Document:

<PAGE>   1

                                                                    EXHIBIT 10.3

NOTE: Certain portions of this document have been omitted pursuant to a request
for confidential treatment and, where applicable, has been marked with an
asterisk to denote where omissions have been made. The confidential material has
been filed separately with the Commission.

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

                       OUTSOURCING AND OPERATING AGREEMENT

                           dated as of March 30, 2000

                                      among

                                 NOVATION, LLC,

                                   VHA, INC.,

                       UNIVERSITY HEALTHSYSTEM CONSORTIUM,

               HEALTHCARE PURCHASING PARTNERS INTERNATIONAL, LLC,

                                       and

                               NEOFORMA.COM, INC.

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

<PAGE>   2

                                TABLE OF CONTENTS

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

2.             NOVATION OBLIGATIONS............................................................................5

               2.1           Agency Relationship...............................................................5
               2.2           Novation Duties...................................................................5
               2.3           Certain Contracts.................................................................7

3.             NEOFORMA OBLIGATIONS............................................................................7

               3.1           Service...........................................................................7
               3.2           Service Levels....................................................................8
               3.3           Cooperation with Novation.........................................................8
               3.4           The First * Locations.............................................................8
               3.5           Quality Assurance Program.........................................................8
               3.6           Notice of Materially Adverse Facts................................................8
               3.7           Case Studies......................................................................8

4.             THE EXCHANGE....................................................................................8

               4.1           Maintenance of Exchange...........................................................8
               4.2           Consultation......................................................................8
               4.3           Provision of Non-Contract Product Information.....................................8
               4.4           Provision of Contract Product Information.........................................9
               4.5           Independent Users.................................................................9
               4.6           Multiple Memberships..............................................................9
               4.7           User Registration.................................................................9
               4.8           Delivery and Order Fulfillment...................................................10
               4.9           Removal of Products from the Exchange............................................10
               4.10          Customized Exchanges.............................................................10
               4.11          Links............................................................................10
               4.12          Reasonable Assistance............................................................10

5.             NOVATION EXCHANGE AND HPPI EXCHANGE............................................................10

               5.1           Development......................................................................10
               5.2           Hosting..........................................................................11
               5.3           Delivery and Order Fulfillment...................................................11
               5.4           Display of Material..............................................................11
               5.5           Reports..........................................................................11
               5.6           Retained Contracts...............................................................11
               5.7           Marketing........................................................................11
               5.8           Neoforma Auction.................................................................12
               5.9           Neoforma Plan....................................................................12

6.             EXCLUSIVITY AND RIGHT OF FIRST OFFER...........................................................12

               6.1           Novation, VHA, UHC and HPPI Exclusivity..........................................12
</TABLE>

* Material has been omitted and filed separately with the Commission.

<PAGE>   3

<TABLE>
<S>           <C>                                                                                            <C>
               6.2           Neoforma Exclusivity.............................................................13
               6.3           Right of First Offer for Novation and Neoforma...................................13
               6.4           First Offer for Non-Exclusive Services...........................................14

7.             LICENSES AND OWNERSHIP.........................................................................15

               7.1           Ownership of Marks...............................................................15
               7.2           Novation Marks...................................................................15
               7.3           Neoforma Marks...................................................................15
               7.4           VHA, UHC and HPPI Marks..........................................................15
               7.5           Ownership of Neoforma Materials and Novation Materials...........................16
               7.6           Neoforma Materials...............................................................16
               7.7           Novation Materials...............................................................16
               7.8           Development of Tools.............................................................16
               7.9           Access License...................................................................17

8.             FEES AND TAXES.................................................................................17

               8.1           Contract Product Transaction Fees................................................17
               8.2           Non-Contract Product Transaction Fees............................................17
               8.3           Target Transaction Fees..........................................................18
               8.4.          Adjustment of Transaction Fees...................................................18
               8.5           Reporting and Payment of Transaction Fees........................................19
               8.6           No Fees Prior to Mergers.........................................................19
               8.7           Taxes............................................................................19
               8.8           New Markets......................................................................20
               8.9           Product Returns..................................................................20
               8.10          Neoforma * and Neoforma *........................................................20
               8.11          Other Expenses...................................................................20
               8.12          VHA/UHC Allocation...............................................................20

9.             TERM AND TERMINATION...........................................................................21

               9.1           Initial Term.....................................................................21
               9.2           Renewal and Extension of Term....................................................21
               9.3           Termination for Cause............................................................21
               9.4           Termination for Insolvency Events................................................21
               9.5           Termination of Merger Agreements.................................................22
               9.6           Termination Upon Neoforma Change of Control......................................22
               9.7           Return of Materials..............................................................22
               9.8           Survival.........................................................................22
               9.9           Termination Assistance Services..................................................22

10.            USER DATA......................................................................................24

               10.1          Registration.....................................................................24
               10.2          Transaction Database.............................................................24
               10.3          Member Data......................................................................24
               10.4.         Aggregated Member Data...........................................................24
               10.5          Transaction Database.............................................................24
               10.6          License Grant of Information to Novation.........................................25
</TABLE>

* Material has been omitted and filed separately with the Commission.

<PAGE>   4

<TABLE>
<S>           <C>                                                                                            <C>
               10.7          No Other Licenses or Use.........................................................25
               10.8          Other Data.......................................................................25
               10.9          Neoforma Information.............................................................25

11.            SAFEGUARDING OF DATA; CONFIDENTIALITY..........................................................26

               11.1          Novation Data....................................................................26
               11.2          Confidentiality..................................................................26

12.            REPRESENTATIONS AND WARRANTIES.................................................................28

               12.1          Representations by Neoforma......................................................28
               12.2          Representations by Novation, VHA, UHC and HPPI...................................29
               12.3          Warranty Disclaimer..............................................................30

13.            USE OF SUBCONTRACTORS..........................................................................30

               13.1          Generally........................................................................30
               13.2          Novation's Right to Revoke Approval..............................................31
               13.3          Continuing Responsibility........................................................31
               13.4          Confidential Information.........................................................31

14.            INSURANCE......................................................................................31

               14.1          Insurance........................................................................31
               14.2          Proof of Insurance...............................................................31

15.            INDEMNITY......................................................................................31

               15.1          Neoforma Indemnity...............................................................31
               15.2          Novation Indemnity...............................................................32
               15.3          Infringement Claims..............................................................32
               15.4          Indemnity Procedures.............................................................33

16.            LIMITATION OF LIABILITY........................................................................33

               16.1          Limitations......................................................................33
               16.2          Exceptions.......................................................................33
               16.3          Liquidated Damages...............................................................33

17.            AUDIT RIGHTS...................................................................................34

               17.1          General..........................................................................34
               17.2          Frequency of Audits..............................................................35
               17.3          Auditors.........................................................................35
               17.4          Record Retention.................................................................35
               17.5          Cooperation......................................................................35
               17.6          Overcharges......................................................................35

18.            DISPUTE RESOLUTION.............................................................................36

               18.1          Resolution of Disputes...........................................................36
               18.2          Negotiations and Escalation......................................................36
               18.3          Appointment of Arbitral Body.....................................................36
               18.4          Qualifications of Arbitrator.....................................................36
               18.5          Initiation of Arbitration and Procedures.........................................37
</TABLE>

* Material has been omitted and filed separately with the Commission.

<PAGE>   5

<TABLE>
<S>           <C>                                                                                            <C>
               18.6          Procedures.......................................................................37
               18.7          Governing Law; Jurisdiction......................................................37
               18.8          Arbitration Award................................................................38
               18.9          Cooperation of the Parties.......................................................38
               18.10         Costs............................................................................38
               18.11         Judgment on the Award; Enforcement...............................................38
               18.12         Preservation of Equitable Relief; Third-Party Litigation.........................38
               18.13         Continued Performance............................................................39

19.            GUARANTY OF PERFORMANCE........................................................................39

               19.1          VHA and UHC Guarantees...........................................................39
               19.3          VHA and UHC Waivers..............................................................39
               19.3          Scope of Liability...............................................................40

20.            GENERAL PROVISIONS.............................................................................40

               20.1          No Waiver........................................................................40
               20.2          Entire Agreement.................................................................40
               20.3          Publicity........................................................................40
               20.4          Covenant of Good Faith...........................................................40
               20.5          Compliance with Laws and Regulations.............................................40
               20.6          Assignment; Successors and Assigns...............................................41
               20.7          Governing Law....................................................................41
               20.8          Notices..........................................................................41
               20.10         No Agency........................................................................42
               20.11         Force Majeure....................................................................42
               20.12         Interest.........................................................................43
               20.13         Program Management...............................................................43
               20.14         Severability.....................................................................43
               20.15         Counterparts.....................................................................43
               20.16         Headings.........................................................................43
</TABLE>

* Material has been omitted and filed separately with the Commission.

<PAGE>   6

EXHIBITS:

Exhibit A      Marks
Exhibit B      Current Marks Usage Guidelines for Novation
Exhibit C      Current Marks Usage Guidelines for Neoforma
Exhibit D      Current Marks Usage Guidelines for VHA, UHC and HPPI
Exhibit E      Reports and Other Information Requirements
Exhibit F      Program Management

* Material has been omitted and filed separately with the Commission.

<PAGE>   7

                       OUTSOURCING AND OPERATING AGREEMENT

        This Outsourcing and Operating Agreement ("AGREEMENT") is entered into
as of March 30, 2000 (the "EFFECTIVE DATE") by and among Neoforma.com, Inc., a
Delaware corporation with offices at 3255-7 Scott Boulevard, Santa Clara,
California 95054 ("NEOFORMA"), Novation, LLC, a Delaware limited liability
company with offices at 125 East John Carpenter Freeway, Irving, Texas 75062
("NOVATION"), Healthcare Purchasing Partners International, LLC, a Delaware
limited liability company with offices at 125 East John Carpenter Freeway,
Irving, Texas 75062 ("HPPI"), VHA, Inc., a Delaware corporation with offices at
220 East Las Colinas Boulevard, Irving, Texas 75039-5500 ("VHA") and University
HealthSystem Consortium, an Illinois corporation with offices at 2001 Spring
Road, Suite 700, Oak Brook, Illinois 60523 ("UHC").

                                    RECITALS

        WHEREAS, Neoforma is a provider of Internet (as defined in Section 1)
e-commerce services to the healthcare industry facilitating the sale, rental or
lease of new and used equipment, products, supplies, services information and
other content, and provides information regarding various healthcare facilities
and equipment through its online offerings and programs;

        WHEREAS, VHA and UHC are organizations whose patrons are hospitals and
healthcare providers, who view e-commerce as an essential part of their
cooperative purchasing programs on behalf of their patrons for the future and
who desire to more fully develop the services they render to their patrons
through this Agreement;

        WHEREAS, VHA and UHC together own all the ownership interests in
Novation and HPPI;

        WHEREAS, Novation is a contracting agent that develops and delivers
supply chain management agreements, programs and services on behalf of VHA and
UHC and their patrons;

        WHEREAS, HPPI is a GPO that serves healthcare organizations that are not
members of VHA and UHC and other GPOs and which develops and delivers
supply-chain management programs and services to such healthcare organizations;

        WHEREAS, the parties wish to establish a long-term, global relationship
to enable the parties to achieve increased efficiency and cost savings through
Internet-based technology and pursuant to which (i) Neoforma will develop and
manage the Exchange (as defined in Section 1), an e-commerce web site for the
benefit of the members of VHA and UHC, the associated healthcare organizations
of HPPI and for the benefit of other users unaffiliated with VHA, UHC or HPPI,
(ii) Novation will serve as the contracting agent for Neoforma by recruiting,
contracting with and managing relationships with healthcare equipment
manufacturers and service suppliers on Neoforma's behalf and (iii) VHA and UHC
will provide marketing support for the Exchange, guarantee Novation's
obligations to the extent provided under this Agreement and enter into the
exclusivity provisions hereunder; and

        WHEREAS, in consideration for the services to be provided by VHA and UHC
pursuant to this Agreement, Neoforma will issue to VHA and UHC warrants (the
"Warrants") to purchase up to 14,191,777 shares and 1,524,477 shares,
respectively, of the common stock, par value

* Material has been omitted and filed separately with the Commission.

                                       1

<PAGE>   8

$0.001, of Neoforma (the "Common Stock"), and Neoforma will issue to VHA and to
UHC 38,316,111 shares and 9,222,488 shares, respectively, of Common Stock, in
each case, in accordance with and subject to the limitations set forth in those
certain Common Stock and Warrant Purchase Agreements entered into by Neoforma
and VHA and by Neoforma and UHC on the date hereof (collectively, the "Purchase
Agreements").

        NOW, THEREFORE, for good and valuable consideration, the parties agree
as follows:

1.      DEFINITIONS

        As used in this Agreement, the following terms shall have the respective
meanings set forth below. Other capitalized terms shall have the meanings set
forth elsewhere in this Agreement.

        "ADJUSTED GROSS TRANSACTION VALUE(S)" means, with regard to a confirmed
purchase, rental or lease on the Exchange, the gross purchase, rental or lease
price * which are related to the Product purchased, rented or leased.

        "AFFILIATE(S)" means, with respect to a specified person, any other
person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by or is under common control with such specified
person. Neoforma, on the one hand, and Novation, VHA and/or UHC, on the other
hand, shall not be Affiliates.

        "AGGREGATED MEMBER DATA" means all or any of an aggregate of the
Information relating to any two or more Members.

        "API(S)" means language and messaging formats, in human and computer
readable form, that define how programs interact with an operating system, a
database, with functions in other programs, with communication systems, or with
hardware drivers.

        "CONTRACT PRODUCT(S)" means any Product that is part of the Novation
Contract Portfolio and available on the Novation Exchange or the HPPI Exchange.

        "CONTRACT TRANSACTION FEE(S)" has the meaning specified in Section 8.1.1
of this Agreement.

        "CUSTOMIZED EXCHANGE(S)" means that portion of the Exchange created
specifically for and accessible only to members of a particular purchasing
organization.

        "EXCHANGE" means the Novation Exchange, HPPI Exchange, all Customized
Exchanges and all other portions of the Neoforma web sites.

        "GPO(S)" means any entity in the United States that meets the definition
of a "Group Purchasing Organization" as set forth in 42 CFR Section 1001.952(j),
and any entity outside the United States performing a similar function.

* Material has been omitted and filed separately with the Commission.

                                       2
<PAGE>   9

        "HPPI EXCHANGE" means that portion of the Exchange accessible only HPPI
Members.

        "HPPI MEMBER(S)" means, at any date, those organizations acting as
purchasers, renters or lessees in their respective markets that are associates
of HPPI and to which HPPI provides procurement related services, cost management
programs and other services.

        "INFORMATION" means the information and data maintained by Neoforma in
the Transaction Database, which shall include, at minimum, (i) any and all
information and data collected, developed and/or stored by Neoforma relating to
Users and (ii) any and all information and data relating to use of or
transactions on the Exchange by Users.

        "INTELLECTUAL PROPERTY RIGHTS" means all copyrights, patents, trade
names and trademarks (in each of the preceding cases, whether registered or not)
and trade secrets and other intellectual property rights of a person.

        "INTERNET" means the public, global network of computer networks and
individual computers constantly connected using standardized communications
protocols, specifically TCP/IP or any successor protocol thereof.

        "MATERIAL(S)" means information on equipment, products, supplies or
services, including, without limitation, product availability and pricing
information, provided to Neoforma for display to Users of the Exchange.

        "MEMBER(S)" means, at any date, those organizations that are (i) patrons
or members of VHA or UHC, or are associated therewith, or (ii) HPPI Members, and
in each case, that are listed in an electronic file supplied to Neoforma and
updated periodically by Novation.

        "MEMBER DATA" means any and all Transaction Database information
relating to a specific Member.

        "MERGERS" means (i) the merger of a subsidiary of Neoforma into Eclipsys
Corporation ("ECLIPSYS") and (ii) the merger of HEALTHvision, Inc.
("HEALTHVISION") into Eclipsys.

        "MERGER AGREEMENTS" means (i) the Agreement and Plan of Merger by and
among Neoforma, Neo III Acquisition Corp. and Eclipsys dated the date hereof and
(ii) the Agreement and Plan of Merger between Neoforma and Healthvision dated
the date hereof.

        "NEOFORMA AUCTION" means Neoforma's auction services offered on the
Exchange.

        "NEOFORMA CHANGE OF CONTROL" means any (i) transaction or series of
related transactions in which more than 50% of the voting securities of Neoforma
immediately after such transaction or transactions is not owned by persons who,
immediately prior to such transaction or transactions, owned more than 50% of
the voting securities of Neoforma, (ii) merger or consolidation in which
Neoforma is not the surviving entity or (iii) the sale of all or substantially
all of the assets of Neoforma; provided, however, none of the Mergers or the
transactions contemplated by the Merger Agreements shall be deemed a Neoforma
Change of Control.

                                       3

* Material has been omitted and filed separately with the Commission.

<PAGE>   10

        "NEOFORMA INFORMATION" means Information received from non-Members.

        "NEOFORMA MATERIALS" means Materials provided by Neoforma and displayed
on and available to Users of the Exchange but shall not include the Novation
Materials.

        "NEOFORMA PLAN" means Neoforma's medical facility planning services
offered on the Exchange.

        "NON-CONTRACT PRODUCT" means any Product available through the Exchange
that is not part of the Novation Contract Portfolio or any other GPO-specific
contract portfolio.

        "NON-CONTRACT TRANSACTION FEES" has the meaning specified in Section
8.2.1 of this Agreement.

        "NOVATION CONTRACT PORTFOLIO" means a catalog of all Products and
Novation Materials that will appear on the Novation Exchange or the HPPI
Exchange, for which Novation has contracted, for the benefit of the Members.

        "NOVATION COMPETITOR" means any person that, at the time of
determination, would reasonably be considered to be (i) a competitor of Novation
or (ii) a competitor of any Member.

        "NOVATION EXCHANGE" means that portion of the Exchange dedicated to the
Novation Contract Portfolio and accessible only to members of VHA or UHC.

        "NOVATION MATERIALS" means Materials provided by Novation or by Novation
Suppliers to Neoforma for display to Users of the Exchange, including to Members
on the Novation Exchange.

        "NOVATION SUPPLIERS" means suppliers, manufacturers or distributors that
provide equipment, products, supplies, services, information and other content
for sale, rental or lease through the Novation Exchange and HPPI Exchange under
the Novation Contract Portfolio.

        "PARTY" means each of Neoforma, Novation, HPPI, VHA and UHC and any
other person who becomes a signatory to this Agreement, unless the context
requires otherwise.

        "PATRON(S)" means a person who is entitled to receive a patronage refund
from VHA or UHC.

        "PERSON" means a natural person, corporation, partnership (limited or
general), limited liability company, business trust or other entity.

        "PRODUCT(S)" means equipment, products, supplies, services, information
and other content provided by Suppliers and available for purchase, rental or
lease by Users through the Exchange.

* Material has been omitted and filed separately with the Commission.

                                       4
<PAGE>   11

        "RETAINED CONTRACT(S)" means those product or service contracts of VHA
or UHC that have not been transferred to Novation and which the Members may have
access to because they are Members in VHA or UHC.

        "SERVICE(S)" means the services to be provided hereunder by Neoforma.

        "SERVICE LEVEL(S)" means the objective criteria establishing the level
of Neoforma's required performance of the Services under this Agreement.

        "SIGN-UP" (also "SIGNS-UP" and "SIGNED-UP") means for a party to enter
into a contractual relationship with a Supplier to enable all or any portion of
that Supplier's equipment, products, supplies, services, information and other
content to be displayed on the Exchange.

        "SUPPLIER(S)" means suppliers, manufacturers or distributors that
provide Products and Materials for display, sale, rental or lease through the
Exchange.

        "SUPPLY CHAIN MANAGEMENT SERVICES" means (i) with respect to Novation,
VHA and HPPI, operations and activities related to evaluation, bidding,
negotiation, contracting, administering, marketing, distribution, sale,
acquisition or disposal of equipment, products, supplies, services, information
and other content by healthcare organizations from third parties and (ii) with
respect to UHC only, operations and activities related to evaluation, bidding,
negotiation, contracting, administering, marketing, distribution, sale,
acquisition or disposal of equipment, products, supplies and services by
healthcare organizations from third parties, and in the case of each of clause
(i) and (ii), including operations and activities directly related to Neoforma
Plan and Neoforma Auction. Notwithstanding the generality of the foregoing, and
with respect to UHC only, Supply Chain Management Services do not include
outsourcing, consulting, information technology products and services (unless
related to equipment or supplies), financial products and services, insurance
products and services, education and networking and communication products and
services.

        "TOOL(S)" means a program, utility or user interface that helps the user
of the program, utility or user interface analyze or search for data.

        "TRANSACTION DATA" means the data maintained by Neoforma on the
Transaction Database.

        "TRANSACTION DATABASE" means any and all means used to store
Information.

        "TRANSACTION FEE(S)" means fees to be paid by Suppliers with whom
Novation has contracted on Neoforma's behalf in respect of transactions
occurring on the Exchange but excluding fees associated with Neoforma Auction
and Neoforma Plan.

        "USER(S)" means all Members and other users of the Exchange, including,
without limitation, participating healthcare organizations, GPOs or other
registered users that do not act as Suppliers.

2.      NOVATION OBLIGATIONS

        2.1     Agency Relationship. Neoforma hereby appoints Novation to act as
                Neoforma's agent to Sign-up Suppliers, and Novation accepts such
                appointment, for the principal purpose of facilitating
                e-commerce purchases by the patrons of VHA and UHC and by
                others.

        2.2     Novation Duties. In connection with Novation's appointment as
                agent under Section 2.1, Novation will perform the following
                obligations:

* Material has been omitted and filed separately with the Commission.

                                       5
<PAGE>   12

                2.2.1   As promptly as practicable after the Effective Date,
                        Neoforma and Novation shall meet to discuss and mutually
                        agree upon (i) the form of agreement to be used by
                        Novation to Sign-up Suppliers on Neoforma's behalf and
                        (ii) certain reasonable negotiating parameters within
                        which Novation may negotiate with Suppliers without
                        seeking Neoforma's approval. The parties will use
                        commercially reasonable efforts to agree on the form
                        supplier agreement and the negotiating parameters within
                        90 days after the Effective Date. While within such
                        parameters, Novation may negotiate with any Supplier and
                        obtain any terms and conditions that in Novation's
                        reasonable discretion are consistent with its
                        obligations under this Agreement. Novation agrees that
                        if it concludes any agreement upon terms or conditions
                        outside of the agreed upon negotiating parameters, it
                        will seek Neoforma's prior consent, which consent shall
                        not be unreasonably withheld or delayed. Novation shall
                        use its diligent efforts to obtain favorable terms from
                        each Supplier with whom it negotiates on behalf of
                        Neoforma. Neoforma agrees, however, that Novation shall
                        have no obligation to obtain the best terms and
                        conditions available from any Supplier.

                2.2.2   Neoforma and Novation shall meet no less frequently than
                        on a quarterly basis (or at any time that either
                        Neoforma or Novation reasonably requests such a meeting)
                        to review the then current form of Supplier agreement
                        and the negotiating parameters. At such meetings,
                        Neoforma and Novation shall in good faith review whether
                        the form of Supplier agreement and the negotiating
                        parameters then in effect are market competitive and, if
                        not, shall adjust either or both so that they are market
                        competitive. For the avoidance of doubt, the parties
                        agree that "market competitive" shall mean that (i)
                        Suppliers are reasonably likely to sign such agreement
                        (after negotiation) or (ii) the negotiating parameters
                        are commercially reasonable.

                2.2.3   Novation will provide to Neoforma promptly after the
                        Sign-up of each Supplier agreement that Novation enters
                        into on Neoforma's behalf, all information concerning
                        such agreement that is necessary for Neoforma to fulfill
                        its obligations thereunder.

                2.2.4   Novation will manage the Supplier relationships in
                        respect of each Supplier that Novation Signs-up on
                        Neoforma's behalf, and will use diligent efforts to
                        facilitate favorable commercial relationships between
                        Neoforma and such Suppliers.

                2.2.5   As promptly as practicable after the Effective Date,
                        Novation will identify certain key Novation employees
                        responsible for performing Novation's agency services
                        hereunder. Novation shall make available a number of
                        employees as will be necessary to perform Novation's
                        agency obligations hereunder. No such employees will be
                        required to devote their full time to providing such
                        services hereunder.

* Material has been omitted and filed separately with the Commission.

                                       6
<PAGE>   13

                2.2.6   Novation and Neoforma shall cooperate to increase the
                        number of Suppliers on the Exchange. Novation and
                        Neoforma will meet on at least a quarterly basis to
                        agree upon targets regarding Supplier recruitment.
                        Subject to Neoforma's obligations set forth in Sections
                        3.4 and 3.7, *, Novation as agent shall Sign-up
                        Suppliers representing * of * as measured by * during *.

                2.2.7   Novation will reasonably cooperate with Neoforma to
                        resolve performance problems with respect to any
                        Supplier that it has Signed-up on Neoforma's behalf and
                        who has become the subject of numerous User complaints.
                        In the resolution of such issues, Novation will act
                        solely as Neoforma's agent with respect to Suppliers,
                        and Novation shall not be required to contact any Users.

                2.2.8   Subject to its obligations under Section 11.2, Novation
                        will bring to Neoforma's attention, reasonably promptly
                        after learning thereof, any fact that would reasonably
                        be likely to materially adversely affect the Exchange,
                        Neoforma or Users, including, without limitation, the
                        institution of litigation against Novation or any
                        Supplier.

                2.2.9   In connection with the negotiation of Supplier
                        agreements, Novation will provide Suppliers with
                        technical information and specifications provided by
                        Neoforma to enable such Suppliers to effectively connect
                        to and interface with the Exchange. Novation shall not
                        independently negotiate or modify any aspects of
                        Neoforma's technical specifications regarding the
                        Exchange without Neoforma's prior written consent.

                2.2.10  In performing its duties under this Section 2, Novation
                        shall not be required to initiate or carry on
                        litigation.

        2.3     Certain Contracts. For the avoidance of doubt, the parties agree
                that the contracts constituting the Novation Contract Portfolio
                or the Retained Contracts, as now or hereafter constituted,
                shall remain obligations of Novation, UHC or VHA, as the case
                may be, and shall not be transferred to, or assumed by, Neoforma
                in connection with this Agreement.

3.      NEOFORMA OBLIGATIONS

        3.1     Service. Neoforma shall provide the Services described in the
                Functionality Specification. Neoforma and Novation anticipate
                that the Services will evolve and be modified or be enhanced
                over time to keep pace with technological advancements and
                improvements in e-commerce and shall include at least the
                functionality described in the Functionality Specifications. All
                modifications to the Functionality Specifications must be in
                writing and agreed to by the parties in writing.

* Material has been omitted and filed separately with the Commission.

                                       7
<PAGE>   14

        3.2     Service Levels. Neoforma shall provide such professional and
                technical personnel and other resources (including, without
                limitation, hardware, software, facilities, equipment and other
                assets) as shall be required to perform the Services in
                accordance with the Service Levels as set forth in the Service
                Level Specifications. All modifications to the Service Level
                Specifications must be in writing and agreed to by the parties
                in writing.

        3.3     Cooperation with Novation. Neoforma shall cooperate with
                Novation in the performance of Novation's agency obligations
                under Section 2.

        3.4     The First * Locations. No later than *, Neoforma shall have
                completed the integration of, and shall have made operational
                for remote order entry, * locations jointly identified by
                Neoforma and Novation. Of the * locations, (i) * shall be *,
                (ii) * shall be * and (iii) each of * of such * shall have * of
                products of *, based on each location's purchasing, renting and
                leasing * during the *.

        3.5     Quality Assurance Program. Neoforma will administer a quality
                assurance program, among other things, to monitor Supplier
                performance and order confirmation for Products ordered by
                Users.

        3.6     Notice of Materially Adverse Facts. Subject to its obligations
                under Section 11.2, Neoforma will bring to Novation's attention,
                reasonably promptly after learning thereof, any fact that would
                reasonably be likely to materially adversely affect the
                Exchange, the Novation Exchange, the HPPI Exchange or the
                Members, VHA, UHC or HPPI, including, without limitation, the
                institution of litigation against Neoforma or any Supplier.

        3.7     Case Studies. As promptly as practicable after the applicable
                data is available (but in no event later than January 1, 2001),
                Neoforma shall undertake to prepare two or more market-leader
                case studies documenting the economic value that the Exchange
                has for each of Suppliers and Members. Such case study will be
                available to Novation, VHA and UHC for the purpose of marketing
                the Exchange to other Suppliers and Members.

4.      THE EXCHANGE

        4.1     Maintenance of Exchange. Neoforma shall use its best efforts to
                maintain the Exchange as a leading provider of e-commerce
                services to the healthcare industry.

        4.2     Consultation. Neoforma, Novation, VHA and UHC will consult
                regularly (but no less frequently than on a quarterly basis) to
                discuss the strategic direction of the Exchange, including the
                features and functions that would provide additional value to
                patrons and others.

        4.3     Provision of Non-Contract Product Information. The Suppliers
                will be responsible for providing Neoforma with Materials to be
                located on the Exchange in respect of all Non-Contract Products.
                Novation will review such Materials

* Material has been omitted and filed separately with the Commission.

                                       8
<PAGE>   15

                relating to the Non-Contract Products, subject to Neoforma
                providing Novation a methodology for previewing such Materials.

        4.4     Provision of Contract Product Information. Novation shall be
                responsible for providing Neoforma with pricing for Contract
                Products and any unique facts and summary sheets relating to
                such Contract Products that are prepared by Novation. The
                Suppliers will be responsible for providing Neoforma with all
                other information regarding such Contract Products. Subject to
                Neoforma providing to Novation a methodology for allowing
                Novation to preview Materials relating to Contract Products,
                Novation will review such information and determine that such
                information is reasonably accurate, prior to being loaded on the
                Exchange (e.g., correct pricing, product numbers, description,
                etc.).

        4.5     Independent Users. Prior to the date on which Neoforma concludes
                an agreement with a GPO (other than HPPI) having its own
                Supplier contracts (an "INDEPENDENT GPO") who, as a condition to
                using the Exchange, contractually requires Neoforma to act in a
                neutral manner, Neoforma shall refer any User who requests
                access to a Customized Exchange (other than a Member entitled to
                use the Novation Exchange) to the HPPI Exchange. After the date
                on which an Independent GPO is on the Exchange, if a User (other
                than a Member entitled to use the Novation Exchange) approaches
                Neoforma requesting access to a Customized Exchange, Neoforma
                shall act in a neutral manner with regard to such User and shall
                not be required to recommend or otherwise refer such User to any
                specific part of the Exchange, including the HPPI Exchange or
                the Novation Exchange. Notwithstanding the preceding sentence,
                Neoforma will at all times feature the HPPI Exchange at least as
                prominently on the Exchange as any other Customized Exchange.

        4.6     Multiple Memberships. If a Member is also a member of any other
                GPO that has a Customized Exchange on the Exchange, that Member
                will have access to all of the Exchange, including the Novation
                Exchange or HPPI Exchange, as the case may be, and the
                applicable Customized Exchange. Members who are also Users of
                Customized Exchanges will have access rights to the Novation
                Exchange or the HPPI Exchange equal to those of Members that do
                not belong to Customized Exchanges. Notwithstanding the
                foregoing, Neoforma shall provide favorable view and framing in
                respect of the Novation Contract Portfolio to any Member
                accessing the Exchange.

        4.7     User Registration. Upon implementation of the Novation Exchange,
                Neoforma, with Novation's assistance, will develop a Tool to
                register Members on the Exchange. Neoforma will require Members
                to create and use passwords as a necessary condition to
                accessing the Novation Exchange. Neoforma shall be responsible
                for keeping the Novation Exchange registry and the HPPI Exchange
                registry current and for not allowing access to such Exchanges
                by unauthorized Users.

* Material has been omitted and filed separately with the Commission.

                                       9
<PAGE>   16

        4.8     Delivery and Order Fulfillment. Neoforma will notify Suppliers
                and provide Suppliers access to the Transaction Database for
                sales, rentals and leases of Products by such Suppliers, in a
                form and format mutually agreed upon by Neoforma and Suppliers
                and to the extent set forth in the Functionality Specifications.

        4.9     Removal of Products from the Exchange. With regard to
                Non-Contract Products, Neoforma shall remove Product listings
                from the Exchange promptly after determining that the appearance
                of such Products will, or is reasonably likely to, result in
                liability to Neoforma, Novation, HPPI, VHA, UHC or any Users.
                Upon such removal, Neoforma will promptly notify Novation of
                such action and the reasons therefore. With regard to Contract
                Products, Neoforma shall notify Novation promptly after becoming
                aware of any problems with a Contract Product or that any such
                Contract Product will, or is reasonably likely to, result in
                liability to Neoforma, Novation, HPPI, VHA, UHC or any Users. In
                addition and at the same time, Neoforma shall provide to
                Novation all information of which it is aware regarding the
                problems with such Contract Product. Neoforma will obtain
                Novation's prior written consent, prior to taking any action to
                remove such Contract Product listing from the Exchange.

        4.10    Customized Exchanges. In accordance with the Functionality
                Specifications, Neoforma may create Customized Exchanges and
                other customized sites for the use and benefit of Users on the
                Exchange. Neoforma will not intentionally create Customized
                Exchanges for the purpose of evading fees owed to Novation under
                Section 8 of this Agreement.

        4.11    Links. The parties will establish and maintain hypertext links
                from the Novation web site, HPPI web site, VHA web site and UHC
                web site to the Exchange. Each of Novation, HPPI and Neoforma
                will use reasonable efforts to ensure that the respective links
                that each party maintains linking Novation, HPPI and Members to
                the Exchange function correctly.

        4.12    Reasonable Assistance. Each party will provide the other parties
                with on-going reasonable assistance with regard to technical,
                administrative and service-oriented issues relating to the
                Exchange.

5.      NOVATION EXCHANGE AND HPPI EXCHANGE

        5.1     Development. As promptly as practicable after the Effective
                Date, the parties shall agree on the "look and feel" and
                organization of the Novation Exchange and the HPPI Exchange. In
                addition, they will jointly develop and agree upon an
                implementation plan and schedule for development of the Novation
                Exchange and the HPPI Exchange; provided, however, that,
                notwithstanding anything herein to the contrary, the Novation
                Exchange and the HPPI Exchange will have at least the minimum
                functionality in the applicable time periods all as described in
                the Functionality Specifications.

* Material has been omitted and filed separately with the Commission.

                                       10
<PAGE>   17

        5.2     Hosting. Neoforma will create, host and implement the Novation
                Exchange and the HPPI Exchange according to the agreed plan and
                display the Novation Contract Portfolio in a manner similar to
                the way in which products currently appear on the Exchange.

        5.3     Delivery and Order Fulfillment. Neoforma will notify the
                Suppliers of purchases, rentals and leases made by Members in a
                form and format according to the terms of Neoforma's agreements
                with Suppliers.

        5.4     Display of Material. In order to facilitate efficient
                presentation of Product information, Neoforma will categorize,
                organize and display all Products on the Novation Exchange and
                the HPPI Exchange in a manner consistent with that in which it
                organizes similar information on the Exchange.

        5.5     Reports. Subject to obtaining the consent of the Members in
                accordance with Section 10, Neoforma will provide Novation, VHA,
                UHC and HPPI with real-time, on-line reports of Members usage
                statistics and reports on other reasonable matters. Such reports
                shall be made available in the form of Excel(TM) files
                transferred via electronic transmission to Novation, VHA, UHC or
                HPPI, or in such other format as the parties agree. The parties
                will mutually agree as to the scope, format and substance of the
                standardized reporting system that Neoforma will develop (at no
                extra charge) and that will be available to Novation, VHA, UHC
                and HPPI via the Internet.

        5.6     Retained Contracts. Either VHA or UHC may at any time elect to
                put their respective Retained Contracts on the Novation
                Exchange. If the posting on the Novation Exchange is merely
                informational and Members are not able to purchase, rent or
                lease Products covered by such Retained Contracts through the
                Exchange, no fees shall be paid for such posting. If during the
                Term, Novation Signs-up the Suppliers under such Retained
                Contracts, Neoforma and Novation will negotiate in good faith to
                allocate the transaction fees paid by such Supplier.

        5.7     Marketing.

                5.7.1   Novation, VHA, UHC and HPPI will use commercially
                        reasonable efforts to drive traffic to the Novation
                        Exchange and the HPPI Exchange, including, without
                        limitation, making appropriate introductions for
                        Neoforma, allowing Neoforma preferred space and
                        visibility at Member forums, and presenting satellite
                        broadcasts or web casting targeted at the Members.
                        Novation, VHA and UHC will work with Neoforma to develop
                        new initiatives targeted toward increasing Members'
                        participation on the Exchange, including the Novation
                        Exchange and the HPPI Exchange.

                5.7.2   Within 45 days after the Effective Date, Novation and
                        Neoforma will complete an execution plan for targeting
                        patrons and others, a general marketing agreement
                        specifying what each of the parties thereto will do with
                        regard to marketing the Exchange to patrons and others,
                        and a plan

* Material has been omitted and filed separately with the Commission.

                                       11
<PAGE>   18

                        for recruitment and for Novation's Sign-up of Suppliers
                        to the Exchange as well as to the Novation Exchange and
                        the HPPI Exchange.

                5.7.3   Within 30 days after the Effective Date, VHA, UHC and
                        HPPI will send an announcement of this Agreement to all
                        Members directed at least to the chief executive
                        officers and purchasing managers of the Members. Within
                        30 days after the Effective Date, Novation will send
                        announcements of this Agreement to Suppliers of Products
                        to the healthcare industry with which Novation has a
                        relationship directed in each case to at least to (i)
                        the Supplier's chief executive officer and (ii)
                        Novation's account representative at such Supplier.

        5.8     Neoforma Auction.

                5.8.1   On the Effective Date, the Exchange will include
                        Neoforma Auction.

                5.8.2   Novation, VHA, UHC and HPPI will promote the use of
                        Neoforma's asset management and recovery services and
                        related activities of Neoforma Auction to patrons and
                        others. Such promotion shall include specific mention of
                        Neoforma Auction in communications to Members and in
                        other promotion, and such other forms of promotion as
                        Novation, VHA and UHC deem is appropriate.

                5.8.3   Any Member wishing to utilize the Neoforma Auction and
                        Neoforma's asset management and recovery services shall
                        enter into an Asset Recovery Services Agreement with
                        Neoforma.

        5.9     Neoforma Plan.

                5.9.1   On the Effective Date, the Exchange will include
                        Neoforma Plan.

                5.9.2   Novation, VHA, UHC and HPPI will promote use of the
                        services included in Neoforma Plan to patrons and others
                        in connection with their capital equipment programs.
                        Such promotion shall include, without limitation,
                        specific mention of Neoforma Plan in communications to
                        Members and in other promotions.

                5.9.3   Novation will inform Suppliers that they have the option
                        to sponsor specific "Centers of Excellence" within
                        Neoforma Plan. Any Supplier wishing to participate in
                        Neoforma Plan shall enter into a Plan Sponsorship
                        Agreement with Neoforma.

6.      EXCLUSIVITY AND RIGHT OF FIRST OFFER

        6.1     Novation, VHA, UHC and HPPI Exclusivity. Except as provided in
                Section 6.3, each of Novation, HPPI, VHA and UHC agrees that it
                will not directly or indirectly develop, promote, contract for
                the development of, assist others to

* Material has been omitted and filed separately with the Commission.

                                       12
<PAGE>   19

                develop, or enter into any agreement with any other person to
                provide to any of them, or promote to their Members, any
                Internet-based exchange related to Supply Chain Management
                Services by acute or non-acute healthcare providers anywhere in
                the world other than the Exchange.

        6.2     Neoforma Exclusivity.

                6.2.1   Except as otherwise provided in Section 6.3, neither
                        Neoforma nor its Affiliates will develop, promote,
                        contract for the development of, assist others to
                        develop, or enter into any agreement with any other
                        person to provide, any Internet-based system related to
                        the acquisition or disposal of equipment, products,
                        supplies, services, information and other content by
                        acute or non-acute healthcare providers anywhere in the
                        world other than the Exchange.

                6.2.2   Except as provided in Section 6.3, Novation will be
                        Neoforma's and Neoforma's Affiliates' exclusive agent to
                        Sign-up Suppliers. Neoforma will not, and will cause any
                        Affiliate of Neoforma not to, (i) Sign-up any Supplier
                        directly or (ii) contract with, or pay any financial
                        incentives to, any person to act as a contracting agent
                        of Neoforma or Neoforma's Affiliates to Sign-up any
                        Supplier on Neoforma's or Neoforma's Affiliates' behalf;
                        provided, however, that nothing herein shall be
                        construed to impose upon Neoforma any obligation to seek
                        to terminate agreements with Suppliers previously
                        entered into by Neoforma and existing as of the
                        Effective Date.

                6.2.3   Notwithstanding the provisions of Subsection 6.2.2,
                        Neoforma may Sign-up any Supplier, if:

                        (i)     Neoforma refers a Supplier to Novation for
                                contracting, and notwithstanding such referral,
                                the Supplier specifically requests to Sign-up
                                with Neoforma or Novation informs Neoforma that
                                Novation will not Sign-up that Supplier; or

                        (ii)    a Supplier is under contract to an Independent
                                GPO and the Independent GPO, as a condition to
                                using the Exchange, contractually requires
                                Neoforma to Sign-up its Suppliers directly.

        6.3     Right of First Offer for Novation and Neoforma.

                6.3.1   If either Novation or Neoforma elects to commence an
                        Internet-venture in any country other than the United
                        States or in any market that is not then served by the
                        Exchange (whether in the United States or otherwise),
                        such party (the "OFFEROR") shall offer to the other (the
                        "OFFEREE") the opportunity to participate in such
                        venture in a manner commensurate with the Offeree's role
                        under this Agreement (including the right of Novation to
                        create other contract portfolios similar to the Novation
                        Contract Portfolio or to recruit suppliers for such
                        venture). The Offeror shall provide full

                                       13
<PAGE>   20

                        information to the Offeree regarding the venture, and
                        shall make its senior executives available to meet with
                        the Offeree to discuss the venture. The Offeror shall
                        also notify the Offeree of such venture a reasonable
                        time prior to commencement of the venture (but in no
                        event less than 60 days prior to the date on which the
                        Offeree must decide to participate). If after
                        consideration the Offeree declines to participate in
                        such venture, then, notwithstanding Section 6.1 or 6.2,
                        as the case may be, the Offeror may proceed with such
                        venture, but solely in that market or country, and on no
                        less favorable terms and conditions in the aggregate as
                        had been offered to the Offeree. In addition, the
                        Offeree shall be released from its obligations under
                        Section 6.1 or 6.2, as the case may be, but solely in
                        respect of the market or country that was the subject of
                        such Offer. If the Offeror subsequently does not
                        consummate the venture, and the Offeror wishes to
                        commence another venture in the same market or country,
                        the Offeror must once again offer such opportunity to
                        the Offeree. The Offeror shall have no obligation to
                        share any fees earned in a venture in which the Offeree
                        has not elected to participate.

                6.3.2   Within 30 days after the Effective Date and on a
                        quarterly basis thereafter, business development
                        representatives of Neoforma and Novation shall meet to
                        review existing opportunities in foreign markets and
                        countries and to review existing opportunities in
                        markets not then served by the Exchange. Such
                        representatives shall prepare a joint plan to identify
                        and exploit such other opportunities in foreign markets
                        and in other healthcare markets. Any right of an Offeror
                        to proceed with a venture under Subsection 6.3.1 without
                        the Offeree shall be conditioned on such Offeror's
                        compliance with this Subsection 6.3.2.

        6.4     First Offer for Non-Exclusive Services.

                6.4.1   The term "NON-EXCLUSIVE SERVICE(S)" means
                        Internet-related services that are outside the scope of
                        Section 6.1. UHC shall give favorable consideration to
                        Neoforma as a third-party provider to UHC of
                        Non-Exclusive Services as follows: if (i) UHC elects to
                        provide for itself or for the benefit of all or
                        substantially all of UHC's Members any new Non-Exclusive
                        Service or (ii) UHC intends to replace any agreement for
                        the provision of a Non-Exclusive Service then being
                        provided to UHC by a third party, then UHC shall first
                        offer to Neoforma the opportunity to provide such
                        Non-Exclusive Service (the "OPPORTUNITY"). Promptly upon
                        becoming aware of an Opportunity, UHC shall send notice
                        of the Opportunity in electronic or paper writing to the
                        Chief Executive Officer of Neoforma, or his or her
                        designate. Promptly after receiving such notification,
                        but in no less than 15 days, Neoforma shall meet with
                        UHC to discuss the Opportunity and Neoforma's proposed
                        role therein. Neoforma and UHC shall continue to meet
                        and discuss the Opportunity for the 30-day period
                        commencing upon UHC's notification to Neoforma. Neither
                        UHC nor Neoforma will have any obligation to meet and to
                        discuss the Opportunity (i) if Neoforma does not meet
                        with UHC within the time required, or (ii) after the
                        expiration of the 30-day discussion period. The
                        communication by UHC to Neoforma of any Opportunity,
                        including the ideas, concepts or other intellectual
                        property contained therein, will be Confidential
                        Information subject to Section 11.

* Material has been omitted and filed separately with the Commission.

                                       14
<PAGE>   21

                6.4.2   For the avoidance of doubt and notwithstanding anything
                        to the contrary in this Agreement, in no event, will UHC
                        be required to obtain any Non-Exclusive Service from
                        Neoforma.

7.      LICENSES AND OWNERSHIP

        7.1     Ownership of Marks. Each party will own and retain all right,
                title and interest in and to its intellectual property,
                including its trademarks, trade names, service marks and logos
                ("MARKS") worldwide, as specified in Exhibit A.

        7.2     Novation Marks. Subject to the terms of this Agreement, Novation
                grants to Neoforma, VHA, UHC and HPPI a worldwide,
                nontransferable, royalty-free license to use, transmit and
                display Novation's Marks in connection with the Exchange during
                the Term of this Agreement, provided that such use is in
                accordance with Novation's then-current trademark usage
                guidelines. A copy of Novation's current trademark usage
                guidelines is attached as Exhibit B. Upon any change in such
                guidelines, Novation will promptly provide to Neoforma a copy of
                such revised usage guidelines. Neoforma will not modify the
                Novation Marks or combine any of the Novation Marks with any
                other mark or term. Subject to the provisions of Section 9.8,
                upon termination or expiration of this Agreement, Neoforma will
                cease all use of the Novation Marks.

        7.3     Neoforma Marks. Subject to the terms of this Agreement, Neoforma
                grants to Novation, VHA, UHC and HPPI a worldwide,
                nontransferable, royalty-free license to use, transmit and
                display Neoforma's Marks during the Term only in promotional
                materials used to encourage participation on the Exchange,
                provided that such use is in accordance with Neoforma's
                then-current trademark usage guidelines. A copy of Neoforma's
                current trademark usage guidelines is attached as Exhibit C.
                Upon any change in such guidelines, Neoforma will promptly
                provide to Novation a copy of such revised usage guidelines.
                Except as authorized under this Agreement, Novation will not
                modify any of the Neoforma Marks or combine the Neoforma Marks
                with any other mark or term. Subject to the provisions of
                Section 9.8, upon the termination or expiration of this
                Agreement, Novation will cease all use of the Neoforma Marks.

        7.4     VHA, UHC and HPPI Marks. Subject to the terms of this Agreement,
                each of VHA, UHC and HPPI grants to Novation and Neoforma a
                worldwide, nontransferable, royalty-free license to use,
                transmit and display its Marks solely to promote the Exchange to
                the Members during the Term, provided that such use is in
                accordance with the then-current trademark usage guidelines of
                VHA, UHC and HPPI, as the case may be. A copy of each of VHA's,
                UHC's and HPPI's current trademark usage guidelines are attached
                as Exhibit D. Except as authorized under this Agreement,
                Neoforma and Novation will not modify any of the Marks of VHA,
                UHC and HPPI or combine any of them with any other mark or term.
                Subject to the provisions of Section 9.8, upon the termination
                or

* Material has been omitted and filed separately with the Commission.

                                       15
<PAGE>   22

                expiration of this Agreement, Neoforma and Novation will cease
                all use of VHA's, UHC's and HPPI's Marks.

        7.5     Ownership of Neoforma Materials and Novation Materials. Neoforma
                and Novation will own and retain all worldwide right, title and
                interest in and to the Neoforma Materials and Novation
                Materials, respectively. Neither Neoforma nor Novation will
                alter or delete any copyright or other proprietary notice that
                may appear in the other party's Materials without prior written
                consent of such party.

        7.6     Neoforma Materials. Neoforma grants to Novation a worldwide,
                nontransferable, royalty-free license to use the Neoforma
                Materials only in promotional materials used to encourage
                participation on the Exchange.

        7.7     Novation Materials. Novation grants to Neoforma a worldwide,
                nontransferable, royalty-free license to use the Novation
                Materials on the Exchange during the Term solely to enable
                Neoforma to provide the Services contemplated under this
                Agreement.

        7.8     Development of Tools. From time to time during the Term,
                Novation may request Neoforma to design Tools for Members or
                Suppliers in addition to the Tools, functions and APIs contained
                in the Functionality Specifications. Within a reasonable time
                after such request, appropriate personnel from Novation and
                Neoforma will meet to discuss and draft technical specifications
                for the desired customized Tools, functions and APIs.

                7.8.1   If the Tool, function or API requested by Novation will
                        be used by all Users of the Exchange, Neoforma will
                        develop such Tool, function or API promptly and at its
                        own expense. Neoforma will own and retain all right,
                        title and interest to all the intellectual property,
                        including the source code, object code and other
                        Confidential Information, in and to the Neoforma
                        developed Tools, functions and APIs.

                7.8.2   If Neoforma does not otherwise agree to develop such
                        Tool, function or API for use by all Users of the
                        Exchange, Novation may, in its sole discretion, agree to
                        pay for the development of such Tool, function or API.
                        If Novation agrees to pay Neoforma for the development
                        of such Tool, function or API, Neoforma will promptly
                        endeavor to develop such requested Tool, function or
                        API, and Novation will own all right, title and interest
                        to all the intellectual property, including all source
                        code, object code and other Confidential Information, in
                        and to such Tools, functions and APIs. Any fees charged
                        to Novation for development of any Tool, function or API
                        shall be provided by Neoforma at the most favorable fee
                        Neoforma charges to any other person for such
                        development or integration services.

                7.8.3   Nothing in this Section 7.8 shall limit Neoforma's
                        obligation to provide the Services set forth in the
                        Functionality Specifications.

* Material has been omitted and filed separately with the Commission.

                                       16
<PAGE>   23

        7.9     Access License. Neoforma grants to Novation a non-exclusive,
                worldwide, non-assignable license to members of Novation and
                HPPI in order to access the Exchange. Novation and HPPI grant to
                Neoforma a non-exclusive, worldwide, non-assignable license to
                access the Novation and HPPI web sites and computer systems
                solely to enable Neoforma to provide the services contemplated
                under this Agreement.

8.      FEES AND TAXES

        8.1     Contract Product Transaction Fees.

                8.1.1   Neoforma shall collect all Transaction Fees paid by
                        Suppliers pursuant to this Agreement with respect to
                        sales, rentals and leases of Contract Products to
                        Members on the Exchange (the "CONTRACT TRANSACTION
                        FEE(S)"). On the *, the * to be used in * is *. The
                        Contract Transaction Fee shall be adjusted from time to
                        time in accordance with Section 8.4.

                8.1.2   Until the * of the Effective Date, and subject to
                        Novation's election in Subsection 8.1.4, Novation * to
                        Neoforma a Contract Transaction Fee of * of the Adjusted
                        Gross Transaction Value in such period. If the Contract
                        Transaction Fee payable by Suppliers during such period
                        is * of the Adjusted Gross Transaction Value at any
                        time, Novation shall pay to Neoforma the *; provided,
                        however, that the * Novation in this Subsection 8.1.2 is
                        solely in respect of the applicable * and not a *. After
                        the * of the Effective Date, no Contract Transaction Fee
                        *  by Novation shall be applicable, and Neoforma shall
                        collect from Suppliers any Contract Transaction Fee then
                        in effect.

                8.1.3   Subject to Subsection 8.3.2, Neoforma shall pay to
                        Novation * of any Contract Transaction Fees * of the *.

                8.1.4   Novation may, *, elect to pay to Neoforma * of the * for
                        *.

                8.1.5   If during the Term, Neoforma enters into any agreement
                        with a * pursuant to which Neoforma will receive a fee
                        for Products sold, rented and leased on the Exchange,
                        and such fee to be paid to Neoforma is * to Neoforma *
                        or Novation to Neoforma * by Novation to Neoforma * then
                        such fee to be paid to Neoforma * or *, as the case may
                        be, *.

        8.2     Non-Contract Product Transaction Fees.

                8.2.1   Neoforma shall collect all fees paid by Suppliers
                        pursuant to this Agreement with respect to sales,
                        rentals and leases of Non-Contract Products on the
                        Exchange (the "NON-CONTRACT TRANSACTION FEES"). On

* Material has been omitted and filed separately with the Commission.

                                       17
<PAGE>   24
                              *           , the    *     of         *
                             *           to be used in          *          is *.
                        The Non-Contract Transaction Fees will be adjusted from
                        time to time in accordance with Section 8.4.

                8.2.2   Subject to Subsection 8.3.2, Novation and Neoforma
                        shall share  Non-Contract Transaction
                        Fees as follows:

                        (i)     Non-Contract Transaction Fees received by
                                Neoforma from Suppliers for Non-Contract
                                Products purchased, rented and leased by *.

                        (ii)    Non-Contract Transaction Fees received by
                                Neoforma from Suppliers for Non-Contract
                                Products purchased, rented and leased by *.

                        (iii)   Neoforma will not share with Novation any fees
                                earned on purchases, rentals and leases through
                                the Exchange by *.

        8.3     Target Transaction Fees.

                8.3.1   The parties have determined target minimum aggregate
                        Transaction Fees to be earned by Neoforma (the "TARGET
                        TRANSACTION FEE(S)"). The Target Transaction Fees are as
                        follows:

                        *

                8.3.2   In any          * in which there is a Target Transaction
                        Fee, Neoforma shall not share any Non-Contract
                        Transaction Fees with Novation pursuant to Section 8.2
                        and will not * Novation any Contract Transaction Fees
                        pursuant to Section 8.1, until Neoforma has received
                        aggregate Transaction Fees (which shall include the
                        Contract Transaction Fees * Neoforma and the
                        Non-Contract Transaction Fees * Novation) in an amount
                        equal to the Target Transaction Fees for such    *
                        *.

                8.3.3   If in any    *     , the Transaction Fees (which shall
                        include the Contract Transaction Fees * Neoforma and the
                        Non-Contract Transaction Fees * Novation) are lower than
                        the Target Transaction Fees for such *, the amount of
                        such deficiency (the "DEFICIENCY AMOUNT") shall be added
                        to the Target Transaction Fees for the following *. For
                        each successive * until the * ending *(the "TERMINAL
                        DATE"), any Deficiency Amount existing at the end of
                        such   *       shall be added to the Target Transaction
                        Fees for the following *. *.

        8.4     Adjustment of Transaction Fees. Within 30 days after the
                Effective Date and on a monthly basis prior to the * of the
                Effective Date, Neoforma and Novation shall meet to review the
                target Contract Transaction Fees and Non-Contract Transaction
                Fees then in effect. Thereafter, Neoforma and Novation shall
                meet no less frequently than on a quarterly basis (or at any
                time that either Neoforma or Novation reasonably requests such a
                meeting) to review such fees. At such

* Material has been omitted and filed separately with the Commission.

                                       18
<PAGE>   25

                meetings, Neoforma and Novation shall in good faith review
                whether the Contract Transaction Fees and Non-Contract
                Transaction Fees then in effect are market competitive and, if
                not, shall adjust either or both of such Contract Transaction
                Fees and Non-Contract Transaction Fees so that they are market
                competitive. For the avoidance of doubt, the parties agree that
                "market competitive" shall mean that (i) Suppliers are
                reasonably likely to agree to pay such fees at such time or (ii)
                such fees are competitive with similar transaction fees paid by
                suppliers in similar e-commerce or related industries. Until
                Neoforma and Novation have agreed upon a change to the Contract
                Transaction Fee or the Non-Contract Transaction Fees, as the
                case may be, the then-existing fees shall remain in effect.

        8.5     Reporting and Payment of Transaction Fees. Within 15 days after
                the end of each month, Neoforma will provide Novation with a
                written report consisting of (i) aggregate Adjusted Gross
                Transaction Values for all purchases, rentals and leases of
                Contract Products and Non-Contract Products, (ii) the
                calculation of any Contract Transaction Fees or Non-Contract
                Transaction Fees owing to Novation and (iii) the calculation of
                any other fees to be paid by Neoforma hereunder. Subject to
                Subsection 8.3.2, Neoforma shall pay all such Transaction Fees
                and other fees within 45 days after receipt of its report. If
                Novation has * to pay *, Novation will pay such Contract
                Transaction Fees within 45 days after receipt of Neoforma's
                report. Any report submitted by Neoforma to Novation shall
                include the information set forth in Exhibit E and such other
                information as Novation may reasonably request.

        8.6     No Fees Prior to Mergers. Notwithstanding anything to the
                contrary in this Agreement, neither Novation nor Neoforma shall
                be obligated to pay any Transaction Fees to the other under this
                Section 8 or otherwise until and unless the Mergers are
                consummated. Any Transaction Fees owing to Neoforma or to
                Novation, as the case may be, under this Section 8 that are not
                paid as a result of this paragraph shall accrue without interest
                and shall be paid by Neoforma or Novation, as the case may be,
                within 30 days after the consummation of the Mergers. Any fees
                not paid within the time period specified in the preceding
                sentence shall be subject to interest in accordance with Section
                20.11.

        8.7     Taxes. Neoforma and Novation shall cooperate to minimize any
                local, state, national and foreign taxes (including, without
                limitation, sales, use and VAT taxes which may apply), licenses,
                export/import fees and any other fees or similar obligations
                relating to any sale, rental or lease of a Contract Product
                through the Exchange. If in the future any such taxes or similar
                obligations are required to be paid by Neoforma or Novation in
                respect of Contract Products, such fees shall be shared by
                Neoforma and Novation proportionately based on revenues each
                derives from the Exchange. In no event shall Novation be
                required to share any taxes under this Section 8.7 for Products
                other than Products for which Novation receives Transaction
                Fees.

* Material has been omitted and filed separately with the Commission.

                                       19
<PAGE>   26

        8.8     New Markets. If Neoforma and Novation agree pursuant to Section
                6.3 to enter any other healthcare market (other than the United
                States acute care market) that is not then served by the
                Exchange or that is in countries outside of the United States,
                Neoforma and Novation shall negotiate in good faith to set the
                Transaction Fees to be paid in respect of such products to be
                purchased, rented and leased on such Exchange.

        8.9     Product Returns. Neoforma and Novation will cooperate in good
                faith to make any adjustments to the fees to be paid hereunder
                to reflect Products that have been returned by Users.

        8.10    Neoforma * and Neoforma *. Both Neoforma and Novation may
                Sign-up Suppliers for Neoforma * and Neoforma *. Neoforma shall
                pay to Novation * from Suppliers that have contracted to use
                Neoforma * through Novation. Neoforma shall pay to Novation *
                from Suppliers that have contracted to use Neoforma * through
                Novation. In addition, Neoforma shall pay to Novation * from any
                Member usage of Neoforma *.

        8.11    Other Expenses. Neither Neoforma nor Novation shall be required
                to pay to the other party any amounts for the performance of
                their respective obligations hereunder other than those
                expressly set forth in this Agreement.

        8.12    VHA/UHC Allocation. VHA and UHC agree as between themselves to
                account for Contract and Non-Contract Transaction Fees and for
                fees related to Neoforma Plan and Neoforma Auction as follows:

                (i)     if the fee relates to business done with or for a VHA
                        patron or other VHA Member or UHC patron or other UHC
                        Member, to allocate the fee to VHA or UHC respectively;

                (ii)    if the fee relates to business done with or for
                        customers of HPPI, to allocate the fee to VHA and UHC
                        according to their ownership interests in HPPI; and

                (iii)   if the fee relates to business done with or for other
                        persons, to allocate the fee *% to VHA and *% to UHC.

                In the event that during * of this Agreement fees otherwise
                earned by Novation are not paid by Neoforma by reason of Section
                8.3.2 of the Agreement, VHA and UHC agree to make an adjusting
                payment as between themselves to the extent that fees earned
                attributable to one are used to offset any deficiencies in
                meeting Target Transaction Fees attributable to the other. In
                making this determination, (i) Target Transaction Fees shall be
                allocated between VHA and UHC *% and *% respectively and (ii)
                actual Transaction Fees paid to Neoforma (A) shall be credited
                to VHA or UHC as the case may be in the case of fees
                attributable to VHA patrons and other VHA Members or UHC patrons
                and other UHC Members, (B) shall be credited to VHA and UHC
                according to their ownership in HPPI in the case of fees related
                to business done with customers of HPPI or (C)

* Material has been omitted and filed separately with the Commission.

                                       20
<PAGE>   27

                shall be credited *% to VHA and *% to UHC if the fee relates to
                business done with or for other persons. The allocations and
                credits agreed to in this Section 8.12 may be modified at any
                time upon mutual written agreement of VHA and UHC.

9.      TERM AND TERMINATION

        9.1     Initial Term. This Agreement commences on the Effective Date and
                will remain in effect for an initial term of 10 years (the
                "INITIAL TERM"), unless terminated earlier in accordance with
                the terms of this Agreement.

        9.2     Renewal and Extension of Term. This Agreement will automatically
                renew for successive one-year terms after the completion of the
                Initial Term (each a "RENEWAL TERM") unless Neoforma or Novation
                provides written notice of its intention to terminate this
                Agreement to the other at least 90 days prior to the end of the
                Initial Term or any then-current Renewal Term. The Initial Term
                and any and all renewals or extensions thereof and any
                Termination Assistance Period are referred to herein as the
                "TERM".

        9.3     Termination for Cause. Each of Neoforma and Novation, after
                complying with Section 18.2 hereunder, will have the right to
                terminate this Agreement if the other party materially breaches
                (i) its service obligations under this Agreement or (ii) its
                exclusivity obligations under Section 6 of this Agreement,
                unless the breaching party (x) cures such breach within 30 days
                after receiving written notice or (y) if such breach is not
                curable within 30 days, makes substantial progress in curing
                such breach within 30 days and cures such breach within 90 days.
                Any repeated or sustained failure of Neoforma to meet its
                Service Level obligations hereunder shall constitute a material
                breach of Neoforma's service obligations under Subsection (i)
                hereunder.

        9.4     Termination for Insolvency Events. If either Neoforma or
                Novation is unable to obtain credit from any creditors, becomes
                insolvent, makes an assignment for the benefit of its creditors,
                or becomes the subject of a proceeding under Title 11 of the
                United States Code, as amended, or becomes the subject of
                similar state court proceedings, then in any such case, the
                other party, or in the case of Neoforma, VHA, UHC or HPPI, may,
                without prejudice to any other rights, immediately terminate
                this Agreement or, if such termination is subject to any
                statutory provision or judicial order staying such action, seek
                leave to modify such stay so as to terminate this Agreement.
                Each of Neoforma and Novation acknowledges and agrees that its
                insolvency, the making of an assignment for the benefit of its
                creditors, or its becoming the subject of a proceeding under
                Title 11 of the United States Code, is "cause" for the
                termination of any statutory or judicial stay of the rights of
                the other party hereunder to terminate this Agreement. Each of
                Neoforma and Novation acknowledges and agrees that, in such
                event, it could not provide "adequate protection" to the other
                party, or in the case of Neoforma, to VHA, UHC or HPPI, that the
                continued imposition of a stay would likely cause irreparable
                harm to the other party, and the continued imposition of a stay
                would

* Material has been omitted and filed separately with the Commission.

                                       21
<PAGE>   28

                adversely affect the health, safety and welfare of communities
                served by the parties hereto.

        9.5     Termination of Merger Agreements. If any or all of the Merger
                Agreements or the Purchase Agreements terminate in accordance
                with their respective terms, Novation may terminate this
                Agreement within 30 days after such termination. Upon a
                termination under this Section 9.5, Novation shall not be
                responsible for any fee or payment to Neoforma under Section 8
                hereunder or otherwise. Notwithstanding the foregoing, the right
                of termination in this Section 9.5 will expire upon the issuance
                of any securities of Neoforma under, and in accordance with the
                terms of, the Purchase Agreements.

        9.6     Termination Upon Neoforma Change of Control. Prior to the
                effective date of the Mergers, Novation may terminate this
                Agreement upon any Neoforma Change of Control.

        9.7     Return of Materials. Subject to Section 9.8, upon termination or
                expiration of this Agreement for any reason, each of Neoforma
                and Novation shall promptly return to the other party, and shall
                not take, use or disclose, all Products of any nature that
                belong to the other party and all records (in any form, format
                or medium) containing or relating to Neoforma Materials or
                Novation Materials or the Confidential Information of the other
                party.

        9.8     Survival. The provisions of Sections 7.1, 7.5, 8.5, 8.6, 9.7,
                9.8, 9.9, 10, 11, 15, 16, 17, 18, 19 and 20 will survive
                termination or expiration of this Agreement for any reason.

        9.9     Termination Assistance Services.

                9.9.1   General. Upon any termination or expiration of this
                        Agreement, Neoforma shall provide termination assistance
                        and shall comply with Novation's reasonable directions
                        to allow the Services to continue without interruption
                        or adverse effect and to facilitate the orderly
                        transition and migration of all Services then being
                        performed by Neoforma from Neoforma to Novation (or a
                        third-party provider undertaking, on behalf of Novation,
                        to provide the Services) (the "TERMINATION ASSISTANCE
                        SERVICES"), all in accordance with this Section 9.
                        Novation shall cooperate in good faith with Neoforma in
                        connection with Neoforma's obligations under this
                        Section 9.

                9.9.2   Termination Assistance Period. Neoforma shall commence
                        providing Termination Assistance Services (i) with
                        respect to the scheduled expiration of this Agreement,
                        90 days prior to such scheduled expiration or such
                        earlier date as Novation may reasonably request and (ii)
                        with respect to any termination of this Agreement, upon
                        the delivery of the notice of termination. Neoforma
                        shall continue providing Termination Assistance Services
                        through the effective date of the expiration or

                                       22
<PAGE>   29

                        termination of this Agreement and for a period of not
                        less than * thereafter (the "TERMINATION ASSISTANCE
                        PERIOD"). Upon at least 30 days prior written notice to
                        Neoforma, Novation may extend, from time to time, the
                        Termination Assistance Period for an additional *.
                        During any Termination Assistance Period, Neoforma shall
                        provide, at Novation's request, and, as part of the
                        Termination Assistance Services, any or all of the
                        Services being provided by Neoforma prior to the date of
                        the expiration or termination of this Agreement.

                9.9.3   Termination Plan. Neoforma and Novation shall cooperate
                        in good faith to develop a termination plan setting
                        forth the respective tasks to be accomplished by each
                        party in connection with the termination and a schedule
                        pursuant to which such tasks are to be completed in
                        accordance with the Termination Assistance Services
                        (collectively, the "TERMINATION PLAN").

                9.9.4   Certain Licenses. In the event that Novation terminates
                        this Agreement pursuant to Section 9.3, Neoforma shall
                        provide the following:

                        (i)     a * license to all third-party software that is
                                required to provide the Services, to the extent
                                Neoforma is entitled to sublicense such
                                software, and to the extent Neoforma is not
                                entitled to sublicense such software, Neoforma
                                shall provide a list of all third-party software
                                licenses that are required to provide the
                                Services and shall assist Novation in licensing
                                a substantially similar software at a
                                commercially reasonable price; and

                        (ii)    a * license to all Neoforma-owned software
                                required to provide the Services solely for
                                Novation's internal use. In addition, Neoforma
                                shall provide to Novation consulting services,
                                at no charge to Novation, as may be reasonably
                                required in order to recreate the Exchange
                                environment for Novation.

                9.9.5   Equitable Remedies. Neoforma acknowledges that, if it
                        breaches (or attempts or threatens to breach) its
                        obligation to provide Novation Termination Assistance
                        Services in accordance with Section 9.9, Novation will
                        be irreparably harmed. In such circumstance, and
                        notwithstanding the provisions of Section 18, Novation
                        may proceed directly to court. If a court of competent
                        jurisdiction should find that Neoforma has breached (or
                        attempted or threatened to breach) any such obligations,
                        Neoforma agrees that even without any additional
                        findings of irreparable injury or other conditions to
                        injunctive relief, it shall not oppose the entry of an
                        appropriate order compelling performance by Neoforma
                        restraining it from further breaches (or attempted or
                        threatened breaches).

* Material has been omitted and filed separately with the Commission.

                                       23
<PAGE>   30

10.     USER DATA

        10.1    Registration. Users who are representatives of Members will be
                required to register as a representative of a Member prior to
                using the Exchange. To effect such registration, Neoforma will
                require that each Member or other User complete a registration
                form in form and substance reasonably acceptable to Novation,
                which form shall request, among other things, submission of
                contact information regarding the User, including, without
                limitation, the User's name, name of the Member organization,
                mailing address, and email address. Neoforma will verify such
                information against the on-line data base information made
                available by Novation and ensure that such registration is
                authorized in accordance with registration and password issuance
                and protection procedures acceptable to Neoforma and in
                accordance with the Functionality Specifications. Neoforma will
                store data collected during registration as part of the
                Information in the Transaction Database.

        10.2    Transaction Database. Neoforma will create and maintain the
                Transaction Database relating to all activity occurring on the
                Exchange in accordance with the Functionality Specifications.
                Novation and Neoforma shall only use Information in accordance
                with the provisions of this Section 10. Neoforma shall at all
                times make all Information available to Novation in any manner
                that it is, or can reasonably be, made available.

        10.3    Member Data. Members shall own their respective Member Data.
                Novation will use commercially reasonable efforts to acquire a
                nonexclusive, non-transferable license from Members (or
                sublicense from VHA, UHC or HPPI) to permit:

                (i)     Novation to access and use such Member Data for, among
                        other things, (A) legal compliance purposes, (B) to
                        track the performance of Suppliers, (C) to be able to
                        track payments to VHA, UHC and HPPI and cooperative
                        payments to the Members, (D) to consult with each of the
                        Members and (E) to promote utilization and
                        standardization among Members; and

                (ii)    Neoforma to use such Member Data provided that such use
                        is (A) solely related to the performance of Neoforma's
                        obligations pursuant to this Agreement and (B) in
                        accordance with the confidentiality provisions of
                        Section 11.

        10.4.   Aggregated Member Data. Subject to the receipt of a license or
                sublicense for use of the Member Data, Novation shall own the
                Aggregated Member Data.

        10.5    Transaction Database. Subject to the ownership rights of the
                Members in Member Data and of Novation in Aggregated Member
                Data, Neoforma shall own the derivative works created by using
                the Member Data and the Aggregated Member Data, provided that no
                such information may be used by Neoforma other than subject to
                the following conditions:

* Material has been omitted and filed separately with the Commission.

                                       24
<PAGE>   31

                (i)     in accordance with the license or sublicense to be
                        obtained from Members in accordance with the provisions
                        of Subsection 10.3.2; or

                (ii)    Member-related Information is (a) combined with
                        non-Member related User Information that * and (b) the
                        Information is provided in such a manner that the
                        identity of the Member, Member Data and Aggregated
                        Member Data can not be discerned or identified by using
                        such Information in connection with any other
                        information.

        10.6    License Grant of Information to Novation.

                10.6.1  Subject to the terms and conditions of this Agreement,
                        Neoforma hereby grants to Novation a nonexclusive,
                        non-transferable license during the Term to access and
                        use the Information; provided, however, that such use is
                        (i) solely for Novation's internal use and for the
                        sublicensing of the use of such data to VHA, UHC and
                        HPPI for their use in serving the needs of their Members
                        (provided that a party may not license, sell or
                        otherwise make available the Information), (ii) complies
                        with the privacy policy in existence on the Exchange at
                        the time of such use and (iii) Novation, VHA, UHC and
                        HPPI each treat such Information as Confidential
                        Information subject to Section 11 of this Agreement.

                10.6.2  Subject to the terms and conditions of this Agreement,
                        Neoforma hereby grants to Novation a nonexclusive,
                        non-transferable license, as agent, to sublicense the
                        Information described in Section 10.5 to Suppliers.

                10.6.3  With respect to the Information sublicensed by Novation
                        under this Subsection 10.6.2, Novation will keep * of
                        the gross license fees and the remaining * of such
                        license fees shall be paid to Neoforma.

        10.7    No Other Licenses or Use. Except as expressly set forth in this
                Section 10, none of the Members, Novation or Neoforma grants any
                license, express or implied, in the Member Data, Aggregated
                Member Data or Information. The failure to abide by the terms
                and conditions of this Section 10 shall constitute a material
                default of this Agreement.

        10.8    Other Data. Neoforma and Novation acknowledge that all other
                data that a party gathers or develops independent of this
                Agreement shall not be covered by this Agreement, provided that
                Neoforma shall not solicit any information from a Member without
                fully disclosing to the Member all intended uses for which such
                information is being collected and will be used.

        10.9    Neoforma Information. Notwithstanding anything herein to the
                contrary, Neoforma may use the Neoforma Information in any
                manner that it chooses, provided that such information does not
                include Member Data or Aggregated Member Data.

* Material has been omitted and filed separately with the Commission.

                                       25
<PAGE>   32

11.     SAFEGUARDING OF DATA; CONFIDENTIALITY

        11.1    Novation Data.

                11.1.1  Generally. As between Neoforma and its Affiliates, on
                        the one hand, and Novation and its Affiliates, on the
                        other hand, information relating to Novation, VHA or UHC
                        or their respective Affiliates, Members or customers,
                        whether or not marked "confidential" and whether
                        disclosed in tangible or in intangible (e.g., oral or
                        visual) form, including, without limitation, (i)
                        information regarding the operations, affairs and
                        business of Novation, VHA or UHC, or their respective
                        Affiliates, Members or customers, (ii) Novation
                        Materials and (iii) all Transaction Data, except as
                        provided in Section 10, (collectively, the "NOVATION
                        DATA") is confidential and will be subject to Section
                        11.2. Novation Data is the property of Novation, VHA or
                        UHC, or their respective Affiliates, Members or
                        customers. Neoforma shall have access to and may make
                        use of Novation Data to the extent reasonably necessary
                        to perform its obligations under this Agreement.
                        Neoforma shall not, however, use Novation Data for any
                        purpose other than providing Services, except as
                        provided in Section 10. Upon termination or expiration
                        of this Agreement for any reason, or upon Novation's
                        request, Neoforma shall promptly return to Novation all
                        of the Novation Data in Neoforma's possession (including
                        backup or archival copies).

                11.1.2  Safeguarding of Data. Neoforma shall maintain
                        appropriate safeguards, consistent with prevailing
                        industry standards, against the destruction,
                        inappropriate disclosure, wrongful access or use, loss
                        or alteration of the Novation Data in the possession of
                        Neoforma. In any event, Neoforma shall maintain
                        safeguards that are no less rigorous than those
                        maintained by Neoforma for its own information of a
                        similar nature and, in no event, less than a reasonable
                        level of safeguards.

        11.2    Confidentiality.

                11.2.1  Confidential Information. "CONFIDENTIAL INFORMATION"
                        means (i) business or technical information of any
                        party, including, without limitation, information
                        relating to a party's product plans, designs, costs,
                        product prices, finances, marketing plans, business
                        opportunities, personnel, research, development,
                        know-how or the pricing information available to
                        Members, (ii) any information communicated with respect
                        to an Opportunity, including the ideas, concepts or
                        other intellectual property contained therein, (iii) any
                        information designated "confidential" or "proprietary"
                        or which, under the circumstances, should reasonably
                        have been understood to be confidential, (iv) Novation
                        Data and (v) the terms and conditions of this Agreement.

* Material has been omitted and filed separately with the Commission.

                                       26
<PAGE>   33

                11.2.2  Confidentiality Obligations. Each party agrees that (i)
                        it will not use or disclose to any third person
                        including its Affiliates any Confidential Information
                        disclosed to it by any other party except as expressly
                        permitted in this Agreement and (ii) it will take all
                        reasonable measures to maintain the confidentiality of
                        all Confidential Information of each other party in its
                        possession or control, which will in no event be less
                        than the measures it uses to maintain the
                        confidentiality of its own information of similar
                        importance.

        11.2.3  Exclusions. Subsection 11.2.2 will not prevent a party from
                disclosing Information that (i) is owned by such party or its
                Affiliates or is already known by the recipient party or its
                Affiliates without an obligation of confidentiality other than
                under this Agreement, (ii) is publicly known or becomes publicly
                known through no unauthorized act of the recipient party, (iii)
                is rightfully received from a third party, provided that the
                source is not known to be bound by a confidentiality agreement
                or (iv) is independently developed by employees of a party or an
                Affiliate of a party without use of the other party's
                Confidential Information. If Confidential Information is
                required to be disclosed pursuant to a requirement of a
                governmental authority, such Confidential Information may be
                disclosed pursuant to such requirement so long as the party
                required to disclose the Confidential Information, to the extent
                possible, (i) provides the party that owns the Confidential
                Information with timely prior notice of such requirement and
                coordinates with such other party in an effort to limit the
                nature and scope of such required disclosure and (ii) uses
                commercially reasonable efforts to ensure that, within
                applicable law, such Confidential Information will not be
                further disclosed. If Confidential Information is required to be
                disclosed in connection with the conduct of any arbitration
                proceeding conducted pursuant to Section 18, such Confidential
                Information may be disclosed pursuant to and in accordance with
                the approval and at the direction of the arbitrator conducting
                such proceeding. Upon written request at the termination or
                expiration of this Agreement for any reason, all such
                Confidential Information in tangible form (and all copies
                thereof) owned by the requesting party or its Affiliates will be
                returned to the requesting party or at the requesting party's
                option will be destroyed, with written certification thereof
                being given to the requesting party, and subject to any rights
                expressly granted to the other party under this Agreement, the
                other party shall cease all further use of any Confidential
                Information, whether tangible or intangible.

        11.2.4  No License. Nothing contained in this Section 11.2 will be
                construed as obligating a party to disclose its Confidential
                Information to another party, or as granting to or conferring on
                a party, expressly or implied, any patent, copyright, trademark,
                trade name, trade secret or other Intellectual Property Rights
                or any license to the Confidential Information of the other
                party.

* Material has been omitted and filed separately with the Commission.

                                       27
<PAGE>   34

        11.2.5  Loss of Confidential Information. In the event of any breach by
                the recipient party of this Section 11.2 that results in a
                disclosure or loss of, or inability to account for, any
                Confidential Information of the furnishing party, the receiving
                party shall promptly, at its own expense, (i) notify the
                furnishing party in writing, (ii) take such commercially
                reasonable actions as may be necessary or reasonably requested
                by the furnishing party to minimize the breach, and (iii)
                cooperate in all reasonable respects with the furnishing party
                to minimize the breach and any damage resulting therefrom.

12.     REPRESENTATIONS AND WARRANTIES

        12.1    Representations by Neoforma. Neoforma represents and warrants to
                Novation, VHA, UHC and HPPI that each of the following
                statements in this Section 12.1 are true and correct as of the
                Effective Date of this Agreement.

                12.1.1  Due Organization. Neoforma is a corporation duly
                        organized, validly existing and in good standing under
                        the laws of the State of Delaware.

                12.1.2  Authority; Non-Contravention.

                        (a)     Neoforma has all requisite corporate power and
                                authority to enter into this Agreement and to
                                perform its obligations hereunder. The execution
                                and delivery of this Agreement and the
                                consummation of the transactions contemplated
                                hereby have been duly authorized by all
                                necessary corporate action on the part of
                                Neoforma. This Agreement has been duly executed
                                and delivered by Neoforma, and it constitutes
                                the valid and binding obligation of Neoforma,
                                enforceable against Neoforma in accordance with
                                its terms, except as enforceability may be
                                limited by bankruptcy and other similar laws
                                affecting the rights of creditors generally and
                                general principles of equity.

                        (b)     The execution and delivery of this Agreement by
                                Neoforma does not, and the performance of this
                                Agreement by Neoforma will not, (i) conflict
                                with or violate the Certificate of Incorporation
                                or Bylaws of Neoforma, (ii) conflict with or
                                violate any law, rule, regulation, order,
                                judgment or decree applicable to Neoforma or by
                                which Neoforma or any of its properties is bound
                                or affected or (iii) result in any breach of or
                                constitute a default (or an event that with
                                notice or lapse of time or both would become a
                                default) under, or impair Neoforma's rights or
                                alter the rights or obligations of any third
                                party under, or give to others any rights of
                                termination, amendment, acceleration or
                                cancellation of, or result in the creation of an
                                encumbrance on any of the properties or assets
                                of Neoforma pursuant to, any note, bond,
                                mortgage, indenture,

* Material has been omitted and filed separately with the Commission.

                                       28
<PAGE>   35

                                agreement, lease, license, permit, franchise or
                                other instrument or obligation to which Neoforma
                                is a party or by which Neoforma or its assets is
                                bound or affected, except, in the case of
                                clauses (ii) and (iii), for such conflicts,
                                violations, breaches, defaults, impairments, or
                                rights which, individually or in the aggregate,
                                would not have a material adverse effect on
                                Neoforma.

                        (c)     No consent, approval, order or authorization of,
                                or registration, declaration or filing with any
                                governmental entity is required to be obtained
                                or made by Neoforma in connection with the
                                execution, delivery and performance of this
                                Agreement.

                12.1.3  Performance. All Services will be performed in a
                        professional and workmanlike manner, consistent with the
                        high professional standards and practices prevailing in
                        the Internet e-commerce services industry.

        12.2    Representations by Novation, VHA, UHC and HPPI. Each of
                Novation, VHA, UHC and HPPI, severally and not jointly,
                represents and warrants to Neoforma that the following
                statements made by it in this Section 12.2 are true and correct
                as of the Effective Date of this Agreement.

                12.2.1  Due Organization. Novation is a limited liability
                        company duly organized, validly existing and in good
                        standing under the laws of the State of Delaware; UHC is
                        a corporation duly organized, validly existing and in
                        good standing under the laws of the State of Illinois;
                        VHA is a corporation duly organized, validly existing
                        and in good standing under the laws of the State of
                        Delaware; HPPI is a limited liability company duly
                        organized, validly existing and in good standing under
                        the laws of the State of Delaware.

                12.2.2  Authority; Non-Contravention.

                        (a)     Each of Novation and HPPI has all requisite
                                limited liability company power and authority,
                                and each of VHA and UHC has all requisite
                                corporate power and authority, to enter into
                                this Agreement and to perform its obligations
                                hereunder. The execution and delivery of this
                                Agreement and the consummation of the
                                transactions contemplated hereby have been duly
                                authorized by all necessary limited liability
                                company action on the parts of Novation and HPPI
                                and all necessary corporate action on the parts
                                of VHA and UHC. This Agreement has been duly
                                executed and delivered by Novation, VHA, UHC and
                                HPPI, and it constitutes the valid and binding
                                obligation of each of Novation, VHA, UHC and
                                HPPI, enforceable against each of Novation, VHA,
                                UHC and HPPI in accordance with its terms,
                                except as enforceability may be limited by
                                bankruptcy and other similar laws affecting the
                                rights of creditors generally and general
                                principles of equity.

* Material has been omitted and filed separately with the Commission.

                                       29
<PAGE>   36

                        (b)     The execution and delivery of this Agreement by
                                Novation, VHA, UHC and HPPI does not, and the
                                performance of this Agreement by each of
                                Novation, VHA, UHC and HPPI will not, (i)
                                conflict with or violate the limited liability
                                company and corporate organizational documents,
                                respectively, (ii) conflict with or violate any
                                law, rule, regulation, order, judgment or decree
                                applicable to Novation, VHA, UHC or HPPI or by
                                which Novation, VHA, UHC or HPPI, or any of
                                their respective properties are bound or
                                affected, or (iii) result in any breach of or
                                constitute a default (or an event that with
                                notice or lapse of time or both would become a
                                default) under, or impair Novation's, VHA's,
                                UHC's or HPPI's rights or alter the rights or
                                obligations of any third party under, or give to
                                others any rights of termination, amendment,
                                acceleration or cancellation of, or result in
                                the creation of an encumbrance on any of the
                                properties or assets of Novation, VHA, UHC or
                                HPPI pursuant to, any note, bond, mortgage,
                                indenture, agreement, lease, license, permit,
                                franchise or other instrument or obligation to
                                which Novation, VHA, UHC or HPPI is a party or
                                by which Novation, VHA, UHC or HPPI, or any of
                                their assets, is bound or affected, except, in
                                the case of clauses (ii) and (iii), for such
                                conflicts, violations, breaches, defaults,
                                impairments, or rights which, individually or in
                                the aggregate, would not have a material adverse
                                effect on Novation, VHA, UHC and HPPI,
                                respectively.

                        (c)     No consent, approval, order or authorization of,
                                or registration, declaration or filing with any
                                governmental entity is required to be obtained
                                or made by Novation, VHA, UHC or HPPI in
                                connection with the execution, delivery and
                                performance of this Agreement.

        12.3    Warranty Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS
                AGREEMENT, EACH PARTY DISCLAIMS ALL EXPRESS AND IMPLIED
                WARRANTIES, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED
                WARRANTIES OF NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A
                PARTICULAR PURPOSE OR USE.

13.     USE OF SUBCONTRACTORS

        13.1    Generally. Neoforma may subcontract its obligations under this
                Agreement subject to the limitations imposed by this Section
                13.1. Neoforma shall not subcontract any of the following
                without the prior written consent of Novation, such consent not
                to be unreasonably withheld:

                (i)     any Services involving any contact or interface with
                        Members, including, without limitation, sales efforts,
                        implementation and integration and call center services;
                        or

* Material has been omitted and filed separately with the Commission.

                                       30
<PAGE>   37

                (ii)    any Services to a Novation Competitor.

        13.2    Novation's Right to Revoke Approval. Novation shall have the
                right during the Term to revoke its prior approval of a
                subcontractor and direct Neoforma to replace such subcontractor
                as soon as possible if the subcontractor's performance is
                materially deficient, good faith doubts exist concerning the
                subcontractor's ability to render future performance because of
                changes in the subcontractor's ownership, management, financial
                condition, or otherwise, or there have been material
                misrepresentations by or concerning the subcontractor.

        13.3    Continuing Responsibility. Neoforma shall remain responsible for
                obligations performed by subcontractors to the same extent as if
                such obligations were performed by Neoforma's employees.
                Neoforma shall be Novation's sole point of contact regarding the
                Services, including with respect to payment.

        13.4    Confidential Information. Neoforma shall not disclose
                Confidential Information of any of Novation, VHA, UHC or HPPI to
                a subcontractor unless and until such subcontractor has agreed
                in writing to protect the confidentiality of such Confidential
                Information as required of Neoforma under this Agreement.

14.     INSURANCE

        14.1    Insurance. Each of Neoforma and Novation shall determine the
                types and amounts of insurance coverage it requires in
                connection with this Agreement, including, without limitation,
                general public liability, property damage and workers
                compensation insurance. Neither Neoforma nor Novation is
                required to obtain insurance for the benefit of the other,
                including, without limitation, business interruption insurance.
                Each of Neoforma and Novation will pay all costs and receive all
                benefits under policies arranged by it, and each waives rights
                of subrogation it may otherwise have regarding the other's
                insurance policies.

        14.2    Proof of Insurance. When requested by Neoforma or Novation, an
                insurance certificate indicating the coverage described in
                Section 14.1, issued by an insurance company licensed to do
                business in the relevant state or states and signed by an
                authorized agent, shall be furnished by the insured party to the
                requesting party. Each of Neoforma and Novation shall provide
                the other with at least 30 days prior written notice of any
                cancellation or material modification of such insurance.

15.     INDEMNITY

        15.1    Neoforma Indemnity. Subject to Section 15.4, Neoforma shall
                indemnify, defend and hold harmless each of Novation, VHA, UHC
                and HPPI and each of their Affiliates, officers, directors,
                employees, consultants and agents from and against any and all
                damages, liabilities, claims, actions, suits, proceedings,
                costs, charges and expenses, including reasonable attorneys'
                fees (collectively, "LOSSES"), incurred or sustained by any of
                such persons as a result of or from any third-party

* Material has been omitted and filed separately with the Commission.

                                       31
<PAGE>   38

                claim relating to (i) any claims based on Neoforma's
                confidentiality obligations contained in Section 11 or its
                warranties contained in Section 12, (ii) the failure of Neoforma
                to perform any of its obligations under any agreement between
                Neoforma and a third party (including, without limitation, any
                agreements between Neoforma and a Supplier) or (iii) any claims
                arising out of Neoforma's breach of this Agreement.

        15.2    Novation Indemnity. Subject to Section 15.4, Novation shall
                indemnify, defend and hold harmless each of Neoforma and its
                Affiliates, officers, directors, employees, consultants and
                agents from and against any and all Losses awarded against or
                paid in settlement by Neoforma, incurred or sustained by any of
                such persons as a result of or from any third-party claim
                relating to (i) any claims based on Novation's confidentiality
                obligations contained in Section 11 or its warranties contained
                in Section 12, (ii) the failure of Novation to perform any of
                its obligations under any agreement between Novation and a third
                party or (iii) any claims arising out of Novation's breach of
                this Agreement.

        15.3    Infringement Claims.

                15.3.1  Each of Neoforma and Novation, at their respective
                        expense, shall indemnify, defend and hold harmless the
                        other party and its Affiliates, and their respective
                        officers, directors, employees, consultants, agents,
                        successors and assigns, from and against any and all
                        Losses arising from any Services, software, hardware or
                        the indemnitor's Materials ("ITEM(S)") provided or
                        delivered by the indemnitor to the indemnitee under this
                        Agreement, when used in conformity with all applicable
                        written instructions and documentation, (i) infringes
                        any patent in any country that is a signatory to the
                        Patent Cooperation Treaty, (ii) infringes any copyright
                        in any country that is a signatory to the Berne
                        Convention for the Protection of Literary and Artistic
                        Works, or (iii) constitutes misappropriation of any
                        trade secret in any country in which a trade secret
                        right exists such that it would be enforceable in the
                        United States (each such third-party claim, action, suit
                        or proceeding, an "INFRINGEMENT CLAIM").

                15.3.2  Notwithstanding anything to the contrary herein, the
                        indemnitor shall have no obligation to defend or
                        indemnify the indemnitee for any Infringement Claim to
                        the extent arising out of or relating to modifications
                        to any Item made by or on behalf of the indemnitee where
                        but for such modifications there would have been no
                        Infringement Claim.

                15.3.3  If the indemnitee's use of any Item is enjoined or
                        otherwise prohibited, or if the indemnitor reasonably
                        believes that there exists a threat of the same, the
                        indemnitor shall have the right, in its sole discretion
                        and at its expense, in addition to its indemnification
                        obligations above, to (i) obtain for the indemnitee the
                        right to continue to use the affected Item, (ii) replace
                        the affected Item with a non-infringing product or
                        service that will not

                                       32
<PAGE>   39

                        degrade the performance quality of the affected
                        component of the Services or (iii) modify the affected
                        Item so that it becomes non-infringing. If the
                        alternatives in (i), (ii) and (iii) are not feasible,
                        the indemnitor shall remove the Item from the Services
                        and equitably adjust the charges to reflect such
                        removal.

                15.3.4  THIS SECTION SETS FORTH THE SOLE AND EXCLUSIVE REMEDY OF
                        THE INDEMNITEES, AND THE ENTIRE OBLIGATION AND LIABILITY
                        OF THE INDEMNITOR, AS TO ANY INFRINGEMENT CLAIMS IN
                        CONNECTION WITH ANY ACTIVITY UNDER THIS AGREEMENT.

        15.4    Indemnity Procedures. The party seeking indemnification under
                Section 15.1 through 15.3, as the case may be (the "INDEMNIFIED
                PARTY"), shall give prompt written notice to the other party
                (the "INDEMNIFYING PARTY"). In addition, the Indemnified Party
                shall allow the Indemnifying Party to direct the defense and
                settlement of any such claim, with counsel of the Indemnifying
                Party's choosing that is reasonably acceptable to the
                Indemnified Party, and will provide the Indemnifying Party, at
                the Indemnifying Party's expense, with information and
                assistance that is reasonably necessary for the defense and
                settlement of the claim. The Indemnified Party reserves the
                right to retain counsel, at the Indemnified Party's sole
                expense, to participate in the defense of any such claim. The
                Indemnifying Party shall not settle any such claim or alleged
                claim without first obtaining the Indemnified Party's prior
                written consent, which consent shall not be unreasonably
                withheld, if the terms of such settlement would not adversely
                affect the Indemnified Party's rights under this Agreement.

16.     LIMITATION OF LIABILITY

        16.1    Limitations. IN NO EVENT WILL ANY PARTY BE LIABLE TO ANY OTHER
                PARTY FOR ANY LOST PROFITS, SPECIAL, INCIDENTAL, INDIRECT OR
                CONSEQUENTIAL DAMAGES, WHETHER BASED ON BREACH OF CONTRACT, TORT
                (INCLUDING NEGLIGENCE) OR OTHERWISE, WHETHER OR NOT THAT PARTY
                HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.

        16.2    Exceptions. The limitation set forth in Section 16.1 above will
                not apply to (i) Neoforma's obligations under Section 11,
                Section 15.1, Section 15.3 or Section 16.3, (ii) Novation's
                obligations under Section 11, Section 15.2 or Section 15.3,
                (iii) Neoforma's willful misconduct or gross negligence in the
                provision of Services or (iv) Neoforma's wrongful termination or
                abandonment of this Agreement.

        16.3    Liquidated Damages.

                16.3.1  Neoforma acknowledges that proper achievement of each of
                        the functions and responsibilities set forth in the
                        Functionality Specifications and the completion of each
                        Phase (as defined in the Functionality Specifications)

                                       33
<PAGE>   40

                        within the timetable specified therein (or as otherwise
                        agreed to by Neoforma and Novation) are critical to the
                        business operations of Novation. In connection
                        therewith, Neoforma agrees that if any of the functions
                        and responsibilities of a particular Phase described in
                        the Functionality Specifications are not properly
                        achieved by that Phase's respective target date, such
                        failure shall be deemed to constitute a material breach
                        of Neoforma's service obligations under this Agreement.
                        Upon such failure, Neoforma shall pay liquidated damages
                        to Novation for each day past the target date in which
                        the objective is still not achieved in the amount of (i)
                        *; provided, however, that any failure by Neoforma to
                        complete any such Phase within the timeframe described
                        in the Functionality Specifications shall be excused if
                        and to the extent (i) such failure by Neoforma resulted
                        principally from a material failure by Novation to
                        perform its obligations in respect of such Phase (as
                        such obligations are set forth in the Implementation
                        Plan to be agreed upon for each Phase, as described in
                        the Functionality Specifications) and (ii) Neoforma used
                        commercially reasonable efforts to perform
                        notwithstanding Novation's failure to perform; provided,
                        further, that any failure by Neoforma to complete any
                        Phase in a timely manner pursuant to the preceding
                        proviso shall only be excused for a number of days equal
                        to the number of days Novation failed to perform its
                        obligations in respect of such Phase (as such
                        obligations are set forth in the applicable
                        Implementation Plan).

                16.3.2  Neoforma acknowledges that proper achievement of the
                        Service Levels set forth in the Service Level
                        Specifications (including those Service Levels which
                        will be determined after the Effective Date) are
                        critical to the business operations of Novation.
                        Accordingly, in connection with any failure to meet
                        Service Levels, Neoforma and Novation shall agree on a
                        methodology whereby Neoforma shall pay to Novation
                        liquidated damages up to *. Such methodology shall be
                        determined in accordance with Section 1.4 of the Service
                        Level Specifications.

                16.3.3  The parties agree that the damages provided in this
                        Section 16 are a reasonable estimate of the damages that
                        would be suffered by Novation as a consequence of the
                        failures described in Subsections 16.3.1 and 16.3.2 and
                        do not constitute a penalty (the parties hereby
                        acknowledging the inconvenience and difficulty of
                        otherwise obtaining an adequate remedy). Notwithstanding
                        anything to the contrary in this Agreement, the
                        aggregate amount of liquidated damages paid by Neoforma
                        to Novation pursuant to this Section 16.3 (including all
                        payments under the Functionality Specifications and the
                        Service Level Specifications) shall not exceed *.

17.     AUDIT RIGHTS

        17.1    General. Upon 10 days prior notice from Novation, Neoforma shall
                provide to such auditors as Novation may designate in writing,
                subject to the limitation

* Material has been omitted and filed separately with the Commission.

                                       34

<PAGE>   41

                imposed by Section 17.3, access during normal business hours to
                Neoforma's applicable facilities and to appropriate Neoforma
                management personnel and subcontractors, and to the data and
                records maintained by Neoforma with respect to the Services for
                the purpose of (i) performing audits and inspections of Neoforma
                and its businesses, (ii) to verify the integrity of Novation
                Materials and Neoforma Materials, (iii) to examine the systems
                that process, store, support and transmit such Novation
                Materials, (iv) to verify user volume reports, (v) to verify the
                accuracy of Transaction Fees and (vi) to confirm Neoforma's
                compliance with this Agreement. To the extent applicable to the
                Services performed by Neoforma, the scope of such audits may
                include, without limitation, (i) Neoforma's practices and
                procedures, (ii) the adequacy of general controls and security
                practices and procedures and (iii) the adequacy of disaster
                recovery and back-up procedures. Subject to Section 17.6, such
                audits shall be conducted at Novation's expense.

        17.2    Frequency of Audits. Operational audits, to examine the
                technological aspects of Neoforma's provision of Services, may
                not be conducted more than once in any 12-month period.
                Financial audits, which examine Neoforma's financial records,
                and other supporting records, may not be conducted more than
                once in any 12-month period. Novation may, at its election,
                conduct operational and financial audits concurrently.

        17.3    Auditors. For the purposes of conducting financial audits,
                Novation may designate any internal auditor who customarily
                audits contract compliance issues for Novation or any nationally
                recognized accounting firm. For the purposes of conducting
                operational audits, Novation may designate any party to act as
                its auditor, subject to Neoforma's consent, which shall not be
                unreasonably delayed or withheld.

        17.4    Record Retention. In order to document the Services and the
                Transaction Fees paid or payable by Novation under this
                Agreement, Neoforma shall retain its standard records and
                supporting documentation for at least seven years.

        17.5    Cooperation. Neoforma shall use commercially reasonable efforts
                to assist such auditors, inspectors, regulators and
                representatives in connection with such audits and inspections.

        17.6    Overcharges. If, as a result of any such audit, Novation
                determines that Neoforma has overcharged Novation, Novation
                shall notify Neoforma of the amount of such overcharge and
                Neoforma shall promptly pay to Novation the amount of the
                overcharge, plus interest at a rate of 1.5% per month or the
                maximum rate permitted by law, whichever is less, calculated
                from the date of receipt by Neoforma of the overcharged amount
                until the date of payment to Novation. If any such audit reveals
                an overcharge to Novation during any 12-month period exceeding
                5% of all Transaction Fees in the aggregate paid by Novation
                during such period, Neoforma shall reimburse Novation for the
                out-of-pocket costs and expenses incurred for such audit.

* Material has been omitted and filed separately with the Commission.

                                       35
<PAGE>   42

18.     DISPUTE RESOLUTION

        18.1    Resolution of Disputes. Except as otherwise provided in this
                Section 18, any and all disputes arising out of or in connection
                with the execution, interpretation, performance or
                nonperformance of this Agreement (each such dispute, a "DISPUTED
                MATTER") will be resolved by the procedures established in this
                Section 18.

        18.2    Negotiations and Escalation. Each party shall use commercially
                reasonable efforts expeditiously to resolve any Disputed Matter
                which arises from time to time between it and any of the other
                parties on a mutually acceptable negotiated basis. In connection
                therewith, any party involved in a Disputed Matter may deliver a
                notice to each of the other parties (an "ESCALATION NOTICE")
                demanding an in-person meeting of the senior level management
                representatives of the parties involved (and providing, as a
                courtesy, notice to the parties not involved). Any agenda,
                location or procedures for such discussions or negotiations may
                be established by the parties to the Disputed Matter, but such
                parties shall, in any event, meet within 10 days after the
                delivery of the Escalation Notice. The parties to a Disputed
                Matter may, if they mutually so desire, retain a mutually agreed
                upon mediator to assist in resolution of the Disputed Matter,
                but (i) all statements and opinions of such mediator shall be
                only advisory and shall be inadmissible in any subsequent
                proceedings between the parties concerning the Disputed Matter,
                (ii) the parties thereto shall bear the costs of any such
                mediation equally (but each party to the mediation shall be
                responsible for its own expenses) and (iii) mediation is not a
                prerequisite to arbitration. If the parties to the Disputed
                Matter are unable to resolve it by the earlier of (i) 30 days
                after the delivery of the Escalation Notice or (ii) the
                conclusion of the meeting held pursuant to the applicable
                Escalation Notice, then any party thereto may institute
                arbitration, as provided below, concerning the Disputed Matter.

        18.3    Appointment of Arbitral Body. Except as provided in Section
                18.11, any Disputed Matters not resolved pursuant to Section
                18.2 or otherwise settled between the parties will be finally
                resolved solely by arbitration, by a single arbitrator appointed
                in accordance with the rules and procedures (the "RULES") of the
                American Arbitration Association, or if the American Arbitration
                Association is no longer conducting such arbitrations, a
                successor organization thereto or such other private arbitration
                service as the parties shall mutually agree (the actual
                authority involved, the "ARBITRAL BODY"). Except as set forth
                below in Sections 18.10 and 18.11, the parties renounce all
                recourse to litigation to resolve Disputed Matters and agree
                that the Award of the arbitrator will be final and subject to no
                judicial review.

        18.4    Qualifications of Arbitrator. The arbitrator shall be selected
                pursuant to the rules and procedures of the Arbitral Body, but
                shall be (i) impartial and will not have been employed by or
                affiliated with any of the parties to this Agreement or any of
                their respective Affiliates, (ii) experienced in commercial
                dispute resolution and (iii) familiar with commercial business
                practices in the medical supplies

* Material has been omitted and filed separately with the Commission.

                                       36
<PAGE>   43

                procurement business or the business involved in the Disputed
                Matter. If the Arbitral Body is unable to provide an arbitrator
                with the qualifications set forth in this Section 18.4, the
                Arbitral Body will consult with the parties and consider their
                recommendations for the arbitrator.

        18.5    Initiation of Arbitration and Procedures. After the expiration
                of the 30-day period referred to in Section 18.2, arbitration
                procedures may be initiated concerning a Disputed Matter by any
                of the parties thereto by giving written notice to the other
                parties thereto and in compliance with any of the applicable
                Rules. If not specified by the Rules, such notice shall be given
                to the parties to the Disputed Matter in the manner provided
                generally for notices in this Agreement. Any notice will specify
                in reasonable detail the dispute being submitted to arbitration
                and comply with all other Rules concerning commencement of
                arbitration.

        18.6    Procedures. The arbitrator will conduct the proceedings,
                including arguments and briefs, in accordance with the Rules;
                provided that the provisions of this Section 18 will prevail in
                the event of any conflict between the Rules and its provisions.
                Within five days after his or her appointment, the arbitrator
                shall contact the parties to the Disputed Matter and arrange an
                initial conference with them, to be conducted within 30 days
                after his or her appointment, at which conference (the "HEARING
                CONFERENCE") the arbitrator and the parties will establish
                procedures (based on a brief written plan submitted in letter
                form by each party to the Disputed Matter in advance of such
                Hearing Conference concerning expected measures to prepare for
                hearing on the merits) and a schedule for the resolution of the
                Disputed Matter by hearing on the merits in a timely and
                efficient manner, giving due consideration to the nature and
                extent of the Disputed Matter, the apparent complexity of
                preparations for, and complexity of, hearing on its merits and
                other factors (such as third-party litigation pending against
                one of the parties on the same subject-matter as raised in the
                Disputed Matter). In the event of a dispute concerning such
                procedures at the Hearing Conference, the arbitrator shall have
                the power to impose the schedule upon the parties to the
                Disputed Matter, giving due consideration to resolution of the
                Disputed Matter by a full and fair hearing on the merits. The
                arbitrator shall include in procedures established at the
                Hearing Conference provisions which permit the parties to engage
                in reasonable, limited discovery in preparation for hearing on
                the merits and which protect and preserve privileges and shield
                confidential proprietary information from disclosure. The
                hearing on the merits will be held within 60 days after the
                Hearing Conference, and evidentiary matters at such hearing will
                be determined in accordance with the Federal Rules of Evidence
                as applied at the place of arbitration.

        18.7    Governing Law; Jurisdiction. The arbitrator will decide the
                issues submitted in accordance with the provisions and
                commercial purposes of this Agreement, provided that all
                substantive questions of law will be determined under the laws
                of the State of New York. The parties consent to venue in the
                State in which the

* Material has been omitted and filed separately with the Commission.

                                       37
<PAGE>   44

                principal place of business of the party initiating arbitration
                regarding a Disputed Matter is located.

        18.8    Arbitration Award. All decisions of the arbitrator will be in
                writing and submitted to the parties, and the decision after
                hearing on the merits which announces resolution of the Disputed
                Matter (the "AWARD") shall, in addition, set forth findings of
                fact and conclusions of law to support the arbitrator's
                resolution of the merits of the Disputed Matter. The arbitrator
                will issue the Award within 30 days after completion of the
                hearing on the merits.

        18.9    Cooperation of the Parties. The parties to the Disputed Matter
                will facilitate the arbitration by (i) making available to one
                another and to the arbitrator for examination, inspection and
                extraction all documents, books, records and personnel under
                their control if determined by the arbitrator to be relevant to
                the dispute, (ii) conducting arbitration hearings to the
                greatest extent possible on successive days and (iii) observing
                strictly the time periods and procedures established by the
                Rules or by the arbitrator for submission of evidence or briefs,
                conduct of the hearing on the merits and preparations therefor.

        18.10   Costs. All costs of the arbitration shall initially be borne
                equally by the parties thereto as incurred, but upon completion
                of the arbitration, the arbitrator shall award to the prevailing
                party, as determined by the arbitrator in accordance with
                principles of New York law for determining prevailing parties in
                litigation, all reasonable costs, fees and expenses related to
                the arbitration, including reasonable fees and expenses of
                attorneys, accountants and other professionals or experts
                incurred by the prevailing party.

        18.11   Judgment on the Award; Enforcement. Judgment on the Award may be
                entered in any court having jurisdiction and procedures
                therefor. Each party agrees that any Award of an arbitrator
                against it and on which judgment is entered may be executed
                against the assets of any party which is a judgment debtor or
                otherwise enforced in any jurisdiction pursuant to the
                procedures in and protections of such jurisdiction which are
                generally applicable to enforcement of judgments, including
                provision in such jurisdiction for the enforcement of equitable
                remedies provided in the Award.

        18.12   Preservation of Equitable Relief; Third-Party Litigation.
                Notwithstanding any provision of this Section 18 to the
                contrary, any party will be entitled (i) to seek a temporary
                restraining order or injunctive or other equitable relief in any
                court of competent jurisdiction with respect to a breach (or
                attempted or threatened breach) of this Agreement by any party
                (including, without limitation, the matters referred to in
                Subsection 9.9.4) or (ii) to institute litigation or other
                formal proceedings to the extent necessary (A) to enforce the
                award of the arbitrator, (B) to avoid the expiration of any
                applicable limitations period or (C) to preserve a superior
                position with respect to other creditors. Nothing in this
                Section 18 shall prevent parties to this Agreement who become
                involved in a Disputed Matter and who have become parties to
                litigation instituted by a third party concerning facts

* Material has been omitted and filed separately with the Commission.

                                       38
<PAGE>   45

                involved in such Disputed Matter from resolving disputes between
                them arising in connection with such Disputed Matter through
                such litigation in lieu of arbitration under this Section 18.

        18.13   Continued Performance. Each party agrees to continue performing
                its obligations under this Agreement during the pendency of any
                dispute resolution process conducted in accordance with this
                Section 18.

19.     GUARANTY OF PERFORMANCE

        19.1    VHA and UHC Guarantees. VHA and UHC agree, severally but not
                jointly, that they will be responsible for the obligations and
                liabilities of Novation under this Agreement, as follows:

                (i)     to the extent that any such obligation or liability
                        relates primarily to any action or omission by UHC or an
                        UHC Member, UHC shall be responsible;

                (ii)    to the extent that any such obligation or liability
                        relates primarily to any action or omission by VHA or a
                        VHA Member, VHA shall be responsible; and

                (iii)   to the extent that the allocations set forth in (i) and
                        (ii) are not applicable, VHA and UHC shall be
                        responsible in proportion to their respective ownership
                        interests in Novation at the time such obligation or
                        liability is incurred.

        19.2    VHA and UHC Waivers. Each of VHA and UHC hereby waives the
                following with regard to its obligations guaranty obligations
                under this Section 19:

                (i)     any right to require Neoforma to (A) proceed first
                        against Novation, VHA or UHC or (B) pursue any other
                        remedy in Neoforma's power whatsoever;

                (ii)    any defense resulting from the absence, impairment or
                        loss of any right of reimbursement, subrogation or
                        contribution of VHA or UHC against Neoforma, or against
                        one another;

                (iii)   any defense of discharge, relief or stay of the
                        principal's obligations hereunder based upon a filing of
                        or against Novation under the U.S. Bankruptcy Code or
                        Novation's request for any relief of its obligations
                        under this Agreement based on laws for the relief of
                        debtors generally;

                (iv)    any right to be informed by Neoforma of the financial or
                        other condition of Novation or of VHA or UHC or any
                        change therein or any other circumstances bearing upon
                        the risk of nonperformance by Novation; and

* Material has been omitted and filed separately with the Commission.

                                       39
<PAGE>   46

                (v)     any defense of exoneration or release based on amendment
                        of this Agreement.

                Each of VHA and UHC agrees that its guarantee, as set forth in
                Section 19.1, constitutes a guarantee of payment when due and
                not of collection.

        19.3    Scope of Liability. Neither VHA's nor UHC's obligations and
                liabilities under this Agreement shall be subject to any
                set-off, reduction, limitation, impairment or termination for
                any reason, including, without limitation, compromise, and shall
                not be subject to any defense or termination whatsoever by
                reason of the invalidity, illegality or unenforceability of any
                of its obligations and liabilities under this Agreement;
                excluding, however, any defenses based upon Neoforma's failure
                to perform any of its obligations under this Agreement.

20.     GENERAL PROVISIONS

        20.1    No Waiver. The delay or omission by any party to exercise or
                enforce any right or power of any provision of this Agreement
                shall not be construed as a waiver or relinquishment to any
                extent of such party's right to assert or rely upon any such
                provision or right in that or any other instance. A waiver by
                any party hereto of any of the covenants to be performed by any
                other or any breach thereof shall not be construed to be a
                waiver of any succeeding breach thereof or of any other covenant
                herein contained.

        20.2    Entire Agreement. This Agreement and the Exhibits and Technical
                Specifications hereto, together constitute the complete and
                exclusive agreement between the parties hereto, and supersede
                any and all prior agreements of the parties with respect to the
                subject matter hereof. Except in the case of Section 8.12 (which
                may be amended with the approval of VHA and UHC only), this
                Agreement and the Exhibits and Technical Specifications hereto
                may be amended or modified, or any rights under it waived, only
                by a written document executed by all parties.

        20.3    Publicity. Except as required by law or provided in this
                Agreement, no party will make any public statement, press
                release or other announcement relating to the terms of or
                existence of this Agreement without the prior written approval
                of all other parties. The parties will cooperate prior to the
                filing of any public document which may require the filing of
                this Agreement as an exhibit or the filing of a description
                thereof in order to preserve the confidentiality and proprietary
                information contained herein.

        20.4    Covenant of Good Faith. Each party agrees that, in its
                respective dealings with all other parties under or in
                connection with this Agreement, it shall act in good faith.

        20.5    Compliance with Laws and Regulations. Each of Neoforma and
                Novation shall perform its respective obligations under this
                Agreement in a manner that complies with applicable law,
                including, without limitation, identifying and procuring
                required permits and approvals.

* Material has been omitted and filed separately with the Commission.

                                       40
<PAGE>   47

        20.6    Assignment; Successors and Assigns. This Agreement will be
                binding on the parties hereto and their respective successors
                and permitted assigns. No party may, or will have the power to,
                assign this Agreement without the prior written consent of all
                other parties. For the purposes of this Section 20.6, any
                assignment by operation of law, under an order of any court or
                pursuant to any plan of merger, consolidation or will be deemed
                an assignment for which prior consent is required, and any
                assignment made without such consent will be void and of no
                effect as between the parties. Notwithstanding the forgoing, no
                assignment made in respect of or as a result of any dissolution
                of Novation will be deemed an assignment for which prior consent
                is required, and such assignment will be valid.

        20.7    Governing Law. This Agreement will be governed by and construed
                in accordance with the laws of the State of New York, without
                regard to or application of conflicts of law rules or
                principles.

        20.8    Notices. Any notice required or permitted by this Agreement
                shall be in writing and shall be deemed given if sent by prepaid
                registered or certified United States mail, return receipt
                requested, overnight mail with a nationally recognized overnight
                mail courier, or sent by facsimile or similar communication, and
                confirmed by such mail, postage prepaid, addressed to another
                party at the address shown below or at such other address for
                which such party gives notice hereunder. Notices will be deemed
                given five business days after deposit in the U.S. Mail, two
                business days after deposit with an overnight mail courier, or
                when confirmation of receipt is obtained if sent by facsimile or
                similar communication, or if by personal delivery, when
                received, as applicable:

* Material has been omitted and filed separately with the Commission.

                                       41
<PAGE>   48

IF TO NOVATION:                             WITH A COPY TO:

Novation, LLC                               Baker Botts L.L.P.
125 East John Carpenter Freeway             2001 Ross Avenue
Irving, Texas  75062                        Dallas, Texas  75201-2980
Facsimile:  (972) 581-5778                  Facsimile:  (214) 953-6503
Attn:  General Counsel                      Attn:  Sarah M. Rechter, Esq.

IF TO VHA:                                  WITH A COPY TO:

VHA, Inc.                                   Skadden, Arps, Slate,
220 East Las Colinas Boulevard              Meagher & Flom LLP
Irving, Texas  75039-5500                   1440 New York Avenue, N.W.
Facsimile:  (972) 830-0391                  Washington, DC  20005
Attn:  Chief Financial Officer              Facsimile:  (202) 393-3760
                                            Attn:  C. Kevin Barnette, Esq.

IF TO UHC:                                  WITH A COPY TO:

University HealthSystem Consortium          McDermott, Will & Emery
2001 Spring Road, Suite 700                 227 West Monroe Street
Oak Brook, Illinois  60523                  Chicago, Illinois 60606
Facsimile:  (630) 954-4730                  Facsimile:  (312) 984-7700
Attn:  Executive Vice President             Attn:  Virginia H. Holden, Esq.
       General Counsel

IF TO NEOFORMA:                             WITH A COPY TO:

Neoforma.com, Inc.                          Fenwick & West LLP
3255-7 Scott Boulevard                      Two Palo Alto Square
Santa Clara, California  95054              Palo Alto, California  94306
Facsimile:  (408) 549-6399                  Facsimile:  (650) 494-1417
Attn:  General Counsel                      Attn:  Gordon K. Davidson, Esq.
                                                   Douglas N. Cogen, Esq.

        20.9    No Agency. The parties are independent contractors and will have
                no power or authority to assume or create any obligation or
                responsibility on behalf of each other, except as expressly
                provided herein. This Agreement will not be construed to create
                or imply any partnership, agency or joint venture.

        20.10   Force Majeure.

                20.10.1 Subject to 20.10.2, no party shall be liable for any
                        default or delay in the performance of its obligations
                        under this Agreement if and to the extent such default
                        or delay is caused, directly or indirectly, by: flood,
                        earthquake, elements of nature or acts of God, riots,
                        civil disorders, rebellions or revolutions in any
                        country, or any other cause beyond the reasonable
                        control of such party, provided that (i) the
                        non-performing party is without fault in failing to
                        prevent or causing such default or delay and (ii) such
                        default or delay cannot reasonably be circumvented by
                        the

* Material has been omitted and filed separately with the Commission.

                                       42
<PAGE>   49

                        non-performing party through the use of alternate
                        sources, workaround plans or other means (including with
                        respect to Neoforma, by Neoforma executing its disaster
                        recovery plans).

                20.10.2 In such event, the non-performing party shall be excused
                        from further performance or observance of the
                        obligation(s) so affected for as long as such
                        circumstances prevail and such party continues to use
                        commercially reasonable efforts to recommence
                        performance or observance whenever and to whatever
                        extent possible without delay. With respect to
                        Neoforma's performance, such efforts shall be no less
                        than the efforts used for any other customer of
                        Neoforma. Any party so delayed in its performance shall
                        immediately notify the party to whom performance is due
                        by telephone (to be confirmed in writing within two days
                        after the inception of such delay) and describe at a
                        reasonable level of detail the circumstances causing
                        such delay.

        20.11   Interest. Any payment under this Agreement which is not paid
                when due, shall accrue interest at the lower of a monthly rate
                of 1.5% or the highest amount allowed by law.

        20.12   Program Management. As promptly as practicable after the
                Effective Date, Neoforma and Novation shall meet to develop a
                program management plan to manage the delivery of Services
                hereunder. Such plan shall have features similar to those
                illustrated in Exhibit F.

        20.13   Severability. If for any reason a court of competent
                jurisdiction finds any provision or portion of this Agreement to
                be unenforceable, that provision of the Agreement will be
                enforced to the maximum extent permissible so as to effect the
                intent of the parties, and the remainder of this Agreement will
                continue in full force and effect.

        20.14   Counterparts. This Agreement may be executed in counterparts,
                each of which will be deemed an original, but all of which,
                together, will constitute one and the same instrument.

        20.15   Headings. Section headings are included for only convenient
                reference and do not describe the sections to which they relate.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

* Material has been omitted and filed separately with the Commission.

                                       43
<PAGE>   50

        IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

NEOFORMA.COM, INC.                          NOVATION, LLC

By:    /s/ Fred Ruegsegger                  By:    /s/ Mark McKenna
   --------------------------------           --------------------------------

Name:  Fred Ruegsegger                      Name:  Mark McKenna
       ----------------------------                ---------------------------

Title: Chief Financial Officer              Title: President
       ----------------------------                ---------------------------

Date:  March 30, 2000                       Date:  March 30, 2000
       ----------------------------                ---------------------------

VHA, INC.                                   UNIVERSITY HEALTHSYSTEM CONSORTIUM

By:    /s/ Curt Nonomaque                   By:    /s/ Robert J. Baker
   --------------------------------           --------------------------------

Name:  Curt Nonomaque                       Name:  Robert J. Baker
       ----------------------------                ---------------------------

Title: Chief Financial Officer              Title: President and
       ----------------------------                Chief Executive Officer
                                                   ---------------------------

Date:  March 30, 2000                       Date:  March 30, 2000
       ----------------------------                ---------------------------

HEALTHCARE PURCHASING PARTNERS INTERNATIONAL, LLC

By:    /s/ Mark McKenna
       ----------------------------

Name:  Mark McKenna
       ----------------------------

Title: Chief Executive Officer
       ----------------------------

Date:  March 30, 2000
       ----------------------------

             [SIGNATURE PAGE TO OUTSOURCING AND OPERATING AGREEMENT]

* Material has been omitted and filed separately with the Commission.

                                       44
<PAGE>   51

                                                                       EXHIBIT A

                                      MARKS

1.      NOVATION MARKS:

        1.1     Registered Marks.

                OPPORTUNITY (Stylized) (Registration No. 2009924) is registered
                to Novation.

        1.2     Pending Marks.

                NOVATION (Serial No. 75-421230); N and Design (Serial No.
                75-602099); NOVAPLUS (Serial No. 75-525857); NOVAPLUS (Serial
                No. 152867 (Czech Republic)); and NOVAPLUS and Design (Serial
                No. 75-603422) are pending.

        1.3     Unregistered Marks.

                None.

2.      NEOFORMA MARKS:

        2.1     Registered Marks.

                None.

        2.2     Pending Marks.

                NEOFORMA (Serial No. 75-555506); NEOFORMA and Design (Serial No.
                75-662962); and NEOFORMA.COM and Design (Serial No. 75-662961)
                are pending.

        2.3     Unregistered Marks.

                TOOLKIT (Serial No. 75-104592); STATCITY (Serial No. 75-562041);
                STATWORLD (Serial No. 75-555393); THE HEALTHCARE BUSINESS
                COMMUNITY (Stylized) (Serial No. 75-555729); AUCTIONONLINE;
                AUCTIONLIVE; and ADSONLINE are unregistered.

3.      VHA MARKS:

* Material has been omitted and filed separately with the Commission.

                                      A-1
<PAGE>   52

        3.1     Registered Marks.

                CFIS (Registration No. 1912695); COUNTDOWN USA (Registration No.
                1533720); EDGEWARE (Registration No. 2294530); LAURUS
                (Registration No. 2254329); Miscellaneous Design (Registration
                No. 2198615); PNEUMONIA PNOCKOUT (Registration No. 1820282);
                STAY CURRENT. STAY HEALTHY (Registration No. 2251550); STAY
                HEALTHY (Registration No. 1814163, 1835895); UNITED TO IMPROVE
                AMERICA'S HEALTH (Registration No. 1892202); VHA (Registration
                No. 1227889 (U.S.A.), 500495 (Benelux), 284986 (Canada), 1676194
                (France), 2904740 (Germany), 613531 (Italy), 414861 (Mexico),
                104986 (Russian Federation)); VHA (Stylized) (Registration No.
                1300891 (U.S.A.), 316977 (Canada)); VHA and Design (swirl logo)
                (Registration No. 1893301); VHA PLUS (Registration No. 1423203
                and 1442669 (U.S.A.), 550496 (Benelux), 1676193 (France),
                2904741 (Germany), 613530 (Italy), 413431 and 413432 (Mexico),
                105521 (Russian Federation)); VHA SATELLITE NETWORK
                (Registration No. 1419470); VHASECURE.NET (Registration No.
                2182462); VHA: THE HEART OF AMERICA'S HEALTH (Registration No.
                1423204); VHA+PLUS (Registration No. 1757926); VHA+PLUS and
                Design (Registration No. 1425903 and 1457123 (U.S.A.), 405620
                (Mexico), 60097 (Sri Lanka), 159275 (Thailand)); VOLUNTEER
                HOSPITALS OF AMERICA (Registration No. 1273226 and 1310365
                (U.S.A.), 298707 (Canada)) are registered to VHA.

        3.2     Pending Marks.

                SUPERRIEN (Serial No. 75-639339) is pending.

        3.3     Unregistered Marks.

                None.

4.      UHC MARKS:

        4.1     Registered Marks.

                UHC (Registration No. 1809491); UHC and Design (Registration No.
                1813976); UHC NEWSLINE (Registration No. 1867798); and ABC
                (Registration No. 2327568) are registered to UHC.

        4.2     Pending Marks.

                None.

        4.3     Unregistered Marks.

* Material has been omitted and filed separately with the Commission.

                                      A-2
<PAGE>   53

                CLINICAL DATA PRODUCTS; CDP; OPERATIONAL DATA BASE; VALUE
                ANALYSIS PROGRAM; CLINICAL PROCESS IMPROVEMENT; CLINICAL
                BENCHMARKING; OPERATIONAL BENCHMARKING; CAPITAL ASSET
                MANAGEMENT; MANAGEMENT AND SUPPLY SERVICES; CLINICAL PRACTICE
                ALERT; TECHNOLOGY ASSESSMENT; and UHC NEWS are unregistered.

5.      HPPI MARKS:

        5.1     Registered Marks.

                HPPI (Registration No. 2003695) and HEALTHCARE PURCHASING
                PARTNERS (Registration No. 1248000) are registered to HPPI.

        5.2     Pending Marks.

                None.

        5.3     Unregistered Marks.

                None.

* Material has been omitted and filed separately with the Commission.

                                      A-3
<PAGE>   54

                                                                       EXHIBIT B

                   CURRENT MARKS USAGE GUIDELINES FOR NOVATION

* Material has been omitted and filed separately with the Commission.

                                      B-1
<PAGE>   55

                                                                       EXHIBIT B

                                                                   Novation Logo

Novation TM Editorial Standards Brief
Revised July 1999

Many Novation staff members communicate regularly in writing with VHA and UHC
members, supply partners, each other and outside audiences. Below are a few
guidelines that address questions and issues that come up every day in the
course of doing business. These guidelines are designed to create consistency in
the way we all refer to our company, its employees, and its products, programs
and services.

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

ACRONYMS - Avoid the use of acronyms on the first reference. It is better to
spell out a title or phrase on first reference and use acronyms on second
reference. It is unnecessary to put the acronym in parentheses after the full
name, like this: HealthCare Purchasing Partners International (HPPI). The reason
is that if the meaning of an acronym must be explained to readers, it probably
should not be used. There are some exceptions to this rule. For example, some
highly specialized acronyms have become so common in usage that the original
wording has been superseded. Examples: DNA, ISDN, RAM, CD-ROM.

AREA CODES, PHONE NUMBERS - Phone numbers should appear as follows: (972)
581-5000. It is not necessary to include a "1" in front of a long-distance
number. It is assumed that people know dialing 1 is necessary. One exception to
this rule is the number for Novation Member Support Services, which should
appear like this: 888/7-NOVATE (766-8283). If it is necessary to refer callers
to a particular extension, this is the correct style: (972) 581-5000, ext. 5555.
"X" is not an acceptable abbreviation for extension in external communications.

AUTHORIZED DISTRIBUTORS - These are distribution partners that have been
approved as official distributors of products offered through Novation
agreements. Use Novation Authorized Distributor on first reference, Authorized
Distributor on subsequent references.

CLINICAL MARKETS PROGRAMS - This is Novation's marketing strategy that focuses
on the needs of physicians and caregivers in a variety of specialties. Novation
Clinical Markets Programs aggregate best-in-class products and services
according to clinical disease states or specialties, helping VHA and UHC members
streamline their purchasing processes through one-stop shopping. Novation
currently offers these Clinical Markets Program:

     o    Novation Anesthesia Program

     o    Novation Cardiology Program

     o    Novation Dialysis Program

     o    Novation Oncology Program

     o    Novation Orthopedic Program

     o    Novation Respiratory Program

     o    Novation Women's Health Program

<PAGE>   56

Some Clinical Markets Programs include agreement subgroups referred to as
portfolios. These include:

     o    Novation Anesthesia Pharmaceutical Portfolio (formerly the Anesthesia
          Pharmaceutical Standardization Program)

     o    Novation Oncology Pharmaceutical Portfolio (formerly the Oncology
          Products Program)

     o    Novation Oncology Breast Care Portfolio (launching in the second
          quarter of 1999)

     o    Novation Oncology Prostate Care Portfolio (launching in 1999)

     o    Novation Respiratory Pharmaceutical Portfolio (launching Oct. 1, 1999)

Novation may be omitted from the program or portfolio name on second and
subsequent references.

In addition to these offerings, several portfolios of OPPORTUNITY (R),
Novation's Committed Program, are based on Clinical Markets Programs. These
portfolios are discussed in the OPPORTUNITY section.

Please note that Clinical Markets is not a separate department of Novation. When
writing about the people who work on a particular Clinical Markets segment,
refer to them as the Novation anesthesia team, group, or unit. More casual
references as the cardiology team are acceptable on subsequent references if it
is clear that you are referring to the Novation Clinical Markets group.

COMPANY NAME, JOB TITLES - include your company name and job title, as well as
the company names and correct titles of any other people mentioned in a
document. Titles are not capitalized unless they preceded the person's name, and
then only if the title is of significant rank. Some examples:

     o    Gov. George W. Bush

     o    George W. Bush, governor of Texas

     o    U.S. Sen. Patrick Moynihan

     o    Kay Bailey Hutchison, U.S. senator from Texas

     o    C. Thomas Smith, VHA president and chief executive officer

     o    UHC President and Chief Executive Officer Robert J. Baker

     o    Novation product manager John Doe

     o    Jane Doe, Novation marketing analyst

Also include the titles and company names of people who are "cc-ed" at the
bottom of a business letter or memo. This is very important because
correspondence is often sent to VHA and UHC members, supply partners and people
at our parent organizations who may not know who you or others mentioned are.

Please don't guess at anyone's name or title; call and ask if you are uncertain.
Getting someone's name or title wrong implies a lack of courtesy and attention
to detail.

E-MAIL ADDRESSES - In communications pieces where you list a Novation contact
person, you should include that person's phone number and e-mail address. The
correct style for e-mail addresses is jdoe@novationco.com (in italics).

HEALTHCARE PURCHASING PARTNERS INTERNATIONAL LLC - This is the full name of
HPPI, Novation's sister company. Like Novation, HPPI is jointly owned by VHA and
UHC. HealthCare Purchasing Partners International should be used on first
reference. HPPI is acceptable in subsequent references. HPPI has no members, it
has clients.

HOSPITAL, HEALTH CARE ORGANIZATION - All hospitals are health care
organizations, but not all health care organizations are hospitals. Therefore,
unless referring specifically to hospitals, health care organization is the
preferred term. For variety's sake, words such as facility and institution are
acceptable on subsequent references. Don't use the acronym HCO in any outside
communication.

<PAGE>   57

INTERNET SITES - Novation's World Wide Web site is www. novationco.com. This and
all other Web sites should appear in all-lower-case, italic letters.

LAUNCH - The date that an agreement or program becomes effective is the launch
date. Please don't use the term launch when you mean introduce, unveil,
announce, etc. For example, a program can be introduced March 1, but may not
launch until May 1, when the program agreements become effective.

LETTERS AND MEMOS - Memorandums are acceptable in some external business
communications, but interoffice memos are not. Appropriate business letters
should be used for more formal communications. In both documents, include the
correct names, organization names, company names (if applicable) and titles of
the recipients, sender and those who receive copies.

MEMBERS, CLIENTS AND CUSTOMERS - Novation has no members or customers. It serves
VHA and UHC members and HealthCare Purchasing Partners International clients.
When addressing or mentioning VHA and UHV organizations, use VHA and UHC members
the first time and members thereafter. Never use Novation members or Novation
customers. The term health care organizations is also acceptable.

NOVAPLUS TM - The name of Novation's private-label program. When writing about
NOVAPLUS, it should be described as the private label of VHA and UHC early in
the document. This description helps reinforce the link between NOVAPLUS and
Novation's parent alliances. Companies that supply products in the private label
are called NOVAPLUS manufacturing partners.

Here are some guidelines for using the NOVAPLUS name and logo in marketing
materials and correspondence.

     o    Capitalize all letters and include a trademark symbol (TM) immediately
          after the name on first reference in every document. The trademark
          symbol should be omitted on second and subsequent references.

     o    In overheads, slides, charts or other presentation materials, use the
          trademark symbol after NOVAPLUS on first reference in every slide or
          chart.

     o    Do no use the NOVAPLUS logo within text as a substitute for the name.

     o    All marketing materials developed by NOVAPLUS manufacturing partners
          must be reviewed by the appropriate Novation product managers, and by
          Novation marketing communications.

NOVAPLUS marketing materials include the NOVAPLUS logo and the tagline Your
Brand and More SM. However, it is not necessary to include this tagline in the
text of correspondence or marketing materials.

NOVATION FOOD SERVICE PROGRAM - The full name of the program. Novation may be
omitted on second reference.

NOVATION LABORATORY PROGRAM - The full name of the program. Novation may be
omitted on second reference.

NOVATION LLC - This is the full legal name of our company. It is not necessary
to include the "LLC" except in legal documents such as contracts, program
enrollment forms, etc.

NOVATION MEMBER SUPPORT SERVICES - This is the correct name of our outbound
telephone service delivery group. TeleServices should no longer by used.
Novation Customer Service is part of Member Support Services and is the group
that handles incoming calls from the 888/7-NOVATE line.

NOVATION PHARMACY PROGRAM - The full name of the program. Novation may be
omitted on second reference.

NOVATION TM, the supply company of VHA and UHC - Our company name should appear
this way on first reference in any document going to an outside audience,
complete with the trademark symbol (TM). Simply the name Novation is acceptable
on subsequent references.

<PAGE>   58

OPPORTUNITY (R) - This is Novation's committed-purchasing program. The name
should appear in the form shown here, with the registered trademark symbol, on
first reference in any document. The (R) should be omitted on subsequent
references.

The program should be referred to on first or second reference in every document
as OPPORTUNITY, Novation's Committed Program. If using the tagline on first
reference would create an awkward sentence, it is acceptable to use it on second
reference. Program is not part of the name, but the phrase OPPORUTUNITY program
is acceptable.

Offerings under the OPPORTUNITY umbrella are called portfolios. Nine portfolios
are currently available, with more in development. The nine existing portfolios
are:

     o    OPPORTUNITY Phase I Portfolio

     o    OPPORTUNITY Phase II Portfolio

     o    OPPORTUNITY Anesthesia Portfolio

     o    OPPORTUNITY International Cardiology Portfolio

     o    OPPORTUNITY Food Service Portfolio

     o    OPPORTUNITY Laboratory Portfolio

     o    OPPORTUNITY Orthopedic Portfolio

     o    OPPORTUNITY Respiratory Portfolio

     o    OPPORTUNITY Unified Portfolio

Please note that OPPORTUNITY is not a separate department of Novation. the
program and its portfolios are jointly operated by Novation's cost reduction
services team and the various contracting teams that develop and maintain
agreements included in the portfolios.

SERVICE DELIVERY - Novation field account managers should be referred to as the
Service Delivery team or Service Delivery account managers. Do not refer to them
as sales representatives or managers.

SUPPLY COST MANAGEMENT - Novation is a supply cost management company. The term
supply chain management is limiting and should be avoided when referring to
Novation. However, supply chain is acceptable when quoting someone or referring
to the system by which products move from suppliers to health care
organizations. (Please note that VHA still refers to Novation as its provider of
supply chain management services.)

SUPPLY PARTNERS - The companies with which Novation enters into supply
agreements are referred to as supply partners. (One exception is NOVAPLUS
manufacturers, see the NOVAPLUS entry.) We should not refer to them as vendors
or business partners and should avoid referring to them as manufacturers.
However, suppliers is acceptable for variety's sake if supply partners begins to
appear too often in a particular document.

TRADEMARKS - When mentioning a trademarked product offered by a Novation supply
partner, include the appropriate TM or (R) symbol with the trademarked name on
first reference. Please note that the two symbols are not interchangeable. TM
identifies trade names or logos that are being used by a company, pending final
approval by the U.S. Patent and Trademark Office. (R) designates names that have
been fully approved and registered with the office.

<PAGE>   59

UHC SUPPLY CO. - With the creation of Novation, UHC Supply Co. ceased to exist,
as did all UHCSC agreements. Those are now Novation agreements. To avoid
confusion for members, please do not refer to UHCSC unless describing it as a
predecessor to Novation.

UNIVERSITY HEALTHSYSTEM CONSORTIUM - The name of our parent UHC should appear
this way on first reference in any document. One exception to this rule: When
Novation, the supply company of VHA and UHC appears first in a document, spell
out University HealthSystem Consortium on the next reference to UHC. Simply the
acronym UHC is acceptable on subsequent references.

VHA - Acceptable in nearly all references to VHA Inc., the majority owner of
Novation and HPPI. The Inc. is usually necessary only in legal documents.

If you have a question regarding proper editorial standard, please contact your
Novation marketing communications manager or Rich Reecer, Novation editorial and
publications manager at ext. 5076.
<PAGE>   60

                                                                      EXHIBIT C

                   CURRENT MARKS USAGE GUIDELINES FOR NEOFORMA

* Material has been omitted and filed separately with the Commission.

                                      C-1

<PAGE>   61

                    NEOFORMA.COM, INC.'S TRADEMARK GUIDELINES

INTRODUCTION

NeoForma.com, Inc. values its intellectual property. Its trademarks and brands
are an important asset. Neoforma.com requires that its trademarks be used
properly in all contexts. Please take a moment to read our Trademark Guidelines.
If you have any questions about specific trademark or logo usage, or would like
further information regarding these Guidelines, please contact our General
Counsel.

WHO MUST FOLLOW THESE GUIDELINES

These Guidelines apply to Neoforma.com, Inc.'s employees, customers, licensees,
affiliates, consultants, and third parties. If you are a licensee or affiliate,
your license or other agreement with Neoforma.com, Inc. may set forth different
requirements regarding trademark and logo usage. If so, you are required to
follow those specific guidelines. Otherwise, if you are a licensee or affiliate
who does not have a license or agreement with Neoforma.com, Inc. that addresses
trademark and logo usage, you must follow these Guidelines.

USE OF NEOFORMA.COM, INC.'S COMPANY NAME

Neoforma.com, Inc. is our company or trade name, and NEOFORMA(TM), NEOFORMA and
Design(TM) and NEOFORMA.COM(TM) are our trademarks. When you refer to us as a
company, please use the incorporated designation (i.e., "Inc.") with the first
prominent reference and the first reference, and do not use a trademark symbol.
Our company name may be abbreviated to Neoforma.com in subsequent references.
Examples of references to Neoforma.com, Inc. as a company include identifying us
as the owner of the Neoforma.com(TM) website, and providing our contact
information, including our address, at the end of a communication.

USE OF NEOFORMA.COM, INC.'S TRADEMARKS

You may use Neoforma.com, Inc.'s trademarks when you are referring to our goods
or services provided that you follow these Guidelines, and ensure that such
references are truthful and not misleading. You may not use Neoforma.com's name
or trademarks as part of the name of your company or your company's services or
products. Such uses infringe Neoforma.com's intellectual property rights and are
unlawful. Last, you may not license Neoforma.com's name, trademarks or logos to
other parties.

* Material has been omitted and filed separately with the Commission.

                                      C-2
<PAGE>   62

PROPER TRADEMARK USAGE

PROPER USE OF A TRADEMARK MEANS THE TRADEMARK IS FOLLOWED BY A TRADEMARK SYMBOL
AND THEN A NOUN.

The Trademark Symbol

A trademark should always be followed by the trademark symbol (TM) for
unregistered trademarks (or with a trademark that will be used on materials
distributed internationally), or (R) for federally registered trademarks. If the
superscript, (TM), or the registered trademark symbol, (R), is not available,
please use (TM) or (R) instead.

If there are multiple references to the same trademark in a given document, it
is sufficient to use the trademark symbol with the first prominent use of the
mark, and with the next use of the mark (for example, in the title or subtitle
of the document and then the first time the mark appears in text) to provide
adequate notice. You do not need to use a trademark symbol with each and every
use of the trademark. If there is doubt about whether to use a trademark symbol,
however, please use one.

Also, please note that if the document or communication has a table of contents
or index in which the trademark appears, the symbol should accompany the
trademark. In the case of presentation graphics, the trademark symbol should
appear on each page or slide where the trademark appears. Again, if there is
doubt about whether to use a trademark symbol, please use one.

A Trademark is an Adjective

A trademark is an adjective, designating the source or origin of the good or
service it modifies. Accordingly, proper trademark usage requires that the
trademark always be followed by a noun. An example of proper trademark usage is:
"Healthcare's most important e-commerce tool is the NEOFORMA.COM(TM) website."
These Guidelines require that you only use Neoforma.com's trademarks with the
service for which they were originally intended.

Note that a trademark cannot be used as a noun. It cannot be pluralized. It
cannot be used in the possessive form. Thus, for example, it is improper to say
"NEOFORMA.COM is healthcare's most important e-commerce tool."

Note also that a trademark cannot be used as verb. For example, it is improper
to say, "We will compile a list of syringe manufacturers by STATWORLDing."

The Appearance of the Trademark

You may not alter Neoforma.com's trademarks in any way unless you have a
specific agreement with Neoforma.com authorizing such alteration. You may not
use corruptions, abbreviations or variations of Neoforma.com's name or
trademarks. You may not alter any logo or design that is

* Material has been omitted and filed separately with the Commission.

                                      C-3
<PAGE>   63

a Neoforma.com trademark. For example, you may not change the color of the
Neoforma.com design, and you may not change the font style of the NEOFORMA word
mark as it appears in the design trademark.

ATTRIBUTION OF TRADEMARK RIGHTS

Provide the following notice when using Neoforma.com's trademarks: "___________
and ___________ are trademarks or registered trademarks of Neoforma.com, Inc. in
the United States and other countries." Please use this exact language.

NEOFORMA.COM, INC.'S TRADEMARKS

Neoforma.com, Inc.'s trademarks include those on the following list, which may
not be exhaustive of our marks:

ADSONLINE(TM)
AUCTIONLIVE(TM)
AUCTIONONLINE(TM)
DEPARTMENT TOOLKIT(TM)
NEOFORMA(TM)
NEOFORMA (and Design)(TM)
NEOFORMA.COM (and Design)(TM)
PHAROS TECHNOLOGIES(TM)
PIMS(TM)
PRODUCT INFORMATION MANAGEMENT DESIGN(TM)
PRODUCT INFORMATION MANAGEMENT SOLUTION(TM)
STATCITY(TM)
STATWORLD(TM)
THE HEALTHCARE BUSINESS COMMUNITY(TM)
U.S. LIFELINE(TM)

* Material has been omitted and filed separately with the Commission.

                                      C-4
<PAGE>   64

                                                                       EXHIBIT D

              CURRENT MARKS USAGE GUIDELINES FOR VHA, UHC AND HPPI

* Material has been omitted and filed separately with the Commission.

                                      D-1
<PAGE>   65

                                                                       EXHIBIT D

VHA Logo

THE VHA IDENTITY

"Corporate Identity' is a term that describes the particular visual elements
that communicate a company's image. It is the graphic uniform that reinforces,
with every application, the company's presence in the marketplace.

Building strong customer recognition and understanding of our VHA identity - in
its national and regional forms - depends on how effectively and consistently we
use it.

Our customers will see variety in VHA's national and regional products and
services, but they should also see consistency in the VHA identity. Our identity
is a representation of the values and qualities we share, and it should be
reflected in every contact we make.

Managing VHA's corporate identity is critical to our long-term growth and
success in serving VHA organizations. Adhering to the standards in this manual
is an important first step. We've included guidelines for a broad range of
materials. If you need more information or assistance with special design needs,
please call VHA's Communications Department at (214) 830-0272.

<PAGE>   66

VHA Logo

TRADEMARK AND COPYRIGHT PROTECTION

Any appearance of VHA corporate or regional names and logos must always be
accompanies by the appropriate symbols that declare and protect their exclusive
use by VHA.

Any printed materials must also be marked with a copyright notice to protect the
entire contents of the piece as the sole property of VHA.

USE OF (R)

The letters VHA and the VHA logo function as a trade name for our company and as
a trademark identifying our products and services. The regional versions of the
name and logo function in the same way for VHA Regional Health Care Systems.

The letters VHA are registered with the U.S. Patent and Trademark Office. The
new VHA logo and the positioning phrase "united to Improve America's Health" are
currently in the process of registration.

The symbol (R) constitutes notice that our name and logo are exclusive for goods
and services we offer. IT provides legal protection from those who might use
part of our corporate signature without permission or use symbols that too
closely resemble our mark.

The standard and modified versions of the corporate logo and the standard
version of each regional VHA logo are currently marketed with the symbol SM
after the position phrase, indicating that we intend to claim the logos as our
property.

On the reduced version of the corporate and regional logos where the positioning
phrase is omitted, the SM symbol appears at the lower right corner of the logo
rectangle itself.

<PAGE>   67

When registration with the U.S. Patent and Trademark Office is complete, we will
replace the SM symbol on all version with (R).

In VHA materials, the symbol (R) should be used after the letters VHA in text
when they are used as part of a product name. For example, "VHA (R) Clinical
Financial Information System" or "VHA (R) New Jersey Quality Institute."

It is not appropriate to use (R) after the letters VHA in text when using them
as our company's name. For example, "VHA announced a new product last week," or
"VHA Iowa has purchased new office space."

In VHA materials, use the registration symbol only for VHA registered
trademarks. The registered trademark of other companies should be designated by
the use of an asterisk and a footnote:

         Example:

         Advil* analgesic

         * Registered trademark of Whitehall Laboratories

Other companies, when mentioning our products or services in their materials,
should use the registration symbol only for their own registered trademarks and
an asterisk and footnote for VHA marks.

VHA registers other product and service trademarks from time to time. For more
information about product naming, use of the VHA trademark and other trademark
issues, please refer to the "Guide of Product Naming" available from the
Communications Department.

COPYRIGHT (C)
All printed materials must be marked with the symbol (c), signifying that the
entire content is protect by copyright laws. Copyright also gives the creator of
brochures, books, etc., the exclusive right to reproduce and distribute such
materials, unless the creator grants limited rights to another party.

All corporate VHA materials must bear the following copyright notice.

         (c) 1994 VHA Inc.  All rights reserved.

The notice may also include one of the following statements, chosen based on the
degree of control VHA departments wish to maintain over the content.

         Duplication or distribution of this document without express permission
from VHA is prohibited.

         Duplication or distribution of this document without express permission
from VHA is prohibited, except for use of VHA health care organizations and
their personnel.
<PAGE>   68

                                                                        UHC Logo

UHC Corporate Identity Standards

THE CORPORATE SIGNATURE

UHC Logo

The UHC acronym and the geodesic dome, along with the UHC name and the service
mark (SM) symbol, make up UHC's corporate signature. The UHC logo is the UHC
acronym and geodesic dome. Because UHC's corporate signature is the single most
important graphic element used on UHC's communications pieces, it should not be
altered or modified in any way. The size of the UHC name should always be
proportionate to the size of the logo (see signature reproduction at left).

SIGNATURE COLOR TREATMENTS

It is preferred that the UHC logo be reproduced in one color only - PMS 541 or
black. Other one-color reproductions are acceptable, as are reversed or embossed
images of the logo. All logo reproductions should be reviewed by UHC. Because of
the intricate lines that make up the geodesic dome, screens or tints of either
color should not be sued.

LOGO REPRODUCTION

The UHC logotype should be sized proportionally. For most reproductions, the
acceptable size range (width b height) is between 1" x 0.5" and 3" x 1.75". (For
certain applications, such as signage, a larger logo may be appropriate.)
Because the intricate lines that make up the geodesic dome are often difficult
to reproduce, it is important that all logo reproductions fall within the
acceptable range and that special attention be paid to the reproduction quality
of the geodesic dome.

Agaramond is the only acceptable typeface for reproduction of the corporate
signature on printed pieces.

If you have any questions or concerns regarding the correct usage of the UHC
logo and name, please check with Melissa Cutting of the UHC Marketing Department
(630/954-1769 or cutting @uhc.edu).
<PAGE>   69

                               HealthCare Purchasing Partners International Logo

HealthCare Purchasing Partners International TM Editorial Standards Brief.
Revised March 2000

Many HPPI staff members communicate regularly in writing with clients, supply
partners, each other and outside audiences. Below are a few guidelines that
address questions and issues that come up every day in the course of doing
business. These guidelines are designed to create consistency in the way we all
refer to our company, its employees, and its products, programs and services.

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

ACRONYMS - Avoid the use of acronyms on the first reference. It is better to
spell out a title or phrase on first reference and use acronyms on second
reference. It is unnecessary to put the acronym in parentheses after the full
name, like this: HealthCare Purchasing Partners International (HPPI). The reason
is that if the meaning of an acronym must be explained to readers, it probably
should not be used. There are some exceptions to this rule. For example, some
highly specialized acronyms have become so common in usage that the original
wording has been superseded. Examples: DNA, ISDN, RAM, CD-ROM.

AREA CODES, PHONE NUMBERS - Phone numbers should appear as follows: (972)
581-5000. It is not necessary to include a "1" in front of a long-distance
number. It is assumed that people know dialing 1 is necessary. One exception to
this rule is the number for Novation Member Support Services, which should
appear like this: 888/7-NOVATE (766-8283). If it is necessary to refer callers
to a particular extension, this is the correct style: (972) 581-5000, ext. 5555.
"X" is not an acceptable abbreviation for extension in external communications.

AUTHORIZED DISTRIBUTORS - These are distribution partners that have been
approved as official distributors of products offered through Novation
agreements. Use Novation Authorized Distributor on first reference, Authorized
Distributor on subsequent references.

CLINICAL MARKETS PROGRAMS - This is Novation's marketing strategy that focuses
on the needs of physicians and caregivers in a variety of specialties. Novation
Clinical Markets Programs aggregate best-in-class products and services
according to clinical disease states or specialties, helping VHA and UHC members
streamline their purchasing processes through one-stop shopping. Novation
currently offers these Clinical Markets Program:

     o    Novation Anesthesia Program

     o    Novation Cardiology Program

     o    Novation Dialysis Program

     o    Novation Oncology Program

     o    Novation Orthopedic Program

     o    Novation Respiratory Program

     o    Novation Women's Health Program

<PAGE>   70

Some Clinical Markets Programs include agreement subgroups referred to as
portfolios. These include:

     o    Novation Anesthesia Pharmaceutical Portfolio (formerly the Anesthesia
          Pharmaceutical Standardization Program)

     o    Novation Oncology Pharmaceutical Portfolio (formerly the Oncology
          Products Program)

     o    Novation Oncology Breast Care Portfolio (launching in the second
          quarter of 1999)

     o    Novation Oncology Prostate Care Portfolio (launching in 1999)

     o    Novation Respiratory Pharmaceutical Portfolio (launching Oct. 1, 1999)

Novation may be omitted from the program or portfolio name on second and
subsequent references.

In addition to these offerings, several portfolios of OPPORTUNITY (R),
Novation's Committed Program, are based on Clinical Markets Programs. These
portfolios are discussed in the OPPORTUNITY section.

Please note that Clinical Markets is not a separate department of Novation. When
writing about the people who work on a particular Clinical Markets segment,
refer to them as the Novation anesthesia team, group, or unit. More casual
references as the cardiology team are acceptable on subsequent references if it
is clear that you are referring to the Novation Clinical Markets group.

COMPANY NAME, JOB TITLES - include your company name and job title, as well as
the company names and correct titles of any other people mentioned in a
document. Titles are not capitalized unless they preceded the person's name, and
then only if the title is of significant rank. Some examples:

     o    Gov. George W. Bush

     o    George W. Bush, governor of Texas

     o    U.S. Sen. Patrick Moynihan

     o    Kay Bailey Hutchison, U.S. senator from Texas

     o    C. Thomas Smith, VHA president and chief executive officer

     o    UHC President and Chief Executive Officer Robert J. Baker

     o    Novation product manager John Doe

     o    Jane Doe, Novation marketing analyst

Also include the titles and company names of people who are "cc-ed" at the
bottom of a business letter or memo. This is very important because
correspondence is often sent to VHA and UHC members, supply partners and people
at our parent organizations who may not know who you or others mentioned are.

Please don't guess at anyone's name or title; call and ask if you are uncertain.
Getting someone's name or title wrong implies a lack of courtesy and attention
to detail.

E-MAIL ADDRESSES - In communications pieces where you list a Novation contact
person, you should include that person's phone number and e-mail address. The
correct style for e-mail addresses is jdoe@novationco.com (in italics).

HEALTHCARE PURCHASING PARTNERS INTERNATIONAL LLC - This is the full name of
HPPI. Like Novation, VHA and UHC jointly own HPPI. HealthCare Purchasing
Partners International should be used on first reference and HPPI on subsequent
references. A trademark symbol (TM) will need to appear immediately after the
name and an (R) after the acronym on first reference in every document. The
trademark and registered symbol should be omitted on second and subsequent
references. IN overheads, slides, charts or other presentation materials, use
the trademark symbol after HealthCare Purchasing Partners International and the
registered symbol after HPPI on first reference in every slide or chart.

HPPI has no members; it has clients. It is not necessary to include the "LLC"
except in legal documents such as contracts, program enrollment forms, etc.

HOSPITAL, HEALTH CARE ORGANIZATION - All hospitals are health care
organizations, but not all health care organizations are hospitals. Therefore,
unless referring specifically to hospitals, health care organization is

<PAGE>   71

the preferred term. For variety's sake, words such as facility and institution
are acceptable on subsequent references. Don't use the acronym HCO in any
outside communication.

INTERNET SITES - Novation's World Wide Web site is www. hppipo.com. This and all
other Web sites should appear in all-lower-case, italic letters.

LAUNCH - The date that an agreement or program becomes effective is the launch
date. Please don't use the term launch when you mean introduce, unveil,
announce, etc. For example, a program can be introduced March 1, but may not
launch until May 1, when the program agreements become effective.

LETTERS AND MEMOS - Memorandums are acceptable in some external business
communications, but interoffice memos are not. Appropriate business letters
should be used for more formal communications. In both documents, include the
correct names, organization names, company names (if applicable) and titles of
the recipients, sender and those who receive copies.

MEMBERS, CLIENTS AND CUSTOMERS - Novation has no members or customers. It serves
VHA and UHC members and HealthCare Purchasing Partners International clients.
When addressing or mentioning VHA and UHV organizations, use VHA and UHC members
the first time and members thereafter. Never use Novation members or Novation
customers. The term health care organizations is also acceptable.

NOVAPLUS TM - The name of Novation's private-label program. When writing about
NOVAPLUS, it should be described as the private label of VHA and UHC early in
the document. This description helps reinforce the link between NOVAPLUS and
Novation's parent alliances. Companies that supply products in the private label
are called NOVAPLUS manufacturing partners.

Here are some guidelines for using the NOVAPLUS name and logo in marketing
materials and correspondence.

     o    Capitalize all letters and include a trademark symbol (TM) immediately
          after the name on first reference in every document. The trademark
          symbol should be omitted on second and subsequent references.

     o    In overheads, slides, charts or other presentation materials, use the
          trademark symbol after NOVAPLUS on first reference in every slide or
          chart.

     o    Do no use the NOVAPLUS logo within text as a substitute for the name.

     o    All marketing materials developed by NOVAPLUS manufacturing partners
          must be reviewed by the appropriate Novation product managers, and by
          Novation marketing communications.

NOVAPLUS marketing materials include the NOVAPLUS logo and the tagline Your
Brand and More SM. However, it is not necessary to include this tagline in the
text of correspondence or marketing materials.

NOVATION FOOD SERVICE PROGRAM - The full name of the program. Novation may be
omitted on second reference.

NOVATION LABORATORY PROGRAM - The full name of the program. Novation may be
omitted on second reference.

NOVATION LLC - This is the full legal name of our company. It is not necessary
to include the "LLC" except in legal documents such as contracts, program
enrollment forms, etc.

NOVATION MEMBER SUPPORT SERVICES - This is the correct name of our outbound
telephone service delivery group. TeleServices should no longer by used.
Novation Customer Service is part of Member Support Services and is the group
that handles incoming calls from the 888/7-NOVATE line.

<PAGE>   72

NOVATION PHARMACY PROGRAM - The full name of the program. Novation may be
omitted on second reference.

NOVATION TM, THE SUPPLY COMPANY OF VHA AND UHC - Our company name should appear
this way on first reference in any document going to an outside audience,
complete with the trademark symbol (TM). Simply the name Novation is acceptable
on subsequent references.

OPPORTUNITY (R) - This is Novation's committed-purchasing program. The name
should appear in the form shown here, with the registered trademark symbol, on
first reference in any document. The (R) should be omitted on subsequent
references.

The program should be referred to on first or second reference in every document
as OPPORTUNITY, Novation's Committed Program. If using the tagline on first
reference would create an awkward sentence, it is acceptable to use it on second
reference. Program is not part of the name, but the phrase OPPORUTUNITY program
is acceptable.

Offerings under the OPPORTUNITY umbrella are called portfolios. Nine portfolios
are currently available, with more in development. The nine existing portfolios
are:

     o    OPPORTUNITY Phase I Portfolio

     o    OPPORTUNITY Phase II Portfolio

     o    OPPORTUNITY Anesthesia Portfolio

     o    OPPORTUNITY International Cardiology Portfolio

     o    OPPORTUNITY Food Service Portfolio

     o    OPPORTUNITY Laboratory Portfolio

     o    OPPORTUNITY Orthopedic Portfolio

     o    OPPORTUNITY Respiratory Portfolio

     o    OPPORTUNITY Unified Portfolio

Please note that OPPORTUNITY is not a separate department of Novation. the
program and its portfolios are jointly operated by Novation's cost reduction
services team and the various contracting teams that develop and maintain
agreements included in the portfolios.

SERVICE DELIVERY - Novation field account managers should be referred to as the
Service Delivery team or Service Delivery account managers. Do not refer to them
as sales representatives or managers.

SUPPLY COST MANAGEMENT - Novation is a supply cost management company. The term
supply chain management is limiting and should be avoided when referring to
Novation. However, supply chain is acceptable when quoting someone or referring
to the system by which products move from suppliers to health care
organizations. (Please note that VHA still refers to Novation as its provider of
supply chain management services.)

SUPPLY PARTNERS - The companies with which Novation enters into supply
agreements are referred to as supply partners. (One exception is NOVAPLUS
manufacturers, see the NOVAPLUS entry.) We should not refer to them as vendors
or business partners and should avoid referring to them as manufacturers.
However, suppliers is acceptable for variety's sake if supply partners begins to
appear too often in a particular document.

TRADEMARKS - When mentioning a trademarked product offered by a Novation supply
partner, include the appropriate TM or (R) symbol with the trademarked name on
first reference. Please note that the two symbols are not interchangeable. TM
identifies trade names or logos that are being used by a company, pending final
approval by the U.S. Patent and Trademark Office. (R) designates names that have
been fully approved and registered with the office.

<PAGE>   73

UHC SUPPLY CO. - With the creation of Novation, UHC Supply Co. ceased to exist,
as did all UHCSC agreements. Those are now Novation agreements. To avoid
confusion for members, please do not refer to UHCSC unless describing it as a
predecessor to Novation.

UNIVERSITY HEALTHSYSTEM CONSORTIUM - The name of our parent UHC should appear
this way on first reference in any document. One exception to this rule: When
Novation, the supply company of VHA and UHC appears first in a document, spell
out University HealthSystem Consortium on the next reference to UHC. Simply the
acronym UHC is acceptable on subsequent references.

VHA - Acceptable in nearly all references to VHA Inc., the majority owner of
Novation and HPPI. The Inc. is usually necessary only in legal documents.

If you have a question regarding proper editorial standard, please contact your
Novation marketing communications manager or Rich Reecer, Novation editorial and
publications manager at ext. 5076.
<PAGE>   74

                                                                       EXHIBIT E

                   REPORTS AND OTHER INFORMATION REQUIREMENTS

1.      REPORT CONTENT.

        Within 20 days after the end of each full and partial month during the
        Term (a "Reporting Month"), each Supplier will submit to Novation a
        report on a diskette containing the following information in the form
        specified in Section 2 of this Exhibit E:

        (i)     the name of Supplier, the Reporting Month and year and the
                agreement number (as provided by Novation to Supplier);

        (ii)    with respect to each Member (described by a LIC number (as
                provided by Novation to Supplier), health industry number (if
                applicable), full name, street address, city, state, zip code
                and, if applicable, tier and committed status, the number of
                units sold and the amount of net sales for each Product on a
                line item basis, and the sum of net sales and the associated
                Marketing Fees for all Products purchased by such Member
                directly or indirectly from Supplier during the Reporting Month,
                whether under the pricing and other terms of this Agreement or
                under the terms of any other purchasing or pricing arrangements
                that may exist between the Member and Supplier;

        (iii)   the sum of the net sales and the associated Marketing Fees for
                all Products sold to all Members during the Reporting Month; and

        (iv)    such additional information as Novation may reasonably request
                from time to time.

2.      REPORT FORMAT AND DELIVERY.

        The reports required by this Exhibit E will be submitted electronically
        in Excel Version 7 or Access Version 7 and in accordance with other
        specifications established by Novation from time to time and will be
        delivered to:

                Novation
                220 East Las Colinas Boulevard
                Irving, TX  75039
                Attn:  SRIS Operations

3.      OTHER INFORMATION REQUIREMENTS.

* Material has been omitted and filed separately with the Commission.

                                      E-1
<PAGE>   75

        In addition to the reporting requirements set forth above, the parties
        agree to facilitate the administration of the Agreement by transmitting
        and receiving information electronically and by complying with the
        information requirements set forth in Appendix 1. Supplier further
        agrees that, except to the extent of any inconsistency with the
        provisions of this Agreement, it will comply with all information
        requirements set forth in the Novation Information Requirements
        Guidebook ("Guidebook"), attached as Appendix 2. On or about the
        Effective Date, Novation will provide Supplier with a current copy of
        the Guidebook and will thereafter provide Supplier with updates and/or
        revisions to the Guidebook from time to time.

* Material has been omitted and filed separately with the Commission.

                                      E-2
<PAGE>   76

                                                                      APPENDIX 1

                         OTHER INFORMATION REQUIREMENTS

        Novation and Supplier desire to facilitate contract administration
transactions ("Transactions") by electronically transmitting and receiving data
in agreed formats in substitution for conventional paper-based documents and to
assure that such Transactions are not legally invalid or unenforceable as a
result of the use of available electronic technologies for the mutual benefit of
the parties.

        The parties agree as follows:

1.      PREREQUISITES.

                a. DOCUMENTS; STANDARDS. Each party will electronically
        communicate to or receive from the other party all of the required
        documents listed in the Novation Electronic Communication Requirements
        Schedule attached hereto (collectively "Documents"). All Documents will
        be communicated in accordance with the standards set forth in the
        applicable sections of the Novation Information Requirements Guidebook
        ("Guidebook"). Supplier agrees that the Guidebook is the Confidential
        Information of Novation and will not disclose information contained
        therein to any other party.

                b. THIRD PARTY SERVICE PROVIDERS. Documents will be communicated
        electronically to each party, as specified in the Guidebook, through any
        third party service provider ("Provider") with which either party may
        contract or VHAseCure.net(TM). Either party may modify its election to
        use, not use or change a Provider upon thirty (30) days' prior written
        notice. Each party will be responsible for the costs of any Provider
        with which it contracts, unless the parties otherwise mutually agree in
        writing.

                c. SIGNATURES. Each party will adopt as its signature an
        electronic identification consisting of symbol(s) or code(s) which are
        to be affixed to or contained in each Document transmitted by such party
        ("Signatures"). Each party agrees that any Signature of such party
        affixed to or contained in any transmitted Document will be sufficient
        to verify such party originated and intends to be bound by such
        Document. Neither party will disclose to any unauthorized person the
        Signatures of the other party.

2.      TRANSMISSIONS.

                a. VERIFICATION. Upon proper receipt of any Document, the
        receiving party will promptly and properly transmit a functional
        acknowledgment in return, unless otherwise specified in the Guidebook.

                b. ACCEPTANCE. If acceptance of a Document is required by the
        Guidebook, any such Document which has been properly received will not
        give rise to any obligation unless

* Material has been omitted and filed separately with the Commission.

                                      E-3
<PAGE>   77

        and until the party initially transmitting such Document has properly
        received in return an Acceptance Document (as specified in the
        Guidebook).

                c. GARBLED TRANSMISSION. If any properly transmitted Document is
        received in an unintelligible or garbled form, the receiving party will
        promptly notify the originating party (if identifiable from the received
        Document) in a reasonable manner. In the absence of such a notice, the
        originating party's records of the contents of such Document will
        control.

3.      TRANSACTION TERMS.

                a. CONFIDENTIALITY. No information contained in any Document or
        otherwise exchanged between the parties will be considered confidential,
        except to the extent provided by written agreement between the parties,
        or by applicable law.

                b. VALIDITY; ENFORCEABILITY. Any Document properly transmitted
        pursuant to this Agreement will be considered, in connection with any
        Transaction, to be a "writing" or "in writing"; and any such Document
        when containing, or to which there is affixed, a Signature ("Signed
        Documents") will be deemed for all purposes to have been "signed" and to
        constitute an "original" when printed from electronic files or records
        established and maintained in the normal course of business.

4.      STANDARDS.

ASC x 12 - Novation Information Requirements Guidebook

5.      THIRD PARTY SERVICE PROVIDERS.

(If the parties will be transmitting Documents directly, insert "NONE")

<TABLE>
<CAPTION>
COMPANY        VAN NAME            ADDRESS                               TELEPHONE NUMBER
-------        --------            -------                               ----------------
<S>           <C>                 <C>                                    <C>
Novation       AT&T                12976 Hollander Drive                 800/624-5672
                                   Bridgeton, MO  63044
</TABLE>

6.      CONTRACT PRICING (PHARMACY). Supplier will transmit contract pricing
        information electronically, to include new contracts, contract renewals
        and any changes to a current contract. This will be sent in a timely
        manner and in compliance with ANSI ASC X12-845 (Price Authorization) and
        Novation Contract Pricing Guidelines. Contract pricing information will
        include the following:

Supplier Identification Number

                HIN (Health Industry Number if Supplier is a HIN subscriber)
                DEA Number (if HIN is not available)
                Supplier Assigned Number (if HIN and DEA are not available)

* Material has been omitted and filed separately with the Commission.

                                      E-4
<PAGE>   78

Supplier Name
Supplier Contract Number
MFG Contract Number
Contract Effective Date
Contract Expiration Date
Member(s) (Member name, HIN or DEA number, Member start/stop dates)
Product Identifier
         NDC
         UPC (if NDC is not available)
Trade Name
Package Count
Package UOM
Selling Unit Price
Item Contract Effective Date
Item Contract Expiration Date

7.      CONTRACT PRICING (MEDICAL/SURGICAL). Supplier will communicate contract
        pricing information electronically, to include new contracts, contract
        renewals and any changes to the current contract. This will be sent in a
        timely manner and in compliance with the Guidebook.

* Material has been omitted and filed separately with the Commission.

                                      E-5
<PAGE>   79

                                                                      APPENDIX 2

                   NOVATION INFORMATION REQUIREMENTS GUIDEBOOK

* Material has been omitted and filed separately with the Commission.

                                      E-6
<PAGE>   80

                                EXECUTIVE SUMMARY

WELCOME TO THE NOVATION INFORMATION REQUIREMENTS GUIDEBOOK

        Thousands of times each year, VHA, UHC and HPPI members ask us to help
        them improve the overall quality of their health care services by
        finding the best products, at the best price, from the best source. We
        meet this need by managing hundreds of product and service agreements
        with the best manufacturers and distributors in the health care
        industry.

Once these agreements are created, our members ask their local Novation account
manager and/or the corporate Supply Cost Management teams to provide information
and service around the following:

        1.      What products are on each agreement?

        2.      What are the equivalent products under agreement for [product
                name that is being bought today]?

        3.      What is the price for [product on agreement]?

        4.      What can I save if I buy [product on agreement] rather than a
                competing product?

        5.      What are the product specifications for the [equivalent Novation
                product]?

        6.      Who is my local sales representative with [company name]?

        7.      Can you help us convert to the [agreement product]?

Additionally, you and other supply partners ask Novation:

        1.      Who are the VHA, UHC and HPPI members?

        2.      Please confirm what items are currently on my Novation
                agreement?

        3.      What pricing does Novation have loaded for each of my products?

        4.      What competitive cross-reference products do you use for each of
                my products when you recommend that a member change over to my
                Novation contracted product?

        5.      Can you be of any assistance in supplying advance notice of
                price changes to our members?

        6.      Who is my Novation service delivery team person for [member
                name]?

This Guidebook is designed to better help us answer these and other questions.
It addresses:

        -       our overall information strategy with supply partners

        -       Novation's information requirements

        -       where Novation is going with respect to supply partner Internet
                solutions

        -       how Novation will help your company gain access to the
                information that you need in managing your business relationship
                with Novation

* Material has been omitted and filed separately with the Commission.

                                      E-7
<PAGE>   81

In summary, our information needs are as follows:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
         NOVATION
       REQUIREMENT                               DESCRIPTION                              WHAT THIS MEANS FOR YOUR COMPANY
----------------------------------------------------------------------------------------------------------------------------------
<S>                             <C>                                                   <C>
REQUIREMENT 1:                  This is the exact catalog number and other            Novation has a large team that works with
                                product information that is needed when ordering      hospitals in converting them to Novation
NEW CONTRACT LAUNCH             your product(s) under the Novation agreement          contracted products. Novation needs product
Agreement Item                  (e.g., all product identifiers, description,          details to successfully help our members
Product Details                 units of measure, packaging, etc.). This              convert business to your contracted items.
                                information is provided at the time of signing
                                your Novation agreement and it is then kept
                                current as changes occur.

----------------------------------------------------------------------------------------------------------------------------------
REQUIREMENT 2:                  Novation needs the current price that the health      Novation provides price change notification,
                                care organizations will pay as they order each        price comparison and economic impact services
ONGOING CONTRACT MAINTENANCE    product. Specific item prices for each price          in helping the health care organizations
Pricing for Each                tier (if any) must to be provided. Price updates      understand all savings opportunities. These
Product on Agreement            are needed as the pricing changes.                    services motivate members to convert to your
                                                                                      products as they save money.

----------------------------------------------------------------------------------------------------------------------------------
REQUIREMENT 3:                  Electronic summary sales reports are needed           This information is loaded into Novation's
SUMMARY SALES REPORTING         every month. Current paper reports must be            sales information system for use by our
Monthly Summary Sales           converted to electronic reporting IMMEDIATELY.        service delivery teams.
Report by Member

----------------------------------------------------------------------------------------------------------------------------------
REQUIREMENT 4:                  Electronic line item sales reports are needed         This information is loaded into Novation's
DETAILED LINE                   every month. There are several formats to send        sales information system for use by our
ITEM SALES REPORTING            these reports in, please consult Requirement 4        service delivery teams. They work with each
Monthly Line Item               for specification. Plan for a 90-day testing          Novation member to identify items that are
Sales Report by Member          period.                                               and, more importantly, are not being bought
                                                                                      on contract.

----------------------------------------------------------------------------------------------------------------------------------
REQUIREMENT 5:                  This details all current, new and deleted             This will keep your company current. Having
MEMBERSHIP                      VHA or UHC membership information. Names,             this information reduces pricing and other
Membership                      addresses, contacts, membership numbers,              errors, and overall, reduces the time
Information provided to you.    etc. are all provided. You must be able to            needed to administer your Novation
                                receive and process monthly membership                agreement(s).
                                updates.

----------------------------------------------------------------------------------------------------------------------------------
REQUIREMENT 6:                  Novation needs to be up-to-date on which              This information tells our service delivery
COMMITMENT FORMS                member has signed your commitment form (if            team which of their members have been
Signed Participation Forms      required by your agreement). This                     approved by your company to buy off your
                                information is made available our service             agreement. If there is no form, they know
                                delivery team.                                        to sell your agreement.
</TABLE>

* Material has been omitted and filed separately with the Commission.

                                       E-8
<PAGE>   82

<TABLE>
<S>                             <C>                                                   <C>
----------------------------------------------------------------------------------------------------------------------------------
REQUIREMENT 7:                  Novation and our members need to know                 This information is available for our
SALES REPRESENTATIVE            who your current sales representatives                service delivery team in promoting your
INFORMATION                     are for each agreement, by territory.                 agreement. Also, members know whom to
Sales Rep Contacts              This information includes all specialty               contact as they decide to buy
                                sales personnel.                                      products/services under your agreement.

----------------------------------------------------------------------------------------------------------------------------------
REQUIREMENT 8:                  For each product under agreement,                     Novation recommends your product(s) to
PRODUCT CROSS REFERENCES        Novation needs a listing of the                       our members whenever we learn that they
Competitor Cross References     competitor's name and their respective                are buying a competitor's product. But
                                competitive part/catalog number and any               our information is very incomplete. We
                                product details that you may have                     need your help in knowing what products
                                available                                             compete directly and indirectly with
                                                                                      each of your products that are on a
                                                                                      Novation agreement.
</TABLE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
         NOVATION
       REQUIREMENT                               DESCRIPTION                              WHAT THIS MEANS FOR YOUR COMPANY
----------------------------------------------------------------------------------------------------------------------------------
<S>                             <C>                                                   <C>
BUSINESS PARTNER                This information repository contains                  This is your link to Novation. This BPRS
REPOSITORY SYSTEM               specific information that is completely               system is designed to eliminate the time
(BPRS) Access                   customized for your Novation, VHA, UHC,               and delay that is inherent in the
                                and HPPI relationships. Examples of                   communication of important business
                                information include access to                         information.
                                membership, items, sales
                                representatives, as well as
                                cross-reference information.

----------------------------------------------------------------------------------------------------------------------------------
UNIVERSAL                       Novation endorses the use of the UPN for              Begin now working on setting up a UPN
PRODUCT NUMBER (UPN)            all product identification throughout                 number for each product on a Novation
                                the supply chain. All communications                  agreement.
                                must include the UPN number immediately.

----------------------------------------------------------------------------------------------------------------------------------
ELECTRONIC SALES REPORTING      During 2000, Novation will be testing a
                                new method for the submission of all
                                summary sales reports. This Web
                                reporting system will be fully
                                implemented with all supply partners in
                                2000.
</TABLE>

HOW YOUR COMPANY SHOULD COMMUNICATE THIS INFORMATION

Novation will be flexible in how we receive or send this information. Our
preference is always to communicate this information through EDI, but if your
company can only use EDI for some transactions, this Guidebook outlines other
acceptable short-term alternatives. EDI REMAINS THE LONG-TERM SOLUTION.

Also, and this is very important: IT IS CRITICAL THAT YOUR COMPANY SEND NOVATION
THE INFORMATION REQUESTED IN THIS GUIDEBOOK. We are willing to discuss timing of
EDI formats but not whether the needed information is to be provided.

All of this information is important.

* Material has been omitted and filed separately with the Commission.

                                      E-9
<PAGE>   83

                            WHAT'S REQUIRED AND WHEN

The following chart summarizes the Novation supply partner reporting
requirements.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
                                                             MANDATORY DUE
     REQUIREMENT #             WHO SUPPLIES                      DATES                   FORMAT REQUIRED
------------------------------------------------------------------------------------------------------------------
<S>                         <C>                          <C>                           <C>
REQUIREMENT 1:              Your Company Sends           60 Days prior to the            -  Spreadsheet File
NEW CONTRACT LAUNCH             To Novation               Contract Effective
                                                                 Date
------------------------------------------------------------------------------------------------------------------
                                                           Due 60 days prior
REQUIREMENT 2:              Your Company Sends           to the effective date           -  EDI 832 or
ONGOING CONTRACT                To Novation                of the line item              -  Spreadsheet File
MAINTENANCE                                                add/delete/change

------------------------------------------------------------------------------------------------------------------
REQUIREMENT 3:              Your Company Sends             Due at the first              -  Spreadsheet File
SUMMARY SALES                  To Novation                 contract reporting
REPORTING                                                       period

------------------------------------------------------------------------------------------------------------------
REQUIREMENT 4:              Your Company Sends               Begin testing               -  EDI 867 or
DETAILED LINE ITEM              To Novation               within 120 days of             -  Flat File Format or
SALES REPORTING                                           Contract Effective             -  Spreadsheet
                                                                 Date                    -  File(small files only)

------------------------------------------------------------------------------------------------------------------
REQUIREMENT 5:                 Your Company                 Due immediately              -  Spreadsheet File or
MEMBERSHIP                     Receives From                                             -  EDI 816
                             Novation Through
                                   BPRS

------------------------------------------------------------------------------------------------------------------
REQUIREMENT 6:              Your Company Sends            Due immediately, if            -  Spreadsheet File
COMMITMENT FORMS                To Novation                   applicable

------------------------------------------------------------------------------------------------------------------
REQUIREMENT 7:              Your Company Sends            Due within 30 days             -  Spreadsheet File
SALES REPRESENTATIVE            To Novation                 of the Contract
INFORMATION                                                  Effective Date

------------------------------------------------------------------------------------------------------------------
REQUIREMENT 8:              Your Company Sends            Due within 90 days             -  Spreadsheet File
PRODUCT CROSS                   To Novation                 of the Contract
REFERENCES                                                   Effective Date
------------------------------------------------------------------------------------------------------------------
</TABLE>

                      FIGURE 1-NOVATION REPORTING OVERVIEW

* Material has been omitted and filed separately with the Commission.

                                      E-10
<PAGE>   84

These requirements are detailed in the section titled NOVATION INFORMATION
REQUIREMENTS, see page 17 for details.

NOVATION'S INFORMATION INFRASTRUCTURE FOR SUPPLY PARTNERS

Novation supports both a private extranet and an EDI infrastructure. Many of the
required information components are available through either mode, but others
may only be available on one system.

Thank you for working with your staff in completing these requirements. All of
us at Novation look forward to working together with your staff in support of
your Novation agreement(s).

* Material has been omitted and filed separately with the Commission.

                                      E-11
<PAGE>   85

                        NOVATION ELECTRONIC COMMUNICATION
                              REQUIREMENTS SCHEDULE

-----------------------------------------            --------------------------
Company Name                                         Date

-----------------------------------------            --------------------------
Your Name                                            Your title

--------------------  -------------------            --------------------------
Phone                 Fax                            E-mail

-----------------------------------------            --------------------------
Technical Contact                                    Title

--------------------  -------------------            --------------------------
Phone                 Fax                            E-mail

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
                                                                                        MANDATORY DUE DATES & FORMATS
NOVATION REQUIREMENT                  NOVATION EXPECTATION                                         TO BE USED
---------------------------------------------------------------------------------------------------------------------------------
<S>                             <C>                                                   <C>
REQUIREMENT 1: New Contract     This only applies to new contracts,                   DUE 60 DAYS PRIOR TO THE CONTRACT
Launch                          unless your company never provided this               EFFECTIVE DATE
                                information. If needed, your Novation
Section 4.1, page 21 of the     product manager will contact you. UPN
2000 Guidebook                  must be included with all line item
                                files.

---------------------------------------------------------------------------------------------------------------------------------
REQUIREMENT 2: Ongoing          Novation must receive contract item and               DUE 60 DAYS PRIOR TO THE EFFECTIVE DATE
               Contract         pricing updates as prices change, and                 OF THE LINE ITEM ADD/DELETE/CHANGE
               Maintenance      when items are added or deleted from
                                contract.                                             Information will be sent via (check one):
Section 4.2,  page 27 of the                                                               ( ) EDI 832
2000 Guidebook                                                                             ( ) Interim File Format
                                                                                               (Excel Spreadsheet)

---------------------------------------------------------------------------------------------------------------------------------
REQUIREMENT 3: Summary Sales    Current paper reports must be                         DUE AT THE FIRST CONTRACT REPORTING
               Reporting        converted to electronic reporting                     PERIOD
                                IMMEDIATELY.

Section 4.3, page 43 of the
2000 Guidebook

---------------------------------------------------------------------------------------------------------------------------------
REQUIREMENT 4: Detailed         Plan for a 90-day testing for this                    BEGIN TESTING WITHIN 120 DAYS OF
               Line Item Sales  requirement.                                          CONTRACT EFFECTIVE DATE
               Reporting                                                              Information will be sent via (check one):
                                                                                              ( ) EDI 867
                                                                                              ( ) Other
Section 4.4, page 51
of the 2000
Guidebook

---------------------------------------------------------------------------------------------------------------------------------
REQUIREMENT 5: Membership       You must be able to receive and process               DUE IMMEDIATELY
                                monthly membership updates.
Section 4.5, page 63 of
the 2000 Guidebook

---------------------------------------------------------------------------------------------------------------------------------
REQUIREMENT 6: Commitment       Details which members have and have not               DUE IMMEDIATELY, IF APPLICABLE
Forms                           signed your contract enrollment forms,
                                if needed.
Section 4.6, page 73 of the
2000 Guidebook
</TABLE>

* Material has been omitted and filed separately with the Commission.

                                      E-12

<PAGE>   86

<TABLE>
<S>                             <C>                                                  <C>
---------------------------------------------------------------------------------------------------------------------------------
REQUIREMENT 7: Sales            Able to update Sales Representative                   DUE WITHIN 30 DAYS OF THE CONTRACT
               Representative   information from a Business Partner                   EFFECTIVE DATE
               Contact          Repository System download.
               Information

Section 4.7, page 77
of the 2000 Guidebook

---------------------------------------------------------------------------------------------------------------------------------
REQUIREMENT 8: Product Cross-   Must to update the items on contract                  DUE WITHIN 90 DAYS OF THE CONTRACT
               referencing      with competitive cross-reference                      EFFECTIVE DATE
Section 4.8, page 81 of the     information
2000 Guidebook

---------------------------------------------------------------------------------------------------------------------------------
Business Partner Repository     Able to connect to Novation BPRS via the              DUE WITHIN 60 DAYS OF THE CONTRACT
System (BPRS) Access            VHAseCURE.net(TM).                                    EFFECTIVE DATE

Section 3, page 13 of the
2000 Guidebook
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Material has been omitted and filed separately with the Commission.

                                      E-13

<PAGE>   87
                                                                       EXHIBIT F

                               PROGRAM MANAGEMENT

1.      PURPOSE.

        Neoforma and Novation will establish a joint Program Management Office
        (the "PMO"). This organization will organize, define, track and manage
        the development progress and delivery status of the Internet e-commerce
        Service for healthcare organizations.

2.      RESPONSIBILITIES.

        The PMO will be responsible for managing and maintaining the ongoing
        operating relationship between Neoforma and Novation. This will include
        establishing operating procedures, gathering all necessary resources,
        driving decision-making within each organization, and communicating back
        to Neoforma and Novation. Specific responsibilities include:

        2.1.    PROGRAM DEFINITION AND ORGANIZATION

                -       Maintenance of program goals and objectives
                        documentation

                -       Establishing program organization, selection of team
                        members, under guidance of the Novation and Neoforma
                        executive sponsors

                -       Establishing administrative procedures

                -       Establishing administrative procedures

                -       Definition of program parameters, objectives,
                        constraints, and scope of work, including program
                        deliverables, completion criteria, and acceptance
                        criteria

                -       Definition of program management procedures:

                        (i)     issue resolution process

                        (ii)    methodology for program tracking

                        (iii)   process for status reporting

                        (iv)    tools for program and configuration management

                        (v)     procedures for program files and correspondence

* Material has been omitted and filed separately with the Commission.

                                      F-1

<PAGE>   88

        2.2.    PROGRAM PLANNING

                -       Development of program work breakdown structure ("WBS")
                        including tasks, task owners, and task completion
                        criteria for tasks which cross companies.

                -       Development of program schedule, including
                        interdependencies and critical path

                -       Refining estimates, assessing required skills and
                        available resources, assigning resources, reviewing
                        program estimates, and finalizing program schedule

                -       Creating a final baseline program plan, and distributing
                        the approved plan to PMO and program team.

                -       Development of the Neoforma product roadmap as it
                        relates to Novation phases and requirements

        2.3.    PROGRAM TRACKING AND MANAGEMENT

                -       Collection of status information, including program
                        tasks and performance data, identifying issues of
                        concern, Development of the Neoforma product roadmap as
                        it relates to Novation phases and requirements

                -       Summarizing status, analysis of variance from plan,
                        determination of critical path impact, identification
                        and analysis of trends, and maintenance of issues and
                        error log

                -       Determination and management of necessary corrective
                        action (e.g., plan adjustment, critical path
                        re-configuration, issue log update, etc.)

                -       Reporting program status to program team, and PMO

3.      ORGANIZATION AND ROLES.

        The PMO will be composed of two Executive Sponsors, a Steering
        Committee, two Program Manager, and PMO Team members. Novation and
        Neoforma will each assign an Executive Sponsor and a Program Manager.
        Together this group will name members of the Steering Committee and PMO
        team.

        3.1.    EXECUTIVE SPONSORS. Novation and Neoforma will each provide an
                executive-level champion to preside over the Internet e-commerce
                program. The Executive Sponsors will be actively responsible for
                the overall execution and performance

* Material has been omitted and filed separately with the Commission.

                                      F-2
<PAGE>   89

                of the program. Appointed by the representative company CEO, he
                or she will serve as the representative of that CEO, and will
                report program progress and performance as required. The
                Executive Sponsors will also provide executive-level decisions
                related to performance of resources committed to the Internet
                e-commerce program, and will be the primary arbiters in
                resolving major issues arising during the execution of the
                program. Together, they will also actively co-chair the
                Executive Committee, and be responsible for the actions and
                performance of that group.

        3.2.    STEERING COMMITTEE MEMBERS. The two parties will jointly
                establish a steering committee. The Steering Committee,
                reporting to the Executive Sponsors, will be responsible for
                executive-level oversight management of the activities of
                specific Novation and Neoforma staff engaged on the e-commerce
                program. These individuals are also responsible for assigning --
                and ensuring the active participation of -- resources to the
                Program Management Team (discussed below). The Executive
                Committee will also make decisions on strategies, development
                priorities, assess business risk, and resolve other significant
                issues.

        3.3.    PROGRAM MANAGEMENT TEAM. Neoforma and Novation will establish a
                joint program management office to perform daily tasks. The
                Program Management Team will be responsible for the day-to-day
                coordination of the activities of the program. The Program
                Manager will be responsible for the overall management of the
                day-to-day activities of the Program Management Team, and will
                report to the Executive Sponsor. Resources will be assigned to
                this team on an as requested basis.

* Material has been omitted and filed separately with the Commission.

                                      F-3<PAGE>   1
                                                                  EXHIBIT 10.23

                  AMENDED AND RESTATED PARTICIPATION AGREEMENT

        THIS AMENDED AND RESTATED PARTICIPATION AGREEMENT (this "Agreement"
herein), dated as of April 18, 2000, is entered into by and among:

               (1) LSI LOGIC CORPORATION, a Delaware corporation ("Lessee");

               (2) ABN AMRO BANK N.V., KEYBANK NATIONAL ASSOCIATION, FBTC
        LEASING CORP. and each other financial institution from time to time
        listed as a lessor in Schedule I hereto, as amended from time to time
        (in such capacity, such financial institutions to be referred to
        collectively as "Lessors");

               (3) ABN AMRO BANK N.V., as agent for Lessors (in such capacity,
        "Lessor Agent");

               (4) Each of the financial institutions from time to time listed
        as a participant in Schedule I hereto, as amended from time to time
        (such financial institutions to be referred to collectively as the
        "Participants"); and

               (5) ABN AMRO BANK N.V., as agent for the Participants (in such
        capacity, "Agent").

                                    RECITALS

        A. The Participation Agreement, dated as of March 31, 2000 (the
"Existing Participation Agreement"), among Lessee, ABN AMRO Bank N.V., as the
original Lessor and Participant, Lessor Agent and Agent, provided for a certain
lease facility is to be provided to Lessee by Lessors and Participants as
follows:

               (1) Lessors would (a) acquire the equipment identified in Exhibit
        A and certain other equipment identified by Lessee and approved by
        Lessor Agent prior to March 31, 2001 (as more fully defined in Schedule
        1.01, collectively, the "Equipment"), (b) lease the Equipment to Lessee,
        (c) make advances to finance certain related expenses and (d) grant to
        Lessee the right to purchase the Equipment; and

               (2) The Participants would participate in such lease facility by
        (a) funding the acquisition price to be paid by Lessors for the
        Equipment and the other advances to be made by Lessors and (b) acquiring
        participation interests in the rental and certain other payments to be
        made by Lessee.

        B. Lessee and Participants have requested that the Existing
Participation Agreement be amended in certain respects at the time additional
parties become Lessors and Participants, and Lessee, Lessors, Lessor Agent, the
Participants and Agent are willing to amend the Existing Participation Agreement
upon the terms and subject to the conditions set forth herein. For

<PAGE>   2

convenience of reference, the parties wish to restate the Existing Participation
Agreement as so amended in its entirety.

                                    AGREEMENT

        NOW, THEREFORE, in consideration of the above Recitals and the mutual
covenants herein contained, the parties hereto hereby agree that the Existing
Participation Agreement shall be amended and restated as of the date hereof to
read in its entirety as follows:

SECTION 1. INTERPRETATION.

        1.01. Definitions. Unless otherwise indicated in this Agreement or any
other Operative Document, each term set forth in Schedule 1.01, when used in
this Agreement or any other Operative Document, shall have the respective
meaning given to that term in Schedule 1.01 or in the provision of this
Agreement or other document, instrument or agreement referenced in Schedule
1.01.

        1.02. Rules of Interpretation. Unless otherwise indicated in this
Agreement or any other Operative Document, the rules of interpretation set forth
in Schedule 1.02 shall apply to this Agreement and the other Operative
Documents.

SECTION 2. LEASE FACILITY.

        2.01. Acquisition, Lease, Amount Limitations, Etc.

               (a) Lease Agreement, Purchase Agreement, Etc. On or prior to the
        date specified by Lessee pursuant to Subparagraph 2.03(a) for the
        acquisition by Lessors of the Equipment identified in Lease Supplement
        No. 1 (the "Closing Date"), Lessors and Lessee shall execute (i) a lease
        agreement in the form of Exhibit B (such lease agreement, together with
        all Lease Supplements thereto, collectively the "Lease Agreement"),
        pursuant to which Lessors agree to lease to Lessee the Equipment,
        together with all Related Goods, Related Agreements and Related Permits
        (as more fully defined in Schedule 1.01, the "Property"), (ii) a
        Purchase Agreement in the form of Exhibit C (the "Purchase Agreement"),
        pursuant to which Lessors grant to Lessee the right to purchase the
        Equipment, and (iii) the other agreements to be executed and delivered
        by them pursuant to Paragraph 3.01 and Schedule 3.01.

               (b) Acquisition and Other Advances . Subject to the terms and
        conditions of this Agreement (including the limitations set forth in
        Subparagraph 2.01(c)), Lessors shall, at the request of Lessee:

                      (i) On the Closing Date, make advances (with funds
               provided by the Participants) (1) to purchase each item of
               Equipment identified in Lease Supplement No. 1 together with all
               Related Goods, Related Agreements and

                                       2
<PAGE>   3

               Related Permits for the lesser of (A) 105% of the Purchase Date
               Appraised Value of such item of Equipment and (B) the Acquisition
               Price and Permitted Installation Expenses with respect to such
               item of Equipment (the "Initial Acquisition Advance"), and (2) to
               pay Permitted Transaction Expenses (an "Expense Advance"); and

                      (ii) From time to time during the period (the "Commitment
               Period") beginning on the Closing Date and ending on the earlier
               of March 30, 2001 and the date, if any, on which Lessee cancels
               the commitments hereunder in their entirety pursuant to
               Subparagraph 2.08(a) (such earlier date to be referred to as the
               "Commitment Termination Date"), make advances (with funds
               provided by the Participants) (1) to purchase each item of
               Equipment which has been delivered to a Property Site and
               installed or is ready for installation during the Installation
               Period for which such advance is requested and all Related Goods,
               Related Agreements and Related Permits for the lesser of (A) 105%
               of the Purchase Date Appraised Value of such item of Equipment
               and (B) the Acquisition Price and Permitted Installation Expenses
               for such item of Equipment (an "Additional Acquisition Advance")
               or (2) to pay Permitted Transaction Expenses (an "Expense
               Advance");

        provided, however, that at the time the Initial Acquisition Advance and
        any Additional Acquisition Advances are made, Agent shall only disburse
        to Lessee or the Suppliers of the Equipment to be purchased by Lessors
        with such Acquisition Advance the portion of the Acquisition Prices for
        such Equipment paid by Lessee or required to be paid to the Suppliers
        under such Acquisition Agreements at or prior to the time such Equipment
        is purchased by Lessors (each such portion of the Acquisition Price for
        any portion of the Equipment to be referred to as the "Paid Acquisition
        Price" for such portion of the Equipment), and the portion of the
        Acquisition Prices for such Equipment which has not been paid to the
        Suppliers of such Equipment (each such portion of the Acquisition Price
        for any portion of the Equipment to be referred to as the "Unpaid
        Acquisition Price" for such portion of the Equipment) shall be disbursed
        to Lessor Agent to be held as Cash Collateral in accordance with the
        terms and conditions set forth in the Lease Agreement. The portion of
        any Acquisition Advance representing the Unpaid Acquisition Price for
        any Equipment shall not be disbursed to Lessee until Lessee has
        delivered to Lessor Agent the items set forth in clause (ii)(B) and
        clause (iv) of Subparagraph 2.01(c).

               (c)    Acceptance or Rejection of Property.

                        (i) Prior to each Acquisition Advance, Lessee shall have
               selected and arranged for the purchase, delivery and
               installation of the Property for which such Acquisition Advance
               is requested as more fully set forth in Subparagraph 4.01(u).
               Such Property shall become subject to the Lease Agreement as of
               the time of such Acquisition Advance. Lessors hereby appoint and
               authorize Lessee to act as Lessors' agent to inspect, test and
               accept or reject the Property in accordance with the Acquisition
               Agreements for the Property. Acting in such capacity, Lessee
               shall (1) inspect and test each item of Property after its
               delivery and installation

                                       3
<PAGE>   4

                and (2) accept or reject such Property. Lessee shall have full
                responsibility for performing the foregoing and agrees that none
                of Lessors or any other Lessor Party shall have any liability
                for any of the foregoing; provided, however, that Lessors'
                obligation to acquire any Property hereunder and lease such
                Property to Lessee pursuant to the Lease Agreement is subject to
                the conditions set forth in this Agreement and the other
                Operative Documents. Lessee acknowledges and agrees that the
                duty of Lessee to inspect and accept or reject Property in
                accordance with the applicable Acquisition Agreements pursuant
                to this Subparagraph 2.01(c) is to be performed by Lessee on
                behalf of Lessors as the purchasers of the Property and shall
                not affect Lessee's acceptance of the Property pursuant to
                Subparagraph 2.01(b) of the Lease Agreement. All Property
                accepted by Lessee pursuant to Subparagraph 2.01(b) of the Lease
                Agreement shall be subject to the terms of the Lease Agreement
                and the other Operative Documents unless and until such Property
                is purchased by Lessee, a Designated Purchaser or an Assignee
                Purchaser pursuant to the Purchase Agreement, notwithstanding
                any rejection by Lessee or failure by Lessee to accept such
                Property in accordance with the applicable Acquisition
                Agreements pursuant to this Subparagraph 2.01(c).

                        (ii) On the first Business Day of each month immediately
                following any month in which Lessee accepts or rejects any
                Property pursuant to this Subparagraph 2.01(c) (or, in the case
                of any Property accepted by Lessee prior to the date hereof, on
                the Closing Date), Lessee shall deliver to Lessor Agent each the
                following:

                             (A) An irrevocable written notice, in form and
                      substance satisfactory to Lessor Agent, setting forth the
                      Property so accepted or rejected and indicating whether
                      such Property was accepted or rejected; and

                             (B) For all Property identified in such report as
                      having been accepted, (1) a Certificate of Acceptance in
                      the form of Exhibit H, appropriately completed and duly
                      executed by Lessee (an "Acquisition Agreement Acceptance
                      Certificate"), and (2) such Uniform Commercial Code
                      releases and other documents, instruments and agreements
                      as Lessor Agent may reasonably request to release or
                      evidence the release of any Lien the Suppliers or any
                      other Person had in such Property (other than any Lien
                      created in favor of any Lessor Party pursuant to this
                      Agreement or the other Operative Documents).

                        (iii) Not later than ninety (90) days following any
                rejection of any Property pursuant to this Subparagraph 2.01(c),
                Lessee shall purchase such Property pursuant to Paragraph 2.02
                of the Purchase Agreement or replace such Property pursuant to
                Subparagraph 3.01(b) of the Lease Agreement.

                                       4
<PAGE>   5

                      (iv) Lessee shall accept or reject all of the Property
               pursuant this Subparagraph 2.01(c) not later than six (6) months
               after the Commitment Termination Date. If Lessee fails to deliver
               to Lessor Agent a notice of acceptance or rejection for any of
               the Property on or prior to such date, Lessee shall be deemed to
               have accepted such Property and to have made the representations
               and warranties set forth in an Acquisition Agreement Acceptance
               Certificate with respect to such Property. If any such Property
               is so deemed to have been accepted, Lessee shall, not later than
               five (5) Business Days after such date, deliver to Lessor Agent
               each of the items set forth in clause (ii)(B) for all such
               Property, together with such Uniform Commercial Code search
               certificates from the jurisdictions in which Uniform Commercial
               Code financing statements and fixture filings are to be filed
               with respect to the Property reflecting no other financing
               statements or filings which evidence Liens of other Persons in
               the Property which are prior to the Liens granted to the Lessor
               Parties in the Operative Documents.

               (d) Amount Limitations. The Initial Acquisition Advance and each
        Additional Acquisition Advance (collectively, the "Acquisition
        Advances") and each Expense Advance made by Lessors (the Acquisition
        Advances and the Expense Advances to be referred to collectively as the
        "Advances") shall be subject to the following limitations:

                      (i) The amount of the Initial Acquisition Advance shall
               not exceed the lesser of (A) the aggregate Purchase Date
               Appraised Values of the Property purchased by Lessors on the
               Closing Date and (B) the aggregate Acquisition Prices and
               Permitted Installation Expenses for the Property purchased by
               Lessors on the Closing Date which has been delivered to a
               Property Site and has been installed or is ready for
               installation;

                      (ii) The aggregate amount of the Additional Acquisition
               Advances made during each Installation Period shall not exceed
               the lesser of (A) the aggregate Purchase Date Appraised Values
               for the Property purchased by Lessors during such Installation
               Period and (B) the aggregate Acquisition Prices and Permitted
               Installation Expenses for such Property which has been delivered
               to a Property Site and has been installed or is ready for
               installation during such Installation Period; and

                      (iii) The aggregate amount of all Advances made by Lessors
               (including all Acquisition Advances and Expense Advances) shall
               not exceed the lesser of (A) Two Hundred Fifty Million Dollars
               ($250,000,000) (the "Total Commitment") and (B) the sum of the
               following (1) the Expiration Date Appraised Values of the
               Property with respect to the then applicable Scheduled Expiration
               Date for the Lease Supplement to which such Property is subject
               plus (2) all payments of the Fixed Component of Base Rent
               scheduled to be made by Lessee pursuant to each Lease Supplement
               prior to its Scheduled Expiration Date.

                                       5
<PAGE>   6

        2.02 Participation Agreement.

               (a) Advances. Subject to the terms and conditions of this
        Agreement, each Participant severally, unconditionally and irrevocably
        agrees with Lessors to participate in each Advance made by Lessors in an
        amount equal to such Participant's Proportionate Share of such Advance;
        provided, however, that the aggregate amount of each Participant's
        Proportionate Share of all Advances shall not exceed such Participant's
        Commitment. Each Participant shall fund its Proportionate Share of each
        Advance as provided in Subparagraph 2.05(a). The amount of each Advance
        shall be included in the Outstanding Lease Amount of a Lease Supplement
        and shall be allocated to the Tranche A Portion, the Tranche B Portion
        and, to the extent necessary or reasonably prudent, the Equity Portion
        of such Lease Supplement in order to have the Lease Agreement classified
        as an operating lease under GAAP, including FASB 13, and set forth in a
        schedule attached to such Lease Supplement, which schedule shall be
        approved by Lessee and Lessor Agent; provided, however, that none of the
        Equity Portion of such Lease Supplement shall be allocated to any
        Participant which has not previously agreed to be an Equity Participant.
        Each Participant's Proportionate Share of the Outstanding Lease Amount
        of such Lease Supplement shall consist of such Participant's Tranche A
        Portion, Tranche B Portion and Equity Portion as set forth in a schedule
        attached to such Lease Supplement.

               (b) Payments. In consideration of each Participant's
        participation in each Advance made by Lessors, such Participant shall
        participate in the payments made by Lessee under this Agreement and the
        other Operative Documents as provided in Paragraph 2.06.

               (c) Other Rights of Participants and Agent.

                      (i) Until all amounts payable to Agent and Participants
               under this Agreement and the other Operative Documents are paid
               in full, Lessee shall deliver all notices under this Agreement
               and the other Operative Documents to Agent at the office or
               facsimile number and during the hours specified in Paragraph
               7.01. Any notice specified in this Agreement or the other
               Operative Documents to be delivered to Lessor Agent may be
               delivered to Agent, and Lessor Agent shall promptly deliver
               copies of any notices it receives from Lessee to Agent. Agent
               shall promptly furnish to each Lessor and Participant copies of
               each such notice and, in the case of each request for an Advance,
               shall notify each Participant of the amount of its Proportionate
               Share of the Advance requested thereby.

                      (ii) Lessors and Lessor Agent are not agents for
               Participants or Agent and may exercise or refrain from
               exercising their rights under this Agreement and the other
               Operative Documents in their discretion; provided, however that,
               until all amounts payable to Agent and Participants under this
               Agreement and the other Operative Documents are paid in full,
               (A) Lessors and Lessor Agent shall, subject to the limitations
               set forth in Section 6, be required to act or to refrain from
               acting

                                       6
<PAGE>   7

               upon instructions of the Required Participants as provided
               in Paragraph 6.03 and (B) Agent may exercise any or all of the
               rights and remedies of Lessors and Lessor Agent, and shall be
               entitled to the other benefits afforded Lessors and Lessor Agent,
               under this Agreement and the other Operative Documents and all
               notices and other deliveries to be made to any Lessor or Lessor
               Agent by or on behalf of Lessee shall be made to Agent.

                      (iii) Neither Agent nor any Participant shall have any
               right, title or interest in the Property, except for Lessors'
               ownership interest in the Property as a result of their
               acquisition of the Property pursuant to the Operative Documents
               and the Lien in the Property granted to Agent, for the benefit of
               the Participants, in the Lessor Security Agreement.

                      (iv) Subject to Section 6, each Lessor and Lessor Agent
               shall perform each of its obligations under the Operative
               Documents, including all obligations owed to Agent or any
               Participant.

        2.03. Advance Requests, Etc.

               (a) Initial Advance Request. Lessee shall request Lessors to
        purchase the Property identified in Lease Supplement No. 1 and advance
        the Permitted Transaction Expenses (the "Initial Advance") by delivering
        to Agent an irrevocable written request in the form of Exhibit D,
        appropriately completed (the "Initial Advance Request"), which
        specifies, among other things:

                      (i) The amount of the Initial Acquisition Advance, which
               shall be in the amount of the lesser of (A) the aggregate
               Purchase Date Appraised Values of the Property identified in
               Lease Supplement No. 1 and (B) the aggregate Acquisition Prices
               and Permitted Installation Expenses for such Property;

                      (ii) The amount of the Permitted Transaction Expenses to
               be paid with the proceeds of any Expense Advance; and

                      (iii) The date of the Initial Advance, which shall be a
               Business Day on or prior to March 31, 2000.

               (b) Additional Advance Requests. Lessee shall request Lessors to
        make an Additional Acquisition Advance or an additional Expense Advance
        by delivering to Agent an irrevocable written request in the form of
        Exhibit E, appropriately completed (an "Additional Advance Request"),
        which specifies, among other things:

                      (i) The amount of such Advance, which (A) shall be in the
               minimum amount of $5,000,000 (or, if less, the Unused Total
               Commitment), and (B) in the case of an Additional Acquisition
               Advance, when aggregated with all prior Additional Acquisition
               Advances made during the same Installation Period, shall not
               exceed the lesser of (y) the aggregate Purchase Date Appraised
               Values of all Property purchased or to be purchased with the
               proceeds of such Additional

                                       7
<PAGE>   8

               Acquisition Advances which has been delivered to a Property Site
               and has been installed or is ready for installation during such
               Installation Period and (z) the aggregate Acquisition Prices and
               Permitted Installation Expenses for all such Property;

                      (ii) The date of such Advance, which shall be the last
               Business Day of any fiscal month prior to or as of the Commitment
               Termination Date;

                      (iii) In the case of an Additional Acquisition Advance,
               each item of Equipment to be purchased including the Supplier,
               model, serial number, delivery date, internal order number,
               Acquisition Price, Unpaid Acquisition Price, Permitted
               Installation Expenses, Purchase Price Appraised Value, Expiration
               Date Appraised Values and the Property Site where such Property
               will be installed; and

                      (iv) In the case of an Expense Advance, the Permitted
               Transaction Expenses to be paid with the proceeds of such Expense
               Advance.

               (c) Delivery of Advance Requests. Etc. Lessee shall deliver (i)
        the Initial Advance Request to Agent at least three (3) Business Days
        before the Closing Date, and (ii) each Additional Advance Request to
        Agent at least three (3) Business Days before the date of the requested
        Advance. The Initial Advance Request and each Additional Advance
        Requests (collectively, "Advance Requests") shall be delivered by
        first-class mail or facsimile as required by Subparagraph 2.02(c) and
        Paragraph 7.01; provided, however, that Lessee shall promptly deliver to
        Agent the original of any Advance Request initially delivered by
        facsimile.

        2.04.  Fees.

               (a) Agent's Fees. Lessee shall pay to Agent, for its own
        account, agent's fees in the amounts and at the times set forth in the
        Agent's Letter (the "Agent's Fees").

               (b) Commitment Fees. Lessee shall pay to Agent, for the ratable
        benefit of the Participants as provided in clause (ii) of Subparagraph
        2.06(c), commitment fees (the "Commitment Fees") equal to the per annum
        percentage which is determined pursuant to the Pricing Grid of the daily
        average Unused Total Commitment for the period beginning on the date of
        this Agreement and ending on the Commitment Termination Date. Lessee
        shall pay the Commitment Fees in arrears on the last Business Day in
        each March, June, September and December (commencing June 30, 2000) and
        on the Commitment Termination Date (or if the Total Commitment is
        cancelled on a date prior to such day, on such prior date).

        2.05.  Funding of Advances.

               (a) Participant Funding and Disbursement. Subject to the terms
        and conditions of this Agreement, each Participant shall, before 12:00
        noon (Chicago time) on the date of each Advance, make available to Agent
        at its office specified in Paragraph 7.01, in same day or immediately
        available funds, such Participant's

                                       8
<PAGE>   9

        Proportionate Share of such Advance. After Agent's receipt of such funds
        and upon fulfillment of the applicable conditions set forth in Section
        3, Agent will promptly disburse such funds on behalf of Lessors, in same
        day or immediately available funds, as directed by Lessee in the Advance
        Request for such Advance.

               (b) Participant Failure to Fund. No Lessor Party shall have any
        obligation to make an Advance requested hereunder in an amount which
        exceeds the aggregate amount of funds actually received by Agent from
        the Participants on account of their respective Proportionate Shares of
        such Advance.

               (c) Participants' Obligations Several. The failure of any
        Participant to fund its Proportionate Share of any Advance shall not
        relieve any other Participant of its obligation hereunder to fund its
        Proportionate Share of such Advance, and no Participant shall be
        responsible for the failure of any other Participant to fund its
        Proportionate Share of any Advance on the date of such Advance.

        2.06.  Sharing of Payments.

               (a) Outstanding Lease Amount. Payments applied to reduce the
        Outstanding Lease Amount of any Lease Supplement (or, if a Lease
        Supplement has not been executed with respect to any Installation
        Period, the Advances made during such Installation Period) shall be
        shared among the Participants as follows:

                      (i) Each payment of the Outstanding Lease Amount of any
               Lease Supplement derived from the Fixed Component of Base Rent
               for such Lease Supplement (including any payment of the Fixed
               Component of Base Rent required to be made pursuant to
               Subparagraph 2.02(b) of the Lease Agreement in connection with
               the exercise of any Renewal Option) shall be paid to the Tranche
               A Participants pro rata according to their respective Outstanding
               Participation Amounts in such Lease Supplement at the time of
               such payment.

                      (ii) Each payment of the Outstanding Lease Amount of any
               Lease Supplement or Installation Period derived from the purchase
               price paid by Lessee (or an Assignee Purchaser) to purchase the
               Property subject to such Lease Supplement or Installation Period
               pursuant to the Purchase Agreement shall be shared: first, by the
               Tranche A Participants and the Tranche B Participants pro rata
               according to their respective Outstanding Participation Amounts
               in such Lease Supplement or Installation Period at the time of
               such payment; and second, if any amounts remain after all
               Outstanding Tranche A Participation Amounts and all Outstanding
               Tranche B Participation Amounts in such Lease Supplement or
               Installation Period are paid in full, by the Equity Participants
               pro rata according to their respective Outstanding Equity
               Participation Amounts in such Lease Supplement or Installation
               Period at the time of such payment.

                      (iii) Each payment of the Outstanding Lease Amount of any
               Lease Supplement or Installation Period derived from the Residual
               Value Guaranty

                                       9
<PAGE>   10

               Amount applicable to such Lease Supplement or Installation
               Period paid by Lessee pursuant to the Purchase Agreement shall be
               shared: first, by the Tranche A Participants pro rata according
               to their respective Outstanding Tranche A Participation Amounts
               in such Lease Supplement or Installation Period at the time of
               such payment; second, if any amounts remain after all Outstanding
               Tranche A Participation Amounts in such Lease Supplement or
               Installation Period are paid in full, by the Tranche B
               Participants pro rata according to their respective Outstanding
               Tranche B Participation Amounts in such Lease Supplement or
               Installation Period at the time of such payment; and third, if
               any amounts remain after all Outstanding Tranche A Participation
               Amounts and all Outstanding Tranche B Participation Amounts in
               such Lease Supplement or Installation Period are paid in full, by
               the Equity Participants pro rata according to their respective
               Outstanding Equity Participation Amounts in such Lease Supplement
               or Installation Period at the time of such payment.

                      (iv) Each payment of the Outstanding Lease Amount of any
               Lease Supplement or Installation Period derived from:

                             (A) the purchase price paid by a Designated
                      Purchaser to purchase the Property subject to such Lease
                      Supplement or Installation Period pursuant to the Purchase
                      Agreement;

                             (B) The Indemnity Amount paid by Lessee with
                      respect to such Lease Supplement or Installation Period
                      pursuant to the Purchase Agreement;

                             (C) Casualty Proceeds or Condemnation Proceeds
                      related to any of the Property subject to such Lease
                      Supplement or Installation Period; or

                             (D) the purchase price paid by any other Person to
                      purchase the Property subject to such Lease Supplement or
                      Installation Period (whether after the retention of such
                      Property by Lessors following the Expiration Date for such
                      Lease Supplement, upon foreclosure or otherwise);

               shall be shared: first by the Tranche B Participants pro rata
               according to their respective Outstanding Tranche B Participation
               Amounts in such Lease Supplement or Installation Period at the
               time of such payment; second, if any amounts remain after all
               Outstanding Tranche B Participation Amounts in such Lease
               Supplement or Installation Period are paid in full, by the
               Tranche A Participants pro rata according to their respective
               Outstanding Tranche A Participation Amounts in such Lease
               Supplement or Installation Period at the time of such payment;
               and third, if any amounts remain after all Outstanding Tranche B
               Participation Amounts and all Outstanding Tranche A Participation
               Amounts in such Lease Supplement or Installation Period are paid
               in full, by the Equity Participants pro rata according to their
               respective Outstanding Equity Participation

                                       10
<PAGE>   11

               Amounts in such Lease Supplement or Installation Period at the
               time of such payment.

               (b) Variable Component of Base Rent. Each payment applied to the
        Variable Component of Base Rent of any Lease Supplement (or, if a Lease
        Supplement has not been executed with respect to any Installation
        Period, such Installation Period) shall be shared among the Participants
        as follows: first, to the Tranche A Participants and the Tranche B
        Participants pro rata according to the respective Outstanding
        Participation Amounts in such Lease Supplement or Installation Period so
        funded by such Tranche A Participants and Tranche B Participants; and
        second, if any amounts remain after the Tranche A Participants and the
        Tranche B Participants have received full payment of the Variable
        Component of Base Rent which has accrued with respect to their
        respective Outstanding Participation Amounts in such Lease Supplement or
        Installation Period, to the Equity Participants pro rata according to
        the respective Outstanding Participation Amounts in such Lease
        Supplement or Installation Period so funded by such Equity Participants.

               (c) Supplemental Rent. Each payment applied to Supplemental Rent
        among the Lessor Parties shall be shared among the Lessor Parties as
        follows:

                      (i) Each payment applied to Agent's Fees shall be solely
               for the account of Agent.

                      (ii) Each payment applied to Commitment Fees shall be
               shared as follows: first, by the Tranche A Participants and the
               Tranche B Participants pro rata according to their respective
               Proportionate Shares; and second, if any amounts remain after the
               Tranche A Participants and the Tranche B Participants have
               received full payment of the Commitment Fees which have accrued
               with respect to their respective Commitments, by the Equity
               Participants pro rata according to their respective Proportionate
               Shares.

                      (iii) Each payment applied to reimburse any Lessor Party
               for any fees, costs and expenses incurred by such Lessor Party
               shall be solely for the account of such Lessor Party.

                      (iv) Each payment of interest and yield pursuant to
               Subparagraph 2.07(c) shall be shared among the Lessor Parties
               owed the amount upon which such interest accrues pro rata
               according to (A) the respective amounts so owed such Lessor
               Parties and (B) the dates on which such amounts became owing to
               such Lessor Parties.

                      (v) All other payments under this Agreement and the other
               Operative Documents shall be for the benefit of the Person or
               Persons specified.

               (d) Disproportionate Payments, Etc. If any Participant shall
        obtain any payment (whether voluntary, involuntary, through the exercise
        of any right of setoff, or

                                       11
<PAGE>   12

        otherwise) on account of amounts owed to it in excess of its ratable
        share of payments on account of such amounts obtained by all
        Participants entitled to such payments, such Participant shall forthwith
        purchase from the other Participants such participations in the payments
        to be made under the Operative Documents as shall be necessary to cause
        such purchasing Participant to share the excess payment ratably with
        each of them; provided, however, that if all or any portion of such
        excess payment is thereafter recovered from such purchasing Participant,
        such purchase shall be rescinded and each other Participant shall repay
        to the purchasing Participant the purchase price to the extent of such
        recovery together with an amount equal to such other Participant's
        ratable share (according to the proportion of (i) the amount of such
        other Participant's required repayment to (ii) the total amount so
        recovered from the purchasing Participant) of any interest or other
        amount paid or payable by the purchasing Participant in respect of the
        total amount so recovered. Lessee agrees that any Participant so
        purchasing a participation from another Participant pursuant to this
        Subparagraph 2.06(d) may, to the fullest extent permitted by law,
        exercise all its rights of payment (including the right of setoff) with
        respect to such participation as fully as if such Participant were the
        direct creditor of Lessee in the amount of such participation.

        2.07.  Other Payment Terms.

               (a) Place and Manner of Payments by Lessee. Lessee shall make all
        payments due to any Lessor Party under this Agreement and the other
        Operative Documents by payments to Agent, for the account of such
        Person, at Agent's office, located at the address specified in Paragraph
        7.01, with each payment due to a Participant to be for the account of
        such Participant's Applicable Participating Office. Lessee shall make
        all payments in lawful money of the United States and in same day or
        immediately available funds not later than 11:00 a.m. (Chicago time) on
        the date due. Agent shall promptly disburse to the appropriate Person
        each such payment received by Agent for such Person.

               (b) Date. Whenever any payment due under this Agreement or any
        other Operative Document shall fall due on a day other than a Business
        Day, such payment shall be made on the next succeeding Business Day, and
        such extension of time shall be included in the computation of Rent,
        interest or fees, as the case may be, unless such next Business Day
        falls in another calendar month, in which case such payment shall be due
        on the immediately preceding Business Day.

               (c) Late Payments. If any amounts required to be paid by Lessee
        under this Agreement or any other Operative Document (including Rent,
        interest, fees or other amounts) remain unpaid after such amounts are
        due and after the expiration of any applicable grace period, Lessee
        shall pay interest and yield on the aggregate, outstanding balance of
        such amounts from the date due until those amounts are paid in full at a
        per annum rate equal to the Base Rate plus two percent (2.0%), such rate
        to change from time to time as the Base Rate shall change; provided,
        however, that, if an Event of Default has occurred and the Rental Rate
        applicable to the Outstanding Lease Amount of any Lease Supplement is
        being calculated at the Applicable Margin described in the proviso to
        the

                                       12
<PAGE>   13

        definition of "Applicable Margin," this Subparagraph 2.07(c) shall not
        apply to late payments applied to the Outstanding Lease Amount of such
        Lease Supplement.

               (d) Application of Payments. Unless an Event of Default has
        occurred and is continuing, Lessee may specify that any payment be
        applied to any amount then due and owing under the Operative Documents
        in a written notice given to Agent at the time such payment is made.
        Upon an Event of Default or if Lessee does not so specify the
        application of any payment, payments under this Agreement and the other
        Operative Documents shall be applied first to unpaid fees, costs,
        expenses and other Supplemental Rent then due and payable under this
        Agreement or any other Operative Document, second to the accrued
        Variable Component of Base Rent then due and payable under this
        Agreement or any other Operative Document and finally to the Fixed
        Component of Base Rent or otherwise to reduce the Outstanding Lease
        Amount of the Lease Supplements.

               (e) Failure to Pay Agent. Unless Agent shall have received notice
        from Lessee at least one (1) Business Day prior to the date on which any
        payment is due to Lessors or the Participants under this Agreement or
        the other Operative Documents that Lessee will not make such payment in
        full, Agent may assume that Lessee has made such payment in full to
        Agent on such date and Agent may, in reliance upon such assumption,
        cause to be distributed to the appropriate Persons on such due date an
        amount equal to the amount then due such Persons. If and to the extent
        Lessee shall not have so made such payment in full to Agent, each such
        Person shall repay to Agent forthwith on demand such amount distributed
        to such Person together with interest thereon, for each day from the
        date such amount is distributed to such Person until the date such
        Person repays such amount to Agent, at (i) the Federal Funds Rate for
        the first three (3) days and (ii) the Base Rate plus two percent (2.0%)
        thereafter, such rate to change from time to time as the Base Rate shall
        change. A certificate of Agent submitted to any Person with respect to
        any amounts owing by such Person under this Subparagraph 2.07(e) shall
        be conclusive absent manifest error.

        2.08.  Commitment Reductions.

               (a) Reduction or Cancellation of Total Commitment. Lessee may, at
        any time prior to the Commitment Termination Date, upon three (3)
        Business Days written notice to Agent, permanently reduce the Total
        Commitment by the amount of Five Million Dollars ($5,000,000) or an
        integral multiple of One Million Dollars ($1,000,000) in excess thereof
        or cancel the Total Commitment in its entirety.

               (b) Effect of Commitment Reductions. From the effective date of
        any reduction of the Total Commitment, the Commitment Fees shall be
        computed on the basis of the Total Commitment as so reduced. Once
        reduced or cancelled, the Total Commitment may not be increased or
        reinstated without the prior written consent of all Lessors and
        Participants. Any reduction of the Total Commitment pursuant to this
        Paragraph 2.08 shall be applied ratably to reduce each Participant's
        Commitment pro rata in accordance with its Proportionate Share.

                                       13
<PAGE>   14

        2.09. Reallocation of Outstanding Lease Amount upon Renewal. Upon the
exercise by Lessee of any Renewal Option with respect to any Lease Supplement on
the terms and conditions set forth in Subparagraph 2.02(b) of the Lease
Agreement, if required in order to have the Lease Agreement and the other
Operative Documents classified as an operating lease under GAAP, including FASB
13, the Outstanding Lease Amount of such renewed Lease Supplement (after any
payment of the Fixed Component of Base Rent required in order to exercise such
Renewal Option) shall be reallocated among the Tranche A Portion, the Tranche B
Portion and, to the extent necessary or reasonably prudent, the Equity Portion
of such renewed Lease Supplement and the Fixed Component of Base Rent and the
Residual Value Guaranty Amount shall be redetermined for such renewed Lease
Supplement and an amendment to such Lease Supplement setting forth such amounts
shall be executed as approved by Lessee and Lessor Agent; provided, however,
that none of the Equity Portion of such renewed Lease Supplement shall be
reallocated to any Participant which was not an Equity Participant prior to the
exercise of such Renewal Option.

        2.10. Nature of the Transactions. Lessee and the Lessor Parties intend
that the transactions evidenced by this Agreement and the other Operative
Documents constitute operating leases pursuant to GAAP, including FASB 13, for
accounting purposes and loans secured by the Property for other purposes,
including federal, state and local income tax purposes and for the purposes of
commercial law and bankruptcy law. Lessee and the Lessor Parties intend that the
Operative Documents have the dual form referred to in the first sentence of this
paragraph, notwithstanding the use of the lease form alone.

               (a) Tax Treatment. For purposes of all income, franchise and
        other taxes imposed upon or measured by income, Lessee and Lessor
        Parties intend that the transactions evidenced by the Operative
        Documents shall be treated as loans by the Participants (through
        Lessors) to Lessee secured by the Property, with Lessee as owner of the
        Property. Lessee and the Lessor Parties shall take reporting positions
        on their respective returns, reports and statements which are consistent
        with such treatment, unless required to do otherwise by an appropriate
        taxing authority after the completion of judicial proceedings at which
        Lessee has had a full and complete opportunity to present its position
        or after a clearly applicable change in applicable Governmental Rules;
        provided, however, that if an appropriate taxing authority or a clearly
        applicable change in applicable Governmental Rules requires any Lessor
        Party to take such an inconsistent position, such Lessor Party shall
        promptly notify Lessee.

               (b) Other Legal Treatment. For purposes of commercial law and
        bankruptcy law, Lessee and Lessor Parties also intend that the
        transactions evidenced by the Operative Documents shall be treated as
        loans by the Participants (through Lessors) to Lessee secured by the
        Property, with Lessee as owner of the Property. Consistent with such
        treatment, Lessee and the Lessor Parties intend that, among other things
        for such purposes, (i) the Advances be treated as loans to Lessee by the
        Participants (through Lessors); (ii) the Advances be secured by the
        Property and the Lessor Parties have the rights and remedies of secured
        lenders; (iii) the Variable Component of Base Rent be treated as
        interest and yield on the Advances; (iv) Lessee be required to pay on
        the Expiration Date for each Lease Supplement only the Residual Value
        Guaranty Amount,

                                       14
<PAGE>   15

        the Indemnity Amount and the other amounts applicable to such Lease
        Supplement (or, if a Lease Supplement has not been executed with respect
        to any Installation Period, the Advances made during such Installation
        Period) required by clause (ii) of Subparagraph 4.06(a) of the Purchase
        Agreement if Lessee exercises the Marketing Option in accordance with
        the Purchase Agreement (or clause (iii) of Subparagraph 4.06(a) if
        Lessors are retaining the Property); and (v) Lessee be required to pay
        on the Termination Date the Outstanding Lease Amount of each Lease
        Supplement (or, if a Lease Supplement has not been executed with respect
        to any Installation Period, the Advances made during such Installation
        Period) and all other amounts outstanding under this Agreement and the
        other Operative Documents (including amounts required by clause (i) of
        Subparagraph 4.06(a) of the Purchase Agreement) if the Lease Agreement
        is terminated after an Event of Default occurs under the Lease Agreement
        or if Lessee fails to or is otherwise not entitled to exercise the
        Marketing Option in accordance with the Purchase Agreement.

               (c) No Reliance by Lessee. Lessee acknowledges and agrees that no
        Lessor Party has made any representations or warranties to Lessee
        concerning the tax, accounting or legal characteristics of the Operative
        Documents and that Lessee has obtained and relied upon such tax,
        accounting and legal advice concerning the Operative Documents as it
        deems appropriate.

        2.11.  Security and Subordination.

               (a) Lessee Obligations.

                      (i) To the extent that the transactions evidenced by the
               Lease Agreement, Purchase Agreement and other Operative Documents
               are treated as loans by the Participants (through Lessors) to
               Lessee secured by the Property, with Lessee as owner of the
               Property pursuant to Paragraph 2.10, the Lessee Obligations shall
               be secured by the Property Collateral as provided in Paragraph
               2.06 of the Lease Agreement.

                      (ii) In addition to the Property Collateral, the Lessee
               Obligations shall be secured by the Cash Collateral that is the
               portion of any Acquisition Advance equal to the aggregate Unpaid
               Acquisition Prices of the Equipment purchased with such
               Acquisition Advance which is disbursed to Lessor Agent and that
               continues to be held as Cash Collateral until it is to be
               disbursed in accordance with the Lease Agreement.

                      (iii) Lessee shall deliver to Agent such additional
               security agreements, pledge agreements, lessor consents and
               estoppels (containing appropriate mortgagee and lender protection
               language) and other instruments, agreements, certificates,
               opinions and documents (including Uniform Commercial Code
               financing statements and fixture filings and landlord waivers) as
               Agent may reasonably request to (A) grant, perfect, maintain,
               protect and evidence security interests in favor of Lessors for
               the benefit of the Lessor Parties in the Property

                                       15
<PAGE>   16
               Collateral and Cash Collateral prior to the Liens or other
               interests of any Person, except in the case of Property
               Collateral for Permitted Property Liens; and (B) otherwise
               establish, maintain, protect and evidence the rights provided to
               Lessors and Agent in the Property Collateral. Lessee shall
               cooperate in all commercially reasonable respects with Agent and
               perform all additional acts reasonably requested by Agent to
               effect the purposes of this Subparagraph 2.11(a)(iii).

                      (iv) The Lessee Obligations arising under this Agreement
               and the other Operative Documents shall be "Designated Senior
               Debt" for the purposes of any indenture or other document
               creating or evidencing Subordinated Debt and such Subordinated
               Debt shall be subordinated to the Lessee Obligations on terms no
               more favorable to the holders of Subordinated Debt than those
               attached as Exhibit I hereto.

               (b)    Lessor Obligations.

                      (i) The Lessor Obligations shall be secured by a Security
               Agreement in the form of Exhibit F, duly executed by Lessors and
               Lessor Agent (the "Lessor Security Agreement").

                      (ii) Lessors and Lessor Agent shall deliver to Agent such
               additional security agreements, pledge agreements, lessor
               consents and estoppels (containing appropriate mortgagee and
               lender protection language) and other instruments, agreements,
               certificates, opinions and documents (including Uniform
               Commercial Code financing statements and fixture filings and
               landlord waivers) as Agent may reasonably request to (A) grant,
               perfect, maintain, protect and evidence security interests in
               favor of Agent in Lessors' rights in the Property Collateral and
               Cash Collateral prior to the Liens or other interests of any
               Person; and (B) otherwise establish, maintain, protect and
               evidence the rights provided to Agent in the Property Collateral
               and Cash Collateral. Lessors and Lessor Agent shall cooperate in
               all commercially reasonable respects with Agent and perform all
               additional acts reasonably requested by Agent to effect the
               purposes of this Subparagraph 2.11(b)(ii).

                      (iii) Lessee hereby consents to the Lessor Security
               Agreement, the Liens granted to Agent therein, and all other
               Liens granted to Agent in any of the Operative Documents and the
               Property to secure the Lessor Obligations.

        2.12.  Change of Circumstances.

               (a) Inability to Determine Rates. If, on or before the first day
        of any Rental Period for any Portion, (i) any Participant shall advise
        Agent that the LIBOR Rental Rate for such Rental Period cannot be
        adequately and reasonably determined due to the unavailability of funds
        in or other circumstances affecting the London interbank market or (ii)
        any Participant shall advise Agent that the LIBOR Rental Rate for such
        Rental

                                       16
<PAGE>   17

        Period does not adequately and fairly reflect the cost to such
        Participant of funding its share of such Portion, Agent shall
        immediately give notice of such condition to Lessee, Lessors and the
        other Participants. After the giving of any such notice (and until Agent
        shall otherwise notify Lessee and Lessors that the circumstances giving
        rise to such condition no longer exist), the LIBOR Rental Rate shall be
        unavailable and the Rental Rate for each new Rental Period shall be the
        Alternate Rental Rate.

               (b) Illegality. If, after the date of this Agreement, the
        adoption of any Governmental Rule, any change in any Governmental Rule
        or the application or requirements thereof (whether such change occurs
        in accordance with the terms of such Governmental Rule as enacted, as a
        result of amendment or otherwise), any change in the interpretation or
        administration of any Governmental Rule by any Governmental Authority,
        or compliance by any Lessor or Participant with any request or directive
        (whether or not having the force of law) of any Governmental Authority,
        except for any such adoption or change publicly announced prior to the
        date of this Agreement (a "Change of Law") shall make it unlawful or
        impossible for any Lessor or Participant to fund or maintain its portion
        of the Outstanding Lease Amount of any Lease Supplement (or, if a Lease
        Supplement has not been executed with respect to any Installation
        Period, the Advances made during such Installation Period) at the LIBOR
        Rental Rate, such Lessor or Participant shall immediately notify Agent
        and Agent shall immediately notify Lessee and the other Lessors and
        Participants of such Change of Law. After the giving of any such notice
        (and until Agent shall otherwise notify Lessee and Lessors that such
        Change of Law is no longer in effect), the LIBOR Rental Rate shall be
        unavailable and the Rental Rate for each Rental Period shall be the
        Alternate Rental Rate.

               (c) Increased Costs. If, after the date of this Agreement, any
        Change of Law:

                      (i) Shall subject any Lessor or Participant to any tax,
               duty or other charge with respect to the Outstanding Lease Amount
               of any Lease Supplement (or, if a Lease Supplement has not been
               executed with respect to any Installation Period, the Advances
               made during such Installation Period), or shall change the basis
               of taxation of Base Rent payments by Lessee to any Lessor or
               Participant under this Agreement or any other Operative Document
               (except for changes in the rate of taxation on the overall net
               income of any Lessor or Participant that exceed the rate of
               taxation that would have been imposed had the transactions
               contemplated by the Operative Documents been characterized as
               loans); or

                      (ii) Shall impose, modify or hold applicable any reserve
               (excluding any Reserve Requirement or other reserve to the extent
               included in the calculation of the LIBOR Rental Rate), special
               deposit or similar requirement against assets held by, deposits
               or other liabilities in or for the account of, advances or loans
               by, or any other acquisition of funds by any Lessor or
               Participant for its portion of the Outstanding Lease Amount of
               any Lease Supplement (or, if a Lease Supplement has not been
               executed with respect to any Installation Period, the Advances
               made during such Installation Period); or

                                       17
<PAGE>   18

                      (iii) Shall impose on any Lessor or Participant any other
               condition related to the Outstanding Lease Amount of any Lease
               Supplement (or, if a Lease Supplement has not been executed with
               respect to any Installation Period, the Advances made during such
               Installation Period), the Base Rent payable with respect thereto
               or such Lessor's or Participant's commitments hereunder;

        And the effect of any of the foregoing is to increase the cost to such
        Lessor or Participant of funding or maintaining its portion of the
        Outstanding Lease Amount of any Lease Supplement or Installation Period
        or commitments or to reduce any amount receivable by such Lessor or
        Participant hereunder; then Lessee shall from time to time within twenty
        (20) days after written demand by such Lessor or Participant, pay to
        such Lessor or Participant additional amounts sufficient to reimburse
        such Lessor or Participant for such increased costs or to compensate
        such Lessor or Participant for such reduced amounts; provided, however,
        that Lessee shall have no obligation to make any payment to any
        demanding party under this Subparagraph 2.12(c) on account of any such
        increased costs or reduced amounts relating to any Rental Period that
        ended more than six (6) months prior to such demanding party's first
        demand for payment (or, if any increased costs or reduced amounts do not
        relate to a particular Rental Period, on account of any such increased
        costs or reduced amounts about which the demanding party first knew or
        should have known more than six (6) months prior to its first demand for
        payment). A certificate setting forth in reasonable detail the amount of
        such increased costs or reduced amounts, submitted by such Lessor or
        Participant to Lessee shall constitute prima facie evidence of such
        costs or amounts. The obligations of Lessee under this Subparagraph
        2.12(c) shall survive the payment and performance of the Lessee
        Obligations and the termination of this Agreement.

               (d) Capital Requirements. If any Lessor or Participant determines
        that (i) any Change of Law occurring after the date of this Agreement
        affects the amount of capital required to be maintained by such Person
        or any other Person controlling such Person (a "Capital Adequacy
        Requirement") and (ii) the amount of capital maintained by such Person
        or such other Person which is attributable to or based upon the
        Advances, the commitments or this Agreement must be increased as a
        result of such Change of Law (taking into account such Person's or such
        other Person's policies with respect to capital adequacy), Lessee shall
        pay to such Person or such other Person, within twenty (20) days after
        written demand of such Person, such amounts as such Person or such other
        Person reasonably shall determine are necessary to compensate such
        Person or such other Person for the increased costs to such Person or
        such other Person of such increased capital; provided, however, that
        Lessee shall have no obligation to make any payment to any demanding
        party under this Subparagraph 2.12(d) on account of any such increased
        costs relating to any Rental Period that ended more than twelve (12)
        months prior to such demanding party's first demand for payment (or, if
        any increased costs do not relate to a particular Rental Period, on
        account of any such increased costs about which the demanding party
        first knew or should have known more than twelve (12) months prior to
        its first demand for payment). A certificate of any Lessor or
        Participant setting forth in reasonable detail the computation of any
        such increased costs, delivered by such Person to Lessee, shall
        constitute prima facie evidence of such increased costs. The obligations

                                       18
<PAGE>   19

        of Lessee under this Subparagraph 2.12(d) shall survive the payment and
        performance of the Lessee Obligations and the termination of this
        Agreement.

               (e) Mitigation. If any Lessor or Participant becomes aware of (i)
        any Change of Law which will make it unlawful or impossible for such
        Person to fund or maintain its portion of the Outstanding Lease Amount
        of any Lease Supplement or Installation Period at the LIBOR Rental Rate
        or (ii) any Change of Law or other event or condition which will
        obligate Lessee to pay any amount pursuant to Subparagraph 2.12(c) or
        Subparagraph 2.12(d), such Person shall notify Lessee and Agent thereof
        as promptly as practical. If any Person has given notice of any such
        Change of Law or other event or condition and thereafter becomes aware
        that such Change of Law or other event or condition has ceased to exist,
        such Person shall notify Lessee and Agent thereof as promptly as
        practical. Each Person affected by any Change of Law which makes it
        unlawful or impossible for such Person to fund or maintain its portion
        of the Outstanding Lease Amount of any Lease Supplement or Installation
        Period at the LIBOR Rental Rate or to which Lessee is obligated to pay
        any amount pursuant to Subparagraph 2.12(c) or Subparagraph 2.12(d)
        shall use reasonable commercial efforts (including changing the
        jurisdiction of its Applicable Participating Office) to avoid the effect
        of such Change of Law or to avoid or materially reduce any amounts which
        Lessee is obligated to pay pursuant to Subparagraph 2.12(c) or
        Subparagraph 2.12(d) if, in the reasonable opinion of such Person, such
        efforts would not adversely affect such Person or be contrary to such
        Person's normal banking practices.

        2.13.  Taxes on Payments.

               (a) Payments Free of Taxes. All payments made by Lessee under
        this Agreement and the other Operative Documents shall be made free and
        clear of, and without deduction or withholding for or on account of, any
        present or future Indemnified Taxes, now or hereafter imposed, levied,
        collected, withheld or assessed by any Governmental Authority. If any
        Indemnified Taxes are required to be withheld from any amounts payable
        to any Lessor Party hereunder or under the other Operative Documents,
        the amounts so payable to such Lessor Party shall be increased to the
        extent necessary to yield to such Lessor Party (after payment of all
        Indemnified Taxes) the Base Rent or any such other amounts payable
        hereunder at the rates or in the amounts specified in this Agreement and
        the other Operative Documents. Whenever any Indemnified Taxes are
        payable by Lessee, as promptly as possible thereafter, Lessee shall send
        to Agent for its own account or for the account of such Lessor or
        Participant, as the case may be, a certified copy of an original
        official receipt received by Lessee showing payment thereof. If Lessee
        fails to pay any Indemnified Taxes when due to the appropriate taxing
        authority or fails to remit to Agent the required receipts or other
        required documentary evidence, Lessee shall indemnify the Lessor Parties
        for any incremental taxes, interest or penalties that may become payable
        by the Lessor Parties as a result of any such failure. The obligations
        of Lessee under this Subparagraph 2.13(a) shall survive the payment and
        performance of the Lessee Obligations and the termination of this
        Agreement.

                                       19
<PAGE>   20

               (b) Withholding Exemption Certificates. On or prior to the date
        any Lessor or Participant becomes a party to this Agreement, any such
        Lessor or Participant which is not organized under the laws of the
        United States of America or a state thereof shall deliver to Lessee and
        Agent two duly completed copies of United States Internal Revenue
        Service Form W-8BEN or W-8ECI (or successor applicable form), as the
        case may be, certifying in each case that such Lessor or Participant, as
        the case may be, is entitled to receive payments under this Agreement
        and the other Operative Documents without deduction or withholding of
        any United States federal income taxes. Each Person which delivers to
        Lessee and Agent a Form W-8BEN or W-8ECI pursuant to the immediately
        preceding sentence further undertakes to deliver to Lessee and Agent two
        further copies of Form W-8BEN or W-8ECI (or successor applicable forms),
        or other manner of certification or procedure, as the case may be, on or
        before the date that any such form expires or becomes obsolete or after
        the occurrence of any event requiring a change in the most recent form
        previously delivered by it to Lessee and Agent, and such extensions or
        renewals thereof as may reasonably be requested by Lessee or Agent,
        certifying in the case of a Form W-8BEN or W-8ECI that such Person is
        entitled to receive payments under this Agreement and the other
        Operative Documents without deduction or withholding of any United
        States federal income taxes, unless in any such cases an event
        (including without limitation any change in treaty, law or regulation)
        has occurred prior to the date on which any such delivery would
        otherwise be required which renders all such forms inapplicable or which
        would prevent a Lessor or Participant from duly completing and
        delivering any such form with respect to it and such Lessor or
        Participant advises Lessee and Agent that it is not capable of receiving
        payments without any deduction or withholding of United States federal
        income tax.

               (c) Mitigation. If any Lessor Party claims any additional amounts
        to be payable to it pursuant to this Paragraph 2.13, such Lessor Party
        shall use reasonable commercial efforts to file any certificate or
        document requested in writing by Lessee (including copies of Internal
        Revenue Service Form W-8BEN (or successor forms) reflecting a reduced
        rate of withholding) or to change the jurisdiction of its Applicable
        Participating Office if the making of such a filing or such change in
        the jurisdiction of its Applicable Participating Office would avoid the
        need for or materially reduce the amount of any such additional amounts
        which may thereafter accrue and if, in the reasonable opinion of a
        Participant, in the case of a change in the jurisdiction of its
        Applicable Participating Office, such change would not adversely affect
        such Person or be contrary to such Person's normal banking practices.

               (d) Tax Returns. Nothing contained in this Paragraph 2.13 shall
        require any Lessor Party to make available any of its tax returns (or
        any other information relating to its taxes which it deems to be
        confidential).

        2.14. Funding Loss Indemnification. If (a) Lessee shall pay any Portion
of the Outstanding Lease Amount of any Lease Supplement (or, if a Lease
Supplement has not been executed with respect to any Installation Period, the
Advances made during such Installation Period) on any day other than the last
day of a Rental Period therefor (whether an optional payment, a mandatory
payment or otherwise), (b) Lessee shall cancel or otherwise fail to

                                       20
<PAGE>   21

consummate any Advance Request which has been delivered to Agent (whether as a
result of the failure to satisfy any applicable conditions or otherwise) or (c)
at the request of Lessee, any affected Participant shall be replaced pursuant to
clause (d) or (e) of Paragraph 2.15 on any day other than the last day of a
Rental Period for the Outstanding Participation Amount being assigned to a
replacement Participant, Lessee shall, within twenty (20) days after written
demand by any Lessor or Participant, reimburse such Person for and hold such
Person harmless from all reasonable costs and losses incurred by such Person as
a result of such payment, cancellation or failure; provided, however, that
Lessee shall have no obligation to make any payment to any demanding Person
under this Paragraph 2.14 on account of any such costs or losses unless Lessee
receives notice of such costs and losses from the demanding Person within six
(6) months after they are incurred or realized. Lessee understands that such
costs and losses may include, without limitation, losses incurred by a Lessor or
Participant as a result of funding and other contracts entered into by such
Person to fund its portion of the Outstanding Lease Amount (or, if a Lease
Supplement has not been executed with respect to any Installation Period, the
Advances made during such Installation Period) of any Lease Supplement or
Installation Period. Each Person demanding payment under this Paragraph 2.14
shall deliver to Lessee, with a copy to Agent, a certificate setting forth the
amount of costs and losses for which demand is made, which certificate shall set
forth in reasonable detail the calculation of the amount demanded. Such a
certificate so delivered to Lessee shall constitute prima facie evidence of such
costs and losses. The obligations of Lessee under this Paragraph 2.14 shall
survive the payment and performance of the Lessee Obligations and the
termination of this Agreement.

                                       21
<PAGE>   22

        2.15. Replacement of Participants. If any Participant shall (a) become a
Defaulting Participant more than one (1) time in a period of twelve (12)
consecutive months, (b) continue as a Defaulting Participant for more than five
(5) Business Days at any time, (c) deliver, pursuant to Subparagraph 2.12(a), a
notice that any LIBOR Rental Rate cannot be adequately and reasonably determined
or that any LIBOR Rental Rate does not adequately and fairly reflect the cost to
such Participant of funding its share of any Portion and such a notice is not
delivered by any other Participant, (d) deliver, pursuant to Subparagraph
2.12(b), a notice of a Change of Law which does not affect any other
Participant, or (e) demand any payment under Subparagraph 2.12(c), 2.12(d) or
2.13(a) for a reason which is not applicable to any other Participant, then
Agent may (or upon the written request of Lessee if no Event of Default has
occurred and is continuing, shall) replace such Participant (the "affected
Participant"), or cause such affected Participant to be replaced, with another
financial institution (the "replacement Participant") satisfying the
requirements of an Eligible Assignee under Subparagraph 7.05(b), by having the
affected Participant sell and assign all of its rights and obligations under
this Agreement and the other Operative Documents to the replacement Participant
pursuant to Subparagraph 7.05(b); provided, however, that if Lessee seeks to
exercise such right, it must do so within sixty (60) days after it first
receives notice of the event, condition or demand giving rise to such right, and
no Lessor Party shall have any obligation to identify or locate a replacement
Participant for Lessee. Upon receipt by any affected Participant of a written
notice from Agent stating that Agent is exercising the replacement right set
forth in this Paragraph 2.15, such affected Participant shall sell and assign
all of its rights and obligations under this Agreement and the other Operative
Documents to the replacement Participant pursuant to an Assignment Agreement and
Subparagraph 7.05(b) for a purchase price equal to the sum of its portion of the
Outstanding Lease Amount of each Lease Supplement (or, if a Lease Supplement has
not been executed with respect to any Installation Period, the Advances made
during such Installation Period), the accrued and unpaid portion of the Base
Rent relating to such portion, all amounts payable under Paragraph 2.14, and its
ratable share of all fees to which it is entitled.

SECTION 3.     CONDITIONS PRECEDENT.

        3.01. Initial Acquisition Advance. The obligations of Lessors to
purchase Property with the Initial Acquisition Advance (and the obligations of
the Participants to fund their respective Proportionate Shares of the Initial
Acquisition Advance) are subject to receipt by Agent, on or prior to the Closing
Date, of each item listed in Schedule 3.01, each in form and substance
reasonably satisfactory to Agent, and with sufficient copies for, Agent and each
Lessor and Participant.

        3.02. Additional Acquisition Advances. The obligations of Lessors to
make each Additional Acquisition Advance (and the obligations of the
Participants to fund their respective Proportionate Shares of such Additional
Acquisition Advance) are subject to satisfaction of the conditions set forth in
Paragraph 3.01 and Schedule 3.01 (unless such conditions were previously
satisfied at the time of the Initial Acquisition Advance or have been
permanently waived) and receipt by Agent, on or prior to the date of such
Additional Acquisition Advance, of each of the following, each in form and
substance reasonably satisfactory to Agent, and with sufficient copies for,
Agent and each Lessor and Participant:

                                       22
<PAGE>   23

               (a) An Additional Advance Request, appropriately completed, duly
        executed and delivered by Lessee in accordance with Subparagraph
        2.03(b);

               (b) Bills of sale for all Property to be purchased with the
        proceeds of such Additional Acquisition Advance, identifying such
        Property by Supplier, model, serial number, delivery date, internal
        order number, Acquisition Price and the Property Site where such
        Property will be installed and showing Lessors as purchaser;

               (c) Such Uniform Commercial Code financing statements and fixture
        filings, or amendments to the Uniform Commercial Code financing
        statements and fixture filings previously filed, for filing in such
        jurisdictions as Agent may reasonably request to perfect the Liens
        created in such Property in favor of the Lessor Parties pursuant to the
        Operative Documents;

               (d) Such Uniform Commercial Code releases and other documents,
        instruments and agreements as Agent may reasonably request to release or
        evidence the release of any Lien the Suppliers or any other Person had
        in such Property (other than any Permitted Property Liens); and

               (e) If the Property to be purchased with the proceeds of such
        Additional Acquisition Advance was not included in the Closing Date
        Appraisal, an Appraisal of such Property on or as of a recent date prior
        to such Additional Acquisition Advance that assesses at that time (i)
        the Fair Market Value and remaining useful life of such Property on such
        date and (ii) the Fair Market Value and remaining useful life of such
        Property on the original Scheduled Expiration Date for the Lease
        Supplement in which such Property will be included and each subsequent
        Scheduled Expiration Date assuming such Scheduled Expiration Date is
        extended by the exercise of each Renewal Option.

        3.03. Expense Advances. The obligations of Lessors to make each Expense
Advance (and the obligations of the Participants to fund their respective
Proportionate Shares of such Advance) are subject to (a) satisfaction of the
conditions set forth in Paragraph 3.01 and Schedule 3.01 (unless such conditions
were previously satisfied at the time of the Initial Acquisition Advance or have
been permanently waived) and (b) receipt by Agent pursuant to Subparagraph
2.03(a) of the Initial Advance Request (in the case of any Expense Advance
requested to be made on the Closing Date) or receipt by Agent pursuant to
Subparagraph 2.03(b) of the Additional Advance Request (in the case of any
Expense Advance requested to be made after the Closing Date), each such Advance
Request appropriately completed and duly executed by Lessee.

        3.04. Other Conditions Precedent. The occurrence of each Credit Event
(including the making of each Advance by Lessors and the funding of each Advance
by the Participants) is subject to the further conditions that, on the date such
Credit Event is to occur and after giving effect to such Credit Event, the
following shall be true and correct:

               (a) The representations and warranties of Lessee set forth in
        Paragraph 4.01 and in the other Operative Documents are true and correct
        in all material respects as if

                                       23
<PAGE>   24

        made on such date (except for representations and warranties expressly
        made as of a specified date, which shall be true as of such date); and

               (b) No Default has occurred and is continuing or will result from
        such Credit Event.

The submission by Lessee to Agent of each Advance Request, Notice of Rental
Period Selection, Notice of Renewal Option Exercise, Notice of Partial Purchase
Option Exercise, Notice of Term Purchase Option Exercise and Notice of Marketing
Option Exercise shall be deemed to be a representation and warranty by Lessee
that each of the statements set forth above in this Paragraph 3.04 is true and
correct as of the date of such request and notice.

        3.05. Covenant to Deliver. Unless a condition is waived by Agent, Lessee
agrees (not as a condition but as a covenant) to deliver to Agent each item
required to be delivered to Agent as a condition to each Advance if such Advance
is made. Lessee expressly agrees that the making of any Advance prior to the
receipt by Agent of any such item shall not constitute a waiver by Agent or any
Lessor or Participant of Lessee's obligation to deliver such item, unless
expressly waived in writing by Agent.

SECTION 4.     REPRESENTATIONS AND WARRANTIES.

        4.01. Lessee's Representations and Warranties. In order to induce the
Lessor Parties to enter into this Agreement and the other Operative Documents to
which they are parties, Lessee hereby represents and warrants to the Lessor
Parties as follows:

               (a) Organization and Powers. Each of Lessee and its Significant
        Subsidiaries is a corporation or partnership duly organized or formed,
        as the case may be, validly existing and 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
        failure so to qualify or be in good standing would result in a Material
        Adverse Effect and has all requisite power and authority to own its
        assets and carry on its business and, with respect to Lessee, to
        execute, deliver and perform its obligations under the Operative
        Documents.

               (b) Authorization: No Conflict. The execution, delivery and
        performance by Lessee of the Operative Documents to which it is a party
        have been duly authorized by all necessary corporate action of Lessee
        and do not and will not (i) contravene the terms of the certificate or
        articles, as the case may be, of incorporation and the bylaws of Lessee
        or result in a breach of or constitute a material default under any
        material Contractual Obligation to which Lessee is a party or by which
        it or its properties may be bound or affected; or (ii) violate in any
        material respect any provision of Governmental Rule binding on or
        affecting Lessee.

               (c) Binding Obligation. The Operative Documents to which Lessee
        is a party constitute, or when delivered under this Agreement will
        constitute, legal, valid and

                                       24
<PAGE>   25

        binding obligations of Lessee, enforceable against Lessee in
        accordance with their respective terms, except to the extent the
        enforceability thereof would be subject to bankruptcy, insolvency,
        receivership or similar laws providing relief from creditors, or
        principles of equity generally.

               (d) Governmental Consents. No authorization, consent, approval,
        license, exemption of, or filing or registration with, any Governmental
        Authority, or approval or consent of any other Person, is required for
        the due execution, delivery or performance by Lessee of any of the
        Operative Documents.

               (e) No Defaults. Neither Lessee nor any of its Significant
        Subsidiaries is in default under any material Contractual Obligation or
        Governmental Rule to which it is a party or by which it or its
        properties may be bound which, individually or together with all such
        defaults, could reasonably be expected to have a Material Adverse
        Effect.

               (f) Title to Properties. Lessee and each Significant Subsidiary
        has good record and marketable title in fee simple to, or valid
        leasehold interests in, all real property necessary or used in the
        ordinary conduct of their respective businesses, except for such defects
        in title as could not, individually or in the aggregate, have a Material
        Adverse Effect. The property of Lessee and its Significant Subsidiaries
        is subject to no Liens, other than Liens permitted under Subparagraph
        5.04(a).

               (g) Litigation. Except as set forth in Schedule 4.01(g), there
        are no actions, suits or proceedings pending or, to the best of Lessee's
        knowledge, threatened against or affecting Lessee or any of its
        Significant Subsidiaries or the properties of Lessee or any of its
        Significant Subsidiaries before any Governmental Authority or arbitrator
        which is likely to be determined adversely to Lessee or any such
        Subsidiary and would be reasonably likely to result in a Material
        Adverse Effect.

               (h) Compliance with Consents and Licenses. Every consent required
        by Lessee or any Significant Subsidiary (including those required under
        or pursuant to any Environmental Law) in connection with the conduct of
        its business and the ownership, use, exploitation or occupation of its
        property and assets has been obtained and is in full force and effect
        and there has not been any default in the observance of the conditions
        and restrictions (if any) imposed in, or in connection with, any of the
        same, except where the failure to obtain any of the foregoing would not
        reasonably be expected to have a Material Adverse Effect.

               (i) Compliance with Environmental Law. Except as set forth in
        Schedule 4.01(i), to the best of Lessee's knowledge after due
        investigation, (i) the properties of Lessee and its Subsidiaries do not
        contain and have not previously contained (at, under, or about any such
        property) any Hazardous Substances or other contamination (A) in amounts
        or concentrations that constitute or constituted a violation of, or
        could give rise to liability under, any Environmental Laws, in either
        case where such violation or liability could reasonably be expected to
        result in a Material Adverse Effect, (B) which could interfere with the
        continued operation of such property, or (C) which could

                                       25
<PAGE>   26

        materially impair the fair market value thereof; and (ii) there
        has been no transportation or disposal of Hazardous Substances from, nor
        any release or threatened release of Hazardous Substances at or from,
        any property of Lessee or any of its Subsidiaries in violation of or in
        any manner could give rise to liability under any Environmental Laws,
        where such violation or liability, individually or in the aggregate,
        could reasonably be expected to result in a Material Adverse Effect.

               (j) Governmental Regulation. Neither Lessee nor any of its
        Subsidiaries is subject to regulation under the Public Utility Holding
        Company Act of 1935, the Federal Power Act, the Investment Company Act
        of 1940, the Interstate Commerce Act, any state public utilities code or
        any other federal or state statute or regulation limiting its ability to
        incur Indebtedness.

               (k)    ERISA.

                      (i) Except as specifically disclosed to the Lessor Parties
               in writing prior to the date of this Agreement: (A) each Plan is
               in compliance in all material respects with the applicable
               provisions of ERISA, the IRC and other Governmental Rules; (B)
               there are no pending, or to the best knowledge of Lessee,
               threatened, claims, actions or lawsuits, or action by any
               Governmental Authority, with respect to any Plan which has
               resulted or could reasonably be expected to result in a Material
               Adverse Effect; (C) there has been no prohibited transaction or
               other violation of the fiduciary responsibility rule with respect
               to any Plan which could reasonably result in a Material Adverse
               Effect; (D) no ERISA Event has occurred or is reasonably expected
               to occur with respect to any Pension Plan; (E) no Pension Plan
               has any Unfunded Pension Liability; (F) Lessee has not incurred,
               nor does it reasonably expect to incur, any liability under Title
               IV of ERISA with respect to any Pension Plan (other than premiums
               due and not delinquent under Section 4007 of ERISA); (G) no trade
               or business (whether or not incorporated under common control
               with Lessee within the meaning of Section 414(b), (c), (m) or (a)
               of the IRC) maintains or contributes to any Pension Plan or other
               Plan subject to Section 412 of the IRC; and (H) neither Lessee
               nor any entity under common control with Lessee in the preceding
               sentence has ever contributed to any Multiemployer Plan.

                      (ii) All employer and employee contributions required by
               any applicable Governmental Rule in connection with all Foreign
               Plans have been made, or, if applicable, accrued, in accordance
               with the country-specific accounting practices. The fair market
               value of the assets of each funded Foreign Plan, the liability of
               each insurer for any Foreign Plan funded through insurance or the
               book reserve established for any Foreign Plan, together with any
               accrued contributions, is sufficient to procure or provide for
               the accrued benefit obligations, as of the date hereof, with
               respect to all current and former participants in such Foreign
               Plan according to the actuarial assumptions and valuations most
               recently used to determine employer contributions to such Foreign
               Plan, which actuarial assumptions are commercially reasonable.
               Each

                                       26
<PAGE>   27

               Foreign Plan required to be registered has been registered
               and has been maintained in good standing with applicable
               Governmental Authorities. Each Foreign Plan reasonably complies
               in all material respects with all applicable Governmental Rules.

               (l) Significant Subsidiaries. The name and ownership of each
        Significant Subsidiary of Lessee on the date of this Agreement is as set
        forth in Schedule 4.01(l). All of the outstanding capital stock of, or
        other interest in, each such Significant Subsidiary has been validly
        issued, and is fully paid and nonassessable.

               (m) Margin Regulations. Lessee is not engaged in the business of
        extending credit for the purpose of purchasing or carrying "margin
        stock" (within the meaning of Regulation U of the FRB). No part of the
        proceeds of the Advances will be used to purchase or carry any margin
        stock or to extend credit to others for the purpose of purchasing or
        carrying any margin stock.

               (n) Taxes. Lessee and its Significant Subsidiaries have filed all
        Federal and other material tax returns and reports required to be filed,
        and have paid all Federal and other material taxes, assessments, fees
        and other Governmental Charges levied or imposed upon them or their
        properties, income or assets otherwise due and payable, except those
        which are being contested in good faith by appropriate proceedings and
        for which adequate reserves have been provided in accordance with GAAP.
        There is no proposed tax assessment against Lessee or any Significant
        Subsidiary except those for which adequate reserves have been provided
        in accordance with GAAP.

               (o) Patents and Other Rights. Each of Lessee and its Significant
        Subsidiaries possesses all permits, franchises, licenses, patents,
        trademarks, trade names, service marks, copyrights and all rights with
        respect thereto, free from maintenance and operation of its business,
        except where the failure to obtain any of the foregoing would not
        reasonably be expected to have a Material Adverse Effect.

               (p) Insurance. The properties of Lessee and its Significant
        Subsidiaries are insured against losses and damages of the kinds and in
        amounts which are deemed prudent by Lessee in its reasonable business
        judgment and within the general parameters customary among similarly
        situated businesses in the industry, and such insurance is maintained
        with financially sound and reputable insurance companies or pursuant to
        a plan or plans or self-insurance to such extent as is usual for
        companies of similar size engaged in the same or similar businesses and
        owning similar properties.

               (q) Financial Statements. The audited Financial Statements of
        Lessee and its Subsidiaries for the fiscal year ended in December 1999,
        are complete and correct and fairly present the financial condition of
        Lessee and its Subsidiaries as at such date and the results of
        operations of Lessee and its Subsidiaries for the period covered by such
        statements, in each case in accordance with GAAP consistently applied.
        Since the last day of the fiscal year ended in December 1999, there has
        been no Material Adverse Effect.

                                       27
<PAGE>   28

               (r) Liabilities. Neither Lessee nor any of its Significant
        Subsidiaries has any material liabilities, fixed or contingent, that are
        not reflected in the Financial Statements referred to in Subparagraph
        4.01(q), in the notes thereto or otherwise disclosed in writing to the
        Lessor Parties, other than liabilities arising in the ordinary course of
        business since December 31, 1999.

               (s) Labor Disputes. Etc. There are no strikes, lockouts or other
        labor disputes against Lessee or any of its Significant Subsidiaries,
        or, to the best of Lessee's knowledge, threatened against or affecting
        Lessee or any of its Significant Subsidiaries, which may result in a
        Material Adverse Effect.

               (t) Solvency. Lessee and its Subsidiaries on a consolidated
        basis are Solvent.

               (u) The Property.

                      (i) Prior to or as of the date of each Acquisition
               Advance, Lessee (A) selected the Suppliers from which the
               Property was to be acquired with such Acquisition Advance, (B)
               selected the Property to be acquired with such Acquisition
               Advance from such Suppliers (including the determination of
               Lessee's needs and the fitness of the Property for such needs),
               (C) negotiated and executed Acquisition Agreements for the
               purchase of such Property, (D) either purchased such Property or
               assigned the Acquisition Agreement for such Property to Lessors
               by an assignment agreement in form and substance satisfactory to
               Lessor Agent, (E) arranged for the delivery and installation of
               such Property at a Property Site, (F) received delivery of all of
               such Property at such Property Site, and (G) paid the Paid
               Acquisition Price portion (if any) of the Acquisition Price
               indicated for each item of Equipment as set forth in the Advance
               Request for such Acquisition Advance. The Unpaid Acquisition
               Price for each item of Equipment to be purchased with an
               Acquisition Advance is set forth in the Advance Request for such
               Acquisition Advance.

                      (ii) At the time any Property is sold by Lessee to
               Lessors, Lessee will have (A) good and valid title to such
               Property, free and clear of all Liens and all other interests of
               other Persons other than Lessor Liens, and (B) full right and
               power, without the consent or approval of any other Person, to
               (1) use the Property itself and (2) sell or lease the Property to
               any other Person.

                      (iii) At the time any Property is purchased by Lessors
               from any Supplier as requested by Lessee in any Advance Request,
               Lessors will acquire good and valid title to such Property, free
               and clear of all Liens and all other interests of other Persons
               (except for the interests of Lessee and Lessor Liens).

                      (iv) Prior to or as of the date of any Acquisition
               Advance, (A) all of the Property to be purchased with such
               Acquisition Advance will have been delivered to Lessee at the
               Property Site specified in the Advance Request for such
               Acquisition Advance and not been removed by Lessee from such
               Property Site,

                                       28
<PAGE>   29

               (B) none of such Property will have been attached to such
               Property Site or any other real property in a manner that would
               cause such Property to constitute real property, and (C) no
               Person having any interest in such Property Site has any Lien or
               ownership or other interest in such Property.

                      (v) All of the Property complies in all material respects
               with all applicable Governmental Rules and Insurance
               Requirements.

               (v) Chief Executive Office. Lessee's chief executive office is
        located at 1551 McCarthy Boulevard, Milpitas, California 95035, or such
        other location to which Lessee has Lessee has relocated its chief
        executive office in accordance with Subparagraph 5.02(i).

               (w) Disclosure. None of the representations or warranties made by
        Lessee in the Operative Documents as of the date of such representations
        and warranties, and none of the statements contained in any exhibit,
        report, statement or certificate furnished by or on behalf of Lessee or
        any of its Subsidiaries to any of the Lessor Parties in connection with
        the Operative Documents, contains any untrue statement of a material
        fact or omits any material fact required to be stated therein or
        necessary to make the statements made therein, in light of the
        circumstances under which they are made, not misleading in any material
        respect as of the time when made or delivered.

Lessee shall be deemed to have reaffirmed, for the benefit of the Lessor
Parties, each representation and warranty contained in this Paragraph 4.01 on
and as of the date of each Credit Event (except for representations and
warranties expressly made as of a specified date, which shall be true in all
material respects as of such date).

        4.02. Lessors' Representations and Warranties. In order to induce
Lessee, Agent and the Participants to enter into this Agreement and the other
Operative Documents to which they are parties, each Lessor hereby represents and
warranties to Lessee, Agent and the Participants as follows:

               (a) Due Incorporation, Qualification, etc. Such Lessor (i) is
        duly organized, validly existing and in good standing under the laws of
        its jurisdiction of organization and (ii) has the power and authority to
        own, lease and operate its properties and carry on its business as now
        conducted and as contemplated herein.

               (b) Authority. The execution, delivery and performance by such
        Lessor of each Operative Document executed, or to be executed, by such
        Lessor and the consummation of the transactions contemplated thereby (i)
        are within the power of such Lessor and (ii) have been duly authorized
        by all necessary actions on the part of such Lessor.

               (c) Enforceability. Each Operative Document executed, or to be
        executed, by such Lessor has been, or will be, duly executed and
        delivered by such Lessor and constitutes, or will constitute, a legal,
        valid and binding obligation of such Lessor,

                                       29
<PAGE>   30

        enforceable against such Lessor in accordance with its terms, except as
        limited by bankruptcy, insolvency or other laws of general application
        relating to or affecting the enforcement of creditors' rights generally
        and general principles of equity.

               (d) Non-Contravention. The execution and delivery by such Lessor
        of the Operative Documents executed by such Lessor and the performance
        and consummation of the transactions contemplated thereby do not (i)
        violate any provision of any Governmental Rule binding on or affecting
        such Lessor; (ii) contravene the terms of any charter, bylaws or other
        organizational documents of such Lessor or result in the breach or the
        acceleration of, or entitle any other Person to accelerate (whether
        after the giving of notice or lapse of time or both), any Contractual
        Obligation of such Lessor; or (iii) result in the creation or imposition
        of any Lien (or the obligation to create or impose any Lien) upon any
        property, asset or revenue of such Lessor (except such Liens as may be
        created in favor of any Lessor Party pursuant to this Agreement or the
        other Operative Documents).

               (e) Approvals. No consent, approval, order or authorization of,
        or registration, declaration or filing with, any Governmental Authority
        or other Person (including, without limitation, the shareholders of any
        Person) is required in connection with the execution and delivery of the
        Operative Documents executed by such Lessor and the performance and
        consummation of the transactions contemplated thereby, except such as
        have been made or obtained and are in full force and effect.

               (f) Litigation. No actions (including, without limitation,
        derivative actions), suits, proceedings or investigations are pending
        or, to the knowledge of such Lessor, threatened against such Lessor at
        law or in equity in any court or before any other Governmental Authority
        which (i) is reasonably likely (alone or in the aggregate) to impair or
        adversely affect the Property or materially and adversely affect the
        ability of such Lessor to perform its obligations under the Operative
        Documents to which it is a party or (ii) seeks to enjoin, either
        directly or indirectly, the execution, delivery or performance by such
        Lessor of the Operative Documents or the transactions contemplated
        thereby.

               (g) Other Regulations. Such Lessor is not subject to regulation
        under the Investment Company Act of 1940, the Public Utility Holding
        Company Act of 1935, the Federal Power Act, the Interstate Commerce Act,
        any state public utilities code or to any other Governmental Rule
        limiting its ability to incur indebtedness.

               (h) Chief Executive Office. Such Lessor's chief executive office
        (if such Lessor is organized in the United States) or major executive
        office in the United States (if such Lessor is organized outside the
        United States) is located at the location listed in Schedule I.

        4.03. Participants' Representations and Warranties. In order to induce
Lessee, Lessors and Agent to enter into this Agreement and the other Operative
Documents to which they are

                                       30
<PAGE>   31

parties, each Participant hereby represents and warranties to Lessee,
Lessors and Agent as follows:

               (a) Due Incorporation, Qualification, etc. Such Participant (i)
        is a corporation duly organized, validly existing and in good standing
        under the laws of its jurisdiction of organization and (ii) has the
        power and authority to own, lease and operate its properties and carry
        on its business as now conducted and as contemplated herein.

               (b) Authority. The execution, delivery and performance by such
        Participant of each Operative Document executed, or to be executed, by
        such Participant and the consummation of the transactions contemplated
        thereby (i) are within the power of such Participant and (ii) have been
        duly authorized by all necessary actions on the part of such
        Participant.

               (c) Enforceability. Each Operative Document executed, or to be
        executed, by such Participant has been, or will be, duly executed and
        delivered by such Participant and constitutes, or will constitute, a
        legal, valid and binding obligation of such Participant, enforceable
        against such Participant in accordance with its terms, except as limited
        by bankruptcy, insolvency or other laws of general application relating
        to or affecting the enforcement of creditors' rights generally and
        general principles of equity.

               (d) Non-Contravention. The execution and delivery by such
        Participant of the Operative Documents executed by such Participant and
        the performance and consummation of the transactions contemplated
        thereby do not (i) violate any provision of any Governmental Rule
        binding on or affecting such Participant; (ii) contravene the terms of
        any charter, bylaws or other organizational documents of such
        Participant or result in the breach or the acceleration of, or entitle
        any other Person to accelerate (whether after the giving of notice or
        lapse of time or both), any Contractual Obligation of such Participant;
        or (iii) result in the creation or imposition of any Lien (or the
        obligation to create or impose any Lien) upon any property, asset or
        revenue of such Participant (except such Liens as may be created in
        favor of any Lessor Party pursuant to this Agreement or the other
        Operative Documents).

               (e) Approvals. No consent, approval, order or authorization of,
        or registration, declaration or filing with, any Governmental Authority
        or other Person (including, without limitation, the shareholders of any
        Person) is required in connection with the execution and delivery of the
        Operative Documents executed by such Participant and the performance and
        consummation of the transactions contemplated thereby, except such as
        have been made or obtained and are in full force and effect.

               (f) Litigation. No actions (including, without limitation,
        derivative actions), suits, proceedings or investigations are pending
        or, to the knowledge of such Participant, threatened against such
        Participant at law or in equity in any court or before any other
        Governmental Authority which (i) is reasonably likely (alone or in the
        aggregate) to impair or adversely affect the Property or materially and
        adversely affect the ability of such Participant to perform its
        obligations under the Operative Documents to which it is a

                                       31
<PAGE>   32

        party or (ii) seeks to enjoin, either directly or indirectly, the
        execution, delivery or performance by such Participant of the Operative
        Documents or the transactions contemplated thereby.

               (g) Own Account. Such Participant is acquiring its participation
        interest hereunder for its own account for investment and not with a
        view to any distribution (as such term is used in Section 2(11) of the
        Securities Act of 1933) thereof, and, if in the future it should decide
        to dispose of its participation interest, it understands that it may do
        so only in compliance with the Securities Act of 1933 and the rules and
        regulations of the Securities and Exchange Commission thereunder and any
        applicable state securities laws.

SECTION 5.     COVENANTS.

        5.01. Lessee's Affirmative Covenants. Until the termination of this
Agreement and the satisfaction in full by Lessee of all Lessee Obligations,
Lessee will comply, and will cause compliance, with the following affirmative
covenants, unless Required Participants shall otherwise consent in writing:

               (a) Financial Statements and Other Reports. Lessee will furnish
        to the Agent in sufficient copies for distribution to the other Lessor
        Parties:

                      (i) As soon as available and in any event within fifty
               (50) days after the end of each of the first three fiscal
               quarters of each fiscal year, the consolidated Financial
               Statements of Lessee and its Subsidiaries for such fiscal
               quarter, prepared in accordance with GAAP consistently applied,
               all in reasonable detail;

                      (ii) As soon as available and in any event within one
               hundred (100) days after the end of each fiscal year, the
               consolidated Financial Statements of Lessee and its Subsidiaries
               for such fiscal year, prepared in accordance with GAAP
               consistently applied, all in reasonable detail, and accompanied
               by a report thereon of PricewaterhouseCoopers LLP or another firm
               of independent certified public accountants of recognized
               national standing, which report shall be unqualified as to scope
               of audit or the status of Lessee and its Subsidiaries as a going
               concern;

                      (iii) Together with the Financial Statements required
               pursuant to clauses (i) and (ii) of this Subparagraph 5.01(a), a
               compliance certificate of a Responsible Officer of Lessee (a
               "Compliance Certificate") which (A) states that such Financial
               Statements fairly present the financial condition of Lessee and
               its Subsidiaries as at the last day of the fiscal quarter or
               fiscal year covered by such Financial Statements and the results
               of operations of Lessee and its Subsidiaries for such quarter or
               year and have been prepared in accordance with GAAP consistently
               applied, subject to normal, year-end audit adjustments in the
               case of the Financial Statements for any fiscal quarter; (B)
               states that no Default has

                                       32
<PAGE>   33

               occurred and is continuing, or, if any such Default has
               occurred and is continuing, a statement as to the nature thereof
               and what action Lessee proposes to take with respect thereto; and
               (C) sets forth, for the fiscal quarter or fiscal year covered by
               such Financial Statements or as of the last day of such quarter
               or year, the calculation of the financial ratios and tests
               provided in Paragraph 5.03;

                      (iv) As soon as available and in any event within fifty
               (50) days after the end of each fiscal quarter, a certificate of
               a Responsible Officer of Lessee (a "Pricing Ratio Certificate")
               which sets forth the calculation of the Pricing Ratio as of the
               last day of such quarter;

                      (v) Promptly after the giving, sending or filing thereof,
               copies of all reports, if any, which Lessee or any of its
               Subsidiaries sends generally to any class of holders of its
               respective capital stock or other securities and of all reports
               or filings, if any, by Lessee or any of its Subsidiaries with the
               SEC or any national securities exchange;

                      (vi) Promptly after Lessee has knowledge or becomes aware
               thereof, notice of the occurrence or existence of any Default;

                      (vii) Prompt written notice of any action, event or
               occurrence that could reasonably be expected to result in a
               Material Adverse Effect due to environmental liability under
               Environmental Laws;

                      (viii) Prompt written notice of all actions, suits and
               proceedings before any Governmental Authority or arbitrator
               pending, or to the best of Lessee's knowledge, threatened against
               or affecting Lessee or any of its Subsidiaries which (A) if
               adversely determined would involve an aggregate liability of
               $25,000,000 or more in excess of amounts covered by third-party
               insurance, or (B) otherwise may have a Material Adverse Effect;

                      (ix) Promptly after Lessee has knowledge or becomes aware
               thereof, (A) notice of the occurrence of any ERISA Event,
               together with a copy of any notice of such ERISA Event to the
               PBGC, and (B) the details concerning any action taken or proposed
               to be taken by the IRS, PBGC, Department of Labor or other Person
               with respect thereto;

                      (x) Promptly upon the commencement or increase of
               contributions to, the adoption of, or an amendment to, a Plan by
               Lessee or an ERISA Affiliate, if such commencement or increase of
               contributions, adoption, or amendment will result in a net
               increase in unfunded liability to Lessee or an ERISA Affiliate in
               excess of $10,000,000, a calculation of the net increase in
               unfunded liability;

                      (xi) Promptly after filing or receipt thereof by Lessee or
               any ERISA Affiliate, copies of the following:

                                       33
<PAGE>   34

                             (A) Any notice received from the PBGC of intent to
                      terminate or have a trustee appointed to administer any
                      Pension Plan;

                             (B) Any notice received from the sponsor of a
                      Multiemployer Plan concerning the imposition, delinquent
                      payment, or amount of withdrawal liability;

                             (C) Any demand by the PBGC under Subtitle D of
                      Title IV of ERISA; and

                             (D) Any notice received from the IRS regarding the
                      disqualification of a Plan intended to qualify under
                      Section 401(a) of the IRC;

                      (xii) Within forty-five (45) days of the date thereof, or,
               if earlier, on the date of delivery of any Financial Statements
               pursuant to clause (i) or (ii) of Subparagraph 5.01(a), notice of
               any change in accounting policies or financial reporting
               practices by Lessee or any of its Significant Subsidiaries that
               is expected to affect (or has affected) materially under U.S.
               GAAP the consolidated financial condition of Lessee and its
               Subsidiaries;

                      (xiii) Promptly after the occurrence thereof, notice of
               any labor controversy resulting in or threatening to result in
               any strike, work stoppage, boycott, shutdown or other material
               labor disruption against or involving Lessee or any of its
               Subsidiaries which could result in a Material Adverse Effect;

                      (xiv) Upon the request from time to time of any Lessor
               Party (through Agent), the Swap Termination Values, together with
               a description of the method by which such values were determined,
               relating to any then-outstanding Rate Contracts to which Lessee
               or any of its Subsidiaries is party;

                      (xv) Prompt written notice of any change in Lessee's
               fiscal year;

                      (xvi) Prompt written notice of any Person or Subsidiary
               not identified on Schedule 4.01(l) that becomes a Significant
               Subsidiary after the date of this Agreement;

                      (xvii) Prompt written notice of any other condition or
               event which has resulted, or that could reasonably be expected to
               result, in a Material Adverse Effect; and

                      (xviii) Such other information respecting the operations,
               properties, business or condition (financial or otherwise) of
               Lessee or its Significant Subsidiaries as any Lessor Party
               (through Agent) may from time to time reasonably request.

                                       34
<PAGE>   35

        Each notice pursuant to clauses (vi) - (xviii) of this Subparagraph
        5.01(a) shall be accompanied by a written statement by a Responsible
        Officer of Lessee setting forth details of the occurrence referred to
        therein, and stating what action Lessee proposes to take with respect
        thereto.

               (b) Preservation of Corporate Existence. Etc. Lessee shall and
        shall cause each Significant Subsidiary to:

                      (i) Preserve and maintain in full force and effect its
               corporate existence and good standing under the laws of its state
               or jurisdiction of incorporation or formation, except (A) in
               connection with transactions permitted by Paragraph 5.02 and (B)
               in the case of any Subsidiary to the extent that the failure to
               obtain or maintain the foregoing would not reasonably be expected
               to have a Material Adverse Effect;

                      (ii) Preserve and maintain in full force and effect all
               governmental rights, privileges, qualifications, permits,
               licenses and franchises necessary or desirable in the normal
               conduct of its business, except to the extent that the failure to
               obtain or maintain the foregoing would not reasonably be expected
               to have a Material Adverse Effect;

                      (iii) Use reasonable efforts, in the ordinary course of
               business, to preserve its business organization and goodwill,
               except in the case of any Significant Subsidiary to the extent
               that the failure to obtain or maintain the foregoing would not
               reasonably be expected to have a Material Adverse Effect; and

                      (iv) Preserve or renew all of its registered patents,
               trademarks, trade names and service marks, the non-preservation
               of which could reasonably be expected to have a Material Adverse
               Effect.

               (c) Payment of Taxes. Etc. Lessee will, and will cause each of
        its Significant Subsidiaries to, pay and discharge all material taxes,
        fees, assessments and other Governmental Charges imposed upon it or upon
        its properties or assets prior to the date on which penalties attach
        thereto, and all lawful and material claims for labor, materials and
        supplies which, if unpaid, might become a Lien upon any properties or
        assets of Lessee or any Significant Subsidiary, except to the extent
        such taxes, fees, assessments or other Governmental Charges, or such
        claims, are being contested in good faith by appropriate proceedings and
        are adequately reserved against in accordance with GAAP.

               (d) Licenses. Lessee will, and will cause each of its
        Significant Subsidiaries to, obtain and maintain all licenses,
        authorizations, consents, filings, exemptions, registrations and other
        governmental approvals necessary in connection with the execution,
        delivery and performance of the Operative Documents, the consummation of
        the transactions therein contemplated or the operation and conduct of
        its business and

                                       35
<PAGE>   36

        ownership of its properties, except to the extent that the
        failure to obtain or maintain the foregoing would not reasonably be
        expected to have a Material Adverse Effect.

               (e) Maintenance of Property. Except as otherwise permitted under
        Subparagraph 5.02(c) or Subparagraph 5.02(d), Lessee shall, and shall
        cause each Subsidiary to, maintain and preserve all its property which
        is used or useful in its business in good working order and condition in
        all material respects, ordinary wear and tear excepted.

               (f) Insurance. In addition to the insurance requirements set
        forth in the Lease Agreement with respect to the Property, Lessee shall
        maintain, and shall cause each Significant Subsidiary to maintain, with
        financially sound and reputable independent insurers, insurance with
        respect to its properties and business against losses and damages of the
        kinds and in amounts which are deemed prudent by Lessee in its
        reasonable business judgment and within the general parameters customary
        among similarly situated businesses in the industry.

               (g) Compliance with Laws. Lessee shall comply, and shall cause
        each Significant Subsidiary to comply, in all material respects with the
        requirements of all Environmental Laws and all applicable laws, rules,
        regulations and orders of any Governmental Authority having jurisdiction
        over it or its business.

               (h)    Compliance with ERISA.

                      (i) Lessee shall, and shall cause each of its ERISA
               Affiliates to: (A) maintain each Plan in compliance in all
               material respects with the applicable provisions of ERISA, the
               IRC and other federal or state law; (B) cause each Plan which is
               qualified under Section 401(a) of the IRC to maintain such
               qualification; and (C) make all required contributions to any
               Plan subject to Section 412 of the IRC.

                      (ii) Neither Lessee nor any of its Significant
               Subsidiaries shall (A) engage in any transaction prohibited by
               any Governmental Rule applicable to any Foreign Plan, (B) fail to
               make full payment when due of all amounts due as contributions to
               any Foreign Plan or (C) otherwise fail to comply with the
               requirements of any Governmental Rule applicable to any Foreign
               Plan, where singly or cumulatively, the above would be reasonably
               likely to have a Material Adverse Effect.

               (i) Inspection of Property and Books and Records. Lessee shall
        maintain and shall cause each Significant Subsidiary to maintain proper
        books of record and account, in which full, true and correct entries in
        conformity with GAAP consistently applied shall be made of all financial
        transactions and matters involving the assets and business of Lessee and
        such Significant Subsidiary. Lessee shall permit, and shall cause each
        Significant Subsidiary to permit, representatives and independent
        contractors of any Lessor Party to visit and inspect any of their
        respective properties, to examine their

                                       36
<PAGE>   37

        respective corporate, financial and operating records, and make
        copies thereof or abstracts therefrom, and to discuss their respective
        affairs, finances and accounts with their respective directors,
        officers, and independent public accountants, all at the expense of
        Lessee and at such reasonable times during normal business hours and as
        often as may be reasonably desired, upon reasonable advance notice to
        Lessee; provided, however, that (i) unless an Event of Default shall
        have occurred and be continuing, (A) Lessee shall be responsible under
        this Subparagraph 5.01(i) for the costs and expenses of Agent only, (B)
        all inspections, visits, examinations and other actions permitted or
        authorized hereunder shall be coordinated only through Lessee, and (C)
        physical inspections of the Property and any Property Site shall be made
        on two weeks' prior notice and shall occur no more frequently than
        semiannually in the case of inspections by Agent and no more frequently
        than annually otherwise, and (ii) when an Event of Default exists any
        Lessor Party may make any visit, inspection or examination or take any
        other action authorized hereunder at the expense of Lessee at any time
        during normal business hours, without advance notice and without being
        subject to any of the other restrictions described in clause (i).

               (j) Use of Proceeds. The proceeds of the Acquisition Advances
        shall be used solely to pay the Acquisition Prices and Permitted
        Installation Expenses for the Property and the proceeds of the Expense
        Advances shall be used solely to pay Permitted Transaction Expenses.

               (k) Further Assurances and Additional Acts. Lessee will execute,
        acknowledge, deliver, file, notarize and register at its own expense all
        such further agreements, instruments, certificates, documents and
        assurances and perform such acts as Agent, Required Participants shall
        deem necessary or appropriate to effectuate the purposes of the
        Operative Documents, and promptly provide the Agent with evidence of the
        foregoing satisfactory in form and substance to Agent and Required
        Participants.

        5.02. Lessee's Negative Covenants. Until the termination of this
Agreement and the satisfaction in full by Lessee of all Lessee Obligations,
Lessee will comply, and will cause compliance, with the following negative
covenants, unless Required Participants shall otherwise consent in writing:

               (a) Liens. Lessee will not, and will not permit any of its
        Significant Subsidiaries to, create, incur, assume or suffer to exist
        any Lien upon or with respect to any of their properties, revenues or
        assets, whether now owned or hereafter acquired, other than (i)
        Permitted Liens and (ii) other Liens that, in the aggregate at any time,
        secure obligations in an amount not in excess of ten percent (10%) of
        Consolidated Total Assets determined as of the last day of the
        immediately preceding fiscal quarter (or fiscal year, as the case may
        be); provided, however, that the foregoing exceptions shall not be
        construed to permit any Liens, except for Permitted Property Liens, in
        any of the Property.

               (b) Change in Nature of Business. Lessee will not, and will not
        permit any of its Significant Subsidiaries to, engage in any material
        line of business other than the electronics business and other
        businesses incidental or reasonably related thereto.

                                       37
<PAGE>   38

               (c) Restrictions on Fundamental Changes. Lessee will not, and
        will not permit any of its Significant Subsidiaries to, merge with or
        consolidate into, or acquire all or substantially all of the assets of,
        any Person, or sell, transfer, lease or otherwise dispose of (whether in
        one transaction or in a series of transactions) all or substantially all
        of its assets, except that:

                      (i) Any of Lessee's Significant Subsidiaries may merge
               with, consolidate into or transfer all or substantially all of
               its assets to another of Lessee's Significant Subsidiaries or to
               Lessee and in connection therewith such Significant Subsidiary
               (other than Lessee) may be liquidated or dissolved, provided that
               (A) if the transaction involves Lessee, Lessee shall be the
               surviving Person, and (B) if any transaction shall be between a
               non-wholly owned Significant Subsidiary and a wholly-owned
               Significant Subsidiary, the wholly-owned Significant Subsidiary
               shall be the continuing or surviving Person, and provided further
               that no Material Adverse Effect or Default shall result
               therefrom;

                      (ii) Lessee or any of its Significant Subsidiaries may
               sell or dispose of assets in accordance with the provisions of
               Subparagraph 5.02(d);

                      (iii) Lessee or any of its Significant Subsidiaries may
               make any investment or Acquisition permitted by Subparagraph
               5.02(e); and

                      (iv) Lessee may merge with or consolidate into any other
               Person, provided that (A) Lessee is the surviving Person, and (B)
               no such merger or consolidation shall be made while there exists
               a Default or if a Default or Material Adverse Effect would occur
               as a result thereof.

               (d) Sales of Assets. Lessee will not, and will not permit any of
        its Significant Subsidiaries to, convey, sell, lease, transfer, or
        otherwise dispose of, or part with control of (whether in one
        transaction or a series of transactions) any assets (including any
        shares of stock in any Subsidiary or other Person), except:

                      (i) Sales or other dispositions of inventory in the
               ordinary course of business;

                      (ii) Sales or other dispositions of assets in the ordinary
               course of business which have become worn out or obsolete or
               which are promptly being replaced;

                      (iii) Sales of accounts receivable to financial
               institutions not affiliated with Lessee; provided that (A) the
               discount rate shall not at any time exceed ten percent (10%), (B)
               the amount of all accounts receivable permitted to be sold in any
               fiscal quarter shall not exceed twenty percent (20%) of the
               consolidated accounts receivable of Lessee and its Subsidiaries,
               determined as of the last of the

                                       38
<PAGE>   39

               immediately preceding fiscal quarter (or fiscal year, as the
               case may be), and (C) the sole consideration received for such
               sales shall be cash;

                      (iv) Sales of equipment to be leased back to Lessee in
               conjunction with a "synthetic lease" of such equipment, provided
               that the "principal" of such financing does not exceed
               $250,000,000 (including any Equipment sold and leased back
               pursuant to the Operative Documents);

                      (v) Sales or other dispositions of assets outside the
               ordinary course of business which do not constitute Substantial
               Assets (as defined below); and

                      (vi) Sales or other dispositions of Permitted Investments;

        Provided, however, that the foregoing exceptions shall not be construed
        to permit any sales, leases, transfers or other disposals of any of the
        Property, except as expressly permitted by the Lease Agreement. For
        purposes of clause (v) above, a sale, lease, transfer or other
        disposition of assets shall be deemed to be of "Substantial Assets" if
        such assets, when added to all other assets conveyed, sold, leased,
        transferred or otherwise disposed of in any period of four consecutive
        fiscal quarters (other than assets sold in the ordinary course of
        business or pursuant to clause (iii) above or Property sold pursuant to
        the Operative Documents), shall exceed ten percent (10%) of Consolidated
        Total Assets as determined as of the last day of the fiscal quarter of
        Lessee immediately preceding the date of determination.

               (e) Loans and Investments. Lessee will not, and will not permit
        any of its Significant Subsidiaries to, extend any credit to, guarantee
        the obligations of or make any investments in or acquire any interest
        in, any Person, other than in connection with:

                      (i) Extensions of credit in the nature of accounts
               receivable or notes receivable arising from the sales of goods or
               services in the ordinary course of business;

                      (ii) Permitted Investments;

                      (iii) Additional purchases of or investments in the stock
               of, or guarantees of the obligations of, Subsidiaries;

                      (iv) Employee loans and guarantees in accordance with
               Lessee's usual and customary practices with respect thereto;

                      (v) Any Acquisition; or

                      (vi) Additional investments not exceeding, in the
               aggregate with all such investments, $300,000,000 during the
               period from the date of this Agreement through the last Scheduled
               Expiration Date of any Lease Supplement;

                                       39
<PAGE>   40

        provided that in the case of an Acquisition referred to in clause (v)
        above or an investment referred to in clause (vi) above, no such
        Acquisition or investment shall be made while there exists a Default or
        if a Default or Material Adverse Effect would occur as a result thereof.

               (f) Distributions. Lessee will not declare or pay any dividends
        in respect of its capital stock, or purchase, redeem, retire or
        otherwise acquire for value any of its capital stock now or hereafter
        outstanding, return any capital to its shareholders as such, or make any
        distribution of assets to its shareholders as such, or permit any of its
        Subsidiaries to purchase, redeem, retire, or otherwise acquire for value
        any stock of Lessee, except that Lessee may:

                      (i) Declare and deliver dividends and distributions
               payable only in common stock of Lessee;

                      (ii) Purchase shares of its capital stock from time to
               time in connection with the issuance of shares under Lessee's
               employee stock option plans;

                      (iii) Purchase, redeem, retire, or otherwise acquire
               shares of its capital stock with the proceeds received from a
               substantially concurrent issue of new shares of its capital
               stock; and

                      (iv) In addition to the dividends, purchases, redemptions,
               retirements and other acquisitions permitted by the foregoing
               clauses (i) through (iii) above, declare and deliver dividends
               and distributions, and purchase, redeem, retire, or otherwise
               acquire shares of its capital stock, in an aggregate amount not
               exceeding $100,000,000 in any period of four consecutive fiscal
               quarters.

               (g) Transactions with Related Parties. Lessee will not, and will
        not permit any of its Significant Subsidiaries to, enter into any
        transaction, including the purchase, sale or exchange of property or the
        rendering of any services, with any Affiliate, any officer or director
        thereof or any Person which beneficially owns or holds twenty percent
        (20%) or more of the equity securities, or twenty percent (20%) or more
        of the equity interest, thereof (a "Related Party"), or enter into,
        assume or suffer to exist, or permit any Significant Subsidiary to enter
        into, assume or suffer to exist, any employment or consulting contract
        with any Related Party, except (i) a transaction or contract which is in
        the ordinary course of Lessee's or such Significant Subsidiary's
        business, including a transaction in the ordinary course of business
        between or among Lessee and one or more of its Subsidiaries, and (ii)
        any other transaction which is upon fair and reasonable terms not less
        favorable to Lessee or such Significant Subsidiary than it would obtain
        in a comparable arm's length transaction with a Person not a Related
        Party. For purposes of this Subparagraph 5.02(g), the sale, transfer or
        disposition of more than thirty percent (30%) of its assets (in any
        transaction or a series of related transactions) by Lessee or any
        Significant Subsidiary shall be deemed to be outside the ordinary course
        of business.

                                       40
<PAGE>   41

               (h) Accounting Changes. Lessee will not, and will not suffer or
        permit any of its Significant Subsidiaries to make any significant
        change in accounting treatment or reporting practices, except as
        required or permitted by GAAP (or, in the case of any Significant
        Subsidiary domiciled in a jurisdiction other than the United States, in
        accordance with generally accepted accounting principles and practices
        in such jurisdiction).

               (i) Chief Executive Office. Lessee shall not change its chief
        executive office unless Lessee has given Agent not less than thirty (30)
        days prior written notice and Lessee has executed and filed such Uniform
        Commercial Code financing statements as Agent may reasonably request
        during such thirty-day period to protect the security interests of the
        Lessor Parties granted by the Operative Documents.

        5.03. Lessee's Financial Covenants. Until the termination of this
Agreement and the satisfaction in full by Lessee of all Lessee Obligations,
Lessee will comply, and will cause compliance, with the following financial
covenants, unless Required Participants shall otherwise consent in writing:

               (a) Consolidated Total Debt to Total Capital. Lessee will
        maintain a ratio of Consolidated Total Debt to Total Capital of not more
        than 0.50 to 1.0 as of the last day of each fiscal quarter.

               (b) Quick Ratio. Lessee will maintain a ratio of Consolidated
        Quick Assets to Consolidated Current Liabilities of not less than 1.25
        to 1.00 as of the last day of each fiscal quarter.

               (c) Minimum Consolidated Tangible Net Worth. Lessee will maintain
        Consolidated Tangible Net Worth (exclusive of the cumulative translation
        adjustment account as reported in the consolidated balance sheet of
        Lessee and its Subsidiaries as of such date) as of the end of each
        fiscal quarter of not less than (i) $1,198,926,000 plus (ii) one hundred
        percent (100%) of the net proceeds received by Lessee or any Subsidiary
        from the sale or issuance of equity securities (including equity
        securities issued upon the conversion of Subordinated Debt) to any
        Person other than Lessee or any Subsidiary after December 31, 1999, plus
        (iii) eighty percent (80%) of the sum of Consolidated Net Income, if
        such sum is positive, for each fiscal quarter elapsed after December 31,
        1999, minus (iv) the net value of Lessee stock not exceeding
        $250,000,000 in aggregate amount repurchased by Lessee pursuant to
        employee stock ownership and purchase plans (provided that Lessee shall
        not so repurchase stock in an aggregate amount which exceeds five
        percent (5%) of its stock outstanding as of the last day of such fiscal
        quarter).

               (d) Debt Service Coverage Ratio. Lessee will maintain a ratio of
        (i) Consolidated EBITDA to (ii) the sum of Consolidated CMLTD, plus
        Consolidated Interest Expense, plus Capitalized Interest, that is not
        less than 2.00 to 1.00 for any period of four consecutive fiscal
        quarters, calculated as of the end of such period.

                                       41
<PAGE>   42

               (e) Subordinated Debt. Lessee will not, and will not permit any
        of its Subsidiaries to, make any voluntary or optional payment or
        repayment on, redemption, exchange or acquisition for value of (other
        than any such payment, repayment, redemption, exchange or acquisition
        which would not constitute a payment for purposes of Section 13.10 of
        the subordination provisions attached hereto as Exhibit I), or any
        sinking fund or similar payment with respect to, any Subordinated Debt
        (a "restricted payment") if a Default shall then exist or would occur as
        a result thereof. In no event shall any restricted payment be made if
        the ratio of Consolidated Quick Assets to Consolidated Current
        Liabilities is less than 1.50 to 1.00 as of the last day of the fiscal
        quarter immediately preceding such restricted payment and after giving
        effect to such restricted payment. At or prior to the time notice of
        such restricted payment is given to the holders of Subordinated Debt (or
        if no such notice is required, prior to the time of such restricted
        payment), Lessee shall give written notice to Agent of the maximum
        amount of such restricted payment and of the satisfaction of the
        foregoing condition.

        5.04. Lessors' Covenants. Until the termination of this Agreement and
the satisfaction in full by Lessors of all Lessor Obligations, each Lessor and
Lessor Agent will comply, and will cause compliance, with the following
covenants, unless Lessee and Required Participants shall otherwise consent in
writing:

               (a) Use of Proceeds. Lessors shall use the proceeds of all
        amounts delivered to Lessors by Participants pursuant to Subparagraph
        2.05(a) solely to fund Advances.

               (b) Lessor Liens. No Lessor or Lessor Agent shall create, incur,
        assume or permit to exist any Lessor Lien (other than any Lien granted
        to Agent or any Participant pursuant to the Operative Documents to
        secure the Lessor Obligations) and each Lessor shall promptly discharge,
        at its sole cost and expense, any Lessor Lien on the Property
        attributable to such Lessor or Lessor Agent (other than any Liens
        granted to Agent or any Participant pursuant to the Operative Documents
        to secure the Lessor Obligations); provided, however, that no Lessor or
        Lessor Agent shall be required so to discharge any such Lessor Lien if
        the same is being (or promptly will be) contested in good faith by
        appropriate proceedings diligently prosecuted, provided that any such
        contest suspends the enforcement of such Lessor Lien and is completed
        and all Lessor Liens are discharged on or prior to the Expiration Date
        for the Lease Supplement to which such Property is subject or at the
        time the Property is purchased by Lessee pursuant to any Term Purchase
        Option or Partial Purchase Option.

               (c) Property Disposition. No Lessor shall sell, lease, transfer
        or otherwise dispose of its right, title and interest in the Property
        and the Operative Documents except as provided in Subparagraph 2.12(b)
        or Subparagraph 7.05(c) hereof or in the Purchase Agreement or after
        retaining the Property following the Expiration Date.

               (d) Chief Executive Office. No Lessor shall change its chief
        executive office (if such Lessor is organized in the United States) or
        its major executive office in the United States (if such Lessor is
        organized outside the United States) without giving Agent prompt written
        notice.

                                       42
<PAGE>   43

        5.05. Participants' Covenants. Each Participant covenants that it will
not fund its portion of any Advance with the assets of any "employee benefit
plan" (as defined in Section 3(3) of ERISA) which is subject to Title I of ERISA
or any "plan" (as defined in Section 4975(e)(1) of the IRC.

SECTION 6. LESSORS, LESSOR AGENT, AGENT AND THEIR RELATIONS WITH PARTICIPANTS.

        6.01. Appointment of Lessor Agent and Agent. Each Lessor hereby appoints
and authorizes Lessor Agent to act as its agent hereunder and under the other
Operative Documents with such powers as are expressly delegated to Lessor Agent
by the terms of this Agreement and the other Operative Documents, together with
such other powers as are reasonably incidental thereto. Each Participant hereby
appoints and authorizes Agent to act as its agent hereunder and under the other
Operative Documents with such powers as are expressly delegated to Agent by the
terms of this Agreement and the other Operative Documents, together with such
other powers as are reasonably incidental thereto. Neither Lessor Agent nor any
Lessor is an agent for the Participants or Agent, and neither this Agreement nor
any other Operative Document shall be construed to constitute or evidence a
partnership among the Lessor Parties or otherwise to impose upon any Lessor,
Lessor Agent or Agent any fiduciary duty.

        6.02. Powers and Immunities. None of Lessors, Lessor Agent or Agent
shall have any duties or responsibilities except those expressly set forth in
this Agreement or in any other Operative Document, be a trustee for any
Participant or have any fiduciary duty to any Participant. Notwithstanding
anything to the contrary contained herein, none of Lessors, Lessor Agent or
Agent shall be required to take any action which is contrary to this Agreement
or any other Operative Document or any applicable Governmental Rule. None of
Lessors, Lessor Agent, Agent or any Participant shall be responsible to any
Participant for any recitals, statements, representations or warranties made by
Lessee or any of its Subsidiaries contained in this Agreement or in any other
Operative Document, for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Operative Document
or for any failure by Lessee or any of its Subsidiaries to perform their
respective obligations hereunder or thereunder. Lessors, Lessor Agent and Agent
may employ agents and attorneys-in-fact and shall not be responsible to any
Participant for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. None of Lessors, Lessor
Agent or Agent nor any of their respective directors, officers, employees,
agents or advisors shall be responsible to any Participant for any action taken
or omitted to be taken by it or them hereunder or under any other Operative
Document or in connection herewith or therewith, except for its or their own
gross negligence or willful misconduct. Except as otherwise provided under this
Agreement, Lessors, Lessor Agent and Agent shall take such action with respect
to the Operative Documents as shall be directed by the Required Participants.

        6.03. Reliance. Lessors, Lessor Agent and Agent shall be entitled to
rely upon any certificate, notice or other document (including any cable,
telegram, facsimile or telex) believed by it in good faith to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel, independent

                                       43
<PAGE>   44

accountants and other experts selected by Lessors, Lessor Agent or Agent with
reasonable care. As to any other matters not expressly provided for by this
Agreement, none of Lessors, Lessor Agent or Agent shall be required to take any
action or exercise any discretion, but shall be required to act or to refrain
from acting upon instructions of the Required Participants and shall in all
cases be fully protected by the Participants in acting, or in refraining from
acting, hereunder or under any other Operative Document in accordance with the
instructions of the Required Participants, and such instructions of the Required
Participants and any action taken or failure to act pursuant thereto shall be
binding on all of the Participants and Lessors.

        6.04. Defaults. None of Lessors, Lessor Agent or Agent shall be deemed
to have knowledge or notice of the occurrence of any Default unless such Lessor,
Lessor Agent or Agent has received a written notice from a Participant or
Lessee, referring to this Agreement, describing such Default and stating that
such notice is a "Notice of Default". If any Lessor, Lessor Agent and Agent
receive such a notice of the occurrence of a Default, Agent shall give prompt
notice thereof to the Participants. Lessors, Lessor Agent and Agent shall take
such action with respect to such Default as shall be reasonably directed by the
Required Participants; provided, however, that until Lessors, Lessor Agent and
Agent shall have received such directions, Lessors, Lessor Agent or Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default as it shall deem advisable in the best
interest of the Participants.

        6.05. Indemnification. Without limiting the Obligations of Lessee
hereunder, each Participant agrees to indemnify Lessors, Lessor Agent and Agent
(to the extent not previously reimbursed by Lessee), ratably in accordance with
such Participant's Proportionate Share, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may at any time
be imposed on, incurred by or asserted against Lessors or Agent in any way
relating to or arising out of this Agreement or any documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
or the enforcement of any of the terms hereof or thereof; provided, however,
that no Participant shall be liable to any Lessor, Lessor Agent or Agent for any
of the foregoing to the extent they arise from such Person's gross negligence or
willful misconduct. Lessors, Lessor Agent or Agent shall be fully justified in
refusing to take or in continuing to take any action hereunder unless it shall
first be indemnified to its satisfaction by the Participants against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The obligations of each Participant under
this Paragraph 6.05 shall survive the payment and performance of the Lessee
Obligations, the termination of this Agreement and any Participant ceasing to be
a party to this Agreement (with respect to events which occurred prior to the
time such Participant ceased to be a Participant hereunder).

        6.06. Non-Reliance. Each Participant represents that it has,
independently and without reliance on Lessors, Lessor Agent, Agent or any other
Participant, and based on such documents and information as it has deemed
appropriate, made its own appraisal of the business, prospects, management,
financial condition and affairs of Lessee and the Subsidiaries and its own
decision to enter into this Agreement and agrees that it will, independently and
without reliance upon Lessors, Lessor Agent, Agent or any other Participant, and
based on such documents and

                                       44
<PAGE>   45

information as it shall deem appropriate at the time, continue to make its own
appraisals and decisions in taking or not taking action under this Agreement or
any other Operative Document. None of Lessors, Lessor Agent or Agent nor any of
their respective affiliates nor any of their respective directors, officers,
employees, agents or advisors shall (a) be required to keep any Participant
informed as to the performance or observance by Lessee or any of its
Subsidiaries of the obligations under this Agreement or any other document
referred to or provided for herein or to make inquiry of, or to inspect the
properties or books of Lessee or any of its Subsidiaries; (b) have any duty or
responsibility to provide any Participant with any credit or other information
concerning Lessee or any of its Subsidiaries which may come into the possession
of any Lessor, Lessor Agent or Agent, except for notices, reports and other
documents and information expressly required to be furnished to the Participants
by Lessors, Lessor Agent or Agent hereunder; or (c) be responsible to any
Participant for (i) any recital, statement, representation or warranty made by
Lessee or any officer, employee or agent of Lessee in this Agreement or in any
of the other Operative Documents, (ii) the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any Operative
Document, (iii) the value or sufficiency of the Property or the validity or
perfection of any of the liens or security interests intended to be created by
the Operative Documents, or (iv) any failure by Lessee to perform its
obligations under this Agreement or any other Operative Document.

        6.07. Resignation or Removal of Lessor Agent or Agent. Lessor Agent may
resign at any time by giving thirty (30) days prior written notice thereof to
Lessee and Lessors, and Lessor Agent may be removed at any time with or without
cause by the Lessors. Upon any such resignation or removal, the Lessors shall
have the right to appoint a successor Lessor Agent, which Lessor Agent, if not a
Participant, shall be reasonably acceptable to Lessee; provided, however, that
Lessee shall have no right to approve a successor Lessor Agent if a Default has
occurred and is continuing. Agent may resign at any time by giving thirty (30)
days prior written notice thereof to Lessee and the Participants, and Agent may
be removed at any time with or without cause by the Required Participants. Upon
any such resignation or removal, the Required Participants shall have the right
to appoint a successor Agent, which Agent, if not a Participant, shall be
reasonably acceptable to Lessee; provided, however, that Lessee shall have no
right to approve a successor Agent if a Default has occurred and is continuing.
Upon the acceptance of any appointment as Lessor Agent or Agent hereunder by a
successor Lessor Agent or successor Agent, such successor Lessor Agent or
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Lessor Agent or retiring
Agent, and the retiring Lessor Agent or retiring Agent shall be discharged from
the duties and obligations thereafter arising hereunder. After any resignation
or removal hereunder as Lessor Agent or Agent, the provisions of this Section 6
and any other provision of this Agreement or any other Operative Document which
by its terms survives the termination of this Agreement shall continue in effect
for the benefit of such retiring Lessor Agent or retiring Agent in respect of
any actions taken or omitted to be taken by it while it was acting as Lessor
Agent or Agent.

        6.08. Authorization. Lessor Agent is hereby authorized by Lessors to
execute, deliver and perform, each of the Operative Documents to which Lessor
Agent is or is intended to be a party and each Lessor agrees to be bound by all
of the agreements of Lessor Agent contained in the Operative Documents. Agent is
hereby authorized by the Participants to execute, deliver
and perform, each of the Operative Documents to which Agent is or is intended to
be a party and

                                       45
<PAGE>   46

each Participant agrees to be bound by all of the agreements of Agent contained
in the Operative Documents. Without limiting the generality of the foregoing,
Lessors and the Participants expressly authorize Lessor Agent and Agent to
execute and deliver to Lessee such Uniform Commercial Code releases and other
documents, instruments and agreements as Lessee may reasonably request to
release its Liens in, and to transfer to Lessee Lessors' right, title and
interest in and to (a) any Replaced Property replaced pursuant to Subparagraph
3.01(b) of the Lease Agreement and (b) any Property purchased by Lessee, an
Assignee Purchaser or a Designated Purchaser pursuant to Paragraph 2.01,
Paragraph 2.02 or Paragraph 3 of the Purchase Agreement.

        6.09. Lessors, Lessor Agent and Agent in their Individual Capacities.
Lessors, Lessor Agent, Agent and their respective affiliates may make loans to,
accept deposits from and generally engage in any kind of banking or other
business with Lessee and its Subsidiaries and affiliates as though Lessors were
not Lessors hereunder, Lessor Agent were not Lessor Agent hereunder and Agent
were not Agent hereunder. With respect to Advances, if any, made by Lessor Agent
or Agent in its capacity as a Participant, Lessor Agent or Agent in its capacity
as a Participant shall have the same rights and powers under this Agreement and
the other Operative Documents as any other Participant and may exercise the same
as though it were not Lessor Agent or Agent, and the terms "Participant" or
"Participants" shall include Lessor Agent or Agent in its capacity as a
Participant.

                                       46
<PAGE>   47

SECTION 7. MISCELLANEOUS

        7.01. Notices. Except as otherwise provided herein, all notices,
requests, demands, consents, instructions or other communications to or upon
Lessee, any Lessor or Participant, Lessor Agent or Agent under this Agreement or
the other Operative Documents shall be in writing and faxed, mailed or
delivered, if to Lessee, Lessor Agent or Agent, at its respective facsimile
number or address set forth below or, if to any Lessor or Participant, at the
address or facsimile number specified beneath the heading "Address for Notices"
under the name of such Lessor or Participant in Part B of Schedule I (or to such
other facsimile number or address for any party as indicated in any notice given
by that party to the other parties). All such notices and communications shall
be effective (a) when sent by an overnight service of recognized standing, on
the Business Day following the deposit with such service; (b) when mailed, first
class postage prepaid and addressed as aforesaid through the United States
Postal Service, upon receipt; (c) when delivered by hand, upon delivery; and (d)
when faxed, upon confirmation of receipt; provided, however, that any Advance
Request, Notice of Rental Period Selection, Notice of Renewal Exercise Option,
Notice of Partial Purchase Option Exercise, Notice of Term Purchase Option
Exercise, Notice of Marketing Option Exercise or Notice of Expiration Date
Purchase Option Exercise delivered to Agent shall not be effective until
received by Agent.

               Lessee:       LSI Logic Corporation
                             1551 McCarthy Blvd.
                             Milpitas, CA 95035
                             Attn:  Anita Prasad, Treasurer
                                    Mail Stop D106
                             Tel. No:  (408) 954-4489
                             Fax. No:  (408) 433-6896

               Lessor
               Agent:        ABN AMRO Bank N.V.
                             Syndications Group
                             1325 Avenue of the Americas, 9th Floor
                             New York, NY  10019
                             Attn:  Linda Boardman
                             Tel. No:  (212) 314-1724
                             Fax. No:  (212) 314-1709

               Agent:        ABN AMRO Bank N.V.
                             Syndications Group
                             1325 Avenue of the Americas, 9th Floor
                             New York, NY  10019
                             Attn:  Linda Boardman
                             Tel. No:  (212) 314-1724
                             Fax. No:  (212) 314-1709

Each Advance Request, Notice of Rental Period Selection, Notice of Renewal
Option Exercise, Notice of Partial Purchase Option Exercise, Notice of Term
Purchase Option Exercise, Notice of

                                       47
<PAGE>   48

Marketing Option Exercise and Notice of Expiration Date Purchase Option Exercise
shall be given by Lessee to Agent's office located at its address referred to
above during its normal business hours; provided, however, that any such notice
received by Agent after 1:00 p.m. (Chicago time) on any Business Day shall be
deemed received by Agent on the next Business Day. In any case where this
Agreement authorizes notices, requests, demands or other communications by
Lessee to any Lessor Party to be made by telephone or facsimile, any Lessor
Party may conclusively presume that anyone purporting to be a person designated
in any incumbency certificate or other similar document received by such Lessor
Party is such a person.

        7.02. Expenses. Lessee shall pay promptly upon receipt of an invoice
therefor, whether or not any Advance is made hereunder, (a) all reasonable fees
and expenses, including reasonable attorneys' fees and expenses, incurred by
Lessor Agent and Agent in connection with (i) the preparation, negotiation,
execution and delivery of this Agreement and the other Operative Documents, (ii)
the consummation of the transactions contemplated by, the exercise of their
duties under and any other actions reasonably taken by them in connection with
this Agreement and the other Operative Documents, and (iii) the preparation,
negotiation, execution and delivery of amendments and waivers hereunder and
thereunder, and (b) all reasonable fees and expenses, including reasonable
attorneys' fees and expenses, incurred by the Lessor Parties in the enforcement
or attempted enforcement of any of the Lessee Obligations or in preserving any
of the Lessor Parties' rights and remedies (including all such fees and expenses
incurred in connection with any "workout" or restructuring affecting the
Operative Documents or the Lessee Obligations or any bankruptcy or similar
proceeding involving Lessee or any of its Subsidiaries). The obligations of
Lessee under this Paragraph 7.02 shall survive the payment and performance of
the Lessee Obligations and the termination of this Agreement.

        7.03. Indemnification. To the fullest extent permitted by law, Lessee
agrees to protect, indemnify, defend and hold harmless, on an after-tax basis,
the Lessor Parties and the other Indemnitees from and against any and all
liabilities, losses, damages or expenses of any kind or nature (including
Indemnified Taxes but not other taxes) and from any suits, claims or demands
(including in respect of or for reasonable attorney's fees and other expenses)
arising on account of or in connection with any matter or thing or action or
failure to act by Indemnitees, or any of them, arising out of or relating to the
Operative Documents, any transaction contemplated thereby or the Property,
including any use by Lessee of the Property or the Advances, except (a) to the
extent such liability arises from the willful misconduct or gross negligence of
such Indemnitee, (b) for the normal administrative expenses of Indemnitees in
performing their obligations under the Operative Documents (except as otherwise
expressly provided therein) and (c) any liabilities, losses, damages or expenses
owed to Lessee (provided that the exception in this clause (c) shall not excuse
Lessee from making any payment or performing any other obligation it is required
to make or perform under any of the Operative Documents or by any applicable
Governmental Rule). Upon receiving knowledge of any suit, claim or demand
asserted by a third party that any Lessor Party believes is covered by this
indemnity, such Lessor Party shall give Lessee notice of the matter and an
opportunity to defend it, at Lessee's sole cost and expense, with legal counsel
reasonably satisfactory to such Lessor Party. Such Lessor Parties may also
require Lessee to defend the matter. Any failure or delay of any Lessor Party to
notify Lessee of any such suit, claim or demand shall not relieve Lessee of its
obligations under this Paragraph 7.03 but shall reduce such obligations to the
extent of any increase in those obligations

                                       48
<PAGE>   49

caused solely by any failure or delay which is unreasonable. The obligations of
Lessee under this Paragraph 7.03 shall survive the payment and performance of
the Lessee Obligations and the termination of this Agreement.

        7.04. Waivers; Amendments. Any term, covenant, agreement or condition of
this Agreement or any other Operative Document may be amended or waived if such
amendment or waiver is in writing and is signed by Lessee and the Required
Participants; provided, however that:

               (a) Any amendment, waiver or consent which (i) increases the
        Total Commitment, (ii) extends the Commitment Termination Date or,
        except as otherwise provided in Subparagraph 2.02(b) of the Lease
        Agreement, the Scheduled Expiration Date for any Lease Supplement, (iii)
        reduces the Fixed Component of Base Rent (except as otherwise provided
        in Paragraph 2.09 hereof and Subparagraph 2.02(b) of the Lease
        Agreement), the Rental Rate or any fees or other amounts payable for the
        account of the Participants hereunder or under the other Operative
        Documents, (iv) postpones any date scheduled for any payment of Base
        Rent or any fees or other amounts payable for the account of all
        Participants hereunder or thereunder, (v) amends Paragraph 2.06 or this
        Paragraph 7.04, (vi) amends the definitions of Required Participants,
        Tranche A Proportionate Share or Tranche B Proportionate Share, or (vii)
        except as otherwise provided in Paragraph 6.08, releases any Lessor's or
        Agent's interest in any substantial part of the Property, must be in
        writing and signed or approved in writing by all Participants;

               (b) Any amendment, waiver or consent which (i) increases or
        decreases the Proportionate Share (other than any allocation or
        reallocation of a Participant's Tranche A Proportionate Share, Tranche B
        Proportionate Share or Equity Proportionate Share as provided in
        Subparagraph 2.02(a) and Paragraph 2.09 of the Participation Agreement
        or Subparagraph 2.02(b) of the Lease Agreement) or Commitment of any
        Participant, or (ii) allocates or reallocates any of the Equity Portion
        of any Lease Supplement to any Participant which was not an Equity
        Participant prior to such allocation or reallocation, must be in writing
        and signed by such Participant; and

               (c) Any amendment, waiver or consent which affects the rights or
        obligations of Lessor Agent or Agent must be in writing and signed by
        Lessor Agent or Agent, as the case may be.

No failure or delay by any Lessor Party in exercising any right under this
Agreement or any other Operative Document shall operate as a waiver thereof or
of any other right hereunder or thereunder nor shall any single or partial
exercise of any such right preclude any other further exercise thereof or of any
other right hereunder or thereunder. Unless otherwise specified in such waiver
or consent, a waiver or consent given hereunder shall be effective only in the
specific instance and for the specific purpose for which given.

        7.05.  Successors and Assigns.

                                       49
<PAGE>   50

               (a) Binding Effect. This Agreement and the other Operative
        Documents shall be binding upon and inure to the benefit of Lessee,
        Lessors, the Participants, Lessor Agent, Agent and their respective
        permitted successors and assigns. All references in this Agreement to
        any Person shall be deemed to include all successors and assigns of such
        Person.

               (b) Participant Assignments.

                      (i) Any Participant may, at any time, sell and assign to
               any other Participant or any Eligible Assignee (individually, an
               "Assignee Participant") all or a portion of its rights and
               obligations under this Agreement and the other Operative
               Documents (such a sale and assignment to be referred to herein as
               an "Assignment") pursuant to an assignment agreement in the form
               of Exhibit G (an "Assignment Agreement"), executed by each
               Assignee Participant and such assignor Participant (an "Assignor
               Participant") and delivered to Agent for its acceptance and
               recording in the Register; provided, however, that:

                             (A) Without the written consent of Agent and, if no
                      Default has occurred and is continuing, Lessee (which
                      consent of Agent and Lessee shall not be unreasonably
                      withheld), no Participant may make any Assignment to any
                      Person which is not, immediately prior to such Assignment,
                      a Participant hereunder or an Affiliate thereof acting
                      through an office or branch located in the United States;

                             (B) Without the written consent of Agent and, if no
                      Default has occurred and is continuing, Lessee (which
                      consent of Agent and Lessee shall not be unreasonably
                      withheld), no Participant may make any Assignment to any
                      Person if, after giving effect to such Assignment, the
                      Commitment of such Participant or such Assignee
                      Participant would be less than Ten Million Dollars
                      ($10,000,000) (except that a Participant may make an
                      Assignment which reduces its Commitment to zero without
                      the written consent of Agent or Lessee);

                             (C) Without the written consent of Agent and, if no
                      Default has occurred and is continuing, Lessee (which
                      consent of Agent and Lessee shall not be unreasonably
                      withheld), no Tranche A Participant or Tranche B
                      Participant may make any Assignment of any of such
                      Participant's Outstanding Tranche A Participation Amount
                      or Outstanding Tranche B Participation Amount in any Lease
                      Supplement (or, if a Lease Supplement has not been
                      executed with respect to any Installation Period, the
                      Advances made during such Installation Period) which does
                      not assign and delegate an equal pro rata interest in both
                      the Outstanding Tranche A Participation Amounts and the
                      Outstanding Tranche B Participation Amounts of such
                      Participant in all Lease Supplements and Installation
                      Periods, including (1) such Participant's Outstanding
                      Tranche A Participation Amounts and Outstanding Tranche B
                      Participation Amounts

                                       50
<PAGE>   51

                      in all Lease Supplements, (2) such Participant's Tranche A
                      Percentages and Tranche B Percentages in all Lease
                      Supplements, and (3) such Participant's other rights,
                      duties and obligations relating to the Tranche A Portions
                      and the Tranche B Portions of all Lease Supplements under
                      this Agreement and the other Operative Documents; or

                             (D) Without the written consent of Agent and, if no
                      Default has occurred and is continuing, Lessee (which
                      consent of Agent and Lessee shall not be unreasonably
                      withheld), no Equity Participant may make any Assignment
                      of any of such Participant's Outstanding Equity
                      Participation Amount in any Lease Supplement (or, if a
                      Lease Supplement has not been executed with respect to any
                      Installation Period, the Advances made during such
                      Installation Period) which does not assign and delegate an
                      equal pro rata interest in the Outstanding Equity
                      Participation Amounts in all Lease Supplements and
                      Installation Periods, including (1) such Participant's
                      Outstanding Equity Participation Amounts in all Lease
                      Supplements, (2) such Participant's Equity Percentages in
                      all Lease Supplements, and (3) such Participant's other
                      rights, duties and obligations relating to the Equity
                      Portions of all Lease Supplements under this Agreement and
                      the other Operative Documents.

               Upon such execution, delivery, acceptance and recording of each
               Assignment Agreement and satisfaction of the conditions set forth
               in Subparagraph 7.05(b)(iii), from and after the Assignment
               Effective Date determined pursuant to such Assignment Agreement,
               (y) each Assignee Participant thereunder shall be a Participant
               hereunder with a Commitment and an Outstanding Participation
               Amount, Tranche A Percentage, Tranche B Percentage, Equity
               Percentage (if applicable) and Proportionate Share in each Lease
               Supplement (or, if a Lease Supplement has not been executed with
               respect to any Installation Period, in the Advances made during
               such Installation Period) as set forth on Attachment 1 to such
               Assignment Agreement (under the caption "Commitment, Outstanding
               Participation Amount, Tranche Percentages and Proportionate
               Shares After Assignment") and shall have the rights, duties and
               obligations of such a Participant under this Agreement and the
               other Operative Documents, and (z) the Assignor Participant
               thereunder shall be a Participant with a Commitment and an
               Outstanding Participation Amount, Tranche A Percentage, Tranche B
               Percentage, Equity Percentage (if applicable) and Proportionate
               Share in each Lease Supplement (or, if a Lease Supplement has not
               been executed with respect to any Installation Period, in the
               Advances made during such Installation Period) as set forth on
               Attachment 1 to such Assignment Agreement (under the caption
               "Commitment, Outstanding Participation Amount, Tranche
               Percentages and Proportionate Shares After Assignment") , or, if
               the Assignor's Commitment and Outstanding Participation Amount in
               each Lease Supplement and Installation Period has been reduced to
               zero, the Assignor Participant shall cease to be a Participant
               and to have any obligation to fund any portion of any Advance;
               provided, however, that any such Assignor Participant which
               ceases to be a

                                       51
<PAGE>   52

               Participant shall continue to be entitled to the benefits of any
               provision of this Agreement which by its terms survives the
               termination of this Agreement. Each Assignment Agreement shall be
               deemed to amend Schedule I and each Lease Supplement to the
               extent, and only to the extent, necessary to reflect the addition
               of each Assignee Participant, the deletion of each Assignor
               Participant which reduces its Commitment and Outstanding
               Participation Amount in each Lease Supplement and Installation
               Period to zero and the resulting adjustment of Commitments,
               Outstanding Participation Amounts, Tranche A Percentages, Tranche
               B Percentages, Equity Percentages (if applicable) and
               Proportionate Shares in each Lease Supplement arising from the
               purchase by each Assignee Participant of all or a portion of the
               rights and obligations of an Assignor Participant under this
               Agreement and the other Operative Documents. Nothing in this
               Subparagraph 7.05(b) shall be deemed to restrict the allocation
               or reallocation by Lessor Agent of the Outstanding Lease Amount
               of any Lease Supplement to the Tranche A Portion, the Tranche B
               Portion or the Equity Portion of such Lease Supplement pursuant
               to Subparagraph 2.02(a) and Paragraph 2.09 hereof and
               Subparagraph 2.02(b) of the Lease Agreement. Each Assignee
               Participant which was not previously a Participant hereunder and
               which is not incorporated under the laws of the United States of
               America or a state thereof shall, within three (3) Business Days
               of becoming a Participant, deliver to Lessee and Agent two duly
               completed copies of United States Internal Revenue Service Form
               W-8BEN or W-8ECI (or successor applicable form), as the case may
               be, certifying in each case that such Participant is entitled to
               receive payments under this Agreement without deduction or
               withholding of any United States federal income taxes.

                      (ii) Agent shall maintain at its address referred to in
               Paragraph 7.01 a copy of each Assignment Agreement delivered to
               it and a register (the "Register") for the recordation of the
               names and addresses of the Participants and the Commitment and
               Outstanding Participation Amount, Tranche A Percentage, Tranche B
               Percentage, Equity Percentage (if applicable) and Proportionate
               Share of each Participant in each Lease Supplement (or, if a
               Lease Supplement has not been executed with respect to any
               Installation Period, in Advances made during such Installation
               Period) from time to time. The entries in the Register shall be
               conclusive in the absence of manifest error, and Lessee, Agent
               and the Participants may treat each Person whose name is recorded
               in the Register as the owner of the interests recorded therein
               for all purposes of this Agreement. The Register shall be
               available for inspection by Lessee or any Participant at any
               reasonable time and from time to time upon reasonable prior
               notice.

                      (iii) Upon its receipt of an Assignment Agreement executed
               by an Assignor Participant and an Assignee Participant (and, to
               the extent required by clause (i) of this Subparagraph 7.05(b),
               by Agent and Lessee), together with payment to Agent by Assignor
               Participant of a registration and processing fee of $3,000, Agent
               shall (A) promptly accept such Assignment Agreement and (B) on
               the Assignment Effective Date determined pursuant thereto record
               the information contained therein in the Register and give notice
               of such acceptance and

                                       52
<PAGE>   53

               recordation to Lessors, the Participants and Lessee. Agent may,
               from time to time at its election, prepare and deliver to
               Lessors, the Participants and Lessee a revised Schedule I and
               schedules to the Lease Supplements reflecting the names,
               addresses and respective Proportionate Shares of all Participants
               then parties hereto.

                      (iv) Subject to Subparagraph 7.13(h), the Lessor Parties
               may disclose the Operative Documents and any financial or other
               information relating to Lessee or any Subsidiary to each other or
               to any potential Assignee Participant.

               (c) Lessor Assignments. Each Lessor may, upon one (1) month's
        prior written notice to Lessee and Agent, sell and assign all of its
        right, title and interest in the Property and its rights, powers,
        privileges, duties and obligations under this Agreement and the other
        Operative Documents, provided that:

                      (i) If such sale and assignment is effected after either
               (A) the occurrence of a Change of Law which makes it unlawful or
               unreasonably burdensome for such Lessor to hold legal or
               beneficial title to the Property or to perform its obligations
               and duties under this Agreement and the other Operative Documents
               or (B) the resignation or removal of the Lessor Agent or Agent
               which was the Lessor Agent or Agent at the time such Lessor
               became a Lessor, the purchaser/assignee (a "successor Lessor")
               shall be either (1) a Participant or an Eligible Assignee which
               is a multi-asset Person having substantial assets beyond its
               interest in the Property and the Operative Documents or (2) a
               Person approved as provided in clause (ii) below; or

                      (ii) If such sale and assignment is effected in any other
               circumstance, a successor Lessor shall be a Person that is (A) a
               financial institution or a Person controlled by a financial
               institution and (B) approved in writing by Lessor Agent, Agent,
               Required Participants and, if no Default has occurred and is
               continuing, Lessee (which consents of Lessor Agent, Agent,
               Required Participants and Lessee shall not be unreasonably
               withheld); and

                      (iii) The successor Lessor executes such documents,
               instruments and agreements as may reasonably be necessary to
               evidence its agreement to assume all of the obligations and
               duties of a Lessor under this Agreement and the other Operative
               Documents.

        Upon the consummation of any such sale and assignment, (A) a successor
        Lessor shall become a "Lessor" and shall succeed to and become vested
        with all the rights, powers, privileges, duties and obligations of a
        Lessor under this Agreement and the other Operative Documents and (B)
        the retiring Lessor shall be discharged from the duties and obligations
        of a Lessor thereafter arising under this Agreement and the other
        Operative Documents. After any retiring Lessor's discharge as a Lessor,
        the provisions of Section 6 and any other provision of this Agreement or
        any other Operative Document which by its

                                       53
<PAGE>   54

        terms survives the termination of this Agreement shall continue in
        effect for its benefit in respect of any actions taken or omitted to be
        taken by it while it was acting as a Lessor.

        7.06. Setoff. In addition to any rights and remedies of the Participants
provided by law, each Participant shall have the right, with the prior written
consent of Agent, but without prior notice to or consent of Lessee, any such
notice and consent being expressly waived by Lessee to the extent permitted by
applicable law, upon the occurrence and during the continuance of an Event of
Default, to set-off and apply against the Lessee Obligations any amount owing
from such Participant to Lessee. The aforesaid right of set-off may be exercised
by such Participant against Lessee or against any trustee in bankruptcy, debtor
in possession, assignee for the benefit of creditors, receiver or execution,
judgment or attachment creditor of Lessee or against anyone else claiming
through or against Lessee or such trustee in bankruptcy, debtor in possession,
assignee for the benefit of creditors, receiver, or execution, judgment or
attachment creditor, notwithstanding the fact that such right of set off shall
not have been exercised by such Participant prior to the occurrence of an Event
of Default. Each Participant agrees promptly to notify Lessee after any such
set-off and application made by such Participant, provided that the failure to
give such notice shall not affect the validity of such set-off and application.

        7.07. No Third Party Rights. Nothing expressed in or to be implied from
this Agreement is intended to give, or shall be construed to give, any Person,
other than the parties hereto and their permitted successors and assigns
hereunder, any benefit or legal or equitable right, remedy or claim under or by
virtue of this Agreement or under or by virtue of any provision herein.

        7.08. Partial Invalidity. If at any time any provision of this Agreement
or any other Operative Document is or becomes illegal, invalid or unenforceable
in any respect under the law or any jurisdiction, neither the legality, validity
or enforceability of the remaining provisions of this Agreement or the other
Operative Documents nor the legality, validity or enforceability of such
provision under the law of any other jurisdiction shall in any way be affected
or impaired thereby.

        7.09. JURY TRIAL. EACH OF LESSEE AND THE LESSOR PARTIES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY AS TO ANY ISSUE RELATING TO THE OPERATIVE DOCUMENTS IN ANY ACTION,
PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY OPERATIVE
DOCUMENT.

        7.10. Counterparts. This Agreement may be executed in any number of
identical counterparts, any set of which signed by all the parties hereto shall
be deemed to constitute a complete, executed original for all purposes.

        7.11. No Joint Venture, Etc. Neither this Agreement nor any other
Operative Document nor any transaction contemplated hereby or thereby shall be
construed to (a) constitute a partnership or joint venture between Lessee and
any Lessor Party or (b) impose upon any Lessor Party any agency relationship
with or fiduciary duty to Lessee.

                                       54
<PAGE>   55

        7.12. Usury Savings Clause. Nothing contained in this Agreement or any
other Operative Documents shall be deemed to require the payment of interest or
other charges by Lessee in excess of the amount the applicable Lessor Parties
may lawfully charge under applicable usury laws. In the event any Lessor Party
shall collect monies which are deemed to constitute interest which would
increase the effective interest rate to a rate in excess of that permitted to be
charged by applicable law, all such sums deemed to constitute excess interest
shall, upon such determination, at the option of Lessor Agent, be returned to
Lessee or credited against other Lessee Obligations.

        7.13. Confidentiality. No Lessor Party shall disclose to any Person any
information with respect to Lessee or any of its Subsidiaries which is furnished
pursuant to this Agreement or under the other Operative Documents, except that
any Lessor Party may disclose any such information (a) to its own directors,
officers, employees, auditors, counsel and other advisors and to its Affiliates
to the extent reasonably determined by such Lessor Party to be necessary for the
administration or enforcement of the Operative Documents; (b) to any other
Lessor Party; (c) which is otherwise available to the public; (d) if required or
appropriate in any report, statement or testimony submitted to any Governmental
Authority having or claiming to have jurisdiction over such Lessor Party; (e) if
required in response to any summons or subpoena; (f) in connection with any
enforcement by any Lessor Party of its rights under this Agreement or the other
Operative Documents or any litigation among the parties relating to the
Operative Documents or the transactions contemplated thereby; (g) to comply with
any Requirement of Law applicable to such Lessor Party; (h) to any Assignee
Participant or any prospective Assignee Participant, provided that such Assignee
Participant or prospective Assignee Participant agrees to be bound by this
Paragraph 7.13; or (i) otherwise with the prior consent of Lessee; provided,
however, that (i) any Lessor Party served with any summons or subpoena demanding
the disclosure of any such information shall use reasonable efforts to notify
Lessee promptly of such summons or subpoena if not prohibited by any requirement
of law and, if requested by Lessee and not disadvantageous to such Lessor Party,
to cooperate with Lessee in obtaining a protective order restricting such
disclosure, and (ii) any disclosure made in violation of this Agreement shall
not affect the obligations of Lessee and its Subsidiaries under this Agreement
and the other Operative Documents.

        7.14. Effect on Existing Participation Agreement. Lessee and the Lessor
Parties agree that on and after the date that this Agreement is executed by all
parties hereto, this Agreement shall amend, restate in its entirety and replace,
without notation, the Existing Participation Agreement; provided, however, that
nothing contained herein shall (i) operate as a waiver of any right, power or
remedy of any Lessor Party under the Existing Participation Agreement or any
other Operative Document or (ii) extinguish or impair any Lessee Obligations
under the Existing Participation Agreement or any other Operative Document
except to the extent any such Lessee Obligation is actually satisfied by Lessee;
and provided, further, that all Advances outstanding under the Existing
Participation Agreement shall remain outstanding and shall be deemed to have
been made under this Agreement on a pro rata basis by the Participants hereunder
in accordance with their respective Proportionate Shares.

                       [The first signature page follows.]

                                       55
<PAGE>   56

        IN WITNESS WHEREOF, Lessee, Lessors, Lessor Agent, the Participants and
Agent have caused this Amended and Restated Participation Agreement to be
executed as of the day and year first above written.

LESSEE:                           LSI LOGIC CORPORATION

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

LESSORS:                          ABN AMRO BANK N.V.

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

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

                                  KEYBANK NATIONAL ASSOCIATION

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

                                  FBTC LEASING CORP.

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

LESSOR AGENT:                     ABN AMRO BANK N.V.

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

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

                                       S-1
<PAGE>   57

AGENT:                            ABN AMRO BANK N.V.

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

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

PARTICIPANTS:                     ABN AMRO BANK N.V.

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

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

                                  BANK ONE, N.A.

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

                                  BANQUE NATIONALE DE PARIS

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

                                  THE DAI-ICHI KANGYO BANK, LTD.

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

                                  FIRST SECURITY BANK, N.A.

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

                                      S-2
<PAGE>   58

                                  FBTC LEASING CORP.

                                  By:
                                     --------------------------------------
                                     Name:
                                          ---------------------------------
                                     Title:
                                           --------------------------------
                                  THE FUJI BANK, LIMITED

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

                                  THE INDUSTRIAL BANK OF JAPAN,
                                  LIMITED

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

                                  KEYBANK NATIONAL ASSOCIATION

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

                                  NATIONAL CITY BANK

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

                                  UNION BANK OF CALIFORNIA, N.A.

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

                                      S-3

<PAGE>   59

                                   SCHEDULE I

                            LESSORS AND PARTICIPANTS

                                     PART A

                                   COMMITMENTS
<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------
      Participant           Commitment Amount      Proportionate Share      Type of Commitment
                                                    of Each Advance
-------------------------------------------------------------------------------------------------
<S>                         <C>                    <C>                    <C>
ABN AMRO Bank N.V.             $43,000,000                17.2%           Tranche A, Tranche B
                                                                          and Equity
-------------------------------------------------------------------------------------------------
The Industrial Bank of          35,000,000                14.0%           Tranche A and Tranche B
Japan, Limited
-------------------------------------------------------------------------------------------------
Bank One, N.A.                  25,000,000                10.0%           Tranche A and Tranche B

-------------------------------------------------------------------------------------------------
Banque Nationale de             25,000,000                10.0%           Tranche A and Tranche B
Paris
-------------------------------------------------------------------------------------------------
First Security Bank,            25,000,000                10.0%           Tranche A and Tranche B
N.A.
-------------------------------------------------------------------------------------------------
KeyBank National                25,000,000                10.0%           Tranche A, Tranche B
Association                                                               and Equity
-------------------------------------------------------------------------------------------------
The Fuji Bank, Limited          23,179,500              9.2718%           Tranche A
-------------------------------------------------------------------------------------------------
The Dai-Ichi Kangyo             15,000,000                 6.0%
Bank, Ltd.
-------------------------------------------------------------------------------------------------
National City Bank              15,000,000                 6.0%           Tranche A and Tranche B

-------------------------------------------------------------------------------------------------
Union Bank of                   15,000,000                 6.0%           Tranche A and Tranche B
California, N.A.
-------------------------------------------------------------------------------------------------
FBTC Leasing Corp.               3,820,500              1.5282%           Tranche B and Equity
-------------------------------------------------------------------------------------------------
TOTAL                         $250,000,000               100.0%
-------------------------------------------------------------------------------------------------
</TABLE>

                                      I-1

<PAGE>   60

                            PART B - ADDRESSES, ETC.

ABN AMRO BANK N.V. (as a Lessor and a Participant)

Applicable Participating Office:

ABN AMRO Bank N.V.
101 California Street, Suite 4550
San Francisco, CA  94111

Address for Advance Requests, Notices of Rental Period Selection and Notices of
Renewal Option Exercise:

ABN AMRO Bank N.V.
208 South LaSalle Street, Suite 1500
Chicago, IL  60604-1003
Attn:  Loan Administration
Tel. No.:  (312) 992-5153
Fax No.:  (312) 992-5158

Address for all other notices:

ABN AMRO Bank N.V.
208 South LaSalle Street, Suite 1500
Chicago, IL  60604-1003
Attn:  Credit Administration
Tel. No.:  (312) 992-5110
Fax No.:  (312) 992-5111

With a copy of all notices to:

ABN AMRO Bank N.V.
101 California Street, Suite 4550
San Francisco, CA  94111
Attn:  Richard DaCosta
Tel. No.:  (415) 984-3718
Fax No.:  (415) 362-3524

ABN AMRO Bank N.V.
135 South LaSalle Street, Suite 740
Chicago, IL  60603
Attn:  Elizabeth McClellan
Tel. No.:  (312) 904-2809
Fax No.:  (312) 904-6217

                                      I-2
<PAGE>   61

Wiring Instructions:

ABN AMRO Bank N.V.
New York, New York
RT/ABA No.:  026009580
F/O ABN AMRO Bank N.V. Chicago CPU
Account No.:  650-001-1789-41
Reference:  LSI Logic Corporation Synthetic Lease

Major Executive Office in United States:

ABN AMRO Bank N.V.
208 South LaSalle Street, Suite 1500
Chicago, IL  60604-1003

                                      I-3

<PAGE>   62

BANK ONE, N.A. (as a Participant)

Applicable Participating Office:

Bank One, N.A.
One Bank One Plaza, 10th Floor
Chicago, IL  60670

Address for Advance Requests, Notices of Rental Period Selection and Notices of
Renewal Option Exercise:

Bank One, N.A.
One Bank One Plaza, 10th Floor
Chicago, IL  60670
Attn: Maryse Theodule
Tel. No: (312) 732-2259
Fax No: (312) 732-4840

Address for all other notices:

Bank One, N.A.
777 S. Figueroa Street, 4th Floor
Los Angeles, CA  90017
Attn: James P. Moore
Tel. No: (213) 683-4966
Fax No: (213) 683-4949

Wiring Instructions:

Bank One, N.A.
Chicago, Illinois
ABA No.:       071000013
Account No.:   4811 5286 0000
               For Further Credit To:  LS2 OSD Money Transfer Incoming Account
Reference:     LSI Logic Corporation
Attn:          Maryse Theodule

                                      I-4
<PAGE>   63

BANQUE NATIONALE DE PARIS (as a Participant)

Applicable Participating Office:

Banque Nationale de Paris
180 Montgomery Street, 3rd Floor
San Francisco, CA  94104

Address for Advance Requests, Notices of Rental Period Selection and Notices of
Renewal Option Exercise:

Banque Nationale de Paris
180 Montgomery Street, 3rd Floor
San Francisco, CA  94104
Attn: Don Hart, Vice President - Treasury
Tel. No: (415) 956-2511
Fax No: (415) 989-9041

Address for all other notices:

Banque Nationale de Paris
180 Montgomery Street, 3rd Floor
San Francisco, CA  94104
Attn: Rafael Lumanlan, Vice President
Tel. No: (415) 956-0707
Fax No: (415) 296-8954

Wiring Instructions:

The Federal Reserve Bank of New York
ABA No.:       026007689 Banque Nationale de Paris
Beneficiary:   BNP San Francisco
Account No.:   14334000176
Reference:     Principal paydown (or commitment fee, interest payment, or etc.)
               By order:  LSI Synthetic Lease
Attn:          Peggy Tatum

                                      I-5
<PAGE>   64

THE DAI-ICHI KANGYO BANK, LTD. (as a Participant)

Applicable Participating Office:

The Dai-Ichi Kangyo Bank, Ltd.
One World Trade Center, Suite 4911
New York, NY  10038

Address for Advance Requests, Notices of Rental Period Selection and Notices of
Renewal Option Exercise:

The Dai-Ichi Kangyo Bank, Ltd.
One World Trade Center, Suite 4911
New York, NY  10048
Attn: Wendy Yuen and/or Adolfo Aguirre
Tel. No: (212) 432-6691
Fax No: (212) 524-0049

Address for all other notices:

The Dai-Ichi Kangyo Bank, Ltd.
One World Trade Center, Suite 4911
New York, NY  10048
Attn: Nelson Chang or Anne Marie Heverin
Tel. No: (212) 432-8341 or (212) 432-8471
Fax No: (212) 524-0579

Wiring Instructions:

The Dai-Ichi Kangyo Bank, New York
ABA No.:       026-004-307
Account No.:   H10-740-014132
Reference:     LSI Logic Corporation
Attn:          Loan Operation Department

                                      I-6
<PAGE>   65

FIRST SECURITY BANK, N.A. (as a Participant)

Applicable Participating Office:

First Security Bank, N.A.
4949 Meadows Road, Suite 150
Lake Oswego, OR  97035

Address for Advance Requests, Notices of Rental Period Selection and Notices of
Renewal Option Exercise:

First Security Bank, N.A.
P.O. Box 7666
Boise, ID  83705
Attn: Mary Wissel, Commercial Loan Accounting Center
Tel. No: (208) 393-4046
Fax No: (208) 393-4540

Address for all other notices:

First Security Bank, N.A.
4949 Meadows Road, Suite 150
Lake Oswego, OR  97035
Attn: Janice K. Sauer, Vice President
Tel. No: (503) 675-3255
Fax No: (503) 675-3209

Wiring Instructions:

First Security Bank, N.A.
Boise, IDR
ABA No.:       124-1000-80
Account No.:   209-091-0429
               For Further Credit To:  Commercial Loan Accounting
Reference:     LSI Logic Corporation
Attn:          Mary Wissel

                                      I-7
<PAGE>   66

THE FUJI BANK, LIMITED (as a Participant)

Applicable Participating Office:

The Fuji Bank, Limited
333 South Hope Street, Suite 3900
Los Angeles, CA  90071

Address for Advance Requests, Notices of Rental Period Selection and Notices of
Renewal Option Exercise:

The Fuji Bank, Limited
333 South Hope Street, Suite 3900
Los Angeles, CA  90071
Attn: Linda Zhong
Tel. No: (213) 253-4137
Fax No: (213) 253-4178

Address for all other notices:

The Fuji Bank, Limited
333 South Hope Street, Suite 3900
Los Angeles, CA  90071
Attn: Mano Mylvaganam
Tel. No: (213) 253-4130
Fax No: (213) 253-4178

Wiring Instructions:

Bankers Trust Company
New York, New York
ABA No.:       021-001-033
Account Name:  The Fuji Bank, Ltd., Los Angeles Agency
Account No.:   0440-02840
Reference:     LSI Logic Corporation

                                      I-8
<PAGE>   67

FBTC LEASING CORP. (as a Lessor and a Participant)

Applicable Participating Office:

FBTC Leasing Corp.
Two World Trade Center, 79th Floor
New York, NY  10048

Address for Advance Requests, Notices of Rental Period Selection and Notices of
Renewal Option Exercise:

FBTC Leasing Corp.
Two World Trade Center, 79th Floor
New York, NY  10048
Attn: Paula Kamuda or Gail Hall
Tel. No: (212) 898-2532 or (212) 898-2441
Fax No: (212) 775-7276

Address for all other notices:

FBTC Leasing Corp.
Two World Trade Center, 79th Floor
New York, NY  10048
Attn:  Carl Marcantonio or Colin Monaghan
Tel. No: (212) 898-2439 or (212) 898-2484
Fax No: (212) 775-7276

Wiring Instructions:

Fuji Bank and Trust Company
ABA No.:              02600-8905
Account Name:  FBTC Leasing Corp.
Account No.:          001-900269

Additional Information:

Attention:  Gail Hall
Reference:  LSI Logic Corporation

Chief Executive Office/Major Executive Office in United States:

FBTC Leasing Corp.
Two World Trade Center, 79th Floor
New York, NY  10048

                                      I-9
<PAGE>   68

THE INDUSTRIAL BANK OF JAPAN, LIMITED (as a Participant)

Applicable Participating Office:

The Industrial Bank of Japan, Limited
One Market Street
Spear Street Tower, Suite 1610
San Francisco, CA  94105-1000

Address for Advance Requests, Notices of Rental Period Selection and Notices of
Renewal Option Exercise:

The Industrial Bank of Japan, Limited
1251 Avenue of the Americas
New York, NY  10020
Attn: Richard Emmich
Tel. No: (212) 282-3000
Fax No: (212) 282-4480

Address for all other notices:

The Industrial Bank of Japan, Limited
One Market Street
Spear Street Tower, Suite 1610
San Francisco, CA  94105-1000
Attn: Joe Endoso
Tel. No: (415) 693-1822
Fax No: (415) 982-1917

Wiring Instructions:

The Industrial Bank of Japan, Limited
New York, NY 10020
ABA No.: 026-008-345
Account No.:   00290661
For Further Credit To:  LSI Logic

                                      I-10
<PAGE>   69

KEYBANK NATIONAL ASSOCIATION (as a Lessor and a Participant)

Applicable Participating Office:

KeyBank National Association
700 Fifth Avenue, 46th Floor
Seattle, WA  98104

Address for Advance Requests, Notices of Rental Period Selection and Notices of
Renewal Option Exercise:

KeyBank National Association
431 East Parkcenter Boulevard
Boise, ID  83705
Attn: Specialty Services Team
Tel. No: (800) 297-5518
Fax No: (800) 297-5495

Address for all other notices:

KeyBank National Association
700 Fifth Avenue, 46th Floor
Seattle, WA  98104
Attn: Mary K. Young
Tel. No: (206) 684-6085
Fax No: (206) 684-6035

Wiring Instructions:

KeyBank National Association
Seattle, WA
ABA No.: 125000574
Account No.: 01500163
Reference: LSI Logic
Attn:  Specialty Services

Chief Executive Office:

KeyBank National Association
700 Fifth Avenue, 46th Floor
Seattle, WA  98104

                                      I-11
<PAGE>   70

NATIONAL CITY BANK (as a Participant)

Applicable Participating Office:

National City Bank
P. O. Box 36000
Louisville, KY  40233-6000

Address for all notices:

National City Bank
1900 East Ninth Street, Locator 01-2071
Cleveland, OH  44114-3484
Attn: Rachel Marotta
Tel. No:
Fax No: (216) 575-2426

Wiring Instructions:

National City Bank
ABA No.:       041-000-124
Account Name:  Commercial Loan Operations
Account No.:   151-804
Reference:     LSI Logic Corporation

                                      I-12
<PAGE>   71

UNION BANK OF CALIFORNIA, N.A. (as a Participant)

Applicable Participating Office:

Union Bank of California, N.A.
350 California Street, 10th Floor
San Francisco, CA  94104

Address for Advance Requests, Notices of Rental Period Selection and Notices of
Renewal Option Exercise:

Union Bank of California, N.A.
Syndication Participation Group
1980 Saturn Street
Monterey Park, CA  91755
Attn: Gohar Karapetvan
Tel. No: (213) 720-2679
Fax No: (213) 724-6198

Address for all other notices:

Union Bank of California, N.A.
350 California Street, 10th Floor
San Francisco, CA  94104
Attn: Glenn Leyrer
Tel. No.: (415) 705-7578
Fax No.: (415) 705-7111

Wiring Instructions:

Union Bank of California, N.A.
1980 Saturn Street
Monterey Park, CA  91755
ABA No.:       122-0000-496
Account No.:   070196431
Reference:     LSI Logic Corporation
Attn:          192 Note Center

                                      I-13

<PAGE>   72

                                   SCHEDULE II

                                  PRICING GRID

                  (For Commitment Fees and LIBOR Rental Rates)

<TABLE>
<CAPTION>

                                                     TRANCHE A AND
                  PRICING                              TRANCHE B           EQUITY
   PRICING         PERIOD                              APPLICABLE        APPLICABLE
    RATIO          LEVEL        COMMITMENT FEES          MARGIN            MARGIN
    -----          -----        ---------------          ------            ------

<S>               <C>           <C>                  <C>                 <C>
  </=0.75            1               0.200%              1.000%            2.000%

    >0.75,
  </=1.50            2               0.250%              1.125%            2.250%

    >1.50            3               0.300%              1.375%            2.500%
</TABLE>

                                   EXPLANATION

1.      The initial Pricing Period shall commence on the date of this Agreement
        and end on the date Lessee delivers to Agent the Pricing Ratio
        Certificate for the two fiscal quarter period ending June 30, 2000.
        During such initial Pricing Period, the Commitment Fee applicable to the
        Tranche A Commitments and the Tranche B Commitments shall be 0.225%, the
        Commitment Fee applicable to the Equity Commitments shall be 0.300%, the
        Tranche A and Tranche B Applicable Margin shall be 1.125% and the Equity
        Applicable Margin shall be 2.250%.

2.      Except for the initial Pricing Period, the Commitment Fees and the
        Applicable Margin for the LIBOR Rental Rate will be set for each Pricing
        Period and will vary depending upon whether such period is a Level 1
        Period, a Level 2 Period or a Level 3 Period.

3.      Each Pricing Period after the initial Pricing Period will be a Level 1
        Period, a Level 2 Period, or a Level 3 Period depending upon the Pricing
        Ratio calculated on an annualized basis for the most recent consecutive
        two-quarter period ending on the last day of the quarter that ended
        prior to the first day of such Pricing Period.

        4. If the Applicable Margin has not yet been determined for a Pricing
        Period on the date any Rental Period commences or any Base Rent is
        payable with respect to any Lease Supplement (or, if a Lease Supplement
        has not been executed with respect to any Installation Period, the
        Advances made during such Installation Period), the Variable Component
        of Base Rent shall accrue and be paid on such Lease Supplement or
        Installation Period calculated on the basis of the Applicable Margin for
        the applicable

                                      II-1
<PAGE>   73

        Tranche during the prior Pricing Period. When the Applicable Margin is
        determined for such Pricing Period, accrued but unpaid Variable
        Component of Base Rent on the Outstanding Lease Amount of such Lease
        Supplement during such Pricing Period shall be recalculated on the basis
        of such Applicable Margin, but Agent and Participants shall not be
        required to refund any excess payment of the Variable Component of Base
        Rent and Lessee shall not be required to make any additional payment of
        Variable Component of Base Rent with respect to any Lease Supplement or
        Installation Period on which the Variable Component of Base Rent was
        paid during such Pricing Period prior to determination of the Applicable
        Margin.

                                      II-2
<PAGE>   74

                                  SCHEDULE 1.01

                                   DEFINITIONS

        "ABN AMRO" shall mean ABN AMRO Bank N.V.

        "Acquisition" shall mean any transaction or series of related
transactions for the purpose of or resulting in (a) the acquisition, directly or
indirectly, of all or substantially all of the assets of a Person or of any
business or division of a Person, (b) the acquisition, directly or indirectly,
of all or substantially all of the capital stock, obligations or other
securities of or interest in a Person, or (c) a merger or consolidation or any
other combination by Lessee or any Subsidiary with another Person.

        "Acquisition Advances" shall have the meaning given to that term in
Subparagraph 2.01(d) of the Participation Agreement.

        "Acquisition Agreements" shall mean the purchase agreements with the
Suppliers of the Property pursuant to which Lessee has agreed to purchase the
Property.

        "Acquisition Agreement Acceptance Certificate" shall have the meaning
given to that term in Subparagraph 2.01(c) of the Participation Agreement.

        "Acquisition Price" shall mean (a) with respect to all of the Property,
the total purchase price payable by Lessee for all of the Property and (b) with
respect to any portion of the Property, the total purchase price payable by
Lessee for such portion of the Property.

        "Additional Acquisition Advances" shall have the meaning given to that
term in Subparagraph 2.01(b) of the Participation Agreement.

        "Additional Advance Request" shall have the meaning given to that term
in Subparagraph 2.03(b) of the Participation Agreement.

        "Advance Requests" shall have the meaning given to that term in
Subparagraph 2.03(c) of the Participation Agreement.

        "Advances" shall have the meaning given to that term in Subparagraph
2.01(d) of the Participation Agreement.

        "Affiliate" shall mean any Person which, directly or indirectly,
controls, is controlled by or is under common control with another Person. For
purposes of the foregoing, "control" with respect to any Person shall mean the
possession, directly or indirectly, of the power (a) to vote twenty-five percent
(25%) or more of the securities having ordinary voting power for the election of
directors of such Person, or (b) to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.

                                     1.01-1

<PAGE>   75

        "Agent" shall mean ABN AMRO, acting in its capacity as Agent for the
Participants under the Operative Documents.

        "Agent's Fees" shall have the meaning given to that term in Subparagraph
2.04(a) of the Participation Agreement.

        "Agent's Letter" shall mean the letter agreement dated as of March 31,
2000, between Lessee and Agent.

        "Alternate Rental Rate" shall mean, for any Rental Period (or portion
thereof), the per annum rate equal to the Base Rate in effect from time to time
during such period plus the Applicable Margin, such rate to change from time
during such period as the Base Rate or Applicable Margin shall change.

        "Applicable Margin" shall mean:

                      (a) The per annum margin which is determined pursuant to
               the Pricing Grid and added to the LIBO Rate with respect to the
               LIBOR Rental Rate; or

                      (b) Zero percent (0%) per annum with respect to the
               Alternate Rental Rate;

provided, however, that each Applicable Margin set forth in subparagraphs (a)
and (b) of this definition shall be increased by two percent (2.0%) per annum on
the date an Event of Default occurs and shall continue at such increased rate
unless and until such Event of Default is cured or waived in accordance with
this Agreement. The Applicable Margins shall be determined as provided in the
Pricing Grid and may change for each Pricing Period.

        "Applicable Participating Office" shall mean, with respect to any
Participant, (a) initially, its office designated as such in Part B of Schedule
I (or, in the case of any Participant which becomes a Participant by an
assignment pursuant to Subparagraph 7.05(b) of the Participation Agreement, its
office designated as such in the applicable Assignment Agreement) and (b)
subsequently, such other office or offices as such Participant may designate to
Agent as the office at which such Participant's interest in the Lease Agreement
will thereafter be maintained and for the account of which all payments of Rent
and other amounts payable to such Participant under the Operative Documents will
thereafter be made.

        "Appraisal" shall mean an appraisal of the Property or a portion thereof
in a form satisfactory to Agent, prepared by an independent appraiser that (a)
has experience with property of the same general type as the Property and (b) is
approved by Agent and the selection of such appraiser and the terms of
engagement are consented to by Lessee at the time such appraiser is selected for
a particular Appraisal, such consent of Lessee not to be unreasonably withheld.
The parties acknowledge that, among other reasons, an appraiser's failure to
perform in accordance with an engagement letter delivered for an Appraisal
previously delivered pursuant to the Operative Documents shall be sufficient
basis for Lessee to withhold its consent, including any delay in delivering an
Appraisal required with respect to an Additional Acquisition Advance after
Lessee provided all information specified in Schedule 3.02(e) with respect to
each item of

                                     1.01-2
<PAGE>   76

Equipment to be included in such Appraisal not less than twenty-one (21) days
prior to the date such Additional Acquisition Advance was requested to be made.

        "Assignee Participant" shall have the meaning given to that term in
Subparagraph 7.05(b) of the Participation Agreement.

        "Assignee Purchaser" shall have the meaning given to that term in
Subparagraph 5.03(b)of the Purchase Agreement.

        "Assignment" shall have the meaning given to that term in Subparagraph
7.05(b) of the Participation Agreement.

        "Assignment Agreement" shall have the meaning given to that term in
Subparagraph 7.05(b) of the Participation Agreement.

        "Assignment Effective Date" shall have, with respect to each Assignment
Agreement, the meaning set forth therein.

        "Assignor Participant" shall have the meaning given to that term in
Subparagraph 7.05(b) of the Participation Agreement.

        "Assumed Appraisal" shall have the meaning given to that term in
Subparagraph 3.02(h) of the Purchase Agreement.

        "Bankruptcy Code" shall mean Title 11 of the United States Code entitled
"Bankruptcy."

        "Base Rate" shall mean, on any day, the greater of (a) the Prime Rate in
effect on such date and (b) the Federal Funds Rate for such day plus one-half
percent (0.50%).

        "Base Rent" shall have the meaning given to that term in Subparagraph
2.03(a) of the Lease Agreement.

        "Business Day" shall mean any day on which (a) commercial banks are not
authorized or required to close in San Francisco, California, Chicago, Illinois,
or New York, New York and (b) if such Business Day is related to a LIBOR Rental
Rate, dealings in Dollar deposits are carried out in the London interbank market
and commercial banks are open for business in London.

        "Capital Adequacy Requirement" shall have the meaning given to that term
in Subparagraph 2.12(d) of the Participation Agreement.

        "Capitalized Interest" shall mean interest that is incurred or accrued
in any period and added to the cost of the asset in connection with which such
interest is incurred.

        "Capital Lease" shall mean, for any Person, any lease of property
(whether real, personal or mixed) which, in accordance with GAAP, would, at the
time a determination is made, be required to be recorded as a capital lease in
respect of which such Person is liable as lessee.

                                     1.01-3
<PAGE>   77

        "Cash Collateral" shall have the meaning given to that term in Paragraph
2.06(b) of the Lease Agreement.

        "Casualty" shall mean any damage to, destruction of or decrease in the
value of all or any portion of any of the Property as a result of fire, flood,
earthquake or other natural cause and any other cause typically covered by an
all risks extended coverage policy of insurance.

        "Casualty and Condemnation Proceeds" shall mean all awards, damages,
compensation, reimbursement and other payments made or to be made to Lessee or
Lessor Agent from any insurer, Governmental Authority or other Person (other
than Lessee or any Lessor Party) on account of any Casualty or Condemnation.

        "Change of Control" shall mean (a) the acquisition after the date hereof
by any person or group of persons (within the meaning of Section 13 or 14 of the
Securities Exchange Act of 1934 (as amended, the "Exchange Act")) of (i)
beneficial ownership (within the meaning of Rule 13d-3 promulgated by the SEC
under the Exchange Act) of thirty percent (30%) or more of the outstanding
equity securities of Lessee entitled to vote for members of the Board of
Directors of Lessee, or (ii) all or substantially all of the assets of Lessee;
or (b) during any period of twelve (12) consecutive calendar months, individuals
who are directors of Lessee on the first day of such period ("Initial
Directors") and any directors of Lessee who are specifically approved by
two-thirds of the Initial Directors and previously-approved Directors shall
cease to constitute a majority of the Board of Directors of Lessee before the
end of such period

        "Change of Law" shall have the meaning given to that term in
Subparagraph 2.12(b) of the Participation Agreement.

        "Closing Date" shall have the meaning given to that term in Subparagraph
2.01(a) of the Participation Agreement.

        "Closing Date Appraisal" shall mean, with respect to the Property
described in Exhibit A, an Appraisal that assesses on or as of a recent date
prior to the Closing Date (a) the Fair Market Value and remaining useful life of
such Property on such date and (b) the Fair Market Value and remaining useful
life of such Property on the original Scheduled Expiration Date for the Lease
Supplement in which such Property will be included and each subsequent Scheduled
Expiration Date assuming such Scheduled Expiration Date is extended by the
exercise of each Renewal Option.

        "Collateral" shall mean the Property Collateral, the Cash Collateral and
all other property in which any Lessor Party has a Lien to secure any of the
Lessee Obligations.

        "Commitment" shall mean, with respect to any Participant at any time,
the amount set opposite such Participant's name on Part A of Schedule I or, if
such amount is reduced pursuant to Subparagraph 2.08 of the Participation
Agreement, the amount to which so reduced.

        "Commitment Fees" shall have the meaning given to that term in
Subparagraph 2.04(b) of the Participation Agreement.

                                     1.01-4

<PAGE>   78

        "Commitment Period" shall have the meaning given to that term in
Subparagraph 2.01(b) of the Participation Agreement.

        "Commitment Termination Date" shall have the meaning given to that term
in Subparagraph 2.01(b) of the Participation Agreement.

        "Compliance Certificate" shall have the meaning given to that term in
clause (iii) of Subparagraph 5.01(a) of the Participation Agreement.

        "Condemnation" shall mean any condemnation, requisition, confiscation,
seizure or other taking or sale of the use, access, occupancy or other right in
or to all or any portion of any of the Property (whether 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 Governmental
Authority or other Person having the power of eminent domain or by or on account
of an eviction by paramount title or any transfer made in lieu of any such
proceeding or action. A "Condemnation" shall be deemed to have occurred on the
earliest of the dates that use, access, occupancy or other right is taken.

        "Conforming Bid" shall have the meaning given to that term in
Subparagraph 3.02(c) of the Purchase Agreement.

        "Consolidated CMLTD" shall mean, as of any date of determination, the
portion of long-term indebtedness coming due in the current quarter and the next
succeeding three-quarter period as determined in accordance with GAAP.

        "Consolidated Current Liabilities" shall mean, as of any date of
determination, the sum of current liabilities of Lessee and its Subsidiaries on
a consolidated basis, as determined in accordance with GAAP, plus (without
duplication) Guaranty Obligations with respect to that portion of the underlying
obligations which come due within one year of such date of determination.

        "Consolidated EBITDA" shall mean, for any period, Consolidated Net
Income plus Consolidated Interest Expense plus income tax expense plus
depreciation expense and amortization expense, which were deducted in
determining Consolidated Net Income, of Lessee and its Subsidiaries on a
consolidated basis, as determined in accordance with GAAP.

        "Consolidated Interest Expense" shall mean, for any period, interest
expense (including interest expense attributable to Capital Leases) of Lessee
and its Subsidiaries on a consolidated basis, as determined in accordance with
GAAP.

        "Consolidated Net Income" shall mean, for any period, the net income of
Lessee and its Subsidiaries on a consolidated basis for such period taken as a
single accounting period, as determined in accordance with GAAP.

        "Consolidated Quick Assets" shall mean, as of any date of determination,
the sum of all unencumbered and unrestricted (except those encumbered or
restricted in favor of the Agent or the Lessor Parties as security for the
Lessee Obligations) cash, cash equivalents and net accounts

                                     1.01-5

<PAGE>   79

receivable classified as current assets according to GAAP, of Lessee and its
Subsidiaries on a consolidated basis, as determined in accordance with GAAP.

        "Consolidated Tangible Net Worth" shall mean, as of any date of
determination, Consolidated Total Assets minus Consolidated Total Liabilities,
minus (a) all assets which would be classified in a separate account as
intangible assets in accordance with GAAP, including goodwill, organizational
expense, research and development expense, capitalized software, patent
applications, patents, trademarks, trade names, brands, copyrights, trade
secrets, customer lists, licenses, franchises and covenants not to compete, (b)
all unamortized debt discount and expense and (c) all treasury stock; provided,
however, that to the extent otherwise included in the amount set forth in the
foregoing clause (a) of this definition, there shall be excluded from such
amount the sum of (i) all engineering costs incurred in connection with the
development of major production capabilities at new manufacturing facilities or
refurbishment of an existing facility or with respect to introducing a new
manufacturing process to existing or new manufacturing facilities and which are
classified as a fixed asset and capitalized on the consolidated balance sheet of
Lessee in accordance with GAAP and (ii) amounts representing the capitalized
portion of the acquisition and development costs of software necessary for the
operation of the business of Lessee and its Subsidiaries, as shown on the
consolidated balance sheet of Lessee.

        "Consolidated Total Assets" shall mean, as of any date of determination,
the total assets of Lessee and its Subsidiaries on a consolidated basis, as
determined in accordance with GAAP.

        "Consolidated Total Debt" shall mean, as of any date of determination,
all Indebtedness of Lessee and its Subsidiaries on a consolidated basis, as
determined in accordance with GAAP.

        "Consolidated Total Liabilities" shall mean, as of any date of
determination, the total liabilities of Lessee and its Subsidiaries on a
consolidated basis, as determined in accordance with GAAP.

        "Contractual Obligation" of any Person shall mean, any indenture, note,
lease, loan agreement, security, deed of trust, mortgage, security agreement,
guaranty, instrument; contract, agreement or other form of contractual
obligation or undertaking to which such Person is a party or by which such
Person or any of its property is bound.

        "Credit Event" shall mean the making of each Advance, the exercise of
any Renewal Option under the Lease Agreement, the exercise of the Partial
Purchase Option under the Purchase Agreement or the exercise of the Marketing
Option under the Purchase Agreement.

        "Current Appraisal" shall have the meaning given to that term in
Subparagraph 3.02(h) of the Purchase Agreement.

        "Default" shall mean an Event of Default or any event or circumstance
not yet constituting an Event of Default which, with the giving of notice or the
lapse of any period of time or both would become an Event of Default.

                                     1.01-6

<PAGE>   80

        "Defaulting Participant" shall mean a Participant which has failed to
fund its portion of any Advance which it is required to fund under the
Participation Agreement and has continued in such failure for three (3) Business
Days after written notice from Agent.

        "Designated Purchaser" shall have the meaning given to that term in
Subparagraph 3.02(e) of the Purchase Agreement.

        "Dollars" and "$" shall mean the lawful currency of the United States of
America and, in relation to any payment under the Operative Documents, same day
or immediately available funds.

        "Eligible Assignee" shall mean a commercial bank having a combined
capital and surplus of at least $100,000,000, or another financial institution
which is a qualified institutional buyer as defined in Rule 144A under the
Securities Act of 1933, as amended, that is acting through a branch or agency or
an office located in the United States.

        "Environmental Laws" shall mean all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directives, requests, licenses, authorizations
and permits of, and agreements with (including consent decrees), any
Governmental Authorities, in each case relating to or imposing liability or
standards of conduct concerning public health, safety and environmental
protection matters, including the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Clean Air Act, the Federal Water
Pollution Control Act of 1972, the Solid Waste Disposal Act, the Federal
Resource Conservation and Recovery Act, the Toxic Substances Control Act, the
Emergency Planning and Community Right-to-Know Act, the California Hazardous
Waste Control Law, the California Solid Waste Management, Resource Recovery and
Recycling Act, the California Water Code and the California Health and Safety
Code.

        "Equipment" shall have the meaning given to that term in Subparagraph
2.01(a) of the Lease Agreement.

        "Equity Capital" shall mean, as of any date of determination,
Consolidated Total Assets minus Consolidated Total Liabilities (exclusive of the
cumulative translation adjustment account as reported in the consolidated
balance sheet of Lessee and its Subsidiaries as of such date).

        "Equity Participant" shall mean, at any time with respect to any Lease
Supplement (or, if a Lease Supplement has not been executed with respect to any
Installation Period, the Advances made during such Installation Period), a
Lessor having an Outstanding Equity Participation Amount in such Lease
Supplement at such time.

        "Equity Percentage" shall mean, with respect to each Participant and any
Lease Supplement (or, if a Lease Supplement has not been executed with respect
to any Installation Period, the Advances made during such Installation Period),
a fraction (expressed as a percentage rounded to the eighth digit to the right
of the decimal point), the numerator of which is such Participant's Outstanding
Equity Participation Amount in such Lease Supplement or Installation

                                     1.01-7
<PAGE>   81

Period on such date and the denominator of which is the Outstanding Lease Amount
of such Lease Supplement or Installation Period on such date.

        "Equity Portion" shall mean, (a) with respect to any Advance without
reference to any Participant, the portion of such Advance equal to the Equity
Proportionate Share of such Advance and (b) with respect to any Advance with
reference to any Participant, the portion of such Advance equal to such
Participant's Equity Percentage of such Advance.

        "Equity Proportionate Share" shall mean, with respect to any Lease
Supplement (or, if a Lease Supplement has not been executed with respect to any
Installation Period, the Advances made during such Installation Period), an
amount equal to the difference between (a) one hundred percent (100%) and (b)
the sum of the Tranche A Proportionate Share and the Tranche B Proportionate
Share for such Lease Supplement or Installation Period.

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

        "ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) which is under common control with Lessee within the meaning of
Section 4001(a)(14) of ERISA and Sections 414(b), (c) and (m) of the IRC.

        "ERISA Event" shall mean (a) a Reportable Event with respect to a
Pension Plan; (b) a withdrawal by Lessee or any ERISA Affiliate from a Pension
Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations which is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) the filing of a notice of intent to terminate, the treatment of a
plan amendment as a termination under Section 4041 or 4041A of ERISA or the
commencement of proceedings by the PBGC to terminate a Pension Plan subject to
Title IV of ERISA; (d) a failure by Lessee or any ERISA Affiliate to make
required contributions to a Pension Plan or other Plan subject to Section 412 of
the IRC; (e) an event or condition which might reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan; (f) the imposition of
any liability under Title IV of ERISA, other than PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon Lessee or any ERISA Affiliate; or
(g) an application for a funding waiver or an extension of any amortization
period pursuant to Section 412 of the Code with respect to any Pension Plan.

        "Event of Default" shall have the meaning given to that term in
Paragraph 5.01 of the Lease Agreement.

        "Existing Lease Agreement" shall have the meaning given to that term in
Recital B of the Lease Agreement.

        "Existing Lessor Security Agreement" shall have the meaning given to
that term in Recital B of the Lessor Security Agreement.

        "Existing Participation Agreement" shall have the meaning given to that
term in Recital A of the Participation Agreement.

                                     1.01-8
<PAGE>   82

        "Existing Purchase Agreement" shall have the meaning given to that term
in Recital B of the Purchase Agreement.

        "Expense Advances" shall have the meaning given to that term in
Subparagraph 2.01(b) of the Participation Agreement.

        "Expiration Date" shall mean, with respect to any Lease Supplement, the
earlier of (a) the Scheduled Expiration Date for such Lease Supplement under the
Lease Agreement, as such date may be extended by the exercise of any Renewal
Option under Subparagraph 2.02(b) of the Lease Agreement, and (b) the
Termination Date for such Lease Supplement under the Lease Agreement, if such
Lease Supplement is terminated prior to its Scheduled Expiration Date in
accordance with its terms.

        "Expiration Date Appraised Value" shall mean, with respect to any
Property, the Fair Market Value of such Property as of the original Scheduled
Expiration Date for the Lease Supplement in which such Property is included and
each subsequent Scheduled Expiration Date assuming such Scheduled Expiration
Date is extended by the exercise of each Renewal Option, as determined by an
Appraisal as of a recent date prior to the date such Property is purchased by
Lessors or by a Renewal Date Appraisal Update as of a recent date prior to the
date such Renewal Option is exercised. In determining the Expiration Date
Appraised Values with respect to any Property, the Fair Market Value of such
Property shall be the value to be realized when such Property is sold on an
individual basis independent of the business of Lessee in a competitive and open
market and with appropriate market exposure.

        "Expiration Date Purchase Option" shall have the meaning given to that
term in Subparagraph 3.01(b) of Purchase Agreement.

        "Fair Market Value" shall mean, with respect to any of the Property or
any portion thereof, the maximum reasonable amount (not less than zero) that
would be paid in cash in an arm's-length transaction between an informed and
willing purchaser and an informed and willing seller, neither of whom is under
any compulsion to purchase or sell, for the ownership of the Property or such
portion.

        "FASB 13" shall mean Financial Accounting Standards Board Statement No.
13, together with any GAAP interpretations thereof. If FASB 13 changes after the
Closing Date such that the allocation of the Outstanding Lease Amount of any
Lease Supplement among the Tranche A Portion, the Tranche B Portion or the
Equity Portion or the determination of the Fixed Component of Base Rent and the
Residual Value Guaranty Amount for such Lease Supplement would be calculated in
a different manner or with different components, Lessee and the Lessor Parties
agree to negotiate in good faith to amend the applicable Operative Documents in
such respects as are necessary to provide for off-balance sheet accounting
treatment for Lessee and the same economic risk and return to the Participants
as in effect prior to such change in FASB 13; provided, however, that, until
Lessee and the Lessor Parties so amend the Operative Documents, the allocation
of the Outstanding Lease Amount of each Lease Supplement among the Tranche A
Portion, the Tranche B Portion or the Equity Portion and the Fixed Component of
Base Rent and

                                     1.01-9
<PAGE>   83

the Residual Value Guaranty Amount for each Lease Supplement shall be calculated
in accordance with FASB 13 as in effect immediately prior to such change.

        "Federal Funds Rate" shall mean, for any day, the rate per annum set
forth in the weekly statistical release designated as H.15 (519), or any
successor publication, published by the Federal Reserve Board (including any
such successor publication, "H.15 (519)") for such day opposite the caption
"Federal Funds (Effective)". If on any relevant day, such rate is not yet
published in H.15 (519), the rate for such day shall be the rate set forth in
the daily statistical release designated as the Composite 3:30 p.m. Quotations
for U.S. Government Securities, or any successor publication, published by the
Federal Reserve Bank of New York (including any such successor publication, the
"Composite 3:30 p.m. Quotations") for such day under the caption "Federal Funds
Effective Rate". If on any relevant day, such rate is not yet published in
either H.15 (519) or the Composite 3:30 p.m. Quotations, the rate for such day
shall be the arithmetic means, as determined by Agent, of the rates quoted to
Agent for such day by three (3) Federal funds brokers of recognized standing
selected by Agent for overnight Federal funds transactions.

        "Financial Statements" shall mean, with respect to any accounting period
for any Person, statements of income, shareholders' equity and cash flows of
such Person for such period, and a balance sheet of such Person as of the end of
such period, setting forth in each case in comparative form figures for the
corresponding period in the preceding fiscal year if such period is less than a
full fiscal year or, if such period is a full fiscal year, corresponding figures
from the preceding annual audit, all prepared in reasonable detail and in
accordance with GAAP.

        "Fixed Component" shall have the meaning given to that term in
Subparagraph 2.03(a) of the Lease Agreement.

        "Foreign Plan" shall mean any employee benefit plan maintained by Lessee
or any of its Subsidiaries which is mandated or governed by any Governmental
Rule of any Governmental Authority other than the United States.

        "FRB" shall mean the Board of Governors of the Federal Reserve System,
and any Governmental Authority succeeding to any of its principal functions.

        "GAAP" shall mean generally accepted accounting principles set forth
from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and authority within the
U.S. accounting profession), which are applicable to the circumstances as of the
date of determination.

        "Governmental Authority" shall mean any domestic or foreign national,
state or local government, any political subdivision thereof, any department,
agency, authority or bureau of any of the foregoing, or any other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including, without limitation, the
Federal Deposit Insurance Corporation, the FRB, the Comptroller of the Currency,
any central bank or any comparable authority.

                                    1.01-10
<PAGE>   84

        "Governmental Charges" shall mean, with respect to any Person, all
levies, assessments, fees, claims or other charges imposed by any Governmental
Authority upon such Person or any of its property or otherwise payable by such
Person.

        "Governmental Rule" shall mean any law, rule, regulation, ordinance,
order, code, interpretation, judgment, decree, directive, guidelines, policy or
similar form of decision of any Governmental Authority.

        "Guaranty Obligation" shall mean, as applied to any Person, any direct
or indirect liability, contingent or otherwise, of that Person:

               (a) With respect to any Indebtedness, lease (other than an
        operating lease), dividend, or other obligation (the "primary
        obligations") of another Person (the "primary obligor"), including any
        obligation of that Person (i) to purchase, repurchase or otherwise
        acquire such primary obligations or any property constituting direct or
        indirect security therefor, or (ii) to advance or provide funds (A) for
        the payment or discharge of any such primary obligation, or (B) to
        maintain working capital or equity capital of the primary obligor or
        otherwise to maintain the net worth or solvency or any balance sheet
        item, level of income or financial condition of the primary obligor, or
        (iii) to purchase property, securities or services primarily for the
        purpose of assuring the owner of any such primary obligation of the
        ability of the primary obligor to make payment of such primary
        obligation, or (iv) otherwise to assure or hold harmless the holder of
        any such primary obligation against loss in respect thereof;

               (b) (i) With respect to letters of credit, acceptances, bank
        guaranties, surety bonds or similar instruments issued for the account
        of that Person or as to which that Person is otherwise liable for
        reimbursement of drawings, or (ii) as a partner or joint venturer in any
        partnership or joint venture;

               (c) With respect to "synthetic" leases; or

               (d) Net obligations with respect to Rate Contracts, other than
        Rate Contracts entered into in connection with a bona fide hedging
        operation that provides offsetting benefits to such Person.

        "Hazardous Substances" shall mean any toxic or hazardous substances,
materials, wastes, contaminants or pollutants, including asbestos, PCBs,
petroleum products and byproducts, and any substances defined or listed as
"hazardous substances," "hazardous materials," "hazardous wastes" or "toxic
substances" (or similarly identified), regulated under or forming the basis for
liability under any applicable Environmental Law.

        "Indebtedness" shall mean, for any Person, without duplication:

               (a) All indebtedness or other obligations of such Person for
        borrowed money;

               (b) All obligations of such Person for the deferred purchase
        price of property or services (including obligations under credit
        facilities which secure or finance such

                                    1.01-11
<PAGE>   85

        purchase price and obligations under "synthetic" leases), other than
        trade payables incurred by such Person in the ordinary course of its
        business on ordinary terms;

               (c) All obligations evidenced by notes, bonds, debentures or
        similar instruments, including obligations so evidenced incurred in
        connection with the acquisition of property, assets or businesses;

               (d) All indebtedness created or arising under any conditional
        sale or other title retention agreement with respect to property
        acquired by such Person (even though the rights and remedies of the
        seller or lender under such agreement in the event of default are
        limited to repossession or sale of such property);

               (e) All obligations under Capital Leases;

               (f) All Guaranty Obligations other than Guaranty Obligations
        described in clauses (a)(iii) and (a)(iv) of the definition of "Guaranty
        Obligation" where the primary obligor is a Subsidiary; and

               (g) All indebtedness of another Person secured by any Lien upon
        or in property owned by the Person for whom Indebtedness is being
        determined, whether or not such Person has assumed or become liable for
        the payment of such indebtedness of such other Person; provided, that if
        such indebtedness is not assumed and recourse is limited solely to such
        property, the Indebtedness incurred hereunder shall be valued at the
        lesser of the principal amount of the obligation so secured or the fair
        market value of the property subject to such Lien.

        "Indemnified Taxes" shall mean all income taxes, stamp taxes, sales
taxes, use taxes, rental taxes, gross receipts taxes, property (tangible and
intangible) taxes, franchise taxes, excise taxes, value added taxes, turnover
taxes, withholding taxes and other taxes and Governmental Charges, together with
any and all assessments, penalties, fines, additions and interest thereon,
except:

               (a) Any tax or other Governmental Charge (other than taxes or
        Governmental Charges that are, or are in the nature of, sales, use,
        rental, value added, transfer or property taxes with respect to the
        Property or any transfer thereof) that are based on or measured by gross
        or net income or gross or net receipts (including any minimum taxes or
        taxes on, measured by or in the nature of capital, net worth, excess
        profits, items of tax preference, capital stock, franchise, business
        privilege or doing business taxes); provided, that this clause (a) 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;

               (b) Any tax or other Governmental Charge that has not become a
        Lien on any of the Property and that Lessee is contesting pursuant to
        Paragraph 3.10 of the Lease Agreement (but only while Lessee is so
        contesting such tax or Governmental Charge);

               (c) Any tax or other Governmental Charge that is imposed upon an
        Indemnitee as a result of the gross negligence or willful misconduct of
        such Indemnitee

                                    1.01-12
<PAGE>   86

        itself, but not taxes or other Governmental Charges imposed as a result
        of ordinary negligence of such Indemnitee;

               (d) Any tax or other Governmental Charge to the extent it relates
        to any act, event or omission that occurs with respect to the Property
        after the termination of the Lease Agreement, redelivery or sale of the
        Property in accordance with the terms of the Operative Documents and
        payment by Lessee of all amounts due under the Operative Documents,
        unless and to the extent such tax or Governmental Charge is attributable
        to actions, omissions or events occurring in connection with the
        exercise of remedies following an Event of Default; provided, that this
        exclusion shall not apply to taxes or Governmental Charges that are
        related to or arising from payments made under the Operative Documents,
        or events, acts or omissions occurring or matters arising prior to or
        simultaneous with the time set forth above; or

               (e) Any tax or other Governmental Charge imposed on an Indemnitee
        as a result of the failure of such Indemnitee to file any return or
        report timely and in the form prescribed by Governmental Rules and to
        pay any tax or Governmental Charge other than any withholding or other
        tax which may be paid by Lessee directly;

               (f) Any tax or other Governmental Charge imposed on an Indemnitee
        as a result of a breach of a representation, warranty or covenant in the
        Operative Documents by such Indemnitee or an Affiliate thereof (unless
        caused by Lessee's breach of its representations, warranties or
        covenants);

               (g) Any tax or other Governmental Charge to the extent that such
        tax or Governmental Charge is actually reimbursed to the Indemnitee by a
        Person other than an Affiliate of such Indemnitee;

               (h) Any tax or other Governmental Charge imposed on an Indemnitee
        with respect to or after any voluntary transfer, sale, financing or
        other voluntary disposition by any Lessor Party (other than in
        connection with (1) the exercise by Lessee of its Term Purchase Option,
        Partial Purchase Option, Expiration Date Purchase Option or any other
        termination option or other purchase of Property by Lessee or its
        Designated Assignee or exercise by Lessee of the Marketing Option, (2)
        the occurrence of an Event of Default, (3) a Casualty or Condemnation
        affecting the Property, or (4) an assignment, sublease, modification or
        addition to the Property) of any interest in the Property or any
        interest in, or created pursuant to, the Operative Documents or any
        voluntary transfer of any interest of a Lessor Party other than with
        respect to any transfer made pursuant to Paragraph 2.15 of the
        Participation Agreement or otherwise requested by Lessee, as provided in
        Paragraph 7.05(c) of the Participation Agreement or in connection with
        the syndication of the Lessee Obligations after the Closing Date, an
        Event of Default or the bankruptcy or insolvency of such Lessor Party;

               (i) Any gift, inheritance or estate tax or similar Governmental
        Charge;

                                    1.01-13
<PAGE>   87

               (j) Any tax or other Governmental Charge imposed on an Indemnitee
        to the extent a credit or other reduction in taxes or Governmental
        Charges is actually received by such Indemnitee as an offset against, or
        reduction in a liability for, taxes or Governmental Charges that are not
        Indemnified Taxes (but only to the extent that such credit is not taken
        into account in calculating the indemnity payment on an after-tax
        basis);

               (k) Any tax or other Governmental Charge imposed on or with
        respect to an Indemnitee as a result of transactions or activities of
        such Indemnitee unrelated to the transactions or activities referred to
        in or contemplated by the Operative Documents;

               (l) Any tax or other Governmental Charge imposed on a direct or
        indirect transferee, successor or assignee of a Lessor Party to the
        extent of the excess of such tax or Governmental Charges over the amount
        of such tax or Governmental Charge that would have been imposed had
        there not been a transfer by the original Lessor Party of an interest
        arising under the Operative Documents; provided, that there shall not be
        excluded under this clause (l) any such tax or Governmental Charge if
        the direct or indirect transferee, successor or assignee of such Lessor
        Party acquired its interest pursuant to Paragraph 2.15 of the
        Participation Agreement or otherwise at the request of Lessee, pursuant
        to Paragraph 7.05(c) of the Participation Agreement or in connection
        with the syndication of the Lessee Obligations after the Closing Date,
        an Event of Default or the bankruptcy or insolvency of such Lessor
        Party;

               (m) Any tax which is a withholding tax if such tax is imposed in
        respect of payments to a Lessor Party that is required to deliver a
        United States Internal Revenue Service Form W-8BEN or W-8ECI if such
        form is not effective to entitle such Lessor Party to receive payment
        under the Operative Documents without deduction or withholding of United
        States federal income tax as a result of an act or omission of such
        Lessor Party or such Lessor Party does not otherwise comply with
        Subparagraph 2.13(b) of the Participation Agreement;

        provided, however, that, the exclusions in clauses (a), (h) and (k)
        shall not apply to the extent that such taxes or Governmental Charges
        exceed the amount of such taxes or Governmental Charges that would have
        been imposed had the transactions contemplated by the Operative
        Documents been characterized as a loan secured by the Property; and
        provided, further, that any tax or Governmental Charge excluded from the
        definition of "Indemnified Tax" in any one of the foregoing clauses (a)
        through (m) shall not be construed as constituting an Indemnified Tax by
        any provision of the aforementioned clauses.

        "Indemnitees" shall mean the Lessor Parties and their Affiliates and
their respective directors, officers, employees, agents and advisors.

        "Indemnity Amount" shall have the meaning given to that term in
Subparagraph 3.02(g) of the Purchase Agreement.

                                    1.01-14
<PAGE>   88

        "Initial Acquisition Advance " shall have the meaning given to that term
in Subparagraph 2.01(b) of the Participation Agreement.

        "Initial Advance" shall have the meaning given to that term in
Subparagraph 2.03(a) of the Participation Agreement.

        "Initial Advance Request" shall have the meaning given to that term in
Subparagraph 2.03(a) of the Participation Agreement.

        "Initial Bid" shall have the meaning given to that term in Subparagraph
3.02(b) of the Purchase Agreement.

        "Initial Marketing Period" shall have the meaning given to that term in
Subparagraph 3.02(b) of the Purchase Agreement.

        "Installation Period" shall mean any of four quarterly periods during
which Property is delivered or installed at a Property Site, with the first
Installation Period commencing on April 2, 2000, and ending on July 2, 2000, the
second Installation Period commencing on July 3, 2000, and ending on October 1,
2000, the third Installation Period commencing on October 2, 2000, and ending on
December 31, 2000, and the fourth Installation Period commencing on January 1,
2001, and ending on April 1, 2001, provided, however, that no Installation
Period shall extend beyond the Commitment Termination Date.

        "Insurance Requirements" shall mean all terms, conditions and
requirements imposed by the policies of insurance which Lessee is required to
maintain by the Operative Documents.

        "IRC" shall mean the Internal Revenue Code of 1986.

        "IRS" shall mean the Internal Revenue Service, or any successor thereto.

        "Lease Agreement" shall have the meaning given to that term in
Subparagraph 2.01(a) of the Participation Agreement.

        "Lease Supplement" shall have the meaning given to that term in
Subparagraph 2.01(a) of the Lease Agreement.

        "Lease Supplement Date" shall mean, with respect to any Lease
Supplement, the Closing Date with respect to Lease Supplement No. 1 and the last
day of the Installation Period for which any subsequent Lease Supplement is
delivered.

        "Lease Supplement Term" shall mean, with respect to each Lease
Supplement, the period (a) beginning on the Closing Date for Lease Supplement
No. 1 and the Lease Supplement Date for each other Lease Supplement and (b)
ending on the Expiration Date of such Lease Agreement.

        "Lessee" shall mean LSI Logic Corporation, acting in its capacity as
Lessee under the Operative Documents.

                                    1.01-15
<PAGE>   89

        "Lessee Obligations" shall mean and include all liabilities and
obligations owed by Lessee to any Lessor Party under any of the Operative
Documents of every kind and description and however arising (whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising), including the obligation of Lessee to pay Rent with respect
to any Lease Supplement (or, if a Lease Supplement has not been executed with
respect to any Installation Period, the Advances made during such Installation
Period), to pay the Residual Value Guaranty Amount, Indemnity Amount and/or
Outstanding Lease Amount with respect to any Lease Supplement or Installation
Period and to pay all interest, fees, charges, expenses, attorneys' fees and
accountants' fees chargeable to Lessee or payable by Lessee under the Operative
Documents.

        "Lessee Security Documents" shall mean and include the Lease Agreement
and all other instruments, agreements, certificates, opinions and documents
(including Uniform Commercial Code financing statements and fixture filings and
landlord waivers) delivered to any Lessor Party in connection with any
Collateral or to secure the Lessee Obligations.

        "Lessor Agent" shall mean ABN AMRO, acting in its capacity as agent for
the Lessors under the Operative Documents.

        "Lessors" shall mean ABN AMRO Bank N.V., KeyBank National Association,
FBTC Leasing Corp. and each other financial institution from time to time listed
as a lessor in Schedule I hereto, as amended from time to time, each acting in
its capacity as a Lessor under the Operative Documents.

        "Lessor Liens" shall mean any Lien, true lease or sublease or
disposition of title in any of the Property arising as a result of (a) any claim
against any Lessor Party not resulting from or related to the transactions
referred to in the Operative Documents, (b) any act or omission of any Lessor
Party in violation of or not permitted by any of the terms of the Operative
Documents, (c) any claim against any Lessor Party with respect to taxes,
transaction expenses or other obligations against which Lessee is not required
to indemnify the Lessor Parties pursuant to the Operative Documents, (d) any
claim against any Lessor Party arising out of any transfer or assignment by any
Lessor Party of all or any portion of the interest of such Lessor Party in the
Property or the Operative Documents unless permitted pursuant to and in
accordance with any of the Operative Documents, or (e) any Liens granted by any
Lessor or Lessor Agent to Agent or any Participant to secure the Lessor
Obligations.

        "Lessor Obligations" shall mean and include all liabilities and
obligations owed by Lessors to Agent or any Participant under any of the
Operative Documents of every kind and description and however arising (whether
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising), including the obligation of Lessors to share payments
made by Lessee to Lessors under the Operative Documents as provided in Paragraph
2.06 of the Participation Agreement.

        "Lessor Parties" shall mean Lessors, Lessor Agent, the Participants and
Agent.

                                    1.01-16
<PAGE>   90

        "Lessor Security Agreement" shall have the meaning given to that term in
Subparagraph 2.11(b) of the Participation Agreement.

        "LIBO Rate" shall mean, with respect to any Rental Period for any
Portion of the Outstanding Lease Amount for any Lease Supplement (or, if a Lease
Supplement has not been executed with respect to any Installation Period, the
Advances made during such Installation Period), a rate per annum equal to the
quotient (rounded upward if necessary to the nearest 1/100 of one percent) of
(a) the arithmetic mean (rounded upward if necessary to the nearest 1/16 of one
percent) of the rates per annum appearing on Telerate Page 3750 (or any
successor publication) on the second Business Day prior to the first day of such
Rental Period at or about 11:00 A.M. (London time) (for delivery on the first
day of such Rental Period) for a term comparable to such Rental Period (or for a
term of one (1) month for any Rental Period that is less than one (1) month but
is at least seven (7) days), divided by (b) one minus the Reserve Requirement in
effect from time to time. If for any reason rates are not available as provided
in clause (a) of the preceding sentence, the rate to be used in clause (a) shall
be, at Agent's discretion, (i) the rate per annum at which Dollar deposits are
offered to ABN AMRO in the London interbank market or (ii) the rate at which
Dollar deposits are offered to ABN AMRO in, or by ABN AMRO to major banks in,
any offshore interbank market selected by Agent, in each case on the second
Business Day prior to the commencement of such Rental Period at or about 10:00
A.M. (New York time) (for delivery on the first day of such Rental Period) for a
term comparable to such Rental Period (or for a term of one (1) month for any
Rental Period that is less than one (1) month but is at least seven (7) days)
and in an amount approximately equal to ABN AMRO's Proportionate Share of the
applicable Portion, as the case may be. The LIBO Rate shall be adjusted
automatically as of the effective date of any change in the Reserve Requirement.

        "LIBOR Rental Rate" shall mean, for any Rental Period and Portion of any
Lease Supplement (or, if a Lease Supplement has not been executed with respect
to any Installation Period, the Advances made during such Installation Period),
the per annum rate equal to the LIBO Rate for such Rental Period and Portion,
plus the Applicable Margin, such rate to change from time to time during such
period as the Applicable Margin shall change.

        "Lien" shall mean any mortgage, deed of trust, pledge, security
interest, assignment, deposit arrangement, charge or encumbrance, lien
(statutory or other), or other preferential arrangement (including any
conditional sale or other title retention agreement, or any financing lease
having substantially the same economic effect as any of the foregoing or any
agreement to give any security interest, but excluding any operating lease,
regardless of whether precautionary filings are made in respect thereof under
Section 9408 of the California Uniform Commercial Code).

        "Liquidation Appraised Value" shall mean, with respect to any Property,
the Fair Market Value of such Property as of the original Scheduled Expiration
Date for the Lease Supplement in which such Property is included and each
subsequent Scheduled Expiration Date assuming such Scheduled Expiration Date is
extended by the exercise of each Renewal Option, as determined by a Renewal Date
Appraisal Update as of a recent date prior to the date such Renewal Option is
exercised. In determining the Liquidation Appraised Values with respect to any
Property, the

                                    1.01-17
<PAGE>   91

Fair Market Value of such Property shall be the gross proceeds which could be
expected from the sale of such Property held under orderly conditions given a
period of time in which to find a purchaser considering a complete sale of all
of the Property subject to such Lease Supplement, as is, where is, and with all
sales made free and clear of all Liens.

        "Marketing Option" shall have the meaning given to that term in
Subparagraph 3.01(a) of the Purchase Agreement.

        "Marketing Option Event of Default" shall mean any Event of Default
other than a Non-Marketing Option Event of Default.

        "Material Adverse Effect" shall mean (a) an adverse change in, or an
adverse effect upon, the operations, business, properties, condition (financial
or otherwise) or prospects of Lessee or Lessee and its Subsidiaries, taken as a
whole, which could reasonably be expected to result in a breach of any of the
covenants contained in Paragraph 5.03 of the Participation Agreement; (b) an
adverse effect upon the legality, validity, binding effect or enforceability of
any Operative Document or any Lessor Party's security interests, Liens or other
rights in the Property and the Collateral or the perfection or priority of such
security interests, Liens or rights; or (c) an adverse effect which reduces the
value of the Property and the Collateral by ten percent (10%) in the aggregate
(other than as a result of ordinary wear and tear, depreciation or changes in
the market for such Property).

        "maturity" shall mean, with respect to any Rent, interest, fee or other
amount payable by Lessee under the Operative Documents, the date such Rent,
interest, fee or other amount becomes due, whether upon the stated maturity or
due date, upon acceleration or otherwise.

        "Modifications" shall have the meaning given to that term in
Subparagraph 3.01(c) of the Lease Agreement.

        "Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Sections 3(37) and 4001(a)(3) of ERISA.

        "Non-Marketing Option Event of Default" shall mean an Event of Default
arising only under Subparagraph 5.01(o) of the Lease Agreement.

        "Notice of Expiration Date Purchase Option Exercise" shall have the
meaning given to that term in Paragraph 3.01 of the Purchase Agreement.

        "Notice of Marketing Option Exercise" shall have the meaning given to
that term in Paragraph 3.01 of the Purchase Agreement.

        "Notice of Partial Purchase Option Exercise" shall have the meaning
given to that term in Subparagraph 2.02(a) of the Purchase Agreement.

        "Notice of Renewal Option Exercise" shall have the meaning given to that
term in Subparagraph 2.02(b) of the Lease Agreement.

                                    1.01-18
<PAGE>   92

        "Notice of Rental Period Selection" shall have the meaning given to that
term in Subparagraph 2.03(a) of the Lease Agreement.

        "Notice of Term Purchase Option Exercise" shall have the meaning given
to that term in Subparagraph 2.01(a) of the Purchase Agreement.

        "Operative Documents" shall mean and include the Participation
Agreement, the Lease Agreement, the Purchase Agreement, the Lessee Security
Documents, the Lessor Security Agreement and the Agent's Letter; all other
notices, requests, certificates, documents, instruments and agreements delivered
to any Lessor Party pursuant to Paragraph 3.01 or 3.02 of the Participation
Agreement; and all notices, requests, certificates, bills of sale, documents,
instruments and agreements delivered to any Lessor Party in connection with any
of the foregoing on or after the date of the Participation Agreement. (Without
limiting the generality of the preceding definition, the term "Operative
Documents" shall include all written waivers, amendments and modifications to
any of the notices, requests, certificates, documents, instruments and
agreements referred to therein.)

        "Outstanding Equity Amount" shall mean, on any date with respect to any
Lease Supplement (or, if a Lease Supplement has not been executed with respect
to any Installation Period, the Advances made during such Installation Period),
the remainder of (a) the sum of the Equity Portions of all Advances made on or
prior to such date with respect to such Lease Supplement or Installation Period,
minus (b) the sum of all Reduction Payments paid on or prior to such date to be
applied to the Equity Portion of the Outstanding Lease Amount of such Lease
Supplement or Installation Period.

        "Outstanding Equity Participation Amount" shall mean, with respect to
any Equity Participant on any date with respect to any Lease Supplement (or, if
a Lease Supplement has not been executed with respect to any Installation
Period, the Advances made during such Installation Period), the remainder of (a)
such Participant's Equity Portion of all Advances made on or prior to such date
with respect to such Lease Supplement or Installation Period, minus (b) such
Participant's share of all Reduction Payments paid on or prior to such date to
be applied to the Equity Portion of the Advances made with respect to such Lease
Supplement or Installation Period.

        "Outstanding Lease Amount" shall mean, on any date with respect to any
Lease Supplement (or, if a Lease Supplement has not been executed with respect
to any Installation Period, the Advances made during such Installation Period),
the remainder of (a) the sum of all Advances made by Lessors on or prior to such
date with respect to such Lease Supplement or Installation Period, minus (b) the
sum of all Reduction Payments paid on or prior to such date to be applied to
such Lease Supplement or Installation Period.

        "Outstanding Participation Amount" shall mean, with respect to any
Participant on any date with respect to any Lease Supplement (or, if a Lease
Supplement has not been executed with respect to any Installation Period, the
Advances made during such Installation Period), the remainder of (a) the sum of
the portions of all Advances funded by such Participant on or prior to such date
with respect to such Lease Supplement or Installation Period, minus (b) the sum
of

                                    1.01-19
<PAGE>   93

such Participant's share of all Reduction Payments paid to be applied to the
Outstanding Lease Amount of such Lease Supplement or Installation Period on or
prior to such date.

        "Outstanding Tranche A Amount" shall mean, on any date with respect to
any Lease Supplement (or, if a Lease Supplement has not been executed with
respect to any Installation Period, the Advances made during such Installation
Period), the remainder of (a) the sum of the Tranche A Portions of all Advances
made on or prior to such date with respect to such Lease Supplement or
Installation Period, minus (b) the sum of all Reduction Payments paid on or
prior to such date to be applied to the Tranche A Portion of the Outstanding
Lease Amount of such Lease Supplement or Installation Period.

        "Outstanding Tranche A Participation Amount" shall mean, with respect to
any Tranche A Participant on any date with respect to any Lease Supplement (or,
if a Lease Supplement has not been executed with respect to any Installation
Period, the Advances made during such Installation Period), the remainder of (a)
such Participant's Tranche A Portion of all Advances made on or prior to such
date with respect to such Lease Supplement or Installation Period, minus (b)
such Participant's share of all Reduction Payments paid on or prior to such date
to be applied to the Tranche A Portion of the Advances made with respect to such
Lease Supplement or Installation Period.

        "Outstanding Tranche B Amount" shall mean, on any date with respect to
any Lease Supplement (or, if a Lease Supplement has not been executed with
respect to any Installation Period, the Advances made during such Installation
Period), the remainder of (a) the sum of the Tranche B Portions of all Advances
made on or prior to such date with respect to such Lease Supplement or
Installation Period, minus (b) the sum of all Reduction Payments paid on or
prior to such date to be applied to the Tranche B Portion of the Outstanding
Lease Amount of such Lease Supplement or Installation Period.

        "Outstanding Tranche B Participation Amount" shall mean, with respect to
any Tranche B Participant on any date with respect to any Lease Supplement (or,
if a Lease Supplement has not been executed with respect to any Installation
Period, the Advances made during such Installation Period), the remainder of (a)
such Participant's Tranche B Portion of all Advances made on or prior to such
date with respect to such Lease Supplement or Installation Period, minus (b)
such Participant's share of all Reduction Payments paid on or prior to such date
to be applied to the Tranche B Portion of the Advances made with respect to such
Lease Supplement or Installation Period.

        "Paid Acquisition Price" shall have the meaning given to that term in
Subparagraph 2.01(b) of the Participation Agreement.

        "Partial Purchase Date" shall have the meaning given to that term in
Subparagraph 2.02(a) of the Purchase Agreement.

        "Partial Purchase Option" shall have the meaning given to that term in
Paragraph 2.02 of the Purchase Agreement.

                                    1.01-20
<PAGE>   94

        "Participants" shall mean the financial institutions from time to time
listed in Schedule I to the Participation Agreement (as amended from time to
time pursuant to Subparagraph 7.05(b) of the Participation Agreement or
otherwise), acting in their capacities as Participants under the Operative
Documents.

        "Participation Agreement" shall mean the Amended and Restated
Participation Agreement, dated as of April 18, 2000 among Lessee and the Lessor
Parties.

        "PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.

        "Pension Plan" shall mean any-employee pension benefit plan covered by
Title IV of ERISA (other than a Multiemployer Plan) that is maintained for
employees of Lessee or any ERISA Affiliate or with regard to which Lessee or an
ERISA Affiliate is a contributing sponsor within the meaning of Sections
4001(a)(13) or 4069 of ERISA.

        "Permitted Installation Expenses" shall mean, with respect to any
Property, the costs and expenses payable by Lessee in connection with and
directly related to shipping such Property to a Property Site (including
insurance of such Property in transit), installation of such Property at a
Property Site and warranties or maintenance plans for such Property which were
not included in the Acquisition Price for such Property.

        "Permitted Investments" shall mean any investments selected by Lessee in
accordance with its Corporate Cash Investment Policy as adopted by Lessee on
August 16, 1996 (as the same may be amended from time to time with the approval
of Agent); provided that any investments not meeting the standards set forth in
such Corporate Cash Investment Policy shall nevertheless be deemed to be
"Permitted Investments' if they do not exceed at any time, in the aggregate, ten
percent (10%) of all Permitted Investments at such time.

        "Permitted Liens" shall mean:

               (a) Liens which may at any time be granted in favor of any Lessor
        Party to secure the Lessee Obligations;

               (b) Liens in existence as of the date of this Agreement listed on
        Schedule 5.02(a), and any substitutions or renewals thereof, provided
        that (i) any substitute or renewal Lien is limited to the property
        encumbered by the existing Lien, and (ii) the principal amount of the
        obligations secured thereby is not increased;

               (c) Liens for current taxes, assessments or other Governmental
        Charges which are not delinquent or remain payable without any penalty
        or which are being contested in good faith via appropriate proceedings,
        with appropriate reserves established therefor in accordance with GAAP;

               (d) Liens in connection with workers' compensation, unemployment
        insurance or other social security obligations;

                                    1.01-21
<PAGE>   95

               (e) Mechanics', workers', materialmen's, landlords', carriers' or
        other like Liens arising in the ordinary and normal course of business
        with respect to obligations which are not past due or which are being
        contested in good faith via appropriate proceedings, with appropriate
        reserves established therefor in accordance with GAAP;

               (f) Purchase money security interests (including by way of
        installment sales and title retention agreements) in personal or real
        property hereafter acquired when the security interest is granted
        contemporaneously with such acquisition (or within nine months
        thereafter), Liens created to secure the cost of construction or
        improvement of property and Liens created to secure Indebtedness
        incurred to finance such purchase price or cost (including Liens of
        Lessee in favor of the United States or any state, or any department,
        agency, instrumentality or political subdivision thereof, securing any
        real property or other assets in connection with the financing of
        industrial revenue bond facilities or of any equipment or other property
        designed primarily for the purpose of air or water pollution control);
        provided that (i) any such Lien shall attach only to the property so
        purchased. constructed or improved, together with attachments and
        accessions thereto, and rents, proceeds, products, substitutions,
        replacements and profits thereof and attachments and accessories
        thereto, and (ii) the amount of Indebtedness secured by any such Lien
        shall not exceed the purchase or construction price of such property
        plus transaction costs and financing charges relating to the acquisition
        or construction thereof;

               (g) Liens arising from attachments or similar proceedings,
        pending litigation, judgments or taxes or assessments in any such event
        whose validity or amount is being contested in good faith by appropriate
        proceedings and for which adequate reserves have been established and
        are maintained in accordance with GAAP;

               (h) Liens arising in the ordinary course of business or by
        operation of law, not securing Indebtedness, but securing such
        obligations as (i) judgments or awards, which (A) are covered by
        applicable insurance or (B) have been outstanding less than thirty (30)
        consecutive days, (ii) interests of landlords or lessors under leases of
        real or personal property entered into in the ordinary course of
        business arising by contract or operation of law, (iii) Liens in favor
        of customs and revenue authorities which secure payment of customs in
        connection with the importation of goods, (iv) Liens which constitute
        rights of set-off of a customary nature or bankers' liens on amounts on
        deposit, whether arising by contract or by operation of law, in
        connection with arrangements entered into with depository institutions
        in the ordinary course of business, (v) such minor defects,
        irregularities, encumbrances, easements, rights of way, and clouds on
        title as normally exist with respect to similar properties which do not,
        individually or in the aggregate, materially impair the property
        affected thereby or the use thereof and (vi) subleases, licenses, and
        sublicenses granted to third parties, the granting of which does not
        result in a Material Adverse Effect;

               (i) Liens securing reimbursement obligations of Lessee under
        documentary letters of credit; provided that such Liens shall attach
        only to documents relating to such letters of credit, goods covered
        thereby and products and proceeds thereof;

                                    1.01-22
<PAGE>   96

               (j) Liens on insurance policies or the proceeds of insurance
        policies incurred solely to secure the financing of premiums owing with
        respect thereto;

               (k) Liens existing on property (including the proceeds and
        accessions thereto) acquired by Lessee (including Liens on assets of any
        corporation at the time it becomes a Subsidiary), but excluding any
        Liens created in contemplation of any such acquisition;

               (l) Liens encumbering customary initial deposits and margin
        deposits, and other Liens that are within the general parameters
        customary in the industry and incurred in the ordinary course of
        business in connection with Rate Contracts or portfolio investments
        maintained with financial intermediaries; and

               (m) Permitted Property Liens in the Property.

        "Permitted Property Liens" shall have the meaning given to that term in
Subparagraph 3.07(a) of the Lease Agreement.

        "Permitted Transaction Expenses" shall mean the following costs and
expenses to the extent payable by Lessee in connection with and directly related
to the preparation, execution and delivery of the Operative Documents and the
transactions contemplated thereby:

               (a) The reasonable fees and expenses of counsel for Lessor Agent
        and Agent incurred in connection with the preparation, negotiation,
        execution and delivery of the Operative Documents;

               (b) The reasonable fees and expenses incurred in recording,
        registering or filing any of the Operative Documents;

               (c) The reasonable costs and other expenses relating to the
        closing of the transactions contemplated by the Operative Documents on
        the Closing Date, the date of any Advance or any Lease Supplement Date;

               (d) The reasonable fees and expenses of required appraisals; and

               (e) The reasonable costs and expenses of syndication (excluding
        fees payable by Agent to Participants under Agent's Letter).

        "Person" shall mean and include an individual, a partnership, a
corporation (including a business trust), a joint stock company, an
unincorporated association, a limited liability company, a joint venture, a
trust or other entity or a Governmental Authority.

        "Plan" shall mean an employee benefit plan (as defined in Section 3(3)
of ERISA) which Lessee or any ERISA Affiliate sponsors or maintains, or to which
Lessee or any ERISA Affiliate makes, is making, or is obligated to make
contributions, and includes any Pension Plan.

        "Portion" shall mean a portion of the Outstanding Lease Amount of any
Lease Supplement (or, if a Lease Supplement has not been executed with respect
to any Installation

                                    1.01-23
<PAGE>   97

Period, the Advances made during such Installation Period) as determined
pursuant to Subparagraph 2.03(a) of the Lease Agreement. Prior to the end of any
Installation Period and at any time thereafter when the Outstanding Lease Amount
of any Lease Supplement is not divided into two or more Portions pursuant to
Subparagraph 2.03(a) of the Lease Agreement, any reference to a Portion shall
mean the total Outstanding Lease Amount of such Lease Supplement or Installation
Period.

        "Pricing Grid" shall mean Schedule II to the Participation Agreement.

        "Pricing Period" shall mean (a) the period which commences on the date
of this Agreement and ends on the date Lessee delivers to Agent the Pricing
Ratio Certificate for the two fiscal quarter period ending June 30, 2000, (b)
the period which commences on the day following the last day of the first
Pricing Period and ends on the last day of the current fiscal quarter, and (c)
each consecutive calendar quarter thereafter which commences on the day
following the last day of the immediately preceding calendar quarter and ends on
the last day of that calendar quarter.

        "Pricing Ratio" shall mean, as of the last day of any fiscal quarter,
the ratio of (a) Senior Debt as of such date to (b) annualized Consolidated
EBITDA for such fiscal quarter and the immediately preceding fiscal quarter.

        "Pricing Ratio Certificate" shall have the meaning given to that term in
clause (iv) of Subparagraph 5.01(a) of the Participation Agreement.

        "Prime Rate" shall mean the per annum rate publicly announced by ABN
AMRO from time to time at its Chicago Office. The Prime Rate is determined by
ABN AMRO from time to time as a means of pricing credit extensions to some
customers and is neither directly tied to any external rate of interest or index
nor necessarily the lowest rate of interest charged by ABN AMRO at any given
time for any particular class of customers or credit extensions. Any change in
the Base Rate resulting from a change in the Prime Rate shall become effective
on the Business Day on which each change in the Prime Rate occurs.

        "Property" shall have the meaning given to that term in Paragraph 2.01
of the Lease Agreement.

        "Property Collateral" shall have the meaning given to that term in
Paragraph 2.06(a) of the Lease Agreement.

        "Property Site" shall mean any of the following locations where the
Property may be delivered and installed: (a) 23400 Northeast Glisan Street,
Gresham, Oregon; (b) 3105 Alfred Street, Santa Clara, California; and (c) 1635
Aeroplaza Drive, Colorado Springs, Colorado.

        "Proportionate Share" shall mean for each Participant (a) with respect
to each Advance, the percentage set forth under the caption "Proportionate
Share" opposite such Participant's name on Part A of Schedule I, and (b) with
respect to each Lease Supplement, the percentage set forth under the caption
"Proportionate Share" opposite such Participant's name on the schedule attached
to each Lease Supplement, or if changed, such percentage as may be set forth for
such

                                    1.01-24
<PAGE>   98

Participant in the Register. The Proportionate Share of each Participant with
respect to any Advance or Lease Supplement shall equal the sum of such
Participant's Tranche A Proportionate Share, Tranche B Proportionate Share and
Equity Proportionate Share with respect to such Advance or Lease Supplement.

        "Purchase Agreement" shall have the meaning given to that term in
Subparagraph 2.01(a) of the Participation Agreement.

        "Purchase Date Appraised Value" shall mean, with respect to any
Property, the Fair Market Value of such Property on the date such Property is
purchased by Lessors, as determined by the Closing Date Appraisal or any
Appraisal delivered by Lessors pursuant to Paragraph 3.02(e) of the
Participation Agreement. In determining the Purchase Date Appraised Values with
respect to any Property, the Fair Market Value of such Property shall include
Permitted Installation Expenses.

        "Purchase Documents" shall have the meaning given to that term in
Subparagraph 4.01(a) of the Purchase Agreement.

        "Purchaser" shall have the meaning given to that term in Subparagraph
4.01(a) of the Purchase Agreement.

        "Rate Contracts" shall mean interest rate swaps, caps, floors and
collars, currency swaps, or other similar financial products designed to provide
protection against fluctuations in interest, currency or exchange rates.

        "Reduction Payments" shall mean, with respect to each Lease Supplement
(or, if a Lease Supplement has not been executed with respect to any
Installation Period, the Advances made during such Installation Period), each of
the following to the extent paid by or on behalf of Lessee or otherwise applied
to reduce the Outstanding Lease Amount of such Lease Supplement or Installation
Period pursuant to the Operative Documents:

               (a) The Fixed Component of Base Rent for such Lease Supplement;

               (b) Casualty and Condemnation Proceeds received with respect to
        Property subject to such Lease Supplement or Installation Period;

               (c) The purchase price paid for the Property subject to such
        Lease Supplement or Installation Period (or any portion thereof) by
        Lessee, an Assignee Purchaser or a Designated Purchaser pursuant to the
        Purchase Agreement;

               (d) The Residual Value Guaranty and Indemnity Amount paid by
        Lessee pursuant to the Purchase Agreement with respect to such Lease
        Supplement or Installation Period;

               (e) Any proceeds received by Lessee from any sale of the Property
        subject to such Lease Supplement or Installation Period after the
        Expiration Date for such Lease Supplement or the Termination Date of
        such Installation Period if such Property is

                                    1.01-25
<PAGE>   99

        retained by Lessors after such Expiration Date or Termination Date
        pursuant to the applicable Purchase Agreement; and

               (f) Any proceeds received by any Lessor Party from the exercise
        of any of its remedies under the Operative Documents after the
        occurrence of an Event of Default under the Lease Agreement.

        "Register" shall have the meaning given to that term in Subparagraph
7.05(b)(ii) of the Participation Agreement.

        "Related Agreements" shall mean all agreements and general intangibles
(in each case, excluding Related Goods), now or hereafter necessary for the use,
operation or maintenance of any Property or otherwise relating to any Property,
including (a) the Acquisition Agreements, (b) all records, files, insurance
policies, guarantees and warranties relating to such Property, and (c) all
computer software and intellectual property, guaranties and warranties and
documents relating to such Property.

        "Related Goods" shall mean (a) all goods other than the Equipment
financed by any Acquisition Advance, (b) all spare parts for the Equipment and
all other goods now or hereafter intended for the repair, replacement,
alteration, addition or improvement of or to any of the Property, (c) all
operation manuals, service manuals, maintenance manuals and other materials
regarding the operation, service or maintenance of the Equipment provided by the
Suppliers of the Equipment or others and (d) all books and records relating to
the Property in any and all tangible forms.

        "Related Permits" shall mean all licenses, authorizations, certificates,
consents, approvals and other permits, now or hereafter necessary for the use,
operation or maintenance of the Property or otherwise relating to the Property.

        "Renewal Date Appraised Value" shall mean, with respect to any Property,
the Fair Market Value of such Property on or as of a recent date prior to the
third anniversary of the Closing Date (in the case of the exercise of the first
Renewal Option) or the fourth anniversary of the Closing Date (in the case of
the exercise of the second Renewal Option), as determined by a Renewal Date
Appraisal Update.

        "Renewal Date Appraisal Update" shall mean a "desktop" Appraisal
performed without any inspection or testing of the Property to update the
Closing Date Appraisal and any Appraisal delivered pursuant to Subparagraph
3.02(e) of the Participation Agreement based on an update of the information
previously provided in connection with the earlier Appraisal of the applicable
Property and current market conditions to be delivered at the time Lessee
exercises any Renewal Option that assesses on or as of a recent date prior to
the third anniversary of the Closing Date (in the case of the exercise of the
first Renewal Option) or the fourth anniversary of the Closing Date (in the case
of the exercise of the second Renewal Option) (a) the Fair Market Value and
remaining useful life of all of the Property subject to the Lease Supplement
being renewed and (ii) the Fair Market Value and remaining useful life of such
Property on the Scheduled Expiration Date for such Lease Supplement as extended
by the exercise of such Renewal Option and

                                    1.01-26
<PAGE>   100

assuming such Scheduled Expiration Date is extended by the exercise of any
further Renewal Option.

        "Renewal Option" shall have the meaning given to that term in
Subparagraph 2.02(b) of the Lease Agreement.

        "Rent" shall mean collectively Base Rent and Supplemental Rent.

        "Rental Periods" shall mean, with respect to any Portion of any Lease
Supplement (or, if a Lease Supplement has not been executed with respect to any
Installation Period, the Advances made during such Installation Period), the
time period determined pursuant to Subparagraph 2.03(a) of the Lease Agreement
which commences on the first day of such Portion and ends on the last day of
such time period, and thereafter, each subsequent time period determined
pursuant to Subparagraph 2.03(a) of the Lease Agreement which commences on the
last day of the immediately preceding time period and ends on the last day of
that time period.

        "Rental Rate" shall have the meaning given to that term in Subparagraph
2.03(a) of the Lease Agreement.

        "Replaced Property" shall have the meaning given to that term in
Subparagraph 3.01(b) of the Lease Agreement.

        "Replacement Property " shall have the meaning given to that term in
Subparagraph 3.01(b) of the Lease Agreement.

        "Reportable Event" shall mean any of the events set forth in Section
4043(b) of ERISA or the regulations promulgated thereunder, other than any such
event for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.

        "Required Participants" shall mean (a) at any time the aggregate
Outstanding Lease Amounts of all Lease Supplements are greater than $0,
Participants whose aggregate Outstanding Participation Amounts in all Lease
Supplements equal or exceed fifty-one percent (51%) or more of the aggregate
Outstanding Lease Amounts of all Lease Supplements at such time and (b) at any
time the aggregate Outstanding Lease Amounts of all Lease Supplements are $0,
Participants whose Proportionate Shares equal or exceed fifty-one percent (51%).

        "Requirement of Law" applicable to any Person shall mean (a) any
Governmental Rule applicable to such Person, (b) any license, permit, approval
or other authorization granted by any Governmental Authority to or for the
benefit of such Person or (c) any judgment, decision or determination of any
Governmental Authority or arbitrator, in each case applicable to or binding upon
such Person or any of its property or to which such Person or any of its
property is subject.

        "Reserve Requirement" shall mean, with respect to any day in any Rental
Period for any Lease Supplement (or, if a Lease Supplement has not been executed
with respect to any Installation Period, the Advances made during such
Installation Period), the aggregate of the reserve requirement rates (expressed
as a decimal) in effect on such day for eurocurrency funding (currently referred
to as "Eurocurrency liabilities" in Regulation D of the FRB) maintained by a

                                    1.01-27
<PAGE>   101

member bank of the Federal Reserve System. As used herein, the term "reserve
requirement" shall include, without limitation, any basic, supplemental or
emergency reserve requirements imposed on any Participant by any Governmental
Authority.

        "Residual Value Guaranty Amount" shall have the meaning given to that
term in Subparagraph 3.02(g) of the Purchase Agreement.

        "Responsible Officer" shall mean, with respect to any Person, the chief
executive officer, the president, the chief financial officer or the treasurer
of such Person, or any other senior officer of such Person having substantially
the same authority and responsibility; or, with respect to compliance with
financial covenants, the chief financial officer or the treasurer of any such
Person, or any other senior officer of such Person involved principally in the
financial administration or controllership function of such Person and having
substantially the same authority and responsibility.

        "Scheduled Expiration Date" shall have the meaning given to that term in
Paragraph 2.02 of the Lease Agreement.

        "Scheduled Rent Payment Date" shall have the meaning given to that term
in Subparagraph 2.03(a) of the Lease Agreement.

        "SEC" shall mean the Securities and Exchange Commission, or any
successor thereto.

        "Secondary Marketing Period" shall have the meaning given to that term
in Subparagraph 3.02(b) of the Purchase Agreement.

        "Senior Debt" shall mean all Indebtedness, other than Subordinated Debt,
of Lessee and its Subsidiaries on a consolidated basis.

        "Significant Subsidiary" shall mean, at any time, any Subsidiary of
Lessee having at such time total assets, as of the last day of the preceding
fiscal quarter, having a net book value in excess of $10,000,000 (exclusive of
intercompany assets and liabilities), based upon Lessee's most recent annual or
quarterly Financial Statements delivered to Agent under Subparagraph 5.01(a).

        "Solvent" shall mean, with respect to any Person, that as of the date of
determination, (a) the then fair saleable value of the property of such Person
is (i) greater than the total amount of liabilities (including reasonably
anticipated liabilities with respect to contingent obligations) of such Person
and (ii) greater than the amount that will be required to pay the probable
liabilities on such Person's then existing debts as they become absolute and
matured considering all financing alternatives and potential asset sales
reasonably available to such Person, and (b) such Person has not incurred and
does not intend to incur, or does not believe that it will incur, debts beyond
its ability to pay such debts as they become due.

        "Subordinated Debt" shall mean any Indebtedness of Lessee or any of its
Subsidiaries the stated maturity date of any scheduled principal payment of
which is not earlier than the first anniversary of the last Scheduled Expiration
Date of any Lease Supplement and which is

                                    1.01-28
<PAGE>   102

subordinated on terms and conditions reasonably acceptable to Required
Participants; provided, that any Subordinated Debt having subordination
provisions no more favorable to the holder than those attached as Exhibit I
hereto shall be deemed to be reasonably acceptable to Required Participants for
the purposes hereof. Without limiting the foregoing, the terms of such
Subordinated Debt shall not include any requirement that the holders thereof
approve the issuance of the Senior Debt or Designated Senior Debt (as defined in
Exhibit I) entitled to the benefit of such subordination provisions.

        "Subsidiary" shall mean any corporation, association, partnership, joint
venture or other business entity of which more than fifty percent (50%) of the
voting stock or other equity interest is owned directly or indirectly by any
Person or one or more of the other Subsidiaries of such Person or a combination
thereof.

        "Supplemental Rent" shall have the meaning given to such term in
Subparagraph 2.03(b) of the Lease Agreement.

        "Suppliers shall mean the manufacturers, vendors and other Persons with
whom Lessee has entered into Acquisition Agreements for the purchase of the
Property.

        "Swap Termination Value" shall mean, in respect of any one or more Rate
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Rate Contracts, (a) for any date on or after
the date such Rate Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a) the amount(s) determined as the
mark-to-market value(s) for such Rate Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Rate Contracts (which may include any Participant).

        "Termination Date" shall mean, with respect to each Lease Supplement
(or, if a Lease Supplement has not been executed with respect to any
Installation Period, the Advances made during such Installation Period), (a) the
date set forth in a Notice of Term Purchase Option as the Scheduled Rent Payment
Date on which such Lease Supplement or Installation Period will be terminated by
Lessee pursuant to Paragraph 4.01 of the Lease Agreement and the Property
subject to such Lease Supplement will be purchased by Lessee pursuant to Section
2 of the Purchase Agreement or (b) the date set forth in a written notice
delivered by Lessor Agent to Lessee pursuant to Subparagraph 5.03(a) or 5.04(a)
of the Lease Agreement after the occurrence of an Event of Default thereunder as
the date on which such Lease Supplement or Installation Period will be
terminated.

        "Term Purchase Option" shall have the meaning given to that term in
Paragraph 2.01 of the Purchase Agreement.

        "Total Capital" shall mean the sum of Equity Capital, Senior Debt and
Subordinated Debt.

                                    1.01-29
<PAGE>   103

        "Total Commitment" shall mean the amount set forth as such in
Subparagraph 2.01(d) of the Participation Agreement or, if such amount is
reduced pursuant to Subparagraph 2.08(a) of the Participation Agreement, the
amount to which so reduced.

        "Tranche A Participant" shall mean, at any time with respect to any
Lease Supplement (or, if a Lease Supplement has not been executed with respect
to any Installation Period, the Advances made during such Installation Period),
any Participant having an Outstanding Tranche A Participation Amount in such
Lease Supplement or Installation Period at such time.

        "Tranche A Percentage" shall mean, with respect to each Participant and
any Lease Supplement (or, if a Lease Supplement has not been executed with
respect to any Installation Period, the Advances made during such Installation
Period), a fraction (expressed as a percentage rounded to the eighth digit to
the right of the decimal point), the numerator of which is such Participant's
Outstanding Tranche A Participation Amount in such Lease Supplement or
Installation Period on such date and the denominator of which is the Outstanding
Lease Amount of such Lease Supplement or Installation Period on such date.

        "Tranche A Portion" shall mean, (a) with respect to any Advance without
reference to any Participant, the portion of such Advance equal to the Tranche A
Proportionate Share of such Advance and (b) with respect to any Advance with
reference to any Participant, the portion of such Advance equal to such
Participant's Tranche A Percentage of such Advance.

        "Tranche A Proportionate Share" shall mean, with respect to any Lease
Supplement (or, if a Lease Supplement has not been executed with respect to any
Installation Period, the Advances made during such Installation Period), an
amount equal to not less than eighty-five percent (85%) of the Outstanding Lease
Amount of such Lease Supplement or Installation Period as determined in order to
have the Lease Agreement classified as an operating lease under GAAP, including
FASB 13, and set forth in a schedule attached to such Lease Supplement, which
schedule shall be approved by Lessee and Lessor Agent at the time the Lease
Supplement is executed and on the date that it is amended in connection with the
exercise of any Renewal Option.

        "Tranche B Participant" shall mean, at any time with respect to any
Lease Supplement (or, if a Lease Supplement has not been executed with respect
to any Installation Period, the Advances made during such Installation Period),
any Participant having an Outstanding Tranche B Participation Amount in such
Lease Supplement or Installation Period at such time.

        "Tranche B Percentage" shall mean, with respect to each Participant and
any Lease Supplement (or, if a Lease Supplement has not been executed with
respect to any Installation Period, the Advances made during such Installation
Period), a fraction (expressed as a percentage rounded to the eighth digit to
the right of the decimal point), the numerator of which is such Participant's
Outstanding Tranche B Participation Amount in such Lease Supplement or
Installation Period on such date and the denominator of which is the Outstanding
Lease Amount of such Lease Supplement or Installation Period on such date.

                                    1.01-30
<PAGE>   104

        "Tranche B Portion" shall mean, (a) with respect to any Advance without
reference to any Participant, the portion of such Advance equal to the Tranche B
Proportionate Share of such Advance and (b) with respect to any Advance with
reference to any Participant, the portion of such Advance equal to such
Participant's Tranche B Percentage of such Advance.

        "Tranche B Proportionate Share" shall mean, with respect to any Lease
Supplement (or, if a Lease Supplement has not been executed with respect to any
Installation Period, the Advances made during such Installation Period), an
amount equal to not more than twelve percent (12%) of the Outstanding Lease
Amount of such Lease Supplement or Installation Period as determined in order to
have the Lease Agreement classified as an operating lease under GAAP, including
FASB 13, and set forth in a schedule attached to such Lease Supplement, which
schedule shall be approved by Lessee and Lessor Agent at the time the Lease
Supplement is executed and on the date that it is amended in connection with the
exercise of any Renewal Option.

        "Unfunded Pension Liability" shall mean the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Plan's assets, determined in accordance with the assumptions used for funding
the Plan pursuant to Section 412 of the IRC for the applicable plan year.

        "United States" and "U.S." each shall mean the United States of America.

        "Unpaid Acquisition Price" shall have the meaning given to that term in
Subparagraph 2.01(b) of the Participation Agreement.

        "Unused" shall mean, with respect to the Total Commitment at any time,
the remainder of (a) the Total Commitment at such time minus (b) the aggregate
amount of all Advances made prior to such time.

        "Variable Component" shall have the meaning given to that term in
Subparagraph 2.03(a) of the Lease Agreement.

                                    1.01-31
<PAGE>   105

                                  SCHEDULE 1.02

                             RULES OF INTERPRETATION

        (a) GAAP. Unless otherwise expressly provided in any Operative Document,
all accounting terms used in the Operative Documents shall be construed, and all
accounting and financial computations thereunder shall be computed, in
accordance with GAAP. If GAAP changes after the date of the Participation
Agreement such that any covenants contained in the Operative Documents would
then be calculated in a different manner or with different components, Lessee
and the Lessor Parties agree to negotiate in good faith to amend the applicable
Operative Documents in such respects as are necessary to conform those covenants
as criteria for evaluating Lessee's financial condition to substantially the
same criteria as were effective prior to such change in GAAP; provided, however,
that, until Lessee and the Lessor Parities so amend the Operative Documents, all
such covenants shall be calculated in accordance with GAAP as in effect
immediately prior to such change.

        (b) Headings. Headings in each of the Operative Documents are for
convenience of reference only and are not part of the substance thereof.

        (c) Plural Terms. All terms defined in any Operative Document in the
singular form shall have comparable meanings when used in the plural form and
vice versa.

        (d) Time. All references in each of the Operative Documents to a time of
day shall mean Chicago, Illinois time, unless otherwise indicated.

        (e) Governing Law. The Operative Documents were executed by Lessee and
the Lessor Parties in the State of California, which state the parties agree has
a substantial relationship to the parties and to the underlying transaction
embodied hereby. Accordingly, in all respects, including, without limiting the
generality of the foregoing, matters of interpretation, validity, enforceability
and performance, unless otherwise provided in any Operative Document, each of
the Operative Documents and the obligations arising thereunder shall be governed
by, and construed in accordance with, the laws of the State of California and
any applicable law of the United States of America, except to the extent that
law requires that perfection and the effect of perfection or nonperfection of
the security interests created pursuant to the Operative Documents be governed
by the laws of the state in which the Property is located. Except as provided in
the immediately preceding sentence, Lessee hereby unconditionally and
irrevocably waives, to the fullest extent permitted by law, any claim to assert
that the law of any jurisdiction other than California governs this Agreement
and the other Operative Documents.

        (f) Interpretation. The Operative Documents are the result of
negotiations among, and have been reviewed by Lessee and each Lessor Party and
their respective counsel. Accordingly, the Operative Documents shall be deemed
to be the product of all parties hereto, and no ambiguity shall be construed in
favor of or against Lessee or any Lessor Party.

                                    1.01-32
<PAGE>   106

        (g) Entire Agreement. The Operative Documents, taken together,
constitute and contain the entire agreement of Lessee and the Lessor Parties and
supersede any and all prior agreements, negotiations, correspondence,
understandings and communications among the parties, whether written or oral,
respecting the subject matter thereof (including the commitment letter dated as
of March 9, 2000, between Lessee and Agent).

        (h) Calculation of Base Rent, Interest and Fees. All calculations of
Base Rent, interest and fees under the Operative Documents for any period (i)
shall include the first day of such period and exclude the last day of such
period and (ii) shall be calculated on the basis of a year of 360 days for
actual days elapsed, except that during any period that Base Rent or any
interest is to be calculated based upon the Base Rate, such Base Rent or
interest shall be calculated on the basis of a year of 365 or 366 days, as
appropriate, for actual days elapsed.

        (i) References.

               (i) References in any Operative Document to "Recitals,"
        "Sections," "Paragraphs," "Subparagraphs," "Articles," "Exhibits" and
        "Schedules" are to recitals, sections, paragraphs, subparagraphs,
        articles, exhibits and schedules therein and thereto unless otherwise
        indicated.

               (ii) References in any Operative Document to any document,
        instrument or agreement (A) shall include all exhibits, schedules and
        other attachments thereto, (B) shall include all documents, instruments
        or agreements issued or executed in replacement thereof if such
        replacement is permitted hereby, and (C) shall mean such document,
        instrument or agreement, or replacement or predecessor thereto, as
        amended, modified and supplemented from time to time and in effect at
        any given time if such amendment, modification or supplement is
        permitted hereby.

               (iii) References in any Operative Document to any Governmental
        Rule (A) shall include any successor Governmental Rule, (B) shall
        include all rules and regulations promulgated under such Governmental
        Rule (or any successor Governmental Rule), and (C) shall mean such
        Governmental Rule (or successor Governmental Rule) and such rules and
        regulations, as amended, modified, codified or reenacted from time to
        time and in effect at any given time.

               (iv) References in any Operative Document to any Person in a
        particular capacity (A) shall include any permitted successors to and
        assigns of such Person in that capacity and (B) shall exclude such
        Person individually or in any other capacity.

        (j) Other Interpretive Provisions. The words "hereof," "herein" and
"hereunder" and words of similar import when used in any Operative Document
shall refer to such Operative Document as a whole and not to any particular
provision of such Operative Document. The words "include" and "including" and
words of similar import when used in any Operative Document shall not be
construed to be limiting or exclusive. In the event of any inconsistency between
the terms of the Participation Agreement and the terms of any other Operative
Document, the terms of the Participation Agreement shall govern.

                                    1.01-33
<PAGE>   107

                                  SCHEDULE 3.01

                     CONDITIONS PRECEDENT TO INITIAL ADVANCE

A.      PRINCIPAL OPERATIVE DOCUMENTS.

        (1) The Participation Agreement, duly executed by Lessee, each Lessor,
Lessor Agent, each Participant and Agent;

        (2) The Lease Agreement, duly executed by Lessee, Lessor Agent and each
Lessor, together with Lease Supplement No. 1 thereto, duly executed by Lessee
and Lessor Agent;

        (3) The Purchase Agreement, duly executed by Lessee, Lessor Agent and
each Lessor; and

        (4) The Lessor Security Agreement, duly executed by Lessor Agent, each
Lessor and Agent.

B.      LESSEE CORPORATE DOCUMENTS.

        (1) The Certificate of Incorporation of Lessee, certified as of a recent
date prior to the Closing Date by the Secretary of State of Delaware;

        (2) A Certificate of Good Standing for Lessee, certified as of a recent
date prior to the Closing Date by the Secretary of State of Delaware;

        (3) A certificate of the Secretary or an Assistant Secretary of Lessee,
dated the Closing Date, certifying (a) that attached thereto is a true and
correct copy of the Bylaws of Lessee as in effect on the Closing Date; (b) that
attached thereto are true and correct copies of resolutions duly adopted by the
Board of Directors of Lessee and continuing in effect, which (i) authorize the
execution, delivery and performance by Lessee of the Operative Documents
executed or to be executed by Lessee and the consummation of the transactions
contemplated thereby and (ii) designate the officers authorized to so execute
and deliver the Operative Documents on behalf of Lessee; and (c) that there are
no proceedings for the dissolution or liquidation of Lessee;

        (4) A certificate of the Secretary or an Assistant Secretary of Lessee,
dated the Closing Date, certifying the incumbency, signatures and authority of
the officers of Lessee authorized to execute, deliver and perform the Operative
Documents and all other documents, instruments or agreements related thereto
executed or to be executed by Lessee; and

        (5) Certificates of Good Standing (or comparable certificates) for
Lessee, certified as of a recent date prior to the Closing Date by the
Secretaries of State (or comparable official) of California, Colorado and Oregon
and each other jurisdiction in which Lessee is qualified to do

                                     3.01-1
<PAGE>   108

business and has assets with a net book value in excess of $10,000,000
(exclusive of intercompany assets and liabilities).

C.      FINANCIAL STATEMENTS, FINANCIAL CONDITION, ETC.

        (1) A copy of the audited consolidated Financial Statements of Lessee
for the fiscal year ended in December 1999 prepared by PricewaterhouseCoopers
LLP and a copy of the unqualified opinion delivered by such accountants in
connection with such Financial Statements;

        (2) A copy of the 10-K report filed by Lessee with the Securities and
Exchange Commission for the fiscal year ended in December 1999; and

        (3) Such other financial, business and other information regarding
Lessee, or any of its Subsidiaries as Agent or any Participant may reasonably
request, including information as to possible contingent liabilities, tax
matters, environmental matters and obligations for employee benefits and
compensation.

D.      COLLATERAL DOCUMENTS.

        (1) Such Uniform Commercial Code financing statements and fixture
filings (appropriately completed and executed) for filing in such jurisdictions
as Agent may reasonably request to perfect the Liens granted to Lessor Agent and
Agent in the Lessee Security Documents, the Lessor Security Agreement and the
other Operative Documents;

        (2) Such Uniform Commercial Code termination statements (appropriately
completed and executed) for filing in such jurisdictions as Agent may reasonably
request to terminate any financing statement evidencing Liens of other Persons
in the Collateral which are prior to the Liens granted to Lessor Agent and Agent
in the Lessee Security Documents, the Lessor Security Agreement and the other
Operative Documents, except for any such prior Liens which are expressly
permitted by the Operative Documents to be prior;

        (3) Uniform Commercial Code search certificates from the jurisdictions
in which Uniform Commercial Code financing statements and fixture filings are to
be filed pursuant to item D(1) above evidencing the filing of such financing
statements and fixture filings and reflecting no other financing statements or
filings which evidence Liens of other Persons in the Collateral which are prior
to the Liens granted to Lessors and Agent in the Lessee Security Documents, the
Lessor Security Agreement and the other Operative Documents, except for any such
prior Liens (a) which are expressly permitted by the Operative Documents to be
prior or (b) for which Agent has received a termination statement pursuant to
item D(2) above;

        (4) Such other documents, instruments and agreements as Agent may
reasonably request to establish and perfect the Liens granted to any Lessor
Party in the Lessee Security Documents, the Lessor Security Agreement and the
other Operative Documents;

                                     3.01-2
<PAGE>   109

        (5) A preliminary title report or other evidence reflecting the Persons
owning each Property Site and having other interests in such Property Site;

        (6) Such landlord waivers, and other consents and estoppels, with
appropriate mortgagee protection language, as are requested by Agent, each duly
executed by the appropriate Person; and

        (7) Such other evidence as Agent may request to establish that the Liens
granted to Agent or any Participant in the Lessee Security Documents, the Lessor
Security Agreement and the other Operative Documents are perfected and prior to
the Liens of other Persons in the Collateral, except for any such Liens which
are expressly permitted by the Operative Documents to be prior.

E.      OPINIONS.

        (1) A favorable written opinion of Latham & Watkins, counsel to Lessee,
dated the Closing Date, addressed to Lessor Agent and Agent, for the benefit of
Agent and the Participants, and covering such legal matters as Agent may
reasonably request and otherwise in form and substance reasonably satisfactory
to Agent; and

        (2) A favorable written opinion of the General Counsel of Lessee, dated
the Closing Date, addressed to Lessor Agent and Agent, for the benefit of Agent
and the Participants, and covering such legal matters as Agent may reasonably
request and otherwise in form and substance reasonably satisfactory to Agent.

F.      OTHER ITEMS.

        (1) The Initial Advance Request, appropriately completed and duly
executed by Lessee;

        (2) A Closing Date Appraisal for the Property, dated as of a recent date
prior to the Closing Date;

        (3) With respect to any Property to be purchased by Lessors on the
Closing Date from Lessee, a full warranty bill of sale transferring Lessee's
right, title and interest in such Property to Lessors, duly executed by Lessee,
and such other documents, instruments and agreements as Lessor Agent shall
reasonably request to evidence such transfer on the terms set forth in the
Operative Documents;

        (4) With respect to any Property to be purchased by Lessors on the
Closing Date directly from a Supplier, the bills of sale for such Property
showing Lessors as the purchaser, duly executed by the Suppliers of the
Property;

        (5) If there is no Unpaid Acquisition Price for any Equipment to be
purchased by Lessors on the Closing Date, an Acquisition Agreement Acceptance
Certificate, appropriately

                                     3.01-3
<PAGE>   110

completed and duly executed by Lessee with respect to such Equipment, and
receipts evidencing the payment by Lessee of the Acquisition Price for such
Equipment, duly executed by the Supplier of such Equipment;

        (6) Certificates of insurance evidencing the insurance Lessee is
required to maintain pursuant to Paragraph 3.03 of the Lease Agreement;

        (7) A certificate of the chief financial officer or treasurer of Lessee,
addressed to Agent and dated the Closing Date, certifying that:

               (a) The representations and warranties set forth in Paragraph
        4.01 of the Participation Agreement and in the other Operative Documents
        are true and correct in all material respects as of such date (except
        for such representations and warranties made as of a specified date,
        which shall be true in all material respects as of such date); and

               (b) No Default has occurred and is continuing as of such date.

        (8) All fees and expenses payable to the Lessor Parties on or prior to
the Closing Date (including all Agent's Fees);

        (9) All reasonable fees and expenses of counsel for Lessor Agent and
Agent through the Closing Date;

        (10) Copies of all documents creating or evidencing Subordinated Debt;
and

        (11) Such other evidence as Agent may reasonably request to establish
the accuracy and completeness of the representations and warranties and the
compliance with the terms and conditions contained in the Operative Documents.

                                     3.01-4
<PAGE>   111

                                SCHEDULE 3.02(e)

                    INFORMATION TO BE DELIVERED TO APPRAISER

1.      Detailed description of Equipment (including estimated number of
        chambers or modules, if applicable)

2.      Manufacturer

3.      Model

4.      Serial number

5.      Tool identification number

6.      Delivery date

7.      Expected in-service date

8.      Internal order number

9.      Acquisition Price

10.     Permitted Installation Expenses

11.     Purchase Date Appraisal Value

12.     Unpaid Acquisition Price

13.     Operational use of Equipment

                                   3.02(e)-1
<PAGE>   112

                                SCHEDULE 4.01(g)

                                   LITIGATION

        Reference is made to Lessee in Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 20, 2000.

                                   4.01(g)-1
<PAGE>   113

                                SCHEDULE 4.01(i)

                              ENVIRONMENTAL MATTERS

                                      None.

                                   4.01(i)-1
<PAGE>   114

                                SCHEDULE 4.01(l)

                            SIGNIFICANT SUBSIDIARIES

LSI Logic Corporation of Canada, Inc.
LSI Logic Europe
LSI Logic Hong Kong Holdings
LSI Logic Hong Kong, Ltd.
LSI Logic Japan Semiconductor, Inc.
LSI Logic KK
LSI Logic Storage Systems, Inc.
Mint Technology
Symbios International, Inc.

                                   4.01(l)-1
<PAGE>   115

                                SCHEDULE 5.02(a)

                                 EXISTING LIENS

THE INDUSTRIAL BANK OF JAPAN LEASING

Master Lease Agreement and Master Purchase Agreement dated June 16, 1995 and
leasing transactions thereunder in connection with JPY 15 billion synthetic
lease.

                                   5.02(a)-1
<PAGE>   116

                                    EXHIBIT A

                                    EQUIPMENT

                                      A-1

<PAGE>   117

                                    EXHIBIT B

                                 LEASE AGREEMENT

                                      B-1

<PAGE>   118

                                    EXHIBIT C

                               PURCHASE AGREEMENT

                                      C-1

<PAGE>   119

                                    EXHIBIT D

                             INITIAL ADVANCE REQUEST

                                     [Date]

ABN AMRO Bank N.V.
   as Agent
Syndications Group
1325 Avenue of the Americas, 9th Floor
New York, NY  10019
Attn:  Linda Boardman

        1. Reference is made to that certain Participation Agreement, dated as
of March 31, 2000 (the "Participation Agreement"), among LSI Logic Corporation
("Lessee"), ABN AMRO Bank N.V. and each other financial institution listed as a
lessor in Schedule I to the Participation Agreement, as lessors (in such
capacity, collectively "Lessors"), ABN AMRO Bank N.V., as agent for Lessors (in
such capacity, "Lessor Agent"), the financial institutions listed in Schedule I
to the Participation Agreement (the "Participants") and ABN AMRO Bank N.V., as
agent for the Participants (in such capacity, "Agent"). Unless otherwise
indicated, all terms defined in the Participation Agreement have the same
respective meanings when used herein.

        2. Pursuant to Subparagraph 2.03(a) of the Participation Agreement,
Lessee hereby irrevocably requests Lessors to make the Initial Advance as
follows:

               (a)    The Initial Acquisition Advance:

                      (i) The amount of the Initial Acquisition Advance shall be
               $___________;

                      (ii) Set forth in Attachment A hereto is a schedule of
               each item of Equipment to be purchased with the Initial
               Acquisition Advance, including the Supplier, model, serial
               number, delivery date, internal order number, Acquisition Price,
               Unpaid Acquisition Price, Permitted Installation Expenses,
               Purchase Date Appraised Value and the Property Site where such
               Equipment has been delivered;

                      (iii) Lessee hereby certifies to the Lessor Parties that
               (A) the amount of the Initial Acquisition Advance requested
               above, together with th does not exceed the lesser of (y) the
               aggregate Purchase Date Appraised Values of all Equipment
               identified in Attachment A and (z) the aggregate Acquisition
               Prices and Permitted Installation Expenses for such Equipment,
               (B) such Equipment has been delivered to the Property Site
               identified in Attachment A and has been installed or is ready for
               installation; and

                      (iv) With respect to the portion of the Initial
               Acquisition Advance requested above which represents Permitted
               Installation Expenses, Lessee hereby certifies to the Lessor
               Parties that (A) Lessee will use such portion of the Initial

                                       D-1
<PAGE>   120

               Acquisition Advance to pay Permitted Installation Expenses for
               the Equipment identified in Attachment A, and (B) all such costs
               and expenses are Permitted Installation Expenses which are now
               due and payable.

               (b)    An Expense Advance:

                      (i) The amount of such Expense Advance shall be
               $___________;

                      (ii) Set forth in Attachment B hereto is a schedule of the
               Permitted Transaction Expenses to be paid with such Expense
               Advance; and

                      (iii) Lessee hereby certifies to the Lessor Parties that
               (A) Lessee will use the proceeds of such Expense Advance to pay
               the costs and expenses identified in Attachment B, and (B) all
               such costs and expenses are Permitted Transaction Expenses which
               are now due and payable.

               (c) The date of the Initial Advance shall be ___________, which
        date is on or prior to March 31, 2000.

        3. Lessee hereby certifies to the Lessor Parties that, on the date of
this Initial Advance Request and after giving effect to the use of the Initial
Advance as described above:

               (a) The representations and warranties of Lessee set forth in
        Paragraph 4.01 of the Participation Agreement and in the other Operative
        Documents are true and correct in all material respects as if made on
        such date (except for representations and warranties expressly made as
        of a specified date, which shall be true in all material respects as of
        such date); and

               (b) No Default has occurred and is continuing.

        4. Lessee hereby agrees to reimburse each Lessor and Participant for,
and hold such Lessor and Participant harmless from, all reasonable costs and
losses incurred by such Participant as a result of any cancellation or other
failure to consummate this Initial Advance Request (whether as a result of the
failure to satisfy any applicable conditions or otherwise) within twenty (20)
days after written demand by such Lessor and Participant; provided, however,
that Lessee shall have no obligation to make any payment to any demanding party
on account of such costs and losses unless Lessee receives notice of such costs
or losses from the demanding party within six (6) months after they are incurred
or realized. Lessee understand that such costs and losses may include, without
limitation, losses incurred by a Lessor or Participant as a result of funding
and other contracts entered into by such party to fund its portion of the
Initial Advance requested in this Initial Advance Request. Each party demanding
payment under this Paragraph 4 shall deliver to Lessee, with a copy to Agent, a
certificate setting forth the amount of costs and losses for which demand is
made, which certificate shall set forth in reasonable detail the calculation of
the amount demanded. Such a certificate so delivered to Lessee shall constitute
prima facie evidence of such costs and losses.

                                       D-2
<PAGE>   121

        5. Except for such portion of the Initial Acquisition Advance
representing the aggregate Unpaid Acquisition Price of all Equipment identified
in Attachment A which shall be disbursed to Lessor Agent to be held as Cash
Collateral, please disburse the proceeds of the Initial Advance to:_____________
________________________________________________________________________________
_______________________________________________________________________________.

        IN WITNESS WHEREOF, Lessee has executed this Initial Advance Request on
the date set forth above.

                                            LSI LOGIC CORPORATION

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

                                       D-3
<PAGE>   122

                                    EXHIBIT E

                           ADDITIONAL ADVANCE REQUEST

                                     [Date]

ABN AMRO Bank N.V.
   as Agent
Syndications Group
1325 Avenue of the Americas, 9th Floor
New York, NY  10019
Attn:  Linda Boardman

        1. Reference is made to that certain Amended and Restated Participation
Agreement, dated as of April 18, 2000 (the "Participation Agreement"), among LSI
Logic Corporation ("Lessee"), ABN AMRO Bank N.V., KeyBank National Association,
FBTC Leasing Corp. and each other financial institution listed as a lessor in
Schedule I to the Participation Agreement, as lessors (in such capacity,
collectively "Lessors"), ABN AMRO Bank N.V., as agent for Lessors (in such
capacity, "Lessor Agent"), the financial institutions listed in Schedule I to
the Participation Agreement (the "Participants") and ABN AMRO Bank N.V., as
agent for the Participants (in such capacity, "Agent"). Unless otherwise
indicated, all terms defined in the Participation Agreement have the same
respective meanings when used herein.

        2. Pursuant to Subparagraph 2.03(b) of the Participation Agreement,
Lessee hereby irrevocably requests Lessors to make an Advance as follows:

                      (a) If an Additional Acquisition Advance is requested:

                      (i) The amount of such Additional Acquisition Advance
               shall be $___________;

                      (ii) Set forth in Attachment A hereto is a schedule of
               each item of Equipment to be purchased with such Additional
               Acquisition Advance, including the Supplier, model, serial
               number, delivery date, internal order number, Acquisition Price,
               Unpaid Acquisition Price, Permitted Installation Expenses,
               Purchase Date Appraised Value and the Property Site where such
               Property will be installed;

                      (iii) Lessee hereby certifies to the Lessor Parties that
               (A) the amount of the Additional Acquisition Advance requested
               above , when aggregated with all prior Additional Acquisition
               Advances made during the Installation Period ending , does not
               exceed the lesser of (y) the aggregate Purchase Date Appraised
               Values of all Property previously purchased or to be purchased
               with the proceeds of such Additional Acquisition Advances and (z)
               the aggregate Acquisition Prices and Permitted Installation
               Expenses for all such Property, and (B) all Equipment identified
               on Attachment A has been delivered to

                                      E-1
<PAGE>   123

               the Property Site identified in Attachment A and has been
               installed or is ready for installation during the Installation
               Period ending _______________;

                      (iv) With respect to the portion of the Additional
               Acquisition Advance requested above which represents Permitted
               Installation Expenses, Lessee hereby certifies to the Lessor
               Parties that (A) Lessee will use such portion of the Additional
               Acquisition Advance to pay Permitted Installation Expenses for
               the Equipment identified in Attachment A, and (B) all such costs
               and expenses are Permitted Installation Expenses which are now
               due and payable.

               (b)    If an Expense Advance is requested:

                      (i) The amount of such Expense Advance shall be
               $___________;

                      (ii) Set forth in Attachment B hereto is a schedule of the
               Permitted Transaction Expenses to be paid with such Expense
               Advance; and

                      (iii) Lessee hereby certifies to the Lessor Parties that
               (A) Lessee will use the proceeds of such Expense Advance to pay
               the costs and expenses identified in Attachment B, (B) all such
               costs and expenses are Permitted Transaction Expenses which are
               now due and payable, and (C) no prior Expense Advance has been
               requested to pay any such costs and expenses.

               (c) The date of the Advance shall be ___________, which date is
        prior to the Commitment Termination Date.

        3. Lessee hereby certifies to the Lessor Parties that, on the date of
this Additional Advance Request and after giving effect to the use of such
Advance as described above:

               (a) The representations and warranties of Lessee set forth in
        Paragraph 4.01 of the Participation Agreement and in the other Operative
        Documents are true and correct in all material respects as if made on
        such date (except for representations and warranties expressly made as
        of a specified date, which shall be true in all material respects as of
        such date); and

               (b) No Default has occurred and is continuing.

        4. Except for such portion of the Additional Acquisition Advance
representing the aggregate Unpaid Acquisition Price of all Equipment identified
in Attachment A which shall be disbursed to Lessor Agent to be held as Cash
Collateral, please disburse the proceeds of such Advance to:__________________
________________________________________________________________________________
_______________________________________________________________________________.

                                      E-2
<PAGE>   124

        IN WITNESS WHEREOF, Lessee has executed this Additional Advance Request
on the date set forth above.

                                            LSI LOGIC CORPORATION

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

                                      E-3

<PAGE>   125

                                    EXHIBIT F

                            LESSOR SECURITY AGREEMENT

<PAGE>   126

                                    EXHIBIT G

                              ASSIGNMENT AGREEMENT

        THIS ASSIGNMENT AGREEMENT, dated as of the date set forth at the top of
Attachment 1 hereto, by and among:

               (1) The party designated under item A of Attachment I hereto as
        the Assignor Participant ("Assignor Participant"); and

               (2) Each party designated under item B of Attachment I hereto as
        an Assignee Participant (individually, an "Assignee Participant").

                                    RECITALS

        A. Assignor Participant is one of the "Participants" in an Amended and
Restated Participation Agreement dated as of April 18, 2000, among LSI Logic
Corporation ("Lessee"), ABN AMRO Bank N.V., KeyBank National Association, FBTC
Leasing Corp. and each other financial institution listed as a lessor in
Schedule I to the Participation Agreement (in such capacity, collectively
"Lessors"), ABN AMRO Bank N.V., as agent for Lessors (in such capacity, "Lessor
Agent"), Assignor Participant and the other institutions parties thereto as
"Participants" (collectively, the "Participants") and ABN AMRO Bank N.V., as
agent for the Participants (in such capacity, "Agent"). (Such Participation
Agreement, as amended, supplemented or otherwise modified in accordance with its
terms from time to time to be referred to herein as the "Participation
Agreement").

        B. Assignor Participant wishes to sell, and each Assignee Participant
wishes to purchase, all or a portion of Assignor Participant's rights under the
Participation Agreement pursuant to Subparagraph 7.05(b) of the Participation
Agreement.

                                    AGREEMENT

        Now, therefore, the parties hereto hereby agree as follows:

        1. Definitions. Except as otherwise defined in this Assignment
Agreement, all capitalized terms used herein and defined in the Participation
Agreement have the respective meanings given to those terms in the Participation
Agreement.

        2. Sale and Assignment. Subject to the terms and conditions of this
Assignment Agreement, Assignor Participant hereby agrees to sell, assign and
delegate to each Assignee Participant and each Assignee Participant hereby
agrees to purchase, accept and assume the rights, obligations and duties of a
Participant under the Participation Agreement and the other Operative Documents
equal to the Commitment, Outstanding Participation Amount, the Tranche A
Percentage, Tranche B Percentage, Equity Percentage (if applicable) and

                                      G-1
<PAGE>   127

Proportionate Share with respect to each Lease Supplement (or, if a Lease
Supplement has not been executed with respect to any Installation Period, the
Advances made during such Installation Period) set forth under the captions
"Commitments, Outstanding Participation Amounts, Tranche Percentages and
Proportionate Shares Assigned" opposite such Assignee Participant's name on Part
A of Attachment I hereto. Such sale, assignment and delegation shall become
effective on the date designated in Part C of Attachment I hereto (the
"Assignment Effective Date"), which date shall be, unless Agent shall otherwise
consent, at least five (5) Business Days after the date following the date
counterparts of this Assignment Agreement are delivered to Agent in accordance
with Paragraph 3 hereof.

        3. Assignment Effective Notice. Upon (a) receipt by Agent of five (5)
counterparts of this Assignment Agreement (to each of which is attached a fully
completed Attachment 1), each of which has been executed by Assignor Participant
and each Assignee Participant (and, to the extent required by clause (i) of
Subparagraph 7.05(b) of the Participation Agreement, by Lessee and Agent) and
(b) payment to Agent of the registration and processing fee specified in clause
(iii) of Subparagraph 7.05(b) of the Participation Agreement, Agent will
transmit to Lessors, Lessor Agent, Lessee, Assignor Participant and each
Assignee Participant an Assignment Effective Notice substantially in the form of
Attachment 2 hereto, fully completed (an "Assignment Effective Notice").

        4. Assignment Effective Date. At or before 12:00 noon (local time of
Assignor Participant) on the Assignment Effective Date, each Assignee
Participant shall pay to Assignor Participant, in immediately available or same
day funds, an amount equal to the purchase price, as agreed between Assignor
Participant and such Assignee Participant (the "Assignment Purchase Price") for
the respective Outstanding Participation Amount, Tranche A Percentage, Tranche B
Percentage, Equity Percentage (if applicable) and Proportionate Share of each
Lease Supplement (or, if a Lease Supplement has not been executed with respect
to any Installation Period, the Advances made during such Installation Period)
purchased by such Assignee Participant hereunder. Effective upon receipt by
Assignor Participant of the Assignment Purchase Price payable by each Assignee
Participant, the sale, assignment and delegation to such Assignee Participant of
such Commitment and such Outstanding Participation Amount, the Tranche A
Percentage, Tranche B Percentage, Equity Percentage (if applicable) and
Proportionate Share with respect to each Lease Supplement or Installation Period
as described in Paragraph 2 hereof shall become effective.

        5. Payments After the Assignment Effective Date. Assignor Participant
and each Assignee Participant hereby agree that Agent shall, and hereby
authorize and direct Agent to, allocate amounts payable under the Participation
Agreement and the other Operative Documents as follows:

               (a) All payments applied to reduce the Outstanding Lease Amount
        of any Lease Supplement (or, if a Lease Supplement has not been executed
        with respect to any Installation Period, the Advances made during such
        Installation Period) after the Assignment Effective Date with respect to
        each Outstanding Participation Amount, Tranche A Percentage, Tranche B
        Percentage, Equity Percentage (if applicable) and Proportionate Share of
        such Lease Supplement or Installation Period assigned to an

                                      G-2
<PAGE>   128

        Assignee Participant pursuant to this Assignment Agreement shall be
        payable to such Assignee Participant.

               (b) All Base Rent with respect to any Lease Supplement (or, if a
        Lease Supplement has not been executed with respect to any Installation
        Period, the Advances made during such Installation Period), interest,
        fees and other amounts accrued after the Assignment Effective Date with
        respect to the Commitment and each Outstanding Participation Amount,
        Tranche A Percentage, Tranche B Percentage, Equity Percentage (if
        applicable) and Proportionate Share of such Lease Supplement or
        Installation Period assigned to an Assignee Participant pursuant to this
        Assignment Agreement shall be payable to such Assignee Participant.

Assignor Participant and each Assignee Participant shall make any separate
arrangements between themselves which they deem appropriate with respect to
payments between them of amounts paid under the Operative Documents on account
of the Commitment or the Outstanding Participation Amount, Tranche A Percentage,
Tranche B Percentage, Equity Percentage (if applicable) and Proportionate Share
with respect to any Lease Supplement (or, if a Lease Supplement has not been
executed with respect to any Installation Period, the Advances made during such
Installation Period) assigned to such Assignee Participant, and neither Agent
nor Lessee shall have any responsibility to effect or carry out such separate
arrangements.

        6. Delivery of Copies of Operative Documents. Concurrently with the
execution and delivery hereof, Assignor Participant will provide to each
Assignee Participant (if it is not already a party to the Participation
Agreement) conformed copies of all documents delivered to Assignor Participant
on or prior to the Closing Date in satisfaction of the conditions precedent set
forth in the Participation Agreement and all documents delivered to Assignor
Participant with respect to any Lease Supplement (or, if a Lease Supplement has
not been executed with respect to any Installation Period, the Advances made
during such Installation Period) in which Assignor Participant is assigning its
Outstanding Participation Amount, Tranche A Percentage, Tranche B Percentage,
Equity Percentage (if applicable) and Proportionate Share.

        7. Further Assurances. Each of the parties to this Assignment Agreement
agrees that at any time and from time to time upon the written request of any
other party, it will execute and deliver such further documents and do such
further acts and things as such other party may reasonably request in order to
effect the purposes of this Assignment Agreement.

        8. Further Representations, Warranties and Covenants. Assignor
Participant and each Assignee Participant further represent and warrant to and
covenant with each other, Lessors, Agent and the other Participants as follows:

               (a) Other than the representation and warranty that it is the
        legal and beneficial owner of the interest being assigned hereby free
        and clear of any adverse claim, Assignor Participant makes no
        representation or warranty and assumes no responsibility with respect to
        any statements, warranties or representations made in or in connection
        with the Participation Agreement or the other Operative Documents or the
        execution, legality, validity, enforceability, genuineness, sufficiency
        or value of the Participation

                                      G-3
<PAGE>   129

        Agreement or the other Operative Documents furnished or the Collateral
        or any security interest therein.

               (b) Assignor Participant makes no representation or warranty and
        assumes no responsibility with respect to the financial condition of
        Lessee or any of its obligations under the Participation Agreement or
        any other Operative Documents.

               (c) Each Assignee Participant confirms that it has received a
        copy of the Participation Agreement and such other documents and
        information as it has deemed appropriate to make its own credit analysis
        and decision to enter into this Assignment Agreement.

               (d) Each Assignee Participant will, independently and without
        reliance upon Lessors, Agent, Assignor Participant or any other
        Participant and based upon such documents and information as it shall
        deem appropriate at the time, continue to make its own credit decisions
        in taking or not taking action under the Participation Agreement and the
        other Operative Documents.

               (e) Each Assignee Participant appoints and authorizes Agent to
        take such action as Agent on its behalf and to exercise such powers
        under the Participation Agreement and the other Operative Documents as
        Agent is authorized to exercise by the terms thereof, together with such
        powers as are reasonably incidental thereto, all in accordance with
        Section 6 of the Participation Agreement.

               (f) Each Assignee Participant (i) affirms that each of the
        representations and warranties set forth in Paragraph 4.03 of the
        Participation Agreement is true and correct with respect to such
        Participant and (ii) agrees that it will perform in accordance with
        their terms all of the obligations which by the terms of the
        Participation Agreement and the other Operative Documents are required
        to be performed by it as a Participant.

               (g) Each Assignee Participant represents and warrants that, as of
        the date hereof, it would not have any basis for demanding any payment
        under Subparagraph 2.12(c) or Subparagraph 2.12(d) of the Participation
        Agreement or, to its knowledge, under Subparagraph 2.13(a) of the
        Participation Agreement.

               (h) Part B of Attachment 1 hereto sets forth administrative
        information with respect to each Assignee Participant.

        9. Effect of this Assignment Agreement. On and after the Assignment
Effective Date, (a) each Assignee Participant shall be a Participant with a
Commitment and an Outstanding Participation Amount, Tranche A Percentage,
Tranche B Percentage, Equity Percentage (if applicable) and Proportionate Share
in each Lease Supplement (or, if a Lease Supplement has not been executed with
respect to any Installation Period, the Advances made during such Installation
Period) as set forth under the caption "Commitments, Outstanding Participation
Amounts, Tranche Percentages and Proportionate Shares After Assignment" opposite
such Assignee Participant's name in Part A of Attachment 1 hereto and shall have
the rights, duties

                                      G-4
<PAGE>   130

and obligations of such a Participant under the Participation Agreement and the
other Operative Documents and (b) Assignor Participant shall be a Participant
with a Commitment and an Outstanding Participation Amount, Tranche A Percentage,
Tranche B Percentage, Equity Percentage (if applicable) and Proportionate Share
in such Lease Supplement or Installation Period as set forth under the caption
"Commitments, Outstanding Participation Amounts, Tranche Percentages and
Proportionate Share After Assignment" opposite Assignor Participant's name in
Part A of Attachment 1 hereto and shall have the rights, duties and obligations
of such a Participant under the Participation Agreement and the other Operative
Documents, or, if Assignor Participant's Commitment and Outstanding
Participation Amounts in each Lease Supplement and Installation Period have been
reduced to zero, Assignor Participant shall cease to be a Participant and shall
have no further obligation to fund any portion of any Advance.

        10. Miscellaneous. This Assignment Agreement shall be governed by, and
construed in accordance with, the laws of the State of California. Paragraph
headings in this Assignment Agreement are for convenience of reference only and
are not part of the substance hereof.

                                      G-5
<PAGE>   131

        IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement to be executed by their respective duly authorized officers as of the
date set forth in Attachment 1 hereto.

                                            ______________________________, as
                                            Assignor Participant

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

                                            ____________________________, as an
                                            Assignee Participant

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

                                            ____________________________, as an
                                            Assignee Participant

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

                                            ____________________________, as an
                                            Assignee Participant

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

                                      G-6
<PAGE>   132

CONSENTED TO AND ACKNOWLEDGED BY:

------------------------------
as Lessee

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

-----------------------------,
as Agent

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

ACCEPTED FOR RECORDATION IN REGISTER:

------------------------------,
As Agent

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

                                      G-7
<PAGE>   133

                                  ATTACHMENT 1

                             TO ASSIGNMENT AGREEMENT
                 COMMITMENTS, OUTSTANDING PARTICIPATION AMOUNTS,
                  TRANCHE PERCENTAGES AND PROPORTIONATE SHARES
<TABLE>
<CAPTION>

                                    Commitments and Proportionate Share             Commitments and Proportionate Shares
                                         of Each Advance Assigned                     of Each Advance After Assignment
                                 ---------------------------------------------     -----------------------------------------
<S>                              <C>                      <C>                      <C>                 <C>
                                                          Proportionate Share                          Proportionate Share
                                 Commitments                of Each Advance        Commitments           of Each Advance
Assignor Participant:

---------

---------

---------

Assignee Participants:

---------

---------

---------

---------
</TABLE>

                                     G(1)-1

<PAGE>   134

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------
                                          Lease Supplement No.
                         Outstanding Participation Amount, Tranche Percentages and
                                       Proportionate Shares Assigned
-------------------------------------------------------------------------------------
<S>                      <C>                 <C>                 <C>
                         (a)  Tranche A      (a)  Tranche B      (a)  Equity
                         Outstanding         Outstanding         Outstanding
                         Participation       Participation       Participation
                         Amount              Amount              Amount
                         (b)  Tranche A      (b)  Tranche B      (b)  Equity
                         Percentage          Percentage          Percentage
                         (c)  Tranche A      (c)  Tranche B      (c)  Equity
                         Proportionate       Proportionate       Proportionate
                         Share               Share               Share
                                                                 (if applicable)
-------------------------------------------------------------------------------------
Assignor Participant:

-------------------------------------------------------------------------------------
---------
-------------------------------------------------------------------------------------
---------
-------------------------------------------------------------------------------------
---------
-------------------------------------------------------------------------------------
Assignee Participants:

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

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

---------------------------------------------------------------------------------------
                                           Lease Supplement No.
                                            Tranche Percentages and
                                     Proportionate Shares After Assignment
---------------------------------------------------------------------------------------

<S>                     <C>                   <C>                  <C>
                        (a)  Tranche A        (a)  Tranche B       (a)  Equity
                        Outstanding           Outstanding          Outstanding
                        Participation Amount  Participation        Participation Amount
                        (b)  Tranche A        Amount               (b)  Equity
                        Percentage            (b)  Tranche B       Percentage
                        (c)  Tranche A        Percentage           (c)  Equity
                        Proportionate Share   (c)  Tranche B       Proportionate Share
                                              Proportionate Share  (if applicable)

---------------------------------------------------------------------------------------
Assignor Participant:

---------------------------------------------------------------------------------------
---------
---------------------------------------------------------------------------------------
---------
---------------------------------------------------------------------------------------
---------
---------------------------------------------------------------------------------------
Assignee Participants:

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

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

</TABLE>

                                     G(1)-2

<PAGE>   135

                                     PART B

[Assignee Participant (as [a Lessor and] a Participant)]

Applicable Participating Office:

Address for notices:

Telephone No:
Telecopier No:

Wiring Instructions:

[Lessor's Chief Executive Office/
Major Executive Office in the United States]

[Assignee Participant (as [a Lessor and] a Participant)]

Applicable Participating Office:

Address for notices:

Telephone No:
Telecopier No:

Wiring Instructions:

[Lessor's Chief Executive Office/
Major Executive Office in the United States]

                                     G(1)-3
<PAGE>   136

               PART C

ASSIGNMENT EFFECTIVE DATE    ________, ____

                                     G(1)-4
<PAGE>   137

                                  ATTACHMENT 2

                             TO ASSIGNMENT AGREEMENT

                                     FORM OF

                           ASSIGNMENT EFFECTIVE NOTICE

        Reference is made to the Amended and Restated Participation Agreement,
dated as of April 18, 2000, among LSI Logic Corporation ("Lessee"), ABN AMRO
Bank N.V., KeyBank National Association, FBTC Leasing Corp. and each other
financial institution listed as a lessor in Schedule I to the Participation
Agreement (in such capacity, collectively "Lessors"), ABN AMRO Bank N.V., as
agent for Lessors (in such capacity, "Lessor Agent"), the financial institutions
parties thereto as "Participants" (the "Participants") and ABN AMRO Bank N.V.,
as agent for the Participants (in such capacity, "Agent"). Agent hereby
acknowledges receipt of five executed counterparts of a completed Assignment
Agreement, a copy of which is attached hereto. [Note: Attach copy of Assignment
Agreement.] Terms defined in such Assignment Agreement are used herein as
therein defined.

        1. Pursuant to such Assignment Agreement, you are advised that the
Assignment Effective Date will be __________.

        2. Pursuant to such Assignment Agreement, each Assignee Participant is
required to pay its Purchase Price to Assignor Participant at or before 12:00
Noon on the Assignment Effective Date in immediately available funds.

                                            Very truly yours,

                                            ABN AMRO Bank N.V.,
                                              as Agent

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

                                     G(2)-1
<PAGE>   138

                                    EXHIBIT H

                          CERTIFICATE OF ACCEPTANCE NO.

                                     [Date]

ABN AMRO Bank N.V.
   as Lessor Agent
Syndication Group
1325 Avenue of the Americas, 9th Floor
New York, NY 10019
Attn: Linda Boardman

        1. Reference is made to (1) the Amended and Restated Participation
Agreement, dated as of April 18, 2000 (the "Participation Agreement"), among LSI
Logic Corporation ("Lessee"), ABN AMRO Bank N.V., KeyBank National Association,
FBTC Leasing Corp. and each other financial institution listed as a lessor in
Schedule I to the Participation Agreement, as lessors (in such capacity,
collectively "Lessors"), ABN AMRO Bank N.V., as agent for Lessors (in such
capacity, "Lessor Agent"), the financial institutions listed in Schedule I to
the Participation Agreement (the "Participants") and ABN AMRO Bank N.V., as
agent for the Participants (in such capacity, "Agent") and (2) the Amended and
Restated Lease Agreement, dated as of April 18,2000 (the "Lease Agreement"),
between Lessee, Lessor Agent and Lessors. Unless otherwise indicated, all terms
defined in the Participation Agreement have the same respective meanings when
used herein.

        2. Pursuant to Subparagraph 2.01(c) of the Participation Agreement,
Lessee hereby confirms that, on or prior to the date hereof, Lessee has accepted
the equipment identified in Schedule 1 hereto (the "Accepted Property") as agent
for Lessors.

        3. Lessee hereby certifies to the Lessor Parties that, on the date
hereof:

               (a) Lessee has paid the full Acquisition Price and all Permitted
        Installation Expenses for the Accepted Property;

               (b) Lessee has (i) good and valid title to the Accepted Property,
        free and clear of all Liens and all other interests of other Persons
        (except for the interests of Lessor Parties pursuant to the Operative
        Documents) and (ii) full right and power, without the consent or
        approval of any other Person, to (A) use the Accepted Property and (B)
        sell or lease the Accepted Property to any other Person;

               (c) The Accepted Property is in good condition and repair and in
        good working order, free of any material defects. The Accepted Property
        is fit for the purposes for which Lessee intends to use it.

                                      H-1

<PAGE>   139

               (d) All material licenses, approvals, authorizations, consents,
        or permits necessary to be issued by any Governmental Authority for the
        operation or use of the Accepted Property by Lessee, Lessors or any
        other Person have been obtained and copies of all such licenses,
        approvals, authorizations, consents, and permits are attached hereto.

               (e) All of the Accepted Property complies with all applicable
        Governmental Rules and Insurance Requirements in all material respects.

               (f) The representations and warranties of Lessee set forth in
        Paragraph 4.01 of the Participation Agreement and in the other Operative
        Documents are true and correct in all material respects as if made on
        such date (except for representations and warranties expressly made as
        of a specified date, which shall be true in all material respects as of
        such date); and

               (g) No Default has occurred and is continuing.

        4. At the time the Accepted Property was purchased by Lessors, the
Unpaid Acquisition Price for each item of Accepted Property disbursed to Lessor
Agent to be held as Cash Collateral was as set forth in Schedule 1 and the
aggregate amount of all such Cash Collateral now held by Lessor Agent with
respect to the Accepted Property is $_________ (the "Withdrawal Amount"). Please
disburse the Withdrawal Amount to:______________________________________________
________________________________________________________________________________
_______________________________________________________________________________.

        IN WITNESS WHEREOF, Lessee has executed this Certificate of Acceptance
on the date set forth above.

                                            LSI LOGIC CORPORATION

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

                                      H-2
<PAGE>   140

                                    EXHIBIT I

                            SUBORDINATION PROVISIONS

        When used in Article 13 below, the following capitalized terms shall
have the meanings set forth below and a cross-reference to any other Article or
Section shall refer to an Article or Section comparable to the Article or
Section which was similarly cross-referenced in Article 13 of the 5 _%
Convertible Subordinated Notes Due 2001:

        "Designated Senior Debt" means (i) Senior Debt under the Existing Credit
Agreement, and (ii) any other particular Senior Debt in which the instrument
creating or evidencing the same or the assumption or guarantee thereof (or
related agreements or documents to which the Company is a party) expressly
provides that such Senior Debt shall be "Designated Senior Debt" for purposes of
this Indenture (provided that such instrument, agreement or other document may
place limitations and conditions on the right of such Senior Debt to exercise
the rights of Designated Senior Debt).

        "Existing Credit Agreement" means that Amended and Restated Credit
Agreement, dated as of September 22, 1998, among the Company, LSI Logic Japan
Semiconductor, Inc., the lenders from time to time parties thereto (the
"Existing Lenders"), and ABN AMRO Bank N.V., as agent for the Existing Lenders,
as such agreement may be amended, amended and restated, supplemented or
otherwise modified from time to time.

        "Indebtedness" means, with respect to any Person, (i) all obligations,
contingent or otherwise, of such Person (a) for borrowed money (whether or not
the recourse of the lender is to the whole of the assets of such Person or only
to a portion thereof), (b) evidenced by a note, debenture, bond or written
instrument (including a purchase money obligation), (c) in respect of leases of
such Person required, in conformity with generally accepted accounting
principles, to be accounted for as capitalized lease obligations on the balance
sheet of such Person and all obligations and other liabilities (contingent or
otherwise) under any lease or related document (including a purchase agreement)
in connection with the lease of real property which provides that such person is
contractually obligated to purchase or cause a third party to purchase the
leased property and thereby guarantee a minimum residual value of the leased
property to the lessor and the obligations of such person under such lease or
related document to purchase or to cause a third party to purchase such leased
property; or (d) in respect of letters of credit (including reimbursement
obligations with respect thereto), local guarantees or bankers' acceptances;
(ii) all obligations of others of the type described in clause (i) above or
clause (iii), (iv) or (v) below assumed by or guaranteed in any manner by such
Person or in effect guaranteed by such Person through an agreement to purchase,
contingent or otherwise (and the obligations of such Person under any such
assumptions, guarantees or other such arrangements); (iii) all obligations
secured by a mortgage, pledge, lien, encumbrance, charge or adverse claim
affecting title or resulting in an encumbrance to which the property or assets
of such Person are subject, whether or not the obligation secured thereby shall
have been assumed by or shall otherwise be such Person's legal liability; (iv)
to the extent not otherwise included, all obligations of such Person under
interest rate and currency swap agreements, cap, floor and collar agreements,
spot and forward contracts and similar agreements and arrangements; and (v) all
obligations,

                                      I-1
<PAGE>   141

contingent or otherwise, of such Person under or in respect of any and all
deferrals, renewals, extensions and refundings of, or amendments, modifications
or supplements to, any liability of the kind described in any of the preceding
clauses (i), (ii), (iii) or (iv).

        "Senior Debt" means the principal of, premium, if any, and interest on,
rent payable under, and any other amounts due on or in connection with any and
all Indebtedness of the Company (including, without limitation, fees, costs,
expenses and any interest accruing after the filing of a petition initiating any
proceeding pursuant to any bankruptcy law, but only to the extent allowed or
permitted to the holder of such Indebtedness against the bankruptcy or other
insolvency estate of the Company in such proceeding), whether outstanding on the
date of the Indenture or thereafter created, incurred, assumed, guaranteed or in
effect guaranteed by the Company (including all deferrals, renewals, extensions
or refundings of, or amendments, modifications or supplements to the foregoing);
provided, however, that Senior Debt does not include (w) Indebtedness evidenced
by the Notes, (x) Indebtedness of the Company to any subsidiary of the Company,
a majority of the voting stock of which is owned by the Company except to the
extent such Indebtedness is pledged by such subsidiary as security for any
Senior Debt, (y) accounts payable of the Company to trade creditors arising in
the ordinary course of business, and (z) any particular Indebtedness in which
the instrument creating or evidencing the same or the assumption or guarantee
thereof expressly provides that such Indebtedness shall not be senior in right
of payment to, or is pari passu with, or is subordinated or junior to, the
Notes.

                                   ARTICLE 13

                                  SUBORDINATION

Section 13.1  Notes Subordinated to Senior Debt.

        The Company covenants and agrees, and each Holder of Notes, by his
acceptance thereof, likewise covenants and agrees, that the indebtedness
represented by the Notes and the payment of the principal of (and premium, if
any) and interest on each and all of the Notes is hereby expressly subordinate
and junior, to the extent and in the manner hereinafter set forth, in right of
payment to the prior payment in full of all Senior Debt.

                                      I-2
<PAGE>   142

        (a) In the event of any distribution of assets of the Company upon any
dissolution, winding up, liquidation or reorganization of the Company, whether
in bankruptcy, insolvency, reorganization or receivership proceedings or upon an
assignment for the benefit of creditors or any other marshalling of the assets
and liabilities of the Company or otherwise, then the holders of all Senior Debt
shall first be entitled to receive payment of the full amount due thereon in
respect of principal (and premium, if any) and interest, or provision shall be
made for such amount in cash or other consideration satisfactory to the Existing
Lenders, before the Holders of any of the Notes are entitled to receive any
payment or distribution of any character, whether in cash, securities or other
property, on account of the principal of (or premium, if any) or interest on the
indebtedness evidenced by the Notes.

        For purposes of this Article 13, the words, "cash, securities or other
property" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article 13 with respect
to the Notes to the payment of all Senior Debt which may at the time be
outstanding; provided that (i) the Senior Debt is assumed by the new
corporation, if any, resulting from any reorganization or readjustment, and (ii)
the rights of the holders of Senior Debt (other than leases which are not
assumed by the Company or the new corporation, as the case may be) are not,
without the consent of such holders, altered by such reorganization or
readjustment. The consolidation of the Company with, or the merger of the
Company into, another Person or the liquidation or dissolution of the Company
following the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another Person upon the terms and conditions
provided for in Article 7 [merger, consolidation covenant of Indenture] shall
not be deemed a dissolution, winding-up, liquidation or reorganization for the
purposes of this Section 13.1(a) if such other corporation shall, as a part of
such consolidation, merger, conveyance or transfer, comply with the conditions
stated in Article 7 [merger, consolidation covenant].

        (b) In the event of any default in payment of the principal of or
premium, if any, or interest on or rent under, or any other payment obligation
under any Senior Debt beyond any applicable grace period with respect thereto,
then, unless and until all such payments due in respect of such Senior Debt have
been paid in full in cash or other consideration satisfactory to the Existing
Lenders or such default shall have been cured or waived or shall have ceased to
exist, no payment shall be made by the Company with respect to the principal of,
premium, if any, or interest on the Notes or to acquire any of the Notes
(including any repurchase pursuant to the repurchase right of a Holder upon a
Fundamental Change).

        (c) In the event (i) any event of default with respect to any Designated
Senior Debt shall have occurred and be continuing permitting the holders of such
Designated Senior Debt (or a trustee or other representative on behalf of the
holders thereof) to declare such Designated Senior Debt due and payable prior to
the date on which it would otherwise have become due and payable, upon written
notice thereof to the Company and

                                      I-3
<PAGE>   143

the Trustee by any holders of such Designated Senior Debt (or a trustee or other
representative on behalf of the holders thereof) (the "Default Notice"), unless
and until such event of default shall have been cured or waived or shall have
ceased to exist and such acceleration shall have been rescinded or annulled, or
(ii) any judicial proceeding shall be pending with respect to any such default
in payment or event of default, then no payment shall be made by the Company,
directly or indirectly, with respect to principal of, premium, if any, or
interest on the Notes (including any repurchase pursuant to the exercise of the
repurchase right of a Holder upon a Fundamental Change) provided, however, that
clause (i) of this paragraph shall not prevent the making of any such payment by
the Company with respect to the Notes for more than 179 days after a Default
Notice shall have been received by the Trustee unless the Designated Senior Debt
in respect of which such event of default exists has been declared due and
payable in its entirety in which case no such payment may be made until such
acceleration has been rescinded or annulled or such Designated Senior Debt has
been paid in full. Notwithstanding the foregoing, no event of default which
existed or was continuing on the date of any Default Notice shall be made the
basis for the giving of a second Default Notice; provided, further, however,
that no subsequent Default Notice shall be effective for purposes of this
Section 13.1(c) unless and until at least 365 days shall have elapsed since the
initial effectiveness of the immediately prior Default Notice.

        (d) If the maturity of the Notes is accelerated, no payment may be made
on the Notes until all amounts due or to become due on Senior Debt has been paid
in full in cash or other consideration satisfactory to the Existing Lenders or
until such acceleration has been cured or waived.

        (e) In the event that, notwithstanding the foregoing provisions of
Sections 13.1 (a), (b), (c) and (d), any payment on account of principal of or
interest on the Notes shall be made by or on behalf of the Company and received
by the Trustee, by any Holder or by any Paying Agent (or, if the Company is
acting as its own Paying Agent, money for any such payment shall be segregated
and held in trust), at a time when such payment is not permitted by any of such
provisions, then, unless and until all Senior Debt (or Designated Senior Debt,
in the case of Section 13.1(c)) is paid in full in cash or other consideration
satisfactory to the Existing Lenders, or such payment is otherwise permitted to
be made by the provisions of each of Sections 13.1(a), 13.1(b), 13.1(c) and
13.1(d) (subject, in each case, to the provisions of Section 13.7), such payment
on account of principal of or interest on the Notes shall be held in trust for
the benefit of, and shall be immediately paid over to, the holders of Senior
Debt (or Designated Senior Debt, in the case of Section 13.1(c)) or their
representative or representatives or the trustee or trustees under any indenture
under which any instruments evidencing any of the Senior Debt (or Designated
Senior Debt, in the case of Section 13.1(c)) may have been issued, as their
interests may appear.

        Regardless of anything to the contrary herein, nothing shall prevent (a)
any payment by the Company or the Trustee to Holders of amounts in connection
with a redemption of Notes if

                                      I-4
<PAGE>   144

(i) notice of such redemption has been given pursuant to Section 11.5 prior to
the receipt by the Trustee of written notice as aforesaid, and (ii) such notice
of redemption is given not earlier than 75 days before the Redemption Date, or
(b) any payment by the Trustee to the Holders of amounts deposited with it
pursuant to Sections 4.1 and 4.2.

Section 13.2  Subrogation.

        Subject to the payment in full of all Senior Debt to which the
indebtedness evidenced by the Notes is in the circumstances subordinated as
provided in Section 13.1, the Holders of the Notes (together with the holders of
any other indebtedness of the Company which is subordinate in right of payment
to the payment in full of all Senior Debt, which is not subordinate in right of
payment to the Notes and which by its terms grants such right of subrogation to
the holders thereof) shall be subrogated to the rights of the holders of such
Senior Debt to receive payments or distributions of cash, property or securities
of the Company applicable to such Senior Debt until all amounts owing on the
Notes shall be paid in full, and, as between the Company, its creditors other
than holders of such Senior Debt, and the Holders of the Notes, no such payment
or distribution made to the holders of Senior Debt by virtue of this Article
which otherwise would have been made to the Holders of the Notes shall be deemed
to be a payment by the Company on account of such Senior Debt, it being
understood that the provisions of this Article are and are intended solely for
the purpose of defining the relative rights of the Holders of the Notes, on the
one hand, and the holders of Senior Debt, on the other hand.

Section 13.3  Obligation of Company Unconditional.

        Nothing contained in this Article or elsewhere in this Indenture or in
the Notes is intended to or shall impair, as between the Company, its creditors
other than the holders of Senior Debt, and the Holders of the Notes, the
obligation of the Company, which is absolute and unconditional, to pay to the
Holders of the Notes the principal of (and premium, if any) and interest on the
Notes as and when the same shall become due and payable in accordance with their
terms, or is intended to or shall affect the relative rights of the Holders of
the Notes and creditors of the Company other than the holders of Senior Debt,
nor shall anything herein or therein prevent the Trustee or the Holder of any
Note from exercising all remedies otherwise permitted by applicable law upon
default under this Indenture, subject to the rights, if any, under this Article
of the holders of Senior Debt in respect of cash, property or securities of the
Company received upon the exercise of any such remedy.

Section 13.4  Modification of Terms of Senior Debt.

        Any renewal or extension of the time of payment of any Senior Debt or
the exercise by the holders of Senior Debt of any of their rights under any
instrument creating or evidencing Senior Debt, including without limitation the
waiver of default thereunder, may be made or done all without notice to or
assent from the Holders of the Notes or the Trustee.

        No compromise, alteration, amendment, modification, extension, renewal
or other change of, or waiver, consent or other action in respect of, any
liability or obligation under or in respect of, or of any of the terms,
covenants or conditions of any indenture or other instrument under

                                      I-5
<PAGE>   145

which any Senior Debt is outstanding or of such Senior Debt, whether or not such
release is in accordance with the provisions of any applicable document, shall
in any way alter or affect any of the provisions of this Article or of the Notes
relating to the subordination thereof.

Section 13.5  Payments on Notes Permitted.

        Nothing contained in this Article or elsewhere in this Indenture, or in
any of the Notes, shall affect the obligation of the Company to make, or prevent
the Company from making, payments of the principal of, or premium, if any, or
interest on the Notes in accordance with the provisions hereof and thereof, or
shall prevent the Trustee or any Paying Agent from applying any moneys deposited
with it hereunder to the payment of the principal of, or premium, if any, or
interest on the Notes, in each case except as otherwise provided in this
Article.

Section 13.6  Effectuation of Subordination by Trustee.

        Each Holder of Notes, by his acceptance thereof, authorizes and directs
the Trustee in his behalf to take such action as may be necessary or appropriate
to effectuate the subordination provided in this Article and appoints the
Trustee his attorney-in-fact for any and all such purposes.

        Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee and the Holders of the Notes shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction in which
any such dissolution, winding up, liquidation or reorganization proceeding
affecting the affairs of the Company is pending or upon a certificate of the
trustee in bankruptcy, receiver, assignee for the benefit of creditors,
liquidating trustee or agent or other Person making any payment or distribution,
delivered to the Trustee or to the Holders of the Notes, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, and as to other facts pertinent to the right of such Persons under
this Article, and if such evidence is not furnished, the Trustee may defer any
payment to such Persons pending judicial determination as to the right of such
Persons to receive such payment.

Section 13.7  Knowledge of Trustee.

        Notwithstanding the provisions of this Article or any other provisions
of this Indenture, the Trustee shall not be charged with knowledge of the
existence of any Senior Debt, of any default in payment of principal, premium
(if any) or interest on any Senior Debt, or of any facts which would prohibit
the making of any payment of moneys to or by the Trustee, or the taking of any
other action by the Trustee, unless and until a Responsible Officer of the
Trustee having responsibility for the administration of the trust established by
this Indenture shall have received written notice thereof from the Company, any
Holder of Notes, any Paying or Conversion Agent of the Company or the holder or
representative of any class of Senior Debt, and, prior to the receipt of any
such written notice, the Trustee shall be entitled in all respects to assume
that no such default or facts exist; provided, however, that unless on the third
Business Day prior to the date upon which by the terms hereof any such moneys
may become payable for any purpose (other than a payment under Article 11) the
Trustee shall have received the notice provided for in this Section 13.7, then,
anything herein contained to the contrary notwithstanding, the Trustee

                                      I-6
<PAGE>   146

shall have full power and authority to receive such moneys and apply the same to
the purpose for which they were received, and shall not be affected by any
notice to the contrary which may be received by it on or after such date.

Section 13.8  Trustee's Relation to Senior Debt.

        The Trustee shall be entitled to all the rights set forth in this
Article with respect to any Senior Debt at the time held by it, to the same
extent as any other holder of Senior Debt and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder.

        Nothing in this Article shall apply to claims of or payments to the
Trustee under or pursuant to Section 6.7.

        With respect to the holders of Senior Debt, the Trustee undertakes to
perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article, and no implied covenants or obligations
with respect to the holders of Senior Debt shall be read into this Indenture
against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty
to the holders of Senior Debt and the Trustee shall not be liable to any holder
of Senior Debt if it shall pay over or deliver to Holders, the Company or any
other Person moneys or assets to which any holder of Senior Debt shall be
entitled by virtue of this Article or otherwise.

Section 13.9  Rights of Holders of Senior Debt Not Impaired.

        No right of any present or future holder of any Senior Debt to enforce
the subordination herein shall at any time or in any way be prejudiced or
impaired by any act or failure to act on the part of the Company or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.

Section 13.10  Certain Conversions Not Deemed Payment.

        For the purposes of this Article 13 only, (1) the issuance and delivery
of junior securities upon conversion of Notes in accordance with Article 12
[conversion] shall not be deemed to constitute a payment or distribution on
account of the principal of, premium, if any, or interest (including Liquidated
Damages, if any) on Notes or on account of the purchase or other acquisition of
Notes, and (2) the payment, issuance or delivery of cash (except in satisfaction
of fractional shares pursuant to Section 12.3), property or securities (other
than junior securities) upon conversion of a Note shall be deemed to constitute
payment on account of the principal of, premium, if any, or interest (including
Liquidated Damages, if any) on such Note. For the purposes of this Section
13.10, the term "junior securities" means (a) shares of any stock of any class
of the Company or (b) securities of the Company that are subordinated in right
of payment to all Senior Debt to substantially the same extent as, or to a
greater extent than, the Notes are so subordinated as provided in this Article.
Nothing contained in this Article 13 or elsewhere in this Indenture or in the
Notes is intended to or shall impair, as among the Company, its creditors (other
than holders of Senior Debt) and the Holders, the right, which is absolute and

                                      I-7
<PAGE>   147

unconditional, of the holder of any Note to convert such note in accordance with
Article 12 [conversion].

                                      I-8
<PAGE>   148

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

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

                  AMENDED AND RESTATED PARTICIPATION AGREEMENT

                                      AMONG

                             LSI LOGIC CORPORATION,
                                    AS LESSEE

                                       AND

                               ABN AMRO BANK N.V.,
                          KEYBANK NATIONAL ASSOCIATION
                             AND FBTC LEASING CORP.,
                                   AS LESSORS

                                       AND

                               ABN AMRO BANK N.V.,
                           AS LESSOR AGENT FOR LESSORS

                          THE PARTICIPANTS NAMED HEREIN

                                       AND

                               ABN AMRO BANK N.V.,
                          AS AGENT FOR THE PARTICIPANTS

                                 APRIL 18, 2000

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

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

<PAGE>   149
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                           PAGE
<S>            <C>                                                                         <C>
SECTION 1.     INTERPRETATION...............................................................2

1.01.   Definitions.........................................................................2

1.02.   Rules of Interpretation.............................................................2

SECTION 2.     LEASE FACILITY...............................................................2

2.01.   Acquisition, Lease, Amount Limitations, Etc.........................................2

2.02    Participation Agreement.............................................................5

2.03.   Advance Requests, Etc...............................................................7

2.04.   Fees.  .............................................................................8

2.05.   Funding of Advances.................................................................8

2.06.   Sharing of Payments.................................................................9

2.07.   Other Payment Terms................................................................12

2.08.   Commitment Reductions..............................................................13

2.09.   Reallocation of Outstanding Lease Amount upon Renewal..............................13

2.10.   Nature of the Transactions.........................................................14

2.11.   Security and Subordination.........................................................15

2.12.   Change of Circumstances............................................................16

2.13.   Taxes on Payments..................................................................19

2.14.   Funding Loss Indemnification.......................................................20

2.15.   Replacement of Participants........................................................21

SECTION 3.     CONDITIONS PRECEDENT........................................................21

3.01.   Initial Acquisition Advance........................................................21

3.02.   Additional Acquisition Advances....................................................21

3.03.   Expense Advances...................................................................22

3.04.   Other Conditions Precedent.........................................................22

3.05.   Covenant to Deliver................................................................23

SECTION 4.     REPRESENTATIONS AND WARRANTIES..............................................23

4.01.   Lessee's Representations and Warranties............................................23

4.02.   Lessors' Representations and Warranties............................................28

4.03.   Participants' Representations and Warranties.......................................29
</TABLE>

                                      -i-

<PAGE>   150

                               TABLE OF CONTENTS

                                  (CONTINUED)

<TABLE>
<CAPTION>
                                                                                          Page
<S>            <C>                                                                         <C>
SECTION 5.     COVENANTS...................................................................31

5.01.   Lessee's Affirmative Covenants.....................................................31

5.02.   Lessee's Negative Covenants........................................................36

5.03.   Lessee's Financial Covenants.......................................................39

5.04.   Lessors' Covenants.................................................................40

5.05.   Participants' Covenants............................................................41

SECTION 6.     LESSORS, LESSOR AGENT, AGENT AND THEIR RELATIONS WITH PARTICIPANTS..........41

6.01.   Appointment of Lessor Agent and Agent..............................................41

6.02.   Powers and Immunities..............................................................41

6.03.   Reliance...........................................................................42

6.04.   Defaults...........................................................................42

6.05.   Indemnification....................................................................42

6.06.   Non-Reliance.......................................................................43

6.07.   Resignation or Removal of Lessor Agent or Agent....................................43

6.08.   Authorization......................................................................44

6.09.   Lessors, Lessor Agent and Agent in their Individual Capacities.....................44

SECTION 7.     MISCELLANEOUS...............................................................45

7.01.   Notices............................................................................45

7.02.   Expenses...........................................................................46

7.03.   Indemnification....................................................................46

7.04.   Waivers; Amendments................................................................47

7.05.   Successors and Assigns.............................................................47

7.06.   Setoff.............................................................................51

7.07.   No Third Party Rights..............................................................52

7.08.   Partial Invalidity.................................................................52

7.09.   JURY TRIAL.........................................................................52

7.10.   Counterparts.......................................................................52

7.11.   No Joint Venture, Etc..............................................................52

7.12.   Usury Savings Clause...............................................................52
</TABLE>

                                      -ii-
<PAGE>   151

                               TABLE OF CONTENTS

                                  (CONTINUED)
<TABLE>
<CAPTION>

                                                                                          Page
<S>     <C>                                                                                <C>
7.13.   Confidentiality....................................................................53

7.14.   Effect on Existing Participation Agreement.........................................53
</TABLE>

SCHEDULES

I              Lessors and Participants
II             Pricing Grid
1.01           Definitions
1.02           Rules of Interpretation
3.01           Conditions Precedent to Acquisition Advance
4.01(g)        Litigation
4.01(i)        Environmental Matters
4.01(l)        Significant Subsidiaries
5.02(a)        Existing Liens

EXHIBITS

A              Equipment (Recital A)
B              Lease Agreement (2.01(a))
C              Purchase Agreement (2.01(a))
D              Initial Advance Request (2.03(a))
E              Additional Advance Request (2.03(b))
F              Lessor Security Agreement (2.10(b))
G              Assignment Agreement (7.05(b))
H              Acquisition Agreement Acceptance Certificate (2.01(a))
I              Subordination Provisions (definition of "Subordinated Debt")

                                     -iii-

<PAGE>   152

  An extra section break has been inserted above this paragraph. Do not delete
         this section break if you plan to add text after the Table of
         Contents/Authorities. Deleting this break will cause Table of
 Contents/Authorities headers and footers to appear on any pages following the
                         Table of Contents/Authorities.

                                      -iv-

<PAGE>   153
                              AMENDED AND RESTATED
                     LEASE AGREEMENT AND SECURITY AGREEMENT

        THIS AMENDED AND RESTATED LEASE AGREEMENT AND SECURITY AGREEMENT
(together with all Lease Supplements delivered hereunder, collectively this
"Agreement" herein), dated as of April 18, 2000 is entered into by and among:

               (1) LSI LOGIC CORPORATION, a Delaware corporation ("Lessee");
        and

               (2) ABN AMRO BANK N.V., KEYBANK NATIONAL ASSOCIATION, FBTC
        LEASING CORP. and each other financial institution from time to time
        listed as a lessor in Schedule I to the Participation Agreement referred
        to in Recital B below, as amended from time to time (in such capacity,
        such financial institutions to be referred to collectively as
        "Lessors"); and

               (3) ABN AMRO BANK N.V., as agent for Lessors (in such capacity,
        "Lessor Agent").

                                    RECITALS

        A. Pursuant to the Participation Agreement referred to in Recital B
below, a certain lease facility is to be provided to Lessee by Lessors and the
other financial institutions which are "Participants" under the Participation
Agreement (such financial institutions to be referred to collectively as the
"Participants") as follows:

               (1) Lessors would (a) acquire certain equipment identified by
        Lessee and approved by Lessor Agent, (b) lease such equipment to Lessee,
        (c) make advances to finance certain related expenses and (d) grant to
        Lessee the right to purchase such equipment; and

               (2) The Participants would participate in such lease facility by
        (a) funding the acquisition price to be paid by Lessors for the
        equipment and the other advances to be made by Lessors and (b) acquiring
        participation interests in the rental and certain other payments to be
        made by Lessee.

        B. In connection with the addition of certain parties as Lessors and
Participants, Lessee and Participants have requested that (i) the Participation
Agreement, dated as March 31, 2000, among Lessee, ABN AMRO Bank N.V., as the
original Lessor and Participant, Lessor Agent, the Participants and ABN AMRO
Bank N.V., as agent for the Participants (in such capacity, "Agent"), be amended
and restated by the Amended and Restated Participation Agreement, dated as of
April 18, 2000 (the "Participation Agreement"), among Lessee, Lessors, Lessor
Agent, the Participants and Agent and (ii) the Lease Agreement, dated as of
March 31, 2000 (the "Existing Lease Agreement"), among Lessee, ABN AMRO Bank
N.V., as the original Lessor, and Lessor Agent be amended and restated by this
Agreement, and Lessors and Lessor

                                       1
<PAGE>   154

Agent are willing for the Existing Lease Agreement to be amended and restated by
this Agreement setting forth the terms of the lease by Lessors to Lessee of the
property.

                                    AGREEMENT

        NOW, THEREFORE, in consideration of the above Recitals and the mutual
covenants herein contained, the parties hereto hereby agree that the Existing
Lease Agreement shall be amended and restated in its entirety as follows:

SECTION 1.     INTERPRETATION.

        1.01 Definitions. Unless otherwise indicated in this Agreement or any
other Operative Document, each term set forth in Schedule 1.01 to the
Participation Agreement, when used in this Agreement or any other Operative
Document, shall have the respective meaning given to that term in such Schedule
1.01 or in the provision of this Agreement or other document, instrument or
agreement referenced in such Schedule 1.01.

        1.02 Rules of Interpretation. Unless otherwise indicated in this
Agreement or any other Operative Document, the rules of interpretation set forth
in Schedule 1.02 to the Participation Agreement shall apply to this Agreement
and the other Operative Documents.

SECTION 2.     BASIC PROVISIONS.

        2.01.  Lease of the Property.

               (a) Subject to the acquisition thereof by Lessors pursuant to the
        Participation Agreement, either as of the date hereof or during the term
        hereof, Lessors agree to lease to Lessee and Lessee agrees to lease from
        Lessors the following property (the "Property") to the extent of
        Lessors' estate, right, title and interest therein, thereto or
        thereunder:

                      (i) The equipment purchased with each Acquisition Advance,
               together with all additions and accessions thereto and all
               replacements (including Replacement Property) and substitutions
               therefor (collectively, the "Equipment"); and

                      (ii) All Related Goods, Related Agreements and Related
               Permits.

        Each item of Property leased hereunder shall be included in a Lease
        Supplement in the form of Exhibit A (a "Lease Supplement"),
        appropriately completed, duly executed and delivered by Lessee and
        accepted by Lessor Agent, on the Closing Date with respect to the
        Equipment to be purchased on the Closing Date and on the last Business
        Day of an Installation Period with respect to any Property purchased
        during such Installation Period; provided, however, that if the Advances
        made during any Installation Period shall be less than Fifteen Million
        Dollars ($15,000,000), the Property purchased during such

                                       2
<PAGE>   155

        Installation Period shall be included in the Lease Supplement executed
        and delivered for the next succeeding Installation Period.

               (b) Lessee hereby agrees that execution and delivery of an
        Advance Request for an Acquisition Advance and the application of such
        Acquisition Advance to acquire the Property described in such Advance
        Request shall, without further act, constitute the irrevocable
        acceptance by Lessee of the Property requested to be purchased in such
        Advance Request for all purposes of this Agreement and the other
        Operative Documents on the terms set forth herein and therein, and that
        such Property shall be deemed to be included in the leasehold estate of
        this Agreement and shall be subject to the terms and conditions of this
        Agreement on the date such Property is purchased by Lessors; provided,
        however, that acceptance of any Property for purposes of this Agreement
        and the other Operative Documents shall not prevent Lessee from
        rejecting such Property for purposes of any Acquisition Agreement if
        such rejected Property is purchased or replaced as provided in
        Subparagraph 2.01(c) of the Participation Agreement.

        2.02.  Term.

               (a) With respect to each item of Property leased under this
        Agreement, the term of such lease shall commence on the date such
        Property is purchased by Lessors and shall end on the day prior to the
        third anniversary of the Lease Supplement Date for the Lease Supplement
        in which such Property is included (such date, as it may be extended
        pursuant to Subparagraph 2.02(b) hereof, the "Scheduled Expiration Date"
        for such Lease Supplement).

               (b) So long as no Event of Default has occurred and is
        continuing, Lessee shall have the option, on the terms and conditions
        provided herein, to renew any Lease Supplement for up to two (2)
        additional terms of one (1) year each (each a "Renewal Option"). A
        Renewal Option may be exercised by Lessee with respect to any Lease
        Supplement by delivering to Agent not less than thirty (30) days prior
        to the Scheduled Expiration Date then applicable to such Lease
        Supplement a notice in the form of Exhibit B (a "Notice of Renewal
        Option Exercise"), together with a Renewal Date Appraisal Update with
        respect to all of the Property then subject to such Lease Supplement.
        If, on the basis of such Renewal Date Appraisal Update, (i) the
        aggregate Renewal Date Appraised Values of the Property then subject to
        such Lease Supplement are less than the Outstanding Lease Amount of such
        Lease Supplement or (ii) the ratio of the aggregate Liquidation
        Appraised Values of the Property then subject to such Lease Supplement
        divided by the sum of the aggregate Outstanding Tranche B Participation
        Amounts and Outstanding Equity Participation Amounts for such Lease
        Supplement is less than 4.6 to 1.0 (with respect to the exercise of the
        first Renewal Option) or 4.0 to 1.0 (with respect to the exercise of the
        second Renewal Option), then the exercise of any Renewal Option for such
        Lease Supplement shall not be effective unless, on or prior to the
        Scheduled Expiration Date applicable to such Lease Supplement prior to
        the exercise of such Renewal Option, Lessee makes such additional
        payments of the Fixed Component of Base Rent which reduce the
        Outstanding Lease Amount of such Lease Supplement to the amount
        necessary to eliminate the deficiency under clause (i) and

                                       3
<PAGE>   156

        increase the ratio described in clause (ii) to at least 4.6 to 1.0 (with
        respect to the exercise of the first Renewal Option) or 4.0 to 1.0 (with
        respect to the exercise of the second Renewal Option). If required in
        order to have this Agreement and the other Operative Documents
        classified as an operating lease under GAAP, including FASB 13, on or
        prior to the date any Lease Supplement is renewed by exercise of any
        Renewal Option, the Outstanding Lease Amount of such renewed Lease
        Supplement shall be reallocated among the Tranche A Portion, the Tranche
        B Portion and, to the extent necessary or reasonably prudent, the Equity
        Portion of such renewed Lease Supplement and the Fixed Component of Base
        Rent and the Residual Value Guaranty Amount shall be redetermined for
        such renewed Lease Supplement and an amendment to such Lease Supplement
        setting forth such amounts shall be executed as approved by Lessee and
        Lessor Agent; provided, however, that none of the Equity Portion of such
        renewed Lease Supplement shall be reallocated to any Participant which
        was not an Equity Participant prior to the exercise of such Renewal
        Option.

        2.03.  Rent.

               (a) Base Rent. With respect to each Lease Supplement (or, if a
        Lease Supplement has not been executed with respect to any Installation
        Period, the Property purchased during such Installation Period):

                      (i) Lessee shall pay as base rent hereunder ("Base Rent")
               for each Rental Period for each Portion of the Outstanding Lease
               Amount of such Lease Supplement or Installation Period an amount
               equal to the sum of the Variable Component and Fixed Component
               for such Rental Period and Portion determined as follows:

                             (A) "Variable Component" shall mean, with respect
                      to any Rental Period for any Portion of such Lease
                      Supplement or Installation Period, the product of (1) the
                      Rental Rate for such Rental Period and Portion, times (2)
                      the amount of such Portion during such Rental Period,
                      times (3) a fraction, the numerator of which is the number
                      of days in such Rental Period and the denominator of which
                      is 360. If the Rental Rate shall change during any Rental
                      Period, the Rental Rate for such Rental Period shall be
                      the weighted average of the Rental Rates in effect from
                      time to time during such Rental Period. If the amount of
                      any Portion shall change during any Rental Period
                      therefor, the amount of such Portion for such Rental
                      Period shall be the weighted average of such Portion in
                      effect from time to time during such Rental Period.

                             (B) "Fixed Component" shall mean:

                                    (1) With respect to any Rental Period ending
                                on or prior to the last day of such Installation
                                Period, zero Dollars ($0.00);

                                       4
<PAGE>   157

                                    (2) With respect to any Rental Period
                             beginning on or after the Lease Supplement Date of
                             such Lease Supplement, the amount payable on the
                             last day of each calendar quarter during the Lease
                             Supplement Term as set forth in such Lease
                             Supplement, as adjusted in a manner approved by
                             Lessee and Lessor Agent (y) to take into account
                             any purchase of less than all of the Property
                             subject to such Lease Supplement or (z) if required
                             in connection with the exercise of any Renewal
                             Option pursuant to Subparagraph 2.02(b); and

                                    (3) Any amount required to be paid with
                             respect to such Lease Supplement in order to
                             exercise any Renewal Option pursuant to
                             Subparagraph 2.02(b).

                      (ii) For the purposes of calculating the Variable
               Component of Base Rent, the Outstanding Lease Amount of such
               Lease Supplement or Installation Period shall consist of one or
               more Portions and the Lease Supplement Term or Installment Period
               shall be divided into Rental Periods for each Portion determined
               as follows:

                             (A) During such Installation Period, the
                      Outstanding Lease Amount shall consist of a single Portion
                      in the full amount of the Advances made during such
                      Installation Period and the period beginning on the first
                      day of such Installation Period and ending on the last
                      Business Day of such Installation Period shall consist of
                      the following Rental Periods:

                                    (1) The period which begins on the first day
                             of such Installation Period and ends on the last
                             Business Day in the first fiscal month immediately
                             following the month in which such Installation
                             Period begins; and

                                    (2) Each successive period thereafter which
                             begins on the last day of the immediately preceding
                             Rental Period and ends one (1) fiscal month
                             thereafter on the last Business Day of such fiscal
                             month through and including the last Business Day
                             of such Installation Period.

                             (B) On and after the Lease Supplement Date for each
                      Lease Supplement, Lessee may select the number and amounts
                      of the Portions into which the Outstanding Lease Amount of
                      such Lease Supplement is to be divided and the Rental
                      Period for each such Portion by delivering to Agent at
                      least three (3) Business Days prior to the last day of
                      each Rental Period for a Portion an irrevocable written
                      notice in the form of Exhibit C, appropriately completed
                      (a "Notice of Rental Period Selection"), subject to the
                      following:

                                       5
<PAGE>   158

                                    (1) Each Portion shall be in an amount not
                             less than $5,000,000; provided, however, that (y)
                             the total number of Portions outstanding at any
                             time for such Lease Supplement shall not exceed two
                             (2), and (z) the Outstanding Lease Amount of such
                             Lease Supplement shall consist of a single Portion
                             in the amount of such Outstanding Lease Amount if
                             such Outstanding Lease Amount is less than
                             $5,000,000.

                                    (2) Each Rental Period selected by Lessee
                             for each Portion pursuant to this clause (B) shall
                             be one (1), two (2), three (3) or six (6) months;
                             provided, however, that (w) every Rental Period
                             shall begin and end on the last Business Day of a
                             calendar month, except as provided in clause (x)
                             following, (x) no Rental Period shall end after the
                             Scheduled Expiration Date for such Lease
                             Supplement, (y) no Rental Period shall be longer
                             than one (1) month if an Event of Default has
                             occurred and is continuing on the date three (3)
                             Business Days prior to the first day of such Rental
                             Period and (z) each Rental Period for any Portion
                             for which Lessee fails to make a selection by
                             delivering a Notice of Rental Period Selection in
                             accordance with this clause (B) shall be one (1)
                             month.

                      Lessee shall deliver each Notice of Rental Period
                      Selection as required by Subparagraph 2.02(c) and
                      Paragraph 7.01 of the Participation Agreement; provided,
                      however, that Lessee shall promptly deliver the original
                      of any Notice of Rental Period Selection initially
                      delivered by facsimile.

                      (iii) The rental rate for each Rental Period for a Portion
               of such Lease Supplement ("Rental Rate") shall be the LIBOR
               Rental Rate for such Rental Period and Portion, except as
               follows:

                             (A) With respect to Lease Supplement No. 1, (1) the
                      first Rental Period shall begin on the Closing Date and
                      end on (but not include) April 18, 2000, and the Rental
                      Rate for such Rental Period shall be the per annum rate
                      equal to the interest rate at which funds are available to
                      ABN AMRO generally in an amount equal to the Outstanding
                      Lease Amount of such Lease Supplement or Installation
                      Period for such Rental Periods, as determined by Agent
                      (which determination shall be conclusive and binding on
                      the parties, absent manifest error) plus the Applicable
                      Margin, such rate to change from time to time as the
                      Applicable Margin shall change, and (2) the second Rental
                      Period shall begin on April 18, 2000, and end on (but not
                      include) April 28, 2000, and the Rental Rate for such
                      Rental Period shall be the LIBOR Rental Rate for a term of
                      one (1) month, notwithstanding that such Rental Period is
                      less than one (1) month;

                                       6
<PAGE>   159

                             (B) If any Rental Period during any Installation
                      Period is less than one (1) month but at least seven (7)
                      days, the Rental Rate for such Rental Period shall be the
                      LIBOR Rental Rate for a term of one (1) month,
                      notwithstanding that such Rental Period is less than one
                      (1) month;

                             (C) If any other Rental Period is less than one (1)
                      month, the Rental Rate for such Rental Period shall be the
                      Alternate Rental Rate; and

                             (D) If any Default has occurred and is continuing
                      at the time any Rental Period commences or the LIBOR
                      Rental Rate is unavailable for any Rental Period pursuant
                      to Subparagraph 2.12(a) or Subparagraph 2.12(b) of the
                      Participation Agreement, the Rental Rate for such Rental
                      Period shall be the Alternate Rental Rate.

                      (iv) Lessee shall pay the Variable Component of Base Rent
               in arrears (A) for each Portion of such Lease Supplement or
               Installation Period, on the last day of each Rental Period
               therefor and, in the case of any Rental Period which exceeds
               three (3) months, each day occurring every three (3) months after
               the first day of such Rental Period (individually, a "Scheduled
               Rent Payment Date" for such Lease Supplement) and (B) for all
               Portions of such Lease Supplement, on the Expiration Date for
               such Lease Supplement.

               (b) Supplemental Rent. Lessee shall pay as supplemental rent
        hereunder ("Supplemental Rent") all amounts payable by Lessee under this
        Agreement and the other Operative Documents, other than Base Rent for
        any Lease Supplement, the purchase price payable by Lessee for any
        purchase of the Property subject to any Lease Supplement (or, if a Lease
        Supplement has not been executed with respect to any Installation
        Period, the Property purchased during such Installation Period) by
        Lessee pursuant to the Purchase Agreement and the Residual Value
        Guaranty Amount of any Lease Supplement or Installation Period payable
        under the Purchase Agreement. Lessee shall pay all Supplemental Rent
        amounts on the dates specified in this Agreement and the other Operative
        Documents for the payment of such amounts or, if no date is specified
        for the payment of any such amount, within twenty (20) days after
        written demand of any Lessor or other Person to whom such amount is
        payable.

        2.04.   "As Is" Lease.

               (a) Lessee Due Diligence. Lessee has conducted, and will conduct
        from time to time with regard to any Property that may purchased with
        any Acquisition Advance after the date hereof, all due diligence which
        it deems appropriate regarding the Property and agrees that no Lessor
        Party has any obligation to conduct any such due diligence.

               (b) No Lessor Party Representations. Lessee is leasing the
        Property "as is, with all faults" without any representation, warranty,
        indemnity or undertaking by any Lessor Party regarding any aspect of the
        Property, including (i) the condition or performance of the Property or
        the fitness of the Property for any purpose; (ii) title to or

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<PAGE>   160

        right to use of the Property, including the existence of any Lien or any
        other right, title or interest (including intellectual property right)
        in or to any of the Property in favor of any Person; (iii) the value,
        usability, design, operation or fitness for use of the Property; (iv)
        any latent, hidden or patent defect in the Property; (v) any
        restrictions on the use of the Property; (vi) the economics of the
        Property; (vii) any Casualty or Condemnation; or (viii) the compliance
        of the Property with any applicable Governmental Rule or Insurance
        Requirement; provided, however, that any Lessor shall be obligated to
        remove Lessor Liens to the extent required in Subparagraph 5.04(b) of
        the Participation Agreement.

               (c) Express Disclaimers. WITHOUT LIMITING THE GENERALITY OF THE
        FOREGOING, EACH LESSOR AND LESSOR AGENT SPECIFICALLY DISCLAIMS AND
        LESSEE SPECIFICALLY WAIVES:

                      (i) ANY COVENANT OF QUIET ENJOYMENT AND ANY WARRANTY
               AGAINST INTERFERENCE OR INFRINGEMENT, EXCEPT AS OTHERWISE
               PROVIDED IN SUBPARAGRAPH 5.04(b) OF THE PARTICIPATION AGREEMENT;

                      (ii) ANY WARRANTY OF MERCHANTABILITY; AND

                      (iii) ANY WARRANTY THAT THE PROPERTY WILL BE FIT FOR A
               PARTICULAR PURPOSE.

        2.05. Nature of Transaction. As more fully provided in Paragraph 2.10 of
the Participation Agreement, Lessee and the Lessor Parties intend that the
transactions evidenced by this Agreement and the other Operative Documents
constitute an operating lease pursuant to GAAP, including FASB 13, for
accounting purposes and loans secured by the Property for federal, state and
local income tax purposes and for purposes of commercial law and bankruptcy law.
(If, notwithstanding the intent of the parties, any court concludes that the
transactions evidenced by this Agreement and the other Operative Documents are
subject to Division 10 of the California Commercial Code (or the corresponding
part of the Uniform Commercial Code as adopted in any other state), Lessee and
Lessors agree that such transactions are "finance leases" thereunder.)

        2.06. Security and Subordination.

               (a) As security for the Lessee Obligations and otherwise to
        assure the Lessor Parties the benefits hereof in the event that the
        transactions evidenced by this Agreement and the other Operative
        Documents are, pursuant to the intent of Lessee and the Lessor Parties,
        treated as loans for certain purposes, Lessee hereby irrevocably and
        unconditionally assigns and grants to Lessor Agent, for the benefit of
        the Lessor Parties, a security interest in all estate, right, title and
        interest of Lessee in the following property, whether now owned or
        leased or hereafter acquired, (collectively, the "Property Collateral"):

                      (i) All Equipment;

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<PAGE>   161

                      (ii) All Related Goods, Related Agreements and Related
               Permits; and

                      (iii) All proceeds of the foregoing, including whatever is
               receivable or received when Property Collateral or proceeds are
               sold, collected, exchanged, returned, substituted or otherwise
               disposed of, whether such disposition is voluntary or
               involuntary, including Casualty and Condemnation Proceeds and
               other rights to payment and return premiums and insurance
               proceeds under insurance with respect to any Property Collateral,
               and all rights to payment with respect to any cause of action
               affecting or relating to the Property Collateral.

               (b) As security for the Lessee Obligations and otherwise to
        assure the Lessor Parties the benefits hereof in the event that the
        transactions evidenced by this Agreement and the other Operative
        Documents are, pursuant to the intent of Lessee and the Lessor Parties,
        treated as loans for certain purposes, Lessee hereby irrevocably and
        unconditionally assigns and grants to Lessor Agent, for the benefit of
        the Lessor Parties, a security interest in all estate, right, title and
        interest of Lessee in the following property, whether now owned or
        leased or hereafter acquired, (collectively, the "Cash Collateral"):

                      (i) The deposit account maintained at Lessor Agent in the
               name of Lessee into which the portion of any Acquisition Advance
               equal to the aggregate Unpaid Acquisition Prices of the Equipment
               purchased with such Acquisition Advance is deposited; all cash
               and other property maintained in or credited to such account; all
               documents, instruments and agreements evidencing the foregoing;
               all extensions, renewals, modifications and replacements of the
               foregoing; all interest and other amounts payable in connection
               therewith; and all other rights of Lessee with respect to the
               foregoing; and

                      (ii) All proceeds of the foregoing, including whatever is
               receivable or received when Cash Collateral or proceeds are sold,
               collected, exchanged, returned, substituted or otherwise disposed
               of, whether such disposition is voluntary or involuntary,
               including rights to payment and return premiums and insurance
               proceeds under insurance with respect to any Cash Collateral, and
               all rights to payment with respect to any cause of action
               affecting or relating to the Cash Collateral.

               (c) The Lessee Obligations arising under this Agreement and the
        other Operative Documents shall be "Designated Senior Debt" for purposes
        of any indenture or other document creating or evidencing Subordinated
        Debt and such Subordinated Debt shall be subordinated to the Lessee
        Obligations on terms no more favorable to the holders of Subordinated
        Debt than those attached as Exhibit I to the Participation Agreement.

        2.07. Withdrawals of Cash Collateral.

               (a) Lessee may not withdraw any Cash Collateral from Lessor Agent
        except as provided in this Paragraph 2.07. If no Event of Default has
        occurred and is continuing, all Cash Collateral shall be maintained in
        time deposit accounts with terms of one (1)

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<PAGE>   162

        month. If an Event of Default has occurred and is continuing, all Cash
        Collateral shall be maintained in time deposit accounts with terms not
        exceeding one (1) week.

               (b) If no Event of Default has occurred and is continuing, Lessee
        shall be entitled to withdraw Cash Collateral, free and clear of all
        liens and security interests in favor of Lessor Parties, from time to
        time prior to the date which is six (6) months after the Commitment
        Termination Date in an amount equal to the Unpaid Acquisition Price paid
        by Lessee to the Supplier of any Equipment upon delivery by Lessee to
        Lessor Agent of the items set forth in clause (ii)(B) of Subparagraph
        2.01(c) of the Participation Agreement with respect to such Equipment in
        form and substance reasonably satisfactory to Lessor Agent, provided
        that:

                      (i) Such withdrawal does not cause the value of the Cash
               Collateral then held by Lessor Agent to be less than the
               aggregate Unpaid Acquisition Prices for all of the Equipment
               which have not been paid to the Suppliers of such Equipment; and

                      (ii) Lessee gives Lessor Agent not less than three (3)
               Business Days prior written notice of such withdrawal; and

                      (iii) Lessee may not make more than one (1) withdrawal of
               Cash Collateral in any fiscal month.

               (c) If no Event of Default has occurred and is continuing, Lessee
        shall be entitled to withdraw any Cash Collateral remaining six (6)
        months after the Commitment Termination Date, free and clear of all
        liens and security interests in favor of the Lessor Parties, only upon
        compliance by Lessee with the requirements of clause (iv) of
        Subparagraph 2.01(c) of the Participation Agreement.

               (d) Lessee represents and warrants to the Lessor Parties that (i)
        no Person other than Lessee has (or, in the case of after-acquired Cash
        Collateral, at the time Lessee acquires rights therein, will have) any
        right, title, claim or interest (by way of Lien or otherwise) in,
        against or to the Cash Collateral except for Liens granted in favor of
        the Lessor Parties to secure the Lessee Obligations, and (ii) Lessor
        Agent has (or, in the case of after-acquired Cash Collateral, at the
        time Lessee acquires rights therein, will have) a first priority
        perfected security interest in the Cash Collateral.

               (e) Subject to Lessee's withdrawal rights hereunder, Lessee shall
        not sell, encumber or otherwise dispose of or transfer any Cash
        Collateral or any right or interest therein.

               (f) Subject to Paragraph 3.10 relating to permitted contests,
        Lessee shall pay promptly when due all taxes and other Governmental
        Charges, all Liens and all other charges now or hereafter imposed upon,
        or relating to or affecting the Cash Collateral.

                                       10
<PAGE>   163

SECTION 3.     OTHER LESSEE AND LESSOR RIGHTS AND OBLIGATIONS.

        3.01.  Maintenance, Repair, Etc.

               (a)    General.

                      (i) Lessee shall not permit any waste of the Property and
               shall, at its sole cost and expense, maintain, service and repair
               the Property as necessary to (A) maintain the Property in all
               material respects, and subject to Subparagraph 3.01(c), in the
               condition in which delivered and accepted by Lessee (except for
               ordinary wear and tear), in good working order, mechanical
               condition and repair and consistent with prudent industry
               practice and Lessee's practice regarding other similar equipment;
               (B) comply in all material respects with all applicable
               Governmental Rules and Insurance Requirements; and (C) maintain
               in full force and effect in all material respects all Suppliers'
               and manufacturers' warranties and guaranties for the respective
               term thereof.

                      (ii) Lessee shall maintain the Property subject to each
               Lease Supplement (or, if a Lease Supplement has not been executed
               with respect to any Installation Period, the Property purchased
               during such Installation Period) at the Property Site identified
               in such Lease Supplement (or the Advance Request for such
               Property) at all times during such Installation Period and the
               Lease Supplement Term for such Lease Supplement; provided,
               however, that Lessee may relocate such Property to any of the
               other Property Sites if Lessee has given Lessor Agent written
               notice of such relocation not less than thirty (30) days prior to
               such relocation and Lessee has executed and filed such Uniform
               Commercial Code financing statements and fixture filings and
               obtained such landlord waivers as Lessor Agent may reasonably
               request to protect the security interests granted in favor of the
               Lessor Parties in such Property.

                      (iii) If any parts of the Property become worn out or
               otherwise permanently rendered unfit for use, then Lessee, at its
               own expense and within a reasonable time, shall replace such
               parts with replacement parts which are free and clear of all
               Liens (other than Permitted Property Liens) and have a value,
               utility and useful life at least equal to the parts replaced;
               provided, however, if any item of Equipment is required to be
               replaced by this clause (iii), the replacement of such Equipment
               shall comply with the requirements of Subparagraph 3.01(b). All
               parts which are added to the Property which are essential to the
               operation of such Property or required to comply with applicable
               Governmental Rules and Insurance Requirements or which cannot be
               detached from the Property without materially interfering with
               the operation of the Property or the value, utility or useful
               life such Property would have had without the addition thereof,
               shall immediately become Replacement Property and shall be deemed
               included in the Lease Supplement to which the Property they are
               added is included and subject to the terms of such Lease
               Supplement as if originally leased thereunder.

                                       11
<PAGE>   164

               (b) Replacements. If no Event of Default has occurred and is
        continuing, Lessee may, at its sole cost and expense, replace any
        portion of the Property subject to any Lease Supplement (the "Replaced
        Property") with other property subject to such Lease Supplement
        ("Replacement Property"), provided that:

                      (i) The Replacement Property is comparable to the Replaced
               Property in function and utility, has a value and useful life
               equal to or greater than the Replaced Property and is covered by
               warranties and guarantees comparable to those for the Replaced
               Property, to the extent reasonably available, and the replacement
               of the Replaced Property with the Replacement Property does not
               adversely affect the utility, value or useful life of or
               warranties and guarantees for the other Property in any material
               respect; provided, however, that the Replacement Property may be
               different in functionality or utility from the Replaced Property
               if Lessee delivers an Appraisal to Lessor Agent evidencing that
               such Replacement Property has a Fair Market Value on the date
               such Replacement Property is transferred to Lessors which is not
               less than the Fair Market Value of the Replaced Property on such
               date and the Expiration Date Appraised Values of such Replacement
               Property are not less than the Expiration Date Appraised Values
               of the Replaced Property;

                      (ii) Except for any Property which is being replaced in
               accordance with clause (iii) of Subparagraph 3.01(a) or
               Subparagraph 3.04(b), the aggregate amount of all Replaced
               Property shall not exceed twenty-five percent (25%) of all
               Property subject to the Lease Supplements, calculated on the
               basis of the lesser of the Purchase Date Appraised Values and the
               Acquisition Prices of the Property; and

                      (iii) Lessee delivers to Lessor Agent each of the
               following with respect to the Replacement Property, each in form
               and substance satisfactory to Lessor Agent:

                             (A) An addendum to such Lease Supplement setting
                      forth a detailed description of the Replacement Property
                      (comparable to the description of the Replaced Property)
                      to be included in such Lease Supplement;

                             (B) A full warranty bill of sale transferring all
                      right, title and interest in the Replacement Property to
                      Lessors, duly executed by Lessee, and such other
                      documents, instruments and agreements as Lessor Agent
                      shall reasonably request to evidence such transfer on the
                      terms set forth in the Operative Documents;

                             (C) Acquisition Agreement Acceptance
                      Certificates for the Replacement Property, duly executed
                      by Lessee;

                                       12
<PAGE>   165

                             (D) Certificates of insurance evidencing that the
                      Replacement Property is covered by the insurance Lessee is
                      required to maintain pursuant to Paragraph 3.03 of the
                      Lease Agreement;

                             (E) Such Uniform Commercial Code amendments as
                      Lessor Agent may reasonably request to perfect the
                      security interests of Lessors in the Replacement Property,
                      duly executed by Lessee, and evidence that such amendments
                      have been duly filed in all appropriate jurisdictions;

                             (F) Such Uniform Commercial Code amendments as
                      Agent may reasonably request to perfect its security
                      interest in the Replacement Property, duly executed by
                      Lessors, and evidence that such amendments have been duly
                      filed in all appropriate jurisdictions;

                             (G) Such evidence as Lessor Agent or Agent may
                      reasonably request (including Uniform Commercial Code
                      releases, termination statements and search certificates)
                      to establish that the security interests of the Lessor
                      Parties in the Replacement Property are perfected and
                      prior to the interests of all other Persons (except for
                      Permitted Property Liens); and

                             (H) Such other evidence as Lessor Agent may
                      reasonably request to establish that the Replacement
                      Property complies with the terms and conditions of the
                      Operative Documents, including the representations and
                      warranties concerning the Property set forth in
                      Subparagraph 4.01(u) of the Participation Agreement.

               Upon the receipt by Lessor Agent of each of the foregoing in
               connection with any Replaced Property and Replacement Property,
               Lessors shall execute and deliver to Lessee such Uniform
               Commercial Code releases and other documents, instruments and
               agreements as Lessee may reasonably request to release their
               Liens in the Replaced Property and to transfer their right, title
               and interest in the Replaced Property to Lessee.

               (c) Modifications. Lessee, at its sole cost and expense, may from
        time to time make alterations, renovations, improvements and additions
        to the Property subject to any Lease Supplement (and substitutions and
        replacements therefor (collectively, "Modifications"); provided that:

                      (i) No Modification impairs the value, utility or useful
               life of the Property or any part thereof from that which existed
               immediately prior to such Modification;

                      (ii) All Modifications are made with reasonable
               promptness and, in all cases unless Lessee currently is
               exercising either the Term Purchase Option or the Expiration
               Date Purchase Option with respect to such Lease Supplement,

                                       13
<PAGE>   166

               completed not later than one (1) month prior to the Scheduled
               Expiration Date for such Lease Supplement;

                      (iii) All Modifications are made in a good and workmanlike
               manner and in compliance in all material respects with all
               applicable Governmental Rules and Insurance Requirements;

                      (iv) Subject to Paragraph 3.10 relating to permitted
               contests, Lessee pays all costs and expenses and discharges (or
               causes to be insured or bonded over) any Liens arising in
               connection with any Modification not later than the earlier of
               (A) sixty (60) days after Lessee receives notice of the filing of
               same and (B) unless Lessee currently is exercising either the
               Term Purchase Option or the Expiration Date Purchase Option with
               respect to such Lease Supplement, one (1) month prior to the
               Scheduled Expiration Date for such Lease Supplement;

                      (v) At least one (1) month prior to the commencement of
               (A) any Modifications to the Property subject to such Lease
               Supplement which are anticipated to cost $2,500,000 or more in
               the aggregate, or (B) any Modifications which cause the total of
               all Modifications undertaken to the Property subject to such
               Lease Supplement during the previous twelve-month period to
               exceed an aggregate cost of $5,000,000 Lessee shall deliver to
               Lessor Agent, with sufficient copies for Agent and each
               Participant, a brief written description of such Modifications;
               and

                      (vi) All Modifications otherwise comply with this
               Agreement and the other Operative Documents.

        3.02. Risk of Loss. Lessee assumes all risks of loss arising from any
Casualty or Condemnation which arises or occurs prior to the Expiration Date for
any Lease Supplement or while Lessee is in possession of the Property and all
liability for all personal injuries and deaths and damages to property suffered
by any Person or property in connection with the Property which arises or occurs
prior to such Expiration Date or while Lessee is in possession of the Property,
except in each case to the extent any such loss or liability is caused by the
gross negligence or willful misconduct of a Lessor Party. Lessee hereby waives
any and all applicable existing or future Governmental Rules permitting the
termination of this Agreement as a result of any Casualty or Condemnation, and
Lessors and Lessor Agent shall in no event be answerable or accountable for any
risk of loss of or decrease in the enjoyment and beneficial use of the Property
as a result of any such event.

        3.03.  Insurance.

               (a) Coverage. Lessee, at its sole cost and expense, shall carry
        and maintain the following insurance coverage:

                      (i) At all times during each Lease Supplement Term,
               commercial liability insurance covering claims for injuries or
               death sustained by persons or

                                       14
<PAGE>   167

               damage to property caused by the Property subject to such
               Lease Supplement, and workers' compensation insurance;

                      (ii) At all times during each Lease Supplement Term,
               property insurance covering loss or damage by fire, flood,
               earthquake and other risks to the Property subject to such Lease
               Supplement in an amount not less than the then current
               Outstanding Lease Amount of such Lease Supplement, except with
               respect to flood and earthquake insurance which shall be subject
               to Lessee's customary blanket policies; and

                      (iii) At all times during each Lease Supplement Term as
               appropriate, such other insurance of the types customarily
               carried by a reasonably prudent Person owning or operating
               properties similar to the Property subject to such Lease
               Supplement in the same geographic area as such Property.

               (b) Carriers. Any insurance carried and maintained by Lessee
        pursuant to this Paragraph 3.03 shall be underwritten by an insurance
        company which (i) has, at the time such insurance is placed and at the
        time of each renewal thereof, a general policyholder rating of "A" and a
        financial rating of at least 10 from A.M. Best and Company or any
        successor thereto (or if there is none, an organization having a similar
        national reputation) or (ii) is otherwise approved by Required
        Participants.

               (c) Terms. Each insurance policy maintained by Lessee pursuant to
        this Paragraph 3.03 shall provide as follows, whether through
        endorsements or otherwise:

                      (i) The Lessor Parties shall be named as additional
               insureds, in the case of each policy of liability and property
               insurance, and Lessor Agent shall be named as additional loss
               payee, in the case of each policy of property insurance.

                      (ii) In respect of the interests of the Lessor Parties in
               the policy, the insurance shall not be invalidated by any action
               or by inaction of Lessee or by any Person having temporary
               possession of the Property while under contract with Lessee to
               perform maintenance, repair, alteration or similar work on the
               Property, and shall insure the interests of the Lessor Parties
               regardless of any breach or violation of any warranty,
               declaration or condition contained in the insurance policy by
               Lessee, any Lessor Party or any other additional insured (other
               than by such additional insured, as to such additional insured);
               provided, however, that the foregoing shall not be deemed to (A)
               cause such insurance policies to cover matters otherwise excluded
               from coverage by the terms of such policies or (B) require any
               insurance to remain in force notwithstanding non-payment of
               premiums except as provided in clause (iii) below.

                      (iii) If the insurance policy is cancelled for any reason
               whatsoever, or substantial change is made in the coverage that
               affects the interests of the Lessor Parties, or if the insurance
               coverage is allowed to lapse for non-payment of premium, such
               cancellation, change or lapse shall not be effective as to the
               Lessor

                                       15
<PAGE>   168

               Parties for ten (10) days after delivery to Lessor Agent of
               written notice from the insurers in the case of any cancellation
               for non-payment of premiums and for thirty (30) days after
               delivery to Lessor Agent of written notice from the insurers in
               the case of any other cancellation, change or lapse.

                      (iv) No Lessor Party shall have any obligation or
               liability for premiums, commissions, assessments, or calls in
               connection with the insurance.

                      (v) The insurer shall waive any rights of set-off or
               counterclaim or any other deduction, whether by attachment or
               otherwise, that it may have against any Lessor Party.

                      (vi) The insurance shall be primary without right of
               contribution from any other insurance that may be carried by any
               Lessor Party with respect to its interest in the Property.

                      (vii) The insurer shall waive any right of subrogation
               against any Lessor Party.

                      (viii) All provisions of the insurance, except the limits
               of liability, shall operate in the same manner as if there were a
               separate policy covering each insured party.

                      (ix) The insurance shall not be invalidated should Lessee
               or any Lessor Party waive, in writing, prior to a loss, any or
               all rights of recovery against any Person for losses covered by
               such policy, nor shall the insurance in favor of any Lessor Party
               or Lessee, as the case may be, or their respective rights under
               and interests in said policies be invalidated or reduced by any
               act or omission or negligence of any Lessee Party or Lessor
               Party, as the case may be, or any other Person having any
               interest in the Property.

                      (x) All insurance proceeds with a value of less than the
               higher of (1) $10,000,000 and (2) ten percent (10%) of the
               outstanding Total Commitment in respect of any loss or occurrence
               with respect to the Property shall be paid to and adjusted solely
               by Lessee and all other insurance proceeds shall be paid to
               Lessor Agent and adjusted jointly by Lessor Agent and Lessee,
               except that, from and after the date on which the insurer
               receives written notice from Lessor Agent that an Event of
               Default has occurred and is continuing (and unless and until such
               insurer receives written notice from Lessor Agent that all Events
               of Default have been cured), all losses shall be adjusted solely
               by, and all insurance proceeds shall be paid solely to, Lessor
               Agent.

                      (xi) Each policy shall contain a standard form mortgagee
               endorsement in favor of Lessor Agent.

               (d) Evidence of Insurance. Lessee, at its sole cost and expense,
        shall furnish to Lessor Agent from time to time upon the request of
        Lessor Agent such certificates or

                                       16
<PAGE>   169

        other documents as Lessor Agent may reasonably request to evidence
        Lessee's compliance with the insurance requirements set forth in this
        Paragraph 3.03.

               (e) Release of Lessor Parties. Lessee hereby waives, releases and
        discharges each Lessor Party and its directors, officers, employees,
        agents and advisors from all claims whatsoever arising out of any loss,
        claim, expense or damage to or destruction covered or coverable by
        insurance required under this Paragraph 3.03 except to the extent any
        such loss, claim, expense or damage is caused by the gross negligence or
        willful misconduct of such Person, notwithstanding that such loss,
        claim, expense or damage may have been caused by any such Person, and,
        as among Lessee and such Persons, Lessee agrees to look to the insurance
        coverage only in the event of such loss.

        3.04.  Casualty and Condemnation.

               (a) Notice. Lessee shall give Agent prompt written notice of the
        occurrence of any Casualty affecting, or the institution of any
        proceedings for the Condemnation of, the Property or any portion
        thereof.

               (b) Repair, Replacement or Purchase Option. After the occurrence
        of any Casualty or Condemnation affecting the Property subject to any
        Lease Supplement or any portion thereof, Lessee shall promptly (i)
        repair and restore the affected Property as required by Subparagraph
        3.04(c), (ii) replace the affected Property pursuant to Subparagraph
        3.01(b), (iii) exercise the Partial Purchase Option and purchase the
        affected Property pursuant to the Purchase Agreement or (iv) exercise
        the Term Purchase Option and purchase all of the Property pursuant to
        the Purchase Agreement. Not later than one (1) month after the
        occurrence of any Casualty or Condemnation, Lessee shall deliver to
        Agent a written notice indicating which of the foregoing options Lessee
        has exercised. If Lessee elects to purchase the affected Property
        pursuant to the Partial Purchase Option or all of the Property pursuant
        to the Term Purchase Option, such purchase shall be completed within
        ninety (90) days after the occurrence of any Casualty or Condemnation.

               (c) Repair and Restoration. If Lessee elects to repair and
        restore the Property subject to any Lease Supplement following any
        Casualty or Condemnation, Lessee shall diligently proceed to repair and
        restore such Property to the condition in which it existed immediately
        prior to such Casualty or Condemnation and shall complete all such
        repairs and restoration as soon as reasonably practicable, but in any
        event, unless Lessee currently is exercising either the Term Purchase
        Option or the Expiration Date Purchase Option with respect to such Lease
        Supplement, not later than one (1) month prior to the Scheduled
        Expiration Date for such Lease Supplement. Lessee shall use its own
        funds to make such repairs and restoration, except to the extent any
        Casualty and Condemnation Proceeds are available and are released to
        Lessee for such purpose pursuant to Subparagraph 3.04(f). Lessee's
        exercise of the repair and restoration option shall, if Required
        Participants direct, be subject to the delivery to Lessor Agent the
        following, each in form and substance acceptable to Lessor Agent:

                                       17
<PAGE>   170

                      (i) Evidence that such Property can, in Lessor Agent's
               reasonable judgment, with diligent restoration or repair, be
               returned to a condition at least equal to the condition thereof
               that existed prior to the Casualty or partial Condemnation
               causing the loss or damage within the time required by
               Subparagraph 3.04(b);

                      (ii) Evidence that all necessary governmental approvals,
               if any, can be timely obtained to allow the repair and
               restoration;

                      (iii) Copies of all contracts for the work;

                      (iv) A cost breakdown for the work;

                      (v) Evidence that, upon completion of the work, the value,
               utility and useful life of such Property will be at least as
               great as it was before the Casualty or Condemnation occurred; and

                      (vi) Evidence of satisfaction of any additional conditions
               that Lessor Agent may reasonably establish to protect the rights
               of the Lessor Parties under this Agreement and the other
               Operative Documents.

               (d) Prosecution of Claims for Casualty and Condemnation Proceeds.
        Lessee shall, at its sole cost and expense, proceed promptly and
        diligently to prosecute in good faith the settlement or compromise of
        any and all claims for Casualty and Condemnation Proceeds; provided,
        however, that any settlement or compromise of any such claim shall,
        except as otherwise provided in clause (x) of Subparagraph 3.03(c), be
        subject to the written consent of Required Participants, which consents
        shall not be unreasonably withheld, delayed or conditioned. Lessor Agent
        may participate in any proceedings relating to such claims, and, after
        the occurrence and during the continuance of any Event of Default,
        Lessor Agent is hereby authorized, in its own name or in Lessee's name,
        to adjust any loss covered by insurance or any Casualty or Condemnation
        claim or cause of action, and to settle or compromise any claim or cause
        of action in connection therewith, and Lessee shall from time to time
        deliver to Lessor Agent any and all further assignments and other
        instruments required to permit such participation.

               (e) Assignment of Casualty and Condemnation Proceeds. Subject to
        clause (x) of Subparagraph 3.03(c), Lessee hereby absolutely and
        irrevocably assigns to Lessors all Casualty and Condemnation Proceeds
        and all claims relating thereto. Except as otherwise provided in clause
        (x) of Subparagraph 3.03(c), Lessee agrees that all Casualty and
        Condemnation Proceeds are to be paid to Lessor Agent and Lessee hereby
        authorizes and directs any insurer, Governmental Authority or other
        Person responsible for paying any Casualty and Condemnation Proceeds to
        make payment thereof directly to Lessor Agent alone, and not to Lessor
        Agent and Lessee jointly. If Lessee receives any Casualty and
        Condemnation Proceeds payable to Lessor Agent hereunder, Lessee shall
        promptly pay over such Casualty and Condemnation Proceeds to Lessor
        Agent. Lessee hereby covenants that until such Casualty and Condemnation
        Proceeds are so paid over to

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<PAGE>   171

        Lessor Agent, Lessee shall hold such Casualty and Condemnation Proceeds
        in trust for the benefit of the Lessor Parties and shall not commingle
        such Casualty and Condemnation Proceeds with any other funds or assets
        of Lessee or any other Person. Except as otherwise provided in clause
        (x) of Subparagraph 3.03(c), Lessor Agent may commence, appear in,
        defend or prosecute any assigned right, claim or action, and may adjust,
        compromise, settle and collect all rights, claims and actions assigned
        to Lessors, but shall not be responsible for any failure to collect any
        such right, claim or action, regardless of the cause of the failure
        unless such failure arises from the gross negligence or willful
        misconduct of Lessor Agent.

               (f) Use of Casualty and Condemnation Proceeds.

                      (i) If (A) no Event of Default has occurred and is
               continuing, (B) Lessee exercises the repair and restoration
               option pursuant to Subparagraphs 3.04(b) and 3.04(c) or the
               replacement option pursuant to Subparagraphs 3.04(b) and 3.01(b)
               and (C) Lessee complies with any conditions imposed pursuant to
               Subparagraph 3.04(c) or Subparagraph 3.01(b), as the case may be,
               then Lessor Agent shall release any Casualty and Condemnation
               Proceeds received with respect to the Property subject to any
               Lease Supplement to Lessee for repair or restoration of such
               Property or purchase of Replacement Property, as the case may be.
               Any surplus Casualty and Condemnation Proceeds remaining after
               the completion of such restoration or the payment of the
               Acquisition Price for the Replacement Property, as the case may
               be, shall be retained by Lessee.

                      (ii) If (A) an Event of Default has occurred and is
               continuing, (B) Lessee fails to or is unable to comply with any
               conditions imposed pursuant to Subparagraph 3.04(c) or
               Subparagraph 3.01(b), as the case may be, with respect to the
               Property subject to any Lease Supplement, or (C) Lessee elects to
               exercise the Term Purchase Option and purchase all of the
               Property pursuant to the Purchase Agreement; then, at the
               absolute discretion of the Required Participants, regardless of
               any impairment of security or lack of impairment of security, but
               subject to applicable Governmental Rules governing use of
               Casualty and Condemnation Proceeds, if any, Lessor Agent may (1)
               apply all or any of the Casualty and Condemnation Proceeds it
               receives with respect to the Property subject to such Lease
               Supplement to the expenses of Lessor Parties in obtaining such
               proceeds; (2) apply the balance to the payment of Rent and/or the
               reduction of the Outstanding Lease Amount under such Lease
               Supplement, notwithstanding that such amounts are not then due
               and payable or that such amounts are otherwise adequately secured
               and/or (3) release all or any part of such proceeds to Lessee
               upon any restoration conditions Lessor Agent may reasonably
               elect.

                      (iii) Lessor Agent shall apply any Casualty and
               Condemnation Proceeds which are to be used to reduce the
               Outstanding Lease Amount of any Lease Supplement only on the last
               day of a Rental Period for such Lease Supplement unless an Event
               of Default has occurred and is continuing.

                                       19
<PAGE>   172

                      (iv) Application of all or any portion of the Casualty and
               Condemnation Proceeds, or the release thereof to Lessee, shall
               not cure or waive any Event of Default or notice of default or
               invalidate any acts done pursuant to such notice.

        3.05. Taxes. Subject to Paragraph 3.10 relating to permitted contests,
Lessee shall promptly pay when due all Indemnified Taxes imposed on or payable
by Lessee or any Lessor Party in connection with the Property, this Agreement or
any of the other Operative Documents, or any of the transactions contemplated
hereby or thereby. As promptly as possible after any Indemnified Taxes are
payable by Lessee, Lessee shall send to Lessor Agent for the account of the
applicable Lessor Party a certified copy of an original official receipt
received by Lessee showing payment thereof. If Lessee fails to pay any such
Indemnified Taxes when due to the appropriate taxing authority or fails to remit
to Lessor Agent the required receipts or other required documentary evidence,
Lessee shall indemnify the Lessor Parties for any incremental taxes, interest or
penalties that may become payable by the Lessor Parties as a result of any such
failure. The obligations of Lessee under this Paragraph 3.05 shall survive the
payment and performance of the Lessee Obligations and the termination of this
Agreement.

        3.06. Severability. Lessee shall not attach the Property to any Property
Site or to any real property in a manner that would cause the Property to
constitute real property or so as to give any Person having an interest in any
Property Site or such real property any right, title or interest in the
Property.

        3.07. Liens, Etc.

               (a) Lessee's Covenants. Subject to Paragraph 3.10 relating to
        permitted contests, Lessee shall not create, incur, assume or permit to
        exist any Lien on or with respect to any of the Property of any
        character, whether now owned or hereafter acquired, except for the
        following ("Permitted Property Liens"):

                      (i) Liens in favor of a Lessor Party securing the Lessee
               Obligations and other Lessor Liens;

                      (ii) Liens for current taxes, assessments or other
               Governmental Charges which are not delinquent or remain payable
               without any penalty;

                      (iii) Liens of mechanics, materialmen, carriers,
               warehousemen and other similar Liens imposed by law incurred in
               the ordinary and normal course of business with respect to
               obligations which are not past due; and

                      (iv) Prior to the Commitment Termination Date only, Liens
               in favor of a Supplier of any item of Equipment, provided that
               such Lien secures only the Unpaid Acquisition Price for such item
               of Equipment and extends only to such item of Equipment.

        Subject to Paragraph 3.10 relating to permitted contests, Lessee shall
        promptly (A) pay all Indebtedness of Lessee and other obligations prior
        to the time the non-payment thereof

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<PAGE>   173

        would give rise to a Lien on the Property and (B) discharge, at its sole
        cost and expense, any Lien on the Property which is not a Permitted
        Property Lien.

               (b) No Consents. Nothing contained in this Agreement shall be
        construed as constituting the consent or request of any Lessor Party,
        express or implied, to or for the performance by any contractor,
        mechanic, laborer, materialman, supplier or vendor of any labor or
        services or for the furnishing of any materials for any construction,
        alteration, addition, repair or demolition of or to the Property or any
        part thereof. NOTICE IS HEREBY GIVEN THAT NO LESSOR PARTY IS OR SHALL BE
        LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED
        TO LESSEE, OR TO ANYONE HOLDING THE PROPERTY OR ANY PART THEREOF THROUGH
        OR UNDER LESSEE, AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH
        LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF
        ANY LESSOR PARTY IN AND TO THE PROPERTY.

        3.08. Subletting. Lessee may, in the ordinary course of business,
sublease the Property subject to any Lease Supplement or any portion thereof to
any Person, provided, that (a) Lessee remains directly and primarily liable for
performing its obligations under this Agreement and all other Lessee
Obligations; (b) each sublease is subject to and subordinated to this Agreement;
(c) each sublease has a term which expires on or prior to the Scheduled
Expiration Date for such Lease Supplement (or, if longer, includes a provision
that the sublease terminates on the Expiration Date for such Lease Supplement if
such Expiration Date occurs prior to the Scheduled Expiration Date for such
Lease Supplement unless Lessee purchases such Property on such Expiration Date
pursuant to the Purchase Agreement); (d) Lessee and each sublessee take all
actions reasonably requested by Lessor Agent and Agent to assure the continuing
perfection and priority of their respective Liens in such Property; (e) no
sublessee uses such Property in a manner substantially different from Lessee's
use of such Property prior to such sublease without the prior written consent of
Lessor Agent, which consents shall not be unreasonably withheld; and (f) no
sublease has a Material Adverse Effect. Any sublease which does not satisfy each
of the requirements of the immediately preceding sentence shall be null and void
as to the Lessor Parties and their successor and assigns. Except for such
permitted subleases, Lessee shall not assign any of its rights or interests
under this Agreement to any other Person without the prior written consent of
the Required Participants.

        3.09. Compliance with Governmental Rules and Insurance Requirements.
Lessee, at its sole cost and expense, shall, (a) comply, and cause its agents,
sublessees, assignees, employees, invitees, licensees, contractors and tenants,
and the Property to comply, in all material respects, with all Governmental
Rules and Insurance Requirements relating to the Property (including the use,
operation, maintenance, repair and restoration thereof, whether or not
compliance therewith shall require structural or extraordinary changes therein
or interfere with the use and enjoyment of the Property), and (b) procure,
maintain and comply with in all material respects all licenses, permits, orders,
approvals, consents and other authorizations required for the use, operation,
maintenance, repair and restoration of the Property.

        3.10. Permitted Contests. Lessee, at its sole cost and expense, may
contest any alleged Lien on any of the Property, any alleged application of any
Governmental Rule or any alleged

                                       21
<PAGE>   174
Governmental Charge, Indebtedness or other obligation which is payable by or on
behalf of Lessee to Persons other than the Lessor Parties or which, if unpaid,
would give rise to a Lien on any of the Property, provided that (a) each such
contest is diligently pursued in good faith by appropriate proceedings; (b) the
commencement and continuation of such proceedings suspends the enforcement of
such Lien or Governmental Rule or the collection of such Governmental Charge,
Indebtedness or obligation; (c) Lessee has established adequate reserves for the
discharge of such Lien, compliance with such Governmental Rule or payment of
such Governmental Charge, Indebtedness or obligation in accordance with GAAP;
(d) the failure to discharge such Lien, comply with such Governmental Rule or
pay such Governmental Charge, Indebtedness or obligation prior to the conclusion
of such contest is not reasonably likely to result in any criminal liability or
civil liability for any Lessor Party; (e) the failure to discharge such Lien,
comply with such Governmental Rule or pay such Governmental Charge, Indebtedness
or obligation is not otherwise reasonably likely to have a Material Adverse
Effect; and (f) unless Lessee currently is exercising either the Term Purchase
Option or the Expiration Date Purchase Option with respect to the Property
subject to any Lease Supplement, any such contest is completed and such Lien is
discharged (either pursuant to such proceedings or otherwise) or the application
of such Governmental Rule or such Governmental Charge, Indebtedness or
obligation is declared invalid, paid or otherwise satisfied not later than one
(1) month prior to the Scheduled Expiration Date for such Lease Supplement.

        3.11. Lessor Obligations; Right to Perform Lessee Obligations. No Lessor
Party shall have any obligation to (a) maintain, repair or make any improvements
to the Property, (b) maintain any insurance on the Property, (c) perform any
other obligation of Lessee under this Agreement or any other Lessee Obligation,
(d) make any expenditure on account of the Property (except to make Advances as
required by the Participation Agreement) or (e) take any other action in
connection with the Property, this Agreement or any other Operative Document,
except as expressly provided herein or in another Operative Document; provided
however, that Lessor Agent may, in its sole discretion and without any
obligation to do so, perform any Lessee Obligation not performed by Lessee when
required after giving Lessee prior written notice of Lessor Agent's intention to
perform such Lessee Obligation. Lessor Agent may enter any Property Site or
exercise any other right of Lessee under this Agreement or any other Operative
Document to the extent Lessor Agent determines in good faith that such entry or
exercise is reasonably necessary for Lessor Agent to perform any such Lessee
Obligation not performed by Lessee when required. Lessee shall reimburse Lessor
Agent and the other Lessor Parties, within five (5) Business Days after demand,
for all fees, costs and expenses incurred by them in performing any such
obligation or curing any Default.

        3.12. Inspection Rights. During the Lease Supplement Term of any Lease
Supplement, Lessee shall permit any Person designated by Lessor Agent, upon
reasonable notice and during normal business hours, to visit any Property Site
and inspect any of the Property subject to such Lease Supplement in accordance
with Subparagraph 5.01(j) of the Participation Agreement.

SECTION 4.     EXPIRATION DATE.

                                       22
<PAGE>   175

        4.01. Termination by Lessee Prior to Scheduled Expiration Date. Subject
to the terms and conditions of the Purchase Agreement, Lessee may, at any time
prior to the earliest Scheduled Expiration Date for any outstanding Lease
Supplement, terminate this Agreement and purchase all of the Property subject to
the Lease Supplements pursuant to Paragraph 2.01 of the Purchase Agreement.
Lessee shall notify Agent of Lessee's election so to terminate this Agreement
and purchase the Property by delivering to Agent a Notice of Term Purchase
Option Exercise pursuant to and in accordance with the provisions of Paragraph
2.01 of the Purchase Agreement.

        4.02.  Surrender of Property.

               (a) Unless Lessee or any Assignee Purchaser purchases the
        Property subject to any Lease Supplement on or before the Expiration
        Date for such Lease Supplement pursuant to the Purchase Agreement,
        Lessee shall, on such Expiration Date, deliver the Property to Lessor
        Agent (or any Designated Purchaser of such Property under the Purchase
        Agreement) as required by Subparagraph 4.02(b), subject to compliance by
        Lessee on or prior to such date of its obligations under this Agreement
        and the other Operative Documents (including the completion of all
        Modifications, the completion of all permitted contests and the removal
        of all Liens which are not Permitted Property Liens of the types
        described in clause (i) or (ii) of Subparagraph 3.07(a)).

               (b) In connection with the delivery of any Property required to
        be made to Lessor Agent (or any Designated Purchaser of such Property
        under the Purchase Agreement), Lessee shall, at its sole cost and
        expense:

                      (i) Properly remove all markings installed on such
               Property by Lessee which are not necessary for the operation,
               maintenance or repair of the Property;

                      (ii) Ensure that such Property complies with all
               applicable Environmental Laws and other Governmental Rules;

                      (iii)  Return such Property in the condition required by
               Subparagraph 3.01(a);

                      (iv) Obtain and pay for a policy of transit insurance for
               the period that such Property is being delivered in an amount
               equal to the replacement value of such Property and with Lessor
               Agent named as the loss payee on all such policies of insurance;

                      (v) At least ninety (90) days prior to the Scheduled
               Expiration Date of the Lease Supplement to which such Property is
               subject, cause a Supplier's representative or qualified
               maintenance provider reasonably acceptable to Lessor Agent to
               perform a comprehensive test of such Property, and if during such
               inspection, examination and test, the authorized inspector finds
               such Property not operating within the Supplier's specifications,
               then Lessee shall repair or replace such defective Property in
               accordance with this Agreement and, after corrective

                                       23
<PAGE>   176

               measures are completed, Lessee will provide for a follow-up
               inspection of such Property by the authorized inspector;

                      (vi) Provide a comprehensive report which certifies that
               the Property has been properly inspected, examined and tested and
               is operating within the Supplier's specifications;

                      (vii) Provide or cause the Supplier or maintenance
               provider to provide to Lessor Agent (or any Designated Purchaser
               of such Property under the Purchase Agreement) one set of service
               manuals and operating manuals and detailing maintenance records
               and other technical data concerning the set-up and operation of
               such Property, each with all replacements or additions thereto,
               such that all such documentation is, to Lessee's knowledge,
               completely up-to-date;

                      (viii) Provide for such Property to be completely
               de-installed and severed from the Property Site or any other real
               property to which attached by a Supplier's representative or
               maintenance provider reasonably acceptable to Lessor Agent in
               accordance with the Supplier's recommendations and repair any and
               all damage caused to such Property by such severance;

                      (ix) Assemble such Property and, if requested by Lessor
               Agent, surrender such Property to Lessor Agent (or any Designated
               Purchaser) at any Property Site; provided that, if Lessor Agent
               or any Designated Purchaser requests that such Property be
               surrendered at any Property Site, such Property shall be removed
               by Lessor Agent or such Designated Purchaser from such Property
               Site within thirty (30) days after the Expiration Date of the
               Lease Supplement to which such Property is subject and Lessee
               shall have no further obligations hereunder with respect to such
               Property after it has been removed from such Property Site;

                      (x) Pack such Property properly for shipment and arrange
               for the shipment thereof to any location within the continental
               United States specified by Lessor Agent (or any Designated
               Purchaser) in a manner consistent with the Supplier's
               recommendations; and

                      (xi) If requested by Lessor Agent (or any Designated
               Purchaser), such delivery shall include the assignment by Lessee
               to Lessor Agent (or any Designated Purchaser) of any Related
               Agreements and, to the extent permitted by Governmental Rule, any
               Related Permits by necessary for the use, operation or
               maintenance of such Property.

        4.03. Holding Over. If Lessee does not purchase the Property subject to
any Lease Supplement on the Expiration Date for such Lease Supplement pursuant
to the Purchase Agreement and fails to surrender any portion of such Property
after such Expiration Date as required by Paragraph 4.02, the Rental Rate shall
no longer apply and Lessee shall pay rent for each day it so fails to surrender
such Property, payable upon demand of Lessor Agent, at a per annum rate equal to
the Alternate Rental Rate plus two percent (2.0%) and shall pay and perform

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<PAGE>   177

all of its other Lessee Obligations under this Agreement and the other Operative
Documents in the same manner as though the Term had not ended; provided,
however, that this Paragraph 4.03 shall not be interpreted to permit such
holding over or to limit any right or remedy of the Lessor Parties for such
holding over.

SECTION 5. DEFAULT.

        5.01. Events of Default. The occurrence or existence of any one or more
of the following shall constitute an "Event of Default" hereunder:

               (a) Payments. Lessee shall fail to pay (i) when due any amount
        payable on the Expiration Date of any Lease Supplement, or (ii) within
        five (5) Business Days after the same becomes due, any installment of
        Base Rent payable under any Lease Supplement (other than Base Rent
        payable on the Expiration Date of such Lease Supplement) or any other
        amount payable by Lessee under any of the Operative Documents.

               (b) Representations and Warranties. Any representation or
        warranty by Lessee made herein or which is contained in any certificate,
        document or financial or other statement by Lessee or any Responsible
        Officer of Lessee, furnished at any time under or in connection with
        this Agreement or any other Operative Document, is false, incorrect or
        inaccurate in any material respect, on or as of the date made; provided,
        however, that such misrepresentation or breach of warranty shall not
        constitute an Event of Default if it is capable of being remedied and
        Lessee remedies such misrepresentation or breach of warranty within
        thirty (30) days after the earlier of (i) Lessee's written
        acknowledgment of such misrepresentation or breach of warranty or (ii)
        any written notice by Lessor Agent or Agent to Lessee of such
        misrepresentation or breach of warranty.

               (c) Failure by Lessee to Perform Certain Covenants. Lessee shall
        fail to perform or observe any term, covenant or agreement contained in
        Subparagraph 3.07(a) or Paragraph 3.03 or 4.02 hereof or Paragraph 5.02
        or 5.03 of the Participation Agreement.

               (d) Failure by Lessee to Perform Other Covenants. Lessee shall
        fail to perform or observe any other term, covenant or agreement
        contained in this Agreement or any other Operative Document on its part
        to be performed or observed and any such failure shall remain unremedied
        for a period of thirty (30) days after the earlier of (i) Lessee's
        written acknowledgment of such failure or (ii) any written notice by
        Lessor Agent or Agent to Lessee of such failure; provided, however,
        that, except with respect to any failure to perform or observe the
        covenants or agreements contained in Subparagraph 3.01(a) or 3.01(c) or
        Paragraph 3.04 or 3.08 hereof, such failure shall not constitute an
        Event of Default if it is capable of being remedied and Lessee
        diligently proceeds to remedy such failure and completes such
        remediation within 180 days after such written acknowledgment or notice.

                                       25
<PAGE>   178

               (e) Insolvency; Voluntary Proceedings. Lessee or any of its
        Significant Subsidiaries shall (i) apply for or consent to the
        appointment of a receiver, trustee, liquidator or custodian of itself or
        of all or a substantial part of its property, (ii) be unable, or admit
        in writing its inability, to pay its debts generally as they mature,
        (iii) make a general assignment for the benefit of its or any of its
        creditors, (iv) be dissolved or liquidated in full or in part, (v)
        become insolvent (as such term may be defined or interpreted under any
        applicable statute), (vi) commence a voluntary case or other proceeding
        seeking liquidation, reorganization or other relief with respect to
        itself or its debts under any bankruptcy, insolvency or other similar
        law now or hereafter in effect or consent to any such relief or to the
        appointment of or taking possession of its property by any official in
        an involuntary case or other proceeding commenced against it, or (vi)
        take any action for the purpose of effecting any of the foregoing.

               (f) Involuntary Proceedings. Proceedings for the appointment of a
        receiver, trustee, liquidator or custodian of Lessee or any of its
        Significant Subsidiaries or of all or a substantial part of the property
        thereof, or an involuntary case or other proceedings seeking
        liquidation, reorganization or other relief with respect to Lessee or
        any of its Significant Subsidiaries or the debts thereof under any
        bankruptcy, insolvency or other similar law now or hereafter in effect
        shall be commenced and an order for relief entered or such proceeding
        shall not be dismissed or discharged within sixty (60) days of
        commencement.

               (g) Cross-Default. (i) Lessee or any of its Significant
        Subsidiaries shall fail to make any payment on account of any
        Indebtedness of such Person (other than the Lessee Obligations) when due
        (whether at scheduled maturity, by required prepayment, upon
        acceleration or otherwise) and such failure shall continue beyond any
        period of grace provided with respect thereto, if the aggregate amount
        of such Indebtedness exceeds $10,000,000 or the effect of such failure
        is to cause, or permit the holder or holders thereof to cause,
        Indebtedness of Lessee or any of its Significant Subsidiaries (other
        than the Lessee Obligations) in an aggregate amount exceeding
        $10,000,000 to become due (whether at scheduled maturity, by required
        prepayment, upon acceleration or otherwise) or (ii) Lessee or any of its
        Significant Subsidiaries shall otherwise fail to observe or perform any
        agreement, term or condition contained in any agreement or instrument
        relating to any Indebtedness of such Person (other than the Lessee
        Obligations and Indebtedness arising under the Amended and Restated
        Credit Agreement, dated as of September 28, 1998, as amended, among
        Lessee and LSI Logic Japan Semiconductor, Inc., as borrowers, certain
        financial institutions parties thereto, as lenders, and ABN AMRO Bank,
        N.V., as agent for such lenders, and the Master Lease Agreement, dated
        June 16, 1995, as amended, among LSI Logic Japan Semiconductor, Inc., as
        lessee, and certain financial institutions parties thereto, as lessors,
        including IBJ Leasing Co., Ltd., as lead lessor), or any other event
        shall occur or condition shall exist, and such failure, event or
        condition shall continue beyond any period of grace provided with
        respect thereto, if the effect of such failure, event or condition is to
        cause, or permit the holder or holders thereof to cause, Indebtedness of
        Lessee or any of its Significant Subsidiaries (other than the Lessee
        Obligations) in an aggregate amount exceeding $10,000,000 to become due
        (and/or to be secured by cash collateral).

                                       26
<PAGE>   179

               (h) Judgments. (i) A final nonappealable judgment or order for
        the payment of money against Lessee or any of its Significant
        Subsidiaries in an amount of $25,000,000 or more in excess of amounts
        covered by third-party insurance shall remain unpaid for ninety (90)
        days following the due date for such payment; or (ii) any non-monetary
        judgment or order shall be rendered against Lessee or any of its
        Significant Subsidiaries which has or would reasonably be expected to
        have a Material Adverse Effect.

               (i) Process Issued. A warrant of attachment, execution,
        distraint, or similar process against any substantial part of the assets
        of Lessee or any of its Significant Subsidiaries is issued which remains
        undismissed or undischarged for a period of thirty (30) days, if as a
        result thereof there is reasonably expected to occur a Material Adverse
        Effect.

               (j) Seizure. All or a material part of the undertaking, assets,
        rights or revenues of Lessee or any of its Significant Subsidiaries are
        seized, nationalized, expropriated or compulsorily acquired by or under
        the authority of any Governmental Authority.

               (k) ERISA. (i) An ERISA Event shall occur with respect to a
        Pension Plan which has resulted or could reasonably be expected to
        result in liability of Lessee under Title IV of ERISA to the Pension
        Plan or PBGC in an aggregate amount in excess of $10,000,000; (ii) the
        commencement or increase of contributions to, or the adoption of or the
        amendment of a Pension Plan by Lessee which has resulted or could
        reasonably be expected to result in an increase in Unfunded Pension
        Liability among all Pension Plans in an aggregate amount in excess of
        $10,000,000; or (iii) any of the representations and warranties
        contained in Subparagraph 4.01(k) of the Participation Agreement shall
        cease to be true and correct which, individually or in combination, has
        resulted or could reasonably be expected to result in a Material Adverse
        Effect.

               (l) Operative Documents. Any Operative Document or any material
        term thereof shall cease to be, or be asserted by Lessee or any of its
        Significant Subsidiaries not to be, a legal, valid and binding
        obligation of Lessee or such Significant Subsidiary enforceable in
        accordance with its terms.

               (m) Dissolution. Etc. Lessee or any of its Significant
        Subsidiaries shall (i) liquidate, wind up or dissolve (or suffer any
        liquidation, wind-up or dissolution), except to the extent expressly
        permitted by clause (i) of Subparagraph 5.02(c) of the Participation
        Agreement, (ii) suspend its operations other than in the ordinary course
        of business, or (iii) take any corporate action to authorize any of the
        actions or events set forth above in this Subparagraph 5.01(m).

               (n) Change of Control. Any Change of Control shall occur.

               (o) Material Adverse Effect. Any event(s) or condition(s) which
        is (are) reasonably likely to have a Material Adverse Effect shall occur
        or exist.

                                       27
<PAGE>   180

               (p) Repurchase of Subordinated Debt. Any event shall occur
        permitting the holders of any Subordinated Debt to require the
        repurchase of such Subordinated Debt prior to its stated maturity, which
        shall not include restricted payments made pursuant to Subparagraph
        5.03(e) of the Participation Agreement.

        5.02. General Remedies. In all cases, upon the occurrence or existence
of any Event of Default and at any time thereafter unless such Event of Default
is waived, Lessor Agent may, with the consent of the Required Participants, or
shall, upon instructions from the Required Participants, exercise any one or
more of the following rights and remedies (except that the remedy set forth in
the first sentence of Subparagraph 5.02(a) shall be automatic):

               (a) Termination of Commitments. If such Event of Default is an
        Event of Default of the type described in Subparagraph 5.01(e) or
        Subparagraph 5.01(f) affecting Lessee, immediately and without notice
        the obligation of Lessors to make Advances and the obligations of the
        Participants to fund Advances shall automatically terminate. If such
        Event of Default is any other Event of Default, Lessor Agent may by
        written notice to Lessee, terminate the obligation of Lessors to make
        Advances and the obligations of the Participants to fund Advances.

               (b) Possession by Lessor Agent. Lessor Agent may take possession
        of the Property. Upon the demand of Lessor Agent, Lessee shall deliver
        the Property to Lessor Agent. Lessee shall make such delivery if so
        demanded by Lessor Agent, at Lessee's sole cost and expense, in the
        manner provided in Subparagraph 4.02(b). Alternatively, Lessor Agent may
        enter into any Property Site or any other location where the Property is
        located, sever the Property from any Property Site or any other real
        property to which attached and take possession of the Property. If
        requested by Lessor Agent, Lessee shall assign to Lessor Agent any
        Related Agreements and, to the extent permitted by Governmental Rule,
        any Related Permits pertaining to the Property.

               (c) Specific Performance. Lessor Agent may bring an action in
        any court of competent jurisdiction to obtain specific enforcement of
        any of the covenants or agreements of Lessee in this Agreement or any of
        the other Operative Documents.

               (d) Other Rights and Remedies. In addition to the specific rights
        and remedies set forth above in this Paragraph 5.02 and in Paragraph
        5.03 and Paragraph 5.04, Lessor Agent may exercise any other right,
        power or remedy granted or permitted to it by any other Operative
        Document or by any applicable Governmental Rule (including the
        California Commercial Code), either by suit in equity or by action at
        law, or both.

        5.03. Lease Remedies. If the transaction evidenced by this Agreement and
the other Operative Documents is treated as a lease, upon the occurrence or
existence of any Event of Default and at any time thereafter unless such Event
of Default is waived, Lessor Agent may, with the consent of the Required
Participants, or shall, upon instructions from the Required Participants,
exercise any one or more of the following rights and remedies in addition to
those rights and remedies set forth in Paragraph 5.02:

                                       28
<PAGE>   181

               (a) Termination of Lease. Lessor Agent may, by written notice to
        Lessee, terminate this Agreement on a Termination Date which is prior to
        the Scheduled Expiration Date of any Lease Supplement, subject to
        Subparagraph 3.02(1) of the Purchase Agreement. Such Termination Date
        shall be the last day of the longest Rental Period then in effect for
        any Lease Supplement unless Required Participants shall otherwise
        direct. On such Termination Date (which shall then be the Expiration
        Date for each Lease Supplement), Lessee shall pay all unpaid Base Rent
        accrued under each Lease Supplement through such date, all Supplemental
        Rent due and payable on or prior to such date and all other amounts
        payable by Lessee on the Expiration Date for each Lease Supplement
        pursuant to this Agreement and the other Operative Documents.

               (b) Disposition of Property. Lessor Agent may dispose of the
        Property by sale, lease or otherwise as permitted by Division 10 of the
        California Commercial Code. Lessor Agent may dispose of the Property at
        any location permitted by such Division, including on the Lessee's
        premises.

               (c) Recovery of Damages. Lessors and Lessee agree that it is
        difficult to determine the damages that a lessor may sustain as a result
        of a lessee breach under a lease agreement. Lessors and Lessee agree
        that the following is a reasonable estimate of the damages that Lessors
        may sustain as a result of any Event of Default:

                      (i) If Lessor Agent terminates this Agreement pursuant to
               Subparagraph 5.03(a) and disposes of the Property pursuant to
               Subparagraph 5.03(b), Lessee shall, upon the demand of Lessor
               Agent, pay to Lessor Parties as liquidated damages (A) the sum of
               (1) all amounts payable by Lessee on or prior to the date of such
               demand (or, if later, the date on which Lessee makes such
               payment) pursuant to this Agreement and the other Operative
               Documents as provided in Subparagraph 5.03(a), (2) the present
               value determined as of the date of such demand of all amounts
               that would have been payable by Lessee under this Agreement and
               the other Operative Documents thereafter had this Agreement not
               been terminated prior to the Scheduled Expiration Date of any
               Lease Supplement and (3) all costs and expenses of such
               disposition and other incidental damages resulting from the Event
               of Default less (B) the sum of (1) all amounts paid by Lessee
               pursuant to Subparagraph 5.03(a) hereof and (2) the present value
               of all amounts realized and to be realized, or that could, with
               reasonable effort, be realized, by the Lessor Parties from such
               disposition.

                      (ii) If Lessor Agent does not terminate this Agreement
               pursuant to Subparagraph 5.03(a) or if Lessor Agent terminates
               this Agreement pursuant to Subparagraph 5.03(a) but is unable
               after exercising all commercially reasonable efforts to dispose
               of the Property pursuant to Subparagraph 5.03(b), Lessee shall
               pay to the Lessor Parties as liquidated damages (A) the sum of
               (1) all amounts payable by Lessee on or prior to the date of such
               demand (or, if later, the date on which Lessee makes such
               payment) pursuant to this Agreement and the other Operative
               Documents as provided in Subparagraph 5.03(a), (2) the present
               value of all amounts that would have been payable by Lessee under
               this Agreement and

                                       29
<PAGE>   182

               the other Operative Documents thereafter had this Agreement not
               been terminated prior to the Scheduled Expiration Date of any
               Lease Supplement and (3) all costs and expenses and other
               incidental damages resulting from the Event of Default. If
               Lessee pays all amounts payable by it pursuant to this clause
               (ii), each Lessor and Lessor Agent shall execute and deliver to
               Lessee such Uniform Commercial Code releases and other
               documents, instruments and agreements as Lessee may reasonably
               request to release Lessors' Liens in the Property and to
               transfer its right, title and interest in the Property to
               Lessee.

        For the purposes of this Subparagraph 5.03(c), the present value on any
        date of determination (the "determination date") of any amount payable
        on any future date (the "payment date") shall be determined using the
        lowest of (x) the LIBOR Rental Rate on the determination date for
        deposits in an amount approximately equal to the amount so payable and
        for a term approximately the same as the period from the determination
        date to the payment date, (y) the Alternate Rental Rate on the
        determination date, and (z) the sum of the federal discount rate
        established by the Federal Reserve Bank of San Francisco and in effect
        on the determination date for advances to member banks plus one percent
        (1%).

        5.04. Loan Remedies. If the transaction evidenced by this Agreement and
the other Operative Documents is treated as a loan, upon the occurrence or
existence of any Event of Default and at any time thereafter unless such Event
of Default is waived, Lessor Agent may, with the consent of the Required
Participants, or shall, upon instructions from the Required Participants,
exercise any one or more of the following rights and remedies in addition to
those rights and remedies set forth in Paragraph 5.02:

               (a) Acceleration of Lessee Obligations. Lessor Agent may, by
        written notice to Lessee, terminate this Agreement on a Termination Date
        which is prior to the Scheduled Expiration Date of any Lease Supplement,
        subject to Subparagraph 3.02(1) of the Purchase Agreement, and declare
        all unpaid Lessee Obligations due and payable on such Termination Date.
        Such Termination Date shall be the last day of the longest Rental Period
        then in effect for any Lease Supplement unless Required Participants
        shall otherwise direct. On such Termination Date (which shall then be
        the Expiration Date for each Lease Supplement), Lessee shall pay all
        unpaid Base Rent accrued under each Lease Supplement through such date,
        all Supplemental Rent due and payable on or prior to such date and all
        other amounts payable by Lessee on the Expiration Date for each Lease
        Supplement pursuant to this Agreement and the other Operative Documents.

               (b) Disposition of Property. Lessor Agent may dispose of the
        Property by sale, lease or otherwise as permitted by Division 9 of the
        California Commercial Code. Lessor Agent may dispose of the Property at
        any location permitted by such Division, including on the Lessee's
        premises.

               (c) Disposition of Cash Collateral. Lessor Agent may collect,
        receive, appropriate or realize upon the Cash Collateral or otherwise
        foreclose or enforce Lessor Agent's security interest in any or all of
        the Cash Collateral in any manner permitted by

                                       30
<PAGE>   183

        applicable Governmental Rules and apply the proceeds of all Cash
        Collateral received by Lessor Agent to the Lessee Obligations.

        5.05. Remedies Cumulative. To the extent permitted by law, the rights
and remedies of the Lessor Parties under this Agreement and the other Operative
Documents are cumulative and may be exercised singularly, successively, or
together.

        5.06. No Cure or Waiver. Neither the performance by Lessor Agent of any
of Lessee's obligations pursuant to Paragraph 3.11 nor the exercise by Lessor
Parties of any of their other rights and remedies under this Agreement or any
other Operative Document shall constitute a cure or waiver of any Default or
nullify the effect of any notice of default or sale, unless and until all Lessee
Obligations are paid in full.

        5.07. Exercise of Rights and Remedies. The rights and remedies provided
to Lessors or Lessor Agent under this Agreement may be exercised by Lessor
Agent, by Agent pursuant to Subparagraph 2.02(c) of the Participation Agreement,
by a court-appointed receiver or by any other Person appointed by any of the
foregoing to act on its behalf. All of the benefits afforded to Lessors or
Lessor Agent under this Agreement and the other Operative Documents shall accrue
to the benefit of Agent to the extent provided in Subparagraph 2.02(c) of the
Participation Agreement.

SECTION 6. MISCELLANEOUS.

        6.01. Notices. Except as otherwise specified herein, all notices,
requests, demands, consents, instructions or other communications to or upon
Lessee, Lessor Agent or any Lessor under this Agreement shall be given as
provided in Subparagraph 2.02(c) and Paragraph 7.01 of the Participation
Agreement.

        6.02. Waivers; Amendments. Any term, covenant, agreement or condition of
this Agreement may be amended or waived only as provided in the Participation
Agreement. No failure or delay by any Lessor Party in exercising any right
hereunder shall operate as a waiver thereof or of any other right nor shall any
single or partial exercise of any such right preclude any other further exercise
thereof or of any other right. Unless otherwise specified in any such waiver or
consent, a waiver or consent given hereunder shall be effective only in the
specific instance and for the specific purpose for which given.

        6.03. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Lessor Parties and Lessee and their permitted
successors and assigns; provided, however, that the Lessor Parties and Lessee
shall not sell, assign or delegate their respective rights and obligations
hereunder except as provided herein and in the Participation Agreement.

        6.04. No Third Party Rights. Nothing expressed in or to be implied from
this Agreement is intended to give, or shall be construed to give, any Person,
other than the Lessor Parties and Lessee and their permitted successors and
assigns, any benefit or legal or equitable

                                       31
<PAGE>   184

right, remedy or claim under or by virtue of this Agreement or under or by
virtue of any provision herein.

        6.05. Partial Invalidity. If at any time any provision of this Agreement
is or becomes illegal, invalid or unenforceable in any respect under the law or
any jurisdiction, neither the legality, validity or enforceability of the
remaining provisions of this Agreement nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction shall
in any way be affected or impaired thereby.

        6.06. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California without reference to
conflicts of law rules, except as otherwise provided in Schedule 1.02 of the
Participation Agreement.

        6.07. Counterparts. This Agreement may be executed in any number of
identical counterparts, any set of which signed by all the parties hereto shall
be deemed to constitute a complete, executed original for all purposes.

        6.08. Nature of Lessee's Obligations.

               (a) Independent Obligation. The obligations of Lessee to pay the
        amounts payable by Lessee under this Agreement and the other Operative
        Documents and to perform the other Lessee Obligation are absolute,
        unconditional and irrevocable obligations which are separate and
        independent of the obligations of the Lessor Parties under this
        Agreement and the other Operative Documents and all other events and
        circumstances, including the events and circumstances set forth in
        Subparagraph 6.08(c).

               (b) No Termination or Abatement. This Agreement and the other
        Operative Documents and Lessee's obligation to pay Rent and to pay and
        perform all other Lessee Obligations shall continue in full force and
        effect without abatement notwithstanding the occurrence or existence of
        any event or circumstance, including any event or circumstance set forth
        in Subparagraph 6.08(c).

               (c) Full Payment and Performance. Lessee shall make all payments
        under this Agreement and the other Operative Documents in the full
        amounts and at the times required by the terms of this Agreement and the
        other Operative Documents without setoff, deduction or reduction of any
        kind and shall perform all other Lessee Obligations as and when
        required, without regard to any event or circumstances whatsoever,
        including (i) the condition or performance of the Property or the
        fitness of the Property for any purpose; (ii) title to or right to use
        of the Property, including the existence of any Lien or any other right,
        title or interest (including intellectual property right) in or to any
        of the Property in favor of any Person; (iii) the value, usability,
        design, operation or fitness for use of the Property; (iv) any latent,
        hidden or patent defect in the Property; (v) any restrictions on the use
        of the Property; (vi) the economics of the Property; (vii) any Casualty
        or Condemnation; (viii) the compliance of the Property with any
        applicable Governmental Rule or Insurance Requirement; (ix) any failure
        by any Lessor Party to perform any of its obligations under this
        Agreement or any other Operative Document; or

                                       32
<PAGE>   185

        (x) the exercise by any Lessor Party of any of its remedies under
        this Agreement or any other Operative Document; provided, however, that
        this Paragraph 6.08 shall not abrogate any right which Lessee may have
        to recover damages from any Lessor Party for any gross negligence,
        willful misconduct or material breach by such Lessor Party of its
        obligations under this Agreement or any other Operative Document.

        6.09. Effect on Existing Lease Agreement. Lessee, Lessors and Lessor
Agent agree that on and after the date that this Agreement is executed by all
parties hereto, this Agreement shall amend, restate in its entirety and replace,
without notation, the Existing Lease Agreement; provided, however, that nothing
contained herein shall (i) operate as a waiver of any right, power or remedy of
any Lessor Party under the Existing Lease Agreement or any other Operative
Document or (ii) extinguish or impair any Lessee Obligations under the Existing
Lease Agreement or any other Operative Document except to the extent any such
Lessee Obligation is actually satisfied by Lessee; and provided, further, that
each Lease Supplement outstanding under the Existing Lease Agreement shall
remain outstanding and shall be deemed to have been made under this Agreement.

                          [The signature page follows.]

                                       33
<PAGE>   186

        IN WITNESS WHEREOF, Lessee, Lessors and Lessor Agent have caused this
Amended and Restated Lease Agreement to be executed as of the day and year first
above written.

LESSEE:                             LSI LOGIC CORPORATION

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

LESSORS:                            ABN AMRO BANK N.V.

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

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

                                    KEYBANK NATIONAL ASSOCIATION

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

                                    FBTC LEASING CORP.

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

LESSOR AGENT:                       ABN AMRO BANK N.V.

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

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

                                      S-1

<PAGE>   187

                                    EXHIBIT A

                            LEASE SUPPLEMENT NO. [ ]

                             [Lease Supplement Date]

ABN AMRO Bank N.V.,
   as Agent
Syndication Group
1325 Avenue of the Americas, 9th Floor
New York, NY 10019
Attn: Linda Boardman

        1. Reference is made to (a) the Amended and Restated Participation
Agreement, dated as of April 18, 2000 (the "Participation Agreement"), among LSI
Logic Corporation ("Lessee"), ABN AMRO Bank N.V., KeyBank National Association,
FBTC Leasing Corp. and each other financial institution listed as a lessor in
Schedule I to the Participation Agreement (in such capacity, collectively
"Lessors"), ABN AMRO Bank N.V., as agent for Lessors (in such capacity, "Lessor
Agent"), the financial institutions listed as Participants in Schedule I to the
Participation Agreement (the "Participants") and ABN AMRO Bank N.V., as agent
for the Participants (in such capacity, "Agent") and (b) the Amended and
Restated Lease Agreement, dated as of April 18, 2000 (the "Lease Agreement"),
among Lessee, Lessors and Lessor Agent. Unless otherwise indicated, all terms
defined in the Participation Agreement have the same respective meanings when
used herein.

        2. The Property subject to this Lease Supplement consists of the
Equipment identified in Attachment A hereto and all Related Goods, Related
Agreements and Related Permits with respect to such Equipment. Lessee warrants
that each item of Equipment has been delivered to and is located at the Property
Site specified for such Equipment in Attachment A.

        3. The Lease Supplement Term of this Lease Supplement shall commence on
the date hereof and end on [day prior to the third anniversary of the Lease
Supplement Date] (the "Scheduled Expiration Date" of this Lease Supplement),
subject to renewal or early termination as provided in the Lease Agreement.

        4. Until reduced by any Reduction Payments applied with respect to this
Lease Supplement, (a) the Outstanding Lease Amount of this Lease Supplement is $
, which is allocated to a Tranche A Portion, a Tranche B Portion and a Equity
Portion as set forth in Attachment B hereto, and (b) the Residual Value Guaranty
Amount of this Lease Supplement is as set forth in Attachment C hereto.

        5. Payments of the Fixed Component of Base Rent are due with respect to
this Lease Supplement on the dates and in the amounts set forth in Attachment D
hereto. Other payments of Base Rent and Supplemental Rent are due with respect
to this Lease Supplement as set forth in Paragraph 2.03 of the Lease Agreement.

                                      A-1
<PAGE>   188

        6. This Lease Supplement is executed and delivered by Lessee pursuant to
the Lease Agreement. All terms and conditions of the Lease Agreement are
incorporated in and made a part of this Lease Supplement as if they were
expressly set forth in this Lease Supplement. Lessee hereby reaffirms all of the
terms and conditions of the Lease Agreement and the other Operative Documents.

        IN WITNESS WHEREOF, Lessee and Lessor Agent has executed this Lease
Supplement on the date set forth above.

LESSEE:                             LSI LOGIC CORPORATION

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

LESSOR AGENT:                       ABN AMRO BANK N.V.

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

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

                                      A-2

<PAGE>   189

                    ATTACHMENT A TO LEASE SUPPLEMENT NO. [ ]

                            DESCRIPTION OF EQUIPMENT
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
 Description of                       Serial Number   Delivery Date    Internal Order    Acquisition         Unpaid       Property
    Equipment     Supplier    Model                                         Number          Price      Acquisition Price     Site
-----------------------------------------------------------------------------------------------------------------------------------
<S>               <C>         <C>     <C>             <C>              <C>               <C>           <C>                <C>

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

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

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

-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>   190

                    ATTACHMENT B TO LEASE SUPPLEMENT NO. [ ]

      ALLOCATION OF OUTSTANDING LEASE AMOUNT AS OF [LEASE SUPPLEMENT DATE]
<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------------
                    Tranche A Portion:  $                   Tranche B Portion:  $                  Equity Portion:  $
                    Tranche A Proportionate Share:     %    Tranche B Proportionate Share:     %   Equity Proportionate Share: %
------------------------------------------------------------------------------------------------------------------------------------
                         Outstanding                             Outstanding                             Outstanding
                          Tranche A           Tranche A           Tranche B          Tranche B             Equity           Equity
Participant          Participation Amount     Percentage    Participation Amount     Percentage     Participation Amount  Percentage
------------------------------------------------------------------------------------------------------------------------------------
<S>                 <C>                       <C>           <C>                      <C>            <C>                   <C>

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

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

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

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

------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>   191

                    ATTACHMENT C TO LEASE SUPPLEMENT NO. [ ]

                         RESIDUAL VALUE GUARANTY AMOUNT

--------------------------------------------------------------------------------
     Residual Value Guaranty Amount                           Effective Date
--------------------------------------------------------------------------------

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

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

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

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

<PAGE>   192

                    ATTACHMENT D TO LEASE SUPPLEMENT NO. [ ]

                          FIXED COMPONENT OF BASE RENT
<TABLE>
<CAPTION>

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

                  Payment Date                                      Amount Due
<S>               <C>                                               <C>

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

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

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

-------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>   193
                                    EXHIBIT B

                        NOTICE OF RENEWAL OPTION EXERCISE

                                     [Date]

ABN AMRO Bank N.V.,
   as Agent
Syndications Group
1325 Avenue of the Americas, 9th Floor
New York, NY  10019
Attn:  Linda Boardman

        1. Reference is made to (a) that certain Amended and Restated
Participation Agreement, dated as of April 18, 2000 (the "Participation
Agreement"), among LSI Logic Corporation ("Lessee"), ABN AMRO Bank N.V., KeyBank
National Association, FBTC Leasing Corp. and each other financial institution
listed as a lessor in Schedule I to the Participation Agreement (in such
capacity, collectively "Lessors"), ABN AMRO Bank N.V., as agent for Lessors (in
such capacity, "Lessor Agent"), the financial institutions listed as
Participants in Schedule I to the Participation Agreement (the "Participants")
and ABN AMRO Bank N.V., as agent for the Participants (in such capacity,
"Agent") and (b) the Amended and Restated Lease Agreement, dated as of April 18,
2000 (the "Lease Agreement"), among Lessee, Lessors and Lessor Agent. Unless
otherwise indicated, all terms defined in the Participation Agreement have the
same respective meanings when used herein.

        2. Pursuant to Subparagraph 2.02(b) of the Lease Agreement, Lessee
hereby notifies the Lessor Parties that Lessee is electing to exercise its
option to renew Lease Supplement No.    , dated              (the "Subject
Supplement"), for an additional one (1) term expiring              .

        3. With this Notice of Renewal Option Exercise, Lessee is delivering to
Agent a Renewal Date Appraisal Update of all of the Property currently subject
to the Subject Supplement. On the basis of the Renewal Date Appraised Values:

               (a) The aggregate Renewal Date Appraised Values of the Property
        subject to the Subject Supplement on the date hereof is [not] less than
        the Outstanding Lease Amount of such Lease Supplement [by $           ]:

               (b) The ratio of the aggregate Liquidation Appraised Values of
        the Property subject to the Subject Supplement on the date hereof
        divided by the sum of the aggregate Outstanding Tranche B Participation
        Amounts and Outstanding Equity Participation Amounts for the Subject
        Supplement is [not] less than [for first Renewal Option: 4.6 to 1.0]
        [for second Renewal Option: 4.0 to 1.0] [and payments of the Fixed
        Component of Base Rent in the amount of $          (in addition to
        payment of any amount set forth in subparagraph (a) above with respect
        to the Subject Supplement) are necessary to reduce

                                      B-1
<PAGE>   194

        the Outstanding Lease Amount of the Subject Supplement to increase such
        ratio to at least [for first Renewal Option: 4.6 to 1.0] [for second
        Renewal Option: 4.0 to 1.0]].

        4. Lessee hereby certifies to the Lessor Parties that on the date of
this Notice of Renewal Option Exercise:

               (a) The representations and warranties of Lessee set forth in
        Paragraph 4.01 of the Participation Agreement and in the other Operative
        Documents are true and correct in all material respects as if made on
        such date (except for representations and warranties expressly made as
        of a specified date, which shall be true in all material respects as of
        such date); and

               (b) No Default has occurred and is continuing.

        IN WITNESS WHEREOF, Lessee has executed this Notice of Renewal Option
Exercise on the date set forth above.

                                    LSI LOGIC CORPORATION

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

                                      B-2
<PAGE>   195

                                    EXHIBIT C

                        NOTICE OF RENTAL PERIOD SELECTION

                                     [Date]

ABN AMRO Bank N.V.,
   as Agent
Syndications Group
1325 Avenue of the Americas, 9th Floor
New York, NY  10019
Attn:  Linda Boardman

        1. Reference is made to (a) the Amended and Restated Participation
Agreement, dated as of April 18, 2000 (the "Participation Agreement"), among LSI
Logic Corporation ("Lessee"), ABN AMRO Bank N.V., KeyBank National Association,
FBTC Leasing Corp. and each other financial institution listed as a lessor in
Schedule I to the Participation Agreement (in such capacity, collectively
"Lessors"), ABN AMRO Bank N.V., as agent for Lessors (in such capacity, "Lessor
Agent"), the financial institutions listed as Participants in Schedule I to the
Participation Agreement (the "Participants") and ABN AMRO Bank N.V., as agent
for the Participants (in such capacity, "Agent"), (b) the Amended and Restated
Lease Agreement, dated as of April 18, 2000 (the "Lease Agreement"), among
Lessee, Lessors and Lessor Agent, and (3) Lease Supplement No. [ ], dated [Lease
Supplement Date], executed and delivered by Lessee (the "Lease Supplement").
Unless otherwise indicated, all terms defined in the Participation Agreement
have the same respective meanings when used herein.

               2. [Insert one of the following as appropriate:]

               [Pursuant to Subparagraph 2.03(a) of the Lease Agreement, Lessee
hereby irrevocably selects a new Rental Period for a Portion of the Outstanding
Lease Amount of the Lease Supplement as follows:

               (a) The Portion for which a new Rental Period is to be selected
        is the Portion in the amount of $__________ with a current Rental Period
        which began on ________, ____ and ends on __________, ____; and

               (b) The next Rental Period for such Portion shall be __________
        month[s].]

               [Pursuant to Subparagraph 2.03(a) of the Lease Agreement, Lessee
hereby irrevocably elects to divide a Portion of the Outstanding Lease Amount of
such [Lease Supplement into further Portions as follows:

               (a) The Portion which is to be divided is the Portion in the
        amount of $__________ with a current Rental Period which began on
        ________, ____ and ends on __________, ____; and

                                      C-1
<PAGE>   196

               (b) On the last day of the current Rental Period for such
        Portion, such Portion is to be divided into the following Portions with
        the following initial Rental Periods:

                         Portion                    Rental Period
                      -------------               ------------------
                      $                                    month[s]
                       -----------                 --------
                      $                                    month[s]]
                       -----------                 --------

               [Pursuant to Subparagraph 2.03(a) of the Lease Agreement, Lessee
hereby irrevocably elects to combine into a single Portion the Portions of the
Outstanding Lease Amount of the Lease Supplement as follows:

               (a) The Portions to be combined are in the amounts of
        $__________ and $_______, each with a current Rental Period which ends
        on __________, ____; and

               (b) The initial Rental Period for such newly created Portion
        shall be __________ month[s].]

        3. Lessee hereby certifies to the Lessor Parties that on the date of
this Notice of Rental Period Selection:

               (a) The representations and warranties of Lessee set forth in
        Paragraph 4.01 of the Participation Agreement and in the other Operative
        Documents are true and correct in all material respects as if made on
        such date (except for representations and warranties expressly made as
        of a specified date, which shall be true in all material respects as of
        such date); and

               (b) No Default has occurred and is continuing.

        IN WITNESS WHEREOF, Lessee has executed this Notice of Rental Period
Selection on the date set forth above.

                                    LSI LOGIC CORPORATION

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

                                      C-2
<PAGE>   197
--------------------------------------------------------------------------------

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

                              AMENDED AND RESTATED
                     LEASE AGREEMENT AND SECURITY AGREEMENT

                                      AMONG

                             LSI LOGIC CORPORATION,
                                    AS LESSEE

                                       AND

                               ABN AMRO BANK N.V.,
                          KEYBANK NATIONAL ASSOCIATION
                             AND FBTC LEASING CORP.,
                                   AS LESSORS

                                       AND

                               ABN AMRO BANK N.V.,
                           AS LESSOR AGENT FOR LESSORS

                                 APRIL 18, 2000

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

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

                    THIS LEASE IS NOT INTENDED TO CONSTITUTE
                      A TRUE LEASE FOR INCOME TAX PURPOSES
                              (SEE PARAGRAPH 2.05)

<PAGE>   198

                               TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                           PAGE
<S>               <C>                                                                      <C>
SECTION 1.        INTERPRETATION............................................................2

1.01              Definitions...............................................................2

1.02              Rules of Interpretation...................................................2

SECTION 2.        BASIC PROVISIONS..........................................................2

2.01.             Lease of the Property.....................................................2

2.02.             Term......................................................................3

2.03.             Rent......................................................................4

2.04.             "As Is" Lease.............................................................7

2.05.             Nature of Transaction.....................................................8

2.06.             Security and Subordination................................................8

2.07.             Withdrawals of Cash Collateral............................................9

SECTION 3.        OTHER LESSEE AND LESSOR RIGHTS AND OBLIGATIONS...........................10

3.01.             Maintenance, Repair, Etc.................................................10

3.02.             Risk of Loss.............................................................14

3.03.             Insurance................................................................14

3.04.             Casualty and Condemnation................................................16

3.05.             Taxes....................................................................19

3.06.             Severability.............................................................19

3.07.             Liens, Etc...............................................................19

3.08.             Subletting...............................................................20

3.09.             Compliance with Governmental Rules and Insurance Requirements............21

3.10.             Permitted Contests.......................................................21

3.11.             Lessor Obligations; Right to Perform Lessee Obligations..................21

3.12.             Inspection Rights........................................................22

SECTION 4.        EXPIRATION DATE..........................................................22

4.01.             Termination by Lessee Prior to Scheduled Expiration Date.................22

4.02.             Surrender of Property....................................................22

4.03.             Holding Over.............................................................24

SECTION 5.        DEFAULT..................................................................24

5.01.             Events of Default........................................................24
</TABLE>

                                      -i-

<PAGE>   199
                               TABLE OF CONTENTS
                                  (CONTINUED)
<TABLE>
<CAPTION>

                                                                                          PAGE
<S>               <C>                                                                     <C>
5.02.             General Remedies.........................................................27

5.03.             Lease Remedies...........................................................28

5.04.             Loan Remedies............................................................29

5.05.             Remedies Cumulative......................................................30

5.06.             No Cure or Waiver........................................................30

5.07.             Exercise of Rights and Remedies..........................................30

SECTION 6.        MISCELLANEOUS............................................................30

6.01.             Notices..................................................................30

6.02.             Waivers; Amendments......................................................30

6.03.             Successors and Assigns...................................................31

6.04.             No Third Party Rights....................................................31

6.05.             Partial Invalidity.......................................................31

6.06.             Governing Law............................................................31

6.07.             Counterparts.............................................................31

6.08.             Nature of Lessee's Obligations...........................................31

6.09.             Effect on Existing Lease Agreement.......................................32
</TABLE>

     EXHIBITS

        A         Lease Supplement (2.01(a))
        B         Notice of Renewal Option Exercise (2.02(b))
        C         Notice of Rental Period Selection (2.03(a))

                                      -ii-

<PAGE>   200

An extra section break has been inserted above this paragraph. Do not delete
this section break if you plan to add text after the Table of
Contents/Authorities. Deleting this break will cause Table of
Contents/Authorities headers and footers to appear on any pages following the
Table of Contents/Authorities.

<PAGE>   201
                    AMENDED AND RESTATED PURCHASE AGREEMENT

        THIS AMENDED AND RESTATED PURCHASE AGREEMENT (this "Agreement" herein),
dated as of April 18, 2000, is entered into by and among:

               (1) LSI LOGIC CORPORATION, a Delaware corporation ("Lessee");
        and

               (2) ABN AMRO BANK N.V., KEYBANK NATIONAL ASSOCIATION, FBTC
        LEASING CORP. and each other financial institution from time to time
        listed as a lessor in Schedule I to the Participation Agreement referred
        to in Recital B below, as amended from time to time (in such capacity,
        such financial institutions to be referred to collectively as
        "Lessors"); and

               (3) ABN AMRO BANK N.V., as agent for Lessors (in such capacity,
        "Lessor Agent").

                                    RECITALS

        A. Pursuant to the Participation Agreement referred to in Recital B
below, a certain lease facility is to be provided to Lessee by Lessors and the
other financial institutions which are "Participants" under the Participation
Agreement (such financial institutions to be referred to collectively as the
"Participants") as follows:

               (1) Lessors would (a) acquire certain equipment identified by
        Lessee and approved by Lessor Agent, (b) lease such equipment to Lessee,
        (c) make advances to finance certain related expenses and (d) grant to
        Lessee the right to purchase such equipment; and

               (2) The Participants would participate in such lease facility by
        (a) funding the acquisition price to be paid by Lessors for the
        equipment and the other advances to be made by Lessors and (b) acquiring
        participation interests in the rental and certain other payments to be
        made by Lessee.

        B. In connection with the addition of certain parties as Lessors and
Participants, Lessee and Participants have requested that (i) the Participation
Agreement, dated as March 31, 2000, among Lessee, ABN AMRO Bank N.V., as the
original Lessor and Participant, Lessor Agent, the Participants and ABN AMRO
Bank N.V., as agent for the Participants (in such capacity, "Agent"), be amended
and restated by the Amended and Restated Participation Agreement, dated as of
April 18, 2000 (the "Participation Agreement"), among Lessee, Lessors, Lessor
Agent, the Participants and Agent and (ii) the Purchase Agreement, dated as of
March 31, 2000 (the "Existing Purchase Agreement"), among Lessee, ABN AMRO Bank
N.V., as the original Lessor, and Lessor Agent be amended and restated by this
Agreement, and Lessors and Lessor Agent are willing for the Existing Purchase
Agreement to be amended and restated by this Agreement setting forth the terms
for the purchase of the property by Lessee from Lessors.

<PAGE>   202

                                    AGREEMENT

        NOW, THEREFORE, in consideration of the above Recitals and the mutual
covenants herein contained, the parties hereto hereby agree that the Existing
Purchase Agreement shall be amended and restated in its entirety as follows:

SECTION 1. INTERPRETATION.

        1.01. Definitions. Unless otherwise indicated in this Agreement or any
other Operative Document, each term set forth in Schedule 1.01 to the
Participation Agreement, when used in this Agreement or any other Operative
Document, shall have the respective meaning given to that term in such Schedule
1.01 or in the provision of this Agreement or other document, instrument or
agreement referenced in such Schedule 1.01.

        1.02. Rules of Interpretation. Unless otherwise indicated in this
Agreement or any other Operative Document, the rules of interpretation set forth
in Schedule 1.02 to the Participation Agreement shall apply to this Agreement
and the other Operative Documents.

SECTION 2. OPTIONAL PURCHASE BY LESSEE DURING THE TERM.

        2.01. Term Purchase Option. Subject to the terms and conditions of this
Agreement and the other Operative Documents (including those set forth below in
this Paragraph 2.01), Lessee may, at its option on any Business Day prior to the
earliest Scheduled Expiration Date for any outstanding Lease Supplement,
terminate the Lease Agreement and purchase all of the Property subject to the
Lease Supplements and, if a Lease Supplement has not been executed with respect
to any Installation Period, the Property leased during such Installation Period
(the "Term Purchase Option").

               (a) Notice of Term Purchase Option Exercise. Lessee shall notify
        Lessors of Lessee's exercise of the Term Purchase Option by delivering
        to Agent an irrevocable written notice in the form of Exhibit A(1),
        appropriately completed (the "Notice of Term Purchase Option Exercise"),
        which states that Lessee is exercising its right to terminate the Lease
        Agreement pursuant to Paragraph 4.01 of the Lease Agreement and purchase
        all of the Property subject to the Lease Agreement pursuant to this
        Paragraph 2.01 and specifies the Business Day on which such termination
        and purchase are to occur (which date, after the delivery of such
        notice, shall be the Expiration Date for each Lease Supplement and, if a
        Lease Supplement has not been executed with respect to any Installation
        Period, the Termination Date of such Installation Period). Lessee shall
        give the Notice of Term Purchase Option Exercise to Agent at least one
        (1) month prior to the Business Day on which such termination and
        purchase are to occur. The Notice of Term Purchase Option Exercise shall
        be delivered as required by Subparagraph 2.02(c) and Paragraph 7.01 of
        the Participation Agreement; provided, however, that Lessee shall

                                       2
<PAGE>   203

        promptly deliver the original of any Notice of Term Purchase Option
        Exercise initially delivered by facsimile.

               (b) Term Purchase Option Purchase Price. Lessee shall pay to
        Lessors on the Expiration Date of the Lease Supplements (and, if a Lease
        Supplement has not been executed with respect to any Installation
        Period, the Termination Date of such Installation Period), as the
        purchase price for the Property, an amount equal to the sum of the
        Outstanding Lease Amount of each Lease Supplement and the Advances made
        during such Installation Period, on such date.

               (c) Effect of Certain Events. Lessee may exercise the Term
        Purchase Option as provided in this Paragraph 2.01, notwithstanding (i)
        the prior election by Lessee to exercise the Partial Purchase Option
        pursuant to Paragraph 2.02, the Marketing Option pursuant to Paragraph
        3.01 and Paragraph 3.02 or the Expiration Date Purchase Option pursuant
        to Paragraph 3.01 and Paragraph 3.03 with respect to the Property
        subject to any Lease Supplement or leased during any Installation
        Period, provided that Lessee completes the purchase of all of the
        Property pursuant to the Term Purchase Option and this Agreement prior
        to the earliest Scheduled Expiration Date of any outstanding Lease
        Supplement and Lessors have not previously entered into an agreement
        with a Designated Purchaser or an Assignee Purchaser to sell the
        Property or (ii) the occurrence of any Event of Default or the exercise
        by the Lessor Parties of any of their rights or remedies under the
        Operative Documents following the occurrence of such Event of Default,
        provided that such exercise by Lessee of the Term Purchase Option after
        the occurrence of any Event of Default shall not require the Lessor
        Parties to cease exercising such rights and remedies unless and until
        Lessee completes the purchase of all of the Property pursuant to the
        Term Purchase Option and this Agreement.

        2.02. Partial Purchase Option. Subject to the terms and conditions of
this Agreement and the other Operative Documents (including those set forth
below in this Paragraph 2.02), Lessee may, at its option on any Business Day
prior to the Scheduled Expiration Date of any Lease Supplement, without
terminating the Lease Agreement, purchase all or a portion of the Property
subject to such Lease Supplement or, if a Lease Supplement has not been executed
with respect to any Installation Period, the Property leased during such
Installation Period (the "Partial Purchase Option").

               (a) Notice of Partial Purchase Option Exercise. Lessee shall
        notify Lessors of Lessee's exercise of the Partial Purchase Option by
        delivering to Agent an irrevocable written notice in the form of Exhibit
        A(2), appropriately completed (the "Notice of Partial Purchase Option
        Exercise"), which states that Lessee is exercising its right to purchase
        all or a portion of the Property subject to any Lease Supplement (or
        leased during any Installation Period) prior to the Scheduled Expiration
        Date for such Lease Supplement (or the last day of such Installation
        Period) pursuant to this Paragraph 2.02 and specifies (i) the portion of
        the Property so to be purchased and (ii) the Business Day on which such
        purchase is to occur (a "Partial Purchase Date"). Lessee shall give each
        Notice of Partial Purchase Option Exercise to Agent at least one (1)
        month prior to the Partial Purchase Date on which a purchase is to
        occur. Each Notice of Partial Purchase Option Exercise

                                       3
<PAGE>   204

        shall be delivered as required by Subparagraph 2.02(c) and Paragraph
        7.01 of the Participation Agreement; provided, however, that Lessee
        shall promptly deliver the original of any Notice of Partial Purchase
        Option Exercise initially delivered by facsimile.

               (b) Partial Purchase Option Purchase Price. Lessee shall pay to
        Lessors on each Partial Purchase Date, as the purchase price for the
        portion of the Property subject to any Lease Supplement (or leased
        during any Installation Period) to be purchased on such date, an amount
        equal to the portion of the Outstanding Lease Amount of such Lease
        Supplement (or the Advances made during such Installation Period) on
        such date attributable to such portion of the Property. (For the
        purposes of this Subparagraph 2.02(b), the portion of the Outstanding
        Lease Amount of such Lease Supplement (or the Advances made during such
        Installation Period) on any date attributable to any portion of the
        Property shall mean the Acquisition Price for such portion of the
        Property as set forth in Lease Supplement (or Advance Request) with
        respect to such Property less the pro rata share of all Reduction
        Payments applied to reduce the Outstanding Lease Amount of such Lease
        Supplement (or the Advances made during such Installation Period) on or
        prior to such date.)

               (c) Conditions to Exercise of Partial Purchase Option. The
        purchase by Lessee on any Partial Purchase Date of any Property subject
        to any Lease Supplement or leased during any Installation Period
        pursuant to this Paragraph 2.02 is subject to satisfaction of the
        following conditions:

                      (i) The purchase price for such Property, when added to
               the sum of the purchase prices for all other Property previously
               purchased by Lessee pursuant to the Partial Purchase Option, does
               not exceed twenty-five percent (25%) of the sum of the
               Outstanding Lease Amounts of all Lease Supplements (and, if a
               Lease Supplement has not been executed with respect to any
               Installation Period, the Advances made during such Installation
               Period) and all Reduction Payments applied to reduce the
               Outstanding Lease Amounts of all Lease Supplements (and the
               Advances made during any such Installation Period); and

                      (ii) If such Property does not constitute all of the
               Property subject to such Lease Supplement or Installation Period,
               the purchase price for the portion of the Property to be
               purchased does not exceed twenty-five percent (25%) of the sum of
               the Outstanding Lease Amount of such Lease Supplement (or the
               Advances made during such Installation Period) and all Reduction
               Payments applied to reduce the Outstanding Lease Amount of such
               Lease Supplement (or the Advances made during such Installation
               Period).

                                       4
<PAGE>   205

SECTION 3. OBLIGATIONS OF LESSEE ON THE EXPIRATION DATE.

        3.01. Alternative. Unless Lessee has exercised the Term Purchase Option
or the Partial Purchase Option with respect to all of the Property subject to
any Lease Supplement, on the Expiration Date of each Lease Supplement, Lessee
shall either:

               (a) Marketing Option. Cause another Person to complete the
        purchase of the Property subject to such Lease Supplement pursuant to
        Paragraph 3.02 (the "Marketing Option"); or

               (b) Expiration Date Purchase Option. Purchase the Property
        subject to such Lease Supplement itself pursuant to Paragraph 3.03 (the
        "Expiration Date Purchase Option").

Lessee shall elect either the Marketing Option or the Expiration Date Purchase
Option by delivering to Agent, not more than ten (10) months nor less than six
(6) months prior to the Scheduled Expiration Date for such Lease Supplement,
either (i) a written notice in the form of Exhibit B, appropriately completed
(the "Notice of Marketing Option Exercise"), or (ii) a written notice in the
form of Exhibit C, appropriately completed (the "Notice of Expiration Date
Purchase Option Exercise"); provided, however, that (A) if the time for
exercising the first or second Renewal Option provided in Subparagraph 2.02(b)
of the Lease Agreement has not expired with respect to any Lease Supplement,
Lessee shall be deemed to have elected the first or second Renewal Option
provided in Subparagraph 2.02(b) of the Lease Agreement with respect to such
Lease Supplement, as applicable, if it fails to deliver either notice as
required by this sentence; (B) if the time for exercising the Renewal Options
provided in Subparagraph 2.02(b) of the Lease Agreement has expired with respect
to any Lease Supplement or Lessee fails to comply with the terms and conditions
provided in Subparagraph 2.02(b) of the Lease Agreement with respect to any
Lease Supplement, Lessee shall be deemed to have elected the Expiration Date
Purchase Option with respect to such Lease Supplement if it fails to deliver
either notice as required by this sentence; (C) Lessee's election of the
Expiration Date Purchase Option (whether expressly by a notice so delivered or
implicitly as described in clause (B)) shall be irrevocable; and (D) Lessee may
not elect the Marketing Option if (1) the Expiration Date of such Lease
Supplement has been accelerated to an earlier Termination Date following a
Marketing Option Event of Default under the Lease Agreement or (2) the
conditions set forth in Paragraph 3.04 of the Participation Agreement are not
satisfied on the date Lessee delivers its election notice or on the Expiration
Date for such Lease Supplement (unless, in each case, the only event or
condition causing such conditions not to be so satisfied is the occurrence of a
Non-Marketing Option Event of Default under the Lease Agreement). The Notice of
Marketing Option Exercise or the Notice of Expiration Date Purchase Option
Exercise shall be delivered as required by Subparagraph 2.02(c) and Paragraph
7.01 of the Participation Agreement; provided, however, that Lessee shall
promptly deliver to Lessors the original of any such notice initially delivered
by facsimile.

        3.02. Marketing Option.

                                       5
<PAGE>   206

               (a) General. If Lessee elects to exercise the Marketing Option
        with respect to the Property subject to any Lease Supplement by
        delivering to Agent a Notice of Marketing Option Exercise pursuant to
        Paragraph 3.01, Lessee shall use all reasonable efforts to (i) locate a
        purchaser which satisfies the requirements set forth in this Paragraph
        3.02, (ii) arrange for such purchaser to purchase such Property on the
        Expiration Date for such Lease Supplement for a purchase price which is
        not less than the lesser of (A) the sum of the Outstanding Tranche B
        Amount and the Outstanding Equity Amount of such Lease Supplement and
        (B) the Fair Market Value of such Property and (iii) otherwise comply,
        or cause compliance with, the requirements of this Paragraph 3.02 and
        the other applicable provisions of this Agreement. Nothing will prevent
        Lessee from commencing the marketing of such Property sooner than the
        dates set forth in this Paragraph 3.02.

               (b) Lessee's Marketing Obligations.

                      (i) Initial Marketing Period. During the period beginning
               on the date Lessee delivers the Notice of Marketing Option
               Exercise with respect to the Property subject to any Lease
               Supplement and ending on the date which is four (4) months prior
               to the Scheduled Expiration Date for such Lease Supplement (the
               "Initial Marketing Period"), Lessee shall use reasonable efforts
               to solicit Conforming Bids from potential purchasers of such
               Property. On or prior to the last day of the Initial Marketing
               Period, Lessee shall deliver to Lessor Agent any Conforming Bid
               selected by Lessee (the "Initial Bid"). If the purchase price
               specified in the Initial Bid is equal to or greater than the sum
               of the Outstanding Tranche B Amount and the Outstanding Equity
               Amount of such Lease Supplement, Lessors shall accept such bid
               and Lessee shall have no further obligations to solicit
               additional bids.

                      (ii) Secondary Marketing Period. If Lessee does not submit
               an Initial Bid or if the purchase price specified in the Initial
               Bid for the Property subject to any Lease Supplement is less than
               the sum of the Outstanding Tranche B Amount and the Outstanding
               Equity Amount of such Lease Supplement, Lessors may reject such
               bid and Lessee shall, during the period which begins on the day
               following the Initial Marketing Period and ends on the date one
               (1) month prior to the Scheduled Expiration Date for such Lease
               Supplement (the "Secondary Marketing Period"):

                             (A) Use its best efforts to solicit additional
                      Conforming Bids, including the engagement of experienced
                      and knowledgeable brokers;

                             (B) Furnish to Lessor Agent copies of all bids and
                      otherwise provide Lessor Agent with such information
                      relating to the marketing of such Property as Lessor Agent
                      may reasonably request in writing;

                             (C) Agree to provide to all potential purchasers
                      all customary seller's indemnities, representations and
                      warranties regarding such

                                       6
<PAGE>   207

                      Property (including the title to, except for Lessor
                      Liens, and condition of such Property);

                             (D) Furnish to Lessor Agent copies of licenses,
                      permits and other evidence reasonably requested by Lessor
                      Agent to establish that no Default has occurred and is
                      continuing under the Lease Agreement;

                             (E) Permit Lessor Agent or any potential purchaser
                      to inspect such Property and the maintenance records for
                      such Property upon reasonable prior written notice and
                      during normal business hours and provide to Lessor Agent
                      or such potential purchaser all information regarding such
                      Property reasonably requested by Lessor Agent or such
                      potential purchaser in writing;

                             (F) Take all other commercially reasonable steps
                      to secure the best price for such Property; and

                             (G) Submit to Lessor Agent on or prior to the last
                      day of the Secondary Marketing Period any Conforming Bid
                      selected by Lessee with a purchase price which is equal to
                      or greater than the sum of the Outstanding Tranche B
                      Amount and the Outstanding Equity Amount of such Lease
                      Supplement or, if no such Conforming Bid was received by
                      Lessee, the highest Conforming Bid received by Lessee
                      during the Secondary Marketing Period.

               During the Secondary Marketing Period, Lessor Agent shall have
               the right to submit one or more bids or solicit bids from other
               Persons.

               (c) Conforming Bids. Each bid for the Property subject to any
        Lease Supplement must meet each of the following requirements (each such
        bid to be referred to herein as a "Conforming Bid"):

                      (i) The bid may be submitted by any Person other than (A)
               a Person which is an Affiliate of Lessee or (B) a Person which
               has an agreement (whether express or implied) with Lessee or any
               of its Affiliates to sell, lease or otherwise make available to
               Lessee or any of its Affiliates any portion of such Property;

                      (ii) The bidder must agree in writing to purchase such
               Property on the Expiration Date for such Lease Supplement for a
               purchase price to be paid in cash which is not less than the
               lesser of (A) the sum of the Outstanding Tranche B Amount and the
               Outstanding Equity Amount for such Lease Supplement on such date
               and (B) the Fair Market Value of such Property on such date;

                      (iii) The bidder must agree to purchase such Property "as
               is" without any representations, warranties or indemnities,
               except for (A) any representations, warranties or indemnities
               provided by Lessors and Lessee pursuant to

                                       7
<PAGE>   208

               Subparagraph 4.01(b) and (B) any representations, warranties or
               indemnities provided by Lessee pursuant to clause (ii)(C) of
               Subparagraph 3.02(b);

                      (iv) The bidder must agree to be bound by the other terms
               and conditions of this Agreement applicable to bidders; and

                      (v) The bidder must be creditworthy, as determined by
               Lessee.

               (d) Lessors' Obligation to Accept Bids. If, at any time on or
        prior to the last day of the Secondary Marketing Period for the Property
        subject to any Lease Supplement, Lessee submits to Lessor Agent a
        Conforming Bid under this Paragraph 3.02 with a purchase price which is
        equal to or greater than the sum of the Outstanding Tranche B Amount and
        the Outstanding Equity Amount of such Lease Supplement, Lessors shall
        accept such bid. If Lessee submits to Lessor Agent a Conforming Bid
        under this Paragraph 3.02 for the Property subject to any Lease
        Supplement with a purchase price which is less than the sum of the
        Outstanding Tranche B Amount and the Outstanding Equity Amount of such
        Lease Supplement, Lessors shall not accept such bid unless so directed
        by the Required Participants. If Lessee fails to submit a bid to Lessor
        Agent on or prior to the last day of the Secondary Marketing Period for
        the Property subject to any Lease Supplement which Lessors are so
        required to accept, Lessors shall retain such Property after the
        Expiration Date for such Lease Supplement. Lessor Agent shall notify
        Lessee of Lessors' election to retain such Property by delivering to
        Lessee, at least ten (10) days prior to the Expiration Date for such
        Lease Supplement, a written notice of such election.

               (e) Purchase Price. If Lessors accept any bid by any Person for
        the Property subject to any Lease Supplement, such Person (the
        "Designated Purchaser") shall pay to Lessors on the Expiration Date for
        such Lease Supplement, as the purchase price for such Property, the
        amount set forth in such bid as the purchase price.

               (f) Termination of the Marketing Option. Lessee's right to
        exercise the Marketing Option with respect to the Property subject to
        any Lease Supplement shall immediately terminate and Lessee shall
        purchase such Property on the Expiration Date for such Lease Supplement
        pursuant to Paragraph 3.03 if (i) Lessee fails to comply with any of its
        obligations under this Paragraph 3.02; (ii) a Marketing Option Event of
        Default under the Lease Agreement occurs after Lessee delivers the
        Notice of Marketing Option Exercise; (iii) the conditions precedent set
        forth in Paragraph 3.04 of the Participation Agreement are not satisfied
        on the Expiration Date for such Lease Supplement (unless the only event
        or condition causing such conditions not to be so satisfied is the
        occurrence of a Non-Marketing Option Event of Default under the Lease
        Agreement); or (iv) the Designated Purchaser fails to consummate the
        purchase of such Property on the Expiration Date for such Lease
        Supplement in accordance with its accepted bid and this Agreement,
        without regard to the reason for such failure (except as otherwise
        provided in the following proviso); provided, however, that, if the
        Designated Purchaser fails to consummate the purchase of such Property
        on the Expiration Date for such Lease Supplement solely due to any
        Lessor's failure to remove Lessor Liens attributable to such

                                       8
<PAGE>   209

        Lessor and deliver the required bill of sale or other documents required
        to be delivered by Lessors hereunder, Lessee's right to exercise the
        Marketing Option shall not terminate, Lessee shall not be required to
        purchase such Property on such Expiration Date and Lessee's payment
        obligations on such Expiration Date shall be limited to the amounts set
        forth in clause (ii) of Subparagraph 4.06(a) (determined as if the
        purchase by the Designated Purchaser had been consummated).

               (g) Residual Value Guaranty Amount and Indemnity Amount. Unless
        Lessee's right to exercise the Marketing Option has terminated and
        Lessee is required to purchase the Property subject to any Lease
        Supplement on the Expiration Date for such Lease Supplement pursuant to
        Paragraph 3.03, Lessee shall pay to Lessors on such Expiration Date the
        following:

                      (i) The difference between (A) the Outstanding Lease
               Amount of such Lease Supplement and (B) the sum of the
               Outstanding Tranche B Amount and the Outstanding Equity Amount of
               such Lease Supplement (the "Residual Value Guaranty Amount"); and

                      (ii) An amount (the "Indemnity Amount") equal to the
               decrease, if any, between the Lease Supplement Date and the
               Expiration Date for such Lease Supplement in the Fair Market
               Value of such Property caused by (A) any representation or
               warranty of Lessee or any of its Affiliates regarding such
               Property set forth in any of the Operative Documents proving to
               be false or inaccurate when made, (B) the existence of, or the
               failure of Lessee to pay any Governmental Charge, Indebtedness or
               other obligation which might give rise to, any Liens in such
               Property (other than Permitted Property Liens), (C) the failure
               of Lessee to complete any Modifications to such Property, or (D)
               any other failure of Lessee to comply with any of its obligations
               regarding such Property set forth in any of the Operative
               Documents.

               (h) Determination of Fair Market Value and Indemnity Amount. If
        the purchase price specified in the Initial Bid for the Property subject
        to any Lease Supplement is less than the sum of the Outstanding Tranche
        B Amount and the Outstanding Equity Amount of such Lease Supplement,
        Lessors may, on or prior to the last day of the Secondary Marketing
        Period (if Lessee has not previously delivered to Lessor Agent a
        Conforming Bid with a purchase price equal to or greater than the sum of
        the Outstanding Tranche B Amount and the Outstanding Equity Amount of
        such Lease Supplement), deliver to Lessee a written notice of Lessor
        Agent's determination of the current Fair Market Value of such Property
        and the Indemnity Amount. To determine such amounts, Lessor Agent shall
        obtain Appraisals of the Property which set forth:

                      (i) A current Appraisal of the Fair Market Value of such
               Property in its then existing condition (the "Current
               Appraisal"); and

                      (ii) An Appraisal of the Fair Market Value of such
               Property which assumes that (A) all representations and
               warranties regarding such Property made

                                       9
<PAGE>   210

               by Lessee or any of its Affiliates in any of the Operative
               Documents were true and correct when made; (B) Lessee has
               maintained such Property in compliance with all applicable
               Governmental Rules, Insurance Requirements and the Operative
               Documents; (C) Lessee has completed all Modifications to such
               Property in a good and workmanlike manner and otherwise as
               required by the Operative Documents; (D) Lessee has repaired such
               Property as required by the Operative Documents following any
               Casualty; (E) Lessee has restored such Property as required by
               the Operative Documents following any Condemnation; (F) Lessee
               has paid all Governmental Charges, Indebtedness and other
               obligations which, if unpaid, might give rise to a Lien (other
               than a Lessor Lien) on such Property; (G) Lessee has removed all
               Liens on such Property except for Permitted Property Liens and
               Lessor Liens; and (H) Lessee has performed all of its other
               obligations as required by the Operative Documents (the "Assumed
               Appraisal").

        In the absence of manifest error, (y) the Current Appraisal shall
        constitute the current Fair Market Value of such Property and (z) the
        difference between the Current Appraisal and the Assumed Appraisal shall
        constitute the Indemnity Amount of such Lease Supplement if the Current
        Appraisal is less than the Assumed Appraisal.

               (i) Lessee Cannot Bind. No Lessor Party shall be bound by any
        acts of Lessee, except as expressly provided in this Paragraph 3.02.

               (j) Excess Proceeds. If, on the Expiration Date for any Lease
        Supplement, after the application by Lessors of all amounts received by
        Lessors on such date to the Outstanding Lease Amount of such Lease
        Supplement, all unpaid Rent with respect to such Lease Supplement
        accrued through or due and payable on or prior to such date and all
        other amounts, if any, due and payable by Lessee under the Operative
        Documents on or prior to such date, any excess amount remains, Lessors
        shall pay such excess amount to Lessee.

               (k) Creditworthiness of Designated Purchaser. Lessee assumes all
        responsibility for determining the creditworthiness of any potential
        purchaser on any bid submitted by Lessee to Lessors hereunder. If, after
        any purchase by a Designated Purchaser hereunder, the purchase price
        paid by such Designated Purchaser is recovered from any Lessor Party,
        Lessee shall reimburse such Lessor Party for such recovery unless such
        recovery is due solely to a material misrepresentation or covenant
        breach by such Lessor Party.

               (l) Exercise of Marketing Option After Non-Marketing Option Event
        of Default. If Lessor Agent notifies Lessee pursuant to Subparagraph
        5.03(a) or Subparagraph 5.04(a) of the Lease Agreement that the Lease
        Agreement is being terminated on a Termination Date which is prior to
        the Scheduled Expiration Date of any Lease Supplement and the only basis
        for such early termination is the occurrence of a Non-Marketing Option
        Event of Default, Lessee may, subject to Paragraph 3.01, elect to
        exercise the Marketing Option if, not later than ten (10) Business Days
        after it receives from Lessor Agent such notice of early termination, it
        (i) delivers to Agent a Notice of

                                       10
<PAGE>   211

        Marketing Option Exercise, (ii) delivers to Agent United States Treasury
        Securities or deposit accounts held and maintained by Agent or the
        Participants in an aggregate amount not less than 105% of the Residual
        Value Guaranty Amount of such Lease Supplement as cash collateral,
        together with a cash collateral agreement, in form and substance
        satisfactory to Agent, granting Agent a first priority perfected
        security interest in such cash collateral securing the Lessee
        Obligations, (iii) delivers to Agent an opinion of Lessee's counsel to
        the effect that such cash collateral agreement is a legal, valid and
        binding agreement of Lessee, enforceable in accordance with its terms,
        and that Agent has a perfected security interest in such cash collateral
        and (iv) takes such other actions as may be necessary to grant to Agent
        a first priority perfected security interest in such cash collateral in
        accordance with such cash collateral agreement. Upon the delivery by
        Lessee to Agent of a Notice of Marketing Option Exercise and
        satisfaction of the cash collateral requirements set forth in the
        preceding sentence of this Subparagraph 3.02(l), the Expiration Date of
        such Lease Supplement shall, if the conditions to the exercise of the
        Marketing Option set forth in Paragraph 3.01 are satisfied, be extended
        to the first Business Day that is six (6) months after the date of
        receipt by Agent of such Notice of Marketing Option Exercise; provided,
        however, that in no event shall the Expiration Date of such Lease
        Supplement be extended beyond the Scheduled Expiration Date of such
        Lease Supplement. Any exercise by Lessee of the Marketing Option
        pursuant to this Subparagraph 3.02(l) shall be subject to the terms and
        conditions otherwise set forth in this Agreement.

               (m) Lessors' Obligation to Sell. If Lessors retain the Property
        subject to any Lease Supplement after the Expiration Date for such Lease
        Supplement for any reason under the Operative Documents without a
        foreclosure sale or other disposition in accordance with the California
        Commercial Code or other applicable Governmental Rules, Lessor Agent
        thereafter shall use commercially reasonable efforts to sell such
        Property in a reasonable time to one or more unrelated third parties for
        the Fair Market Value of such Property; provided, however that Lessors
        shall have no obligation to sell such Property at a time, or in a
        manner, that would adversely affect the Lessor Parties' ability to be
        paid in full the Outstanding Lease Amount of such Lease Supplement, all
        other amounts payable to the Lessor Parties under the Operative
        Documents (including reasonable costs of maintaining, managing and
        selling such Property) and carrying costs for such Outstanding Lease
        Amount and such other amounts accruing at the Base Rate; provided,
        however, that if such Expiration Date did not occur as a result of an
        Event of Default and Lessee has complied with its obligations under
        Paragraph 4.02 of the Lease Agreement regarding delivery of such
        Property on or prior to such Expiration Date, Lessee shall have no
        further obligations with respect to such Property after such Expiration
        Date. Following such sale, Lessor Agent shall pay to Lessee any amounts
        received by Lessor Agent in excess of the amounts referred to in the
        proviso to the preceding sentence.

        3.03.  Expiration Date Purchase Option.

               (a) General. With respect to any Lease Supplement, if (i) Lessee
        elects to exercise the Expiration Date Purchase Option by delivering to
        Agent a Notice of

                                       11
<PAGE>   212

        Expiration Date Purchase Option Exercise pursuant to Paragraph 3.01;
        (ii) Lessee elects to exercise the Marketing Option by delivering to
        Agent a Notice of Marketing Option Exercise pursuant to Paragraph 3.01
        but the Marketing Option terminates pursuant to Subparagraph 3.02(f); or
        (iii) Lessee fails to deliver to Agent either notice as required by
        Paragraph 3.01 and the time for exercising the Renewal Options provided
        in Subparagraph 2.02(b) of the Lease Agreement has expired or Lessee
        fails to comply with the terms and conditions provided in Subparagraph
        2.02(b) of the Lease Agreement; Lessee shall purchase the Property
        subject to such Lease Supplement on the Expiration Date for such Lease
        Supplement and otherwise comply, or cause compliance with, the
        requirements of this Paragraph 3.03 and the other applicable provisions
        of this Agreement.

               (b) Purchase Price. If Lessee is purchasing the Property subject
        to any Lease Supplement pursuant to the Expiration Date Purchase Option,
        Lessee shall pay to Lessors on the Expiration Date for such Lease
        Supplement, as the purchase price for such Property, an amount equal to
        the Outstanding Lease Amount of such Lease Supplement on such date.

SECTION 4. TERMS OF ALL PURCHASES.

        4.01.  Representations and Warranties of Lessors and Lessee.

               (a) Lessee shall represent and warrant to the Designated
        Purchaser (or Lessors if Lessors are to retain the Property) on the
        Expiration Date for such Lease Supplement that no Liens are attached to
        such Property, except for Lessor Liens. Lessee shall make such
        additional representations and warranties as it may be required to make
        pursuant to clause (ii) of Subparagraph 3.02(b).

               (b) Each Lessor shall represent and warrant to each purchaser of
        the Property subject to any Lease Supplement, whether Lessee, an
        Assignee Purchaser or a Designated Purchaser (a "Purchaser") on the
        Expiration Date for such Lease Supplement (or, in the case of a purchase
        of a portion of such Property pursuant to the Partial Purchase Option,
        on the applicable Partial Purchase Date) that no Lessor Liens
        attributable to such Lessor are attached to such Property (or, in the
        case of a purchase of a portion of such Property pursuant to the Partial
        Purchase Option, the portion to be purchased). Except for the foregoing
        representations and warranties to be made by Lessors on the Expiration
        Date for such Lease Supplement (or, in the case of a purchase of a
        portion of such Property pursuant to the Partial Purchase Option, on the
        applicable Partial Purchase Date), no Lessor Party shall make any
        representation or warranty regarding such Property or the sale of such
        Property.

               (c) Survival of Representations and Warranties. The
        representations and warranties of Purchaser, Lessors and Lessee made in
        connection with the sale of the Property subject to any Lease Supplement
        shall survive for a period of twelve (12) months after the Expiration
        Date for such Lease Supplement (or, in the case of a purchase

                                       12
<PAGE>   213

        of a portion of such Property pursuant to the Partial Purchase Option,
        after the applicable Partial Purchase Date). Any claim which any such
        party may have at any time against any other such party for a breach of
        any such representation or warranty, whether known or unknown, which is
        not asserted by written notice within such twelve (12) month-period
        shall not be valid or effective, and the party shall have no liability
        with respect thereto.

        4.02. "As Is" Purchase. All purchases hereunder of the Property subject
to any Lease Supplement shall be "as is, with all faults" and without any
representations, warranties or indemnities except for any representations,
warranties or indemnities provided by Lessee pursuant to clause (ii)(C) of
Subparagraph 3.02(b) or by Lessors or Lessee pursuant to Subparagraph 4.01(b).
Each Purchaser shall specifically acknowledge and agree that Lessors are selling
and such Purchaser is purchasing such Property on an "as is, with all faults"
basis and that such Purchaser is not relying on any representations or
warranties of any kind whatsoever, express or implied, from any Lessor Party,
its agents, or brokers as to any matters concerning such Property (except for
any representations and warranties provided by Lessors pursuant to Subparagraph
4.01(b)), including (a) the condition or performance of such Property or the
fitness of such Property for any purpose; (b) title to or right to use of such
Property, including the existence of any Lien or any other right, title or
interest (including intellectual property right) in or to any of such Property
in favor of any Person; (c) the value, usability, design, operation or fitness
for use of such Property; (d) any latent, hidden or patent defect in such
Property; (e) any restrictions on the use of such Property; (f) the economics of
such Property; (g) any Casualty or Condemnation with respect to such Property;
or (h) the compliance of such Property with any applicable Governmental Rule or
Insurance Requirement.

        4.03. Release. Without limiting the foregoing, each Purchaser shall, on
behalf of itself and its successors and assigns, waive its right to recover
from, and forever release and discharge, Lessors and the other Indemnitees from
any and all demands, claims, legal or administrative proceedings, losses,
liabilities, damages, penalties, fines, liens, judgments, costs or expenses
whatsoever (including attorneys' fees and costs), whether direct or indirect,
known or unknown, foreseen or unforeseen, that may arise on account of or in any
way be connected with the physical condition of the Property subject to any
Lease Supplement or any Governmental Rule applicable thereto, including any
Environment Law. Each Purchaser shall expressly waive the benefits of Section
1542 of the California Civil Code, which provides that, "a general release does
not extend to claims which the creditor does not know or expect to exist in his
favor at the time of executing the release, which if known to him must have
materially affected the settlement with the debtor."

        4.04. Permits, Approvals, Etc. Lessee shall obtain all permits, licenses
and approvals from and make all required filings with Governmental Authorities
and other Persons, comply and cause compliance with all applicable Governmental
Rules and/or take all other actions required for the marketing, purchase and
sale of the Property subject to any Lease Supplement.

        4.05. Costs. Lessee shall pay directly, without deduction from the
purchase price or any other amount payable to Lessors hereunder, all reasonable
costs and expenses of Lessee and Lessor Agent associated with the marketing and
sale of the Property subject to any Lease Supplement, including brokers' fees
and commissions; Uniform Commercial Code and other

                                       13
<PAGE>   214

searches; tax and other prorations; fees and expenses of attorneys; appraisal
costs; escrow fees; recording fees; and documentary, transfer and other similar
taxes.

        4.06. Lessee's Expiration Date and Partial Purchase Date Payment
Obligations.

               (a) Expiration Date. On the Expiration Date of any Lease
        Supplement (and, if a Lease Supplement has not been executed with
        respect to any Installation Period, the Termination Date of such
        Installation Period), Lessee shall pay, or cause to be paid, to Lessors
        the following:

                      (i) Purchase by Lessee. If the Property subject to such
               Lease Supplement (or leased during such Installation Period) is
               to be purchased by Lessee or an Assignee Purchaser on such date,
               (i) the purchase price payable to Lessors, (ii) all unpaid Rent
               with respect to such Lease Supplement (or Installation Period)
               accrued through or due and payable on or prior to such date and
               (iii) all other amounts, if any, due and payable by Lessee under
               the Operative Documents on or prior to such date;

                      (ii) Purchase by a Designated Purchaser. If the Property
               subject to such Lease Supplement is to be purchased by a
               Designated Purchaser on such date, (i) the Residual Value
               Guaranty Amount of such Lease Supplement, (ii) the Indemnity
               Amount of such Lease Supplement, (iii) all unpaid Rent with
               respect to such Lease Supplement accrued through or due and
               payable on or prior to such date and (iv) all other amounts, if
               any, due and payable by Lessee under the Operative Documents on
               or prior to such date; or

                      (iii) Retention by Lessors. If the Property subject to
               such Lease Supplement is to be retained by Lessors on such date
               pursuant to Subparagraph 3.02(d), (i) the Residual Value Guaranty
               Amount of such Lease Supplement, (ii) the Indemnity Amount of
               such Lease Supplement, (iii) all unpaid Rent with respect to such
               Lease Supplement accrued through or due and payable on or prior
               to such date and (iv) all other amounts, if any, due and payable
               by Lessee under the Operative Documents on or prior to such date.

               (b) Partial Purchase Date. On any Partial Purchase Date for any
        Property subject to any Lease Supplement (or, if a Lease Supplement has
        not been executed with respect to any Installation Period, the Property
        leased during such Installation Period), Lessee shall pay, or cause to
        be paid, to Lessors (i) the purchase price for the portion of such
        Property to be purchased on such date, (ii) all unpaid Rent with respect
        to such Lease Supplement (or Installation Period) attributable to such
        portion of such Property accrued through or due and payable on or prior
        to such date and (iii) all other amounts attributable to such portion of
        such Property, if any, due and payable by Lessee under the Operative
        Documents on or prior to such date.

        4.07. Lessor Liens. Each Lessor shall remove all Lessor Liens
attributable to such Lessor from the Property subject to any Lease Supplement
before the Expiration Date for such

                                       14
<PAGE>   215

Lease Supplement (or, in the case of a purchase of a portion of such Property
pursuant to the Partial Purchase Option, from the portion to be purchased before
the applicable Partial Purchase Date).

        4.08. Transfer Documents.

               (a)    Expiration Date.

                      (i) Lessors. Subject to receipt by Lessors on the
               Expiration Date for any Lease Supplement (and, if a Lease
               Supplement has not been executed with respect to any Installation
               Period, the Termination Date of such Installation Period) of the
               full amount of the following, without any setoff, deduction or
               reduction of any kind:

                             (A) In the case of a transfer to Lessee or an
                      Assignee Purchaser, all amounts payable to Lessors
                      pursuant to clause (i) of Subparagraph 4.06(a); or

                             (B) In the case of a transfer to a Designated
                      Purchaser, (1) the purchase price payable by the
                      Designated Purchaser and (2) all amounts payable by Lessee
                      pursuant to clause (ii) of Subparagraph 4.06(a);

               Lessors shall transfer their interest in the Property subject to
               such Lease Supplement to Purchaser on the Expiration Date for
               such Lease Supplement or the Termination Date of such
               Installation Period by executing and delivering to Purchaser a
               bill of sale in substantially the form of Exhibit D and such
               other documents, instruments and agreements as such Person may
               reasonably request.

                      (ii) Lessee. On the Expiration Date of any Lease
               Supplement (and, if a Lease Supplement has not been executed with
               respect to any Installation Period, the Termination Date of such
               Installation Period), unless Lessee is to purchase the Property
               subject to such Lease Supplement (and the Property leased during
               such Installation Period), Lessee shall transfer its interest in
               such Property to the Designated Purchaser or the Assignee
               Purchaser (or Lessors if Lessors are to retain such Property
               pursuant to Paragraph 3.02(d)) by executing and delivering to
               such Person a Bill of Sale in substantially the form of Exhibit E
               and such other documents, instruments and agreements as such
               Person may reasonably request.

               (b) Partial Purchase Date. Subject to receipt by Lessors on any
        Partial Purchase Date of all amounts payable to Lessors pursuant to
        Subparagraph 4.06(b), without any setoff, deduction or reduction of any
        kind, Lessors shall transfer their interest in the portion of the
        Property subject to any Lease Supplement (or, if a Lease Supplement has
        not been executed with respect to any Installation Period, the Property
        leased during such Installation Period) to be purchased on such date to
        Lessee or an Assignee Purchaser,

                                       15
<PAGE>   216

        as applicable, by executing and delivering to Lessee or an Assignee
        Purchaser, as applicable, a Bill of Sale in substantially the form of
        Exhibit D and such other documents, instruments and agreements as Lessee
        may reasonably request.

        4.09. Casualty and Condemnation Proceeds. If, on the Expiration Date for
any Lease Supplement, any Casualty and Condemnation Proceeds are held by Lessor
Agent in a Repair and Restoration Account or otherwise, Lessor Agent shall (a)
if Lessee is to purchase the Property subject to such Lease Supplement on the
Expiration Date for such Lease Supplement and Lessee shall so direct, apply such
proceeds to the purchase price to be paid by Lessee or (b) in all other cases,
release such proceeds to Lessee; provided, however, that Lessor Agent shall not
have any obligation so to apply or release such proceeds unless Lessee and/or
any Designated Purchaser has complied with all of the terms and conditions of
this Agreement.

        4.10. Payments. Purchaser and Lessee shall make all payments in lawful
money of the United States and in same day or immediately available funds not
later than 11:00 a.m. on the date due.

        4.11. Further Assurances. Lessee shall, and shall cause any Designated
Purchaser to, execute and deliver such documents, instruments and agreements and
take such other actions as Lessor Agent may reasonably request to effect the
purposes of this Agreement and comply with the terms hereof. Similarly, Lessors
and Lessor Agent shall execute and deliver such documents, instruments and
agreements and take such other actions as Lessee or an Assignee Purchaser or a
Designated Purchaser may reasonably request to effect the purposes of this
Agreement and comply with the terms hereof.

SECTION 5. MISCELLANEOUS.

        5.01. Notices. Except as otherwise specified herein, all notices,
requests, demands, consents, instructions or other communications to or upon
Lessee, Agent, Lessor Agent or any Lessor under this Agreement shall be given as
provided in Subparagraph 2.02(c) and Paragraph 7.01 of the Participation
Agreement.

        5.02. Waivers, Amendments. Any term, covenant, agreement or condition of
this Agreement may be amended or waived only as provided in the Participation
Agreement. No failure or delay by any Lessor Party in exercising any right
hereunder shall operate as a waiver thereof or of any other right nor shall any
single or partial exercise of any such right preclude any other further exercise
thereof or of any other right. Unless otherwise specified in any such waiver or
consent, a waiver or consent given hereunder shall be effective only in the
specific instance and for the specific purpose for which given.

        5.03.  Successors and Assigns.

               (a) General. This Agreement shall be binding upon and inure to
        the benefit of the Lessor Parties and Lessee and their permitted
        successors and assigns; provided, however, that the Lessor Parties and
        Lessee shall not sell, assign or delegate their

                                       16
<PAGE>   217

        respective rights and obligations hereunder except as provided in the
        Participation Agreement and in Subparagraph 5.03(b).

               (b) Assignment by Lessee of Purchase Rights. Lessee may assign to
        a third party (an "Assignee Purchaser") its right to purchase the
        Property pursuant to the Partial Purchase Option, the Term Purchase
        Option or the Expiration Date Purchase Option; provided, however, that
        (i) such an assignment shall not relieve Lessee of its obligations to
        consummate or cause the consummation of any such purchase in accordance
        with the terms of this Agreement and (ii) Lessee assumes all
        responsibility for determining the creditworthiness of any such Assignee
        Purchaser. If, after any purchase by an Assignee Purchaser hereunder,
        the purchase price paid by such Assignee Purchaser is recovered from any
        Lessor Party, Lessee shall reimburse such Lessor Party for such recovery
        unless such recovery is due solely to a material misrepresentation or
        covenant breach by such Lessor Party.

        5.04. No Third Party Rights. Nothing expressed in or to be implied from
this Agreement is intended to give, or shall be construed to give, any Person,
other than the Lessor Parties and Lessee and their permitted successors and
assigns, any benefit or legal or equitable right, remedy or claim under or by
virtue of this Agreement or under or by virtue of any provision herein.

        5.05. Partial Invalidity. If at any time any provision of this Agreement
is or becomes illegal, invalid or unenforceable in any respect under the law or
any jurisdiction, neither the legality, validity or enforceability of the
remaining provisions of this Agreement nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction shall
in any way be affected or impaired thereby.

        5.06. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California without reference to
conflicts of law rules, except as otherwise provided in Schedule 1.02 to the
Participation Agreement.

        5.07. Counterparts. This Agreement may be executed in any number of
identical counterparts, any set of which signed by all the parties hereto shall
be deemed to constitute a complete, executed original for all purposes.

        5.08. Nature of Lessee's Obligations.

               (a) Independent Obligation. The obligations of Lessee to pay the
        amounts payable by Lessee under this Agreement and the other Operative
        Documents and to perform the other Lessee Obligation are absolute,
        unconditional and irrevocable obligations which are separate and
        independent of the obligations of the Lessor Parties under this
        Agreement and the other Operative Documents and all other events and
        circumstances, including the events and circumstances set forth in
        Subparagraph 5.08(c).

               (b) No Termination or Abatement. This Agreement and the other
        Operative Documents and Lessee's obligation to pay all amounts hereunder
        and to pay and perform

                                       17
<PAGE>   218

        all other Lessee Obligations shall continue in full force and effect
        without abatement notwithstanding the occurrence or existence of any
        event or circumstance, including any event or circumstance set forth in
        Subparagraph 5.08(c).

               (c) Full Payment and Performance. Lessee shall make all payments
        under this Agreement and the other Operative Documents in the full
        amounts and at the times required by the terms of this Agreement and the
        other Operative Documents without setoff, deduction or reduction of any
        kind and shall perform all other Lessee Obligations as and when
        required, without regard to any event or circumstances whatsoever,
        including (i) the condition or performance of the Property or the
        fitness of the Property for any purpose; (ii) title to or right to use
        of the Property, including the existence of any Lien or any other right,
        title or interest (including intellectual property right) in or to any
        of the Property in favor of any Person; (iii) the value, usability,
        design, operation or fitness for use of the Property; (iv) any latent,
        hidden or patent defect in the Property; (v) any restrictions on the use
        of the Property; (vi) the economics of the Property; (vii) any Casualty
        or Condemnation; (viii) the compliance of the Property with any
        applicable Governmental Rule or Insurance Requirement; (ix) any failure
        by any Lessor Party to perform any of its obligations under this
        Agreement or any other Operative Document; or (x) the exercise by any
        Lessor Party of any of its remedies under this Agreement or any other
        Operative Document; provided, however, that (A) Lessee shall have no
        obligation to purchase the Property subject to any Lease Supplement on
        the Expiration Date for such Lease Supplement if any Lessor fails to
        remove Lessor Liens attributable to such Lessor or deliver the required
        deed and bill of sale or other documents required to be delivered by
        Lessors hereunder and (B) this Paragraph 5.08 shall not abrogate any
        right which Lessee may have to recover damages from any Lessor Party for
        any material breach by such Lessor Party of its obligations under this
        Agreement or any other Operative Document to the extent permitted
        hereunder or thereunder.

               (d) The Lessee Obligations arising under this Agreement and the
other Operative Documents shall be "Designated Senior Debt" for purposes of any
indenture or other document creating or evidencing Subordinated Debt and such
Subordinated Debt shall be subordinated to the Lessee Obligations on terms no
more favorable to the holders of Subordinated Debt than those attached as
Exhibit I to the Participation Agreement.

        5.09. Effect on Existing Purchase Agreement. Lessee, Lessors and Lessor
Agent agree that on and after the date that this Agreement is executed by all
parties hereto, this Agreement shall amend, restate in its entirety and replace,
without notation, the Existing Purchase Agreement; provided, however, that
nothing contained herein shall (i) operate as a waiver of any right, power or
remedy of any Lessor Party under the Existing Purchase Agreement or any other
Operative Document or (ii) extinguish or impair any Lessee Obligations under the
Existing Purchase Agreement or any other Operative Document except to the extent
any such Lessee Obligation is actually satisfied by Lessee.

                          [The signature page follows.]

                                       18
<PAGE>   219

        IN WITNESS WHEREOF, Lessee, Lessors and Lessor Agent have caused this
Amended and Restated Purchase Agreement to be executed as of the day and year
first above written.

LESSEE:                             LSI LOGIC CORPORATION

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

LESSORS:                            ABN AMRO BANK N.V.

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

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

                                    KEYBANK NATIONAL ASSOCIATION

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

                                    FBTC LEASING CORP.

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

LESSOR AGENT:                       ABN AMRO BANK N.V.

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

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

                                      S-1

<PAGE>   220

                                  EXHIBIT A(1)

                     NOTICE OF TERM PURCHASE OPTION EXERCISE

                                     [Date]

ABN AMRO Bank N.V.
  as Agent
Syndications Group
1325 Avenue of the Americas, 9th Floor
New York, NY  10019
Attn:  Linda Boardman

        1. Reference is made to the following:

               (a) The Amended and Restated Participation Agreement, dated as of
        April 18, 2000 (the "Participation Agreement"), among LSI Logic
        Corporation ("Lessee"), ABN AMRO Bank N.V., KeyBank National
        Association, FBTC Leasing Corp. and each other financial institution
        listed as a lessor in Schedule I to the Participation Agreement (in such
        capacity, collectively "Lessors"), ABN AMRO Bank N.V., as agent for
        Lessors (in such capacity, "Lessor Agent"), the financial institutions
        listed as Participants in Schedule I to the Participation Agreement (the
        "Participants") and ABN AMRO Bank N.V., as agent for the Participants
        (in such capacity, "Agent");

               (b) The Amended and Restated Lease Agreement, dated as of April
        18, 2000 (the "Lease Agreement"), among Lessee, Lessors and Lessor
        Agent; and

               (c) The Amended and Restated Purchase Agreement, dated as of
        April 18, 2000 (the "Purchase Agreement"), among Lessee, Lessors and
        Lessor Agent.

Unless otherwise indicated, all terms defined in the Participation Agreement
have the same respective meanings when used herein.

        2. Pursuant to Subparagraph 4.01(a) of the Lease Agreement and Paragraph
2.01 of the Purchase Agreement, Lessee hereby irrevocably notifies Lessors that
Lessee is exercising its right to terminate the Lease Agreement prior to the
earliest Scheduled Expiration Date of any outstanding Lease Supplement and
purchase all of the Property subject to the Lease Agreement on [_________, ____]
(which date is a Business Day and which date, after the delivery of this notice,
shall be the Expiration Date for each Lease Supplement and, if a Lease
Supplement has not been executed with respect to any Installation Period, the
Termination Date of such Installation Period).

                                     A(1)-1
<PAGE>   221

        IN WITNESS WHEREOF, Lessee has executed this Notice of Term Purchase
Option Exercise on the date set forth above.

                                    LSI LOGIC CORPORATION

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

                                     A(2)-2

<PAGE>   222

                                  EXHIBIT A(2)

                   NOTICE OF PARTIAL PURCHASE OPTION EXERCISE

                                     [Date]

ABN AMRO Bank N.V.
  as Agent
Syndications Group
1325 Avenue of the Americas, 9th Floor
New York, NY  10019
Attn:  Linda Boardman

        1. Reference is made to the following:

               (a) The Amended and Restated Participation Agreement, dated as of
        April 18, 2000 (the "Participation Agreement"), among LSI Logic
        Corporation ("Lessee"), ABN AMRO Bank N.V., KeyBank National
        Association, FBTC Leasing Corp. and each other financial institution
        listed as a lessor in Schedule I to the Participation Agreement (in such
        capacity, collectively "Lessors"), ABN AMRO Bank N.V., as agent for
        Lessors (in such capacity, "Lessor Agent"), the financial institutions
        listed as Participants in Schedule I to the Participation Agreement (the
        "Participants") and ABN AMRO Bank N.V., as agent for the Participants
        (in such capacity, "Agent");

               (b) The Amended and Restated Purchase Agreement, dated as of
        April 18, 2000 (the "Purchase Agreement"), among Lessee, Lessors and
        Lessor Agent; and

               (c) [Lease Supplement No. [ ], dated [Lease Supplement Date]
        (the "Lease Supplement"), executed and delivered by Lessee][The
        Installation Period commencing on________ (the "Installation Period")].

Unless otherwise indicated, all terms defined in the Participation Agreement
have the same respective meanings when used herein.

        2. Pursuant to Paragraph 2.02 of the Purchase Agreement, Lessee hereby
irrevocably notifies Lessors that Lessee is exercising its right to purchase all
or a portion of the Property [subject to the Lease Supplement][leased during the
Installation Period] as follows:

               (a) The Property to be purchased is set forth in Attachment 1
        hereto; and

               (b) The date on which such purchase is to occur is [_________,
        ____] (which date is a Business Day).

        3. Lessee hereby certifies to the Lessor Parties that, on the date of
this notice:

                                     A(2)-1
<PAGE>   223

               (a) The representations and warranties of Lessee set forth in
        Paragraph 4.01 of the Participation Agreement and in the other Operative
        Documents are true and correct in all material respects as if made on
        such date (except for representations and warranties expressly made as
        of a specified date, which shall be true in all material respects as of
        such date); and

               (b) No Default has occurred and is continuing.

        IN WITNESS WHEREOF, Lessee has executed this Notice of Partial Purchase
Option Exercise on the date set forth above.

                                    LSI LOGIC CORPORATION

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

                                     A(2)-2

<PAGE>   224

                                    EXHIBIT B

                       NOTICE OF MARKETING OPTION EXERCISE

                                     [Date]

ABN AMRO Bank N.V.
  as Agent
Syndications Group
1325 Avenue of the Americas, 9th Floor
New York, NY  10019
Attn:  Linda Boardman

        1. Reference is made to the following:

               (a) The Amended and Restated Participation Agreement, dated as of
        April 18, 2000 (the "Participation Agreement"), among LSI Logic
        Corporation ("Lessee"), ABN AMRO Bank N.V., KeyBank National
        Association, FBTC Leasing Corp. and each other financial institution
        listed as a lessor in Schedule I to the Participation Agreement (in such
        capacity, collectively "Lessors"), ABN AMRO Bank N.V., as agent for
        Lessors (in such capacity, "Lessor Agent"), the financial institutions
        listed as Participants in Schedule I to the Participation Agreement (the
        "Participants") and ABN AMRO Bank N.V., as agent for the Participants
        (in such capacity, "Agent");

               (b) The Amended and Restated Purchase Agreement, dated as of
        April 18, 2000 (the "Purchase Agreement"), among Lessee, Lessors and
        Lessor Agent; and

               (c) Lease Supplement No. [ ], dated [Lease Supplement Date] (the
        "Lease Supplement"), executed and delivered by Lessee.

Unless otherwise indicated, all terms defined in the Participation Agreement
have the same respective meanings when used herein.

        2. Pursuant to Paragraph 3.01 of the Purchase Agreement, Lessee hereby
notifies Lessors that Lessee is electing to exercise the Marketing Option on the
Scheduled Expiration Date for the Lease Supplement of [_____, ____].

        3. Lessee hereby certifies to the Lessor Parties that, on the date of
this notice:

               (a) The representations and warranties of Lessee set forth in
        Paragraph 4.01 of the Participation Agreement and in the other Operative
        Documents are true and correct in all material respects as if made on
        such date (except for representations and warranties expressly made as
        of a specified date, which shall be true in all material respects as of
        such date); and

               (b) No Default (other than a Non-Marketing Option Event of
        Default under the Lease Agreement) has occurred and is continuing.

                                      B-1
<PAGE>   225

        IN WITNESS WHEREOF, Lessee has executed this Notice of Marketing Option
Exercise on the date set forth above.

                                    LSI LOGIC CORPORATION

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

                                      B-2
<PAGE>   226

                                    EXHIBIT C

               NOTICE OF EXPIRATION DATE PURCHASE OPTION EXERCISE

                                     [Date]

ABN AMRO Bank N.V.
   as Agent
Syndications Group
1325 Avenue of the Americas, 9th Floor
New York, NY  10019
Attn:  Linda Boardman

        1. Reference is made to the following:

               (a) The Amended and Restated Participation Agreement, dated as of
        April 18, 2000 (the "Participation Agreement"), among LSI Logic
        Corporation ("Lessee"), ABN AMRO Bank N.V., KeyBank National
        Association, FBTC Leasing Corp. and each other financial institution
        listed as a lessor in Schedule I to the Participation Agreement (in such
        capacity, collectively "Lessors"), ABN AMRO Bank N.V., as agent for
        Lessors (in such capacity, "Lessor Agent"), the financial institutions
        listed as Participants in Schedule I to the Participation Agreement (the
        "Participants") and ABN AMRO Bank N.V., as agent for the Participants
        (in such capacity, "Agent");

               (b) The Amended and Restated Purchase Agreement, dated as of
        April 18, 2000 (the "Purchase Agreement"), among Lessee, Lessors and
        Lessor Agent; and

               (c) Lease Supplement No. [ ], dated [Lease Supplement Date] (the
        "Lease Supplement"), executed and delivered by Lessee.

Unless otherwise indicated, all terms defined in the Participation Agreement
have the same respective meanings when used herein.

        2. Pursuant to Paragraph 3.01 of the Purchase Agreement, Lessee hereby
notifies Lessors that Lessee is electing to exercise the Expiration Date
Purchase Option on the Scheduled Expiration Date for the Lease Supplement of
[_____, ____].

        IN WITNESS WHEREOF, Lessee has executed this Notice of Expiration Date
Purchase Option Exercise on the date set forth above.

                                    LSI LOGIC CORPORATION

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

                                      C-1

<PAGE>   227
                                    EXHIBIT D

                                  BILL OF SALE

        FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of
which are hereby acknowledged, ABN AMRO Bank N.V., KeyBank National Association
and FBTC Leasing Corp. (collectively, "Sellers") do hereby sell, transfer and
convey to [Buyer], ("Buyer"), the personal property itemized on SCHEDULE 1
attached hereto and incorporated herein by this reference (the "Property").

        Sellers are selling and Buyer is purchasing the Property on an "AS IS,
WITH ALL FAULTS" basis and Buyer is not relying on any representations or
warranties of any kind whatsoever, express or implied, from Sellers, their
agents, or brokers as to any matters concerning the Property including (a) the
condition or performance of the Property or the fitness of the Property for any
purpose; (b) title to or right to use of the Property, including the existence
of any Lien or any other right, title or interest (including intellectual
property right) in or to any of the Property in favor of any Person; (c) the
value, usability, design, operation or fitness for use of the Property; (d) any
latent, hidden or patent defect in the Property; (e) any restrictions on the use
of the Property; (f) the economics of the Property; (g) any Casualty or
Condemnation; or (h) the compliance of the Property with any applicable
Governmental Rule or Insurance Requirement.

        WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, SELLERS SPECIFICALLY
DISCLAIM AND BUYER SPECIFICALLY WAIVES:

               (i) ANY COVENANT OF QUIET ENJOYMENT AND ANY WARRANTY AGAINST
        INTERFERENCE OR INFRINGEMENT, EXCEPT THAT SELLERS SHALL NOT INTERFERE
        WITH BUYER'S ENJOYMENT OF THE PROPERTY;

               (ii) ANY WARRANTY OF MERCHANTABILITY; AND

                                      D-1
<PAGE>   228

                (iii) ANY WARRANTY THAT THE PROPERTY WILL BE FIT FOR A
        PARTICULAR PURPOSE.

Dated:  ________, __                SELLERS:

                                    ABN AMRO BANK N.V.

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

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

                                    KEYBANK NATIONAL ASSOCIATION

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

                                    FBTC LEASING CORP.

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

                                    BUYER:

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

                                      D-2
<PAGE>   229

                                   SCHEDULE 1

                                    PROPERTY

                                     D(1)-1

<PAGE>   230

                                    EXHIBIT E

                                  BILL OF SALE

        FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of
which are hereby acknowledged, LSI Logic Corporation ("Seller"), does hereby
sell, transfer and convey to [Buyer] ("Buyer"), the personal property itemized
on SCHEDULE 1 attached hereto and incorporated herein by this reference(the
"Property"), which Seller warrants to be free and clear of all liens and
encumbrances (other than Lessor Liens).

        Seller does hereby covenant with Buyer that Seller will warrant and
defend the title to the Property unto Buyer, its successors and assigns, against
the claims and demands of all persons whomsoever.

Dated:  ________, __                SELLER:

                                    LSI LOGIC CORPORATION

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

                                      E-1
<PAGE>   231

                                   SCHEDULE 1

                                    PROPERTY

                                     E(1)-1

<PAGE>   232

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

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

                              AMENDED AND RESTATED
                               PURCHASE AGREEMENT

                                      AMONG

                              LSI LOGIC CORPORATION

                                       AND

                               ABN AMRO BANK N.V.,
                          KEYBANK NATIONAL ASSOCIATION
                             AND FBTC LEASING CORP.,
                                   AS LESSORS

                                       AND

                               ABN AMRO BANK N.V.,
                           AS LESSOR AGENT FOR LESSORS

                                 APRIL 18, 2000

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

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

<PAGE>   233

                               TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                           PAGE
<S>               <C>                                                                      <C>
SECTION 1.        INTERPRETATION............................................................2

1.01.             Definitions...............................................................2

1.02.             Rules of Interpretation...................................................2

SECTION 2.        OPTIONAL PURCHASE BY LESSEE DURING THE TERM...............................2

2.01.             Term Purchase Option......................................................2

2.02.             Partial Purchase Option...................................................3

SECTION 3.        OBLIGATIONS OF LESSEE ON THE EXPIRATION DATE..............................4

3.01.             Alternative...............................................................4

3.02.             Marketing Option..........................................................5

3.03.             Expiration Date Purchase Option..........................................11

SECTION 4.        TERMS OF ALL PURCHASES...................................................12

4.01.             Representations and Warranties of Lessors and Lessee.....................12

4.02.             "As Is" Purchase.........................................................12

4.03.             Release..................................................................13

4.04.             Permits, Approvals, Etc..................................................13

4.05.             Costs....................................................................13

4.06.             Lessee's Expiration Date and Partial Purchase Date Payment
                  Obligations..............................................................13

4.07.             Lessor Liens.............................................................14

4.08.             Transfer Documents.......................................................14

4.09.             Casualty and Condemnation Proceeds.......................................15

4.10.             Payments.................................................................15

4.11.             Further Assurances.......................................................15

SECTION 5.        MISCELLANEOUS............................................................16

5.01.             Notices..................................................................16

5.02.             Waivers, Amendments......................................................16

5.03.             Successors and Assigns...................................................16

5.04.             No Third Party Rights....................................................16

5.05.             Partial Invalidity.......................................................16

5.06.             Governing Law............................................................17

5.07.             Counterparts.............................................................17
</TABLE>

                                      -i-

<PAGE>   234

<TABLE>
<CAPTION>

<S>               <C>                                                                      <C>
5.08.             Nature of Lessee's Obligations...........................................17

5.09.             Effect on Existing Purchase Agreement....................................18
</TABLE>

                                      -ii-

<PAGE>   235

                               TABLE OF CONTENTS

  EXHIBITS

        A(1) Notice of Term Purchase Option Exercise (2.01)
        A(2) Notice of Partial Purchase Option Exercise (2.02)
        B    Notice of Marketing Option Exercise (3.01)
        C    Notice of Expiration Date Purchase Option Exercise (3.02)
        D    Bill of Sale (Lessors) (4.08(a))
        E    Bill of Sale (Lessee) (4.08(b))

                                      -ii-

<PAGE>   236

An extra section break has been inserted above this paragraph. Do not delete
this section break if you plan to add text after the Table of
Contents/Authorities. Deleting this break will cause Table of
Contents/Authorities headers and footers to appear on any pages following the
Table of Contents/Authorities.

<PAGE>   237
                              AMENDED AND RESTATED
                            LESSOR SECURITY AGREEMENT

        THIS AMENDED AND RESTATED LESSOR SECURITY AGREEMENT (this "Agreement"
herein), dated as of April 18, 2000, is executed by:

               (1) ABN AMRO BANK N.V., KEYBANK NATIONAL ASSOCIATION, FBTC
        LEASING CORP. and each other financial institution from time to time
        listed as a lessor in Schedule I to the Participation Agreement referred
        to in Recital B below, as amended from time to time (in such party's
        capacity as a lessor and owner of the Lessor Collateral as defined in
        Paragraph 2.01 and not in its capacity as a holder of a participation
        interest in the rental and certain other payments to be made by Lessee
        under the Participation Agreement as defined in the Recitals, such
        financial institutions to be referred to collectively as "Lessors"); and

               (2) ABN AMRO BANK N.V., as agent for Lessors (in such capacity,
        "Lessor Agent");

                                   in favor of

               (3) ABN AMRO BANK N.V., as agent for the Participants under the
        Participation Agreement (in such capacity, "Agent").

                                    RECITALS

        A. Pursuant to the Participation Agreement referred to in Recital B
below, a certain lease facility is to be provided to LSI Logic Corporation, as
Delaware corporation ("Lessee") by Lessors and the other financial institutions
which are "Participants" under the Participation Agreement (such financial
institutions to be referred to collectively as the "Participants") as follows:

               (1) Lessors would (a) acquire certain equipment identified by
        Lessee and approved by Lessor Agent, (b) lease such equipment to Lessee,
        (c) make advances to finance certain related expenses and (d) grant to
        Lessee the right to purchase such equipment; and

               (2) The Participants would participate in such lease facility by
        (a) funding the acquisition price to be paid by Lessors for the
        equipment and the other advances to be made by Lessors and (b) acquiring
        participation interests in the rental and certain other payments to be
        made by Lessee.

        B. In connection with the addition of certain parties as Lessors and
Participants, Lessee and Participants have requested that (i) the Participation
Agreement, dated as March 31, 2000, among Lessee, ABN AMRO Bank N.V., as the
original Lessor and Participant, Lessor Agent, the Participants and ABN AMRO
Bank N.V., as agent for the Participants (in such

<PAGE>   238

capacity, "Agent"), be amended and restated by the Amended and Restated
Participation Agreement, dated as of April 18, 2000 (the "Participation
Agreement"), among Lessee, Lessors, Lessor Agent, the Participants and Agent and
(ii) the Lessor Security Agreement, dated as of March 31, 2000 (the "Existing
Lessor Security Agreement"), among Lessee, ABN AMRO Bank N.V., as the original
Lessor, and Lessor Agent be amended and restated by this Agreement, and Lessors,
Lessor Agent and Agent are willing for the Existing Lessor Security Agreement to
be amended and restated by this Agreement.

                                    AGREEMENT

        NOW, THEREFORE, in consideration of the above Recitals and the mutual
covenants herein contained, the parties hereto hereby agree that the Existing
Lessor Security Agreement shall be amended and restated in its entirety as
follows:

SECTION 1. INTERPRETATION.

        1.01. Definitions. Unless otherwise indicated in this Assignment or any
other Operative Document, each term set forth in Schedule 1.01 to the
Participation Agreement, when used in this Assignment or any other Operative
Document, shall have the respective meaning given to that term in such Schedule
1.01 or in the provision of this Assignment or other document, instrument or
agreement referenced in such Schedule 1.01.

        1.02. Rules of Interpretation. Unless otherwise indicated in this
Assignment or any other Operative Document, the rules of interpretation set
forth in Schedule 1.02 to the Participation Agreement shall apply to this
Assignment and the other Operative Documents.

SECTION 2. GRANT OF SECURITY INTEREST.

        2.01. Grant. As security for the Lessor Obligations, each Lessor hereby
irrevocably and unconditionally pledges and assigns to Agent, for the benefit of
the Participants and Agent, and grants to Agent, for the benefit of the
Participants and Agent, a security interest in all estate, right, title and
interest of such Lessor, whether now owned or hereafter acquired, in and to the
following property (such estate, right, title and interest in such property
herein, collectively and severally, the "Lessor Collateral"):

               (a) Operative Documents. The Participation Agreement, the Lease
        Agreement, the Purchase Agreement, the Lessee Security Documents and all
        other Operative Documents; all exhibits, schedules and other attachments
        thereto; and all documents, instruments or agreements issued or executed
        in replacement thereof; each as amended, modified and supplemented from
        time to time and in effect at any given time;

               (b) Collateral. All Collateral for the Lessee Obligations under
        the Operative Documents; and

                                       2
<PAGE>   239

               (c) Proceeds. All proceeds of the foregoing (including, without
        limitation, whatever is receivable or received when Lessor Collateral or
        proceeds are sold, collected, exchanged, returned, substituted or
        otherwise disposed of, whether such disposition is voluntary or
        involuntary, including rights to payment and return premiums and
        insurance proceeds under insurance with respect to any Lessor
        Collateral, and all rights to payment with respect to any cause of
        action affecting or relating to the Lessor Collateral).

SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSORS.

        3.01. Representations and Warranties. Each Lessor represents and
warrants to Agent and the Participants as follows:

               (a) Such Lessor is the legal and beneficial owner of an undivided
        interest in the Lessor Collateral (or, in the case of after-acquired
        Lessor Collateral, at the time such Lessor acquires rights in the Lessor
        Collateral, will be the legal and beneficial owner of an undivided
        interest therein).

               (b) Such Lessor has not transferred to any other Person any of
        its right, title or interest in the Lessor Collateral, whether by way of
        Lien or otherwise.

               (c) Such Lessor's chief executive office (if such Lessor is
        organized in the United States) or major executive office in the United
        States (if such Lessor is not organized in the United States) is located
        at the location listed in Schedule I to the Participation Agreement.

        3.02. Covenants. Each Lessor hereby covenants to Agent and the
Participants as follows:

               (a) Such Lessor shall promptly procure, execute and deliver to
        Agent all documents, instruments and agreements and perform all acts
        which are necessary or desirable, or which Agent may request, to
        establish, maintain, preserve, protect and perfect the Lessor
        Collateral, the Lien granted to Agent therein and the first priority of
        such Lien or to enable Agent to exercise and enforce its rights and
        remedies hereunder with respect to any Lessor Collateral.

               (b) Such Lessor shall not sell, transfer or assign any of its
        right, title or interest in the Lessor Collateral to any Person (other
        than Agent), whether by way of Lien or otherwise.

               (c) Without prompt written notice to Agent, such Lessor shall not
        change such Lessor's name or chief executive office (if such Lessor is
        organized in the United States) or major executive office in the United
        States (if such Lessor is not organized in the United States).

                                       3
<PAGE>   240

SECTION 4. RIGHTS AND REMEDIES OF AGENT.

        4.01. Authorized Action by Agent. Each Lessor and Lessor Agent hereby
irrevocably appoints Agent as its attorney-in-fact and agrees that Agent may
perform (but Agent shall not be obligated to and shall incur no liability to
Lessors, Lessor Agent or any third party for failure so to do) any act which any
Lessor or Lessor Agent is obligated by this Agreement to perform, and to
exercise such rights and powers as any Lessor or Lessor Agent might exercise
with respect to the Lessor Collateral, including, without limitation, the right
to (a) collect by legal proceedings or otherwise and endorse, receive and
receipt for all dividends, interest, payments, proceeds and other sums and
property now or hereafter payable on or on account of the Lessor Collateral; (b)
enter into any extension, reorganization, deposit, merger, consolidation or
other agreement pertaining to, or deposit, surrender, accept, hold or apply
other property in exchange for the Lessor Collateral; (c) insure, process,
preserve and enforce the Lessor Collateral; (d) make any compromise or
settlement, and take any action it deems advisable, with respect to the Lessor
Collateral; (e) pay any Indebtedness of any Lessor or Lessor Agent relating to
the Lessor Collateral; and (f) execute UCC financing statements. Each Lessor and
Lessor Agent agrees that such care as Agent gives to the safekeeping of its own
property of like kind shall constitute reasonable care of the Lessor Collateral
when in Agent's possession; provided, however, that Agent shall not be required
to make any presentment, demand or protest, or give any notice and need not take
any action to preserve any rights against any prior party or any other Person in
connection with the Lessor Obligations or with respect to the Lessor Collateral.

        4.02. Other Rights and Remedies Upon Default. In addition to all other
rights and remedies granted to Agent by this Agreement and the other Operative
Documents, the UCC and other applicable Governmental Rules, Agent may, if any
Lessor or Lessor Agent fails to perform any of the Lessor Obligations, exercise
any one or more of the following rights and remedies: (a) collect, receive,
appropriate or realize upon the Lessor Collateral or otherwise foreclose or
enforce Agent's security interests in any or all Lessor Collateral in any manner
permitted by applicable Governmental Rules or in this Security Agreement; (b)
notify Lessee to make any or all payments to be made by Lessee under the
Operative Documents to Agent; (c) sell or otherwise dispose of any or all Lessor
Collateral at one or more public or private sales, whether or not such Lessor
Collateral is present at the place of sale, for cash or credit or future
delivery, on such terms and in such manner as Agent may determine; (d) require
Lessor Agent to assemble the Lessor Collateral and make it available to Agent at
a place to be designated by Agent; and (e) prior to the disposition of the
Lessor Collateral, store, process, repair or recondition any Lessor Collateral
consisting of goods, perform any obligations and enforce any rights of any
Lessor or Lessor Agent under any Operative Documents or otherwise prepare and
preserve Lessor Collateral for disposition in any manner and to the extent Agent
deems appropriate. In any case where notice of any sale or disposition of any
Lessor Collateral is required, each Lessor and Lessor Agent hereby agrees that
thirty (30) days notice of such sale or disposition is reasonable.

                                       4
<PAGE>   241

SECTION 5. MISCELLANEOUS.

        5.01. Notices. Except as otherwise specified herein, all notices,
requests, demands, consents, instructions or other communications to or upon any
Lessor, Lessor Agent or Agent under this Agreement shall be given as provided in
Paragraph 7.01 of the Participation Agreement.

        5.02. Waivers; Amendments. Any term, covenant, agreement or condition of
this Agreement may be amended or waived only as provided in the Participation
Agreement. No failure or delay by Agent in exercising any right hereunder shall
operate as a waiver thereof or of any other right nor shall any single or
partial exercise of any such right preclude any other further exercise thereof
or of any other right. Unless otherwise specified in any such waiver or consent,
a waiver or consent given hereunder shall be effective only in the specific
instance and for the specific purpose for which given.

        5.03. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Lessor Parties and their permitted successors and
assigns; provided, however, that the Lessor Parties shall not sell, assign or
delegate their respective rights and obligations hereunder except as provided in
the Participation Agreement.

        5.04. No Third Party Rights. Nothing expressed in or to be implied from
this Agreement is intended to give, or shall be construed to give, any Person,
other than the Lessor Parties and their permitted successors and assigns, any
benefit or legal or equitable right, remedy or claim under or by virtue of this
Agreement or under or by virtue of any provision herein.

        5.05. Partial Invalidity. If at any time any provision of this Agreement
is or becomes illegal, invalid or unenforceable in any respect under the law or
any jurisdiction, neither the legality, validity or enforceability of the
remaining provisions of this Agreement nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction shall
in any way be affected or impaired thereby.

        5.06. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California without reference to
conflicts of law rules, except as otherwise provided in Schedule 1.02 of the
Participation Agreement.

        5.07. Counterparts. This Agreement may be executed in any number of
identical counterparts, any set of which signed by all the parties hereto shall
be deemed to constitute a complete, executed original for all purposes.

                                       5
<PAGE>   242

        5.08. Effect on Existing Lessor Security Agreement. Lessors, Lessor
Agent and Agent agree that on and after the date that this Agreement is executed
by all parties hereto, this Agreement shall amend, restate in its entirety and
replace, without notation, the Existing Lessor Security Agreement; provided,
however, that nothing contained herein shall (i) operate as a waiver of any
right, power or remedy of Agent under the Existing Lessor Security Agreement or
any other Operative Document or (ii) extinguish or impair any Lessor Obligations
under the Existing Lessor Security Agreement or any other Operative Document
except to the extent any such Lessor Obligation is actually satisfied by
Lessors; and provided, further, that all security interests granted under the
Existing Lessor Security Agreement shall remain in full force.

                          [The signature page follows.]

                                       6
<PAGE>   243

        IN WITNESS WHEREOF, Lessors and Lessor Agent have caused this Amended
and Restated Lessor Security Agreement to be executed as of the day and year
first above written.

LESSORS:                                    ABN AMRO BANK N.V.

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

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

                                            KEYBANK NATIONAL ASSOCIATION

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

                                            FBTC LEASING CORP.

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

LESSOR AGENT:                               ABN AMRO BANK N.V.

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

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

                                      S-1

<PAGE>   244
--------------------------------------------------------------------------------

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

                              AMENDED AND RESTATED
                            LESSOR SECURITY AGREEMENT

                                       BY

                               ABN AMRO BANK N.V.,
                          KEYBANK NATIONAL ASSOCIATION
                             AND FBTC LEASING CORP.,
                                   AS LESSORS

                                       AND

                               ABN AMRO BANK N.V.,
                           AS LESSOR AGENT FOR LESSORS

                                   IN FAVOR OF

                               ABN AMRO BANK N.V.,
                                    AS AGENT

                                 APRIL 18, 2000

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

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

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