereunder  or under any  other  Operative  Agreement)  and all
      standards of Lessee with respect to similar properties owned by Lessee.

            (y) The Property shall comply with all Legal Requirements (including
      without  limitation all zoning and land use laws and Environmental  Laws),
      except to the extent that failure to comply therewith,  individually or in
      the aggregate, shall not have and could not reasonably be expected to have
      a Material  Adverse  Effect;  provided,  that  Lessee may contest any such
      Legal Requirements in accordance with Section 13.1 of the Lease.

            (z)  All  utility   services  and   facilities   necessary  for  the
      construction  and operation of the  Improvements  and the installation and
      operation  of the  Equipment  regarding  the Property  (including  without
      limitation  gas,  electrical,  water and sewage  services and  facilities)
      shall be available at the applicable Land or shall be constructed prior to
      the Completion Date for the Property.

            (aa) The acquisition,  installation and testing of the Equipment (if
      any) and construction of the Improvements (if any) shall be performed in a
      good  and  workmanlike  manner,   substantially  in  accordance  with  the
      applicable Plans and Specifications.

            (bb) Except to the extent  contemplated in Section 8.13 with respect
      to the Excess Land,  upon  recordation of the Mortgage  Instruments in the
      real estate recording  office in the applicable  Approved State identified
      by the  Construction  Agent or the  Lessee,  (x) the Lien  created  by the
      Tranche B Mortgage  Instruments  in the real  property  described  therein
      shall be a perfected first priority mortgage Lien on the Property in favor
      of the Agent,  for the  benefit of the  Tranche B Lenders and (y) the Lien
      created  by the  Tranche  A  Mortgage  Instruments  in the  real  property
      described  therein  shall be a perfected  second  priority  mortgage  Lien
      (subject to the Lien created by the Tranche B Mortgage Instruments) on the
      Property  in favor of the Agent,  for the  benefit  of the  Tranche A Note
      Purchasers.  To the extent that the  security  interests in the portion of
      the Collateral  comprised of personal  property can be perfected by filing
      in the  filing  offices in the  applicable  Approved  States or  elsewhere
      identified  by the  Construction  Agent or the Lessee,  upon filing of the
      Primary Financing Party Financing  Statements in such

                                       34
<PAGE>

      filing offices,  the security  interests created by the Security Agreement
      shall be perfected  first  priority  security  interests in such  personal
      property  in favor of the Agent,  for the  ratable  benefit of the Secured
      Parties.

            (cc) Except to the extent contemplated under Section 8.13 respecting
      the Excess Land, upon recordation of the memorandum of the Lease Agreement
      (or,  a short  form  lease)  in the real  estate  recording  office in the
      applicable  Approved  State  identified by the  Construction  Agent or the
      Lessee,  the Lien  created  by the Lease  Agreement  in the real  property
      described therein shall be a perfected  mortgage Lien (subject only to the
      Lien of the Mortgage  Instruments  and, to the extent  covering  such real
      property,  the Security  Agreement) on the Property in favor of the Agent,
      for the benefit of the Secured  Parties.  To the extent that the  security
      interests  in the portion of the Property  comprised of personal  property
      can be  perfected  by the filing in the filing  offices in the  applicable
      Approved State or elsewhere  identified by the  Construction  Agent or the
      Lessee,  upon  filing of the Lessor  Financing  Statements  in such filing
      offices,  the security  interests  created by the Lease Agreement shall be
      perfected  security  interests  (subject  only to the Lien of the Security
      Agreement and, to the extent covering such personal property, the Mortgage
      Instruments)  in such  personal  property  in favor of the  Lessor,  which
      rights  pursuant to the Lessor  Financing  Statements  are assigned to the
      Agent, for the benefit of the Secured Parties.

            (dd)  Lessee  shall  not  incur or  suffer  to exist any Lien on the
      Property  other than the Liens  created  and/or  evidenced by the Security
      Documents, Permitted Liens and as otherwise permitted under Sections 8.5.

            (ee) Lessee shall  deliver a written  notice to Agent and the Lessor
      promptly  upon  Lessee's   receiving  notice  or  actual  knowledge  of  a
      Responsible Officer of Lessee of the taking by a Governmental Authority of
      an action which would  constitute a  Condemnation,  receiving  notice of a
      material  violation  of  any  Legal  Requirement  on or at  the  Property,
      including any Environmental Law, under which liability may be imposed upon
      Lessor,  Agent, any Primary Financing Party or Lessee, or receiving notice
      or actual  knowledge of  modification  of the Property (other than routine
      construction progress, fire, life-safety and similar inspections) required
      to remove or cure any violation of Lessor under which  criminal  liability
      may be imposed upon Agent, any Primary Financing Party or Lessee.

            (ff) Lessee shall not, nor shall it permit anyone  authorized to act
      on its behalf to, take any action which would  subject the  Property,  the
      Operative  Agreements,  the issuance or sale of the Notes, or any security
      or lease the offering of which,  for purposes of the Securities Act or any
      state  securities laws, would be deemed to be part of the same offering of
      the aforementioned items, to the registration requirements of Section 5 of
      the Securities Act or any state securities laws.

            (gg) Not less than two (2) Business Days prior to any  prepayment of
      any Tranche A Note,  the Lessee (on behalf of the Lessor) shall deliver to
      each  affected  holder

                                       35
<PAGE>

      of one or more  Tranche A Notes a  certificate  of a  Responsible  Officer
      specifying the calculation of such  Make-Whole  Amount as of the specified
      prepayment date.

            (hh)  Lessee  will  promptly  (but in no  event  more  than ten (10)
      Business Days after such event or  occurrence)  provide  written notice to
      the  Agent if it shall  change  its legal  name or use,  or  transact  any
      business under, any trade name other than its legal name.

            (ii) The Lessee  agrees  that in the event  neither  S&P nor Moody's
      provides a rating of the Lessee,  the Lessee shall cause one of the Rating
      Agencies to issue and maintain at all times a "private  letter" rating for
      the  Lessee,  and to  submit  to such  Rating  Agency  the  materials  and
      information  necessary  for,  and a request  for, a new  "private  letter"
      rating  every six (6)  months  thereafter.  The Lessee  further  agrees to
      provide  each of the  Tranche A Note  Purchasers  a copy of such  "private
      letter" rating and will permit and allow such Tranche A Note Purchasers to
      discuss such rating with the Rating Agency.

            (jj) The Construction  Agent shall deliver (i) evidence of builder's
      risk insurance in compliance  with the  requirements  set forth in Section
      2.6(f) of the Agency  Agreement  and (ii) a  certificate  of the Insurance
      Consultant  on or  before  the date of the  initial  Construction  Advance
      respecting  the  Property  and every three (3) year  anniversary  thereof,
      certifying  as  to  compliance   by  the   Construction   Agent  with  the
      requirements  of  Article  XIV of the  Lease  and  otherwise  in form  and
      substance reasonably satisfactory to the Agent.

      8.3A. Affirmative Covenants.

      The Lessee  agrees  that,  so long as this  Agreement  is in effect or any
other  amount  is owing  under  this  Agreement  or under  any  other  Operative
Agreement to any Financing Party, the Lessee will:

      8.3A.1. Financial Statements.

      Maintain a standard  system of  accounting in  accordance  with GAAP,  and
furnish or cause to be furnished to the Agent and each Primary Financing Party:

            (a) Form 10-K.  As soon as  available,  but in any event  within 105
      days after the end of each fiscal year of the Lessee, a copy of the annual
      audited   Consolidated   financial   statements  of  the  Lessee  and  its
      Consolidated  Subsidiaries  prepared in conformity  with GAAP and as filed
      with the SEC in the  Lessee's  Annual  Report on Form 10-K for such fiscal
      year. Such financial  statements shall be certified by Accountants,  which
      certification  shall (i) state that the examination by such Accountants in
      connection with such financial statements has been made in accordance with
      generally accepted auditing standards and (ii) include the opinion of such
      Accountants   that  such  financial   statements  have  been  prepared  in
      accordance with GAAP.

                                       36
<PAGE>

            (b) Form 10-Q. As soon as available, but in any event within 50 days
      after the end of each  quarter  (except  the last  quarter) of each fiscal
      year of the Lessee, copies of unaudited  Consolidated financial statements
      of the Lessee and its  Consolidated  Subsidiaries as filed with the SEC in
      the Lessee's Quarterly Report on Form 10-Q for such quarter.

            (c)  Ratings.  As soon as  available,  but in any event  within  two
      Business  Days after any  downgrade or withdrawal by either S&P or Moody's
      of the Debt Rating of the Lessee, written notice to the Agent thereof, and
      of the  effective  date  thereof,  in each case  certified  by a Financial
      Officer of the Lessee.

            (d) Compliance Certificate. The financial statements to be delivered
      pursuant  to  paragraphs  (a) and (b)  above  shall  be  accompanied  by a
      certificate of a Financial  Officer of the Lessee (i)  certifying  that no
      Lease Default or Lease Event of Default has occurred and was continuing as
      of the end of the fiscal period covered by such statements,  or, if such a
      Lease Default or Lease Event of Default has occurred and was continuing at
      the end of such fiscal period, the action the Lessee proposes to take with
      respect  thereto  and  (ii)  setting  forth  the  Funded  Indebtedness  to
      Capitalization  Ratio as at the end of such  fiscal  period  and the Fixed
      Charge  Coverage Ratio for the period of four fiscal  quarters then ended,
      including computations thereof in reasonable detail.

            (e) Other Information.  Such other information  regarding the Lessee
      as any Primary  Financing Party may, through the Agent,  reasonably and in
      good faith request in writing.

      8.3A.2 Certificates; Other Information.

      Furnish to the Agent and each Primary  Financing Party promptly upon their
becoming  available,  copies  of all (i)  10-K,  10-Q,  8-K or  other  material,
regular,  periodic or special  reports,  schedules and other documents which the
Lessee or any of its  Subsidiaries may now or hereafter be required to file with
or deliver to any securities exchange or the SEC, (ii) information regarding the
Lessee that is necessary to meet the  requirements  of Rule 144A(d)(4) to enable
resales of the  Tranche A Notes to be made under  Rule 144A,  upon  request of a
Tranche A Note  Purchaser,  in the event that the Lessee is no longer subject to
the periodic reporting requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934,  as amended,  and (iii)  material news releases and annual
reports relating to the Lessee or any of its Subsidiaries.

      8.3A.3 Legal Existence.

      Except as permitted  in Section  8.3B.1,  maintain,  and cause each of its
Subsidiaries  (other  than  Subsidiaries  that  do  not  constitute  a  Material
Subsidiary  Group) so to maintain,  its legal  existence in good standing in the
jurisdiction of its incorporation or formation and in each other jurisdiction in
which the  failure  so to do could  reasonably  be  expected  to have a Material
Adverse Effect.

                                       37
<PAGE>

      8.3A.4 Taxes.

      Pay and discharge when due, and cause each of its  Subsidiaries  so to do,
all Taxes,  assessments and governmental charges, license fees and levies which,
if unpaid,  could  reasonably  be  expected to have a Material  Adverse  Effect,
unless and to the extent only that such  Taxes,  assessments,  charges,  license
fees and levies shall be contested in good faith and by appropriate  proceedings
diligently  conducted by the Lessee or such  Subsidiary  and  provided  that the
Lessee shall give the Agent prompt  notice of such contest and that such reserve
or other  appropriate  provision  as shall be  required  by the  Accountants  in
accordance with GAAP shall have been made therefor.

      8.3A.5 Observance of Legal Requirements.

      Observe and comply in all respects,  and cause each of its Subsidiaries so
to do, with all Legal Requirements of all Governmental Authorities, which now or
at any time  hereafter  may be  applicable  to it, a  violation  of which  could
reasonably be expected to have a Material Adverse Effect, except such thereof as
shall be  contested  in good  faith and by  appropriate  proceedings  diligently
conducted by it,  provided that the Lessee shall give the Agent prompt notice of
such  contest and that such reserve or other  appropriate  provision as shall be
required  by the  Accountants  in  accordance  with  GAAP  shall  have been made
therefor.

      8.3A.6 Inspection of Property; Books and Records; Discussions.

      Keep proper  books of record and  account in which full,  true and correct
entries in conformity with GAAP and all Legal  Requirements shall be made of all
dealings and  transactions in relation to its business and activities and, after
the  occurrence and during the  continuance of a Lease Event of Default,  permit
representatives  of the Agent and any Primary Financing Party, upon at least two
Business Days' prior written notice, to visit its corporate headquarters, and to
discuss the business,  operations,  prospects,  licenses, property and financial
condition of the Lessee and its Subsidiaries with the officers thereof.

      8.3B Negative Covenants.

      The Lessee  agrees  that,  so long as this  Agreement  is in effect or any
amount is owing by the Lessee under this Agreement or under any other  Operative
Agreement to any Financing Party, it will not:

      8.3B.1 Merger or Consolidation, Etc:

            (a)  Consolidate  with,  be  acquired  by, or merge into or with any
      Person,  or convey or otherwise  transfer all or substantially  all of its
      property except that the Lessee may consolidate with or merge with another
      Person,  or convey or transfer all or substantially all of its property to
      another  Person,  provided  that (A) the Lessee shall have given the Agent
      prior notice thereof,  (B) the Person formed by such consolidation or into
      which the Lessee is merged,  or the Person which acquires by conveyance or
      transfer all or substantially  all of such property,  or any Person owning
      beneficially 100 percent of the

                                       38
<PAGE>

      Voting Stock of such Person (in each case, the  "Successor  Person") shall
      expressly assume by an instrument  executed and delivered to the Agent, in
      form  satisfactory  to  the  Agent,  the  obligations  of the  Lessee  and
      Guarantor  under the Operative  Agreements,  (C) no Lease Default or Lease
      Event of Default  shall exist before or after giving effect  thereto,  and
      (D)  the  Agent  shall  have   received  such   documents,   opinions  and
      certificates  as the Agent shall have  reasonably  requested in connection
      therewith.

            (b) Upon any  consolidation or merger, or any conveyance or transfer
      of all or  substantially  all of the property of the Lessee in  accordance
      with Section  8.3B.1(a),  the  Successor  Person shall  succeed to, and be
      substituted  for, and may exercise  every right and power of, and shall be
      subject to all  obligations  and  liabilities  of,  the Lessee  under this
      Agreement with the same effect as if such Successor  Person had been named
      as the Lessee herein. In the event of any such conveyance or transfer, the
      Lessee,  as  the  predecessor  Person,  may  be  dissolved,  wound  up  or
      liquidated  at any time  thereafter,  provided  that  until  such time the
      Lessee,  as such predecessor  Person,  shall retain all of its obligations
      and liabilities  under this  Agreement,  except for the obligations of the
      Lessee under Sections 8.3, 8.3A and 8.3B.

      8.3B.2 Subsidiary Indebtedness.

            (a) Permit any  Subsidiary  to  create,  incur,  assume or permit to
      exist any Indebtedness  described in clause (a), (b), (c), (e), (f) or (g)
      of the definition of such term, other than:

                  (i) any such Indebtedness  existing on the date hereof and set
            forth in Schedule 8.3B.2 and extensions,  renewals and  replacements
            of any  such  Indebtedness  that  do not  increase  the  outstanding
            principal amount thereof;

                  (ii)  any  such  Indebtedness  to  the  Lessee  or  any  other
            Subsidiary of Lessee; and

                  (iii) any such  Indebtedness  of the type  described in clause
            (f) of the definition of such term to the extent the Liens described
            in such clause (f) secure liabilities of another  Subsidiary,  which
            liabilities are permitted under this Section 8.3B.2; and

                  (iv) other such Indebtedness; provided that the sum of (A) the
            aggregate  outstanding principal amount of such Indebtedness and (B)
            the  aggregate  outstanding  principal  amount  of  the  obligations
            secured by Liens permitted  under Section  8.3B.3(i) does not at any
            time exceed 10% of Consolidated Tangible Net Worth.

            (b) Permit any  Subsidiary  of Lessee to enter into,  assume or be a
      party to any  Guarantee  of  Indebtedness  of the Lessee  (other  than any
      Guarantee in  connection  with the Lessee  Credit  Agreement)  unless such
      Subsidiary  shall also guarantee the  obligations of the Lessee  hereunder
      and under the other Operative Agreements.

                                       39
<PAGE>

      8.3B.3 Liens, Etc.

      Create,  assume,  incur or  suffer to exist or permit  any  Subsidiary  to
create,  assume, incur or suffer to exist, any Lien on any property now owned or
hereafter  acquired by it, or assign,  or permit any  Subsidiary to assign,  any
income or right with respect thereto, other than:

            (a) respecting the Property,  Permitted  Liens and Lessor Liens and,
      respecting any other property, Non-prohibited Encumbrances;

            (b) any Lien on any property of the Lessee or any  Subsidiary of the
      Lessee existing on the date hereof and set forth in Schedule  8.3B.3,  and
      any other  Lien on any  property  of the Lessee or any  Subsidiary  of the
      Lessee  existing  on the date hereof  that was  incurred  in the  ordinary
      course of business and does not secure (i)  Indebtedness  to Persons other
      than the Lessee or any  Subsidiary of the Lessee of the type  described in
      clauses (a), (b) or (g) of the definition of such term or (ii)  Guarantees
      in respect of any such Indebtedness;  provided that (i) no such Lien shall
      apply to any other  property of the Lessee or any Subsidiary of the Lessee
      and (ii) any such  Lien  shall  secure  only  those  obligations  which it
      secures on the date hereof;

            (c) any Lien  existing  on any  property  prior  to the  acquisition
      thereof  by the  Lessee  or any  Subsidiary  of the  Lessee,  and any Lien
      existing on any  property of any Person  (other than a  Subsidiary  of the
      Lessee)  that  is  merged  into  or  consolidated  with  the  Lessee  or a
      Subsidiary of the Lessee,  or that  otherwise  becomes a Subsidiary of the
      Lessee,  prior to the time such  Person is so  merged or  consolidated  or
      becomes a  Subsidiary  of the Lessee;  provided  that (i) such Lien is not
      created in contemplation of such  acquisition,  merger or consolidation or
      such Person becoming a Subsidiary of the Lessee,  as the case may be, (ii)
      such  Lien  shall not apply to any  other  property  of the  Lessee or any
      Subsidiary  of the  Lessee and (iii)  such Lien  shall  secure  only those
      obligations  which it secures on the date of such  acquisition,  merger or
      consolidation  or the date such Person becomes a Subsidiary of the Lessee,
      as the case may be;

            (d)  Liens on fixed  or  capital  assets  acquired,  constructed  or
      improved  by the  Lessee or any  Subsidiary  of the  Lessee  securing  the
      purchase price of such fixed or capital assets or Indebtedness  (including
      Capital Lease  Obligations)  of the Lessee or any Subsidiary of the Lessee
      incurred and used to finance the acquisition,  construction or improvement
      of such  fixed or  capital  assets;  provided  that (i) such Liens and the
      Indebtedness  secured  thereby  are  incurred  prior to or within one year
      after  such  acquisition  or  the  completion  of  such   construction  or
      improvement,  and (ii) such Liens shall not apply to any other property of
      the Lessee or any Subsidiary of the Lessee;

            (e) Liens arising in connection  with Capital Lease  Obligations  of
      Subsidiaries of the Lessee not prohibited  under Section 8.3B.2;  provided
      that no such Lien  shall  extend to or cover any  property  other than the
      property subject to such Capital Lease Obligations;

                                       40
<PAGE>

            (f) Liens on  property  of any  Subsidiary  of the  Lessee  securing
      obligations owing to the Lessee or any other Subsidiary of the Lessee;

            (g)  Liens  securing  any   extension,   renewal  or  refunding  (or
      successive extensions,  renewals or refundings) in whole or in part of any
      obligations  secured by Liens referred to in the foregoing  paragraphs (a)
      through (f); provided that the principal amount of the obligations secured
      by any such  Lien  shall  not  exceed  the  principal  amount  outstanding
      immediately  prior to such extension,  renewal or refunding,  and that any
      such Lien shall be limited to the  property  which,  immediately  prior to
      such extension, renewal or refunding, secured such obligations;

            (h) Liens constituting Indebtedness of the type described in Section
      8.3B.2(a)(iii); and

            (i) Liens not expressly  permitted by clauses (a) through (h) above;
      provided that the sum of (i) the aggregate outstanding principal amount of
      the  Indebtedness  permitted by clause  (a)(iv) of Section 8.3B.2 and (ii)
      the aggregate principal amount of outstanding obligations secured by Liens
      (which amount,  in the case of any sale of accounts  receivable,  shall be
      deemed to equal the  lesser of the  aggregate  uncollected  balance of the
      accounts  so sold and the  maximum  claim of the  purchaser  with  respect
      thereto)  permitted  by this clause (i) does not at any time exceed 10% of
      Consolidated Tangible Net Worth.

      8.3B.4 Change in Nature of Business.

      Make, or permit any of its Subsidiaries  (other than  Subsidiaries that do
not constitute a Material  Subsidiary Group) to make, any material change in the
nature of its business as carried out at the date hereof,  other than reasonable
extensions thereof.

      8.3B.5 Use of Proceeds.

            (a) Use the  proceeds of the  Financing  other than for the purposes
      set forth in this Agreement and the other Operative  Agreements or (b) use
      any part of the proceeds of the Financing,  directly or indirectly,  for a
      purpose which  violates the  provisions of Regulations U or X of the Board
      of Governors of the Federal Reserve System, as amended.

      8.3B.6 Fixed Charge Coverage Ratio.

      Permit the Fixed Charge Coverage Ratio for any period of four  consecutive
fiscal quarters of the Lessee,  in each case taken as one accounting  period, to
be less than 1.80 to 1.00.

      8.3B.7 Funded Indebtedness to Capitalization Ratio.

      Permit the Funded Indebtedness to Capitalization Ratio, as of the last day
of each fiscal quarter of the Lessee, to be greater than 0.58 to 1.0.

                                       41
<PAGE>

      8.4.  Sharing of Certain Payments.

      Except for Excepted  Payments,  the parties hereto  acknowledge  and agree
that all  payments  due and owing by the Lessee to the Lessor under the Lease or
any of the other  Operative  Agreements  shall be made by the Lessee directly to
the Agent as more particularly  provided in Section 8.3 hereof.  The Lessor, the
Agent,  the Primary  Financing  Parties and the Lessee  acknowledge the terms of
Section 8.7 of this  Agreement  regarding  the  allocation of payments and other
amounts made or received  from time to time under the Operative  Agreements  and
agree that all such  payments  and  amounts are to be  allocated  as provided in
Section 8.7 of this Agreement.

      8.5.  Grant of Easements, etc.

      The Agent, the Primary Financing Parties and the Lessor hereby agree that,
so long as no Event of Default shall have occurred and be continuing,  and until
such time as the Agent gives  instructions  to the  contrary to the Lessor after
the occurrence and continuance of such Event of Default,  the Lessor shall, with
the prior  consent of the Agent not to be  unreasonably  withheld,  from time to
time  at  the  request  of the  Lessee,  in  connection  with  the  transactions
contemplated  by  the  Agency  Agreement,  the  Lease  or  the  other  Operative
Agreements,  (i) grant  easements and other rights with respect to the Property,
(ii) release existing easements or other rights which are for the benefit of the
Property,  (iii) execute and deliver to any Person any instrument appropriate to
confirm or effect  such  grants or  releases,  (iv)  execute  and deliver to any
Person such other  documents or materials in  connection  with the  acquisition,
development,  construction,  testing,  demolition  or operation of the Property,
including  without  limitation  reciprocal  easement  agreements,   construction
contracts,  operating  agreements,  development  agreements,  plats,  replats or
subdivision documents,  and (v) participate and cooperate in the subdivision and
sale of the Excess Land in accordance with Section 8.13; provided,  that each of
the  agreements  referred to in this  Section 8.5 shall be of the type  normally
executed by the Lessee in the  ordinary  course of its  business and shall be on
commercially reasonable terms so as not to diminish the value of the Property in
any  material  respect  (except in the case of the sale of the  Excess  Land) or
otherwise have a Material Adverse Effect.

      8.6.  Appointment  of the Agent by the Primary  Financing  Parties and the
            Lessor.

            (a) The Secured Parties and the Cash Collateral Lenders  acknowledge
      and agree and direct that the rights and remedies of the  beneficiaries of
      the Lien of the  Security  Documents  shall be  exercised  by the Agent on
      behalf  of  the  Secured  Parties  and  the  Cash  Collateral  Lenders  in
      accordance with the provisions of the Intercreditor  Agreement;  provided,
      in all cases, the Agent shall allocate payments and other amounts received
      in accordance with Section 8.7. The Agent is further  appointed to provide
      notices  under the  Operative  Agreements on behalf of the Lessor and each
      Primary  Financing  Party (as  determined by the Agent,  in its reasonable
      discretion),  to receive notices under the Operative  Agreements on behalf
      of the Lessor and each  Primary  Financing  Party and  (subject to Section
      8.5) to take such other action under the Operative Agreements on behalf of
      the Lessor as the Agent shall determine in its reasonable

                                       42
<PAGE>

      discretion from time to time. The Agent hereby accepts such  appointments.
      Further,  the Agent shall be entitled to take such action on behalf of the
      Lessor as is delegated to the Agent under any Operative Agreement (whether
      express or implied) as may be reasonably incidental thereto.

            (b) Each Primary  Financing Party hereby designates and appoints the
      Agent as the agent of such Primary  Financing  Party under this  Agreement
      and the other Operative Agreements,  and each such Primary Financing Party
      authorizes  the  Agent,  in  such  capacity,   to  execute  the  Operative
      Agreements as agent for and on behalf of such Primary  Financing Party, to
      take  such  action on behalf of such  Primary  Financing  Party  under the
      provisions of this  Agreement and the other  Operative  Agreements  and to
      exercise such powers and perform such duties as are expressly delegated to
      the Agent by the terms of this Agreement and other  Operative  Agreements,
      together  with such other  powers as are  reasonably  incidental  thereto.
      Subject  to the  terms  of the  Operative  Agreements  (including  without
      limitation the  Intercreditor  Agreement),  each of the Primary  Financing
      Parties directs the Agent to exercise such powers, make such decisions and
      otherwise  perform such duties as are delegated to the Agent  hereunder or
      thereunder.  Notwithstanding  any  provision to the contrary  elsewhere in
      this Agreement,  the Agent shall not have any duties or  responsibilities,
      except those  expressly  set forth herein,  or any fiduciary  relationship
      with any Primary  Financing  Party, and no implied  covenants,  functions,
      responsibilities,  duties,  obligations or liabilities  shall be read into
      this Agreement or any other Operative Agreement or otherwise exist against
      the Agent.

            (c) The Agent may execute any of its duties under this Agreement and
      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 shall not be  responsible  for the
      negligence or misconduct of any agents or attorneys-in-fact selected by it
      with reasonable care.

            (d) Neither the Agent nor any of its officers, directors, employees,
      agents, attorneys-in-fact or Affiliates shall be (a) liable for any action
      lawfully  taken or  omitted to be taken by it or such  Person  under or in
      connection  with this Agreement or any other Operative  Agreement  (except
      for its or such Person's own gross negligence,  willful  misconduct or its
      or such Person's failure to use ordinary care in the handling of funds) or
      (b) responsible in any manner to any of the Primary  Financing Parties for
      any  recitals,  statements,  representations  or  warranties  made  by the
      Borrower or the Lessee or any officer thereof  contained in this Agreement
      or any other Operative Agreement or in any certificate,  report, statement
      or other document referred to or provided for in, or received by the Agent
      under  or in  connection  with,  this  Agreement  or any  other  Operative
      Agreement  or  for  the  value,  validity,   effectiveness,   genuineness,
      enforceability  or sufficiency  of this  Agreement or any other  Operative
      Agreement  or for any failure of the Borrower or the Lessee to perform its
      obligations  hereunder  or  thereunder.  The Agent  shall not be under any
      obligation to any Primary Financing Party to ascertain or to inquire as to
      the observance or  performance  of any of the agreements  contained in, or
      conditions  of, this  Agreement or any other  Operative  Agreement,  or to
      inspect the properties, books or records of the Borrower or the Lessee.

                                       43
<PAGE>

            (e) The  Agent  shall  be  entitled  to  rely,  and  shall  be fully
      protected in relying, upon any Note, writing, resolution, notice, consent,
      certificate,  affidavit,  letter,  telecopy,  telex or  teletype  message,
      statement,  order or other document or  conversation  believed by it to be
      genuine and correct  and to have been  signed,  sent or made by the proper
      Person  or  Persons  and upon  advice  and  statements  of  legal  counsel
      (including  without  limitation  counsel to the  Borrower or the  Lessee),
      independent accountants and other experts selected by the Agent. The Agent
      may deem and  treat the  payee of any Note as the  owner  thereof  for all
      purposes  unless a written notice of  assignment,  negotiation or transfer
      thereof  shall have been filed  with the Agent.  The Agent  shall be fully
      justified in failing or refusing to take any action  under this  Agreement
      or any other Operative Agreement unless it shall first receive such advice
      or concurrence of the Majority  Secured  Parties,  the Majority  Tranche A
      Note  Purchasers,  the  Majority  Tranche B  Lenders,  the  Majority  Cash
      Collateral Lenders or all the Primary Financing  Parties,  as the case may
      be, as set forth in the  Intercreditor  Agreement  or any other  Operative
      Agreement  or it shall first be  indemnified  to its  satisfaction  by the
      Primary  Financing Parties 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 shall in all cases be fully protected in acting,  or in
      refraining  from  acting,  under this  Agreement  and the other  Operative
      Agreements in accordance with the Intercreditor  Agreement, and any action
      taken or failure to act  pursuant  thereto  shall be binding  upon all the
      Primary Financing Parties and all future holders of the Notes.

            (f) The Agent shall not be deemed to have knowledge or notice of the
      occurrence  of any Default or Event of Default  hereunder  (other than the
      failure of the Lessee to pay Basic Rent as and when due and the failure of
      the  Lessee  to  deliver,  or  cause  to be  delivered,  the  certificates
      described  in Section  8.3(w) and  Section  8.3(jj))  unless the Agent has
      received written notice from a Primary  Financing Party, the Lessee or the
      Borrower  referring to this Agreement or such other  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  receives  such a
      notice,  the Agent  shall give  notice  thereof to the  Primary  Financing
      Parties and the Lessee.  The Agent shall take such action with  respect to
      such  Default  or Event of  Default  as shall be  reasonably  directed  in
      accordance with the terms of the Intercreditor  Agreement;  provided, that
      unless and until the Agent shall have received such directions,  the Agent
      may (but shall not be  obligated  to) take such  action,  or refrain  from
      taking such action, with respect to such Default or Event of Default as it
      shall  deem  advisable  in the best  interests  of the  Primary  Financing
      Parties;  provided,  further,  the foregoing shall not limit the rights of
      the Majority Secured Parties, the Majority Tranche A Note Purchasers,  the
      Majority  Tranche B Lenders,  the Majority Cash Collateral  Lenders or all
      the Primary  Financing  Parties,  as the case may be, as described in this
      Agreement or the Intercreditor Agreement.

            (g) Each Primary Financing Party expressly acknowledges that neither
      the  Agent  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  hereinafter  taken,  including without
      limitation any review of the affairs of the Borrower or the

                                       44
<PAGE>

      Lessee,  shall be deemed to constitute any  representation  or warranty by
      the Agent to any Primary  Financing  Party.  Each Primary  Financing Party
      represents to the Agent that it has,  independently  and without  reliance
      upon the Agent or any other  Primary  Financing  Party,  and based on such
      documents  and  information  as it has  deemed  appropriate,  made its own
      appraisal of and investigation  into the business,  operations,  property,
      financial and other condition and creditworthiness of the Borrower and the
      Lessee and made its own  decision to purchase  its Tranche A Notes or make
      its Tranche B Loans or Cash Collateral Loans hereunder and enter into this
      Agreement.  Each Primary  Financing  Party also  represents  that it will,
      independently  and without  reliance  upon the Agent or any other  Primary
      Financing  Party,  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
      Agreement  and  the  other   Operative   Agreements,   and  to  make  such
      investigation  as it deems  necessary to inform itself as to the business,
      operations,  property,  financial and other condition and creditworthiness
      of the Borrower and the Lessee. The Agent agrees to provide to the Primary
      Financing   Parties   notices,   reports  and  other  documents  that  are
      customarily provided by the Agent in its capacity as Agent in transactions
      similar to the transactions contemplated hereby and by the other Operative
      Agreements.  Except for  notices,  reports and other  documents  expressly
      required to be  furnished  to the Primary  Financing  Parties by the Agent
      hereunder,  the Agent shall not have any duty or responsibility to provide
      any  Primary   Financing  Party  with  any  credit  or  other  information
      concerning the business,  operations,  property,  condition  (financial or
      otherwise),  prospects or  creditworthiness  of the Borrower or the Lessee
      which may come into the  possession  of the Agent or any of its  officers,
      directors, employees, agents, attorneys-in-fact or Affiliates.

            (h) The Primary  Financing  Parties agree to indemnify the Agent, in
      its capacity as such (to the extent not  reimbursed by the Borrower or the
      Lessee and without  limiting any  obligation of the Borrower or the Lessee
      under and in accordance  with the terms of the Operative  Agreements to do
      so),  ratably  according to their  respective  Commitment  Percentages  in
      effect on the date on which  indemnification  is sought under this Section
      (or,  if   indemnification  is  sought  after  the  date  upon  which  the
      Commitments  shall have  terminated  and the Notes shall have been paid in
      full, ratably in accordance with their Commitment Percentages  immediately
      prior  to  such  date),   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
      Notes) be imposed on,  incurred by or asserted  against any of them in any
      way relating to or arising out of, the Commitments, this Agreement, any of
      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 any of  them  under  or in
      connection with any of the foregoing;  provided, that no Primary Financing
      Party shall be liable for the payment of any portion of such  liabilities,
      obligations,   damages,  penalties,   actions,  judgments,  suits,  costs,
      expenses or  disbursements  resulting  solely from the gross negligence or
      willful  misconduct  of the Agent,  or its failure to use ordinary care in
      the handling of funds.  The  agreements  in this Section shall survive the
      payment of the Notes and all other amounts payable hereunder.

                                       45
<PAGE>

            (i) The Agent and its Affiliates may make loans to, accept  deposits
      from and generally engage in any kind of business with the Borrower or the
      Lessee as  though  the Agent  were not the Agent  hereunder  and under the
      other  Operative  Agreements.  With respect to its Tranche B Loans or Cash
      Collateral  Loans  made or  renewed  by it and any  Tranche B Note or Cash
      Collateral  Note  issued to it, the Agent  shall have the same  rights and
      powers under this  Agreement  and the other  Operative  Agreements  as any
      Tranche B Lender or Cash  Collateral  Lender and may  exercise the same as
      though it were not the Agent, and the terms "Tranche B Lender", "Tranche B
      Lenders",  "Cash Collateral  Lender" and "Cash  Collateral  Lenders" shall
      include the Agent in its individual capacity.

            (j) (i) The Agent may  resign  at any time as the Agent  upon  sixty
            (60) days'  notice to the Primary  Financing  Parties,  the Borrower
            and, so long as no Lease Event of Default shall have occurred and be
            continuing, the Lessee. If the Agent shall resign as the Agent under
            this Agreement, a successor Agent shall be appointed by the Majority
            Tranche A Note Purchasers,  the Majority Cash Collateral Lenders and
            the  Majority  Tranche  B Lenders  which  successor  Agent  shall be
            subject  to the  approval  of, so long as no Lease  Event of Default
            shall have occurred and be continuing, the Lessee, such approval not
            to be  unreasonably  withheld or delayed.  If no successor  Agent is
            appointed  prior to the  effective  date of the  resignation  of the
            resigning  Agent,  the Agent may appoint,  after consulting with the
            Primary Financing Parties and subject to the approval of, so long as
            no Lease Event of Default shall have occurred and be continuing, the
            Lessee, such approval not to be unreasonably  withheld or delayed, a
            successor Agent. Any successor Agent, however appointed,  shall be a
            bank or trust company  incorporated  and doing  business  within the
            United  States of America and having a combined  capital and surplus
            of at least $200,000,000 and having a Debt Rating equal to or higher
            than the Debt Rating of the Lessee on the date of such  appointment,
            if there be such an institution willing,  able and legally qualified
            to perform  the duties of the Agent  hereunder  upon  reasonable  or
            customary  terms. If no successor Agent has accepted  appointment as
            the Agent by the date which is sixty (60) days  following a retiring
            Agent's  notice  of  resignation,  the  retiring  Agent's  notice of
            resignation  shall  nevertheless  thereupon become effective and the
            Primary  Financing  Parties  shall  perform all of the duties of the
            Agent  until  such  time,  if any,  as the  Majority  Tranche A Note
            Purchasers,  the Majority Cash  Collateral  Lenders and the Majority
            Tranche B Lenders appoint a successor  Agent, as provided for above.
            If no successor  Agent shall have been appointed in accordance  with
            the provisions of this Section  8.3(j)(i) on or before the effective
            date of such  resignation,  the Lessee shall pay Rent to such Person
            or Persons and at such location as the parties hereto shall agree at
            such time.  Upon the effective date of such  resignation,  only such
            successor  Agent shall succeed to all the rights,  powers and duties
            of the retiring Agent and the term "Agent" shall mean such successor
            agent and the  retiring  Agent's  rights,  powers and duties in such
            capacity  shall be  terminated.  After any  retiring  Agent  resigns
            hereunder as the Agent,  the provisions of this Section 8.6, Section
            9.5 of the  Tranche  B  Credit  Agreement,  Section  9.5 of the Cash
            Collateral  Credit  Agreement  and Section 15.1 of the Note

                                       46
<PAGE>

            Purchase  Agreement shall inure to such retiring  Agent's benefit as
            to any  actions  taken or omitted to be taken by it while it was the
            Agent under this Agreement.

                  (ii)  The  Agent  may be  removed  (x) by any of the  Majority
            Tranche A Note Purchasers,  the Majority Cash Collateral  Lenders or
            the   Majority   Tranche   B   Lenders   in  the   case  of   fraud,
            misappropriation  of funds or the  commission of illegal acts by the
            Agent or where the  Agent has  failed  to  perform  its  obligations
            hereunder  or under any other  Operative  Agreement  in any material
            respect,  or (y) any time at the  request of any  Primary  Financing
            Party,  but only with the  consent  of the  Majority  Tranche A Note
            Purchasers,  the Majority Cash  Collateral  Lenders and the Majority
            Tranche B Lenders  and so long as no Lease  Event of  Default  shall
            have occurred and be continuing,  the Lessee. Any such removal shall
            be effective upon the acceptance of appointment of a successor Agent
            in accordance  with the  provisions of paragraph (i) of this Section
            8.6(j);  provided,  however,  to the extent the Agent being replaced
            pursuant to clause (x) of this Section  8.6(j)(ii) is also a Tranche
            A Note Purchaser,  a Cash  Collateral  Lender or a Tranche B Lender,
            such Person shall not be permitted  to vote in  connection  with the
            appointment  or approval of a successor  Agent pursuant to paragraph
            (i) of this Section 8.6(j).

            (k) Other than the  exercise of  reasonable  care to assure the safe
      custody of the Collateral while being held by the Agent hereunder or under
      any other Operative  Agreement,  the Agent shall have no duty or liability
      to preserve rights pertaining thereto, it being understood and agreed that
      the Lessee  shall be  responsible  for  preservation  of all rights in the
      Collateral,  and the Agent shall be relieved of all responsibility for the
      Collateral  upon  surrendering  it or tendering the surrender of it to the
      Lessee. The Agent shall be deemed to have exercised reasonable care in the
      custody  and  preservation  of the  Collateral  in its  possession  if the
      Collateral  is accorded  treatment  substantially  equal to that which the
      Agent accords its own property,  which shall be no less than the treatment
      employed by a  reasonable  and  prudent  agent in the  industry,  it being
      understood  that the Agent  shall not have  responsibility  for taking any
      necessary steps to preserve rights against any parties with respect to any
      of the Collateral.

      8.7.  Collection and Allocation of Payments and Other Amounts.

            (a) The Lessee has agreed  pursuant to Section 5.10 and otherwise in
      accordance  with the terms of this  Agreement  to pay to (i) the Agent any
      and all Rent (excluding  Excepted  Payments) and any and all other amounts
      of any kind or type under any of the Operative Agreements due and owing or
      payable  by the  Lessee  to any  party  hereto  and (ii)  each  Person  as
      appropriate the Excepted Payments. Promptly after receipt, the Agent shall
      apply and allocate, in accordance with the terms of this Section 8.7, such
      amounts  received  from the Lessee and all other  payments,  receipts  and
      other  consideration of any kind whatsoever received by the Agent pursuant
      to the Security  Agreement or otherwise  received by the Agent, the Lessor
      or any of the Primary Financing Parties in connection with the Collateral,
      the Security Documents or any of the other Operative  Agreements.  Ratable
      distributions  among the Primary  Financing Parties

                                       47
<PAGE>

      under this  Section  8.7 shall be made  based on the ratio of the  amounts
      outstanding  under  the  Notes to the  aggregate  Property  Cost.  Ratable
      distributions  among the Tranche A Note Purchasers  under this Section 8.7
      shall be made  based  on the  ratio of the  amounts  outstanding  under an
      individual  Tranche A Note Purchaser's  Tranche A Note to the aggregate of
      all  amounts  outstanding  under  all of the  Tranche  A Note  Purchasers'
      Tranche A Notes.  Ratable  distributions among the Cash Collateral Lenders
      under this  Section  8.7 shall be made  based on the ratio of the  amounts
      outstanding  under an individual Cash Collateral  Lender's Cash Collateral
      Note to the  aggregate  of all amounts  outstanding  under all of the Cash
      Collateral Lenders' Cash Collateral Notes. Ratable distributions among the
      Tranche B Lenders  under this Section 8.7 shall be made based on the ratio
      of the individual Tranche B Lender's Commitment for Tranche B Loans to the
      aggregate of all the Tranche B Lenders' Commitments for Tranche B Loans.

            (b) Payments and other amounts  received by the Agent or Lessor from
      time to time in  accordance  with the terms of  subparagraph  (a) shall be
      applied and allocated as follows (subject in all cases to Section 8.7(c)):

                  (i) Any such payment or amount  identified  as or deemed to be
            Basic Rent shall be applied and  allocated  by the Agent if no Lease
            Default or Lease  Event of Default is in effect,  first,  ratably to
            the Primary  Financing Parties for application and allocation to the
            payment of interest on the Notes and thereafter the principal of the
            Notes which is due and payable on such date;  second, to any and all
            other amounts  owing under the  Operative  Agreements to the Primary
            Financing Parties; and third, any excess shall be paid to the Lessee
            or such  Person or Persons as the  Lessee may  designate;  provided,
            that if a Lease Default or Lease Event of Default is in effect, such
            amounts  shall instead be held by the Agent until the earlier of (I)
            the first date  thereafter  on which no Lease Default or Lease Event
            of Default  shall be in effect (in which case such amounts  shall be
            applied pursuant to this  subparagraph  (i)) and (II) the Expiration
            Date (or, if earlier,  the date of any Acceleration),  in which case
            such  amounts   shall  be  applied  and   allocated  in  the  manner
            contemplated by Section 8.7(b)(iv).

                  (ii) If on any date the Agent or the Lessor shall  receive any
            amount in respect of any  Casualty,  Condemnation  or  Environmental
            Violation  pursuant  to  Sections  15.1(a)  or  15.1(g) of the Lease
            (excluding any payments in respect  thereof which are payable to the
            Lessee in  accordance  with the  Lease)  and such  payment  is in an
            amount less than the  Termination  Value at such time, the Lessor or
            the Agent,  as the case may be, shall be required to pay such amount
            received in accordance with Section  8.7(b)(iii)  hereof;  provided,
            that  any  excess  shall  be  paid  to  Lessee  or its  designee  in
            accordance with Section 15.1 of the Lease.

                  (iii) An amount equal to any payment identified as proceeds of
            the  sale or other  disposition  (or  lease  upon  the  exercise  of
            remedies)  of the  Property  (other than the Excess Land) to a third
            party or any portion  thereof,  whether  pursuant to Article XXII of
            the Lease or the exercise of remedies  under the Security  Documents
            or  otherwise  or the  exercise of  foreclosure  remedies  under the
            Lease,

                                       48
<PAGE>

            and any  payment  in  respect of excess  wear and tear  pursuant  to
            Section 22.3 of the Lease (whether such payment  relates to a period
            before or after the Construction  Period Termination Date), shall be
            applied and allocated by the Agent first,  ratably to the payment of
            the principal and interest of the Tranche B Loans then  outstanding,
            second,  to any and all other  amounts  owing  under  the  Operative
            Agreements  to the  Tranche  B Lenders  under  the  Tranche B Loans,
            third,  to the extent such amount  exceeds the maximum  amount to be
            returned  pursuant to the  foregoing  provisions  of this  paragraph
            (iii),  ratably  to the  payment  of  the  principal,  interest  and
            Make-Whole  Amount, if any, on the Tranche A Notes then outstanding,
            fourth,  to any and all other  amounts  owing  under  the  Operative
            Agreements  to the  Tranche A Note  Purchasers  under the  Tranche A
            Notes, and fifth, to the extent moneys remain after  application and
            allocation  pursuant to clauses first through  fourth above,  to the
            Lessor for  application  and allocation to any and all other amounts
            owing to any Financing Party as the Lessor shall determine.

                  (iv) An amount  equal to (A) any  payment  pursuant to Section
            22.1(b)  of  the  Lease  (or  otherwise)  of  the  Maximum  Residual
            Guarantee  Amount in respect of the  Property,  (B) any other amount
            payable  after the  occurrence of an Event of Default not covered by
            Sections   8.7(b)(i)  or  8.7(b)(iii)   above   (including   without
            limitation  any amount  received  in  connection  with an action for
            liquidated  damages  pursuant to Section 17.4 or Section 17.6 of the
            Lease  or a  payment  of the  Maximum  Amount  or by set  off by the
            Agent),  and (C) any amount payable under the  Structural  Guarantee
            shall be applied and allocated by the Agent first,  ratably,  to the
            payment of the principal, interest and Make-Whole Amount, if any, on
            the Tranche A Notes then  outstanding,  second, to any and all other
            amounts owing under the  Operative  Agreements to the Tranche A Note
            Purchasers  under the  Tranche A Notes,  third,  to the extent  such
            amount  exceeds  the maximum  amount to be retained  pursuant to the
            foregoing  provisions of this paragraph (iv), ratably to the payment
            of the  principal  and interest  balance of the Tranche B Loans then
            outstanding,  fourth,  to the Tranche B Lenders  under the Tranche B
            Loans, and fifth, to the extent moneys remain after  application and
            allocation  pursuant to clauses first through  fourth above,  to the
            Lessor for  application  and allocation to any and all other amounts
            owing to any Financing Party as the Lessor shall determine.

                  (v)  An  amount  equal  to  any  such  payment  identified  as
            Supplemental  Rent  payable to the Agent,  the Lessor or any Primary
            Financing  Party shall be applied and  allocated by the Agent to the
            payment  of any  amounts  then  owing  to  the  Agent,  the  Primary
            Financing Parties, the Lessor and the other parties to the Operative
            Agreements  (or any of them)  (other than any such  amounts  payable
            pursuant to the  preceding  provisions  of this  Section  8.7(b)) as
            shall  be  determined  by the  Agent in its  reasonable  discretion;
            provided,   however,  that  Supplemental  Rent  received  after  the
            occurrence  and  continuance of an Event of Default shall be applied
            and allocated as set forth in Section 8.7(b)(iv).

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<PAGE>

                  (vi) Except as set forth in subparagraph  (ii) of this Section
            8.7(b),  any  payment of  Termination  Value  shall be  applied  and
            allocated by the Agent if no Lease Default or Lease Event of Default
            is in effect,  first,  ratably to the Primary  Financing Parties for
            application and allocation to the payment of the principal, interest
            and Make-Whole Amount, if any, on the Notes which is due and payable
            on such date;  second,  to any and all other amounts owing under the
            Operative  Agreements to the Financing  Parties;  third,  any excess
            shall be paid to the Lessee or such  Person or Persons as the Lessee
            may designate;  provided,  that if a Lease Default or Lease Event of
            Default is in effect,  such amount shall be applied and allocated in
            the manner contemplated by Section 8.7(b)(iv).

                  (vii)  Any  Excess  Land  Payment  Amount or  payment  of Cash
            Collateral Rent shall be applied and allocated first, ratably to the
            Cash  Collateral  Lenders  for  application  and  allocation  to the
            payment of the Cash Collateral Loan Balance which is due and payable
            on such date; and second,  any excess shall be paid to the Lessee or
            such Person or Persons as the Lessee may designate.

                  (viii) The Agent in its reasonable judgment shall identify the
            nature of each payment or amount received by the Agent and apply and
            allocate each such amount in the manner specified above.

            (c)  Notwithstanding  any provision contained herein or in any other
      Operative Agreement to the contrary, upon the payment in full of the Notes
      and all other amounts then due and owing by the Lessor  hereunder or under
      any Operative  Agreement and the payment in full of all other amounts then
      due and owing to the Primary Financing Parties,  the Lessor, the Agent and
      the other  Financing  Parties  pursuant to the Operative  Agreements,  any
      moneys  remaining  with the Agent  shall be  returned to the Lessee or its
      designee.  Notwithstanding the foregoing, the obligations of the Lessee to
      pay all  amounts due to any  Financing  Party under the Notes or any other
      Operative Agreement shall be automatically reinstated if and to the extent
      that for any reason any payment by or on behalf of the Lessee is rescinded
      or must be otherwise restored by any Financing Party,  whether as a result
      of any proceedings in bankruptcy or reorganization  or otherwise,  and the
      Lessee agrees that it will,  subject to Section 11.7 of the  Participation
      Agreement,  indemnify  each  Financing  Party on demand for all reasonable
      costs and expenses  (including,  without  limitation,  reasonable  fees of
      counsel)   incurred  by  any  Financing  Party  in  connection  with  such
      rescission or restoration, including without limitation any such costs and
      expenses  incurred  in  defending  against  any claim  alleging  that such
      payment  constituted a preference,  fraudulent transfer or similar payment
      under any bankruptcy, insolvency or similar law.

      8.8.  Release of Properties, etc.

      If the Lessee  shall at any time  purchase  the  Property  pursuant to the
Lease,  or the  Construction  Agent shall purchase the Property  pursuant to the
Agency  Agreement,  or if the Property shall be sold in accordance  with Article
XXII of the Lease,  then, upon satisfaction by the Borrower of its obligation to
prepay  the  Financing  and all other  amounts  owing to the

                                       50
<PAGE>

Primary  Financing Parties under the Operative  Agreements,  the Agent is hereby
authorized  and directed to release such  Property from the Liens created by the
Security Documents to the extent of its interest therein. In addition,  upon the
termination of the  Commitments and the payment in full of the Financing and all
other amounts owing by the Borrower and the Lessee  hereunder or under any other
Operative Agreement,  the Agent is hereby authorized and directed to release the
Property from the Liens  created by the Security  Documents to the extent of its
interest therein.  Following any such release, the Agent shall, at the sole cost
and expense of the Lessee,  execute and deliver to the  Borrower  and the Lessee
such  documents  as the  Borrower  or the  Lessee  shall  reasonably  request to
evidence such release.

      8.9.  Limitation of Lessor's Obligations.

            (a) The  Lessor  shall not have any duty or  obligation  to  manage,
      control,  use, make any payment in respect of, register,  record,  insure,
      inspect, sell, dispose of or otherwise deal with the Property or any other
      part of the  Borrower's  Interest,  or to  otherwise  take or refrain from
      taking any action under or in connection  with any Operative  Agreement to
      which the Lessor is a party,  except as expressly provided by the terms of
      the Operative  Agreements or in written  instructions from all the Primary
      Financing  Parties  and/or the Majority  Secured  Parties,  as applicable,
      received  pursuant to Section  8.6; and no implied  duties or  obligations
      shall be read into the Operative Agreements against the Lessor. The Lessor
      shall have no duty or obligation  to supervise or monitor the  performance
      of the  Construction  Agent  under  the  Agency  Agreement,  which for all
      purposes  shall be an  independent  contractor.  The  Lessor  nevertheless
      agrees  that it will  promptly  take all  action  as may be  necessary  to
      discharge any Lessor Liens on any part of the Property.

            (b) The Lessor agrees that it will not manage,  control,  use, sell,
      dispose of or  otherwise  deal with the  Property or any other part of the
      Borrower's  Interest  except (a) as required by the terms of the Operative
      Agreements, (b) in accordance with the powers granted to, or the authority
      conferred  upon,  it  pursuant  to  the  Operative  Agreements  or  (c) in
      accordance  with the express  terms hereof and with  written  instructions
      from  all the  Primary  Financing  Parties  and/or  the  Majority  Secured
      Parties, as applicable, pursuant to Section 8.6.

            (c)  Except  in  accordance  with  written  instructions   furnished
      pursuant to an applicable provision of the Operative Agreements (expressly
      cited in such  instructions),  and without limitation of the generality of
      Section 8.9(a),  the Lessor shall not have any duty to (i) file, record or
      deposit any Operative Agreement or any other document,  or to maintain any
      such filing,  recording or deposit or to refile, rerecord or redeposit any
      such document; (ii) obtain insurance on the Property or effect or maintain
      any such  insurance,  other than to receive  and  forward to each  Primary
      Financing  Party and the  Agent any  notices,  policies,  certificates  or
      binders furnished to the Lessor pursuant to the Lease;  (iii) maintain the
      Property;  (iv) pay or discharge any Tax or any Lien owing with respect to
      or assessed or levied against any part of the Borrower's Interest,  except
      as provided in the last sentence of Section 8.9(a),  other than to forward
      notice  of such  Tax or  Lien  received  by the  Lessor  to  each  Primary
      Financing Party and the Agent; (v) confirm, verify,

                                       51
<PAGE>

      investigate  or  inquire  into the  failure  to  receive  any  reports  or
      financial  statements  of Lessee or any other  Person;  (vi)  inspect  the
      Property  at any time or  ascertain  or inquire as to the  performance  or
      observance of any of the covenants of Lessee or any other Person under any
      Operative  Agreement  with  respect  to the  Property;  or  (vii)  manage,
      control,  use, sell, dispose of or otherwise deal with the Property or any
      part  thereof  or any other  part of the  Borrower's  Interest,  except as
      provided in Section 8.9(b).

            (d) The  Lessor,  in the  exercise or  administration  of its powers
      pursuant to the Operative Agreements,  may, at the expense and, so long as
      no Lease  Default or Lease  Event of Default  shall have  occurred  and be
      continuing,  with the consent of Lessee (which amounts may be funded prior
      to the  Construction  Period  Termination  Date  in  accordance  with  the
      Operative Agreements) employ agents, attorneys,  accountants, and auditors
      and enter into  agreements  with any of them and the  Lessor  shall not be
      liable  for the  default  or  misconduct  of any such  agents,  attorneys,
      accountants or auditors if such agents, attorneys, accountants or auditors
      shall have been selected by it with reasonable care.

      8.10. No  Representations  or  Warranties  as to the Property or Operative
            Agreements.

      THE LESSOR  MAKES (i) NO  REPRESENTATION  OR WARRANTY,  EITHER  EXPRESS OR
IMPLIED,   AS  TO  THE  TITLE,  VALUE,  USE,   CONDITION,   DESIGN,   OPERATION,
MERCHANTABILITY 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 THE LESSOR SHALL NOT 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 except that the Lessor
hereby  represents,  warrants and covenants to each Primary  Financing Party and
the Lessee  that it will comply with the last  sentence of Section  8.9(a),  and
(ii) no  representation  or warranty as to the validity or enforceability of any
Operative  Agreement  as against  any Person  other than the Lessor or as to the
correctness of any statement made by a Person other than the Lessor contained in
any thereof.

      8.11. Reliance; Advice of Counsel.

      The Lessor shall not incur any  liability to any Person in acting upon any
signature, instrument, notice, resolution, request, consent, order, certificate,
report, opinion, bond or other document or paper reasonably believed by it to be
genuine  and  believed  by it in good faith to be signed by the proper  party or
parties. The Lessor may accept and rely upon a certified copy of a resolution of
the  board  of  directors  or other  governing  body of any  corporate  party as
conclusive  evidence that such resolution has been duly adopted by such body and
that the same is in full force and  effect.  As to any fact or matter the manner
of ascertainment of which is not specifically  prescribed herein, the Lessor may
for all purposes of the Operative Agreements rely on an Officer's Certificate of
the  relevant  party,  as to such fact or  matter,  and such  certificate  shall
constitute  full  protection to the Lessor for any action taken or omitted to be
taken by it

                                       52
<PAGE>

reasonably  in good faith in  reliance  thereon.  In the  administration  of the
Lessor's  duties,  the  Lessor may  execute  and  perform  its powers and duties
directly  or  through   agents  or  attorneys  and  may  consult  with  counsel,
accountants and other skilled Persons to be selected and employed by it, and the
Lessor shall not be liable for anything done,  suffered or omitted reasonably in
good faith by it in  accordance  with the advice or opinion of any such counsel,
accountants  or  other  skilled  Persons  and  not  contrary  to  the  Operative
Agreements.

      8.12. [Reserved].

      8.13. Subdivision of the Property; Sale of Excess Land.

            (a) The  Construction  Agent and the Lessee  shall have the right to
      subdivide  the Property  into one or more parcels of Land on the following
      terms and conditions:

                  (i) (A) the  Construction  Agent or the Lessee shall file with
            the appropriate  Governmental  Authorities in the Township of Wayne,
            Passaic  County,  New  Jersey an  application  for  subdivision  (in
            accordance  with all  applicable  Laws) of the Excess  Land from the
            Remaining  Property,  (B) the Construction Agent or the Lessee shall
            cause  the  subdivision  plan  (in  form  and  substance  reasonably
            satisfactory  to  the  Agent  and  the  Primary  Financing  Parties,
            prepared by a professional  reasonably satisfactory to the Agent and
            accurately and completely  depicting the Remaining  Property and the
            Excess Land such that legal descriptions of each may be verified) to
            be  delivered  to the Agent and the Primary  Financing  Parties with
            regard to the Excess  Land and the  Remaining  Property  and (C) the
            Lessee shall deliver an Officer's  Certificate  to the Agent and the
            Primary Financing Parties certifying to the following: (I) that such
            subdivision  plan is true and  accurate  and has been  appropriately
            recorded in the appropriate  recording  office,  (II) that the legal
            descriptions of the Remaining  Property and the Excess Land attached
            thereto are true and accurate and (III) that the Remaining  Property
            has  (or,  upon  Completion,  will  have)  such  easements,  utility
            services and other  facilities  necessary or appropriate to operate,
            utilize,   maintain  and  control  such  Remaining   Property  in  a
            commercially reasonable manner;

                  (ii)  concurrently  with the  subdivision  of the  Property in
            accordance  with  Section   8.13(a)(i),   (A)  the  Tranche  A  Note
            Purchasers shall execute such termination  statements,  quit-claims,
            releases  of  mortgage  or other  documents  or  instruments  as the
            Lessee,  the Construction  Agent, the Lessor,  the Agent or the Cash
            Collateral Lenders shall reasonably request to cause the Excess Land
            to be released from the Liens of the Tranche A Mortgage  Instruments
            and the  Liens  of the  other  Security  Documents  in  favor of the
            Tranche A Note  Purchasers,  (B) the Tranche B Lenders shall execute
            such termination  statements,  quit-claims,  releases of mortgage or
            other  documents  or  instruments  as the Lessee,  the  Construction
            Agent,  the Lessor,  the Agent or the Cash Collateral  Lenders shall
            reasonably  request to cause the Excess Land to be released from the
            Liens of the  Tranche B  Mortgage  Instruments  and the Liens of the
            other Security Documents in favor of the Tranche B Lenders,

                                       53
<PAGE>

            and (C) the Construction Agent or the Lessee shall have delivered or
            cause to be  delivered to the Agent,  the Tranche A Note  Purchasers
            and  the  Tranche  B  Lenders  a  "Certificate  as  to  Approval  of
            Subdivision  of  Land"  issued  by  the  appropriate  administrative
            officer  of the  Township  of  Wayne,  Passaic  County,  New  Jersey
            pursuant to N.J.S.A. 40:55D-56; and

                  (iii)  concurrently  with the  subdivision  of the Property in
            accordance  with  Section  8.13(a)(i),  the  Lessee  shall  cause an
            Appraisal  for the  Remaining  Property to be delivered to the Agent
            evidencing  a Fair Market Sales Value of the  Remaining  Property of
            one hundred percent (100%) or more of the Property Cost allocable to
            such Remaining Property.

            (b) The  Construction  Agent and the Lessee  shall have the right to
      sell,  transfer  and  convey  all or any  portion  of the  Excess  Land in
      accordance with the provisions set forth in Section 21.1 of the Lease.

            (c) Upon the sale,  transfer  or  conveyance  of any Excess  Land in
      accordance  with Section  8.13(b) and Section 21.1 of the Lease,  and upon
      application  of the proceeds  from such sale,  transfer or  conveyance  in
      accordance  with  Section  21.1(b)(ii)  of the  Lease,  the amount of Cash
      Collateral  required  to be  maintained  in the  Cash  Collateral  Account
      pursuant  to Section  5.11 shall be  reduced  by the Excess  Land  Payment
      Amount so received and applied,  and the Agent shall,  promptly  following
      the written request of the Lessee or the Construction Agent and so long as
      no Lease  Default or Lease  Event of Default  shall have  occurred  and be
      continuing,  cause  any  excess  amounts  then  on  deposit  in  the  Cash
      Collateral Account to be returned to the Lessee or the Construction Agent.

      8.14. Non Disturbance.

            In the event of a  foreclosure  under any Security  Document  (other
      than the  Lease),  so long as there  shall  then  exist no Lease  Event of
      Default,  the Primary  Financing  Parties agree,  for themselves and their
      respective  successors and assigns,  that neither the leasehold  interest,
      right of possession  nor use and enjoyment of the Property by Lessee under
      the  Lease  shall  be   extinguished  or  terminated  by  reason  of  such
      foreclosure,  but rather the Lease shall continue in full force and effect
      and the Lease  shall  automatically  and  unconditionally  become a direct
      lease between the Primary Financing Parties or any successor  thereto,  as
      lessor as if such Primary  Financing  Parties or successor were the Lessor
      originally named in the Lease, and Lessee.  If any award,  compensation or
      proceeds of insurance are received by or turned over to Lessor,  the Agent
      or any Primary Financing Party in accordance with the Lease, in respect of
      any Casualty or Condemnation (collectively,  as used in this Section 8.14,
      "proceeds"),  and if a Lease  Default or Lease Event of Default  shall not
      have  occurred  and be  continuing,  then  Lessor,  Agent and the  Primary
      Financing  Parties  shall  make  available  for  expenses  related  to the
      Restoration of the Property, all such proceeds it receives pursuant to the
      terms of the Lease.

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<PAGE>

          SECTION 9. TRANCHE B CREDIT AGREEMENT, CASH COLLATERAL CREDIT
                     AGREEMENT AND NOTE PURCHASE AGREEMENT.

      9.1.  The   Construction   Agent's  and  the  Lessee's  Tranche  B  Credit
            Agreement,  Cash  Collateral  Credit  Agreement  and  Note  Purchase
            Agreement Rights.

      Notwithstanding anything to the contrary contained in the Tranche B Credit
Agreement,  the Cash Collateral Credit Agreement or the Note Purchase Agreement,
the Agent, the Tranche A Note Purchasers,  the Tranche B Lenders, the Lessee and
the Lessor hereby agree that,  prior to the occurrence and  continuation  of any
Lease Default under Sections 17.1(a), (b), (g), (h) or (j) of the Lease or Lease
Event of Default,  the  Construction  Agent or the  Lessee,  as the case may be,
shall have the following rights:

            (a) the right to designate an account to which amounts  funded under
      the Operative  Agreements shall be credited  pursuant to Section 2.3(a) of
      the Tranche B Credit  Agreement and Section 2.3(a) of the Cash  Collateral
      Credit Agreement;

            (b) the right to  terminate  or  reduce  the  Tranche B  Commitments
      pursuant to Section 2.5(a) of the Tranche B Credit Agreement;

            (c) the right to exercise the  conversion and  continuation  options
      pursuant to Section 2.7 of the Tranche B Credit  Agreement and Section 2.7
      of the Cash Collateral Credit Agreement;

            (d) the right to receive  any notice  and any  certificate,  in each
      case issued pursuant to Section 2.11(a) of the Tranche B Credit  Agreement
      and Section 2.11(a) of the Cash Collateral Credit Agreement;

            (e) [Reserved];

            (f) the right to approve any successor Escrow Agent;

            (g) the right to consent to any  assignment by a Tranche B Lender or
      a Cash  Collateral  Lender to which the  Lessor  has the right to  consent
      pursuant to Section 9.8 of the Tranche B Credit  Agreement  or Section 9.8
      of the Cash Collateral Credit Agreement, as applicable;

            (h) the right to make  determinations  as to whether  the  Tranche B
      Loans and Cash  Collateral  Loans  will be  Eurodollar  Loans or ABR Loans
      pursuant  to  Sections  2.1(b),  2.3(a) and 2.8(a) of the Tranche B Credit
      Agreement  and  Sections  2.1(b),  2.3 and  2.8(a) of the Cash  Collateral
      Credit Agreement, respectively;

            (i) the right to require  Borrower  to elect to  convert  Eurodollar
      Loans  to ABR  Loans  pursuant  to  Section  2.7 of the  Tranche  B Credit
      Agreement  and  Section  2.7  of the  Cash  Collateral  Credit  Agreement,
      respectively;

                                       55
<PAGE>

            (j) the  right to elect to  require  any Cash  Collateral  Lender to
      transfer or assign its interests,  rights and  obligations  under the Cash
      Collateral  Credit Agreement to a replacement  bank or institution,  or to
      require  the  Borrower to prepay all  outstanding  Cash  Collateral  Loans
      pursuant to Section 2.11 of the Cash Collateral Credit Agreement; and

            (k) the right to elect to require  any  Tranche B Lender to transfer
      or assign its interests, rights and obligations under the Tranche B Credit
      Agreement to a replacement bank or institution, or to require the Borrower
      to prepay all outstanding  Tranche B Loans pursuant to Section 2.11 of the
      Tranche B Credit Agreement.

                        SECTION 10. TRANSFER OF INTEREST.

      10.1. Restrictions on Transfer.

      (a) Each Tranche B Lender may, at its own cost and  expense,  participate,
assign or  transfer  all or a portion of its  interest  hereunder  and under the
other  Operative  Agreements  in  accordance  with  Sections  9.7 and 9.8 of the
Tranche  B  Credit  Agreement;   provided,  that  each  Tranche  B  Lender  that
participates,  assigns or transfers  all or a portion of its interest  hereunder
and under the other  Operative  Agreements  shall  deliver  to the Agent and the
Lessee a copy of each Assignment and Acceptance (as referenced in Section 9.8 of
the Tranche B Credit  Agreement) for purposes of maintaining  the Register under
the Tranche B Credit Agreement. Each Cash Collateral Lender may, at its own cost
and  expense,  participate,  assign or transfer all or a portion of its interest
hereunder and under the other  Operative  Agreements in accordance with Sections
9.7 and 9.8 of the Cash Collateral  Credit Agreement;  provided,  that each Cash
Collateral  Lender that  participates,  assigns or transfers all or a portion of
its interest hereunder and under the other Operative Agreements shall deliver to
the Agent and the Lessee a copy of each Assignment and Acceptance (as referenced
in  Section  9.8 of the  Cash  Collateral  Credit  Agreement)  for  purposes  of
maintaining the Register under the Cash Collateral Credit Agreement.  The Lessor
may, subject to the rights of the Lessee under the Lease and the other Operative
Agreements and to the Lien of the applicable Security  Documents,  but only with
the prior  written  consent of the Agent and, so long as no Lease  Default under
Sections  17.1(a),  (b), (g), (h), or (j) of the Lease or Lease Event of Default
shall have occurred and be continuing, the Lessee (which consent may be withheld
by the Agent or the Lessee in such party's  sole  discretion)  at Lessor's  sole
expense,  directly or indirectly,  assign, convey, appoint an agent with respect
to enforcement of, or otherwise  transfer any of its right, title or interest in
or to the  Property,  the Lease and the other  Operative  Agreements  (including
without  limitation  any  right to  indemnification  thereunder),  or any  other
document relating to the Property or any interest in the Property as provided in
the Lease to a special  purpose  entity  owned by any Person  with a minimum net
worth of at least $200,000,000.00 and a Debt Rating of a Rating Agency of "A" or
higher. The provisions of the immediately  preceding sentence shall not apply to
the obligations of the Lessor to transfer the Property or the Excess Land to the
Lessee,  its designee or a third party purchaser pursuant to Article XXI or XXII
of the Lease upon  payment  for the  Property in  accordance  with the terms and
conditions  of the Lease.  Except as  otherwise  expressly  permitted  under the
Operative  Agreements  (including  pursuant to Article  XXV of the  Lease),  the
Lessee

                                       56
<PAGE>

may  not  assign  any of the  Operative  Agreements  or  any  of its  rights  or
obligations  thereunder  or with  respect to the Property in whole or in part to
any  Person  without  the prior  written  consent  of the  Agent,  each  Primary
Financing  Party and the Lessor.  Each Tranche A Note  Purchaser may, at its own
expense,  participate,  assign  or  transfer  all or a portion  of its  interest
hereunder and under the other  Operative  Agreements only in accordance with the
provisions of the Note Purchase Agreement.

      (b)  Notwithstanding  anything  to the  contrary  in Section  10.1(a),  no
consent  shall be required from the Agent,  the Lessee or any Primary  Financing
Party (but Lessor shall  provide one hundred  eighty (180) days (or such shorter
period as  required  by the Legal  Requirement  giving  rise to the  assignment,
conveyance,  appointment  or  transfer  contemplated  by this  Section  10.1(b))
written notice to the Agent and the Lessee) in connection  with any  assignment,
conveyance,  appointment  or  transfer  by the  Lessor  required  by  any  Legal
Requirement of all or any of its right, title or interest in or to the Property,
the Lease and the other Operative  Agreements  (including without limitation any
right to  indemnification  thereunder),  or any other  document  relating to the
Property or any  interest in the  Property as provided in the Lease to a special
purpose   entity  or  any  Person   with  a  minimum   net  worth  of  at  least
$200,000,000.00 and a Debt Rating of a Rating Agency of "A" or higher; provided,
in such case, so long as no Lease Default under Sections 17.1(a),  (b), (g), (h)
or (j) of the  Lease or Lease  Event  of  Default  shall  have  occurred  and be
continuing,  Lessee  shall have the right to require  the  Lessor  (unless  such
transfer or conveyance has already occurred, in which case the Lessee shall have
the right to require such transferee) to transfer its interest to another Person
with a minimum  net  worth of at least  $200,000,000.00  and a Debt  Rating of a
Rating Agency of "A" or higher (or to a special  purpose  entity owned by such a
Person) selected by the Lessee, in its reasonable discretion; provided, further,
Lessee shall be  responsible  for any cost or expense  incurred by the Lessor in
connection  with any  assignment,  conveyance,  appointment  or  transfer by the
Lessor pursuant to this Section 10.1(b).

      (c) In the event that any change in GAAP occurs that adversely affects the
financial  accounting  reporting of the Lessor, as such reporting relates to the
transactions  contemplated  by the  Operative  Agreements,  Lessor shall provide
written  notice of such  change to Lessee (a  "Change  in GAAP  Notice"),  which
notice shall specify the effective date of such change in GAAP and shall contain
details as to the types and amounts of any loss,  claim and/or  increased  costs
incurred or to be  incurred  by Lessor as a result of such  change in GAAP,  and
(subject to Section 11.7) Lessee agrees to indemnify  Lessor for any loss, claim
or increased costs incurred by Lessor as a result of the change in GAAP from and
after the date of Lessee's receipt of such Change in GAAP Notice.  After receipt
of any such Change in GAAP  Notice,  Lessee  shall have the right (i) to require
the Lessor to transfer its  interest to another  Person with a minimum net worth
of at least  $200,000,000.00  and a Debt  Rating  of a Rating  Agency  of "A" or
higher  (or to a special  purpose  entity  owned by such a Person)  selected  by
Lessee, in its reasonable discretion; or (ii) give irrevocable written notice of
its  election to exercise the  Purchase  Option  pursuant to Section 20.1 of the
Lease on the first  Payment  Date  occurring  at least  sixty  (60)  days  after
Lessee's receipt of such Change in GAAP Notice.

      (d) Upon the occurrence and during the  continuance of an Event of Default
by the Lessor, Lessee shall have the right to require the Lessor to transfer its
interest in the Property and

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the  Operative  Agreements  to a Person  with a  minimum  net  worth of at least
$200,000,000.00  and a Debt Rating of a Rating  Agency of "A" or higher (or to a
special  purpose entity owned by such a Person)  selected by the Lessee,  in its
reasonable discretion.

      10.2. Effect of Transfer.

      From and after any transfer  effected in accordance  with this Section 10,
the  transferor  shall be  released,  to the extent of such  transfer,  from its
liability  hereunder  and under the  other  documents  to which it is a party in
respect of  obligations  to be performed on or after the date of such  transfer;
provided,  however,  that any transferor shall remain liable hereunder and under
such other  documents to the extent that the  transferee  shall not have assumed
the obligations of the transferor thereunder. Upon any transfer by the Lessor or
a Primary  Financing Party as above provided,  any such transferee  shall assume
the  obligations of the Lessor or the Primary  Financing  Party, as the case may
be, and shall be deemed the "Lessor" or a "Primary Financing Party", as the case
may be, for all  purposes of such  documents  and each  reference  herein to the
transferor  shall  thereafter be deemed a reference to such  transferee  for all
purposes,  except as provided in the  preceding  sentence.  Notwithstanding  any
transfer  of all or a portion of the  transferor's  interest as provided in this
Section 10, the  transferor  shall be entitled to all  benefits  accrued and all
rights  vested prior to such transfer  including  without  limitation  rights to
indemnification under any such document.

                          SECTION 11. INDEMNIFICATION.

      11.1. General Indemnity.

      Subject to the  limitations  set forth in Section 11.7 hereof,  whether or
not any of the  transactions  contemplated  hereby  shall  be  consummated,  the
Indemnity Provider 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  which  may be  imposed  on,  incurred  by or  asserted  against  an
Indemnified  Person by any third  party,  including  without  limitation  Claims
arising from the negligence of an Indemnified Person (but not to the extent such
Claims arise from the gross negligence or willful misconduct of such Indemnified
Person, as determined by a court of competent  jurisdiction) in any way relating
to or arising or alleged to arise out of the negotiation,  execution,  delivery,
performance or enforcement of this  Agreement,  the Lease or any other Operative
Agreement  or on or with  respect  to the  Property  or any  component  thereof,
including without limitation Claims in any way relating to or arising or alleged
to arise out of (a) the financing, refinancing, purchase, acceptance, rejection,
ownership,   design,   construction,   refurbishment,   development,   delivery,
non-delivery,   leasing,  subleasing,  possession,  use,  occupancy,  operation,
maintenance,  repair,  modification,  transportation,  condition,  sale, return,
repossession  (whether by summary proceedings or otherwise),  or any disposition
of  the  Property  or  any  part  thereof,   including  without  limitation  the
acquisition,  holding or disposition  of any interest in the Property,  lease or
agreement  comprising a portion of any thereof;  (b) any latent or other defects
in the  Property  or any  portion  thereof  whether  or not  discoverable  by an
Indemnified Person or the Indemnity  Provider;  (c) a violation of, or penalties
arising from any violation of, Environmental Laws, Environmental Claims or other
loss of or damage to any

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property or the  environment,  relating to the Property,  the Lease,  the Agency
Agreement  or the  Indemnity  Provider;  (d) the  Operative  Agreements,  or any
transaction  contemplated  thereby;  (e) any breach by the Indemnity Provider of
any of its representations or warranties under the Operative Agreements to which
the  Indemnity  Provider  is a party or failure  by the  Indemnity  Provider  to
perform or observe any  covenant or agreement to be performed by it under any of
the Operative  Agreements;  (f) 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; (g) personal  injury,  death or property damage,
including  without  limitation  Claims based on strict or absolute  liability in
tort; (h) any claim for patent, trademark or copyright infringement; and (i) any
fees,  expenses  and/or  other  assessments  by any  business  park or any other
applicable entity with oversight responsibility for the Property.

      If a  written  demand is made  against  any  Indemnified  Person or if any
proceeding shall be commenced against such Indemnified Person (including without
limitation a written notice of such proceeding) for any Claim,  such Indemnified
Person shall  promptly  notify the  Indemnity  Provider in writing and shall not
take action  with  respect to such Claim  without  the consent of the  Indemnity
Provider for thirty (30) days after the receipt of such notice by the  Indemnity
Provider; provided, however, that in the case of any such Claim, if action shall
be required by law or  regulation to be taken prior to the end of such period of
thirty (30) days, such  Indemnified  Person shall endeavor to, in such notice to
the Indemnity  Provider,  inform the Indemnity  Provider of such shorter period,
and no action shall be taken with  respect to such Claim  without the consent of
the  Indemnity  Provider  before  seven (7) days before the end of such  shorter
period unless the Indemnified Person shall be required by such law or regulation
to take action prior to the end of such seven (7) day period; provided, further,
that the failure of such  Indemnified  Person to give the notices referred to in
this sentence shall not diminish the Indemnity  Provider's  obligation hereunder
except  to the  extent  such  failure  precludes  the  Indemnity  Provider  from
contesting all or any part of such Claim,  but only for the portion of the Claim
that the Indemnity Provider is precluded from contesting.

      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
Indemnity  Provider is required by law or regulation for the Indemnified  Person
to respond to such Claim),  the Indemnity Provider shall request in writing that
such Indemnified  Person respond to such Claim, the Indemnified Person shall, at
the  reasonable  expense of the  Indemnity  Provider,  in good faith conduct and
control  such  action  (including  without  limitation  by pursuit  of  appeals)
(provided,  however,  that  (A)  if  such  Claim,  in the  Indemnity  Provider's
reasonable discretion,  can be pursued by the Indemnity Provider on behalf of or
in the name of such Indemnified Person, the Indemnified Person, at the Indemnity
Provider's  request,  shall allow the Indemnity  Provider to conduct and control
the response to such Claim and (B) in the case of any Claim (and notwithstanding
the  provisions of the foregoing  subsection  (A)), the  Indemnified  Person may
request in writing that the Indemnity  Provider conduct and control the response
to such Claim  (with  counsel  to be  selected  by the  Indemnity  Provider  and
consented to by such  Indemnified  Person,  such consent not to be  unreasonably
withheld or delayed;  provided,  however, that any Indemnified Person may retain
separate  counsel at the  expense of the  Indemnity  Provider  in the event of a
potential conflict of interest between such Indemnified Person and the Indemnity
Provider)) by, in the sole  discretion of the Person  conducting and controlling
the response to such Claim (1)  resisting  payment

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<PAGE>

thereof,  (2) not paying the same except under protest,  if protest is necessary
and proper,  (3) if the payment be made,  using  reasonable  efforts to obtain a
refund thereof in appropriate  administrative and judicial  proceedings,  or (4)
taking such other action as is reasonably  requested by the  Indemnity  Provider
from time to time.

      The party  controlling  the  response to any Claim  shall  consult in good
faith with the non-controlling  party and shall keep the  non-controlling  party
reasonably  informed as to the conduct of the response to such Claim;  provided,
that all decisions ultimately shall be made in the 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 response to such Claim and may settle
such Claim if such  Indemnified  Person shall waive its rights to any  indemnity
from the Indemnity  Provider that otherwise  would be payable in respect of such
Claim (and any future Claim, the pursuit of which is precluded by reason of such
resolution  of such Claim) and shall pay to the  Indemnity  Provider  any amount
previously paid or advanced by the Indemnity  Provider  pursuant to this Section
11.1 by way of indemnification or advance for the payment of an amount regarding
such Claim,  except reasonable  expenses  therefrom incurred by such Indemnified
Person in connection with the response to such Claim.

      Notwithstanding  the  foregoing   provisions  of  this  Section  11.1,  an
Indemnified  Person  shall not be required to take any action and the  Indemnity
Provider  shall not be permitted to respond to any Claim in its own name or that
of the Indemnified Person unless (A) the Indemnity Provider shall have agreed to
pay 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  such  Claim,   including  without  limitation  all
reasonable legal,  accounting and  investigatory  fees and disbursements and the
Indemnity  Provider shall have agreed that the Claim is an  indemnifiable  Claim
hereunder,  (B) 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 any  part  thereof  or  interest  therein,  will  not
interfere  with the  payment of Rent,  and will not  result in risk of  criminal
liability,  (C) if such Claim shall  involve the payment of any amount  prior to
the  resolution  of such Claim,  the  Indemnity  Provider  shall  provide to the
Indemnified  Person an  interest-free  advance in an amount  equal to the amount
that the Indemnified Person is required to pay (with no additional net after-tax
cost to such  Indemnified  Person) prior to the date such payment is due, (D) in
the case of an  appeal  of an  adverse  determination  of a Claim  that  must be
pursued in the name of an  Indemnified  Person (or an  Affiliate  thereof),  the
Indemnity  Provider shall have provided to such Indemnified Person an opinion of
independent   counsel   selected  by  the  Indemnity   Provider  and  reasonably
satisfactory  to the  Indemnified  Person stating that the position  asserted in
such appeal will more likely than not prevail and (E) no Event of Default by the
Indemnity  Provider 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 to the position  taken by the  Indemnity  Provider by a
court of  competent  jurisdiction  pursuant  to the contest  provisions  of this
Section  11.1,  unless there shall have been a change in law (or  interpretation
thereof)  and the  Indemnified  Person  shall have  received,  at the  Indemnity
Provider's  expense, an opinion of independent counsel selected by the Indemnity
Provider and

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<PAGE>

reasonably acceptable to the Indemnified Person 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. In no event shall the Indemnity
Provider be permitted  to adjust or settle any Claim  without the consent of the
Indemnified Person to the extent any such adjustment or settlement involves,  or
is reasonably  likely to involve,  any performance by or adverse admission by or
with respect to the Indemnified Person.

      11.2. General Tax Indemnity.

            (a) Subject to the limitations set forth in Section 11.7 hereof, the
      Indemnity  Provider  shall pay and assume  liability  for, and does hereby
      agree to  indemnify,  protect and defend the Property and all  Indemnified
      Persons,  and hold them harmless against,  all Impositions on an After Tax
      Basis, and all payments pursuant to the Operative Agreements shall be made
      free and clear of and without deduction for any and all present and future
      Impositions.

            (b)  Notwithstanding  anything to the  contrary  in Section  11.2(a)
      hereof,  the following  shall be excluded  from the indemnity  required by
      Section 11.2(a):

                  (i) Taxes (other than Taxes that are, or are in the nature of,
            sales,  use, rental,  value added, ad valorem,  transfer or property
            taxes)  that are  imposed on a  Indemnified  Person  (other than the
            Lessor) by the United States federal government that are based on or
            measured by the net income (including without limitation 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;

                  (ii) Taxes  (other  than Taxes that are,  or are in the nature
            of,  sales,  use,  rental,  value  added,  ad  valorem,  transfer or
            property  taxes) that are imposed on any  Indemnified  Person (other
            than  the  Lessor)  by any  state or local  jurisdiction  or  taxing
            authority within any state or local  jurisdiction and that are based
            upon or measured  by the net income  (including  without  limitation
            taxes  based on capital  gains and  minimum  taxes) of such  Person;
            provided   that  such  Taxes  shall  not  be  excluded   under  this
            subparagraph  (ii) to the extent such Taxes would have been  imposed
            had the location, possession or use of the Property in, the location
            or the operation of the Lessee in, or the Lessee's  making  payments
            under the Operative Agreements from, the jurisdiction  imposing such
            Taxes been the sole connection  between such Indemnified  Person and
            the jurisdiction imposing such Taxes;  provided,  further, 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;

                  (iii) any Tax to the extent it  relates  to any act,  event or
            omission  that  occurs  after  the  termination  of  the  Lease  and
            redelivery or sale of the Property in  accordance  with the terms of
            the  Lease  (but  not  any Tax  that  relates  to such

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<PAGE>

            termination,  redelivery  or sale and/or to any period prior to such
            termination, redelivery or sale); and

                  (iv) any Taxes which are imposed on an Indemnified Person as a
            result  of the  gross  negligence  or  willful  misconduct  of  such
            Indemnified  Person  itself,  as  determined by a court of competent
            jurisdiction (as opposed to gross  negligence or willful  misconduct
            imputed  to such  Indemnified  Person),  but not Taxes  imposed as a
            result of ordinary negligence of such Indemnified Person.

Notwithstanding   the  foregoing,   the   exclusions   from  the  definition  of
"Impositions"  set forth in clauses (i), (ii) and (iii) shall not apply (but the
other  exclusions  shall apply) to any Taxes or increase in Taxes  imposed on an
Indemnified  Person net of any  decrease in Taxes  realized by such  Indemnified
Person, to the extent that such tax increase or decrease would not have occurred
if on each date of an Advance the Primary  Financing  Parties has advanced funds
to the Lessee in the form of a loan  secured by the  Property in an amount equal
to the Acquisition and Construction  Advances funded on such date of an Advance,
with debt  service  equal to the Basic Rent  payable on each  Schedule  Interest
Payment  Date and a principal  balance at the maturity of such loan in an amount
equal to the then outstanding  amount of the Notes at the end of the term of the
Lease.

            (c) (i)  Subject  to the terms of  Section  11.2(f)  and  11.7,  the
            Indemnity  Provider shall pay or cause to be paid in a timely manner
            all Impositions  directly to the taxing  authorities  where feasible
            and otherwise to the Indemnified  Person,  as  appropriate,  and the
            Indemnity  Provider 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.

                  (ii) In the  case of  Impositions  for  which  no  contest  is
            conducted  pursuant  to  Section  11.2(f)  and which  the  Indemnity
            Provider  pays  directly to the taxing  authorities,  the  Indemnity
            Provider  shall  pay  such  Impositions  prior  to the  latest  time
            permitted by the relevant taxing  authority for timely  payment.  In
            the case of Impositions for which the Indemnity Provider  reimburses
            an  Indemnified  Person,  the Indemnity  Provider shall do so within
            thirty (30) days after receipt by the  Indemnity  Provider of demand
            by such  Indemnified  Person  describing  in  reasonable  detail the
            nature of the  Imposition  and the basis for the  demand  (including
            without   limitation  the   computation  of  the  amount   payable),
            accompanied by receipts or other reasonable evidence of such demand.
            In the case of Impositions for which a contest is conducted pursuant
            to  Section   11.2(f),   the  Indemnity   Provider  shall  pay  such
            Impositions   or  reimburse   such   Indemnified   Person  for  such
            Impositions,  to  the  extent  not  previously  paid  or  reimbursed
            pursuant to subsection  (a),  prior to the latest time  permitted by
            the relevant taxing authority for timely payment after conclusion of
            all contests under Section 11.2(f).

                  (iii) At the Indemnity  Provider's request,  the amount of any
            indemnification  payment  by  the  Indemnity  Provider  pursuant  to
            subsection  (a)

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<PAGE>

            shall be verified and certified by an independent  public accounting
            firm  mutually   acceptable  to  the  Indemnity   Provider  and  the
            Indemnified Person. The fees and expenses of such independent public
            accounting firm shall be paid by the Indemnity  Provider unless such
            verification   shall  result  in  an  adjustment  in  the  Indemnity
            Provider's  favor of fifteen percent (15%) or more of the payment as
            computed by the Indemnified  Person, in which case such fee shall be
            paid by the Indemnified Person.

            (d) The Indemnity  Provider 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 Indemnity Provider under
      or arising out of subsection  (a) and of which the Indemnity  Provider has
      knowledge or should have knowledge,  the Indemnity  Provider,  at its sole
      cost and expense,  shall notify the  relevant  Indemnified  Person of such
      requirement and (except if such Indemnified  Person notifies the Indemnity
      Provider  that such  Indemnified  Person  intends to prepare and file such
      report  or  return)  (A)  to  the  extent  required  or  permitted  by and
      consistent  with  Legal  Requirements,  make  and  file  in the  Indemnity
      Provider's 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 Indemnity
      Provider under or arising out of subsection (a),  provide such Indemnified
      Person at the Indemnity Provider's expense with information  sufficient to
      permit such return,  statement or report to be properly  made with respect
      to any  obligations  of the  Indemnity  Provider  under or arising  out of
      subsection  (a) no later  than  fifteen  (15)  days  prior to the due date
      thereof.  Such  Indemnified  Person shall,  upon the Indemnity  Provider's
      request  and  at  the  Indemnity  Provider's  expense,  provide  any  data
      maintained by such Indemnified  Person (and not otherwise  available to or
      within the control of the Indemnity Provider) with respect to the Property
      which the  Indemnity  Provider  may  reasonably  require  to  prepare  any
      required tax returns or reports.

            (e) As  between  the  Indemnity  Provider  on  one  hand,  and  each
      Financing  Party  on the  other  hand,  the  Indemnity  Provider  shall be
      responsible  for, and the  Indemnity  Provider  shall  indemnify  and hold
      harmless each Financing Party (without  duplication of any indemnification
      required by subsection (a)) on an After Tax Basis against,  any obligation
      for United States or foreign withholding taxes or similar levies, imposts,
      charges, fees, deductions or withholdings  (collectively,  "Withholdings")
      imposed in respect of the interest payable on the Notes or with respect to
      any other payments under the Operative Agreements (all such payments being
      referred  to herein as "Exempt  Payments"  to be made  without  deduction,
      withholding or set off) (and, if any Financing Party receives a demand for
      such  payment  from any taxing  authority  or a  Withholding  is otherwise
      required with respect to any Exempt Payment,  the Indemnity Provider shall
      discharge  such  demand  on  behalf of such  Financing  Party);  provided,
      however,  that the obligation of the Indemnity Provider under this Section
      11.2(e) shall not apply to:

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                  (i)  Withholdings on any Exempt Payment to any Financing Party
            which is a non-U.S.  Person unless such  Financing  Party is, on the
            date hereof (or on the date it becomes a Financing Party  hereunder)
            and on the date of any change in the principal  place of business or
            the lending  office of such  Financing  Party,  entitled to submit a
            Form W-8BEN or Form W-8ECI or successor applicable form,  certifying
            in each case that such party is entitled  under Section 1441 or 1442
            of the Code or any other applicable  provision  thereof or under any
            applicable tax treaty or convention to receive payments  pursuant to
            the Operative  Agreements without deduction or withholding of United
            States federal  income tax and is a foreign Person thereby  entitled
            to an exemption from United States backup  withholding taxes (except
            where the  failure  of the  exemption  results  from a change in the
            principal place of business of the Lessee); provided,  however, if a
            failure  of the  exemption  is due to a change in law after the date
            hereof  or in the  case  of a  Financing  Party  that  acquires  its
            interest after the date hereof, a change in law occurring after such
            date,   then  the  Indemnity   Provider  shall  be  liable  for  any
            withholding resulting therefrom; or

                  (ii) Any U.S. Taxes imposed solely by reason of the failure by
            a  non-U.S.   Person  to  comply  with   applicable   certification,
            information,   documentation   or   other   reporting   requirements
            concerning the nationality,  residence, identity or connections with
            the  United  States  of  America  of such  non-U.S.  Person  if such
            compliance is required by statute or regulation of the United States
            of America as a  precondition  to relief or exemption from such U.S.
            Taxes if the  Indemnity  Provider has provided  such  certification,
            information,  documentation  or other reporting  requirements to the
            Financing  Party  on a  timely  basis  and the  Financing  Party  is
            eligible for such relief or exemption.

      For the purposes of this Section 11.2(e),  (A) "U.S.  Person" shall mean a
      citizen,  national  or  resident  of  the  United  States  of  America,  a
      corporation,  partnership or other entity created or organized in or under
      any laws of the  United  States of America  or any State  thereof,  or any
      estate or trust that is subject to Federal income  taxation  regardless of
      the source of its  income,  (B) "U.S.  Taxes"  shall  mean any  present or
      future tax,  assessment or other charge or levy imposed by or on behalf of
      the United States of America or any taxing  authority  thereof or therein,
      (C) "Form W-8BEN" shall mean Form W-8BEN (Certificate of Foreign Status of
      Beneficial  Owner for United States  Withholding) of the Department of the
      Treasury of the United  States of America and (D) "Form W-8ECI" shall mean
      Form W-8ECI  (Certificate  of Foreign  Person's  Claim for Exemption  from
      Withholding on Income Effectively Connected with the Conduct of a Trade or
      Business in the United  States) of the  Department  of the Treasury of the
      United  States  of  America  (or in  relation  to  either  such  Form such
      successor  and  related  forms as may from time to time be  adopted by the
      relevant taxing  authorities of the United States of America to document a
      claim to which such Form  relates).  Each of the Forms  referred to in the
      foregoing  clauses (C) and (D) shall  include such  successor  and related
      forms  as may  from  time  to  time  be  adopted  by the  relevant  taxing
      authorities  of the United  States of America to document a claim to which
      such Form relates.

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<PAGE>

            If a Financing  Party or an Affiliate with whom such Financing Party
      files a consolidated tax return (or equivalent)  subsequently receives the
      benefit in any country of a tax credit or an allowance resulting from U.S.
      Taxes  with  respect to which it has  received a payment of an  additional
      amount under this Section  11.2(e),  such Financing  Party will pay to the
      Indemnity  Provider  such part of that  benefit as in the  opinion of such
      Financing  Party will leave it (after such  payment) in a position no more
      and no less favorable than it would have been in if no additional  payment
      had been  required to be paid,  provided  always  that (i) such  Financing
      Party will be the sole judge of the amount of any such  benefit and of the
      date on which it is  received,  (ii) such  Financing  Party  will have the
      absolute  discretion  as to the order and  manner in which it  employs  or
      claims tax credits and allowances available to it and (iii) such Financing
      Party will not be obliged to  disclose  to the  Borrower  any  information
      regarding its tax affairs or tax  computations.  A subsequent loss of such
      tax credit or allowance  with respect to which a payment is made  pursuant
      to  this  paragraph  to an  Indemnity  Provider  shall  be  treated  as an
      Imposition  that is  indemnifiable  under Section  11.2(a)  hereof without
      regard to the exclusions of Section 11.2(b)(i), (ii), and (iii) hereof.

            Each non-U.S.  Person that shall become a Financing  Party after the
      date hereof  shall,  upon the  effectiveness  of the  related  transfer or
      otherwise  upon  becoming a  Financing  Party  hereunder,  be  required to
      provide  all of  the  forms  and  statements  referenced  above  or  other
      evidences of exemption  from  Withholdings  if the Indemnity  Provider has
      provided such certification, information, documentation or other reporting
      requirements  to the Financing  Party and the Financing  Party is eligible
      for such relief or exemption.

            (f) If a written Claim is made against any Indemnified  Person or if
      any  proceeding  shall  be  commenced  against  such  Indemnified   Person
      (including  without  limitation a written notice of such proceeding),  for
      any  Impositions,  the provisions in Section 11.1 relating to notification
      and rights to contest shall apply;  provided,  however, that the Indemnity
      Provider  shall have the right to conduct and control such contest only if
      such  contest  involves  a Tax  other  than  a Tax on  net  income  of the
      Indemnified  Person  that can be  pursued  independently  from  any  other
      proceeding  involving a Tax liability of such  Indemnified  Person and the
      Indemnity  Provider agrees to pay to such Indemnified Person on demand the
      Impositions  which are the subject of such claim to the extent the contest
      is unsuccessful.  The controlling party shall provide the  non-controlling
      party with a copy of (or appropriate  excerpts from) any reports or claims
      issued  by  the  relevant  auditing  agents  or  taxing  authority  to the
      controlling  party thereof,  in connection  with such claim or the contest
      thereof.

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

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      11.3. Increased Costs, Illegality, etc.

            (a) If, due to either (i) the introduction of or any change in or in
      the   interpretation   of  any  law  or  regulation   (but  excluding  any
      introduction  of or  change  in any law or  regulation  that  has the sole
      effect of increasing  reportable income or the income tax rate or reducing
      income tax deductions of a Financing  Party) or (ii) the  compliance  with
      any guideline or request  hereafter  adopted,  promulgated  or made by any
      central bank or other  Governmental  Authority  (whether or not having the
      force of law),  there shall be any  increase in the cost to any  Financing
      Party of agreeing to make or making, funding or maintaining Advances, then
      the Lessee shall from time to time,  upon demand by such  Financing  Party
      (with a copy of such demand to the Agent but, in the case of any Tranche B
      Lender or Cash Collateral Lender,  subject to the terms of Section 2.11 of
      the  Tranche B Credit  Agreement  or Section  2.11 of the Cash  Collateral
      Credit Agreement, as the case may be), pay to the Agent for the account of
      such Financing  Party  additional  amounts  sufficient to compensate  such
      Financing  Party  for  such  increased  cost  on an  After  Tax  Basis.  A
      certificate  as to the amount of such  increased  cost,  submitted  to the
      Lessee and the Agent by such  Financing  Party,  shall be  conclusive  and
      binding for all purposes, absent manifest error.

            (b) If any Financing  Party  determines that compliance with any law
      or  regulation  or any guideline or request from any central bank or other
      governmental  authority  (whether  or not having the force of law,  but in
      each case  promulgated  or made  after the date  hereof)  affects or would
      affect the amount of capital required or expected to be maintained by such
      Financing  Party or any corporation  controlling  such Financing Party and
      that  the  amount  of such  capital  is  increased  by or  based  upon the
      existence of such  Financing  Party's  commitment to make Advances or upon
      the Advances,  then,  upon demand by such Financing  Party (with a copy of
      such  demand to the Agent but, in the case of any Tranche B Lender or Cash
      Collateral  Lender,  subject to the terms of Section 2.11 of the Tranche B
      Credit Agreement or Section 2.11 of the Cash Collateral  Credit Agreement,
      as the case may be),  the Lessee shall pay to the Agent for the account of
      such  Financing  Party,  from time to time as specified by such  Financing
      Party, additional amounts sufficient to compensate such Financing Party or
      such corporation on an After Tax Basis in the light of such circumstances,
      to the  extent  that  such  Financing  Party  reasonably  determines  such
      increase in capital to be  allocable to the  existence  of such  Financing
      Party's commitment to make such Advances. A certificate as to such amounts
      submitted  to the Lessee and the Agent by such  Financing  Party  shall be
      conclusive and binding for all purposes, absent manifest error.

            (c) [Reserved].

            (d) Without  affecting its rights under Sections  11.3(a) or 11.3(b)
      or any other  provision of any Operative  Agreement,  each Financing Party
      agrees that if there is any  increase in any cost to or  reduction  in any
      amount receivable by such Financing Party with respect to which the Lessee
      would be obligated to compensate such Financing Party pursuant to Sections
      11.3(a) or 11.3(b),  such Financing Party shall use reasonable  efforts to
      select an  alternative  office for Advances  which would not result in any
      such increase in

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      any cost to or reduction in any amount receivable by such Financing Party;
      provided, however, that no Financing Party shall be obligated to select an
      alternative  office for Advances if such Financing  Party  determines that
      (i) as a  result  of such  selection  such  Financing  Party  would  be in
      violation of any applicable  law,  regulation,  treaty,  or guideline,  or
      would incur  additional  costs or expenses or (ii) such selection would be
      inadvisable  for regulatory  reasons or materially  inconsistent  with the
      interests of such Financing Party.

            (e) With  reference  to the  obligations  of the Lessee set forth in
      Sections 11.3(a) through 11.3(d), the Lessee shall not have any obligation
      to pay to any  Financing  Party  amounts owing under such Sections for any
      period  which is more than one (1) year  prior to the date upon  which the
      request for payment therefor is delivered to the Lessee.

            (f)  Notwithstanding  any other provision of this Agreement,  if any
      Tranche B Lender or Cash Collateral  Lender shall notify the Agent and the
      Agent shall notify the Borrower and the Lessee that the introduction of or
      any change in or in the  interpretation  of any law or regulation makes it
      unlawful, or any central bank or other governmental authority asserts that
      it is  unlawful,  for any  Tranche B Lender or Cash  Collateral  Lender to
      perform its obligations hereunder and under the other Operative Agreements
      to make or maintain  Eurodollar  Loans then (i) each  Eurodollar Loan will
      automatically,  at the earlier of the end of the Interest  Period for such
      Eurodollar Loan or the date required by law,  convert into an ABR Loan and
      (ii) the obligation of such Tranche B Lender or Cash Collateral  Lender to
      make,  convert or continue  Eurodollar  Loans shall be suspended until the
      Agent  shall  notify  the  Lessee  that  such  Tranche  B  Lender  or Cash
      Collateral  Lender has  determined  that the  circumstances  causing  such
      suspension no longer exist.

      11.4. Funding/Contribution Indemnity.

      Subject  to the  provisions  of Section  2.11(a)  of the  Tranche B Credit
Agreement  and  Section  2.11(a) of the Cash  Collateral  Credit  Agreement,  as
applicable,  the  Lessee  agrees to  indemnify  each  Tranche B Lender  and Cash
Collateral  Lender and to hold each Tranche B Lender and Cash Collateral  Lender
harmless from any loss or reasonable expense which such Tranche B Lender or Cash
Collateral  Lender may sustain or incur as a  consequence  of (a) any default by
the Construction  Agent in connection with the drawing of funds for any Advance,
(b) any default in making any  prepayment  after a notice thereof has been given
in accordance with the provisions of the Operative  Agreements or (c) the making
of a voluntary or involuntary  payment of Eurodollar Loans on a day which is not
the last day of an Interest  Period with respect  thereto.  The Lessee agrees to
indemnify  each  Tranche  A Note  Purchaser  and to  hold  each  Tranche  A Note
Purchaser harmless from any loss or reasonable expense which such Tranche A Note
Purchaser may sustain or incur as a consequence  of the making of a voluntary or
involuntary  payment  of any  Tranche A Note on a day which is not the  Maturity
Date.  Such  indemnification  shall be (I)  respecting  Tranche B Loans and Cash
Collateral Loans, in an amount equal to the excess, if any, of (x) the amount of
interest  which would have  accrued on the amount so paid,  or not so  borrowed,
accepted, converted or continued for the period from the date of such payment or
of such failure to borrow,  accept,  convert or continue to the last day of such

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Interest  Period  (or,  in the case of a failure to borrow,  accept,  convert or
continue,  the  Interest  Period that would have  commenced  on the date of such
failure)  in each case at the  applicable  Eurodollar  Rate plus the  Applicable
Percentage  for such  Loan for  such  Interest  Period  over (y) the  amount  of
interest (as  determined by such Financing  Party in its reasonable  discretion)
which would have accrued to such  Financing  Party on such amount by reemploying
such funds in loans of the same type and amount  during the period from the date
of payment or failure to borrow to the last day of the then applicable  Interest
Period (or, in the case of a failure to borrow,  the Interest  Period that would
have  commenced on the date of such failure) and (II)  respecting  the Tranche A
Notes, the Make-Whole Amount. This covenant shall survive the termination of the
Operative Agreements and the payment of all other amounts payable hereunder.

      11.5. EXPRESS  INDEMNIFICATION FOR ORDINARY NEGLIGENCE,  STRICT LIABILITY,
            ETC.

      WITHOUT LIMITING THE GENERALITY OF THE  INDEMNIFICATION  PROVISIONS OF ANY
AND ALL OF THE OPERATIVE  AGREEMENTS  AND TO THE EXTENT  PERMITTED BY APPLICABLE
LAW, EACH PERSON PROVIDING INDEMNIFICATION OF ANOTHER PERSON UNDER ANY OPERATIVE
AGREEMENT  HEREBY  FURTHER  EXPRESSLY  RELEASES  EACH  BENEFICIARY  OF ANY  SUCH
INDEMNIFICATION  FROM ALL CLAIMS FOR LOSS OR DAMAGE,  DESCRIBED IN ANY OPERATIVE
AGREEMENT,  CAUSED BY ANY ACT OR  OMISSION  ON THE PART OF ANY SUCH  BENEFICIARY
ATTRIBUTABLE TO THE ORDINARY NEGLIGENCE (WHETHER SOLE OR CONTRIBUTORY) OR STRICT
LIABILITY OF ANY SUCH  BENEFICIARY,  AND INDEMNIFIES,  EXONERATES AND HOLDS EACH
SUCH BENEFICIARY FREE AND HARMLESS FROM AND AGAINST ANY AND ALL ACTIONS,  CAUSES
OF ACTION,  SUITS,  CLAIMS,  LOSSES,  COSTS,  LIABILITIES,  DAMAGES AND EXPENSES
(INCLUDING  WITHOUT  LIMITATION   REASONABLE   ATTORNEY'S  FEES  AND  EXPENSES),
DESCRIBED ABOVE,  INCURRED BY ANY SUCH BENEFICIARY  (IRRESPECTIVE OF WHETHER ANY
SUCH BENEFICIARY IS A PARTY TO THE ACTION FOR WHICH  INDEMNIFICATION  UNDER THIS
AGREEMENT  OR ANY OTHER  OPERATIVE  AGREEMENT  IS  SOUGHT)  ATTRIBUTABLE  TO THE
ORDINARY  NEGLIGENCE  (WHETHER SOLE OR  CONTRIBUTORY) OR STRICT LIABILITY OF ANY
SUCH BENEFICIARY.

      11.6. Additional Provisions Regarding Environmental Indemnification.

      Without   limiting  the  generality  of  Section  11.1,   each  and  every
Indemnified  Person  shall at all times have the rights  and  benefits,  and the
Indemnity Provider shall have the obligations, in each case provided pursuant to
the Operative  Agreements with respect to environmental  matters,  violations of
any  Environmental  Law, any  Environmental  Claim,  the Existing  Environmental
Matters or other loss of or damage to any property or the  environment  relating
to the  Property,  the Lease,  the Agency  Agreement or the  Indemnity  Provider
(including  without  limitation  the rights and  benefits  provided  pursuant to
Section 11.1(c)).

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<PAGE>

      11.7. Indemnity Prior to Completion Date.

      Notwithstanding  the provisions of Sections 11.1,  11.2,  11.3, 11.4, 11.5
and 11.6  (other than with  respect to matters  concerning  indemnification  for
environmental  conditions  existing  on or before the  Closing  Date,  including
without limitation the Existing  Environmental  Matters) and any other indemnity
obligations of the Indemnity  Provider under the Operative  Agreements,  (a) the
Lessor shall be the only  beneficiary  of the  provisions  set forth in Sections
11.1,  11.2,  11.3,  11.4,  11.5 and 11.6  (again,  subject  to the  immediately
preceding  parenthetical  phrase)  and any other  indemnity  obligations  of the
Indemnity  Provider  under the  Operative  Agreements  with respect to any Claim
arising thereunder solely for the period prior to the Completion Date related to
the  Property,  and (b) such limited  rights of  indemnification  referenced  in
Section 11.7(a) (to the extent relating to third-party  claims) shall be limited
to third-party claims caused by or resulting from the Indemnity  Provider's acts
or omissions  and/or all other Persons acting by, through or under the Indemnity
Provider (including, without limitation,  contractors,  subcontractors and other
Persons  contracted  or  controlled  by  the  Construction   Agent).  After  the
Completion Date for the Property, each Indemnified Person shall be a beneficiary
of the provisions set forth in Sections 11.1 through 11.6.

      To the extent the  Indemnity  Provider is not  obligated to indemnify  any
Indemnified  Person with respect to Claims arising under  Sections  11.1,  11.2,
11.3,  11.4, 11.5 or 11.6 and any other  indemnity  obligations of the Indemnity
Provider under the Operative Agreements prior to the Completion Date, the Lessor
shall provide such indemnities in favor of such Indemnified Person in accordance
with the relevant  provisions of Sections 11.1,  11.2,  11.3, 11.4, 11.5 or 11.6
and  any  other  indemnity  obligations  of the  Indemnity  Provider  under  the
Operative  Agreements as the case may be. It is acknowledged and agreed that any
amount for which the Lessor becomes obligated to any Indemnified Person pursuant
hereto shall  become a Claim for which the Lessor is entitled to indemnity  from
the Indemnity  Provider  pursuant to and subject to the limitations set forth in
subpart (b) of the first sentence of the preceding paragraph.

      THE  INDEMNITY  OBLIGATIONS  UNDERTAKEN  BY THE  LESSOR  PURSUANT  TO THIS
SECTION  11.7  ARE IN ALL  RESPECTS  SUBJECT  TO THE  LIMITATIONS  ON  LIABILITY
REFERENCED IN SECTION 12.9.

                           SECTION 12. MISCELLANEOUS.

      12.1. 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 transfer of the Property to the Lessor,  the acquisition
of  the  Property  (or  any  of  its   components),   the  construction  of  any
Improvements, the Completion of the Property, any disposition of any interest of
the Lessor in the Property, 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

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<PAGE>

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 with
respect to matters occurring prior to such expiration or termination.

      12.2. Notices.

      All  notices  required  or  permitted  to be  given  under  any  Operative
Agreement shall be in writing.  Notices may be served by certified or registered
mail, postage paid with return receipt requested;  by private courier,  prepaid;
by telex, facsimile,  or other telecommunication  device capable of transmitting
or creating a written  record;  or  personally.  Notices sent by mail or courier
shall be deemed  delivered  when  delivered as  addressed,  or if the  addressee
refuses  delivery,  when  presented for delivery  notwithstanding  such refusal.
Telex or  telecommunicated  notices  shall be deemed  delivered  when receipt is
acknowledged  by the  addressee  or  its  office.  Personal  delivery  shall  be
effective when accomplished. Unless a party changes its address by giving notice
to the other party as provided herein, notices shall be delivered to the parties
at the following addresses:

      If to the  Construction  Agent  or  the  Lessee,  to  such  entity  at the
following address:

             Toys "R" Us, Inc.
             461 From Road
             Paramus, New Jersey  07652
             Attention:  General Counsel
             Telephone:  (201) 599-7880
             Telecopy:  (201) 262-9097

      If to the Borrower or the Lessor, to such entity at the following address:

             First Union Development Corporation
             c/o First Union Securities, Inc.
             One First Union Center
             301 South College Street, TW-14
             Charlotte, North Carolina  28288-5604
             Attention:  Van S. Jones, Vice President
             Telephone: (704) 383-6787
             Telecopy:  (704) 383-8108

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<PAGE>

      If to the Agent, to it at the following address:

             First Union National Bank
             c/o First Union Securities, Inc.
             301 South College Street, TW-14
             Charlotte, North Carolina  28288-5604
             Attention: Van S. Jones, Vice President
             Telephone: (704) 383-6787
             Telecopy:  (704) 383-8108

      If to the Escrow Agent, to it at the following address:

             First Union National Bank
             Corporate Trust
             21 South Street, NJ3201
             Morristown, NJ  07960
             Attention: Melissa Matthews
                        Vice President
             Telephone: (973) 898-7159
             Telecopy:  (973) 680-4531 or
                        (973) 680-4538

            If to any Primary  Financing  Party,  to it at the address set forth
      for such  Primary  Financing  Party  in  Exhibit  A to the  Note  Purchase
      Agreement  or in  Schedule  2.1 of the  Tranche B Credit  Agreement  or in
      Schedule 2.1 of the Cash Collateral Credit Agreement, as applicable.

            From time to time any party may designate  additional parties and/or
      another address for notice purposes by notice to each of the other parties
      hereto.  Each notice  hereunder shall be effective upon receipt or refusal
      thereof.

      12.3. 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 (1) and the same
instrument.

      12.4. Terminations, Amendments, Waivers, Etc.

      Each Operative Agreement may be terminated, amended, supplemented,  waived
or modified only by an instrument in writing signed by the Agent (as directed by
the  Secured  Parties  in  accordance  with  the  terms  of  the   Intercreditor
Agreement),  the  Lessor  and the Lessee (to the extent the Lessee is a party to
such  Operative  Agreement);  provided,  to the  extent no Lease  Default  under
Sections  17.1(a),  (b),  (g), (h) or (j) of the Lease or Lease Event of Default
shall have occurred and be continuing, the Agent and the Lessor shall not amend,
supplement,  waive or modify any provision of any Operative  Agreement  which is
binding on the Lessee or

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<PAGE>

the  Property in such a manner as to  adversely  affect the rights of the Lessee
without the prior written consent (not to be  unreasonably  withheld or delayed)
of the Lessee.

      12.5. Headings, etc.

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

      12.6. 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.

      12.7. GOVERNING  LAW;  SUBMISSION TO  JURISDICTION;  WAIVER OF JURY TRIAL;
            VENUE.

            (a) THIS  AGREEMENT  AND THE RIGHTS AND  OBLIGATIONS  OF THE PARTIES
      HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED,  INTERPRETED AND ENFORCED IN
      ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING
      EFFECT TO THE PRINCIPLES  THEREOF RELATING TO CONFLICTS OF LAW), EXCEPT TO
      THE  EXTENT  THE LAWS OF THE  STATE  WHERE THE  PROPERTY  IS  LOCATED  ARE
      REQUIRED TO APPLY.  Any legal  action or  proceeding  with respect to this
      Agreement or any other Operative Agreement may be brought in the courts of
      the State of New York or of the United States for the Southern District of
      New York,  and, by execution and delivery of this  Agreement,  each of the
      parties to this  Agreement  hereby  irrevocably  accepts for itself and in
      respect of its property,  generally and unconditionally,  the nonexclusive
      jurisdiction of such courts. Each of the parties to this Agreement further
      irrevocably  consents  to  the  service  of  process  out  of  any  of the
      aforementioned  courts in any such action or  proceeding by the mailing of
      copies thereof by registered or certified mail, postage prepaid,  to it at
      the address set out for notices  pursuant to Section 12.2, such service to
      become  effective  upon receipt or rejection.  Nothing herein shall affect
      the right of any party to serve  process in any other manner  permitted by
      Law.

            (b) EACH OF THE PARTIES HERETO IRREVOCABLY AND  UNCONDITIONALLY,  TO
      THE FULLEST EXTENT ALLOWED BY APPLICABLE  LAW, WAIVES TRIAL BY JURY IN ANY
      LEGAL ACTION OR PROCEEDING RELATING TO ANY DISPUTE OR THIS AGREEMENT,  ANY
      OTHER OPERATIVE AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.

            (c) Each of the parties to this Agreement hereby  irrevocably waives
      any objection which it may now or hereafter have to the laying of venue of
      any  of  the  aforesaid  actions  or  proceedings  arising  out  of  or in
      connection with this Agreement or any other Operative Agreement brought in
      the  courts  referred  to in  subsection  (a)  above  and  hereby  further
      irrevocably waives and agrees not to plead or claim in any such court

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<PAGE>

      that any such  action or  proceeding  brought  in any such  court has been
      brought in an inconvenient forum.

      Subject to the other  applicable  provisions of the Operative  Agreements,
the parties shall have the right to proceed in any court of proper  jurisdiction
or by self-help to exercise or prosecute the following remedies,  as applicable:
(i) all rights to  foreclose  against  any real or  personal  property  or other
security  by  exercising  a power of sale or under  applicable  law by  judicial
foreclosure  including  a  proceeding  to confirm  the sale;  (ii) all rights of
self-help  including  peaceful  occupation  of real  property and  collection of
rents, set-off and peaceful possession of personal property; and (iii) obtaining
provisional or ancillary  remedies including  injunctive relief,  sequestration,
garnishment,  attachment,  appointment  of  receiver  and filing an  involuntary
bankruptcy  proceedings.  Any claim or  controversy  with  regard to any party's
entitlement to such remedies is a Dispute.

      Each  party to this  Agreement  agrees  that it shall not have a remedy of
punitive or exemplary  damages against any other party in any Dispute and hereby
waives any right or claim to punitive or  exemplary  damages it has now or which
may arise in the future in connection with any Dispute.

      12.8. 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.

      12.9. Liability Limited.

            (a) [Reserved].

            (b)  Anything  to the  contrary  contained  in this  Agreement,  the
      Tranche B Credit Agreement, the Cash Collateral Credit Agreement, the Note
      Purchase  Agreement,  the  Notes  or  in  any  other  Operative  Agreement
      notwithstanding,  no Exculpated  Person shall be personally  liable in any
      respect for any liability or obligation  arising hereunder or in any other
      Operative  Agreement  including  without  limitation  the  payment  of the
      principal of, or interest on, the Notes,  or for monetary  damages for the
      breach of performance  of any of the covenants  contained in the Tranche B
      Credit Agreement,  the Cash Collateral Credit Agreement, the Note Purchase
      Agreement, the Notes, this Agreement, the Security Agreement or any of the
      other Operative  Agreements.  The Primary  Financing Parties and the Agent
      agree that, in the event any remedies  under any  Operative  Agreement are
      pursued,  neither the Primary  Financing  Parties nor the Agent shall have
      any recourse against any Exculpated  Person,  for any deficiency,  loss or
      Claim for monetary damages or otherwise  resulting  therefrom and recourse
      shall be had  solely  and  exclusively  against  the  Borrower's  Interest
      (excluding Excepted Payments) and the Lessee (with respect to the Lessee's
      obligations under the Operative Agreements);  but

                                       73
<PAGE>

      nothing contained herein shall be taken to prevent recourse against or the
      enforcement  of  remedies  against  the  Borrower's   Interest  (excluding
      Excepted Payments) in respect of any and all liabilities,  obligations and
      undertakings  contained  herein and/or in any other  Operative  Agreement.
      Notwithstanding  the provisions of this Section,  nothing in any Operative
      Agreement  shall:  (i)  constitute  a waiver,  release or discharge of any
      indebtedness  or  obligation  evidenced  by the  Notes  arising  under any
      Operative  Agreement or secured by any Operative  Agreement,  but the same
      shall  continue  until paid or  discharged;  (ii)  relieve any  Exculpated
      Person from  liability and  responsibility  for (but only to the extent of
      the damages arising by reason of): active waste knowingly committed by any
      Exculpated  Person  with  respect  to  the  Property,   any  fraud,  gross
      negligence  or willful  misconduct on the part of any  Exculpated  Person;
      (iii) relieve any Exculpated Person from liability and  responsibility for
      (but only to the extent of the moneys  misappropriated,  misapplied or not
      turned  over)  (A)  except  for  Excepted  Payments,  misappropriation  or
      misapplication  by the Lessor (i.e.,  application in a manner  contrary to
      any of the Operative Agreements) of any insurance proceeds or condemnation
      award paid or  delivered to the Lessor by any Person other than the Agent,
      (B) except for Excepted  Payments,  any deposits or any escrows or amounts
      owed by the  Construction  Agent  under the Agency  Agreement  held by the
      Lessor or (C) except for  Excepted  Payments,  any rent or other income or
      funds  received  by the Lessor  from the Lessee that is not turned over to
      the Agent; (iv) affect or in any way limit the Agent's rights and remedies
      under any  Operative  Agreement  with  respect to the Rents and rights and
      powers of the Agent under the Operative Agreements or to obtain a judgment
      against the Lessee's interest in the Property pursuant to the terms of the
      Operative Agreements or the Agent's rights and powers to obtain a judgment
      against the Lessor or the Lessee;  or (v)  relieve any  Exculpated  Person
      from  liability  and  responsibility  (A) with  respect  to such  Person's
      obligations  concerning  Lessor Liens  pursuant to Section  8.2(a) and the
      last sentence of Section 8.9(a) hereof or (B) to the extent such liability
      or responsibility is attributable to any representation or warranty of any
      Exculpated  Person  contained  in  Section  6.1  hereof  that was false or
      inaccurate  in any material way when made  (provided,  that no  deficiency
      judgment or other money judgment shall be enforced  against any Exculpated
      Person  except to the extent of the  Lessor's  interest in the  Borrower's
      Interest  (excluding Excepted Payments) or to the extent the Lessor may be
      liable as otherwise  contemplated  in clauses  (ii),  (iii) or (v) of this
      Section 12.9(b)).

      12.10. Rights of the Lessee.

      If at any time all  obligations  (i) of the  Borrower  under the Tranche B
Credit  Agreement,  the Cash  Collateral  Credit  Agreement,  the Note  Purchase
Agreement,  the Notes, the Security Documents and the other Operative Agreements
and (ii) of the Lessee  under the  Operative  Agreements  have in each case been
satisfied  or  discharged  in full,  then the Lessee  shall be  entitled  to (a)
terminate  the Lease and (b) receive all amounts  then held under the  Operative
Agreements and all proceeds with respect to the Property.  Upon the  termination
of the Lease pursuant to the foregoing  clause (a), the Lessor shall transfer to
the Lessee or its designee all of its right,  title and interest  free and clear
of the Lien of the  Lease,  the Lien of the  Security  Documents  and all  other
Operative Agreements and all Lessor Liens in and to the Property and

                                       74
<PAGE>

any amounts or proceeds  referred to in the  foregoing  clause (b) shall be paid
over to the Lessee or its designee.

      12.11. Further Assurances.

      The  parties  hereto  shall   promptly   cause  to  be  taken,   executed,
acknowledged or delivered,  at the sole expense of the Lessee,  all such further
acts,  conveyances,  documents and assurances as the other parties may from time
to time  reasonably  request in order to carry out and effectuate the intent and
purposes of this Participation Agreement, the other Operative 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,  filings of  Mortgage  Instruments  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  and without  need of any prior
request  from any  other  party,  shall  take such  action  as may be  necessary
(including without  limitation any action specified in the preceding  sentence),
or (if the Lessor  shall so request) as so  requested,  in order to maintain and
protect  all  security  interests  provided  for  hereunder  or under  any other
Operative  Agreement.  In  addition,  in  connection  with  the  sale  or  other
disposition of the Property or any portion thereof, the Lessee agrees to execute
such instruments of conveyance as reasonably  required pursuant to the Operative
Agreements in connection therewith.

      12.12. Calculations under Operative Agreements.

      The   parties   hereto   agree  that  all   calculations   and   numerical
determinations to be made under the Operative  Agreements by the Lessor shall be
made by the  Agent  and  that  such  calculations  and  determinations  shall be
conclusive and binding on the parties hereto in the absence of manifest error.

      12.13. Confidentiality.

      Each Financing Party severally agrees to keep  confidential all non-public
information  pertaining  to the  Lessee  or any of  its  Subsidiaries  which  is
provided to it by the Lessee or any of its  Subsidiaries and which an officer of
the  Lessee  or any  of its  Subsidiaries  has  requested  in  writing  be  kept
confidential,  and shall not  intentionally  disclose  such  information  to any
Person except:

            (a) to the extent such  information  is public when received by such
      Person or becomes  public  thereafter  due to the act or  omission  of any
      party other than such Person;

            (b) to the extent such  information  is lawfully  and  independently
      obtained  from a source  other than the Lessee or any of its  Subsidiaries
      and such information from such source is not, to such Person's  knowledge,
      subject to an obligation of  confidentiality  or, if such  information  is
      subject to an  obligation  of  confidentiality,  that  disclosure  of such
      information is permitted;

                                       75
<PAGE>

            (c) to counsel,  auditors or accountants retained by any such Person
      or any Affiliates of any such Person (if such  Affiliates are permitted to
      receive such  information  pursuant to clause (f) or (g) below),  provided
      they  agree to keep such  information  confidential  as if such  Person or
      Affiliate  were  party  to this  Agreement  and to  financial  institution
      regulators,  including  examiners of any Financing  Party or any Affiliate
      thereof in the course of examinations of such Persons;

            (d)  in  connection  with  any  litigation  or  the  enforcement  or
      preservation  of the rights of any  Financing  Party  under the  Operative
      Agreements;

            (e) to the  extent  required  by any  applicable  statute,  rule  or
      regulation  or  court  order  (including  without  limitation,  by  way of
      subpoena)  or pursuant to the request of any  regulatory  or  Governmental
      Authority having  jurisdiction  over any such Person  (including,  but not
      limited  to,  the  National   Association  of  Insurance   Commissioners);
      provided,  however,  that such Person  shall  endeavor  (if not  otherwise
      prohibited  by Law) to notify  the  Lessee  prior to any  disclosure  made
      pursuant to this clause (e),  except that no such Person  shall be subject
      to any liability whatsoever for any failure to so notify the Lessee;

            (f) any  Financing  Party may disclose such  information  to another
      Financing  Party or to any Affiliate of a Financing Party that is a direct
      or indirect owner of any Financing Party (provided, in each case that such
      Affiliate  has  agreed  to  maintain  confidentiality  as if it were  such
      Financing Party);

            (g)  any  Financing  Party  may  disclose  such  information  to  an
      Affiliate of any Financing Party to the extent required in connection with
      the  transactions  contemplated  hereby or to the extent such Affiliate is
      involved in, or provides  advice or assistance to such Person with respect
      to, such  transactions  (provided,  in each case that such  Affiliate  has
      agreed to maintain confidentiality as if it were such Financing Party);

            (h) in connection with any proposed or actual assignment or grant of
      a participation  by any of the Primary  Financing  Parties of interests in
      the Note  Purchase  Agreement,  the Tranche B Credit  Agreement,  the Cash
      Collateral   Credit   Agreement  or  any  Note  to  such  other  financial
      institution   (who   shall  in  turn   agree  in   writing   to   maintain
      confidentiality  as if it were a Primary  Financing Party originally party
      to this Agreement); or

            (i) any Financing Party may disclose the Operative Agreements to any
      Rating Agency requesting the same.

      Subject to the terms of Sections 12.13(a)-12.13(i), under the terms of any
one or more of which circumstances disclosure shall be permitted, each Financing
Party  severally  agrees  to  keep   confidential  all  non-public   information
pertaining  to the financing  structure  described in the  unrecorded  Operative
Agreements.  Any Person required to maintain the  confidentiality of information
as provided in this Section  12.13 shall be considered to have complied with its
obligation  to do so if such  Person has  exercised  the same  degree of care to
maintain the

                                       76
<PAGE>

confidentiality  of such  information  as such  Person  would  accord to its own
confidential information.

      12.14. Financial Reporting/Tax Characterization.

      Lessee  agrees to obtain advice from its own  accountants  and tax counsel
regarding the financial reporting treatment and the tax  characterization of the
transactions  described in the Operative Agreements.  Lessee further agrees that
Lessee shall not rely upon any statement of any Financing  Party or any of their
respective Affiliates and/or Subsidiaries regarding any such financial reporting
treatment  and/or  tax  characterization.  The  transactions  described  in  the
Operative  Agreements are intended to comply fully with the  requirements of FAS
13, FAS 98, EITF 90-15, EITF 96-21, EITF 97-1 and EITF 97-10.

      12.15. Set-off.

      In addition to any rights now or hereafter  granted under  applicable  Law
and not by way of  limitation  of any such rights,  after the  occurrence of any
Lease Event of Default and during the continuance thereof, the Primary Financing
Parties,  the Lessor and any assignee of a Primary Financing Party or the Lessor
in accordance  with the  applicable  provisions of the Operative  Agreements are
hereby authorized by the Lessee at any time or from time to time, without notice
to the Lessee or to any other  Person,  any such notice being  hereby  expressly
waived, to set-off and to appropriate and to apply any and all deposits (general
or special, time or demand,  including without limitation indebtedness evidenced
by  certificates  of  deposit,  whether  matured  or  unmatured)  and any  other
indebtedness  at any time held or owing by the Primary  Financing  Parties,  the
Lessor, their respective  Affiliates or any assignee or participant of a Primary
Financing  Party in accordance  with the applicable  provisions of the Operative
Agreements  to or for the credit or the  account of the  Lessee  against  and on
account  of the  obligations  of  the  Lessee  under  the  Operative  Agreements
irrespective of whether or not (a) the Primary  Financing  Parties or the Lessor
shall have made any demand under any Operative  Agreement or (b) the Agent shall
have  declared any or all of the  obligations  of the Lessee under the Operative
Agreements  to be due  and  payable  and  although  such  obligations  shall  be
contingent or unmatured.  Notwithstanding  the foregoing,  neither the Agent nor
any other Financing Party shall exercise,  or attempt to exercise,  any right of
setoff,  banker's lien, or the like,  against any deposit account or property of
the Lessee  held by the Agent or any other  Financing  Party,  without the prior
written  consent of the Agent (acting upon the direction of the Secured  Parties
in  accordance  with  the  Intercreditor  Agreement),  and any  Financing  Party
violating  this  provision  shall  indemnify  the Agent and the other  Financing
Parties  from any and all costs,  expenses,  liabilities  and damages  resulting
therefrom. The contractual restriction on the exercise of setoff rights provided
in the  foregoing  sentence  is  solely  for the  benefit  of the  Agent and the
Financing Parties and may not be enforced by the Lessee.

                            [signature pages follow]

                                       77
<PAGE>

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

CONSTRUCTION AGENT
AND LESSEE:                           TOYS "R" US, INC.

                                      By:     /s/ JON W. KIMMINS
                                         ----------------------------------
                                      Name:   JON W. KIMMINS
                                           --------------------------------
                                      Title:  SR. VICE PRESIDENT-TREASURER
                                            -------------------------------

                           [signature pages continue]
<PAGE>

BORROWER AND LESSOR:                  FIRST UNION DEVELOPMENT CORPORATION

                                      By:     /s/ EVANDER S. JONES, JR.
                                         ----------------------------------
                                      Name:   EVANDER S. JONES, JR.
                                           --------------------------------
                                      Title:  VICE PRESIDENT
                                            -------------------------------

                           [signature pages continue]

<PAGE>

THE AGENT AND
TRANCHE B LENDERS:                    FIRST UNION NATIONAL BANK,
                                      as a Tranche B Lender and as the Agent

                                      By:     /s/ EVANDER S. JONES, JR.
                                         ----------------------------------
                                      Name:   EVANDER S. JONES, JR.
                                           --------------------------------
                                      Title:  VICE PRESIDENT
                                            -------------------------------

                           [signature pages continue]
<PAGE>

ESCROW AGENT:                         FIRST UNION NATIONAL BANK,
                                      as the Escrow Agent

                                      By:     /s/ EVANDER S. JONES, JR.
                                         ----------------------------------
                                      Name:   EVANDER S. JONES, JR.
                                           --------------------------------
                                      Title:  VICE PRESIDENT
                                            -------------------------------

                           [signature pages continue]
<PAGE>

TRANCHE A NOTE PURCHASERS:            ALLSTATE LIFE INSURANCE COMPANY,
                                      as a Tranche A Note Purchaser

                                      By:     /s/ PATRICIA W. WILSON
                                         ----------------------------------
                                      Name:   PATRICIA W. WILSON
                                           --------------------------------
                                      Title:
                                            -------------------------------

                                      By:     /s/ DANIEL C. LEIMBACH
                                         ----------------------------------
                                      Name:   DANIEL C. LEIMBACH
                                           --------------------------------
                                      Title:
                                            -------------------------------

                                      Authorized Signatories

                           [signature pages continue]
<PAGE>

                                      EQUITRUST LIFE INSURANCE COMPANY,
                                      as a Tranche A Note Purchaser

                                      By:     /s/ ROBERT J. RUMMELHART
                                         ----------------------------------
                                      Name:   Robert J. Rummelhart
                                           --------------------------------
                                      Title:  Fixed Income-Vice President
                                            -------------------------------

                           [signature pages continue]
<PAGE>

                                      FARM BUREAU LIFE INSURANCE COMPANY,
                                      as a Tranche A Note Purchaser

                                      By:     /s/ ROBERT J. RUMMELHART
                                         ----------------------------------
                                      Name:   Robert J. Rummelhart
                                           --------------------------------
                                      Title:  Fixed Income-Vice President
                                            -------------------------------

                           [signature pages continue]
<PAGE>

                                      FARM BUREAU MUTUAL INSURANCE COMPANY,
                                      as a Tranche A Note Purchaser

                                      By:     /s/ ROBERT J. RUMMELHART
                                         ----------------------------------
                                      Name:   Robert J. Rummelhart
                                           --------------------------------
                                      Title:  Fixed Income-Vice President
                                            -------------------------------

                           [signature pages continue]
<PAGE>

                                      FIRST UNION SECURITIES, INC.,
                                      as a Tranche A Note Purchaser

                                      By:     /s/ [ILLEGIBLE]
                                         ----------------------------------
                                      Name:   [ILLEGIBLE]
                                           --------------------------------
                                      Title:  Director
                                            -------------------------------

                           [signature pages continue]
<PAGE>

                                      HARBOURVIEW CDO III, LIMITED,
                                      as a Tranche A Note Purchaser

                                      By:     /s/ JOHN S. KOWALIK
                                         ----------------------------------
                                      Name:   John S. Kowalik
                                           --------------------------------
                                      Title:  Sr. Vice President
                                            -------------------------------

                           [signature pages continue]
<PAGE>

                                      STATE OF WISCONSIN INVESTMENT BOARD,
                                      as a Tranche A Note Purchaser

                                      By:     /s/ EVE A. HENNESSEE
                                         ----------------------------------
                                      Name:   Eve A. Hennessee
                                           --------------------------------
                                      Title:  Portfolio Manager
                                            -------------------------------

                           [signature pages continue]
<PAGE>

CASH COLLATERAL LENDERS:              FIRST UNION NATIONAL BANK,
                                      as a Cash Collateral Lender

                                      By:     /s/ EVANDER S. JONES, JR.
                                         ----------------------------------
                                      Name:   EVANDER S. JONES, JR.
                                           --------------------------------
                                      Title:  VICE PRESIDENT
                                            -------------------------------

                              [signature pages end]
<PAGE>

                                  Schedule 5.11

                         [Form of Officer's Certificate]

      I, ______________________, _____________________ of TOYS "R" US. INC. (the
"Lessee") hereby certify that, to the best of my knowledge and belief, with
respect to that certain Participation Agreement dated as of September 26, 2001
(as amended, modified, restated or supplemented from time to time, the
"Participation Agreement"; all of the defined terms in the Participation
Agreement are incorporated herein by reference) among the Lessee, the Lessor,
the Tranche A Note Purchasers, the Tranche B Lenders, the Cash Collateral
Lenders, the Agent and the Escrow Agent:

      a.    The copies of the investment account statements which accompany this
            Officer's Certificate are true and correct copies of the investment
            account statements relating to the Cash Collateral Account received
            by the Lessee from the Intermediary covering the monthly period
            beginning on _____________, 200__ and ending on __________, 200__;

      b.    Since ___________ (the date of the last similar certification, or,
            if none, the Closing Date) no Lease Default or Lease Event of
            Default has occurred; and

      Delivered herewith are detailed calculations demonstrating compliance by
the Lessee with the provisions of Section 5.11 of the Participation Agreement as
of the end of the period referred to above.

      This ______ day of ___________, ______.

                                      TOYS "R" US, INC.

                                      By:
                                         ----------------------------------
                                      Name:
                                           --------------------------------
                                      Title:
                                            -------------------------------
<PAGE>

                       Attachment to Officer's Certificate

             Calculations Demonstrating Compliance with Section 5.11
                         of the Participation Agreement

              (Attach copies of Cash Collateral Account Statements)
<PAGE>

                                 Schedule 8.3B.2
                        Existing Subsidiary Indebtedness

I.    Capitalized Lease Obligations of Toys "R" Us (Canada) Ltd. in an aggregate
      amount of US$2,020,206.

II.   Capitalized  Lease  Obligations of Toys "R" Us S. A. R. L. in an aggregate
      amount of US$2,088,186.

III.  Industrial  Revenue Bonds of TRU of Puerto Rico, due 2005, in an aggregate
      principal amount of US$20,000,000 (guaranteed by Toys "R" Us, Inc.).

IV.   Industrial  Revenue Bonds of Toys "R" Us-Nytex,  due 2014, in an aggregate
      principal amount of US$2,500,000 (guaranteed by Toys "R" Us, Inc.).

V.    Industrial  Revenue  Bonds of Toys "R"  Us-Penn,  Inc.,  due  2014,  in an
      aggregate  principal  amount of  US$1,120,000  (guaranteed by Toys "R" Us,
      Inc.)

VI.   Indebtedness  of Toys "R"  Us-Service,  Inc. and  Geoffrey  International,
      Inc.,  as Joint  Obligors,  under the  Limited  Recourse  Yen  Receivables
      Financing due 2005 in an aggregate amount of US$120,095,475.

VII.  Guarantee by Toys "R" Us-Delaware, Inc. of the obligations of Toys "R" Us,
      Inc.  under  the  CHF406,006,562.50  Letter of  Credit  and  Reimbursement
      Facility agented by Citibank, N.A. (due 2004)

VIII. Uncommitted Lines of Credit:

      A.    One or more Canadian Subsidiaries of Toys "R" Us, Inc. with Canadian
            Imperial Bank of Commerce in a maximum aggregate principal amount of
            CAD$20,000,000.

      B.    One or more UK  Subsidiaries of Toys "R" Us, Inc. with Barclays Bank
            in a maximum aggregate principal amount of GBP5,000,000.

      C.    One or more German Subsidiaries of Toys "R" Us, Inc. with ComerzBank
            in a maximum aggregate principal amount of DEM30,000,000.

      D.    One or more French  Subsidiaries  of Toys "R" Us, Inc.  with Societe
            Generale in a maximum aggregate principal amount of FRF70,000,000.

      E.    One or more French  Subsidiaries  of Toys "R" Us,  Inc.  with Credit
            Lyonnais in a maximum aggregate principal amount of FRF70,000,000.

      F.    One or more  Australian  Subsidiaries  of Toys  "R"  Us,  Inc.  with
            Commonwealth  Bank  in  a  maximum  aggregate  principal  amount  of
            AUD$15,000,000.
<PAGE>

                                 Schedule 8.3B.3
                                 Existing Liens

I.    Liens  created on certain  royalties,  service  payments and other payment
      receivables  (and  proceeds  thereof)  of Toys "R"  Us-Service,  Inc.  and
      Geoffrey  International,  Inc.,  arising in  connection  with the  Limited
      Recourse  Yen  Receivables  Financing  referred  to in Item VI of Schedule
      8.3B.2.

II.   Liens on equipment and related assets  arising in connection  with Capital
      Lease Obligations referred to in Items I and II of Schedule 8.3B.2.

III.  Liens arising in connection with various Capital Lease Obligations of Toys
      "R" Us, Inc., in an aggregate amount of $24,192,542 (of which  $21,193,333
      is  comprised  of   capitalized   leases  of  cash   registers   with  NCR
      Corporation).

IV.   Liens  arising  under  mortgages  of real  property of Toys "R" Us,  Inc.,
      located at 1333 West Avenue K, Lancaster,  California and 1972 Wells Road,
      Orange Park, Florida.

V.    Liens arising in connection  with the Industrial  Revenue Bonds of various
      subsidiaries  of Toys "R" Us,  Inc.  referred to in Items III, IV and V of
      Schedule 8.3B.2.

VI.   Cash of  approximately  GBP40,000,000  on deposit with The Chase Manhattan
      Bank,   as   Investment   Manager,   for   defeasance   of  the  remaining
      Stepped-Coupon Bonds due 2017.
<PAGE>

                                    EXHIBIT A

                                REQUISITION FORM
   (Pursuant to Sections 4.2, 5.2, 5.3 and 5.4 of the Participation Agreement)

      TOYS  "R"  US,  INC.,  a  Delaware   corporation  (the  "Company"  or  the
"Construction  Agent")  hereby  certifies  as true and correct and  delivers the
following Requisition to FIRST UNION NATIONAL BANK, as the agent for the Primary
Financing Parties  (hereinafter  defined) and respecting the Security Documents,
as the agent for the Secured Parties (the "Agent"):

      Reference is made herein to that certain Participation  Agreement dated as
of September 26, 2001 (as amended, modified,  extended,  supplemented,  restated
and/or  replaced from time to time,  the  "Participation  Agreement")  among the
Company,  in its  capacity as the Lessee and as the  Construction  Agent,  First
Union  Development  Corporation,  as the  lessor  (the  "Lessor"),  the  various
financial  institutions  and other  institutional  investors  which are  parties
thereto from time to time as  purchasers of Tranche A Notes (the "Tranche A Note
Purchasers"), the various banks and other lending institutions which are parties
thereto from time to time as lenders under the Tranche B Credit  Agreement  (the
"Tranche B Lenders"), the various banks and other lending institutions which are
parties  thereto from time to time as lenders under the Cash  Collateral  Credit
Agreement (the "Cash Collateral  Lenders") (the Tranche A Note  Purchasers,  the
Tranche  B  Lenders  and  the  Cash  Collateral   Lenders  may  be  referred  to
collectively  as the  "Primary  Financing  Parties"),  the Agent and First Union
National Bank, as the Escrow Agent (the "Escrow Agent").  Capitalized terms used
herein  but not  otherwise  defined  herein  shall have the  meanings  set forth
therefor in the Participation Agreement.

Check one:

       ____ CLOSING DATE: _________________
       (three (3) Business Days prior notice required for Advance)

       ____ CONSTRUCTION ADVANCE DATE:_____________
       (three (3) Business Days prior notice required for Advance)

1.    Transaction  Expenses  and other fees,  expenses and  disbursements  under
      Sections 7.1(a) or 7.1(b) of the  Participation  Agreement and any and all
      other  amounts   contemplated  to  be  financed  under  the  Participation
      Agreement  including  without  limitation any Work,  broker's fees, taxes,
      recording fees and the like: See attached Schedule 1.

2.    Description  of Land  (which  shall  be a legal  description  of the  Land
      subject to the Lease): See attached Schedule 2.

3.    Description of Equipment: See attached Schedule 3.

                                      A-1
<PAGE>

4.    Construction Budget (which shall include,  without limitation,  line items
      for capitalized interest and Transaction Expenses):  See attached Schedule
      4.

5.    Aggregate Loans and disbursements  from the Escrow Account requested since
      the  Closing  Date  with  respect  to  the  Property,   including  without
      limitation all amounts requested under this Requisition:

      [Amount of Cash Collateral Loan Request:              [$______________]
      (Closing Date Only)]

      Amount Drawn Prior to Current Requisition:             $______________ (a)

      Current Draw for Project Costs:                        $______________ (b)

      A-Note Interest on Escrow Principal (Fixed):           $______________ (c)

      Calculation of Non-GAAP Expense for Current Period:
         A-Note Interest on Drawn Balance                    $______________ (d)
         A-Note Interest on Undrawn Balance                  $______________ (e)
         Less Returns on Reinvested Funds                    $______________ (f)
         Tranche A Non-GAAP Interest Expense (e-f)           $______________ (g)
         Other Non-GAAP Expenses (itemize)                   $______________ (h)
         Total Non-GAAP Expenses (g + h)                     $______________ (i)
      B-Loan Interest for Current Period                     $______________ (j)
      Cash Collateral Loan Interest for Current Period       $______________ (k)

      Calculation of A-Note Request = 74.84% (b+d+j+k)
      Calculation of B-Loan Request = 25.16% (b+d+j+k) + i

      In connection with this Requisition, the Company hereby requests that [the
Cash Collateral  Lenders make Cash Collateral  Loans to the Lessor in the amount
of  $___________],  the Tranche B Lenders make Loans to the Lessor in the amount
of  $______________  and that the Agent  disburse  Tranche A  Proceeds  from the
Escrow Account in the amount of $________________.  The Company hereby certifies
(i) that the foregoing  amounts  requested do not exceed the total  aggregate of
the  Available   Tranche  B  Lender   Commitments   [plus  the  Cash  Collateral
Commitments] plus Tranche A Proceeds  currently on deposit in the Escrow Account
and (ii) each of the provisions of the Participation Agreement applicable to the
Tranche B Loans [, the Cash  Collateral  Loans] and  disbursements  of Tranche A
Proceeds from the Escrow Account requested  hereunder have been complied with as
of the date of this Requisition.

      The Company requests the Tranche B Loans be allocated as follows:

           $______________                         ABR Loans

           $______________                         Eurodollar Loans

                                      A-2
<PAGE>

      [The Company requests the Cash Collateral Loans be allocated as follows:]

          [$______________                         ABR Loans]

          [$______________                         Eurodollar Loans]

6.    Each and every  representation  and  warranty  of the  Construction  Agent
      contained in the  Operative  Agreements to which it is a party is true and
      correct in all material respects,  on and as of the date hereof (except to
      the extent any such representation or warranty relates to an earlier date,
      in which case such  representation  or  warranty  shall have been true and
      correct as of such earlier date).

7.    No Lease  Default or Lease Event of Default has occurred and is continuing
      under any  Operative  Agreement,  and 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  hereby on the date of
      such Advance.

8.    Each Operative Agreement to which Construction Agent is a party is in full
      force and effect with respect to it,  except as the same may be limited by
      applicable  bankruptcy,  insolvency,  fraudulent  transfer or  conveyance,
      reorganization,  moratorium or other similar laws relating to or affecting
      creditors' or lessors' rights generally and general principles of equity.

9.    The Construction Agent has duly performed and complied with all covenants,
      agreements and conditions  contained in the Participation  Agreement or in
      any Operative Agreement required to be performed or complied with by it on
      or prior to the date hereof.

10.   After giving effect to the Advance requested in this Requisition,  the sum
      of the Available Tranche B Lender Commitments plus the balance of funds in
      the Escrow Account will be sufficient to complete the Improvements.

                                      A-3
<PAGE>

      The  Company  has  caused  this  Requisition  to be  executed  by its duly
authorized officer as of this _____ day of __________, ______.

                                      TOYS "R" US, INC.

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

                                      A-4
<PAGE>

                                   Schedule 1

                [Schedule of Transaction Expenses and other Fees]

                                      A-5
<PAGE>

                                   Schedule 2

                               Description of Land
                     (Legal Description and Street Address)

                                      A-6
<PAGE>

                                   Schedule 3

                            Description of Equipment

                                      A-7
<PAGE>

                                   Schedule 4

                              [Construction Budget

Item                Budgeted             Funded to Date        Funded this Draw]
----                --------             --------------        -----------------

                                      A-8
<PAGE>

                                    EXHIBIT B

                                   [Reserved]

                                      B-1
<PAGE>

                                    EXHIBIT C

                                TOYS "R" US, INC.

                              OFFICER'S CERTIFICATE
           (Pursuant to Section 5.3(y) of the Participation Agreement)

      TOYS "R" US, INC., a Delaware  corporation  (the  "Company"),  DOES HEREBY
CERTIFY as follows:

      1.    Each and every  representation and warranty of the Company contained
            in the  Operative  Agreements  to  which  it is a party  is true and
            correct  in all  material  respects  on and as of the  date  hereof,
            except to the extent any such  representation or warranty relates to
            an earlier date, in which case such representation or warranty shall
            have been  true and  correct  in all  material  respects  as of such
            earlier date.

      2.    No Lease  Default or Lease  Event of  Default  has  occurred  and is
            continuing under any Operative Agreement.

      3.    Each Operative  Agreement to which the Company is a party is in full
            force  and  effect  with  respect  to it,  except as the same may be
            limited by applicable bankruptcy, insolvency, fraudulent transfer or
            conveyance,   reorganization,   moratorium  or  other  similar  laws
            relating to or affecting creditors' or lessors' rights generally and
            general principles of equity.

      4.    The Company has duly  performed  and  complied  with all  covenants,
            agreements and conditions  contained in the Participation  Agreement
            (hereinafter  defined) or in any Operative  Agreement required to be
            performed or complied with by it on or prior to the date hereof.

      Capitalized  terms used in this  Officer's  Certificate  and not otherwise
defined  herein  have  the   respective   meanings   ascribed   thereto  in  the
Participation  Agreement,  dated as of September 26, 2001 among the Company,  as
the Lessee and as the Construction  Agent, First Union Development  Corporation,
as the  Lessor,  the  various  financial  institutions  and other  institutional
investors  which  are  parties  thereto  from  time to time,  as  Tranche A Note
Purchasers  (the  "Tranche  A Note  Purchasers"),  the  various  banks and other
lending  institutions  which are parties thereto from time to time, as Tranche B
Lenders  (the  "Tranche  B  Lenders"),  the  various  banks  and  other  lending
institutions  which are parties  thereto from time to time,  as Cash  Collateral
Lenders (the "Cash Collateral Lenders"), First Union National Bank, as the agent
for the Primary Financing Parties and respecting the Security Documents,  as the
agent for the Secured  Parties (the "Agent") and First Union  National  Bank, as
the escrow agent (the "Escrow Agent").

                                      C-1
<PAGE>

      IN WITNESS WHEREOF,  the Company has caused this Officer's  Certificate to
be duly executed and delivered as of this _____ day of __________, ______.

                                      TOYS "R" US, INC.

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

                                      C-2
<PAGE>

                                    EXHIBIT D

                                TOYS "R" US, INC.

                             SECRETARY'S CERTIFICATE
           (Pursuant to Section 5.3(z) of the Participation Agreement)

      TOYS "R" US,  INC., a Delaware  corporation  (the  "Company")  DOES HEREBY
CERTIFY as follows:

      1.    Attached  hereto as Schedule 1 is a true,  correct and complete copy
            of the  resolutions  of the Board of  Directors  of the Company duly
            adopted by the Board of Directors of the Company on __________. Such
            resolutions have not been amended, modified or rescinded since their
            date of adoption  and remain in full force and effect as of the date
            hereof.

      2.    Attached  hereto as Schedule 2 is a true,  correct and complete copy
            of the  Articles  of  Incorporation  of the  Company  on file in the
            Office of the  Secretary of State of  __________.  Such  Articles of
            Incorporation  have not been  amended,  modified or rescinded  since
            their date of adoption and were in full force and effect on the date
            of the  resolutions  referenced  in  paragraph  1 and remain in full
            force and effect as of the date hereof.

      3.    Attached  hereto as Schedule 3 is a true,  correct and complete copy
            of the Bylaws of the  Company.  Such Bylaws  have not been  amended,
            modified or  rescinded  since  their date of adoption  and remain in
            full force and effect as of the date hereof.

      4.    The persons  named  below now hold the  offices  set forth  opposite
            their names, and the signatures  opposite their names and titles are
            their true and correct signatures.

            Name                     Office                    Signature
            ----                     ------                    ---------

      -------------------    -----------------------   -------------------------

      -------------------    -----------------------   -------------------------

IN WITNESS WHEREOF,  the Company has caused this  Secretary's  Certificate to be
duly executed and delivered as of this _____ day of ___________, ______.

                                      TOYS "R" US, INC.

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

                                      D-1
<PAGE>

                                   Schedule 1

                                Board Resolutions

                                      D-2
<PAGE>

                                   Schedule 2

                            Articles of Incorporation

                                      D-3
<PAGE>

                                   Schedule 3

                                     Bylaws

                                      D-4
<PAGE>

                                    EXHIBIT E

                       FIRST UNION DEVELOPMENT CORPORATION

                              OFFICER'S CERTIFICATE
          (Pursuant to Section 5.3(bb) of the Participation Agreement)

      FIRST UNION  DEVELOPMENT  CORPORATION,  a North Carolina  corporation (the
"Lessor"), DOES HEREBY CERTIFY as follows:

      1.    Each and every  representation  and warranty of the Lessor contained
            in the  Operative  Agreements  to  which  it is a party  is true and
            correct on and as of the date hereof.

      2.    Each  Operative  Agreement to which the Lessor is a party is in full
            force and effect with respect to it.

      3.    The Lessor  has duly  performed  and  complied  with all  covenants,
            agreements and conditions  contained in the Participation  Agreement
            (hereinafter  defined) or in any Operative  Agreement required to be
            performed  or  complied  with by it on or prior to the date  hereof,
            other than those conditions which have been expressly waived.

      4.    No Default or Event of Default attributable solely to the Lessor has
            occurred and is continuing under any Operative Agreement.

Capitalized  terms used in this Officer's  Certificate and not otherwise defined
herein  have the  respective  meanings  ascribed  thereto  in the  Participation
Agreement  dated as of September 26, 2001 among Toys "R" Us, Inc., as the Lessee
and as the Construction  Agent, the Lessor,  the various financial  institutions
and other  institutional  investors which are parties thereto from time to time,
as Tranche A Note  Purchasers  (the  "Tranche A Note  Purchasers"),  the various
banks and other  lending  institutions  which are parties  thereto  from time to
time,  as Tranche B Lenders  (the  "Tranche B Lenders"),  the various  banks and
other lending  institutions which are parties thereto from time to time, as Cash
Collateral Lenders (the "Cash Collateral  Lenders"),  First Union National Bank,
as the agent for the Primary  Financing  Parties  and,  respecting  the Security
Documents,  as the agent for the Secured  Parties (the  "Agent") and First Union
National Bank, as the escrow agent (the "Escrow Agent").

                                      E-1
<PAGE>

IN WITNESS WHEREOF, the Lessor has caused this Officer's  Certificate to be duly
executed and delivered as of this _____ day of __________________, ______.

                                      FIRST UNION DEVELOPMENT CORPORATION

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

                                      E-2
<PAGE>

                                    EXHIBIT F

                       FIRST UNION DEVELOPMENT CORPORATION

                             SECRETARY'S CERTIFICATE
          (Pursuant to Section 5.3(cc) of the Participation Agreement)

                      CERTIFICATE OF [ASSISTANT] SECRETARY

      I,   ______________________,   duly  elected  and  qualified   [Assistant]
Secretary of First Union Development Corporation (the "Company"), hereby certify
as follows:

      1.    Attached  hereto as Schedule 1 is a true,  correct and complete copy
            of the  resolutions  of the Board of  Directors  of the Company duly
            adopted by the Board of Directors of the Company on __________. Such
            resolutions have not been amended, modified or rescinded since their
            date of adoption  and remain in full force and effect as of the date
            hereof.

      2.    Attached  hereto as Schedule 2 is a true,  correct and complete copy
            of the  Articles  of  Incorporation  of the  Company  on file in the
            Office of the Secretary of State of North Carolina. Such Articles of
            Incorporation  have not been  amended,  modified or rescinded  since
            their date of adoption and were in full force and effect on the date
            of the  resolutions  referenced  in  paragraph  1 and remain in full
            force and effect as of the date hereof.

      3.    Attached  hereto as Schedule 3 is a true,  correct and complete copy
            of the Bylaws of the  Company.  Such Bylaws  have not been  amended,
            modified or  rescinded  since  their date of adoption  and remain in
            full force and effect as of the date hereof.

      4.    The persons  named  below now hold the  offices  set forth  opposite
            their names, and the signatures  opposite their names and titles are
            their true and correct signatures.

            Name                     Office                    Signature
            ----                     ------                    ---------

      -------------------    -----------------------   -------------------------

      -------------------    -----------------------   -------------------------

                                      F-1
<PAGE>

IN WITNESS WHEREOF, the Company has caused this ________ Secretary's Certificate
to be duly executed and delivered as of this _____ day of ___________, ______.

                                      FIRST UNION DEVELOPMENT CORPORATION

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

                                      F-2
<PAGE>

                                    EXHIBIT G

                                   [Reserved]

                                      G-1
<PAGE>

                                    EXHIBIT H

                                   [Reserved]

                                       H-1
<PAGE>

                                    EXHIBIT I

                                TOYS "R" US, INC.

                              OFFICER'S CERTIFICATE
            (Pursuant to Section 5.5 of the Participation Agreement)

      TOYS "R" US,  INC., a Delaware  corporation  (the  "Company")  DOES HEREBY
CERTIFY as follows:

      1.    The      address      for     the      subject      Property      is
            _________________________________________________________________.

      2.    The Completion  Date for the  construction  of  Improvements  at the
            Property occurred on ______________.

      3.    The aggregate Property Cost for the Property was $___________.

      4.    All  representations and warranties of the Company in each Operative
            Agreement and in each  certificate  delivered  pursuant  thereto are
            true and correct in all material respects as of the Completion Date,
            except to the extent any such  representation or warranty relates to
            an earlier date, in which case such representation or warranty shall
            have been  true and  correct  in all  material  respects  as of such
            earlier date.

      5.    No changes or  modifications  other than those approved by the Agent
            were  made  to the  Plans  and  Specifications  as  provided  to the
            appraiser  for  purposes of preparing  the  Appraisal  that,  to our
            knowledge individually or in the aggregate have caused or reasonably
            could cause the Fair Market  Sales Value of the  Improvements  to be
            materially  less than the Fair Market Sales Value at  Completion  as
            set forth in the Appraisal.

Capitalized  terms used in this Officer's  Certificate and not otherwise defined
have the respective  meanings  ascribed thereto in the  Participation  Agreement
dated as of  September  26,  2001  among the  Company,  as the Lessee and as the
Construction  Agent,  First Union  Development  Corporation,  as the lessor (the
"Lessor"),  the various financial institutions and other institutional investors
which are parties  thereto  from time to time as  purchasers  of Tranche A Notes
(the  "Tranche  A  Note  Purchasers"),  the  various  banks  and  other  lending
institutions  which are parties  thereto from time to time as lenders  under the
Tranche B Credit  Agreement  (the  "Tranche B Lenders"),  the various  banks and
other  lending  institutions  which are parties  thereto  from time to time,  as
lenders  under  the Cash  Collateral  Credit  Agreement  (the  "Cash  Collateral
Lenders"),  (the Tranche A Note  Purchasers,  the Tranche B Lenders and the Cash
Collateral Lender may be referred to as the "Primary Financing Parties"),  First
Union  National  Bank,  as the  agent for the  Primary  Financing  Parties  and,
respecting  the  Security  Documents,  as the agent for the Secured  Parties and
First Union National Bank, as the escrow agent (the "Escrow Agent").

                                      I-1
<PAGE>

IN WITNESS WHEREOF, the Company has caused this Officer's Certificate to be duly
executed and delivered as of this ____ day of ______________, ______.

                                      TOYS "R" US, INC.

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

                                      I-2
<PAGE>

                                   Schedule 1

              (Documentation in Support of Aggregate Property Cost)

                                      I-3
<PAGE>

                                    EXHIBIT J

                                   [Reserved]

                                       J-1
<PAGE>

                                    EXHIBIT K

                      [Description of Material Litigation]
           (Pursuant to Section 6.2(d) of the Participation Agreement)

                                      None.

                                       K-1
<PAGE>

--------------------------------------------------------------------------------
                                   Appendix A
                         Rules of Usage and Definitions
--------------------------------------------------------------------------------

                                I. Rules of Usage

The  following  rules of usage shall apply to this  Appendix 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:

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

      (b) 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.

      (c) 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.

      (d)  References to any Person shall include such Person,  its  successors,
permitted assigns and permitted transferees.

      (e) Except as otherwise  expressly  provided,  reference to any  agreement
means  such  agreement  as  amended,  modified,  extended,  supplemented  and/or
restated from time to time in accordance with the applicable provisions thereof.

      (f) 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.

      (g)  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.

      (h)  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.

                                      A-1
<PAGE>

      (i) 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 construction and  interpretation
of the Operative Agreements and any amendments or exhibits thereto.

      (j)  Capitalized  terms  used in any  Operative  Agreements  which are not
defined in this Appendix A but are defined in another Operative  Agreement shall
have the meaning so ascribed to such term in the applicable Operative Agreement.

      (k) In  computing  any  period  of  time  for  purposes  of any  Operative
Agreement,  the mechanics for counting the number of days set forth in Rule 6 of
the Federal Rules of Civil Procedure shall be observed.

                                 II. Definitions

      "ABR"  shall  mean,  for any day, a rate per annum equal to the greater of
(a) the Prime  Lending  Rate in effect on such day,  and (b) the  Federal  Funds
Effective  Rate in effect on such day plus one-half of one percent  (0.5%).  For
purposes hereof: "Prime Lending Rate" shall mean the rate announced by the Agent
from time to time as its prime lending rate as in effect from time to time.  The
Prime Lending Rate is a reference rate and is one of several interest rate bases
used by the  Agent  and  does  not  necessarily  represent  the  lowest  or most
favorable  rate  offered  by the Agent  actually  charged to any  customer.  Any
Tranche B Lender or Cash Collateral  Lender may make  commercial  loans or other
loans at rates of interest at, above or below the Prime Lending Rate.  The Prime
Lending Rate shall change  automatically and without notice from time to time as
and when the prime lending rate of the Agent changes.  "Federal Funds  Effective
Rate" shall mean,  for any period,  a fluctuating  interest rate per annum equal
for  each day  during  such  period  to the  weighted  average  of the  rates on
overnight Federal funds  transactions with members or the Federal Reserve System
arranged by Federal funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding  Business Day) by the Federal Reserve
Bank of New York,  or, if such rate is not so  published  for any day which is a
Business Day, the average of the  quotations  for such day on such  transactions
received  by the Agent  from  three (3)  Federal  funds  brokers  of  recognized
standing  selected  by it.  Any  change  in the ABR due to a change in the Prime
Lending Rate or the Federal  Funds  Effective  Rate shall be effective as of the
opening of business  on the  effective  day of such change in the Prime  Lending
Rate or the Federal Funds Effective Rate, respectively.

      "ABR Loans" shall mean Tranche B Loans or Cash  Collateral  Loans the rate
of interest applicable to which is based upon the ABR.

      "Acceleration"  shall have the meaning  given to such term in Section 6 of
the  Tranche  B  Credit  Agreement,  Section  6 of the  Cash  Collateral  Credit
Agreement and/or Section 11 of the Note Purchase Agreement.

                                      A-2
<PAGE>

      "Accountants" means Ernst & Young (or any successor thereto), or any other
firm of certified public accountants of recognized national standing selected by
the Lessee.

      "Accumulated Funding Deficiency" shall have the meaning given to such term
in Section 302 of ERISA.

      "Accounts"  shall have the meaning  given to such term in Section 1 of the
Security Agreement.

      "Acquisition Advance" shall have the meaning given to such term in Section
5.3 of the Participation Agreement.

      "Advance" shall mean a Construction Advance or an Acquisition Advance.

      "Affiliate"  shall mean,  with respect to any Person,  any Person or group
acting in  concert  in  respect of the  Person in  question  that,  directly  or
indirectly,  controls or is controlled  by or is under common  control with such
Person.

      "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 by the  recipient  calculated at the then maximum
marginal  rates  generally  applicable  to  Persons  of  the  same  type  as the
recipients  with respect to the receipt by the  recipient of such amounts  (less
any tax savings realized as a result of the payment of the indemnified  amount),
such  increased  payment  (as so  reduced)  is  equal to the  payment  otherwise
required to be made.

      "Agency  Agreement"  shall  mean  the  Agency  Agreement,  dated as of the
Closing Date between the Construction Agent and the Lessor.

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

      "Agency  Agreement  Event of Default" shall have the meaning given to such
term in Section 5.1 of the Agency Agreement.

      "Agent"  shall mean First Union  National  Bank,  as agent for the Primary
Financing  Parties  pursuant  to  the  Tranche  B  Credit  Agreement,  the  Cash
Collateral  Credit Agreement and the Note Purchase  Agreement,  or any successor
agent appointed in accordance with the terms of the Tranche B Credit  Agreement,
the Cash  Collateral  Credit  Agreement  and the  Note  Purchase  Agreement  and
respecting the Security Documents, as agent for the Secured Parties.

      "Applicable  Percentage"  shall mean (i) for Tranche B  Eurodollar  Loans,
1.73% and (ii) for Cash Collateral Eurodollar Loans, (A) during the Construction
Period, 0.50% and (B) after the Construction Period, 0.40%.

      "Appraisal"  shall  mean,  with  respect to the  Property,  an  "as-built"
appraisal to be delivered in connection with the  Participation  Agreement or in
accordance  with the terms of the

                                      A-3
<PAGE>

Lease, in each case prepared by a reputable appraiser  reasonably  acceptable to
the Agent,  which in the reasonable  judgment of counsel to the Agent,  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.

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

      "Approved  Bank"  shall mean any bank whose  short-term  commercial  paper
rating from S&P is at least A-1 or the equivalent  thereof or from Moody's is at
least P-1 or the equivalent thereof.

      "Approved State" shall mean the State of New Jersey.

      "Appurtenant Rights" shall mean (a) 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 underlying the Improvements 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 (b) all permits,
licenses and rights,  whether or not of record,  appurtenant to such Land or the
Improvements.

      "Assignment and Acceptance" shall mean either an Assignment and Acceptance
in the form  attached  to the  Tranche  B Credit  Agreement  as  Exhibit B or an
Assignment  and  Acceptance in the form attached to the Cash  Collateral  Credit
Agreement as EXHIBIT B, as applicable.

      "Assignment of Escrow Account" shall mean the Assignment of Escrow Account
dated on the Closing Date  executed by the Lessor and agreed and accepted by the
Construction Agent and the Agent.

      "Available  Tranche B Lender  Commitment"  shall mean, as to any Tranche B
Lender at any time, an amount equal to the excess,  if any, of (a) the amount of
such Tranche B Lender's  Commitment over (b) the aggregate  principal  amount of
all Tranche B Loans made by such  Tranche B Lender as of such date (but  without
giving effect to any  repayments or prepayments of any Tranche B Loans under the
Tranche B Credit Agreement).

      "Bankruptcy  Code"  shall  mean  Title  11 of  the  U.  S.  Code  entitled
"Bankruptcy," as now or hereafter in effect or any successor thereto.

      "Bankruptcy  Event"  means with  respect to Borrower  or the  Lessee,  any
voluntary or involuntary dissolution,  winding-up,  total or partial liquidation
or reorganization, or bankruptcy, insolvency, receivership or other statutory or
common law proceedings or  arrangements  involving the Borrower or the Lessee or
the  readjustment  of its  liabilities  or any  assignment  for the  benefit  of
creditors or any marshalling of its assets or liabilities.

                                      A-4
<PAGE>

      "Basic Documents" shall mean the following:  the Participation  Agreement,
the  Agency  Agreement,  the  Tranche  B Credit  Agreement,  the  Note  Purchase
Agreement,  the Cash Collateral Credit  Agreement,  the Notes, the Lease and the
Security Agreement.

      "Basic Rent" shall mean an amount equal to the  scheduled  interest due on
any Scheduled  Interest Payment Date (but not including interest on (a) any Note
due prior to the Rent  Commencement Date with respect to the Property or (b) any
overdue amounts under Section 2.8(b) of the Tranche B Credit Agreement,  Section
2.8(b)  of the Cash  Collateral  Credit  Agreement,  Section  7.1(b) of the Note
Purchase  Agreement or otherwise)  payable in accordance  with the Lease and the
Participation Agreement.

      "Basic  Term" shall have the meaning  given to such term in Section 2.2 of
the Lease.

      "Beneficiaries"  shall have the meaning given to such term in Section 1 of
the Structural Guarantee.

      "Benefitted Lender" shall have the meaning specified in Section 9.10(a) of
the Tranche B Credit Agreement or Section 9.10(a) of the Cash Collateral  Credit
Agreement, as applicable.

      "Benefitted  Note Purchaser"  shall have the meaning  specified in Section
22.6(a) of the Note Purchase Agreement.

      "Bill of Sale" shall mean a Bill of Sale  regarding  Equipment in form and
substance satisfactory to the Agent.

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

      "Borrower"  shall  mean  First  Union  Development  Corporation,  a  North
Carolina corporation, and any successor,  replacement and/or additional borrower
or lessor expressly permitted under the Operative Agreements.

      "Borrower's  Interest"  shall mean the Borrower's  rights in, to and under
the Property, the Operative Agreements, any other property contributed on behalf
of the Lessee and any and all other  property or assets from time to time of the
Borrower obtained with respect to the Operative Agreements,  including,  without
limitation,  Modifications,  and all  amounts of Rent,  insurance  proceeds  and
condemnation  awards,  indemnity or other  payments of any kind  received by the
Borrower pursuant to the Operative Agreements.

      "Borrowing  Date"  shall  mean  any  Business  Day  specified  in a notice
delivered pursuant to Section 2.3 of the Tranche B Credit Agreement as a date on
which the Lessor requests the Tranche B Lenders to make Loans thereunder.

      "Budgeted  Total Property  Cost" shall mean, at any date of  determination
with respect to the Property during the Construction  Period, an amount equal to
the aggregate  amount which the

                                      A-5
<PAGE>

Construction  Agent in good  faith  expects to be  expended  in order to achieve
Completion with respect to the Property.

      "Business Day" shall mean a day other than a Saturday, Sunday or other day
on which commercial banks in New Jersey, North Carolina or any other states from
which the Agent or any Tranche B Lender funds the  transactions  contemplated by
the Operative  Agreements are authorized or required by law to close;  provided,
however, that when used in connection with a Eurodollar Loan, the term "Business
Day" shall also  exclude  any day on which  banks are not open for  dealings  in
dollar deposits in the London interbank market.

      "Called  Principal"  shall mean,  with respect to any Tranche A Note,  the
principal  of such  Tranche A Note  that is to be  prepaid  or has  become or is
declared to be immediately due and payable, as the context requires.

      "Capital Lease  Obligations"  of any Person means the  obligations of such
Person to pay rent or other  amounts  under  any lease of (or other  arrangement
conveying the right to use) real or personal property, or a combination thereof,
which  obligations  are required to be  classified  and accounted for as capital
leases on a balance  sheet of such  Person  under  GAAP,  and the amount of such
obligations  shall be the  capitalized  amount thereof  determined in accordance
with GAAP.

      "Capital Stock" shall mean any  nonredeemable  capital stock of the Lessee
or any of its Subsidiaries or of any other applicable Person,  whether common or
preferred.

      "Capitalized  Lease"  shall mean,  as applied to any Person,  any lease of
property (whether real, personal, tangible,  intangible or mixed of such Person)
by such Person as the lessee which would be  capitalized  on a balance  sheet of
such Person prepared in accordance with GAAP.

      "Cash   Collateral"   shall  mean  such  cash  and/or   Cash   Equivalents
constituting  part of the Collateral  pledged by the  Construction  Agent or the
Lessee and maintained in the Cash Collateral  Account,  all as referenced in the
Cash Collateral Agreement.

      "Cash  Collateral   Account"  shall  mean  the  cash  collateral   account
(including  without  limitation the deposits and certificates of deposit in such
account) which is the subject of the Cash Collateral Agreement and held at Wells
Fargo Bank Northwest, National Association as account number 37737.

      "Cash  Collateral  Agreement" shall mean the Assignment of Cash Collateral
Account dated as of the Initial  Closing Date executed by the Lessee in favor of
the Agent, on behalf of the Cash Collateral Lenders.

      "Cash  Collateral  Agreement  Event of  Default"  shall  have the  meaning
specified in Section 3.1 of the Cash Collateral Agreement.

      "Cash  Collateral  Commitments"  shall  mean  the  obligation  of the Cash
Collateral  Lenders to make the Cash Collateral Loans on the Closing Date to the
Lessor in an  aggregate  principal

                                      A-6
<PAGE>

amount not to exceed the  aggregate of the amounts set forth  opposite each Cash
Collateral  Lender's  name  on  Schedule  2.1  to  the  Cash  Collateral  Credit
Agreement;  provided,  no Cash Collateral Lender shall be obligated to make Cash
Collateral  Loans in excess of such Cash  Collateral  Lender's share of the Cash
Collateral  Commitments as set forth adjacent to such Cash  Collateral  Lender's
name on Schedule 2.1 to the Cash Collateral Credit Agreement.

      "Cash  Collateral  Control  Agreement"  shall  mean that  certain  Control
Agreement  dated as of the  Closing  Date  among  the  Agent,  the  Lessor,  the
Construction Agent and the Intermediary.

      "Cash Collateral  Credit  Agreement" shall mean the Cash Collateral Credit
Agreement,  dated as of the Closing Date, among the Borrower,  the Agent and the
Cash Collateral Lenders, as specified therein.

      "Cash  Collateral  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 Cash Collateral Credit Agreement Event of Default.

      "Cash  Collateral  Credit Agreement Event of Default" shall mean any event
or  condition  defined  as an  "Event  of  Default"  in  Section  6 of the  Cash
Collateral Credit Agreement.

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

      "Cash  Collateral  Lenders" shall mean First Union National Bank and shall
include the several  banks and other  financial  institutions  from time to time
party to the Cash  Collateral  Credit  Agreement  that  commit  to make the Cash
Collateral Loans.

      "Cash  Collateral  Loan"  shall mean the loans made  pursuant  to the Cash
Collateral Commitments.

      "Cash  Collateral Loan Balance" shall mean, at any date of  determination,
the sum of the outstanding  aggregate principal amount of Cash Collateral Loans,
plus any accrued and unpaid interest owing to the Cash Collateral  Lenders under
the Cash  Collateral  Notes,  plus any  amounts  payable to any Cash  Collateral
Lender  pursuant to Section 11.4 of the  Participation  Agreement,  plus, to the
extent  the same is not  duplicative  of the  amounts  payable  under any of the
foregoing,  all other amounts then due and payable to any Cash Collateral Lender
under any Operative Agreement.

      "Cash Collateral  Maturity Date" shall mean the second  anniversary of the
Closing  Date,  unless a later date has been  expressly  agreed to in writing by
each of the Borrower,  the Lessee,  the Agent,  and each of the Cash  Collateral
Lenders.

      "Cash  Collateral  Note" shall have the meaning given to it in Section 2.2
of the Cash Collateral Credit Agreement.

                                      A-7
<PAGE>

      "Cash  Collateral  Obligations"  means  the  collective  reference  to all
obligations, now existing or hereafter arising, owing by the Borrower and/or the
Lessee and/or any of their  affiliates to the Cash  Collateral  Lenders under or
pursuant to the Operative  Agreements  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 Participation Agreement, the Cash
Collateral Credit Agreement, the Lease Agreement, the Agency Agreement, the Cash
Collateral Notes, or any of the other Operative  Agreements,  whether on account
of principal,  advanced  amounts,  interest,  reimbursement  obligations,  fees,
indemnities,  costs, expenses or otherwise (including,  without limitation,  all
reasonable  fees  and  disbursements  of  counsel  to the  Agent  or to the Cash
Collateral  Lenders)  that are  required to be paid by the  Borrower  and/or the
Lessee pursuant to the terms of the Operative Agreements.

      "Cash Collateral Rent" shall mean, at any date of determination, an amount
sufficient to pay the Cash Collateral Loan Balance then due and owing.

      "Cash  Equivalents" shall mean (a) securities issued or directly and fully
guaranteed  or  insured  by the  United  States  of  America  or any  agency  or
instrumentality  thereof  (provided that the full faith and credit of the United
States of America is pledged in support  thereof),  (b) U.S. dollar  denominated
time and demand deposits and certificates of deposit of any Approved Bank having
capital and surplus in excess of  $500,000,000,  in each case with maturities of
not more than 270 days from the date of  acquisition,  (c) commercial  paper and
variable or fixed rate notes,  in each case with maturities of not more than 270
days from the date of acquisition, issued by any Approved Bank (or by the parent
company thereof),  or issued or guaranteed by any domestic corporation rated A-1
(or the equivalent  thereof) or better by S&P or P-1 (or the equivalent thereof)
or better by Moody's  (d)  repurchase  agreements  with a bank or trust  company
(including any of the Tranche B Lenders) or recognized  securities dealer having
capital and surplus in excess of $500,000,000 for direct  obligations  issued by
or fully  guaranteed by the United States of America and having,  on the date of
purchase  thereof,  a fair  market  value of at least  100% of the amount of the
repurchase obligations, and (e) investments,  classified in accordance with GAAP
as current assets,  in money market  investment  programs  registered  under the
Investment Company Act of 1940, as amended,  which are administered by reputable
financial   institutions  having  capital  of  at  least  $500,000,000  and  the
portfolios of which are limited to investments of the character described in the
foregoing subdivisions (a) through (c).

      "Cash Interest  Expense" means,  for any period,  interest expense (net of
interest income) of the Lessee and its Consolidated Subsidiaries for such period
including,  without  duplication,  Consolidated  interest  capitalized  in  such
period,  minus  non-cash  interest  expense of the  Lessee and its  Consolidated
Subsidiaries for such period, in each case determined in accordance with GAAP.

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

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

                                      A-8
<PAGE>

      "Change  in GAAP  Notice"  shall  have the  meaning  given to such term in
Section 10.1(c) of the Participation Agreement.

      "Chattel  Paper" shall have the meaning given to such term in Section 1 of
the Security Agreement.

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

      "Closing"  shall have the  meaning  given to such term in Section 3 of the
Note Purchase Agreement.

      "Closing Date" shall mean September 26, 2001.

      "Code" shall mean the Internal  Revenue Code of 1986  together  with rules
and  regulations  promulgated  thereunder,  as amended from time to time, or any
successor statute thereto.

      "Collateral"  shall mean all assets of the Lessor,  the Construction Agent
and the Lessee, now owned or hereafter acquired,  upon which a Lien is purported
to be created by one or more of the Security Documents.

      "Commencement Date" shall have the meaning specified in Section 2.2 of the
Lease.

      "Commitments"  shall mean the Tranche A Commitments of each Tranche A Note
Purchaser  as set forth in Schedule A to the Note  Purchase  Agreement,  as such
Schedule  A may be  amended  or  replaced  from  time to  time,  the  Tranche  B
Commitments of each Tranche B Lender as set forth in Schedule 2.1 to the Tranche
B Credit Agreement, as such Schedule 2.1 may be amended or replaced from time to
time and the Cash Collateral  Commitments of each Cash Collateral  Lender as set
forth in Schedule 2.1 to the Cash Collateral Credit Agreement,  as such Schedule
2.1 may be amended or replaced from time to time.

      "Commitment  Percentage"  shall mean, as to any Primary Financing Party at
any time, the percentage which such Primary  Financing  Party's  Commitment then
constitutes  of the  aggregate  Commitments  (or,  with respect to the Tranche B
Lenders, at any time after the Commitments shall have expired or terminated, the
percentage  which  the  aggregate  principal  amount of such  Primary  Financing
Party's Financing then outstanding constitutes of the aggregate principal amount
of all of the Financing then outstanding).

      "Commitment  Period"  shall mean the period from and including the Closing
Date to and including the Construction  Period Termination Date, or such earlier
date as the Tranche B Commitments  shall  terminate as provided in the Tranche B
Credit Agreement.

      "Completion"  shall mean,  with respect to the Property,  such time as the
acquisition,  installation,  testing and final completion (subject to completion
of punch list items) of the

                                      A-9
<PAGE>

Improvements  on the Property has been achieved in accordance with the Plans and
Specifications,  the Agency  Agreement  and/or the Lease, and in compliance with
all Legal Requirements and Insurance Requirements and a certificate of occupancy
has been issued with  respect to the  Property by the  appropriate  governmental
entity (except if  non-compliance,  individually or in the aggregate,  shall not
have and could not  reasonably be expected to have a Material  Adverse Effect or
if compliance  with any of the  foregoing is otherwise  waived by the Agent upon
instruction  from the  Secured  Parties  in  accordance  with  the  terms of the
Intercreditor Agreement).

      "Completion Date" shall mean the date on which Completion for the Property
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 or
threatened  eminent  domain  proceeding  or other taking of action by any Person
having the power of eminent domain,  including without limitation 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 the Property, or by or on account of an
eviction by paramount  title or any transfer made in lieu of any such proceeding
or action.

      "Consolidated"  refers to the Lessee and its  Subsidiaries the accounts of
which  are  consolidated  with  those  of the  Lessee  for  financial  reporting
purposes.

      "Consolidated  EBITDAR" means, for any period, net income (or net loss) of
the Lessee and its Consolidated Subsidiaries for such period plus (a) the sum of
(i) interest expense (net of interest  income),  (ii) income tax expense,  (iii)
depreciation  expense, (iv) amortization expense, (v) Consolidated Rent Expense,
(vi) extraordinary  losses in excess of $5,000,000 and (vii) LIFO charges of the
Lessee and its Consolidated  Subsidiaries,  in each case for such period,  minus
(b) the sum of (i)  extraordinary  gains in excess of  $5,000,000  and (ii) LIFO
credits of the Lessee and its Consolidated  Subsidiaries,  in each case for such
period, all determined in accordance with GAAP.

      "Consolidated Rent Expense" means, for any period,  rental expense (net of
rental  income) of the Lessee and its  Consolidated  Subsidiaries  determined in
accordance with GAAP for such period.

      "Consolidated  Subsidiary" shall mean, as to any Person, any Subsidiary of
such Person which under the rules of GAAP  consistently  applied should have its
financial  results  consolidated  with  those of such  Person  for  purposes  of
financial accounting statements.

      "Consolidated Tangible Net Worth" means, at any date of determination, the
sum of all  amounts  which  would be included  under  shareholders'  equity on a
Consolidated  balance  sheet of the Lessee and its  Subsidiaries  determined  in
accordance  with  GAAP as at such date less all  assets  of the  Lessee  and its
Subsidiaries,  determined on a  Consolidated  basis at such date,  that would be
classified as intangible assets in accordance with GAAP.

                                      A-10
<PAGE>

      "Construction Advance" shall mean an advance of funds to pay Project Costs
pursuant to Section 5.4 of the Participation Agreement.

      "Construction Agent" shall mean Toys "R" Us, Inc., a Delaware corporation,
as the construction agent under the Agency Agreement.

      "Construction  Budget" shall mean the cost (net of any amounts  payable by
the seller under the Purchase  Agreement  or made  available to the Lessor,  the
Lessee or the Construction Agent from funds held in escrow or other arrangements
made pursuant to the Purchase Agreement) of acquisition,  installation, testing,
repairing, renovating,  constructing,  equipping and developing the Property and
other Project Costs as determined by the  Construction  Agent in its reasonable,
good faith judgment.

      "Construction Commencement Date" shall mean, with respect to Improvements,
the date on which  construction of such Improvements  commences  pursuant to the
Agency Agreement.

      "Construction  Contract" shall mean each of (i) the construction  contract
between the Construction Agent and the General  Contractor,  and (ii) each other
contract  entered  into  between  the  Construction  Agent or the Lessee  with a
Contractor for the  construction  of  Improvements or any portion thereof on the
Property,  in each case in form and  substance  reasonably  satisfactory  to the
Lessor.

      "Construction  Documents" shall mean each of the  Construction  Contracts,
the   Construction   Budget,   the   Construction   Schedule,   the   Plans  and
Specifications, and each Performance Bond.

      "Construction Period" shall mean the period commencing on the Construction
Commencement  Date for the  Property and ending on the  Completion  Date for the
Property.

      "Construction  Period  Property" shall have the meaning given to such term
in Section 5.3(b) of the Agency Agreement.

      "Construction  Period  Termination Date" shall mean (a) the earlier of (i)
the date that the Tranche B Commitments  have been  terminated in their entirety
in  accordance  with  the  terms  of  Section  2.5(a)  of the  Tranche  B Credit
Agreement,  or (ii) September 26, 2003 (subject to extension in accordance  with
Section 5.9 of the Participation  Agreement) or (b) any such later date as shall
be agreed to by the Majority Secured Parties.

      "Construction   Schedule"   shall  mean  the  schedule   prepared  by  the
Construction  Agent  in its  reasonable,  good  faith  judgment  reflecting,  in
reasonable  detail,  the  anticipated  progress  and timing of the  acquisition,
installation,  testing,  repairing,  renovating,   constructing,  equipping  and
developing the Property.

      "Contractor"  shall mean each entity with whom the  Construction  Agent or
the Lessee contracts to construct any Improvements or any portion thereof on the
Property.

                                      A-11
<PAGE>

      "Controlled  Group"  shall  mean  all  members  of a  controlled  group of
corporations and all trades or businesses  (whether or not  incorporated)  under
common control which, together with the Lessee, are treated as a single employer
under Section 414 of the Code.

      "Credit Documents" shall mean the Participation  Agreement,  the Tranche B
Credit  Agreement,  the Note  Purchase  Agreement,  the Cash  Collateral  Credit
Agreement, the Notes and the Security Documents.

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

      "Deed"  shall  mean a bargain  and sale  deed  regarding  the Land  and/or
Improvements in form and substance satisfactory to the Agent.

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

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

      "Dispute" shall mean any claim or controversy  arising out of, or relating
to, the Operative Agreements between or among the parties thereto.

      "Documents"  shall have the meaning given to such term in Section 1 of the
Security Agreement.

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

      "Domestic  Subsidiary"  shall  mean,  with  respect  to  any  Person,  any
Subsidiary of such Person which is  incorporated  or organized under the laws of
any State of the United States or the District of Columbia.

      "Election  Date" shall have the meaning given to such term in Section 20.1
of the Lease.

      "Election  Notice"  shall have the  meaning  given to such term in Section
20.1 of the Lease.

      "Employee  Benefit  Plan" or "Plan"  shall mean an employee  benefit  plan
(within the meaning of Section 3(3) of ERISA,  including without  limitation any
Multiemployer  Plan), or any "plan" as defined in Section 4975(e)(1) of the Code
and as interpreted by the Internal  Revenue

                                      A-12
<PAGE>

Service and the Department of Labor in rules, regulations, releases or bulletins
in effect on the Closing Date.

      "Environmental  Claims" shall mean any investigation,  notice,  violation,
demand, allegation,  action, suit, injunction,  judgment, order, consent decree,
penalty, fine, lien, proceeding, or claim (whether administrative,  judicial, or
private in nature)  relating to or affecting  the Property  arising (a) pursuant
to, or in connection with, an actual or alleged  violation of, any Environmental
Law, (b) in connection  with any Hazardous  Substance,  (c) from any  abatement,
removal,  remedial,  corrective,  or other response  action in connection with a
Hazardous Substance, Environmental Law, or other order of a Tribunal or (d) from
any actual or alleged damage, injury, threat, or harm to health, safety, natural
resources, or the environment.

      "Environmental  Laws"  shall  mean any  Law,  permit,  consent,  approval,
license,  award, or other  authorization or requirement of any Tribunal relating
to  emissions,  discharges,  releases,  threatened  releases  of  any  Hazardous
Substance  into  ambient  air,  surface  water,  ground  water,  publicly  owned
treatment works,  septic system, or land, or otherwise relating to the handling,
storage,  treatment,  generation,  use,  or disposal  of  Hazardous  Substances,
pollution or to the protection of health or the environment,  including  without
limitation  CERCLA,  the Resource  Conservation  and Recovery Act, 42 U.S.C. ss.
6901, et seq., and state statutes analogous thereto.

      "Environmental  Reports"  shall  have the  meaning  given to such  term in
Section 6.2(t) of the Participation Agreement.

      "Environmental Violation" shall mean any activity, occurrence or condition
that  violates  or  threatens  (if the  threat  requires  remediation  under any
Environmental  Law and is not  remediated  during any grace period allowed under
such  Environmental  Law) to violate or results in or  threatens  (if the threat
requires  remediation  under any  Environmental Law and is not remediated during
any  grace  period   allowed  under  such   Environmental   Law)  to  result  in
noncompliance with any Environmental Law relating to or affecting the Property.

      "Equipment"  shall mean equipment,  apparatus,  furnishings,  fittings and
personal  property  of every kind and  nature  whatsoever  purchased,  leased or
otherwise acquired using the proceeds of Advances by the Construction Agent, the
Lessee  or the  Lessor  and  all  improvements  and  modifications  thereto  and
replacements  thereof,  whether or not now owned or hereafter acquired or now or
subsequently  attached  to,  contained  in or  used  or  usable  in  any  way in
connection  with  any  operation  of any  Improvements,  including  but  without
limiting  the  generality  of the  foregoing,  all  equipment  described  in the
Appraisal including without limitation all heating,  electrical,  and mechanical
equipment,   lighting  fixtures,   switchboards,   plumbing,   ventilation,  air
conditioning  and  air-cooling   apparatus,   refrigerating,   and  incinerating
equipment,  escalators,  elevators, loading and unloading equipment and systems,
cleaning  systems  (including  without  limitation  window cleaning  apparatus),
telephones,  communications  systems  (including  without  limitation  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.

                                      A-13
<PAGE>

      "Equipment  Schedule" shall mean (a) each Equipment  Schedule  attached to
the  applicable  Requisition  and (b) each  Equipment  Schedule  attached to the
applicable Lease Supplement.

      "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.

      "Escrow  Account"  shall  mean that  certain  deposit  account  (including
without  limitation  the deposits and other  property in such account)  which is
held at First Union National Bank as account number 2572004235.

      "Escrow  Account  Control  Agreement"  shall  mean  that  certain  Control
Agreement  dated as of the  Closing  Date  among  the  Agent,  the  Lessor,  the
Construction Agent and the Escrow Agent.

      "Escrow Agent" shall mean First Union  National  Bank, a national  banking
association, as escrow agent regarding the Escrow Account.

      "Eurocurrency Reserve Requirements" shall mean for any day as applied to a
Eurodollar  Loan,  the  aggregate  (without  duplication)  of the maximum  rates
(expressed  as a  decimal)  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  on  eurocurrency  funding  (currently  referred to as  "Eurocurrency
liabilities" in Regulation D) maintained by a member bank of the Federal Reserve
System.

      "Eurodollar  Loans"  shall  mean  Tranche  B  Eurodollar  Loans  and  Cash
Collateral Eurodollar Loans.

      "Eurodollar  Rate" shall mean for the Interest  Period for each Eurodollar
Loan  comprising  part of the  same  borrowing  or  advance  (including  without
limitation  conversions,  extensions  and  renewals),  a per annum interest rate
equal to a fraction (a) expressed as a percentage (rounded upward to the nearest
one one-hundredth (1/100) of one percent (1%)) (i) with the numerator equal to a
per annum  interest  rate  determined  by the Agent on the basis of the  offered
rates  for  deposits  in  dollars  for a period  of time  corresponding  to such
Interest  Period  (and  commencing  on the first day of such  Interest  Period),
reported on Telerate  page 3750 as of 11:00 a.m.  (London time) two (2) Business
Days before the first day of such Interest Period and (ii) the denominator equal
to 100%  minus  the  Eurocurrency  Reserve  Requirements.  In the  event no such
offered rates appear on Telerate page 3750, "Eurodollar Rate" shall mean for the
Interest  Period for each  Eurodollar Loan comprising part of the same borrowing
or advance (including without limitation conversions,  extensions and renewals),
a per annum  interest  rate equal to a fraction  (b)  expressed  as a percentage
(rounded  upward to the nearest one  one-hundredth  (1/100) of one percent (1%))
(i) with the  numerator  equal to a per annum  interest  rate  determined by the
Agent on the basis of

                                      A-14
<PAGE>

the offered rates for deposits in dollars for a period of time  corresponding to
such Interest Period (and commencing on the first day of such Interest  Period),
which appear on the Reuters Screen LIBO Page as of 11:00 a.m.  (London time) two
(2) Business Days before the first day of such Interest Period (provided that if
at least two (2) such offered rates appear on the Reuters  Screen LIBO Page, the
rate in respect of such  Interest  Period  will be the  arithmetic  mean of such
offered  rates) and (ii) the  denominator  equal to 100% minus the  Eurocurrency
Reserve  Requirements.  As used  herein,  "Reuters  Screen  LIBO Page" means the
display designated as page "LIBO" on the Reuters Monitor Money Rates Service (or
such other page as may replace the LIBO page on that  service for the purpose of
displaying  London  interbank  offered rates of major banks)  ("RMMRS").  In the
event the RMMRS is not then quoting such offered rates,  "Eurodollar Rate" shall
mean for the Interest  Period for each  Eurodollar  Loan  comprising part of the
same borrowing or advance (including without limitation conversions,  extensions
and renewals),  a per annum interest rate equal to a fraction (c) expressed as a
percentage  (rounded  upward to the  nearest  one  one-hundredth  (1/100) of one
percent  (1%)) (i) with the  numerator  equal to the  average  per annum rate of
interest  determined by the office of the Agent (each such  determination  to be
conclusive  and binding) as of two (2)  Business  Days prior to the first day of
such Interest  Period,  as the effective  rate at which  deposits in immediately
available  funds in U.S.  dollars are being,  have been,  or would be offered or
quoted  by the  Agent to major  banks in the  applicable  interbank  market  for
Eurodollar  deposits  at any time  during the  Business  Day which is the second
Business Day immediately  preceding the first day of such Interest Period, for a
term  comparable  to such  Interest  Period and in the  amount of the  requested
Eurodollar  Loan and (ii) the denominator  equal to 100% minus the  Eurocurrency
Reserve  Requirements.  If no such offers or quotes are generally  available for
such amount,  then the Agent shall be entitled to determine the Eurodollar  Rate
from another recognized service or interbank quotation,  or by estimating in its
reasonable  judgment  the per annum  rate (as  described  above)  that  would be
applicable if such quote or offers were generally available.

      "Event  of  Default"  shall  mean a Lease  Event  of  Default,  an  Agency
Agreement Event of Default,  a Tranche B Credit  Agreement  Event of Default,  a
Cash Collateral  Credit Agreement Event of Default or a Note Purchase  Agreement
Event of Default.

      "Event of Loss" shall mean any  Casualty,  Condemnation  or  Environmental
Violation that causes or results in the delivery of a Termination  Notice by the
Lessee in accordance with Section 16.1 of the Lease.

      "Excepted Payments" shall mean:

            (a) all indemnity payments  (including without limitation  indemnity
      payments  made  pursuant  to Section 11 of the  Participation  Agreement),
      whether  made by  adjustment  to Basic  Rent or  otherwise,  to which  any
      Financing Party or any of its Affiliates,  agents, officers,  directors or
      employees is entitled;

            (b) any amounts (other than Basic Rent or Termination Value) payable
      under any Operative  Agreement to reimburse any Financing  Party or any of
      its Affiliates  (including without  limitation the reasonable  expenses of
      any  Financing  Party  incurred in

                                      A-15
<PAGE>

      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;

            (c) any amount payable to the Lessor or any Primary  Financing Party
      by a transferee  permitted under the Operative  Agreements as the purchase
      price of the Lessor's  interest in the Borrower's  Interest  (which amount
      shall not include any amounts necessary to pay the principal, interest and
      Make-Whole Amount on the Notes or any other amount payable to the Agent or
      the Primary Financing  Parties) or such Primary Financing Party's interest
      in the transactions contemplated by the Operative Agreements (or a portion
      thereof);

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

            (e) any insurance  proceeds under policies  maintained by the Lessor
      or any other  Financing  Party pursuant to or in accordance with the terms
      of the Operative Agreements;

            (f) Transaction  Expenses or other amounts,  fees,  disbursements or
      expenses  paid or payable to or for the benefit of the Lessor or any other
      Financing Party;

            (g) any  payments in respect of interest to the extent  attributable
      to payments referred to in clauses (a) through (f) above; and

            (h) any rights of the Financing Parties to demand,  collect, sue for
      or otherwise receive and enforce payment of any of the foregoing  amounts,
      provided  that such rights  shall not include the right to  terminate  the
      Lease.

      "Excess Land" shall mean,  with respect to the Property,  any  undeveloped
Land which has been identified and subdivided by the Lessee or the  Construction
Agent  for  sale,  transfer  and  conveyance  to a third  party  which  is not a
Subsidiary  or Affiliate of the Lessee or the  Construction  Agent in accordance
with the requirements of Section 8.13 of the Participation Agreement.

      "Excess Land Payment  Amount" shall mean,  with respect to any Excess Land
sold in  accordance  with Section 8.13 of the Lease,  the net sales  proceeds of
such Excess Land.

      "Excess  Proceeds" shall mean the excess,  if any, of the aggregate of all
awards, compensation or insurance proceeds payable in connection with a Casualty
or Condemnation  over the  Termination  Value paid by the Lessee pursuant to the
Lease with respect to such Casualty or Condemnation.

      "Exculpated  Persons"  shall mean the Lessor  (except  with respect to the
representations  and warranties and the other obligations of the Lessor pursuant
to the  Operative  Agreements

                                      A-16
<PAGE>

expressly  undertaken by it in its capacity as a Primary Financing  Party),  its
officers, directors, shareholders and partners.

      "Exempt  Payments" shall have the meaning  specified in Section 11.2(e) of
the Participation Agreement.

      "Existing Environmental Matters" shall have the meaning given to such term
in Section 6.2(t) of the Participation Agreement.

      "Expiration  Date"  shall mean the last day of the Term;  provided,  in no
event  shall the  Expiration  Date be later  than the tenth  anniversary  of the
Closing  Date,  unless a later date has been  expressly  agreed to in writing by
each of the Lessor,  the Lessee, the Agent, and the Primary Financing Parties in
accordance with the terms and conditions set forth in Section 2.2 of the Lease.

      "Fair Market Sales Value" shall mean,  with respect to the  Property,  the
amount,  which in any event, shall not be less than zero (0), that would be paid
in cash in an arms-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,  the  Property.  Fair Market Sales Value of the
Property shall be determined based on the assumption  that,  except for purposes
of Section 17 of the Lease, the Property is in the condition and state of repair
required  under Section 10.1 of the Lease and the Lessee is in  compliance  with
the other requirements of the Operative Agreements.

      "Federal Funds  Effective  Rate" shall have the meaning given to such term
in the definition of ABR.

      "Financial   Officer"  means  the  chief  financial   officer,   principal
accounting officer, treasurer or controller of the Lessee.

      "Financing"  shall mean the financing  extended  pursuant to the Tranche B
Credit  Agreement,  the Cash  Collateral  Credit  Agreement or the Note Purchase
Agreement and shall include both the Tranche A Proceeds, the Tranche B Loans and
the Cash Collateral Loans.

      "Financing Parties" shall mean the Lessor, the Agent, the Escrow Agent and
the Primary Financing Parties.

      "First  Priority  Liens"  shall  have the  meaning  given to such  term in
Section 3.1 of the Intercreditor Agreement.

      "Fixed Charge Coverage Ratio" means,  on each date of  determination,  the
ratio of Consolidated  EBITDAR to the sum of Consolidated  Cash Interest Expense
and Consolidated Rent Expense for the period of four consecutive fiscal quarters
of the Lessee ended on or immediately prior to such date.

                                      A-17
<PAGE>

      "Fixtures" shall mean all fixtures relating to the Improvements, including
without  limitation all components  thereof,  located in or on the Improvements,
together  with  all  replacements,   modifications,  alterations  and  additions
thereto.

      "Force Majeure Event" shall mean any event  including  without  limitation
strikes,  lockouts,  adverse  soil  conditions,  acts  of God,  adverse  weather
conditions,  fire or other  casualty,  inability to obtain  labor or  materials,
governmental  actions or inaction,  civil  commotion and enemy  action,  if such
event shall be beyond the control of the  Construction  Agent; but excluding any
event, cause or condition that results from the Construction Agent's or Lessee's
financial condition.

      "Form W-8BEN" shall have the meaning  specified in Section  11.2(e) of the
Participation Agreement.

      "Form W-8ECI" shall have the meaning  specified in Section  11.2(e) of the
Participation Agreement.

      "Funded   Indebtedness"  means,  with  respect  to  any  Person,   without
duplication,  (a) all Indebtedness of such Person other than Indebtedness of the
types  referred to in clauses (f) and (h) of the  definition of  "Indebtedness",
(b) all  Indebtedness  of another  Person of the type  referred to in clause (a)
above  secured by (or for which the holder of such  Funded  Indebtedness  has an
existing  right,  contingent  or  otherwise,  to be secured  by) any Lien on, or
payable out of the proceeds of production  from,  property  owned or acquired by
such Person,  whether or not the obligations  secured thereby have been assumed,
and (c) all Guaranty  Obligations of such Person with respect to Indebtedness of
the type referred to in clause (a) above of another Person.

      "Funded  Indebtedness to Capitalization  Ratio" means, with respect to the
Lessee and its Consolidated  Subsidiaries,  the ratio of (a) Funded Indebtedness
of the Lessee and its Consolidated  Subsidiaries to (b) Total  Capitalization of
the Lessee and its Consolidated Subsidiaries.

      "GAAP" shall mean generally accepted accounting  principles,  consistently
applied,  set  forth  in the  opinions  and  pronouncements  of  the  accounting
principles board of the American Institute of Certified Public Accountants,  and
statements and pronouncements of the Financial  Accounting Standards Board or in
such other  statements  by such other entity as may be approved by a significant
segment of the accounting  profession,  that are applicable to the circumstances
as of the date of determination.

      "General  Contractor" means the general  contractor in connection with the
Property selected by the Construction Agent and reasonably acceptable to Agent.

      "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 operating of the Property.

                                      A-18
<PAGE>

      "Governmental Authority" shall mean any nation or government, any state or
other  political  subdivision  thereof  and  any  entity  exercising  executive,
legislative,  judicial,  regulatory or administrative functions of or pertaining
to government.

      "Guarantee" of or by any Person (the  "guarantor")  means any  obligation,
contingent or otherwise,  of the guarantor  guaranteeing  or having the economic
effect of guaranteeing  any Indebtedness or other obligation of any other Person
(the  "primary  obligor") in any manner,  whether  directly or  indirectly,  and
including any obligation of the guarantor,  direct or indirect,  (a) to purchase
or pay (or  advance  or  supply  funds  for the  purchase  or  payment  of) such
Indebtedness  or other  obligation or to purchase (or to advance or supply funds
for the purchase of) any  security for the payment  thereof,  (b) to purchase or
lease property,  securities or services for the purpose of assuring the owner of
such  Indebtedness or other obligation of the payment  thereof,  (c) to maintain
working capital,  equity capital or any other financial  statement  condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness  or other  obligation  or (d) as an account party in respect of any
letter of credit or letter of guaranty  issued to support such  Indebtedness  or
obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.

      "Guarantor"  shall  mean  Toys  "R"  Us,  Inc.,  as  guarantor  under  the
Structural Guarantee.

      "Hard  Costs"  shall mean all costs and  expenses  payable  for  supplies,
materials,  labor, general conditions (including bonds, insurance and utilities)
and profit for contractors and subcontractors;  fees of a construction  manager,
if any; administrative,  supervision,  travel and overhead costs incurred by the
Construction Agent or construction manager; permit fees; all so-called "impact",
"tap",  "development" or "traffic generation  assessment" fees; periodic on-site
inspections  required  to be made  by the  project  engineer  or  other  special
consultants;  and  the  cost  of  payment  and  performance  bonds  required  by
governmental  authorities;  in each case with respect to the Improvements  under
any Construction Contract.

      "Hazardous  Substance" shall mean any of the following:  (a) any petroleum
or petroleum product, explosives, radioactive materials, asbestos, formaldehyde,
polychlorinated  biphenyls,  lead and radon gas;  (b) any  substance,  material,
product, derivative, compound or mixture, mineral, chemical, waste, gas, medical
waste, or pollutant,  in each case whether naturally occurring,  man-made or the
by-product  of  any  process,  that  is  toxic,  harmful  or  hazardous  to  the
environment  or human  health or safety as  determined  in  accordance  with any
Environmental Law; or (c) 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 any and all liabilities, losses, expenses, costs,
charges  and Liens of any kind  whatsoever  for fees,  taxes,  levies,  imposts,
duties, charges,  assessments or withholdings of any nature whatsoever ("Taxes")
including  but not limited to (i) real and personal  property  taxes,  including
without limitation  personal property taxes on any property covered by the Lease
that is classified by Governmental  Authorities as personal  property,  and

                                      A-19
<PAGE>

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) excise taxes; (iv) real estate transfer 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  without  limitation  all  assessments  for  public   Improvements  or
benefits, whether or not such improvements are commenced or completed within the
Term;  and (vii)  taxes,  Liens,  assessments  or charges  asserted,  imposed or
assessed by the PBGC or any governmental  authority  succeeding to or performing
functions  similar  to,  the  PBGC;  and  all  interest,  additions  to tax  and
penalties,  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) any  Indemnified  Person,  the Property or
any part thereof or interest therein; (b) the leasing,  financing,  refinancing,
purchase,  acceptance,   rejection,  demolition,   construction,   substitution,
subleasing,  assignment, control, condition, occupancy, servicing,  maintenance,
repair, ownership,  possession, activity conducted on or in, delivery, insuring,
use, rental, lease, operation,  improvement,  sale, transfer of title, return or
other disposition of the Property or any part thereof or interest  therein;  (c)
the Notes, other indebtedness with respect to the Property,  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  execution,  performance  or  enforcement  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 Property or any part thereof
or interest  therein;  (h) the  issuance of the Notes;  (i) the  Borrower or the
Borrower's  Interest;  or (j)  otherwise  in  connection  with the  transactions
contemplated by the Operative Agreements.

      "Improvements"  shall  mean,  with  respect to the  construction,  repair,
renovations,  replacement  and/or  Modifications  on the  Land,  all  buildings,
structures,  Fixtures, and other improvements of every kind existing at any time
and from time to time on or under the Land purchased or otherwise acquired using
the  proceeds  of  Advances,  together  with any and all  appurtenances  to such
buildings,  structures or improvements,  including without limitation sidewalks,
utility  pipes,  conduits and lines,  parking areas and roadways,  and including
without  limitation all  Modifications  and other additions to or changes in the
Improvements  at any time,  including  without  limitation (a) any  Improvements
existing as of the Closing Date as such  Improvements  may be  referenced on the
applicable  Requisition and (b) any Improvements  made subsequent to the Closing
Date.

      "Indebtedness"  of any Person means, at a particular time, all items which
constitute,  without  duplication,  (a)  indebtedness  for borrowed money or the
deferred  purchase  price of  property  (other than trade  payables  and accrued
liabilities  incurred in the  ordinary  course of  business),  (b)  indebtedness
evidenced by notes, bonds,  debentures or similar  instruments,  (c) obligations
with  respect  to  any  conditional  sale  or  title  retention  agreement,  (d)
indebtedness arising under acceptance  facilities and the amount available to be
drawn under all letters of credit issued for the account of such Person, (e) all
drafts  drawn under  letters of credit  issued for the account of such Person to
the extent such Person  shall not have  reimbursed  the issuer in respect

                                      A-20
<PAGE>

of the issuer's payment of such drafts, (f) all liabilities  secured by any Lien
on any property  owned by such Person even though such Person has not assumed or
otherwise   become  liable  for  the  payment  thereof  (other  than  carriers',
warehousemen's,  mechanics',  repairmen's or other like non-consensual statutory
Liens arising in the ordinary course of business), (g) obligations under capital
leases  and (h)  Guarantees  in  respect  of the  foregoing;  provided  that any
Indebtedness owing by the Lessee to any of its Subsidiaries or by any Subsidiary
of the  Lessee to the  Lessee or by any  Subsidiary  of the  Lessee to any other
Subsidiary  of the  Lessee  or any  Guarantees  in  respect  thereof  shall  not
constitute Indebtedness for purposes of this definition; and provided,  further,
that the amount of any such Guarantees shall be deemed to be the lower of (a) an
amount equal to the stated or determinable  amount of the primary  obligation in
respect of which such  Guarantees  is made and (b) the maximum  amount for which
such Person may be liable pursuant to the terms of the agreement  embodying such
Guarantees unless such primary  obligation and the maximum amount for which such
Person may be liable are not stated or determinable, in which case the amount of
such Guarantees shall be such Person's maximum reasonably  anticipated liability
in respect thereof as determined by such Person in good faith.

      "Indemnified  Person"  shall mean the  Lessor,  the Agent,  the  Placement
Agent,  the Escrow Agent,  the Primary  Financing  Parties and their  respective
successors,  assigns, directors,  trustees,  shareholders,  partners,  officers,
employees, agents and Affiliates.

      "Indemnity Provider" shall mean the Lessee.

      "Initial  Construction  Advance" shall mean any initial Advance to pay for
Property Costs for construction of any Improvements.

      "Instruments"  shall have the  meaning  given to such term in Section 1 of
the Security Agreement.

      "Insurance Consultant" shall mean Marsh USA Inc.

      "Insurance  Requirements"  shall  mean all  terms  and  conditions  of any
insurance  policy either required by the Lease to be maintained by the Lessee or
required by the Agency Agreement to be maintained by the Construction Agent, and
all requirements of the issuer of any such policy and, regarding self insurance,
any other requirements of the Lessee or the Construction  Agent, as the case may
be.

      "Intercreditor  Agreement" shall mean that certain  Intercreditor and Lien
Subordination  Agreement  dated as of the  Closing  Date among the  Lessee,  the
Lessor,  the  Tranche  A Note  Purchasers,  the  Tranche  B  Lenders,  the  Cash
Collateral Lenders and the Agent.

      "Interest  Period" shall mean during the Commitment  Period and thereafter
as to any Eurodollar  Loan (i) with respect to the initial  Interest  Period and
any Interest  Period  immediately  following a conversion  from an ABR Loan to a
Eurodollar  Loan, the period  beginning on the date of such  Eurodollar Loan and
ending on the first day of the following month, and (ii) thereafter, each period
commencing on the last day of the next preceding  Interest Period  applicable to
such Eurodollar  Loan and ending one (1) month  thereafter;  provided,  however,
that

                                      A-21
<PAGE>

all of the foregoing  provisions relating to Interest Periods are subject to the
following: (A) if any Interest Period would end on a day which is not a Business
Day, such Interest Period shall be extended to the next succeeding  Business Day
(except that where the next succeeding Business Day falls in the next succeeding
calendar month, then on the next preceding Business Day), (B) no Interest Period
shall  extend  beyond  the  Expiration  Date,  as the case may be,  (C) where an
Interest Period begins on a day for which there is no numerically  corresponding
day in the calendar month in which the Interest  Period is to end, such Interest
Period shall end on the last  Business  Day of such  calendar  month,  (D) there
shall not be more  than four (4)  Interest  Periods  outstanding  at any one (1)
time.

      "Interim Term" shall have the meaning given to such term in Section 2.2 of
the Lease.

      "Intermediary"   shall  mean  Wells   Fargo   Bank   Northwest,   National
Association, a national banking association.

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

      "Land"  shall  mean a  parcel  of  real  property  described  on  (a)  the
Requisition  issued by the  Construction  Agent on the Closing Date  relating to
such parcel and (b) the schedules to each applicable Lease  Supplement  executed
and delivered in accordance  with the  requirements of Section 2.4 of the Lease,
but shall  exclude the Excess Land if and when such Excess Land is sold pursuant
to Section 21.1 of the Lease.

      "Land Cost" shall have the meaning  specified in Section 5.4 of the Agency
Agreement.

      "Law" shall mean any statute, law, ordinance, regulation, rule, directive,
order, writ, injunction or decree of any Tribunal.

      "Lease" or "Lease  Agreement"  shall mean the Lease  Agreement dated as of
the Closing  Date,  between the Lessor and the Lessee,  together  with the Lease
Supplement thereto.

      "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  specified in Section 17.1
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.

      "Legal  Requirements"  shall mean all  foreign,  federal,  state,  county,
municipal and other governmental  statutes,  laws, rules,  orders,  regulations,
ordinances, judgments, decrees and injunctions affecting the Lessor, the Lessee,
the Agent,  any Primary  Financing  Party or the  Property,  Land,  Improvement,
Equipment or the taxation,  demolition,  construction, use or alteration of such
Property, Land, Improvements,  or Equipment whether now or hereafter enacted and
in force,  including without limitation any that require repairs,  modifications
or

                                      A-22
<PAGE>

alterations  in or to the  Property  or in any way limit  the use and  enjoyment
thereof (including  without  limitation all building,  zoning and fire codes and
the Americans with  Disabilities  Act of 1990, 42 U.S.C. ss. 12101 et. seq., and
any other similar federal, state or local laws or ordinances and the regulations
promulgated  thereunder) and any that may relate to  environmental  requirements
(including  without  limitation  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 or the Appurtenant Rights.

      "Lessee" shall have the meaning set forth in the Lease.

      "Lessee Credit Agreement" shall mean that certain 364-Day Credit Agreement
dated as of September 19, 2001, among Lessee, as borrower, The Bank of New York,
as  Administrative  Agent and the lenders party thereto as such may hereafter be
amended, modified, supplemented, restated and/or replaced from time to time.

      "Lessor" shall mean First Union Development Corporation,  a North Carolina
corporation,  and any successor,  replacement and/or additional lessor or lessor
expressly permitted under the Operative Agreements.

      "Lessor  Financing  Statements"  shall mean UCC financing  statements  and
fixture  filings  appropriately   completed  and  executed  for  filing  in  the
applicable  jurisdictions  in order to protect the Lessor's  interest  under the
Lease to the extent the Lease is a security agreement or a mortgage.

      "Lessor Lien" shall mean any Lien,  true lease or sublease or  disposition
of title  arising as a result of (a) any claim  against the Lessor not resulting
from the transactions  contemplated by the Operative Agreements,  (b) any act or
omission of the 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 Lessor with respect to Taxes or Transaction  Expenses  against which
the Lessee is not required to indemnify the Lessor pursuant to Section 11 of the
Participation  Agreement or (d) any claim against the Lessor  arising out of any
transfer  by the Lessor of all or any  portion of the  interest of the Lessor in
the Property, the Borrower's Interest or the Operative Agreements other than the
transfer of title to or possession of any Property by the Lessor pursuant to and
in accordance with the Lease, the Note Purchase Agreement,  the Tranche B Credit
Agreement,  the Cash Collateral Credit Agreement,  the Security Agreement or the
Participation Agreement or pursuant to the exercise of the remedies set forth in
Article XVII of the Lease.

      "Lien" shall mean any mortgage,  pledge,  security interest,  encumbrance,
lien, option or charge of any kind.

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

                                      A-23
<PAGE>

      "Majority Cash Collateral Lenders" shall mean at any time, Cash Collateral
Lenders whose Cash  Collateral  Loans  outstanding  represent at least fifty-one
percent (51%) of (a) the aggregate Cash Collateral  Loans  outstanding or (b) to
the extent there are no Cash Collateral Loans outstanding,  the aggregate of the
Cash Collateral Commitments.

      "Majority  Secured  Parties"  shall  mean at any time,  Primary  Financing
Parties whose Financings  outstanding represent at least fifty-one percent (51%)
of (a) the aggregate  Financings  outstanding  or (b) to the extent there are no
Financings   outstanding,   the  aggregate  of  the  Primary   Financing   Party
Commitments.

      "Majority  Tranche A Note  Purchasers"  shall mean at any time,  Tranche A
Note  Purchasers  whose  Tranche  A  Proceeds  outstanding  represent  at  least
fifty-one percent (51%) of the aggregate Tranche A Proceeds outstanding.

      "Majority  Tranche B Lenders"  shall  mean at any time,  Tranche B Lenders
whose Tranche B Loans outstanding  represent at least fifty-one percent (51%) of
(a) the aggregate  Tranche B Loans outstanding or (b) to the extent there are no
Tranche B Loans outstanding, the aggregate of the Tranche B Commitments.

      "Make-Whole  Amount"  shall mean,  with respect to any Tranche A Note,  an
amount  equal to the excess,  if any of the  Discounted  Value of the  Remaining
Scheduled  Payments with respect to the Called  Principal of such Tranche A Note
over the amount of such Called  Principal;  provided that the Make-Whole  Amount
may in no event be less than  zero.  In the event any holder of a Tranche A Note
disagrees  with the  calculation  by the  Lessee or  Borrower  of the Make Whole
Amount,  such  holder of a Tranche A Note shall  provide  notice to the  Lessee,
Borrower  and the  other  holders  of the  Tranche  A  Notes  setting  forth  in
reasonable  detail its  calculation of the Make Whole Amount.  In case of such a
disagreement,  the  calculation  of the Make  Whole  Amount  shall be made by an
independent  accounting  firm  reasonably  acceptable  to the  parties  to  such
disagreement.

      "Marketing  Notice"  shall have the meaning  given to such term in Section
3.2(c) of the Intercreditor Agreement.

      "Marketing  Period"  shall mean,  if the Lessee has given a Sale Notice in
accordance  with Section 20.1 of the Lease,  the period  commencing  on the date
such Sale Notice is given and ending on the Expiration Date.

      "Marketing  Price"  shall have the  meaning  given to such term in Section
3.2(c) of the Intercreditor Agreement.

      "Material"  means  material  in  relation  to  the  business,  operations,
affairs,  financial  condition,  assets  or  properties  of any  Person  and its
Subsidiaries taken as a whole.

      "Material  Adverse Effect" shall mean a material adverse effect on (a) the
business, condition (financial or otherwise),  assets, liabilities or operations
of the  Lessee  and its  Consolidated  Subsidiaries  taken as a  whole,  (b) the
ability of Lessee to perform its  obligations

                                      A-24
<PAGE>

under  any  Operative  Agreement  to which it is a party,  (c) the  validity  or
enforceability  of any  Operative  Agreement  or the rights and  remedies of the
Agent,  the  Primary  Financing  Parties,  or the  Lessor  thereunder,  (d)  the
validity,  priority  or  enforceability  of  any  Lien  on the  Property  or the
Collateral  created by any of the Operative  Agreements,  or (e) the fair market
value,  utility or useful  life of the  Property  or the use,  or ability of the
Lessee to use, the Property for the purpose for which it was intended.

      "Material  Subsidiary Group" means any Subsidiary or group of Subsidiaries
as to which,  individually  or in the aggregate,  any of the following tests are
met: (a) the Lessee's and the other Subsidiaries' investments in and advances to
such Subsidiary or group of  Subsidiaries  exceed 10% of the total assets of the
Lessee and its  Subsidiaries  on a Consolidated  basis as of the last day of the
most recently  completed  fiscal year of the Lessee,  (b) such  Subsidiary's  or
group  of  Subsidiaries'   proportionate   share  of  the  total  assets  (after
intercompany  eliminations) of the Lessee and its Subsidiaries on a Consolidated
basis  exceeds 10% of the total assets of the Lessee and its  Subsidiaries  on a
Consolidated basis as of the last day of the most recently completed fiscal year
of the Lessee, or (c) the equity in the income from continuing operations before
income  taxes,  extraordinary  items  and the  cumulative  effect of a change in
accounting principles of such Subsidiary or group of Subsidiaries exceeds 10% of
such income of the Lessee and its  Subsidiaries on a Consolidated  basis for the
most  recently  completed  fiscal  year  of the  Lessee.  In the  event  any new
Subsidiary  shall  be  acquired  or  formed,  the  status  of any  one  or  more
Subsidiaries as a Material  Subsidiary  Group shall be determined on a pro forma
basis,  giving effect to such  acquisition or formation as if it had occurred at
the beginning of the most recently completed fiscal year of the Lessee.

      "Maturity Date" shall mean the Expiration Date.

      "Maximum  Amount" shall have the meaning given to such term in Section 5.4
of the Agency Agreement.

      "Maximum   Residual   Guarantee   Amount"  shall  mean,  at  any  date  of
determination,  an amount  equal to the sum of all  amounts due and owing to the
Tranche A Note Purchasers under the Note Purchase Agreement, the Tranche A Notes
and under any other Operative Agreement.

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

      "Moody's" shall mean Moody's Investors Service, Inc.

      "Mortgage  Instruments"  shall  mean  each  deed of  trust  and any  other
instrument  executed by the Lessor and the Lessee in favor of the Agent (for the
benefit of the Primary  Financing  Parties and the Lessor) and evidencing a Lien
on the  Property,  in form and  substance  reasonably  acceptable  to the Agent,
including without limitation the Tranche A Mortgage Instrument and the Tranche B
Mortgage Instrument.

      "Multiemployer  Plan" shall mean a  multiemployer  plan defined as such in
Section  3(37) of ERISA to which  contributions  have been made by the Lessee or
any ERISA Affiliate and that is covered by Title IV of ERISA.

                                      A-25
<PAGE>

      "Multiple  Employer  Plan"  shall  mean a plan to which the  Lessee or any
ERISA  Affiliate  and at  least  one (1)  other  employer  other  than an  ERISA
Affiliate is making or accruing an obligation to make, or has made or accrued an
obligation to make, contributions.

      "Net Worth" means,  as of any date,  shareholders'  equity or net worth of
the  Lessee  and  its  Consolidated  Subsidiaries  on a  consolidated  basis  as
determined in accordance with GAAP.

      "Non-GAAP  Expenses"  shall  mean  Tranche A  Non-GAAP  Interest  Expense,
up-front  structuring fees and any monthly extension fees paid or payable to the
Tranche B Lenders, any other  non-capitalized  expenses relating to the Property
determined  in  accordance  with GAAP,  as such term was  defined on the Closing
Date, and any other  non-capitalized  expenses  expressly approved by Lessor and
each Tranche B Lender (in their sole discretion) from time to time.

      "Non-prohibited Encumbrances" means:

            (a) Liens imposed by law for taxes that are not yet due or are being
      contested  in  good  faith  and  by  appropriate   proceedings  diligently
      conducted  by the Lessee or a Subsidiary  of Lessee,  as  applicable,  and
      provided  that the  Lessee  shall  give the  Agent  prompt  notice of such
      contest and that such reserve or other  appropriate  provision as shall be
      required in accordance with GAAP shall have been made therefor;

            (b)   carriers',    warehousemen's,    mechanics',    materialmen's,
      repairmen's  and other like Liens imposed by law,  arising in the ordinary
      course of business and securing  obligations  that are not overdue by more
      than  90  days  or are  being  contested  in  good  faith  by  appropriate
      proceedings;

            (c) pledges and deposits made in the ordinary  course of business in
      compliance with workers'  compensation,  unemployment  insurance and other
      social  security  laws or  regulations  or to secure  public or  statutory
      obligations;

            (d) Liens  securing  the  performance  of, or payment in respect of,
      bids, trade contracts,  leases,  statutory obligations,  surety and appeal
      bonds,  performance  bonds and other obligations of a like nature, in each
      case in the ordinary course of business;

            (e) judgment Liens in respect of judgments that do not constitute an
      Event of Default under clause (m) of Section 17.1 of the Lease.

            (f) any  interest  or title of a lessor or  sublessor  (other than a
      lessor or sublessor  under a lease or sublease that  constitutes a Capital
      Lease  Obligation  or that  is  entered  into as part of a  sale-leaseback
      arrangement)  and any  restriction or encumbrance to which the interest or
      title of such lessor or  sublessor  may be subject that is incurred in the
      ordinary course of business;

                                      A-26
<PAGE>

            (g) Liens in favor of customs and revenue  authorities  arising as a
      matter of law or pursuant to a bond to secure payment of customs duties in
      connection with the importation of goods;

            (h)  customary  rights of setoff  upon  deposits of cash in favor of
      banks or other depository institutions in which such cash is maintained in
      the ordinary course of business;

            (i)  Liens  on  goods  (or  related  documents  of  title)  securing
      reimbursement  obligations  under trade  letters of credit  issued for the
      account  of the  Lessee  or its  Subsidiaries  in the  ordinary  course of
      business in connection with the purchase of such goods; and

            (j) easements, operating agreements,  covenants,  conditions, rights
      of  way,  survey  exceptions,  licenses,  zoning  restrictions  and  other
      encumbrances on title to, or restriction on the use of, real property that
      do not render title to the property  encumbered  thereby  unmarketable  or
      adversely  affect the use of such property for its present purposes in any
      material manner;

provided  that,  except as provided in clauses (d), (h) and (i) above,  the term
"Non-prohibited Encumbrances" shall not include any Lien securing Indebtedness.

      "Note Purchase  Agreement" shall mean that certain Note Purchase Agreement
dated as of the Closing Date among the Tranche A Note  Purchasers,  the Borrower
and the Agent.

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

      "Note Purchase  Agreement  Event of Default " shall have the meaning given
to such term in Section 11 of the Note Purchase Agreement.

      "Notes"  shall mean those notes  issued to the Primary  Financing  Parties
pursuant to the Note Purchase  Agreement,  the Tranche B Credit Agreement or the
Cash Collateral  Credit  Agreement and shall include all of the Tranche A Notes,
the Tranche B Notes and the Cash Collateral Notes.

      "Obligations"  shall have the  meaning  given to such term in Section 1 of
the Security Agreement.

      "Officer's   Certificate"   with  respect  to  any  person  shall  mean  a
certificate  executed on behalf of such person by a Responsible  Officer who has
made or caused to be made such  examination or  investigation as is necessary to
enable such  Responsible  Officer to express an informed opinion with respect to
the subject matter of such Officer's Certificate.

                                      A-27
<PAGE>

      "Operative  Agreements"  shall  mean  the  following:   the  Participation
Agreement,  the Agency  Agreement,  the Note Purchase  Agreement,  the Tranche B
Credit Agreement,  the Cash Collateral  Credit Agreement,  the Notes, the Lease,
the Lease Supplement,  the Security Agreement, the Assignment of Escrow Account,
the Escrow Account Control Agreement,  the Cash Collateral  Agreement,  the Cash
Collateral  Control  Agreement,  the  Intercreditor  Agreement,  the  Structural
Guarantee, the Mortgage Instruments, the other Security Documents, the Deed, the
Bills  of Sale  and any and all  other  agreements,  documents  and  instruments
executed in connection with any of the foregoing.

      "Ordinary Course Liens" shall mean:

            (a) Liens imposed by law for taxes that are not yet due or are being
      contested in compliance with Section 8.3A.4;

            (b)   carriers',    warehousemen's,    mechanics',    materialmen's,
      repairmen's  and other like Liens imposed by law,  arising in the ordinary
      course of business and securing  obligations  that are not overdue by more
      than  90  days  or are  being  contested  in  good  faith  by  appropriate
      proceedings;

            (c) pledges and deposits made in the ordinary  course of business in
      compliance with workers'  compensation,  unemployment  insurance and other
      social  security  laws or  regulations  or to secure  public or  statutory
      obligations;

            (d) Liens  securing  the  performance  of, or payment in respect of,
      bids, trade contracts,  leases,  statutory obligations,  surety and appeal
      bonds,  performance  bonds and other obligations of a like nature, in each
      case in the ordinary course of business;

            (e) judgment liens in respect of judgments that do not constitute an
      Event of Default under clause (m) of Section 17.1 of the Lease;

            (f) any  interest  or title of a lessor or  sublessor  (other than a
      lessor or sublessor  under a lease or sublease that  constitutes a Capital
      Lease  Obligation  or that  is  entered  into as part of a  sale-leaseback
      arrangement)  and any  restriction or encumbrance to which the interest or
      title of such lessor or  sublessor  may be subject that is incurred in the
      ordinary course of business;

            (g) Liens in favor of customs and revenue  authorities  arising as a
      matter of law or pursuant to a bond to secure payment of customs duties in
      connection with the importation of goods;

            (h)  customary  rights of setoff  upon  deposits of cash in favor of
      banks or other depository institutions in which such cash is maintained in
      the ordinary course of business;

            (i)  Liens  on  goods  (or  related  documents  of  title)  securing
      reimbursement  obligations  under trade  letters of credit  issued for the
      account  of the  Lessee  or its

                                      A-28
<PAGE>

      Subsidiaries  in the ordinary  course of business in  connection  with the
      purchase of such goods; and

            (j) easements, operating agreements,  covenants,  conditions, rights
      of  way,  survey  exceptions,  licenses,  zoning  restrictions  and  other
      encumbrances  on title to, or  restrictions  on the use of, real  property
      that do not render title to the property  encumbered thereby  unmarketable
      or adversely  affect the use of such property for its present  purposes in
      any material manner;

provided  that,  except as provided in clauses (d), (h) and (i) above,  the term
"Ordinary Course Liens" shall not include any Lien securing Indebtedness.

      "Original Executed  Counterpart" shall have the meaning given to such term
in Section 5 of Exhibit A to the Lease.

      "Overdue  Interest"  shall mean any interest  payable  pursuant to Section
2.8(b)  of the  Tranche  B  Credit  Agreement  or  Section  2.8(b)  of the  Cash
Collateral Credit Agreement, as applicable.

      "Overdue Rate" shall mean (a) with respect to Basic Rent and  Supplemental
Rent,  and any other  amount owed under or with  respect to the Tranche B Credit
Agreement,  the Note Purchase  Agreement,  the Cash Collateral Credit Agreement,
the Notes or the Security Documents, the rate specified in Section 2.8(b) of the
Tranche  B  Credit  Agreement,  Section  2.8(b)  of the Cash  Collateral  Credit
Agreement or 7.1(b) of the Note Purchase Agreement, as applicable,  and (b) with
respect to any other  amount,  the amount  referred  to in clause (y) of Section
2.8(b) of the Tranche B Credit  Agreement,  clause (y) of Section  2.8(b) of the
Cash  Collateral  Credit  Agreement or clause (y) of Section  7.1(b) of the Note
Purchase Agreement, as applicable.

      "Participant"  shall have the meaning given to such term in Section 9.7 of
the  Tranche B Credit  Agreement  or Section 9.7 of the Cash  Collateral  Credit
Agreement, as applicable.

      "Participation  Agreement" shall mean the Participation Agreement dated as
of the Closing  Date,  among the  Lessee,  the  Lessor,  the  Primary  Financing
Parties, the Agent and the Escrow Agent.

      "Payment Date" shall mean any Scheduled Interest Payment Date and any date
on which interest in connection  with a prepayment of principal on the Financing
is due  under  the  Tranche  B  Credit  Agreement,  the Cash  Collateral  Credit
Agreement, the Note Purchase Agreement or the Notes.

      "PBGC"  shall mean the Pension  Benefit  Guaranty  Corporation  created by
Section 4002(a) of ERISA or any successor thereto.

      "Pension  Plan"  shall mean a "pension  plan",  as such term is defined in
section  3(2) of ERISA,  which is  subject  to title IV of ERISA  (other  than a
Multiemployer Plan), and to which

                                      A-29
<PAGE>

the Lessee or any ERISA  Affiliate  may have any  liability,  including  without
limitation any liability by reason of having been a substantial  employer within
the meaning of section 4063 of ERISA at any time during the  preceding  five (5)
years,  or by reason of being deemed to be a contributing  sponsor under section
4069 of ERISA.

      "Performance  Bonds"  shall  mean any  performance  bonds  and  labor  and
material  payment bonds as to the General  Contractor  and any other  Contractor
(and any of their respective  subcontractors)  as may be reasonably  required by
the Agent,  each of which  shall  name the  Lessor  and the Agent as  additional
obligees.

      "Permitted  Encumbrances"  shall  have the  meaning  given to such term in
Section 5 of the Purchase Agreement.

      "Permitted  Facility"  shall mean  Pointview  Corporate  Park,  located in
Wayne, New Jersey (together with improvements existing or to be built thereon).

      "Permitted Liens" shall mean, with respect to the Property:

            (a) the  respective  rights  and  interests  of the  parties  to the
      Operative Agreements as provided in the Operative Agreements;

            (b) the rights of any  sublessee or assignee  under a sublease or an
      assignment  expressly  permitted  by the  terms of the Lease for no longer
      than the duration of the Lease;

            (c)  Liens  for  Taxes  that  either  are not  yet due or are  being
      contested in accordance with the provisions of Section 13.1 of the Lease;

            (d) Liens  arising by operation of law,  materialmen's,  mechanics',
      workmen's, repairmen's,  employees',  carriers',  warehousemen's and other
      like  Liens  relating  to  the  construction  of  the  Improvements  or in
      connection  with any  Modifications  or arising in the ordinary  course of
      business  for amounts  that either are not more than thirty (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 13.1 of
      the Lease;

            (e) Liens of any of the types  referred  to in clause (d) above that
      have been  bonded for not less than the full  amount in dispute  (or as to
      which other security  arrangements  reasonably  satisfactory to the Lessor
      and the Agent 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;

            (f) 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,  which are or will be covered by a policy or policies of
      insurance or for which other  appropriate  provisions

                                      A-30
<PAGE>

      have been made, so long as such proceedings have the effect of staying the
      execution  of such  judgments  or awards and,  if such  appeal  relates to
      Taxes, the conditions for the continuation of proceedings to contest Taxes
      set forth in Section 13.1 of the Lease have been satisfied;

            (g) Liens in favor of  municipalities to the extent agreed to by the
      Lessor and the Agent;

            (h) all encumbrances, exceptions, restrictions, easements, rights of
      way,  servitudes,  encroachments and  irregularities in title,  other than
      Liens  which,  in the  reasonable  assessment  of the  Agent,  will have a
      Material Adverse Effect;

            (i) any other Lien expressly  consented to or approved by the Agent;
      and

            (j) Permitted Encumbrances.

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

      "Placement Agent" shall mean First Union Securities, Inc., in its capacity
as the Placement Agent under the Note Purchase Agreement.

      "Plan" means an employee  benefit or other plan  established or maintained
by the Lessee or any ERISA  Affiliate  and that is covered by Title IV of ERISA,
other than a Multiemployer Plan.

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

      "Primary  Financing Party  Commitments"  shall mean the Primary  Financing
Party Commitment of (i) each Tranche A Note Purchaser as set forth on Schedule A
to the Note Purchase  Agreement,  as such Schedule A may be amended and replaced
from time to time,  (ii) each  Tranche B Lender as set forth in Schedule  2.1 to
the Tranche B Credit  Agreement as such Schedule 2.1 may be amended and replaced
from time to time and (iii) each Cash Collateral Lender as set forth in Schedule
2.1 to the Cash Collateral  Credit Agreement as such Schedule 2.1 may be amended
and replaced from time to time.

      "Primary Financing Parties" shall mean the Tranche A Note Purchasers,  the
Tranche B Lenders,  the Cash Collateral  Lenders and any other banks,  financial
institutions or other  institutional  investors which may be from time to time a
Tranche A Note Purchaser,  a Tranche B Lender or a Cash Collateral Lender to the
Participation  Agreement  and any of the  Tranche B

                                      A-31
<PAGE>

Credit  Agreement,  the Note Purchase  Agreement or the Cash  Collateral  Credit
Agreement pursuant to the terms thereof.

      "Primary  Financing Party Financing  Statements"  shall mean UCC financing
statements and fixture filings  appropriately  completed and executed for filing
in the applicable  jurisdiction in order to procure a security interest in favor
of the Agent in the Collateral subject to the Security Documents.

      "Prime  Lending  Rate"  shall have the  meaning  given to such term in the
definition of ABR.

      "Prohibited Transaction" shall mean a transaction that is prohibited under
Section  4975 of the Code or Section 406 of ERISA and not exempt  under  Section
4975 of the Code or Section 408 of ERISA.

      "Project Cost" shall have the meaning given to such term in Section 5.1 of
the Participation Agreement;  provided, however, Project Costs shall not include
any amounts paid by the seller under the  Purchase  Agreement or otherwise  made
available to the Lessor or Construction Agent from funds held in escrow or other
arrangements made pursuant to the Purchase Agreement.

      "Property"  shall  mean  the  Permitted  Facility  that  is  (or is to be)
acquired,  constructed  and/or renovated  pursuant to the terms of the Operative
Agreements, the Land and each item of Equipment and the various Improvements, in
each case located on such Land.

      "Property  Acquisition Cost" shall mean the cost to the Lessor to purchase
the Property on the Closing Date.

      "Property  Cost" shall mean,  with  respect to the Property at any date of
determination,  an amount  equal to (a) the  aggregate  principal  amount of all
Advances made on or prior to such date and advanced to or for the benefit of the
Construction  Agent pursuant to and for the purposes set forth in Section 5.1 of
the Participation Agreement with respect to the Property minus (b) the aggregate
amount of  prepayments  or repayments as the case may be of the Tranche A Notes,
the  Tranche  B Loans or the Cash  Collateral  Loans  allocated  to  reduce  the
Property  Cost of the  Property  pursuant  to  Section  8 of the  Note  Purchase
Agreement, Section 2.6(c) of the Tranche B Credit Agreement or Section 2.6(c) of
the Cash Collateral Credit Agreement, respectively.

      "PTE" shall have the meaning  given to such term in Section  6.2(a) of the
Note Purchase Agreement.

      "Purchase  Agreement" shall mean  collectively,  (i) that certain Purchase
and Sale Agreement  between WWG Pointview LLC, as seller,  and Toys "R" Us, Inc,
as purchaser,  dated as of July 6, 2001 and (ii) that certain  letter  agreement
between WWG Pointview LLC and Toys "R" Us, Inc. dated as of July 6, 2001.

                                      A-32
<PAGE>

      "Purchase  Option"  shall have the  meaning  given to such term in Section
20.1 of the Lease.

      "Purchasing  Lender"  shall have the meaning given to such term in Section
9.8(a)  of the  Tranche  B  Credit  Agreement  or  Section  9.8(a)  of the  Cash
Collateral Credit Agreement, as applicable.

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

      "Rating  Agencies" shall mean Moody's,  S&P and Fitch  Investors  Service,
L.P. or, in each case, any successor  nationally  recognized  statistical rating
organization.

      "Register"  shall have the meaning given to such term in Section 9.9(a) of
the Tranche B Credit  Agreement or Section 9.9(a) of the Cash Collateral  Credit
Agreement, as applicable.

      "Regulation  D" shall mean  Regulation D of the Board,  as the same may be
modified and supplemented and in effect from time to time.

      "Regulation  T" shall mean  Regulation T of the Board,  as the same may be
modified and supplemented and in effect from time to time.

      "Regulation  U" shall mean  Regulation U of the Board,  as the same may be
modified and supplemented and in effect from time to time.

      "Regulation  X" shall mean  Regulation X of the Board,  as the same may be
modified and supplemented and in effect from time to time.

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

                                      A-33
<PAGE>

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

      "Related  Financing  Party"  shall have the meaning  given to such term in
Section 3.12 of the Intercreditor 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.

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

      "Remaining  Property"  shall mean, as the context shall  require,  (i) the
portion of the Property  exclusive of the Excess Land following the  subdivision
of the  Property  in  accordance  with  Section  8.13(a)  of  the  Participation
Agreement or (ii) the portion of the Property which remains subject to the Lease
and the other Operative  Agreements after any Excess Land is sold,  transferred,
conveyed or purchased by any third party in accordance  with Section  8.13(b) of
the Participation Agreement.

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

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

      "Rent Commencement Date" shall mean the Completion Date.

      "Reportable  Event"  shall have the meaning  specified  in Section 4043 of
ERISA.

      "Requested  Funds"  shall  mean any funds  requested  by the Lessee or the
Construction  Agent,  as  applicable,  in  accordance  with  Section  5  of  the
Participation Agreement.

      "Requisition"  shall have the  meaning  specified  in  Section  4.2 of the
Participation Agreement.

                                      A-34
<PAGE>

      "Responsible  Officer"  shall mean the  Chairman  or Vice  Chairman of the
Board of Directors,  the Chief Executive Officer, the President, any Senior Vice
President or Executive Vice President,  any Vice President,  the Secretary,  any
Assistant Secretary, the Treasurer, or any Assistant Treasurer.

      "Restoration" shall have the meaning given to such term in Section 15.1(e)
of the Lease.

      "Rule 144A" shall mean Rule 144A of the Securities Act.

      "S&P"  shall mean  Standard  and Poor's  Rating  Group,  a division of The
McGraw-Hill Companies, Inc.

      "Sale Date" shall have the meaning  given to such term in Section  20.3(a)
of the Lease.

      "Sale Notice"  shall mean a notice given to the Agent in  connection  with
the election by the Lessee of its Sale Option.

      "Sale Option" shall have the meaning given to such term in Section 20.1 of
the Lease.

      "Sale Proceeds Shortfall" shall mean the amount by which the proceeds of a
sale  described in Section 22.1 of the Lease are less than the Limited  Recourse
Amount  with  respect to the  Property if it has been  determined  that the Fair
Market  Sales Value of the Property at the  expiration  of the term of the Lease
has been  impaired by greater than ordinary wear and tear during the Term of the
Lease.

      "Scheduled  Interest  Payment  Date"  shall mean (a) as to any  Eurodollar
Loan, any ABR Loan and any interest  payment pursuant to any Tranche A Note, the
first day of each month,  unless such day is not a Business Day and in such case
on the next occurring Business Day and (b) as to all Financings, the date of any
voluntary or involuntary payment, prepayment, return or redemption, and the Cash
Collateral  Maturity Date (in the case of Cash Collateral Loans),  Maturity Date
or the Expiration Date, as the case may be.

      "SEC" means United States Securities and Exchange Commission.

      "Second  Priority  Liens"  shall  have the  meaning  given to such term in
Section 3.1 of the Intercreditor Agreement.

      "Secured  Parties"  shall  have  the  meaning  given  to such  term in the
Security Agreement.

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

      "Security  Agreement"  shall mean the Security  Agreement  dated as of the
Closing Date between the Borrower and the Agent,  for the benefit of the Secured
Parties, and accepted and agreed to by the Lessee.

                                      A-35
<PAGE>

      "Security  Assets"  shall have the meaning given to such term in Section 2
of the Security Agreement.

      "Security  Documents" shall mean the collective  reference to the Security
Agreement, the Mortgage Instruments,  (to the extent the Lease is construed as a
security  instrument)  the Lease,  the UCC  Financing  Statements  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 Lessor
under the Note  Purchase  Agreement,  the Tranche B Credit  Agreement,  the Cash
Collateral Credit Agreement and/or under any of the other Credit Documents.

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

      "Soft  Costs"  shall mean all costs which are  ordinarily  and  reasonably
incurred   in   relation   to  the   acquisition,   development,   installation,
construction,  improvement  and testing of the  Property  other than Hard Costs,
including without limitation structuring fees,  administrative fees, legal fees,
upfront fees, fees and expenses related to appraisals, title examinations, title
insurance,  document  recordation,   surveys,  environmental  site  assessments,
geotechnical  soil  investigations  and  similar  costs  and  professional  fees
customarily  associated with a real estate closing, the fees and expenses of the
Lessor  payable or  reimbursable  under the Operative  Agreements  and costs and
expenses  incurred  pursuant to Sections 7.3(a) and 7.3(b) of the  Participation
Agreement.

      "Source"  shall have the meaning  given to such term in Section 6.2 of the
Note Purchase Agreement.

      "Structural  Guarantee" shall mean that certain Structural Guarantee dated
as of September 26, 2001 from the Guarantor in favor of the Beneficiaries.

      "Subsidiary"  shall mean, as to any Person,  any  corporation  of which at
least a majority of the outstanding  stock having by the terms thereof  ordinary
voting power to elect a majority of the board of  directors of such  corporation
(irrespective  of whether or not at the time stock of any other class or classes
of such  corporation  shall  have or might  have  voting  power by reason of the
happening of any contingency) is at the time owned by such Person, or by one (1)
or more Subsidiaries, or by such Person and one (1) or more Subsidiaries.

      "Successor  Person"  shall have the meaning  given to such term in Section
8.3B.1 of the Participation Agreement.

      "Supplemental  Amounts"  shall  have the  meaning  given  to such  term in
Section  9.18 of the  Tranche  B  Credit  Agreement,  Section  9.18 of the  Cash
Collateral  Credit  Agreement and Section 22.14 of the Note Purchase  Agreement,
respectively.

                                      A-36
<PAGE>

      "Supplemental  Rent" shall mean all amounts,  liabilities  and obligations
(other than Basic Rent) which the Lessee assumes or agrees to pay to the Lessor,
the Agent, the Primary  Financing Parties or any other Person under the Lease or
under  any  of the  other  Operative  Agreements  including  without  limitation
payments of the Termination Value and the Maximum Residual  Guarantee Amount and
all indemnification amounts, liabilities and obligations.

      "Tax Affiliate" means, with respect to any corporate Person, any member of
an affiliated  group  (within the meaning of Section  1504(a) of the Code or any
similar  provision  of state or local  law) in which  such  Person  is a member,
"former Tax Affiliate" means,  with respect to any corporate  Person,  any other
Person  that had been but is not  currently  affiliated  (within  the meaning of
Section 1504(a) of the Code or any similar provision of state or local law) with
such Person, with respect to the period of their affiliation.

      "Taxes"   shall  have  the  meaning   specified  in  the   definition   of
"Impositions".

      "Term" shall mean, collectively, the Interim Term and the Basic Term.

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

      "Termination  Event" shall mean (a) with respect to any Pension Plan,  the
occurrence  of a Reportable  Event or an event  described in Section  4062(e) of
ERISA,  (b) the withdrawal of the Lessee or any ERISA  Affiliate from a Multiple
Employer Plan during a plan year in which it was a substantial employer (as such
term is  defined in  Section  4001(a)(2)  of  ERISA),  or the  termination  of a
Multiple  Employer Plan, (c) the distribution of a notice of intent to terminate
a Plan or Multiemployer  Plan pursuant to Section  4041(a)(2) or 4041A of ERISA,
(d) the institution of proceedings to terminate a Plan or Multiemployer  Plan by
the PBGC under  Section 4042 of ERISA,  (e) any other event or  condition  which
might constitute  grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer,  any Plan or Multiemployer  Plan, or
(f) the complete or partial withdrawal of the Lessee or any ERISA Affiliate from
a Multiemployer Plan.

      "Termination  Notice" shall have the meaning  specified in Section 16.1 of
the Lease.

      "Termination  Value" shall mean the sum of (a) the  outstanding  aggregate
purchase  price paid by the  Tranche A Note  Purchasers  for the Tranche A Notes
(minus  any  amounts  then on  deposit  in the  Escrow  Account),  plus  (b) the
outstanding  aggregate  principal  amount  of  Tranche  B  Loans,  plus  (c) the
outstanding  aggregate  principal amount of Cash Collateral  Loans, plus (d) any
accrued and unpaid interest owing to the Tranche A Note Purchasers,  the Tranche
B Lenders or the Cash Collateral  Lenders under the Tranche A Notes, the Tranche
B Notes and the Cash  Collateral  Notes,  plus (e) with respect to the Tranche B
Lenders and the Cash Collateral Lenders, any amounts payable pursuant to Section
11.4 of the  Participation  Agreement,  and with  respect to the  Tranche A Note
Purchasers,  the  Make-Whole  Amount,  plus  (f) to the  extent  the same is not
duplicative  of the amounts  payable  under  clauses (a) through (e) above,  all
other Rent and other  amounts  then due and payable or accrued  under the Agency
Agreement,  Lease and/or under any other Operative Agreement  (including without
limitation  amounts under Sections 11.1

                                      A-37
<PAGE>

and 11.2 of the  Participation  Agreement and all costs and expenses referred to
in clause FIRST of Section 22.2 of the Lease).

      "Total Capitalization" means, at any date of determination  calculated for
the Lessee and its Consolidated  Subsidiaries the sum of (i) Net Worth plus (ii)
Funded Indebtedness of the Lessee and its Consolidated Subsidiaries.

      "Tranche A  Commitments"  shall mean the  obligation of the Tranche A Note
Purchasers  to purchase  the Tranche A Notes from the  Borrower in an  aggregate
principal  amount not to exceed the aggregate of the amounts set forth  opposite
each  Tranche  A Note  Purchaser's  name  on  Schedule  A to the  Note  Purchase
Agreement;  provided, no Tranche A Note Purchaser shall be obligated to purchase
Tranche  A Notes in  excess  of such  Tranche  A Note  Purchaser's  share of the
Tranche A Commitments as set forth  adjacent to such Tranche A Note  Purchaser's
name on Schedule A to the Note Purchase Agreement.

      "Tranche  A Mortgage  Instruments"  means each deed of trust and any other
instrument  executed by the  Borrower  and the Lessee in favor of the Agent (for
the  benefit of the  Tranche A Note  Purchasers)  and  evidencing  a Lien on the
Property,  in form and  substance  reasonably  acceptable  to the Tranche A Note
Purchasers.

      "Tranche A Non-GAAP  Interest Expense" shall mean, for any Interest Period
during the Construction  Period,  the interest payable pursuant to the Tranche A
Notes on that  portion of the Tranche A Proceeds  then  remaining  in the Escrow
Account  minus any income  earned from the  investment  of Tranche A Proceeds in
Cash Equivalents pursuant to Section 5.12 of the Participation Agreement.

      "Tranche A Note"  shall have the  meaning  given to it in Section 1 of the
Note Purchase Agreement.

      "Tranche A Note Purchasers" shall mean the several institutional investors
from time to time party to the Note Purchase  Agreement  that commit to purchase
or otherwise hold from time to time the Tranche A Notes.

      "Tranche A Obligations" means the collective reference to all obligations,
now  existing or  hereafter  arising,  owing by the  Borrower  and/or the Lessee
and/or  any of  their  affiliates  to the  Tranche  A Note  Purchasers  under or
pursuant to the Operative  Agreements  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 Participation Agreement, the Note
Purchase  Agreement,  the Lease Agreement,  the Agency Agreement,  the Tranche A
Notes or any of the other Operative Agreements, whether on account of principal,
advanced amounts, interest, Make-Whole Amount, reimbursement obligations,  fees,
indemnities,  costs, expenses or otherwise (including,  without limitation,  all
reasonable  fees and  disbursements  of counsel to the Agent or to the Tranche A
Note  Purchasers) that are required to be paid by the Borrower and/or the Lessee
pursuant to the terms of the Operative Agreements.

                                      A-38
<PAGE>

      "Tranche A Proceeds"  shall mean the proceeds from the sale of the Tranche
A Notes to the Tranche A Note Purchasers pursuant to the Tranche A Commitment.

      "Tranche B Commitments" shall mean the obligation of the Tranche B Lenders
to make the Tranche B Loans to the Lessor in an  aggregate  principal  amount at
any one time  outstanding  not to exceed the  aggregate of the amounts set forth
opposite  each  Tranche B Lender's  name on Schedule 2.1 to the Tranche B Credit
Agreement,  as such  amount may be  increased  or  reduced  from time to time in
accordance with the provisions of the Operative Agreements; provided, no Tranche
B Lender  shall be obligated to make Tranche B Loans in excess of such Tranche B
Lender's  share of the  Tranche  B  Commitments  as set forth  adjacent  to such
Tranche B Lender's name on Schedule 2.1 to the Tranche B Credit Agreement.

      "Tranche B Credit  Agreement"  shall mean the Tranche B Credit  Agreement,
dated as of the Closing Date,  among the  Borrower,  the Agent and the Tranche B
Lenders, as specified therein.

      "Tranche B 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 Tranche B Credit Agreement Event of Default.

      "Tranche  B Credit  Agreement  Event of  Default"  shall mean any event or
condition  defined as an "Event of Default" in Section 6 of the Tranche B Credit
Agreement.

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

      "Tranche B Lenders" shall mean First Union National Bank and shall include
the several banks and other  financial  institutions  from time to time party to
the Tranche B Credit Agreement that commit to make the Tranche B Loans.

      "Tranche  B Loan"  shall  mean the loans made  pursuant  to the  Tranche B
Commitments.

      "Tranche  B Mortgage  Instruments"  means each deed of trust and any other
instrument  executed by the  Borrower  and the Lessee in favor of the Agent (for
the benefit of the Tranche B Lenders) and evidencing a Lien on the Property,  in
form and substance reasonably acceptable to the Tranche B Lenders.

      "Tranche B Note" shall have the meaning  given to it in Section 2.2 of the
Tranche B Credit Agreement.

      "Tranche B Obligations" means the collective reference to all obligations,
now  existing or  hereafter  arising,  owing by the  Borrower  and/or the Lessee
and/or any of their affiliates to the Tranche B Lenders under or pursuant to the
Operative Agreements 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  Participation  Agreement,  the Tranche B Credit
Agreement,  the Lease Agreement,  the Agency Agreement,  the Tranche B Notes, or
any of the

                                      A-39
<PAGE>

other Operative Agreements,  whether on account of principal,  advanced amounts,
interest,  reimbursement  obligations,  fees,  indemnities,  costs,  expenses or
otherwise (including,  without limitation, all reasonable fees and disbursements
of counsel to the Agent or to the  Tranche B Lenders)  that are  required  to be
paid by the Borrower  and/or the Lessee  pursuant to the terms of the  Operative
Agreements.

      "Transaction  Expenses"  shall mean all Soft Costs and all other costs and
expenses incurred in connection with the preparation,  execution and delivery of
the Operative  Agreements  and the  transactions  contemplated  by the Operative
Agreements  including  without  limitation  all costs and expenses  described in
Section 7 of the Participation Agreement and the following:

            (a) the reasonable fees, out-of-pocket expenses and disbursements of
      Moore & Van Allen PLLC and Chapman and Cutler, as counsel to the Financing
      Parties,  and of  counsel to the  Lessee in  negotiating  the terms of the
      Operative  Agreements and the other transaction  documents,  preparing for
      the closings  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,  but excluding in
      all  cases  the  fees,  expenses  and  disbursements  of  counsel  to  any
      individual Tranche A Note Purchaser or Tranche B Lender or Cash Collateral
      Lender;

            (b) the reasonable fees, out-of-pocket expenses and disbursements of
      accountants for the Lessee in connection with the transaction contemplated
      by the Operative Agreements;

            (c) any and all other  reasonable  fees,  charges  or other  amounts
      payable to the Primary Financing  Parties,  the Agent, the Escrow Agent or
      the Lessor which arises under any of the Operative Agreements;

            (d) any other reasonable fees, out-of-pocket expenses, disbursements
      or costs of any  party to the  Operative  Agreements  or any of the  other
      transaction documents; and

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

      "Tribunal"  shall  mean  any  state,   commonwealth,   federal,   foreign,
territorial,  or other court or government body, subdivision agency, department,
commission, board, bureau or instrumentality of a governmental body.

      "Type" shall mean, as to any Tranche B Loan or any Cash  Collateral  Loan,
whether it is an ABR Loan or a Eurodollar Loan.

      "UCC Financing  Statements"  shall mean collectively the Primary Financing
Party Financing Statements and the Lessor Financing Statements.

                                      A-40
<PAGE>

      "Unfunded  Liability"  shall mean,  with respect to any Plan, at any time,
the amount (if any) by which (a) the present value of all accrued benefits under
such Plan exceeds (b) the fair market value of all Plan assets allocable to such
benefits,  all  determined  as of the then most recent  valuation  date for such
Plan, but only to the extent that such excess  represents a potential  liability
of the  Lessee or any  member of the  Controlled  Group to the PBGC or such Plan
under Title IV of ERISA.

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

      "U.S.  Person" shall have the meaning  specified in Section 11.2(e) of the
Participation Agreement.

      "U.S.  Taxes" shall have the meaning  specified in Section  11.2(e) of the
Participation Agreement.

      "Voting Stock" means capital stock issued by a corporation,  or equivalent
interests  in any other  Person,  the  holders of which are  ordinarily,  in the
absence of  contingencies,  entitled to vote for the election of  directors  (or
persons performing  similar  functions) of such Person,  even if the right so to
vote has been suspended by the happening of such a contingency.

      "Wholly-Owned  Entity"  shall  mean a Person  all of the shares of capital
stock or other ownership interest of which are owned by a referent Person and/or
one of such referent Person's  wholly-owned  Subsidiaries or other  wholly-owned
entities.

      "Withdraw  Liability" shall have the meaning given to such term under Part
I of Subtitle E of Title IV of ERISA.

      "Withholdings"  shall have the meaning specified in Section 11.2(e) of the
Participation Agreement.

      "Work"  shall  mean  the  furnishing  of  labor,  materials,   components,
furniture,  furnishings,  fixtures,  appliances,  machinery,  equipment,  tools,
power, water, fuel, lubricants,  supplies, goods and/or services with respect to
the Property.

                                      A-41Exhibit 10DD

                        SEPARATION AND RELEASE AGREEMENT

      This Separation and Release Agreement ("Agreement") is entered into as of
this27th day of February, 2002, between Toys "R" Us, Inc. and any successor
thereto (collectively, the "Company") and Michael Shannon (the "Officer').

      The Officer and the Company agree as follows:

      1. The employment relationship between the Officer and the Company
terminated on February 1, 2002 (the "Termination Date"). The Officer understands
and agrees that he has been paid through January 25, 2002 and will not be paid
for the period January 26, 2002 through February 1, 2002.

      2. In accordance with the Officer's Retention Agreement, dated October 8,
1998 a copy of which is attached hereto as Exhibit A, the Company has agreed to
pay the Officer certain payments and to make certain benefits available after
the Termination Date.

      3. In consideration of the above, the sufficiency of which the Officer
hereby acknowledges, the Officer, on behalf of the Officer and the Officer's
heirs, executors and assigns, hereby releases and forever discharges the Company
and its members, parents, affiliates, subsidiaries, divisions, any and all
current and former directors, officers, employees, agents, and contractors and
their heirs and assigns, and any and all employee pension benefit or welfare
benefit plans of the Company, including current and former trustees and
administrators of such employee pension benefit and welfare benefit plans, from
all claims, charges, or demands, in law or in equity, whether known or unknown,
which may have existed or which may now exist from the beginning of time to the
date of this Agreement, including, without limitation, any claims the Officer
may have arising from or relating to the Officer's employment or termination
from employment with the Company, including a release of any rights or claims
the Officer may have under Title VII of the Civil Rights Act of 1964, as
amended, and the Civil Rights Act of 1991 (which prohibit discrimination in
employment based upon race, color, sex, religion, and national origin); the
Americans with Disabilities Act of 1990, as amended, and the Rehabilitation Act
of 1973 (which prohibit discrimination based upon disability); the Family and
Medical Leave Act of 1993 (which prohibits discrimination based on requesting or
taking a family or medical leave); Section 1981 of the Civil Rights Act of 1866
(which prohibits discrimination based upon race); Section 1985(3) of the Civil
Rights Act of 1871 (which prohibits conspiracies to discriminate); the Employee
Retirement Income Security Act of 1974, as amended (which prohibits
discrimination with regard to benefits); the New Jersey Law Against
Discrimination, N.J.S.A. 10:15-1, et seq.; the New Jersey Conscientious
Executive Protection Act N.J.S.A. 34:19-1 to 19-8; the New Jersey Wage and Hour
Act, N.J.S.A. 34-11-56a, et seq.; any other federal, state or local laws against
discrimination; or any other federal, state, or 1ocal statute, or common law
relating to employment, wages, hours, or any other terms and conditions of
employment. This includes a release by the Officer of any claims for wrongful
discharge, breach of contract, torts or any other claims in any way related to
the Officer's employment with or resignation or termination from the Company.
This release also includes a release of any claims for age discrimination under
the Age Discrimination in Employment Act as amended ("ADEA"). The ADEA requires
that the Officer be advised to consult with an attorney before the Officer
waives any claim under ADEA.
<PAGE>

      In addition, the ADEA provides the Officer with at-least 21 days to decide
whether to waive claims under ADEA and seven days after the Officer signs the
Agreement to revoke that waiver. This release does not release the Company from
any obligations due to the Officer under Section 4, 7,9(a), 9(b), 10, 11 or
13(e) of the Officer's Retention Agreement, the Officer's Indemnification
Agreement with the Company or under this Agreement.

      Additionally, the Company agrees to discharge and release the Officer and
the Officers heirs from any claims, demands, and/or causes of action whatsoever,
presently known or unknown, that are based upon facts occurring prior to the
date of this Agreement, including, but not limited to, any claim, matter or
action related to the Officer's employment and/or affiliation with, or
termination and separation from the Company; provided that such release shall
not release the Officer from any loan or advance by the Company or any of its
subsidiaries, any act that would constitute "Cause" under the Officer's
Retention Agreement or a breach under Section 9(b), 11 or 13(e) of the Officer's
Retention Agreement.

      4. This Agreement is not an admission by either the Officer or the Company
of any wrongdoing or liability.

      5. The Officer waives any right to reinstatement or future employment with
the Company following the Officer's separation from the Company on the
Termination Date.

      6. The Officer agrees not to engage in any act after execution of the
Separation and Release Agreement that is intended, or may reasonably be expected
to harm the reputation, business, prospects or operations of the Company, its
officers, directors, stockholders or employees. The Company further agrees that
it will engage in no act which is intended, or may reasonably be expected to
harm the reputation, business or prospects of the Officer. This paragraph shall
not prohibit either party from cooperating with government agencies.

      7. The Officer shall continue to be bound by Sections 11 and 13(e) of the
Officer's Retention Agreement.

      8. The Officer shall promptly return all the Company property in the
Officer's possession, including, but not limited to, the Company keys, credit
cards, cellular phones, computer equipment, software and peripherals and
originals or copies of books, records, or other information pertaining to the
Company business. The Officer shall return any leased or Company car at the
expiration of the Consulting Period (as defined in the Officer's Retention
Agreement).

      9. This Agreement shall be governed by and construed in accordance with
the laws of the State of New Jersey, without reference to the principles of
conflict of laws. Exclusive jurisdiction with respect to any legal proceeding
brought concerning any subject matter contained in this Agreement shall be
settled by arbitration as provided in the Officer's Retention Agreement.

      10.This Agreement (including Exhibit "A" which is attached hereto and made
a part of this Agreement) represents the complete agreement between the Officer
and the Company concerning the subject matter in this Agreement and supersedes
all prior agreements or understandings, written or oral. This Agreement may not
be amended or modified otherwise than
<PAGE>

by a written agreement executed by the parties hereto or their respective
successors and legal representatives.

      11.Each of the sections contained in this Agreement shall be enforceable
independently of every other section in this Agreement, and the invalidity or
nonenforceability of any section shall not invalidate or render unenforceable
any other section contained in this Agreement.

      12.It is further understood that for a period of 7 days following the
execution of this Agreement in duplicate originals, the Officer may revoke this
Agreement, and this Agreement shall not become effective or enforceable until
the revocation period has expired. No revocation of this Agreement by the
Officer shall be effective unless the Company has received within the 7-day
revocation period, written notice of any revocation, all monies received by the
Officer under this Agreement and all originals and copies of this Agreement.

      13.This Agreement has been entered into voluntarily and not as a result of
coercion, duress, or undue influence. The Officer acknowledges that the Officer
has read and fully understands the terms of this Agreement and has been advised
to consult with an attorney before executing this Agreement. Additionally, the
Officer acknowledges that the Officer has been afforded the opportunity of at
least 21 days to consider this Agreement.

      The parties to this Agreement have executed this Agreement as of the day
and year first written above.

TOYS "R" US, INC.

By:
   -------------------------------
   Name:
   Titles

----------------------------------
Michael Shannon

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