Document:

EXHIBIT
10.39

 

AGREEMENT FOR SALE AND LEASEBACK

 

 

By and Between

 

 

SPECIALTY LABORATORIES, INC.

a California corporation,

 

as Seller

 

 

and

 

 

LEXINGTON CORPORATE PROPERTIES TRUST

a Maryland statutory

real estate investment
trust,

 

as Buyer

 

 

February 11, 2004

 

 

27027 Tourney Road

Santa Clarita, California

 

 

AGREEMENT FOR SALE AND LEASEBACK

 

THIS AGREEMENT FOR SALE AND LEASEBACK
(“Agreement”) is made and entered into as of February
        , 2004 by and between SPECIALTY
LABORATORIES, INC., a California corporation (“Seller”), and LEXINGTON
CORPORATE PROPERTIES TRUST, a Maryland statutory real estate
investment trust (“Buyer”).

 

R E C I T A L S

 

A.            Seller
desires to sell to Buyer, and Seller desires to lease back from Buyer, a
certain 13.78 parcel of land in Santa Clarita, California together with
improvements located thereon.

 

B.            Buyer
is willing to purchase the property identified in this Agreement and to lease
it back to Seller on the terms and subject to the conditions set forth in this
Agreement.

 

NOW, THEREFORE, FOR VALUABLE CONSIDERATION,
the receipt and adequacy of which are hereby acknowledged, Seller and Buyer
agree as follows:

 

ARTICLE I

 

Sale and Leaseback

 

1.1           Sale.  Seller hereby agrees to sell and convey to
Buyer, and Buyer hereby agrees to purchase from Seller, subject to the terms
and conditions set forth herein, the property described in Sections 1.1(a)
through 1.1(d) below.

 

(a)           Land.  The parcel of real property more
particularly described in Exhibit A (the “Land”), which, subject to the
terms and conditions hereof, shall be conveyed to Buyer at the Closing
described below by a grant deed in the form of Exhibit B (the
“Deed”);

 

(b)           Improvements.  All improvements located on the Land,
including the three story office and research and development facility
containing approximately 201,330 square feet currently under construction and
all other buildings, structures and other improvements owned by Seller which
are permanently affixed to the Land (all of which are collectively referred to
as the “Improvements”);

 

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(c)           Personal
Property. All building systems located on the Land and
Improvements (all of which are collectively referred to as the “Personal
Property”) all of which shall be transferred to Buyer at the Closing
by an instrument in the form of Exhibit C (the “Bill of Sale”). As used
herein, “Personal Property” shall not be deemed to include Seller’s furniture,
moveable trade fixtures, equipment (including all laboratory testing
equipment), machinery and inventory; and

 

(d)           Intangible
Property.  All of the
interest of Seller in any intangible personal property owned by Seller now or
on the Closing Date which relates to and is reasonably required for the
ownership of the Land or occupation of the Improvements (as opposed to and
excluding intangible personal property and intellectual property which relate
to the operation of the business to be conducted by Seller on the Property,
which intangible personal property and intellectual property shall not be
included in the sale of the Property hereunder), including without limitation,
building plans and specifications, certain licenses and entitlements (e.g.,
building permits and certificates of occupancy), claims and causes of action
related to the Land or Improvements, surveys, maps, any and all warranties
(including roof warranties), guarantees, utility contracts, permits and other
rights owned by Seller, if any, relating to the ownership of all or any part of
the Property (“Intangible Property”), all of which shall be transferred, to
the extent assignable, to Buyer at the Closing by an instrument in the form of Exhibit D
(the “Assignment
of Intangible Property”).

 

1.2           Certain
Definitions.

 

(a)           The
Land, the Improvements, the Personal Property and the Intangible Property are
collectively referred to herein as the “Property”. 
The Land and the Improvements are collectively referred to herein as the
“Real
Property”.

 

1.3           Leaseback.  Concurrently with consummation of the
Closing, Buyer (as landlord) agrees to lease to Seller, and Seller (as tenant)
agrees to lease from Buyer, the Real Property, pursuant to a lease in
substantially the form and substance of Exhibit E (the “Net Lease”).

 

ARTICLE II

 

Purchase Price

 

2.1           Purchase
Price.  (a) The purchase
price for the Property shall be Forty Seven Million Dollars ($47,000,000.00)
(the “Purchase
Price”) subject to the holdbacks and adjustments provided for in
Section 2.3 below.  Upon Buyer’s
purchase of the Property at the Closing, Buyer shall pay the first installment
of the Purchase Price in an amount equal to $25,586,773.00 (the “First
Installment”) in cash to Seller at Closing, subject to adjustments
as provided herein. The balance of the Purchase Price of

 

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$21,413,227.00 (the “Holdback
Funds”) shall be due and payable by Buyer in accordance with the
terms and conditions of the Construction Funding Agreement to be entered into
by Seller and Buyer at Closing.

 

(b)           Buyer
has deposited the sum of Five Hundred Thousand Dollars ($500,000.00) (the “Deposit”)
with First American Title Insurance Company (the “Escrow Agent”), substantially
in accordance with the instructions set forth in Exhibit F (the “Deposit
Instructions”).  As set forth
in the Deposit Instructions, the Deposit shall be invested in an interest
bearing account, as directed by Buyer. 
If the sale of the Property to Buyer closes, the Deposit and the
interest earned thereon shall be a credit against the Purchase Price and shall
be delivered by the Escrow Agent to Seller at the Closing in accordance with
the provisions of Section 6.1(d). 
If the sale of the Property to Buyer does not close for any reason other
than Buyer’s default under this Agreement, the Deposit shall be returned to
Buyer together with any interest earned thereon.

 

2.2           Intentionally
Omitted.

 

2.3           Purchase
Price to be Funded at Closing. 
Based on information provided by Seller, the parties believe that the
amount necessary to complete construction of the Improvements in accordance
with the Plans and Specifications is $17,130,582 (the “Completion Amount”).  The parties have agreed that at Closing
Buyer shall only be obligated to fund the First Installment which is an amount
equal to the Purchase Price less one hundred twenty five percent (125%) of the
Completion Amount. Accordingly, based on current information provided by
Seller, the amount to be funded at Closing will be $25,586,773.  On or before one (1) business day prior to
the expiration of the Due Diligence Period, Buyer shall confirm or revise the
Completion Amount which shall be based upon information provided by the
Contractor and from Buyer’s own due diligence and shall so advise Seller by
written notice. Seller shall approve or disapprove the Completion Amount
submitted by Buyer within five (5) business days of its receipt thereof and if
Seller disapproves such Completion Amount, the parties will confer for a period
not to exceed five (5) business days to reach agreement on the Completion
Amount.  In the event that the parties
are unable to agree on the Completion Amount, Buyer’s sole remedy shall be
either (a) to terminate this Agreement and receive the Deposit back or (b) to
waive its objection to the original Completion Amount.

 

ARTICLE III

 

Title To Real Property and Due Diligence

 

3.1           Title.

 

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(a)           Seller
shall deliver to Buyer a commitment from First American Title Insurance Company
(the “Title
Company”) to issue a ALTA Owner’s Policy of Title Insurance with
respect to the Property in the full amount of the Purchase Price (the “Title
Commitment”), accompanied by complete and legible copies of all
exceptions to title contained therein.

 

(b)           On
or before five (5) days before the expiration of the Due Diligence Period,
Seller shall obtain and deliver to Buyer and the Title Company an “as-built”
survey (the “Survey”) of the Property prepared by a surveyor or civil
engineer licensed in California reasonably acceptable to Buyer.  The Survey shall be acceptable in form to
Buyer and shall conform to the “Minimum Standard Detail Requirements for
ALTA/ACSM Land Title Surveys” for urban properties jointly adopted in 1999
including items 1-4, 6-11 and 13-16 of Table A thereof.  The Survey shall be certified to Buyer, the
Title Company and such other persons as Buyer may reasonably require in the
form set forth in Exhibit G.

 

(c)           At
its expense, Seller shall remove as liens on the Real Property at or prior to
the Closing:  (i) all delinquent taxes,
bonds and assessments together with interest and penalties thereon (but
expressly excluding any installments of taxes, bonds and assessments not yet
due); (ii) all other monetary liens, including without limitation all those
shown on the Title Commitment (including judgment and mechanics liens, whether
or not liquidated, and mortgages and deeds of trust, with Seller being fully
responsible for any fees or penalties incurred in connection therewith, but
specifically excluding those caused by Buyer or its agents, employees or
contractors); and (iii) any matter which would constitute a breach by Seller of
its representations in Article VII. 
If Seller fails to remove the foregoing items at or prior to the time
required above, Buyer may elect to close the purchase of the Property, cure or
remove the non-approved matters which have not been removed and, if they are
matters required to be removed by Seller, credit the reasonable costs of such
cure or removal against the Purchase Price payable by Buyer.

 

(d)           On
or before the expiration of the Due Diligence Period, Buyer shall deliver
notice to Seller (the “Title Objection Notice”) with a list of
anything disapproved by Buyer on the Survey and a list of any exceptions to
title shown on the Title Commitment required to be removed by Seller, other
than easements and minor exceptions which do not materially interfere with the
operation or the mortgage financing of the Property.  Failure of Buyer to give the Title Objection Notice shall be
deemed to be an approval of all matters set forth in the Title Commitment and
the Survey.  Seller shall have a period
of five (5) business days to respond as to whether Seller agrees to attempt to
remove such disapproved matters. 
Failure of Seller to respond in such five (5) business day period shall
be deemed a rejection of Buyer’s Title Objection Notice.  If Seller rejects or is deemed to have
rejected Buyer’s Title Objection Notice, Buyer shall have the right to either
(A) take title to the Property subject to such title or Survey defects without
abatement or reduction of the Purchase Price or (B) elect to terminate this
Agreement and receive its Deposit.  If
Buyer has not terminated this Agreement, Seller

 

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shall convey title to the
Property to Buyer at the Closing subject to no exceptions other than the
following (“Permitted Exceptions”): (i) those exceptions or matters set
forth in the Title Commitment and Survey not disapproved by Buyer in the manner
provided above or if disapproved, which Seller has not agreed to remove, (ii)
the documents called for by this Agreement to be recorded at the Closing, or
(iii) any lien placed on the Property at Closing by Buyer.  If Seller agrees to remove any of the
matters in the Title Objection Notice, Seller shall exercise its reasonable,
good faith efforts to remedy to Buyer’s satisfaction any such matter as
promptly as possible.  Buyer shall take
title to the Property at the Closing if Seller cures, on or before the Closing,
any such title or Survey defects identified by Buyer in the Title Objection
Notice.  If Seller agrees to remove any
matters set forth in the Title Objection Notice and, despite the exercise of
its reasonable, good faith efforts, is not able to cure, on or before the
Closing, any such title or Survey defects, Buyer shall have the right to either
(A) take title to the Property subject to such title or Survey defects without
abatement or reduction of the Purchase Price or (B) elect to terminate this
Agreement.

 

(e)           On
or before the Closing Date, Seller shall cause the Title Company to deliver to
Buyer a binding commitment, in form acceptable to Buyer, to issue at the
Closing an ALTA-B Owner’s Policy of Title Insurance with liability in the
amount of the Purchase Price, insuring Buyer’s interest in the Real Property
and all easements benefiting the Real Property, subject to the Permitted
Exceptions, together with the following endorsements: zoning (ALTA 3.1), LP 10,
survey, access and contiguity.

 

3.2           Due
Diligence Items. Buyer shall have the period beginning on the
date hereof and ending at 5 p.m. Eastern Standard Time twenty (20) business
days after date of this Agreement (the “Due Diligence Period”) to examine the
Property and all matters related thereto. 
Within three (3) business days of the date of this Agreement, Seller
shall deliver to Buyer each of the following items to the extent not previously
delivered (the “Due Diligence Materials”):

 

(i)            a
true and correct copy of the Project Management Agreement and all amendments
thereto (the “PMA”) with Lowe Enterprises Commercial Group (“Lowe”);

 

(ii)           a
true and correct copy of guaranteed maximum price contract and all amendments
thereto (the “GMP Contract”) between Lowe and Tectonics Construction Inc.
(the “Contractor”);

 

(iii)          soil and geotechnical reports, engineering
reports and other contracts or documents of any nature relating to the Property
or any portion thereof, as disclosed on Exhibit I (the “Reports”);

 

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(iv)          the
building permit for the Improvements, a zoning letter from the municipality in
which the Property is located, and, to the extent in its possession or under
its control, all other governmental permits, licenses, entitlements and
approvals with respect to the Property obtained or held by Seller and relating
to the construction, ownership or occupancy of the Property or any portion
thereof;

 

(v)           copies
of all of Seller’s book and records which document all sums expended to acquire
the Land and construct the Improvements, including purchase agreements,
invoices, bills, draw requests and purchase orders (collectively, the “Construction
Funding Records”); and

 

(vi)          the
plans and specifications for the Improvements (the “Plans and Specifications”).

 

ARTICLE IV

 

Operation of the Property Pending the Closing

 

4.1           Continuing
Operations.  Between
Seller’s execution of this Agreement and the Closing, Seller shall at Seller’s
sole cost and expense:  (i) maintain the
Property in good order, condition and repair, casualty excepted (provided that
the foregoing covenant shall not be deemed to obligate Seller to complete
construction of the Improvements prior to the Close of Escrow); (ii) maintain
accurate books and records regarding Property ownership, development and
construction; (iii) comply with all applicable laws, rules and regulations
relating to the Property and its operation; (iv) maintain property damage and
comprehensive general liability insurance covering the Improvements in amounts
and coverages not less than that presently maintained; and (v) pay all taxes
and assessments prior to delinquency.

 

4.2           GMP
Contract and Other Agreements. 
Between Seller’s execution of this Agreement and the Closing, Seller
shall not, other than as permitted under the terms of the Net Lease:  (i) enter into, amend in any material
respect or terminate any lease, contract or agreement pertaining to the
Property, including but not limited to the PMA, the GMP Contract (provided,
however, that any such agreement entered into or amended shall not create
privity of contract with Buyer); nor shall Seller (ii) modify in any material
respect any contract or agreement pertaining to the Property or waive any
rights of Seller thereunder; (iii) take any action which would preclude or
interfere with the timely satisfaction of the conditions set forth in Article
V; (iv) permit any alteration, modification or addition to the Improvements
or the Land, except in accordance with the PMA and the GMP Contract and the
Plans and Specifications and for insubstantial and immaterial changes which do
not adversely affect the same or the value thereof; or (v) sell or agree to
sell the Property or any part thereof.

 

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4.3           Encumbrances.  Seller shall not further encumber or suffer
to be further encumbered all or any portion of the Property between the date
hereof and the date the same is acquired by Buyer pursuant to this Agreement.

 

4.4           Casualty;
Condemnation.  In the
event the Improvements are materially destroyed or damaged in an amount
exceeding three hundred thousand dollars ($300,000), or if condemnation
proceedings are threatened or commenced against all or any material portion of
the Property, in each case between the date hereof and the date the same is
scheduled to be acquired by Buyer pursuant to this Agreement, Buyer shall have
the option, exercisable in its sole discretion and by giving notice of such
decision to Seller within ten (10) business days after Buyer’s receipt of
notice of such damage, destruction or condemnation proceedings, to terminate
this Agreement.  In the event Buyer does
not elect to so terminate, (i) in the case of condemnation, Seller shall assign
to Buyer at the Closing all of its right, title and interest in and to all
proceeds resulting from such condemnation of the Property, after deducting therefrom
any third party costs or expenses incurred by Seller in settling, adjusting or
compromising such condemnation award, including the right to apply for and
prosecute the same, which proceeds shall be held by Seller until disbursed in
accordance with the provisions of Section 6.5 of the Net Lease; provided
however, that this assignment shall not preclude Seller from filing a separate
claim for non-real property related condemnation proceeds (other than the
Personal Property), including but not limited to, loss of business, future
profits, and good will; damages related to stock and/or trade fixtures,
furniture and other personal property belonging to Seller; the cost of removing
fixtures, equipment and inventory; moving expenses related to the relocation of
the business, and any and all other related damages or expenses incurred as a
result thereof and for loss of or damage to its leasehold interest in the
Property, provided that such claim shall not diminish any condemnation award
otherwise due to Buyer; and (ii) in the case of casualty, Seller shall repair
such damage at its expense prior to the Closing, or if that is impossible, then
promptly following such Closing, in the manner and subject to the standards in Section
5.5 of the Net Lease.

 

4.5           No
Solicitation.  Seller
shall not solicit, seek, negotiate, or respond to any offer to purchase, ground
lease, lease or sell and leaseback, all or any portion of the Property for the
period commencing on the date hereof and continuing through the Closing Date,
unless the Closing is delayed or fails to occur as a result of any breach of
this Agreement, or refusal of performance by Seller, in which event the
covenant of Seller set forth in this Section 4.5 shall continue until
such failure or refusal is cured.

 

ARTICLE V

 

Conditions to Closing

 

A.            Buyer’s
Conditions to Closing. 
The obligations of Buyer to purchase the Property and lease the same to
Seller are subject to satisfaction of the following conditions on or before the
Closing Date:

 

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5.1           Title.  The Title Company issuing the binding
commitment called for by Section 3.1(e).

 

5.2           Physical
Characteristics of the Property.  Prior to the expiration of the Due Diligence Period, Buyer’s
review and approval of (i) an engineering report confirming to Buyer’s
satisfaction that the structures, fixtures and equipment located on and to be
constructed on the Land are and will be structurally sound, suited for their
intended use, and constructed in accordance with the Plans and Specifications
(the “Engineering
Report”), (ii) a Phase I environmental report confirming to Buyer’s
satisfaction that the Property is not affected by hazardous substances or
hazardous wastes at levels requiring reporting or remediation under applicable
Laws (as hereinafter defined) (the “Environmental Report”); (iii) the Plans and
Specifications with respect to the Property; and (iv) the Construction Funding
Records.  If Buyer does not terminate
the Agreement by the expiration of the Due Diligence Period, this condition
shall be deemed to be waived.

 

5.3           Legal
Compliance.  The Property
having no outstanding violations of any laws, statutes, requirements,
ordinances and regulations (including, without limitation, those relating to
zoning, land use, building codes, the environment, health and safety) relating
to the Property (collectively, “Laws”) (including the Americans with
Disabilities Act of, 42 U.S.C. §12,101 et  seq. (“ADA”).
If Buyer does not terminate the Agreement by the expiration of the Due Diligence
Period, this condition shall be deemed to be waived.

 

5.4           Financial
Condition.  Buyer shall
have received and found satisfactory the audited financial statements of Seller
and there shall have been no subsequent material adverse change in the financial
condition of Seller since the date of such audited financial statements.

 

5.5           Representations
and Warranties.  All of
Seller’s representations and warranties contained herein, or made in writing by
Seller pursuant to this Agreement, shall have been true and correct in all
material respects when made and shall be true and correct in all material
respects as of the Closing Date.

 

5.6           Non-Foreign
Status of Seller. 
Seller’s execution and delivery to Buyer, at the Closing Date, of
Seller’s certificate in the form attached hereto as Exhibit K (the “Non-Foreign
Certificate”).

 

5.7           California Withholding
Exemption.  Seller’s execution
and delivery to Buyer, at the Closing Date, of California Franchise Tax Board
Form 593-W, establishing Seller’s exemption from real
estate withholding requirements under California law.

 

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5.8           Approval
of Update Certificate. 
Seller’s execution and delivery to Buyer at the Closing of an Update
Certificate in the form of Exhibit L.

 

5.9           Deliveries
by Seller.  Seller’s due
and timely execution and delivery of Seller’s Closing Documents and all of the
other documents and items specified in Section 6.3 (“Seller’s Closing Documents”).

 

5.10         Committee
Approval.  On or before
the expiration of the Due Diligence Period, Buyer’s investment committee shall
have approved the transactions contemplated hereunder in its sole discretion.
If Buyer does not terminate the Agreement by the expiration of the Due
Diligence Period, this condition shall be deemed to be waived.

 

5.11         Construction
Funding Agreement.  The
final form and content of an agreement between Seller and Buyer having as its
subject matter the Improvements and the funding by Buyer of the cost thereof
(the “Construction
Funding Agreement”) shall have been agreed to by Seller and Buyer on
or before the expiration of the Due Diligence Period. If Buyer does not
terminate the Agreement by the expiration of the Due Diligence Period, this
condition shall be deemed to be waived.

 

The foregoing conditions contained in this Section
5(A) are intended solely for the benefit of Buyer.  Buyer shall have the right to terminate this
Agreement for any reason on or before the expiration of the Due Diligence
Period upon notice to Seller.  In
addition, if the conditions are not satisfied by the expiration of the Due
Diligence Period with respect to the matters in Sections 5.2, 5.3, 5.9 and 5.10
and by the Close of Escrow with respect to all other matters in this Section
5(A), Buyer may elect in its sole discretion to either waive such matters or
deliver written notice to Seller that this Agreement shall terminate and
thereafter the parties shall have no further obligation to one another except
that the indemnities provided for in Section 9.2 ,  Section 9.16 and the provisions of
the Deposit Instructions shall survive (the “Surviving Obligations”).

 

B.            Seller’s
Conditions to Closing. 
Seller’s obligation to sell the Property and lease the same back from
Buyer is conditioned upon satisfaction of the following conditions on or before
the Closing Date: (i) approval by Seller’s Board of Directors of this Agreement
and the transactions contemplated herein within five (5) business days of the
date of this Agreement, (ii) the final form and content of the Net Lease and the
Construction Funding Agreement shall have been agreed to by Seller and Buyer on
or before the expiration of the Due Diligence Period; (iii) all of Buyer’s
representations and warranties made in this Agreement shall have been true and
correct in

 

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all material respects
when made and as of the Closing Date; and (iv) Buyer’s due and timely execution
and delivery of all documents and items to be executed and/or delivered by
Buyer pursuant to this Agreement including, without limitation, (a) the
Purchase Price, (b) the Net Lease, and (c) all of the other documents and items
specified in Section 6.4 (the Net Lease and such other documents executed and
delivered on behalf of Buyer, “Buyer’s Closing Documents”).

 

The foregoing conditions contained in this Section
5(B )are intended solely for the benefit of Seller.  If any of the foregoing conditions are not
satisfied in a timely manner or waived by Seller in its sole discretion, Seller
may elect to terminate this Agreement upon written notice to Buyer and this
Agreement shall terminate and thereafter the parties shall have no further
obligation to one another except for the Surviving Obligations.

 

ARTICLE VI

 

Closing and Recording

 

6.1           Closing
and Closing Date.  Subject
to the provisions of Section 5A, the parties shall consummate the sale and
leaseback of the Property as contemplated herein at a closing (the “Closing”)
to be held within ten (10) days of the expiration of the Due Diligence Period
and in all events on or before March 8, 2004 (the “Closing Date”), by means of
an escrow closing held at the offices of the Escrow Agent in Los Angeles
County, California. Recording by Buyer of the Deed will be conclusive evidence
that all conditions to the Closing have been satisfied or waived.

 

(a)           The
Closing shall be deemed to have occurred when all conditions to such Closing
have been satisfied (or waived in writing by the party in whose favor the
condition was established).

 

(b)           In
order to effect the Closing, the parties shall deliver to the Escrow Agent at
least one (1) business day prior to the Close of Escrow all documents and other
instruments required hereunder to be delivered at such Closing, although no
delivery shall be deemed complete until all of such documents and other
instruments have been delivered and the other conditions to such Closing have
been satisfied (or waived as provided above).

 

(c)           The
procedure for satisfying the condition in Section 3.1(e) (“Title
Condition”) shall be as follows: 
when all conditions to the Closing have been satisfied other than the
Title Condition and the delivery of the Purchase Price, Seller shall cause the
Title Company to deliver to Buyer, irrevocably, the binding commitment required
by the Title Condition, together with a written commitment by the Title Company
to: (i) promptly record the documents required to be recorded in order for the
title insurance policy called for by the Title Condition to be issued; and (ii)
deliver said title insurance

 

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policy to Buyer within
thirty (30) days following the Closing Date. 
The form of Buyer’s and Seller’s recording instructions to the Title
Company and the Title Company’s written commitment to comply with such instructions
and the terms of this Agreement are contained in Exhibit M.

 

(d)           When
the Title Condition pertaining to the Closing has been satisfied, the Title
Company shall deliver to Seller the First Installment of the Purchase Price by
wire transfer of immediately available funds in accordance with instructions of
Seller in the form of Exhibit N.  The First Installment of the Purchase Price shall be adjusted on
account of any credits due to Seller or Buyer, as the case may be, pursuant to
this Agreement and shall be reduced by the amount of the Deposit and any
interest thereon, which shall be delivered to Seller by the Title Company
pursuant to the Deposit Instructions. 
Following telephonic confirmation of such wire transfer, the other documents
and instruments shall be deemed delivered and the Closing shall be deemed
consummated.

 

6.2           Intentionally
Omitted.

 

6.3           Deposits
by Seller.  On or prior
to the date that is one (1) business day prior to the Closing Date, Seller
shall deposit, or cause to be deposited, with the Title Company Seller’s
Closing Documents as more fully described in Exhibit P.

 

6.4           Deposits
by Buyer.  On or prior to
the date that is one (1) business day prior to the Closing Date, Buyer shall
deposit with the Title Company Buyer’s Closing Documents as more fully
described in Exhibit Q together with an amount equal to the First
Installment less the Deposit.

 

6.5           Other
Instruments.  Seller and
Buyer shall each deposit such other instruments as are reasonably required by
the Title Company or otherwise required to consummate the sale and leaseback of
the Property in accordance with the terms of this Agreement.

 

6.6           Prorations.  No prorations shall be required to be made
in connection with the Closing since Seller, as owner, shall be responsible for
all costs incurred in connection with the Property up to the Closing Date and
Seller, as tenant under the Net Lease, shall be responsible for all costs
incurred in connection with the Property after the Closing Date.

 

6.8           Costs and
Expenses.  Buyer shall
pay all of Buyer’s legal fees and costs, and all expenses incurred by Buyer in
its review of the Property.  Seller
shall pay all other costs and expenses incurred or payable in connection with
this transaction, including without limitation, the premium for the policy of
title insurance called for herein and all endorsements thereto, the cost of the
Survey, the conveyance and transfer tax and recording and filing fees charged
by the Title Company to record and/or file any

 

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documents required to be
recorded and/or filed as necessary to deliver title pursuant to this Agreement
(including the Deed and Memorandum of Lease), all legal fees and costs incurred
by Seller, all sales tax, if any, applicable with respect to the sale of the
Intangible Property, CRESA’s fee and all Escrow Agent fees and expenses, but
specifically excluding all of Buyer’s costs and expenses as set forth in the
first sentence of this Section 6.8..

 

6.9           Settlement
Statement.  On or prior
to the Closing Date, Buyer and Seller shall prepare, execute and deliver a
final settlement statement showing the categories and amounts of the closing
costs and all adjustments to the Purchase Price called for herein.

 

ARTICLE VII

 

Representations and Warranties of Seller 

 

As an inducement to Buyer to enter into this Agreement
and to consummate the sale and leaseback transaction contemplated hereby,
Seller hereby represents and warrants to and agrees with Buyer, both as of the
date hereof and again as of the Closing Date, that:

 

7.1           Condition
of Property.  To the
knowledge (which term shall, as used in this Agreement, mean the knowledge of
Seller and its officers, directors and executive level employees) of Seller,
except as disclosed in the environmental and engineering reports heretofore
delivered by Seller to Buyer and except as addressed in the Construction
Funding Agreement, there are no material physical or mechanical defects in any
of the Improvements, including, without limitation, the plumbing, heating, air
conditioning, ventilating, life safety and electrical systems, and all such
items are in good operating condition and repair and in compliance with all
Laws (including the ADA). Buyer acknowledges that the Improvements have not
been completely constructed and that the mechanical systems of the Building
must be completed in accordance with the Net Lease and the Construction Funding
Agreement before such systems will be ready for use; however, Seller represents
and warrants that all contractors and subcontractors who have performed work
and/or delivered materials to the Property have been paid in full for all work
performed and materials delivered prior to the date hereof.

 

7.2           Use and
Operation.  To the
knowledge of Seller, the use and operation of the Property and its facilities,
fixtures, installations and equipment, complies, or will comply in all material
respects upon completion of the Improvements, with applicable Laws.

 

7.3           Utilities.  All water, sewer, electric, telephone and
drainage facilities and all other utilities required for the normal use and
operation of the Property

 

12

 

are, or will be prior to
completion of the Improvements, be installed to the property lines of the Land,
are all connected and operating pursuant to valid permits, are adequate to
service the Property and to permit compliance in all material respects with all
requirements of Law and the contemplated usage of the Property, and are
connected to the Property by means of one or more public or private easements
extending from the Property to one or more public streets, public rights-of-way
or utility facilities.

 

7.4           Use
Permits and Other Approvals. 
Seller has obtained all licenses, permits, approvals, easements and
rights of way required from all governmental authorities having jurisdiction
over the Property or from private parties for the intended normal use and
operation of the Property and to ensure free and unimpeded vehicular and
pedestrian ingress to and egress from the Property as required to permit the
present usage of the Property by the Seller and its invitees, licensees and
customers.  No violations have been
recorded in respect of any such licenses, permits or approvals and no
proceeding is pending, or to the knowledge of Seller, threatened, to revoke or
limit any of such licenses, permits, approvals, easements or rights of
way.  Seller is in compliance with all
such licenses, permits and approvals.

 

7.5           Authority
of Seller.  (i) Seller is
a corporation duly formed, validly existing and in good standing under the laws
of the State of California, (ii) the persons executing Seller’s Closing
Documents are duly appointed and authorized by Seller to execute such
documents, (iii) Seller’s Closing Documents will, when delivered, have been duly
authorized, executed and delivered by Seller and will constitute legal, valid
and binding obligations of Seller enforceable against Seller in accordance with
their terms, except as may be limited by bankruptcy, insolvency, moratorium or
other laws affecting the rights of creditors of bankrupt or insolvent entities,
(iv) subject to receipt of approval as provided in Section 5(B)(i), Seller has
full power and authority to execute, deliver and perform its obligations under
Seller’s Closing Documents and to carry on its business as presently conducted,
(v) subject to receipt of approval as provided in Section 5(B)(i),  Seller has obtained all necessary permits,
licenses, entitlements and/or approvals required to comply with the provisions
of Seller’s Closing Documents, and to carry on its business as presently
conducted, and (vi) the execution, delivery and performance of Seller’s Closing
Documents do not violate any provisions of Seller’s certificate of
incorporation or by laws or any agreement or document to which either of Seller
is a party or by which Seller is bound (including, any loan agreement, line of
credit agreement, mortgage, deed of trust or license), or of any order, writ,
injunction, decree or regulation of any court, regulatory body, administrative
agency or governmental body having jurisdiction over Seller or the Property.

 

7.6           Zoning
and Environmental.

 

(a)           The
Property constitutes separate tax lots, except for off-site utility easements,
if any.  There are no conditional use or
similar permits and no zoning or other variances from applicable zoning,
building and land use and/or regulations in connection

 

13

 

with the development or
operation of the Property.  Seller has
not received any written notice of any investigations or intent to investigate
zoning or environmental violations. 
There are no condemnation, environmental, zoning or other land use
regulations or proceedings, either instituted or, to Seller’s knowledge,
planned or threatened, which might detrimentally affect the use or enjoyment of
the Property by Buyer in any material respect.

 

(b)           During
the period of Seller’s ownership, of the Property, other than those disclosed
by the environmental report described on Exhibit R, to the knowledge of Seller,
there have been no Environmental Conditions with respect to the Property.  Seller has no current, actual knowledge of
any Environmental Condition with respect to Property which may have occurred
prior to its ownership of the Property. 
As used herein, “Environmental Condition” shall mean the
presence, disposal, release or threatened release of hazardous substances or
hazardous wastes on, from or under the Property.  The terms “disposal”, “release”, “threatened release”, “hazardous
substances” and “hazardous wastes” shall have the
definitions assigned to those terms by the Federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended to date.  Except as disclosed on Exhibit J and normal
and customary toxic and hazardous substances used in the construction of office
buildings in accordance with Environmental Laws and other applicable laws,  to the current, actual knowledge of Seller,
there have been no toxic or hazardous materials used in the development or
construction of the Improvements.

 

(c)           With
respect to the Property, to the knowledge of Seller, Seller is in compliance in
all material respects with the provisions of all applicable federal, state and
local requirements pertaining to or governing the use, disposal, release or
presence of hazardous substances or hazardous wastes pertaining to or governing
the use, disposal, release or presence of hazardous substances or hazardous
wastes (“Environmental
Laws”).

 

7.7           Asbestos.  Except as previously disclosed by Seller or
by the environmental report attached hereto as Exhibit R, to the
knowledge of Seller, there is no asbestos in any of the Improvements or
personal property used in connection with the Property.

 

7.8           Leases.  There are no leases, tenancies or license,
franchise, occupancy, concession or other agreements pertaining to possession
or ownership of any Property or any portion thereof other than the Net Lease.

 

7.9           Contracts.  Other than the PMA and the GMP Contract,
Seller has no obligation under the terms of any contract or other instrument
relating to the construction development, maintenance or operation of the
Property and there will be, as of the Closing Date, no such obligation other
than set forth in the PMA and the GMP

 

14

 

Contract.  There are no service, maintenance or other
contracts with respect to the Property for which Buyer will be liable on or
after the Closing Date

 

7.10         Litigation.  There is no litigation pending or, to the
knowledge of Seller, threatened, against Seller, that arises out of the
ownership or operation of the Property; and (i) might materially and
detrimentally affect the use and operation of the Property for its current
usage or the value of the Property, or (ii) might materially and adversely
affect the ability of Seller to perform its obligations under this Agreement or
the Net Lease, or (iii) might constitute or result in a lien on the Property or
any portion thereof.

 

7.11         Other
Contracts to Convey Property. 
Seller is not a party to any currently effective agreement or option to
sell the Property, or any portion thereof, to any party other than Buyer.  Seller has not hypothecated or assigned any
rents or income from the Property, except for hypothecations or assignments on behalf
of lenders with respect to loans to Seller which will be terminated or as to
which releases of such lenders’ liens will be obtained at the Closing.  No person or entity has any right to acquire
or to lease the Property or any part thereof, or to obtain any interest
therein.  There are no outstanding
rights of first refusal, rights of reverter or options relating to the Property
or any interest therein.  No person or
entity holding a security interest in the Property or any part thereof has the
right to consent or deny consent to the sale of the Property as contemplated
herein.

 

7.12         Conflicts.  The terms of this Agreement do not conflict
with or result in a breach or violation of any term or provision of, or
constitute a default under (i) the Certificates of Incorporation or Bylaws of
Seller or (ii) any loan agreement, line of credit agreement, mortgage, deed of
trust, lease, license or other agreement or instrument to which Seller is a
party or by which Seller is bound.

 

7.13         Full
Disclosure.  To the knowledge
of Seller, neither this Agreement nor any exhibit hereto nor any letter,
certificate or other document furnished by Seller to Buyer pursuant hereto
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained in this Agreement and the
exhibits, in the light of the circumstances under which they were made, not
misleading as a whole.  Subject to the
limitations set forth below, Seller hereby agrees to indemnify, defend, protect
and hold Buyer harmless from and against any and all loss, cost, liability,
damage, claim and expense including, without limitation, reasonable attorneys’
and paralegals’ fees and expenses incurred by Buyer in connection with or
arising from any breach by Seller of any of the representations and warranties
made by Seller in this Agreement.

 

7.14         Limitation
of Representations and Warranties. . Buyer represents, warrants,
acknowledges and agrees that upon Closing, Seller shall sell and convey to
Buyer and Buyer shall accept the Property “AS IS, WHERE IS, WITH ALL

 

15

 

FAULTS,” subject to the representations, warranties and
covenants set for in this Agreement, Seller’s Closing Documents and the
Lease.  Except as expressly set forth in
this Agreement, Seller’s Closing Documents and the Lease, Buyer has not relied
and will not rely on, and Seller has not made and is not liable for or bound
by, any express or implied warranties, guarantees, statements, representations
or information pertaining to the Property or relating thereto (including
specifically, without limitation, Property information packages distributed
with respect to the Property) made or furnished by Seller, or any real estate
broker, agent or third party representing or purporting to represent Seller, to
whomever made or given, directly or indirectly, orally or in writing.  Buyer represents that it is a knowledgeable,
experienced and sophisticated purchaser of real estate and that, except as
expressly set forth in this Agreement, Seller’s Closing Documents and the
Lease, it is relying solely on its own expertise and that of Buyer’s
consultants in purchasing the Property and shall make an independent
verification of the accuracy of any documents and information provided by
Seller or any of Seller’s agents or representatives.  Buyer will conduct such inspections and investigations of the
Property as Buyer deems necessary, including, but not limited to, the physical
and environmental conditions thereof, and shall rely upon same.  By failing to terminate this Agreement prior
to the expiration of the Due Diligence Period, Buyer acknowledges that Seller
has afforded Buyer a full opportunity to conduct such investigations of the Property
as Buyer deemed necessary to satisfy itself as to the condition of the Property
and the existence or non-existence or curative action to be taken with respect
to any hazardous materials on or discharged from the Property, and will rely
solely upon same and not upon any information provided by or on behalf of
Seller, or its agents or employees with respect thereto, other than such
representations, warranties and covenants of Seller as are expressly set forth
in this Agreement, Seller’s Closing Documents and the Lease.  Upon Closing, subject to Seller’s
undertakings in this Agreement, Seller’s Closing Documents and the Lease, Buyer
shall assume the risk that adverse matters, including, but not limited to,
adverse physical or construction defects or adverse environmental, health or
safety conditions, may not have been revealed by Buyer’s inspections and
investigations.  Finally, Buyer
specifically acknowledges that the Improvements on the Land have not been
completed and that Buyer is assuming all risks with respect thereto, subject to
Seller’s obligations under the Lease.

 

Buyer’s initials BPM

 

16

 

ARTICLE VIII

 

Representations and Warranties of Buyer

 

8.1           Representations
and Warranties of Buyer. 
Buyer hereby represents and warrants to Seller that (i) Buyer is a
statutory real estate investment trust duly organized, validly existing and in
good standing under the laws of the State of Maryland, (ii) the persons
executing Buyer’s Closing Documents are duly appointed and authorized by Buyer
to execute such documents, (iii) Buyer’s Closing Documents will, when
delivered, have been duly authorized, executed and delivered by Buyer and will
constitute legal, valid and binding obligations of Buyer, and this Agreement
will be enforceable against Buyer in accordance with its terms, (iv) Buyer has
full power and authority to execute, deliver and perform its obligations under
Buyer’s Closing Documents, (v) to the current, actual knowledge of Buyer, Buyer
is not required to obtain any permits, licenses, entitlements and/or approvals
in order to own the Property for the purpose of leasing the Property to Seller
or complying with the provisions of Buyer’s Closing Documents, and (vi) the
execution, delivery and performance of Buyer’s Closing Documents do not violate
any provisions of any agreement or document to which Buyer is a party or by
which Buyer is bound, or of any order or regulation of any court, regulatory
body, administrative agency or governmental body having jurisdiction over
Buyer.

 

SELLER ACKNOWLEDGES THAT BUYER HAS MADE NO
REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, OTHER THAN THOSE EXPRESSLY
CONTAINED IN THIS AGREEMENT.

 

ARTICLE IX

 

Miscellaneous

 

9.1           Notices.  All notices, consent, approvals or other
communications required or permitted to be given under this Agreement shall be
in writing and be deemed to have been duly given (i) when delivered personally
if delivered on a business day (or if the same is not a business day, then the
next business day after delivery), (ii) three (3) business days after being
sent by United States mail, registered or certified mail, postage prepaid,
return receipt requested or (iii) if delivery is made by Federal Express or a
similar, nationally recognized overnight courier service for morning delivery,
then on the date of delivery (or if the same is not a business day, then the
next business day after delivery); and addressed as follows:

 

	
  If to
  Seller:

  	
   

  	
  Specialty Laboratories, Inc.

  
	
   

  	
   

  	
  2211 Michigan Avenue

  
	
   

  	
   

  	
  Santa Monica, California 90404

  
	
   

  	
   

  	
  Attn: Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Specialty Laboratories Inc.

  
	
   

  	
   

  	
  2211 Michigan Avenue

  

 

17

 

	
   

  	
   

  	
  Santa Monica, California 90404

  
	
   

  	
   

  	
  Attention: General Counsel

  
	
   

  	
   

  	
   

  
	
  And to:

  	
   

  	
  O’Melveny & Myers LLP

  
	
   

  	
   

  	
  400 South Hope Street

  
	
   

  	
   

  	
  Los Angeles, California 90071

  
	
   

  	
   

  	
  Attention: Christine H. Suh, Esq.

  
	
   

  	
   

  	
   

  
	
  If to Buyer:

  	
   

  	
  Lexington Corporate Properties Trust

  
	
   

  	
   

  	
  One Penn Plaza, Suite 4015

  
	
   

  	
   

  	
  New York, New York 10119-4015

  
	
   

  	
   

  	
  Attn: Richard J. Rouse

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Crowe Deegan LLP

  
	
   

  	
   

  	
  535 Fifth Avenue, Suite 611

  
	
   

  	
   

  	
  New York, New York 10017

  
	
   

  	
   

  	
  Attn: Richard C. Hamlin, Esq.

  

 

 

or such other address as either party may from time to time specify in
writing to the other in the manner aforesaid.

 

9.2           Brokers
and Finders.  Each party
represents to the other party that except for the advisory fee due to CRESA
Partners (“CRESA”) from Seller, the representing party has incurred no
liability for any brokerage commission, financing fee or finder’s fee arising
from or relating to the transactions contemplated by this Agreement.  In the event of a claim for any broker’s
fee, finder’s fee, financing fee, commission or other similar compensation in
connection herewith, other than the advisory fee due to the CRESA, (i) Buyer,
if such claim is based upon any agreement alleged to have been made by Buyer,
hereby agrees to indemnify, defend, protect and hold Seller and its affiliates,
officers and directors and their successors and assigns harmless against any
and all liability, loss, cost, damage or expense (including reasonable
attorneys’ and paralegals’ fees and costs) which Seller may sustain or incur by
reason of such claim, and (ii) Seller, if such claim is based upon any
agreement alleged to have been made by Seller, hereby agrees to indemnify, defend,
protect and hold Buyer and its affiliates, officers and directors and their
successors and assigns harmless against any and all liability, loss, cost,
damage or expense (including reasonable attorneys’ and paralegals’ fees and
costs) which Buyer may sustain or incur by reason of such claim.

 

9.3           Successors
and Assigns.  This
Agreement shall be binding upon, and inure to the benefit of, the parties
hereto and their respective successors, heirs, administrators and assigns,
except that neither party’s interest under this Agreement may be assigned,
encumbered or otherwise transferred, whether voluntarily, involuntarily, by
operation of law or otherwise, without the prior written consent of the other
party; provided, however, without being relieved of any liability under this
Agreement, Buyer

 

18

 

reserves the right to
assign its rights and obligations hereunder to any entity with which it is
affiliated so long as such affiliate assumes the obligations of Buyer hereunder
and Buyer is not released of its obligations hereunder.

 

9.4           Amendments.  This Agreement may be amended or modified
only by a written instrument executed by the party asserted to be bound
thereby.

 

9.5           Continuation
and Survival of Indemnities, Representations and Warranties.  All indemnities, representations and
warranties by Seller or Buyer contained herein or made in writing pursuant to
this Agreement or any other instrument delivered by Seller or Buyer pursuant
hereto are intended to and shall remain true, correct and binding as of the
time of Closing and shall survive the execution and delivery of this Agreement,
the delivery of the Deed and the transfer of title to the Property for a period
of one (1) year.  All representations
and warranties of Seller contained in any certificate or other instrument
delivered at any time by or on behalf of Seller in connection with the
transaction contemplated hereby shall constitute representations and warranties
hereunder.

 

9.6           Interpretation.  Whenever used herein, the term “including”
shall be deemed to be followed by the words “without limitation.”  Words used in the singular number shall
include the plural, and vice-versa, and any gender shall be deemed to include
each other gender.  The captions and headings
of the Articles and Sections of this Agreement are for convenience of reference
only, and shall not be deemed to define or limit the provisions hereof.

 

9.7           Governing
Law.  This Agreement
shall be governed by and construed in accordance with the internal laws of the
State of California, except that the laws with respect to conflict of laws
shall be disregarded.

 

9.8           Merger of
Prior Agreements.  This
Agreement (including the exhibits hereto) constitutes the entire agreement
between the parties with respect to the purchase and sale of the Property
specifically described herein and supersedes all prior and contemporaneous
(whether oral or written) agreements and understandings between the parties
hereto relating to the specific subject matter hereof.

 

9.9           Attorneys’
Fees.  In the event of
any action or proceeding at law or in equity between Buyer and Seller
(including an action or proceeding between Buyer and the trustee or debtor in
possession while Seller is a debtor in a proceeding under the Bankruptcy Code
(Title 11 of the United States Code) or any successor statute to such Code) to
enforce or interpret any provision of this Agreement or to protect or establish
any right or remedy of either Buyer or Seller hereunder, the unsuccessful party
to such action or proceeding shall pay to the prevailing party all costs and
expenses, including, without limitation, reasonable attorneys’ and paralegals’
fees and expenses, incurred in

 

19

 

such action or proceeding
and in any appeal in connection therewith by such prevailing party, whether or
not such action, proceeding or appeal is prosecuted to judgment or other final
determination, together with all costs of enforcement and/or collection of any
judgment or other relief.  The term
“prevailing party” shall include, without limitation, a party who brings an
action against the other by reason of the other’s breach or default and obtains
substantially the relief sought by judgment of the court. If such prevailing
party shall recover judgment in any such action, proceeding or appeal, such
costs, expenses and attorneys’ and paralegals’ fees shall be included in and as
a part of such judgment.

 

9.10         Remedies.  (a) 
The parties understand and agree that the Property is unique and for
that reason, among others, Buyer will be irreparably damaged in the event that
this Agreement is not specifically enforced. 
Accordingly, in the event of any breach or default in or of this
Agreement or any of the warranties, terms or provisions hereof by Seller, Buyer
shall have, as Buyer’s sole remedies hereunder, (i) the right to demand and
have specific performance of this Agreement, (ii) the right to recover monetary
damages resulting from Seller’s breach or default of this Agreement, provided
however, that the amount of such damages shall be limited to the sum of (A) all
actual out-of-pocket expenses incurred by Buyer by reason of this transaction,
including, but not limited to third party report and due diligence expenses,
appraisal fees, financing fees and expenses (application fees, commitments
fees, rate lock fees and the due diligence and legal fees of Buyer’s lender)
and the reasonable attorney’s fees and expenses of Buyer’s counsel and (B)
consequential damages not to exceed $500,000 and (iii) the right to a return of
the Deposit.

 

(b)           IF
BUYER DEFAULTS IN ITS OBLIGATION TO CLOSE THE PURCHASE OF THE PROPERTY, THE
CASH DEPOSIT, PLUS ANY INTEREST ACCRUED THEREON, SHALL BE PAID TO AND RETAINED
BY SELLER AS LIQUIDATED DAMAGES.  THE
AMOUNT PAID TO AND RETAINED BY SELLER AS LIQUIDATED DAMAGES SHALL BE SELLER’S
SOLE REMEDY IF BUYER FAILS TO CLOSE THE PURCHASE OF THE PROPERTY.  THE PARTIES HERETO EXPRESSLY AGREE AND
ACKNOWLEDGE THAT SELLER’S ACTUAL DAMAGES IN THE EVENT OF A DEFAULT BY BUYER
WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO ASCERTAIN AND THAT THE AMOUNT
OF THE DEPOSIT PLUS ANY INTEREST ACCRUED THEREON REPRESENTS THE PARTIES’
REASONABLE ESTIMATE OF SUCH DAMAGES.   
THE PAYMENT OF SUCH AMOUNT AS LIQUIDATED DAMAGES IS NOT INTENDED AS A
FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTIONS 3275
OR 3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER PURSUANT TO
CALIFORNIA CIVIL CODE SECTIONS 1671, 1676 AND 1677.  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS
SECTION 9.10(b), THIS LIQUIDATED DAMAGES PROVISION IS NOT INTENDED AND SHALL
NOT BE DEEMED OR CONSTRUED TO LIMIT IN ANY WAY BUYER’S INDEMNITY OBLIGATIONS
UNDER SECTIONS 9.2 and 9.16.

 

20

 

SELLER’S INITIALS: FJS   BUYER’S INITIALS: 
NR

 

9.11         Relationship.  It is not intended by this Agreement to, and
nothing contained in this Agreement shall, create any partnership, joint
venture, financing arrangement or other agreement between Buyer and Seller.  No term or provision of this Agreement is
intended to be, or shall be, for the benefit of any person, firm, organization
or corporation not a party hereto, and no such other person, firm, organization
or corporation shall have any right or cause of action hereunder.

 

9.12         Authority.  The individuals signing below represent and
warrant that they have the requisite authority to bind the entities on whose
behalf they are signing.

 

9.13         Counterparts.  This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.  It shall be necessary to account for only
one fully executed counterpart in proving this Agreement.

 

9.14         Exhibits.  References in this Agreement to Exhibits
mean the exhibits described in the List of Exhibits attached hereto, all of
which exhibits are incorporated by reference into this Agreement.

 

9.15         Access;
Confidentiality.  After
reasonable notice provided by Buyer, Seller shall give, and shall authorize and
instruct its counsel, its accountants and its other agents and representatives
to give to Buyer and Buyer’s counsel, accountants and other representatives
full access during normal business hours to the Property and to all of Seller’s
books, contracts and records related to the Property, and shall furnish such
information and copies of such materials related to the Property as Buyer from
time to time reasonably may request, 
provided, however that in no event shall (i) such inspections or tests
materially disrupt or disturb the operation of the Property, or (ii) Buyer or
its agents, representatives and consultants drill or bore on or through the
surface of the Real Property or the Improvements without Seller’s prior written
consent, which consent may be given or withheld in Seller’s sole and absolute
discretion.  After making such tests and
inspections, Buyer shall promptly restore the Property to the condition that
existed prior to making such tests and inspections (which obligation shall
survive the Closing or any termination of this Agreement).  In the event that the Agreement is
terminated for any reason other than Seller’s default, Buyer shall promptly
deliver to Seller copies of all written reports, studies and results of tests
and investigations obtained or conducted by Buyer with respect to the Property
(which obligation shall survive any termination of this Agreement) provided
that Seller first reimburses Buyer for the cost of obtaining such reports,
studies and results. All information so learned by Buyer shall be kept in
confidence pending the Closing.  If the
Closing does not take place for any reason, Buyer shall keep such information
in confidence thereafter (unless and until such

 

21

 

information otherwise is
or becomes public knowledge through no fault of Buyer) and shall promptly
return to Seller all materials so provided by Seller; provided, that the
foregoing shall not prohibit Buyer from utilizing such information or materials
in connection with the exercise of its rights hereunder.  Buyer shall indemnify, defend and hold
harmless Seller from any damage or injury caused by Buyer’s or Buyer’s agents’
negligence or willful misconduct while reviewing Seller’s books and records at
the Property.  The foregoing provisions
shall survive the termination of this Agreement.

 

9.16         Damage to
Property.  Buyer
acknowledges that Buyer shall be responsible for any injury or damage to the
Property caused by Buyer or Buyer’s consultants, agents or representatives
during Buyer’s review of the Property, regardless of whether the Closing
occurs.  Buyer shall keep the Property
free from liens filed by Buyer’s contractors and consultants and shall indemnify,
defend and hold harmless Seller from and against all claims, actions, losses,
liabilities, damages, costs and expenses (including, but not limited to
reasonable attorneys’ fees and costs) incurred, suffered by, or claimed against
the Seller by reason of any damage to the Property or injury to persons caused
by Buyer and/or its agents, representatives or consultants in exercising its
rights to inspect the Property under this Agreement.  The foregoing provisions shall survive the Closing or any termination
of this Agreement.

 

9.17         Arbitration.  Any dispute or controversy between Seller,
on the one hand, and Buyer, on the other hand, in any way arising out of this
Agreement shall be resolved exclusively through final and binding arbitration
in Los Angeles, California, pursuant to California Code of Civil Procedure
Sections 1282 through 1284.2.  In the
event of such arbitration, unless otherwise required by law, Seller and Buyer
shall each pay one-half of the costs and expenses of such arbitration, and shall
separately pay its counsel fees and expenses. 
Notwithstanding any provision in this Section, neither party shall be
prohibited from seeking injunctive relief as necessary to maintain the status
quo pending an arbitration proceeding regarding the breach or threatened breach
of this Agreement.

 

 

[Balance of page left blank intentionally]

 

22

 

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

 

	
   

  	
  “BUYER”

  
	
   

  	
  LEXINGTON
  CORPORATE PROPERTIES TRUST,

  
	
   

  	
  a Maryland statutory real estate

  
	
   

  	
    investment trust

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ NATASHA
  ROBERTS

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Natasha Roberts

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “SELLER”

  
	
   

  	
   

  
	
   

  	
  SPECIALTY
  LABORATORIES, INC.,

  
	
   

  	
  a California corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ FRANK J.
  SPINA

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Frank J. Spina

  
	
   

  	
   

  	
  Title:

  	
  Sr. Vice President & CFO

  
							

 

23

 

FIRST
AMENDMENT TO AGREEMENT

FOR SALE AND LEASEBACK

 

FIRST
AMENDMENT TO AGREEMENT FOR SALE AND LEASEBACK (this
“Amendment”), made and entered into as of the 8th day of March, 2004 by and
between SPECIALTY LABORATORIES, INC. (“Seller”)
and LEXINGTON CORPORATE PROPERTIES TRUST (“Buyer”).

 

W I T N E S S E T H:

 

WHEREAS,
Buyer and Seller have previously entered into a certain
Agreement for Sale and Leaseback dated as of February 11, 2004 (the
“Agreement”) having as its subject matter the sale and leaseback of the
Property as more fully described therein; 
and

 

WHEREAS,
Buyer and Seller desire to modify and amend the Agreement.

 

NOW
THEREFORE, in consideration of the premises, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledge, the parties hereto agree as follows:

 

1.               Close of Escrow   Anything in Section 6.1 of the Agreement to
the contrary notwithstanding, Seller and Buyer agree that the Close of Escrow
shall be adjourned from March 8, 2004 to March 15, 2004.

 

2.             Defined Terms.  Except as expressly provided herein, all
capitalized terms shall have the same meanings as set forth in the Agreement.

 

3.             No Further
Amendment.  Except as expressly
provided for in this Amendment, the Agreement is in full force and effect in
accordance with its terms and is not further amended.

 

24

 

IN WITNESS WHEREOF,
Seller and Buyer have executed this First Amendment to Agreement for Purchase
and Sale as of the day and year first above written.

 

	
   

  	
  SELLER:

  	
  SPECIALTY LABORATORIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BY:

  	
  /S/ NICHOLAS R.
  SIMMONS

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Nicholas R. Simmons

  
	
   

  	
   

  	
   

  	
  Title:

  	
  General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BUYER:

  	
  LEXINGTON CORPORATE

  
	
   

  	
   

  	
  PROPERTIES TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BY:

  	
  /S/ BRENDEN P.
  MULLINIX

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Brenden P. Mullinix

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  
						

 

25

 

SECOND
AMENDMENT TO AGREEMENT

FOR SALE AND LEASEBACK

 

SECOND
AMENDMENT TO AGREEMENT FOR SALE AND LEASEBACK (this
“Amendment”), made and entered into as of the 11th day of March, 2004 by and
between SPECIALTY LABORATORIES, INC. (“Seller”)
and LEXINGTON CORPORATE PROPERTIES TRUST (“Buyer”).

 

W I T N E S S E T H:

 

WHEREAS,
Buyer and Seller have previously entered into a certain
Agreement for Sale and Leaseback dated as of February 11, 2004 as amended by a
certain First Amendment to Agreement for Sale and Leaseback dated March 8, 2004
(collectively, the “Agreement”) having as its subject matter the sale and
leaseback of the Property as more fully described therein;  and

 

WHEREAS,
Buyer and Seller desire to further modify and amend the
Agreement.

 

NOW
THEREFORE, in consideration of the premises, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledge, the parties hereto agree as follows:

 

2.               Extension of Due
Diligence Period Anything in Section 3.2 to the contrary notwithstanding,
the Due Diligence Period shall be extended to 5pm p Pacific Standard Time on
March 12, 2004.

 

3.               Close of Escrow   Anything in Section 6.1 of the Agreement to
the contrary notwithstanding, Seller and Buyer agree that the Close of Escrow
shall be adjourned from March 15, 2004 to March 16, 2004.

 

3.             Defined Terms.  Except as expressly provided herein,  all capitalized terms shall have the same
meanings as set forth in the Agreement.

 

4.             No Further
Amendment.  Except as expressly
provided for in this Amendment, the Agreement is in full force and effect in
accordance with its terms and is not further amended.

 

26

 

IN WITNESS WHEREOF,
Seller and Buyer have executed this Second Amendment to Agreement for Purchase
and Sale as of the day and year first above written.

 

	
   

  	
  SELLER:

  	
  SPECIALTY LABORATORIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BY:

  	
  /S/ NICHOLAS R.
  SIMMONS

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Nicholas R. Simmons

  
	
   

  	
   

  	
   

  	
  Title:

  	
  General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BUYER:

  	
  LEXINGTON CORPORATE

  
	
   

  	
   

  	
  PROPERTIES TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BY:

  	
  /S/ BRENDEN P.
  MULLINIX

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Brenden P. Mullinix

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  
						

 

27

 

THIRD
AMENDMENT TO AGREEMENT

FOR SALE AND LEASEBACK

 

THIRD
AMENDMENT TO AGREEMENT FOR SALE AND LEASEBACK (this
“Amendment”), made and entered into as of the 12th day of March, 2004 by and
between SPECIALTY LABORATORIES, INC. (“Seller”)
and LEXINGTON CORPORATE PROPERTIES TRUST (“Buyer”).

 

W I T N E S S E T H:

 

WHEREAS,
Buyer and Seller have previously entered into a certain
Agreement for Sale and Leaseback dated as of February 11, 2004 as amended by a
certain First Amendment to Agreement for Sale and Leaseback dated March 8, 2004
and a Second Amendment to Agreement for Sale and Leaseback dated March 11, 2004
(collectively, the “Agreement”) having as its subject matter the sale and
leaseback of the Property as more fully described therein;  and

 

WHEREAS,
Buyer and Seller desire to further modify and amend the
Agreement.

 

NOW
THEREFORE, in consideration of the premises, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledge, the parties hereto agree as follows:

 

4.             Extension of Due
Diligence Period Anything in Section 3.2 to the contrary notwithstanding,
the Due Diligence Period shall be extended to 5pm Pacific Standard Time on
March 17, 2004 for those matters identified in Exhibit B attached
hereto, it being agreed that Buyer has waived its right to terminate the
Agreement for any other matter.

 

5.             Close of Escrow   Anything in Section 6.1 of the Agreement to
the contrary notwithstanding, Seller and Buyer agree that the Close of Escrow
shall be adjourned from March 16, 2004 to March 18, 2004.

 

3.             Description of the
Land.  Exhibit A to the
Agreement is hereby deleted and the Exhibit A attached hereto is
substituted in its place.  Wherever in
the Agreement, a legal description of the land is required as an exhibit,
including but not limited to, Exhibit A to the Memorandum of Lease, the Exhibit
A attached hereto shall be substituted therefore.

 

4.             Defined Terms.  Except as expressly provided herein, all
capitalized terms shall have the same meanings as set forth in the Agreement.

 

28

 

5.             No Further
Amendment.  Except as expressly
provided for in this Amendment, the Agreement is in full force and effect in
accordance with its terms and is not further amended.

 

IN WITNESS WHEREOF,
Seller and Buyer have executed this Third Amendment to Agreement for Purchase
and Sale as of the day and year first above written.

 

	
   

  	
  SELLER:

  	
  SPECIALTY LABORATORIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BY:

  	
  /S/ NICHOLAS R.
  SIMMONS

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Nicholas R. Simmons

  
	
   

  	
   

  	
   

  	
  Title:

  	
  General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BUYER:

  	
  LEXINGTON CORPORATE

  
	
   

  	
   

  	
  PROPERTIES TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BY:

  	
  /S/ BRENDEN P.
  MULLINIX

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Brenden P. Mullinix

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  
						

 

29

 

FOURTH
AMENDMENT TO AGREEMENT

FOR SALE AND LEASEBACK

 

FOURTH
AMENDMENT TO AGREEMENT FOR SALE AND LEASEBACK (this
“Amendment”), made and entered into as of the 17th day of March, 2004 by and
between SPECIALTY LABORATORIES, INC. (“Seller”)
and LEXINGTON
LION CLARITA L.P. as successor by assignment to LEXINGTON CORPORATE PROPERTIES TRUST (“Buyer”).

 

W I T N E S S E T H:

 

WHEREAS,
Buyer and Seller have previously entered into a certain
Agreement for Sale and Leaseback dated as of February 11, 2004 as amended by a
certain First Amendment to Agreement for Sale and Leaseback dated March 8,
2004, a Second Amendment to Agreement for Sale and Leaseback dated March 11,
2004 and a Third Amendment to Agreement for Sale and Leaseback dated March 12,
2004 (collectively, the “Agreement”) having as its subject matter the sale and
leaseback of the Property as more fully described therein;  and

 

WHEREAS,
Buyer and Seller desire to further modify and amend the
Agreement.

 

NOW
THEREFORE, in consideration of the premises, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledge, the parties hereto agree as follows:

 

6.             Extension of Due
Diligence Period Anything in Section 3.2 to the contrary notwithstanding,
the Due Diligence Period shall be extended to 5pm Pacific Standard Time on
March 18, 2004 for those matters identified in Exhibit A attached
hereto, it being agreed that Buyer has waived its right to terminate the
Agreement for any other matter.

 

7.             Close of Escrow   Anything in Section 6.1 of the Agreement to
the contrary notwithstanding, Seller and Buyer agree that the Close of Escrow
shall be adjourned from March 18, 2004 to March 19, 2004.

 

3.             Defined Terms.  Except as expressly provided herein,  all capitalized terms shall have the same
meanings as set forth in the Agreement.

 

4.             No Further
Amendment.  Except as expressly
provided for in this Amendment, the Agreement is in full force and effect in
accordance with its terms and is not further amended.

 

30

 

IN WITNESS WHEREOF,
Seller and Buyer have executed this Fourth Amendment to Agreement for Purchase
and Sale as of the day and year first above written.

 

	
   

  	
  SELLER:

  	
  SPECIALTY LABORATORIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /S/ NICHOLAS R.
  SIMMONS

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Nicholas R. Simmons

  
	
   

  	
   

  	
   

  	
  Title:

  	
  General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BUYER:

  	
  LEXINGTON LION CLARITA L.P.

  
	
   

  	
   

  	
  By:

  	
  Lexington Lion Clarita
  GP LLC, its

  general partner

  
	
   

  	
   

  	
   

  	
  By:

  	
  Lexington/Lion Venture
  L.P., its

  
	
   

  	
   

  	
   

  	
  sole member

  
	
   

  	
   

  	
   

  	
  By:

  	
  Lex GP, LLC, its
  general

  
	
   

  	
   

  	
   

  	
  partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /S/ BRENDEN P.
  MULLINIX

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Brenden P. Mullinix

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  
									

 

31Exhibit
10.40

 

CONSTRUCTION FUNDING
AGREEMENT

 

THIS
CONSTRUCTION FUNDING AGREEMENT (this “Agreement”), is made
effective as of this 18th day March, 2004, by and between LEXINGTON LION CLARITA L.P.,
a Delaware limited partnership, having an office c/o Lexington Corporate
Properties Trust, One Penn Plaza, Suite 4015, New York, New York 10119-4015
(“Owner”) and SPECIALTY LABORATORIES, INC., a California corporation, having
an address at 2211 Michigan Avenue, Santa Monica, California 90404 (“Tenant”).

 

RECITALS:

 

A.    Tenant has
owned and previously caused the partial construction of a research and
development and office facility (“Building”) containing approximately Two
Hundred One Thousand Three Hundred Thirty square feet (201,330) with related
improvements including parking, lighting and landscaping (collectively, the
“Improvements”) pursuant to the Construction Documents (as hereinafter defined)
on an approximately 13.78 acre site in the City of Santa Clarita, California,
and more particularly described on Exhibit A attached hereto (the
“Land”) (the Land and Improvements are herein together referred to as the
“Premises”).

 

B.    Pursuant to
a certain Agreement for Sale and Leaseback dated February 11, 2004 (the “Sale
Agreement”) between Tenant as seller and Owner as buyer, Owner is purchasing
the Premises, including the Improvements in their current state of completion,
from Tenant effective as of today’s date.

 

C.    Simultaneously
herewith, Owner, as landlord, and Tenant, as tenant, are entering into a
certain lease dated even date herewith (the “Lease”) with respect to the
Premises.

 

D.    Owner and
Tenant desire to set forth their agreement pursuant to which Tenant will cause
completion of the Improvements in accordance with the Construction Documents
and Owner will fund the cost of such construction, subject to the terms and
conditions hereinafter set forth.

 

AGREEMENT

 

NOW,
THEREFORE, in consideration of the mutual promises and
covenants contained herein and in consideration of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
both Tenant and Owner, it is hereby 

agreed as follows:

 

 

1. 
Construction of Improvements.  (a) Tenant shall cause the construction of
the Improvements (the “Work”) to be performed in accordance with the Drawings
and Specifications attached hereto as Exhibit B, the Project Management
Agreement, as amended (the “PMA”) between Tenant and Lowe Enterprises Southwest
(“Lowe”), the Cost-Plus Contract with Guaranteed Maximum Price and Guaranty
dated February 25, 2002, as amended and including change orders #1 through 7
inclusive (the “GMP Contract”) between Lowe and Tectonics Construction, Inc.
(the “Contractor”) and in full compliance with all applicable federal, state
and local laws, ordinances, codes, rules and regulations, all at Owner’s
expense in accordance with the Budget and in no event to exceed Owner’s Maximum
Cost (as defined in Section 2(a) below).

 

(b)  Simultaneously herewith, Tenant is
delivering estoppel certificates from Lowe and Contractor together with true
and complete copies of amendments to the PMA and GMP Contract which together
provide in substance that the PMA and GMP Contract have been re-instated, that
all sums due Lowe and the Contractor have been paid, that the cost to complete
the Improvements is consistent with the Budget (as defined in Section 2(a)
below) and that, subject to the terms and conditions of the PMA and the GMP
Contract, the Improvements will be completed in accordance with the Project
Schedule attached hereto as Exhibit D.

 

(c)  Tenant shall cause Lowe and the Contractor
to construct the Improvements in accordance with the Project Schedule attached
hereto as Exhibit D and cause Substantial Completion (hereinafter
defined) of the Work to occur on or before June 30, 2004 (the “Projected
Substantial Completion Date”), subject to Unavoidable Delays (hereinafter
defined) and approved Change Orders.

 

2.   Funding of Construction.  (a) The parties acknowledge that the total
project cost for acquisition of the Land and construction of the Building and
related improvements and fixturization in accordance with the Drawings and
Specifications is Fifty-Seven Million Seven Hundred Ninety Five Thousand Three
Hundred Eighty Three Dollars ($57,795,383.00) as set forth on the detailed line
item budget and schedule of values (the “Budget”) on Exhibit C attached
hereto and consists of (i) a purchase price of Forty Seven Million Dollars
($47,000,000.00) (the “Purchase Price”) payable by Owner pursuant to the Sale
Agreement to acquire the Land and the Improvements, of which $27,830,049.74
Owner is funding at Closing (the “Closing Funds”) and the balance of
$19,169,950.26 (the “Holdback Funds”) are to be disbursed in accordance with
this Agreement, (ii) Ten Million Seven Hundred Ninety Five Thousand Three
Hundred Eighty Three Dollars ($10,795,383.00) in costs for construction and
fixturization of the Improvements previously funded by Tenant (“Tenant’s
Contribution”) in accordance with the Tenant Contribution Budget attached
hereto as Exhibit E, and (iii) subject to the terms and conditions
herein set forth, the balance of the construction costs of the Improvements,
which cost is currently anticipated to be $5,004,750.86 (the “Completion
Funds”).  The Holdback Funds in the
amount of $19,169,950.26 is hereafter sometimes referred to as “Owner’s Maximum
Cost”. Subject to the limits on Change Orders set forth in Section 8, in no
event shall Owner’s payments exceed Owner’s Maximum Cost as

 

2

 

such amount may be decreased, from time to time, pursuant to Section
9.  The parties acknowledge that the
Budget contains $0 in contingencies (the “Contingency”).

 

(b)  Any change by Tenant to the Drawings and
Specifications, the Project Schedule and/or the Budget which constitutes a
“Material Deviation” from the standards set forth in the Specifications shall
be submitted by Tenant in writing to Owner (“Change Order(s)”), and Owner shall
not unreasonably withhold its consent thereto, so long as appropriate
adjustments are made to the Drawings and Specifications, the Project Schedule
and the Budget.  As used herein, a
“Material Deviation” shall be deemed to mean one which either (1) results in an
increase or decrease in the square footage of the Building of one percent (1%)
or more, (2) changes the footprint of the Building, (3) alters the structure of
the Building (including the specifications of the structure), or (4) alters the
mechanical systems, heating, ventilation and air conditioning system, electrical
system and/or the main lines of the plumbing or fire system. Any reduction in
construction and development costs associated with any such Change Order(s)
shall decrease the Fixed Rent in accordance with Section 9 and shall be subject
to the limits set forth in Section 8. 
Alternatively, any increase in construction and development costs shall
be paid directly by Tenant in accordance with the costs of any such Change
Order(s) in which event there shall not be any increase in Fixed Rent by reason
of such Change Order.  In no case shall
Owner be required to (i) compensate for costs associated with Change Orders
that have not been approved, in advance in writing, by Owner and (ii) pay any
amount to Tenant in addition to the Closing Funds in excess of Owner’s Maximum
Cost.  All Change Orders shall specify
the Change in the Specifications, the adjustments, if any, to the Budget, the
decrease, if any, in Fixed Rent and the adjustment, if any, to the Project
Schedule and must be approved in writing by Owner and Tenant.  In addition, Tenant shall not make any
change to Tenant’s Contribution which effects any reduction in quantity or
quality of equipment, materials or facilities constituting the Improvements
without first obtaining Owner’s consent which may be granted or withheld in its
sole discretion.  Owner shall respond to
any request for approval of a Change Order within five (5) business days of its
receipt thereof, failing which it shall be deemed to have approved such Change
Order.

 

(c) Owner shall
fund to Tenant, or at Tenant’s request, directly to Lowe and/or the Contractor,
after the Substantial Completion Date (as defined in Section 10 below) up to an
amount equal to Owner’s Maximum Cost, as the same may be adjusted in accordance
with the terms and conditions of this Agreement (the “Final Payment”) within
ten (10) days after satisfaction of the following conditions and delivery to
Owner of the following documents:

 

(i) Tenant shall
submit to Owner an application for payment in form reasonably satisfactory to
Owner which shall include (a) copies of the Job Cost Reports and Job Cost
Detailed Reports received from the Lowe, (b) the AIA G 702/703 forms containing
the itemized schedule of values, for the construction work and all costs
incurred for construction pursuant to each category of such schedule of values
set forth in the Budget and (c) a separate itemization of costs incurred for
equipment, construction and non-construction expenses in connection with the
Premises and the Improvements (which shall be itemized under the line item on
the Budget, with copies of

 

3

 

invoices for all such amounts)  The accuracy of the costs shall be certified
to Owner by Tenant and Lowe and shall be reviewed and approved by National
Assessment Corp. (the “Construction Inspector”).

 

(ii) The completed
construction work with respect to the Improvements in the application for
payment must be reviewed and approved by the Construction Inspector as a
condition to funding, which approval shall not be unreasonably withheld,
delayed or conditioned. Tenant will contact the Construction Inspector and
coordinate delivery of applications for payment with an inspection by the
Construction Inspector in order to allow Construction Inspector to review the
completed construction work.  The
Construction Inspector will review and certify to Owner and Tenant its opinion
of compliance with the Specifications and the amounts to be funded, which shall
be determined in accordance with this Agreement.

 

(iii) Owner shall
be provided with written notice of, but its consent shall not be required with
regard to, any Change Order that is not a Material Deviation from the
Specifications.

 

(iv) In no event
shall Owner be obligated to advance the Final Payment unless it receives (1) a
final unconditional lien waiver from Lowe, (2) final unconditional lien waivers
from the Contractor, any subcontractor or supplier receiving in excess of
$100,000 and any contractor, subcontractor and material supplier who has served
a 20 day preliminary notice on Owner, (3) a copy of the permanent certificate
of occupancy for the Premises from the City of Santa Clarita (provided however
that a temporary certificate of occupancy shall be deemed to satisfy this
condition so long as the only items to be completed before the issuance of the
permanent certificate of occupancy are the punchlist items, that the right to
lawful occupancy of the Premises cannot be terminated prior to the issuance of
a permanent certificate of occupancy and that Tenant diligently and
continuously prosecutes all matters necessary to obtaining the permanent
certificate of occupancy), (4) evidence satisfactory to Owner that Tenant’s
Contribution has been fully constructed and installed and (5) evidence that all
other requirements of Sections 2(c)(i) and 2(c)(ii) have been satisfied;

 

(v) The Final
Payment shall be reduced by an amount equal to the greater of (A) two times the
agreed punch list value or (B) $100,000, which sum shall be due and payable
upon completion of the punch list items and shall be for all outstanding sums
not subject to dispute or offset due under the Agreement;

 

(vi) Anything in
this Agreement to the contrary notwithstanding, in no event shall Owner be
obligated to fund the Final Payment if:

 

(1) Tenant has
failed to make the deliveries required hereunder, including but not limited to,
those specified in Sections 2(c)(i) and 2(c)(ii); or

 

4

 

(2) There is any
event of default outstanding under this Agreement for which notice has been
given in accordance with Section13 which remains uncured; or

 

(3) There is any
Event of Default outstanding under the Lease.

 

(vii) The
conditions and limitations of this Section 2 may be waived by Owner at Owner’s
sole option without notice.

 

(viii) Anything in
this Agreement to the contrary notwithstanding, Owner shall nonetheless pay to
Tenant in the Final Payment the full amount of sums due to Tenant in
constructing the Improvements (subject to Section 2(c)(v)), but not in any
event to exceed Owner’s Maximum Cost, as such amount may be decreased pursuant
to Section 9.

 

(d)             In addition, in consideration of its use
and occupancy of the Premises for the period from the date hereof until the
“Acceptance Date” (as defined in the Lease) during which time Tenant shall
construct and install “Tenant’s Initial Alterations” (as defined in the Lease),
Tenant shall pay rent for the use and occupancy rights with respect to the
Premises in the amount of $784,590.81 on the date hereof.

 

3. 
Fixed Rent. 
The Fixed Rent to be paid by Tenant to Owner under the terms of the
Lease was determined by the parties based on an estimated cost to complete
construction of the Improvements pursuant to the Budget attached as Exhibit
C hereto previously delivered to and approved by Tenant and Owner.

 

4. 
Additional Costs.  Owner shall not be responsible for funding any costs in addition
to the Closing Funds and the Owner’s Maximum Cost, as such amount may be
decreased pursuant to Section 9.  To the
extent that any cost is incurred in connection with the acquisition of the
Premises (including but not limited to title insurance premiums) or in the
ownership and development of the Premises prior to Substantial Completion,
including but not limited to the fees and expenses of the Construction
Inspector and real estate taxes, such costs shall either be directly paid by
Tenant or, to the extent funded by Owner and not reimbursed by Tenant, shall
dollar for dollar be applied against Owner’s Maximum Cost.

 

5.  Construction Documents.  As used in this Agreement, the term
“Construction Documents” shall mean and include (i) the Drawings and
Specifications attached hereto as Exhibit B, (ii) the PMA between Tenant
and Lowe and (iii) the GMP Contract between Lowe and Contractor.  Owner shall have the right to inspect the
Work at all reasonable times.  If Owner
discovers that the Work which fails to comply with the Construction Documents,
Owner shall notify Tenant and Tenant shall cause Lowe and/or the Contractor to
take all necessary action to correct the deficiencies.

 

5

 

6. Contractor Warranties.
(a) Notwithstanding any terms or conditions of the Lease, Tenant shall cause
the Contractor to guarantee to Owner and Tenant that the Improvements will be
constructed without defective workmanship and materials, latent or otherwise,
for a period of one (1) year from the Substantial Completion Date (the
“Warranty Period”).  The Contractor shall
also guarantee the foundations, slab, structural frame, roof deck, roof and
roof membrane and exterior walls of the Improvements against defective,
workmanship and materials, latent or otherwise, for a period of one (1) years
from the Substantial Completion Date (the “Structural Warranty Period”).  The landscaping warranty shall be one year
for all trees and six months for all plant materials, including shrubs and
groundcover.  The Construction Documents
shall require, among other provisions, that the Contractor obtain a warranty on
the roof membrane of not less than 20 years and to assign such warranty to
Owner.

 

(b)         By
virtue of the foregoing guaranties, the Contractor shall repair or replace at
its sole cost and expense any defective item occasioned by defective,
workmanship or materials that Tenant or Owner discovers during the Warranty
Period or the Structural Warranty Period, as the case may be.  On the expiration of the Warranty Period or
the Structural Warranty Period, as the case may be, and with the exception of
any equipment or roof warranty, provided that such warranties have theretofore
been assigned pursuant to Section 6(a), the Contractor shall assign and deliver
to Owner originals of all continuing assignable guaranties and warranties
(whether express or implied) issued or made in connection with the construction
of the Improvements and any and all claims against vendors or others who
provided materials or construction during the construction of the Improvements
and must assign to Owner, free and clear of all liens and encumbrances, the
Contractor’s interest in those guaranties, warranties and claims by means of a
duly executed and acknowledged assignment in form and substance satisfactory to
Owner.  In addition, the Contractor
shall warrant to Owner and Tenant that it will replace all landscape plantings
at the Premises during the initial year of the term of the Lease, except for
those which do not survive by reason of neglect or intentional misconduct.

 

(c)         Tenant acknowledges and agrees that its sole remedy
for any defect in construction of the Improvements shall be an action for
specific performance and/or damages against the Contractor.  Tenant specifically waives any right which
Tenant may otherwise have at law or in equity to make any claim against Owner
for any latent or patent defect in construction of the Improvements, including
but not limited to, any right to offset against or deduct from rent due to
Owner under the Lease.

 

7. 
Representatives.  Owner designates Brendan Mullinix, phone:  (212) 692-7200, fax:  (212) 986-6972 and e-mail: bmullinix@LXP.com
to act on behalf of Owner relating to the construction of the
Improvements.  Tenant designates Reid
McCartney of CRESA Partners, phone: 
(310)-207-1700 to act on behalf of Tenant relating to the construction
of the Improvements.  Any party may
change its representatives by giving written notice of a change of designation
to the other party.  Each party will
exert its commercially reasonable efforts to render decisions and take actions
in a timely manner so as to avoid unreasonable delay in the other party’s work
and action relating to the Improvements.

 

6

 

8.  Limits on Change Orders.  Any Change Order approved by Tenant and
Owner shall require a corresponding change to the Budget (both specific line
item and total cost of the Work), and, if applicable, the Projected Substantial
Completion Date. Such Change Order shall not be implemented unless and until
both the change to the Plans, the corresponding change to the Budget, and, if applicable,
the corresponding change to the Projected Substantial Completion Date are
approved in writing by Owner and Tenant. 
In no event, however, shall any Change Order result in a reduction of
the quality or utility of the Improvements or obligate Owner to fund an amount
in excess of Owner’s Maximum Cost as set forth in the Budget attached hereto as
Exhibit C .

 

9.  Actual Cost of Work.  In the event the final actual cost of
the Work is less than the amount set forth in the Budget, excluding the Contingency,
as may have been adjusted, as a result of Change Orders approved by Tenant and
Owner in accordance with this Agreement, then such amount shall be evidenced by
a decrease in the Fixed Rent provided in the Lease.  The annual decrease in the initial Fixed Rent under the Lease per
$10,000 deviation from the Budget shall be $752.00. Upon Substantial Completion
(defined in Section 10), Owner and Tenant shall execute and deliver an
amendment to the Lease to make any changes to the Fixed Rent to reflect the final
actual cost of the Work.  Such final
actual cost of the Work shall be certified to Tenant by Lowe and the Contractor
which certification shall be accompanied by evidence of such costs incurred.  Owner and Tenant will each have the right to
review, copy and audit Contractor’s books and records with respect to all costs
of the Work at Contractor’s place of business during reasonable business hours.

 

10.  Substantial Completion.  The “Substantial Completion Date” shall mean
the date after issuance of the Completion Certificate (as defined in Section 11
below) which is the first to occur of (i) the issuance of a Certificate of
Occupancy (temporary or permanent) from the applicable building department,
permitting Tenant to immediately occupy the Building for Tenant’s intended
purpose, but not including completion or correction of all customary “punch
list” items; or (ii) Tenant’s conduct of normal business operations at the
Building (the first to occur of (i) and (ii), “Substantial Completion”).  Tenant shall keep Owner informed from time
to time in writing of the anticipated Substantial Completion Date.  Subject to delays resulting from force
majeure and long lead items beyond its reasonable control, the Contractor shall
complete the punch list items within thirty (30) days of the later to occur of
the (i) Tenant’s delivery of the punch list to Owner, and (ii) issuance of the
permanent Certificate of Occupancy. 
“Punch List” items shall be agreed to by a mutual inspection of the
Improvements by Owner and Tenant in accordance with Section 23.2(c) of the
Lease.  The aggregate cost of all punch
list items (other than those which do not affect use and occupancy of the
Premises) shall not exceed $100,000.

 

11.  Completion Certificate.  Upon Substantial Completion of the
Improvements, Tenant shall cause the Contractor and the architect to execute
and deliver to Tenant and Owner a certificate (the “Completion Certificate”)
that shall expressly provide the following representations and warranties: (a)
the Premises have been substantially

 

7

 

completed in accordance
with the Drawings and Specifications and are free of any mechanic’s,
materialmen’s, architects’, suppliers’ or other similar liens or, if such liens
exist, they have been bonded in accordance with applicable law or the Title
Company has issued title insurance for the benefit of Owner and Tenant in form
reasonably acceptable to Owner and Tenant over such liens; and (b) the
Improvements are in compliance with all laws, ordinances, rules and regulations
of any state, federal, municipal or other governmental agency having
jurisdiction of the Premises that relate to the intended use, condition or
occupancy of the Premises prior to Tenant’s occupancy thereof.  The parties hereto further agree to provide
any necessary documentation to the Title Company to remove any exceptions
related to mechanics’ or materialmens’ liens contained in any title policy
issued to Owner and Tenant after Substantial Completion, provided however, in
the event of any dispute with a lienor, the contesting party shall have the
right bond off such lien.

 

12.  Unavoidable Delays.  The time for completion of construction
(including punch list items) of the Improvements as provided herein shall be
extended for the number of days equal to such delays and their effects caused
by Unavoidable Delays. For purposes of this Agreement, the term “Unavoidable
Delays” shall mean causes and events beyond a party’s reasonable control which
prevent or materially interferes with such party’s performance under this
Agreement, which events may include; acts of God, fire, earthquake, flood,
storm, explosion, war, sabotage, terrorism, invasion, insurrection, civil
commotion, embargo, riots, offsite and third party lockouts, strikes and
picketing, litigation involving the Premises which cannot be resolved by the
payment of sums certain by a party to this Agreement, delays caused by or
resulting from the delay or failure of the public utilities and public
authorities to perform and complete their service requirements, including
water, electricity, gas, sanitation, roads and authorization for curb and road
cuts, in a timely manner, in accordance with the schedule for completion of the
Work, failure of transportation, condemnation, unavailability of materials or
extraordinary delays in delivery, governmental restriction, including weather
delays in excess of five (5) aggregate days of inclement weather.  In the event of a failure of transportation,
the unavailability or shortages of materials and/or offsite and third party
lockouts, strikes or picketing, each party agrees to use its good faith
reasonable efforts to locate alternative sources and, if appropriate, in other
geographic areas.  The party claiming
Unavoidable Delay shall provide to the other party, within five (5) business
days after becoming aware of such Unavoidable Delay (i) evidence of the
occurrence of each instance thereof reasonably satisfactory to the other
parties hereto; and (ii) good faith estimated notice of the number of days of
Unavoidable Delay that the party is claiming, as so evidenced. If Tenant
reasonably believes that an item of Unavoidable Delay will affect the
Substantial Completion Date, then Tenant shall notify Owner in writing.  Failure to give such notice or to provide
such evidence shall result in a loss of the days of claimed Unavoidable Delay.

 

13.  Default/Termination.  (a) No party hereto shall be deemed to be in
default under this Agreement unless and until (i) it has received written notice
from the other party specifying the particulars in which such party has failed
to perform its obligation

 

8

 

hereunder and (ii) fifteen (15) days have expired from the receipt of
such notice and the default specified has not been cured.

 

(b) 
Notwithstanding the provisions of Section 13(a), in the event that a
default is not susceptible to immediate cure, a defaulting party shall be
afforded such additional time as may be reasonably necessary to cure its default
provided that (i) such cure commences during the initial fifteen (15) day
period, (ii) is prosecuted diligently and continuously to completion and (iii)
in no event exceeds sixty (60) days from receipt of the original notice of
default.

 

(c)  In the event
of any such default which remains uncured after the applicable cure period, the
non-defaulting party shall have all of the rights and remedies available to
such party at law or in equity.

 

14.
 Notices.  Any notice or demand which either party
hereto either is required to or may desire to serve upon the other, must be in
writing, and shall be sufficiently served if (i) personally delivered, (ii)
sent by registered or certified mail, postage prepaid, or (iii) sent by
commercial overnight carrier, and addressed to:

 

	
  Owner:

  	
   

  	
  Lexington Lion Clarita L.P.

  
	
   

  	
   

  	
  c/o Lexington Corporate Properties Trust

  
	
   

  	
   

  	
  One Penn Plaza, Suite 4015

  
	
   

  	
   

  	
  New York, New York 10119-4015

  
	
   

  	
   

  	
  Attn: 
  Richard J. Rouse

  
	
   

  	
   

  	
  Facsimile No.: 
  (212) 594-6600

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Crowe Deegan LLP

  
	
   

  	
   

  	
  535 Fifth Avenue – Suite 611

  
	
   

  	
   

  	
  New York, New York 10017

  
	
   

  	
   

  	
  Attn: 
  Richard C. Hamlin, Esq.

  
	
   

  	
   

  	
  Facsimile No.: 
  (212) 557-7270

  
	
   

  	
   

  	
   

  
	
  Tenant:

  	
   

  	
  Specialty Laboratories Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2211 Michigan Avenue

  
	
   

  	
   

  	
  Santa Monica, California  90404

  
	
   

  	
   

  	
  Attn:  Chief
  Financial Officer

  
	
   

  	
   

  	
  Facsimile No.:

  

 

9

 

	
  With a copy to:

  	
   

  	
  Specialty Laboratories Inc.

  
	
   

  	
   

  	
  2211 Michigan Avenue

  
	
   

  	
   

  	
  Santa Monica, California  90404

  
	
   

  	
   

  	
  Attn: 
  General Counsel

  
	
   

  	
   

  	
  Facsimile No.:

  
	
   

  	
   

  	
   

  
	
  And to:

  	
   

  	
  O’Melveny & Myers LLP

  
	
   

  	
   

  	
  400 South Hope Street

  
	
   

  	
   

  	
  Los Angeles, California 90071

  
	
   

  	
   

  	
  Attn: 
  Christine H. Suh, Esq.

  
	
   

  	
   

  	
  Facsimile No.: 
  213-430-6407

  

 

or any other address
which the parties notice to the other. 
Such notice shall be deemed to have been received on the third business
day following the mailing thereof or upon receipt in the event of personal
service and on the following business day if by overnight courier.  Each party may send notices by facsimile
provided the sender confirms receipt by the party to whom the notice was
addressed.

 

15.  Governing Law.  If any term or provision of this Agreement
shall to any extent be held invalid or unenforceable, the remaining terms and
provisions of this Agreement shall not be affected thereby, but each term and
provision of this Agreement shall be valid and be enforced to the fullest
extent under the laws of the State of California.  If any conflict exists or occurs between this Agreement and the
Lease, the terms of this Agreement shall be controlling.

 

16.  Attorneys’ Fees.  Each party shall pay the other party’s
reasonable legal costs and attorney’s fees incurred in successfully enforcing
against the other party any covenants, terms or conditions of this Agreement.

 

17.  Due Authorization.  Owner and Tenant each represent that the
execution and delivery of this Agreement and the performance of all of the
covenants and agreements contained herein have been duly authorized, ratified
and confirmed by all necessary corporate action on the part of each of said
parties.

 

18.  Successors and Assigns.  The covenants and agreements herein
contained shall bind and inure to the benefit of Owner, its successors and
assigns, and Tenant and its permitted successors and assigns.  No party shall have the right to assign this
Agreement or any interest herein to third party without first obtaining the
prior written consent of the other parties hereto which consent may be granted
or withheld in such party’s sole and absolute discretion.  Capitalized terms shall have the meanings as
defined herein or, if not defined in this Agreement, as set forth the Lease.

 

19.          Dispute
Resolution.  Any dispute or controversy between Owner and
Tenant arising out of this Agreement shall be resolved exclusively through
binding arbitration in Los Angeles, California pursuant to California Code of
Civil Procedure Sections 1282 through 1284.2 . 
In the event of such arbitration, unless otherwise required by law,

 

10

 

Tenant and Owner shall each pay one-half of
the costs and expenses of such arbitration, and shall separately pay its
counsel fees and expenses. Notwithstanding any provision in this Section,
neither party shall be prohibited from seeking injunctive relief as necessary
to maintain the status quo pending an arbitration proceeding regarding the
breach of this Agreement.

 

20.          Limitation
on Liability for Indemnification.    Anything in this Agreement
to the contrary notwithstanding, in no event shall Tenant be obligated to
indemnify Owner or any of its officers, directors, employees, contractors,
agents or consultants (“Owner Parties”) for any act or omission constituting
gross negligence or willful misconduct by such Owner Parties nor shall Tenant
be deemed to have released any of the Owner Parties for any act or omission
constituting gross negligence or willful misconduct by such Owner Parties.

 

[Balance of Page Left Blank Intentionally]

 

11

 

IN WITNESS WHEREOF,
each of the parties hereto has caused this Agreement to be duly executed as of
the day and year first above written.

 

	
  OWNER:

  	
  LEXINGTON
  LION CLARITA L.P.

  
	
   

  	
  By:  

  	
  Lexington
  Lion Clarita GP LLC

  
	
   

  	
   

  	
  By:  

  	
  Lexington/Lion Venture L.P.

  
	
   

  	
   

  	
  By:

  	
  Lex GP, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /S/
  BRENDEN P. MULLINIX

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Brenden
  P. Mullinix

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
  TENANT:

  	
  SPECIALTY
  LABORATORIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /S/
  FRANK J. SPINA

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Frank
  J. Spina

  
	
   

  	
   

  	
  Title:

  	
  Senior
  Vice President &

  Chief Financial Officer

  
												

 

12

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