Document:

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                                                             Exhibit (10)(ii)(D)

                                  OFFICE LEASE

                                 BY AND BETWEEN

                     DAVIS CHURCH OFFICE DEVELOPMENT, L.L.C.
                                  AS LANDLORD,

                                       AND

                            HOUGHTON MIFFLIN COMPANY,
                                    AS TENANT

                               EVANSTON, ILLINOIS
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                                TABLE OF CONTENTS

ARTICLE                                                                     PAGE

1. BASIC LEASE PROVISIONS..................................................    1
   A.  Premises Location...................................................    1
   B.  Rentable Square Feet of the Premises................................    1
   C.  Rentable Square Feet of the Building................................    1
   D.  Tenant's Proportionate Share........................................    1
   E.  Term................................................................    2
   F.  Commencement Date...................................................    2
   G.  Expiration Date.....................................................    2
   H.  Projected Final Delivery Date.......................................    2
   I.  Base Rent...........................................................    2
   J.  Broker(s)...........................................................    2
   K.  Retail Area.........................................................    2
2. LEASE OF PREMISES.......................................................    2
3. DESCRIPTION OF THE PROJECT, BUILDING, PREMISES AND COMMON AREAS.........    2
   A.  The Project.........................................................    2
   B.  The Building........................................................    3
   C.  The Premises; Rentable Square Feet..................................    3
   D.  The Common Areas....................................................    5
4. TERM AND POSSESSION.....................................................    5
   A.  Commencement and Expiration.........................................    5
   B.  Construction of Landlord's Work.....................................    5
   C.  "As Is"; Landlord Warranty..........................................    6
   D.  Early Occupancy.....................................................    6
5. RENT....................................................................    7
   A.  Definitions.........................................................    7
   B.  Components of Rent..................................................   12
   C.  Payment of Rent.....................................................   13
   D.  Audit Rights........................................................   14
   E.  Reimbursement of Excess Expenses....................................   15
   F.  Tax Contests........................................................   15
6. USE.....................................................................   15
7. CONDITION OF PREMISES...................................................   16
8. BUILDING SERVICES.......................................................   16
   A.  Basic Services......................................................   16
   B.  Electricity.........................................................   16
   C.  Telephones..........................................................   16
   D.  Additional Service; Supplemental Air Conditioning Units.............   17
   E.  Failure or Delay in Furnishing Services.............................   18

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ARTICLE                                                                     PAGE

    F.  Holidays...........................................................   18
    G.  Operating Standards................................................   18
9.  RULES AND REGULATIONS..................................................   19
10. CERTAIN RIGHTS RESERVED TO LANDLORD....................................   19
11. MAINTENANCE AND REPAIRS................................................   20
    A.  Tenant's Obligations...............................................   20
    B.  Landlord's Obligations.............................................   21
12. ALTERATIONS............................................................   21
    A.  Requirements.......................................................   21
    B.  Liens..............................................................   22
    C.  Reasonable Consent.................................................   23
    D.  Non-Structural Alterations.........................................   23
    E.  Alterations to Storage Area........................................   24
13. INSURANCE..............................................................   24
    A.  Tenant's Insurance.................................................   24
    B.  Landlord's Insurance...............................................   25
    C.  Risk of Loss.......................................................   26
    D.  General Waiver.....................................................   26
14. TENANT'S RESPONSIBILITIES..............................................   26
    A.  Waiver of Claims...................................................   26
    B.  Indemnity..........................................................   27
    C.  Indemnity by Landlord..............................................   27
    D.  Landlord's Negligence..............................................   27
15. DAMAGE OR DESTRUCTION BY CASUALTY......................................   28
    A.  Termination of Lease, Repair by Landlord...........................   28
    B.  Repair by Tenant...................................................   29
    C.  Abatement of Rent..................................................   30
    D.  Untenantability....................................................   30
    E.  Core and Shell.....................................................   30
16. EMINENT DOMAIN.........................................................   30
    A.  Substantial Taking.................................................   30
    B.  Taking of Part.....................................................   31
    C.  Compensation.......................................................   31
17. ASSIGNMENT AND SUBLETTING..............................................   31
    A.  Prohibitions.......................................................   31
    B.  Continuing Liability...............................................   32
    C.  Notice of Proposed Assignment of Subletting........................   32
    D.  Grounds for Withholding Consent....................................   33
    E.  Excess Rent Payment................................................   34
    F.  Lease Assumption; Subtenant Attornment.............................   34

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ARTICLE                                                                     PAGE

    H.  Corporation, Partnership and Limited Liability Company Transfers...   35
    I.  Permitted Transfers................................................   36
18. SURRENDER..............................................................   36
19. DEFAULTS AND REMEDIES..................................................   37
    A.  Evidence of Default................................................   37
    B.  Right of Re-Entry..................................................   38
    C.  Termination of Right to Possession.................................   38
    D.  Termination of Lease...............................................   39
    E.  Other Remedies.....................................................   39
    F.  Bankruptcy.........................................................   39
    G.  Waiver of Trial by Jury............................................   39
    H.  Venue..............................................................   39
    I.  Landlord Default...................................................   39
20. HOLDING OVER...........................................................   40
21. CERTAIN REGULATORY MATTERS.............................................   40
    A.  Hazardous Substances...............................................   40
    B.  Landlord Responsibility............................................   41
    C.  Americans With Disabilities Act....................................   41
    D.  Environmental Laws.................................................   42
22. ESTOPPEL CERTIFICATE...................................................   42
23. SUBORDINATION..........................................................   43
    A.  Subordination of Lease.............................................   43
    B.  Rights of Successors...............................................   43
    C.  Subordination of Mortgage..........................................   44
24. QUIET ENJOYMENT........................................................   44
25. BROKER.................................................................   44
26. NOTICES................................................................   45
27. BASE BUILDING; TENANT IMPROVEMENTS.....................................   46
    A.  Landlord's Work....................................................   46
    B.  Substantially Complete.............................................   47
    C.  Holdover Costs.....................................................   49
    D.  Milestone Dates....................................................   50
28. MISCELLANEOUS..........................................................   51
    A.  Successors and Assigns.............................................   51
    B.  Entire Agreement...................................................   51
    C.  Time of Essence....................................................   51
    D.  Execution and Delivery.............................................   51
    E.  Severability.......................................................   51
    F.  Governing Law......................................................   51
    G.  Attorneys' Fees....................................................   52

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ARTICLE                                                                     PAGE

    H.  Tenant; Joint and Several Liability................................   52
    I.  Force Majeure......................................................   52
    J.  Captions...........................................................   52
    K.  No Waiver..........................................................   52
    L.  Landlord...........................................................   53
    M.  Landlord Access to Premises........................................   53
    N.  Limitation of Liability............................................   53
29. CERTAIN RIGHTS TO LEASE VACANT SPACE...................................   54
    A.  Exercise...........................................................   54
    B.  Vacant Space Exercise Notice.......................................   54
    C.  Conditions to Exercise.............................................   55
    D.  Terms of Lease.....................................................   55
    E.  Amendment..........................................................   58
30. RIGHT OF FIRST OFFER...................................................   58
    A.  Notice.............................................................   58
    B.  Exercise...........................................................   58
    C.  Entire Space.......................................................   59
    D.  Conditions to Exercise.............................................   59
    E.  Terms of Lease.....................................................   59
    F.  Possession.........................................................   60
    G.  Other Rights.......................................................   61
    H.  First Offer Period.................................................   61
31. EXPANSION OPTIONS......................................................   61
    A.  Exercise Dates.....................................................   61
    B.  Designation of Expansion Space.....................................   62
    C.  Conditions to Exercise.............................................   62
    D.  Addition of Expansion Space........................................   62
    E.  Amendment..........................................................   63
    F.  Possession.........................................................   64
32. RENEWAL OPTIONS........................................................   64
    A.  Exercise...........................................................   64
    B.  Conditions to Exercise.............................................   65
    C.  Base Rent..........................................................   65
    D.  Amendment..........................................................   65
    E.  No Further Extensions..............................................   65
33. MARKET RENTAL RATE.....................................................   65
    A.  Definition.........................................................   65
    B.  Arbitration........................................................   66
34. PARKING................................................................   67
    A.  At-Grade Spaces....................................................   67

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ARTICLE                                                                     PAGE

    B.  Building Parking Garage............................................   67
    C.  Offsite Parking....................................................   69
    D.  Expansion..........................................................   70
35. SIGNAGE................................................................   70
    A.  Tenant's Signage...................................................   70
    B.  Other Exterior Signage.............................................   71
36. RETAIL AREA............................................................   71

EXHIBITS:

EXHIBIT A         -        PREMISES FLOOR PLANS
EXHIBIT B         -        SQUARE FOOTAGE CALCULATIONS
EXHIBIT C         -        BUILDING FLOOR PLANS
EXHIBIT D         -        LEGAL DESCRIPTION
EXHIBIT E         -        PRO FORMA RENTAL RATES
EXHIBIT F         -        CLEANING SPECIFICATIONS
EXHIBIT G         -        OPERATING STANDARDS
EXHIBIT H                  RULES AND REGULATIONS
EXHIBIT I         -        FF&E CATEGORIES
EXHIBIT J         -        PLAN DEVELOPMENT DRAWINGS AND SHELL AND CORE
                           DESCRIPTION
EXHIBIT K         -        WORKLETTER AGREEMENT
EXHIBIT L         -        COMPLETION GUARANTY
EXHIBIT M         -        PARKING LEASE
EXHIBIT N         -        RETAIL SIGNAGE GUIDELINES

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                                  OFFICE LEASE

         THIS OFFICE LEASE ("LEASE") is made as of the ____ day of August, 2000
("LEASE DATE"), between DAVIS CHURCH OFFICE DEVELOPMENT, L.L.C., a Delaware
limited liability company ("LANDLORD"), and HOUGHTON MIFFLIN COMPANY, a
Massachusetts corporation ("TENANT").

         1. BASIC LEASE PROVISIONS. The basic terms of this Lease are known as
the "BASIC LEASE PROVISIONS", which are set forth below:

                  A. PREMISES LOCATION: The portions of Floors 1 and 3 of the
         Building and all of floors 4, 5 and 6 of the Building, which are
         depicted on the floor plans for the Premises attached to this Lease as
         EXHIBIT A ("OFFICE PREMISES"), subject to increase pursuant to any
         expansion rights of Tenant set forth in this Lease, and the portion of
         the basement of the Building which is depicted on Exhibit A attached to
         this Lease ("STORAGE AREA:).

                  B. RENTABLE SQUARE FEET OF THE PREMISES: Initially the
         Premises shall contain 139,056 Rentable Square Feet, consisting of
         137,295 Rentable Square Feet in the Office Premises and 1,761 Rentable
         Square Feet in the Storage Area, calculated in accordance with the
         Building Owners and Management Association International Methods of
         Measurements - ANSI/BOMAZ65.1 1996 ("BOMA"), as modified with respect
         to the Building and Premises to reflect re-apportioned Building Common
         Areas in accordance with the methodology utilized in EXHIBIT B attached
         to this Lease, which contains a summary, on a floor by floor basis of
         the Rentable Square Feet of the Building and the Rentable Square Feet
         of the Premises. The Rentable Square Feet of the Office Premises shall
         be subject to increase in accordance with any expansion rights granted
         Tenant in this Lease. Tenant acknowledges that Landlord's architect has
         provided its auto-cad electronic files ("AUTO-CAD FILES") to Tenant's
         architect confirming the Rentable Square Feet of the Building and
         Premises shown on EXHIBIT B, and that Tenant's architect and Tenant
         have confirmed the accuracy of, and approved EXHIBIT B.

                  C. RENTABLE SQUARE FEET OF THE BUILDING: 195,245 Rentable
         Square Feet, measured in accordance with BOMA, as modified with respect
         to the Building and Premises to reflect re-apportioned Building Common
         Areas in accordance with the methodology utilized in EXHIBIT B attached
         to this Lease, subject to adjustment in accordance with Section 3. A
         copy of the current floor plans for all floors of the Building are
         attached to this Lease as EXHIBIT C and a summary of the number of
         Rentable Square Feet for each floor of the Building is contained in
         EXHIBIT B.

                  D. TENANT'S PROPORTIONATE SHARE: The percentage obtained from
         time to time by dividing (i) the Rentable Square Feet of the Office
         Premises by (ii) an
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         amount equal to the Rentable Square Feet of the Building (excluding the
         Retail Area), subject to adjustment as hereinafter provided. Tenant's
         Proportionate Share shall initially be Seventy and 32/100 percent
         (70.32%).

                  E. TERM: Fifteen (15) Years, beginning with the Commencement
         Date and ending with the Expiration Date (provided, however, that if
         the Commencement Date is a date other than the first day of a calendar
         month, the Term shall commence on the Commencement Date but shall end
         on the date which is fifteen (15) years following the first day of the
         calendar month immediately succeeding the Commencement Date), subject
         to any extension rights provided in this Lease.

                  F. COMMENCEMENT DATE: April 1, 2002, subject to adjustment as
         hereinafter provided in Section 4.E, and subject to Tenant's early
         access rights under the Workletter Agreement (as defined in Section 27)
         and in Section 4.D.

                  G. EXPIRATION DATE: The date which is fifteen (15) years
         following the Commencement Date (or if the Commencement Date is a date
         other than the first day of any calendar month, the date which is
         fifteen (15) years following the first day of the calendar month
         immediately succeeding the Commencement Date), subject to adjustment as
         hereinafter provided.

                  H. PROJECTED FINAL DELIVERY DATE: April 12, 2002.

                  I. BASE RENT: As provided in Section 5.

                  J. BROKER(S): Montero Partners Ltd.

                  K. RETAIL AREA: That portion of the first floor of the office
         building within which the Premises is located to be utilized for retail
         uses, located on the ground floor thereof, and consisting of twelve
         thousand four hundred ninety eight (12,498) Rentable Square Feet,
         subject to adjustment as hereinafter provided.

         2. LEASE OF PREMISES. Landlord, in consideration of the rents and
covenants hereinafter set forth, does hereby demise, let and lease to Tenant,
and Tenant does hereby hire, take and lease from Landlord, on the terms and
conditions hereinafter set forth, the Premises described in Section 3.C, to have
and to hold the same, with all appurtenances, unto the Tenant for the Term
herein specified.

         3. DESCRIPTION OF THE PROJECT, BUILDING, PREMISES AND COMMON AREAS.

                  A. THE PROJECT. The term "PROJECT" means that certain office
         building project and appurtenant improvements (excluding the Retail
         Area) to be situated on certain land (the "LAND") in the City of
         Evanston, Illinois, located between Church and Davis

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         Streets, which land is legally described in EXHIBIT D attached to this
         Lease. Landlord's obligations with respect to the construction of the
         Project are set forth in and governed by Section 27.

                  B. THE BUILDING. The term "BUILDING" means the six story
         office building to be located at the Project (excluding, however, the
         Retail Area). Any reference in this Lease to the term Building shall
         include such office building (other than the Retail Area), the land on
         which it is located and the Common Areas (as hereinafter defined in
         Section 3.D), unless the context requires otherwise.

                  C. THE PREMISES; RENTABLE SQUARE FEET.

                           (i) The term "PREMISES" means initially, the "Office
                  Premises" consisting of the portions of the Building located
                  on floors 1, 3, 4, 5 and 6, containing 137,295 Rentable Square
                  Feet as depicted on EXHIBIT A attached to this Lease and the
                  "Storage Area" consisting of the portion of the basement of
                  the Building containing 1,761 Rentable Square Feet, depicted
                  on Exhibit A attached to this Lease. The configuration of the
                  Premises shall be subject to further adjustment pursuant to
                  the expansion rights set forth in this Lease.

                           (ii) Upon completion of the Design Documents (as
                  defined in Section 27.A) Landlord's architect shall forward to
                  Tenant and Tenant's architect the Design Documents, and if the
                  Rentable Square Feet of the Office Premises, Storage Area or
                  Building differs from that set forth in Sections 1.B and 1.C
                  as a result of changes in design of the Building or revised
                  floor plans for the Building, Landlord's architect shall
                  forward to Tenant and Tenant's architect a revised table
                  showing the rentable square footage of each floor within the
                  Building, the total rentable square footage of the Building,
                  and the total rentable square footage of each of the Office
                  Premises and Storage Area, all calculated in accordance with
                  BOMA, as modified with respect to the Building and Premises to
                  reflect re-apportioned Building Common Areas in accordance
                  with the methodology utilized in EXHIBIT B, together with
                  Landlord's architect's Auto-Cad Files for the same, for Tenant
                  and Tenant's architect's verification and approval (such
                  approval not to be unreasonably withheld). As used herein, the
                  term "RENTABLE SQUARE FEET OF THE OFFICE PREMISES" shall mean
                  137,295 Rentable Square Feet and the term "RENTABLE SQUARE
                  FEET OF THE STORAGE AREA" shall mean 1,761 Rentable Square
                  Feet, or if there are changes necessitated by the Design
                  Documents, that number of rentable square feet in the Office
                  Premises and/or Storage Area as determined by Landlord's
                  architect and set forth in the table delivered to Tenant and
                  Tenant's architect pursuant to the immediately preceding
                  sentence and approved by Tenant and Tenant's architect,
                  calculated in accordance with the methodology utilized in
                  EXHIBIT B, all subject to adjustments for expansion rights
                  provided in this Lease, and subject to adjustments as
                  hereinafter provided. In addition, as used herein, the
                  "RENTABLE SQUARE FEET OF THE BUILDING" shall mean 195,245
                  Rentable Square Feet, or if there are changes necessitated by
                  the Design

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                  Documents, that number of rentable square feet in the Building
                  as determined by Landlord's architect and set forth in the
                  table provided to and approved by Tenant and Tenant's
                  architect pursuant to this Section 3.C (ii), as calculated in
                  accordance with the methodology used in EXHIBIT B and subject
                  to adjustment as hereinafter provided. At the request of
                  Tenant's architect, Landlord's architect shall provide to
                  Tenant's architect copies of shop drawings and such other
                  documentation as Tenant's architect may reasonably require. If
                  the Rentable Square Feet of the Office Premises and/or Storage
                  Area and the Rentable Square Feet of the Building as shown in
                  the Design Documents differs from that set forth in Sections
                  1.B and 1.C, then upon verification of the revised Rentable
                  Square Feet of the Building and the Rentable Square Feet of
                  the Office Premises and/or Storage Area by Tenant's architect
                  and approval of the revisions by Tenant (such approval not to
                  be unreasonably withheld), Landlord and Tenant shall enter
                  into an amendment to this Lease, designating such square
                  footage as well as the revised Tenant's Proportionate Share
                  (although no changes to Tenant's Proportionate Share shall be
                  required as a resulting of changes to the Rentable Square Feet
                  of the Storage Area).

                           (iii) If after determination of the Rentable Square
                  Feet of the Building and the Rentable Square Feet of the
                  Office Premises and Storage Area pursuant to Section 3.C(ii),
                  additional changes are made to the Design Documents, or any
                  other changes are made to the configuration of the Premises
                  and/or Building, Landlord's architect shall provide Tenant and
                  Tenant's architect with revised calculations of the Rentable
                  Square Feet of the Building and the Rentable Square Feet of
                  the Office Premises and/or Storage Area, along with its
                  Auto-Cad Files evidencing the revisions, for Tenant's
                  architect's verification and for Tenant's approval (not to be
                  unreasonably withheld), and shall also provide Tenant's
                  architect with copies of shop drawings and other changes
                  during construction that relate to such area variances, to
                  enable Tenant's architect to perform the verifications. Upon
                  Substantial Completion (as defined in Section 27), at the
                  request of Landlord or Tenant, Landlord and Tenant shall enter
                  into an amendment to the Lease confirming the Rentable Square
                  Feet of the Building, and the Rentable Square Feet of the
                  Office Premises and/or Storage Area and Tenant's Proportionate
                  Share, as approved by Tenant based on the final configuration
                  of the Building and Premises (if changes have been made after
                  completion of the Design Documents).

                           (iv) If Tenant or Tenant's architect, after review of
                  the Auto-Cad Files and other documents provided by Landlord's
                  architect, disputes whether Landlord's architect has properly
                  determined the Rentable Square Feet of the Building and the
                  Rentable Square Feet of the Premises in accordance with the
                  standards of EXHIBIT B, Tenant shall notify Landlord of the
                  dispute, within five (5) business days following receipt of
                  the applicable determination or redetermination. If Landlord
                  and Tenant are unable to resolve the dispute within fifteen
                  (15) days after Tenant's architect's receipt of the Auto-Cad
                  Files, then the parties shall select a third licensed,
                  reputable architect, with at least ten (10) years experience
                  in office building design in the

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                  Chicago area, who will review the determination of each
                  party's architect and make a determination of the disputed
                  square footage, based on the criteria set forth in this
                  Section 3 and in EXHIBIT B. If Landlord and Tenant cannot
                  agree upon the third architect within five (5) days following
                  Tenant's architect's receipt of the applicable Auto-Cad Files,
                  then Landlord and Tenant may petition the presiding judge of
                  the Circuit Court in Cook County, Illinois, who shall appoint
                  the third architect based upon the criteria set forth above.
                  The third architect's determination shall be binding upon the
                  parties.

                  D. THE COMMON AREAS. The term "COMMON AREAS" means the
         "BUILDING COMMON AREAS" and "PROJECT COMMON AREAS". The term "BUILDING
         COMMON AREAS" means the areas of the interior of the Building which are
         designated by Landlord for use in common by or provide services to the
         tenants and other occupants of the Building, and their respective
         employees, agents, customers, invitees and others, as delineated on
         EXHIBITS B AND C attached hereto. The term "PROJECT COMMON AREAS" means
         the areas of the Project other than the interior of the Building which
         are designated by Landlord for use in common by or to provide services
         to the tenants and other occupants of the Building and their respective
         employees, agents, customers, invitees and others, and includes,
         without limitation, private sidewalks, driveways and other areas
         located outside the Building designated by Landlord as part of the
         Project Common Areas. Landlord reserves the right to modify, alter and
         otherwise change the Common Areas from time to time, subject to the
         terms of Section 27 (i.e., regarding Tenant's right to consent to
         material Scope Changes as therein defined) and provided that no such
         changes shall increase or decrease the Rentable Square Feet of the
         Building or Premises or Tenant's Proportionate Share, without Tenant's
         prior approval.

         4.       TERM AND POSSESSION.

                  A. COMMENCEMENT AND EXPIRATION. The term of this Lease
         (sometimes referred to herein as the "TERM") shall be the period of
         time specified in Section 1. Except as hereinafter provided, the Term
         shall commence on the Commencement Date (as adjusted pursuant to
         Section 4.E) and shall expire without notice to Tenant on the
         Expiration Date, as the same may be extended by renewal options
         provided herein. If Landlord's Work (as defined in Section 27) has not
         been Substantially Completed on or before the Projected Final Delivery
         Date set forth in Section 1, then, except as provided in Sections 27.C.
         and 27.D., Landlord shall not be liable or responsible for any claims,
         damages or liabilities in connection therewith or by reason thereof.
         Upon the determination of the actual Commencement Date and Expiration
         Date of the Term in accordance with this Section 4., at either
         Landlord's or Tenant's request, Landlord and Tenant shall promptly
         execute and deliver a commencement certificate confirming the
         Commencement Date and the Expiration Date.

                  B. CONSTRUCTION OF LANDLORD'S WORK. Landlord will perform or
         cause to be performed Landlord's Work, which work shall be performed in
         accordance with the terms of Section 27. When applicable, at Landlord's
         or Tenant's request, Landlord and

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         Tenant shall enter into a written agreement containing Tenant's
         acknowledgment that the "Substantial Completion" requirements set forth
         in Section 27 have been meet.

                  C. "AS IS"; LANDLORD WARRANTY. Except for Landlord's
         obligation to perform Landlord's Work as set forth in Section 27, the
         warranties hereinafter set forth, any punchlist items determined
         pursuant to the procedures of the Workletter Agreement and subject to
         Section 7, Tenant shall accept the Premises and Building, except as set
         forth in this Section 4.C, "as is", and Tenant acknowledges that
         Landlord has made no representations or warranties as to the condition
         of the Premises or the Building, express or implied, and that Landlord
         shall not be required to make any improvements to the Premises or the
         Building to ready the same for Tenant's occupancy, except as expressly
         set forth this Lease. Except for Landlord's performance of Landlord's
         Work, all work desired by Tenant of the Premises to ready the same for
         Tenant's initial occupancy shall be performed by Tenant in accordance
         with the terms and conditions of Section 12. The acceptance, by Tenant
         of the Building "as is", shall not, however, relieve Landlord from any
         of Landlord's repair or maintenance obligations with respect to the
         Building under this Lease. Landlord shall, however, procure from its
         contractors and subcontractors, and make Tenant an intended third party
         beneficiary of, all warranties received by Landlord from the
         contractor, subcontractors, and suppliers performing the Tenant
         Improvements (as defined in Section 27) (collectively, the "CONTRACTOR
         WARRANTIES") required by the Construction Documents (as defined in the
         Workletter Agreement) and, in addition, Landlord shall upon Substantial
         Completion, provide Tenant with a one (1) year warranty with respect to
         the construction of the Landlord's Work from Landlord which shall be
         identical in form and substance to the warranty received by Landlord
         from its general contractor with respect to Landlord's Work ("LANDLORD
         WARRANTY"). In addition, Landlord shall, at Tenant's request, upon
         expiration of the Landlord Warranty, assign to Tenant all unexpired
         Contractor Warranties and shall diligently enforce all Contractor
         Warranties which have not been assigned to Tenant.

                  D. EARLY OCCUPANCY. In addition to Tenant's rights of early
         access for installation of FF&E (as hereinafter defined in Section 18)
         under Section 15 of the Workletter Agreement, the parties anticipate
         that prior to the Commencement Date, Landlord shall Substantially
         Complete certain floors within the Premises (each such Substantially
         Completed floor, "EARLY OCCUPANCY SPACE") in accordance with the
         construction delivery schedule ("DELIVERY SCHEDULE") attached to the
         Workletter Agreement as Schedule 2 and that certain of the Floors will
         be Substantially Completed after the Commencement Date, all as more
         particularly shown on the Delivery Schedule. If the Early Occupancy
         Space may be occupied by Tenant and utilized by Tenant for the purposes
         permitted under this Lease without violating any applicable legal
         requirements, Tenant may elect to occupy the Early Occupancy Space as
         of the date the Early Occupancy Space is Substantially Complete.
         Tenant's occupancy of the Early Occupancy Space prior to the
         Commencement Date pursuant to this Section 4.D shall be upon and
         subject to all of the terms and provisions of this Lease, except for
         the obligation to pay Base Rent (hereinafter defined), Taxes
         (hereinafter defined) and Excess Expenses (hereinafter defined) for the
         Early Occupancy Space, provided, however, that Tenant shall reimburse
         Landlord for all Expenses incurred by Landlord attributable to the

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                  Early Occupancy Space for the period prior to the Commencement
                  Date, within thirty (30) days following Landlord's written
                  request, accompanied by invoices evidencing the amounts
                  incurred, and provided further, however, that occupancy of any
                  Early Occupancy Space prior to the Commencement Date shall not
                  otherwise affect the determination of the Commencement Date or
                  the Expiration Date.

                  E. ADJUSTMENTS. If Landlord fails to Substantially Complete
         Landlord's Work for any of the floors within the Premises and to
         deliver possession thereof to Tenant on or before the projected
         delivery date ("PROJECTED DELIVERY DATE") for the applicable floor set
         forth in the Delivery Schedule, for any reason other than Tenant Delay
         (as defined in Section 27), in addition to Tenant's rights under
         Sections 27.C and 27.D, if applicable, the Commencement Date shall be
         extended by the number of days (rounded up or down to the nearest full
         day) which is equal to (i) the sum, calculated on a floor by floor
         basis, of the number of days of delay for each floor, multiplied by a
         fraction which has as its numerator the number of Rentable Square Feet
         of the floor and its denominator the number of Rentable Square Feet of
         the Premises, less (ii) the sum, calculated on a floor by basis, of the
         number of days Landlord Substantially Completes and delivers to Tenant
         any floor prior to its Projected Delivery Date, multiplied by a
         fraction which has as its numerator the number of Rentable Square Feet
         of the floor, and its denominator the number of Rentable Square Feet of
         the Premises. In no event shall the Commencement Date occur prior to
         April 1, 2002, regardless of the date of delivery of the Premises, or
         applicable portions thereof.

         5.       RENT.

                  A. DEFINITIONS. For purposes of this Lease, the following
         terms shall have the following meanings:

                           (i) "EXPENSES" shall mean any and all direct
                  expenses, costs and disbursements (other than Taxes) incurred
                  by Landlord in connection with the Project and the ownership
                  management, maintenance, operation, replacement and/or repair
                  of the Project, including the Building, the Premises and the
                  Common Areas. Expenses shall also include, without limitation,
                  all expenses allocated to the Building and Project under any
                  declaration of covenants or other recorded instrument to which
                  the Building and Project are from time to time subject and all
                  insurance procured by Landlord with respect to the Building,
                  Tenant Improvements and Project. Expenses shall not include:

                                    (1) costs or other items included within the
                           meaning of the term "TAXES" (as hereinafter defined)
                           or any type of taxes specifically excluded from the
                           definition of "TAXES" hereunder;

                                    (2) any cost or expense to the extent to
                           which Landlord is paid or reimbursed (other than as a
                           payment for Expenses), including but not necessarily
                           limited to, (1) work or service performed for any
                           tenant (including Tenant) at such tenant's cost, (2)
                           the cost of any item for which Landlord is

                                        7
<PAGE>   14
                           paid or reimbursed by insurance, warranties, service
                           contracts, condemnation proceeds, insurance
                           reimbursements or otherwise, (3) increased insurance
                           assessed specifically to any tenant of the Building,
                           (4) charges (including applicable taxes) for
                           electricity, water and other utilities for which
                           Landlord is entitled to reimbursement from any
                           tenant, and (5) the cost of any HVAC, janitorial or
                           other services provided to tenants on an extra-cost
                           basis after regular business hours;

                                    (3) the cost of installing, operating and
                           maintaining any special service, such as an
                           observatory, broadcasting facilities, luncheon club,
                           athletic or recreation club;

                                    (4) the cost of correcting defects in the
                           design, construction or equipment of the Building, or
                           any latent defect in any of the foregoing discovered
                           throughout the Term of this Lease or of any other
                           work which Landlord is obligated to perform pursuant
                           to this Lease (unless such defect is attributable to
                           any act or omission of Tenant or the result of normal
                           wear and tear or usage);

                                    (5) salaries and bonuses of officers,
                           executives of Landlord and administrative employees
                           above the grade of property manager or building
                           supervisor, and if a property manager or building
                           supervisor or any personnel below such grades are
                           shared with other buildings or has other duties not
                           related to the Building, only the allocable portion
                           of such person or persons salary shall be included in
                           Expenses;

                                    (6) the cost of any work or service
                           performed on an extra-cost basis for any tenant of
                           the Building (including Tenant) or any costs in
                           connection with services or benefits which are
                           provided to or for the benefit of other tenants but
                           not offered to Tenant;

                                    (7) the cost of any work or service
                           performed for any facility other than the Building
                           and/or Project;

                                    (8) the cost, including increased real
                           estate taxes and other operating expenses, related to
                           any additions (as opposed to renovations) to the
                           Building after the original construction;

                                    (9) interest on debt or principal
                           amortization payments or any other payments on any
                           mortgage or any payments under any ground lease;

                                    (10) any fees, costs, and commissions
                           incurred in procuring or attempting to procure other
                           tenants including, but not necessarily limited to

                                        8
<PAGE>   15
                           brokerage commissions, finders fees, attorneys' fees
                           and expenses, entertainment costs and travel
                           expenses;

                                    (11) any cost included in Expenses
                           representing an amount paid to a person, firm,
                           corporation or other entity related to Landlord which
                           is in excess of the amount which would have been paid
                           on an arms length basis in the absence of such
                           relationship;

                                    (12) any costs of painting or decorating of
                           any interior parts of the Building occupied or
                           occupiable by tenants;

                                    (13) any cost or expense which is applicable
                           to or incurred for the Building Parking Garage (as
                           defined in Section 34) or any costs of personnel used
                           to park cars, collect money or provide special
                           security, and garage management fees;

                                    (14) Landlord's general overhead, provided
                           that Expenses shall include the costs of operating
                           the leasing/management office of the Building
                           (provided that there shall not be more than one (1)
                           such office);

                                    (15) the cost of initial cleaning of, and
                           rubbish removal from, the Building to be performed
                           prior to final completion of the Base Building Work
                           or to the completion of any tenant's space, including
                           Tenant's;

                                    (16) with exception of those items
                           specifically referred to as an inclusion or
                           hereinafter described, the cost of any repairs,
                           alterations, additions, improvements, changes,
                           replacements, compliance expenses or other items
                           which under generally accepted accounting principles
                           are properly classified as capital expenses;

                                    (17) lease payments for rental equipment
                           which would constitute a major capital expenditure if
                           the equipment were purchased (unless such capital
                           expenditure is otherwise specifically included within
                           Expenses);

                                    (18) the cost of acquiring sculptures,
                           paintings and other objects of art;

                                    (19) the cost of advertising or promotion
                           for the Building;

                                    (20) depreciation of the Building or any
                           part thereof;

                                    (21) replacement or contingency reserves;

                                    (22) expenses for renovating tenant space;

                                        9
<PAGE>   16
                                    (23) accounting and bookkeeping services,
                           except to the extent included in the management fee
                           for the Project;

                                    (24) legal or other professional fees
                           related to leasing, financing, tenant disputes or
                           other services not related to the normal maintenance,
                           cleaning, repair or protection of the Building;

                                    (25) any compensation paid to personnel in
                           retail concessions operated by Landlord;

                                    (26) charitable contributions;

                                    (27) any offsite traffic mitigation
                           requirements including traffic lights;

                                    (28) Any charge for Landlord's income taxes,
                           corporate excise taxes, excess profit taxes or
                           franchise taxes; and

                                    (29) management fees in excess of market
                           rate management fees customarily charged by third
                           party managers for buildings comparable to the
                           Building. Management fees charged pursuant to any
                           arrangement approved by Tenant under Section 8.H,
                           shall be deemed to be "market rate".

         Notwithstanding anything contained in the above definition of Expenses
to the contrary:

                  The cost of any capital improvements, repairs, alterations,
         additions, changes, replacements, or compliance expenses (collectively,
         "CAPITAL IMPROVEMENTS") to the Building made after construction of the
         Building which are intended in good faith to reduce Expenses (and are
         made pursuant to sound management practices) or which are required
         under any governmental laws, rules, regulations, orders or ordinances
         which were not applicable to the Building as of the date the City
         approved the final plans for the construction of the Building, or which
         are intended to enhance the safety of the Building or its occupants,
         shall be included in Expenses in the year of installation and
         subsequent calendar years as hereinafter provided. In any calendar
         year, the portion includable in Expenses shall be the annual
         amortization of the cost, using as the amortization period the useful
         life of the applicable Capital Improvements, together with interest at
         the rate of ten percent (10%) per annum on the unamortized cost of the
         applicable Capital Improvements, or if Landlord has financed the
         Capital Improvements, at the rate charged to Landlord (without
         mark-up). In the case of loss or damage to the Building due to fire or
         other casualty, the costs of repairing, restoring or replacing any
         portion of the Building which constitute Capital Improvements shall be
         included in Expenses, but only to the extent of deductible or other
         uncollectible amounts under insurance policies.

                                       10
<PAGE>   17
                           (ii) "EXCESS EXPENSES" shall mean for any full or
                  partial calendar year during the Term that the Building is not
                  fully leased and occupied by tenants paying rent, the Expenses
                  for such calendar year, multiplied by a fraction which has as
                  its numerator the number of Rentable Square Feet of the
                  Building which have not been leased to Tenant under this Lease
                  and are not being leased to any other party, where such party
                  is in possession and paying rent, including any space which
                  has previously been leased to a third party tenant, where the
                  lease has been terminated prior to its stated expiration, as a
                  result of a default by the tenant thereunder (but excluding
                  any space leased to any third party which has terminated on
                  its stated expiration), with the applicable number of Rentable
                  Square Feet to be determined in accordance with the
                  methodology utilized in EXHIBIT B (such space being referred
                  to herein as the "UNLEASED SPACE") (provided that the Rentable
                  Square Feet of the Unleased Space shall be calculated on a
                  weighted average basis if any such space which was Unleased
                  Space at the beginning of the calendar year for which Excess
                  Expenses are being calculated becomes leased and the tenant
                  thereof is in possession and commences paying rent during such
                  calendar year or if previously leased space becomes Unleased
                  Space as a result of the termination of a lease prior to its
                  stated expiration arising from the tenant's default) and as
                  its denominator the Rentable Square Feet of the Building.
                  Excess Expenses shall no longer accrue or be calculated, and
                  Tenant's obligations with respect to payment thereof under
                  Section 5.B(ii) shall terminate, from and after the date all
                  of the Unleased Space has been initially leased and is
                  occupied by tenants paying rent unless any such lease has
                  terminated prior to the expiration of its stated term as a
                  result of the tenant's default, in which case the space which
                  was the subject of the terminated lease will revert back to,
                  and become Unleased Space but only through the expiration of
                  the stated term of the initial lease.

                           (iii) "LEASE YEAR" shall mean the following
                  designated periods: if the Commencement Date is the first day
                  of a calendar month, the period of twelve (12) consecutive
                  months commencing on the Commencement Date; if the
                  Commencement Date is not the first day of a calendar month,
                  the period commencing with the Commencement Date and ending on
                  the last day of the twelfth (12th) full calendar month of the
                  Term; and, in either case, each consecutive twelve (12) month
                  period (or portion thereof) falling within the Term.

                           (iv) "RENT" shall mean Base Rent, Additional Rent (as
                  hereinafter defined), and any other sums or charges due from
                  Tenant under this Lease.

                           (v) "TAXES" shall mean all taxes, assessments and
                  fees levied upon the Building and/or Land or the property of
                  Landlord located therein, by any governmental entity based
                  upon the ownership, leasing, renting or operation of the
                  Building, including all costs and expenses of protesting any
                  taxes, assessments or fees other than costs Tenant is
                  obligated to pay directly pursuant to Section 5.G. Taxes shall
                  not include any net income, capital stock, succession,
                  transfer, franchise, gift,

                                       11
<PAGE>   18
                  estate or inheritance taxes of Landlord; provided, however, if
                  at any time during the Term, a tax or excise on rental income
                  or any other tax is levied or assessed by any governmental
                  entity, which tax or excise is enacted in lieu of or as a
                  substitute for, in whole or proportionately in part, real
                  estate taxes or other ad valorem taxes, the tax (to the extent
                  it is in lieu of or a substitute for real estate taxes) shall
                  constitute and be included in Taxes. For the purpose of
                  determining Taxes for any given year, the amount to be
                  included for the applicable year shall be Taxes which are
                  assessed or become a lien during the applicable year (and not
                  Taxes which are due for payment or paid during the applicable
                  year). Tenant shall have the right to contest Taxes to the
                  extent hereinafter provided in Section 5.F.

                  B. COMPONENTS OF RENT. Tenant agrees to pay the following
         amounts to Landlord at the office of the Building or at such other
         place as Landlord designates:

                           (i) Annual base rent for the Premises ("BASE RENT")
                  in an amount equal to (a) the product of the number of
                  Rentable Square Feet of the Office Premises multiplied by
                  $16.02 (subject to escalation in accordance with the last
                  sentence of this Section 5.B(i)) plus (b) the applicable
                  annual Storage Area Base Rent (as hereinafter defined), to be
                  paid in equal monthly installments (subject to adjustment for
                  any expansion options provided hereunder and as hereinafter
                  provided ), in advance on or before the first day of each
                  month of the Term, without notice, offset or demand (prorated
                  for any partial calendar month occurring during the Term). The
                  annual "Storage Area Base Rent" shall be an amount per annum
                  equal to: (1) the product of $16.00 and the number of Rentable
                  Square Feet of the Storage Area during the period from the
                  Commencement Date until the expiration of the fifth (5th)
                  Lease Year, (2) the product of $16.50 and the number of
                  Rentable Square Feet of the Storage Area during the period
                  commencing with the sixth (6th) Lease Year and ending on the
                  expiration of the tenth (10th) Lease Year and (3) the product
                  of $17.00 and the number of Rentable Square Feet of the
                  Storage Area during the period commencing with the eleventh
                  (11th) Lease Year and ending on the Expiration Date. On each
                  anniversary of the Commencement Date (except as otherwise
                  provided in Section 32.C), the Base Rent for the Office
                  Premises shall automatically be increased to an amount equal
                  to the product of (c) the Base Rent for the Office Premises
                  for the immediately preceding Lease Year and (d) 1.03.

                           (ii) Additional Rent ("ADDITIONAL RENT") with respect
                  to the Premises (other than the Storage Area) in an amount
                  equal to (a) Tenant's Proportionate Share of Expenses for any
                  calendar year, (b) Tenant's Proportionate Share of Taxes for
                  any calendar year and (c) the Excess Expenses for any calendar
                  year. On or prior to the Commencement Date, or as soon as is
                  reasonably practicable thereafter, with respect to the first
                  calendar year, or portion thereof, of the Term, and
                  thereafter, on or prior to November 1 of each calendar year
                  during the Term, or as soon as reasonably practicable
                  thereafter, for each calendar year of the Term following

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<PAGE>   19
                  the first calendar year, Landlord shall estimate and notify
                  Tenant of the amount of Additional Rent due for the following
                  calendar year, and Tenant shall pay Landlord one-twelfth of
                  such estimate on the first day of each month during the
                  following calendar year. Such estimate may be revised by
                  Landlord whenever it obtains information relevant to making
                  the estimate more accurate, including, with respect to Excess
                  Expenses, when Landlord enters into any leases for the
                  Unleased Space. On or before April 1 of each calendar year
                  during the Term (or as soon thereafter as is reasonably
                  practicable), Landlord shall deliver to Tenant a report
                  setting forth the actual Expenses and Taxes for the preceding
                  calendar year, a statement of the amount of Additional Rent
                  that Tenant has paid and that was payable for such calendar
                  year, and, if applicable, the amount of the credit that Tenant
                  is entitled to as a result of Excess Expenses previously paid,
                  as determined pursuant to Section 5.E., which credit shall be
                  calculated on a Lease Year (not a calendar year) basis. Tenant
                  acknowledges that actual Taxes for a calendar year may not be
                  determined until after actual Expenses for such calendar year
                  are determined. Accordingly, Tenant acknowledges that Landlord
                  may report the actual Expenses and actual Taxes for a calendar
                  year separately. Within thirty (30) days after receipt of the
                  report or reports, whether or not exception is taken thereto,
                  Tenant shall pay to Landlord the amount of Additional Rent due
                  for the applicable calendar year minus any payments of
                  Additional Rent made by Tenant for the applicable year, it
                  being acknowledged by Tenant that if Landlord separately
                  reports actual Expenses and actual Taxes for a calendar year,
                  Landlord may reasonably allocate Additional Rent paid by
                  Tenant for the applicable calendar year between Expenses and
                  Taxes for the applicable calendar year. If Tenant's estimated
                  payments of Additional Rent exceed the amount due Landlord for
                  the applicable calendar year, Landlord shall apply the excess
                  as a credit against Tenant's other rental obligations under
                  this Lease or promptly refund the excess to Tenant if the Term
                  has already expired (except that Landlord may first offset the
                  excess against any claim for rental or other damages resulting
                  from any default of Tenant hereunder), in either case without
                  interest to Tenant.

                  C. PAYMENT OF RENT. As used in this Lease, the term Rent shall
         mean the Base Rent, Additional Rent, and any Excess Expenses payable by
         Tenant to Landlord pursuant to Sections 5.A. and 5.B. The following
         provisions shall govern the payment of Rent: (i) if this Lease
         commences or ends on a day other than the first day or last day of a
         calendar month, respectively, the Rent for the month in which this
         Lease so begins or ends shall be prorated accordingly, and if this
         Lease commences or ends on a day other than the first day or last day
         of a calender year, respectively, the Additional Rent for the year in
         which the Lease so begins or ends shall be prorated accordingly based
         on the number of days in such calendar year falling within the Term
         (and the monthly installments shall be adjusted accordingly); and (ii)
         all Rent shall be paid to Landlord without offset or deduction (except
         as expressly provided herein), and the covenant to pay Rent shall be
         independent of every other covenant in this Lease; (iii) any sum due
         from Tenant to Landlord or due from Landlord to Tenant (as the case may
         be) which is not paid within five (5) days after Tenant's receipt of
         written notice that the same is due shall bear interest from the date
         due until the earlier of

                                       13
<PAGE>   20
         (a) the date which is thirty (30) days following Tenant's receipt of
         written notice or (b) the date paid, at the annual rate of two
         percentage (2%) points above the rate then most recently announced by
         Bank One in Chicago, Illinois as its prime or corporate base lending
         rate ("PRIME RATE"), from time to time in effect, provided further that
         if the payment is not made on or before the thirtieth (30th) day
         following Tenant's receipt of written notice that the same is due, from
         and after the thirtieth (30th) day until the date the delinquent amount
         is paid, the sum shall bear interest at the annual percentage rate of
         three percentage points (3%) above the Prime Rate from time to time in
         effect, but in either case, in no event shall the delinquent amount
         bear interest at a rate that is higher than the maximum rate permitted
         by law (the "DEFAULT RATE"); and, in addition, Tenant shall pay
         Landlord a late charge for any Rent payment which is paid more than
         five (5) days after Tenant's receipt of written notice that the same is
         due equal to three percent (3%) of the payment (provided, however, that
         the late charge shall only be assessed one time for each delinquent
         payment under this Lease); (v) if this Lease terminates prior to the
         determination of any Additional Rent, Tenant's agreement to pay any
         Additional Rent not yet determined and Landlord's obligation to refund
         any Additional Rent collected in excess of the amounts due from Tenant
         shall survive the termination of this Lease (provided that if Tenant is
         then in default, Landlord may offset the amounts necessary to cure the
         default or to otherwise satisfy Landlord's damages on account thereof
         against Landlord's obligation to refund sums to Tenant for over-payment
         of Additional Rent); (vi) Landlord may at any time with no less than
         twelve (12) months prior notice to Tenant change the fiscal year of the
         Building; (vii) each amount owed to Landlord under this Lease for which
         the date of payment is not expressly fixed shall be due on the later of
         (a) ten (10) business days after delivery of an invoice therefor and
         (b) the due date listed on the statement to Tenant showing the amount
         is due; and (viii) if Landlord fails to give Tenant an estimate of
         Additional Rent prior to the beginning of any calendar year, Tenant
         shall continue to pay Additional Rent at the rate for the previous
         calendar year until Landlord delivers the estimate, at which time
         Tenant shall pay retroactively the increased amount (or deduct from
         subsequent payments of Additional Rent any decreased amount) with
         respect to all previous months of such calendar year.

                  D. AUDIT RIGHTS. Tenant shall have the right, at its expense
         (except as expressly set forth below), to have its "REPRESENTATIVES"
         (hereinafter defined) audit Landlord's accounting records relative to
         Expenses and Taxes during normal business hours at any time within
         three (3) years following the furnishing to Tenant of the annual
         statement(s) of Expenses or Taxes (as the case may be). Unless Tenant
         shall take written exception to any item of Taxes or Expenses,
         specifying in detail the reasons for the exception as to a particular
         item within three (3) years after Tenant's receipt of Landlord's annual
         statement covering Expenses or Taxes (as the case may be), Landlord's
         statement of Expenses or Taxes, as applicable, shall be considered as
         final and accepted by Tenant. For purposes of this Lease, the term
         "REPRESENTATIVES" shall mean either a nationally recognized independent
         certified public accounting firm licensed to do business in the State
         of Illinois, or another accounting firm reasonably acceptable to
         Landlord, or any other real estate professionals (with one or more
         certified public accountant(s) on staff ) experienced in management of
         first-class office buildings and reasonably acceptable to Landlord. If
         any audit determines that

                                       14
<PAGE>   21
         Landlord's annual statement of Expenses or Taxes overstated Tenant's
         Additional Rent attributable to Expenses or Taxes from the actual
         amount so required hereunder for any calendar year by an amount in
         excess of three percent (3%), Landlord shall be responsible for the
         prompt payment of reasonable audit fees incurred by Tenant under this
         Section 5.D.; otherwise, Tenant shall be responsible for the costs of
         the audit and, in addition, Tenant shall pay Landlord, within five (5)
         business days after Landlord's demand therefor, an amount equal to all
         of Landlord's reasonable costs and expenses incurred relative to the
         audit performed by Tenant. Landlord shall maintain its books and
         records in Chicago, Illinois (or such other location in the Chicago
         metropolitan area as Landlord may designate), showing Taxes and
         Expenses, which books and records shall be maintained for a period of
         not less than three (3) years following the date Landlord delivers to
         Tenant its annual statement(s) of Taxes and Expenses for the applicable
         year. The books and records shall be available for review by Tenant
         and/or Tenant's Representatives at all reasonable times within the
         foregoing three (3) year period, upon Tenant's reasonable prior request
         therefor to Landlord.

                  E. REIMBURSEMENT OF EXCESS EXPENSES. If during any Lease Year
         after the Commencement Date, Landlord actually receives triple net
         income (after all rent abatement and other concessions are taken into
         account) from leases of the space which constituted Unleased Space as
         of the Commencement Date, in excess of the pro forma triple net income
         for the applicable year (which amount shall be adjusted pro rata for
         the first Lease Year, if the Commencement Date is other than the first
         day of a calendar month) set forth in EXHIBIT E attached to this Lease
         (the "EXCESS"), Landlord shall on an annual basis, in connection with
         the delivery of the report described in Section 5.b(ii), if and to the
         extent the Excess is actually received, credit to Tenant against any
         Rent then or thereafter due under the Lease from Tenant, an amount
         equal to the Excess, until such time as the amount credited to Tenant
         equals the Excess Expenses previously paid by Tenant to Landlord
         pursuant to Section 5.B.

                  F. TAX CONTESTS. Landlord shall, when Landlord deems it
         necessary or appropriate, contest the assessed valuation of the
         Building, and Taxes (and the cost thereof shall be included as part of
         Taxes). In addition, if Landlord is not contesting and if Tenant
         requests that Landlord seek a reduction in the assessed valuation of
         the Building or contest any Taxes, Landlord, at Tenant's expense, shall
         in good faith and with all due diligence seek the reduction or contest
         the Tax, provided that the contest shall not result in delinquent
         payment of any Taxes. If Landlord contests Taxes at Tenant's request,
         Tenant shall indemnify, defend and hold Landlord harmless from and
         against any and all costs, expenses and the liabilities arising as a
         result of the contest. If Landlord does not institute any proceedings
         within thirty (30) days following Tenant's request, then Tenant may
         bring or carry on the proceeding in its own name, or Landlord's name,
         at Tenant's sole expense and Landlord shall, reasonably cooperate with
         Tenant in connection with the proceeding to ensure that Taxes for the
         Building are as low as reasonably possible.

         6. USE. Tenant agrees that it shall occupy and use the Office Premises
only as business offices and/or other ancillary uses permitted by law and
consistent with first class

                                       15
<PAGE>   22
office buildings in the Chicago area's north suburban office market, and the
Storage Area only for storage ancillary to Tenant's use of the Office Premises
and for no other purposes. Tenant shall, at its own cost and expense, comply
with all federal, state and municipal laws, ordinances, rules and regulations
issued by any governmental authority and all covenants, conditions and
restrictions of record which relate to the condition, use or occupancy of the
Premises, including without limitation, those described in Section 6(d) of the
proposed Redevelopment Agreement ("REDEVELOPMENT AGREEMENT") to be entered into
by and between the City of Evanston ("CITY") and Landlord, in substantially the
form of the draft thereof previously delivered by Landlord to Tenant.

         7. CONDITION OF PREMISES. Tenant's possession of the Premises for the
conduct of business shall be conclusive evidence that the Premises were then in
good order and satisfactory condition, subject to punchlist items as determined
pursuant to the Workletter, latent defects in Landlord's Work within the
Premises identified by Tenant in writing to Landlord within one (1) year
following the Commencement Date and the Landlord Warranty. No agreement of
Landlord to alter, remodel, decorate, clean or improve the Premises or the
Building (or to provide Tenant with any credit or allowance for the same), and
no representation regarding the condition of the Premises or the Building, have
been made by or on behalf of Landlord or relied upon by Tenant, except as
expressly set forth herein.

         8. BUILDING SERVICES.

                  A. BASIC SERVICES. During the Term, Landlord shall furnish the
         following services: (i) heating, ventilating and air conditioning to
         provide a temperature condition required, in Landlord's reasonable
         judgment, for comfortable occupancy of the Office Premises under normal
         business operations, consistent with seasonal air comfort at other
         first class office buildings in the Chicago area's north suburban
         office market and consistent with the HVAC specifications described in
         the Building Outline Specifications (as defined in Section 27), Monday
         through Friday from 7:00 A.M. to 6:00 P.M. and Saturday from 7:00 A.M.
         to 1:00 P.M.), with Sundays and Holidays (as hereafter defined)
         excepted; (ii) hot and cold water for use in all lavatories from the
         regular supply of the Building; (iii) janitor service in the Office
         Premises and common areas of the Building, as set forth in the Cleaning
         Specifications attached as EXHIBIT F to this Lease, weekends and
         Holidays excepted, including periodic outside window washing of the
         perimeter windows in the Office Premises not less than twice per year;
         (iv) passenger elevator service for the Office Premises in common with
         Landlord and other tenants of the Building, 24 hours a day, 7 days a
         week; and (v) freight elevator service daily, weekends and Holidays
         excepted, upon request of Tenant and subject to scheduling and
         reasonable charges by Landlord (based upon Landlord's actual cost of
         providing the freight elevator service).

                  B. ELECTRICITY. The Premises shall be separately metered for
         electrical use for lighting and business machines (however, power for
         building systems shall not be separately metered). Electricity shall be
         distributed to the Premises by the electric utility company serving the
         Building (which shall be Commonwealth Edison, provided that Landlord
         may elect not to utilize Commonwealth Edison, so long as Landlord
         obtains

                                       16
<PAGE>   23
         competitive bids from other electric utility providers, and selects the
         lowest responsible bidder, after consultation with Tenant). Tenant at
         its cost shall make all necessary arrangements with the electric
         utility company providing service to the Building for metering and
         paying for electric current furnished to the Premises. All electricity
         used during the performance of janitor service, or the making of any
         alterations or repairs in the Premises, or the operation of any special
         air conditioning systems serving the Premises shall be paid for by
         Tenant.

                  C. TELEPHONES. Tenant shall arrange for telephone service
         directly with one or more of the public telephone companies servicing
         the Building and shall be solely responsible for paying for telephone
         service. Landlord shall permit Tenant to connect to Landlord's
         telephone cables on such reasonable terms and conditions as Landlord
         may prescribe (and Landlord shall install in the Building at no cost to
         Tenant the copper risers and fiber optic connection described in the
         Base Building Work). In no event does Landlord make any representation
         or warranty with respect to telephone service in the Building and
         Landlord shall have no liability with respect thereto. Further, any
         access by Tenant or its representatives to any of the telephone
         closets, risers or other telephone cables at the Building, shall be
         coordinated with Landlord and shall be subject to Landlord's reasonable
         regulations relating thereto. Tenant shall be entitled to Tenant's
         Proportionate Share of riser space available at the Building, at no
         additional charge to Tenant.

                  D. ADDITIONAL SERVICE; SUPPLEMENTAL AIR CONDITIONING UNITS. If
         Tenant requests Landlord to provide services for the Office Premises in
         addition to those stated above (including services at times other than
         those stated above), Landlord shall, unless the services are
         commercially unobtainable, provide Tenant with the services, and Tenant
         shall pay all related costs and charges incurred by Landlord in
         providing the service (including any capital expenditures incurred by
         Landlord in connection with providing the service), within thirty (30)
         days following Landlord's written request for reimbursement; provided
         that if the service is also being provided to other tenants of the
         Building as well, Tenant shall pay Landlord as a charge therefor,
         Landlord's reasonable rates then established at the Building for the
         furnishing of the services. If Tenant fails to make any payment for
         additional services, Landlord may, after five (5) days' written notice
         to Tenant, in addition to all other remedies available to Landlord,
         discontinue any additional services. No discontinuance of any
         additional service shall result in any liability of Landlord to Tenant
         or be considered as an eviction or a disturbance of Tenant's use of the
         Premises. Without limitation of the foregoing, if Tenant desires
         ventilation, air conditioning or heat during times or on days for which
         Landlord is not required to provide those services pursuant to Section
         8.A., Landlord shall provide the service to Tenant provided that (a)
         Tenant notifies Landlord before 2:00 P.M. on any business day on which
         Tenant desires ventilation, air conditioning or heat after hours on
         such business day, or before 2:00 P.M. on the business day immediately
         preceding any Holiday or weekend day for which Tenant desires the
         additional service, and (b) Tenant shall pay Landlord, Landlord's then
         after-hours HVAC charges in connection with the after-hours service.
         Landlord's charges for after-hours HVAC shall be based upon all actual
         direct and indirect costs to Landlord in providing the service (but
         shall not reflect any "mark-up" by

                                       17
<PAGE>   24
         Landlord). Landlord, on or before the beginning of each calendar year
         of the Term, shall provide Tenant with a schedule of its anticipated
         after hour HVAC charges, which shall not be adjusted during the
         calendar year for which it applies, unless Landlord's out-of-pocket
         costs of providing HVAC services increases. In addition, if Landlord
         reasonably determines that Tenant's concentration of personnel or
         equipment at the Premises is not consistent with ordinary and customary
         office usage and adversely affects the temperature or humidity in the
         Premises or the Building, Landlord may install (or require Tenant to
         install) supplementary air conditioning units in the Premises, and
         Tenant shall pay all of the costs of installation, operation and
         maintenance thereof (other than supplemental air conditioning installed
         as part of Landlord's Work, the cost of which shall be allocated
         pursuant to Section 27 and the Workletter Agreement).

                  E. FAILURE OR DELAY IN FURNISHING SERVICES. Tenant agrees that
         Landlord shall not be liable for damages for failure or delay in
         furnishing any service stated above, nor shall any such failure or
         delay be considered to be an eviction or disturbance of Tenant's use of
         the Premises, or (except as hereinafter provided) relieve Tenant from
         its obligation to pay any Rent when due or from any other obligations
         of Tenant under this Lease. Notwithstanding the foregoing, if any of
         the services described in Sections 8.A.(i), (ii) (limited to water
         supplied to base building washrooms) or (iv) or Section 8.B. above are
         interrupted for any reason, resulting in a material impairment to
         Tenant's ability to conduct a substantial portion of Tenant's customary
         business operations at the Premises, and Tenant is unable to conduct a
         substantial portion of its customary operations from the Premises as a
         result thereof for a period of three (3) consecutive business days,
         then, as Tenant's sole recourse therefor, Base Rent, and Additional
         Rent shall abate as of the date of the interruption and thereafter
         until the service is restored so that the material impairment is cured
         or until Tenant is able to occupy the Premises for the conduct of a
         substantial portion of its customary business operations therefrom
         (whichever first occurs). Tenant shall not, however, have any right to
         abate Base Rent or Additional Rent if the service is restored within
         three (3) business days following the date of the interruption.
         Landlord shall use commercially reasonable efforts to minimize any
         failure, delay, interruption or diminution in furnishing any service
         described above. Nothing contained herein shall be deemed to diminish
         any rental abatement rights of Tenant arising out of a casualty to the
         extent provided for in Section 15.

                  F. HOLIDAYS. For purposes of this Section 8, "HOLIDAYS" means
         New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving
         Day, Christmas Day and any other day customarily designated as a
         holiday by landlords operating first-class office buildings in the
         Chicago area's north suburban office market.

                  G. OPERATING STANDARDS. During the Term, Landlord shall
         operate the Building in accordance with the standards set forth in
         EXHIBIT G attached to this Lease.

                  H. PROPERTY MANAGEMENT. Prior to entering into any management
         agreement for the Building, or any renewal thereof, Landlord shall
         notify Tenant of the proposed business terms

                                       18
<PAGE>   25
         thereof, and shall demonstrate that they reflect market terms. Tenant
         shall have the right to approve the terms, which approval shall not be
         unreasonably withheld, conditioned or delayed and shall be given or
         withheld within forty (40) days following Landlord's request, by
         written notice to Landlord, which response, if it is a disapproval
         shall specify the reasons for disapproval and the terms, based upon
         bona fide written proposals from reputable third party managers
         providing for a similar scope of services, received by Tenant and
         delivered to Landlord, which are acceptable to Tenant. If Tenant has
         not responded to Landlord's request for approval, within forty (40)
         days following such request, Landlord shall give Tenant a second notice
         requesting such approval, and if Tenant fails to respond within five
         (5) days following the second notice, Tenant's consent shall be deemed
         given.

                  I. OPERATING BUDGET. On or prior to ninety (90) days before
         the beginning of each full calendar year of the Term, Landlord shall
         submit to Tenant a proposed operating budget for the Project, detailing
         the anticipated Taxes and Expenses for the following calendar year,
         including without limitation, anticipated capital expenditures. The
         proposed operating budget shall be subject to Tenant's approval, not to
         be unreasonably withheld, conditioned or delayed. Tenant shall notify
         Landlord in writing of its approval or disapproval of the operating
         budget (with any disapproval specifying in detail Tenant's objections
         to particular line items therein) within thirty (30) days following
         Landlord's request for approval. If Tenant fails to respond within the
         thirty (30) day period, Landlord shall give Tenant a second notice
         requesting approval and if Tenant fails to respond within five (5) days
         following the second notice, the proposed operating budget shall be
         deemed approved. Landlord shall use reasonable efforts to operate the
         Building in accordance with the approved operating budget; provided,
         however, that Landlord and Tenant acknowledge that the operating budget
         is only an estimate of anticipated expenditures, and nothing contained
         herein shall be deemed (i) to limit Tenant's obligation to pay
         Expenses, Excess Expenses or other items of Additional Rent under
         Section 5, whether or not actual Expenses, Excess Expenses or other
         Additional Rent exceed those in the operating budget or (ii) to
         preclude Landlord from incurring expenditures in excess of or in
         addition to those set forth in the operating budget, to the extent
         required in connection with the performance of Landlord's obligations
         under this Lease or deemed necessary or desirable by Landlord in
         connection with the prudent operation of the Project. If the parties
         are unable to agree upon an operating budget, until an operating budget
         is approved, Landlord shall use reasonable efforts, to the extent
         possible, to operate the Project in accordance with the most recently
         approved operating budget, subject to the terms and conditions set
         forth above and subject to increase for increases in costs for items
         outside of Landlord's control and which Landlord has knowledge of
         (i.e., taxes, insurance costs, utilities and other similar costs).

         9. RULES AND REGULATIONS. Tenant shall observe and comply, and shall
cause its subtenants, assignees, invitees, employees, contractors and agents to
observe and comply, with the Rules and Regulations listed on EXHIBIT H attached
to this Lease, with such reasonable modifications and additions thereto as
Landlord may make from time to time. Landlord shall not be liable for failure of
any person to obey the Rules and Regulations. Landlord shall not be obligated to
enforce the Rules and Regulations against any person, and the failure of
Landlord to enforce any of the Rules and Regulations shall not constitute a
waiver thereof or relieve Tenant from compliance with the Rules and Regulations,
provided, however, that Landlord shall not discriminate

                                       19
<PAGE>   26
against Tenant in the enforcement of the Rules and Regulations which are
applicable to all tenants generally.

         10. CERTAIN RIGHTS RESERVED TO LANDLORD. Landlord reserves the
following rights, each of which Landlord may exercise without notice to Tenant
(except as expressly indicated below) and without liability to Tenant, and the
exercise of any of Landlord's reserved rights shall not be deemed to constitute
an eviction or disturbance of Tenant's use or possession of the Premises and
shall not give rise to any claim for set-off or abatement of rent or any other
claim: (a) if mandated by the post office or other governmental body, to change
the street address of the Building; (b) to install, affix and maintain any and
all signs on the exterior or interior of the Building or elsewhere at the
Project (subject, however, to the approval rights of Tenant set forth in Section
35 and the other limitations contained therein); (c) to make repairs,
decorations, alterations, additions or improvements, whether structural or
otherwise, in and about the Building or the Common Areas, provided that any
repairs, decorations, alterations, additions or improvements to be performed
within the Premises which will interfere with Tenant's ability to operate its
business therein, shall, except in the case of an emergency, be performed by
Landlord after ordinary business hours, except that Tenant agrees to pay
Landlord for overtime and similar expenses incurred if the work is done other
than during ordinary business hours at Tenant's request (and Landlord is not
otherwise obligated to perform the work after ordinary business hours), and in
connection with the foregoing purposes to enter upon the Premises, temporarily
close doors, corridors and other areas of the Building and interrupt or
temporarily suspend services or use of Common Areas (provided that, in the
absence of an emergency, Landlord shall (1) give at least forty-eight (48)
hours' notice to Tenant prior to entry upon the Premises under this Section
10(c), except for entry for routine repairs, maintenance and/or cleaning, and
(2) use all reasonable efforts not to materially interfere with Tenant's
business operations at the Premises during the course of any actions taken
within the Premises under this Section 10(c)); (d) to retain at all times, and
to use in appropriate instances, keys to all doors within and into the Premises;
(e) to grant to any person or to reserve unto itself the exclusive right to
conduct any business or render any service in the Building; (f) to show or
inspect the Premises at reasonable times during normal business hours (provided
that Landlord shall only have the right to show the Premises to prospective
tenants during the last twelve (12) months of the Term and while any Default (as
defined in Section 19) under this Lease is continuing) and, while any Default is
continuing, to prepare the Premises for reoccupancy; (g) to install, use and
maintain in and through the Premises pipes, conduits, wires and ducts serving
the Building, provided that Tenant shall have the right to approve the location
of any such installation not otherwise provided as part of the Base Building
(which approval shall not be unreasonably withheld); (h) to take any other
action which Landlord deems reasonable in connection with the operation,
maintenance, marketing or preservation of the Building or the Project; and (i)
to approve the weight, size and location of safes or other heavy equipment or
articles, which articles may be moved in, about or out of the Building or
Premises only at times and in a manner as Landlord shall reasonably direct, at
Tenant's sole risk and responsibility.

                                       20
<PAGE>   27

         11.      MAINTENANCE AND REPAIRS.

                  A. TENANT'S OBLIGATIONS. Tenant, at its expense, shall
         maintain and keep the Premises (other than elevator lobby areas),
         including all tenant improvements therein, in good order and repair,
         and in accordance with all applicable laws, ordinances and other legal
         requirements, at all times during the Term, including correcting all
         defects in the design of the Tenant Improvements. Subject to the terms
         of Section 15, Tenant shall promptly and adequately repair all damages
         to the Premises and replace or repair all damaged or broken glass in
         the interior of the Premises, fixtures or appurtenances. Any repairs or
         maintenance shall be completed with materials of similar quality to the
         original materials. All repairs, maintenance and other work (i)
         affecting structural or other Base Building components of the Building,
         (ii) affecting Building systems, or (iii) otherwise involving the use
         of paint or other materials which could result in odors penetrating
         other tenant premises or Common Areas at the Building, shall, in each
         instance, be completed under the supervision of Landlord, if Landlord
         so elects, and shall otherwise be performed in accordance with the same
         terms and requirements as set forth in Section 12. If Tenant fails to
         perform any of its obligations set forth in this Section 11.A, Landlord
         may, in its sole discretion and upon thirty (30) days prior notice to
         Tenant (except in the case of emergencies, when no notice shall be
         required), without limitation of any other rights or remedies available
         to Landlord, perform the same, and Tenant shall pay to Landlord the
         actual direct and indirect costs incurred by Landlord in performing
         Tenant's obligations, within thirty (30) days following Landlord's
         written demand (accompanied by invoices evidencing the amount
         incurred). Tenant shall have no responsibility to maintain or repair
         any items which Landlord is specifically obligated to maintain or
         repair pursuant to Section 11.B.

                  B. LANDLORD'S OBLIGATIONS. Subject to the provisions of
         Section 15, Landlord shall maintain and make necessary repairs to the
         foundations, roof, exterior walls, and structural elements of the
         Building, the electrical, plumbing, heating, ventilation and
         air-conditioning systems of the Building, the public corridors,
         washrooms and lobbies of the Building and the restrooms and elevator
         lobbies on each floor of the Building which are within the Premises,
         except that Landlord shall not be responsible for: (i) the maintenance
         or repair of any floor or wall coverings in the Premises or any of the
         systems which are located within the Premises and are supplemental or
         special to the Building's standard systems; (ii) the cost of performing
         any maintenance or repairs whether to the Premises or to the Building,
         caused by the negligence of Tenant, its employees, agents, servants,
         licensees, subtenants, contractors or invitees, shall be paid by
         Tenant, except to the extent of insurance proceeds, if any, actually
         collected by Landlord with regard to the damage necessitating the
         repairs; and (iii) correcting and/or repairing any defects in the
         Tenant Improvements resulting from any defects in the design thereof.
         Landlord shall have no responsibility to maintain or repair any items
         which Tenant is specifically obligated to repair pursuant to Section
         11.A.

                                       21
<PAGE>   28
           12.      ALTERATIONS.

                  A. REQUIREMENTS. Except as provided in Section 12.D., Tenant
         shall not make any replacement, alteration, improvement or addition to
         or removal from the Premises (collectively an "ALTERATION") without the
         prior written consent of Landlord (not to be unreasonably withheld, as
         hereinafter provided). Subject to the terms of Section 12.D., if Tenant
         proposes to make any alteration requiring Landlord's consent, Tenant
         shall, prior to commencing the alteration, submit to Landlord for
         Landlord's prior written approval detailed plans and specifications. In
         addition, following approval of the detailed plans and specifications
         for any alteration by Landlord, and prior to commencing the alteration,
         Tenant shall also submit to Landlord, for Landlord's approval: (i) the
         names, addresses and, if required by any Mortgagee or Ground Lessor (as
         those terms are defined in Section 23), copies of contracts for all
         contractors; (ii) all necessary permits evidencing compliance with all
         applicable governmental rules, regulations and requirements; (iii)
         certificates of insurance (including builders risk) in form and amounts
         required by Landlord, naming Landlord, its managing agent and any other
         parties reasonably designated by Landlord as additional insureds; (iv)
         payment and performance bonds from sureties and in form and amount
         satisfactory to Landlord, in its discretion, with respect to any
         alteration, the cost of which Landlord determines, in its reasonable
         discretion, will exceed Five Hundred Thousand and
         No/100 Dollars ($500,000.00), showing Landlord as dual obligee; and (v)
         all other documents and information as Landlord may reasonably request
         in connection with the proposed alteration. If Tenant requests that
         Landlord perform any construction management or supervisory services
         relative to any alterations (other than in connection with the Tenant
         Improvements, for which Landlord will not charge a fee) and if Landlord
         agrees to perform the services, then Tenant agrees to pay Landlord
         market rate charges for the services, to be agreed upon by Landlord and
         Tenant. In addition, Tenant shall reimburse Landlord within thirty (30)
         days following Landlord's written request, for any out-of-pocket costs
         incurred by Landlord for review of architectural and engineering plans
         and specifications; provided that prior to incurring any charges for
         review of plans and specifications, Landlord shall notify Tenant of its
         intention to engage an architect and/or engineer to review the same and
         the anticipated cost of the review. Neither approval of the plans and
         specifications nor supervision of the alteration by Landlord shall
         constitute a representation or warranty by Landlord as to the accuracy,
         adequacy, sufficiency or propriety of the plans and specifications or
         the quality of workmanship or the compliance of the alteration with
         applicable law. Tenant shall pay the entire cost of the alteration.
         Each alteration shall be performed in a good and workmanlike manner, in
         accordance with the plans and specifications approved by Landlord, and
         shall meet or exceed the standards for construction and quality of
         materials established by Landlord for the Building. In addition, each
         alteration shall be performed in compliance with all applicable
         governmental and insurance company laws, regulations and requirements,
         as well as such reasonable construction rules and regulations for the
         Building as may be promulgated by Landlord from time to time
         (including, without limitation, any rules governing usage of and
         charges for elevator service). Each alteration shall be performed in
         harmony with Landlord's employees, contractors and other tenants and in
         a manner so as not to interfere with any other tenant's occupancy and,
         at Landlord's option, Landlord shall have

                                       22
<PAGE>   29
         the right, to monitor the progress of all alterations. In connection
         with each alteration, Tenant shall utilize union labor, unless
         otherwise consented to by Landlord. Each alteration, whether temporary
         or permanent in character, made by Landlord or Tenant in or upon the
         Premises (excepting only FF&E) shall become Landlord's property and
         shall remain upon the Premises at the expiration or termination of this
         Lease without compensation to Tenant; provided, however, that Landlord
         shall have the right to require Tenant to remove any alteration at
         Tenant's sole cost and expense, provided at the time of approval of the
         alteration by Landlord, Landlord has notified Tenant that Landlord will
         require removal and the alteration does not constitute a standard
         office installation (e.g., vaults, safes, internal stairwells, raised
         floors, and other similar items).

                  B. LIENS. Upon completion of any alteration, Tenant shall
         promptly furnish Landlord with sworn owner's and contractors'
         statements and full and final waivers of lien covering all labor and
         materials included in the alteration. Tenant shall not permit any
         mechanics' lien to be filed against the Building, or any part thereof,
         arising out of any alteration performed, or alleged to have been
         performed, by or on behalf of Tenant. Landlord and Tenant shall notify
         each other promptly following receipt by the applicable party of notice
         of any lien filed. If any mechanics' lien is filed, Tenant shall within
         thirty (30) days thereafter have the lien released of record or deliver
         to Landlord a bond or title insurance in form, amount, and issued by a
         surety or title company satisfactory to Landlord, in its sole
         discretion, indemnifying Landlord against all costs and liabilities
         resulting from the lien and the foreclosure or attempted foreclosure
         thereof. If Tenant fails to have the lien released or to deliver a
         satisfactory bond or title insurance to Landlord in accordance with the
         preceding sentence, Landlord, without investigating the validity of the
         lien, may (without limiting any other rights or remedies available to
         Landlord), upon five (5) business days' prior notice to Tenant, pay or
         discharge the same, and Tenant shall reimburse Landlord within thirty
         (30) days following Landlord's demand for the amount so paid by
         Landlord, including Landlord's reasonable expenses and reasonable
         attorneys' fees. If Tenant delivers the bond or title insurance to
         Landlord with respect to the lien, Tenant shall thereafter have the
         right and duty to diligently contest the lien; provided that Tenant
         shall, in any event, have the lien released of record prior to final
         enforcement thereof.

                  C. REASONABLE CONSENT. Landlord agrees not to unreasonably
         withhold or delay its consent to any alterations; provided, however,
         that Landlord shall not be deemed to have acted unreasonably if it
         withholds its consent because, in Landlord's reasonable opinion, the
         work: would adversely affect Building systems, the structure of the
         Building or the safety of its occupants; would increase Landlord's cost
         of repairs, insurance or furnishing services or otherwise adversely
         affect Landlord's ability to efficiently operate the Building or
         furnish services to Tenant or other tenants; involves toxic or
         hazardous materials in any unlawful manner; or requires entry into
         another tenant's premises or use of public areas (other than use of
         public areas for movement of materials to the Premises). The foregoing
         reasons, however, shall not be exclusive of the reasons for which
         Landlord may withhold consent, whether or not any other reasons are
         similar or dissimilar to the foregoing. In addition, if Tenant requests
         Landlord's approval of any plans and specifications for

                                       23
<PAGE>   30
         alterations or of any of the other items described in Section 12.A,
         Landlord shall have fifteen (15) days following receipt of Tenant's
         request for approval of each of such items to notify Tenant of
         Landlord's approval or disapproval. If Landlord fails to respond to
         Tenant within the fifteen (15) day period, Tenant shall deliver a
         second notice to Landlord, stating in bold type on the first page
         thereof "URGENT - DELAY NOTICE," which notice shall specify the matter
         or item for which Tenant is seeking approval and shall state that if
         Landlord fails to respond within three (3) business days following
         receipt of the notice, such matter or item will be deemed approved by
         Landlord. If Landlord fails to respond to the second notice within
         three (3) business days following receipt, the matters for which
         approval has been sought shall be deemed approved.

                  D. NON-STRUCTURAL ALTERATIONS. Notwithstanding the foregoing
         provisions of this Section 12, Tenant may perform certain interior
         decorating or other non-structural alterations to the Premises, such as
         carpeting, painting (so long as the odors from the same do not
         materially or unreasonably interfere with any other tenant's
         operations), hanging artwork or wall coverings, cabling, installing
         furniture systems, installing cubicle systems or other similar interior
         decorating improvements or non-structural alterations, without
         obtaining Landlord's consent therefor (but subject to satisfaction of
         all of the other requirements of this Section 12), but only if (i) the
         items do not affect the Building structure or systems, the public areas
         of the Building or any other tenant space, (ii) such items are not
         visible from outside of the Premises, (iii) the hard costs of
         construction for the proposed alterations does not exceed the sum of
         $500,000.00 with respect to any proposed alteration project, taken as a
         whole, and (iv) Tenant gives prior written notice to Landlord of the
         items, including a description of the contemplated work and the types
         of materials being used. Approval of plans and specifications shall not
         be required for the foregoing interior decorating or non-structural
         items, where plans and specifications are not reasonably appropriate
         for the work to be performed.

                  E. ALTERATIONS TO STORAGE AREA. Notwithstanding anything to
         the contrary in Sections 12.A through 12.D of this Lease, Tenant shall
         not have the right to make any alterations to the Storage Area, except
         for the installation of racking and shelving (which may be installed by
         Tenant without Landlord's prior consent but otherwise subject to
         Tenant's compliance with all of the other terms and conditions of this
         Section 12 applicable to alterations).

         13. INSURANCE. In consideration of the leasing of the Premises at the
rent stated herein, Landlord and Tenant agree to provide insurance and allocate
the risks of loss as follows:

                  A.       TENANT'S INSURANCE.  Throughout the Term:

                  (i) Tenant, at its sole cost and expense but for the mutual
         benefit of Landlord and Tenant (when used in this Section 13.A(i) the
         term "LANDLORD" shall include Landlord, its constituent members and the
         partners, directors, officers, agents,

                                       24
<PAGE>   31
         servants and employees of each of them), agrees to purchase and keep in
         force and effect during the term hereof, insurance under policies
         issued by insurers of recognized responsibility licensed to do business
         in the State of Illinois with a Best's rating of A-/VIII or better on
         all alterations, additions, and improvements located at the Premises
         (other than the Tenant Improvements), and on all personal property and
         FF&E located in the Premises, protecting Landlord and Tenant (including
         Tenant's partners, directors, officers, agents, servants and employees)
         from damage or other loss caused by fire or other casualty, including
         but not limited to vandalism and malicious mischief, perils covered by
         extended coverage, theft, sprinkler leakage, water damage (however
         caused), explosion malfunction or failure of heating and cooling or
         other apparatus, and other similar risks in amounts not less than the
         full insurable replacement value of the applicable property. Tenant's
         property insurance shall provide that it is specific and
         non-contributory and shall contain a replacement cost endorsement.
         Tenant's insurance shall also contain a clause pursuant to which the
         insurance carriers waive all rights of subrogation against the Landlord
         with respect to losses payable under the policies. Landlord shall have
         no right or interest in insurance proceeds under this Section 13.A.
         which relate to Tenant's trade fixtures and personalty (including FF&E,
         unless paid for by Landlord pursuant to the Workletter Agreement) and
         which do not relate to the Tenant Improvements and shall not be an
         additional insured with respect to the insurance covering Tenant's
         trade fixtures, personalty or FF&E (other than any items paid for by
         Landlord pursuant to the Workletter Agreement).

                  (ii) Tenant also agrees to maintain commercial general
         liability insurance with the broad form commercial liability
         endorsement, including contractual liability insurance covering
         Tenant's indemnity obligations hereunder, covering Tenant (including
         Tenant's partners, directors, officers, agents, servants and employees)
         as the insured party, and naming Landlord, each Mortgagee, and each
         Ground Lessor, against claims for bodily injury and death and property
         damage occurring in or about the Premises, with limits of at least Two
         Million Dollars ($2,000,000.00) per occurrence.

                  (iii) Tenant also agrees to maintain Workers' Compensation and
         Employers' Liability insurance in such amounts as is required under
         applicable law, together with such other insurance or coverages as
         Landlord reasonably requests, consistent with insurance requirements of
         tenants at other comparable first-class office buildings in the Chicago
         area's north suburban office market.

         Tenant shall, prior to commencement of the Term and thereafter at least
thirty (30) days prior to any renewal or replacement of such policies, furnish
to Landlord certificates, in form and substance satisfactory to Landlord, issued
by the insurers and binding upon the insurers, evidencing all of the coverages
required under this Section 13, which certificates shall state (and the
underlying policies shall provide) that the insurance coverage may not be
changed or canceled without at least thirty (30) days prior written notice to
Landlord and Tenant. Any certificate shall also confirm to the satisfaction of
the insured parties that the

                                       25
<PAGE>   32
         policies are primary insurance. If Tenant shall fail to procure the
         insurance required pursuant to this Section 13, Landlord may at its
         option, after giving Tenant no less than ten (10) business days prior
         written notice of its election to do so and without limiting any other
         rights or remedies available to Landlord, procure the same for the
         account of Tenant and the cost thereof shall be paid to Landlord as
         additional rent upon receipt by Tenant of bills therefor. All such
         policies maintained by Tenant pursuant to this Section 13.A shall
         contain commercially reasonable deductibles.

                  B. LANDLORD'S INSURANCE. Landlord agrees to purchase and keep
         in force and effect replacement cost "all risk" property insurance on
         the core and shell of the Building(as described in Section 15.E. below)
         and on the Tenant Improvements, containing, a clause pursuant to which
         the insurance carrier waives all rights of subrogation against Tenant
         with respect to losses payable under the policy. Landlord shall also
         purchase and keep in full force and effect (without limitation of other
         coverages deemed prudent by Landlord) (i) commercial general liability
         insurance (including contractual liability insurance covering
         Landlord's indemnity obligations hereunder) with liability limits no
         less than the amounts specified in Section 13.A(ii), and (ii) Workers'
         Compensation and Employers' liability insurance, in commercially
         reasonable amounts or as otherwise required by applicable law. All such
         policies shall contain commercially reasonable deductibles.

                  C. RISK OF LOSS. By this Section 13, Landlord and Tenant
         intend that the risk of loss or damage as described above be borne by
         responsible insurance carriers to the extent above provided, and
         Landlord and Tenant hereby agree to look solely to, and to seek
         recovery only from, their respective insurance carriers in the event of
         a loss of a type described above to the extent that such coverage is
         agreed to be provided hereunder. For this purpose, any applicable
         deductible amount shall be treated as though it were recoverable under
         the insurance policies described above. Landlord and Tenant agree that
         applicable portions of all monies collected from their respective
         insurance shall be used toward the full compliance with the obligations
         of Landlord and Tenant under this Lease in connection with damage
         resulting from fire or other casualty.

                  D. GENERAL WAIVER. In addition to and without limiting or
         being limited by any other releases or waivers of claims in this Lease,
         but rather in confirmation and furtherance thereof, to the extent not
         prohibited by law, Landlord and Tenant each releases and waives any and
         all claims for, and rights to recover, damages against and from the
         other, and the other's respective agents, members, partners,
         shareholders, officers and employees (collectively, the "RELEASED
         PARTIES"), for loss, damage or destruction to any of its property
         (including the Premises, the Building and their contents), the elements
         of which are insured against or which would have been insured against
         had the party suffering the loss, damage or destruction maintained the
         property or physical damage insurance policies required under this
         Section 13. In no event shall this clause be deemed, construed or
         asserted (i) to affect or limit any claims or rights against any
         Released Parties other than the right to recover damages for loss,
         damage or destruction to property, or (ii) to benefit any third party
         other than the Released Parties.

                                       26
<PAGE>   33
           14.      TENANT'S RESPONSIBILITIES.

                  A. WAIVER OF CLAIMS. To the extent permitted by law, Tenant
         releases Landlord, its constituent members and their respective
         officers, directors, employees agents, successors and assigns (herein
         the "LANDLORD PARTIES") from, and waives all claims for, damage to
         person or property sustained by Tenant or any occupant of the Building
         or Premises resulting directly or indirectly from any existing or
         future condition, defect, matter or thing in and about the Building or
         the Premises or any part of either or any equipment or appurtenance
         therein, or resulting from any accident in or about the Building, or
         resulting directly or indirectly from any act of neglect of any tenant
         or occupant of the Building or of any other person, including
         Landlord's agents and servants, except where resulting from the willful
         misconduct or negligence of any of the Landlord Parties. If any damage,
         whether to the Premises or to the Building or any part thereof, or
         whether to Landlord or to other tenants in the Building, results from
         any act or neglect of Tenant, its employees, agents, invitees or
         customers, Tenant shall be liable therefor and Landlord may, at
         Landlord's option and without limiting any other rights or remedies
         available to Landlord, repair such damage and Tenant shall, as payment
         of additional Rent hereunder, reimburse Landlord within ten (10)
         business days of demand for the total costs of such repairs, in excess
         of amounts, if any, paid to Landlord under insurance covering the
         damage. Tenant shall not be liable for any damage caused by its acts or
         neglect if Landlord has recovered the full amount of the damage from
         proceeds of insurance policies and, the insurance company has waived
         its right of subrogation against Tenant.

                  B. INDEMNITY. To the extent permitted by law, Tenant agrees to
         indemnify, defend and hold the Landlord Parties harmless from and
         against any and all actions, claims, demands, costs and expenses,
         including reasonable attorneys' fees and expense for the defense
         thereof, arising from Tenant's occupancy of the Premises, from the
         undertaking of any Tenant alterations or repairs to the Premises, from
         the conduct of Tenant's business on the Premises, or from any breach or
         default on the part of Tenant in the performance of any covenant or
         agreement on the part of Tenant to be performed, pursuant to the terms
         of this Lease, or from any willful or negligent act or omission of
         Tenant, its agents, servants, employees or invitees, in or about the
         Premises, but only to the extent of Landlord's liability, if any, in
         excess of amounts, if any, paid to Landlord under insurance covering
         the claims or liabilities and excluding any claims resulting solely
         from the willful misconduct or negligent acts of any of the Landlord
         Parties. In case of any action or proceeding brought against the
         Landlord Parties by reason of any claim being indemnified by Tenant
         hereunder, upon notice from Landlord, Tenant shall defend such action
         or proceeding by counsel reasonably satisfactory to Landlord.

                  C. INDEMNITY BY LANDLORD. In addition to and without limiting
         or being limited by any other indemnity in this Lease, but rather in
         confirmation and furtherance thereof, to the extent not prohibited by
         law, Landlord agrees to indemnify, defend by counsel reasonably
         acceptable to Tenant and hold Tenant, its constituent shareholders, and

                                       27
<PAGE>   34
         their respective officers, directors, members, partners, agents,
         employees, successors and assigns (collectively, the "TENANT PARTIES")
         harmless of, from and against any and all losses, damages, liabilities,
         claims, liens, costs and expenses, including court costs and reasonable
         attorneys' fees and expenses, imposed on them in connection with injury
         to or death of third parties, other than the Tenant Parties, occurring
         in connection with Landlord's performance of Landlord's Work, or
         otherwise occurring within the Common Areas of the Building, or with
         respect to damage to or theft, loss or loss of the use of property of
         third parties, other than Tenant Parties, occurring within the Common
         Areas of the Building, but only to the extent that the foregoing
         losses, damages, liabilities, claims, liens, costs and expenses arise
         from or are caused directly or indirectly by any negligent act or
         omission or wilful misconduct of Landlord, or any of its employees,
         agents, officers, directors, members or partners. Such third parties
         shall not be deemed third party beneficiaries to this Lease.

                  D. LANDLORD'S NEGLIGENCE. Subject to the provisions of Section
         13.B. and Section 13.C., to the extent permitted by law, no agreement
         of Tenant in this Lease shall be deemed to exempt Landlord from
         liability or damages for injury to persons or damage to property caused
         by or resulting from the negligence of Landlord, its agents, servants
         or employees, in the operation or maintenance of the Premises or
         Building.

            15.      DAMAGE OR DESTRUCTION BY CASUALTY.

                  A.       TERMINATION OF LEASE, REPAIR BY LANDLORD.

                  (i) If the Premises or the Building shall be damaged by fire
         or other casualty, then Landlord, so long as Landlord's Mortgagee(s) or
         Ground Lessor(s), if any, are obligated or agree to make insurance
         proceeds available for restoration or, if the Mortgagee(s) or Ground
         Lessor(s) are not obligated to make insurance proceeds available for
         restoration or do not agree to do so, and Landlord elects to fund any
         shortfall, shall proceed with reasonable promptness to repair and
         restore the core and shell of the Building (including any elements
         thereof within the Premises) and the Tenant Improvements (but not any
         alterations or FF&E) so as to render the Premises tenantable, subject
         to the terms and conditions hereinafter set forth and subject to zoning
         laws and building codes then in effect. Landlord shall, with reasonable
         promptness after the occurrence of the damage, (a) engage an architect
         to estimate the length of time that will be required to substantially
         complete the repair and restoration of the core and shell of the
         Building or the core and shell of the Premises and the Tenant
         Improvements, as the case may be, necessitated by such damage and
         Landlord shall use reasonable efforts to ensure that the architect
         provides the estimate as soon as reasonably possible, and (b) obtain a
         determination from the Mortgagee(s) or Ground Lessor(s), if any, as to
         whether insurance proceeds will be made available for restoration and,
         in each case, Landlord shall notify Tenant ("CASUALTY NOTICE") of the
         determination as to length of time for repair, and if there are
         Mortgagee(s) or Ground Lessor(s) whether the Mortgagee(s) or Ground
         Lessor(s) will make proceeds available for restoration and/or whether
         Landlord will fund any shortfall(s) from its own funds

                                       28
<PAGE>   35
         or other sources (and if Landlord elects to fund any shortfall,
         Landlord shall provide Tenant with reasonable evidence of the
         availability of funds to cover the shortfall). If there are
         Mortgagee(s) or Ground Lessor(s), and the Mortgagee(s) or Ground
         Lessor(s) are unwilling to make proceeds of insurance available for
         restoration (and Landlord does not elect to cover any shortfall) this
         Lease shall terminate effective as of the date of the Casualty Notice
         to Tenant, if Tenant is not in occupancy, or on the date which is sixty
         (60) days following the Casualty Notice, if Tenant remains in occupancy
         of any portion of the Premises. If the Mortgagee(s) or Ground Lessor(s)
         agree to or are obligated to make proceeds available for restoration or
         Landlord elects to fund any shortfall, Tenant shall remain obligated
         under this Lease, this Lease shall not terminate as a result of the
         casualty and shall remain in full force and effect, and Tenant hereby
         waives any right to terminate as a result of a casualty, except as
         hereinafter specifically provided. Notwithstanding the foregoing, if
         the estimate of the amount of time required to substantially complete
         the repair and restoration will exceed two hundred seventy (270) days
         from the date the damage occurred, then Tenant shall have the right to
         terminate this Lease effective as of the date of notice of the election
         by giving written notice to Landlord of termination within twenty (20)
         days after Landlord gives Tenant the Casualty Notice. Unless this Lease
         is terminated as provided in the preceding sentence, Landlord shall
         proceed with reasonable promptness to repair and restore the core and
         shell of the Building (including any elements thereof within the
         Premises) and the Tenant Improvements (other than FF&E) to an equal or
         better condition as existed prior to the damage and so as to render the
         Premises tenantable, subject to reasonable delays for insurance
         adjustments and delays caused by matters beyond Landlord's reasonable
         control, and also subject to zoning laws and building codes then in
         effect. Landlord shall have no liability to Tenant, and Tenant shall
         not be entitled to terminate this Lease (except as hereinafter
         provided) if the repairs and restoration are not in fact completed
         within the time period estimated by Landlord's architect, as aforesaid,
         or within said two hundred seventy (270) days. However, if the repairs
         and restoration are not completed by a date ("OUTSIDE DATE") which is
         thirty (30) days after the expiration of the time period estimated by
         Landlord's architect as aforesaid (which Outside Date shall be extended
         by the number of days of delay caused by Tenant or Force Majeure,
         except that in no event shall the Outside Date be extended by more than
         ninety (90) days as a result of delays caused by Force Majeure) then
         Tenant may terminate this Lease, effective as of the date of notice of
         such election, by giving written notice to Landlord within the thirty
         (30) day period after said Outside Date (as the same may be extended),
         but prior to substantial completion of repair or restoration.

                           (ii)     Notwithstanding anything to the contrary
                                    herein set forth:

                                (a) Landlord shall have no duty pursuant to this
                           Section 15 to repair or restore any portion of
                           Tenant's alterations or any other improvements or
                           additions made by or on behalf of Tenant in the
                           Premises following installation of the Tenant
                           Improvements, including any FF&E; and

                                       29
<PAGE>   36
                                (b) Landlord shall not be obligated (but may, at
                           its option, so elect) to repair or restore the
                           Premises or Building if the damage is due to any
                           casualty which Landlord is not required to insure
                           against pursuant to this Lease, or is otherwise
                           uninsurable (provided that if Landlord elects not to
                           so repair or restore the Premises as a result of any
                           matter described in this clause (b), Landlord shall
                           promptly notify Tenant of Landlord's election, and,
                           Tenant shall thereafter have the right to terminate
                           this Lease effective upon written notice thereof to
                           Landlord given not later than ten (10) business days
                           after Tenant's receipt of notice of Landlord's
                           election).

                  B. REPAIR BY TENANT. If this Lease is not terminated pursuant
         to this Section 15, Tenant shall, in accordance with Section 12,
         proceed with reasonable promptness to repair and restore all of
         Tenant's alterations, all FF&E and all other alterations, additions and
         improvements in the Premises other than the Tenant Improvements, and
         other than any repairs or restoration required to be made by Landlord
         pursuant to Section 15.A. above, to as near the condition which existed
         prior to the fire or other casualty as is reasonably possible. If
         Landlord allows Tenant to perform work concurrent with Landlord's work,
         then Tenant shall fully cooperate with Landlord in coordinating any
         work being performed by Tenant under this Section 15.B with work being
         performed by Landlord under Section 15.A. above.

                  C. ABATEMENT OF RENT. If any fire or casualty damage renders
         the Premises untenantable and if this Lease shall not be terminated
         pursuant to the foregoing provisions of this Section 15 by reason of
         the damage, then Rent shall abate during the period beginning with the
         date of the damage and ending with the date which is the later of (i)
         when Landlord substantially completes its repair or restoration
         required hereunder and possession of the Premises is delivered to
         Tenant or (ii) the earlier of the date which is sixty (60) days
         following the date Landlord allows Tenant access to the Premises
         pursuant to Section 15.B to restore alterations and install FF&E in
         conjunction with Landlord's restoration work or the date Tenant
         occupies the restored portion of the Premises for purposes of
         conducting business therein. The abatement shall be in an amount
         bearing the same ratio to the total amount of Rent for the period as
         the portion of the Rentable Square Feet of the Premises which is
         untenantable and not used by Tenant from time to time bears to the
         Rentable Square Feet of the entire Premises. In the event of
         termination of this Lease pursuant to this Section 15, Rent shall be
         apportioned on a per diem basis and be paid to the date of the
         termination.

                  D. UNTENANTABILITY. As used in this Lease, the term
         "UNTENANTABLE" means (i)with respect to the Premises, material
         impairment to Tenant's ability to conduct a substantial portion of its
         customary business operations therefrom due to damage to the Premises,
         and (ii) with respect to any other portion of the Building, material
         impairment to continued occupancy for its intended use due to damage to
         the applicable portion of the Building. Notwithstanding anything
         contained to the contrary in this Section 15, neither the Premises nor
         any portion of the Premises shall be deemed untenantable if Landlord is
         not

                                       30
<PAGE>   37
         required to repair or restore same (or if Landlord is required to
         repair or restore same, then following the time Landlord has
         substantially completed the repair and restoration work required to be
         performed by Landlord under this Section 15), or if Tenant continues to
         actually occupy the subject portion of the Premises.

                  E. CORE AND SHELL. The term "CORE AND SHELL" shall mean and
         refer to the Base Building, including any elements thereof located
         within the Premises, and specifically excludes the Tenant Improvements,
         FF&E or any work related to tenant improvements constructed by or for
         Tenant or other tenants or installed within the Premises or within any
         other tenant's premises (except to the extent included as part of the
         Base Building hereunder).

         16.      EMINENT DOMAIN.

                  A. SUBSTANTIAL TAKING. If the entire Building, or a
         substantial part thereof, shall be taken or condemned by any competent
         authority for any public or quasi-public use or purpose or if any part
         of the Premises is so taken or condemned and Tenant elects by written
         notice to Landlord within thirty (30) days following the taking to
         terminate this Lease, the Term shall end upon and not before the
         earlier of the date when the possession of the part so taken shall be
         required for the use or purpose or the effective date of the taking. If
         any condemnation proceeding shall be instituted in which it is sought
         to take or damage any part of the Building, the taking or damaging of
         which would, in Landlord's opinion, prevent the economical operation of
         the Building, or if the grade of any street or alley adjacent to the
         Land or the Building is changed or any such street or alley is closed
         by any competent authority, and the taking, damage, change of grade or
         closing makes it necessary or desirable to remodel the Building to
         conform to the taking, damage, change of grade or closing, Landlord
         shall have the right to terminate this Lease upon written notice to
         Tenant given not less than ninety (90) days prior to the date of
         termination designated in the notice. In either of the events above
         referred to, Rent shall be apportioned on a per diem basis and be
         payable to the date of the termination.

                  B. TAKING OF PART. If a part of the Building or the Premises
         is taken or condemned by any competent authority and this Lease is not
         terminated as provided in Section 16.A., the Lease shall be amended to
         reduce (if applicable) the monthly Base Rent, or to reduce or increase,
         as the case may be, the Tenant's Proportionate Share to reflect the
         Rentable Square Feet of the Premises or Building, as the case may be,
         remaining after the taking or condemnation. Landlord, upon receipt and
         to the extent of the award in condemnation (or proceeds of sale), shall
         make necessary repairs and restorations to the Premises (including
         Tenant Improvements, but excluding any FF&E, Tenant's alterations, or
         any other improvements made by or on behalf of Tenant) and to the
         Building to the extent necessary to constitute the portion of the
         Building not so taken or condemned as a complete architectural and
         economically efficient unit.

                                       31
<PAGE>   38
                  C. COMPENSATION. Landlord shall be entitled to receive the
         entire award (or sale proceeds) from any taking, condemnation or sale
         without any payment to Tenant, and Tenant hereby assigns to Landlord
         all of Tenant's interest, if any, in the award; provided, however,
         Tenant shall have the right separately to pursue against the condemning
         authority a separate award in respect of the loss, if any, to any of
         Tenant's FF&E, alterations paid for by Tenant without any credit or
         allowance from Landlord, and with respect to Tenant's moving expenses,
         so long as there is no diminution of Landlord's award as a result, and
         subject to the rights of any Ground Lessor or Mortgagee of Landlord
         with respect thereto.

           17.      ASSIGNMENT AND SUBLETTING.

                  A. PROHIBITIONS. Except as provided in Section 17.D. and 17.I.
         below, Tenant shall not, either prior or subsequent to the commencement
         of the Term, (i) assign, transfer, mortgage, pledge, hypothecate or
         encumber or subject to or permit to exist upon or be subjected to any
         lien or charge, this Lease or any interest under it, (ii) allow to
         exist or occur any transfer of or lien upon this Lease or Tenant's
         interest herein by operation of law, (iii) sublet the Premises or any
         part thereof, or (iv) permit the use or occupancy of the Premises or
         any part thereof for any purpose not provided for under Section 6 of
         this Lease or by anyone other than Tenant and Tenant's employees (which
         shall be deemed to include Tenant's operating division known commonly
         as McDougal Littell, any other operating division of Tenant or any
         operating division of any entity wholly owned by Tenant), without the
         prior consent of Landlord in each instance, not to be unreasonably
         withheld, conditioned or delayed (subject to the terms and conditions
         hereafter set forth), with respect to any matters described in Section
         17.A.(i) and (iii), and which may be withheld in Landlord's sole
         discretion, with respect to the matters described in Section 17.A(ii)
         and (iv). In no event shall this Lease be assigned or assignable by
         voluntary or involuntary bankruptcy proceedings or otherwise, except as
         provided by law, and in no event shall this Lease or any rights or
         privileges hereunder be an asset of Tenant under any bankruptcy,
         insolvency or reorganization proceedings, except as provided by law.
         Any of the foregoing performed or attempted in violation of the
         provisions of this Section shall be null and void.

                  B. CONTINUING LIABILITY. No assignment, subletting, use,
         occupancy, transfer or encumbrance by Tenant shall operate to relieve
         Tenant from any covenant, liability or obligation hereunder except to
         the extent, if any, expressly provided for in any written consent of
         Landlord to the foregoing given pursuant to the terms of Section 17.G,
         and no consent to any of the foregoing, shall be deemed to be a consent
         to or relieve Tenant from obtaining Landlord's consent to any
         subsequent assignment, subletting, use, occupancy, transfer or
         encumbrance. Tenant shall pay all of Landlord's reasonable costs,
         charges and expenses, including, without limitation, reasonable
         attorneys' fees and expenses, incurred in connection with any
         assignment, subletting, use, occupancy, transfer or encumbrance made or
         requested by Tenant.

                  C. NOTICE OF PROPOSED ASSIGNMENT OF SUBLETTING. Subject to the
         terms of Section 17.I. below if Tenant desires to assign this Lease or
         to sublease all or any

                                       32
<PAGE>   39
         portion of the Premises, Tenant shall, by notice in writing, advise
         Landlord of its intention from, on and after a stated date (which shall
         not be less than ten (10) business days nor more than six (6) months
         after the date of the giving of Tenant's notice to Landlord; provided,
         however, that in connection with an assignment or subletting arising
         out of a merger, consolidation, dissolution, reorganization or other
         similar corporate transaction, the six (6) month period shall be
         automatically extended, so long as Tenant is diligently negotiating the
         terms of the transaction) to assign this Lease or sublet all or any
         part of the Premises for the balance or any part of the Term and,
         Landlord shall within ten (10) business days after its receipt of
         Tenant's notice, consent or refuse to consent to the proposed
         assignment or sublease (which consent shall not be unreasonably
         withheld, as described in Section 17.D. below). Tenant's notice shall
         include the name and address of the proposed assignee or subtenant, a
         true and complete copy of the proposed assignment or sublease and
         sufficient information, as Landlord deems reasonably necessary, to
         permit Landlord to determine (i) the financial responsibility of any
         prospective assignee or subtenant; (ii) the character and the nature of
         the business of the proposed assignee or subtenant, and (iii) whether
         Landlord has the right under this Lease to withhold consent to the
         proposed assignment or sublease. If Landlord fails to respond to
         Tenant's request for approval within the ten (10) business day period,
         Landlord shall be deemed to have consented to the proposed assignment
         or subletting.

                  D. GROUNDS FOR WITHHOLDING CONSENT. Landlord will not
         unreasonably withhold or delay its consent to Tenant's proposed
         assignment of this Lease or subletting of the space covered by Tenant's
         notice to a "REPUTABLE TENANT", as hereinafter defined. Without
         limiting the grounds on which it may be reasonable for Landlord to
         withhold its consent, Landlord shall not be deemed to have unreasonably
         withheld its consent to a proposed assignment of this Lease or to a
         proposed sublease of part or all of the Premises if its consent is
         withheld because: (i) Tenant is then in default hereunder (provided
         that if the default is cured within applicable cure periods, Tenant
         shall again have the right to propose the assignment or subletting to
         Landlord for its consent hereunder); (ii) the proposed assignee or
         sublessee is a governmental or quasi-governmental agency, foreign or
         domestic, and its status as a governmental or quasi- governmental
         agency will in any way effect the obligations of Tenant (or such
         assignee or sublessee) to pay or reimburse Landlord for Taxes; (iii)
         the proposed assignee or sublessee is a tenant in the Building (and
         Landlord has space available or coming available within the Building
         sufficient to accommodate the proposed subtenant within three (3)
         months of the commencement date of the proposed sublease) or a party
         with whom Landlord is negotiating a lease of space in the Building with
         (provided that if Landlord withholds consent because Landlord is
         negotiating with the assignee or sublessee, Landlord shall provide
         Tenant with written evidence of the terms upon which Landlord and the
         assignee or sublessee are negotiating a lease of space in the
         Building); (iv) the assignment or sublease would violate any of the
         terms of this Lease; or (v) the proposed use would be inconsistent with
         the nature of the Building. As used herein, the term "REPUTABLE TENANT"
         shall mean, with respect to any proposed assignee or subtenant, an
         assignee or subtenant that in Landlord's reasonable judgment, satisfies
         all of the following criteria: (i) the financial condition of the
         transferee (a) in the case of an assignment is in Landlord's judgment
         (1) sufficient to enable the assignee to perform its obligations under
         this Lease and (2) is either equal to or greater

                                       33
<PAGE>   40
         than Tenant's and each entity remaining liable on the Lease as of the
         date of the assignment or if the assignee's financial condition is not
         equal to or greater than Tenant's (and each entity remaining liable on
         the Lease) as of the date of the assignment, then the assignee's
         financial condition must be sufficient in Landlord's reasonable
         judgment, to preclude any increase in the interest rate applicable to
         any debt secured by the Project, or to preclude any adverse impact on
         Landlord's ability to finance or refinance the Project at rates and on
         terms equivalent to those that would be available if Tenant had
         remained the tenant under the Lease, or (b) in the case of a
         subletting, is sufficient to enable the transferee to perform its
         obligations under the proposed sublease; (ii) the transferee has not in
         the five (5) year period immediately preceding the assignment or
         subletting been the subject of any state or federal bankruptcy,
         insolvency or other similar proceeding, and has not within the five (5)
         year period made an assignment for the benefit of creditors, admitted
         its inability to pay its debts when due, or taken any other similar
         actions; and (iii) the transferee has a use which is consistent with
         the use permitted under this Lease and with the first class nature of
         the Building. Notwithstanding anything to the contrary herein, so long
         as Landlord has approximately comparable space in the Building
         available for lease or coming available for lease in the Building
         within three (3) months of the proposed commencement date of any
         sublease, Tenant shall not have the right to offer to sublease or to
         enter into a sublease for all or any portion of the Premises (except
         for a sublease permitted pursuant to Section 17.I), which offer or
         sublease is for a net effective rental which is less than the net
         effective rental that Landlord is then quoting for space in the
         Building, and Landlord shall have no obligation to approve any such
         sublease which has a net effective rental rate which is less than the
         net effective rental rate which Landlord is quoting for space in the
         Building.

                  E. EXCESS RENT PAYMENT. If Tenant (as Tenant or
         debtor-in-possession) shall assign this Lease or sublet the Premises,
         or any part thereof, at a rental or for other monetary or non-monetary
         consideration in excess of the Rent or pro rata portion thereof due and
         payable by Tenant under this Lease, then Tenant shall pay to Landlord
         as additional Rent one-half (1/2) of the excess rent or other
         consideration, immediately upon receipt under any such assignment or,
         in the case of a sublease, (i) on the later of the first day of each
         month during the term of any sublease, or the day of receipt from such
         subtenant, one-half (1/2) of the excess of all rent and other
         consideration paid by the subtenant for such month over the Rent then
         payable to Landlord pursuant to the provisions of this Lease for said
         month (or if only a portion of the Premises is being sublet, one-half
         (1/2) of the excess of all rent and other consideration due from the
         subtenant for the month over the portion of the Rent then payable to
         Landlord pursuant to the provisions of this Lease for said month which
         is allocable on a rentable area basis to the space sublet), and (ii)
         immediately upon the receipt thereof, one-half (1/2) of any other
         consideration realized by Tenant from the subletting. Landlord shall
         not be responsible for any deficiency if Tenant shall assign this Lease
         or sublet the Premises or any part thereof at a rental less than that
         provided for herein. Whenever reference is made to the "EXCESS" of rent
         or other consideration, such excess shall be reduced by charging (until
         Tenant has recouped such amount in full) against the rent or other
         consideration paid by the assignee or subtenant, reasonable brokerage
         commissions, leasehold improvements costs and other tenant concessions
         which Tenant has paid or given in

                                       34
<PAGE>   41
         connection with assigning the Lease or subleasing the applicable
         portion of the Premises, as well as the then unamortized portion of any
         amount paid directly by Tenant for Tenant Improvements pursuant to the
         Workletter Agreement, which amount shall be deemed amortized, on a
         straight line basis over the Term, without interest.

                  F. LEASE ASSUMPTION; SUBTENANT ATTORNMENT. If Tenant shall
         assign this Lease, then, as a condition to the effectiveness of the
         assignment, the assignee shall expressly assume all of the obligations
         of Tenant under this Lease in a written instrument mutually acceptable
         to Landlord and the assignee, with an unexecuted copy thereof being
         delivered to Landlord not later than ten (10) days prior to the
         effective date of the assignment and an executed copy of the assignment
         being delivered to Landlord not later than fifteen (15) days after the
         effective date of the assignment. If Tenant shall sublease any part of
         the Premises, then as a condition to the effectiveness of the sublease,
         Tenant shall obtain and furnish to Landlord, not later than ten (10)
         days prior to the effective date of the sublease and in form reasonably
         satisfactory to Landlord and the subtenant, an unexecuted copy of the
         proposed written agreement of the subtenant to the effect that the
         subtenant will attorn to Landlord, at Landlord's option and written
         request (at Landlord's sole election), if this Lease terminates before
         the expiration of the sublease, with an executed copy of the written
         agreement being delivered to Landlord not later than fifteen (15) days
         after the effective date of the sublease. Tenant shall, not later than
         fifteen (15) days after the effective date of any the assignment or
         sublease, deliver to Landlord a certified copy of the instrument of
         assignment or sublease.

                  G. RELEASE. In connection with any proposed assignment of this
         Lease, if Tenant desires to be released from its obligations under this
         Lease, Tenant shall request a release at the time of requesting
         Landlord's consent to the assignment, and Landlord shall not withhold
         its consent to a release of Tenant's obligations under this Lease
         accruing from and after the assignment, provided (i) the proposed
         transferee is "investment grade" as hereinafter described or if the
         proposed assignee is not considered "investment grade" because it does
         not have issued and outstanding publicly traded securities and is
         privately held, Landlord shall have determined, in its good faith
         discretion, that the financial condition of the assignee is sufficient
         to enable commercial lenders who provide long term debt secured by
         leased properties, using commercial underwriting standards, to provide
         financing on a long term basis for the Project in an amount equal to or
         greater than the amounts which could be obtained if the assignee had a
         credit rating equivalent to that of an "investment grade" assignee, and
         upon terms at least as favorable to Landlord as the terms that would be
         available if the assignee were considered "investment grade", (ii) each
         of the Mortgagee's and Ground Lessor's, if any, consent in writing to
         the release, and (iii) Landlord otherwise is obligated to, and has
         granted its consent to, the assignment pursuant to this Section 17. For
         purposes of this Section 17.G, a proposed transferee shall be
         considered "investment grade" if the transferee (A) has, at the time of
         the proposed transfer, and at all times throughout the Compliance
         Period (as hereinafter defined) had, issued and outstanding publicly
         traded securities ("SECURITIES") listed on a "national securities
         exchange", as defined in the Securities Exchange Act of 1934, and (B)
         at the time of the proposed transfer, the Securities have, and at all
         times throughout the Compliance Period the Securities had, a credit
         rating from Standard & Poors, Dun & Bradstreet, Moody's Investor
         Services or Duff & Phelps of at least BBB-. As used

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<PAGE>   42
         herein, the term "Compliance Period" shall mean the period from the
         date of the filing of the most recent annual report for the proposed
         transferee with the Securities and Exchange Commission ("SEC") until
         and through and including the date of the proposed transfer; provided
         that if the most recent annual report has been filed within six (6)
         months of the date of the proposed transfer, the Compliance Period
         shall be deemed to be the period from the date of the filing of the
         annual report for the proposed transferee which preceded the most
         recent annual report filed, until and through and including the date of
         the proposed transfer. Tenant shall not, however, be released as a
         result of a transfer to a Tenant Affiliate, regardless of whether the
         Tenant Affiliate is "investment grade" unless the Tenant Affiliate is
         an entity resulting from the merger, reorganization or consolidation of
         another entity with Tenant or is an entity which acquires all or
         substantially all of the assets of Tenant and all of the requirements
         of this Section 17.G for a release have been met.

                  H. CORPORATION, PARTNERSHIP AND LIMITED LIABILITY COMPANY
         TRANSFERS. If Tenant is a corporation, any transaction or series of
         transactions (including without limitation any dissolution, merger,
         consolidation or other reorganization of Tenant, or any issuance, sale,
         gift, transfer or redemption of any capital stock of Tenant, whether
         voluntary, involuntary or by operation of law, or any combination of
         any of the foregoing transactions) resulting in the transfer of control
         of Tenant, other than by reason of death, shall be deemed to be a
         voluntary assignment of this Lease by Tenant subject to the provisions
         of this Section 17. If Tenant is a partnership or limited liability
         company, any transaction or series of transactions (including without
         limitation any withdrawal or admittance of a partner or member or any
         change in any partner's or member's interest in Tenant, whether
         voluntary, involuntary or by operation of law, or any combination of
         any of the foregoing transactions) resulting in the transfer of control
         of Tenant, other than by reason of death, shall be deemed to be a
         voluntary assignment of this Lease by Tenant subject to the provisions
         of this Section 17. The term "CONTROL" as used in this Lease means the
         power to directly or indirectly direct or cause the direction of the
         management or policies of Tenant, whether through the ownership of
         voting securities or beneficial interest or otherwise. Notwithstanding
         any of the foregoing, the provisions of this Section 17.H. shall not
         apply to any entity the outstanding voting stock of which is listed at
         the time of a transaction referred to herein on a "NATIONAL SECURITIES
         EXCHANGE", as defined in the Securities Exchange Act of 1934.

                  I. PERMITTED TRANSFERS. Notwithstanding any of the foregoing,
         Landlord's consent under Sections 17.C. and 17.D. shall not be required
         for an assignment or sublet to a Tenant Affiliate, and Landlord shall
         not collect any excess rent under Section 17.E. as a result of an
         assignment or sublet to a Tenant Affiliate, as long as (i) Tenant gives
         reasonable prior notice to Landlord of the assignment or sublet
         (provided that in the case of an assignment or subletting to a Tenant
         Affiliate arising out of a merger, consolidation, dissolution or
         reorganization of Tenant, or any other similar corporate transaction,
         prior notice shall not be required, so long as Tenant notifies Landlord
         of the transaction promptly following the consummation of the
         transaction or when corporate policy permits, if earlier); and (ii) if
         an assignment, the assignee assumes the obligations of Tenant under
         this Lease. As used herein, the term "TENANT AFFILIATE" shall mean any
         entity (i) which acquires all or substantially all of the assets of or
         ownership interests in the original Tenant under this Lease

                                       36
<PAGE>   43
         for a purpose other than to circumvent the provisions of this Article
         17; (ii) which results from a merger or consolidation with the original
         Tenant under this Lease; or (iii) which is controlled by, controls, or
         is under common control with, the Tenant under this Lease. For purposes
         of the foregoing, the term "CONTROL" shall have the meaning described
         in Section 17.H. Except as provided in this Section 17.I. all terms of
         this Section 17 shall apply with respect to an assignment or sublet to
         a Tenant Affiliate (including, without limitation, the terms of Section
         17.B. regarding the continued liability of the "TENANT" making the
         assignment or sublease, as well as the continued liability of each
         prior "TENANT" and of and any guarantor(s) of this Lease, except as
         provided in Section 17.G relating to releases).

                18. SURRENDER. Upon termination of the Term or Tenant's right to
possession of the Premises, Tenant shall return the Premises to Landlord in good
order and condition, ordinary wear and damage by fire or other casualty
excepted. If, in connection with the approval of plans for any alterations,
Landlord notifies Tenant in accordance with Section 12 that Landlord requires
Tenant to remove any of such alterations, then at Landlord's request, Tenant
shall remove the applicable alterations, and the removal shall be done in a good
and workmanlike manner, and upon the removal Tenant shall restore the Premises
to its condition prior to the installation of such alterations (as the case may
be), in each case on or before the expiration of the Term or Tenant's right to
possession. Tenant shall not, however, be obligated to remove the Tenant
Improvements (as defined in the Workletter Agreement) or any associated
telephone, data and power wiring and cabling at the expiration or earlier
termination of the Term. If Tenant does not remove the applicable alterations on
or before the expiration of the Term or termination of Tenant's right to
possession, then Landlord, without limiting any other rights or remedies
available to Landlord, may remove the same and restore the Premises, and Tenant
shall pay the reasonable cost of the removal and restoration to Landlord within
thirty (30) days following Landlord's written demand. Notwithstanding the
foregoing, it is understood and agreed that Tenant shall remove its FF&E (other
than any associated telephone, data and power wiring and cabling installed in
connection with the Tenant Improvements) from the Premises prior to termination
of the Term or Tenant's right to possession of the Premises. As used herein, the
term "FF&E" shall mean all of Tenant's furniture, equipment, trade fixtures, and
all other items of non-affixed personal property and associated telephone, data
and power wiring and cabling from time to time within the Premises, including
without limitation, the categories of items listed in EXHIBIT I attached to this
Lease. On or about the Commencement Date, Landlord and Tenant shall prepare and
agree upon an updated list of the FF&E within the Premises, which shall be
insured by Tenant under this Lease and shall be removed by Tenant upon the
expiration of the Term or Tenant's right of possession. If Tenant does not
remove the FF&E (other than cabling and wiring as described above), Tenant shall
be conclusively presumed to have conveyed the same to Landlord without further
payment or credit by Landlord to Tenant, or at Landlord's sole option and
without limiting any other rights or remedies available to Landlord, the items
shall be deemed abandoned, in which event Landlord may cause the items to be
removed and disposed of at Tenant's expense, which shall be Landlord's
reasonable cost of removal (less any net proceeds received by Landlord from the
sale thereof), without notice to Tenant and without obligation to compensate
Tenant.

                19. DEFAULTS AND REMEDIES.

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<PAGE>   44
                  A. EVIDENCE OF DEFAULT. The occurrence or existence of any one
         or more of the following shall constitute a "DEFAULT" by Tenant under
         this Lease: (i) Tenant fails to pay any installment or other payment of
         Rent when due (provided that Tenant shall have five (5) days after
         written notice of the failure to cure the default on the first two (and
         only two) occasions thereof occurring in any twelve (12) consecutive
         month period during the Term); (ii)Tenant fails to observe or perform
         any of the other covenants, conditions or provisions of this Lease and
         fails to cure the default within thirty (30) days after written notice
         thereof to Tenant (provided that the thirty (30) day period shall be
         extended for the time reasonably required to complete the cure, not
         exceeding, in any event, an additional ninety (90) day period, if the
         failure cannot reasonably be cured within the thirty (30) day period
         and Tenant commences to cure such failure within the thirty (30) day
         period and thereafter diligently and continuously proceeds to cure the
         failure and provided further that if the default is not reasonably
         susceptible of being cured within the ninety (90) day period, and
         Tenant is diligently proceeding with the cure, the ninety (90) day
         period shall be extended while Tenant is diligently curing, so long as
         the default does not cause a default under any Mortgage or Ground Lease
         (each, as hereinafter defined in Section 23.A), create any risk to
         life, health or safety at the Project or otherwise cause Landlord to be
         in default under any lease or other agreement to which Landlord is a
         party or bound); (iii) the interest of Tenant in this Lease is levied
         upon under execution or other legal process; (iv) a petition is filed
         by or against Tenant to declare Tenant bankrupt or seeking a plan or
         reorganization or arrangement under any Chapter of the United States
         Bankruptcy Code (or any similar law for the relief of debtors), or any
         amendment, replacement, or substitution therefor, or to delay payment
         of, reduce or modify Tenant's debts, which in the case of an
         involuntary action, is not discharged within ninety (90) days after
         filing of the petition; (vi) Tenant is declared insolvent by law or any
         assignment of Tenant's property is made for the benefit of creditors;
         (vi) a receiver is appointed for Tenant or Tenant's property, which
         appointment is not discharged within sixty (60) days after the
         appointment; (vii) any action taken by or against Tenant to reorganize
         or modify Tenant's capital structure, which in the case of an
         involuntary action, is not discharged within sixty (60) days after the
         action; or (ix) upon the dissolution of Tenant.

                  B. RIGHT OF RE-ENTRY. Upon the occurrence of a Default,
         Landlord may elect to terminate this Lease or, without terminating this
         Lease, terminate Tenant's right to possession of the Premises. Upon any
         termination pursuant to the preceding sentence, Tenant shall
         immediately surrender and vacate the Premises and deliver possession
         thereof to Landlord in the condition required for surrender set forth
         in this Lease. Tenant grants to Landlord the right to enter and
         repossess the Premises and to expel Tenant and any others who may be
         occupying the Premises and to remove any and all property therefrom,
         without being deemed in any manner guilty of trespass and without
         relinquishing Landlord's rights to Rent or any other right given to
         Landlord hereunder or by operation of law.

                  C. TERMINATION OF RIGHT TO POSSESSION. If Landlord terminates
         Tenant's right to possession of the Premises without terminating this
         Lease, Landlord may relet the Premises or any part thereof. If Landlord
         terminates Tenant's right to possession, but not the Lease, Landlord
         shall use reasonable efforts to mitigate Tenant's damages as required

                                       38
<PAGE>   45
         by applicable law and to relet the Premises on such terms as Landlord
         shall reasonably deem appropriate (and Landlord hereby reaffirms its
         obligations under applicable law to mitigate damages); provided,
         however, Landlord may first lease Landlord's other available space and
         shall not be required to accept any tenant offered by Tenant or to
         observe any instructions given by Tenant about such reletting. Tenant
         shall reimburse Landlord for the costs and expenses of reletting the
         Premises including, but not limited to, all brokerage, advertising,
         legal, alteration, redecorating, repairs and other expenses incurred to
         secure a new tenant for the Premises. In addition, if the consideration
         collected by Landlord upon any such reletting, after payment of the
         expenses of reletting the Premises which have not been reimbursed by
         Tenant, is insufficient to pay monthly the full amount of the Rent,
         Tenant shall pay to Landlord the amount of each monthly deficiency as
         it becomes due. If the consideration actually received by Landlord is
         greater than the amount necessary to pay the full amount of the monthly
         Rent, the full amount of such excess shall be retained by Landlord and
         shall in no event be payable to Tenant.

                  D. TERMINATION OF LEASE. If Landlord terminates this Lease,
         Landlord may recover from Tenant and Tenant shall pay to Landlord, on
         demand, as and for liquidated and final damages, an accelerated lump
         sum amount equal to the amount by which Landlord's estimate of the
         aggregate amount of Rent owing from the date of the termination through
         the stated expiration date of the Term hereof plus Landlord's estimate
         of the aggregate expenses of reletting the Premises, exceeds Landlord's
         estimate of the fair rental value of the Premises for the same period
         (after deducting from the fair rental value the time needed to relet
         the Premises and the amount of concessions which would normally be
         given to a new tenant) both discounted to present value at the rate of
         six and one-half percent (6.5%) per annum.

                  E. OTHER REMEDIES. Upon the occurrence of a Default, and
         without limiting any other rights or remedies available to Landlord,
         Landlord may, but shall not be obligated to, perform any obligation of
         Tenant under this Lease, and, if Landlord so elects, all costs and
         expenses paid by Landlord in performing the obligation, together with
         interest at the Default Rate, shall be reimbursed by Tenant to Landlord
         on demand. Any and all remedies set forth in this Lease: (i) shall be
         in addition to any and all other remedies Landlord may have at law or
         in equity; (ii) shall be cumulative; and (iii) may be pursued
         successively or concurrently as Landlord may elect. The exercise of any
         remedy by Landlord shall not be deemed an election of remedies or
         preclude Landlord from exercising any other remedies in the future.

                  F. BANKRUPTCY. If Tenant becomes bankrupt, the bankruptcy
         trustee shall not have the right to assume or assign this Lease unless
         the trustee complies with all requirements of the United States
         Bankruptcy Code, and Landlord expressly reserves all of its rights,
         claims and remedies thereunder.

                  G. WAIVER OF TRIAL BY JURY. To the fullest extent permitted by
         law, Landlord and Tenant waive trial by jury in the event of any
         action, proceeding or

                                       39
<PAGE>   46
         counterclaim brought by either Landlord or Tenant against the other in
         connection with this Lease.

                  H. VENUE. If either Landlord or Tenant desires to bring an
         action against the other in connection with this Lease, such action
         shall be brought in the federal courts located in Chicago, Illinois, or
         state courts located in Cook County, Illinois. Landlord and Tenant
         consent to the jurisdiction of such courts and waive any right to have
         such action transferred from such courts on the grounds of improper
         venue or inconvenient forum.

                  I. LANDLORD DEFAULT. Landlord shall be in default under this
         Lease if Landlord fails to perform any obligation required of Landlord
         under the terms of this Lease and fails to cure the default within
         thirty (30) days after written notice thereof by Tenant to Landlord
         specifying the nature of Landlord's failure to perform; provided that
         the thirty (30) day period shall be extended for the time reasonably
         required to complete the cure, not exceeding an additional ninety (90)
         day period, if the failure cannot reasonably be cured within the thirty
         (30) day period and if Landlord commences performance within the thirty
         (30) day period and thereafter diligently and continuously proceeds to
         cure the failure and provided further that if the default is not
         reasonably susceptible of being cured within the ninety (90) day
         period, and Landlord is diligently proceeding with the cure, the ninety
         (90) day period shall be extended while Landlord is diligently curing,
         so long as the failure does not create any risk to life, health or
         safety at the Project. If Landlord fails to cure any such default
         within the time period specified above, and such default materially
         interferes with Tenant's ability to use and occupy the Premises, Tenant
         may elect, by ten (10) days' prior written notice to Landlord, as its
         sole remedy, to cure the default, and the reasonable costs of Tenant
         incurred in curing the default, shall be reimbursed by Landlord to
         Tenant within ten (10) days following Tenant's written demand therefor,
         accompanied by appropriate invoices. Notwithstanding the foregoing,
         this Section shall not apply to Landlord's obligations under Section
         27, and Tenant's sole rights and remedies with respect to any failure
         of Landlord to perform under Landlord's obligations under Section 27
         shall be exclusively governed by Section 27.

         20. HOLDING OVER. If Tenant retains possession of the Premises after
the expiration or termination of the Term or Tenant's right to possession of the
Premises, Tenant shall pay (i) Base Rent during the first thirty (30) days of
the holdover at one hundred fifty percent (150%) of the Base Rent in effect
immediately preceding such holdover, and thereafter pay Base Rent during the
holdover in an amount equal to two hundred percent (200%) of the Base Rent in
effect immediately preceding such holdover, plus (ii) Additional Rent and all
other amounts otherwise payable under the Lease (including, without limitation,
Excess Expenses) computed on a per diem basis for each day that Tenant remains
in possession and Tenant shall perform all of its other obligations under the
Lease. Tenant shall also pay, indemnify and defend Landlord from and against all
claims and damages, consequential as well as direct, sustained by reason of
Tenant's holding over, provided, however, that so long as Tenant pays the
holdover rent described herein above, and the holdover terminates and Tenant
vacates the Premises in the condition required by the Lease on or before the
date which is the earlier of sixty (60) days following the expiration of the
Term or the

                                       40
<PAGE>   47
termination of Tenant's right of possession, Tenant shall have no liability to
Landlord for consequential damages; otherwise, Tenant shall be so liable. The
provisions of this Section do not waive Landlord's right of re-entry or right to
regain possession by actions at law or in equity or any other rights hereunder,
and any receipt of payment by Landlord shall not be deemed a consent by Landlord
to Tenant's remaining in possession or be construed as creating or renewing any
Lease or right of tenancy between Landlord and Tenant.

         21. CERTAIN REGULATORY MATTERS.

                  A. HAZARDOUS SUBSTANCES. Except for Landlord's obligations
         expressly described in Section 21.B., Tenant shall comply , at its sole
         expense, with all laws relating to the protection of public health,
         safety and welfare and with all environmental laws (hereinafter
         defined) in the use, occupancy and operation of the Premises. Tenant
         agrees that no Hazardous Substances (as hereinafter defined) shall be
         used, located, stored or processed on the Premises or be brought into
         the Building by Tenant, except for minor quantities of cleaning
         materials and other items not inconsistent with office use and, in any
         event, in compliance with all applicable laws. Tenant further agrees
         that no Hazardous Substances will be released or discharged from the
         Premises (including, but not limited to, ground water contamination).
         The term "HAZARDOUS SUBSTANCES" shall mean and include all hazardous
         and toxic substances, waste or materials, any pollutant or contaminant,
         including, without limitation PCB's, asbestos and raw materials that
         include hazardous constituents or any other similar substances or
         materials that are now or hereafter included under or regulated by any
         environmental laws or that would pose a health, safety or environmental
         hazard. If Tenant is notified of any investigation or violation of any
         environmental law arising from Tenant's activities at the Premises,
         Tenant shall immediately deliver to Landlord a copy of such notice. In
         such event or if Landlord reasonably believes that a violation of
         environmental law exists, Landlord may, upon notice to Tenant, conduct
         such tests and studies relating to compliance by Tenant with
         environmental laws or the alleged presence of Hazardous Substances upon
         the Premises as Landlord reasonably deems necessary or desirable, and
         to the extent the tests and studies indicate non-compliance by Tenant
         with environmental laws or the presence of Hazardous Substances upon
         the Premises based upon Tenant's activities, then Tenant shall pay the
         cost of the tests and studies. Landlord's inspection and testing rights
         are for Landlord's own protection only, and Landlord has not, and shall
         not be deemed to have, assumed any responsibility to Tenant or any
         other party for compliance with environmental laws, as a result of the
         exercise or non-exercise of Landlord's rights. Tenant shall indemnify,
         defend, protect and hold harmless Landlord, its constituent members,
         and their respective officers, directors, members, partners, agents,
         employees, successors and assigns, from and against any and all loss,
         claim, expense, liability and costs (including attorneys' fees) arising
         out of or in any way related to the presence of any Hazardous Substance
         introduced to the Premises during the Term by Tenant, its agents,
         employees, contractors, subcontractors, subtenants or invitees.

                  B. LANDLORD RESPONSIBILITY. As to any Hazardous Substances (as
         now defined) existing in the Premises or the Building or the Land on
         the Commencement Date in violation of applicable environmental laws,
         Landlord shall remove or otherwise

                                       41
<PAGE>   48
         remediate the Hazardous Substances to the extent required by law (as
         now existing), at Landlord's sole cost and expense. Tenant shall
         cooperate with Landlord in allowing proper access to the Premises to
         perform the foregoing removal or remediation activities, and shall use
         reasonable efforts not to take any action which may worsen any
         environmental condition once discovered. Landlord shall restore any
         damage caused to the Premises as a result of access by Landlord under
         this Section 21.B., to the extent the damage was not caused by Tenant's
         negligence or willful misconduct or Tenant's breach of its obligations
         hereunder. In any entry into the Premises under this Section 21.B.,
         Landlord shall use commercially reasonable efforts to minimize
         interference with Tenant's business operations at the Premises. In
         addition, Landlord shall, at Tenant's request, either enforce the
         City's obligations under the Redevelopment Agreement with respect to
         Hazardous Substances or assign its rights with respect to Hazardous
         Substances under the Redevelopment Agreement to Tenant.

                  C. AMERICANS WITH DISABILITIES ACT. Landlord and Tenant
         acknowledge that the Americans With Disabilities Act of 1990 (42 U.S.C.
         Section 12101 et seq.) and regulations and guidelines promulgated
         thereunder, as all of the same may be amended and supplemented from
         time to time (collectively referred to herein as the "ADA"), establish
         requirements for business operations, accessibility and barrier
         removal, and that such requirements may or may not apply to the
         Premises and the Building depending on, among other things: (1) whether
         Tenant's business is deemed a "PUBLIC ACCOMMODATION" or "COMMERCIAL
         FACILITY", (2) whether such requirements are "READILY ACHIEVABLE", and
         (3) whether a given alteration affects a primary function area or
         triggers "PATH OF TRAVEL" requirements. The parties hereby agree that:
         (a) Landlord shall be responsible for ADA Title III compliance in the
         Common Areas of the Building, except as provided below, and Landlord
         shall perform all work required for such compliance, (b) Tenant shall
         be responsible for ADA Title III compliance in the Premises, including
         paying the costs in connection with the Tenant Improvements and any
         other leasehold improvements or other work to be performed in the
         Premises under or in connection with this Lease, subject, however, to
         Landlord's obligations under the Workletter Agreement to perform
         certain construction and to fund certain costs, and (c) Landlord may
         perform, or require that Tenant perform, and Tenant shall be
         responsible for the cost of, ADA Title III "PATH OF TRAVEL"
         requirements triggered by any improvements or alterations in the
         Premises made by Tenant after the Commencement Date. Tenant shall be
         solely responsible for requirements under Title I of the ADA relating
         to Tenant's employees.

                  D. ENVIRONMENTAL LAWS. As used in this Lease, the term
         "ENVIRONMENTAL LAWS" means any applicable state, local, or federal
         statute, law, code, rule, regulation, ordinance, order, standard,
         permit, license or requirement (including consent decrees, judicial
         decisions and administrative orders) together with all related
         amendments, implementing, preservation, conservation or regulation of
         the environment, and regulations and reauthorizations pertaining to the
         protection, preservation, conservation or regulation of the
         environment, including but not limited to: the Comprehensive
         Environmental Response, Compensation and Liability Act, 42
         U.S.C.Section 9601 et seq.; the Resource Conservation and Recovery Act,
         42 U.S.C.Section 6901 et seq.; the Toxic Substances Control Act, 15
         U.S.C.Section 2601

                                       42
<PAGE>   49
         et seq.; the Clean Air Act, 42 U.S.C.Section 7401 et seq.; and the
         Clean Water Act, 33 U.S.C.Section 1251 et seq.

             22. ESTOPPEL CERTIFICATE. Tenant agrees that, from time to time
within thirty (30) days' following actual receipt by Tenant of a written request
by Landlord, Tenant shall execute and deliver to Landlord a written certificate
certifying, to the extent factually accurate: (i) that this Lease is unmodified
and in full force and effect (or if there have been modifications, a description
of the modifications and that this Lease as modified is in full force and
effect); (ii) the dates to which Rent has been paid; (iii) that Tenant is in
possession of the Premises, if that is the case; (iv) that Landlord is not in
default under this Lease, or, if Tenant believes Landlord is in default, the
nature thereof in detail; (v) that Tenant has no off-sets or defenses to the
performance of its obligations under this Lease (or if Tenant believes there are
any off-sets or defenses, a full and complete explanation thereof); (vi) that
the Premises have been completed in accordance with the terms and provisions
hereof, that Tenant has accepted the Premises and the condition thereof and of
all improvements thereto and has no claims against Landlord or any other party
with respect thereto (or if Tenant believes that such matters are not accurate,
a full and complete explanation thereof); and (vii) such additional matters as
may be reasonably requested by Landlord, it being agreed that the certificate
may be relied upon by any prospective purchaser, investor, mortgagee, or other
person having or acquiring a direct or indirect interest in the Building. If
Tenant fails to execute and deliver any certificate within thirty (30) days
after receipt of Landlord's request, then Tenant's failure shall be deemed a
"DEFAULT" hereunder, without any further notice or cure periods being required
under this Lease.

             23. SUBORDINATION.

                  A. SUBORDINATION OF LEASE. Landlord may have heretofore or may
         hereafter encumber with a mortgage or trust deed the Building, the
         Project, and/or the Land, or any part thereof or any interest therein,
         may sell and lease back the Land or any part thereof, and may encumber
         the leasehold estate under any sale and leaseback arrangement with a
         mortgage or trust deed. Any such mortgage or trust deed is herein
         called a "MORTGAGE" and the holder of any such mortgage or the
         beneficiary under any such trust deed is herein called a "MORTGAGEE."
         Any such lease of the land underlying the Building or Project (or any
         part thereof) is herein called a "GROUND LEASE" and the lessor under
         any such lease is herein called a "GROUND LESSOR." This Lease and the
         rights of Tenant hereunder shall be and are hereby expressly made
         subject to and subordinate at all times to any Mortgage and to any
         Ground Lease now or hereafter existing, and to all amendments,
         modifications, renewals, extensions, consolidations and replacements
         thereof, and to all advances made or hereafter to be made upon the
         security thereof, subject to the non-disturbance rights hereinafter set
         forth. Notwithstanding the foregoing, Landlord shall provide Tenant
         with a non-disturbance agreement from any Mortgagee or Ground Lessor
         existing as of the date of execution of this Lease and any future
         Mortgagee or Ground Lessor, which agreement shall be on the Mortgagee's
         or Ground Lessor's customary form with changes thereto as reasonably
         requested by Tenant, and may include the provisions set forth below in
         this Section 23. Tenant agrees to execute and deliver to Landlord any
         further instruments consenting to or confirming the

                                       43
<PAGE>   50
         subordination of this Lease to any Mortgage and to any Ground Lease and
         containing any other reasonable provisions which may be requested in
         writing by Landlord within thirty (30) days after Tenant's receipt of
         Landlord's written request; provided that any such instrument shall
         also include recognition and non-disturbance provisions to the effect
         that the Mortgagee or Ground Lessor, as the case may be, will not
         disturb Tenant's continued occupancy of the Premises under this Lease
         so long as Tenant is not in Default hereunder, which recognition and
         non-disturbance provisions may contain such other terms and conditions
         as are contained in the Mortgagee's or Ground Lessor's customary form
         of subordination, non-disturbance and attornment agreement, with
         changes thereto as reasonably requested by Tenant, and including
         customary notice and cure rights in favor of the Mortgagee or Ground
         Lessor.

                  B. RIGHTS OF SUCCESSORS. If any Mortgage is foreclosed, or
         Landlord's interest under this Lease is conveyed or transferred in lieu
         of foreclosure, or if any Ground Lease is terminated:

                           (i) no person or entity which as the result of any of
                  the foregoing has succeeded to the interest of Landlord in
                  this Lease (any such person or entity being hereafter called a
                  "SUCCESSOR") shall be liable for any default by Landlord or
                  any other matter which occurred prior to the date such
                  Successor succeeded to Landlord's interest in this Lease, nor
                  shall any Successor be bound by or subject to any offsets or
                  defenses which Tenant may have against Landlord or any other
                  predecessor in interest to such Successor (provided further,
                  however, that nothing herein shall be deemed to limit a
                  Successor's obligations under this Lease which are required to
                  be performed from and after the date the Successor succeeds to
                  Landlord's interest hereunder).

                           (ii) upon request of any Successor, Tenant will
                  attorn to the Successor, as Landlord under this Lease, subject
                  to the provisions of this Section 23, and will execute and
                  deliver such instruments as may be necessary or appropriate to
                  evidence the attornment within twenty (20) days after receipt
                  of a written request to do so.

                           (iii) no Successor shall be bound to recognize any
                  prepayment by more than thirty (30) days of Base Rent,
                  Additional Rent or Excess Expenses from the date when
                  otherwise due hereunder.

                           (iv) no Successor shall be bound to recognize any
                  amendment or modification of this Lease made without the
                  written consent of the Mortgagee or Ground Lessor (as the case
                  may be).

                  C. SUBORDINATION OF MORTGAGE. Notwithstanding anything to the
         contrary contained herein, any Mortgagee may subordinate, in whole or
         in part, its Mortgage to this Lease by sending Tenant notice in writing
         subordinating all or any part of its Mortgage to this Lease, and Tenant
         agrees to execute and deliver to the Mortgagee such further instruments
         consenting to or confirming the subordination of all or any portion of
         its

                                       44
<PAGE>   51
         Mortgage to this Lease and containing any other provisions which may be
         requested in writing by the Mortgagee within thirty (30) days after
         Tenant's receipt of a written request.

         24. QUIET ENJOYMENT. As long as no Default exists, Tenant shall
peacefully and quietly have and enjoy the Premises for the Term, free from
interference by Landlord, subject, however, to the provisions of this Lease. In
addition, if Tenant's quiet enjoyment of the Premises is interfered with by any
party other than Landlord, and the existence of such parties rights would give
rise to a claim in favor of Landlord under its title insurance policy for the
Project, Landlord shall, at Tenant's request, diligently enforce its rights
under the title policy, and Tenant shall reimburse Landlord for the reasonable
out of pocket costs incurred by Landlord in connection with enforcement of its
rights under the title policy (to the extent not reimbursed by the title
company) within thirty (30) days following Landlord's request for reimbursement,
accompanied by invoices evidencing the costs incurred. The loss or reduction of
Tenant's light, air or view will not be deemed a disturbance of Tenant's
occupancy of the Premises nor will it affect Tenant's obligations under this
Lease or create any liability of Landlord to Tenant.

         25. BROKER. Tenant represents to Landlord that Tenant has dealt only
with the broker(s) set forth in Section 1 hereof (the "BROKER") and McCall and
Almy in connection with this Lease and that, insofar as Tenant knows, no other
broker negotiated this Lease or is entitled to any commission in connection
herewith. Tenant agrees to indemnify, defend and hold Landlord and Landlord's
constituent members and agents harmless from and against any claims for a fee or
commission made by any broker, other than the Broker, claiming to have acted by
or on behalf of Tenant in connection with this Lease. Landlord represents to
Tenant that Landlord has dealt only with Broker and McCall and Almy in
connection with this Lease and that, insofar as Landlord knows, no other broker
negotiated this Lease or is entitled to any commission in connection herewith.
Landlord agrees to indemnify, defend and hold Tenant and Tenant's constituent
partners and agents harmless from and against any claims for a fee or commission
made by any broker, other than the Broker and McCall and Almy, claiming to have
acted by or on behalf of Landlord in connection with this Lease. Landlord agrees
to pay the Broker a commission in accordance with a separate agreement between
Landlord and the Broker; however, Landlord shall not be responsible for the
payment of any commission to McCall and Almy.

         26. NOTICES. All notices and demands to be given by one party to the
other party under this Lease shall be given in writing, mailed, sent by
recognized overnight courier or hand delivered to Landlord or Tenant, as the
case may be, at the following address:

         If to Landlord:                    Davis Church Office Development,
                                            L.L.C.
                                            c/o Mesirow Stein Real Estate
                                            350 North Clark Street
                                            Chicago, Illinois  60601
                                            Attn.: Mike Szkatulski

                                       45
<PAGE>   52
         With a copy to:                    Mesirow Stein Real Estate
                                            350 North Clark Street
                                            Chicago, Illinois 60601
                                            Attn: Denny Block

         And a copy to:                     Piper Marbury Rudnick & Wolfe
                                            203 North LaSalle
                                            Chicago, Illinois  60601
                                            Attn.: Robert H. Goldman, Esq.

         If to Tenant:                      Houghton Mifflin Company
                                            222 Berkeley Street
                                            Boston, Massachusetts  02116-3764
                                            Attn.:  Director of Corporate
                                                    Services

         With a copy to:                    Houghton Mifflin Company
                                            222 Berkeley Street
                                            Boston, Massachusetts 02116-3764
                                            Attn.: General Counsel

         And a copy to:                     McCall & Almy, Inc.
                                            One Post Office Square
                                            Boston, Massachusetts 02109
                                            Attn: David Richardson

         And a copy to:                     Mark Bartelstein & Associates
                                            222 West Ontario
                                            Suite 600
                                            Chicago, Illinois 60610
                                            Attn: Rick Smith, Esq.

or at such other address as either party may hereafter designate. Notices shall
be delivered by hand or by United States certified or registered mail, postage
prepaid, return receipt requested, or by a nationally recognized overnight air
courier service. Notices shall be considered to have been given upon actual
receipt or upon delivery (if delivered by hand) or upon refusal to accept
delivery.

         27.      BASE BUILDING; TENANT IMPROVEMENTS.

                            A. LANDLORD'S WORK.

                           (i) Landlord, at Landlord's sole cost and expense,
                  agrees to construct, or cause to be constructed, the core and
                  shell of the Building ("BASE BUILDING" or "BASE BUILDING
                  WORK") substantially in accordance with the plan development
                  drawings and core and shell description ("PLAN DEVELOPMENT
                  DRAWINGS

                                       46
<PAGE>   53
                  AND DESCRIPTION") attached to this Lease as EXHIBIT J, as such
                  Plan Development Drawings and Description have been or are
                  hereafter developed into the Design Documents, and as modified
                  from time to time, all subject to the limitations on Scope
                  Changes described hereinbelow. For purposes of this Section,
                  "DESIGN DOCUMENTS" shall mean the Plan Development Drawings
                  and Description as further developed into final plans and
                  specifications. In addition to Landlord's obligations to
                  provide Tenant with copies of all construction drawings and
                  plans and specifications, as hereinafter described, Landlord
                  shall notify Tenant of any material changes to the Design
                  Documents which are not within the scope of the Plan
                  Development Drawings and Description (collectively, "SCOPE
                  CHANGES"). No material Scope Changes affecting Tenant rights
                  hereunder in any material respect shall be made unless
                  Landlord obtains Tenant's consent thereto (which consent shall
                  not be unreasonably withheld, conditioned or delayed, and
                  which consent shall be given or withheld within five (5)
                  business days following such request by Landlord; provided
                  that if Tenant fails to respond within the five (5) business
                  day period, Landlord shall give Tenant an additional notice
                  requesting Tenant's consent, and if Tenant fails to respond
                  within two (2) business days following the second request,
                  Tenant's consent shall be deemed given). In addition, Landlord
                  shall provide Tenant with copies of any construction drawings
                  and plans and specifications, including the Design Documents
                  and progress and construction administration documents, for
                  the Base Building Work, as they are developed; provided
                  further, that following completion of the construction
                  drawings for the Base Building Work, any changes made
                  thereafter shall be highlighted on the copies delivered to
                  Tenant. In addition, Tenant may from time to time request
                  changes in the Design Documents, which changes shall be
                  subject to Landlord's approval, not to be unreasonably
                  withheld or delayed, so long as the changes do not delay
                  Substantial Completion of Landlord's Work, Tenant pays all
                  increased costs of Landlord's Work resulting from the changes,
                  and the changes do not otherwise adversely affect the costs of
                  operating, insuring or maintaining the Building or affect the
                  ability of Landlord to lease the balance of the Building not
                  leased to Tenant or reduce the Rentable Square Feet of the
                  Building.

                           (ii) Landlord also agrees to construct, or cause to
                  be constructed the Tenant Improvements, all as more
                  particularly described and defined in, and subject to all of
                  the terms and conditions of the Workletter Agreement
                  ("WORKLETTER AGREEMENT") attached to this Lease as EXHIBIT K
                  and to wire Tenant's workstations installed as part of the
                  FF&E with telephone, data and electrical wiring ("WORKSTATION
                  WIRING"). The Base Building, Tenant Improvements and
                  Workstation Wiring are collectively referred to in this Lease
                  as "LANDLORD'S WORK".

                           B. SUBSTANTIALLY COMPLETE. Landlord agrees to use all
reasonable efforts to Substantially Complete Landlord's Work and to deliver
possession of each floor of the Premises to Tenant, on or before the Projected
Delivery Date for the applicable floor set for the Delivery Schedule, with each
such date subject to extension for delays actually caused by Force Majeure
(hereinafter defined) and Tenant Delays (hereinafter defined), and subject

                                       47
<PAGE>   54
         to Tenant's termination rights under Section 27.D. Failure of
         Landlord's Work to be Substantially Completed and/or of Landlord to
         deliver possession of any floor on or before the Projected Delivery
         Date for such floor shall be subject to the terms of Section 4.E. and
         the terms and conditions hereinafter provided.

                           (i) "FORCE MAJEURE" means any of the following which
                  causes delays, to the extent that such delays are outside of
                  Landlord's reasonable control to avoid: war, insurrection;
                  strikes; lockouts; labor trouble; riots; theft; vandalism;
                  floods; fires; casualties; acts of God; accidents; acts of the
                  public enemy; epidemic; quarantine; freight embargos; lack of
                  transportation; governmental or municipal restrictions, laws,
                  moratoria, regulations or priorities; unexpected or
                  unanticipated soil or environmental conditions; unexpected
                  weather conditions; inability to obtain materials,
                  electricity, gas or other fuel or water or utilities;
                  defective supplies, equipment or material used or to be used
                  in construction of the Building; non-delivery or late delivery
                  of supplies, equipment or materials to be used in construction
                  of the Building; any act or failure to act of any governmental
                  agency or authority or of any other public or quasi-public
                  authority, including, without limitation, any delay in the
                  issuance of or the non-issuance of any governmental permits,
                  licenses, consents or other approvals necessary for Landlord
                  to commence and complete construction of the Building and
                  Landlord's Work in accordance with this Lease; where the delay
                  is not the result of Landlord's actions or failure to act;
                  utility company requirements, actions or failure to act; and
                  any other delays beyond Landlord's reasonable control. If a
                  Force Majeure delay occurs Landlord and Tenant shall promptly
                  meet and discuss ways of alleviating the delay.

                           (ii) "TENANT DELAY" means any of the following, to
                  the extent they actually cause delays in Substantial
                  Completion of Landlord's Work: (a) delay caused by any default
                  by Tenant or its agents in Tenant's obligations under this
                  Lease, (b) delays caused by Tenant's access to the Premises
                  (including access by Tenant's agents, contractors, architects,
                  space planners, brokers, or consultants) prior to the
                  Commencement Date which unreasonably interferes with
                  Substantial Completion, (c) delays resulting from Tenant's
                  failure to install any FF&E in sufficient time to enable
                  Landlord to perform the Workstation Wiring prior to the
                  applicable Projected Delivery Date (unless Landlord has failed
                  to provide Tenant with sufficient access to the applicable
                  portion of the Premises to do so), (c) any event, condition or
                  circumstance defined as a Tenant Delay in the Workletter
                  Agreement, or (d) any other delay of any kind or nature caused
                  by Tenant (including its agents, contractors, architects,
                  space planners, brokers or consultants). For purpose of the
                  foregoing, the term "CAUSED BY" shall mean that the particular
                  delay (i.e., whether in meeting "SUBSTANTIAL COMPLETION"
                  requirements or the Construction Commencement Date or Outside
                  Completion Date as hereinafter defined in Section 27.D) would
                  not otherwise have occurred in the absence of such specified
                  act or failure to act by Tenant (or its agents, contractors,
                  architects, space planners, brokers or consultants). Landlord
                  shall give Tenant notice of any claim of Tenant Delay within
                  the earlier of

                                       48
<PAGE>   55
                  (A) three (3) business days following receipt by Landlord of
                  actual knowledge of the matters giving rise to such claim or
                  (B) ten (10) business days following receipt by Landlord's
                  general contractor of actual knowledge of the matters giving
                  rise to such claim, and, if Landlord fails to so give such
                  timely notice, then Landlord may not claim "TENANT DELAY" with
                  respect to any period of delay occurring prior to Landlord's
                  delivery of such notice to Tenant. If Tenant disputes
                  Landlord's determination as to whether a Tenant Delay has
                  occurred or the length thereof, Tenant shall notify Landlord
                  in writing ("TENANT DELAY DISPUTE NOTICE") within three (3)
                  business days following receipt of Landlord's notice of Tenant
                  Delays whereupon the dispute shall be resolved in accordance
                  with Section 27.E. If Tenant fails to give a timely Tenant
                  Delay Dispute Notice, Tenant shall be deemed to have waived
                  any right to contest the claim of Tenant Delay asserted by
                  Landlord.

                           (iii)     "SUBSTANTIAL COMPLETION" or "SUBSTANTIALLY
                  COMPLETE" or "SUBSTANTIALLY COMPLETED" shall mean that
                  Landlord's Work (or the portion thereof applicable to any
                  floor within the Premises) has been substantially completed
                  except for such minor, insubstantial details of construction,
                  decoration or mechanical adjustments as would not materially
                  interfere with the use of the Building as an office building
                  or Tenant's occupancy of the Premises, or applicable floor
                  thereof, as the context requires, for office purposes. If
                  Substantial Completion of Landlord's Work as a whole, or for
                  any floor or floors, is delayed in whole or in part by any
                  Tenant Delay, then Substantial Completion shall be deemed to
                  have occurred as of such date as the Landlord's Work, as a
                  whole, or for such floor or floors, as the context requires,
                  would have been so completed but for such Tenant Delay.
                  Substantial Completion shall be conclusively evidenced by a
                  certificate of Landlord's architect.

                  C. HOLDOVER COSTS. If Landlord's Work is not "SUBSTANTIALLY
COMPLETE" (as defined above) on or before May 1, 2002, subject to extensions for
delays in Substantial Completion caused by Tenant Delay (as used herein, the
"HOLDOVER DATE"), then Tenant shall have the following recourse (except for the
remedy described in Section 27.D. below and the extension of the Commencement
Date pursuant to Section 4.E) as Tenant's sole and exclusive remedies hereunder,
and subject to the terms and conditions hereinafter set forth.

                           (i) Subject to the terms hereinafter set forth,
                  Tenant shall be entitled to payment from Landlord of an amount
                  equal to its actual Holdover Costs (as hereinafter defined)
                  incurred from and after the Holdover Date and through the
                  Holdover Costs Period (as hereinafter defined).

                           (ii) The term "HOLDOVER COSTS" means any (A) rental
                  costs (including base rent and additional rent, such as
                  Tenant's share of taxes and expenses) for holdover under
                  Tenant's Existing Leases (hereinafter defined) in excess of
                  the rental costs due or which would have otherwise been due
                  hereunder (without taking into account any rent abatement)
                  accruing from and after the later of (1) the Holdover Date, or
                  (2) the date of early cancellation elected by Tenant under the
                  applicable Existing Leases, through the Commencement Date,
                  plus (B) any rental costs

                                       49
<PAGE>   56
                  (including base rent and additional rent) for temporary space
                  leased by Tenant (not to exceed 120,000 rentable square feet
                  in the aggregate) in excess of the base rent and additional
                  rent due or which would otherwise have been due hereunder for
                  rentable square footage within the Office Premises equal to
                  the lesser of 120,000 rentable square feet or the rentable
                  square footage of the temporary space (without taking into
                  account any rent abatement from the Holdover Date until the
                  Commencement Date) and continuing through the Commencement
                  Date (the "HOLDOVER COSTS PERIOD"), all subject to Section
                  27.D below plus (C) reasonable storage costs incurred by
                  Tenant during the Holdover Costs Period as a result of the
                  delay in Substantial Completion. Tenant will use good faith
                  efforts to prevent or minimize Holdover Costs, including,
                  without limitation, consultation and cooperation with Landlord
                  in its negotiations with Tenant's existing landlords. Tenant
                  shall also notify Landlord of its exercise of cancellation
                  rights under the Existing Leases, concurrently with or prior
                  to the exercise of such rights. In addition, as and when
                  floors are Substantially Completed, Tenant shall utilize best
                  efforts to move out of the space covered by any Existing
                  Leases and interim leases, so as to minimize Holdover Costs.

                           (iii) If Substantial Completion is delayed beyond the
                  Projected Final Delivery Date as a result of Tenant Delay or
                  Force Majeure (i.e., meaning such delay beyond the Projected
                  Final Delivery Date would not have occurred in the absence of
                  such Tenant Delay or Force Majeure), then notwithstanding
                  anything to the contrary above, Landlord shall have no
                  obligation to pay Holdover Costs attributable to the period
                  from the Holdover Date until the date which is the number of
                  days after the Holdover Date equal to the number of days of
                  Tenant Delay plus the number of days of Force Majeure delay.

                           (iv) Tenant represents that it has delivered to
                  Landlord a true and correct copy of its present leases (the
                  "EXISTING LEASES") relative to space at 1560 Sherman Avenue
                  and 1603 Orrington Street in the City of Evanston, Illinois.
                  Tenant hereby agrees that it shall not amend or otherwise
                  modify the Existing Leases following the date hereof in any
                  manner which increases the Holdover Costs, and to the extent
                  any of such Existing Leases are so modified or amended,
                  Landlord shall have no obligation to pay any additional
                  Holdover Costs resulting therefrom.

                           (v) Landlord shall have the right along with Tenant
                  to jointly negotiate with each of the existing landlords under
                  the Existing Leases, so as to reduce the amount and extent of
                  Holdover Costs hereunder, and Tenant agrees to cooperate with
                  Landlord in all reasonable respects (but at no out-of-pocket
                  cost to Tenant) relative to any such negotiations to enable
                  Landlord and Tenant to minimize the Holdover Costs.

                           (vi) Notwithstanding anything contained herein to the
                  contrary, if Tenant terminates this Lease pursuant to Section
                  27.D below, Tenant shall have no right to any Holdover Costs
                  under this Section 27.C accruing on and after the date Tenant
                  terminates this Lease.

                                       50
<PAGE>   57
          D. MILESTONE DATES. If Landlord fails to commence construction of the
     Building on or before February 1, 2001 (which for purposes hereof shall
     mean the commencement of work on footings, foundations and/or caissons for
     the Building) ("CONSTRUCTION COMMENCEMENT DATE"), for any reason other than
     Tenant Delay, Landlord shall notify Tenant of such event (herein, a "FAILED
     MILESTONE NOTICE"), promptly after Landlord becomes aware of the same,
     whereupon Tenant shall have the right to terminate the Lease by written
     notice to Landlord, given at any time on or before the earlier to occur of
     thirty (30) days following the date of Tenant's receipt of the Failed
     Milestone Notice or the commencement of construction, whereupon this Lease
     shall terminate and the parties shall have no further rights or obligations
     hereunder. In addition, without limitation of any rights or obligations
     described in this Section 27.D, if the Substantial Completion of Landlord's
     Work has not occurred on or before January 2, 2003 ("OUTSIDE COMPLETION
     DATE"), for any reason other than as a result of Tenant Delay, and if this
     Lease is then in full force and effect, then, Tenant shall have the right
     by written notice to Landlord given at any time after the Outside
     Completion Date and prior to the Substantial Completion of Landlord's Work
     to terminate this Lease as of the date of such notice, whereupon neither
     party shall have any further rights or obligations hereunder. Without
     limitation of the foregoing terms of this Section 27.D., it is understood
     and agreed that, if Tenant exercises its termination rights under this
     Section 27.D., Tenant shall not be entitled to any Holdover Costs described
     in Section 27.C. above accruing from and after the date of termination, and
     that if the termination is a result of Landlord's failure to commence
     construction by the Construction Commencement Date, no Holdover Costs shall
     accrue and the terms of said Section 27.C. shall thereafter be deemed null
     and void.

     E. TENANT DELAY DISPUTES. If Tenant gives a Tenant Delay Dispute Notice in
accordance with Section 27.B(ii), promptly following Landlord's receipt of the
Tenant Delay Dispute Notice, representatives of Landlord and Tenant shall meet
and attempt in good faith to negotiate a resolution of the dispute. If within
fifteen (15) days following Landlord's receipt of the Tenant Delay Dispute
Notice, representatives of Landlord and Tenant are unable to resolve the
dispute, then within fifteen (15) days following the end of such negotiation
period, the chief executive officer of Landlord and either the chief executive
officer of Tenant or the president of McDougal Littell shall meet and attempt to
resolve the dispute. If such parties are unable to resolve the dispute within
three (3) days following their initial meeting, either Landlord or Tenant may
elect, by written notice to the other, to submit the dispute to binding
arbitration, to be conducted at the offices of the American Arbitration
Association in Chicago, Illinois, pursuant to the construction arbitration rules
and procedures of the American Arbitration Association.

     28. MISCELLANEOUS.

          A. SUCCESSORS AND ASSIGNS. Subject to Section 17 of this Lease, each
     provision of this Lease shall extend to, bind and inure to the benefit of
     Landlord and Tenant and their respective legal representatives, successors
     and assigns, and all references herein to Landlord and Tenant shall be
     deemed to include all such parties. Notwithstanding the foregoing, if
     Landlord assigns this Lease (other than an assignment for security
     purposes) at any time prior to Substantial Completion, Landlord shall cause
     to be delivered to Tenant

                                       51
<PAGE>   58
     a completion guaranty executed by Mesirow Stein Development Services, Inc.
     in the form of EXHIBIT L to this Lease.

          B. ENTIRE AGREEMENT. This Lease, and the riders and exhibits, if any,
     attached hereto which are hereby made a part of this Lease, represent the
     complete agreement between Landlord and Tenant, and Landlord has made no
     representations or warranties except as expressly set forth in this Lease.
     No modification or amendment of or waiver under this Lease shall be binding
     upon Landlord or Tenant unless in writing signed by Landlord and Tenant.

          C. TIME OF ESSENCE. Time is of the essence of this Lease and each and
     all of its provisions.

          D. EXECUTION AND DELIVERY. Submission of this instrument for
     examination by Tenant does not constitute a reservation of space or an
     option for Lease, and it is not effective until execution and delivery by
     both Landlord and Tenant.

          E. SEVERABILITY. The invalidity or unenforceability of any provision
     of this Lease shall not affect or impair any other provisions.

          F. GOVERNING LAW. This Lease shall be governed by and construed in
     accordance with the laws of the State of Illinois.

          G. ATTORNEYS' FEES. Tenant shall pay to Landlord all costs and
     expenses, including reasonable attorneys' fees, incurred by Landlord in
     enforcing this Lease or incurred by Landlord as a result of any litigation
     in which Tenant causes Landlord, without Landlord's fault, to become
     involved. Landlord shall pay to Tenant all costs and expenses, including
     reasonable attorneys' fees, incurred by Tenant in enforcing this Lease or
     incurred by Tenant as a result of any litigation in which Landlord causes
     Tenant, without Tenant's fault, to become involved.

          H. TENANT; JOINT AND SEVERAL LIABILITY. The word "TENANT" whenever
     used herein shall be construed to mean Tenant or any one or more of them in
     all cases where there is more than one Tenant; and the necessary
     grammatical changes required to make the provisions hereof apply either to
     corporations or other organizations, partnerships or other entities, or
     individuals, shall in all cases be assumed as though in each case fully
     expressed. In all cases where there is more than one Tenant, the liability
     of each shall be joint and several and any one person or entity comprising
     Tenant may give any notice or approval required or permitted to be given by
     Tenant under this Lease and such notice or approval shall be deemed binding
     upon all persons or entities comprising Tenant and may be relied upon by
     Landlord as if such notice or approval had been given by all persons or
     entities comprising Tenant.

          I. FORCE MAJEURE. Without limiting or being limited by any of the
     provisions of this Lease, but subject to the terms of Section 27 hereof, if
     Landlord fails to perform timely any of the terms, covenants or conditions
     of this Lease on Landlord's part

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<PAGE>   59
     to be performed, and such failure is due in whole or in part to Force
     Majeure, then Landlord shall not be deemed in default under this Lease as a
     result of such failure. Following the occurrence of any event of Force
     Majeure, at Tenant's request, Landlord and Tenant shall meet to determine
     methods for alleviating the Force Majeure event. The foregoing shall not,
     however, affect any rental abatement rights expressly provided for in the
     Lease. The terms of this Section 28.I. shall not apply with respect to the
     obligations of Landlord described in Section 27 hereof, and in lieu
     thereof, the express provisions dealing with "FORCE MAJEURE" delays as
     described in Section 27 shall apply relative to Landlord's obligations
     thereunder, as and to the extent expressly set forth in Section 27.

          J. CAPTIONS. The headings and titles in this Lease are for convenience
     only and shall have no effect upon the construction or interpretation of
     this Lease. References to "SECTION" or "SECTIONS" in this Lease shall be
     deemed to refer to the applicable Section or Sections of this Lease.

          K. NO WAIVER. No receipt of money by Landlord from Tenant after
     termination of this Lease or after the service of any notice or after the
     commencing of any suit or after final judgment for possession of the
     Premises shall renew, reinstate, continue or extend the Term or affect any
     such notice or suit. No waiver of any default of Tenant shall be implied
     from any omission by Landlord to take any action on account of such default
     if such default persists or is repeated, and no express waiver shall affect
     any default other than the default specified in the express waiver and then
     only for the time and to the extent therein stated.

          L. LANDLORD. The term "LANDLORD" as used in this Lease means only the
     owner of Landlord's interest in the Premises from time to time. Upon any
     assignment, conveyance or sale, once or successively, of Landlord's
     interest in the Premises or any assignment of this Lease by Landlord, the
     Landlord making the assignment conveyance or sale shall be and hereby is
     entirely freed and relieved of all covenants and obligations of Landlord
     hereunder accruing after the assignment, conveyance or sale, and Tenant
     agrees to look solely to the assignee, grantee or purchaser, with respect
     thereto. The holder of a Mortgage on the Building shall not be deemed to be
     an assignee, grantee or purchaser under this Section 28.L unless and until
     the foreclosure of the Mortgage or the conveyance or transfer of Landlord's
     interest under this Lease in lieu of foreclosure, and then subject to the
     provisions of Section 23. This Lease shall not be affected by any
     assignment, conveyance or sale, and Tenant agrees to attorn to the
     assignee, grantee or purchaser.

          M. LANDLORD ACCESS TO PREMISES. Landlord or Landlord's agents shall
     have the right to enter upon the Premises, to inspect the Premises, to
     perform janitorial and other services and to make such repairs,
     alterations, improvements or additions to the Premises or the Building as
     Landlord may deem necessary or desirable, without such action constituting
     an eviction of Tenant in whole or in part or giving rise to an abatement of
     Rent, by reason of loss or interruption of business of Tenant, or
     otherwise, provided that in connection with any such entry, to the extent
     Landlord's activities would materially interfere with Tenant's ability to
     operate its business in the Premises, except in an emergency, Landlord
     shall perform such activities after normal business hours. Landlord shall
     also have the right

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<PAGE>   60
     at any time without the same constituting an actual or constructive
     eviction and without incurring any liability to Tenant therefor, to change
     the arrangement and/or location of entrances or passageways, doors and
     doorways, and corridors, elevators, stairs, toilets or public parts of the
     Building, and to close entrances, doors, corridors, elevators or other
     facilities, provided that such action shall not interfere with Tenant's
     access to the Premises or the Building in a permanent and material adverse
     manner. In any entry into the Premises under this Section 28.M. (other than
     in the case of an emergency or to perform services required of Landlord
     hereunder), Landlord shall give Tenant reasonable prior notice of entry,
     shall allow a representative of Tenant to accompany Landlord, and shall use
     reasonable efforts to minimize interference with Tenant's operations
     therefrom.

          N. LIMITATION OF LIABILITY. Any liability of Landlord under this Lease
     shall be limited solely to its interest in the Building, and in no event
     shall any personal liability be asserted against Landlord in connection
     with this Lease nor shall any recourse be had to any other property or
     assets of Landlord. Assets of a Landlord which is a partnership or limited
     liability company do not include the assets of the partners or members of
     such Landlord, and any negative capital account of a partner or member in a
     partnership or limited liability company which is a Landlord, and any
     obligation of a partner or member to contribute capital to the partnership
     or limited liability company which is Landlord, shall not be deemed to be
     assets of the partnership or limited liability company which is the
     Landlord. No directors, officers, employees, managers, members, or
     shareholders of any corporation or limited liability company which is
     Landlord shall have any personal liability arising from or in connection
     with this Lease.

          O. CITY DOCUMENTS. Landlord shall promptly following receipt of any
     notice from the City under the Redevelopment Agreement or City Parking
     Lease (as defined in Section 34), forward a copy of same to Tenant.

     29. CERTAIN RIGHTS TO LEASE VACANT SPACE. From and after the Lease Date
until the date which is the earlier to occur of the date the Building (other
than the Retail Area) has been fully leased or the date which is eighteen (18)
months following the Commencement Date (the "LEASE-UP PERIOD"), Landlord shall,
on a monthly basis and additionally upon Tenant's request from time to time
during the Lease-up Period, provide Tenant with written reports (each, a "VACANT
SPACE REPORT"), identifying those portions of the Building (other than the
Retail Area) for which Landlord has not yet entered into a lease or into a
letter of intent to lease or for which Landlord has not sent out a proposal to
lease (which Landlord is then negotiating), with any party (including Tenant) or
for which Landlord has previously entered into a lease with a party other than
Tenant, which lease has terminated (such portions, as they may be modified from
time to time as a result of leasing activity in the Building, are referred to as
the "VACANT SPACE"). From time to time during the Lease-up Period, Tenant may
elect to lease all or a portion of the Vacant Space, the exact area,
configuration, and location of which shall be designated by Tenant, and
finalized by Landlord as provided in Section 29.E, within the parameters set
forth below, upon and subject to all of the terms and conditions set forth in
this Section 29.

          A. EXERCISE. Tenant's right to lease the Vacant Space identified in a
     Vacant Space Report shall be exercisable by written notice ("VACANT SPACE
     EXERCISE

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<PAGE>   61
NOTICE") from Tenant to Landlord given at any time after receipt of the Vacant
Space Report and prior to Tenant's receipt of written notice from Landlord that
Landlord has sent out a proposal to a potential tenant for a lease for all or a
portion of the Vacant Space, whereupon Tenant's right to lease such space shall
terminate while Landlord is negotiating with the potential tenant (provided,
however, that if a letter of intent, term sheet or lease has not been entered
into with the prospective tenant within three (3) months following delivery of
the proposal to the prospective tenant, the applicable space shall be considered
Vacant Space again and shall be included in the next Vacant Space Report). The
Vacant Space Exercise Notice shall indicate the Rentable Square Feet desired by
Tenant to comprise the Vacant Space to be leased, and the general configuration
and location thereof, all within the parameters described in Section 29.B.
below.

         B. VACANT SPACE EXERCISE NOTICE. Each Vacant Space Exercise Notice
above shall designate the portion of the Vacant Space to be leased by Tenant,
subject to the following conditions:

               (i) the area of the Vacant Space to be leased by Tenant shall be
          the Rentable Square Feet amount designated by Tenant (subject to
          adjustment by Landlord as provided in Section 29.B (iii)), shall not
          be more than the Rentable Square Footage of the Vacant Space described
          in the most recent Vacant Space Report and shall not be less than
          5,000 Rentable Square Feet; and

               (ii) the Vacant Space to be leased by Tenant pursuant to such
          Vacant Space Exercise Notice shall be on such floor or floors within
          the Building as designated by Tenant; provided that such Vacant Space
          shall be, if at all possible, contiguous to the other space then
          included as part of the Premises hereunder; and

               (iii) the balance of any floor which contains Vacant Space and
          which is not being entirely leased by Tenant hereunder pursuant to
          such Vacant Space Exercise Notice shall, in Landlord's judgment, have
          a size and configuration reasonably required for leasing to third
          parties (including access to restrooms, Common Areas and elevator
          lobbies) and shall comply (or without the necessity of extraordinary
          expense can be made to comply) with applicable legal requirements (or
          Landlord may adjust the size and configuration of the Vacant Space to
          be leased by Tenant to the extent necessary to satisfy the foregoing
          criteria).

         C. CONDITIONS TO EXERCISE. Tenant may only exercise its rights under
this Section 29 and an exercise thereof shall only be effective, if at the time
of Tenant's exercise of said right this Lease is in full force and effect and
Tenant is not in Default under this Lease.

         D. TERMS OF LEASE. If Tenant has validly exercised its option to lease
all or a portion of the Vacant Space, then the applicable Vacant Space shall be
included as part of the Premises for all purposes hereof, subject to all of the
terms, conditions and provisions of this Lease. Without limitation of the
foregoing:

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<PAGE>   62
               (i) Base Rent per Rentable Square Foot for the applicable Vacant
          Space shall be at the same respective rates from time to time as Base
          Rent for the initial Office Premises or Storage Area, as applicable;

               (ii) the Rentable Square Feet of the Office Premises and/or
          Storage Area, shall be increased by the Rentable Square Feet of the
          applicable Vacant Space and Tenant's Proportionate Share shall be
          accordingly adjusted if the Vacant Space is not basement space;

               (iii) the term of the demise covering the applicable Vacant Space
          shall commence on the later to occur of the Commencement Date or the
          earlier of the date which is one hundred fifty (150) days following
          the date of Landlord's receipt of the Vacant Space Exercise Notice or
          the date of substantial completion of the Vacant Space Improvements
          (as defined in Section 29.D(iv)) and shall expire simultaneously with
          the expiration or earlier termination of the Term of this Lease,
          including any extension or renewal thereof; and

               (iv) if the Vacant Space Exercise Notice is given by Tenant
          before October 1, 2001 and is accompanied by a detailed space plan for
          the applicable Vacant Space, the tenant improvements for the
          applicable Vacant Space shall be completed by Landlord as part of
          Landlord's Work pursuant to Section 27 and the Workletter Agreement
          and the Delivery Schedule shall be adjusted to reflect the addition of
          such space. If the Vacant Space Exercise Notice is given by Tenant on
          or after October 1, 2001, any tenant improvements for the Vacant Space
          ("VACANT SPACE IMPROVEMENTS") shall be completed by Tenant at Tenant's
          cost (except as hereinafter provided) pursuant to the requirements of
          Section 12 (although the Vacant Space Improvements shall be considered
          Tenant Improvements for purposes of removal pursuant to Section 18),
          and Landlord shall make a contribution towards the cost of the Vacant
          Space Improvements in the amount of Thirty Two and 50/100 Dollars
          ($32.50) per Rentable Square Foot of the applicable Vacant Space
          ("VACANT SPACE ALLOWANCE") to be disbursed as hereinafter provided.
          The Vacant Space Allowance shall be utilized by Tenant to pay for
          items covered under Section 13.1 of the Workletter Agreement with
          respect to the Vacant Space Improvements; provided that no more than
          $.50 per Rentable Square Foot may be utilized to pay architectural and
          engineering fees and the Vacant Space Allowance may not be utilized
          for FF&E or Workstation Wiring. Notwithstanding the foregoing, if the
          applicable Vacant Space has previously been built out and occupied by
          another tenant whose lease has terminated or is storage space within
          the basement of the Building, Landlord shall not be obligated to fund
          any Vacant Space Allowance or construct any tenant improvements
          therein.

               (v) Landlord shall disburse the Vacant Space Allowance to Tenant
          (or to the contractor(s) performing the Vacant Space Improvements as,
          Landlord may elect), in progress payments, with each payment to be
          made within thirty (30) days following Tenant's written request for
          payment (to be given no more than monthly), provided all of the
          following conditions have been satisfied:

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<PAGE>   63
               (a) prior to any disbursement of the Vacant Space Allowance,
          Tenant shall have provided Landlord, the Mortgagee(s), the Ground
          Lessor(s) and the title insurance company disbursing the Vacant Space
          Allowance and/or insuring the Building ("TITLE COMPANY"), if any, with
          such customary assurances and undertakings that Tenant will, and has
          the ability to, pay the amounts by which the costs of the Vacant Space
          Improvements will exceed the Vacant Space Allowance, as reasonably
          determined by Landlord ("VACANT SPACE EXCESS COSTS"), as they may
          reasonably require, and shall further execute such documents and
          instruments, including indemnities as the Mortgagee(s), Ground
          Lessor(s) and Title Company may require in connection therewith,
          including assurances of lien-free completion. The costs of the Vacant
          Space Improvements shall be funded from the Vacant Space Allowance,
          and from Tenant's funds, on a pari passu basis;

               (b) each progress payment shall be for work performed during the
          preceding month less a retainage of ten percent (10%) of each progress
          payment ("RETAINAGE") and each request for a progress payment shall be
          accompanied by a certificate from Tenant certifying the costs incurred
          and/or paid in the preceding month, the names of each contractor and
          subcontractor to whom payment is due and the amount thereof, and shall
          also be accompanied by copies of conditional waivers and releases of
          lien upon progress payment, in form satisfactory to Landlord, from all
          contractors, subcontractors and material suppliers covering all work
          and materials (provided that as long as the general contractor's lien
          waiver has been obtained, Tenant may submit subcontractor lien waivers
          within thirty (30) days after the progress payment, subject to
          Landlord's receipt of title endorsements satisfactory to Landlord, and
          the approval of any Mortgagee or any Ground Lessor) as well as a
          certificate from the architect supervising the Vacant Space
          Improvements, in form satisfactory to Landlord, certifying the status
          of the work to date, and that the work is being completed in
          accordance with the plans and specifications therefor approved by
          Landlord in accordance with Section 12, in accordance with all
          applicable legal requirements, and in accordance with all other
          requirements of Section 12. In addition, Tenant shall fund its
          proportionate share of each progress payment prior to or concurrently
          with the disbursement of the applicable portion of the Vacant Space
          Allowance;

               (c) with respect to the final disbursement of the Vacant Space
          Allowance (including Retainage), Landlord shall have received
          certifications from the architect supervising the Vacant Space
          Improvements, that the Vacant Space Improvements have been completed
          in accordance with the plans and specifications therefor approved by
          Landlord pursuant to Section 12, and in accordance with all applicable
          legal requirements, and that all other requirements of Section 12
          applicable to the Vacant Space Improvements have been met;

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<PAGE>   64
               (d) with respect to the final disbursement of the Vacant Space
          Allowance (including Retainage), Landlord shall have received
          contractors' affidavits and suppliers' affidavits (for suppliers with
          lien rights) and waivers of lien satisfactory to Landlord evidencing
          that the Vacant Space Improvements have been completed and that all
          costs of the Vacant Space Improvements have been paid in full (or will
          be paid in full out of the final disbursement of the Vacant Space
          Allowance) and evidence satisfactory to Landlord, the Mortgagee(s),
          Ground Lessor(s), and Title Company that Tenant has paid or
          concurrently with the disbursement is paying all costs of the Vacant
          Space Improvements in excess of the Vacant Space Allowance; and

               (e) Tenant shall not be in default under any of the terms and
          provisions of this Lease at the time of any disbursement of the Vacant
          Space Allowance.

          (vi) Disbursement of any portion of the Vacant Space Allowance shall
        not be deemed a waiver of Tenant's obligation to comply with any of the
        terms of Section 12. Tenant shall be solely responsible for the
        completeness of the contractor's affidavits and waivers of lien and
        approval of any work done, and Landlord shall have no responsibility
        therefor.

          E. AMENDMENT. If Tenant has validly exercised its right to lease any
     Vacant Space, within thirty (30) days after request by either party hereto
     Landlord and Tenant shall enter into a written amendment to this Lease
     confirming the terms, conditions and provisions applicable to the Vacant
     Space being leased by Tenant as determined in accordance herewith, which
     shall include a final floor plan or floor plans to be prepared by or on
     behalf of Landlord showing the exact area, location and configuration of
     the Vacant Space determined in accordance with this Section 29, which
     Vacant Space shall contain that number of Rentable Square Feet designated
     by Tenant in accordance with this Section 29, subject to Landlord's right
     to adjust the size and configuration of the Vacant Space pursuant to
     Section 29.B(iii).

     30. RIGHT OF FIRST OFFER. Subject to the provisions hereinafter set forth,
Landlord hereby grants to Tenant the right to lease, on the terms and conditions
hereinafter set forth, each portion of the space in the Building (the "FIRST
OFFER SPACE") which is not otherwise being leased by Tenant hereunder and (i)
has not yet been leased at the time the First Offer Period (hereinafter defined)
commences or (ii) becomes available for lease as a result of the termination of
the lease of an existing tenant therein during the First Offer Period.

          A. NOTICE. If Landlord becomes aware that any portion of the First
     Offer Space has or will become available for lease as a result of the
     expiration or termination of any lease thereof during the First Offer
     Period or if, as of the commencement of the First Offer Period, any portion
     of the First Offer Space has not yet been leased to Tenant or any other
     party, Landlord shall prior to leasing any portion of the First Offer Space
     for a term commencing during the First Offer Period, give Tenant written
     notice of the location and

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<PAGE>   65
     number of Rentable Square Feet of the First Offer Space, the anticipated
     date as determined by Landlord, which the First Offer Space will become
     available (the "FIRST OFFER SPACE COMMENCEMENT DATE") and Landlord's
     determination of the Market Rental Rate (as defined in Section 33) for such
     portion of the First Offer Space and, if applicable, the amount of any
     market tenant improvement allowance, to the extent provided for in Section
     30.E.(iv). The First Offer Space Commencement Date shall not be less than
     sixty (60) days after the date such notice is given by Landlord. In no
     event shall the First Offer Space Commencement Date be earlier than the
     date which is eighteen (18) months following the Commencement Date.

          B. EXERCISE. Tenant's right to lease the First Offer Space described
     in any First Offer Notice shall be exercisable by written notice from
     Tenant to Landlord of Tenant's election to lease the applicable First Offer
     Space (a "FIRST OFFER EXERCISE NOTICE") given not later than ten (10)
     business days after Landlord's notice is given, time being of the essence.
     If such right is not so exercised, Tenant's right of first offer shall
     thereupon terminate as to such portion of the First Offer Space, and
     Landlord may thereafter lease and grant options to lease such portion of
     the First Offer Space without notice to Tenant and free of any right in
     Tenant under this Section 30, provided that Landlord shall have leased or
     granted an option to lease such First Offer Space within the period ending
     six (6) months following the date of the First Offer Notice regarding such
     First Offer Space plus, if Landlord is negotiating with a particular
     potential tenant at the time such period expires, such additional period
     (not to exceed an additional four (4) months) during which Landlord
     diligently continues to negotiate with such potential tenant (and Landlord
     shall, at Tenant's request, provide Tenant with signed written evidence of
     the ongoing negotiation); otherwise, Landlord shall not enter into a lease
     or grant an option in any such portion of the First Offer Space without
     again giving the notice referred to above. In addition, if Landlord enters
     into a lease or grants any options with respect to any such First Offer
     Space, then, at the end of such lease (including any renewals thereof,
     whether or not pursuant to renewal options granted therein) and the
     expiration of all such other options, Tenant shall again have first offer
     rights with respect to such space under this Section 30, to the extent
     Landlord again proposes to lease or grant options to lease any portion
     thereof for a term commencing during the First Offer Period.

          C. ENTIRE SPACE. Tenant may not elect to lease less than the entire
     area of the First Offer Space described in a First Offer Notice; provided,
     however, that if the First Offer Space consists of a full floor or full
     floors, Tenant may elect to lease less than all of the space on one of the
     full floors (which election shall be made by delivery of a floor plan for
     the partial floor at the time of delivery of the First Exercise Notice) so
     long as Landlord is not then negotiating in good faith a lease or letter of
     intent for the full floor (and Landlord shall, at Tenant's request, provide
     Tenant with signed written evidence of the negotiation), and the balance of
     the floor not being leased by Tenant is of a size and configuration which
     in Landlord's judgment, is reasonably required for leasing to third parties
     (including access to restrooms, Common Areas and elevator lobbies) and
     shall comply (or without the necessity of extraordinary expense can be made
     to comply) with applicable legal requirements (or Landlord may adjust the
     size and configuration of the First Offer Space for the partial floor to
     the extent necessary to satisfy the foregoing requirements).

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<PAGE>   66
               D. CONDITIONS TO EXERCISE. Tenant may only exercise its right to
        lease the First Offer Space described in a First Offer Notice, and any
        exercise thereof shall only be effective, if at the time of Tenant's
        exercise of said right and on the pertinent First Offer Space
        Commencement Date, this Lease is in full force and effect and Tenant is
        not in Default under this Lease.

               E. TERMS OF LEASE. If Tenant has validly exercised its right to
        lease a portion of the First Offer Space, then effective as of the First
        Offer Space Commencement Date such portion of the First Offer Space
        shall be included in the Premises, subject to all of the terms,
        conditions and provisions of this Lease, except that:

                    (i) Base Rent per Rentable Square Foot for such portion of
               the First Offer Space shall be equal to the Market Rental Rate
               for such First Offer Space. If Tenant disagrees with Landlord's
               determination of the Market Rental Rate set forth in the First
               Offer Notice, the Market Rental Rate shall be determined by
               arbitration in accordance with the procedures set forth in
               Section 33, provided Tenant has given Landlord timely notice of
               its disagreement in accordance with Section 33;

                    (ii) the Rentable Square Feet of the Office Premises and/or
               Storage Area, as applicable, shall be increased by the Rentable
               Square Feet of such portion of the First Offer Space and Tenant's
               Proportionate Share, if applicable, shall be adjusted to reflect
               the added square footage;

                    (iii) the term of the demise covering such portion of the
               First Offer Space shall commence on the later of the date of
               delivery of the First Offer Space to Tenant or the First Offer
               Space Commencement Date and shall expire simultaneously with the
               expiration of the Term of this Lease, including any extension or
               renewal thereof;

                    (iv) the First Offer Space shall be rented in its "AS IS"
               condition as of the First Offer Space Commencement Date (inasmuch
               as tenant construction periods and/or tenant improvement work and
               allowances, if any, will be reflected in the Market Rental Rate
               determined pursuant to Section 33 below) unless the First Offer
               Space has never been improved for use by another tenant and is
               not storage space within the basement of the Building, in which
               event Landlord shall provide Tenant with a market tenant
               improvement allowance (which shall also be determined pursuant to
               the procedures for determination of the Market Rental Rate set
               forth in Section 33) and shall be disbursed in accordance with
               the procedures for disbursement of the Vacant Space Allowance set
               forth in Section 29.D.(v); and

                    (v) if Tenant has validly exercised its right to lease a
               portion of the First Offer Space, on or before the First Offer
               Space Commencement Date Landlord and Tenant shall enter into a
               written amendment to this Lease confirming the terms, conditions
               and provisions applicable to such portion of the First Offer
               Space as determined in accordance herewith.

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               F. POSSESSION. If Tenant has validly exercised its right to lease
          a portion of the First Offer Space, Landlord shall use commercially
          reasonable efforts to deliver possession of such First Offer Space to
          Tenant on the applicable First Offer Space Commencement Date, but in
          the event Landlord should be unable for any reason to do so, then,
          Landlord shall not be subject to any liability for failure to deliver
          possession. Such failure to deliver possession shall not affect either
          the validity of this Lease or the obligations of either Landlord or
          Tenant hereunder or be construed to extend the expiration of the Term
          of this Lease either as to such portion of the First Offer Space or
          the balance of the Premises; provided, however, that under such
          circumstances, rent shall not commence as to such portion of the First
          Offer Space until Landlord is able to deliver possession. In addition,
          if notwithstanding Landlord's commercially reasonable efforts,
          Landlord is unable to deliver possession of the applicable First Offer
          Space to Tenant on or before the date which is one hundred twenty
          (120) days following the applicable First Offer Space Commencement
          Date, then Tenant, as its sole remedy, may elect to rescind the First
          Exercise Notice and its lease of the applicable First Offer Space, by
          written notice to Landlord given at any time prior to delivery of
          possession of the applicable First Offer Space.

               G. OTHER RIGHTS. Tenant's rights to lease the First Offer Space
          are also subject to any expansion options with respect to the First
          Offer Space or portions thereof granted in any lease of First Offer
          Space entered into by Landlord and a third party following notice to
          Tenant in accordance with this Section and Tenant's failure to lease
          such space pursuant to this Section, and to Landlord's right to extend
          or renew the lease of any tenant occupying any portion of the First
          Offer Space even if not pursuant to an option contained in its lease;
          provided that any first offer rights or rights of first refusal
          granted to a third party tenant shall be subordinate to Tenant's
          rights hereunder.

               H. FIRST OFFER PERIOD. As used herein, the term "FIRST OFFER
          PERIOD" shall mean the period commencing on the expiration of the
          Lease-up Period and continuing through the balance of the Term of this
          Lease, provided, however, that the First Offer Period shall not
          include the last one (1) year of the Term or any renewal thereof
          pursuant to Section 32, unless Tenant has exercised an option granted
          to Tenant, if any, in this Lease to extend the Term hereof for the
          applicable renewal period described in Section 32.

         31. EXPANSION OPTIONS. Subject to the provisions hereinafter set forth,
Landlord hereby grants to Tenant three (3) separate options to lease
(collectively, the "OPTIONS" and individually, in the order of potential
exercise, the "FIRST OPTION", the "SECOND OPTION" and the "THIRD OPTION"), on
the terms and conditions hereinafter set forth, certain space to be designated
by Landlord in connection with each Option (the "EXPANSION SPACE") which
consists in the aggregate of all portions of the Building (other than the Retail
Area) which have not been leased to Tenant as of the Lease Date (the "TOTAL
EXPANSION SPACE"). The exact area, configuration and location of the applicable
Expansion Space for each Option shall be designated by Landlord within the
parameters set forth below.

               A. EXERCISE DATES. Each of the Options to lease Expansion Space
          shall be exercisable by written notice (each, an "EXPANSION OPTION
          EXERCISE NOTICE") from Tenant to Landlord of Tenant's election to
          exercise the applicable Option given not later than

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          the applicable latest exercise date designated below for such Option,
          time being of the essence, and the applicable Expansion Space shall be
          delivered to Tenant on the applicable date set forth below (each such
          date being referred to as an "EXPANSION SPACE COMMENCEMENT DATE"):

<TABLE>
<CAPTION>

   EXPANSION                  LATEST                       EXPANSION SPACE
    OPTION                EXERCISE DATE                    COMMENCEMENT DATE
   ---------              -------------                    -----------------
<S>             <C>                                       <C>
First Option    End of the 24th full calendar month of    Beginning of 37th month of the
                the Term                                  Term
Second Option   End of 57th full calendar month of        Beginning of 73rd month of the
                the Term                                  term
Third Option    End of 93rd full calendar month of the    Beginning of 109th month of the
                Term Lease Year                           term
</TABLE>

          If any Option is not exercised on or before the applicable latest
          exercise date described above for such Option, Landlord shall give
          Tenant written notice that Tenant has failed to exercise the Option,
          and if within two (2) business days following Tenant's receipt of the
          notice, Tenant fails to deliver to Landlord an Expansion Option
          Exercise Notice, the applicable Option shall terminate and Tenant
          shall not thereafter have any right to lease any portion of the Total
          Expansion Space pursuant to such Option (provided that any remaining
          Options which may thereafter be exercised shall continue in full force
          and effect). As to any such Option, Tenant may not elect to lease less
          than the entire area of the Expansion Space designated by Landlord for
          such Option (unless otherwise consented to by Landlord, in Landlord's
          sole discretion), in accordance with the parameters described in
          Section 31.B. below.

               B. DESIGNATION OF EXPANSION SPACE. Upon the exercise of the First
          Option, Landlord shall be obligated, upon the applicable Expansion
          Space Commencement Date, to deliver Expansion Space to Tenant which
          contains Rentable Square Footage approximately equal to 11,041
          Rentable Square Feet, upon the exercise of the Second Option, Landlord
          shall be obligated, upon the applicable Expansion Space Commencement
          Date, to deliver Expansion Space of approximately 22,460 Rentable
          Square Feet, and upon the exercise of the Third Option, Landlord shall
          be obligated, upon the applicable Expansion Space Commencement Date,
          to deliver Expansion Space of approximately 22,688 Rentable Square
          Feet, in each case except as hereinafter provided. The exact location
          and configuration of the Expansion Space to be delivered in connection
          with each Option shall be designated by Landlord by written notice
          (each, an "EXPANSION SPACE DESIGNATION NOTICE") to Tenant, given
          within sixty (60) days of Landlord's receipt of the applicable
          Expansion Option Exercise Notice, identifying the location of the
          applicable Expansion Space, the Rentable Square Footage thereof, the
          configuration thereof, and the applicable Expansion Space Commencement
          Date. Landlord shall, to the extent reasonably possible, provide
          Expansion Space which is contiguous. Notwithstanding the foregoing, if
          Tenant exercises any rights to lease additional space pursuant to
          Sections 29 or 30 prior to the delivery of any Expansion Space, the
          square footage of the Expansion Space shall be reduced by the square
          footage of the space leased by Tenant pursuant to Sections 29 and 30,
          and if the square footage of the

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<PAGE>   69
          Premises leased by Tenant pursuant to Sections 29 and 30, exceeds the
          square footage of the applicable Expansion Space to be delivered, such
          excess square footage shall reduce the amount of square footage that
          Landlord is obligated to deliver in connection with the next Option
          or, if applicable, Options.

               C. CONDITIONS TO EXERCISE. Tenant may only exercise each Option,
          and an exercise thereof shall only be effective, if at the time of
          Tenant's exercise of said option and on the applicable Expansion Space
          Commencement Date, this Lease is in full force and effect, Tenant is
          not in Default under this Lease.

               D. ADDITION OF EXPANSION SPACE. If Tenant has validly exercised
          any Option, then effective as of the applicable Expansion Space
          Commencement Date, the designated Expansion Space shall be included in
          the Office Premises, subject to all of the terms, conditions and
          provisions of this Lease, except that:

                    (i) With respect to the First Option only, Base Rent per
               Rentable Square Feet for the First Expansion Space shall be at
               the same rates as Base Rent for the initial Office Premises;

                    (ii) With respect to the Expansion Space leased pursuant to
               each of the Second Option and Third Option, Base Rent shall be an
               amount equal to the Market Rental Rate as of the applicable
               Expansion Space Commencement Date, as determined by Landlord
               (which determination shall be included within the Expansion Space
               Designation Notice); provided that if Tenant disagrees with
               Landlord's determination, the Market Rental Rate shall be
               determined by arbitration pursuant to Section 33, provided Tenant
               has given a timely notice of disagreement pursuant to Section 33;

                    (iii) Tenant's obligation to pay Rent with respect to any
               Expansion Space shall not commence until the date which is sixty
               (60) days following delivery of the Expansion Space to Tenant;

                    (iv) The Rentable Square Feet of the Office Premises shall
               be increased by the Rentable Square Feet of the applicable
               Expansion Space and Tenant's Proportionate Share shall be
               accordingly adjusted;

                    (v) The term of the demise covering the applicable Expansion
               Space shall commence on the applicable Expansion Space
               Commencement Date and shall expire simultaneously with the
               expiration or earlier termination of the Term of this Lease,
               including any extension or renewal thereof; and

                    (vi) The applicable Expansion Space shall be rented in its
               "AS IS" condition as of the Expansion Space Commencement Date;
               provided that if the Expansion Space (or any portion thereof) has
               not previously been improved for another tenant's use, Tenant
               shall be entitled to a tenant improvement allowance equal to
               Thirty Dollars and No/100 ($30.00) multiplied by the number of
               Rentable Square

                                       63
<PAGE>   70
               Feet in the applicable Expansion Space (the "EXPANSION SPACE
               ALLOWANCE"). Any work performed by Tenant at the pertinent
               Expansion Space in order to ready the same for occupancy shall be
               performed in accordance with Section 12 hereof. The Expansion
               Space Allowance shall be disbursed by Landlord in accordance
               with, and subject to satisfaction of all of the conditions for
               disbursement of the Vacant Space Allowance, all as more
               particularly set forth in Section 29.D.(v).

               E. AMENDMENT. If Tenant has validly exercised an Option to lease
          any applicable Expansion Space, within thirty (30) days after request
          by either party given at any time following the delivery of the
          Expansion Space Designation Notice, Landlord and Tenant shall enter
          into a written amendment to this Lease confirming the terms,
          conditions and provisions applicable to the Expansion Space as
          determined in accordance herewith.

               F. POSSESSION. If Tenant has validly exercised any Option,
          Landlord shall use commercially reasonable efforts to deliver
          possession of the applicable Expansion Space on the applicable
          Expansion Space Commencement Date, provided that if Landlord should be
          unable to deliver possession of the applicable Expansion Space on the
          applicable Expansion Space Commencement Date for any reason which is
          not within Landlord's reasonable control, then Landlord shall not be
          subject to any liability for failure to deliver possession. Such
          failure to deliver possession shall not affect either the validity of
          this Lease or the obligations of either Landlord or Tenant hereunder,
          or be construed to extend the expiration of the Term of this Lease
          either as to the Expansion Space or the balance of the Premises. In
          addition, if notwithstanding Landlord's commercially reasonable
          efforts, Landlord is unable to deliver possession of the applicable
          Expansion Space to Tenant on or before the date which is one hundred
          twenty (120) days following the applicable Expansion Space
          Commencement Date, Tenant may, as its sole remedy, elect to rescind
          the exercise of the Expansion Option and its lease of the applicable
          Expansion Space by written notice to Landlord given at any time prior
          to deliver of possession of the applicable Expansion Space.

         32. RENEWAL OPTIONS. Subject to the provisions hereinafter set forth,
Landlord hereby grants to Tenant three (3) successive options to extend the Term
of this Lease (collectively the "RENEWAL OPTIONS", and individually in the order
of potential exercise, the "FIRST RENEWAL OPTION", "SECOND RENEWAL OPTION", and
"THIRD RENEWAL OPTION") for all or a portion of the Premises (provided that in
no event shall Tenant be entitled to exercise any Renewal Option if the Premises
would be less than 120,000 Rentable Square Feet) on the same terms, conditions
and provisions as contained in this Lease, except as otherwise provided herein,
for three (3) successive periods of five (5) years per Renewal Option
(collectively, the "RENEWAL PERIODS" and individually a "RENEWAL PERIOD"), with
the first Renewal Period to commence on the first day of the sixteenth (16th)
Lease Year and end on the last day of the twentieth (20th) Lease Year; the
second Renewal Period to commence on the first day of the twenty-first (21st)
Lease Year and end on the last day of the twenty-fifth (25th) Lease Year and the
third Renewal Period to commence on the first day of the twenty-sixth (26th)
Lease Year and to end on the last day of the thirtieth (30th) Lease Year.

               A. EXERCISE. Each Renewal Option shall be exercisable by written
          notice from Tenant to Landlord of Tenant's election to extend the Term
          given not later than the date which is twelve (12) months prior to the
          commencement date for the applicable

                                       64
<PAGE>   71
          Renewal Period, time being of the essence, which notice shall also
          designate the portions of the Premises which will be subject to the
          Lease during the Renewal Period (which in no event shall be less than
          120,000 Rentable Square Feet). If Tenant's notice does not designate
          the portions of the Premises to be subject to the Renewal Period,
          Tenant shall be deemed to have elected to extend as to the entire
          Premises. If the First Renewal Option is not timely exercised,
          Landlord shall notify Tenant in writing of the failure, and if within
          two (2) business days following receipt of Landlord's notice, Tenant
          fails to deliver written notice of exercise of such Renewal Option,
          all of the Renewal Options shall expire. If the First Renewal Option
          is timely exercised but the Second Renewal Option is not timely
          exercised, Landlord shall notify Tenant in writing of the failure, and
          if within two (2) business days following receipt of Landlord's
          notice, Tenant fails to deliver written notice of exercise of such
          Renewal Option, the Second Renewal Option and Third Renewal Option
          shall expire. If the Third Renewal Option is not timely exercised,
          Landlord shall notify Tenant in writing of the failure, and if within
          two (2) business days following receipt of Landlord's notice, Tenant
          fails to deliver written notice of exercise of such Renewal Option,
          the Third Renewal Option shall expire.

               B. CONDITIONS TO EXERCISE. Tenant may only exercise a Renewal
          Option, and an exercise thereof shall only be effective, if at the
          time of Tenant's exercise of the Renewal Option and on the
          commencement date of the applicable Renewal Period, this Lease is in
          full force and effect and Tenant is not in Default under this Lease.

               C. BASE RENT. Base Rent per Rentable Square Foot of the Premises
          payable during each Renewal Period with respect to all space included
          in the Premises as of the commencement of the applicable Renewal
          Period shall be equal to ninety percent (90%) of the Market Rental
          Rate for the Premises during such Renewal Period (which the parties
          acknowledge may be less than or more than the Base Rent payable during
          any one year period prior to the commencement of the applicable
          Renewal Period). Landlord shall give Tenant written notice of the
          proposed Market Rental Rate for the applicable Renewal Period within
          thirty (30) days following written request by Tenant made not earlier
          than fifteen (15) months prior to the commencement of the applicable
          Renewal Period. If Tenant disagrees with Landlord's determination of
          the Market Rental Rate for any Renewal Period, the determination of
          the Market Rental Rate for the Renewal Period shall be subject to
          arbitration pursuant to the procedures set forth in Section 33,
          provided Tenant has given a timely notice of disagreement pursuant to
          Section 33. The Base Rent for the first year of each Renewal Period
          shall not be subject to the adjustment described in the last sentence
          of Section 5.B(i). D. AMENDMENT. If Tenant has validly exercised any
          Renewal Option, within thirty --------- (30) days after request by
          either party hereto, Landlord and Tenant shall enter into a written
          amendment to this Lease confirming the terms, conditions and
          provisions applicable to the applicable Renewal Period as determined
          in accordance herewith, with such revisions to the rental provisions
          of this Lease as may be necessary to conform such provisions to the
          Market Rental Rate and reflecting any reduction in the size of the
          Premises..

               E. NO FURTHER EXTENSIONS. Tenant shall not have any option to
          extend the Term of this Lease beyond the expiration of the Third
          Renewal Period.

                                       65
<PAGE>   72
         33. MARKET RENTAL RATE.

               A. DEFINITION. As used herein, the term "MARKET RENTAL RATE" per
     Rentable Square Foot of the Premises shall mean (i) the annual rate of net
     rent reasonably determined by Landlord to be the prevailing market net
     rental rate for comparable tenants for leases of comparable space in
     comparable Class A office buildings in the Chicago area's north suburban
     office market (taking into consideration the duration of the term for which
     such space is being leased, location and/or floor level within the
     applicable building, when the applicable rate first becomes effective and
     other comparable factors; and reflecting (i.e., reduced, if applicable, to
     reflect any prevailing concessions which are not being provided to Tenant
     in kind) prevailing concessions, such as, but not limited to, rental
     concessions, tenant improvement work, design, construction and moving
     allowances, and time for construction of tenant improvements; and assuming
     that leasing commissions will be paid) for terms commencing on or about the
     time for which Market Rental Rate is being determined hereunder, plus (ii)
     additional components of the Market Rental Rate, which may include periodic
     adjustments and increases to adjust for inflation. Comparable arms length
     lease transactions at the Building and/or any other relevant information or
     factors which a qualified MAI appraiser would utilize in determining the
     prevailing market net rental rate applicable to space in the Building may
     be used by Landlord as factors for the determination of the Market Rental
     Rate and Landlord, at Tenant's request, shall provide Tenant with copies of
     the applicable portions of the leases with respect to space in the Building
     and other information being utilized by Landlord in connection with the
     determination.

               B. ARBITRATION.

               (i) If Tenant disagrees with Landlord's determination of the
          Market Rental Rate (and/or, if applicable, the amount of any market
          tenant improvement allowance under Section 30.E.(iv)) with respect to
          any First Offer Space under Section 30, any Expansion Space pursuant
          to Section 31, or any renewal of the Term under Section 32 (which, in
          each instance, Tenant must do, if at all, in writing setting forth
          Tenant's determination of the proposed Market Rental Rate (and/or, if
          applicable, the amount of any market tenant improvement allowance
          under Section 30.E.(iv)) within thirty (30) days after notice of
          Landlord's determination) and if the parties cannot agree on the
          Market Rental Rate (and/or, if applicable, the amount of any market
          tenant improvement allowance under Section 30.E.(iv)) within thirty
          (30) days after Tenant's notice, then such dispute shall be determined
          by binding arbitration as hereinafter provided.

               (ii) Within ten (10) days following the expiration of the thirty
          (30) day period following Tenant's notice, Landlord and Tenant will
          each select (and notify the other party of the identity of) an
          arbitrator who shall be disinterested and shall either be a person who
          is a licensed real estate broker that is experienced in office leasing
          in the Chicago area's north suburban office market or that has been
          actively engaged in the development or leasing of first-class office
          buildings in the Chicago area's north suburban office market, in each
          case for a period not less than seven (7) years

                                       66
<PAGE>   73
          immediately preceding his or her appointment. If either party fails to
          notify the other party of the appointment of its arbitrator within the
          time specified, then the arbitrator appointed by the party who does so
          notify the other party shall be the sole arbitrator to determine the
          Market Rental Rate (and/or, if applicable, the amount of any market
          tenant improvement allowance under Section 30.E.(iv)) for the
          applicable Renewal Period and such arbitrator's determination shall be
          binding upon the parties.

               (iii) If two (2) arbitrators are chosen pursuant to Section
          33.B(ii), the arbitrators so chosen shall meet within ten (10)
          business days after the second arbitrator is appointed in an attempt
          to set the Market Rental Rate (and/or, if applicable, the amount of
          any market tenant improvement allowance under Section 30.E.(iv)) for
          the applicable Renewal Period. If the two (2) arbitrators agree, their
          determination of the Market Rental Rate (and/or, if applicable, the
          amount of any market tenant improvement allowance under Section
          30.E.(iv)) shall be binding upon the parties.

               (iv) If the two (2) arbitrators so appointed fail to agree as to
          the Market Rental Rate (and/or, if applicable, the amount of any
          market tenant improvement allowance under Section 30.E.(iv)), the two
          (2) arbitrators shall notify the parties in writing of their
          respective determinations of the Market Rental Rate (and/or, if
          applicable, the amount of any market tenant improvement allowance
          under Section 30.E.(iv)) and shall thereafter appoint a third
          arbitrator, using the criteria described above, and the third
          arbitrator shall notify the parties of its determination of the Market
          Rental Rate (and/or, if applicable, the amount of any market tenant
          improvement allowance under Section 30.E.(iv)) within thirty (30) days
          following the third arbitrator's appointment. If the two (2)
          arbitrators are not able to so agree upon a third arbitrator, the
          third arbitrator shall be appointed by the American Arbitration
          Association, using the criteria described above.

               (v) If a third arbitrator is appointed, upon the third
          arbitrator's determination of the Market Rental Rate (and/or, if
          applicable, the amount of any market tenant improvement allowance
          under Section 30.E.(iv)), such determination shall be averaged with
          the Market Rental Rate (and/or, if applicable, the amount of any
          market tenant improvement allowance under Section 30.E.(iv)) of the
          arbitrator whose Market Rental Rate was closest in amount to the third
          arbitrator's determination, and the average of such determinations
          shall constitute the Market Rental Rate (and/or, if applicable, the
          amount of any market tenant improvement allowance under Section
          30.E.(iv)) and shall be binding upon the parties. Each party shall pay
          one-half (1/2) of the costs of the arbitration, provided that each
          party shall be required to pay directly the costs of the arbitrator
          that it appointed. If no determination is made prior to the date for
          commencement of payment of rent for which Market Rental Rate must be
          determined, then the determination of Landlord's arbitrator shall be
          used until the arbitration is completed. Upon the final determination
          Landlord shall promptly refund any overpayments to Tenant.

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<PAGE>   74
         34. PARKING. During the Term, Landlord shall provide to Tenant parking,
as follows:

               A. AT-GRADE SPACES. Tenant shall be entitled to utilize all
          on-grade parking spaces, if any, constructed by Landlord upon the Land
          as part of the Project, at no cost to Tenant (other than costs
          reimbursable as part of Expenses).

               B. BUILDING PARKING GARAGE. In connection with the construction
          of the Building, Landlord shall construct a below grade parking garage
          on the Land (the "BUILDING PARKING GARAGE") and Tenant shall initially
          have the right to utilize the number of permits for parking in the
          Building Parking Garage which is equal to Tenant's Proportionate Share
          multiplied by the total number of spaces within the Building Parking
          Garage (i.e., with each parking permit related to the right to park
          one automobile) (the "BUILDING ALLOCATED PARKING"). On or before sixty
          (60) days prior to the Commencement Date, Tenant shall notify Landlord
          in writing as to how many parking permits (which in no event shall
          exceed the Building Allocated Parking) Tenant shall utilize as of the
          Commencement Date. If Tenant fails to notify Landlord in a timely
          manner, Landlord shall send Tenant a notice requesting that Tenant
          notify Landlord as to how many parking permits Tenant desires, and if
          within five (5) business days thereafter Tenant fails to respond,
          Tenant shall be deemed to have elected to utilize all of the Building
          Allocated Parking. If Tenant does not elect to utilize all of the
          Building Allocated Parking, Landlord shall have the right to issue
          parking permits to other tenants for the unutilized Building Allocated
          Parking, provided that any parking arrangements for the unutilized
          Building Allocated Parking shall provide that they are terminable upon
          no more than sixty (60) days prior notice from Landlord. At Tenant's
          election, upon sixty (60) days prior notice to Landlord, Landlord
          shall make available to Tenant any spaces not being utilized by Tenant
          out of the Building Allocated Parking prior to Tenant's notice. In
          addition, if Tenant has elected to utilize all of the Building
          Allocated Parking, at Tenant's request, Tenant shall also be placed on
          the Building Parking Garage's waiting list, and shall be notified when
          additional spaces become available; provided that all spaces made
          available to Tenant above the Building Allocated Parking shall be
          subject to a right in favor of Landlord to terminate Tenant's use
          thereof upon sixty (60) days prior notice to Tenant. Also, from time
          to time following the Commencement Date, Tenant may elect to terminate
          its use of some or all of the parking permits, upon no less than sixty
          (60) days prior written notice to Landlord, whereupon Tenant's rights
          to utilize the applicable parking permits shall terminate and Landlord
          shall have the right to issue parking permits to other tenants,
          subject to a right in favor of Landlord to terminate the use upon
          sixty (60) days prior notice to the holder of the permit to the extent
          such spaces are unutilized spaces from the Building Allocated Parking.
          If Tenant has terminated its use of parking permits within the
          Building Allocated Parking, at Tenant's election, upon sixty (60) days
          prior notice to Landlord, Tenant may elect to utilize such spaces, up
          to the Building Allocated Parking, and Landlord shall terminate any
          existing arrangements with third parties for use of the spaces. Tenant
          shall pay to Landlord a parking charge, monthly in advance, equal to
          the then applicable parking charge calculated on a per space, per
          month basis, that Landlord is obligated to pay the City under the City
          Parking Lease, as the parking charges may be adjusted from time to
          time under the City Parking Lease, multiplied by the number of parking
          permits Tenant has elected to utilize, which shall be due and payable
          concurrently with each payment

                                       68
<PAGE>   75
          of Base Rent, and the use of parking spaces within the Building
          Parking Garage shall be further subject to the terms and conditions,
          including reasonable parking rules and regulations, promulgated by
          Landlord, applicable from time to time to parking in the Building
          Parking Garage. The parking rules and regulations (and any revisions
          thereto) shall be subject to Tenant's prior written approval, not to
          be unreasonably withheld, conditioned or delayed and to be given
          within five (5) business days following Landlord's request; provided
          that if Tenant fails to respond within the five (5) business day
          period, Landlord shall give Tenant a second notice, and Tenant's
          consent shall be deemed given, if the second notice is not responded
          to within three (3) business days of Landlord's second written request
          for approval. Landlord shall not implement any changes to the parking
          rules and regulations, without at least sixty (60) days prior written
          notice to Tenant. In that connection, Tenant may be required to
          periodically execute standard parking agreements that are being
          utilized in the Building Parking Garage. Tenant shall pay parking
          charges for all parking permits provided for hereunder, whether or not
          Tenant does, in fact, utilize the parking permits and spaces, subject
          to the termination rights set forth above.

               C. OFFSITE PARKING. Pursuant to the terms of the Redevelopment
          Agreement, upon acquisition of the Land by Landlord, the City and
          Landlord shall enter into a Parking Lease ("CITY PARKING LEASE")
          substantially in the form attached to this Lease as EXHIBIT M,
          obligating the City to provide Landlord with certain parking spaces at
          the proposed Maple Street Garage at the northwest corner of Clark and
          Maple Street (the "MAPLE STREET PARKING STRUCTURE") and at the City's
          existing Sherman Avenue parking structure ("SHERMAN AVENUE PARKING
          STRUCTURE") (the Maple Street Parking Structure and Sherman Avenue
          Parking Structure are collectively the "CITY PARKING STRUCTURES") as
          designated by Landlord in accordance with the City Parking Lease;
          provided, however, until completion of the Maple Street Parking
          Structure, alternative parking for the parking spaces designated by
          Landlord to be located in the Maple Street Parking Structure shall be
          provided at the Sherman Avenue Parking Structure and during any
          redevelopment of the Sherman Avenue Parking Structure, to the extent
          there are not sufficient remaining spaces available from the City in
          the Sherman Avenue Parking Structure to accommodate the parking spaces
          designated by Landlord to be located in the Sherman Avenue Parking
          Structure, then the City shall put all such designated parking spaces
          in the Maple Avenue Parking Structure. The Parking Lease provides that
          the City shall be paid a quarterly rental payment at the market rate
          for the parking spaces provided. Any parking space provided pursuant
          to the Parking Lease shall be non-segregated and non-exclusive.
          Landlord shall initially allocate for use by Tenant's employees from
          the spaces leased pursuant to the City Parking Lease in the City
          Parking Structures, the number of spaces which is equal to (i) the
          Rentable Square Feet of the Office Premises as of the Completion Date,
          multiplied by 1.5, (ii) reduced by the number of spaces provided by
          Landlord to Tenant pursuant to Sections 34.A and B above (such sum
          being referred to as the "ADDITIONAL REQUIRED PARKING"). The
          Additional Required Parking shall be allocated by Landlord between the
          Sherman Avenue Parking Structure and the Maple Street Parking
          Structure pro rata based upon the allocation of Landlord's spaces
          under the City Parking Lease (as such allocation may change from time
          to time based upon the construction and reconstruction of the City
          Parking Structures) among the City Parking Structures (i.e., if fifty
          percent of the spaces given Landlord under the City Parking Lease are
          in the Maple Street Parking Structure and fifty percent are in the
          Sherman Avenue Parking Structure, fifty

                                       69
<PAGE>   76
          percent of the Additional Required Parking will be allocated to each
          such structure). Landlord shall offer to lease directly to Tenant's
          employees the Additional Required Parking for a monthly rate equal to
          the rate then being charged by the City under the City Parking Lease
          for the spaces (prorated to reflect a per month, per space rental
          amount) with the parking payment to be made directly by Tenant's
          employees to Landlord. Tenant shall require that all of Tenant's
          employees utilizing parking outside of the Building enter into parking
          agreements with Landlord to the extent Landlord has spaces available
          out of the Additional Required Parking. If Tenant's employees have not
          entered into parking leases covering all of the Additional Required
          Parking on or before the Commencement Date, Landlord may enter into
          parking leases with others for the portion of the Additional Required
          Parking not leased to Tenant's employees so long as those parking
          leases are terminable upon sixty (60) days prior notice to the user of
          the space, and if Tenant's employees thereafter choose to utilize the
          spaces (not to exceed the Additional Required Parking), Landlord shall
          exercise its termination rights and make the spaces available to
          Tenant's employees. In addition, if Tenant's employees are utilizing
          all of the Additional Required Parking, Landlord, at Tenant's request
          from time to time, shall put Tenant's employees on the waiting list
          for any spaces in excess of the Additional Required Parking, as they
          become available; provided that the right of Tenant's employees to
          utilize the excess spaces shall be terminable upon sixty (60) days
          prior notice from Landlord. In addition, from and after the
          Commencement Date if Tenant's employees have not elected to utilize or
          have terminated the use of some or all of the Additional Required
          Parking, and such spaces are subsequently leased to other parties, if
          Tenant's employees thereafter desire to use all or a portion of the
          unutilized Additional Required Parking, at Tenant's request, Landlord
          shall exercise its termination rights under the parking leases for the
          appropriate number of spaces requested by Tenant (not to exceed the
          Additional Required Parking) and shall make the spaces available for
          Tenant's employees upon such termination. In connection with their use
          of the Additional Required Parking, Tenant's employees shall comply
          with the terms of the City Parking Lease and any rules and regulations
          promulgated by the City or the operators of the City Parking
          Structures. To the extent Landlord has approval rights over the
          parking rules and regulations, Landlord shall not exercise such rights
          without Tenant's consent, not to be unreasonably withheld, conditioned
          or delayed. If Landlord defaults in the performance of its obligations
          under the City Parking Lease, and as a result of Landlord's default,
          Tenant's employees are precluded from utilizing any Additional
          Required Parking they have leased, the default by Landlord under the
          City Parking Lease shall also constitute a default by Landlord under
          this Lease.

               D. EXPANSION. If Tenant elects to expand the Premises pursuant to
          Sections 29, 30 or 31, in connection with each such expansion, Tenant
          shall have the right to utilize, the number of parking spaces within
          either the Building Parking Garage or the City Parking Structures,
          wherever available, equal to (i) the total parking spaces leased by
          Landlord pursuant to the City Parking Lease, plus (ii) the total
          number of spaces within the Building Parking Garage, multiplied by
          (iii) a fraction which has as its numerator the Rentable Square Feet
          of the expansion area and as its denominator the Rentable Square Feet
          of the Building ("EXPANSION PARKING ALLOCATION"). Tenant shall
          concurrently with the exercise of the expansion rights, notify
          Landlord as to the number of parking spaces Tenant would like to
          utilize (not to exceed the Expansion Parking Allocation) and Landlord
          shall provide such spaces, if they are not being leased by other
          tenants or licensees, or if they are being leased,

                                       70
<PAGE>   77
          Landlord shall exercise its sixty (60) day termination rights with
          respect to the spaces Tenant desires to use and thereafter provide the
          spaces to Tenant, up to the Expansion Parking Allocation, upon the
          terms and conditions set forth in Sections 34.B or 34.C, as
          applicable, (and Landlord shall also notify Tenant as to the
          allocation of the spaces among the Building Parking Garage and City
          Parking Structures, promptly following receipt of Tenant's notice
          requesting the spaces).

         35. SIGNAGE.

               A. TENANT'S SIGNAGE. As part of the Tenant Improvements, Landlord
          shall install for Tenant, and Tenant shall maintain during the Term
          hereof, at Tenant's expense, (a) subject to obtaining all applicable
          governmental approvals, exterior Building signage ("EXTERIOR SIGNAGE")
          identifying the Building as Tenant's headquarters; (b) identification
          signage for Tenant located in the first floor lobby of the Building
          (the "LOBBY SIGNAGE"), and (c) identification signage for Tenant
          located in the common corridors of any floors of the Building in which
          Tenant is leasing the full floor as part of the Premises hereunder
          ("ENTRY SIGNAGE"). The foregoing Exterior Signage, Lobby Signage and
          Entry Signage shall be located at areas mutually acceptable to
          Landlord and Tenant and identified in the plans and specifications for
          the Tenant Improvements provided for in the Workletter Agreement. The
          signage rights of Tenant set forth in this Section 35 are personal to
          the original named Tenant hereunder and to any permitted Tenant
          Affiliate assignee under Section 17 hereof, and no other party shall
          have the right to exercise such signage rights under this Section 35
          without the express written consent of Landlord (at Landlord's sole
          discretion).

               B. OTHER EXTERIOR SIGNAGE. Landlord shall not install or grant
          any tenant (other than tenants of the Retail Area) signage identifying
          the tenant of the Building on the exterior of the Building or on the
          Land, except that Landlord may grant any tenant other than Tenant
          which leases a full floor in the Building with a minimum of 20,000
          rentable square feet, the right to install exterior signage of
          moderate size (but smaller than Tenant's Exterior Signage) at grade
          level. The size, configuration and location of all exterior signage
          for tenants of the Building (other than tenants of the Retail Area)
          shall be subject to Tenant's approval, not to be unreasonably
          withheld, delayed, or conditioned (and to be deemed given if Tenant
          fails to approve or disapprove in writing, within ten (10) days
          following Landlord's request for approval). In addition, the retail
          tenants of the ground floor of the Building shall have the right to
          place exterior signage on the exterior of the Building, provided that
          all such exterior signage shall be smaller than Tenant's Exterior
          Signage and shall be consistent with the retail signage guidelines
          attached to this Lease as EXHIBIT N.

         36. RETAIL AREA. Landlord shall use commercially reasonable efforts to
enforce the use and leasing restrictions set forth in the recorded documents
entered into or to be entered into between Landlord and the owner of the Retail
Area or otherwise applicable to the Retail Area relating to the operation of the
Building and Retail Area (the "Restrictions"). In addition, Landlord shall not
approve any "Type 2" restaurant use in the Retail Area over which Landlord has
approval rights under the Restrictions, without the prior written consent of
Tenant, not to be unreasonably withheld, conditioned or delayed.

                                       71
<PAGE>   78

                                       72
<PAGE>   79
        IN WITNESS WHEREOF, the parties hereto have executed this Lease in
manner sufficient to bind them as of the day and year first above written.

                           LANDLORD:

                           DAVIS CHURCH OFFICE
                           DEVELOPMENT, L.L.C., a Delaware limited
                           liability company

                           By:    MESIROW STEIN
                                  DEVELOPMENT SERVICES, INC.,
                                  an Illinois corporation, its Member

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

                           TENANT:

                                  HOUGHTON MIFFLIN COMPANY, a
                           Massachusetts corporation

                           By:
                               ----------------------------------------
                           Name:
                                 --------------------------------------
                           Its:
                                 --------------------------------------

                                       73
<PAGE>   80
                                    EXHIBIT A

                              PREMISES FLOOR PLANS

                                      A-1
<PAGE>   81
                                    EXHIBIT B

                           SQUARE FOOTAGE CALCULATIONS

                                      B-1
<PAGE>   82
                                    EXHIBIT C

                              BUILDING FLOOR PLANS

                                      C-1
<PAGE>   83
                                    EXHIBIT D

                                LEGAL DESCRIPTION

                                      D-1
<PAGE>   84
                                    EXHIBIT E

                             PRO FORMA RENTAL RATES

                                      E-1
<PAGE>   85
                                    EXHIBIT F

                             CLEANING SPECIFICATIONS

                                      F-1
<PAGE>   86
                                    EXHIBIT G

                               OPERATING STANDARDS

                                      G-1
<PAGE>   87
                                    EXHIBIT H

                              RULES AND REGULATIONS

         1. No sign, lettering, picture (excluding artwork within the Premises),
notice or advertisement shall be placed on any outside window or in a position
to be visible from outside the Premises (except as otherwise permitted in
Section 35 of the Lease) and if visible from the outside or public corridors
within the Building shall be installed in such manner and be of such character
and style as Landlord shall approve in writing.

         2. No article which is explosive or inherently dangerous is allowed in
the Building.

         3. Tenant shall not represent itself as being associated with any
company or corporation by which the Building is owned.

         4. Sidewalks, entrances, passages, courts, corridors, halls, elevators
and stairways in and about the Premises shall not be obstructed.

         5. No animals (except for dogs in the company of a blind person), pets,
bicycles or other vehicles shall be brought or permitted to be in the Building
or the Premises.

         6. Room-to-room canvasses to solicit business from other tenants of the
Building are not permitted; Tenant shall not advertise the business, profession
or activities of Tenant conducted in the Building in any manner which violates
any code of ethics by any recognized association or organization pertaining to
such business, profession or activities.

         7. Tenant shall not waste electricity, water or air-conditioning and
shall cooperate reasonably with Landlord to assure the most effective and
efficient operation of the Building's heating and air-conditioning systems.

         8. No locks or similar devices shall be attached to any door except by
Landlord and Landlord shall have the right to retain a key to all such locks.
Tenant may not install any locks without Landlord's prior written approval.

         9. Tenant assumes full responsibility of protecting the Premises from
theft, robbery and pilferage; the Indemnitees shall not be liable for damage
thereto or theft or misappropriation thereof. Except during Tenant's normal
business hours, Tenant shall keep all doors to the Premises locked and other
means of entry to the Premises closed and secured. All corridor doors shall
remain closed at all times. If Tenant desires telegraphic, telephones, burglar
alarms or other electronic or mechanical devices, then Landlord will, upon
request, direct where and how connections and all wiring for such services shall
be installed and no boring, cutting or installing of wires or cables is
permitted without Landlord's approval.

                                      H-1
<PAGE>   88
         10. Except with the prior approval of Landlord, all cleaning,
repairing, janitorial, decorating, painting or other services and work in and
about the Premises shall be done only by authorized Building personnel.

         11. The weight, size and location of safes, furniture, equipment,
machines and other large or bulky articles shall be subject to Landlord's
reasonable approval and shall be brought to the Building and into and out of the
Premises at such times and in such manner as the Landlord shall direct and at
Tenant's sole risk and cost. Prior to Tenant's removal of any of such articles
from the Building, Tenant shall obtain written authorization from Landlord
(which Landlord shall not unreasonably withhold or delay) and shall present such
authorization to a designated employee of Landlord.

         12. Tenant shall not overload the safe capacity of the electrical
wiring of the Building and the Premises or exceed the capacity of the feeders to
the Building or risers.

         13. To the extent permitted by law, Tenant shall not cause or permit
picketing or other activity which would interfere with the business of Landlord
or any other tenant or occupant of the Building, or distribution of written
materials involving its employees in or about the Building, except in those
locations and subject to time and other limitations as to which Landlord may
give prior written consent.

         14. Tenant shall not cook, otherwise prepare or sell any food or
beverages in or from the Premises or use the Premises for housing accommodations
or lodging or sleeping purposes except that Tenant may install and maintain
vending machines, coffee/beverage stations and food cooking and preparation
equipment and eating facilities for the benefit of its employees or guests,
provided the same are maintained in compliance with applicable laws and
regulations and do not disturb other tenants in the Building with odor, refuse
or pests.

         15. Tenant shall not permit the use of any apparatus for sound
production or transmission in such manner that the sound so transmitted or
produced shall be audible or vibrations therefrom shall be detectable beyond the
Premises; nor permit objectionable odors or vapors to emanate from the Premises

         16. No floor covering shall be affixed to any floor in the Premises by
means of glue or other adhesive without Landlord's prior written consent (which
consent shall be deemed given as to any such matters included as part of the
plans and specifications for Tenant's Work or for subsequent alterations which
are otherwise approved by Landlord).

         17. Tenant shall only use the freight elevator for mail carts, dollies
and other similar devices for delivering material between floors that Tenant may
occupy.

         18. No smoking, eating, drinking or loitering is permitted in the
common areas of the Building except in designated areas.

                                      H-2
<PAGE>   89
         19. Landlord may require that all persons who enter or leave the
Building identify themselves to security guards, by registration or otherwise.
Landlord, however, shall have no responsibility or liability for any theft,
robbery or other crime in the Building.

         20. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental agency
and shall cooperate and participate in all reasonable security and safety
programs affecting the Building.

         21. Tenant shall cooperate and participate in all recycling programs
established for the Building by Landlord or any governmental agency.

                                       H-3
<PAGE>   90
                                    EXHIBIT I

                                 FF&E CATEGORIES

                                       I-1
<PAGE>   91
                                    EXHIBIT J

            PLAN DEVELOPMENT DRAWINGS AND SHELL AND CORE DESCRIPTION

                                       J-1
<PAGE>   92
                                    EXHIBIT K

                              WORKLETTER AGREEMENT

         THIS WORKLETTER AGREEMENT ("AGREEMENT") is made and entered into this
_____ day of ____________, _______, by and between DAVIS CHURCH OFFICE
DEVELOPMENT, L.L.C., a Delaware limited liability company ("LANDLORD"), and
HOUGHTON MIFFLIN COMPANY, a Massachusetts corporation ("TENANT").

         THE PARTIES ENTER INTO this Agreement based upon the following facts,
intentions and understandings:

         A. Landlord and Tenant have entered into a Lease of even date herewith
(the "LEASE"), for certain Premises (as defined in the Lease) in the Building
(as defined in the Lease) to be constructed by Landlord in Evanston, Illinois as
more particularly described therein. The capitalized terms used in this
Agreement shall have the meanings set forth in the Lease, unless otherwise
defined herein or in the project team directory ("PROJECT DIRECTORY") attached
hereto as Schedule 1 and incorporated herein by reference.

         B. Certain tenant improvement work is to be completed by Landlord
within the Premises upon the terms and conditions hereinafter set forth.

         NOW, THEREFORE, for and in consideration of the agreement to lease the
Premises and pay rent and the mutual covenants contained herein, the parties
agree as follows:

         22. TENANT IMPROVEMENTS. Landlord shall perform, or cause to be
performed, the tenant improvements (the "TENANT IMPROVEMENTS") as shown on the
Construction Documents (as hereinafter defined) approved by Landlord and Tenant,
as provided in Paragraphs 5 and 6 below. Landlord currently intends to utilize
Power Construction as its general contractor for the Tenant Improvements, but
reserves the right to change the general contractor, so long as Landlord
notifies Tenant of the change, which shall be subject to Tenant's reasonable
approval.

         23. TENANT'S ARCHITECT. Tenant's Architect is designated in the Project
Directory (such architect, or such other architect as may be selected by Tenant,
and approved by Landlord in its reasonable discretion, in substitution for such
firm, is hereinafter referred to as "TENANT'S ARCHITECT").

         24. LANDLORD'S ARCHITECT AND CONSULTING ENGINEERS. Landlord's Architect
is designated in the Project Directory (such architect, or such other architect
as may be selected by Landlord in substitution for such firm, is hereinafter
referred to as "LANDLORD'S ARCHITECT"). Landlord's Architect is also utilizing
certain consulting engineers for civil engineering and overseeing mechanical
work, each of whom are designated in the Project Directory (such engineers, or
such other engineers as may be selected by Landlord or Landlord's Architect in
substitution for such firms, are hereinafter referred to as the "CONSULTING
ENGINEERS").

                                       K-1
<PAGE>   93
         25.      PRELIMINARY TENANT IMPROVEMENTS PLANS

                  Attached hereto as Schedule 2 are preliminary plans for the
         Tenant Improvements to be constructed in the Premises ("PRELIMINARY
         TENANT IMPROVEMENT PLANS"), which have been approved by Landlord and
         Tenant for purposes of indicating the scope of work for the Tenant
         Improvements.

         26.      ARCHITECTURAL CONSTRUCTION DOCUMENTS.

                  26.1 Tenant shall cause Tenant's Architect to prepare and
         deliver on or before December 1, 2000, at Tenant's cost and expense, to
         Landlord, Landlord's Architect, the Consulting Engineers and the Design
         Build Subcontractors (hereinafter defined in Paragraph 6.2),
         preliminary construction drawings ("PRELIMINARY CONSTRUCTION DRAWINGS")
         containing sufficient information and detail to enable Landlord's
         Architect, the Consulting Engineers and the Design Build Subcontractors
         to begin preparation of the engineering construction drawings for the
         Tenant Improvements, including "backgrounds" for the Tenant
         Improvements for engineering use.

                  26.2 Tenant shall cause Tenant's Architect to prepare and
         deliver, at Tenant's cost and expense, completed architectural portions
         of the Construction Documents (the "ARCHITECTURAL CONSTRUCTION
         DOCUMENTS"), to Landlord and Tenant on or before February 1, 2001.

                  26.3 Within ten (10) business days following receipt by
         Landlord of the architectural Construction Documents referred to in
         Paragraph 5.1 above, Landlord shall indicate its acceptance or
         rejection of the architectural Construction Documents in writing.
         Landlord shall not unreasonably withhold its acceptance of the
         architectural Construction Documents, as long as they are consistent
         with the scope of work outlined in the Preliminary Tenant Improvements
         Plans and Specifications. If Landlord rejects the architectural
         Construction Documents, Landlord shall advise Tenant and Tenant's
         Architect of the reasons for Landlord's rejection.

                  26.4 If pursuant to Paragraph 5.3 above Landlord rejects the
         architectural Construction Documents, Tenant shall submit revised
         architectural Construction Documents to Landlord within twenty (20)
         business days following receipt by Tenant of written advice of the
         rejection and the reasons therefor. The submission of revised
         architectural Construction Documents shall be accompanied by a point by
         point written response from Tenant specifically responding to any
         disapprovals or other responses delivered by Landlord to Tenant.

                  26.5 If Tenant is required to submit revised architectural
         Construction Documents pursuant to Paragraph 5.4 above, Landlord shall
         indicate its acceptance or rejection of the revisions within five (5)
         business days following receipt by Landlord of the revised
         architectural Construction Documents. If Landlord rejects the
         revisions, Landlord shall advise Tenant and Tenant's Architect of the
         reasons for the rejection. If the rejection is based on Tenant's
         failure to remedy a reason or reasons for rejection specified by
         Landlord pursuant to

                                      K-2
<PAGE>   94
         Paragraph 5.3 above, the delay attributable to all further revisions of
         the architectural Construction Documents required to correct such
         reasons for rejection shall constitute Tenant Delay under Paragraph 12
         below and accordingly shall not result in a delay in the Commencement
         Date or the rental and other obligations in the Lease.

                  26.6 The parties contemplate that the final Construction
         Documents will be completed and approved by all parties by March 26,
         2001.

         27.      ENGINEERING CONSTRUCTION DOCUMENTS.

                  27.1 Landlord's Architect, Consulting Engineers, and/or the
         Design Build Subcontractors, as applicable, shall prepare and deliver
         to Landlord and Tenant, at Tenant's cost and expense (subject, however,
         to Paragraph 13), the applicable engineering portions of the
         Construction Documents, including, but not limited to, fire protection,
         H.V.A.C., electrical, life safety, plumbing and, if applicable,
         structural drawings and specifications (the "ENGINEERING CONSTRUCTION
         DOCUMENTS", which together with the architectural Construction
         Documents are collectively referred to as the "CONSTRUCTION
         DOCUMENTS").

                  27.2 Landlord and Tenant acknowledge that certain portions of
         the Tenant Improvements shall be designed and constructed by
         subcontractors of Landlord's general contractor on a design-build basis
         ("DESIGN-BUILD SUBCONTRACTORS"), that have been selected at the time
         Landlord bids the Base Building Work, including the H.V.A.C.,
         electrical, plumbing, and life safety systems which are part of the
         Tenant Improvements. The Design Build Subcontractors shall be selected
         based upon competitive pricing for the building systems included in the
         Base Building Work and unit pricing for the Tenant Improvements (which
         unit pricing shall be subject to Tenant's approval, not to be
         unreasonably withheld, conditioned or delayed). Upon receipt of the
         Construction Drawings, Landlord's general contractor shall price the
         design-build portions of the Tenant Improvements with the Design Build
         Subcontractors, based upon unit-pricing and unique items and shall
         obtain Tenant's approval of the costs for each of the Design Build
         Subcontractors, which approval shall not be unreasonably withheld,
         conditioned or delayed. Any rejection must specify in writing the
         reasons for rejection, and the changes to the Construction Drawings or
         the costs needed to obtain Tenant's approval. If agreement on costs
         cannot be reached with the applicable Design Build Subcontractor,
         Landlord shall cause Landlord's general contractor to re-bid the
         applicable portion of the work, and the lowest responsive bidder shall
         be awarded the work. Any delays caused by rejection of costs of any
         Design Build Subcontractor and/or any rebidding shall be deemed Tenant
         Delay under Paragraph 12 below.

                  27.3 Following selection of the Design Build Subcontractors,
         Landlord shall cause Landlord's Architect, the Consulting Engineers and
         the Design Build Subcontractors, and Tenant shall cause Tenant's
         Architect, to coordinate the timely preparation of such engineering
         Construction Documents with the preparation of the architectural
         Construction Documents pursuant to Paragraph 5 above, allowing a
         minimum of two (2) months following receipt of the Preliminary
         Construction Documents, for preparation of the engineering Construction
         Documents, which shall be prepared concurrently with the final
         preparation of the architectural Construction Documents. Within ten
         (10) business days of receipt of the

                                      K-3
<PAGE>   95
         engineering Construction Documents, Tenant shall indicate its
         acceptance or rejection in writing. If Tenant rejects any portion of
         the engineering Construction Documents, Tenant shall advise Landlord in
         writing of the reasons for Tenant's rejection. Landlord's Architect,
         the Consulting Engineers or the Design Build Subcontractors, as the
         case may be, shall then, at Tenant's cost and expense unless such
         revisions are made necessary by reason of an error on the part of
         Landlord's Architect, the Consulting Engineers or the Design Build
         Subcontractors revise the applicable portion of the engineering
         Construction Documents within twenty (20) business days following
         receipt of Tenant's requested revisions. The revised engineering
         drawings shall be delivered to Tenant, and the revisions shall be
         subject to Tenant's approval or rejection, which shall be given in
         writing within five (5) business days of receipt. The final engineering
         Construction Documents approved by Tenant must also be approved by
         Landlord.

         28. COST SCHEDULE. Landlord shall, in consultation with its general
contractor, within thirty(30) business days of Tenant's written approval of all
of the Construction Documents, advise Tenant of the cost to Tenant, or where
necessitated by the uniqueness of the item the cost estimate based on the best
information then available to Landlord, for all Tenant Improvements, together
with the installation costs thereof, by means of a schedule of costs and unit
prices ("COST SCHEDULE"). Landlord shall require its general contractor to
competitively bid each of the major subcontracts for the Tenant Improvements,
either on a unit cost or total cost basis, including the work being performed by
the Design Build Subcontractors (as more specifically provided in Paragraph 6.2)
and shall reflect the bids and/or unit costs in the Cost Schedule. Tenant shall
have five (5) business days to accept or reject the Cost Schedule in writing. If
Tenant rejects the Cost Schedule, Tenant shall advise Landlord in writing of the
reasons for such rejection, and shall work with Landlord, Landlord's Architect,
the Consulting Engineers, the Design Build Subcontractors and Tenant's Architect
to revise Tenant's construction requirements so that the Cost Schedule may be
approved by Tenant. Tenant may not, however, disapprove or reject any portion of
the Cost Schedule which is consistent with the unit prices previously approved
in connection with the approval of any of the Design Build Subcontractors. Such
revisions shall be made within five (5) business days after Tenant's written
rejection of the Cost Schedule. Any delays caused by a rejection of the Cost
Schedule and the necessary revisions shall constitute Tenant Delay under
Paragraph 12 below.

         29. UNIQUE ITEMS. To the extent that the Construction Documents call
for specialty items, items requiring extensive lead time or structural
modifications, modifications to the Base Building Work and/or items involving
extensive amounts of labor or would otherwise cause the build-out period for the
Tenant Improvements for any floor of the Premises to exceed one hundred eighty
(180) days (collectively "UNIQUE ITEMS"), Landlord's general contractor, after
such consultation with Tenant's Architect as may be necessary, shall deliver to
Landlord and Tenant, upon completion and delivery of the Construction Documents,
a list of such Unique Items. Tenant shall have the option to meet with
Landlord's general contractor and Tenant's Architect regarding substitutions for
such Unique Items within five (5) business days after receipt of Landlord's
general contractor's list of Unique Items, and to substitute items for Unique
Items which would not be classified as Unique Items by making such substitutions
within five (5) business days after receipt of such list. Expenses associated
with making the substitutions shall be borne by Tenant. Any delays in
Substantial Completion of the Tenant Improvements attributable to Unique Items
retained as part of the Tenant Improvements shall constitute Tenant Delay under
Paragraph 12.

                                       K-4
<PAGE>   96
         30.      CHANGE ORDERS.

                  30.1 TENANT INITIATED CHANGES. Subsequent to Tenant's approval
         of the Construction Documents, Tenant may, by written direction to
         Landlord, initiate changes to the Construction Documents and
         construction contemplated thereby. Tenant shall be responsible for all
         costs and expenses attributable to any changes if the Costs of the Work
         (as defined in Paragraph 13), taking into account the change, will
         exceed the TI Allowance (as defined in Section 13). Notwithstanding
         anything contained herein to the contrary, Landlord shall not be
         required to execute any requested changes to the Construction Documents
         which (a) adversely affect mechanical, plumbing, electric, heating,
         ventilating, air cooling or life safety systems of the Building, (b)
         adversely affect any structural components of the Building or require
         any penetration of the floor or ceiling not originally contemplated in
         the Construction Documents, (c) would be visible from the outside of
         the Building, (d) would adversely affect other tenants of the Building
         or (e) would require Landlord to make changes or alterations to other
         portions of the Building and/or to the Base Building Work.

                  Landlord, upon receipt of Tenant's written direction, shall
         cause Landlord's Architect or the Consulting Engineers or Design Build
         Subcontractors, as the case may be, to promptly prepare, at Tenant's
         cost and expense, a written change proposal, together with appropriate
         construction drawings and specifications as required, if Landlord's
         Architect or the Consulting Engineers or Design Build Subcontractors,
         as the case may be, initially prepared the portion of the Construction
         Documents which are to be revised, otherwise, Tenant shall cause
         Tenant's Architect to prepare, at Tenant's cost and expense, such
         construction drawings and specifications. Said change proposal shall
         set forth the cost from Landlord's general contractor of said change
         including any costs for delay or out of sequence work and preparation
         costs for drawings and related work (or if the cost cannot reasonably
         be determined, the basis upon which such change proposal shall be
         billed, for example, time and materials plus applicable mark-up) and
         the impact of the change upon the scheduled date of Substantial
         Completion of the Tenant Improvements or, if the exact impact upon the
         scheduled date of Substantial Completion of the Tenant Improvements
         cannot reasonably be determined, the estimated impact upon the
         scheduled date of Substantial Completion of the Tenant Improvements.
         Tenant shall have three (3) business days from the receipt of said
         change order to accept or reject it. Accepted change proposals shall
         become change orders and be executed by Tenant upon receipt. No field
         work will proceed without written approval of said change order by
         Tenant. The costs of change orders shall be paid by Tenant within
         thirty (30) days of Tenant's acceptance of the change order if the
         Costs of the Work, taking into account the change order, will exceed
         the TI Allowance. If Tenant fails to make such payment to Landlord for
         change orders, Landlord shall not be obligated to perform such change
         order and may proceed to complete the Tenant Improvements pursuant to
         the approved Plans and Specifications.

                  All delays caused by Tenant initiated change orders,
         including, without limitation, any stoppage of the work during the
         change order review process, shall constitute Tenant Delay under
         Paragraph 12.

                                      K-5
<PAGE>   97
                  30.2 LANDLORD INITIATED CHANGES. Landlord may make minor
         changes in the Tenant Improvements arising during the construction
         process not requiring an adjustment to the Cost of the Work and not
         inconsistent with the intent hereof. In addition, after prior notice to
         Tenant (which notice need not be in writing), the Tenant Improvements
         shall be changed (and the Construction Documents will be revised by
         Tenant) to reflect changes required by any local government inspectors
         and the Cost of Work shall be increased by the cost of such changes or
         decreased by any savings resulting from such changes; provided,
         however, that if as a result of any such changes required by local
         government inspectors arising from any changes in applicable laws or
         interpretations thereof occurring after approval of the plans and
         specifications for the Tenant Improvements, the Cost of Work shall
         materially increase (i.e., by more than $25,000), then prior to
         implementing the change, Tenant may request changes to the plans and
         specifications in order to reduce the Cost of Work (and the time period
         for implementing Tenant's changes shall not constitute Tenant Delay,
         but shall be considered Force Majeure). Landlord shall notify Tenant of
         such increase or decrease by delivering to Tenant a change order, which
         shall be effective upon issuance by Landlord.

         31. CODE COMPLIANCE. Tenant shall be responsible to deliver Preliminary
Construction Drawings and architectural Construction Documents in conformance
with all applicable statutes, laws, ordinances, orders, codes, rules,
regulations and building and fire codes, including, without limitation, the
Americans With Disabilities Act and which do not require the use of asbestos or
asbestos-containing materials. Landlord's, Landlord's Architect's or the
Consulting Engineers' or Design Build Subcontractors' review of the
architectural Construction Documents shall create no responsibility or liability
on the part of Landlord for such compliance or their completeness or design
sufficiency. Tenant shall be responsible for any delays in obtaining necessary
permits and occupancy certificates caused by non-compliance of such Preliminary
Construction Drawings and architectural Construction Documents with such
statutes, laws, ordinances, orders, codes, rules and regulations, and such
delays shall constitute Tenant Delay under Paragraph 12 below and under the
Lease.

         32. SUBSTANTIAL COMPLETION. Landlord's Architect shall schedule a joint
inspection with Tenant, and, if desired by Tenant, Tenant's Architect,
Landlord's contractor and Landlord's representative of the Premises prior to
occupancy by Tenant to determine if the Tenant Improvements are Substantially
Complete and to establish a complete list of items which are unfinished or in
need of corrective work (the "PUNCHLIST"). The Punchlist shall be signed by both
Landlord's Architect and Tenant's Architect. Landlord's Architect shall certify
Substantial Completion. Landlord shall proceed expeditiously to complete and/or
correct any items listed on said Punchlist, during normal business hours. Tenant
shall, at Tenant's expense, cause Tenant's Architect to review for accuracy and
completeness "AS BUILT" drawings of the Tenant Improvements prepared by
Landlord's contractor, make all necessary corrections thereto and make all
additions necessary to reflect installations not shown thereon. Within thirty
(30) days after Substantial Completion of the Tenant Improvements, Tenant shall
furnish one (1) complete reproducible set of such drawings acceptable to
Landlord.

         33. DELAYS IN WORK. If Landlord shall be delayed in Substantially
Completing the Tenant Improvements for any reason set forth in the following
subparagraphs 12.1 through 12.9 below (each, a "TENANT DELAY"), then neither the
Commencement Date of the Lease nor the payment of Rent thereunder shall be
affected or deferred on account of such Tenant Delay. Landlord shall notify

                                       K-6
<PAGE>   98
Tenant in writing within three (3) business days following Landlord's actual
knowledge of the occurrence of the event constituting a Tenant Delay, that such
event is or will result in a Tenant Delay under this Workletter Agreement
(provided that if Landlord fails to give a timely notice, then Landlord may not
claim "Tenant Delay" with respect to any period of delay occurring prior to
Landlord's delivery of such notice to Tenant). The following constitute Tenant
Delay:

                  33.1 Tenant's failure to furnish the initial Preliminary
         Construction Drawings and architectural Construction Documents or the
         information required for the preparation of the same or the engineering
         Construction Documents as and when required hereby or other Tenant
         delay under Paragraph 4, 5, 6 and 10 above;

                  33.2 Tenant's failure to approve the Cost Schedule within the
         time period required hereby or other Tenant delay under Paragraph 7
         above;

                  33.3 Tenant's request for or use of Unique Items;

                  33.4 Tenant's failure to pay for any portions of the Tenant
         Improvements as and when payable by Tenant hereunder;

                  33.5 Tenant's changes in the work or the Construction
         Documents (notwithstanding Landlord's approval of any such changes) or
         other Tenant delay under Paragraph 9 above;

                  33.6 Landlord's determination that modifications to the Base
         Building Work are necessary in order to accommodate the Tenant
         Improvements;

                  33.7 the entry by Tenant or Tenant's contractors, suppliers,
         vendors or other agents in or about the Premises or Building or other
         Tenant delay under Paragraph 15 below;

                  33.8 Landlord's inability to commence the Tenant Improvements
         on or before September 1, 2001 due to the failure to have final
         Construction Documents and the Cost Schedule approved by both parties
         on or before May 15, 2001 for any reason other than Landlord's
         arbitrary objections to, or disapproval of, such items or Landlords'
         failure to respond to Tenant's submittals as and when required
         hereunder; or

                  33.9 any other act, omission or delay by Tenant, its agents or
         contractors or persons employed by any of such persons delaying
         Substantial Completion of the Tenant Improvements or otherwise
         described as a "Tenant Delay" in this Workletter Agreement.

         [OPEN:  TENANT WANTS BINDING ARBITRATION FOR DISPUTES REGARDING TENANT
         DELAYS]

         34.      COST OF THE WORK, TENANT IMPROVEMENT ALLOWANCE AND
                  MOVING ALLOWANCE.

                  34.1 For purposes hereof, the "COST OF THE WORK" shall mean
         and include the following costs attributable to the Tenant
         Improvements: (a) the cost of all materials and labor; (b) general
         conditions (including rubbish removal, hoisting, permits, temporary

                                       K-7
<PAGE>   99
         facilities, safety and protection, cleaning, tools, blueprints and
         reproduction, telephone, temporary power, field supervision and the
         like); (c) premium cost of workers compensation, public liability,
         casualty and other insurance charged by contractors'; (d) contractors'
         charges for overhead and fees; (e) architectural, engineering and
         consulting fees incurred by Landlord and Tenant, including fees payable
         to any Design Build Subcontractor; and (f) utility costs. Costs of the
         Work shall not include any supervisory fee for loading dock and
         elevator service. In addition, Landlord will serve as project manager
         for the Tenant Improvements at no additional charge. Hoisting charges
         for Base Tenant's furniture, fixtures and equipment shall be invoiced
         to and paid separately by Tenant, and not as part of Costs of the Work.

                  34.2 Provided that Tenant is not in Default, Landlord shall
         contribute in progress payments a maximum amount ("TENANT IMPROVEMENT
         ALLOWANCE") equal to (i) Thirty-Two Dollars and 50/100 Cents ($32.50)
         multiplied by (ii) the Rentable Square Feet of the Premises as of the
         Lease Date, as Landlord's share of the Cost of the Work (a portion of
         which, not to exceed $2.50 per Rentable Square Foot ("A&E ALLOWANCE")
         may be utilized for fees of Landlord's and Tenant's Architects and
         engineers, including the Design Build Subcontractors in connection with
         the Tenant Improvements) and Tenant shall pay Landlord, as Additional
         Rent under the Lease, any excess of the Cost of the Work over the
         amount of the Tenant Improvement Allowance ("EXCESS COSTS"). Landlord
         shall not be obligated to commence the work until either (i) Tenant has
         paid Landlord Landlords' estimate of such Excess Costs and all other
         costs and charges in connection with the Tenant Improvements for which
         Tenant is responsible hereunder or (ii) if, and only if, Landlord's
         lender and the title company are amenable to progress payments by
         Tenant of the Excess Costs (and do not require Landlord to deposit such
         funds), Tenant shall have provided Landlord, Landlord's lender and the
         title company with reasonable assurances that the Excess Costs are or
         will be available as construction proceeds. Landlord agrees to use such
         funds paid by Tenant, along with the Tenant Improvement Allowance, to
         pay the Costs of the Work in progress payments, as the work proceeds,
         and Tenant's funds shall be disbursed pari pasu with disbursements of
         the Tenant Improvement Allowance. If, after the Construction Documents
         have been approved or work has commenced, the Cost Schedule or
         Construction Documents are revised such that Tenant owes Landlord
         additional amounts on account of the Cost of the Work, Landlord shall
         not be obligated to proceed with the Tenant Improvements until Tenant
         has paid Landlord any such deficit or, to the extent permitted above,
         provided Landlord, Landlord's lender and the title company with
         reasonable assurances that the funds are or will be available as
         construction proceeds. Any such deficit owed by Tenant shall be paid to
         Landlord within thirty (30) days after issuance of the revised Cost
         Schedule. If the actual Cost of the Work is less than the Tenant
         Improvement Allowance, Tenant shall not be entitled to receive a
         payment or a credit for such difference. In addition, if Tenant has not
         deposited the Excess Costs with Landlord, to the extent permitted
         above, Tenant shall fund its proportionate share of each progress
         payment made by Landlord concurrently with the disbursement of the
         applicable portion of the Tenant Improvement Allowance, and if Tenant
         fails to do so, Landlord shall not be obligated to disburse the Tenant
         Improvement Allowance; provided further, however, that if the estimated
         costs of the Tenant Improvements do not exceed the product of 1.25 and
         the Tenant Improvements Allowance, and the title company and all
         Mortgagees and Ground Lessors approve, Tenant may fund the Excess Costs
         concurrently

                                       K-8
<PAGE>   100
         with the last construction draw made by Landlord to cover the costs of
         the Tenant Improvements.

                  34.3 Notwithstanding any thing contained herein to the
         contrary above, so long as Tenant is not in Default, upon Tenant's
         request, accompanied by invoices evidencing the amounts due, at any
         time following final approval of the Construction Documents by Landlord
         and Tenant, Landlord shall disburse out of the Tenant Improvement
         Allowance an amount not to exceed the A&E Allowance, to Landlord's and
         Tenant's Architects and engineers including the Design Build
         Subcontractors, to pay the costs incurred in connection with the
         preparation of the Construction Drawings. Tenant shall be responsible
         for paying all such costs in excess of the A&E Allowance.

                  13.4 Upon substantial completion of the Premises, Tenant's
         acceptance and occupancy thereof, and provided Tenant is not then in
         Default, Landlord shall pay to Tenant a moving allowance in an amount
         equal to $1.00 per Rentable Square Foot of the Premises (with the
         square footage of the Premises being determined as of the Lease Date)
         to reimburse Tenant for costs incurred in connection with moving into
         the Premises.

         35.      FAILURE TO MAKE PAYMENTS. In the event Tenant fails to make
any payment to Landlord as provided for in Paragraph 13 above, Landlord at its
option may:

                  35.1     Stop all work.

                  35.2 Complete the Tenant Improvements, pursuant to the
         approved Construction Documents, and continue to hold Tenant liable for
         all costs due to Landlord. In such event all sums shall bear interest
         as provided for late payments in the Lease.

         These rights shall be cumulative and in addition to all other rights at
law and equity of Landlord. Tenant's failure to pay any sum due hereunder shall
constitute a default under the Lease.

         36.      ACCESS BY TENANT PRIOR TO COMMENCEMENT OF LEASE. [OPEN
ISSUE REGARDING PERIOD OF FREE RENT AFTER SUBSTANTIAL COMPLETIONS] Landlord,
shall permit Tenant and Tenant's agents to enter the Premises no less than
forty-five (45) days prior to the Commencement Date in order that Tenant may
make the Premises ready for Tenant's use and occupancy by installation of FF&E.
Tenant shall notify Landlord in writing prior to allowing any party to enter the
Premises, and shall provide Landlord with, and update as needed, a list of
parties authorized by Tenant to so enter. Such entry prior to the commencement
of the term shall constitute a license only and not a lease and such license
shall be conditioned upon (a) Tenant working in harmony and not interfering in
any way with Landlord and Landlord's agents, contractors, workmen, mechanics and
suppliers in doing Landlord's Work in the Building or with other tenants and
occupants of the Building, (b) Tenant furnishing Landlord with evidence of such
insurance as Landlord may reasonably require Tenant, Tenant's suppliers, vendors
and contractors to carry against liabilities which may arise out of such entry
(including, without limitation, any insurance required to be maintained by
Tenant under the Lease), (c) Tenant's assuming full responsibility for any
damages it causes and (d) each party entering being identified on the authorized
entry list described above. Landlord shall have the right to withdraw such
license if Tenant interferes in any way with the completion of Landlord's Work,
causes

                                      K-9
<PAGE>   101
any damage, or otherwise violates any of the terms of this Paragraph 15. Tenant
agrees that Landlord shall not be liable in any way for any injury, loss or
damage which may occur to any of Tenant's property placed, or installations
made, in the Premises prior to the commencement of the term of the Lease, the
same being at Tenant's sole risk, and Tenant agrees to protect, defend,
indemnify and hold harmless Landlord, its employees, contractors, agents and
consultants from any and all liabilities, costs, damages, losses, suits,
proceedings, injuries, fees and expenses (including, without limitation,
attorneys' fees) arising in any way out of or in any way connected with the
activities of Tenant or its agents, contractors, suppliers or workmen in or
about the Premises or the Building prior to the Commencement Date. Tenant shall
not interfere with or impair the mandated coordination with labor unions
provided for under the construction agreements for the Premises and the
Building. Tenant has no authority or power to cause or permit any lien or
encumbrance of any kind whatsoever, whether created by act of Tenant, operation
of law or otherwise, to be attached to or be placed upon Landlord's title or
interest in the Premises, Building or underlying land and Tenant shall permit no
mechanics lien, materials lien or other lien to be filed against the Premises,
Building or underlying land. Tenant assumes full responsibility for any of its
employees, agents or contractors admitted to the Premises pursuant to this
paragraph, and does hereby indemnify Landlord as respects any claims which arise
against Landlord because of their presence, or by or through said employees,
agents or contractors. Without limitation of the other provisions of the Lease
and this Agreement, any delay in Substantial Completion of the Tenant
Improvements caused by entry hereunder prior to the commencement of the term
shall constitute Tenant Delay under the Lease and Tenant Delay under Paragraph
12 above. Any increase in construction costs caused by out-of-sequence work or
other disruption of the normal construction process to accommodate Tenant's
access hereunder shall be a cost borne by Tenant.

         37.      MISCELLANEOUS.

                  37.1 HEADINGS. The headings are for convenience only.

                  37.2 ELECTION OF LAW. This Agreement shall be governed by the
         laws of the State of Illinois.

                  37.3 TIME IS OF THE ESSENCE. Time is of the essence in this
         Agreement.

                  37.4 ENTIRE AGREEMENT. This Agreement sets forth the entire
         Agreement of Tenant and Landlord regarding Tenant Improvements.

                  37.5 AMENDMENT. This Agreement may only be amended in writing,
         duly executed by both Landlord and Tenant.

                  37.6 PAYMENTS. All payments to be made by Tenant pursuant to
         this Agreement shall be deemed Rent.

                  37.7 DATES. Any date specified herein which may fall on a
         Saturday, Sunday or holiday shall be deemed to be extended to the next
         day which is not a Saturday, Sunday or holiday.

                                      K-10
<PAGE>   102
                  37.8 NO WARRANTIES. All implied warranties, including, but not
         limited to, those of merchantability and fitness for a particular
         purpose, are expressly negated and waived by Tenant.

                  37.9 PREMISES ONLY. This Agreement shall not be deemed
         applicable to any additional space added to the original Premises at
         any time or from time to time, whether by any options under the Lease
         or otherwise, or to any portion of the original Premises or any
         additions thereto in the event of a renewal or extension of the
         original term of the Lease, whether by any options under the Lease or
         otherwise, unless expressly so provided in the Lease or any amendment
         or supplement thereto.

                  37.10 LANDLORD LIABILITY. The liability of Landlord hereunder
         or under an amendment hereto or any instrument or document executed in
         connection herewith shall be limited as provided in Section 28.N of the
         Lease.

         38. DESIGNATED REPRESENTATIVES; COOPERATION.

                  38.1 Landlord's and Tenant's representatives with the
         authority to give and receive notices, other materials and information
         relating to the Tenant Improvements, and approvals under this Agreement
         are listed in the Project Directory, and may be changed by Landlord or
         Tenant by giving written notice to the other party.

                  38.2 Tenant and Landlord agree to make their respective
         architects and engineers available to the other to answer questions and
         provide clarifications and additional information as is reasonable for
         the timely progress and completion of the Tenant Improvements.

                                      K-11
<PAGE>   103
         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
first day aforewritten.

                                        LANDLORD:

                                        DAVIS CHURCH OFFICE
                                        DEVELOPMENT, L.L.C., a Delaware
                                        limited liability company

                                        By:____________________________

                                                 Name:_________________

                                                 Its:__________________

                                        TENANT:

                                        HOUGHTON MIFFLIN COMPANY, a
                                        Massachusetts corporation

                                        By:___________________________

                                                 Name:________________

                                                 Its:_________________

                                      K-12
<PAGE>   104
                                    EXHIBIT L

                               COMPLETION GUARANTY

                                       L-1
<PAGE>   105
                                    EXHIBIT M

                                  PARKING LEASE

                                       M-1
<PAGE>   106
                                    EXHIBIT N

                            RETAIL SIGNAGE GUIDELINES

                                       N-1<PAGE>   1
                                                             Exhibit (10)(ii)(D)

                                                                  Execution Copy

                                  $200,000,000

                                     364-DAY
                                CREDIT AGREEMENT

                          DATED AS OF DECEMBER 18, 2000

                                      AMONG

                            HOUGHTON MIFFLIN COMPANY,
                                   AS BORROWER

                            THE LENDERS PARTY HERETO,

                              WACHOVIA BANK, N.A.,
                       AS ADMINISTRATIVE AGENT AND LENDER,

                                  BANK ONE, NA,
                         AS SYNDICATION AGENT AND LENDER

                                       AND

                         BANC ONE CAPITAL MARKETS, INC.,
                  AS JOINT LEAD ARRANGER AND JOINT BOOK MANAGER

                           WACHOVIA SECURITIES, INC.,
                  AS JOINT LEAD ARRANGER AND JOINT BOOK MANAGER

                              FLEET NATIONAL BANK,
                             AS DOCUMENTATION AGENT

                   THE CHASE MANHATTAN BANK AND SUNTRUST BANK,
                                  AS CO-AGENTS

<PAGE>   2

                                TABLE OF CONTENTS
                                -----------------
<TABLE>
<CAPTION>
                                                                             PAGE
                                                                             ----
<S>      <C>                                                                 <C>
ARTICLE I  DEFINITIONS.........................................................1
   1.1   Defined Terms.........................................................1
   1.2   Accounting Terms and Determinations..................................13

ARTICLE II  THE CREDITS.......................................................13
   2.1   Commitment...........................................................13
   2.2   Required Payments; Termination.......................................13
   2.3   Ratable Loans........................................................14
   2.4   Types of Advances....................................................14
   2.5   Fees; Reductions in Aggregate Commitment.............................14
   2.6   Minimum Amount of Each Advance.......................................14
   2.7   Optional Principal Payments..........................................15
   2.8   Method of Selecting Types and Interest Periods for New Advances......15
   2.9   Conversion and Continuation of Outstanding Advances..................15
   2.10  Changes in Interest Rate, etc........................................16
   2.11  Rates Applicable After Default.......................................16
   2.12  Method of Payment....................................................17
   2.13  Noteless Agreement; Evidence of Indebtedness.........................17
   2.14  Telephonic Notices...................................................18
   2.15  Interest Payment Dates; Interest and Fee Basis.......................18
   2.16  Notification of Advances, Interest Rates, Prepayments
         and Commitment Reductions............................................19
   2.17  Lending Installations................................................19
   2.18  Non-Receipt of Funds by the Administrative Agent.....................19
   2.19  Extension of Facility Termination Date...............................19

ARTICLE III  YIELD PROTECTION; TAXES..........................................21
   3.1   Yield Protection.....................................................21
   3.2   Changes in Capital Adequacy Regulations..............................21
   3.3   Availability of Types of Advances....................................22
   3.4   Funding Indemnification..............................................22
   3.5   Taxes................................................................22
   3.6   Lender Statements; Survival of Indemnity.............................24

ARTICLE IV  CONDITIONS PRECEDENT..............................................25
   4.1   Closing Date.........................................................25
   4.2   Each Advance.........................................................26

ARTICLE V  REPRESENTATIONS AND WARRANTIES.....................................26
   5.1   Existence and Standing...............................................26
   5.2   Authorization and Validity...........................................27
</TABLE>

                                        i
<PAGE>   3

<TABLE>
<S>      <C>                                                                  <C>
   5.3   No Conflict; Government Consent......................................27
   5.4   Financial Statements.................................................27
   5.5   Material Adverse Change..............................................27
   5.6   Taxes................................................................27
   5.7   Litigation and Contingent Obligations................................28
   5.8   Subsidiaries.........................................................28
   5.9   ERISA................................................................28
   5.10  Accuracy of Information..............................................28
   5.11  Regulation U.........................................................29
   5.12  Material Agreements..................................................29
   5.13  Compliance With Laws.................................................29
   5.14  Ownership of Properties..............................................29
   5.15  Plan Assets; Prohibited Transactions.................................29
   5.16  Environmental Matters................................................29
   5.17  Investment Company Act...............................................30
   5.18  Public Utility Holding Company Act...................................30
   5.19  Insurance............................................................30
   5.20  Solvency.............................................................30

ARTICLE VI  COVENANTS.........................................................31
   6.1   Financial Reporting..................................................31
   6.2   Use of Proceeds......................................................32
   6.3   Notice of Default....................................................32
   6.4   Conduct of Business..................................................32
   6.5   Taxes................................................................33
   6.6   Insurance............................................................33
   6.7   Compliance with Laws.................................................33
   6.8   Maintenance of Properties............................................33
   6.9   Inspection...........................................................33
   6.10  Dividends............................................................33
   6.11  Consolidation, Merger and Sales......................................34
   6.12  Liens................................................................34
   6.13  Affiliates...........................................................35
   6.14  Contingent Obligations...............................................35
   6.15  Sale of Accounts.....................................................36
   6.16  Financial Contracts..................................................36
   6.17  Financial Covenants..................................................36
         6.17.1  Coverage Ratio...............................................36
         6.17.2  Leverage Ratio...............................................36
   6.18  Subsidiary Guarantors................................................37
   6.19  ERISA Compliance.....................................................37
   6.20  Permitted Investments and Acquisitions...............................37
   6.21  Subsidiary Indebtedness..............................................38
</TABLE>

                                       ii

<PAGE>   4
<TABLE>
<S>        <C>                                                              <C>

ARTICLE VII  DEFAULTS.........................................................38

ARTICLE VIII  ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES..................40
   8.1   Acceleration.........................................................40
   8.2   Amendments...........................................................40
   8.3   Preservation of Rights...............................................41

ARTICLE IX  GENERAL PROVISIONS................................................41
   9.1   Survival of Representations..........................................41
   9.2   Governmental Regulation..............................................41
   9.3   Headings.............................................................41
   9.4   Entire Agreement.....................................................41
   9.5   Several Obligations; Benefits of this Agreement......................42
   9.6   Expenses; Indemnification............................................42
   9.7   Numbers of Documents.................................................43
   9.8   [Reserved.]..........................................................43
   9.9   Severability of Provisions...........................................43
   9.10  Nonliability of Lenders..............................................43
   9.11  Confidentiality......................................................43
   9.12  Nonreliance..........................................................43
   9.13  Disclosure...........................................................44

ARTICLE X  THE ADMINISTRATIVE AGENT...........................................44
   10.1  Appointment; Powers and Immunities...................................44
   10.2  Reliance by Administrative Agent.....................................44
   10.3  Defaults.............................................................45
   10.4  Rights of Administrative Agent and its Affiliates as a Lender........45
   10.5  Indemnification......................................................45
   10.6  Consequential Damages................................................46
   10.7  Registered Holder of Loan Treated as Owner...........................46
   10.8  Nonreliance on Administrative Agent and Other Lenders................46
   10.9  Failure to Act.......................................................47
   10.10 Successor Administrative Agent.......................................47
   10.11 Other Agents.........................................................47

ARTICLE XI  SETOFF; RATABLE PAYMENTS..........................................47
   11.1  Setoff...............................................................47
   11.2  Ratable Payments.....................................................48

ARTICLE XII  BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS................48
   12.1  Successors and Assigns...............................................48
   12.2  Participations.......................................................48
   12.3  Assignments..........................................................49
   12.4  Dissemination of Information; Tax Treatment..........................50
</TABLE>
                                       iii

<PAGE>   5
<TABLE>
<S>        <C>                                                              <C>
ARTICLE XIII  NOTICES.........................................................50

ARTICLE XIV  COUNTERPARTS.....................................................51

ARTICLE XV  CHOICE OF LAW; CONSENT TO JURISDICTION;
         WAIVER OF JURY TRIAL.................................................51
   15.1  CHOICE OF LAW........................................................51
   15.2  CONSENT TO JURISDICTION..............................................51
   15.3  WAIVER OF JURY TRIAL.................................................51

</TABLE>

SCHEDULES

Pricing Schedule
Schedule 1     Commitments
Schedule 5.8   Material Subsidiaries
Schedule 5.14  Liens

EXHIBITS

Exhibit A      Form of Opinion of Goodwin, Procter & Hoar LLP
Exhibit B      Form of Compliance Certificate
Exhibit C      Form of Assignment Agreement
Exhibit D      Form of Loan-Credit Related Money Transfer Instruction
Exhibit E      Form of Note
Exhibit F      Form of Guaranty

                                       iv

<PAGE>   6

                            364-DAY CREDIT AGREEMENT

     This 364-Day Credit Agreement, dated as of December 18, 2000, is among
Houghton Mifflin Company, a Massachusetts corporation, the Lenders party hereto,
Wachovia Bank, N.A., a national banking association, individually and as
Administrative Agent, and Bank One, NA, individually and as Syndication Agent.
The parties hereto agree as follows:

                                    ARTICLE I

                                   DEFINITIONS
                                   -----------

     1.1  DEFINED TERMS. As used in this Agreement:

     "Acquisition" means any transaction, or any series of related transactions,
consummated on or after the date of this Agreement, by which the Borrower or any
of its Subsidiaries (i) acquires any going business or all or substantially all
of the assets of any firm, corporation or limited liability company, or division
thereof, whether through purchase of assets, merger or otherwise or (ii)
directly or indirectly acquires (in one transaction or as the most recent
transaction in a series of transactions) at least a majority (in number of
votes) of the securities of a corporation which have ordinary voting power for
the election of directors (other than securities having such power only by
reason of the happening of a contingency) or a majority (by percentage or voting
power) of the outstanding ownership interests of a partnership or limited
liability company.

     "Administrative Agent" means Wachovia Bank, N.A., a national banking
association, in its capacity as contractual representative of the Lenders
pursuant to ARTICLE X, and not in its individual capacity as a Lender, and any
successor Administrative Agent appointed pursuant to ARTICLE X.

     "Advance" means a borrowing hereunder, (i) made by the Lenders on the same
Borrowing Date, or (ii) converted or continued by the Lenders on the same date
of conversion or continuation, consisting, in either case, of the aggregate
amount of the several Loans of the same Type and, in the case of Eurodollar
Loans, for the same Interest Period.

     "Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person owns 20% or
more of any class of voting securities (or other ownership interests) of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.

     "Agent" and "Agents" means, individually and collectively, the
Administrative Agent and the Syndication Agent.

<PAGE>   7

     "Aggregate Commitment" means the aggregate of the Commitments of all the
Lenders, as reduced from time to time pursuant to the terms hereof.

     "Agreement" means this 364-Day Credit Agreement, as it may be amended or
modified and in effect from time to time.

     "Applicable Facility Fee Rate" means, at any time, the percentage rate per
annum at which Facility Fees are accruing on the Aggregate Commitment (without
regard to usage) at such time as set forth in the PRICING SCHEDULE,

     "Applicable Margin" means, with respect to Eurodollar Advances at any time,
the percentage rate per annum which is applicable at such time with respect to
Eurodollar Advances as set forth in the PRICING SCHEDULE.

     "Applicable Utilization Fee Rate" means, at any time, the percentage rate
per annum at which Utilization Fees are accruing as set forth in the PRICING
SCHEDULE.

     "Arranger" and "Arrangers" means, individually and collectively, as the
case may be, Banc One Capital Markets, Inc. and Wachovia Securities, Inc., and
each of their respective successors and assigns, each in its capacity as Joint
Lead Arranger and Joint Book Runner.

     "Article" means an article of this Agreement unless another document is
specifically referenced.

     "Authorized Officer" means any of the President and Chief Executive
Officer, Chief Financial Officer or Treasurer of the Borrower, acting singly.

     "Base Rate" means, for any day, a rate of interest per annum equal to the
higher of (i) the Prime Rate for such day and (ii) the sum of the Federal Funds
Rate for such day plus 1/2% per annum.

     "Base Rate Advance" means an Advance which, except as otherwise provided in
SECTION 2.11, bears interest at the Base Rate.

     "Base Rate Loan" means a Loan which, except as otherwise provided in
SECTION 2.11, bears interest at the Base Rate.

     "Borrower" means Houghton Mifflin Company, a Massachusetts corporation, and
its successors and assigns.

     "Borrowing Date" means a date on which an Advance is made hereunder.

     "Borrowing Notice" is defined in SECTION 2.8.

                                       2

<PAGE>   8

     "Capitalized Lease" of a Person means any lease of Property by such Person
as lessee which would be capitalized on a balance sheet of such Person prepared
in accordance with GAAP.

     "Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with GAAP.

     "Cash Equivalent Investments" means (i) short-term obligations of, or fully
guaranteed by, the United States of America, (ii) commercial paper rated A-1 or
better by S&P or P-1 or better by Moody's, (iii) demand deposit accounts
maintained in the ordinary course of business, (iv) securities with maturities
of one year or less from the date of acquisition issued by a corporation
organized under the laws of one of the states of the United States rated at A or
better by S&P and A or better by Moody's and (v) certificates of deposit issued
by and time deposits with commercial banks (whether domestic or foreign) having
capital and surplus in excess of $100,000,000; provided in each case that the
same provides for payment of both principal and interest (and not principal
alone or interest alone) and is not subject to any contingency regarding the
payment of principal or interest.

     "Change in Control" means the occurrence of either of the following: (i)
the acquisition by any Person, or two or more Persons acting in concert, of
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934) of 20% or more of
the outstanding shares of voting stock of the Borrower; or (ii) individuals who
were directors of the Borrower as of the date of this Agreement (together with
any individuals who after the date of this Agreement become directors of the
Borrower and whose election by the board of directors was effected or
recommended by a majority of the directors then in office) shall cease for any
reason to constitute a majority of the board of directors of the Borrower.

     "Closing Date" means December 18, 2000.

     "Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.

     "Commitment" means, (i) for each Lender, the obligation of such Lender to
make Loans not exceeding the amount set forth on SCHEDULE 1, and (ii) with
respect to each Person which becomes a Lender after the Closing Date, the amount
specified for such Person on the signature page of the Assignment Agreement to
which it is a party, in each case, as such amount may be modified as a result of
any assignment that has become effective pursuant to SECTION 12.3 or as
otherwise modified from time to time pursuant to the terms hereof.

     "Consolidated EBIT" means Consolidated Net Income plus, to the extent
deducted from revenues in determining Consolidated Net Income, (i) Consolidated
Interest Expense, (ii) expense for taxes paid or accrued, and (iii) with respect
to the fiscal quarters ending March 31,

                                       3

<PAGE>   9

2000, June 30, 2000, and September 30, 2000 only, non-cash nonrecurring losses
or charges in an amount not to exceed $9,200,000, all calculated for the
Borrower and its Subsidiaries on a consolidated basis.

     "Consolidated EBITDA" means Consolidated Net Income plus, to the extent
deducted from revenues in determining Consolidated Net Income, (i) Consolidated
Interest Expense, (ii) expense for taxes paid or accrued, (iii) depreciation,
(iv) amortization, and (v) with respect to the fiscal quarters ending March 31,
2000, June 30, 2000 and September 30, 2000 only, non-cash nonrecurring losses or
charges in an amount not to exceed $9,200,000, all calculated for the Borrower
and its Subsidiaries on a consolidated basis.

     "Consolidated Interest Expense" means, with reference to any period, the
interest expense of the Borrower and its Subsidiaries calculated on a
consolidated basis for such period.

     "Consolidated Net Income" means, with reference to any period, the net
income (or loss) of the Borrower and its Subsidiaries calculated on a
consolidated basis for such period, but excluding extraordinary items incurred
other than in the ordinary course of business, all calculated for the Borrower
and its Subsidiaries on a consolidated basis.

     "Consolidated Net Worth" means at any time the consolidated stockholders'
equity of the Borrower and its Subsidiaries calculated on a consolidated basis
as of such time.

     "Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, operating
agreement, take-or-pay contract or the obligations of any such Person as general
partner of a partnership with respect to the liabilities of the partnership.

     "Controlled Group" means all members of a controlled group of corporations
or other business entities and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or any of
its Subsidiaries, are treated as a single employer under Section 414 of the
Code.

     "Conversion/Continuation Notice" is defined in SECTION 2.9.

     "Default" means an event described in ARTICLE VII.

     "Domestic Business Day" means a day (other than a Saturday or Sunday) on
which banks generally are open in New York for the conduct of substantially all
of their commercial lending activities and interbank wire transfers can be made
on the Fedwire system.

                                       4

<PAGE>   10

     "Environmental Laws" means any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, plans, injunctions, permits, concessions, grants, franchises,
licenses, agreements and other governmental restrictions relating to (i) the
protection of the environment, (ii) the effect of the environment on human
health, (iii) emissions, discharges or releases of pollutants, contaminants,
hazardous substances or wastes into surface water, ground water or land, or (iv)
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, hazardous substances or
wastes or the clean-up or other remediation thereof.

     "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.

     "Eurodollar Advance" means an Advance which, except as otherwise provided
in SECTION 2.11, bears interest at the applicable Eurodollar Rate.

     "Eurodollar Base Rate" means, with respect to a Eurodollar Advance for the
relevant Interest Period, the applicable British Bankers' Association Interest
Settlement Rate for deposits in U.S. dollars appearing on Telerate Page 3750 as
of 11:00 a.m. (London time) two Eurodollar Business Days prior to the first day
of such Interest Period, and having a maturity equal to such Interest Period,
provided that, (i) if Telerate Screen 3750 is not available to the
Administrative Agent for any reason, the applicable Eurodollar Base Rate for the
relevant Interest Period shall instead be the applicable British Bankers'
Association Interest Settlement Rate for deposits in U.S. dollars as reported by
any other generally recognized financial information service as of 11:00 a.m.
(London time) two Eurodollar Business Days prior to the first day of such
Interest Period, and having a maturity equal to such Interest Period, and (ii)
if no such British Bankers' Association Interest Settlement Rate is available to
the Administrative Agent, the applicable Eurodollar Base Rate for the relevant
Interest Period shall instead be the rate determined by the Administrative Agent
to be the rate at which Wachovia Bank, N.A. or one of its Affiliate banks offers
to place deposits in U.S. dollars with first-class banks in the London interbank
market at approximately 11:00 a.m. (London time) two Eurodollar Business Days
prior to the first day of such Interest Period, in the approximate amount of
Wachovia Bank, N.A.'s relevant Eurodollar Loan and having a maturity equal to
such Interest Period.

     "Eurodollar Business Day" means any Domestic Business Day on which dealings
in United States dollars are carried on in the London interbank market.

     "Eurodollar Loan" means a Loan which, except as otherwise provided in
SECTION 2.11, bears interest at the applicable Eurodollar Rate.

     "Eurodollar Rate" means, with respect to a Eurodollar Advance for the
relevant Interest Period, the sum of (i) the quotient of (a) the Eurodollar Base
Rate applicable to such Interest Period, divided by (b) one minus the Reserve
Requirement (expressed as a decimal) applicable to such Interest Period, plus
(ii) the Applicable Margin.

                                       5

<PAGE>   11

     "Excluded Taxes" means, in the case of each Lender or applicable Lending
Installation and the Administrative Agent, taxes imposed on its overall net
income, and franchise taxes imposed on it, by (i) the jurisdiction under the
laws of which such Lender or the Administrative Agent is incorporated or
organized or (ii) the jurisdiction in which the Administrative Agent's or such
Lender's principal executive office or such Lender's applicable Lending
Installation is located.

     "Exhibit" refers to an exhibit to this Agreement, unless another document
is specifically referenced.

     "Extension Period" is defined in SECTION 2.19(i).

     "Extension Request" is defined in SECTION 2.19(i).

     "Facility Fee" is defined in SECTION 2.5(i).

     "Facility Termination Date" means December 17, 2001, or any later date as
may be specified as the Facility Termination Date in accordance with SECTION
2.19 or any earlier date on which the Aggregate Commitment is reduced to zero or
otherwise terminated pursuant to the terms hereof.

     "Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the next higher 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day, provided that (i) if the day for which such rate is to
be determined is not a Domestic Business Day, the Federal Funds Rate for such
day shall be such rate on such transactions on the next preceding Domestic
Business Day as so published on the next succeeding Domestic Business Day, and
(ii) if such rate is not so published for any day, the Federal Funds Rate for
such day shall be the average rate charged to the Administrative Agent on such
day on such transactions, as determined by the Administrative Agent.

     "Financial Contract" of a Person means any exchange-traded or
over-the-counter futures, forward, swap or option contract or other financial
instrument with similar characteristics.

     "Funded Indebtedness" of a Person means such Person's Indebtedness for
borrowed money which by its terms matures at, or is extendible or renewable at
the option of such Person, to a date more than twelve months after the date of
the creation of such Indebtedness.

     "GAAP" means, subject to the limitations on the application thereof set
forth in SECTION 1.2, generally accepted accounting principles set forth in
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other

                                       6

<PAGE>   12

statements by such other entity as may be approved by a significant segment of
the accounting profession, in each case as the same are applicable to the
circumstances as of the date of determination.

     "Guarantor" means each Material Subsidiary of the Borrower that is or
becomes a party to the Guaranty.

     "Guaranty" means the Guaranty made by the Guarantors in favor of the
Administrative Agent on behalf of the Lenders, substantially in the form of
EXHIBIT F, and delivered in accordance with SECTION 6.18.

     "Guaranty Limitation" is defined in SECTION 6.18.

     "Guaranty Supplement" is defined in the Guaranty.

     "Indebtedness" of a Person means such Person's (i) obligations for borrowed
money, (ii) obligations representing the deferred purchase price of Property or
services (other than accounts payable arising in the ordinary course of such
Person's business payable on terms customary in the trade), (iii) obligations,
whether or not assumed, secured by Liens or payable out of the proceeds or
production from Property now or hereafter owned or acquired by such Person, (iv)
obligations which are evidenced by notes, acceptances, or similar instruments,
(v) Capitalized Lease Obligations, (vi) Rate Management Obligations, (vii)
Contingent Obligations, (viii) obligations for which such Person is obligated
pursuant to or in respect of a Letter of Credit, and (ix) Off-Balance Sheet
Liabilities. For the purpose hereof, the amount of any Contingent Obligation
shall be deemed to be an amount equal to the stated or determinable amount of
the primary obligation in respect of which such Contingent Obligation is made
or, if not stated or determinable, the maximum reasonably anticipated liability
in respect thereof (assuming such Person is required to perform thereunder) as
determined by such Person in good faith.

     "Investment" of a Person means any loan, advance (other than commission,
travel and similar advances to officers and employees made in the ordinary
course of business), extension of credit (other than accounts receivable arising
in the ordinary course of business on terms customary in the trade) or
contribution of capital by such Person; stocks, bonds, mutual funds, partnership
interests, notes, debentures or other securities owned by such Person; any
deposit accounts and certificate of deposit owned by such Person; and structured
notes, derivative financial instruments and other similar instruments or
contracts owned by such Person.

     "Interest Period" means, with respect to a Eurodollar Advance, a period of
one, two, three or six months commencing on a Eurodollar Business Day selected
by the Borrower pursuant to this Agreement. Such Interest Period shall end on
the day which corresponds numerically to such date one, two, three or six months
thereafter, provided, however, that if there is no such numerically
corresponding day in such next, second, third or sixth succeeding month, such
Interest Period shall end on the last Eurodollar Business Day of such next,
second, third or sixth succeeding month. If an Interest Period would otherwise
end on a day which is not a Eurodollar

                                       7

<PAGE>   13

Business Day, such Interest Period shall end on the next succeeding Eurodollar
Business Day, provided, however, that if said next succeeding Eurodollar
Business Day falls in a new calendar month, such Interest Period shall end on
the immediately preceding Eurodollar Business Day.

     "Lender" and "Lenders" means the lending institutions, individually and
collectively, as the case may be, listed on the signature pages of this
Agreement and their respective successors and assigns.

     "Lending Installation" means, with respect to a Lender or the
Administrative Agent, the office, branch, subsidiary or affiliate of such Lender
or the Administrative Agent listed on the signature pages hereof or on a
Schedule or otherwise selected by such Lender or the Administrative Agent
pursuant to SECTION 2.17.

     "Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable.

     "Leverage Ratio" means, as of any date of calculation, the ratio of (i)
Indebtedness of the Borrower and its Subsidiaries, determined on a consolidated
basis, outstanding on such date to (ii) Consolidated EBITDA for the period of
four consecutive fiscal quarters ended on such date.

     "Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).

     "Loan" or "Loans" means, with respect to a Lender, such Lender's loan or
loans made pursuant to ARTICLE II (or any conversion or continuation thereof).

     "Loan Documents" means this Agreement and any Notes issued pursuant to
SECTION 2.13, the Guaranty (when delivered in accordance with SECTION 6.18) and
any other documents contemplated hereby and executed by the Borrower in favor of
the Administrative Agent or any Lender.

     "Long-Term Credit Agreement" means the Five-Year Credit Agreement dated as
of December 18, 2000, among the Borrower, the lenders party thereto, Wachovia
Bank, N.A., as administrative agent, and Bank One, NA, as syndication agent, as
the same may from time to time be amended, restated, supplemented or otherwise
modified.

     "Material Adverse Effect" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise), results of operations,
or prospects of the Borrower and its Subsidiaries taken as a whole, (ii) the
ability of the Borrower to perform its obligations under the

                                       8

<PAGE>   14

Loan Documents, or (iii) the validity or enforceability of any of the Loan
Documents or the rights or remedies of the Administrative Agent or the Lenders
thereunder.

     "Material Indebtedness" is defined in SECTION 7.5.

     "Material Subsidiary" means any Subsidiary that has consolidated assets or
consolidated annual revenues of more than $10,000,000.

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

     "Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Borrower or any
member of the Controlled Group is a party to which more than one employer is
obligated to make contributions.

     "Non-U.S. Lender" is defined in SECTION 3.5(iv).

     "Note" is defined in SECTION 2.13.

     "Obligations" means all unpaid principal of and accrued and unpaid interest
on the Loans, all accrued and unpaid fees and all expenses, reimbursements,
indemnities and other obligations of the Borrower to the Lenders or to any
Lender, the Agents or any Agent or any indemnified party arising under the Loan
Documents.

     "Off-Balance Sheet Liability" of a Person means (i) any repurchase
obligation or liability of such Person with respect to accounts or notes
receivable sold by such Person, (ii) any liability under any Sale and Leaseback
Transaction which is not a Capitalized Lease, (iii) any liability under any
so-called "synthetic lease" transaction entered into by such Person, (iv) any
liability under any asset-backed securitization transaction with respect to
accounts or notes receivable sold by such Person, or (v) any obligation arising
with respect to any other transaction which is the functional equivalent of or
takes the place of borrowing but which does not constitute a liability on the
balance sheets of such Person, but excluding from this clause (v) Operating
Leases.

     "Operating Lease" of a Person means any lease of Property (other than a
Capitalized Lease) by such Person as lessee which has an original term
(including any required renewals and any renewals effective at the option of the
lessor) of one year or more.

     "Other Taxes" is defined in SECTION 3.5(ii).

     "Participants" is defined in SECTION 12.2.

     "Payment Date" means the last day of each March, June, September and
December.

     "PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.

                                       9

<PAGE>   15

     "Permitted Securitization" means any receivables financing program
providing for the sale of accounts receivable and related rights by the Borrower
and its Subsidiaries to an SPC in transactions purporting to be sales (and
treated as sales for GAAP purposes), which SPC shall finance the purchase of
such assets by the sale, transfer, conveyance, lien or pledge of such assets to
one or more limited purpose financing companies, special purpose entities and/or
other financial institutions, in each case pursuant to documentation in form and
substance reasonably satisfactory to the Administrative Agent.

     "Person" means any natural person, corporation, firm, joint venture,
partnership, limited liability company, association, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.

     "Plan" means an employee pension benefit plan which is covered by Title IV
of ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which the Borrower or any member of the Controlled Group may have any
liability.

     "Pricing Schedule" means the Schedule attached hereto and identified as
such.

     "Prime Rate" means that interest rate per annum so denominated and set by
the Administrative Agent from time to time as an interest rate basis for
borrowings. The Administrative Agent's prime rate is but one of several interest
rate bases used by the Administrative Agent. The Administrative Agent lends at
interest rates above and below the Administrative Agent's prime rate.

     "Property" of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned, leased or
operated by such Person.

     "Purchasers" is defined in SECTION 12.3.

     "Rate Management Transaction" means, with respect to the Borrower or any of
its Subsidiaries, any transaction (including an agreement with respect thereto)
now existing or hereafter entered into which is a rate swap, basis swap, forward
rate transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
forward transaction, currency swap transaction, cross-currency rate swap
transaction, currency option or any other similar transaction (including any
option with respect to any of these transactions) or any combination thereof,
whether linked to one or more interest rates, foreign currencies, commodity
prices, equity prices or other financial measures.

     "Rate Management Obligations" of a Person means any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all Rate
Management Transactions, and (ii) any and all

                                       10

<PAGE>   16

cancellations, buy backs, reversals, terminations or assignments of any Rate
Management Transactions.

     "Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or other
regulation or official interpretation of said Board of Governors relating to
reserve requirements applicable to member banks of the Federal Reserve System.

     "Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying margin
stocks applicable to member banks of the Federal Reserve System.

     "Related Fund" means, with respect to any Lender that is an investment
fund, any other investment fund that invests in commercial loans and that is
managed or advised by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.

     "Replacement Lenders" is defined in SECTION 2.19(ii).

     "Reportable Event" means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC has by regulation waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event, provided, however, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA or Section
412(d) of the Code.

     "Required Lenders" means Lenders in the aggregate having at least 51% of
the Aggregate Commitment or, if the Aggregate Commitment has been terminated,
Lenders in the aggregate holding at least 51% of the aggregate unpaid principal
amount of the outstanding Advances.

     "Reserve Requirement" means, with respect to an Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.

     "Response Date" is defined in SECTION 2.19(i).

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

     "Sale and Leaseback Transaction" means any sale or other transfer of
Property by any Person with the intent to lease such Property as lessee.

                                       11
<PAGE>   17

     "Schedule" refers to a specific schedule to this Agreement, unless another
document is specifically referenced.

     "Section" means a numbered section of this Agreement, unless another
document is specifically referenced.

     "Single Employer Plan" means a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member of
the Controlled Group.

     "SPC" means a special purpose, bankruptcy-remote Wholly-Owned Subsidiary of
the Borrower which may be formed for the sole and exclusive purpose of engaging
in activities in connection with the purchase, sale and financing of accounts
receivable and related rights in connection with and pursuant to a Permitted
Securitization.

     "Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, limited liability company, association, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a "Subsidiary"
shall mean a Subsidiary of the Borrower.

     "Syndication Agent" means Bank One, NA, a national banking association, in
its capacity as syndication agent for the Lenders, and not in its individual
capacity as a Lender, and its successors and assigns.

     "Taxes" means any and all present or future taxes, duties, levies, imposts,
deductions, charges or withholdings, and any and all liabilities with respect to
the foregoing, but excluding Excluded Taxes and Other Taxes.

     "Transferee" is defined in SECTION 12.4.

     "Type" means, with respect to any Advance, its nature as a Base Rate
Advance or a Eurodollar Advance.

     "Unfunded Liabilities" means the amount (if any) by which the present value
of all vested and unvested accrued benefits under all Single Employer Plans
exceeds the fair market value of all such Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such
Plans using PBGC actuarial assumptions for single employer plan terminations.

     "Unmatured Default" means an event which but for the lapse of time or the
giving of notice, or both, would constitute a Default.

                                       12

<PAGE>   18

     "Utilization Fee" is defined in SECTION 2.5(ii).

     "Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of the
outstanding voting securities of which shall at the time be owned or controlled,
directly or indirectly, by such Person or one or more Wholly-Owned Subsidiaries
of such Person, or by such Person and one or more Wholly-Owned Subsidiaries of
such Person, or (ii) any partnership, limited liability company, association,
joint venture or similar business organization 100% of the ownership interests
having ordinary voting power of which shall at the time be so owned or
controlled.

     The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms.

     1.2  ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise specified
herein, all terms of an accounting character used herein shall be interpreted,
all accounting determinations hereunder shall be made, and all financial
statements required to be delivered hereunder shall be prepared, in accordance
with GAAP, applied on a basis consistent (except for changes concurred in by the
Borrower's independent public accountants or otherwise required by a change in
GAAP) with the most recent audited consolidated financial statements of the
Borrower and its Subsidiaries delivered to the Lenders unless with respect to
any such change concurred in by the Borrower's independent public accountants or
required by GAAP, in determining compliance with any of the provisions of this
Agreement or any of the other Loan Documents: (i) the Borrower shall have
objected to determining such compliance on such basis at the time of delivery of
such financial statements, or (ii) the Required Lenders shall so object in
writing within 30 days after the delivery of such financial statements, in
either of which events such calculations shall be made on a basis consistent
with those used in the preparation of the latest financial statements as to
which such objection shall not have been made (which, if objection is made in
respect of the first financial statements delivered under SECTION 6.1 hereof,
shall mean the financial statements referred to in SECTION 5.4).

                                   ARTICLE II

                                  THE CREDITS
                                  -----------

     2.1  COMMITMENT. From and including the date of this Agreement and prior to
the Facility Termination Date, each Lender severally agrees, on the terms and
conditions set forth in this Agreement, to make Loans to the Borrower from time
to time in amounts not to exceed in the aggregate at any one time outstanding
the amount of its Commitment. Subject to the terms of this Agreement, the
Borrower may borrow, repay and reborrow at any time prior to the Facility
Termination Date. The Commitments to lend hereunder shall expire on the Facility
Termination Date.

     2.2  REQUIRED PAYMENTS; TERMINATION. Any outstanding Advances and all other
unpaid Obligations shall be paid in full by the Borrower on the Facility
Termination Date.

                                       13

<PAGE>   19

     2.3  RATABLE LOANS. Each Advance hereunder shall consist of Loans made from
the several Lenders ratably in proportion to the ratio that their respective
Commitments bear to the Aggregate Commitment.

     2.4  TYPES OF ADVANCES. The Advances may be Base Rate Advances or
Eurodollar Advances, or a combination thereof, selected by the Borrower in
accordance with SECTIONS 2.8 and 2.9.

     2.5  FEES; REDUCTIONS IN AGGREGATE COMMITMENT.

     (i)   FACILITY FEE. The Borrower agrees to pay to the Administrative Agent
           for the ratable account of each Lender a facility fee (the
           "Facility Fee") at a per annum rate equal to the Applicable
           Facility Fee Rate on the Aggregate Commitment (without regard to
           usage) The Facility Fee is payable quarterly in arrears on each
           Payment Date hereafter and on the Facility Termination Date.

     (ii)  UTILIZATION FEE. For each day on which the sum of (a) the aggregate
           principal amount of all outstanding Advances under this Agreement
           and (b) the aggregate principal amount of all outstanding
           "Advances" under (and as defined in) the Long-Term Credit
           Agreement equals or exceeds 33% of the sum of (I) the Aggregate
           Commitment under this Agreement and (II) the "Aggregate
           Commitment" under (and as defined in) the Long-Term Credit
           Agreement, the Borrower agrees to pay to the Administrative Agent
           for the ratable account of each Lender based on such Lender's
           outstanding Advances a utilization fee (the "Utilization Fee") at
           a per annum rate equal to the Applicable Utilization Fee Rate on
           the average daily amount of all outstanding Advances. The
           Utilization Fee is payable quarterly in arrears on each Payment
           Date hereafter and on the Facility Termination Date.

     (iii) REDUCTIONS IN AGGREGATE COMMITMENT. The Borrower may permanently
           reduce the Aggregate Commitment in whole, or in part ratably
           among the Lenders in a minimum aggregate amount of $10,000,000 or
           any integral multiple of $5,000,000 thereof, upon at least three
           Domestic Business Days' written notice to the Administrative
           Agent, which notice shall specify the amount of any such
           reduction, provided, however, that the amount of the Aggregate
           Commitment may not be reduced below the aggregate principal
           amount of the outstanding Advances. All accrued facilities fees
           shall be payable on the effective date of any termination of the
           obligations of the Lenders to make Loans hereunder.

     2.6  MINIMUM AMOUNT OF EACH ADVANCE. Each Eurodollar Advance shall be in
the minimum amount of $10,000,000 (and in multiples of $1,000,000 if in excess
thereof), and each Base Rate Advance shall be in the minimum amount of
$5,000,000 and in multiples of $1,000,000 if in excess thereof), provided,
however, that any Base Rate Advance may be in the

                                       14

<PAGE>   20

amount of the unused Aggregate Commitment, and provided, further, however, that
in no event shall more than five (5) separate Eurodollar Advances be outstanding
at any time.

     2.7  OPTIONAL PRINCIPAL PAYMENTS. The Borrower may from time to time pay,
without penalty or premium, all outstanding Base Rate Advances, or, in a minimum
aggregate amount of $5,000,000 or any integral multiple of $1,000,000 in excess
thereof, any portion of the outstanding Base Rate Advances upon one Domestic
Business Day's prior notice to the Administrative Agent. The Borrower may from
time to time pay, subject to the payment of any funding indemnification amounts
required by SECTION 3.4 but without penalty or premium, all outstanding
Eurodollar Advances, or, in a minimum aggregate amount of $5,000,000 or any
integral multiple of $1,000,000 in excess thereof, any portion of the
outstanding Eurodollar Advances upon three Eurodollar Business Days' prior
notice to the Administrative Agent.

     2.8  METHOD OF SELECTING TYPES AND INTEREST PERIODS FOR NEW ADVANCES. The
Borrower shall select the Type of Advance and, in the case of each Eurodollar
Advance, the Interest Period applicable thereto from time to time. The Borrower
shall give the Administrative Agent irrevocable notice (a "Borrowing Notice")
not later than 10:30 a.m. (New York City time) on the Borrowing Date of each
Base Rate Advance and not later than 11:00 a.m. (New York City time) at least
three Eurodollar Business Days before the Borrowing Date for each Eurodollar
Advance, specifying:

     (i)   the Borrowing Date, which shall be a Eurodollar Business Day, of such
           Advance,

     (ii)  the aggregate amount of such Advance,

     (iii) the Type of Advance selected, and

     (iv)  in the case of each Eurodollar Advance, the Interest Period
           applicable thereto.

Not later than 12:00 noon (New York City time) on each Borrowing Date, each
Lender shall make available its Loan or Loans in funds immediately available in
New York to the Administrative Agent at its address specified pursuant to
ARTICLE XIII. The Administrative Agent will make the funds so received from the
Lenders available to the Borrower at the Administrative Agent's aforesaid
address.

     2.9  CONVERSION AND CONTINUATION OF OUTSTANDING ADVANCES. Base Rate
Advances shall continue as Base Rate Advances unless and until such Base Rate
Advances are converted into Eurodollar Advances pursuant to this SECTION 2.9 or
are repaid in accordance with SECTION 2.7. Each Eurodollar Advance shall
continue as a Eurodollar Advance until the end of the then applicable Interest
Period therefor, at which time such Eurodollar Advance shall be automatically
converted into a Base Rate Advance unless (x) such Eurodollar Advance is or was
repaid in accordance with SECTION 2.7 or (y) the Borrower shall have given the
Administrative Agent a Conversion/Continuation Notice (as defined below)
requesting that, at the end of such Interest Period, such Eurodollar Advance
continue as a Eurodollar Advance for the same or

                                       15

<PAGE>   21

another Interest Period. Subject to the terms of SECTION 2.6, the Borrower may
elect from time to time to convert all or any part of a Base Rate Advance into a
Eurodollar Advance. The Borrower shall give the Administrative Agent irrevocable
notice (a "Conversion/Continuation Notice") of each conversion of a Base Rate
Advance into a Eurodollar Advance or continuation of a Eurodollar Advance not
later than 11:00 a.m. (New York City time) at least three Eurodollar Business
Days prior to the date of the requested conversion or continuation, specifying:

     (i)   the requested date, which shall be a Eurodollar Business Day, of such
           conversion or continuation,

     (ii)  the aggregate amount and Type of the Advance which is to be converted
           or continued, and

     (iii) the amount of such Advance which is to be converted into or continued
           as a Eurodollar Advance and the duration of the Interest Period
           applicable thereto.

     2.10  CHANGES IN INTEREST RATE, ETC. Each Base Rate Advance shall bear
interest on the outstanding principal amount thereof, for each day from and
including the date such Advance is made or is automatically converted from a
Eurodollar Advance into a Base Rate Advance pursuant to SECTION 2.9, to but
excluding the date it is paid or is converted into a Eurodollar Advance pursuant
to SECTION 2.9 hereof, at a rate per annum equal to the Base Rate for such day.
Changes in the rate of interest on that portion of any Advance maintained as a
Base Rate Advance will take effect simultaneously with each change in the Base
Rate. Each Eurodollar Advance shall bear interest on the outstanding principal
amount thereof from and including the first day of the Interest Period
applicable thereto to (but not including) the last day of such Interest Period
at a rate per annum equal to the Eurodollar Rate as applicable to such
Eurodollar Advance based upon the Borrower's selections under SECTIONS 2.8 and
2.9 and otherwise in accordance with the terms hereof. No Interest Period may
end after the Facility Termination Date.

     2.11  RATES APPLICABLE AFTER DEFAULT. Notwithstanding anything to the
contrary contained in SECTION 2.8 or 2.9, during the continuance of a Default
the Required Lenders may, at their option, by notice to the Borrower (which
notice may be revoked at the option of the Required Lenders notwithstanding any
provision of SECTION 8.2 requiring unanimous consent of the Lenders to changes
in interest rates), declare that no Advance may be made as, converted into or
continued as a Eurodollar Advance. During the continuance of a Default the
Required Lenders may, at their option, by notice to the Borrower (which notice
may be revoked at the option of the Required Lenders notwithstanding any
provision of SECTION 8.2 requiring unanimous consent of the Lenders to changes
in interest rates), declare that (i) each Eurodollar Advance shall bear interest
for the remainder of the applicable Interest Period at a rate per annum equal to
the Eurodollar Rate otherwise applicable to such Interest Period plus 2% per
annum and (ii) each Base Rate Advance shall bear interest at a rate per annum
equal to the Base Rate in effect from time to time plus 2% per annum, provided
that, during the continuance of a Default

                                       16

<PAGE>   22

under SECTION 7.6 or 7.7, the interest rates set forth in clauses (i) and (ii)
above shall be applicable to all Advances without any election or action on the
part of the Administrative Agent or any Lender.

     2.12  METHOD OF PAYMENT. All payments of the Obligations hereunder shall be
made, without setoff, deduction, or counterclaim, in immediately available funds
to the Administrative Agent at the Administrative Agent's address specified
pursuant to ARTICLE XIII, or at any other Lending Installation of the
Administrative Agent specified in writing by the Administrative Agent to the
Borrower, by 12:00 noon (New York City time) on the date when due and shall be
applied ratably by the Administrative Agent among the Lenders. Each payment
delivered to the Administrative Agent for the account of any Lender shall be
delivered promptly by the Administrative Agent to such Lender in the same type
of funds that the Administrative Agent received at its address specified
pursuant to ARTICLE XIII or at any Lending Installation specified in a notice
received by the Administrative Agent from such Lender. The Administrative Agent
is hereby authorized to charge the account of the Borrower maintained with the
Administrative Agent for each payment of principal, interest and fees as it
becomes due hereunder.

     2.13  NOTELESS AGREEMENT; EVIDENCE OF INDEBTEDNESS

     (i)   Each Lender shall maintain in accordance with its usual practice an
           account or accounts evidencing the indebtedness of the Borrower
           to such Lender resulting from each Loan made by such Lender from
           time to time, including the amounts of principal and interest
           payable and paid to such Lender from time to time hereunder.

     (ii)  The Administrative Agent shall also maintain accounts in which it
           will record (a) the amount of each Loan made hereunder, the Type
           thereof and the Interest Period with respect thereto, (b) the
           amount of any principal or interest due and payable or to become
           due and payable from the Borrower to each Lender hereunder and
           (c) the amount of any sum received by the Administrative Agent
           hereunder from the Borrower and each Lender's share thereof.

     (iii) The entries maintained in the accounts maintained pursuant to
           paragraphs (i) and (ii) above shall be prima facie evidence of
           the existence and amounts of the Obligations therein recorded;
           provided, however, that the failure of the Administrative Agent
           or any Lender to maintain such accounts or any error therein
           shall not in any manner affect the obligation of the Borrower to
           repay the Obligations in accordance with their terms.

     (iv)  Any Lender may request that its Loans be evidenced by a promissory
           note in substantially the form of EXHIBIT E (a "Note"). In such
           event, the Borrower shall prepare, execute and deliver to such
           Lender such Note payable to the order of such Lender. Thereafter,
           the Loans evidenced by such Note and interest thereon shall at
           all times (including after any assignment pursuant to SECTION
           12.3) be

                                       17

<PAGE>   23

            represented by one or more Notes payable to the order of the
            payee named therein or any assignee pursuant to SECTION 12.3,
            except to the extent that any such Lender or assignee
            subsequently returns any such Note for cancellation and requests
            that such Loans once again be evidenced as described in
            paragraphs (i) and (ii) above.

     2.14  TELEPHONIC NOTICES. The Borrower hereby authorizes the Lenders and
the Administrative Agent to extend, convert or continue Advances, effect
selections of Types of Advances and to transfer funds based on telephonic
notices made by any person or persons the Administrative Agent or any Lender in
good faith believes to be acting on behalf of the Borrower, it being understood
that the foregoing authorization is specifically intended to allow Borrowing
Notices and Conversion/Continuation Notices to be given telephonically. The
Borrower agrees to deliver promptly to the Administrative Agent a written
confirmation, if such confirmation is requested by the Administrative Agent or
any Lender, of each telephonic notice signed by an Authorized Officer. If the
written confirmation differs in any material respect from the action taken by
the Administrative Agent and the Lenders, the records of the Administrative
Agent and the Lenders shall govern absent manifest error.

     2.15  INTEREST PAYMENT DATES; INTEREST AND FEE BASIS. Interest accrued on
each Base Rate Advance shall be payable on the Payment Date, on any date on
which the Base Rate Advance is prepaid, whether due to acceleration or
otherwise, and at maturity. Interest accrued on that portion of the outstanding
principal amount of any Base Rate Advance converted into a Eurodollar Advance on
a day other than the Payment Date shall be payable on the date of conversion.
Interest accrued on each Eurodollar Advance shall be payable on the last day of
its applicable Interest Period, on any date on which the Eurodollar Advance is
prepaid, whether by acceleration or otherwise, and at maturity. Interest accrued
on each Eurodollar Advance having an Interest Period longer than three months
shall also be payable on the last day of each three-month interval during such
Interest Period. Interest and fees shall be calculated for actual days elapsed
on the basis of a 360-day year. Interest shall be payable for the day an Advance
is made but not for the day of any payment on the amount paid if payment is
received prior to 12:00 noon (New York City time) at the place of payment. If
any payment of principal of or interest on an Advance shall become due on a day
which is not a Domestic Business Day with respect to Base Rate Advances or fees,
such payment shall be made on the next succeeding Domestic Business Day and, in
the case of a principal payment, such extension of time shall be included in
computing interest in connection with such payment. If any payment of principal
of or interest on an Advance shall become due on a day which is not a Eurodollar
Business Day with respect to Eurodollar Advances, such payment shall be made on
the next succeeding Eurodollar Business Day (unless such Eurodollar Business Day
falls in another calendar month, in which case the date for payment thereof
shall be the next preceding Eurodollar Business Day) and, in the case of a
principal payment, such extension of time shall be included in computing
interest in connection with such payment.

                                       18

<PAGE>   24

     2.16  NOTIFICATION OF ADVANCES, INTEREST RATES, PREPAYMENTS AND COMMITMENT
REDUCTIONS. Promptly after receipt thereof, the Administrative Agent will notify
each Lender of the contents of each Aggregate Commitment reduction notice,
Borrowing Notice, Conversion/Continuation Notice, and repayment notice received
by it hereunder. The Administrative Agent will notify each Lender of the
interest rate applicable to each Eurodollar Advance promptly upon determination
of such interest rate and will give each Lender prompt notice of each change in
the Base Rate.

     2.17  LENDING INSTALLATIONS. Each Lender may book its Loans at any Lending
Installation selected by such Lender and may change its Lending Installation
from time to time. All terms of this Agreement shall apply to any such Lending
Installation and the Loans and any Notes issued hereunder shall be deemed held
by each Lender for the benefit of any such Lending Installation. Each Lender
may, by written notice to the Administrative Agent and the Borrower in
accordance with ARTICLE XIII, designate replacement or additional Lending
Installations through which Loans will be made by it and for whose account Loan
payments are to be made.

     2.18  NON-RECEIPT OF FUNDS BY THE ADMINISTRATIVE AGENT. Unless the Borrower
or a Lender, as the case may be, notifies the Administrative Agent prior to the
date on which it is scheduled to make payment to the Administrative Agent of (i)
in the case of a Lender, the proceeds of a Loan or (ii) in the case of the
Borrower, a payment of principal, interest or fees to the Administrative Agent
for the account of the Lenders, that it does not intend to make such payment,
the Administrative Agent may assume that such payment has been made. The
Administrative Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such assumption. If
such Lender or the Borrower, as the case may be, has not in fact made such
payment to the Administrative Agent, the recipient of such payment shall, on
demand by the Administrative Agent, repay to the Administrative Agent the amount
so made available together with interest thereon in respect of each day during
the period commencing on the date such amount was so made available by the
Administrative Agent until the date the Administrative Agent recovers such
amount at a rate per annum equal to (x) in the case of payment by a Lender, the
Federal Funds Rate for such day for the first three days and, thereafter, the
interest rate applicable to the relevant Loan or (y) in the case of payment by
the Borrower, the interest rate applicable to the relevant Loan.

     2.19  EXTENSION OF FACILITY TERMINATION DATE

     (i)   The Borrower may request an extension of the Facility Termination
           Date by submitting a request for an extension to the Administrative
           Agent (an "Extension Request") no more than 60 days prior to the
           Facility Termination Date. The Extension Request must specify the
           new Facility Termination Date requested by the Borrower and the
           date (which must be at least 30 days after the Extension Request
           is delivered to the Administrative Agent) as of which the Lenders
           must respond to the Extension Request (the "Response Date"). The
           new Facility Termination Date shall be no more than 364 days (the
           "Extension Period") after

                                       19

<PAGE>   25

           the Facility Termination Date in effect at the time the Extension
           Request is received, including the Facility Termination Date as
           one of the days in the calculation of the days elapsed. Promptly
           upon receipt of an Extension Request, the Administrative Agent
           shall notify each Lender of the contents thereof and shall
           request each Lender to approve the Extension Request. Each Lender
           approving the Extension Request shall deliver its written consent
           no later than the Response Date, and the failure of a Lender to
           deliver its written consent to an Extension Request on or before
           the Response Date shall be deemed a rejection of the requested
           extension by such Lender. If the consent of the Required Lenders
           is received by the Administrative Agent, the Facility Termination
           Date specified in the Extension Request shall become effective on
           the existing Facility Termination Date as to such consenting
           Lenders only (and not as to any Lender which has not consented to
           such extension) and the Administrative Agent shall promptly
           notify the Borrower and each Lender of the new Facility
           Termination Date. Notwithstanding anything contained in this
           Agreement to the contrary, (a) subject to the provisions of
           SECTION 2.19(ii), all Obligations owing to the non-extending
           Lenders shall be due and payable on the Facility Termination Date
           without giving effect to any requested extension and (b) the
           Aggregate Commitment as of the commencement of the Extension
           Period shall be reduced to an amount equal to the sum of the
           Commitments of the Lenders ultimately granting the Extension
           Request.

     (ii)  A nonconsenting Lender shall be obligated, at the request of the
           Borrower, and subject to the nonconsenting Lender receiving
           payment in full of (a) the principal amount of all Advances owing
           to such nonconsenting Lender, and (b) all accrued interest and
           fees owing to such nonconsenting Lender and all other amounts
           owing to such nonconsenting Lender hereunder, to assign without
           representation, warranty (other than good title to its Advances)
           or expense to such nonconsenting Lender, at any time prior to the
           Facility Termination Date applicable to such nonconsenting
           Lender, all of its rights (other than rights that would survive
           the termination of this Agreement pursuant to SECTION 9.6) and
           obligations hereunder to one or more banks or other entities (the
           "Replacement Lenders") nominated by the Borrower and willing to
           take the place of such nonconsenting Lender; provided, that each
           such Replacement Lender satisfies all the requirements of this
           Agreement and the Administrative Agent shall have consented to
           such assignment, which consent shall not be unreasonably
           withheld. Each such Replacement Lender shall be deemed to be a
           consenting Lender hereunder in replacement of the nonconsenting
           Lender.

                                       20

<PAGE>   26

                                  ARTICLE III

                             YIELD PROTECTION; TAXES
                             -----------------------

     3.1  YIELD PROTECTION. If, on or after the date of this Agreement, the
adoption of any law or any governmental or quasi-governmental rule, regulation,
policy, guideline or directive (whether or not having the force of law), or any
change in the interpretation or administration thereof by any governmental or
quasi-governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender or
applicable Lending Installation with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency:

     (i)   subjects any Lender or any applicable Lending Installation to any
           Taxes, or changes the basis of taxation of payments (other than
           with respect to Excluded Taxes) to any Lender in respect of its
           Eurodollar Loans, or

     (ii)  imposes or increases or deems applicable any reserve, assessment,
           insurance charge, special deposit or similar requirement against
           assets of, deposits with or for the account of, or credit
           extended by, any Lender or any applicable Lending Installation
           (other than reserves and assessments taken into account in
           determining the interest rate applicable to Eurodollar Advances), or

     (iii) imposes any other condition the result of which is to increase the
           cost to any Lender or any applicable Lending Installation of
           making, funding or maintaining its Eurodollar Loans or reduces
           any amount receivable by any Lender or any applicable Lending
           Installation in connection with its Eurodollar Loans, or requires
           any Lender or any applicable Lending Installation to make any
           payment calculated by reference to the amount of Eurodollar Loans
           held or interest received by it, by an amount deemed material by
           such Lender,

and the result of any of the foregoing is to increase the cost to such Lender or
applicable Lending Installation of making or maintaining its Eurodollar Loans or
Commitment or to reduce the return received by such Lender or applicable Lending
Installation in connection with such Eurodollar Loans or Commitment, then,
within 15 days of demand by such Lender, the Borrower shall pay such Lender such
additional amount or amounts as will compensate such Lender for such increased
cost or reduction in amount received.

     3.2  CHANGES IN CAPITAL ADEQUACY REGULATIONS. If a Lender determines the
amount of capital required or expected to be maintained by such Lender, any
Lending Installation of such Lender or any corporation controlling such Lender
is increased as a result of a Change, then, within 15 days of demand by such
Lender, the Borrower shall pay such Lender the amount necessary to compensate
for any shortfall in the rate of return on the portion of such increased capital
which such Lender determines is attributable to this Agreement, its Loans or its

                                       21

<PAGE>   27

Commitment to make Loans hereunder (after taking into account such Lender's
policies as to capital adequacy). "Change" means (i) any change after the date
of this Agreement in the Risk-Based Capital Guidelines or (ii) any adoption of
or change in any other law, governmental or quasi-governmental rule, regulation,
policy, guideline, interpretation, or directive (whether or not having the force
of law) after the date of this Agreement which affects the amount of capital
required or expected to be maintained by any Lender or any Lending Installation
or any corporation controlling any Lender. "Risk-Based Capital Guidelines" means
(i) the risk-based capital guidelines in effect in the United States on the date
of this Agreement, including transition rules, and (ii) the corresponding
capital regulations promulgated by regulatory authorities outside the United
States implementing the July 1988 report of the Basle Committee on Banking
Regulation and Supervisory Practices Entitled "International Convergence of
Capital Measurements and Capital Standards," including transition rules, and any
amendments to such regulations adopted prior to the date of this Agreement.

     3.3  AVAILABILITY OF TYPES OF ADVANCES. If any Lender determines that
maintenance of its Eurodollar Loans at a suitable Lending Installation would
violate any applicable law, rule, regulation, or directive, whether or not
having the force of law, or if the Required Lenders determine that (i) deposits
of a type and maturity appropriate to match fund Eurodollar Advances are not
available or (ii) the interest rate applicable to Eurodollar Advances does not
accurately reflect the cost of making or maintaining Eurodollar Advances, then
the Administrative Agent shall suspend the availability of Eurodollar Advances
and require any affected Eurodollar Advances to be repaid or converted to Base
Rate Advances, subject to the payment of any funding indemnification amounts
required by SECTION 3.4.

     3.4  FUNDING INDEMNIFICATION. If any payment of a Eurodollar Advance occurs
on a date which is not the last day of the applicable Interest Period, whether
because of acceleration, prepayment or otherwise, or a Eurodollar Advance is not
made on the date specified by the Borrower for any reason other than default by
the Lenders, the Borrower will indemnify each Lender for any loss or cost
incurred by it resulting therefrom, including, without limitation, any loss or
cost in liquidating or employing deposits acquired to fund or maintain such
Eurodollar Advance.

     3.5  TAXES

     (i)   All payments by the Borrower to or for the account of any Lender or
           the Administrative Agent hereunder or under any Note shall be
           made free and clear of and without deduction for any and all
           Taxes. If the Borrower shall be required by law to deduct any
           Taxes from or in respect of any sum payable hereunder to any
           Lender or the Administrative Agent, (a) the sum payable shall be
           increased as necessary so that after making all required
           deductions (including deductions applicable to additional sums
           payable under this SECTION 3.5) such Lender or the Administrative
           Agent (as the case may be) receives an amount equal to the sum it
           would have received had no such deductions been made, (b) the
           Borrower shall

                                       22

<PAGE>   28

           make such deductions, (c) the Borrower shall pay the full amount
           deducted to the relevant authority in accordance with applicable
           law and (d) the Borrower shall furnish to the Administrative
           Agent the original copy of a receipt evidencing payment thereof
           within 30 days after such payment is made.

     (ii)  In addition, the Borrower hereby agrees to pay any present or future
           stamp or documentary taxes and any other excise or property
           taxes, charges or similar levies which arise from any payment
           made hereunder or under any Note or from the execution or
           delivery of, or otherwise with respect to, this Agreement or any
           Note ("Other Taxes").

     (iii) The Borrower hereby agrees to indemnify the Administrative Agent and
           each Lender for the full amount of Taxes or Other Taxes
           (including, without limitation, any Taxes or Other Taxes imposed
           on amounts payable under this SECTION 3.5) paid by the
           Administrative Agent or such Lender and any liability (including
           penalties, interest and expenses) arising therefrom or with
           respect thereto. Payments due under this indemnification shall be
           made within 30 days of the date the Administrative Agent or such
           Lender makes demand therefor pursuant to SECTION 3.6.

     (iv)  Each Lender that is not incorporated under the laws of the United
           States of America or a state thereof (each a "Non-U.S. Lender")
           agrees that it will, not more than ten Domestic Business Days
           after the date of this Agreement, (i) deliver to each of the
           Borrower and the Administrative Agent two duly completed copies
           of United States Internal Revenue Service Form W-8BEN or W-8ECI,
           certifying in either case that such Lender is entitled to receive
           payments under this Agreement without deduction or withholding of
           any United States federal income taxes, and (ii) deliver to each
           of the Borrower and the Administrative Agent a United States
           Internal Revenue Form W-8 or W-9, as the case may be, and certify
           that it is entitled to an exemption from United States backup
           withholding tax. Each Non-U.S. Lender further undertakes to
           deliver to each of the Borrower and the Administrative Agent (x)
           renewals or additional copies of such form (or any successor
           form) on or before the date that such form expires or becomes
           obsolete, and (y) after the occurrence of any event requiring a
           change in the most recent forms so delivered by it, such
           additional forms or amendments thereto as may be reasonably
           requested by the Borrower or the Administrative Agent. All forms
           or amendments described in the preceding sentence shall certify
           that such Lender is entitled to receive payments under this
           Agreement without deduction or withholding of any United States
           federal income taxes, unless 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 such Lender from duly completing and delivering any such
           form or amendment with respect to it and

                                       23

<PAGE>   29

           such Lender advises the Borrower and the Administrative Agent
           that it is not capable of receiving payments without any
           deduction or withholding of United States federal income tax.

     (v)   For any period during which a Non-U.S. Lender has failed to provide
           the Borrower with an appropriate form pursuant to clause (iv),
           above (unless such failure is due to a change in treaty, law or
           regulation, or any change in the interpretation or administration
           thereof by any governmental authority, occurring subsequent to
           the date on which a form originally was required to be provided),
           such Non-U.S. Lender shall not be entitled to indemnification
           under this SECTION 3.5 with respect to Taxes imposed by the
           United States; provided that, should a Non-U.S. Lender which is
           otherwise exempt from or subject to a reduced rate of withholding
           tax become subject to Taxes because of its failure to deliver a
           form required under clause (iv) above, the Borrower shall take
           such steps as such Non-U.S. Lender shall reasonably request to
           assist such Non-U.S. Lender to recover such Taxes.

     (vi)  Any Lender that is entitled to an exemption from or reduction of
           withholding tax with respect to payments under this Agreement or
           any Note pursuant to the law of any relevant jurisdiction or any
           treaty shall deliver to the Borrower (with a copy to the
           Administrative Agent), at the time or times prescribed by
           applicable law, such properly completed and executed
           documentation prescribed by applicable law as will permit such
           payments to be made without withholding or at a reduced rate.

     3.6  LENDER STATEMENTS; SURVIVAL OF INDEMNITY. To the extent reasonably
possible, each Lender shall designate an alternate Lending Installation with
respect to its Eurodollar Loans to reduce any liability of the Borrower to such
Lender under SECTIONS 3.1, 3.2 and 3.5 or to avoid the unavailability of
Eurodollar Advances under SECTION 3.3, so long as such designation is not, in
the judgment of such Lender, disadvantageous to such Lender. Each Lender shall
deliver a written statement of such Lender to the Borrower (with a copy to the
Administrative Agent) as to the amount due, if any, under SECTION 3.1, 3.2, 3.4
or 3.5. Such written statement shall set forth in reasonable detail the
calculations upon which such Lender determined such amount and shall be final,
conclusive and binding on the Borrower in the absence of manifest error.
Determination of amounts payable under such Sections in connection with a
Eurodollar Loan shall be calculated as though each Lender funded its Eurodollar
Loan through the purchase of a deposit of the type and maturity corresponding to
the deposit used as a reference in determining the Eurodollar Rate applicable to
such Loan, whether in fact that is the case or not. Unless otherwise provided
herein, the amount specified in the written statement of any Lender shall be
payable ten (10) Domestic Business Days after receipt by the Borrower of such
written statement. The obligations of the Borrower under SECTIONS 3.1, 3.2, 3.4
and 3.5 shall survive payment of the Obligations and termination of this
Agreement.

                                       24

<PAGE>   30

                                   ARTICLE IV

                              CONDITIONS PRECEDENT
                              --------------------

     4.1  CLOSING DATE. As conditions precedent to the obligations of the
Lenders to make Advances hereunder, the Borrower shall furnish to the
Administrative Agent, with sufficient copies for the Lenders, on or prior to the
Closing Date:

     (i)   Copies of the articles or certificate of incorporation of the
           Borrower, together with all amendments, and a certificate of good
           standing, each certified by the appropriate governmental officer in
           its jurisdiction of incorporation.

     (ii)  Copies, certified by the Secretary or Assistant Secretary of the
           Borrower, of its by-laws and of its Board of Directors' resolutions
           and of resolutions or actions of any other body authorizing the
           execution of the Loan Documents to which the Borrower is a party.

     (iii) An incumbency certificate, executed by the Secretary or Assistant
           Secretary of the Borrower, which shall identify by name and title and
           bear the signatures of the officer(s) of the Borrower authorized to
           sign the Loan Documents to which the Borrower is a party, upon which
           certificate the Administrative Agent and the Lenders shall be
           entitled to rely until informed of any change in writing by the
           Borrower.

     (iv)  A certificate, signed by the chief financial officer of the Borrower,
           stating that (a) on the Closing Date no Default or Unmatured Default
           has occurred and is continuing, (b) since December 31, 1999, there
           has been no change in the business, Property, condition (financial or
           otherwise) or results of operations of the Borrower and its
           Subsidiaries which could reasonably be expected to have a Material
           Adverse Effect and (c) the representations and warranties contained
           in ARTICLE V are true and correct as of the Closing Date.

     (v)   A written opinion of counsel to the Borrower, addressed to the
           Lenders, in substantially the form of EXHIBIT A.

     (vi)  Any Notes requested by a Lender pursuant to SECTION 2.13 payable to
           the order of each such requesting Lender.

     (vii) Written money transfer instructions, in substantially the form of
           EXHIBIT D, addressed to the Administrative Agent and signed by an
           Authorized Officer, together with such other related money transfer
           authorizations as the Administrative Agent may have reasonably
           requested.

                                       25

<PAGE>   31

     (viii) Evidence of termination of the Credit Agreement, dated as of October

            31, 2000, among the Borrower, the financial institutions party
            thereto, Wachovia Bank, N.A., as Administrative Agent, and Bank One,
            NA, as Syndication Agent, and repayment of all principal, interest
            and other amounts due thereunder, if any.

     (ix)   Such other documents as any Lender or its counsel may have
            reasonably requested.

     4.2  EACH ADVANCE. The Lenders shall not be required to make any Advance
unless on the applicable Borrowing Date:

     (i)    The Administrative Agent shall have received a Borrowing Notice as
            required by SECTION 2.8.

     (ii)   Immediately after such Advance, the aggregate outstanding principal
            amount of the Loans will not exceed the Aggregate Commitment.

     (iii)  There exists no Default or Unmatured Default.

     (iv)   The representations and warranties contained in ARTICLE V (other
            than SECTION 5.5) are true and correct as of such Borrowing Date
            except to the extent any such representation or warranty is
            stated to relate solely to an earlier date, in which case such
            representation or warranty shall have been true and correct on
            and as of such earlier date.

     (v)    All legal matters incident to the making of such Advance shall be
            satisfactory to the Lenders and their counsel.

     Each Borrowing Notice with respect to each such Advance shall constitute a
representation and warranty by the Borrower that the conditions contained in
SECTION 4.2(i), (ii), (iii) and (iv) have been satisfied. Any Lender may require
a duly completed compliance certificate in substantially the form of EXHIBIT B
as a condition to making an Advance.

                                   ARTICLE V

                         REPRESENTATIONS AND WARRANTIES
                         ------------------------------

     The Borrower represents and warrants to the Lenders that:

     5.1  EXISTENCE AND STANDING. The Borrower and each of its Material
Subsidiaries is duly and properly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
requisite authority to conduct its business in each jurisdiction in which its
business is conducted, except where the failure to so qualify could not
reasonably be expected to have a Material Adverse Effect.

                                       26

<PAGE>   32

     5.2  AUTHORIZATION AND VALIDITY. The Borrower has the power and authority
and legal right to execute and deliver the Loan Documents and to perform its
obligations thereunder. The execution and delivery by the Borrower of the Loan
Documents and the performance of its obligations thereunder have been duly
authorized by proper corporate proceedings, and the Loan Documents to which the
Borrower is a party constitute legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with their terms, except
as enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally.

     5.3  NO CONFLICT; GOVERNMENT CONSENT. Neither the execution and delivery by
the Borrower of the Loan Documents, nor the consummation of the transactions
therein contemplated, nor compliance with the provisions thereof will violate
(i) any law, rule or regulation, to its knowledge, binding on the Borrower or
any of its Subsidiaries, or any order, writ, judgment, injunction, decree or
award binding on the Borrower or any of its Subsidiaries or (ii) the Borrower's
or any Subsidiary's articles or certificate of incorporation, partnership
agreement, certificate of partnership, articles or certificate of organization,
by-laws, or operating or other management agreement, as the case may be, or
(iii) the provisions of any indenture, instrument or agreement to which the
Borrower or any of its Subsidiaries is a party or is subject, or by which it, or
its Property, is bound, or conflict with or constitute a default thereunder, or
result in, or require, the creation or imposition of any Lien in, of or on the
Property of the Borrower or a Subsidiary pursuant to the terms of any such
indenture, instrument or agreement. No order, consent, adjudication, approval,
license, authorization, or validation of, or filing, recording or registration
with, or exemption by, or other action in respect of any governmental or public
body or authority, or any subdivision thereof, which has not been obtained by
the Borrower or any of its Subsidiaries, is required to be obtained by the
Borrower or any of its Subsidiaries in connection with the execution and
delivery of the Loan Documents, the borrowings under this Agreement, the payment
and performance by the Borrower of the Obligations or the legality, validity,
binding effect or enforceability of any of the Loan Documents.

     5.4  FINANCIAL STATEMENTS. The December 31, 1999 consolidated financial
statements of the Borrower and its Subsidiaries heretofore delivered to the
Lenders were prepared in accordance with generally accepted accounting
principles in effect on the date such statements were prepared and fairly
present the consolidated financial condition and operations of the Borrower and
its Subsidiaries at such date and the consolidated results of their operations
for the period then ended.

     5.5  MATERIAL ADVERSE CHANGE. Since December 31, 1999, there has been no
change in the business, Property, condition (financial or otherwise) or results
of operations of the Borrower and its Subsidiaries which could reasonably be
expected to have a Material Adverse Effect.

     5.6  TAXES. The Borrower and its Subsidiaries have filed all United States
federal tax returns and all other tax returns which are required to be filed and
have paid all taxes due

                                       27

<PAGE>   33

pursuant to said returns or pursuant to any assessment received by the Borrower
or any of its Subsidiaries, except such taxes, if any, as are being contested in
good faith and as to which adequate reserves have been provided in accordance
with GAAP and as to which no Lien exists. The United States income tax returns
of the Borrower and its Subsidiaries have been audited by the Internal Revenue
Service through the fiscal year ended December 31, 1995. No tax liens have been
filed and no claims are being asserted with respect to any such taxes. The
charges, accruals and reserves on the books of the Borrower and its Subsidiaries
in respect of any taxes or other governmental charges are adequate. If the
Borrower or any of its Subsidiaries is a limited liability company, each such
limited liability company qualifies for partnership tax treatment under United
States federal tax law.

     5.7  LITIGATION AND CONTINGENT OBLIGATIONS. There is no litigation,
arbitration, governmental investigation, proceeding or inquiry pending or, to
the knowledge of any of the Authorized Officers, threatened against or affecting
the Borrower or any of its Subsidiaries which could reasonably be expected to
have a Material Adverse Effect or which seeks to prevent, enjoin or delay the
making of any Loans. Other than any liability incident to any litigation,
arbitration or proceeding which could not reasonably be expected to have a
Material Adverse Effect, the Borrower has no material contingent obligations not
provided for or disclosed in the financial statements referred to in SECTION
5.4.

     5.8  SUBSIDIARIES. SCHEDULE 5.8 contains an accurate list of all Material
Subsidiaries of the Borrower as of the date of this Agreement, setting forth the
percentage of their respective capital stock or other ownership interests owned
by the Borrower or other Subsidiaries of the Borrower. All of the issued and
outstanding shares of capital stock or other ownership interests of such
Material Subsidiaries have been (to the extent such concepts are relevant with
respect to such ownership interests) duly authorized and issued and are fully
paid and non-assessable.

     5.9  ERISA. The Unfunded Liabilities of all Single Employer Plans do not in
the aggregate exceed $1,000,000. Neither the Borrower nor any other member of
the Controlled Group has incurred, or is reasonably expected to incur, any
withdrawal liability to any Multiemployer Plan. Each Plan complies in all
material respects with all applicable requirements of law and regulations, no
Reportable Event has occurred with respect to any Plan, neither the Borrower nor
any other member of the Controlled Group has withdrawn from any Plan or
initiated steps to do so, and no steps have been taken to reorganize or
terminate any Plan.

     5.10  ACCURACY OF INFORMATION. No information, exhibit or report furnished
by the Borrower or any of its Subsidiaries to the Administrative Agent or to any
Lender in connection with the negotiation of, or compliance with, the Loan
Documents contained any material misstatement of fact or omitted to state a
material fact or any fact necessary to make the statements contained therein not
misleading, provided that assumptions in projections regarding future operations
and results are to the best knowledge of the Borrower.

                                       28

<PAGE>   34

     5.11  REGULATION U. Margin stock (as defined in Regulation U) constitutes
less than 25% of the value of those assets of the Borrower and its Subsidiaries
which are subject to any limitation on sale, pledge, or other restriction
hereunder.

     5.12  MATERIAL AGREEMENTS. Neither the Borrower nor any Subsidiary is a
party to any agreement or instrument or subject to any charter or other
corporate restriction which could reasonably be expected to have a Material
Adverse Effect. Neither the Borrower nor any Subsidiary is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in (i) any agreement to which it is a party, which default
could reasonably be expected to have a Material Adverse Effect or (ii) any
agreement or instrument evidencing or governing Indebtedness.

     5.13  COMPLIANCE WITH LAWS. The Borrower and its Subsidiaries have complied
with all applicable statutes, rules, regulations, orders and restrictions of any
domestic or foreign government or any instrumentality or agency thereof having
jurisdiction over the conduct of their respective businesses or the ownership of
their respective Property, except where the failure to so comply could not
reasonably be expected to have a Material Adverse Effect.

     5.14  OWNERSHIP OF PROPERTIES. Except as set forth on SCHEDULE 5.14, on the
date of this Agreement, the Borrower and its Material Subsidiaries will have
good title, free of all Liens other than those permitted by SECTION 6.12, to all
of the Property and assets reflected in the Borrower's most recent consolidated
financial statements provided to the Administrative Agent as owned by the
Borrower and its Subsidiaries.

     5.15  PLAN ASSETS; PROHIBITED TRANSACTIONS. The Borrower is not an entity
deemed to hold "plan assets" within the meaning of 29 C.F.R. ss. 2510.3-101 of
an employee benefit plan (as defined in Section 3(3) of ERISA) which is subject
to Title I of ERISA or any plan (within the meaning of Section 4975 of the
Code), and neither the execution of this Agreement nor the making of Loans
hereunder gives rise to a prohibited transaction within the meaning of Section
406 of ERISA or Section 4975 of the Code. The Borrower is an "operating company"
as defined in 29 C.F.R 2510-101 (c). Neither the Borrower nor any other member
of the Controlled Group is the sponsor of, or is otherwise obligated to make
contributions in respect of any Multiemployer Plan.

     5.16 ENVIRONMENTAL MATTERS. In the ordinary course of its business, the
officers of the Borrower consider the effect of Environmental Laws on the
business of the Borrower and its Subsidiaries, in the course of which they
identify and evaluate potential risks and liabilities accruing to the Borrower
due to Environmental Laws. On the basis of this consideration, the Borrower has
concluded that Environmental Laws cannot reasonably be expected to have a
Material Adverse Effect. Neither the Borrower nor any Subsidiary has received
any notice to the effect that its operations are not in compliance with any of
the requirements of applicable Environmental Laws or are the subject of any
federal or state investigation evaluating whether any remedial action is needed
to respond to a release of any toxic or hazardous waste or

                                       29

<PAGE>   35

substance into the environment, which non-compliance or remedial action could
reasonably be expected to have a Material Adverse Effect.

     5.17  INVESTMENT COMPANY ACT. Neither the Borrower nor any Subsidiary is an
"investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended.

     5.18  PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Borrower nor any
Subsidiary is a "holding company" or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended.

     5.19  INSURANCE. The Borrower and each of its Subsidiaries maintain (either
in the name of the Borrower or in such Subsidiary's own name) with financially
sound and reputable insurance companies, insurance in at least such amounts,
with such deductibles and against at least such risks (including on all its
Property, and public liability and workers' compensation) as are usually insured
against in the same general area by companies of established repute engaged in
the same or similar business.

     5.20  SOLVENCY

     (i)  Immediately after the consummation of the transactions to occur on the
          date hereof and immediately following the making of each Loan, if any,
          and after giving effect to the application of the proceeds of such
          Loans, (a) the fair value of the assets of the Borrower and its
          Subsidiaries on a consolidated basis, at a fair valuation, will exceed
          the Indebtedness, subordinated, contingent or otherwise, of the
          Borrower and its Subsidiaries on a consolidated basis; (b) the present
          fair saleable value of the Property of the Borrower and its
          Subsidiaries on a consolidated basis will be greater than the amount
          that will be required to pay the probable liability of the Borrower
          and its Subsidiaries on a consolidated basis on their Indebtedness,
          subordinated, contingent or otherwise, as such Indebtedness becomes
          absolute and matured; (c) the Borrower and its Subsidiaries on a
          consolidated basis will be able to pay their Indebtedness,
          subordinated, contingent or otherwise, as such Indebtedness becomes
          absolute and matured; and (d) the Borrower and its Subsidiaries on a
          consolidated basis will not have unreasonably small capital with which
          to conduct the businesses in which they are engaged as such businesses
          are now conducted and are proposed to be conducted after the date
          hereof.

     (ii) The Borrower does not intend to, or to permit any of its Subsidiaries
          to, and does not believe that it or any of its Subsidiaries will,
          incur Indebtedness beyond its ability to pay such Indebtedness as it
          matures, taking into account the timing of

                                       30

<PAGE>   36

          and amounts of cash to be received by it or any such Subsidiary and
          the timing of the amounts of cash to be payable on or in respect of
          its Indebtedness or the Indebtedness of any such Subsidiary.

                                   ARTICLE VI

                                    COVENANTS
                                    ---------

     During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:

     6.1  FINANCIAL REPORTING. The Borrower will maintain, for itself and each
Subsidiary, a system of accounting established and administered in accordance
with generally accepted accounting principles, and furnish to the Lenders:

     (i)   Within 90 days after the close of each of its fiscal years, an
           unqualified (except for qualifications relating to changes in
           accounting principles or practices reflecting changes in generally
           accepted accounting principles and required or approved by the
           Borrower's independent certified public accountants) audit report
           certified by independent certified public accountants acceptable to
           the Lenders, prepared in accordance with GAAP on a consolidated basis
           for itself and its Subsidiaries, including balance sheets as of the
           end of such period, related statements of income, stockholders'
           equity and cash flows, accompanied by (a) any management letter
           prepared by said accountants, and (b) a certificate of said
           accountants (I) that, in the course of their examination necessary
           for their certification of the foregoing, they have obtained no
           knowledge of any Default or Unmatured Default, or if, in the opinion
           of such accountants, any Default or Unmatured Default shall exist,
           stating the nature and status thereof, and (II) confirming the
           calculations set forth in the Compliance Certificate delivered
           simultaneously therewith pursuant to clause (iii) below.

     (ii)  Within 45 days after the close of the first three quarterly periods
           of each of its fiscal years, for itself and its Subsidiaries,
           consolidated unaudited balance sheets as at the close of each such
           period and consolidated statements of income, stockholders' equity
           and of cash flows for the period from the beginning of such fiscal
           year to the end of such quarter, all certified (subject to normal
           year-end adjustments and the absence of footnotes) by its chief
           financial officer.

     (iii) Together with the financial statements required under SECTIONS 6.1(i)
           and (ii), a compliance certificate in substantially the form of
           EXHIBIT B signed by its chief financial officer showing the
           calculations necessary to determine compliance with this Agreement
           and stating that no Default or Unmatured Default exists, or if any
           Default or Unmatured Default exists, stating the nature and status
           thereof.

                                       31

<PAGE>   37

     (iv)   As soon as possible and in any event within 10 days after the
            Borrower knows that any Reportable Event has occurred with respect
            to any Plan, a statement, signed by the chief financial officer of
            the Borrower, describing said Reportable Event and the action which
            the Borrower proposes to take with respect thereto.

     (v)    As soon as possible and in any event within 10 days after receipt by
            the Borrower, a copy of (a) any notice or claim to the effect that
            the Borrower or any of its Subsidiaries is or may be liable to any
            Person as a result of the release by the Borrower, any of its
            Subsidiaries, or any other Person of any toxic or hazardous waste or
            substance into the environment, and (b) any notice alleging any
            violation of any federal, state or local environmental, health or
            safety law or regulation by the Borrower or any of its Subsidiaries,
            which, in either case, could reasonably be expected to have a
            Material Adverse Effect.

     (vi)   Promptly upon the furnishing thereof to the shareholders of the
            Borrower, copies of all financial statements, reports and proxy
            statements so furnished.

     (vii)  Promptly upon the filing thereof, copies of all registration
            statements and annual, quarterly, monthly or other regular reports
            which the Borrower or any of its Subsidiaries files with the
            Securities and Exchange Commission.

     (viii) Such other information (including non-financial information) as the
            Administrative Agent or any Lender may from time to time reasonably
            request.

     6.2  USE OF PROCEEDS. The Borrower will, and will cause each Subsidiary to,
use the proceeds of the Advances for general corporate purposes. The Borrower
will not, nor will it permit any Subsidiary to, use any of the proceeds of the
Advances to purchase or carry any "margin stock" (as defined in Regulation U) or
to finance the Acquisition of any Person which has not been approved and
recommended by the board of directors (or functional equivalent thereof) of such
Person.

     6.3  NOTICE OF DEFAULT. The Borrower will, and will cause each Subsidiary
to, deliver, within five (5) Domestic Business Days after the Borrower becomes
aware of the occurrence of any Default or Unmatured Default or of any other
development, financial or otherwise, which could reasonably be expected to have
a Material Adverse Effect, a written certificate signed by the chief financial
officer or the chief accounting officer of the Borrower, describing in detail
such occurrence and the action which the Borrower proposes to take with respect
thereto.

     6.4  CONDUCT OF BUSINESS. The Borrower will, and will cause each Subsidiary
to, carry on and conduct its business in substantially the same manner and in
substantially the same fields of enterprise as it is presently conducted and do
all things necessary to remain duly incorporated or organized, validly existing
and (to the extent such concept applies to such entity) in good standing as a
domestic corporation, partnership or limited liability company in its
jurisdiction of

                                       32

<PAGE>   38

incorporation or organization, as the case may be, and maintain all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted.

     6.5  TAXES. The Borrower will, and will cause each Subsidiary to, timely
file complete and correct United States federal and applicable foreign, state
and local tax returns required by law and pay when due all taxes, assessments
and governmental charges and levies upon it or its income, profits or Property,
except those which are being contested in good faith by appropriate proceedings
and with respect to which adequate reserves have been set aside in accordance
with GAAP.

     6.6  INSURANCE. The Borrower will, and will cause each Subsidiary to,
maintain (either in the name of the Borrower or in such Subsidiary's own name)
with financially sound and reputable insurance companies, insurance in at least
such amounts, with such deductibles and against at least such risks (including
on all its Property, and public liability and workers' compensation) as are
usually insured against in the same general area by companies of established
repute engaged in the same or similar business, and the Borrower will furnish to
any Lender upon request full information as to the insurance carried.

     6.7  COMPLIANCE WITH LAWS. The Borrower will, and will cause each
Subsidiary to, comply with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject including,
without limitation, all Environmental Laws.

     6.8  MAINTENANCE OF PROPERTIES. The Borrower will, and will cause each
Subsidiary to, do all things necessary to maintain, preserve, protect and keep
its Property in good repair, working order and condition, and make all necessary
and proper repairs, renewals and replacements so that its business carried on in
connection therewith may be properly conducted at all times.

     6.9  INSPECTION. The Borrower will, and will cause each Subsidiary to,
permit the Administrative Agent and the Lenders, by their respective
representatives and agents, to inspect any of the Property, books and financial
records of the Borrower and each Subsidiary, to examine and make copies of the
books of accounts and other financial records of the Borrower and each
Subsidiary, and to discuss the affairs, finances and accounts of the Borrower
and each Subsidiary with, and to be advised as to the same by, their respective
officers at such reasonable times and intervals as the Administrative Agent or
any Lender may designate.

     6.10  DIVIDENDS. The Borrower will not, nor will it permit any Subsidiary
to, declare or pay any dividends or make any distributions on its capital stock
(other than dividends payable in its own capital stock) or redeem, repurchase or
otherwise acquire or retire any of its capital stock at any time outstanding,
except that (i) any Subsidiary may declare and pay dividends or make
distributions to the Borrower or to a Wholly-Owned Subsidiary and (ii) the
Borrower may declare and pay dividends or redeem, repurchase or otherwise
acquire or retire any of its capital stock so long as no Default or Unmatured
Default shall have occurred and be continuing after giving effect to such
dividend or such redemption, repurchase or acquisition.

                                       33

<PAGE>   39

     6.11  CONSOLIDATION, MERGER AND SALES. The Borrower will not, nor will it
permit any Subsidiary to, merge or consolidate with or into any other Person,
and the Borrower will not sell, lease or otherwise transfer, directly or
indirectly, all or any substantial part of the assets of the Borrower and its
Subsidiaries, taken as a whole, to any other Person, except that (i) a
Subsidiary may merge into the Borrower or a Wholly-Owned Subsidiary, and (ii) a
Subsidiary may merge with any other Person as a means of effecting a transaction
permitted by this Agreement so long as such Subsidiary is the surviving Person
of such Merger and (a) no Default or Unmatured Default arises as a consequence
of such Merger and (b) after giving effect to such Merger, such Subsidiary
remains a consolidated Subsidiary under GAAP.

     6.12  LIENS. The Borrower will not, nor will it permit any Subsidiary to,
create, incur, or suffer to exist any Lien in, of or on the Property of the
Borrower or any of its Subsidiaries, except:

     (i)    Liens existing on the date of this Agreement securing Indebtedness
            outstanding on the date of this Agreement in an aggregate principal
            or face amount not exceeding $1,000,000.

     (ii)   Any Lien existing on any Property of any Person at the time such
            Person becomes a Subsidiary and not created in contemplation of
            such event.

     (iii)  Any Lien on any Property securing Indebtedness incurred or assumed
            for the purpose of financing all or any part of the cost of
            acquiring such Property, provided that such Lien attaches to such
            Property concurrently with or within 90 days after the acquisition
            thereof.

     (iv)   Any Lien on any Property of any Person existing at the time such
            Person is merged or consolidated with or into the Borrower or any
            Subsidiary and not created in contemplation of such event.

     (v)    Any Lien existing on any Property prior to the acquisition thereof
            by the Borrower or a Subsidiary and not created in contemplation of
            such acquisition.

     (vi)   Any Lien arising out of the refinancing, extension, renewal or
            refunding of any Indebtedness secured by any Lien permitted by any
            of the foregoing clauses of this Section, provided that such
            Indebtedness is not increased and is not secured by any additional
            Property.

     (vii)  Liens arising in the ordinary course of its business which (a) do
            not secure Indebtedness, (b) do not secure any obligation in an
            amount exceeding $25,000,000 and (c) do not in the aggregate
            materially detract from the value of its Property or materially
            impair the use thereof in the operation of its business.

                                       34

<PAGE>   40

     (viii)  Liens on cash and Cash Equivalents securing Rate Management
             Obligations, provided that the aggregate amount of cash and Cash
             Equivalents subject to such Liens may at no time exceed
             $25,000,000.

     (ix)    Liens upon assets of an SPC relating to any Permitted
             Securitization.

     (x)     Liens not otherwise permitted by the foregoing clauses of this
             Section securing Indebtedness in an aggregate principal or face
             amount at any date not to exceed 5% of Consolidated Net Worth.

     Notwithstanding the foregoing clauses of this SECTION 6.12, (i) the
Borrower shall not permit its Subsidiaries, individually or in the aggregate, to
create, incur or suffer to exist Liens on any Property of such Subsidiary or
Subsidiaries in an aggregate principal or face amount in excess of $5,000,000 at
any time and (ii) the Borrower shall not pledge, or permit its Material
Subsidiaries to pledge, the capital stock of its or their Material Subsidiaries,
as the case may be, to any Person at any time. In the event that the capital
stock of any Subsidiary (which is not a Material Subsidiary) has been pledged
and such Subsidiary is either acquired as a direct or indirect Material
Subsidiary of the Borrower or is later reclassified as a Material Subsidiary as
a result of such Subsidiary meeting the definition of "Material Subsidiary" set
forth in SECTION 1.1, then the Borrower shall, at the Borrower's expense, (a)
with respect to an acquired Material Subsidiary, within 120 days after such
acquisition, cause the release of such pledge on the capital stock of such
Subsidiary or (b) with respect to a reclassified Material Subsidiary, within 150
days following the close of the fiscal year in which such reclassification
occurred, cause the release of such pledge on the capital stock of such
Subsidiary.

     6.13  AFFILIATES. The Borrower will not, and will not permit any Subsidiary
to, enter into any transaction (including, without limitation, the purchase or
sale of any Property or service) with, or make any payment or transfer to, any
Affiliate except (i) in the ordinary course of business and pursuant to the
reasonable requirements of the Borrower's or such Subsidiary's business and upon
fair and reasonable terms no less favorable to the Borrower or such Subsidiary
than the Borrower or such Subsidiary would obtain in a comparable arms-length
transaction and (ii) a Permitted Securitization.

     6.14  CONTINGENT OBLIGATIONS. The Borrower will not, nor will it permit any
Subsidiary to, make or suffer to exist any Contingent Obligation (provided that
the Borrower may incur a Contingent Obligation with respect to the obligations
of a Material Subsidiary), except (i) by endorsement of instruments for deposit
or collection in the ordinary course of business, (ii) the Guaranty (when
delivered in accordance with SECTION 6.18), and (iii) the Subsidiaries of the
Borrower may make or suffer to exist any Contingent Obligations with respect to
Funded Indebtedness, individually or in the aggregate, which do not exceed the
aggregate principal amount of $5,000,000 at any time outstanding.

                                       35

<PAGE>   41

     6.15  SALE OF ACCOUNTS. The Borrower will not, nor will it permit any
Subsidiary to, sell or otherwise dispose of any notes receivable or accounts
receivable, with or without recourse, except sales of accounts receivable and
related rights to or by an SPC pursuant to a Permitted Securitization; provided
that such accounts receivable and related rights sold after the date hereof
pursuant to a Permitted Securitization do not have an aggregate book value in
excess of $200,000,000 for all such Permitted Securitizations.

     6.16  FINANCIAL CONTRACTS. The Borrower will not, nor will it permit any
Subsidiary to, enter into or remain liable upon any Financial Contract, except
with respect to Rate Management Transactions providing protection against
fluctuations in currency or commodity values in connection with the Borrower's
or any of its Subsidiaries' operations so long as management of the Borrower or
such Subsidiary, as the case may be, has determined that the entering into of
such Rate Management Transactions are BONA FIDE hedging activities done in the
ordinary course of business and are not done for speculative purposes.

     6.17  FINANCIAL COVENANTS.

          6.17.1  COVERAGE RATIO. The Borrower will not permit the ratio,
     determined as of the end of each of its fiscal quarters, of (i)
     Consolidated EBIT for the most-recently ended four fiscal quarters to (ii)
     Consolidated Interest Expense for the most-recently ended four fiscal
     quarters to be less than 3.0 to 1.0.

          6.17.2  LEVERAGE RATIO. The Borrower will not permit the Leverage
     Ratio, determined as of the end of any fiscal quarter, to be greater than
     the ratio set forth below opposite such fiscal quarter:

                       Period                                     Ratio
                       ------                                     -----

                  December 31, 2000                           2.50 to 1.00
                  March 31, 2001                              3.00 to 1.00
                  June 30, 2001                               3.50 to 1.00
                  September 30, 2001                          2.75 to 1.00
                  December 31, 2001                           2.50 to 1.00
                  March 31, 2002                              2.50 to 1.00
                  June 30, 2002                               3.00 to 1.00
                  September 30, 2002                          2.50 to 1.00
                  December 31, 2002                           2.25 to 1.00
                  March 31, 2003                              2.50 to 1.00
                  June 30, 2003                               3.00 to 1.00
                  September 30, 2003                          2.50 to 1.00
                  December 31, 2003                           2.25 to 1.00
                  March 31, 2004                              2.50 to 1.00

                                       36

<PAGE>   42

                  June 30, 2004                               3.00 to 1.00
                  September 30, 2004                          2.50 to 1.00
                  December 31, 2004                           2.25 to 1.00
                  March 31, 2005                              2.50 to 1.00
                  June 30, 2005                               3.00 to 1.00
                  September 30, 2005                          2.50 to 1.00
                  December 31, 2005                           2.25 to 1.00

     6.18  SUBSIDIARY GUARANTORS. The parties to this Agreement hereby
acknowledge that, as of the Closing Date, provisions contained in existing
documentation governing certain Indebtedness of the Borrower restrict the dollar
amount of Funded Indebtedness that may be guaranteed by Subsidiaries of the
Borrower to $5,000,000 (the "Guaranty Limitation"). In the event that the
Guaranty Limitation is amended or modified to permit an additional principal
amount of Indebtedness to be guaranteed by such Subsidiaries or if, for any
reason, the Guaranty Limitation no longer remains in effect, the Borrower agrees
to immediately notify the Administrative Agent that the Guaranty Limitation is
no longer effective or has otherwise been amended or modified. The Borrower
further agrees, upon receipt of the request of the Administrative Agent, to
cause, within 30 days following the date of such request (and at the Borrower's
expense), the Obligations to be (and remain) guarantied in writing by each of
its Material Subsidiaries pursuant to the Guaranty. Following the execution and
delivery of the Guaranty in accordance with this Section, upon the formation or
acquisition of any new direct or indirect Material Subsidiary by the Borrower or
upon the reclassification of a Subsidiary of the Borrower as a Material
Subsidiary as a result of such Subsidiary meeting the definition of "Material
Subsidiary" set forth in SECTION 1.1, then the Borrower shall, at the Borrower's
expense, within 30 days after such formation, acquisition or reclassification,
cause each such Material Subsidiary to duly execute and deliver to the
Administrative Agent a Guaranty Supplement. Upon execution of the Guaranty by
any Material Subsidiary, the Borrower shall also cause to be delivered to the
Administrative Agent such items evidencing legal existence, validity, power, and
authorization (including, without limitation, an opinion of counsel) comparable
to the items required with respect to the Borrower pursuant to SECTION 4.1 as
the Administrative Agent may reasonably require.

     6.19  ERISA COMPLIANCE. The Borrower will not, nor will it permit any
Subsidiary to, at any time engage in a transaction which could be subject to
Section 4069 or 4212(c) of ERISA, or permit any Plan to (a) engage in any
non-exempt "prohibited transaction" (as defined in Section 4975 of the Code);
(b) fail to comply with ERISA or any other applicable laws; or (c) incur any
material "accumulated funding deficiency" (as defined in Section 302 of ERISA),
which, with respect to each event listed above, could be reasonable expected to
have a Material Adverse Effect.

     6.20  PERMITTED INVESTMENTS AND ACQUISITIONS. The Borrower is permitted to
make any Investments (including, without limitation, loans and advances to, and
other Investments in, Subsidiaries) or commitments therefor, and to become a
partner in any partnership or joint

                                       37

<PAGE>   43

venture, or to make any Acquisition provided that (i) with respect to an
Acquisition involving a merger, the Borrower is the surviving Person of such
merger and (ii) immediately before and after giving effect to such Investment or
Acquisition no Unmatured Default or Default shall or would exist.

     6.21  SUBSIDIARY INDEBTEDNESS. Notwithstanding any other provision of this
Agreement to the contrary, the Borrower will not permit its Subsidiaries,
individually or in the aggregate, to create, incur, assume or suffer Funded
Indebtedness in an aggregate principal amount in excess of $5,000,000 at any
time outstanding.

                                  ARTICLE VII

                                    DEFAULTS
                                    --------

     The occurrence of any one or more of the following events shall constitute
a Default:

     7.1  Any representation or warranty made or deemed made by or on behalf of
the Borrower or any of its Subsidiaries to the Lenders or the Administrative
Agent under or in connection with this Agreement, any Loan, or any certificate
or information delivered in connection with this Agreement or any other Loan
Document shall be materially false on the date as of which made.

     7.2  Nonpayment of principal of any Loan when due, or nonpayment of
interest upon any Loan or of any commitment fee or other obligations under any
of the Loan Documents within five days after the same becomes due.

     7.3  The breach by the Borrower of any of the terms or provisions of
SECTION 6.2, SECTION 6.3 or any of SECTION 6.9 through 6.18 or any of Section
6.20 through 6.21.

     7.4  The breach by the Borrower (other than a breach which constitutes a
Default under another Section of this ARTICLE VII) of any of the terms or
provisions of this Agreement which is not remedied within thirty days after
written notice from the Administrative Agent or any Lender.

     7.5  Failure of the Borrower or any of its Subsidiaries to pay when due any
Indebtedness aggregating in excess of $5,000,000 ("Material Indebtedness"); or
the default by the Borrower or any of its Subsidiaries in the performance
(beyond the applicable grace period with respect thereto, if any) of any term,
provision or condition contained in any agreement under which any such Material
Indebtedness was created or is governed, or any other event shall occur or
condition exist, the effect of which default or event is to cause, or to permit
the holder or holders of such Material Indebtedness to cause, such Material
Indebtedness to become due prior to its stated maturity; or any Material
Indebtedness of the Borrower or any of its Subsidiaries shall be declared to be
due and payable or required to be prepaid or repurchased (other than by a
regularly scheduled payment) prior to the stated maturity thereof; or the

                                       38

<PAGE>   44

Borrower or any of its Subsidiaries shall not pay, or admit in writing its
inability to pay, its debts generally as they become due.

     7.6  The Borrower or any of its Subsidiaries shall (i) have an order for
relief entered with respect to it under the Federal bankruptcy laws as now or
hereafter in effect, (ii) make an assignment for the benefit of creditors, (iii)
apply for, seek, consent to, or acquiesce in, the appointment of a receiver,
custodian, trustee, examiner, liquidator or similar official for it or any
substantial part of its Property, (iv) institute any proceeding seeking an order
for relief under the Federal bankruptcy laws as now or hereafter in effect or
seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution,
winding up, liquidation, reorganization, arrangement, adjustment or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or fail to file an answer or other pleading
denying the material allegations of any such proceeding filed against it, (v)
take any corporate or partnership action to authorize or effect any of the
foregoing actions set forth in this SECTION 7.6 or (vi) fail to contest in good
faith any appointment or proceeding described in SECTION 7.7.

     7.7  Without the application, approval or consent of the Borrower or any of
its Subsidiaries, a receiver, trustee, examiner, liquidator or similar official
shall be appointed for the Borrower or any of its Subsidiaries or any
substantial part of its Property, or a proceeding described in SECTION 7.6(iv)
shall be instituted against the Borrower or any of its Subsidiaries and such
appointment continues undischarged or such proceeding continues undismissed or
unstayed for a period of 60 consecutive days.

     7.8  Any court, government or governmental agency shall condemn, seize or
otherwise appropriate, or take custody or control of, all or any portion of the
Property of the Borrower and its Subsidiaries which, when taken together with
all other Property of the Borrower and its Subsidiaries so condemned, seized,
appropriated, or taken custody or control of, during the twelve-month period
ending with the month in which any such action occurs, constitutes a Substantial
Portion.

     7.9  The Borrower or any of its Subsidiaries shall fail within 30 days to
pay, bond or otherwise discharge one or more (i) judgments or orders for the
payment of money in excess of $25,000,000 (or the equivalent thereof in
currencies other than U.S. Dollars) in the aggregate, or (ii) nonmonetary
judgments or orders which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect, which judgment(s), in any such case,
is/are not stayed on appeal or otherwise being appropriately contested in good
faith.

     7.10  The Unfunded Liabilities of all Single Employer Plans shall exceed in
the aggregate $1,000,000 or any Reportable Event shall occur in connection with
any Plan.

     7.11  Any Change in Control shall occur.

     7.12  At such time as the Guaranty has been executed and delivered in
accordance with SECTION 6.18 and thereafter, if the Guaranty shall fail to
remain in full force or effect or any

                                       39

<PAGE>   45

action shall be taken to discontinue or to assert the invalidity or
unenforceability of the Guaranty, or any Material Subsidiary shall fail to
comply with any of the terms or provisions of the Guaranty, or any Material
Subsidiary shall deny that it has any further liability under the Guaranty, or
shall give notice to such effect.

                                  ARTICLE VIII

                 ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
                 ----------------------------------------------

     8.1  ACCELERATION. If any Default described in SECTION 7.6 or 7.7 occurs
with respect to the Borrower, the obligations of the Lenders to make Loans
hereunder shall automatically terminate and the Obligations shall immediately
become due and payable without any election or action on the part of the
Administrative Agent or any Lender. If any other Default occurs, the Required
Lenders (or the Administrative Agent with the consent of the Required Lenders)
may terminate or suspend the obligations of the Lenders to make Loans hereunder,
or declare the Obligations to be due and payable, or both, whereupon the
Obligations shall become immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which the Borrower hereby
expressly waives.

     If, within 30 days after acceleration of the maturity of the Obligations or
termination of the obligations of the Lenders to make Loans hereunder as a
result of any Default (other than any Default as described in SECTION 7.6 or 7.7
with respect to the Borrower) and before any judgment or decree for the payment
of the Obligations due shall have been obtained or entered, the Required Lenders
(in their sole discretion) shall so direct, the Administrative Agent shall, by
notice to the Borrower, rescind and annul such acceleration and/or termination.

     8.2  AMENDMENTS. Subject to the provisions of this ARTICLE VIII, the
Required Lenders (or the Administrative Agent with the consent in writing of the
Required Lenders) and the Borrower may enter into agreements supplemental hereto
for the purpose of adding or modifying any provisions to the Loan Documents or
changing in any manner the rights of the Lenders or the Borrower hereunder or
waiving any Default hereunder; provided, however, that no such supplemental
agreement shall, without the consent of all of the Lenders:

     (i)   Extend the final maturity of any Loan or forgive all or any portion
           of the principal amount thereof, or reduce the rate or extend the
           time of payment of interest or fees thereon.

     (ii)  Reduce the percentage specified in the definition of Required
           Lenders.

     (iii) Extend the Facility Termination Date (other than pursuant to
           SECTION 2.19), or reduce the amount of, change the manner of
           application of, or extend the payment date for, the mandatory
           payments required under SECTION 2.2, or increase the amount of the
           Commitment of any Lender hereunder, or permit the Borrower to assign
           its rights under this Agreement.

                                       40

<PAGE>   46

     (iv)  Amend this SECTION 8.2.

     (v)   At such time as the Guaranty has been delivered in accordance with
           SECTION 6.18 and thereafter, release any Material Subsidiary from
           liability under the Guaranty or limit its liability in respect of the
           Guaranty.

No amendment of any provision of this Agreement relating to the Administrative
Agent shall be effective without the written consent of the Administrative
Agent. The Administrative Agent may waive payment of the fee required under
SECTION 12.3 without obtaining the consent of any other party to this Agreement.

     8.3  PRESERVATION OF RIGHTS. No delay or omission of the Lenders or the
Administrative Agent to exercise any right under the Loan Documents shall impair
such right or be construed to be a waiver of any Default or an acquiescence
therein, and the making of a Loan notwithstanding the existence of a Default or
the inability of the Borrower to satisfy the conditions precedent to such Loan
shall not constitute any waiver or acquiescence. Any single or partial exercise
of any such right shall not preclude other or further exercise thereof or the
exercise of any other right, and no waiver, amendment or other variation of the
terms, conditions or provisions of the Loan Documents whatsoever shall be valid
unless in writing signed by the Lenders required pursuant to SECTION 8.2, and
then only to the extent in such writing specifically set forth. All remedies
contained in the Loan Documents or by law afforded shall be cumulative and all
shall be available to the Administrative Agent and the Lenders until the
Obligations have been paid in full.

                                   ARTICLE IX

                               GENERAL PROVISIONS
                               ------------------

     9.1  SURVIVAL OF REPRESENTATIONS. All representations and warranties of the
Borrower contained in this Agreement shall survive the making of the Loans
herein contemplated.

     9.2  GOVERNMENTAL REGULATION. Anything contained in this Agreement to the
contrary notwithstanding, no Lender shall be obligated to extend credit to the
Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.

     9.3  HEADINGS. Section headings in the Loan Documents are for convenience
of reference only, and shall not govern the interpretation of any of the
provisions of the Loan Documents.

     9.4  ENTIRE AGREEMENT. The Loan Documents embody the entire agreement and
understanding among the Borrower, the Arrangers, the Agents and the Lenders and
supersede all prior agreements and understandings among the Borrower, the Agents
and the Lenders relating to the subject matter thereof.

                                       41

<PAGE>   47

     9.5 SEVERAL OBLIGATIONS; BENEFITS OF THIS AGREEMENT. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other (except to the extent to which the
Administrative Agent is authorized to act as such). The failure of any Lender to
perform any of its obligations hereunder shall not relieve any other Lender from
any of its obligations hereunder. This Agreement shall not be construed so as to
confer any right or benefit upon any Person other than the parties to this
Agreement and their respective successors and assigns, provided, however, that
the parties hereto expressly agree that each of the Arrangers shall enjoy the
benefits of the provisions of SECTIONS 9.6, 9.10 and 10.5 to the extent
specifically set forth therein and shall have the right to enforce such
provisions on its own behalf and in its own name to the same extent as if it
were a party to this Agreement.

     9.6  EXPENSES; INDEMNIFICATION

     (i)  The Borrower shall reimburse the Agents and the Arrangers for any
          costs (excluding internal charges) and out-of-pocket expenses
          (including reasonable attorneys' fees and time charges of attorneys
          for the Agents, which attorneys may be employees of either of the
          Agents) paid or incurred by the Agents or the Arrangers in connection
          with the preparation, negotiation, execution, delivery, syndication,
          distribution (including, without limitation, via the internet),
          review, amendment, modification, and administration of the Loan
          Documents. The Borrower also agrees to reimburse the Agents, the
          Arrangers and the Lenders for any costs (excluding internal charges)
          and out-of-pocket expenses (including reasonable attorneys' fees and
          time charges of attorneys for the Agents, the Arrangers and the
          Lenders, which attorneys may be employees of any of the Agents, the
          Arrangers or the Lenders) paid or incurred by the Agents, the
          Arrangers or any Lender in connection with the collection and
          enforcement of the Loan Documents.

     (ii) The Borrower hereby further agrees to indemnify the Agents, the
          Arrangers, each Lender, their respective affiliates, and each of their
          directors, officers and employees against all losses, claims, damages,
          penalties, judgments, liabilities and expenses (including, without
          limitation, all expenses of litigation or preparation therefor whether
          or not any of the Agents, the Arrangers, any Lender or any affiliate
          is a party thereto) which any of them may pay or incur arising out of
          or relating to this Agreement, the other Loan Documents, the
          transactions contemplated hereby or the direct or indirect application
          or proposed application of the proceeds of any Loan hereunder except
          to the extent that they are determined in a final non-appealable
          judgment by a court of competent jurisdiction to have resulted from
          the gross negligence or willful misconduct of the party seeking
          indemnification. The obligations of the Borrower under this SECTION
          9.6 shall survive the termination of this Agreement.

                                       42

<PAGE>   48

     9.7  NUMBERS OF DOCUMENTS. All statements, notices, closing documents, and
requests hereunder shall be furnished to the Administrative Agent with
sufficient counterparts so that the Administrative Agent may furnish one to each
of the Lenders.

     9.8  [Reserved.]

     9.9  SEVERABILITY OF PROVISIONS. Any provision in any Loan Document that is
held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as
to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.

     9.10  NONLIABILITY OF LENDERS. The relationship between the Borrower on the
one hand and the Lenders and the Administrative Agent on the other hand shall be
solely that of borrower and lender. Neither the Agents, the Arrangers nor any
Lender shall have any fiduciary responsibilities to the Borrower. Neither the
Agents, the Arrangers nor any Lender undertakes any responsibility to the
Borrower to review or inform the Borrower of any matter in connection with any
phase of the Borrower's business or operations. The Borrower agrees that neither
the Agents, the Arrangers nor any Lender shall have liability to the Borrower
(whether sounding in tort, contract or otherwise) for losses suffered by the
Borrower in connection with, arising out of, or in any way related to, the
transactions contemplated and the relationship established by the Loan
Documents, or any act, omission or event occurring in connection therewith,
unless it is determined in a final non-appealable judgment by a court of
competent jurisdiction that such losses resulted from the gross negligence or
willful misconduct of the party from which recovery is sought. Neither the
Agents, the Arrangers nor any Lender shall have any liability with respect to,
and the Borrower hereby waives, releases and agrees not to sue for, any special,
indirect or consequential damages suffered by the Borrower in connection with,
arising out of, or in any way related to the Loan Documents or the transactions
contemplated thereby.

     9.11  CONFIDENTIALITY. Each Lender agrees to hold any confidential
information which it may receive from the Borrower pursuant to this Agreement in
confidence, except for disclosure (i) to its Affiliates and to other Lenders and
their respective Affiliates, (ii) to legal counsel, accountants, and other
professional advisors to such Lender or to a Transferee, (iii) to regulatory
officials, (iv) to any Person as requested pursuant to or as required by law,
regulation, or legal process, (v) to any Person in connection with any legal
proceeding to which such Lender is a party, (vi) to such Lender's direct or
indirect contractual counterparties in swap agreements or to legal counsel,
accountants and other professional advisors to such counterparties, and (vii)
permitted by SECTION 12.4.

     9.12  NONRELIANCE. Each Lender hereby represents that it is not relying on
or looking to any margin stock (as defined in Regulation U of the Board of
Governors of the Federal Reserve System) for the repayment of the Loans provided
for herein.

                                       43

<PAGE>   49

     9.13  DISCLOSURE. The Borrower and each Lender hereby acknowledge and agree
that any of (i) Wachovia Bank, N.A. and/or its Affiliates or (ii) Bank One, NA
and/or its Affiliates, from time to time may hold investments in, make other
loans to or have other relationships with the Borrower and its Affiliates.

                                   ARTICLE X

                            THE ADMINISTRATIVE AGENT
                            ------------------------

     10.1  APPOINTMENT; POWERS AND IMMUNITIES. Each Lender hereby irrevocably
appoints and authorizes the Administrative Agent to act as its Administrative
Agent hereunder and under the other Loan Documents with such powers as are
specifically delegated to the Administrative Agent by the terms hereof and
thereof, together with such other powers as are reasonably incidental thereto.
The Administrative Agent: (a) shall have no duties or responsibilities except as
expressly set forth in this Agreement and the other Loan Documents, and shall
not by reason of this Agreement or any other Loan Document be a trustee for any
Lender; (b) makes no warranty or representation to any Lender and shall not be
responsible to the Lenders for any recitals, statements, representations or
warranties contained in this Agreement or any other Loan Document, or in any
certificate or other document referred to or provided for in, or received by any
Lender under, this Agreement or any other Loan Document, or for the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document or any other document referred to or provided for herein
or therein or for any failure by the Borrower to perform any of its obligations
hereunder or thereunder; (c) shall not be required to initiate or conduct any
litigation or collection proceedings hereunder or under any other Loan Document
except to the extent requested by the Required Lenders, and then only on terms
and conditions satisfactory to the Administrative Agent, and (d) shall not be
responsible for any action taken or omitted to be taken by it hereunder or under
any other Loan Document or any other document or instrument referred to or
provided for herein or therein or in connection herewith or therewith, except
for its own gross negligence or willful misconduct. The Administrative Agent may
employ agents and attorneys-in-fact and shall not be responsible for the
negligence or misconduct of any such Administrative Agents or attorneys-in-fact
selected by it with reasonable care. The provisions of this ARTICLE X are solely
for the benefit of the Administrative Agent and the Lenders, and the Borrower
shall not have any rights as a third party beneficiary of any of the provisions
hereof. In performing its functions and duties under this Agreement and under
the other Loan Documents, the Administrative Agent shall act solely as
Administrative Agent of the Lenders and does not assume and shall not be deemed
to have assumed any obligation towards or relationship of agency or trust with
or for the Borrower. The duties of the Administrative Agent shall be ministerial
and administrative in nature, and the Administrative Agent shall not have by
reason of this Agreement or any other Loan Document a fiduciary relationship in
respect of any Lender.

     10.2  RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent shall be
entitled to rely upon any certification, notice or other communication
(including any thereof by telephone,

                                       44

<PAGE>   50

telecopier, telegram or cable) believed by it 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 accountants or other
experts selected by the Administrative Agent. As to any matters not expressly
provided for by this Agreement or any other Loan Document, the Administrative
Agent shall in all cases be fully protected in acting, or in refraining from
acting, hereunder and thereunder in accordance with instructions signed by the
Required Lenders, and such instructions of the Required Lenders in any action
taken or failure to act pursuant thereto shall be binding on all of the Lenders.

     10.3  DEFAULTS. The Administrative Agent shall not be deemed to have
knowledge of the occurrence of an Unmatured Default or a Default (other than the
nonpayment of principal of or interest on the Loans) unless the Administrative
Agent has received notice from a Lender or the Borrower specifying such
Unmatured Default or Default and stating that such notice is a "Notice of
Default". In the event that the Administrative Agent receives such a notice of
the occurrence of an Unmatured Default or a Default, the Administrative Agent
shall give prompt notice thereof to the Lenders. The Administrative Agent shall
(subject to SECTION 8.2) take such action hereunder with respect to such
Unmatured Default or Default as shall be directed by the Required Lenders,
provided that, unless and until the Administrative Agent shall have received
such directions, the Administrative Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Unmatured Default or Default as it shall deem advisable in the best interests of
the Lenders.

     10.4  RIGHTS OF ADMINISTRATIVE AGENT AND ITS AFFILIATES AS A LENDER. With
respect to its Commitment and the Loans made by it and any of its Affiliates,
Wachovia Bank, N.A. (and any successor acting as Administrative Agent hereunder)
in its capacity as a Lender hereunder and any Affiliate of Wachovia Bank, N.A.
in its capacity as a Lender hereunder shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were not
acting as the Administrative Agent, and the term "Lender" or "Lenders" shall,
unless the context otherwise indicates, include Wachovia Bank, N.A. in its
individual capacity and any Affiliate of the Administrative Agent in its
individual capacity. Wachovia Bank, N.A. (and any successor acting as
Administrative Agent hereunder) and any Affiliate thereof may (without having to
account therefor to any Lender) accept deposits from, lend money to and
generally engage in any kind of banking, trust or other business with the
Borrower (and any of the Borrower's Affiliates) as if it were not acting as the
Administrative Agent, and Wachovia Bank, N.A. and any Affiliate thereof may
accept fees and other consideration from the Borrower or any Subsidiary or
Affiliate thereof for services in connection with this Agreement or any other
Loan Document or otherwise without having to account for the same to the
Lenders.

     10.5  INDEMNIFICATION. Each Lender severally agrees to indemnify each of
the Agents, to the extent not reimbursed by the Borrower, ratably in accordance
with its Commitment, for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including, without
limitation, counsel fees and disbursements) or disbursements of any kind and
nature whatsoever which may be imposed on, incurred by or asserted against such

                                       45

<PAGE>   51

Agent in any way relating to or arising out of this Agreement or any other Loan
Document or any other documents contemplated by or referred to herein or therein
or the transactions contemplated hereby or thereby (including, without
limitation, the costs and expenses that the Borrower is obligated to pay under
SECTION 9.6 or any amount the Borrower is obligated to pay under SECTION 9.6,
but excluding, unless an Unmatured Default has occurred and is continuing, the
normal administrative costs and expenses incident to the performance of its
agency duties hereunder) or the enforcement of any of the terms hereof or
thereof or any such other documents; provided that no Lender shall be liable for
any of the foregoing to the extent they arise from the gross negligence or
willful misconduct of the Agent seeking indemnification. If any indemnity
furnished to an Agent for any purpose shall, in the opinion of such Agent, be
insufficient or become impaired, such Agent may call for additional indemnity
and cease, or not commence, to do the acts indemnified against until such
additional indemnity is furnished.

     10.6  CONSEQUENTIAL DAMAGES. THE AGENTS SHALL NOT BE RESPONSIBLE OR LIABLE
TO ANY LENDER, THE BORROWER OR ANY OTHER PERSON OR ENTITY FOR ANY PUNITIVE,
EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.

     10.7  REGISTERED HOLDER OF LOAN TREATED AS OWNER. The Administrative Agent
may deem and treat each Person in whose name a Loan is registered as the owner
thereof for all purposes hereof unless and until a written notice of the
assignment or transfer thereof shall have been filed with the Administrative
Agent and the provisions of SECTION 12.3 have been satisfied. Any requests,
authority or consent of any Person who at the time of making such request or
giving such authority or consent is the holder of any Note shall be conclusive
and binding on any subsequent holder, transferee or assignee of that Note or of
any Note or Notes issued in exchange therefor or replacement thereof.

     10.8  NONRELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS. Each Lender
agrees that it has, independently and without reliance on the Agents or any
other Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrower and decision to enter
into this Agreement and that it will, independently and without reliance upon
the Agents or any other Lender, and based on such documents and information as
it shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement or any of the
other Loan Documents. The Administrative Agent shall not be required to keep
itself (or any Lender) informed as to the performance or observance by the
Borrower of this Agreement or any of the other Loan Documents or any other
document referred to or provided for herein or therein or to inspect the
properties or books of the Borrower or any other Person. Except for notices,
reports and other documents and information expressly required to be furnished
to the Lenders by the Administrative Agent hereunder or under the other Loan
Documents, the Administrative Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the affairs,
financial condition or business of the Borrower or any other

                                       46

<PAGE>   52

Person (or any of their Affiliates) which may come into the possession of the
Administrative Agent or any of its Affiliates.

     10.9  FAILURE TO ACT. Except for action expressly required of the
Administrative Agent hereunder or under the other Loan Documents, the
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder and thereunder unless it shall receive further
assurances to its satisfaction by the Lenders of their indemnification
obligations under SECTION 10.5 against any and all liability and expense which
may be incurred by the Administrative Agent by reason of taking, continuing to
take, or failing to take any such action.

     10.10  SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may resign
at any time by giving notice thereof to the Lenders and the Borrower. Upon any
such resignation, the Required Lenders shall have the right to appoint a
successor Administrative Agent. If no successor Administrative Agent shall have
been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent's notice of
resignation, then the retiring Administrative Agent may, on behalf of the
Lenders, appoint a successor Administrative Agent. Any successor Administrative
Agent shall be a bank or other financial institution which has a combined
capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder. After any retiring Administrative
Agent's resignation hereunder as Administrative Agent, the provisions of this
ARTICLE X 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 the Administrative
Agent hereunder.

     10.11  OTHER AGENTS. The Borrower and each Lender hereby acknowledges that
any Lender designated as an "Agent" on the signature pages hereof (other than
the Administrative Agent) shall not have any obligations, duties or liabilities
hereunder other than in its capacity as a Lender.

                                   ARTICLE XI

                            SETOFF; RATABLE PAYMENTS
                            ------------------------

     11.1  SETOFF. In addition to, and without limitation of, any rights of the
Lenders under applicable law, if the Borrower becomes insolvent, however
evidenced, or any Default occurs, any and all deposits (including all account
balances, whether provisional or final and whether or not collected or
available) and any other Indebtedness at any time held or owing by any Lender or
any Affiliate of any Lender to or for the credit or account of the Borrower may
be offset and applied toward the payment of the Obligations owing to such
Lender, whether or not the Obligations, or any part thereof, shall then be due.

                                       47

<PAGE>   53

     11.2 RATABLE PAYMENTS. If any Lender, whether by setoff or otherwise, has
payment made to it upon its Loans (other than payments received pursuant to
SECTION 3.1, 3.2, 3.4 or 3.5) in a greater proportion than that received by any
other Lender, such Lender agrees, promptly upon demand, to purchase a portion of
the Loans held by the other Lenders so that after such purchase each Lender will
hold its ratable proportion of Loans. If any Lender, whether in connection with
setoff or amounts which might be subject to setoff or otherwise, receives
collateral or other protection for its Obligations or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to take such action
necessary such that all Lenders share in the benefits of such collateral ratably
in proportion to their Loans. In case any such payment is disturbed by legal
process, or otherwise, appropriate further adjustments shall be made.

                                  ARTICLE XII

                BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
                -------------------------------------------------

     12.1  SUCCESSORS AND ASSIGNS. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and the
Lenders and their respective successors and assigns, except that (i) the
Borrower shall not have the right to assign its rights or obligations under the
Loan Documents and (ii) any assignment by any Lender must be made in compliance
with SECTION 12.3. The parties to this Agreement acknowledge that clause (ii) of
this SECTION 12.1 relates only to absolute assignments and does not prohibit
assignments creating security interests, including, without limitation, any
pledge or assignment by any Lender of all or any portion of its rights under
this Agreement and any Note to a Federal Reserve Bank; provided, however, that
no such pledge or assignment creating a security interest shall release the
transferor Lender from its obligations hereunder unless and until the parties
thereto have complied with the provisions of SECTION 12.3. The Administrative
Agent may treat the Person which made any Loan or which holds any Note as the
owner thereof for all purposes hereof unless and until such Person complies with
SECTION 12.3. Any assignee of the rights to any Loan or any Note agrees by
acceptance of such assignment to be bound by all the terms and provisions of the
Loan Documents. Any request, authority or consent of any Person, who at the time
of making such request or giving such authority or consent is the owner of the
rights to any Loan (whether or not a Note has been issued in evidence thereof),
shall be conclusive and binding on any subsequent holder or assignee of the
rights to such Loan.

     12.2  PARTICIPATIONS. Any Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time sell to one or more
banks or other entities ("Participants") participating interests in any Loan
owing to such Lender, any Note held by such Lender, any Commitment of such
Lender or any other interest of such Lender under the Loan Documents. In the
event of any such sale by a Lender of participating interests to a Participant,
such Lender's obligations under the Loan Documents shall remain unchanged, such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, such Lender shall remain the owner of its Loans
and the holder of any Note issued to it in

                                       48
<PAGE>   54

evidence thereof for all purposes under the Loan Documents, all amounts payable
by the Borrower under this Agreement shall be determined as if such Lender had
not sold such participating interests, and the Borrower and the Administrative
Agent shall continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under the Loan Documents. Each Lender
shall retain the sole right to approve, without the consent of any Participant,
any amendment, modification or waiver of any provision of the Loan Documents
other than any amendment, modification or waiver with respect to any Loan or
Commitment in which such Participant has an interest which would require consent
of all of the Lenders pursuant to the terms of SECTION 8.2 or of any other Loan
Document. The Borrower agrees that each Participant shall be deemed to have the
right of setoff provided in SECTION 11.1 in respect of its participating
interest in amounts owing under the Loan Documents to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
the Loan Documents, provided that each Lender shall retain the right of setoff
provided in SECTION 11.1 with respect to the amount of participating interests
sold to each Participant. The Lenders agree to share with each Participant, and
each Participant, by exercising the right of setoff provided in Section 11.1,
agrees to share with each Lender, any amount received pursuant to the exercise
of its right of setoff, such amounts to be shared in accordance with SECTION
11.2 as if each Participant were a Lender.

     12.3  ASSIGNMENTS. Any Lender may, in the ordinary course of its business
and in accordance with applicable law, at any time assign to one or more banks
or other entities ("Purchasers") all or any part of its rights and obligations
under the Loan Documents. Such assignment shall be substantially in the form of
EXHIBIT C or in such other form as may be agreed to by the parties thereto. The
consent of the Borrower and the Administrative Agent shall be required prior to
an assignment becoming effective with respect to a Purchaser which is not a
Lender or an Affiliate thereof; provided, however, that if a Default has
occurred and is continuing, the consent of the Borrower shall not be required.
Such consent shall not be unreasonably withheld or delayed. Each such assignment
with respect to a Purchaser which is not a Lender or an Affiliate thereof shall
(unless each of the Borrower and the Administrative Agent otherwise consents) be
in an amount not less than the lesser of (i) $5,000,000 or (ii) the remaining
amount of the assigning Lender's Commitment (calculated as at the date of such
assignment) or outstanding Loans (if the applicable Commitment has been
terminated). Upon (i) delivery to the Administrative Agent of an assignment,
together with any consents required by this SECTION 12.3 and (ii) payment of a
$3,500 fee to the Administrative Agent (or a $1,000 fee to the Administrative
Agent with respect to a Purchaser which is a Lender or an Affiliate thereof or a
Related Fund thereof) for processing such assignment (unless such fee is waived
by the Administrative Agent), such assignment shall become effective on the
effective date specified in such assignment. On and after the effective date of
such assignment, such Purchaser shall for all purposes be a Lender party to this
Agreement and any other Loan Document executed by or on behalf of the Lenders
and shall have all the rights and obligations of a Lender under the Loan
Documents, to the same extent as if it were an original party hereto, and no
further consent or action by the Borrower, the Lenders or the Administrative
Agent shall be required to release the transferor Lender with respect to the
percentage of the Aggregate Commitment and Loans

                                       49

<PAGE>   55

assigned to such Purchaser. Upon the consummation of any assignment to a
Purchaser pursuant to this SECTION 12.3, the transferor Lender, the
Administrative Agent and the Borrower shall, if the transferor Lender or the
Purchaser desires that its Loans be evidenced by Notes, make appropriate
arrangements so that new Notes or, as appropriate, replacement Notes are issued
to such transferor Lender and new Notes or, as appropriate, replacement Notes,
are issued to such Purchaser, in each case in principal amounts reflecting their
respective Commitments, as adjusted pursuant to such assignment.

     12.4  DISSEMINATION OF INFORMATION; TAX TREATMENT. The Borrower authorizes
each Lender to disclose to any Participant or Purchaser or any other Person
acquiring an interest in the Loan Documents by operation of law (each a
"Transferee") and any prospective Transferee any and all information in such
Lender's possession concerning the creditworthiness of the Borrower and its
Subsidiaries; provided that each Transferee and prospective Transferee agrees to
be bound by SECTION 9.11 of this Agreement. If any interest in any Loan Document
is transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the transferor
Lender shall cause such Transferee, concurrently with the effectiveness of such
transfer, to comply with the provisions of SECTION 3.5(iv).

                                  ARTICLE XIII

                                     NOTICES
                                     -------

     Except as otherwise permitted by SECTION 2.14 with respect to borrowing
notices, all notices, requests and other communications to any party hereunder
shall be in writing (including electronic transmission, facsimile transmission
or similar writing) and shall be given to such party: (x) in the case of the
Borrower or the Administrative Agent, at its address or facsimile number set
forth on the signature pages hereof, (y) in the case of any Lender, at its
address or facsimile number set forth below its signature hereto or (z) in the
case of any party, at such other address or facsimile number as such party may
hereafter specify for the purpose by notice to the Administrative Agent and the
Borrower in accordance with the provisions of this ARTICLE XIII. Each such
notice, request or other communication shall be effective (i) if given by
facsimile transmission, when transmitted to the facsimile number specified in
this Section and confirmation of receipt is received, (ii) if given by mail, 72
hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid, or (iii) if given by any other means,
when delivered (or, in the case of electronic transmission, received) at the
address specified in this Section; provided that notices to the Administrative
Agent under ARTICLE II shall not be effective until received. The Borrower, the
Administrative Agent and any Lender may each change the address for service of
notice upon it by a notice in writing to the other parties hereto.

                                       50

<PAGE>   56

                                  ARTICLE XIV

                                  COUNTERPARTS
                                  -------------

     This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one agreement, and any of the parties hereto may
execute this Agreement by signing any such counterpart. This Agreement shall be
effective when it has been executed by the Borrower, the Administrative Agent,
the Syndication Agent and the Lenders and each party has notified the
Administrative Agent by facsimile transmission or telephone that it has taken
such action.

                                   ARTICLE XV

          CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
          ------------------------------------------------------------

     15.1  CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS) OF THE
STATE OF NEW YORK, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS.

     15.2  CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY SUBMITS TO
THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT
SITTING IN THE STATE, COUNTY AND CITY OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION
IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.
NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY LENDER
TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER
JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE ADMINISTRATIVE
AGENT OR ANY LENDER OR ANY AFFILIATE OF THE ADMINISTRATIVE AGENT OR ANY LENDER
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED
TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW
YORK.

     15.3  WAIVER OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH
LENDER HEREBY WAIVE TRIAL BY JURY

                                       51

<PAGE>   57

IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED
THEREUNDER.

                      [Signature Pages Immediately Follow]

                                       52

<PAGE>   58

     IN WITNESS WHEREOF, the Borrower, the Lenders, the Administrative Agent and
the Syndication Agent have executed this Agreement as of the date first above
written.

                                  HOUGHTON MIFFLIN COMPANY

                                  By:
                                      -----------------------------------------

                                  Title:
                                       ----------------------------------------
                                         222 Berkeley Street
                                         Boston, Massachusetts 02116
                                         Attention:  Bradley D. Lehan,
                                                     Treasurer
                                         Telephone:  (617) 351-5051
                                         FAX:        (617) 351-5104

                                      S-1

<PAGE>   59

                                  WACHOVIA BANK, N.A., individually
                                  and as Administrative Agent

                                  By:
                                      -----------------------------------------

                                  Title:
                                         --------------------------------------
                                           191 Peachtree Street NE
                                           Atlanta, Georgia  30303
                                           Attention:  Sharon L. Prince
                                           Telephone:  (404) 332-6413
                                           FAX:        (404) 332-4058

                                      S-2

<PAGE>   60

                                  BANK ONE, N.A., individually and as
                                  Syndication Agent

                                  By:
                                      -----------------------------------------

                                  Title:
                                         --------------------------------------
                                           153 W. 51st Street
                                           New York, New York 10019
                                           Attention:  Mahua G. Thakurta
                                           Telephone:  (212) 373-1574
                                           FAX:        (212) 373-1180
                                           Main Office:
                                                 1 Bank One Plaza
                                                 Chicago, Illinois 60670
                                                 Attention: Nanette Wilson
                                                 Telephone: (312) 732-1221

                                      S-3

<PAGE>   61

                                  FLEET NATIONAL BANK, individually
                                  and as Documentation Agent

                                  By:
                                      -----------------------------------------

                                  Title:
                                         --------------------------------------
                                           Mailstop: MA DE 10009D
                                           100 Federal Street
                                           Boston, Massachusetts 02110
                                           Attention:  Sue Anderson
                                           Telephone:  (617) 434-8281
                                           FAX:        (617) 434-8426

                                      S-4

<PAGE>   62

                                THE CHASE MANHATTAN BANK,
                                individually and as Co-Agent

                                By:
                                    -------------------------------------------

                                Title:
                                       ----------------------------------------
                                         270 Park Avenue, 36th Floor
                                         New York, New York 10017
                                         Attention:  Tracy Ewing
                                         Telephone:  (212) 270-8916
                                         FAX:        (212) 270-4584

                                      S-5
<PAGE>   63

                               SUN TRUST BANK, individually and as
                               Co-Agent

                               By:
                                  ---------------------------------------------

                               Title:
                                     ------------------------------------------
                                       711 Fifth Avenue, 16th Floor
                                       New York, New York 10022
                                       Attention:  Maria A. Mamilovich, Director
                                       Telephone:  (212) 583-2602
                                       FAX:        (212) 371-9386

                                      S-6

<PAGE>   64

                                THE BANK OF NEW YORK

                                By:
                                    -------------------------------------------

                                Title:
                                       ----------------------------------------
                                         One Wall Street - 16th Floor
                                         New York, New York  10286
                                         Attention:       Steven Correll
                                         Telephone:       (212) 635-8696
                                         FAX:             (212) 635-8593

                                      S-7

<PAGE>   65

                               CITIZENS BANK OF MASSACHUSETTS,
                               A MASSACHUSETTS BANK

                               By:
                                  ---------------------------------------------

                               Title:
                                     ------------------------------------------
                                       Exchange Place, 53 State Street
                                       8th Floor
                                       Boston, Massachusetts  02109
                                       Attention:  Mark Young
                                       Telephone:  (617) 994-9045
                                       FAX:        (617) 227-2035

                                      S-8

<PAGE>   66

                               CREDIT SUISSE FIRST BOSTON

                               By:
                                  ---------------------------------------------

                               Title:
                                     ------------------------------------------

                               By:
                                  ---------------------------------------------

                               Title:
                                     ------------------------------------------
                                       5 World Trade Center
                                       New York, New York 10048
                                       Attention:  Nilsa Ware
                                       Telephone:  (212) 322-5094
                                       FAX:        (212) 355-0593

                                      S-9

<PAGE>   67

                                THE INDUSTRIAL BANK OF JAPAN,
                                LIMITED - NEW YORK BRANCH

                                By:
                                   --------------------------------------------

                                Title:
                                      -----------------------------------------
                                        1251 Avenue of the Americas
                                        New York, New York 10020-1104
                                        Attention:  Mary-Ellen Macciola
                                        Telephone:  (212) 282-3515
                                        FAX:        (212) 282-4486

                                      S-10

<PAGE>   68

                                NATIONAL CITY BANK

                                By:
                                   --------------------------------------------

                                Title:
                                      -----------------------------------------
                                        1 South Broad Street
                                        Philadelphia, Pennsylvania  19106
                                        Attention:  Tara Handforth/
                                                    Melissa Landay
                                        Telephone:  (267) 256-4044
                                        FAX:        (267) 256-4001

                                      S-11

<PAGE>   69

                                THE NORTHERN TRUST COMPANY

                                By:
                                   --------------------------------------------

                                Title:
                                      -----------------------------------------
                                        50 South LaSalle Street, 11th Floor
                                        Chicago, Illinois 60675
                                        Attention:  Linda Honda
                                        Telephone:  (312) 444-3532
                                        FAX:        (312) 630-1566

                                      S-12
<PAGE>   70

                                PRICING SCHEDULE

<TABLE>
<CAPTION>
=====================================================================================================
                            LEVEL I       LEVEL II        LEVEL III       LEVEL IV        LEVEL V
                            STATUS         STATUS          STATUS          STATUS         STATUS
-----------------------------------------------------------------------------------------------------
<S>                         <C>            <C>             <C>             <C>            <C>
Applicable Margin           0.420%         0.525%          0.750%          0.950%         1.125%
-----------------------------------------------------------------------------------------------------
Facility Fee Rate           0.080%         0.100%          0.125%          0.175%         0.250%
-----------------------------------------------------------------------------------------------------
Utilization Fee             0.125%         0.125%          0.250%          0.250%         0.250%
=====================================================================================================
</TABLE>

     For the purposes of this Schedule, the following terms have the following
meanings, subject to the final paragraph of this Schedule:

     "LEVEL I STATUS" exists with respect to the Borrower, at any date if, on
such date, the Borrower's S&P Rating is A- or better and the Borrower's Moody's
Rating is A3 or better.

     "LEVEL II STATUS" exists with respect to the Borrower at any date if, on
such date, (a) the Borrower has not qualified for Level I Status and (b) the
Borrower's S&P Rating is BBB+ or better and the Borrower's Moody's Rating is
Baa1 or better.

     "LEVEL III STATUS" exists with respect to the Borrower at any date if, on
such date, (a) the Borrower has not qualified for Level I Status or Level II
Status and (b) the Borrower's S&P Rating is BBB or better and the Borrower's
Moody's Rating is Baa2 or better.

     "LEVEL IV STATUS" exists with respect to the Borrower at any date if, on
such date, (a) the Borrower has not qualified for Level I Status, Level II
Status or Level III Status and (b) the Borrower's S&P Rating is BBB- or better
and the Borrower's Moody's Rating is Baa3 or better.

     "LEVEL V STATUS" exists with respect to the Borrower at any date if, on
such date, the Borrower has not qualified for Level 1 Status, Level II Status,
Level III Status or Level IV Status.

     "MOODY'S RATING" means, at any time, the rating issued by Moody's and then
in effect with respect to the Borrower's senior unsecured long-term debt
securities without third-party credit enhancement.

     "S&P RATING" means, at any time, the rating issued by S&P and then in
effect with respect to the Borrower's senior unsecured long-term debt securities
without third-party credit enhancement.

     "STATUS" means either Level I Status, Level II Status, Level III Status,
Level IV Status or Level V Status.

     The Applicable Margin, the Applicable Facility Fee Rate and the Applicable
Utilization Fee with respect to the Borrower shall be determined in accordance
with the foregoing table

<PAGE>   71

based on the Borrower's Status as determined from its then-current Moody's and
S&P Ratings. Any change in the Moody's Rating or S&P Rating shall be deemed for
purposes of this Schedule to become effective on the date of public announcement
thereof and shall remain in effect until the date of public announcement that
such rating shall no longer be in effect. If at any time the Borrower has no
Moody's Rating or S&P Rating, Level V Status shall exist. If, during any period
that both Moody's and S&P have publicly announced a Rating, and such Moody's
Rating and S&P Rating fall within different levels of Status (i) in the case of
a differential of one level of Status, the Status resulting in the lower pricing
for the Borrower shall apply and (ii) in the case of a differential of two or
more levels of Status, the level of Status immediately following the level of
Status that would have resulted in the lower pricing shall apply.

<PAGE>   72

                                   SCHEDULE I

                                   COMMITMENTS
                                   -----------

--------------------------------------------------------------------------------
         LENDER                                     COMMITMENT
--------------------------------------------------------------------------------
  Wachovia Bank, N.A.                               30,000,000
--------------------------------------------------------------------------------
  Bank One, NA                                      30,000,000
--------------------------------------------------------------------------------
  Fleet National Bank                               30,000,000
--------------------------------------------------------------------------------
  The Chase Manhattan Bank                          22,500,000
--------------------------------------------------------------------------------
  SunTrust Bank                                     22,500,000
--------------------------------------------------------------------------------
  The Bank of New York                              15,000,000
--------------------------------------------------------------------------------
  Citizens Bank                                     10,000,000
--------------------------------------------------------------------------------
  Credit Suisse First Boston                        10,000,000
--------------------------------------------------------------------------------
  The Industrial Bank of Japan, Limited             10,000,000
--------------------------------------------------------------------------------
  National City Bank                                10,000,000
--------------------------------------------------------------------------------
  The Northern Trust Company                        10,000,000
--------------------------------------------------------------------------------
  AGGREGATE COMMITMENT                            $200,000,000
                                                  ============
--------------------------------------------------------------------------------

<PAGE>   73

                                  SCHEDULE 5.8
                              MATERIAL SUBSIDIARIES

1.  McDougal Littell, Inc., wholly-owned by the Borrower

2.  The Riverside Publishing Company, wholly-owned by the Borrower

3.  Great Source Education Group, Inc., wholly-owned by the Borrower

4.  Sunburst Technology Corporation, wholly-owned by the Borrower

5.  HMI Holdings, Inc., wholly-owned by the Borrower

<PAGE>   74

                                  SCHEDULE 5.14
                                      LIENS

1.  Houghton Mifflin Company

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
          SECURED PARTY                                  NATURE OF LIEN
-------------------------------------------------------------------------------------------
<S>                                   <C>
Pullman Bank & Trust Company          Equipment  lease notice  filings  recorded  with the
                                      Secretary  of State of CA,  GA,  MA,  NJ, TX and the
                                      City Clerk of Boston, MA
-------------------------------------------------------------------------------------------
Fleet Bank, N.A.                      Equipment  lease notice  filings  recorded  with the
                                      Secretary of State of MA
-------------------------------------------------------------------------------------------
AT&T Credit Corporation               Equipment  lease notice  filings  recorded  with the
                                      Secretary  of  State  of MA and the  City  Clerk  of
                                      Boston, MA
-------------------------------------------------------------------------------------------
Imaging Financial Services, Inc.      Equipment  lease notice  filings  recorded  with the
                                      Secretary of State of MA
-------------------------------------------------------------------------------------------
National City Bank of Kentucky        Equipment  lease notice  filings  recorded  with the
                                      Secretary  of  State  of MA and the  City  Clerk  of
                                      Boston, MA
-------------------------------------------------------------------------------------------
Sun Microsystems Finance              Equipment  lease notice  filings  recorded  with the
                                      Secretary  of  State  of MA and the  City  Clerk  of
                                      Boston, MA
-------------------------------------------------------------------------------------------
Trimarc Financial, Inc.               Equipment  lease notice  filings  recorded  with the
                                      Secretary  of State of CA,  GA,  MA, TX and the City
                                      Clerk of Boston, MA
-------------------------------------------------------------------------------------------
National City Leasing Corporation     Equipment  lease notice  filings  recorded  with the
                                      Secretary  of State of CO, MA, NJ and the City Clerk
                                      of Boston, MA
-------------------------------------------------------------------------------------------
Beacon Press                          Equipment  lease notice  filings  recorded  with the
                                      Secretary of State of IN
-------------------------------------------------------------------------------------------
Copelco Capital Inc.                  Equipment  lease notice  filings  recorded  with the
                                      Secretary of State of TX
-------------------------------------------------------------------------------------------
O/E Systems, Inc.                     Equipment  lease notice  filings  recorded  with the
                                      City Clerk of Boston, MA
-------------------------------------------------------------------------------------------
</TABLE>

<PAGE>   75

2.  The Riverside Publishing Company

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
          SECURED PARTY                                  NATURE OF LIEN
-------------------------------------------------------------------------------------------
<S>                                   <C>
Heritage Bank                         Equipment lease notice filings recorded with the
                                      Secretary of State of IL
-------------------------------------------------------------------------------------------
</TABLE>

3.       McDougal Littell, Inc.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
          SECURED PARTY                                               NATURE OF LIEN
---------------------------------------------------------------------------------------------------------
<S>                                                     <C>
Dept. of Treasury - Internal Revenue Service            Notice of Federal Tax Lien recorded with the
                                                        Secretary of State of IL on 7/1/91 for $2453.11
---------------------------------------------------------------------------------------------------------

Fleet Bank, N.A.                                        Equipment lease notice filings recorded with the
                                                        Secretary of State of IL
---------------------------------------------------------------------------------------------------------
</TABLE>

4.  Great Source Education Group, Inc. - None

5.  Sunburst Technology Corporation - None

6.  HMI Holdings, Inc. - None

                                       2

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