Exhibit 10.137

CONSTRUCTION AGREEMENT
(LIVERMORE/PARCEL 6)
BETWEEN
LAM RESEARCH CORPORATION
(“LRC”)
AND
BNP PARIBAS LEASING CORPORATION
(“BNPPLC”)
December 18, 2007

 

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TABLE OF CONTENTS

                                              Page ENGAGEMENT AND AUTHORIZATION
    1   GENERAL TERMS AND CONDITIONS     2   1   Additional definitions     2  
    “97-10/Meltdown Event”     2       “97-10/Prepayment”     2      
“97-10/Project Costs”     3       “97-10/Pronouncement”     4       “Accrued
Construction Period Interest Expense”     4       “Administrative Fee”     5    
  “Affiliate’s Contract”     5       “Arrangement Fee”     5       “Capital
Adequacy Charges”     5       “Carrying Costs”     5       “Commitment Fees”    
5       “Complete Taking”     5       “Completion Date”     5       “Completion
Notice”     5       “Construction Advances”     6       “Construction Advance
Request”     6       “Construction Allowance”     6       “Construction Budget”
    6       “Construction Project”     6       “Covered Construction Period
Losses”     6       “Defective Work”     6       “FOCB Notice”     6      
“Force Majeure Event”     7       “Funded Construction Allowance”     7      
“Future Work”     7       “Increased Cost Charges”     7       “Increased
Commitment”     7       “Increased Funding Commitment”     7       “Increased
Time Commitment”     8       “Initial Advance”     8       “LRC’s Estimate of
Force Majeure Delays”     8       “LRC’s Estimate of Force Majeure Excess Costs”
    8       “Maximum Construction Allowance”     8       “Notice of LRC’s Intent
to Terminate”     8       “Notice of LRC’s Intent to Terminate Because of a
Force Majeure Event”     8       “Notice of Termination by LRC”     8      
“Outstanding Construction Allowance”     8       “Pre-lease Casualty”     8  

 

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TABLE OF CONTENTS
(Continued)

                                              Page     “Pre-lease Force Majeure
Delays”     8       “Pre-lease Force Majeure Event”     8       “Pre-lease Force
Majeure Event Notice”     9       “Pre-lease Force Majeure Excess Costs”     9  
    “Pre-lease Force Majeure Losses”     9       “Prior Work”     10      
“Projected Cost Overruns”     10       “Reimbursable Construction Period Costs”
    10       “Remaining Proceeds”     10       “Scope Change”     10      
“Target Completion Date”     11       “Termination of LRC’s Work”     11      
“Third Party Contract”     11       “Third Party Contract/Termination Fees”    
11       “Timing or Budget Shortfall”     11       “Work”     12      
“Work/Suspension Event”     12       “Work/Suspension Notice”     12      
“Work/Suspension Period”     13     2   Construction and Management of the
Property by LRC     13       (A)   The Construction Project     13           (1)
  Construction Approvals by BNPPLC     13  
 
          (a)   Preconstruction Approvals by BNPPLC     13  
 
          (b)   Approval of Scope Changes     13           (2)   LRC’s Rights of
Access and to Control Construction     13  
 
          (a)   Performance of the Work     14  
 
          (b)   Third Party Contracts     14  
 
          (c)   Adequacy of Drawings, Specifications and Budgets     15  
 
          (d)   Existing Condition of the Land and Improvements     15  
 
          (e)   Correction of Defective Work     15  
 
          (f)   Clean Up     15  
 
          (g)   No Damage for Delays     15  
 
          (h)   No Other Fees to LRC     16  
 
          (i)   Administration of Existing Space Leases     16           (3)  
Quality of Work     17       (B)   Completion Notice     17       (C)   Status
of Property Acquired With BNPPLC’s Funds     17       (D)   Insurance     18    
      (1)   Liability Insurance     18           (2)   Property Insurance     18
 

(ii)

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TABLE OF CONTENTS
(Continued)

                                              Page         (3)   Failure of LRC
to Obtain Insurance     19           (4)   Waiver of Subrogation     19      
(E)   Condemnation     19       (F)   Additional Representations, Warranties and
Covenants of LRC Concerning the Property     20           (1)   Payment of Local
Impositions     20           (2)   Operation and Maintenance     20          
(3)   Debts for Construction, Maintenance, Operation or Development     21      
    (4)   Permitted Encumbrances     22           (5)   Books and Records
Concerning the Property     22       (G)   BNPPLC’s Right of Access     22      
    (1)   Access Generally     22           (2)   Failure of LRC to Perform    
22     3   Amounts to be Added to the Lease Balance (in Addition to Construction
Advances)     23       (A)   Initial Advance     23       (B)   Carrying Costs  
  23       (C)   Commitment Fees     24       (D)   Future Administrative Fees
and Out-of-Pocket Costs     24       (E)   Increased Cost Charges and Capital
Adequacy Charges     25     4   Construction Advances     26       (A)   Costs
Subject to Reimbursement Through Construction Advances     26       (B)  
Exclusions From Reimbursable Construction Period Costs     27       (C)  
Conditions to LRC’s Right to Receive Construction Advances     28           (1)
  Construction Advance Requests     28           (2)   Amount of the Advances  
  28  
 
          (a)   The Maximum Construction Allowance     28  
 
          (b)   Costs Previously Incurred by LRC     28  
 
          (c)   Limits During any Work/Suspension Period     29  
 
          (d)   Restrictions Imposed for Administrative Convenience     30      
    (3)   No Advances After Certain Dates     30       (D)   Breakage Costs for
Construction Advances Requested But Not Taken     30       (E)   No Third Party
Beneficiaries     30       (F)   No Waiver     30     5   Application of
Insurance and Condemnation Proceeds     30       (A)   Collection and
Application Generally     30       (B)   Advances of Escrowed Proceeds to LRC  
  31       (C)   Status of Escrowed Proceeds After Commencement of the Term of
the Lease     31       (D)   Special Provisions Applicable After a
97-10/Meltdown Event or Event of Default     32       (E)   LRC’s Obligation to
Restore     32  

(iii)

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TABLE OF CONTENTS
(Continued)

                                              Page     (F)   Special Provisions
Concerning a Complete Taking     32       (G)   Preservation of LRC’s Right to
Receive Construction Advances     32     6   Notice of Cost Overruns and
Pre-lease Force Majeure Events     33       (A)   Notice of Projected Cost
Overruns     33       (B)   Pre-lease Force Majeure Event Events and Notices    
33     7   Suspension and Termination of LRC’s Work     33       (A)   Rights
and Obligations During a Work/Suspension Period     33       (B)   LRC’s
Election to Terminate LRC’s Work     33       (C)   BNPPLC’s Election to
Terminate LRC’s Work     36       (D)   Surviving Rights and Obligations     37
      (E)   Cooperation After a Termination of LRC’s Work     37     8   LRC’s
Obligation for a 97-10/Prepayment     39     9   Indemnity for Covered
Construction Period Losses     39       (A)   Covenant to Indemnify Against
Covered Construction Period Losses     39       (B)   Certain Losses Included or
Excluded     41           (1)   Environmental     41           (2)   Failure to
Maintain a Safe Work Site     41           (3)   Failure to Complete
Construction     41           (4)   Fraud     41           (5)   Excluded Taxes
and Other Exclusions     42           (6)   Action or Omission of Tenant Under
Existing Space Lease     42       (C)   Express Negligence Protection     42    
  (D)   Survival of Indemnity     43       (E)   Due Date for Indemnity Payments
    43       (F)   Order of Application of Payments     44       (G)   Defense
of BNPPLC     44           (1)   Assumption of Defense     44           (2)  
Indemnity Not Contingent     44       (H)   Notice of Claims     44       (I)  
Settlements Without the Prior Consent of LRC     45           (1)   Election to
Pay Reasonable Settlement Costs in Lieu of Actual     45           (2)  
Conditions to Election     45           (3)   Indemnity Survives Settlement    
45  

(iv)

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TABLE OF CONTENTS
(Continued)
Exhibits and Schedules

     
Exhibit A
  Legal Description
 
   
Exhibit B
  Description of the Construction Project and Budget
 
   
Exhibit C
  Construction Advance Request Form
 
   
Exhibit D
  Pre-lease Force Majeure Event Notice
 
   
Exhibit E
  Notice of Termination by LRC’s Work
 
   
Exhibit F
  Notice of LRC’s Intent to Terminate
 
   
Exhibit G
  Notice of Increased Funding Commitment by BNPPLC
 
   
Exhibit H
  Notice of Increased Time Commitment by BNPPLC
 
   
Exhibit I
  Notice of Rescission of LRC’s Intent to Terminate

(v)

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CONSTRUCTION AGREEMENT
(LIVERMORE/PARCEL 6)
     This CONSTRUCTION AGREEMENT (LIVERMORE/PARCEL 6) (this “Agreement”), dated
as of December 18, 2007 (the “Effective Date”), is made by and between BNP
PARIBAS LEASING CORPORATION (“BNPPLC”), a Delaware corporation, and LAM RESEARCH
CORPORATION(“LRC”), a Delaware corporation.
RECITALS
     Contemporaneously with the execution of this Agreement, BNPPLC and LRC are
executing a Common Definitions and Provisions Agreement (Livermore/Parcel 6)
dated as of the Effective Date (the “Common Definitions and Provisions
Agreement”), which by this reference is incorporated into and made a part of
this Agreement for all purposes. As used in this Agreement, capitalized terms
defined in the Common Definitions and Provisions Agreement and not otherwise
defined in this Agreement are intended to have the respective meanings assigned
to them in the Common Definitions and Provisions Agreement.
     At the request of LRC and to facilitate the transaction contemplated in the
other Operative Documents, contemporaneously with this Agreement BNPPLC is
acquiring the Land described in Exhibit A and other Property.
     Also contemporaneously with this Agreement, BNPPLC and LRC are executing a
Lease Agreement (Livermore/Parcel 6) (the “Lease”), pursuant to which the
parties expect that LRC will lease the Land described in Exhibit A and other
Property from BNPPLC for a lease term that will commence on the Completion Date
(as defined below).
     In anticipation of the construction of new or additional Improvements for
LRC’s use pursuant to the Lease, BNPPLC and LRC have agreed upon the terms and
conditions upon which BNPPLC is willing to authorize LRC to arrange and manage
such construction and upon which BNPPLC is willing to provide funds for such
construction, and by this Agreement BNPPLC and LRC desire to evidence such
agreement.
ENGAGEMENT AND AUTHORIZATION
     Subject to the terms and conditions set forth in this Agreement, BNPPLC
does hereby engage and authorize LRC — and LRC does hereby accept such
engagement and authorization, as an independent contractor for BNPPLC — to
construct the Construction Project on the Land and to manage such construction
for BNPPLC as BNPPLC’s construction agent. As more particularly provided in
subparagraph 2(A)(2) below, LRC will have full and exclusive rights of

 

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access to the Land and all Improvements on the Land to accomplish such
construction. However, the rights and authority granted to LRC by this Agreement
are expressly made subject and subordinate to the terms and condition
hereinafter set forth and to the Permitted Encumbrances and to any other claims
or encumbrances affecting the Land or the Property that may be asserted by third
parties other than Liens Removable by BNPPLC.
GENERAL TERMS AND CONDITIONS
1 Additional definitions. As used in this Agreement, capitalized terms defined
above will have the respective meanings assigned to them above; as indicated
above, capitalized terms that are defined in the Common Definitions and
Provisions Agreement and that are used but not defined herein will have the
respective meanings assigned to them in the Common Definitions and Provisions
Agreement; and, the following terms will have the following respective meanings:
     “97-10/Meltdown Event” means any of the following:
     (a) LRC gives a Notice of LRC’s Intent to Terminate and thereafter (i)
fails to rescind the same as described in subparagraph 7(B)(7) within ten days
after BNPPLC responds with any Increased Commitment, or (ii) gives a Notice of
Termination by LRC as provided in subparagraph 7(B)(1); or
     (b) LRC gives a notice to terminate the Supplemental Payment Obligation
imposed by the Purchase Agreement as described in subparagraph 6(A) of the
Purchase Agreement; or
     (c) BNPPLC gives notice to LRC as described in subparagraph 7(C) to cause a
Termination of LRC’s Work; or
     (d) LRC fails for any reason whatsoever to substantially complete the
Construction Project and give a Completion Notice to BNPPLC prior to the Target
Completion Date; or
     (e) for any reason whatsoever (including the accrual of Carrying Costs),
the Funded Construction Allowance exceeds the Maximum Construction Allowance.
“97-10/Prepayment” means a payment to BNPPLC required by Paragraph 8, which will
equal eighty-nine percent (89%) of the aggregate of all 97-10/Project Costs paid
or
 
 Construction Agreement (Livermore/Parcel 6) — Page 2

 

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incurred on or prior to the date of such payment, less amounts (if any) then
owed by BNPPLC to LRC pursuant to this Agreement as reimbursements for
Reimbursable Construction Period Costs paid by LRC and not theretofore
reimbursed.
“97-10/Project Costs” means all of the following, but without duplication of any
item, including any of the following paid or reimbursed from the Initial
Advance:
     (a) the net purchase price paid by BNPPLC to acquire the Land and existing
Improvements;
     (b) costs incurred for the Work, including not only hard costs incurred for
the new Improvements described in Exhibit B, but also the following costs to the
extent reasonably incurred in connection with the Construction Project:

  •   soft costs, such as architectural fees, engineering fees and fees and
costs paid in connection with obtaining project permits and approvals required
by Governmental Authorities or any Permitted Encumbrance,     •   site
preparation costs, and     •   costs of offsite and other public improvements
required as conditions of governmental approvals for the Construction Project or
required by any Permitted Encumbrances;

     (c) costs incurred to maintain insurance required by (and consistent with
the requirements of) this Agreement prior to the Completion Date;
     (d) Local Impositions that have accrued or become due prior to the
Completion Date;
     (e) Accrued Construction Period Interest Expense; and
     (f) any costs in addition to those described in clauses (a) through
(e) preceding that GAAP (as it exists on the Effective Date) would allow BNPPLC
to capitalize as part of the cost of the Property or that the
97-10/Pronouncement would allow BNPPLC to characterize as project costs,
including cancellation or termination fees or other compensation payable by LRC
or BNPPLC pursuant to any contract concerning the Construction Project made by
LRC or BNPPLC with any general contractor, architect, engineer or other third
party because of any election by LRC or BNPPLC to cancel or terminate such
contract.
 
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However, notwithstanding the foregoing, 97-10/Project Costs will not include
Pre-lease Force Majeure Losses, Commitment Fees, the Arrangement Fee, any
Administrative Fee or any legal fees which are included in Transaction Expenses.
Further, 97-10 Project Costs will not include costs incurred to satisfy any
Existing Space Lease to the extent such cost would not have been incurred but
for such Existing Space Lease. (Thus, for example, costs of providing any
required janitorial service to a tenant under an Existing Space Lease would not
be included. In contrast, a Local Imposition that must be paid irrespective of
the requirements of any Existing Space Lease may qualify as a 97-10/Project Cost
even if payment of such Local Imposition is required by an Existing Space
Lease.)
“97-10/Pronouncement” means the pronouncement issued by the Emerging Issues Task
Force of the Financial Accounting Standards Board in 1998 titled “EITF 97-10:
The Effect of Lessee Involvement in Asset Construction”, which provides that
certain kinds of involvement by a lessee in pre-lease commencement construction
will cause the lessee to be considered as the owner of the leased property
during the construction period and then will require application of the
appropriate sale and leaseback accounting rules.
“Accrued Construction Period Interest Expense” means interest that has accrued
and that BNPPLC has paid or is obligated to pay on Funding Advances used to pay
or reimburse 97-10/Project Costs for any period prior to the Completion Date.
Subject to the limitations and qualifications set out below in this definition:
(1) Accrued Construction Period Interest Expense will include a percentage,
equal to the aggregate Percentages of all Participants (under and as defined in
the Participation Agreement), of Carrying Costs and Commitment Fees that are
added to the Outstanding Construction Allowance as provided in this Agreement,
it being understood that the additional amounts BNPPLC must pay to the
Participants under the Participation Agreement because of the accrual of
Carrying Costs and Commitment Fees effectively constitute construction period
interest on advances the Participants make to BNPPLC under the Participation
Agreement.
(2) Accrued Construction Period Interest Expense will also include any interest
and other finance charges that accrue prior to the Completion Date because of
Funding Advances provided to BNPPLC by BNPPLC’s Parent in the form of loans.
However, the interest and other finance charges accruing on Funding Advances
provided by BNPPLC’s Parent and included in Accrued Construction Period Interest
Expense will not in any event exceed the portion of Carrying Costs attributable
to the percentage of the Lease Balance funded or maintained by such Funding
Advances, computed as if such
 
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Carrying Costs accrued at a per annum rate equal to LIBOR (i.e., before the
addition of the Secured Spread as provided in subparagraph 3(B)). Further,
Accrued Construction Period Interest Expense will not include any Carrying Costs
(or the corresponding interest or finance charges that BNPPLC must pay to the
Participants under the Participation Agreement or to BNPPLC’s Parent) that
accrue from time to time in respect of the portion of the Lease Balance which
exceeds the outstanding 97-10/Project Costs. For example, Accrued Construction
Period Interest Expense will not include any portion of Carrying Costs (or any
corresponding interest or finance charges that BNPPLC must pay to the
Participants under the Participation Agreement or to BNPPLC’s Parent) because of
the inclusion in the Lease Balance of the Arrangement Fee, Administrative Fees
or other amounts excluded from 97-10/Project Costs as described in the last
paragraph of the definition thereof set out above. Without limiting the
foregoing, Accrued Construction Period Interest Expense will not include any
portion of Carrying Costs included in Pre-lease Force Majeure Losses (as set
forth in the definition thereof below) or interest or finance charges that
BNPPLC must pay to the Participants under the Participation Agreement or to
BNPPLC’s Parent because of the accrual of such portion of Carrying Costs.
“Administrative Fee” has the meanings indicated in subparagraph 3(A) and
subparagraph 3(D).
“Affiliate’s Contract” has the meaning indicated in subparagraph 2(A)(2)(b)2).
“Arrangement Fee” has the meaning indicated in subparagraph 3(A).
“Capital Adequacy Charges” has the meaning indicated in subparagraph 3(E)(1).
“Carrying Costs” has the meaning indicated in subparagraph 3(B).
“Commitment Fees” has the meaning indicated in subparagraph 3(C).
“Complete Taking” means a taking by eminent domain prior to the Completion Date
over LRC’s objection of all of the Land or the Property, or so much thereof as
to make it impossible to complete the Construction Project for its intended uses
on the Land regardless of any Scope Changes BNPPLC may be willing to approve or
any Increased Commitment that BNPPLC may be willing to provide.
“Completion Date” means the date upon which LRC gives the notice to BNPPLC which
is required by subparagraph 2(B), after having substantially completed the
Construction Project and having obtained any certificate of occupancy or other
permit (temporary or permanent) required for the commencement of LRC’s use of
the Improvements.
 
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“Completion Notice” means the notice required by subparagraph 2(B) from LRC to
BNPPLC, advising BNPPLC that LRC has substantially completed construction of the
Construction Project and has obtained any certificate of occupancy or other
permit (temporary or permanent) required for the commencement of LRC’s use of
the Improvements.
“Construction Advances” means actual advances of funds made by or on behalf of
BNPPLC to or on behalf of LRC as provided in Paragraph 4, which sets forth LRC’s
rights to receive advances for Reimbursable Construction Period Costs. The term
“Construction Advances” will not, however, include advances of insurance
proceeds, condemnation proceeds or other Escrowed Proceeds to pay or reimburse
costs of repairs or restoration.
“Construction Advance Request” has the meaning indicated in subparagraph
4(C)(1).
“Construction Allowance” means the allowance to be provided by BNPPLC for the
design and construction of the Construction Project, against which and from
which Carrying Costs, Construction Advances and other amounts will be or may be
charged and paid as provided in various provisions of this Agreement (including
Paragraphs 3 and 4).
“Construction Budget” means the budget for the Construction Project set forth in
Exhibit B.
“Construction Project” means the new buildings or other substantial Improvements
to be constructed, or the alteration of existing Improvements, as described
generally in Exhibit B.
“Covered Construction Period Losses” has the meaning indicated in subparagraph
9(A).
“Defective Work” has the meaning indicated in subparagraph 2(A)(2)(e).
“FOCB Notice” means a notice from BNPPLC to LRC advising LRC of any of the
following events or circumstances, and also advising LRC that because of any of
the following events or circumstances BNPPLC will be entitled to make the
election described in subparagraph 7(C), which will constitute a Termination of
LRC’s Work and a 97-10/Meltdown Event:
     (1) LRC has taken action to cancel or terminate or reduce the coverage
available to BNPPLC under the builder’s risk insurance obtained for the
Construction
 
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Project as required by this Agreement, or LRC has otherwise failed to maintain
any insurance or to provide insurance certificates to BNPPLC as required by this
Agreement and not cured such failure within ten days after receiving notice
thereof, or
     (2) LRC has given any Pre-lease Force Majeure Event Notice to BNPPLC, or
     (3) an Event of Default has occurred and is continuing; or
     (4) a Work/Suspension Event has occurred and not been rectified by LRC.
“Force Majeure Event” means (A) any taking of any part of the Property by
eminent domain prior to the Completion Date, and (B) any damage to the
Improvements or disruption of the Work that occurs prior to the Completion Date,
excluding, however, any damage or disruption that would not have occurred or
been suffered but for any act or any omission of LRC or of any LRC’s contractors
or subcontractors during the period prior to any Termination of LRC’s Work as
provided in subparagraphs 7(B) and 7(C) or during any subsequent period in which
LRC does not relinquish possession or control of the Construction Project. Force
Majeure Events will include, for example and without limitation damage to the
Improvements or disruption of the Work caused by fire, or acts of God (such as
flood, lightning, earthquake or hurricane), war, strikes and other labor
disputes, riot or similar civil disturbance, or any act or omission (which is
not requested or authorized by LRC) of any tenant (or of a tenant’s employees or
of any other party acting under such tenant’s control or with the approval or
authorization of such tenant) under an Existing Space Lease; but only to the
extent such damage or disruption is beyond the control of and not caused in
whole or in part by negligence, illegal acts or willful misconduct on the part
of LRC or of its employees or of any other party acting under LRC’s control or
with the approval or authorization of LRC.
“Funded Construction Allowance” means on any day the Outstanding Construction
Allowance on that day, including all Construction Advances and Carrying Costs
added to the Outstanding Construction Allowance on or prior to that day, plus
the amount of any Qualified Prepayments deducted on or prior to that day in the
calculation of such Outstanding Construction Allowance.
“Future Work” has the meaning indicated in subparagraph 4(C)(2)(b).
“Increased Cost Charges” has the meaning indicated in subparagraph 3(E)(1).
“Increased Commitment” has the meaning indicated in subparagraph 7(B)(6).
“Increased Funding Commitment” has the meaning indicated in
 
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subparagraph 7(B)(6)(a).
“Increased Time Commitment” has the meaning indicated in subparagraph
7(B)(6)(b).
“Initial Advance” has the meaning indicated in subparagraph 3(A).
“LRC’s Estimate of Force Majeure Delays” has the meaning indicated in
subparagraph 7(B)(4).
“LRC’s Estimate of Force Majeure Excess Costs” has the meaning indicated in
subparagraph 7(B)(3).
“Maximum Construction Allowance” means an amount equal to the difference
computed by subtracting the Initial Advance from $32,375,000, as such amount may
be increased from time to time by any Increased Funding Commitment made by
BNPPLC as provided in subparagraph 7(B)(6).
“Notice of LRC’s Intent to Terminate” has the meaning indicated in subparagraph
7(B)(2).
“Notice of LRC’s Intent to Terminate Because of a Force Majeure Event” has the
meaning indicated in subparagraph 7(B)(5).
“Notice of Termination by LRC” has the meaning indicated in subparagraph
7(B)(1).
“Outstanding Construction Allowance” means, as of any date, the difference (but
not less than zero) of (A) the total Construction Advances made by or on behalf
of BNPPLC on or prior to such date in question, plus (B) all Carrying Costs,
Commitment Fees, Administrative Fees, Increased Cost Charges and Capital
Adequacy Charges added on or prior to the date as provided in Paragraph 3, less
(C) any funds received and applied as Qualified Prepayments on or prior to such
date.
“Pre-lease Casualty” has the meaning indicated in subparagraph 2(A)(2)(a).
“Pre-lease Force Majeure Delays” means delays in the completion of the Work to
the extent (but only to the extent) caused by a Pre-lease Force Majeure Event.
“Pre-lease Force Majeure Event” means a Force Majeure Event that occurs prior to
the Completion Date; provided, however, that if LRC does not notify BNPPLC of
any such Force Majeure Event by the delivery of a Pre-lease Force Majeure Event
Notice within thirty days after the Force Majeure Event first occurs or
commences, then such Force
 
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Majeure Event will not qualify as a “Pre-lease Force Majeure Event” for purposes
of this Agreement or the other Operative Documents.
“Pre-lease Force Majeure Event Notice” has the meaning indicated in subparagraph
6(B).
“Pre-lease Force Majeure Excess Costs” means the amount (if any) by which the
increases in the costs of the Work resulting directly and solely from a
Pre-lease Force Majeure Event (such as, for example, the costs of repairing
damage to the Improvements caused by a Pre-lease Force Majeure Event) exceed the
amounts available to pay or reimburse LRC for such increased costs. Amounts
available to pay or reimburse such increased costs will include (a) insurance
proceeds or any recovery from a third party (including any Escrowed Proceeds
held by BNPPLC), and (b) any part of the Construction Allowance (including any
unused contingency amount in the Construction Budget) not used or needed to
cover other Reimbursable Construction Period Costs.
“Pre-lease Force Majeure Losses” means any of the following Losses resulting
from any taking of the Property, damage to the Improvements or disruption of the
Work which constitutes a Pre-lease Force Majeure Event:
     (a) the costs of repairing any such damage to the extent that such costs
have, as of the date of any required determination of Pre-lease Force Majeure
Losses, been paid or reimbursed from a Construction Advance (and thus are
included in the Lease Balance as of that date), to be distinguished from costs
of repairs paid or reimbursed from insurance proceeds or from any recovery from
a third party;
     (b) any diminution in the value of the Property resulting from any such
taking or resulting from any such damage that has not, as of the date of the
required determination of Pre-lease Force Majeure Losses, been repaired;
     (c) any increase in the total amount of Carrying Costs, Commitment Fees,
Administrative Fees, Increased Cost Charges and Capital Adequacy Charges (and
any other amounts) added to the Lease Balance as provided in Paragraph 3 solely
by reason of Pre-lease Force Majeure Delays; and
     (d) to the extent not already included in the increase described in the
preceding clause, all increases in Carrying Costs that are attributable to the
amounts included in Pre-lease Force Majeure Losses pursuant to the preceding
clause (a);
but in each case such amounts will constitute Pre-lease Force Majeure Losses
only to the extent, if any, that they are not offset by condemnation or
insurance proceeds which are
 
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(1) paid by reason of such Pre-lease Force Majeure Event (including insurance
proceeds paid to compensate BNPPLC or LRC for increased financing costs, the
lost time value of BNPPLC’s investment in the Project or business interruption)
and (2) applied as a Qualified Prepayment to reduce the Lease Balance.
It is understood that costs of repairing damage caused by a Pre-lease Force
Majeure Event which are not covered by insurance proceeds by reason of an
insurance policy deductible permitted by the Minimum Insurance Requirements, and
thus are paid or reimbursed from a Construction Advance instead, will constitute
Pre-Lease Force Majeure Losses.
Also, for purposes of this definition, the diminution in the value of the
Improvements, as described in the preceding clause (b), because of any damage
that constitutes a Pre-lease Force Majeure Event will not exceed the amount
thereof estimated in good faith by any independent appraiser or insurance
adjuster engaged by BNPPLC to determine such amount after BNPPLC has received a
Pre-lease Force Majeure Event Notice as provided in subparagraph 6(B), nor will
it exceed the cost of repairing the damage as estimated in good faith by any
such independent insurance adjuster or as indicated by any bona fide written bid
to make the repairs that BNPPLC obtains from a reputable contractor capable of
making the repairs.
“Prior Work” has the meaning indicated in subparagraph 4(C)(2)(b).
“Projected Cost Overruns” means the excess (if any), calculated as of the date
of each Construction Advance Request, of (1) the total of projected Reimbursable
Construction Period Costs yet to be incurred or for which LRC has yet to be
reimbursed hereunder (including projected Reimbursable Construction Period Costs
for Future Work), over (2) the balance of the remaining Construction Allowance
then projected to be available to cover such costs. The balance of the remaining
Construction Allowance then projected to be available will equal: (i) the amount
(if any) by which the Maximum Construction Allowance exceeds the Funded
Construction Allowance, plus (ii) any Escrowed Proceeds then available or
expected to be available to cover costs of repairs and restoration that LRC will
perform as part of the Work after a casualty or condemnation, less (iii) all
projected future Carrying Costs, Commitment Fees, Administrative Fees and other
amounts to be added to the Outstanding Construction Allowance as provided in
Paragraph 3.
“Reimbursable Construction Period Costs” has the meaning indicated in
subparagraph 4(A).
“Remaining Proceeds” has the meaning indicated in subparagraph 5(A).
 
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“Scope Change” means a change to the Construction Project that, if implemented,
will make the quality, function or capacity of the Improvements “materially
different” (as defined below in this subparagraph) than as described or inferred
by the site plan or plans and renderings referenced in Exhibit B. The term
“Scope Change” is not intended to include the mere refinement, correction or
detailing of the site plan, plans or renderings submitted to BNPPLC by LRC. As
used in this definition, a “material difference” means a difference that could
reasonably be expected to (a) cause the Lease Balance to exceed the fair market
value of the Property when the Construction Project is completed and all
Construction Advances required in connection therewith have been funded, or
significantly increase any such excess, (b) change the general character of the
Improvements from that needed to accommodate the uses to be permitted by
subparagraph 2(A) of the Lease, or (c) cause or exacerbate Projected Cost
Overruns.
“Target Completion Date” means the date which is the last day of the 18th
calendar month following the Effective Date, as such date may be extended from
time to time by any Increased Time Commitment made by BNPPLC as provided in
subparagraph 7(B)(6).
“Termination of LRC’s Work” means a termination of LRC’s rights and obligations
to continue the Work because of an election to terminate made by LRC pursuant to
subparagraph 7(B) or because of an election by BNPPLC made pursuant to
subparagraph 7(C).
“Third Party Contract” has the meaning indicated in subparagraph 2(A)(2)(b)1).
“Third Party Contract/Termination Fees” means any amounts, however denominated,
for which LRC will be obligated under a Third Party Contract as a result of any
election or decision by LRC to terminate such Third Party Contract, including
demobilization costs; provided, however, amounts payable only by reason of Prior
Work as of the date of any such termination will not be characterized as Third
Party Contract/Termination Fees. If LRC reserves an absolute express right in a
Third Party Contract to terminate such contract at any time, without cause, for
a specified U.S. dollar amount, such amount will constitute a Third Party
Contract/Termination Fee. If no such right is reserved in a Third Party
Contract, the amount of damages that LRC is required to pay (in addition to
payments required for Prior Work) upon a repudiation of the Third Party Contract
by LRC will qualify as a “Third Party Contract/Termination Fee” applicable to
such contract for purposes of this Agreement.
“Timing or Budget Shortfall” means that, as of any time prior to the Completion
Date, (i) the remaining available Construction Allowance will not be sufficient
to cover
 
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Reimbursable Construction Period Costs yet to be paid or reimbursed from
Construction Advances (x) because the cost of the Work exceeds budgeted
expectations (resulting in Projected Cost Overruns) through no fault of LRC or
its employees or any other party acting under LRC’s control or with the approval
or authorization of LRC, (y) because of any Pre-lease Force Majeure Event or
(z) because LRC can no longer satisfy conditions to BNPPLC’s obligation to
provide further Construction Advances, or (ii) the Work will not be
substantially completed prior to the Target Completion Date through no fault of
LRC or its employees or any other party acting under LRC’s control or with the
approval or authorization of LRC. As used in this definition with respect to any
party, the term “fault” will not include inadequate estimation of time or
dollars unless shown to be caused by the negligence or willful misconduct of
that party.
“Work” has the meaning indicated in subparagraph 2(A)(2)(a).
“Work/Suspension Event” means any of the following:
     (1) Projected Cost Overruns have become more likely than not, in BNPPLC’s
good faith judgment (taking into account any notices or Construction Draw
Requests from LRC indicating that a Pre-lease Force Majeure Event may result in
Projected Cost Overruns), and BNPPLC has notified LRC of such judgment and the
reasons therefor.
     (2) Delays in the Work (including any delays resulting from damage to the
Property by fire or other casualty or from any taking of the Property by eminent
domain) have made it substantially unlikely, in BNPPLC’s good faith judgment,
that LRC will be able to complete the Construction Project in accordance with
the requirements of this Agreement prior to the Target Completion Date using
only the funds available to LRC under this Agreement, and BNPPLC has notified
LRC of such judgment and the reasons therefor.
     (3) With respect to any Construction Advance, BNPPLC has requested, but LRC
has failed to provide within thirty days after receipt of the request:
(1) invoices, requests for payment from contractors and other evidence
reasonably establishing that the costs and expenses for which LRC has requested
or is requesting reimbursement constitute actual Reimbursable Construction
Period Costs, and (2) canceled checks, lien waivers or other evidence reasonably
establishing that all prior Construction Advances paid to LRC have been used by
LRC to pay the Reimbursable Construction Period Costs for which the prior
advances were requested and made.
“Work/Suspension Notice” means a notice from BNPPLC to LRC advising LRC of any
event or circumstances that constitute a Work/Suspension Event and advising LRC
that (1) before the Work/Suspension Event is rectified BNPPLC may limit
Construction
 
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Advances to LRC as permitted by this Agreement, and (2) unless LRC does rectify
the Work/Suspension Event within thirty days after LRC’s receipt of such notice,
BNPPLC may elect to send an FOCB Notice in anticipation of a Termination of
LRC’s Work.
“Work/Suspension Period” means any period (1) beginning with the date of any
Work/Suspension Notice, FOCB Notice or Notice of LRC’s Intent to Terminate, and
(2) ending on the earlier of (a) the first date upon which (i) no
Work/Suspension Events are continuing, (ii) all previous FOCB Notices and
Notices of LRC’s Intent to Terminate (if any) have been rescinded, and (iii) no
97-10/Meltdown Events have occurred, or (b) the effective date of any
Termination of LRC’s Work as described in subparagraph 7(B) or subparagraph
7(C).
2 Construction and Management of the Property by LRC.
     (A) The Construction Project.
     (1) Construction Approvals by BNPPLC.
     (a) Preconstruction Approvals by BNPPLC. LRC has submitted and obtained
BNPPLC’s approval of the site plan and descriptions of the Construction Project
referenced in Exhibit B. Also set forth in Exhibit B is a general description of
the Construction Project. The Construction Project, as constructed by LRC
pursuant to this Agreement, and all construction contracts and other agreements
executed or adopted by LRC in connection therewith, must not be inconsistent in
any material respect with the plans or other items referenced in Exhibit B,
except to the extent otherwise provided by any Scope Change approved by BNPPLC.
     (b) Approval of Scope Changes. Before making a Scope Change, LRC must
provide to BNPPLC a reasonably detailed written description of the Scope Change,
a revised Construction Budget and a copy of any changes to the drawings, plans
and specifications for the Improvements required in connection therewith, all of
which must be approved in writing by BNPPLC before the Scope Change is
implemented. After receiving such items, BNPPLC will endeavor in good faith to
promptly respond to any request by LRC for approval of the Scope Change. BNPPLC
will not, however, be liable for any failure to provide a prompt response.
Further, BNPPLC’s approval will not in any event constitute a waiver of
subparagraph 2(A)(3) or of any other provision of this Agreement or other
Operative Documents.
 
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     (2) LRC’s Rights of Access and to Control Construction. Subject to the
terms and conditions set forth in this Agreement, and prior to any Termination
of LRC’s Work as provided in subparagraphs 7(B) and 7(C), LRC will have full
access to the Land and all Improvements on the Land to the exclusion of BNPPLC
or others claiming through BNPPLC (except as provided in subparagraph 2(G)) and
will have the sole right to control and the sole responsibility for the design
and construction of the Construction Project, including the means, methods,
sequences and procedures implemented to accomplish such design and construction.
Although title to all Improvements will vest in BNPPLC (as more particularly
provided in subparagraph 2(C)), BNPPLC’s obligation with respect to the
Construction Project will be limited to the making of advances under and subject
to the conditions set forth in this Agreement. Without limiting the foregoing,
LRC acknowledges and agrees that:
     (a) Performance of the Work. Except as provided in subparagraphs 7(A) and
7(D), LRC must, using commercially reasonable efforts and in an expeditious and
economical manner not inconsistent with the interests of BNPPLC, perform or
cause to be performed all work required, and must provide or cause to be
provided all supplies and materials required, to demolish and remove existing
Improvements on the Property (as appropriate to accommodate the new Improvements
to be constructed) and to design and complete construction of the Construction
Project (collectively, the “Work”) no later than the Target Completion Date. The
Work will include obtaining all necessary building permits and other
governmental approvals required in connection with the design and construction
of the Construction Project, or required in connection with the use and
occupancy thereof (e.g., certificates of occupancy). The Work will also include
any repairs or restoration required because of damage to Improvements by fire or
other casualty prior to the Completion Date (a “Pre-lease Casualty”); provided,
however, the cost of any such repairs or restoration will be subject to
reimbursement not only through Construction Advances made to LRC on and subject
to the terms and conditions of this Agreement, but also through the application
of Escrowed Proceeds as provided in Paragraph 5; and, provided further, like
other Work, any such repairs and restoration to be provided by LRC will be
subject to subparagraphs 7(A) and 7(B), which establish certain rights of LRC to
suspend or discontinue any Work. LRC will carefully schedule and supervise all
Work, will check all materials and services used in connection with all Work and
will keep full and detailed accounts as may be necessary to document
expenditures made or expenses incurred for the Work.
     (b) Third Party Contracts.
 
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     1) LRC will not enter into any construction contract or other agreement
with a third party concerning the Work or the Construction Project (a “Third
Party Contract”) in the name of BNPPLC or otherwise purport to bind BNPPLC to
any obligation to any third party.
     2) In any Third Party Contract between LRC and any of its Affiliates (an
“Affiliate’s Contract”) LRC must reserve the right to terminate such contract at
any time, without cause, and without subjecting LRC to liability for any Third
Party Contract/Termination Fee. Further, LRC must not enter into any Affiliate’s
Contract that obligates LRC to pay more than would be required under an
arms-length contract or that would require LRC to pay its Affiliate any amount
in excess of the sum of actual, out-of-pocket direct costs and internal labor
costs incurred by the Affiliate to perform such contract.
     (c) Adequacy of Drawings, Specifications and Budgets. BNPPLC has not made
and will not make any representations as to the adequacy of the Construction
Budget or any other budget or any site plans, renderings, plans, drawings or
specifications for the Construction Project, and no modification of any such
budgets, site plans, renderings, plans, drawings or specifications that may be
required from time to time will entitle LRC to any adjustment in the
Construction Allowance.
     (d) Existing Condition of the Land and Improvements. LRC is familiar with
the conditions of the Land and any existing Improvements on the Land. LRC will
have no claim for damages against BNPPLC or for an increase in the Construction
Allowance or for an extension of the deadline specified in subparagraph
2(A)(2)(a) for completing the Work by reason of any condition (concealed or
otherwise) of or affecting the Land or Improvements.
     (e) Correction of Defective Work. LRC will promptly correct all Work
performed prior to any Termination of LRC’s Work that does not comply with the
requirements of this Agreement for any reason other than a Pre-lease Casualty
(“Defective Work”). If LRC fails to correct any Defective Work or fails to carry
out Work in accordance with this Agreement, BNPPLC may (but will not be required
to) order LRC to stop all Work until the cause for such failure has been
eliminated.
     (f) Clean Up. Upon the completion of all Work, LRC will remove all waste
material and rubbish from and about the Land, as well as all tools, construction
equipment, machinery and surplus materials. LRC will keep the Land and the
Improvements thereon in a reasonably safe and sightly condition as
 
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     Work progresses.
     (g) No Damage for Delays. LRC will have no claim for damages against BNPPLC
or for an increase in the Construction Allowance by reason of any delay in the
performance of any Work. Nor will LRC have any claim for an extension of the
deadline specified in subparagraph 2(A)(2)(a) for completing the Work because of
any such period of delay, except that (i) in the case of any Pre-lease Force
Majeure Delays, LRC will have certain rights as set forth in subparagraph 7(B)
and other provisions of this Agreement, and (ii) in the event of intentional
interference with the Work by BNPPLC itself for which LRC provides written
notice to cease, LRC will be entitled to an extension of the deadline specified
in subparagraph 2(A)(2)(a) as needed because of any delays resulting from such
intentional interference. It is also understood that any such intentional
interference by BNPPLC will constitute a Force Majeure Event. In no event,
however, will BNPPLC’s exercise of its rights and remedies permitted under this
Agreement or the other Operative Documents be construed as intentional
interference with LRC’s performance of any Work; and thus neither BNPPLC’s
exercise of its right to withhold Construction Advances at any time when LRC has
failed to satisfy all conditions herein to such advances, nor BNPPLC’s exercise
of its right to terminate Work by LRC as provided in subparagraph 7(C), be
considered as intentional interference with the Work or a Pre-lease Force
Majeure Event.
     (h) No Other Fees to LRC. Except as provided in the next subparagraph, LRC
will have no claim under this Agreement for any fee or other compensation or for
any reimbursement of internal administrative or overhead expenses (other than
the out-of-pocket overhead expenses properly included in the Construction
Budget, if any), it being understood that LRC is executing this Agreement in
consideration of the rights expressly granted to it herein and in the other
Operative Documents.
     (i) Administration of Existing Space Leases. Prior to any Termination of
LRC’s Work, LRC’s rights under this Agreement will extend to and include the
right to enforce and administer Existing Space Leases and to receive and enjoy
all benefits conferred upon BNPPLC by the Existing Space Leases, including the
right to receive rents thereunder as they become due. Without limiting the
foregoing, LRC may (on behalf of BNPPLC) exercise any right to terminate any
Existing Space Lease provided therein in the event of a default by the tenant
thereunder. LRC must apply all rents paid to it under the Existing Space Leases
prior to the Completion Date in the following order: (A) first, to pay on behalf
of BNPPLC the management fee due to LRC as described
 
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below in this subparagraph; (B) second, to pay any costs incurred to provide
maintenance or repairs or services, if any, required of the landlord by the
Existing Space Leases; (C) third, to reimburse BNPPLC for any Losses it may
incur with respect to the Property or this Agreement, other than Covered
Construction Period Losses for which BNPPLC is entitled to be indemnified by LRC
pursuant to this Agreement. LRC must also pay any such rents not otherwise
applied as provided in the preceding sentence, or needed by LRC to pay amounts
described in the preceding sentence, over to BNPPLC for application as a
Qualified Prepayment. As compensation for administering the Existing Space
Leases during each calendar month or portion thereof after the Effective Date
and prior to the Completion Date or any Termination of LRC’s Work, LRC will be
entitled to the payment by or on behalf of BNPPLC of a management fee of three
percent (3%) of the rents payable (whether or not collected) under the Existing
Space Leases for such calendar month or portion thereof.
     (3) Quality of Work. LRC will cause the Work undertaken and administered by
it pursuant to this Agreement to be performed (a) in a safe and good and
workmanlike manner, (b) in accordance with Applicable Laws, and (c) in
compliance with the provisions of this Agreement and the material provisions of
the Permitted Encumbrances.
     (B) Completion Notice. Within fifteen Business Days after LRC substantially
completes construction of the Construction Project and obtains any certificate
of occupancy or other permit (temporary or permanent) required by Applicable
Laws for the commencement of LRC’s use and occupancy of the Improvements, LRC
must provide a notice (a “Completion Notice”) to BNPPLC, advising BNPPLC
thereof, and thereby establish the Completion Date. For purposes of this
Agreement and the other Operative Documents, BNPPLC will be entitled to rely
without investigation upon any such notice given by LRC as evidence that LRC
has, in fact, substantially completed the Construction Project and has obtained
any certificate of occupancy or other permit (temporary or permanent) required
for the commencement of LRC’s use of the Improvements, and after giving any such
notice LRC will be estopped from later claiming that the Completion Date has not
occurred.
     (C) Status of Property Acquired With BNPPLC’s Funds. All Improvements
constructed on the Land as provided in this Agreement will constitute “Property”
for purposes of the Lease and other Operative Documents. Further, to the extent
heretofore or hereafter acquired (in whole or in part) with any portion of the
Initial Advance or with any Construction Advances or with other funds for which
LRC receives reimbursement from the Initial Advance or Construction Advances,
all furnishings, furniture, chattels, permits, licenses, franchises,
certificates and other personal property of whatever nature will be considered
as having been acquired on behalf of BNPPLC by LRC and will constitute
“Property” for purposes of the Lease and other Operative Documents, as will all
renewals or replacements of or substitutions for any
 
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such Property. The parties intend that title to the Improvements and to any
other such Property will vest in BNPPLC without passing through LRC or LRC’s
Affiliates before it is transferred to BNPPLC from contractors, suppliers,
vendors or other third Persons, but with the understanding that all such
Property will be accepted by BNPPLC subject to the terms and conditions of the
other Operative Documents, including subparagraph 4(C)(1) of the Lease
(concerning the characterization of the Lease and other Operative Documents for
tax and certain other purposes). Although nothing herein constitutes
authorization of LRC by BNPPLC to bind BNPPLC to any construction contract or
other agreement with a third Person, any construction contract or other
agreement executed by LRC for the acquisition or construction of Improvements or
other components of the Property may, as LRC deems appropriate, provide for the
direct transfer of title to BNPPLC as described in the preceding sentence.
     (D) Insurance.
     (1) Liability Insurance. Throughout the period prior to any Termination of
LRC’s Work, LRC must maintain commercial general liability insurance against
claims for bodily and personal injury, death and property damage occurring in or
upon or resulting from any occurrence in or upon the Property under one or more
insurance policies that satisfy the Minimum Insurance Requirements, which are
set forth in an exhibit to the Common Definitions and Provisions Agreement. LRC
must deliver and maintain with BNPPLC for each liability insurance policy
required by this Agreement written confirmation of the policy and the scope of
the coverage provided thereby issued by the applicable insurer or its authorized
agent, which confirmation must also satisfy the Minimum Insurance Requirements.
     (2) Property Insurance. Throughout the period prior to any Termination of
LRC’s Work, LRC must also keep all Improvements (including all alterations,
additions and changes made to the Improvements) insured against fire and other
casualty under one or more property insurance policies that satisfy the Minimum
Insurance Requirements. LRC must deliver and maintain with BNPPLC for each
property insurance policy required by this Agreement written confirmation of the
policy and the scope of the coverage provided thereby issued by the applicable
insurer or its authorized agent, which confirmation must also satisfy the
Minimum Insurance Requirements. If any of the Property is destroyed or damaged
by fire, explosion, windstorm, hail or by any other casualty against which
insurance has been required hereunder, (i) BNPPLC may, but will not be obligated
to, make proof of loss if not made promptly by LRC after notice from BNPPLC,
(ii) each insurance company concerned is hereby authorized and directed to make
payment for such loss directly to BNPPLC for application as required by
Paragraph 5, and (iii) BNPPLC may settle, adjust or compromise any and all
claims for loss, damage or destruction under any policy or policies of insurance
(provided, that so long as no 97-10/Meltdown Event has occurred and no Event of
Default has occurred and
 
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is continuing, BNPPLC must provide LRC with at least forty-five days notice of
BNPPLC’s intention to settle any such claim before settling it unless LRC has
already approved of the settlement by BNPPLC). BNPPLC will not in any event or
circumstances be liable or responsible for failure to collect, or to exercise
diligence in the collection of, any insurance proceeds. If any casualty results
in damage to or loss or destruction of the Property, LRC must give prompt notice
thereof to BNPPLC and Paragraph 5 will apply.
     (3) Failure of LRC to Obtain Insurance. If LRC fails to obtain any
insurance or to provide confirmation of any insurance as required by this
Agreement, BNPPLC will be entitled (but not required) to obtain the insurance
that LRC has failed to obtain or for which LRC has not provided the required
confirmation and, without limiting BNPPLC’s other remedies under the
circumstances, BNPPLC may charge the cost of such insurance against the
Construction Allowance as if it were a Construction Advance paid to LRC as
hereinafter provided.
     (4) Waiver of Subrogation. LRC, for itself and for any Person claiming
through it (including any insurance company claiming by way of subrogation),
waives any and every claim which arises or may arise in its favor against BNPPLC
or any other Interested Party for any and all Losses, to the extent that LRC is
compensated by insurance or would be compensated by the insurance policies
contemplated in this Agreement, but for any deductible or self-insured retention
maintained under such insurance or but for a failure of LRC to maintain the
insurance as required by this Agreement. LRC agrees to have such insurance
policies properly endorsed so as to make them valid notwithstanding this waiver,
if such endorsement is required to prevent a loss of insurance.
     (E) Condemnation. Immediately upon obtaining knowledge of the institution
of any proceedings for the condemnation of the Property or any portion thereof,
or any other similar governmental or quasi-governmental proceedings arising out
of injury or damage to the Property or any portion thereof, each party must
promptly notify the other (provided, however, BNPPLC will have no liability for
its failure to provide such notice) of the pendency of such proceedings. Prior
to any Termination of LRC’s Work, LRC must, if requested by BNPPLC, diligently
prosecute any such proceedings and consult with BNPPLC, its attorneys and
experts and cooperate with them as reasonably requested in the carrying on or
defense of any such proceedings. All proceeds of condemnation awards or proceeds
of sale in lieu of condemnation with respect to the Property and all judgments,
decrees and awards for injury or damage to the Property will be paid to BNPPLC
as Escrowed Proceeds, and all such proceeds will be applied as provided in
Paragraph 5. BNPPLC is hereby authorized, in its own name or in the name of LRC
or in the name of both, to settle and deliver valid acquittances for, or to
challenge and to appeal from, any such judgment, decree or award concerning
condemnation of any of the
 
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Property (provided, that so long as no 97-10/Meltdown Event has occurred and no
Event of Default has occurred and is continuing, BNPPLC must provide LRC with at
least forty-five days notice of BNPPLC’s intention to settle any such claim
before settling it unless LRC has already approved of the settlement by BNPPLC).
BNPPLC will not in any event or circumstances be liable or responsible for
failure to collect, or to exercise diligence in the collection of, any such
proceeds, judgments, decrees or awards.
     (F) Additional Representations, Warranties and Covenants of LRC Concerning
the Property. Without limiting the rights granted to LRC by other provisions of
this Agreement to be reimbursed from Construction Advances for the cost of
complying with the following, LRC represents, warrants and covenants as follows:
     (1) Payment of Local Impositions. Throughout the period prior to any
Termination of LRC’s Work, LRC must pay or cause to be paid prior to delinquency
all ad valorem taxes assessed against the Property and other Local Impositions.
If requested by BNPPLC from time to time, LRC will furnish BNPPLC with receipts
or other appropriate evidence showing payment of all Local Impositions prior to
the applicable delinquency date therefor.
Notwithstanding the foregoing, LRC may in good faith, by appropriate
proceedings, contest the validity, applicability or amount of any asserted Local
Imposition, and pending such contest LRC will not be deemed in default under any
of the provisions of this Agreement because of the Local Imposition if (1) LRC
diligently prosecutes such contest to completion in a manner reasonably
satisfactory to BNPPLC, and (2) LRC promptly causes to be paid any amount
adjudged by a court of competent jurisdiction to be due, with all costs,
penalties and interest thereon, promptly after such judgment becomes final;
provided, however, in any event each such contest must be concluded and the
contested Local Impositions must be paid by LRC prior to the earlier of (i) the
date that any criminal prosecution is instituted or overtly threatened against
BNPPLC or its directors, officers or employees because of the nonpayment
thereof, or (ii) the date any writ or order is issued under which any property
owned or leased by BNPPLC (including the Property) may be seized or sold or any
other action is taken or overtly threatened against BNPPLC or against any
property owned or leased by BNPPLC because of the nonpayment thereof, or
(iii) any Designated Sale Date upon which, for any reason, LRC or an Affiliate
of LRC or any Applicable Purchaser does not purchase BNPPLC’s interest in the
Property pursuant to the Purchase Agreement for a price to BNPPLC (when taken
together with any Supplemental Payment paid by LRC pursuant to the Purchase
Agreement, in the case of a purchase by an Applicable Purchaser) equal to the
Break Even Price.
     (2) Operation and Maintenance. Throughout the period prior to any
 
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Termination of LRC’s Work, LRC must operate and maintain the Property in a good
and workmanlike manner and in compliance with Applicable Laws and Existing Space
Leases in all material respects and pay or cause to be paid all fees or charges
of any kind in connection therewith. (If LRC does not promptly correct any
failure of the Property to comply with Applicable Laws that is the subject of a
written complaint or demand for corrective action given by any Governmental
Authority to LRC, or to BNPPLC and forwarded by it to LRC, then for purposes of
the preceding sentence, LRC will be considered not to have maintained the
Property “in compliance with all Applicable Laws in all material respects”
whether or not the noncompliance would be material in the absence of the
complaint or demand.) LRC must not use or occupy, or allow the use or occupancy
of, the Property in any manner which violates any Applicable Law or which
constitutes a public or private nuisance or which makes void, voidable or
cancelable any insurance then in force with respect thereto. Without limiting
the generality of the foregoing, LRC must not conduct or permit others to
conduct Hazardous Substance Activities on the Property, except Permitted
Hazardous Substance Use and Remedial Work; and LRC must not discharge or permit
the discharge of anything (including Permitted Hazardous Substances) on or from
the Property that would require any permit under applicable Environmental Laws,
other than (1) storm water runoff, (2) fume hood emissions, (3) waste water
discharges through a publicly owned treatment works, (4) discharges that are a
necessary part of any Remedial Work, and (5) other similar discharges consistent
with the definition of Permitted Hazardous Substance Use which do not
significantly increase the risk of Environmental Losses to BNPPLC, in each case
in compliance with Environmental Laws. To the extent that any of the following
would, individually or in the aggregate, increase the likelihood of a
97-10/Meltdown Event or materially and adversely affect the value of the
Property or the use of the Property for purposes permitted by this Agreement,
LRC must not, without BNPPLC’s prior consent: (i) initiate or permit any zoning
reclassification of the Property; (ii) seek any variance under existing zoning
ordinances applicable to the Property; (iii) use or permit the use of the
Property in a manner that would result in such use becoming a nonconforming use
under applicable zoning ordinances or similar laws, rules or regulations;
(iv) execute or file any subdivision plat affecting the Property; or (v) consent
to the annexation of the Property to any municipality. LRC will not cause or
permit any drilling or exploration for, or extraction, removal or production of,
minerals from the surface or subsurface of the Property, and LRC must not do
anything that could reasonably be expected to significantly reduce the market
value of the Property. If LRC receives a notice or claim from any federal, state
or other Governmental Authority that the Property is not in compliance with any
Applicable Law, or that any action may be taken against BNPPLC because the
Property does not comply with any Applicable Law, LRC must promptly furnish a
copy of such notice or claim to BNPPLC.
     (3) Debts for Construction, Maintenance, Operation or Development. LRC
 
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must promptly pay or cause to be paid all debts and liabilities incurred by it
or its contractors or subcontractors in the construction, maintenance, operation
or development of the Property. Such debts and liabilities will include those
incurred for labor, material and equipment and all debts and charges for
utilities servicing the Property.
     (4) Permitted Encumbrances. LRC must comply with and will cause to be
performed all of the covenants, agreements and obligations imposed upon the
owner of any interest in the Property by the Permitted Encumbrances throughout
the period prior to any Termination of LRC’s Work. LRC must not, without the
prior consent of BNPPLC, enter into, initiate, approve or consent to any
modification of any Permitted Encumbrance that would create or expand or purport
to create or expand obligations or restrictions encumbering BNPPLC’s interest in
the Property.
     (5) Books and Records Concerning the Property. LRC must keep books and
records that are accurate and complete in all material respects for LRC’s
construction and management of the Property as contemplated in this Agreement
and must permit all such books and records (including all contracts, statements,
invoices, bills and claims for labor, materials and services supplied for the
construction and operation of any Improvements) to be inspected and copied by
BNPPLC during reasonable business hours.
     (G) BNPPLC’s Right of Access.
     (1) Access Generally. BNPPLC and BNPPLC’s representatives may enter the
Property at any time after reasonable prior notice to LRC for the purpose of
making inspections or performing any work BNPPLC is authorized to undertake by
the next subparagraph or for the purpose of confirming whether LRC has complied
with the requirements of this Agreement or the other Operative Documents.
     (2) Failure of LRC to Perform. If LRC fails to perform any act or to take
any action required of it by this Agreement or other Operative Documents, or to
pay any money which LRC is required by this Agreement or other Operative
Documents to pay, then in addition to any other remedies specified herein or
otherwise available, BNPPLC may, perform or cause to be performed such act or
take such action or pay such money. (To the extent that expenses so incurred by
BNPPLC, or money so paid by BNPPLC, qualify as Covered Construction Period
Losses, LRC must pay the same to BNPPLC upon demand. If any such expenses
incurred or money paid do not qualify as Covered Construction Period Losses,
they will be included - with interest — in the Balance of Unpaid Covered
Construction Period Losses under and as defined in the Purchase Agreement.)
Further, BNPPLC, upon making such payment, will be subrogated to all of the
rights of the person, corporation or body politic receiving such payment. But
nothing herein will imply any duty upon the part of BNPPLC to do any work which,
under any
 
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provision of this Agreement or otherwise, LRC may be required to perform, and
the performance thereof by BNPPLC will not constitute a waiver of LRC’s default.
BNPPLC may during the progress of any such work permitted by BNPPLC hereunder on
or in the Property keep and store upon the Property all necessary materials,
tools, and equipment. BNPPLC will not in any event be liable for inconvenience,
annoyance, disturbance, loss of business, or other damage to LRC or its invitees
by reason of BNPPLC’s performance of any such work, or on account of bringing
materials, supplies and equipment into or through the Property during the course
of such work, and the obligations of LRC under this Agreement and the other
Operative Documents will not thereby be excused in any manner.
3 Amounts to be Added to the Lease Balance (in Addition to Construction
Advances).
     (A) Initial Advance. Upon execution and delivery of this Agreement by
BNPPLC, an advance (the “Initial Advance”) will be made by BNPPLC to cover the
(i) purchase price for the Property due pursuant to the Existing Contract, and
(ii) certain Transaction Expenses and other amounts described in this
subparagraph. The amount of the Initial Advance, which will be included in the
Lease Balance, may be confirmed by a separate closing certificate executed by
LRC as of the Effective Date. An arrangement fee of as provided in the Closing
Letter (the “Arrangement Fee”) and an initial administrative agency fee of as
provided in the Closing Letter (an “Administrative Fee”) will all be paid from
the Initial Advance (and thus be included in the Lease Balance). To the extent
that BNPPLC does not itself use the entire the Initial Advance to pay the
purchase price for the Property or Transaction Expenses incurred by BNPPLC, the
remainder thereof will be advanced to LRC, with the understanding that LRC will
use any such amount advanced for one or more of the following purposes: (1) the
reimbursement of any earnest money or other escrow or deposits funded by LRC
under the Existing Contract, to the extent (if any) that such escrow or deposits
are applied against the purchase price due to the Prior Owner rather than
returned to LRC; (2) the payment or reimbursement of Transaction Expenses
incurred by LRC and “soft costs” incurred by LRC in connection with the
acquisition of the Property or the planning, design, engineering, construction
and permitting of the Construction Project; or (3) the payment of other amounts
due pursuant to the Operative Documents. (Before executing the separate closing
certificate to confirm the Initial Advance, LRC will make a reasonable effort to
determine all prior deposits made and expenses incurred by it as described in
clauses (1) and (2) of the preceding sentence and to request an Initial Advance
sufficient in amount to cover all such deposits and expenses in addition to the
net purchase price payable by BNPPLC to the Prior Owner, the Arrangement Fee,
the initial Administrative Fee and all Transaction Expenses incurred by BNPPLC.
However, no failure by LRC to identify and include all such deposits and
expenses in the amount of the requested Initial Advance will preclude LRC from
requesting reimbursement for the same through a subsequent Construction
 
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Advance as provided in Paragraph 4. Reimbursable Construction Period Costs to be
paid or reimbursed pursuant to Paragraph 4 will not be limited to those incurred
after the Effective Date.)
     (B) Carrying Costs. For each Construction Period certain charges (“Carrying
Costs”) will accrue and be added to the Outstanding Construction Allowance on
the last day of such Construction Period (i.e., generally on the Advance Date
upon which such Construction Period ends). If, however, for any reason the Lease
Balance (and thus the Outstanding Construction Allowance included as a component
thereof) must be determined as of any date between Advance Dates, the
Outstanding Construction Allowance determined on such date will include not only
Carrying Costs added on or before the immediately preceding Advance Date
computed as described below, but also Carrying Costs accruing on and after such
preceding Advance Date to but not including the date in question. Carrying Costs
accruing for any Construction Period will be equal to:

  •   the amount equal on the first day of such Construction Period to the Lease
Balance, times     •   the sum of LIBOR and the Secured Spread for such
Construction Period, times     •   a fraction, the numerator of which is the
number of days in such Construction Period and the denominator of which is three
hundred sixty.

     (C) Commitment Fees. For each Construction Period additional charges
(“Commitment Fees”) will accrue and be added to the Outstanding Construction
Allowance on the last day of such Construction Period (i.e., generally on the
Advance Date upon which such Construction Period ends). If, however, for any
reason the Lease Balance (and thus the Outstanding Construction Allowance
included as a component thereof) must be determined as of any date between
Advance Dates, the Outstanding Construction Allowance determined on such date
will include not only Commitment Fees added on or before the immediately
preceding Advance Date computed as described below, but also Commitment Fees
accruing on and after such preceding Advance Date to but not including the date
in question. Commitment Fees for each Construction Period will be computed as
follows:

  •   twenty basis points (20/100 of 1%), times an amount equal to:

(1) the Maximum Construction Allowance, less
(2) the Funded Construction Allowance on the first day of such Construction
Period; times
 
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  •   the number of days in such Construction Period; divided by     •   three
hundred sixty.

     (D) Future Administrative Fees and Out-of-Pocket Costs. If the Completion
Date does not occur prior to the first anniversary of the Effective Date, then
on each anniversary of the Effective Date prior to the Completion Date, an
annual administrative agency fee (also, an “Administrative Fee”) of the amount
specified in the Closing Letter will be added to the Outstanding Construction
Allowance by BNPPLC in the amount provided in the Term Sheet. Also, to the
extent that BNPPLC incurs any out-of-pocket costs prior to the Completion Date
with respect to the administration of or performance of its obligations under
this Agreement or other Operative Documents (e.g., any Attorneys’ Fees or other
costs incurred to evaluate lien releases and other information submitted by LRC
with requests for Construction Advances), BNPPLC may add such costs to the
Outstanding Construction Allowance from time to time.
     (E) Increased Cost Charges and Capital Adequacy Charges.
     (1) If after the Effective Date and prior to the Completion Date there is
any increase in the cost to BNPPLC’s Parent or any Participant of agreeing to
make or making, funding or maintaining advances to BNPPLC in connection with the
Property because of any Banking Rules Change, then BNPPLC may agree or become
obligated to pay to BNPPLC’s Parent or such Participant, as the case may be,
additional amounts (“Increased Cost Charges”) sufficient to compensate BNPPLC’s
Parent or the Participant for such increased costs. Any Increased Cost Charges
paid by BNPPLC or for which BNPPLC becomes obligated to pay, prior to the
Completion Date, will be added to the Outstanding Construction Allowance by
BNPPLC.
     (2) BNPPLC’s Parent or any Participant may demand additional payments
(“Capital Adequacy Charges”) if BNPPLC’s Parent or the Participant determines
that any Banking Rules Change affects the amount of capital to be maintained by
it and that the amount of such capital is increased by or based upon the
existence of advances made or to be made to BNPPLC to permit BNPPLC to maintain
BNPPLC’s investment in the Property or to make Construction Advances. To the
extent that BNPPLC’s Parent or a Participant provides a certificate or notice to
BNPPLC and to LRC demanding Capital Adequacy Charges as compensation for the
additional capital requirements reasonably allocable to such investment or
advances, and BNPPLC pays or becomes obligated to pay to BNPPLC’s Parent or such
Participant the amount so demanded prior to the Completion Date, such amount
will also be added to the Outstanding Construction Allowance by BNPPLC;
provided, however, such certificate or notice must set forth the nature of the
occurrence giving rise to such demand, the amount of the Capital Adequacy Charge
to be
 
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paid, and the method by which such amount was determined. Any such certificate
or notice will conclusive and binding upon LRC, absent clear and demonstrable
error. In determining the amount of any Capital Adequacy Charges, BNPPLC’s
Parent or any Participant may use any reasonable averaging and attribution
method, applied on a non-discriminatory basis.
     (3) Notwithstanding the foregoing provisions of this subparagraph 3(E), the
Outstanding Construction Allowance will not be increased, over the objection of
LRC, by reason of any claim for compensation made as provided in this
subparagraph 3(E) that arises or accrues (a) as a result of any change in the
rating assigned to BNPPLC’s Parent or any Participant (or its parent) making the
claim by rating agencies or bank regulators in regard to BNPPLC’s Parent’s or
such Participant’s (or its parent’s) creditworthiness, record keeping or failure
to comply with Applicable Laws (including U.S. banking regulations applicable to
subsidiaries of a bank holding company), or (b) more than nine months prior to
the date LRC is notified of the intent of BNPPLC’s Parent or such Participant to
make a claim for such charges; provided, that if the Banking Rules Change which
results in a claim for compensation is retroactive, then the nine month period
will be extended to include the period of the retroactive effect of such Banking
Rules Change. Further, BNPPLC will cause BNPPLC’s Parent to use, and will ask
any Participant to use, commercially reasonable efforts to reduce or eliminate
any claim for compensation described in this subparagraph 3(E), including a
change in the office of BNPPLC’s Parent or the Participant, as the case may be,
through which it provides and maintains Funding Advances if such change will
avoid the need for, or reduce the amount of, such compensation and will not, in
the reasonable judgment of BNPPLC’s Parent or such Participant, be otherwise
disadvantageous to it. Nothing in this subparagraph will be construed to require
BNPPLC’s Parent or any Participant to create any new office through which to
make or maintain Funding Advances..
4 Construction Advances.
     (A) Costs Subject to Reimbursement Through Construction Advances. Subject
to the terms and conditions set forth herein, LRC will be entitled to a
Construction Allowance, from which BNPPLC will make Construction Advances on
Advance Dates from time to time to pay or reimburse LRC for the following costs
(“Reimbursable Construction Period Costs”) to the extent the following costs are
not already included in Transaction Expenses paid by BNPPLC from the Initial
Advance:
     (1) the actual costs and expenses incurred or paid by LRC for the
preparation, negotiation and execution of this Agreement and the other Operative
Documents;
 
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     (2) costs of the Work, including not only hard costs incurred for the new
Improvements described in Exhibit B, but also the following costs to the extent
reasonably incurred in connection with the Construction Project:

  •   soft costs payable to third parties (whether or not incurred prior to the
Effective Date), such as legal fees, architectural fees, engineering fees,
construction management fees, transaction management fees and fees and costs
paid in connection with obtaining project permits and approvals required by
Governmental Authorities or any of the Permitted Encumbrances,     •   site
preparation costs, and     •   costs of offsite and other public improvements
required as conditions of governmental approvals for the Construction Project;

     (3) the cost of title insurance in favor of BNPPLC and of maintaining other
insurance required by (and consistent with the requirements of) this Agreement
prior to the Completion Date, and costs of repairing any damage to the
Improvements caused by a Pre-lease Casualty to the extent such costs are not
covered by Escrowed Proceeds made available to LRC as provided herein prior to
the Completion Date;
     (4) Local Impositions that accrue or become due prior to the Completion
Date;
     (5) reasonable and ordinary out-of-pocket costs of operating and
maintaining the Property prior to the Completion Date in accordance with the
requirements of this Agreement; and
     (6) Third Party Contract/Termination Fees, not to exceed in the aggregate
ten percent (10%) of the Maximum Construction Allowance, payable by LRC in
connection with any Third Party Contract between LRC and a Person not an
Affiliate of LRC because of any election by LRC to cancel or terminate such
contract during a Work/Suspension Period.
 
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     (B) Exclusions From Reimbursable Construction Period Costs. Notwithstanding
anything herein to the contrary, BNPPLC will not be required to make any
Construction Advance to pay or to reimburse or compensate LRC for Covered
Construction Period Losses paid by LRC as provided in subparagraph 9(A) or for
any of the following Losses which may be incurred by LRC or any other party:
     (1) Environmental Losses;
     (2) Losses that would not have been incurred but for any affirmative act
taken by LRC or by any of LRC’s contractors or subcontractors, which act is
contrary to the terms and conditions of this Agreement or the other Operative
Documents (e.g., undertaking a Scope Change without prior authorization of
BNPPLC);
     (3) Losses that would not have been incurred but for any fraud,
misapplication of Construction Advances or other funds, illegal acts or willful
misconduct on the part of LRC or its employees or of any other party acting
under LRC’s control or with the approval or authorization of LRC; and
     (4) Losses that would not have been incurred but for any bankruptcy
proceeding involving LRC as the debtor.
     (C) Conditions to LRC’s Right to Receive Construction Advances. BNPPLC’s
obligation to provide Construction Advances to LRC from time to time under this
Agreement will be subject to the following terms and conditions, all of which
terms and conditions are intended for the sole benefit of BNPPLC, and none of
which will limit in any way the right of BNPPLC to treat costs or expenditures
incurred or paid by or on behalf of BNPPLC as Construction Advances pursuant to
subparagraph 8(A):
     (1) Construction Advance Requests. LRC must make a written request (a
“Construction Advance Request”) for any Construction Advance, specifying the
amount of such advance, at least five Business Days prior to the Advance Date
upon which the advance is to be paid. To be effective for purposes of this
Agreement, a Construction Advance Request must be in substantially the form
attached as Exhibit C. LRC will not submit more than one Construction Advance
Request in any calendar month.
 
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     (2) Amount of the Advances.
     (a) The Maximum Construction Allowance. LRC will not be entitled to require
any Construction Advance that would cause the Funded Construction Allowance to
exceed the Maximum Construction Allowance or that would increase the amount of
any such excess.
     (b) Costs Previously Incurred by LRC. LRC will not be entitled to require
any Construction Advance that would cause the aggregate of all Construction
Advances to exceed the sum of:
     (i) Reimbursable Construction Period Costs that LRC has, to the reasonable
satisfaction of BNPPLC, substantiated as having been paid or incurred by LRC
other than for Work (e.g., Local Impositions), plus
     (ii) the Reimbursable Construction Period Costs that LRC has, to the
reasonable satisfaction of BNPPLC, substantiated as having been paid or incurred
for Prior Work as of the date of the Construction Advance Request in which LRC
requests the advance.
As used in this Agreement, “Prior Work” means all labor and services actually
performed, and all materials actually delivered to the construction site, as
part of the Work in accordance with this Agreement prior to the date in
question, and “Future Work” means labor and services performed or to be
performed, and materials delivered or to be delivered, as part of the Work on or
after the date in question. For purposes of this Agreement, LRC and BNPPLC
intend to allocate Reimbursable Construction Period Costs between Prior Work and
Future Work in a manner that is generally consistent with the allocations
expressed or implied in construction-related contracts negotiated in good faith
between LRC and third parties not affiliated with LRC (e.g., a construction
contractor engaged by LRC); however, in order to verify the amount of
Reimbursable Construction Period Costs actually paid or incurred by LRC and the
proper allocation thereof between Prior Work and Future Work, BNPPLC will be
entitled (but not required) to: (x) request, receive and review copies of such
agreements between LRC and third parties and of draw requests, budgets or other
supporting documents provided to LRC in connection with or pursuant to such
agreements as evidence of the allocations expressed or implied therein, (y) from
time to time engage one or more independent inspecting architects, certified
public accountants or other appropriate professional consultants and, absent
manifest error, rely without further investigation upon their reports and
recommendations, and (z) without waiving BNPPLC’s right to challenge or verify
allocations required with respect
 
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to future Construction Advances, rely without investigation upon the accuracy of
LRC’s own Construction Advance Requests.
     (c) Limits During any Work/Suspension Period. Without limiting the other
terms and conditions imposed by this Agreement for the benefit of BNPPLC with
respect all Construction Advances, BNPPLC will have no obligation to make any
Construction Advance during any Work/Suspension Period that would cause the
aggregate of all Construction Advances to exceed the sum of:
     (i) Reimbursable Construction Period Costs that LRC has, to the reasonable
satisfaction of BNPPLC, substantiated as having been paid or incurred by LRC
other than for Work (e.g., Local Impositions), plus
     (ii) the Reimbursable Construction Period Costs that LRC has, to the
reasonable satisfaction of BNPPLC, substantiated as having been paid or incurred
for Prior Work as of the date the Work/Suspension Period commenced.
For purposes of computing the limits described in this subparagraph 4(C)(2)(c),
Reimbursable Construction Period Costs “other than for Work” will include Third
Party Contract/Termination Fees that qualify as Reimbursable Construction Period
Costs pursuant to subparagraph 4(A)(6). However, as provided in subparagraph
4(A)(6), the amount of such Third Party Contract/Termination Fees subject to
reimbursement will not in any event exceed ten percent (10%) of the Maximum
Construction Allowance. If LRC fails to manage and administer Third Party
Contracts as necessary to ensure that LRC can (at any point in time) terminate
all such contracts without becoming liable for Third Party Contract/Termination
Fees in excess of ten percent (10%) of the Maximum Construction Allowance, then
the excess will be the responsibility of LRC.
     (d) Restrictions Imposed for Administrative Convenience. LRC will not
request any Construction Advance (other than the final Construction Advance LRC
intends to request) for an amount less than $1,000,000.
     (3) No Advances After Certain Dates. BNPPLC will have no obligation to make
any Construction Advance (x) after the last Advance Date, (y) on or after the
Designated Sale Date, or (z) on or after the effective date of any Termination
of LRC’s Work pursuant to subparagraph 7(B) or subparagraph 7(C).
     (D) Breakage Costs for Construction Advances Requested But Not Taken. If
LRC requests but thereafter declines to accept any Construction Advance, or if
LRC requests a
 
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Construction Advance that it is not permitted to take because of its failure to
satisfy any of the conditions specified in subparagraph 4(C), BNPPLC will be
entitled to add any resulting Breakage Costs to the Outstanding Construction
Allowance and the Lease Balance.
     (E) No Third Party Beneficiaries. No contractor or other third party will
be entitled to require BNPPLC to make advances as a third party beneficiary of
this Agreement, and nothing contained herein or in any of the other Operative
Documents will be construed as an agreement obligating BNPPLC to make advances
to anyone other than LRC itself.
     (F) No Waiver. No funding of Construction Advances and no failure of BNPPLC
to object to any Work proposed or performed by or for LRC will constitute a
waiver by BNPPLC of the requirements contained in this Agreement.
5 Application of Insurance and Condemnation Proceeds.
     (A) Collection and Application Generally. This Paragraph 5 will govern the
application of proceeds received by BNPPLC or LRC from any third party prior to
the commencement of the Term of the Lease (1) under any property insurance
policy as a result of damage to the Property (including proceeds payable under
any insurance policy covering the Property which is maintained by LRC), (2) as
compensation for any restriction placed upon the use or development of the
Property or for the condemnation of the Property or any portion thereof, or
(3) because of any judgment, decree or award for injury or damage to the
Property (e.g., damage resulting from a third party’s release of Hazardous
Materials onto the Property); excluding, however, any funds paid to BNPPLC by
BNPPLC’s Parent, by another Affiliate of BNPPLC or by any Participant that is
made to compensate BNPPLC for any Losses BNPPLC may suffer or incur in
connection with this Agreement or the Property. LRC will promptly pay over to
BNPPLC any insurance, condemnation or other proceeds covered by this Paragraph 5
which LRC may receive from any insurer, condemning authority or other third
party. All proceeds covered by this Paragraph 5, including those received by
BNPPLC from LRC or third parties, will be applied as follows:
     (1) First, proceeds covered by this Paragraph 5 will be used to reimburse
BNPPLC for any Attorneys’ Fees or other reasonable expenses that BNPPLC incurred
to collect the proceeds.
     (2) Second, the proceeds remaining after such reimbursement to BNPPLC (the
“Remaining Proceeds”) will be applied, as hereinafter more particularly
provided, either as a Qualified Prepayment or to pay or reimburse LRC or BNPPLC
for the actual out-of-pocket costs of repairing or restoring the Property. Until
any Remaining Proceeds received by BNPPLC are applied by BNPPLC as a Qualified
Prepayment or applied by
 
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BNPPLC to reimburse costs of repairs to or restoration of the Property pursuant
to this Paragraph 5, BNPPLC will hold and maintain such Remaining Proceeds as
Escrowed Proceeds in an interest bearing account, and all interest earned on
such account will be added to and made a part of such Escrowed Proceeds.
     (B) Advances of Escrowed Proceeds to LRC. Except as otherwise provided
below in this Paragraph 5, prior to the Completion Date BNPPLC will hold all
such Remaining Proceeds as Escrowed Proceeds until they are advanced to
reimburse LRC for the actual out-of-pocket cost to LRC of repairing or restoring
the Property in accordance with the requirements of this Agreement. BNPPLC will
so advance the Escrowed Proceeds as the applicable repair or restoration
progresses and upon compliance by LRC with such conditions and requirements as
may be reasonably imposed by BNPPLC, including conditions and requirements
similar to those that set forth herein for the payment of Construction Advances.
In no event, however, will BNPPLC be required to pay Escrowed Proceeds to LRC in
excess of the actual out-of-pocket cost to LRC of the applicable repair,
restoration or replacement, as evidenced by invoices or other documentation
reasonably satisfactory to BNPPLC.
     (C) Status of Escrowed Proceeds After Commencement of the Term of the
Lease. Any Remaining Proceeds governed by this Paragraph 5 which BNPPLC is
continuing to hold as Escrowed Proceeds when the Term of the Lease commences
will be applied in accordance with the terms and conditions of the Lease as if
received by BNPPLC immediately after the Term commenced.
     (D) Special Provisions Applicable After a 97-10/Meltdown Event or Event of
Default. Notwithstanding the foregoing, after any 97-10/Meltdown Event and when
any Event of Default has occurred and is continuing, BNPPLC will be entitled to
receive and collect all insurance, condemnation or other proceeds governed by
this Paragraph 5 and to apply all Remaining Proceeds, when and in such order and
to such extent deemed appropriate by BNPPLC in its sole discretion, either
(A) to the reimbursement of LRC or BNPPLC for the out-of-pocket cost of
repairing or restoring the Property, or (B) as Qualified Prepayments.
     (E) LRC’s Obligation to Restore. Regardless of the adequacy of any
Remaining Proceeds available to LRC hereunder, if the Property is damaged by
fire or other casualty or any part of the Property is taken by eminent domain,
LRC must to the maximum extent possible, as part of the Work, restore the
Property or the remainder thereof and continue construction of the Construction
Project on and subject to the terms and conditions set forth in this Agreement;
provided, however, like other Work, any such restoration and continuation of
construction by LRC will be subject to subparagraphs 7(A) and 7(B), which
establish certain rights of LRC to suspend or discontinue any Work; and,
provided further, any additional costs required to complete the Construction
Project resulting from such a casualty or taking prior to the Completion Date
will, to the extent not covered by Remaining Proceeds paid to LRC as provided
 
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herein, be subject to reimbursement by BNPPLC as Reimbursable Construction
Period Costs on the same terms and conditions that apply to reimbursements of
other costs of the Work hereunder.
     (F) Special Provisions Concerning a Complete Taking. LRC may react to any
threat of a Complete Taking from a Governmental Authority by exercising LRC’s
right to accelerate the Designated Sale Date (as provided in the definition
thereof) and by exercising the Purchase Option under the Purchase Agreement. By
so doing, LRC will put itself in a position to control condemnation proceedings
and to receive all proceeds of the Complete Taking. If, however, LRC does not
buy the Property pursuant to the Purchase Agreement prior to any Complete
Taking, then BNPPLC will be entitled to receive and retain all amounts paid for
the Property in connection with the Complete Taking, notwithstanding any
contrary provision herein or in the other Operative Documents and
notwithstanding that such proceeds may exceed the Lease Balance.
     (G) Preservation of LRC’s Right to Receive Construction Advances.
Notwithstanding the foregoing, nothing in this Paragraph 5 (including
limitations upon LRC’s rights to receive insurance or condemnation proceeds) is
intended to limit or impair LRC’s rights, on and subject to the terms and
conditions set forth in Paragraph 4, to receive Construction Advances as
reimbursement for Reimbursable Construction Period Costs.
6 Notice of Cost Overruns and Pre-lease Force Majeure Events.
     (A) Notice of Projected Cost Overruns. If, at the time LRC submits any
Construction Advance Request, LRC believes for any reason (including any damage
to the Property by fire or other casualty or any taking of any part of the
Property by eminent domain) that Projected Cost Overruns are more likely than
not, LRC must state such belief in the Construction Advance Request and, if LRC
can reasonably do so, LRC will estimate the approximate amount of such Projected
Cost Overruns.
     (B) Pre-lease Force Majeure Event Events and Notices. LRC may from time to
time provide a notice to BNPPLC in the form attached as Exhibit D (a “Pre-lease
Force Majeure Event Notice”), describing any Pre-lease Force Majeure Event that
has occurred or commenced within the 30 days prior to such notice and setting
forth LRC’s preliminary good faith estimate of any Pre-lease Force Majeure
Delays, Pre-lease Force Majeure Losses and Pre-lease Force Majeure Excess Costs
that are likely to result from such event. BNPPLC will have the option to
respond to any Pre-lease Force Majeure Event Notice with an FOCB Notice or,
alternatively and if applicable, with an Increased Commitment as provided in
subparagraph 7(B)(6).
 
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7 Suspension and Termination of LRC’s Work.
     (A) Rights and Obligations During a Work/Suspension Period. During any
Work/Suspension Period, LRC will have the right to suspend the Work; however,
the obligations of LRC which are to survive any Termination of LRC’s Work as
provided in subparagraph 7(D) will continue and survive during any
Work/Suspension Period.
     (B) LRC’s Election to Terminate LRC’s Work. LRC may elect to terminate its
rights and obligations to continue Work at any time prior to the Completion Date
if at such time LRC believes in good faith that a Timing or Budget Shortfall
exists. To be effective, however, any such election by LRC must be made in
accordance with the following provisions:
     (1) Any such election by LRC to terminate its rights and obligations to
continue the Work must be made by notice to BNPPLC in the form of Exhibit E (a
“Notice of Termination by LRC”).
     (2) At least forty-five days before giving any such Notice of Termination
by LRC, LRC must give a notice of LRC’s intent to terminate to BNPPLC in the
form of Exhibit F (a “Notice of LRC’s Intent to Terminate”), and the Notice of
LRC’s Intent to Terminate must state the reasons, in LRC’s good faith
determination, for the Timing or Budget Shortfall.
     (3) Without limiting the forgoing, prior to giving any Notice of
Termination by LRC predicated upon LRC’s belief that the remaining available
Construction Allowance will not be sufficient only because of Pre-lease Force
Majeure Excess Costs incurred or anticipated as a result of a Pre-lease Force
Majeure Event, LRC must — after having notified BNPPLC of the such event by the
delivery of a Pre-lease Force Majeure Event Notice in accordance with
subparagraph 6(B) — expressly set forth such belief in the Notice of LRC’s
Intent to Terminate as indicated in Exhibit F. In any such Notice of LRC’s
Intent to Terminate, LRC must also specify its good faith estimate of the
Pre-lease Force Majeure Excess Costs likely to be incurred (“LRC’s Estimate of
Force Majeure Excess Costs”).
     (4) Similarly, prior to giving any Notice of Termination by LRC predicated
upon LRC’s belief that the Work will not be substantially complete before the
Target Completion Date only because of Pre-lease Force Majeure Delays resulting
from a Pre-lease Force Majeure Event, LRC must — after having notified BNPPLC of
such event by the delivery of a Pre-lease Force Majeure Event Notice in
accordance with subparagraph 6(B) — expressly set forth such belief in the
Notice of LRC’s Intent to Terminate as indicated in Exhibit F. In any such
Notice of LRC’s Intent to Terminate, LRC must also specify its good faith
estimate of the Pre-lease Force Majeure Delays
 
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likely to occur (“LRC’s Estimate of Force Majeure Delays”).
     (5) As used herein, a “Notice of LRC’s Intent to Terminate Because of a
Force Majeure Event” means any Notice of LRC’s Intent to Terminate that sets
forth LRC’s belief, by the optional provisions contemplated in Exhibit F, that
either or both: (a) the remaining available Construction Allowance will not be
sufficient only because of Pre-lease Force Majeure Excess Costs incurred or
anticipated as a result of a Pre-lease Force Majeure Event, or (b) the Work will
not be substantially complete before the Target Completion Date only because of
Pre-lease Force Majeure Delays resulting from a Pre-lease Force Majeure Event.
Should any Termination of LRC’s Work occur before LRC sends a Notice of LRC’s
Intent to Terminate Because of a Force Majeure Event (in accordance with this
subparagraph and in the form attached as Exhibit F), such Termination of LRC’s
Work will, for purposes of determining whether any 97-10/Prepayment may be
required pursuant to Paragraph 8, be conclusively presumed to have occurred for
reasons other than a Pre-lease Force Majeure Event.
     (6) After receipt of any Notice of LRC’s Intent to Terminate and before
receipt of a Notice of Termination by LRC, BNPPLC may, but will not be obligated
to, respond to LRC with certain commitments as follows (such a response being
hereinafter called an “Increased Commitment”):
     (a) In the case of a Notice of Intent to Terminate Because of a Force
Majeure Event which expresses LRC’s belief that the remaining available
Construction Allowance will not be sufficient only because of Pre-lease Force
Majeure Excess Costs, BNPPLC may respond with a written commitment to increase
the Construction Allowance (an “Increased Funding Commitment”) by an amount at
least equal to LRC’s Estimate of Force Majeure Excess Costs as set forth in such
Notice of LRC’s Intent to Terminate. Any such Increased Funding Commitment may
be in the form of Exhibit G.
     (b) In the case of a Notice of Intent to Terminate Because of a Force
Majeure Event which expresses LRC’s belief that the Work will not be
substantially complete before the Target Completion Date only because of
Pre-lease Force Majeure Delays, BNPPLC may respond with a written commitment to
extend the Target Completion Date (an “Increased Time Commitment”) by at least
the number of days included in LRC’s Estimate of Force Majeure Delays as set
forth in such Notice of LRC’s Intent to Terminate. Any such Increased Time
Commitment may be in the form of Exhibit H.
     (c) In the case of a Notice of Intent to Terminate Because of a Force
Majeure Event which expresses LRC’s belief that both (i) the remaining available
 
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Construction Allowance will not be sufficient only because of Pre-lease Force
Majeure Excess Costs and (ii) the Work will not be substantially complete before
the Target Completion Date only because of Pre-lease Force Majeure Delays,
BNPPLC may respond with both an Increased Funding Commitment and an Increased
Time Commitment as provided in the preceding subparagraphs (a) and (b).
     (d) In the case of a Notice of Intent to Terminate which is not a Notice of
Intent to Terminate Because of a Force Majeure Event (and thus not covered by
any of the preceding subparagraphs (a) through (c)), BNPPLC may require LRC to
promptly provide a good faith estimate of the minimum Increased Funding
Commitment or Increased Time Commitment (or both) reasonably required to
eliminate the reasons for LRC’s delivery of the Notice of Intent to Terminate.
After receipt of LRC’s good faith estimate, BNPPLC may respond with an Increased
Funding Commitment or Increased Time Commitment (or both) consistent with such
estimate.
     (7) If BNPPLC does respond to a Notice of LRC’s Intent to Terminate with an
Increased Commitment, LRC will be entitled to, and will not unreasonably refuse
to, rescind such Notice of LRC’s Intent to Terminate within ten days after
receipt of such Increased Commitment. To be effective, any such rescission must
be by notice to BNPPLC in the form of Exhibit I. In any event, except as
provided in the next subparagraph, the failure of LRC to so rescind any Notice
of LRC’s Intent to Terminate within ten days after receipt of the Increased
Commitment will, for purposes of determining whether any 97-10/Prepayment may be
required pursuant to Paragraph 8, create a conclusive presumption that any
Termination of LRC’s Work after the date of such response was made for reasons
other than a Pre-lease Force Majeure Event.
     (8) For the avoidance of doubt, BNPPLC acknowledges that LRC’s rescission
of any Notice of LRC’s Intent to Terminate (including any Notice of LRC’s Intent
to Terminate Because of a Force Majeure Event) after receipt of an Increased
Commitment as described in the preceding subsection will not preclude LRC from
subsequently exercising its rights under this subparagraph 7(B) in the event LRC
subsequently believes in good faith that a Timing or Budget Shortfall exists.
Thus, for example, if LRC rescinds a Notice of LRC’s Intent to Terminate Because
of a Force Majeure Event after receiving an Increased Commitment from BNPPLC,
but subsequently determines that such Increased Commitment is insufficient
(through no fault of LRC or its employees or any other party acting under LRC’s
control or with the approval or authorization of LRC) to rectify the Timing or
Budget Shortfall which caused LRC to send such notice, then LRC may deliver a
second Notice of LRC’s Intent to
 
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Terminate Because of a Force Majeure Event, and in response thereto BNPPLC may
elect to provide yet another Increased Commitment. Moreover, such process may be
repeated any number of times, in each case without causing LRC to lose its right
to subsequently invoke this subparagraph 7(B) and send yet another Notice of
LRC’s Intent to Terminate (including another Notice of LRC’s Intent to Terminate
Because of a Force Majeure Event).
     (9) Notwithstanding the foregoing, in the event of a Complete Taking, LRC
may deliver a Notice of LRC’s Intent to Terminate Because of a Force Majeure
Event that explains the futility of continuing with the Construction Project on
the Land regardless of any willingness of BNPPLC to approve or consider Scope
Changes or an Increased Commitment, and no offer by BNPPLC of an Increased
Commitment after a Complete Taking will preclude a “Termination of LRC’s Work
Because of a Pre-lease Force Majeure Event” for the purposes of determining
whether LRC must pay a 97-10/Prepayment pursuant to Paragraph 8.
     (C) BNPPLC’s Election to Terminate LRC’s Work. By notice to LRC BNPPLC may
elect to terminate LRC’s rights and obligations to continue the Work at any time
(i) more than thirty days after BNPPLC has given an FOCB Notice to LRC, or
(ii) after BNPPLC’s receipt of a Notice of LRC’s Intent to Terminate and before
an election by LRC to rescind the same as described in subparagraph 7(B)(7).
     (D) Surviving Rights and Obligations. Following any Termination of LRC’s
Work as provided in subparagraph 7(B) or in 7(C), LRC will have no obligation to
continue or complete any Work; however, no such Termination of LRC’s Work will
reduce or excuse the following rights and obligations of the parties, it being
intended that all such rights and obligations will survive and continue after
any Termination of LRC’s Work:
     (1) LRC’s obligations described in the next subparagraph 7(E);
     (2) any obligations of LRC under the other Operative Documents by reason of
any misrepresentation or other act or omission of LRC that occurred prior to the
Termination of LRC’s Work or during any subsequent period in which LRC does not
relinquish possession or control of the Construction Project; and
     (3) LRC’s obligations to indemnify BNPPLC as set forth in subparagraph 9(A)
(which are to some extent, as more particularly provided therein, limited to
Losses resulting or arising from events or circumstances that existed or
occurred or are alleged to have existed or occurred prior to the Termination of
LRC’s Work or during any subsequent period in which LRC does not relinquish
possession or control of the Construction Project, whether such Losses are
asserted, suffered or paid before or after the Termination of LRC’s Work).
 
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     (E) Cooperation After a Termination of LRC’s Work. After any Termination of
LRC’s Work as provided in subparagraph 7(B) or subparagraph 7(C), LRC must
comply with the following terms and conditions, all of which will survive
notwithstanding any such termination:
     (1) LRC must promptly deliver copies to BNPPLC of all Third Party Contracts
and purchase orders made by LRC in the performance of or in connection with the
Work, together with all plans, drawings, specifications, bonds and other
materials relating to the Work in LRC’s possession, including all papers and
documents relating to governmental permits, orders placed, bills and invoices,
lien releases and financial management under this Agreement. All such deliveries
must be made free and clear of any liens, security interests, or encumbrances,
except such as may be created by the Operative Documents.
     (2) Promptly after any request from BNPPLC made with respect to any Third
Party Contract, LRC must deliver a letter confirming: (i) whether LRC has
performed any act or executed any other instrument which invalidates or modifies
such contract in whole or in part (and, if so, the nature thereof); (ii) the
extent to which such contract is valid and subsisting and in full force and
effect; (iii) that, to LRC’s knowledge, there are no defaults or events of
default then existing under such contract and, to LRC’s knowledge, no event has
occurred which with the passage of time or the giving of notice, or both, would
constitute such a default or event of default (or, if there is a default or
potential default, the nature of such default in detail); (iv) whether the
services and construction contemplated by such contract are proceeding in a
satisfactory manner in all material respects (and if not, a detailed description
of all significant problems with the progress of the services or construction);
(v) in reasonable detail the then critical dates projected by LRC for work and
deliveries required by such contract; (vi) the total amount received by the
other party to such contract for work or services provided by the other party
through the date of the letter; (vii) LRC’s good faith estimate of the total
cost of completing the services and work contemplated under such contract as of
the date of the letter, together with any current draw or payment schedule for
the contract; and (viii) any other information BNPPLC may reasonably request to
allow it to decide what steps it should take concerning the contract within
BNPPLC’s rights under this Agreement and the other Operative Documents.
     (3) As and to the extent requested by BNPPLC, LRC will make every
reasonable effort (but without any obligation to incur any expense or liability
to do so, unless BNPPLC agrees to reimburse the same with reasonable promptness)
to secure any required consents or approvals for an assignment of any then
existing Third Party Contract to BNPPLC or its designee, upon terms satisfactory
to BNPPLC. To the extent assignable, any then existing Third Party Contract will
be assigned by LRC to BNPPLC
 
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upon request, without charge by LRC.
     (4) If LRC has canceled any Third Party Contract before and in anticipation
of a Termination of LRC’s Work, then as and to the extent requested by BNPPLC,
LRC must make every reasonable effort (but without any obligation to incur any
expense or liability to do so, unless BNPPLC agrees to reimburse the same with
reasonable promptness) to secure a reinstatement of such Third Party Contract in
favor of BNPPLC and upon terms satisfactory to BNPPLC.
     (5) For a period not to exceed thirty days after the Termination of LRC’s
Work, LRC must take such steps as are reasonably necessary to preserve and
protect Work completed and in progress and to protect materials, equipment, and
supplies at the Property or in transit. Without regard to the conditions
applicable to other payments required of BNPPLC by this Agreement, BNPPLC must
with reasonable promptness reimburse any reasonable out-of-pocket expenses
incurred by LRC to comply with this subparagraph (5); however, BNPPLC may at any
time or from time to time by notice to LRC limit or terminate such
reimbursements as to expenses incurred after LRC’s receipt of such notice, and
thereafter LRC will be excused from any obligation to incur expenses that BNPPLC
may decline to reimburse.
8 LRC’s Obligation for a 97-10/Prepayment. After any 97-10/Meltdown Event LRC
must make a 97-10/Prepayment to BNPPLC within three Business Days after receipt
from BNPPLC of a demand for such a payment. LRC acknowledges that it is
undertaking the obligation to make a 97-10/Prepayment as provided in this
Paragraph in consideration of the rights afforded to it by this Agreement, but
that such obligation is not contingent upon any exercise by LRC of such rights
or upon its rights under any other Operative Documents. If a 97-10/Meltdown
Event does occur, LRC’s obligation to make a 97-10/Prepayment as provided in
this Paragraph will survive any Termination of LRC’s Work.
Notwithstanding the foregoing provisions of this Paragraph 8, if (as provided in
subparagraph 7(B)) LRC effectively makes the election for a Termination of LRC’s
Work because of a Pre-lease Force Majeure Event that resulted in Pre-lease Force
Majeure Excess Costs or Pre-lease Force Majeure Delays, then LRC will be excused
from the obligation to make a 97-10/Prepayment, regardless of whether LRC
delivered only one or more than one Notice of Intent to Terminate Because of a
Force Majeure Event as described in the example set forth in subparagraph
7(B)(8).
9 Indemnity for Covered Construction Period Losses.
     (A) Covenant to Indemnify Against Covered Construction Period Losses.
Subject to the qualifications in subparagraph 9(B), as directed by BNPPLC, LRC
must indemnify and
 
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defend BNPPLC from and against all of the following Losses (“Covered
Construction Period Losses”):
     (1) Losses suffered or incurred by BNPPLC, directly or indirectly, relating
to or arising out of, based on or as a result of any of the following which
occurs or is alleged to have occurred prior to any Termination of LRC’s Work:
(i) any Hazardous Substance Activity; (ii) any violation of any applicable
Environmental Laws relating to the Land or the Property or to the ownership,
use, occupancy or operation thereof; (iii) any investigation, inquiry, order,
hearing, action, or other proceeding by or before any governmental or
quasi-governmental agency or authority in connection with any Hazardous
Substance Activity; or (iv) any claim, demand, cause of action or investigation,
or any action or other proceeding, whether meritorious or not, brought or
asserted against BNPPLC which directly or indirectly relates to, arises from, is
based on, or results from any of the matters described in clauses (i), (ii), or
(iii) of this provision or any allegation of any such matters;
     (2) Losses incurred or suffered by BNPPLC that BNPPLC would not have
incurred or suffered but for any act or any omission of LRC or of any LRC’s
contractors or subcontractors during the period prior to any Termination of
LRC’s Work or during any subsequent period in which LRC does not relinquish
possession or control of the Construction Project (including any failure by LRC
to obtain or maintain insurance as required by this Agreement during such
periods; but excluding, however, as described below, certain Losses consisting
of claims related to any failure of LRC to complete the Construction Project);
     (3) Losses incurred or suffered by BNPPLC that would not have been incurred
but for any fraud, misapplication of funds (including Construction Advances),
illegal acts, or willful misconduct on the part of LRC or its employees or of
any other party acting under LRC’s control or with the approval or authorization
of LRC; and
     (4) Losses incurred or suffered by BNPPLC that would not have been incurred
but for any bankruptcy proceeding involving LRC as the debtor.
LRC’s obligations under this indemnity will apply whether or not BNPPLC is also
indemnified as to the applicable Covered Construction Period Loss by any third
party (including another Interested Party) and whether or not the Covered
Construction Period Loss arises or accrues prior to the Effective Date. Further,
in the event, for income tax purposes, BNPPLC must include in its taxable income
any payment or reimbursement from LRC which is required by this indemnity (in
this provision, the “Original Indemnity Payment”), and yet BNPPLC is not
entitled during the same taxable year to a corresponding and equal deduction
from its taxable income for the Covered Construction Period Loss paid or
reimbursed by such Original Indemnity
 
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Payment (in this provision, the “Corresponding Loss”), then LRC must also pay to
BNPPLC on demand the additional amount (in this provision, the “Additional
Indemnity Payment”) needed to gross up the Original Indemnity Payment for any
and all resulting additional income taxes. That is, LRC must pay an Additional
Indemnity Payment as is needed so that the Corresponding Loss (computed net of
the reduction, if any, of BNPPLC’s income taxes because of credits or deductions
that are attributable to the BNPPLC’s payment or deemed payment of the
Corresponding Loss and that are recognized for tax purposes in the same taxable
year during which BNPPLC must recognize the Original Indemnity Payment as
income) will not exceed the difference computed by subtracting (i) all income
taxes (determined for this purpose based on the highest marginal income tax
rates charged to corporations by federal, state and local tax authorities, as
applicable, for the relevant period or periods) imposed because of the receipt
or constructive receipt of the Original Indemnity Payment and the Additional
Indemnity Payment, from (ii) the sum of the Original Indemnity Payment and the
Additional Indemnity Payment. (With regard to any payment or reimbursement of an
Original Indemnity Payment, “After Tax Basis” means that such payment or
reimbursement is or will be made together with the additional amount needed to
gross up such Original Indemnity Payment as described in this provision.)

     (B) Certain Losses Included or Excluded.
     (1) Environmental. As used in clause (1) of the preceding subparagraph
9(A), “Losses” will not include costs properly incurred in connection with the
Work to prevent the occurrence of a violation of Environmental Laws which did
not previously exist. (For example, they will not include the increase in costs
resulting from LRC’s installation of fire proofing materials other than asbestos
because of Environmental Laws that prohibit the use of asbestos.) However, any
costs to correct or answer for any violation of Environmental Laws that occurred
on or prior to the Effective Date or that LRC causes or permits to occur after
the Effective Date in connection with the Work or the Property will be included
in such Losses. (Thus, for instance, if LRC releases Hazardous Materials from
the Property in a manner that contaminates ground water in violation of
Environmental Laws, the costs of correcting the contamination and any applicable
fines or penalties will be included in Losses for which LRC must indemnify and
defend BNPPLC pursuant to subparagraph 9(A).)
     (2) Failure to Maintain a Safe Work Site. If a third party asserts a claim
for damages against BNPPLC because of injuries the third party sustained while
on the Land as a result of LRC’s breach of its obligations under this Agreement
to keep the Land and the Improvements thereon in a reasonably safe condition as
Work progresses under LRC’s direction and control, then any such claim and other
Losses resulting from such claim will constitute Covered Construction Period
Losses under clause (2) of subparagraph 9(A).
 
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     (3) Failure to Complete Construction. Additional costs of construction may
result from LRC’s failure to complete the Construction Project if a Termination
of LRC’s Work occurs pursuant to subparagraphs 7(B) and 7(C). Nevertheless, it
is understood that a failure of LRC to complete the Construction Project
following any such Termination of LRC’s Work will not necessarily constitute a
breach of this Agreement, and clause (2) of subparagraph 9(A) will not include
any such additional costs of performing the Work or the cost to BNPPLC of
completing the Construction Project after the Termination of LRC’s Work.
     (4) Fraud. As used in clause (3) of subparagraph 9(A), “fraud” or “willful
misconduct” will include (i) any deliberate decision by LRC to make a Scope
Change without BNPPLC’s prior written approval, (ii) any fraud or intentional
misrepresentation by LRC, or its vendors, contractors or subcontractors
regarding LRC’s ongoing compliance with the requirements of this Agreement, and
(iii) the performance by LRC or its vendors, contractors or subcontractors of
Defective Work, with LRC’s knowledge that it constitutes Defective Work, prior
to any Termination of LRC’s Work as provided in subparagraphs 7(B) and 7(C).
     (5) Excluded Taxes and Other Exclusions. Nothing in this Paragraph 9 or
other provisions of this Agreement will be construed to require LRC to reimburse
or pay (a) Excluded Taxes, (b) Losses incurred or suffered by BNPPLC that are
proximately caused by (and attributed by any applicable principles of
comparative fault to) the Established Misconduct of BNPPLC, or (c) any Losses
incurred or suffered by any of the Participants in connection with the
negotiation or execution of the Participation Agreement (or supplements making
them parties thereto) or in connection with any due diligence Participants may
undertake before entering into the Participation Agreement.
     (6) Action or Omission of Tenant Under Existing Space Lease. Nothing in
this Paragraph 9 or other provisions of this Agreement will be construed to
require LRC to reimburse or pay costs incurred because of an action or omission
of a tenant (or of any employees or of any other party acting under a tenant’s
control or with the approval or authorization of a tenant) under an Existing
Space Lease; except when such action or omission was requested or authorized by
LRC itself or for some other reason such costs would not have been incurred but
for an action or omission of LRC itself.
     (C) Express Negligence Protection. Neither BNPPLC nor any other Interested
Party will lose the benefit of, or suffer any impairment of its rights under,
any release of liability provided in other provisions of this Agreement by
reason of its own negligence or strict liability, or by reason of any allegation
that it was negligent or strictly liable, in regard to the subject matter of
such release.
 
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Similarly, BNPPLC will not lose the benefit of, or suffer any impairment of its
rights under, the indemnity provided in the preceding subparagraph 9(A) by
reason of its own negligence or strict liability, or any allegation that it was
negligent or strictly liable, in regard to the subject matter of such indemnity.
However, this provision will not create any new or distinct right of indemnity
in favor of BNPPLC, separate and apart from its rights under subparagraph 9(A);
and this provision will not expand BNPPLC’s right to be indemnified against
claims or Losses other than those listed in subparagraph 9(A). Thus, the purpose
of this provision is only to preserve BNPPLC’s indemnity rights under
subparagraph 9(A) against certain common law defenses in order that the
indemnity in subparagraph 9(A) could apply in circumstances where BNPPLC is
allegedly or actually deemed negligent or strictly liable. Such common law
defenses have sometimes been characterized as “fair notice” requirements or the
“clear and unequivocal test” or the “express negligence test.” 1

Thus, for example, if a person is injured on the Land prior to the Completion
Date because of negligent acts of LRC or LRC’s contractors or subcontractors,
under subparagraph 9(A)(2) BNPPLC will be entitled to indemnification against
claims asserted by such person even if BNPPLC is alleged or held to be negligent
by omission, as the owner of the Property, for failing to prevent or rectify
such negligent acts of LRC or its contractors or subcontractors. On the other
hand, if a person is injured on the Land prior to the Completion Date through no
fault whatsoever on the part of LRC or its contractors or subcontractors, the
foregoing provisions of this subparagraph 9(C) will not be construed to obligate
LRC to indemnify BNPPLC against claims by such person that BNPPLC was negligent
for failing to prevent such injury. As illustrated by the preceding examples,
this subparagraph 9(C) is intended to preserve BNPPLC’s
 

1   See, for example, Fisk Electric Co. v. Constructors & Associates, 888 S.W.
2d 813 (Tex. 1994), in which the Texas Supreme Court held that an indemnity
agreement could not be enforced to require the indemnitor (a subconractor) to
pay the defense costs of the indemnitee (a contractor) unless the agreement
included a provision like this subparagraph 9(C), as necessary to satisfy the
“express negligence test,” despite the fact that the indemnitee had established
in the underlying lawsuit that it was not negligent as had been alleged. See
also, Rossmoor Sanitation, Inc. v. Pylon, Inc., 13 Cal. 3d 622 (1975), in which
the California Supreme Court held that a contract may expressly provide for
indemnification against an indemnitee’s own negligence, but that such an
agreement “must be clear and explicit and is strictly construed against the
indemnitee.”

 
Construction Agreement (Livermore/Parcel 6) — Page 43

 

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right to indemnity against claims that fall within the scope of subparagraph
9(A) despite negligence or strict liability of BNPPLC or an allegation thereof;
however, nothing in this subparagraph 9(C) will expand the scope of the
indemnity provided in the preceding subparagraph 9(A).
It is also understood that releases provided for the benefit of BNPPLC or any
other Interested Party in this Agreement, and the indemnity provided in the
preceding subparagraph 9(A) for the benefit of BNPPLC, will not be limited by
reason of the fact that insurance obtained by LRC or required of LRC by this
Agreement is not adequate to cover Losses against or for which the releases and
the indemnity are provided. Moreover, LRC’s liability for any failure to obtain
insurance required by this Agreement will not be limited to Losses against which
indemnity is provided, it being understood that the parties have agreed upon
insurance requirements for reasons that extend beyond providing a source of
payment for Losses against which BNPPLC may be indemnified by LRC.
     (D) Survival of Indemnity. LRC’s obligations under this Paragraph 9 will
survive the termination or expiration of this Agreement and any Termination of
LRC’s Work with respect to Losses suffered by BNPPLC resulting or arising from
events or circumstances which existed or occurred or are alleged to have existed
or occurred prior to the Termination of LRC’s Work or during any subsequent
period in which LRC does not relinquish possession or control of the
Construction Project, whether such Losses are asserted, suffered or paid before
or after the Termination of LRC’s Work.
     (E) Due Date for Indemnity Payments. Any amount to be paid by LRC under
this Paragraph 9 will be due ten days after a notice requesting such payment is
received by LRC. Any such amount not paid by LRC when first due will bear
interest at the Default Rate in effect from time to time from the date it first
became due until paid; provided, that nothing herein contained will be construed
as permitting the charging or collection of interest at a rate exceeding the
maximum rate permitted under Applicable Laws.
     (F) Order of Application of Payments. BNPPLC will be entitled to apply any
payments by or on behalf of LRC against LRC’s obligations under this Paragraph 9
or against other amounts owing by LRC and then past due under any of the other
Operative Documents in the order the same became due or in such other order as
BNPPLC may elect.
     (G) Defense of BNPPLC.
     (1) Assumption of Defense. By notice to LRC BNPPLC may direct LRC to assume
on behalf of BNPPLC and to conduct with due diligence and in good faith the
defense of and the response to any claim, proceeding or investigation included
in or concerning any Covered Construction Period Loss. LRC must promptly comply
with
 
Construction Agreement (Livermore/Parcel 6) — Page 44

 

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any such direction using counsel selected by LRC and reasonably satisfactory to
BNPPLC to represent BNPPLC. In the event LRC fails to promptly comply with any
such direction from BNPPLC, BNPPLC may contest or settle the claim, proceeding
or investigation using counsel of its own selection at LRC’s expense.
     (2) Indemnity Not Contingent. Also, although subparagraph 9(I) will apply
to tort claims asserted against BNPPLC related to the Property, the right of
BNPPLC to be indemnified pursuant to subparagraph 9(A) for payments that are
made to satisfy governmental requirements and that qualify as Covered
Construction Period Losses (“Government Mandated Payments”) (e.g., fines payable
because of any release of Hazardous Materials from the Property) will not be
conditioned in any way upon LRC having consented to or approved of, or having
been provided with an opportunity to defend against or contest, such Government
Mandated Payments.
     (H) Notice of Claims. If BNPPLC receives a written notice of a claim for
taxes or a claim alleging a tort or other unlawful conduct that BNPPLC believes
is covered by the indemnity in subparagraph 9(A), then BNPPLC will be expected
to promptly furnish a copy of such notice to LRC. The failure to so provide a
copy of the notice will not excuse LRC from its obligations under subparagraph
9(A); except that if such failure continues for more than fifteen days after the
notice is received by BNPPLC and LRC is unaware of the matters described in the
notice, with the result that LRC is unable to assert defenses or to take other
actions which could minimize its obligations, then LRC will be excused from its
obligation to indemnify BNPPLC against the Covered Construction Period Losses,
if any, which would not have been incurred or suffered but for such failure. For
example, if BNPPLC fails to provide LRC with a copy of a notice of an overdue
tax obligation covered by the indemnity set out in subparagraph 9(A) and LRC is
not otherwise already aware of such obligation, and if as a result of such
failure BNPPLC becomes liable for penalties and interest covered by the
indemnity in excess of the penalties and interest that would have accrued if LRC
had been promptly provided with a copy of the notice, then LRC will be excused
from any obligation to BNPPLC (or any Affiliate of BNPPLC) to pay the excess.
     (I) Settlements Without the Prior Consent of LRC.
     (1) Election to Pay Reasonable Settlement Costs in Lieu of Actual. Except
as otherwise provided in subparagraph 9(I)(2), if BNPPLC settles any tort claim
for which it is entitled to be indemnified by LRC without LRC’s consent, then
LRC may, by notice given to BNPPLC no later than ten days after LRC is notified
of the settlement, elect to pay Reasonable Settlement Costs to BNPPLC in lieu of
a payment or reimbursement of actual settlement costs. (With respect to any tort
claim asserted against BNPPLC, “Reasonable Settlement Costs” means the maximum
amount that a prudent Person in the position of BNPPLC, but able to pay any
amount, might reasonably agree to pay to
 
Construction Agreement (Livermore/Parcel 6) — Page 45

 

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settle the tort claim, taking into account the nature and amount of the claim,
the relevant facts and circumstances known to BNPPLC at the time of settlement
and the additional Attorneys Fees’ and other costs of defending the claim which
could be anticipated but for the settlement.) After making an election to pay
Reasonable Settlement Costs with regard to a particular tort claim, LRC will
have no right to rescind or revoke the election, despite any subsequent
determination that Reasonable Settlement Costs exceed actual settlement costs.
     (2) Conditions to Election. Notwithstanding the foregoing, LRC will have no
right to elect to pay Reasonable Settlement Costs in lieu of actual settlement
costs if BNPPLC settles claims without LRC’s consent at any time when an Event
of Default has occurred and is continuing or after a failure by LRC to conduct
with due diligence and in good faith the defense of and the response to any
claim, proceeding or investigation as provided in subparagraph 9(G)(1).
     (3) Indemnity Survives Settlement. Except as provided in this subparagraph
9(I), no settlement by BNPPLC of any claim made against it will excuse LRC from
any obligation to indemnify BNPPLC against the settlement costs or other Covered
Construction Period Losses suffered by reason of, in connection with, arising
out of, or in any way related to such claim.
[The signature pages follow.]
 
Construction Agreement (Livermore/Parcel 6) — Page 46

 

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     IN WITNESS WHEREOF, this Construction Agreement (Livermore/Parcel 6) is
executed to be effective as of December 18, 2007.

            BNP PARIBAS LEASING CORPORATION, a
Delaware corporation
      By:   /s/ Barry Mendelsohn        Barry Mendelsohn, Director             

 
Construction Agreement (Livermore/Parcel 6) — Signature Page

 

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[Continuation of signature pages for Construction Agreement (Livermore/Parcel 6)
dated as of December 18, 2007]

            LAM RESEARCH CORPORATION, a
Delaware corporation
      By:   /s/ Roch LeBlanc        Roch LeBlanc, Treasurer             

 
Construction Agreement (Livermore/Parcel 6) — Signature Page

 

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Exhibit A
Legal Description
PARCEL 6, AS SAID PARCEL IS SHOWN ON THE PARCEL MAP 7341 FILED IN BOOK 268 OF
PARCEL MAPS AT PAGE 85, ALAMEDA COUNTY RECORDS.
A.P.N. 903-0010-017

 

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Exhibit B
Description of the Construction Project and Construction Budget
     Subject to future Scope Changes, the Construction Project will be
substantially consistent with the site plans and elevations attached to this
Exhibit and also with the following general description, to the extent that the
following description anticipates construction or renovation of Improvements on
the Land. The following description includes not only work that will be
undertaken on the Land pursuant to this Agreement, but also work on an adjacent
parcel (which BNPPLC is acquiring and leasing separately to LRC) pursuant to a
Construction Agreement (Livermore/ Parcel 7) dated of even date between BNPPLC
and LRC (the “Other Construction Agreement”). References below to “Building 1”
are to the building on Parcel 6, which is to be constructed or renovated as part
of the Construction Project contemplated by this Agreement; whereas references
below to “Building 2” are to the building on the adjacent tract to be
constructed or renovated as part of the project contemplated by the Other
Construction Agreement.
Renovation of #1 and #101 Portola Avenue, Buildings 1 & 2, Livermore, CA:
Subject to further Design Development, the following is a narrative and plan (as
of 11.12.07) description of the construction changes planned for the two
existing parcels and structures at #1 and #101 Portola Avenue in Livermore, CA,
(currently occupied by KLA Tencor, Buildings L1 and L2), necessary to meet the
manufacturing, lab and office support needs of Lam Research.
Existing Structures:
The existing buildings are each two-story, 120,000 square foot, braced steel
frame structures classified as Type II N structures in the CBC with mixed
occupancies of B, F1 and A3. The existing tenant improvements on the ground
floor of both buildings are Class C-100 & C-10,000 clean rooms and labs for
electronics manufacturing/assembly and testing, and some training rooms. The
second floor of both buildings is offices and administrative in nature. The
first floor of Bldg 2 also has a cafeteria.
Proposed New Exterior Construction:
The proposed exterior construction scope of this renovation includes minor
modifications to the equipment yard including the addition of three tanks for DI
Water, LN2 and Heavy Metals Storage, the addition of a make up air handler,
scrubber, acid waste neutralization and Nitrogen generation systems and
construction of a chemical storage containment enclosure with a screened
scrubber and vent stack. This work is primarily in support of Building 2,
located on the Building 2 equipment pad, and within the Building 2 budget.

 

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The existing building mass and street facing elevations will not be altered
except for the addition and subtraction of various man doors around the ground
floor perimeter. This work is split evenly between the buildings. All new doors
will match existing storefront doors and all removed doors will be replaced with
new glazing and sill construction to match existing.
Proposed New Interior Construction:
The existing clean rooms and labs on the ground floors of both buildings will be
extensively demolished and reconfigured to accommodate LAM’s manufacturing and
lab modifications, to include the complete reconfiguring of plenum chase
locations, raising the ceiling heights from 9’ to ~11’ and excavating trenches
and pits within the clean rooms for chases and utility runs. The majority of the
C-100 clean rooms will be reclassified as C-10,000. A small Server Room will be
constructed in an existing lab area in Building 2.
The office areas, building lobbies, employee cafeteria, and various labs will
remain essentially untouched.
Building Occupancy Revisions:
Lam’s lab processes involve the onsite storage of quantities of a variety of
hazardous chemicals and agents. The renovation anticipates building a separate
H2 occupancy containment enclosure completely separated from the existing Type
II N buildings within two of the existing loading dock bays of Bldg 2 to
accommodate the onsite storage of these chemicals. Lam’s SOPs will allow for
amounts of these hazardous chemicals to be removed from the containment
enclosure and used within the manufacturing areas of the building in small
enough quantities to maintain the F1 occupancy for the manufacturing areas. All
other existing occupancies within the building will be maintained in the
proposed renovation.
     All of the buildings will be suitable for uses contemplated in the Lease
and of a quality, when complete to be considered first class facilities for such
uses. When construction is complete, the Property will include parking areas,
driveways and other facilities on the Land of suitable quality for the finished
buildings on the Land.
     The outline description that follows is provided to explain how costs will
be allocated between those to be funded under this Agreement and those to be
funded under the Other Construction Agreement. Again, references below to
“Building 1” are to the building on Parcel 6, which is to be constructed or
renovated as part of the Construction Project contemplated by this Agreement;
whereas references below to “Building 2” are to the building on the adjacent
tract to be constructed or renovated as part of the project contemplated by the
 
Exhibit B to Construction Agreement (Livermore/Parcel 6) — Page 2

 

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Other Construction Agreement.
Livermore Cost Allocation Methodology
     Assumptions:

  •   Building 2 design is more complicated than Building 1; soft cost design
work will be greater for Building 2 than Building 1     •   Building 1
construction is expected to start in March 2008. Building 2 construction is
expected to start in April or May 2008 (depending on when KLA moves out of the
building)     •   Hard costs incurred that support both buildings will be
allocated to the Building/Parcel where they will be physically located     •  
Allocation of costs between buildings only occurs during the “accounting
construction period” for each building, and will include any costs incurred
prior to lease inception for which Lam will be reimbursed on the closing date
(design fees, permits, due diligence costs, etc.).     •   Utilities (for items
not metered separately), and Operations & Maintenance costs incurred by Lam and
not the lessee during the lease period, and not charged as part of Operating
Expenses under the lease, will be allocated on a 50% : 50% basis.

Utility and Operations & Maintenance costs incurred by the lessee during the
lease period, or charged by Lam to the lessee as Operating Expense during the
lease period, are excluded from the allocation process. Expenses will be
recorded as incurred / accrued.
     Soft Cost Allocation:
Costs that do not involve design but involve both buildings will be allocated on
a 50% : 50% basis. Example costs for this area:

  •   Environmental Assessments     •   ALTA surveys     •   Conditional Use
Permits (City of Livermore)

Costs that involve design or are dependant upon the volume of work planned to be
done will be allocated based upon the proportion of Construction Costs budgeted
to be incurred between Building 1 and Building 2.

  •   The Utility Yard costs, currently “building neutral” will be split into
the

 
Exhibit B to Construction Agreement (Livermore/Parcel 6) — Page 3

 

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planned Construction Costs for Building 1 and 2 based upon the physical location
of equipment and work.
Example costs for this area:

  •   Project Management     •   Architectural     •   Mechanical, Electrical,
Piping     •   HAZMAT

Costs that are directly attributable to only one building will be allocated as
such. Example costs for this area:

  •   Building permits     •   Operating permits     •   Occupancy permits

     Hard Cost Allocation:
Hard costs will be allocated based upon the physical location of the work/asset,
specifically, Building 1 and Building 2. The Utility Yard costs, currently
“building neutral” will be split into the planned Construction Costs for
Building 1 and 2 based upon the physical location of equipment and work.

  •   The General Contractor (GC) Periodic invoices will have costs for the
period broken out by Building 1 or Building 2 when submitted to Lam

  •   Costs outside of the control of the GC will have the allocation done by
Lam and/or Outside Services upon receipt of invoice

     Utility Allocation:
Utilities, specifically Natural Gas, Water, and Electrical are metered
separately for each building and will be allocated directly to each building
during the construction period for each building.

  •   For Building 1, these will be allocated directly to Building 1     •   For
Building 2:

  •   During the period while the KLA lease is in effect, there will be no
allocation since KLA will still be in the building (see assumptions)     •  
During construction following KLA’s exit, they will be allocated 50/50 for
non-metered items; directly to each building depending on the meter.

     Operations & Maintenance Costs:
 
Exhibit B to Construction Agreement (Livermore/Parcel 6) — Page 4

 

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Operations and Maintenance costs for Livermore will be billed separately or
identified on the invoice as relating to Livermore, and allocated to each
building as such. Costs for common area maintenance will be allocated on a 50% :
50% basis as appropriate.
Termination Fees:
If there are any termination fees applicable to an agreement with a contractor,
the fees will be allocated to appropriate building if they are specifically
attributable to a building. If termination fees exist with a contractor that are
NOT specifically identifiable to a building, the termination fees will be
allocated based on a ratio of costs incurred to date with the particular
contractor between the 2 buildings.
     The budget for the Construction Project is as shown on the attached pages.
(The column in the budget designated as “Lease Cap B1” is the budget for the
construction to take place on the Land and to be included in the funding
contemplated by this Agreement.). Also shown on the attached pages are site
plans and elevations that depict or help explain both the construction
contemplated by this Agreement and the construction contemplated by the Other
Construction Agreement.
 
Exhibit B to Construction Agreement (Livermore/Parcel 6) — Page 5

 

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Exhibit C
Construction Advance Request Form
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
     Re: Construction Agreement (Livermore/Parcel 6) dated as of December 18,
2007 (the “Construction Agreement”), between Lam Research Corporation (“LRC”), a
Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”)
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Construction Agreement or in the Common Definitions and
Provisions Agreement (Livermore/Parcel 6) referenced in the Construction
Agreement. This letter constitutes a Construction Advance Request, requesting a
Construction Advance of:
$                                        ,
on the Advance Date that will occur on:
, 20      .
     To induce BNPPLC to make such Construction Advance, LRC represents and
warrants as follows:
I. Calculation of limit imposed by Subparagraph 4(C)(2)(b) of the Construction
Agreement:

     
(1) LRC has paid or incurred bona fide Reimbursable Construction Period Costs
other than for Work (e.g., property taxes) of no less than
  $______________      
(2) LRC has paid or incurred bona fide Reimbursable Construction Period Costs
for Prior Work of no less than
  $______________      
(3) LRC has received prior Construction Advances of
  $______________

 

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LIMIT (1 + 2 — 3)
  $______________

II. Projected Cost Overruns:
LRC [check one: ___ does / ___ does not ] believe that Projected Construction
Overruns are more likely than not. [If LRC does believe that Projected Cost
Overruns are more likely than not, and if LRC believes that the amount of such
Projected Construction Overruns can be reasonably estimated, LRC estimates the
same at $____________.]
III. Construction Advances Covering Pre-lease Force Majeure Losses:
Neither the Construction Advance requested by this letter nor prior Construction
Advances (if any) have been used or will be used to cover any costs of repairs
that constitute Pre-lease Force Majeure Losses, except as follows: (if there are
no exceptions, insert “No Exceptions”)
 
 
 
 
IV. Absence of Certain Work/Suspension Events:
     A. The Construction Project is progressing without significant interruption
in a good and workmanlike manner and substantially in accordance with Applicable
Laws, with Permitted Encumbrances and with the requirements of the Construction
Agreement, except as follows: (if there are no exceptions, insert “No
Exceptions”)
 
 
 
 
     B. If LRC has received notice of any Defective Work, LRC has promptly
corrected or is diligently pursuing the correction of such Defective Work,
except as follows: (if there are no exceptions, insert “No Exceptions”)
 
 
 
 

 

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            LAM RESEARCH CORPORATION, a
Delaware corporation         By:           Name:           Title:        

 
Exhibit C to Construction Agreement (Livermore/Parcel 6) — Page 3

 

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Exhibit D
Pre-lease Force Majeure Event Notice
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
     Re: Construction Agreement (Livermore/Parcel 6) dated as of December 18,
2007 (the “Construction Agreement”), between Lam Research Corporation (“LRC”), a
Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware
corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Construction Agreement referenced above or in the Common
Definitions and Provisions Agreement (Livermore/Parcel 6) referenced in the
Construction Agreement.
     IMPORTANT: It is imperative that BNPPLC promptly review with legal counsel
the ramifications of this notice under the Construction Agreement and other
Operative Documents.
     This letter constitutes a Pre-lease Force Majeure Event Notice, given as
provided in subparagraph 6(B) of the Construction Agreement to preserve the
right of LRC to assert the occurrence of a Pre-lease Force Majeure Event.
     LRC certifies to BNPPLC that the following Pre-lease Force Majeure Event
occurred or commenced on ____________, 20___:
[INSERT DESCRIPTION OF EVENT HERE]
     LRC’s preliminary good faith estimate of the Pre-lease Force Majeure
Delays, of the Pre-lease Force Majeure Losses and of the Pre-lease Force Majeure
Excess Costs likely to result from such event are ____________ days,
$____________ and $____________, respectively. Such amounts, however, are only
estimates.
     LRC acknowledges that after LRC gives this notice, BNPPLC may at any time
deliver an FOCB Notice to LRC as described in the Construction Agreement.

 

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            LAM RESEARCH CORPORATION, a Delaware corporation
      By:           Name:           Title:        

 
Exhibit D to Construction Agreement (Livermore/Parcel 6) — Page 2

 

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Exhibit E
Notice of Termination of LRC’s Work
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
     Re: Construction Agreement (Livermore/Parcel 6) dated as of December 18,
2007 (the “Construction Agreement”), between Lam Research Corporation (“LRC”), a
Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware
corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Construction Agreement referenced above or in the Common
Definitions and Provisions Agreement (Livermore/Parcel 6) referenced in the
Construction Agreement.
     IMPORTANT: It is imperative that BNPPLC promptly review with legal counsel
the ramifications of this notice under the Construction Agreement and other
Operative Documents.
     LRC has determined that the Construction Allowance to be provided to it
under the Construction Agreement will not be sufficient to cover all
Reimbursable Construction Period Costs yet to be paid or reimbursed from
Construction Advances for the reason or reasons set forth in the Notice of LRC’s
Intent to Terminate dated __________, 200___, previously delivered to you as
provided in subparagraph 7(B) of the Construction Agreement. That Notice of
LRC’s Intent to Terminate has not been rescinded by LRC.
     LRC hereby irrevocably and unconditionally elects to terminate its rights
and obligations to continue the Work under Construction Agreement effective as
of the date of this letter (which, as required by subparagraph 7(B) of the
Construction Agreement, is a date not less than forty-five days after the date
the aforementioned Notice of LRC’s Intent to Terminate). This notice constitutes
a “Notice of Termination by LRC” as described in subparagraph 7(B) of the
Construction Agreement.
     LRC also acknowledges that a 97-10/Meltdown Event has occurred under and as
defined in the Construction Agreement, and that BNPPLC is thus entitled to
demand and receive a 97-10/Prepayment under and as provided in Paragraph 8 of
the Construction Agreement, unless the last sentence of Paragraph 8 excuses LRC
from paying the same.

 

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            LAM RESEARCH CORPORATION, a
Delaware corporation         By:           Name:           Title:        

 
Exhibit E to Construction Agreement (Livermore/Parcel 6) — Page 2

 

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Exhibit F
Notice of LRC’s Intent to Terminate
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
     Re: Construction Agreement (Livermore/Parcel 6) dated as of December 18,
2007 (the “Construction Agreement”)between Lam Research Corporation (“LRC”), a
Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware
corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Construction Agreement referenced above or in the Common
Definitions and Provisions Agreement (Livermore/Parcel 6) referenced in the
Construction Agreement.
     IMPORTANT: It is imperative that BNPPLC promptly review with legal counsel
the ramifications of this notice under the Construction Agreement and other
Operative Documents.
 
[DRAFTING NOTE: Unless this letter contains the alternative provisions set forth
below as being required after a Complete Taking in any “Notice of LRC’s Intent
to Terminate Because of a Force Majeure Event,” this letter must contain the
following paragraph and inserts following such paragraph as indicated:
     LRC has determined that the Construction Allowance to be provided to it
under the Construction Agreement will not be sufficient to cover all
Reimbursable Construction Period Costs yet to be paid or reimbursed from
Construction Advances, because:
[INSERT ANY ONE OR MORE OF THE FOLLOWING REASONS THAT APPLY: (1) THE COST OF THE
WORK EXCEEDS BUDGETED EXPECTATIONS (RESULTING IN PROJECTED COST OVERRUNS), (2) A
PRE-LEASE FORCE MAJEURE EVENT HAS OCCURRED, OR (3) LRC CAN NO LONGER SATISFY
CONDITIONS TO BNPPLC’S OBLIGATION TO PROVIDE CONSTRUCTION ADVANCES IN THE
CONSTRUCTION AGREEMENT.]

 

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     The purpose of this letter is to give notice to BNPPLC of LRC’s intent to
terminate LRC’s rights and obligations to perform Work under the Construction
Agreement. This letter constitutes a “Notice of LRC’s Intent to Terminate” given
pursuant to subparagraph 7(B) of the Construction Agreement. As provided in that
subparagraph, as a condition to any effective Termination of LRC’s Work, LRC
must deliver a subsequent notice of termination to BNPPLC no less than
forty-five days after the date BNPPLC receives this letter.
 
[DRAFTING NOTE: Unless this letter contains the alternative provisions set forth
below as being required for any “Notice of LRC’s Intent to Terminate Because of
a Force Majeure Event,” this letter must contain the following paragraph:
     The period running from the date of BNPPLC’s receipt of this letter to the
effective date of any actual Termination of LRC’s Work by LRC or BNPPLC will
constitute a Work/Suspension Period under the Construction Agreement. During
such period BNPPLC’s funding obligations will be limited and LRC may suspend the
Work to the extent so provided in the Construction Agreement. Moreover, LRC
acknowledges that the delivery of this Notice of Intent to Terminate is a
97-10/Meltdown Event. Therefore, after receipt of this notice BNPPLC will have
the rights to demand and receive a 97-10/Prepayment from LRC as provided in
Paragraph 9 of the Construction Agreement.]
[DRAFTING NOTE: This letter will qualify as a “Notice of LRC’s Intent to
Terminate Because of a Force Majeure Event” only if LRC includes one of the
following alternative sets of provisions, as applicable.]
[ALTERNATIVE #1 (Applies only if there has been a Complete Taking):
     This letter constitutes a “Notice of LRC’s Intent to Terminate Because of a
Force Majeure Event” as defined in the Construction Agreement. A Complete Taking
has occurred. Thus, regardless of any Scope Changes BNPPLC may be willing to
approve or consider, and regardless of any Increased Commitment BNPPLC may be
willing to provide, it would be futile to continue the Construction Project on
the Land.
     LRC acknowledges and agrees that BNPPLC is entitled to all proceeds of the
taking of the Property and all such proceeds must be paid to BNPPLC. LRC has no
right and will not assert any right to share in such proceeds. LRC agrees to
cooperate with BNPPLC as BNPPLC may from time to time request in order to
maximize BNPPLC’s recovery of such proceeds.]

 

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[ALTERNATIVE #2 (applies in the event of a Pre-lease Force Majeure Event other
than a Complete Taking): Include the next (single sentence) paragraph, together
with one or both (as applicable) of the two paragraphs following the next
(single sentence) paragraph, and together with the remaining paragraphs after
those two paragraphs, all with blanks filled in appropriately:
     This letter constitutes a “Notice of LRC’s Intent to Terminate Because of a
Force Majeure Event” as defined in the Construction Agreement.
     LRC now believes that the remaining available Construction Allowance will
not be sufficient to cover all Reimbursable Construction Period Costs yet to be
paid or reimbursed from Construction Advances only because of Pre-lease Force
Majeure Excess Costs incurred or anticipated as a result of one or more
Pre-lease Force Majeure Events. BNPPLC has previously been notified of such
Pre-lease Force Majeure Event(s) by notice(s) dated ________, which LRC
delivered to BNPPLC in accordance with subparagraph 6(B) of the Construction
Agreement. LRC’s current good faith estimate of the Pre-lease Force Majeure
Excess Costs that are most likely to be incurred because of such Pre-lease Force
Majeure Event(s) is $___________.
     LRC now believes that the Work will not be substantially complete before
the Target Completion Date only because of Pre-lease Force Majeure Delays
resulting from one or more Pre-lease Force Majeure Events. BNPPLC has previously
been notified of such Pre-lease Force Majeure Event(s) by notice(s) dated
_______, which LRC delivered to BNPPLC in accordance with subparagraph 6(B) of
the Construction Agreement. LRC’s current good faith estimate of the Pre-lease
Force Majeure Delays that are most likely to occur because of such Pre-lease
Force Majeure Event(s) is ___________ days.
     Also be advised that, as provided in subparagraph 7(B) of the Construction
Agreement, BNPPLC is entitled to (but not obligated to) respond to this notice
with an Increased Commitment. Responding with an Increased Commitment will
result in a conclusive presumption (for purposes of calculating any
97-10/Prepayment required of LRC under the Purchase Agreement) that any
Termination of LRC’s Work is for reasons other than the Pre-lease Force Majeure
Events of which BNPPLC has previously been notified.
     In the event BNPPLC fails to respond with an Increased Commitment, the
failure may excuse LRC from the obligation to make a 97-10/Prepayment under
Paragraph 8 of the Construction Agreement notwithstanding any Termination of
LRC’s Work, which would constitute a very material adverse consequence to
BNPPLC. Moreover, the Construction Agreement grants to LRC a right to cause a
Termination of LRC’s Work at any time more than forty-five days after giving
this notice, provided that LRC continues to believe that a Timing or Budget
Shortfall exists at that time. Thus, if BNPPLC intends to respond with an
Increased Commitment, BNPPLC would be well advised to do so before the
expiration of such forty-five
 
Exhibit F to Construction Agreement (Livermore/Parcel 6) — Page 3

 

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day period.]

            LAM RESEARCH CORPORATION, a
Delaware corporation         By:           Name:           Title:        

 
Exhibit F to Construction Agreement (Livermore/Parcel 6) — Page 4

 

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Exhibit G
Notice of Increased Funding Commitment by BNPPLC
[Date]
Lam Research Corporation
4300 Cushing Parkway
Fremont, California 94538
Attention: Roch LeBlanc, Treasurer
     Re: Construction Agreement (Livermore/Parcel 6) dated as of December 18,
2007 (the “Construction Agreement”)between Lam Research Corporation (“LRC”), a
Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware
corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Construction Agreement or in the Common Definitions and
Provisions Agreement (Livermore/Parcel 6) referenced in the Construction
Agreement.
     LRC has delivered a notice to BNPPLC dated _________, 20___, which by its
terms expressed LRC’s intent that it constitute a “Notice of LRC’s Intent to
Terminate Because of a Force Majeure Event” as defined in the Construction
Agreement. In such notice, LRC advised BNPPLC of LRC’s intent to terminate the
Construction Agreement because of LRC’s belief that the Construction Allowance
to be provided to it under the Construction Agreement will not be sufficient to
cover all Reimbursable Construction Period Costs yet to be paid or reimbursed
from Construction Advances. Such notice also suggested LRC’s belief that, but
for the cost of repairing damage to the Improvements caused by a Pre-lease Force
Majeure Event, the remaining available Construction Allowance would be
sufficient. In addition, such notice set forth the amount of $______ as LRC’s
estimate of the Pre-lease Force Majeure Excess Costs most likely to be incurred
because of such Pre-lease Force Majeure Event.
     This response to such notice constitutes an Increased Funding Commitment.
BNPPLC hereby commits to increase the amount of the Construction Allowance by
$______ (the estimate given by LRC as described above). Such commitment is made
on and subject to all of the same terms and conditions set forth in the
Construction Agreement and other Operative Documents as being applicable to the
original Construction Allowance and to Construction Advances required
thereunder.
     Please note that, according to the Construction Agreement, LRC will have
ten days after the date of any Increased Commitment (which may be comprised of
this Increased Funding Commitment and any separate Increased Time Commitment
given contemporaneously herewith) within which LRC may rescind the
aforementioned Notice of LRC’s Intent to Terminate Because

 

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of a Force Majeure Event by a notice given in the form prescribed by the
Construction Agreement. Any failure of LRC to so rescind the notice will
constitute a 97-10/Meltdown Event under and as defined in the Construction
Agreement and will result in a conclusive presumption (for purposes of
calculating any 97-10/Prepayment required of LRC) that any Termination of LRC’s
Work occurred for reasons other than the Pre-lease Force Majeure Events of which
BNPPLC has previously been notified.

            BNP PARIBAS LEASING CORPORATION, a
Delaware corporation         By:           Name:           Title:        

 
Exhibit G to Construction Agreement (Livermore/Parcel 6) — Page 2

 

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Exhibit H
Notice of Increased Time Commitment by BNPPLC
[Date]
Lam Research Corporation
4300 Cushing Parkway
Fremont, California 94538
Attention: Roch LeBlanc, Treasurer
     Re: Construction Agreement (Livermore/Parcel 6) dated as of December 18,
2007 (the “Construction Agreement”)between Lam Research Corporation (“LRC”), a
Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware
corporation
Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Construction Agreement or in the Common Definitions and
Provisions Agreement (Livermore/Parcel 6) referenced in the Construction
Agreement.
     LRC has delivered a notice to BNPPLC dated _______, 20__, which by its
terms expressed LRC’s intent that it constitute a “Notice of LRC’s Intent to
Terminate Because of a Force Majeure Event” as defined in the Construction
Agreement. In such notice, LRC advised BNPPLC of LRC’s intent to elect a
Termination of LRC’s Work because of LRC’s belief that the Work will not be
substantially complete prior to the Target Completion Date only because of
Pre-lease Force Majeure Delays. Such notice also expressed LRC’s belief that
Pre-lease Force Majeure Delays are likely to be ______ days in the aggregate.
     This response to such notice constitutes an Increased Time Commitment.
BNPPLC hereby commits to extend the Target Completion Date by ______ days (the
estimate given by LRC as described above).

 

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     Please note that, according to the Construction Agreement, LRC will have
ten days after the date of any Increased Commitment (which may be comprised of
this Increased Time Commitment and any separate Increased Funding Commitment
given contemporaneously herewith) within which LRC may rescind the
aforementioned Notice of LRC’s Intent to Terminate Because of a Force Majeure
Event by a notice given in the form prescribed by the Construction Agreement.
Any failure of LRC to so rescind the notice will constitute a 97-10/Meltdown
Event under and as defined in the Construction Agreement and will result in a
conclusive presumption (for purposes of calculating any 97-10/Prepayment
required of LRC) that any Termination of LRC’s Work occurred for reasons other
than the Pre-lease Force Majeure Events of which BNPPLC has previously been
notified.

            BNP PARIBAS LEASING CORPORATION, a
Delaware corporation         By:           Name:           Title:        

 
Exhibit H to Construction Agreement (Livermore/Parcel 6) — Page 2

 

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Exhibit I
Rescission of Notice of LRC’s Intent to Terminate
[Date]
BNP Paribas Leasing Corporation
12201 Merit Drive, Suite 860
Dallas, Texas 75251
Attention: Lloyd G. Cox, Managing Director
     Re: Construction Agreement (Livermore/Parcel 6) dated as of December 18,
2007 (the “Construction Agreement”)between Lam Research Corporation (“LRC”), a
Delaware corporation, and BNP Paribas Leasing Corporation (“BNPPLC”), a Delaware
corporation
     Gentlemen:
     Capitalized terms used in this letter are intended to have the meanings
assigned to them in the Construction Agreement referenced above or in the Common
Definitions and Provisions Agreement (Livermore/Parcel 6) referenced in the
Construction Agreement.
     LRC has delivered to BNPPLC a Notice of LRC’s Intent to Terminate dated
_______, 200__, and BNPPLC has responded with an Increased Commitment as of
________, 200__. LRC hereby accepts the Increased Commitment and, as provided in
subparagraph 7(B) of the Construction Agreement, rescinds such Notice of LRC’s
Intent to Terminate.
     LRC acknowledges that, because of such rescission, LRC must, as a condition
precedent to any exercise of its remaining rights to terminate the Construction
Agreement pursuant to subparagraph 7(B) thereof, deliver another Notice of LRC’s
Intent to Terminate at least forty five days prior to the effective date of the
Termination of LRC’s Work.

            LAM RESEARCH CORPORATION, a Delaware corporation
      By:           Name:           Title: