Participation Agreement - HealthSouth Corp., First Security Bank NA, The Chase Manhattan Bank, UBS Warburg LLC, Deutsche Bank Securities Inc., Deutsche Bank AG and UBS AG


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                             PARTICIPATION AGREEMENT
                          Dated as of October 31, 2000
                                      among
                             HEALTHSOUTH Corporation

                                   as Lessee,

                   FIRST SECURITY BANK, NATIONAL ASSOCIATION,
                      not individually, except as expressly
                   stated herein, but solely as Owner Trustee
                 under the HEALTHSOUTH Corporation Trust 2000-1,

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

                           THE VARIOUS BANKS AND OTHER
                           LENDING INSTITUTIONS WHICH
                      ARE PARTIES HERETO FROM TIME TO TIME,

                                 as the Lenders,

                            THE CHASE MANHATTAN BANK,
                             as Documentation Agent,

                                UBS WARBURG LLC,
                                       and
                         DEUTSCHE BANK SECURITIES, INC.,
                            as Joint Lead Arrangers,

                        DEUTSCHE BANK AG NEW YORK BRANCH,
                              as Syndication Agent,

                                       and
                            UBS AG, STAMFORD BRANCH,
                         as Administrative Agent for the
                                     Lenders


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                            PARTICIPATION AGREEMENT

                  THIS PARTICIPATION AGREEMENT, dated as of October 31, 2000 (as
further amended or supplemented from time to time, this "Agreement"),  is by and
among HEALTHSOUTH Corporation.,  as Lessee (the "Lessee"),  FIRST SECURITY BANK,
NATIONAL ASSOCIATION,  a national banking association,  not individually (in its
individual  capacity,  the "Trust Company"),  except as expressly stated herein,
but solely as Owner Trustee under the HEALTHSOUTH  Corporation Trust 2000-1 (the
"Owner Trustee" or the "Lessor"),  THE CHASE  MANHATTAN  BANK, as  Documentation
Agent;  UBS  WARBURG  LLC and  DEUTSCHE  BANK  SECURITIES,  INC.,  as Joint Lead
Arrangers;  DEUTSCHE  BANK AG NEW YORK BRANCH,  as  Syndication  Agent;  UBS AG,
Stamford Branch, as Administrative Agent (in such capacity, the "Agent") for the
Lenders and the Holders;  UBS AG, Stamford  Branch,  and the various other banks
and lending  institutions which are parties hereto from time to time as Holders,
and UBS AG, Stamford Branch and the various other banks and lending institutions
which are parties  hereto from time to time as Lenders.  Capitalized  terms used
but not otherwise defined in this Agreement shall have the meanings set forth in
Appendix A hereto.

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

         SECTION 1. THE LOANS.

                  The  Lenders  have  agreed  to  make  Loans  in  an  aggregate
principal amount of up to the aggregate amount of the Commitments of the Lenders
in order for the Lessor to acquire the Properties and certain Improvements,  and
in  consideration  of the receipt of such Loan  proceeds,  the Lessor,  upon the
request of the relevant Lenders, will issue the Notes (together with any note or
notes issued in exchange or substitution  therefor in accordance with the Credit
Agreement,  the "Notes").  The Loans shall be made and the Notes shall be issued
pursuant to the Credit  Agreement.  Pursuant to Section 5 of this  Agreement and
Section 2 of the Credit  Agreement,  the Loans will be made to the Lessor on the
Closing  Date and in  accordance  with this  Agreement  and the other  Operative
Agreements.  The Loans  and the  obligations  of the  Lessor  under  the  Credit
Agreement are secured by the Collateral.

         SECTION 2. HOLDER ADVANCES.

                  Subject to the terms and  conditions of this  Agreement and in
reliance on the  representations  and  warranties of each of the parties  hereto
contained  herein or made  pursuant  hereto on each  date  Advances  are made in
accordance  with Section 5 hereof,  each Holder shall make a Holder Advance on a
pro rata basis to the Owner Trustee with respect to the HEALTHSOUTH  Corporation
Trust  2000-1  based  on its  Holder  Commitment  in an  amount  in  immediately
available  funds such that the aggregate of all Holder  Advances  shall be three
percent (3%) of the amount of the Advances being funded on such date;  provided,
no Holder  shall be obligated  for any Holder  Advance in excess of its pro rata
share of the  Available  Holder  Commitment.  The  aggregate  amount  of  Holder
Advances  shall be up to the  aggregate  amount of the  Holder  Commitments.  No
prepayment  or any other  payment with respect to any Advance shall be permitted
such that the Holder Advance with respect to such Advance is less than 3% of


                                       1


the outstanding amount of such Advance, except in connection with termination or
expiration of the Term or in connection  with the exercise of remedies  relating
to the occurrence of a Lease Event of Default. The representations,  warranties,
covenants  and  agreements  of the  Holders  herein  and in the other  Operative
Agreements are several, and not joint and several.

         SECTION 3. SUMMARY OF TRANSACTIONS.

         3.1 Operative Agreements. On the date hereof (the "Closing Date"), each
of the  respective  parties  hereto and thereto  shall  execute and deliver this
Agreement,  the Lease,  the Credit  Agreement,  the Notes (if  applicable),  the
Certificates,  the  Trust  Agreement,  the  Security  Agreement  and such  other
documents, instruments, certificates and opinions of counsel as agreed to by the
parties hereto.

         3.2  Closing  Date.  On the  Closing  Date and subject to the terms and
conditions  of this  Agreement  (a) each Holder will make  available  to UBS AG,
Stamford  Branch,  the  amount  set forth for such  Holder on  Schedule 1 to the
Holder Addendum, executed and delivered by such Holder pursuant to Section 14.18
hereof,  constituting  the principal  amount of the Holder Advance to be made by
such  Holder  hereunder,  and (b) each  Lender  will make  available  to UBS AG,
Stamford  Branch,  the amount set forth for such Lender on such Lender's  Lender
Addendum executed and delivered by such Lender pursuant to Section 14.18 hereof,
as the principal  amount of the Loan to be made by such Lender  thereunder.  The
Lessor will purchase pursuant to a Deed or lease pursuant to a Ground Lease each
Property,  as the  case  may  be,  as of the  Closing  Date,  and a Lien on each
Property  for the benefit of the Agent shall be in full force and effect  before
and after the execution of the required Security Documents.  After giving effect
to the Advances on the Closing  Date,  there shall no longer be any  Commitments
outstanding.

         SECTION 4. THE CLOSING.

         4.1  Closing  Date.  All  documents  and  instruments  required  to  be
delivered  on the  Closing  Date shall be  delivered  at the  offices of Simpson
Thacher & Bartlett,  425 Lexington Avenue,  New York, New York, or at such other
location as may be determined by the Lessor, the Agent and the Lessee.

         SECTION 5. MAKING OF ADVANCES.

         5.1 General.

             The Lessor has used and will use the proceeds of the Advances  made
on the date  hereof to acquire  the  Properties,  repay the  existing  loans and
advances.

         5.2 Intentionally Deleted.

         5.3 Conditions  to  the Holders' and the Lenders'  Obligations  to Make
Advances on the Closing Date.

             Subject  to  Section  6, the  obligations  of each  Holder  to make
Holder  Advances,  and each Lender to make Loans on the Closing Date are subject
to the  prior  or  contemporaneous  satisfaction  or  waiver  of  the  following
conditions precedent:

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(a) the correctness in all material respects on such date of the representations
and warranties of the Owner Trustee, the Lessee and the Holders contained herein
and in each of the other Operative Agreements;

(b) the  performance  in all material  respects by the Lessee of its  agreements
contained herein and in the other Operative Agreements which covenants are to be
performed by it on or prior to such date;

(c) the  satisfaction  of all conditions to any such making of Holder Advance or
Loan set forth in any Operative Agreement;

(d) no Default or Event of Default under any of the Operative  Agreements  shall
have occurred after giving effect to the making of Holder Advances and Loans;

(e) title to each Property shall conform to the  representations  and warranties
set forth in Section 7.2(l) and 7.3(l) hereof;

(f) the Lessor  shall have good and  marketable  title to each  Property  in fee
simple,  subject  only to the  Permitted  Exceptions.  The Lessor shall have the
right to grant the Mortgage Instruments on the Properties;

(g) the Lessee shall have delivered to the Agent and the Owner Trustee,  a title
insurance  policy in favor of the Agent and Owner  Trustee  with respect to each
Property,  such policy being in form and substance reasonably  acceptable to the
Owner  Trustee  and  the  Agent,  with  such  title  exceptions  thereto  as are
reasonably acceptable to the Owner Trustee and the Agent;

(h) the Lessee  shall have  delivered  to the Agent and the Owner  Trustee (A) a
"Phase I" environmental site assessment with respect to each Property,  prepared
by an independent recognized professional reasonably acceptable to the Agent and
the Owner Trustee and in a form and substance  that is reasonably  acceptable to
the Agent and the Owner Trustee,  and (B) the Agent shall have received  letters
from such  environmental  professional  stating,  among other  things,  that the
Agent,  the  Lenders,  the  Owner  Trustee  and  the  Holders  may  rely  on the
Environmental  Report with respect to each Property  which were prepared by such
firm as if they were originally addressed to them in all respects;

(i) the Lessee  shall have  delivered  to the Agent,  the Owner  Trustee and the
Title Company an as-built  survey of each Property  certified to the Agent,  the
Holders,  the Owner Trustee and the Title  Company,  prepared by an  independent
recognized  professional  meeting  the  then  current  minimum  standard  detail
requirements  for American Land Title  Association and the American  Congress of
Surveying and Mapping  (ALTA/ACSM) Land Title Surveys certified to the Agent and
otherwise reasonably acceptable to the Agent;

(j) the Lessee  shall  have  caused to be  delivered  to the Agent and the Owner
Trustee a legal opinion (in the form attached  hereto as Exhibit A) from counsel
located in the state where each Property is located;

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(k) the Owner  Trustee and the Agent shall be  satisfied,  in their  discretion,
that the execution of the Mortgage  Instruments and the other Security Documents
will not  adversely  affect  in any  material  respect  the  rights of the Owner
Trustee,  the  Holders,  the Agent or the Lenders  under or with  respect to the
other Operative Agreements in effect as of the Closing Date (it being understood
and  acknowledged  that the Agent and the Owner  Trustee  may  require  that the
Lessee deliver an acceptable legal opinion in connection with this condition);

(l) the  Lessee  shall  have  delivered  to the  Agent  and the  Owner  Trustee,
respecting  each  Property,  Invoices for the various  Transaction  Expenses and
other  fees,  expenses  and  disbursements  referenced  in  Section  9.1 of this
Agreement (to the extent paid from Loan  proceeds) and an Officer's  Certificate
in the form attached  hereto as Exhibit B specifying  the Property Cost for each
Property;

(m) the  Lessee  shall  have  delivered  to the  Agent  and the  Owner  Trustee,
respecting each Property,  certificates of insurance meeting the requirements of
Section 14.3 of the Lease;

(n) the Lessor  shall have  delivered  to the Agent a  Mortgage  Instrument  and
Lender  Financing  Statements with respect to each Property in a form reasonably
acceptable to the Agent and Lessee and all necessary recording fees, documentary
stamp  taxes or similar  amounts  will be paid in  connection  with the  related
Mortgage Instrument in an amount sufficient to cover such maximum total Property
Cost,  or (in  the  case of the  recording  tax  with  respect  to the  Mortgage
Instrument)  in an amount  required to be paid at the time of  recording of such
instrument  (provided  that the  Lessee  shall  promptly  pay or  reimburse  any
Indemnified Person for payment of, any additional  recording tax that may be due
at any time with respect to such instrument);

(o) the Lessee shall have delivered to the Lessor with respect to each Property,
a Memorandum of Lease (such  memorandum to be substantially in the form attached
to the Lease as Exhibit B and in form suitable for recording);

(p) the  Lessee  shall  have  delivered  to the  Lessor,  with  respect  to each
Property, Lessor Financing Statements executed by the Lessee and the Lessor;

(q) all necessary (or in the reasonable opinion of the Owner Trustee, the Agent,
or their  respective  counsel,  advisable)  Governmental  Actions,  in each case
required  by any law or  regulation  enacted,  imposed or adopted on or prior to
each such date or by any  change in facts or  circumstances  on or prior to each
such date, shall have been obtained or made and be in full force and effect;

(r) if any such  Property is subject to a Ground  Lease,  the Lessee  shall have
caused a lease  memorandum (in form and substance  satisfactory to the Agent) to
be delivered to the Agent for such Ground lease;

(s) the Lessee shall cause (i) Uniform  Commercial Code lien searches,  tax lien
searches and judgment lien searches  regarding each of the Lessee and the Lessor
to be conducted  (and copies  thereof to be delivered to the Agent and the Owner
Trustee) in the 

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state and county (or other Jurisdiction) in which each Property is located, by a
nationally  recognized  search  company  acceptable to the Owner Trustee and the
Agent,   and  (ii)  the  liens  referenced  in  such  lien  searches  which  are
objectionable  to the  Owner  Trustee  or the  Agent  to be  either  removed  or
otherwise handled in a manner  reasonably  satisfactory to the Owner Trustee and
the Agent;

(t) the Agent shall have received an Appraisal  for each  Property  showing that
each Property has an enterprise  value,  when taken together with the enterprise
value of all other  Properties,  equal to at least  fifty  percent  (50%) of the
Total Property Cost of all Properties and all Improvements constructed thereon;

(u) The Agent shall have received a certificate of the chief  financial  officer
of the Lessee (i) attaching copies of all consents,  authorizations  and filings
required to consummate the transactions contemplated by this Agreement, and (ii)
stating that such  consents,  licenses and filings are in full force and effect,
and each such consent,  authorization  and filing shall be in form and substance
reasonably satisfactory to the Agent; and

(v)  all  conditions  set  forth  in  Section  5.1 of the  Existing  HEALTHSOUTH
Corporation Credit Agreement shall have been satisfied.

         5.4 Inspection of Documents; Hold Harmless; Removal of Property.

             Any   document   or  item   (including   without   limitation   any
environmental  report)  delivered to the Agent shall be available for inspection
at any time during ordinary  business hours upon reasonable notice by any Lender
or Holder.  The Agent shall not incur any  liability to any Lender,  any Holder,
the Owner Trustee or any other Person (and each Lender,  each Holder,  the Owner
Trustee and the Lessee hereby holds the Agent harmless from any such  liability)
as a result of any such document or item, any information contained therein, the
failure to receive any such document,  or the Agent's  approval of any Property.
In the  event  the  Majority  Lenders  determine  that  any  environmental  site
assessment  reveals an  Environmental  Violation and they or the Agent so notify
the Lessee, then the Lessee shall remedy or purchase such Property in accordance
with Sections 15.2. 16.1 and 16.2 of the Lease.

         SECTION 6. CONDITIONS OF THE CLOSING.

         6.1 Conditions to the Lessor's and the Holders' Obligations.

             The  obligations  of the Lessor and the Holders to  consummate  the
transactions  contemplated by this Agreement on the Closing Date,  including the
obligation to execute and deliver the applicable  Operative  Agreements to which
each is a party  on the  Closing  Date,  are  subject  to (i) the  accuracy  and
correctness  on the Closing Date of the  representations  and  warranties of the
other parties hereto contained herein,  (ii) the accuracy and correctness on the
Closing Date of the  representations  and warranties of the other parties hereto
contained in any other  Operative  Agreement or certificate  delivered  pursuant
hereto or thereto,  (iii) the  performance  by the other parties hereto of their
respective agreements contained herein and in the other Operative Agreements and
to be  performed  by  them  on or  prior  to  the  Closing  Date  and 

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(iv) the  satisfaction,  or waiver by the Lessor and the Holders,  of all of the
following conditions on or prior to the Closing Date:

         (a) Each of the Operative  Agreements  shall have been duly authorized,
         executed and delivered by the parties  thereto,  other than the Lessor,
         and  shall be in full  force and  effect,  and no  Default  or Event of
         Default shall exist  thereunder (both before and after giving effect to
         the  transactions  contemplated by the Operative  Agreements),  and the
         Lessor  shall  have  received  a  fully  executed  copy  of each of the
         Operative  Agreements  (other  than the  Notes  of which it shall  have
         received  specimens).  The Operative Agreements (or memoranda thereof),
         any  supplements  thereto  and any  financing  statements  and  fixture
         filings in connection  therewith  required under the Uniform Commercial
         Code shall have been filed or shall be promptly filed, if necessary, in
         such  manner as to enable the  Lessee's  counsel to render its  opinion
         referred to in Section 6.1(g) hereof;

         (b) All taxes, fees and other charges in connection with the execution,
         delivery,   recording,   filing  and   registration  of  the  Operative
         Agreements  shall have been paid or provision  for such  payment  shall
         have been made to the  reasonable  satisfaction  of the  Lessor and the
         Agent;

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

         (d) In the  reasonable  opinion of the Lessor and the Holders and their
         counsel,  the transactions  contemplated by the Operative Agreements do
         not and will not violate any material Legal Requirements and do not and
         will not subject the Lessor or the  Holders to any  materially  adverse
         regulatory prohibitions or constraints,  in each case enacted, imposed,
         adopted or proposed since the date hereof;

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

         (f) The Lessor and the Agent shall each have received (i) a certificate
         of the  Secretary or an  Assistant  Secretary of the Lessee in the form
         attached  hereto as Exhibit D or in such  other  form as is  reasonably
         acceptable  to such  parties  attaching  and  certifying 

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         as to (A) the  resolutions  of the Board of  Directors  of Lessee  duly
         authorizing  the execution,  delivery and performance by Lessee of each
         of the  Operative  Agreements  to which it is or will be a party  and a
         statement that the resolutions have not been amended, modified, revoked
         or rescinded, (B) its certificate of incorporation and by-laws, in each
         case  certified  as of a recent date by the  Secretary  of State of the
         State of its incorporation,  as correct and complete copies and (C) the
         incumbency  and signature of persons  authorized to execute and deliver
         on its behalf the Operative  Agreements to which it is a party and (ii)
         a good standing  certificate from the appropriate officer of each state
         in which any Property is located as to its good standing in such state;

         (g) Haskell Slaughter & Young,  L.L.C.,  counsel for the Lessee,  shall
         have  issued to the Lessor,  the Agent,  the Lenders and the Holders an
         opinion in the form attached hereto as Exhibit A;

         (h) As of the Closing  Date,  there shall not have  occurred any event,
         condition,  situation or status since December 31, 1999 that has had or
         could  reasonably be expected to result in a Material  Adverse  Effect;
         and

         (i) The Agent and the Joint Lead Arrangers shall have received the fees
         to be paid on the Closing Date pursuant to the Fee Letter, or any other
         Lender or Holder  entitled  to fees to be paid on the  Closing  Date by
         Lessee  have  received  fees;  which  fees  shall not be paid using the
         proceeds, if any, of the Loans or Holder Advances.

         6.2 Conditions to the Lessee's Obligations.

             The  obligation  of  the  Lessee  to  consummate  the  transactions
contemplated by this Agreement on the Closing Date,  including the obligation to
execute  and  deliver  the  Operative  Agreements  to which it is a party on the
Closing Date, is subject to (i) the accuracy and correctness on the Closing Date
of the  representations  and  warranties of the other parties  hereto  contained
herein,   (ii)  the  accuracy  and  correctness  on  the  Closing  Date  of  the
representations  and  warranties  of the other parties  hereto  contained in any
other Operative  Agreement or certificate  delivered pursuant hereto or thereto,
(iii) the performance by the other parties hereto of their respective agreements
contained  herein  and in the  other  Operative  Agreements,  in each case to be
performed by them on or prior to the Closing Date, and (iv) the  satisfaction or
waiver  by the  Lessee  of all of the  following  conditions  on or prior to the
Closing Date:

         (a) Each of the Operative  Agreements to be entered into on the Closing
         Date shall have been duly  authorized,  executed  and  delivered by the
         parties thereto,  other than the Lessee, and shall be in full force and
         effect, and no Default,  other than Defaults of the Lessee, shall exist
         thereunder, and the Lessee shall have received a fully executed copy of
         each of the  Operative  Agreements  (other than Notes of which it shall
         have received a specimen);

         (b) In the  reasonable  opinion  of the  Lessee  and its  counsel,  the
         transactions  contemplated  by the Operative  Agreements do not violate
         any  material  Legal  Requirements  and will not subject  Lessee to any
         materially adverse regulatory prohibitions or constraints;

                                       7



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

         (d) The Lessee  and the Agent  shall each have  received  an  Officer's
         Certificate  of the Lessor  dated as of such  Closing  Date in the form
         attached  hereto as Exhibit E or in such  other  form as is  reasonably
         acceptable  to Lessee  and the Agent,  stating  that (i) each and every
         representation  and warranty of the Lessor  contained in the  Operative
         Agreements  to which it is a party is true and correct on and as of the
         Closing Date;  (ii) each  Operative  Agreement to which the Lessor is a
         party is in full  force and  effect  with  respect to it, and (iii) the
         Lessor has duly performed and complied with all  covenants,  agreements
         and conditions  contained herein or in any Operative Agreement required
         to be performed or complied with by it on or prior to the Closing Date;

         (e) The Lessee and the Agent shall each have received (i) a certificate
         of the  Secretary,  an  Assistant  Secretary,  Trust  Officer  or  Vice
         President of the Trust Company in the form attached hereto as Exhibit F
         or in such other  form as is  reasonably  acceptable  to Lessee and the
         Agent, attaching and certifying as to (A) the signing resolutions,  (B)
         its articles of incorporation or other equivalent charter documents, as
         the  case  may be,  certified  as of a  recent  date by an  appropriate
         officer of the Trust Company, (C) its bylaws and (D) the incumbency and
         signature  of persons  authorized  to execute and deliver on its behalf
         the  Operative  Agreements  to  which  it is a  party  and  (ii) a good
         standing  certificate  from the  state of  incorporation  of the  Trust
         Company; and

         (f) Ray, Quinney & Nebeker,  counsel for the Lessor,  shall have issued
         to the Lessee, the Holders, the Lenders and the Agent an opinion in the
         form attached hereto as Exhibit G.

         6.3 Conditions to the Agent's and Lenders' Obligations.

             The  obligation  of each of the Agent and the Lenders to consummate
the transactions  contemplated by this Agreement on the Closing Date,  including
the obligation to execute and deliver each of the Operative  Agreements to which
it is a  party  on the  Closing  Date,  is  subject  to  (i)  the  accuracy  and
correctness  on the Closing Date of the  representations  and  warranties of the
other parties hereto contained herein,  (ii) the accuracy and correctness on the
Closing Date of the  representations  and warranties of the other parties hereto
contained in any other  Operative  Agreement or certificate  delivered  pursuant
hereto or thereto,  (iii) the  performance  by the other parties hereto of their
respective agreements contained herein and in the other Operative Agreements, in
each case to be performed by them on or prior to the Closing Date,  and (iv) the
satisfaction,  or waiver by the Agent, of all of the following  conditions on or
prior to the Closing Date:

         (a) Each of the Operative  Agreements to be entered into on the Closing
         Date shall have been duly  authorized,  executed  and  delivered by the
         parties  thereto,  other than the

                                       8


         Agent,  and shall be in full force and effect,  and no Default or Event
         of Default shall exist  thereunder (both before and after giving effect
         to the transactions contemplated by the Operative Agreements),  and the
         Agent  shall  have  received  a  fully  executed  copy  of  each of the
         Operative  Agreements  (including the Notes). The Operative  Agreements
         (or  memoranda  thereof),  any  supplements  thereto and any  financing
         statements and fixture filings in connection  therewith  required under
         the Uniform  Commercial Code shall have been filed or shall be promptly
         filed, if necessary,  in such manner as to enable the Lessor's  counsel
         to render its opinion referred to in Section 6.2(f) hereof;

         (b) The satisfaction of each of the conditions set forth in Sections 6.
         1(b), (c), (e), (f), (g), (h) and (i) and Sections 6.2(d),  (e) and (f)
         hereof, and

         (c) In the  reasonable  opinion  of the  Agent  and  its  counsel,  the
         transactions  contemplated by the Operative  Agreements do not and will
         not violate any  material  Legal  Requirements  and do not and will not
         subject the Agent or the Lenders to any materially  adverse  regulatory
         prohibitions or constraints.

         SECTION 7. REPRESENTATIONS AND WARRANTIES ON THE CLOSING DATE.

         7.1 Representations and Warranties of the Holders.

             Effective as of the Closing  Date,  each of the Holders  represents
and warrants to each of the other parties hereto that:

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

         (b) The execution, delivery and performance of each Operative Agreement
         to which it is or will be a party  have  been  duly  authorized  by all
         necessary corporate, limited liability company or partnership action on
         its part and  neither  the  execution  and  delivery  thereof,  nor the
         consummation of the transactions  contemplated  thereby, nor compliance
         by it with any of the terms and provisions thereof (i) requires or will
         require any approval of the  stockholders of, or approval or consent of
         any  trustee or holder of any  indebtedness  or  obligations  of,  such
         Holder which has not been  obtained or is not in full force and effect,
         (ii)  violates or will violate any Legal  Requirement  applicable to or
         binding on it (except no  representation  or warranty is made as to any
         Legal  Requirement to which it may be subject solely as a result of the
         activities of the Lessee) as of the date hereof, (iii) violates or will
         violate or result in any breach of or constitute any default under,  or
         result  in the  creation  of any Lien upon any  Property  or any of the
         Improvements  (other than Liens  created by the  Operative  Agreements)
         under its  certificate of  incorporation  or other  equivalent  charter
         documents, or any indenture, mortgage, chattel mortgage, deed of trust,
         conditional  sales  contract,  bank loan or credit  agreement  or other
         agreement  or 

                                       9


         instrument  to which it is a party or by which it or its  properties is
         bound or affected or (iv)  requires  or will  require any  Governmental
         Action by any  Governmental  Authority  (other than  arising  solely by
         reason of the  business,  condition or  activities of the Lessee or any
         Affiliate  thereof or the  construction or use of the Properties or the
         Improvements);

         (c) This Agreement and each other Operative Agreement to which it is or
         will be a party has been, or will be, duly executed and delivered by it
         and  constitutes,  or upon  execution and delivery will  constitute,  a
         legal,  valid  and  binding  obligation   enforceable   against  it  in
         accordance  with  the  terms  thereof,  subject  to the  effect  of any
         applicable bankruptcy, moratorium, insolvency,  reorganization or other
         similar  laws  affecting  the   enforceability   of  creditors'  rights
         generally and to the effect of general  principles  of equity  (whether
         considered in a proceeding at law or in equity);

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

         (e) It has not  assigned  or  transferred  any of its  right,  title or
         interest in or under the Lease except in accordance  with the Operative
         Agreements;

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

         (g) Except as otherwise  contemplated by the Operative  Agreements,  it
         has not,  it shall not,  and it did not,  nor shall it direct the Owner
         Trustee  to, use the  proceeds  of any Loan or Holder  Advance  for any
         purpose  other than the payment of  Transaction  Expenses and the fees,
         expenses  and other  disbursements  referenced  in  Section  9.1of this
         Agreement; and

         (h) It is  acquiring  its  interest  in the  Trust  Estate  for its own
         account for investment and not with a view to any distribution (as such
         term is used in Section 2(11) of the  Securities  Act) thereof,  and no
         part of such amount constitutes the assets of any Employee Benefit Plan
         and if in the future it should decide to dispose of its interest in the
         Trust Estate,  it understands that it may do so only in compliance with
         the Securities Act and the rules and  regulations of the Securities and
         Exchange  Commission  thereunder  and any applicable  state  securities
         laws.  Neither it nor anyone  authorized to act on its behalf has taken
         or will take any action which would subject, as a direct result of such
         action alone, the issuance or sale of any interest in any Property, the
         Trust Estate or the Lease to the registration requirements of Section 5
         of the Securities Act. No representation or warranty  contained in this
         Section  7.1(g)  shall  include or cover any action or  inaction of the
         Lessee or any Affiliate thereof whether or not purportedly on behalf of
         the Holders, the Owner Trustee or any of their Affiliates.

                                       10


         7.2 Representations and Warranties of the Owner Trustee.

             Effective  as of  the  Closing  Date,  the  Trust  Company  in  its
individual  capacity and as the Owner  Trustee,  as  indicated,  represents  and
warrants  to each of the other  parties  hereto as follows,  provided,  that the
representations in paragraphs (h), (i), (j) and (k) below are made solely in its
capacity as the Owner Trustee:

         (a)  It is a  national  banking  association  duly  organized,  validly
         existing and in good  standing  under the laws of the United  States of
         America and has the power and  authority  to enter into and perform its
         obligations under the Trust Agreement and (assuming due  authorization,
         execution  and delivery of the Trust  Agreement by the Holders) has the
         corporate and trust power and authority to act as the Owner Trustee and
         to enter  into and  perform  the  obligations  under  each of the other
         Operative  Agreements to which Trust Company or the Owner  Trustee,  as
         the  case  may be,  is or will be a party  and  each  other  agreement,
         instrument and document to be executed and delivered by it on or before
         each Closing Date in connection  with or as  contemplated  by each such
         Operative Agreement to which Trust Company or the Owner Trustee, as the
         case may be, is or will be a party;

         (b) The execution, delivery and performance of each Operative Agreement
         to which it is or will be a party, either in its individual capacity or
         (assuming  due  authorization,  execution  and  delivery  of the  Trust
         Agreement by the Holders) as the Owner Trustee, as the case may be, has
         been duly  authorized by all  necessary  action on its part and neither
         the  execution  and  delivery  thereof,  nor  the  consummation  of the
         transactions contemplated thereby, nor compliance by it with any of the
         terms and provisions  thereof (i) requires or will require any approval
         of its  stockholders,  or any  approval  or consent  of any  trustee or
         holders of any of its  indebtedness  or  obligations,  (ii) violates or
         will violate any current law,  governmental rule or regulation relating
         to its  banking or trust  powers,  (iii)  violates  or will  violate or
         result in any breach of or constitute any default  under,  or result in
         the  creation  of any Lien  upon  any of its  property  under,  (A) its
         charter or by-laws, or (B) any indenture,  mortgage,  chattel mortgage,
         deed  of  trust,  conditional  sales  contract,  bank  loan  or  credit
         agreement or other agreement or instrument to which it is a party or by
         which it or its properties may be bound or affected,  which  violation,
         breach, default or Lien under clause (B) would materially and adversely
         affect its ability,  in its individual capacity or as Owner Trustee, to
         perform its obligations under the Operative Agreements to which it is a
         party or (iv) requires or will require any  Governmental  Action by any
         Governmental Authority regulating its banking or trust powers;

         (c) The Trust Agreement and, assuming the Trust Agreement is the legal,
         valid and  binding  obligation  of the  Holders,  each other  Operative
         Agreement to which the Trust Company or the Owner Trustee,  as the case
         may be, is or will be a party have been,  or will be, duly executed and
         delivered by Trust  Company or the Owner  Trustee,  as the case may be,
         and the Trust  Agreement  and each such other  Operative  Agreement  to
         which  Trust  Company  or the Owner  Trustee,  as the case may be, is a
         party  constitutes,  or upon execution and delivery will constitute,  a
         legal, valid and binding obligation  enforceable  against Trust Company
         or the Owner Trustee,  as the case may be, in accordance with the terms
         thereof;

                                       11


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

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

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

         (g) Except as otherwise  contemplated in the Operative Agreements,  the
         Owner  Trustee  shall not use the  proceeds  of the  Loans  and  Holder
         Advances  for any  purpose  other than  solely in  accordance  with the
         provisions of the Operative Agreements;

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

         (i) The Owner Trustee's chief place of business, chief executive office
         and office where the  documents,  accounts and records  relating to the
         transactions  contemplated  by this Agreement and each other  Operative
         Agreement are kept are located at 79 South Main Street, Salt Lake City,
         Utah 84111;

         (j) The Owner Trustee is not engaged  principally in, and does not have
         as one of its important  activities,  the business of extending  credit
         for the purpose of  purchasing or carrying any margin stock (within the
         meaning  of  Regulation  U of the  Board of  Governors  of the  Federal
         Reserve  System of the United  States),  and no part of the proceeds of
         the Loans or the  Holder  Advances  will be used by it to  purchase  or
         carry any margin stock or to extend credit to others for the purpose of
         purchasing  or carrying  any such margin  stock or for any purpose that
         violates,  or is inconsistent with, the provisions of Regulations T, U,
         or X of the Federal Reserve Board;

                                       12


         (k) The Owner  Trustee  is not a  "holding  company"  or a  "subsidiary
         company"  of a  "holding  company"  or  an  "affiliate"  of a  "holding
         company" or a "public utility" within the meaning of the Public Utility
         Holding Company Act of 1935, as amended,  or a "public  utility" within
         the meaning of the Federal Power Act, as amended.  The Owner Trustee is
         not an "investment company" or a company "controlled" by an "investment
         company"  within  the  meaning  of  the  Investment  Company  Act or an
         "investment  adviser" within the meaning of the Investment Advisers Act
         of 1940, as amended; and

         (l) The Properties are free and clear of all Lessor Liens.

         7.3 Representations and Warranties of the Lessee.

                  Effective as of the Closing Date,  the Lessee  represents  and
warrants to each of the other parties hereto that:

         (a) It and each of its Subsidiaries is duly organized, validly existing
         and  in  good  standing  under  the  laws  of the  jurisdiction  of its
         organization  and is  duly  qualified  to do  business  in  each  other
         jurisdiction  where the nature of its business makes such qualification
         necessary,  except  where such  failure to so qualify  would not have a
         Material  Adverse Effect.  The Lessee and each of its  Subsidiaries has
         the power and  authority to carry on its business as now  conducted and
         to  enter  into  and  perform  its  obligations  under  each  Operative
         Agreement  to which it is or will be a party and each other  agreement,
         instrument and document to be executed and delivered by it on or before
         the Closing Date in  connection  with or as  contemplated  by each such
         Operative Agreement to which it is or will be a party;

         (b) The execution,  delivery and  performance by the Lessee and each of
         its relevant  Subsidiaries  of this  Agreement and the other  Operative
         Agreements  to  which  each is or will be a party  (i) have  been  duly
         authorized by all necessary  corporate action on the part of the Lessee
         and each such Subsidiary  (including any necessary shareholder action),
         (ii) have received all necessary  governmental  approval,  and (iii) do
         not and will not (A) violate any Legal Requirement, decree, judgment or
         award or order of any Governmental  Authority,  (B) violate or conflict
         with,  or result in a breach of, any  provision of the  Certificate  of
         Incorporation,  By-Laws or other organizational documents of the Lessee
         or  any of  its  Subsidiaries,  or  any  indenture,  mortgage,  chattel
         mortgage, deed of trust,  conditional sales contract, bank loan, credit
         agreement  or other  agreement,  instrument  or  document  to which the
         Lessee or any of its Subsidiaries is a party or which is binding on the
         Lessee  or  any  of  its   Subsidiaries  or  any  of  their  respective
         properties, or (C) result in, or require, the creation or imposition of
         any  Lien  (other  than  pursuant  to  the.   terms  of  the  Operative
         Agreements) on any asset of the Lessee or any of its Subsidiaries;

         (c) Each of this Agreement and each other Operative  Agreement to which
         the Lessee or any of its  Subsidiaries  is or will be a party has been,
         or will be, duly executed and delivered by it and constitutes,  or upon
         execution and delivery will  constitute,  the legal,  valid and binding
         obligation  of the  Lessee  or such  Subsidiary,  as the  case  may be,
         enforceable against it in accordance with the terms thereof. The Lessee
         and each of its

                                       13


         relevant   Subsidiaries   have  each  executed  the  various  Operative
         Agreements required to be executed as of the Closing Date;

         (d) Except as disclosed in the Lessee's  annual report on Form 10-K for
         the year  ended  December  31,  1999,  there are no  actions,  suits or
         proceedings  (including,  without  limitation,  any derivative  action)
         pending or, to the knowledge of the Lessee,  threatened with respect to
         the Lessee or any of its Subsidiaries which, if adversely decided,  are
         reasonably likely to result, either individually or collectively,  in a
         Material Adverse Effect.  None of the Lessee or any of its Subsidiaries
         has any material  contingent  liabilities not provided for or disclosed
         in the financial  statements  referred to in Section 7.3(f),  which are
         required  in  accordance  with GAAP to be  reported  in such  financial
         statements;

         (e)  No   Governmental   Action  by  any   Governmental   Authority  or
         authorization, registration, consent, approval, waiver, notice or other
         action by, to or of any other  Person is  required to  authorize  or is
         required in connection with (i) the leasing of the Properties, (ii) the
         execution, delivery or performance of any Operative Agreement, or (iii)
         the  legality,  validity,  binding  effect  or  enforceability  of  any
         Operative Agreement, in each case except those which have been obtained
         and are in full force and effect;

         (f)  (i)  The  audited   consolidated   financial   statements  of  the
         Consolidated  Entities as of December  31,  1999,  copies of which have
         been  furnished to the Agent and the Owner  Trustee,  were  prepared in
         accordance  with GAAP applied on a consistent  basis and fairly present
         the  financial  condition  of the  Lessee  and the  other  Consolidated
         Entities on a consolidated basis as of such date and their consolidated
         results  of  operations  for the  fiscal  year then  ended and (ii) the
         unaudited consolidated financial statements as at June 30, 2000, copies
         of which have been furnished to the Agent and the Owner  Trustee,  were
         prepared in accordance with GAAP applied on a consistent basis (subject
         to normal  year-end  adjustments)  and fairly  present in all  material
         respects the  financial  condition  of the Lessee and its  Consolidated
         Entities on a consolidated  basis as of such date and its  consolidated
         results  of  operations  for the  fiscal  period  then  ended  and such
         two-quarter period, respectively;

         (g) Since the date of the audited  financial  statements  described  in
         Section  7.3(f) there has been no event or occurrence  which has had or
         is reasonably likely to have a Material Adverse Effect;

         (h) The Lessee knows of no proposed material tax assessments against it
         or any of its  Subsidiaries.  No  extension of time for  assessment  or
         payment of any  material  federal,  state or local tax by the Lessee or
         any of its Subsidiaries is in effect;

         (i) Each of the Lessee and its ERISA Affiliates is in compliance in all
         material  respects  with the  applicable  provisions  of ERISA  and the
         regulations and published interpretations thereunder. The execution and
         delivery of the Operative  Agreements  will not involve any  prohibited
         transaction  within  the  meaning  of ERISA,  the Lessee and each ERISA
         Affiliate  has  fulfilled  its  obligations  under the minimum  funding
         standards  imposed by ERISA and each is in  compliance  in all material
         respects with the  applicable 

                                       14


         provisions of ERISA,  and no "Reportable  Event," as defined in Section
         4043(b) of Title IV of ERISA,  has  occurred  with  respect to any plan
         maintained by the Lessee or any of its ERISA Affiliates.  No Reportable
         Event has  occurred as to which the Lessee or any ERISA  Affiliate  was
         required to file a report with the PBGC,  and the present  value of all
         benefit liabilities under each Plan (based on those assumptions used to
         fund  such  Plan)  did  not,  as of  the  last  annual  valuation  date
         applicable  thereto,  exceed by more than  $1,000,000  the value of the
         assets of such Plan.  Neither  the Lessee nor any ERISA  Affiliate  has
         incurred any Withdrawal  Liability  which remains unpaid and that could
         result in a Material  Adverse Effect.  Neither the Lessee nor any ERISA
         Affiliate has received any notification that any Multiemployer  Plan is
         in reorganization or has been terminated within the meaning of Title IV
         of ERISA, and to the best knowledge of the Lessee no Multiemployer Plan
         is   reasonably   expected   to   be   in   reorganization   or  to  be
         terminated,where  such  reorganization  or termination  has resulted or
         could  reasonably  be  expected  to result,  through  increases  in the
         contributions  required  to be  made to such  Plan or  otherwise,  in a
         Material Adverse Effect;

         (j) Upon the execution  and delivery of the Lease,  (i) the Lessee will
         have unconditionally  accepted the Properties and will have a valid and
         subsisting  leasehold  interest in the Properties,  subject only to the
         Permitted Exceptions, and (ii) no offset will exist with respect to any
         Rent or other sums payable under the Lease;  

         (k)  Neither  the  Lessee  nor  any of its  Subsidiaries  has  filed  a
         voluntary  petition in  bankruptcy  or been  adjudicated  a bankrupt or
         insolvent,  or filed any petition or answer seeking any reorganization,
         liquidation,  receivership,  dissolution  or similar  relief  under any
         bankruptcy,  receivership,  insolvency, or other law relating to relief
         for debtors, or sought or consented to or acquiesced in the appointment
         of any trustee, receiver,  conservator or liquidator of all or any part
         of its  properties  or  its  interest  in any  Property.  No  court  of
         competent  jurisdiction  has  entered  an  order,  judgment,  or decree
         approving  a  petition   filed   against  the  Lessee  or  any  of  its
         Subsidiaries  seeking  any  reorganization,  arrangement,  composition,
         readjustment,  liquidation,  dissolution  or similar  relief  under any
         federal  or state  bankruptcy,  receivership,  insolvency  or other law
         relating  to  relief  for  debtors,  and no other  liquidator  has been
         appointed for the Lessee or any of its  Subsidiaries or all or any part
         of its  properties or its interest in any Property,  and no such action
         is pending.  Neither the Lessee nor any of its  Subsidiaries  has given
         notice to any  Governmental  Authority or any Person of  insolvency  or
         pending insolvency, or suspension or pending suspension of operations;

         (l)  The  Lessee  has a  subsisting  leasehold  interest  in all of the
         Properties free and clear of all Liens,  except  Permitted  Liens.  The
         Lessee has complied with all  obligations  under all leases relating to
         the  Properties  to which it is a party and all such leases are in full
         force  and  effect.  Each of the  Lessee  and its  Subsidiaries  enjoys
         peaceful and undisturbed possession under all such leases;

         (m)  Neither  the  Lessee  nor  any  of  its  Subsidiaries  is  (a)  an
         "investment  company"  or a  company  "controlled"  by  an  "investment
         company",  within  the  meaning  of the  Investment  Company  Act or an
         "investment  adviser" within the meaning of the Investment Advisers Act
         of 1940,  as  amended,  or (b) a "holding  company",  or a

                                       15



         "subsidiary  company" of a "holding  company",  or an  "affiliate" of a
         "holding company" or of a "subsidiary  company" of a "holding company",
         or a "public utility", within the meaning of the Public Utility Holding
         Company  Act of 1935,  as  amended,  or a "public  utility"  within the
         meaning of the Federal Power Act, as amended;

         (n)  Neither  the  Lessee  nor  any  of  its  Subsidiaries  is  engaged
         principally in, or has as one of its important activities, the business
         of  extending  credit for the purpose of  purchasing  or  carrying  any
         margin stock (within the meaning of Regulation U of the Federal Reserve
         Board), and no part of the proceeds of the Loans or the Holder Advances
         will  be  used  for  the  purpose,  whether  immediate,  incidental  or
         ultimate,  of purchasing or carrying any margin stock or maintaining or
         extending  credit to others for such  purpose,  or for any purpose that
         violates, or is inconsistent with Regulations T, U, or X of the Federal
         Reserve Board;

         (o) The Lessee and each of its  Subsidiaries has filed all material tax
         returns  and  reports  required by Law to have been filed by it and has
         paid all  Taxes and  governmental  charges  thereby  shown to be owing,
         except any such Taxes or charges which are being  diligently  contested
         in  good  faith  by  appropriate  proceedings  and for  which  adequate
         reserves  shall in  accordance  with  GAAP  have  been set aside on its
         books;

         (p) To the  best  of the  knowledge  of the  Lessee,  after  reasonable
         inquiry,  the Lessee and each Subsidiary is in material compliance with
         all  Environmental  Laws and Occupational  Safety and Health Laws where
         failure to comply  could have a Material  Adverse  Effect.  Neither the
         Lessee nor any of its  Subsidiaries  has received  notice of any claims
         that any of them is not in compliance in all material respects with any
         Environmental Law where failure to comply could have a Material Adverse
         Effect;

         (q) The Lessee and each of its  Subsidiaries  is in compliance with all
         statutes,  judicial and administrative orders, permits and governmental
         rules and  regulations  which are material to its  business  except for
         such non-compliance as would not have a Material Adverse Effect;

         (r) No financial  statement,  document,  certificate  or other  written
         communication  furnished to the Agent, the Owner Trustee, any Lender or
         any Holder by or on behalf of the Lessee or any Consolidated Entity, or
         to the extent not a Consolidated  Entity any Subsidiary,  in connection
         with  any  Operative  Agreement  contains  any  untrue  statement  of a
         material fact or omits to state a material  fact  necessary to make the
         statements contained herein or therein not misleading. There is no fact
         known to the Lessee that materially  adversely  affects the business or
         condition  of the  Lessee  or any  Material  Group  that  has not  been
         disclosed herein or in such financial statements;

         (s) Each of the Arizona  Ground Lease  Documents has been duly executed
         and delivered by each of the parties  thereto and constitute the legal,
         valid and binding  obligation  enforceable  against  each such party in
         accordance with the terms thereof;

         (t) The  Properties  consist  of (i)  Land  and  existing  Improvements
         thereon  which   Improvements  are  suitable  for  occupancy  and  (ii)
         Equipment;

                                       16


         (u) Each of the Deeds,  the  Memoranda of Lease and the  Mortgages  has
         been recorded  with,  or delivered  for  recording to, the  appropriate
         Governmental Authorities;

         (v) Upon recording, each of the Mortgage Instruments and the Memorandum
         of Lease  will  constitute  a valid  and  perfected  first  lien on the
         Property  described  thereto  in an  amount  not less  than the  Loans,
         subject only to the Permitted Exceptions;

         (w) Upon filing of each of the UCC Financing  Statements  (with respect
         to each Property) in the filing offices designated by the Lessee,  such
         UCC  Financing  Statements  will have been filed  with the  appropriate
         Governmental Authorities in order to perfect a security interest in the
         Property described therein (to the extent perfection can be obtained by
         filing under the UCC);

         (x) Upon filing in the filing  offices  designated  by the Lessee,  the
         Lender Financing  Statements,  together with an assignment to the Agent
         of the filed Lessor  Financing  Statements,  will perfect a valid first
         priority  security  interest (in favor of the Agent, for the benefit of
         itself,  the  Lenders  and the  Holders)  in the  Properties  and other
         collateral  described  therein in which a security interest or mortgage
         can be perfected  by filing under the UCC, and upon filing,  the Lessor
         Financing  Statements will protect Lessor's interest under the Lease to
         the extent the Lease is a security agreement and mortgage;

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

         (z) None of the Properties consists of Tangible Personal Property;

         (aa) The Lessee has obtained insurance coverage for each Property which
         meets  the  requirements  of  Article  XIV of the Lease and all of such
         coverage is in full force and effect;

         (bb) The  Properties  comply  with all Legal  Requirements  (including,
         without  limitation,  all  zoning  and land use laws and  Environmental
         Laws), except to the extent that failure to comply therewith would not,
         individually or in the aggregate, have a Material Adverse Effect;

         (cc) All consents, licenses, permits,  authorizations,  assignments and
         building  permits  required,  as  of  the  Closing  Date,  by  a  Legal
         Requirement  or  pursuant  to the  terms  of any  contract,  indenture,
         instrument  or  agreement  for  construction,   completion,  occupancy,
         operation,  leasing or subleasing of the Properties  have been obtained
         and are in full force and effect, except to the extent that the failure
         to so  obtain  would  not,  individually  or in the  aggregate,  have a
         Material Adverse Effect;

         (dd) All Improvements comply with all applicable Legal Requirements and
         Insurance Requirements (including,  without limitation,  all zoning and
         land use laws and 

                                       17


         Environmental  Laws),  except  to the  extent  the  failure  to  comply
         therewith would not, individually or in the aggregate,  have a Material
         Adverse  Effect.  Such  Improvements do not encroach in any manner onto
         any adjoining land (except as permitted by express  written  easements)
         and such Improvements and the use thereof by the Lessee and its agents,
         assignees,  employees,  invitees, lessees, licensees and tenants comply
         in all respects  with all  applicable  Legal  Requirements  (including,
         without  limitation,  all applicable  Environmental  Laws and building,
         planning,  zoning and fire codes),  except to the extent the failure to
         comply  therewith would not,  individually or in the aggregate,  have a
         Material  Adverse  Effect.  There  are  no  material  defects  to  such
         Improvements including,  without limitation, the plumbing, heating, air
         conditioning  and  electrical  systems  thereof  and all water,  sewer,
         electric,   gas,  telephone  and  drainage  facilities  and  all  other
         utilities  required to adequately  service such  Improvements for their
         intended use are available  pursuant to adequate permits (including any
         that may be required under applicable  Environmental  Laws),  except to
         the  extent  that   failure  to  obtain  any  such  permit  would  not,
         individually or in the aggregate, have a Material Adverse Effect. There
         is  no  action,  suit  or  proceeding   (including  any  proceeding  in
         condemnation or eminent domain or under any Environmental  Law) pending
         or, to the best  knowledge of the Lessee,  threatened  which  adversely
         affects  the  title  to,  or  the  use,  operation  or  value  of,  the
         Properties.  No fire or other  casualty with respect to the  Properties
         has occurred  which has had a Material  Adverse  Effect.  All utilities
         serving  the  Properties  are located in and  vehicular  access to such
         Improvements  is provided by (or will be provided  by),  either  public
         rights-of-way abutting each related Property or Appurtenant Rights. All
         licenses,  approvals,  authorizations,  consents,  permits  (including,
         without  limitation,  building,  demolition and environmental  permits,
         licenses,  approvals,   authorizations  and  consents),  easements  and
         rights-of-way, including proof of dedication, required for (i) the use,
         treatment, storage, transport, disposal or disposition of any Hazardous
         Substance  on,  at,  under or from the real  property  underlying  such
         Improvements  during the use and  operation of such  Improvements,  and
         (ii) the use and  operation of such  Improvements  with the  applicable
         Equipment  which such  Improvements  support for the purposes for which
         they were intended have been obtained from the appropriate Governmental
         Authorities or from private parties, as the case may be;

         (ee)  Construction  of  Improvements  has been  performed in a good and
         workmanlike  manner in compliance with all Insurance  Requirements  and
         Legal Requirements,  except to the extent  noncompliance with any Legal
         Requirements  would  not,  individually  or in  the  aggregate,  have a
         Material Adverse Effect;

         (ff) The Improvements are wholly within any building  restriction lines
         (unless  consented to by applicable  Government  Authorities),  however
         established;

         (gg) The Advance is secured by the Lien of the Security Documents,  and
         the  Lessee  has not  received  any  notice  of, or taken any action to
         incur,  any  Lien  against  the  applicable   Improvements  other  than
         Permitted Liens;

         (hh) All  conditions  precedent  contained in this Agreement and in the
         other  Operative  Agreements  relating  to the  Closing  Date have been
         substantially satisfied; and

                                       18



         (ii) All utility  services and facilities  necessary for the use of the
         Improvements (including gas, electrical,  water and sewage services and
         facilities) are available to the Properties.

         7.4 Representations and Warranties of the Agent.

             Effective as of the Closing Date, the Agent represents and warrants
to each of the other parties hereto that:

         (a) It has the full power and authority to enter into and perform its
         obligations under this Agreement and each other Operative  Agreement to
         which it is or will be a party;

         (b) The  execution,  delivery  and  performance  by the  Agent  of this
         Agreement and each other Operative  Agreement to which it is or will be
         a party  are  not,  and  will not be,  inconsistent  with  the  charter
         documents of the Agent,  do not and will not  contravene any applicable
         Law of the State of  Connecticut  or of the  United  States of  America
         governing its  activities  and will not contravene any provision of, or
         constitute a default under any indenture,  mortgage,  contract or other
         instrument to which it is a party or by which it or its  properties are
         bound, or require any consent or approval of any Governmental Authority
         under  any  applicable   law,  rule  or  regulation  of  the  State  of
         Connecticut or any federal law, rule or regulation of the United States
         of America governing its activities;

         (c) Each of this Agreement and each other Operative  Agreement to which
         it is a party has been, or when  executed and  delivered  will be, duly
         authorized by all necessary  corporate  action on the part of the Agent
         and has been,  or on such  Closing  Date  will be,  duly  executed  and
         delivered by the Agent and, assuming the due  authorization,  execution
         and  delivery  hereof  and  thereof  by the other  parties  hereto  and
         thereto,   will  constitute  a  legal,  valid  and  binding  obligation
         enforceable against the Agent in accordance with the terms thereof; and

(d)      Except as otherwise contemplated by the Operative Agreements, the Agent
         shall not, nor shall it direct the Owner Trustee to, use the proceeds
         of any Loan for any  purpose  other  than the  payment  of  Transaction
         Expenses and the fees, expenses and other  disbursements  referenced in
         Section 9.1 of this Agreement.

         SECTION 8. INTENTIONALLY DELETED.

         SECTION 9. PAYMENT OF CERTAIN EXPENSES.

         9.1 Transaction Expenses.

             Lessee agrees on the Closing Date, to pay, or cause to be paid, all
reasonable  fees,  expenses and  disbursements of the various legal counsels for
the Lessor and the Agent in connection with the transactions contemplated by the
Operative Agreements and incurred in connection with the Closing Date, including
all Transaction  Expenses,  all fees,  expenses and disbursements  incurred with
respect to the various  items  referenced  in Sections  5.3  (including  without
limitation the cost of any Appraisals or  environmental  site  assessments,  any
developer's fees, any premiums for title insurance  policies and charges for any
updates  to  such  policies)  and 

                                       19


all other  reasonable  fees,  expenses and  disbursements in connection with the
Closing Date, and including,  without  limitation,  all expenses relating to and
all fees (including brokers' fees), taxes (including any and all stamp, transfer
or similar  taxes) and expenses for the  recording,  registration  and filing of
documents.

         9.2 Certain Fees and Expenses.

             The Lessee  agrees to pay or cause to be paid (i) the  initial  and
annual Owner Trustee's fee and all reasonable  expenses of the Owner Trustee and
any necessary co-trustees  (including without limitation reasonable counsel fees
and expenses) or any successor owner trustee,  for acting as owner trustee under
the Trust  Agreement,  (ii) all  reasonable  costs and expenses  incurred by the
Lessee,  the Agent, the Lenders,  the Holders or the Lessor  (including  without
limitation  reasonable counsel fees and expenses) in entering into any actual or
proposed future  amendments or supplements  requested by the Lessee with respect
to  any  of  the  Operative  Agreements,  whether  or  not  such  amendments  or
supplements are ultimately  entered into, or giving or withholding of waivers of
consents  hereto or thereto which have been  requested by the Lessee,  and (iii)
all  reasonable  costs and  expenses  incurred  by the Lessor,  the Lessee,  the
Holders,  the Lenders or the Agent in  connection  with the  enforcement  of any
Operative Agreement or any exercise of remedies under any Operative Agreement or
any purchase of the Property by the Lessee pursuant to Article XX of the Lease.

         SECTION 10. OTHER COVENANTS AND AGREEMENTS.

         10.1 Cooperation with the Lessee.

              The Holders,  the Owner  Trustee (at the direction of the Holders)
and the Agent  shall,  to the extent  reasonably  requested  by the Lessee  (but
without assuming  additional  liabilities on account  thereof),  at the Lessee's
expense,  cooperate with the Lessee in connection  with its covenants  contained
herein including,  without  limitation,  at any time and from time to time, upon
the request of the Lessee,  promptly and duly  executing and  delivering any and
all  such  further   instruments,   documents  and  financing   statements  (and
continuation statements related thereto) as the Lessee may reasonably request in
order to perform such covenants.

         10.2 Covenants of the Owner Trustee and the Holders.

              Each  of  the  Owner  Trustee  and  each  of  the  Holders,   each
individually and not jointly,  hereby agree that so long as this Agreement is in
effect:

         (a) None of the  Holders  and the  Owner  Trustee  (both  in its  trust
         capacity and in its individual capacity) will create or permit to exist
         at any time, and each of the Holders and the Owner Trustee will, at its
         own cost and expense,  promptly  take such action (and notify Lessee of
         such action) as may be necessary  duly to discharge,  or to cause to be
         discharged,  all Lessor  Liens  attributable  to it on the  Properties;
         provided,  however, that the Holders and the Owner Trustee shall not be
         required  to  discharge  any such  Lessor  Lien while the same is being
         contested  in  good  faith  by   appropriate   proceedings   diligently
         prosecuted  so long as (a)  such  proceedings  shall  not  involve  any
         material danger of impairment of the Liens of the Security Documents or
         of the sale,  forfeiture or loss of, the Properties or title thereto or
         any interest  therein or the payment of Rent, and

                                       20


         (b)  such   proceedings   shall  not  materially   interfere  with  the
         disposition of any Property or title thereto or interest therein or the
         payment  of Rent or the  possession  and use of the  Properties  by the
         Lessee;

         (b) Without prejudice to any right of the Owner Trustee under the Trust
         Agreement to resign  (subject to the requirement set forth in the Trust
         Agreement  that  such  resignation  shall  not  be  effective  until  a
         successor  shall  have  agreed  to  accept  such  appointment),  or the
         Holders'  rights under the Trust  Agreement  to remove the  institution
         acting as Owner Trustee  (after consent to such removal by the Agent as
         provided  in the Trust  Agreement),  each of the  Holders and the Owner
         Trustee  hereby  agrees  with  the  Lessee  and  the  Agent  (i) not to
         terminate or revoke the trust created by the Trust Agreement  except as
         permitted  by Article VIII of the Trust  Agreement,  (ii) not to amend,
         supplement,  terminate or revoke or otherwise  modify any  provision of
         the Trust Agreement in such a manner as to adversely  affect the rights
         of the Lessee or the Agent  without the prior  written  consent of such
         party and (iii) to comply with all of the terms of the Trust Agreement,
         the nonperformance of which would adversely affect any such party;

         (c) The Owner  Trustee or any successor may resign or be removed by the
         Holders as Owner  Trustee,  a successor  Owner Trustee may be appointed
         and a  corporation  may  become  the  Owner  Trustee  under  the  Trust
         Agreement,  only in accordance with the provisions of Article IX of the
         Trust Agreement and, with respect to such appointment, with the consent
         of the  Lessee,  which  consent  shall  not be  unreasonably  withheld,
         conditioned or delayed;

         (d) The Owner Trustee, in its capacity as Owner Trustee under the Trust
         Agreement,  and not in its individual capacity, shall not contract for,
         create, incur or assume any indebtedness, or enter into any business or
         other  activity,   other  than  pursuant  to  or  under  the  Operative
         Agreements;

         (e) The Holders will not instruct the Owner  Trustee to take any action
         in violation of the terms of any Operative Agreement;

         (f) Neither any Holder nor the Owner  Trustee  shall (i)  commence  any
         case,  proceeding  or other  action with  respect to the Owner  Trustee
         under any  existing  or future  law of any  jurisdiction,  domestic  or
         foreign,   relating   to   bankruptcy,   insolvency,    reorganization,
         arrangement, winding-up, liquidation, dissolution, composition or other
         relief with respect to it or its debts,  or (ii) seek  appointment of a
         receiver,  trustee, custodian or other similar official with respect to
         the  Owner  Trustee  or  for  all  or any  substantial  benefit  of the
         creditors  of the Owner  Trustee;  and neither any Holder nor the Owner
         Trustee  shall take any action in  furtherance  of, or  indicating  its
         consent to, approval of, or acquiescence  in, any of the acts set forth
         in this paragraph;

         (g) The Owner  Trustee  shall give prompt  notice to the Lessee and the
         Agent if the Owner Trustee's chief place of business or chief executive
         office,  or the office  where the records  concerning  the  accounts or
         contract  rights  relating to any Property are kept,  shall cease to be
         located at 79 South Main Street,  Salt Lake City,  Utah 84111, or if it
         shall change its name;

                                       21


         (h)  Provided  that no Lease  Default  or Lease  Event of  Default  has
         occurred and is  continuing,  neither the Owner  Trustee nor any Holder
         shall,  without the prior written consent of the Lessee,  consent to or
         permit any amendment, supplement or other modification of the terms and
         provisions of the Credit Agreement or the Notes;

         (i) Neither the Owner Trustee nor any Holder shall consent to or permit
         any  amendment,  supplement  or other  modification  of the  terms  and
         provisions of any Operative  Agreement,  in each case without the prior
         written  consent of the Agent  except as  described  in Section 10.5 of
         this Agreement; and

         (j) The Owner  Trustee (i) shall take such  actions  and shall  refrain
         from taking such actions with respect to the  Operative  Agreements  or
         the  Properties  and shall grant such  approvals  and  otherwise act or
         refrain from acting with  respect to the  Operative  Agreements  or the
         Properties  in each case as directed in writing by the Agent or, to the
         extent required by Section 10.5 hereof, the Lessee, notwithstanding any
         contrary  instruction  or  absence  of  instruction  by any  Holder  or
         Holders;  and (ii) shall not take any action,  grant any  approvals  or
         otherwise act under or with respect to the Operative  Agreements or any
         matters  relating to the Properties  without first  obtaining the prior
         written  consent  of the Agent  (and  without  regard  to any  contrary
         instruction  or  absence  of  instruction  by  any  Holder);  provided,
         however,   that   notwithstanding  the  foregoing  provisions  of  this
         subparagraph  (j) the Owner  Trustee,  the Agent and the  Holders  each
         acknowledge, covenant and agree that, with respect to all matters under
         the Operative Agreements that require the consent or concurrence of all
         of the  Lenders  pursuant  to the terms of  Section  9.1 of the  Credit
         Agreement (the "Unanimous Vote Matters"), neither the Owner Trustee nor
         the  Agent  shall  act or  refrain  from  acting  with  respect  to any
         Unanimous  Vote Matter  until such party has  received  the approval of
         each Lender and each Holder with respect thereto.

         10.3 Lessee Covenants, Consents, Acknowledgments and Representation.

         (a) Lessee acknowledges and agrees that the Owner Trustee,  pursuant to
         the terms and  conditions  of the Security  Agreement  and the Mortgage
         Instruments,   shall  create  Liens  respecting  the  various  personal
         property,  fixtures and real property described therein in favor of the
         Agent. Lessee hereby irrevocably  consents to the creation,  perfection
         and maintenance of such Liens;

         (b) Lessor hereby instructs Lessee, and Lessee hereby  acknowledges and
         agrees,  that  until  such  time as the  Loans are paid in full and the
         Liens evidenced by the Security Agreement and the Mortgage  Instruments
         have been released,  (i) any and all Rent and any and all other amounts
         of any kind or type under any of the Operative Agreements due and owing
         or  payable to the Lessor or the Owner  Trustee  shall  instead be paid
         directly  to the Agent or as the Agent may direct from time to time and
         (ii)  Lessee   shall  cause  all   notices,   certificates,   financial
         statements, communications and other information which is delivered, or
         is required to be  delivered,  to the Lessor,  the Owner Trustee or any
         Holder also to be delivered at the same time to the Agent;

                                       22


         (c) Lessee shall not consent to or permit any amendment,  supplement or
         other  modification  of  the  terms  or  provisions  of  any  Operative
         Agreement without, in each case, obtaining the prior written consent of
         the Agent and,  to the  extent  required  by the  proviso at the end of
         Section 10.2(j) hereof, each of the Holders;

         (d)  Except as  otherwise  contemplated  by the  Operative  Agreements,
         neither  the Owner  Trustee  nor the  Lessee  has used or shall use the
         proceeds of any Holder  Advance for any purpose  other than the payment
         of (i) the Property  Cost and (ii)  Transaction  Expenses and the fees,
         expenses  and other  disbursements  referenced  in Section  9.1 of this
         Agreement;

         (e) The  Lessee  shall not  permit  any of the  Property  to consist of
         Tangible Personal Property; and, without limiting the generality of the
         first  clause of this  paragraph  (e),  the Lessee shall not permit the
         aggregate  Property Cost of any "Personal  Property" (as defined in the
         Arizona Ground Lease) located at, or included in, the Arizona  Property
         to exceed $3,000,000;

         (f) The Lessee covenants and agrees that aggregate appraised enterprise
         value of all Properties as shown in the most recent  Appraisals of each
         Property  received by the Agent  pursuant  to Section 5.3 or  otherwise
         shall at all  times be  greater  than or equal to 50% of the  aggregate
         Property Cost of all Properties;  and any Appraisal  obtained to comply
         with this provision shall be at the Lessee's sole cost and expense; and
         to confirm compliance with this provision,  the Lessee expressly agrees
         to provide an  Appraisal  to the Agent from time to time at the request
         of the Agent within sixty (60) days of such request,  at the expense of
         Lessee, but not more often than once per calendar year;

         (g) The Lessee agrees to perform each of the Incorporated Covenants and
         any other  covenants set forth in (or  incorporated  by reference into)
         Article XXVIII of the Lease, in accordance with their respective terms;

         (h) The Lessee shall not create or permit to exist at any time (and the
         Lessee shall, at its own expense,  take such action as may be necessary
         to duly  discharge,  or cause to be  discharged)  any Lien  against any
         Property other than Permitted Liens and Lessor Liens;

         (i) The Lessee has performed or has caused to be performed all actions
         recommended or required by the Environmental Reports, or has undertaken
         to perform such actions, such performance to be reasonably satisfactory
         to the Agent;

         (j) The Lessee shall pay (when and as due) any fees pursuant to the Fee
         Letter; and

         (k) The  Lessee  agrees  that the  provisions  of the Fee Letter or any
         other  letter  entitling  any Lender to fees to be paid by Lessee shall
         remain in full force and effect after the Closing Date.

         10.4 Sharing of Certain Payments.

              The parties hereto acknowledge and agree that all payments due and
owing by the Lessee to the Lessor under the Lease or any of the other  Operative
Agreements  shall  be  made  by

                                       23


the Lessee directly to the Agent as more  particularly  provided in Section 10.3
hereof.  The Holders and the Agent,  on behalf of the Lenders,  acknowledge  the
terms of Section 8 of the Credit Agreement  regarding the allocation of payments
and  other  amounts  made or  received  from time to time  under  the  Operative
Agreements  and agree all such  payments  and  amounts  are to be  allocated  as
provided  in Section 8 of the Credit  Agreement.  In  connection  therewith  the
Holders hereby (a) appoint the Agent to act as collateral  agent for the Holders
in  connection  with the Lien  granted  by the  Mortgage  Instruments  and other
Security Documents to secure the Holder Amount and (b) acknowledge and agree and
direct  that the rights and  remedies  of the  beneficiaries  of the Lien of the
Mortgage  Instruments  and other  Security  Documents  shall be exercised by the
Agent on behalf of the Lenders and the Holders as directed  from time to time by
the Lenders without notice to or consent from the Holders.

         10.5 Grant of Easements, etc.

              The Agent and the Holders  hereby agree that,  so long as no Event
of Default  shall have  occurred and be  continuing,  and until such time as the
Agent gives instructions to the contrary to the Owner Trustee, the Owner Trustee
shall,  from time to time at the request of the Lessee,  in connection  with the
transactions  contemplated by the Lease or the other Operative  Agreements,  (i)
grant  easements and other rights in the nature of easements with respect to any
Property,  (ii)  release  existing  easements  or other  rights in the nature of
easements  which are for the benefit of any Property,  (iii) execute and deliver
to any Person any  instrument  appropriate  to confirm or effect  such grants or
releases,  and (iv)  execute and deliver to any Person such other  documents  or
materials in connection with the operation of any Property,  including,  without
limitation,  reciprocal easement agreements,  operating agreements,  development
agreements, plats, replats or subdivision documents;  provided, that each of the
agreements  and documents  referred to in this Section 10.5 shall be of the type
normally executed by the Lessee in the ordinary course of the Lessee's business,
or  consistent  with  local  practice  or  as  required  by  local  Governmental
Authorities, and shall be on commercially reasonable terms so as not to diminish
the value of any Property in any material respect.

         SECTION 11. CREDIT AGREEMENT AND TRUST AGREEMENT.

         11.1 Lessee's Credit Agreement Rights.

              Notwithstanding  anything to the contrary  contained in the Credit
Agreement,  the Agent, the Lessee and the Owner Trustee hereby agree that, prior
to the  occurrence  and  continuation  of any Lease  Default  or Lease  Event of
Default the Lessee (as designated below) shall have the following rights:

         (a) The Lessee  shall have the right to give the notice  referred to in
         Section 2.3 of the Credit Agreement,  to designate the account to which
         a borrowing  under the Credit  Agreement is to be credited  pursuant to
         Section 2.3 of the Credit Agreement;

         (b) the Lessee  shall have the right to  exercise  the  conversion  and
         continuation options pursuant to Section 2.7 of the Credit Agreement;

         (c) the  Lessee  shall have the right to approve  any  successor  agent
         pursuant to Section 7.8 of the Credit Agreement;

                                       24


         (d) the Lessee shall have the right to consent to any  assignment  by a
         Lender to which the Lessor has the right to consent pursuant to Section
         9.8 of the Credit Agreement; and

         (e) without  limiting  the  foregoing  clauses (a) through  (d), and in
         addition  thereto,  provided that no Event of Default then exists,  the
         Lessee  shall have the right to  exercise  any other right of the Owner
         Trustee under the Credit Agreement upon not less than five (5) Business
         Days' prior written notice from the Lessee to the Owner Trustee and the
         Agent.

         11.2 Lessee's Trust Agreement Rights.

              Notwithstanding anything to the contrary contained in the
Trust  Agreement,  the Lessee,  the Owner  Trustee and the Holders  hereby agree
that,  prior to the  occurrence and  continuation  of any Lease Default or Lease
Event of Default  the  Lessee (as  designated  below)  shall have the  following
rights:

         (a) the Lessee  shall have the right to  exercise  the  conversion  and
         continuation options pursuant to Section 3.8 of the Trust Agreement;

         (b) no removal of the Owner  Trustee  and  appointment  of a  successor
         Owner Trustee  pursuant to Section 9.1 of the Trust  Agreement shall be
         made without the prior written consent (not to be unreasonably withheld
         or delayed) of the Lessee; and

         (c) the Holders and the Owner  Trustee  shall not amend,  supplement or
         otherwise  modify any provision of the Trust Agreement in such a manner
         as to  adversely  affect  the rights of the  Lessee  without  the prior
         written  consent  (not to be  unreasonably  withheld or delayed) of the
         Lessee.

         SECTION 12. TRANSFER OF INTEREST.

         12.1 Restrictions on Transfer.

              The  Holders  may,  directly  or  indirectly,  assign,  convey  or
otherwise  transfer  any of their  right,  title or  interest in or to the Trust
Estate or the Trust Agreement with the prior written  consent of the Agent,  and
(provided  no Default or Event of Default has occurred  and is  continuing)  the
Lessee  (which  consent  in each case  shall  not be  unreasonably  withheld  or
delayed); provided that such consents shall not be required for an assignment to
a Lender or an affiliate of a Lender. The Owner Trustee may, subject to the Lien
of the applicable Security Documents, but only with the prior written consent of
the Agent,  the  Holders  (which  consent  may be  withheld  by the Agent or the
Holders in their sole  discretion)  and (provided no Default or Event of Default
has occurred and is  continuing)  the Lessee,  directly or  indirectly,  assign,
convey,  appoint an agent with respect to enforcement of, or otherwise  transfer
any of the Owner Trustee's right,  title or interest in or to any Property,  the
Lease, the Trust Agreement, this Agreement (including,  without limitation,  any
right to  indemnification  thereunder),  or any  other  document  relating  to a
Property or any  interest in a Property as provided in the Trust  Agreement  and
the Lease. The provisions of the immediately  preceding sentence shall not apply
to the obligations of the Owner Trustee to transfer the Properties to the Lessee
or a third party

                                       25


purchaser pursuant to Article XXII of the Lease upon payment for such Properties
in accordance with each of the terms and conditions of the Lease.

         12.2 Effect of Transfer.

              From and after  any  transfer  effected  in  accordance  with this
Section 12, the  transferor  shall be released,  to the extent of such transfer,
from its  liability  hereunder  and under the other  documents  to which it is a
party in respect of  obligations  to be  performed  on or after the date of such
transfer;  provided,  however,  that any  transferor  Holder shall remain liable
under Article XI of the Trust Agreement to the extent that the transferee Holder
shall not have assumed the obligations of the transferor Holder thereunder. Upon
any  transfer  by the  Owner  Trustee  or a Holder as above  provided,  any such
transferee  shall assume the  obligations of the Owner Trustee and Lessor or the
obligations  of a  Holder,  as the case may be,  and  shall be  deemed an "Owner
Trustee",  "Lessor" or  "Holder",  as the case may be, for all  purposes of such
documents and each reference herein to the transferor shall thereafter be deemed
a  reference  to such  transferee  for all  purposes,  except as provided in the
preceding  sentence.  Notwithstanding  any  transfer  of all or a portion of the
transferor's  interest as provided in this Section 12, the  transferor  shall be
entitled to all benefits  accrued and all rights  vested prior to such  transfer
including,  without  limitation,   rights  to  indemnification  under  any  such
document.

         SECTION 13. INDEMNIFICATION.

         13.1 General Indemnity.

         (a) Whether or not any of the transactions contemplated hereby shall be
         consummated,  the Indemnity  Provider hereby assumes  liability for and
         agrees to defend,  indemnify and hold harmless each Indemnified  Person
         on an After Tax Basis from and against any Claims  which may be imposed
         on, incurred by or asserted against an Indemnified  Person by any other
         Person in any way relating to or arising or alleged to arise out of the
         execution,  delivery, performance or enforcement of this Agreement, the
         Lease or any other  Operative  Agreement  or on or with  respect to any
         Property or any part thereof, including, without limitation,  Claims in
         any way  relating  to or  arising  or  alleged  to arise out of (i) the
         financing,  refinancing,  purchase, acceptance,  rejection,  ownership,
         design, construction, refurbishment, development, delivery, acceptance,
         nondelivery,   leasing,   subleasing,   possession,   use,   operation,
         maintenance,  repair,  modification,  transportation,  condition, sale,
         return,  repossession (whether by summary proceedings or otherwise), or
         any other disposition of any Property,  or any part thereof,  including
         the  acquisition,  holding  or  disposition  of  any  interest  in  any
         Property,  lease or agreement comprising a portion of any thereof; (ii)
         any latent or other defect in any Property  whether or not discoverable
         by  an  Indemnified  Person  or  the  Indemnity  Provider;   (iii)  any
         Environmental  Claim, any violation of Environmental Laws, or any other
         loss of or damage to any  Property or the  environment  relating to any
         Property,  the  Lease or the  Indemnity  Provider;  (iv) the  Operative
         Agreements,  or any transaction contemplated thereby; (v) any breach by
         the  Lessee  of any of its  representations  or  warranties  under  the
         Operative Agreements to which it is a party or failure by the Lessee to
         perform or observe any  covenant or  agreement  to be  performed  by it
         under  any  of  the  Operative   Agreements;   (vi)  the   transactions
         contemplated hereby or by any other Operative 

                                       26


         Agreement, in respect of the application of Parts 4 and 5 of Subtitle B
         of Title I of  ERISA;  (vii) any  personal  injury,  death or  property
         damage, including without limitation Claims based on strict or absolute
         liability in tort;  (viii) any easement,  right,  agreement or document
         referred to in Section 10.5 of this Agreement;  or (ix) any Lien on any
         Property  (other than Liens created by the Operative  Agreements).  The
         foregoing  indemnity shall not apply to a Claim imposed on, incurred by
         or  asserted  against an  Indemnified  Person to the extent  such Claim
         arises  from  the  gross  negligence  or  willful  misconduct  of  such
         Indemnified  Person as  determined  by a final  judgment  of a court of
         competent jurisdiction;

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

         (c) If,  within  thirty  (30) days of receipt of such  notice  from the
         Indemnified  Person (or such shorter period as the  Indemnified  Person
         has notified the  Indemnity  Provider is required by law or  regulation
         for the  Indemnified  Person to respond to such Claim),  the  Indemnity
         Provider shall request in writing that such Indemnified  Person respond
         to such Claim,  the  Indemnified  Person  shall,  at the expense of the
         Indemnity  Provider,  in good faith  conduct  and  control  such action
         (including,   without  limitation  by  pursuit  of  appeals)  provided,
         however,  that  (A) if  such  Claim  can be  pursued  by the  Indemnity
         Provider on behalf of or in the name of such  Indemnified  Person,  the
         Indemnified Person, at the Indemnity  Provider's  request,  shall allow
         the  Indemnity  Provider to conduct  and  control the  response to such
         Claim and (B) in the case of any  Claim,  the  Indemnified  Person  may
         request the  Indemnity  Provider to conduct and control the response to
         such Claim (with counsel to be selected by the  Indemnity  Provider and
         consented  to by  such  Indemnified  Person,  such  consent  not  to be
         unreasonably withheld,  conditioned or delayed;  provided however, that
         any Indemnified  Person may retain  separate  counsel at the expense of
         the  Indemnity  Provider in the event of a  conflict))  by, in the sole
         discretion of the Person  conducting  and  controlling  the response to
         such Claim,  (1)  resisting  payment  thereof,  (2) not paying the same
         except under  protest,  if protest is necessary and proper,  (3) if the
         payment be made, using reasonable efforts to obtain a refund thereof in
         appropriate administrative and judicial proceedings, or (4) taking such
         other action as is reasonably  requested by the Indemnity Provider from
         time to time;

                                       27


         (d) The party  controlling  the response to any Claim shall  consult in
         good  faith  with  the   non-controlling   party  and  shall  keep  the
         non-controlling  party  reasonably  informed  as to the  conduct of the
         response to such Claim;  provided,  that all decisions ultimately shall
         be made in the  discretion of the  controlling  party,  except that the
         Indemnity  Provider may not agree to any dismissal or settlement of, or
         other agreement in connection with, any claim without the prior written
         consent of such Indemnified  Person,  if such dismissal,  settlement or
         agreement  would  require  any  admission  or   acknowledgment  of  any
         culpability or wrongdoing by such Indemnified Person or provide for any
         nonmonetary  relief to be performed  by such  Indemnified  Person.  The
         parties  agree that an  Indemnified  Person may at any time  decline to
         take further  action with respect to the response to such Claim and may
         settle such Claim if such Indemnified  Person shall waive its rights to
         any indemnity  from the  Indemnity  Provider  that  otherwise  would be
         payable in respect of such Claim (and any future Claim,  the pursuit of
         which is  precluded  by reason of such  resolution  of such  Claim) and
         shall pay to the  Indemnity  Provider  any  amount  previously  paid or
         advanced by the Indemnity Provider pursuant to this Section 13.1 by way
         of  indemnification  or advance for the payment of any amount regarding
         such Claim other than  expenses  of the action  relating to such Claim;
         and

         (e) Notwithstanding  the foregoing  provisions of this Section 13.1, an
         Indemnified  Person  shall not be  required  to take any  action and no
         Indemnity  Provider  shall be  permitted to respond to any Claim in its
         own name or that of the  Indemnified  Person  unless (i) the  Indemnity
         Provider  shall  have  agreed to pay and shall pay to such  Indemnified
         Person on demand and on an After Tax Basis all reasonable costs, losses
         and expenses that such Indemnified Person actually incurs in connection
         with such Claim, including,  without limitation,  all reasonable legal,
         accounting  and  investigatory   fees  and   disbursements,   (ii)  the
         Indemnified Person shall have reasonably  determined that the action to
         be taken will not result in any material danger of sale,  forfeiture or
         loss of any Property, or any part thereof or interest therein, will not
         interfere  with the  payment  of Rent,  and will not  result in risk of
         criminal  liability,  (iii) if such Claim shall  involve the payment of
         any  amount  prior  to the  resolution  of such  Claim,  the  Indemnity
         Provider  shall  provide  to the  Indemnified  Person an  interest-free
         advance in an amount equal to the amount that the Indemnified Person is
         required  to pay  (with  no  additional  net  after-tax  cost  to  such
         Indemnified  Person),  (iv) in the case of a Claim that must be pursued
         in the name of an  Indemnified  Person (or an Affiliate  thereof),  the
         Indemnity  Provider shall have provided to such  Indemnified  Person an
         opinion of independent  counsel selected by the Indemnified  Person and
         reasonably  satisfactory  to  the  Indemnity  Provider  stating  that a
         reasonable  basis  exists to  contest  such Claim and (v) such claim is
         covered by  insurance  and no  Default  or Event of Default  shall have
         occurred and be continuing.  In addition,  an Indemnified  Person shall
         not be  required  to  contest  any  Claim  in its  name  (or that of an
         Affiliate)  if the  subject  matter  thereof  shall be of a  continuing
         nature and shall have previously  been decided  adversely by a court of
         competent  jurisdiction  pursuant  to the  contest  provisions  of this
         Section  13.1,  unless  there  shall  have  been a  change  in law  (or
         interpretation thereof) and the Indemnified Person shall have received,
         at the Indemnity  Provider's expense, an opinion of independent counsel
         selected by the  Indemnified  Person and  reasonably  acceptable to the
         Indemnity  Provider  stating that as a result of such change in law (or
         interpretation   thereof),   it  is  more  likely  than  not  that  the
         Indemnified Person will prevail in such contest.

                                       28


         13.2 General Tax Indemnity.

         (a) The Indemnity Provider shall pay and assume liability for, and does
         hereby  agree to  indemnify,  protect and defend each  Property and all
         Indemnified Persons, and hold them harmless against, all Impositions on
         an After Tax Basis;

         (b) (i) Subject to the terms of Section 13.2(f), the Indemnity Provider
         shall pay or cause to be paid all  Impositions  directly  to the taxing
         authorities where feasible and otherwise to the Indemnified  Person, as
         appropriate,  and the Indemnity Provider shall at its own expense, upon
         such  Indemnified   Person's  reasonable   request,   furnish  to  such
         Indemnified  Person copies of official  receipts or other  satisfactory
         proof evidencing such payment;

             (ii) In the case of  Impositions  for which no contest is conducted
         pursuant  to Section  13.2(f)  and which the  Indemnity  Provider  pays
         directly to the taxing  authorities,  the Indemnity  Provider shall pay
         such  Impositions  prior to the latest time  permitted  by the relevant
         taxing  authority for timely  payment.  In the case of Impositions  for
         which the Indemnity  Provider  reimburses an  Indemnified  Person,  the
         Indemnity Provider shall do so within thirty (30) days after receipt by
         the Indemnity  Provider of demand by such Indemnified Person describing
         in reasonable detail the nature of the Imposition and the basis for the
         demand  (including the computation of the amount payable).  In the case
         of  Impositions  for which a contest is  conducted  pursuant to Section
         13.2(f), the Indemnity Provider shall pay such Impositions or reimburse
         such  Indemnified  Person  for  such  Impositions,  to the  extent  not
         previously paid or reimbursed  pursuant to subsection (a), prior to the
         latest time  permitted  by the  relevant  taxing  authority  for timely
         payment after conclusion of all contests under Section 13.2(f).

             (iii) Impositions  imposed with respect to a Property for a billing
         period  during which the Lease  expires or  terminates  with respect to
         such Property (unless the Lessee has exercised the Purchase Option with
         respect to such  Property or the Lessee has  otherwise  purchased  such
         Property)  shall be adjusted and prorated on a daily basis  between the
         Indemnity  Provider and the Lessor,  whether or not such  Imposition is
         imposed before or after such  expiration or  termination  and each such
         party shall pay its pro rata share thereof; and

             (iv)  At  the  Indemnity  Provider's  request,  the  amount  of any
         indemnification   payment  by  the  Indemnity   Provider   pursuant  to
         subsection (a) shall be verified and certified by an independent public
         accounting firm mutually  acceptable to the Indemnity  Provider and the
         Indemnified  Person.  The fees and expenses of such independent  public
         accounting  firm shall be paid by the  Indemnity  Provider  unless such
         verification shall result in an adjustment in the Indemnity  Provider's
         favor of 15% or more of the  payment  as  computed  by the  Indemnified
         Person, in which case such fee shall be paid by the Indemnified Person;

         (c) The  Indemnity  Provider  shall be  responsible  for  preparing and
         filing any real and  personal  property or ad valorem tax returns  with
         respect to each Property.  In case any other report or tax return shall
         be required to be made with respect to any obligations of 

                                       29


         the Indemnity  Provider  under or arising out of subsection  (a) and of
         which the Indemnity  Provider has  knowledge or should have  knowledge,
         the Indemnity Provider, at its sole cost and expense,  shall notify the
         relevant  Indemnified  Person of such  requirement  and (except if such
         Indemnified   Person   notifies  the   Indemnity   Provider  that  such
         Indemnified  Person  intends to file such  report or return) (A) to the
         extent required or permitted by and consistent with Legal Requirements,
         make and file in Indemnity  Provider's  name such return,  statement or
         report;  and (B) in the case of any other  such  return,  statement  or
         report  required  to be made in the  name of such  Indemnified  Person,
         advise such  Indemnified  Person of such fact and prepare  such return,
         statement  or report for filing by such  Indemnified  Person or,  where
         such return,  statement or report shall be required to reflect items in
         addition to any obligations of the Indemnity  Provider under or arising
         out of subsection (a), provide such Indemnified Person at the Indemnity
         Provider's  expense with information  sufficient to permit such return,
         statement or report to be properly made with respect to any obligations
         of the Indemnity  Provider under or arising out of subsection (a). Such
         Indemnified Person shall, upon the Indemnity  Provider's request and at
         the Indemnity  Provider's expense,  provide any data maintained by such
         Indemnified  Person  (and not  otherwise  available  to or  within  the
         control of the Indemnity  Provider) with respect to each Property which
         the Indemnity  Provider may reasonably  require to prepare any required
         tax returns or reports;

         (d) If as a result of the  payment or  reimbursement  by the  Indemnity
         Provider of any Imposition or other  reasonable  expenses of the Lessor
         or the payment of any Transaction  Expenses incurred in connection with
         the transactions contemplated by the Operative Agreements,  the Lessor,
         the Holders,  partners of any Holder,  or shareholders of such partners
         of a partnership which is a partner of such Holder,  shall suffer a net
         increase  in any  federal,  state or local  income tax  liability,  the
         Indemnity Provider shall indemnify such Persons (without duplication of
         any  indemnification  required by subsection (a)) on an After Tax Basis
         for the  amount  of such  increase.  The  calculation  of any  such net
         increase  shall take into  account  any  current or future tax  savings
         (including any net operating loss carry-forward) realized or reasonably
         expected to be realized by such Person in respect  thereof,  as well as
         any interest, penalties and additions to tax payable by such Lessor, or
         such Holder, or such Affiliate, in respect thereof;

         (e) As between the  Indemnity  Provider on one hand,  and the Lessor or
         the Agent,  any Lender or any Holder on the other hand,  the  Indemnity
         Provider  shall be  responsible  for, and the Indemnity  Provider shall
         indemnify and hold harmless the Lessor, the Agent, the Lenders and each
         Holder  (without   duplication  of  any  indemnification   required  by
         subsection  (a)) on an After  Tax Basis  against,  any  obligation  for
         United  States or  foreign  withholding  taxes  imposed  in  respect of
         payments on the Notes or  Certificates or with respect to Rent payments
         under the Lease  (and,  if the  Lessor,  the  Agent,  any Lender or any
         Holder  receives a demand for such payment  from any taxing  authority,
         the Indemnity  Provider  shall  discharge  such demand on behalf of the
         Lessor, the Agent, such Lender or such Holder); provided, however, that
         the right of any Lender to make a claim for indemnification  under this
         Section  13.2(e) is subject to the  compliance  by such Lender with the
         requirements of Section 2.13 of the Credit  Agreement,  but only to the
         extent that such claim is attributable to  noncompliance by such Lender
         under such Section 2.13; and

                                       30


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

             (ii) If, within thirty (30) days of receipt of such notice from the
         Indemnified  Person (or such shorter period as the  Indemnified  Person
         has notified the  Indemnity  Provider is required by law or  regulation
         for the  Indemnified  Person to commence such  contest),  the Indemnity
         Provider shall request in writing that such Indemnified  Person contest
         such  Imposition,  the Indemnified  Person shall, at the expense of the
         Indemnity  Provider,  in good faith  conduct and control  such  contest
         (including,  without limitation, by pursuit of appeals) relating to the
         validity,   applicability  or  amount  of  such  Imposition  (provided,
         however, that (A) if such contest can be pursued independently from any
         other proceeding  involving a tax liability of such Indemnified Person,
         the Indemnified  Person,  at the Indemnity  Provider's  request,  shall
         allow the  Indemnity  Provider to conduct and control  such contest and
         (B) in the case of any contest,  the Indemnified Person may request the
         Indemnity Provider to conduct and control such contest (with counsel to
         be  selected  by  the  Indemnity  Provider  and  consented  to by  such
         Indemnified  Person,  such  consent  not to be  unreasonably  withheld,
         conditioned or delayed; provided,  however, that any Indemnified Person
         may retain separate counsel at the expense of the Indemnity Provider in
         the event of a  conflict))  by, in the sole  discretion  of the  Person
         conducting and controlling such contest, (1) resisting payment thereof,
         (2) not paying the same except under  protest,  if protest is necessary
         and proper,  (3) if the payment be made,  using  reasonable  efforts to
         obtain a refund  thereof in  appropriate  administrative  and  judicial
         proceedings, or (4) taking such other action as is reasonably requested
         by the Indemnity Provider from time to time;

             (iii) The party controlling any contest shall consult in good faith
         with the non-controlling party and shall keep the non-controlling party
         reasonably informed as to the conduct of such contest;  provided,  that
         all decisions  ultimately  shall be made in the sole  discretion of the
         controlling  party. The parties agree that an Indemnified Person may at
         any time decline to take further  action with respect to the contest of
         any Imposition and may settle such contest if such  Indemnified  Person
         shall waive its rights to any  indemnity  from the  Indemnity  Provider
         that otherwise  would be payable in respect of such Imposition (and any
         future Claim by any taxing authority, the contest of which is precluded
         by  reason of such  resolution  of such  contest)  and shall pay to the
         Indemnity 

                                       31


         Provider  any  amount  previously  paid or  advanced  by the  Indemnity
         Provider  pursuant to this  Section 13.2 by way of  indemnification  or
         advance for the payment of any amount  regarding such Imposition  other
         than expenses of such contest; and

             (iv) Notwithstanding the foregoing provisions of this Section 13.2,
         an  Indemnified  Person shall not be required to take any action and no
         Indemnity  Provider shall be permitted to contest any Imposition in its
         own name or that of the  Indemnified  Person  unless (A) the  Indemnity
         Provider  shall  have  agreed to pay and shall pay to such  Indemnified
         Person on demand and on an After Tax Basis all reasonable costs, losses
         and expenses that such Indemnified Person actually incurs in connection
         with contesting such Imposition,  including,  without  limitation,  all
         reasonable legal,  accounting and investigatory fees and disbursements,
         (B) the Indemnified  Person shall have  reasonably  determined that the
         action  to be taken  will not  result in any  material  danger of sale,
         forfeiture  or loss of any  Property,  or any part  thereof or interest
         therein,  will not  interfere  with the  payment of Rent,  and will not
         result in risk of criminal liability, (C) if such contest shall involve
         the  payment  of the  Imposition  prior to or during the  contest,  the
         Indemnity   Provider  shall  provide  to  the  Indemnified   Person  an
         interest-free  advance in an amount  equal to the  Imposition  that the
         Indemnified Person is required to pay (with no additional net after-tax
         cost to such Indemnified  Person), (D) in the case of a Claim that must
         be  pursued  in the  name of an  Indemnified  Person  (or an  Affiliate
         thereof),   the  Indemnity   Provider   shall  have  provided  to  such
         Indemnified  Person an opinion of independent  tax counsel  selected by
         the  Indemnified  Person and reasonably  satisfactory  to the Indemnity
         Provider  stating that a reasonable  basis exists to contest such Claim
         and (E) no  Default  or Event of Default  shall  have  occurred  and be
         continuing. In addition, an Indemnified Person shall not be required to
         contest any claim in its name (or that of an  Affiliate) if the subject
         matter  thereof  shall  be  of  a  continuing  nature  and  shall  have
         previously been decided adversely by a court of competent  jurisdiction
         pursuant to the contest  provisions of this Section 13.2,  unless there
         shall  have been a change in law (or  interpretation  thereof)  and the
         Indemnified  Person shall have  received,  at the Indemnity  Provider's
         expense,  an  opinion  of  independent  tax  counsel  selected  by  the
         Indemnified Person and reasonably  acceptable to the Indemnity Provider
         stating  that as a  result  of such  change  in law (or  interpretation
         thereof),  it is more likely than not that the Indemnified  Person will
         prevail in such contest.

         13.3 Environmental Indemnity.

              Without  limiting the generality of the foregoing,  whether or not
the  transactions  contemplated  hereby  shall  be  consummated,  the  Indemnity
Provider hereby assumes  liability for and agrees to defend,  indemnify and hold
harmless  each  Indemnified  Person on an After Tax Basis from and  against  any
Claims which may be imposed on,  incurred by or asserted  against an Indemnified
Person by any other  Person (but not to the extent  such  Claims  arise from the
gross negligence or willful  misconduct of such Indemnified Person as determined
by a final judgment of a court of competent jurisdiction) in any way relating to
or  arising,  or  alleged  (by any  Person  asserting  such a Claim  against  an
Indemnified  Person) to arise, out of any Environmental  Claim, any violation of
Environmental  Laws,  or any  other  loss of or damage  to any  Property  or the
environment  (including  without  limitation  the  presence  on any  Property of
wetlands, tidelands or swamp or overflow lands, or any condition arising from

                                       32


or  affecting  any  Property or arising  from or  affecting  any lands nearby or
adjacent to any Property  that has or threatens to have any adverse  effect upon
human health or the environment at any Property or upon the use or value of such
Property),  in each case  relating to any  Property,  the Lease or the Indemnity
Provider.

         SECTION 14. MISCELLANEOUS.

         14.1 Survival of Agreements.

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

         14.2 No Broker, etc.

              Each of the parties  hereto  represents  to the others that it has
not retained or employed any broker,  finder or financial  adviser to act on its
behalf in connection  with this  Agreement,  nor has it  authorized  any broker,
finder or financial  adviser retained or employed by any other Person so to act.
Any party who is in breach of this  representation  shall indemnify and hold the
other parties harmless from and against any liability arising out of such breach
of this representation.

         14.3 Notices.

              Unless  otherwise   specifically  provided  herein,  all  notices,
consents, directions, approvals, instructions, requests and other communications
required or  permitted  by the terms  hereof to be given to any Person  shall be
given in  writing  by  United  States  certified  or  registered  mail  (postage
prepaid),  by nationally recognized courier service, by hand or by telecopy with
confirming  notice and any such notice shall become  effective  upon receipt and
shall be directed to the address of such Person as indicated:

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

                     HEALTHSOUTH Corporation
                     One HealthSouth Parkway
                     Birmingham, Alabama 35243
                     Attention: Malcolm E. McVay
                     Telephone No.: (205) 969-6140
                     Telecopy No.: (205) 969-4620
                     Email: tadd.mcvay@healthsouth.com

                                       33



With a copy to:

                     HEALTHSOUTH Corporation
                     One HealthSouth Parkway
                     Birmingham, Alabama 35243
                     Attention: William W. Horton
                     Telephone No.: (205) 969-4977
                     Telecopy No.: (205) 969-4730
                     Email: bill.horton@healthsouth.com

If to the Owner Trustee, to it at the following address:

                     First Security Bank, National Association
                     79 South Main Street
                     Salt Lake City, Utah 84111
                     Attention: Val T. Orton
                     Telephone No.: (801) 246-5208
                     Telecopy No.: (801) 246-5053

If to UBS AG, Stamford Branch,  as a Holder or a Lender,  to it at the following
address:

                     UBS AG, Stamford Branch
                     677 Washington Boulevard
                     Stamford, Connecticut 06901
                     Attn: Jennifer Poccia
                     Telephone No.: (203) 719-3834
                     Telecopy No.: (203)719-3888
                     Email: jennifer.poccia@ubsw.com

if to any other  Holder,  to it at the address set forth for such Holder on each
Holder's Holder Addendum hereto or in the applicable Assignment and Assumption;

If to any  other  Lender,  to it at the  address  for  notice  set forth on such
Lender's Lender Addendum hereto or in the applicable  Assignment and Assumption,
the form of which is attached as a schedule to the Credit Agreement;

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

                           UBS AG, Stamford Branch
                           677 Washington Boulevard
                           Stamford, Connecticut 06901
                           Attn: Jennifer Poccia
                           Telephone No.: (203) 719-3834
                           Telecopy No.: (203)719-3888
                           Email: jennifer.poccia@ubsw.com

with all notices of  borrowing,  conversion,  continuation  or prepayment of any
Loan to be  delivered  to the  address  set forth in  Section  9.2 of the Credit
Agreement.

                                       34


From time to time any party may  designate a new address for  purposes of notice
hereunder by notice to each of the other parties hereto.

         14.4 Counterparts.

              This  Agreement may be executed by the parties  hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all  such  counterparts  shall  together  constitute  but  one and the  same
instrument.

         14.5 Amendments and Termination.

              Neither  this  Agreement  nor  any  of  the  terms  hereof  may be
terminated, amended, supplemented, waived or modified except by an instrument in
writing  signed by the  Lessor,  the Lessee and  (subject  to Section 9.1 of the
Credit  Agreement)  the Agent.  This Agreement may be terminated by an agreement
signed in writing by the Owner Trustee, the Holders, the Lenders, the Lessee and
the Agent.

         14.6 Headings, etc.

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

         14.7 Parties in Interest.

              Except as expressly  provided  herein,  none of the  provisions of
this  Agreement  are intended  for the benefit of any Person  except the parties
hereto;  provide, that the Lenders are intended to be third-party  beneficiaries
of this Agreement.

         14.8 GOVERNING LAW; WAIVERS OF JURY TRIAL.

              (i) THIS  AGREEMENT  SHALL  BE  GOVERNED  BY,  AND  CONSTRUED  AND
         INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

              (ii) TO THE MAXIMUM  EXTENT  PERMITTED BY APPLICABLE  LAW, EACH OF
         THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY
         IN ANY LEGAL  ACTION OR  PROCEEDING  RELATING TO THIS  AGREEMENT OR ANY
         OTHER OPERATIVE AGREEMENT AND FOR ANY COUNTERCLAIM THERETO.

         14.9 Submission to Jurisdictions Waivers.

              Each of the parties hereto irrevocably and unconditionally:

         (a)  submits  for  itself  and its  property  in any  legal  action  or
         proceeding   relating  to  this  Agreement  and  the  other   Operative
         Agreements to which it is a party,  or for  recognition and enforcement
         of any judgment in respect thereof, to the non-exclusive general

                                       35


         jurisdiction  of the  courts of the State of New York and the courts of
         the United  States  located in the  Southern  District  of New York and
         appellate courts thereof;

         (b) consents that any such action or proceeding  may be brought in such
         courts and waives any  objection  that it may now or hereafter  have to
         the venue of any such  action or  proceeding  in any such court or that
         such  action or  proceeding  was brought in an  inconvenient  court and
         agrees not to plead or claim the same;

         (c) agrees that service of process in any such action or proceeding may
         be effected by mailing a copy thereof by registered  or certified  mail
         (or any  substantially  similar form of mail) postage  prepaid,  to the
         respective  party at its address set forth in Section 14.3 hereof or at
         such other  address of which the  Administrative  Agent shall have been
         notified pursuant thereto;

         (d) agrees that nothing herein shall affect the right to effect service
         of  process in any other  manner  permitted  by law or shall  limit the
         right to sue in any other jurisdiction; and

         (e) waives,  to the maximum  extent not prohibited by law, any right it
         may have to claim or recover in any legal action or proceeding referred
         to  in  this  Section  14.9  any   special,   exemplary,   punitive  or
         consequential damages.

         14.10 Severability.

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

         14.11 Liability Limited.

         (a) The Agent,  the Lessee and the Holders each  acknowledge  and agree
         that the Owner  Trustee  is  (except as  otherwise  expressly  provided
         herein or therein) entering into this Agreement and the other Operative
         Agreements  to which it is a party (other than the Trust  Agreement and
         other than as set forth in Section  7.2 of this  Agreement),  solely in
         its  capacity  as  trustee  under  the Trust  Agreement  and not in its
         individual  capacity  and that  Trust  Company  shall  not be liable or
         accountable  under  any  circumstances  whatsoever  in  its  individual
         capacity  for  or  on  account  of  any  statements,   representations,
         warranties,  covenants or  obligations  stated to be those of the Owner
         Trustee,  except for its own gross negligence or willful misconduct and
         except as otherwise expressly provided herein or in the other Operative
         Agreements.

         (b) Anything to the contrary  contained in this  Agreement,  the Credit
         Agreement,   the   Notes   or  in   any   other   Operative   Agreement
         notwithstanding,  neither the Lessor nor any Holder (in its capacity as
         a Holder) nor any officer, director,  shareholder,  or partner thereof,
         nor any of the successors or assigns of the foregoing (all such Persons
         being   hereinafter   referred  to   collectively  as  the  "Exculpated
         Persons"),  shall be personally liable in any respect for any liability
         or  obligation   hereunder  or  under  any  other  Operative

                                       36


         Agreement  including  the payment of the  principal of, or interest on,
         the Notes, or for monetary damages for the breach of performance of any
         of the covenants  contained in the Credit  Agreement,  the Notes,  this
         Agreement,  the  Security  Agreement  or  any of  the  other  Operative
         Agreements.  The Agent (for itself and on behalf of the Lenders) agrees
         that,  in the  event  the  Agent or any  Lender  pursues  any  remedies
         available  to  them  under  the  Credit  Agreement,   the  Notes,  this
         Agreement,  the Security Agreement,  the Mortgage  Instruments or under
         any other Operative Agreement,  neither the Lenders nor the Agent shall
         have any recourse  against any Exculpated  Person,  for any deficiency,
         loss or Claim for monetary  damages or otherwise  resulting  therefrom,
         and  recourse  shall be had solely and  exclusively  against  the Trust
         Estate and the Lessee (with respect to the Lessee's  obligations  under
         the  Lease,  the  Participation   Agreement  and  any  other  Operative
         Agreement);  but  nothing  contained  herein  shall be taken to prevent
         recourse  against or the  enforcement  of  remedies  against  the Trust
         Estate  in  respect  of  any  and  all  liabilities,   obligations  and
         undertakings  contained herein, in the Credit Agreement,  in the Notes,
         in the Security  Agreement,  the Mortgage  Instruments  or in any other
         Operative  Agreement.  Notwithstanding  the provisions of this Section,
         nothing  in this  Agreement,  the  Credit  Agreement,  the  Notes,  the
         Security  Agreement,  the Mortgage  Instruments or any other  Operative
         Agreement shall:  (i) constitute a waiver,  release or discharge of any
         indebtedness or obligation evidenced by the Notes or arising under this
         Agreement,  the Security  Agreement,  the Mortgage  Instruments  or the
         Credit  Agreement  or secured by the Security  Agreement,  the Mortgage
         Instruments  or any  other  Operative  Agreement,  but the  same  shall
         continue  until  paid or  discharged;  (ii)  relieve  the Lessor or any
         Exculpated  Person from liability and  responsibility  for (but only to
         the extent of the  damages  arising  by reason  of):  (a) active  waste
         knowingly  committed  by such  Lessor or such  Exculpated  Person  with
         respect to the Properties or (b) any fraud,  gross negligence,  willful
         misconduct or willful  breach as  determined  by a final  judgment of a
         court of  competent  jurisdiction,  on the part of such  Lessor or such
         Exculpated Person;  (iii) relieve such Lessor or such Exculpated Person
         from  liability and  responsibility  for (but only to the extent of the
         moneys   misappropriated,   misapplied   or  not   turned   over)   (a)
         misappropriation or misapplication by such Lessor (i.e., application in
         a manner contrary to any Operative Agreement) of any insurance proceeds
         or  condemnation  award paid or  delivered to such Lessor by any Person
         other than the Agent or (b) any rents or other income  received by such
         Lessor from the Lessee  that are not turned over to the Agent;  or (iv)
         affect or in any way limit the Agent's  rights and  remedies  under any
         Operative Agreement with respect to the Rents and its rights thereunder
         or its right to obtain a judgment against the Lessor's  interest in the
         Properties.

         14.12 Rights of Lessee.

               Notwithstanding any provision of the Operative Agreements,  if at
any time all  obligations  (i) of the Owner Trustee under the Credit  Agreement,
the Security Documents,  the Trust Agreement and the other Operative  Agreements
and (ii) of the Lessee  under the  Operative  Agreements  have in each case been
satisfied  or  discharged  in full,  then the Lessee  shall be  entitled  to (a)
terminate  the Lease and (b) receive all amounts  then held under the  Operative
Agreements  and all  proceeds  with respect to any of the  Properties.  Upon the
termination of the Lease pursuant to the foregoing  clause (a), the Lessor shall
transfer to the Lessee all of its right,  title and  interest  free and clear of
the Lien of the  Lease and all  Lessor  Liens in and to the 

                                       37


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

         14.13 Further Assurances.

               The parties hereto shall  promptly  cause to be taken,  executed,
acknowledged or delivered,  at the sole expense of the Lessee,  all such further
acts,  conveyances,  documents and assurances as the other parties may from time
to time  reasonably  request in order to carry out and effectuate the intent and
purposes of this Participation Agreement, the other Operative Agreements and the
transactions contemplated hereby and thereby (including, without limitation, the
preparation,  execution  and  filing  of any and  all  Uniform  Commercial  Code
financing statements and other filings or registrations which the parties hereto
may from time to time request to be filed or effected).  The Lessee,  at its own
expense and without need of any prior  request from any other party,  shall take
such action as may be necessary (including any action specified in the preceding
sentence),  or (if Owner Trustee shall so request) as so requested,  in order to
maintain and protect all security  interests provided for hereunder or under any
other Operative Agreement.

         14.14 Calculations under Operative Agreements.

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

         14.15 Confidentiality.

               Each of the Owner Trustee, the Holders, the Agent and the Lenders
severally agrees to use reasonable  efforts to keep  confidential all non-public
information pertaining to the Lessee or its Subsidiaries which is provided to it
by the Lessee or its  Subsidiaries,  provided that nothing herein shall prohibit
the disclosure by any such Person of such information:

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

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

         (c) to counsel,  auditors or accountants retained by any such Person or
         any  Affiliates  of any such  Person  provided  they agree to keep such
         information.  confidential as if such Person or Affiliate were party to
         this  Agreement  and to  financial  institution  regulators,  including
         examiners of any Lender, the Agent or the Owner Trustee,  any Holder or
         any Affiliate in the course of examinations of such Persons;

                                       38


         (d)  in  connection   with  any   litigation  or  the   enforcement  or
         preservation of the rights of the Agent, the Owner Trustee, the Lessor,
         any Lender or any Holder under the Operative Agreements;

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

         (f) the Agent may disclose such  information to the Owner Trustee,  any
         Lender or any Holder; or

         (g) to the extent  disclosure  to any other  financial  institution  or
         other Person is appropriate  in connection  with any proposed or actual
         (i)  assignment  or grant of a  participation  by any of the Lenders of
         interests in the Credit  Agreement or (ii)  assignment by any Holder of
         interests in the Trust Agreement to another Person.

         14.16 Calculation of Rent, Interest, Holder Yield and Fees.

               Except  as  otherwise   expressly  set  forth  in  the  Operative
Agreements,  all  calculation  of Rent,  interest,  Holder Yield,  Overdue Rate,
Holder  Overdue  Rate,  Commitment  Fees,  or  Holder  Commitment  Fees  payable
hereunder  shall be computed  based on the actual  number of days elapsed over a
year of 360 days.

         14.17 Responsibilities and Liabilities.

               The  Joint  Lead  Arrangers,  the  Documentation  Agent  and  the
Syndication   Agent,   in   such   respective   capacities,    shall   have   no
responsibilities,  and shall incur no liabilities under this Agreement or any of
the Operative Agreements.

         14.18 Holder and Lender Addenda.

               Each Holder shall become a party to this  Agreement by delivering
to the  Administrative  Agent a Holder  Addendum,  substantially  in the form of
Exhibit  H,  duly   executed  by  such  Holder,   the  Owner   Trustee  and  the
Administrative  Agent.  Each Lender  shall  become a party to this  Agreement by
delivering to the Administrative  Agent a Lender Addendum,  substantially in the
form  of  Exhibit  I,  duly  executed  by  such  Lender,  the  Borrower  and the
Administrative Agent.


                                       39


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

                                        HEALTHSOUTH Corporation., as Lessee


                                        By:      /s/ Malcolm E. McVay
                                           ------------------------------------
                                           Name: Malcolm E. McVay
                                           Title: Senior Vice President

                                        FIRST    SECURITY     BANK,     NATIONAL
                                        ASSOCIATION, not individually, except as
                                        expressly  stated herein,  but solely as
                                        Owner  Trustee  under  the   HEALTHSOUTH
                                        Corporation Trust 2000-1


                                        By:         /s/ Arge Pavlos
                                           -------------------------------------
                                           Name: Arge Pavlos
                                           Title: Trust Officer

                                        UBS AG, STAMFORD BRANCH, as Agent


                                        By:       /s/ Daniel W. Ladd III
                                           -------------------------------------
                                           Name: Daniel W. Ladd III
                                           Title: Executive Director


                                        By:      /s/ Wilfred V. Saint
                                           -------------------------------------
                                           Name: Wilfred V. Saint



                                       40