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Exhibit 10.3  

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN REDACTED PROVISIONS OF THIS AGREEMENT. THE REDACTED PROVISIONS ARE IDENTIFIED BY THREE ASTERISKS ENCLOSED BY BRACKETS AND
UNDERLINED. THE CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  

GROUND LEASE  

BETWEEN  

 BNP PARIBAS LEASING CORPORATION  

 ("BNPPLC")  

 AND  

 SPECIALTY LABORATORIES, INC.  

 ("Specialty Laboratories")  

 March 26, 2002  

 (Santa Clarita, California)  

  

 
 

TABLE OF CONTENTS    
  

	 
	 	 
	 	 
	 	Page

	1.	 	Defined Terms and References	 	2
	

2.	
 	

Ground Lease Term and Early Termination	
 	

3
	

3.	
 	

Ground Lease Rent	
 	

3
	

4.	
 	

Receipt and Application of Insurance and Condemnation Proceeds	
 	

3
	

5.	
 	

No Lease Termination	
 	

3
	

6.	
 	

The Lease and other Operative Documents	
 	

4
	

7.	
 	

Use of Leased Property	
 	

4
	 	 	(A)	 	Permitted Uses and Construction of Improvements	 	4
	 	 	(B)	 	Cooperation by Specialty Laboratories and its Affiliates	 	4
	 	 	(C)	 	Performance and Preservation of the Development Contracts for the Benefit of BNPPLC	 	4
	 	 	(D)	 	Title to Improvements	 	5
	

8.	
 	

Assignment and Subletting; Pass Through of BNPPLC's Liability Insurance and Indemnity Rights	
 	

5
	

9.	
 	

Estoppel Certificate	
 	

6
	

10.	
 	

Leasehold Mortgages	
 	

7
	

11.	
 	

Other Representations, Warranties and Covenants of Specialty Laboratories	
 	

8
	 	 	(A)	 	Current Status of Title	 	8
	 	 	(B)	 	Defense of Adverse Title Claims	 	8
	 	 	(C)	 	Prohibition Against Consensual Liens on the Leased Property	 	9
	 	 	(D)	 	Compliance With Permitted Encumbrances	 	9
	 	 	(E)	 	 	 	9
	 	 	(F)	 	Modification of Permitted Encumbrances and Development Contracts	 	9
	 	 	(G)	 	Title Insurance	 	9
	 	 	(H)	 	Environmental Representations	 	10
	 	 	(I)	 	Condition of Property	 	10
	 	 	(J)	 	Omissions	 	10
	 	 	(K)	 	Insurance and Casualty	 	10
	 	 	(L)	 	Condemnation	 	11
	 	 	(M)	 	Further Assurances	 	11
	

12.	
 	

Environmental Indemnification	
 	

11
	 	 	(A)	 	Indemnity	 	11
	 	 	(B)	 	Assumption of Defense	 	11
	 	 	(C)	 	Notice of Environmental Losses	 	12
	 	 	(D)	 	Rights Cumulative	 	12
	 	 	(E)	 	Survival of the Indemnity	 	12
	

13.	
 	

Ground Lease Defaults	
 	

13
	 	 	(A)	 	Definition of Ground Lease Default	 	13
	 	 	(B)	 	Remedy	 	13
	

14.	
 	

Quiet Enjoyment	
 	

13
	

15.	
 	

Option to Purchase	
 	

13

i

 

	

16.	
 	

Miscellaneous	
 	

14
	 	 	(A)	 	No Merger	 	14
	 	 	(B)	 	Memorandum of Lease	 	14

Exhibits and Schedules  

	Exhibit A	 	Legal Description
	

Exhibit B	
 	

Permitted Encumbrance List
	

Exhibit C	
 	

Determination of Fair Rental Value
	

Exhibit D	
 	

Contingent Purchase Option

ii

 
 

GROUND LEASE    
  

        This GROUND LEASE (this "Ground Lease") is made and dated as of March 26, 2002 (the
"Effective Date") by and between BNP PARIBAS LEASING CORPORATION, a Delaware corporation ("BNPPLC"), as
lessee, and SPECIALTY LABORATORIES, INC., a California corporation ("Specialty Laboratories"), as lessor. 

RECITALS  

        Contemporaneously with the execution of this Ground Lease, BNPPLC and Specialty Laboratories are executing a Common Definitions and Provisions Agreement 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 Ground
Lease for all purposes. As used in this Ground Lease, capitalized terms defined in the Common Definitions and Provisions Agreement and not otherwise defined in this Ground
Lease are intended to have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.

        At
the request of Specialty Laboratories, and to facilitate the transaction contemplated in the other Operative Documents, BNPPLC is executing this Ground Lease to acquire from Specialty
Laboratories a leasehold estate of less than 35 years in the Land described in Exhibit A attached hereto (the
"Land") and any existing improvements thereon. 

        Pursuant
to a Lease Agreement dated as of the Effective Date (the "Lease") between BNPPLC, as landlord, and Specialty Laboratories, as
tenant, BNPPLC is subleasing the Land and leasing Improvements (defined below) to Specialty Laboratories for a term expected to end at approximately the same time as the Turnover Date (as defined
below) under this Ground Lease. 

        Pursuant
to a Purchase Agreement dated as of the Effective Date (the "Purchase Agreement") between BNPPLC and Specialty Laboratories,
Specialty Laboratories is permitted to purchase BNPPLC's interest under this Ground Lease or arrange for a purchase of such interest, on and subject to the terms and conditions set forth therein. 

GRANTING CLAUSES  

        NOW, THEREFORE, in consideration of the rent to be paid and the covenants and agreements to be performed by BNPPLC, as hereinafter set forth, Specialty
Laboratories does hereby LEASE, DEMISE and LET unto BNPPLC for the term hereinafter set forth the Land, together with: 

        (1)  all
easements and rights-of-way now owned or hereafter acquired by Specialty Laboratories for use in connection with the Land or any improvements
constructed thereon or as a means of access thereto and any and all easements and rights appurtenant to the Land; and 

        (2)  all
right, title and interest of Specialty Laboratories, now owned or hereafter acquired, in and to (A) any land lying within the
right-of-way of any street, open or proposed, adjoining the Land, (B) any and all sidewalks and alleys adjacent to the Land and (C) any strips and gores between
the Land and abutting land not owned by Specialty Laboratories. 

The
Land and all of the property described in items (1) and (2) above are hereinafter referred to collectively as the "Real Property". 

        To
the extent, but only to the extent, that assignable rights or interests in, to or under the following have been or will be acquired by Specialty Laboratories as the owner of any
interest in the Real Property, Specialty Laboratories also hereby grants and assigns to BNPPLC for the term of this Ground Lease the right to use and enjoy (and, in the case of contract rights, to
enforce) such rights or interests of Specialty Laboratories: 

        (a)  the
Permitted Encumbrances; and 

        (b)  any
general intangibles, permits, licenses, franchises, certificates, and other rights and privileges related to the Real Property that BNPPLC (rather than Specialty
Laboratories) would 

 

have acquired if BNPPLC had itself acquired the fee estate in the Real Property (excluding, however, any rights and privileges of Specialty Laboratories under this Ground Lease, any rights or
privileges of Specialty Laboratories under the Lease or Purchase Agreement, and [without limiting Specialty
Laboratories' obligations under subparagraphs 7(B), 7(C), 11(D) or 11(F) or BNPPLC's rights as a "Mortgagee" under any Development Contracts] any rights and privileges of Specialty
Laboratories under the Development Contracts). 

Such
rights and interests of Specialty Laboratories, whether now existing or hereafter arising, are hereinafter collectively called the "Personal
Property". The Real Property and the Personal Property are hereinafter sometimes collectively called the "Leased Property." 

        Provided,
however, the leasehold estate conveyed hereby and BNPPLC's rights hereunder are expressly made subject and subordinate to the Permitted Encumbrances, including those listed on  Exhibit B.
FURTHER, SO LONG AS THE OTHER OPERATIVE DOCUMENTS REMAIN IN FORCE, THE RIGHTS AND OBLIGATIONS OF SPECIALTY
LABORATORIES AND BNPPLC HEREUNDER SHALL BE SUBJECT TO ANY CONTRARY PROVISIONS THEREIN, INCLUDING PROVISIONS IN THE CONSTRUCTION MANAGEMENT AGREEMENT AND THE LEASE THAT GOVERN THE COLLECTION AND
APPLICATION OF CONDEMNATION AND INSURANCE PROCEEDS IN THE EVENT OF ANY TAKING OF OR DAMAGE TO THE LEASED PROPERTY.

GENERAL TERMS AND CONDITIONS  

        The Leased Property is leased by Specialty Laboratories to BNPPLC and is accepted and is to be used and possessed by BNPPLC upon and subject to the following
terms, provisions, covenants, agreements and conditions: 

        1    Defined Terms and References.    As used herein, the terms "Ground Lease," "Specialty Laboratories," "BNPPLC,"
"Real Property," "Personal Property" and "Leased Property" shall have the meanings indicated above; as indicated above, capitalized terms that are defined in the Common Definitions and Provisions
Agreement and that are used but not defined herein shall have the respective meanings assigned to them in the Common Definitions and Provisions Agreement; and, the following terms shall have the
following respective meanings: 

"Contingent Purchase Option" means the option granted BNPPLC by Specialty Laboratories as provided in  Exhibit D attached to this Ground Lease. 

"Fair Rental Value" means (and all appraisers and other persons involved in the determination of the Fair Rental Value will be so advised) the annual
rent, as determined in accordance with Exhibit C, that would be agreed upon between a willing tenant, under no compulsion to lease, and a willing
landlord, under no compulsion to lease, for unimproved land (including appurtenances) comparable in size and location to the Land, exclusive of any
Improvements but assuming that there is no higher and better use for such land than as a site for improvements of comparable size and utility to the Improvements, at the time a determination is
required under this Ground Lease and taking into consideration the
condition of the Land, the encumbrances affecting the title to the Land and all applicable zoning, land use approvals and other governmental permits relating to the Land at the time of such
determination. 

"Ground Lease Default" shall have the meaning assigned to it in subparagraph 13(A) below. 

"Ground Lease Rent" means the rent payable by BNPPLC pursuant to Paragraph 3 below. 

"Ground Lease Term" shall have the meaning assigned to it in Paragraph 2 below. 

"Improvements" means anything constructed on the Land from time to time which is deemed to be a "work of improvement" as said term is presently defined
in California Civil Code Section 3106, including all buildings, landscaping, sidewalks and paving for driveways and parking 

Ground Lease - Page 2

 

lots. There are no significant Improvements on the Land as of the Effective Date, but any and all new improvements to the Land made as contemplated in the Construction Management Agreement shall
constitute Improvements as that term is used herein. 

"Leasehold Mortgage" means any mortgage, deed of trust (with or without a private power of sale), security agreement or assignment executed by BNPPLC to
secure an obligation to repay borrowed money or other voluntary obligations, which covers BNPPLC's leasehold estate hereunder or any part thereof or any rents or other charges to be paid to BNPPLC
pursuant to any sublease. 

"Leasehold Mortgagee" means any lender or other beneficiary of a Leasehold Mortgage that shall have notified Specialty Laboratories of the existence
such Leasehold Mortgage and of its address to which notices should be delivered. 

"Turnover Date" means the first Business Day of the first calendar month which is more than thirty days after the Designated Sale Date. 

        2    Ground Lease Term and Early Termination.    The term of this Ground Lease (herein called the
"Ground Lease Term") shall commence on and include the Effective Date and end on the last Business Day prior to the thirty-fifth anniversary of the
Effective Date. However, subject to the prior approval of any Leasehold Mortgagee, BNPPLC shall have the right to terminate this Ground Lease by giving a notice to Specialty Laboratories stating that
BNPPLC unequivocally elects to terminate effective as of a date specified in such notice, which may be any date more than thirty days after the notice and after the expiration or termination of the
Lease pursuant to its terms. 

        3    Ground Lease Rent.    On each anniversary of the Effective Date, BNPPLC shall make a payment to Specialty
Laboratories of rent for the then preceding year (herein called "Ground Lease Rent"), in currency that at the time of payment is legal tender for public
and private debts in the United States of America. Each such payment of Ground Lease Rent shall equal the Fair Rental Value, determined as provided in  Exhibit C. 

        4    Receipt and Application of Insurance and Condemnation Proceeds.    All insurance and condemnation proceeds
payable with respect to any damage to or taking of the Leased Property shall be payable to and become the property of BNPPLC; provided, however, Specialty Laboratories shall be entitled to receive
condemnation proceeds awarded for the value of Specialty Laboratories' remainder interest in the Land exclusive of the Improvements. BNPPLC is authorized to take all action necessary on behalf of both
BNPPLC and Specialty Laboratories (as lessor under this Ground Lease) to collect insurance and condemnation proceeds. 

        5    No Lease Termination.    Except as expressly provided herein, this Ground Lease shall not terminate, nor shall
Specialty Laboratories have any right to terminate this Ground Lease nor shall the obligations of Specialty Laboratories under this Ground Lease be excused, for any reason whatsoever, including
without limitation any of the following: (i) any damage to or the destruction of all or any part of the Leased Property from whatever cause, (ii) the taking of the Leased Property or any
portion thereof by eminent domain or otherwise for any reason, (iii) any default on the part of BNPPLC under this Ground Lease or under any other agreement to which Specialty Laboratories and
BNPPLC are parties, or (iv) any other cause whether similar or dissimilar to the foregoing, any existing or future law to the contrary notwithstanding. Notwithstanding the foregoing, upon the
purchase of BNPPLC's interest in the Land and Improvements pursuant to the Purchase Agreement and payment to BNPPLC of any other sums dues under any of the other Operative Documents, this Ground Lease
shall terminate. It is the intention of the parties hereto that the obligations of Specialty Laboratories hereunder shall be separate and independent of the covenants and agreements of BNPPLC.
However, nothing in this Paragraph shall be construed as a waiver by Specialty Laboratories of any right Specialty 

Ground Lease - Page 3

 

Laboratories may have at law or in equity to recover monetary damages for any default under this Ground Lease by BNPPLC. 

        6    The Lease and other Operative Documents.    Nothing contained in this Ground Lease shall limit, modify or
otherwise affect any of Specialty Laboratories' or BNPPLC's respective rights and obligations under the other Operative Documents (including the Construction Management Agreement and the Lease), which
rights and obligations are intended to be separate, independent and in addition to, and not in lieu of, the obligations established by this Ground Lease. In the event of any inconsistency between the
terms and provisions of the other Operative Documents and the terms and provisions of this Ground Lease, the terms and provisions of the other Operative Documents shall control. 

        7    Use of Leased Property.    

        (A)    Permitted Uses and Construction of Improvements.    Subject to the Permitted Encumbrances and the terms hereof,
BNPPLC may use and occupy the Leased Property for any purpose permitted by Applicable Laws and may construct, modify, renovate, replace and remove any Improvements on the Land from time to time,
subject only to the constraints that Applicable Laws would impose upon the owner of the Land if the owner were constructing, modifying, renovating, replacing or removing Improvements. To afford
Specialty Laboratories an opportunity to file a notice of nonresponsibility pursuant to California Civil Code §3094, BNPPLC shall, before commencing the construction any major
Improvements upon the Land after the Turnover Date, endeavor to notify Specialty Laboratories that BNPPLC intends to commence such construction; provided, however, BNPPLC shall have no liability for
its failure to provide such a notice. 

        (B)    Cooperation by Specialty Laboratories and its Affiliates.    

        (1)  After
(but only after) the Turnover Date, if a use of the Leased Property by BNPPLC or any new Improvements or any removal or modification of Improvements proposed by
BNPPLC would violate any Permitted Encumbrance, Development Contract or Applicable Law unless Specialty Laboratories or any of its Affiliates, as an owner of adjacent property or otherwise, gave its
consent or approval thereto or agreed to join in a modification of a Permitted Encumbrance or Development Contract, then Specialty Laboratories shall give and cause its Affiliates to give such consent
or approval or join in such modification. 

        (2)  After
(but only after) the Turnover Date, to the extent, if any, that any Permitted Encumbrance, Development Contract or Applicable Law requires the consent or approval
of Specialty Laboratories or any of its Affiliates or of the City of Santa Clarita, California or any other Person to an assignment of this Ground Lease or a transfer of any interest in the Leased
Property by BNPPLC or its successors or assigns, Specialty Laboratories will without charge give and cause its Affiliates to give such consent or approval and will at its own expense cooperate in any
way reasonably requested by BNPPLC to assist BNPPLC to obtain such consent or approval from the City or any other Person; provided, however, the consent or approval is not then prohibited by this
Ground Lease or the Lease. 

        (3)  Specialty
Laboratories' obligations under this subparagraph 7(B) shall be binding upon any successor or assign of Specialty Laboratories or its Affiliates with respect
to the Land and other properties encumbered by the Permitted Encumbrances or subject to the Development Contracts, and such obligations shall survive any sale of Specialty Laboratories' interest in
the Leased Property to BNPPLC because of BNPPLC's exercise of the Contingent Purchase Option. 

        (C)    Performance and Preservation of the Development Contracts for the Benefit of BNPPLC.    Not only prior to the
expiration or termination of other Operative Documents, but thereafter throughout the term of this Ground Lease, Specialty Laboratories shall comply with and perform the obligations imposed by
the Development Contracts upon Specialty Laboratories or upon any owner of the Land and shall do whatever is required to preserve the rights and benefits conferred or intended to be 

Ground Lease - Page 4

 

conferred by the Development Contracts, as necessary to facilitate the construction of Improvements on the Land contemplated in the Lease and to facilitate the use of such Improvements after the
Turnover Date by BNPPLC and its successors, assigns and subtenants under this Ground Lease. Further, Specialty Laboratories hereby agrees for itself and its Affiliates, as the owner of the Land and
any other land now owned or hereafter acquired by Specialty Laboratories or its Affiliates, which is described in the Development Contracts, to assume liability for and to indemnify BNPPLC and other
Interested Parties and to defend and hold them harmless from and against all Losses (including Losses caused by any decline in the value of the Leased Property or of the Improvements) that they would
not have incurred or suffered but for: 

        (1)  any
breach by Specialty Laboratories of its obligations under the preceding sentence, 

        (2)  any
termination of any Development Contract, to which Specialty Laboratories agreed, or which resulted from a breach thereof by Specialty Laboratories or its Affiliates,
or 

        (3)  any
restrictions imposed by or asserted under any Development Contract upon any transfer after (but only after) the Turnover Date by BNPPLC or other Interested Parties
of any interests they may then have in the Leased Property or in any Improvements. 

THE INDEMNITY SET OUT IN THIS SUBPARAGRAPH 7(C) SHALL APPLY EVEN IF THE SUBJECT OF THE INDEMNIFICATION IS CAUSED BY OR ARISES OUT OF THE NEGLIGENCE OF BNPPLC OR ANOTHER
INTERESTED PARTY AND EVEN IF BNPPLC OR ANOTHER INTERESTED PARTY IS STRICTLY LIABLE FOR THE LOSSES AGAINST WHICH THE INDEMNITY IS PROVIDED; however, such indemnity shall not
protect an Interested Party against Losses proximately caused by (and attributed by any applicable principles of comparative fault to) the Established Misconduct of that Interested Party. Specialty
Laboratories' obligations under this subparagraph 7(C) shall be binding upon any successor or assign of Specialty Laboratories or its Affiliates with respect to the Land and other properties subject
to the Development Contracts, and such obligations shall survive any sale of Specialty Laboratories' interest in the Leased Property to BNPPLC because of BNPPLC's exercise of the Contingent Purchase
Option. 

        (D)    Title to Improvements.    The leasehold estate created in favor of BNPPLC by this Ground Lease shall extend to
and include the rights to use and enjoy any and all Improvements of whatever nature at any time and from time to time located on the Land. Thus, throughout the term of this Ground Lease, BNPPLC and
its sublessees, assignees, licensees and concessionaires shall be entitled to use and enjoy such Improvements—to the exclusion of Specialty Laboratories as the lessor hereunder, but
subject to Specialty Laboratories' rights under the Operative Documents (including the Lease) so long as they remain in effect—as if the lessee hereunder was the owner of the Improvements.
Further, although all interest in any Improvements which remain on the Land when this Ground Lease expires or is
terminated shall revert to Specialty Laboratories (and BNPPLC shall cause all such interest that reverts to Specialty Laboratories to be free and clear of any Liens Removable by BNPPLC, to the extent
the same was caused by BNPPLC), it is also understood and agreed that the lessee hereunder may at any time and from time to time—after Specialty Laboratories ceases to have possession of
the Leased Property pursuant to the Construction Management Agreement or as tenant under the Lease and prior to the expiration or termination of this Ground Lease—remove all or any
Improvements from the Land without the consent of Specialty Laboratories and without any obligation to Specialty Laboratories or its Affiliates to provide compensation or to construct other
Improvements on or about the Land. Any Improvements removed as provided in the preceding sentence shall be considered severed from the Land and thereupon become personal property of the lessee
hereunder. 

        8    Assignment and Subletting; Pass Through of BNPPLC's Liability Insurance and Indemnity Rights.    BNPPLC may
sublet or assign this Ground Lease without the consent of Specialty Laboratories or any of its Affiliates, subject only to limitations set forth in the Lease for the benefit of Specialty Laboratories
so long as those limitations remain in force. 

Ground Lease - Page 5

 

        To
the extent that BNPPLC may from time to time after the Turnover Date require any subtenant to agree to maintain liability insurance against claims of third parties and agree to make
BNPPLC an additional or named insured under such insurance, BNPPLC shall also require the subtenant to agree to make Specialty Laboratories an additional or named insured. However, BNPPLC shall have
no liability to Specialty Laboratories for a breach by the subtenant of any such agreements, and to the extent that BNPPLC's rights as an additional or named insured are subject to exceptions or
limitations concerning BNPPLC's own acts or omissions or the acts or omissions of anyone other than the subtenant, so too may Specialty Laboratories' rights as an additional or named insured be
subject to exceptions or limitations concerning Specialty Laboratories' own acts or omissions or the acts or omissions of anyone other than the subtenant. 

        To
the extent that BNPPLC may itself from time to time after the Turnover Date maintain liability insurance against claims of third parties which may arise because of any occurrence on
or alleged to have occurred on or about the Leased Property, BNPPLC shall cause Specialty Laboratories to be an additional or named insured under such insurance, provided Specialty Laboratories pays
or reimburses BNPPLC for any additional insurance premium required to have Specialty Laboratories made an insured. 

        To
the extent that BNPPLC may from time to time after the Turnover Date require any subtenant to agree to indemnify BNPPLC against Environmental Losses or other Losses concerning the
Leased Property, BNPPLC shall also require the subtenant to agree to indemnify Specialty Laboratories. However, BNPPLC shall have no liability to Specialty Laboratories for a breach by the subtenant
of any such agreement, and to the extent that BNPPLC's rights as an indemnitee of the subtenant are subject to exceptions or limitations concerning BNPPLC's own acts or omissions or the acts or
omissions of anyone other than the subtenant, so too may Specialty Laboratories' rights as an
indemnitee be subject to exceptions or limitations concerning Specialty Laboratories' own acts or omissions or the acts or omissions of anyone other than the subtenant. 

        9    Estoppel Certificate.    Specialty Laboratories and BNPPLC shall from time to time, within ten days after receipt
of request by the other party hereto, deliver a statement in writing to such other party or other Person(s) designated by such party certifying: 

        (A)  that
this Ground Lease is unmodified and in full force and effect (or if modified that this Ground Lease as so modified is in full force and effect); 

        (B)  that
to the knowledge of the party providing such certificate, the other party has not previously assigned or hypothecated its rights or interests under this Ground
Lease, except as is described in such statement with as much specificity as the party so certifying is able to provide; 

        (C)  the
term of this Ground Lease and the Ground Lease Rent then in effect and any additional charges; 

        (D)  that
to the knowledge of the party providing such certificate, the other party is not in default under any provision of this Ground Lease (or if in default, the nature
thereof in detail) and, in any certificate provided by Specialty Laboratories, a statement as to any outstanding obligations on the part of Specialty Laboratories or BNPPLC; and 

        (E)  in
any certificate provided by Specialty Laboratories, such other factual matters concerning the Leased Property or BNPPLC's rights and obligations under this Ground
Lease as are requested by BNPPLC. 

Specialty
Laboratories' failure to deliver such statement within such time shall be conclusive upon BNPPLC (i) that this Ground Lease is in full force and effect, without modification except as
may be represented by BNPPLC, (ii) that there are no uncured defaults in BNPPLC's performance hereunder. 

Ground Lease - Page 6

 

        10    Leasehold Mortgages.    

        (A)  By
Leasehold Mortgage BNPPLC may encumber BNPPLC's leasehold estate in the Leased Property created by this Ground Lease and BNPPLC's rights and interests in buildings,
fixtures, equipment and improvements situated on the Land and rents, issues, profits, revenues and other income to be derived by BNPPLC from the Leased Property. However, prior to the Turnover Date,
any Leasehold Mortgage will be permitted hereunder only if it constitutes a Permitted Transfer and only if it is made expressly subject to the rights of Specialty Laboratories under the other
Operative Documents. 

        (B)  Any
Leasehold Mortgagee or other party, including any corporation formed by a Leasehold Mortgagee, may become the legal owner of the leasehold estate created by this
Ground Lease and of BNPPLC's rights and interests in the improvements, equipment, fixtures and other property assigned as additional security pursuant to a Leasehold Mortgage, by foreclosure of a
Leasehold Mortgage or as a result of the assignment or conveyance in lieu of foreclosure. Further, any such Leasehold Mortgagee or other party may itself, after becoming the legal owner and holder of
the leasehold estate created by this Ground Lease, or of any improvements, equipment, fixtures and other property assigned as additional security pursuant to a Leasehold Mortgage, convey or pledge the
same without the consent of Specialty Laboratories. 

        (C)  Specialty
Laboratories shall serve notice of any default by BNPPLC hereunder upon any Leasehold Mortgagee for which Specialty Laboratories has received written
notification from BNPPLC of the Leasehold Mortgagee's address for such notice. No notice of a default by BNPPLC shall be deemed effective until it is so served. Any Leasehold Mortgagee shall have the
right to correct or cure any such default within the same period of time after receipt of such notice as is given to BNPPLC under this Ground Lease to correct or cure defaults, plus an additional
period of thirty days thereafter. Specialty Laboratories will accept performance by any Leasehold Mortgagee of any covenant, condition or agreement on BNPPLC's part to be performed hereunder with the
same force and effect as though performed by BNPPLC. 

        (D)  If
this Ground Lease should terminate by reason of a disaffirmance or rejection of this Ground Lease by BNPPLC or any receiver, liquidator or trustee for the property of
BNPPLC, or by any governmental authority which had taken possession of the business or property of BNPPLC by reason of the insolvency or alleged insolvency of BNPPLC, then: 

        (1)  Specialty
Laboratories shall give notice thereof to each Leasehold Mortgagee for which Specialty Laboratories has received written notification from BNPPLC of the
Leasehold Mortgagee's address for such notice; and upon request of any Leasehold Mortgagee made within sixty days after Specialty Laboratories has given such notice, Specialty Laboratories shall enter
into a new ground lease of the Leased Property with such Leasehold Mortgagee for the remainder of the Ground Lease Term, at the same Ground Lease Rent and on the same terms and conditions (including
subparagraph 7(D)) as are contained in this Ground Lease (a "New Ground Lease"). 

        (2)  The
estate of the Leasehold Mortgagee, as lessee under the New Ground Lease, shall have priority equal to the estate of BNPPLC hereunder. That is, there shall be no
charge, lien or burden upon the Leased Property prior to or superior to the estate granted by such New Ground Lease which was not
prior to or superior to the estate of BNPPLC under this Ground Lease as of the date immediately preceding the termination of this Ground Lease. To the extent, however, that the other Operative
Documents are in effect at the time of execution of such New Ground Lease, the New Ground Lease shall be made expressly subject to the other Operative Documents. 

        (3)  Notwithstanding
the foregoing, if Specialty Laboratories shall receive requests to enter into a New Ground Lease from more than one Leasehold Mortgagee because of the
expiration or termination of this Ground Lease, Specialty Laboratories shall be required to enter into only one 

Ground Lease - Page 7

 

New Ground Lease, and the New Ground Lease shall be to the requesting Leasehold Mortgagee who holds the highest priority lien or interest in BNPPLC's leasehold estate in the Land. If the liens or
security interests of two or more such requesting Leasehold Mortgagees which shared the highest priority just prior to the termination of this Ground Lease, the New Ground Lease shall name all such
Leasehold Mortgagees as co-tenants thereunder. 

        (E)  If
BNPPLC has agreed with any Leasehold Mortgagee that such Leasehold Mortgagee's consent will be required to any modification or early termination of this Ground Lease
by BNPPLC, and if Specialty Laboratories has been notified in writing of such agreement, such consent will be required for such Leasehold Mortgagee to be bound by any such modification or early
termination of this Ground Lease. 

        (F)  No
Leasehold Mortgagee will assume any liability under this Ground Lease either by virtue of its Leasehold Mortgage or by any subsequent receipt or collection of rents
or profits generated from the Leased Property, unless and until the Leasehold Mortgagee acquires BNPPLC's leasehold estate in the Leased Property at foreclosure or by deed in lieu of foreclosure. 

        (G)  Although
the foregoing provisions concerning Leasehold Mortgages and Leasehold Mortgagees will be self operative, Specialty Laboratories agrees to include, in addition
to the items specified in Paragraph 9, confirmation of the foregoing with respect to any Leasehold Mortgagee or prospective Leasehold Mortgagee in any statement delivered to such Leasehold
Mortgagee which is provided to a pursuant to Paragraph 9. 

        11    Other Representations, Warranties and Covenants of Specialty Laboratories.    Specialty Laboratories represents,
warrants and covenants as follows: 

        (A)    Current Status of Title.    Specialty Laboratories holds good and marketable title to the Land, free and clear
of all liens and encumbrances, other than the Permitted Encumbrances and Development Contracts. 

        (B)    Defense of Adverse Title Claims.    If any encumbrance or title defect whatsoever affecting the Leased Property
or Improvements constructed prior to the Turnover Date (collectively, the "Improved Property") is claimed or discovered (including Liens against any
part of or interest in the Improved Property, whether or not expressly subordinate to this Ground Lease, but excluding Permitted Encumbrances, Development Contracts and any Liens Removable by BNPPLC)
or if any legal proceedings are instituted with respect to title to the Improved Property, Specialty Laboratories shall give prompt notice thereof to BNPPLC and at Specialty Laboratories' own cost and
expense will promptly remove any such encumbrance and cure any such defect and will take all necessary and proper steps for the defense of any such legal proceedings, including the employment of
counsel, the prosecution or defense of litigation and the release or discharge of all adverse claims. If Specialty Laboratories fails to promptly remove any encumbrance or cure any title defect as
required by the preceding sentence, BNPPLC (whether or not named as a party to legal proceedings with respect thereto) shall be entitled to take such additional steps as in its judgment may be
necessary or proper to remove such encumbrance or cure such defect or for the defense of any such attack or legal proceedings or the protection of BNPPLC's leasehold or other interest in the Property,
including the employment of counsel, the prosecution or defense of litigation, the compromise or discharge of any adverse claims made with respect to the Property, the removal of prior liens or
security interests, and all expenses (including Attorneys' Fees) so incurred of every kind and character shall be a demand obligation owing by Specialty Laboratories. 

        For
purposes of this subparagraph 11(B), Specialty Laboratories shall be deemed to be acting promptly to remove any encumbrance or to cure any title defect, other than a Lien which
Specialty Laboratories or any of its Affiliates has granted or authorized, so long as Specialty Laboratories is in good faith by appropriate proceedings contesting the validity and applicability of
the encumbrance or 

Ground Lease - Page 8

 

defect, and pending such contest Specialty Laboratories shall not be deemed in default under this subparagraph because of the encumbrance or defect, provided that Specialty Laboratories must satisfy
the following conditions and requirements: 

        (1)  Specialty
Laboratories must diligently prosecute the contest to completion in a manner reasonably satisfactory to BNPPLC. 

        (2)  Specialty
Laboratories must immediately remove the encumbrance or cure the defect upon a final determination by a court of competent jurisdiction that it is valid and
applicable to the Property. 

        (3)  Specialty
Laboratories must in any event conclude the contest and remove the encumbrance or cure the defect and pay any claims asserted against BNPPLC or the Improved
Property because of such encumbrance or defect, all prior to (i) the date any criminal charges may be brought against BNPPLC or any of its directors, officers or employees because of such
encumbrance or defect or (ii) the date any action is taken or threatened against BNPPLC or any property owned by BNPPLC (including BNPPLC's leasehold estate under this Ground Lease) by any
governmental authority or any other Person who has or claims rights superior to BNPPLC because of the encumbrance or defect. Also, with respect to a contest of any encumbrance or defect discovered or
claimed before the Designated Sale
Date, Specialty Laboratories must conclude the contest and remove the encumbrance or cure the defect and pay any claims asserted against BNPPLC or the Improved Property because of such encumbrance or
defect, all prior to the Designated Sale Date, unless on the Designated Sale Date Specialty Laboratories or an Affiliate of Specialty Laboratories or any Applicable Purchaser purchases the Property
pursuant to the Purchase Agreement for a net price to BNPPLC (when taken together with any additional payments made by Specialty Laboratories pursuant to Paragraph 1(a)(ii) of the
Purchase Agreement, in the case of a purchase by an Applicable Purchaser) equal to Stipulated Loss Value. 

        (C)    Prohibition Against Consensual Liens on the Leased Property.    Specialty Laboratories shall not, without the
prior consent of BNPPLC, create, place or authorize, or through any act or failure to act, acquiesce in the placing of, any deed of trust, mortgage or other Lien, whether statutory, constitutional or
contractual against or covering the Improved Property or any part thereof (other than Permitted Encumbrances and Liens Removable by BNPPLC), regardless of whether the same are expressly or otherwise
subordinate to this Ground Lease or BNPPLC's interest in the Improved Property. 

        (D)    Compliance With Permitted Encumbrances.    Specialty Laboratories shall comply with and will cause to be
performed all of the covenants, agreements and obligations imposed upon the owner of the Improved Property by the Permitted Encumbrances. 

        (E)    Compliance With Laws.    Without limiting the foregoing, the use of the Property permitted by the Lease
complies, or will comply after readily available permits are obtained, in all material respects with all Applicable Laws. 

        (F)    Modification of Permitted Encumbrances and Development Contracts.    Specialty Laboratories shall not enter
into, initiate, approve or consent to any modification of any Permitted Encumbrance or Development Contract that would create or expand or purport to create or expand obligations or restrictions which
would encumber the Leased Property or any improvements constructed thereon without the prior consent of BNPPLC. Whether BNPPLC must give any such consent requested by Specialty Laboratories prior to
the Designated Sale Date shall be governed by subparagraph 3(A) of the Closing Certificate. 

        (G)    Title Insurance.    Without limiting Specialty Laboratories' obligations under the preceding subparagraphs,
contemporaneously with the execution of this Ground Lease Specialty Laboratories is providing to BNPPLC a title insurance policy in the amount of no less than $60,000,000 insuring 

Ground Lease - Page 9

 

BNPPLC's leasehold estate in the Land and its option to purchase the Land as provided herein, subject to Permitted Encumbrances. 

        (H)    Environmental Representations.    To the knowledge of Specialty Laboratories, except as otherwise disclosed in
the Environmental Report: (i) no Hazardous Substances Activity has occurred prior to the Effective Date; (ii) no owner or operator of the Leased Property has reported or been required to
report any release of any Hazardous Substances on or from the Leased Property pursuant to any Environmental Law; and (iii) no owner or operator of the Leased Property has received from any
federal, state or local governmental authority any warning, citation, notice of violation or other communication regarding a suspected or known release or discharge of Hazardous Substances on or from
the Leased Property or regarding a suspected or known violation of Environmental Laws concerning the Leased Property. Further, Specialty Laboratories represents that to its knowledge, the
Environmental Report taken as a whole is not misleading or inaccurate in any material respect. (As used in this subparagraph, "the knowledge of Specialty
Laboratories" means the present actual knowledge (with due investigation) of Frank Spina, a current employee of Specialty Laboratories.) 

        (I)    Condition of Property.    The Land as described in  Exhibit A is the same as the land shown on the plat included as part
of the survey prepared by Hennon Surveying & Mapping, Inc.
dated November 29, 2001 (the "Survey,"), which survey was delivered to BNPPLC at the request of Specialty Laboratories. Specialty Laboratories is
not aware of any latent or patent material defects or deficiencies in the Leased Property that, either individually or in the aggregate, could materially and adversely affect the use or occupancy of
the Leased Property as permitted by the Lease or could reasonably be anticipated to endanger life or limb. No part of the Real Property is within a flood plain as designated by any governmental
authority. All material improvements on the Land as of the Effective Date are as shown on the Survey, and except as shown on the Survey there are no easements or encroachments visible or apparent from
an inspection of the Land. Adequate provision has been made (or can be made at a cost that is reasonable in connection with future development of the Land) for the Land to be served by electric, gas,
storm and sanitary sewers, sanitary water supply, telephone and other utilities required for the use thereof. All streets, alleys and easements necessary to serve the Land and Improvements
contemplated by the Lease, the Ground Lease and the Construction Management Agreement have been completed and are serviceable (or can be completed at a cost that is reasonable in connection with the
construction contemplated in the Lease and the Construction Management Agreement). To the best knowledge of Specialty Laboratories, no extraordinary circumstances (including any use of the Land as a
habitat for endangered species) exists that would materially and adversely affect the future development of the Land. When the Improvements contemplated in the Construction Management Agreement have
been completed, such Improvements will be useable for their intended purpose without the need to obtain any easement, right-of-way, or concession from any other party. 

        (J)    Omissions.    None of Specialty Laboratories' representations or warranties contained in this Ground Lease or
in any other document, certificate or written statement furnished to BNPPLC by or on behalf of Specialty Laboratories contains any untrue statement of a material fact or omits a material fact
necessary in order to make the statements contained herein or therein (when taken in their entireties) not misleading. 

        (K)    Insurance and Casualty.    In the event any of the Leased Property is destroyed or damaged by fire, explosion,
windstorm, hail or by any other casualty against which insurance shall have been required hereunder, (i) BNPPLC may make proof of loss, (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 4, and (iii) BNPPLC's consent must be obtained for any settlement,
adjustment or compromise of any claims for loss, damage or destruction under any policy or policies of insurance. 

Ground Lease - Page 10

 

        (L)    Condemnation.    All proceeds of condemnation awards or proceeds of sale in lieu of condemnation with respect
to the Leased Property and all judgments, decrees and awards for injury or damage to the Leased Property shall be paid to BNPPLC and applied as provided in Paragraph 4 above. BNPPLC is hereby
authorized, in the name of Specialty Laboratories, to execute and deliver valid acquittances for, and to appeal from, any such judgment, decree or award concerning condemnation of any of the Leased
Property. BNPPLC shall not be, in any event or circumstances, liable or responsible for failure to collect, or to exercise diligence in the collection of, any such proceeds, judgments, decrees or
awards. 

        (M)    Further Assurances.    Specialty Laboratories shall, on request of BNPPLC, (i) promptly correct any
defect, error or omission which may be discovered in the contents of this Ground Lease or in any other instrument executed in connection herewith or in the execution or acknowledgment thereof;
(ii) execute, acknowledge, deliver and record or file such further instruments and do such further acts as may be necessary, desirable or proper to carry out more effectively the purposes of
this Ground Lease and to subject to this Ground Lease any property intended by the terms hereof to be covered hereby including specifically, but without limitation, any renewals, additions,
substitutions, replacements or appurtenances to the Leased Property; (iii) execute, acknowledge, deliver, procure and record or file any document or instrument deemed advisable by BNPPLC to
protect its rights in and to the Leased Property against the rights or interests of third persons; and (iv) provide such certificates, documents, reports, information, affidavits and other
instruments and do such further acts as may be necessary, desirable or proper in the reasonable determination of BNPPLC to enable BNPPLC or any Leasehold Mortgagee to comply with the requirements or
requests of any agency or authority having jurisdiction over them. 

        12    Environmental Indemnification.    

        (A)    Indemnity.    Specialty Laboratories hereby agrees to assume liability for and to indemnify BNPPLC and other
Interested Parties and defend and hold them harmless from and against all Environmental Losses, subject only to the provisions of subparagraph 12(C) below. THE INDEMNITY SET
OUT IN THIS SUBPARAGRAPH SHALL APPLY EVEN IF THE SUBJECT OF THE INDEMNIFICATION IS CAUSED BY OR ARISES OUT OF THE NEGLIGENCE OF BNPPLC OR ANOTHER INTERESTED PARTY AND EVEN IF BNPPLC OR ANOTHER
INTERESTED PARTY IS STRICTLY LIABLE FOR THE ENVIRONMENTAL LOSSES AGAINST WHICH THE INDEMNITY IS PROVIDED; however, such indemnity shall not protect an Interested Party against
Environmental Losses proximately caused by (and attributed by any applicable principles of comparative fault to) the Established Misconduct of (1) that Interested Party or (2) any
subtenant, contractor or other Person who, at the time of such Established Misconduct, had entered upon the Land with authority expressly granted by that Interested Party or its Affiliates or by
anyone lawfully claiming an interest in the Land through or under that Interested Party or its Affiliates (excluding, however, Specialty Laboratories and its Affiliates and any subtenant, contractor
or other Person who had entered upon the Land with the consent or approval of Specialty Laboratories or its Affiliates). 

        (B)    Assumption of Defense.    

        (1)  If
an Interested Party notifies Specialty Laboratories of any claim, demand, action, administrative or legal proceeding, investigation or allegation as to which the
indemnity provided for in this Paragraph 12 applies, Specialty Laboratories shall assume on behalf of the Interested Party and conduct with due diligence and in good faith the investigation and
defense thereof and the response thereto with counsel reasonably satisfactory to the Interested Party; provided, that the Interested Party shall have the right to be represented by advisory counsel of
its own selection and at its own expense; and provided further, that if any such claim, demand, action, proceeding, investigation or allegation involves both Specialty Laboratories and the Interested
Party and the Interested Party shall have been advised in writing by reputable counsel that there may be legal 

Ground Lease - Page 11

 

defenses available to it which are inconsistent with those available to Specialty Laboratories, then the Interested Party shall have the right to select separate counsel to participate in the
investigation and defense of and response to such claim, demand, action, proceeding, investigation or allegation on its own behalf, and Specialty Laboratories shall pay or reimburse the Interested
Party for all Attorney's Fees incurred by the Interested Party because of the selection of such separate counsel. 

        (2)  If
any claim, demand, action, proceeding, investigation or allegation arises as to which the indemnity provided for in this Paragraph 12 applies, and Specialty
Laboratories fails to assume promptly (and in any event within twenty days after being notified of the claim, demand, action, proceeding, investigation or allegation) the defense of the Interested
Party, then the Interested Party may contest (or settle, with the prior consent of Specialty Laboratories, which consent shall not be unreasonably withheld) the claim, demand, action, proceeding,
investigation or allegation at Specialty Laboratories' expense using counsel selected by the Interested Party; provided, that after any such failure by Specialty Laboratories which continues for sixty
days or more no such contest need be made or continued by the Interested Party and settlement or full payment of any claim may be made by the Interested Party without Specialty Laboratories' consent
and without releasing Specialty Laboratories from any obligations to the Interested Party under this Paragraph 12 if, in the written opinion of reputable counsel to the Interested Party, the
settlement or payment in full is clearly advisable. 

        (C)    Notice of Environmental Losses.    If an Interested Party receives a written notice of Environmental Losses
that it believes are covered by this Paragraph 12, then such Interested Party will be expected to promptly furnish a copy of such notice to Specialty Laboratories. Such Interested Party's
failure to so provide a copy of the notice to Specialty Laboratories shall not excuse Specialty Laboratories from its obligations under this Paragraph 12; but if Specialty Laboratories is
unaware of the matters described in the notice and such failure renders unavailable defenses that Specialty Laboratories might otherwise assert, or precludes actions that Specialty Laboratories might
otherwise take, to minimize its obligations hereunder, then Specialty Laboratories shall be excused from its obligation to indemnify that particular Interested Party (and any of its Affiliates which
may also be Interested Parties) against Environmental Losses, if any, which would not have been incurred but for such failure. For example, if BNPPLC fails to provide Specialty Laboratories with a
copy of a notice of an obligation covered by the indemnity set out in subparagraph 12(A) and Specialty Laboratories 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 Specialty Laboratories had been promptly provided with a copy of the notice, then Specialty Laboratories will be
excused from any obligation to BNPPLC or BNPPLC's Parent to pay the excess. 

        (D)    Rights Cumulative.    The rights of each Interested Party under this Paragraph 12 shall be in addition
to any other rights and remedies of such Interested Party against Specialty Laboratories under the other provisions of this Ground Lease or under any other document or instrument now or hereafter
executed by Specialty Laboratories, or at law or in equity (including any right of reimbursement or contribution pursuant to CERCLA). 

        (E)    Survival of the Indemnity.    Specialty Laboratories' obligations under this Paragraph 12 shall survive
the termination or expiration of this Ground Lease. All obligations of Specialty Laboratories under this Paragraph 12 shall be payable upon demand, and any amount due upon demand to any
Interested Party by Specialty Laboratories which is not paid within thirty days after demand shall bear interest from the date of such demand at a floating interest rate equal to the Default Rate, but
in no event in excess of the maximum rate permitted by Applicable Laws. 

Ground Lease - Page 12

 

        13    Ground Lease Defaults.    

        (A)    Definition of Ground Lease Default.    Each of the following events shall be deemed to be a
"Ground Lease Default" by BNPPLC under this Ground Lease: 

        (1)  BNPPLC
shall fail to pay when due any installment of Ground Lease Rent due hereunder and such failure shall continue for sixty days after BNPPLC receives notice thereof. 

        (2)  BNPPLC
shall fail to execute any Sale Closing Documents required by the Purchase Agreement. 

        (3)  BNPPLC
shall fail to comply with any term, provision or covenant of this Ground Lease (other than as described in the other clauses of this subparagraph 13(A)), and
shall not cure such failure prior to the earlier of (A) ninety days after notice thereof is sent to BNPPLC, or (B) the date any writ or order is issued for the levy or sale of any
property owned by Specialty Laboratories or its Affiliates (including the Leased Property) because of such failure or any criminal action is instituted against BNPPLC or any of its directors, officers
or employees because of such failure; provided, however, that so long as no such writ or order is issued and no such criminal actions is instituted, if such failure is susceptible of cure but cannot
with reasonable diligence be cured within such ninety day period, and if BNPPLC shall promptly have commenced to cure the same and shall thereafter prosecute the curing thereof with
reasonable diligence, the period within which such failure may be cured shall be extended for such further period as shall be necessary for the curing thereof with reasonable diligence. 

        (B)    Remedy.    Upon the occurrence of a Ground Lease Default which is not cured within any applicable period
expressly permitted by subparagraph 13(A), Specialty Laboratories' sole and exclusive remedies shall be to sue BNPPLC for the collection of any amount due under this Ground Lease, to sue for the
specific enforcement of BNPPLC's obligations hereunder, or to enjoin the continuation of the Ground Lease Default, provided, however, no limitation of Specialty Laboratories' remedies contained herein
will prevent Specialty Laboratories from exercising rights expressly provided in other Operative Documents or from recovering any reasonable costs Specialty Laboratories may incur to mitigate its
damages by curing a Ground Lease Default that BNPPLC has failed to cure itself (so long as the cure by Specialty Laboratories is pursued in a lawful manner and the costs Specialty Laboratories seeks
to recover do not exceed the actual damages to be mitigated). Specialty Laboratories may not terminate this Ground Lease or BNPPLC's right to possession under this Ground Lease, except as expressly
provided in the Operative Documents. Any judgment which Specialty Laboratories may obtain against BNPPLC for amounts due under this Ground Lease may be collected only through resort of a judgement
lien against BNPPLC's interest in the Leased Property and any Improvements. BNPPLC shall have no personal liability for the payment amounts due under this or for the performance of any obligations of
BNPPLC under this Ground Lease. 

        14    Quiet Enjoyment.    Neither Specialty Laboratories nor any third party lawfully claiming any right or interest
in the Leased Property shall during the Ground Lease Term disturb BNPPLC's peaceable and quiet enjoyment of the Leased Property; however, such enjoyment shall be subject to the terms, provisions,
covenants, agreements and conditions of this Ground Lease and the Permitted Encumbrances, to which this Ground Lease is subject and subordinate as hereinabove set forth. 

        15    Option to Purchase.    Subject to the terms and conditions set forth in Exhibit D, including the
condition specified therein that Specialty Laboratories shall have breached the Purchase Agreement and failed to cure such breach within any time for cure expressly provided in the Purchase Agreement,
BNPPLC (and any assignee of BNPPLC's entire interest in the Leased Property, but not any subtenant or assignee of a lesser interest) shall have the option to purchase Specialty Laboratories' interest
in the Leased Property. 

Ground Lease - Page 13

 

        16    Miscellaneous.    

        (A)    No Merger.    There shall be no merger of this Ground Lease or of the leasehold estate hereby created with the
fee or any other estate in the Leased Property or any part thereof by reason of the fact that the same person may acquire or hold, directly or indirectly, this Ground Lease or the leasehold estate
hereby created or any interest in this Ground Lease or in such leasehold estate as well as the fee or any other estate in the Leased Property or any interest in such fee or other estate, unless all
parties
with an interest in the Leased Property that would be adversely affected by any such merger specifically agree in writing that such a merger shall occur. 

        (B)    Memorandum of Lease.    Specialty Laboratories and BNPPLC shall execute a memorandum of this Ground Lease in
recordable form which shall be filed in the real property records of Los Angeles County, California. 

[signature
pages follow] 

Ground Lease - Page 14

        IN WITNESS WHEREOF, this Ground Lease is hereby executed in multiple originals as of March 26, 2002. 

	 	 	"Specialty Laboratories"
	

 	
 	

SPECIALTY LABORATORIES, INC., a California corporation
	

 	
 	

By:	
 	

/s/ Frank J. Spina
	 	 	 	 	

	 	 	 	 	Name:	Frank J. Spina
	 	 	 	 	 	

	 	 	 	 	Title:	Chief Financial Officer
	 	 	 	 	 	

        [Continuation
of signature pages to Ground Lease dated as of March 26, 2002 between Specialty Laboratories and BNPPLC] 

	 	 	"BNPPLC"
	

 	
 	

BNP PARIBAS LEASING CORPORATION, a Delaware corporation
	

 	
 	

By:	

/s/ Barry Mendelsohn
	 	 	 	
 Barry Mendelsohn, Vice President

 
 

Exhibit A    
    
    Legal Description    
  

        The real property is located in the State of California, County of Los Angeles and is described as follows: 

Parcel A: 

        LOT
3 OF TRACT 43735, IN THE CITY OF SANTA CLARITA, AS PER MAP RECORDED IN BOOK 1074, PAGES 37 TO 39 INCLUSIVE OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. 

Parcel B: 

        LOT
1 OF TRACT 43736, IN THE CITY OF SANTA CLARITA, AS PER MAP RECORDED IN BOOK 1076, PAGES 38 TO 41 INCLUSIVE OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. 

Parcel C: 

        THAT
PORTION OF LOT 2 OF TRACT 43736, IN THE CITY OF SANTA CLARITA, AS SHOWN ON MAP FILED IN BOOK 1076 PAGES 38 TO 41 INCLUSIVE OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY, DESCRIBED AS FOLLOWS: 

        BEGINNING
AT THE NORTHWESTERLY CORNER OF SAID LOT 2; THENCE 

	1.
	ALONG
THE NORTHERLY LINE OF SAID LOT 2 NORTH 77° 25' 56" EAST 531.27 FEET TO THE NORTHEASTERLY CORNER OF SAID LOT 2, SAID CORNER BEING A POINT ON A CURVE CONCAVE WESTERLY
HAVING A RADIUS OF 458.00 FEET, A RADIAL LINE TO SAID CORNER BEARS NORTH 72° 49' 01" EAST; THENCE

	2.
	SOUTHERLY
ALONG THE EASTERLY LINE OF SAID LOT 2 AND ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 4° 36' 54" AN ARC DISTANCE OF 36.89 FEET; THENCE

	3.
	TANGENT
TO SAID CURVE SOUTH 12° 34' 04" EAST 140.43 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE WESTERLY HAVING A RADIUS OF 3958.00 FEET; THENCE

	4.
	SOUTHERLY
ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 1° 27' 13" AN ARC DISTANCE OF 100.42 FEET TO A POINT ON LAST SAID CURVE, A RADIAL LINE TO SAID POINT BEARS NORTH
78° 53' 09" EAST; THENCE

	5.
	PARALLEL
TO THE SOUTHERLY LINE OF SAID LOT 2 SOUTH 77° 25' 56" WEST 472.58 FEET TO THE WESTERLY LINE OF SAID LOT 2; THENCE

	6.
	ALONG
SAID WESTERLY LINE OF LOT 2 NORTH 36° 20' 00" EAST 41.06 FEET; THENCE

	7.
	NORTH
54° 00' 00" WEST 95.00 FEET; THENCE

	8.
	NORTH
1° 50' 00" EAST 24.00 FEET; THENCE

	9.
	NORTH
48° 20' 00" EAST 59.00 FEET; THENCE

	10.
	NORTH
42° 10' 00" WEST 54.00 FEET; THENCE

	11.
	NORTH
68° 14' 55" WEST 55.60 FEET; THENCE

	12.
	NORTH
26° 10' 00" WEST 55.66 FEET TO THE POINT OF BEGINNING. 

 

SAID
LAND IS SHOWN AS PARCEL 3 OF CERTIFICATE OF COMPLIANCE NO. 91-001, A COPY OF WHICH RECORDED MAY 1, 1991 AS INSTRUMENT NO. 91-627467. 

Parcel D: 

        LOT
3 AND THOSE PORTIONS OF LOTS 2 AND 4 OF TRACT 43736, IN THE CITY OF SANTA CLARITA, AS PER MAP RECORDED IN BOOK 1076 PAGES 38 TO 41 INCLUSIVE OF MAPS, IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: 

        BEGINNING
AT THE NORTHWESTERLY CORNER OF LOT 4; THENCE 

	1.
	ALONG
THE WESTERLY LINE OF SAID LOT 4 SOUTH 44°40'00" EAST 32.29 FEET; THENCE

	2.
	SOUTH
10°40'00" WEST 80.00 FEET TO A POINT DISTANT THEREON NORTH 10°40'00" EAST 18.00 FEET FROM THE SOUTHWESTERLY TERMINUS OF THAT COURSE IN SAID WESTERLY LINE
SHOWN AS NORTH 10°40'00" EAST 98.00 FEET; THENCE

	3.
	PARALLEL
WITH THE SOUTHERLY LINE OF SAID LOT 4 NORTH 77°25'56" EAST 455.86 FEET TO THE EASTERLY LINE OF SAID LOT 4; THENCE

	4.
	ALONG
SAID EASTERLY LINE AND THE EASTERLY LINE OF SAID LOTS 3 AND 2 NORTH 05°20'37" WEST 2.71 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE WESTERLY HAVING A RADIUS OF
3958.00; THENCE

	5.
	NORTHERLY
ALONG SAID EASTERLY LINE AND ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 05°46'14" AN ARC DISTANCE OF 398.63 FEET TO A POINT ON SAID CURVE, A RADIAL LINE TO SAID
POINT BEARS NORTH 78°53'09" EAST; THENCE

	6.
	PARALLEL
TO THE NORTHERLY LINE OF SAID LOT 3 SOUTH 77°25'56" WEST 472.58 FEET TO THE WESTERLY LINE OF SAID LOT 2; THENCE

	7.
	ALONG
SAID WESTERLY LINE AND THE WESTERLY LINE OF SAID LOT 3 SOUTH 36°20'00" WEST 29.94 FEET; THENCE

	8.
	SOUTH
01°10'00" WEST 133.00 FEET; THENCE

	9.
	SOUTH
63°00'00" EAST 76.00 FEET; THENCE

	10.
	SOUTH
12°50'00" WEST 68.00; THENCE

	11.
	SOUTH
44°40'00" EAST 47.71 FEET TO THE POINT OF BEGINNING. 

SAID
LAND IS SHOWN AS PARCEL 2 OF CERTIFICATE OF COMPLIANCE NO. 91-001, A COPY OF WHICH RECORDED MAY 1, 1991 AS INSTRUMENT NO. 91-627467. 

        TAX
ASSESSOR PARCELS 2861-001-049,050,110,111,093 AND 094. 

        EXCEPTING FROM PARCELS A THROUGH D ABOVE THE FOLLOWING RIGHTS, WHICH HAVE BEEN RESERVED TO GRANTOR IN THAT CERTAIN GRANT DEED RECORDED
DECEMBER 14, 2001 IN THE REAL PROPERTY RECORDS OF THE RECORDER OF LOS ANGELES COUNTY, CALIFORNIA, AS DOCUMENT NUMBER 01 2394274: 

        ALL
OIL, OIL RIGHTS, MINERALS, MINERAL RIGHTS, NATURAL GAS RIGHTS AND OTHER HYDROCARBONS BY WHATSOEVER NAME KNOWN, GEOTHERMAL STEAM AND ALL PRODUCTS DERIVED FROM ANY OF THE FOREGOING,
THAT MAY BE WITHIN OR 

Exhibit A - Page 2

 

UNDER THE REAL PROPERTY REFERRED TO ABOVE, TOGETHER WITH THE PERPETUAL RIGHT OF DRILLING, MINING, EXPLORING AND OPERATING THEREFOR AND STORING IN AND REMOVING THE SAME FROM SUCH REAL PROPERTY OR ANY
OTHER PROPERTY, INCLUDING THE RIGHT TO WHIPSTOCK OR DIRECTIONALLY DRILL AND MINE FROM PROPERTIES OTHER THAN THE REAL PROPERTY REFERRED TO ABOVE, OIL OR GAS WELLS, TUNNELS AND SHAFTS INTO, THROUGH OR
ACROSS THE SUBSURFACE OF THE REAL PROPERTY REFERRED TO ABOVE, AND TO THE BOTTOM SUCH WHIPSTOCKED OR DIRECTIONALLY DRILLED WELLS, TUNNELS AND SHAFTS UNDER AND BENEATH OR BEYOND THE EXTERIOR LIMITS
THEREOF, AND TO REDRILL, RETUNNEL, EQUIP, MAINTAIN, REPAIR, DEEPEN AND OPERATE ANY SUCH WELLS OR MINES; PROVIDED, HOWEVER, ALL OF THE FOREGOING IS WITHOUT THE RIGHT TO DRILL, MINE, STORE, EXPLORE OR
OPERATE THROUGH THE SURFACE OF THE REAL PROPERTY REFERRED TO ABOVE OR THE UPPER 500 FEET OF THE SUBSURFACE OF SUCH REAL PROPERTY. 

        ALSO EXCEPTING FROM PARCELS A THROUGH D ABOVE THE FOLLOWING RIGHTS, WHICH HAVE BEEN RESERVED TO GRANTOR IN THAT CERTAIN GRANT DEED
RECORDED DECEMBER 14, 2001 IN THE REAL PROPERTY RECORDS OF THE RECORDER OF LOS ANGELES COUNTY, CALIFORNIA, AS DOCUMENT NUMBER 01 2394274: 

        ALL
WATER AND WATER RIGHTS NOW IN OR IN THE FUTURE OWNED BY SELLER APPURTENANT TO OR RELATED IN ANY WAY TO THE REAL PROPERTY REFERRED TO ABOVE OR USED BY SELLER IN CONNECTION WITH OR
RELATED TO SUCH REAL PROPERTY (NO MATTER HOW ACQUIRED BY SELLER) TOGETHER WITH THE RIGHT AND POWER TO EXPLORE, DRILL, REDRILL, REMOVE AND STORE THE SAME FROM, UNDER OR IN THE REAL PROPERTY REFERRED TO
ABOVE OR TO DIVERT OR OTHERWISE UTILIZE SUCH WATER, RIGHTS OR INTERESTS ON ANY OTHER PROPERTY OWNED OR LEASED BY SELLER AND THE RIGHT AND POWER TO CONDUCT WATER OVER OR TO STORE WATER UNDERNEATH THE
REAL PROPERTY REFERRED TO ABOVE BY SUCH MEANS AS SELLER DEEMS REASONABLE. THE WATER AND WATER RIGHTS EXCEPTED AND RESERVED TO SELLER INCLUDE, BUT ARE NOT LIMITED TO, ALL RIPARIAN WATER RIGHTS, ALL
APPROPRIATIVE WATER RIGHTS, ALL WATER RIGHTS AND RIGHTS TO STORE WATER IN SUBSURFACE RESERVOIRS BASED ON OVERLYING LAND OWNERSHIP, ALL LITTORAL WATER RIGHTS, ALL RIGHTS TO PERCOLATING WATER, ALL
PRESCRIPTIVE WATER RIGHTS, ALL ADJUDICATED, STATUTORY OR CONTRACTUAL WATER RIGHTS, ALL RIGHTS TO AQUIFERS, RESERVOIRS, SUBSURFACE AND SURFACE WATERS, AND ALL RIGHTS TO TAKE, USE AND DEVELOP FOR USE
ANY AND ALL WATER THAT MAY NOW EXIST OR MAY IN THE FUTURE EXIST UPON, IN OR UNDER THE REAL PROPERTY REFERRED TO ABOVE; PROVIDED, HOWEVER, ALL OF THE FOREGOING IS WITHOUT THE RIGHT TO USE OR ALTER THE
SURFACE OF THE REAL PROPERTY OR TO OTHERWISE INTERFERE WITH THE USE AND ENJOYMENT OF THE SAME BY GRANTEE AND ITS HEIRS, PERSONAL REPRESENTATIVES, SUCCESSORS AND ASSIGNS. 

Exhibit A - Page 3

 
 

Exhibit B    
    
    Permitted Encumbrances    
  

        References to "Official Records" shall mean the Official Records of Los Angeles County, California 

        The
leasehold and other interests in the Land hereby conveyed by Specialty Laboratories are conveyed subject to the following matters to the extent the same are still valid and in force: 

	1.
	Taxes
and assessments for the year 2001-2002 and subsequent years, which are not yet due and payable.

	2.
	An
acceptance form recorded December 23, 1982 as Instrument No. 82-1287917, Official Records.

	3.
	Covenants,
conditions and restrictions as set forth in document recorded February 18, 1983 as Instrument No. 83-192391, Official Records, as modified by
document recorded January 11, 1985 as Instrument No. 85-33709, Official Records, and as further modified by document recorded July 8, 1985, as Instrument
No. 85-781671, Official Records.

	4.
	Protective
conditions in document recorded June 27, 1985, as Instrument No. 85-748557, Official Records.

	5.
	Provisions
of the dedication statement on the Map of Tract No. 43736, recorded in Book 1076, Pages 38 to 41 inclusive of Maps, Official Records.

	6.
	Document
entitled "Memorandum of Repurchase and Right of First Refusal" dated December 6, 2001, executed by the Newhall Land and Farming Company and Specialty
Laboratories, Inc., recorded December 14, 2001 as Instrument No. 01-2394275, as subordinated by Subordination Agreement of even date herewith. 

 
 

Exhibit C    
    
    DETERMINATION OF FAIR RENTAL VALUE    
  

        Each annual payment of Ground Lease Rent will equal the Fair Rental Value, computed as of the most recent Rental Determination Date when such payment becomes due.
As used in this Exhibit, "Rental Determination Date" means the (1) the Effective Date, (2) the earliest anniversary of the Effective Date
to follow the Turnover Date by more than thirty days, and (3) after the second Rental Determination Date described in clause (2), each fifth anniversary of the preceding Rental
Determination Date. 

        As
of the Effective Date (i.e., the first Rental Determination Date), the parties agree that Fair Rental Value is
[***]*. 

        If
Specialty Laboratories and BNPPLC have not agreed upon Fair Rental Value as of any subsequent Rental Determination Date within one hundred eighty days after the such date, then Fair
Rental Value will be determined as follows: 

        (a)  Specialty
Laboratories and BNPPLC shall each appoint a real estate appraiser who is familiar with rental values for properties in the vicinity of the Land and who has
not previously acted for either party. Each party will make the appointment no later than ten days after receipt of notice from the other party that the appraisal process described in this Exhibit has
been invoked. The agreement of the two appraisers as to Fair Rental Value will be binding upon Specialty Laboratories and BNPPLC. If the two appraisers cannot agree upon the Fair Rental Value within
ten days following their appointment, they shall within another ten days agree upon a third real estate appraiser. Immediately thereafter, each of the first two appraisers will submit his best
estimate of the appropriate Fair Rental Value (together with a written report supporting such estimate) to the third appraiser and the third appraiser will choose between the two estimates. The
estimate of Fair Rental Value chosen by the third appraiser as the closest to the prevailing annual fair rental value will be binding upon Specialty Laboratories and BNPPLC. Notification in writing of
this estimate shall be made to Specialty Laboratories and BNPPLC within fifteen days following the selection of the third appraiser. 

        (b)  If
appraisers must be selected under the procedure set out above and either BNPPLC or Specialty Laboratories fails to appoint an appraiser or fails to notify the other
party of such appointment within fifteen days after receipt of notice that the prescribed time for appointing the appraisers has passed, then the other party's appraiser will determine the Fair Rental
Value. All appraisers selected for the appraisal process set out in this Exhibit will be disinterested, reputable, qualified real estate appraisers
with the designation of MAI or equivalent and with at least 5 years experience in appraising properties in Los Angeles County, California comparable to the Land. 

        (c)  If
a third appraiser must be chosen under the procedure set out above, he or she will be chosen on the basis of objectivity and competence, not on the basis of his
relationship with the other appraisers or the parties to this Ground Lease, and the first two appraisers will be so advised. Although the first two appraisers will be instructed to attempt in good
faith to agree upon the third appraiser, if for any reason they cannot agree within the prescribed time, either Specialty Laboratories and BNPPLC may require the first two appraisers to immediately
submit its top choice for the third appraiser to the then highest ranking officer of the Los Angeles Bar Association who will agree to help and who has no attorney/client or other significant
relationship to either Specialty Laboratories or BNPPLC. Such officer will have complete discretion to select the most objective and competent third appraiser from between the choice of each of the
first two appraisers, and will do so within twenty days after such choices are submitted to him. 

*
PORTIONS OF THIS PAGE HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 

 

        (d)  Either
Specialty Laboratories or BNPPLC may notify the appraiser selected by the other party to demand the submission of an estimate of Fair Rental Value or a choice of
a third appraiser as required under the procedure described above; and if the submission of such an estimate or choice is required but the other party's appraiser fails to comply with the demand
within fifteen days after receipt of such notice, then the Fair Rental Value or choice of the third appraiser, as the case may be, selected by the other appraiser (i.e., the notifying party's
appraiser) will be binding upon Specialty Laboratories and BNPPLC. 

        (e)  Specialty
Laboratories and BNPPLC shall each bear the expense of the appraiser appointed by it, and the expense of the third appraiser and of any officer of the Los
Angeles Bar Association who participates in the appraisal process described above will be shared equally by Specialty Laboratories and BNPPLC. 

Exhibit C - Page 2

 
 

Exhibit D    
    
    CONTINGENT PURCHASE OPTION    
  

        Subject to the terms of this Exhibit, BNPPLC shall have an option (the "Option") to buy Specialty Laboratories'
fee interest in the Leased Property at any time during the term of this Ground Lease after (but only after) any breach by Specialty Laboratories under the Purchase Agreement, provided Specialty
Laboratories does not cure the breach within any time permitted for cure by the express provisions of the Purchase Agreement, for a purchase price (the "Option
Price") to Specialty Laboratories equal to fair market value. 

        For
the purposes of this Exhibit, "fair market value" means (and all appraisers and other persons involved in the determination of the Option Price will be so advised) the price that
would be agreed upon between a willing buyer, under no compulsion to buy, and a willing seller, under no compulsion to sell, for unimproved land
comparable in size and location to the Land, exclusive of any Improvements but assuming that there is no higher and better use for such land than as a site for improvements of comparable size and
utility to the Improvements, at the time of BNPPLC's exercise of the Option and taking into consideration the condition of the Land, the encumbrances affecting the title to the Land and all applicable
zoning, land use approvals and other governmental permits relating to the Land at the time of the exercise of the Option. 

        If
BNPPLC exercises the Option, which BNPPLC may do by notifying Specialty Laboratories that BNPPLC has elected to buy Specialty Laboratories' interest in the Leased Property as provided
herein, then: 

        (a)  To
the extent, if any, required as a condition imposed by law to the conveyance of the fee interest in the Leased Property to BNPPLC, Specialty Laboratories shall
promptly at its expense do whatever is necessary and possible (including, without limitation, cooperating with BNPPLC in seeking any zoning variances requested by BNPPLC) to obtain approvals of a new
Parcel Map or lot line adjustments. Should it be determined that it is not possible to satisfy any such condition imposed by law, neither Specialty Laboratories nor BNPPLC shall be required to
consummate any purchase pursuant to this Exhibit, and this Ground Lease will continue as if BNPPLC had not exercised the Option. 

        (b)  Upon
BNPPLC's tender of the Option Price to Specialty Laboratories, Specialty Laboratories will convey good and marketable title to the fee estate in the Land and its
interest in all other Leased
Property to BNPPLC by general warranty deed and assignment subject only to the Permitted Encumbrances and, to the extent still in force, the Lease and the Purchase Agreement. 

        (c)  BNPPLC's
obligation to close the purchase shall be subject to the following terms and conditions, all of which are for the benefit of BNPPLC: (1) BNPPLC shall
have been furnished with evidence satisfactory to BNPPLC that Specialty Laboratories can convey title as required by the preceding subparagraph; (2) nothing shall have occurred or been
discovered after BNPPLC exercised the Option that could significantly and adversely affect title to the Leased Property or BNPPLC's use thereof, (3) all of the representations of Specialty
Laboratories in this Ground Lease shall continue to be true as if made effective on the date of the closing and, with respect to any such representations which may be limited to the knowledge of
Specialty Laboratories or any of Specialty Laboratories' representatives, would continue to be true on the date of the closing if all relevant facts and circumstances were known to Specialty
Laboratories and such representatives, and (4) BNPPLC shall have been tendered the deed and other documents which are described in this Exhibit as documents to be delivered to BNPPLC at the
closing of BNPPLC's purchase. 

        (d)  Closing
of the purchase will be scheduled on the first Business Day following thirty days after the Option Price is established in accordance with the terms and
conditions of this Exhibit and after any approvals described in subparagraph (a) above are obtained, and prior to closing BNPPLC's occupancy of the Leased Property shall continue to be subject
to the terms and conditions of this Ground Lease, including the terms setting forth BNPPLC's obligation to pay 

 

rent. Closing shall take place at the offices of any title insurance company reasonably selected by BNPPLC to insure title under the title insurance policy described below. 

        (e)  Any
transfer taxes or notices or registrations required by law in connection with the sale contemplated by this Exhibit will be the responsibility of Specialty
Laboratories. 

        (f)    Specialty
Laboratories will deliver a certificate of nonforeign status to BNPPLC at closing as needed to comply with the provisions of the U.S. Foreign Investors Real
Property Tax Act (FIRPTA) or any comparable federal, state or local law in effect at the time. 

        (g)  Specialty
Laboratories will also pay for and deliver to BNPPLC at the closing an owner's title insurance policy in the full amount of the Option Price, issued by a title
insurance company designated by BNPPLC (or written confirmation from the title company that it is then prepared to issue such a
policy), and subject only to standard printed exceptions which the title insurance company refuses to delete or modify in a manner acceptable to BNPPLC and to Permitted Encumbrances. 

        (h)  Specialty
Laboratories shall also deliver at the closing all other documents or things reasonably required to be delivered to BNPPLC or by the title insurance company to
evidence Specialty Laboratories' ability to transfer the Leased Property to BNPPLC. 

        If
Specialty Laboratories and BNPPLC do not otherwise agree upon the amount of the Option Price within twenty days after BNPPLC exercises the Option, the Option Price shall be determined
in accordance with the following procedure: 

        (1)  Specialty
Laboratories and BNPPLC shall each appoint a real estate appraiser who is familiar with properties in the vicinity of the Land and who has not previously acted
for either party. Each party will make the appointment no later than ten days after receipt of notice from the other party that the appraisal process described in this Exhibit has been invoked. The
agreement of the two appraisers as to the Option Price will be binding upon Specialty Laboratories and BNPPLC. If the two appraisers cannot agree upon the Option Price within ten days following their
appointment, they shall within another ten days agree upon a third real estate appraiser. Immediately thereafter, each of the first two appraisers will submit his best estimate of the appropriate
Option Price (together with a written report supporting such estimate) to the third appraiser and the third appraiser will choose between the two estimates. The estimate of Option Price chosen by the
third appraiser as the closest to the prevailing monthly fair market value will be binding upon Specialty Laboratories and BNPPLC. Notification in writing of the Option Price shall be made to
Specialty Laboratories and BNPPLC within fifteen days following the selection of the third appraiser. 

        (2)  If
appraisers must be selected under the procedure set out above and either BNPPLC or Specialty Laboratories fails to appoint an appraiser or fails to notify the other
party of such appointment within fifteen days after receipt of notice that the prescribed time for appointing the appraisers has passed, then the other party's appraiser will determine the Option
Price. All appraisers selected for the appraisal process set out in this Exhibit will be disinterested, reputable, qualified real estate appraisers with the designation of MAI or equivalent and with
at least 5 years experience in appraising properties comparable in Los Angeles County, California to the Land. 

        (3)  If
a third appraiser must be chosen under the procedure set out above, he will be chosen on the basis of objectivity and competence, not on the basis of his relationship
with the other appraisers or the parties to this Ground Lease, and the first two appraisers will be so advised. Although the first two appraisers will be instructed to attempt in good faith to agree
upon the third appraiser, if for any reason they cannot agree within the prescribed time, either Specialty Laboratories and BNPPLC may require the first two appraisers to immediately submit its top
choice for the third appraiser to the then highest ranking officer of the Los Angeles Bar 

Exhibit D - Page 2

 

Association who will agree to help and who has no attorney/client or other significant relationship to either Specialty Laboratories or BNPPLC. Such officer will have complete discretion to select
the most objective and competent third appraiser from between the choice of each of the first two appraisers, and will do so within ten days after such choices are submitted to him. 

        (4)  Either
Specialty Laboratories or BNPPLC may notify the appraiser selected by the other party to demand the submission of an estimate of Option Price or a choice of a
third appraiser as required under the procedure described above; and if the submission of such an estimate or choice is required but the other party's appraiser fails to comply with the demand within
fifteen days after receipt of such notice, then the Option Price or choice of the third appraiser, as the case may be, selected by the other appraiser (i.e., the notifying party's appraiser) will be
binding upon Specialty Laboratories and BNPPLC. 

        (5)  Specialty
Laboratories and BNPPLC shall each bear the expense of the appraiser appointed by it, and the expense of the third appraiser and of any officer of the Los
Angeles Bar Association who participates in the appraisal process described above will be shared equally by Specialty Laboratories and BNPPLC. 

Exhibit D - Page 3

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TABLE OF CONTENTS

GROUND LEASE

Exhibit A Legal Description

Exhibit B Permitted Encumbrances

Exhibit C DETERMINATION OF FAIR RENTAL VALUE

Exhibit D CONTINGENT PURCHASE OPTIONQuickLinks
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Exhibit 10.4  

PURCHASE AGREEMENT  

 BETWEEN  

 BNP PARIBAS LEASING CORPORATION  

 ("BNPPLC")  

 AND  

 SPECIALTY LABORATORIES, INC.  

 ("Specialty Laboratories")  

 March 26, 2002  

 (Santa Clarita, California)  

 
 

TABLE OF CONTENTS    
  

	 
	 	 
	 	 
	 	Page

	1.	 	Additional definitions	 	1
	 	 	"97-1/Default (100%)"	 	1
	 	 	"Applicable Purchaser"	 	2
	 	 	"Applicable Sale"	 	2
	 	 	"Appraised Value"	 	2
	 	 	"Balance of Unpaid Construction Period Losses"	 	2
	 	 	"Bona Fide Arrangement"	 	3
	 	 	"BNPPLC's Adjusted Investment in the Property"	 	3
	 	 	"BNPPLC's Gross Investment in the Property"	 	3
	 	 	"Break Even Price"	 	3
	 	 	"Committed Price"	 	3
	 	 	"Contingent Losses"	 	3
	 	 	"Deemed Sale"	 	4
	 	 	"DSD Retention Election"	 	4
	 	 	"Extended Period Retention Election"	 	4
	 	 	"Final Sale Date"	 	4
	 	 	"Make Whole Amount"	 	4
	 	 	"Maximum Remarketing Obligation"	 	4
	 	 	"Must-Sell Price"	 	4
	 	 	"Notice of Intent to Retain"	 	5
	 	 	"Notice of Sale"	 	5
	 	 	"Proposed Sale Date"	 	5
	 	 	"Purchase Option"	 	5
	 	 	"Sale Closing Documents"	 	5
	 	 	"Settle Up Date"	 	5
	 	 	"Specialty Laboratories' Extended Remarketing Period"	 	5
	 	 	"Specialty Laboratories' Extended Remarketing Right"	 	5
	 	 	"Specialty Laboratories' Initial Remarketing Right"	 	5
	 	 	"Specialty Laboratories' PA Obligations"	 	5
	 	 	"Specialty Laboratories' Target Price"	 	5
	 	 	"Supplemental Payment"	 	5
	 	 	"Supplemental Payment Obligation"	 	5
	 	 	"Third Party Price"	 	5
	 	 	"Voting Stock"	 	5
	2.	 	Specialty Laboratories' Options and Obligations on the Designated Sale Date	 	6
	 	 	(A)	 	Right to Purchase; Initial Remarketing Right; Supplemental Payment Obligation	 	6
	 	 	(B)	 	Designation of the Purchaser	 	7
	 	 	(C)	 	Effect of the Purchase Option and Specialty Laboratories' Initial Remarketing Right on Subsequent Title Encumbrances	 	7
	 	 	(D)	 	Security for the Purchase Option and Specialty Laboratories' Initial Remarketing Right	 	7
	 	 	(E)	 	Delivery of Books and Records If BNPPLC Retains the Property	 	7
	3.	 	Specialty Laboratories' Rights and Options After the Designated Sale Date	 	8
	 	 	(A)	 	Specialty Laboratories' Right to Buy During the 30 Days After the Designated Sale Date	 	8
	 	 	(B)	 	Specialty Laboratories' Extended Right to Remarket	 	8
	 	 	(C)	 	BNPPLC's Right to Decline to Sell for a Price Below the Must-Sell Price; Distribution of Deemed Sales Proceeds	 	9
	 	 	(D)	 	BNPPLC's Right to Sell	 	10
	 	 	(E)	 	Specialty Laboratories' Right to Share in Sales Proceeds Received By BNPPLC While Specialty Laboratories' Extended Remarketing Right Continues	 	10

	 	 	(F)	 	Permitted Transfers During Specialty Laboratories' Extended Remarketing Period	 	11
	4.	 	Terms of Conveyance Upon Purchase	 	11
	5.	 	Survival and Termination of the Rights and Obligations of Specialty Laboratories and BNPPLC	 	11
	 	 	(A)	 	Status of this Agreement Generally	 	11
	 	 	(B)	 	Election by Specialty Laboratories to Terminate the Supplemental Payment Obligation Prior to the Completion Date	 	12
	 	 	(C)	 	Automatic Termination of Specialty Laboratories' Rights	 	13
	 	 	(D)	 	Termination of Specialty Laboratories' Extended Remarketing Right to Permit a Sale by BNPPLC	 	13
	 	 	(E)	 	Payment Only to BNPPLC	 	14
	 	 	(F)	 	Preferences and Voidable Transfers	 	14
	 	 	(G)	 	Remedies Under the Other Operative Documents	 	14
	 	 	(H)	 	Provisions Concerning Condemnation	 	14
	6.	 	[Intentionally Omitted].	 	14
	7.	 	Return of Funds	 	14
	8.	 	Certain Remedies Cumulative	 	15
	9.	 	Attorneys' Fees and Legal Expenses	 	15
	10.	 	Estoppel Certificate	 	15
	11.	 	Successors and Assigns	 	15

 
 

Exhibits and Schedules    
  

	

Exhibit A	
 	

Legal Description
	

Exhibit B	
 	

Requirements Re: Form of Assignment or Termination of Ground Lease
	

Exhibit B-1	
 	

Form of Assignment of Ground Lease and Improvements
	

Exhibit B-2	
 	

Form of Assignment of Ground Lease and Improvements
	

Exhibit B-3	
 	

Bill of Sale and Assignment
	

Exhibit B-4	
 	

Acknowledgment of Disclaimer of Representation and Warranties
	

Exhibit C	
 	

Secretary's Certificate
	

Exhibit D	
 	

FIRPTA Statement
	

Exhibit E	
 	

Grant of Repurchase Option and Restrictive Covenants Agreement
	

Exhibit F	
 	

Notice of Election to Terminate the Supplemental Payment Obligation

 
 

PURCHASE AGREEMENT    
  

        This PURCHASE AGREEMENT (this "Agreement") is made and dated as of March 26, 2002 (the
"Effective Date") by and between BNP PARIBAS LEASING CORPORATION, a Delaware corporation ("BNPPLC"), and
SPECIALTY LABORATORIES, INC., a California corporation ("Specialty Laboratories"). 

 
 

RECITALS    
  

        Contemporaneously with the execution of this Agreement, BNPPLC and Specialty Laboratories are executing a Common Definitions and Provisions Agreement 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 Specialty Laboratories and to facilitate the transaction contemplated in the other Operative Documents, pursuant to the Ground Lease, BNPPLC is acquiring a leasehold
estate in the Land described in Exhibit A and any existing improvements thereon from Specialty Laboratories contemporaneously with the execution
of this Agreement. 

        Pursuant
to the Construction Management Agreement, BNPPLC is agreeing to provide funding for the construction of new Improvements, which when completed will be leased by BNPPLC to
Specialty Laboratories pursuant to the Lease. (As used herein, "Property" means (i) all of BNPPLC's interests, including those created by the
Ground Lease, in the Land and in the Improvements and in all other real and personal property from time to time covered by the Lease and included within the "Property" as defined therein, and
(ii) BNPPLC's interest in any Escrowed Proceeds yet to be applied as a Qualified Prepayment or to the cost of repairs to the Improvements or other property covered by the Lease; provided,
however, for purposes of this Agreement, Property shall not include any condemnation or insurance proceeds included in Escrowed Proceeds as a result of any Pre-lease Force Majeure Event,
nor shall it include any right to receive any such condemnation or insurance proceeds in the future.) 

        Specialty
Laboratories and BNPPLC have reached agreement upon the terms and conditions upon which Specialty Laboratories will purchase or arrange for the purchase of the Property, and by
this Agreement they desire to evidence such agreement. 

 
 

AGREEMENTS    
  

1.    Additional definitions.    As used in this Agreement, capitalized terms defined above shall 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 shall have the respective
meanings assigned to them in the Common Definitions and Provisions Agreement; and, the following terms shall have the following respective meanings: 

"97-1/Default (100%)" means an Event of Default that results from (A) a failure of Specialty Laboratories to make any payment
required by any Operative Document, including any payment of Base Rent or any Supplemental Payment required by this Agreement on the Designated Sale Date, (B) any failure of Specialty
Laboratories to use, maintain and insure the Property in accordance with the requirements of the Construction Management Agreement and the Lease, or (C) any breach by Specialty Laboratories of
subparagraphs 1(A), 1(B), 1(C), 1(D) or 1(E) of the Closing Certificate or any breach by Specialty Laboratories of the Ground Lease. (Except for the impact upon the calculation of Specialty
Laboratories' Maximum Remarketing Obligation as defined below, the characterization of any Event of Default as a 97-1/Default (100%) will not affect the rights or remedies available to
BNPPLC because of the Event of Default.) 

 

"Applicable Purchaser" means any third party designated by Specialty Laboratories to purchase BNPPLC's interest in the Property as provided in this
Agreement. 

"Applicable Sale" shall have the meaning indicated in subparagraph 3.(C). 

"Appraised Value" shall have the meaning indicated in subparagraph 5.(D)(3). 

"Balance of Unpaid Construction Period Losses" means, subject to the qualifications hereinafter set forth, an amount equal to the sum of: 

	(1)
	the
total Losses (if any), including Contingent Losses, that have been incurred or suffered by BNPPLC or other Interested Parties at any time and from time to time prior to the
Completion Date by reason of, in connection with or arising out of (A) their ownership or alleged ownership of any interest in the Property or the payments required by the Operative Documents,
(B) the use or operation of the Property, (C) the negotiation, administration or enforcement of the Operative Documents, (D) the making of Funding Advances, (E) the
Construction Project, (F) the breach by Specialty Laboratories of this Agreement or any other Operative Document or any other document executed by Specialty Laboratories in connection herewith,
(G) any failure of the Property or Specialty Laboratories itself to comply with Applicable Laws, (H) Permitted Encumbrances, (I) Hazardous Substance Activities, including those
occurring prior to Effective Date, (J) any obligations of BNPPLC under the Ground Lease or the Closing Certificate, or (K) any bodily or personal injury or death or property damage
occurring in or upon or in the vicinity of the Property through any cause whatsoever; plus

	(2)
	interest
accruing at the Default Rate, compounded annually, on each payment of any such Losses by BNPPLC or any other Interested Party from the date such payment was made to the
Designated Sale Date. 

For
purposes of computing the Balance of Unpaid Construction Period Losses hereunder, Losses as described in clause (1) of this definition will include each reduction (if any) (i) in the
Carrying Costs added to the Outstanding Construction Allowance as provided in the Construction Management Agreement, or (ii) in the Base Rent payable to BNPPLC as provided in the Lease, that
results from Pre-lease Force Majeure Losses. In other words, the Losses described in clause (1) will include the amounts (if any) by which additional Carrying Costs and Base Rent
would have accrued if Pre-lease Force Majeure Losses were not a factor in the formulas which are set forth in the Construction Management Agreement and in the Lease for calculating
Carrying Costs and Base Rent, respectively. 

Notwithstanding
the foregoing, however, none of the following will be included in the Balance of Unpaid Construction Period Losses: (i) costs paid by BNPPLC with the proceeds of the Initial
Funding Advance as part of the Transaction Expenses; (ii) Losses paid or reimbursed from Construction Advances (including Impositions, insurance premiums and amounts paid by Specialty
Laboratories prior to the Completion Date and reimbursed to it through Construction Advances made pursuant to the Construction Management Agreement, and also including costs and expenditures incurred
or paid by or on behalf of BNPPLC after any Owner's Election to Continue Construction, to the extent that such costs and expenditures are considered to be Construction Advances as provided in the
Construction Management Agreement); (iii) any other Losses which Specialty Laboratories has paid prior to the Designated Sale Date or for which Specialty Laboratories remains fully obligated to
pay pursuant to the other Operative Documents (including Covered Construction Period Losses paid or payable by Specialty Laboratories pursuant to the Construction Management Agreement); and
(iv) any decline in the value of the Property, including any such decline that 

2

 

is attributable solely to a Pre-lease Force Majeure Event and thus constitutes a Pre-lease Force Majeure Loss. 

Also,
none of the following will be included in the Balance of Unpaid Construction Period Losses: (w) any costs or expenses incurred by any Interested Party (including BNPPLC or any transferee
of BNPPLC) to accomplish any Permitted Transfers described in clauses (2) or (3) of the definition thereof in the Common Definitions and Provisions Agreement, (x) Excluded Taxes,
(y) Losses incurred or suffered by any Interested Party that are proximately caused by (and attributed by any applicable principles of comparative fault to) the Established Misconduct of that
Interested Party, or (z) Losses incurred or suffered in connection with the execution of the Participation Agreement by Participants (or supplements making them parties thereto) or in
connection with any negotiation or due diligence Participants may undertake before entering into the Participation Agreement. 

"Bona Fide Arrangement" shall have the meaning indicated in subparagraph 3.(C). 

"BNPPLC's Adjusted Investment in the Property" means BNPPLC's Gross Investment in the Property, less Pre-lease Force Majeure Losses (if
any), calculated as of the Designated Sale Date. 

"BNPPLC's Gross Investment in the Property" means Stipulated Loss Value on the Designated Sale Date,  plus any 97-10/Prepayments that have been deducted as Qualified
Prepayments in the calculation of such Stipulated Loss Value. 

"Break Even Price" means an amount equal to: 

	(1)
	Stipulated
Loss Value on the Designated Sale Date, plus

	(2)
	all
out-of-pocket costs and expenses (including any appraisal costs, withholding taxes (if any) not constituting Excluded Taxes, transfer taxes, Breakage Costs
and Attorneys' Fees) incurred by BNPPLC in connection with any sale of BNPPLC's interests in the Property under this Agreement or in connection with collecting payments due hereunder,  and plus

	(3)
	an
amount equal to the Balance of Unpaid Construction Period Losses, less

	(4)
	the
aggregate amounts (if any) of Direct Payments to Participants and Deposit Taker Losses. 

If,
however, the Balance of Unpaid Construction Period Losses includes Contingent Losses, then for purposes of computing the Break Even Price applicable to any proposed sale on the Designated Sale
Date, Specialty Laboratories may elect to exclude such Contingent Losses from the Break Even Price by providing to BNPPLC, for the benefit of BNPPLC and other Interested Parties, a written agreement
to indemnify and defend BNPPLC and other Interested Parties against the excluded Losses. However, to be effective for purposes of reducing the Break Even Price, any such written indemnity must be
fully executed and delivered by Specialty Laboratories on or prior to the Designated Sale Date, must include provisions comparable to subparagraphs 5(C)(ii), (iii), (iv) and
(v) of the Lease and otherwise must be in form and substance reasonably satisfactory to BNPPLC. 

"Committed Price" shall have the meaning indicated in subparagraph 3.(B)(4). 

"Contingent Losses" means any Losses that consist of claims asserted against BNPPLC or another Interested Party prior to the Designated Sale Date, but
that are not liquidated or paid on or prior to the Designated Sale Date. Any Contingent Losses included in the Unpaid Balance of Construction Period Losses, and thus which are relevant to the
computation of the Break Even Price, will equal the sum as reasonably estimated by BNPPLC of (i) all Attorneys' 

3

 

Fees and other costs that will be incurred to defend against such claims, and (ii) the amount for which BNPPLC or the other Interested Party can settle or satisfy such claims. 

"Deemed Sale" shall have the meaning indicated in subparagraph 3.(C). 

"DSD Retention Election" shall have the meaning indicated in subparagraph 2.(A)(2)(a). 

"Extended Period Retention Election" shall have the meaning indicated in subparagraph 3.(C). 

"Final Sale Date" means the earlier of (1) the date upon which BNPPLC conveys the Property to consummate any sale of the Property to an
Applicable Purchaser resulting from Specialty Laboratories' exercise of Specialty Laboratories' Extended Remarketing Right as described in subparagraph 3.(B); (2) if a Deemed Sale occurs as
described in subparagraph 3.(C), the Proposed Sale Date upon which BNPPLC would have conveyed the Property to consummate a sale to an Applicable Purchaser but for BNPPLC's Extended Period Retention
Election; or (3) the date upon which BNPPLC otherwise conveys the Property to consummate a sale, with respect to which (i) Specialty Laboratories' Extended Remarketing Right is
terminated pursuant to subparagraph 5.(D) and (ii) sales proceeds are distributed by BNPPLC as described in subparagraph 3.(E). 

"Make Whole Amount" means the sum of the following: 

	(1)
	the
amount by which the Break Even Price on the Designated Sale Date exceeds any Supplemental Payment actually paid to BNPPLC on the Designated Sale Date,  plus

	(2)
	interest
on the amount described in the preceding clause (1) computed at the Default Rate for the period commencing on the Designated Sale Date and ending on the Final Sale
Date, plus

	(3)
	all
out-of-pocket costs and expenses (including Attorneys' Fees and withholding taxes [if any], other than Excluded Taxes) incurred by
BNPPLC in connection with the sale of the Property, to the extent (if any) not already included in the Break Even Price, and plus

	(4)
	the
sum of all Impositions, insurance premiums and other Losses suffered or incurred by BNPPLC or any other Interested Party with respect to the ownership, operation or maintenance of
the Property after the Designated Sale Date, together with interest on such Impositions, insurance premiums and other Losses computed at the Default Rate from the date paid or incurred to the Final
Sale Date. 

"Maximum Remarketing Obligation" means a dollar amount equal to the product of: 

	(i)
	BNPPLC's
Adjusted Investment in the Property, times

	(ii)
	100%
minus the Residual Risk Percentage; 

provided,
however, that (a) Specialty Laboratories itself shall not have elected to accelerate the Designated Sale Date as provided in clause (2) of the definition of Designated Sale
Date in the Common Definitions and Provisions Agreement, and (b) no 97-1/Default (100%) shall have occurred on or be continuing on the Designated Sale Date. If Specialty
Laboratories shall have elected to accelerate the Designated Sale Date as provided in clause (2) of the definition of Designated Sale Date in the Common Definitions and Provisions Agreement,
then the Maximum Remarketing Obligation shall equal the full amount of the Break Even Price. If Specialty Laboratories shall have made no such election, but a 97-1/Default (100%) shall
have occurred or be continuing on the Designated Sale Date, then the Maximum Remarketing Obligation shall equal BNPPLC's Adjusted Investment in the Property. 

"Must-Sell Price" means a price for the Property sufficient to generate sales proceeds that, when added to the reimbursement to Specialty
Laboratories required of BNPPLC by 

4

 

clause (4) of subparagraph 3.(E) (i.e., that when added to the aggregate payments, if any, made by Specialty Laboratories to BNPPLC as a
Supplemental Payment or as a 97-10/Prepayment), equal the Make Whole Amount. 

"Notice of Intent to Retain" shall have the meaning indicated in subparagraph 3.(C). 

"Notice of Sale" shall have the meaning indicated in subparagraph 3.(B)(4). 

"Proposed Sale Date" shall have the meaning indicated in subparagraph 3.(B). 

"Purchase Option" shall have the meaning indicated in subparagraph 2.(A)(1). 

"Sale Closing Documents" means the assignments and other documents that BNPPLC must tender pursuant to Paragraph 4 to consummate any sale of the
Property pursuant to this Agreement. 

"Settle Up Date" shall have the meaning indicated in subparagraph 3.(C). 

"Specialty Laboratories' Extended Remarketing Period" means the thirty months following the Designated Sale Date. 

"Specialty Laboratories' Extended Remarketing Right" shall have the meaning indicated in subparagraph 3.(B). 

"Specialty Laboratories' Initial Remarketing Right" shall have the meaning indicated in subparagraph 2.(A)(2). 

"Specialty Laboratories' PA Obligations" means the obligations of Specialty Laboratories under this Agreement, including Specialty Laboratories'
obligations to pay a Supplemental Payment as provided in subparagraph 2.(A)(3) and its obligation to pay any and all damages (whether direct or indirect,
foreseen or unforeseen, general or special) that BNPPLC suffers because of any breach of this Agreement by Specialty Laboratories. 

"Specialty Laboratories' Target Price" means the highest cash purchase price that, according to Specialty Laboratories, should reasonably be expected
for the Property during Specialty Laboratories' Extended Remarketing Period if Specialty Laboratories makes a reasonable marketing effort to sell the Property, as such price is set forth in a notice
given by Specialty Laboratories to BNPPLC after the Designated Sale Date. Once established by any such notice, the amount of Specialty Laboratories' Target Price will not be increased, although
nothing in this definition will be construed to prevent Specialty Laboratories from arranging a sale of the Property pursuant to this Agreement at a price higher than Specialty Laboratories' Target
Price. After providing a notice of Specialty Laboratories' Target Price to BNPPLC, Specialty Laboratories may later decrease Specialty Laboratories' Target Price by another notice to BNPPLC; provided,
however, that any such decrease is justified by a material adverse change in the condition of the Property (e.g., significant damage to the Property by
fire or other casualty). 

"Supplemental Payment" shall have the meaning indicated in subparagraph 2.(A)(3). 

"Supplemental Payment Obligation" shall have the meaning indicated in subparagraph 2.(A)(3). 

"Third Party Price" shall have the meaning indicated in subparagraph 2.(A)(2)(a). 

"Voting Stock" of any Person means any shares of stock of such Person whose holders are entitled under ordinary circumstances to vote for the election
of directors of such Person (irrespective of whether at the time stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency). 

5

   
2.    Specialty Laboratories' Options and Obligations on the Designated Sale Date. 

        (A)    Right to Purchase; Initial Remarketing Right; Supplemental Payment Obligation.    Whether or not an Event of
Default shall have occurred and be continuing, but subject to Paragraph 5 below: 

        (1)  Specialty
Laboratories shall have the right (the "Purchase Option") to purchase or cause an Affiliate of Specialty
Laboratories to purchase the Property on the Designated Sale Date for a cash price equal to the Break Even Price. 

        (2)  If
neither Specialty Laboratories nor an Affiliate of Specialty Laboratories purchases the Property on the Designated Sale Date as provided in the preceding subparagraph
2.(A)(1), then Specialty Laboratories shall have the following rights (collectively, "Specialty Laboratories' Initial Remarketing Rights"): 

        (a)  First,
Specialty Laboratories shall have the right (but not the obligation) to designate a third party who is not an Affiliate of Specialty Laboratories as the
Applicable Purchaser and to cause such Applicable Purchaser to purchase the Property on the Designated Sale Date for a cash price designated by Specialty Laboratories that Specialty Laboratories has
determined in good faith to constitute reasonably equivalent value for the Property (the "Third Party Price"). If, however, the Break Even Price exceeds
the sum of any Third Party Price actually tendered or to be tendered to BNPPLC by the Applicable Purchaser and any Supplemental Payment actually paid by Specialty Laboratories as described below, then
BNPPLC may affirmatively elect to decline such tender from the Applicable Purchaser and to keep the Property rather than sell to the Applicable Purchaser pursuant to this subparagraph 2.(A)(2) (a
"DSD Retention Election"). 

        (b)  Second,
if Specialty Laboratories elects to cause and does cause an Applicable Purchaser who is not an Affiliate of Specialty Laboratories to purchase the Property on
the Designated Sale Date and the cash proceeds actually received by BNPPLC as the purchase price from the Applicable Purchaser exceed the Break Even Price, then BNPPLC shall pay such excess to
Specialty Laboratories or as otherwise required by Applicable Law. 

        (3)  If
for any reason whatsoever neither Specialty Laboratories nor an Applicable Purchaser pays to BNPPLC a net cash price for the Property on the Designated Sale Date
equal to or in excess of the Break Even Price, then Specialty Laboratories shall have the obligation (the "Supplemental Payment Obligation") to pay to
BNPPLC on the Designated Sale Date a supplemental payment (the "Supplemental Payment") equal to the lesser of: 

        (a)  the
amount by which the Break Even Price exceeds the net cash price (if any) actually received and retained by BNPPLC on the Designated Sale Date; or 

        (b)  the
Maximum Remarketing Obligation. 

Without
limiting the generality of the foregoing, unless Specialty Laboratories makes an effective election to terminate the Supplemental Payment Obligation as provided in subparagraph 5.(B),
Specialty Laboratories must pay the Supplemental Payment to BNPPLC even if BNPPLC does not sell the Property to Specialty Laboratories or an Applicable Purchaser on the Designated Sale Date because of
(A) a DSD Retention Election, or (B) a failure of Specialty Laboratories to exercise, or decision by Specialty Laboratories not to exercise, the Purchase Option or Specialty
Laboratories' Initial Remarketing Right. If any Supplemental Payment or other amount payable to BNPPLC pursuant to this subparagraph 2.(A) is not actually paid to BNPPLC on the Designated Sale Date,
Specialty Laboratories shall also pay interest on the past due amount computed at the Default Rate from the Designated Sale Date. Specialty Laboratories acknowledges that it is undertaking the
Supplemental Payment Obligation in consideration of the rights afforded to it by this Agreement, but that such obligation is not contingent upon any exercise by Specialty 

6

 

Laboratories of such rights or upon any purchase of the Property by Specialty Laboratories or an Applicable Purchaser. 

        (B)    Designation of the Purchaser.    To give BNPPLC the opportunity before the Designated Sale Date to prepare the
Sale Closing Documents, Specialty Laboratories must, by a notice to BNPPLC given at least ten days prior to the Designated Sale Date, specify irrevocably, unequivocally and with particularity any
party who will purchase the Property because of Specialty Laboratories' exercise of its Purchase Option or of Specialty Laboratories' Initial Remarketing Right. If for any reason Specialty
Laboratories fails to do so, BNPPLC shall be entitled to postpone the delivery of the Sale Closing Documents until a date after the Designated Sale Date and not more than twenty days after Specialty
Laboratories finally does so specify a party, but such postponement will not relieve or postpone the obligation of Specialty Laboratories to make a Supplemental Payment on the Designated Sale Date as
provided in subparagraph 2.(A)(3). 

        (C)    Effect of the Purchase Option and Specialty Laboratories' Initial Remarketing Right on Subsequent Title
Encumbrances.    Any conveyance of the Property to Specialty Laboratories or any Applicable Purchaser pursuant to subparagraph 2.(A) shall cut off and terminate any
interest in the Improvements or other Property claimed by, through or under BNPPLC, including any interest claimed by the Participants and
including any Liens Removable by BNPPLC (such as, but not limited to, any judgment liens established against the Property because of a judgment rendered against BNPPLC and any leasehold or other
interests conveyed by BNPPLC in the ordinary course of BNPPLC's business), but not including personal obligations of Specialty Laboratories to BNPPLC under the Lease or other Operative Documents
(including obligations arising under the indemnities therein). Anyone accepting or taking any interest in the Property through or under BNPPLC after the date of this Agreement shall acquire such
interest subject to the Purchase Option and Specialty Laboratories' Initial Remarketing Right. Further, Specialty Laboratories and any Applicable Purchaser shall be entitled to pay any payment
required by this Agreement for the purchase of the Property directly to BNPPLC notwithstanding any prior conveyance or assignment by BNPPLC, voluntary or otherwise, of any right or interest in this
Agreement or the Property, and neither Specialty Laboratories nor any Applicable Purchaser shall be responsible for the proper distribution or application of any such payments by BNPPLC; and any such
payment to BNPPLC shall discharge the obligation of Specialty Laboratories to cause such payment to all Persons claiming an interest in such payment. Contemporaneously with the execution of this
Agreement, the parties shall execute and record a memorandum of this Agreement for purposes of effecting constructive notice to all Persons of Specialty Laboratories' rights under this Agreement,
including its rights under this subparagraph. 

        (D)    Security for the Purchase Option and Specialty Laboratories' Initial Remarketing Right.    To secure BNPPLC's
obligation to sell the Property pursuant to subparagraph 2.(A) and to pay any damages to Specialty Laboratories caused by a breach of such obligations, including any such breach caused by a rejection
or termination of this Agreement in any bankruptcy or insolvency proceeding instituted by or against BNPPLC, as debtor, BNPPLC does hereby grant to Specialty Laboratories a lien and security interest
against all rights, title and interests of BNPPLC from time to time in and to the Improvements and other Property. Specialty Laboratories may enforce such lien and security interest judicially after
any such breach by BNPPLC, but not otherwise. 

        Contemporaneously
with the execution of this Agreement, Specialty Laboratories and BNPPLC will execute a memorandum of this Agreement which is in recordable form and which specifically
references the lien granted in this subparagraph, and Specialty Laboratories shall be entitled to record such memorandum at any time prior to the Designated Sale Date. 

        (E)    Delivery of Books and Records If BNPPLC Retains the Property.    Unless Specialty Laboratories or its Affiliate
or another Applicable Purchaser purchases the Property pursuant to subparagraph 2.(A), promptly after the Designated Sale Date Specialty Laboratories shall deliver to 

7

 

BNPPLC copies of all plans and specifications for the Property prepared in connection with the construction contemplated by the Construction Management Agreement and the Lease, together with copies
of all other books and records of Specialty Laboratories cross out which will be necessary or useful to any future owner's or occupant's use of the Property in the manner permitted by the Lease.
(Specialty Laboratories may, however, redact the copies of its books and records delivered pursuant to this Paragraph as necessary to remove, delete or black out any "proprietary information," as
defined in Paragraph 21 of the Lease, before delivering such copies to BNPPLC.) 

3.    Specialty Laboratories' Rights and Options After the Designated Sale Date. 

        (A)    Specialty Laboratories' Right to Buy During the 30 Days After the Designated Sale Date.    Even after a failure
to pay any required Supplemental Payment on the Designated Sale Date, Specialty Laboratories may nonetheless tender (or cause an Applicable Purchaser to tender) to BNPPLC the full Break Even Price and
all amounts then due under the Operative Documents, together with interest on the total Break Even Price computed at the Default Rate from the Designated Sale Date to the date of tender, on any
Business Day within thirty days after the Designated Sale Date. If presented with such a tender within thirty days after the Designated Sale Date, BNPPLC must accept it and promptly thereafter deliver
to Specialty Laboratories (or the Applicable Purchaser) the Sale Closing Documents listed in Paragraph 4 and any Escrowed Proceeds then constituting Property held by BNPPLC. Otherwise, BNPPLC
shall have no obligation to convey the Property pursuant to this subparagraph. 

        (B)    Specialty Laboratories' Extended Right to Remarket.    During Specialty Laboratories' Extended Remarketing
Period, Specialty Laboratories shall have the right ("Specialty Laboratories' Extended Remarketing Right") to purchase or cause an Applicable Purchaser
to purchase the Property. Specialty Laboratories' Extended Remarketing Right shall, however, be subject to all of the following conditions: 

        (1)  The
Property shall not have been sold on the Designated Sale Date as provided in Paragraph 2 or within the thirty days thereafter as provided in subparagraph
3.(A). 

        (2)  Specialty
Laboratories' Extended Remarketing Right shall not have been terminated pursuant to subparagraph 5.(C) because of Specialty Laboratories' failure to make any
Supplemental Payment or 97-10/Prepayment. 

        (3)  Specialty
Laboratories' Extended Remarketing Right shall not have been terminated by BNPPLC pursuant to subparagraph 5.(D) to facilitate BNPPLC's sale of the Property to
a third party as described in subparagraph 3.(D). 

        (4)  Specialty
Laboratories must provide a notice to BNPPLC (a "Notice of Sale") setting forth (i) the date proposed by
Specialty Laboratories as the Final Sale Date (the "Proposed Sale Date"), which must be no sooner than thirty days after BNPPLC's receipt of the Notice
of Sale and no later than the last Business Day of the Extended Remarketing Period, (ii) the full legal name of the purchaser (be it Specialty Laboratories or an Applicable Purchaser) and such
other information as will be required to prepare the Sale Closing Documents, (iii) the amount of Specialty Laboratories' Target Price, if Specialty Laboratories has not previously notified
BNPPLC of Specialty Laboratories' Target Price, and the cash price that will be tendered to BNPPLC for the Property (the "Committed Price"), and
(iv) an affirmative, conspicuous statement as follows: 

IMPORTANT: This notice is intended as a "Notice of Sale" given to satisfy the conditions imposed by subparagraph 3.(B) of the Purchase Agreement dated as of March 26,
2002 between you and the undersigned. Because of this Notice of Sale, you may have important rights and elections under subparagraph 3.(C) of that Purchase Agreement, which you should review and
discuss with counsel immediately following receipt of this notice.

        (5)  If
the purchaser of the Property is to be Specialty Laboratories or an Affiliate of Specialty Laboratories, then the cash price to be paid to BNPPLC for the Property
must be no less 

8

 

than the Must Sell Price, and the Proposed Sale Date must be no later than ninety days after the Designated Sale Date. 

        (6)  If
the purchaser of the Property is not to be Specialty Laboratories or an Affiliate of Specialty Laboratories, the Committed Price must be no less than Specialty
Laboratories' Target Price. Also, if the cash price to be paid to BNPPLC is less than the Must Sell Price or the Proposed Sale Date is more than ninety days after the Designated Sale Date, both
Specialty Laboratories and the Applicable Purchaser must execute and acknowledge a Grant of Repurchase Option and Restrictive Covenants Agreement in the form attached as  Exhibit E for delivery with
the other Sale Closing Documents upon the consummation of the sale. 

        (C)    BNPPLC's Right to Decline to Sell for a Price Below the Must-Sell Price; Distribution of Deemed Sales
Proceeds.    

        (1)  Notwithstanding
the foregoing, if Specialty Laboratories delivers a Notice of Sale specifying a Committed Price below the Must-Sell Price for any sale of the
Property that Specialty Laboratories is attempting to arrange pursuant to subparagraph 3.(B), and with regard to which Specialty Laboratories can satisfy all the conditions listed in subparagraph
3.(B) (for purposes of this subparagraph 3.(C), the "Applicable Sale"), then: 

        (I)  until
the Final Sale Date, BNPPLC itself may continue to market the Property for sale at a price higher than the Committed Price; and 

        (II)  BNPPLC
may decline to convey its interest in the Property to the Applicable Purchaser on the Proposed Sale Date for the Applicable Sale, and by so doing BNPPLC will be
considered to have made an affirmative election to keep the Property (an "Extended Period Retention Election"). 

        (2)  If
Specialty Laboratories does satisfy all the conditions listed in subparagraph 3.(B) for any Applicable Sale, and yet BNPPLC makes an Extended Period Retention
Election on the Proposed Sale
Date for the Applicable Sale, Specialty Laboratories may qualify the Applicable Sale as a "Bona Fide Arrangement" (herein so called) by
(i) notifying BNPPLC on the Proposed Sale Date that Specialty Laboratories will qualify the Applicable Sale as a Bona Fide Arrangement hereunder, and (ii) causing the Applicable
Purchaser to tender the following to BNPPLC at a convenient location in Dallas, Texas, starting no later than three Business Days after the Proposed Sale Date for the Applicable Sale and continuing
thereafter for a period of not less than ten Business Days: 

        (a)  all
Sale Closing Documents, properly completed and duly executed and acknowledged (where appropriate) on behalf of both the Applicable Purchaser and Specialty
Laboratories, and ready for execution and acknowledgment on behalf of BNPPLC; and 

        (b)  the
full amount of the Committed Price for the Applicable Sale. 

No
such tender will be effective to establish a Bona Fide Arrangement if it is made subject to any conditions other than the execution and acknowledgment (where appropriate) of the Sale Closing
Documents on behalf of BNPPLC or if it is withdrawn before ten Business Days following the day upon which the tender was first made. Notwithstanding BNPPLC's prior Extended Period Retention Election,
BNPPLC may accept any such tender at any time until it is withdrawn by notice to BNPPLC. 

        (3)  If
Specialty Laboratories qualifies an Applicable Sale as a Bona Fide Arrangement, but BNPPLC rejects the tender of the Committed Price and executed Sale Closing
Documents made by the Applicable Purchaser, then BNPPLC will, for purposes of subparagraph 3.(E), be deemed to have sold the Property for a price equal
to the Committed Price (a "Deemed Sale") as of the Final Sale Date for such Applicable Sale. The date upon which BNPPLC must make any payments to 

9

 

Specialty Laboratories required by subparagraph 3.(E) because of the Deemed Sale (the "Settle Up Date") will be the thirty days after the Final Sale
Date for the Applicable Sale, unless BNPPLC elects to postpone the Settle Up Date. By notice to Specialty Laboratories BNPPLC may postpone the Settle Up Date one or more times to any Business Day that
is prior to the expiration of Specialty Laboratories' Extended Remarketing Right and prior to any termination of Specialty Laboratories' Extended Remarketing Right by BNPPLC in connection with an
actual sale of the Property as described subparagraph 5.(D) of this Agreement. 

        (D)    BNPPLC's Right to Sell.    At any time more than thirty days after the Designated Sale Date, if the Property
has not already been sold and conveyed by BNPPLC pursuant to Paragraph 2 or this Paragraph 3, BNPPLC shall have the right to sell the Property or offer the Property for sale to any third
party on any terms believed to be appropriate by BNPPLC in its sole good faith business judgment. If, however, Specialty Laboratories' Extended Remarketing Right has not already been terminated or
expired prior to the sale by BNPPLC, and if Specialty Laboratories' Extended Remarketing Right is not terminated by BNPPLC contemporaneously with the sale pursuant to subparagraph 5.(D) of this
Agreement, then (as more particularly provided in subparagraph 3.(F)) Specialty Laboratories'
Extended Remarketing Right will survive the sale by BNPPLC and the purchaser at the sale will take subject to Specialty Laboratories' Extended Remarketing Right. Without limiting the foregoing, any
purchaser of the Property from BNPPLC that takes the Property subject to Specialty Laboratories' Extended Remarketing Right will be obligated to distribute proceeds of a subsequent sale of the
Property as described in the next subparagraph in the same manner and to the same extent that BNPPLC itself would have been obligated if not for the sale by BNPPLC to the purchaser. 

        (E)    Specialty Laboratories' Right to Share in Sales Proceeds Received By BNPPLC While Specialty Laboratories' Extended Remarketing Right
Continues.    If BNPPLC completes any sale and conveyance of the Property (other than to Specialty Laboratories or an Affiliate of Specialty Laboratories) after the
Designated Sale Date and before the termination or expiration of Specialty Laboratories' Extended Remarketing Right, then BNPPLC must, unless Specialty Laboratories' Extended Remarketing Right will
survive the sale as described in the preceding subparagraph, apply the cash proceeds actually received by BNPPLC from the sale (regardless of whether the sale is arranged by Specialty Laboratories as
provided in subparagraph 3.(B) or by BNPPLC itself) in the following order: 

        (1)  first,
to pay or reimburse to BNPPLC the out-of-pocket costs and expenses (including Attorneys' Fees and withholding taxes [if
any], other than Excluded Taxes) incurred by BNPPLC in connection with the sale of the Property; 

        (2)  second,
to pay or reimburse to BNPPLC the Impositions, insurance premiums and other Losses suffered or incurred by BNPPLC with respect to the ownership, operation or
maintenance of the Property after the Designated Sale Date, together with interest on such Impositions, insurance premiums and other Losses computed at the Default Rate from the date paid or incurred
to the date reimbursed from sales proceeds; 

        (3)  third,
to pay to BNPPLC an amount equal to the difference, if any, computed by subtracting (i) the aggregate payments, if any, previously made by Specialty
Laboratories to BNPPLC as a Supplemental Payment or as a 97-10/Prepayment, from (ii) BNPPLC's Adjusted Investment in the Property; 

        (4)  fourth,
to reimburse Specialty Laboratories for the aggregate payments, if any, previously made by Specialty Laboratories to BNPPLC as a Supplemental Payment or as a
97-10/Prepayment; 

        (5)  fifth,
to pay to BNPPLC an amount that, when added to all payments or reimbursements to BNPPLC described in the preceding clauses (1), (2) and (3), will equal the
Make Whole Amount; 

10

 

        (6)  sixth,
to pay to BNPPLC any other amounts then due from Specialty Laboratories to BNPPLC under any of the Operative Documents; and 

        (7)  seventh,
if any such cash proceeds exceed all the payments and reimbursements that are required or may be required as described in the clauses (1) through
(6) preceding, to pay the excess to Specialty Laboratories or as otherwise required by Applicable Law. 

If,
however, BNPPLC completes any sale and conveyance of the Property after Specialty Laboratories' Extended Remarketing Right expires or is terminated,
BNPPLC will not be required by this subparagraph to share such proceeds with Specialty Laboratories or any other party. 

        (F)    Permitted Transfers During Specialty Laboratories' Extended Remarketing Period.    Any "Permitted Transfer"
described in clause (8) of the definition thereof in the Common Definitions and Provisions Agreement to an Affiliate of BNPPLC or that covers
BNPPLC's entire interest in the Improvements will be made subject to Specialty Laboratories' Extended Remarketing Right if, at the time of the Permitted Transfer, Specialty Laboratories' Extended
Remarketing Right has not already expired or been terminated as provided herein. Any other such Permitted Transfer described in clause (8) of the
definition thereof, however, will not be subject to Specialty Laboratories' Extended Remarketing Right. Thus, for example, BNPPLC's conveyance of a utility easement or a space lease more than thirty
days after the Designated Sale Date to a Person not an Affiliate of BNPPLC shall not be subject to Specialty Laboratories' Extended Remarketing Right, although following the conveyance of the lesser
estate, Specialty Laboratories' Extended Remarketing Right may continue to apply to BNPPLC's remaining interest in the Improvements and any Personal Property. 

4.    Terms of Conveyance Upon Purchase.    As necessary to consummate any sale of the Property to Specialty Laboratories or an
Applicable Purchaser pursuant to this Agreement, BNPPLC must, subject to any postponement permitted by subparagraph 2.(B), promptly after the tender of the purchase price and any other payments to
BNPPLC required pursuant to Paragraph 2 or Paragraph 3, as applicable, convey all of BNPPLC's right, title and interest in the Improvements and other Property to Specialty Laboratories
or the Applicable Purchaser, as the case may be, by BNPPLC's execution, acknowledgment (where appropriate) and delivery of the Sale Closing Documents. Such conveyance by BNPPLC will be subject only to
the Permitted Encumbrances and any other encumbrances that do not constitute Liens Removable by BNPPLC. However, such conveyance shall not include the rights of BNPPLC or other Interested Parties
under the indemnities provided in the Operative Documents, including rights to any payments then due from Specialty Laboratories under the indemnities or that may become due thereafter because of any
expense or liability incurred by BNPPLC or another Interested Party resulting in whole or in part from events or circumstances occurring or alleged to have occurred before such conveyance. All costs,
both foreseen and unforeseen, of any purchase by Specialty Laboratories or an Applicable Purchaser hereunder shall be the responsibility of the purchaser. The Sale Closing Documents used to accomplish
such conveyance shall consist of the following: (1) documents in the forms required by Exhibit B, including either a termination or an
assignment of the Ground Lease and other rights and interests of BNPPLC in the Property, (2) a Secretary's Certificate in the form attached as  Exhibit C, (3) a certificate concerning tax
withholding in the form attached as  Exhibit D, and (4) if the condition specified in subparagraph 3.(B)(6) is applicable, a Grant of Repurchase Option and Restrictive
Covenants Agreement executed by both Specialty Laboratories and the Applicable Purchaser in the form attached as Exhibit E. If for any reason
BNPPLC fails to tender
the Sale Closing Documents as required by this Paragraph 4, BNPPLC may cure such refusal at any time before thirty days after receipt of a demand for such cure from Specialty Laboratories. 

5.    Survival and Termination of the Rights and Obligations of Specialty Laboratories and BNPPLC. 

        (A)    Status of this Agreement Generally.    Except as expressly provided herein, this Agreement shall not terminate;
nor shall Specialty Laboratories have any right to terminate this Agreement; nor shall Specialty Laboratories be entitled to any reduction of the Break Even Price, the Maximum 

11

 

Remarketing Obligation, the Make Whole Amount or any payment required hereunder; nor shall any of the obligations of Specialty Laboratories to BNPPLC under Paragraph 2 be excused by reason of
(i) any damage to or the destruction of all or any part of the Property from whatever cause, (ii) the taking of or damage to the Property or any portion thereof by eminent domain or
otherwise for any reason, (iii) the prohibition, limitation or restriction of Specialty Laboratories' use of all or any portion of the Property or any interference with such use by governmental
action or otherwise, (iv) any eviction of Specialty Laboratories or any party claiming under Specialty Laboratories by paramount title or otherwise, (v) Specialty Laboratories' prior
acquisition or ownership of any interest in the Property, (vi) any default on the part of BNPPLC under this Agreement, the Ground Lease, the Construction Management Agreement, the Lease or any
other agreement to which BNPPLC is a party, or (vii) any other cause, whether similar or dissimilar to the foregoing, any existing or future law to the contrary notwithstanding. It is the
intention of the parties hereto that the obligations of Specialty Laboratories hereunder (including the obligation to make any Supplemental Payment as provided in Paragraph 2 shall be separate
and independent covenants and agreements from BNPPLC's obligations under this Agreement or any other agreement between BNPPLC and Specialty Laboratories; provided, however, that nothing in this
subparagraph shall be construed as a waiver by Specialty Laboratories of any right Specialty Laboratories may have at law or in equity to the following remedies, whether because of BNPPLC's failure to
remove a Lien Removable by BNPPLC or because of any other default by BNPPLC under this Agreement: (i) the recovery of monetary damages, (ii) injunctive relief in case of the violation,
or attempted or threatened violation, by BNPPLC of any of the express covenants, agreements, conditions or provisions of this Agreement which are binding upon BNPPLC, or (iii) a decree
compelling performance by BNPPLC of any of the express covenants, agreements, conditions or provisions of this Agreement which are binding upon BNPPLC. 

        (B)    Election by Specialty Laboratories to Terminate the Supplemental Payment Obligation Prior to the Completion
Date.    By delivery of a notice to BNPPLC and the Participants in the form attached as Exhibit F, Specialty
Laboratories may terminate its Supplemental Payment Obligation, but only prior to the Completion Date and only after (x) Specialty Laboratories shall have given Notice of Specialty
Laboratories' Intent to Terminate as provided in the Construction Management Agreement, (y) BNPPLC shall have given any FOCB Notice as provided in the Construction Management Agreement, or
(z) BNPPLC shall have given notice of its election to accelerate the Designated Sale Date as provided in clause (3) of the definition Designated Sale Date in the Common Definitions and
Provisions Agreement. (If for any reason BNPPLC does not receive a notice terminating the Supplemental Payment Obligation as described in the preceding sentence prior to the Completion Date, then
without any notice or other action by the parties to this Agreement, Specialty Laboratories shall cease to have any right to terminate the Supplemental Payment Obligation. Thus, even a decision by
BNPPLC to accelerate the Designated Sale Date will not entitle Specialty Laboratories to terminate
the Supplemental Payment Obligation so long as BNPPLC refrains from giving notice of the acceleration until after the Completion Date.) If Specialty Laboratories does send a notice to BNPPLC and
Participants in the form attached as Exhibit F, such notice shall (as provided therein) constitute an irrevocable and absolute waiver by
Specialty Laboratories of Specialty Laboratories' rights to purchase the Property or to cause any of its Affiliates to purchase the Property pursuant to this Agreement. 

12

   
        (C)    Automatic Termination of Specialty Laboratories' Rights.    If Specialty Laboratories fails to pay the full
amount of any Supplemental Payment required by subparagraph 2.(A)(3) on the Designated Sale Date, then the Purchase Option, Specialty Laboratories' Initial Remarketing Right, Specialty Laboratories'
Extended Remarketing Right and all other rights of Specialty Laboratories hereunder, other than its rights under subparagraph 3.(A), shall terminate automatically. If, however, prior to the Designated
Sale Date Specialty Laboratories effectively terminates the Supplemental Payment Obligation pursuant to subparagraph 5.(B) by the delivery of a notice to BNPPLC and Participants in the form attached
as Exhibit F, so that Specialty Laboratories is excused from the obligation to make any Supplemental Payment pursuant to subparagraph 2.(A)(3),
then Specialty Laboratories' Extended Remarketing Right will not terminate automatically pursuant to this subparagraph 5.(C), but rather will survive except to the extent waived by such notice. No
termination of Specialty Laboratories' rights as described in this subparagraph will limit BNPPLC's other remedies, including its right to sue for any Supplemental Payment or other amounts due from
Specialty Laboratories pursuant to this Agreement. 

        (D)    Termination of Specialty Laboratories' Extended Remarketing Right to Permit a Sale by BNPPLC.    To permit a
sale of the Property unencumbered by Specialty Laboratories' Extended Remarketing Right, BNPPLC may terminate Specialty Laboratories' Extended Remarketing Right contemporaneously with the consummation
of a sale of the Property by BNPPLC to any third party on any date that is more than thirty days after the Designated Sale Date, if: 

        (1)  Specialty
Laboratories has notified BNPPLC of Specialty Laboratories' Target Price, and either (a) the price being paid by the third party is greater than
Specialty Laboratories' Target Price, or (b) (i) the third party purchasing the Property from BNPPLC is not an affiliate of BNPPLC, (ii) BNPPLC has obtained an appraisal of Property from
an independent real estate appraiser as described below, and the price to be paid by the third party is not less than 90% of the Appraised Value indicated by such appraisal, and (iii) the other
terms and conditions of the sale are satisfactory to BNPPLC in its sole good faith business judgment; or 

        (2)  Specialty
Laboratories has failed to notify BNPPLC of Specialty Laboratories' Target Price, and the third party purchasing the Property from BNPPLC is not an affiliate
of BNPPLC, and the price and other terms and conditions of the sale are satisfactory to BNPPLC in its sole good faith business judgment; or 

        (3)  the
third party purchasing the Property is paying a price sufficient to obligate BNPPLC to reimburse Specialty Laboratories, pursuant to clause (4) of
subparagraph 3.(E), for any and all payments
previously made by Specialty Laboratories to BNPPLC as a Supplemental Payment or as a 97-10/Prepayment. 

Specialty
Laboratories acknowledges that BNPPLC's own marketing efforts after the Designated Sale Date will depend upon its rights under this subparagraph, and such efforts could be hampered if
Specialty Laboratories' Target Price is too high or if Specialty Laboratories delays in notifying BNPPLC of Specialty Laboratories' Target Price. Thus, BNPPLC may at any time and from time to time
after the Designated Sale Date engage a professional real estate appraiser to determine the fair market value of the Property in its then "AS IS" condition (the "Appraised
Value"). Any such appraiser must be an independent contractor (not an employee of BNPPLC or any of its Affiliates), must have earned the designation of MAI or equivalent and
must have at least 10 years experience in appraising commercial real estate in the Los Angeles area. 

Without
limiting the foregoing, if a Deemed Sale occurs as described in subparagraph 3.(C)(3), then BNPPLC shall also be deemed to have terminated Specialty Laboratories' Extended Remarketing Right
pursuant to this subparagraph on the Settle Up Date, with the result that BNPPLC shall be required to distribute an amount equal to the sales proceeds it is deemed to have received in accordance with
subparagraph 3.(E). In such a case, however, BNPPLC may condition any payments to Specialty Laboratories as required by subparagraph 3.(E) upon the delivery by Specialty Laboratories of a 

13

 

recordable written release and quitclaim of any rights and interests it may have in and to the Property under this Agreement. 

        (E)    Payment Only to BNPPLC.    All amounts payable under this Agreement by Specialty Laboratories and, if
applicable, by an Applicable Purchaser must be paid directly to BNPPLC, and no payment to any other party shall be effective for the purposes of this Agreement. This subparagraph shall not, however,
be construed to limit Specialty Laboratories' right to require the deduction of Direct Payments to Participants and Deposit Taker Losses in the calculation of the Break Even Price as provided in
Paragraph 1. 

        (F)    Preferences and Voidable Transfers.    If any payment to BNPPLC by an Applicable Purchaser hereunder is held to
constitute a preference or a voidable transfer under Applicable Law, or must for any other reason be refunded by BNPPLC to the Applicable Purchaser or to another Person, and if such payment to BNPPLC
reduced or had the effect of reducing a payment required of Specialty Laboratories by this Agreement (e.g., a Supplemental Payment) or increased or had
the effect of increasing any sale proceeds paid over to Specialty Laboratories pursuant to subparagraph 2.(A)(2)(b) or pursuant to subparagraph 3.(E), then Specialty Laboratories shall pay to BNPPLC
upon demand an amount equal to the reduction of the payment required of Specialty Laboratories or to the increase of the excess sale proceeds paid to Specialty Laboratories, as applicable, and this
Agreement shall continue to be effective or shall be reinstated as necessary to permit BNPPLC to enforce its right to collect such amount from Specialty Laboratories. 

        (G)    Remedies Under the Other Operative Documents.    No repossession of or re-entering upon the
Property or exercise of any other remedies available to BNPPLC under the Construction Management Agreement, the Lease or other Operative Documents shall terminate Specialty Laboratories' rights or
obligations hereunder, all of which shall survive BNPPLC's exercise of remedies under the other Operative Documents. Specialty Laboratories acknowledges that the consideration for this Agreement is
separate and independent of the consideration for the Construction Management Agreement, the Lease, the Closing Certificate and other agreements executed by the parties, and Specialty Laboratories'
obligations hereunder shall not be affected or impaired by any event or circumstance that would excuse Specialty Laboratories from performance of its obligations under such other Operative Documents. 

        (H)    Provisions Concerning Condemnation.    In anticipation of any condemnation of all or part of the Property,
Specialty Laboratories shall be entitled to exercise its rights, subject to other terms and conditions of the Operative Documents, to accelerate the Designated Sale Date (as provided in
clause (2) of the definition thereof in the Common Definitions and Provisions Agreement) and to exercise the Purchase Option. By doing so, Specialty Laboratories may acquire BNPPLC's interest
in the Property and thereafter control all aspects of the condemnation proceedings. But neither condemnation nor any negotiations that Specialty Laboratories may undertake with condemning authorities
shall in and of itself be considered an exercise by Specialty Laboratories of the Purchase Option or of Specialty Laboratories' other rights under this Agreement. 

6.    [Intentionally Omitted].

7.    Return of Funds.    BNPPLC shall be entitled to deliver any Escrowed Proceeds directly to Specialty Laboratories or to any
Applicable Purchaser purchasing BNPPLC's interest in the Property pursuant to this Agreement notwithstanding any prior actual or attempted conveyance or assignment by Specialty Laboratories, voluntary
or otherwise, of any right to receive the same; BNPPLC shall not be responsible for the proper distribution or application by Specialty Laboratories or any Applicable Purchaser of any such Escrowed
Proceeds paid over to Specialty Laboratories or the Applicable Purchaser; and any such payment of Escrowed Proceeds to Specialty Laboratories or an Applicable Purchaser shall discharge any obligation
of BNPPLC to deliver the same to all Persons claiming an interest therein. 

14

 

8.    Certain Remedies Cumulative.    No right or remedy herein conferred upon or reserved to BNPPLC is intended to be exclusive of
any other right or remedy BNPPLC has with respect to the Property, and each and every right and remedy shall be cumulative and in addition to any other right or remedy given hereunder or now or
hereafter existing at law or in equity or by statute. In addition to other remedies available under this Agreement, either party shall be entitled, to the extent permitted by applicable law, to a
decree compelling performance of any of the other party's agreements hereunder. 

9.    Attorneys' Fees and Legal Expenses.    If either party commences any legal action or other proceeding because of any breach of
this Agreement by the other party, then the party prevailing in such action or proceeding shall be entitled to recover all Attorneys' Fees incurred by it in connection therewith from the other party,
whether or not such controversy, claim or dispute is prosecuted to a final judgment. Any Attorneys' Fees incurred by the party prevailing in enforcing a judgment in its favor under this Agreement
shall be recoverable separately from such judgment, and the obligation for such Attorneys' Fees is intended to be severable from other provisions of this Agreement and not to be merged into any such
judgment. 

10.    Estoppel Certificate.    Upon request by BNPPLC, Specialty Laboratories shall execute, acknowledge and deliver a written
statement certifying that this Agreement is unmodified and in full effect (or, if there have been modifications, that this Agreement is in full effect as modified, and setting forth such modification)
and either stating that no default exists hereunder or specifying each such default of which Specialty Laboratories has knowledge. Any such statement may be relied upon by any Participant or
prospective purchaser or assignee of BNPPLC with respect to the Property. 

11.    Successors and Assigns.    The terms, provisions, covenants and conditions hereof shall be binding upon Specialty
Laboratories and BNPPLC and their respective permitted successors and assigns and shall inure to the benefit of Specialty Laboratories and BNPPLC and all permitted transferees, mortgagees, successors
and assignees of Specialty Laboratories and BNPPLC with respect to the Property; provided, that (A) the rights of BNPPLC hereunder shall not pass to Specialty Laboratories or any Applicable
Purchaser or any subsequent owner claiming through Specialty Laboratories or an Applicable Purchaser, (B) BNPPLC shall not assign this Agreement or any rights hereunder except pursuant to a
Permitted Transfer, and (C) Specialty Laboratories shall not assign this Agreement or any rights hereunder without the prior written consent of BNPPLC. 

[Signature
pages follow.] 

15

 

        IN
WITNESS WHEREOF, Specialty Laboratories and BNPPLC have caused this Purchase Agreement to be executed as of March 26, 2002. 

	 	 	"Specialty Laboratories"
	

 	
 	

SPECIALTY LABORATORIES, INC., a California corporation
	

 	
 	

By:	
 	

/s/ Frank J. Spina

	 	 	Name:	 	Frank J. Spina

	 	 	Title:	 	Chief Financial Officer

16

 

[Continuation
of signature pages to Purchase Agreement dated to be effective March 26, 2002] 

	 	 	"BNPPLC"
	

 	
 	

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

	 	 	 	 	Barry Mendelsohn, Vice President

17

  

 
 

Exhibit A
  
    LEGAL DESCRIPTION    
  

        The real property is located in the State of California, County of Los Angeles and is described as follows: 

Parcel A:  

        LOT 3 OF TRACT 43735, IN THE CITY OF SANTA CLARITA, AS PER MAP RECORDED IN BOOK 1074, PAGES 37 TO 39 INCLUSIVE OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF
SAID COUNTY. 

Parcel B:  

        LOT 1 OF TRACT 43736, IN THE CITY OF SANTA CLARITA, AS PER MAP RECORDED IN BOOK 1076, PAGES 38 TO 41 INCLUSIVE OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF
SAID COUNTY. 

Parcel C:  

        THAT PORTION OF LOT 2 OF TRACT 43736, IN THE CITY OF SANTA CLARITA, AS SHOWN ON MAP FILED IN BOOK 1076 PAGES 38 TO 41 INCLUSIVE OF MAPS, IN THE OFFICE OF THE
COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: 

        BEGINNING
AT THE NORTHWESTERLY CORNER OF SAID LOT 2; THENCE 

	1.
	ALONG
THE NORTHERLY LINE OF SAID LOT 2 NORTH 77° 25' 56" EAST 531.27 FEET TO THE NORTHEASTERLY CORNER OF SAID LOT 2, SAID CORNER BEING A
POINT ON A CURVE CONCAVE WESTERLY HAVING A RADIUS OF 458.00 FEET, A RADIAL LINE TO SAID CORNER BEARS NORTH 72° 49' 01" EAST; THENCE

	2.
	SOUTHERLY
ALONG THE EASTERLY LINE OF SAID LOT 2 AND ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 4° 36' 54" AN ARC DISTANCE OF 36.89 FEET;
THENCE

	3.
	TANGENT
TO SAID CURVE SOUTH 12° 34' 04" EAST 140.43 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE WESTERLY HAVING A RADIUS OF 3958.00
FEET; THENCE

	4.
	SOUTHERLY
ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 1° 27' 13" AN ARC DISTANCE OF 100.42 FEET TO A POINT ON LAST SAID CURVE, A RADIAL LINE
TO SAID POINT BEARS NORTH 78° 53' 09" EAST; THENCE

	5.
	PARALLEL
TO THE SOUTHERLY LINE OF SAID LOT 2 SOUTH 77° 25' 56" WEST 472.58 FEET TO THE WESTERLY LINE OF SAID LOT 2; THENCE

	6.
	ALONG
SAID WESTERLY LINE OF LOT 2 NORTH 36° 20' 00" EAST 41.06 FEET; THENCE

	7.
	NORTH
54° 00' 00" WEST 95.00 FEET; THENCE

	8.
	NORTH
1° 50' 00" EAST 24.00 FEET; THENCE

	9.
	NORTH
48° 20' 00" EAST 59.00 FEET; THENCE

	10.
	NORTH
42° 10' 00" WEST 54.00 FEET; THENCE

	11.
	NORTH
68° 14' 55" WEST 55.60 FEET; THENCE 

18

 

	12.
	NORTH
26° 10' 00" WEST 55.66 FEET TO THE POINT OF BEGINNING. 

        SAID
LAND IS SHOWN AS PARCEL 3 OF CERTIFICATE OF COMPLIANCE NO. 91-001, A COPY OF WHICH RECORDED MAY 1, 1991 AS INSTRUMENT NO. 91-627467. 

Parcel D:  

        LOT 3 AND THOSE PORTIONS OF LOTS 2 AND 4 OF TRACT 43736, IN THE CITY OF SANTA CLARITA, AS PER MAP RECORDED IN BOOK 1076 PAGES 38 TO 41 INCLUSIVE OF MAPS, IN THE
OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: 

        BEGINNING
AT THE NORTHWESTERLY CORNER OF LOT 4; THENCE 

	1.
	ALONG
THE WESTERLY LINE OF SAID LOT 4 SOUTH 44°40'00" EAST 32.29 FEET; THENCE

	2.
	SOUTH
10°40'00" WEST 80.00 FEET TO A POINT DISTANT THEREON NORTH 10°40'00" EAST 18.00 FEET FROM THE SOUTHWESTERLY TERMINUS OF
THAT COURSE IN SAID WESTERLY LINE SHOWN AS NORTH 10°40'00" EAST 98.00 FEET; THENCE

	3.
	PARALLEL
WITH THE SOUTHERLY LINE OF SAID LOT 4 NORTH 77°25'56" EAST 455.86 FEET TO THE EASTERLY LINE OF SAID LOT 4; THENCE

	4.
	ALONG
SAID EASTERLY LINE AND THE EASTERLY LINE OF SAID LOTS 3 AND 2 NORTH 05°20'37" WEST 2.71 FEET TO THE BEGINNING OF A TANGENT CURVE
CONCAVE WESTERLY HAVING A RADIUS OF 3958.00; THENCE

	5.
	NORTHERLY
ALONG SAID EASTERLY LINE AND ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 05°46'14" AN ARC DISTANCE OF 398.63 FEET TO A POINT ON
SAID CURVE, A RADIAL LINE TO SAID POINT BEARS NORTH 78°53'09" EAST; THENCE

	6.
	PARALLEL
TO THE NORTHERLY LINE OF SAID LOT 3 SOUTH 77°25'56" WEST 472.58 FEET TO THE WESTERLY LINE OF SAID LOT 2; THENCE

	7.
	ALONG
SAID WESTERLY LINE AND THE WESTERLY LINE OF SAID LOT 3 SOUTH 36°20'00" WEST 29.94 FEET; THENCE

	8.
	SOUTH
01°10'00" WEST 133.00 FEET; THENCE

	9.
	SOUTH
63°00'00" EAST 76.00 FEET; THENCE

	10.
	SOUTH
12°50'00" WEST 68.00; THENCE

	11.
	SOUTH
44°40'00" EAST 47.71 FEET TO THE POINT OF BEGINNING. 

        SAID
LAND IS SHOWN AS PARCEL 2 OF CERTIFICATE OF COMPLIANCE NO. 91-001, A COPY OF WHICH RECORDED MAY 1, 1991 AS INSTRUMENT NO. 91-627467. 

        TAX
ASSESSOR PARCELS 2861-001-049,050,110,111,093 AND 094. 

        EXCEPTING FROM PARCELS A THROUGH D ABOVE THE FOLLOWING RIGHTS, WHICH HAVE BEEN RESERVED TO GRANTOR IN THAT CERTAIN GRANT DEED RECORDED
DECEMBER 14, 2001 IN THE REAL PROPERTY RECORDS OF THE RECORDER OF LOS ANGELES COUNTY, CALIFORNIA, AS DOCUMENT NUMBER 01 2394274: 

        ALL
OIL, OIL RIGHTS, MINERALS, MINERAL RIGHTS, NATURAL GAS RIGHTS AND OTHER HYDROCARBONS BY WHATSOEVER NAME KNOWN, GEOTHERMAL STEAM AND 

19

 

ALL PRODUCTS DERIVED FROM ANY OF THE FOREGOING, THAT MAY BE WITHIN OR UNDER THE REAL PROPERTY REFERRED TO ABOVE, TOGETHER WITH THE PERPETUAL RIGHT OF DRILLING, MINING, EXPLORING AND OPERATING
THEREFOR AND STORING IN AND REMOVING THE SAME FROM SUCH REAL PROPERTY OR ANY OTHER PROPERTY, INCLUDING THE RIGHT TO WHIPSTOCK OR DIRECTIONALLY DRILL AND MINE FROM PROPERTIES OTHER THAN THE REAL
PROPERTY REFERRED TO ABOVE, OIL OR GAS WELLS, TUNNELS AND SHAFTS INTO, THROUGH OR ACROSS THE
SUBSURFACE OF THE REAL PROPERTY REFERRED TO ABOVE, AND TO THE BOTTOM SUCH WHIPSTOCKED OR DIRECTIONALLY DRILLED WELLS, TUNNELS AND SHAFTS UNDER AND BENEATH OR BEYOND THE EXTERIOR LIMITS THEREOF, AND TO
REDRILL, RETUNNEL, EQUIP, MAINTAIN, REPAIR, DEEPEN AND OPERATE ANY SUCH WELLS OR MINES; PROVIDED, HOWEVER, ALL OF THE FOREGOING IS WITHOUT THE RIGHT TO DRILL, MINE, STORE, EXPLORE OR OPERATE THROUGH
THE SURFACE OF THE REAL PROPERTY REFERRED TO ABOVE OR THE UPPER 500 FEET OF THE SUBSURFACE OF SUCH REAL PROPERTY. 

        ALSO EXCEPTING FROM PARCELS A THROUGH D ABOVE THE FOLLOWING RIGHTS, WHICH HAVE BEEN RESERVED TO GRANTOR IN THAT CERTAIN GRANT DEED
RECORDED DECEMBER 14, 2001 IN THE REAL PROPERTY RECORDS OF THE RECORDER OF LOS ANGELES COUNTY, CALIFORNIA, AS DOCUMENT NUMBER 01 2394274: 

        ALL
WATER AND WATER RIGHTS NOW IN OR IN THE FUTURE OWNED BY SELLER APPURTENANT TO OR RELATED IN ANY WAY TO THE REAL PROPERTY REFERRED TO ABOVE OR USED BY SELLER IN CONNECTION WITH OR
RELATED TO SUCH REAL PROPERTY (NO MATTER HOW ACQUIRED BY SELLER) TOGETHER WITH THE RIGHT AND POWER TO EXPLORE, DRILL, REDRILL, REMOVE AND STORE THE SAME FROM, UNDER OR IN THE REAL PROPERTY REFERRED TO
ABOVE OR TO DIVERT OR OTHERWISE UTILIZE SUCH WATER, RIGHTS OR INTERESTS ON ANY OTHER PROPERTY OWNED OR LEASED BY SELLER AND THE RIGHT AND POWER TO CONDUCT WATER OVER OR TO STORE WATER UNDERNEATH THE
REAL PROPERTY REFERRED TO ABOVE BY SUCH MEANS AS SELLER DEEMS REASONABLE. THE WATER AND WATER RIGHTS EXCEPTED AND RESERVED TO SELLER INCLUDE, BUT ARE NOT LIMITED TO, ALL RIPARIAN WATER RIGHTS, ALL
APPROPRIATIVE WATER RIGHTS, ALL WATER RIGHTS AND RIGHTS TO STORE WATER IN SUBSURFACE RESERVOIRS BASED ON OVERLYING LAND OWNERSHIP, ALL LITTORAL WATER RIGHTS, ALL RIGHTS TO PERCOLATING WATER, ALL
PRESCRIPTIVE WATER RIGHTS, ALL ADJUDICATED, STATUTORY OR CONTRACTUAL WATER RIGHTS, ALL RIGHTS TO AQUIFERS, RESERVOIRS, SUBSURFACE AND SURFACE WATERS, AND ALL RIGHTS TO TAKE, USE AND DEVELOP FOR USE
ANY AND ALL WATER THAT MAY NOW EXIST OR MAY IN THE FUTURE EXIST UPON, IN OR UNDER THE REAL PROPERTY REFERRED TO ABOVE; PROVIDED, HOWEVER, ALL OF THE FOREGOING IS WITHOUT THE RIGHT TO USE OR ALTER THE
SURFACE OF THE REAL PROPERTY OR TO OTHERWISE INTERFERE WITH THE USE AND ENJOYMENT OF THE SAME BY GRANTEE AND ITS HEIRS, PERSONAL REPRESENTATIVES, SUCCESSORS AND ASSIGNS. 

20

  

 
 

Exhibit B
  
    Requirements Re: Form of Assignment or Termination of Ground Lease    
  

        The form of the documents to be used to accomplish any conveyance of BNPPLC's interest in the Improvements and other Property pursuant to this Agreement will
depend upon whether the conveyance is to Specialty Laboratories or an Applicable Purchaser and, in the case of an conveyance by Specialty Laboratories itself, upon whether Specialty Laboratories
elects to take an assignment of the Ground Lease or to terminate the Ground Lease. 

        If
Specialty Laboratories is itself acquiring BNPPLC's interest in the Property, the conveyance of such interest will be accomplished either by (A) the execution of an Agreement
Concerning Ground Lease in the form attached as Exhibit B-1, which (among other things) will effectively terminate the Ground Lease
with the result that BNPPLC's interest in all Improvements will revert to Specialty Laboratories by operation of law, or (B) BNPPLC's execution of assignments in the forms attached as  Exhibit B-2 and Exhibit B-3 and the execution by BNPPLC and
Specialty Laboratories of an Acknowledgment of Disclaimer in the form attached as Exhibit B-4. Specialty Laboratories may choose
between the Agreement Concerning Ground Lease or the alternative forms attached as Exhibits B-2,  B-3 and B-4; provided, however, that if Specialty Laboratories fails to notify
BNPPLC at least fifteen days prior to the Designated Sale Date that Specialty Laboratories chooses to receive the assignments in the forms attached as  Exhibit B-2 and Exhibit B-3, BNPPLC may assume that Specialty
Laboratories has elected instead to have BNPPLC execute the Agreement Concerning Ground Lease in the form attached as Exhibit B-1. If
Specialty Laboratories does choose to receive the assignments in the forms attached as Exhibit B-2 and  Exhibit B-3, Specialty Laboratories must
join with BNPPLC in executing the Acknowledgment of Disclaimer in the form attached as  Exhibit B-4. 

        If
an Applicable Purchaser is acquiring BNPPLC's interest in the Improvements and other Property, such interest will be conveyed by BNPPLC's execution and delivery of assignments in the
forms attached as Exhibit B-2 and Exhibit B-3, and the Applicable
Purchaser shall be required to join with BNPPLC in executing an Acknowledgment of Disclaimer in the form attached as Exhibit B-4. 

21

  

 
 

Exhibit B-1
  
    Form of Assignment of Ground Lease and Improvements    
  

RECORDING
REQUESTED BY AND,

WHEN RECORDED, RETURN TO: 

	Specialty Laboratories, Inc.	 	 
	

Attn:	
 	

 	
 	

 	
 	

 
	 	 	
	 	 	 	 
	

	
 	

 	
 	

 
	

	
 	

 	
 	

 

AGREEMENT CONCERNING GROUND LEASE 

        THIS
AGREEMENT CONCERNING GROUND LEASE (this "Agreement") dated as of                        , 200    (the
"Effective Date"), is made by and between BNP PARIBAS LEASING CORPORATION
("BNPPLC"), a Delaware corporation, and SPECIALTY LABORATORIES, INC., a California corporation ("Specialty Laboratories"). 

RECITALS 

        This
Agreement is entered into upon, and with respect to, the following facts and intentions: 

        A.    BNPPLC
and Specialty Laboratories have heretofore entered into the following agreements: 

        (1)  Ground
Lease dated as of March 26, 2002 and recorded in the official records of Los Angeles County, California (the "Official Records) on March 26, 2002 as
Instrument Number            (as the same may have been modified, the "Ground Lease"), whereby Specialty Laboratories, as ground lessor, ground leased to BNPPLC, as ground lessee, that
certain
land more particularly described in Annex A, attached hereto and incorporated herein by this reference (herein the "Land"); and 

        (2)  Lease
Agreement dated as of March 26, 2002 (as the same may have been modified, the "Sublease"), which was the subject of that certain Short Form of Sublease,
dated as of March 26, 2002 and recorded in the Official Records on March 26, 2002 as Instrument
Number                        (the "Short Form of Sublease"), whereby BNPPLC, as sublessor,
leased to Specialty Laboratories, as sublessee, its ground leasehold interest in the Land and all of the improvements located thereon (collectively the "Subleased Premises"); and 

        (3)  Purchase
Agreement dated as of March 26, 2002 (has the same may have been modified, the "Purchase Agreement"), which was the subject of that certain Memorandum of
Purchase Agreement, dated as of March 26, 2002 and recorded in the Official Records on March 26, 2002 as Instrument
Number                        . 

        (4)  Common
Definitions and Provisions Agreement dated as of March 26, 2002 Date (as the same may have been modified, the "Common Definitions and Provisions
Agreement"). 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. 

        B.    BNPPLC
and Specialty Laboratories now mutually wish to terminate the Ground Lease on the terms and conditions more particularly herein set forth. 

22

 

 
 

AGREEMENT    
  

        NOW, THEREFORE, for good and valuable consideration the adequacy of which is hereby acknowledges, the parties hereto agree as follows: 

        1.    Termination
of Ground Lease. As of the Effective Date, BNPPLC hereby surrenders all of its right title and interest in the Ground Lease unto Specialty Laboratories,
subject only to the "Permitted Encumbrances" described in Annex B attached hereto and incorporated herein by this reference, and the Ground Lease is hereby terminated. Notwithstanding anything to the
contrary in this Agreement, BNPPLC does, for itself and its successors, covenant, warrant and agree to defend the title to the Land against claims and demands of any person claiming under or through a
Lien Removable by BNPPLC. Except as expressly set forth in the preceding sentence, BNPPLC makes no warranty of title, express or implied. 

        2.    Acknowledgment
of Reversion. BNPPLC also acknowledges and agrees that because of the termination of the Ground Lease, all of BNPPLC's right, title and interest in and to
the following property will revert to Specialty Laboratories and BNPPLC does hereby forever relinquish, waive, and quitclaim unto Specialty Laboratories (subject to such Permitted Encumbrances): 

	A.
	the
Sublease;

	B.
	the
Purchase Agreement;

	C.
	any
pending or future award made because of our condemnation affecting the Property or because of any conveyance to be made in lieu thereof, and any unpaid proceeds of insurance or
claim or cause of action for damages, loss or injury to the Subleased Premises; and

	D.
	all
other property included within the definition of "Property" as set forth in the Purchase Agreement; 

provided,
however, that excluded from this conveyance and reserved to BNPPLC are any rights or privileges of BNPPLC under the following are expressly reserved and retained by BNPPLC: (i) the
indemnities set forth in the Sublease and the Ground Lease, whether such rights are presently known or unknown, including rights of BNPPLC to be indemnified against environmental claims of third
parties, as provided in the Ground Lease which may not presently be known; and (ii) provision in the Sublease that establish the right of BNPPLC to recover any accrued unpaid rent under the
Sublease
which may be outstanding as of the date hereof; and (iii) agreements between BNPPLC and BNPPLC's Parent or any Participant, or any modification or extension thereof. 

        BNPPLC
agrees to warrant and defend the title to the Subleased Premises as herein assigned, against claims and demands of any person claiming under or through a Lien Removable by BNPPLC
relating to the Subleased Premises. 

        3.    "As
Is" Reversion. Notwithstanding any contrary provisions contained herein, Specialty Laboratories acknowledges that BNPPLC makes no representations or warranties of any
nature or kind, whether statutory, express or implied, with respect to environmental matters or the physical condition of the Subleased Premises, and Specialty Laboratories, by acceptance of this
agreement, accepts the Subleased Premises "As Is," "Where Is," and "With All Faults," and without any such representation or warranty by BNPPLC as to environmental matters, the physical condition of
the Subleased Premises, compliance with subdivision or platting requirements or construction of any improvements. Without limiting the generality of the foregoing, Specialty Laboratories hereby
further acknowledges and agrees that warranties of merchantability and fitness for a particular purpose are excluded from the transactions contemplated by this Agreement, as are any warranties arising
from a course of dealing or usage of trade. Specialty Laboratories hereby assumes all risk and liability (and agrees that BNPPLC shall not be liability for any special, direct, indirect,
consequential, or other damages) resulting or arising from or relating to the ownership, use, condition, location, maintenance, 

23

 

repair, or operation of the Subleased Premises, except for damages proximately caused by (and attributed by any applicable principles of comparative fault to) the "Established Misconduct" of BNPPLC. 

        4.    Binding
Effect. The terms, provisions, covenants, and conditions hereof shall be binding upon Specialty Laboratories and BNPPLC and their respective successors and
assigns, and any other party claiming through either of them, and shall inure to the benefit of Specialty Laboratories and BNPPLC and all transferees, mortgages, successors and assigns. 

        5.    Miscellaneous.
This Agreement and any other agreement relating hereto and executed concurrently herewith represent the entire agreement of the parties hereto with respect
to the subject matter hereof and supersede any prior negotiations and agreement between BNPPLC and Specialty Laboratories concerning the subject matter hereof. No amendment or modification of this
Agreement shall be binding or valid unless express in a writing executed by both parties hereto. This Agreement shall be governed by and construed in accordance with the laws of the State of
California without regard to conflict or choice of laws. Words in the singular number shall be held to include the plural and vice versa, unless the context otherwise requires. This Agreement may be
executed in counterparts, each of which shall be an original and all of which together shall be a single instrument. 

[signature
pages follow] 

24

 

        IN
WITNESS WHEREOF, BNPPLC and Specialty Laboratories have signed this Agreement Concerning Ground Lease to be effective as
of                        , 200    . 

BNP
PARIBAS LEASING CORPORATION,

a Delaware corporation 

By:

Name:

Title: 

	STATE OF	 	)	 	 
	COUNTY OF	 	)	 	ss.

        On                        ,
200    , before me                        , a Notary Public in and for the County and State aforesaid,
personally appeared                        , who is personally known
to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her
authorized capacity and that by his/her signature on such instrument the person, or the entity upon behalf of which the person acted, executed the instrument. 

WITNESS,
my hand and official seal. 

25

 

[Continuation
of signature pages to Agreement Concerning Ground Lease dated to be effective as of                        ,
200    .] 

Specialty
Laboratories, Inc.,

a California corporation 

By:

Name:

Title: 

	STATE OF	 	)	 	 
	COUNTY OF	 	)	 	ss.

        On                        ,
200    , before me                        , a Notary Public in and for the County and State aforesaid,
personally appeared                        , who is personally known
to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her
authorized capacity and that by his/her signature on such instrument the person, or the entity upon behalf of which the person acted, executed the instrument. 

WITNESS,
my hand and official seal. 

26

  

 
 

Annex A
  
    LEGAL DESCRIPTION    
  

        [DRAFTING NOTE: TO THE EXTENT THAT THE "LAND" COVERED BY THE GROUND LEASE CHANGES FROM TIME TO TIME AS PROVIDED THEREIN OR BECAUSE OF ADJUSTMENTS FOR
WHICH SPECIALTY LABORATORIES REQUESTS BNPPLC'S CONSENT OR APPROVAL AS PROVIDED IN THE LEASE, SO TOO WILL THE DESCRIPTION OF THE LAND BELOW CHANGE. ANY SUCH CHANGES WILL BE INCORPORATED INTO THE
DESCRIPTION BELOW AND THIS "DRAFTING NOTE" WILL BE DELETED BEFORE THE ASSIGNMENT TO WHICH THIS DESCRIPTION IS ATTACHED IS ACTUALLY EXECUTED AND DELIVERED.] 

27

  

 
 

Annex B
  
    Permitted Encumbrances    
  

        [DRAFTING NOTE: BEFORE THIS AGREEMENT IS ACTUALLY EXECUTED AND DELIVERED BY BNPPLC: ALL PERMITTED ENCUMBRANCES LISTED IN EXHIBIT B TO THE CLOSING
CERTIFICATE WILL BE SET OUT BELOW, IN ADDITION TO THE ITEMS ALREADY LISTED. ALSO, IF ANY ENCUMBRANCES (OTHER THAN "LIENS REMOVABLE BY BNPPLC") ARE IDENTIFIED IN ADDITION TO THOSE DESCRIBED BELOW OR IN
EXHIBIT B TO THE CLOSING CERTIFICATE, SUCH ADDITIONAL ENCUMBRANCES WILL BE ADDED TO THE LIST BELOW. AFTER SUCH ADJUSTMENTS ARE MADE, THIS "DRAFTING NOTE" WILL BE DELETED. THE ADDITIONAL ENCUMBRANCES
TO BE LISTED BELOW WOULD INCLUDE ANY NEW ENCUMBRANCES APPROVED BY BNPPLC AS "PERMITTED ENCUMBRANCES" UNDER THE LAND LEASE OR THE OTHER LEASE AGREEMENT FROM TIME TO TIME OR BECAUSE OF SPECIALTY
LABORATORIES' REQUEST FOR BNPPLC'S CONSENT OR APPROVAL TO AN ADJUSTMENT.] 

        This
conveyance is subject to all encumbrances not constituting a "Lien Removable by BNPPLC" (as defined in the Common Definitions and Provisions Agreement), including the following
matters to the extent the same are still valid and in force: 

        References
to "Official Records" shall mean the Official Records of Los Angeles County, California 

        The
leasehold and other interests in the Land hereby conveyed by Specialty Laboratories are conveyed subject to the following matters to the extent the same are still valid and in force: 

	1.
	Taxes
and assessments for the year 2001-2002 and subsequent years, which are not yet due and payable.

	2.
	An
acceptance form recorded December 23, 1982 as Instrument No. 82-1287917, Official Records.

	3.
	Covenants,
conditions and restrictions as set forth in document recorded February 18, 1983 as Instrument No. 83-192391, Official Records, as modified by
document recorded January 11, 1985 as Instrument No. 85-33709, Official Records, and as further modified by document recorded July 8, 1985, as Instrument
No. 85-781671, Official Records.

	4.
	Protective
conditions in document recorded June 27, 1985, as Instrument No. 85-748557, Official Records.

	5.
	Provisions
of the dedication statement on the Map of Tract No. 43736, recorded in Book 1076, Pages 38 to 41 inclusive of Maps, Official Records.

	6.
	Document
entitled "Memorandum of Repurchase and Right of First Refusal" dated December 6, 2001, executed by the Newhall Land and Farming Company and Specialty
Laboratories, Inc., recorded December 14, 2001 as Instrument No. 01-2394275, as subordinated by Subordination Agreement of even date herewith. 

28

  

 
 

Exhibit B-2
  
    Form of Assignment of Ground Lease and Improvements    
  

RECORDING REQUESTED BY

AND WHEN RECORDED MAIL TO:  

	NAME:	 	[Specialty Laboratories or the Applicable Purchaser]
	

ADDRESS:	
 	

 	
 	

 
	 	 	
	 	 
	ATTN:	 	 	 	 
	 	 	
	 	 
	CITY:	 	 	 	 
	 	 	
	 	 
	STATE:	 	 	 	 
	 	 	
	 	 
	Zip:	 	 	 	 
	 	 	
	 	 

MAIL TAX STATEMENTS TO:

	NAME:	 	[Specialty Laboratories or the Applicable Purchaser]
	

ADDRESS:	
 	

 	
 	

 
	 	 	
	 	 
	ATTN:	 	 	 	 
	 	 	
	 	 
	CITY:	 	 	 	 
	 	 	
	 	 
	STATE:	 	 	 	 
	 	 	
	 	 
	Zip:	 	 	 	 
	 	 	
	 	 

 
 

ASSIGNMENT OF GROUND LEASE AND IMPROVEMENTS
  (Covering Improvements and Leasehold Estate in Land)    

        BNP
PARIBAS LEASING CORPORATION, a Delaware corporation (hereinafter called "Grantor"), for and in consideration of the sum of Ten Dollars ($10.00) and other valuable consideration paid
to Grantor by [Specialty Laboratories or the Applicable Purchaser] (hereinafter called "Grantee"), the receipt and sufficiency of which are hereby acknowledged, does hereby
GRANT, SELL, CONVEY, ASSIGN and DELIVER to Grantee (1) the leasehold estate created by a Ground Lease from Specialty Laboratories to Grantor dated as of March 26, 2002, which covers the
land described in Annex A attached hereto and hereby made a part hereof, and (2) all other rights, titles and interests of Grantor in and to (a) such land, (b) the buildings and
other improvements situated on such land, (c) any fixtures and other property affixed thereto and (d) the adjacent streets, alleys and rights-of-way (all of the
property interests conveyed hereby being hereinafter collectively referred to as the "Property"); provided, however, this conveyance is made by Grantor and accepted by Grantee subject to the terms and
conditions of the aforementioned Ground Lease and to all zoning and other ordinances affecting the Property, all general or special assessments due and payable after the date hereof, all
encroachments, variations in area or in measurements, boundary line disputes, roadways and other matters not of record which would be disclosed by a current survey and inspection of the Property, and
the encumbrances listed in Annex B attached hereto and made a part hereof (collectively, the "Permitted Encumbrances"). 

        TO
HAVE AND TO HOLD the Property, together with all and singular the rights and appurtenances thereto belonging unto Grantee, its successors and assigns, forever, and Grantor does hereby
bind Grantor and Grantor's successors and assigns to warrant and forever defend all and 

29

 

singular the said premises unto Grantee, its successors and assigns against every person whomsoever lawfully claiming, or to claim the same, or any part thereof by, through or under Grantor, but not
otherwise; subject, however, to the Permitted Encumbrances. Except as expressly set forth in the preceding sentence, Grantor makes no warranty of title, express or implied. 

        Grantor makes no representations or warranties of any nature or kind, whether statutory, express or implied, with respect to environmental matters or the physical
condition of the Property, and Grantee, by acceptance of this Assignment, accepts the Property "AS IS," "WHERE
IS," "WITH ALL FAULTS" and without any such representation or warranty by Grantor as to environmental matters, the physical
condition of the Property, compliance with subdivision or platting requirements or construction of any improvements. Without limiting the generality of the foregoing, by
acceptance of this Assignment, Grantee hereby further acknowledges and agrees that warranties of merchantability and fitness for a particular purpose are excluded from the transaction contemplated by
this Assignment, as are any warranties arising from a course of dealing or usage of trade. 

        Grantee
hereby assumes the obligations (including any personal obligations) of Grantor, if any, created by or under, and agrees to be bound by the terms and conditions of, the Permitted
Encumbrances to the extent that the same concern or apply to the land or improvements conveyed by this Assignment. 

        IN
WITNESS WHEREOF, this Assignment is executed by Grantor and Grantee as of the    day of            ,
            . 

	 	 	BNP PARIBAS LEASING CORPORATION
	

 	
 	

By:	
 	

	

 	
 	

Name:	
 	

	

 	
 	

Title:	
 	

	

 	
 	

[SPECIALTY LABORATORIES OR APPLICABLE PURCHASER]
	

 	
 	

By:	
 	

	

 	
 	

Name:	
 	

	

 	
 	

Title:	
 	

30

 

	

STATE OF	
 	

	
 	

)	
 	

 	
 	

 
	 	 	 	 	)	 	SS	 	 
	COUNTY OF	 	
	 	)	 	 	 	 

        On                        before
me,            , personally appeared            and            ,
personally known to me (or proved to me on the basis of satisfactory evidence) to
be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the
person, or the entity upon behalf of which the persons acted, executed the instrument. 

        WITNESS
my hand and official seal. 

        Signature

	

STATE OF	
 	

	
 	

)	
 	

 	
 	

 
	 	 	 	 	)	 	SS	 	 
	COUNTY OF	 	
	 	)	 	 	 	 

        On                        before
me,            , personally appeared            and            ,
personally known to me (or proved to me on the basis of satisfactory evidence) to
be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the
person, or the entity upon behalf of which the persons acted, executed the instrument. 

        WITNESS
my hand and official seal. 

        Signature

31

  

 
 

Annex A
  
    LEGAL DESCRIPTION    
  

        [DRAFTING NOTE: TO THE EXTENT THAT THE "LAND" COVERED BY THE GROUND LEASE CHANGES FROM TIME TO TIME AS PROVIDED THEREIN OR
BECAUSE OF ADJUSTMENTS FOR WHICH SPECIALTY LABORATORIES REQUESTS BNPPLC'S CONSENT OR APPROVAL AS PROVIDED IN THE LEASE, SO TOO WILL THE DESCRIPTION OF THE LAND BELOW CHANGE. ANY SUCH CHANGES WILL BE
INCORPORATED INTO THE DESCRIPTION BELOW AND THIS "DRAFTING NOTE" WILL BE DELETED BEFORE THE ASSIGNMENT TO WHICH THIS DESCRIPTION IS ATTACHED IS ACTUALLY EXECUTED AND
DELIVERED.]

32

  

 
 

Annex B
  
    Permitted Encumbrances    
  

        [DRAFTING NOTE: BEFORE THIS ASSIGNMENT IS ACTUALLY EXECUTED AND DELIVERED BY BNPPLC: ALL PERMITTED ENCUMBRANCES LISTED IN
EXHIBIT B TO THE CLOSING CERTIFICATE WILL BE SET OUT BELOW, IN ADDITION TO THE ITEMS ALREADY LISTED. ALSO, IF ANY ENCUMBRANCES (OTHER THAN "LIENS REMOVABLE BY BNPPLC") ARE IDENTIFIED IN ADDITION TO
THOSE DESCRIBED BELOW OR IN EXHIBIT B TO THE CLOSING CERTIFICATE, SUCH ADDITIONAL ENCUMBRANCES WILL BE ADDED TO THE LIST BELOW. AFTER SUCH ADJUSTMENTS ARE MADE, THIS "DRAFTING NOTE" WILL BE DELETED.
THE ADDITIONAL ENCUMBRANCES TO BE LISTED BELOW WOULD INCLUDE ANY NEW ENCUMBRANCES APPROVED BY BNPPLC AS "PERMITTED ENCUMBRANCES" UNDER THE LAND LEASE OR THE OTHER LEASE AGREEMENT FROM TIME TO TIME OR
BECAUSE OF SPECIALTY LABORATORIES' REQUEST FOR BNPPLC'S CONSENT OR APPROVAL TO AN ADJUSTMENT.]

        This
conveyance is subject to all encumbrances not constituting a "Lien Removable by BNPPLC" (as defined in the Common Definitions and Provisions Agreement incorporated by reference into
the Lease Agreement referenced in the last item of the list below), including the following matters to the extent the same are still valid and in force: 

        References
to "Official Records" shall mean the Official Records of Los Angeles County, California 

        The
leasehold and other interests in the Land hereby conveyed by Specialty Laboratories are conveyed subject to the following matters to the extent the same are still valid and in force: 

	1.
	Taxes
and assessments for the year 2001-2002 and subsequent years, which are not yet due and payable.

	2.
	An
acceptance form recorded December 23, 1982 as Instrument No. 82-1287917, Official Records.

	3.
	Covenants,
conditions and restrictions as set forth in document recorded February 18, 1983 as Instrument No. 83-192391, Official Records, as modified by
document recorded January 11, 1985 as Instrument No. 85-33709, Official Records, and as further modified by document recorded July 8, 1985, as Instrument
No. 85-781671, Official Records.

	4.
	Protective
conditions in document recorded June 27, 1985, as Instrument No. 85-748557, Official Records.

	5.
	Provisions
of the dedication statement on the Map of Tract No. 43736, recorded in Book 1076, Pages 38 to 41 inclusive of Maps, Official Records.

	6.
	Document
entitled "Memorandum of Repurchase and Right of First Refusal" dated December 6, 2001, executed by the Newhall Land and Farming Company and Specialty
Laboratories, Inc., recorded December 14, 2001 as Instrument No. 01-2394275, as subordinated by Subordination Agreement of even date herewith. 

33

  

 
 

Exhibit B-3
  
    BILL OF SALE AND ASSIGNMENT    
  

        Reference is made to: (1) that certain Purchase Agreement between BNP Paribas Leasing Corporation
("Assignor") and Specialty Laboratories, Inc., dated as of March 26, 2002, (the "Purchase
Agreement"), and (2) that certain Lease Agreement between Assignor, as landlord, and Specialty Laboratories, Inc., as tenant, dated as of March 26, 2002
(the "Lease"). (Capitalized terms used and not otherwise defined in this document are intended to have the meanings assigned to them in the Common
Definitions and Provisions Agreement incorporated by reference into both the Purchase Agreement and Lease.) 

        As
contemplated by the Purchase Agreement, Assignor hereby sells, transfers and assigns unto [SPECIALTY LABORATORIES OR THE APPLICABLE PURCHASER, AS
THE CASE MAY BE], a                        ("Assignee"),
all of Assignor's right, title and interest in and to the
following property, if any, to the extent such property is assignable: 

        (a)  the
Lease; 

        (b)  any
pending or future award made because of any condemnation affecting the Property or because of any conveyance to be made in lieu thereof, and any unpaid award for
damage to the Property and any unpaid proceeds of insurance or claim or cause of action for damage, loss or injury to the Property; and 

        (c)  all
other property included within the definition of "Property" as set forth in the Purchase Agreement, including but not limited to any of the following transferred to
Assignor by the tenant pursuant to Paragraph 6 of the Lease or otherwise acquired by Assignor, at the time of the execution and delivery of the
Lease and Purchase Agreement or thereafter, by reason of Assignor's status as the owner of any interest in the Property: (1) any goods, equipment, furnishings, furniture, chattels and tangible
personal property of whatever nature that are located on the Property and all renewals or replacements of or substitutions for any of the foregoing; (ii) the rights of Assignor, existing at the
time of the execution of the Lease and Purchase Agreement or thereafter arising, under Permitted Encumbrances or Development Documents (both as defined in the Lease); and (iii) any general
intangibles, other permits, licenses, franchises, certificates, and other rights and privileges related to the
Property that Assignee would have acquired if Assignee had itself acquired a leasehold estate in the land included in the Property as the lessee under the Ground Lease. 

Provided,
however, excluded from this conveyance and reserved to Assignor are any rights or privileges of Assignor under the following ("Excluded
Rights"): (1) the indemnities set forth in the Lease and the Ground Lease, whether such rights are presently known or unknown, including rights of the Assignor to be
indemnified against environmental claims of third parties as provided in the Lease which may not presently be known, (2) provisions in the Lease that establish the right of Assignor to recover
any accrued unpaid rent under the Lease which may be outstanding as of the date hereof, (3) agreements between Assignor and "BNPPLC's Parent" or any "Participant," both as defined in the Lease,
or any modification or extension thereof, (4) the right to retain Escrowed Proceeds, if any, that consist of condemnation or insurance proceeds resulting from a Pre-lease Force
Majeure Event, (5) any right to receive future payments of any such condemnation or insurance proceeds, or (6) any other instrument being delivered to Assignor contemporaneously herewith
pursuant to the Purchase Agreement. To the extent that this conveyance does include any rights to receive future payments under the Lease or future condemnation or insurance proceeds, such rights
("Included Rights") shall be subordinate to Assignor's Excluded Rights, and Assignee hereby waives any rights to enforce Included Rights until such time
as Assignor has received all payments to which it remains entitled by reason of Excluded Rights. If any amount shall be paid to Assignee on account of any Included Rights at any time before Assignor
has received all payments to which it is entitled because of Excluded Rights, such amount 

34

 

shall be held in trust by Assignee for the benefit of Assignor, shall be segregated from the other funds of Assignee and shall forthwith be paid over to Assignor to be held by Assignor as collateral
for, or then or at any time thereafter applied in whole or in part by Assignor against, the payments due to Assignor because of Excluded Rights, whether matured or unmatured, in such order as Assignor
shall elect. 

        Assignor
does for itself and its successors covenant and agree to warrant and defend the title to the property assigned herein against the just and lawful claims and demands of any
person claiming under or through a Lien Removable by BNPPLC, but not otherwise. 

        Assignee
hereby assumes and agrees to keep, perform and fulfill Assignor's obligations, if any, relating to any permits or contracts, under which Assignor has rights being assigned
herein. 

        IN
WITNESS WHEREOF, this Bill of Sale and Assignment is executed by Assignor and Assignee as of the    day of            ,
            . 

	 	 	BNP PARIBAS LEASING CORPORATION
	

 	
 	

By:	
 	

 
	 	 	 	 	

	 	 	Name:	 	 
	 	 	 	 	

	 	 	Title:	 	 
	 	 	 	 	

	 	 	[SPECIALTY LABORATORIES OR APPLICABLE PURCHASER]
	

 	
 	

By:	
 	

 
	 	 	 	 	

	 	 	Name:	 	 
	 	 	 	 	

	 	 	Title:	 	 
	 	 	 	 	

35

 

	

STATE OF	
 	

	
 	

)	
 	

 	
 	

 
	 	 	 	 	)	 	SS	 	 
	COUNTY OF	 	
	 	)	 	 	 	 

        On                        before
me,            , personally appeared            and            ,
personally known to me (or proved to me on the basis of satisfactory evidence) to
be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the
person, or the entity upon behalf of which the persons acted, executed the instrument. 

        WITNESS
my hand and official seal. 

        Signature

	

STATE OF	
 	

	
 	

)	
 	

 	
 	

 
	 	 	 	 	)	 	SS	 	 
	COUNTY OF	 	
	 	)	 	 	 	 

        On                        before
me,            , personally appeared            and            ,
personally known to me (or proved to me on the basis of satisfactory evidence) to
be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the
person, or the entity upon behalf of which the persons acted, executed the instrument. 

        WITNESS
my hand and official seal. 

        Signature

36

  

 
 

Exhibit B-4
  
    ACKNOWLEDGMENT OF DISCLAIMER OF REPRESENTATIONS AND WARRANTIES    
  

        THIS ACKNOWLEDGMENT OF DISCLAIMER OF REPRESENTATIONS AND WARRANTIES (this "Certificate") is made as of
                        ,            , by [Specialty Laboratories or
the Applicable Purchaser, as the case may be], a                        
("Grantee"). 

        Contemporaneously
with the execution of this Certificate, BNP Paribas Leasing Corporation, a Delaware corporation ("BNPPLC"), is executing
and delivering to Grantee (1) an Assignment of Ground Lease and Improvements, and (2) a Bill of Sale and Assignment (the foregoing documents and any other documents to be executed in
connection therewith are herein called the "Conveyancing Documents" and any of the properties, rights or other matters assigned, transferred or conveyed
pursuant thereto are herein collectively called the "Subject Property"). 

        Notwithstanding any provision contained in the Conveyancing Documents to the contrary, Grantee acknowledges that BNPPLC makes no representations or warranties of
any nature or kind, whether statutory, express or implied, with respect to environmental matters or the physical condition of the Subject Property, and Grantee, by acceptance of the Conveyancing
Documents, accepts the Subject Property "AS IS," "WHERE IS," "WITH ALL
FAULTS" and without any such representation or warranty by Grantor as to environmental matters, the physical condition of the Subject Property, compliance with subdivision or
platting requirements or construction of any improvements. Without limiting the generality of the foregoing, Grantee hereby further acknowledges and agrees that warranties of
merchantability and fitness for a particular purpose are excluded from the transaction contemplated by the Conveyancing Documents, as are any warranties arising from a course of dealing or usage of
trade. Grantee hereby assumes all risk and liability (and agrees that BNPPLC shall not be liable for any special, direct, indirect, consequential, or other damages) resulting or arising from or
relating to the ownership, use, condition, location, maintenance, repair, or operation of the Subject Property, except for damages proximately caused by (and attributed by any applicable principles of
comparative fault to) the Established Misconduct of BNPPLC. As used in the preceding sentence, "Established Misconduct" is intended to have, and be
limited to, the meaning given to it in the Common Definitions and Provisions Agreement incorporated by reference into the Purchase Agreement between BNPPLC and Specialty Laboratories, Inc.
dated as of March 26, 2002, pursuant to which Purchase Agreement BNPPLC is delivering the Conveyancing Documents. 

        The
provisions of this Certificate shall be binding on Grantee, its successors and assigns and any other party claiming through Grantee. Grantee hereby acknowledges that BNPPLC is
entitled to rely and is relying on this Certificate. 

        IN
WITNESS WHEREOF, this Certificate is executed by Grantee as of the    day of            ,            .

	 	 	[SPECIALTY LABORATORIES OR APPLICABLE PURCHASER]
	

 	
 	

By:	
 	

 
	 	 	 	 	

	 	 	Name:	 	 
	 	 	 	 	

	 	 	Title:	 	 
	 	 	 	 	

37

  

 
 

Exhibit C
  
    SECRETARY'S CERTIFICATE    
  

        The undersigned, [Secretary or Assistant Secretary] of BNP Paribas Leasing Corporation, a Delaware corporation (the "Corporation"), hereby
certifies as follows: 

        1.    That
he is the duly, elected, qualified and acting Secretary [or Assistant Secretary] of the Corporation and has custody of the corporate records,
minutes and corporate seal. 

        2.    That
the following named persons have been properly designated, elected and assigned to the office in the Corporation as indicated below; that such persons hold such
office at this time and that the specimen signature appearing beside the name of such officer is his or her true and correct signature. 

[The following blanks must be completed with the names and signatures of the officers who will be signing the Assignment of Ground Lease and Improvements and other
Sale Closing Documents on behalf of the Corporation.]

	Name
 
	 	Title
	 	Signature
	 	 

	

 	
 	

	
 	

	
 	

 
	

 	
 	

	
 	

	
 	

 

        3.    That
the resolutions attached hereto and made a part hereof were duly adopted by the Board of Directors of the Corporation in accordance with the Corporation's Articles
of Incorporation and Bylaws. Such resolutions have not been amended, modified or rescinded and remain in full force and effect. 

        IN
WITNESS WHEREOF, I have hereunto signed my name and affixed the seal of the Corporation on this    , day
of                        ,        . 

[signature
and title] 

38

 
 
 

CORPORATE RESOLUTIONS OF
  BNP PARIBAS LEASING CORPORATION    
  

        WHEREAS, pursuant to that certain Purchase Agreement (herein called the "Purchase Agreement") dated as of March 26, 2002, by and between BNP Paribas
Leasing Corporation (the "Corporation") and [Specialty Laboratories or the Applicable Purchaser as the case may be]
("Purchaser"), the Corporation agreed to sell and Purchaser agreed to purchase or cause the Applicable Purchaser (as defined in the Purchase Agreement) to purchase the Corporation's interest in the
property (the "Property") located in Santa Clarita, California, more particularly described therein. 

        NOW
THEREFORE, BE IT RESOLVED, that the Board of Directors of the Corporation, in its best business judgment, deems it in the best interest of the Corporation and its shareholders that
the Corporation convey the Property to Purchaser or the Applicable Purchaser pursuant to and in accordance with the terms of the Purchase Agreement. 

        RESOLVED
FURTHER, that the proper officers of the Corporation, and each of them, are hereby authorized and directed in the name and on behalf of the Corporation to cause the Corporation
to fulfill its obligations under the Purchase Agreement. 

        RESOLVED
FURTHER, that the proper officers of the Corporation, and each of them, are hereby authorized and directed to take or cause to be taken any and all actions and to prepare or
cause to be prepared and to execute and deliver any and all deeds, assignments and other documents, instruments and agreements that shall be necessary, advisable or appropriate, in such officer's sole
and absolute discretion, to carry out the intent and to accomplish the purposes of the foregoing resolutions. 

39

  

 
 

Exhibit D
  
    FIRPTA STATEMENT    
  

        Section 1445 of the Internal Revenue Code of 1986, as amended, provides that a transferee of a U.S. real property interest must withhold tax if the
transferor is a foreign person. Sections 18805, 18815 and 26131 of the California Revenue and Taxation Code, as amended, provide that a transferee of a California real property interest must withhold
income tax if the transferor is a nonresident seller. 

        To
inform [Specialty Laboratories or the Applicable Purchaser] (the "Transferee") that withholding of tax is not
required upon the disposition of a California real property interest by transferor, BNP Paribas Leasing Corporation (the "Seller"), the undersigned hereby certifies the following on behalf of the
Seller: 

        1.    The
Seller is not a foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax
Regulations); 

        2.    The
United States employer identification number for the Seller is                        ; 

        3.    The
office address of the Seller
is                                         
                               .
 

[Note: BNPPLC MUST INCLUDE EITHER ONE, BUT ONLY ONE, OF THE FOLLOWING REPRESENTATIONS IN THE FIRPTA STATEMENT, BUT IF THE ONE INCLUDED STATES THAT BNPPLC IS DEEMED
EXEMPT FROM CALIFORNIA INCOME AND FRANCHISE TAX, THEN BNPPLC MUST ALSO ATTACH A WITHHOLDING CERTIFICATE FROM THE CALIFORNIA FRANCHISE TAX BOARD EVIDENCING THE SAME:

        4.    The
Seller is qualified to do business in California. 

OR

        4.    The
Seller is deemed to be exempt from the withholding requirement of California Revenue and Taxation Code Section 26131(e), as evidenced by the withholding
certificate from the California Franchise Tax Board which is attached.] 

        The
Seller understands that this certification may be disclosed to the Internal Revenue Service and/or to any applicable state governmental authorities by the Transferee and that any
false statement contained herein could be punished by fine, imprisonment, or both. 

        The
Seller understands that the Transferee is relying on this affidavit in determining whether withholding is required upon said transfer. 

        Under
penalties of perjury I declare that I have examined this certification and to the best of my knowledge and belief it is true, correct and complete, and I further declare that I
have authority to sign this document on behalf of the Seller. 

        Dated:                        ,
        . 

	 	 	By:
	 	 	Name:
	 	 	Title:

40

  

 
 

Exhibit E
  
    GRANT OF REPURCHASE OPTION AND RESTRICTIVE COVENANTS AGREEMENT    
  

        THIS GRANT OF REPURCHASE OPTION AND RESTRICTIVE COVENANTS AGREEMENT (this "Agreement") is made as of
                        ,            , by Specialty Laboratories,
 Inc., a California corporation ("Specialty Laboratories"), whose address is
                        , and [THE APPLICABLE PURCHASER] (the "Applicable Purchaser"), whose address is                        , in favor of BNP
PARIBAS LEASING CORPORATION, a Delaware corporation ("BNPPLC"). 

 
 

RECITALS    
  

        BNPPLC and Specialty Laboratories entered into a Purchase Agreement dated as of March 26, 2002, (the "Purchase
Agreement") concerning the leasehold estate under a ground lease covering the land described in Annex 1 attached hereto and made
a part hereof and other property described therein. (Capitalized terms used and not otherwise defined in this document are intended to have the meanings assigned to them in the
Common Definitions and Provisions Agreement incorporated by reference into the Purchase Agreement.) 

        Pursuant
to the Purchase Agreement, BNPPLC is, contemporaneously with the execution of this Agreement, executing and delivering to the Applicable Purchaser (1) an Assignment of
Ground Lease and Improvements and (2) a Bill of Sale and Assignment (the foregoing documents and any other documents to be executed in connection therewith are herein called the
"Conveyancing Documents" and any of the properties, rights or other matters assigned, transferred or conveyed pursuant thereto are herein collectively
called the "Subject Property"). 

        As
provided in the Purchase Agreement, BNPPLC is entitled to require this Agreement from Specialty Laboratories and the Applicable Purchaser to induce BNPPLC to execute the Conveyancing
Documents and in consideration thereof. 

 
 

COVENANTS AND GRANTS    
  

        NOW, THEREFORE, the Applicable Purchaser does hereby grant to BNPPLC an option to repurchase the Subject Property (the "Repurchase
Option") for a price and on the terms and conditions hereinafter set forth, and on the condition that Specialty Laboratories or the Applicable Purchaser shall breach either of
the following covenants (a "Breach"), both of which covenants are made jointly and severally by Specialty Laboratories and the Applicable Purchaser as
covenants intended to run with the land described in Annex 1 for the benefit of BNPPLC and its successors and assigns: 

        1.    No Other Payments to Specialty Laboratories.    Except for the payments (if any) that BNPPLC must pay to
Specialty Laboratories as provided in the Purchase Agreement, neither Specialty Laboratories nor any Affiliate of Specialty Laboratories will receive or accept any payment or other thing of value,
directly or indirectly, from the Applicable Purchaser or any Affiliate of the Applicable Purchaser or any successor or assign of the Applicable Purchaser because of or in connection with the sale of
the Subject Property from BNPPLC to the Applicable Purchaser pursuant to the Purchase Agreement. 

        2.    10 Year Restriction Against Specialty Laboratories' Involvement With the Property.    Neither Specialty
Laboratories nor any Affiliate of Specialty Laboratories shall acquire, occupy or use, directly or indirectly, the Subject Property for a period of ten years after the date hereof. 

        To
exercise the Repurchase Option, BNPPLC shall deliver notice thereof to Specialty Laboratories and the Applicable Purchaser at the addresses indicated above no later than the earlier
of (1) one year 

41

 

after BNPPLC is itself notified of a Breach, or (2) the tenth anniversary of the date of this Agreement. Within thirty days after receipt of any such notice, Specialty Laboratories and the
Applicable Purchaser must deliver to BNPPLC an assignment of ground lease and bill of sale that is sufficient to reconvey the Subject Property back to BNPPLC, with warranties of title by Specialty
Laboratories and the Applicable Purchaser against any and all claims other than the Permitted Encumbrances. Further, if the Ground Lease is no longer then in effect, Specialty Laboratories must
reinstate the Ground Lease in favor of BNPPLC. (But in no event will BNPPLC be responsible for any breach of, or required to cure any default by the lessee under, the Ground Lease that first occurred
after the date hereof and prior to any such conveyance back to BNPPLC.) Contemporaneously with the reconveyance back to BNPPLC, Specialty Laboratories and the Applicable Purchaser shall cause
possession of the Subject Property to be delivered to BNPPLC, with the Subject Property in good condition and in compliance with Applicable Laws, unoccupied and free from any encumbrances other than
Permitted Encumbrances. 

        The
price required for the Subject Property if BNPPLC exercises the Repurchase Option shall be the lesser of (1) the net cash sales proceeds remaining after the payment of all
sales costs that BNPPLC is receiving and entitled to retain under the Purchase Agreement because of its sale of the Subject Property to the Applicable Purchaser, or (2) the then fair market
value of the Subject Property, as
determined in accordance with the appraisal procedures set forth in Annex 2 attached hereto. If for any reason the price has not been determined as of
the date upon which a reconveyance to BNPPLC is required by this Agreement, such date will be deferred until the price is determined. 

        Any
reconveyance of the Subject Property back to BNPPLC pursuant to this Agreement shall cut off and terminate any interest in the Subject Property claimed by, through or under the
Applicable Purchaser (such as, but not limited to, any judgment liens established against the Subject Property because of a judgment rendered against the Applicable Purchaser and any leasehold or
other interests conveyed by the Applicable Purchaser in the ordinary course of its business). Anyone accepting or taking any interest in the Property through or under the Applicable Purchaser after
the date of this Agreement shall acquire such interest subject to the Repurchase Option. Further, BNPPLC shall be entitled to make any payment of the purchase price required by this Agreement for the
purchase of the Subject Property directly to the Applicable Purchaser notwithstanding any prior conveyance or assignment by the Applicable Purchaser, voluntary or otherwise, of any right or interest
in the Subject Property, and BNPPLC shall not be responsible for the proper distribution or application of any such payments by the Applicable Purchaser; and any such payment to the Applicable
Purchaser shall discharge the obligation of BNPPLC to cause such payment to all Persons claiming an interest in such payment. 

        Notwithstanding
any exercise by BNPPLC of the Repurchase Option, BNPPLC's obligation to close the repurchase of the Subject Property shall be subject to the following terms and
conditions, all of which are for the benefit of BNPPLC: (1) BNPPLC shall have been furnished with evidence satisfactory to BNPPLC that title will be conveyed to it as required by the preceding
subparagraph; (2) nothing shall have occurred or been discovered after BNPPLC exercised the Repurchase Option that could significantly and adversely affect title to the Subject Property or
BNPPLC's use thereof, (3) all of the representations of Specialty Laboratories in the Ground Lease shall continue to be true as if made effective on the date of the closing and, with respect to
any such representations which may be limited to the knowledge of Specialty Laboratories or any of Specialty Laboratories' representatives, would continue to be true on the date of the closing if all
relevant facts and circumstances were known to Specialty Laboratories and such representatives, (4) BNPPLC shall find the price for the Subject Property to be acceptable after it is determined
as provided in this Agreement, (5) BNPPLC shall have been tendered the deed and other documents which are described in this Agreement as documents to be delivered to BNPPLC at the closing of
BNPPLC's repurchase; and (6) Specialty Laboratories and the Applicable Purchaser shall have complied with the all the terms and condition of this Agreement. 

42

 

        BNPPLC
may deduct from the purchase price required of it by this Agreement the full amount of any transfer taxes required because of the reconveyance of the Subject Property back to
BNPPLC. Further, BNPPLC will be entitled to deduct any withholding tax from the price required by this Agreement if BNPPLC is not excused from such withholding because of the delivery to it of an
appropriate certificate of nonforeign status as needed to comply with the provisions of the U.S. Foreign Investors Real Property Tax Act (FIRPTA) or any comparable federal, state or local law in
effect at the time. 

        At
the closing or any repurchase of the Subject Property by BNPPLC hereunder, Specialty Laboratories and the Applicable Purchaser will pay for and deliver to BNPPLC an owner's title
insurance policy in the full amount of the purchase price payable by BNPPLC, issued by a title insurance company designated by BNPPLC (or written confirmation from the title company that it is then
prepared to issue such a policy), and subject only to standard printed exceptions which the title insurance company refuses to delete or modify in a manner acceptable to BNPPLC and to Permitted
Encumbrances. 

        To
secure the obligations of the Applicable Purchaser to reconvey the Subject Property if BNPPLC exercises the Repurchase Option and to pay any damages to BNPPLC caused by a breach of
Specialty Laboratories' or the Applicable Purchaser's obligations hereunder, including any such breach caused by a rejection or termination of this Agreement in any bankruptcy or insolvency proceeding
instituted by or against Specialty Laboratories or the Applicable Purchaser, as debtor, the Applicable Purchaser does hereby grant to BNPPLC (and BNPPLC does hereby reserve from the conveyances
provided in the Conveyancing Documents) a lien and security interest against all rights, title and interests conveyed by BNPPLC under the Conveyancing Documents. 

        The
terms, provisions, covenants and conditions hereof shall be binding upon Specialty Laboratories and the Applicable Purchaser and their respective successors and assigns with respect
to the Subject Property and shall inure to the benefit of BNPPLC and all transferees, mortgagees, successors and assignees of BNPPLC with respect to the Subject Property. It is understood that BNPPLC
may transfer the Repurchase Option and other rights and interests granted to it or reserved by it herein, in whole or in part, by any instrument recorded in the real property records of the county in
which the Subject Property is located. 

        IN
WITNESS WHEREOF, the undersigned parties have executed this instrument as of                        ,
            . 

	 	 	Specialty Laboratories:
	

 	
 	

Specialty Laboratories, Inc., a California corporation
	

 	
 	

By:	
 	

	

 	
 	

Its:	
 	

	

 	
 	
APPLICABLE PURCHASER:
	

 	
 	

[the Applicable Purchaser], a
	

 	
 	

By:	
 	

	

 	
 	

Its:	
 	

43

 

	

STATE OF	
 	

	
 	

)	
 	

 	
 	

 
	 	 	 	 	)	 	 	 	 
	COUNTY OF	 	
	 	)	 	 	 	 

        On                        before
me,            , personally appeared            and            ,
personally known to me (or proved to me on the basis of satisfactory evidence) to
be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the
person, or the entity upon behalf of which the persons acted, executed the instrument. 

	 	 	Notary Public, State of	 	 
	 	 	 	 	
 (printed name)

My commission expires: 

	

STATE OF	
 	

	
 	

)	
 	

 	
 	

 
	 	 	 	 	)	 	 	 	 
	COUNTY OF	 	
	 	)	 	 	 	 

        On                        before
me,            , personally appeared            and            ,
personally known to me (or proved to me on the basis of satisfactory evidence) to
be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the
person, or the entity upon behalf of which the persons acted, executed the instrument. 

	 	 	Notary Public, State of	 	 
	 	 	 	 	
 (printed name)

My commission expires: 

44

  

 
 

Annex 1
  
    LEGAL DESCRIPTION    
  

        [DRAFTING NOTE: TO THE EXTENT THAT THE "LAND" COVERED BY THE GROUND LEASE
CHANGES FROM TIME TO TIME BECAUSE OF ADJUSTMENTS FOR WHICH SPECIALTY LABORATORIES REQUESTS BNPPLC'S CONSENT OR APPROVAL, SO TOO WILL THE DESCRIPTION OF THE LAND BELOW CHANGE. ANY SUCH CHANGES WILL BE
INCORPORATED INTO THE DESCRIPTION BELOW AND THIS "DRAFTING NOTE" WILL BE DELETED BEFORE THE DOCUMENT TO WHICH THIS DESCRIPTION IS ATTACHED IS ACTUALLY EXECUTED AND
DELIVERED.]

45

  

 
 

Annex 2
  
    APPRAISAL PROCEDURES    
  

        If the Applicable Purchaser and BNPPLC do not otherwise agree upon the amount of the fair market value of the Subject Property as required to establish the price
to be paid by BNPPLC for the Subject Property following BNPPLC's exercise of the Repurchase Option, the fair market value shall be determined in accordance with the following procedure: 

        1.    The
Applicable Purchaser and BNPPLC shall each appoint a real estate appraiser who is familiar with properties in the vicinity of the Subject Property and who has not
previously acted for either party. Each party will make the appointment no later than ten days after receipt of notice from the other party that the appraisal process described in this Annex has been
invoked. The agreement of the two appraisers as to the Option Price will be binding upon the Applicable Purchaser and BNPPLC. If the two appraisers cannot agree upon fair market value within ten days
following their appointment, they shall within another ten days agree upon a third real estate appraiser. Immediately thereafter, each of the first two appraisers will submit his best estimate of the
fair market value of the Subject Property (together with a written report supporting such estimate) to the third appraiser and the third appraiser will choose between the two estimates. The estimate
of fair market value chosen by the third appraiser as the closest to the actual fair market value will be binding upon the Applicable Purchaser and BNPPLC. Notification in writing of fair market value
shall be made to the Applicable Purchaser and BNPPLC within fifteen days following the selection of the third appraiser. 

        2.    If
appraisers must be selected under the procedure set out above and either BNPPLC or the Applicable Purchaser fails to appoint an appraiser or fails to notify the other
party of such appointment within fifteen days after receipt of notice that the prescribed time for appointing the appraisers has passed, then the other party's appraiser will determine fair market
value. All appraisers selected for the appraisal process set out in this Annex will be disinterested, reputable, qualified real estate appraisers with the designation of MAI or equivalent and with at
least 5 years experience in appraising properties comparable to the Subject Property. 

        3.    If
a third appraiser must be chosen under the procedure set out above, he will be chosen on the basis of objectivity and competence, not on the basis of his relationship
with the other appraisers or the parties to this Agreement, and the first two appraisers will be so advised. Although the first two appraisers will be instructed to attempt in good faith to agree upon
the third appraiser, if for any reason they cannot agree within the prescribed time, either the Applicable Purchaser and BNPPLC
may require the first two appraisers to immediately submit its top choice for the third appraiser to JAMS/ENDISPUTE in Los Angeles, California, who will have complete discretion to select the most
objective and competent third appraiser from between the choices of each of the first two appraisers, and will do so within ten Business Days after such choices are submitted for decision. 

        4.    Either
the Applicable Purchaser or BNPPLC may notify the appraiser selected by the other party to demand the submission of an estimate of Option Price or a choice of a
third appraiser as required under the procedure described above; and if the submission of such an estimate or choice is required but the other party's appraiser fails to comply with the demand within
fifteen days after receipt of such notice, then fair market value or choice of the third appraiser, as the case may be, selected by the other appraiser (i.e., the notifying party's appraiser) will be
binding upon the Applicable Purchaser and BNPPLC. 

        5.    The
Applicable Purchaser bear the expenses of all appraisers involved in the determination of fair market value as provided in this Annex. 

46

  

 
 

Exhibit F
  
    Notice of Election to Terminate the Supplemental Payment Obligation
  and Irrevocable Release and Waiver of the Right to Purchase    
  

        [Date] 

BNP
Paribas Leasing Corporation

12201 Merit Drive

Suite 860

Dallas, Texas 75251

Attention: Lloyd G. Cox 

        Re:
Purchase Agreement dated as of March 26, 2002 (the "Purchase Agreement"), between Specialty Laboratories, Inc.
("Specialty Laboratories") and BNP Paribas Leasing Corporation ("BNPPLC") 

        Gentlemen: 

        Capitalized
terms used in this letter are intended to have the meanings assigned to them in the Purchase Agreement referenced above. This letter shall constitute a notice, given before
the Completion Date pursuant to subparagraph 5.(B) of the Purchase Agreement. As provided in that subparagraph, Specialty Laboratories irrevocably elects to terminate the Supplemental Payment
Obligation effective immediately, subject only to the conditions described below. In addition, Specialty Laboratories irrevocably waives and releases its rights to purchase or cause an Affiliate of
Specialty Laboratories to purchase the Property granted to it by the Purchase Agreement. Because of (but without limiting) such waiver and release, the Purchase Option is terminated and are all rights
of Specialty Laboratories under subparagraph 2.(A) of the Purchase Agreement. 

        Specialty
Laboratories acknowledges that even if no prior 97-10/Event has occurred, the delivery of this notice is in and of itself a 97-10/Event under and as
defined in the Construction Management
Agreement. Therefore, after receipt of this notice BNPPLC will have the rights to demand and receive 97-10/Prepayments on and subject to the terms and conditions of
Paragraph 9 of the Construction Management Agreement.

        Specialty
Laboratories also acknowledges that its right to terminate the Supplemental Payment Obligation is subject to the condition precedent that (x) Specialty Laboratories
shall have given Notice of Specialty Laboratories' Intent to Terminate as provided in the Construction Management Agreement, (y) BNPPLC shall have given any FOCB Notice as provided in the
Construction Management Agreement, or (z) BNPPLC shall have given notice of its election to accelerate the Designated Sale Date as provided in clause (3) of the definition Designated
Sale Date in the Common Definitions and Provisions Agreement. Accordingly, if none of the notices described in the preceding sentence have been given, the Supplemental Payment Obligation shall not
terminate by reason of this notice. 

        Finally,
Specialty Laboratories acknowledges that because the delivery of this notice constitutes a 97-10/Event, BNPPLC will have the right at any time for any reason or no
reason to terminate the Lease by notice to Specialty Laboratories. 

	 	 	Specialty Laboratories, Inc.
	

 	
 	

By:	
 	

 
	 	 	Name:	 	 
	 	 	Title:	 	 

[cc
all Participants] 

47

QuickLinks

TABLE OF CONTENTS

Exhibits and Schedules

PURCHASE AGREEMENT

RECITALS

AGREEMENTS

Exhibit A LEGAL DESCRIPTION

Exhibit B Requirements Re: Form of Assignment or Termination of Ground Lease

Exhibit B-1 Form of Assignment of Ground Lease and Improvements

AGREEMENT

Annex A LEGAL DESCRIPTION

Annex B Permitted Encumbrances

Exhibit B-2 Form of Assignment of Ground Lease and Improvements

ASSIGNMENT OF GROUND LEASE AND IMPROVEMENTS (Covering Improvements and Leasehold Estate in Land)

Annex A LEGAL DESCRIPTION

Annex B Permitted Encumbrances

Exhibit B-3 BILL OF SALE AND ASSIGNMENT

Exhibit B-4 ACKNOWLEDGMENT OF DISCLAIMER OF REPRESENTATIONS AND WARRANTIES

Exhibit C SECRETARY'S CERTIFICATE

CORPORATE RESOLUTIONS OF BNP PARIBAS LEASING CORPORATION

Exhibit D FIRPTA STATEMENT

Exhibit E GRANT OF REPURCHASE OPTION AND RESTRICTIVE COVENANTS AGREEMENT

RECITALS

COVENANTS AND GRANTS

Annex 1 LEGAL DESCRIPTION

Annex 2 APPRAISAL PROCEDURES

Exhibit F Notice of Election to Terminate the Supplemental Payment Obligation and Irrevocable Release and Waiver of the Right to Purchase

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